Exhibit 10.1

EXECUTION COPY

 

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DYNEGY HOLDINGS INC.

FOURTH AMENDED AND RESTATED CREDIT AGREEMENT

Dated as of April 19, 2006

among

DYNEGY HOLDINGS INC.,

as the Borrower,

DYNEGY INC.,

as the Parent Guarantor,

The Other Guarantors Party Hereto,

The Lenders Party Hereto,

CITICORP USA, INC.

and

JPMORGAN CHASE BANK, N.A.,

as Administrative Agents,

CITICORP USA, INC.,

as Payment Agent,

JPMORGAN CHASE BANK, N.A.

and

CITIBANK, N.A.,

as Revolving L/C Issuers

JPMORGAN CHASE BANK, N.A.,

as Term L/C Issuer

and

JPMORGAN CHASE BANK, N.A.

as Collateral Agent

 

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J.P. MORGAN SECURITIES INC.

and

CITIGROUP GLOBAL MARKETS INC.,

as Joint Lead Arrangers and Joint Bookrunners

and

CREDIT SUISSE, CAYMAN ISLANDS BRANCH,

BANK OF AMERICA, N.A.

and

LEHMAN COMMERCIAL PAPER INC.,

as Co-Documentation Agents

 

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Table of Contents

 

          Page

ARTICLE I DEFINITIONS AND ACCOUNTING TERMS

   1

1.01.

  

Defined Terms

   1

1.02.

  

Other Interpretive Provisions

   46

1.03.

  

Accounting Terms

   46

1.04.

  

Rounding

   47

1.05.

  

References to Agreements, Laws and Persons

   47

1.06.

  

Times of Day

   47

1.07.

  

Letter of Credit Amounts

   47

1.08.

  

Currency Equivalents Generally

   47

ARTICLE II THE COMMITMENTS AND CREDIT EXTENSIONS

   47

2.01.

  

The Loans

   47

2.02.

  

Borrowings, Conversions and Continuations of Loans

   48

2.03.

  

Letters of Credit

   49

2.04.

  

Prepayments

   60

2.05.

  

Termination or Reduction of Commitments

   64

2.06.

  

Repayment of Loans

   65

2.07.

  

Interest

   65

2.08.

  

Fees

   66

2.09.

  

Computation of Interest and Fees

   66

2.10.

  

Evidence of Indebtedness

   66

2.11.

  

Payments Generally

   67

2.12.

  

Sharing of Payments

   69

2.13.

  

Incremental Revolving Credit Commitments

   69

ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY

   70

3.01.

  

Taxes

   70

3.02.

  

Illegality

   71

3.03.

  

Inability to Determine Rates

   72

3.04.

  

Increased Cost and Reduced Return; Capital Adequacy; Reserves on Eurodollar Rate
Loans

   72

3.05.

  

Funding Losses

   72

3.06.

  

Matters Applicable to all Requests for Compensation

   73

3.07.

  

Survival

   73

ARTICLE IV CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

   73

4.01.

  

Conditions of Initial Credit Extension

   73

4.02.

  

Conditions to all Credit Extensions

   76

ARTICLE V REPRESENTATIONS AND WARRANTIES

   77

5.01.

  

Existence, Qualification and Power; Compliance with Laws

   77

5.02.

  

Authorization; No Contravention

   77

5.03.

  

Governmental Authorization; Other Consents

   78

5.04.

  

Binding Effect

   79

5.05.

  

Financial Statements

   79

5.06.

  

Litigation

   79

5.07.

  

No Default

   79

 

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5.08.

  

Ownership of Property; Liens; Etc.

   79

5.09.

  

Environmental Compliance

   80

5.10.

  

Insurance

   81

5.11.

  

Taxes

   81

5.12.

  

ERISA Compliance

   81

5.13.

  

Subsidiaries

   82

5.14.

  

Margin Regulations; Investment Company Act

   82

5.15.

  

Disclosure

   83

5.16.

  

Intellectual Property; Licenses, Etc.

   83

5.17.

  

Solvency

   83

ARTICLE VI AFFIRMATIVE COVENANTS

   84

6.01.

  

Financial Statements

   84

6.02.

  

Certificates; Other Information

   85

6.03.

  

Notices

   86

6.04.

  

Payment of Obligations

   87

6.05.

  

Preservation of Existence, Etc.

   87

6.06.

  

Maintenance of Properties

   87

6.07.

  

Maintenance of Insurance

   87

6.08.

  

Compliance with Laws

   87

6.09.

  

Books and Records

   87

6.10.

  

Inspection Rights

   88

6.11.

  

Use of Proceeds

   88

6.12.

  

Covenant to Guarantee Obligations and Give Security in Personal Property

   88

6.13.

  

Covenant to Give Security in Real Property; Recordation of Rights of Way;
Supplements to Mortgages

   90

6.14.

  

Compliance with Environmental Laws

   91

6.15.

  

Preparation of Environmental Reports

   91

6.16.

  

Further Assurances

   92

ARTICLE VII NEGATIVE COVENANTS

   92

7.01.

  

Liens

   92

7.02.

  

Investments

   96

7.03.

  

Indebtedness

   98

7.04.

  

Fundamental Changes

   101

7.05.

  

Asset Sales

   102

7.06.

  

Restricted Payments

   104

7.07.

  

Change in Nature of Business

   105

7.08.

  

Transactions with Affiliates

   106

7.09.

  

Burdensome Agreements

   106

7.10.

  

Use of Proceeds

   108

7.11.

  

Financial Covenants

   108

7.12.

  

Capital Expenditures

   109

7.13.

  

Amendments of Organizational Documents

   109

7.14.

  

Accounting Changes

   109

7.15.

  

Prepayments, Etc. of Indebtedness

   109

7.16.

  

Swap Contracts

   110

7.17.

  

Partnerships, Etc.

   111

7.18.

  

Formation of Subsidiaries

   111

7.19.

  

Amendments, Etc. of 2003 Convertible Preferred Stock

   111

 

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ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES

   111

8.01.

  

Events of Default

   111

8.02.

  

Remedies Upon Event of Default

   113

8.03.

  

Application of Monies Upon Event of Default

   114

ARTICLE IX ADMINISTRATIVE AGENTS AND OTHER AGENTS

   114

9.01.

  

Appointment and Authorization of Agents

   114

9.02.

  

Delegation of Duties

   115

9.03.

  

Liability of Agents

   115

9.04.

  

Reliance by Agents

   116

9.05.

  

Notice of Default

   116

9.06.

  

Credit Decision; Disclosure of Information by Agents

   116

9.07.

  

Indemnification of Agents

   117

9.08.

  

Agents in their Individual Capacities

   118

9.09.

  

Successor Agents

   118

9.10.

  

Administrative Agents May File Proofs of Claim

   118

9.11.

  

Collateral and Guaranty Matters

   119

9.12.

  

Other Agents; Arrangers and Bookrunners

   119

9.13.

  

Appointment of Supplemental Collateral Agents

   120

ARTICLE X GUARANTY

   121

10.01.

  

Guaranty; Limitation of Liability

   121

10.02.

  

Guaranty Absolute

   121

10.03.

  

Waivers and Acknowledgments

   122

10.04.

  

Subrogation

   123

10.05.

  

Guaranty Supplements

   124

10.06.

  

Subordination

   124

10.07.

  

Continuing Guaranty; Assignments

   125

ARTICLE XI MISCELLANEOUS

   125

11.01.

  

Amendments, Etc.

   125

11.02.

  

Notices and Other Communications

   127

11.03.

  

No Waiver; Cumulative Remedies

   128

11.04.

  

Costs and Expenses

   128

11.05.

  

Release and Indemnification by the Borrower and the Parent Guarantor

   128

11.06.

  

Payments Set Aside

   130

11.07.

  

Successors and Assigns

   130

11.08.

  

Confidentiality

   133

11.09.

  

Setoff

   133

11.10.

  

Interest Rate Limitation

   133

11.11.

  

Counterparts

   134

11.12.

  

Integration

   134

11.13.

  

Survival of Representations and Warranties

   134

11.14.

  

Severability

   134

11.15.

  

Tax Forms

   134

11.16.

  

Governing Law

   136

11.17.

  

Waiver of Right to Trial by Jury

   136

11.18.

  

Binding Effect

   137

11.19.

  

Amendment and Restatement

   137

11.20.

  

USA PATRIOT Act

   137

11.21.

  

Lender Addendum

   137

 

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SCHEDULES

 

I    Existing Mortgagors and Existing Mortgages II    Non-Pledging Subsidiaries
III    Tolling Agreements 2.01    Lender Commitments 2.03    Existing Revolving
Letters of Credit 4.01(a)(iii)(C)    Insurance 4.01(a)(iv)    Mortgages to be
Amended 4.01(a)    Jurisdictions of Local Counsel to the Loan Parties 5.03(b)   
Perfection of Security Interests 5.08(b)    Owned Real Property 5.08(c)   
Leased Real Property 5.09    Environmental Matters 5.11    Certain Tax
Information 5.13    Subsidiaries 7.01    Existing Liens 7.03    Existing
Indebtedness 7.08    Existing Affiliate Transactions 11.02    Certain Addresses
for Notices

EXHIBITS

 

A    Form of Committed Loan Notice B-1    Form of Revolving Credit Note B-2   
Form of Term L/C Facility Term Note C    Form of Compliance Certificate D   
Form of Assignment and Assumption E-1    Form of Shared Security Agreement E-2
   Form of Non-Shared Security Agreement E-3    Form of Collateral Trust
Agreement F    Form of Mortgage G    Form of Mortgage Supplement H    Form of
Guaranty Supplement I    Form of Prepayment Option Notice J    Form of Joinder
Agreement K    Form of Lender Addendum

 

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FOURTH AMENDED AND RESTATED CREDIT AGREEMENT

This FOURTH AMENDED AND RESTATED CREDIT AGREEMENT (“Agreement”) is entered into
as of April 19, 2006, among DYNEGY HOLDINGS INC., DYNEGY INC., the SUBSIDIARY
GUARANTORS party hereto, the Lenders party hereto, JPMORGAN CHASE BANK, N.A. and
CITICORP USA, INC., as Administrative Agents, CITICORP USA, INC., as Payment
Agent, JPMORGAN CHASE BANK, N.A., as Collateral Agent, and each L/C ISSUER party
hereto.

PRELIMINARY STATEMENTS

1. The Borrower is a party to the Third Amended and Restated Credit Agreement,
dated as of March 6, 2006, with the Parent Guarantor, the Subsidiary Guarantors,
JPMorgan Chase Bank, N.A. and Citicorp USA, Inc., each as an administrative
agent, Citicorp USA, Inc., as payment agent, JPMorgan Chase Bank, N.A. and
Citibank, N.A., each as a letter of credit issuer, JPMorgan Chase Bank, N.A., as
collateral agent, and the other lenders party thereto (as heretofore amended,
supplemented or otherwise modified, the “Existing DHI Credit Agreement”).

2. The Parent Guarantor and the Borrower wish to amend and restate the Existing
DHI Credit Agreement and therefore have requested that the Lenders provide the
credit facilities described herein under this Agreement which shall amend and
restate the Existing DHI Credit Agreement. The Lenders and the L/C Issuers have
indicated their willingness to amend and restate the Existing DHI Credit
Agreement and to make loans and to issue letters of credit, respectively, on the
terms and subject to the conditions set forth herein.

In consideration of the mutual covenants and agreements herein contained, the
parties hereto covenant and agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

1.01. Defined Terms. As used in this Agreement, the following terms shall have
the meanings set forth below:

“1996 Indenture” means the Indenture dated as of September 26, 1996 between the
Borrower and JPMCB (successor to The First National Bank of Chicago and Bank
One, N.A.), as trustee.

“2003 Convertible Preferred Stock” means the Series C convertible preferred
stock issued by the Parent Guarantor to Chevron USA on August 11, 2003.

“2003 Convertible Securities” means the 4.75% convertible subordinated debt
securities due 2023 issued by the Parent Guarantor and guaranteed by the
Borrower on August 11, 2003.

“2003 Second Lien Indenture” means the Indenture, dated as of August 11, 2003,
among the Borrower, each of the subsidiary guarantors named therein, Wilmington
Trust Company, as trustee and Wells Fargo Bank Minnesota, N.A., as collateral
trustee, pursuant to which the 2003 Second Lien Notes were issued by the
Borrower.

“2003 Second Lien Notes” means the second-priority senior secured notes issued
by the Borrower and guaranteed by the subsidiary guarantors under the 2003
Second Lien Indenture on August 11, 2003 and October 15, 2003 comprised of
(a) $225,000,000 original principal amount of

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floating rate notes due 2008, (b) $625,000,000 original principal amount of
9.875% notes due 2010 and (c) $900,000,000 original principal amount of 10.125%
notes due 2013.

“2006 Senior Unsecured Notes” means the 8.375% senior unsecured notes due 2016
issued by the Borrower in an aggregate principal amount of $750,000,000 under
that certain Second Supplemental Indenture, dated as of April 12, 2006, to the
1996 Indenture (including the 8.375% Initial Securities (as defined in such
Second Supplemental Indenture) and any 8.375% Private Exchange Securities and
8.375% Exchange Securities (each as so defined) exchanged for such 8.375%
Initial Securities in accordance with such Second Supplemental Indenture).

“ACH Obligations” means any and all obligations of any Loan Party owing to any
Lender or any Affiliate of any Lender under any treasury management services
agreement, any service terms or any service agreements, including electronic
payments service terms and/or automated clearing house agreements, and all
overdrafts on any account which any Loan Party maintains with any Lender or any
Affiliate of any Lender.

“Additional Subsidiary Guarantor” means each Restricted Subsidiary of the Parent
Guarantor or the Borrower (other than the Subsidiary Guarantors party hereto on
the Closing Date) that shall be required to execute and deliver a Guaranty
Supplement pursuant to Section 6.12.

“Administrative Agents” means JPMCB and Citicorp USA, Inc., each in its capacity
as an administrative agent for the Lenders under the Loan Documents.

“Administrative Questionnaire” means an Administrative Questionnaire in a form
supplied by the Administrative Agents.

“Affiliate” means, with respect to any Person, another Person that directly, or
indirectly through one or more intermediaries, Controls or is Controlled by or
is under common Control with the Person specified. “Control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the ability
to exercise voting power, by contract or otherwise. “Controlling” and
“Controlled” have meanings correlative thereto. Without limiting the generality
of the foregoing, for all purposes other than for purposes of the definition of
“Approved Fund”, a Person shall be deemed to be Controlled by another Person if
such other Person possesses, directly or indirectly, power to vote 10% or more
of the securities having ordinary voting power for the election of directors,
managing general partners or the equivalent.

“Affiliate Transaction” means, with respect to any Person, a payment by such
Person to, or a sale, lease, transfer, or other disposition of any of its
properties or assets to, or a purchase of any property or assets from, or the
entry into or making or amendment of any transaction, contract, agreement,
understanding, loan, advance or guarantee with, or for the benefit of, any
Affiliate of such Person; provided that the following shall not be deemed to be
Affiliate Transactions:

(a) any employment agreement, employee benefit plan, officer and director
indemnification agreement or any similar arrangement entered into by the
Borrower or any of its Restricted Subsidiaries in the ordinary course of
business or approved by the Borrower’s Board of Directors;

(b) (i) transactions between or among the Borrower and any of its Restricted
Subsidiaries, or (ii) transactions between or among the Borrower, its Restricted
Subsidiaries, the Parent, its Restricted Subsidiaries and Sithe (but, in the
case of clause (ii) only, only to the extent consistent with arrangements in
place on the Closing Date and between or among the Parent, the

 

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Borrower, any of the Borrower’s Restricted Subsidiaries, any of the Parent’s
Restricted Subsidiaries as are in existence on the Closing Date and Sithe);

(c) transactions with a Person that is an Affiliate of the Borrower solely
because the Borrower owns, directly or through a Restricted Subsidiary, an
Equity Interest in, or Controls, such Person;

(d) payment of reasonable directors’ fees to Persons who are not otherwise
Affiliates of the Borrower;

(e) any issuance of Equity Interests (other than Disqualified Stock) of the
Borrower to the Parent Guarantor;

(f) Investments that do not violate Section 7.02 and Restricted Payments that do
not violate Section 7.06;

(g) Permitted Payments to Parents;

(h) commercial transactions in the ordinary course of business between or among
the Borrower and/or its Restricted Subsidiaries on the one hand and Chevron USA
and its related parties on the other hand;

(i) loans or advances to executive officers and directors in the ordinary course
of business and otherwise permitted by applicable law not to exceed $1,000,000
in the aggregate outstanding at any one time;

(j) any agreement, instrument or arrangement as in effect as of the Closing Date
and set forth on Schedule 7.08 or any amendment thereto or any transaction
contemplated thereby (including pursuant to any amendment thereto) or in any
replacement agreement thereto so long as any such amendment or replacement
agreement is not more disadvantageous to the Lenders in any material respect
than the original agreement as in effect on the Closing Date as reasonably
determined by the Borrower;

(k) payments or advances to employees or consultants that are incurred in the
ordinary course of business or that are approved by the Board of Directors of
the Borrower in good faith;

(l) the existence of, or the performance by the Borrower or any of its
Restricted Subsidiaries of its obligations under the terms of, any stockholders
agreement (including any registration rights agreement or purchase agreement
related thereto) to which it is a party as of the Closing Date and any similar
agreements which it may enter into thereafter; provided that the existence of,
or the performance by the Borrower or any of its Restricted Subsidiaries of
their respective obligations under, any future amendment to any such existing
agreement or under any similar agreement entered into after the Closing Date
shall only be permitted by this clause (l) to the extent that the terms of any
such amendment or new agreement are not otherwise more disadvantageous to the
Lenders than such existing agreement in any material respect;

(m) transactions with customers, clients, suppliers, joint venture partners or
purchasers or sellers of goods or services, in each case, in the ordinary course
of business (including pursuant to joint venture agreements) and otherwise in
compliance with the terms of this Agreement that are fair to the Borrower and
its Restricted Subsidiaries, in the reasonable determination of the Board of
Directors of the Borrower or the senior management thereof, or are on terms not
materially less

 

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favorable taken as a whole as might reasonably have been obtained at such time
from an unaffiliated party; and

(n) the cancellation of all or any portion of the Sithe Subordinated
Indebtedness, provided that the requirements of the proviso to
Section 7.02(q)(iv) shall have been satisfied with respect thereto.

“Agent-Related Persons” means each of the Administrative Agents, the Payment
Agent, the Collateral Agent, and each Joint Lead Arranger and each Joint
Bookrunner named on the cover page of this Agreement, together with their
respective Affiliates, and the officers, directors, employees, agents and
attorneys-in-fact of such Persons and Affiliates.

“Agents” means, collectively, the Administrative Agents, the Payment Agent and
the Collateral Agent.

“Aggregate Credit Exposure” means, at any time, the sum of (a) the unused
portion of the Commitments and (b) the Total Outstandings at such time.

“Agreement” has the meaning specified in the recital of parties to this
Agreement.

“Alleghanies Entities” means Alleghany No. 9, L.P., a Delaware limited
partnership, Alleghany No. 9, Inc., a Delaware corporation, Alleghany No. 8,
L.P., a Delaware limited partnership, Alleghany No. 8, Inc., a Delaware
corporation, Alleghany No. 6 Hydro Partners, a Pennsylvania limited partnership,
Alleghany Hydro Partners Limited, a Pennsylvania limited partnership, Alleghany
Hydroelectric, Inc., a Delaware corporation, and Alleghany Hydro No. 1, a
Pennsylvania corporation.

“Alternative Currency” means Pounds Sterling, Canadian Dollars or Euros.

“Applicable Commitment Fee Rate” has the meaning specified in the definition of
“Applicable Margin”.

“Applicable Margin” means, for any day, with respect to Revolving Credit Loans
or Term L/C Facility Term Loans of any Type, or with respect to the commitment
fees payable hereunder, as the case may be, the applicable rate per annum set
forth below under the caption “Revolving Credit Loans” or “Term L/C Facility
Term Loans”, as the case may be, based upon the ratings by Moody’s and S&P,
respectively, applicable on such date to the Facilities (such rate, in the case
of the commitment fees payable hereunder, being the “Applicable Commitment Fee
Rate”):

 

     Revolving Credit Loans     Term L/C Facility Term
Loans  

S&P/Moody’s Ratings for the Facilities

   Applicable
Commitment
Fee Rate     Applicable
Margin for
Eurodollar
Loans     Applicable
Margin for
Base Rate
Loans     Applicable
Margin for
Eurodollar
Loans     Applicable
Margin for
Base Rate
Loans  

Category 1

³ BB+/Ba1

   0.25 %   1.25 %   0.25 %   1.50 %   0.50 %

Category 2

³ BB/Ba2 < BB+/Ba1

   0.375 %   1.50 %   0.50 %   1.50 %   0.50 %

Category 3

£ BB-/Ba3

   0.50 %   1.75 %   0.75 %   1.75 %   0.75 %

 

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For purposes of the foregoing, (i) if either Moody’s or S&P shall not have in
effect a rating for the Facilities (other than by reason of the circumstances
referred to in the penultimate sentence of this definition), then such rating
agency shall be deemed to have established a rating in Category 3; (ii) if the
ratings established or deemed to have been established by Moody’s and S&P for
the Facilities shall fall within different Categories, the Applicable Margin and
the Applicable Commitment Fee Rate shall be based on the higher of the two
ratings unless one of the two ratings is two or more Categories lower than the
other, in which case the Applicable Margin shall be determined by reference to
the Category next below that of the higher of the two ratings; and (iii) if the
ratings established or deemed to have been established by Moody’s and S&P for
the Facilities shall be changed (other than as a result of a change in the
rating system of Moody’s or S&P), such change shall be effective as of the date
on which it is first announced by the applicable rating agency, irrespective of
when notice of such change shall have been furnished by the Borrower to the
Payment Agent pursuant to Section 6.02(h) or otherwise. Each change in the
Applicable Margin or the Applicable Commitment Fee Rate shall apply during the
period commencing on the effective date of such change and ending on the date
immediately preceding the effective date of the next such change. If the rating
system of Moody’s or S&P shall change, or if either such rating agency shall
cease to be in the business of rating debt obligations of the same type as the
Facilities, the Borrower and the Lenders shall negotiate in good faith to amend
this definition to reflect such changed rating system or the unavailability of
ratings from such rating agency and, pending the effectiveness of any such
amendment, the Applicable Margin shall be determined by reference to the rating
most recently in effect prior to such change or cessation. Notwithstanding any
other provision of this Agreement, no reduction in the Applicable Margin or the
Applicable Commitment Fee Rate shall occur so long as any Event of Default has
occurred and is continuing.

“Approved Fund” means any Person (other than a natural person) that is engaged
in making, purchasing, holding or investing in bank loans and similar extensions
of credit in the ordinary course of its business and that is administered or
managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an
Affiliate of an entity that administers or manages a Lender.

“Asset Sale” means (a) the sale, lease, conveyance, or other disposition of any
assets or rights by the Borrower or any of its Restricted Subsidiaries, provided
that the sale, lease, conveyance or other disposition of all or substantially
all of the assets of the Borrower and its Restricted Subsidiaries taken as a
whole shall be governed by Section 7.04, and (b) the issuance of Equity
Interests in any of the Borrower’s Restricted Subsidiaries or the sale of Equity
Interests in any of its Subsidiaries. Notwithstanding the preceding, none of the
following items shall be deemed to be an Asset Sale:

(i) any single transaction or series of related transactions that involves
assets having a Fair Market Value of less than $10,000,000;

(ii) a transfer of assets between or among the Borrower and any of its
Restricted Subsidiaries;

(iii) an issuance of Equity Interests by a Restricted Subsidiary of the Borrower
to the Borrower or to a Restricted Subsidiary of the Borrower (including any
Person that becomes a Restricted Subsidiary of the Borrower in connection with
such transaction);

(iv) (A) the sale or lease of products, services or accounts receivable in the
ordinary course of business, (B) any sale or other disposition of surplus,
damaged, worn-out or obsolete

 

5

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assets or property (including, without limitation, inventory, immaterial assets
and property no longer commercially viable to maintain and operate) in the
ordinary course of business, (C) the granting of any option or other right to
purchase, or otherwise acquire property in the ordinary course of business,
(D) the sale, transfer or other disposition of power, capacity, energy,
ancillary services, and other products or services, or the sale of any other
inventory or contracts related to any of the foregoing, (E) the sale, lease,
conveyance or other disposition for value by the Borrower or any Restricted
Subsidiary of fuel or emission credits in the ordinary course of business and
(F) the licensing of intellectual property;

(v) the sale or disposition by the Borrower and its Restricted Subsidiaries of
assets in connection with (A) the termination, amendment or restructuring of any
tolling agreement and (B) dispositions of property in connection with settlement
of any Disclosed Litigation, in the case of both clauses (A) and (B), for
reasonably equivalent value, as determined by the Borrower or such Restricted
Subsidiary, provided that in no event shall the fair market value of the sales
or dispositions of Collateral (other than Collateral consisting of cash)
pursuant to this clause (v) exceed $300,000,000 in the aggregate or such sales
or dispositions include the sale of the Baldwin Facility;

(vi) the sale or disposition by the Borrower and its Restricted Subsidiaries of
assets in connection with any Discontinued Business Operations of the Borrower
and its Restricted Subsidiaries so long as such sale or disposition is for
reasonably equivalent value, as determined by the Borrower or such Restricted
Subsidiary;

(vii) sales or dispositions resulting from the bona fide exercise by a
governmental authority of its claimed or actual power of eminent domain or
dispositions otherwise required by applicable law that would not materially
adversely affect the Borrower and its Restricted Subsidiaries, taken as a whole;

(viii) dispositions of property subject to a Permitted Lien that is transferred
to the lienholder or its designee in satisfaction or settlement of such
lienholder’s claim or a realization upon any Lien permitted pursuant to this
Agreement;

(ix) the sale or other disposition of cash or Cash Equivalents;

(x) a Restricted Payment that does not violate Section 7.06; and

(xi) an Investment that does not violate Section 7.02.

“Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an assignee (with the consent of any party whose consent is required
by Section 11.07), and accepted by the Payment Agent, in the form of Exhibit D
or any other form approved by the Administrative Agents and the Borrower.

“Attorney Costs” means and includes all reasonable documented and out-of-pocket
fees, expenses and disbursements of any law firm or other external counsel
(which fees, expenses and disbursement shall, other than under the circumstances
described in clause (b) of Section 11.04, be reasonable).

“Attributable Indebtedness” means, on any date, in respect of any obligation of
the type described in clauses (a) and (b)(ii) of the definition of “Off-Balance
Sheet Obligations”, the capitalized amount of the remaining lease payments under
the relevant lease that would appear on a balance sheet of

 

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such Person prepared as of such date in accordance with GAAP if such lease were
accounted for as a capital lease.

“Auto-Renewal Letter of Credit” means a Letter of Credit with an initial expiry
date of one year or less after the date of its issuance that has automatic
renewal provisions.

“Available Amount” means, on any date of determination, an amount equal at such
time to (a) the sum of, without duplication:

(i) an amount equal to the sum of 25% of Excess Cash Flow for each fiscal year
of the Borrower commencing with the fiscal year ending December 31, 2007 and
ending prior to such date of determination;

(ii) the amount of Exempt Equity Proceeds on such date of determination;

(iii) the aggregate amount of all cash dividends and other cash distributions
received by the Borrower or any of its Restricted Subsidiaries from any Minority
Investment or Unrestricted Subsidiary after the Closing Date and on or prior to
such date of determination (less the amount of any Tax Payments in respect
thereof);

(iv) the aggregate amount of all cash repayments of principal and interest
received by the Borrower or any of its Restricted Subsidiaries from any Minority
Investment or Unrestricted Subsidiary after the Closing Date and on or prior to
such date of determination in respect of loans made by the Borrower or any
Restricted Subsidiary to such Minority Investment or Unrestricted Subsidiary;
and

(v) the aggregate amount of all Net Proceeds of Asset Sales received by the
Borrower or any of its Restricted Subsidiaries in connection with the sale,
transfer or other disposition of its ownership interest in any Minority
Investment or Unrestricted Subsidiary after the Closing Date and on or prior to
such date of determination,

minus (b) the aggregate amount of any Investments made by the Borrower or any
Restricted Subsidiary pursuant to clause (ii) of Section 7.02(r) after the
Closing Date and on or prior to such date of determination.

“Availability Period” means the period from and including the Closing Date to
but not including the earliest of (a) the Revolving Credit Termination Date,
(b) the date of termination of the Revolving Credit Commitments pursuant to
Section 2.05, and (c) the date of termination of the commitment of each
Revolving Credit Lender to make Revolving Credit Loans and of the obligation of
the Revolving L/C Issuers to make Revolving L/C Credit Extensions pursuant to
Section 8.02.

“Baldwin Facility” means, collectively, (a) the coal-fired steam electric
generating plant owned by DMG and located in Randolph County, Illinois,
consisting of three generating units, (b) all associated equipment and support
facilities and (c) real property associated with the foregoing; excluding, in
each case, any assets the sale of which would not constitute an “Asset Sale”
pursuant to clause (i), (ii), (iv), (ix), (x) or (xi) of “Asset Sale”.

“Bankruptcy Code” means Title 11 of the United States Code, 11 U.S.C. §§ 101, et
seq.

“Base Rate” means, for any period, a fluctuating interest rate per annum as
shall be in effect from time to time, which rate per annum shall at all times
equal the higher of (i) the rate of interest announced publicly by Citibank in
New York, New York, from time to time, as Citibank’s base rate and (ii) the
Federal Funds Rate in effect from time to time plus 0.50%.

 

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“Base Rate Loan” means a Loan that bears interest based on the Base Rate.

“Basket Assets” means assets (other than assets relating to the Baldwin
Facility), the sale or disposition of which pursuant to an Asset Sale results in
Net Proceeds not in excess of $150,000,000 in the aggregate for all such assets
since the Closing Date, that have been designated by the Borrower as “Basket
Assets” for purposes of this Agreement.

“Borrower” means Dynegy Holdings Inc., a Delaware corporation.

“Borrower Group” means the Borrower and all of its Restricted Subsidiaries.

“Borrowing” means a Revolving Credit Borrowing or a Term L/C Facility Borrowing,
as the context may require.

“Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to be closed generally under the Laws of, or are
in fact generally closed in, Houston, Texas or the city or state where the
Payment Agent’s Office is located and, if such day relates to any Eurodollar
Rate Loan, means any day on which dealings in Dollar deposits are generally
conducted by and between banks in the London interbank eurodollar market.

“Canadian Dollars” and “C$” each mean lawful money of Canada.

“Capital Commitment” means any contractual commitment or obligation under an
equity contribution or other agreement the purpose of which is for the Borrower
or any of its Restricted Subsidiaries to provide to another Person (other than
the Borrower or any of its Restricted Subsidiaries) a portion of the capital for
such Person or for a Proportionately Consolidated Interest.

“Capital Expenditures” means, with respect to any Person for any period, any
expenditure required to be capitalized as a capital expenditure in accordance
with GAAP; provided that: (a) the purchase price of equipment or property that
is (i) purchased substantially simultaneously with the trade-in of existing
equipment or property, (ii) exchanged in connection with a swap of existing
equipment or property or (iii) purchased or repaired with insurance proceeds
and/or deductibles (promptly following receipt thereof on account of such
property or equipment being replaced or repaired) shall be included in Capital
Expenditures only to the extent of the gross amount by which such purchase price
exceeds the credit granted by the seller of such equipment or property for the
equipment or property being so repaired, traded in or exchanged or the amount of
such insurance proceeds and/or deductibles, as the case may be; (b) any
expenditure funded with warranty proceeds, proceeds from an indemnity claim,
settlement payments or any other payments made to compensate such Person for any
damage, defect, delay or loss relating to the expenditure being made shall not
be included in Capital Expenditures to the extent such expenditure does not
exceed the applicable proceeds or payments; (c) the aggregate amount of any
Indebtedness assumed in connection with any Investment made in respect of any
such capital expenditure shall be included in Capital Expenditures; (d) any
capital expenditure related to the settlement of a Tolling Agreement shall not
be included in Capital Expenditures; and (e) any investment in or acquisition of
Replacement Assets permitted under Section 2.04(b)(ii) or Section 7.05(b)(ii)
shall not be included in Capital Expenditures.

“Capital Lease Obligation” means, at the time any determination is to be made,
the amount of the liability in respect of a capital lease that would at that
time be required to be capitalized on a balance sheet in accordance with GAAP,
and the Stated Maturity thereof shall be the date of the last payment of rent or
any other amount due under such lease prior to the first date upon which such
lease may be prepaid by the lessee without payment of a penalty; provided that
any obligations existing on the

 

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Closing Date (i) which were not included on the balance sheet of the Borrower
and its Subsidiaries as capital lease obligations and (ii) which are
subsequently recharacterized for accounting purposes as capital lease
obligations, shall for all purposes of this Agreement not be treated as Capital
Lease Obligations.

“Capital Stock” means:

(a) in the case of a corporation, corporate stock:

(b) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock:

(c) in the case of a partnership or limited liability company, partnership
interests (whether general or limited) or membership interests; and

(d) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing Person, but excluding from all of the foregoing any debt securities
convertible into Capital Stock, whether or not such debt securities include any
right of participation with Capital Stock.

“Cash Collateral” has the meaning specified in the definition of “Cash
Collateralize.”

“Cash Collateral Account” means a blocked deposit account at JPMCB (or another
commercial bank which has executed a control agreement in accordance with the
provisions of the Collateral Documents) in the name of the Collateral Agent and
under the sole dominion and control of the Collateral Agent, and otherwise
established in a manner satisfactory to the Collateral Agent.

“Cash Collateralize” means to pledge and deposit with or deliver to the
Collateral Agent, for the benefit of any Revolving L/C Issuer and the Revolving
Credit Lenders, as collateral for the Revolving L/C Obligations and/or the
Revolving Credit Commitments and/or Revolving Credit Loans, pursuant to
Section 2.04(b)(v), cash or deposit account balances in each case in Dollars
pursuant to documentation in form and substance satisfactory to the
Administrative Agents, the Collateral Agent and such Revolving L/C Issuer.
Derivatives of such term (including the term “Cash Collateral”) have
corresponding meanings.

“Cash Equivalents” means:

(a) Dollars;

(b) securities issued or directly and fully guaranteed or insured by the United
States government or any agency or instrumentality of the United States
government (provided that the full faith and credit of the United States is
pledged in support of those securities) having maturities of not more than one
year from the date of acquisition;

(c) certificates of deposit, demand deposits, and eurodollar time deposits with
maturities of one year or less from the date of acquisition, bankers’
acceptances with maturities not exceeding one year and overnight bank deposits,
in each case, with any Lender or with any domestic commercial bank having
capital and surplus in excess of $500,000,000 and a Thomson Bank Watch Rating of
“B” or better;

 

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(d) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (b) and (c) above
entered into with any financial institution meeting the qualifications specified
in clause (c) above;

(e) commercial paper having one of the two highest ratings obtainable from
Moody’s or S&P and in each case maturing within one year after the date of
acquisition; and

(f) money market funds at least 95% of the assets of which constitute Cash
Equivalents of the kinds described in clauses (a) through (e) above.

“CERCLA” means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.

“CERCLIS” means the Comprehensive Environmental Response, Compensation and
Liability Information System maintained by the U.S. Environmental Protection
Agency.

“CH Lease” means the facility leases contemplated by the Participation Agreement
dated as of May 1, 2001 among Dynegy Roseton, L.L.C., Roseton OL LLC, Wilmington
Trust Company, as lessor manager, Roseton OP LLC, and JPMCB, as trustee and by
the Participation Agreement dated as of May 1, 2001 among Dynegy Danskammer,
L.L.C., Danskammer OL LLC, Wilmington Trust Company, as lessor manager,
Danskammer OP LLC, and JPMCB, as trustee.

“Change of Control” means the occurrence of any of the following:

(a) any Person or “group” (within the meaning of Rules 13d-3 and 13d-5 of the
SEC under the Exchange Act), other than (i) a trustee or other fiduciary holding
securities under an employee benefit plan of the Parent Guarantor or of any
Subsidiary of the Parent Guarantor, or (ii) ChevronTexaco and its Affiliates,
shall have acquired beneficial ownership (within the meaning of Rules 13d-3 and
13d-5 of the SEC under the Exchange Act), directly or indirectly, of securities
of the Parent Guarantor (or other securities convertible into such securities)
representing 40% or more of the combined voting power of all securities of the
Parent Guarantor entitled to vote in the election of directors, other than
securities having such power only by reason of the happening of a contingency;

(b) during any period of up to 24 consecutive months, commencing on or after the
date of this Agreement, individuals who at the beginning of such 24-month period
were (i) directors of the Parent Guarantor or (ii) elected or nominated by
(x) individuals who at the beginning of such 24-month period were such
directors, (y) individuals elected in accordance with this clause (b), or
(z) the Regents of the University of California or their designee, shall cease
for any reason (other than as a result of death, incapacity or normal
retirement) to constitute a majority of the board of directors of the Parent
Guarantor; or

(c) the Parent Guarantor shall cease to own (directly or indirectly) 100% of the
Equity Interests of the Borrower.

“ChevronTexaco” means ChevronTexaco Corporation, a Delaware corporation.

“Chevron USA” means Chevron U.S.A., Inc., a Pennsylvania corporation.

“Citibank” means Citibank, N.A.

 

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“Claims” has the meaning specified in Section 11.05.

“Closing Date” means the first date all the conditions precedent in Section 4.01
are satisfied or waived in accordance with Section 4.01 (or, in the case of
Section 4.01(b), waived by the Person entitled to receive the applicable
payment).

“Code” means the Internal Revenue Code of 1986, as amended from time to time,
and the regulations promulgated thereunder.

“Collateral” means all of the property subject to the Liens under the Collateral
Documents.

“Collateral Agent” means JPMCB, in its capacity as collateral agent for the
Lenders under the Loan Documents.

“Collateral Documents” means, collectively, the Shared Security Agreement, the
Collateral Trust Agreement, the Mortgages, the Mortgage Supplements, the
Non-Shared Security Agreement, each of the mortgages, collateral assignments,
Shared Security Agreement Supplements, Non-Shared Security Agreement
Supplements, security agreements, pledge agreements or other similar agreements
delivered to the Administrative Agents, the Collateral Agent and the Lenders
pursuant to Section 6.12, and each of the other agreements, instruments or
documents that creates or purports to create a Lien in favor of the Collateral
Trustees or the Collateral Agent, for the benefit of the applicable Secured
Parties.

“Collateral Trust Agreement” means the Second Amended and Restated Collateral
Trust Agreement, dated as of April 19, 2006, among the Parent Guarantor, the
Borrower, the other grantors signatory thereto and the Collateral Trustees,
substantially in the form of Exhibit E-3.

“Collateral Trustees” means Wilmington Trust Company, a Delaware banking
corporation, not in its individual capacity but solely as corporate trustee, and
John M. Beeson, Jr., an individual residing in the State of Delaware, not in his
individual capacity but solely as individual trustee, in each case together with
any successor trustee appointed pursuant to the Collateral Trust Agreement.

“Commitment” means a Revolving Credit Commitment, a Term L/C Facility Commitment
and/or a Term L/C Issuer Commitment, as the context may require.

“Committed Loan Notice” means a notice of (a) a Borrowing, (b) a conversion of
Loans from one Type to the other or (c) a continuation of Eurodollar Rate Loans,
pursuant to Section 2.02(a), which, if in writing, shall be substantially in the
form of Exhibit A.

“Compliance Certificate” means a certificate substantially in the form of
Exhibit C.

“Consolidated Interest Expense” means, for any Measurement Period, (a) the cash
interest expense (including imputed cash interest expense in respect of Capital
Lease Obligations and Synthetic Lease Obligations) of the Borrower Group for
such Measurement Period (including all commissions, discounts and other fees and
charges owed by the Borrower Group with respect to letters of credit and
bankers’ acceptance financing), net of interest income, in each case determined
on a consolidated basis in accordance with GAAP, minus (b) to the extent
included in such cash interest expense for such period, amounts attributable to
the amortization of financing costs and non-cash amounts attributable to the
amortization of debt discounts and other debt issuance costs, fees and expenses;
provided that Consolidated Interest Expense will exclude (i) cash interest
expense attributable

 

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to Non-Recourse Debt and all other cash interest expense of Excluded
Subsidiaries and (ii) cash interest expense paid during the relevant Measurement
Period with respect to any 2003 Second Lien Notes repurchased or redeemed during
such Measurement Period. For purposes of the foregoing, Consolidated Interest
Expense shall be determined after giving effect to any net payments made or
received by the Borrower Group with respect to Hedging Obligations relating to
interest rate hedging activities (other than any such Hedging Obligations in
respect of Non-Recourse Debt of Excluded Subsidiaries).

“Consolidated Secured Indebtedness” means, as of any date of determination and
without duplication, for the Borrower Group on a consolidated basis, the sum of
(a) the outstanding principal amount of (i) all secured obligations, whether
current or long-term, for borrowed money (including Obligations hereunder) and
(ii) all secured obligations evidenced by bonds, debentures, notes, loan
agreements or other similar instruments, (b) all secured direct payment
obligations arising under bankers’ acceptances and similar instruments, (c) all
secured accounts payable to pay the deferred purchase price of property or
services incurred after the date hereof that in the aggregate, are greater than
$20,000,000, more than 90 days past due, and not being contested in good faith,
(d) all Capital Lease Obligations and secured Attributable Indebtedness, in each
case in respect of obligations of the type described in clauses (a) and (b)(ii)
of the definition of “Off-Balance Sheet Obligations”, (e) all secured Guarantees
with respect to outstanding Indebtedness of the types specified in clauses (a)
through (d) above of Persons other than any member of the Borrower Group, and
(f) all secured Indebtedness of the types referred to in clauses (a) through
(e) above of any Pass Through Liability Entity, in each case that is outstanding
on such date to the extent it is secured by a Lien on any property of any member
of the Borrower Group (other than a JV Lien) at such time; provided that there
shall be excluded from “Consolidated Secured Indebtedness” (i) any Excluded
Obligation, (ii) any obligations with respect to Equity Interests (whether or
not recorded as a liability under GAAP), (iii) all obligations in respect of
letters of credit, (iv) any completion guaranties or similar guaranties that a
project perform as planned, (v) Indebtedness among or between the Borrower
and/or any of its Subsidiaries, (vi) any items relating to Discontinued Business
Operations, (vii) amounts owing under Permitted Contracts or Netting Agreements,
(viii) any loans from an insurance company or insurance premium finance company
solely for the purpose of financing all or any portion of the premium on any
insurance policy maintained by the Parent Guarantor, the Borrower or its
Subsidiaries with respect to properties and business of the Borrower and its
Subsidiaries, but only to the extent such loans are consistent with industry
practice and (ix) the Term L/C Facility Term Loans.

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

“Control” has the meaning specified in the definition of “Affiliate.”

“Credit Extension” means each of (a) a Borrowing and (b) a L/C Credit Extension.

“Currency Valuation Notice” has the meaning specified in Section 2.04(b)(i).

“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all
other liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency, reorganization,
or similar debtor relief Laws of the United States or other applicable
jurisdictions from time to time in effect and affecting the rights of creditors
generally.

“Declined Proceeds” means the amounts that were offered to the Lenders as a
prepayment of Loans and/or reduction of Revolving Credit Commitments pursuant to
Section 2.04(b)(vi), which offer was declined by the applicable Lenders.

 

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“Default” means any event or condition that constitutes an Event of Default or
that, with the giving of any notice, the passage of time, or both, would become
an Event of Default.

“Default Rate” means an interest rate equal to (a) the Base Rate plus (b) the
Applicable Margin applicable to Base Rate Loans under the Revolving Credit
Facility plus (c) 2.0% per annum; provided that with respect to a Eurodollar
Rate Loan, the Default Rate shall be an interest rate equal to the interest rate
(including any Applicable Margin) otherwise applicable to such Loan plus
2.0% per annum, in each case to the fullest extent permitted by applicable Laws.

“Defaulting Lender” means any Lender that (a) has failed to fund any portion of
the Loans or participations in Revolving Unreimbursed Amounts required to be
funded by it hereunder within one Business Day of the date required to be funded
by it hereunder, (b) has otherwise failed to pay over to any Agent or any other
Lender any other amount required to be paid by it hereunder within one Business
Day of the date when due, unless the subject of a good faith dispute or (c) has
been deemed insolvent or become the subject of a conservatorship, receivership,
bankruptcy, liquidation or insolvency proceeding.

“Designated Assets” means the Capital Stock or assets of IGC Chorrera, LLC.

“Disclosed Litigation” means actions, suits, proceedings, claims or disputes
pending, in arbitration or before any Governmental Authority by or against the
Parent Guarantor or any of its Subsidiaries or against any of their properties,
as disclosed in any Public Disclosure.

“Discontinued Business Operations” means, with respect to the Borrower and its
Restricted Subsidiaries or the Parent Guarantor and its Restricted Subsidiaries,
as the context shall require, the results of operations and any charges, fees,
penalties, costs or impairments associated with (a) lines of business or assets
that were wound down, discontinued, sold, transferred, or otherwise disposed of,
or were under contract to be sold, transferred, or otherwise disposed of, by the
Borrower or any of its Subsidiaries, or the Parent Guarantor or any of its
Subsidiaries (other than the Borrower and its Subsidiaries), as the case may be,
on or prior to the Closing Date, including those associated with Dynegy
Midstream Services, Limited Partnership, Electric Energy Inc., West Coast Power,
Dynegy Intrastate Pipeline LLC’s sale of the Breckenridge assets, Hartwell
Energy Limited Partnership, Michigan Power Holdings, Inc. and Michigan Power
Limited Partnership, the Sherman Gas Processing Plant and related gathering
system, Commonwealth Atlantic Limited Partnership, Oyster Creek Limited
Partnership, Dynegy Global Liquids, Inc., Northern Natural Gas Company, NNGC
Holding Company, Inc., MCTJ Holding Co. LLC, Dynegy Onshore Processing UK
Limited, Dynegy Storage Limited, Dynegy Offshore UK Limited, Dynegy Canada Gas
Marketing Ltd., the Hackberry LNG Facility, the Indian Basin Plant and the
related gathering system and related facilities, IGC Jamaica Partnership, LLC,
Plantas Eolicas S. de R.L. and Dynegy Communications Clearinghouse, Inc. and
their respective Subsidiaries, (b) lines of business or assets that are being
wound down, discontinued, sold, transferred, or otherwise disposed of in
connection with Third Party Risk Management or those associated with Dynegy
Communications Clearinghouse, Inc. and its respective Subsidiaries or (c) any
Tolling Agreement, including the termination, sale, transfer, disposal, or
restructuring thereof.

“Discontinued Foreign Subsidiaries” has the meaning specified in
Section 5.13(c).

“Disqualified Stock” means any Capital Stock that, by its terms (or by the terms
of any security into which it is convertible, or for which it is exchangeable,
in each case at the option of the holder of the Capital Stock), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
of the Capital Stock, in whole or in part, on or prior to the date that is 91
days after the Term L/C Facility Term Loan Maturity Date. Notwithstanding the
preceding sentence, any Capital Stock that would constitute

 

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Disqualified Stock solely because the holders of the Capital Stock have the
right to require the issuer thereof to repurchase such Capital Stock upon the
occurrence of a change of control or an asset sale (in either case, however
defined) shall not constitute Disqualified Stock if the terms of such Capital
Stock provide that the issuer thereof may not repurchase or redeem any such
Capital Stock pursuant to such provisions unless either (a) such repurchase or
redemption complies with Section 7.06 or (b) the issuer of such Capital Stock,
to the extent required, has first complied with Section 7.05. The amount of
Disqualified Stock deemed to be outstanding at any time for purposes of this
Agreement shall be the maximum amount that the Borrower and its Restricted
Subsidiaries may become obligated to pay upon the maturity of, or pursuant to
any mandatory redemption provisions of, such Disqualified Stock, exclusive of
accrued dividends.

“DMG” means Dynegy Midwest Generation, Inc., an Illinois corporation.

“Dollar” and “$” each mean lawful money of the United States.

“Dollar Equivalent” means on any day (a) with respect to any amount denominated
in Dollars, such amount and (b) with respect to any amount denominated in an
Alternative Currency, the amount of Dollars into which such amount may be
converted at the spot rate at which Dollars are offered to the Payment Agent in
New York, New York for the Alternative Currency in which such amount is
denominated at approximately 11:00 a.m. (New York time) on such day or if such
day is not a Business Day, on the immediately preceding Business Day.

“Dormant Subsidiaries” has the meaning specified in Section 5.13(b).

“Draw Amount” means, with respect to any Letter of Credit, the amount necessary
to settle the obligations of any L/C Issuer under any draft or demand made under
such Letter of Credit.

“EBITDA” means, at any date of determination, without duplication for the
Borrower Group on a consolidated basis, in accordance with GAAP, and for the
applicable Measurement Period: (a) operating income (loss) exclusive of
depreciation and amortization expense, plus (b) the sum of (i) income (or
losses) from unconsolidated investments, (ii) income (or losses) from
discontinued operations excluding for any fiscal quarter occurring in the fiscal
year of the Borrower ended December 31, 2005 and (iii) other income, minus
(c) the sum of (i) other expenses and (ii) minority interests; provided that the
calculation of EBITDA shall specifically exclude: (1) any results of operations
relating to any Discontinued Business Operations, (2) any amounts paid, incurred
or reserved in connection with any of the Disclosed Litigation (including
settlement payments, payment of any judgment, or expenditures made to comply
with any settlement, or order judgment, excluding any costs and expenses of
outside legal counsel to the Borrower and its Restricted Subsidiaries, in each
case associated with such Disclosed Litigation), (3) interest income on cash and
marketable securities, (4) interest expense, (5) gains (or losses) on the
disposition of assets or lines of business not in the ordinary course of
business, (6) gains (or losses) on the repurchase or extinguishment of debt or
preferred stock, (7) interest on preferred dividends and/or any dividends that
are paid or that accrue, accumulate or are deemed to accrue or accumulate on
preferred stock (including the 2003 Convertible Preferred Stock and the capital
securities issued in an aggregate amount of $200,000,000 by NGC Corporation
Capital Trust I), (8) income tax expense, (9) cumulative effects of changes in
accounting principles, (10) any non-cash impairment, abandonment, restructuring
or other non-cash expense, (11) expenses related to stock options granted to
employees or directors or pension plans, (12) extraordinary and non-recurring
gains (or losses), (13) the impact of any non-cash impairment, abandonment,
restructuring or other non-recurring and non-cash expense, or any other item
identified in clause (1), (2), (5), (6), (7), (9), (10), (11) or (12) above also
recognized by any unconsolidated investment, (14) cash restructuring charges
incurred in the fiscal years of the Borrower respectively ending December 31,
2005 and December 31, 2006, but only to the extent

 

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the aggregate amount of such cash expenses does not exceed $15,000,000 and
(15) any termination payment or crediting of a progress payment made (or in the
case of a progress payment, credited) solely in connection with the cancellation
of contracts of the Borrower or any of its Restricted Subsidiaries existing
prior to or as of the Closing Date for the purchase of power generation turbines
but only to the extent the aggregate amount of such payments does not exceed
$10,000,000.

“Environmental Action” means any action, suit, demand, demand letter, claim,
notice of noncompliance or violation, notice of liability or potential
liability, investigation, proceeding, consent order or consent agreement, by or
with any Person, relating in any way to any Environmental Law, Environmental
Permit or Hazardous Material, or arising from actual or alleged injury or threat
of injury to the environment or public health.

“Environmental Capital Expenditures” means Capital Expenditures to the extent
deemed reasonably necessary, as determined by the Borrower or its Restricted
Subsidiaries, as applicable, in good faith to comply with applicable
Environmental Laws or consent decrees.

“Environmental Law” means any Federal, state, local or foreign statute, law,
ordinance, rule, regulation, code, order, writ, judgment, injunction, decree or
judicial or agency interpretation, or enforceable policy or guidance relating to
pollution or protection of the environment, health or safety as such relates to
exposure to Hazardous Materials, or natural resource damages, including, without
limitation, those relating to the use, handling, transportation, treatment,
storage, disposal, actual or alleged release or discharge of Hazardous
Materials.

“Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
attorney’s fees, penalties or indemnities), of the Parent Guarantor, any other
Loan Party or any of their respective Subsidiaries directly or indirectly
resulting from or based upon (a) a violation of any Environmental Law or
Environmental Permit, (b) the generation, use, handling, transportation,
storage, treatment or disposal of any Hazardous Materials, (c) exposure to any
Hazardous Materials, (d) the release or threatened release of any Hazardous
Materials into the environment or (e) any contract, agreement or other
consensual arrangement pursuant to which liability is assumed or imposed with
respect to any of the foregoing.

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

“Equity Interests” means, with respect to any Person, without duplication, all
of the shares of Capital Stock of such Person, all of the warrants, options or
other rights for the purchase or acquisition from such Person of shares of
Capital Stock of such Person, all of the securities convertible into or
exchangeable for shares of Capital Stock of such Person or warrants, rights or
options for the purchase or acquisition from such Person of such shares (or such
other interests), and all of the other ownership or profit interests in such
Person (including, without limitation, partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such shares, warrants,
options, rights or other interests are outstanding on any date of determination;
provided that none of the (i) 2003 Convertible Securities, (ii) any Permitted
Refinancing Indebtedness with respect to the 2003 Convertible Securities and
(iii) any profit sharing or other employee benefit arrangements shall be “Equity
Interests” for purposes of the Loan Documents.

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

 

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“ERISA Affiliate” means any trade or business (whether or not incorporated) that
is a member of the controlled group of any Loan Party or under common control
with any Loan Party within the meaning of Section 414(b) or (c) of the Code (and
Sections 414(m) and (o) of the Code for purposes of provisions relating to
Section 412 of the Code).

“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan;
(b) the application for a minimum funding waiver with respect to a Pension Plan;
(c) a withdrawal by any Loan Party or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001 (a)(2) of ERISA) or a cessation
of operations that is treated as such a withdrawal under Section 4062(e) of
ERISA; (d) a complete or partial withdrawal by any Loan Party or any ERISA
Affiliate from a Multiemployer Plan or notification received by any Loan Party
or any ERISA Affiliate that a Multiemployer Plan is in reorganization; (e) the
filing of a notice of intent to terminate, the treatment of a plan amendment as
a termination under Sections 4041 or 4041 A of ERISA, or the commencement of
proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan;
(f) an event or condition which constitutes grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan or Multiemployer Plan; or (g) the imposition of any liability under
Title IV of ERISA, other than for PBGC premiums due but not delinquent under
Section 4007 of ERISA, upon any Loan Party or any ERISA Affiliate.

“Euro” means the lawful currency of the member states of the European Union that
participate in the euro.

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

“Eurodollar Base Rate” means for any Interest Period with respect to any
Eurodollar Rate Loan:

(a) the rate per annum equal to the rate determined by the Payment Agent to be
the offered rate that appears on the page of the Telerate screen (or any
successor thereto) that displays an average British Bankers Association Interest
Settlement Rate for deposits in Dollars (for delivery on the first day of such
Interest Period) with a term equivalent to such Interest Period, determined as
of approximately 11:00 a.m. (London time) two Business Days prior to the first
day of such Interest Period, or

(b) if the rate referenced in clause (a) above does not appear on such page or
service or such page or service shall not be available, the rate per annum equal
to the rate determined by the Payment Agent to be the offered rate on such other
page or other service that displays an average British Bankers Association
Interest Settlement Rate for deposits in Dollars (for delivery on the first day
of such Interest Period) with a term equivalent to such Interest Period,
determined as of approximately 11:00 a.m. (London time) two Business Days prior
to the first day of such Interest Period, or

(c) if the rates referenced in clauses (a) and (b) above are not available, the
rate per annum determined by the Payment Agent as the rate of interest at which
deposits in Dollars for delivery on the first day of such Interest Period in
same day funds in the approximate amount of

 

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the Eurodollar Rate Loan being made, continued or converted by Citibank and with
a term equivalent to such Interest Period would be offered by Citibank’s London
Branch to major banks in the London interbank eurodollar market at their request
at approximately 4:00 p.m. (London time) two Business Days prior to the first
day of such Interest Period.

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

 

                        Eurodollar Base Rate                         1.00 minus
Eurocurrency Reserve Requirements

“Eurodollar Rate Loan” means a Loan that bears interest at a rate based on the
Eurodollar Rate.

“Event of Default” has the meaning specified in Section 8.01.

“Excess Cash Flow” means, for any period, an amount equal to the greater of zero
and (a) the sum, without duplication, of:

(i) net income (loss) of the Borrower Group determined on a consolidated basis
in accordance with GAAP for such period, and before any reduction in respect of
preferred stock dividends or accretion, excluding, however, (x) any gain or
loss, together with any related provision for taxes on such gain or loss,
realized in connection with (A) any Asset Sale (without regard to the threshold
provided for in the definition thereof) or (B) the disposition of any securities
by the Borrower or any of its Restricted Subsidiaries or the extinguishment of
any Indebtedness of the Borrower or any of its Restricted Subsidiaries; and
(y) any extraordinary gain (but not loss), together with any related provision
for taxes on such extraordinary gain (but not loss);

(ii) an amount equal to the amount of all non-cash charges to the extent
deducted in arriving at such net income;

(iii) decreases in Working Capital for such period;

(iv) an amount equal to the aggregate net non-cash loss on the sale, lease,
transfer or other disposition of assets by the Borrower and the Restricted
Subsidiaries during such period (other than sales in the ordinary course of
business) to the extent deducted in arriving at such net income;

(v) to the extent not included in the determination of such net income, any
termination payments or similar payments received by the Borrower or any
Restricted Subsidiary during such period in connection with the termination,
partial termination or other reduction of any Swap Contract; and

(vi) an amount equal to the amount, if any, by which booked lease expense
exceeds actual cash lease payments for such period;

minus (b) the sum, without duplication, of:

(i) an amount equal to the amount of all non-cash credits included in arriving
at such net income;

(ii) the aggregate amount actually paid by the Borrower and the Restricted
Subsidiaries in cash during such period on account of Capital Expenditures (to
the extent financed

 

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with internally generated cash flows of the Borrower and the Restricted
Subsidiaries), and including Necessary Capital Expenditures and Environmental
Capital Expenditures;

(iii) the aggregate amount of all voluntary prepayments of Revolving Credit
Loans made during such period to the extent of accompanying reductions of the
Revolving Credit Commitments except to the extent financed with the proceeds of
other Indebtedness of the Borrower or the Restricted Subsidiaries;

(iv) the aggregate amount of all principal payments of Indebtedness of the
Borrower or the Restricted Subsidiaries (including the principal component of
payments in respect of Capital Lease Obligations, but excluding all principal
payments of Revolving Credit Loans, voluntary prepayments of Term L/C Facility
Term Loans pursuant to Section 2.04(a) and mandatory prepayments of Term L/C
Facility Term Loans pursuant to Section 2.04(b)) made during such period (other
than in respect of any revolving credit facility to the extent there is not an
equivalent permanent reduction in commitments thereunder) except to the extent
financed with the proceeds of other Indebtedness of the Borrower or the
Restricted Subsidiaries;

(v) an amount equal to the aggregate net non-cash gain on the sale, lease,
transfer or other disposition of assets by the Borrower and the Restricted
Subsidiaries during such period (other than sales in the ordinary course of
business) to the extent included in arriving at such net income;

(vi) increases in Working Capital for such period;

(vii) payments by the Borrower and the Restricted Subsidiaries during such
period in respect of long-term liabilities of the Borrower and the Restricted
Subsidiaries other than Indebtedness;

(viii) the amount of Investments made during such period pursuant to
Section 7.02 to the extent that such Investments were financed with internally
generated cash flow of the Borrower and the Restricted Subsidiaries;

(ix) the aggregate amount of expenditures actually made by the Borrower and the
Restricted Subsidiaries in cash during such period (including expenditures for
the payment of financing fees) to the extent that such expenditures are not
expensed during such period;

(x) the aggregate amount of any premium, make-whole or penalty payments actually
paid in cash by the Borrower and the Restricted Subsidiaries during such period
that are required to be made in connection with any prepayment of Indebtedness
and that are accounted for as extraordinary items;

(xi) to the extent not included in the determination of net income, any
termination payments or similar payments made by the Borrower or any Restricted
Subsidiary during such period in connection with the termination, partial
termination or other reduction of any Swap Contract;

(xii) an amount equal to the amount, if any, by which actual cash lease payments
exceed booked lease expenses for such period; and

(xiii) the lesser of (A) the Excluded Annual Amount (as defined below) for such
period and (B) the Excluded Cumulative Amount (as defined below) as at the last
day of such period.

For purposes of clause (b)(xiii) above, (I) ”Base Amount” means the aggregate
amount of the Commodity Amounts as of December 31, 2006, as determined by the
Borrower and certified in writing to the Administrative Agents in connection
with the delivery of the financial statements of the Borrower for the fiscal
year ending on such date pursuant to Section 6.01(a); (II) ”Commodity Amounts”
means, at any

 

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time, collectively, the Commodity Collateral Amounts and the Prepaid Commodity
Amounts; (III) Commodity Collateral Amounts” means, at any time, cash and Cash
Equivalents pledged or deposited as collateral to a contract counterparty,
issuer of surety bonds or issuer of letters of credit by the Borrower or any of
the Restricted Subsidiaries as security for any of its respective obligations
under any contract for commercial and trading activities and contracts
(including physical delivery, option (whether cash or financial), exchange, swap
and futures contracts) for the purchase, transmission, transportation,
distribution, sale, lease or hedge of any fuel-related or power-related
commodity or service; (IV) ”Excluded Cumulative Amount” means, determined for
each fiscal year commencing with the fiscal year ending December 31, 2007, the
sum (but not less than zero) of (a) the Base Amount, minus (b) the sum of the
Excluded Annual Amounts (if any) for all prior fiscal years commencing with the
fiscal year ending December 31, 2007 (but excluding the fiscal year for which
the calculation of Excess Cash Flow is being made); (V) ”Excluded Annual Amount”
means, determined for each fiscal year commencing with the fiscal year ending
December 31, 2007, the difference, if any (but not less than zero), between
(a) the Commodity Amounts as at the last day of the immediately preceding fiscal
year and (b) the Commodity Amounts as at the last day of the most recent fiscal
year; and (VI) ”Prepaid Commodity Amounts” means, at any time, the cash amounts
prepaid by the Borrower or any of the Restricted Subsidiaries in respect of
purchases of any fuel-related or power-related commodity.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Excluded Obligations” means (a) all obligations under the CH Lease and the
Vermilion Lease, (b) all obligations under the Tolling Agreements, (c) any other
obligations existing as of the Closing Date to the extent such other obligations
(i) were not included on the balance sheet of the Borrower and its Subsidiaries
as indebtedness at the time such other obligation was entered into and (ii) were
subsequently recharacterized for accounting purposes as indebtedness and (d) any
other obligations of any Person acquired after the Closing Date which Person
thereupon becomes a Restricted Subsidiary to the extent such other obligations
(i) were not included on the balance sheet of such Person as indebtedness at the
time of such acquisition and (ii) were subsequently recharacterized for
accounting purposes as indebtedness.

“Excluded Parent Subsidiary” means, on any date of determination, a Subsidiary
of the Parent Guarantor (other than the Borrower and its Subsidiaries) which on
such date is not required to be a Guarantor under this Agreement.

“Excluded Subsidiaries” means Dynegy Communications Clearinghouse, Inc. and its
Subsidiaries.

“Exempt Proceeds” means (a) Net Proceeds of any sale or disposition of Basket
Assets (other than Designated Assets) and (b) Net Proceeds of any sale or
disposition of Designated Assets.

“Exempt Equity Proceeds” means, at any time, an amount equal to the aggregate
amount of cash proceeds contributed to the Borrower at or prior to such time
from the sale or other issuance after the date of this Agreement of Equity
Interests of the Parent Guarantor, less the aggregate of all amounts applied
pursuant to Section 7.02(n)(ii), Section 7.06(a)(xi), clause (b) of the last
sentence of Section 7.12, Section 7.15(f)(ii) or Section 7.15(h)(ii).

“Existing DHI Credit Agreement” has the meaning specified in the Preliminary
Statements.

“Existing Revolving Letters of Credit” means the letters of credit listed on
Schedule 2.03.

 

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“Facility” means the Revolving Credit Facility, the Revolving L/C Sublimit or
the Term L/C Facility, as the context may require.

“Fair Market Value” means the value that would be paid by a willing buyer to an
unaffiliated willing seller in a transaction not involving distress or necessity
of either party, determined in good faith by the chief financial officer or
Board of Directors of the Person required to make such determination.

“Federal Funds Rate” means, for any day, the 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 by the Federal Reserve Bank on the Business Day next
succeeding such day; provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day,
and (b) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average rate (rounded upward,
if necessary, to a whole multiple of 1/100 of 1%) charged to Citibank on such
day on such transactions as determined by the Payment Agent.

“Foreign Lender” has the meaning specified in Section 11.15(a).

“FRB” means the Board of Governors of the Federal Reserve System of the United
States.

“GAAP” means generally accepted accounting principles in the United States as in
effect from time to time.

“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, administrative tribunal, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.

“Granting Lender” has the meaning specified in Section 11.07(g).

“Guarantee” means, as to any Person (a) any obligation, contingent or otherwise,
of such Person guaranteeing or having the economic effect of guaranteeing any
Indebtedness or other obligation of any other Person (the “primary obligor”) in
any manner, whether directly or indirectly, and including any obligation of such
Person, direct or indirect, (i) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness or other obligation, (ii) to
purchase or lease property, securities or services for the purpose of assuring
the obligee in respect of such Indebtedness or other obligation of the payment
of such Indebtedness or other obligation, (iii) to maintain working capital,
equity capital or any other financial statement condition or liquidity or level
of income or cash flow of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation, or (iv) entered into for
the purpose of assuring in any other manner the obligee in respect of such
Indebtedness or other obligation of the payment thereof or to protect such
obligee against loss in respect thereof (in whole or in part), or (b) any Lien
on any assets of such Person securing any Indebtedness or other obligation of
any other Person, whether or not such Indebtedness or other obligation is
assumed by such Person (or any right, contingent or otherwise, of any holder of
such Indebtedness to obtain any such Lien); provided that the term “Guarantee”
shall not include endorsements for collection or deposit in the ordinary course
of business or, for the avoidance of doubt, obligations of such Person to
provide capital under a Capital Commitment. The amount of any Guarantee shall be
deemed to be an amount equal to the stated or determinable amount of the related
primary obligation, or portion thereof, in respect of which

 

20

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such Guarantee is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by the guaranteeing
Person in good faith. The term “Guarantee” as a verb has a corresponding
meaning.

“Guaranteed Obligations” has the meaning specified in Section 10.01.

“Guarantors” means, collectively, the Parent Guarantor and the Subsidiary
Guarantors.

“Guaranty” means, collectively, the Guaranty made by the Guarantors as set forth
in Article X together with each Guaranty Supplement delivered pursuant to
Section 6.12.

“Guaranty Supplement” has the meaning specified in Section 10.05.

“Havana Advance” means certain payments made from BNSF Railway Company (“BNSF”)
to DMG in connection with DMG’s election to convert its Havana Power Station to
burn coal from Wyoming and/or Montana, which amounts, are being repaid to BNSF
through an increased rate applicable to shipments of coal transported by BNSF to
DMG.

“Hazardous Materials” means all explosive substances or wastes, radioactive
substances or wastes that exceed any health-based radiation standards provided
in any Environmental Law, and any other substances or wastes that are
designated, classified or regulated as hazardous or toxic or as a pollutant or
contaminant under any Environmental Law, including, without limitation, asbestos
or asbestos-containing materials, polychlorinated biphenyls, radon gas,
infectious or medical wastes, and any petroleum or petroleum distillates that,
with respect to any such petroleum or petroleum distillates, (a) are actually or
allegedly handled, generated, used, stored, disposed, transported or treated in
violation of or in noncompliance with any Environmental Law, (b) have been, or
are threatened to be, released, spilled, discharged or emitted into the
environment in violation of or in noncompliance with any Environmental Law or
(c) are the subject matter of any Environmental Action.

“Hedging Obligations” means, with respect to any specified Person, the
obligations of such Person under (a) interest rate swap agreements (whether from
fixed to floating or from floating to fixed), interest rate cap agreements and
interest rate collar agreements, (b) other agreements or arrangements designed
to manage interest rates or interest rate risk and (c) other agreements or
arrangements designed to protect such Person against fluctuations in currency
exchange rates or commodity prices.

“Honor Date” means the date of any payment by any L/C Issuer under a Letter of
Credit.

“ICC” has the meaning specified in Section 2.03(h).

“Illinova” means Illinova Corporation, an Illinois corporation.

“Illinova Asset Sale” means a sale of the Capital Stock of, or all or
substantially all of the assets of, Illinova.

“Indebtedness” means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP:

(a) all obligations of such Person for borrowed money and all obligations of
such Person evidenced by bonds, debentures, notes, loan agreements or other
similar instruments;

 

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(b) all direct or contingent obligations of such Person to reimburse any letter
of credit issuer or other Person in respect of amounts paid under letters of
credit (including standby and commercial), bankers’ acceptances, bank
guaranties, surety bonds and similar instruments;

(c) all accounts payable of such Person to pay the deferred purchase price of
property or services (other than accounts payable in the ordinary course of
business);

(d) all Capital Lease Obligations

(e) all Off-Balance Sheet Obligations;

(f) all obligations of such Person to purchase, redeem, retire, defease or
otherwise make any payment in cash (whether dividends, interest or otherwise) on
or prior to the Term L/C Facility Term Loan Maturity Date in respect of any
Equity Interests in such Person or any other Person (other than the
Proportionately Consolidated Interests) or any warrants, rights or options to
acquire such Equity Interests, valued, in the case of redeemable preferred
interests, at the greater of its voluntary or involuntary liquidation preference
plus accrued and unpaid dividends; and

(g) all Guarantees of such Person in respect of any of the foregoing.

For all purposes hereof, the Indebtedness of any Person shall (i) include the
Indebtedness described in clauses (a) through (g) above of any partnership or
joint venture (other than a joint venture that is itself a corporation or
limited liability company) in which such Person is a general partner or a joint
venturer, except to the extent such Indebtedness is non-recourse to such Person
(other than through a JV Lien) or the only assets of such Person are its
interests in such partnership or joint venture, and such partnership or joint
venture itself is not a Loan Party, (ii) exclude any Excluded Obligation and
(iii) exclude any loans from an insurance company or an insurance premium
finance company to finance all or any portion of the premium on any insurance
policy maintained by the Parent Guarantor, the Borrower or any of its
Subsidiaries with respect to the properties and business of the Borrower and its
Subsidiaries, but only to the extent consistent with industry practice. The
amount of any obligation of the type described in clauses (a) and (b)(ii) of the
definition of “Off-Balance Sheet Obligations” as of any date shall be deemed to
be the amount of Attributable Indebtedness in respect thereof as of such date.

“Indemnified Liabilities” has the meaning specified in Section 9.07.

“Indemnitees” has the meaning specified in Section 11.05.

“Indentures” means (a) the 1996 Indenture and (b) the 2003 Second Lien
Indenture.

“Initial Financial Statements” means the respective audited consolidated balance
sheets of the Parent Guarantor and its consolidated Subsidiaries, and of the
Borrower and its consolidated Subsidiaries, in each case, for the fiscal year
ended December 31, 2005 and the related respective consolidated statements of
income or operations, shareholders’ equity and cash flows for the fiscal year
then ended.

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

“Interest Payment Date” means (a) as to any Eurodollar Rate Loan, the last day
of each Interest Period applicable to such Loan; provided that if any Interest
Period for a Eurodollar Rate Loan

 

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exceeds three months, the respective dates that fall every three months after
the beginning of such Interest Period shall also be Interest Payment Dates;
(b) as to any Base Rate Loan, the last Business Day of each calendar quarter;
(c) as to any Loan under the Revolving Credit Facility, the Revolving Credit
Termination Date; and (d) as to any Loan under the Term L/C Facility, the Term
L/C Facility Term Loan Maturity Date.

“Interest Period” means, as to each Eurodollar Rate Loan, the period commencing
on the date such Eurodollar Rate Loan is disbursed or converted to or continued
as a Eurodollar Rate Loan and ending on the date one, two, three or six months
thereafter, as selected by the Borrower in its Committed Loan Notice; provided
that:

(a) any Interest Period that would otherwise end on a day that is not a Business
Day shall be extended to the next succeeding Business Day unless such Business
Day falls in another calendar month, in which case such Interest Period shall
end on the next preceding Business Day;

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

(c) no Interest Period under the Revolving Credit Facility shall extend beyond
the Revolving Credit Termination Date; and

(d) no Interest Period under the Term L/C Facility shall extend beyond the Term
L/C Facility Term Loan Maturity Date.

“Investments” means, with respect to any Person, all direct or indirect
investments by such Person in other Persons (including Affiliates) in the forms
of loans (including Guarantees or other obligations), advances or capital
contributions (excluding payroll, commission, travel and similar advances to
officers and employees made in the ordinary course of business), purchases or
other acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. If the Borrower
or any of its Subsidiaries sells or otherwise disposes of any Equity Interests
of any direct or indirect Subsidiary of the Borrower, such that, after giving
effect to any such sale or disposition, such Person is no longer a Subsidiary of
the Borrower, then the Borrower shall be deemed to have made an Investment on
the date of any such sale or disposition equal to the Fair Market Value of the
Borrower’s Investments in such Subsidiary that were not sold or disposed of in
an amount determined as provided in the final paragraph of Section 7.06(a). The
acquisition by the Borrower or any of its Subsidiaries of a Person that holds an
Investment in a third Person shall be deemed to be an Investment by the Borrower
or such Subsidiary in such third Person in an amount equal to the Fair Market
Value of the Investments held by the acquired Person in such third Person in an
amount determined as provided in the final paragraph of Section 7.06(a). Except
as otherwise provided in this Agreement, the amount of an Investment shall be
its Fair Market Value at the time the Investment is made and without giving
effect to subsequent changes in value.

“IP Rights” has the meaning specified in Section 5.16.

“IRS” means the United States Internal Revenue Service.

“Joinder Agreement” means an agreement substantially in the form of Exhibit J.

 

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“JPMCB” means JPMorgan Chase Bank, N.A.

“JV Lien” has the meaning specified in the definition of “Pass-Through Liability
Entity”.

“Laws” means, collectively, all applicable international, foreign, Federal,
state and local statutes, treaties, rules, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, licenses, authorizations and
permits of, and agreements with, any Governmental Authority (other than any such
agreements which are entered into in respect of a commercial transaction).

“L/C Credit Extensions” means the Revolving L/C Credit Extensions and the Term
L/C Credit Extensions.

“L/C Issuer” means (a) with respect to any Revolving Letter of Credit, any
Revolving L/C Issuer and (b) with respect to any Term L/C Facility Letter of
Credit, any Term L/C Issuer.

“L/C Obligations” means the Revolving L/C Obligations and the Term L/C Facility
Obligations.

“Lender” means each Person listed on Schedule 2.01 that has executed and
delivered this Agreement or a Lender Addendum and any other Person that shall
have become a party hereto as a Lender pursuant to an Assignment and Assumption
or a Joinder Agreement entered into pursuant to Section 2.13, other than any
such Person that ceases to be a party hereto pursuant to an Assignment and
Assumption. Unless the context other requires, the term “Lender” includes each
L/C Issuer.

“Lender Addendum” means, with respect to any initial Lender, a Lender Addendum,
substantially in the form of Exhibit K, to be executed by such Lender on the
Closing Date as provided in Section 11.21.

“Lenders’ Portion” means, with respect to the Net Proceeds from any Asset Sale
that results in a mandatory prepayment under Section 2.04(b), (a) in the case of
any Asset Sale of property that does not constitute Collateral owned by the
Borrower or any of its Subsidiaries, 100% of such Net Proceeds, (b) in the case
of any Asset Sale of property that constitutes Collateral owned by the Borrower
or any of its Subsidiaries prior to payment in full of the Loans and all other
amounts owing under the Loan Documents and the expiration of the Letters of
Credit and termination of this Agreement, a fraction the numerator of which is
equal to the Aggregate Credit Exposure at such time and the denominator of which
is equal to the sum of (i) the Aggregate Credit Exposure at such time plus
(ii) the aggregate principal amount of all other Priority Lien Debt permitted
hereunder outstanding at such time that is entitled to a mandatory prepayment as
a result of such Asset Sale and (c) in all other cases, 100% of such Net
Proceeds.

“Lending Office” means, as to any Lender, the office or offices of such Lender
described as such in such Lender’s Administrative Questionnaire, or such other
office or offices as a Lender may from time to time notify the Borrower, the
Payment Agent and the Administrative Agents.

“Letter of Credit Application” means a request or application for the issuance
or amendment of a Letter of Credit in such form as may from time to time be
satisfactory to the relevant L/C Issuer and signed by, or otherwise
authenticated (pursuant to a computer system utilizing the internet, any other
electronic system or any other means satisfactory to such L/C Issuer) in a
manner satisfactory to

 

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such L/C Issuer as having been transmitted by, a Responsible Officer of the
Borrower, including, without limitation, any such request or application
transmitted to such L/C Issuer by facsimile, email, a computerized system
utilizing the internet or any other electronic means satisfactory to such L/C
Issuer; provided that, contemporaneously with any such transmission to such L/C
Issuer, the Payment Agent receives substantially the same information as is
included in the request or application delivered to such L/C Issuer by such
means (including, without limitation, facsimile, e-mail, a computerized system
utilizing the internet or any other electronic means satisfactory to the Payment
Agent) as may be from time to time be satisfactory to the Payment Agent.

“Letters of Credit” means the Revolving Letters of Credit and Term L/C Facility
Letters of Credit.

“Leverage Ratio” means, at any date of determination, the ratio of (a) Total
Indebtedness at such date to (b) consolidated EBITDA of the Borrower Group for
the most recently ended Measurement Period. In addition, when required to make a
pro forma calculation of this ratio under this Agreement:

(i) acquisitions that have been made by the Borrower or any of its Restricted
Subsidiaries, including through mergers or consolidations, or any Person or any
of its Restricted Subsidiaries acquired by the Borrower or any of its Restricted
Subsidiaries, and including any related financing transactions and including
increases in ownership of Restricted Subsidiaries, during the relevant
Measurement Period or subsequent to such period and on or prior to the relevant
date of determination shall be given pro forma effect (in accordance with
Regulation S-X under the Securities Act) as if they had occurred on the first
day of the relevant Measurement Period and EBITDA and Total Indebtedness for
such reference period shall be calculated on a pro forma basis;

(ii) the EBITDA and Total Indebtedness attributable to discontinued operations,
as determined in accordance with GAAP, and operations or businesses (and
ownership interests therein) disposed of prior to the relevant date of
determination, shall be excluded;

(iii) any Person that is a Restricted Subsidiary on the relevant date of
determination shall be deemed to have been a Restricted Subsidiary at all times
during the relevant Measurement Period;

(iv) any Person that is not a Restricted Subsidiary on relevant date of
determination shall be deemed not to have been a Restricted Subsidiary at any
time during the relevant Measurement Period; and

(v) in the case of a pro forma calculation made in connection with
(i) Section 7.02(r), the investment shall be given pro forma effect in the
calculation of EBITDA as if it had been made on the first day of the Measurement
Period, (ii) Section 7.05(c), the sale of assets shall be given pro forma effect
in the calculation of EBITDA and Total Indebtedness as if it had been made on
the first day of the Measurement Period and (iii) Section 7.15(g), the
prepayment, redemption, repurchase, defeasance or other unscheduled payment
shall be given pro forma effect in the calculation of Total Indebtedness as if
it had been made on the first day of the Measurement Period.

For purposes of this definition, whenever pro forma effect is to be given to an
acquisition or investment and the amount of income or earnings relating thereto,
the pro forma calculations shall be determined in good faith by a Responsible
Officer of the Borrower. Any such pro forma calculations may include

 

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operating expense reductions for such period resulting from the acquisition
which is being given pro forma effect that would be permitted pursuant to
Article 11 of Regulation S-X under the Securities Act. For the avoidance of
doubt, the pro forma Leverage Ratio shall be required not to exceed the
applicable level specified in Sections 7.02(r), 7.03(x)(iii), 7.05(c) and
7.15(g) and in the definition of “Permitted Refinancing Indebtedness”, only at
the time of the relevant incurrence, investment, asset sale or prepayment,
redemption, repurchase, defeasance or other unscheduled payment.

“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind, or any other type of preferential
arrangement that, in each case, has the practical effect of creating a security
interest, in respect of such asset; provided that there shall be excluded from
“Liens”: (a) set-off or netting rights granted by the Borrower or any of its
Subsidiaries pursuant to a Permitted Contract, a Hedging Obligation or a Netting
Agreement solely in respect of amounts owing under such agreements and
(b) obligations with respect to the acquisition or sale or disposition of
interests in Proportionately Consolidated Interests, provided that in the case
of this clause (b) such Liens result solely from variances from prior periods in
the volumes of natural gas processed or the volumes of natural gas liquids
produced pursuant to the applicable construction or operation agreement. For the
purposes of this Agreement, the Parent Guarantor or any of its Subsidiaries
shall be deemed to own, subject to a Lien, any asset which it has acquired or
holds subject to the interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement relating to such
asset.

“Loan” means a Revolving Credit Loan or a Term L/C Facility Term Loan.

“Loan Documents” means, collectively, (a) this Agreement, (b) the Notes, (c) the
Collateral Documents and (d) each Letter of Credit Application.

“Loan Parties” means, collectively, the Borrower and each Guarantor.

“Mandatory Prepayment Date” has the meaning specified in Section 2.04(b)(vi).

“Material Adverse Effect” means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, financial condition or prospects
of the Borrower and its Subsidiaries taken as a whole; (b) a material adverse
change in the rights and remedies of any Agent or any Lender under the Loan
Documents, taken as a whole, or of the ability of the Loan Parties to perform
their obligations under the Loan Documents, taken as a whole; or (c) a material
adverse change in the legality, validity, binding effect or enforceability
against the Loan Parties, taken as a whole, of the Loan Documents, taken as a
whole.

“Material Subsidiary” means any Restricted Subsidiary of the Borrower or the
Parent Guarantor (other than the Alleghanies Entities) that, on any date of
determination, directly or indirectly holds assets (other than any intercompany
debt owed by the Parent Guarantor or any of its Subsidiaries) with a Fair Market
Value of at least $50,000,000. Notwithstanding the foregoing, any Restricted
Subsidiary of the Parent Guarantor or the Borrower that directly or indirectly
guarantees or otherwise provides direct credit support for any Indebtedness
(other than Indebtedness under the Loan Documents) of the Parent Guarantor, the
Borrower or any of their respective Restricted Subsidiaries will be considered a
Material Subsidiary.

“Maximum Percentage” means the quotient of 1 divided by 1.03, multiplied by 100.

“Measurement Period” means, at any date of determination, the most recently
completed four consecutive fiscal quarters of the Borrower ending on or prior to
such date.

 

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“Minority Investment” means any Person (other than a Subsidiary) in which the
Borrower or any Restricted Subsidiary owns Capital Stock.

“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto that
is a nationally recognized rating agency.

“Mortgages” means each deed of trust, trust deed, mortgage, leasehold mortgage
and leasehold deed of trust listed on Schedule I in effect on the Closing Date,
and each other deed of trust, trust deed, mortgage, leasehold mortgage and
leasehold deed of trust, substantially in the form of Exhibit F (which form, in
the case of any such deed of trust, trust deed, leasehold mortgage or leasehold
deed of trust, shall be modified to reflect such changes as the Borrower and the
Administrative Agents shall agree), delivered by a Non-Shared Grantor or a
Shared Grantor that is a Mortgagor pursuant to Section 6.13.

“Mortgage Policies” means fully paid American Land Title Association Lender’s
Extended Coverage title insurance policies or, in the case of properties located
in the State of Texas, fully paid Mortgage Policies of Title Insurance in the
form prescribed by the Texas Board of Insurance.

“Mortgage Supplements” has the meaning specified in Section 4.01(iv).

“Mortgagor” means those Subsidiaries of the Borrower listed on Schedule I, or
any Subsidiary of the Borrower that executes and delivers a Mortgage pursuant to
Section 6.13.

“Multiemployer Plan” means any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA, to which any Loan Party or any ERISA Affiliate
makes or is obligated to make contributions, or during the preceding five plan
years, has made or been obligated to make contributions.

“Necessary Capital Expenditures” means Capital Expenditures (other than
Environmental Capital Expenditures) that are required by applicable Law or are
undertaken for health and safety reasons. The term “Necessary Capital
Expenditures” does not include any Capital Expenditure undertaken primarily to
increase the efficiency of, expand or re-power any power generation facility.

“Net Proceeds” means (a) with respect to any Asset Sale, the aggregate cash
proceeds received by the Borrower or any Restricted Subsidiary in respect of
such Asset Sale (including, without limitation, any cash received upon the sale
or other disposition of any non-cash consideration received in such Asset Sale)
or Recovery Event, net of (i) the direct costs relating thereto, including,
without limitation, legal, accounting and investment banking fees, and sales
commissions, and any relocation expenses incurred as a result of such Asset
Sale, (ii) in the case of any Asset Sale, taxes paid or payable as a result
thereof, in each case, after taking into account any available tax credits or
deductions, any tax sharing arrangements and amounts reserved for adjustment in
respect of the sale price of such asset or assets established in accordance with
GAAP and (iii) the amount of any Indebtedness required to be repaid in
connection with such Asset Sale; provided that, in the case of any non-wholly
owned Restricted Subsidiary of the Borrower, “Net Proceeds” shall be net of any
payments required to be made to any minority interest holder in such Restricted
Subsidiary that is not a Restricted Subsidiary of the Borrower from the proceeds
of any Asset Sale or Recovery Event by such Restricted Subsidiary; and (b) with
respect to the issuance or incurrence of any Subject Indebtedness, the aggregate
cash proceeds received by the Borrower or any Restricted Subsidiary in respect
of such Subject Indebtedness, net of the direct costs relating thereto,
including, without limitation, legal, accounting and investment banking fees and
sales commissions.

 

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“Netting Agreement” means a netting agreement, master netting agreement or other
similar document having the same effect as a netting agreement or master netting
agreement and, as applicable, any collateral annex, security agreement, or other
similar document related to any master netting agreement (in each case in
connection with contracts or transactions entered into in the ordinary course of
business) or any Permitted Contract.

“New Revolving Credit Commitment” has the meaning specified in Section 2.13.

“New Revolving Credit Lender” has the meaning specified in Section 2.13.

“New Revolving Credit Loan” has the meaning specified in Section 2.13.

“Non-Recourse Debt” means Indebtedness (a) as to which neither the Parent
Guarantor, the Borrower nor any of their respective Restricted Subsidiaries
(i) provides credit support of any kind (including any undertaking, agreement or
instrument that would constitute Indebtedness), (ii) is directly or indirectly
liable as a guarantor or otherwise, or (iii) constitutes the lender; (b) no
default with respect to which (including any rights that the holders of the
Indebtedness may have to take enforcement action against an Unrestricted
Subsidiary or an Excluded Parent Subsidiary) would permit upon notice, lapse of
time or both any holder of any other Indebtedness of the Parent Guarantor, the
Borrower or any of their respective Restricted Subsidiaries to declare a default
on such other Indebtedness or cause the payment of the Indebtedness to be
accelerated or payable prior to its Stated Maturity; and (c) as to which the
lenders have been notified in writing that they will not have any recourse to
the Capital Stock or assets of the Parent Guarantor, the Borrower or any of
their respective Restricted Subsidiaries.

“Nonrenewal Notice Date” means, for any Letter of Credit, a day (to be agreed
upon at the time such Letter of Credit is issued) before which the relevant L/C
Issuer may prevent the renewal of such Letter of Credit.

“Non-Shared Grantors” means the Parent Guarantor and its Restricted
Subsidiaries.

“Non-Shared Mortgages” means each deed of trust, trust deed, mortgage, leasehold
mortgage and leasehold deed of trust listed as “Non-Shared Mortgages” on
Schedule I in effect on the Closing Date, and each other deed of trust, trust
deed, mortgage, leasehold mortgage and leasehold deed of trust, substantially in
the form of Exhibit F (which form, in the case of any such deed of trust, trust
deed, leasehold mortgage or leasehold deed of trust, shall be modified to
reflect such changes as the Borrower and the Administrative Agents shall agree),
delivered by a Non-Shared Grantor that is a Mortgagor pursuant to Section 6.13.

“Non-Shared Secured Obligations” means (a) all obligations of the Loan Parties
now or hereafter existing under the Loan Documents and (b) all ACH Obligations.

“Non-Shared Secured Parties” means the Agents, the L/C Issuers, the Lenders and
all Lenders (or Affiliates of Lenders) to which ACH Obligations are owed.

“Non-Shared Security Agreement” means the Amended and Restated Non-Shared
Security Agreement, dated as of April 19, 2006, among the Parent Guarantor, the
grantors signatory thereto and the Collateral Agent substantially in the form of
Exhibit E-2, as collateral agent, together with each other security agreement
and security agreement supplement delivered by the Non-Shared Grantors pursuant
to Section 6.12.

 

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“Non-Shared Security Agreement Supplement” has the meaning specified in the
Non-Shared Security Agreement.

“Note” means a Revolving Credit Note or a Term L/C Facility Term Note, as the
context may require.

“NPL” means the National Priorities List under CERCLA.

“Obligations” means all advances to, and debts, liabilities, obligations,
covenants and duties of, any Loan Party arising under any Loan Document or
otherwise with respect to any Loan or Letter of Credit, whether direct or
indirect (including those acquired by assumption), absolute or contingent, due
or to become due, now existing or hereafter arising and including interest and
fees that accrue after the commencement by or against any Loan Party or any
Affiliate thereof of any proceeding under any Debtor Relief Law naming such
Person as the debtor in such proceeding, regardless of whether such interest and
fees are allowed claims in such proceeding. Without limiting the generality of
the foregoing, the Obligations of the Loan Parties under the Loan Documents
include (a) the obligation to pay principal, interest, prepayment premium,
letter of credit commissions, charges, expenses, fees, attorneys’ fees and
disbursements, indemnities and other amounts payable by any Loan Party under any
Loan Document and (b) the obligation of any Loan Party to reimburse any amount
in respect of any of the foregoing that any Lender, in its sole discretion, may
elect to pay or advance on behalf of such Loan Party.

“Off-Balance Sheet Obligations” means, as to any Person at a particular time,
without duplication of any clause within this definition or within the
definition of “Indebtedness”, all (a) obligations of such Person under any lease
which is treated as an operating lease for financial accounting purposes and a
financing lease for tax purposes (i.e., a “synthetic lease”);
(b) (i) obligations of such Person under the CH Lease, (ii) other similar
leveraged lease arrangements receiving similar accounting and tax treatment to
the CH Lease (i.e., a “leveraged lease”) and (iii) transactions entered into by
such Person, the proceeds from which would be reflected on the financial
statements of such Person in accordance with GAAP as cash flows from financings
at the time such transaction was entered into (other than as a result of the
issuance of Equity Interests or, to the extent the same does not exceed
$20,000,000 in the aggregate, the Havana Advance); (c) net cash payment
obligations of such Person with respect to any forward sale contract for a
commodity with respect to which the Borrower or any of its Subsidiaries has
received a prepayment by a counterparty thereto; provided that “Off-Balance
Sheet Obligations” shall exclude forward sales contracts that are entered into
in the ordinary course of the Borrower’s or any of its Subsidiaries’ trading,
power generation or natural gas liquids businesses and not intended to function
primarily as a borrowing of funds; and (d) other transactions entered into by
such Person that are not otherwise addressed in the definition of “Indebtedness”
or “Off-Balance Sheet Obligations” that are intended to function primarily as a
borrowing of funds (including, without limitation, any minority interest
transactions that function primarily as a borrowing); provided that “Off-Balance
Sheet Obligations” shall exclude (i) any completion or performance guaranties
(or similar guaranties that a project or a Subsidiary perform as planned) or
(ii) any lease entered into in the ordinary course of such Person’s business
that is not intended primarily as a borrowing of funds, including leases of
office equipment, office space, vehicles, barges, tugs, railcars, or copy
machines or equipment normally leased in the operation of the business of the
Borrower or its Subsidiaries (or any extension, renewals, or similar replacement
of any of the foregoing items (i) and (ii)).

“Organizational Documents” means (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement; and (c) with respect to
any partnership, joint

 

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venture, trust or other form of business entity, the partnership, joint venture
or other applicable agreement of formation or organization and any agreement,
instrument, filing or notice with respect thereto filed in connection with its
formation or organization with the applicable Governmental Authority in the
jurisdiction of its formation or organization and, if applicable, any
certificate or articles of formation or organization of such entity.

“Other Taxes” has the meaning specified in Section 3.01(b).

“Outstanding Amount” means (a) with respect to Revolving Credit Loans on any
date, the aggregate outstanding principal amount thereof after giving effect to
any borrowings and prepayments or repayments of Revolving Credit Loans occurring
on such date, (b) with respect to any Revolving L/C Obligations on any date, the
Dollar Equivalent of the amount of such Revolving L/C Obligations on such date
after giving effect to any Revolving L/C Credit Extension occurring on such date
and any other changes in the aggregate amount of the Revolving L/C Obligations
as of such date, including as a result of any reimbursements of outstanding
unpaid drawings under any Revolving Letters of Credit, (c) with respect to Term
L/C Facility Term Loans on any date, the aggregate outstanding principal amount
thereof after giving effect to any borrowings and prepayments or repayments of
Term L/C Facility Term Loans occurring on such date and (d) with respect to any
Term L/C Facility Obligations on any date, the Dollar Equivalent of the amount
of such Term L/C Facility Obligations on such date after giving effect to any
Term L/C Credit Extension occurring on such date and any other changes in the
aggregate amount of the Term L/C Facility Obligations as of such date, including
as a result of any reimbursements of outstanding unpaid drawings under any Term
L/C Facility Letters of Credit.

“Outstanding Loans” has the meaning specified in Section 2.04(b)(v).

“Parent Guarantor” means Dynegy Inc., an Illinois corporation.

“Parent Information” has the meaning specified in Section 11.08.

“Parents” means the Parent Guarantor and BG Holdings, Inc.

“Parity Indebtedness” means (a) any Subordinated Indebtedness and (b) any
Indebtedness permitted under Section 7.03(b)(xvi).

“Parity Lien” means a Lien granted to the Parity Lien Collateral Trustee upon
any property of the Borrower or any other Loan Party securing Parity Lien
Obligations.

“Parity Lien Collateral Trustee” means (a) Wells Fargo Bank, National
Association (formerly known as Wells Fargo Bank Minnesota, N.A.), as collateral
trustee under the 2003 Second Lien Indenture, and any successor trustee thereto,
in the capacity as the holder of Liens (as defined in the 2003 Second Lien
Indenture) granted pursuant to the Security Documents (as defined in the 2003
Second Lien Indenture), (b) after transfer of the Note Liens (as defined in the
2003 Second Lien Indenture) to the Joint Collateral Agent (as defined in the
2003 Second Lien Indenture) pursuant to Section 12.02 of the 2003 Second Lien
Indenture, the Joint Collateral Agent and (c) after release of such Notes Liens,
the Person acting as collateral agent (however titled) on behalf of the holders
of Parity Lien Obligations permitted under this Agreement.

“Parity Lien Debt” means (a) the 2003 Second Lien Notes and (b) any other
Indebtedness that is permitted to be incurred under this Agreement and to be
secured by Parity Liens.

 

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“Parity Lien Obligations” means Parity Lien Debt and all other obligations in
respect thereof.

“Participant” has the meaning specified in Section 11.07(d).

“Pass-Through Liability Entity” means a partnership or joint venture in which
the Borrower or any of its Restricted Subsidiaries is a general partner or joint
venturer, except (i) to the extent that the Indebtedness of such partnership or
joint venture is non-recourse to the Borrower or such Restricted Subsidiary
(other than through a Lien on the Borrower’s or such Restricted Subsidiary’s
interest in such partnership or joint venture (a “JV Lien”)), (ii) where the
joint venture is itself a corporation or limited liability company, or
(iii) where the Restricted Subsidiary owns only its interest in such partnership
or joint venture and such partnership or joint venture is not itself a Loan
Party.

“Payment Agent” means Citicorp USA, Inc., in its capacity as payment agent for
the Lenders under the Loan Documents.

“Payment Agent’s Office” means the Payment Agent’s address and, as appropriate,
account as set forth on Schedule 11.02, or such other address or account as the
Payment Agent may from time to time notify the Borrower, the other Agents and
the Lenders.

“PBGC” means the Pension Benefit Guaranty Corporation.

“Pension Plan” means any “employee pension benefit plan” (as such term is
defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA and is sponsored or maintained by any Loan Party or
any ERISA Affiliate or to which any Loan Party or any ERISA Affiliate
contributes or has an obligation to contribute, or in the case of a multiple
employer or other plan described in Section 4064(a) of ERISA, has made
contributions at any time during the immediately preceding five plan years.

“Permitted Acquisition” means any acquisition, by merger or otherwise, by the
Borrower or any of the Restricted Subsidiaries of assets or Capital Stock after
the Closing Date, so long as, (a) such acquisition and all transactions related
thereto shall be consummated in accordance with all Laws; (b) such acquisition
shall result in the issuer of such Capital Stock becoming a Restricted
Subsidiary that is not an Excluded Subsidiary and, to the extent required by
Section 6.12, a Subsidiary Guarantor; (c) such acquisition shall result in the
applicable Collateral Trustee, for the benefit of the Secured Parties, being
granted a security interest in any Capital Stock and/or any assets so acquired
to the extent required by Sections 6.12 and/or 6.13; (d) after giving effect to
such acquisition, no Default shall have occurred and be continuing; and (e) the
Borrower shall be in compliance, on a pro forma basis after giving effect to
such acquisition (including any Indebtedness assumed or permitted to exist or
incurred pursuant to Sections 7.03(b)(xiv) and 7.03(b)(xv), respectively), with
the covenants set forth in Section 7.11, as such covenants are recomputed as at
the last day of the most recently ended fiscal quarter for which financial
statements are required to be delivered pursuant to Section 6.01(a) or 6.01(b)
under Section 7.11 as if such acquisition had occurred on the first day of the
applicable Measurement Period.

“Permitted Business” means the business substantially similar to the lines of
business conducted by the Borrower and its Restricted Subsidiaries as of the
date of this Agreement or any business or activity that is reasonably related,
ancillary or complementary thereto or a reasonable extension, development or
expansion thereof.

“Permitted Contract” has the meaning specified in Section 7.01(p).

 

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“Permitted Liens” has the meaning specified in Section 7.01.

“Permitted Payments to Parents” means, without duplication as to amounts,
(a) payments to the Parents to permit the Parents to pay their operating costs
and expenses in the ordinary course consistent as to scope, character and amount
with past practices and otherwise maintain their existence, including, without
limitation, all reasonable accounting, general corporate overhead, legal and
administrative expenses, directors’ fees and expenses and SEC filing fees, of
the Parents when due; and (b) for so long as the Borrower is a member of a group
filing a consolidated or combined tax return with the Parents, payments to the
Parents in respect of an allocable portion of the tax liabilities of such group
that is attributable to the Borrower and its Subsidiaries (“Tax Payments”);
provided that (i) the Tax Payments shall not exceed the lesser of (A) the amount
of the relevant tax (including any penalties and interest) that the Borrower
would owe if the Borrower were filing a separate tax return (or a separate
consolidated or combined return with its Subsidiaries that are members of the
consolidated or combined group), taking into account any carryovers and
carrybacks of tax attributes (such as net operating losses) of the Borrower and
its Subsidiaries from other taxable years and (B) the net amount of the relevant
tax that the Parents actually owe to the appropriate taxing authority, and
(ii) any Tax Payments received from the Borrower shall be paid over to the
appropriate taxing authority within 30 days of the Parents’ receipt of such Tax
Payments or refunded to the Borrower.

“Permitted Refinancing Indebtedness” means any Indebtedness of the Borrower or
any of its Restricted Subsidiaries issued in exchange for, or the net proceeds
of which are used to extend, renew, refund, refinance, replace, defease, or
discharge other Indebtedness of the Borrower or any of its Restricted
Subsidiaries (other than intercompany Indebtedness) that is permitted pursuant
to Section 7.03; provided that:

(a) the principal amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness does not exceed the principal amount (or accreted
value, if applicable) of the Indebtedness extended, refinanced, renewed,
replaced, defeased, refunded or discharged (plus all accrued interest on the
Indebtedness and the amount of all expenses and premiums incurred in connection
therewith);

(b) such Permitted Refinancing Indebtedness has a final maturity date later than
the final maturity date of, and has a Weighted Average Life to Maturity equal to
or greater than the Weighted Average Life to Maturity of, the Indebtedness being
extended, refinanced, renewed, replaced, defeased, refunded or discharged;

(c) if the Indebtedness being extended, refinanced, renewed, replaced, defeased,
refunded or discharged is subordinated in right of payment to the Obligations,
such Permitted Refinancing Indebtedness has a final maturity date equal to or
later than the final maturity date of, and is subordinated in right of payment
to, the Obligations on terms at least as favorable to the Lenders as those
contained in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased, refunded or discharged;

(d) such Permitted Refinancing Indebtedness is incurred either by the Borrower
or by the Restricted Subsidiary who is the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased, refunded or discharged;

(e) if incurred by the Borrower, such Permitted Refinancing Indebtedness may be
guaranteed by the Guarantors; and

 

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(f) partial refinancings of the Facilities will be limited to refinancings in
whole of the Revolving Credit Facility.

In addition, the Borrower shall be permitted to designate as “Permitted
Refinancing Indebtedness” (by providing notice in writing of such designation to
the Administrative Agents promptly upon the incurrence thereof) Indebtedness of
the Borrower and its Restricted Subsidiaries otherwise meeting the requirements
of clauses (a) through (f) above incurred not more than one year after the
discharge (other than from the proceeds of other Indebtedness) of all or any
portion of any Indebtedness outstanding under Section 7.03(b)(ii), (iii), (vi),
(vii), (viii), (xi), (xii), (xiv), (xv), (xvi), (xviii), (xix) or (xx), provided
that if such Permitted Refinancing Indebtedness is incurred more than 30 days
after such discharge, the pro forma Leverage Ratio, after giving effect to the
incurrence of such Permitted Refinancing Indebtedness (as if such Permitted
Refinancing Indebtedness had been incurred on the first day of the applicable
Measurement Period), shall not exceed (A) 7.0 to 1.0 at any time during fiscal
year 2006, (B) 6.5 to 1.0 at any time from January 1, 2007 through March 31,
2007, (C) 6.25 to 1.0 at any time from April 1, 2007 through June 30, 2007,
(D) 6.0 to 1.0 at any time from July 1, 2007 through September 30, 2007,
(E) 5.75 to 1.0 at any time from October 1, 2007 through December 31, 2007,
(F) 5.25 to 1.0 at any time during fiscal year 2008 and (G) thereafter, 5.0 to
1.0.

“Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.

“Post-Petition Interest” has the meaning specified in Section 10.06(b).

“Pounds Sterling” and “£” each mean lawful money of the United Kingdom.

“Prepayment Amount” has the meaning specified in Section 2.04(b)(vi).

“Prepayment Option Notice” has the meaning specified in Section 2.04(b)(vi).

“Priority Lien” means a Lien on any property which is Collateral that secures
Indebtedness or other obligations equally and ratably with the Liens securing
the Obligations.

“Priority Lien Cap” means the sum of Priority Lien Debt, but in no event
exceeding $1,500,000,000; provided that for purposes of this definition, (a) any
interest, penalties, premiums, fees, costs, expenses or other obligations in
respect of any Priority Lien Debt shall not be subject to the cap, (b) all
letters of credit shall be valued at face amount, whether or not drawn, (c) any
Indebtedness outstanding under ACH Obligations shall be disregarded in
calculating the total Priority Liens at any time outstanding and (d) all Hedging
Obligations of the Borrower and its Restricted Subsidiaries and all obligations
of the Borrower and its Restricted Subsidiaries under Swap Contracts, in either
such case, secured by Priority Liens, shall be included in calculating the total
Priority Liens at any time outstanding.

“Priority Lien Debt” means (a) Indebtedness under this Agreement,
(b) Indebtedness permitted under Section 7.03(b)(xviii), (c) Hedging Obligations
of the Borrower and its Restricted Subsidiaries secured by a Priority Lien or
(d) any Permitted Refinancing Indebtedness in respect of any of the foregoing,
but, in the case of clause (c) or (d), only if on or before the day on which
such Hedging Obligations or Permitted Refinancing Indebtedness, as applicable,
is incurred by the Borrower or any of its Restricted Subsidiaries such Hedging
Obligations or Permitted Refinancing Indebtedness, as applicable, is designated
by the Borrower, in an officer’s certificate delivered to the Administrative
Agents on or before such date, as Priority Lien Debt for the purposes of this
Agreement.

“Project Interest” means an undivided interest in a power or energy related
facility.

 

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“Project Subsidiary” means any Subsidiary of the Borrower that has no
outstanding Indebtedness other than Non-Recourse Debt.

“Proportionately Consolidated Interest” means undivided ownership interests in
plants and/or gathering systems that are (a) co-owned with others and (b) are
consolidated on a proportional basis in the Borrower’s financial information.

“Pro Rata Share” means, with respect to each Lender and with respect to any
Facility at any time, a fraction (expressed as a percentage, carried out to the
ninth decimal place), (a) with respect to the Revolving Credit Facility, the
numerator of which is the amount of the Revolving Credit Commitment of the
relevant Revolving Credit Lender (or, in the case of the Revolving L/C Sublimit,
the amount of such Revolving Credit Lender’s obligation to participate therein)
at such time and the denominator of which is the aggregate Revolving Credit
Commitments (or, in the case of the Revolving L/C Sublimit, the aggregate amount
of the Revolving Credit Lenders’ obligations to participate therein) at such
time; provided that if the commitment of each Revolving Credit Lender to make
Revolving Credit Loans and the obligation of any Revolving L/C Issuer to make
Revolving L/C Credit Extensions have been terminated pursuant to Section 8.02,
then the Pro Rata Share of each Revolving Credit Lender shall be determined
based on the Pro Rata Share of such Revolving Credit Lender immediately prior to
such termination and after giving effect to any subsequent assignments made
pursuant to the terms hereof and (b) with respect to the Term L/C Facility, the
numerator of which is the outstanding principal amount of the Term L/C Facility
Term Loans of the relevant Term L/C Facility Lender at such time and the
denominator of which is the aggregate outstanding principal amount of the Term
L/C Facility Term Loans at such time.

“Public Disclosure” means the Parent Guarantor’s and the Borrower’s most recent
annual report, Form 10-K for the most recently completed fiscal year, each
quarterly report on Form 10-Q or any current reports on Form 8-K (or similar
reports filed on successor forms) filed since the initial filing date of such
Form 10-K, in each case filed at least 5 Business Days prior to the Closing
Date.

“Real Property” means the real property owned, leased, used, operated or
occupied by any of the Borrower or any of its Restricted Subsidiaries.

“Recovery Event” means any settlement of or payment in excess of $10,000,000 in
respect of any property or casualty insurance claim or any condemnation
proceeding relating to any asset of the Borrower or any of its Restricted
Subsidiaries (whether received by the Parent Guarantor, the Borrower or any of
their respective Restricted Subsidiaries).

“Register” has the meaning specified in Section 11.07(c).

“Reinvestment Deferred Amount” means, with respect to any Reinvestment Event,
the aggregate Net Proceeds received by the Borrower or any of its Restricted
Subsidiaries in connection therewith that are not applied to prepay the Loans or
reduce the Revolving Credit Commitments pursuant to Section 2.04(b)(ii) as a
result of the delivery of a Reinvestment Notice to the Administrative Agents.

“Reinvestment Event” means any Asset Sale or Recovery Event in respect of which
the Borrower has delivered a Reinvestment Notice.

“Reinvestment Notice” means a written notice executed by a Responsible Officer
of the Borrower to the effect that (a) no Event of Default has occurred and is
continuing and (b) the Borrower (directly or indirectly through a Subsidiary)
intends and expects to use all or a specified portion of the Net

 

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Proceeds of a Asset Sale or Recovery Event to acquire or repair assets useful in
its Permitted Business or make any Investments permitted under Section 7.02.

“Reinvestment Prepayment Amount” means, with respect to any Reinvestment Event,
the Reinvestment Deferred Amount relating thereto less any amount expended prior
to the relevant Reinvestment Prepayment Date to acquire or repair assets useful
in the Borrower’s Permitted Business or make any Investments permitted under
Section 7.02.

“Reinvestment Prepayment Date” means, with respect to any Reinvestment Event,
the earlier of (a) the date occurring 365 days after such Reinvestment Event and
(b) the date on which the Borrower shall have determined not to, or shall have
otherwise ceased to, acquire or repair assets useful in the Borrower’s business
or make any Investments permitted under Section 7.02 with all or any portion of
the relevant Reinvestment Deferred Amount; provided that in the event approval
of any Governmental Authority is required to be procured in connection with the
reinvestment of such proceeds, the date under clause (a) above shall be extended
for an additional period (not to exceed 90 days) as necessary to obtain such
approval.

“Replacement Assets” means (a) any property or capital assets (other than
Indebtedness and Capital Stock) to be used by the Borrower or any of its
Restricted Subsidiaries in a Permitted Business or any improvement to any
property or capital assets that are used by the Borrower or any of its
Restricted Subsidiaries in a Permitted Business; (b) Capital Stock of a Person
that is a Restricted Subsidiary of the Borrower or that becomes a Restricted
Subsidiary of the Borrower as a result of the acquisition of such Capital Stock
by the Borrower or another Restricted Subsidiary (including by means of merger,
consolidation or other business combination permitted under this Agreement); or
(c) Capital Stock constituting a minority interest in any Person that at such
time is a Restricted Subsidiary of the Borrower; provided that any such
Restricted Subsidiary described in clauses (b) or (c) above is primarily engaged
in a Permitted Business.

“Reportable Event” means any of the events set forth in Section 4043(c) of
ERISA, other than events for which the 30 day notice period has been waived.

“Request for Credit Extension” means (a) with respect to a Borrowing, conversion
or continuation of Loans, a Committed Loan Notice and (b) with respect to a L/C
Credit Extension, a Letter of Credit Application.

“Required ECF Prepayment Percentage” means (a) 50% or (b) if on the date of the
applicable prepayment, the Leverage Ratio is less than or equal to 3.50 to 1.00,
25%.

“Required Lenders” means, as of any date of determination, Lenders having more
than 50% of the sum of (a) the Total Outstandings (with the aggregate amount of
each Lender’s risk participation and funded participation in Revolving L/C
Obligations being deemed “held” by such Lender for purposes of this definition)
and (b) the aggregate unused Revolving Credit Commitments; provided that the
unused Revolving Credit Commitment of, and the portion of the Total Outstandings
held or deemed held by, any Defaulting Lender shall be excluded for purposes of
making a determination of Required Lenders.

“Required Term L/C Collateral Account Balance” means, at any time, an amount
equal to the Term L/C Issuer Commitments as then in effect; provided that if at
any time the Outstanding Amount of the Term L/C Facility Obligations exceeds (or
would exceed, after the proposed issuance of any Term L/C Facility Letter of
Credit hereunder) the Maximum Percentage of the Term L/C Issuer Commitments as
then in effect, “Required Term L/C Collateral Account Balance” shall at such
time and

 

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at all times thereafter mean an amount equal to 103% of the Term L/C Issuer
Commitments as in effect from time to time.

“Responsible Officer” means the chief executive officer, president, chief
financial officer, treasurer, assistant treasurer, controller, senior vice
president or any vice president of finance of a Loan Party. Any document
delivered hereunder that is signed by a Responsible Officer of a Loan Party
shall be conclusively presumed to have been authorized by all necessary
corporate, partnership and/or other action on the part of such Loan Party and
such Responsible Officer shall be conclusively presumed to have acted on behalf
of such Loan Party.

“Restricted Asset” means an asset that is subject (or the owner of which is
subject) to a legal or contractual restriction that prevents the owner from
subjecting such asset to a Collateral Document.

“Restricted Payment” means any of the following:

(a) any dividend or other payment or distribution on account of the Borrower’s
Equity Interests (including, without limitation, any payment in connection with
any merger or consolidation involving the Borrower) or to the direct or indirect
holders of the Borrower’s Equity Interests in their capacity as such (other than
dividends or distributions payable in Equity Interests (other than Disqualified
Stock) of the Borrower);

(b) any purchase, redemption, or other acquisition or retirement for value
(including, without limitation, in connection with any merger or consolidation
involving the Borrower) of any Equity Interests of the Borrower held by any
Person (other than a Restricted Subsidiary of the Borrower); or

(c) any payment on or with respect to, or any purchase, redemption, defeasance,
or other acquisition or retirement for value of any Indebtedness of the Borrower
or any Restricted Subsidiary that is contractually subordinated to the
Obligations (excluding any intercompany Indebtedness between or among the
Borrower and any of its Restricted Subsidiaries and excluding the purchase,
repurchase, or other acquisition of any Subordinated Indebtedness purchased in
anticipation of satisfying a sinking fund obligation, principal installment, or
final maturity, in each case due within one year of the date of acquisition),
except a payment of interest or principal at the Stated Maturity thereof;

provided that, for clarification, no payment or transfer to a Restricted
Subsidiary shall be a Restricted Payment.

“Restricted Subsidiary” means (a) with respect to the Borrower, each Subsidiary
of the Borrower that is not an Unrestricted Subsidiary and (b) with respect to
the Parent Guarantor, each Subsidiary of the Parent Guarantor other than the
Borrower, its Subsidiaries and any Excluded Parent Subsidiaries. As of the
Closing Date, all of the Borrower’s Subsidiaries shall be deemed to be
Restricted Subsidiaries of the Borrower. Unless otherwise specified, all
references in this Agreement to Restricted Subsidiaries shall be to Restricted
Subsidiaries of the Borrower.

“Revolving Credit Borrowing” means a borrowing consisting of simultaneous
Revolving Credit Loans of the same Type and, in the case of Eurodollar Rate
Loans, having the same Interest Period made by each of the Revolving Credit
Lenders pursuant to Section 2.01(a).

 

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“Revolving Credit Commitment” means, as to each Revolving Credit Lender, its
obligation to (a) make Revolving Credit Loans to the Borrower pursuant to
Section 2.01(a) and (b) purchase participations in Revolving L/C Obligations, in
an aggregate principal or face amount at any one time outstanding not to exceed
the amount set forth opposite such Lender’s name on Schedule 2.01 under the
caption “Revolving Credit Commitment” or in the Assignment and Assumption or a
Joinder Agreement entered into under Section 2.13 pursuant to which such Lender
becomes a party hereto, as applicable, as such amount may be adjusted from time
to time in accordance with this Agreement. The initial aggregate amount of the
Revolving Credit Commitments is $470,000,000.

“Revolving Credit Facility” means, at any time, the aggregate amount of the
Revolving Credit Lenders’ Revolving Credit Commitments at such time.

“Revolving Credit Lender” means, at any time, any Lender that has a Revolving
Credit Commitment at such time.

“Revolving Credit Loan” means a loan by a Revolving Credit Lender to the
Borrower under Section 2.01(a).

“Revolving Credit Note” means a promissory note of the Borrower payable to any
Revolving Credit Lender, substantially in the form of Exhibit B-1, evidencing
the aggregate indebtedness of the Borrower to such Revolving Credit Lender
resulting from the Revolving Credit Loans made by such Revolving Credit Lender.

“Revolving Credit Reduction Amount” has the meaning specified in
Section 2.04(b)(vi).

“Revolving Credit Termination Date” means the earlier of (a) April 19, 2009 and
(b) the date of termination in whole of the Revolving Credit Commitments and the
Revolving L/C Sublimit pursuant to Section 2.05 or Section 8.02.

“Revolving L/C Advance” means, with respect to each Revolving Credit Lender,
such Revolving Credit Lender’s funding of its participation in any Revolving L/C
Borrowing in accordance with its Pro Rata Share.

“Revolving L/C Borrowing” means an extension of credit resulting from a drawing
under any Revolving Letter of Credit which has not been reimbursed on the date
when made or refinanced as a Revolving Credit Borrowing.

“Revolving L/C Credit Extension” means, with respect to any Revolving Letter of
Credit, the issuance thereof or extension of the expiry date thereof, or the
renewal or increase of the amount thereof.

“Revolving L/C Issuer” means Citibank and JPMCB, each in its capacity as issuer
of Revolving Letters of Credit hereunder, any successor issuer (under
Section 2.03(a)(iv) or otherwise) of Revolving Letters of Credit hereunder, or
any other Revolving Credit Lender that agrees, upon the request of the Borrower
and with the consent of the Administrative Agents, to become a Revolving L/C
Issuer and to issue Revolving Letters of Credit hereunder on the terms and
conditions set forth herein. As used herein with respect to any Revolving Letter
of Credit, the term “Revolving L/C Issuer” shall refer to the Revolving L/C
Issuer of such Revolving Letter of Credit.

“Revolving L/C Issuer Sublimit” means, with respect to any Revolving L/C Issuer,
the amount agreed in writing by such Revolving L/C Issuer and the Borrower from
time to time.

 

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“Revolving L/C Obligations” means, as at any date of determination, the
aggregate undrawn amount of all outstanding Revolving Letters of Credit plus the
aggregate of all Revolving Unreimbursed Amounts, including all Revolving L/C
Borrowings.

“Revolving L/C Sublimit” means, at any time, the aggregate amount of the
Revolving Credit Commitments of the Revolving Credit Lenders.

“Revolving Letter of Credit” means (a) any Existing Revolving Letter of Credit
and (b) any other letter of credit issued under the Revolving Credit Facility on
or after the Closing Date. A Revolving Letter of Credit may be a commercial
letter of credit or a standby letter of credit.

“Revolving Letter of Credit Expiration Date” means the day that is five Business
Days prior to the Revolving Credit Termination Date.

“Revolving Prepayment Amount” has the meaning specified in Section 2.04(b)(vi).

“Revolving Unreimbursed Amount” has the meaning specified in Section 2.03(c)(i).

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc. and any successor thereto that is a nationally recognized rating
agency.

“SEC” means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.

“Section 7.01 Counterparty” has the meaning specified in Section 7.01(q).

“Secured Debt/EBITDA Ratio” means, at any date of determination, the ratio of
(a) Consolidated Secured Indebtedness at such date to (b) consolidated EBITDA of
the Borrower Group for the most recently ended Measurement Period. In addition,
when required to make a pro forma calculation of this ratio under this
Agreement:

(i) acquisitions that have been made by the Borrower or any of its Restricted
Subsidiaries, including through mergers or consolidations, or any Person or any
of its Restricted Subsidiaries acquired by the Borrower or any of its Restricted
Subsidiaries, and including any related financing transactions and including
increases in ownership of Restricted Subsidiaries, during the relevant
Measurement Period or subsequent to such period and on or prior to the relevant
date of determination shall be given pro forma effect (in accordance with
Regulation S-X under the Securities Act) as if they had occurred on the first
day of the relevant Measurement Period and EBITDA and Consolidated Secured
Indebtedness for such reference period shall be calculated on a pro forma basis;

(ii) the EBITDA and Consolidated Secured Indebtedness attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses (and ownership interests therein) disposed of prior to the
relevant date of determination, shall be excluded;

(iii) any Person that is a Restricted Subsidiary on the relevant date of
determination shall be deemed to have been a Restricted Subsidiary at all times
during the relevant Measurement Period;

 

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(iv) any Person that is not a Restricted Subsidiary on relevant date of
determination shall be deemed not to have been a Restricted Subsidiary at any
time during the relevant Measurement Period; and

(v) in the case of a pro forma calculation made in connection with
(i) Section 7.02(r), the investment shall be given pro forma effect in the
calculation of EBITDA as if it had been made on the first day of the Measurement
Period and (ii) Section 7.15(g), the prepayment, redemption, repurchase,
defeasance or other unscheduled payment shall be given pro forma effect in the
calculation of Consolidated Secured Indebtedness as if it had been made on the
first day of the Measurement Period.

For purposes of this definition, whenever pro forma effect is to be given to an
acquisition or investment and the amount of income or earnings relating thereto,
the pro forma calculations shall be determined in good faith by a Responsible
Officer of the Borrower. Any such pro forma calculations may include operating
expense reductions for such period resulting from the acquisition which is being
given pro forma effect that would be permitted pursuant to Article 11 of
Regulation S-X under the Securities Act.

“Secured Obligations” means (a) in respect of any Collateral covered by the
Shared Security Agreement and the Shared Mortgages, the Shared Secured
Obligations and (b) in respect of any Collateral covered by the Non-Shared
Security Agreement and the Non-Shared Mortgages, the Non-Shared Secured
Obligations.

“Secured Parties” means (a) in respect of any Collateral covered by the Shared
Security Agreement and the Shared Mortgages, the Shared Secured Parties and
(b) in respect of any Collateral covered by the Non-Shared Security Agreement
and the Non-Shared Mortgages, the Non-Shared Secured Parties.

“Securities Act” means the Securities Act of 1933, as amended.

“Shared Collateral Documents” means the Shared Security Agreement and the Shared
Mortgages.

“Shared Grantors” means the Borrower and its Restricted Subsidiaries (other than
(a) those listed on Schedule II and (b) any Restricted Subsidiary of the Parent
Guarantor or the Borrower that is a controlled foreign corporation within the
meaning of Section 957 of the Code).

“Shared Mortgages” means each deed of trust, trust deed, mortgage, leasehold
mortgage and leasehold deed of trust listed as “Shared Mortgages” on Schedule I
in effect on the Closing Date, and each other deed of trust, trust deed,
mortgage, leasehold mortgage and leasehold deed of trust, substantially in the
form of Exhibit F (which form, in the case of any such deed of trust, trust
deed, leasehold mortgage or leasehold deed of trust shall be modified to reflect
such changes as the Borrower and the Administrative Agents shall agree)
delivered by a Shared Grantor that is a Mortgagor pursuant to Section 6.13.

“Shared Secured Obligations” means (a) the Non-Shared Secured Obligations and
(b) all obligations of the Borrower in respect of other Priority Lien Debt.

“Shared Secured Parties” means (a) the Non-Shared Secured Parties and (b) the
agents, lenders, holders or purchasers under any other Priority Lien Debt.

 

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“Shared Security Agreement” means the Amended and Restated Shared Security
Agreement, dated as of April 19, 2006, among the Borrower, the other grantors
signatory thereto and the Collateral Trustees substantially in the form of
Exhibit E-1, together with each other security agreement and security agreement
supplement delivered by the Shared Grantors pursuant to Section 6.12.

“Shared Security Agreement Supplement” has the meaning specified in
Section 20(b) of the Shared Security Agreement.

“Sithe” means Sithe/Independence Power Partners, L.P.

“Sithe Contribution” means a transaction pursuant to which the Parent Guarantor
shall, on or after consummation of the Sithe Holdco Contribution, cause
Subsidiaries (the “Sithe 51% Holding Companies”) of the Parent Guarantor
collectively owning the remaining Equity Interests in Sithe not already owned by
the Sithe 49% Holding Companies, to be contributed or otherwise transferred to
the Borrower, whereupon (w) the Sithe 51% Holding Companies shall be wholly
owned Subsidiaries of the Borrower and shall be designated as Restricted
Subsidiaries of the Borrower in accordance with this Agreement, (x) the Sithe
49% Holding Companies and the Sithe 51% Holding Companies shall collectively
directly own 100% of the Equity Interests in Sithe, (y) the Borrower or the
applicable Subsidiary or Subsidiaries thereof shall, to the extent they are not
contractually or legally prohibited from so doing, grant, pursuant to
documentation satisfactory to the Administrative Agents, valid and perfected
Liens on and in 100% of the Equity Interests in the Sithe 51% Holding Companies,
securing, in favor of the Collateral Trustees for the benefit of the Shared
Secured Parties, the payment of all the Obligations of the Borrower under the
Loan Documents and (z) if it shall not already be such, Sithe shall be an
Unrestricted Subsidiary.

“Sithe Holdco Contribution” means a transaction pursuant to which the Parent
Guarantor shall cause Subsidiaries (the “Sithe 49% Holding Companies”) of the
Parent Guarantor collectively owning at least 49% of the voting Equity Interests
in Sithe to be contributed or otherwise transferred to the Borrower, whereupon
(a) the Sithe 49% Holding Companies shall be wholly owned Subsidiaries of the
Borrower and shall be designated as Restricted Subsidiaries in accordance with
this Agreement, (b) the Sithe 49% Holding Companies shall directly own at least
49% of the voting Equity Interests in Sithe and (c) if the Borrower shall
thereupon indirectly own at least a majority of the outstanding Equity Interests
in Sithe, Sithe shall be an Unrestricted Subsidiary.

“Sithe 49% Holdco Pledge” means, whether or not the Sithe Holdco Contribution or
Sithe Contribution shall have been consummated, the grant by the Parent
Guarantor or the applicable Subsidiary or Subsidiaries thereof, pursuant to
documentation satisfactory to the Administrative Agents, of valid and perfected
Liens on and in 100% of the Equity Interests in the Sithe 49% Holding Companies
and in the rights of the holder or holders of 100% of the Equity Interests in
Sithe to receive distributions on Equity Interests in Sithe permitted to be made
under Section 6.18 of the Sithe Indenture, securing, in favor of the Collateral
Trustees and/or Collateral Agent, as applicable, for the benefit of the Shared
Secured Parties and/or Non-Shared Secured Parties, as applicable, the payment of
all the Obligations of the Borrower under the Loan Documents.

“Sithe 49% Holding Companies” has the meaning specified in the definition of
“Sithe Contribution”.

“Sithe Indenture” means the Trust Indenture, dated as of January 1, 1993, as
supplemented January 1, 1993 and October 23, 1993, among Sithe/Independence
Funding Corporation, Sithe and The Bank of New York (as successor in interest to
IBJ Schroder Bank & Trust Company), as trustee.

 

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“Sithe Subordinated Indebtedness” means Indebtedness (in an aggregate principal
amount not exceeding the amount thereof outstanding on the Closing Date, plus
any interest thereon converted to principal from time to time thereafter)
arising under that certain Amended and Restated Base Gas Sales Agreement dated
October 26, 1992 between Enron Power Services, Inc. and Sithe, as amended.

“Solvent” and “Solvency” mean, with respect to any Person on any date of
determination, that on such date (a) the fair value of the property of such
Person is greater than the total amount of liabilities, including, without
limitation, contingent liabilities that are probable and estimatable, of such
Person, (b) the present fair salable value of the assets of such Person is not
less than the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured, taking into account the
possibility of refinancing such obligations and selling assets, (c) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person’s ability to pay such debts and liabilities as
they mature taking into account the possibility of refinancing such obligations
and selling assets and (d) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
such Person’s property would constitute an unreasonably small capital. The
determination of whether a Person is “Solvent” and the facts and circumstances
relevant thereto (including the amount of contingent and actual liabilities) on
the applicable date shall be computed in the light of all the facts and
circumstances existing at such time. For clarification, no preferred stock or
Equity Interests, including any obligation to redeem preferred stock whether
before or after the scheduled redemption date, shall be considered liabilities
for purposes of this definition, regardless of whether they are treated as
liabilities under GAAP.

“SPC” has the meaning specified in Section 11.07(g).

“Stated Maturity” means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.

“Subject Indebtedness” means any Indebtedness incurred pursuant to
Sections 7.03(b)(xii) and 7.03(b)(xvi) the Net Proceeds of which are required to
be applied in accordance with Section 2.04(b)(iii).

“Subordinated Indebtedness” means any Indebtedness of any Person which is
subordinated to any other obligations of such Person.

“Subordinated Obligations” has the meaning specified in Section 10.06.

“Subsidiary” of a Person means a corporation, partnership, joint venture,
limited liability company or other business entity, in each case, of which a
majority of the shares of securities or other interests having ordinary voting
power for the election of directors or other governing body (other than
securities or interests having such power only by reason of the happening of a
contingency) are at the time beneficially owned by such Person. Unless otherwise
specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall
refer to a Subsidiary or Subsidiaries of the Borrower.

“Subsidiary Guarantors” means (a) each of the Restricted Subsidiaries of the
Parent Guarantor or the Borrower, as the case may be, listed on the signature
pages hereof and (b) each of the Additional Subsidiary Guarantors.

 

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“Supplemental Collateral Agent” has the meaning specified in Section 9.13.

“Swap Contract” means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, cap transactions, floor transactions,
collar transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, or any other similar transactions or any
combination of any of the foregoing (including any options to enter into any of
the foregoing), whether or not any such transaction is governed by or subject to
any master agreement, (b) any and all transactions of any kind, and the related
confirmations, which are subject to the terms and conditions of, or governed by,
any form of master agreement published by the International Swaps and
Derivatives Association, Inc., any International Foreign Exchange Master
Agreement, or any other similar master agreement, together with any related
schedules, and including any such obligations or liabilities thereunder, and
(c) commercial or trading agreements, each with respect to, or involving the
purchase, transmission, distribution, sale, lease or hedge of, any energy,
generation capacity or fuel, or any other energy related commodity or service,
price or price indices for any such commodities or services or any other similar
derivative agreements, and any other similar agreements.

“Synthetic Lease Obligations” means all monetary obligations of a Person under
(a) a so-called synthetic, off-balance sheet or tax retention lease or (b) an
agreement for the use or possession of any property (whether real, personal or
mixed) creating obligations which do not appear on the balance sheet of such
Person, but which, upon the insolvency or bankruptcy of such Person, would be
characterized as Indebtedness of such Person (without regard to accounting
treatment).

“Taxes” has the meaning specified in Section 3.01(a).

“Tax Payments” has the meaning specified in the definition of “Permitted
Payments to Parents”.

“Term L/C Collateral Account” means one or more Cash Collateral Accounts or
securities accounts established pursuant to, and subject to the terms of,
Section 2.03(k).

“Term L/C Collateral Account Balance” means, at any time, the aggregate amount
on deposit in the Term L/C Collateral Account.

“Term L/C Credit Extension” means, with respect to any Term L/C Facility Letter
of Credit, the issuance thereof or extension of the expiry date thereof, or the
renewal or increase of the amount thereof.

“Term L/C Expiration Date” means the day that is five Business Days prior to the
Term L/C Facility Term Loan Maturity Date.

“Term L/C Facility” means, at any time, the aggregate Term L/C Facility Term
Loans of all Term L/C Facility Lenders at such time.

“Term L/C Facility Borrowing” means a borrowing consisting of simultaneous Term
L/C Facility Term Loans of the same Type and, in the case of Eurodollar Rate
Loans, having the same Interest Period made by each of the Term L/C Facility
Lenders pursuant to Section 2.01(b).

 

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“Term L/C Facility Commitment” means, as to each Term L/C Facility Lender, its
obligation to make a Term L/C Facility Term Loan in a principal amount equal to
the amount set forth opposite such Lender’s name on Schedule 2.01 under the
caption “Term L/C Facility Commitment” (or in the Assignment and Assumption
pursuant to which such Lender becomes a party hereto, as applicable), as such
amount may be adjusted from time to time in accordance with this Agreement. The
aggregate amount of the Term L/C Facility Commitments is $200,000,000 as of the
Closing Date.

“Term L/C Facility Lender” means, at any time, any Lender that has a Term L/C
Facility Commitment or holds a Term L/C Facility Term Loan at such time.

“Term L/C Facility Letter of Credit” means any letter of credit issued under the
Term L/C Facility. A Term L/C Facility Letter of Credit may be a commercial
letter of credit or a standby letter of credit.

“Term L/C Facility Obligations” means, as at any date of determination, the
aggregate undrawn amount of all outstanding Term L/C Facility Letters of Credit
plus the aggregate of all Term L/C Facility Unreimbursed Amounts.

“Term L/C Facility Prepayment Amount” has the meaning specified in
Section 2.04(b)(vi).

“Term L/C Facility Term Loan” means a loan by a Term L/C Facility Lender to the
Borrower under Section 2.01(b).

“Term L/C Facility Term Loan Maturity Date” means January 31, 2012.

“Term L/C Facility Term Note” means a promissory note of the Borrower payable to
any Term L/C Facility Term Lender, substantially in the form of Exhibit B-2,
evidencing aggregate indebtedness of the Borrower to such Term L/C Facility Term
Lender resulting from the Term L/C Facility Term Loan made or held by such Term
L/C Facility Term Lender.

“Term L/C Facility Unreimbursed Amount” has the meaning specified in
Section 2.03(c)(i).

“Term L/C Issuer” means, at any time, JMPCB, in its capacity as issuer of Term
L/C Facility Letters of Credit hereunder, any successor issuer (under
Section 2.03(a)(iv) or otherwise) of Term L/C Facility Letters of Credit
hereunder, or any other Lender that agrees, upon the request of the Borrower, to
become a Term L/C Issuer and to issue Term L/C Facility Letters of Credit
hereunder on the terms and conditions set forth herein. As used herein with
respect to any Term L/C Facility Letter of Credit, the term “Term L/C Issuer”
shall refer to the Term L/C Issuer of such Term L/C Facility Letter of Credit.

“Term L/C Issuer Commitment” means, as to each Term L/C Issuer, its obligation
to issue Term L/C Facility Letters of Credit, in an aggregate face amount at any
one time outstanding not to exceed its Term L/C Issuer Sublimit, as such amount
may be adjusted from time to time in accordance with this Agreement, but in no
event exceeding in the aggregate for all Term L/C Issuers $200,000,000. The
aggregate amount of the Term L/C Issuer Commitments is $200,000,000 as of the
Closing Date.

“Term L/C Issuer Sublimit” means, with respect to any Term L/C Issuer, the
amount agreed in writing by such Term L/C Issuer and the Borrower from time to
time.

 

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“Third Party Risk Management” has the meaning specified in Section 7.16.

“Tolling Agreements” means the agreements described on Schedule III.

“Total Outstandings” means the aggregate Outstanding Amount of all Loans and all
L/C Obligations.

“Total Indebtedness” means, as of any date of determination and without
duplication, for the Borrower Group on a consolidated basis, the sum of (a) the
outstanding principal amount of (i) all obligations, whether current or
long-term, for borrowed money (including Obligations hereunder) and (ii) all
obligations evidenced by bonds, debentures, notes, loan agreements or other
similar instruments, (b) all direct payment obligations arising under bankers’
acceptances and similar instruments, (c) all accounts payable to pay the
deferred purchase price of property or services incurred after the date hereof
that in the aggregate, are greater than $20,000,000, more than 90 days past due,
and not being contested in good faith, (d) all Capital Lease Obligations and
Attributable Indebtedness, in each case in respect of obligations of the type
described in clauses (a) and (b)(ii) of the definition of “Off-Balance Sheet
Obligations”, (e) all Guarantees with respect to outstanding Indebtedness of the
types specified in clauses (a) through (d) above of Persons other than any
member of the Borrower Group, and (f) all Indebtedness of the types referred to
in clauses (a) through (e) above of any Pass Through Liability Entity, in each
case that is outstanding on such date to the extent it is secured by a Lien on
any property of any member of the Borrower Group (other than a JV Lien) at such
time; provided that there shall be excluded from “Total Indebtedness” (i) any
Excluded Obligation, (ii) any obligations with respect to Equity Interests
(whether or not recorded as a liability under GAAP), (iii) all obligations in
respect of letters of credit, (iv) any completion guaranties or similar
guaranties that a project perform as planned, (v) Indebtedness among or between
the Borrower and/or any of its Subsidiaries, (vi) any items relating to
Discontinued Business Operations, (vii) amounts owing under Permitted Contracts
or Netting Agreements, (viii) any loans from an insurance company or insurance
premium finance company solely for the purpose of financing all or any portion
of the premium on any insurance policy maintained by the Parent Guarantor, the
Borrower or its Subsidiaries with respect to properties and business of the
Borrower and its Subsidiaries, but only to the extent such loans are consistent
with industry practice and (ix) the Term L/C Facility Term Loans.

“TransCanada Term L/C Facility Letter of Credit” means a Canadian Dollar
denominated Term L/C Facility Letter of Credit issued hereunder for the account
of TransCanada Pipelines Limited in a face amount not to exceed the Dollar
Equivalent (at the time of issuance) of $6,000,000, it being understood and
agreed that not more than one such Term L/C Facility Letter of Credit may be
outstanding at any time.

“Type” means, with respect to a Loan, its character as a Base Rate Loan or a
Eurodollar Rate Loan.

“United States” and “U.S.” mean the United States of America.

“Unreimbursed Amount” has the meaning specified in Section 2.03(c)(i).

“Unrestricted Subsidiary” means each Excluded Subsidiary and any Subsidiary of
the Borrower that is designated by the Board of Directors of the Borrower as an
Unrestricted Subsidiary pursuant to a Board resolution, but only to the extent
that such Subsidiary:

(a) has no Indebtedness other than Non-Recourse Debt;

 

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(b) except as permitted pursuant to Section 7.08 (whether by virtue of clause
(b) of the definition of “Affiliate Transaction” or otherwise), is not party to
any agreement, contract, arrangement or understanding with the Borrower or any
of its Restricted Subsidiaries unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to the Borrower or such
Restricted Subsidiary than those that might be obtained at the time (or might
have been obtained at the relevant time) from Persons who are not Affiliates of
the Borrower;

(c) is a Person with respect to which neither the Borrower nor any of its
Restricted Subsidiaries has any direct or indirect obligation (i) to subscribe
for additional Equity Interests or (ii) to maintain or preserve such Person’s
financial condition or to cause such Person to achieve any specified levels of
operating results; and

(d) has not guaranteed or otherwise directly or indirectly provided credit
support for any Indebtedness of the Parent Guarantor, the Borrower or any of
their respective Restricted Subsidiaries.

Any designation of a Subsidiary of the Borrower as an Unrestricted Subsidiary
will be evidenced to the Administrative Agents by filing with the Administrative
Agents a certified copy of the Board Resolution giving effect to such
designation and a certificate of a Responsible Officer of the Borrower
certifying that such designation complied with the preceding conditions and was
permitted by Section 7.06. If, at any time, any Unrestricted Subsidiary would
fail to meet the preceding requirements as an Unrestricted Subsidiary, it will
thereafter cease to be an Unrestricted Subsidiary for purposes of this Agreement
and the other Loan Documents and any Indebtedness of such Subsidiary will be
deemed to be incurred by a Restricted Subsidiary of the Borrower as of such date
and, if such Indebtedness is not permitted to be incurred as of such date
pursuant to Section 7.03, the Borrower will be in default of such covenant. The
Board of Directors of the Borrower may at any time designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided that such designation will be
deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the
Borrower of any outstanding Indebtedness of such Unrestricted Subsidiary and
such designation will only be permitted if (i) such Indebtedness is permitted
pursuant to Section 7.03; and (ii) no Default would be in existence following
such designation. Upon any such designation of an Unrestricted Subsidiary as a
Restricted Subsidiary, the redesignated Subsidiary will become a Subsidiary
Guarantor pursuant to and if required by Section 6.12; provided that any
redesignated Restricted Subsidiary that is not a Material Subsidiary need not
become a Subsidiary Guarantor until such time as it becomes a Material
Subsidiary. Notwithstanding anything herein to the contrary, no designation of a
Subsidiary as an Unrestricted Subsidiary shall be permitted if, after giving
effect thereto (x) the sum of the total assets of all Unrestricted Subsidiaries
(other than Sithe if it shall then be such) would exceed 10% of the consolidated
assets of the Borrower and its Subsidiaries and (y) the sum of the EBITDA of all
Unrestricted Subsidiaries (other than Sithe if it shall then be such)
(determined for each such Unrestricted Subsidiary on a unconsolidated basis in
accordance with the definition of “EBITDA” as if it applied to any Subsidiary)
for the most recently ended Measurement Period would exceed 10% of EBITDA of the
Borrower for such period.

“Vermilion Lease” means the lease contemplated by the Coal Transloading and
Trucking Agreement dated July 12, 2005 between Dynegy Midwestern Generation Inc.
and Vermilion Transmodal LLC.

“Weighted Average Life to Maturity” means, when applied to any Indebtedness at
any date, the number of years obtained by dividing: (a) the sum of the products
obtained by multiplying (i) the amount of each then remaining installment,
sinking fund, serial maturity or other required payments of principal, including
payment at final maturity, in respect of the Indebtedness, by (ii) the number of
years

 

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(calculated to the nearest one-twelfth) that shall elapse between such date and
the making of such payment; by (b) the then outstanding principal amount of such
Indebtedness.

“Working Capital” means, at any date, the excess of (a) the sum of all amounts
(other than cash, cash equivalents and bank overdrafts) that would, in
conformity with GAAP, be set forth opposite the caption “total current assets”
(or any like caption) on a consolidated balance sheet of the Borrower and the
Restricted Subsidiaries at such date over (b) the sum of all amounts that would,
in conformity with GAAP, be set forth opposite the caption “total current
liabilities” (or any like caption) on a consolidated balance sheet of the
Borrower and the Restricted Subsidiaries on such date, but excluding (i) the
current portion of any long-term Indebtedness, (ii) without duplication of
clause (i) above, all Indebtedness consisting of Loans and L/C Obligations to
the extent otherwise included therein and (iii) the current portion of deferred
income taxes.

1.02. Other Interpretive Provisions. With reference to this Agreement and each
other Loan Document, unless otherwise specified herein or in such other Loan
Document:

(a) The meanings of defined terms are equally applicable to the singular and
plural forms of the defined terms.

(i) The words “herein,” “hereto,” “hereof” and “hereunder” and words of similar
import when used in any Loan Document shall refer to such Loan Document as a
whole and not to any particular provision thereof.

(ii) Article, Section, Exhibit and Schedule references are to the Loan Document
in which such reference appears.

(iii) The term “including” is by way of example and shall be deemed “without
limitation” wherever used.

(iv) The term “documents” includes any and all instruments, documents,
agreements, certificates, notices, reports, financial statements and other
writings, however evidenced, whether in physical or electronic form.

(b) In the computation of periods of time from a specified date to a later
specified date, the word “from” means “from and including;” the words “to” and
“until” each mean “to but excluding;” and the word “through” means “to and
including.”

(c) Section headings herein and in the other Loan Documents are included for
convenience of reference only and shall not affect the interpretation of this
Agreement or any other Loan Document.

1.03. Accounting Terms.

(a) All accounting terms not specifically or completely defined herein shall be
construed in conformity with, and all financial data (including financial ratios
and other financial calculations) required to be submitted pursuant to this
Agreement shall be prepared in conformity with, GAAP, except as otherwise
specifically prescribed herein.

(b) If at any time any change in GAAP or in the application of GAAP would affect
the computation of any financial ratio or other financial covenant set forth in
any Loan Document, and either the Borrower or the Required Lenders shall so
request, the Administrative Agents, the Lenders and the

 

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Borrower shall negotiate in good faith to amend (subject to the approval of the
Required Lenders) such ratio or covenant to preserve the original intent thereof
in light of such change in (or in the application of) GAAP; provided that, until
so amended, (i) such ratio or financial covenant shall continue to be computed
in accordance with GAAP prior to such change and (ii) the Borrower shall provide
to the Payment Agent financial statements and other documents required under
this Agreement or as reasonably requested hereunder setting forth a
reconciliation between calculations of such ratio or financial covenant made
before and after giving effect to such change in (or in the application of) GAAP
as is reasonably necessary to demonstrate compliance (or non-compliance) with
such ratio or financial covenant.

1.04. Rounding. Any financial ratios required to be maintained by the Borrower
pursuant to this Agreement shall be calculated by dividing the appropriate
component by the other component, carrying the result to one place more than the
number of places by which such ratio is expressed herein and rounding the result
up or down to the nearest number (with a rounding-up if there is no nearest
number).

1.05. References to Agreements, Laws and Persons. Unless otherwise expressly
provided herein, (a) references to Organizational Documents, agreements
(including the Loan Documents) and other contractual instruments shall be deemed
to include all subsequent amendments, restatements, extensions, supplements and
other modifications thereto, but only to the extent that such amendments,
restatements, extensions, supplements and other modifications are not prohibited
by any Loan Document; and (b) references to any Law shall include all statutory
and regulatory provisions consolidating, amending, replacing, supplementing or
interpreting such Law. A reference to any Person includes the successors and
assigns of such Person, but such reference shall not increase, decrease or
otherwise modify in any way the provisions of this Agreement governing the
assignment of rights and obligations under or the binding effect of any such
provision of this Agreement or any other Loan Document.

1.06. Times of Day. Unless otherwise specified, all references herein to times
of day shall be references to eastern time (daylight or standard, as
applicable).

1.07. Letter of Credit Amounts. Unless otherwise specified, all references
herein to the amount of a Letter of Credit at any time shall be deemed to mean
the maximum face amount of such Letter of Credit.

1.08. Currency Equivalents Generally. Any amount specified in this Agreement
(other than in Articles II, IX and XI) or any of the other Loan Documents to be
in Dollars shall also include the equivalent of such amount in any currency
other than Dollars, such equivalent amount to be determined at the rate of
exchange quoted by Citibank in New York at the close of business on the Business
Day immediately preceding any date of determination thereof, to prime banks in
New York, New York for the spot purchase in the New York foreign exchange market
of such amount in Dollars with such other currency.

ARTICLE II

THE COMMITMENTS AND CREDIT EXTENSIONS

2.01. The Loans.

(a) The Revolving Credit Loans. Subject to the terms and conditions set forth
herein, each Revolving Credit Lender severally agrees to make loans to the
Borrower from time to time, on any Business Day during the Availability Period,
in an aggregate amount not to exceed at any time outstanding the amount of such
Lender’s Revolving Credit Commitment; provided that after giving effect

 

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to any Revolving Credit Borrowing, the sum of the aggregate Outstanding Amount
of the Revolving Credit Loans of any Lender plus such Lender’s Pro Rata Share of
the Outstanding Amount of all Revolving L/C Obligations shall not exceed such
Lender’s Revolving Credit Commitment. Within the limits of each Lender’s
Revolving Credit Commitment, and subject to the other terms and conditions
hereof, the Borrower may borrow under this Section 2.01(a), prepay under
Section 2.04, and reborrow under this Section 2.01(a). Revolving Credit Loans
may be Base Rate Loans or Eurodollar Rate Loans, as further provided herein.

(b) The Term L/C Facility Term Loans. Subject to the terms and conditions set
forth herein, each Term L/C Facility Lender severally agrees to make a term loan
to the Borrower on the Closing Date in an amount equal to the Term L/C Facility
Commitment of such Term L/C Facility Lender. Amounts borrowed under this
Section 2.01(b) and repaid or prepaid may not be reborrowed. Term L/C Facility
Term Loans may be Base Rate Loans or Eurodollar Rate Loans, as further provided
herein.

2.02. Borrowings, Conversions and Continuations of Loans.

(a) Each Borrowing, each conversion of Loans from one Type to the other, and
each continuation of Eurodollar Rate Loans shall be made upon the Borrower’s
irrevocable notice to the Payment Agent, which may be given by telephone. Each
such notice must be received by the Payment Agent not later than 12:00 noon
(eastern time) (i) three Business Days prior to the requested date of any
Borrowing of, conversion to or continuation of Eurodollar Rate Loans or of any
conversion of Eurodollar Rate Loans to Base Rate Loans and (ii) on the requested
date of any Borrowing of Base Rate Loans. Each telephonic notice by the Borrower
pursuant to this Section 2.02(a) must be confirmed promptly by delivery to the
Payment Agent of a written Committed Loan Notice, appropriately completed and
signed by a Responsible Officer of the Borrower; provided that upon request by
the Payment Agent, such confirmation shall be received prior to the date of the
related Borrowing (but shall not be required to be received prior to the date
referenced in the previous sentence had the request not been made by telephone).
Each Borrowing of, conversion to or continuation of Eurodollar Rate Loans shall
be in a principal amount of $10,000,000 or a whole multiple of $1,000,000 in
excess thereof. Except as provided in Section 2.03(c), each Borrowing of or
conversion to Base Rate Loans shall be in a principal amount of $5,000,000 or a
whole multiple of $1,000,000 in excess thereof. Each Committed Loan Notice
(whether telephonic or written) shall specify (i) whether the Borrower is
requesting a Revolving Credit Borrowing or Term L/C Facility Borrowing, a
conversion of Revolving Credit Loans or Term L/C Facility Loans from one Type to
the other, or a continuation of Eurodollar Rate Loans, (ii) the requested date
of the Borrowing, conversion or continuation, as the case may be (which shall be
a Business Day), (iii) the principal amount of Loans to be borrowed, converted
or continued, (iv) the Type of Loans to be borrowed or to which existing Loans
are to be converted, and (v) if applicable, the duration of the Interest Period
with respect thereto. If the Borrower fails to specify a Type of Loan in a
Committed Loan Notice or if the Borrower fails to give a timely notice
requesting a conversion or continuation, then the applicable Loans shall be made
as, or converted to, Base Rate Loans. Any such automatic conversion to Base Rate
Loans shall be effective as of the last day of the Interest Period then in
effect with respect to the applicable Eurodollar Rate Loans. If the Borrower
requests a Borrowing of, conversion to, or continuation of Eurodollar Rate Loans
in any such Committed Loan Notice, but fails to specify an Interest Period, it
will be deemed to have specified an Interest Period of one month.

(b) Following receipt of a Committed Loan Notice, the Payment Agent shall
promptly notify each Lender under the applicable Facility of the amount of its
Pro Rata Share of the applicable Loans, and if no timely notice of a conversion
or continuation is provided by the Borrower, the Payment Agent shall notify each
Lender of the details of any automatic conversion to Base Rate Loans described
in Section 2.02(a). In the case of a Borrowing, each Lender under the applicable
Facility shall make the

 

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amount of its Loan available to the Payment Agent in immediately available funds
at the Payment Agent’s Office not later than 1:00 p.m. (eastern time) on the
Business Day specified in the applicable Committed Loan Notice. Upon
satisfaction of the applicable conditions set forth in Section 4.02 (and, if
such Borrowing is the initial Credit Extension, Section 4.01), the Payment Agent
shall make all funds so received available to the Borrower in like funds as
received by the Payment Agent either by (i) crediting the account of the
Borrower on the books of the Person serving as the Payment Agent with the amount
of such funds or (ii) wire transfer of such funds, in each case in accordance
with instructions provided to (and reasonably acceptable to) the Payment Agent
by the Borrower.

(c) Except as otherwise provided herein, a Eurodollar Rate Loan may be continued
or converted only on the last day of an Interest Period for such Eurodollar Rate
Loan. During the existence of an Event of Default, no Loans may be requested as,
converted to or continued as Eurodollar Rate Loans without the consent of the
Required Lenders.

(d) The Payment Agent shall promptly notify the Borrower and the Lenders of the
interest rate applicable to any Interest Period for Eurodollar Rate Loans upon
determination of such interest rate. The determination of the Eurodollar Rate by
the Payment Agent shall be conclusive in the absence of manifest error. At any
time that Base Rate Loans are outstanding, the Payment Agent shall notify the
Borrower and the Lenders of any change in the Payment Agent’s prime rate used in
determining the Base Rate promptly following the public announcement of such
change.

(e) After giving effect to all Borrowings, all conversions of Loans from one
Type to the other, and all continuations of Loans as the same Type, there shall
not be more than ten Interest Periods in effect.

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

2.03. Letters of Credit.

(a) Revolving L/C Sublimit; Term L/C Facility Letters of Credit.

(i) Subject to the terms and conditions set forth herein, (A) the Revolving L/C
Issuers agree, in reliance upon the agreements of the other Revolving Credit
Lenders set forth in this Section 2.03, (1) from time to time on any Business
Day during the period from the Closing Date until the Revolving Letter of Credit
Expiration Date, to issue Revolving Letters of Credit for the account of the
Borrower (it being understood and agreed that subject to the other terms herein,
the Borrower may obtain for its account Revolving Letters of Credit on behalf of
the Parent Guarantor or any of its Affiliates), and to amend or renew Revolving
Letters of Credit previously issued by it, in accordance with Section 2.03(b),
and (2) to honor drafts under the Letters of Credit; and (B) the Revolving
Credit Lenders severally agree to participate in Revolving Letters of Credit
issued for the account of the Borrower; provided that no Revolving L/C Issuer
shall be obligated to make any Revolving L/C Credit Extension with respect to
any Revolving Letter of Credit, and no Revolving Credit Lender shall be
obligated to participate in any Revolving Letter of Credit if as of the date of
such Revolving L/C Credit Extension, (x) the Total Outstandings under the
Revolving Credit Facility would exceed the aggregate Revolving Credit
Commitments, (y) the sum of the aggregate Outstanding Amount of the Revolving
Credit Loans of any Revolving Credit Lender plus such

 

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Lender’s Pro Rata Share of the Outstanding Amount of all Revolving L/C
Obligations would exceed such Lender’s Revolving Credit Commitment or (z) the
Outstanding Amount of the Revolving L/C Obligations would exceed the Revolving
L/C Sublimit; provided, further, that the Dollar Equivalent of the aggregate
face amount of Revolving Letters of Credit issued by a Revolving L/C Issuer
shall not exceed such Revolving L/C Issuer’s Revolving L/C Issuer Sublimit.

Subject to the terms and conditions set forth herein, the Term L/C Issuers
agree, (1) from time to time on any Business Day during the period from the
Closing Date until the Term L/C Expiration Date, to issue Term L/C Facility
Letters of Credit for the account of the Borrower (it being understood and
agreed that subject to the other terms herein, the Borrower may obtain for its
account Term L/C Facility Letters of Credit on behalf of the Parent Guarantor or
any of its Affiliates), and to amend or renew Term L/C Facility Letters of
Credit previously issued by it, in accordance with Section 2.03(b), and (2) to
honor drafts under the Term L/C Facility Letters of Credit; provided that no
Term L/C Issuer shall be obligated to make any Term L/C Credit Extension with
respect to any Term L/C Facility Letter of Credit if as of the date of such Term
L/C Credit Extension (x) the Outstanding Amount of all Term L/C Facility
Obligations would exceed the aggregate Term L/C Issuer Commitments; (y) the
Outstanding Amount of Term L/C Facility Obligations in respect of Term L/C
Facility Letters of Credit issued by such Term L/C Issuer would exceed such Term
L/C Issuer’s Term L/C Issuer Sublimit; or (z) the Term L/C Collateral Account
Balance shall be less than the Required Term L/C Collateral Account Balance;
provided, further, that the Dollar Equivalent of the aggregate face amount of
Term L/C Facility Letters of Credit issued by a Term L/C Issuer shall not exceed
such Term L/C Issuer’s Term L/C Issuer Sublimit.

Within the foregoing limits, and subject to the terms and conditions hereof, the
Borrower’s ability to obtain Letters of Credit shall be fully revolving, and
accordingly the Borrower may, during the foregoing period, obtain Letters of
Credit to replace Letters of Credit that have expired or that have been drawn
upon and reimbursed. All Existing Revolving Letters of Credit shall be deemed to
have been issued pursuant hereto, and from and after the Closing Date shall be
Revolving Letters of Credit and shall be subject to and governed by the terms
and conditions hereof.

(ii) No L/C Issuer shall be under any obligation to issue any Letter of Credit
if:

(A) any order, judgment or decree of any Governmental Authority or arbitrator
shall by its terms purport to enjoin or restrain such L/C Issuer from issuing
such Letter of Credit, or any Law applicable to such L/C Issuer or any request
or directive (whether or not having the force of law) from any Governmental
Authority with jurisdiction over such L/C Issuer shall prohibit, or request that
such L/C Issuer refrain from, the issuance of letters of credit generally or
such Letter of Credit in particular or shall impose upon such L/C Issuer with
respect to such Letter of Credit any restriction, reserve or capital requirement
(for which such L/C Issuer is not otherwise compensated hereunder) not in effect
on the Closing Date, or shall impose upon such L/C Issuer any unreimbursed loss,
cost or expense which was not applicable on the Closing Date and which such L/C
Issuer in good faith deems material to it;

 

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(B) the expiry date of such requested Letter of Credit would occur after the
earlier of (1) the first anniversary of its date of issuance and (2) in the case
of a Revolving Letter of Credit, the Revolving Letter of Credit Expiration Date
and in the case of a Term L/C Facility Letter of Credit, the Term L/C Expiration
Date; provided that, notwithstanding the foregoing, any Revolving Letter of
Credit issued or extended no later than 90 days prior to the Revolving Credit
Termination Date may have an expiration date of up to nine months after the
Revolving Credit Termination Date so long as the Borrower has provided Cash
Collateral in an amount equal to the undrawn amount of such Revolving Letter of
Credit on or before the date of such issuance or extension and otherwise in
accordance with Section 2.03(g); or

(C) the issuance of such Letter of Credit would violate one or more generally
applicable policies of such L/C Issuer.

(iii) No L/C Issuer shall be under any obligation to amend any Letter of Credit
in any way (whether or not such amendment increases the amount of the applicable
Letter of Credit) (A) at any time on or after, in the case of a Revolving Letter
of Credit, the Revolving Credit Termination Date or, in the case of a Term L/C
Facility Letter of Credit, the Term L/C Facility Term Loan Maturity Date, or
(B) if the beneficiary of such Letter of Credit does not accept the proposed
amendment to such Letter of Credit. In addition, and without limiting the terms
of the first sentence of this Section 2.03(a)(iii), no L/C Issuer shall be under
any obligation to amend any Letter of Credit to increase the amount thereof if
such L/C Issuer would have no obligation at such time to issue such Letter of
Credit in its amended form under the terms hereof by reason of the provisions of
Section 2.03(a)(i), Section 2.03(a)(ii), Section 4.02 or otherwise.

(iv) Any L/C Issuer may be replaced at any time by written agreement among the
Borrower, the Administrative Agents, the replaced L/C Issuer and the applicable
successor L/C Issuer. The Payment Agent shall notify the Lenders of any such
replacement of an L/C Issuer. At the time any such replacement shall become
effective, the Borrower shall pay all unpaid fees accrued for the account of the
replaced L/C Issuer pursuant to Sections 2.03(i) and (j). From and after the
effective date of any such replacement, (i) such successor L/C Issuer shall have
all the rights and obligations of the replaced L/C Issuer under this Agreement
with respect to Revolving Letters of Credit or Term L/C Facility Letters of
Credit, as the case may be, otherwise to be issued thereafter by such replaced
LC Issuer and (ii) references herein to the term “L/C Issuer”, “Revolving L/C
Issuer” or “Term L/C Issuer”, shall be deemed to refer, as the case may be, to
(x) such successor or any previous or other Revolving L/C Issuer or Term L/C
Issuer or (y) such successor and all previous and other Revolving L/C Issuers
and/or Term L/C Issuers, as the context shall require. After the replacement of
an L/C Issuer hereunder, the replaced L/C Issuer shall remain a party hereto and
shall continue to have all the rights and obligations of a Revolving L/C Issuer
or Term L/C Issuer, as the case may be, under this Agreement with respect to
Revolving Letters of Credit or Term L/C Facility Letters of Credit, as the case
may be, issued by it prior to such replacement, but shall not be required to
issue additional Revolving Letters of Credit or Term L/C Facility Letters of
Credit, as the case may be.

 

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(b) Procedures for Issuance and Amendment of Letters of Credit; Auto-Renewal
Letters of Credit.

(i) Each Letter of Credit shall be issued or amended, as the case may be, upon
the request of the Borrower delivered to the relevant L/C Issuer (with a copy to
the Payment Agent) in the form of a Letter of Credit Application. Such Letter of
Credit Application must be received by such L/C Issuer and the Payment Agent not
later than 12:00 noon (eastern time) at least two Business Days (or such later
date and time as such L/C Issuer may agree in a particular instance in its sole
discretion) prior to the proposed issuance date or date of amendment, as the
case may be. In the case of a request for an initial issuance of a Letter of
Credit, such Letter of Credit Application shall specify in form and detail
reasonably satisfactory to such L/C Issuer: (A) whether such Letter of Credit is
to be a Revolving Letter of Credit or a Term L/C Facility Letter of Credit,
(B) the proposed issuance date of the requested Letter of Credit (which shall be
a Business Day); (C) the amount thereof; (D) the expiry date thereof; (E) in the
case of a Revolving Letter of Credit, the currency (which may be Dollars,
Canadian Dollars, Pounds Sterling or Euros), and in the case of a Term L/C
Facility Letter of Credit, whether such Term L/C Facility Letter of Credit will
be denominated in Dollars or will be the TransCanada Term L/C Facility Letter of
Credit (which shall be denominated in Canadian Dollars); (F) the name and
address of the beneficiary thereof; (G) the account party or parties thereof;
(H) the full text of any certificate to be presented by such beneficiary in case
of any drawing thereunder; and (I) the transactions or obligations to be
supported thereby. In the case of a request for an amendment of any outstanding
Letter of Credit, such Letter of Credit Application shall specify in form and
detail reasonably satisfactory to the relevant L/C Issuer (1) the Letter of
Credit to be amended; (2) the proposed date of amendment thereof (which shall be
a Business Day); (3) the nature of the proposed amendment; and (4) such other
matters consistent with the items set forth in clauses (A)-(I) in the preceding
sentence as such L/C Issuer may reasonably require. Renewals of, and amendments
to increase the available amount under, any outstanding Letters of Credit will
be effectuated by the applicable L/C Issuer within one Business Day of the
applicable L/C Issuer’s receipt of the Borrower’s written request for such
renewal or increase. The Borrower’s request to reduce the effective face amount
of any Letter of Credit shall be effective upon the applicable L/C Issuer’s
receipt of a written consent of the beneficiary of such Letter of Credit
consenting to such reduction.

(ii) Promptly after receipt of any Letter of Credit Application, the relevant
L/C Issuer will confirm with the Payment Agent (by telephone or in writing) that
the Payment Agent has received a copy of such Letter of Credit Application from
the Borrower and, if not, such L/C Issuer will provide the Payment Agent with a
copy thereof. Upon receipt by such L/C Issuer of confirmation from the Payment
Agent that the requested issuance or amendment is permitted in accordance with
the terms hereof, then, subject to the terms and conditions hereof, such L/C
Issuer shall, on the requested date, issue a Letter of Credit for the account of
the Borrower or enter into the applicable amendment, as the case may be, in each
case in accordance with such L/C Issuer’s usual and customary business
practices. Immediately upon the issuance of each Revolving Letter of Credit,
each Revolving Credit Lender shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from the relevant Revolving L/C Issuer a
risk participation in such Revolving Letter of Credit in an amount equal to the
product of such Revolving Credit Lender’s Pro Rata Share times the amount of
such Revolving Letter of Credit. No L/C Issuer shall be obligated to make any
independent determination as to whether the requested issuance or amendment is
permitted in

 

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accordance with the terms hereof, and, unless and until such L/C Issuer receives
such confirmation from the Payment Agent, such L/C Issuer shall have no
obligation to issue the requested Letter of Credit.

(iii) If the Borrower so requests in any applicable Letter of Credit
Application, any L/C Issuer may, in its sole and absolute discretion, agree to
issue an Auto-Renewal Letter of Credit. Unless otherwise directed by such L/C
Issuer, the Borrower shall not be required to make a specific request to such
L/C Issuer for any such renewal. Once an Auto-Renewal Letter of Credit has been
issued, the Borrower and, in the case of any Revolving Letter of Credit, the
Revolving Credit Lenders, shall be deemed to have authorized (but may not
require) such L/C Issuer to permit the renewal of such Letter of Credit at any
time to an expiry date not later than, in the case of any Revolving Letter of
Credit, the Revolving Letter of Credit Expiration Date and, in the case of any
Term L/C Facility Letter of Credit, the Term L/C Expiration Date; provided that
(A) such L/C Issuer may give a notice of non-renewal and thereby prevent the
renewal of an Auto-Renewal Letter of Credit if such L/C Issuer has determined at
any time within 30 calendar days prior to the Nonrenewal Notice Date of such
Auto-Renewal Letter of Credit that it would have no obligation at such time to
issue such Letter of Credit in its renewed form under the terms hereof (by
reason of the provisions of Section 2.03(a)(i), Section 2.03(a)(ii),
Section 2.03(a)(iii) or otherwise), and (B) such L/C Issuer shall not permit any
such renewal if it has received notice (which may be by telephone, if
immediately confirmed in writing, or in writing) on or before the day that is
ten days before the Nonrenewal Notice Date from the Payment Agent or the
Borrower that one or more of the applicable conditions specified in
Section 2.03(a)(i) is not then satisfied; and provided, further, that,
notwithstanding the foregoing, any Revolving Letter of Credit so renewed no
later than 90 days prior to the Revolving Credit Termination Date may have an
expiration date of up to nine months after the Revolving Credit Termination Date
so long as the Borrower has provided Cash Collateral in an amount equal to the
undrawn amount of such Letter of Credit on or before the date of such renewal in
accordance with Section 2.03(g).

(iv) Promptly after its delivery of any Letter of Credit or any amendment to a
Letter of Credit to an advising bank with respect thereto or to the beneficiary
thereof, the relevant L/C Issuer will also deliver to the Borrower and the
Payment Agent a true and complete copy of such Letter of Credit or amendment.

(c) Drawings and Reimbursements of Letters of Credit; Funding of Participations
in Revolving Letters of Credit.

(i) Upon receipt from the beneficiary of any Revolving Letter of Credit of any
notice of a drawing under such Letter of Credit, the relevant Revolving L/C
Issuer shall promptly notify the Borrower and the Payment Agent thereof (which
may be telephonic, promptly confirmed by telecopy). Not later than 12:00 p.m.,
(eastern time), on the Honor Date, the Borrower may (but shall not be required
to) reimburse such Revolving L/C Issuer through the Payment Agent in an amount
equal to the Dollar Equivalent of such drawing. If the Borrower does not so
reimburse the relevant Revolving L/C Issuer on the date necessary to settle the
obligations of such Revolving L/C Issuer under any draft drawn or demand made
under such Revolving Letter of Credit, the Payment Agent shall promptly notify
each Revolving Credit Lender of the Honor Date, the Dollar Equivalent of the
unreimbursed drawing (the “Revolving Unreimbursed Amount”), and the amount of
such Revolving Credit Lender’s Pro Rata Share thereof. In

 

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such event, the Revolving Unreimbursed Amount shall automatically be converted
(unless the Borrower is in Default under Section 8.01(f) or (g)) to a Revolving
Credit Borrowing of Base Rate Loans to be disbursed on the Honor Date in an
amount equal to the Dollar Equivalent of the Revolving Unreimbursed Amount,
without regard to the minimum and multiples specified in Section 2.02 for the
principal amount of Base Rate Loans and without regard to whether the conditions
in Section 4.02 are then satisfied.

Upon receipt from the beneficiary of any Term L/C Facility Letter of Credit of
any notice of a drawing under such Letter of Credit, the relevant Term L/C
Issuer shall promptly notify the Borrower and the Payment Agent thereof (which
may be telephonic, promptly confirmed by telecopy). The Borrower shall be
required to reimburse such Term L/C Issuer through the Payment Agent in an
amount equal to the Dollar Equivalent of such drawing not later than 1:00 p.m.,
(eastern time) on the Honor Date, if the Borrower shall have received such
notice prior to 11:00 a.m. (eastern time) on such date, or, if such notice has
not been received by the Borrower prior to such time on such date, then not
later than 1:00 p.m. (eastern time) on the next Business Day; provided that
unless the Borrower shall reimburse such Term L/C Issuer by 1:00 p.m. (eastern
time) on the same day on which such drawing is made, the unpaid amount thereof
shall bear interest at a rate per annum equal to the Base Rate plus the
Applicable Margin, for each day commencing on the date the drawing is made until
the date that the Borrower pays the Payment Agent for the account of such Term
L/C Issuer the Dollar Equivalent of the amount of such drawing. If the Borrower
does not so reimburse the relevant Term L/C Issuer at or prior to the time for
payment specified above in respect of such drawing under such Term L/C Facility
Letter of Credit, the Payment Agent shall promptly cause the amounts on deposit
in the Term L/C Collateral Account to be applied to repay in full such amounts
(such amounts, including accrued interest, the “Term L/C Facility Unreimbursed
Amount” and, together with the Revolving Unreimbursed Amount, the “Unreimbursed
Amount”) and the Term L/C Facility shall be automatically and permanently
reduced by the Term L/C Facility Unreimbursed Amount in accordance with
Section 2.05(c).

Any notice given by any L/C Issuer or the Payment Agent pursuant to this
Section 2.03(c)(i) may be given by telephone if immediately confirmed in
writing; provided that the lack of such an immediate confirmation shall not
affect the conclusiveness or binding effect of such notice.

(ii) Each Revolving Credit Lender (including the Revolving Credit Lender acting
as Revolving L/C Issuer) shall upon any notice pursuant to Section 2.03(c)(i)
make funds available to the Payment Agent for the account of the relevant
Revolving L/C Issuer at the Payment Agent’s Office in an amount equal to its Pro
Rata Share of the Revolving Unreimbursed Amount not later than 1:00 p.m.
(eastern time) on the Business Day specified in such notice by the Payment
Agent, whereupon, subject to the provisions of Section 2.03(c)(iii), each
Revolving Credit Lender that so makes funds available shall be deemed to have
made a Base Rate Loan to the Borrower in such amount. The Payment Agent shall
remit the funds so received to such Revolving L/C Issuer.

(iii) Such Base Rate Loan shall be made as of the date of such settlement of
such Revolving Letter of Credit. The proceeds of such Base Rate Loan shall be
paid by the Revolving Credit Lenders to the Payment Agent for payment to the
relevant Revolving L/C Issuer of such Revolving Letter of Credit (and the
Payment Agent shall promptly pay such proceeds to such Revolving L/C Issuer) to
reimburse such Revolving

 

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L/C Issuer of such Revolving Letter of Credit for each Revolving Lender’s Pro
Rata Share of the Dollar Equivalent of the amount actually disbursed by such
Revolving L/C Issuer of such Revolving Letter of Credit pursuant to such draft
or demand. In the event that any Revolving L/C Issuer of a Revolving Letter of
Credit makes the Draw Amount available to the beneficiary of such Revolving
Letter of Credit and the Dollar Equivalent of such amount made available by the
Revolving Lenders to the Payment Agent for payment to such Revolving L/C Issuer
is not sufficient to enable such Revolving L/C Issuer to obtain Alternative
Currency equal to the entire Draw Amount, the Borrower shall pay the Payment
Agent on demand for the benefit of such Revolving L/C Issuer an amount equal to
the Dollar Equivalent required to enable such Revolving L/C Issuer to obtain
Alternative Currency equal to the Draw Amount, but any shortfall shall be
immediately converted to an additional Borrowing of Base Rate Loans made by the
Revolving Credit Lenders to the Borrower to the extent the Borrower does not
immediately make such payment, and such Revolving L/C Issuer shall be reimbursed
therefrom. With respect to any Revolving Unreimbursed Amount that is not fully
refinanced by a Revolving Credit Borrowing of Base Rate Loans because the
Borrower is in Default under Section 8.01(f) or (g) or for any other reason, the
Borrower shall be deemed to have incurred from the relevant Revolving L/C Issuer
a Revolving L/C Borrowing in the amount of the Revolving Unreimbursed Amount
that is not so refinanced, which Revolving L/C Borrowing shall be due and
payable on demand (together with interest) and shall bear interest at the
Default Rate. In such event, each Revolving Credit Lender’s payment to the
Payment Agent for the account of such Revolving L/C Issuer pursuant to
Section 2.03(c)(ii) shall be deemed payment in respect of its participation in
such Revolving L/C Borrowing and shall constitute a Revolving L/C Advance from
such Lender in satisfaction of its participation obligation under this
Section 2.03.

(iv) Until each Revolving Credit Lender funds its Revolving Credit Loan or
Revolving L/C Advance pursuant to this Section 2.03(c) to reimburse any
Revolving L/C Issuer for any amount drawn under any Revolving Letter of Credit,
interest in respect of such Revolving Lender’s Pro Rata Share of such amount
shall be solely for the account of such Revolving L/C Issuer.

(v) Each Revolving Credit Lender’s obligation to make Revolving Credit Loans or
Revolving L/C Advances to reimburse any Revolving L/C Issuer for amounts drawn
under Revolving Letters of Credit, as contemplated by this Section 2.03(c),
shall be absolute and unconditional and shall not be affected by any
circumstance, including (A) any setoff, counterclaim, recoupment, defense or
other right which such Revolving Credit Lender may have against such Revolving
L/C Issuer, the Borrower or any other Person for any reason whatsoever, (B) the
occurrence or continuance of a Default, or (C) any other occurrence, event or
condition, whether or not similar to any of the foregoing; provided that each
Revolving Credit Lender’s obligation to make Revolving Credit Loans (but not its
obligation to make Revolving L/C Advances) pursuant to this Section 2.03(c) is
subject to the Borrower not being in Default under Section 8.01(f) or (g). No
such making of a Revolving L/C Advance shall relieve or otherwise impair the
obligation of the Borrower to reimburse such Revolving L/C Issuer for the amount
of any payment made by such Revolving L/C Issuer under any Revolving Letter of
Credit, together with interest as provided herein.

(vi) If any Revolving Credit Lender fails to make available to the Payment Agent
for the account of any Revolving L/C Issuer any amount required to be paid by

 

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such Revolving Credit Lender pursuant to the foregoing provisions of this
Section 2.03(c) by the time specified in Section 2.03(c)(ii), such Revolving L/C
Issuer shall be entitled to recover from such Revolving Credit Lender (acting
through the Payment Agent), on demand, such amount with interest thereon for the
period from the date such payment is required to the date on which such payment
is immediately available to such Revolving L/C Issuer at a rate per annum equal
to the Federal Funds Rate from time to time in effect for the first three
Business Days and, thereafter, at a rate of interest equal to the Base Rate. A
certificate of the relevant Revolving L/C Issuer submitted to any Revolving
Credit Lender (through the Payment Agent) with respect to any amounts owing
under this Section 2.03(c)(vi) shall be conclusive absent manifest error.

(vii) If at any time a distribution is to be made by the Payment Agent to any
Revolving Credit Lender and such Revolving Credit Lender has failed to make
available to the Payment Agent for the account of the relevant Revolving L/C
Issuer any amount required to be paid by such Revolving Credit Lender pursuant
to the foregoing provisions of this Section 2.03(c), the Payment Agent shall pay
such distribution to such Revolving L/C Issuer, to the extent of such unpaid
amount together with any interest thereon accrued pursuant to
Section 2.03(c)(vi).

(d) Repayment of Participations in Revolving Letters of Credit.

(i) At any time after any Revolving L/C Issuer has made a payment under any
Revolving Letter of Credit and has received from any Revolving Credit Lender
such Revolving Credit Lender’s Revolving L/C Advance in respect of such payment
in accordance with Section 2.03(c), if the Payment Agent receives for the
account of such Revolving L/C Issuer any payment in respect of the related
Revolving Unreimbursed Amount or interest thereon (whether directly from the
Borrower or otherwise, including proceeds of Cash Collateral applied thereto by
the Payment Agent), the Payment Agent will distribute to such Revolving Credit
Lender its Pro Rata Share thereof (appropriately adjusted, in the case of
interest payments, to reflect the period of time during which such Revolving
Credit Lender’s Revolving L/C Advance was outstanding) in the same funds as
those received by the Payment Agent.

(ii) If any payment received by the Payment Agent for the account of any
Revolving L/C Issuer pursuant to Section 2.03(c)(i) is required to be returned
under any of the circumstances described in Section 11.06 (including pursuant to
any settlement entered into by such Revolving L/C Issuer in its discretion),
each Revolving Credit Lender shall pay to the Payment Agent for the account of
such Revolving L/C Issuer its Pro Rata Share thereof on demand of the Payment
Agent, plus interest thereon from the date of such demand to the date such
amount is returned by such Revolving Credit Lender, at a rate per annum equal to
the Federal Funds Rate from time to time in effect for the first three days and,
thereafter, at a rate of interest equal to the Base Rate.

(e) Obligations Absolute. The obligation of the Borrower to reimburse any
relevant L/C Issuer for each drawing under each Letter of Credit and (without
duplication, in the case of any Revolving Letter of Credit) to repay each
Revolving L/C Borrowing shall be absolute, unconditional and irrevocable, and
shall be paid strictly in accordance with the terms of this Agreement under all
circumstances, including the following:

(i) any lack of validity or enforceability of such Letter of Credit, this
Agreement, or any other agreement or instrument relating thereto;

 

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(ii) the existence of any claim, counterclaim, setoff, defense or other right
that the Borrower may have at any time against any beneficiary or any transferee
of such Letter of Credit (or any Person for whom any such beneficiary or any
such transferee may be acting), such L/C Issuer or any other Person, whether in
connection with this Agreement, the transactions contemplated hereby or by such
Letter of Credit or any agreement or instrument relating thereto, or any
unrelated transaction;

(iii) any draft, demand, certificate or other document presented under such
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect;
or any loss or delay in the transmission or otherwise of any document required
in order to make a drawing under such Letter of Credit;

(iv) any payment by such L/C Issuer under such Letter of Credit against
presentation of a draft or certificate that does not strictly comply with the
terms of such Letter of Credit; or any payment made by such L/C Issuer under
such Letter of Credit to any Person purporting to be a trustee in bankruptcy,
debtor-in-possession, assignee for the benefit of creditors, liquidator,
receiver or other representative of or successor to any beneficiary or any
transferee of such Letter of Credit, including any arising in connection with
any proceeding under any Debtor Relief Law;

(v) any exchange, release or nonperfection of any Collateral, or any release or
amendment or waiver of or consent to departure from the Guaranty or any other
guarantee, for all or any of the Obligations of the Borrower in respect of such
Letter of Credit; or

(vi) any other circumstance or happening whatsoever, whether or not similar to
any of the foregoing, including any other circumstance that might otherwise
constitute a defense available to, or a discharge of, the Borrower, except as
otherwise provided in clause (f) of this Section 2.03.

The Borrower shall promptly examine a copy of each Letter of Credit and each
amendment thereto that is delivered to it and, in the event of any claim of
noncompliance with the Borrower’s instructions or other irregularity, the
Borrower will immediately notify the relevant L/C Issuer. The Borrower shall be
conclusively deemed to have waived any such claim against such L/C Issuer and
its correspondents unless such notice is given as aforesaid.

(f) Role of L/C Issuer. The Borrower and, in the case of Revolving Letters of
Credit, the Revolving Credit Lenders agree that, in paying any drawing under a
Letter of Credit, no L/C Issuer shall have any responsibility to obtain any
document (other than any sight draft, certificates and documents expressly
required by the Letter of Credit) or to ascertain or inquire as to the validity
or accuracy of any such document or the authority of the Person executing or
delivering any such document. None of any L/C Issuer, any Agent-Related Person
nor any of the respective correspondents, participants or assignees of any L/C
Issuer shall be liable to any Lender for (i) any action taken or omitted in
connection herewith at the request or with the approval of the Lenders or the
Required Lenders, as applicable; (ii) any action taken or omitted in the absence
of gross negligence or willful misconduct; or (iii) the due execution,
effectiveness, validity or enforceability of any document or instrument related
to any Letter of Credit or Letter of Credit Application. The Borrower hereby
assumes all risks of the acts or omissions of any beneficiary or transferee with
respect to its use of any Letter of Credit; provided that this assumption is not
intended to, and shall not, preclude the Borrower’s pursuing such rights and
remedies as it may have against the beneficiary or transferee at law or under
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Agent-Related Person, nor any of the respective correspondents, participants or
assignees of any L/C Issuer, shall be liable or responsible for any of the
matters described in clauses (i) through (iv) of Section 2.03(e); provided that
anything in such clauses to the contrary notwithstanding, the Borrower may have
a claim against an L/C Issuer, and such L/C Issuer may be liable to the
Borrower, to the extent, but only to the extent, of any direct, as opposed to
consequential or exemplary, damages suffered by the Borrower which the Borrower
proves were caused by such L/C Issuer’s willful misconduct or gross negligence
or such L/C Issuer’s willful failure to pay under any Letter of Credit after the
presentation to it by the beneficiary of a sight draft and certificate(s)
strictly complying with the terms and conditions of a Letter of Credit AND THE
PARENT GUARANTOR AND THE BORROWER FOR THEMSELVES AND THEIR SUBSIDIARIES HEREBY
WAIVE AND RELINQUISH ANY AND ALL CLAIMS THEY MAY HAVE FOR INCIDENTAL,
CONSEQUENTIAL OR EXEMPLARY DAMAGES AND FOR DIRECT DAMAGES RESULTING FROM
NEGLIGENCE BY ANY L/C ISSUER WHICH DOES NOT RISE TO THE LEVEL OF GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT. In furtherance and not in limitation of the
foregoing, any L/C Issuer may accept documents that appear on their face to be
in order, without responsibility for further investigation, regardless of any
notice or information to the contrary, and such L/C Issuer shall not be
responsible for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign a Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or in part, which may prove
to be invalid or ineffective for any reason.

(g) Cash Collateral for Revolving Letters of Credit. Upon the request of the
Payment Agent or any Revolving L/C Issuer to the Borrower, if, as of the
Revolving Letter of Credit Expiration Date, any Revolving Letter of Credit may
for any reason remain outstanding and partially or wholly undrawn, the Borrower
shall immediately Cash Collateralize the then Outstanding Amount of all
Revolving L/C Obligations (in an amount equal to 103% of the Dollar Equivalent
of such Outstanding Amount determined as of the Revolving Letter of Credit
Expiration Date). As required pursuant to Section 2.03(a)(ii) or 2.03(b)(iii),
the Borrower shall immediately Cash Collateralize the relevant Revolving
Letter(s) of Credit in the amount specified therein. The Borrower hereby grants
to the Collateral Agent, for the benefit of the Revolving L/C Issuers and the
Revolving Credit Lenders, a security interest in all such cash, deposit accounts
and all balances therein and all proceeds of the foregoing. Cash Collateral for
the Revolving L/C Obligations shall be maintained in a Cash Collateral Account
(other than the Term L/C Collateral Account). If at any time the Collateral
Agent determines that any such Cash Collateral is subject to any right or claim
of any Person other than the Collateral Agent or that the total amount of such
funds is less than the aggregate Outstanding Amount of all Revolving L/C
Obligations that are required to be Cash Collateralized at such time, the
Borrower will, forthwith upon demand by the Collateral Agent, pay to the
Collateral Agent, as additional funds to be deposited and held in such Cash
Collateral Account, an amount equal to the excess of (a) 103% of the Dollar
Equivalent of such aggregate Outstanding Amount over (b) the total amount of
funds, if any, then held as Cash Collateral that the Collateral Agent determines
to be free and clear of any such right and claim. Upon the drawing of any
Revolving Letter of Credit for which funds are on deposit as Cash Collateral for
the Revolving L/C Obligations, such funds shall be applied, to the extent
permitted under applicable law, to reimburse the relevant Revolving L/C Issuers.
So long as no Event of Default shall have occurred and be continuing, upon
payment, expiration or termination of a Revolving Letter of Credit that was Cash
Collateralized, applicable amounts on deposit in Cash Collateral Accounts (other
than the Term L/C Collateral Account) shall be promptly returned to the
Borrower.

(h) Applicability of ISP98 and UCP. Unless otherwise expressly agreed by the
relevant L/C Issuer and the Borrower when a Letter of Credit is issued
(including any such agreement applicable to an Existing Revolving Letter of
Credit), (i) the rules of the “International Standby Practices 1998” published
by the Institute of International Banking Law & Practice (or such later version
thereof as may be in effect at the time of issuance) shall apply to each standby
Letter of Credit, and (ii) the rules of the

 

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Uniform Customs and Practice for Documentary Credits, as most recently published
by the International Chamber of Commerce (the “ICC”) at the time of issuance
shall apply to each commercial Letter of Credit, and in each case to the extent
not inconsistent with the above referred rules, the laws of the State of New
York shall apply to each Letter of Credit.

(i) Letter of Credit Fees. In the case of Revolving Letters of Credit, the
Borrower shall pay to the Payment Agent for the account of each Revolving Credit
Lender in accordance with its Pro Rata Share a Letter of Credit fee for each
Revolving Letter of Credit equal to the Applicable Margin per annum for
Eurodollar Rate Loans under the Revolving Credit Facility times the daily
maximum amount available to be drawn under such Letter of Credit, provided that
for purposes of this Section 2.03(i), the Dollar Equivalent of each Revolving
Letter of Credit in an Alternative Currency will be deemed to be, on any day
(i) during the month a Revolving Letter of Credit is issued or renewed, the
Dollar Equivalent on such date of issuance or renewal or (ii) in any month
subsequent to the month of issuance or renewal, the Dollar Equivalent on the
first Business Day of such subsequent month, in each case from and including the
date issued to and including the date of its expiration or earlier termination.
Such letter of credit fees shall be computed on a quarterly basis in arrears.
Such letter of credit fees shall accrue and be due and payable on the fifth
Business Day following receipt by the Borrower of an invoice for such Letter of
Credit fees owing with respect to the prior calendar quarter commencing with the
first such date to occur after the issuance of such Revolving Letter of Credit,
and on the Revolving Credit Termination Date.

(j) Fronting Fee and Documentary and Processing Charges Payable to L/C Issuer.
The Borrower hereby agrees to pay to the relevant L/C Issuer solely for its
benefit, (i) in the case of Letters of Credit that are standby Letters of Credit
a Letter of Credit fronting fee equal to a per annum amount (calculated for the
actual number of days elapsed on the basis of a year consisting of 365, or when
appropriate 366, days) as agreed between the Borrower and such L/C Issuer on the
daily average available amount under each such Letter of Credit issued,
increased or extended by such L/C Issuer from and including the date issued,
increased or extended to and including the date of its expiration or earlier
termination, (ii) in the case of Letters of Credit that are commercial Letters
of Credit a Letter of Credit fronting fee equal to a per annum amount
(calculated for the actual number of days elapsed on the basis of a year
consisting of 365, or when appropriate 366, days) as agreed between the Borrower
and such L/C Issuer on the daily average available amount under each such Letter
of Credit issued, increased or extended by the such L/C Issuer from and
including the date issued, increased or extended to and including the date of
its expiration or earlier termination, and (iii) a fee for each issuance,
amendment or renewal of, and for each negotiation of a draft drawn under, a
Letter of Credit issued, increased or extended by such L/C Issuer in the amount
customarily charged by such L/C Issuer from time to time or such other amount
that may be agreed to in writing from time to time by such L/C Issuer and the
Borrower, provided that for purposes of this Section 2.03(j), the Dollar
Equivalent of each Letter of Credit in an Alternative Currency will be deemed to
be, on any day (i) during the month the Letter of Credit was issued or renewed,
the Dollar Equivalent on the date of issuance or renewal of such Letter of
Credit or (ii) in any month subsequent to the month of issuance or renewal, the
Dollar Equivalent on the first Business Day of such subsequent month, in each
case from and including the date issued to and including the date of its
expiration or earlier termination. The Borrower shall pay to the Payment Agent
on the fifth Business Day following receipt by the Borrower of an invoice for
such fees owing with respect to the prior calendar quarter, the Letter of Credit
fronting fee due with respect to each outstanding Letter of Credit commencing on
the first such date to occur after such Letter of Credit is issued, increased or
extended and, in the case of Letters of Credit, on the Revolving Credit
Termination Date and, in the case of the Term L/C Facility Letters of Credit,
the Term L/C Facility Term Loan Maturity Date. The Payment Agent shall promptly
remit to the relevant L/C Issuer any Letter of Credit fronting fee due to such
L/C Issuer after the Payment Agent’s receipt of such fee.

 

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(k) Term L/C Collateral Account. On or prior to the Closing Date, the Borrower
shall establish the Term L/C Collateral Account for the purpose of cash
collateralizing the Borrower’s obligations to the Term L/C Issuers in respect of
the Term L/C Facility Letters of Credit. On the Closing Date the proceeds of the
Term L/C Facility Term Loans, together with other funds (if any) provided by the
Borrower, shall be deposited into the Term L/C Collateral Account such that, and
the Borrower agrees that at all times thereafter, and shall immediately cause
additional funds to be deposited and held in the Term L/C Collateral Account
from time to time in order that, the Term L/C Collateral Account Balance shall
at least equal the Required Term L/C Collateral Account Balance. The Borrower
hereby grants to the Collateral Agent, for the benefit of the Term L/C Issuers,
a security interest in the Term L/C Collateral Account and all cash and balances
therein and all proceeds of the foregoing, as security for the Term L/C Facility
Obligations (and, in addition, grants a security interest therein, for the
benefit of the Secured Parties as collateral security for the Secured
Obligations, provided that amounts on deposit in the Term L/C Collateral Account
shall be applied, first, to repay the Term L/C Facility Obligations and, then,
all other Secured Obligations). Except as expressly provided herein or in any
other Loan Document, no Person shall have the right to make any withdrawal from
the Term L/C Collateral Account or to exercise any right or power with respect
thereto; provided that at any time the Borrower shall fail to reimburse any Term
L/C Issuer for any Term L/C Facility Unreimbursed Amounts in accordance with the
terms of Section 2.03(c), the Borrower hereby absolutely, unconditionally and
irrevocably agrees that the Collateral Agent shall be entitled to instruct the
depositary bank (the “Depositary Bank”) of the Term L/C Collateral Account to
withdraw therefrom and pay to the Payment Agent for account of such Term L/C
Issuer amounts equal to such Term L/C Facility Unreimbursed Amounts. So long as
no Event of Default shall have occurred and be continuing, upon at least three
Business Days’ prior written notice to the Collateral Agent and the Payment
Agent, the Borrower may, at any time and from time to time, request release of
and payment to the Borrower of (and the Collateral Agent hereby agrees to
instruct the Depositary Bank to release and pay to the Borrower) any amounts on
deposit in the Term L/C Collateral Account in excess of the Required Term L/C
Collateral Account Balance (provided that the Collateral Agent shall have
received prior confirmation of the amount of such excess from the Payment
Agent). In addition, the Collateral Agent hereby agrees to instruct the
Depositary Bank to release and pay to the Borrower amounts (if any) remaining on
deposit in the Term L/C Collateral Account after the termination of the Term L/C
Facility and all Term L/C Facility Letters of Credit and the repayment in full
of all outstanding Term L/C Facility Term Loans and Term L/C Facility
Obligations.

(l) Conflict with Letter of Credit Application. In the event of any conflict
between the terms hereof and the terms of any Letter of Credit Application, the
terms hereof shall control.

2.04. Prepayments.

(a) Optional. The Borrower may, upon notice to the Payment Agent, at any time or
from time to time voluntarily prepay Loans under either Facility in whole or in
part without premium or penalty; provided that (i) such notice must be received
by the Payment Agent not later than 12:00 noon (eastern time) on the date of
prepayment of any Loans; (ii) any prepayment of Eurodollar Rate Loans shall be
in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess
thereof; and (iii) any prepayment of Base Rate Loans shall be in a principal
amount of $500,000 or a whole multiple of $100,000 in excess thereof or, in each
case, if less, the entire principal amount thereof then outstanding. Each such
notice shall specify the date and amount of such prepayment and the Type(s) of
Loans under the respective Facility to be prepaid. The Payment Agent will
promptly notify the relevant Lenders of its receipt of each such notice, and of
the amount of such Lender’s Pro Rata Share (if any) of such prepayment. If such
notice is given by the Borrower, the Borrower shall make such prepayment and the
payment amount specified in such notice shall be due and payable on the date
specified therein. Any prepayment of a Eurodollar Rate Loan shall be accompanied
by all accrued interest thereon, together with any additional amounts required
pursuant to Section 3.05. Each prepayment of the outstanding Loans

 

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pursuant to this Section 2.04(a) shall be applied to the respective Facilities
in the manner indicated by the Borrower and to the Lenders under such Facility
in accordance with their respective Pro Rata Shares. Prepayments made pursuant
to this Section 2.04(a) of the Term L/C Facility Term Loans shall be applied in
accordance with Section 2.11(j).

(b) Mandatory.

(i) If for any reason the aggregate Outstanding Amount of all Revolving Credit
Loans and Revolving L/C Obligations at any time exceeds the aggregate Revolving
Credit Commitments then in effect, the Borrower shall immediately prepay the
Revolving Credit Loans, reimburse Revolving Unreimbursed Amounts in respect of
Revolving Letters of Credit and/or Cash Collateralize the Revolving L/C
Obligations in an aggregate amount equal to such excess (or, in the case of the
Cash Collateralization of Revolving L/C Obligations, 103% of the Dollar
Equivalent of such excess) in accordance with the terms thereof. Once quarterly
on such date as the Payment Agent shall determine and promptly upon the receipt
by the Payment Agent of a Currency Valuation Notice (as defined below), if any
Revolving L/C Obligations in respect of Revolving Letters of Credit denominated
in an Alternative Currency shall then be outstanding, the Payment Agent shall
determine the Dollar Equivalent of all such Revolving L/C Obligations as of such
determination date (or, in the case of a Currency Valuation Notice received by
the Payment Agent prior to 12:00 noon on a Business Day, on such Business Day
or, in the case of a Currency Valuation Notice otherwise received, on the first
Business Day after such Currency Valuation Notice is received). Upon making such
determination, the Payment Agent shall promptly notify the Administrative
Agents, the Lenders and the Borrower thereof. For purposes hereof, “Currency
Valuation Notice” means a notice given by the Required Lenders to the Payment
Agent stating that such notice is a “Currency Valuation Notice” and requesting
that the Payment Agent determine the Dollar Equivalent of the Revolving L/C
Obligations in respect of Revolving Letters of Credit denominated in Alternative
Currencies. The Payment Agent shall not be required to make more than one
determination pursuant to Currency Valuation Notices within any rolling three
month period. If, on the date of such determination such Dollar Equivalent of
such Revolving L/C Obligations in respect of Revolving Letters of Credit
denominated in Alternative Currencies, when added to Revolving L/C Obligations
in respect of Revolving Letters of Credit denominated in Dollars and Revolving
Credit Loans, shall exceed the Revolving Credit Commitments, the Borrower shall
prepay Revolving Credit Loans and/or Cash Collateralize Revolving L/C
Obligations in the amount of such excess (or, in the case of Cash
Collateralization of Revolving Letters of Credit, 103% of the Dollar Equivalent
of such excess).

(ii) Subject to Section 2.04(b)(vi), if on any date the Borrower or any of its
Restricted Subsidiaries shall receive Net Proceeds from any Asset Sales or the
Parent Guarantor, the Borrower or any of their respective Restricted
Subsidiaries shall receive Net Proceeds from any Recovery Event, then, unless a
Reinvestment Notice shall be delivered in respect thereof, the Lenders’ Portion
of such Net Proceeds shall be applied within five Business Days toward the
prepayment of the Loans and the reduction of the Revolving Credit Commitments as
set forth in Section 2.04(b)(v); provided that, notwithstanding the foregoing,
(A) the cumulative Net Proceeds of Asset Sales that may be excluded from the
foregoing requirement pursuant to one or more Reinvestment Notices shall not
exceed $750,000,000 in the aggregate, (B) on each Reinvestment Prepayment Date,
an amount equal to the Reinvestment Prepayment Amount with respect to the
relevant Reinvestment Event shall be applied toward the prepayment of the Loans

 

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and the reduction of the Revolving Credit Commitments as set forth in
Section 2.04(b)(v), (C) the sale of the Baldwin Facility shall not be permitted
to be subject to any Reinvestment Notice and (D) any Net Proceeds of any Asset
Sale or Recovery Event subject to a Reinvestment Notice shall be deposited into
a Designated Account (as defined in the Shared Security Agreement) that is
subject to an Account Control Agreement (as defined in the Shared Security
Agreement) until the use or application of such Net Proceeds (it being
understood that in the event the Parent Guarantor or any of its Restricted
Subsidiaries shall receive any Net Proceeds of any Recovery Event, the Parent
Guarantor shall forthwith cause such Net Proceeds to be paid or otherwise made
available to the Borrower or the Restricted Subsidiary thereof that incurred the
underlying loss).

(iii) Subject to Section 2.04(b)(vi), if on any date the Borrower or any of its
Restricted Subsidiaries shall receive Net Proceeds from any Subject
Indebtedness, then such Net Proceeds shall be applied within five Business Days
toward the prepayment of the Loans and the reduction of the Revolving Credit
Commitments as set forth in Section 2.04(b)(v).

(iv) Subject to Section 2.04(b)(vi), no later than ten days following the
earlier of (i) the applicable deadline for filing the annual financial
statements of the Borrower and its Subsidiaries with the SEC (without giving
effect to any extension thereof that is specific to the Borrower) for each
fiscal year of the Borrower, commencing with the fiscal year ending on
December 31, 2007, and (ii) the date on which the financial statements with
respect to such period are delivered pursuant to Section 6.01(a), the Borrower
shall prepay outstanding Loans and reduce the Revolving Credit Commitments as
set forth in Section 2.04(b)(v), in an aggregate principal amount equal to
(x) the Required ECF Prepayment Percentage of Excess Cash Flow for the fiscal
year then ended minus (y) the aggregate amount of any voluntary prepayments of
Term L/C Facility Term Loans made pursuant to Section 2.04(a) during such fiscal
year.

(v) Prepayments made pursuant to this Section 2.04(b) shall be applied, first,
ratably to the prepayment of the Revolving Credit Loans (and, in the case of any
Revolving Letters of Credit, to Cash Collateralize the Revolving L/C Obligations
in respect thereof in an amount equal to 103% of the Dollar Equivalent of the
amount thereof) and the Term L/C Facility Term Loans then outstanding
(collectively, the “Outstanding Loans”), and, then after payment in full of the
Outstanding Loans, to the permanent reduction of the unused amount of the
Revolving Credit Commitments in accordance with Section 2.11(h); provided that,
notwithstanding anything to the contrary in Section 2.04(b)(ii),
Section 2.04(b)(iii), Section 2.04(b)(iv) or Section 2.11, the Borrower shall be
permitted to Cash Collateralize, at 103% of the Dollar Equivalent of the amount
otherwise required to be applied to the prepayment or reduction thereof,
Revolving Credit Loans or unused Revolving Credit Commitments required to be so
prepaid or reduced under Section 2.04(b)(ii), Section 2.04(b)(iii) or
Section 2.04(b)(iv), and for purposes of Section 2.04(b)(vi), the amount of any
applicable mandatory prepayment or commitment reduction, as the case may be,
shall be reduced by the amount thereof so Cash Collateralized in accordance with
this clause (v). Any such Cash Collateralization so elected by the Borrower
shall be effected on the date otherwise required for the applicable prepayment
or commitment reduction, as the case may be, specified in Section 2.04(b)(ii),
(iii) or (iv), and the Borrower will give the Payment Agent telephonic notice on
such date (promptly confirmed in writing) of any such Cash Collateralization.

 

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(vi) Notwithstanding anything to the contrary in Section 2.04(b)(v) or
Section 2.11, with respect to the amount of any mandatory prepayment described
in Section 2.04(b)(ii), (iii) or (iv) (as the same shall have been reduced as
described in clause (v) above) that is allocated to the Outstanding Loans (such
amount, the “Prepayment Amount” and such amount with respect to the Term L/C
Facility Term Loans, the “Term L/C Facility Prepayment Amount” and such amount
with respect to the Revolving Credit Loans, the “Revolving Prepayment Amount”)
or, as applicable, the permanent reduction of the unused amount of the Revolving
Credit Commitments (such amount, as the same shall have been reduced as
described in clause (v) above, the “Revolving Credit Reduction Amount”), the
Borrower will, in lieu of applying such amount to the prepayment of the
Outstanding Loans (or, in the case of any outstanding Revolving Letters of
Credit, to Cash Collateralize the Revolving L/C Obligations in respect thereof
in an amount equal to 103% of the Dollar Equivalent of the amount thereof) or,
as applicable, the permanent reduction of the Revolving Credit Commitments as
provided in clause (v) above, on the respective date specified in
Section 2.04(b)(ii), (iii) or (iv) for such prepayment or permanent reduction,
give the Payment Agent telephonic notice (promptly confirmed in writing)
requesting that the Payment Agent prepare and provide to each Lender a notice
(each, a “Prepayment Option Notice”) as described below (which shall specify the
portion, if any, of the relevant Prepayment Amount or Revolving Credit Reduction
Amount that the Borrower will Cash Collateralize pursuant to the proviso set
forth in Section 2.04(b)(v)). As promptly as practicable after receiving such
notice from the Borrower, the Payment Agent will send to each relevant Lender a
Prepayment Option Notice, which shall be in the form of Exhibit I, and shall
include an offer by the Borrower to, as applicable (A) prepay on the date (each
a “Mandatory Prepayment Date”) that is 10 Business Days after the date of the
Prepayment Option Notice, the Outstanding Loans of such Lender by an amount
equal to the portion of the Prepayment Amount (i.e., the Revolving Prepayment
Amount and/or the Term L/C Facility Prepayment Amount, as applicable) indicated
in such Lender’s Prepayment Option Notice as being applicable to such Lender’s
Outstanding Loans (i.e., the Revolving Credit Loans and/or the Term L/C Facility
Term Loans, as applicable) and/or (B) as applicable, permanently reduce on the
Mandatory Prepayment Date, the unused amount of the Revolving Credit Commitments
of such Lender by an amount equal to the portion of the Revolving Credit
Reduction Amount indicated in such Lender’s Prepayment Option Notice as being
applicable to such Lender’s Revolving Credit Commitment. Each Lender shall
notify the Payment Agent at least three Business Days prior to the Mandatory
Prepayment Date of its decision to accept or reject such offer, and the Payment
Agent shall notify the Borrower thereof no later than two Business Days prior to
the Mandatory Prepayment Date. On the Mandatory Prepayment Date, (I) the
Borrower shall pay to the Payment Agent for account of the relevant Lenders the
aggregate amount necessary to prepay that portion of the Outstanding Loans in
respect of which such Lenders have accepted prepayment as described above,
(II) as applicable, the Revolving Credit Commitment of each Revolving Credit
Lender who has accepted reduction as described above shall be permanently
reduced to the extent set forth in its Prepayment Option Notice and (III) the
Borrower shall be entitled to retain the Declined Proceeds, which Declined
Proceeds shall be used by the Borrower for any purpose permitted or required
under this Agreement.

(vii) Upon the drawing of any Revolving Letter of Credit which has been Cash
Collateralized, such Cash Collateral shall be applied (without any further
action by or notice to or from the Borrower or any other Loan Party) to
reimburse the relevant Revolving L/C Issuers or the Revolving Credit Lenders, as
applicable. For so long as no

 

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Event of Default has occurred and is continuing, Cash Collateral shall be
released to the Borrower (A) upon the termination or expiration of any such Cash
Collateralized Letter of Credit, in an amount equal to the Cash Collateral
pledged in respect of such Revolving Letter of Credit less any amounts used to
reimburse the relevant Revolving L/C issuers and the Revolving Credit Lenders,
as applicable, (B) upon the permanent reduction of Cash Collateralized Revolving
Credit Commitments, in an amount equal to the Cash Collateral pledged in respect
of such Revolving Credit Commitments and (C) upon the repayment of Cash
Collateralized Revolving Credit Loans, in an amount equal to the Cash Collateral
pledged in respect of such Revolving Credit Loans (provided that the associated
Revolving Credit Commitments in respect of such Revolving Credit Loans shall
have been permanently cancelled).

(c) Prepayments to Include Accrued Interest, Etc. All prepayments under this
Section 2.04 shall be made together with (i) accrued and unpaid interest to the
date of such prepayment on the principal amount so prepaid and (ii) in the case
of any such prepayment of a Eurodollar Rate Loan on a date other than the last
day of an Interest Period therefor, any amounts owing in respect of such
Eurodollar Rate Loan pursuant to Section 3.05. Notwithstanding any of the other
provisions of Section 2.04(b), so long as no Default shall have occurred and be
continuing, if any prepayment of Eurodollar Rate Loans is required to be made
under Section 2.04(b) other than on the last day of the Interest Period
therefor, the Borrower may, in its sole discretion, deposit the amount of any
such prepayment otherwise required to be made thereunder into a Cash Collateral
Account until the last day of such Interest Period, at which time the Payment
Agent shall be authorized (without any further action by or notice to or from
the Borrower or any other Loan Party) to apply such amount to the prepayment of
such Loans in accordance with Section 2.04(b). Upon the occurrence of a Default,
the Payment Agent shall also be authorized (without any further action by or
notice to or from the Borrower or any other Loan Party) to apply such amount to
the prepayment of such Loans in accordance with Section 2.04(b).

2.05. Termination or Reduction of Commitments.

(a) Termination or Reduction of Revolving Credit Commitments, Revolving L/C
Sublimit and Term L/C Issuer Commitments. The Borrower may, upon notice to the
Payment Agent, terminate the unused portion of the Revolving Credit Commitments
or the Revolving L/C Sublimit, or from time to time permanently reduce the
unused portion of the Revolving Credit Commitments or the Revolving L/C
Sublimit; provided that (i) any such notice shall be received by the Payment
Agent not later than 12:00 noon (eastern time) three Business Days prior to the
date of termination or reduction, (ii) any such partial reduction shall be in a
minimum aggregate amount of $5,000,000 or any whole multiple of $1,000,000 in
excess thereof, (iii) the Borrower shall not terminate or reduce the unused
portion of the Revolving Credit Commitments if, after giving effect thereto and
to any concurrent prepayments hereunder, the Outstanding Amount of Revolving
Credit Loans and Revolving L/C Obligations would exceed the aggregate Revolving
Credit Commitments or if the Revolving L/C Sublimit would exceed the aggregate
Revolving Credit Commitments and (iv) the Borrower shall not terminate or reduce
the unused portion of the Revolving L/C Sublimit if, after giving effect thereto
and to any concurrent prepayments hereunder, the Outstanding Amount of the
Revolving L/C Obligations would exceed the Revolving L/C Sublimit. If after
giving effect to any reduction or termination of unused Revolving Credit
Commitments under this Section 2.05, the Revolving L/C Sublimit exceeds the
aggregate Revolving Credit Commitments, the Revolving L/C Sublimit shall be
automatically reduced by the amount of such excess.

The Borrower may, upon notice to the Payment Agent, terminate the unused portion
of the Term L/C Issuer Commitments, or from time to time permanently reduce the
unused portion of the Term L/C Issuer Commitments; provided that (i) any such
notice shall be received by the Payment Agent not later than 12:00 noon (eastern
time) three Business Days prior to the date of termination or reduction,

 

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(ii) any such partial reduction shall be in a minimum aggregate amount of
$5,000,000 or any whole multiple of $1,000,000 in excess thereof and (iii) the
Borrower shall not terminate or reduce the Term L/C Issuer Commitments if, after
giving effect thereto and to any concurrent prepayments hereunder, the
Outstanding Amount of Term L/C Facility Obligations would exceed the aggregate
Term L/C Issuer Commitment.

(b) Application of Commitment Reductions; Payment of Fees. The Payment Agent
will promptly notify the Revolving Credit Lenders of any termination or
reduction of the unused portions of the Revolving L/C Sublimit or the unused
Revolving Credit Commitments under this Section 2.05. Upon any reduction of
unused Revolving Credit Commitments, the Revolving Credit Commitment of each
Revolving Credit Lender shall be reduced by such Lender’s Pro Rata Share of the
amount by which the Revolving Credit Commitments are reduced. All commitment
fees accrued until the effective date of any termination of the Revolving Credit
Commitments shall be paid on the fifth Business Day following receipt by the
Borrower of an invoice on the first such date to occur after the effective date
of such termination.

(c) Mandatory Commitment Reductions. The Term L/C Facility Commitments shall
terminate upon the Term L/C Facility Borrowing on the Closing Date. The Term L/C
Issuer Commitments shall be permanently reduced from time to time by the amount,
if any, by which the amount of the Term L/C Issuer Commitments exceed the
Maximum Percentage of the Term L/C Collateral Account Balance.

2.06. Repayment of Loans.

(a) The Borrower shall repay all outstanding Revolving Credit Loans on the
Revolving Credit Termination Date.

(b) The Borrower shall repay all outstanding Term L/C Facility Term Loans on the
Term L/C Facility Term Loan Maturity Date.

2.07. Interest.

(a) Subject to the provisions of Section 2.07(b), (i) each Eurodollar Rate Loan
shall bear interest on the outstanding principal amount thereof for each
Interest Period at a rate per annum equal to the Eurodollar Rate for such
Interest Period plus the Applicable Margin; and (ii) each Base Rate Loan shall
bear interest on the outstanding principal amount thereof from the applicable
borrowing date at a rate per annum equal to the Base Rate plus the Applicable
Margin.

(b) Subject to the provisions of Section 11.10, if any amount payable by the
Borrower under any Loan Document is not paid when due (without regard to any
applicable grace periods), whether at stated maturity, by acceleration or
otherwise, such amount shall thereafter bear interest at a fluctuating interest
rate per annum at all times equal to the Default Rate to the fullest extent
permitted by applicable Laws. Accrued and unpaid interest on past due amounts
(including interest on past due interest) shall be due and payable upon demand.

(c) Interest on each Loan shall be due and payable in arrears on each Interest
Payment Date applicable thereto and at such other times as may be specified
herein. Interest hereunder shall be due and payable in accordance with the terms
hereof before and after judgment, and before and after the commencement of any
proceeding under any Debtor Relief Law.

 

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2.08. Fees. In addition to certain fees described in Sections 2.03(i) and (j):

(a) Commitment Fee. The Borrower shall pay to the Payment Agent for the account
of each Revolving Credit Lender in accordance with its Pro Rata Share, a
commitment fee for the period from and including the Closing Date to but not
including the last day of the Availability Period, computed at a rate equal to
the Applicable Commitment Fee Rate times the actual daily amount by which the
aggregate Revolving Credit Commitments exceed the sum of the Outstanding Amounts
of the Revolving Credit Loans and the Revolving L/C Obligations; provided that
any commitment fee accrued with respect to any of the Revolving Credit
Commitments of a Defaulting Lender during the period prior to the time such
Lender became a Defaulting Lender and unpaid at such time shall not be payable
by the Borrower so long as such Lender shall be a Defaulting Lender except to
the extent that such commitment fee shall otherwise have been due and payable by
the Borrower prior to such time; and provided, further, that no commitment fee
shall accrue on any of the Revolving Credit Commitments of a Defaulting Lender
so long as such Lender shall be a Defaulting Lender. The commitment fee shall
accrue at all times during the Availability Period, including at any time during
which one or more of the conditions in Article IV is not met, and shall be due
and payable quarterly in arrears on the fifth Business Day following receipt by
the Borrower of an invoice with appropriate back up, commencing with the first
such date to occur after the Closing Date, and on the Revolving Credit
Termination Date. The commitment fee shall be calculated quarterly in arrears.

(b) Other Fees. The Borrower shall pay to the Agents such fees as shall have
been separately agreed upon in writing in the amounts and at the times so
specified. Such fees shall be fully earned when paid and shall not be refundable
for any reason whatsoever.

2.09. Computation of Interest and Fees. All computations of interest for Base
Rate Loans when the Base Rate is determined by Citibank’s “base rate” or fees
shall be made on the basis of a year of 365 or 366 days, as the case may be, and
actual days elapsed. All other computations of interest shall be made on the
basis of a 360-day year and actual days elapsed (which results in more fees or
interest, as applicable, being paid than if computed on the basis of a 365-day
year). Interest shall accrue on each Loan for the day on which the Loan is made,
and shall not accrue on a Loan, or any portion thereof, for the day on which the
Loan or such portion is paid, provided that any Loan that is repaid on the same
day on which it is made shall, subject to Section 2.11(a), bear interest for one
day. Each determination by the Payment Agent of an interest rate or fee
hereunder shall be conclusive and binding for all purposes, absent manifest
error.

2.10. Evidence of Indebtedness.

(a) The Credit Extensions made by each Lender shall be evidenced by one or more
accounts or records maintained by such Lender and by the Payment Agent in the
ordinary course of business. The accounts or records maintained by the Payment
Agent and each Lender shall be conclusive absent manifest error of the amount of
the Credit Extensions made by the Lenders to the Borrower and the interest and
payments thereon. Any failure to so record or any error in doing so shall not,
however, limit or otherwise affect the obligation of the Borrower hereunder to
pay any amount owing with respect to the Obligations. In the event of any
conflict between the accounts and records maintained by any Lender and the
accounts and records of the Payment Agent in respect of such matters, the
accounts and records of the Payment Agent shall control in the absence of
manifest error. Upon the request of any Lender made through the Payment Agent,
the Borrower shall execute and deliver to such Lender (through the Payment
Agent) a Note for each Facility under which such Lender holds Loans, which shall
evidence such Lender’s Loans thereunder in addition to such accounts or records.
Each Lender may attach schedules to its Note or Notes and endorse thereon the
date, Type (if applicable), amount and maturity of its Loans and payments with
respect thereto.

 

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(b) In addition to the accounts and records referred to in Section 2.10(a), each
Lender and the Payment Agent shall maintain in accordance with its usual
practice accounts or records evidencing the purchases and sales by such Lender
of participations in Revolving Letters of Credit. In the event of any conflict
between the accounts and records maintained by the Payment Agent and the
accounts and records of any Lender in respect of such matters, the accounts and
records of the Payment Agent shall control in the absence of manifest error.

(c) Entries made in good faith by the Payment Agent in the Register pursuant to
Section 2.10(b), and by each Lender in its account or accounts pursuant to
Section 2.10(a), shall be prima facie evidence of the amount of principal and
interest due and payable or to become due and payable from the Borrower to, in
the case of the Register, each Lender and, in the case of such account or
accounts, such Lender, under this Agreement and the other Loan Documents, absent
manifest error; provided that the failure of the Payment Agent or such Lender to
make an entry, or any finding that an entry is incorrect, in the Register or
such account or accounts shall not limit or otherwise affect the obligations of
the Borrower under this Agreement and the other Loan Documents.

2.11. Payments Generally.

(a) All payments to be made by the Borrower shall be made without condition or
deduction for any counterclaim, defense, recoupment or setoff. Except as
otherwise expressly provided herein, all payments by the Borrower hereunder
shall be made to the Payment Agent, for the account of the respective Lenders to
which such payment is owed, at the Payment Agent’s Office in Dollars and in
immediately available funds not later than 2:00 p.m. (eastern time) on the date
specified herein for such payment. The Payment Agent will promptly distribute to
the Lenders such payment in like funds as received by wire transfer to such
Lender’s Lending Office. All payments received by the Payment Agent after 2:00
p.m. (eastern time) shall be deemed received on the next succeeding Business Day
and any applicable interest or fee shall continue to accrue.

(b) If any payment to be made by the Borrower shall come due on a day other than
a Business Day, payment shall be made on the next following Business Day, and
such extension of time shall be reflected in computing interest or fees, as the
case may be; provided that, if such extension would cause payment of interest on
or principal of Eurodollar Rate Loans to be made in the next succeeding calendar
month, such payment shall be made on the immediately preceding Business Day.

(c) Unless the Borrower or any Lender has notified the Payment Agent, prior to
the date any payment is required to be made by it to the Payment Agent
hereunder, that the Borrower or such Lender, as the case may be, will not make
such payment, the Payment Agent may assume that the Borrower or such Lender, as
the case may be, has timely made such payment and may (but shall not be so
required to), in reliance thereon, make available a corresponding amount to the
Person entitled thereto. If and to the extent that such payment was not in fact
made to the Payment Agent in immediately available funds, then:

(i) if the Borrower failed to make such payment, each Lender shall forthwith on
demand repay to the Payment Agent the portion of such assumed payment that was
made available to such Lender in immediately available funds, together with
interest thereon in respect of each day from and including the date such amount
was made available by the Payment Agent to such Lender to the date such amount
is repaid to the Payment Agent in immediately available funds at the Federal
Funds Rate from time to time in effect; and

 

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(ii) if any Lender failed to make such payment, such Lender shall forthwith on
demand pay to the Payment Agent the amount thereof in immediately available
funds, together with interest thereon for the period from the date such amount
was made available by the Payment Agent to the Borrower to the date such amount
is recovered by the Payment Agent (the “Compensation Period”) at a rate per
annum equal to the Federal Funds Rate from time to time in effect. If such
Lender pays such amount to the Payment Agent, then such amount shall constitute
such Lender’s Loan included in the applicable Borrowing. If such Lender does not
pay such amount forthwith upon the Payment Agent’s demand therefor, the Payment
Agent may make a demand therefor upon the Borrower, and the Borrower shall pay
such amount to the Payment Agent, together with interest thereon for the
Compensation Period at a rate per annum equal to the rate of interest applicable
to the applicable Borrowing. Nothing herein shall be deemed to relieve any
Lender from its obligation to fulfill its Commitment or to prejudice any rights
which the Payment Agent or the Borrower may have against any Lender as a result
of any default by such Lender hereunder.

A notice of the Payment Agent to any Lender or the Borrower with respect to any
amount owing under this Section 2.11(c) shall be conclusive, absent manifest
error.

(d) If any Lender makes available to the Payment Agent funds for any Loan to be
made by such Lender as provided in the foregoing provisions of this Article II,
and such funds are not made available to the Borrower by the Payment Agent
because the conditions to the applicable Credit Extension set forth in Article
IV are not satisfied or waived in accordance with the terms hereof, the Payment
Agent shall return such funds (in like funds as received from such Lender) to
such Lender, without interest.

(e) The obligations of the Lenders hereunder to make Loans and to fund
participations in Letters of Credit are several and not joint. The failure of
any Lender to make any Loan or to fund any such participation on any date
required hereunder shall not relieve any other Lender of its corresponding
obligation to do so on such date, and no Lender shall be responsible for the
failure of any other Lender to so make its Loan or purchase its participation.

(f) Nothing herein shall be deemed to obligate any Lender to obtain the funds
for any Loan in any particular place or manner or to constitute a representation
by any Lender that it has obtained or will obtain the funds for any Loan in any
particular place or manner.

(g) Whenever any payment received by the Payment Agent under this Agreement or
any of the other Loan Documents is insufficient to pay in full all amounts due
and payable to the Agents and the Lenders under or in respect of this Agreement
and the other Loan Documents on any date, such payment shall be distributed by
the Payment Agent and applied by the Agents and the Lenders ratably in
accordance with each Lender’s Pro Rata Share of all amounts then due and payable
in respect of the Obligations. If the Payment Agent receives funds for
application to the Obligations of the Loan Parties under or in respect of the
Loan Documents under circumstances for which the Loan Documents do not specify
the manner in which such funds are to be applied, the Payment Agent may, but
shall not be obligated to, elect to distribute such funds to each of the Lenders
in accordance with such Lender’s Pro Rata Share of the Total Outstandings at
such time, in repayment or prepayment of such of the outstanding Loans or other
Obligations then owing to such Lender.

(h) Each Borrowing by the Borrower from the Lenders under the Revolving Credit
Facility, each payment by the Borrower on account of any commitment fee and any
reduction of the Revolving Credit Commitments shall be made in accordance with
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Revolving Credit Lenders under the Revolving Credit Facility (except as
otherwise provided in Section 2.04(b)(iv)).

(i) Each payment (including each prepayment) by the Borrower on account of
principal of and interest on the Revolving Credit Loans shall be made in
accordance with the respective Pro Rata Shares of the Revolving Credit Lenders
under the Revolving Credit Facility.

(j) Each payment (including each prepayment) by the Borrower on account of
principal of and interest on the Term L/C Facility Term Loans shall be made in
accordance with the respective Pro Rata Shares of the Term L/C Facility Lenders
under the Term L/C Facility (except as otherwise provided in
Section 2.04(b)(vi)).

2.12. Sharing of Payments. If, other than as expressly provided elsewhere
herein, any Lender shall obtain on account of the Loans made by it, or the
participations in Revolving L/C Obligations held by it, any payment (whether
voluntary, involuntary, through the exercise of any right of setoff, or
otherwise) in excess of its Pro Rata Share (or other share contemplated
hereunder) thereof, such Lender shall immediately (a) notify the Payment Agent
of such fact, and (b) purchase from the other Lenders under the Facility in
respect of which such excess payment was made such participations in the Loans
made by them and/or such subparticipations in the participations in Revolving
L/C Obligations held by them as shall be necessary to cause such purchasing
Lender to share the excess payment in respect of such Loans or such
participations, as the case may be, pro rata with each of them; provided that if
all or any portion of such excess payment is thereafter recovered from the
purchasing Lender under any of the circumstances described in Section 11.06
(including pursuant to any settlement entered into by the purchasing Lender in
its discretion), such purchase shall to that extent be rescinded and each such
other Lender shall repay to the purchasing Lender the purchase price paid
therefor, together with an amount equal to such paying Lender’s ratable share
(according to the proportion of (i) the amount of such paying Lender’s required
repayment to (ii) the total amount so recovered from the purchasing Lender) of
any interest or other amount paid or payable by the purchasing Lender in respect
of the total amount so recovered, without further interest thereon. The Borrower
agrees that any Lender so purchasing a participation from another Lender may, to
the fullest extent permitted by law, exercise all its rights of payment
(including the right of setoff, but subject to Section 11.09) with respect to
such participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation. The Payment Agent will keep
records (which shall be conclusive and binding in the absence of manifest error)
of participations purchased under this Section 2.12 and will in each case notify
the Lenders following any such purchases or repayments. Each Lender that
purchases a participation pursuant to this Section 2.12 shall from and after
such purchase have the right to give all notices, requests, demands, directions
and other communications under this Agreement with respect to the portion of the
Obligations purchased to the same extent as though the purchasing Lender were
the original owner of the Obligations purchased.

2.13. Incremental Revolving Credit Commitments.

(a) The Borrower may, by written notice to the Administrative Agents, elect to
request, prior to the date 30 days prior to Revolving Credit Termination Date,
an increase to the existing Revolving Credit Commitments (any such increase, the
“New Revolving Credit Commitments”); provided that (i) the aggregate amount of
New Revolving Credit Commitments shall not exceed $30,000,000 and (ii) the
minimum amount of any such increase shall be $10,000,000 and multiples of
$5,000,000 thereof. Each such notice shall specify the date (each, an “Increased
Amount Date”) on which the Borrower proposes that the New Revolving Credit
Commitments shall be effective, which shall be a date not less than five
Business Days after the date on which such notice is delivered to the Payment
Agent; provided that the Borrower shall first offer the Revolving Credit
Lenders, on a pro rata basis, the opportunity to provide all of the New
Revolving Credit Commitments prior to offering such opportunity

 

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to any other Person that is an eligible assignee pursuant to Section 11.07(b);
provided, further, that any Revolving Credit Lender offered or approached to
provide all or a portion of the New Revolving Credit Commitments may elect or
decline, in its sole discretion, to provide a New Revolving Credit Commitment.
Such New Revolving Credit Commitments shall become effective, as of such
Increased Amount Date; provided that (i) no Default shall exist on such
Increased Amount Date before or after giving effect to such New Revolving Credit
Commitments; (ii) both before and after giving effect to the making of any New
Revolving Credit Loans, each of the conditions set forth in Section 4.02 shall
be satisfied; (iii) the Borrower and its Subsidiaries shall be in pro forma
compliance with each of the covenants set forth in Section 7.11 as of the last
day of the most recently ended fiscal quarter for which financial statements are
required to be delivered pursuant to Section 6.01(a), (b), (c) and (d) after
giving effect to such New Revolving Credit Commitments; (iv) the New Revolving
Credit Commitments shall be effected pursuant to one or more Joinder Agreements
executed and delivered by each Lender with a New Revolving Credit Commitment
(each, a “New Revolving Credit Lender”) and the Borrower (subject to the
consents specified in clause (viii) below), and each of which shall be recorded
in the Register; (v) the Borrower shall make any payments required pursuant to
Section 3.05 in connection with the New Revolving Credit Commitments, as
applicable; (vi) the Borrower shall deliver or cause to be delivered any legal
opinions or other documents reasonably requested by the Payment Agent in
connection with any such transaction; (vii) the requirements set forth in
Section 6.13(b) shall have been satisfied; and (viii) the New Revolving Credit
Lender in respect of a New Revolving Credit Commitment shall be approved by the
Payment Agent and each Revolving L/C Issuer (such approval not to be
unreasonably withheld or delayed). Each Joinder Agreement may, without the
consent of any Lender (other than the Lender providing the New Revolving Credit
Commitment pursuant thereto), effect such amendments to this Agreement and the
other Loan Documents as may be necessary or appropriate, in the opinion of the
Payment Agent, to reflect the relevant increase in the Revolving Credit
Commitments contemplated in this Section 2.13.

(b) On any Increased Amount Date, subject to the satisfaction of the foregoing
terms and conditions, (i) each of the Revolving Credit Lenders with Revolving
Credit Commitments shall assign to each New Revolving Credit Lender and each of
the New Revolving Credit Lenders shall purchase from each of the Lenders with
Revolving Credit Commitments, at the principal amount thereof (together with
accrued interest), such interests in the Revolving Credit Loans outstanding on
such Increased Amount Date as shall be necessary in order that, after giving
effect to all such assignments and purchases, such Revolving Credit Loans will
be held by existing Lenders with Revolving Credit Loans and New Revolving Credit
Lenders ratably in accordance with their Revolving Credit Commitments after
giving effect to the addition of such New Revolving Credit Commitments to the
Revolving Credit Commitments, (ii) each New Revolving Credit Commitment shall be
deemed for all purposes a Revolving Credit Commitment and each loan made
thereunder (a “New Revolving Credit Loan”) shall be deemed, for all purposes, a
Revolving Credit Loan and (iii) each New Revolving Credit Lender shall become a
Lender with respect to its New Revolving Credit Commitment and all matters
relating thereto.

(c) The Payment Agent shall notify the Lenders promptly upon receipt of the
Borrower’s notice of each Increased Amount Date and, in respect thereof, the
respective interests in such Lender’s Revolving Credit Loans subject to the
assignments contemplated by Section 2.13(b).

ARTICLE III

TAXES, YIELD PROTECTION AND ILLEGALITY

3.01. Taxes.

(a) Any and all payments by the Borrower to or for the account of any Agent or
any Lender under any Loan Document shall be made free and clear of and without
deduction for any and all

 

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present or future withholding taxes, including duties, levies, imposts,
deductions, assessments, fees, withholdings or similar charges, and all
liabilities with respect thereto, excluding, in the case of each Agent and each
Lender, (i) taxes imposed on or measured by its income by the jurisdiction (or
any political subdivision thereof) under the Laws of which such Agent or such
Lender, as the case may be, is organized or in which it maintains a Lending
Office and (ii) in the case of a Foreign Lender, any taxes imposed (other than
taxes imposed because of a change in law (including a rate change), treaty,
governmental rule or the application thereof, which change occurs after the date
hereof, or in the case of an entity that becomes a Foreign Lender after the date
hereof, after such entity becomes a Lender) by the United States of America by
means of withholding at the source if and to the extent that such taxes shall be
in effect and shall be applicable, under Laws in effect on the date hereof (or,
with respect to any entity that becomes a Foreign Lender after the date hereof,
on the date such entity becomes a Lender), on payments to be made to such
Foreign Lender after taking into account any forms or certificates provided by
such Foreign Lender under Section 11.15 (all such non-excluded taxes, duties,
levies, imposts, deductions, assessments, fees, withholdings or similar charges,
and liabilities being hereinafter referred to as “Taxes”). If the Borrower shall
be required by any Laws to deduct any Taxes from or in respect of any sum
payable under any Loan Document to any Agent or any Lender, (A) 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 3.01), each of such Agent and such Lender receives an amount equal to
the sum it would have received had no such deductions been made, (B) the
Borrower shall make such deductions, (C) the Borrower shall pay the full amount
deducted to the relevant taxation authority or other authority in accordance
with applicable Laws, and (D) within 30 days after the date of such payment, the
Borrower shall furnish to such Agent or Lender (as the case may be) (which shall
forward the same to such Lender) the original or a certified copy of a receipt
evidencing payment thereof to the extent such a receipt is issued therefor, or
other written proof of payment thereof that is reasonably satisfactory to the
Payment Agent.

(b) In addition, the Borrower agrees to pay any and all present or future stamp,
court or documentary taxes and any other excise or property, intangible,
mortgage recording or similar taxes, charges or levies which arise from any
payment made by the Borrower under any Loan Document or from the execution,
delivery, performance, enforcement or registration of any Loan Document
(hereinafter referred to as “Other Taxes”).

(c) The Borrower agrees to indemnify each Agent and each Lender for (i) the full
amount of Taxes and Other Taxes (including any Taxes or Other Taxes imposed or
asserted by any jurisdiction on amounts payable under this Section 3.01) paid by
such Agent and such Lender and (ii) any liability (including additions to tax,
penalties, interest and expenses) arising therefrom or with respect thereto,
except as a result of the gross negligence or willful misconduct of such Agent
or such Lender (as the case may be), in each case whether or not such Taxes or
Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. Payment under this Section 3.01(c) shall be made within
30 days after the date such Agent or such Lender makes a demand therefor.

3.02. Illegality. If any Lender determines that the introduction of or change in
or in the interpretation of any Law has made it unlawful, or that any
Governmental Authority has asserted that it is unlawful, for any Lender or its
applicable Lending Office to make, maintain or fund Eurodollar Rate Loans, or to
determine or charge interest rates based upon the Eurodollar Rate, then, on
notice thereof by such Lender to the Borrower through the Payment Agent, any
obligation of such Lender to make or continue Eurodollar Rate Loans or to
convert Base Rate Loans to Eurodollar Rate Loans shall be suspended until such
Lender notifies the Payment Agent and the Borrower that the circumstances giving
rise to such determination no longer exist. Upon receipt of such notice, the
Borrower shall, upon demand from such Lender (with a copy to the Payment Agent),
prepay or, if applicable, convert all Eurodollar Rate Loans of such Lender to
Base Rate Loans, either on the last day of the Interest Period therefor, if

 

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such Lender may lawfully continue to maintain such Eurodollar Rate Loans to such
day, or immediately, if such Lender may not lawfully continue to maintain such
Eurodollar Rate Loans. Upon any such prepayment or conversion, the Borrower
shall also pay accrued interest on the amount so prepaid or converted. Each
Lender agrees to designate a different Lending Office if such designation will
avoid the need for such notice and will not, in the good faith judgment of such
Lender, otherwise be materially disadvantageous to such Lender.

3.03. Inability to Determine Rates. If the Required Lenders determine that for
any reason adequate and reasonable means do not exist for determining the
Eurodollar Rate for any requested Interest Period with respect to a proposed
Eurodollar Rate Loan, or that the Eurodollar Rate for any requested Interest
Period with respect to a proposed Eurodollar Rate Loan does not adequately and
fairly reflect the cost to such Lenders of funding such Loan, or that Dollar
deposits are not being offered to banks in the London interbank eurodollar
market for the applicable amount and the Interest Period of such Eurodollar Rate
Loan, the Payment Agent will promptly so notify the Borrower and each Lender.
Thereafter, the obligation of the Lenders to make or maintain Eurodollar Rate
Loans shall be suspended until the Payment Agent (upon the instruction of the
Required Lenders) revokes such notice. Upon receipt of such notice, the Borrower
may revoke any pending request for a Borrowing of, conversion to or continuation
of Eurodollar Rate Loans or, failing that, will be deemed to have converted such
request into a request for Base Rate Loans in the amount specified therein.

3.04. Increased Cost and Reduced Return; Capital Adequacy; Reserves on
Eurodollar Rate Loans.

(a) If any Lender determines that as a result of the introduction of or any
change in or in the interpretation of any Law, in each case after the date
hereof, or such Lender’s compliance therewith, there shall be any increase in
the cost to such Lender of agreeing to make or making, funding or maintaining
Eurodollar Rate Loans or (as the case may be) issuing or participating in
Letters of Credit, or a reduction in the amount received or receivable by such
Lender in connection with any of the foregoing (excluding for purposes of this
Section 3.04(a) any such increased costs or reduction in amount resulting from
(i) Taxes or Other Taxes (as to which Section 3.01 shall govern) and
(ii) changes in the basis of taxation of overall net income or overall gross
income by the United States or any foreign jurisdiction or any political
subdivision of either thereof under the Laws of which such Lender is organized
or has its Lending Office), then from time to time upon demand of such Lender
(with a copy of such demand to the Payment Agent), the Borrower shall pay to
such Lender such additional amounts as will compensate such Lender for such
increased cost or reduction.

(b) If any Lender determines that the introduction of any Law regarding capital
adequacy or any change therein or in the interpretation thereof, in each case
after the date hereof, or compliance by such Lender (or its Lending Office)
therewith, has the effect of reducing the rate of return on the capital of such
Lender or any corporation controlling such Lender as a consequence of such
Lender’s obligations hereunder (taking into consideration its policies with
respect to capital adequacy and such Lender’s desired return on capital), then
from time to time upon demand of such Lender (with a copy of such demand to the
Payment Agent), the Borrower shall pay to such Lender such additional amounts as
will compensate such Lender for such reduction.

3.05. Funding Losses. Upon demand of any Lender (with a copy to the Payment
Agent) from time to time, the Borrower shall promptly compensate such Lender for
and hold such Lender harmless from any loss, cost or expense incurred by it as a
result of:

(a) any continuation, conversion, payment or prepayment of any Loan other than a
Base Rate Loan on a day other than the last day of the Interest Period for such
Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or
otherwise); or

 

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(b) any failure by the Borrower (for a reason other than the failure of such
Lender to make a Loan) to prepay, borrow, continue or convert any Loan other
than a Base Rate Loan on the date or in the amount notified by the Borrower;

including any loss of anticipated profits and any loss or expense arising from
the liquidation or reemployment of funds obtained by it to maintain such Loan or
from fees payable to terminate the deposits from which such funds were obtained.
The Borrower shall also pay any customary administrative fees charged by such
Lender in connection with the foregoing.

For purposes of calculating amounts payable by the Borrower to the Lenders under
this Section 3.05, each Lender shall be deemed to have funded each Eurodollar
Rate Loan made by it at the Eurodollar Rate for such Loan by a matching deposit
or other borrowing in the London interbank eurodollar market for a comparable
amount and for a comparable period, whether or not such Eurodollar Rate Loan was
in fact so funded.

3.06. Matters Applicable to all Requests for Compensation. A certificate of any
Agent or any Lender claiming compensation under this Article III and setting
forth the additional amount or amounts to be paid to it hereunder shall be
conclusive in the absence of manifest error. In determining such amount, such
Agent or such Lender may use any reasonable averaging and attribution methods.

3.07. Survival. All of the Borrower’s obligations under this Article III shall
survive termination of the Commitments and repayment of all other Obligations
hereunder.

ARTICLE IV

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

4.01. Conditions of Initial Credit Extension. The obligation of each Lender to
make its initial Credit Extension hereunder is subject to satisfaction of the
following conditions precedent:

(a) Receipt by the Administrative Agents of the following, each of which shall
be originals or facsimiles (followed promptly by originals) unless otherwise
specified, each properly executed by a Responsible Officer of the signing Loan
Party, each dated the Closing Date (or, in the case of certificates of
governmental officials, a recent date before the Closing Date) and each in form
and substance satisfactory to the Administrative Agents and their legal counsel:

(i) counterparts of this Agreement, executed by the Borrower, each Guarantor,
each Agent and (subject to Section 11.21) each Lender;

(ii) a Note executed by the Borrower in favor of each Lender requesting a Note;

(iii) the Shared Security Agreement and Non-Shared Security Agreement, duly
executed by each party thereto, together with:

(A) to the extent not previously delivered to the Collateral Agent or the
Collateral Trustees, as applicable, certificates representing the Pledged Equity
referred to (and as defined) in the Non-Shared Security Agreement or the Shared

 

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Security Agreement, as the case may be, accompanied by undated stock powers
executed in blank and instruments evidencing the Pledged Debt referred to (and
as defined) therein indorsed in blank,

(B) to the extent not already duly filed pursuant to the Existing DHI Credit
Agreement or as requested by the Administrative Agent, proper financing
statements, duly prepared for filing under the Uniform Commercial Code of all
jurisdictions that the Administrative Agents may deem necessary or desirable in
order to perfect the first (other than any Permitted Liens) priority liens and
security interests created under the Non-Shared Security Agreement or the Shared
Security Agreement, as applicable, covering the Collateral described in the
Non-Shared Security Agreement or the Shared Security Agreement, as applicable,

(C) evidence of insurance in effect as of the Closing Date with respect
to the Borrower and its Restricted Subsidiaries as described on
Schedule 4.01(a)(iii)(C) (it being understood that the delivery of such evidence
is a condition precedent under this Section 4.01 only and that the Borrower’s
obligation to maintain insurance from and after the Closing Date shall
be governed by Section 6.07),

(D) amendments to the Security Control Agreements and Account Control Agreements
referred to in the Non-Shared Security Agreement, duly executed by the
securities intermediaries and depositary banks, as applicable, referred to in
the Non-Shared Security Agreement, as necessary, and

(E) evidence that all other action that the Administrative Agents may reasonably
deem necessary in order to perfect the first (other than any Permitted Liens)
priority liens and security interests created under the Non-Shared Security
Agreement and the Shared Security Agreement has been commenced (other than the
filings referred to in clause (B) above);

(iv) supplements (the “Mortgage Supplements”) to the Mortgages set forth on
Schedule 4.01(a)(iv), substantially in the form of Exhibit G (with such changes
as may be required to account for local law matters), duly executed by the
appropriate Loan Party, together with:

(A) delivery of the Mortgage Supplements in the appropriate form for filing or
recording in order to continue a valid first and subsisting Lien, subject only
to (i) Permitted Encumbrances (as defined in the Mortgages) and (ii) Permitted
Liens, in each case on the property described therein, in favor of the
Collateral Agent or the Collateral Trustees, as the case may be, for the benefit
of the appropriate Secured Parties and reasonable evidence that all filing and
recording taxes, documentary stamp taxes, and similar taxes, charges, and fees
required to be paid in connection with the filing or recording of such Mortgage
Supplements shall be paid;

(B) regarding all Real Property for which Mortgages were obtained in connection
with the Existing DHI Credit Agreement, (i) evidence in the form of updated
title searches, title reports or “abstractor” certificates, “title” certificates
or so-called “nothing further” certificates, as applicable, reasonably
sufficient to

 

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determine whether each Loan Party and each of its Subsidiaries required to
execute and deliver a Mortgage Supplement pursuant to this Agreement has good
title in fee simple to, or valid leasehold interests in, all Collateral covered
by the Mortgages (other than the properties comprised of “pipelines” or
“gathering systems”) and (ii) a modification/date-down endorsement to each
existing Mortgage Policy extending the effective date of the policy to the date
of recording for the applicable Mortgage Supplement and insuring that that the
modification of the insured mortgage does not impair the validity,
enforceability or priority of the insured mortgage, as modified; and

(C) such other documents as may be reasonably necessary to record the Mortgage
Supplements, to issue the modification/date-down endorsements, or to create,
perfect or preserve the security interests granted by the Mortgages or the
Mortgage Supplements;

(v) the Collateral Trust Agreement, duly executed by the parties thereto;

(vi) such certificates of resolutions or other action, incumbency certificates
and/or other certificates of Responsible Officers or assistant secretary of each
Loan Party as the Administrative Agents may require evidencing the identity,
authority and capacity of each Responsible Officer thereof authorized to act as
a Responsible Officer in connection with this Agreement and the other Loan
Documents to which such Loan Party is a party or is to be a party;

(vii) such documents and certifications as the Administrative Agents may
reasonably require to evidence that each Loan Party is duly organized or formed,
and that each of the Borrower and the Guarantors is validly existing, in good
standing and qualified to engage in business in each jurisdiction where its
ownership, lease or operation of properties or the conduct of its business
requires such qualification, except to the extent that failure to do so could
not reasonably be expected to have a Material Adverse Effect;

(viii) a favorable opinion of Akin Gump Strauss Hauer & Feld LLP, counsel to the
Loan Parties, addressed to each Agent and each Lender, in form and substance
reasonably satisfactory to the Administrative Agents;

(ix) a favorable opinion of appropriate local counsel to the Loan Parties in the
jurisdictions set forth in Schedule 4.01(a), addressed to each Agent and each
Lender, in form and substance reasonably satisfactory to the Administrative
Agents;

(x) a certificate signed by a Responsible Officer of the Borrower certifying
that the conditions specified in Sections 4.02(a), (b) and (c) have been
satisfied;

(xi) such financial, business and other information regarding each Loan Party
and its Subsidiaries as the Lenders shall have requested, including, without
limitation, information as to obligations under Pension Plans, Multiemployer
Plans (to the knowledge of any Loan Party), collective bargaining agreements and
other arrangements with employees;

(xii) a Request for Credit Extension relating to the initial Credit Extension,
provided that any such Request for Credit Extension that selects the Eurodollar
Rate for

 

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the Credit Extensions to be made hereunder on the Closing Date shall have been
so received by 12:00 noon (eastern time) three Business Days prior to the
Closing Date, together with one or more written indemnities in form and
substance satisfactory to the Payment Agent obligating the Borrower to
compensate the Lenders for losses, costs and expenses of the type described in
Section 3.05 that may be incurred by them in the event such Credit Extensions
are not made on the date requested in such Request for Credit Extension;

(xiii) a certificate signed by a Responsible Officer of the Borrower certifying,
as of the Closing Date, (A) that the elimination of substantially all the
restrictive covenants, elimination or modification of certain events of default
and elimination or modification of related provisions, in each case, contained
in the 2003 Second Lien Indenture, has been consummated as contemplated in the
Second Supplemental Indenture dated as of March 28, 2006 to the 2003 Second Lien
Indenture, (B) that there exists no “Principal Property” (as defined in, and for
purposes of Section 10.06 of, the 1996 Indenture) and (C) that the Liens on the
Collateral securing the Secured Obligations are otherwise permitted under the
terms of all agreements and instruments to which the Parent Guarantor, the
Borrower or any of its Subsidiaries is a party, including, without limitation,
the 1996 Indenture;

(xiv) the Borrower shall have entered into such cash collateral account
agreements with respect to the Term L/C Collateral Account (and control
agreements relating thereto) as the Collateral Agent shall request, each in form
and substance satisfactory to the Collateral Agent, and the Borrower shall have
funded the Term L/C Collateral Account in the amount required by Section 2.03(k)
as of the Closing Date; and

(xv) such other collateral documents as the Administrative Agents may reasonably
request.

(b) (i) All fees required to be paid on or before the Closing Date shall have
been paid, (ii) to the extent that written invoices have been provided, all
costs and expenses of the Agents shall have been paid and (iii) all accrued fees
and (to the extent confirmed in writing by the Payment Agent to the Borrower)
other amounts owing to the Agents and the Lenders under (and as defined in) the
Existing DHI Credit Agreement shall have been paid.

(c) The Lenders shall be reasonably satisfied with the environmental affairs of
the Parent Guarantor and its Subsidiaries.

4.02. Conditions to all Credit Extensions. The obligation of each Lender to
honor any Request for Credit Extension (other than a Committed Loan Notice
requesting only a conversion of Loans to the other Type, or a continuation of
Eurodollar Rate Loans, or an extension of the expiry date of any Letter of
Credit (without increasing the amount thereof), or the renewal of any Letter of
Credit (without increasing the amount thereof)) is subject to the following
conditions precedent:

(a) The representations and warranties of each Loan Party contained in Article V
or in any other Loan Document, or which are contained in any document furnished
at any time under or in connection herewith or therewith, shall be true and
correct in all material respects on and as of the date of such Credit Extension,
except to the extent that such representations and warranties specifically refer
to an earlier date, in which case they shall be true and correct in all material
respects as of such earlier date, and except that for purposes of this
Section 4.02, the representations and warranties contained in

 

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Section 5.05 shall be deemed to refer to the most recent statements furnished
pursuant to Sections 6.01(a) and (b), respectively.

(b) No Default shall exist, or would result from such proposed Credit Extension
or from the application of the proceeds therefrom.

(c) Since December 31, 2005, except as disclosed in any Public Disclosure, there
has been no event or circumstance, either individually or in the aggregate, that
has had or could reasonably be expected to have a Material Adverse Effect.

(d) The Administrative Agents and, if applicable, the relevant L/C Issuers,
shall have received a Request for Credit Extension in accordance with the
requirements hereof.

Each Request for Credit Extension (other than a Committed Loan Notice requesting
only a conversion of Loans to the other Type or a continuation of Eurodollar
Rate Loans or an extension of the expiry date of any Letter of Credit (without
increasing the amount thereof), or the renewal of any Letter of Credit (without
increasing the amount thereof)) submitted by the Borrower shall be deemed to be
a representation and warranty that the conditions specified in Sections 4.02(a),
(b) and (c) have been satisfied on and as of the date of the applicable Credit
Extension and with respect to a L/C Credit Extension (other than an extension of
the expiry date of any Letter of Credit (without increasing the amount thereof),
or the renewal of any Letter of Credit (without increasing the amount thereof)),
the Payment Agent shall have received for the account of the relevant L/C Issuer
a certificate signed by a Responsible Officer of the Borrower, dated the date of
such Credit Extension, stating that such statements are true (which shall be
deemed to be included as part of the Letter of Credit Application for such
request for a L/C Credit Extension).

ARTICLE V

REPRESENTATIONS AND WARRANTIES

Each of the Borrower and the Parent Guarantor represents and warrants to the
Agents and the Lenders that:

5.01. Existence, Qualification and Power; Compliance with Laws. Each Loan Party
and each of its Restricted Subsidiaries (a) is a corporation, partnership or
limited liability company duly organized or formed, validly existing and in good
standing under the Laws of the jurisdiction of its incorporation or
organization, (b) has all requisite power and authority and all requisite
governmental licenses, authorizations, consents and approvals to own or lease
its assets and carry on its business, (c) has all requisite power and authority
to execute, deliver and perform its obligations under the Loan Documents to
which it is a party, (d) is duly qualified and is licensed and in good standing
under the Laws of each jurisdiction where its ownership, lease or operation of
properties or the conduct of its business requires such qualification or license
and (e) is in compliance with all Laws, except in each case referred to in
clause (a), (b), (c), (d) or (e) to the extent that failure to do so could not
reasonably be expected to have a Material Adverse Effect.

5.02. Authorization; No Contravention. The execution, delivery and performance
by each Loan Party of each Loan Document to which such Person is a party are
within such Loan Party’s corporate or other powers, have been duly authorized by
all necessary corporate or other organizational action, and do not
(a) contravene the terms of any of such Person’s Organizational Documents;
(b) conflict with or result in any breach or contravention of, or the creation
of any Lien (other than Liens created under the Loan Documents) under, or
require any payment to be made under (i) any Contractual Obligation to which
such Person is a party, or (ii) any order, injunction, writ or applicable Law to
which

 

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such Person or its property is subject; or (c) violate any Law, except in the
case of clauses (a) through (c) where such contravention, conflict, breach,
violation or creation could not reasonably be expected to have a Material
Adverse Effect; provided that any foreclosure or other exercise of remedies by
the Collateral Trustees or the Collateral Agent may require notice to, filing
with, or approval or consent from regulators or Governmental Authorities of
lenders, service providers or suppliers to, or co-owners, partners, investors,
customers or other contractual counterparties of a Person in which the Parent
Guarantor or any of its Subsidiaries has a direct or indirect Equity Interest.

5.03. Governmental Authorization; Other Consents.

(a) No approval, consent, exemption, authorization, or other action by, or
notice to, or filing with, any Governmental Authority (including, under the
Federal Power Act) or any other Person is necessary or required in connection
with (i) the execution, delivery or performance (which for purposes of
clarification shall not include the exercise by the Secured Parties of any of
their remedies under the applicable Collateral Documents) by any Loan Party of
this Agreement or any other Loan Document or (ii) the grant by any Loan Party of
the Liens granted by it pursuant to the Collateral Documents, except in the case
of clauses (i) and (ii) to the extent that failure to obtain same could not
reasonably be expected to have a Material Adverse Effect or to the extent such
items have already been duly obtained, taken, given or made and are in full
force and effect; provided that any foreclosure or other exercise of remedies by
the Collateral Trustees or the Collateral Agent may require notice to, filing
with, or approval or consent from regulators or Governmental Authorities of
lenders, service providers or suppliers to, or co-owners, partners, investors,
customers or other contractual counterparties of a Person in which the Parent
Guarantor or any of its Subsidiaries has a direct or indirect Equity Interest.

(b) Except as set forth on Schedule 5.03(b), upon (i) the filing of UCC-1
financing statements (and any amendments thereto) as contemplated by the Shared
Security Agreement and the Non-Shared Security Agreement, (ii) the filing of the
Mortgage Supplements in the appropriate offices and (iii) other necessary
actions, all filings and other actions necessary to perfect the security
interest granted by each Loan Party in the Collateral created under the
Collateral Documents will have been duly made or taken and are in full force and
effect, and (A) the Shared Security Agreement creates in favor of the Collateral
Trustees for the benefit of the Secured Parties in respect of the Shared
Security Agreement, a valid, and together with such filings and other actions,
perfected security interest in the Collateral covered by the Shared Security
Agreement (subject to no Liens other than Liens permitted by the Loan
Documents), securing the payment of the Secured Obligations in respect of the
Shared Security Agreement, (B) the Non-Shared Security Agreement creates in
favor of the Collateral Agent for the benefit of Secured Parties in respect of
the Non-Shared Security Agreement a valid and, together with such filings and
other actions, perfected security interests in the Collateral covered by the
Non-Shared Security Agreement (subject to no Liens other than Liens permitted by
the Loan Documents), securing the Secured Obligations in respect of the
Non-Shared Security Agreement and (C) the Collateral Trust Agreement creates in
favor of the Collateral Trustees for the benefit of the Secured Parties in
respect of the Shared Security Agreement, a valid and, together with such other
actions, perfected security interest in the Additional Collateral Trust
Agreement Collateral (as defined in the Collateral Trust Agreement) (subject to
no Liens other than Liens permitted by the Loan Documents), and in each case all
filings and other actions necessary to perfect such security interests have been
duly taken, but in each of the foregoing instances only to the extent that a
security interest can be perfected against such collateral by filing a UCC-1
financing statement or taking possession thereof; provided that any foreclosure
or other exercise of remedies by the Collateral Trustees or the Collateral Agent
may require notice to, filings with, or approvals and consents that have not
been obtained from regulators or Governmental Authorities of, lenders, service
providers or suppliers to, or co-owners, partners, investors, customers or other
contractual counterparties of, a Person in which the Parent Guarantor or any of
its Subsidiaries has a direct or indirect

 

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Equity Interest, and failure to make such notices or filings or to obtain such
approval or consent could result in a default, or a breach of agreement or other
legal obligations of such Subsidiaries.

5.04. Binding Effect. This Agreement has been, and each other Loan Document,
when delivered hereunder, will have been, duly executed and delivered by each
Loan Party that is party thereto. This Agreement constitutes, and each other
Loan Document when so delivered will constitute, a legal, valid and binding
obligation of such Loan Party, enforceable against each Loan Party that is party
thereto in accordance with its terms, except as the enforceability thereof may
be limited by the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ rights generally
and by general principles of equity.

5.05. Financial Statements. The Initial Financial Statements (i) were prepared
in accordance with GAAP and (ii) fairly present in all material respects the
consolidated financial condition of the Parent Guarantor and its Subsidiaries as
of the date thereof and their results of operations for the period covered
thereby in accordance with GAAP in effect on the date such statements were
prepared.

5.06. Litigation. Except for Disclosed Litigation, there are no actions, suits,
proceedings, claims or disputes pending or, to the knowledge of the Borrower and
the Parent Guarantor, threatened or contemplated, at law, in equity, in
arbitration or before any Governmental Authority, by or against the Parent
Guarantor or any of its Subsidiaries or against any of their properties that
(a) pertain to this Agreement or any other Loan Document or (b) either
individually or in the aggregate could reasonably be expected to have a Material
Adverse Effect.

5.07. No Default. Except as disclosed in any Public Disclosure, neither the
Parent Guarantor nor any Subsidiary is in default under or with respect to any
Contractual Obligation that could, either individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. No Default has
occurred and is continuing or would result from the consummation of the
transactions contemplated by this Agreement or any other Loan Document.

5.08. Ownership of Property; Liens; Etc.

(a) Each Loan Party and each of its Restricted Subsidiaries has good record and
marketable title in fee simple to, or valid leasehold interests in, all real
property necessary or used in the ordinary conduct of its business except for
(i) such defects in title as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect and (ii) Permitted
Liens.

(b) As of the Closing Date, set forth on Schedule 5.08(b) is a complete and
accurate list of all real property owned by any Loan Party or any of its
Restricted Subsidiaries (a) subject to a Mortgage or (b) with a Fair Market
Value in excess of (i) $1,000,000 for each property that is used in connection
with a power generation facility and (ii) $5,000,000 for each property that is
otherwise used in the business of any Loan Party or any of its Restricted
Subsidiaries, which Schedule shows the county or other relevant jurisdiction,
state, and record owner of such properties.

(c) As of the Closing Date, set forth on Schedule 5.08(c) is a complete and
accurate list of all leases of real property under which any Loan Party or any
of its Material Subsidiaries is the lessee and which have an annual rental cost
in excess of $1,000,000 per lease, in each case exclusive of taxes, insurance
premiums and other operating expenses, excluding office leases (other than the
office lease for the Parent Guarantor’s corporate headquarters at 1000
Louisiana, Houston, Texas), showing the street address, county or other relevant
jurisdiction, state, lessor, lessee and expiration date.

 

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5.09. Environmental Compliance.

(a) Except as disclosed on Schedule 5.09 or as could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, the Loan
Parties and their Restricted Subsidiaries and the Real Property are in
compliance with and have no liability under any Environmental Laws or
Environmental Permits, including, without limitation, with respect to any
third-party disposal sites or with respect to any formerly owned, leased, used,
operated or occupied properties.

(b) Except as otherwise set forth on Schedule 5.09, as of the date hereof, none
of the Real Property is listed or proposed for listing on the NPL or on the
CERCLIS or any analogous foreign, state or local list or is adjacent to any such
property, and, to the knowledge of the Loan Parties and their Restricted
Subsidiaries, none of the real properties formerly owned, leased, used, operated
or occupied by any Loan Parties or any of its Restricted Subsidiaries is listed
or proposed for listing on the NPL or on the CERCLIS or any analogous foreign,
state or local list.

(c) Except as disclosed on Schedule 5.09 or as could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect: (i) any
current or former underground storage tank in which Hazardous Materials are
being or have been treated, stored or disposed on any Real Property is and has
been handled in compliance with applicable Environmental Laws; (ii) any asbestos
or asbestos-containing material at any Real Property has been and is being
handled in accordance with applicable Environmental Laws; and (iii) any
Hazardous Material that has been released, discharged or disposed of on any Real
Property has been or is in the process of being remediated to the extent
required under applicable Environmental Laws.

(d) Except as disclosed on Schedule 5.09 or as could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect: (i) neither
any Loan Party nor any of its Restricted Subsidiaries is undertaking or funding,
and has not completed or funded, either individually or together with other
potentially responsible parties, any investigation or assessment or remedial or
response action relating to any actual or threatened release, discharge or
disposal of Hazardous Materials at or from any property, site, location or
operation, either voluntarily or pursuant to the order of any Governmental
Authority or the requirements of any Environmental Law; and (ii) all Hazardous
Materials generated, used, treated, handled or stored at, or transported to or
from, any real property currently or formerly owned or operated by any Loan
Party or any of its Restricted Subsidiaries have been disposed of in a manner
not reasonably expected to result in liability to any Loan Party or any of its
Restricted Subsidiaries.

(e) Except as disclosed on Schedule 5.09 or as could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, none of the
Loan Parties or any of their Restricted Subsidiaries have received (i) a written
notice of any Environmental Action within the last five years from a Person
other than a Governmental Authority that has not been finally resolved without
any pending or future significant liability, obligation or cost or (ii) a
written notice of any Environmental Action from a Person, including a
Governmental Authority, in each case that has not been finally resolved without
any pending or future liability, obligation or cost.

(f) Except as disclosed on Schedule 5.09 or as could not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect, (i) the
Loan Parties and their Restricted Subsidiaries have all Environmental Permits
necessary for the operation of any and all Real Property and any ongoing or
planned construction thereon (other than with respect to any generation sites
under development for which necessary operating permits are expected to be
obtained in due course if development is continued) or are in the process of
obtaining such replacements or renewals thereof, which are reasonably expected
to be obtained in due course, (ii) there is no default under any such permit,
and

 

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(iii) the Loan Parties and their Restricted Subsidiaries have no reason to
believe that cause exists, with respect to Environmental Permits possessed by
the Loan Parties or their Subsidiaries for the revocation of any such permits
or, with respect to Environmental Permits for which the Loan Parties or their
Restricted Subsidiaries have timely applied for or are expected to be obtained
in due course, the rejection or non-issuance of any such permit.

5.10. Insurance. The properties of the Parent Guarantor and its Subsidiaries are
insured with financially sound and reputable insurance companies not Affiliates
of the Parent Guarantor (other than prudent self-insurance programs, including
captive insurance arrangements, in each case consistent with past practices), in
such amounts with such deductibles and covering such risks as are customarily
carried by companies engaged in similar businesses and owning similar properties
in localities where the Parent Guarantor or the applicable Subsidiary operates.

5.11. Taxes. The Parent Guarantor and its Subsidiaries have filed all Federal,
state and other material tax returns and reports required to be filed, and have
paid or provided for the payment of all Federal, state and other material taxes
due on such tax returns pursuant to any assessment received by them, except
those taxes that are being contested in good faith by appropriate proceedings
diligently conducted and for which adequate reserves have been provided in
accordance with GAAP. There is no proposed tax assessment in writing against the
Parent Guarantor or any Subsidiary that would, if made, have a Material Adverse
Effect. Neither any Loan Party nor any of its Subsidiaries is party to any tax
sharing agreement other than (a) the agreements listed on Schedule 5.11 and
(b) any tax sharing agreement entered into in connection with any Asset Sale
permitted by this Agreement.

5.12. ERISA Compliance.

(a) Except as disclosed in any Public Disclosure or, with respect to any matter
not so disclosed, except as has not resulted and could not reasonably be
expected to result in a Material Adverse Effect, each Pension Plan is in
compliance with the applicable provisions of ERISA, the Code, and other Federal
or state laws. Each Loan Party and each ERISA Affiliate have made all
contributions required by Section 412 of the Code, including any required
quarterly contributions, to each Pension Plan subject to Section 412 of the
Code, and no application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code has been made with
respect to any such Pension Plan.

(b) Except as disclosed in any Public Disclosure or, with respect to any matter
not so disclosed, except as has not resulted and could not reasonably be
expected to result in a Material Adverse Effect, there has been no prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Pension Plan.

(c) (i) No ERISA Event (other than an ERISA Event described in clause (e) or
(f) of the definition of such term that relates solely to a Multiemployer Plan)
has occurred or is reasonably expected to occur that has resulted or could
reasonably be expected to result in a Material Adverse Effect; (ii) to the
knowledge of any Loan Party, no ERISA Event described in clause (e) or (f) of
the definition of such term (solely to the extent that such ERISA Event pertains
to a Multiemployer Plan) has occurred or is reasonably expected to occur that
has resulted or could reasonably be expected to result in a Material Adverse
Effect; (iii) no Pension Plan has an “accumulated funding deficiency” (as
defined in Section 412 of the Code), whether or not waived, and no application
for a waiver of the minimum funding standard has been filed with respect to any
Pension Plan; (iv) neither any Loan Party nor any ERISA Affiliate has incurred,
or reasonably expects to incur, any liability under Title IV of ERISA with
respect to any Pension Plan (other than premiums due and not delinquent under
Section 4007 of ERISA) that has resulted or could reasonably be expected to
result in a Material Adverse Effect; (v) neither any Loan Party nor any ERISA
Affiliate has incurred, or reasonably expects to incur, any liability (and no
event has

 

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occurred which, with the giving of notice under Section 4219 of ERISA, would
result in such liability) under Sections 4201 or 4243 of ERISA with respect to a
Multiemployer Plan that has resulted or could reasonably be expected to result
in a Material Adverse Effect; and (vi) neither any Loan Party nor any ERISA
Affiliate has engaged in a transaction that could be reasonably expected to be
subject to Section 4069 or 4212(c) of ERISA.

5.13. Subsidiaries.

(a) As of the Closing Date, each Loan Party has no Subsidiaries other than those
specifically disclosed in Schedule 5.13, and all of the outstanding Equity
Interests in the Subsidiaries listed in Part (a) of Schedule 5.13 owned by a
Loan Party have been validly issued, are fully paid and (in the case of each
such Subsidiary that is a corporation) non-assessable and are owned by a Loan
Party in the amounts specified in Part (a) of Schedule 5.13 free and clear of
all Liens except those created or permitted under the Loan Documents. As of the
Closing Date, each Subsidiary of the Parent Guarantor that is a Loan Party is
set forth on Part (a) of Schedule 5.13.

(b) As of the Closing Date, the aggregate net worth of the Subsidiaries of the
Parent Guarantor that are listed in Part (b) of Schedule 5.13 (the “Dormant
Subsidiaries”) is not greater than $20,000,000.

(c) Set forth in Part (c) of Schedule 5.13 hereto is a list of foreign
Subsidiaries of the Parent Guarantor that are engaged in Discontinued Business
Operations described in clause (b) of the definition thereof as of the Closing
Date (the “Discontinued Foreign Subsidiaries”).

(d) Set forth in Part (d) of Schedule 5.13 is a list of Subsidiaries of the
Parent Guarantor that, as of the Closing Date, are not Loan Parties and that are
not otherwise described in Parts (b) or (c) of Schedule 5.13.

(e) Set forth in Part (e) of Schedule 5.13 is a list of Subsidiaries of the
Parent Guarantor that, as of the Closing Date, are Unrestricted Subsidiaries.

5.14. Margin Regulations; Investment Company Act.

(a) The Borrower is not engaged and will not engage, principally or as one of
its important activities, in the business of purchasing or carrying margin stock
(within the meaning of Regulation U issued by the FRB), or extending credit for
the purpose of purchasing or carrying margin stock and no proceeds of any
Borrowings or drawings under any Letter of Credit will be used to purchase or
carry any margin stock or to extend credit to others for the purpose of
purchasing or carrying any margin stock in violation of Regulation U.

(b) None of the Borrower, the Parent Guarantor, or any Material Subsidiary of
the Parent Guarantor is an “investment company” or a company “controlled” by an
“investment company” within the meaning of the Investment Company Act of 1940.

(c) Neither the making of any Loan, nor the issuance of any Letters of Credit,
nor the application of the proceeds or repayment thereof by the Borrower, nor
the consummation of the other transactions contemplated by the Loan Documents,
will violate any provision of any Act referred to in Section 5.14(b) or
(c) above or any rule, regulation or order of the SEC thereunder.

(d) All “qualifying facilities” (if any) owned by the Parent Guarantor or any of
its Restricted Subsidiaries continue to meet the eligibility requirements for
“qualifying facilities” under the

 

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Public Utility Regulatory Policies Act of 1978 and related regulations, except
where failure to meet such eligibility requirements could not reasonably be
expected to have a Material Adverse Effect.

5.15. Disclosure. To the best knowledge of the executive officers of the Parent
Guarantor and the Borrower as of the date hereof, the written information
furnished by or on behalf of any Loan Party to any Agent or any Lender in
connection with the transactions contemplated hereby (including, without
limitation, reports, financial statements and certificates) and the negotiation
of this Agreement or delivered hereunder or under any other Loan Document (as
modified or supplemented by other information so furnished), when taken as a
whole together with the Public Disclosure and any Form 10-K, Form 10-Q or Form
8-K filed by the Parent Guarantor or the Borrower after the Closing Date (all of
the foregoing as updated, restated, or otherwise modified in writing from time
to time) do not contain any material misstatement of fact or omit to state any
material facts necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that, with
respect to projected financial information, the Parent Guarantor and the
Borrower represent only that such information was prepared in good faith based
upon assumptions believed to be reasonable at the time. Notwithstanding anything
to the contrary in the preceding sentence, no representation, warranty or
covenant is made with respect to information for which the source is any
separately identified (a) third party source or (b) other person or entity not
affiliated with or acting as agent or representative for the Parent Guarantor or
any of its Subsidiaries.

5.16. Intellectual Property; Licenses, Etc. Each Loan Party and its Restricted
Subsidiaries (other than Discontinued Foreign Subsidiaries) own, or possess the
right to use, all of the trademarks, service marks, trade names, copyrights,
patents, patent rights, franchises, licenses and other intellectual property
rights (collectively, “IP Rights”) that are reasonably necessary for the
operation of their respective businesses, without conflict with the rights of
any other Person, except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect. To the knowledge of the Borrower and
the Parent Guarantor, no slogan or other advertising device, product, process,
method, substance, part or other material now employed, or now contemplated to
be employed, by any Loan Party or any Restricted Subsidiary (other than
Discontinued Foreign Subsidiaries) infringes upon any rights held by any other
Person, except for any such infringement that if litigated could not reasonably
be expected to have a Material Adverse Effect.

5.17. Solvency. The Borrower and its Subsidiaries, taken as a whole, are Solvent
on a consolidated basis.

 

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ARTICLE VI

AFFIRMATIVE COVENANTS

So long as any Lender shall have any Commitment hereunder, any Loan or other
payment Obligation (other than indemnification obligations under Sections 3.01,
3.04 and 11.05) hereunder which is accrued and payable shall remain unpaid or
unsatisfied, or any Letter of Credit shall remain outstanding, (1) the Parent
Guarantor shall (only with respect to itself and only in the case of the
covenants set forth in Sections 6.01, 6.02(b) and 6.02(c)), (2) the Parent
Guarantor shall, and shall cause each of its Restricted Subsidiaries to (only
with respect to the Parent Guarantor and its Restricted Subsidiaries and only in
case of the covenants set forth in Sections 6.03(b), 6.03(c), 6.04, 6.05, 6.09
and 6.12), and (3) the Borrower shall, and shall (except in the case of the
covenants set forth in Sections 6.01, 6.02, 6.03 and 6.11) cause each of its
Restricted Subsidiaries to:

6.01. Financial Statements. Deliver to the Payment Agent:

(a) as soon as available, but in any event within 10 days after the applicable
SEC deadline (without giving effect to any extension thereof that is specific to
the Borrower) for filing the same for each fiscal year commencing with the
fiscal year ending December 31, 2006 of the Borrower, a consolidated balance
sheet of the Borrower and its Subsidiaries as at the end of such fiscal year,
and the related consolidated statements of income or operations, shareholders’
equity and cash flows for such fiscal year, setting forth in each case in
comparative form the figures for the previous fiscal year, all in reasonable
detail and prepared in accordance with GAAP consistently applied for the period
covered thereby, except as otherwise expressly noted therein, audited and
accompanied by a report and opinion of PricewaterhouseCoopers LLP or another
“big four” accounting firm, which report and opinion shall be prepared in
accordance with generally accepted auditing standards;

(b) as soon as available, but in any event within 10 days after the applicable
SEC deadline (without giving effect to any extension thereof that is specific to
the Borrower) for filing the same for each of the first three fiscal quarters of
each fiscal year commencing with the fiscal quarter ending March 31, 2006 of the
Borrower, a consolidated balance sheet of the Borrower and its Subsidiaries as
at the end of such fiscal quarter, and the related consolidated statement of
income or operations for such fiscal quarter and related consolidated statements
of income or operations and cash flows for the portion of the Borrower’s fiscal
year then ended, setting forth (i) an income statement in comparative form to
the figures for the corresponding fiscal quarter of the previous fiscal year and
the corresponding portion of the previous fiscal year, (ii) a cash flows
statement in comparative form to the corresponding portion of the previous
fiscal year, and (iii) a balance sheet in comparative form to the previous
fiscal year end, all in reasonable detail and certified by a Responsible Officer
of the Borrower as fairly presenting in all material respects the financial
condition, results of operations, and cash flows of the Borrower and its
Subsidiaries in accordance with GAAP consistently applied for the period covered
thereby, except as otherwise expressly noted therein, subject only to normal
year-end adjustments and the absence of footnotes;

(c) as soon as available, but in any event within 10 days after the applicable
SEC deadline (without giving effect to any extension thereof that is specific to
the Parent Guarantor) for filing the same for each fiscal year commencing with
the fiscal year ending December 31, 2006 of the Parent Guarantor, a consolidated
balance sheet of the Parent Guarantor and its Subsidiaries as at the end of such
fiscal year, and the related consolidated statements of income or operations,
shareholders’ equity and cash flows for such fiscal year, setting forth in each
case in comparative form the figures for the previous fiscal year, all in
reasonable detail and prepared in accordance with GAAP consistently applied for
the period covered thereby, except as otherwise expressly noted therein, audited
and accompanied by a report and opinion of PricewaterhouseCoopers LLP or another
“big four” accounting firm, which report and opinion shall be prepared in
accordance with generally accepted auditing standards; and

(d) as soon as available, but in any event within 10 days after the applicable
SEC deadline (without giving effect to any extension thereof that is specific to
the Parent Guarantor) for filing the same for each of the first three fiscal
quarters of each fiscal year commencing with the fiscal quarter ending March 31,
2006 of the Parent Guarantor, a consolidated balance sheet of the Parent
Guarantor and its Subsidiaries as at the end of such fiscal quarter, and the
related consolidated statement of income or operations for such fiscal quarter
and related consolidated statements of income or operations and cash flows for
the portion of the Parent Guarantor’s fiscal year then ended, setting forth
(i) an income statement in comparative form to the figures for the corresponding
fiscal quarter of the previous fiscal year and the corresponding portion of the
previous fiscal year, (ii) a cash flows statement in comparative form to the
corresponding portion of the previous fiscal year, and (iii) a balance sheet in
comparative form to the previous fiscal year end, all in reasonable detail and
certified by a Responsible Officer of the

 

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Parent Guarantor as fairly presenting in all material respects the financial
condition, results of operations, and cash flows of the Parent Guarantor and its
Subsidiaries in accordance with GAAP consistently applied for the period covered
thereby, except as otherwise expressly noted therein, subject only to normal
year-end adjustments and the absence of footnotes.

6.02. Certificates; Other Information. Deliver to the Payment Agent, in form and
detail satisfactory to the Administrative Agents:

(a) no later than the final deadline provided above for the delivery of the
financial statements referred to in Sections 6.01(a) and (b), a duly completed
Compliance Certificate signed by a Responsible Officer of the Borrower, and in
the event of any change in GAAP used in the preparation of such financial
statements, the Borrower shall also provide, if necessary for the determination
of compliance with Section 7.11, financial statements and other documents
required under this Agreement or as reasonably requested hereunder setting forth
a reconciliation between calculations of the financial ratios and financial
covenants made before and after giving effect to such change;

(b) promptly after receipt thereof, copies of any management letters or
recommendations submitted to the board of directors (or the audit committee of
the board of directors) of any Loan Party by independent auditors in connection
with the accounts or books of any Loan Party or any Subsidiary, or any audit of
any of them;

(c) promptly after the same are available, copies of each publicly available
annual report, proxy or financial statement or other report or communication
sent to the stockholders of the Parent Guarantor, and copies of all publicly
available annual, regular, periodic and special reports and registration
statements which the Parent Guarantor or the Borrower may file or be required to
file with the SEC under Section 13 or 15(d) of the Exchange Act, or with any
Governmental Authority that may be substituted therefor, or with any national
securities exchange, and in any case not otherwise required to be delivered to
the Administrative Agents pursuant hereto;

(d) promptly after receipt thereof by any Loan Party or any of its Subsidiaries,
copies of each initial notice or other initial correspondence received from the
SEC (or comparable agency in any applicable non-U.S. jurisdiction) concerning
any investigation or possible investigation or other inquiry by such agency
regarding financial or other operational results of any Loan Party or any of its
Subsidiaries; provided that the foregoing shall not apply to any comment letters
issued by the division of Corporation Finance of the SEC;

(e) promptly after the receipt thereof, notice of any Environmental Action
against any Loan Party or any of its Subsidiaries, or notice of any
noncompliance with or liability under any Environmental Law or Environmental
Permit, that could (i) reasonably be expected to have a Material Adverse Effect,
(ii) cause any property described in the Mortgages to be subject to any
restrictions on occupancy or use under any Environmental Law that, individually
or in the aggregate, could reasonably be expected to have a Material Adverse
Effect, or (iii) cause any property described in the Mortgages to be subject to
any restrictions on ownership or transferability under any Environmental Law
that, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect;

(f) upon the determination by the Parent Guarantor or the Borrower that (i) any
Loan Party ceases to be a Material Subsidiary or (ii) any Subsidiary of the
Parent Guarantor becomes a Material Subsidiary, a notice as to such
determination together with, in the case of clause (i), a certification as to
the calculation of the Fair Market Value of the assets held by such Subsidiary;

 

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(g) promptly, such additional information regarding the business, financial or
corporate affairs or properties of any Loan Party or any Subsidiary or any
Pension Plan or Multiemployer Plan (but with respect to any Multiemployer Plan,
only to the extent any Loan Party or any Subsidiary has received such
information from such plan), or compliance with the terms of the Loan Documents,
as the Administrative Agents or any Lender may from time to time reasonably
request; provided that no Loan Party or its Subsidiaries shall be obligated to
deliver (i) any information which is subject to the attorney-client privilege or
with respect to which the attorney-client privilege would be waived if such
information were disclosed to the Payment Agent or any Lender, (ii) any
information that is subject to a confidentiality agreement that restricts its
disclosure or (iii) any information that can otherwise not be disclosed due to
legal or contractual restrictions; and

(h) promptly after Moody’s or S&P shall have announced a change in the rating
established or deemed to have been established for the Facilities, written
notice of such rating change.

Documents required to be delivered pursuant to Section 6.01(a), (b), (c) or
(d) (to the extent any such documents are included in materials otherwise filed
with the SEC) may be delivered electronically and if so delivered, shall be
deemed to have been delivered on the date (i) on which the Parent Guarantor or
the Borrower, as the case may be, posts such documents, or provides a link
thereto, on the Parent Guarantor’s or the Borrower’s (as the case may be)
website on the Internet at the website address listed on Schedule 11.02; or
(ii) on which such documents are posted on the Parent Guarantor’s or the
Borrower’s behalf, as the case may be, on IntraLinks/IntraAgency or another
relevant website, if any, to which each Lender and each Agent have access
(whether a commercial, third-party website or whether sponsored by either
Administrative Agent); provided that the Parent Guarantor or the Borrower, as
the case may be, shall deliver paper copies of such documents to the Payment
Agent (and the Payment Agent shall deliver to such Lender) if any Lender
requests the Parent Guarantor or the Borrower, as the case may be, to deliver
such paper copies. Notwithstanding anything contained herein, in every instance
the Borrower shall be required to provide paper copies of the Compliance
Certificates required by Section 6.02(a) to the Payment Agent. Except for such
Compliance Certificates, the Administrative Agents shall have no obligation to
request the delivery or to maintain copies of the documents referred to above,
and in any event shall have no responsibility to monitor compliance by the
Parent Guarantor or the Borrower with any such request for delivery, and each
Lender shall be solely responsible for requesting delivery to it or maintaining
its copies of such documents.

6.03. Notices. Promptly notify the Payment Agent of:

(a) the occurrence of any Default;

(b) any matter that has resulted or could reasonably be expected to result in a
Material Adverse Effect; and

(c) the occurrence of any ERISA Event (or, in the case of an ERISA Event
described in clause (e) or (f) of the definition of such term and solely to the
extent that such ERISA Event pertains to a Multiemployer Plan, any Loan Party or
any Subsidiary obtaining knowledge of the occurrence of any such ERISA Event)
that has resulted or could reasonably be expected to result in a Material
Adverse Effect.

Each notice pursuant to this Section 6.03 shall be accompanied by a statement of
a Responsible Officer of the Borrower setting forth details of the occurrence
referred to therein and stating what action the Borrower has taken and proposes
to take with respect thereto. Each notice pursuant to Section 6.03(a) shall
describe with particularity any and all provisions of this Agreement and any
other Loan Document that have been breached.

 

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6.04. Payment of Obligations. Pay and discharge as the same shall become due and
payable (a) all tax liabilities, assessments and governmental charges or levies
upon it or its properties or assets, unless the same are being contested in good
faith by appropriate proceedings diligently conducted and adequate reserves in
accordance with GAAP are being maintained by the Parent Guarantor, the Borrower
or such Subsidiary, and (b) all lawful claims which, if unpaid, would by law
become a Lien upon its property (other than a Permitted Lien or a claim being
contested in good faith), except, in the case of clauses (a) and (b) of this
Section 6.04, where the failure to do so could not reasonably be expected to
have a Material Adverse Effect.

6.05. Preservation of Existence, Etc. Except in a transaction permitted by
Section 7.04 or 7.05, (a) preserve, renew and maintain in full force and effect
its legal existence and good standing under the Laws of the jurisdiction of its
organization; and (b) take all reasonable action to maintain all rights,
privileges, permits, licenses and franchises necessary or desirable in the
normal conduct of its business; except in the case of clause (a) (solely with
respect to good standing of the Parent Guarantor, the Borrower and all Material
Subsidiaries) and clause (b), to the extent that failure to do so could not
reasonably be expected to have a Material Adverse Effect.

6.06. Maintenance of Properties. (a) Maintain, preserve and protect all of its
material properties and equipment necessary in the operation of its business in
good working order and condition, ordinary wear and tear excepted; and (b) make
all necessary repairs thereto and renewals and replacements thereof; except, in
the case of clauses (a) and (b), where the failure to do so could not reasonably
be expected to have a Material Adverse Effect; provided that the foregoing shall
not (i) require such maintenance, preservation, protection, repair, renewal or
replacement of obsolete, surplus or worn out property or with respect to
property that is no longer commercially viable to operate and maintain or
(ii) otherwise restrict an Asset Sale otherwise permitted under Section 7.05.

6.07. Maintenance of Insurance. Maintain with financially sound and reputable
insurance companies (provided, however, that there shall be no breach of this
Section 6.07 if any such insurer becomes financially unsound and such Loan Party
obtains reasonably promptly insurance coverage from a different financially
sound and reputable insurer) not Affiliates of the Parent Guarantor (other than
in connection with prudent self-insurance programs, including captive insurance
arrangements, in each case consistent with past practices) insurance with
respect to its properties and business against loss or damage of the kinds
customarily insured against by Persons engaged in the same or similar business,
of such types and in such amounts with reasonable deductibles, limits,
retentions and self-insurance (including captive insurance arrangements
consistent with past practices) as are customarily carried under similar
circumstances by such other Persons and providing for not less than 30 days’
prior notice to the Administrative Agents of termination, lapse or cancellation
of such insurance (other than as a result of non-payment of premiums) or 10
days’ prior notice to the Administrative Agents of termination, lapse or
cancellation of such insurance as a result of non-payment of premiums with
respect to such insurance; provided that the Parent Guarantor shall be permitted
to comply with the Borrower’s obligations under this Section 6.07 in lieu of the
Borrower so doing.

6.08. Compliance with Laws. Except as disclosed in any Public Disclosure, comply
in all material respects with the requirements of all Laws and all orders,
writs, injunctions and decrees applicable to it or to its business or property,
except in such instances in which (a) such requirement of Law or order, writ,
injunction or decree is being contested in good faith by appropriate proceedings
diligently conducted; or (b) the failure to comply therewith could not
reasonably be expected to have a Material Adverse Effect.

6.09. Books and Records. Maintain such proper books of record and account as are
necessary to prepare the financial statements and other documentation required
by Sections 6.01 and 6.02.

 

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6.10. Inspection Rights. Permit representatives and independent contractors of
each Agent and each Lender (as coordinated by the Administrative Agents) to
visit and inspect any of its properties, to examine its corporate, financial and
operating records, and make copies thereof or abstracts therefrom, and to
discuss its affairs, finances, and accounts with its directors, officers, and
independent public accountants, all at such reasonable times during normal
business hours and as often as may be reasonably desired, upon reasonable
advance notice to the Borrower and subject to any applicable safety rules and
procedures; provided that (a) when no Event of Default exists, one such visit
for each Agent per fiscal year of the Borrower shall be at the expense of the
Borrower, and additional visits shall be at the expense of the relevant Agent or
Lender, and (b) when an Event of Default exists, any Agent or any Lender (or any
of their respective representatives or independent contractors) may do any of
the foregoing at the expense of the Borrower at any time during normal business
hours, without advance notice and without any limit on the number or frequency
of such visits.

6.11. Use of Proceeds. (a) Use the proceeds of the Revolving Credit Loans made
on the Closing Date to repay principal, accrued interest and fees and other
amounts owing as of the Closing Date under the Existing DHI Credit Agreement,
(b) use the proceeds of the Term L/C Facility Term Loans made on the Closing
Date to fund the Term L/C Collateral Account and (c) use the proceeds of the
Revolving Credit Loans and use the Letters of Credit for general corporate
purposes in the ordinary course of business not in contravention of any Law or
of any Loan Document.

6.12. Covenant to Guarantee Obligations and Give Security in Personal Property.
If any of the following shall occur: (a) a Material Subsidiary that is not a
Loan Party on the Closing Date shall be formed or acquired, (b) any Material
Subsidiary that was not a Loan Party on the Closing Date because it was either
subject to a legal or contractual restriction which restricted its ability to
enter into the Guaranty or the Collateral Documents or prohibited by Laws from
entering into the Guaranty or the Collateral Documents shall cease to be subject
to such restrictions or prohibitions, (c) any Agent shall identify, or be given
notice by a Loan Party of, any material asset (other than a Restricted Asset or
Real Property) that was owned by a Loan Party (other than a Loan Party that is
not a Material Subsidiary) on the Closing Date but not disclosed in writing to
any of the Agents prior to the Closing Date, or (d) any Loan Party (other than a
Loan Party that is not a Material Subsidiary) shall acquire, after the Closing
Date, any material asset (other than a Restricted Asset or Real Property) that,
in the reasonable judgment of the Administrative Agents, shall not already be
subject to a perfected security interest in favor of the Collateral Agent or the
Collateral Trustees, as appropriate, for the benefit of the appropriate Secured
Parties; then the Parent Guarantor shall, or shall cause the appropriate
Subsidiary to, at the Borrower’s expense:

(i) within 30 days after the occurrence of any event described in clause (a) or
(b) above, cause each such affected, new, or acquired Subsidiary to duly execute
and deliver to the Administrative Agent a Guaranty or Guaranty Supplement,
guaranteeing the Borrower’s obligations under the Loan Documents;

(ii) within 30 days after (A) the occurrence of any event described in clause
(a) or (b) above, furnish to the Administrative Agents and the Collateral Agent
a description of the material real properties and personal properties of such
Subsidiary not previously disclosed to the Administrative Agent or Collateral
Agent that are not Restricted Assets, and (B) the occurrence of any event
described in clause (c) or (d) above, furnish to the Administrative Agents and
the Collateral Agent a general description of such material asset, in each case
in reasonable detail reasonably satisfactory to the Administrative Agents and
the Collateral Agent;

(iii) within 60 days after such occurrence, duly execute and deliver, and cause
each such affected Loan Party (whether previously designated as a Loan Party or
newly designated as a

 

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Loan Party as a result of the actions taken under clause (ii)(A) above) to duly
execute and deliver to the Administrative Agents and Collateral Agent
appropriate Collateral Documents covering the personal properties of such Loan
Party that are not Restricted Assets and have not previously been subject to the
Collateral Documents in substantially the same form as the Collateral Documents
delivered on the Closing Date and otherwise in form and substance reasonably
satisfactory to the Administrative Agents, securing payment of all the
Obligations of such Loan Party under the Loan Documents and creating Liens on
all such assets;

(iv) within 60 days after such occurrence, take, and cause such affected Loan
Party (whether previously designated as a Loan Party or newly designated as a
Loan Party as a result of the actions taken under clause (ii)(A) above) or the
parent of such affected Loan Party to take, whatever action (including, without
limitation, the recording of mortgages, the filing of Uniform Commercial Code
financing statements, the giving of notices and the endorsement of notices on
title documents) may be necessary or advisable in the reasonable opinion of the
Administrative Agents to vest in the Collateral Agent or the Collateral
Trustees, as applicable (or in any representative of such Person designated by
it), valid and perfected Liens on the properties described in clause
(iii) above, enforceable against all third parties in accordance with their
terms;

(v) within 60 days after such occurrence (if, in the reasonable determination of
the Administrative Agents, any such assets have a value in excess of $50,000,000
or any such Restricted Subsidiary being designated a Loan Party under clause
(a) above has a net worth in excess of $50,000,000, and if requested by the
Administrative Agents), deliver to the Administrative Agents a signed copy of a
favorable opinion, addressed to the Administrative Agents and the Collateral
Agent and the other Secured Parties, of counsel for the Loan Parties reasonably
acceptable to the Administrative Agents as to (i) the matters contained in
clauses (a), (c), and (d) above, (ii) such Guaranty, Guaranty Supplement, or
applicable Collateral Document being valid and binding obligations of each Loan
Party thereto enforceable in accordance with their terms, (iii) such recordings,
filings, notices, endorsements, and other actions being sufficient to create
valid perfected Liens on such properties, and (iv) such other matters as the
Administrative Agents may reasonably request; and

(vi) at any time and from time to time, promptly execute and deliver any and all
further instruments and documents and take all such other action as the
Administrative Agents and the Collateral Agent may reasonably deem necessary or
desirable in obtaining the full benefits of, or in perfecting and preserving the
Liens of, such Guaranties, Guaranty Supplements, and Collateral Documents;

provided that this Section 6.12 shall not be applicable to (A) the extent that
the grant or perfection of a Lien on the Equity Interests in a Subsidiary or on
the assets of the Borrower, the Parent Guarantor or any Subsidiary or the
entering into of a Guaranty or Guaranty Supplement would require waiver,
approval or consent from Governmental Authorities, lenders, service providers,
suppliers, co-owners, partners, investors, customers, or other contractual
counterparties of a Person in which the Parent Guarantor or any of its
Subsidiaries has a direct or indirect Equity Interest, (B) a Subsidiary that is
a controlled foreign corporation as provided in Section 957 of the Code or that
is directly or indirectly owned in part by a Person that is not a wholly owned
Subsidiary of the Parent Guarantor, or (C) any Subsidiary that is not a Material
Subsidiary or assets that do not have a Fair Market Value of more than
$10,000,000.

 

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6.13. Covenant to Give Security in Real Property; Recordation of Rights of Way;
Supplements to Mortgages.

(a) (i) If after the Closing Date, any Loan Party purchases, leases, or
otherwise acquires, any Real Property having a Fair Market Value of $20,000,000
or more, promptly, but in any event within 60 days or such additional period of
time not to exceed thirty days with the prior written consent of the
Administrative Agent, after such purchase, lease or other acquisition,
(x) provide written notice thereof to the Administrative Agents and the
Collateral Trustees, setting forth in sufficient detail for the filing of a
Mortgage thereon, a description of such Real Property purchased, leased, or
otherwise acquired and an appraisal or such Loan Party’s good faith estimate of
the current Fair Market Value of such Real Property and (y) execute and deliver
(or cause the applicable Loan Party to execute and deliver) to the Collateral
Trustees and the Collateral Agent, as applicable (with copies to the
Administrative Agents), one or more Mortgages to secure the applicable Secured
Obligations and such other documents, instruments, reports, legal opinions, and
title insurance policies as the Administrative Agents shall reasonably request
(and in form and substance reasonably satisfactory to the Administrative Agents)
with respect to such Real Property consistent with the reports, legal opinions,
title insurance policies, and other information required to be delivered with
the other Collateral that is subject to Mortgages. Any right of way purchased,
leased, or otherwise acquired or granted after the Closing Date shall be
promptly evidenced by an instrument duly executed and recorded against the
property it burdens in the appropriate recording office unless the decision to
permit such right of way to remain unrecorded is commercially reasonable for
companies of the same or similar size in the same or similar business.

(ii) With respect to (x) Real Property owned by Rocky Road Power LLC and
(y) Real Property owned or leased by CoGen Lyondell, Inc., in each case, as of
the Closing Date (without regard to the Fair Market Value of such Real
Property), comply with the requirements of Section 6.13(a)(i) within the time
period specified therein (measured from the Closing Date).

(b) As a condition precedent to the Borrower’s incurrence of additional
Indebtedness pursuant to Section 2.13 and to the extent applicable additional
Indebtedness secured by a first priority Lien pursuant to Section 7.03(b)(xviii)
as provided for herein, the Borrower shall satisfy the following requirements:

(i) the Subsidiary Guarantors shall enter into, and deliver to the
Administrative Agents and the Collateral Trustees, at the direction and in the
sole discretion of the Administrative Agents and/or the Collateral Trustees
(i) in the case of additional Indebtedness incurred pursuant to Section 2.13, a
mortgage modification or new Mortgage, and (ii) in the case of additional
Indebtedness secured by a Priority Lien incurred pursuant to
Section 7.03(b)(xviii), a mortgage modification or a new Mortgage, in each case
in proper form and along with payment of all taxes and charges, if any,
necessary for recording in the relevant jurisdiction and in a form reasonably
satisfactory to the Administrative Agents (such Mortgage or mortgage
modification, the “Modification”);

(ii) the Borrower shall deliver a local counsel opinion in form and substance
reasonably satisfactory to the Administrative Agents;

(iii) the Borrower shall have caused a title company reasonably acceptable to
the Administrative Agents to have delivered to the Administrative Agents and the
Collateral Trustees a title insurance policy (or, as applicable, an endorsement
to the title insurance policy (if any) delivered pursuant to
Section 4.01(a)(iv)), date down(s) or other evidence reasonably satisfactory to
the Administrative Agents and/or the Collateral Trustees (x) insuring that the
priority of the liens evidenced by, or the continuing priority of the Lien of
the Mortgage as security for, such Indebtedness, as the case may be, has not
changed and (y) confirming and/or insuring that

 

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(A) since the immediately prior incurrence of such Indebtedness, or additional
Indebtedness, as the case may be, there has been no change in the condition of
title and (B) there are no intervening liens or encumbrances which may then or
thereafter take priority over the Lien of the Mortgage, other than the Permitted
Liens (without adding any additional exclusions or exceptions to coverage) (a
“Modification Endorsement”); and

(iv) the Borrower shall, upon the request of the Administrative Agents and/or
the Collateral Trustees, deliver to the approved title company, the Collateral
Trustees, the Administrative Agents and/or all other relevant third parties all
other items reasonably necessary to maintain the continuing priority of the Lien
of the Mortgage as security for such Indebtedness.

6.14. Compliance with Environmental Laws. Except as set forth in any Public
Disclosure or except where failure to do so could not, individually or in the
aggregate, be reasonably expected to have a Material Adverse Effect, (a) comply,
and use commercially reasonable efforts to cause all lessees and other Persons
operating or occupying its properties to comply, in all material respects, with
all applicable Environmental Laws and Environmental Permits, (b) obtain and
renew all Environmental Permits necessary for its operations and properties, and
(c) conduct any investigation, study, sampling and testing, required under
Environmental Laws and undertake any cleanup, removal, remedial or other action
required under Environmental Laws to remove and clean up all Hazardous Materials
from any of its properties; provided that neither the Parent Guarantor nor any
of its Subsidiaries shall be required to undertake any such cleanup, removal,
remedial or other action to the extent that its obligation to do so is being
contested in good faith and by proper proceedings with diligence in bringing the
matter to closure, appropriate reserves are being maintained with respect to
such circumstances, and any such Hazardous Material do not and could not
reasonably be expected to pose an imminent and substantial endangerment to human
health or the environment.

6.15. Preparation of Environmental Reports. To the extent the Borrower or any
Loan Party has the authority to conduct such assessments without obtaining
required consent from any other Person, at the request of the Administrative
Agents, provide to the Lenders within 90 days after such request, at the expense
of the Borrower, an environmental site assessment, soil or groundwater report
for any of the properties subject to a Mortgage in the event that (a) any Loan
Parties or any of their Subsidiaries receive notice of any Environmental Action
relating to any such properties, or any such properties become subject to any
Environmental Liability, that individually or in the aggregate could reasonably
be expected to result in the Borrower or any of its Restricted Subsidiaries
having or becoming subject to liability or liabilities exceeding $50,000,000 or
(b) if a Default has occurred and is continuing. With respect to any such
properties that require consent from any other person prior to conducting such
assessment, the Borrower shall use reasonable efforts to obtain such consent
and, if such consent is obtained, will conduct the environmental assessment. If
such consent is not granted, the Borrower shall not be required to conduct such
assessment. Any environmental site assessment report prepared pursuant to this
Section 6.15 shall be prepared by an environmental consulting firm acceptable to
the Administrative Agent and shall indicate the presence or absence of Hazardous
Materials affecting any subject property and the estimated cost of any
compliance, removal or remedial action required under Environmental Laws.
Without limiting the generality of the foregoing, if the Administrative Agents
determine at any time that a material risk exists that any such report will not
be provided within the time referred to above, the Administrative Agents may
retain an environmental consulting firm to prepare such report at the expense of
the Borrower, and, to the extent the Borrower has the right to grant such
authorization or to cause such Subsidiary to grant such authorization, the
Borrower hereby grants and agrees to cause any such Subsidiary that owns any
property described in such request to grant at the time of such request to the
Administrative Agents, the Lenders, such firm and any agents or representatives
thereof an irrevocable non-exclusive license, subject to the rights of tenants,
to enter onto their respective properties to undertake such an assessment.

 

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6.16. Further Assurances. Promptly upon request by any Agent, or any Lender
through either Administrative Agent, (a) correct any material defect or error
that may be discovered in any Loan Document or in the execution, acknowledgment,
filing or recordation thereof, and (b) do, execute, acknowledge, deliver,
record, re-record, file, re-file, register and re-register any and all such
further acts, deeds, certificates, assurances and other instruments as any
Agent, or any Lender through either Administrative Agent, may reasonably require
from time to time in order to carry out the purposes of the Loan Documents.

ARTICLE VII

NEGATIVE COVENANTS

So long as any Lender shall have any Commitment hereunder, any Loan or other
payment Obligation hereunder (other than indemnification obligations under
Sections 3.01, 3.04 and 11.05) which is accrued and payable shall remain unpaid
or unsatisfied, or any Letter of Credit shall remain outstanding:

7.01. Liens. The Borrower shall not, nor shall it permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume, or suffer to
exist any Lien upon any of its property, assets or revenues, whether now owned
or hereafter acquired, other than the following (“Permitted Liens”):

(a) Liens pursuant to any Loan Document;

(b) Priority Liens securing Priority Lien Debt, provided that, as of the date of
incurrence thereof, the Priority Lien Debt shall not exceed the Priority Lien
Cap;

(c) (i) Parity Liens securing the 2003 Second Lien Notes and (ii) other second
priority Liens securing Indebtedness permitted under Section 7.03(b)(xiii), or
(in the case of clause (i) or clause (ii) above) securing any Permitted
Refinancing Indebtedness in respect thereof; provided that such Liens shall be
on terms at least as favorable to the Lenders as the terms (as in effect on
March 6, 2006) of the second priority Liens securing the 2003 Second Lien Notes
(whether or not any 2003 Second Lien Notes are outstanding on the date of
determination);

(d) Liens existing on the date hereof and either (i) listed on Schedule 7.01 or
(ii) which do not secure in the aggregate an amount of obligations in excess of
$20,000,000;

(e) Liens for taxes, assessments or other governmental charges or levies not yet
delinquent or that are being contested in good faith and by appropriate
proceedings diligently conducted, if adequate reserves with respect thereto are
maintained on the books of the applicable Person in accordance with GAAP;

(f) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s,
employee’s, landlord’s, lessor’s, contractor’s, operator’s or other like Liens
arising in the ordinary course of business that are not past due for a period of
more than 30 days or which are being contested in good faith and by appropriate
proceedings diligently conducted;

(g) pledges or deposits in the ordinary course of business in connection with
workers’ compensation, unemployment insurance, other social security benefits or
obligations arising under similar legislation, other than any Lien imposed by
ERISA;

 

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(h) deposits to secure the performance of bids, tenders, trade contracts and
leases (other than Indebtedness), public or statutory obligations, surety bonds
(other than bonds related to judgments or litigation), performance bonds and
other obligations of a like nature incurred in the ordinary course of business;

(i) survey exceptions, zoning restrictions, easements, rights-of-way,
reservations, servitudes, permits, encroachments, exceptions, conditions,
covenants, restrictions, rights of others and other similar encumbrances
affecting real property which (i) are shown in the applicable real property
records on the Closing Date or (ii) in the aggregate, are not substantial in
amount, and which do not in any case materially detract from the value of the
property subject thereto or materially interfere with the ordinary conduct of
the business of the applicable Person;

(j) Liens securing judgments for the payment of money not constituting an Event
of Default under Section 8.01(h) or securing appeal or other surety bonds
related to such judgments;

(k) Liens securing Indebtedness permitted under Section 7.03(b)(v); provided
that (i) such Liens do not at any time encumber any property other than the
property, as applicable, financed by such Indebtedness or acquired in connection
with the assumption of such Indebtedness, and (ii) the Indebtedness secured
thereby does not exceed the cost or Fair Market Value, whichever is lower, of
such financed or acquired property being acquired on the date of its financing
or acquisition;

(l) Liens arising under Section 9.343 of the Texas Uniform Commercial Code or
similar statutes of states other than Texas;

(m) Liens arising under any obligations or duties affecting any of the property
of any Person to any municipality or public authority with respect to any
franchise, grant, license or permit which do not materially impair the use of
such property for the purposes for which it is held;

(n) Liens reserved in customary oil, gas and/or mineral leases for bonus or
rental payments and for compliance with the terms of such leases and Liens
reserved in customary operating agreements farm-out and farm-in agreements,
exploration agreements, development agreements and other similar agreements for
compliance with the terms of such agreements, in each case entered into in the
ordinary course of business consistent with past practices;

(o) Liens arising out of all presently existing and future division and transfer
orders, advance payment agreements, processing contracts, gas processing plant
agreements, operating agreements, gas balancing or deferred production
agreements, pooling, unitization or communitization agreements, pipeline,
gathering or transportation agreements, platform agreements, drilling contracts,
injection or repressuring agreements, cycling agreements, construction
agreements, salt water or other disposal agreements, leases or rental
agreements, farm-out and farm-in agreements, exploration and development
agreements, and any and all other contracts or agreements (including agreements
related to Proportionately Consolidated Interests) covering, arising out of,
used or useful in connection with or pertaining to the exploration, development,
operation, production, sale, use, purchase, exchange, storage, separation,
dehydration, treatment, compression, gathering, transportation, processing,
improvement, marketing, disposal or handling of any property of a Person,
provided that such agreements are entered into in the ordinary course of
business and provided, further, that such permitted security interest shall not
include any security interest in accounts receivable other than accounts
receivable from an applicable counterparty or its Affiliates to the extent such
counterparty or its Affiliates are being granted a security interest in such
accounts receivable;

 

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(p) Liens on cash and short-term investments deposited by the Borrower or any of
its Subsidiaries with or on behalf of brokers, credit clearing organizations,
independent system operators, regional transmission organizations, pipelines,
state agencies, federal agencies, futures contract brokers, customers, trading
counterparties, or any other parties or pledged by the Borrower or any of its
Subsidiaries to secure its obligations and/or the obligations of any Subsidiary
and/or the Borrower with respect to: (i) any contracts and transactions for the
purchase, sale, exchange of, or the option (whether physical or financial) to
purchase, sell or exchange (a) natural gas, (b) electricity, (c) coal,
(d) petroleum-based liquids, (e) oil, (f) emissions, (g) waste byproducts,
(h) weather, or (i) any other energy-related commodity or derivative; (ii) any
contracts or transactions for the processing, transmission, transportation, or
storage of, or any other services related to any commodity identified in
subparts (a) - (i) above, including any capacity agreement; (iii) any financial
derivative agreement (including but not limited to swaps, options or swaptions)
related to any commodity identified in subparts (a) - (i) above, or to any
interest rate or currency rate management activities; (iv) any agreement for
membership or participation in an organization that facilitates or permits the
entering into or clearing of any Netting Agreement or any agreement described in
this Section 7.01(p); (v) any agreement combining part or all of a Netting
Agreement or part or all of any of the agreements described in this
Section 7.01(p); (vi) any document relating to any agreement described in this
Section 7.01(p) that is filed with a governmental body and any related service
agreements; or (vii) any commercial or trading agreements, each with respect to,
or involving the purchase, transmission, distribution, sale, lease or hedge of,
any energy, generation capacity or fuel, or any other energy related commodity
or service, price or price indices for any such commodities or services or any
other similar derivative agreements, and any other similar agreements (such
agreements described in clauses (i) through (vii) of this Section 7.01(p) being
collectively, “Permitted Contracts”), Netting Agreements and letters of credit
supporting Permitted Contracts and Netting Agreements;

(q) Liens granted by the Borrower or any of its Subsidiaries to a counterparty
and/or to Affiliates of such counterparty (each, a “Section 7.01 Counterparty”)
on accounts receivable and other obligations owed to, and other rights of the
Borrower or any of its Subsidiaries under, Netting Agreements or Permitted
Contracts to secure the Borrower’s or such Subsidiary’s obligations under such
Netting Agreement or Permitted Contract, and any netting, setoff or similar
rights granted by the Borrower or any of its Subsidiaries to a Section 7.01
Counterparty pursuant to a Permitted Contract or Netting Agreement;

(r) Liens granted by the Borrower or any of its Subsidiaries on its or their
rights under any insurance policy, but only to the extent that such Lien is
granted to the insurers under such insurance policies or any insurance premium
finance company to secure payment of the premiums and other amounts owed to the
insurers or such premium finance company with respect to such insurance policy;

(s) Liens (i) securing reimbursement obligations with respect to letters of
credit that encumber documents and other property relating to such letters of
credit and the proceeds and products thereof or (ii) on cash or cash equivalents
securing reimbursement obligations with respect to letters of credit permitted
pursuant to Section 7.03(b)(x);

(t) Liens on cash deposits in the nature of a right of setoff, banker’s lien,
counterclaim or netting of cash amounts owed arising in the ordinary course of
business on deposit accounts;

(u) Liens securing Indebtedness acquired or assumed in connection with an
Investment permitted pursuant to Section 7.02(j); provided that such Liens do
not extend to any assets other than the assets acquired in connection with the
corresponding Investment under Section 7.02(j) and the Indebtedness secured by
such Liens was not incurred in contemplation of such Investment;

 

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(v) Liens on any property (including Capital Stock) acquired by the Borrower or
any of its Restricted Subsidiaries in compliance with Section 7.02; provided
that such Liens were in existence at the time of such acquisition and the
Indebtedness secured by such Liens was not incurred in contemplation of such
acquisition;

(w) Liens in respect of “true leases”, and not in respect of Indebtedness,
arising from Uniform Commercial Code financing statements filed for information
purposes with respect to leases incurred in the ordinary course of business and
not otherwise prohibited by this Agreement;

(x) inchoate statutory Liens arising under ERISA;

(y) any restrictions on any Equity Interest or Project Interest of a Person
providing for a breach, termination or default under any owners, participation,
shared facility, joint venture, stockholder, membership, limited liability
company or partnership agreement between such Person and one or more other
holders of Equity Interests or Project Interests of such Person, if a security
interest or other Lien is created on such Equity Interest or Project Interest as
a result thereof and other similar Liens and restrictions described in
Sections 7.09(viii) and 7.09(xiv);

(z) Liens existing on the assets of any Person that becomes a Restricted
Subsidiary, or existing on assets acquired, pursuant to a Permitted Acquisition
to the extent the Liens on such assets secure Indebtedness permitted by
Section 7.03(b)(xiv); provided that such Liens attach at all times only to the
same assets that such Liens attached to, and secure only the same Indebtedness
that such Liens secured, immediately prior to such Permitted Acquisition;

(aa) (i) Liens placed upon the Capital Stock of any Restricted Subsidiary
acquired pursuant to a Permitted Acquisition to secure Indebtedness of the
Borrower or any other Restricted Subsidiary incurred pursuant to
Section 7.03(b)(xv) in connection with such Permitted Acquisition and (ii) Liens
placed upon the assets of such Restricted Subsidiary to secure a guarantee by
such Restricted Subsidiary of any such Indebtedness of the Borrower or any other
Restricted Subsidiary;

(bb) extensions, renewals or replacements of any of the Liens permitted in
clauses (b) through (aa) so long as (i) the principal amount of the Indebtedness
or obligation secured thereby is no greater than the principal amount of such
Indebtedness or obligation at the time such Lien was permitted hereunder except
for increases in an amount equal to a reasonable premium or other reasonable
amount paid, and fees and expenses reasonably incurred, in connection with such
extension, renewal, refinancing, or replacement and in an amount equal to any
existing commitments unutilized thereunder, (ii) any such extension, renewal or
replacement Lien is limited to the property originally encumbered thereby, and
(iii) any renewal or extension of the Indebtedness or obligations secured or
benefited thereby is permitted by Section 7.03;

(cc) other Liens securing obligations not to exceed $50,000,000 in the aggregate
at any time outstanding; and

(dd) second priority Liens securing Hedging Obligations of the Borrower and its
Restricted Subsidiaries, provided that such Liens shall be structured as
“silent” second priority Liens on terms satisfactory to the Administrative
Agents, and, without limiting the foregoing, shall be on terms at least as
favorable to the Lenders as the terms (as in effect on March 6, 2006) of the
second priority Liens securing the 2003 Second Lien Notes (whether or not any
2003 Second Lien Notes are outstanding on the date of determination).

 

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7.02. Investments. The Borrower shall not, nor shall it permit any of its
Restricted Subsidiaries to, directly or indirectly, make or hold any Investments
except the following:

(a) any Investment in the Borrower or in a Restricted Subsidiary of the
Borrower;

(b) any Investment in Cash Equivalents;

(c) any Investment made as a result of the receipt of non-cash consideration
from an Asset Sale that was made pursuant to and in compliance with
Section 7.05;

(d) any Investment in any Person solely in exchange for the issuance of Equity
Interests (other than Disqualified Stock) of the Parent Guarantor;

(e) any Investments received (i) in compromise or resolution of obligations of
trade creditors or customers that were incurred in the ordinary course of
business of the Borrower or any of its Restricted Subsidiaries, including
(A) obligations of financially troubled account debtors to the extent reasonably
necessary in order to prevent or limit loss and (B) pursuant to any plan of
reorganization or similar arrangement upon the bankruptcy or insolvency of any
trade creditor or customer, (ii) in compromise or resolution of litigation,
arbitration or other disputes, or (iii) on account of any claim against, or an
interest in, any other Person (A) acquired in good faith in connection with or
as a result of a bankruptcy, workout, reorganization or recapitalization of such
other Person or (B) as a result of a bona fide foreclosure by the Borrower or
any of its Restricted Subsidiaries with respect to any claim against any other
Person;

(f) any Investment consisting of extensions of credit including, without
limitation, accounts receivables or notes receivables arising from the grant of
trade credit or prepayments or similar transactions, if created or acquired in
the ordinary course of business and Investments received in satisfaction or
partial satisfaction thereof from financially troubled account debtors to the
extent reasonably necessary in order to prevent or limit loss;

(g) any Investment existing on the date of this Agreement;

(h) Investments in the form of, or pursuant to, operating agreements, joint
ventures, partnership agreements, working interests, royalty interests, mineral
leases, processing agreements, farm-out agreements, contracts for the sale,
transportation or exchange of oil and natural gas, unitization agreements,
pooling agreements, area of mutual interest agreements, production sharing
agreements or other similar or customary agreements, transactions, properties,
interests or arrangements, and Investments and expenditures in connection
therewith or pursuant thereto, in each case, made or entered into in the
ordinary course of business;

(i) Investments in Affiliates of the Borrower resulting from the drawings under,
or renewals or extensions of, letters of credit, surety bonds, guarantees, or
performance bonds supporting obligations of such Affiliates, and Investments in
Subsidiaries of the Borrower to cash collateralize obligations supported by such
letters of credit, bonds or guarantees if they expire or are cancelled undrawn
to be made by the Borrower or any of its Subsidiaries in order to avoid a
default pursuant to contracts or agreements;

(j) Investments made in connection with any Discontinued Business Operations or
Disclosed Litigation so long as (i) in the case of any Discontinued Business
Operations other than as described in clause (ii) below, the aggregate amount of
such Investments shall not exceed $75,000,000 at any time outstanding and
(ii) in the case of Tolling Agreements, Disclosed Litigation, or the wind-down,

 

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settlement or disposition of Third Party Risk Management transactions, (A) the
Borrower or its Subsidiaries shall have received reasonably equivalent value for
such Investment, or (B) (in the case of Tolling Agreements) the liabilities, if
any, in respect of such Investment shall not be any greater than the liabilities
associated with the applicable Tolling Agreement;

(k) Investments in any (i) Person in which the Borrower or any of its
Subsidiaries, directly or indirectly, owns Equity Interests, to provide for the
operation, maintenance or working capital of such Person or pursuant to Capital
Commitments in an aggregate amount not to exceed $20,000,000 in any calendar
year, (ii) Proportionately Consolidated Interests resulting from variances from
prior periods in the volume of natural gas processed or the volumes of natural
gas liquids produced pursuant to applicable construction and operation
agreements, or (iii) Proportionately Consolidated Interests consisting of the
payment of the proportional share of operating expenses through joint interest
billings pursuant to applicable construction and operating agreements;

(l) any Guarantees permitted to be incurred pursuant to Section 7.03;

(m) to the extent not prohibited by Law, (i) loans and advances to officers,
directors, and employees of the Borrower and Subsidiaries existing on the
Closing Date and (ii) additional loans and advances to officers, directors, and
employees of the Borrower and Subsidiaries in an aggregate amount not to exceed
$1,000,000 at any time outstanding made in the ordinary course of business;

(n) any Investment made with Exempt Proceeds or Exempt Equity Proceeds;

(o) any Investment in the Parent Guarantor to the extent the same would be
permitted to be made as a Restricted Payment pursuant to Section 7.06;

(p) other Investments having an aggregate Fair Market Value (measured on the
date each such Investment was made and without giving effect to subsequent
changes in value) not to exceed $30,000,000 incurred in any calendar year;

(q) (i) Investments made by the Borrower in Sithe Subordinated Indebtedness,
(ii) Investments held by the Sithe 49% Holding Companies in Equity Interests in
Sithe (to the extent Sithe is then not a Restricted Subsidiary) at the time of
consummation of the Sithe Holdco Contribution, (iii) Investments held by the
Sithe 51% Holding Companies in Sithe (to the extent Sithe is then not a
Restricted Subsidiary) at the time of consummation of the Sithe Contribution and
(iv) Investments comprised of direct or indirect contributions to Sithe of all
or any portion of the Sithe Subordinated Indebtedness, provided that, in the
case of this clause (iv), the Sithe Holdco Contribution or the Sithe 49% Holdco
Pledge (or, if the Parent Guarantor and the applicable Subsidiaries thereof are
not contractually or legally prohibited from so doing, both the Sithe Holdco
Contribution and the Sithe 49% Holdco Pledge) shall have been consummated, it
being understood that any cancellation of all or any portion of the Sithe
Subordinated Indebtedness shall be subject to the requirements of the foregoing
proviso; and

(r) additional Investments (including Investments in Excluded Subsidiaries,
Minority Investments and Unrestricted Subsidiaries), as valued at the Fair
Market Value of such Investment at the time each such Investment is made, in an
aggregate amount that, at the time such Investment is made, would not exceed the
sum of (i) $100,000,000 plus (ii) the Available Amount at such time plus
(iii) to the extent such amounts do not increase the Available Amount, an amount
equal to any repayments, interest, returns, profits, distributions, income and
similar amounts actually received in cash in respect of any such Investment
(which amount shall not exceed the amount of such Investment valued at the Fair
Market Value of such Investment at the time such Investment was made); provided
that the pro forma Leverage Ratio, after giving effect to such Investment, shall
not exceed (A) 7.0 to 1.0 at any time during fiscal year

 

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2006, (B) 6.5 to 1.0 at any time from January 1, 2007 through March 31, 2007,
(C) 6.25 to 1.0 at any time from April 1, 2007 through June 30, 2007, (D) 6.0 to
1.0 at any time from July 1, 2007 through September 30, 2007, (E) 5.75 to 1.0 at
any time from October 1, 2007 through December 31, 2007, (F) 5.25 to 1.0 at any
time during fiscal year 2008 and (G) thereafter, 5.0 to 1.0.

7.03. Indebtedness. The Borrower shall not, nor shall it permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, assume or
suffer to exist any Indebtedness, or issue any Disqualified Stock or, in the
case of the Restricted Subsidiaries, any preferred stock, except:

(a) in the case of the Borrower, any of its Restricted Subsidiaries or any Loan
Party, Indebtedness owed to the Borrower, any other Restricted Subsidiary or any
Loan Party, provided that, in each case, such Indebtedness shall (i) be
permitted by Section 7.02 and (ii) be subordinated to the Obligations as
provided in Section 10.06; and

(b) in the case of the Borrower and its Restricted Subsidiaries,

(i) Indebtedness under the Loan Documents;

(ii) Indebtedness outstanding on the date hereof that is listed on
Schedule 7.03;

(iii) Indebtedness in respect of any Guarantees by the Guarantors (A) of
Indebtedness under the Indentures and (B) and any newly-created direct
Subsidiary of the Borrower in respect of any Indebtedness of the Borrower issued
in connection with a refinancing or refunding of, or exchange for, any
Indebtedness issued under the Indentures, so long as any such newly-created
Subsidiary is in compliance with the provisions of Section 6.12;

(iv) (A) Indebtedness represented by Capital Lease Obligations, mortgage
financings, Off-Balance Sheet Obligations and purchase money obligations, in
each case, incurred for the purpose of financing all or any part of the purchase
price or cost of design, construction, installation or improvement of property,
plant or equipment used in the business of the Borrower or any of its Restricted
Subsidiaries, and (B) Indebtedness acquired or assumed in connection with
acquisitions consummated solely in connection with Capital Expenditures
permitted by Section 7.12; provided that the aggregate principal amount (or
accreted value, as applicable) of all Indebtedness incurred pursuant to this
clause (iv), including all Permitted Refinancing Indebtedness incurred to
refund, refinance, replace, defease or discharge any such Indebtedness, shall
not exceed $100,000,000 at any time outstanding;

(v) the obligation of the Borrower or any of its Restricted Subsidiaries to pay
the deferred purchase price of goods or services, or progress payments in
connection with such goods and services, including turbines, transformers and
similar equipment, so long as such obligations are incurred in the ordinary
course of business and, if applicable, such payments are permitted under
Section 7.12;

(vi) Indebtedness not otherwise permitted by this Section 7.03 incurred or
assumed in connection with the Discontinued Business Operations or Disclosed
Litigation so long as (A) the Borrower or such Subsidiary shall have complied
with the requirements of Section 7.02(j) with respect to the transaction
pursuant to which such Indebtedness is incurred or assumed and (B) the aggregate
amount of such Indebtedness

 

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shall not exceed $40,000,000 at any time outstanding, provided that the
following shall not be included when calculating the foregoing dollar
limitation: (y) any Indebtedness created or incurred as a result of set off,
cancellation, assignment or similar transactions among or between Subsidiaries
that engage in Discontinued Business Operations, or among or between such
Subsidiaries and other Loan Parties in connection with the wind-down of the
Discontinued Business Operations and (z) any Indebtedness related to Tolling
Agreements, Disclosed Litigation, or the wind-down, settlement, or disposition
of Third Party Risk Management transactions;

(vii) Indebtedness in respect of the 2003 Second Lien Notes and Indebtedness in
respect of the 2006 Senior Unsecured Notes, in each case, outstanding on the
date hereof;

(viii) Indebtedness in respect of the 2003 Convertible Securities;

(ix) Indebtedness representing deferred tax obligations assumed in connection
with an Illinova Asset Sale;

(x) Indebtedness in respect of (A) letters of credit in an aggregate face amount
not in excess of $50,000,000 and (B) surety bonds issued in the ordinary course
of business;

(xi) any Guarantee of Indebtedness that is otherwise permitted pursuant to this
Section 7.03;

(xii) the incurrence of Non-Recourse Debt by any Project Subsidiary after the
date hereof, provided that the Net Proceeds thereof are used to prepay Loans and
reduce the Revolving Credit Commitments pursuant to and to the extent required
by Section 2.04(b)(iii);

(xiii) the incurrence by the Borrower and/or any of its Restricted Subsidiaries
of additional Indebtedness in an aggregate principal amount (or accreted value,
as applicable) at any time outstanding, including all Permitted Refinancing
Indebtedness incurred to refund, refinance, replace, defease or discharge any
Indebtedness incurred pursuant to this clause (xiii), not to exceed the sum of
(i) $650,000,000 and (ii)(A) 50% of (1) the aggregate amount of all
consideration paid or costs incurred in connection with the acquisition,
expansion, upgrading or construction, after the Closing Date, of any assets of
the Borrower and the Restricted Subsidiaries constituting Collateral (any such
assets, “Relevant Assets”) (excluding fuel and consumable inventory purchased in
the ordinary course of business) minus (2) any Indebtedness incurred pursuant to
Section 7.03(b)(xiv) or Section 7.03(b)(xv) in respect of any such Relevant
Assets less (B) 50% of the consideration paid or costs incurred in respect of
Relevant Assets that are sold or otherwise disposed of by the Borrower and the
Restricted Subsidiaries after the Closing Date to the extent the proceeds of
such sale or other disposition are not actually applied in accordance with
Section 2.04(b); provided that (w) the Borrower shall be in compliance, on a pro
forma basis after giving effect to the incurrence of such Indebtedness (as if
such Indebtedness had been incurred on the first day of the applicable
Measurement Period), with the covenants set forth in Section 7.11; (x) the pro
forma Leverage Ratio, after giving effect to the incurrence of such Indebtedness
(as if such Indebtedness had been incurred on the first day of the applicable
Measurement Period), shall not exceed (A) 7.0 to 1.0 at any time during fiscal
year 2006, (B) 6.5 to 1.0 at any

 

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time from January 1, 2007 through March 31, 2007, (C) 6.25 to 1.0 at any time
from April 1, 2007 through June 30, 2007, (D) 6.0 to 1.0 at any time from
July 1, 2007 through September 30, 2007, (E) 5.75 to 1.0 at any time from
October 1, 2007 through December 31, 2007, (F) 5.25 to 1.0 at any time during
fiscal year 2008 and (G) thereafter, 5.0 to 1.0; (y) the aggregate principal
amount of Indebtedness incurred pursuant to this clause (xiii) that is secured
by second priority Liens permitted under Section 7.01(c)(ii) shall not exceed
$2,450,000,000 less the aggregate principal amount of 2003 Second Lien Notes
(and of any Permitted Refinancing Indebtedness thereof secured by second
priority Liens permitted under Section 7.01(c)) on the date of such incurrence;
and (z) no Indebtedness incurred pursuant to this clause (xiii) shall mature
earlier than six months after the Term L/C Facility Term Loan Maturity Date;

(xiv) the incurrence of Indebtedness of a Person that becomes a Restricted
Subsidiary, the incurrence of Indebtedness assumed in connection with the
acquisition of assets of such a Person, or the incurrence of Indebtedness
assumed in connection with other acquisitions of assets by the Borrower or any
Restricted Subsidiary, in each case after the Closing Date as the result of a
Permitted Acquisition; provided that (i) such Indebtedness existed at the time
such Person became a Restricted Subsidiary or at the time such assets were
acquired and, in each case, was not created in anticipation thereof, (ii) such
Indebtedness is not guaranteed in any respect by the Borrower or any Restricted
Subsidiary (other than any such Person that so becomes a Restricted Subsidiary)
except to the extent that such Guarantee is permitted to be incurred (and is so
incurred) pursuant to clause (b)(xiii) of this Section 7.03 and (iii)(A) the
Equity Interests of such Person are pledged to the Administrative Agent to the
extent required under Section 6.12 and (B) such Person executes a supplement to
the applicable Collateral Documents and a Guaranty or a Guaranty Supplement (or
alternative guarantee and security arrangements in relation to the Obligations)
to the extent required under Section 6.12;

(xv) the incurrence by the Borrower or any Restricted Subsidiary of Indebtedness
to finance a Permitted Acquisition; provided that (i) such Indebtedness is not
guaranteed in any respect by any Restricted Subsidiary (other than any Person
acquired (the “acquired Person”) as a result of such Permitted Acquisition) or
by the Borrower except to the extent that such Guarantee is permitted to be
incurred (and is so incurred) pursuant to clause (b)(xiii) of this Section 7.03,
and (ii)(A) the Borrower pledges the Equity Interests of such acquired Person to
the Administrative Agent to the extent required under Section 6.12 and (B) such
acquired Person executes a supplement to the applicable Collateral Documents and
a Guaranty or a Guaranty Supplement (or alternative guarantee and security
arrangements in relation to the Obligations) to the extent required under
Section 6.12;

(xvi) the incurrence by the Borrower and/or any of its Restricted Subsidiaries
of unsecured Indebtedness, in each case, (i) that does not mature, and is not
subject to mandatory repurchase, redemption or amortization (other than pursuant
to customary asset sale or change of control provisions requiring redemption or
repurchase only if and to the extent permitted by this Agreement) prior to the
date that is six months after the Term L/C Facility Term Loan Maturity Date,
(ii) that is not exchangeable or convertible into Indebtedness (other than other
Indebtedness permitted by this clause (xvi)) or Equity Interests of the Borrower
or any Restricted Subsidiary and (iii) if such Indebtedness is exchangeable or
convertible into any preferred stock or other Equity Interest of the Borrower or
if such Indebtedness is subordinated debt, such Indebtedness shall be
contractually subordinated to the Obligations and the ACH Obligations on terms
no less

 

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favorable to the Lenders than those customarily found in senior subordinated or
convertible notes of similar issuers issued under Rule 144A of the Securities
Act or in a public offering, as reasonably determined by the Administrative
Agent; provided that the Net Proceeds thereof are used to prepay Loans and
reduce the Revolving Credit Commitments pursuant to and to the extent required
by Section 2.04(b)(iii);

(xvii) the incurrence by the Borrower or any Restricted Subsidiary of
Indebtedness consisting of (i) obligations to pay insurance premiums or
(ii) take-or-pay obligations contained in supply agreements, in each case
arising in the ordinary course of business and not in connection with the
borrowing of money or Hedging Obligations;

(xviii) Indebtedness of the Borrower (which may be guaranteed by any Subsidiary
Guarantor) in an aggregate principal amount not in excess of $250,000,000
secured under the Collateral Documents on an equal and ratable basis with the
Loans and the other Obligations; provided that and any such Liens must be
granted in favor of the Collateral Trustees in the manner set forth in, and be
otherwise subject to (and in compliance with), the Collateral Trust Agreement;
and provided, further, that in connection with the incurrence of such
Indebtedness, the requirements of Section 6.13(b) shall have been satisfied to
the extent applicable;

(xix) unsecured Indebtedness of the Borrower in an aggregate principal amount
not in excess of $350,000,000, issued in exchange for the assignment to the
Borrower of the Sithe Subordinated Indebtedness (and accrued interest thereon to
the date of such assignment) by the holder or holders thereof, provided that the
Borrower shall have granted, pursuant to documentation satisfactory to the
Administrative Agents, valid and perfected liens on and in the Sithe
Subordinated Indebtedness, securing, in favor of the Collateral Trustees for the
benefit of the Shared Secured Parties, the payment of all the Obligations of the
Borrower under the Loan Documents (it being understood that such documentation
shall expressly permit the direct or indirect contribution by the Borrower to
Sithe of all or any portion of the Sithe Subordinated Indebtedness to the extent
permitted under Section 7.02(q)(iv), free and clear of such liens, and shall
permit the cancellation of all or any portion of the Sithe Subordinated
Indebtedness to the extent permitted under such Section); and

(xx) Permitted Refinancing Indebtedness in respect of the foregoing clauses (i),
(ii), (iii), (vi), (vii), (viii), (xi), (xii), (xiv), (xv), (xvi), (xviii),
(xix) and this clause (xx).

7.04. Fundamental Changes.

(a) The Parent Guarantor shall not, and the Borrower shall not, nor shall it
permit any of its Restricted Subsidiaries to, directly or indirectly,
consolidate or merge with or into another Person, or sell, assign, transfer,
convey or otherwise dispose of all or substantially all of the properties or
assets (whether now owned or hereafter acquired) of the Borrower and its
Restricted Subsidiaries taken as a whole, in one or more related transactions,
to another Person except that:

(i) so long as no Default exists or would result therefrom, (x) any Subsidiary
of the Parent Guarantor (other than the Borrower and its Subsidiaries) may merge
with or dissolve into (A) the Parent Guarantor, provided that the Parent
Guarantor shall be the continuing or surviving Person, (B) the Borrower,
provided that the Borrower shall be the continuing or surviving Person or
(C) any one or more other Subsidiaries, and (y) any

 

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Subsidiary of the Borrower may merge with or dissolve into (A) the Borrower,
provided that the Borrower shall be the continuing or surviving Person or
(B) any one or more other Subsidiaries of the Borrower, provided in each case
that when any Subsidiary Guarantor is merging with or dissolving into another
Subsidiary, such Subsidiary Guarantor shall be the continuing or surviving
Person or such other Subsidiary shall become a Guarantor upon the consummation
of such merger or dissolution in compliance with Section 6.12;

(ii) in connection with any Investment, sale or disposition, restructuring,
liquidation, winding up, dissolution or other transaction relating to the
Discontinued Business Operations, any Subsidiary of the Borrower may merge into
or consolidate with any other Person or permit any other Person to merge into or
consolidate with it or may dissolve, liquidate or otherwise wind up;

(iii) in connection with any Asset Sale permitted under Section 7.05, any
Subsidiary of the Borrower may dissolve, liquidate, consolidate or merge with or
into any other Person or permit any other Person to merge into or consolidate
with it;

(iv) so long as no Default exists or would result therefrom, in connection with
any Investment permitted under Section 7.02, any Subsidiary of the Borrower may
merge or dissolve into or consolidate with any other Person or permit any other
Person to merge or dissolve into or consolidate with it; provided that the
Person surviving such merger, dissolution or consolidation shall be a Guarantor
in compliance with Section 6.12; and

(v) any Dormant Subsidiary may dissolve, liquidate, wind up, consolidate or
merge with or into any other Person;

provided that in each case, immediately after giving effect thereto, in the case
of any such merger, consolidation or dissolution to which the Borrower is a
party, the Borrower is the surviving corporation.

(b) The Borrower shall not, nor shall it permit any of its Restricted
Subsidiaries to, directly or indirectly, lease all or substantially all of its
properties or assets, in one or more related transactions, to any other Person;

provided that this Section 7.04 shall not apply to (i) a merger of the Parent
Guarantor with an Affiliate (other than the Borrower) solely for the purpose of
reincorporating the Parent Guarantor in another jurisdiction or (ii) any sale,
transfer, assignment, conveyance, lease or other disposition of assets between
or among the Borrower and Subsidiary Guarantors which are Subsidiaries of the
Borrower.

7.05. Asset Sales. The Borrower shall not, nor shall it permit any of its
Restricted Subsidiaries to, directly or indirectly, consummate an Asset Sale
unless:

(a) the Borrower or such Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the Fair Market
Value of the assets or Equity Interests issued or sold or otherwise disposed of
(as reasonably determined by the Borrower or such Restricted Subsidiary);

 

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(b) at least 75% of the consideration received in the Asset Sale by the Borrower
or such Restricted Subsidiary is in the form of:

(i) cash or Cash Equivalents; provided that for purposes of this provision, each
of the following shall be deemed to be cash:

(A) any liabilities, as shown on the Borrower’s most recent consolidated balance
sheet, of the Borrower or any Restricted Subsidiary (other than contingent
liabilities and liabilities that are by their terms subordinated to the
Obligations) that are assumed by the transferee of any such assets pursuant to a
customary novation agreement that releases the Borrower or such Restricted
Subsidiary from further liability; and

(B) any securities, notes, or other obligations received by the Borrower or such
Restricted Subsidiary from such transferee that are converted (by sale or other
disposition) by the Borrower or such Restricted Subsidiary into cash, to the
extent of the cash received in that conversion within 180 days after such Asset
Sale; and

(C) reasonable reserves for indemnity obligations and purchase price adjustments
funded in cash or held back by the purchaser; and/or

(ii) Replacement Assets; provided that:

(A) the Fair Market Value of such Replacement Assets shall be at least equal to
the Fair Market Value of the portion of the assets sold or otherwise disposed of
attributable thereto, and, in each case, the Fair Market Value shall be
evidenced by (1) in the case of Replacement Assets representing consideration
less than $75,000,000, a resolution of the applicable Board of Directors or
(2) in the case of Replacement Assets representing consideration equal to or
exceeding $75,000,000, an appraisal satisfactory to the Administrative Agents
that is conducted by a valuation firm reasonably satisfactory to the
Administrative Agents; and

(B) if the assets or Equity Interests sold in the relevant Asset Sale
constituted part of the Collateral, then the Parent Guarantor or the Borrower,
as applicable, shall use all commercially reasonable efforts to grant, or cause
the applicable Restricted Subsidiary to grant, as promptly as reasonably
practicable, a first-priority Lien (subject to Permitted Liens) upon such
Replacement Assets as security for the Obligations; and

(c) if the Asset Sale is a sale of assets other than Designated Assets or Basket
Assets, the pro forma Leverage Ratio, after giving effect to such Asset Sale,
shall not exceed (A) 7.0 to 1.0 at any time during fiscal year 2006, (B) 6.5 to
1.0 at any time from January 1, 2007 through March 31, 2007, (C) 6.25 to 1.0 at
any time from April 1, 2007 through June 30, 2007, (D) 6.0 to 1.0 at any time
from July 1, 2007 through September 30, 2007, (E) 5.75 to 1.0 at any time from
October 1, 2007 through December 31, 2007, (F) 5.25 to 1.0 at any time during
fiscal year 2008 and (G) thereafter, 5.0 to 1.0.

 

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7.06. Restricted Payments.

(a) The Borrower shall not, nor shall the Borrower permit any of its Restricted
Subsidiaries to, directly or indirectly, make any Restricted Payment, except for
the following:

(i) the payment by any Person of any dividend solely in the common stock or
other common Equity Interests of such Person;

(ii) the payment of any dividend within 60 days after the date of declaration of
the dividend, if at the date of declaration the dividend payment would have
complied with the provisions of this Agreement;

(iii) so long as no Default has occurred and is continuing or would be caused
thereby, the making of any Restricted Payment of the type described in clause
(c) of the definition of such term in exchange for, or out of the net cash
proceeds of the substantially concurrent sale (other than to a Subsidiary of the
Borrower) of, Equity Interests of the Borrower (other than Disqualified Stock);

(iv) the defeasance, redemption, repurchase, or other acquisition of
Indebtedness of the Borrower or any of its Restricted Subsidiaries that is
contractually subordinated to the Obligations in exchange for or with the net
cash proceeds from a substantially concurrent (A) incurrence of Permitted
Refinancing Indebtedness or issuance of Equity Interests (other than
Disqualified Stock) of the Borrower or (B) contribution to the capital of the
Borrower or any of its Restricted Subsidiaries of proceeds from the incurrence
of Indebtedness of the Parent Guarantor (excluding Indebtedness that is
Guaranteed by the Borrower or any of its Restricted Subsidiaries) or issuance of
Equity Interests of the Parent Guarantor;

(v) so long as no Default has occurred and is continuing or would be caused
thereby, from time to time, the payment of dividends in cash to the Parent
Guarantor to repurchase, redeem or otherwise acquire or retire for value, any
Equity Interests of the Parent Guarantor or any Restricted Subsidiary of the
Parent Guarantor held by any current or former officer, director or employee of
the Parent Guarantor or any of its Restricted Subsidiaries pursuant to any
equity subscription agreement, stock option agreement, shareholders’ agreement,
employee benefit plan or similar agreement; provided that (A) the aggregate
price paid for all such repurchased, redeemed, acquired or retired Equity
Interests in any twelve-month period shall not exceed $10,000,000 and (B) any
amounts not used in any twelve-month period may be carried forward, in an amount
not to exceed $10,000,000, to the following twelve-month period;

(vi) the repurchase of Equity Interests deemed to occur upon the exercise of
stock options to the extent such Equity Interests represent a portion of the
exercise price of those stock options;

(vii) Permitted Payments to Parents;

(viii) so long as no Default has occurred and is continuing or would be caused
thereby, distributions in cash to make regularly scheduled dividend payments in
respect of the 2003 Convertible Preferred Stock; provided that all such
distributions under this clause (viii) in any fiscal year shall not exceed the
sum of (A) $22,000,000 and (B) any unused portion of such $22,000,000 basket
plus accrued dividends on such unused portion from each preceding fiscal year
since the Closing Date;

 

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(ix) any purchase, redemption, defeasance, or other acquisition or retirement
for value of Subordinated Indebtedness upon a Change of Control or an Asset Sale
to the extent required by any agreement pursuant to which such Subordinated
Indebtedness was issued, but only if the Borrower, in the case of an Asset Sale,
has complied with Section 7.05;

(x) any Restricted Payment made with Exempt Proceeds; provided that (A) any such
Restricted Payment shall be qualified, to the extent qualified by default and
event of default qualification in such Indenture, by the condition that no
Default has occurred and is continuing or would be caused thereby and
(B) proceeds of any such Restricted Payments may not be used for the payment of
dividends on, or the repurchase or redemption of common stock of, the Parent
Guarantor; or

(xi) so long as no Default has occurred and is continuing or would be caused
thereby, from time to time, the payment by the Borrower of dividends in cash to
the Parent Guarantor in an amount not exceeding the amount of Exempt Equity
Proceeds at such time, provided that amounts paid to the Parent Guarantor
pursuant to this Section 7.06(a)(xi) may not be used for the payment of
dividends on, or the repurchase or redemption of common stock of, the Parent
Guarantor; or

(xii) so long as no Default has occurred and is continuing or would be caused
thereby, other Restricted Payments in an aggregate amount not to exceed
$50,000,000 since the Closing Date.

The amount of all Restricted Payments (other than cash) shall be the Fair Market
Value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by the Borrower or such Restricted
Subsidiary, as the case may be, pursuant to the Restricted Payment. If the Fair
Market Value of any assets or securities that are required to be valued by this
covenant exceeds $50,000,000, then such Fair Market Value shall be determined by
the Board of Directors whose resolution with respect thereto shall be delivered
to the Administrative Agents. For the avoidance of doubt, the Borrower or any of
its Restricted Subsidiaries may pay (either directly or indirectly by making
payments to the Parent Guarantor) interest on or principal at Stated Maturity of
Indebtedness of the Parent Guarantor, including the 2003 Convertible Securities
and any other convertible subordinated debt securities of Parent Guarantor, so
long as the Borrower or its Restricted Subsidiaries have Guaranteed such
Indebtedness and the Guarantee was permitted to be incurred pursuant to
Section 7.03. Payments by the Borrower or any of its Restricted Subsidiaries in
respect of such Guaranteed Indebtedness and such other securities of the Parent
Guarantor shall not constitute Restricted Payments. Any loans, dividends, or
advances from the Borrower or any of its Restricted Subsidiaries to the Parent
Guarantor, for purposes of this Section 7.06, shall be determined to be
“distributions.”

(b) The Parent Guarantor shall not make (i) any dividend or other payment or
distribution on account of the Parent Guarantor’s common stock (including,
without limitation, any payment in connection with any merger or consolidation
involving the Parent Guarantor) or to the direct or indirect holders of the
Parent Guarantor’s common stock in their capacity as such (other than dividends
or distributions payable in common stock (other than Disqualified Stock) of the
Parent Guarantor) or (ii) any purchase, redemption, or other acquisition or
retirement for value (including, without limitation, in connection with any
merger or consolidation involving the Parent Guarantor) of any common stock of
the Parent Guarantor.

7.07. Change in Nature of Business. The Parent Guarantor shall not, and the
Borrower shall not, nor shall they permit any of their respective Restricted
Subsidiaries to, directly or indirectly, engage in any material line of business
other than Permitted Business.

 

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7.08. Transactions with Affiliates. The Borrower shall not, nor shall it permit
any of its Restricted Subsidiaries to, directly or indirectly, enter into any
Affiliate Transaction, unless such Affiliate Transaction is (a) otherwise
permitted under this Agreement, (b) in the ordinary course of business of the
Borrower or the relevant Restricted Subsidiary, and (c) on terms that are no
less favorable (as reasonably determined by the Borrower) to the Borrower or the
relevant Restricted Subsidiary than those that would have been obtained in a
comparable transaction by the Borrower or such Restricted Subsidiary with an
unrelated Person.

7.09. Burdensome Agreements. Except as otherwise permitted under Section 7.01,
7.02, 7.03(b), 7.05 or 7.16, the Borrower shall not, nor shall it permit any of
its Restricted Subsidiaries to, directly or indirectly, enter into any
Contractual Obligation (other than this Agreement, any other Loan Document, any
agreement or instrument governing the terms of the 2003 Convertible Securities,
any Permitted Refinancing Indebtedness of the 2003 Second Lien Notes or the 2003
Convertible Securities, or any agreement with, or any agreement resulting from,
the application of any Law by any Governmental Authority) that limits the
ability (a) of any Restricted Subsidiary (other than a Dormant Subsidiary or a
Discontinued Foreign Subsidiary) to make Restricted Payments to the Borrower or
any Guarantor or to otherwise transfer property to or invest in the Borrower or
any Guarantor, (b) of any Restricted Subsidiary (other than a Dormant Subsidiary
or a Discontinued Foreign Subsidiary) to Guarantee the Indebtedness of the
Borrower, or (c) of the Borrower or any Restricted Subsidiary (other than a
Dormant Subsidiary or a Discontinued Foreign Subsidiary) to create, incur,
assume or suffer to exist Liens on property of such Person. The restrictions in
this Section 7.09 will not apply to encumbrances or restrictions existing under
or by reason of:

(i) any such limitation contained in any agreement in effect on the Closing Date
and any amendments, modifications, restatements, renewals or replacements
thereof that are not more restrictive, taken as a whole, than the encumbrances
existing on the Closing Date;

(ii) customary encumbrances and restrictions entered into in the ordinary course
of business that are not more restrictive, taken as a whole, than the
encumbrances existing on the Closing Date;

(iii) (A) any limitation that limits the ability of a Subsidiary to transfer
property or enter into such Guarantees or (B) any negative pledge on any
property contained in any agreement for an Asset Sale of such property so long
as such Asset Sale is permitted by the terms hereof, any negative pledge in
favor of the holder of a Permitted Lien on the property subject to such
Permitted Lien and any negative pledge on any accounts receivable, payment
intangibles, instruments or other similar rights to payment from a counterparty
or its Affiliates granted on such rights to payment to such counterparty or its
Affiliates;

(iv) customary non-assignment provisions in contracts, agreements, leases,
permits and licenses;

(v) purchase money obligations for property acquired and Capital Lease
Obligations that impose property transfer restrictions on the property purchased
or leased of the nature described in clause (a) of this Section 7.09;

(vi) any agreement for the sale or other disposition of the stock or assets of a
Restricted Subsidiary that restricts distributions by that Restricted Subsidiary
pending the sale or other disposition;

 

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(vii) Liens permitted to be incurred under the provisions of Section 7.01 that
limit the right of the debtor to dispose of the assets subject to such Liens;

(viii) provisions limiting the disposition or distribution of assets or property
in joint venture agreements, ownership, participation, shareholders, partnership
or limited liability company agreements relating to Project Interests, asset
sale agreements, sale-leaseback agreements, stock sale agreements, agreements
governing Non-Recourse Debt and other similar agreements, which limitation is
applicable only to the assets that are the subject of such agreements;

(ix) restrictions on cash or other deposits or net worth or other similar
requirements imposed by customers under contracts entered into in connection
with a Permitted Business;

(x) restrictions or conditions contained in any trading, netting, operating,
construction, service, supply, purchase, sale or similar agreement to which the
Borrower or any Restricted Subsidiary is a party entered into in connection with
a Permitted Business; provided that such agreement prohibits the encumbrance of
solely the property or assets of the Borrower or such Restricted Subsidiary that
are the subject of that agreement, the payment rights arising thereunder and/or
the proceeds thereof and not of any other asset or property of the Borrower or
such Restricted Subsidiary or the assets or property of any other Restricted
Subsidiary;

(xi) any instrument governing Indebtedness or Capital Stock of a Person acquired
by the Borrower or any of its Restricted Subsidiaries as in effect at the time
of such acquisition (except to the extent such Indebtedness or Capital Stock was
incurred in connection with or in contemplation of such acquisition), which
encumbrance or restriction is not applicable to any Person, or the properties or
assets of any Person, other than the Person, or the property or assets of the
Person, so acquired; provided that, in the case of Indebtedness, such
Indebtedness was permitted by the terms of this Agreement to be incurred;

(xii) Indebtedness of a Restricted Subsidiary existing at the time it became a
Restricted Subsidiary if such restriction was not created in connection with or
in anticipation of the transaction or series of transactions pursuant to which
such Restricted Subsidiary became a Restricted Subsidiary or was acquired by the
Borrower;

(xiii) with respect to property transfer restrictions of the type described in
clause (a) of this Section 7.09 only, restrictions encumbering property at the
time such property was acquired by the Borrower or any of its Restricted
Subsidiaries, so long as such restriction relates solely to the property so
acquired and was not created in connection with or in anticipation of such
acquisition;

(xiv) customary provisions in joint venture, stockholder, membership, limited
liability company or partnership agreements or organizational documents relating
to joint ventures or partnerships or owners, participation, shared facility or
other similar agreements relating to Project Interests; and

(xv) any encumbrance or restriction of the type referred to in clauses (a),
(b) or (c) of this Section 7.09 (except to the extent that any of clauses
(i) through (xiv) of this Section 7.09 refers or applies only to certain of such
clauses (a), (b) or (c), and, in such case, only to such applicable clause),
imposed by any amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings of the contracts,
instruments or obligations referred to in clauses (i) through (xiv) of this
Section 7.09; provided that such amendments,

 

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modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings are, when taken as a whole, in the good faith
judgment of the chief financial officer of the Borrower, no more restrictive
with respect to such dividend and other payment restrictions than those
contained in the dividend or other payment restrictions prior to such amendment,
modification, restatement, renewal, increase, supplement, refunding, replacement
or refinancing.

7.10. Use of Proceeds. The Borrower shall not use the proceeds of any Credit
Extension, whether directly or indirectly, and whether immediately, incidentally
or ultimately, to purchase or carry margin stock (within the meaning of
Regulation U of the FRB) or to extend credit to others for the purpose of
purchasing or carrying margin stock or to refund Indebtedness originally
incurred for such purpose (in each case to the extent such action is in
violation of Regulation U).

7.11. Financial Covenants.

(a) Secured Debt/EBITDA Ratio. The Borrower shall not permit the Secured
Debt/EBITDA Ratio as of the last day of any fiscal quarter to be greater than
the ratio set forth below:

 

Measurement Period Ending:

   Maximum Secured
Debt/EBITDA Ratio:

June 30, 2006

   3.50:1.0

September 30, 2006

   3.50:1.0

December 31, 2006

   3.0:1.0

March 31, 2007

   2.75:1.0

June 30, 2007

   2.5:1.0

September 30, 2007

   2.25:1.0

December 31, 2007 and thereafter

   2.0:1.0

(b) Interest Coverage Ratio. The Borrower shall not permit the Interest Coverage
Ratio as of the last day of any Measurement Period ending during any period set
forth below to be less than the ratio set forth opposite such period below:

 

Measurement Period Ending:

   Interest Coverage Ratio

June 30, 2006

   1.40:1.0

September 30, 2006

   1.40:1.0

December 31, 2006

   1.50:1.0

March 31, 2007

   1.625:1.0

June 30, 2007

   1.625:1.0

September 30, 2007

   1.625:1.0

December 31, 2007

   1.625:1.0

March 31, 2008

   1.625:1.0

June 30, 2008 and thereafter

   1.75:1.0

 

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7.12. Capital Expenditures. The Borrower shall not, nor shall it permit any of
its Restricted Subsidiaries to, directly or indirectly, make Capital
Expenditures (other than Capital Expenditures made with Exempt Proceeds) during
the four-fiscal quarter period ending on the applicable date set forth below in
an aggregate amount exceeding, in the aggregate for the Borrower and its
Restricted Subsidiaries, the amount set forth opposite such date:

 

Four-Fiscal Quarter Period Ending:

   Amount:

June 30, 2006

   $ 155,000,000

September 30, 2006

   $ 155,000,000

December 31, 2006

   $ 155,000,000

March 31, 2007

   $ 145,000,000

June 30, 2007

   $ 145,000,000

September 30, 2007

   $ 145,000,000

December 31, 2007

   $ 145,000,000

March 31, 2008

   $ 160,000,000

June 30, 2008

   $ 160,000,000

September 30, 2008

   $ 160,000,000

December 31, 2008

   $ 160,000,000

March 31, 2009

   $ 220,000,000

June 30, 2009

   $ 220,000,000

September 30, 2009

   $ 220,000,000

December 31, 2009

   $ 220,000,000

March 31, 2010

   $ 220,000,000

June 30, 2010

   $ 220,000,000

September 30, 2010

   $ 220,000,000

December 31, 2010

   $ 220,000,000

March 31, 2011

   $ 220,000,000

June 30, 2011

   $ 220,000,000

September 30, 2011

   $ 220,000,000

December 31, 2011

   $ 220,000,000

March 31, 2012

   $ 240,000,000

provided that (i) any portion of any amount set forth above, if not expended in
the four fiscal quarter period for which it is permitted above, may be carried
over for expenditure in the immediately succeeding four fiscal quarter period
and (ii) up to 50% of any amount set forth above for any four quarter fiscal
period may be carried back for expenditure in the immediately prior four fiscal
quarter period (any such amount, the “Capital Expenditure Carryback Amount”) and
the amount set forth above for such future four fiscal quarter period shall be
reduced by such Capital Expenditure Carryback Amount. Notwithstanding the
foregoing, the Borrower and its Restricted Subsidiaries may at any time make
additional Capital Expenditures (a) that are Environmental Capital Expenditures
or Necessary Capital Expenditures or (b) in an amount equal to the amount of
Exempt Equity Proceeds at such time.

7.13. Amendments of Organizational Documents. The Borrower shall not, nor shall
it permit any of its Restricted Subsidiaries to, directly or indirectly, amend
any of its Organizational Documents other than any such amendment (a) made
solely in connection with a transaction that is otherwise permitted under this
Agreement, (b) that could not reasonably be expected to have a Material Adverse
Effect, or (c) in connection with Discontinued Business Operations.

7.14. Accounting Changes. The Parent Guarantor shall not, and the Borrower shall
not, nor shall they permit any of their respective Restricted Subsidiaries to,
directly or indirectly, make any change in (a) accounting policies or reporting
practices, except (i) as required or permitted by GAAP or (ii) as the Parent
Guarantor or the Borrower, as the case may be, deems necessary to comply with
any Law, or (b) fiscal year.

7.15. Prepayments, Etc. of Indebtedness. The Borrower shall not, nor shall it
permit any of its Restricted Subsidiaries to, directly or indirectly, prepay,
redeem, purchase, defease or otherwise satisfy or make any unscheduled payment,
in each case, prior to the scheduled maturity thereof in any

 

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manner (whether directly or indirectly), or make any payment in violation of any
subordination terms of, any Indebtedness for borrowed money (other than any
intercompany Indebtedness), except for the following:

(a) the prepayment of the Credit Extensions in accordance with the terms of this
Agreement;

(b) required prepayments or redemptions of Indebtedness that is permitted by
Section 7.03;

(c) the prepayment, redemption, repurchase, defeasance, or other unscheduled
payment of any Indebtedness that, as of the date hereof, has a final maturity
date no later than the Term L/C Facility Term Loan Maturity Date;

(d) the prepayment, redemption, repurchase, defeasance, or other unscheduled
payment of any Indebtedness in connection with any refinancing, refunding, or
exchange thereof permitted by Section 7.03;

(e) any payment permitted pursuant to Section 7.02(j);

(f) the prepayment, redemption, repurchase, defeasance, or other unscheduled
payment of Indebtedness that, as of the date hereof, has a final maturity date
after the Term L/C Facility Term Loan Maturity Date (i) with Exempt Proceeds,
(ii) with Exempt Equity Proceeds or (iii) with funds other than Exempt Proceeds
or Exempt Equity Proceeds in an aggregate amount not to exceed $150,000,000;

(g) the prepayment, redemption, repurchase, defeasance or other unscheduled
payment of the 2003 Second Lien Notes, provided that the pro forma Leverage
Ratio, after giving effect to such prepayment, redemption, repurchase,
defeasance or other unscheduled payment, shall not exceed (A) 7.0 to 1.0 at any
time during fiscal year 2006, (B) 6.5 to 1.0 at any time from January 1, 2007
through March 31, 2007, (C) 6.25 to 1.0 at any time from April 1, 2007 through
June 30, 2007, (D) 6.0 to 1.0 at any time from July 1, 2007 through
September 30, 2007, (E) 5.75 to 1.0 at any time from October 1, 2007 through
December 31, 2007, (F) 5.25 to 1.0 at any time during fiscal year 2008 and
(G) thereafter, 5.0 to 1.0;

(h) any such prepayment, redemption, purchase, defeasance, or other unscheduled
payment made with (i) Exempt Proceeds or (ii) Exempt Equity Proceeds; and

(i) notwithstanding anything to the contrary in this Section 7.15, any such
prepayment, redemption, purchase, defeasance, or other unscheduled payment made
solely with the net proceeds of any Parity Indebtedness or the issuance of any
Capital Stock by the Borrower or any of its Restricted Subsidiaries.

7.16. Swap Contracts. The Borrower shall not, nor shall it permit any of its
Restricted Subsidiaries to, directly or indirectly, enter into or assume any
Swap Contracts other than: (a) in respect of the production, handling,
aggregation, storage, purchase, supply and delivery of energy-related products
and services, financial or physical energy-related risk management products and
services, energy management and asset management services, in each case to the
extent such activities are performed directly or indirectly for the benefit of,
or to manage or mitigate risk involving assets, property, inventory positions or
sales or purchase obligation positions owned, controlled or held by, the
Borrower or any Subsidiary thereof, (b) in connection with the on-going
management of Third Party Risk Management transactions or positions, existing as
of the Closing Date, including entering into amendments, modifications,
supplements, restatements or replacement thereof or new transactions or
positions in order

 

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to manage the risks from time to time relating to such transactions or
positions, or entered into as agent for or on behalf of third parties where
effective liability for such transactions or positions resides with or has been
transferred to such third parties by law or contract, (c) in respect of gas
processing and natural gas liquids or in connection with the management of
natural gas or natural gas liquids price risk or (d) in respect of interest
rates or currency incurred in the ordinary course of business and consistent
with prudent business practice. As used herein, “Third Party Risk Management”
means, the production, handling, aggregation, storage, purchase, supply and
delivery of energy-related products and services, financial or physical
energy-related risk management products and services, energy management,
operation and maintenance services, general and administrative services, back
office services, asset management services and operations of Southstar and Nicor
Energy retail alliances, in each case to the extent such activities are not
performed directly or indirectly for the benefit of, or to manage or mitigate
risk involving assets, property, inventory positions or sales or purchase
obligation positions owned, controlled or held by, the Borrower or any
Subsidiary thereof.

7.17. Partnerships, Etc. The Borrower shall not, nor shall it permit any of its
Restricted Subsidiaries to, directly or indirectly, become a general partner in
any general or limited partnership or joint venture, other than any Subsidiary
the sole assets of which consist of its interest in such partnership or joint
venture.

7.18. Formation of Subsidiaries. The Borrower shall not, nor shall it permit any
of its Restricted Subsidiaries to, directly or indirectly, organize or invest in
any new Subsidiary except as permitted under Section 7.02.

7.19. Amendments, Etc. of 2003 Convertible Preferred Stock. The Parent Guarantor
shall not amend, modify or change any term or condition of the 2003 Convertible
Preferred Stock or agree in any manner to any other amendment, modification or
change of any term or condition of the 2003 Convertible Preferred Stock in any
manner adverse to the interests of the Lenders.

ARTICLE VIII

EVENTS OF DEFAULT AND REMEDIES

8.01. Events of Default. Any of the following shall constitute an Event of
Default:

(a) Non-Payment. The Borrower fails to pay (i) when and as required to be paid
herein, any amount of principal of any Loan or any L/C Obligation, or
(ii) within five Business Days after the same becomes due, any interest on any
Loan or on any L/C Obligation, or any prepayment premium, or any commitment or
other fee due hereunder, or (iii) within five Business Days after the same
becomes due, any other amount payable hereunder or under any other Loan
Document; or

(b) Specific Covenants. The Borrower or the Parent Guarantor, as applicable,
fails to perform or observe any term, covenant or agreement contained in any of
Section 6.01, 6.02(a) and 6.05 (with respect to the Parent Guarantor, the
Borrower or any Material Subsidiary only) or Article VII; or

(c) Other Defaults. Any Loan Party fails to perform or observe (i) the covenant
in Section 6.07 and such failure continues for ten days after the earlier of
(A) the date such Loan Party obtains knowledge of such non-compliance and
(B) receipt of notice of such non-compliance from either Administrative Agent
(whether by itself or at the request of any Lender) to the Borrower or (ii) any
other covenant or agreement (not specified in clause (i) above or in
Section 8.01(a) or (b)) contained in any Loan Document on its part to be
performed or observed and such failure continues for 30 days after the earlier
of (A) the date such Loan Party obtains knowledge of such non-compliance and
(B) receipt of

 

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notice of such non-compliance from either Administrative Agent (whether by
itself or at the request of any Lender) to the Borrower; or

(d) Representations and Warranties. Any representation, warranty, certification
or statement of fact made or deemed made by or on behalf of the Borrower, the
Parent Guarantor or any other Loan Party herein, in any other Loan Document, or
in any document delivered in connection herewith or therewith shall be incorrect
or misleading in any material respect when made or deemed made, and, with
respect to any representation contained in Section 5.08(b), 5.08(c) or 6.02(f)
which is incorrect or misleading in any material respect when made or deemed
made, the Loan Parties shall not have complied with the provisions of
Section 6.13 with respect to such real property or leases within 30 days
following the date on which a Loan Party obtains knowledge of the inaccuracy of
such representation; or

(e) Cross-Default. Any Loan Party or any Restricted Subsidiary of the Borrower
(i) fails to make any payment when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness
or Guarantee of Indebtedness (other than Indebtedness hereunder and intercompany
Indebtedness) having an aggregate principal amount (including undrawn amounts
under letters of credit and including amounts owing to all creditors under any
combined or syndicated credit arrangement) of more than $50,000,000 or
(ii) fails to observe or perform any other agreement or condition relating to
any such Indebtedness or Guarantee of Indebtedness or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event occurs, the effect of which default or other event is to cause, or to
permit the holder or holders of such Indebtedness or the beneficiary or
beneficiaries of such Guarantee (or a trustee or agent on behalf of such holder
or holders or beneficiary or beneficiaries) to cause, with the giving of notice
if required, such Indebtedness to be demanded or to become due or to be
repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an
offer to repurchase, prepay, defease or redeem such Indebtedness to be made,
prior to its stated maturity, or such Guarantee to become payable or cash
collateral in respect thereof to be demanded; provided that any event described
in this Section 8.01(e) that occurs in respect of a non-wholly owned Subsidiary
shall not be an Event of Default unless the Fair Market Value of the total
aggregate assets of the non-wholly owned Subsidiaries as to which such event or
events have occurred is at least $50,000,000 and such event or events shall not
have been cured within 45 days; or

(f) Insolvency Proceedings, Etc. The Parent Guarantor, the Borrower or any
Material Subsidiary institutes or consents to the institution of any proceeding
under any Debtor Relief Law, or makes a general assignment for the benefit of
creditors; or applies for or consents to the appointment of any receiver,
trustee, custodian, conservator, liquidator, rehabilitator or similar officer
for it or for all or any material part of its property; or any receiver,
trustee, custodian, conservator, liquidator, rehabilitator or similar officer is
appointed without the application or consent of such Person and the appointment
continues undischarged or unstayed for 60 consecutive calendar days; or any
proceeding under any Debtor Relief Law relating to any such Person or to all or
any material part of its property is instituted without the consent of such
Person and continues undismissed or unstayed for 60 consecutive calendar days,
or an order for relief is entered in any such proceeding; or

(g) Inability to Pay Debts; Attachment. (i) The Parent Guarantor, the Borrower
or any Material Subsidiary becomes unable or admits in writing its inability or
fails generally to pay its debts as they become due or (ii) any writ or warrant
of attachment or execution or similar process is issued or levied against all or
any material part of the property of any such Person and is not released,
vacated or fully bonded within 60 days after its issue or levy; or

(h) Judgments. There is entered against the Parent Guarantor, the Borrower or
any Material Subsidiary a final non-appealable judgment or order for the payment
of money for an amount

 

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exceeding $50,000,000 (net of insurance coverage which is reasonably expected to
be paid by the insurer) and either (i) such judgment or order is not discharged
within a period of 60 consecutive days following the rendering thereof and
enforcement proceedings are commenced by any creditor upon such judgment or
order, or (ii) there is a period of 60 consecutive days during which a stay of
enforcement of such judgment, by reason of a pending appeal or otherwise, is not
in effect; or

(i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or
Multiemployer Plan which has resulted or could reasonably be expected to result
in liability of any Loan Party to the Pension Plan, Multiemployer Plan or the
PBGC in an aggregate amount in excess of $50,000,000, or (ii) any Loan Party or
any ERISA Affiliate defaults, within the meaning of Section 4219(c)(5) of ERISA,
with respect to its withdrawal liability under Section 4201 of ERISA under a
Multiemployer Plan in an aggregate amount in excess of $50,000,000; or

(j) Invalidity of Loan Documents. The Parent Guarantor or any Subsidiary thereof
asserts that any provision of any Loan Document, at any time after its execution
and delivery and for any reason other than as expressly permitted hereunder or
thereunder or satisfaction in full of all the Obligations, ceases to be in full
force and effect; the Parent Guarantor or any Subsidiary thereof contests in any
manner the validity or enforceability of any provision of any Loan Document; or
any Loan Party denies that it has any or further liability or obligation under
any Loan Document, or purports to revoke, terminate or rescind any Loan
Document; or

(k) Change of Control. There occurs any Change of Control; or

(l) Collateral Document. Any Collateral Document after delivery thereof pursuant
to Section 4.01, 6.12 or 6.13 shall for any reason (other than pursuant to the
terms thereof or hereof) cease to create a valid and perfected lien on and
security interest in any material portion of the Collateral.

8.02. Remedies Upon Event of Default.

(a) Termination of Commitments. If any Event of Default occurs and is
continuing, the Administrative Agents shall, at the request of, or may, with the
consent of, the Required Lenders, declare the Revolving Credit Commitments and
any obligation of any L/C Issuer to make L/C Credit Extensions to be terminated,
whereupon such Revolving Credit Commitments and obligation shall be terminated;

(b) Acceleration and other Remedies. If any Event of Default occurs and is
continuing, the Administrative Agents shall, at the request of, or may, with the
consent of, the Required Lenders, take any or all of the following actions:

(i) declare the unpaid principal amount of all outstanding Loans, all interest
accrued and unpaid thereon, and all other amounts owing or payable hereunder or
under any other Loan Document to be immediately due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Borrower;

(ii) require that the Borrower Cash Collateralize the Revolving L/C Obligations
(in an amount equal to the then Outstanding Amount thereof); and

(iii) exercise on behalf of itself, the other Agents and the Lenders all rights
and remedies available to it, the other Agents and the Lenders under the Loan
Documents (including, without limitation, all of the Collateral Documents) or
applicable Law;

 

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provided that upon the occurrence of an actual or deemed entry of an order for
relief with respect to the Borrower under the Bankruptcy Code of the United
States, the obligation of each Lender to make Loans and any obligation of any
L/C Issuer to make L/C Credit Extensions shall automatically terminate, the
unpaid principal amount of all outstanding Loans and all interest and other
amounts as aforesaid shall automatically become due and payable, and the
obligation of the Borrower to Cash Collateralize the Revolving L/C Obligations
as aforesaid shall automatically become effective, in each case without further
act of any Agent or any Lender.

8.03. Application of Monies Upon Event of Default. Upon an Event of Default, any
monies received by any Agent shall be applied to the Obligations, subject to the
priorities set forth in the Collateral Trust Agreement, in the following order
of priority:

(i) first, to costs and expenses owed to the Agents and any L/C Issuer, ratably
in accordance with such respective costs and expenses then owing to the Agents
and such L/C Issuers;

(ii) second, to fees and interest owed to the Lenders, ratably in accordance
with such respective fees and interest then owing to the Lenders; and

(iii) third, ratably to payments of principal (and Cash Collateralization of
Letters of Credit).

ARTICLE IX

ADMINISTRATIVE AGENTS AND OTHER AGENTS

9.01. Appointment and Authorization of Agents.

(a) Each Lender hereby irrevocably appoints, designates and authorizes each
Agent to take such action on its behalf under the provisions of this Agreement
and each other Loan Document and to exercise such powers and perform such duties
as are expressly delegated to it by the terms of this Agreement or any other
Loan Document, together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere herein or in
any other Loan Document, no Agent shall have any duties or responsibilities,
except those expressly set forth herein, nor shall any Agent have or be deemed
to have any fiduciary relationship with any Lender or participant, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against any Agent. Without limiting the generality of the
foregoing sentence, the use of the term “agent” herein and in the other Loan
Documents with reference to any Agent is not intended to connote any fiduciary
or other implied (or express) obligations arising under agency doctrine of any
applicable Law. Instead, such term is used merely as a matter of market custom,
and is intended to create or reflect only an administrative relationship between
independent contracting parties.

(b) Each L/C Issuer shall act on behalf of the Lenders with respect to any
Letters of Credit issued by it and the documents associated therewith, and such
L/C Issuer shall have all of the benefits and immunities (i) provided to the
Agents in this Article IX with respect to any acts taken or omissions suffered
by such L/C Issuer in connection with Letters of Credit issued by it or proposed
to be issued by it and the applications and agreements for letters of credit
pertaining to such Letters of Credit as fully as if the term “Agent” as used in
this Article IX and in the definition of “Agent-Related Person” included such
L/C Issuer with respect to such acts or omissions, and (ii) as additionally
provided herein with respect to such L/C Issuer.

 

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(c) Each of the Lenders (in its capacities as a Lender and L/C Issuer (if
applicable)) hereby irrevocably appoints and authorizes the Collateral Agent to
act as the agent and as the representative of such Lender for purposes of
acquiring, holding and enforcing any and all Liens on Collateral granted by any
of the Loan Parties to secure any of the Secured Obligations, together with such
powers and discretion as are reasonably incidental thereto. In this connection,
the Collateral Agent (and any co-agents, subagents and attorneys-in-fact
appointed by the Collateral Agent or by either Administrative Agent pursuant to
Section 9.02 for purposes of holding or enforcing any Lien on the Collateral (or
any portion thereof) granted under the Collateral Documents, or for exercising
any rights and remedies thereunder at the direction of the Collateral Agent),
shall be entitled to the benefits of all provisions of this Article IX
(including, without limitation, Section 9.07, as though such co-agents,
sub-agents and attorneys-in-fact were the “collateral agent” under the Loan
Documents) as if set forth in full herein with respect thereto.

(d) Each of the Lenders hereby irrevocably authorizes the Agents to enter into
intercreditor arrangements on behalf of such Lender in respect of the 2003
Second Lien Notes and any other Parity Lien Debt (including amendments thereto,
if any, (i) consistent with the terms of this Agreement and (ii) which do not
otherwise adversely affect the rights and remedies of the Lenders) and any
Permitted Refinancing Indebtedness in respect of the 2003 Second Lien Notes and
such Parity Lien Debt.

(e) Each Lender hereby irrevocably authorizes the Collateral Agent to (i) direct
the Collateral Trustees to execute the Mortgage Supplements, (ii) consent to the
amendment to the Collateral Trust Agreement delivered pursuant to
Section 4.01(a)(iv) and (iii) enter into any other documents necessary to
reflect the terms of this Agreement or effectuate the provisions in clauses (i)
and (ii), in each case, in accordance with the Collateral Trust Agreement.

9.02. Delegation of Duties. Any Agent may execute any of its duties under this
Agreement or any other Loan Document (including for purposes of holding or
enforcing any Lien on the Collateral (or any portion thereof) granted under the
Collateral Documents or of exercising any rights and remedies thereunder at the
direction of the Administrative Agents) by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel and other
consultants or experts concerning all matters pertaining to such duties. No
Agent shall be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects in the absence of gross negligence or willful
misconduct.

9.03. Liability of Agents. No Agent-Related Person shall (a) be liable for any
action taken or omitted to be taken by any of them under or in connection with
this Agreement or any other Loan Document or the transactions contemplated
hereby (except for its own gross negligence or willful misconduct in connection
with its duties expressly set forth herein), or (b) be responsible in any manner
to any Lender or participant for any recital, statement, representation or
warranty made by any Loan Party or any officer thereof, contained herein or in
any other Loan Document, or in any certificate, report, statement or other
document referred to or provided for in, or received by any Agent under or in
connection with, this Agreement or any other Loan Document, or the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document, or the perfection or priority of any Lien or security
interest created or purported to be created under the Collateral Documents, or
for any failure of any Loan Party or any other party to any Loan Document to
perform its obligations hereunder or thereunder. No Agent-Related Person shall
be under any obligation to any Lender or participant to ascertain or to inquire
as to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
properties, books or records of any Loan Party or any Affiliate thereof.

 

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9.04. Reliance by Agents.

(a) Each Agent shall be entitled to rely, and shall be fully protected in
relying, upon any writing, communication, signature, resolution, representation,
notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or
telephone message, electronic mail message, statement or other document or
conversation 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 (including counsel to any Loan Party), independent accountants and
other experts selected by such Agent. Each Agent shall be fully justified in
failing or refusing to take any action under any Loan Document unless it shall
first receive such advice or concurrence of the Required Lenders as it deems
appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action.
Each Agent shall in all cases be fully protected in acting, or in refraining
from acting, under this Agreement or any other Loan Document in accordance with
a request or consent of the Required Lenders (or such greater number of Lenders
as may be expressly required hereby in any instance) and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders. The Lenders hereby acknowledge that each 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 Loan Document unless it shall be
requested in writing to do so by the Required Lenders. Each Agent shall be fully
justified in failing or refusing to take any action hereunder and under any
other Loan Document unless it shall first be indemnified to its satisfaction by
the Lenders pro rata against any and all liability, cost and expense that it may
incur by reason of taking or continuing to take any such action.

(b) For purposes of determining compliance with the conditions specified in
Section 4.01, each Lender that has signed this Agreement shall be deemed to have
consented to, approved or accepted or to be satisfied with, each document or
other matter required thereunder to be consented to or approved by or acceptable
or satisfactory to a Lender unless the Administrative Agents shall have received
notice from such Lender prior to the proposed Closing Date specifying its
objection thereto.

9.05. Notice of Default. No Agent shall be deemed to have knowledge or notice of
the occurrence of any Default, except with respect to defaults in the payment of
principal, interest and fees required to be paid to the Payment Agent for the
account of the Lenders, unless such Agent shall have received written notice
from a Lender or the Borrower referring to this Agreement, describing such
Default and stating that such notice is a “notice of default.” The
Administrative Agents will notify the Lenders of its receipt of any such notice.
The Administrative Agents shall take such action, or direct the Collateral Agent
to take such action or refrain from taking such action, with respect to such
Default as may be directed by the Required Lenders in accordance with Article
VIII; provided that unless and until the Administrative Agents or the Collateral
Agent, as the case may be, have received any such direction, the Administrative
Agents or the Collateral Agent, as the case may be, may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default as they shall deem advisable or in the best interest of the
Lenders.

9.06. Credit Decision; Disclosure of Information by Agents. Each Lender
acknowledges that no Agent-Related Person has made any representation or
warranty to it, and that no act by any Agent hereafter taken, including any
consent to and acceptance of any assignment or review of the affairs of any Loan
Party or any Affiliate thereof, shall be deemed to constitute any representation
or warranty by any Agent-Related Person to any Lender as to any matter,
including whether Agent-Related Persons have disclosed material information in
their possession. Each Lender represents to each Agent that it has,
independently and without reliance upon any Agent-Related Person and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the

 

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Loan Parties and their respective Subsidiaries, and all applicable bank or other
regulatory Laws relating to the transactions contemplated hereby, and made its
own decision to enter into this Agreement and to extend credit to the Borrower
and the other Loan Parties hereunder. Each Lender also represents that it will,
independently and without reliance upon any Agent-Related Person and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Borrower and the other Loan Parties. Except for notices,
reports and other documents expressly required to be furnished to the Lenders by
any Agent herein, such Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the business,
prospects, operations, property, financial and other condition or
creditworthiness of any of the Loan Parties or any of their respective
Affiliates which may come into the possession of any Agent-Related Person.

9.07. Indemnification of Agents. Whether or not the transactions contemplated
hereby are consummated, the Lenders shall indemnify upon demand each
Agent-Related Person (to the extent not reimbursed by or on behalf of any Loan
Party and without limiting the obligation of any Loan Party to do so), pro rata,
and hold harmless each Agent-Related Person from and against any and all
Indemnified Liabilities incurred by it; provided that no Lender shall be liable
for the payment to any Agent-Related Person of any portion of such Indemnified
Liabilities to the extent determined in a final, nonappealable judgment by a
court of competent jurisdiction to have resulted from such Agent-Related
Person’s own gross negligence or willful misconduct; provided that no action
taken by any Agent-Related Person in accordance with the directions of the
Required Lenders, and no action taken or refrained from being taken by the
Collateral Agent at the direction of an Administrative Agent, shall be deemed to
constitute gross negligence or willful misconduct for purposes of this
Section 9.07. In the case of any investigation, litigation or proceeding giving
rise to any Indemnified Liabilities, this Section 9.07 applies whether any such
investigation, litigation or proceeding is brought by any Lender or any other
Person. As used herein, “Indemnified Liabilities” for each Agent-Related Person
means (i) any amounts not reimbursed by the Borrower for which such
Agent-Related Person is entitled to reimbursement by the Borrower under the Loan
Documents, (ii) any other reasonable expenses incurred by such Agent-Related
Person on behalf of the Lenders, in connection with the preparation, execution,
delivery, administration and enforcement of the Loan Documents (including,
without limitation, for any reasonable expenses incurred by such Agent-Related
Person in connection with any dispute between such Agent-Related Person and any
Lender or between two or more of the Lenders) and (iii) any liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, reasonable
costs, expenses or disbursements of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against such Agent-Related Person in any way
relating to or arising out of the Loan Documents or any other document delivered
in connection therewith or the transactions contemplated thereby (including,
without limitation, for any such amounts incurred by or asserted against such
Agent-Related Person in connection with any dispute between such Agent-Related
Person and any Lender or between two or more of the Lenders), or the enforcement
of any of the terms of the Loan Documents or of any such other documents.
Without limitation of the foregoing, each Lender shall reimburse each Agent and
each L/C Issuer upon demand for its ratable share of any reasonable costs or
out-of-pocket expenses (including Attorney Costs) incurred by such Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that such Agent is not
reimbursed for such expenses by or on behalf of the Borrower. The undertaking in
this Section 9.07 shall survive termination of the Commitments, the payment of
all other Obligations and the resignation of such Agent.

 

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9.08. Agents in their Individual Capacities. Citicorp USA, Inc. and JPMCB and
their respective Affiliates may make loans to, issue letters of credit for the
account of, accept deposits from, acquire Equity Interests in and generally
engage in any kind of banking, trust, financial advisory, underwriting or other
business with each of the Loan Parties and their respective Affiliates as though
Citicorp USA, Inc. and JPMCB were not Agents hereunder and without notice to or
consent of the Lenders. The Lenders acknowledge that, pursuant to such
activities, Citicorp USA, Inc. and JPMCB or their respective Affiliates may
receive information regarding any Loan Party or its Affiliates (including
information that may be subject to confidentiality obligations in favor of such
Loan Party or such Affiliate) and acknowledge that no Agent shall be under any
obligation to provide such information to them. With respect to its Loans, each
of Citicorp USA, Inc. and JPMCB shall have the same rights and powers under this
Agreement as any other Lender and may exercise such rights and powers as though
it were not an Agent, and the terms “Lender” and “Lenders” include each of
Citicorp USA, Inc. and JPMCB in its individual capacity.

9.09. Successor Agents. Any Agent may resign as Agent upon 30 days’ notice to
the Borrower and to the Lenders. If any Agent resigns under this Agreement, the
Required Lenders shall, with the consent of the Borrower at all times other than
during the existence of an Event of Default (which consent of the Borrower shall
not be unreasonably withheld or delayed), appoint from among the Lenders a
successor agent for the Lenders. If no successor agent is appointed prior to the
effective date of the resignation of such Agent, such Agent may appoint, after
consulting with the Lenders and the Borrower, a successor agent from among the
Lenders. Upon the acceptance of its appointment as successor agent hereunder,
the Person acting as such successor agent shall succeed to all the rights,
powers and duties of the retiring Agent and the terms “Administrative Agent” and
“Collateral Agent” shall mean such successor administrative agent and collateral
agent and the retiring Agent’s appointment, powers and duties as Agent shall be
terminated. After any retiring Agent’s resignation hereunder as Agent, the
provisions of this Article IX and Sections 11.04 and 11.05 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was an
Agent under this Agreement. If no successor agent has accepted appointment as
Agent by the date which is 30 days following a retiring Agent’s notice of
resignation, the retiring Agent’s resignation shall nevertheless thereupon
become effective and the Lenders shall perform all of the duties of such Agent
hereunder until such time, if any, as the Required Lenders appoint a successor
agent as provided for above. Upon the acceptance of any appointment as Agent
hereunder by a successor and upon the execution and filing or recording of such
financing statements, or amendments thereto, and such amendments or supplements
to the Mortgages, and such other instruments or notices, as may be necessary or
desirable, or as the Required Lenders may request, in order to continue the
perfection of the Liens granted or purported to be granted by the Collateral
Documents, such successor Agent shall thereupon succeed to and become vested
with all the rights, powers, discretion, privileges, and duties of the retiring
Agent, and the retiring Agent shall be discharged from its duties and
obligations under the Loan Documents. After any retiring Agent’s resignation
hereunder as an Agent, the provisions of this Article IX 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 an Agent.

9.10. Administrative Agents May File Proofs of Claim. In case of the pendency of
any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceeding relative to
any Loan Party, the Administrative Agents (irrespective of whether the principal
of any Loan or L/C Obligation shall then be due and payable as herein expressed
or by declaration or otherwise and irrespective of whether the Administrative
Agents shall have made any demand on the Borrower) shall be entitled and
empowered, by intervention in such proceeding or otherwise

(a) to file and prove a claim for the whole amount of the principal and interest
owing and unpaid in respect of the Loans, L/C Obligations and all other
Obligations that are owing and unpaid and

 

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to file such other documents as may be necessary or advisable in order to have
the claims of the Lenders and the Agents (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Lenders and the Agents
and their respective agents and counsel and all other amounts due the Lenders
and the Agents under Sections 2.03(i) and (j), 2.08 and 11.04) allowed in such
judicial proceeding; and

(b) to collect and receive any monies or other property payable or deliverable
on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Administrative Agents and, in the event
that the Administrative Agents shall consent to the making of such payments
directly to the Lenders, to pay to the Administrative Agents any amount due for
the reasonable compensation, expenses, disbursements and advances of the Agents
and their respective agents and counsel, and any other amounts due the Agents
under Sections 2.08 and 11.04.

Nothing contained herein shall be deemed to authorize the Administrative Agents
to authorize or consent to or accept or adopt on behalf of any Lender any plan
of reorganization, arrangement, adjustment or composition affecting the
Obligations or the rights of any Lender or to authorize the Administrative
Agents to vote in respect of the claim of any Lender in any such proceeding.

9.11. Collateral and Guaranty Matters.

(a) Provided that no Event of Default then exists, the Collateral Agent shall,
and shall direct the Collateral Trustees to, release any Lien on any property
granted to or held by the Collateral Agent or the Collateral Trustees under any
Loan Document (i) upon termination of the Commitments and payment in full of all
Obligations (other than contingent indemnification obligations not yet accrued
and payable) and the expiration or termination of all Letters of Credit,
(ii) that is Disposed of as part of or in connection with any sale, lease,
conveyance or other disposition permitted hereunder or under any other Loan
Document, or (iii) subject to Section 11.01(f) and (g), if approved, authorized
or ratified in writing by the Required Lenders.

(b) Provided that no Event of Default then exists, the Administrative Agents and
the Collateral Agent shall, and shall direct the Collateral Trustees to, release
any Loan Party from its obligations under the Loan Documents to which it is a
party or by which it is bound (i) if such Person ceases to be a Subsidiary or is
no longer required to be a party to the Guaranty as a result of a transaction
permitted hereunder or otherwise in accordance with the terms of the Loan
Documents, or (ii) subject to Section 11.01(f) and (g), if approved, authorized
or ratified in writing by the Required Lenders.

(c) The Collateral Agent and the Administrative Agents, as the case may be,
will, at the Borrower’s expense, timely execute and deliver such documents and
notices and take such other actions as the Borrower may reasonably request to
evidence the release of any Collateral or Loan Documents in accordance with this
Section 9.11 and any other applicable terms of the Loan Documents.

(d) Each Lender hereby authorizes the Collateral Agent or the Administrative
Agents to take the actions required under this Section 9.11. Without limiting
such authorization, the requisite Lenders will timely confirm in writing the
authority of the Collateral Agent or the Administrative Agents, as applicable,
with respect to any action under this Section 9.11.

9.12. Other Agents; Arrangers and Bookrunners. None of the Lenders or other
Persons identified on the facing page or signature pages of this Agreement as a
“syndication agent,”

 

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“documentation agent,” “co-agent,” “bookrunner,” “lead manager,” “arranger,”
“lead arranger” or “co-arranger” shall have any right, power, obligation,
liability, responsibility or duty under this Agreement other than, in the case
of such Lenders, those applicable to all Lenders as such. Without limiting the
foregoing, none of the Lenders or other Persons so identified shall have or be
deemed to have any fiduciary relationship with any Lender. Each Lender
acknowledges that it has not relied, and will not rely, on any of the Lenders or
other Persons so identified in deciding to enter into this Agreement or in
taking or not taking action hereunder.

9.13. Appointment of Supplemental Collateral Agents.

(a) It is the purpose of this Agreement and the other Loan Documents that there
shall be no violation of any law of any jurisdiction denying or restricting the
right of banking corporations or associations to transact business as agent or
trustee in such jurisdiction. It is recognized that in case of litigation under
this Agreement or any of the other Loan Documents, and in particular in case of
the enforcement of any of the Loan Documents, or in case the Administrative
Agents deem that by reason of any present or future law of any jurisdiction it
may not exercise any of the rights, powers or remedies granted herein or in any
of the other Loan Documents or take any other action which may be desirable or
necessary in connection therewith, it may be necessary that the Administrative
Agents appoint an additional individual or institution as a separate trustee,
co-trustee, collateral agent, collateral sub-agent or collateral co-agent (any
such additional individual or institution being referred to herein individually
as a “Supplemental Collateral Agent” and collectively as “Supplemental
Collateral Agents”).

(b) In the event that the Administrative Agents appoint a Supplemental
Collateral Agent with respect to any Collateral, (i) each and every right,
power, privilege or duty expressed or intended by this Agreement or any of the
other Loan Documents to be exercised by or vested in or conveyed to the
Administrative Agents with respect to such Collateral shall be exercisable by
and vest in such Supplemental Collateral Agent to the extent, and only to the
extent, necessary to enable such Supplemental Collateral Agent to exercise such
rights, powers and privileges with respect to such Collateral and to perform
such duties with respect to such Collateral, and every covenant and obligation
contained in the Loan Documents and necessary to the exercise or performance
thereof by such Supplemental Collateral Agent shall run to and be enforceable by
either the Administrative Agents or such Supplemental Collateral Agents, and
(ii) the provisions of this Article and of Section 11.04 that refer to the
Administrative Agent shall inure to the benefit of such Supplemental Collateral
Agent and all references therein to the Administrative Agent shall be deemed to
be references to the Administrative Agents and/or such Supplemental Collateral
Agent, as the context may require.

(c) Should any instrument in writing from any Loan Party be required by any
Supplemental Collateral Agent so appointed by the Administrative Agents for more
fully and certainly vesting in and confirming to him or it such rights, powers,
privileges and duties, such Loan Party shall execute, acknowledge and deliver
any and all such instruments promptly upon request by the Administrative Agents.
In case any Supplemental Collateral Agent, or a successor thereto, shall die,
become incapable of acting, resign or be removed, all the rights, powers,
privileges and duties of such Supplemental Collateral Agent, to the extent
permitted by law, shall vest in and be exercised by the Administrative Agents
until the appointment of a new Supplemental Collateral Agent.

 

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ARTICLE X

GUARANTY

10.01. Guaranty; Limitation of Liability.

(a) Each Guarantor, jointly and severally, hereby absolutely, unconditionally
and irrevocably guarantees the punctual payment when due, whether at scheduled
maturity or on any date of a required prepayment or by acceleration, demand or
otherwise, of all Obligations of the Borrower and of all ACH Obligations now or
hereafter existing (including, without limitation, any extensions,
modifications, substitutions, amendments or renewals of any or all of the
foregoing Obligations), whether direct or indirect, absolute or contingent, and
whether for principal, interest, premiums, fees, indemnities, contract causes of
action, costs, expenses or otherwise (such Obligations being the “Guaranteed
Obligations”), and agrees to pay any and all expenses (including, without
limitation, fees and expenses of counsel) incurred by any Agent or any other
Secured Party in enforcing any rights under this Guaranty or any other Loan
Document. Without limiting the generality of the foregoing, each Guarantor’s
liability shall extend to all amounts that constitute part of the Guaranteed
Obligations and would be owed by any other Loan Party to any Secured Party under
or in respect of the Loan Documents but for the fact that they are unenforceable
or not allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving such other Loan Party.

(b) Each Guarantor, and by its acceptance of this Guaranty, the Administrative
Agents and each other Secured Party, hereby confirms that it is the intention of
all such Persons that this Guaranty and the Obligations of each Guarantor
hereunder not constitute a fraudulent transfer or conveyance for purposes of
Debtor Relief Laws, the Uniform Fraudulent Conveyance Act, the Uniform
Fraudulent Transfer Act or any similar foreign, federal or state law to the
extent applicable to this Guaranty and the Obligations of each Guarantor
hereunder. To effectuate the foregoing intention, the Administrative Agents, the
other Secured Parties and the Guarantors hereby irrevocably agree that the
Obligations of each Subsidiary Guarantor under this Guaranty at any time shall
be limited to the maximum amount as will result in the Obligations of such
Subsidiary Guarantor under this Guaranty not constituting a fraudulent transfer
or conveyance.

(c) Each Subsidiary Guarantor hereby unconditionally and irrevocably agrees that
in the event any payment shall be required to be made to any Secured Party under
this Guaranty or any Guaranty Supplement, such Subsidiary Guarantor will
contribute, to the maximum extent permitted by law, such amounts to each other
Subsidiary Guarantor and each other Guarantor so as to maximize the aggregate
amount paid to the Secured Parties under or in respect of the Loan Documents.

10.02. Guaranty Absolute. Each Guarantor guarantees that the Guaranteed
Obligations will be paid strictly in accordance with the terms of the Loan
Documents, regardless of any law, regulation or order now or hereafter in effect
in any jurisdiction affecting any of such terms or the rights of any Secured
Party with respect thereto. The Obligations of each Guarantor under or in
respect of this Guaranty are independent of the Guaranteed Obligations or any
other Obligations of any other Loan Party under or in respect of the Loan
Documents, and a separate action or actions may be brought and prosecuted
against each Guarantor to enforce this Guaranty, irrespective of whether any
action is brought against the Borrower or any other Loan Party or whether the
Borrower or any other Loan Party is joined in any such action or actions. The
liability of each Guarantor under this Guaranty shall be irrevocable, absolute
and unconditional irrespective of, and each Guarantor hereby irrevocably waives
any defenses it may now have or hereafter acquire in any way relating to, any or
all of the following:

(a) any lack of validity or enforceability of any Loan Document or any agreement
or instrument relating thereto;

 

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(b) any change in the time, manner or place of payment of, or in any other term
of, all or any of the Guaranteed Obligations or any other Obligations of any
other Loan Party under or in respect of the Loan Documents, or any other
amendment or waiver of or any consent to departure from any Loan Document,
including, without limitation, any increase in the Guaranteed Obligations
resulting from the extension of additional credit to any Loan Party or any of
its Subsidiaries or otherwise;

(c) any taking, exchange, release or non-perfection of any Collateral or any
other collateral, or any taking, release or amendment or waiver of, or consent
to departure from, any other guaranty, for all or any of the Guaranteed
Obligations;

(d) any manner of application of Collateral or any other collateral, or proceeds
thereof, to all or any of the Guaranteed Obligations, or any manner of sale or
other disposition of any Collateral or any other collateral for all or any of
the Guaranteed Obligations or any other Obligations of any Loan Party under the
Loan Documents or any other assets of any Loan Party or any of its Subsidiaries;

(e) any change, restructuring or termination of the corporate structure or
existence of any Loan Party or any of its Subsidiaries;

(f) any failure of any Secured Party to disclose to any Loan Party any
information relating to the business, condition (financial or otherwise),
operations, performance, properties or prospects of any other Loan Party now or
hereafter known to such Secured Party (each Guarantor waiving any duty on the
part of the Secured Parties to disclose such information);

(g) the failure of any other Person to execute or deliver this Guaranty, any
Guaranty Supplement or any other guaranty or agreement or the release or
reduction of liability of any Guarantor or other guarantor or surety with
respect to the Guaranteed Obligations; or

(h) any other circumstance (including, without limitation, any statute of
limitations) or any existence of or reliance on any representation by any
Secured Party that might otherwise constitute a defense available to, or a
discharge of, any Loan Party or any other guarantor or surety.

This Guaranty shall survive termination of this Agreement and shall continue to
be effective or be reinstated, as the case may be, if at any time any payment of
any of the Guaranteed Obligations is rescinded or must otherwise be returned by
any Secured Party or any other Person upon the insolvency, bankruptcy or
reorganization of the Borrower or any other Loan Party or otherwise, all as
though such payment had not been made.

10.03. Waivers and Acknowledgments.

(a) Each Guarantor hereby unconditionally and irrevocably waives promptness,
diligence, notice of acceptance, presentment, demand for performance, notice of
nonperformance, default, acceleration, protest or dishonor and any other notice
with respect to any of the Guaranteed Obligations and this Guaranty and any
requirement that any Secured Party protect, secure, perfect or insure any Lien
or any property subject thereto or exhaust any right or take any action against
any Loan Party or any other Person or any Collateral.

(b) Each Guarantor hereby unconditionally and irrevocably waives any right to
revoke this Guaranty and acknowledges that this Guaranty is continuing in nature
and applies to all Guaranteed Obligations, whether existing now or in the
future.

 

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(c) Each Guarantor hereby unconditionally and irrevocably waives (i) any defense
arising by reason of any claim or defense based upon an election of remedies by
any Secured Party that in any manner impairs, reduces, releases or otherwise
adversely affects the subrogation, reimbursement, exoneration, contribution or
indemnification rights of such Guarantor or other rights of such Guarantor to
proceed against any of the other Loan Parties, any other guarantor or any other
Person or any Collateral and (ii) any defense based on any right of set-off or
counterclaim against or in respect of the Obligations of such Guarantor
hereunder.

(d) Each Guarantor acknowledges that the Collateral Agent may, without notice to
or demand upon such Guarantor and without affecting the liability of such
Guarantor under this Guaranty, foreclose under any mortgage by nonjudicial sale,
and each Guarantor hereby waives any defense to the recovery by the Collateral
Agent and the other Secured Parties against such Guarantor of any deficiency
after such nonjudicial sale and any defense or benefits that may be afforded by
applicable law.

(e) Each Guarantor hereby unconditionally and irrevocably waives any duty on the
part of any Secured Party to disclose to such Guarantor any matter, fact or
thing relating to the business, condition (financial or otherwise), operations,
performance, properties or prospects of any other Loan Party or any of its
Subsidiaries now or hereafter known by such Secured Party.

(f) Each Guarantor acknowledges that it will receive substantial direct and
indirect benefits from the financing arrangements contemplated by the Loan
Documents and that the waivers set forth in Section 10.02 and this Section 10.03
are knowingly made in contemplation of such benefits.

10.04. Subrogation. Each Guarantor hereby unconditionally and irrevocably agrees
not to exercise any rights that it may now have or hereafter acquire against the
Borrower, any other Loan Party or any other insider guarantor that arise from
the existence, payment, performance or enforcement of such Guarantor’s
Obligations under or in respect of this Guaranty or any other Loan Document,
including, without limitation, any right of subrogation, reimbursement,
exoneration, contribution or indemnification and any right to participate in any
claim or remedy of any Secured Party against the Borrower, any other Loan Party
or any other insider guarantor or any Collateral, whether or not such claim,
remedy or right arises in equity or under contract, statute or common law,
including, without limitation, the right to take or receive from the Borrower,
any other Loan Party or any other insider guarantor, directly or indirectly, in
cash or other property or by set-off or in any other manner, payment or security
on account of such claim, remedy or right, unless and until all of the
Guaranteed Obligations and all other amounts payable under this Guaranty shall
have been paid in full in cash, all Letters of Credit shall have expired or been
terminated and the Commitments shall have expired or been terminated. If any
amount shall be paid to any Guarantor in violation of the immediately preceding
sentence at any time prior to the latest of (a) the payment in full in cash of
the Guaranteed Obligations and all other amounts payable under this Guaranty,
(b) the latest maturity date in respect of the Facilities outstanding from time
to time and (c) the latest date of expiration or termination of all Letters of
Credit, such amount shall be received and held in trust for the benefit of the
Secured Parties, shall be segregated from other property and funds of such
Guarantor and shall forthwith be paid or delivered to the Administrative Agents
in the same form as so received (with any necessary endorsement or assignment)
to be credited and applied to the Guaranteed Obligations and all other amounts
payable under this Guaranty, whether matured or unmatured, in accordance with
the terms of the Loan Documents, or to be held as Collateral for any Guaranteed
Obligations or other amounts payable under this Guaranty thereafter arising. If
(i) any Guarantor shall make payment to any Secured Party of all or any part of
the Guaranteed Obligations, (ii) all of the Guaranteed Obligations and all other
amounts payable under this Guaranty shall have been paid in full in cash,
(iii) the latest maturity date in respect of the Facilities outstanding from
time to time shall have occurred and (iv) all Letters of Credit shall have
expired or been terminated, the Secured Parties will, at such Guarantor’s
request and expense, execute and deliver to such Guarantor appropriate

 

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documents, without recourse and without representation or warranty, necessary to
evidence the transfer by subrogation to such Guarantor of an interest in the
Guaranteed Obligations resulting from such payment made by such Guarantor
pursuant to this Guaranty.

10.05. Guaranty Supplements. Upon the execution and delivery by any Additional
Subsidiary Guarantor of a guaranty supplement substantially in the form of
Exhibit H (each, a “Guaranty Supplement”), (a) such Person shall become and be a
Guarantor hereunder, and each reference in this Guaranty to a “Guarantor” shall
also mean and be a reference to such Additional Subsidiary Guarantor, and each
reference in any other Loan Document to a “Subsidiary Guarantor” shall also mean
and be a reference to such Additional Subsidiary Guarantor, and (b) each
reference herein to “this Guaranty,” “hereunder,” “hereof” or words of like
import referring to this Guaranty, and each reference in any other Loan Document
to the “Guaranty,” “thereunder,” “thereof” or words of like import referring to
this Guaranty, shall mean and be a reference to this Guaranty as supplemented by
such Guaranty Supplement.

10.06. Subordination. Each Guarantor hereby subordinates any and all debts,
liabilities and other obligations owed to such Guarantor by each other Loan
Party (the “Subordinated Obligations”) to the Guaranteed Obligations to the
extent and in the manner hereinafter set forth in this Section 10.06:

(a) Prohibited Payments, Etc. Except during the continuance of a Default
(including the commencement and continuation of any proceeding under any Debtor
Relief Law relating to any other Loan Party), each Guarantor may receive
regularly scheduled payments from any other Loan Party on account of the
Subordinated Obligations. After the occurrence and during the continuance of any
Default (including the commencement and continuation of any proceeding under any
Debtor Relief Law relating to any other Loan Party), however, unless the
Required Lenders otherwise agree, no Guarantor shall demand, accept or take any
action to collect any payment on account of the Subordinated Obligations.

(b) Prior Payment of Guaranteed Obligations. In any proceeding under any Debtor
Relief Law relating to any other Loan Party, each Guarantor agrees that the
Secured Parties shall be entitled to receive payment in full in cash of all
Guaranteed Obligations (including all interest and expenses accruing after the
commencement of a proceeding under any Debtor Relief Law, whether or not
constituting an allowed claim in such proceeding (“Post-Petition Interest”))
before such Guarantor receives payment of any Subordinated Obligations.

(c) Turn-Over. After the occurrence and during the continuance of any Default
(including the commencement and continuation of any proceeding under any Debtor
Relief Law relating to any other Loan Party), each Guarantor shall, if the
Administrative Agents so request, collect, enforce and receive payments on
account of the Subordinated Obligations as trustee for the Secured Parties and
deliver such payments to the Administrative Agents on account of the Guaranteed
Obligations (including all Post-Petition Interest), together with any necessary
endorsements or other instruments of transfer, but without reducing or affecting
in any manner the liability of such Guarantor under the other provisions of this
Guaranty.

(d) Administrative Agents Authorization. After the occurrence and during the
continuance of any Default (including the commencement and continuation of any
proceeding under any Debtor Relief Law relating to any other Loan Party), the
Administrative Agents are authorized and empowered (but without any obligation
to so do), in its discretion, (i) in the name of each Guarantor, to collect and
enforce, and to submit claims in respect of, Subordinated Obligations and to
apply any amounts received thereon to the Guaranteed Obligations (including any
and all Post-Petition Interest), and (ii) to require each Guarantor (A) to
collect and enforce, and to submit claims in respect of, Subordinated
Obligations and (B) to pay any amounts received on such obligations to the
Administrative Agents for application to the Guaranteed Obligations (including
any and all Post-Petition Interest).

 

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10.07. Continuing Guaranty; Assignments. This Guaranty is a continuing guaranty
and shall (a) remain in full force and effect until the latest of (i) the
payment in full in cash of the Guaranteed Obligations and all other amounts
payable under this Guaranty, (ii) the latest maturity date in respect of the
Facilities outstanding from time to time and (iii) the latest date of expiration
or termination of all Letters of Credit, (b) be binding upon each Guarantor and
its successors and assigns and (c) inure to the benefit of and be enforceable by
the Secured Parties and their successors, transferees and assigns. Upon the
occurrence of the latest date specified in clause (a) above, the Guarantors
shall be released from other Obligations under the Loan Documents. Without
limiting the generality of clause (c) of the immediately preceding sentence, any
Secured Party may assign or otherwise transfer all or any portion of its rights
and obligations under this Agreement (including, without limitation, all or any
portion of its Commitments, the Advances owing to it and the Note or Notes held
by it) to any other Person, and such other Person shall thereupon become vested
with all the benefits in respect thereof granted to such Secured Party herein or
otherwise, in each case as and to the extent provided in this Section 10.07. No
Guarantor shall have the right to assign its rights hereunder or any interest
herein without the prior written consent of the Lenders.

ARTICLE XI

MISCELLANEOUS

11.01. Amendments, Etc. No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent to any departure by the
Borrower or any other Loan Party therefrom, shall be effective unless in writing
signed by the Required Lenders and the Borrower or the applicable Loan Party, as
the case may be, and acknowledged by each Administrative Agent that Lenders
constituting the Required Lenders have approved such amendment or waiver, and
each such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given; provided that no such amendment,
waiver or consent shall:

(a) extend or increase the Commitment of any Lender (or reinstate any Commitment
terminated pursuant to Section 8.02) without the written consent of such Lender;

(b) postpone any date scheduled for any payment of principal or interest under
Section 2.06 or 2.07, or any due date for any fees payable to the Lenders (or
any of them) hereunder or under any other Loan Document, without the written
consent of each Lender directly affected thereby;

(c) reduce the principal of, or the rate of interest specified herein on, any
Loan, Revolving L/C Borrowing, or any fees payable hereunder or under any other
Loan Document, without the written consent of each Lender directly affected
thereby; provided that only the consent of the Required Lenders shall be
necessary to change clause (c) of the definition of “Default Rate”;

(d) change the order of application of any prepayment of Loans between the
Facilities from the application thereof set forth in the applicable provisions
of Section 2.04(b), 2.11(i) or 2.11(j), respectively, or change the provisions
for pro rata payments, pro rata sharing or other pro rata treatment of the
Lenders under any Facility, without the written consent of each Lender directly
affected thereby;

(e) change any provision of this Section 11.01 or the definition of “Pro Rata
Share” or “Required Lenders” or any other provision hereof specifying the number
or percentage of Lenders required to amend, waive or otherwise modify any rights
hereunder or make any determination or grant any consent hereunder, without the
written consent of each Lender;

 

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(f) release all or substantially all of the Collateral (other than as permitted
by the Loan Documents) in any transaction or series of related transactions,
without the written consent of each Lender;

(g) release all or substantially all of the value of the Guaranty (in each case,
other than as permitted by the Loan Documents), without the written consent of
each Lender; or

(h) impose any greater restriction on the ability of any Lender to assign, or
sell participations in, any of its rights or obligations hereunder without the
written consent of each Lender directly affected thereby;

and provided, further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by any L/C Issuer in addition to the Lenders required above,
affect the rights or duties of, or any fees or other amounts payable to, such
L/C Issuer under this Agreement or any Letter of Credit Application relating to
any Letter of Credit issued or to be issued by it or, in the case of any Term
L/C Issuer, modify the provisions relating to the Term L/C Collateral Account;
(ii) no amendment, waiver or consent shall, unless in writing and signed by an
Agent in addition to the Lenders required above, affect the rights or duties of,
or any fees or other amounts payable to, such Agent under this Agreement or any
other Loan Document; (iii) Section 11.07(g) may not be amended, waived or
otherwise modified without the consent of each Granting Lender all or any part
of whose Loans are being funded by an SPC at the time of such amendment, waiver
or other modification; and (iv) notwithstanding anything in this Section 11.01
to the contrary, any amendment to this Agreement or any other Loan Document may
be effected in accordance with the last sentence of Section 2.13(a).
Notwithstanding anything to the contrary herein, no Defaulting Lender shall have
any right to approve or disapprove any amendment, waiver or consent hereunder,
except that (A) no such amendment, waiver or consent shall modify any provision
of the Loan Documents (1) providing for Lenders to receive pro rata payments,
pro rata sharing or other pro rata treatment or (2) in a manner that has a
disproportionate effect on such Lender in relation to other Lenders under the
affected Facility and (B) the Commitment of such Lender may not be increased or
extended, in each case without the consent of such Lender if the consent of such
Lender is otherwise required under the other provisions of this Section 11.01.

Anything in this Section 11.01 to the contrary notwithstanding:

(1) no waiver or modification of any provision of this Agreement that has the
effect (either immediately or at some later time) of enabling the Borrower to
satisfy a condition precedent to the making of a Credit Extension under the
Revolving Credit Facility shall be effective against the Revolving Credit
Lenders unless the Revolving Credit Lenders having more than 50% of the
Revolving Credit Commitments shall have concurred with such waiver or
modification;

(2) this Agreement may be amended (or amended and restated) with the written
consent of the Required Lenders, the Administrative Agents and the Borrower
(a) to add one or more additional credit facilities to this Agreement and to
permit the extensions of credit from time to time outstanding thereunder and the
accrued interest and fees in respect thereof to share ratably in the benefits of
this Agreement and the other Loan Documents with the Loans (and any other credit
facilities added pursuant to this clause (2)) and the accrued interest and fees
in respect thereof and (b) to include appropriately the Lenders holding such
credit facilities in any determination of the Required Lenders; and

(3) this Agreement may be amended with the written consent of the Administrative
Agents, the Borrower and the Lenders providing the Replacement Term Loans (as
defined below) to permit the refinancing of all outstanding Term L/C Facility
Term Loans (or all loans under any other tranche of term loans added to this
Agreement pursuant to clause (2) immediately above) (“Refinanced

 

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Term Loans”) with a replacement term loan tranche denominated in Dollars
(“Replacement Term Loans”) hereunder; provided that (a) the aggregate principal
amount of such Replacement Term Loans shall not exceed the aggregate principal
amount of such Refinanced Term Loans, (b) the Applicable Margin for such
Replacement Term Loans shall not be higher than the Applicable Margin for such
Refinanced Term Loans, (c) the Weighted Average Life to Maturity of such
Replacement Term Loans shall not be shorter than the Weighted Average Life to
Maturity of such Refinanced Term Loans at the time of such refinancing (except
to the extent of nominal amortization for periods where amortization has been
eliminated as a result of prepayment of a tranche of term loans under this
Agreement) and (d) all other terms applicable to such Replacement Term Loans
shall be substantially identical to, or less favorable to the Lenders providing
such Replacement Term Loans than, those applicable to such Refinanced Term
Loans, except to the extent necessary to provide for covenants and other terms
applicable to any period after the latest final maturity of the tranche or
tranches of term loans in effect immediately prior to such refinancing.

11.02. Notices and Other Communications.

(a) General. Unless otherwise expressly provided herein, all notices and other
communications provided for hereunder or any other Loan Document shall be in
writing (including by facsimile transmission). All such written notices shall be
mailed, faxed or delivered to the applicable address, facsimile number or
(subject to Section 11.02(c)) electronic mail address, and all notices and other
communications expressly permitted hereunder to be given by telephone shall be
made to the applicable telephone number, as follows:

(i) if to the Borrower, the Payment Agent, an Administrative Agent or any L/C
Issuer, to the address, facsimile number, electronic mail address or telephone
number specified for such Person on Schedule 11.02 or to such other address,
facsimile number, electronic mail address or telephone number as shall be
designated by such party in a notice to the other parties; and

(ii) if to any other Lender, to the address, facsimile number, electronic mail
address or telephone number specified in its Administrative Questionnaire or to
such other address, facsimile number, electronic mail address or telephone
number as shall be designated by such party in a notice to the Borrower, the
Administrative Agents and the L/C Issuers.

All such notices and other communications shall be deemed to be given or made
upon the earlier to occur of (i) actual receipt by the relevant party hereto and
(ii) (A) if delivered by hand or by courier, when signed for by or on behalf of
the relevant party hereto; (B) if delivered by mail, four Business Days after
deposit in the mails, postage prepaid; (C) if delivered by facsimile, when sent
and receipt has been confirmed by telephone; and (D) if delivered by electronic
mail (which form of delivery is subject to the provisions of Section 11.02(c)),
when delivered; provided that notices and other communications to the
Administrative Agents and the L/C Issuers pursuant to Article II shall not be
effective until actually received by such Person. In no event shall a voicemail
message be effective as a notice, communication or confirmation hereunder.

(b) Effectiveness of Facsimile Documents and Signatures. Loan Documents may be
transmitted and/or signed by facsimile. The effectiveness of any such documents
and signatures shall, subject to applicable Law, have the same force and effect
as manually-signed originals and shall be binding on all Loan Parties, the
Agents and the Lenders. The Administrative Agents may also require that any such
documents and signatures be confirmed by a manually-signed original thereof;
provided that

 

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the failure to request or deliver the same shall not limit the effectiveness of
any facsimile document or signature.

(c) Limited Use of Electronic Mail. Electronic mail and Internet and intranet
websites may be used only to distribute routine communications, such as
financial statements and other information as provided in Sections 6.01 and
6.02, and to distribute Loan Documents for execution by the parties thereto, and
may not be used for any other purpose.

(d) Reliance by Agents and Lenders. The Agents and the Lenders shall be entitled
to rely and act upon any notices (including telephonic Committed Loan Notices)
purportedly given by or on behalf of the Borrower even if (i) such notices were
not made in a manner specified herein, were incomplete or were not preceded or
followed by any other form of notice specified herein, or (ii) the terms
thereof, as understood by the recipient, varied from any confirmation thereof.
The Borrower shall indemnify each Agent-Related Person and each Lender from all
losses, costs, expenses and liabilities resulting from the reliance by such
Person on each notice purportedly given by or on behalf of the Borrower. All
telephonic notices to and other communications with any Agent may be recorded by
such Agent, and each of the parties hereto hereby consents to such recording.

11.03. No Waiver; Cumulative Remedies. No failure by any Lender or any Agent to
exercise, and no delay by any such Person in exercising, any right, remedy,
power or privilege hereunder or any other Loan Document shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided, and provided under each other
Loan Document, are cumulative and not exclusive of any rights, remedies, powers
and privileges provided by law.

11.04. Costs and Expenses. The Borrower agrees (a) to pay or reimburse each
Agent, each L/C Issuer, and each Joint Arranger named on the cover page of this
Agreement for all reasonable costs and expenses incurred in connection with the
development, preparation, negotiation, syndication and execution of this
Agreement and the other Loan Documents, and any amendment, waiver, consent or
other modification of the provisions hereof and thereof (whether or not the
transactions contemplated hereby or thereby are consummated), and the
consummation and administration of the transactions contemplated hereby and
thereby, including all Attorney Costs for one principal counsel at any time for
all such parties and reasonably required local counsel, and other professionals
retained and (b) to pay or reimburse each Agent and each Lender for all costs
and expenses incurred in connection with the enforcement of any rights or
remedies under this Agreement or the other Loan Documents (including all such
costs and expenses incurred during any legal proceeding, including any
proceeding under any Debtor Relief Law), including all Attorney Costs. The
foregoing costs and expenses shall include all search, filing, recording, title
insurance and appraisal charges and fees and taxes related thereto, and other
out-of-pocket expenses incurred by any Agent and the cost of independent public
accountants and other outside experts retained by any Agent. All amounts due
under this Section 11.04 shall be payable within ten Business Days after demand
therefor. The agreements in this Section 11.04 shall survive the termination of
the Commitments and repayment of all other Obligations. If any Loan Party fails
to pay when due any costs, expenses or other amounts payable by it hereunder or
under any Loan Document, including, without limitation, Attorney Costs and
indemnities, such amount may be paid on behalf of such Loan Party by any Agent
or any Lender, in its sole discretion.

11.05. Release and Indemnification by the Borrower and the Parent Guarantor.

(a) Whether or not the transactions contemplated hereby are consummated, the
Borrower and the Parent Guarantor hereby, jointly and severally, unconditionally
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Agent-Related Person, each Lender and their respective Affiliates, successors,
assigns, agents, directors, officers, employees, accountants, consultants,
contractors, advisors and attorneys (collectively, the “Indemnitees”) from all
Claims and jointly and severally agree to indemnify the Indemnitees, and hold
them harmless from any and all claims, losses, causes of action, costs and
expenses of every kind or character in connection with the Claims. As used in
this Agreement, the term “Claims” shall mean any and all possible claims,
demands, actions, causes of actions, costs, expenses and liabilities whatsoever,
known or unknown, at law or in equity, originating in whole or in part, which
the Borrower or the Parent Guarantor, or any of their agents, employees or
affiliates may now or hereafter have or claim against any of the Indemnitees and
irrespective of whether any such Claims arise out of contract, tort, strict
liability, violation of Law or otherwise in connection with any of the Loan
Documents and regardless of whether any Indemnitee is a party thereto, in all
cases, whether or not caused by or arising, in whole or in part, out of the
negligence of the Indemnitee; provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such liabilities, obligations,
losses, damages, penalties, claims, demands, actions, judgments, suits, costs,
expenses or disbursements are determined by a court of competent jurisdiction by
final and nonappealable judgment to have resulted from the gross negligence or
willful misconduct of such Indemnitee. The Borrower and the Parent Guarantor,
jointly and severally, agree that none of the Indemnitees have fiduciary or
similar obligations to the Borrower or the Parent Guarantor and that their
relationships are strictly that of creditor and debtor. This release is accepted
by each Lender pursuant to this Agreement and shall not be construed as an
admission of liability by any Lender or any other Indemnitee. No Indemnitee
shall be liable for any damages arising from the use by others of any
information or other materials obtained through IntraLinks or other similar
information transmission systems in connection with this Agreement, nor shall
any Indemnitee have any liability for any indirect or consequential damages
relating to this Agreement or any other Loan Document or arising out of its
activities in connection herewith or therewith (whether before or after the
Closing Date). In the case of an investigation, litigation or other proceeding
to which the indemnity in this Section 11.05 applies, such indemnity shall be
effective whether or not such investigation, litigation or proceeding is brought
by any Loan Party, its directors, shareholders or creditors or an Indemnitee or
any other Person, whether or not any Indemnitee is otherwise a party thereto and
whether or not any of the transactions contemplated hereunder or under any of
the other Loan Documents is consummated. All amounts due under this
Section 11.05 shall be payable within ten Business Days after demand therefor.
The agreements in this Section 11.05 shall survive the resignation of any Agent,
the replacement of any Lender, the termination of the Commitments and the
repayment, satisfaction or discharge of all the other Obligations.

(b) THE BORROWER AND EACH GUARANTOR ACKNOWLEDGES THAT THIS AGREEMENT AND OTHER
TRANSACTION DOCUMENTS CONTAIN PROVISIONS RELEASING EACH INDEMNITEE FROM
LIABILITY AND/OR INDEMNIFYING AND HOLDING HARMLESS EACH INDEMNITEE FOR, AMONG
OTHER THINGS, INDEMNITEE’S OWN NEGLIGENCE. EACH OF THE BORROWER AND THE PARENT
GUARANTOR AGREES THAT THE RELEASE AND/OR INDEMNITY PROVISIONS CONTAINED IN THESE
DOCUMENTS ARE CAPTIONED TO CLEARLY IDENTIFY THE RELEASE AND/OR INDEMNITY
PROVISIONS AND, THEREFORE, ARE SO CONSPICUOUS THAT EACH OF THE BORROWER AND THE
PARENT GUARANTOR HAS FAIR NOTICE OF THE EXISTENCE AND CONTENTS OF SUCH
PROVISIONS. EACH OF THE BORROWER AND THE PARENT GUARANTOR HEREBY WAIVES ANY
DEFENSES IT MIGHT ASSERT AGAINST EACH INDEMNITEE BASED ON THE HOLDING OF THE
TEXAS SUPREME COURT IN ETHYL CORP. v. DANIEL CONST. CO., 725 S.W.2d 705 (Tex.
1987), PAGE PETROLEUM, INC., et al. V. DRESSER INDUSTRIES, INC., et al., 853
S.W.2d 505 (Tex. 1993), AND QUORUM HEALTH RESOURCES, L.L.C. v. MAVERICK COUNTY
HOSPITAL DISTRICT et al., 308 F.3rd 451 (5th Cir. 2002) AND ANY RELATED CASE LAW
HOLDINGS.

 

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11.06. Payments Set Aside. To the extent that any payment by or on behalf of any
Loan Party is made to any Agent or any Lender, or any Agent or any Lender
exercises its right of setoff, and such payment or the proceeds of such setoff
or any part thereof is subsequently invalidated, declared to be fraudulent or
preferential, set aside or required (including pursuant to any settlement
entered into by such Agent or such Lender in its discretion) to be repaid to a
trustee, receiver or any other party, in connection with any proceeding under
any Debtor Relief Law or otherwise, then to the extent permitted by Law (a) to
the extent of such recovery, the obligation or part thereof originally intended
to be satisfied shall be revived and continued in full force and effect as if
such payment had not been made or such setoff had not occurred, and (b) each
Lender severally agrees to pay to the Administrative Agents upon demand its
applicable share of any amount so recovered from or repaid by any Agent, plus
interest thereon from the date of such demand to the date such payment is made
at a rate per annum equal to the Federal Funds Rate from time to time in effect.

11.07. Successors and Assigns.

(a) The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that the Borrower may not assign or otherwise transfer
any of its rights or obligations hereunder without the prior written consent of
each Lender and no Lender may assign or otherwise transfer any of its rights or
obligations hereunder except (i) in accordance with the provisions of
Section 11.07(b), (ii) by way of participation in accordance with the provisions
of Section 11.07(d), (iii) by way of pledge or assignment of a security interest
subject to the restrictions of Section 11.07(f) or (i), or (iv) to an SPC in
accordance with the provisions of Section 11.07(g) (and any other attempted
assignment or transfer by any party hereto shall be null and void). Nothing in
this Agreement, expressed or implied, shall be construed to confer upon any
Person (other than the parties hereto, their respective successors and assigns
permitted hereby, Participants to the extent provided in Section 11.07(d) and,
to the extent expressly contemplated hereby, the Indemnitees) any legal or
equitable right, remedy or claim under or by reason of this Agreement.

(b) Any Lender may at any time assign to one or more assignees all or a portion
of its rights and obligations under this Agreement (including all or a portion
of its Commitment and the Loans (including, for purposes of this
Section 11.07(b), participations in Revolving L/C Obligations) at the time owing
to it) with the prior consent (not to be unreasonably withheld or delayed) of
each of the Borrower, the Payment Agent and (only in the case of assignments of
the Revolving Credit Commitments) each Revolving L/C Issuer, provided that
(i) no such consent of the Payment Agent shall be required for an assignment of
a Term L/C Facility Term Loan to a Lender, an Affiliate of a Lender or an
Approved Fund; (ii) no such consent of the Borrower shall be required for an
assignment (A) to a Lender, an Affiliate of a Lender or an Approved Fund, (B) if
an Event of Default has occurred and is continuing, to any other Person or
(C) of a Term L/C Facility Term Loan; (iii) except in the case of an assignment
of the entire remaining amount of the assigning Lender’s Commitment under a
Facility and the Loans at the time owing to it thereunder or in the case of an
assignment to a Lender or an Affiliate of a Lender or by the Administrative
Agents, the aggregate amount of the Commitment (which for this purpose includes
Loans outstanding thereunder) or, if the applicable Commitment is not then in
effect, the principal outstanding balance of the Loan of the assigning Lender
subject to each such assignment shall not be less than $5,000,000 (or, in the
case of the Term L/C Facility Term Loans, $1,000,000), unless each of the
Administrative Agents and, so long as no Event of Default has occurred and is
continuing, the Borrower otherwise consents (each such consent not to be
unreasonably withheld or delayed); (iv) each partial assignment shall be made as
an assignment of a proportionate part of all the assigning Lender’s rights and
obligations under this Agreement with respect to the Loans or the Commitment
assigned under a Facility, except that this clause (iv) shall not prohibit any
Lender from assigning all or a portion of its rights and obligations among
separate Facilities on a non-pro rata basis; and (v) the parties to each
assignment shall execute and deliver to the Payment Agent an Assignment and
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recordation fee of $3,500 (which shall be payable by either the assignor or
assignee, as they may agree). Subject to acceptance and recording thereof by the
Payment Agent pursuant to Section 11.07(c), from and after the effective date
specified in each Assignment and Assumption, the assignee thereunder shall be a
party to this Agreement and, to the extent of the interest assigned by such
Assignment and Assumption, have the rights and obligations of a Lender under
this Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (other than delinquent obligations to any
Revolving L/C Issuer) (and, in the case of an Assignment and Assumption covering
all of the assigning Lender’s rights and obligations under this Agreement, such
Lender shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 3.01, 3.04, 3.05, 11.04 and 11.05 with respect to facts and
circumstances occurring prior to the effective date of such assignment). Upon
request, the Borrower (at its expense) shall execute and deliver a Note to the
assignee Lender. Any assignment or transfer by a Lender of rights or obligations
under this Agreement that does not comply with this Section 11.07(b) shall be
treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with
Section 11.07(d).

(c) The Payment Agent, acting solely for this purpose as an agent of the
Borrower, shall maintain at the Payment Agent’s Office a copy of each Assignment
and Assumption delivered to it and a register for the recordation of the names
and addresses of the Lenders, and the Commitments of, and principal amounts of
the Loans and the L/C Obligations owing to, each Lender pursuant to the terms
hereof from time to time (the “Register”). The entries in the Register shall be
conclusive, and the Borrower, the Agents and the Lenders may treat each Person
whose name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary. The Register shall be available for inspection by the Borrower, any
Agent and any Lender, at any reasonable time and from time to time upon
reasonable prior notice.

(d) Any Lender may at any time, without the consent of, or notice to, the
Borrower or the Administrative Agents, sell participations to any Person (other
than a natural person or the Borrower or any of the Borrower’s Affiliates or
Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s
rights and/or obligations under this Agreement (including all or a portion of
its Commitment and/or the Loans (including such Lender’s participations in
Revolving L/C Obligations) owing to it); provided that (i) such Lender’s
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (iii) the Borrower, the Agents and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender’s rights and obligations under this Agreement. Any agreement or
instrument pursuant to which a Lender sells such a participation shall provide
that such Lender shall retain the sole right to enforce this Agreement and to
approve any amendment, modification or waiver of any provision of this
Agreement; provided that such agreement or instrument may provide that such
Lender will not, without the consent of the Participant, agree to any amendment,
waiver or other modification described in the first proviso to Section 11.01
that directly affects such Participant. Subject to Section 11.07(e), the
Borrower agrees that each Participant shall be entitled to the benefits of
Sections 3.01, 3.04 and 3.05 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to Section 11.07(b). To the extent
permitted by law, each Participant also shall be entitled to the benefits of
Section 11.09 as though it were a Lender, provided such Participant agrees to be
subject to Section 2.12 as though it were a Lender.

(e) A Participant shall not be entitled to receive any greater payment under
Section 3.01 or 3.04 than the applicable Lender would have been entitled to
receive with respect to the participation sold to such Participant, unless the
sale of the participation to such Participant is made with the Borrower’s prior
written consent. A Participant that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of Section 3.01 unless the Borrower
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such Participant and such Participant agrees, for the benefit of the Borrower,
to comply with Section 11.15 as though it were a Lender.

(f) Any Lender may at any time pledge or assign a security interest in all or
any portion of its rights under this Agreement (including under its Note, if
any) to secure obligations of such Lender, including any pledge or assignment to
secure obligations to a Federal Reserve Bank; provided that no such pledge or
assignment shall release such Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.

(g) Notwithstanding anything to the contrary contained herein, any Lender (a
“Granting Lender”) may grant to a special purpose funding vehicle identified as
such in writing from time to time by the Granting Lender to the Payment Agent
and the Borrower (an “SPC”) the option to provide all or any part of any Loan
that such Granting Lender would otherwise be obligated to make pursuant to this
Agreement; provided that (i) nothing herein shall constitute a commitment by any
SPC to fund any Loan, and (ii) if an SPC elects not to exercise such option or
otherwise fails to make all or any part of such Loan, the Granting Lender shall
be obligated to make such Loan pursuant to the terms hereof. Each party hereto
hereby agrees that (i) neither the grant to any SPC nor the exercise by any SPC
of such option shall increase the costs or expenses or otherwise increase or
change the obligations of the Borrower under this Agreement (including its
obligations under Section 3.04), (ii) no SPC shall be liable for any indemnity
or similar payment obligation under this Agreement for which a Lender would be
liable, and (iii) the Granting Lender shall for all purposes, including the
approval of any amendment, waiver or other modification of any provision of any
Loan Document, remain the lender of record hereunder. The making of a Loan by an
SPC hereunder shall utilize the Commitment of the Granting Lender to the same
extent, and as if, such Loan were made by such Granting Lender. In furtherance
of the foregoing, each party hereto hereby agrees (which agreement shall survive
the termination of this Agreement) that, prior to the date that is one year and
one day after the payment in full of all outstanding commercial paper or other
senior debt of any SPC, it will not institute against, or join any other Person
in instituting against, such SPC any bankruptcy, reorganization, arrangement,
insolvency, or liquidation proceeding under the laws of the United States or any
State thereof. Notwithstanding anything to the contrary contained herein, any
SPC may (i) with notice to, but without prior consent of the Borrower and the
Payment Agent and with the payment of a processing fee of $3,500, assign all or
any portion of its right to receive payment with respect to any Loan to the
Granting Lender and (ii) disclose on a confidential basis any non-public
information relating to its funding of Loans to any rating agency, commercial
paper dealer or provider of any surety or Guarantee or credit or liquidity
enhancement to such SPC.

(h) Notwithstanding anything to the contrary contained herein, any Lender may
create a security interest in all or any portion of the Loans owing to it and
the Note, if any, held by it to the trustee as agent for holders of obligations
owed, or securities issued, by such Lender as security for such obligations or
securities, provided that unless and until such trustee actually becomes a
Lender in compliance with the other provisions of this Section 11.07, (i) no
such pledge shall release the pledging Lender from any of its obligations under
the Loan Documents and (ii) such trustee shall not be entitled to exercise any
of the rights of a Lender under the Loan Documents even though such trustee may
have acquired ownership rights with respect to the pledged interest through
foreclosure or otherwise.

(i) Notwithstanding anything to the contrary contained herein, if at any time
any of Citibank or JPMCB or any other L/C Issuer assigns all of its respective
Commitments and Loans pursuant to Section 11.07(b), Citibank, JPMCB or such L/C
Issuer, as applicable, may, upon 30 days’ notice to the Borrower and the
Lenders, resign as an L/C Issuer. In the event of any such resignation as L/C
Issuer, the Borrower shall be entitled to appoint from among the Lenders a
successor L/C Issuer hereunder; provided that no failure by the Borrower to
appoint any such successor shall affect the resignation of any of Citibank,
JPMCB or such L/C Issuer, as applicable, as L/C Issuer. If any of Citibank,
JPMCB or any

 

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other L/C Issuer, as applicable, resigns as L/C Issuer, it shall retain all the
rights and obligations of the L/C Issuers hereunder with respect to all Letters
of Credit outstanding as of the effective date of its resignation as L/C Issuer
and all L/C Obligations with respect thereto (including the right to require the
Lenders to make Base Rate Loans or fund risk participations in Unreimbursed
Amounts pursuant to Section 2.03(c)).

11.08. Confidentiality. Neither any Agent nor any Lender may disclose to any
Person any confidential, proprietary or non-public information of the Parent
Guarantor and its Subsidiaries furnished to the Agents or the Lenders by any
Loan Party (such information being referred to collectively herein as the
“Parent Information”), except that each of the Agents and each of the Lenders
may disclose Parent Information (i) to its and its affiliates’ employees,
officers, directors, agents and other advisors, including accountants and legal
counsel (it being understood that the Persons to whom such disclosure is made
will be informed of the confidential nature of such Parent Information and
instructed to keep such Information confidential on substantially the same terms
as provided herein), (ii) to the extent requested by any regulatory authority,
(iii) to the extent required by applicable laws or regulations or by any
judicial order, subpoena or similar legal process or requested by any regulatory
body with jurisdiction over any of the Agents or Lenders or their affiliates,
employees, officers, directors, agents, accountants, attorneys and other
advisors, (iv) to any other party to this Agreement, (v) in connection with the
exercise of any remedies hereunder or under any other Loan Document or any suit,
action or proceeding relating to this Agreement or any other Loan Document or
the enforcement of rights hereunder or thereunder, (vi) subject to an agreement
containing provisions substantially the same as those of this Section 11.08, to
any assignee of or participant in, or any prospective assignee of or participant
in, any of its rights or obligations under this Agreement, (vii) to the extent
such Parent Information (A) is or becomes generally available to the public on a
nonconfidential basis other than as a result of a breach of this Section 11.08
by such Agent or such Lender, or (B) is or becomes available to such Agent or
such Lender on a nonconfidential basis from a source other than a Loan Party and
(viii) with the consent of the Borrower.

11.09. Setoff. In addition to any rights and remedies of the Lenders provided by
law, upon the occurrence and during the continuance of any Event of Default,
each Lender and each of their respective Affiliates is authorized at any time
and from time to time, with prior notice to the Borrower or any other Loan
Party, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held by, and other Indebtedness at any
time owing by, such Lender to or for the credit or the account of the respective
Loan Parties against any and all Obligations owing to such Lender hereunder or
under any other Loan Document, now or hereafter existing, irrespective of
whether or not such Agent or such Lender shall have made demand under this
Agreement or any other Loan Document and although such Obligations may be
contingent or unmatured or denominated in a currency different from that of the
applicable deposit or Indebtedness. Each Lender agrees promptly to notify the
Borrower, the Payment Agent and the Administrative Agents after any such set-off
and application made by such Lender; provided that the failure to give such
notice shall not affect the validity of such setoff and application. The rights
of the Payment Agent, the Administrative Agents and each Lender and their
respective Affiliates under this Section 11.09 are in addition to other rights
and remedies (including, without limitation, other rights of setoff) that the
Payment Agent, the Administrative Agents, such Lender and their respective
Affiliates may have.

11.10. Interest Rate Limitation. Notwithstanding anything to the contrary
contained in any Loan Document, the interest paid or agreed to be paid under the
Loan Documents shall not exceed the maximum rate of non-usurious interest
permitted by applicable Law (the “Maximum Rate”). If any Agent or any Lender
shall receive interest in an amount that exceeds the Maximum Rate, the excess
interest shall be applied to the principal of the Loans or, if it exceeds such
unpaid principal, refunded to the Borrower. In determining whether the interest
contracted for, charged, or received by an Agent or a Lender exceeds the Maximum
Rate, such Person may, to the extent permitted by applicable Law, (a)

 

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characterize any payment that is not principal as an expense, fee, or premium
rather than interest, (b) exclude voluntary prepayments and the effects thereof,
and (c) amortize, prorate, allocate, and spread in equal or unequal parts the
total amount of interest throughout the contemplated term of the Obligations
hereunder.

11.11. Counterparts. This Agreement and each other Loan Document may be executed
in one or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument. Delivery by
telecopier of an executed counterpart of a signature page to this Agreement and
each other Loan Document shall be effective as delivery of an original executed
counterpart of this Agreement and such other Loan Document. The Agents may also
require that any such documents and signatures delivered by telecopier be
confirmed by a manually-signed original thereof; provided that the failure to
request or deliver the same shall not limit the effectiveness of any document or
signature delivered by telecopier.

11.12. Integration. This Agreement, together with the other Loan Documents,
comprises the complete and integrated agreement of the parties on the subject
matter hereof and thereof and supersedes all prior agreements, written or oral,
on such subject matter. In the event of any conflict between the provisions of
this Agreement and those of any other Loan Document, the provisions of this
Agreement shall control; provided that the inclusion of supplemental rights or
remedies in favor of the Agents or the Lenders in any other Loan Document shall
not be deemed a conflict with this Agreement. Each Loan Document was drafted
with the joint participation of the respective parties thereto and shall be
construed neither against nor in favor of any party, but rather in accordance
with the fair meaning thereof.

11.13. Survival of Representations and Warranties. All representations and
warranties made hereunder and in any other Loan Document or other document
delivered pursuant hereto or thereto or in connection herewith or therewith
shall survive the execution and delivery hereof and thereof. Such
representations and warranties have been or will be relied upon by each Agent
and each Lender, regardless of any investigation made by any Agent or any Lender
or on their behalf and notwithstanding that any Agent or any Lender may have had
notice or knowledge of any Default at the time of any Credit Extension, and
shall continue in full force and effect as long as any Loan or any other
Obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit
shall remain outstanding.

11.14. Severability. If any provision of this Agreement or the other Loan
Documents is held to be illegal, invalid or unenforceable, (a) the legality,
validity and enforceability of the remaining provisions of this Agreement and
the other Loan Documents shall not be affected or impaired thereby and (b) the
parties shall endeavor in good faith negotiations to replace the illegal,
invalid or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

11.15. Tax Forms.

(a) Each Lender that is not a “United States person” within the meaning of
Section 7701(a)(30) of the Code (a “Foreign Lender”) shall deliver to the
Payment Agent, prior to receipt of any payment subject to withholding under the
Code (or upon accepting an assignment of an interest herein), two duly signed
completed copies of either IRS Form W-8BEN or any successor thereto (relating to
such Foreign Lender and entitling it to an exemption from, or reduction of,
withholding tax on all payments to be made to such Foreign Lender by the
Borrower pursuant to this Agreement) or IRS Form W-8ECI or any successor thereto
(relating to all payments to be made to such Foreign Lender by the Borrower
pursuant to this Agreement) or such other evidence satisfactory to the Borrower
and the Payment Agent that such Foreign Lender is entitled to an exemption from,
or reduction of, U.S. withholding tax,

 

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including any exemption pursuant to Section 881(c) of the Code, and in the case
of a Foreign Lender claiming such an exemption under Section 881(c) of the Code,
a certificate that establishes in writing to the Administrative Agent that such
Foreign Lender is not (i) a “bank” as defined in Section 881(c)(3)(A) of the
Code, (ii) a 10-percent shareholder within the meaning of Section 871(h)(3)(B)
of the Code, and (iii) a controlled foreign corporation related to the Borrower
within the meaning of Section 864(d) of the Code. Thereafter and from time to
time, each such Foreign Lender shall (A) promptly submit to the Payment Agent
such additional duly completed and signed copies of one of such forms (or such
successor forms as shall be adopted from time to time by the relevant United
States taxing authorities) as may then be available under then current United
States laws and regulations to avoid, or such evidence as is satisfactory to the
Borrower and the Payment Agent of any available exemption from or reduction of,
United States withholding taxes in respect of all payments to be made to such
Foreign Lender by the Borrower pursuant to this Agreement, (B) promptly notify
the Payment Agent of any change in circumstances which would modify or render
invalid any claimed exemption or reduction, and (C) take such steps as shall not
be materially disadvantageous to it, in the reasonable judgment of such Lender,
and as may be reasonably necessary (including the re-designation of its Lending
Office) to avoid any requirement of applicable Laws that the Borrower make any
deduction or withholding for taxes from amounts payable to such Foreign Lender.

(i) Each Foreign Lender, to the extent it does not act or ceases to act for its
own account with respect to any portion of any sums paid or payable to such
Lender under any of the Loan Documents (for example, in the case of a typical
participation by such Lender), shall deliver to the Payment Agent on the date
when such Foreign Lender ceases to act for its own account with respect to any
portion of any such sums paid or payable, and at such other times as may be
necessary in the determination of the Payment Agent (in the reasonable exercise
of its discretion), (A) two duly signed completed copies of the forms or
statements required to be provided by such Lender as set forth above, to
establish the portion of any such sums paid or payable with respect to which
such Lender acts for its own account that is not subject to U.S. withholding
tax, and (B) two duly signed completed copies of IRS Form W-81MY (or any
successor thereto), together with any information such Lender chooses to
transmit with such form, and any other certificate or statement of exemption
required under the Code, to establish that such Lender is not acting for its own
account with respect to a portion of any such sums payable to such Lender.

(ii) The Borrower shall not be required to pay any additional amount to any
Foreign Lender under Section 3.01 (A) with respect to any Taxes required to be
deducted or withheld on the basis of the information, certificates or statements
of exemption such Lender transmits with an IRS Form W-8IMY pursuant to this
Section 11.15(a) or (B) if such Lender shall have failed to satisfy the
foregoing provisions of this Section 11.15(a); provided that if such Lender
shall have satisfied the requirement of this Section 11.15(a) on the date such
Lender became a Lender or ceased to act for its own account with respect to any
payment under any of the Loan Documents, nothing in this Section 11.15(a) shall
relieve the Borrower of its obligation to pay any amounts pursuant to
Section 3.01 in the event that, as a result of any change in any applicable Law,
treaty or governmental rule, regulation or order, or any change in the
interpretation, administration or application thereof, such Lender is no longer
properly entitled to deliver forms, certificates or other evidence at a
subsequent date establishing the fact that such Lender or other Person for the
account of which such Lender receives any sums payable under any of the Loan
Documents is not subject to withholding or is subject to withholding at a
reduced rate.

 

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(iii) The Payment Agent may, without reduction, withhold any Taxes required to
be deducted and withheld from any payment under any of the Loan Documents with
respect to which the Borrower is not required to pay additional amounts under
this Section 11.15(a).

(b) Upon the request of the Payment Agent, each Lender that is a “United States
person” within the meaning of Section 7701(a)(30) of the Code shall deliver to
the Payment Agent two duly signed completed copies of IRS Form W-9. If such
Lender fails to deliver such forms, then the Payment Agent may withhold from any
interest payment to such Lender an amount equivalent to the applicable back-up
withholding tax imposed by the Code, without reduction.

(c) If any Governmental Authority asserts that the Payment Agent did not
properly withhold or backup withhold, as the case may be, any tax or other
amount from payments made to or for the account of any Lender, such Lender shall
indemnify the Payment Agent therefor, including all penalties and interest, any
taxes imposed by any jurisdiction on the amounts payable to the Payment Agent
under this Section 11.15, and costs and expenses (including Attorney Costs) of
the Payment Agent. The obligation of the Lenders under this Section 11.15 shall
survive the termination of the Commitments, repayment of all other Obligations
hereunder and the resignation of the Payment Agent.

11.16. Governing Law.

(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF NEW YORK.

(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK SITTING IN
NEW YORK CITY OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF SUCH STATE,
AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER, EACH AGENT AND
EACH LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. THE BORROWER, EACH AGENT AND EACH
LENDER IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN
DOCUMENT OR OTHER DOCUMENT RELATED THERETO. THE BORROWER, EACH AGENT AND EACH
LENDER WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH
MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE.

11.17. Waiver of Right to Trial by Jury. EACH PARTY TO THIS AGREEMENT HEREBY
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY
JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN
DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS
OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE
TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY
HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO
THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 11.17

 

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WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO
THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

11.18. Binding Effect. This Agreement shall become effective when it shall have
been executed by the Borrower and each Guarantor and each Administrative Agent
shall have been notified by each Lender and each L/C Issuer that each such
Lender or L/C Issuer, as the case may be, has executed it and thereafter shall
be binding upon and inure to the benefit of the Borrower, and each Guarantor,
each Agent-Related Person and each Lender and their respective successors and
assigns and shall inure to the benefit of each Indemnitee, except that the
Borrower shall not have the right to assign its rights hereunder or any interest
herein without the prior written consent of the Lenders.

11.19. Amendment and Restatement. This Agreement is an amendment and restatement
(but not an extinguishment) of the Existing DHI Credit Agreement and, other than
as specifically amended and restated herein, the rights and obligations of the
parties thereto shall remain in full force and effect. Each Revolving Credit
Lender that is a “Lender” under the Existing DHI Credit Agreement hereby waives
any requirement thereunder to receive prior notice of the prepayment of any
loans and/or termination of commitments thereunder, if applicable, and each such
Revolving Credit Lender agrees that as of the Closing Date it shall have, and
continue to have, a Revolving Credit Commitment hereunder in the amount set
forth opposite such Lender’s name on Schedule 2.01.

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

11.21. Lender Addendum. Each initial Lender shall become a party to this
Agreement by either signing a counterpart of this Agreement or delivering to the
Administrative Agents a Lender Addendum duly executed by such Lender and the
Borrower.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.

 

DYNEGY INC.

By:

  /s/ Charles C. Cook  

Name:

 

Charles C. Cook

 

Title:

 

Senior Vice President and Treasurer

DYNEGY HOLDINGS INC.

By:

  /s/ Charles C. Cook  

Name:

 

Charles C. Cook

 

Title:

 

Senior Vice President and Treasurer

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

SUBSIDIARY GUARANTORS:

DYNEGY POWER CORP.

DPC II INC.

DYNEGY ENGINEERING, INC.

DYNEGY SERVICES, INC.

DYNEGY POWER MANAGEMENT SERVICES, L.P.

CALCASIEU POWER, INC.

DYNEGY PARTS AND TECHNICAL SERVICES, INC.

DYNEGY POWER MANAGEMENT SERVICES, INC.

HEP COGEN, INC.

NORTHWAY COGEN, INC.

DYNEGY POWER INVESTMENTS, INC.

DYNEGY POWER SERVICES, INC.

DYNEGY POWER NEVADA, INC.

MICHIGAN COGEN, INC.

MICHIGAN POWER, INC.

OCG COGEN, INC.

OYSTER CREEK COGEN, INC.

RRP COMPANY

DPC COLOMBIA – OPON POWER RESOURCES COMPANY

TERMO SANTANDER HOLDING, LLC

RIVERSIDE GENERATION, INC.

RIVERSIDE GENERATING COMPANY, L.L.C.

ROLLING HILLS GENERATION, INC.

DYNEGY RENAISSANCE POWER, INC.

DYNEGY NORTHEAST GENERATION, INC.

HUDSON POWER, L.L.C.

DYNEGY MIDSTREAM GP, INC.

DYNEGY UPPER HOLDINGS, L.L.C.

DYNEGY HOLDING COMPANY, L.L.C

By:

  /s/ Charles C. Cook  

Name:

 

Charles C. Cook

 

Title:

 

Senior Vice President and Treasurer

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

DMG ENTERPRISES, INC.

HAVANA DOCK ENTERPRISES, LLC

DMT HOLDINGS, INC.

DMT G.P., L.L.C.

DMT HOLDINGS, L.P.

DYNEGY MARKETING AND TRADE

DYNEGY COAL TRADING & TRANSPORTATION, L.L.C.

NGC STORAGE, INC.

BLACK THUNDER MEMBER, INC.

ILLINOVA CORPORATION

ILLINOVA GENERATING COMPANY

IGC GRIMES COUNTY, INC.

IGC GRIMES FRONTIER, INC.

IPG FERNDALE, INC.

IPG PARIS, INC.

CHARTER OAK (PARIS) INC.

ILLINOVA ENERGY PARTNERS, INC.

PARISH POWER, INC.

CALCASIEU POWER, LLC

DELTA COGEN, INC.

DYNEGY POWER HOLDINGS, INC.

COGEN POWER, INC.

COGEN POWER, L.P.

BG HOLDINGS, INC.

BLACK MOUNTAIN COGEN, INC.

BLUEGRASS GENERATION, INC.

BLUEGRASS GENERATION COMPANY, L.L.C.

DYNEGY CABRILLO II LLC

BLUE RIDGE GENERATION INC.

BLUE RIDGE GENERATION LLC

CHICKAHOMINY GENERATING COMPANY

CHICKAHOMINY POWER, LLC

FLORIDA MERCANTILE POWER, INC.

GASIFICATION SERVICES, INC.

PAMETTO POWER, L.L.C.

DYNEGY OPERATING COMPANY

By:

  /s/ Charles C. Cook  

Name:

 

Charles C. Cook

 

Title:

 

Senior Vice President and Treasurer

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

GEORGIA MERCANTILE POWER, INC.

HEARD COUNTY POWER, L.L.C.

DYNEGY ROSETON, L.L.C.

DYNEGY HUDSON POWER RETAIL, L.L.C.

DYNEGY GLOBAL ENERGY, INC.

DYNEGY BROADBAND MARKETING AND TRADE

DYNEGY GP INC.

DYNEGY TECHNOLOGY CAPITAL CORP.

DYNEGY STRATEGIC INVESTMENTS, L.P.

DYNEGY STRATEGIC INVESTMENTS GP, L.L.C.

RENAISSANCE POWER, L.L.C.

ROLLING HILLS GENERATING, L.L.C.

DYNEGY POWER MARKETING, INC.

DYNEGY ENERGY SERVICES, INC.

ILLINOIS POWER ENERGY, INC.

DES NORTHEAST, INC.

DEM GP, LLC

DYNEGY ENERGY MARKETING, LP

DYNEGY ADMINISTRATIVE SERVICES COMPANY

NIPC, INC.

DYNEGY CATLIN MEMBER, INC.

DYNEGY MIDWEST GENERATION , INC.

DYNEGY I.T., INC.

JAMES RIVER ENERGY CORP.

DPC POWER RESOURCES HOLDING COMPANY

DRY CREEK POWER, INC.

ROCKINGHAM POWER, L.L.C.

DYNEGY POWER DEVELOPMENT COMPANY

By:

  /s/ Charles C. Cook  

Name:

 

Charles C. Cook

 

Title:

 

Senior Vice President and Treasurer

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

DYNEGY STRATEGIC INVESTMENTS LP, INC.

DYNEGY DANSKAMMER, L.L.C.

DYNEGY MIDSTREAM HOLDINGS, INC.

DYNEGY GAS TRANSPORTATION, INC.

DYNEGY STORAGE TECHNOLOGY AND SERVICES, INC.

CHESAPEAKE POWER, INC.

ROCKY ROAD POWER LLC

COGEN LYONDELL, INC.

By:

  /s/ Charles C. Cook  

Name:

 

Charles C. Cook

 

Title:

 

Senior Vice President and Treasurer

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

DYNEGY MANAGEMENT, INC.

DEM L.P., LLC

DMT L.P., L.L.C.

By:

  /s/ Richard W. Eimer  

Name:

 

Richard W. Eimer

 

Title:

 

Senior Vice President

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

JPMORGAN CHASE BANK, N.A.

By:

  /s/ Robert Traband  

Name:

 

Robert Traband

 

Title:

 

Vice President

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

CITICORP USA, INC.

By:

  /s/ Richard Evans  

Name:

 

Richard Evans

 

Title:

 

Vice President

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

CREDIT SUISSE, CAYMAN ISLANDS BRANCH

By:

  /s/ Thomas R. Cantello  

Name:

 

Thomas R. Cantello

 

Title:

 

Vice President

By:

  /s/ Gregory S. Richards  

Name:

 

Gregory S. Richards

 

Title:

 

Associate

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

BANK OF AMERICA, N.A.

By:

  /s/ Kevin P. Bertelson  

Name:

 

Kevin P. Bertelson

 

Title:

 

Senior Vice President

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

LEHMAN COMMERCIAL PAPER INC.

By:

  /s/ Frank P. Turner  

Name:

 

Frank P. Turner

 

Title:

 

Vice President

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

DRESDNER BANK AG

NEW YORK AND GRAND CAYMAN BRANCHES

By:

 

/s/ Thomas R. Brady

 

Name:

 

Thomas R. Brady

 

Title:

 

Director

By:

 

/s/ Brian Smith

 

Name:

 

Brian Smith

 

Title:

 

Managing Director

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

ABN AMRO BANK N.V.

By:

  /s/ Jamie Conn  

Name:

 

Jamie Conn

 

Title:

 

Managing Director

By:

  /s/ John Reed  

Name:

 

John Reed

 

Title:

 

Director

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

UNION BANK OF CALIFORNIA, N.A.

By:

  /s/ Robert J. Cole  

Name:

 

Robert J. Cole

 

Title:

 

Vice President

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

GENERAL ELECTRIC CAPITAL CORPORATION

By:

  /s/ Simon Duncan  

Name:

 

Simon Duncan

 

Title:

 

Authorized Signatory

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

CITICORP USA, INC.,

as Administrative Agent and Payment Agent

By:

  /s/ Richard Evans  

Name:

 

Richard Evans

 

Title:

 

Vice President

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

By:

  /s/ Robert Traband  

Name:

 

Robert Traband

 

Title:

 

Vice President

CITIBANK, N.A.,

as Revolving L/C Issuer

By:

  /s/ Richard Evans  

Name:

 

Richard Evans

 

Title:

 

Vice President

JPMORGAN CHASE BANK, N.A.,

as Collateral Agent

By:

  /s/ Janice Ott Rotunno  

Name:

 

Janice Ott Rotunno

 

Title:

 

Vice President

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JPMORGAN CHASE BANK, N.A.,

as Revolving L/C Issuer and Term L/C Issuer

By:

  /s/ Robert Traband  

Name:

 

Robert Traband

 

Title:

 

Vice President