_____________________________________________________________________________

 

 

CREDIT AGREEMENT

 

DATED AS OF

 

MAY 7, 2007

 

AMONG

 

BLACK HILLS CORPORATION,

as Borrower,

 

ABN AMRO BANK N.V.,

as Administrative Agent, Sole Bookrunner and Co-Arranger,

 

BMO CAPITAL MARKETS, as Syndication Agent and Co-Arranger,

 

CREDIT SUISSE SECURITIES (USA) LLC, as Syndication Agent and Co-Arranger,

 

UNION BANK OF CALIFORNIA, N.A., as Syndication Agent and Co-Arranger,

 

and

 

THE FINANCIAL INSTITUTIONS PARTY HERETO,

as Banks

 

_____________________________________________________________________________

 

TABLE OF CONTENTS

 

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

 

 

Page

 

 

 

SECTION 1.

DEFINITIONS; INTERPRETATION

1

 

 

 

Section 1.1

Definitions

1

Section 1.2

Interpretation

16

 

 

 

SECTION 2.

THE CREDITS

17

 

 

 

Section 2.1

The Term Loan

17

Section 2.2

Reserved

17

Section 2.3

Applicable Interest Rates

17

Section 2.4

Minimum Borrowing Amounts

19

Section 2.5

Manner of Borrowing Loans and Designating Interest Rates Applicable to Loans

19

Section 2.6

Interest Periods

21

Section 2.7

Maturity of Loans

21

Section 2.8

Prepayments

22

Section 2.9

Default Rate

23

Section 2.10

The Notes

24

Section 2.11

Funding Indemnity

24

Section 2.12

Commitments

25

 

 

 

SECTION 3.

FEES

25

 

 

 

Section 3.1

Fees

25

 

 

 

SECTION 4.

PLACE AND APPLICATION OF PAYMENTS

26

 

 

 

Section 4.1

Place and Application of Payments

26

 

 

 

SECTION 5.

REPRESENTATIONS AND WARRANTIES

26

 

 

 

Section 5.1

Corporate Organization and Authority

26

Section 5.2

Subsidiaries

27

Section 5.3

Corporate Authority and Validity of Obligations

27

Section 5.4

Financial Statements

27

Section 5.5

No Litigation; No Labor Controversies

28

Section 5.6

Taxes

28

Section 5.7

Approvals

28

Section 5.8

ERISA

28

Section 5.9

Government Regulation

28

Section 5.10

Margin Stock; Use of Proceeds

29

Section 5.11

Licenses and Authorizations; Compliance with Laws

29

Section 5.12

Ownership of Property; Liens

30

Section 5.13

No Burdensome Restrictions; Compliance with Agreements

30

Section 5.14

Full Disclosure

30

 

 

ii

 

Section 5.15

Solvency

30

Section 5.16

Related Transactions

30

Section 5.17

Certain Other Representations and Warranties

30

Section 5.18

Foreign Assets Control Regulations and Anti-Money Laundering

30

 

 

 

SECTION 6.

CONDITIONS PRECEDENT

31

 

 

 

Section 6.1

Closing

31

Section 6.2

Making of Term Loan

32

Section 6.3

All Borrowings

33

 

 

 

SECTION 7.

COVENANTS

34

 

 

 

Section 7.1

Corporate Existence; Subsidiaries

34

Section 7.2

Maintenance

34

Section 7.3

Taxes

34

Section 7.4

ERISA

35

Section 7.5

Insurance

35

Section 7.6

Financial Reports and Other Information

35

Section 7.7

Bank Inspection Rights

37

Section 7.8

Conduct of Business

37

Section 7.9

Liens

38

Section 7.10

Use of Proceeds; Regulation U

40

Section 7.11

Sales and Leasebacks

40

Section 7.12

Mergers, Consolidations and Sales of Assets

40

Section 7.13

Use of Property and Facilities; Environmental and Health and Safety Laws

42

Section 7.14

Investments, Acquisitions, Loans, Advances and Guaranties

42

Section 7.15

Restrictions on Indebtedness

44

Section 7.16

Consolidated Net Worth

47

Section 7.17

Recourse Leverage Ratio

47

Section 7.18

Interest Expense Coverage Ratio

47

Section 7.19

Dividends and Other Shareholder Distributions

47

Section 7.20

No Negative Pledge

47

Section 7.21

Transactions with Affiliates

48

Section 7.22

Compliance with Laws

48

Section 7.23

Pari-Passu

48

Section 7.24

Certain Subsidiaries

48

Section 7.25

Ratings

48

Section 7.26

OFAC

48

 

 

 

SECTION 8.

EVENTS OF DEFAULT AND REMEDIES

49

 

 

 

Section 8.1

Events of Default

49

Section 8.2

Non-Bankruptcy Defaults

50

Section 8.3

Bankruptcy Defaults

51

Section 8.4

Reserved

51

Section 8.5

Expenses

51

 

 

iii

 

 

 

 

 

 

 

SECTION 9.

CHANGE IN CIRCUMSTANCES

51

 

 

 

Section 9.1

Change of Law

51

Section 9.2

Unavailability of Deposits or Inability to Ascertain, or Inadequacy of, LIBOR

51

Section 9.3

Increased Cost and Reduced Return

52

Section 9.4

Lending Offices

54

Section 9.5

Discretion of Bank as to Manner of Funding

54

 

 

 

SECTION 10.

THE AGENT.

54

 

 

 

Section 10.1

Appointment and Authorization of Administrative Agent

54

Section 10.2

Administrative Agent and its Affiliates

54

Section 10.3

Action by Administrative Agent

54

Section 10.4

Consultation with Experts

55

Section 10.5

Liability of Administrative Agent; Credit Decision

55

Section 10.6

Indemnity

56

Section 10.7

Resignation of Administrative Agent and Successor Administrative Agent

56

 

 

 

SECTION 11.

MISCELLANEOUS

56

 

 

 

Section 11.1

Withholding Taxes

56

Section 11.2

No Waiver of Rights

57

Section 11.3

Non-Business Day

58

Section 11.4

Documentary Taxes

58

Section 11.5

Survival of Representations

58

Section 11.6

Survival of Indemnities

58

Section 11.7

Set-Off

58

Section 11.8

Notices

59

Section 11.9

Counterparts

60

Section 11.10

Successors and Assigns

60

Section 11.11

Amendments

64

Section 11.12

Headings

64

Section 11.13

Legal Fees, Other Costs and Indemnification

64

Section 11.14

Entire Agreement

65

Section 11.15

Construction

65

Section 11.16

Governing Law

65

Section 11.17

SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL

65

Section 11.18

Replacement of Bank

66

Section 11.19

Confidentiality

67

Section 11.20

Rights and Liabilities of Syndication Agents, Sole Bookrunner and Co-Arrangers

67

Section 11.21

Absence of Termination-Related Events of Defaults in Prior Facilities

67

Section 11.22

Severability of Provisions

68

 

 

iv

* EXHIBITS

 

 

A

Form of Note

 

B

Form of Compliance Certificate

 

C

Form of Assignment and Assumption Agreement

 

D

Voting Participant Information

 

E

Form of Notice of Borrowing

 

* SCHEDULES

 

 

SCHEDULE 2.1

Commitments

 

SCHEDULE 4

Administrative Agent Notice and Payment Info

 

SCHEDULE 5.2

Schedule of Existing Subsidiaries

 

SCHEDULE 5.5

Litigation and Labor Controversies

 

SCHEDULE 5.11

Environmental Matters

 

SCHEDULE 7.9

Existing Liens

 

SCHEDULE 7.14

Existing Investments

 

SCHEDULE 7.15(a)

Marketing Subsidiary Indebtedness

 

SCHEDULE 7.15(b)

Existing Secured Indebtedness

 

SCHEDULE 7.19

Restrictions on Distributions and Existing Negative Pledges

 

* The above schedules and exhibits have been omitted from this filing, however
the Registrant will provide them to the Securities and Exchange Commission upon
request.

 

v

CREDIT AGREEMENT

CREDIT AGREEMENT, dated as of May 7, 2007 among Black Hills Corporation, a South
Dakota corporation (“Borrower”), the financial institutions from time to time
party hereto (each a “Bank,” and collectively the “Banks”), CREDIT SUISSE
SECURITIES (USA) LLC, as a syndication agent for the Banks (in such capacity, a
“Syndication Agent”) and as a co-arranger of the Banks (in such capacity, a
“Co-Arranger”), UNION BANK OF CALIFORNIA, N.A., as a Syndication Agent and as a
Co-Arranger, BMO CAPITAL MARKETS, as a Syndication Agent and as a Co-Arranger,
and ABN AMRO Bank N.V. (“ABN AMRO”) in its capacity as administrative agent for
the Banks hereunder (in such capacity, the “Administrative Agent”), the sole
bookrunner (in such capacity, “Sole Bookrunner”) and as a Co-Arranger.

WITNESSETH THAT:

WHEREAS, the Borrower desires to obtain the several commitments of the Banks to
make available an acquisition and bridge loan facility, as described herein; and

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

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

SECTION 1. DEFINITIONS; INTERPRETATION.

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

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

“ABN AMRO Fee Letter” means that certain letter among dated as of February 6,
2007 by and between ABN AMRO and Borrower pertaining to fees to be paid by
Borrower to ABN AMRO for its sole account and benefit.

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

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

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

“Affiliate” means, as to any Person, any other Person which directly or
indirectly controls, or is under common control with, or is controlled by, such
Person. As used in this definition, “control” (including, with their correlative
meanings, “controlled by” and “under common control with”) means possession,
directly or indirectly, of power to direct or cause the

direction of management or policies of a Person (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise), provided that, in any event for purposes of this definition: (i) any
Person which owns directly or indirectly twenty percent (20%) or more of the
securities having ordinary voting power for the election of directors or other
governing body of a corporation or twenty percent (20%) or more of the
partnership or other ownership interests of any other Person will be deemed to
control such corporation or other Person; and (ii) each director and executive
officer of Borrower or any Subsidiary of Borrower shall be deemed an Affiliate
of Borrower and each of its Subsidiaries.

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

“Agreement and Plan of Merger” means that certain Agreement and Plan of Merger
dated as of February 6, 2007 by and among Gregory Acquisition Corp., a Delaware
corporation, Great Plains Energy Incorporated, a Missouri corporation and
Borrower, as such agreement may be amended in accordance with the terms thereof.

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

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

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

“Aquila Agreements” means (i) the Asset Purchase Agreement, (ii) the Partnership
Interests Purchase Agreement, (iii) the Agreement and Plan of Merger, and (iv)
all deliveries, agreements and other documents delivered or executed in
connection with any of the foregoing.

“Aquila Assets” means the “Purchased Assets” and the “Colorado Assets” as such
terms are defined in the Asset Purchase Agreement and the “Company Interest” as
such term is defined in the Partnership Interest Purchase Agreement.

“Asset Disposition” means any sale, lease, license or other consensual
disposition by Borrower or any of its Subsidiaries of any asset, but excluding
(i) dispositions of inventory in the ordinary course of business, (ii)
dispositions of cash and cash equivalents, (iii) dispositions of assets by the
Marketing Subsidiaries in the ordinary course of business consistent with past
practices, and (iv) sales of electricity, gas and ancillary services by the
utility Subsidiaries in the ordinary course of business.

“Asset Purchase Agreement” means that certain Asset Purchase Agreement dated as
of February 6, 2007 by and among Gregory Acquisition Corp., a Delaware
corporation, Great Plains Energy Incorporated, a Missouri corporation, the
Borrower and Aquila, Inc., a Delaware corporation, as such agreement may be
amended in accordance with the terms thereof.

 

2

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

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

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

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

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

“Base Rate Margin” means zero percent (0%).

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

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

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

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

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

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

 

3

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

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

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

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

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

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

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

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

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

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

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

“Commitment Fee Rate” means, 0.125% per annum; provided, however, in the event
and for so long as (i) the S&P Rating of the Borrower is lower than BBB- or (ii)
the Moody’s Rating of the Borrower is lower than Baa3, such percentage shall be
increased to 0.25%. Each change in a rating shall be effective as of the date it
is announced by the applicable rating agency.

“Commitment Termination Date” means August 5, 2008.

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

 

4

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

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

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

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

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

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

 

5

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

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

“Credit Documents” means this Agreement, the Notes, the Fee Letters and all
other documents executed in connection herewith or therewith.

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

“Derivative Arrangement” means any agreement (including any master agreement and
any agreement, whether or not in writing, relating to any single transaction)
that is an interest rate swap agreement, basis swap, forward rate agreement,
commodity swap, commodity option, equity or equity index swap or option, bond
option, interest rate option, forward foreign exchange agreement, rate cap,
collar or floor agreement, future agreement, currency swap agreement,
cross-currency rate swap agreement, swaption, currency option, that relates to
fluctuations in raw material prices or utility or energy prices or other costs,
or any other similar agreement, including any option to enter into any of the
foregoing, or any combination of any of the foregoing. “Derivative Arrangements”
shall include all such agreements or arrangements made or entered into at any
time, or in effect at any time, whether or not related to a Loan.

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

“Effective Date” means May 7, 2007.

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

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

 

6

storage, disposal, transport or handling of pollutants, contaminants, hazardous
or toxic substances, wastes or any other controlled or regulated substance or
the clean-up or other remediation thereof.

“ERISA” is defined in Section 5.8 hereof.

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

“Eurodollar Margin” means:

(i)        from the Effective Date through the date which is six (6) months
after the Initial Loan Date, 0.55% (and, in the event and for so long as (x) the
S&P Rating of the Borrower is lower than BBB- or (y) the Moody’s Rating of the
Borrower is lower than Baa3, such Eurodollar Margin shall be increased to
0.80%);

(ii)       from the date which is six (6) months and one (1) day after the
Initial Loan Date through the date which is nine (9) months after the Initial
Loan Date, 0.675% (and, in the event and for so long as (x) the S&P Rating of
the Borrower is lower than BBB- or (y) the Moody’s Rating of the Borrower is
lower than Baa3, such Eurodollar Margin shall be increased to 0.925%); and

(iii)      from the date which is nine (9) months and one (1) day after the
Initial Loan Date and thereafter, 0.925% (and, in the event and for so long as
(x) the S&P Rating of the Borrower is lower than BBB- or (y) the Moody’s Rating
of the Borrower is lower than Baa3, such Eurodollar Margin shall be increased to
1.175%).

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

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

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

“Existing Credit Agreement” means that certain Credit Agreement dated as of May
5, 2005 by and among, inter alia, ABN AMRO, as Administrative Agent, Borrower
and the various financial institutions party thereto as “Banks,” as amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof.

 

7

“Extraordinary Receipts” means any cash received by or paid to or for the
account of any Borrower or any of its Subsidiaries received in respect of
purchase price and other monetary adjustments made pursuant to any Related
Transaction Document and/or indemnification payments made pursuant to any
Related Transaction Document; provided, Extraordinary Receipts shall exclude any
single or related series of amounts received in an aggregate amount less than
$50,000,000.00.

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

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

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

“Fee Letter” and “Fee Letters” means either or both the ABN AMRO Fee Letter and
the Initial Banks Fee Letter, as the context may require.

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

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

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

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

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

 

8

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

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

“Initial Bank Fee Letter” means that certain letter agreement dated as of
February 6, 2007 by and among certain of the initial Banks party to this
Agreement, certain of their respective Affiliates and Borrower pertaining to
fees to be paid by Borrower to such Persons for their sole accounts and benefit.

“Initial Loan Date” means the date upon which the Term Loan is made by the Banks
to the Borrower in accordance with the terms hereof.

 

9

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

“Interest Period” is defined in Section 2.6 hereof.

“Investments” is defined in Section 7.14.

“Lending Office” is defined in Section 9.4 hereof.

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

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

“Loan” and “Loans” means all or any portion of the Term Loan (as the context
requires) and includes a Base Rate Loan or Eurodollar Loan, each of which is a
“type” of Loan hereunder.

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

“Major Casualty Proceeds” means (i) the aggregate insurance proceeds received in
connection with one or more related events under any property insurance policy
or (ii) any award or other compensation with respect to any condemnation of
property (or any transfer or disposition of property in lieu of condemnation),
if the amount of such aggregate insurance proceeds or award or other
compensation exceeds $20,000,000.00.

“Marketing Subsidiary” means Enserco Energy, Inc., a South Dakota corporation,
and its subsidiaries.

“Marketing Subsidiary Excluded Credit Facility” means that certain credit
facilities of Enserco Energy, Inc., a South Dakota corporation, described on
Schedule 7.15(a) hereof, as such credit facility is in effect on the Effective
Date (or as such credit facility may be amended, restated or otherwise modified
on terms and conditions and pursuant to documentation to (x) accommodate an
increase in the borrowings thereunder to $300,000,000 and (y) permit such credit
facility to be either asset-based or non-asset-based (whether secured or
unsecured). Any

 

10

replacement credit facility of the Marketing Subsidiary Excluded Credit Facility
shall be deemed a Marketing Subsidiary Excluded Credit Facility only if such
replacement credit facility contains terms substantially the same as the
Marketing Subsidiary Excluded Credit Facility being replaced (including tenor
but excluding the increase in borrowings otherwise permitted above) or is
approved in writing by the Required Banks.

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

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

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

“Material Subsidiaries” means BHP, Black Hills Energy, Inc., a South Dakota
corporation, Wyodak Resources Development Corp., a Delaware corporation, Black
Hills Generation, Inc., a Delaware corporation, CLF&P, and any other Subsidiary
of Borrower which is not either an Immaterial Subsidiary or a Project Finance
Subsidiary. For purposes of the definition of Specified Representations” only,
the term “Material Subsidiaries” means BHP, Black Hills Energy, Inc., a South
Dakota corporation, Wyodak Resources Development Corp., a Delaware corporation,
Black Hills Generation, Inc., a Delaware corporation, CLF&P, and any other
Subsidiary of the Borrower whose assets constitute at least 5% of the
consolidated assets of the Borrower and not including, in any event, any Project
Finance Subsidiaries.

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

“Net Cash Proceeds” means, with respect to any transaction or event and any
Person, an amount equal to the cash proceeds received by such Person from or in
respect of such transaction

 

11

or event (including cash proceeds of any non-cash proceeds of such transaction),
less (i) any out-of-pocket expenses paid that are reasonably incurred by such
Person in connection therewith and (ii) in the case of an asset disposition, the
amount of any Indebtedness secured by a Lien on the related asset and discharged
from the proceeds of such asset disposition and any taxes paid or reasonably
estimated by such Person to be payable by such Person in respect of such asset
disposition (provided, that if the actual amount of taxes paid is less than the
estimated amount, the difference shall immediately constitute Net Cash
Proceeds).

“Non-Recourse Indebtedness” means, without duplication, all Indebtedness of
Borrower and its Consolidated Subsidiaries determined on a consolidated basis in
accordance with GAAP incurred in connection with project financings (including
project financings of existing assets) as to which the holder of such
Indebtedness has recourse solely against the assets of the Project Finance
Subsidiary that incurs such Indebtedness and not against Borrower or a
Consolidated Subsidiary of Borrower other than a Project Finance Subsidiary or
any of their other assets (whether directly, through a Guarantee or otherwise),
other than the pledge of the stock (or similar equity interest) of the Project
Finance Subsidiary which incurred such Indebtedness. For purposes of
clarification, any Indebtedness of a Project Finance Subsidiary which would
otherwise constitute Non-Recourse Indebtedness but for the issuance by the
Borrower or a Consolidated Subsidiary of the Borrower of a Guarantee or other
document which provides recourse with respect to such Indebtedness, such
Indebtedness shall for all purposes of this Agreement be deemed Non-Recourse
Indebtedness so long as (i) the Borrower’s or such Consolidated Subsidiary’s
obligations under such Guarantee or other document are treated for all purposes
as Recourse Indebtedness hereunder, (ii) such Recourse Indebtedness of the
Borrower or such Consolidated Subsidiary is unsecured and is otherwise permitted
by this Agreement, and (iii) such Recourse Indebtedness of the Borrower or such
Consolidated Subsidiary does not in the aggregate exceed $100,000,000 at any one
time outstanding.

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

“Notice of Borrowing” means a notice of an Authorized Representative of
Borrower, appropriately completed and substantially in the form of Exhibit E
hereto.

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

“Partnership Interests Purchase Agreement” means that certain Partnership
Interests Purchase Agreement dated as of February 6, 2007 by and among Gregory
Acquisition Corp., a Delaware corporation, Great Plains Energy Incorporated, a
Missouri corporation, the Borrower, Aquila Colorado, LLC, a Delaware limited
liability company and, Aquila, Inc., a Delaware corporation, as such agreement
may be amended in accordance with the terms thereof.

“Patriot Act” means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, P.L.
107-56, as amended.

 

12

“Percentage” means, for each Bank, the percentage of the Commitments represented
by such Bank’s Commitment or, if the Commitments have been terminated, the
percentage held by such Bank of the aggregate principal amount of all
outstanding Obligations.

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

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

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

“PBGC” is defined in Section 5.8 hereof.

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

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

“PUCHA” means the Public Utility Holding Company Act of 2005, as amended.

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

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

 

13

“Related Transaction Documents” means the Asset Purchase Agreement, the
“Partnership Interests Purchase Agreement” (as such term is defined in the Asset
Purchase Agreement), the “Merger Agreement” (as such term is defined in the
Asset Purchase Agreement), the Existing Credit Agreement and all deliveries,
agreements and other documents delivered or executed in connection with any of
the foregoing.

“Related Transactions” means the transactions contemplated by the Related
Transaction Documents.

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

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

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

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

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

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

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

“Specified Representations” means each of the following representations and
warranties:

(a)       each of the representations and warranties made under the Related
Transaction Documents (other than the Existing Credit Agreement) made by or with
respect to Gregory Acquisition Corp., a Delaware corporation, Great Plains
Energy Incorporated, a Missouri corporation, Aquila, Inc. or any of their
respective assets is true and correct, in each case only to the extent the
failure of such representation or warranty

 

14

to be true, individually or in the aggregate, may form a basis for the Borrower
to terminate its obligations to consummate the transactions contemplated thereby
as a result thereof; and

(b)       the representations and warranties made in Sections 5.1, 5.3, 5.7,
5.9, 5.10, 5.15, 5.18 and, solely with respect to Section 6.2 (and not with
respect to Section 6.1), 5.16;

(c)       a representation and warranty that all other unsecured Indebtedness of
the Borrower is (i) junior in right of payment to the Obligations, or (ii) pari
passu to the Obligations;

 

(d)

a representation and warranty that:

(i)        neither Borrower nor any Material Subsidiary has, since September 30,
2006, (A) failed to pay its debts generally as they become due or admitted in
writing its inability to pay its debts generally as they become due, (B) made an
assignment for the benefit of creditors, (C) applied for, sought, consented to,
or acquiesced in, the appointment of a receiver, custodian, trustee, examiner,
liquidator or similar official for it or any substantial part of its Property,
(D) instituted any proceeding seeking to have entered against it an order for
relief under the United States Bankruptcy Code, as amended, to adjudicate it
insolvent, or seeking dissolution, winding up, liquidation, reorganization,
arrangement, adjustment or composition of it or its debts under any law relating
to bankruptcy, insolvency or reorganization or relief of debtors or fail to file
an answer or other pleading denying the material allegations of any such
proceeding filed against it or any analogous action is taken under any other
applicable law relating to bankruptcy or insolvency, (E) taken any corporate
action (such as the passage by its board of directors of a resolution) in
furtherance of any matter described in parts (A) through (D) above, or (F)
failed to contest in good faith any appointment or proceeding described in
clause (ii) below; and

(ii)       no custodian, receiver, trustee, examiner, liquidator or similar
official has, since September 30, 2006 been appointed for Borrower or any
Material Subsidiary, or any substantial part of any of their Property, and no
proceeding of the type described in clause (i)(D) above has been instituted
against Borrower or any Material Subsidiary since such date; and

(e)       a representation and warranty that no acceleration of Indebtedness
with a principal balance exceeding $50,000,000 of Borrower or its Material
Subsidiaries as the result of events of default thereunder shall have occurred
and be continuing.

“Subsidiary” means, as to Borrower, any corporation or other entity (i) which is
consolidated into the financial statements of such Borrower in accordance with
GAAP or (ii) of which more than fifty percent (50%) of the outstanding stock or
comparable equity interests having ordinary voting power for the election of the
Board of Directors of such corporation or similar governing body in the case of
a non-corporation (irrespective of whether or not, at the

 

15

time, stock or other equity interests of any other class or classes of such
corporation or other entity shall have or might have voting power by reason of
the happening of any contingency) is at the time directly or indirectly owned by
such Borrower or by one or more of its Subsidiaries.

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

“Telerate Service” means Moneyline Telerate, Inc.

“Term Loan” is defined in Section 2.1.

“Termination Date” means the earlier to occur of (i) the date which is 364 days
from the Initial Loan Date and (ii) February 5, 2009.

 

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

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

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

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

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

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

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

Section 1.2 Interpretation. The foregoing definitions shall be equally
applicable to both the singular and plural forms of the terms defined. All
references to times of day in this Agreement shall be references to New York,
New York time unless otherwise specifically provided. The word “including” means
including without limiting the generality of any description preceding such
term. Where the character or amount of any asset or liability or item of income
or expense is required to be determined or any consolidation or other accounting
computation is required to be made for the purposes of this Agreement, the same
shall be done in accordance with GAAP in effect on the Effective Date, to the
extent applicable, except where such principles are inconsistent with the
specific provisions of this Agreement.

 

16

SECTION 2. THE CREDITS.

Section 2.1 The Term Loan. Subject to the terms and conditions hereof (including
Sections 6.1, 6.2 and 6.3), each Bank, by its acceptance hereof, severally
agrees to make a term loan in U.S. Dollars (the “Term Loan”) prior to the
Commitment Termination Date; such Term Loan shall be made in one draw on the
Initial Loan Date and in an original principal amount (i) up to the amount of
such Bank’s commitment set forth opposite the name of such Bank on Schedule 2.1
hereto (such amount, as reduced pursuant to Section 2.12 or changed as a result
of one or more assignments under Section 11.10 its “Commitment” and,
cumulatively for all the Banks, the “Commitments”) and (ii) equal to an amount
designated by the Borrower (but not to exceed the aggregate amount of the
Commitments then outstanding) in an executed written notice in form satisfactory
to (and delivered not later than three (3) Business Days beforehand) to the
Administrative Agent. Each Bank’s obligation to fund the Term Loan shall be
limited to such Bank’s own Commitment, the Borrowing of the Term Loan shall be
made ratably from the Banks in proportion to their respective Percentages and no
Bank shall have any obligation to fund any portion of the Term Loan required to
be funded by any other Bank, but not so funded. The Borrower shall not have any
right to reborrow any portion of the Term Loan which is repaid or prepaid from
time to time. The Commitments shall terminate on the Commitment Termination
Date. As provided in Section 2.5(a) hereof, Borrower may elect that such initial
Borrowing of the Term Loan be either Base Rate Loans or Eurodollar Loans
(subject to any applicable limitations set forth in this Agreement). Unless an
earlier maturity is provided for hereunder, the Term Loan shall mature and be
due and payable on the Termination Date.

Section 2.2 Reserved.

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

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

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

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

 

17

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

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

 

Adjusted LIBOR =

LIBOR

1 - Eurodollar Reserve Percentage

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

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

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

“Eurodollar Reserve Percentage” means for a Borrowing of Eurodollar Loans from
any Bank, the daily average for the applicable Interest Period of the actual
effective rate, expressed as a decimal, at which reserves (including, without
limitation, any supplemental, marginal and emergency reserves) are maintained by
such Bank during such Interest Period pursuant to Regulation D of the Board of
Governors of the Federal Reserve System (or any successor) on “eurocurrency
liabilities,” as defined in such Board’s Regulation D (or in respect of any
other

 

18

category of liabilities that includes deposits by reference to which the
interest rate on Eurodollar Loans is determined or any category of extensions of
credit or other assets that include loans by non-United States offices of any
Bank to United States residents), subject to any amendments of such reserve
requirement by such Board or its successor, taking into account any transitional
adjustments thereto. For purposes of this definition, the Eurodollar Loans shall
be deemed to be “eurocurrency liabilities” as defined in Regulation D without
benefit or credit for any prorations, exemptions or offsets under Regulation D.

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

Section 2.4 Minimum Borrowing Amounts. Each Borrowing of Base Rate Loans and
Eurodollar Loans shall be in an amount not less than (i) if such Borrowing is
comprised of Borrowing of Base Rate Loans, $1,000,000 and integral multiples of
$500,000 in excess thereof, and (ii) if such Borrowing is comprised of Borrowing
of Eurodollar Loans, $2,000,000 and integral multiples of $1,000,000 in excess
thereof.

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

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

 

19

independent investigation, and in the event any such notice by telephone
conflicts with any written confirmation, such telephonic notice shall govern if
the Administrative Agent has acted in reliance thereon. There may be no more
than six (6) different Interest Periods in effect at any one time; provided, for
purposes of determining the number of Interest Periods in effect at any one
time, all Base Rate Loans shall be deemed to have one and the same Interest
Period.

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

(c)       Borrower’s Failure to Notify. Any outstanding Borrowing of Base Rate
Loans shall, subject to Section 6.2 hereof, automatically be continued for an
additional Interest Period on the last day of its then current Interest Period
unless Borrower has notified the Administrative Agent within the period required
by Section 2.5(a) that it intends to convert such Borrowing into a Borrowing of
Eurodollar Loans or notifies the Administrative Agent within the period required
by Section 2.8(a) that it intends to prepay such Borrowing. If Borrower fails to
give notice pursuant to Section 2.5(a) above of the continuation or conversion
of any outstanding principal amount of a Borrowing of Eurodollar Loans before
the last day of its then current Interest Period within the period required by
Section 2.5(a) and has not notified the Administrative Agent within the period
required by Section 2.8(a) that it intends to prepay such Borrowing, such
Borrowing shall automatically be converted into a Borrowing of Base Rate Loans,
subject to Section 6.2 hereof. The Administrative Agent shall promptly notify
the Banks of Borrower’s failure to so give a notice under Section 2.5(a).

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

(e)       Administrative Agent Reliance on Bank Funding. Unless the
Administrative Agent shall have been notified by a Bank before the date on which
such Bank is scheduled to make payment to the Administrative Agent of the
proceeds of a Loan (which notice shall be effective upon receipt) that such Bank
does not intend to make such payment, the Administrative Agent may assume that
such Bank has made such payment when due and the Administrative Agent may in
reliance upon such assumption (but shall not be required to) make available to
Borrower the proceeds of the Loan to be made by such Bank and, if any Bank has
not in fact made such payment to the

 

20

Administrative Agent, such Bank shall, on demand, pay to the Administrative
Agent the amount made available to Borrower attributable to such Bank together
with interest thereon in respect of each day during the period commencing on the
date such amount was made available to Borrower and ending on (but excluding)
the date such Bank pays such amount to the Administrative Agent at a rate per
annum equal to (i) from the date the related payment was made by the
Administrative Agent to the date two (2) Business Days after payment by such
Bank is due hereunder, the Federal Funds Rate for each such day and (ii) from
the date two (2) Business Days after the date such payment is due from such Bank
to the date such payment is made by such Bank, the Base Rate in effect for each
such day. If such amount is not received from such Bank by the Administrative
Agent immediately upon demand, Borrower will, on demand, repay to the
Administrative Agent the proceeds of the Loan attributable to such Bank with
interest thereon at a rate per annum equal to the interest rate applicable to
the relevant Loan.

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

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

(b)       for any Borrowing of Eurodollar Loans, Borrower may not select an
Interest Period that extends beyond the Termination Date;

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

(d)       for purposes of determining an Interest Period for a Borrowing of
Eurodollar Loans, a month means a period starting on one day in a calendar month
and ending on the numerically corresponding day in the next calendar month;
provided, however, if there is no numerically corresponding day in the month in
which such an Interest Period is to end or if such an Interest Period begins on
the last Business Day of a calendar month, then such Interest Period shall end
on the last Business Day of the calendar month in which such Interest Period is
to end.

Section 2.7 Maturity of Loans. Unless an earlier maturity is provided for
hereunder (whether by acceleration or otherwise), all Obligations (including
principal and interest on all

 

21

outstanding Loans) shall mature and become due and payable by Borrower on the
Termination Date.

Section 2.8 Prepayments.

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

(b)       Mandatory Prepayments. There shall become due and payable and Borrower
shall prepay the Loans in the following amounts and at the following times:

 

(i)        on the date on which Borrower or any of its Subsidiaries (other than
any of its Project Finance Subsidiaries) receives any payment which constitutes
Major Casualty Proceeds (other than Major Casualty Proceeds received by utility
Subsidiaries with respect to property that is subject to first mortgage bonds
otherwise permitted by the terms of this Agreement), an amount equal to the Net
Cash Proceeds of such payment; provided, the recipient (other than
Administrative Agent) of any payment which constitutes such Major Casualty
Proceeds may reinvest such payment within one hundred eighty (180) days, in
replacement assets comparable to the assets giving rise to such payment;
provided, further, the aggregate amount which may be reinvested by Borrower and
its Subsidiaries pursuant to the preceding proviso may not exceed $50,000,000.00
in any Fiscal Year; provided, further, if Borrower does not intend to reinvest
such payment, or if the time period set forth in this sentence expires without
Borrower or such Subsidiary having reinvested such payment, Borrower shall
prepay the Loans in an amount equal to the Net Cash Proceeds of such payment;

 

(ii)       promptly upon receipt by any Borrower or any of its Subsidiaries
(other than any of its Project Finance Subsidiaries) of the proceeds from the
issuance and sale of any Indebtedness or equity securities, including but not
limited to Indebtedness or equity securities undertaken to refinance funds used
to consummate the Related Transactions (other than proceeds of: (w) Indebtedness
incurred as a result of extensions and refinancings of the “Black Hills
Corporation lease payment obligation on the Wygen I facility” described on
Schedule 7.15(b)

 

22

hereto which do not increase the principal amount thereof permitted under
Section 7.17(c)(A), (x) Indebtedness under the Existing Credit Agreement and any
credit agreement entered into by and among, inter alia, the Initial Banks and
Borrower which refinances the Existing Credit Agreement; (y) Indebtedness issued
by Black Hills Power, Inc. or CLF&P; and (z) the Marketing Subsidiary Excluded
Credit Facility), an amount equal to one hundred percent (100%) of the Net Cash
Proceeds of such issuance and sale;

 

(iii)      on the date on which Borrower or any of its Subsidiaries receives any
payment which constitutes Extraordinary Receipts (other than, to the extent they
constitute Extraordinary Receipts, proceeds of: (w) Indebtedness incurred as a
result of extensions and refinancings of the “Black Hills Corporation lease
payment obligation on the Wygen I facility” described on Schedule 7.15(b) hereto
which do not increase the principal amount thereof permitted under Section
7.17(c)(A), (x) Indebtedness under the Existing Credit Agreement and any credit
agreement entered into by and among, inter alia, the Initial Banks and Borrower
which refinances the Existing Credit Agreement; (y) Indebtedness issued by Black
Hills Power, Inc. or CLF&P; and (z) the Marketing Subsidiary Excluded Credit
Facility), an amount equal to the amount of such payment; and

 

(iv)      promptly upon receipt by any Borrower or any of its Subsidiaries of
the proceeds of any Asset Disposition, an amount equal to one hundred percent
(100%) of the Net Cash Proceeds of such Asset Disposition; provided, no
prepayment shall be required pursuant to this Section 2.8(b)(iv) unless and
until the aggregate Net Cash Proceeds received from Asset Dispositions exceeds
$20,000,000 (in which case all Net Cash Proceeds in excess of such amount shall
be used to make prepayments pursuant to this Section 2.8(b)(iv)); provided,
further, the recipient of such Net Cash Proceeds may reinvest such Net Cash
Proceeds within one hundred eighty (180) days, in replacement assets of a kind
then used or usable in the business of Borrower. If Borrower does not intend to
so reinvest such Net Cash Proceeds, or if the period set forth in the
immediately preceding sentence expires without Borrower having reinvested such
Net Cash Proceeds, Borrower shall prepay the Loans in an amount equal to such
Net Cash Proceeds.

 

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

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

 

23

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

Section 2.10 The Notes.

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

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

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

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

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

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

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

 

24

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

Section 2.12 Commitments. Borrower shall have the right at any time and from
time to time, upon three (3) Business Days prior written notice to the
Administrative Agent, to terminate the Commitments without premium or penalty
(other than as set forth in the Initial Bank Fee Letter), in whole or in part,
any partial termination to be (i) in an amount not less than $5,000,000 and
integral multiples of $1,000,000 in excess thereof, and (ii) allocated ratably
among the Banks in proportion to their respective Percentages, provided that the
Commitments may not be reduced to an amount less than the sum of the Loans then
outstanding. The Administrative Agent shall give prompt notice to each Bank of
any such termination of Commitments. Any termination of Commitments pursuant to
this Section 2.12 may not be reinstated. Additionally, prior to the making of
the Term Loan, the Commitments shall be reduced by an amount equal to the net
proceeds received by Borrower or any of its Subsidiaries pursuant to (i) Asset
Dispositions which, either individually or in the aggregate, exceed $75,000,000
(in which case all Net Cash Proceeds in excess of such amount received in
connection therewith shall reduce the Commitments) and (ii) other capital
markets transactions which are undertaken to consummate the Related
Transactions; for purposes of clarification, it is hereby acknowledged and
agreed the issuance of approximately 4,170,000 shares of common stock of
Borrower on February 22, 2007 through a private placement shall not be
considered a capital markets transactions undertaken to consummate the Related
Transactions pursuant to the foregoing clause (ii). All mandatory reductions of
the Commitments pursuant to the immediately preceding sentence shall reduce the
Commitment of each Bank on a pro rata basis in accordance with their respective
Percentages.

SECTION 3. FEES.

Section 3.1 Fees.

(a)       Commitment Fee. From and after the Effective Date until the date of
the first Borrowing, Borrower shall pay to the Administrative Agent for the
ratable account of the Banks in accordance with their Percentages a commitment
fee accruing at a rate per annum equal to the Commitment Fee Rate on the full
amount of the Commitment. Such commitment fee is payable in arrears on the last
Business Day of each calendar quarter, and if the Commitments are terminated in
whole prior to the Termination Date, the fee for the period to but not including
the date of such termination shall be paid in whole on the date of such
termination. The terms of this Section 3.1(a) shall be deemed to supersede
paragraph (i)(b) of the Initial Bank Fee Letter.

 

25

 

(b)

Reserved.

 

(c)

Reserved.

(d)       Administrative Agent and Initial Bank Fees. Borrower shall pay to (i)
the Administrative Agent for its own account (and no other Persons) and (ii) the
Banks party to the Initial Bank Fee Letter, the fees agreed to in the Fee
Letters (other than the fees described in paragraph (i)(b) of the Initial Bank
Fee Letter, which are hereby superseded by the terms of Section 3.1(a) above).

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

SECTION 4. PLACE AND APPLICATION OF PAYMENTS.

Section 4.1 Place and Application of Payments. All payments of principal of and
interest on the Loans, and of all other Obligations and other amounts payable by
Borrower under the Credit Documents, shall be made by Borrower in U.S. Dollars
to the Administrative Agent by no later than 2:00 p.m. (New York time) on the
due date thereof at the principal office of the Administrative Agent in New
York, New York pursuant to the payment instructions set forth on Part A of
Schedule 4 hereof (or such other location in the, United States as the
Administrative Agent may designate to Borrower), in each case for the benefit of
the Person or Persons entitled thereto. Any payments received after such time
shall be deemed to have been received by the Administrative Agent on the next
Business Day. All such payments shall be made free and clear of, and without
deduction for, any set-off, defense, counterclaim, levy, or any other deduction
of any kind in immediately available funds at the place of payment. The
Administrative Agent will promptly thereafter cause to be distributed like funds
relating to the payment of principal or interest on Loans or applicable fees
ratably to the Banks and like funds relating to the payment of any other amount
payable to any Person to such Person, in each case to be applied in accordance
with the terms of this Agreement.

SECTION 5. REPRESENTATIONS AND WARRANTIES.

The Borrower hereby represents and warranties to each Bank each of the following
are true, correct, and complete, both before and after giving effect to the
Related Transactions:

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

 

26

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

Section 5.3 Corporate Authority and Validity of Obligations. Borrower has full
right and authority to enter into this Agreement and the other Credit Documents
to which it is a party, to make the borrowings herein provided for, to issue its
Notes in evidence thereof and to perform all of its obligations under the Credit
Documents to which it is a party. Each Credit Document to which it is a party
has been duly authorized, executed and delivered by Borrower and constitutes
valid and binding obligations of Borrower enforceable in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforceability of
creditors’ rights generally and by equitable principles of general applicability
(regardless of whether such enforceability is considered in a proceeding in
equity or at law). No Credit Document, nor the performance or observance by
Borrower of any of the matters or things therein provided for, contravenes any
provision of law or any charter or by-law provision of Borrower or any material
Contractual Obligation of or affecting Borrower or any of Borrower’s Properties
or results in or requires the creation or imposition of any Lien on any of the
Properties or revenues of Borrower.

Section 5.4 Financial Statements. All financial statements heretofore delivered
to the Banks showing historical performance of Borrower for Borrower’s fiscal
years ending on or before December 31, 2006, have been prepared in accordance
generally accepted accounting principles applied on a basis consistent, except
as otherwise noted therein, with that of the previous fiscal year. Solely in the
event they were publicly filed with the SEC prior to the Effective Date, the
unaudited financial statements for the fiscal period ended March 31, 2007 have
been prepared in accordance generally accepted accounting principles applicable
to interim financial statements applied on a basis consistent, except as
otherwise noted therein, with the previous same fiscal period of Borrower in the
prior fiscal year (subject to normal year-end adjustments). Each of such
financial statements fairly presents on a consolidated basis the financial
condition of Borrower and its Subsidiaries as of the dates thereof and the
results of operations for the periods covered thereby. Borrower and its
Subsidiaries have no material contingent liabilities other than those disclosed
in such financial statements referred to in this Section 5.4 or in comments or
footnotes thereto, or in any report supplementary thereto, heretofore furnished
to the Banks. Since December 31, 2006, there has been no event or series

27

of events which has resulted in, or reasonably could be expected to result in, a
Material Adverse Effect.

Section 5.5 No Litigation; No Labor Controversies.

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

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

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

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

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

Section 5.9 Government Regulation. Neither Borrower nor any Subsidiary of
Borrower is an “investment company” within the meaning of the Investment Company
Act of 1940, as amended.

 

28

Section 5.10 Margin Stock; Use of Proceeds. Neither Borrower nor any Subsidiary
of Borrower is engaged principally, or as one of its primary activities, in the
business of extending credit for the purpose of purchasing or carrying margin
stock (“margin stock” to have the same meaning herein as in Regulation U of the
Board of Governors of the Federal Reserve System). The proceeds of the Loans are
to be used solely to (i) consummate the Related Transactions, and (ii) pay fees,
costs and expenses incurred in connection therewith. Borrower will not use the
proceeds of any Loan in a manner that violates any provision of Regulation U or
X of the Board of Governors of the Federal Reserve System.

Section 5.11 Licenses and Authorizations; Compliance with Laws.

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

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

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

 

29

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

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

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

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

Section 5.16 Related Transactions. At the time the Banks extend the Term Loan to
the Borrower in accordance with the terms of this Agreement, the only remaining
condition precedent to consummation of each of the transactions contemplated by
the Related Agreements in all material respects pursuant to the provisions of
the Related Agreements shall be the making of such Term Loan. The consummation
of the Related Transactions will be in compliance in all material respects with
all applicable provisions of law.

Section 5.17 Certain Other Representations and Warranties. As of the Initial
Loan Date (and, unless such representations and warranties are made only prior
to or on the Initial Loan Date, any other date on which representations and
warranties are otherwise remade or deemed remade hereunder), each of the
representations and warranties contained in the Related Transaction Documents is
true and correct. The Borrower agrees that, by this reference, such
representations and warranties made in the Related Transaction Documents,
without limiting any of the representations and warranties otherwise contained
herein or in any other Credit Document, hereby are incorporated herein, mutatis
mutandis, for the benefit of Administrative Agent and each Bank.

Section 5.18 Foreign Assets Control Regulations and Anti-Money Laundering.

(a)       OFAC. Neither the Borrower nor any Subsidiary of the Borrower: (i) is
a person whose property or interest in property is blocked or subject to
blocking pursuant to Section 1 of Executive Order 13224 of September 23, 2001
Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten
to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)), (ii) engages in any
dealings or transactions

 

30

prohibited by Section 2 of such executive order, or is otherwise associated with
any such person in any manner violative of Section 2, or (iii) is a person on
the list of Specially Designated Nationals and Blocked Persons or subject to the
limitations or prohibitions under any other U.S. Department of Treasury’s Office
of Foreign Assets Control regulation or executive order.

(b)       Patriot Act. The Borrower and each of its Subsidiaries are in
compliance with the Patriot Act, except to the extent that non-compliance could
not reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect. No part of the proceeds of the Loans will be used,
directly or indirectly, for any payments to any governmental official or
employee, political party, official of a political party, candidate for
political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977, as amended.

SECTION 6. CONDITIONS PRECEDENT.

Section 6.1 Closing. The effectiveness of this Agreement is subject to the
following conditions precedent:

(a)       the Administrative Agent shall have received for each Bank the
favorable written opinion of (i) Morgan, Lewis & Bockius LLP, counsel to
Borrower, and (ii) General Counsel to the Borrower; provided, one such opinion
shall include a legal opinion to the effect that Borrower has obtained all
necessary approvals necessary to conduct its business, and otherwise be, in
compliance with all applicable laws, regulations, ordinances and orders of any
governmental or judicial authorities (except where the failure to be in
compliance could not reasonably be expected to have a Material Adverse Effect on
Borrower or any of its Material Subsidiaries), in each case in connection with
its obligations under the Credit Documents, and both such opinions shall include
legal opinions regarding such other related matters as the Administrative Agent
may reasonably request;

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

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

(d)       the Administrative Agent shall have received for each Bank
certificates of good standing or their equivalent from the Secretary of State
(or other, similar office) of South Dakota and each other jurisdiction in which
the nature of the business transacted

 

31

by Borrower or the nature of the Property owned or leased by Borrower makes such
licensing, qualification or good standing necessary and in which the failure to
be so licensed, qualified or in good standing would have a Material Adverse
Effect;

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

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

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

(h)       the Banks and the Administrative Agent shall have received all fees
required to be paid pursuant to the Fee Letters and all reasonable expenses for
which invoices have been presented;

(i)        since September 30, 2006, no “Material Adverse Effect” (as such term
is defined in the Asset Purchase Agreement as in effect on February 6, 2007)
shall have occurred and be continuing;

(j)        the Borrower shall be able to and shall actually provide a
certificate executed by one of its Authorized Representatives (in such
Authorized Representative’s capacity as an officer of Borrower and not in such
Person’s personal capacity), in form satisfactory to the Administrative Agent,
pursuant to which it represents and warrants to the Administrative Agent and the
Banks that each of the Specified Representations is true and correct in all
material respects (unless any such representation or warranty is already
qualified by materiality, in which case it shall be true and correct in all
respects); and

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

Section 6.2 Making of Term Loan. The obligation of each Bank to make its
Percentage of the Term Loan is subject to the satisfaction of the following
conditions:

(a)       the Administrative Agent shall have received from the Borrower a
certification by its Secretary or an Assistant Secretary stating, since its
delivery thereof pursuant to Section 6.1 above, none of the Borrower’s (i)
Articles of Incorporation, together with all amendments or (ii) bylaws (or
comparable constituent documents) have been amended, restated, supplemented or
otherwise modified (or, if they have been so modified, including copies
thereof);

(b)       the Administrative Agent shall have received for each Bank
certificates of good standing or their equivalent from the Secretary of State
(or other, similar office) of South Dakota and each other jurisdiction in which
the nature of the business transacted by Borrower or the nature of the Property
owned or leased by Borrower makes such

 

32

licensing, qualification or good standing necessary and in which the failure to
be so licensed, qualified or in good standing would have a Material Adverse
Effect;

(c)       the Banks and the Administrative Agent shall have received all fees
required to be paid pursuant to the Fee Letters and all reasonable expenses for
which invoices have been presented;

(d)       since September 30, 2006, no “Material Adverse Effect” (as such term
is defined in the Asset Purchase Agreement as in effect on February 6, 2007)
shall have occurred and be continuing;

(e)       the Related Transactions shall have occurred in accordance with the
terms and conditions of the Related Transaction Documents in all respects (other
than the payment of any portion of the purchase price which is to be paid with
the proceeds of the Term Loan) without the waiver of any term or condition
thereof;

(f)        the Borrower shall be able to and shall actually provide a
certificate executed by one of its Authorized Representatives (in such
Authorized Representative’s capacity as an officer of Borrower and not in such
Person’s personal capacity), in form satisfactory to the Administrative Agent,
pursuant to which it represents and warrants to the Administrative Agent and the
Banks that each of the Specified Representations is true and correct in all
material respects (unless any such representation or warranty is already
qualified by materiality, in which case it shall be true and correct in all
respects); and

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

(h)       the Administrative Agent shall have received a completed and executed
Notice of Borrowing in the manner required by Section 2.5 hereof (and, with
respect to the making of the Term Loan, such Notice of Borrowing shall be
received by the Administrative Agent no later than 12:00 noon (New York time) at
least three (3) Business Days before the requested date for the Term Loan); and

(i)        the Administrative Agent shall have received from the Borrower a
certified copy of the fully-executed Related Transaction Documents.

Section 6.3 All Borrowings. As of the time of each Borrowing hereunder (other
than, in the cases of clauses (b) and (c) below, with respect to the funding of
the Term Loan on the Initial Loan Date):

(a)       The Administrative Agent shall have received a completed and executed
Notice of Borrowing in the manner required by Section 2.5 hereof (and, with
respect to the making of the Term Loan, such Notice of Borrowing shall be
received by the Administrative Agent no later than 12:00 noon (New York time) at
least three (3) Business Days before the requested date for such Term Loan);

(b)       Each of the representations and warranties set forth in Section 5
hereof shall be and remain true and correct in all material respects (unless
such representation or

 

33

warranty is already qualified with respect to materiality, in which case it
shall be and remain true and correct in all respects) as of said time, both
before and after giving effect to the Related Transactions, except that if any
such representation or warranty relates solely to an earlier date it need only
remain true in all material respects (unless such representation or warranty is
already qualified with respect to materiality, in which case it shall be and
remain true and correct in all respects) as of such date; and

(c)       (i) Borrower shall be in full compliance with all of the terms and
conditions hereof, and (ii) no Default or Event of Default of the type described
in Section 8.1 which arises out of a failure of any of the Specified
Representations to be true and correct in all material respects (unless any such
representation or warranty is already qualified by materiality, in which case it
shall be true and correct in all respects) when made shall have occurred and be
continuing (or would occur as a result of such Borrowing).

Each request for a Borrowing shall be deemed to be a representation and warranty
by Borrower on the date of such Borrowing as to the facts specified in
paragraphs (b) and (c) of this Section 6.3.

SECTION 7. COVENANTS.

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

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

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

Section 7.3 Taxes. Borrower will duly pay and discharge, and will cause each of
its Subsidiaries duly to pay and discharge, all taxes, rates, assessments, fees
and governmental charges upon or against it or against its Properties, in each
case before the same becomes delinquent and before penalties accrue thereon,
unless and to the extent that the same is being

 

34

contested in good faith by appropriate proceedings and reserves in conformity
with GAAP have been provided therefor on the books of Borrower.

Section 7.4 ERISA. Borrower will, and will cause each of its Subsidiaries to,
promptly pay and discharge all obligations and liabilities arising under ERISA
of a character which if unpaid or unperformed might result in the imposition of
a Lien against any of its properties or assets and will promptly notify the
Administrative Agent of (i) the occurrence of any reportable event (as defined
in ERISA) affecting a Plan, other than any such event of which the PBGC has
waived notice by regulation, (ii) receipt of any notice from PBGC of its
intention to seek termination of any Plan or appointment of a trustee therefor,
(iii) its or any of its Subsidiaries’ intention to terminate or withdraw from
any Plan, and (iv) the occurrence of any event affecting any Plan which could
result in the incurrence by Borrower or any of its Subsidiaries of any material
liability, fine or penalty, or any material increase in the contingent liability
of Borrower or any of its Subsidiaries under any post-retirement Welfare Plan
benefit. The Administrative Agent will promptly distribute to each Bank any
notice it receives from Borrower pursuant to this Section 7.4.

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

Section 7.6 Financial Reports and Other Information.

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

(i)        within 120 days after the end of each fiscal year of Borrower, a copy
of Borrower financial statements for such fiscal year, including the
consolidated balance sheet of Borrower and its Subsidiaries for such year and
the related statements of income and statements of cash flow, each as certified
by independent public accountants of recognized national standing selected by
Borrower in accordance with GAAP with such accountants’ unqualified opinion to
the effect that the financial statements have been prepared in accordance with
GAAP and present fairly in all material respects in accordance with GAAP the
consolidated financial position of Borrower and its Subsidiaries as of the close
of such fiscal year and the results of their operations and cash flows for the
fiscal year then ended and that an examination of such accounts in connection
with such financial statements has been made in accordance with generally
accepted

 

35

auditing standards and, accordingly, such examination included such tests of the
accounting records and such other auditing procedures as were considered
necessary in the circumstances, provided that if Borrower files its annual
report on Form 10-K for the applicable annual period, and such annual report
contains the financial statements and accountants certifications, opinions and
statements described above, the Borrower may satisfy the requirements of this
Section 7.6(a)(i) by delivering a copy of such annual report to the
Administrative Agent. Together with such information the Borrower shall provide
to the Administrative Agent such consolidating information as may be necessary
for the Banks to determine the Borrower’s compliance with Section 7.17 hereof;

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

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

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

(b)       Each financial statement furnished to the Banks pursuant to subsection
(i) or (ii) of this Section 7.6 shall be accompanied by (A) a written
certificate signed by Borrower’s chief financial officer or corporate controller
to the effect that (i) no Default or Event of Default has occurred during the
period covered by such statements or, if any such Default or Event of Default
has occurred during such period, setting forth a description of such Default or
Event of Default and specifying the action, if any, taken by Borrower to remedy
the same, (ii) the representations and warranties contained in Section

 

36

5 hereof are true and correct in all material respects as though made on the
date of such certificate (other than those made solely as of an earlier date,
which need only remain true as of such date), except as otherwise described
therein, and (B) a Compliance Certificate showing Borrower’s compliance with the
covenants set forth in Sections 7.9, 7.11, 7.12 and 7.14 through 7.19 hereof.

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

 

(i)

of the occurrence of any Default or Event of Default;

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

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

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

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

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

Section 7.8 Conduct of Business. Neither Borrower nor any Subsidiary of Borrower
will engage in any line of business other than business activities in the field
of (i) cogeneration and related thermal uses, (ii) energy production, (iii)
energy development, (iv) energy recovery, (v) utility ownership, operation and
management, including the provisions of services reasonably ancillary thereto,
such as gas services and call centers, (vi) demand side management services,
(vii) energy trading, (viii) management of investment funds which invest in
energy related businesses and investments in such funds, (ix) hedging but not
speculative activities relating to any of the foregoing lines of business, (x)
telecommunications, (xi) management and operating services related to any of the
foregoing lines of business, and (xii) other businesses not described

 

37

in the foregoing so long as the Investments and expenses made in such other
businesses does not exceed $40,000,000.

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

(a)       Liens arising by operation of law in respect of Property of Borrower
or any of its Subsidiaries which are incurred in the ordinary course of business
which do not in the aggregate materially detract from the value of such Property
or materially impair the use thereof in the operation of the business of
Borrower or any of its Subsidiaries;

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

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

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

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

 

38

 

(f)

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

(g)       Liens securing (i) Indebtedness evidencing the deferred purchase price
of newly acquired property or incurred to finance the acquisition of personal
property of Borrower or a Subsidiary of Borrower used in the ordinary course of
business of Borrower or a Subsidiary of Borrower, so long as such Lien is
limited to the property being financed or acquired and proceeds thereof, (ii)
Capitalized Lease Obligations, so long as such Lien is limited to the property
subject to the related Capital Lease and proceeds thereof, and (iii) the
performance of tenders, statutory obligations, bids, leases or other similar
obligations (other than for borrowed money) entered into in the ordinary course
of business or to secure obligations on performance bonds; provided, that such
Liens shall only be permitted to the extent the aggregate amount of Indebtedness
and other obligations secured by all such Liens does not exceed five percent
(5%) of Consolidated Assets as reflected on the most recent balance sheet
delivered by Borrower pursuant to Section 7.6;

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

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

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

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

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

 

39

the CLF&P Indenture, together with all amendments and supplemental indentures
thereto;

(m)      From and after the Initial Loan Date, Liens on the Aquila Assets which
exist on the Initial Loan Date, other than “Non-Permitted Encumbrances” (as such
term is defined in the Asset Purchase Agreement and Partnership Interests
Purchase Agreement);

(n)       From and after the Initial Loan Date, Liens on the Aquila Assets
consisting of first mortgage bonds which secure Indebtedness of the type
specifically permitted pursuant to Section 7.15(j), which Liens are incurred on
or before a date which is eighteen (18) months after the Initial Loan Date; and

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

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

Section 7.10 Use of Proceeds; Regulation U. The proceeds of the Term Loan will
be used by Borrower solely to (i) consummate the Related Transactions, and (ii)
pay fees, costs and expenses incurred in connection therewith. Borrower will not
use any part of the proceeds of any of the Borrowings directly or indirectly to
purchase or carry any margin stock (as defined in Section 5.10 hereof) or to
extend credit to others for the purpose of purchasing or carrying any such
margin stock.

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

Section 7.12 Mergers, Consolidations and Sales of Assets.

(a)       Borrower will not, and will not permit any of its Material
Subsidiaries to, (i) consolidate with or be a party to merger with any other
Person or (ii) sell, lease or otherwise dispose of all or a “substantial part”
of the assets of Borrower and its Subsidiaries; provided, however, that (v) the
foregoing shall not prohibit any sale, lease,

 

40

transfer or disposition of assets, other than equity interests in or the assets
of Black Hills Power, Inc. and Cheyenne Light, Fuel and Power Company, solely to
the extent and so long as (A) such transaction does not result in a downgrade of
Borrower’s S&P Rating or Borrower’s Moody’s Rating, (B) such transaction is for
cash consideration (or other consideration acceptable to the Required Banks) in
an amount not less than the fair market value of the applicable assets, (C) such
transaction, when combined with all other such transactions, would not have a
Material Adverse Effect, taken as a whole, and (D) such transaction is
consummated (and all consideration therefore is received by Borrower or its
applicable Subsidiary) on or before the date which is eighteen (18) months after
the Initial Loan Date, (w) the foregoing shall not prohibit any sale, lease,
transfer or disposition to which the Required Banks have consented, such consent
not to by unreasonably withheld if (A) such transaction does not result in a
downgrade of either Borrower’s S&P Rating or Moody’s Rating, (B) such
transaction is for cash consideration (or other consideration acceptable to the
Required Banks) in an amount not less than the fair market value of the
applicable assets, and (C) such transaction, when combined with all other such
transactions, would not have a Material Adverse Effect, taken as a whole, (x)
any Subsidiary of Borrower may merge or consolidate with or into or sell, lease
or otherwise convey all or a substantial part of its assets to Borrower or any
Subsidiary of which Borrower holds (directly or indirectly) at least the same
percentage equity ownership; provided that in any such merger or consolidation
involving Borrower, Borrower shall be the surviving or continuing corporation,
(y) Borrower and its Subsidiaries may sell inventory, reserves and electricity
in the ordinary course of business, and (z) Borrower may enter into a merger
with, or acquisition of all of, another Person so long as:

 

(i)

Borrower is the surviving entity,

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

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

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

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

 

41

(b)       Except as permitted pursuant to Section 7.12(a) or Section 7.14
hereof, Borrower will not sell, transfer or otherwise dispose of, or permit any
of its Subsidiaries to issue, sell, transfer or otherwise dispose of, any shares
of stock of any class (including as “stock” for purposes of this Section, any
warrants, rights or options to purchase or otherwise acquire stock or other
Securities exchangeable for or convertible into stock) of any Subsidiary of
Borrower, except to Borrower or a Wholly-Owned Subsidiary of Borrower or except
for the purpose of qualifying directors.

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

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

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

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

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

(b)       investments in (i) commercial paper rated P-1 by Moody’s Investors
Services, Inc. or A-1 by Standard & Poor’s Corporation maturing within one year
of its

 

42

date of issuance, and (ii) debt and auction preferred securities rated Aaa by
Moody's Investors Services, Inc. or AAA by Standard & Poor’s Corporation
maturing within one year of their respective dates of purchase;

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

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

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

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

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

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

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

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

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

 

43

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

 

(m)

transactions permitted pursuant to Section 7.12(a);

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

(o)       (i) Investments in Marketing Subsidiaries (other than Investments in
Marketing Subsidiaries consisting of Guaranties of Indebtedness of Marketing
Subsidiaries) existing on December 31, 2006 and listed on Schedule 7.14 and (ii)
Investments consisting of Guaranties of Indebtedness of Marketing Subsidiaries
in existence on December 31, 2006 and Investments in Marketing Subsidiaries made
after December 31, 2006 (including through Guaranties (including Long-Term
Guaranties)) provided, that the aggregate amount of Investments permitted by
this clause (ii) when combined with the amount of intercompany Indebtedness
owing by Marketing Subsidiaries permitted pursuant to Section 7.15(e)(iii) plus
the aggregate amount of “L/C Obligations” outstanding attributable to “Marketing
Subsidiary Letter of Credit” (as such terms are defined in the Existing Credit
Agreement) shall not in the aggregate exceed the Marketing Subsidiary Sublimit
(it being understood that any increase in the value of any such Investment
attributable to the undistributed net earnings of the Marketing Subsidiaries
shall not be deemed a violation of this Section 7.14(o));

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

(q)       to the extent it constitutes an Investment, consummation of the Aquila
Transactions in accordance with the terms of the Aquila Agreements; and

 

(r)

consummation of the Related Transactions.

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

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

Section 7.15 Restrictions on Indebtedness. Borrower will not, nor will it permit
any Subsidiary of Borrower to, issue, incur, assume, create, become liable for,
contingently or otherwise, or have outstanding any Indebtedness; provided,
however, that the foregoing

 

44

provisions shall not restrict nor operate to prevent the following Indebtedness,
so long as the incurrence and maintenance of such Indebtedness would not cause
the Borrower to be in violation of Section 7.17 hereof if compliance with such
covenant were measured on the date of the incurrence of such Indebtedness:

 

(a)

the Obligations;

 

(b)

Non-Recourse Indebtedness of any Project Finance Subsidiary;

(c)       so long as the Borrower would be in compliance with Section 7.17
hereof (calculated as of the date of, and after giving affect to, the incurrence
of such Indebtedness), secured Indebtedness (excluding Indebtedness of the type
described in (e), (f), and (g) below but including the pledge of stock or
similar equity interest of any Project Finance Subsidiary or any Subsidiary
which is an entity whose sole purpose and extent of business activities is to
own the stock or similar equity interest of a Project Finance Subsidiary) (A)
set forth on Schedule 7.15(b) hereto (and, with respect to the “Black Hills
Corporation lease payment obligation on the Wygen I facility” described thereon,
extensions and refinancings of such facility which do not increase the principal
amount thereof), (B) (i) of BHP, (ii) evidencing the deferred purchase price of
newly acquired property or incurred to finance the acquisition of personal
property of the Borrower or a Subsidiary of the Borrower used in the ordinary
course of business of the Borrower or Subsidiary, (iii) constituting Capitalized
Lease Obligations or with respect to synthetic (or similar type) lease
arrangements, or (iv) incurred in connection with the performance of tenders,
statutory obligations, bids, leases or other similar obligations (other than for
borrowed money) entered into in the ordinary course of business or to secure
obligations on performance bonds; provided, that the aggregate amount of
Indebtedness permitted by this clause (B) at any time outstanding shall not
exceed 5% of Consolidated Assets as reflected on the most recent balance sheet
delivered by the Borrower pursuant to Section 7.6, provided that Borrower shall
promptly provide the Administrative Agent with a copy of any documentation
evidencing such Indebtedness in excess of $25,000,000 and any modification to
such Indebtedness, and (C) of CLF&P outstanding under the CLF&P Indenture;

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

(e)       intercompany loans (i) from (x) Subsidiary to Borrower so long as such
loans are subordinated to the Obligations on terms reasonably satisfactory to
the Administrative Agent, and (y) Borrower to a Subsidiary of Borrower, (ii)
among Wholly-Owned Subsidiaries, and (iii) from a Subsidiary of Borrower to a
Marketing Subsidiary, so long as the aggregate amount of such loans from time to
time owing by the Marketing

 

45

Subsidiaries does not exceed the difference between (I) the Marketing Subsidiary
Sublimit, less (II) the sum of (A) the aggregate amount of Guaranties
outstanding pursuant to Section 7.15(f), and (B) the aggregate amount of other
Investments then made in the Marketing Subsidiaries pursuant to Section
7.14(o)(ii) (it being understood that to the extent such limit is exceeded
solely as a result of an increase in the value of any such Investment
attributable to the undistributed net earnings of the Marketing Subsidiaries, it
shall not be deemed a violation of this Section 7.15(e));

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

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

 

(h)

Permitted Derivative Obligations;

(i)        Indebtedness outstanding under the Existing Credit Agreement and any
credit agreement entered into by and among, inter alia, the Initial Banks and
Borrower which refinances the Existing Credit Agreement;

(j)        (A) solely to the extent the incurrence or maintenance of such
Indebtedness could not reasonably be expected to otherwise cause a Default or
Event of Default to occur or continue, Indebtedness (x) incurred on or before a
date which is eighteen (18) months after the Initial Loan Date to finance or
refinance the Aquila Assets and (y) consisting of first mortgage bond
Indebtedness (which is secured only by Liens of the type specifically permitted
pursuant to Section 7.9(n)), it being agreed and acknowledged by Borrower that
Indebtedness incurred pursuant to this clause (i) shall be deemed “Recourse
Indebtedness” hereunder and (B) Indebtedness assumed in connection with the
Aquila Transactions, provided such Indebtedness under this clause (B) was not
incurred to finance the acquisition of the Aquila Transactions; and

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

 

46

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

 

Section 7.16 Consolidated Net Worth. Borrower will, at the end of each fiscal
quarter, maintain Consolidated Net Worth in an amount of not less than the sum
of (i) $625,000,000 plus (ii) fifty percent (50%) of the aggregate Consolidated
Net Income (if positive) for the period beginning September 30, 2006 and ending
on the last day of such fiscal quarter.

Section 7.17 Recourse Leverage Ratio. Borrower will not at the end of any fiscal
quarter permit the Recourse Leverage Ratio to exceed, with respect to any fiscal
quarter ending in the period (x) from the Effective Date until the Initial Loan
Date, 0.65 to 1.00, (y) from the Initial Loan Date until the one (1) year
anniversary thereof, 0.70 to 1.00, and (z) thereafter, 0.65 to 1.00.

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

Section 7.19 Dividends and Other Shareholder Distributions.

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

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

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

 

47

Documents and, solely with respect to the asset so financed, Capitalized Leases,
to the extent such Indebtedness is permitted herein) prohibiting the creation or
assumption of any Lien upon its properties or assets, whether now owned or
hereafter acquired.

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

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

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

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

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

Section 7.26 OFAC. Neither the Borrower nor any Subsidiary of the Borrower will:
(i) become a person whose property or interests in property are blocked or
subject to blocking pursuant to Section 1 of Executive Order 13224 of September
23, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit,
Threaten to Commit or Support Terrorism (66 Fed. Reg. 49079(2001), (ii) engage
in any dealings or transactions prohibited by Section 2 of such executive order,
or be otherwise associated with any such person in any manner violative of
Section 2, or (iii) otherwise become a person on the list of Specially
Designated Nationals and Blocked Persons or subject to the limitations or
prohibitions under any other OFAC regulation or executive order.

 

48

SECTION 8. EVENTS OF DEFAULT AND REMEDIES.

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

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

(b)       default by Borrower or any Subsidiary in the observance or performance
of any covenant set forth in Section 7.1, Section 7.6(c), Section 7.9 through
7.12, Sections 7.14 through 7.21, 7.23 through 7.26 hereof;

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

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

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

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

 

49

parts (i)-(iv) above, or (vi) fail to contest in good faith any appointment or
proceeding described in Section 8.1(g) hereof;

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

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

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

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

 

(k)

a Change of Control Event shall have occurred; or

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

Section 8.2 Non-Bankruptcy Defaults. When any Event of Default other than those
described in subsections (f) or (g) of Section 8.1 hereof has occurred and is
continuing, the Administrative Agent shall, if so directed by the Required
Banks, by written notice to Borrower: (a) terminate the remaining Commitments
and all other obligations of the Banks hereunder on the date stated in such
notice (which may be the date thereof); and (b) declare the principal of and the
accrued interest on all outstanding Notes to be forthwith due and payable and
thereupon all outstanding Notes, including both principal and interest thereon,
and all other Obligations, shall be and become immediately due and payable
together with all other amounts payable under

 

50

the Credit Documents without further demand, presentment, protest or notice of
any kind, and Borrower agrees to immediately make such payment and acknowledge
and agrees that the Banks would not have an adequate remedy at law for failure
by Borrower to honor any such demand and that the Administrative Agent, for the
benefit of the Banks, shall have the right to require Borrower to specifically
perform such undertaking. The Administrative Agent, after giving notice to
Borrower pursuant to Section 8.1(c) or this Section 8.2, shall also promptly
send a copy of such notice to the other Banks, but the failure to do so shall
not impair or annul the effect of such notice.

Section 8.3 Bankruptcy Defaults. When any Event of Default described in
subsections (f) or (g) of Section 8.1 hereof has occurred and is continuing,
then all outstanding Notes, including both interest and principal thereon, and
all other Obligations shall immediately become due and payable together with all
other amounts payable under the Credit Documents without presentment, demand,
protest or notice of any kind and the obligation of the Banks to extend further
credit pursuant to any of the terms hereof shall immediately terminate.

Section 8.4 Reserved.

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

SECTION 9. CHANGE IN CIRCUMSTANCES.

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

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

(a)       the Administrative Agent determines that deposits in U.S. Dollars (in
the applicable amounts) are not being offered to major banks in the eurodollar
interbank

 

51

market for such Interest Period, or that by reason of circumstances affecting
the interbank eurodollar market adequate and reasonable means do not exist for
ascertaining the applicable LIBOR, or

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

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

Section 9.3 Increased Cost and Reduced Return.

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

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

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

 

52

and the result of any of the foregoing is to increase the cost to such Bank (or
its Lending Office) of making or maintaining any Eurodollar Loan or
participating therein, or to reduce the amount of any sum received or receivable
by such Bank (or its Lending Office) under this Agreement or under its Notes
with respect thereto, by an amount deemed by such Bank to be material, then,
within fifteen (15) days after demand by such Bank (with a copy to the
Administrative Agent), Borrower shall be obligated to pay to such Bank such
additional amount or amounts as will compensate such Bank for such increased
cost or reduction. In the event any law, rule, regulation or interpretation
described above is revoked, declared invalid or inapplicable or is otherwise
rescinded, and as a result thereof a Bank is determined to be entitled to a
refund from the applicable authority for any amount or amounts which were paid
or reimbursed by Borrower to such Bank hereunder, such Bank shall refund such
amount or amounts to Borrower without interest.

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

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

 

53

Section 9.4 Lending Offices. Each Bank may, at its option, elect to make its
Loans hereunder at the branch, office or affiliate specified on the appropriate
signature page hereof or in the assignment agreement which any assignee bank
executes pursuant to Section 11.12 hereof (each a “Lending Office”) for each
type of Loan available hereunder or at such other of its branches, offices or
affiliates as it may from time to time elect and designate in a written notice
to Borrower and the Administrative Agent, so long as such election does not
increase costs or other amounts payable by Borrower to such Bank hereunder.

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

SECTION 10. THE AGENT.

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

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

Section 10.3 Action by Administrative Agent. If the Administrative Agent
receives from Borrower a written notice of an Event of Default pursuant to
Section 7.6(c)(i) hereof, the Administrative Agent shall promptly give each of
the Banks written notice thereof. The obligations of the Administrative Agent
under the Credit Documents are only those expressly set forth therein. Without
limiting the generality of the foregoing, the Administrative Agent shall not be
required to take any action hereunder with respect to any Default or Event of
Default, except as expressly provided in Sections 8.2 and 8.3. In no event,
however, shall the Administrative Agent be required to take any action in
violation of applicable law or of any

 

54

provision of any Credit Document, and the Administrative Agent shall in all
cases be fully justified in failing or refusing to act hereunder or under any
other Credit Document unless it shall be first indemnified to its reasonable
satisfaction by the Banks against any and all costs, expense, and liability
which may be incurred by it by reason of taking or continuing to take any such
action. The Administrative Agent shall be entitled to assume that no Default or
Event of Default exists unless notified to the contrary in writing by a Bank or
Borrower. In all cases in which this Agreement and the other Credit Documents do
not require the Administrative Agent to take certain actions, the Administrative
Agent shall be fully justified in using its discretion in failing to take or in
taking any action hereunder and thereunder.

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

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

 

55

Section 10.6 Indemnity. The Banks shall ratably, in accordance with their
respective Percentages, indemnify and hold the Administrative Agent, and its
directors, officers, employees, agents and representatives harmless from and
against any liabilities, losses, costs or expenses suffered or incurred by it
under any Credit Document or in connection with the transactions contemplated
thereby, regardless of when asserted or arising, except to the extent the
Administrative Agent is promptly reimbursed for the same by Borrower and except
to the extent that any event giving rise to a claim was caused by the gross
negligence or willful misconduct of the party seeking to be indemnified. The
obligations of the Banks under this Section 10.6 shall survive termination of
this Agreement.

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

SECTION 11. MISCELLANEOUS.

Section 11.1 Withholding Taxes.

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

 

56

Bank or Administrative Agent on whose account such withholding was made (with a
copy to the Administrative Agent if not the recipient of the original) on or
before the thirtieth day after payment. If any Bank or the Administrative Agent
determines it has received or been granted a credit against or relief or
remission for, or repayment of, any taxes paid or payable by it because of any
taxes, penalties or interest paid by Borrower and evidenced by such a tax
receipt, such Bank or Administrative Agent shall, to the extent it can do so
without prejudice to the retention of the amount of such credit, relief,
remission or repayment, pay to Borrower such amount as such Bank or
Administrative Agent determines is attributable to such deduction or withholding
and which will leave such Bank or Administrative Agent (after such payment) in
no better or worse position than it would have been in if Borrower had not been
required to make such deduction or withholding. Nothing in this Agreement shall
interfere with the right of each Bank and the Administrative Agent to arrange
its tax affairs in whatever manner it thinks fit nor obligate any Bank or the
Administrative Agent to disclose any information relating to its tax affairs or
any computations in connection with such taxes.

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

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

Section 11.2 No Waiver of Rights. No delay or failure on the part of the
Administrative Agent or any Bank or on the part of the holder or holders of any
Note in the exercise of any power or right under any Credit Document shall
operate as a waiver thereof, nor as an

 

57

acquiescence in any default, nor shall any single or partial exercise thereof
preclude any other or further exercise of any other power or right, and the
rights and remedies hereunder of the Administrative Agent, the Banks and the
holder or holders of any Notes are cumulative to, and not exclusive of, any
rights or remedies which any of them would otherwise have.

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

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

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

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

Section 11.7 Set-Off.

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

 

58

(b)       Each Bank agrees with each other Bank a party hereto that if such Bank
shall receive and retain any payment, whether by set-off or application of
deposit balances or otherwise, on any of the Loans in excess of its ratable
share of payments on all such obligations then outstanding to the Banks, then
such Bank shall purchase for cash at face value, but without recourse, ratably
from each of the other Banks such amount of the Loans or participations therein,
held by each such other Banks (or interest therein) as shall be necessary to
cause such Bank to share such excess payment ratably with all the other Banks;
provided, however, that if any such purchase is made by any Bank, and if such
excess payment or part thereof is thereafter recovered from such purchasing
Bank, the related purchases from the other Banks shall be rescinded ratably and
the purchase price restored as to the portion of such excess payment so
recovered, but without interest.

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

If to Borrower:

 

Black Hills Corporation

625 9th Street

Rapid City, South Dakota 57709

Attention: Garner M. Anderson

Facsimile: 605.721.2597

Telephone: 605.721.2311

 

with copies to:

 

Black Hills Corporation

625 9th Street

Rapid City, South Dakota 57709

Attention: Steven J. Helmers

Facsimile: 605.721.2550

Telephone: 605.721.2303

 

If to the Administrative Agent:

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

 

59

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

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

Section 11.10 Successors and Assigns.

(a)       Successors and Assigns Generally. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that the Borrower may
not assign any of its rights or obligations under any Credit Document unless
such assignation occurs in connection with a merger or acquisition by Borrower
which is otherwise permitted under the terms of this Agreement and the
appropriate Credit Documents, if applicable, and Borrower obtains the prior
written consent of all of the Banks, which consent shall be in form and
substance satisfactory to the Administrative Agent. No Bank may assign or
otherwise transfer any of its rights or obligations hereunder except (i) to an
Eligible Assignee in accordance with the provisions of paragraph (b) of this
Section, (ii) by way of participation in accordance with the provisions of
paragraph (d) of this Section or (iii) by way of pledge or assignment of a
security interest subject to the restrictions of paragraph (f) of this Section
(and any other attempted assignment or transfer by any party hereto shall be
null and void). Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby, Participants to the extent
provided in paragraph (d) of this Section and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent and
the Banks) any legal or equitable right, remedy or claim under or by reason of
this Agreement.

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

(i)        except in the case of an assignment (x) of the entire remaining
amount of the assigning Bank’s Commitment and the Loans at the time owing to it
or (y) to a Bank or an Affiliate of a Bank or an Approved Fund with respect to a
Bank, the aggregate amount of the Commitment (which for this purpose includes

 

60

Loans outstanding thereunder) or, if the applicable Commitment is not then in
effect, the principal outstanding balance of the Loan of the assigning Bank
subject to each such assignment (determined as of the date the Assignment and
Assumption with respect to such assignment is delivered to the Administrative
Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of
the Trade Date) shall not be less than $5,000,000, unless each of the
Administrative Agent and, so long as no Event of Default has occurred and is
continuing, the Borrower, otherwise consents (neither such consent not to be
unreasonably withheld or delayed);

(ii)       each such assignment (other than assignments by a Bank to another
Bank or an Affiliate of or an Approved Fund with respect to a Bank) shall be
subject to the consent of the Administrative Agent and, so long as no Event of
Default has occurred and is continuing, the Borrower (neither such consent to be
unreasonably withheld or delayed);

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

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

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

Subject to acceptance and recording thereof by the Administrative Agent pursuant
to paragraph (c) of this Section, from and after the effective date specified in
each Assignment and Assumption, the Eligible Assignee thereunder shall be a
party to this Agreement and, to the extent of the interest assigned by such
Assignment and Assumption, have the rights and obligations of a Bank under this
Agreement, and the assigning Bank thereunder shall, to the extent of the
interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Bank’s rights and obligations under
this Agreement, such Bank shall cease to be a party hereto) but shall continue
to be entitled to the benefits of Sections 9.3 and 9.4 with respect to facts and
circumstances occurring prior to the effective date of such assignment. Any
assignment or transfer by a Bank of rights or obligations under this Agreement
that does not comply with this paragraph shall be treated for purposes of this
Agreement as a sale by such Bank of a participation in such rights and
obligations in accordance with paragraph (d) of this Section. The Borrower shall
execute and deliver to the assignee a Note upon written request from such
assignee. The assignor shall promptly return to the Borrower its Note if after
giving effect to such assignment such assignor has no Commitment and no
Obligations are owing to such assignor.

 

61

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

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

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

(f)        Limitations upon Participant Rights. A Participant shall not be
entitled to receive any greater payment under Sections 9.3 and 9.4 than the
applicable Bank would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to
such Participant is made with the Borrower’s prior written consent. A
Participant that would be a Foreign Bank if it were a Bank shall not be entitled
to the benefits of Section 9.4 unless the Borrower is notified of the
participation sold to such Participant and such Participant agrees, for the
benefit of the Borrower, to comply with Section 9.4 as though it were a Bank.

(g)       Certain Pledges. Any Bank may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of

 

62

such Bank, including without limitation any pledge or assignment to secure
obligations to a Federal Reserve Bank; provided that no such pledge or
assignment shall release such Bank from any of its obligations hereunder or
substitute any such pledgee or assignee for such Bank as a party hereto.

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

(i)        Farm Credit System. Notwithstanding anything in this Section to the
contrary, any bank that is a member of the Farm Credit System that: (x) has
purchased a participation in the minimum amount of $10,000,000 on or after the
Effective Date, (y) is, by written notice to the Borrower and the Administrative
Agent ("Voting Participant Notification"), designated by the selling Bank as
being entitled to be accorded the rights of a Voting Participant hereunder (any
bank that is a member of the Farm Credit System so designated being called a
"Voting Participant") and (z) receives the prior written consent of the Borrower
and the Administrative Agent to become a Voting Participant, shall be entitled
to vote (and the voting rights of the selling Bank shall be correspondingly
reduced), on a dollar for dollar basis, as if such participant were a Bank, on
any matter requiring or allowing a Bank to provide or withhold its consent, or
to otherwise vote on any proposed action. To be effective, each Voting
Participant

 

63

Notification shall, with respect to any Voting Participant: (i) state the full
name, as well as all contact information required of an Assignee as set forth in
Exhibit D hereto and (ii) state the dollar amount of the participation
purchased. The Borrower and the Administrative Agent shall be entitled to
conclusively rely on information contained in notices delivered pursuant to this
paragraph.

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

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

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

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

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

Section 11.13 Legal Fees, Other Costs and Indemnification. Borrower agrees to
pay all reasonable costs and expenses of the Administrative Agent and each
Co-Arranger (in their respective roles as Banks hereunder) in connection with
the preparation and negotiation of the Credit Documents (including past and
future reasonable out-of-pocket expenses incurred by the Administrative Agent
and each Co-Arranger (in their respective roles as Banks hereunder) in
connection with the syndication of the transaction), including without
limitation, the reasonable fees and disbursements of counsel to the
Administrative Agent and Co-Arranger (in their respective roles as Banks
hereunder), in connection with the preparation and execution of the

 

64

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

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

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

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

Section 11.17 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL. BORROWER HEREBY
SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN THE
CITY OF NEW YORK FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR
RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY. BORROWER IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND

 

65

ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN
AN INCONVENIENT FORUM. BORROWER HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO ANY CREDIT
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY.

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

 

i.

prior written notice to the Administrative Agent,

 

ii.

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

 

iii.

satisfaction of the provisions set forth in Section 11.10, and

 

iv.

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

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

 

66

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

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

Section 11.20 Rights and Liabilities of Syndication Agents, Sole Bookrunner and
Co-Arrangers. None of any Syndication Agent, Sole Bookrunner nor any Co-Arranger
shall have any special rights, powers, obligations, liabilities,
responsibilities or duties under this Agreement as a result of acting in the
capacity of Syndication Agent, Sole Bookrunner or Co-Arranger, as applicable,
other than those applicable to them in their capacity as Banks hereunder (if
any). Without limiting the foregoing, none of any Syndication Agent, Sole
Bookrunner nor any Co-Arranger shall have or be deemed to have a fiduciary
relationship with any Bank. Each Bank hereby makes the same acknowledgments and
undertakings with respect to each Syndication Agent, Sole Bookrunner and each
Co-Arranger as it makes with respect to the Administrative Agent and any
directors, officers, agents and employees of the Administrative Agent in Section
10.5.

Section 11.21 Absence of Termination-Related Events of Defaults in Prior
Facilities. Administrative Agent and the Banks which were party to: (i) that
certain 364-Day Credit Agreement among the Borrower, the financial institutions
party thereto, as lenders, and ABN

 

67

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

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

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

 

68

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

 

BORROWER:

 

BLACK HILLS CORPORATION, a South

Dakota corporation

 

By:

/s/ Mark T. Thies

 

Name:

Mark T. Thies

 

Title:

Executive Vice President and CFO

 

 

 

 

 

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Credit Agreement

 

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ADMINISTRATIVE AGENT AND BANK:

 

 

 

ABN AMRO BANK N.V., as Administrative

 

Agent, Sole Bookrunner, a Co-Arranger and as

 

a Bank

 

 

 

By:

/s/ Kris Grosshans

 

Name:

Kris Grosshans

 

Title:

Managing Director

 

 

 

By:

/s/ Meghan Schultz

 

Name:

Meghan Schultz

 

Title:

Vice President

 

 

 

Address for notices:

Lending Offices:

 

 

ABN AMRO Bank N.V.

Base Rate and Eurocurrency Loans

540 West Madison Street, Suite 2621

 

Chicago, Illinois 60661

ABN AMRO Bank N.V.

Attn:

Credit Administration

135 S. LaSalle Street, Suite 1425

E-Mail:

melanie.dziobas@abnamro.com

Chicago, Illinois 60603

FAX:

312.992.5111

Attn:

Loan Administration

Telephone:

312.992.5135

E-Mail:

Judith.kinney@abnamro.com

 

FAX:

312.992.5157

ABN AMRO Bank N.V.

Telephone:

312.992.5098

135 S. LaSalle Street, Suite 839

 

 

Chicago, IL 60603

 

 

Attn:

Meghan Schultz

 

 

E-Mail:

Meghan.schultz@abnamro.com

 

 

FAX:

312.904.1994

 

 

Telephone:

312.904.9457

 

 

 

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Credit Agreement

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CREDIT SUISSE SECURITIES (USA)

 

 

LLC, as a Syndication Agent and as a Co-

 

 

Arranger

 

 

 

 

 

 

By:

/s/ Christopher G. Cunningham

 

 

Name:

Christopher G. Cunningham

 

 

Title:

Managing Director

 

 

 

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Credit Agreement

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CREDIT SUISSE, CAYMAN ISLANDS

 

BRANCH, as a Bank

 

 

 

By:

/s/ James Moran

 

Name:

James Moran

 

Title:

Managing Director

 

 

 

 

 

 

 

By:

/s/ Nupur Kumar

 

Name:

Nupur Kumar

 

Title:

Associate

 

 

 

Address for notices:

Lending Offices:

 

 

One Madison Avenue

Base Rate Loans:

New York, NY 10009

 

Attn:

Loan Closers

One Madison Avenue

E-Mail:

loan.closers@credit-suisse.com

New York, NY 10009

FAX:

212.538.9120

Attn:

Loan Closers

Telephone:

212.325.9041

E-Mail:

loan.closures@credit-suisse.com

 

FAX:

212.538.9120

 

Telephone:

212.325.9041

 

 

 

Eurocurrency Loans:

 

 

 

One Madison Avenue

 

New York, NY 10009

 

Attn:

Loan Closers

 

E-Mail:

loan.closures@credit-suisse.com

 

FAX:

212.538.9120

 

Telephone:

212.325.9041

 

 

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Credit Agreement

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UNION BANK OF CALIFORNIA, N.A., as

 

a Syndication Agent and a Co-Arranger and as

 

a Bank

 

 

 

 

 

By:

/s/ Kevin M. Zitar

 

Name:

Kevin M. Zitar

 

Title:

Senior Vice President

 

 

 

 

Address for notices:

Lending Offices:

 

 

 

445 S. Figueroa St., 15th Floor

Base Rate and Eurocurrency Loans:

Los Angeles, California 90071

 

Attn:

Kevin Zitar

445 S. Figueroa St., 15th Floor

E-Mail:

Kevin.zitar@uboc.com

Los Angeles, California 90071

FAX:

213.236.4096

Attn:

Kevin Zitar

Telephone:

213.236.5503

E-Mail:

Kevin.zitar@uboc.com

 

FAX:

213.236.4096

445 S. Figueroa St., 15th Floor

Telephone:

213.236.5503

Los Angeles, California 90071

 

Attn:

Robert Cole

 

E-Mail:

Robert.cole@uboc.com

 

 

FAX:

213.236.4096

 

 

Telephone:

213.236.6225

 

 

 

 

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Credit Agreement

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BMO CAPITAL MARKETS, as a

 

Syndication Agent and a Co-Arranger

 

 

 

 

 

By:

/s/ Cathal Carmody

 

Name:

Cathal Carmody

 

Title:

Vice President

 

 

 

 

 

 

 

Address for notices:

Lending Offices:

 

 

 

115 S. LaSalle

n/a

Chicago, Illinois 6060.

 

Attn:

Sameer Dewji

 

E-Mail:

sameer.dewji@bmo.com

 

FAX:

416.867.4050

 

Telephone:

416.867.6983

 

 

 

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Credit Agreement

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BMO CAPITAL MARKETS FINANCING,

 

INC., as a Bank

 

 

 

 

 

By:

/s/ Cahal Carmody

 

Name:

Cahal Carmody

 

Title:

Vice President

 

 

 

 

 

 

 

Address for notices:

Lending Offices:

 

 

 

115 S. LaSalle

Base Rate and Eurocurrency Loans:

Chicago, Illinois 6060.

 

Attn:

Sameer Dewji

115 S. LaSalle

E-Mail:

sameer.dewji@bmo.com

Chicago, Illinois 6060.

FAX:

416.867.4050

Attn:

Sameer Dewji

Telephone:

416.867.6983

E-Mail:

sameer.dewji@bmo.com

 

 

FAX:

416.867.4050

 

 

Telephone:

416.867.6983

 

 

Credit Agreement