Exhibit 10.1

 

 

_____________________________________________________________________________

 

 

CREDIT AGREEMENT

 

DATED AS OF

 

MAY 5, 2005

 

AMONG

 

BLACK HILLS CORPORATION,

as Borrower,

 

THE FINANCIAL INSTITUTIONS PARTY HERETO,

as Banks,

 

ABN AMRO BANK N.V.,

as Administrative Agent and Co-Book Runner,

 

UNION BANK OF CALIFORNIA, N.A.,

as Co-Syndication Agent and Co-Book Runner,

 

U.S. BANK, NATIONAL ASSOCIATION,

as Co-Syndication Agent,

 

BANK OF AMERICA, N.A.

as Co-Documentation Agent

 

and

 

BANK OF MONTREAL dba HARRIS NESBITT,

as Co-Documentation Agent

 

_____________________________________________________________________________

 

 

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TABLE OF CONTENTS

 

(This Table of Contents is not part of the Agreement)

 

 

 

Page

 

 

 

SECTION 1.

DEFINITIONS; INTERPRETATION

1

 

 

 

Section 1.1

Definitions

1

Section 1.2

Interpretation

14

 

 

 

SECTION 2.

THE CREDITS

15

 

 

 

Section 2.1

The Revolving Loan Commitment

15

Section 2.2

Letters of Credit

15

Section 2.3

Applicable Interest Rates

18

Section 2.4

Minimum Borrowing Amounts

20

Section 2.5

Manner of Borrowing Loans and Designating Interest Rates

 

 

Applicable to Loans

20

Section 2.6

Interest Periods

22

Section 2.7

Maturity of Loans

23

Section 2.8

Prepayments

23

Section 2.9

Default Rate

23

Section 2.10

The Notes

24

Section 2.11

Funding Indemnity

24

Section 2.12

Commitments

25

Section 2.13

BHP Borrowings

25

 

 

 

SECTION 3.

FEES

26

 

 

 

Section 3.1

Fees

26

 

 

 

SECTION 4.

PLACE AND APPLICATION OF PAYMENTS

27

 

 

 

Section 4.1

Place and Application of Payments

27

 

 

 

SECTION 5.

REPRESENTATIONS AND WARRANTIES

28

 

 

 

Section 5.1

Corporate Organization and Authority

28

Section 5.2

Subsidiaries

28

Section 5.3

Corporate Authority and Validity of Obligations

28

Section 5.4

Financial Statements

29

Section 5.5

No Litigation; No Labor Controversies

29

Section 5.6

Taxes

29

Section 5.7

Approvals

30

Section 5.8

ERISA

30

Section 5.9

Government Regulation

30

Section 5.10

Margin Stock; Use of Proceeds

30

Section 5.11

Licenses and Authorizations; Compliance with Laws

30

Section 5.12

Ownership of Property; Liens

31

 

 

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Section 5.13

No Burdensome Restrictions; Compliance with Agreements

31

Section 5.14

Full Disclosure

31

Section 5.15

Solvency

32

 

 

 

SECTION 6.

CONDITIONS PRECEDENT

32

 

 

 

Section 6.1

Initial Credit Event

32

Section 6.2

All Credit Events

33

 

 

 

SECTION 7.

COVENANTS

34

 

 

 

Section 7.1

Corporate Existence; Subsidiaries

34

Section 7.2

Maintenance

34

Section 7.3

Taxes

34

Section 7.4

ERISA

34

Section 7.5

Insurance

35

Section 7.6

Financial Reports and Other Information

35

Section 7.7

Bank Inspection Rights

37

Section 7.8

Conduct of Business

37

Section 7.9

Liens

37

Section 7.10

Use of Proceeds; Regulation U

40

Section 7.11

Sales and Leasebacks

40

Section 7.12

Mergers, Consolidations and Sales of Assets

40

Section 7.13

Use of Property and Facilities; Environmental and Health and

 

 

Safety Laws

41

Section 7.14

Investments, Acquisitions, Loans, Advances and Guaranties

42

Section 7.15

Restrictions on Indebtedness

44

Section 7.16

Consolidated Net Worth

46

Section 7.17

Recourse Leverage Ratio

46

Section 7.18

Interest Expense Coverage Ratio

46

Section 7.19

Dividends and Other Shareholder Distributions

46

Section 7.20

No Negative Pledge

46

Section 7.21

Transactions with Affiliates

47

Section 7.22

Compliance with Laws

47

Section 7.23

Pari-Passu

47

Section 7.24

Certain Subsidiaries

47

Section 7.25

Ratings

47

 

 

 

SECTION 8.

EVENTS OF DEFAULT AND REMEDIES

47

 

 

 

Section 8.1

Events of Default

47

Section 8.2

Non-Bankruptcy Defaults

49

Section 8.3

Bankruptcy Defaults

50

Section 8.4

Collateral for Outstanding Letters of Credit

50

Section 8.5

Expenses

51

 

 

 

SECTION 9.

CHANGE IN CIRCUMSTANCES

51

 

 

 

Section 9.1

Change of Law

51

 

 

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Section 9.2

Unavailability of Deposits or Inability to Ascertain, or Inadequacy

 

 

of, LIBOR

51

Section 9.3

Increased Cost and Reduced Return

52

Section 9.4

Lending Offices

53

Section 9.5

Discretion of Bank as to Manner of Funding

54

 

 

 

SECTION 10.

THE AGENT

54

 

 

 

Section 10.1

Appointment and Authorization of Administrative Agent

54

Section 10.2

Administrative Agent and its Affiliates

54

Section 10.3

Action by Administrative Agent

54

Section 10.4

Consultation with Experts

55

Section 10.5

Liability of Administrative Agent; Credit Decision

55

Section 10.6

Indemnity

55

Section 10.7

Resignation of Administrative Agent and Successor Administrative

 

 

Agent

56

 

 

 

SECTION 11.

MISCELLANEOUS

56

 

 

 

Section 11.1

Withholding Taxes

56

Section 11.2

No Waiver of Rights

57

Section 11.3

Non-Business Day

58

Section 11.4

Documentary Taxes

58

Section 11.5

Survival of Representations

58

Section 11.6

Survival of Indemnities

58

Section 11.7

Set-Off

58

Section 11.8

Notices

59

Section 11.9

Counterparts

60

Section 11.10

Successors and Assigns

60

Section 11.11

Amendments

64

Section 11.12

Headings

65

Section 11.13

Legal Fees, Other Costs and Indemnification

65

Section 11.14

Entire Agreement

65

Section 11.15

Construction

65

Section 11.16

Governing Law

65

Section 11.17

SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL

65

Section 11.18

Replacement of Bank

66

Section 11.19

Confidentiality

67

Section 11.20

Rights and Liabilities of Co-Syndication Agents, Co-Documentation

 

 

Agents and Arrangers

67

Section 11.21

Absence of Termination-Related Events of Default in Prior

 

 

Facilities

68

Section 11.22

Severability of Provisions

68

 

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EXHIBITS

 

A

Form of Note

 

B

Form of Compliance Certificate

 

C

Form of Assignment and Assumption Agreement

D

Voting Participant Information

 

 

SCHEDULES

 

SCHEDULE 1

Pricing Grid

 

SCHEDULE 1.1

Existing Letters of Credit

 

SCHEDULE 2.1

Commitments

 

SCHEDULE 4

Administrative Agent Notice and Payment Info

 

SCHEDULE 5.2

Schedule of Existing Subsidiaries

 

SCHEDULE 5.5

Litigation and Labor Controversies

 

SCHEDULE 5.11

Environmental Matters

 

SCHEDULE 6.1

New Material Indebtedness

 

SCHEDULE 7.9

Existing Liens

 

SCHEDULE 7.14

Existing Investments

 

SCHEDULE 7.15(a)

Marketing Subsidiary Indebtedness

 

SCHEDULE 7.15(b)

Existing Secured Indebtedness

 

SCHEDULE 7.19

Restrictions on Distributions and Existing Negative Pledges

 

 

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CREDIT AGREEMENT

CREDIT AGREEMENT, dated as of May 5, 2005 among Black Hills Corporation, a South
Dakota corporation (“Borrower”), the financial institutions from time to time
party hereto (each a “Bank,” and collectively the “Banks”), U.S. Bank, National
Association, in its capacity as a co-syndication agent for the Banks (in such
capacity, a “Co-Syndication Agent”), Union Bank of California, N.A., in its
capacity as a Co-Syndication Agent, BANK OF AMERICA, N.A. , in its capacity as a
co-documentation agent for the Banks (in such capacity, a “Co-Documentation
Agent”), BANK OF MONTREAL dba HARRIS NESBITT, as Co-Documentation Agent, and ABN
AMRO Bank N.V. in its capacity as agent for the Banks hereunder (in such
capacity, the “Administrative Agent”).

WITNESSETH THAT:

WHEREAS, the Borrower desires to obtain the several commitments of the Banks to
make available a revolving credit for loans and letters of credit (the
“Revolving Credit”), as described herein; and

WHEREAS, the Banks are willing to extend such commitments subject to all of the
terms and conditions hereof and on the basis of the representations and
warranties hereinafter set forth.

NOW, THEREFORE, in consideration of the recitals set forth above and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:

SECTION 1. DEFINITIONS; INTERPRETATION.

Section 1.1 Definitions. The following terms when used herein have the following
meanings:

“Account” is defined in Section 8.4(b) hereof.

“Adjusted LIBOR” is defined in Section 2.3(b) hereof.

“Administrative Questionnaire” means an administrative questionnaire in a form
supplied by the Administrative Agent.

“Affiliate” means, as to any Person, any other Person which directly or
indirectly controls, or is under common control with, or is controlled by, such
Person. As used in this definition, “control” (including, with their correlative
meanings, “controlled by” and “under common control with”) means possession,
directly or indirectly, of power to direct or cause the direction of management
or policies of a Person (whether through ownership of securities or partnership
or other ownership interests, by contract or otherwise), provided that, in any
event for purposes of this definition: (i) any Person which owns directly or
indirectly twenty percent (20%) or more of the securities having ordinary voting
power for the election of directors or other governing body of a corporation or
twenty percent (20%) or more of the partnership or other ownership interests of
any other Person will be deemed to control such corporation or other

 

60364071.5

 

 

Person; and (ii) each director and executive officer of Borrower or any
Subsidiary of Borrower shall be deemed an Affiliate of Borrower and each of its
Subsidiaries.

“Administrative Agent” is defined in the first paragraph of this Agreement and
includes any successor Administrative Agent pursuant to Section 10.7 hereof.

“Agreement” means this Credit Agreement, including all Exhibits and Schedules
hereto, as it may be amended, supplemented or otherwise modified from time to
time in accordance with the terms hereof.

“Allocable Amount” has the meaning specified in 2.13(b).

“Applicable Margin” means, at any time (i) with respect to Base Rate Loans, the
Base Rate Margin and (ii) with respect to Eurodollar Loans, the Eurodollar
Margin.

“Applicable Telerate Page” is defined in Section 2.3(b) hereof.

“Application” is defined in Section 2.2(b) hereof.

“Approved Fund” means any Fund that is administered or managed by (a) a Bank,
(b) an Affiliate of a Bank or (c) an entity or an Affiliate of an entity that
administers or manages a Bank.

“Arrangers” means, collectively, ABN AMRO Bank, Inc., Union Bank of California,
N.A., and U.S. Bank, National Association.

“Assignment and Assumption” means an assignment and assumption entered into by a
Bank and an Eligible Assignee (with the consent of any party whose consent is
required by the terms hereof), and accepted by the Administrative Agent, in
substantially the form of Exhibit C or any other form approved by the
Administrative Agent.

“Authorized Representative” means those persons whose specimen signature is
included in the incumbency certificate provided by the Borrower pursuant to
Section 6.1(c) hereof, or any further or different officer of the Borrower so
named by any Authorized Representative of the Borrower in a written notice to
the Administrative Agent.

“Bank” and “Banks” are defined in the first paragraph of this Agreement.

“Base Rate” is defined in Section 2.3(a) hereof.

“Base Rate Loan” means a Loan bearing interest prior to maturity at a rate
specified in Section 2.3(a) hereof.

“Base Rate Margin” means the percentage set forth in Schedule 1 hereto beside
the then applicable Level.

“BHP” means Black Hills Power, Inc., a South Dakota corporation.

“Borrower” is defined in the first paragraph of this Agreement.

 

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60364071.5

 

 

 

“Borrowing” means the total of Loans of a single type advanced, continued for an
additional Interest Period, or converted from a different type into such type by
the Banks on a single date and for a single Interest Period. Borrowings of Loans
are made by and maintained ratably for each of the Banks according to their
Percentages. A Borrowing is “advanced” on the day Banks advance funds comprising
such Borrowing to Borrower, is “continued” on the date a new Interest Period for
the same type of Loans commences for such Borrowing and is “converted” when such
Borrowing is changed from one type of Loan to the other, all as requested by
Borrower pursuant to Section 2.5(a).

“Business Day” means any day other than a Saturday or Sunday on which Banks are
not authorized or required to close in New York, New York, Chicago, Illinois or
Rapid City, South Dakota and, if the applicable Business Day relates to the
borrowing or payment of a Eurodollar Loan, on which banks are dealing in U.S.
Dollars in the interbank market in London, England.

“Capital” means, as of any date of determination thereof, without duplication,
the sum of (A) Consolidated Net Worth plus (B) all Recourse Indebtedness
(provided that for purposes of clause (B) of this definition, to the extent
otherwise included, Indebtedness of Marketing Subsidiaries in an aggregate
amount not to exceed the Marketing Subsidiary Indebtedness Limit incurred under
Marketing Subsidiary Excluded Credit Facilities shall not be deemed to be
Recourse Indebtedness).

“Capital Lease” means at any date any lease of Property which, in accordance
with GAAP, would be required to be capitalized on the balance sheet of the
lessee.

“Capitalized Lease Obligations” means, for any Person, the amount of such
Person’s liabilities under Capital Leases determined at any date in accordance
with GAAP.

“Change of Control Event” means one or more of the following events:

(a)        less than a majority of the members of the Board of Directors of
Borrower shall be persons who either (i) were serving as directors on the
Effective Date or (ii) were nominated as directors and approved by the vote of
the majority of the directors who are directors referred to in clause (i) above
or this clause (ii); or

(b)        the stockholders of Borrower shall approve any plan or proposal for
the liquidation or dissolution of Borrower; or

(c)        a Person or group of Persons acting in concert (other than the direct
or indirect beneficial owners of the Voting Stock of Borrower as of the
Effective Date) shall, as a result of a tender or exchange offer, open market
purchases, privately negotiated purchases or otherwise, have become the direct
or indirect beneficial owner (within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934, as amended from time to time) of Voting Stock
of Borrower representing more than ten percent (10%) of the combined voting
power of the outstanding Voting Stock or other ownership interests for the
election of directors or shall have the right to elect a majority of the Board
of Directors of Borrower; or

 

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60364071.5

 

 

 

(d)        Except as permitted by Section 7.12, Borrower ceases at any time to
own one hundred percent (100%) of the Voting Stock and other equity interest of
any Material Subsidiary.

“CLF&P” means Cheyenne Light, Fuel & Power Company, a Wyoming corporation.

“CLF&P Indenture” means that certain Indenture of Mortgage and Deed of Trust,
dated March 1, 1948, between CLF&P and The United States National Bank of
Denver, as Trustee, together with all amendments and supplemental indentures
thereto, and the industrial revenue bonds issued in connection therewith.

“Co-Documentation Agent” is defined in the first paragraph of this Agreement.

“Co-Syndication Agent” is defined in the first paragraph of this Agreement.

“Code” means the Internal Revenue Code of 1986, as amended.

“Commitment” and “Commitments” are defined in Section 2.1 hereof.

“Compliance Certificate” means a certificate in the form of Exhibit B hereto.

“Consolidated Assets” means all assets which should be listed on the
consolidated balance sheet of Borrower and its Consolidated Subsidiaries, as
determined on a consolidated basis in accordance with GAAP.

“Consolidated EBITDA” means, for any period, for Borrower and its Consolidated
Subsidiaries on a consolidated basis, (A) the sum of the amounts for such period
of (i) Consolidated Net Income, (ii) to the extent deducted in arriving at
Consolidated Net Income, net federal, state and local income taxes in respect of
such period, (iii) to the extent deducted in arriving at Consolidated Net
Income, Consolidated Interest Expense, (iv) to the extent deducted in arriving
at Consolidated Net Income, the amount charged for the amortization of
intangible assets, (v) to the extent deducted in arriving at Consolidated Net
Income, the amount charged for the depreciation and depletion of assets, and
(vi) to the extent deducted in arriving at Consolidated Net Income, losses on
sales of assets (excluding sales in the ordinary course of business) and other
extraordinary losses, less (B) the amount for such period of (i) to the extent
added in arriving at Consolidated Net Income, interest income arising from
traditional investment activities with banks, investments banks and other
financial institutions or relating to governmental or other marketable
securities and (ii) to the extent added in arriving at Consolidated Net Income,
gains on sales of assets (excluding sales in the ordinary course of business)
and other extraordinary gains, all as determined on a consolidated basis in
accordance with GAAP.

“Consolidated Interest Expense” means, with reference to any period of the
Borrower and its Subsidiaries, the sum of (i) all interest charges (including
capitalized interest, imputed interest charges with respect to Capitalized Lease
Obligations and all amortization of debt discount and expense and other deferred
financing charges) of the Borrower and its Subsidiaries on a consolidated basis
for such period determined in accordance with GAAP, (ii) all commitment or other
fees payable in respect of the issuance of standby letters of credit or other

 

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60364071.5

 

 

credit facilities for the account of the Borrower or its Subsidiaries, and (iii)
net costs/expenses incurred by the Borrower and its Subsidiaries under interest
rate derivative arrangements.

“Consolidated Net Income” means, for any period of the Borrower and its
Consolidated Subsidiaries, the amount for such period of consolidated net income
(or net loss) of the Borrower and its Consolidated Subsidiaries, as determined
on a consolidated basis in accordance with GAAP.

“Consolidated Net Worth” means, as of any time the same is to be determined, the
total shareholders’ equity (including capital stock, additional paid-in-capital
and retained earnings after deducting treasury stock, but excluding (to the
extent otherwise included in calculating shareholders’ equity), minority
interests in Subsidiaries) which would appear on the consolidated balance sheet
of Borrower determined on a consolidated basis in accordance with GAAP.

“Consolidated Subsidiary” means, as to any Person, each subsidiary of such
Person (whether now existing or hereafter created or acquired) the financial
statements of which shall be (or should have been) consolidated, with the
financial statements of such Person in accordance with GAAP, including
principles of consolidation.

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

“Controlled Group” means all members of a controlled group of corporations and
all trades and businesses (whether or not incorporated) under common control
that, together with Borrower or any of its Subsidiaries, are treated as a single
employer under Section 414 of the Code.

“Credit Documents” means this Agreement, the Notes, the Mandate Letter, the
Master Letter of Credit Agreement, the Applications, the Letters of Credit and
all other documents executed in connection herewith or therewith, including
without limitation all documents executed in connection with the making of any
Loan to BHP in accordance with the terms of Section 2.13.

“Credit Event” means any Borrowing or the issuance of, or extension of the
expiration date or increase in the amount of, any Letter of Credit.

“Default” means any event or condition the occurrence of which would, with the
passage of time or the giving of notice, or both, constitute an Event of
Default.

“Derivative Arrangement” means any agreement (including any master agreement and
any agreement, whether or not in writing, relating to any single transaction)
that is an interest rate swap agreement, basis swap, forward rate agreement,
commodity swap, commodity option, equity or equity index swap or option, bond
option, interest rate option, forward foreign exchange agreement, rate cap,
collar or floor agreement, future agreement, currency swap agreement,
cross-currency rate swap agreement, swaption, currency option, that relates to
fluctuations in raw material prices or utility or energy prices or other costs,
or any other similar agreement, including any option to enter into any of the
foregoing, or any combination of any of

 

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60364071.5

 

 

the foregoing. “Derivative Arrangements” shall include all such agreements or
arrangements made or entered into at any time, or in effect at any time, whether
or not related to a Loan or L/C Obligations.

“Derivative Obligations” means, with respect to any Person, all liabilities of
such Person under any Derivative Arrangement (including but not limited to
obligations and liabilities arising in connection with or as a result of early
or premature termination of a Derivative Arrangement, whether or not occurring
as a result of a default thereunder), absolute or contingent, now or hereafter
existing or incurred or due or to become due.

“Effective Date” means May 5, 2005.

“Eligible Assignee” means (a) a Bank, (b) an Affiliate of a Bank, (c) an
Approved Fund, and (d) any other Person (other than a natural person) approved
by (i) the Administrative Agent, (ii) the Issuing Bank, and (iii) unless an
Event of Default has occurred and is continuing, the Borrower (each such
approval not to be unreasonably withheld or delayed); provided that
notwithstanding the foregoing, “Eligible Assignee” shall not include the
Borrower or any of the Borrower’s Affiliates or Subsidiaries.

“Environmental and Health Laws” means any and all federal, state, local and
foreign statutes, laws, regulations, ordinances, judgments, permits and other
governmental rules or restrictions relating to human health, safety (including
without limitation occupational safety and health standards), or the environment
or to emissions, discharges or releases of pollutants, contaminants, hazardous
or toxic substances, wastes or any other controlled or regulated substance into
the environment, including without limitation ambient air, surface water, ground
water or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, hazardous or toxic substances, wastes or any other
controlled or regulated substance or the clean-up or other remediation thereof.

“ERISA” is defined in Section 5.8 hereof.

“Eurodollar Loan” means a Loan bearing interest prior to its maturity at the
rate specified in Section 2.3(b) hereof.

“Eurodollar Margin” means the percentage set forth in Schedule 1 hereto beside
the then applicable Level.

“Eurodollar Reserve Percentage” is defined in Section 2.3(b) hereof.

“Event of Default” means any of the events or circumstances specified in Section
8.1 hereof.

“Existing Letters of Credit” means the Letters of Credit set forth on Schedule
1.1 hereto, which were issued under one of the credit agreements described under
Section 6.1(i) hereof but from and after the Effective Date shall be deemed to
be outstanding under this Agreement.

 

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60364071.5

 

 

 

“Facility Fee Rate” means the percentage set forth in Schedule 1 hereto beside
the then applicable Level.

“Federal Funds Rate” means, for any period, a fluctuating interest rate per
annum equal for each day during such period to:

(a)        the weighted average of the rates on overnight federal funds
transactions with members of the United States Federal Reserve System arranged
by federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the United States Federal
Reserve Bank of New York; or

(b)        if such rate is not so published for any day which is a Business Day,
the average of the quotations for such day on such transactions received by the
Administrative Agent from three federal funds brokers of recognized standing
selected by it.

“Fund” means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.

“GAAP” means generally accepted accounting principles as in effect in the United
States from time to time, applied by Borrower and its Subsidiaries on a basis
consistent with the preparation of Borrower’s financial statements furnished to
the Banks as described in Section 5.4 hereof.

“Granting Bank” has the meaning specified in Section 11.10(h).

“Guarantee” means, in respect of any Person, any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Indebtedness
or other obligations of another Person, including, without limitation, by means
of an agreement to purchase or pay (or advance or supply funds for the purchase
or payment of) such Indebtedness or to maintain financial covenants, or to
assure the payment of such Indebtedness by an agreement to make payments in
respect of goods or services regardless of whether delivered, or otherwise,
provided, that the term “Guarantee” shall not include endorsements for deposit
or collection in the ordinary course of business; and such term when used as a
verb shall have a correlative meaning.

“Guarantor Payment” has the meaning specified in 2.13(b).

“Hazardous Material” means any substance or material which is hazardous or
toxic, and includes, without limitation, (a) asbestos, polychlorinated
biphenyls, dioxins and petroleum or its by-products or derivatives (including
crude oil or any fraction thereof) and (b) any other material or substance
classified or regulated as “hazardous” or “toxic” pursuant to any Environmental
and Health Law.

“Immaterial Subsidiary” shall mean, any direct or indirect subsidiary of
Borrower (i) whose total assets (as determined in accordance with GAAP) do not
represent at least five percent (5%) of the total assets (as determined in
accordance with GAAP) of Borrower and its subsidiaries on a consolidated basis
or (ii) whose total revenues (as determined in accordance

 

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60364071.5

 

 

with GAAP) do not represent at least five percent (5%) of the total revenues (as
determined in accordance with GAAP) of Borrower and its subsidiaries on a
consolidated basis, provided that no subsidiary shall be deemed an Immaterial
Subsidiary to the extent (a) the total assets of such subsidiary, when combined
with the total assets of other subsidiaries which are Immaterial Subsidiaries,
represent at least ten percent (10%) of the total assets (as determined in
accordance with GAAP) of Borrower and its subsidiaries on a consolidated basis
or (ii) the total revenues of such subsidiary, when combined with the total
revenues of other Immaterial Subsidiaries, (as determined in accordance with
GAAP) represent at least ten percent (10%) of the total revenues (as determined
in accordance with GAAP) of Borrower and its subsidiaries on a consolidated
basis. As used in this definition “subsidiary” shall mean any Person whose
financial statements are consolidated into the financial statements of Borrower
in accordance with GAAP.

“Indebtedness” means, as to any Person, without duplication: (i) all obligations
of such Person for borrowed money or evidenced by bonds, debentures, notes or
similar instruments; (ii) all obligations of such Person for the deferred
purchase price of property or services (other than in respect of trade accounts
payable arising in the ordinary course of business which are not past-due);
(iii) all Capitalized Lease Obligations of such Person; (iv) all Indebtedness of
others secured by a Lien on any properties, assets or revenues of such Person
(other than stock, partnership interests or other equity interests of Borrower
or any Subsidiary of Borrower in other entities) to the extent of the lesser of
the value of the property subject to such Lien or the amount of such
Indebtedness; (v) all Guarantees issued by such Person, provided that Long-Term
Guaranties shall not be deemed “Indebtedness” for purposes of calculating
Borrower’s compliance with the financial covenants set forth in Sections 7.16,
7.17 and 7.18 hereof; (vi) all obligations of such Person, contingent or
otherwise, in respect of any letters or credit (whether commercial or standby)
or bankers’ acceptances, (vii) all Derivative Obligations of such Person (but
excluding Derivative Obligations of Marketing Subsidiaries), provided that for
purposes of determining Borrower’s compliance with the financial covenants set
forth herein, only Borrower’s Derivative Obligations under Derivative
Arrangements which must be marked-to-market in accordance with GAAP shall be
included as Indebtedness of Borrower, and (viii) all obligations of such Person
under synthetic (and similar type) lease arrangements, provided that for
purposes of calculating such Person’s Indebtedness under such synthetic (or
similar type) lease arrangements, such lease arrangement shall be treated as if
it were a Capitalized Lease.

“Interest Expense Coverage Ratio” means, for any period of four consecutive
quarters of the Borrower ending with the most recently completed such fiscal
quarter, the ratio of (A) Consolidated EBITDA to (B) Consolidated Interest
Expenses for such period.

“Interest Period” is defined in Section 2.6 hereof.

“Investments” is defined in Section 7.14.

“Issuing Agents” means: (i) U.S. Bank, National Association, (ii) solely with
respect to the Existing Letters of Credit, each Bank which has issued any such
Existing Letters of Credit, and (iv) and any other Bank who agrees to be an
Issuing Agent and who is acceptable to the Borrower and the Administrative
Agent.

 

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“L/C Documents” means the Letters of Credit, any draft or other document
presented in connection with a drawing thereunder, the Applications and this
Agreement.

“L/C Fee Rate” means the percentage set forth in Schedule 1 hereto beside the
then applicable Level.

“L/C Obligations” means the aggregate undrawn face amounts of all outstanding
Letters of Credit and all unpaid Reimbursement Obligations.

“Lending Office” is defined in Section 9.4 hereof.

“Letter of Credit” is defined in Section 2.2(a) hereof.

“Level I Status” means Borrower’s S&P Rating is A- or higher and its Moody’s
Rating is A3 or higher.

“Level II Status” means Level I Status does not exist, but Borrower’s S&P Rating
is BBB+ or higher and its Moody’s Rating is Baa1 or higher.

“Level III Status” means neither Level I Status nor Level II Status exists, but
Borrower’s S&P Rating is BBB or higher and its Moody’s Rating is Baa2 or higher.

“Level IV Status” means neither Level I Status, Level II Status, nor Level III
Status exists, but Borrower’s S&P Rating is BBB- or higher and its Moody’s
Rating is Baa3 or higher.

“Level V Status” means neither Level I Status, Level II Status, Level III
Status, nor Level IV Status exists, but Borrower’s S&P Rating is BB+ or higher
and its Moody’s Rating is Ba1 or higher.

“Level VI Status” means none of Level I Status, Level II Status, Level III
Status, Level IV Status nor Level V Status exists.

“LIBOR” is defined in Section 2.3(b) hereof.

“LIBOR Loan Restriction Period” means the period commencing on and including the
fifth to last Business Day of any calendar year and ending on and including the
fifth Business Day of the immediately succeeding calendar year.

“Lien” means any interest in Property securing an obligation owed to, or a claim
by, a Person other than the owner of the Property, whether such interest is
based on the common law, statute or contract, including, but not limited to, the
security interest or lien arising from a mortgage, encumbrance, pledge,
conditional sale, security agreement or trust receipt, or a lease, consignment
or bailment for security purposes. For the purposes of this definition, a Person
shall be deemed to be the owner of any Property which it has acquired or holds
subject to a conditional sale agreement, Capital Lease or other arrangement
pursuant to which title to the Property has been retained by or vested in some
other Person for security purposes, and such retention of title shall constitute
a “Lien.”

 

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“Loan” and “Loans” are defined in Section 2.1 hereof and includes a Base Rate
Loan or Eurodollar Loan, each of which is a “type” of Loan hereunder.

“Long-Term Guarantee” means (i) any Guarantee issued by Borrower or its
Subsidiaries under which the holder or beneficiary of such Guarantee is not
permitted under any circumstance or contingency to make demand or exercise any
other remedies under such Guarantee prior to the Termination Date, as extended
from time to time in accordance with the terms hereof and (ii) any coal mining
reclamation bonds or contingent indemnity or reimbursement obligations with
respect to such reclamation bonds (so long as such reclamation bonds have not
been called upon).

“Mandate Letter” means that certain letter among dated as of March 31, 2005 by
and among the Arrangers and Borrower pertaining to fees to be paid by Borrower
to the Administrative Agent for its sole account and benefit.

“Marketing Subsidiary” means each of Black Hills Energy Resources, Inc., a South
Dakota corporation, and Enserco Energy, Inc., a South Dakota corporation, and
their respective subsidiaries.

“Marketing Subsidiary Excluded Credit Facilities” means those certain credit
facilities of the Marketing Subsidiaries described on Schedule 7.15(a) hereof,
as such credit facilities are in effect on the Effective Date (or, in the case
of: (i) the credit facility of Enserco Energy Inc., as such credit facility may
be amended, restated or otherwise modified on terms and conditions and pursuant
to documentation to accommodate an increase in the borrowings thereunder from
$150,000,000 to $200,000,000 or (ii) the credit facility of Black Hills Energy
Resources, Inc., as such credit facility may be amended, restated or otherwise
modified on terms and conditions and pursuant to documentation to accommodate an
increase in the borrowings thereunder from $40,000,000 to $60,000,000 or (iii)
the credit facilities of Enserco Energy Inc. and Black Hills Energy Resources,
Inc., as such credit facilities may be combined pursuant to a merger of such
Persons, on terms and conditions and pursuant to documentation reasonably
acceptable to Administrative Agent and, in any event, without any increase in
the aggregate amount of combined Indebtedness under such credit facilities),
provided that such credit facilities shall cease to be Marketing Subsidiary
Excluded Credit Facilities to the extent availability is otherwise increased,
any substantive term thereof is materially modified, or such credit facility is
extended more than once in any fiscal year for a period of more than one year.
Any replacement credit facility of a Marketing Subsidiary Excluded Credit
Facility shall be deemed a Marketing Subsidiary Excluded Credit Facility only if
such replacement credit facility contains terms substantially the same as the
Marketing Subsidiary Excluded Credit Facility being replaced (including tenor
but excluding the increase in borrowings otherwise permitted above) or is
approved in writing by the Required Banks.

“Marketing Subsidiary Indebtedness Limit” means the sum of (i) aggregate amount
of credit availability (used or unused) under Marketing Subsidiary Excluded
Credit Facilities as of the Effective Date and (ii) $25,000,000.

 

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“Marketing Subsidiary Letter of Credit” means a Letter of Credit issued
hereunder which supports any obligation of a Marketing Subsidiary or the primary
purpose of which is to otherwise benefit a Marketing Subsidiary.

“Marketing Subsidiary Sublimit” means, at any time, an amount equal to the
greater of: (x) $150,000,000 and (y) seven and one half percent (7.50%) of
Consolidated Assets as reflected on the most recent audited, fiscal year-end
balance sheet delivered by Borrower pursuant to Section 7 outstanding at any
time.

“Master Letter of Credit Agreement” is defined in Section 2.2(a) hereof.

“Material Adverse Effect” means a material adverse effect on (i) the business,
financial position or results of operations of Borrower or Borrower and its
Subsidiaries taken as a whole, (ii) the ability of Borrower to perform its
material obligations under the Credit Documents, (iii) the validity or
enforceability of the material obligations of Borrower under any Credit
Document, (iv) the rights and remedies of the Banks or the Administrative Agent
against Borrower; or (v) the timely payment of the principal of and interest on
the Loans or other amounts payable by Borrower hereunder, provided, that a
downgrade of Borrower’s S&P Rating and/or Moody’s Rating shall not, in and of
itself, be deemed a “Material Adverse Effect” for purposes of this Agreement.

“Material Subsidiaries” means BHP, Black Hills Energy, Inc., a South Dakota
corporation, Wyodak Resources Development Corp., a Delaware corporation, Black
Hills Generation, Inc., a Delaware corporation, CLF&P, and any other Subsidiary
of Borrower which is not either an Immaterial Subsidiary or a Project Finance
Subsidiary.

“Moody’s Rating” means the rating assigned by Moody’s Investors Service, Inc.
and any successor thereto that is a nationally recognized rating agency to the
outstanding senior unsecured non-credit enhanced long-term indebtedness of a
Person (or if neither Moody’s Investors Service, Inc. nor any such successor
shall be in the business of rating long-term indebtedness, a nationally
recognized rating agency in the United States of America as mutually agreed
between the Required Banks and Borrower). Any reference in this Agreement to any
specific rating is a reference to such rating as currently defined by Moody’s
Investors Service, Inc. (or such a successor) and shall be deemed to refer to
the equivalent rating if such rating system changes.

“Non-Recourse Indebtedness” means, without duplication, all Indebtedness of
Borrower and its Consolidated Subsidiaries determined on a consolidated basis in
accordance with GAAP incurred in connection with project financings (including
project financings of existing assets) as to which the holder of such
Indebtedness has recourse solely against the assets of the Project Finance
Subsidiary that incurs such Indebtedness and not against Borrower or a
Consolidated Subsidiary of Borrower other than a Project Finance Subsidiary or
any of their other assets (whether directly, through a Guarantee or otherwise),
other than the pledge of the stock (or similar equity interest) of the Project
Finance Subsidiary which incurred such Indebtedness. For purposes of
clarification, any Indebtedness of a Project Finance Subsidiary which would
otherwise constitute Non-Recourse Indebtedness but for the issuance by the
Borrower or a Consolidated Subsidiary of the Borrower of a Guarantee or other
document which provides

 

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recourse with respect to such Indebtedness, such Indebtedness shall for all
purposes of this Agreement be deemed Non-Recourse Indebtedness so long as (i)
the Borrower’s or such Consolidated Subsidiary’s obligations under such
Guarantee or other document are treated for all purposes as Recourse
Indebtedness hereunder, (ii) such Recourse Indebtedness of the Borrower or such
Consolidated Subsidiary is unsecured and is otherwise permitted by this
Agreement, and (iii) such Recourse Indebtedness of the Borrower or such
Consolidated Subsidiary does not in the aggregate exceed $100,000,000 at any one
time outstanding.

“Note” is defined in Section 2.10(a) hereof.

“Obligations” means all fees payable hereunder, all obligations of Borrower to
pay principal or interest on Loans and L/C Obligations, fees, expenses,
indemnities, and all other payment obligations of Borrower arising under or in
relation to any Credit Document.

“Participating Interest” is defined in Section 2.2(d) hereof.

“Percentage” means, for each Bank, the percentage of the Commitments represented
by such Bank’s Commitment or, if the Commitments have been terminated, the
percentage held by such Bank (including through participation interests in L/C
Obligations) of the aggregate principal amount of all outstanding Obligations.

“Permitted Derivative Obligations” means all Derivative Obligations as to which
the Derivative Arrangements giving rise to such Derivative Obligation are
entered into in the ordinary course of business to hedge interest rate risk,
currency risk, commodity price risk or the production of Borrower or its
Subsidiaries (and not for speculative purposes) and if such Derivative
Obligation is an obligation of Borrower, such Derivative Obligation ranks no
greater than pari passu to the Obligations.

“Person” means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization or any other entity or
organization, including a government or any agency or political subdivision
thereof.

“Plan “ means at any time an employee pension benefit plan covered by Title IV
of ERISA or subject to the minimum funding standards under Section 412 of the
Code that is either (i) maintained by a member of the Controlled Group or (ii)
maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
a member of the Controlled Group is then making or accruing an obligation to
make contributions or has within the preceding five plan years made
contributions.

“PBGC” is defined in Section 5.8 hereof.

“Project Finance Subsidiary” means any Subsidiary of Borrower as to which the
creditors and other holders of Indebtedness of such Subsidiary have recourse
solely against the assets of such Subsidiary and not against Borrower or any
other Subsidiary of Borrower or any of their other assets (whether directly,
through a Guarantee or otherwise) other than (i) pursuant to a Guarantee
permitted hereunder and (ii) the stock of such special purpose Subsidiary (or
similar equity interest).

 

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“Property” means any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible, whether now owned or hereafter
acquired.

“PUHCA” means the Public Utility Holding Company Act of 1935, as amended.

“Recourse Indebtedness” means, without duplication, all Indebtedness of Borrower
and its Consolidated Subsidiaries determined on a consolidated basis in
accordance with GAAP other than Non-Recourse Indebtedness.

“Recourse Leverage Ratio” means, as of any time the same is to be determined,
the ratio of the amount of (A) Recourse Indebtedness outstanding at such time
(provided that for purposes of clause (A) of this definition, to the extent
otherwise included, Indebtedness of Marketing Subsidiaries in an aggregate
amount not to exceed the Marketing Subsidiary Indebtedness Limit incurred under
Marketing Subsidiary Excluded Credit Facilities shall not be deemed to be
Recourse Indebtedness) to (B) the amount of Capital at such time.

“Reimbursement Obligation” is defined in Section 2.2(c) hereof.

“Required Banks” means, as of the date of determination thereof, any Banks
holding in the aggregate more than fifty percent (50%) of the Percentages,
provided, that at any time there are two (2) or less Banks, Required Banks shall
mean Banks holding one hundred percent (100%) of the Percentages.

“Revolving Credit” has the meaning specified in the recitals hereof.

“SEC” means the United States Securities and Exchange Commission.

“Security” has the same meaning as in Section 2(l) of the Securities Act of
1933, as amended.

“S&P Rating” means the rating assigned by Standard & Poor’s Ratings Group, a
division of The McGraw-Hill Companies, Inc. and any successor thereto that is a
nationally recognized rating agency to the outstanding senior unsecured
non-credit enhanced long-term indebtedness of a Person (or, if neither such
division nor any successor shall be in the business of rating long-term
indebtedness, a nationally recognized rating agency in the United States as
mutually agreed between the Required Banks and Borrower). Any reference in this
Agreement to any specific rating is a reference to such rating as currently
defined by Standard & Poor’s Ratings Group, a division of The McGraw-Hill
Companies, Inc. (or such a successor) and shall be deemed to refer to the
equivalent rating if such rating system changes.

“Solvent” means that (a) the fair value of a Person’s assets is in excess of the
total amount of such Person’s debts, as determined in accordance with the United
States Bankruptcy Code, and (b) the present fair saleable value of a Person’s
assets is in excess of the amount that will be required to pay such Person’s
debts as they become absolute and matured. As used in this definition, the term
“debts” includes any legal liability, whether matured or unmatured, liquidated
or unliquidated, absolute, fixed or contingent, as determined in accordance with
the United States Bankruptcy Code.

 

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“SPC” has the meaning specified in Section 11.10(h).

“Subsidiary” means, as to Borrower, any corporation or other entity (i) which is
consolidated into the financial statements of such Borrower in accordance with
GAAP or (ii) of which more than fifty percent (50%) of the outstanding stock or
comparable equity interests having ordinary voting power for the election of the
Board of Directors of such corporation or similar governing body in the case of
a non-corporation (irrespective of whether or not, at the time, stock or other
equity interests of any other class or classes of such corporation or other
entity shall have or might have voting power by reason of the happening of any
contingency) is at the time directly or indirectly owned by such Borrower or by
one or more of its Subsidiaries.

“Telerate Service” means Moneyline Telerate, Inc.

“Termination Date” means May 4, 2010.

 

“Unfunded Vested Liabilities” means, with respect to any Plan at any time, the
amount (if any) by which (i) the present value of all vested nonforfeitable
accrued benefits under such Plan exceeds (ii) the fair market value of all Plan
assets allocable to such benefits, all determined as of the then most recent
valuation date for such Plan, but only to the extent that such excess represents
a potential liability of a member of the Controlled Group to the PBGC or the
Plan under Title IV of ERISA.

“Utilization Fee Rate” means the percentage set forth in Schedule 1 hereto
beside the then applicable Level.

“U.S. Dollars” and “$” each means the lawful currency of the United States of
America.

“Voting Participant” is defined in Section 11.10(i) hereof.

“Voting Participant Notification” is defined in Section 11.10(i) hereof.

“Voting Stock” of any Person means capital stock of any class or classes or
other equity interests (however designated) having ordinary voting power for the
election of directors or similar governing body of such Person.

“Welfare Plan” means a “welfare plan”, as defined in Section 3(l) of ERISA.

“Wholly-Owned” when used in connection with any Subsidiary means a Subsidiary of
which all of the issued and outstanding shares of stock or other equity
interests (other than directors’ qualifying shares as required by law) shall be
owned by Borrower and/or one or more of its Wholly-Owned Subsidiaries.

Section 1.2 Interpretation. The foregoing definitions shall be equally
applicable to both the singular and plural forms of the terms defined. All
references to times of day in this Agreement shall be references to New York,
New York time unless otherwise specifically provided. The word “including” means
including without limiting the generality of any description preceding such
term. Where the character or amount of any asset or liability or item

 

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of income or expense is required to be determined or any consolidation or other
accounting computation is required to be made for the purposes of this
Agreement, the same shall be done in accordance with GAAP in effect on the
Effective Date, to the extent applicable, except where such principles are
inconsistent with the specific provisions of this Agreement.

SECTION 2. THE CREDITS.

Section 2.1 The Revolving Loan Commitment. Subject to the terms and conditions
hereof (including Sections 6.1 and 6.2), each Bank, by its acceptance hereof,
severally agrees to make a loan or loans (individually a “Loan” and collectively
“Loans”) to Borrower from time to time on a revolving basis in U.S. Dollars in
an aggregate outstanding amount up to the amount of its commitment set forth
opposite the name of such Bank on Schedule 2.1 hereto (such amount, as reduced
pursuant to Section 2.12(a), increased pursuant to Section 2.12(b), or changed
as a result of one or more assignments under Section 11.10 its “Commitment” and,
cumulatively for all the Banks, the “Commitments”) before the Termination Date,
provided that the sum of the aggregate amount of Loans and of L/C Obligations at
any time outstanding shall not exceed the Commitments in effect at such time. On
the Termination Date the Commitments shall terminate. Each Borrowing of Loans
shall be made ratably from the Banks in proportion to their respective
Percentages. As provided in Section 2.5(a) hereof, Borrower may elect that each
Borrowing of Loans be either Base Rate Loans or Eurodollar Loans. Loans may be
repaid and the principal amount thereof reborrowed before the Termination Date,
subject to all the terms and conditions hereof. Unless an earlier maturity is
provided for hereunder, all Loans shall mature and be due and payable on the
Termination Date. Notwithstanding anything is this Agreement to the contrary, no
Eurodollar Loans may be advanced during the LIBOR Loan Restriction Period.

Section 2.2 Letters of Credit.

(a)        General Terms. Subject to the terms and conditions hereof, as part of
the Revolving Credit the Issuing Agents shall issue standby letters of credit
denominated in U.S. Dollars (each a “Letter of Credit”) for Borrower’s account,
provided that: (i) the aggregate L/C Obligations at any time outstanding
attributable to Marketing Subsidiary Letters of Credit shall not exceed the
Marketing Subsidiary Sublimit and (ii) the aggregate amount of L/C Obligations
outstanding at any time shall not exceed the difference between the Commitments
in effect at such time and the aggregate amount of Loans then outstanding. Each
Letter of Credit shall be issued by the applicable Issuing Agent, but each Bank
shall be obligated to purchase an undivided percentage participation interest of
such Letter of Credit from the applicable Issuing Agent pursuant to Section
2.2(d) hereof in an amount equal to its Percentage of the amount of each drawing
thereunder and, accordingly, the undrawn face amount of each Letter of Credit
shall constitute usage of the Commitment of each Bank pro rata in accordance
with each Bank’s Percentage. The Borrower shall execute a master letter of
credit agreement with each Issuing Agent (collectively, the “Master Letter of
Credit Agreement”) which shall contain certain terms applicable to the Letters
of Credit. To the extent any provision of the Master Letter of Credit Agreement
is inconsistent with the terms of this Agreement, the terms of this Agreement
shall control. Each Existing Letter of Credit shall for all purposes be deemed
to be a Letter of Credit issued on the Effective Date under this Agreement. No
Issuing Agent shall have an obligation pursuant to the Credit Documents

 

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to issue any Letter of Credit if, after giving effect to the issuance of such
Letter of Credit, the aggregate face amount of Letters of Credit issued by such
Issuing Agent then outstanding would exceed $100,000,000, unless otherwise
agreed to by such Issuing Agent.

(b)        Applications. At any time before thirty (30) days prior to the
Termination Date, an Issuing Agent shall, at the request of Borrower given to
such Issuing Agent at least three (3) Business Days prior to the requested date
of issuance, issue one or more Letters of Credit, in a form satisfactory to such
Issuing Agent, with expiration dates no later than five (5) Business Days prior
to the Termination Date, in an aggregate face amount as set forth above, upon
the receipt of a duly executed application for the relevant Letter of Credit in
the form customarily prescribed by such Issuing Agent for the type of Letter of
Credit, requested (each an “Application”). Notwithstanding anything contained in
any Application to the contrary (i) Borrower’s obligation to pay fees in
connection with each Letter of Credit shall be as exclusively set forth in
Section 3.1(b) hereof, and (ii) if the applicable Issuing Agent is not timely
reimbursed for the amount of any drawing under a Letter of Credit on the date
such drawing is paid (it being understood that a drawing which is reimbursed
pursuant to, and in accordance with, the last sentence of Section 2.5(c) shall
be deemed to have been timely reimbursed), Borrower’s obligation to reimburse
the applicable Issuing Agent for the amount of such drawing shall bear interest
(which Borrower hereby promises to pay on demand) from and after the date such
drawing is paid at a rate per annum equal to the sum of two percent (2%) plus
the Base Rate Margin plus the Base Rate from time to time in effect. The
applicable Issuing Agent will promptly notify the Banks of each issuance by it
of a Letter of Credit and any amendment or extension of a Letter of Credit. Each
Issuing Agent agrees to issue amendments to any Letters of Credit issued by it
increasing the amount, or extending the expiration date, thereof at the request
of Borrower subject to the conditions set forth herein (including the conditions
set forth in Section 6.2 and the other terms of this Section 2.2). Without
limiting the generality of the foregoing, a Issuing Agent’s obligation to issue,
amend or extend the expiration date of a Letter of Credit is subject to the
conditions set forth herein (including the conditions set forth in Section 6.2
and the other terms of this Section 2.2) and an Issuing Agent will not issue,
amend or extend the expiration date of any Letter of Credit if any Bank notifies
such Issuing Agent of any failure to satisfy or otherwise comply with such
conditions and terms and directs such Issuing Agent not to take such action.

(c)        The Reimbursement Obligations. Subject to Section 2.2(b) hereof, the
obligation of Borrower to reimburse the applicable Issuing Agent for all
drawings under a Letter of Credit (a “Reimbursement Obligation”) shall be
governed, to the extent not inconsistent with this Agreement, by the Master
Letter of Credit Agreement and the Application related to such Letter of Credit,
except that reimbursement of each drawing shall be made in immediately available
funds at the applicable Issuing Agent’s principal office in New York, New York
by no later than 1:30 p.m. (New York time) on the date when such drawing is paid
or, if such drawing was paid after 1:30 p.m. (New York time), by the end of such
day. If Borrower does not make any such reimbursement payment on the date due
(whether through a deemed request for a Base Rate Loan pursuant to Section
2.5(c) or otherwise) and the Banks fund their participations therein in the
manner set

 

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forth in Section 2.2(d) below, then all payments thereafter received by an
Issuing Agent in discharge of any of the relevant Reimbursement Obligations
shall be distributed in accordance with Section 2.2(d) below. An Issuing Agent
shall notify Borrower promptly of its intent to pay, or payment of, a drawing
under a Letter of Credit.

(d)        The Participating Interests. Each Bank, by its acceptance hereof,
severally agrees to purchase from each Issuing Agent, and each Issuing Agent
hereby agrees to sell to each such Bank, an undivided percentage participating
interest (a “Participating Interest”), to the extent of its Percentage, in each
Letter of Credit issued by, and each Reimbursement Obligation owed to, such
Issuing Agent. Upon any failure by Borrower to pay any Reimbursement Obligation
at the time required on the date the related drawing is paid, as set forth in
Section 2.2(c) above, or if an Issuing Agent is required at any time to return
to Borrower or to a trustee, receiver, liquidator, custodian or other Person any
portion of any payment of any Reimbursement Obligation, each Bank shall, not
later than the Business Day it receives a demand from such Issuing Agent to such
effect, if such demand is received before 2:00 p.m. (New York time), or not
later than the following Business Day, if such demand is received after such
time, pay to such Issuing Agent an amount equal to its Percentage of such unpaid
or recaptured Reimbursement Obligation together with interest on such amount
accrued from the date the related payment was made by such Issuing Agent to the
date of such payment by such Bank a rate per annum equal to (i) from the date
the related payment was made by such Issuing Agent to the date two (2) Business
Days after payment by such Bank is due hereunder, the Federal Funds Rate for
each such day and (ii) from the date two (2) Business Days after the date such
payment is due from such Bank to the date such payment is made by such Bank, the
Base Rate in effect for each such day. Each such Bank shall thereafter be
entitled to receive its Percentage of each payment received in respect of the
relevant Reimbursement Obligation and of interest paid thereon, with the
applicable Issuing Agent retaining its Percentage as a Bank hereunder.

The several obligations of the Banks to the Issuing Agents under this Section
2.2 shall be absolute, irrevocable and unconditional under any and all
circumstances whatsoever and shall not be subject to any set-off, counterclaim
or defense to payment which any Bank may have or have had against Borrower, the
Administrative Agent, the Issuing Agents, any Bank or any other Person
whatsoever. Without limiting the generality of the foregoing, such obligations
shall not be affected by any Default or Event of Default or by any reduction or
termination of any Commitment of any Bank, and each payment by a Bank under this
Section 2.2 shall be made without any offset, abatement, withholding or
reduction whatsoever. The Issuing Agents and the Administrative Agent shall be
entitled to offset amounts received for the account of a Bank under the Credit
Documents against unpaid amounts due from such Bank to the applicable Issuing
Agent or the Administrative Agent, as applicable, hereunder (whether as fundings
of participations, indemnities or otherwise).

(e)        Indemnification. The Banks shall, to the extent of their respective
Percentages, indemnify each Issuing Agent (to the extent not reimbursed by
Borrower) against any cost, expense (including reasonable counsel fees and
disbursements), claim, demand, action, loss or liability (except such as result
from such Issuing Agent’s gross negligence or willful misconduct) that an
Issuing Agent may suffer or incur in connection

 

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with any Letter of Credit issued by it. The Issuing Agents shall be entitled to
all of the rights and protections afforded the Administrative Agent under
Section 10 hereof. The obligations of the Banks under this Section 2.2(e) and
all other parts of this Section 2.2 shall survive termination of this Agreement
and of all other L/C Documents.

(f)         Issuing Agents. Each Bank hereby appoints U.S. Bank, National
Association, and any other Person who satisfies the definition of Issuing Agent,
as the Issuing Agents hereunder and hereby authorizes each of the Issuing Agent
to take such action as Issuing Agent on its behalf and to exercise such powers
under the Credit Documents as are delegated to the Issuing Agents by the terms
thereof, together with such powers as are reasonably incidental thereto. The
relationship between each of the Issuing Agents and the Banks is and shall be
that of agent and principal only, and nothing contained in this Agreement or any
other Credit Document shall be construed to constitute a Issuing Agent as a
trustee or fiduciary for any Bank or the Borrower.

Section 2.3 Applicable Interest Rates. (a) Base Rate Loans. Each Base Rate Loan
made or maintained by a Bank shall bear interest during each Interest Period it
is outstanding (computed (x) at all times the Base Rate is based on the rate
described in clause (i) of the definition thereof, on the basis of a year of 365
or 366 days, as applicable, and actual days elapsed or (y) at all times the Base
Rate is based on the rate described in clause (ii) of the definition thereof, on
the basis of a year of 360 days and actual days elapsed) on the unpaid principal
amount thereof from the date such Loan is advanced, continued or created by
conversion from a Eurodollar Loan until maturity (whether by acceleration or
otherwise) at a rate per annum equal to the sum of the Applicable Margin plus
the Base Rate from time to time in effect, payable on the last day of its
Interest Period and at maturity (whether by acceleration or otherwise).

“Base Rate” means for any day the greater of:

(i)         the rate of interest announced by ABN AMRO Bank N.V. from time to
time as its prime rate, or equivalent, for U.S. Dollar loans within the United
States as in effect on such day, with any change in the Base Rate resulting from
a change in said prime rate to be effective as of the date of the relevant
change in said prime rate; and

(ii)         the sum of (x) the Federal Funds Rate, plus (y) one half of one
percent (0.50%).

(b)        Eurodollar Loans. Each Eurodollar Loan made or maintained by a Bank
shall bear interest during each Interest Period it is outstanding (computed on
the basis of a year of 360 days and actual days elapsed) on the unpaid principal
amount thereof from the date such Loan is advanced, continued, or created by
conversion from a Base Rate Loan until maturity (whether by acceleration or
otherwise) at a rate per annum equal to the sum of the Applicable Margin plus
the Adjusted LIBOR applicable for such Interest Period, payable on the last day
of the Interest Period and at maturity (whether by acceleration or otherwise),
and, if the applicable Interest Period is longer than three

 

18

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months, on each day occurring every three months after the commencement of such
Interest Period.

“Adjusted LIBOR” means, for any Borrowing of Eurodollar Loans, a rate per annum
determined in accordance with the following formula:

Adjusted LIBOR =

LIBOR

_

1 - Eurodollar Reserve Percentage

“LIBOR” means, for an Interest Period for a Borrowing of Eurodollar Loans, (a)
the LIBOR Index Rate for such Interest Period, if such rate is available, and
(b) if the LIBOR Index Rate cannot be determined, the arithmetical average of
the rates of interest per annum (rounded upwards, if necessary, to the nearest
one-sixteenth of one percent) at which deposits in U.S. Dollars, in immediately
available funds are offered to the Administrative Agent at 11:00 a.m. (London,
England time) two (2) Business Days before the beginning of such Interest Period
by major banks in the interbank eurodollar market for delivery on the first day
of and for a period equal to such Interest Period in an amount equal or
comparable to the principal amount of the Eurodollar Loan scheduled to be made
by each Bank as part of such Borrowing.

“LIBOR Index Rate” means, for any Interest Period, the rate per annum (rounded
upwards, if necessary, to the next higher one-sixteenth of one percent) for
deposits in U.S. Dollars for delivery on the first day of and for a period equal
to such Interest Period in an amount equal or comparable to the principal amount
of the Eurodollar Loan scheduled to be made by each Bank as part of such
Borrowing, which appears on the Applicable Telerate Page as of 11:00 a.m.
(London, England time) on the day two (2) Business Days before the commencement
of such Interest Period.

“Applicable Telerate Page” means the display page designated as “Page 3750” on
the Telerate Service (or such other pages as may replace any such page on that
service or such other service as may be nominated by the British Bankers’
Association as the information vendor for the purpose of displaying British
Bankers’ Association Interest Settlement Rates for deposits in U.S. Dollars).

“Eurodollar Reserve Percentage” means for an Borrowing of Eurodollar Loans from
any Bank, the daily average for the applicable Interest Period of the actual
effective rate, expressed as a decimal, at which reserves (including, without
limitation, any supplemental, marginal and emergency reserves) are maintained by
such Bank during such Interest Period pursuant to Regulation D of the Board of
Governors of the Federal Reserve System (or any successor) on “eurocurrency
liabilities”, as defined in such Board’s Regulation D (or in respect of any
other category of liabilities that includes deposits by reference to which the
interest rate on Eurodollar Loans is determined or any category of extensions of
credit or other assets that include loans by non-United States offices of any
Bank to United States residents), subject to any amendments of such reserve
requirement by such Board or its successor, taking into account any transitional
adjustments thereto. For purposes of this definition, the Eurodollar Loans shall
be deemed to be “eurocurrency liabilities” as defined in Regulation D without
benefit or credit for any prorations, exemptions or offsets under Regulation D.

 

19

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(c)        Rate Determinations. The Administrative Agent shall determine each
interest rate applicable to Obligations, and a determination thereof by the
Administrative Agent shall be conclusive and binding except in the case of
manifest error.

Section 2.4 Minimum Borrowing Amounts. Each Borrowing of Base Rate Loans and
Eurodollar Loans shall be in an amount not less than (i) if such Borrowing is
comprised of Borrowing of Base Rate Loans, $1,000,000 and integral multiples of
$500,000 in excess thereof, and (ii) if such Borrowing is comprised of Borrowing
of Eurodollar Loans, $2,000,000 and integral multiples of $1,000,000 in excess
thereof, provided that a Borrowing of Base Rate Loans applied to pay a
Reimbursement Obligation pursuant to Section 2.5(c) hereof shall be in an amount
equal to such Reimbursement Obligation.

Section 2.5 Manner of Borrowing Loans and Designating Interest Rates Applicable
to Loans.

(a)        Notice to the Administrative Agent. The Borrower shall give notice to
the Administrative Agent by no later than 12:00 noon (New York time) (i) at
least three (3) Business Days before the date on which Borrower requests the
Banks to advance a Borrowing of Eurodollar Loans, or (ii) on the date on which
Borrower requests the Banks to advance a Borrowing of Base Rate Loans. The Loans
included in each Borrowing shall bear interest initially at the type of rate
specified in such notice of a new Borrowing. Thereafter, Borrower may from time
to time elect to change or continue the type of interest rate borne by each
Borrowing or, subject to Section 2.4’s minimum amount requirement for each
outstanding Borrowing, a portion thereof, as follows: (i) if such Borrowing is
of Eurodollar Loans, on the last day of the Interest Period applicable thereto,
Borrower may continue part or all of such Borrowing as Eurodollar Loans for an
Interest Period or Interest Periods specified by Borrower or convert part or all
of such Borrowing into Base Rate Loans, and (ii) if such Borrowing is of Base
Rate Loans, on any Business Day, Borrower may convert all or part of such
Borrowing into Eurodollar Loans for an Interest Period or Interest Periods
specified by Borrower. Borrower shall give all such notices requesting, the
advance, continuation, or conversion of a Borrowing to the Administrative Agent
by telephone or telecopy (which notice shall be irrevocable once given and, if
by telephone, shall be promptly confirmed in writing). Notices of the
continuation of a Borrowing of Eurodollar Loans for an additional Interest
Period or of the conversion of part or all of a Borrowing of Eurodollar Loans
into Base Rate Loans or of Base Rate Loans into Eurodollar Loans must be given
by no later than 12:00 noon (New York time) at least three (3) Business Days
before the date of the requested continuation or conversion. All such notices
concerning the advance, continuation, or conversion of a Borrowing shall be
irrevocable once given and shall specify the date of the requested advance,
continuation or conversion of a Borrowing (which shall be a Business Day), the
amount of the requested Borrowing to be advanced, continued, or converted, the
type of Loans to comprise such new, continued or converted Borrowing and, if
such Borrowing is to be comprised of Eurodollar Loans, the Interest Period
applicable thereto. Borrower agrees that the Administrative Agent may rely on
any such telephonic or telecopy notice given by any person it in good faith
believes is an Authorized Representative without the necessity of independent
investigation, and in the event any such notice by telephone conflicts with any
written confirmation, such

 

20

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telephonic notice shall govern if the Administrative Agent has acted in reliance
thereon. There may be no more than six different Interest Periods in effect at
any one time, provided that for purposes of determining the number of Interest
Periods in effect at any one time, all Base Rate Loans shall be deemed to have
one and the same Interest Period.

(b)        Notice to the Banks. The Administrative Agent shall give prompt
telephonic or telecopy notice to each Bank of any notice from Borrower received
pursuant to Section 2.5(a) above. The Administrative Agent shall give notice to
Borrower and each Bank by like means of the interest rate applicable to each
Borrowing of Eurodollar Loans.

(c)        Borrower’s Failure to Notify. Any outstanding Borrowing of Base Rate
Loans shall, subject to Section 6.2 hereof, automatically be continued for an
additional Interest Period on the last day of its then current Interest Period
unless Borrower has notified the Administrative Agent within the period required
by Section 2.5(a) that it intends to convert such Borrowing into a Borrowing of
Eurodollar Loans or notifies the Administrative Agent within the period required
by Section 2.8(a) that it intends to prepay such Borrowing. If Borrower fails to
give notice pursuant to Section 2.5(a) above of the continuation or conversion
of any outstanding principal amount of a Borrowing of Eurodollar Loans before
the last day of its then current Interest Period within the period required by
Section 2.5(a) and has not notified the Administrative Agent within the period
required by Section 2.8(a) that it intends to prepay such Borrowing, such
Borrowing shall automatically be converted into a Borrowing of Base Rate Loans,
subject to Section 6.2 hereof. The Administrative Agent shall promptly notify
the Banks of Borrower’s failure to so give a notice under Section 2.5(a). In the
event Borrower fails to give notice pursuant to Section 2.5(a) above of a
Borrowing equal to the amount of a Reimbursement Obligation and has not notified
the Administrative Agent by 12:00 noon (New York time) on the day such
Reimbursement Obligation becomes due that it intends to repay such Reimbursement
Obligation through funds not borrowed under this Agreement, Borrower shall be
deemed to have requested a Borrowing of Base Rate Loans on such day in the
amount of the Reimbursement Obligation then due, subject to Section 6.2 hereof,
which Borrowing shall be applied to pay the Reimbursement Obligation then due.

(d)        Disbursement of Loans. Not later than 12:00 noon (New York time) on
the date of any requested advance of a new Borrowing of Eurodollar Loans, and
not later than 2:00 p.m. (New York time) on the date of any requested advance of
a new Borrowing of Base Rate Loans, subject to Section 6 hereof, each Bank shall
make available its Loan comprising part of such Borrowing in funds immediately
available at the principal office of the Administrative Agent in New York, New
York. The Administrative Agent shall make available to Borrower Loans at the
Administrative Agent’s principal office in New York, New York or such other
office as the Administrative Agent has previously agreed in writing to with
Borrower, in each case in the type of funds received by the Administrative Agent
from the Banks.

(e)        Administrative Agent Reliance on Bank Funding. Unless the
Administrative Agent shall have been notified by a Bank before the date on which
such

 

21

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Bank is scheduled to make payment to the Administrative Agent of the proceeds of
a Loan (which notice shall be effective upon receipt) that such Bank does not
intend to make such payment, the Administrative Agent may assume that such Bank
has made such payment when due and the Administrative Agent may in reliance upon
such assumption (but shall not be required to) make available to Borrower the
proceeds of the Loan to be made by such Bank and, if any Bank has not in fact
made such payment to the Administrative Agent, such Bank shall, on demand, pay
to the Administrative Agent the amount made available to Borrower attributable
to such Bank together with interest thereon in respect of each day during the
period commencing on the date such amount was made available to Borrower and
ending on (but excluding) the date such Bank pays such amount to the
Administrative Agent at a rate per annum equal to (i) from the date the related
payment was made by the Administrative Agent to the date two (2) Business Days
after payment by such Bank is due hereunder, the Federal Funds Rate for each
such day and (ii) from the date two (2) Business Days after the date such
payment is due from such Bank to the date such payment is made by such Bank, the
Base Rate in effect for each such day. If such amount is not received from such
Bank by the Administrative Agent immediately upon demand, Borrower will, on
demand, repay to the Administrative Agent the proceeds of the Loan attributable
to such Bank with interest thereon at a rate per annum equal to the interest
rate applicable to the relevant Loan.

Section 2.6 Interest Periods. As provided in Section 2.5(a) hereof, at the time
of each request of a Borrowing of Eurodollar Loans, Borrower shall select an
Interest Period applicable to such Loans from among the available options. The
term “Interest Period” means the period commencing on the date a Borrowing of
Loans is advanced, continued, or created by conversion and ending: (a) in the
case of Base Rate Loans, on the last Business Day of the calendar quarter in
which such Borrowing is advanced, continued, or created by conversion (or on the
last day of the following calendar quarter if such Loan is advanced, continued
or created by conversion on the last Business Day of a calendar quarter), and
(b) in the case of Eurodollar Loans, 1, 2, 3, 6, or, if agreed to by the
Administrative Agent, 12 months thereafter; provided, however, that:

(a)        any Interest Period for a Borrowing of Base Rate Loans that otherwise
would end after the Termination Date shall end on the Termination Date;

(b)        for any Borrowing of Eurodollar Loans, Borrower may not select an
Interest Period that extends beyond either (i) the fifth to last Business Day of
any calendar year or (ii) the Termination Date;

(c)        whenever the last day of any Interest Period would otherwise be a day
that is not a Business Day, the last day of such Interest Period shall be
extended to the next succeeding Business Day, provided that, if such extension
would cause the last day of an Interest Period for a Borrowing of Eurodollar
Loans to occur in the following calendar month, the last day of such Interest
Period shall be the immediately preceding Business Day; and

(d)        for purposes of determining an Interest Period for a Borrowing of
Eurodollar Loans, a month means a period starting on one day in a calendar month
and ending on the numerically corresponding day in the next calendar month;
provided,

 

22

60364071.5

 

 

however, that if there is no numerically corresponding day in the month in which
such an Interest Period is to end or if such an Interest Period begins on the
last Business Day of a calendar month, then such Interest Period shall end on
the last Business Day of the calendar month in which such Interest Period is to
end.

Section 2.7 Maturity of Loans. Unless an earlier maturity is provided for
hereunder (whether by acceleration or otherwise), all Obligations (including
principal and interest on all outstanding Loans) shall mature and become due and
payable by Borrower on the Termination Date.

Section 2.8 Prepayments.

(a)        Borrower may prepay without premium or penalty and in whole or in
part (but, if in part, then (i) in an amount not less than $5,000,000 and
integral multiples of $1,000,000 in excess thereof, and (ii) in an amount such
that the minimum amount required for a Borrowing pursuant to Section 2.4 hereof
remains outstanding) any Borrowing of Eurodollar Loans upon three (3) Business
Days’ prior irrevocable notice to the Administrative Agent or, in the case of a
Borrowing of Base Rate Loans, irrevocable notice delivered to the Administrative
Agent no later than 12:00 noon (New York time) on the date of prepayment, such
prepayment to be made by the payment of the principal amount to be prepaid and
accrued interest thereon to the date fixed for prepayment. In the case of
Eurodollar Loans, any amounts owing under Section 2.11 hereof as a result of
such prepayment shall be paid contemporaneously with such prepayment. The
Administrative Agent will promptly advise each Bank of any such prepayment
notice it receives from Borrower. Any amount paid or prepaid before the
Termination Date may, subject to the terms and conditions of this Agreement, be
borrowed, repaid and borrowed again.

(b)        If the aggregate amount of outstanding Loans and L/C Obligations
shall at any time for any reason exceed the Commitments then in effect or the
amount of L/C Obligations at any time outstanding attributable to Marketing
Subsidiary Letters of Credit exceeds the Marketing Subsidiary Sublimit, Borrower
shall, immediately and without notice or demand, pay the amount of such excess
to the Administrative Agent for the ratable benefit of the Banks as a prepayment
of the Loans and, if necessary, a prefunding of Letters of Credit. Immediately
upon determining the need to make any such prepayment Borrower shall notify the
Administrative Agent of such required prepayment. Each such prepayment shall be
accompanied by a payment of all accrued and unpaid interest on the Loans prepaid
and shall be subject to Section 2.11.

Section 2.9 Default Rate. If any payment of principal or interest on any Loan,
or payment of any other Obligation, is not made when due (whether by
acceleration or otherwise), such principal, interest or other Obligation shall
bear interest (computed on the basis of a year of 360 days and actual days
elapsed or, if based on the rate described in clause (i) of the definition of
Base Rate, on the basis of a year of 365 or 366 days, as applicable, and the
actual number of days elapsed) from the date such payment was due until paid in
full, payable on demand, at a rate per annum equal to:

 

23

60364071.5

 

 

 

(a)        for any Obligation other than a Eurodollar Loan (including principal
and interest relating to Base Rate Loans and interest on Eurodollar Loans), the
sum of two percent (2%) plus the Applicable Margin plus the Base Rate from time
to time in effect; and

(b)        for the principal of any Eurodollar Loan, the sum of two percent (2%)
plus the rate of interest in effect thereon at the time of such default until
the end of the Interest Period applicable thereto and, thereafter, at a rate per
annum equal to the sum of two percent (2%) plus the Applicable Margin plus the
Base Rate from time to time in effect.

Section 2.10 The Notes.

(a)        The Loans made to Borrower by each Bank shall be evidenced by a
single promissory note of Borrower issued to such Bank in the form of Exhibit A
hereto. Each such promissory note is hereinafter referred to as a “Note” and
collectively such promissory notes are referred to as the “Notes.”

(b)        Each Bank shall record on its books and records or on a schedule to
its Note the amount of each Loan advanced, continued, or converted by it, all
payments of principal and interest and the principal balance from time to time
outstanding thereon, the type of such Loan, and, for any Eurodollar Loan, the
Interest Period and the interest rate applicable thereto. The record thereof,
whether shown on such books and records of a Bank or on a schedule to any Note,
shall be prima facie evidence of the same; provided, however, that the failure
of any Bank to record any of the foregoing or any error in any such record shall
not limit or otherwise affect the obligation of Borrower to repay all Loans made
hereunder together with accrued interest thereon. At the request of any Bank and
upon such Bank tendering to Borrower the Note to be replaced, Borrower shall
furnish a new Note to such Bank to replace any outstanding Note, and at such
time the first notation appearing on a schedule on the reverse side of, or
attached to, such Note shall set forth the aggregate unpaid principal amount of
all Loans, if any, then outstanding thereon.

Section 2.11 Funding Indemnity. If any Bank shall incur any loss, cost or
expense (including, without limitation, any loss, cost or expense (excluding
loss of margin) incurred by reason of the liquidation or re-employment of
deposits or other funds acquired by such Bank to fund or maintain any Eurodollar
Loan or the relending or reinvesting of such deposits or amounts paid or prepaid
to such Bank) as a result of:

(a)        any payment (whether by acceleration or otherwise), prepayment or
conversion of a Eurodollar Loan on a date other than the last day of its
Interest Period,

(b)        any failure (because of a failure to meet the conditions of Section 6
or otherwise) by Borrower to borrow or continue a Eurodollar Loan, or to convert
a Base Rate Loan into a Eurodollar Loan, on the date specified in a notice given
pursuant to Section 2.5(a) or established pursuant to Section 2.5(c) hereof,

(c)        any failure by Borrower to make any payment or prepayment of
principal on any Eurodollar Loan when due (whether by acceleration or
otherwise), or

 

24

60364071.5

 

 

 

(d)        any acceleration of the maturity of a Eurodollar Loan as a result of
the occurrence of any Event of Default hereunder,

(e)        then, upon the demand of such Bank, Borrower shall pay to such Bank
such amount as will reimburse such Bank for such loss, cost or expense. If any
Bank makes such a claim for compensation, it shall provide to Borrower, with a
copy to the Administrative Agent, a certificate executed by an officer of such
Bank setting forth the amount of such loss, cost or expense in reasonable detail
(including an explanation of the basis for and the computation of such loss,
cost or expense) and the amounts shown on such certificate if reasonably
calculated shall be prima facie evidence of the amount of such loss, cost or
expense.

Section 2.12 Commitments.

(a)        Borrower shall have the right at any time and from time to time, upon
five (5) Business Days’ prior written notice to the Administrative Agent, to
terminate the Commitments without premium or penalty, in whole or in part, any
partial termination to be (i) in an amount not less than $5,000,000 and integral
multiples of $1,000,000 in excess thereof, and (ii) allocated ratably among the
Banks in proportion to their respective Percentages, provided that the
Commitments may not be reduced to an amount less than the sum of the Loans and
all L/C Obligations then outstanding. The Administrative Agent shall give prompt
notice to each Bank of any such termination of Commitments. Any termination of
Commitments pursuant to this Section 2.12 may not be reinstated.

(b)        The Borrower and the Administrative Agent may from time to time add
additional financial institutions as parties to this Agreement or, with the
written consent of an existing Bank, increase the Commitment of such existing
Bank (any such financial institution or existing Bank which is increasing its
commitment being referred to as an “Added Bank”) pursuant to documentation
reasonably satisfactory to the Borrower and the Administrative Agent and any
such Added Bank shall for all purposes be considered a Bank for purposes of this
Agreement and the other Credit Documents with a Commitment as set forth in such
documentation. Any such Added Bank shall on the date it is deemed a party to
this Agreement purchase from the other Banks its Percentage (or the increase in
its Percentage, in the case of an Added Bank which is an existing Bank) of the
Loans outstanding and shall be deemed to purchase pursuant to Section 2.2(d) a
Participating Interest in all Letters of Credit and Reimbursement Obligations
outstanding on such date to the extent of its Percentage (or the increase in its
Percentage, in the case of an Added Bank which is an existing Bank).
Notwithstanding anything contained in this Section 2.12(b) to the contrary, the
aggregate amount of Commitments may not at any time exceed $500,000,000 without
the consent of the Required Banks.

Section 2.13 BHP Borrowings. The Borrower agrees to reserve under the
Commitments at all times an aggregate amount equal to $3,100,000 (the “BHP
Reserve”) to be used by the Borrower to fund, directly or indirectly, any
liquidity needs arising under or in connection with that certain Loan Agreement
between the City of Gillette, Campbell County, Wyoming and BHP (fka Black Hills
Corporation), dated June 1, 1994, as such Loan Agreement is amended,

 

25

60364071.5

 

 

modified, supplemented or refinanced from time to time (the “BHP Liquidity
Requirements”). The BHP Reserve shall be: (i) reduced for each Loan requested by
the Borrower, the proceeds of which are used to fund, directly or indirectly,
the BHP Liquidity Requirements, and (ii) increased, up to the limit of
$3,100,000 at any time, for any such Loan that is repaid in accordance with the
terms of this Agreement. Nothing in this paragraph shall restrict Borrower’s use
of other Loans made under this Agreement in accordance with the terms and
conditions of this Agreement. The Administrative Agent and the Banks shall have
no responsibility for ensuring that the proceeds of Loans made under the BHP
Reserve are used for the BHP Liquidity Requirements.

 

SECTION 3. FEES.

Section 3.1 Fees.

(a)        Facility Fee. From and after the Effective Date, Borrower shall pay
to the Administrative Agent for the ratable account of the Banks in accordance
with their Percentages a facility fee accruing at a rate per annum equal to the
Facility Fee Rate on the average daily amount of the Commitments (whether used
or unused), or if the Commitments have expired or terminated, on the principal
amount of Loans and L/C Obligations then outstanding. Such facility fee is
payable in arrears on the last Business Day of each calendar quarter and on the
Termination Date, and if the Commitments are terminated in whole prior to the
Termination Date, the fee for the period to but not including the date of such
termination shall be paid in whole on the date of such termination.

(b)

Letter of Credit Fees.

(i)         Borrower shall pay to the Administrative Agent for the account of
each Bank letter of credit fees with respect to the Letters of Credit at a rate
per annum equal to the L/C Fee Rate on the average daily maximum undrawn face
amount of such outstanding Letters of Credit (including any Letters of Credit
outstanding after the termination of the Commitments), computed in each case on
a quarterly basis in arrears on the last Business Day of each calendar quarter
and on the Termination Date.

(ii)         Borrower shall pay to the Administrative Agent for the benefit of
each Issuing Agent, as issuer of each Letter of Credit issued by such Issuing
Agent, for the sole account of such Issuing Agent, a letter of credit fronting
fee for each outstanding Letter of Credit issued by such Issuing Agent at the
rate per annum equal to 0.125% on the average daily maximum undrawn face amount
of outstanding Letters of Credit (including any Letters of Credit outstanding
after the termination of the Commitments), computed on the last Business Day of
each calendar quarter and on the Termination Date.

(iii)        The letter of credit fees payable under Section 3.1(b)(i) and the
fronting fees payable under Section 3.1(b)(ii) shall be due and payable
quarterly

 

26

60364071.5

 

 

in arrears on the last Business Day of each calendar quarter during which
Letters of Credit are outstanding, commencing on the first such quarterly date
to occur after the Effective Date, and on the Termination Date, and if the
Commitments are terminated in whole on an earlier date, the fee for the period
to but not including the date of such termination shall be paid in whole on the
date of such termination.

(iv)        Borrower shall pay to each Issuing Agent from time to time on demand
the normal issuance, presentation, amendment and other processing fees, and
other standard costs and charges, of such Issuing Agent relating to letters of
credit as from time to time in effect.

(c)        Utilization Fee. From and after the Effective Date, for any day on
which the aggregate principal amount of Loans and L/C Obligations then
outstanding exceeds fifty percent (50%) of the Commitments then in effect,
Borrower shall pay to the Administrative Agent for the ratable account of the
Banks in accordance with their Percentages a utilization fee accruing at a rate
per annum equal to the Utilization Fee Rate on the aggregate amount of Loans and
L/C Obligations outstanding on such date. Such fee is payable in arrears on the
last Business Day of each calendar quarter and on the Termination Date, and if
the Commitments are terminated in whole prior to the Termination Date, the fee
for the period to but not including the date of such termination shall be paid
in whole on the date of such termination.

(d)        Arranger Fees. Borrower shall pay to the Arrangers for the accounts
of the Arrangers (and no other Persons) the fees agreed to among the Arrangers
and Borrower in the Mandate Letter or as otherwise agreed in writing among them.

(e)        Fee Calculations. All fees payable under this Agreement shall be
payable in U.S. Dollars and shall be computed on the basis of a year of 360
days, for the actual number of days elapsed. All determinations of the amount of
fees owing hereunder (and the components thereof) shall be made by the
Administrative Agent and shall be prima facie evidence of the amount of such
fee.

SECTION 4. PLACE AND APPLICATION OF PAYMENTS.

Section 4.1 Place and Application of Payments. All payments of principal of and
interest on the Loans, and of all other Obligations and other amounts payable by
Borrower under the Credit Documents, shall be made by Borrower in U.S. Dollars
to the Administrative Agent or the applicable Issuing Agent if such payment is
being made with respect to a Reimbursement Obligation, by no later than 2:00
p.m. (New York time) on the due date thereof at the principal office of the
Administrative Agent or the applicable Issuing Agent, as applicable, in New
York, New York pursuant to the payment instructions set forth on Part A of
Schedule 4 hereof (or such other location in the, United States as the
Administrative Agent or the applicable Issuing Agent, as applicable, may
designate to Borrower) or, if such payment is on a Reimbursement Obligation, no
later than provided by Section 2.2(c) hereof, in each case for the benefit of
the Person or Persons entitled thereto. Any payments received after such time
shall be deemed to have been received by the Administrative Agent or the Issuing
Agent on the next Business Day.

 

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All such payments shall be made free and clear of, and without deduction for,
any set-off, defense, counterclaim, levy, or any other deduction of any kind in
immediately available funds at the place of payment. The Administrative Agent or
the applicable Issuing Agent, as applicable, will promptly thereafter cause to
be distributed like funds relating to the payment of principal or interest on
Loans or applicable fees ratably to the Banks and like funds relating to the
payment of any other amount payable to any Person to such Person, in each case
to be applied in accordance with the terms of this Agreement.

SECTION 5. REPRESENTATIONS AND WARRANTIES.

The Borrower hereby represents and warrants to each Bank as to itself and, where
the following representations and warranties apply to its Subsidiaries, as to
each Subsidiary of Borrower, as follows:

Section 5.1 Corporate Organization and Authority. Borrower is duly organized and
existing in good standing under the laws of the state of South Dakota; has all
necessary corporate power to carry on its present business; and is duly licensed
or qualified and in good standing in each jurisdiction in which the nature of
the business transacted by it or the nature of the Property owned or leased by
it makes such licensing, qualification or good standing necessary and in which
the failure to be so licensed, qualified or in good standing would have a
Material Adverse Effect.

Section 5.2 Subsidiaries. Schedule 5.2 (as updated from time to time pursuant to
Section 7.1) hereto identifies each Subsidiary of Borrower, the jurisdiction of
organization, the percentage of issued and outstanding equity securities owned
by the Borrower and its Subsidiaries and, if such percentage is not one hundred
percent (100%) (excluding directors’ qualifying shares as required by law), a
description of each class of its equity securities and the number of securities
issued and outstanding. Each Subsidiary is duly organized and existing in good
standing under the laws of the jurisdiction of its organization, has all
necessary corporate or equivalent power to carry on its present business, and is
duly licensed or qualified and in good standing in each jurisdiction in which
the nature of the business transacted by it or the nature of the Property owned
or leased by it makes such licensing or qualification necessary and in which the
failure to be so licensed or qualified would have a Material Adverse Effect. All
of the issued and outstanding securities of each Subsidiary owned directly or
indirectly by Borrower are validly issued and outstanding and fully paid and
nonassessable except as set forth on Schedule 5.2 hereto. All such securities
owned by Borrower are owned beneficially, and of record, free of any Lien,
except as permitted in Section 7.9.

Section 5.3 Corporate Authority and Validity of Obligations. Borrower has full
right and authority to enter into this Agreement and the other Credit Documents
to which it is a party, to make the borrowings herein provided for, to issue its
Notes in evidence thereof, to apply (and to have applied) for the issuance of
the Letters of Credit, and to perform all of its obligations under the Credit
Documents to which it is a party. Each Credit Document to which it is a party
has been duly authorized, executed and delivered by Borrower and constitutes
valid and binding obligations of Borrower enforceable in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforceability of
creditors’ rights generally and by equitable principles of general

 

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applicability (regardless of whether such enforceability is considered in a
proceeding in equity or at law). No Credit Document, nor the performance or
observance by Borrower of any of the matters or things therein provided for,
contravenes any provision of law or any charter or by-law provision of Borrower
or any material Contractual Obligation of or affecting Borrower or any of
Borrower’s Properties or results in or requires the creation or imposition of
any Lien on any of the Properties or revenues of Borrower.

Section 5.4 Financial Statements. All financial statements heretofore delivered
to the Banks showing historical performance of Borrower for Borrower’s fiscal
years ending on or before December 31, 2004, have been prepared in accordance
generally accepted accounting principles applied on a basis consistent, except
as otherwise noted therein, with that of the previous fiscal year. The unaudited
financial statements for the fiscal period ended March 31, 2005 have been
prepared in accordance generally accepted accounting principles applicable to
interim financial statements applied on a basis consistent, except as otherwise
noted therein, with the previous same fiscal period of Borrower in the prior
fiscal year (subject to normal year-end adjustments). Each of such financial
statements fairly presents on a consolidated basis the financial condition of
Borrower and its Subsidiaries as of the dates thereof and the results of
operations for the periods covered thereby. Borrower and its Subsidiaries have
no material contingent liabilities other than those disclosed in such financial
statements referred to in this Section 5.4 or in comments or footnotes thereto,
or in any report supplementary thereto, heretofore furnished to the Banks. Since
December 31, 2004, there has been no event or series of events which has
resulted in, or reasonably could be expected to result in, a Material Adverse
Effect.

Section 5.5 No Litigation; No Labor Controversies.

(a)         Except as set forth on Schedule 5.5, there is no litigation or
governmental proceeding pending, or to the knowledge of Borrower, threatened,
against Borrower or any Subsidiary of Borrower in which there is a reasonable
possibility of an adverse decision which, if adversely determined, could
(individually or in the aggregate) have a Material Adverse Effect.

(b)        Except as set forth on Schedule 5.5, there are no labor controversies
pending or, to the best knowledge of Borrower, threatened against Borrower or
any Subsidiary of Borrower which could (individually or in the aggregate) have a
Material Adverse Effect.

Section 5.6 Taxes. Borrower and its Subsidiaries have filed all United States
federal tax returns, and all other foreign, state, local and other tax returns,
required to be filed and have paid all taxes due pursuant to such returns or
pursuant to any assessment received by Borrower or any Subsidiary of Borrower,
except such taxes, if any, as are being contested in good faith and for which
adequate reserves have been provided. No notices of tax liens have been filed
and no claims are being asserted concerning any such taxes, which liens or
claims are material to the financial condition of Borrower or any of its
Subsidiaries (individually or in the aggregate). The charges, accruals and
reserves on the books of Borrower and its Subsidiaries for any taxes or other
governmental charges are adequate and in conformance with GAAP.

 

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Section 5.7 Approvals. No authorization, consent, approval, license, exemption,
filing or registration with any court or governmental department, agency or
instrumentality which have not already been obtained, nor any approval or
consent of the stockholders of Borrower or any Subsidiary of Borrower or from
any other Person, is necessary to the valid execution, delivery or performance
by Borrower or any Subsidiary of Borrower of any Credit Document to which it is
a party.

Section 5.8 ERISA. With respect to each Plan, Borrower and each other member of
the Controlled Group has fulfilled its obligations under the minimum funding
standards of and is in compliance in all material respects with the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”), and with the Code
to the extent applicable to it and has not incurred any liability to the Pension
Benefit Guaranty Corporation (“PBGC”) or a Plan under Title IV of ERISA other
than a liability to the PBGC for premiums under Section 4007 of ERISA. Neither
Borrower nor any Subsidiary of Borrower has any contingent liabilities for any
post-retirement benefits under a Welfare Plan, other than liability for
continuation coverage described in Part 6 of Title I of ERISA.

Section 5.9 Government Regulation.

(a)        Neither Borrower nor any Subsidiary of Borrower is an “investment
company” within the meaning of the Investment Company Act of 1940, as amended.

(b)        Borrower is a “registered holding company” within the meaning of
PUHCA, and the entering into of, and the performance by the Borrower of its
obligations under, the Credit Documents (including its utilization of the credit
provided for under the Credit Documents) (x) does not violate PUHCA or the rules
promulgated thereunder (including by the SEC), and (y) has received all
necessary approvals required pursuant to PUHCA and the rules promulgated
thereunder (including by the SEC).

Section 5.10 Margin Stock; Use of Proceeds. Neither Borrower nor any Subsidiary
of Borrower is engaged principally, or as one of its primary activities, in the
business of extending credit for the purpose of purchasing or carrying margin
stock (“margin stock” to have the same meaning herein as in Regulation U of the
Board of Governors of the Federal Reserve System). The proceeds of the Loans and
Letters of Credit are to be used solely (i) to fund Borrower’s working capital
needs, and (ii) for general corporate purposes of Borrower. Borrower will not
use the proceeds of any Loan or Letter of Credit in a manner that violates any
provision of Regulation U or X of the Board of Governors of the Federal Reserve
System.

Section 5.11 Licenses and Authorizations; Compliance with Laws.

(a)        Borrower and each of its Subsidiaries has all necessary licenses,
permits and governmental authorizations to own and operate its Properties and to
carry on its business as currently conducted and contemplated. Borrower and each
of its Subsidiaries is in compliance with all applicable laws, regulations,
ordinances and orders of any governmental or judicial authorities except for any
such law, regulation, ordinance or order which, the failure to comply therewith,
could not reasonably expected to have a Material Adverse Effect.

 

30

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(b)        In the ordinary course of its business, Borrower and each of its
Subsidiaries conduct an ongoing review of the effect of Environmental and Health
Laws on the Properties and all aspects of the business and operations of such
Borrower and its Subsidiaries in the course of which such Borrower identifies
and evaluates associated liabilities and costs (including, without limitation,
any capital or operating expenditures required for clean-up or closure of
Properties currently or previously owned, any capital or operating expenditures
required to achieve or maintain compliance with standards imposed by law and any
actual or potential liabilities to third parties, including employees or
governmental entities, and any related costs and expenses). On the basis of this
review, Borrower has reasonably concluded that Environmental and Health Laws are
unlikely to have any Material Adverse Effect.

(c)        Except as set forth on Schedule 5.11 (as amended from time to time in
accordance with the provisions hereof), neither the Borrower nor any Subsidiary
of Borrower has given, nor is it required to give, nor has it received, any
notice, letter, citation, order, warning, complaint, inquiry, claim or demand to
or from any governmental entity or in connection with any court proceeding which
could reasonably have a Material Adverse Effect claiming that: (i) Borrower or
any Subsidiary of Borrower has violated, or is about to violate, any
Environmental and Health Law; (ii) there has been a release, or there is a
threat of release, of Hazardous Materials from Borrower’s or any of its
Subsidiary’s Property, facilities, equipment or vehicles; (iii) Borrower or any
of its Subsidiary may be or is liable, in whole or in part, for the costs of
cleaning up, remediating or responding to a release of Hazardous Materials; or
(iv) any of Borrower’s or any of its Subsidiary’s Property or assets are subject
to a Lien in favor of any governmental entity for any liability, costs or
damages, under any Environmental and Health Law arising from, or costs incurred
by such governmental entity in response to, a release of a Hazardous Materials.

Section 5.12 Ownership of Property; Liens. Borrower and each Subsidiary of
Borrower has good title to or valid leasehold interests in all its Property.
None of Borrower’s or any Subsidiary’s Property is subject to any Lien, except
as permitted in Section 7.9.

Section 5.13 No Burdensome Restrictions; Compliance with Agreements. Neither
Borrower nor any Subsidiary of Borrower is (a) party or subject to any law,
regulation, rule or order, or any Contractual Obligation, that (individually or
in the aggregate) materially adversely affects the business, operations,
Property or financial or other condition of Borrower and its Subsidiaries
(individually or in the aggregate) or (b) in default in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any agreement to which it is a party (including any Contractual
Obligation), which default could materially adversely affect the business,
operations, Property or financial or other condition of Borrower and its
Subsidiaries (individually or in the aggregate).

Section 5.14 Full Disclosure. All information heretofore furnished by Borrower
to the Administrative Agent or any Bank for purposes of or in connection with
the Credit Documents or any transaction contemplated thereby is, and all such
information hereafter furnished by Borrower to the Administrative Agent or any
Bank will be, true and accurate in all material respects and not misleading.

 

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Section 5.15 Solvency. Borrower and each of its Subsidiaries, individually and
on a consolidated basis, is Solvent.

SECTION 6. CONDITIONS PRECEDENT.

The obligation of each Bank to effect a Borrowing, or of an Issuing Agent to
issue, extend the expiration date of or increase the amount of any Letter of
Credit, shall be subject to the following conditions precedent:

Section 6.1 Initial Credit Event. On or before the Effective Date:

(a)        The Administrative Agent shall have received for each Bank the
favorable written opinion of (i) Morgan, Lewis & Bockius LLP, counsel to
Borrower, (ii) General Counsel to the Borrower; provided, either such opinion
shall include a legal opinion to the effect that Borrower has obtained all
necessary approvals under such PUHCA in connection with its obligations under
the Credit Documents, and such other related matters as the Administrative Agent
may reasonably request;

(b)        The Administrative Agent shall have received for each Bank copies of
Borrower’s (i) Articles of Incorporation, together with all amendments and (ii)
bylaws (or comparable constituent documents) and any amendments thereto,
certified in each instance by its Secretary or an Assistant Secretary;

(c)        The Administrative Agent shall have received for each Bank copies of
resolutions of Borrower’s Board of Directors authorizing the execution and
delivery of the Credit Documents and the consummation of the transactions
contemplated thereby together with specimen signatures of the persons authorized
to execute such documents on such Borrower’s behalf, all certified in each
instance by its Secretary or Assistant Secretary;

(d)        The Administrative Agent shall have received for each Bank which has
requested same such Bank’s duly executed Note of Borrower dated the date hereof
and otherwise in compliance with the provisions of Section 2.10(a) hereof;

(e)        The Administrative Agent shall have received a duly executed set of
the Credit Documents;

(f)         All legal matters incident to the execution and delivery of the
Credit Documents shall be satisfactory to the Banks;

(g)        The Administrative Agent shall have received a duly executed original
of the Mandate Letter;

(h)        The Administrative Agent shall have received a duly executed
Compliance Certificate containing financial information as of March 31, 2005;

(i)         With respect to all Indebtedness and other obligations, absolute or
contingent, under the credit facilities created by the following agreements, a
payoff letter

 

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from each lender or agent for a group of lenders in form and substance
reasonably satisfactory to the Administrative Agent, together with such
termination statements, releases of mortgage Liens and other instruments,
documents and/or agreements necessary or appropriate to terminate any Liens in
favor of such lenders securing such obligations which is to be paid off on the
Effective Date as the Administrative Agent may reasonably request, duly executed
and in form and substance reasonably satisfactory to the Administrative Agent:
(i) that certain 364-Day Credit Agreement among the Borrower, the financial
institutions party thereto, as lenders, and ABN AMRO Bank N.V., as
administrative agent for such lenders, dated as of May 13, 2004, as amended from
time to time and (ii) that certain Multi-Year Credit Agreement among the
Borrower, the financial institutions party thereto, as lenders, and ABN AMRO
Bank N.V., as administrative agent for such lenders, dated as of August 21,
2003, as amended from time to time;

(j)         During the period from December 31, 2004 to the Effective Date,
neither Borrower nor any of its Subsidiaries have, except as specifically set
forth on Schedule 6.1, issued, incurred, assumed, created, become liable for,
contingently or otherwise, any material Indebtedness;

(k)        The Borrower shall have provided a certificate stating that the
conditions precedent set forth in this Section 6.1 have been satisfied;

(l)         The Borrower shall have paid to each Bank the applicable fees for
providing its Commitment under this Agreement; and

(m)       The Administrative Agent shall have received such other documents and
information as it may reasonably request.

Section 6.2 All Credit Events. As of the time of each Credit Event hereunder:

(a)        In the case of a Borrowing, the Administrative Agent shall have
received the notice required by Section 2.5 hereof, in the case of the issuance
of any Letter of Credit, the applicable Issuing Agent shall have received the
request for such Letter of Credit required by Section 2.2(b), and a duly
completed Application for a Letter of Credit and, in the case of an extension or
increase in the amount of a Letter of Credit, the applicable Issuing Agent shall
have received a written request therefor, in a form acceptable to such Issuing
Agent;

(b)         Each of the representations and warranties set forth in Section 5
hereof shall be and remain true and correct in all material respects (unless
such representation or warranty is already qualified with respect to
materiality, in which case it shall be and remain true and correct in all
respects) as of said time, except that if any such representation or warranty
relates solely to an earlier date it need only remain true in all material
respects (unless such representation or warranty is already qualified with
respect to materiality, in which case it shall be and remain true and correct in
all respects) as of such date; and

 

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(c)        Borrower shall be in full compliance with all of the terms and
conditions hereof, and no Default or Event of Default shall have occurred and be
continuing or would occur as a result of such Credit Event.

Each request for a Credit Event shall be deemed to be a representation and
warranty by Borrower on the date of such Credit Event as to the facts specified
in paragraphs (b) and (c) of this Section 6.2.

SECTION 7. COVENANTS.

Borrower covenants and agrees that, so long as any Note, Loan or L/C Obligation
is outstanding hereunder, or any Commitment is available to or in use by
Borrower hereunder, except to the extent compliance in any case is waived in
writing by the Required Banks:

Section 7.1 Corporate Existence; Subsidiaries. Borrower shall, and shall cause
each of its Subsidiaries to, preserve and maintain its corporate existence,
subject to the provisions of Section 7.12 hereof. Together with any financial
statements delivered pursuant to Section 7.6 hereof, Borrower shall deliver an
updated Schedule 5.2 to reflect any changes from the existing Schedule 5.2.

Section 7.2 Maintenance. Borrower will maintain, preserve and keep its plants,
Properties and equipment necessary to the proper conduct of its business in
reasonably good repair, working order and condition and will from time to time
make all reasonably necessary repairs, renewals, replacements, additions and
betterments thereto so that at all times such plants, Properties and equipment
shall be reasonably preserved and maintained, and Borrower will cause each of
its Subsidiaries to do so in respect of Property owned or used by it; provided,
however, that nothing in this Section 7.2 shall prevent Borrower or a Subsidiary
of Borrower from discontinuing the operation or maintenance of any such
Properties if such discontinuance is not disadvantageous to the Banks or the
holders of the Notes, does not materially impair the operations of Borrower or
any Subsidiary of Borrower and is, in the judgment of Borrower, desirable in the
conduct of its business or the business of its Subsidiaries.

Section 7.3 Taxes. Borrower will duly pay and discharge, and will cause each of
its Subsidiaries duly to pay and discharge, all taxes, rates, assessments, fees
and governmental charges upon or against it or against its Properties, in each
case before the same becomes delinquent and before penalties accrue thereon,
unless and to the extent that the same is being contested in good faith by
appropriate proceedings and reserves in conformity with GAAP have been provided
therefor on the books of Borrower.

Section 7.4 ERISA. Borrower will, and will cause each of its Subsidiaries to,
promptly pay and discharge all obligations and liabilities arising under ERISA
of a character which if unpaid or unperformed might result in the imposition of
a Lien against any of its properties or assets and will promptly notify the
Administrative Agent of (i) the occurrence of any reportable event (as defined
in ERISA) affecting a Plan, other than any such event of which the PBGC has
waived notice by regulation, (ii) receipt of any notice from PBGC of its
intention to seek termination of any Plan or appointment of a trustee therefor,
(iii) its or any of its Subsidiaries’ intention to terminate or withdraw from
any Plan, and (iv) the occurrence of any event affecting

 

34

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any Plan which could result in the incurrence by Borrower or any of its
Subsidiaries of any material liability, fine or penalty, or any material
increase in the contingent liability of Borrower or any of its Subsidiaries
under any post-retirement Welfare Plan benefit. The Administrative Agent will
promptly distribute to each Bank any notice it receives from Borrower pursuant
to this Section 7.4.

Section 7.5 Insurance. Borrower will insure, and keep insured, and will cause
each of its Subsidiaries to insure, and keep insured, with good and responsible
insurance companies, all insurable Property owned by it of a character usually
insured by companies similarly situated and operating like Property. To the
extent usually insured by companies similarly situated and conducting similar
businesses, Borrower will also insure, and cause each of its Subsidiaries to
insure, employers’ and public and product liability risks with good and
responsible insurance companies. Borrower will, upon request of any Bank,
furnish to such Bank a summary setting forth the nature and extent of the
insurance maintained pursuant to this Section 7.5.

Section 7.6 Financial Reports and Other Information.

(a)        Borrower will maintain a system of accounting in accordance with GAAP
and will furnish to the Banks and their respective duly authorized
representatives such information respecting the business and financial condition
of Borrower and its Subsidiaries as any Bank may reasonably request; and without
any request, the Borrower shall deliver to the Administrative Agent in form and
detail satisfactory to the Administrative Agent, with copies for each Bank in
form and substance satisfactory to them, each of the following:

(i)         within 120 days after the end of each fiscal year of Borrower, a
copy of Borrower financial statements for such fiscal year, including the
consolidated balance sheet of Borrower and its Subsidiaries for such year and
the related statements of income and statements of cash flow, each as certified
by independent public accountants of recognized national standing selected by
Borrower in accordance with GAAP with such accountants’ unqualified opinion to
the effect that the financial statements have been prepared in accordance with
GAAP and present fairly in all material respects in accordance with GAAP the
consolidated financial position of Borrower and its Subsidiaries as of the close
of such fiscal year and the results of their operations and cash flows for the
fiscal year then ended and that an examination of such accounts in connection
with such financial statements has been made in accordance with generally
accepted auditing standards and, accordingly, such examination included such
tests of the accounting records and such other auditing procedures as were
considered necessary in the circumstances, provided that if Borrower files its
annual report on Form 10-K for the applicable annual period, and such annual
report contains the financial statements and accountants certifications,
opinions and statements described above, the Borrower may satisfy the
requirements of this Section 7.6(a)(i) by delivering a copy of such annual
report to each Bank. Together with such information the Borrower shall provide
to each Bank such consolidating information as may be necessary for the Banks to
determine the Borrower’s compliance with Section 7.17 hereof;

 

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(ii)         within 60 days after the end of each of the first three quarterly
fiscal periods of Borrower, a consolidated unaudited balance sheet of Borrower
and its Subsidiaries, and the related statements of income and statements of
cash flow, as of the close of such period, all of the foregoing prepared by
Borrower in reasonable detail in accordance with GAAP and certified by
Borrower’s chief financial officer or corporate controller as fairly presenting
the financial condition as at the dates thereof and the results of operations
for the periods covered thereby, provided that if Borrower files a Form 10-Q for
the applicable quarterly period, and such quarterly report contains the
financial statements and certifications described above, the Borrower may
satisfy the requirements of this Section 7.6(a)(ii) by delivering a copy of such
quarterly report to each Bank. Together with such information the Borrower shall
provide to each Bank such consolidating information as may be necessary for the
Banks to determine the Borrower’s compliance with Section 7.17 hereof;

(iii)        within the period provided in subsection (i) above, the written
statement of the accountants who certified the audit report thereby required
that in the course of their audit they have obtained no knowledge of any Default
or Event of Default, or, if such accountants have obtained knowledge of any such
Default or Event of Default, they shall disclose in such statement the nature
and period of the existence thereof; and

(iv)        promptly after the sending or filing thereof, copies of all proxy
statements, financial statements and reports Borrower or any of its Subsidiaries
sends to their shareholders, and copies of all other regular, periodic and
special reports and all registration statements Borrower or any of its
Subsidiaries file with the SEC or any successor thereto, or with any national
securities exchanges.

(b)        Each financial statement furnished to the Banks pursuant to
subsection (i) or (ii) of this Section 7.6 shall be accompanied by (A) a written
certificate signed by Borrower’s chief financial officer or corporate controller
to the effect that (i) no Default or Event of Default has occurred during the
period covered by such statements or, if any such Default or Event of Default
has occurred during such period, setting forth a description of such Default or
Event of Default and specifying the action, if any, taken by Borrower to remedy
the same, (ii) the representations and warranties contained in Section 5 hereof
are true and correct in all material respects as though made on the date of such
certificate (other than those made solely as of an earlier date, which need only
remain true as of such date), except as otherwise described therein, and (B) a
Compliance Certificate in the form of Exhibit B hereto showing Borrower’s
compliance with the covenants set forth in Sections 7.9, 7.11, 7.12 and 7.14
through 7.19 hereof.

(c)        Borrower will promptly (and in any event within three Business Days
after an officer of Borrower has knowledge thereof) give notice to the
Administrative Agent and each Bank:

(i)

of the occurrence of any Default or Event of Default;

 

 

36

60364071.5

 

 

 

(ii)         any event or condition which could reasonably be expected to have a
Material Adverse Effect;

(iii)        of any litigation or governmental proceeding of the type described
in Section 5.5 hereof;

(iv)        of any material change in the information set forth on the Schedules
hereto; and

(v)        of the entering into of any Long-Term Guaranties, and Borrower shall
promptly provide the Administrative Agent with a copy of any such Guarantee and
any modification to such Guarantee.

Section 7.7 Bank Inspection Rights. For purposes of confirming compliance with
the Credit Documents or after the occurrence and during the continuance of an
Event of Default, upon reasonable notice from the Administrative Agent or the
Required Banks, Borrower will, at Borrower’s expense, permit such Banks (and
such Persons as any Bank may designate) during normal business hours to visit
and inspect, under Borrower’s guidance, any of the Properties of Borrower or any
of its Subsidiaries, to examine all of their books of account, records, reports
and other papers, to make copies and extracts therefrom, and to discuss their
respective affairs, finances and accounts with their respective officers,
employees and with their independent public accountants (and by this provision
Borrower authorizes such accountants to discuss with the Banks (and such Persons
as any Bank may designate) the finances and affairs of Borrower and its
Subsidiaries) all at such reasonable times and as often as may be reasonably
requested; provided, however, that except upon the occurrence and during the
continuation of any Default or Event of Default, not more than one such visit
and inspection may be conducted each calendar quarter.

Section 7.8 Conduct of Business. Neither Borrower nor any Subsidiary of Borrower
will engage in any line of business other than business activities in the field
of (i) cogeneration and related thermal uses, (ii) energy production, (iii)
energy development, (iv) energy recovery, (v) utility operation and management,
(vi) demand side management services, (vii) energy trading, (viii) management of
investment funds which invest in energy related businesses and investments in
such funds, (ix) hedging but not speculative activities relating to any of the
foregoing lines of business, (x) telecommunications, (xi) management and
operating services related to any of the foregoing lines of business, and (xii)
other businesses not described in the foregoing so long as the Investments and
expenses made in such other businesses does not exceed $40,000,000.

Section 7.9 Liens. Borrower will not, and will not permit any of its
Subsidiaries to, create, incur, permit to exist or to be incurred any Lien of
any kind on any Property owned by the Borrower or any Subsidiary of Borrower;
provided, however, that this Section 7.9 shall not apply to or operate to
prevent:

(a)        Liens arising by operation of law in respect of Property of Borrower
or any of its Subsidiaries which are incurred in the ordinary course of business
which do not

 

37

60364071.5

 

 

in the aggregate materially detract from the value of such Property or
materially impair the use thereof in the operation of the business of Borrower
or any of its Subsidiaries;

(b)        Liens securing (i) Non-Recourse Indebtedness of any Subsidiary of
Borrower or (ii) the obligations of a Project Finance Subsidiary under a power
purchase agreement, provided that in the case of clause (i) above any such Lien
is limited to the Property being financed or refinanced by such Indebtedness and
the stock (or similar equity interest) of the Subsidiary which incurred such
Non-Recourse Indebtedness, and in the case of clause (ii) above any such Lien is
limited to the Property and the stock (or similar equity interest) of such
Project Finance Subsidiary;

(c)        Liens for taxes or assessments or other government charges or levies
on Borrower or any Subsidiary of Borrower or their respective Properties which
are being contested in good faith by appropriate proceedings and for which
reserves in conformity with GAAP have been provided on the books of Borrower;
provided that the aggregate amount of liabilities (including interest and
penalties, if any) of Borrower and its Subsidiaries secured by such Liens shall
not exceed $20,000,000 at any one time outstanding;

(d)        Liens arising out of judgments or awards against Borrower or any
Subsidiary of Borrower, or in connection with surety or appeal bonds in
connection with bonding such judgments or awards, the time for appeal from which
or petition for rehearing of which shall not have expired or with respect to
which such Borrower or such Subsidiary shall be prosecuting an appeal or
proceeding for review, and with respect to which it shall have obtained a stay
of execution pending such appeal or proceeding for review; provided that the
aggregate amount of liabilities (including interest and penalties, if any) of
Borrower and its Subsidiaries secured by such Liens shall not exceed $20,000,000
at any one time outstanding;

(e)        Survey exceptions or encumbrances, easements or reservations, or
rights of others for rights-of-way, utilities and other similar purposes, or
zoning or other restrictions as to the use of real properties which are
necessary for the conduct of the activities of Borrower and any Subsidiary of
Borrower or which customarily exist on properties of corporations engaged in
similar activities and similarly situated and which do not in any event
materially impair their use in the operation of the business of Borrower or any
Subsidiary of Borrower;

(f)

Liens existing on the date hereof and listed on Schedule 7.9 hereto;

(g)        Liens securing (i) Indebtedness evidencing the deferred purchase
price of newly acquired property or incurred to finance the acquisition of
personal property of Borrower or a Subsidiary of Borrower used in the ordinary
course of business of Borrower or a Subsidiary of Borrower, so long as such Lien
is limited to the property being financed or acquired and proceeds thereof, (ii)
Capitalized Lease Obligations, so long as such Lien is limited to the property
subject to the related Capital Lease and proceeds thereof, and (iii) the
performance of tenders, statutory obligations, bids, leases or other similar
obligations (other than for borrowed money) entered into in the ordinary

 

38

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course of business or to secure obligations on performance bonds; provided, that
such Liens shall only be permitted to the extent the aggregate amount of
Indebtedness and other obligations secured by all such Liens does not exceed
five percent (5%) of Consolidated Assets as reflected on the most recent balance
sheet delivered by Borrower pursuant to Section 7.6;

(h)        Liens in favor of carriers, warehousemen, mechanics, materialmen and
landlords granted in the ordinary course of business for amounts not overdue or
being diligently contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with GAAP shall have been set aside on its
books;

(i)         Liens incurred or deposits made in the ordinary course of business
in connection with worker’s compensation, unemployment insurance or other forms
of governmental insurance or benefits;

(j)         Liens relating to synthetic lease arrangements of Borrower or a
Subsidiary of Borrower, provided that (i) such Lien is limited to the Property
being leased, and (ii) to the extent the lessor or any other Person has recourse
to the Borrower, any Subsidiary or any of their Property (other than the
Property being so leased), through a Guarantee (including a residual guarantee)
or otherwise, such Lien shall be permitted if Borrower has included the recourse
portion of such obligations as Indebtedness for all purposes (including
financial covenant calculations) under the Credit Documents;

(k)        Liens on assets of the Marketing Subsidiaries granted in the ordinary
course of business securing the reimbursement obligations of Marketing
Subsidiaries with respect to letters of credit and any working capital facility
of the Marketing Subsidiaries so long as the holder of such reimbursement
obligation or provider of such working capital facility has no recourse against
Borrower or a Consolidated Subsidiary of Borrower other than such Marketing
Subsidiary or any of their other assets (whether directly, through a Guarantee
or otherwise) other than pursuant to a Guarantee permitted pursuant to Section
7.15(f);

(l)         Liens securing Indebtedness issued pursuant to (i) that certain
Restated and Amended Indenture of Mortgage and Deed of Trust dated as of
September 1, 1999 between BHP and The Chase Manhattan Bank, as trustee (and any
successor trustee thereunder), together with all amendments and supplemental
indentures thereto, and (ii) the CLF&P Indenture, together with all amendments
and supplemental indentures thereto; and

(m)       Any extension, renewal or replacement (or successive extensions,
renewals or replacements) in whole or in part of any Lien referred to in the
foregoing paragraphs (a) through (j), inclusive, provided, however, that the
principal amount of Indebtedness secured thereby shall not exceed the principal
amount of Indebtedness so secured at the time of such extension, renewal or
replacement, and that such extension, renewal or replacement shall be limited to
the Property which was subject to the Lien so extended, renewed or replaced.

 

39

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provided, that the foregoing paragraphs shall not be deemed under any
circumstance to permit a Lien to exist on any capital stock or other equity
interests of the Material Subsidiaries.

Section 7.10 Use of Proceeds; Regulation U. The proceeds of each Borrowing, and
the credit provided by Letters of Credit, will be used by Borrower solely (i) to
fund Borrower’s working capital needs, and (ii) for general corporate purposes
of Borrower. Borrower will not use any part of the proceeds of any of the
Borrowings or of the Letters of Credit directly or indirectly to purchase or
carry any margin stock (as defined in Section 5.10 hereof) or to extend credit
to others for the purpose of purchasing or carrying any such margin stock.

Section 7.11 Sales and Leasebacks. Borrower will not, nor will it permit any of
its Subsidiaries to, enter into any arrangement with any bank, insurance company
or other lender or investor providing for the leasing by Borrower or any
Subsidiary of Borrower of any Property theretofore owned by it and which has
been or is to be sold or transferred by such owner to such lender or investor if
the total amount of rent and other obligations of the Borrower and its
Subsidiaries under such lease, when combined with all rent and other obligations
of Borrower and its Subsidiaries under all such leases, would exceed $30,000,000
in the aggregate, provided that Borrower and its Subsidiaries may engage in
synthetic lease transactions so long as the Borrower’s or such Subsidiary’s, as
applicable, obligations under such synthetic leases are included as Indebtedness
for all purposes (including financial covenant calculations) under the Credit
Documents.

Section 7.12 Mergers, Consolidations and Sales of Assets.

(a)        Borrower will not, and will not permit any of its Material
Subsidiaries to, (i) consolidate with or be a party to merger with any other
Person or (ii) sell, lease or otherwise dispose of all or a “substantial part”
of the assets of Borrower and its Subsidiaries; provided, however, that (w) the
foregoing shall not prohibit any sale, lease, transfer or disposition to which
the Required Banks have consented, such consent not to by unreasonably withheld
if (A) such transaction does not result in a downgrade of either Borrower’s S&P
Rating or Moody’s Rating, (B) such transaction is for cash consideration (or
other consideration acceptable to the Required Banks) in an amount not less than
the fair market value of the applicable assets, and (C) such transaction, when
combined with all other such transactions, would not have a Material Adverse
Effect, taken as a whole, (x) any Subsidiary of Borrower may merge or
consolidate with or into or sell, lease or otherwise convey all or a substantial
part of its assets to Borrower or any Subsidiary of which Borrower holds
(directly or indirectly) at least the same percentage equity ownership; provided
that in any such merger or consolidation involving Borrower, Borrower shall be
the surviving or continuing corporation, (y) Borrower and its Subsidiaries may
sell inventory, reserves and electricity in the ordinary course of business, and
(z) Borrower may enter into a merger with, or acquisition of all of, another
Person so long as:

(i)

Borrower is the surviving entity,

 

 

40

60364071.5

 

 

 

(ii)         unless consented to by the Required Banks, no downgrade in the
Borrower’s S&P Rating or Moody’s Rating would occur as a result of the
consummation of such a transaction,

(iii)         if such transaction is an acquisition, the Board of Directors (or
similar governing body) of the Person being acquired has approved being so
acquired, and

(iv)        no Default or Event of Default would has occurred and is continuing
at the time of, or would occur as a result of, such transaction.

As used in this Section 7.12(a), a sale, lease, transfer or disposition of
assets during any fiscal year shall be deemed to be of a “substantial part” of
the consolidated assets of Borrower and its Subsidiaries if the net book value
of such assets, when added to the net book value of all other assets sold,
leased, transferred or disposed of by the Borrower and its Subsidiaries
(excluding the Marketing Subsidiaries) during such fiscal year (other than
inventory, reserves and electricity in the ordinary course of business) exceeds
ten percent (10%) of the total assets of Borrower and its Consolidated
Subsidiaries, determined on a consolidated basis as of the last day of the
immediately preceding fiscal year.

(b)        Except as permitted pursuant to Section 7.12(a) or Section 7.14
hereof, Borrower will not sell, transfer or otherwise dispose of, or permit any
of its Subsidiaries to issue, sell, transfer or otherwise dispose of, any shares
of stock of any class (including as “stock” for purposes of this Section, any
warrants, rights or options to purchase or otherwise acquire stock or other
Securities exchangeable for or convertible into stock) of any Subsidiary of
Borrower, except to Borrower or a Wholly-Owned Subsidiary of Borrower or except
for the purpose of qualifying directors; provided, however, nothing in this
Agreement shall be deemed to prohibit, for so long as no Event of Default has
occurred and is continuing at such time, the contemplated sale of the equity
interests in Black Hills Fiber Systems, Inc. owned by Borrower or any of its
Subsidiaries on the Effective Date on substantially the same terms and
conditions disclosed by Borrower to Administrative Agent prior to the Effective
Date.

Section 7.13 Use of Property and Facilities; Environmental and Health and Safety
Laws.

(a)        Borrower will, and will cause each of its Subsidiaries to, comply in
all material respects with the requirements of all Environmental and Health Laws
applicable to or pertaining to the Properties or business operations of Borrower
or any Subsidiary of Borrower. Without limiting the foregoing, Borrower will
not, and will not permit any Person to, except in accordance with applicable
law, dispose of any Hazardous Material into, onto or upon any real property
owned or operated by Borrower or any of its Subsidiaries.

(b)        Borrower will promptly provide the Banks with copies of any notice or
other instrument of the type described in Section 5.11(b) hereof, and in no
event later than five (5) Business Days after an officer of Borrower or a
Subsidiary of Borrower receives such notice or instrument.

 

41

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Section 7.14 Investments, Acquisitions, Loans, Advances and Guaranties. Borrower
will not, nor will it permit any Subsidiary of Borrower to, directly or
indirectly, make, retain or have outstanding any investments (whether through
purchase of stock or obligations or otherwise) in, or loans or advances to, any
other Person, or acquire all or any substantial part of the assets or business
of any other Person or division thereof, or be or become liable as endorser,
guarantor, surety or otherwise (such as liability as a general partner) for any
debt, obligation or undertaking of any other Person, or otherwise agree to
provide funds for payment of the obligations of another, or supply funds thereto
or invest therein or otherwise assure a creditor of another against loss, or
apply for or become liable to the issuer of a letter of credit which supports an
obligation of another, or subordinate any claim or demand it may have to the
claim or demand of any other Person (cumulatively, all of the foregoing
“Investments”); provided, however, that the foregoing provisions shall not apply
to nor operate to prevent:

(a)        investments in direct obligations of the United States of America or
of any agency or instrumentality thereof whose obligations constitute full faith
and credit obligations of the United States of America, provided that (i) any
such obligation matures within ten years from the date it is acquired by
Borrower or Subsidiary, (ii) on any day, the aggregate amount of all such
investments maturing beyond one year from such date shall not exceed
$100,000,000 and (iii) on any day, the aggregate amount of all such investments
does not exceed five percent (5%) of Consolidated Assets as reflected on the
most recent balance sheet delivered by Borrower pursuant to Section 7.6;

(b)        investments in (i) commercial paper rated P-1 by Moody’s Investors
Services, Inc. or A-1 by Standard & Poor’s Corporation maturing within one year
of its date of issuance, and (ii) debt and auction preferred securities rated
Aaa by Moody's Investors Services, Inc. or AAA by Standard & Poor’s Corporation
maturing within one year of their respective dates of purchase;

(c)        investments in certificates of deposit issued by any Bank or any
United States commercial bank having capital and surplus of not less than
$200,000,000 maturing within one year from the date of issuance thereof or in
banker’s acceptances endorsed by any Bank or other such commercial bank and
maturing within six months of the date of acceptance;

(d)        investments in repurchase obligations with a term of not more than
seven (7) days for underlying securities of the types described in subsection
(a) above entered into with any bank meeting the qualifications specified in
subsection (c) above, provided all such agreements require physical delivery of
the securities securing such repurchase agreement, except those delivered
through the Federal Reserve Book Entry System;

(e)        investments in money market funds that invest solely, and which are
restricted by their respective charters to invest solely, in investments of the
type described in the immediately preceding subsections (a), (b), (c) and (d)
above;

(f)         ownership of stock, obligations or securities received in settlement
of debts (created in the ordinary course of business) owing to Borrower or any
Subsidiary;

 

42

60364071.5

 

 

 

(g)        endorsements of negotiable instruments for collection in the ordinary
course of business;

(h)        loans and advances to employees in the ordinary course of business
for travel, relocation, and similar purposes;

(i)         Investments (i) existing on the Effective Date in Subsidiaries of
Borrower, (ii) existing on the Effective Date and identified in Schedule 7.14
hereof, or (iii) consisting of intercompany loans permitted pursuant to Section
7.15(e);

(j)         Investments constituting (i) accounts receivable arising, (ii) trade
debt granted, or (iii) deposits made in connection with the purchase price of
goods or services, in each case in the ordinary course of business;

(k)        Investments in Persons other than Marketing Subsidiaries engaged in
lines of business related to the lines of business described in Section 7.8 so
long as (i) both before and after giving effect to such Investment no Default of
Event of Default shall have occurred and be continuing, (ii) such Investments do
not permit any creditor of such Person recourse to Borrower or any other
Subsidiary of Borrower or any of their assets (other than the assets and/or the
stock or similar equity interest of such Person) and (iii) if such Investments
are in Persons engaged in the lines of business described in clause (xii) of
Section 7.8, such Investments and expenses in the aggregate do not exceed
$40,000,000 outstanding at any time;

(l)         Guaranties, other than Long-Term Guaranties, so long as such
Indebtedness is permitted pursuant to Section 7.15;

(m)

transactions permitted pursuant to Section 7.12(a);

(n)        Investments constituting Long-Term Guaranties other than Long-Term
Guarantees of Indebtedness of the Marketing Subsidiaries;

(o)        (i) Investments in Marketing Subsidiaries (other than Investments in
Marketing Subsidiaries consisting of Guaranties of Indebtedness of Marketing
Subsidiaries) existing on December 31, 2004 and listed on Schedule 7.14 and (ii)
Investments consisting of Guaranties of Indebtedness of Marketing Subsidiaries
in existence on December 31, 2004 and Investments in Marketing Subsidiaries made
after December 31, 2004 (including through Guaranties (including Long-Term
Guaranties)) provided, that the aggregate amount of Investments permitted by
this clause (ii) when combined with the amount of intercompany Indebtedness
owing by Marketing Subsidiaries permitted pursuant to Section 7.15(e)(iii) plus
the aggregate amount of L/C Obligations outstanding attributable to Marketing
Subsidiary Letters of Credit shall not in the aggregate exceed the Marketing
Subsidiary Sublimit (it being understood that any increase in the value of any
such Investment attributable to the undistributed net earnings of the Marketing
Subsidiaries shall not be deemed a violation of this Section 7.14(o)); and

 

43

60364071.5

 

 

 

(p)        Investments consisting of promissory notes issued in consideration
for the sale by the Borrower or a Subsidiary of a portion of the stock (or
similar equity interests) of a Subsidiary where (i) such note is secured by the
stock (or similar equity interest) sold, and (ii) one of the purposes of such
sale is to ensure that such Subsidiary qualifies as a "qualifying facility"
under the Public Utility Regulatory Policies Act of 1978, as amended

Any Investment which when made complies with the requirements of paragraphs (a)
through (e) may continue to be held notwithstanding that such Investment if made
thereafter would not comply with such requirements;

In determining the amount of investments, acquisitions, loans, advances and
guarantees permitted under this Section 7.14, investments and acquisitions shall
always be taken at the original cost thereof (regardless of any subsequent
appreciation or depreciation therein), loans and advances shall be taken at the
principal amount thereof then remaining unpaid, and guarantees shall be taken at
the amount of obligations guaranteed thereby.

Section 7.15 Restrictions on Indebtedness. Borrower will not, nor will it permit
any Subsidiary of Borrower to, issue, incur, assume, create, become liable for,
contingently or otherwise, or have outstanding any Indebtedness; provided,
however, that the foregoing provisions shall not restrict nor operate to prevent
the following Indebtedness, so long as the incurrence and maintenance of such
Indebtedness would not cause the Borrower to be in violation of Section 7.17
hereof if compliance with such covenant were measured on the date of the
incurrence of such Indebtedness:

(a)

the Obligations;

 

(b)

Non-Recourse Indebtedness of any Project Finance Subsidiary;

(c)        so long as the Borrower would be in compliance with Section 7.17
hereof (calculated as of the date of, and after giving affect to, the incurrence
of such Indebtedness), secured Indebtedness (excluding Indebtedness of the type
described in (e), (f), and (g) below but including the pledge of stock or
similar equity interest of any Project Finance Subsidiary or any Subsidiary
which is an entity whose sole purpose and extent of business activities is to
own the stock or similar equity interest of a Project Finance Subsidiary) (A)
set forth on Schedule 7.15(b) hereto, (B) (i) of BHP, (ii) evidencing the
deferred purchase price of newly acquired property or incurred to finance the
acquisition of personal property of the Borrower or a Subsidiary of the Borrower
used in the ordinary course of business of the Borrower or Subsidiary, (iii)
constituting Capitalized Lease Obligations or with respect to synthetic (or
similar type) lease arrangements, or (iv) incurred in connection with the
performance of tenders, statutory obligations, bids, leases or other similar
obligations (other than for borrowed money) entered into in the ordinary course
of business or to secure obligations on performance bonds; provided, that the
aggregate amount of Indebtedness permitted by this clause (B) at any time
outstanding shall not exceed 5% of Consolidated Assets as reflected on the most
recent balance sheet delivered by the Borrower pursuant to Section 7.6, provided
that Borrower shall promptly provide the Administrative Agent with a copy of any

 

44

60364071.5

 

 

documentation evidencing such Indebtedness in excess of $25,000,000 and any
modification to such Indebtedness, and (C) of CLF&P outstanding under the CLF&P
Indenture;

(d)        so long as the Borrower would be in compliance with Section 7.17
hereof (calculated as of the date of, and after giving affect to, the incurrence
of such Indebtedness), other Indebtedness (excluding Indebtedness of the type
described in (e), (f), and (g) below) which is unsecured and either junior in
right of payment to the Obligations or pari passu to the Obligations or is
equally and ratably secured with the Obligations, provided that Borrower shall
promptly provide the Administrative Agent with a copy of any documentation
evidencing such Indebtedness in excess of $25,000,000 and any modification to
such Indebtedness;

(e)        intercompany loans (i) from (x) Subsidiary to Borrower so long as
such loans are subordinated to the Obligations on terms reasonably satisfactory
to the Administrative Agent, and (y) Borrower to a Subsidiary of Borrower, (ii)
among Wholly-Owned Subsidiaries, and (iii) from a Subsidiary of Borrower to a
Marketing Subsidiary, so long as the aggregate amount of such loans from time to
time owing by the Marketing Subsidiaries does not exceed the difference between
(I) the Marketing Subsidiary Sublimit, less (II) the sum of (A) the aggregate
amount of Guaranties outstanding pursuant to Section 7.15(f), and (B) the
aggregate amount of other Investments then made in the Marketing Subsidiaries
pursuant to Section 7.14(o)(ii) (it being understood that to the extent such
limit is exceeded solely as a result of an increase in the value of any such
Investment attributable to the undistributed net earnings of the Marketing
Subsidiaries, it shall not be deemed a violation of this Section 7.15(e));

(f)         Indebtedness consisting of Guaranties of the Indebtedness of the
Marketing Subsidiaries (including Long-Term Guaranties), provided that such
Indebtedness shall only be permitted to the extent the aggregate amount of such
Indebtedness, when added to the sum of (i) the aggregate amount of all
intercompany loans made to the Marketing Subsidiaries pursuant to Section
7.15(e), plus (ii) the aggregate amount of all other Investments made in
Marketing Subsidiaries pursuant to Section 7.14(o)(ii), plus (iii) the aggregate
amount of L/C Obligations outstanding attributable to Marketing Subsidiary
Letters of Credit, does not exceed the Marketing Subsidiary Sublimit (it being
understood that to the extent such limit is exceeded solely as a result of an
increase in the value of any such Investment attributable to the undistributed
net earnings of the Marketing Subsidiaries, it shall not be deemed a violation
of this Section 7.15(f)) provided, further that Borrower shall promptly provide
the Administrative Agent with a copy of any such Guarantee and any modification
to such Guarantee;

(g)        Indebtedness of the Marketing Subsidiaries under Marketing Subsidiary
Excluded Credit Facilities in an aggregate amount not to exceed the Marketing
Subsidiary Indebtedness Limit;

(h)

Permitted Derivative Obligations; and

 

 

45

60364071.5

 

 

 

(i)         Indebtedness pursuant to Long-Term Guaranties (other than Long-Term
Guaranties of Indebtedness of Marketing Subsidiaries).

Indebtedness shall only be permitted under (e), (f), (h), and (i) above to the
extent such Indebtedness will have a priority of payment with the Obligations
which is no greater than pari passu.

 

Section 7.16 Consolidated Net Worth. Borrower will at the end of each fiscal
quarter maintain Consolidated Net Worth in an amount of not less than the sum of
(i) $625,000,000 plus (ii) fifty percent (50%) of the aggregate Consolidated Net
Income, if positive, for the period beginning January 1, 2005 and ending on the
last day of such fiscal quarter.

Section 7.17 Recourse Leverage Ratio. Borrower will not at the end of any fiscal
quarter permit the Recourse Leverage Ratio to exceed 0.65 to 1.00.

Section 7.18 Interest Expense Coverage Ratio. Borrower will maintain a Interest
Expense Coverage Ratio of not less than 2.50:1.00, as determined at the end of
each fiscal quarter.

Section 7.19 Dividends and Other Shareholder Distributions.

(a)        Borrower shall not (i) declare or pay any dividends or make a
distribution of any kind (including by redemption or purchase) on or relating to
its outstanding capital stock, or (ii) repay (directly, through sinking fund
payments or otherwise) any Indebtedness or other obligations owing to a
shareholder unless in either circumstance no Default or Event of Default exists
prior to or would result after giving effect to such action.

(b)        Except (i) to the extent such an encumbrance or restriction is
imposed by PUHCA, the rules and regulations promulgated thereunder or any order
of the SEC issued pursuant thereto, (ii) as set forth on Schedule 7.19, or (iii)
in connection with Non-Recourse Indebtedness of a Project Finance Subsidiary,
Borrower will not, and will not permit any of its Subsidiaries, directly or
indirectly to create or otherwise cause or suffer to exist or become effective
any consensual encumbrance or restriction of any kind on the ability of any such
Subsidiary to: (1) pay dividends or make any other distribution on any of such
Subsidiary’s capital stock owned by Borrower or any Subsidiary of Borrower; (2)
pay any Indebtedness owed to Borrower or any other Subsidiary; (3) make loans or
advances to Borrower or any other Subsidiary; or (4) transfer any of its
property or assets to Borrower or any other Subsidiary.

Section 7.20 No Negative Pledge. Except (i) as set forth on Schedule 7.19 or
(ii) in connection with Non-Recourse Indebtedness of a Project Finance
Subsidiary, the Borrower will not, and will not permit any of its Subsidiaries
(other than Project Finance Subsidiaries), directly or indirectly to enter into
or assume any agreement (other than customary non-assignment and no sub-letting
provisions in leases consistent with Borrower’s past practices and the Credit
Documents and, solely with respect to the asset so financed, Capitalized Leases,
to the extent

 

46

60364071.5

 

 

such Indebtedness is permitted herein) prohibiting the creation or assumption of
any Lien upon its properties or assets, whether now owned or hereafter acquired.

Section 7.21 Transactions with Affiliates. Except as is required by PUHCA or the
rules and regulations promulgated thereunder, Borrower will not, and will not
permit any of its Subsidiaries to, enter into or be a party to any material
transaction or arrangement with any Affiliate of such Person (other than
Borrower), including without limitation, the purchase from, sale to or exchange
of Property with, any merger or consolidation with or into, or the rendering of
any service by or for, any Affiliate, except in the ordinary course of and
pursuant to the reasonable requirements of Borrower’s or such Subsidiary’s
business and upon terms no less favorable to such Borrower or such Subsidiary
than could be obtained in a similar transaction involving a third-party.

Section 7.22 Compliance with Laws. Without limiting any of the other covenants
of Borrower in this Section 7, Borrower will, and will cause each of its
Subsidiaries to, conduct its business, and otherwise be, in compliance with all
applicable laws, regulations, ordinances and orders of any governmental or
judicial authorities; provided, however, that neither Borrower nor any
Subsidiary of Borrower shall be required to comply with any such law,
regulation, ordinance or order if the failure to comply therewith could not
reasonably be expected to have a Material Adverse Effect.

Section 7.23 Pari-Passu. Borrower will at all times cause the Obligations to
rank at least pari passu with all other senior unsecured Indebtedness of
Borrower.

Section 7.24 Certain Subsidiaries. Unless pursuant to Indebtedness which is
authorized pursuant to this Agreement, Borrower will not, and the Subsidiaries
of Borrower will not, permit any creditor of a Marketing Subsidiary or a Project
Finance Subsidiary to have recourse to any Borrower or any Subsidiary of
Borrower or any of their assets (other than (i) the stock or similar equity
interest of the applicable Subsidiary and (ii) with respect to a Permitted
Derivative Obligation) other than recourse under Guaranties permitted pursuant
to Sections 7.15(f) and (i).

Section 7.25 Ratings. Borrower will at all times this Agreement is in effect
maintain a S&P Rating and a Moody’s Rating (or if one or both of such ratings
are unavailable, rating(s) from such other recognized national rating agency or
agencies as may be acceptable to the Administrative Agent and the Required
Banks).

SECTION 8. EVENTS OF DEFAULT AND REMEDIES.

Section 8.1 Events of Default. Any one or more of the following shall constitute
an Event of Default:

(a)        (i) default in the payment when due of any fees, interest or of any
other Obligation not covered by clause (ii) below and such payment default
continues for three (3) days or (ii) default in the payment when due of the
principal amount of any Loan or of any Reimbursement Obligation;

 

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(b)        default by Borrower or any Subsidiary in the observance or
performance of any covenant set forth in Section 7.1, Section 7.6(c), Section
7.9 through 7.12, Sections 7.14 through 7.21, 7.23, 7.24 and 7.25 hereof;

(c)        default by Borrower or any Subsidiary in the observance or
performance of any provision hereof or of any other Credit Document not
mentioned in (a) or (b) above, which is not remedied within thirty (30) days
after notice thereof shall have been given to the Borrower by the Administrative
Agent;

(d)        (i) failure to pay when due Indebtedness in an aggregate principal
amount of $20,000,000 or more of Borrower or any Material Subsidiary, or (ii)
default shall occur under one or more indentures, agreements or other
instruments under which any Indebtedness of Borrower or any of its Material
Subsidiary in an aggregate principal amount of $20,000,000 or more may be issued
or created and such default shall continue for a period of time sufficient to
permit the holder or beneficiary of such Indebtedness or a trustee therefor to
cause the acceleration of the maturity of any such Indebtedness or any mandatory
unscheduled prepayment, purchase or funding thereof;

(e)        any representation or warranty made herein or in any other Credit
Document by Borrower or any Subsidiary of Borrower, or in any statement or
certificate furnished pursuant hereto or pursuant to any other Credit Document
by Borrower or any Subsidiary of Borrower, or in connection with any Credit
Document, proves untrue in any material respect as of the date of the issuance
or making, or deemed making or issuance, thereof;

(f)         Borrower or any Material Subsidiary shall (i) fail to pay its debts
generally as they become due or admit in writing its inability to pay its debts
generally as they become due, (ii) make an assignment for the benefit of
creditors, (iii) apply for, seek, consent to, or acquiesce in, the appointment
of a receiver, custodian, trustee, examiner, liquidator or similar official for
it or any substantial part of its Property, (iv) institute any proceeding
seeking to have entered against it an order for relief under the United States
Bankruptcy Code, as amended, to adjudicate it insolvent, or seeking dissolution,
winding up, liquidation, reorganization, arrangement, adjustment or composition
of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors or fail to file an answer or other pleading
denying the material allegations of any such proceeding filed against it or any
analogous action is taken under any other applicable law relating to bankruptcy
or insolvency, (v) take any corporate action (such as the passage by its board
of directors of a resolution) in furtherance of any matter described in parts
(i)-(iv) above, or (vi) fail to contest in good faith any appointment or
proceeding described in Section 8.1(g) hereof;

(g)        a custodian, receiver, trustee, examiner, liquidator or similar
official shall be appointed for Borrower or any Material Subsidiary, or any
substantial part of any of their Property, or a proceeding described in Section
8.1(f)(iv) shall be instituted against Borrower or any Material Subsidiary, and
such appointment continues undischarged or such proceeding continues undismissed
or unstayed for a period of sixty (60) days;

 

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(h)        Borrower or any Material Subsidiary shall fail within thirty (30)
days to pay, bond or otherwise discharge any judgment or order for the payment
of money in excess of $20,000,000, which is not stayed on appeal or otherwise
being appropriately contested in good faith in a manner that stays execution
thereon;

(i)         Borrower or any other member of the Controlled Group shall fail to
pay when due an amount or amounts which it shall have become liable, to pay to
the PBGC or to a Plan under Title IV of ERISA; or notice of intent to terminate
a Plan or Plans having aggregate Unfunded Vested Liabilities in excess of
$20,000,000 (collectively, a “Material Plan”) shall be filed under Title IV of
ERISA by Borrower or any Subsidiary of Borrower or any other member of the
Controlled Group, any plan administrator or any combination of the foregoing; or
the PBGC shall institute proceedings under Title IV of ERISA to terminate or to
cause a trustee to be appointed to administer any Material Plan or a proceeding
shall be instituted by a fiduciary of any Material Plan against Borrower or any
other member of the Controlled Group to enforce Section 515 or 4219(c)(5) of
ERISA and such proceeding shall not have been dismissed within thirty (30) days
thereafter; or a condition shall exist by reason of which the PBGC would be
entitled to obtain a decree adjudicating that any Material Plan must be
terminated;

(j)         Borrower or any Subsidiary of Borrower or any Person acting on
behalf of Borrower, a Subsidiary or any governmental authority challenges the
validity of any Credit Document or Borrower’s or one of its Subsidiary’s
obligations thereunder or any Credit Document ceases to be in full force and
effect or is modified other than in accordance with the terms thereof and
hereof;

(k)

a Change of Control Event shall have occurred; or

(l)         Borrower shall for any reason cease to be wholly liable for the full
amount of the Obligations.

Section 8.2 Non-Bankruptcy Defaults. When any Event of Default other than those
described in subsections (f) or (g) of Section 8.1 hereof has occurred and is
continuing, the Administrative Agent shall, if so directed by the Required
Banks, by written notice to Borrower: (a) terminate the remaining Commitments
and all other obligations of the Banks hereunder on the date stated in such
notice (which may be the date thereof); (b) declare the principal of and the
accrued interest on all outstanding Notes to be forthwith due and payable and
thereupon all outstanding Notes, including both principal and interest thereon,
and all other Obligations, shall be and become immediately due and payable
together with all other amounts payable under the Credit Documents without
further demand, presentment, protest or notice of any kind; and (c) demand that
Borrower immediately pay to the Administrative Agent, subject to Section 8.4,
the full amount then available for drawing under each or any Letter of Credit,
and Borrower agrees to immediately make such payment and acknowledge and agrees
that the Banks would not have an adequate remedy at law for failure by Borrower
to honor any such demand and that the Administrative Agent, for the benefit of
the Banks, shall have the right to require Borrower to specifically perform such
undertaking whether or not any drawings or other demands for payment have been
made under any Letter of Credit. The Administrative Agent, after giving notice
to Borrower pursuant to Section 8.1(c) or this Section 8.2, shall also promptly
send a copy

 

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of such notice to the other Banks, but the failure to do so shall not impair or
annul the effect of such notice.

Section 8.3 Bankruptcy Defaults. When any Event of Default described in
subsections (f) or (g) of Section 8.1 hereof has occurred and is continuing,
then all outstanding Notes, including both interest and principal thereon, and
all other Obligations shall immediately become due and payable together with all
other amounts payable under the Credit Documents without presentment, demand,
protest or notice of any kind, the obligation of the Banks to extend further
credit pursuant to any of the terms hereof shall immediately terminate and
Borrower shall immediately pay to the Administrative Agent, subject to Section
8.4, the full amount then available for drawing, under all outstanding Letters
of Credit, Borrower acknowledging that the Banks would not have an adequate
remedy at law for failure by Borrower to honor any such demand and that the
Banks, and the Administrative Agent on their behalf, shall have the right to
require Borrower to specifically perform such undertaking whether or not any
draws or other demands for payment have been made under any of the Letters of
Credit.

Section 8.4 Collateral for Outstanding Letters of Credit.

(a)        If the payment or prepayment of the amount available for drawing
under any or all outstanding Letters of Credit is required under Section 2.2(b),
Section 2.8(b) or under Section 8.2 or 8.3 above, Borrower shall forthwith pay
the amount required to be so prepaid, to be held by the Administrative Agent as
provided in subsection (b) below.

(b)        All amounts prepaid pursuant to subsection (a) above shall be held by
the Administrative Agent in a separate collateral account (such account, and the
credit balances, properties and any investments from time to time held therein,
and any substitutions for such account, any certificate of deposit or other
instrument evidencing any of the foregoing and all proceeds of and earnings on
any of the foregoing being collectively called the “Account”) as security for,
and for application by the Administrative Agent (to the extent available) to,
the reimbursement of any payment under any Letter of Credit then or thereafter
made by the Issuing Agents, and to the payment of the unpaid balance of any
Loans and all other Obligations. The Account shall be held in the name of and
subject to the exclusive dominion and control of the Administrative Agent for
the benefit of the Administrative Agent, the Issuing Agents and the Banks, and
Borrower hereby grants to the Administrative Agent, for the benefit of the
Administrative Agent, the Issuing Agents and the Banks, a security interest in
all of Borrower’s rights, title and interest in and to the Account and all
property (including investment property) contained therein or credited thereto.
So long as no Default or Event of Default has occurred, if and when requested by
Borrower, the Administrative Agent shall invest funds held in the Account from
time to time in direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America with a remaining maturity of one year or less, provided, that the
Administrative Agent is irrevocably authorized to sell investments held in the
Account when and as required to make payments out of the Account for application
to amounts due and owing from Borrower to the Administrative Agent, the Issuing
Agents or Banks, and provided, further, that if a Default or Event of Default
has then occurred and is continuing, Borrower shall have no access to or right
to control the Account. If (i)

 

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Borrower shall have made payment of all such obligations referred to in
subsection (a) above, (ii) all relevant preference or other disgorgement periods
relating to the receipt of such payments have passed, and (iii) no Letters of
Credit, Commitments, Loans or other Obligations remain outstanding hereunder,
then the Administrative Agent shall repay to Borrower any remaining amounts held
in the Account.

Section 8.5 Expenses. Borrower agrees to pay to the Administrative Agent, the
Issuing Agents and each Bank, and any other holder of any Note outstanding
hereunder, all costs and expenses incurred or paid by the Administrative Agent,
the Issuing Agents or such Bank or any such holder, including attorneys’ fees
(including allocable fees of in-house counsel) and court costs, in connection
with (i) any amendment or waiver to the Credit Documents requested by Borrower,
(ii) any Default or Event of Default by Borrower hereunder, or (iii) the
enforcement of any of the Credit Documents.

SECTION 9. CHANGE IN CIRCUMSTANCES.

Section 9.1 Change of Law. Notwithstanding any other provisions of this
Agreement or any Note, if at any time after the date hereof any change in
applicable law or regulation or in the interpretation thereof makes it unlawful
for any Bank to make or continue to maintain Eurodollar Loans or to perform its
obligations as contemplated hereby, such Bank shall promptly give notice thereof
to Borrower and such Bank’s obligations to make or maintain Eurodollar Loans
under this Agreement shall terminate until it is no longer unlawful for such
Bank to make or maintain Eurodollar Loans. Borrower shall prepay on demand the
outstanding principal amount of any such affected Eurodollar Loans, together
with all interest accrued thereon at a rate per annum equal to the interest rate
applicable to such Loan; provided, however, subject to all of the terms and
conditions of this Agreement, Borrower may then elect to borrow the principal
amount of the affected Eurodollar Loans from such Bank by means of Base Rate
Loans from such Bank, which Base Rate Loans shall not be made ratably by the
Banks but only from such affected Bank.

Section 9.2 Unavailability of Deposits or Inability to Ascertain, or Inadequacy
of, LIBOR. If on or prior to the first day of any Interest Period for any
Borrowing of Eurodollar Loans:

(a)        the Administrative Agent determines that deposits in U.S. Dollars (in
the applicable amounts) are not being offered to major banks in the eurodollar
interbank market for such Interest Period, or that by reason of circumstances
affecting the interbank eurodollar market adequate and reasonable means do not
exist for ascertaining the applicable LIBOR, or

(b)        Banks having more than 33% percent (33)% or more of the aggregate
amount of the Commitments reasonably determine and so advise the Administrative
Agent that LIBOR as reasonably determined by the Administrative Agent will not
adequately and fairly reflect the cost to such Banks or Bank of funding their or
its Eurodollar Loans or Loan for such Interest Period,

 

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then the Administrative Agent shall forthwith give notice thereof to Borrower
and the Banks, whereupon until the Administrative Agent notifies Borrower that
the circumstances giving rise to such suspension no longer exist, the
obligations of the Banks or of the relevant Bank to make Eurodollar Loans shall
be suspended.

Section 9.3 Increased Cost and Reduced Return.

(a)        If, on or after the date hereof, the adoption of any applicable law,
rule or regulation, or any change therein, or any change in the interpretation
or administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by any Bank (or its Lending Office) with any request or directive
(whether or not having the force of law but, if not having the force of law,
compliance with which is customary in the relevant jurisdiction) of any such
authority, central bank or comparable agency:

(i)         shall subject any Bank (or its Lending Office) to any tax, duty or
other charge with respect to its Eurodollar Loans, its Notes, its Letter(s) of
Credit, or its participation in any thereof, any Reimbursement Obligations owed
to it or its obligation to make Eurodollar Loans, issue a Letter of Credit, or
to participate therein, or shall change the basis of taxation of payments to any
Bank (or its Lending Office) of the principal of or interest on its Eurodollar
Loans, Letter(s) of Credit, or participations therein or any other amounts due
under this Agreement in respect of its Eurodollar Loans, Letter(s) of Credit, or
participations therein, any Reimbursement Obligations owed to it, or its
obligation to make Eurodollar Loans, issue a Letter of Credit, or acquire
participations therein (except for changes in the rate of tax on the overall net
income or profits of such Bank or its Lending Office imposed by the jurisdiction
in which such Bank or its lending office is incorporated in which such Bank’s
principal executive office or Lending Office is located); or

(ii)         shall impose, modify or deem applicable any reserve, special
deposit or similar requirement (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve System, but
excluding with respect to any Eurodollar Loans any such requirement included in
an applicable Eurodollar Reserve Percentage) against assets of, deposits with or
for the account of, or credit extended by, any Bank (or its Lending Office) or
shall impose on any Bank (or its Lending Office) or on the interbank market any
other condition affecting its Eurodollar Loans, its Notes, its Letter(s) of
Credit, or its participation in any thereof, any Reimbursement Obligation owed
to it, or its obligation to make Eurodollar Loans, to issue a Letter of Credit,
or to participate therein;

and the result of any of the foregoing is to increase the cost to such Bank (or
its Lending Office) of making or maintaining any Eurodollar Loan, issuing or
maintaining a Letter of Credit, or participating therein, or to reduce the
amount of any sum received or receivable by such Bank (or its Lending Office)
under this Agreement or under its Notes with respect thereto, by an amount
deemed by such Bank to be material, then, within fifteen (15) days after demand
by such Bank

 

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(with a copy to the Administrative Agent), Borrower shall be obligated to pay to
such Bank such additional amount or amounts as will compensate such Bank for
such increased cost or reduction. In the event any law, rule, regulation or
interpretation described above is revoked, declared invalid or inapplicable or
is otherwise rescinded, and as a result thereof a Bank is determined to be
entitled to a refund from the applicable authority for any amount or amounts
which were paid or reimbursed by Borrower to such Bank hereunder, such Bank
shall refund such amount or amounts to Borrower without interest.

(b)        If, after the date hereof, any Bank or the Administrative Agent shall
have determined that the adoption of any applicable law, rule or regulation
regarding capital adequacy, or any change therein (including, without
limitation, any revision in the Final Risk-Based Capital Guidelines of the Board
of Governors of the Federal Reserve System (12 CFR Part 208, Appendix A; 12 CFR
Part 225, Appendix A) or of the Office of the Comptroller of the Currency (12
CFR Part 3, Appendix A), or in any other applicable capital rules heretofore
adopted and issued by any governmental authority), or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank (or its Lending Office) with any request or
directive regarding capital adequacy (whether or not having the force of law
but, if not having the force of law, compliance with which is customary in the
applicable jurisdiction) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on such
Bank’s capital, or on the capital of any corporation controlling such Bank, as a
consequence of its obligations hereunder to a level below that which such Bank
could have achieved but for such adoption, change or compliance (taking into
consideration such Bank’s policies with respect to capital adequacy) by an
amount deemed by such Bank to be material, then from time to time, within
fifteen (15) days after demand by such Bank (with a copy to the Administrative
Agent), Borrower shall pay to such Bank such additional amount or amounts as
will compensate such Bank for such reduction.

(c)        Each Bank that determines to seek compensation under this Section 9.3
shall notify Borrower and the Administrative Agent of the circumstances that
entitle the Bank to such compensation pursuant to this Section 9.3 and will
designate a different Lending Office if such designation will avoid the need
for, or reduce the amount of, such compensation and will not, in the sole
judgment of such Bank, be otherwise disadvantageous to such Bank. A certificate
of any Bank claiming compensation under this Section 9.3 and setting forth the
additional amount or amounts to be paid to it hereunder submitted to Borrower
and the Administrative Agent by such Bank in good faith shall be prima facie
evidence of the amount of such compensation. In determining such amount, such
Bank may use any reasonable averaging and attribution methods.

Section 9.4 Lending Offices. Each Bank may, at its option, elect to make its
Loans hereunder at the branch, office or affiliate specified on the appropriate
signature page hereof or in the assignment agreement which any assignee bank
executes pursuant to Section 11.12 hereof (each a “Lending Office”) for each
type of Loan available hereunder or at such other of its branches, offices or
affiliates as it may from time to time elect and designate in a written notice

 

53

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to Borrower and the Administrative Agent, so long as such election does not
increase costs or other amounts payable by Borrower to such Bank hereunder.

Section 9.5 Discretion of Bank as to Manner of Funding. Notwithstanding any
other provision of this Agreement, each Bank shall be entitled to fund and
maintain its funding of all or any part of its Loans in any manner it sees fit,
it being understood, however, that for the purposes of this Agreement all
determinations hereunder shall be made as if each Bank had actually funded and
maintained each Eurodollar Loan through the purchase of deposits in the
eurodollar interbank market having a maturity corresponding to such Loan’s
Interest Period and bearing an interest rate equal to LIBOR for such Interest
Period.

SECTION 10. THE AGENT.

Section 10.1 Appointment and Authorization of Administrative Agent. Each Bank
hereby appoints ABN AMRO Bank N.V. as the Administrative Agent under the Credit
Documents and hereby authorizes the Administrative Agent to take such action as
Administrative Agent on its behalf and to exercise such powers under the Credit
Documents as are delegated to the Administrative Agent by the terms thereof,
together with such powers as are reasonably incidental thereto. The
Administrative Agent shall have no duties or responsibilities except those
expressly set forth in this Agreement and the Credit Documents. The duties of
the Administrative Agent shall be mechanical and administrative in nature; the
Administrative Agent shall not have by reason of this Agreement or any other
Credit Document a fiduciary relationship in respect of any Bank, the holder of
any Note or any other Person; and nothing in this Agreement or any other Credit
Document, expressed or implied, is intended to or shall be so construed as to
impose upon the Administrative Agent any obligations in respect of this
Agreement or any other Credit Document except as expressly set forth herein or
therein.

Section 10.2 Administrative Agent and its Affiliates. The Administrative Agent
shall have the same rights and powers under this Agreement and the other Credit
Documents as any other Bank and may exercise or refrain from exercising the same
as though it were not the Administrative Agent, and the Administrative Agent and
its affiliates may accept deposits from, lend money to, and generally engage in
any kind of business with Borrower or any Affiliate of Borrower as if it were
not the Administrative Agent under the Credit Documents.

Section 10.3 Action by Administrative Agent. If the Administrative Agent
receives from Borrower a written notice of an Event of Default pursuant to
Section 7.6(c)(i) hereof, the Administrative Agent shall promptly give each of
the Banks written notice thereof. The obligations of the Administrative Agent
under the Credit Documents are only those expressly set forth therein. Without
limiting the generality of the foregoing, the Administrative Agent shall not be
required to take any action hereunder with respect to any Default or Event of
Default, except as expressly provided in Sections 8.2 and 8.3. In no event,
however, shall the Administrative Agent be required to take any action in
violation of applicable law or of any provision of any Credit Document, and the
Administrative Agent shall in all cases be fully justified in failing or
refusing to act hereunder or under any other Credit Document unless it shall be
first indemnified to its reasonable satisfaction by the Banks against any and
all costs, expense, and liability which may be incurred by it by reason of
taking or continuing to take any such action. The Administrative Agent shall be
entitled to assume that no Default or Event of Default

 

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exists unless notified to the contrary in writing by a Bank or Borrower. In all
cases in which this Agreement and the other Credit Documents do not require the
Administrative Agent to take certain actions, the Administrative Agent shall be
fully justified in using its discretion in failing to take or in taking any
action hereunder and thereunder.

Section 10.4 Consultation with Experts. The Administrative Agent may consult
with legal counsel, independent public accountants and other experts selected by
it and shall not be liable for any action taken or omitted to be taken by it in
good faith in accordance with the advice of such counsel, accountants or
experts.

Section 10.5 Liability of Administrative Agent; Credit Decision. Neither the
Administrative Agent nor any of its directors, officers, agents, or employees
shall be liable for any action taken or not taken by it in connection with the
Credit Documents (i) with the consent or at the request of the Required Banks or
(ii) in the absence of its own gross negligence or willful misconduct. Neither
the Administrative Agent nor any of its directors, officers, agents or employees
shall be responsible for or have any duty to ascertain, inquire into or verify
(i) any statement, warranty or representation made in connection with this
Agreement, any other Credit Document or any Credit Event; (ii) the performance
or observance of any of the covenants or agreements of Borrower or any other
party contained herein or in any other Credit Document; (iii) the satisfaction
of any condition specified in Section 6 hereof; or (iv) the validity,
effectiveness, genuineness, enforceability, perfection, value, worth or
collectibility hereof or of any other Credit Document or of any other documents
or writing furnished in connection with any Credit Document; and the
Administrative Agent makes no representation of any kind or character with
respect to any such matter mentioned in this sentence. The Administrative Agent
may execute any of its duties under any of the Credit Documents by or through
employees, agents, and attorneys-in-fact and shall not be answerable to the
Banks, Borrower, or any other Person for the default or misconduct of any such
agents or attorneys-in-fact selected with reasonable care. The Administrative
Agent shall not incur any liability by acting in reliance upon any notice,
consent, certificate, other document or statement (whether written or oral)
believed by it to be genuine or to be sent by the proper party or parties. In
particular and without limiting any of the foregoing, the Administrative Agent
shall have no responsibility for confirming the accuracy of any Compliance
Certificate or other document or instrument received by it under the Credit
Documents. The Administrative Agent may treat the payee of any Note as the
holder thereof until written notice of transfer shall have been filed with the
Administrative Agent signed by such payee in form satisfactory to the
Administrative Agent. Each Bank acknowledges that it has independently and
without reliance on the Administrative Agent or any other Bank, and based upon
such information, investigations and inquiries as it deems appropriate, made its
own credit analysis and decision to extend credit to Borrower in the manner set
forth in the Credit Documents. It shall be the responsibility of each Bank to
keep itself informed as to the creditworthiness of Borrower and any other
relevant Person, and the Administrative Agent shall have no liability to any
Bank with respect thereto.

Section 10.6 Indemnity. The Banks shall ratably, in accordance with their
respective Percentages, indemnify and hold the Administrative Agent, and its
directors, officers, employees, agents and representatives harmless from and
against any liabilities, losses, costs or expenses suffered or incurred by it
under any Credit Document or in connection with the transactions contemplated
thereby, regardless of when asserted or arising, except to the extent the

 

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Administrative Agent is promptly reimbursed for the same by Borrower and except
to the extent that any event giving rise to a claim was caused by the gross
negligence or willful misconduct of the party seeking to be indemnified. The
obligations of the Banks under this Section 10.6 shall survive termination of
this Agreement.

Section 10.7 Resignation of Administrative Agent and Successor Administrative
Agent. The Administrative Agent may resign at any time by giving written notice
thereof to the Banks and Borrower. Upon any such resignation of the
Administrative Agent, the Required Banks shall have the right to appoint a
successor Administrative Agent with the consent of Borrower. If no successor
Administrative Agent shall have been so appointed by the Required Banks, and
shall have accepted such appointment, within thirty (30) days after the retiring
Administrative Agent’s giving of notice of resignation, then the retiring
Administrative Agent may, on behalf of the Banks, appoint a successor
Administrative Agent, which shall be any Bank hereunder or any commercial bank
organized under the laws of the United States of America or of any State thereof
and having a combined capital and surplus of at least $200,000,000. Upon the
acceptance of its appointment as the Administrative Agent hereunder, such
successor Administrative Agent shall thereupon succeed to and become vested with
all the rights and duties of the retiring or removed Administrative Agent under
the Credit Documents, and the retiring Administrative Agent shall be discharged
from its duties and obligations thereunder. After any retiring Administrative
Agent’s resignation hereunder as Administrative Agent, the provisions of this
Section 10 and all protective provisions of the other Credit Documents shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Administrative Agent.

SECTION 11. MISCELLANEOUS.

Section 11.1 Withholding Taxes.

(a)        Payments Free of Withholding. Subject to Section 11.1 (b) hereof,
each payment by Borrower under this Agreement or the other Credit Documents
shall be made without withholding for or on account of any present or future
taxes (other than overall net income taxes on the recipient). If any such
withholding is so required, Borrower shall make the withholding, pay the amount
withheld to the appropriate governmental authority before penalties attach
thereto or interest accrues thereon and forthwith pay such additional amount as
may be necessary to ensure that the net amount actually received by each Bank
and the Administrative Agent free and clear of such taxes (including such taxes
on such additional amount) is equal to the amount which that Bank or the
Administrative Agent (as the case may be) would have received had such
withholding not been made. If the Administrative Agent or any Bank pays any
amount in respect of any such taxes, penalties or interest Borrower shall
reimburse the Administrative Agent or that Bank for that payment on demand in
the currency in which such payment was made. If Borrower pay any such taxes,
penalties or interest, they shall deliver official tax receipts evidencing that
payment or certified copies thereof to the Bank or Administrative Agent on whose
account such withholding was made (with a copy to the Administrative Agent if
not the recipient of the original) on or before the thirtieth day after payment.
If any Bank or the Administrative Agent determines it has received or been
granted a credit against or relief or remission for, or repayment of, any taxes
paid or payable by it because of any taxes, penalties or interest paid by
Borrower

 

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and evidenced by such a tax receipt, such Bank or Administrative Agent shall, to
the extent it can do so without prejudice to the retention of the amount of such
credit, relief, remission or repayment, pay to Borrower such amount as such Bank
or Administrative Agent determines is attributable to such deduction or
withholding and which will leave such Bank or Administrative Agent (after such
payment) in no better or worse position than it would have been in if Borrower
had not been required to make such deduction or withholding. Nothing in this
Agreement shall interfere with the right of each Bank and the Administrative
Agent to arrange its tax affairs in whatever manner it thinks fit nor obligate
any Bank or the Administrative Agent to disclose any information relating to its
tax affairs or any computations in connection with such taxes.

(b)        U.S. Withholding Tax Exemptions. Each Bank that is not a United
States person (as such term is defined in Section 7701(a)(30) of the Code) shall
submit to Borrower and the Administrative Agent on or before the date of the
initial Borrowing hereunder two duly completed and signed copies of either Form
W8BEN (relating to such Bank and entitling it to a complete exemption from
withholding under the Code on all amounts to be received by such Bank, including
fees, pursuant to the Credit Documents and the Loans) or Form W8ECI (relating to
all amounts to be received by such Bank, including fees, pursuant to the Credit
Documents and the Loans) of the United States Internal Revenue Service.
Thereafter and from time to time, each Bank shall submit to Borrower and the
Administrative Agent such additional duly completed and signed copies of one or
the other of such Forms (or such successor forms as shall be adopted from time
to time by the relevant United States taxing authorities) as may be (i)
requested by Borrower in a written notice, directly or through the
Administrative Agent, to such Bank and (ii) required under then current United
States law or regulations to avoid or reduce United States withholding taxes on
payments in respect of all amounts to be received by such Bank, including fees,
pursuant to the Credit Documents or the Loans.

(c)        Inability of Bank to Submit Forms. If any Bank determines, as a
result of any change in applicable law, regulation or treaty, or in any official
application or interpretation thereof, that it is unable to submit to Borrower
or Administrative Agent any form or certificate that such Bank is obligated to
submit pursuant to subsection (b) of this Section 11.1 or that such Bank is
required to withdraw or cancel any such form or certificate previously submitted
or any such form or certificate otherwise becomes ineffective or inaccurate,
such Bank shall promptly notify Borrower and Administrative Agent of such fact
and the Bank shall to that extent not be obligated to provide any such form or
certificate and will be entitled to withdraw or cancel any affected form or
certificate, as applicable.

Section 11.2 No Waiver of Rights. No delay or failure on the part of the
Administrative Agent or any Bank or on the part of the holder or holders of any
Note in the exercise of any power or right under any Credit Document shall
operate as a waiver thereof, nor as an acquiescence in any default, nor shall
any single or partial exercise thereof preclude any other or further exercise of
any other power or right, and the rights and remedies hereunder of the
Administrative Agent, the Banks and the holder or holders of any Notes are
cumulative to, and not exclusive of, any rights or remedies which any of them
would otherwise have.

 

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Section 11.3 Non-Business Day. If any payment of principal or interest on any
Loan or of any other Obligation shall fall due on a day which is not a Business
Day, interest or fees (as applicable) at the rate, if any, such Loan or other
Obligation bears for the period prior to maturity shall continue to accrue on
such Obligation from the stated due date thereof to and including the next
succeeding Business Day, on which the same shall be payable.

Section 11.4 Documentary Taxes. Borrower agrees that it will pay any
documentary, stamp or similar taxes payable in respect to any Credit Document,
including interest and penalties, in the event any such taxes are assessed,
irrespective of when such assessment is made and whether or not any credit is
then in use or available hereunder.

Section 11.5 Survival of Representations. All representations and warranties
made herein or in certificates given pursuant hereto shall survive the execution
and delivery of this Agreement and the other Credit Documents, and shall
continue in full force and effect with respect to the date as of which they were
made as long as any credit is in use or available hereunder.

Section 11.6 Survival of Indemnities. All indemnities and all other provisions
relative to reimbursement to the Banks of amounts sufficient to protect the
yield of the Banks with respect to the Loans, including, but not limited to,
Section 2.11, Section 9.3 and Section 11.13 hereof, shall survive the
termination of this Agreement and the other Credit Documents and the payment of
the Loans and all other Obligations.

Section 11.7 Set-Off.

(a)        In addition to any rights now or hereafter granted under applicable
law and not by way of limitation of any such rights, upon the occurrence of any
Event of Default, each Bank and each subsequent holder of any Note is hereby
authorized by Borrower at any time or from time to time, without notice to
Borrower or to any other Person, any such notice being hereby expressly waived,
to set off and to appropriate and to apply any and all deposits (general or
special, including, but not limited to, Indebtedness evidenced by certificates
of deposit, whether matured or unmatured, or otherwise fully matured, and in
whatever currency denominated) and any other Indebtedness at any time held or
owing by that Bank or that subsequent holder to or for the credit or the account
of Borrower, whether or not matured, against and on account of the obligations
and liabilities of Borrower to that Bank or that subsequent holder under the
Credit Documents, including, but not limited to, all claims of any nature or
description arising out of or connected with the Credit Documents, irrespective
of whether or not (a) that Bank or that subsequent holder shall have made any
demand hereunder or (b) the principal of or the interest on the Loans or Notes
and other amounts due hereunder shall have become due and payable pursuant to
Section 8 and although said obligations and liabilities, or any of them, may be
contingent or unmatured.

(b)        Each Bank agrees with each other Bank a party hereto that if such
Bank shall receive and retain any payment, whether by set-off or application of
deposit balances or otherwise, on any of the Loans or Reimbursement Obligations
in excess of its ratable share of payments on all such obligations then
outstanding to the Banks, then such

 

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Bank shall purchase for cash at face value, but without recourse, ratably from
each of the other Banks such amount of the Loans or Reimbursement Obligations,
or participations therein, held by each such other Banks (or interest therein)
as shall be necessary to cause such Bank to share such excess payment ratably
with all the other Banks; provided, however, that if any such purchase is made
by any Bank, and if such excess payment or part thereof is thereafter recovered
from such purchasing Bank, the related purchases from the other Banks shall be
rescinded ratably and the purchase price restored as to the portion of such
excess payment so recovered, but without interest. For purposes of this Section
11.7(b), amounts owed to or recovered by, an Issuing Agent in connection with
Reimbursement Obligations in which Banks have been required to fund their
participation shall be treated as amounts owed to or recovered by such Issuing
Agent as a Bank hereunder.

Section 11.8 Notices. Except as otherwise specified herein, all notices under
the Credit Documents shall be in writing (including facsimile or other
electronic communication) and shall be given to a party hereunder at its address
or facsimile number set forth below or such other address or facsimile number as
such party may hereafter specify by notice to the Administrative Agent and
Borrower, given by courier, by United States certified or registered mail, or by
other telecommunication device capable of creating a written record of such
notice and its receipt. Notices under the Credit Documents to the Banks shall be
addressed to their respective addresses, facsimile or telephone numbers set
forth on the signature pages hereof or in the assignment agreement which any
assignee bank executes pursuant to Section 11.12 hereof, and to Borrower and to
the Administrative Agent to:

If to Borrower:

 

Black Hills Corporation

625 9th Street

Rapid City, South Dakota 57709

Attention: Garner M. Anderson

Facsimile: 605.721.2597

Telephone: 605.721.2311

 

with copies to:

 

Black Hills Corporation

625 9th Street

Rapid City, South Dakota 57709

Attention: Steven J. Helmers

Facsimile: 605.721.2550

Telephone: 605.721.2303

 

If to the Administrative Agent:

Notices shall be sent to the applicable address set forth on Part B of Schedule
4 hereto.

 

 

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With copies of all such notices to:

 

ABN AMRO Bank N.V.

4400 Post Oak Parkway

Suite 1500

Houston, TX 77027

Attention: Frank TJ van Deur

Facsimile: 832-681-7141

Telephone 832-681-7100

 

Each such notice, request or other communication shall be effective (i) if given
by facsimile, when such facsimile is transmitted to the facsimile number
specified in this Section 11.8 or on the signature pages hereof and a
confirmation of receipt of such facsimile has been received by the sender, (ii)
if given by courier, when delivered, (iii) if given by mail, three business days
after such communication is deposited in the mail, registered with return
receipt requested, addressed as aforesaid or (iv) if given by any other means,
when delivered at the addresses specified in this Section 11.8; provided that
any notice given pursuant to Section 2 hereof shall be effective only upon
receipt.

Section 11.9 Counterparts. This Agreement may be executed in any number of
counterpart signature pages, and by the different parties on different
counterparts, each of which when executed shall be deemed an original but all
such counterparts taken together shall constitute one and the same instrument.
Delivery of an executed counterpart hereof via facsimile or electronic means
shall for all purposes be as effective as delivery of an original counterpart.

Section 11.10 Successors and Assigns.

(a)        Successors and Assigns Generally. 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 any of its rights or obligations under any Credit Document unless
such assignation occurs in connection with a merger or acquisition by Borrower
which is otherwise permitted under the terms of this Agreement and the
appropriate Credit Documents, if applicable, and Borrower obtains the prior
written consent of all of the Banks, which consent shall be in form and
substance satisfactory to the Administrative Agent. No Bank may assign or
otherwise transfer any of its rights or obligations hereunder except (i) to an
Eligible Assignee in accordance with the provisions of paragraph (b) of this
Section, (ii) by way of participation in accordance with the provisions of
paragraph (d) of this Section or (iii) by way of pledge or assignment of a
security interest subject to the restrictions of paragraph (f) of this Section
(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 paragraph (d) of this Section and, to the extent expressly
contemplated hereby, the

 

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Related Parties of each of the Administrative Agent and the Banks) any legal or
equitable right, remedy or claim under or by reason of this Agreement.

(b)        Assignments by Banks. Any Bank may at any time assign to one or more
Eligible Assignees all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitment and the Loans at the
time owing to it); provided that

(i)         except in the case of an assignment of the entire remaining amount
of the assigning Bank’s Commitment and the Loans at the time owing to it or in
the case of an assignment to a Bank or an Affiliate of a Bank or an Approved
Fund with respect to a Bank, 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 Bank subject to each such assignment (determined as of the date
the Assignment and Assumption with respect to such assignment is delivered to
the Administrative Agent or, if “Trade Date” is specified in the Assignment and
Assumption, as of the Trade Date) shall not be less than $5,000,000, unless each
of the Administrative Agent 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);

(ii)         each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Bank’s rights and obligations under this
Agreement with respect to the Loan, L/C Obligations or the Commitment assigned;

(iii)        any assignment of a Commitment must be approved by the
Administrative Agent and the Issuing Agent unless the Person that is the
proposed assignee is itself a Bank with a Commitment (whether or not the
proposed assignee would otherwise qualify as an Eligible Assignee); and

(iv)        the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Assumption, together with a processing
and recordation fee of $3,500, and the Eligible Assignee, if it shall not be a
Bank, shall deliver to the Administrative Agent an Administrative Questionnaire.

Subject to acceptance and recording thereof by the Administrative Agent pursuant
to paragraph (c) of this Section, from and after the effective date specified in
each Assignment and Assumption, the Eligible 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 Bank under this
Agreement, and the assigning Bank thereunder shall, to the extent of the
interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Bank’s rights and obligations under
this Agreement, such Bank shall cease to be a party hereto) but shall continue
to be entitled to the benefits of Sections 9.3 and 9.4 with respect to facts and
circumstances occurring prior to the effective date of such assignment. Any

 

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assignment or transfer by a Bank of rights or obligations under this Agreement
that does not comply with this paragraph shall be treated for purposes of this
Agreement as a sale by such Bank of a participation in such rights and
obligations in accordance with paragraph (d) of this Section. The Borrower shall
execute and deliver to the assignee a Note upon written request from such
assignee. The assignor shall promptly return to the Borrower its Note if after
giving effect to such assignment such assignor has no Commitment and no
Obligations are owing to such assignor.

(c)        Register. The Administrative Agent, acting solely for this purpose as
an agent of the Borrower, shall maintain at one of its offices in Chicago,
Illinois a copy of each Assignment and Assumption delivered to it and a register
for the recordation of the names and addresses of the Banks, and the Commitments
of, and principal amounts of the Loans owing to, each Bank pursuant to the terms
hereof from time to time (the “Register”). The entries in the Register shall be
conclusive, and the Borrower, the Administrative Agent and the Banks may treat
each Person whose name is recorded in the Register pursuant to the terms hereof
as a Bank hereunder for all purposes of this Agreement, notwithstanding notice
to the contrary. The Register shall be available for inspection by the Borrower
and any Bank, at any reasonable time and from time to time upon reasonable prior
notice.

(d)        Participations. Any Bank may at any time, without the consent of, or
notice to, the Borrower or the Administrative Agent, 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
Bank’s rights and/or obligations under this Agreement (including all or a
portion of its Commitment and/or the Loans owing to it); provided that (i) such
Bank’s obligations under this Agreement shall remain unchanged, (ii) such Bank
shall remain solely responsible to the other parties hereto for the performance
of such obligations and (iii) the Borrower, the Administrative Agent and the
other Banks shall continue to deal solely and directly with such Bank in
connection with such Bank’s rights and obligations under this Agreement.

(e)        Any agreement or instrument pursuant to which a Bank sells such a
participation shall provide that such Bank 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 Bank will not, without the consent of the Participant, agree
to any amendment, modification or waiver of the type described in Section
11.11(i) that affects such Participant. Subject to paragraph (e) of this
Section, the Borrower agrees that each Participant shall be entitled to the
benefits of Sections 9.3 and 9.4 to the same extent as if it were a Bank and had
acquired its interest by assignment pursuant to paragraph (b) of this Section.
To the extent permitted by law, each Participant also shall be entitled to the
benefits of Section 11.7(a) as though it were a Bank, provided such Participant
agrees to be subject to Section 11.7(b) as though it were a Bank.

(f)         Limitations upon Participant Rights. A Participant shall not be
entitled to receive any greater payment under Sections 9.3 and 9.4 than the
applicable Bank would have been entitled to receive with respect to the
participation sold to such Participant,

 

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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 Bank if
it were a Bank shall not be entitled to the benefits of Section 9.4 unless the
Borrower is notified of the participation sold to such Participant and such
Participant agrees, for the benefit of the Borrower, to comply with Section 9.4
as though it were a Bank.

(g)        Certain Pledges. Any Bank may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of such Bank, including without limitation any pledge or assignment
to secure obligations to a Federal Reserve Bank; provided that no such pledge or
assignment shall release such Bank from any of its obligations hereunder or
substitute any such pledgee or assignee for such Bank as a party hereto.

(h)        Certain Funding Arrangements. Notwithstanding anything to the
contrary contained herein, any Bank (a “Granting Bank”) may grant to a special
purpose funding vehicle which is an Affiliate of such Bank (a “SPC”), identified
as such in writing from time to time by the Granting Bank to the Administrative
Agent and the Borrower, the option to provide to the Borrower all or any part of
any Loan that such Granting Bank would otherwise be obligated to make to the
Borrower pursuant to this Agreement; provided that (i) nothing herein shall
constitute a commitment by any SPC to make any Loan, and (ii) if an SPC elects
not to exercise such option or otherwise fails to provide all or any part of
such Loan, the Granting Bank shall be obligated to make such Loan pursuant to
the terms hereof. The making of a Loan by an SPC hereunder shall utilize the
Commitment of the Granting Bank to the same extent, and as if, such Loan were
made by such Granting Bank. Each party hereto hereby agrees that no SPC shall be
liable for any indemnity or similar payment obligation under this Agreement (all
liability for which shall remain with the Granting Bank). 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 indebtedness 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 proceedings under the laws of the United
States or any State thereof. In addition, notwithstanding anything to the
contrary contained in this Section 11.10, any SPC may (i) with notice to, but
without the prior written consent of, the Borrower and the Administrative Agent
and without paying any processing fee therefor, assign all or a portion of its
interests in any Loans to the Granting Bank or to any financial institutions
(consented to by the Borrower and Administrative Agent) providing liquidity
and/or credit support to or for the account of such SPC to support the funding
or maintenance of Loans and (ii) disclose on a confidential basis any non-public
information relating to its Loans to any rating agency, commercial paper dealer
or provider of any surety, guarantee or credit or liquidity enhancement to such
SPC. This section may not be amended without the written consent of the SPC.

(i)         Farm Credit System. Notwithstanding anything in this Section to the
contrary, any bank that is a member of the Farm Credit System that: (x) has
purchased a participation in the minimum amount of $10,000,000 on or after the
Effective Date, (y) is, by written notice to the Borrower and the Administrative
Agent ("Voting Participant

 

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Notification"), designated by the selling Bank as being entitled to be accorded
the rights of a Voting Participant hereunder (any bank that is a member of the
Farm Credit System so designated being called a "Voting Participant") and (z)
receives the prior written consent of the Borrower and the Administrative Agent
to become a Voting Participant, shall be entitled to vote (and the voting rights
of the selling Bank shall be correspondingly reduced), on a dollar for dollar
basis, as if such participant were a Bank, on any matter requiring or allowing a
Bank to provide or withhold its consent, or to otherwise vote on any proposed
action. To be effective, each Voting Participant Notification shall, with
respect to any Voting Participant: (i) state the full name, as well as all
contact information required of an Assignee as set forth in Exhibit D hereto and
(ii) state the dollar amount of the participation purchased. The Borrower and
the Administrative Agent shall be entitled to conclusively rely on information
contained in notices delivered pursuant to this paragraph.

Section 11.11 Amendments. Any provision of the Credit Documents may be amended
or waived if, but only if, such amendment or waiver is in writing and is signed
by (a) Borrower, (b) the Required Banks, and (c) if the rights or duties of the
Administrative Agent are affected thereby, the Administrative Agent; provided
that:

(i)         no amendment or waiver pursuant to this Section. 11.11 shall (A)
increase, decrease or extend any Commitment of any Bank without the consent of
such Bank or (B) reduce the amount of or postpone any fixed date for payment of
any principal of or interest on any Loan or Reimbursement Obligation or of any
fee or other Obligation payable hereunder without the consent of each Bank; and

(ii)         no amendment or waiver pursuant to this Section 11.11 shall, unless
signed by each Bank, change this Section 11.11, or the definition of Required
Banks, or affect the number of Banks required to take any action under the
Credit Documents.

Anything in this Agreement to the contrary notwithstanding, if at any time when
the conditions precedent set forth in Section 6.2 hereof to any Loan hereunder
are satisfied, any Bank shall fail to fulfill its obligations to make such Loan
or such Bank shall fail to fund its Participating Interest pursuant to Section
2.2(d) (any such Bank, a “Defaulting Bank”) then, for so long as such failure
shall continue, the Defaulting Bank shall (unless Borrower, the Administrative
Agent and the Required Banks (determined as if the Defaulting Bank were not a
Bank hereunder) shall otherwise consent in writing) be deemed for all purposes
related to amendments, modifications, waivers or consents under this Agreement
(other than amendments or waivers referred to in clause (i) and (ii) above) to
have no Loans or Commitments and shall not be treated as a Bank hereunder when
performing the computation of the Required Banks. To the extent the
Administrative Agent receives any payments or other amounts for the account of a
Defaulting Bank such Defaulting Bank shall be deemed to have requested that the
Administrative Agent use such payment or other amount first, to fund its
purchase of its Participating Interest pursuant to Section 2.2(d) and secondly,
to fulfill its obligations to make such Loan.

 

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Section 11.12 Headings. Section headings used in this Agreement are for
reference only and shall not affect the construction of this Agreement.

Section 11.13 Legal Fees, Other Costs and Indemnification. Borrower agrees to
pay all reasonable costs and expenses of the Arrangers in connection with the
preparation and negotiation of the Credit Documents (including past and future
reasonable out-of-pocket expenses incurred by the Arrangers in connection with
the syndication of the transaction), including without limitation, the
reasonable fees and disbursements of counsel to the Arrangers, in connection
with the preparation and execution of the Credit Documents, and any amendment,
waiver or consent related hereto, whether or not the transactions contemplated
herein are consummated. Borrower further agrees to indemnify each Bank, the
Administrative Agent and the Issuing Agents, and their respective directors,
agents, officers and employees, against all losses, claims, damages, penalties,
judgments, liabilities and expenses (including, without limitation, all expenses
of litigation or preparation therefor, whether or not the indemnified Person is
a party thereto) which any of them may incur or reasonably pay arising out of or
relating to any Credit Document (including any relating to a misrepresentation
by Borrower under any Credit Document) or any of the transactions contemplated
thereby or the direct or indirect application or proposed application of the
proceeds of any Loan or Letter of Credit, other than those which arise from the
gross negligence or willful misconduct of the party claiming indemnification.
Borrower, upon demand by any of the Administrative Agent, an Issuing Agent or a
Bank at any time, shall reimburse the Administrative Agent, such Issuing Agent
or Bank for any reasonable legal or other expenses (including allocable fees and
expenses of in-house counsel) incurred in connection with investigating or
defending against any of the foregoing except if the same is directly due to the
gross negligence or willful misconduct of the party to be indemnified, provided
that with respect to legal costs and expenses incurred in connection with the
enforcement of the Banks rights hereunder or any work-out or similar situation,
Borrower shall only be obligated to pay the legal fees of the Administrative
Agent and not of any other Bank.

Section 11.14 Entire Agreement. The Credit Documents constitute the entire
understanding of the parties thereto with respect to the subject matter thereof
and any prior or contemporaneous agreements, whether written or oral, with
respect thereto are superseded thereby.

Section 11.15 Construction. The parties hereto acknowledge and agree that
neither this Agreement nor the other Credit Documents shall be construed more
favorably in favor of one than the other based upon which party drafted the
same, it being acknowledged that all parties hereto contributed substantially to
the negotiation of this Agreement and the other Credit Documents.

Section 11.16 Governing Law. This Agreement and the other Credit Documents, and
the rights and duties of the parties hereto, shall be construed and determined
in accordance with the internal laws of the State of New York.

Section 11.17 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL. BORROWER HEREBY
SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF

 

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NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN THE CITY OF NEW YORK FOR
PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT,
THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
BORROWER IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY
SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. BORROWER
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO ANY CREDIT DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED THEREBY.

Section 11.18 Replacement of Bank. Each Bank agrees that, upon the occurrence of
any event set forth in Sections 9.1, 9.3 and 11.1, such Bank will use reasonable
efforts to book and maintain its Loans through a different Lending Office or to
transfer its Loans to an Affiliate with the objective of avoiding or minimizing
the consequences of such event; provided that such booking or transfer is not
otherwise disadvantageous to such Bank as determined by such Bank in its sole
and absolute discretion. If any Bank has demanded to be paid additional amounts
pursuant to Sections 9.1, 9.3 and 11.1, and the payment of such additional
amounts are, and are likely to continue to be, more onerous in the reasonable
judgment of Borrower than with respect to the other Banks, then Borrower shall
have the right at any time when no Default or Event of Default shall have
occurred and be continuing to seek one or more financial institutions which are
not Affiliates of Borrower (each, a “Replacement Bank”) to purchase with the
written consent of the Administrative Agent (which consent shall not be (x)
required if such proposed Replacement Bank is already a Bank, or an Affiliate of
a Bank, or (y) unreasonably delayed or withheld) the outstanding Loans and
Commitments of such Bank (the “Affected Bank”), and if Borrower locate a
Replacement Bank, the Affected Bank shall, upon

i.

prior written notice to the Administrative Agent,

ii.

(i) payment to the Affected Bank of the purchase price agreed between it and the
Replacement Bank (or, failing such agreement, a purchase price in the amount of
the outstanding principal amount of the Affected Bank’s Loans and accrued
interest thereon to the date of payment) by the Replacement Bank plus (ii)
payment by Borrower of all Obligations (other than principal and interest with
respect to Loans) then due to the Affected Bank or accrued for its account
hereunder or under any other Loan Document,

iii.

satisfaction of the provisions set forth in Section 11.10, and

iv.

payment by Borrower to the Affected Bank and the Administrative Agent of all
reasonable out-of-pocket expenses in connection with such assignment and
assumption (including the recordation fee described in Section 11.10),

 

 

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assign and delegate all its rights and obligations under this Agreement and any
other Credit Document to which it is a party (including its outstanding Loans)
to the Replacement Bank (such assignment to be made without recourse,
representation or warranty), and the Replacement Bank shall assume such rights
and obligations, whereupon the Replacement Bank shall in accordance with Section
11.10 become a party to each Credit Document to which the Affected Bank is a
party and shall have the rights and obligations of a Bank thereunder and the
Affected Bank shall be released from its obligations hereunder and each other
Credit Document to the extent of such assignment and delegation.

Section 11.19 Confidentiality. The Administrative Agent and the Banks shall hold
all non-public information provided to them by Borrower pursuant to or in
connection with this Agreement in accordance with their customary procedures for
handling confidential information of this nature, but may make disclosure to any
of their examiners, regulators, Affiliates, outside auditors, counsel and other
professional advisors in connection with this Agreement or any other Credit
Document or as reasonably required by any potential bona fide transferee,
participant or assignee, or in connection with the exercise of remedies under a
Credit Document, or to any direct or indirect contractual counterparty in swap
agreements or such contractual counterparty’s professional advisor (so long as
such contractual counterparty or professional advisor to such contractual
counterparty agrees to be bound by the provisions of this Section 11.19), or to
any nationally recognized rating agency that requires access to information
about a Bank’s investment portfolio in connection with ratings issued with
respect to such Bank, or as requested by any governmental agency or
representative thereof or pursuant to legal process; provided, however, that
unless specifically prohibited by applicable law or court order, the
Administrative Agent and each Bank shall use reasonable efforts to promptly
notify Borrower of any request by any governmental agency or representative
thereof (other than any such request in connection with an examination of the
financial condition of the Administrative Agent or such Bank by such
governmental agency) for disclosure of any such non-public information and,
where practicable, prior to disclosure of such information. Prior to any such
disclosure pursuant to this Section 11.19, the Administrative Agent and each
Bank shall require any such bona fide transferee, participant and assignee
receiving a disclosure of non-public information to agree, for the benefit of
Borrower, in writing to be bound by this Section 11.19; and to require such
Person to require any other Person to whom such Person discloses such non-public
information to be similarly bound by this Section 11.19.

Notwithstanding anything herein to the contrary, “confidential information”
shall not include, and the Administrative Agent and each Bank may disclose to
any and all persons, without limitation of any kind, any information with
respect to the U.S. federal income tax treatment and U.S. federal income tax
structure of the transactions contemplated hereby and all materials of any kind
(including opinions or other tax analyses) that are provided to the
Administrative Agent or such Bank relating to such tax treatment and tax
structure.

Section 11.20 Rights and Liabilities of Co-Syndication Agents, Co-Documentation
Agents and Arrangers. Neither any Co-Syndication Agent, any Co-Documentation
Agent nor any Arranger have any special rights, powers, obligations,
liabilities, responsibilities or duties under this Agreement as a result of
acting in the capacity of Co-Syndication Agent, Co-Documentation Agent or
Arranger, as applicable, other than those applicable to them in their capacity
as Banks hereunder (if any). Without limiting the foregoing, neither any Co-

 

67

60364071.5

 

 

Syndication Agent, any Co-Documentation Agent nor any Arranger shall have or be
deemed to have a fiduciary relationship with any Bank. Each Bank hereby makes
the same acknowledgments and undertakings with respect to each Co-Syndication
Agent, each Co-Documentation Agent and each Arranger as it makes with respect to
the Administrative Agent and any directors, officers, agents and employees of
the Administrative Agent in Section 10.5.

Section 11.21 Absence of Termination-Related Events of Defaults in Prior
Facilities. Administrative Agent and the Banks which were party to: (i) that
certain 364-Day Credit Agreement among the Borrower, the financial institutions
party thereto, as lenders, and ABN AMRO Bank N.V., as administrative agent for
such lenders, dated as of May 13, 2004, as amended from time to time and/or (ii)
that certain Multi-Year Credit Agreement among the Borrower, the financial
institutions party thereto, as lenders, and ABN AMRO Bank N.V., as
administrative agent for such lenders, dated as of August 21, 2003, as amended
from time to time each hereby waive any “Events of Default” which may have
arisen thereunder as a result of the failure Borrower to give the
“Administrative Agent” thereunder at least five (5) “Business Days” prior
written notice under subsection 2.12(a) of both such agreements of its desire to
terminate the “Commitments” thereunder on the Effective Date (as all such terms
are defined thereunder).

Section 11.22 Severability of Provisions. Any provision in this Agreement or any
other Credit Document that is held to be inoperative, unenforceable, or invalid
in any jurisdiction shall, as to that jurisdiction, be inoperative,
unenforceable, or invalid without affecting the remaining provisions in that
jurisdiction or the operation, enforceability, or validity of that provision in
any other jurisdiction, and to this end the provisions of this Agreement and the
other Credit Documents are declared to be severable.

 

- Remainder of Page Intentionally Left Blank; Signature Page Follows –

 

 

68

60364071.5

 

 

 

In Witness Whereof, the parties hereto have caused this Agreement to be duly
executed and delivered in New York, New York by their duly authorized officers
as of the day and year first above written.

 

BLACK HILLS CORPORATION, a South Dakota corporation

 

By:

_____________________________

Name:

_____________________________

Title:

_____________________________

 

 

Credit Agreement

 

 

 

 

 

Credit Agreement

 

 

 

EXHIBIT A

NOTE

 

May __, 2005

FOR VALUE RECEIVED, the undersigned, Black Hills Corporation, a South Dakota
corporation (“Borrower”), promises to pay to the order of [_________________]
(the “Bank”) on the Termination Date of the hereinafter defined Credit
Agreement, at the principal office of ABN AMRO Bank N.V., in New York, New York,
in accordance with Section 4.1 of the Credit Agreement (as hereafter defined),
the aggregate unpaid principal amount of all Loans made by the Bank to Borrower
pursuant to the Credit Agreement, together with interest on the principal amount
of each Loan from time to time outstanding hereunder at the rates, and payable
in the manner and on the dates, specified in the Credit Agreement.

The Bank shall record on its books or records or on a schedule attached to this
Note, which is a part hereof, each Loan made by it pursuant to the Credit
Agreement, together with all payments of principal and interest and the
principal balances from time to time outstanding hereon, whether the Loan is a
Base Rate Loan or a Eurodollar Loan, and the interest rate and Interest Period
applicable thereto, provided that prior to the transfer of this Note all such
amounts shall be recorded on a schedule attached to this Note. The record
thereof, whether shown on such books or records or on a schedule to this Note,
shall be shall be prima facie evidence of the same; provided, however, that the
failure of the Bank to record any of the foregoing or any error in any such
record shall not limit or otherwise affect the obligation of Borrower to repay
all Loans made to it pursuant to the Credit Agreement together with accrued
interest thereon.

This Note is one of the Notes referred to in the Credit Agreement dated as of
May [5], 2005, among Borrower, ABN AMRO Bank N.V., as Administrative Agent, U.S.
Bank, National Association as Co-Syndication Agent, Union Bank of California,
N.A., as Co-Syndication Agent, Bank of America, N.A., as Co-Documentation Agent,
Bank of Montreal dba Harris Nesbitt, as Co-Documentation Agent and the financial
institutions party thereto (as the same may be amended, restated, supplemented
or otherwise modified from time to time, the “Credit Agreement”), and this Note
and the holder hereof are entitled to all the benefits provided for thereby or
referred to therein, to which Credit Agreement reference is hereby made for a
statement thereof. All defined terms used in this Note, except terms otherwise
defined herein, shall have the same meaning as in the Credit Agreement. This
Note shall be governed by and construed in accordance with the internal laws of
the State of New York.

Prepayments may be made hereon and this Note may be declared due prior to the
expressed maturity hereof, all in the events, on the terms and in the manner as
provided for in the Credit Agreement.

- Remainder of Page Intentionally Left Blank; Signature Page Follows -

 

Credit Agreement

 

 

 

The Borrower hereby waives demand, presentment, protest or notice of any kind
hereunder.

 

BLACK HILLS CORPORATION, a South Dakota corporation

 

By:

_____________________________

Name:

_____________________________

Title:

_____________________________

 

 

Credit Agreement

 

 

 

EXHIBIT B

COMPLIANCE CERTIFICATE

 

This Compliance Certificate is furnished to ABN AMRO Bank N.V., as
Administrative Agent pursuant to the Credit Agreement dated as of May 5, 2005,
among Black Hills Corporation, a South Dakota corporation (“Borrower”), ABN AMRO
Bank N.V., as Administrative Agent, U.S. Bank, National Association, as
Co-Syndication Agent, Union Bank of California, N.A., as Co-Syndication Agent,
Bank of America, N.A., as Co-Documentation Agent, Bank of Montreal dba Harris
Nesbitt, as Co-Documentation Agent, and the financial institutions party thereto
(as the same may be amended, restated, supplemented or otherwise modified from
time to time, the “Credit Agreement”). Unless otherwise defined herein, the
terms used in this Compliance Certificate have the meanings ascribed thereto in
the Credit Agreement.

THE UNDERSIGNED HEREBY CERTIFIES THAT:

1.

I am the duly elected or appointed ___________________of Borrower;

 

2.          I have reviewed the terms of the Credit Agreement and I have made,
or have caused to be made under my supervision, a detailed review of the
transactions and conditions of Borrower and its Subsidiaries during the
accounting period covered by the attached financial statements;

 

3.          The examinations described in paragraph 2 did not disclose, and I
have no knowledge of, the existence of any condition or event which constitutes
a Default or an Event of Default during or at the end of the accounting period
covered by the attached financial statements or as of the date of this
Certificate, except as set forth below; and

 

4.          Schedule 1 attached hereto sets forth financial data and
computations evidencing compliance with certain covenants of the Credit
Agreement, all of which data and computations are true, complete and correct.
All computations are made in accordance with the terms of the Credit Agreement.

 

Described below are the exceptions, if any, to paragraph 3 by listing, in
detail, the nature of the condition or event, the period during which it has
existed and the action which Borrower has taken, is taking, or proposes to take
with respect to each such condition or event:

 

 

The foregoing certifications, together with the computations set forth in
Schedule 1 hereto and the financial statements delivered with this Certificate
in support hereof, are made and delivered this ___________day of __________,
200_.

 

 

Credit Agreement

 

 

 

SCHEDULE 1 TO COMPLIANCE CERTIFICATE

Compliance Calculations for Credit Agreement

CALCULATION AS OF ________ __,200_

 

A.          Liens (Sec. 7.9(c), (d), and (g))

 

 

1.           Liens securing taxes or assessments or other government charges or
levies equal to or less than $20,000,000 (Section 7.9(c))

(Answer should be yes)

2.           Liens securing judgments or awards or surety or appeal bonds issued
in connection therewith equal to or less than $20,000,000 (Section 7.9(d))

(Answer should be yes)

3.           Is the aggregate amount of Indebtedness and other obligations
consisting of (i) the deferred purchase price of newly acquired property or
incurred to finance the acquisition of personal property of Borrower used in the
ordinary course of business of such Borrower, (ii) Capitalized Lease
Obligations, and (iii) the performance of tenders, statutory obligations, bids,
leases or other similar obligations (other than for borrowed money) entered into
in the ordinary course of business or to secure obligations on performance bonds
which is secured by Liens equal to or less than 5% of Consolidated Assets as
reflected on the most recent balance sheet delivered by Borrower (Section
7.9(g)).

(Answer should be yes)

B.           Sale and Leasebacks (Section 7.11)

 

 

1.            Aggregate obligations under all Sale and Leasebacks arrangements
(other than synthetic lease transactions excluded by Section 7.11)

$

(Line B1 not to exceed $30,000,000)

C.           Sale of Assets (Section 7.12)

 

 

1.            Net book value of assets (other than inventory, reserves and
electricity in the ordinary course of business) sold during this fiscal year

$

(Line C1 not to exceed 10% of total consolidated assets)

 

 

Credit Agreement

 

 

 

 

D.          Permitted Investments (Section 7.14)

 

 

1.            Aggregate amount of Investments in Marketing Subsidiaries made
after December 31, 2004 (Section 7.14(o)(ii))

$

 

2.            Investments consisting of Guaranties of Indebtedness of Marketing
Subsidiaries existing on the Effective Date

$

 

3.            Intercompany loans permitted pursuant to Section 7.15(e)(iii)
owing by Marketing Subsidiaries (Line E3)

$

Line E3

4.            Outstanding L/C Obligations attributable to Marketing Subsidiary
Letters of Credit

$

 

5.            Sum of Lines D1, D2, D3 and D4

$

 

6.            Is Line D5 equal to or less than the Marketing Subsidiary
Sublimit?

(Answer should be yes)

7.            Aggregate amount of Investments in Persons engaged in the lines of
business described in clause (xii) of Section 7.8 (Section 7.14(k))

$

(Line D7 not to exceed $40,000,000)

E.           Permitted Indebtedness (Section 7.15)

 

 

1.            Secured Indebtedness except as set forth on Schedule 7.15(b): (i)
of BHP (ii) evidencing the deferred purchase price of newly acquired property or
incurred to finance the acquisition of personal property of Borrower or a
Subsidiary used in the ordinary course of business of the Borrower of a
Subsidiary, (iii) constituting Capitalized Lease Obligations or with respect to
synthetic (or similar type) lease transactions, or (iv) incurred in connection
with the performance of tenders, statutory obligations, bids, leases or other
similar obligations (other than for borrowed money) entered into in the ordinary
course of business or to secure obligations on performance bonds (Section
7.15(c))

$

(Line E1 not to exceed 5% of Consolidated Assets)

2.            Intercompany loans owing by Borrower (Section 7.15(e)(i)(x))

$

(Must be subordinated to Obligations)

 

 

Credit Agreement

 

 

 

 

3.            Intercompany Indebtedness owing by Marketing Subsidiaries to
Subsidiaries (Section 7.15(e)(iii))

$

(Line E3 not to exceed the difference between (i) the Marketing Subsidiary
Sublimit less (ii) the sum of Lines E4, D1 and D4)

4.            Indebtedness consisting of Guarantees (including Long-Term
Guaranties) of Marketing Subsidiary Indebtedness (Section 7.15(f))

$

(Line E4 not to exceed the difference between (i) the Marketing Subsidiary
Sublimit less (ii) the sum of Lines E3 and D1)

5.            Indebtedness of Marketing Subsidiaries under Marketing Subsidiary
Excluded Credit Facilities (Section 7.15(g))

$

(Line E5 not to exceed Marketing Subsidiary Indebtedness Limit)

F.           Consolidated Net Worth (Section 7.16)

 

 

1.            Consolidated Net Worth

$

 

2.            50% of aggregate Consolidated Net Income, if positive, from and
including January 1, 2005

$

 

3. Does Line F1 exceed sum of (i) $625,000,000 plus (ii) line F2

 

(Answer should be yes)

 

G.          Recourse Leverage Ratio (Section 7.17)

 

 

1.            consolidated Indebtedness

$

 

2.            Non-Recourse Indebtedness

$

 

3.            Recourse Indebtedness (Line G1 minus Line G2)

$

 

4.            Indebtedness of Marketing Subsidiaries under Marketing Subsidiary
Excluded Credit Facilities (Line E5)

$

(Not to exceed Marketing Subsidiary Indebtedness Limit)

5.            Consolidated Net Worth

$

 

6.            Capital (Line G3 minus Line G4 plus Line G5)

$

 

7.            Recourse Leverage Ratio

:1.00

(ratio of (A) difference between (x) Line G3 minus (y) Line G4 to (B) Line G6
not to exceed 0.65 to 1.00)

 

 

Credit Agreement

 

 

 

 

H.          Interest Expense Coverage Ratio (Section 7.18)

 

 

1.            Consolidated Net Income for past four fiscal quarters

$

 

2.            Income taxes for past four fiscal quarters (to the extent
subtracted in calculating H1)

$

 

3.            Consolidated Interest Expense for past four fiscal quarters (to
the extent subtracted in calculating H1)

$

Insert amount from Line H13

4. Amortization expense for intangible assets for past four fiscal quarters (to
the extent subtracted in calculating H1)

$

 

5. Depreciation and depletion expense for past four fiscal quarters (to the
extent subtracted in calculating H1)

$

 

6.            Losses on sales of assets (excluding sales in the ordinary course
of business) and other extraordinary losses for past four fiscal quarters (to
the extent subtracted in calculating H1)

$

 

7.            Interest income for past four fiscal quarters arising from
traditional investment activities with banks, investment banks and other
financial institutions or relating to governmental or other marketable
securities (to the extent added in calculating H1)

$

 

8.            Gains on sales of assets (excluding sales in the ordinary course
of business) and other extraordinary gains for past four fiscal quarters (to the
extent added in calculating H1)

$

 

9.            Consolidated EBITDA (sum of Lines H1, H2, H3, H4, H5 and H6 less
sum of Lines H7 and H8)

$

 

 

 

Credit Agreement

 

 

 

 

Credit Agreement

 

 

 

10.         All interest charges (including capitalized interest, imputed
interest charges with respect to Capitalized Lease Obligations and all
amortization of debt discount and expense and other deferred financing charges)
of the Borrower and its Subsidiaries on a consolidated basis for such period
determined in accordance with GAAP

$

 

11.         All commitment or other fees payable in respect of the issuance of
standby letters of credit or other credit facilities for the account of the
Borrower or its Subsidiaries

$

 

12.         Net costs/expenses incurred by the Borrower and its Subsidiaries
under Derivative Arrangements

$

 

13.         Consolidated Interest Expense (Sum of Lines H10, H11 and H12)

$

 

14.         Interest Expense Coverage Ratio (ratio of (i) Line H9 to (ii) Line
H13)

:1.00

(ratio must not be less than 2.50 to 1.00)

 

 

 

 

 

EXHIBIT C

ASSIGNMENT AND ASSUMPTION

This Assignment and Assumption (the “Assignment and Assumption”) is dated as of
the Effective Date set forth below and is entered into by and between [Insert
name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the
“Assignee”). Capitalized terms used but not defined herein shall have the
meanings given to them in the Credit Agreement identified below (as amended, the
“Credit Agreement”), receipt of a copy of which is hereby acknowledged by the
Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto
are hereby agreed to and incorporated herein by reference and made a part of
this Assignment and Assumption as if set forth herein in full.

For an agreed consideration, the Assignor hereby irrevocably sells and assigns
to the Assignee, and the Assignee hereby irrevocably purchases and assumes from
the Assignor, subject to and in accordance with the Standard Terms and
Conditions and the Credit Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below (i) all of the Assignor’s rights and
obligations in its capacity as a Bank under the Credit Agreement and any other
documents or instruments delivered pursuant thereto to the extent related to the
amount and percentage interest identified below of all of such outstanding
rights and obligations of the Assignor under the respective facilities
identified below (including without limitation any letters of credit,
guarantees, and swingline loans included in such facilities) and (ii) to the
extent permitted to be assigned under applicable law, all claims, suits, causes
of action and any other right of the Assignor (in its capacity as a Bank)
against any Person, whether known or unknown, arising under or in connection
with the Credit Agreement, any other documents or instruments delivered pursuant
thereto or the loan transactions governed thereby or in any way based on or
related to any of the foregoing, including, but not limited to, contract claims,
tort claims, malpractice claims, statutory claims and all other claims at law or
in equity related to the rights and obligations sold and assigned pursuant to
clause (i) above (the rights and obligations sold and assigned pursuant to
clauses (i) and (ii) above being referred to herein collectively as, the
“Assigned Interest”). Such sale and assignment is without recourse to the
Assignor and, except as expressly provided in this Assignment and Assumption,
without representation or warranty by the Assignor.

1.

Assignor: ______________________________

 

2.

Assignee: ______________________________

 

 

[and is an Affiliate/Approved Fund of [identify Bank]1

3.

Borrower(s): Black Hills Corporation

 

 

 

1Select as applicable.

 

 

Credit Agreement

 

 

 

4.

Administrative Agent: ABN AMRO Bank N.V., as the administrative agent under the
Credit Agreement

5.

Credit Agreement: The Credit Agreement dated as of May 5, 2005 among Black Hills
Corporation, the Banks parties thereto, and ABN AMRO Bank N.V., as
Administrative Agent, as amended.

6.

Assigned Interest:

Amount of Commitment/Loans of Assignor prior to Trade Date

Amount of Commitment/Loans of Assignee prior to Trade Date

Amount of Commitment/Loans Assigned

Amount of Commitment/Loans of Assignor after Trade Date

Amount of Commitment/Loans of Assignee after Trade Date

$

$

$

$

$

[7.

Trade Date: ______________]2

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

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

 

ASSIGNOR

[NAME OF ASSIGNOR]

By:                                          
                                                    
       Title:

 

ASSIGNEE

[NAME OF ASSIGNEE]

By:                                          
                                                   
       Title:

[Consented to and]3 Accepted:

ABN AMRO Bank N.V., as

Administrative Agent

By:                                          
                                               
       Title:

 

 

2 To be completed if the Assignor and the Assignee intend that the minimum
assignment amount is to be determined as of the Trade Date.

3 To be added only if the consent of the Administrative Agent is required by the
terms of the Credit Agreement.

 

Credit Agreement

 

 

 

 

[Consented to:]4

 

 

BLACK HILLS CORPORATION

By:                                          
                                               
       Title:

 

[ISSUING AGENTS]

By:                                          
                                               
       Title:

 

 

4To be added only if the consent of the Borrower and/or other parties (e.g. L/C
Issuer) is required by the terms of the Credit Agreement.

 

 

Credit Agreement

 

 

 

ANNEX 1 to Assignment and Assumption

 

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

a.

Representations and Warranties.

1.1        Assignor. The Assignor (a) represents and warrants that (i) it is the
legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest
is free and clear of any lien, encumbrance or other adverse claim and (iii) it
has full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby; and (b) assumes no responsibility with respect to (i) any
statements, warranties or representations made in or in connection with the
Credit Agreement or any other Credit Document, (ii) the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Documents or any collateral thereunder, (iii) the financial condition of the
Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in
respect of any Credit Document or (iv) the performance or observance by the
Borrower, any of its Subsidiaries or Affiliates or any other Person of any of
their respective obligations under any Credit Document.

1.2        Assignee. The Assignee (a) represents and warrants that (i) it has
full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby and to become a Bank under the Credit Agreement, (ii) it
meets all requirements of an Eligible Assignee under the Credit Agreement
(subject to receipt of such consents as may be required under the Credit
Agreement), (iii) from and after the Effective Date, it shall be bound by the
provisions of the Credit Agreement as a Bank thereunder and, to the extent of
the Assigned Interest, shall have the obligations of a Bank thereunder, (iv) it
has received a copy of the Credit Agreement, together with copies of the most
recent financial statements delivered pursuant to Section 7.6 thereof, as
applicable, and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Assumption and to purchase the Assigned Interest on the basis of
which it has made such analysis and decision independently and without reliance
on the Administrative Agent or any other Bank, and (v) if it is not a United
States person (as defined in Section 7701(a)(30) of the Code), it shall have
attached to the Assignment and Assumption the documentation specified in Section
11.1(b) of the Credit Agreement, duly completed and executed by the Assignee;
and (b) agrees that (i) it will, independently and without reliance on the
Administrative Agent, the Assignor or any other Bank, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Credit
Documents, and (ii) it will perform in accordance with their terms all of the
obligations which by the terms of the Credit Documents are required to be
performed by it as a Bank.

b.          Payments. From and after the Effective Date, the Administrative
Agent shall make all payments in respect of the Assigned Interest (including
payments of principal, interest, fees and other amounts) to the Assignee whether
such amounts have accrued prior to, on or after the Effective Date. The Assignor
and the Assignee shall make all appropriate adjustments in

 

Credit Agreement

 

 

payments by the Administrative Agent for periods prior to the Effective Date or
with respect to the making of this assignment directly between themselves.

c.          General Provisions. This Assignment and Assumption shall be binding
upon, and inure to the benefit of, the parties hereto and their respective
successors and assigns. This Assignment and Assumption may be executed in any
number of counterparts, which together shall constitute one instrument. Delivery
of an executed counterpart of a signature page of this Assignment and Assumption
by telecopy shall be effective as delivery of a manually executed counterpart of
this Assignment and Assumption. This Assignment and Assumption shall be governed
by, and construed in accordance with, the law of the State of New York.

 

 

Credit Agreement

 

 

 

EXHIBIT D

 

FORM OF VOTING PARTICIPANT NOTIFICATION AND CONSENT

 

Voting Participant Notification and Consent

 

Reference is made to the Credit Agreement dated as of May 5, 2005 by and among
Black Hills Corporation, a South Dakota corporation (“Borrower”), ABN AMRO Bank
N.V., as Administrative Agent, U.S. Bank, National Association, as
Co-Syndication Agent, Union Bank of California, N.A., as Co-Syndication Agent,
Bank of America, N.A., as Co-Documentation Agent, Bank of Montreal dba Harris
Nesbitt, as Co-Documentation Agent, and the financial institutions party thereto
(as the same may be amended, restated, supplemented or otherwise modified from
time to time, the “Credit Agreement”). Capitalized terms used herein and not
otherwise defined shall have the meanings assigned to such terms in the Credit
Agreement.

 

Pursuant to Section 11.10(i) of the Credit Agreement, the Bank identified below
hereby notifies Administrative Agent that it is designating the participant
identified below as being entitled to be accorded the rights of a Voting
Participant.

 

 

Bank:

 

Voting Participant:1

 

Full Legal Name:

 

Address for Notices:

 

 

 

 

Attention:

 

 

Amount of Participation Purchased:

$

 

Date of Notification:

 

 

 

 

_________________________

1age 1 of 2

 

 

Credit Agreement

 

 

 

 

 

1 Voting Participants must be members of the Farm Credit System, have purchased
a

participation in the minimum amount of $<> on or after the Effective Date and

have received the written consent of Borrower and the Administrative Agent.

 

 

Voting Participant Notification and Consent

 

 

 

Bank

Voting Participant

 

______________________________

____________________________________

 

By: ___________________________

By:

________

Name:

Name:

 

Title:

Title:

 

 

Pursuant to Section <> of the Credit Agreement, the undersigned hereby

consent to the institution identified herein becoming a Voting Participant.

 

[Borrower]

 

By:

________________________

Name:

Title:

 

[Administrative Agent]

 

By:

Name:

Title:

 

Page 2 of 2

 

 

Credit Agreement

 

 

 

SCHEDULE 1

 

PRICING GRID

 

If the Level Status Is

The Facility Fee Rate is:

The Utilization Fee Rate is:

The Eurodollar Margin is:

The Base Rate Margin is:

The L/C Fee Rate is:

Level I Status

0.100%

0.125%

0.400%

0.000%

0.400%

Level II Status

0.125%

0.125%

0.500%

0.000%

0.500%

Level III Status

0.150%

0.125%

0.600%

0.000%

0.600%

Level IV Status

0.175%

0.125%

0.700%

0.000%

0.700%

Level V Status

0.300%

0.250%

0.950%

0.250%

0.950%

Level VI Status

0.500%

0.250%

1.500%

1.000%

1.500%

 

Each change in a rating shall be effective as of the date it is announced by the
applicable rating agency.

In the event that the Moody’s Rating and the S&P Rating fall in consecutive
Levels, the rating falling in the lower Level (with Level I being the highest
Level and Level VI being the lowest Level) shall govern for purposes of
determining the applicable pricing pursuant to the above pricing grid. In the
event that the Moody’s Rating and the S&P Rating fall in non-consecutive Levels,
the Level immediately above the Level in which the lower rating falls (with
Level I being the highest Level and Level VI being the lowest Level) shall
govern for purposes of determining the applicable pricing pursuant to the above
pricing grid.

 

 

Credit Agreement

 

 

 

SCHEDULE 1.1

 

EXISTING LETTERS OF CREDIT

L/C #

"Bill To" Company

Beneficiary

Amount

 

From

To

 

 

 

 

 

 

 

SLCMMSP01645

BH Colorado

Bank of Nova Scotia

7,000,000.00

 

8/28/2001

8/30/2005

SLCMMSP01646

BH Colorado

PSCO

15,800,000.00

 

8/28/2001

8/31/2005

SLCMMSP01647

BH Nevada

Southwestern Gas Corp

722,876.00

 

8/30/2001

8/30/2005

SLCMMSP01648

BH Nevada

Duke Energy Mktg LLC

3,000,000.00

 

8/30/2001

5/31/2005

SLCMMSP01649

BH Nevada

Nevada Power Co.

278,300.00

 

8/31/2001

8/31/2005

SLCMMSP01651

BH Nevada

City of North Las Vegas

1,805,276.75

 

8/28/2001

6/22/2005

SLCMMSP01653

BH Nevada

Southwest Gas Corp

3,632,717.00

 

8/31/2001

8/30/2005

SLCMMSP01837

BH Power/ BH WY (50%/50%)

Bear Paw Energy LLC

888,579.39

 

1/17/2002

2/28/2006

SLCMMSP01964

BH Expl & Prod

Bureau of Land Mgmt

25,000.00

 

5/31/2004

5/31/2005

SLCMMSP01974

BH Fountain Valley

Union Bank of California

4,500,000.00

 

4/30/2004

4/30/2006

SLCMMSP02624

LV Cogen

Sempra Energy Solutions

200,000.00

 

6/01/2004

6/01/2005

SLCMMSP02668

BH Gas Resources

US Dept of Interior-BIA

75,000.00

 

6/27/2003

8/28/2005

SLCMMSP02676

BH Gas Resources

US Dept of Interior-BIA

75,000.00

 

6/27/2003

8/28/2005

SLCMMSP02667

BH Gas Resources

US Dept of Interior-BLM

25,000.00

 

6/27/2003

8/28/2005

SLCMMSP02666

BH Gas Resources

USDA Forest Service

10,000.00

 

6/27/2003

8/28/2005

SLCMMSP02670

BH Gas Resources

ST of NM-Oil Conservation Dv

50,000.00

 

6/27/2003

7/02/2005

SLCMMSP02898

LV Cogen II

Nevada Power Co.

476,056.00

 

12/02/2003

1/05/2006

MS1450874

Harbor

Southern California Gas

400,000.00

 

12/12/2003

10/31/2005

MS1451064

LV Cogen II

Nevada Power Co.

5,000,000.00

 

12/18/2003

12/19/2005

SLCMMSP02979

BH Gas Resources

Costa Rica

275,000.00

 

1/28/2004

1/28/2006

SLCMMSP03082

BH Ontario

Southern California Gas

400,000.00

 

4/09/2004

03/31/2006

 

 

Credit Agreement

 

 

 

 

SLCMMSP03548

BH Harbor

Southern California Edison

3,500,000.00

 

2/11/2005

1/31/2006

SLCMMSP03646

BH Generation

Pacific Gas & Electric Co.

813,500.00

 

4/27/2005

12/31/2005

SLCMMSP03647

BH Generation

Pacific Gas & Electric Co.

577,500.00

 

4/27/2005

12/31/2005

SLCMMSP03648

BH Generation

Pacific Gas & Electric Co.

577,500.00

 

4/27/2005

12/31/2005

SLCMMSP03649

BH Generation

Pacific Gas & Electric Co.

825,000.00

 

4/27/2005

12/31/2005

SLCMMSP03650

BH Generation

Pacific Gas & Electric Co.

605,500.00

 

4/27/2005

12/31/2005

SLCMMSP03651

BH Generation

Pacific Gas & Electric Co.

470,500.00

 

4/27/2005

12/31/2005

 

 

Total Current L/C's

52,008,305.14

 

 

 

 

 

Credit Agreement

 

 

 

SCHEDULE 2.1

 

COMMITMENTS

 

Bank

 

Commitment Amount

 

Pro Rata Share

 

ABN AMRO Bank N.V.

 

$32,000,000.00

8.00000000%

Union Bank of California, N.A.

 

$32,000,000.00

8.00000000%

U.S. Bank National Association

 

$32,000,000.00

8.00000000%

Bank of America, N.A.

 

$30,000,000.00

7.50000000%

CoBank, ACB

 

$62,000,000.00

15.50000000%

Harris Nesbitt Financing, Inc.

 

$30,000,000.00

7.50000000%

The Bank of Nova Scotia

 

$15,000,000.00

3.75000000%

Scotiabanc Inc.

 

$15,000,000.00

3.75000000%

Wells Fargo Bank, N.A.

 

$30,000,000.00

7.50000000%

Bayern LB

 

$24,000,000.00

6.00000000%

Societe Generale

 

$24,000,000.00

6.00000000%

Calyon, New York Branch

 

$18,000,000.00

4.50000000%

Fifth Third Bank

 

$14,000,000.00

3.50000000%

Mizuho Corporate Bank, Ltd.

 

$14,000,000.00

3.50000000%

Royal Bank of Canada

 

$14,000,000.00

3.50000000%

Royal Bank of Scotland

 

$14,000,000.00

3.50000000%

TOTALS

 

$400,000,000.00

 

100.00000000%

 

 

 

 

Credit Agreement

 

 

 

SCHEDULE 4

 

ADMINISTRATIVE AGENT’S NOTICE AND PAYMENT INFORMATION

 

Part A – Payments

 

Loan Repayments, Interest, Fees:

 

ABN AMRO Bank N.V.

New York, NY

ABA # 026009580

F/O ABN AMRO Bank, N.V.

Chicago Branch CPU

Account # 650-001-1789-41

Reference: Agency Services – MTI#: 00488593

Name: Black Hills Corporation

 

Letters of Credit:

 

ABN AMRO Bank N.V.

New York, NY

ABA # 026009580

F/O ABN AMRO Bank N.V.

Chicago Trade Services CPU

Account # 655-001-1711-41

Reference: Agency Services – MTI#: 00488593

Name: Black Hills Corporation

 

 

Part B – Notices

 

Notices related to commitments, covenants or extensions of expiry/termination
dates:

 

ABN AMRO Bank N.V.

540 West Madison Street, Suite 2131

Chicago, IL 60661-2591

Attn: Agency Services

E-Mail: judith.kinney@abnamro.com

FAX:

312-992-5157

 

ABN AMRO Bank N.V.

540 West Madison Street, Suite 2621

Chicago, IL 60661-2591

Attn: Credit Administration

E-Mail: melanie.dziobas@abnamro.com

FAX:

312-992-5111

 

ABN AMRO Bank N.V.

 

Credit Agreement

 

 

 

4400 Post Oak Parkway

Suite 1500

 

Houston, TX 77027

 

Attn: John Reed

 

E-Mail: john.reed@abnamro.com

 

FAX: 832-681-7141

 

Notices related to Loans, Letters of Credit and Fees:

 

ABN AMRO Bank N.V.

540 West Madison Street, Suite 2131

Chicago, IL 60661-2591

Attn: Agency Services

E-Mail: judith.kinney@abnamro.com

FAX:

312-601-3611

 

Address for all Required Executed Documentation and Financial Information:

 

ABN AMRO Bank N.V.

540 West Madison Street, Suite 2621

Chicago, IL 60661-2591

Attn: Credit Administration

E-Mail: melanie.dziobas@abnamro.com

FAX:

312-992-5111

 

 

Credit Agreement

 

 

 

SCHEDULE 5.2

 

BLACK HILLS CORPORATION SUBSIDIARIES

 

 

Subsidiary Name

 

State of Origin

 

BHC’s
Ownership

 

Description of Subsidiary’s Authorized Capital Stock, if not wholly owned

 

1.

Acquisition Partners, L.P.

New York

100%

N/A

2.

Adirondack Hydro Development Corporation

Delaware

100%

N/A

3.

BHFC Publishing, LLC

Delaware

100%

N/A

4.

Black Hills Cabresto Pipeline, LLC

Delaware

100%

 

5.

Black Hills Colorado, LLC

Delaware

100%

N/A

6.

Black Hills Energy Pipeline, LLC

Delaware

100%

N/A

7.

Black Hills Energy Resources, Inc.

South Dakota

100%

N/A

8.

Black Hills Energy Terminal, LLC

South Dakota

100%

N/A

9.

Black Hills Energy, Inc.

South Dakota

100%

N/A

10.

Black Hills Exploration and Production, Inc.

Wyoming

100%

N/A

11.

Black Hills Fiber Systems, Inc.

South Dakota

100%

N/A

12.

Black Hills FiberCom, LLC

South Dakota

100%

N/A

13.

Black Hills Fountain Valley, LLC

Delaware

100%

N/A

14.

Black Hills Fountain Valley II, LLC

Colorado

100%

N/A

15.

Black Hills Gas Resources, Inc., (fka Mallon Oil Company)

Colorado

100%

N/A

16.

Black Hills Gas Holdings Corp. (fka Mallon Resources Corporation)

Colorado

100%

N/A

17.

Black Hills Generation, Inc.

Delaware

100%

N/A

18.

Black Hills Idaho Operations, LLC

Delaware

100%

N/A

19.

Black Hills Independent Power Fund, Inc.

Texas

100%

N/A

20.

Black Hills Ivanpah, LLC

Delaware

100%

N/A

21.

Black Hills Ivanpah GP, LLC

Delaware

100%

N/A

22.

Black Hills Kilgore Energy Pipeline, LLC

Delaware

100%

N/A

 

 

Credit Agreement

 

 

 

 

23.

Black Hills Kilgore Pipeline, Inc.

Delaware

100%

N/A

24.

Black Hills Kilgore Pipeline Company, L.P.

Texas

100%

N/A

25.

Black Hills Midstream, LLC

South Dakota

100%

N/A

26.

Black Hills Millennium Pipeline, Inc.

South Dakota

100%

N/A

27.

Black Hills Millennium Terminal, Inc.

South Dakota

100%

N/A

28.

Black Hills Nevada Operations, LLC

Delaware

100%

N/A

29.

Black Hills Nevada Real Estate Holdings, LLC

Delaware

100%

N/A

30.

Black Hills Nevada, LLC

Delaware

100%

N/A

31.

Black Hills Ontario, LLC

Delaware

50%

Black Hills Ontario, LLC has a single class of units of membership, of which 100
units are issued and outstanding. Black Hills Corporation indirectly holds 50
units.

32.

Black Hills Operating Company, LLC

Delaware

100%

N/A

33.

Black Hills Pepperell Power Associates, LLC

Delaware

100%

N/A

34.

Black Hills Power, Inc.

South Dakota

100%

N/A

35.

Black Hills Publishing Montana, LLC

Delaware

100%

N/A

36.

Black Hills Service Company, LLC

South Dakota

100%

N/A

37.

Black Hills Southwest, LLC

Delaware

100%

N/A

38.

Black Hills Valmont Colorado, Inc.

Delaware

100%

N/A

39.

Black Hills Waterville Station, LLC

South Dakota

100%

N/A

40.

Black Hills Wyoming, Inc.

Wyoming

100%

N/A

41.

Cheyenne Light, Fuel and Power Company

Wyoming

100%

N/A

42.

Daksoft, Inc.

South Dakota

100%

N/A

 

 

Credit Agreement

 

 

 

 

43.

Desert Arc I, LLC

Delaware

50%

Desert Arc I, LLC has a single class of units of membership, of which Black
Hills Corporation indirectly holds 50%.

44.

Desert Arc II, LLC

Delaware

50%

Desert Arc II, LLC has a single class of units of membership, of which Black
Hills Corporation indirectly holds 50%.

45.

E-Next A Equipment Leasing Company, LLC

Delaware

100%

N/A

46.

EIF Investors, Inc.

Delaware

100%

N/A

47.

Enserco Energy Inc.

South Dakota

100%

N/A

48.

Fountain Valley Power, L.L.C.

Delaware

100%

N/A

49.

Harbor Cogeneration Company, LLC

Delaware

100%

N/A

50.

Las Vegas Cogeneration Energy Financing, LLC

Delaware

100%

N/A

51.

Las Vegas Cogeneration II, LLC

Delaware

100%

N/A

52.

Las Vegas Cogeneration Limited Partnership

Nevada

50%

Black Hills Corporation indirectly owns 50% of the 85% general partnership
interest, and 50% of the 15% limited partnership interest.

53.

Millennium Pipeline Company, L.P.

Texas

100%

N/A

54.

Millennium Terminal Company, L.P.

Texas

100%

N/A

55.

NHP, L.P.

New York

100%

N/A

56.

Sunco, Ltd., a limited liability company

Nevada

100%

N/A

57.

VariFuel, LLC

South Dakota

100%

N/A

58.

West Cascade Energy, LLC

Delaware

100%

N/A

59.

Wyodak Resources Development Corp.

Delaware

100%

N/A

 

 

 

Credit Agreement

 

 

 

SCHEDULE 5.5

 

LITIGATION AND LABOR CONTROVERSIES

 

 

1.

Hell Canyon Fire

 

In September 2001, a fire occurred in the southwestern Black Hills. It is
alleged that the fire occurred when a high voltage electrical span maintained by
Black Hills Power, Inc. (“BHP”) broke, and electrical arching from the severed
line ignited dry grass. The fire burned approximately 10,000 acres of land owned
by the Black Hills National Forest, the Oglala Sioux Tribe, and other private
landowners. The State of South Dakota initiated litigation against BHP, in the
Seventh Judicial Circuit Court, Fall River County, South Dakota, on or about
January 31, 2003. The Complaint seeks recovery of damages for alleged fire
suppression and rehabilitation costs. A claim for treble damages is asserted
with respect to the claim for injury to timber. A substantially similar suit was
filed against BHP by the United States Forest Service, on June 30, 2003, in the
United States District Court for the District of South Dakota, Western Division.
The State subsequently joined its claim in the federal action. The State claims
damages in the amount of approximately $800,000 for fire suppression and
rehabilitation costs. The United States Government’s claim for fire suppression
and related costs has been submitted at approximately $1,300,000. The Company
continues to investigate the cause and origin of the fire, and the damage
claims. A trial date is expected in 2005. The Company has denied all claims and
will vigorously defend this matter, the timing or outcome of which is uncertain.

 

2.

Smith v. Black Hills Energy Resources, Inc.

 

In this litigation, private landowners have sued Black Hills Energy Resources
(“BHER”) and Wickford Energy Marketing Company (the predecessor of BHER) in
state court in the state of Arkansas. The lawsuit alleges claims against a
number of oil producing and marketing Defendants as a consequence of an alleged
oil spill affecting private property. BHER allegedly purchased oil directly from
the production facility for truck transport. It did not have an ownership or
operating interest in the production facility or the pipeline from which the
spill allegedly occurred. BHER filed a Motion to Dismiss All Claims. The court
denied BHER’s motion in order to allow limited discovery to proceed. A tentative
settlement agreement in the amount of $12,000 has been reached, pending approval
of final documentation.

 

3.

Grizzly Gulch Fire

 

On June 29, 2002, a forest fire began near Deadwood, South Dakota. Before being
contained more than eight days later, the fire consumed over 10,000 acres of
public and private land, mostly consisting of rugged forested areas. The fire
destroyed approximately 7 homes, and 15 outbuildings. There were no reported
personal injuries. In addition, the fire burned to the edge of the City of
Deadwood, forcing the evacuation of the City of Deadwood, and the adjacent City
of Lead, South Dakota. These communities are active in the tourist and gaming
industries. Individuals were ordered to leave their homes, and businesses were
closed for a short period of time. On July 16, 2002, the State of South Dakota
announced the results of its investigation of the cause and origin of the fire.
The State asserted that the fire was caused by tree encroachment

 

Credit Agreement

 

 

into and contact with a transmission line owned and maintained by Black Hills
Power, Inc. (“BHP”).

 

On September 6, 2002, the State of South Dakota commenced litigation against
BHP, in the Seventh Judicial Circuit Court, Pennington County, South Dakota. The
Complaint seeks recovery of damages for alleged injury to timber, fire
suppression and rehabilitation costs. A claim for treble damages is asserted
with respect to the claim for injury to timber.

 

On March 3, 2003, the United States of America filed a similar suit against BHP,
in the United States District Court, District of South Dakota, Western Division.
The federal government’s Complaint likewise seeks recovery of damages for
alleged injury to timber, fire suppression and rehabilitation costs. A similar
claim for treble damages is asserted with respect to the claim for injury to
timber. In April 2003, the State of South Dakota intervened in the federal
action. Accordingly, the state court litigation will be stayed, and all
governmental claims will be tried in U.S. District Court.

 

The state and federal government have claimed approximately $5,300,000 for
suppression costs, $1,200,000 for rehabilitation costs, and $610,000 for timber
loss (which could be trebled). Additional claims could be asserted for alleged
loss of habitat and aesthetics or for assistance to private landowners.

 

BHP is completing its own investigation of the fire cause and origin. BHP’s
investigation is continuing, but based upon information currently available, BHP
filed its Answer to the Complaints of both the State and the federal government,
denying all claims, and asserting that the fire was caused by an independent
intervening cause, or an act of God. The Company expects to vigorously defend
all claims brought by governmental or private parties.

 

A.

Dale Stoneberger and Collette Stoneberger v. Black Hills Power, Inc.

 

On April 11, 2003, a private civil action was filed against BHP by Dale
Stoneberger and Collette Stoneberger, asserting that the Grizzly Gulch Fire
caused damage to their real property located in Meade County, South Dakota. The
action was filed in the Fourth Judicial Circuit Court, Lawrence County, South
Dakota. The Complaint seeks recovery on the same theories asserted in the
governmental Complaints, but specifies no amount for a claim of damages. The
parties have agreed to hold this matter in abeyance pending the outcome of the
state and federal claims. The Company will vigorously defend this matter.

 

B.

No Claim Jumpers Allowed, LLC v. Black Hills Power, Inc.

 

On September 29, 2003, a private civil action was filed against BHP by No Claim
Jumpers Allowed, LLC, asserting that the Grizzly Gulch Fire caused damage to its
real property located in Lawrence County, South Dakota. The action was filed in
the Fourth Judicial Circuit Court, Lawrence County, South Dakota. The Complaint
seeks recovery on the same theories asserted in the governmental Complaints, but
specifies no amount for a claim of damages. The parties filed a Stipulation for
Stay of Litigation pending the outcome of the state and federal claims. The
Company will vigorously defend this matter.

 

Credit Agreement

 

 

 

 

C.

Frank Seiler v. Black Hills Power, Inc.

 

On November 6, 2003, a private civil action was filed against BHP by Frank
Seiler, asserting that the Grizzly Gulch Fire caused damage to his real property
located in Lawrence County, South Dakota. The action was filed in the Fourth
Judicial Circuit Court, Lawrence County, South Dakota. The Complaint seeks
recovery on the same theories asserted in the governmental Complaints, but
specifies no amount for a claim of damages. The parties filed a Stipulation for
Stay of Litigation pending the outcome of the state and federal claims. The
Company will vigorously defend this matter.

 

D.

Timothy and Sandy Cleveringa v. Black Hills Power, Inc.

 

On November 6, 2003, a private civil action was filed against BHP by Timothy and
Sandy Cleveringa, asserting that the Grizzly Gulch Fire caused damage to their
real property located in Lawrence County, South Dakota. The action was filed in
the Fourth Judicial Circuit Court, Lawrence County, South Dakota. The Complaint
seeks recovery on the same theories asserted in the governmental Complaints, but
specifies no amount for a claim of damages. The parties filed a Stipulation for
Stay of Litigation pending the outcome of the state and federal claims. The
Company will vigorously defend this matter.

 

E.

Farm Bureau Mutual Insurance Company (Virginia Rantapaa) v. Black Hills Power,
Inc.

 

On November 26, 2003, a private civil action was filed against BHP by Farm
Bureau Mutual Insurance Company, asserting that the Grizzly Gulch Fire caused
damage to the real property of Virginia Rantapaa, their insured, located in
Lawrence County, South Dakota. The subrogation action was filed in the Fourth
Judicial Circuit Court, Lawrence County, South Dakota. The Complaint seeks
recovery on the same theories asserted in the governmental Complaints, and
specifies a claim for damages in the amount of $4,329.76. The parties filed a
Stipulation for Stay of Litigation pending the outcome of the state and federal
claims. The Company will vigorously defend this matter.

 

F.

Glenn Dale and Merrily Dale v. Black Hills Power, Inc.

 

On April 28, 2004, a private civil action was filed against BHP by Glenn and
Merrily Dale, asserting that the Grizzly Gulch Fire caused damage to their real
property located in Lawrence County, South Dakota. The action was filed in the
Fourth Judicial Circuit Court, Lawrence County, South Dakota. The Complaint
seeks recovery on the same theories asserted in the governmental Complaints, but
specifies no amount for a claim of damages. The Company will vigorously defend
this matter.

 

G.

Eugene Heisinger and Carina Heisinger v. Black Hills Power, Inc.

 

On April 28, 2004, a private civil action was filed against BHP by Eugene and
Carina Heisinger, asserting that the Grizzly Gulch Fire caused damage to their
real

 

Credit Agreement

 

 

property located in Lawrence County, South Dakota. The action was filed in the
Fourth Judicial Circuit Court, Lawrence County, South Dakota. The Complaint
seeks recovery on the same theories asserted in the governmental Complaints, but
specifies no amount for a claim of damages. The Company will vigorously defend
this matter.

 

H.

David Sandidge and Linda Sandidge v. Black Hills Power, Inc.

 

On June 2, 2004, a private civil action was filed against BHP by David and Linda
Sandidge, asserting that the Grizzly Gulch Fire caused damage to their real
property located in Lawrence County, South Dakota. The action was filed in the
Fourth Judicial Circuit Court, Lawrence County, South Dakota. The Complaint
seeks recovery on the same theories asserted in the governmental Complaints, but
specifies no amount for a claim of damages. The Company will vigorously defend
this matter.

 

I.

Diane Graff v. Black Hills Power, Inc.

 

On June 11, 2004, a private civil action was filed against BHP by Diane Graff,
asserting that the Grizzly Gulch Fire caused damage to her real property located
in Lawrence County, South Dakota. The action was filed in the Fourth Judicial
Circuit Court, Lawrence County, South Dakota. The Complaint seeks recovery on
the same theories asserted in the governmental Complaints, but specifies no
amount for a claim of damages. The Company will vigorously defend this matter.

 

J.

Deweese Corporation v. Black Hills Power, Inc.

 

On July 7, 2004, a private civil action was filed against BHP by Deweese
Corporation, asserting that the Grizzly Gulch Fire caused damage to its real
property located in Lawrence County, South Dakota. The action was filed in the
Fourth Judicial Circuit Court, Lawrence County, South Dakota. The Complaint
seeks recovery on the same theories asserted in the governmental Complaints, but
specifies no amount for a claim of damages. The parties filed a Stipulation for
Stay of Litigation pending the outcome of the state and federal claims. The
Company will vigorously defend this matter.

 

K.

Federal Insurance Company (Exports, Inc.)

 

On September 14, 2004, Black Hills Corporation was notified of a subrogation
claim in the amount of $63,467.24 by Federal Insurance Company, asserting that
the Grizzly Gulch Fire caused damage to the real property of Exports, Inc.,
their insured, located in Lawrence County, South Dakota. A subrogation action
has not yet been filed. The Company will vigorously defend this matter.

 

L.

Daryle and Virginia Poling v. Black Hills Power, Inc.

 

On February 18, 2005, a private civil action was filed against BHP by Daryle and
Virginia Poling, asserting that the Grizzly Gulch Fire destroyed vegetation in
the area of Plaintiffs’ home, thus causing subsequent mud slides on August 8 and
24, 2002, which caused damage to Plaintiffs’ real and personal property located
in Lawrence County,

 

Credit Agreement

 

 

South Dakota. The action was filed in the Fourth Judicial Circuit Court,
Lawrence County, South Dakota. The Complaint seeks recovery on the same theories
asserted in the governmental Complaints, but specifies no amount for a claim of
damages. The parties filed a Stipulation for Stay of Litigation pending the
outcome of the state and federal claims. The Company will vigorously defend this
matter.

 

Additional claims could be made for individual and business losses relating to
injury to personal and real property, and lost income.

 

4.

Price Reporting Class Actions

 

A.

Cornerstone Propane Partners, L.P.

 

On August 18, 2003, Cornerstone Propane Partners, L.P. commenced a putative
class action lawsuit against over thirty energy companies. Cornerstone Propane
Partners, L.P. v. Reliant Energy Services, Inc., et. al., Civ. No. 03-CV-6168
(U.S. District Court, Southern District of New York)(“Cornerstone Propane
Litigation”). The Complaint, which names Enserco Energy Inc. as a defendant,
asserts claims for an unspecified amount of damages, based upon alleged
violations of the Commodity Exchange Act. General allegations in the Complaint
assert that defendants manipulated natural gas futures contracts through false
reporting of prices and volumes. Similar specific allegations are made against
Enserco, based upon claims that former traders at Enserco reported false price
and volume information to trade publications. Other defendants are alleged to
have manipulated spot market gas prices by engaging in “wash trades” and/or by
“churning” natural gas trades. Initially, the plaintiff seeks an order
certifying the proceeding as a class action according to applicable rules.
Enserco has denied all claims for damages and will vigorously defend this
action, beginning with the request for class certification. Enserco cannot
predict the outcome of this litigation, but based upon information currently
available to the Company, we believe the likelihood that the action would have a
material adverse effect upon its financial condition and results of operations
is remote.

 

B.

Roberto E. Calle Gracey

 

On October 1, 2003, Roberto E. Calle Gracey commenced a putative class action
lawsuit against a group of defendants that sets forth claims and demands similar
to those described above with respect to the Cornerstone Propane Litigation.
Black Hills Corporation and Enserco Energy, Inc. are named as defendants in this
action as well. Gracey v. American Electric Power Company, Inc., et. al., Civ.
No., 03-CV-7750 (U.S. District Court, Southern District of New York). Black
Hills and Enserco will deny all claims for damages and vigorously defend this
action, beginning with the request for class certification. Black Hills
Corporation cannot predict the outcome of this litigation, but based upon
information currently available to the Company, we believe the likelihood that
the action would have a material adverse effect upon its financial condition and
results of operations is remote.

 

C.

In re Natural Gas Commodity Litigation

 

 

Credit Agreement

 

 

 

On December 5, 2003, the actions cited in paragraphs A and B were consolidated,
with other actions involving similar claims against other parties, in a civil
action captioned In re Natural Gas Commodity Litigation, 03 CV 6186(VM), United
States District Court, Southern District of New York. All further proceedings
relative to these matters will be conducted in the consolidated action. The
consolidated class action now includes claims against a number of companies,
based upon a variety of alleged misconduct. The claims against Enserco comprise
a relatively small part of only one category of the total claims included in
this lawsuit. The action has not been certified to proceed as a class action.
Motions to Dismiss were denied. Defendants will make an effort to “decertify”
the matter as a class action based upon the dissimilarity of parties, claims and
issues. While it is possible for an individual to state a claim for relief based
upon allegations such as those made against Enserco, those Plaintiffs that have
asserted claims against Enserco have a number of procedural and substantive
hurdles to overcome. Even if Plaintiffs’ claims survive Motions to Dismiss, and
successfully avoid class decertification, they still must prove actual damages
as a result of the conduct of an individual Defendant, such as Enserco. Based
upon information currently available, and given the current status of the
litigation, we do not believe it is likely that Plaintiffs will be able to
succeed in recovering on a claim that would be material to Enserco.

 

5.

Black Hills Power, Inc./PacifiCorp Power Marketing Dispute

 

On January 2, 2004, PPM Energy, Inc. (“PPM”) delivered its Demand for
Arbitration to Black Hills Power, Inc. (“BHP”). The Demand alleges claims for
breach of contract and requests a declaration of the parties’ rights and
responsibilities under an Exchange Agreement executed on or about April 3, 2001.
Specifically, PPM asserts that the Exchange Agreement obligates BHP to accept
receipt and cause corresponding delivery of electric energy, and to grant access
to transmission rights allegedly covered by the Agreement. PPM requests an award
of damages in an amount not less than $20,000,000. BHP denies all claims and
will vigorously defend this matter, the timing and outcome of which is
uncertain. BHP filed its Response to Demand, including a Counterclaim that seeks
recovery of sums PPM has refused to pay pursuant to the Exchange Agreement. The
arbitration is scheduled for hearing in early June, 2005.

 

6.

Elley v. Black Hills Power, Inc.

 

On March 8, 2004, Black Hills Power, Inc. (“BHP”) was served with a Complaint by
Mae Elley and Patty Elley. The Complaint seeks recovery for alleged excessive
cutting of trees, as well as treble and exemplary damages. The Company filed its
Answer on May 7, 2004. On July 1, 2004, BHP served a Third Party Complaint
against Willson’s Tree Service, Inc. for contribution and/or indemnification.
Plaintiffs filed a Motion for Summary Judgment. The court granted Plaintiffs’
motion on the issue of treble damages only. A trial date is expected in 2005.
The Company will vigorously defend this matter.

 

7.

Earn-Out Litigation

 

On August 13, 2004, Gerald R. Forsythe and other individuals identified at
“Stockholders” under an Agreement and Plan of Merger dated July 7, 2000,
commenced litigation against Black Hills Corporation in United States District
Court, Northeastern District of Illinois, Eastern Division. The lawsuit concerns
the Company’s performance of its obligations

 

Credit Agreement

 

 

under the “Earn-Out” provisions of the Agreement and Plan of Merger. Under these
provisions, the Stockholders, who are former owners of Indeck Capital, Inc.,
were entitled to receive “contingent merger consideration” for a period of four
years following the merger of Indeck Capital with Black Hills Energy Capital,
Inc. The Stockholders allege that Black Hills failed to meet its obligation to
produce documentation for its calculation of the contingent merger
consideration, and in addition, failed to issue stock compensation in the full
amount due to them. Black Hills denies these allegations and contends that it
has fully and in good faith performed all of its obligations under the Agreement
and Plan of Merger. In addition, Black Hills contends that the Agreement and
Plan of Merger provides for mandatory arbitration as a medium for resolution of
all disputes relating to the payment of contingent merger consideration, and
will aggressively pursue the dismissal of the litigation.

 

The parties are currently sharing information and documentation, and have agreed
that the federal court may issue a subpoena relating to the work papers of
Deloitte & Touche. For that limited purpose alone, the court may supervise
limited discovery, following which Black Hills will seek enforcement of the
contractual remedy of arbitration. The outcome of this matter is uncertain, as
is the amount of contingent merger consideration that could be awarded following
arbitration or litigation.

 

8.

Peter C. Gasner v. A.O. Smith Corp., et al.

 

On February 7, 2005, Black Hills Corporation received service of process for a
lawsuit captioned Peter C. Gasner v. A.O. Smith Corp., et al., Cause No.
2004-42761, 11th Judicial District Court of Harris County, Texas. This is a
class action commenced under the Texas Rules of Civil Procedures. The Plaintiff
alleges that during the course of his career, he was exposed to asbestos while
working at the DuPont Chemical Plant in Victoria, Texas, among other facilities.
The Defendants include a host of companies, large and small, that are divided
into several categories. One group of Defendants is referred to as “Product
Defendants,” another group is referred to as “Premises Defendants,” and the
final group is called “Contractor Defendants.” Black Hills Corporation is named
among the “Premises Defendants” (among a list of other parties) in which the
only direct allegation is that Plaintiff was exposed to asbestos and
asbestos-containing products while working at premises owned and controlled by
Black Hills Corporation. The parties have reached a settlement on all issues.
Final documentation of a full and final settlement, with dismissal of all
claims, is being prepared.

 

 

9.

Mallon Tax and Royalty Litigation

 

A.

Bayless/Jicarilla Lawsuit.

 

From January 1984 through December 1996, Robert L. Bayless operated the majority
of the gas wells that Black Hills Exploration and Production (“BHEP”) ultimately
acquired from Mallon Resources, Inc. (“Mallon”) in March 2003. Mallon owned a
significant working interest in these wells during that time. The Department of
Interior - Minerals Management Service (“MMS”) and the Jicarilla Apache Nation
believed that Bayless had failed to pay royalties using the correct pricing
analysis. Bayless disputed this claim and for at least the past six years fought
this matter through proceedings with the Department of Interior - Internal Board
of Land Appeals (“IBLA”),

 

Credit Agreement

 

 

mediation and finally under litigation against the Department of Interior,
Jicarilla Apache Nation and the Department of Justice as filed in the United
States District Court for the District of Columbia in Washington D.C. On behalf
of itself, Mallon and other working interest owners, Bayless vigorously pursued
this lawsuit. Bayless was forced to take extreme action because the Jicarilla
Apache Nation had made claims in their earlier efforts to settle the matter that
additional royalties from Bayless could amount to as much as $5,000,000 to
$13,000,000 for the time period in question.

 

Following the merger (March 10, 2003), BHEP/Mallon worked with Jicarilla Apache
officials, Bayless personnel, Fulbright & Jaworski lawyers and the MMS. On
September 29, 2003, BHEP negotiated a mutually agreeable settlement that was
executed by Bayless and the Jicarilla Apache Nation, settling the dispute for
$1,250,000. BHEP’s share of this settlement was $664,725, not including legal
fees. The Department of Justice and the Department of Interior ratified this
settlement agreement and by Order dated July 29, 2004, the United States
District Court for the District of Columbia dismissed the lawsuit with
prejudice.

 

B.

Possessory Interest Tax (“PIT”) Lawsuit.

 

From 1998 through 2001, substantially all of the gas produced from approximately
130 wells within the East Blanco Field was processed through the Amine Plant.
Based on the plain wording contained in Tribal Ordinances in effect at that
time, Mallon considered the Amine Plant to be “production equipment”, and
calculated and paid the resulting Possessory Interest Tax to the Nation. The
Nation later assessed Mallon for PIT based on a change in regulations and
retroactive application. Prior to the BHEP merger, Mallon paid the revised taxes
and interests, under protest, totaling more than $3.3 million. The Jicarilla
Department of Revenue and Taxation denied the protest. Mallon appealed to the
Tribal Court of the Jicarilla Apache Nation for relief.

 

On September 8, 2003, BHEP successfully negotiated and executed a Tax Settlement
Agreement and Mutual Release with the Jicarilla Apache Nation. On September 15,
2003, the Jicarilla Apache Tribal Court dismissed the lawsuit with prejudice and
the corresponding lien on Mallon’s (now BHEP’s) properties was removed. The
terms of the settlement waived all additional penalties and interest, in the
amount of $260,269, culminating from Mallon’s late tax payment of $1.4 million
for the 2002 tax year. To date, all Possessory Interest Tax that has been
assessed and billed have been paid.

 

 

Credit Agreement

 

 

 

SCHEDULE 5.11

 

ENVIRONMENTAL MATTERS

 

None.

 

 

Credit Agreement

 

 

 

SCHEDULE 6.1

 

NEW MATERIAL INDEBTEDNESS

 

As part of the Borrower’s acquisition of Cheyenne Light, Fuel and Power, Inc.
(“CLF&P”) in January, 2005, the outstanding First Mortgage Bonds of CLF&P were
assumed. The total amount of debt assumed was $24.6 million. The assumed debt
consisted of three issues:

 

1) $7.6 million 7.5% First Mortgage Bonds, due January 1, 2024.

 

2) $10 million Laramie County, Wyoming Industrial Development Revenue Bonds
Series 1997A, variable rate bonds due March 1, 2027.

 

3) $7 million Laramie County, Wyoming Industrial Development Revenue Bonds,
Series 1997B, variable rate bonds due September 1, 2021.

 

Substantially all of the real and personal property of CLF&P is subject to the
liens securing the First Mortgage Bonds.

 

 

 

Credit Agreement

 

 

 

SCHEDULE 7.9

 

EXISTING LIENS

 

1.

Enserco Energy Inc. has granted a security interest in favor of Fortis Capital
Corp., as agent, with respect to Enserco Energy Inc.’s personal property assets
to secure the credit facility referred to on Schedule 7.15.

2.

Black Hills Energy Resources, Inc. has granted a security interest in favor of
Fortis Capital Corp., as agent, with respect to Black Hills Energy Resources,
Inc.’s personal property assets to secure the credit facility referred to on
Schedule 7.15.

3.

Black Hills Power, Inc. has granted a first mortgage lien in favor of the
Trustee on substantially all of the properties used in the electric utility
business under the Indenture of Mortgage and Deed of Trust related to the First
Mortgage Bonds referred to on Schedule 7.15, excluding certain “Excepted
Property” as identified in the Indenture.

4.

Black Hills Exploration and Production has granted security interests in various
certificates of deposits for oil and gas leases and operations totaling less
than $150,000 in aggregate.

5.

Wyodak Resources Development Corp. has granted a security interest in (i) a
certificate of deposit in the amount of $398,000 to securitize its
self-insurance permit for black lung liability, and (ii) a U.S. Treasury Note in
the amount of $1,295,000 to secure a Federal Coal Lease.

6.

Black Hills Generation, Inc. has granted a security interest in a spare turbine
currently housed at its Arapahoe facility in Denver County, Colorado and certain
related contracts, chattel paper and general intangibles in the amount of $4.5
million to securitize the loan from General Electric Capital Corporation
referred to on Schedule 7.15.

7.

Black Hills Wyoming, Inc. has granted a security interest in its Gillette CT II
facility and the associated real property located in Campbell County, Wyoming
and certain related inventory, fixtures, contracts, chattel paper and general
intangibles in the amount of $27.5 million to securitize the loan from General
Electric Capital Corporation referred to on Schedule 7.15.

8.

Black Hills Corporation’s indirect, wholly owned Subsidiaries Las Vegas
Cogeneration II, L.L.C. (“LVCII”), Las Vegas Cogeneration Energy Financing
Company, L.L.C., Black Hills Nevada, LLC and Black Hills Nevada Real Estate
Holdings, LLC have granted security interests in favor of Nevada Power Company
(“NPC”) in their respective personal property (comprising the personal property
of LVCII facility and the sole membership interest in LVCII) as security for
LVCII’s performance of its obligations under its power purchase agreement with
NPC, dated December 19, 2003.

9.

Black Hills Colorado, LLC has granted a security interest in its Arapahoe and
Valmont facilities (located in Denver and Boulder counties, respectively) in
favor of Public

 

Credit Agreement

 

 

Service Company of Colorado as security for its obligations under the power
purchase agreements for both facilities, each dated January 26, 2001.

10.

Cheyenne Light, Fuel and Power Company has granted a first mortgage lien on
substantially all of its real and personal property in favor of the Trustee
under its Indenture of Mortgage and Deed of Trust related to the First Mortgage
Bonds referred to on Schedule 7.15, excluding certain “Excepted Property” as
identified in the Indenture.

 

Credit Agreement

 

 

 

SCHEDULE 7.14  

EXISTING INVESTMENTS

 

1.

Black Hills Corporation holds a $450,000 equity investment in Phase Technology,
LLC.

2.

Black Hills Corporation holds a $50,000 equity investment in Genesis Equity
Fund, LLC.

3.

Black Hills Corporation holds investments in life insurance policies and
nonqualified deferred compensation plan accounts in the amount of $3,126,301.

4.

Black Hills Corporation holds a $6,693,155 investment in various development
projects.

5.

Black Hills Power, Inc. holds investments in life insurance policies and
nonqualified deferred compensation plan accounts in the amount of $3,411,385.

C.

Black Hills Power, Inc. holds long-term notes receivable in the amount of
$251,404.

6.

Wyodak Resources Development Corp. holds investments in life insurance policies
in the amount of $572,655.

7.

Wyodak Resources Development Corp. holds investments in US Treasury Notes in the
amount of $1,693,000.

8.

Black Hills Exploration and Production, Inc. holds investments in an affiliate
in the amount of $2,096,663.

9.

Black Hills FiberCom, LLC holds investments in life insurance policies in the
amount of $153,870.

10.

Black Hills Generation, Inc. holds equity interests in Energy Investors Funds,
Project Finance Funds, Caribbean Basin Funds and other energy funds in the
amount of $5,839,092.

11.

Black Hills Generation, Inc. has an equity investment in Black Hills Idaho
Management, Inc. in the amount of $3,239,855.

12.

Black Hills Energy, Inc. holds investments in life insurance policies and
nonqualified compensation plans in the amount of $301,423.

13.

Black Hills Fiber Systems, Inc. holds a convertible debenture note in the amount
of $40,000,000 due from Black Hills FiberCom, LLC.

14.

Black Hills Energy, Inc. has a $19,636,104 equity investment in Black Hills
Energy Resources, Inc., as of December 31, 2004.

15.

Black Hills Energy, Inc. has a $113,732,776 equity investment in Enserco Energy
Inc., as of December 31, 2004.

 

 

 

Credit Agreement

 

 

 

SCHEDULE 7.15

PERMITTED INDEBTEDNESS

 

(A) Indebtedness of Marketing Subsidiaries

SECTION 1     [

Enserco Energy Inc. Credit Facility with Fortis Capital Corp., BNP Paribas, US
Bank, and Societe Generale.

up to $200,000,000

SECTION 2

Black Hills Energy Resources, Inc. Credit Facility with Fortis Capital Corp.

up to $60,000,000

(B) Other Indebtedness

1.

Black Hills Corporation 6.5% senior unsecured notes.

$224,763,000

2.

Black Hills Power, Inc./Black Hills Wyoming, Inc. Note Payable to Bear Paw
Energy, LLC.

$834,000

3.

Credit Agreement between Black Hills Colorado, LLC, the Bank Nova Scotia, and
various other banks.

$123,028,000

4.

Black Hills Power, Inc. First Mortgage Bonds.

$137,275,000

5.

Black Hills Power, Inc. Pollution Control Revenue Bonds.

$18,650,000

6.

Black Hills Power, Inc. Environmental Improvement Revenue Bonds (Floating Rate).

$2,855,000

7.

Term loan and letter of credit facility between Black Hills Fountain Valley,
LLC, Fountain Valley Power, LLC, and E-Next A Equipment Leasing Company, LLC and
various banks (including Union Bank of California as agent bank).

$81,459,000

8.

Black Hills Corporation lease payment obligation on the Wygen 1 facility.

$128,264,000

9.

Credit Agreement Among Black Hills Wyoming, Inc. and General Electric Capital
Corporation.

$23,776,000

10.

Credit Agreement among Black Hills Generation, Inc. and General Electric Capital
Corporation.

$3,938,000

11.

Note payable from Black Hills Generation, Inc. for Las Vegas Cogeneration II
sewer fee.

$1,656,000

12.

Cheyenne Light, Fuel and Power Company First Mortgage Bonds.

$26,365,000

13.

Black Hills Corporation guarantee of Wyodak Resources Development Corp.
reclamation and lease bond obligations relating to its mining permits.

$20,713,000

14.

Black Hills Corporation guarantee of miscellaneous surety bonds of subsidiaries,
other than reclamation bonds.

$4,287,000

15.

Black Hills Southwest, LLC guarantee in favor of Sempra Energy Solutions under
the Las Vegas Cogen I Power Purchase and Sale Agreement.

$10,000,000

 

 

Credit Agreement

 

 

 

 

16.

Black Hills Corporation guarantee in connection with Enserco Energy Inc.’s
obligations to Fortis Capital Corp. under its credit facility.

 

$3,000,000

17.

Black Hills Corporation guarantee of payment obligations of Black Hills Power,
Inc. to Idaho Power Company.

$250,000

18.

Black Hills Nevada, LLC guarantee in favor of Nevada Power Company in connection
with performance of the LV Cogen II and Western Systems Power Pool Agreement.

$5,000,000

19.

Black Hills Corporation guarantee in favor of Nevada Power Company in connection
with Las Vegas Cogen II interconnection agreement.

$750,000

 

 

 

 

 

 

Credit Agreement

 

 

 

SCHEDULE 7.19

 

RESTRICTIONS ON DISTRIBUTIONS AND EXISTING NEGATIVE PLEDGES

 

1.

Enserco Energy Inc.’s Credit Agreement with Fortis Capital Corp. referred to on
Schedule 7.15 prohibits Enserco and any of its subsidiaries from (a) granting
certain Liens, and (b) paying certain dividends.

 

2.

Black Hills Energy Resources, Inc.’s Credit Agreement with Fortis Capital Corp.
referred to on Schedule 7.15 prohibits Black Hills Energy Resources and any of
its subsidiaries from (a) granting certain Liens, and (b) paying certain
dividends.

 

3.

Black Hills Power, Inc.’s Indenture of Mortgage and Deed of Trust contains a
prohibition on the payment of dividends should the Company’s retained earnings
amount not meet certain minimal levels. Currently the Company is required to
maintain a retained earnings level of greater than $318,000 for dividend
payments to be allowed under the Indenture.

 

4.

Substantially all of Black Hills Generation, Inc.’s project finance
subsidiaries’ non-recourse debt contains restrictions that prohibit
distributions unless certain financial covenants limits are met.

 

5.

Black Hills Corporation is prohibited (with certain exceptions) under its
indenture related to its 6.5% Notes due 2013 issued on May 16, 2003 from
pledging the capital stock of any of its subsidiaries unless it equally and
ratably also secures the notes and all other parity indebtedness.

 

6.

Dividends on Black Hills Corporation’s preferred stock must be paid or declared
and set apart for payment before any dividends may be paid or declared and set
apart for payment on the Company’s common stock. The Company’s preferred stock
is cumulative.

 

 

 

 

Credit Agreement