EXHIBIT 10-3

 

$500,000,000

 

THREE-YEAR

CREDIT AGREEMENT

 

dated as of

 

June 30, 2004

 

among

 

Duke Energy Corporation,

 

The Banks Listed Herein,

 

Citicorp USA, Inc.,

as Administrative Agent

 

and

 

Bank of America, N.A.,

as Syndication Agent

 

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Citigroup Global Markets Inc. and

Banc of America Securities LLC

 

Joint Lead Arrangers and

Joint Bookrunners

 

Deutsche Bank Securities Inc.,

JPMorgan Chase Bank and

UBS Securities LLC

 

Documentation Agents

 

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TABLE OF CONTENTS

 

          PAGE

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     ARTICLE 1           DEFINITIONS     

Section 1.01.

   Definitions    1

Section 1.02.

   Accounting Terms and Determinations    9

Section 1.03.

   Types of Borrowings    9      ARTICLE 2           THE CREDITS     

Section 2.01.

   Commitments to Lend    10

Section 2.02.

   Notice of Borrowings    11

Section 2.03.

   Notice to Banks; Funding of Loans    11

Section 2.04.

   Registry; Notes    12

Section 2.05.

   Maturity of Loans    13

Section 2.06.

   Interest Rates    13

Section 2.07.

   Fees    14

Section 2.08.

   Optional Termination or Reduction of Commitments    14

Section 2.09.

   Method of Electing Interest Rates    15

Section 2.10.

   Mandatory Termination of Commitments    16

Section 2.11.

   Optional Prepayments    16

Section 2.12.

   General Provisions as to Payments    16

Section 2.13.

   Funding Losses    17

Section 2.14.

   Computation of Interest and Fees    17

Section 2.15.

   Regulation D Compensation    18      ARTICLE 3           CONDITIONS     

Section 3.01.

   Effectiveness    18

Section 3.02.

   Borrowings    20      ARTICLE 4           REPRESENTATIONS AND WARRANTIES     

Section 4.01.

   Organization and Power    20

Section 4.02.

   Corporate and Governmental Authorization; No Contravention    20

Section 4.03.

   Binding Effect    21

Section 4.04.

   Financial Information    21

Section 4.05.

   Regulation U    21

Section 4.06.

   Litigation    22

Section 4.07.

   Compliance with Laws    22

 

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Section 4.08.

   Taxes    22

Section 4.09.

   Public Utility Holding Company Act    22      ARTICLE 5           COVENANTS
    

Section 5.01.

   Information    22

Section 5.02.

   Payment of Taxes    24

Section 5.03.

   Maintenance of Property; Insurance    24

Section 5.04.

   Maintenance of Existence    25

Section 5.05.

   Compliance with Laws    25

Section 5.06.

   Books and Records    25

Section 5.07.

   Negative Pledge    26

Section 5.08.

   Consolidations, Mergers and Sales of Assets    27

Section 5.09.

   Use of Proceeds    27

Section 5.10.

   Indebtedness/Capitalization Ratio    27      ARTICLE 6           DEFAULTS   
 

Section 6.01.

   Events of Default    28

Section 6.02.

   Notice of Default    30      ARTICLE 7           THE ADMINISTRATIVE AGENT   
 

Section 7.01.

   Appointment and Authorization    30

Section 7.02.

   Administrative Agent and Affiliates    30

Section 7.03.

   Action by Administrative Agent    30

Section 7.04.

   Consultation with Experts    30

Section 7.05.

   Liability of Administrative Agent    30

Section 7.06.

   Indemnification    31

Section 7.07.

   Credit Decision    31

Section 7.08.

   Successor Administrative Agent    31

Section 7.09.

   Administrative Agent’s Fee    32

Section 7.10.

   Other Agents    32      ARTICLE 8           CHANGE IN CIRCUMSTANCES     

Section 8.01.

   Basis for Determining Interest Rate Inadequate or Unfair    32

Section 8.02.

   Illegality    33

Section 8.03.

   Increased Cost and Reduced Return    33

Section 8.04.

   Taxes    34

Section 8.05.

   Base Rate Loans Substituted for Affected Euro-Dollar Loans    37

Section 8.06.

   Substitution of Bank; Termination Option    37

 

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     ARTICLE 9           MISCELLANEOUS     

Section 9.01.

   Notices    38

Section 9.02.

   No Waivers    38

Section 9.03.

   Expenses; Indemnification    38

Section 9.04.

   Sharing of Set-offs    39

Section 9.05.

   Amendments and Waivers    39

Section 9.06.

   Successors and Assigns    40

Section 9.07.

   Collateral    41

Section 9.08.

   Confidentiality    41

Section 9.09.

   Governing Law; Submission to Jurisdiction    42

Section 9.10.

   Counterparts; Integration    42

Section 9.11.

   WAIVER OF JURY TRIAL    42

Section 9.12.

   USA Patriot Act    42

 

PRICING SCHEDULE

 

SCHEDULE I -

   Duke Energy Corporation Credit Facility (Being Replaced by this Agreement)

EXHIBIT A -

   Note

EXHIBIT B-1 -

   Opinion of Associate General Counsel of the Borrower

EXHIBIT B-2 -

   Opinion of Special Counsel for the Borrower

EXHIBIT C -

   Opinion of Davis Polk & Wardwell, Special Counsel for the Agents

EXHIBIT D -

   Assignment and Assumption Agreement

EXHIBIT E -

   Extension Agreement

 

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THREE-YEAR

CREDIT AGREEMENT

 

THREE-YEAR CREDIT AGREEMENT dated as of June 30, 2004 among DUKE ENERGY
CORPORATION, the BANKS listed on the signature pages hereof, CITICORP USA, INC.,
as Administrative Agent, and BANK OF AMERICA, N.A., as Syndication Agent.

 

The parties hereto agree as follows:

 

ARTICLE 1

DEFINITIONS

 

Section 1.01. Definitions. The following terms, as used herein, have the
following meanings:

 

“Additional Bank” means any financial institution that becomes a Bank for
purposes hereof in connection with the replacement of a Bank pursuant to Section
8.06.

 

“Administrative Agent” means Citicorp USA, Inc. in its capacity as
administrative agent for the Banks hereunder, and its successors in such
capacity.

 

“Administrative Questionnaire” means, with respect to each Bank, the
administrative questionnaire in the form submitted to such Bank by the
Administrative Agent and submitted to the Administrative Agent (with a copy to
the Borrower) duly completed by such Bank.

 

“Affiliate” means, as to any Person (the “specified Person”) (i) any Person that
directly, or indirectly through one or more intermediaries, controls the
specified Person (a “Controlling Person”) or (ii) any Person (other than the
specified Person or a Subsidiary of the specified Person) which is controlled by
or is under common control with a Controlling Person. As used herein, the term
“control” means possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through
the ownership of voting securities, by contract or otherwise. Unless otherwise
specified, “Affiliate” means an Affiliate of the Borrower.

 

“Agent” means any of the Administrative Agent, the Syndication Agent or the
Documentation Agents.

 

“Applicable Lending Office” means, with respect to any Bank, (i) in the case of
its Base Rate Loans, its Domestic Lending Office and (ii) in the case of its
Euro-Dollar Loans, its Euro-Dollar Lending Office.

 

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

 

“Approved Officer” means the president, the treasurer, an assistant treasurer or
the controller of the Borrower or such other representative of the Borrower as
may be designated by any one of the foregoing with the consent of the
Administrative Agent.

 

“Assignee” has the meaning set forth in Section 9.06(c).

 

“Bank” means each bank or other financial institution listed on the signature
pages hereof, each Additional Bank, each Assignee which becomes a Bank pursuant
to Section 9.06(c), and their respective successors.

 

“Base Rate” means, for any day, a rate per annum equal to the higher of (i) the
Citibank Rate for such day and (ii) the sum of 1/2 of 1% plus the Federal Funds
Rate for such day.

 

“Base Rate Loan” means (i) a Loan which bears interest at the Base Rate pursuant
to the applicable Notice of Borrowing or Notice of Interest Rate Election or the
provisions of Article 8 or (ii) an overdue amount which was a Base Rate Loan
immediately before it became overdue.

 

“Borrower” means Duke Energy Corporation, a North Carolina corporation, and its
successors.

 

“Borrowing” has the meaning set forth in Section 1.03.

 

“Citibank Rate” means the rate of interest per annum publicly announced from
time to time by Citibank, N.A. as its base rate in effect at its principal
office in New York City. Each change in the Citibank Rate shall be effective on
the date such change is publicly announced.

 

“Commitment” means (i) with respect to each Bank listed on the signature pages
hereof, the amount set forth opposite the name of such Bank on the signature
pages hereof, and (ii) with respect to each Additional Bank or Assignee which
becomes a bank pursuant to Sections 8.06 and 9.06(c), the amount of the
Commitment thereby assumed by it, in each case as such amount may from time to
time be reduced pursuant to Section 2.08, 2.10, 8.06 or 9.06(c) or increased
pursuant to Section 8.06 or 9.06(c).

 

“Commitment Termination Date” means, for each Bank, June 30, 2007, as such date
may be extended from time to time with respect to such Bank pursuant to Section
2.01(c) or, if such day is not a Euro-Dollar Business Day, the next preceding
Euro-Dollar Business Day.

 

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“Consolidated Capitalization” means the sum of (i) Consolidated Indebtedness,
(ii) consolidated common stockholders’ equity as would appear on a consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries prepared in
accordance with generally accepted accounting principles, (iii) the aggregate
liquidation preference of preferred stocks (other than preferred stocks subject
to mandatory redemption or repurchase) of the Borrower and its Consolidated
Subsidiaries upon involuntary liquidation, (iv) the aggregate outstanding amount
of all Equity Preferred Securities and (v) minority interests as would appear on
a consolidated balance sheet of the Borrower and its Consolidated Subsidiaries
prepared in accordance with generally accepted accounting principles.

 

“Consolidated Indebtedness” means, at any date, all Indebtedness of the Borrower
and its Consolidated Subsidiaries determined on a consolidated basis in
accordance with generally accepted accounting principles.

 

“Consolidated Subsidiary” means, for any Person, at any date any Subsidiary or
other entity the accounts of which would be consolidated with those of such
Person in its consolidated financial statements if such statements were prepared
as of such date; unless otherwise specified “Consolidated Subsidiary” means a
Consolidated Subsidiary of the Borrower.

 

“Default” means any condition or event which constitutes an Event of Default or
which with the giving of notice or lapse of time or both would, unless cured or
waived, become an Event of Default.

 

“Documentation Agent” means each of Deutsche Bank Securities Inc., JPMorgan
Chase Bank and UBS Securities LLC, in its capacity as a documentation agent in
connection with the credit facility provided under this Agreement.

 

“Domestic Business Day” means any day except a Saturday, Sunday or other day on
which commercial banks in New York City are authorized by law to close.

 

“Domestic Lending Office” means, as to each Bank, its office located at its
address set forth in its Administrative Questionnaire (or identified in its
Administrative Questionnaire as its Domestic Lending Office) or such other
office as such Bank may hereafter designate as its Domestic Lending Office by
notice to the Borrower and the Administrative Agent.

 

“Effective Date” means the date this Agreement becomes effective in accordance
with Section 3.01.

 

“Endowment” means the Duke Endowment, a charitable common law trust established
by James B. Duke by Indenture dated December 11, 1924.

 

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“Environmental Laws” means any and all federal, state, local and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges, releases of pollutants, contaminants, chemicals, or industrial,
toxic or hazardous substances or wastes 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, chemicals, or
industrial, toxic or hazardous substances or wastes.

 

“Equity Preferred Securities” means any securities, however denominated, (i)
issued by the Borrower or any Consolidated Subsidiary of the Borrower, (ii) that
are not subject to mandatory redemption or the underlying securities, if any, of
which are not subject to mandatory redemption, (iii) that are perpetual or
mature no less than 20 years from the date of issuance, (iv) the indebtedness
issued in connection with which, including any guaranty, is subordinated in
right of payment to the unsecured and unsubordinated indebtedness of the issuer
of such indebtedness or guaranty and (v) the terms of which permit the deferral
of interest or distributions thereon to date occurring after the first
anniversary of the Commitment Termination Date.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

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

 

“Euro-Dollar Business Day” means any Domestic Business Day on which commercial
banks are open for international business (including dealings in dollar
deposits) in London.

 

“Euro-Dollar Lending Office” means, as to each Bank, its office, branch or
affiliate located at its address set forth in its Administrative Questionnaire
(or identified in its Administrative Questionnaire as its Euro-Dollar Lending
Office) or such other office, branch or affiliate of such Bank as it may
hereafter designate as its Euro-Dollar Lending Office by notice to the Borrower
and the Administrative Agent.

 

“Euro-Dollar Loan” means (i) a Loan which bears interest at a Euro-Dollar Rate
pursuant to the applicable Notice of Borrowing or Notice of Interest Rate
Election or (ii) an overdue amount which was a Euro-Dollar Loan immediately
before it became overdue.

 

“Euro-Dollar Margin” means the applicable rate per annum determined in
accordance with the Pricing Schedule.

 

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“Euro-Dollar Rate” means a rate of interest determined pursuant to Section
2.06(b) on the basis of a London Interbank Offered Rate.

 

“Euro-Dollar Reference Banks” means the principal London offices of Citibank,
N.A. and Bank of America, N.A.

 

“Euro-Dollar Reserve Percentage” has the meaning set forth in Section 2.15.

 

“Event of Default” has the meaning set forth in Section 6.01.

 

“Existing Credit Agreement” means the credit facility identified in Schedule I
hereto, as amended and in effect on the Effective Date.

 

“Facility Fee Rate” has the meaning set forth in the Pricing Schedule.

 

“Federal Funds Rate” means, for any day, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100th of 1%) equal to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Domestic Business Day next
succeeding such day; provided that (i) if such day is not a Domestic Business
Day, the Federal Funds Rate for such day shall be such rate on such transactions
on the next preceding Domestic Business Day as so published on the next
succeeding Domestic Business Day and (ii) if no such rate is so published on
such next succeeding Domestic Business Day, the Federal Funds Rate for such day
shall be the average rate quoted to Citibank, N.A. on such day on such
transactions as determined by the Administrative Agent.

 

“Final Maturity Date” means, for each Bank, the first anniversary of its
Commitment Termination Date or, if such day is not a Euro-Dollar Business Day,
the next preceding Euro-Dollar Business Day.

 

“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.

 

“Group of Loans” means at any time a group of Loans consisting of (i) all Loans
which are Base Rate Loans at such time or (ii) all Euro-Dollar Loans having the
same Interest Period at such time; provided that, if a Loan of any particular
Bank is converted to or made as a Base Rate Loan pursuant to Article 8, such
Loan shall be included in the same Group or Groups of Loans from time to time as
it would have been if it had not been so converted or made.

 

“Indebtedness” of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all indebtedness of such
Person for the deferred purchase price of property or services purchased

 

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(excluding current accounts payable incurred in the ordinary course of
business), (iii) all indebtedness created or arising under any conditional sale
or other title retention agreement with respect to property acquired, (iv) all
indebtedness under leases which shall have been or should be, in accordance with
generally accepted accounting principles, recorded as capital leases in respect
of which such Person is liable as lessee, (v) the face amount of all outstanding
letters of credit issued for the account of such Person (other than letters of
credit relating to indebtedness included in Indebtedness of such Person pursuant
to another clause of this definition) and, without duplication, the unreimbursed
amount of all drafts drawn thereunder, (vi) indebtedness secured by any Lien on
property or assets of such Person, whether or not assumed (but in any event not
exceeding the fair market value of the property or asset), (vii) all direct
guarantees of Indebtedness referred to above of another Person, (viii) all
amounts payable in connection with mandatory redemptions or repurchases of
preferred stock and (ix) any obligations of such Person (in the nature of
principal or interest) in respect of acceptances or similar obligations issued
or created for the account of such Person.

 

“Interest Period” means, with respect to each Euro-Dollar Loan, the period
commencing on the date of borrowing specified in the applicable Notice of
Borrowing or on the date specified in an applicable Notice of Interest Rate
Election and ending one, two, three or six, or, if deposits of a corresponding
maturity are generally available in the London interbank market, nine or twelve,
months thereafter, as the Borrower may elect in such notice; provided that:

 

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

 

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

 

provided further that: (x) no Interest Period applicable to any Loan of any Bank
which begins before such Bank’s Commitment Termination Date may end after such
Bank’s Commitment Termination Date; and (y) no Interest Period applicable to any
Loan of any Bank may end after such Bank’s Final Maturity Date.

 

“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended, or
any successor statute.

 

“Investment Grade Status” exists as to any Person at any date if all senior
long-term unsecured debt securities of such Person outstanding at such date

 

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which had been rated by S&P or Moody’s are rated BBB- or higher by S&P or Baa3
or higher by Moody’s, as the case may be.

 

“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset. For the
purposes of this Agreement, the Borrower or any Subsidiary shall be deemed to
own subject to a Lien any asset which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such asset.

 

“Loan” means a loan made by a Bank pursuant to Section 2.01(a) or 2.01(b);
provided that, if any loan or loans (or portions thereof) are combined or
subdivided pursuant to a Notice of Interest Rate Election, the term “Loan” shall
refer to the combined principal amount resulting from such combination or to
each of the separate principal amounts resulting from such subdivision, as the
case may be.

 

“London Interbank Offered Rate” has the meaning set forth in Section 2.06(b).

 

“Material Debt” means Indebtedness of the Borrower or any of its Material
Subsidiaries in an aggregate principal amount exceeding $150,000,000.

 

“Material Plan” has the meaning set forth in Section 6.01(i).

 

“Material Subsidiary” means at any time any Subsidiary of the Borrower that is a
“significant subsidiary” (as such term is defined on the Effective Date in
Regulation S-X of the Securities and Exchange Commission (17 CFR 210.1-02(w)),
but treating all references therein to the “registrant” as references to the
Borrower); provided, however, in no event shall Duke Energy Field Services, LLC
be deemed a Material Subsidiary.

 

“Moody’s” means Moody’s Investors Service, Inc.

 

“Mortgage Indenture” means the First and Refunding Mortgage between the Borrower
and JPMorgan Chase Bank, as successor trustee, dated as of December 1, 1927, as
amended or supplemented from time to time.

 

“Notes” means promissory notes of the Borrower, in the form required by Section
2.04, evidencing the obligation of the Borrower to repay the Loans, and “Note”
means any one of such promissory notes issued hereunder.

 

“Notice of Borrowing” has the meaning set forth in Section 2.02.

 

“Notice of Interest Rate Election” has the meaning set forth in Section 2.09(b).

 

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“Parent” means, with respect to any Bank, any Person controlling such Bank.

 

“Participant” has the meaning set forth in Section 9.06(b).

 

“PBGC” means the Pension Benefit Guaranty Corporation or any entity succeeding
to any or all of its functions under ERISA.

 

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

 

“Plan” means at any time an employee pension benefit plan which is covered by
Title IV of ERISA or subject to the minimum funding standards under Section 412
of the Internal Revenue Code and is either (i) maintained by a member of the
ERISA Group for employees of a member of the ERISA 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
ERISA Group is then making or accruing an obligation to make contributions or
has within the preceding five plan years made contributions.

 

“Pricing Schedule” means the Pricing Schedule attached hereto.

 

“Quarterly Payment Date” means the first Domestic Business Day of each January,
April, July and October.

 

“Regulation U” means Regulation U of the Board of Governors of the Federal
Reserve System, as in effect from time to time.

 

“Required Banks” means at any time Banks (i) having at least 51% of the sum of
the aggregate amount of the Commitments or (ii) if all the Commitments shall
have been terminated, holding at least 51% of the aggregate unpaid principal
amount of the Loans.

 

“Revolving Credit Loan” means a loan made or to be made by a Bank pursuant to
Section 2.01(a); provided that, if any such loan or loans (or portions thereof)
are combined or subdivided pursuant to a Notice of Interest Rate Election, the
term “Revolving Credit Loan” shall refer to the combined principal amount
resulting from such combination or to each of the separate principal amounts
resulting from such subdivision, as the case may be.

 

“Revolving Credit Period” means, with respect to any Bank, the period from and
including the Effective Date to but not including its Commitment Termination
Date.

 

“S&P” means Standard & Poor’s Rating Services, a division of The McGraw-Hill
Companies, Inc.

 

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“Subsidiary” means, as to any Person, any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at the time directly or indirectly owned by such Person; unless otherwise
specified, “Subsidiary” means a Subsidiary of the Borrower.

 

“Substantial Assets” means assets sold or otherwise disposed of in a single
transaction or a series of related transactions representing 25% or more of the
consolidated assets of the Borrower and its Consolidated Subsidiaries, taken as
a whole.

 

“Syndication Agent” means Bank of America, N.A., in its capacity as syndication
agent for the Banks hereunder, and its successors in such capacity.

 

“Term Loan” means a loan made or to be made by a Bank pursuant to Section
2.01(b); provided that, if any such loan or loans (or portions thereof) are
combined or subdivided pursuant to a Notice of Interest Rate Election, the term
“Term Loan” shall refer to the combined principal amount resulting from such
combination or to each of the separate principal amounts resulting from such
subdivision, as the case may be.

 

“Trust” means The Doris Duke Trust, a trust established by James B. Duke by
Indenture dated December 11, 1924 for the benefit of certain relatives.

 

“United States” means the United States of America, including the States and the
District of Columbia, but excluding its territories and possessions.

 

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

 

“Utilization” has the meaning set forth in the Pricing Schedule.

 

Section 1.02. Accounting Terms and Determinations. Unless otherwise specified
herein, all accounting terms used herein shall be interpreted, all accounting
determinations hereunder shall be made, and all financial statements required to
be delivered hereunder shall be prepared in accordance with generally accepted
accounting principles as in effect from time to time, applied on a basis
consistent (except for changes concurred in by the Borrower’s independent public
accountants) with the most recent audited consolidated financial statements of
the Borrower and its Consolidated Subsidiaries delivered to the Banks.

 

Section 1.03. Types of Borrowings. The term “Borrowing” denotes the aggregation
of Loans of one or more Banks to be made to the Borrower pursuant

 

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to Article 2 on a single date and for a single Interest Period. Borrowings are
classified for purposes of this Agreement by reference to the pricing of Loans
comprising such Borrowing (e.g., a “Euro-Dollar Borrowing” is a Borrowing
comprised of Euro Dollar Loans).

 

ARTICLE 2

THE CREDITS

 

Section 2.01. Commitments to Lend. (a) Revolving Credit Loans. During its
Revolving Credit Period, each Bank severally agrees, on the terms and conditions
set forth in this Agreement, to make loans to the Borrower pursuant to this
subsection from time to time in amounts such that the aggregate principal amount
of Revolving Credit Loans by such Bank at any one time outstanding shall not
exceed the amount of its Commitment. Each Borrowing under this subsection shall
be in an aggregate principal amount of $10,000,000 or any larger multiple of
$1,000,000 (except that any such Borrowing may be in the aggregate amount
available in accordance with Section 3.02(b)) and shall be made from the several
Banks ratably in proportion to their respective Commitments in effect on the
date of Borrowing; provided that, if the Interest Period selected by the
Borrower for a Borrowing would otherwise end after the Commitment Termination
Dates of some but not all Banks, the Borrower may in its Notice of Borrowing
elect not to borrow from those Banks whose Commitment Termination Dates fall
prior to the end of such Interest Period. Within the foregoing limits, the
Borrower may borrow under this subsection (a), or to the extent permitted by
Section 2.11, prepay Loans and reborrow at any time during the Revolving Credit
Periods under this subsection (a).

 

(b) Term Loans. Each Bank severally agrees, on the terms and conditions set
forth in this Agreement, to make a loan to the Borrower on its Commitment
Termination Date in an amount up to but not exceeding the amount of its
Commitment; provided that no Bank shall be obligated to make a loan pursuant to
this subsection if any Commitment is extended on such date pursuant to Section
2.01(c). Each Borrowing under this Section 2.01(b) shall be made from the
several Banks having the same Commitment Termination Date ratably in proportion
to their respective Commitments.

 

(c) Extension of Commitments. The Borrower may, upon not less than 45 days but
no earlier than 60 days notice prior to the then current Commitment Termination
Dates to the Administrative Agent (which shall notify each Bank of receipt of
such request), propose to extend the Commitment Termination Dates for an
additional one-year period measured from the Commitment Termination Dates then
in effect. Each Bank shall endeavor to respond to such request, whether
affirmatively or negatively (such determination in the sole discretion of such
Bank), by notice to the Borrower and the Administrative Agent not more than 45
days nor less than 28 days prior to such Bank’s Commitment Termination

 

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Date. Subject to the execution by the Borrower, the Administrative Agent and
such Banks of a duly completed Extension Agreement in substantially the form of
Exhibit E, the Commitment Termination Date applicable to the Commitment of each
Bank so affirmatively notifying the Borrower and the Administrative Agent shall
be extended for the period specified above; provided that no Commitment
Termination Date of any Bank shall be extended unless Banks having Commitments
in an aggregate amount equal to at least 66 2/3% in aggregate amount of the
Commitments in effect at the time any such extension is requested shall have
elected so to extend their Commitments. Any Bank which does not give such notice
to the Borrower and the Administrative Agent shall be deemed to have elected not
to extend as requested, and the Commitment of each non-extending Bank shall
terminate on its Commitment Termination Date determined without giving effect to
such requested extension. The Borrower may, in accordance with Section 8.06,
designate another bank or other financial institution (which may be, but need
not be, an extending Bank) to replace a non-extending Bank.

 

Section 2.02. Notice of Borrowings. The Borrower shall give the Administrative
Agent notice (a “Notice of Borrowing”) not later than 11:00 A.M. (New York City
time) on (x) the date of each Base Rate Borrowing and (y) the third Euro-Dollar
Business Day before each Euro-Dollar Borrowing, specifying:

 

(a) the date of such Borrowing, which shall be a Domestic Business Day in the
case of a Domestic Borrowing or a Euro-Dollar Business Day in the case of a
Euro-Dollar Borrowing;

 

(b) the aggregate amount of such Borrowing;

 

(c) whether the Loans comprising such Borrowing are to bear interest initially
at the Base Rate or a Euro-Dollar Rate; and

 

(d) in the case of a Euro-Dollar Borrowing, the duration of the initial Interest
Period applicable thereto, subject to the provisions of the definition of
Interest Period.

 

Section 2.03. Notice to Banks; Funding of Loans. (a) Upon receipt of a Notice of
Borrowing, the Administrative Agent shall promptly notify each Bank of the
contents thereof and of such Bank’s share (if any) of such Borrowing and such
Notice of Borrowing shall not thereafter be revocable by the Borrower.

 

(b) Not later than 1:00 P.M. (New York City time) on the date of each Borrowing,
each Bank participating therein shall (except as provided in subsection (c) of
this Section) make available its share of such Borrowing, in Federal or other
funds immediately available in New York City, to the Administrative Agent at its
address specified in or pursuant to Section 9.01. Unless the Administrative
Agent determines that any applicable condition specified in Article 3 has not
been satisfied, the Administrative Agent will make

 

11

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the funds so received from the Banks available to the Borrower at the
Administrative Agent’s aforesaid address.

 

(c) Unless the Administrative Agent shall have received notice from a Bank prior
to the date of any Borrowing that such Bank will not make available to the
Administrative Agent such Bank’s share of such Borrowing, the Administrative
Agent may assume that such Bank has made such share available to the
Administrative Agent on the date of such Borrowing in accordance with subsection
(b) of this Section 2.03 and the Administrative Agent may, in reliance upon such
assumption, make available to the Borrower on such date a corresponding amount.
If and to the extent that such Bank shall not have so made such share available
to the Administrative Agent, such Bank and, if such Bank shall not have made
such payment within two Domestic Business Days of demand therefor, the Borrower
severally agree to repay to the Administrative Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Borrower until the date such amount is
repaid to the Administrative Agent, at (i) in the case of the Borrower, a rate
per annum equal to the higher of the Federal Funds Rate and the interest rate
applicable thereto pursuant to Section 2.06 and (ii) in the case of such Bank,
the Federal Funds Rate. If such Bank shall repay to the Administrative Agent
such corresponding amount, such amount so repaid shall constitute such Bank’s
Loan included in such Borrowing for purposes of this Agreement.

 

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

 

Section 2.04. Registry; Notes. (a) The Administrative Agent shall maintain a
register (the “Register”) on which it will record the Commitment of each Bank,
each Loan made by such Bank and each repayment of any Loan made by such Bank.
Any such recordation by the Administrative Agent on the Register shall be
conclusive, absent manifest error. Failure to make any such recordation, or any
error in such recordation, shall not affect the Borrower’s obligations
hereunder.

 

(b) The Borrower hereby agrees that, promptly upon the request of any Bank at
any time, the Borrower shall deliver to such Bank a duly executed Note, in
substantially the form of Exhibit A hereto, payable to the order of such Bank
and representing the obligation of the Borrower to pay the unpaid principal
amount of the Loans made to the Borrower by such Bank, with interest as provided
herein on the unpaid principal amount from time to time outstanding.

 

(c) Each Bank shall record the date, amount and maturity of each Loan made by it
and the date and amount of each payment of principal made by the Borrower with
respect thereto, and each Bank receiving a Note pursuant to this

 

12

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Section, if such Bank so elects in connection with any transfer or enforcement
of its Note, may endorse on the schedule forming a part thereof appropriate
notations to evidence the foregoing information with respect to each such Loan
then outstanding; provided that the failure of such Bank to make any such
recordation or endorsement shall not affect the obligations of the Borrower
hereunder or under the Notes. Such Bank is hereby irrevocably authorized by the
Borrower so to endorse its Note and to attach to and make a part of its Note a
continuation of any such schedule as and when required.

 

Section 2.05. Maturity of Loans. (a) Each Revolving Credit Loan made by any Bank
shall mature, and the principal amount thereof shall be due and payable together
with accrued interest thereon, on the Commitment Termination Date of such Bank.

 

(b) The Term Loan of each Bank shall mature, and the principal amount thereof
shall be due and payable, together with accrued interest thereon, on the Final
Maturity Date.

 

Section 2.06. Interest Rates. (a) Each Base Rate Loan shall bear interest on the
outstanding principal amount thereof, for each day from the date such Loan is
made until it becomes due, at a rate per annum equal to the Base Rate for such
day. Such interest shall be payable quarterly in arrears on each Quarterly
Payment Date, at maturity and on the date of termination of the Commitments in
their entirety. Any overdue principal of or overdue interest on any Base Rate
Loan shall bear interest, payable on demand, for each day until paid at a rate
per annum equal to the sum of 1% plus the Base Rate for such day.

 

(b) Each Euro-Dollar Loan shall bear interest on the outstanding principal
amount thereof, for each day during each Interest Period applicable thereto, at
a rate per annum equal to the sum of the Euro-Dollar Margin for such day plus
the London Interbank Offered Rate applicable to such Interest Period. Such
interest shall be payable for each Interest Period on the last day thereof and,
if such Interest Period is longer than three months, at intervals of three
months after the first day thereof.

 

The “London Interbank Offered Rate” applicable to any Interest Period means the
rate appearing on Page 3750 of the Telerate Service Company (or on any successor
or substitute page of such service, or any successor to or substitute for such
service, providing rate quotations comparable to those currently provided on
such page of the Telerate Service, as may be nominated by the British Bankers’
Association for purposes of providing quotations of interest rates applicable to
dollar deposits in the London interbank market) as of 11:00 A.M. (London time)
two Euro-Dollar Business Days prior to the commencement of such Interest Period,
as the rate for dollar deposits with a maturity comparable to such Interest
Period. In the event that such rate is not so available at such time for any
reason, then the “London Interbank Offered Rate” for such Interest Period shall
be the average (rounded upward, if necessary, to the next higher 1/16 of 1%)

 

13

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of the respective rates per annum at which deposits in dollars are offered to
each of the Euro-Dollar Reference Banks in the London interbank market at
approximately 11:00 A.M. (London time) two Euro-Dollar Business Days before the
first day of such Interest Period in an amount approximately equal to the
principal amount of the Loan of such Euro-Dollar Reference Bank to which such
Interest Period is to apply and for a period of time comparable to such Interest
Period. If any Euro-Dollar Reference Bank does not furnish a timely quotation,
the Administrative Agent shall determine the relevant interest rate on the basis
of the quotation furnished by the remaining Euro-Dollar Reference Bank or, if
none of such quotations is available on a timely basis, the provisions of
Section 8.01 shall apply.

 

(c) Any overdue principal of or overdue interest on any Euro-Dollar Loan shall
bear interest, payable on demand, for each day from and including the date
payment thereof was due to but excluding the date of actual payment, at a rate
per annum equal to the sum of 1% plus the higher of (i) the sum of the
Euro-Dollar Margin for such day plus the London Interbank Offered Rate
applicable to such Loan at the date such payment was due and (ii) the Base Rate
for such day.

 

(d) The Administrative Agent shall determine each interest rate applicable to
the Loans hereunder. The Administrative Agent shall give prompt notice to the
Borrower and the participating Banks by telecopy, telex or cable of each rate of
interest so determined, and its determination thereof shall be conclusive in the
absence of manifest error unless the Borrower raises an objection thereto within
five Domestic Business Days after receipt of such notice.

 

Section 2.07. Fees. (a) Facility Fee. The Borrower shall pay to the
Administrative Agent for the account of each Bank a facility fee at the Facility
Fee Rate (determined daily in accordance with the Pricing Schedule). Such
facility fee shall accrue (i) from and including the Effective Date to but
excluding such Bank’s Commitment Termination Date, on the daily average
aggregate amount of such Bank’s Commitment (whether used or unused) and (ii)
from and including such Bank’s Commitment Termination Date to but excluding the
date such Bank’s Loans shall be repaid in their entirety, on the daily average
aggregate outstanding principal amount of such Bank’s Loans.

 

(b) Payments. Accrued fees under this Section for the account of any Bank shall
be payable quarterly in arrears on each Quarterly Payment Date and upon such
Bank’s Commitment Termination Date and Final Maturity Date (and, if later, the
date the Loans of such Bank shall be repaid in their entirety).

 

Section 2.08. Optional Termination or Reduction of Commitments. The Borrower
may, upon at least three Domestic Business Days’ notice to the Administrative
Agent, (i) terminate the Commitments at any time, if no Loans are outstanding at
such time, or (ii) ratably reduce from time to time by an aggregate amount of
$10,000,000 or any larger multiple of $1,000,000 the aggregate amount

 

14

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of the Commitments in excess of the aggregate outstanding principal amount of
the Loans.

 

Section 2.09. Method of Electing Interest Rates. (a) The Loans included in each
Borrowing shall bear interest initially at the type of rate specified by the
Borrower in the applicable Notice of Borrowing. Thereafter, the Borrower may
from time to time elect to change or continue the type of interest rate borne by
each Group of Loans (subject in each case to the provisions of Article 8 and the
last sentence of this subsection (a)), as follows:

 

(i) if such Loans are Base Rate Loans, the Borrower may elect to convert such
Loans to Euro-Dollar Loans as of any Euro-Dollar Business Day; and

 

(ii) if such Loans are Euro-Dollar Loans, the Borrower may elect to convert such
Loans to Base Rate Loans or elect to continue such Loans as Euro-Dollar Loans
for an additional Interest Period, subject to Section 2.13 in the case of any
such conversion or continuation effective on any day other than the last day of
the then current Interest Period applicable to such Loans.

 

Each such election shall be made by delivering a notice (a “Notice of Interest
Rate Election”) to the Administrative Agent not later than 11:00 A.M. (New York
City time) on the third Euro-Dollar Business Day before the conversion or
continuation selected in such notice is to be effective. A Notice of Interest
Rate Election may, if it so specifies, apply to only a portion of the aggregate
principal amount of the relevant Group of Loans; provided that (i) such portion
is allocated ratably among the Loans comprising such Group and (ii) the portion
to which such notice applies, and the remaining portion to which it does not
apply, are each $10,000,000 or any larger multiple of $1,000,000.

 

(b) Each Notice of Interest Rate Election shall specify:

 

(i) the Group of Loans (or portion thereof) to which such notice applies;

 

(ii) the date on which the conversion or continuation selected in such notice is
to be effective, which shall comply with the applicable clause of subsection
2.09(a) above;

 

(iii) if the Loans comprising such Group are to be converted, the new type of
Loans and, if the Loans being converted are to be Euro-Dollar Loans, the
duration of the next succeeding Interest Period applicable thereto; and

 

15

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(iv) if such Loans are to be continued as Euro-Dollar Loans for an additional
Interest Period, the duration of such additional Interest Period.

 

Each Interest Period specified in a Notice of Interest Rate Election shall
comply with the provisions of the definition of the term “Interest Period”.

 

(c) Promptly after receiving a Notice of Interest Rate Election from the
Borrower pursuant to subsection 2.09(a) above, the Administrative Agent shall
notify each Bank of the contents thereof and such notice shall not thereafter be
revocable by the Borrower. If no Notice of Interest Rate Election is timely
received prior to the end of an Interest Period for any Group of Loans, the
Borrower shall be deemed to have elected that such Group of Loans be converted
to Base Rate Loans as of the last day of such Interest Period.

 

(d) An election by the Borrower to change or continue the rate of interest
applicable to any Group of Loans pursuant to this Section shall not constitute a
“Borrowing” subject to the provisions of Section 3.02.

 

Section 2.10. Mandatory Termination of Commitments. The Commitment of each Bank
shall terminate on such Bank’s Commitment Termination Date, and any Revolving
Credit Loans of such Bank then outstanding (together with accrued interest
thereon) shall be due and payable on such date.

 

Section 2.11. Optional Prepayments. (a) The Borrower may (i) upon notice to the
Administrative Agent not later than 11:00 A.M. (New York City time) on any
Domestic Business Day prepay on such Domestic Business Day any Group of Base
Rate Loans and (ii) upon at least three Euro-Dollar Business Days’ notice to the
Administrative Agent not later than 11:00 A.M. (New York City time) prepay any
Group of Euro-Dollar Loans, in each case in whole at any time, or from time to
time in part in amounts aggregating $5,000,000 or any larger multiple of
$1,000,000, by paying the principal amount to be prepaid together with accrued
interest thereon to the date of prepayment and together with any additional
amounts payable pursuant to Section 2.13. Each such optional prepayment shall be
applied to prepay ratably the Loans of the several Banks included in such Group
or Borrowing.

 

(b) Upon receipt of a notice of prepayment pursuant to this Section, the
Administrative Agent shall promptly notify each Bank of the contents thereof and
of such Bank’s share (if any) of such prepayment and such notice shall not
thereafter be revocable by the Borrower.

 

Section 2.12. General Provisions as to Payments. (a) The Borrower shall make
each payment of principal of, and interest on, the Loans and of fees hereunder,
not later than 1:00 P.M. (New York City time) on the date when due, in Federal
or other funds immediately available in New York City, to the Administrative
Agent at its address referred to in Section 9.01 and without

 

16

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reduction by reason of any set-off, counterclaim or deduction of any kind. The
Administrative Agent will promptly distribute to each Bank in like funds its
ratable share of each such payment received by the Administrative Agent for the
account of the Banks. Whenever any payment of principal of, or interest on, the
Base Rate Loans or of fees shall be due on a day which is not a Domestic
Business Day, the date for payment thereof shall be extended to the next
succeeding Domestic Business Day. Whenever any payment of principal of, or
interest on, the Euro-Dollar Loans shall be due on a day which is not a
Euro-Dollar Business Day, the date for payment thereof shall be extended to the
next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day
falls in another calendar month, in which case the date for payment thereof
shall be the next preceding Euro-Dollar Business Day. If the date for any
payment of principal is extended by operation of law or otherwise, interest
thereon shall be payable for such extended time.

 

(b) Unless the Administrative Agent shall have received notice from the Borrower
prior to the date on which any payment is due to the Banks hereunder that the
Borrower will not make such payment in full, the Administrative Agent may assume
that the Borrower has made such payment in full to the Administrative Agent on
such date and the Administrative Agent may, in reliance upon such assumption,
cause to be distributed to each Bank on such due date an amount equal to the
amount then due such Bank. If and to the extent that the Borrower shall not have
so made such payment, each Bank shall repay to the Administrative Agent
forthwith on demand such amount distributed to such Bank together with interest
thereon, for each day from the date such amount is distributed to such Bank
until the date such Bank repays such amount to the Administrative Agent, at the
Federal Funds Rate.

 

Section 2.13. Funding Losses. If the Borrower makes any payment of principal
with respect to any Euro-Dollar Loan or any Euro-Dollar Loan is converted to a
Base Rate Loan or continued as a Euro-Dollar Loan for a new Interest Period
(pursuant to Article 2, 6 or 8 or otherwise) on any day other than the last day
of an Interest Period applicable thereto, or if the Borrower fails to borrow,
prepay, convert or continue any Euro-Dollar Loans after notice has been given to
any Bank in accordance with Section 2.03(a), 2.09(c) or 2.11(b), the Borrower
shall reimburse each Bank within 15 days after demand for any resulting loss or
expense incurred by it (or by an existing or prospective Participant in the
related Loan), including (without limitation) any loss incurred in obtaining,
liquidating or employing deposits from third parties, but excluding loss of
margin for the period after any such payment or conversion or failure to borrow,
prepay, convert or continue; provided that such Bank shall have delivered to the
Borrower a certificate setting forth in reasonable detail the calculation of the
amount of such loss or expense, which certificate shall be conclusive in the
absence of manifest error.

 

Section 2.14. Computation of Interest and Fees. Interest based on the Base Rate
and facility fees hereunder shall be computed on the basis of a year of

 

17

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365 days (or 366 days in a leap year) and paid for the actual number of days
elapsed (including the first day but excluding the last day). All other interest
shall be computed on the basis of a year of 360 days and paid for the actual
number of days elapsed (including the first day but excluding the last day).

 

Section 2.15. Regulation D Compensation. In the event that a Bank is required to
maintain reserves of the type contemplated by the definition of “Euro-Dollar
Reserve Percentage”, such Bank may require the Borrower to pay,
contemporaneously with each payment of interest on the Euro-Dollar Loans,
additional interest on the related Euro-Dollar Loan of such Bank at a rate per
annum determined by such Bank up to but not exceeding the excess of (i) (A) the
applicable London Interbank Offered Rate divided by (B) one minus the
Euro-Dollar Reserve Percentage over (ii) the applicable London Interbank Offered
Rate. Any Bank wishing to require payment of such additional interest (x) shall
so notify the Borrower and the Administrative Agent, in which case such
additional interest on the Euro-Dollar Loans of such Bank shall be payable to
such Bank at the place indicated in such notice with respect to each Interest
Period commencing at least three Euro-Dollar Business Days after the giving of
such notice and (y) shall notify the Borrower at least three Euro-Dollar
Business Days prior to each date on which interest is payable on the Euro-Dollar
Loans of the amount then due it under this Section. Each such notification shall
be accompanied by such information as the Borrower may reasonably request.

 

“Euro-Dollar Reserve Percentage” means for any day that percentage (expressed as
a decimal) which is in effect on such day, as prescribed by the Board of
Governors of the Federal Reserve System (or any successor) for determining the
maximum reserve requirement for a member bank of the Federal Reserve System in
New York City with deposits exceeding five billion dollars in respect of
“Eurocurrency liabilities” (or in respect of any other category of liabilities
which includes deposits by reference to which the interest rate on Euro-Dollar
Loans is determined or any category of extensions of credit or other assets
which includes loans by a non-United States office of any Bank to United States
residents).

 

ARTICLE 3

CONDITIONS

 

Section 3.01. Effectiveness. This Agreement shall become effective on the date
that each of the following conditions shall have been satisfied (or waived in
accordance with Section 9.05):

 

(a) receipt by the Administrative Agent of counterparts hereof signed by each of
the parties hereto (or, in the case of any party as to which an executed
counterpart shall not have been received, receipt by the Administrative Agent in
form satisfactory to it of telegraphic, telecopy, telex or other written
confirmation from such party of execution of a counterpart hereof by such
party);

 

18

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(b) receipt by the Administrative Agent of (i) an opinion of an associate
general counsel of the Borrower, substantially in the form of Exhibit B-1 hereto
and (ii) an opinion of Robinson, Bradshaw & Hinson, P.A., special counsel for
the Borrower, substantially in the form of Exhibit B-2 hereto, and, in each
case, covering such additional matters relating to the transactions contemplated
hereby as the Required Banks may reasonably request;

 

(c) receipt by the Administrative Agent of an opinion of Davis Polk & Wardwell,
special counsel for the Agents, substantially in the form of Exhibit C hereto
and covering such additional matters relating to the transactions contemplated
hereby as the Required Banks may reasonably request;

 

(d) receipt by the Administrative Agent of a certificate signed by a Vice
President, the Treasurer, an Assistant Treasurer or the Controller of the
Borrower, dated the Effective Date, to the effect set forth in clauses (c) and
(d) of Section 3.02;

 

(e) receipt by the Administrative Agent of all documents it may have reasonably
requested prior to the date hereof relating to the existence of the Borrower,
the corporate authority for and the validity of this Agreement and the Notes,
and any other matters relevant hereto, all in form and substance satisfactory to
the Administrative Agent;

 

(f) receipt by the Administrative Agent of evidence satisfactory to it of the
payment of all principal of and interest on any loans outstanding under, and all
accrued commitment fees under, the Existing Credit Agreement and the
cancellation or the expiration of any letter of credit issued thereunder; and

 

(g) receipt by the Administrative Agent for the account of the Banks of
participation fees as heretofore mutually agreed by the Borrower and the
Administrative Agent;

 

provided that this Agreement shall not become effective or be binding on any
party hereto unless all of the foregoing conditions are satisfied not later than
June 30, 2004. The Administrative Agent shall promptly notify the Borrower and
the Banks of the Effective Date, and such notice shall be conclusive and binding
on all parties hereto. The Borrower and the Banks party to the Existing Credit
Agreement, comprising the “Required Banks” as defined therein, hereby agree that
(i) the commitments of the lenders under the Existing Credit Agreement shall
terminate in their entirety immediately and automatically upon the effectiveness
of this Agreement, without further action by any party to the Existing Credit
Agreement, (ii) all accrued fees under the Existing Credit Agreement shall be
due and payable at such time and (iii) subject to the funding loss indemnities
in the Existing Credit Agreement, the Borrower may prepay any and all loans
outstanding thereunder on the date of effectiveness of this Agreement.

 

19

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Section 3.02. Borrowings. The obligation of any Bank to make a Loan on the
occasion of any Borrowing is subject to the satisfaction of the following
conditions:

 

(a) receipt by the Administrative Agent of a Notice of Borrowing as required by
Section 2.02;

 

(b) the fact that, immediately after such Borrowing, the aggregate outstanding
principal amount of the Loans will not exceed the aggregate amount of the
Commitments;

 

(c) the fact that, immediately after such Borrowing, no Default shall have
occurred and be continuing; and

 

(d) the fact that the representations and warranties of the Borrower contained
in this Agreement (except the representations and warranties set forth in
Sections 4.04(c) and 4.06) shall be true on and as of the date of such
Borrowing.

 

Each Borrowing hereunder shall be deemed to be a representation and warranty by
the Borrower on the date of such Borrowing as to the facts specified in clauses
(b), (c) and (d) of this Section.

 

ARTICLE 4

REPRESENTATIONS AND WARRANTIES

 

The Borrower represents and warrants that:

 

Section 4.01. Organization and Power. The Borrower is duly organized, validly
existing and in good standing under the laws of North Carolina and has all
requisite powers and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted and is
duly qualified to do business in each jurisdiction where such qualification is
required, except where the failure so to qualify would not have a material
adverse effect on the business, financial position or results of operations of
the Borrower and its Consolidated Subsidiaries, considered as a whole.

 

Section 4.02. Corporate and Governmental Authorization; No Contravention. The
execution, delivery and performance by the Borrower of this Agreement and the
Notes are within the Borrower’s corporate powers, have been duly authorized by
all necessary corporate action, require no action by or in respect of, or filing
with, any governmental body, agency or official (except for the approval of the
obtaining of credit pursuant to this Agreement by the North Carolina Utilities
Commission and The Public Service Commission of South Carolina which shall have
been obtained not later than the Effective Date) and do not contravene, or
constitute a default under, any provision of applicable law or regulation or of
the articles of incorporation or by-laws of the Borrower or of any

 

20

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agreement, judgment, injunction, order, decree or other instrument binding upon
the Borrower or result in the creation or imposition of any Lien on any asset of
the Borrower or any of its Material Subsidiaries.

 

Section 4.03. Binding Effect. This Agreement constitutes a valid and binding
agreement of the Borrower and each Note, if and when executed and delivered in
accordance with this Agreement, will constitute a valid and binding obligation
of the Borrower, in each case enforceable in accordance with its terms, except
as the same may be limited by bankruptcy, insolvency or similar laws affecting
creditors’ rights generally and by general principles of equity.

 

Section 4.04. Financial Information. (a) The consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of December 31, 2003 and the
related consolidated statements of income, cash flows, capitalization and
retained earnings for the fiscal year then ended, reported on by Deloitte &
Touche, copies of which have been delivered to each of the Banks by using the
Borrower’s IntraLinks site, fairly present, in conformity with generally
accepted accounting principles, the consolidated financial position of the
Borrower and its Consolidated Subsidiaries as of such date and their
consolidated results of operations and cash flows for such fiscal year.

 

(b) The unaudited consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of March 31, 2004 and the related unaudited
consolidated statements of income and cash flows for the three months then
ended, copies of which have been delivered to each of the Banks by using the
Borrower’s IntraLinks site, fairly present, in conformity with generally
accepted accounting principles applied on a basis consistent with the financial
statements referred to in subsection (a) of this Section, the consolidated
financial position of the Borrower and its Consolidated Subsidiaries as of such
date and their consolidated results of operations and changes in financial
position for such three-month period (subject to normal year-end adjustments and
the absence of footnotes).

 

(c) Since December 31, 2003, there has been no material adverse change in the
business, financial position or results of operations of the Borrower and its
Consolidated Subsidiaries, considered as a whole.

 

Section 4.05. Regulation U. The Borrower and its Material Subsidiaries are not
engaged in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation U issued by the Board of
Governors of the Federal Reserve System) and no proceeds of any Borrowing by the
Borrower will be used to purchase or carry any margin stock or to extend credit
to others for the purpose of purchasing or carrying any margin stock. Not more
than 25% of the value of the assets of the Borrower and its Material
Subsidiaries is represented by margin stock.

 

21

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Section 4.06. Litigation. Except as disclosed in the reports referred to in
Section 4.04, there is no action, suit or proceeding pending against, or to the
knowledge of the Borrower threatened against or affecting, the Borrower or any
of its Subsidiaries before any court or arbitrator or any governmental body,
agency or official which would be likely to be decided adversely to Borrower or
such Subsidiary and, as a result, have a material adverse effect upon the
business, consolidated financial position or results of operations of the
Borrower and its Consolidated Subsidiaries, considered as a whole, or which in
any manner draws into question the validity of this Agreement or any Note.

 

Section 4.07. Compliance with Laws. The Borrower and each Material Subsidiary is
in compliance in all material respects with all applicable laws, ordinances,
rules, regulations and requirements of governmental authorities (including,
without limitation, ERISA and Environmental Laws) except where (i)
non-compliance would not have a material adverse effect on the business,
financial position or results of operations of the Borrower and its Consolidated
Subsidiaries, considered as a whole, or (ii) the necessity of compliance
therewith is contested in good faith by appropriate proceedings.

 

Section 4.08. Taxes. The Borrower and its Material Subsidiaries have filed all
United States Federal income tax returns and all other material tax returns
which are required to be filed by them and have paid all taxes due pursuant to
such returns or pursuant to any assessment received by the Borrower or any
Material Subsidiary except (i) where nonpayment would not have a material
adverse effect on the business, financial position or results of operations of
the Borrower and its Consolidated Subsidiaries, considered as a whole, or (ii)
where the same are contested in good faith by appropriate proceedings. The
charges, accruals and reserves on the books of the Borrower and its Material
Subsidiaries in respect of taxes or other governmental charges are, in the
opinion of the Borrower, adequate.

 

Section 4.09. Public Utility Holding Company Act. The Borrower is not a holding
company subject to the registration requirements of the Public Utility Holding
Company Act of 1935, as amended.

 

ARTICLE 5

COVENANTS

 

The Borrower agrees that, so long as any Bank has any Commitment hereunder or
any amount payable hereunder remains unpaid:

 

Section 5.01. Information. The Borrower will deliver to each of the Banks:

 

(a) as soon as available and in any event within 120 days after the end of each
fiscal year of the Borrower, a consolidated balance sheet of the Borrower

 

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and its Consolidated Subsidiaries as of the end of such fiscal year and the
related consolidated statements of income, cash flows, capitalization and
retained earnings for such fiscal year, setting forth in each case in
comparative form the figures for the previous fiscal year, all reported on in a
manner consistent with the requirements of the Securities and Exchange
Commission by Deloitte & Touche or other independent public accountants of
nationally recognized standing;

 

(b) as soon as available and in any event within 60 days after the end of each
of the first three quarters of each fiscal year of the Borrower, a consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries as of the end of
such quarter and the related consolidated statements of income and cash flows
for such quarter and for the portion of the Borrower’s fiscal year ended at the
end of such quarter, setting forth in each case in comparative form the figures
for the corresponding quarter and the corresponding portion of the Borrower’s
previous fiscal year, all certified (subject to normal year-end adjustments) as
to fairness of presentation, generally accepted accounting principles and
consistency by an Approved Officer of the Borrower;

 

(c) simultaneously with the delivery of each set of financial statements
referred to in clauses (a) and (b) above, a certificate of an Approved Officer
of the Borrower (i) setting forth in reasonable detail the calculations required
to establish whether the Borrower was in compliance with the requirements of
Section 5.10 on the date of such financial statements and (ii) stating whether
any Default exists on the date of such certificate and, if any Default then
exists, setting forth the details thereof and the action which the Borrower is
taking or proposes to take with respect thereto;

 

(d) within five days after any officer of the Borrower with responsibility
relating thereto obtains knowledge of any Default, if such Default is then
continuing, a certificate of an Approved Officer of the Borrower setting forth
the details thereof and the action which the Borrower is taking or proposes to
take with respect thereto;

 

(e) promptly upon the filing thereof, copies of all registration statements
(other than the exhibits thereto and any registration statements on Form S-8 or
its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or their equivalents)
which the Borrower shall have filed with the Securities and Exchange Commission;

 

(f) if and when any member of the ERISA Group (i) gives or is required to give
notice to the PBGC of any “reportable event” (as defined in Section 4043 of
ERISA) with respect to any Material Plan which might constitute grounds for a
termination of such Plan under Title IV of ERISA, or knows that the plan
administrator of any Material Plan has given or is required to give notice of
any such reportable event, a copy of the notice of such reportable event given
or required to be given to the PBGC; (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA or notice that any Material Plan is
in reorganization, is insolvent or has been terminated, a copy of such notice;
(iii)

 

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receives notice from the PBGC under Title IV of ERISA of an intent to terminate,
impose material liability (other than for premiums under Section 4007 of ERISA)
in respect of, or appoint a trustee to administer any Plan, a copy of such
notice; (iv) applies for a waiver of the minimum funding standard under Section
412 of the Internal Revenue Code, a copy of such application; (v) gives notice
of intent to terminate any Material Plan under Section 4041(c) of ERISA, a copy
of such notice and other information filed with the PBGC; (vi) gives notice of
withdrawal from any Material Plan pursuant to Section 4063 of ERISA, a copy of
such notice; or (vii) fails to make any payment or contribution to any Material
Plan or makes any amendment to any Material Plan which has resulted or could
result in the imposition of a Lien or the posting of a bond or other security, a
certificate of the chief financial officer or the chief accounting officer of
the Borrower setting forth details as to such occurrence and action, if any,
which the Borrower or applicable member of the ERISA Group is required or
proposes to take; and

 

(g) from time to time such additional information regarding the financial
position or business of the Borrower and its Subsidiaries as the Administrative
Agent, at the request of any Bank, may reasonably request.

 

Information required to be delivered pursuant to these Sections 5.01(a), 5.01(b)
and 5.01(e) shall be deemed to have been delivered on the date on which the
Borrower provides notice to the Banks that such information has been posted on
the Securities and Exchange Commission website on the Internet at
sec.gov/edaux/searches.htm, on the Borrower’s IntraLinks site at intralinks.com
or at another website identified in such notice and accessible by the Banks
without charge; provided that (i) such notice may be included in a certificate
delivered pursuant to Section 5.01(c) and such notice or certificate shall also
be deemed to have been delivered upon being posted to the Borrower’s IntraLinks
site and (ii) the Borrower shall deliver paper copies of the information
referred to in Sections 5.01(a), 5.01(b) and 5.01(e) to any Bank which requests
such delivery.

 

Section 5.02. Payment of Taxes. The Borrower will pay and discharge, and will
cause each Material Subsidiary to pay and discharge, at or before maturity, all
their tax liabilities, except where (i) nonpayment would not have a material
adverse effect on the business, financial position or results of operations of
the Borrower and its Consolidated Subsidiaries, considered as a whole, or (ii)
the same may be contested in good faith by appropriate proceedings, and will
maintain, and will cause each Material Subsidiary to maintain, in accordance
with generally accepted accounting principles, appropriate reserves for the
accrual of any of the same.

 

Section 5.03. Maintenance of Property; Insurance. (a) The Borrower will keep,
and will cause each Material Subsidiary to keep, all property useful and
necessary in its business in good working order and condition, ordinary wear and
tear excepted.

 

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(b) The Borrower will, and will cause each of its Material Subsidiaries to,
maintain (either in the name of the Borrower or in such Subsidiary’s own name)
with financially sound and responsible insurance companies, insurance on all
their respective properties in at least such amounts and against at least such
risks (and with such risk retention) as are usually insured against by companies
of established repute engaged in the same or a similar business; provided that
self-insurance by the Borrower or any such Material Subsidiary shall not be
deemed a violation of this covenant to the extent that companies engaged in
similar businesses and owning similar properties self-insure; and will furnish
to the Banks, upon request from the Administrative Agent, information presented
in reasonable detail as to the insurance so carried.

 

Section 5.04. Maintenance of Existence. The Borrower will preserve, renew and
keep in full force and effect, and will cause each Material Subsidiary to
preserve, renew and keep in full force and effect their respective corporate or
other legal existence and their respective rights, privileges and franchises
material to the normal conduct of their respective businesses; provided that
nothing in this Section 5.04 shall prohibit the termination of any right,
privilege or franchise of the Borrower or any Material Subsidiary or of the
corporate or other legal existence of any Material Subsidiary or the change in
form of organization of the Borrower or any Material Subsidiary if the Borrower
in good faith determines that such termination or change is in the best interest
of the Borrower, is not materially disadvantageous to the Banks and, in the case
of a change in the form of organization of the Borrower, the Administrative
Agent has consented thereto.

 

Section 5.05. Compliance with Laws. The Borrower will comply, and cause each
Material Subsidiary to comply, in all material respects with all applicable
laws, ordinances, rules, regulations, and requirements of governmental
authorities (including, without limitation, ERISA and Environmental Laws) except
where (i) noncompliance would not have a material adverse effect on the
business, financial position or results of operations of the Borrower and its
Consolidated Subsidiaries, considered as a whole, or (ii) the necessity of
compliance therewith is contested in good faith by appropriate proceedings.

 

Section 5.06. Books and Records. The Borrower will keep, and will cause each
Material Subsidiary to keep, proper books of record and account in which full,
true and correct entries shall be made of all financial transactions in relation
to its business and activities in accordance with its customary practices; and
will permit, and will cause each Material Subsidiary to permit, representatives
of any Bank at such Bank’s expense (accompanied by a representative of the
Borrower, if the Borrower so desires) to visit any of their respective
properties, to examine any of their respective books and records and to discuss
their respective affairs, finances and accounts with their respective officers,
employees and independent public accountants, all upon such reasonable notice,
at such reasonable times and as often as may reasonably be desired.

 

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Section 5.07. Negative Pledge. The Borrower will not create, assume or suffer to
exist any Lien on any asset now owned or hereafter acquired by it, except:

 

(a) Liens granted by the Borrower existing on the date of this Agreement
securing Indebtedness outstanding on the date of this Agreement in an aggregate
principal amount not exceeding $100,000,000;

 

(b) the Lien of the Mortgage Indenture securing Indebtedness outstanding on the
date of this Agreement or issued hereafter;

 

(c) any Lien on any asset of any Person existing at the time such Person is
merged or consolidated with or into the Borrower and not created in
contemplation of such event;

 

(d) any Lien existing on any asset prior to the acquisition thereof by the
Borrower and not created in contemplation of such acquisition;

 

(e) any Lien on any asset securing Indebtedness incurred or assumed for the
purpose of financing all or any part of the cost of acquiring such asset;
provided that such Lien attaches to such asset concurrently with or within 180
days after the acquisition thereof;

 

(f) any Lien arising out of the refinancing, extension, renewal or refunding of
any Indebtedness secured by any Lien permitted by any of the foregoing clauses
of this Section; provided that such Indebtedness is not increased and is not
secured by any additional assets;

 

(g) Liens for taxes, assessments or other governmental charges or levies not yet
due or which are being contested in good faith by appropriate proceedings and
with respect to which adequate reserves or other appropriate provisions are
being maintained in accordance with generally accepted accounting principles;

 

(h) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics,
materialmen and other Liens imposed by law, created in the ordinary course of
business and for amounts not past due for more than 60 days or which are being
contested in good faith by appropriate proceedings which are sufficient to
prevent imminent foreclosure of such Liens, are promptly instituted and
diligently conducted and with respect to which adequate reserves or other
appropriate provisions are being maintained in accordance with generally
accepted accounting principles;

 

(i) Liens incurred or deposits made in the ordinary course of business
(including, without limitation, surety bonds and appeal bonds) in connection
with workers’ compensation, unemployment insurance and other types of social
security benefits or to secure the performance of tenders, bids, leases,
contracts (other than for the repayment of Indebtedness), statutory obligations
and other

 

26

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similar obligations or arising as a result of progress payments under government
contracts;

 

(j) easements (including, without limitation, reciprocal easement agreements and
utility agreements), rights-of-way, covenants, consents, reservations,
encroachments, variations and other restrictions, charges or encumbrances
(whether or not recorded) affecting the use of real property;

 

(k) Liens with respect to judgments and attachments which do not result in an
Event of Default;

 

(l) Liens, deposits or pledges to secure the performance of bids, tenders,
contracts (other than contracts for the payment of money), leases (permitted
under the terms of this Agreement), public or statutory obligations, surety,
stay, appeal, indemnity, performance or other obligations arising in the
ordinary course of business;

 

(m) other Liens including Liens imposed by Environmental Laws arising in the
ordinary course of its business which (i) do not secure Indebtedness, (ii) do
not secure any obligation in an amount exceeding $100,000,000 at any time at
which Investment Grade Status does not exist as to the Borrower and (iii) do not
in the aggregate materially detract from the value of its assets or materially
impair the use thereof in the operation of its business; and

 

(n) Liens not otherwise permitted by the foregoing clauses of this Section
securing obligations in an aggregate principal or face amount at any date not to
exceed $500,000,000.

 

Section 5.08. Consolidations, Mergers and Sales of Assets. The Borrower will not
(i) consolidate or merge with or into any other Person or (ii) sell, lease or
otherwise transfer, directly or indirectly, Substantial Assets to any Person
(other than a Subsidiary); provided that the Borrower may merge with another
Person if the Borrower is the corporation surviving such merger and, after
giving effect thereto, no Default shall have occurred and be continuing.

 

Section 5.09. Use of Proceeds. The proceeds of the Loans made under this
Agreement will be used by the Borrower for its general corporate purposes,
including liquidity support for outstanding commercial paper and acquisitions.
None of such proceeds will be used, directly or indirectly, for the purpose,
whether immediate, incidental or ultimate, of buying or carrying any “margin
stock” within the meaning of Regulation U.

 

Section 5.10. Indebtedness/Capitalization Ratio. The ratio of Consolidated
Indebtedness to Consolidated Capitalization will at no time exceed 65%.

 

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ARTICLE 6

DEFAULTS

 

Section 6.01. Events of Default. If one or more of the following events (“Events
of Default”) shall have occurred and be continuing:

 

(a) the Borrower shall fail to pay when due any principal of any Loan or shall
fail to pay, within five days of the due date thereof, any interest, fees or any
other amount payable hereunder;

 

(b) the Borrower shall fail to observe or perform any covenant contained in
Sections 5.04, 5.07, 5.08, 5.10 or the second sentence of 5.09, inclusive;

 

(c) the Borrower shall fail to observe or perform any covenant or agreement
contained in this Agreement (other than those covered by clause (a) or (b)
above) for 30 days after notice thereof has been given to the Borrower by the
Administrative Agent at the request of any Bank;

 

(d) any representation, warranty, certification or statement made by the
Borrower in this Agreement or in any certificate, financial statement or other
document delivered pursuant to this Agreement shall prove to have been incorrect
in any material respect when made (or deemed made);

 

(e) the Borrower or any Material Subsidiary shall fail to make any payment in
respect of Material Debt (other than the Loans) when due or within any
applicable grace period;

 

(f) any event or condition shall occur and shall continue beyond the applicable
grace or cure period, if any, provided with respect thereto so as to result in
the acceleration of the maturity of Material Debt;

 

(g) the Borrower or any Material Subsidiary shall commence a voluntary case or
other proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other similar
law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall admit in writing its inability to, or shall
fail generally to, pay its debts as they become due, or shall take any corporate
action to authorize any of the foregoing;

 

(h) an involuntary case or other proceeding shall be commenced against the
Borrower or any Material Subsidiary seeking liquidation, reorganization or other
relief with respect to it or its debts under any bankruptcy, insolvency or

 

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other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of 90 days; or an order for
relief shall be entered against the Borrower or any Material Subsidiary under
the federal bankruptcy laws as now or hereafter in effect;

 

(i) any member of the ERISA Group shall fail to pay when due an amount or
amounts aggregating in excess of $25,000,000 which it shall have become liable
to pay 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 $50,000,000 (collectively, a “Material Plan”) shall be filed under Title IV
of ERISA by any member of the ERISA Group, any plan administrator or any
combination of the foregoing; 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 any member of the ERISA Group to enforce Section
515 or 4219(c)(5) of ERISA and such proceeding shall not have been dismissed
within 90 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) a judgment or other court order for the payment of money in excess of
$50,000,000 shall be rendered against the Borrower or any Material Subsidiary
and such judgment or order shall continue without being vacated, discharged,
satisfied or stayed or bonded pending appeal for a period of 45 days; or

 

(k) any person or group of persons (within the meaning of Section 13 or 14 of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) other than
trustees and participants in employee benefit plans of the Borrower and its
Subsidiaries or the Endowment or Trust, shall have acquired beneficial ownership
(within the meaning of Rule 13d-3 promulgated by the Securities and Exchange
Commission under the Exchange Act) of 50% or more of the outstanding shares of
common stock of the Borrower; or, during any period of twelve consecutive
calendar months, individuals who were directors of the Borrower on the first day
of such period (together with any successors nominated or appointed by such
directors in the ordinary course) shall cease to constitute a majority of the
board of directors of the Borrower;

 

then, and in every such event, the Administrative Agent shall (i) if requested
by Banks having more than 66-2/3% in aggregate amount of the Commitments, by
notice to the Borrower terminate the Commitments and they shall thereupon
terminate and (ii) if requested by Banks holding more than 66-2/3% in aggregate
principal amount of the Loans, by notice to the Borrower declare the Loans
(together with accrued interest thereon) to be, and the Loans shall thereupon
become, immediately due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Borrower;

 

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provided that in the case of any of the Events of Default specified in clause
(g) or (h) above with respect to the Borrower, without any notice to the
Borrower or any other act by the Administrative Agent or the Banks, the
Commitments shall thereupon terminate and the Loans (together with accrued
interest thereon) shall become immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrower.

 

Section 6.02. Notice of Default. The Administrative Agent shall give notice to
the Borrower under Section 6.01(c) promptly upon being requested to do so by any
Bank and shall thereupon notify all the Banks thereof.

 

ARTICLE 7

THE ADMINISTRATIVE AGENT

 

Section 7.01. Appointment and Authorization. Each Bank irrevocably appoints and
authorizes the Administrative Agent to take such action as agent on its behalf
and to exercise such powers under this Agreement and the Notes as are delegated
to the Administrative Agent by the terms hereof or thereof, together with all
such powers as are reasonably incidental thereto.

 

Section 7.02. Administrative Agent and Affiliates. Citicorp USA, Inc. shall have
the same rights and powers under this Agreement as any other Bank and may
exercise or refrain from exercising the same as though it were not the
Administrative Agent, and Citicorp USA, Inc. and its affiliates may accept
deposits from, lend money to, and generally engage in any kind of business with
the Borrower or any Subsidiary or affiliate of the Borrower as if it were not
the Administrative Agent hereunder.

 

Section 7.03. Action by Administrative Agent. The obligations of the
Administrative Agent hereunder are only those expressly set forth herein.
Without limiting the generality of the foregoing, the Administrative Agent shall
not be required to take any action with respect to any Default, except as
expressly provided in Article 6.

 

Section 7.04. Consultation with Experts. The Administrative Agent may consult
with legal counsel (who may be counsel for the Borrower), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.

 

Section 7.05. Liability of Administrative Agent. Neither the Administrative
Agent nor any of its affiliates nor any of their respective directors, officers,
agents or employees shall be liable to any Bank for any action taken or not
taken by it in connection herewith (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 affiliates nor any
of

 

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their respective directors, officers, agents or employees shall be responsible
for or have any duty to ascertain, inquire into or verify (i) any statement,
warranty or representation made in connection with this Agreement or any
borrowing hereunder; (ii) the performance or observance of any of the covenants
or agreements of the Borrower; (iii) the satisfaction of any condition specified
in Article 3, except receipt of items required to be delivered to the
Administrative Agent; or (iv) the validity, effectiveness or genuineness of this
Agreement, the Notes or any other instrument or writing furnished in connection
herewith. The Administrative Agent shall not incur any liability by acting in
reliance upon any notice, consent, certificate, statement, or other writing
(which may be a bank wire, telex or similar writing) believed by it in good
faith to be genuine or to be signed by the proper party or parties. Without
limiting the generality of the foregoing, the use of the term “agent” in this
Agreement with reference to the Administrative Agent is not intended to connote
any fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable law. Instead, such term is used merely as a matter of
market custom and is intended to create or reflect only an administrative
relationship between independent contracting parties.

 

Section 7.06. Indemnification. Each Bank shall, ratably in accordance with its
Commitment, indemnify the Administrative Agent, its affiliates and their
respective directors, officers, agents and employees (to the extent not
reimbursed by the Borrower) against any cost, expense (including counsel fees
and disbursements), claim, demand, action, loss or liability (except such as
result from such indemnitees’ gross negligence or willful misconduct) that such
indemnitees may suffer or incur in connection with this Agreement or any action
taken or omitted by such indemnitees thereunder.

 

Section 7.07. Credit Decision. Each Bank acknowledges that it has, independently
and without reliance upon any Agent or any other Bank, and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Bank also acknowledges
that it will, independently and without reliance upon any Agent or any other
Bank, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
any action under this Agreement.

 

Section 7.08. Successor Administrative Agent. The Administrative Agent may
resign at any time by giving notice thereof to the Banks and the Borrower. Upon
any such resignation, the Borrower, with the consent of the Required Banks (such
consent not to be unreasonably withheld or delayed), shall have the right to
appoint a successor Administrative Agent. If no successor Administrative Agent
shall have been so appointed, and shall have accepted such appointment, within
30 days after the retiring Administrative Agent gives notice of resignation,
then the retiring Administrative Agent may, on behalf of the Banks, appoint a
successor Administrative Agent, which shall be a commercial bank organized or
licensed under the laws of the United States of America or of any State thereof

 

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and having a combined capital and surplus of at least $250,000,000. Upon the
acceptance of its appointment as Administrative Agent hereunder by a successor
Administrative Agent, such successor Administrative Agent shall thereupon
succeed to and become vested with all the rights and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder; provided that if such successor
Administrative Agent is appointed without the consent of the Borrower, such
successor Administrative Agent may be replaced by the Borrower with the consent
of the Required Banks. After any retiring Administrative Agent’s resignation
hereunder as Administrative Agent, the provisions of this Article shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent.

 

Section 7.09. Administrative Agent’s Fee. The Borrower shall pay to the
Administrative Agent for its own account fees in the amounts and at the times
previously agreed upon between the Borrower and the Administrative Agent.

 

Section 7.10. Other Agents. None of the Syndication Agent or the Documentation
Agents, in their capacity as such, shall have any duties or obligations of any
kind under this Agreement.

 

ARTICLE 8

CHANGE IN CIRCUMSTANCES

 

Section 8.01. Basis for Determining Interest Rate Inadequate or Unfair. If on or
prior to the first day of any Interest Period for any Euro-Dollar Borrowing:

 

(a) the Administrative Agent is advised by the Euro-Dollar Reference Banks that
deposits in dollars (in the applicable amounts) are not being offered to the
Euro-Dollar Reference Banks in the relevant market for such Interest Period, or

 

(b) Banks having 66-2/3% or more of the aggregate amount of the affected Loans
advise the Administrative Agent that the London Interbank Offered Rate as
determined by the Administrative Agent will not adequately and fairly reflect
the cost to such Banks of funding their Euro-Dollar Loans for such Interest
Period,

 

the Administrative Agent shall forthwith give notice thereof to the Borrower and
the Banks, whereupon until the Administrative Agent notifies the Borrower that
the circumstances giving rise to such suspension no longer exist, (i) the
obligations of the Banks to make Euro-Dollar Loans or to continue or convert
outstanding Loans as or into Euro-Dollar Loans shall be suspended and (ii) each
outstanding Euro-Dollar Loan shall be converted into a Base Rate Loan on the
last day of the then current Interest Period applicable thereto. Unless the
Borrower

 

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notifies the Administrative Agent at least one Domestic Business Day before the
date of any Euro-Dollar Borrowing for which a Notice of Borrowing has previously
been given that it elects not to borrow on such date, such Borrowing shall
instead be made as a Base Rate Borrowing.

 

Section 8.02. Illegality. If on or after the date of this Agreement, the
adoption of any applicable law, rule or regulation, or any change in any
applicable law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Bank (or its Euro-Dollar Lending Office) with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency shall make it unlawful or impossible for any Bank (or its
Euro-Dollar Lending Office) to make, maintain or fund any of its Euro-Dollar
Loans and such Bank shall so notify the Administrative Agent, the Administrative
Agent shall forthwith give notice thereof to the other Banks and the Borrower,
whereupon until such Bank notifies the Borrower and the Administrative Agent
that the circumstances giving rise to such suspension no longer exist, the
obligation of such Bank to make Euro-Dollar Loans, or to continue or convert
outstanding Loans as or into Euro-Dollar Loans, shall be suspended. Before
giving any notice to the Administrative Agent pursuant to this Section, such
Bank shall designate a different Euro-Dollar Lending Office if such designation
will avoid the need for giving such notice and will not be otherwise
disadvantageous to such Bank in the good faith exercise of its discretion. If
such notice is given, each Euro-Dollar Loan of such Bank then outstanding shall
be converted to a Base Rate Loan either (a) on the last day of the then current
Interest Period applicable to such Euro-Dollar Loan if such Bank may lawfully
continue to maintain and fund such Loan to such day or (b) immediately if such
Bank shall determine that it may not lawfully continue to maintain and fund such
Loan to such day.

 

Section 8.03. Increased Cost and Reduced Return. (a) If on or after the date of
this Agreement, the adoption of any applicable law, rule or regulation, or any
change in any applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank (or its Applicable Lending Office) with any
request or directive (whether or not having the force of law) issued on or after
such date of any such authority, central bank or comparable agency 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
Euro-Dollar Loan any such requirement included in an applicable Euro-Dollar
Reserve Percentage) against assets of, deposits with or for the account of, or
credit extended by, any Bank (or its Applicable Lending Office) or shall impose
on any Bank (or its Applicable Lending Office) or on the London interbank market
any other condition (other than in respect of Taxes or Other Taxes)

 

33

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affecting its Euro-Dollar Loans, its Note or its obligation to make Euro-Dollar
Loans and the result of any of the foregoing is to increase the cost to such
Bank (or its Applicable Lending Office) of making or maintaining any Euro-Dollar
Loan, or to reduce the amount of any sum received or receivable by such Bank (or
its Applicable Lending Office) under this Agreement or under its Note with
respect thereto, by an amount deemed by such Bank to be material, then, within
15 days after demand by such Bank (with a copy to the Administrative Agent), the
Borrower shall pay to such Bank such additional amount or amounts as will
compensate such Bank for such increased cost or reduction; provided that no such
amount shall be payable with respect to any period commencing more than 90 days
prior to the date such Bank first notifies the Borrower of its intention to
demand compensation therefor under this Section 8.03(a).

 

(b) If any Bank shall have determined that, on or after the date of this
Agreement, the adoption of any applicable law, rule or regulation regarding
capital adequacy, or any change in any such law, rule or regulation, or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency given or made after the date of this Agreement, has or would
have the effect of reducing the rate of return on capital of such Bank (or its
Parent) as a consequence of such Bank’s obligations hereunder to a level below
that which such Bank (or its Parent) could have achieved but for such adoption,
change, request or directive (taking into consideration its policies with
respect to capital adequacy) by an amount deemed by such Bank to be material,
then from time to time, within 15 days after demand by such Bank (with a copy to
the Administrative Agent), the Borrower shall pay to such Bank such additional
amount or amounts as will compensate such Bank (or its Parent) for such
reduction; provided that no such amount shall be payable with respect to any
period commencing less than 30 days after the date such Bank first notifies the
Borrower of its intention to demand compensation under this Section 8.03(b).

 

(c) Each Bank will promptly notify the Borrower and the Administrative Agent of
any event of which it has knowledge, occurring after the date hereof, which will
entitle such Bank to compensation pursuant to this Section and will designate a
different Applicable Lending Office if such designation will avoid the need for,
or reduce the amount of, such compensation and will not, in the judgment of such
Bank, be otherwise disadvantageous to such Bank. A certificate of any Bank
claiming compensation under this Section and setting forth the additional amount
or amounts to be paid to it hereunder shall be conclusive in the absence of
manifest error. In determining such amount, such Bank may use any reasonable
averaging and attribution methods.

 

34

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Section 8.04. Taxes. (a) For purposes of this Section 8.04, the following terms
have the following meanings:

 

“Taxes” means any and all present or future taxes, duties, levies, imposts,
deductions, charges or withholdings with respect to any payment by the Borrower
pursuant to this Agreement or any Note, and all liabilities with respect
thereto, excluding (i) in the case of each Bank and the Administrative Agent,
taxes imposed on its income, net worth or gross receipts and franchise or
similar taxes imposed on it by a jurisdiction under the laws of which such Bank
or the Administrative Agent (as the case may be) is organized or in which its
principal executive office is located or, in the case of each Bank, in which its
Applicable Lending Office is located and (ii) in the case of each Bank, any
United States withholding tax imposed on such payments except to the extent that
such Bank is subject to United States withholding tax by reason of a U.S. Tax
Law Change.

 

“Other Taxes” means any present or future stamp or documentary taxes and any
other excise or property taxes, or similar charges or levies, which arise from
any payment made pursuant to this Agreement or under any Note or from the
execution or delivery of, or otherwise with respect to, this Agreement or any
Note.

 

“U.S. Tax Law Change” means with respect to any Bank or Participant the
occurrence (x) in the case of each Bank listed on the signature pages hereof,
after the date of its execution and delivery of this Agreement and (y) in the
case of any other Bank, after the date such Bank shall have become a Bank
hereunder, and (z) in the case of each Participant, after the date such
Participant became a Participant hereunder, of the adoption of any applicable
U.S. federal law, U.S. federal rule or U.S. federal regulation relating to
taxation, or any change therein, or the entry into force, modification or
revocation of any income tax convention or treaty to which the United States is
a party.

 

(b) Any and all payments by the Borrower to or for the account of any Bank or
the Administrative Agent hereunder or under any Note shall be made without
deduction for any Taxes or Other Taxes; provided that, if the Borrower shall be
required by law to deduct any Taxes or Other Taxes from any such payments, (i)
the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 8.04) such Bank or the Administrative Agent (as the case may
be) receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions, (iii) the
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law and (iv) the Borrower shall
furnish to the Administrative Agent, at its address referred to in Section 9.01,
the original or a certified copy of a receipt evidencing payment thereof.

 

(c) The Borrower agrees to indemnify each Bank and the Administrative Agent for
the full amount of Taxes or Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable
under this Section 8.04) paid by such Bank or the Administrative Agent (as the
case may be) and any liability (including penalties,

 

35

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

interest and expenses) arising therefrom or with respect thereto. This
indemnification shall be paid within 15 days after such Bank or the
Administrative Agent (as the case may be) makes demand therefor.

 

(d) Each Bank organized under the laws of a jurisdiction outside the United
States, on or prior to the date of its execution and delivery of this Agreement
in the case of each Bank listed on the signature pages hereof and on or prior to
the date on which it becomes a Bank in the case of each other Bank, and from
time to time thereafter as required by law (but only so long as such Bank
remains lawfully able to do so), shall provide the Borrower two completed and
duly executed copies of Internal Revenue Service form W-8BEN or W-8ECI, as
appropriate, or any successor form prescribed by the Internal Revenue Service,
or other documentation reasonably requested by the Borrower, certifying that
such Bank is entitled to benefits under an income tax treaty to which the United
States is a party which exempts the Bank from United States withholding tax or
reduces the rate of withholding tax on payments of interest for the account of
such Bank or certifying that the income receivable pursuant to this Agreement is
effectively connected with the conduct of a trade or business in the United
States.

 

(e) For any period with respect to which a Bank has failed to provide the
Borrower with the appropriate form pursuant to Section 8.04(d) (unless such
failure is due to a U.S. Tax Law Change), such Bank shall not be entitled to
indemnification under Section 8.04(b) or 8.04(c) with respect to any Taxes or
Other Taxes which would not have been payable had such form been so provided;
provided that if a Bank, which is otherwise exempt from or subject to a reduced
rate of withholding tax, becomes subject to Taxes because of its failure to
deliver a form required hereunder, the Borrower shall take such steps as such
Bank shall reasonably request to assist such Bank to recover such Taxes (it
being understood, however, that the Borrower shall have no liability to such
Bank in respect of such Taxes).

 

(f) If the Borrower is required to pay additional amounts to or for the account
of any Bank pursuant to this Section 8.04, then such Bank will take such action
(including changing the jurisdiction of its Applicable Lending Office) as in the
good faith judgment of such Bank (i) will eliminate or reduce any such
additional payment which may thereafter accrue and (ii) is not otherwise
disadvantageous to such Bank.

 

(g) If any Bank or the Administrative Agent receives a refund (including a
refund in the form of a credit against taxes that are otherwise payable by the
Bank or the Administrative Agent) of any Taxes or Other Taxes for which the
Borrower has made a payment under Section 8.04(b) or (c) and such refund was
received from the taxing authority which originally imposed such Taxes or Other
Taxes, such Bank or the Administrative Agent agrees to reimburse the Borrower to
the extent of such refund; provided that nothing contained in this paragraph (g)
shall require any Bank or the Administrative Agent to seek any

 

36

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

such refund or make available its tax returns (or any other information relating
to its taxes which it deems to be confidential).

 

Section 8.05. Base Rate Loans Substituted for Affected Euro-Dollar Loans. If (i)
the obligation of any Bank to make or to continue or convert outstanding Loans
as or into Euro-Dollar Loans has been suspended pursuant to Section 8.02 or (ii)
any Bank has demanded compensation under Section 8.03(a) or 8.04 with respect to
its Euro-Dollar Loans and the Borrower shall, by at least five Euro-Dollar
Business Days’ prior notice to such Bank through the Administrative Agent, have
elected that the provisions of this Section shall apply to such Bank, then,
unless and until such Bank notifies the Borrower that the circumstances giving
rise to such suspension or demand for compensation no longer apply:

 

(a) all Loans which would otherwise be made by such Bank as (or continued as or
converted to) Euro-Dollar Loans, as the case may be, shall instead be Base Rate
Loans (on which interest and principal shall be payable contemporaneously with
the related Euro-Dollar Loans of the other Banks), and

 

(b) after each of its Euro-Dollar Loans has been repaid, all payments of
principal which would otherwise be applied to repay such Loans shall be applied
to repay its Base Rate Loans instead.

 

If such Bank notifies the Borrower that the circumstances giving rise to such
suspension or demand for compensation no longer exist, the principal amount of
each such Base Rate Loan shall be converted into a Euro-Dollar Loan on the first
day of the next succeeding Interest Period applicable to the related Euro-Dollar
Loans of the other Banks.

 

Section 8.06. Substitution of Bank; Termination Option. If (i) the obligation of
any Bank to make or to convert or continue outstanding Loans as or into
Euro-Dollar Loans has been suspended pursuant to Section 8.02, (ii) any Bank has
demanded compensation under Section 8.03 or 8.04, (iii) any Bank exercises its
right not to extend its Commitment Termination Date pursuant to Section 2.01(c)
or (iv) Investment Grade Status ceases to exist as to any Bank, then:

 

(a) the Borrower shall have the right, with the assistance of the Administrative
Agent, to designate a substitute bank or banks (which may be one or more of the
Banks) mutually satisfactory to the Borrower and the Administrative Agent (whose
consent shall not be unreasonably withheld or delayed) to purchase for cash,
pursuant to an Assignment and Assumption Agreement in substantially the form of
Exhibit D hereto, the outstanding Loans of such Bank and assume the Commitment
of such Bank, without recourse to or warranty by, or expense to, such Bank, for
a purchase price equal to the principal amount of all of such Bank’s outstanding
Loans plus any accrued but unpaid interest thereon and the accrued but unpaid
fees in respect of such Bank’s

 

37

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

Commitment hereunder and all other amounts payable by the Borrower to such Bank
hereunder plus such amount, if any, as would be payable pursuant to Section 2.13
if the outstanding Loans of such Bank were prepaid in their entirety on the date
of consummation of such assignment; and

 

(b) if at the time Investment Grade Status exists as to the Borrower, the
Borrower may elect to terminate this Agreement as to such Bank; provided that
(i) the Borrower notifies such Bank through the Administrative Agent of such
election at least three Euro-Dollar Business Days before the effective date of
such termination and (ii) the Borrower repays or prepays the principal amount of
all outstanding Loans made by such Bank plus any accrued but unpaid interest
thereon and the accrued but unpaid fees in respect of such Bank’s Commitment
hereunder plus all other amounts payable by the Borrower to such Bank hereunder,
not later than the effective date of such termination. Upon satisfaction of the
foregoing conditions, the Commitment of such Bank shall terminate on the
effective date specified in such notice.

 

ARTICLE 9

MISCELLANEOUS

 

Section 9.01. Notices. All notices, requests and other communications to any
party hereunder shall be in writing (including bank wire, telex, facsimile
transmission or similar writing) and shall be given to such party: (x) in the
case of the Borrower or the Administrative Agent, at its address or telecopy or
telex number set forth on the signature pages hereof, (y) in the case of any
Bank, at its address or telecopy or telex number set forth in its Administrative
Questionnaire or (z) in the case of any party, such other address or telecopy or
telex number as such party may hereafter specify for the purpose by notice to
the Administrative Agent and the Borrower. Each such notice, request or other
communication shall be effective (i) if given by telecopy or telex, when such
telecopy or telex is transmitted to the telecopy or telex number specified in
this Section and the appropriate answerback or confirmation slip, as the case
may be, is received or (ii) if given by any other means, when delivered at the
address specified in this Section; provided that notices to the Administrative
Agent under Article 2 or Article 3 shall not be effective until delivered.

 

Section 9.02. No Waivers. No failure or delay by the Administrative Agent or any
Bank in exercising any right, power or privilege hereunder or under any Note
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein provided shall
be cumulative and not exclusive of any rights or remedies provided by law.

 

Section 9.03. Expenses; Indemnification. (a) The Borrower shall pay (i) all
reasonable out-of-pocket expenses of the Administrative Agent, including
reasonable fees and disbursements of special counsel for the Agents, in

 

38

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

connection with the preparation of this Agreement, any waiver or consent
hereunder or any amendment hereof or any Default or alleged Default hereunder
and (ii) if an Event of Default occurs, all reasonable out-of-pocket expenses
incurred by the Administrative Agent or any Bank, including reasonable fees and
disbursements of counsel, in connection with such Event of Default and
collection and other enforcement proceedings resulting therefrom.

 

(b) The Borrower agrees to indemnify each Agent and each Bank, their respective
affiliates and the respective directors, officers, agents and employees of the
foregoing (each an “Indemnitee”) and hold each Indemnitee harmless from and
against any and all liabilities, losses, damages, costs and expenses of any
kind, including, without limitation, the reasonable fees and disbursements of
counsel, which may be incurred by such Indemnitee in connection with any
investigative, administrative or judicial proceeding (whether or not such
Indemnitee shall be designated a party thereto) relating to or arising out of
this Agreement or any actual or proposed use of proceeds of Loans hereunder;
provided that no Indemnitee shall have the right to be indemnified hereunder for
such Indemnitee’s own gross negligence or willful misconduct as determined by a
court of competent jurisdiction.

 

Section 9.04. Sharing of Set-offs. Each Bank agrees that if it shall, by
exercising any right of set-off or counterclaim or otherwise, receive payment of
a proportion of the aggregate amount then due with respect to the Loans held by
it which is greater than the proportion received by any other Bank in respect of
the aggregate amount then due with respect to the Loans held by such other Bank,
the Bank receiving such proportionately greater payment shall purchase such
participations in the Loans held by the other Banks, and such other adjustments
shall be made, as may be required so that all such payments with respect to the
Loans held by the Banks shall be shared by the Banks pro rata; provided that
nothing in this Section shall impair the right of any Bank to exercise any right
of set-off or counterclaim it may have and to apply the amount subject to such
exercise to the payment of indebtedness of the Borrower other than its
indebtedness under this Agreement.

 

Section 9.05. Amendments and Waivers. Any provision of this Agreement or the
Notes may be amended or waived if, but only if, such amendment or waiver is in
writing and is signed by the Borrower and the Required Banks (and, if the rights
or duties of any Agent are affected thereby, by such Person); provided that no
such amendment or waiver shall, unless signed by all the Banks, (i) increase or
decrease the Commitment of any Bank (except for a ratable decrease in the
Commitments of all Banks) or subject any Bank to any additional obligation, (ii)
reduce the principal of or rate of interest on any Loan or any interest thereon
or any fees hereunder, (iii) postpone the date fixed for any payment of
principal of or interest on any Loan or any fees hereunder or for termination of
any Commitment, (iv) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans, or the number of Banks, which
shall be required for the Banks or any of them to take any action under this

 

39

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

Section or any other provision of this Agreement or (v) change the provisions of
Section 9.04.

 

Section 9.06. Successors and Assigns. (a) The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns and each Indemnitee, except that the Borrower
may not assign or otherwise transfer any of its rights under this Agreement
without the prior written consent of all Banks.

 

(b) Any Bank may, with the consent (unless an Event of Default then exists) of
the Borrower (such consent not to be unreasonably withheld or delayed), at any
time grant to one or more banks or other institutions (each a “Participant”)
participating interests in its Commitment or any or all of its Loans; provided
that any Bank may, without the consent of the Borrower, at any time grant
participating interests in its Commitment or any or all of its Loans to another
Bank, an Approved Fund or an Affiliate of such transferor Bank. In the event of
any such grant by a Bank of a participating interest to a Participant, whether
or not upon notice to the Administrative Agent, such Bank shall remain
responsible for the performance of its obligations hereunder, and the Borrower
and the Administrative Agent shall continue to deal solely and directly with
such Bank in connection with such Bank’s rights and obligations under this
Agreement. Any agreement pursuant to which any Bank may grant such a
participating interest shall provide that such Bank shall retain the sole right
and responsibility to enforce the obligations of the Borrower hereunder
including, without limitation, the right to approve any amendment, modification
or waiver of any provision of this Agreement; provided that such participation
agreement may provide that such Bank will not agree to any modification,
amendment or waiver of this Agreement described in clause (i), (ii) or (iii) of
Section 9.05 without the consent of the Participant. The Borrower agrees that
each Participant shall, to the extent provided in its participation agreement,
be entitled to the benefits of Article 8 with respect to its participating
interest, subject to the performance by such Participant of the obligations of a
Bank thereunder. An assignment or other transfer which is not permitted by
subsection (c) or (d) below shall be given effect for purposes of this Agreement
only to the extent of a participating interest granted in accordance with this
subsection (b).

 

(c) Any Bank may at any time assign to one or more banks or other financial
institutions (each an “Assignee”) all, or a proportionate part (equivalent to an
initial Commitment of not less than $10,000,000 (unless the Borrower and the
Administrative Agent shall otherwise agree)) of all, of its rights and
obligations under this Agreement and its Note (if any), and such Assignee shall
assume such rights and obligations, pursuant to an Assignment and Assumption
Agreement in substantially the form of Exhibit D hereto executed by such
Assignee and such transferor Bank, with (and only with and subject to) the prior
written consent of the Administrative Agent (which shall not be unreasonably
withheld or delayed) and, so long as no Event of Default has occurred and is
continuing, the Borrower (which shall not be unreasonably withheld or delayed);

 

40

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

provided that unless such assignment is of the entire right, title and interest
of the transferor Bank hereunder, after making any such assignment such
transferor Bank shall have a Commitment of at least $10,000,000 (unless the
Borrower and the Administrative Agent shall otherwise agree). Upon execution and
delivery of such instrument of assumption and payment by such Assignee to such
transferor Bank of an amount equal to the purchase price agreed between such
transferor Bank and such Assignee, such Assignee shall be a Bank party to this
Agreement and shall have all the rights and obligations of a Bank with a
Commitment as set forth in such instrument of assumption, and the transferor
Bank shall be released from its obligations hereunder to a corresponding extent,
and no further consent or action by any party shall be required. Upon the
consummation of any assignment pursuant to this subsection (c), the transferor
Bank, the Administrative Agent and the Borrower shall make appropriate
arrangements so that, if required by the Assignee, a Note is issued to the
Assignee. If the Assignee is not incorporated under the laws of the United
States of America or a state thereof, it shall, prior to the first date on which
interest or fees are payable hereunder for its account, deliver to the Borrower
and the Administrative Agent certification as to exemption from deduction or
withholding of any United States federal income taxes in accordance with Section
8.04. All assignments (other than assignments to Affiliates) shall be subject to
a transaction fee established by, and payable by the transferor Bank to, the
Administrative Agent for its own account (which shall not exceed $5,000).

 

(d) Any Bank may at any time assign all or any portion of its rights under this
Agreement and its Note (if any) to a Federal Reserve Bank. No such assignment
shall release the transferor Bank from its obligations hereunder or modify any
such obligations.

 

(e) No Assignee, Participant or other transferee of any Bank’s rights (including
any Applicable Lending Office other than such Bank’s initial Applicable Lending
Office) shall be entitled to receive any greater payment under Section 8.03 or
8.04 than such Bank would have been entitled to receive with respect to the
rights transferred, unless such transfer is made by reason of the provisions of
Section 8.02, 8.03 or 8.04 requiring such Bank to designate a different
Applicable Lending Office under certain circumstances or at a time when the
circumstances giving rise to such greater payment did not exist.

 

Section 9.07. Collateral. Each of the Banks represents to the Administrative
Agent and each of the other Banks that it in good faith is not relying upon any
“margin stock” (as defined in Regulation U) as collateral in the extension or
maintenance of the credit provided for in this Agreement.

 

Section 9.08. Confidentiality. Each Agent and each Bank agrees to keep any
information delivered or made available by the Borrower pursuant to this
Agreement confidential from anyone other than persons employed or retained by
such Bank and its affiliates who are engaged in evaluating, approving,
structuring or administering the credit facility contemplated hereby; provided
that nothing

 

41

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

herein shall prevent any Bank from disclosing such information (a) to any other
Bank or any Agent, (b) to any other Person if reasonably incidental to the
administration of the credit facility contemplated hereby, (c) upon the order of
any court or administrative agency, (d) upon the request or demand of any
regulatory agency or authority, (e) which had been publicly disclosed other than
as a result of a disclosure by any Agent or any Bank prohibited by this
Agreement, (f) in connection with any litigation to which any Agent, any Bank or
its subsidiaries or Parent may be a party, (g) to the extent necessary in
connection with the exercise of any remedy hereunder, (h) to such Bank’s or any
Agent’s legal counsel and independent auditors and (i) subject to provisions
substantially similar to those contained in this Section 9.08, to any actual or
proposed Participant or Assignee.

 

Section 9.09. Governing Law; Submission to Jurisdiction. This Agreement and each
Note (if any) shall be construed in accordance with and governed by the law of
the State of New York. The Borrower hereby submits to the nonexclusive
jurisdiction of the United States District Court for the Southern District of
New York and of any New York State court sitting in New York City for purposes
of all legal proceedings arising out of or relating to this Agreement or the
transactions contemplated hereby. The 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.

 

Section 9.10. Counterparts; Integration. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument. This
Agreement constitutes the entire agreement and understanding among the parties
hereto and supersedes any and all prior agreements and understandings, oral or
written, relating to the subject matter hereof.

 

Section 9.11. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE AGENTS AND THE
BANKS, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW,
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.

 

Section 9.12. USA Patriot Act. Each Bank hereby notifies the Borrower that
pursuant to the requirements of the USA Patriot Act, Title III of Pub. L. 107-56
(signed into law October 26, 2001) (the “Act”), it is required to obtain, verify
and record information that identifies the Borrower, which information includes
the name and address of the Borrower and other information that will allow such
Bank to identify the Borrower in accordance with the Act.

 

42

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

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.

 

DUKE ENERGY CORPORATION

By:

       

Title:

 

Assistant Treasurer

   

Address:

 

422 South Church Street

Charlotte, NC 28202-1904

   

Attention:

 

S.L. Love

    Telecopy number:  

704-382-9497

 

43

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

Commitments

 

$39,705,882.35          

CITIBANK, N.A.

           

By:

                   

Name:

               

Title:

$39,705,882.35          

BANK OF AMERICA, N.A.

           

By:

                   

Name:

               

Title:

$39,705,882.35          

JPMORGAN CHASE BANK

           

By:

                   

Name:

               

Title:

$39,705,882.35          

WACHOVIA BANK, NATIONAL
ASSOCIATION

           

By:

                   

Name:

               

Title:

$29,411,764.71          

ABN AMRO BANK N.V.

           

By:

                   

Name:

               

Title:

           

By:

                   

Name:

               

Title:

 

44

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

$29,411,764.71          

BARCLAYS BANK PLC

           

By:

                   

Name:

               

Title:

           

By:

                   

Name:

               

Title:

$29,411,764.71          

UBS LOAN FINANCE LLC

           

By:

                   

Name:

               

Title:

           

By:

                   

Name:

               

Title:

$29,411,764.71          

DEUTSCHE BANK AG NEW YORK
BRANCH

           

By:

                   

Name:

               

Title:

           

By:

                   

Name:

               

Title:

 

45

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

$29,411,764.71          

WILLIAM STREET COMMITMENT
CORPORATION

           

By:

                   

Name:

               

Title:

$29,411,764.71          

LEHMAN BROTHERS BANK, FSB

           

By:

                   

Name:

               

Title:

$20,588,235.29          

THE BANK OF TOKYO-MITSUBISHI,
LTD., NEW YORK BRANCH

           

By:

                   

Name:

               

Title:

$20,588,235.29          

CREDIT SUISSE FIRST BOSTON,
acting through its Cayman Islands
Branch

           

By:

                   

Name:

               

Title:

           

By:

                   

Name:

               

Title:

 

46

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

$20,588,235.29          

DRESDNER BANK AG, NEW YORK
AND GRAND CAYMAN
BRANCHES

           

By:

                   

Name:

               

Title:

           

By:

                   

Name:

               

Title:

$20,588,235.29          

THE ROYAL BANK OF SCOTLAND plc

           

By:

                   

Name:

               

Title:

$20,588,235.29          

MORGAN STANLEY BANK

           

By:

                   

Name:

               

Title:

$20,588,235.29          

SUNTRUST BANK

           

By:

                   

Name:

               

Title:

 

47

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

$10,294,117.65          

WESTLB AG, NEW YORK BRANCH

           

By:

                   

Name:

               

Title:

           

By:

                   

Name:

               

Title:

$10,294,117.65          

KEYBANK NATIONAL
ASSOCIATION

           

By:

                   

Name:

               

Title:

$10,294,117.65          

THE NORTHERN TRUST COMPANY

           

By:

                   

Name:

               

Title:

$10,294,117.65          

MIZUHO CORPORATE BANK, LTD.

           

By:

                   

Name:

               

Title:

Total Commitments             $500,000,000.00            

 

48

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

CITICORP USA, INC., as Administrative
Agent

By:

       

Name:

       

Title:

   

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

By:

       

Name:

       

Title:

   

 

49

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

Pricing Schedule

 

Each of “Euro-Dollar Margin” and “Facility Fee Rate” means, for any date, the
rate set forth below in the applicable row and column corresponding to the
column and “Utilization” that exist on such date:

 

(basis points per annum)

 

Ratings

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

   at least A-
by S&P or
A3 by
Moody’s

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

   BBB+ by
S&P or
Baa1 by
Moody’s

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

   BBB by
S&P or
Baa2 by
Moody’s

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

   BBB- by
S&P or
Baa3 by
Moody’s

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

   less than
BBB- by
S&P
and less
than
Baa3 by
Moody’s

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

Facility Fee

   12.5    15.0    17.5    22.5    30.0

Euro-Dollar Margin

                        

Utilization* £ 50%

   50.0    60.0    70.0    90.0    120.0

Utilization* > 50%

   62.5    72.5    82.5    102.5    145.0

 

The Euro-Dollar Margin for the Term Loan shall equal the sum of (i) the rate
that would otherwise be in effect based upon the table above and (ii) fifty (50)
basis points.

 

* The “Utilization” applicable to any date is the percentage equivalent of a
fraction the numerator of which is the aggregate outstanding principal amount of
the Loans determined at such time after giving effect, if one or more Loans are
being made at such time, to any substantially concurrent application of the
proceeds thereof to repay one or more other Loans and the denominator of which
is the aggregate amount of the Commitments at such date. If for any reason any
Loans remain outstanding following termination of the Commitments, Utilization
will be deemed to be 100%.

 

The credit ratings to be utilized for purposes of this Schedule are those
indicated for or assigned to the senior unsecured long-term debt securities of
the Borrower without third-party credit enhancement, and any rating indicated
for or assigned to any other debt security of the Borrower shall be disregarded.
The ratings in effect for any day are those in effect at the close of business
on such day. A change in credit rating will result in an immediate change in the
applicable pricing. In the case of split ratings from S&P and Moody’s, the
rating to be used to determine the applicable pricing is a rating one notch
higher than the lower of the two.

 

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

SCHEDULE I

 

DUKE ENERGY CORPORATION

 

CREDIT FACILITY

 

(Being Replaced by this Agreement)

 

Credit Agreement (3-Year Facility) dated as of August 29, 2001 among Duke Energy
Corporation, the lenders party thereto and JPMorgan Chase Bank, as
administrative agent.

 

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

EXHIBIT A

 

NOTE

 

New York, New York

June 30, 2004

 

For value received, Duke Energy Corporation, a North Carolina corporation (the
“Borrower”), promises to pay to the order of (the “Bank”), for the account of
its Applicable Lending Office, the unpaid principal amount of each Loan made by
the Bank to the Borrower pursuant to the Credit Agreement referred to below on
the date specified in the Credit Agreement. The Borrower promises to pay
interest on the unpaid principal amount of each such Loan on the dates and at
the rate or rates provided for in the Credit Agreement. All such payments of
principal and interest shall be made in lawful money of the United States in
Federal or other immediately available funds at the office of Citicorp USA,
Inc., 388 Greenwich Street, New York, New York 10013.

 

All Loans made by the Bank, the respective types and maturities thereof and all
repayments of the principal thereof shall be recorded by the Bank, and the Bank,
if the Bank so elects in connection with any transfer or enforcement of its
Note, may endorse on the schedule attached hereto appropriate notations to
evidence the foregoing information with respect to the Loans then outstanding;
provided that the failure of the Bank to make any such recordation or
endorsement shall not affect the obligations of the Borrower hereunder or under
the Credit Agreement.

 

This note is one of the Notes referred to in the Three-Year Credit Agreement
dated as of June 30, 2004 among the Borrower, the banks listed on the signature
pages thereof, Citicorp USA, Inc., as Administrative Agent, and Bank of America,
N.A., as Syndication Agent (as the same may be amended from time to time, the
“Credit Agreement”). Terms defined in the Credit Agreement are used herein with
the same meanings. Reference is made to the Credit Agreement for provisions for
the prepayment hereof and the acceleration of the maturity hereof.

 

DUKE ENERGY CORPORATION

By:

       

Title:

   

 

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

Note (cont’d)

 

LOANS AND PAYMENTS OF PRINCIPAL

 

Date

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

 

Amount

of Loan

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

 

Type

of Loan

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

  

Amount of

Principal Repaid

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

  

Maturity

Date

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

  

Notation

Made By

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

                                                                                
                                                                              
                                                                               
                                                                               
                                                      

 

2

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

EXHIBIT B-1

 

OPINION OF ASSOCIATE GENERAL COUNSEL OF THE BORROWER

 

June 30, 2004

To the Banks and the Administrative Agent

    Referred to Below

c/o Citicorp USA, Inc.

    as Administrative Agent

388 Greenwich Street

New York, New York 10013

 

Ladies and Gentlemen:

 

I am an Associate General Counsel of Duke Energy Corporation (the “Borrower”)
and have acted as its counsel in connection with the Three-Year Credit Agreement
(the “Credit Agreement”), dated as of June 30, 2004, among the Borrower, the
banks listed on the signature pages thereof, Citicorp USA, Inc., as
Administrative Agent, and Bank of America, N.A., as Syndication Agent.
Capitalized terms defined in the Credit Agreement are used herein as therein
defined. This opinion letter is being delivered pursuant to Section 3.01(b) of
the Credit Agreement.

 

In such capacity, I or attorneys under my direct supervision have examined
originals or copies, certified or otherwise identified to my satisfaction, of
such documents, corporate records, certificates of public officials and other
instruments and have conducted such other investigations of fact and law as I
have deemed necessary or advisable for purposes of this opinion.

 

Upon the basis of the foregoing, I am of the opinion that:

 

1. The Borrower is a corporation duly incorporated, validly existing and in good
standing under the laws of North Carolina.

 

2. The execution, delivery and performance by the Borrower of the Credit
Agreement and any Notes are within the Borrower’s corporate powers, have been
duly authorized by all necessary corporate action, require no action by or in
respect of, or filing with, any governmental body, agency or official (except
for the approval of the obtaining of credit pursuant to the Credit Agreement by
the North Carolina Utilities Commission and The Public Service Commission of
South Carolina, which has been obtained) and do not contravene, or constitute a

 

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

default under, any provision of applicable law or regulation or of the articles
of incorporation or by-laws of the Borrower or, to my knowledge, of any
agreement, judgment, injunction, order, decree or other instrument binding upon
the Borrower or, to my knowledge, result in the creation or imposition of any
Lien on any asset of the Borrower or any of its Material Subsidiaries.

 

3. Except as disclosed in the reports referred to in Section 4.04 of the Credit
Agreement, to my knowledge (but without independent investigation), there is no
action, suit or proceeding pending or threatened against or affecting, the
Borrower or any of its Subsidiaries before any court or arbitrator or any
governmental body, agency or official, which would be likely to be decided
adversely to the Borrower or such Subsidiary and, as a result, to have a
material adverse effect upon the business, consolidated financial position or
consolidated results of operations of the Borrower and its Consolidated
Subsidiaries, considered as a whole, or which in any manner draws into question
the validity of the Credit Agreement or any Notes.

 

4. The Borrower is not a holding company subject to the registration
requirements of the Public Utility Holding Company Act of 1935, as amended.

 

The phrase “to my knowledge”, as used in the foregoing opinion, refers to my
actual knowledge without any independent investigation as to any such matters.

 

I am a member of the Bar of the State of North Carolina and do not express any
opinion herein concerning any law other than the law of the State of North
Carolina and the federal law of the United States of America.

 

This opinion is rendered to you in connection with the above-referenced mater
and may not be relied upon by you for any other purpose, or relied upon by, or
furnished to, any other Person, firm or corporation without my prior written
consent, except for Additional Banks and Assignees. My opinions expressed herein
are as of the date hereof, and I undertake no obligation to advise you of any
changes of applicable law or any other matters that may come to my attention
after the date hereof that may affect my opinions expressed herein.

 

Very truly yours,

 

2

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

EXHIBIT B-2

 

OPINION OF

ROBINSON, BRADSHAW & HINSON, P.A.,

SPECIAL COUNSEL FOR THE BORROWER

 

June 30, 2004

 

To the Banks and the Administrative Agent

     Referred to Below

c/o Citicorp USA, Inc.

     as Administrative Agent

388 Greenwich Street

New York, New York 10013

 

Ladies and Gentlemen:

 

We have acted as counsel to Duke Energy Corporation, a North Carolina
corporation (the “Borrower”), in connection with the Three-Year Credit Agreement
(the “Credit Agreement”), dated as of June 30, 2004, among Duke Energy
Corporation, the banks listed on the signature pages thereof, Citicorp USA,
Inc., as Administrative Agent, and Bank of America, N.A., as Syndication Agent.
Capitalized terms used herein and not defined shall have the meanings given to
them in the Credit Agreement. This opinion letter is being delivered pursuant to
Section 3.01(b) of the Credit Agreement.

 

In connection with this opinion, we also examined originals, or copies
identified to our satisfaction, of such other documents and considered such
matters of law and fact as we, in our professional judgment, have deemed
appropriate to render the opinions contained herein. Where we have considered it
appropriate, as to certain facts we have relied, without investigation or
analysis of any underlying data contained therein, upon certificates or other
comparable documents of public officials and officers or other appropriate
representatives of the Borrower.

 

In rendering the opinions contained herein, we have assumed, among other things,
that the Credit Agreement and any Notes to be executed (i) are within the
Borrower’s corporate powers, (ii) have been duly authorized by all necessary
corporate action, (iii) require no action by or in respect of, or filing with,
any governmental body, agency of official, and (iv) do not contravene, or
constitute a default under, any provision of applicable law or regulation or of
the Borrower’s certificate of incorporation or by-laws or any agreement,
judgment, injunction, order, decree or other instrument binding upon the
Borrower or result in the

 

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

creation or imposition of any Lien on any asset of the Borrower. In addition, we
have assumed that the Credit Agreement fully states the agreement between the
Borrower and the Banks with respect to the matters addressed therein, and that
the Credit Agreement constitutes a legal, valid and binding obligation of each
Bank, enforceable in accordance with its respective terms.

 

The opinions set forth herein are limited to matters governed by the laws of the
State of North Carolina and the federal laws of the United States, and no
opinion is expressed herein as to the laws of any other jurisdiction. For
purposes of our opinions, we have disregarded the choice of law provisions in
the Credit Agreement and, instead, have assumed with your permission that the
Credit Agreement and the Notes are governed exclusively by the internal,
substantive laws and judicial interpretations of the State of North Carolina. We
express no opinion concerning any matter respecting or affected by any laws
other than laws that a lawyer in North Carolina exercising customary
professional diligence would reasonably recognize as being directly applicable
to the Borrower, the Loans, or any of them.

 

Based upon and subject to the foregoing and the further limitations and
qualifications hereinafter expressed, it is our opinion that the Credit
Agreement constitutes the legal, valid and binding obligation of the Borrower
and the Notes, if and when issued, will constitute legal, valid and binding
obligations of the Borrower, in each case, enforceable against the Borrower in
accordance with its terms.

 

The opinions expressed above are subject to the following qualifications and
limitations:

 

1. Enforcement of the Credit Agreement and the Notes is subject to the effect of
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium and similar laws affecting the enforcement of creditors’ rights
generally.

 

2. Enforcement of the Credit Agreement and the Notes is subject to the effect of
general principles of equity (regardless of whether considered in a proceeding
in equity or at law) by which a court with proper jurisdiction may deny rights
of specific performance, injunction, self-help, possessory remedies or other
remedies.

 

3. We do not express any opinion as to the enforceability of any provisions
contained in the Credit Agreement or any Note that (i) purport to excuse a party
for liability for its own acts, (ii) purport to make void any act done in
contravention thereof, (iii) purport to authorize a party to act in its sole
discretion, (iv) require waivers or amendments to be made only in writing, (v)
purport to effect waivers of constitutional, statutory or equitable rights or
the

 

2

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

effect of applicable laws, (vi) impose liquidated damages, penalties or
forfeiture, or (vii) purport to indemnify a party for its own negligence or
willful misconduct. Indemnification provisions in the Credit Agreement are
subject to and may be rendered unenforceable by applicable law or public policy,
including applicable securities law.

 

4. We do not express any opinion as to the enforceability of any provisions
contained in the Credit Agreement or the Notes purporting to require a party
thereto to pay or reimburse attorneys’ fees incurred by another party, or to
indemnify another party therefor, which may be limited by applicable statutes
and decisions relating to the collection and award of attorneys’ fees, including
but not limited to North Carolina General Statutes § 6-21.2.

 

5. We do not express any opinion as to the enforceability of any provisions
contained in the Credit Agreement purporting to waive the right of jury trial.
Under North Carolina General Statutes § 22B-10, a provision for the waiver of
the right to a jury trial is unconscionable and unenforceable.

 

6. We do not express any opinion as to the enforceability of any provisions
contained in the Credit Agreement concerning choice of forum or consent to the
jurisdiction of courts, venue of actions or means of service of process.

 

7. It is likely that North Carolina courts will enforce the provisions of the
Credit Agreement providing for interest at a higher rate resulting from a
Default or Event of Default (a ”Default Rate”) which rate is higher than the
rate otherwise stipulated in the Credit Agreement. The law, however, disfavors
penalties, and it is possible that interest at the Default Rate may be held to
be an unenforceable penalty, to the extent such rate exceeds the rate applicable
prior to a default under the Credit Agreement. Also, since North Carolina
General Statutes § 24-10.1 expressly provides for late charges, it is possible
that North Carolina courts, when faced specifically with the issue, might rule
that this statutory late charge preempts any other charge (such as default
interest) by a bank for delinquent payments. The only North Carolina case which
we have found that addresses this issue is a 1978 Court of Appeals decision,
which in our opinion is of limited precedential value, North Carolina National
Bank v. Burnette, 38 N.C. App. 120, 247 S.E.2d 648 (1978), rev’d on other
grounds, 297 N.C. 524, 256 S.E.2d 388 (1979). While the court in that case did
allow interest after default (commencing with the date requested in the
complaint) at a rate six percent in excess of pre-default interest, we are
unable to determine from the opinion that any question was raised as to this
being penal in nature, nor does the court address the possible question of the
statutory late charge preempting a default interest surcharge. Therefore, since
the North Carolina Supreme Court has not ruled in a properly presented case
raising issues of its possible penal nature and those of North Carolina General
Statutes § 24-10.1, we are unwilling

 

3

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

to express an unqualified opinion that the Default Rate of interest prescribed
in the Credit Agreement is enforceable.

 

8. We do not express any opinion as to the enforceability of any provisions
contained in the Credit Agreement relating to evidentiary standards or other
standards by which the Credit Agreement are to be construed.

 

This opinion letter is delivered solely for your benefit in connection with the
Credit Agreement and, except for any Additional Bank or any Assignee which
becomes a Bank pursuant to Section 9.06(c) of the Credit Agreement, may not be
used or relied upon by any other Person or for any other purpose without our
prior written consent in each instance. Our opinions expressed herein are as of
the date hereof, and we undertake no obligation to advise you of any changes of
applicable law or any other matters that may come to our attention after the
date hereof that may affect our opinions expressed herein.

 

Very truly yours,

 

4

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

EXHIBIT C

 

OPINION OF

DAVIS POLK & WARDWELL, SPECIAL COUNSEL

FOR THE AGENTS

 

June 30, 2004

 

To the Banks and the Administrative Agent

     Referred to Below

c/o Citicorp USA, Inc.,

as Administrative Agent

388 Greenwich Street

New York, New York 10013

 

Dear Sirs:

 

We have participated in the preparation of the Three-Year Credit Agreement (the
“Credit Agreement”) dated as of June 30, 2004 among Duke Energy Corporation, a
North Carolina corporation (the “Borrower”), the banks listed on the signature
pages thereof (the “Banks”), Citicorp USA, Inc., as Administrative Agent (the
“Administrative Agent”), and Bank of America, N.A., as Syndication Agent, and
have acted as special counsel for the Agents for the purpose of rendering this
opinion pursuant to Section 3.01(c) of the Credit Agreement. Terms defined in
the Credit Agreement are used herein as therein defined.

 

We have examined originals or copies, certified or otherwise identified to our
satisfaction, of such documents, corporate records, certificates of public
officials and other instruments and have conducted such other investigations of
fact and law as we have deemed necessary or advisable for purposes of this
opinion.

 

Upon the basis of the foregoing, we are of the opinion that:

 

1. The execution, delivery and performance by the Borrower of the Credit
Agreement and the Notes are within the Borrower’s corporate powers and have been
duly authorized by all necessary corporate action.

 

2. The Credit Agreement constitutes a valid and binding agreement of the
Borrower and the Notes, if and when issued, constitute valid and binding
obligations of the Borrower enforceable in accordance with their respective
terms,

 

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

except as the same may be limited by bankruptcy, insolvency or similar laws
affecting creditors’ rights generally and by general principles of equity.

 

In giving the foregoing opinion, (i) we express no opinion as to the effect (if
any) of any law of any jurisdiction (except the State of New York) in which any
Bank is located which limits the rate of interest that such Bank may charge or
collect and (ii) we have relied, without independent investigation, as to all
matters governed by the laws of North Carolina, upon the opinion of the
Associate General Counsel of the Borrower, dated June 30, 2004, a copy of which
has been delivered to you.

 

This opinion is rendered solely to you in connection with the above matter. This
opinion may not be relied upon by you for any other purpose or relied upon by or
furnished to any other person, firm or corporation without our prior written
consent, except for Additional Banks and all Participants.

 

Very truly yours,

 

2

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

EXHIBIT D

 

ASSIGNMENT AND ASSUMPTION AGREEMENT

 

AGREEMENT dated as of             , 20     among [ASSIGNOR] (the “Assignor”),
[ASSIGNEE] (the “Assignee”), [DUKE ENERGY CORPORATION,] and CITICORP USA, INC.,
as Administrative Agent (the “Administrative Agent”).

 

W I T N E S S E T H

 

WHEREAS, this Assignment and Assumption Agreement (the “Agreement”) relates to
the Three-Year Credit Agreement dated as of June 30, 2004 among Duke Energy
Corporation (the “Borrower”), the Assignor and the other Banks party thereto, as
Banks, the Administrative Agent and Bank of America, N.A., as Syndication Agent
(the “Credit Agreement”);

 

WHEREAS, as provided under the Credit Agreement, the Assignor has a Commitment
to make Loans to the Borrower in an aggregate principal amount at any time
outstanding not to exceed $            ;1

 

WHEREAS, Loans made to the Borrower by the Assignor under the Credit Agreement
in the aggregate principal amount of $             are outstanding at the date
hereof; and

 

WHEREAS, the Assignor proposes to assign to the Assignee all of the rights of
the Assignor under the Credit Agreement in respect of a portion of its
Commitment thereunder in an amount equal to $             (the “Assigned
Amount”), together with a corresponding portion of its outstanding Loans, and
the Assignee proposes to accept assignment of such rights and assume the
corresponding obligations from the Assignor on such terms;*

 

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein, the parties hereto agree as follows:

 

SECTION 1. Definitions. All capitalized terms not otherwise defined herein shall
have the respective meanings set forth in the Credit Agreement.

 

SECTION 2. Assignment. The Assignor hereby assigns and sells to the Assignee all
of the rights of the Assignor under the Credit Agreement to the extent of the
Assigned Amount, and the Assignee hereby accepts such assignment

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

1 The asterisked provisions shall be appropriately revised in the event of an
assignment after the Commitment Termination Date.

 

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

from the Assignor and assumes all of the obligations of the Assignor under the
Credit Agreement to the extent of the Assigned Amount, including the purchase
from the Assignor of the corresponding portion of the principal amount of the
Loans made by the Assignor outstanding at the date hereof. Upon the execution
and delivery hereof by the Assignor, the Assignee, [the Borrower] and the
Administrative Agent, the payment of the amounts specified in Section 3 required
to be paid on the date hereof (i) the Assignee shall, as of the date hereof,
succeed to the rights and be obligated to perform the obligations of a Bank
under the Credit Agreement with a Commitment in an amount equal to the Assigned
Amount, and (ii) the Commitment of the Assignor shall, as of the date hereof, be
reduced by a like amount and the Assignor released from its obligations under
the Credit Agreement to the extent such obligations have been assumed by the
Assignee. The assignment provided for herein shall be without recourse to the
Assignor.

 

SECTION 3. Payments. As consideration for the assignment and sale contemplated
in Section 2 hereof, the Assignee shall pay to the Assignor on the date hereof
in Federal funds the amount heretofore agreed between them.2 It is understood
that facility fees accrued to the date hereof in respect of the Assigned Amount
are for the account of the Assignor and such fees accruing from and including
the date hereof are for the account of the Assignee. Each of the Assignor and
the Assignee hereby agrees that if it receives any amount under the Credit
Agreement which is for the account of the other party hereto, it shall receive
the same for the account of such other party to the extent of such other party’s
interest therein and shall promptly pay the same to such other party.

 

SECTION 4. Consent to Assignment. This Agreement is conditioned upon the consent
of [the Borrower and] the Administrative Agent pursuant to Section 9.06(c) of
the Credit Agreement. The execution of this Agreement by [the Borrower and] the
Administrative Agent is evidence of this consent. Pursuant to Section 9.06(c)
the Borrower agrees to execute and deliver a Note, if required by the Assignee,
payable to the order of the Assignee to evidence the assignment and assumption
provided for herein.

 

SECTION 5. Non-reliance on Assignor. The Assignor makes no representation or
warranty in connection with, and shall have no responsibility with respect to,
the solvency, financial condition, or statements of any Borrower, or the
validity and enforceability of the obligations of any Borrower in respect of the
Credit Agreement or any Note. The Assignee acknowledges that it has,
independently and without reliance on the Assignor, and based on such

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

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

 

2

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

documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and will continue to be
responsible for making its own independent appraisal of the business, affairs
and financial condition of the Borrower.

 

SECTION 6. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.

 

SECTION 7. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.

 

SECTION 8. Administrative Questionnaire. Attached is an Administrative
Questionnaire duly completed by the Assignee.

 

3

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

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

 

[ASSIGNOR]

By:        

Title:

[ASSIGNEE]

By:        

Title:

[DUKE ENERGY CORPORATION]

By:        

Title:

CITICORP USA, INC., as Administrative Agent

By:        

Title:

 

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EXHIBIT E

 

EXTENSION AGREEMENT

 

Citicorp USA, Inc., as Administrative

Agent under the Credit Agreement

referred to below

388 Greenwich Street

New York, New York 10013

 

Ladies and Gentlemen:

 

Effective as of [date], the undersigned hereby agrees to extend its Commitment
and Commitment Termination Date under the Three-Year Credit Agreement dated as
of June 30, 2004 among Duke Energy Corporation, (the “Borrower”), the banks
parties thereto, Citicorp USA, Inc., as Administrative Agent, and Bank of
America, N.A., as Syndication Agent (the “Credit Agreement”) for one year to
[date to which its Commitment Termination Date is to be extended] pursuant to
Section 2.01(c) of the Credit Agreement. Terms defined in the Credit Agreement
are used herein as therein defined.

 

This Extension Agreement shall be construed in accordance with and governed by
the law of the State of New York. This Extension Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument.

 

[NAME OF BANK]

By:        

Title:

 

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Agreed and Accepted:

 

DUKE ENERGY CORPORATION,

as Borrower

By:        

Title:

CITICORP USA, INC.,

as Administrative Agent

By:        

Title:

 

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