Exhibit 10.3

 

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

CREDIT AGREEMENT

Dated as of March 30, 2006

among

WISCONSIN GAS LLC,

as Borrower,

THE LENDERS IDENTIFIED HEREIN,

CITIBANK, N.A.,

as Administrative Agent

and

U.S. BANK NATIONAL ASSOCIATION,

as Fronting Bank

 

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

CITIGROUP GLOBAL MARKETS INC.

U.S. BANK CAPITAL MARKETS,

Co-Lead Arrangers

JPMORGAN CHASE BANK, N.A.

WACHOVIA BANK, NATIONAL ASSOCIATION

BNP PARIBAS,

Co-Documentation Agents

and

U.S. BANK NATIONAL ASSOCIATION,

Syndication Agent

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

TABLE OF CONTENTS

 

         Page

ARTICLE I DEFINITIONS AND ACCOUNTING TERMS

   1

SECTION 1.1.

 

Definitions.

   1

SECTION 1.2.

 

Computation of Time Periods.

   15

SECTION 1.3.

 

Accounting Terms.

   16

ARTICLE II THE COMMITMENTS AND THE EXTENSIONS OF CREDIT

   16

SECTION 2.1.

 

The Commitments.

   16

SECTION 2.2.

 

Method of Borrowing.

   16

SECTION 2.3.

 

Funding of Borrowings.

   17

SECTION 2.4.

 

Continuations and Conversions.

   17

SECTION 2.5.

 

Minimum Amounts.

   18

SECTION 2.6.

 

Reduction of the Commitments.

   18

SECTION 2.7.

 

Extension of Maturity Date.

   18

SECTION 2.8.

 

Letters of Credit.

   20

ARTICLE III PAYMENTS

   24

SECTION 3.1.

 

Interest.

   24

SECTION 3.2.

 

Prepayments.

   24

SECTION 3.3.

 

Payment in full at Maturity.

   25

SECTION 3.4.

 

Fees.

   25

SECTION 3.5.

 

Place and Manner of Payments.

   25

SECTION 3.6.

 

Pro Rata Treatment.

   26

SECTION 3.7.

 

Computations of Interest and Fees.

   26

SECTION 3.8.

 

Sharing of Payments.

   27

SECTION 3.9.

 

Additional Interest on Advances.

   27

SECTION 3.10.

 

Evidence of Debt.

   28

ARTICLE IV ADDITIONAL PROVISIONS REGARDING ADVANCES

   29

SECTION 4.1.

 

Eurodollar Borrowing Provisions.

   29

SECTION 4.2.

 

Capital Adequacy.

   30

SECTION 4.3.

 

Compensation.

   30

SECTION 4.4.

 

Taxes.

   31

SECTION 4.5.

 

Replacement of Lenders.

   33

ARTICLE V CONDITIONS PRECEDENT

   33

SECTION 5.1.

 

Conditions Precedent to the Effective Date and the Obligations of the Lenders
and Fronting Bank.

   33

SECTION 5.2.

 

Conditions to Each Extension of Credit.

   35

 

i

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

TABLE OF CONTENTS

(Continued)

 

          Page

ARTICLE VI REPRESENTATIONS AND WARRANTIES

   36

SECTION 6.1.

  

Organization and Good Standing.

   36

SECTION 6.2.

  

Due Authorization.

   36

SECTION 6.3.

  

No Conflicts.

   36

SECTION 6.4.

  

Consents.

   37

SECTION 6.5.

  

Enforceable Obligations.

   37

SECTION 6.6.

  

Financial Condition.

   37

SECTION 6.7.

  

No Material Change.

   37

SECTION 6.8.

  

No Default.

   37

SECTION 6.9.

  

Indebtedness.

   38

SECTION 6.10.

  

Litigation.

   38

SECTION 6.11.

  

Taxes.

   38

SECTION 6.12.

  

Compliance with Law.

   38

SECTION 6.13.

  

ERISA.

   38

SECTION 6.14.

  

Use of Proceeds; Margin Stock.

   39

SECTION 6.15.

  

Investment Company Act.

   40

SECTION 6.16.

  

Solvency.

   40

SECTION 6.17.

  

Disclosure.

   40

SECTION 6.18.

  

Environmental Matters.

   40

ARTICLE VII AFFIRMATIVE COVENANTS

   40

SECTION 7.1.

  

Information Covenants.

   40

SECTION 7.2.

  

Total Funded Debt to Capitalization.

   42

SECTION 7.3.

  

Preservation of Existence and Franchises.

   42

SECTION 7.4.

  

Books and Records.

   43

SECTION 7.5.

  

Compliance with Law.

   43

SECTION 7.6.

  

Payment of Taxes and Other Indebtedness.

   43

SECTION 7.7.

  

Insurance.

   43

SECTION 7.8.

  

Performance of Obligations.

   43

SECTION 7.9.

  

Use of Proceeds.

   43

SECTION 7.10.

  

Audits/Inspections.

   44

ARTICLE VIII NEGATIVE COVENANTS

   44

SECTION 8.1.

  

Nature of Business.

   44

SECTION 8.2.

  

Consolidation and Merger.

   44

SECTION 8.3.

  

Sale or Lease of Assets.

   44

SECTION 8.4.

  

Arm’s-Length Transactions.

   45

SECTION 8.5.

  

Fiscal Year.

   45

SECTION 8.6.

  

Liens.

   45

 

ii

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

TABLE OF CONTENTS

(Continued)

 

          Page

ARTICLE IX EVENTS OF DEFAULT

   45

SECTION 9.1.

  

Events of Default.

   45

SECTION 9.2.

  

Acceleration; Remedies.

   47

SECTION 9.3.

  

Allocation of Payments After Event of Default.

   49

ARTICLE X AGENCY PROVISIONS

   49

SECTION 10.1.

  

Appointment.

   49

SECTION 10.2.

  

Delegation of Duties.

   50

SECTION 10.3.

  

Exculpatory Provisions.

   50

SECTION 10.4.

  

Reliance on Communications.

   50

SECTION 10.5.

  

Notice of Default.

   51

SECTION 10.6.

  

Non-Reliance on Agent and Other Lenders.

   51

SECTION 10.7.

  

Indemnification.

   52

SECTION 10.8.

  

Agent in Its Individual Capacity.

   52

SECTION 10.9.

  

Successor Agent.

   52

ARTICLE XI MISCELLANEOUS

   53

SECTION 11.1.

  

Notices.

   53

SECTION 11.2.

  

Right of Set-Off.

   53

SECTION 11.3.

  

Benefit of Agreement.

   53

SECTION 11.4.

  

No Waiver; Remedies Cumulative.

   57

SECTION 11.5.

  

Payment of Expenses, etc.

   57

SECTION 11.6.

  

Amendments, Waivers and Consents.

   58

SECTION 11.7.

  

Counterparts/Telecopy.

   59

SECTION 11.8.

  

Headings.

   59

SECTION 11.9.

  

Defaulting Lender.

   59

SECTION 11.10.

  

Confidentiality.

   59

SECTION 11.11.

  

Survival of Indemnification and Representations and Warranties.

   60

SECTION 11.12.

  

Governing Law; Venue.

   60

SECTION 11.13.

  

Waiver of Jury Trial; Waiver of Consequential Damages.

   61

SECTION 11.14.

  

Time.

   61

SECTION 11.15.

  

Severability.

   61

SECTION 11.16.

  

Assurances.

   61

SECTION 11.17.

  

Entirety.

   62

 

       SCHEDULES   

Schedule I

 

  -

    

Commitment Percentages

  

Schedule II

 

  -

    

Addresses for Notices

  

 

iii

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

              Page

EXHIBITS

 

Exhibit A

 

-

  

Form of Notice of Borrowing

  

Exhibit B

 

-

  

Form of Notice of Continuation/Conversion

  

Exhibit C

 

-

  

Form of Officer’s Certificate

  

Exhibit D

 

-

  

Form of Assignment Agreement

  

Exhibit E

 

-

  

Form of Request for Issuance

  

 

iv

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

CREDIT AGREEMENT

This CREDIT AGREEMENT (this “Agreement”), dated as of March 30, 2006, is entered
into among WISCONSIN GAS LLC, a Wisconsin limited liability company, the Lenders
(as defined herein), CITIBANK, N.A. (“Citibank”), as Administrative Agent (in
such capacity, the “Agent”), and U.S. BANK NATIONAL ASSOCIATION, as Fronting
Bank (as defined below).

RECITALS

WHEREAS, the Borrower has requested that the Lenders provide a $300,000,000 five
year revolving credit and letter of credit facility to the Borrower for the
purposes hereinafter set forth; and

WHEREAS, the Lenders have agreed to provide such five year revolving credit and
letter of credit facility on the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

SECTION 1.1. Definitions.

As used herein, the following terms shall have the meanings herein specified
unless the context otherwise requires. Defined terms herein shall include in the
singular number the plural and in the plural the singular:

“Advance” means an advance by a Lender to the Borrower as part of a Borrowing
and refers to a Base Rate Advance or a Eurodollar Advance.

“Affiliate” means, with respect to any Person, any other Person directly or
indirectly controlling (including but not limited to all directors and officers
of such Person), controlled by or under direct or indirect common control with
such Person. A Person shall be deemed to control a corporation if such Person
possesses, directly or indirectly, the power (i) to vote 10% or more of the
securities having ordinary voting power for the election of directors of such
corporation or (ii) to direct or cause direction of the management and policies
of such corporation, whether through the ownership of voting securities, by
contract or otherwise.

“Agent” has the meaning ascribed to such term in the preamble hereto.

“Agreement” has the meaning ascribed to such term in the preamble hereto.

“Applicable Margin” means, with respect to Base Rate Advances, 0.0% per annum
and, with respect to Eurodollar Advances, the amount per annum set forth below
in the column identified by the Applicable Rating Level at the time of
determination. The Applicable Margin

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

shall increase by an amount equal to the Utilization Fee set forth below (the
“Utilization Fee”) during any period (and for only such period) in which more
than 50% of the Commitments are utilized. Upon the occurrence and during the
continuance of any Event of Default, the Applicable Margin shall increase by
2.0% per annum, and if any Advance is a Eurodollar Advance, it will convert to a
Base Rate Advance at the end of the Interest Period then in effect for such
Eurodollar Advance.

 

Applicable Rating Level

   Level 1   Level 2   Level 3   Level 4   Level 5   Level 6   Level 7

Applicable Margin

   0.11%   0.15%   0.19%   0.23%   0.26%   0.35%   0.50%

Utilization Fee

   0.05%   0.05%   0.05%   0.05%   0.05%   0.10%   0.10%

Any change in the Applicable Margin shall be effective on the date on which
Moody’s, S&P or Fitch, as the case may be, announces any change in any rating
that results in a change in the Applicable Rating Level.

“Applicable Rating Level” means, at any time, the number set forth below in the
row next to the then-applicable ratings by S&P, Moody’s and Fitch, respectively,
of the Borrower’s long-term senior unsecured debt.

 

Moody’s Rating
S&P Rating
Fitch Rating

 

Applicable Rating Level

At least Aa3,

at least AA- and

at least AA-

  1

A1,

A+ and

A+

  2

A2,

A and

A

  3

A3,

A- and

A-

  4

Baa1,

BBB+ and

BBB+

  5

Baa2,

BBB and

BBB

  6

Baa3 or below*,

BBB- or below* or

BBB- or below*

  7

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

* or unrated

 

2

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

Notwithstanding the foregoing, if the Borrower shall (i) fail to maintain a
rating of its senior unsecured debt by at least two of Moody’s, S&P and Fitch,
Level 7 shall be the pricing level; (ii) maintain a rating of its senior
unsecured debt from only two of Moody’s, S&P and Fitch and (A) there is a
difference of one level in such ratings, then the higher of such ratings shall
be used to determine the Applicable Rating Level, or (B) there is a difference
of more than one level in such ratings, then the rating that is one level below
the higher of such ratings shall be used to determine the Applicable Rating
Level; and (iii) maintain a rating of its senior unsecured debt from all three
of Moody’s, S&P and Fitch and there is a difference in such ratings such that
(A) two of such ratings fall in the same Applicable Rating Level and are higher
than the third, then the higher of such ratings will be used to determine the
Applicable Rating Level, (B) two of such ratings fall in the same Applicable
Rating Level and are lower than the third, then the lower of such ratings will
be used to determine the Applicable Rating Level, and (C) all three such ratings
fall in different Applicable Rating Levels, then the intermediate rating will be
used to determine the Applicable Rating Level.

“Approved Fund” means with respect to any Lender that is a fund that invests in
bank loans, any other fund that invests in commercial loans and is managed or
advised by the same investment advisor as such Lender or by an Affiliate of such
investment advisor.

“Bankruptcy Code” means the Bankruptcy Code in Title 11 of the United States
Code, as amended, modified, succeeded or replaced from time to time.

“Base Rate” means a fluctuating interest rate per annum in effect from time to
time, which rate per annum shall at all times be equal to the higher of:

(i) the rate of interest announced publicly by Citibank in New York City, from
time to time, as Citibank’s base rate; and

(ii) 1/2 of 1% per annum above the Federal Funds Rate.

If for any reason the Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable after due inquiry to
ascertain the Federal Funds Rate for any reason, including the inability or
failure of the Agent to obtain sufficient quotations in accordance with the
terms hereof, the Base Rate shall be determined without regard to clause (ii) of
the first sentence of this definition until the circumstances giving rise to
such inability no longer exist. Any change in the Base Rate due to a change in
Citibank’s base rate or the Federal Funds Rate shall be effective on the
effective date of such change in the base rate or the Federal Funds Rate, as the
case may be.

“Base Rate Advance” means an Advance that bears interest based on the Base Rate.

 

3

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

“Base Rate Borrowing” means a Borrowing consisting of simultaneous Base Rate
Advances.

“Borrower” means (i) Wisconsin Gas LLC, a Wisconsin limited liability company or
(ii) any successor to Wisconsin Gas LLC permitted by Section 8.2. It is
understood that the term “Borrower” does not include the Subsidiaries of the
Borrower.

“Borrowing” means a borrowing consisting of simultaneous Advances of the same
Type made by each of the Lenders pursuant to Section 2.1 or converted pursuant
to Section 2.4.

“Business Day” means any day other than a Saturday, a Sunday, a legal holiday or
a day on which banking institutions are authorized or required by law or other
governmental action to close in Milwaukee, Wisconsin or New York, New York;
provided that in the case of Eurodollar Advances, such day is also a day on
which dealings between banks are carried on in U.S. dollar deposits in the
London interbank market.

“Capitalization” means the sum of (i) Total Funded Debt plus (ii) Net Worth.

“Cash Collateral Account” has the meaning assigned such term in Section 9.2(d).

“Change of Control” means any of the following events: (i) any “person” or
“group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act) has
become, directly or indirectly, the “beneficial owner” (as defined in Rules
13d-3 and 13d-5 under the Exchange Act, except that a Person shall be deemed to
have “beneficial ownership” of all shares that any such Person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time), by way of merger, consolidation or otherwise, of 30% or more of the
voting power of the Voting Stock of WEC on a fully-diluted basis, after giving
effect to the conversion and exercise of all outstanding warrants, options and
other securities of WEC (whether or not such securities are then currently
convertible or exercisable), (ii) during any period of two consecutive calendar
years, individuals who at the beginning of such period constituted the board of
directors of WEC cease for any reason to constitute a majority of the directors
of WEC then in office unless (A) such new directors were elected by a majority
of the directors of WEC who constituted the board of directors of WEC at the
beginning of such period or (B) the reason for such directors failing to
constitute a majority is a result of retirement by directors due to age, death
or disability or (iii) the failure of WEC to directly or indirectly own at least
51% of the Voting Stock of the Borrower.

“Citibank” has the meaning ascribed to such term in the preamble hereto.

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

“Commitment” means, as to any Lender, the amount set opposite such Lender’s name
on Schedule I hereto or, if such Lender has entered into any Assignment
Agreement, set forth for such Lender in the Register maintained by the Agent
pursuant to Section 11.3(c), as such amount may be reduced pursuant to
Section 2.6.

 

4

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

“Commitment Percentage” means, for each Lender, the percentage identified as its
Commitment Percentage opposite such Lender’s name on Schedule I attached hereto,
as such percentage may be modified by assignment in accordance with the terms of
this Agreement.

“Credit Documents” means this Agreement, any promissory note and all other
related agreements delivered hereunder or thereunder.

“Default” means any event, act or condition that, with notice or lapse of time,
or both, would constitute an Event of Default.

“Defaulting Lender” means, at any time, any Lender that, at such time, (i) has
failed to make an Advance required pursuant to the term of this Agreement,
(ii) has failed to pay to the Agent or any Lender an amount owed by such Lender
pursuant to the terms of this Agreement or (iii) has been deemed insolvent or
has become subject to a bankruptcy or insolvency proceeding or to a receiver,
trustee or similar official.

“Dollars” and “$” means dollars in lawful currency of the United States of
America.

“Effective Date” means the date on which the conditions set forth in Section 5.1
shall have been satisfied.

“Eligible Assignee” means a Person that is (i) a Lender, (ii) an Affiliate of a
Lender, (iii) approved by the Agent, the Borrower and the Fronting Bank (such
approvals not to be unreasonably withheld or delayed) or (iv) a financial
institution Affiliate of any Lender or an Approved Fund of any Lender
immediately prior to any assignment provided in each case that (A) the
Borrower’s approval is not required during the existence and continuation of an
Event of Default, (B) approval by the Borrower shall be deemed given if no
objection is received by the assigning Lender and the Agent from the Borrower
within five Business Day after notice of such proposed assignment has been
received by the Borrower and (C) neither the Borrower nor an Affiliate of the
Borrower shall qualify as an Eligible Assignee.

“Environmental Laws” means any legal requirement of any Governmental Authority
pertaining to (i) the protection of the environment, (ii) the protection of
natural resources and wildlife, (iii) the protection or use of surface water and
groundwater, (iv) the management, manufacture, possession, presence, use,
generation, transportation, treatment, storage, disposal, release, threatened
release, abatement, removal, remediation or handling of, or exposure to, any
hazardous or toxic substance or material or (v) pollution (including any release
to land surface water and groundwater) and includes, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 USC
9601 et seq., Solid Waste Disposal Act, as amended by the Resource Conservation
and Recovery Act of 1976 and Hazardous and Solid Waste Amendment of 1984, 42 USC
6901 et seq., Federal Water Pollution Control Act, as amended by the Clean Water
Act of 1977, 33 USC 1251 et seq., Clean Air Act of 1966, as amended, 42 USC 7401
et seq., Toxic Substances Control Act of 1976, 15 USC 2601 et seq., Hazardous
Materials Transportation Act, 49 USC App. 1801 et seq., Oil Pollution Act of
1990, 33 USC 2701 et seq., Emergency Planning and Community Right-to-Know Act of
1986, 42 USC 11001 et seq., National Environmental Policy Act of 1969, 42 USC
4321 et seq., Safe Drinking Water Act of 1974, as amended, 42 USC 300(f) et
seq., any analogous implementing or successor law, and any amendment, rule,
regulation, order, or directive issued thereunder.

 

5

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

“Environmental Trust Bonds” has the meaning assigned to such term in
Section 196.027 of the Wisconsin Statutes or any successor thereto.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and any successor statute thereto, as interpreted by the rules and regulations
thereunder, all as the same may be in effect from time to time. References to
sections of ERISA shall be construed also to refer to any successor sections.

“ERISA Affiliate” means an entity, whether or not incorporated, which is under
common control with the Borrower or any of its Subsidiaries within the meaning
of Section 4001(a)(14) of ERISA, or is a member of a group that includes the
Borrower or any of its Subsidiaries and that is treated as a single employer
under Sections 414(b), (c), (m), or (o) of the Code.

“Eurocurrency Liabilities” has the meaning assigned to that term in Regulation D
of the Board of Governors of the Federal Reserve System, as in effect from time
to time.

“Eurodollar Advance “ means an Advance bearing interest at the Eurodollar Rate.

“Eurodollar Borrowing” means a Borrowing consisting of simultaneous Eurodollar
Advances.

“Eurodollar Rate” means, for the Interest Period applicable thereto, the rate
per annum equal to the sum of (i) the London Interbank Offered Rate plus
(ii) the Applicable Margin.

“Eurodollar Rate Reserve Percentage” of any Lender for the Interest Period for
any Eurodollar Advance means the reserve percentage applicable during such
Interest Period (or if more than one such percentage shall be so applicable, the
daily average of such percentages for those days in such Interest Period during
which any such percentage shall be so applicable) under regulations issued from
time to time by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement (including, without
limitation, any emergency, supplemental or other marginal reserve requirement)
for such Lender with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities having a term equal to such Interest Period.

“Event of Default” has the meaning specified in Section 9.1.

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

“Extension of Credit” means (i) the making of an Advance, (ii) the issuance of a
Letter of Credit or the amendment of any Letter of Credit having the effect of
extending the stated termination date thereof or increasing the maximum amount
available to be drawn thereunder or (iii) the funding of a participation in the
unpaid reimbursement obligation of the Borrower with respect to a payment made
by the Fronting Bank under a Letter of Credit (excluding any reimbursement
obligation that has been repaid with the proceeds of any Advance).

 

6

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

“Facility Fee Percentage” means the rate per annum set forth in the column
identified by the Applicable Rating Level at the time of determination:

 

Applicable Rating Level

   Level 1   Level 2   Level 3   Level 4   Level 5   Level 6   Level 7

Facility Fee Percentage

   0.04%   0.05%   0.06%   0.07%   0.09%   0.10%   0.15%

Any change in the Facility Fee Percentage shall be effective on the date on
which Moody’s, S&P or Fitch, as the case may be, announces any change in any
rating that results in a change in the Applicable Rating Level.

“Fee Letters” means (i) that certain letter agreement, dated February 28, 2006,
among Citigroup Global Markets Inc., the Borrower and Wisconsin Electric Power
Company and (ii) that certain Letter Agreement, dated February 28, 2006, among
U.S. Bank National Association, U.S. Bank Capital Markets, the Borrower and
Wisconsin Electric Power Company, in each case, as amended, modified,
supplemented or replaced from time to time.

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

“Fitch” means Fitch Ratings Ltd., or any successor or assignee of the business
of such company in the business of rating securities.

“Fronting Bank” means U.S. Bank National Association, as issuer of Letters of
Credit, and/or such other Lender that may be appointed from time to time by the
Borrower (and that agrees to such appointment) to act in such a capacity under
this Agreement.

“Funded Debt” of any Person means, without duplication, the sum of (i) all
Indebtedness of such Person for borrowed money, (ii) all purchase money
Indebtedness of such Person, (iii) the principal portion of all obligations of
such Person under capital lease obligations, (iv) all obligations, contingent or
otherwise, relative to the face amount of all letters of credit (other than
letters of credit supporting trade payables in the ordinary course of business),
whether or not drawn, and banker’s acceptances issued for the account of such
Person, in each case in excess of $10 million, subject to the further
limitations hereafter provided (it being understood that, to the extent an
undrawn letter of credit supports another obligation consisting of Indebtedness,
in calculating aggregated Indebtedness only such other obligation shall be
included), (v) all Guaranty Obligations of such Person with respect to
Indebtedness and obligations of the type described in clauses (i) through
(iv) hereof of another Person in excess of $10 million, subject to

 

7

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

the further limitations hereafter provided, (vi) all Indebtedness and
obligations of the type described in clauses (i), (ii), (iii), (iv), (viii) and
(ix) hereof of another Person in excess of $10 million, subject to the further
limitations hereafter provided, secured by a Lien on any property of such Person
whether or not such Indebtedness or obligations has been assumed by such Person,
(vii) all Indebtedness and obligations of the type described in clauses (i),
(ii), (iii), (iv), (viii) and (ix) hereof of any partnership or unincorporated
joint venture in excess of $10 million, subject to the further limitations
hereafter provided, to the extent such Person is legally obligated, net of any
assets of such partnership or joint venture, (viii) the outstanding principal
balance in excess of $10 million, subject to the further limitations hereafter
provided, under any synthetic lease, tax retention operating lease, off-balance
sheet loan or similar off-balance sheet financing product of such Person where
such transaction is considered borrowed money indebtedness for tax purposes but
is classified as an operating lease in accordance with GAAP, (ix) all net
obligations of such Person in excess of $10 million, subject to the further
limitations hereafter provided, in respect of interest rate protection
agreements, foreign currency exchange agreements, commodity purchase or option
agreements or other interest or exchange rate or commodity price hedging
agreements and (x) all Indebtedness and obligations of the types described in
the foregoing clauses (iv) through (ix) hereof, to the extent excluded from the
definition of “Funded Debt” hereunder (as a result of such Indebtedness or
obligation being less than $10 million), and to the extent in excess of $200
million in the aggregate.

“GAAP” means generally accepted accounting principles in the United States
applied on a consistent basis and subject to Section 1.3.

“Governmental Authority” means any Federal, state, local or foreign court or
governmental agency, authority, instrumentality or regulatory body.

“Guaranty Obligations” means, with respect to any Person, without duplication,
any obligations (other than endorsements in the ordinary course of business of
negotiable instruments for deposit or collection) guaranteeing any Indebtedness
of any other Person in any manner, whether direct or indirect, and including
without limitation any obligation, whether or not contingent, (i) to purchase
any such Indebtedness or other obligation or any property constituting security
therefor, (ii) to advance or provide funds or other support for the payment or
purchase of such Indebtedness or obligation or to maintain working capital,
solvency or other balance sheet condition of such other Person (including,
without limitation, maintenance agreements, comfort letters, take or pay
arrangements, put agreements or similar agreements or arrangements) for the
benefit of the holder of Indebtedness of such other Person, (iii) to lease or
purchase property, securities or services primarily for the purpose of assuring
the owner of such Indebtedness or (iv) to otherwise assure or hold harmless the
owner of such Indebtedness or obligation against loss in respect thereof. The
amount of any Guaranty Obligation hereunder shall (subject to any limitations
set forth therein) be deemed to be an amount equal to the outstanding principal
amount (or maximum principal amount, if larger) of the Indebtedness in respect
of which such Guaranty Obligation is made.

“Hybrid Equity Securities” means any securities issued by the Borrower or a
Subsidiary or a financing vehicle of the Borrower that (i) are classified at the
time of issuance thereof as possessing a minimum of “intermediate equity
content” by S&P and Basket C equity credit by Moody’s and (ii) require no
repayments or prepayments and no mandatory redemptions or repurchases, in each
case, prior to at least 91 days after the occurrence of the Maturity Date and
the repayment in full of the Outstanding Credits and all other amounts due under
this Agreement.

 

8

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

“Indebtedness” of any Person means, without duplication, (i) all obligations of
such Person for borrowed money, (ii) all obligations of such Person evidenced by
bonds, debentures, notes or similar instruments, or upon which interest payments
are customarily made, (iii) all obligations of such Person under conditional
sale or other title retention agreements relating to property purchased by such
Person to the extent of the value of such property (other than customary
reservations or retentions of title under agreements with suppliers entered into
in the ordinary course of business), (iv) all obligations, other than
intercompany items, of such Person issued or assumed as the deferred purchase
price of property or services purchased by such Person that would appear as
liabilities on a balance sheet of such Person, (v) all Indebtedness of others
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien on, or payable out of the
proceeds of production from, property owned or acquired by such Person, whether
or not the obligations secured thereby have been assumed, (vi) all Guaranty
Obligations of such Person, (vii) the principal portion of all obligations of
such Person under (A) capital lease obligations and (B) any synthetic lease, tax
retention operating lease, off-balance sheet loan or similar off-balance sheet
financing product of such Person where such transaction is considered borrowed
money indebtedness for tax purposes but is classified as an operating lease in
accordance with GAAP, (viii) all obligations of such Person to repurchase any
securities, which repurchase obligation is related to the issuance thereof,
including, without limitation, obligations commonly known as residual equity
appreciation potential shares, (ix) all net obligations of such Person in
respect of interest rate protection agreements, foreign currency exchange
agreements, commodity purchase or option agreements or other interest or
exchange rate or commodity price hedging arrangements, (x) the maximum amount of
all performance and standby letters of credit issued or bankers’ acceptance
facilities created for the account of such Person and, without duplication, all
drafts drawn thereunder (to the extent unreimbursed), and (xi) the aggregate
amount of uncollected accounts receivable of such Person subject at such time to
a sale of receivables (or similar transaction) regardless of whether such
transaction is effected without recourse to such Person or in a manner that
would not be reflected on the balance sheet of such Person in accordance with
GAAP. The Indebtedness of any Person shall include the Indebtedness of any
partnership or unincorporated joint venture for which such Person is legally
obligated.

“Interest Payment Date” means (i) as to Base Rate Advances, quarterly in arrears
on the last day of each March, June, September and December and the Maturity
Date and (ii) as to Eurodollar Advances, the last day of each applicable
Interest Period and the Maturity Date and, in addition, where the applicable
Interest Period for a Eurodollar Advance is greater than three months, then also
on the last day of each fiscal quarter of the Borrower during such Interest
Period. If an Interest Payment Date falls on a date that is not a Business Day,
such Interest Payment Date shall be deemed to be the next succeeding Business
Day, except that in the case of Eurodollar Advances where the next succeeding
Business Day falls in the next succeeding calendar month, then on the next
preceding day.

“Interest Period” means, as to Eurodollar Advances, a period of one, two, three
or, subject to availability, six months’ duration, as the Borrower may elect,
commencing, in each case, on the date of the borrowing (including continuations
and conversions of Eurodollar

 

9

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

Advances); provided, however, (i) if any Interest Period would end on a day that
is not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day (except that where the next succeeding Business Day
falls in the next succeeding calendar month, then on the next preceding Business
Day), (ii) no Interest Period shall extend beyond the Maturity Date and
(iii) with respect to Eurodollar Advances, where an Interest Period begins on a
day for which there is no numerically corresponding day in the calendar month in
which the Interest Period is to end, such Interest Period shall end on the last
Business Day of such calendar month.

“Issuance Fee” has the meaning specified in Section 3.4(b).

“LC Commitment Amount” means, at any time, an amount equal to the sum of the
Commitments of all Lenders at such time.

“LC Fee” has the meaning specified in Section 3.4(b).

“LC Outstandings” means, on any date of determination, the sum of the undrawn
stated amounts of all Letters of Credit that are outstanding on such date plus
the aggregate principal amount of all unpaid reimbursement obligations of the
Borrower on such date with respect to payments made by the Fronting Bank under
Letters of Credit (excluding reimbursement obligations that have been repaid
with the proceeds of any Advance).

“Lender” means any of the Persons identified as a “Lender” on the signature
pages hereto, and any Eligible Assignee that may become a Lender by way of
assignment in accordance with the terms hereof, together with their successors
and permitted assigns.

“Letter of Credit” means a letter of credit issued by the Fronting Bank pursuant
to Section 2.8, as such letter of credit may from time to time be amended,
modified or extended in accordance with the terms of this Agreement.

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, security interest, encumbrance, lien (statutory or otherwise),
preference, priority or charge of any kind (including any agreement to give any
of the foregoing, any conditional sale or other title retention agreement, any
financing or similar statement or notice filed under the Uniform Commercial Code
as adopted and in effect in the relevant jurisdiction or other similar recording
or notice statute, and any lease in the nature thereof).

“London Interbank Offered Rate” means, with respect to any Eurodollar Borrowing
for the Interest Period applicable thereto, the rate of interest per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Dow
Jones Markets Page 3750 (or any successor page) as the London interbank offered
rate for deposits in Dollars at approximately 11:00 A.M. (London time) two
Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period; provided, however, if more than one rate is
specified on Dow Jones Markets Page 3750, the applicable rate shall be the
arithmetic mean of all such rates. If, for any reason, such rate is not
available, the term “London Interbank Offered Rate” shall mean, with respect to
any Eurodollar Borrowing for the Interest Period applicable thereto, the rate of
interest per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Reuters Screen LIBO Page as the London interbank offered rate for
deposits in Dollars at

 

10

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

approximately 11:00 A.M. (London time) two Business Days prior to the first day
of such Interest Period for a term comparable to such Interest Period; provided,
however, if more than one rate is specified on Reuters Screen LIBO Page, the
applicable rate shall be the arithmetic mean of all such rates.

“Long-Term PSCW Approval” means an order of the Public Service Commission of
Wisconsin that authorizes receipt by the Borrower of Extensions of Credit that
may be repaid at least one year after the respective dates on which such
Extensions of Credit are made.

“Mandatory Borrowing” has the meaning assigned to such term in Section 2.8(f).

“Material Adverse Effect” means a material adverse effect on (i) the business,
condition (financial or otherwise), operations or prospects of the Borrower,
(ii) the ability of the Borrower to perform its obligations under this Agreement
or (iii) the validity or enforceability of this Agreement, any of the other
Credit Documents, or the rights and remedies of the Lenders hereunder or
thereunder.

“Maturity Date” means the earlier to occur of (i) March 30, 2011, or such later
date that may be established from time to time pursuant to Section 2.7 hereof,
and (ii) the date of termination in whole of the Commitments pursuant to
Section 2.6 or Section 9.2 hereof.

“Moody’s” means Moody’s Investors Service, Inc., or any successor or assignee of
the business of such company in the business of rating securities.

“Multiemployer Plan” means a Plan covered by Title IV of ERISA that is a
multiemployer plan as defined in Section 3(37) or 4001(a)(3) of ERISA.

“Multiple Employer Plan” means a Plan covered by Title IV of ERISA, other than a
Multiemployer Plan, of which the Borrower or any ERISA Affiliate and at least
one employer other than the Borrower or any ERISA Affiliate are contributing
sponsors.

“Net Worth” means, as of any date, the members’ equity or net worth of the
Borrower and its Subsidiaries (including but not limited to the value of any
Trust Preferred Securities or Hybrid Equity Securities), on a consolidated
basis, as determined in accordance with GAAP.

“Notice of Borrowing” means a request by the Borrower for a Borrowing in the
form of Exhibit A.

“Notice of Continuation/Conversion” means a request by the Borrower for the
continuation or conversion of a Borrowing in the form of Exhibit B.

“Outstanding Credits” at any time means the sum of the aggregate principal
amount of Advances outstanding at such time plus the LC Outstandings at such
time.

“PBGC” means the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA and any successor thereto.

 

11

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

“Permitted Liens” means (i) Liens securing the obligations of Borrower
hereunder, (ii) any Lien created or arising over any property (or any
improvements thereto) that is acquired, constructed or created by the Borrower,
but only if (a) such Lien secures only principal amounts (not exceeding the cost
of such acquisition, construction, creation or improvement) of Indebtedness
incurred for the purposes of such acquisition, construction, creation or
improvement together with any costs, expenses, interest and fees incurred in
relation thereto or a guarantee given in respect thereof and (b) such Lien is
confined solely to the property so acquired, constructed or created or such
improvement (including any such Lien so created or arising in connection with
WEC’s Power the Future Strategic Plan), (iii) any extensions, renewals or
replacements (or successive extensions, renewals or replacements), in whole or
in part, of Liens permitted by the foregoing clause (ii), (iv) the pledge of any
bonds or other securities at any time issued under any of the Liens permitted by
clauses (ii) or (iii), (v) Liens of taxes, assessments or governmental charges
for the then current year and taxes, assessments or governmental charges not
then delinquent; Liens for workers’ compensation awards and similar obligations
not then delinquent; mechanics’, laborers’, materialmen’s and similar Liens not
then delinquent; and any of such liens, whether or not delinquent, whose
validity is at the time being contested in good faith by the Borrower,
(vi) Liens and charges incidental to construction or current operations that
have not at the time been filed or asserted or the payment of which has been
adequately secured or that, in the opinion of counsel, are not material in
amount, (vii) Liens, securing obligations neither assumed by the Borrower nor on
account of which it customarily pays interest directly or indirectly, existing,
either at the date hereof, or, as to property hereafter acquired, at the time of
acquisition by the Borrower, (viii) any right that any municipal or governmental
body or agency may have by virtue of any franchise, license, contract or statute
to purchase, or designate a purchaser of or order the sale of, any property of
the Borrower upon payment of reasonable compensation therefor, or to terminate
any franchise, license or other rights or to regulate the property and business
of the Borrower, (ix) the Lien of judgments covered by insurance, or upon appeal
and covered, if necessary, by the filing of an appeal bond, or if not so covered
not exceeding at any one time $1,000,000 in aggregate amount, (x) easements or
reservations in respect of any property of the Borrower for the purpose of
roads, pipelines, utility transmission and distribution lines or other
rights-of-way and similar purposes, zoning ordinances, regulations,
reservations, restrictions, covenants, party wall agreements, conditions of
record and other encumbrances (other than to secure the payment of money), none
of which in the opinion of counsel are such as to interfere with the proper
operation and development of the property affected thereby in the business of
the Borrower for the use intended, (xi) any Lien or encumbrance, moneys
sufficient for the discharge of which have been deposited in trust with the
trustee under the Borrower’s Indenture dated as of September 1, 1990, as
heretofore or hereafter amended, modified and supplemented, with U.S. Bank,
N.A., as trustee (the “1990 Indenture”), providing for certain debt securities
or with the trustee or mortgagee under the instrument evidencing such Lien or
encumbrance, with irrevocable authority to the trustee under the Indenture or to
such other trustee or mortgagee to apply such moneys to the discharge of such
Lien or encumbrance to the extent required for such purpose, (xii) Liens
incurred to secure the Borrower’s payment obligations pursuant to Section 607 of
the 1990 Indenture, (xiii) any Lien or encumbrance, moneys sufficient for the
discharge of which have been deposited in trust with the trustee under the
Borrower’s Indenture dated as of December 1, 2003, as heretofore or hereafter
amended, modified and supplemented, with U.S. Bank, N.A., as trustee (the “2003
Indenture”), providing for certain debt securities or with the trustee or

 

12

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

mortgagee under the instrument evidencing such Lien or encumbrance, with
irrevocable authority to the trustee under the Indenture or to such other
trustee or mortgagee to apply such moneys to the discharge of such Lien or
encumbrance to the extent required for such purpose, (xiv) Liens incurred to
secure the Borrower’s payment obligations pursuant to Section 7.06 of the 2003
Indenture, (xv) any defects of title and any terms, conditions, agreements,
covenants, exceptions and reservations expressed or provided in deeds or other
instruments, respectively, under and by virtue of which the Borrower has
acquired any property or shall hereafter acquire any property, none of which, in
the opinion of counsel, materially adversely affects the operation of the
properties of the Borrower, (xvi) the pledge of cash or marketable securities
for the purpose of obtaining any indemnity, performance or other similar bonds
in the ordinary course of business, or as security for the payment of taxes or
other assessments being contested in good faith, or for the purpose of obtaining
a stay or discharge in the course of any legal proceedings, (xvii) the pledge or
assignment in the ordinary course of business of electricity, gas (either
natural or artificial) or steam, accounts receivable or customers’ installment
paper, (xviii) rights reserved to or vested in others to take or receive any
part of the electricity, gas (either natural or artificial), steam or any
by-products thereof generated or produced by or from any properties of the
Borrower or with respect to any other rights concerning electricity, gas (either
natural or artificial) or steam supply, transportation, or storage that are in
use in the ordinary course of the electricity, gas (either natural or
artificial) or steam business, (xix) any landlord’s Lien, (xx) Liens created or
assumed by the Borrower in connection with the issuance of debt securities, the
interest on which is excludable from the gross income of the holders of such
securities pursuant to Section 103 of the Code, for purposes of financing, in
whole or in part, the acquisition or construction of property to be used by the
Borrower, but such Liens shall be limited to the property so financed (and the
real estate on which such property is to be located), (xxi) Liens affixing to
property of the Borrower at the time a Person consolidates with or merges into,
or transfers all or substantially all of its assets to, the Borrower, provided
that in the opinion of the Board of Directors of the Borrower or any authorized
committee of the Board of Directors of the Borrower or Borrower management
(evidenced by a certified resolution of the Board of Directors of the Borrower
or an officer’s certificate) the property acquired pursuant to the
consolidation, merger or asset transfer is adequate security for the Lien, and
(xxii) Liens or encumbrances not otherwise permitted if, at the time of
incurrence and after giving effect thereto, the aggregate of all obligations of
the Borrower secured thereby does not exceed 15% of Total Assets.

“Person” means any individual, partnership, joint venture, firm, corporation,
association, trust, limited liability company or other enterprise (whether or
not incorporated), or any government or political subdivision or any agency,
department or instrumentality thereof.

“Plan” means any employee benefit plan (as defined in Section 3(3) of ERISA)
which is covered by ERISA and with respect to which the Borrower or any ERISA
Affiliate is (or, if such plan were terminated at such time, would under
Section 4069 of ERISA be deemed to be) an “employer” within the meaning of
Section 3(5) of ERISA.

“Power the Future Capitalized Leases” means any capital lease obligations
recorded on the consolidated balance sheet of the Borrower and its Subsidiaries
and not eliminated in consolidation related to WEC’s Power the Future strategic
plan.

 

13

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

“Register” has the meaning set forth in Section 11.3(c).

“Regulation D, U or X” means Regulation D, U or X, respectively, of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof

“Reportable Event” means a “reportable event” as defined in Section 4043 of
ERISA with respect to which the notice requirements to the PBGC have not been
waived.

“Request for Issuance” means a request made pursuant to Section 2.8(a) in the
form of Exhibit E.

“Required Lenders” means Lenders holding in excess of 50% of outstanding
Advances, or, if no Advances are outstanding, in excess of 50% of the
Commitments.

“S&P” means Standard & Poor’s Rating Services, a division of McGraw Hill, Inc.,
or any successor or assignee of the business of such division in the business of
rating securities.

“Single Employer Plan” means any Plan that is covered by Title IV of ERISA, but
that is not a Multiemployer Plan.

“Solvent” means, with respect to any Person as of a particular date, that on
such date (i) such Person is able to pay its debts and other liabilities,
contingent obligations and other commitments as they mature in the normal course
of business, (ii) such Person does not intend to, and does not believe that it
will, incur debts or liabilities beyond such Person’s ability to pay as such
debts and liabilities mature in their ordinary course, (iii) such Person is not
engaged in a business or a transaction, and is not about to engage in a business
or a transaction, for which such Person’s assets would constitute unreasonably
small capital after giving due consideration to the prevailing practice in the
industry in which such Person is engaged or is to engage, (iv) the fair value of
the assets of such Person is greater than the total amount of liabilities,
including, without limitation, contingent liabilities, of such Person and
(v) the present fair saleable value of the assets of such Person is not less
than the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured. In computing the amount
of contingent liabilities at any time, it is intended that such liabilities will
be computed as the amount that, in light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.

“Subsidiary” means, as to any Person, (i) any corporation more than 50% of whose
stock of any class or classes having by the terms thereof ordinary voting power
to elect a majority of the directors of such corporation (irrespective of
whether or not at the time, any class or classes of such corporation shall have
or might have voting power by reason of the happening of any contingency) is at
the time owned by such Person directly or indirectly through Subsidiaries and
(ii) any partnership, association, joint venture, limited liability company or
other entity in which such person directly or indirectly through Subsidiaries
has more than 50% equity interest at any time.

“Termination Event” means (i) with respect to any Single Employer Plan, the
occurrence of a Reportable Event or the substantial cessation of operations
(within the meaning of

 

14

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

Section 4062(e) of ERISA), (ii) the withdrawal of the Borrower or any ERISA
Affiliate from a Multiple Employer Plan during a plan year in which it was a
substantial employer (as such term is defined in Section 4001(a)(2) of ERISA),
or the termination of a Multiple Employer Plan, (iii) the distribution of a
notice of intent to terminate or the actual termination of a Plan pursuant to
Section 4041(a)(2) or 4041A of ERISA, (iv) the institution of proceedings to
terminate or the actual termination of a Plan by the PBGC under Section 4042 of
ERISA, (v) any event or condition that might reasonably constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan, or (vi) the complete or partial withdrawal of the Borrower
or any ERISA Affiliate from a Multiemployer Plan.

“Total Assets” means all assets of the Borrower as shown on its most recent
quarterly or annual audited consolidated balance sheet, as determined in
accordance with GAAP.

“Total Funded Debt” means all Funded Debt of the Borrower and its Subsidiaries,
on a consolidated basis, as determined in accordance with GAAP.

“Trust Preferred Stock” means any trust preferred securities issued by a
subsidiary capital trust established by the Borrower or any of its Subsidiaries
reflected in the consolidated financial statements of the Borrower and its
Subsidiaries, along with any junior subordinated debt obligations of the
Borrower or its Subsidiaries so long as (i) the terms thereof require no
repayments or prepayments and no mandatory redemptions or repurchases, in each
case, prior to at least 91 days after the occurrence of the Maturity Date and
the repayment in full of the Outstanding Credits and all other amounts due under
this Agreement, (ii) such securities are subordinated and junior in right of
payment to all obligations of the Borrower or any of its Subsidiaries for or in
respect of borrowed money and (iii) the obligors in respect of such preferred
securities and subordinated debt have the right to defer interest and dividend
payments on similar terms customary for trust preferred securities and not
materially less favorable to the interests of the Borrower or the Lenders.

“Type” when used with respect to any Advance or Borrowing, refers to the rate of
interest on such Advance or the Advances comprising such Borrowing (either the
Base Rate or the Eurodollar Rate).

“Utilization Fee” has the meaning set forth in the definition of “Applicable
Margin”.

“Voting Stock” means, (i) for any Person that is a corporation, all classes of
the capital stock (or other voting interests) of such Person then outstanding
and normally entitled to vote in the election of its directors or, (ii) for any
Person that is a limited liability company, the membership interests in such
Person then outstanding.

“WEC” means Wisconsin Energy Corporation, a Wisconsin corporation and its
successors and assigns.

SECTION 1.2. Computation of Time Periods.

For purposes of computation of periods of time hereunder, the word “from” means
“from and including” and the words “to” and “until” each mean “to but
excluding.” References in this Agreement to “Articles”, “Sections”, “Schedules”
or “Exhibits” shall be to Articles, Sections, Schedules or Exhibits of or to
this Agreement unless otherwise specifically provided.

 

15

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

SECTION 1.3. Accounting Terms.

Except as otherwise expressly provided herein, all accounting terms used herein
shall be interpreted, and all financial statements and certificates and reports
as to financial matters required to be delivered to the Lenders hereunder shall
be prepared, in accordance with GAAP applied on a consistent basis. All
calculations made for the purposes of determining compliance with this Agreement
shall (except as otherwise expressly provided herein) be made by application of
GAAP applied on a basis consistent with the most recent annual or quarterly
financial statements delivered pursuant to Section 7.1 (or, prior to the
delivery of the first financial statements pursuant to Section 7.1, consistent
with the financial statements described in Section 5.1(e)); provided, however,
if (i) the Borrower shall object to determining such compliance on such basis at
the time of delivery of such financial statements due to any change in GAAP or
the rules promulgated with respect thereto or (ii) the Agent or the Required
Lenders shall so object in writing within 30 days after delivery of such
financial statements, then such calculations shall be made on a basis consistent
with the financial statements most recently delivered by the Borrower to the
Lenders as to which no such objection shall have been made.

ARTICLE II

THE COMMITMENTS AND THE EXTENSIONS OF CREDIT

SECTION 2.1. The Commitments.

Subject to the terms and conditions set forth herein, each Lender severally
agrees to make Advances to the Borrower in Dollars, at any time and from time to
time prior to the Maturity Date, in an amount not to exceed at any time such
Lender’s Commitment, the Fronting Bank agrees to issue Letters of Credit for the
account of the Borrower at any time and from time to time until the fifth
Business Day preceding the Maturity Date in an aggregate stated amount at any
time outstanding not to exceed the LC Commitment Amount, and each Lender agrees
to purchase participations in such Letters of Credit as more fully set forth in
Section 2.8; provided, however, that (i) the aggregate amount of Outstanding
Credits shall not exceed the aggregate Commitments and (ii) with respect to each
individual Lender, such Lender’s pro rata share of Outstanding Credits shall not
exceed such Lender’s Commitment Percentage of the aggregate Commitments. Unless
and until the Borrower has obtained a Long-Term PSCW Approval (and provided the
Agent with a copy thereof), amounts borrowed and repaid hereunder may not be
reborrowed; thereafter, subject to the terms of this Agreement, the Borrower may
borrow, repay and reborrow Advances.

SECTION 2.2. Method of Borrowing.

By no later than 11:00 a.m. (i) on the date of the requested Borrowing that will
comprise Base Rate Advances or (ii) three Business Days prior to the date of the
requested Borrowing that will comprise Eurodollar Advances, the Borrower shall
submit to the Agent a written Notice of Borrowing in the form of Exhibit A
setting forth (A) the amount requested, (B) whether such Advances shall accrue
interest at the Base Rate or the Eurodollar Rate, (C) with respect to Borrowings
that will comprise Eurodollar Advances, the Interest Period applicable thereto,
and (D) certification that the Borrower has complied in all respects with
Section 5.2.

 

16

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

SECTION 2.3. Funding of Borrowings.

(a) Upon receipt of a Notice of Borrowing, the Agent shall promptly inform the
Lenders as to the terms thereof. Each such Lender shall make its Commitment
Percentage of the requested Borrowing available to the Agent by 1:00 p.m. on the
date specified in the Notice of Borrowing by deposit, in Dollars, of immediately
available funds at the principal offices of the Agent in New York, New York or
at such other address as the Agent may designate in writing. The amount of the
requested Borrowing will then be made available to the Borrower by the Agent by
crediting the account of the Borrower on the books of such office of the Agent,
to the extent the amount of such Borrowing is made available to the Agent.

(b) No Lender shall be responsible for the failure or delay by any other Lender
in its obligation to make Advances hereunder; provided, however, that the
failure of any Lender to fulfill its obligations hereunder shall not relieve any
other Lender of its obligations hereunder. Unless the Agent shall have been
notified by any Lender prior to the date of any such Borrowing (in the case of a
Eurodollar Borrowing) or the time of any such Borrowing (in the case of a Base
Rate Borrowing) that such Lender does not intend to make available to the Agent
its portion of the Borrowing to be made on such date, the Agent may assume that
such Lender has made such amount available to the Agent on the date of such
Borrowing, and the Agent in reliance upon such assumption, may (in its sole
discretion but without any obligation to do so) make available to the Borrower a
corresponding amount. If such corresponding amount is not in fact made available
to the Agent, the Agent shall be able to recover such corresponding amount from
such Lender. If such Lender does not pay such corresponding amount forthwith
upon the Agent’s demand therefor, the Agent will promptly notify the Borrower,
and the Borrower shall immediately pay such corresponding amount to the Agent.
The Agent shall also be entitled to recover from the Lender or the Borrower, as
the case may be, interest on such corresponding amount in respect of each day
from the date such corresponding amount was made available by the Agent to the
Borrower to the date such corresponding amount is recovered by the Agent at a
per annum rate equal to, (i) if from the Borrower, the applicable rate for such
Advance pursuant to the Notice of Borrowing and (ii) if from a Lender, the
Federal Funds Rate.

SECTION 2.4. Continuations and Conversions.

The Borrower shall have the option, on any Business Day, to continue existing
Eurodollar Advances for a subsequent Interest Period, to convert Base Rate
Advances into Eurodollar Advances or to convert Eurodollar Advances into Base
Rate Advances; provided, however, that (i) each such continuation or conversion
must be requested by the Borrower pursuant to a written Notice of
Continuation/Conversion, in the form of Exhibit B, in compliance with the terms
set forth below, (ii) except as provided in Section 4.1, Eurodollar Advances may
be continued or converted into Base Rate Advances only on the last day of the
Interest Period applicable hereto, (iii) Eurodollar Advances may not be
continued nor may Base Rate Advances be converted into Eurodollar Advances
during the existence and continuation of a Default or Event of Default and
(iv) any request to extend a Eurodollar Advance that fails to comply with the
terms hereof or any failure to request an extension of a Eurodollar Advance that
fails to

 

17

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

comply with the terms hereof or any failure to request an extension of a
Eurodollar Advance at the end of an Interest Period shall constitute a
conversion to a Base Rate Advance on the last day of the applicable Interest
Period. Each continuation or conversion must be requested by the Borrower no
later than 11:00 a.m. (A) on the date for a requested conversion of a Eurodollar
Advance to a Base Rate Advance or (B) three Business Days prior to the date for
a requested continuation of a Eurodollar Advance or conversion of a Base Rate
Advance to a Eurodollar Advance, in each case pursuant to a written Notice of
Continuation/Conversion submitted to the Agent, which shall set forth
(1) whether the Borrower wishes to continue or convert such Advances and (2) if
the request is to continue a Eurodollar Advance or convert a Base Rate Advance
to a Eurodollar Advance, the Interest Period applicable thereto.

SECTION 2.5. Minimum Amounts.

Each request for a Borrowing or a conversion or continuation hereunder shall be
subject to the following requirements: (i) each Borrowing consisting of
Eurodollar Advances shall be in a minimum of $5,000,000 (and in integral
multiples of $1,000,000 in excess thereof); (ii) each Borrowing consisting of
Base Rate Advances shall be in a minimum amount of the lesser of $500,000 (and
in integral multiples of $500,000 in excess thereof) and the remaining amount
available to be borrowed; and (iii) no more than ten Eurodollar Borrowings shall
be outstanding hereunder at any one time. For the purposes of this Section, all
Eurodollar Borrowings with the same Interest Periods that begin and end on the
same date shall be considered as one Eurodollar Borrowing, but Eurodollar
Borrowings with different Interest Periods, even if they begin on the same date,
shall be considered separate Eurodollar Borrowings.

SECTION 2.6. Reduction of the Commitments.

(a) Optional Reduction of Commitments. Upon at least five Business Days’ notice,
the Borrower shall have the right to permanently terminate or reduce the
aggregate unused amount of the Commitments at any time or from time to time;
provided that each partial reduction shall be in an aggregate amount at least
equal to $5,000,000 and in integral multiples of $1,000,000 above such amount
and no reduction shall be made that would reduce the Commitments to an amount
less than the then Outstanding Credits. Any reduction in (or termination of) the
Commitments shall be permanent and may not be reinstated.

(b) Mandatory Reduction of Commitments. For so long as the Borrower has not
obtained a Long-Term PSCW Approval, upon the repayment or prepayment of any
Borrowing pursuant to Section 3.2 or Section 3.3, the Commitments shall
automatically and permanently be reduced by an amount equal to the aggregate
principal amount of the Borrowing so repaid or prepaid.

SECTION 2.7. Extension of Maturity Date.

(a) Not earlier than 45 days prior to, nor later than 30 days prior to, the
then-effective Maturity Date, the Borrower may request by Requisite Notice (as
defined below) made to the Agent (which shall promptly notify the Lenders) a
one-year extension of the Maturity Date. Such request shall include a
certificate signed by a Responsible Officer (as defined below) stating that
(i) the representations and warranties contained in Article VI are true and
correct on

 

18

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

and as of the date of such certificate and (ii) no Default or Event of Default
has occurred and is continuing. Each Lender shall notify the Agent by Requisite
Notice by the date specified by the Agent (which date shall be a Business Day
and shall not be less than 15 Business Days prior to, nor more than 30 days
prior to, the then Maturity Date) that either (A) such Lender declines to
consent to extending the Maturity Date or (B) such Lender consents to extending
the Maturity Date. Any Lender not responding within the above time period shall
be deemed not to have consented to extending the Maturity Date. The Agent shall,
after receiving the notifications from all of the Lenders or the expiration of
such period, whichever is earlier, notify the Borrower and the Lenders of the
results thereof. The Borrower may request no more than two extensions pursuant
to this Section.

(b) If any Lender declines, or is deemed to have declined, to consent to such
request for extension (a “Declining Lender”), provided that (i) no Default or
Event of Default has occurred and is continuing at such time and (ii) the
Required Lenders are non-Declining Lenders, the Borrower may, at its own expense
(such expense to include any transfer fee payable to the Agent under
Section 11.3(b) and any expense pursuant to Section 4.3) and in its sole
discretion, require such Declining Lender to transfer and assign in whole (but
not in part) without recourse (in accordance with and subject to the terms and
conditions of Section 11.3(b)) all of its interests, rights and obligations
under this Agreement to an Eligible Assignee, which shall assume such assigned
obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that (A) such assignment shall not conflict with any law,
rule or regulation or order of any court or other Governmental Authority and
(B) the assigning Declining Lender shall have received in immediately available
funds the principal of and interest accrued to the date of such payment on the
portion of the Advances hereunder held by such assigning Declining Lender and
all other amounts owed to such assigning Declining Lender hereunder, including
amounts owed pursuant to Sections 4.1 through 4.4.

(c) If the conditions set forth in subsection (b) above have been satisfied, the
Maturity Date shall be extended (solely with respect to the non-Declining
Lenders) to the date that is one year after the then-effective Maturity Date,
effective as of the date to be determined by the Agent and the Borrower (the
“Maturity Extension Decision Date”), and the Agent shall promptly notify the
Lenders thereof. On or prior to the Maturity Extension Decision Date, the
Borrower shall deliver to the Agent, in form and substance satisfactory to the
Agent and the Lenders (i) the resolutions of the Board of Directors of the
Borrower authorizing such extension, certified as in effect as of the Maturity
Extension Decision Date and the related incumbency certificate of the Borrower,
(ii) new or amended promissory notes, if requested by any new or affected
Lender, evidencing the new or revised Commitment of such Lender, (iii) a
certificate of the Borrower stating that on and as of such Maturity Extension
Decision Date, and after giving effect to the extension to be effective on such
date, (A) the representations and warranties set forth in Article VI are true
and correct and (B) no Default or Event of Default is continuing. The Agent
shall distribute an amended Schedule I to this Agreement (which shall thereafter
be incorporated into this Agreement), to reflect any changes in Lenders, the
Commitments and each Lender’s Commitment Percentage.

 

19

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

(d) For purposes of this Section:

(i) “Responsible Officer” means the chairman of the board, chief executive
officer, president, chief financial officer, treasurer, or assistant treasurer
of the Borrower. Any document or certificate hereunder that is signed by a
Responsible Officer shall be conclusively presumed to have been authorized by
all necessary limited liability company action on the part of the Borrower and
such Responsible Officer shall be conclusively presumed to have acted on behalf
of the Borrower.

(ii) “Requisite Notice” means irrevocable written notice to the intended
recipient or irrevocable telephonic notice to the intended recipient,
immediately followed by a written notice to such recipient. Such notices shall
be (i) delivered to such recipient at the address or telephone number specified
on Schedule II or as otherwise designated by such recipient by Requisite Notice
to each other party hereto, and (ii) if made by the Borrower, given or made by a
Responsible Officer. Any written notice delivered shall be delivered as provided
in Section 11.1. Any notice sent by other than hardcopy shall be promptly
confirmed by a telephone call to the recipient and, if requested by the Agent,
by a manually-signed hardcopy thereof.

SECTION 2.8. Letters of Credit.

(a) Subject to the terms and conditions hereof, the Fronting Bank agrees to
issue Letters of Credit from time to time for the account of the Borrower (or to
extend the stated maturity thereof or to modify or amend the terms thereof) for
the purposes set forth in Section 7.9 on not less than five Business Days’ prior
notice thereof by delivery of a Request for Issuance to the Agent (which shall
promptly distribute copies thereof to the Lenders) and the Fronting Bank. Each
Request for Issuance shall specify (i) the date (which shall be a Business Day)
of issuance of such Letter of Credit (or the date of effectiveness of such
extension, modification or amendment) and the stated expiry date thereof (which
shall be no later than one year following the date of such issuance), (ii) the
proposed stated amount of such Letter of Credit, (iii) the name and address of
the beneficiary of such Letter of Credit and (iv) a statement of drawing
conditions applicable to such Letter of Credit, and if such Request for Issuance
relates to an amendment or modification of a Letter of Credit, it shall be
accompanied by the consent of the beneficiary of the Letter of Credit thereto.
Each Request for Issuance shall be irrevocable unless modified or rescinded by
the Borrower not less than two Business Days prior to the proposed date of
issuance (or effectiveness) specified therein. Not later than 12:00 noon (New
York City time) on the proposed date of issuance (or effectiveness) specified in
such Request for Issuance, and upon fulfillment of the applicable conditions
precedent and the other requirements set forth herein, the Fronting Bank shall
issue (or extend, amend or modify) such Letter of Credit and provide notice and
a copy thereof to the Agent, which shall promptly furnish copies thereof to the
Lenders. The Fronting Bank shall provide to the Agent, on a monthly basis, a
list of the amounts and expiration dates of all undrawn Letters of Credit, a
copy of which list the Agent shall furnish to each Lender that requests such
list.

(b) No Letter of Credit shall be requested or issued hereunder if, after the
issuance thereof, (i) the Outstanding Credits would exceed the aggregate
Commitments or (ii) the LC Outstandings would exceed the LC Commitment Amount.

 

20

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

(c) In the event that any Letter of Credit remains outstanding beyond the
fifteenth day prior to the Maturity Date, the Borrower shall either (i) pay to
the Agent an amount equal to 103% of the LC Outstandings on the later of such
date and the date of issuance of such Letter of Credit, which amount the Agent
shall hold in the Cash Collateral Account for the account of the Borrower,
without interest, for the purpose of paying any draft presented, with the
excess, if any, to be returned to the Borrower upon termination or expiration of
such Letter of Credit and payment in full of all amounts due hereunder or
(ii) deliver a back-up letter of credit to the Agent securing the Borrower’s
reimbursement obligations with respect to such Letter of Credit in form and
substance acceptable to the Fronting Bank and the Agent and from a creditworthy
financial institution acceptable to the Agent. While any Letter of Credit is
outstanding, the Agent may not release funds held in the Cash Collateral Account
pursuant to this subsection (c) without the consent of all Lenders.

(d) Each Lender, upon issuance of a Letter of Credit, shall be deemed to have
purchased without recourse a participation from the Fronting Bank in such Letter
of Credit and the rights and obligations arising thereunder and any collateral
relating thereto, in each case in an amount equal to such Lender’s Commitment
Percentage of the obligations under such Letter of Credit, and shall absolutely,
unconditionally and irrevocably assume, as primary obligor and not as surety,
and be obligated to pay to the Fronting Bank therefor and discharge when due,
such Lender’s Commitment Percentage of the obligations arising under such Letter
of Credit. Without limiting the scope and nature of each Lender’s participation
in any Letter of Credit, to the extent that the Fronting Bank has not been
reimbursed as required hereunder or under any such Letter of Credit, each Lender
shall pay to the Fronting Bank its Commitment Percentage of such unreimbursed
drawing in same day funds on the day of notification by the Fronting Bank of an
unreimbursed drawing pursuant to the provisions of subsection (e). The
obligation of each Lender so to reimburse the Fronting Bank shall be absolute
and unconditional and shall not be affected by the occurrence of a Default, an
Event of Default or any other occurrence or event. Any such reimbursement shall
not relieve or otherwise impair the obligation of the Borrower to reimburse the
Fronting Bank under any Letter of Credit, together with interest as hereinafter
provided.

(e) In the event of any drawing under any Letter of Credit, the Fronting Bank
will promptly notify the Borrower. Unless the Borrower shall immediately notify
the Fronting Bank of its intent otherwise to reimburse the Fronting Bank for any
drawing made prior to the Maturity Date, the Borrower shall be deemed to have
requested a Base Rate Advance in the amount of such drawing as provided in
subsection (f), the proceeds of which will be used to satisfy the reimbursement
obligation of the Borrower with respect to such drawing. If, at any time on or
after the Maturity Date, any drawing is made under any Letter of Credit, the
Fronting Bank shall instruct the Agent to withdraw from the Cash Collateral
Account funds in an amount equal to the amount of such drawing, which the Agent
shall transfer to the Fronting Bank in order to reimburse the Fronting Bank for
such drawing. In the case of any drawing made under any Letter of Credit prior
to the Maturity Date, the Borrower shall reimburse the Fronting Bank on the day
such drawing is paid either with the proceeds of an Advance obtained hereunder
or otherwise in same day funds as provided herein. If the Borrower shall fail to
reimburse the Fronting Bank as provided herein, the unreimbursed amount of such
drawing shall bear interest at a per annum rate equal to the Base Rate plus two
percent (2%) per annum. The Borrower’s reimbursement obligations hereunder shall
be absolute and unconditional under all circumstances

 

21

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

irrespective of any rights of set-off, counterclaim or defense to payment that
the applicable account party or the Borrower may claim or have against the
Fronting Bank, the Lenders, the beneficiary of the Letter of Credit drawn upon
or any other Person, including, without limitation, any defense based on any
failure of the applicable account party or the Borrower to receive consideration
or the legality, validity, regularity or unenforceability of the Letter of
Credit. The Fronting Bank will promptly notify the Lenders of the amount of any
unreimbursed drawing and each Lender shall promptly pay to the Fronting Bank, in
immediately available funds, the amount of such Lender’s Commitment Percentage
of such unreimbursed drawing. Such payment shall be made on the day such notice
is received by such Lender from the Fronting Bank if such notice is received at
or before 2:00 p.m., otherwise such payment shall be made at or before 12:00
noon on the Business Day next succeeding the day such notice is received. If
such Lender does not pay such amount to the Fronting Bank in full upon such
request, such Lender shall, on demand, pay to the Fronting Bank interest on the
unpaid amount during the period from the date the Lender received the notice
regarding the unreimbursed drawing until the Lender pays such amount to the
Fronting Bank in full at a rate per annum equal to, if paid within two Business
Days of the date of drawing, the Federal Funds Rate and thereafter at a rate
equal to the Base Rate. Each Lender’s obligation to make such payment to the
Fronting Bank, and the right of the Fronting Bank to receive the same, shall be
absolute and unconditional, shall not be affected by any circumstance whatsoever
and without regard to the termination of this Agreement or the Commitments, the
existence of a Default or Event of Default or the acceleration of the
obligations hereunder and shall be made without any offset, abatement,
withholding or reduction whatsoever. Simultaneously with the making of each such
payment by a Lender to the Fronting Bank, such Lender shall, automatically and
without any further action on the part of the Fronting Bank or such Lender,
acquire a participation in an amount equal to such payment (excluding the
portion of such payment constituting interest owing to the Fronting Bank) in the
related unreimbursed drawing portion of the LC Outstandings and in the interest
thereon, and shall have a claim against the Borrower with respect thereto.

(f) On any day on which the Borrower shall have requested, or been deemed to
have requested, a Borrowing to reimburse a drawing under a Letter of Credit, the
Fronting Bank shall give notice to the Lenders that a Borrowing has been
requested or deemed requested in connection with a drawing under a Letter of
Credit, in which case an Advance comprised solely of Base Rate Advances (each
such borrowing, a “Mandatory Borrowing”) shall be immediately made by all
Lenders (without giving effect to any termination of the Commitments pursuant to
Section 9.1) pro rata based on each Lender’s Commitment Percentage, and the
proceeds thereof shall be paid directly to the Fronting Bank for application to
the applicable LC Outstandings. Each Lender hereby irrevocably agrees to make
such Base Rate Advances upon any such request or deemed request on account of
each such Mandatory Borrowing in the amount and in the manner specified in the
preceding sentence and on the same such date notwithstanding (i) the amount of
Mandatory Borrowing may not comply with the minimum amount for Borrowings
otherwise required hereunder, (ii) whether any conditions specified in Article
III are then satisfied, (iii) whether a Default or Event of Default then exists,
(iv) failure of any such request or deemed request for a Borrowing to be made by
the time otherwise required hereunder, (v) the date of such Mandatory Borrowing,
or (vi) any reduction in or any termination of the Commitments. Such funding of
Borrowings shall be made on the day notice of such Mandatory Borrowing is
received by each Lender from the Fronting Bank if such notice is received at or
before 2:00 p.m., otherwise such payment shall be made at or before 12:00 noon
on the Business

 

22

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

Day next succeeding the day such notice is received. In the event that any
Mandatory Borrowing cannot for any reason be made on the date otherwise required
above (including, without limitation, as a result of the commencement of a
proceeding under any applicable bankruptcy law with respect to the Borrower),
then each Lender hereby agrees that it shall forthwith fund (as of the date the
Mandatory Borrowing would otherwise have occurred, but adjusted for any payments
received from the Borrower on or after such date and prior to such purchase) its
Commitment Percentage of the outstanding LC Outstandings; provided, further,
that in the event any Lender shall fail to fund its Commitment Percentage on the
day the Mandatory Borrowing would otherwise have occurred, then the amount of
such Lender’s unfunded Commitment Percentage therein shall bear interest payable
to the Fronting Bank upon demand, if paid within two Business Days of such date,
at the Federal Funds Rate, and thereafter, at the Base Rate.

(g) The payment obligations of each Lender under subsection (d) and of the
Borrower under this Agreement in respect of any payment under any Letter of
Credit shall be unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of this Agreement under all circumstances, including,
without limitation, the following circumstances:

(i) any lack of validity or enforceability of any Credit Document or any other
agreement or instrument relating thereto or to such Letter of Credit;

(ii) any amendment or waiver of, or any consent to departure from, the terms of
any Credit Document or such Letter of Credit;

(iii) the existence of any claim, set-off, defense or other right that the
Borrower may have at any time against any beneficiary, or any transferee, of
such Letter of Credit (or any persons for whom any such beneficiary or any such
transferee may be acting), the Fronting Bank, or any other person, whether in
connection with any Credit Document, the transactions contemplated hereby or by
such Letter of Credit, or any unrelated transaction;

(iv) any statement or any other document presented under such Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect;

(v) payment in good faith by the Fronting Bank under the Letter of Credit issued
by the Fronting Bank against presentation of a draft or certificate that does
not comply with the terms of such Letter of Credit; or

(vi) any other circumstance or happening whatsoever, whether or not similar to
any of the foregoing.

(h) The Borrower assumes all risks of the acts and omissions of any beneficiary
or transferee of any Letter of Credit. Neither the Fronting Bank, the Lenders
nor any of their respective officers, directors, employees, agents or Affiliates
shall be liable or responsible for (i) the use that may be made of such Letter
of Credit or any acts or omissions of any beneficiary or transferee thereof in
connection therewith, (ii) the validity, sufficiency or genuineness of
documents, or of any endorsement thereon, even if such documents should prove to
be in any or all respects invalid, insufficient, fraudulent or forged,
(iii) payment by the Fronting Bank against

 

23

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

presentation of documents that do not comply with the terms of such Letter of
Credit, including failure of any documents to bear any reference or adequate
reference to such Letter of Credit, or (iv) any other circumstances whatsoever
in making or failing to make payment under such Letter of Credit, except that,
and notwithstanding subsection (f) and the foregoing clauses (i) through (iii),
the Borrower and each Lender shall have the right to bring suit against the
Fronting Bank, and the Fronting Bank shall be liable to the Borrower and any
Lender, to the extent of any direct, as opposed to consequential, damages
suffered by the Borrower or such Lender that the Borrower or such Lender proves
were caused by the Fronting Bank’s willful misconduct or gross negligence,
including, in the case of the Borrower, the Fronting Bank’s willful failure to
make timely payment under such Letter of Credit following the presentation to it
by the beneficiary thereof of a draft and accompanying certificate(s) that
strictly comply with the terms and conditions of such Letter of Credit. In
furtherance and not in limitation of the foregoing, the Fronting Bank may accept
sight drafts and accompanying certificates presented under the Letter of Credit
issued by the Fronting Bank that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary, and payment against such documents shall not
constitute willful misconduct or gross negligence by the Fronting Bank.
Notwithstanding the foregoing, no Lender shall be obligated to indemnify the
Borrower for damages caused by the Fronting Bank’s willful misconduct or gross
negligence.

ARTICLE III

PAYMENTS

SECTION 3.1. Interest.

(a) Interest Rate.

(i) All Base Rate Advances shall accrue interest at the Base Rate.

(ii) All Eurodollar Advances shall accrue interest at the Eurodollar Rate
applicable to such Eurodollar Advance.

(b) Interest Payments. Interest on Advances shall be due and payable in arrears
on each Interest Payment Date.

SECTION 3.2. Prepayments.

(a) Optional Prepayments. The Borrower shall have the right to prepay Advances
in whole or in part from time to time without premium or penalty; provided,
however, that (i) Eurodollar Advances may be prepaid only on two Business Days’
prior written notice to the Agent, and any prepayment of Eurodollar Advances
will be subject to Section 4.3, and (ii) each partial prepayment of Advances
shall be in the minimum principal amount of $1,000,000 and in increments of
$1,000,000 in excess thereof; provided that if less than $1,000,000 would remain
outstanding after such prepayment, such prepayment shall be in the amount of the
entire outstanding principal amount of the Advances. Amounts prepaid hereunder
shall be applied as the Borrower may elect; provided that if the Borrower fails
to specify an optional prepayment then such prepayment shall be applied first to
Base Rate Advances, and then to Eurodollar Advances in direct order of Interest
Period maturities.

 

24

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

(b) Mandatory Prepayments. If at any time the Outstanding Credits exceed the
aggregate Commitments, the Borrower shall immediately make a principal payment
to the Agent and/or deposit funds in the Cash Collateral Account in respect of
LC Outstandings pursuant to Section 9.2(d) for the ratable accounts of the
Lenders as shall be necessary in order that the Outstanding Credits (after
giving effect to such prepayment) minus the amount held in the Cash Collateral
Account after giving effect to such cash collateralization will be less than or
equal to the aggregate Commitments. Any payments made under this subsection
(b) shall be subject to Section 4.3 and, in the case of principal payments,
shall be applied first to Base Rate Advances, and then to Eurodollar Advances in
direct order of Interest Period maturities.

SECTION 3.3. Payment in full at Maturity.

On the Maturity Date, the entire outstanding principal balance of all Advances,
together with accrued but unpaid interest and all other sums owing under this
Agreement, shall be due and payable in full; provided, however, that until the
Borrower obtains a Long-Term PSCW Approval (and provides the Agent with a copy
thereof), the outstanding principal balance of each Advance, together with
accrued but unpaid interest thereon, shall be due and payable in full on the
earlier of (i) the date that is 364 days following the date on which such
Advance is made and (ii) the Maturity Date.

SECTION 3.4. Fees.

(a) Facility Fee. In consideration of the Commitments being made available by
the Lenders hereunder, the Borrower agrees to pay to the Agent, for the pro rata
benefit of each Lender, a facility fee at a rate per annum equal to the Facility
Fee Percentage in effect from time to time commencing on the date hereof, on the
Commitment from time to time of such Lender (regardless of usage), quarterly in
arrears, on the last day of each March, June, September and December, on the
Maturity Date, and (if applicable) on the date after the Maturity Date on which
all Advances and other amounts payable by the Borrower hereunder are paid in
full (without regard to any termination of the Commitments on the Maturity
Date).

(b) LC Fee. The Borrower agrees to pay the Agent for the account of the Fronting
Bank an issuance fee (an “Issuance Fee”) and such other charges as are
separately agreed upon with the Fronting Bank, and agrees to pay to the Agent
for the account of the Lenders a fee (the “LC Fee”) on the face amount of each
Letter of Credit issued by the Fronting Bank calculated at a rate per annum at
all times equal to the Applicable Margin in effect for Eurodollar Rate Advances,
in each case computed on the basis of the actual number of days that each Letter
of Credit is outstanding over a year of 360 days, payable quarterly in arrears
on each March 31, June 30, September 30 and December 31, and on the date that
such Letter of Credit expires or is drawn in full.

(c) Administrative Fees. The Borrower agrees to pay such other fees as agreed to
by the Borrower in the Fee Letters.

SECTION 3.5. Place and Manner of Payments.

All payments of principal, interest, fees, expenses and other amounts to be made
by the Borrower under this Agreement shall be received without setoff, deduction
or counterclaim not

 

25

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

later than 2:00 p.m. on the date when due in Dollars and in immediately
available funds by the Agent at its offices in New York, New York. The Borrower
shall, at the time it makes any payment under this Agreement, specify to the
Agent the Outstanding Credits, fees or other amounts payable by the Borrower
hereunder to which such payment is to be applied (and in the event that it fails
to specify, or if such application would be inconsistent with the terms hereof,
the Agent shall distribute such payment to the Lenders in such manner as it
reasonably determines in its sole discretion).

SECTION 3.6. Pro Rata Treatment.

Except to the extent otherwise provided herein, all Borrowings, each payment or
prepayment of principal of any Advance, each payment of interest on the
Advances, each payment of facility fees, LC Fees, each reduction of the
Commitments, and each conversion or continuation of any Advance, shall be
allocated pro rata among the Lenders in accordance with the respective
Commitment Percentages; provided that, if any Lender shall have failed to fund
its applicable pro rata share of any Borrowing, then any amount to which such
Lender would otherwise be entitled pursuant to this Section 3.6 shall instead be
payable to the Agent until the share of such Borrowing not funded by such Lender
has been repaid; and provided, further, that in the event any amount paid to any
Lender pursuant to this Section 3.6 is rescinded or must otherwise be returned
by the Agent, each Lender shall, upon the request of the Agent, repay to the
Agent the amount so paid to such Lender, with interest for the period commencing
on the date such payment is returned by the Agent until the date the Agent
receives such repayment at a rate per annum equal to, during the period to but
excluding the date two Business Days after such request, the Federal Funds Rate,
and thereafter, the Base Rate plus two percent per annum.

SECTION 3.7. Computations of Interest and Fees.

(a) Except for Base Rate Advances bearing interest determined under clause
(i) of the definition of Base Rate, on which interest shall be computed on the
basis of a 365 or 366 day year, as the case may be, all computations of interest
and fees hereunder shall be made on the basis of the actual number of days
elapsed over a year of 360 days.

(b) It is the intent of the Lenders and the Borrower to conform to and contract
in strict compliance with applicable usury law from time to time in effect. All
agreements between the Lenders and the Borrower are hereby limited by the
provisions of this subsection, which shall override and control all such
agreements, whether now existing or hereafter arising and whether written or
oral. In no way, nor in any event or contingency (including but not limited to
prepayment or acceleration of the maturity of any obligation), shall the
interest taken, reserved, contracted for, charged, or received under this
Agreement or otherwise exceed the maximum nonusurious amount permissible under
applicable law. If, from any possible construction of any of the Credit
Documents or any other document, interest would otherwise be payable in excess
of the maximum nonusurious amount, any such construction shall be subject to the
provisions of this subsection and such documents shall be automatically reduced
to the maximum nonusurious amount permitted under applicable law, without the
necessity of execution of any amendment or new document. If any Lender shall
ever receive anything of value that is characterized as interest on the Advances
under applicable law and that would, apart from this provision, be in excess of
the maximum lawful amount, an amount equal to the amount that would have been

 

26

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

excessive interest shall, without penalty, be applied to the reduction of the
principal amount owing on the Advances and not to the payment of interest, or
refunded to the Borrower or the other payor thereof if and to the extent such
amount that would have been excessive exceeds such unpaid principal amount of
the Advances. The right to demand payment of the Advances or any other
indebtedness evidenced by any of the Credit Documents does not include the right
to receive any interest that has not otherwise accrued on the date of such
demand, and the Lenders do not intend to charge or receive any unearned interest
in the event of such demand. All interest paid or agreed to be paid to the
Lenders with respect to the Advances shall, to the extent permitted by
applicable law, be amortized, prorated, allocated, and spread throughout the
full stated term (including any renewal or extension) of the Advances so that
the amount of interest on account of such indebtedness does not exceed the
maximum nonusurious amount permitted by applicable law.

SECTION 3.8. Sharing of Payments.

Each Lender agrees that, in the event that any Lender shall obtain payment in
respect of any Extension of Credit or any other obligation owing to such Lender
under this Agreement through the exercise of a right of set-off, banker’s lien,
counterclaim or otherwise (including, but not limited to, pursuant to the
Bankruptcy Code) in excess of its pro rata share as provided for in this
Agreement, such Lender shall promptly purchase from the other Lenders a
participation in such Extension of Credit and other obligations, in such amounts
and with such other adjustments from time to time, as shall be equitable in
order that all Lenders share such payment in accordance with their respective
ratable shares as provided for in this Agreement. Each Lender further agrees
that if a payment to a Lender (which is obtained by such Lender through the
exercise of a right of set-off, banker’s lien, counterclaim or otherwise) shall
be rescinded or must otherwise be restored, each Lender that shall have shared
the benefit of such payment shall, by repurchase of a participation theretofore
sold, return its share of that benefit to each Lender whose payment shall have
been rescinded or otherwise restored. The Borrower agrees that any Lender so
purchasing such a participation may, to the fullest extent permitted by law,
exercise all rights of payment, including set-off, banker’s lien or
counterclaim, with respect to such participation as fully as if such Lender were
a holder of such Advance or other obligation in the amount of such
participation. Except as otherwise expressly provided in this Agreement, if any
Lender shall fail to remit to the Agent or any other Lender an amount payable by
such Lender to the Agent or such other Lender pursuant to this Agreement on the
date when such amount is due, such payments shall accrue interest thereon, for
each day from the date such amount is due until the day such amount is paid to
the Agent or such other Lender, at a rate per annum equal to the Federal Funds
Rate. If under any applicable bankruptcy, insolvency or other similar law, any
Lender receives a secured claim in lieu of a setoff to which this Section 3.8
applies, such Lender shall, to the extent practicable, exercise its rights in
respect of such secured claim in a manner consistent with the rights of the
Lenders under this Section 3.8 to share in the benefits of any recovery on such
secured claim.

SECTION 3.9. Additional Interest on Advances.

The Borrower agrees to pay to each Lender, so long as such Lender shall be
required under regulations of the Board of Governors of the Federal Reserve
System to maintain reserves with respect to liabilities or assets consisting of
or including Eurocurrency Liabilities, additional

 

27

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

interest on the unpaid principal amount of each Eurodollar Advance of such
Lender, from the date of such Advance until such principal amount is paid in
full, at an interest rate per annum equal at all times to the remainder obtained
by subtracting (i) the Eurodollar Rate for the Interest Period for such Advance
from (ii) the rate obtained by dividing such Eurodollar Rate by a percentage
equal to 100% minus the Eurodollar Rate Reserve Percentage of such Lender for
such Interest Period, payable on each date on which interest is payable on such
Advance. Such additional interest shall be determined by such Lender and
notified to the Borrower through the Agent, and such determination shall be
conclusive and binding for all purposes, absent manifest error.

SECTION 3.10. Evidence of Debt.

(a) Each Lender shall maintain an account or accounts evidencing each Advance
made by such Lender to the Borrower from time to time, including the amounts of
principal and interest payable and paid to such Lender from time to time under
this Agreement. Each Lender will make reasonable efforts to maintain the
accuracy of its account or accounts and to promptly update its account or
accounts from time to time, as necessary.

(b) The Agent shall maintain the Register pursuant to Section 11.3(c), and a
subaccount for each Lender, in which Register and subaccounts (taken together)
shall be recorded (i) the amount, type and Interest Period of each such Advance
hereunder, (ii) the amount of any principal or interest due and payable or to
become due and payable to each Lender hereunder and (iii) the amount of any sum
received by the Agent hereunder from or for the account of the Borrower and each
Lender’s share thereof. The Agent will make reasonable efforts to maintain the
accuracy of the subaccounts referred to in the preceding sentence and to
promptly update such subaccounts from time to time, as necessary.

(c) The entries made in the accounts, Register and subaccounts maintained
pursuant to subsection (b) (and, if consistent with the entries of the Agent,
subsection (a)) shall be prima facie evidence of the existence and amounts of
the obligations of the Borrower therein recorded; provided, however, that the
failure of any Lender or the Agent to maintain any such account, such Register
or such subaccount, as applicable, or any error therein, shall not in any manner
affect the obligation of the Borrower to repay the Advances made by such Lender
in accordance with the terms hereof.

(d) Any Lender may request that its Advances be evidenced by a promissory note.
In such event, the Borrower shall prepare, execute and deliver to such Lender a
promissory note, in a form acceptable to the Agent, payable to the order of such
Lender. Thereafter, the Advances evidenced by such promissory note and interest
thereon shall at all times (including after any assignment pursuant to
Section 11.3) be represented by one or more promissory notes payable to the
order of the payee named therein or any assignee pursuant to Section 11.3,
except to the extent that any such Lender or assignee subsequently returns any
such promissory note for cancellation and requests that such Advances once again
be evidenced as described in subsections (a) and (b) above.

 

28

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

ARTICLE IV

ADDITIONAL PROVISIONS REGARDING ADVANCES

SECTION 4.1. Eurodollar Borrowing Provisions.

(a) Unavailability. In the event that the Agent shall have determined in good
faith (i) that Dollar deposits in the principal amounts requested with respect
to a Eurodollar Borrowing are not generally available in the London interbank
Eurodollar market or (ii) that reasonable means do not exist for ascertaining
the Eurodollar Rate, the Agent shall, as soon as practicable thereafter, give
notice of such determination to the Borrower and the Lenders. In the event of
any such determination under clause (i) or (ii) above, until the Agent shall
have advised the Borrower and the Lenders that the circumstances giving rise to
such notice no longer exist, (A) any request by the Borrower for Eurodollar
Borrowings shall be deemed to be a request for Base Rate Borrowings, (B) any
request by the Borrower for conversion into or continuation of Eurodollar
Borrowings shall be deemed to be a request for conversion into or continuation
of Base Rate Borrowings and (C) any Borrowings that were to be converted or
continued as Eurodollar Borrowings on the first day of an Interest Period shall
be converted to or continued as Base Rate Borrowings.

(b) Change in Legality. Notwithstanding any other provision herein, if any
change, after the date hereof, in any law or regulation (including the
introduction of any new law or regulation) or in the interpretation thereof by
any Governmental Authority charged with the administration or interpretation
thereof shall make it unlawful for any Lender to make or maintain any Eurodollar
Advance or to give effect to its obligations as contemplated hereby with respect
to any Eurodollar Advance, then, by written notice to the Borrower and to the
Agent, such Lender may:

(i) declare that Eurodollar Advances, and conversions to or continuations of
Eurodollar Advances, will not thereafter be made by such Lender hereunder,
whereupon any request by the Borrower for, or for conversion into or
continuation of, Eurodollar Borrowings shall, as to such Lender only, be deemed
a request for, or for conversion into or continuation of, Base Rate Borrowings,
unless such declaration shall be subsequently withdrawn; and

(ii) require that all outstanding Eurodollar Advances made by it be converted to
Base Rate Advances in which event all such Eurodollar Advances shall be
automatically converted to Base Rate Advances.

In the event any Lender shall exercise its rights under clause (i) or
(ii) above, all payments and prepayments of principal that would otherwise have
been applied to repay the Eurodollar Advances that would have been made by such
Lender or the converted Eurodollar Advances of such Lender shall instead be
applied to repay the Base Rate Advances made by such Lenders in lieu of, or
resulting from the conversion of, such Eurodollar Advances.

(c) Requirements of Law. If at any time a Lender shall incur increased costs or
reductions in the amounts received or receivable hereunder with respect to the
making, the commitment to make or the maintaining of any Eurodollar Advance
because of (i) any change,

 

29

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

after the date hereof, in any applicable law, governmental rule, regulation,
guideline or order (or in the interpretation or administration thereof and
including the introduction of any new law or governmental rule, regulation,
guideline or such order) including, without limitation, the imposition,
modification or deemed applicability of any reserves, deposits or similar
requirements (such as, for example, but not limited to, a change in official
reserve requirements, but, in all events, excluding reserves required under
Regulation D to the extent included in the computation of additional interest
under Section 3.9) or (ii) other circumstances affecting the London interbank
Eurodollar market, then the Borrower shall pay to such Lender promptly upon
written demand therefor, such additional amounts (in the form of an increased
rate of, or a different method of calculating, interest or otherwise as such
Lender may determine in its sole discretion) as may be required to compensate
such Lender for such increased costs or reductions in amounts receivable
hereunder.

Each determination and calculation made by a Lender under this Section 4.1
shall, absent manifest error, be binding and conclusive on the parties hereto.
Any conversions of Eurodollar Advances made pursuant to this Section 4.1 shall
subject the Borrower to the payments required by Section 4.3. This Section shall
survive termination of this Agreement and the other Credit Documents and payment
of the Advances and all other amounts payable hereunder.

SECTION 4.2. Capital Adequacy.

If any Lender has determined that the adoption or effectiveness, after the date
hereof, of any applicable law, rule or regulation regarding capital adequacy, or
any change therein (after the date hereof), 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 such Lender (or its parent corporation) with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on such Lender’s (or parent corporation’s)
capital or assets as a consequence of its commitments or obligations hereunder
to a level below that which such Lender (or its parent corporation) could have
achieved but for such adoption, effectiveness, change or compliance (taking into
consideration such Lender’s (or parent corporation’s) policies with respect to
capital adequacy), then, upon notice from such Lender, the Borrower shall pay to
such Lender such additional amount or amounts as will compensate such Lender for
such reduction. Each determination by any such Lender of amounts owing under
this Section 4.2 shall, absent manifest error, be conclusive and binding on the
parties hereto. This Section shall survive termination of this Agreement and the
other Credit Documents and payment of the Advances and all other amounts payable
hereunder.

SECTION 4.3. Compensation.

The Borrower promises to indemnify each Lender and to hold each Lender harmless
from any loss or expense that such Lender may sustain or incur as a consequence
of (i) default by the Borrower in making a borrowing of, conversion into or
continuation of Eurodollar Advances after the Borrower has given a notice
requesting the same in accordance with the provisions of this Agreement,
(ii) default by the Borrower in making any prepayment of a Eurodollar Advance
after the Borrower has given a notice thereof in accordance with the provisions
of this

 

30

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

Agreement, (iii) the making of a prepayment of Eurodollar Advances on a day that
is not the last day of an Interest Period with respect thereto and (iv) the
payment, continuation or conversion of a Eurodollar Advance on a day that is not
the last day of the Interest Period applicable thereto or the failure to repay a
Eurodollar Advance when required by the terms of this Agreement. Such
indemnification may include such additional amount or amounts as will compensate
such Lender for such loss or expense actually sustained or incurred by such
Lender. The agreements in this Section shall survive the termination of this
Agreement and the payment of the Advances and all other amounts payable
hereunder.

SECTION 4.4. Taxes.

(a) Except as provided below in this Section 4.4, all payments made by the
Borrower under this Agreement shall be made free and clear of, and without
deduction or withholding for or on account of, any present or future income,
stamp or other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or assessed
by any court or governmental body, agency or other official, excluding taxes
measured by or imposed upon the net income of any Lender or its applicable
lending office, or any branch or affiliate thereof, and all franchise taxes,
branch taxes, taxes on doing business or taxes on the capital or net worth of
any Lender or its applicable lending office, or any branch or affiliate thereof,
in each case imposed in lieu of net income taxes (i) by the jurisdiction under
the laws of which such Lender, applicable lending office, branch or affiliate is
organized or is located, or in which its principal executive office is located,
or any nation within which such jurisdiction is located or any political
subdivision thereof or (ii) by reason of any connection between the jurisdiction
imposing such tax and such Lender, applicable lending office, branch or
affiliate other than a connection arising solely from such Lender having
executed, delivered or performed its obligations, or received payment under or
enforced, this Agreement. If any such non-excluded taxes, levies, imposts,
duties, charges, fees, deductions or withholdings (“Non-Excluded Taxes”) are
required to be withheld from any amounts payable to an Agent or any Lender
hereunder, (A) the amounts so payable to the Agent or such Lender shall be
increased to the extent necessary to yield to the Agent or such Lender (after
payment of all Non-Excluded Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in this Agreement and any
promissory notes, provided, however, that the Borrower shall be entitled to
deduct and withhold any Non-Excluded Taxes and shall not be required to increase
any such amounts payable to any Lender that is not organized under the laws of
the United States of America or a state thereof if such Lender fails to comply
with the requirements of subsection (b) whenever any Non-Excluded Taxes are
payable by the Borrower, and (B) as promptly as possible after requested, the
Borrower shall send to the Agent for its own account or for the account of such
Lender, as the case may be, a certified copy of an original official receipt
received by the Borrower showing payment thereof. If the Borrower fails to pay
any Non-Excluded Taxes when due to the appropriate taxing authority or fails to
remit to the Agent the required receipts or other required documentary evidence,
the Borrower shall indemnify the Agent and any Lender for any incremental
Non-Excluded Taxes, interest or penalties that may become payable by the Agent
or any Lender as a result of any such failure. The agreements in this
Section shall survive the termination of this Agreement and the payment of the
Borrowings and all other amounts payable hereunder.

 

31

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

(b) Each Lender that is not incorporated under the laws of the United States of
America or a state thereof shall:

(i) (A) on or before the date of any payment by the Borrower under this
Agreement to such Lender, deliver to the Borrower and the Agent (x) two duly
completed copies of United States Internal Revenue Service Form W-8BEN or
W-8ECI, or successor applicable form, as the case may be, certifying that it is
entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes and (y) an Internal
Revenue Service Form W-8 or W-9, or successor applicable form, as the case may
be, certifying that it is entitled to an exemption from United States backup
withholding tax; (B) deliver to the Borrower and the Agent two further copies of
any such form or certification on or before the date that any such form or
certification expires or becomes obsolete and after the occurrence of any event
requiring a change in the most recent form previously delivered by it to the
Borrower; and (C) obtain such extensions of time for filing and complete such
forms or certifications as may reasonably be requested by the Borrower or the
Agent; or

(ii) in the case of any such Lender that is not a “bank” within the meaning of
Section 881(c)(3)(A) of the Internal Revenue Code, (A) represent to the Borrower
(for the benefit of the Borrower and the Agent) that it is not a bank within the
meaning of Section 88l(c)(3)(A) of the Internal Revenue Code, (B) agree to
furnish to the Borrower, on or before the date of any payment by the Borrower,
with a copy to the Agent, two accurate and complete original signed copies of
Internal Revenue Service Form W-8, or successor applicable form certifying to
such Lender’s legal entitlement at the date of such certificate to an exemption
from U.S. withholding tax under the provisions of Section 881(c) of the Internal
Revenue Code with respect to payments to be made under this Agreement (and to
deliver to the Borrower and the Agent two further copies of such form on or
before the date it expires or becomes obsolete and after the occurrence of any
event requiring a change in the most recently provided form and, if necessary,
obtain any extensions of time reasonably requested by the Borrower or the Agent
for filing and completing such forms), and (C) agree, to the extent legally
entitled to do so, upon reasonable request by the Borrower, to provide to the
Borrower (for the benefit of the Borrower and the Agent) such other forms as may
be reasonably required in order to establish the legal entitlement of such
Lender to an exemption from withholding with respect to payments under this
Agreement.

Notwithstanding the above, if any change in treaty, law or regulation has
occurred after the date such Person becomes a Lender hereunder which renders all
such forms inapplicable or that would prevent such Lender from duly completing
and delivering any such form with respect to it and such Lender so advises the
Borrower and the Agent, then such Lender shall be exempt from such requirements.
Each Person that shall become a Lender or a participant of a Lender pursuant to
Section 11.3 shall, upon the effectiveness of the related transfer, be required
to provide all of the forms, certifications and statements required pursuant to
this subsection (b); provided that in the case of a participant of a Lender, the
obligations of such participant of a Lender pursuant to this subsection
(b) shall be determined as if the participant of a Lender were a Lender except
that such participant of a Lender shall furnish all such required forms,
certifications and statements to the Lender from which the related participation
shall have been purchased.

 

32

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

SECTION 4.5. Replacement of Lenders.

The Agent and each Lender shall use reasonable efforts to avoid or mitigate any
increased cost or suspension of the availability of an interest rate under
Sections 4.1 through 4.4 above to the greatest extent practicable (including
transferring the Advances to another lending office of Affiliate of a Lender)
unless, in the opinion of the Agent or such Lender, such efforts would be likely
to have an adverse effect upon it. In the event a Lender makes a request to the
Borrower for additional payments in accordance with Section 4.1, 4.2 or 4.4,
then, provided that no Default or Event of Default has occurred and is
continuing at such time, the Borrower may, at its own expense (such expense to
include any transfer fee payable to the Agent under Section 11.3(b) and any
expense pursuant to Section 4) and in its sole discretion, require such Lender
to transfer and assign in whole (but not in part), without recourse (in
accordance with and subject to the terms and conditions of Section 11.3(b)), all
of its interests, rights and obligations under this Agreement to an Eligible
Assignee, which shall assume such assigned obligations (which assignee may be
another Lender, if a Lender accepts such assignment); provided that (i) such
assignment shall not conflict with any law, rule or regulation or order of any
court or other Governmental Authority and (ii) the Borrower or such assignee
shall have paid to the assigning Lender in immediately available funds the
principal of and interest accrued to the date of such payment on the portion of
the Advances hereunder held by such assigning Lender and all other amounts owed
to such assigning Lender hereunder, including amounts owed pursuant to
Sections 4.1 through 4.4.

ARTICLE V

CONDITIONS PRECEDENT

SECTION 5.1. Conditions Precedent to the Effective Date and the Obligations of
the Lenders and Fronting Bank.

The obligations of the Lenders and the Fronting Bank hereunder are subject to
the following conditions precedent:

(a) Executed Credit Documents. The Agent shall have received (i) counterparts of
this Agreement, duly executed by the Agent, the Fronting Bank, the Borrower and
the Lenders and (ii) a promissory note payable to each Lender that has requested
one pursuant to Section 3.10(d), duly executed by the Borrower.

(b) Termination of Revolving Credit Agreement. The Agent shall have received
evidence satisfactory to the Agent that the Credit Agreement, dated as of
June 23, 2004, among the Borrower, the lenders party thereto, Citibank, N.A., as
administrative agent, and U.S. Bank National Association, as fronting bank, has
been terminated and all obligations of the Borrower thereunder have been paid in
full.

 

33

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

(c) Limited Liability Company Documents. The Agent shall have received the
following, in form and substance satisfactory to the Agent, each dated the same
date, except as provided otherwise below:

(i) Organizational Documents. Copies of the articles of organization or other
organizational documents of the Borrower certified to be true and complete as of
a recent date by the appropriate Governmental Authority of the state or other
jurisdiction of its organization and certified by a secretary or assistant
secretary of the Borrower to be true and correct as of such date.

(ii) Operating Agreement. A copy of the operating agreement of the Borrower
certified by a secretary or assistant secretary of the Borrower to be true and
correct as of such date.

(iii) Resolutions. Copies of resolutions of the Board of Directors of the
Borrower approving and adopting the Credit Documents to which it is a party, the
transactions contemplated therein and authorizing execution and delivery
thereof, certified by a secretary or assistant secretary of the Borrower to be
true and correct and in force and effect as of such date.

(iv) Good Standing. Copies of (A) certificates of good standing, existence or
its equivalent with respect to the Borrower certified as of a recent date by the
appropriate Governmental Authorities of the state or other jurisdiction of
organization and each other jurisdiction in which the failure so to qualify and
be in good standing would have a Material Adverse Effect and (B) to the extent
available, a certificate indicating payment of all corporate or business
franchise taxes certified as of a recent date by the appropriate Governmental
Authorities of the state or other jurisdiction of organization and each other
jurisdiction in which the failure to pay such franchise taxes would have a
Material Adverse Effect.

(v) Incumbency. An incumbency certificate of the Borrower certified by a
secretary or assistant secretary of the Borrower to be true and correct as of
such date.

(vi) Officer’s Certificates. The Agent shall have received a certificate or
certificates executed by the treasurer or assistant treasurer of the Borrower as
of such date stating that (i) the Borrower is in compliance with all existing
material financial obligations, (ii) except as disclosed in the Borrower’s
Annual Report on its Form 10-K for the year ended December 31, 2005 and in
subsequent filings under the Exchange Act made prior to the date of this
Agreement, no action, suit, investigation or proceeding is pending or, to his
knowledge, threatened in any court or before any arbitrator or governmental
instrumentality that purports to affect the Borrower or any transaction
contemplated by the Credit Documents, if such action, suit, investigation or
proceeding would have or would be reasonably expected to have a Material Adverse
Effect and (iii) immediately after giving effect to this Agreement, the other
Credit Documents and all the transactions contemplated therein to occur on such
date, (A) no Default or Event of Default shall have occurred and be continuing,
(B) all representations and warranties contained herein and in the other Credit
Documents, are true and correct in all material respects on and as of the date
made, (C) the Borrower is in compliance with the financial covenant set forth in
Section 7.2 and (D) the Borrower is Solvent.

 

34

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

(d) Opinion of Counsel. The Agent shall have received an opinion, or opinions,
from legal counsel to the Borrower addressed to the Agent, the Fronting Bank and
the Lenders and dated as of the date hereof, in each case satisfactory in form
and substance to the Agent.

(e) Financial Statements. The Lenders and the Fronting Bank shall have received
the audited financial statements of the Borrower and its consolidated
subsidiaries, for the fiscal year ended December 31, 2005, including balance
sheets and income and cash flow statements, audited by independent public
accountants of recognized standing and prepared in accordance with GAAP.

(f) Fees and Expenses. The Borrower shall have paid all fees and expenses owed
by it to the Lenders, the Fronting Bank and the Agent on or prior to the date of
this Agreement, including, without limitation, payment to the Agent of the fees
set forth in the Fee Letter.

(g) Litigation. Except as disclosed in the Borrower’s Annual Report on its Form
10-K for the year ended December 31, 2005 and in subsequent filings under the
Exchange Act made prior to the date of this Agreement, there shall not exist on
the Effective Date any action, suit or investigation, nor shall any action, suit
or investigation be pending or threatened on the Effective Date before any
arbitrator or Governmental Authority that materially adversely affects the
Borrower or any transaction contemplated hereby or the ability of the Borrower
to perform its obligations under the Credit Documents.

(h) Material Adverse Effect. On the Effective Date, no event or condition shall
have occurred since the date of the financial statements delivered pursuant to
Section 5.1(e) above that has had or would be likely to have a Material Adverse
Effect.

(i) Patriot Act. The Agent shall have received all documentation and information
required by regulatory authorities under applicable “know your customer” and
anti-money laundering rules and regulations, including without limitation the
USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)).

(j) Other. The Agent, the Fronting Bank and the Lenders shall have received such
other documents, instruments, agreements or information as reasonably requested
by the Agent on or prior to the date of this Agreement.

SECTION 5.2. Conditions to Each Extension of Credit.

In addition to the conditions precedent stated elsewhere herein, the Lenders
shall not be obligated to make any Advance and the Fronting Bank shall not be
obligated to issue any Letter of Credit unless:

(a) Request. The Borrower shall have timely delivered, in the case of any new
Borrowing, a duly executed and completed Notice of Borrowing or Request for
Issuance, as applicable, in conformance with all the terms and conditions of
this Agreement.

 

35

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

(b) Representations and Warranties. The representations and warranties made by
the Borrower herein (other than the representations and warranties set forth in
Sections 6.7, 6.10 and 6.18) are true and correct in all material respects at
and as if made as of the date of the making of the Advance (except where such
representations and warranties expressly refer to an earlier date).

(c) No Default. No Default or Event of Default shall have occurred and be
continuing either prior to or after giving effect thereto.

(d) Availability. Immediately after giving effect to such Extension of Credit
(and the application of the proceeds thereof), the sum of the Outstanding
Credits shall not exceed the aggregate Commitments.

(e) Effective Date. The Effective Date shall have occurred.

The delivery of each Notice of Borrowing or Request for Issuance, as applicable,
shall constitute a representation and warranty by the Borrower of the
correctness of the matters specified in subsections (b), (c) and (d) above.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES

The Borrower hereby represents and warrants to each Lender that:

SECTION 6.1. Organization and Good Standing.

The Borrower (i) is a limited liability company duly organized, validly existing
and in active status under the laws of the State of Wisconsin, (ii) is duly
qualified and in good standing as a foreign limited liability company authorized
to do business in every jurisdiction where the failure so to qualify would have
a Material Adverse Effect and (iii) has the requisite limited liability company
power and authority to own its properties and to carry on its business as now
conducted and as proposed to be conducted.

SECTION 6.2. Due Authorization.

The Borrower (i) has the requisite limited liability company power and authority
to execute, deliver and perform this Agreement and the other Credit Documents
and to incur the obligations herein and therein provided for and (ii) is duly
authorized to, and has been authorized by all necessary limited liability
company action to, execute, deliver and perform this Agreement and the other
Credit Documents.

SECTION 6.3. No Conflicts.

Neither the execution and delivery of the Credit Documents, nor the consummation
of the transactions contemplated therein, nor performance of and compliance with
the terms and provisions thereof by the Borrower will (i) violate or conflict
with any provision of its organizational documents or operating agreement,
(ii) violate, contravene or materially conflict with any law, regulation
(including without limitation, Regulation U, Regulation X and any

 

36

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

regulation promulgated by the Federal Energy Regulatory Commission), order,
writ, judgment, injunction, decree or permit applicable to it, (iii) violate,
contravene or materially conflict with contractual provisions of, or cause an
event of default under, any indenture, loan agreement, mortgage, deed of trust,
contract or other agreement or instrument to which it is a party or by which it
may be bound, the violation of which could have a Material Adverse Effect or
(iv) result in or require the creation of any Lien upon or with respect to its
properties.

SECTION 6.4. Consents.

No consent, approval, authorization or order of, or filing, registration or
qualification with, any court or Governmental Authority (including, without
limitation, the Public Service Commission of Wisconsin pursuant to Chapter 201
of the Wisconsin Statutes) or third party is required in connection with the
execution, delivery or performance of this Agreement or any of the other Credit
Documents that has not been obtained.

SECTION 6.5. Enforceable Obligations.

This Agreement and the other Credit Documents have been duly executed and
delivered and constitute legal, valid and binding obligations of the Borrower
enforceable against the Borrower in accordance with their respective terms,
except as may be limited by bankruptcy or insolvency laws or similar laws
affecting creditors’ rights generally or by general equitable principles.

SECTION 6.6. Financial Condition.

(a) The financial statements delivered to the Lenders pursuant to Section 5.1(e)
and pursuant to Sections 7.1(a) and (b): (i) have been prepared in accordance
with GAAP (subject to the provisions of Section 1.3); and (ii) present fairly
the financial condition, results of operations and cash flows of the Borrower
and its Subsidiaries as of such date and for such periods.

(b) Since December 31, 2005, there has been no sale, transfer or other
disposition by the Borrower of any material part of the business or property of
the Borrower, and no purchase or other acquisition by the Borrower of any
business or property (including any capital stock of any other Person) material
in relation to the financial condition of the Borrower, in each case, that, is
not (i) reflected in the most recent financial statements delivered to the
Lenders pursuant to Section 7.1 or in the notes thereto or (ii) otherwise
permitted by the terms of this Agreement and communicated to the Agent.

SECTION 6.7. No Material Change.

Since December 31, 2005, there has been no development or event relating to or
affecting the Borrower that has had or would be reasonably expected to have a
Material Adverse Effect.

SECTION 6.8. No Default.

The Borrower is not in default in any respect under any contract, lease, loan
agreement, indenture, mortgage, security agreement or other agreement or
obligation to which it is a party or by which any of its properties is bound,
which default would have or would be reasonably expected to have a Material
Adverse Effect. No Default or Event of Default presently exists and is
continuing.

 

37

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

SECTION 6.9. Indebtedness.

As of December 31, 2005, the Borrower had no Indebtedness except as disclosed in
the financial statements described in Section 5.1(e).

SECTION 6.10. Litigation.

There are no actions, suits, investigations or legal, equitable, arbitration or
administrative proceedings, pending or, to the knowledge of the Borrower,
threatened that materially adversely affect the Borrower or any transaction
contemplated hereby or the ability of the Borrower to perform its obligations
under the Credit Documents.

SECTION 6.11. Taxes.

The Borrower has filed, or caused to be filed, all material tax returns
(federal, state, local and foreign) required to be filed and paid all amounts of
taxes shown thereon to be due (including interest and penalties) and has paid
all other taxes, fees, assessments and other governmental charges (including
mortgage recording taxes, documentary stamp taxes and intangibles taxes) owing
by it, except for such taxes that are not yet delinquent or that are being
contested in good faith and by proper proceedings, and against which adequate
reserves are being maintained in accordance with GAAP. As of the date of this
Agreement, the Borrower is not aware of any proposed tax assessments against it
that have had or would be reasonably expected to have a Material Adverse Effect.

SECTION 6.12. Compliance with Law.

The Borrower is in compliance with all material laws, rules, regulations, orders
and decrees applicable to it or to its properties.

SECTION 6.13. ERISA.

Except as would not result or be reasonably expected to result in a Material
Adverse Effect:

(a) During the five-year period prior to the date on which this representation
is made or deemed made (i) no Termination Event has occurred, and, to the best
knowledge of the Borrower, no event or condition has occurred or exists as a
result of which any Termination Event would be reasonably expected to occur,
with respect to any Plan, (ii) no “accumulated funding deficiency,” as such term
is defined in Section 302 of ERISA and Section 412 of the Code, whether or not
waived, has occurred with respect to any Plan, (iii) each Plan has been
maintained, operated, and funded in compliance with its own terms and in
material compliance with the provisions of ERISA, the Code, and any other
applicable federal or state laws, and (iv) no Lien in favor or the PBGC or a
Plan has arisen or is reasonably likely to arise on account of any Plan.

 

38

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

(b) No liability has been or is reasonably expected by the Borrower to be
incurred under Sections 4062, 4063 or 4064 of ERISA with respect to any Single
Employer Plan by the Borrower or any of its Subsidiaries.

(c) The actuarial present value of all “benefit liabilities” under each Single
Employer Plan (determined within the meaning of Section 401(a)(2) of the Code,
utilizing the actuarial assumptions used to fund such Plans), whether or not
vested, did not, as of the last annual valuation date prior to the date on which
this representation is made or deemed made, exceed the current value of the
assets of such Plan allocable to such accrued liabilities, except as disclosed
in the Borrower’s financial statements.

(d) Neither the Borrower nor any ERISA Affiliate has incurred, or, to the best
knowledge of the Borrower, is reasonably expected to incur, any withdrawal
liability under ERISA to any Multiemployer Plan or Multiple Employer Plan.
Neither the Borrower nor any ERISA Affiliate has received any notification that
any Multiemployer Plan is in reorganization (within the meaning of Section 4241
of ERISA), is insolvent (within the meaning of Section 4245 of ERISA), or has
been terminated (within the meaning of Title IV of ERISA), and no Multiemployer
Plan is, to the best knowledge of the Borrower, reasonably expected to be in
reorganization, insolvent, or terminated.

(e) No prohibited transaction (within the meaning of Section 406 of ERISA or
Section 4975 of the Code) or breach of fiduciary responsibility has occurred
with respect to a Plan, which has subjected or would be reasonably likely to
subject the Borrower or any ERISA Affiliate to any liability under Sections 406,
409, 502(i), or 502(1) of ERISA or Section 4975 of the Code, or under any
agreement or other instrument pursuant to which the Borrower or any ERISA
Affiliate has agreed or is required to indemnify any person against any such
liability.

(f) The present value (determined using actuarial and other assumptions that are
reasonable with respect to the benefits provided and the employees
participating) of the liability of the Borrower and each ERISA Affiliate for
post-retirement welfare benefits to be provided to their current and former
employees under Plans that are welfare benefit plans (as defined in Section 3(1)
of ERISA), net of all assets under all such Plans allocable to such benefits,
are reflected on the financial statements referenced in Section 7.1 in
accordance with FASB 106.

(g) Each Plan that is a welfare plan (as defined in Section 3(1) of ERISA) to
which Sections 601-609 of ERISA and Section 4980B of the Code apply has been
administered in compliance in all material respects with such sections.

SECTION 6.14. Use of Proceeds; Margin Stock.

The proceeds of the Extensions of Credit hereunder will be used solely for the
purposes specified in Section 7.9. None of such proceeds will be used (i) in
violation of Regulation U or Regulation X (A) for the purpose of purchasing or
carrying any “margin stock” as defined in Regulation U or Regulation X or
(B) for the purpose of reducing or retiring any Indebtedness that was originally
incurred to purchase or carry “margin stock” or (ii) for the acquisition of
another Person unless the board of directors (or other comparable governing
body) or stockholders, as appropriate, of such Person has approved such
acquisition.

 

39

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

SECTION 6.15. Investment Company Act.

The Borrower is not an “investment company” registered or required to be
registered under the Investment Company Act of 1940, as amended, or controlled
by such a company.

SECTION 6.16. Solvency.

The Borrower is and, after the consummation of the transactions contemplated by
this Agreement, will be Solvent.

SECTION 6.17. Disclosure.

Neither this Agreement nor any financial statements delivered to the Lenders nor
any other document, certificate or statement furnished to the Lenders by or on
behalf of the Borrower in connection with the transactions contemplated hereby
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained therein or herein,
taken as a whole, not misleading.

SECTION 6.18. Environmental Matters.

Except as would not result or be reasonably expected to result in a Material
Adverse Effect: (i) each of the properties of the Borrower (the “Properties”)
and all operations at the Properties are in compliance with all applicable
Environmental Laws, (ii) there is no violation of any Environmental Law with
respect to the Properties or the businesses operated by the Borrower (the
“Businesses”), and (iii) there are no conditions relating to the Businesses or
Properties that would reasonably be expected to give rise to a liability under
any applicable Environmental Laws.

ARTICLE VII

AFFIRMATIVE COVENANTS

The Borrower hereby covenants and agrees that so long as this Agreement is in
effect and until all Outstanding Credits and other amounts payable by the
Borrower hereunder have been paid in full and the Commitments hereunder shall
have terminated:

SECTION 7.1. Information Covenants.

The Borrower will furnish, or cause to be furnished, to the Agent:

(a) Annual Financial Statements. As soon as available, and in any event within
120 days after the close of each fiscal year of the Borrower, a consolidated
balance sheet and income statement of the Borrower and its Subsidiaries, as of
the end of such fiscal year that includes retained earnings and a consolidated
statement of cash flows for such fiscal year, setting forth in comparative form
figures for the preceding fiscal year, all such financial information described
above to be in reasonable form and detail and audited by independent certified
public accountants of recognized national standing reasonably acceptable to the
Agent and whose opinion shall be to the effect that such financial statements
have been prepared in accordance with GAAP (except for changes with which such
accountants concur) and shall not be limited as to the scope of the audit or
qualified in any respect. The Lenders agree that delivery of the Borrower’s Form
10-K will meet the financial information requirements of this subsection (a).

 

40

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

(b) Quarterly Financial Statements. As soon as available, and in any event
within 60 days after the close of each of the first three fiscal quarters of
each fiscal year of the Borrower, a consolidated balance sheet and income
statement of the Borrower and its Subsidiaries, as of the end of such fiscal
quarter, together with a related consolidated statement of cash flows for such
fiscal year through the last day of such fiscal quarter in each case setting
forth in comparative form figures for the corresponding period of the preceding
fiscal year, all such financial information described above to be in reasonable
form and detail and reasonably acceptable to the Agent, and accompanied by the
review letter required to be filed with the Borrower’s quarterly reports on Form
10-Q pursuant to Section 10-01(d) of Regulation S-X, if any, and a certificate
of the treasurer or assistant treasurer of the Borrower to the effect that such
quarterly financial statements fairly present in all material respects the
financial condition of the Borrower and have been prepared in accordance with
GAAP, subject to changes resulting from audit and normal year-end audit
adjustments. The Lenders agree that the delivery of the Borrower’s Form 10-Q
will meet the financial information requirements of this subsection (b).

(c) Officer’s Certificate. At the time of delivery of the financial statements
provided for in Sections 7.1(a) and 7.1(b) above (and within 60 days after the
end of the fourth fiscal quarter of the Borrower), a certificate of the
treasurer or assistant treasurer of the Borrower, substantially in the form of
Exhibit C, (i) demonstrating compliance with the financial covenant contained in
Section 7.2 by calculation thereof as of the end of each such fiscal period,
(ii) stating that no Default or Event of Default has occurred and is continuing,
or if any Default or Event of Default has occurred and is continuing, specifying
the nature and extent thereof and what action the Borrower proposes to take with
respect thereto and (iii) confirming the then existing long-term senior
unsecured debt ratings of the Borrower.

(d) Reports. Promptly upon transmission or receipt thereof, copies of any
filings and registrations with, and reports to or from, the Securities and
Exchange Commission, or any successor agency.

(e) Notices. Upon the Borrower obtaining knowledge thereof, the Borrower will
give written notice to the Agent immediately of (i) the occurrence of an event
or condition consisting of a Default or Event of Default, specifying the nature
and existence thereof and what action the Borrower proposes to take with respect
thereto, (ii) the occurrence of any of the following with respect to the
Borrower: (A) the pendency or commencement of any litigation, arbitral or
governmental proceeding against the Borrower the claim of which is in excess of
$50,000,000 or that, if adversely determined, would have or be reasonably likely
to have a Material Adverse Effect or (B) the institution of any proceedings
against the Borrower with respect to, or the receipt of notice by such Person of
potential liability or responsibility for violation, or alleged violation of any
federal, state or local law, rule or regulation, the violation of which would
likely have a Material Adverse Effect, and (iii) any change in the Borrower’s
long-term senior unsecured debt rating, as determined by S&P, Moody’s and Fitch,
that would result in a change in the Applicable Rating Level.

 

41

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

(f) ERISA. Upon the Borrower or any ERISA Affiliate obtaining knowledge thereof,
the Borrower will give written notice to the Agent and each of the Lenders
promptly (and in any event within five Business Days) of: (i) any event or
condition, including, but not limited to, any Reportable Event, that
constitutes, or would be reasonably expected to lead to, a Termination Event;
(ii) with respect to any Multiemployer Plan, the receipt of notice as prescribed
in ERISA or otherwise of any withdrawal liability assessed against the Borrower
or any of their ERISA Affiliates, or of a determination that any Multiemployer
Plan is in reorganization or insolvent (both within the meaning of Title IV of
ERISA); (iii) the failure to make full payment on or before the due date
(including extensions) thereof of all amounts that the Borrower or any of its
Subsidiaries or ERISA Affiliates is required to contribute to each Plan pursuant
to its terms and as required to meet the minimum funding standard set forth in
ERISA and the Code with respect thereto; or (iv) any change in the funding
status of any Plan that would be reasonably expected to have a Material Adverse
Effect; together with a description of any such event or condition or a copy of
any such notice and a statement by an officer of the Borrower briefly setting
forth the details regarding such event, condition, or notice, and the action, if
any, which has been or is being taken or is proposed to be taken by the Borrower
with respect thereto. Promptly upon request, the Borrower shall furnish the
Agent and each of the Lenders with such additional information concerning any
Plan as may be reasonably requested, including, but not limited to, copies of
each annual report/return (Form 5500 series), as well as all schedules and
attachments thereto required to be filed with the Department of Labor and/or the
Internal Revenue Service pursuant to ERISA and the Code, respectively, for each
“plan-year” (within the meaning of Section 3(39) of ERISA).

(g) Other Information. With reasonable promptness upon any such request, such
other information regarding the business, properties or financial condition of
the Borrower as the Agent or the Required Lenders may reasonably request.

SECTION 7.2. Total Funded Debt to Capitalization.

The Borrower will maintain a ratio of (i) Total Funded Debt to
(ii) Capitalization at all times less than or equal to 0.65 to 1.0. In making
the preceding calculation, the following shall be excluded: (A) Indebtedness
incurred by the Borrower or any Subsidiary in connection with the issuance of
Environmental Trust Bonds and interest thereon, (B) Trust Preferred Stock and
other Hybrid Equity Securities, (C) Power the Future Capitalized Leases, and
(D) variable interest entities whose financial statements are consolidated with
those of the Borrower and its Subsidiaries solely because of Financial
Accounting Standards Board Staff Position FIN 46R-5 Implicit Variable Interests
under FASB Interpretations 46 (revised December 2003).

SECTION 7.3. Preservation of Existence and Franchises.

The Borrower will do all things necessary to preserve and keep in full force and
effect its existence, material rights, franchises and authority.

 

42

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

SECTION 7.4. Books and Records.

Subject to Section 1.3, the Borrower will keep complete and accurate books and
records of its transactions in accordance with good accounting practices on the
basis of GAAP (including the establishment and maintenance of appropriate
reserves).

SECTION 7.5. Compliance with Law.

The Borrower will comply with all laws, rules, regulations and orders, and all
applicable restrictions imposed by all Governmental Authorities, applicable to
it and its property, if the failure to comply would have or be reasonably
expected to have a Material Adverse Effect.

SECTION 7.6. Payment of Taxes and Other Indebtedness.

The Borrower will pay, settle or discharge (i) all material taxes, assessments
and governmental charges or levies imposed upon it, or upon its income or
profits, or upon any of its properties, before they shall become delinquent,
(ii) all lawful claims (including claims for labor, materials and supplies)
which, if unpaid, might give rise to a Lien upon any of its properties, and
(iii) all of its other Indebtedness in excess of $50,000,000 as it shall become
due (to the extent such repayment is not otherwise prohibited by this
Agreement); provided, however, that the Borrower shall not be required to pay
any such tax, assessment, charge, levy, claim or Indebtedness that is being
contested in good faith by appropriate proceedings and as to which adequate
reserves therefor have been established in accordance with GAAP, unless the
failure to make any such payment (A) would give rise to an immediate right to
foreclose or collect on a Lien securing such amounts or (B) would have or
reasonably be expected to have a Material Adverse Effect.

SECTION 7.7. Insurance.

The Borrower will at all times maintain in full force and effect insurance
(including worker’s compensation insurance, liability insurance, casualty
insurance and business interruption insurance) in such amounts, covering such
risks and liabilities and with such deductibles or self-insurance retentions as
are in accordance with normal industry practice.

SECTION 7.8. Performance of Obligations.

The Borrower will perform in all material respects all of its obligations under
the terms of all material agreements, indentures, mortgages, security agreements
or other debt instruments to which it is a party or by which it is bound and
that pertain to Indebtedness in excess of $50,000,000.

SECTION 7.9. Use of Proceeds.

The Borrower will use the proceeds of the Extensions of Credit solely for
(i) liquidity support for commercial paper issued by the Borrower and
(ii) general business purposes; provided that proceeds of the Extensions of
Credit may not be used to acquire another Person unless the board of directors
(or other comparable body) or shareholders, as appropriate, of such Person has
approved such acquisition.

 

43

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

SECTION 7.10. Audits/Inspections.

The Borrower will permit, upon reasonable notice and during normal business
hours, representatives appointed by the Agent, including, without limitation,
independent accountants, agents, attorneys, and appraisers to visit and inspect
the Borrower’s property, including its books and records, its accounts
receivable and inventory, the Borrower’s facilities and its other business
assets, and to make photocopies or photographs thereof and to write down and
record any information such representative obtains and shall permit the Agent or
its representatives to investigate and verify the accuracy of information
provided to the Lenders and to discuss all such matters with the officers,
employees and representatives of the Borrower.

ARTICLE VIII

NEGATIVE COVENANTS

The Borrower hereby covenants and agrees that so long as this Agreement is in
effect and until all Outstanding Credits and other amounts payable by the
Borrower hereunder have been paid in full and the Commitments shall have
terminated:

SECTION 8.1. Nature of Business.

The Borrower will not alter in any material respect the character of its
business from that conducted as of the date of this Agreement; provided that the
foregoing shall not prevent the disposition of assets, business or operations
permitted by Section 8.3 below so long as the Borrower shall have complied with
all other terms and conditions of this Agreement.

SECTION 8.2. Consolidation and Merger.

The Borrower will not enter into any transaction of merger or consolidation or
liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution); provided that a Person may be merged or consolidated with or into
the Borrower; so long as (i) the Borrower shall be the continuing or surviving
Person or, if the Borrower is not the continuing or surviving Person, the
continuing or surviving corporation is Wisconsin Electric Power Company, which
shall expressly assume the Borrower’s obligations under this Agreement and the
other Credit Documents and (ii) immediately before and after such merger or
consolidation there does not exist a Default or an Event of Default.

SECTION 8.3. Sale or Lease of Assets.

The Borrower will not, and will not permit its Subsidiaries to, within any
twelve month period, convey, sell, lease, transfer or otherwise dispose of
assets, business or operations with a fair market value in excess of twenty-five
percent of Total Assets, as calculated as of the end of the most recent fiscal
quarter; provided that any sale of “environmental control property” (as defined
in Section 196.027(1)(h) of the Wisconsin Statutes) in connection with the
issuance of Environmental Trust Bonds shall be excluded from the calculation of
the foregoing covenant.

 

44

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

SECTION 8.4. Arm’s-Length Transactions.

The Borrower will not enter into any transaction or series of transactions,
whether or not in the ordinary course of business, with any officer or director
other than on terms and conditions substantially as favorable to the Borrower as
would be obtainable in a comparable arm’s-length transaction with a Person other
than an officer or director.

SECTION 8.5. Fiscal Year.

The Borrower will not change its fiscal year (i) without prior written
notification to the Lenders and (ii) if such change would materially affect the
Lenders’ ability to read and interpret the financial statements delivered
pursuant to Section 7.1 or calculate the financial covenant in Section 7.2.

SECTION 8.6. Liens.

The Borrower will not contract, create, incur, assume or permit to exist any
Lien with respect to any of its property or assets of any kind (whether real or
personal, tangible or intangible), whether now owned or hereafter acquired,
except for Permitted Liens.

ARTICLE IX

EVENTS OF DEFAULT

SECTION 9.1. Events of Default.

An Event of Default shall exist upon the occurrence of any of the following
specified events (each an “Event of Default”):

(a) Payment. The Borrower shall (i) default in the payment when due of any
principal of any of the Extensions of Credit or (ii) default, and such default
shall continue for three or more Business Days, in the payment when due of any
interest on the Extensions of Credit or of any fees or other amounts owing
hereunder, under any of the other Credit Documents or in connection herewith.

(b) Representations. Any representation, warranty or statement made or deemed to
be made by the Borrower herein, in any of the other Credit Documents, or in any
statement or certificate delivered or required to be delivered pursuant hereto
or thereto shall prove untrue in any material respect on the date as of which it
was deemed to have been made.

(c) Covenants. The Borrower shall:

(i) default in the due performance or observance of any term, covenant or
agreement contained in Sections 2.8(c), 7.2, 8.2, 8.3 or 8.6; or

(ii) default in the due performance or observance by it of any term, covenant or
agreement contained in Sections 7.1, 7.3, 7.4, 7.5, 7.10, 8.1, 8.4 or 8.5 and
such default shall continue unremedied for a period of five Business Days after
the earlier of the Borrower becoming aware of such default or notice thereof
given by the Agent; or

 

45

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

(iii) default in the due performance or observance by it of any term, covenant
or agreement (other than those referred to in subsections (a), (b), (c)(i), or
(c)(ii)) contained in this Agreement or any other Credit Document and such
default shall continue unremedied for a period of at least 30 days after the
earlier of the Borrower becoming aware of such default or notice thereof given
by the Agent.

(d) Credit Documents. Any Credit Document shall fail to be in full force and
effect or the Borrower shall so assert or any Credit Document shall fail to give
the Agent and/or the Lenders the rights, powers and privileges purported to be
created thereby.

(e) Bankruptcy, etc. The occurrence of any of the following with respect to the
Borrower: (i) a court or governmental agency having jurisdiction in the premises
shall enter a decree or order for relief in respect of the Borrower in an
involuntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or appoint a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Borrower or for any
substantial part of its property or ordering the winding up or liquidation of
its affairs; (ii) an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect is commenced against
the Borrower and such petition remains unstayed and in effect for a period of 60
consecutive days; (iii) the Borrower shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or consent to the entry of an order for relief in an involuntary case
under any such law, or consent to the appointment or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official of such Person or any substantial part of its property or make any
general assignment for the benefit of creditors; or (iv) the Borrower shall
admit in writing its inability to pay its debts generally as they become due or
any action shall be taken by such Person in furtherance of any of the aforesaid
purposes.

(f) Defaults Under Other Agreements.

(i) The Borrower shall default in the due performance or observance (beyond the
applicable grace period with respect thereto) of any material obligation or
condition of any contract or lease to which it is a party, if such default
constitutes or would reasonably be expected to constitute a Material Adverse
Effect.

(ii) With respect to any Indebtedness in excess of $50,000,000 (other than
Indebtedness outstanding under this Agreement) of the Borrower (i) the Borrower
shall (A) default in any payment (beyond the applicable grace period with
respect thereto, if any) with respect to any such Indebtedness, or (B) default
(after giving effect to any applicable grace period) in the observance or
performance relating to such Indebtedness or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event or
condition shall occur or condition exist, the effect of which default or other
event or condition is to cause, or permit, the holder of the holders of such
Indebtedness (or trustee or agent on behalf of such holders) to cause
(determined without regard to whether any notice or lapse of time is required)
any such Indebtedness to become due prior to its stated maturity; or (ii) any
such Indebtedness shall be declared due and payable, or required to be prepaid
other than by a regularly scheduled required prepayment prior to the stated
maturity thereof; or (iii) any such Indebtedness shall mature and remain unpaid.

 

46

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

(g) Judgments. One or more judgments, orders, or decrees shall be entered
against the Borrower involving a liability of $50,000,000 or more, in the
aggregate (to the extent not paid or covered by insurance provided by a carrier
who has acknowledged coverage), and such judgments, orders or decrees shall
continue unsatisfied, undischarged and unstayed for a period ending on the first
to occur of (i) the last day on which such judgment, order or decree becomes
final and unappealable and, where applicable, with the status of a judicial lien
or (ii) 60 days; provided that if such judgment, order or decree provides for
periodic payments over time then the Borrower shall have a grace period of 30
days with respect to each such periodic payment.

(h) ERISA. The occurrence of any of the following events or conditions if any of
the same would be reasonably expected to have a Material Adverse Effect: (A) any
“accumulated funding deficiency,” as such term is defined in Section 302 of
ERISA and Section 412 of the Code, whether or not waived, shall exist with
respect to any Plan, or any lien shall arise on the assets of the Borrower or
any ERISA Affiliate in favor of the PBGC or a Plan; (B) a Termination Event
shall occur with respect to a Single Employer Plan, which is, in the reasonable
opinion of the Agent, likely to result in the termination of such Plan for
purposes of Title IV of ERISA; (C) a Termination Event shall occur with respect
to a Multiemployer Plan or Multiple Employer Plan, which is, in the reasonable
opinion of the Agent, likely to result in (i) the termination of such Plan for
purposes of Title IV of ERISA, or (ii) the Borrower or any ERISA Affiliate
incurring any liability in connection with a withdrawal from, reorganization of
(within the meaning of Section 4241 of ERISA), or insolvency (within the meaning
of Section 4245 of ERISA) of such Plan; or (D) any prohibited transaction
(within the meaning of Section 406 of ERISA or Section 4975 of the Code) or
breach of fiduciary responsibility shall occur that would be reasonably expected
to subject the Borrower or any ERISA Affiliate to any liability under
Sections 406, 409, 502(i), or 502(1) of ERISA or Section 4975 of the Code, or
under any agreement or other instrument pursuant to which the Borrower or any
ERISA Affiliate has agreed or is required to indemnify any person against any
such liability.

(i) Change of Control. The occurrence of any Change of Control.

SECTION 9.2. Acceleration; Remedies.

Upon the occurrence of an Event of Default, and at any time thereafter unless
and until such Event of Default has been waived by the Required Lenders (or the
Lenders as may be required hereunder) the Agent may, and shall, upon the request
and direction of the Required Lenders, by written notice to the Borrower take
any of the following actions without prejudice to the rights of the Agent or any
Lender to enforce its claims against the Borrower, except as otherwise
specifically provided for herein:

(a) Termination of the Commitments. Declare the Commitments terminated whereupon
the Commitments shall be immediately terminated.

(b) Acceleration of Advances. Declare the unpaid amount of all Advances and all
other amounts payable by the Borrower hereunder to be due whereupon the same
shall be immediately due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Borrower.

 

47

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

(c) Enforcement of Rights. Enforce any and all rights and interests created and
existing under the Credit Documents, including, without limitation, all rights
of set-off.

(d) Cash Collateralization of LC Outstandings. Notwithstanding anything to the
contrary contained herein, no notice given or declaration made by the Agent
pursuant to this Article IX shall affect (i) the obligation of the Fronting Bank
to make any payment under any Letter of Credit in accordance with the terms of
such Letter of Credit or (ii) the obligations of each Lender in respect of each
such Letter of Credit; provided, however, that if an Event of Default has
occurred and is continuing, the Agent shall at the request, or may with the
consent, of the Required Lenders, upon notice to the Borrower, require the
Borrower to deposit with the Agent an amount in the cash collateral account (the
“Cash Collateral Account”) described below equal to the LC Outstandings on such
date. Such Cash Collateral Account shall at all times be free and clear of all
rights or claims of third parties. The Cash Collateral Account shall be
maintained with the Agent in the name of, and under the sole dominion and
control of, the Agent, and amounts deposited in the Cash Collateral Account
shall bear interest at a rate equal to the rate generally offered by the Agent
for deposits equal to the amount deposited by the Borrower in the Cash
Collateral Account, for a term to be determined by the Agent, in its sole
discretion. The Borrower hereby grants to the Agent for the benefit of the
Fronting Bank and the Lenders a Lien in and hereby assigns to the Agent for the
benefit of the Fronting Bank and the Lenders all of its right, title and
interest in, the Cash Collateral Account and all funds from time to time on
deposit therein to secure its reimbursement obligations in respect of Letters of
Credit. If any drawings then outstanding or thereafter made are not reimbursed
in full immediately upon demand or, in the case of subsequent drawings, upon
being made, then, in any such event, the Agent may apply the amounts then on
deposit in the Cash Collateral Account, toward the payment in full of any of the
obligations as and when such obligations shall become due and payable. Upon
payment in full, after the termination of the Letters of Credit, of all such
obligations, the Agent will repay and reassign to the Borrower any cash then in
the Cash Collateral Account and the Lien of the Agent on the Cash Collateral
Account and the funds therein shall automatically terminate. In addition, at any
time the Borrower is required under Section 2.8(c) or 3.2(b) to cash
collateralize any of the LC Outstandings, the Borrower shall deposit such amount
in the Cash Collateral Account. If, at any time no Event of Default has occurred
and is continuing and the cash on deposit in the Cash Collateral Account shall
exceed the LC Outstandings, then the Agent will repay and reassign to the
Borrower cash in an amount equal to such excess, and the Lien of the Agent on
such cash shall automatically terminate.

(e) Notwithstanding the foregoing, if an Event of Default specified in
Section 9.1(e) shall occur, then the Commitments shall automatically terminate
and all Advances, all accrued interest in respect thereof, all accrued and
unpaid fees and other indebtedness or obligations owing to the Lenders and the
Agent hereunder shall immediately become due and payable without the giving of
any notice or other action by the Agent or the Lenders.

(f) Notwithstanding the fact that enforcement powers reside primarily with the
Agent, each Lender has, to the extent permitted by law, a separate right of
payment and shall be considered a separate “creditor” holding a separate “claim”
within the meaning of Section 101(5) of the Bankruptcy Code or any other
insolvency statute.

 

48

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

SECTION 9.3. Allocation of Payments After Event of Default.

Notwithstanding any other provisions of this Agreement, after the occurrence of
an Event of Default, all amounts collected or received by the Agent or any
Lender on account of amounts outstanding under any of the Credit Documents shall
be paid over or delivered as follows:

FIRST, to the payment of all reasonable out-of-pocket costs and expenses
(including without limitation reasonable attorneys’ fees) of the Agent or any of
the Lenders in connection with enforcing the rights of the Lenders under the
Credit Documents, pro rata as set forth below;

SECOND, to payment of any fees owed to the Agent or any Lender, pro rata as set
forth below;

THIRD, to the payment of all accrued interest payable to the Lenders hereunder,
pro rata as set forth below;

FOURTH, to the payment or cash collateralization, as applicable, of the
Outstanding Credits, pro rata as set forth below;

FIFTH, to all other obligations that shall have become due and payable under the
Credit Documents and not repaid pursuant to clauses “FIRST” through “THIRD”
above; and

SIXTH, to the payment of the surplus, if any, to whoever may be lawfully
entitled to receive such surplus.

In carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; and (ii) each of the Lenders shall receive an amount equal
to its pro rata share (based on the proportion that the then Outstanding Credits
held by such Lender bears to the aggregate then outstanding Advances of amounts
available to be applied.

ARTICLE X

AGENCY PROVISIONS

SECTION 10.1. Appointment.

Each Lender and the Fronting Bank hereby designates and appoints Citibank as
agent of such Lender to act as specified herein and the other Credit Documents,
and each such Lender and the Fronting Bank hereby authorizes the Agent, as the
agent for such Lender and the Fronting Bank, to take such action on its behalf
under the provisions of this Agreement and the other Credit Documents and to
exercise such powers and perform such duties as are expressly delegated by the
terms hereof and of the other Credit Documents, together with such other powers
as are reasonably incidental thereto. Notwithstanding any provision to the
contrary elsewhere herein and in the other Credit Documents, the Agent shall not
have any duties or

 

49

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

responsibilities, except those expressly set forth herein and therein, or any
fiduciary relationship with any Lender or the Fronting Bank, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or any of the other Credit Documents, or shall
otherwise exist against the Agent. The provisions of this Section are solely for
the benefit of the Agent, the Lenders, the Fronting Bank and the Borrower shall
not have any rights as a third party beneficiary of the provisions hereof. In
performing its functions and duties under this Agreement and the other Credit
Documents, the Agent shall act solely as agent of the Lenders and the Fronting
Bank and does not assume and shall not be deemed to have assumed any obligation
or relationship of agency or trust with or for the Borrower.

SECTION 10.2. Delegation of Duties.

The Agent may execute any of its duties hereunder or under the other Credit
Documents by or through agents or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining to such duties. The Agent
shall not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.

SECTION 10.3. Exculpatory Provisions.

Neither the Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates shall be liable for any action lawfully taken or
omitted to be taken by it or such Person under or in connection herewith or in
connection with any of the other Credit Documents (except for its or such
Person’s own gross negligence or willful misconduct), or responsible in any
manner to any of the Lenders for any recitals, statements, representations or
warranties made by the Borrower contained herein or in any of the other Credit
Documents or in any certificate, report, statement or other document referred to
or provided for in, or received by the Agent under or in connection herewith or
in connection with the other Credit Documents, or enforceability or sufficiency
therefor of any of the other Credit Documents, or for any failure of the
Borrower to perform its obligations hereunder or thereunder. The Agent shall not
be responsible to any Lender for the effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement, or any of the
other Credit Documents or for any representations, warranties, recitals or
statements made herein or therein or made by the Borrower in any written or oral
statement or in any financial or other statements, instruments, reports,
certificates or any other documents in connection herewith or therewith
furnished or made by the Agent to the Lenders or the Fronting Bank or by or on
behalf of the Borrower to the Agent or any Lender or the Fronting Bank or be
required to ascertain or inquire as to the performance or observance of any of
the terms, conditions, provisions, covenants or agreements contained herein or
therein or as to the use of the proceeds of the Advances or of the existence or
possible existence of any Default or Event of Default or to inspect the
properties, books or records of the Borrower. The Agent is not a trustee for the
Lenders or the Fronting Bank and owes no fiduciary duty to the Lenders or the
Fronting Bank.

SECTION 10.4. Reliance on Communications.

The Agent shall be entitled to rely, and shall be fully protected in relying,
upon any note, writing, resolution, notice, consent, certificate, affidavit,
letter, cablegram, telegram, telecopy, telex or teletype message, statement,
order or other document or conversation believed by it in

 

50

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

good faith to be genuine and correct and to have been signed, sent or made by
the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Borrower, independent accountants
and other experts selected by the Agent with reasonable care). The Agent may
deem and treat the Lenders as the owner of its interests hereunder for all
purposes unless a written notice of assignment, negotiation or transfer thereof
shall have been filed with the Agent in accordance with Section 11.3(b). The
Agent shall be fully justified in failing or refusing to take any action under
this Agreement or under any of the other Credit Documents unless it shall first
receive such advice or concurrence of the Required Lenders as it deems
appropriate or it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense that may be incurred by it by reason
of taking or continuing to take any such action. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, hereunder or under any
of the other Credit Documents in accordance with a request of the Required
Lenders (or to the extent specifically provided in Section 11.6, all the
Lenders) and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders (including their successors and
assigns).

SECTION 10.5. Notice of Default.

The Agent shall not be deemed to have knowledge or notice of the occurrence of
any Default or Event of Default hereunder unless the Agent has received notice
from a Lender or the Borrower referring to the Credit Document, describing such
Default or Event of Default and stating that such notice is a “notice of
default”. In the event that the Agent receives such a notice, the Agent shall
give prompt notice thereof to the Lenders. The Agent shall take such action with
respect to such Default or Event of Default as shall be reasonably directed by
the Required Lenders.

SECTION 10.6. Non-Reliance on Agent and Other Lenders.

Each Lender and the Fronting Bank expressly acknowledges that neither the Agent
nor any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates has made any representations or warranties to it and that no act by
the Agent or any affiliate thereof hereinafter taken, including any review of
the affairs of the Borrower, shall be deemed to constitute any representation or
warranty by the Agent to any Lender or the Fronting Bank. Each Lender and the
Fronting Bank represents to the Agent that it has, independently and without
reliance upon the Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, assets, operations, property, financial and
other conditions, prospects and creditworthiness of the Borrower and made its
own decision to make its Extensions of Credit hereunder and enter into this
Agreement. Each Lender and the Fronting Bank also represents that it will,
independently and without reliance upon the Agent or any other Lender, and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement, and to make such investigation as it
deems necessary to inform itself as to the business, assets, operations,
property, financial and other conditions, prospects and creditworthiness of the
Borrower. Except for notices, reports and other documents expressly required to
be furnished to the Lenders and the Fronting Bank by the Agent hereunder, the
Agent shall not have any duty or responsibility to provide any Lender or the
Fronting Bank with any credit or other information concerning the business,
operations,

 

51

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

assets, property, financial or other conditions, prospects or creditworthiness
of the Borrower that may come into the possession of the Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates.

SECTION 10.7. Indemnification.

Each Lender agrees to indemnify the Agent in its capacity as such (to the extent
not reimbursed by the Borrower and without limiting the obligation of the
Borrower to do so), ratably according to its Commitment Percentage, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever that may at any time (including without limitation at any time
following the payment in full of the Advances and the other obligations of the
Borrower hereunder) be imposed on, incurred by or asserted against the Agent in
its capacity as such in any way relating to or arising out of this Agreement or
the other Credit Documents or any documents contemplated by or referred to
herein or therein or the transactions contemplated hereby or thereby or any
action taken or omitted by the Agent under or in connection with any of the
foregoing; provided that no Lender shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the gross
negligence or willful misconduct of the Agent. If any indemnity furnished to the
Agent for any purpose shall, in the opinion of the Agent, be insufficient or
become impaired, the Agent may call for additional indemnity and cease, or not
commence, to do the acts indemnified against until such additional indemnity is
furnished. The agreements in this Section 10.7 shall survive the payment of the
Advances and all other amounts payable hereunder.

SECTION 10.8. Agent in Its Individual Capacity.

The Agent in its individual capacity and its Affiliates may make loans to,
accept deposits from and generally engage in any kind of business with the
Borrower as though the Agent were not Agent hereunder. With respect to the
Advances made and all obligations of the Borrower owing to the Agent, the Agent
in its individual capacity shall have the same rights and powers under this
Agreement as any Lender and may exercise the same as though they were not Agent,
and the terms “Lender” and “Lenders” shall include Citibank in its individual
capacity.

SECTION 10.9. Successor Agent.

The Agent may, and at the request of the Required Lenders shall, resign as the
Agent upon 30 days notice to the Lenders and the Fronting Bank. If the Agent
resigns under this Agreement, the Required Lenders and the Fronting Bank shall
appoint from among the Lenders a successor agent for the Lenders, which
successor agent shall be approved by the Borrower so long as no Event of Default
has occurred and is continuing. If no successor agent is appointed prior to the
effective date of the resignation of the Agent, the Agent may appoint, after
consulting with the Lenders and the Borrower, a successor agent from among the
Lenders. Upon the acceptance of its appointment as successor agent hereunder,
such successor agent shall succeed to all the rights, powers and duties of the
retiring Agent, and the term “Agent” shall mean such successor agent and the
retiring Agent’s appointment, powers and duties as Agent shall be terminated.
After any retiring Agent’s resignation hereunder as Agent, the provisions of
this

 

52

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

Section 10 and Section 11.5 shall inure to its benefit as to any actions taken
or omitted to be taken, by it while it was the Agent under this Agreement. If no
successor agent has accepted appointment as the Agent by the date that is 30
days following a retiring Agent’s notice of resignation, the retiring Agent’s
resignation shall nevertheless thereupon become effective and the Lenders shall
perform all of the duties of the Agent hereunder until such time, if any, as the
Required Lenders appoint a successor agent as provided for above.

ARTICLE XI

MISCELLANEOUS

SECTION 11.1. Notices.

Except as otherwise expressly provided herein, all notices and other
communications shall have been duly given and shall be effective (i) when
delivered, (ii) when transmitted via telecopy (or other facsimile device),
(iii) the Business Day following the day on which the same has been delivered
prepaid to a reputable national overnight air courier service, or (iv) the third
Business Day following the day on which the same is sent by certified or
registered mail, postage prepaid, in each case to the respective parties at the
address or telecopy numbers set forth on Schedule II, or at such other address
as such party may specify by written notice to the other parties hereto.

SECTION 11.2. Right of Set-Off.

In addition to any rights now or hereafter granted under applicable law or
otherwise, and not by way of limitation of any such rights, upon the occurrence
of an Event of Default and the commencement of remedies described in
Section 9.2, each Lender is authorized at any time and from time to time,
without presentment, demand, protest or other notice of any kind (all of which
rights being hereby expressly waived), to set off and to appropriate and apply
any and all deposits (general or special) and any other indebtedness at any time
held or owing by such Lender (including, without limitation branches, agencies
or Affiliates of such Lender wherever located) to or for the credit or the
account of the Borrower against obligations and liabilities of the Borrower to
the Lenders hereunder or under the other Credit Documents or otherwise,
irrespective of whether the Agent or the Lenders shall have made any demand
hereunder and although such obligations, liabilities or claims, or any of them,
may be contingent or unmatured, and any such set-off shall be deemed to have
been made immediately upon the occurrence of an Event of Default even though
such charge is made or entered on the books of such Lender subsequent thereto.
The Borrower hereby agrees that any Person purchasing a participation in the
Advances and the Commitments hereunder pursuant to Section 11.3(c) may exercise
all rights of set-off with respect to its participation interest as fully as if
such Person were a Lender hereunder.

SECTION 11.3. Benefit of Agreement.

(a) Generally. This Agreement shall be binding upon and inure to the benefit of
and be enforceable by the respective successors and assigns of the parties
hereto; provided the Borrower may not assign and transfer any of its interests
without the prior written consent of the Lenders and the Fronting Bank; and
provided, further, that the rights of each Lender to transfer, assign or grant
participations in its rights and/or obligations hereunder shall be limited as
set forth below in this Section 11.3.

 

53

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

(b) Assignments. Each Lender may assign to one or more Eligible Assignees all or
a portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Advances and its Commitment); provided,
however, that:

(i) each such assignment shall be to an Eligible Assignee;

(ii) except in the case of an assignment to another Lender, an Approved Fund of
any Lender or an Affiliate of any Lender, or an assignment of all of a Lender’s
rights and obligations under this Agreement, any such partial assignment shall
be in an amount at least equal to $5,000,000 (or, if less, the remaining amount
of the Commitment being assigned by such Lender) and an integral multiple of
$1,000,000 in excess thereof;

(iii) each such assignment by a Lender shall be of a constant and not varying,
percentage of all of its rights and obligations under this Agreement; and

(iv) the parties to such assignment shall execute and deliver to the Agent for
its acceptance an Assignment Agreement together with a processing fee (other
than in connection with any assignment to a Lender, an Approved Fund of any
Lender or an Affiliate of such Lender) from the assignor of $3,500.

Upon execution, delivery, and acceptance of such Assignment Agreement, the
assignee thereunder shall be a party hereto and, to the extent of such
assignment, have the obligations, rights, and benefits of a Lender hereunder and
the assigning Lender shall, to the extent of such assignment, relinquish its
rights and be released from its obligations under this Agreement. Upon the
consummation of any assignment pursuant to this subsection (b), the assignor,
the Agent and the Borrower shall make appropriate arrangements so that, if
required, new promissory notes are issued to the assignor and the assignee. If
the assignee is not incorporated under the laws of the United States of America
or a state thereof, it shall deliver to the Borrower and the Agent certification
as to exemption from deduction or withholding of taxes in accordance with
Section 4.4.

By executing and delivering an Assignment Agreement in accordance with this
subsection (b), the assigning Lender thereunder and the assignee thereunder
shall be deemed to confirm to and agree with each other and the other parties
hereto as follows: (A) such assigning Lender represents and warrants that it is
legally authorized to enter into such Assignment Agreement and it is the legal
and beneficial owner of the interest being assigned thereby free and clear of
any adverse claim created by such assigning Lender and the assignee warrants
that it is an Eligible Assignee; (B) except as set forth in clause (A) above,
such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement, any of the other Credit Documents
or any other instrument or document furnished pursuant hereto or thereto, or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement, any of the other Credit Documents or any other instrument or
document furnished pursuant hereto or thereto or the financial condition of the
Borrower or the performance or

 

54

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

observance by the Borrower of any of its obligations under this Agreement, any
of the other Credit Documents or any other instrument or document furnished
pursuant hereto or thereto; (C) such assignee represents and warrants that it is
legally authorized to enter into such Assignment Agreement; (D) such assignee
confirms that it has received a copy of this Agreement, the other Credit
Documents and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into such Assignment
Agreement; (E) such assignee will independently and without reliance upon the
Agent, such assigning Lender or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement and the
other Credit Documents; (F) such assignee appoints and authorizes the Agent to
take such action on its behalf and to exercise such powers under this Agreement
or any other Credit Document as are delegated to the Agent by the terms hereof
or thereof, together with such powers as are reasonably incidental thereto; and
(G) such assignee agrees that it will perform in accordance with their terms all
the obligations that by the terms of this Agreement and the other Credit
Documents are required to be performed by it as a Lender.

(c) Register. The Agent shall maintain a copy of each Assignment Agreement
delivered to and accepted by it and a register for the recordation of the names
and addresses of the Lenders and the Commitment of, and principal amount of the
Advances owing to, each Lender from time to time (the “Register”). The entries
in the Register shall be conclusive and binding for all purposes, absent
manifest error, and the Borrower, the Agent and the Lenders may treat each
Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.

(d) Acceptance. Upon its receipt of an Assignment Agreement executed by the
parties thereto, together with and payment of the processing fee, the Agent
shall, if such Assignment Agreement has been completed and is in substantially
the form of Exhibit D hereto, (i) accept such Assignment Agreement, (ii) record
the information contained therein in the Register and (iii) give prompt notice
thereof to the parties thereto.

(e) Participations. Each Lender may sell participations to one or more Persons
in all or a portion of its rights, obligations or rights and obligations under
the Credit Documents (including all or a portion of its Commitment and its
Advances); provided, however, that (i) such Lender’s obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) the participant shall be entitled to the benefit of the yield protection
provisions contained in Sections 4.1 through 4.4, inclusive, and the right of
set-off contained in Section 11.2, and (iv) the Borrower shall continue to deal
solely and directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement, and such Lender shall retain the sole right to
enforce the obligations of the Borrower relating to its Advances and to approve
any amendment, modification, or waiver of any provision of this Agreement (other
than amendments, modifications, or waivers decreasing the amount of principal of
or the rate at which interest is payable on such Advances, extending any
principal payment date or date fixed for the payment of interest on such
Advances, or extending its Commitment).

 

55

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

(f) Nonrestricted Assignments. Notwithstanding any other provision set forth in
this Agreement:

(i) any Lender may at any time, without the consent of the Borrower or the
Agent, assign all or any portion of its rights under the Credit Documents to any
Federal Reserve Bank as security. No such assignment shall release the assigning
Lender from its obligations hereunder;

(ii) any Lender (a “Granting Lender”) may grant to a special purpose funding
vehicle (an “SPC”) of such Granting Lender identified as such in writing from
time to time by the Granting Lender to the Agent and the Borrower, the option to
provide to the Borrower all or any part of any Extension of Credit that such
Granting Lender would otherwise be obligated to make to such Borrower pursuant
to this Agreement; provided that (i) nothing herein shall constitute a
commitment by any such SPC to make any Extension of Credit, (ii) if such SPC
elects not to exercise such option or otherwise fails to provide all or any part
of such Extension of Credit, the Granting Lender shall be obligated to make such
Extension of Credit pursuant to the terms hereof and (iii) no SPC or Granting
Lender shall be entitled to receive any greater amount pursuant to
Section 4.1(c) or 4.4 than the Granting Lender would have been entitled to
receive had the Granting Lender not otherwise granted such SPC the option to
provide any Extension of Credit to the Borrower. The making of an Extension of
Credit by an SPC hereunder shall utilize the Commitment of the Granting Lender
to the same extent, and as if, such Extension of Credit were made by such
Granting Lender. Each party hereto hereby agrees that no SPC shall be liable for
any indemnity or similar payment obligation under this Agreement for which a
Lender would otherwise be liable so long as, and to the extent that, the related
Granting Lender provides such indemnity or makes such payment. 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. Notwithstanding the foregoing, the Granting Lender
unconditionally agrees to indemnify the Borrower, the Agent, the Fronting Bank
and each Lender against all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever that may be incurred by or asserted against the
Borrower, the Agent, the Fronting Bank or such Lender, as the case may be, in
any way relating to or arising as a consequence of any such forbearance or delay
in the initiation of any such proceeding against its SPC. Each party hereto
hereby acknowledges and agrees that no SPC shall have the rights of a Lender
hereunder, such rights being retained by the applicable Granting Lender.
Accordingly, and without limiting the foregoing, each party hereby further
acknowledges and agrees that no SPC shall have any voting rights hereunder and
that the voting rights attributable to any Extension of Credit made by an SPC
shall be exercised only by the relevant Granting Lender and that each Granting
Lender shall serve as the administrative agent and attorney-in-fact for its SPC
and shall on behalf of its SPC receive any and all payments made for the benefit
of such SPC and take all actions hereunder to the extent, if any, such

 

56

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

SPC shall have any rights hereunder. In addition, notwithstanding anything to
the contrary contained in this Agreement, any SPC may (i) with notice to, but
without the prior written consent of any other party hereto, assign all or a
portion of its interest in any Extension of Credit to the Granting Lender and
(ii) disclose on a confidential basis any information relating to its Extensions
of Credit 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 prior written consent of each Granting Lender,
all or any part of whose Extension of Credit is being funded by an SPC at the
time of such amendment; and

(iii) any Lender at any time may assign all or any portion of its rights and
obligations under this Agreement to any Affiliate or Approved Fund of such
Lender, provided such assignment does not result in the incurrence of any
increased payment obligations by any Borrower under Section 4.2 or 4.4. Upon
execution, delivery, and acceptance of such Assignment Agreement, the assignee
thereunder shall be a party hereto and, to the extent of such assignment, have
the obligations, rights, and benefits of a Lender hereunder and the assigning
Lender shall, to the extent of such assignment, relinquish its rights and be
released from its obligations under this Agreement. If the assignee is not
incorporated under the laws of the United States of America or a state thereof,
it shall deliver to the Borrower and the Agent certification as to exemption
from deduction or withholding of taxes in accordance with Section 4.4.

(g) Information. Any Lender may furnish any information concerning the Borrower
in the possession of such Lender from time to time to assignees and participants
(including prospective assignees and participants) or to any party that such
Lender has engaged or proposes to engage in any swap, securitization or
derivative transaction involving any of such Lender’s rights or obligations
hereunder.

SECTION 11.4. No Waiver; Remedies Cumulative.

No failure or delay on the part of the Agent, the Fronting Bank or any Lender in
exercising any right, power or privilege hereunder or under any other Credit
Document and no course of dealing between the Borrower and the Agent, the
Fronting Bank or any Lender shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or privilege hereunder or under
any other Credit Document preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder or thereunder. The
rights and remedies provided herein are cumulative and not exclusive of any
rights or remedies that the Agent, the Fronting Bank or any Lender would
otherwise have. No notice to or demand on the Borrower in any case shall entitle
the Borrower to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the Agent, the Fronting
Bank or the Lenders to any other or further action in any circumstances without
notice or demand.

SECTION 11.5. Payment of Expenses, etc.

The Borrower agrees to: (i) pay all reasonable out-of-pocket costs and expenses
of the Agent in connection with (A) the negotiation, preparation, execution and
delivery and

 

57

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

administration of this Agreement and the other Credit Documents and the
documents and instruments referred to therein (including, without limitation,
legal fees of the Agent) and (B) any amendment, waiver or consent relating
hereto and thereto including, but not limited to, any such amendments, waivers
or consents resulting from or related to any work-out, renegotiation or
restructure relating to the performance by the Borrower under this Agreement;
(ii) pay all reasonable out-of-pocket costs and expenses of the Agent, the
Fronting Bank and the Lenders in connection with (A) enforcement of the Credit
Documents and the documents and instruments referred to therein (including,
without limitation, in connection with any such enforcement, the reasonable fees
and disbursements of counsel for the Agent, the Fronting Bank and each of the
Lenders) and (B) any bankruptcy or insolvency proceeding of the Borrower; and
(iii) indemnify the Agent, the Fronting Bank and each Lender, its affiliates,
officers, directors, employees, advisors and agents from and hold each of them
harmless against any and all losses, liabilities, claims, damages or expenses
incurred by any of them as a result of, or arising out of, or in any way related
to, or by reason of, any investigation, litigation or other proceeding (whether
or not the Agent or any Lender is a party thereto) related to the entering into
and/or performance of any Credit Document or the use of proceeds of any
Extension of Credit hereunder or the consummation of any other transactions
contemplated in any Credit Document, including, without limitation, the
reasonable fees and disbursements of counsel incurred in connection with any
such investigation, litigation or other proceeding (but excluding any such
losses, liabilities, claims, damages or expenses to the extent incurred by
reason of gross negligence or willful misconduct on the part of the Person to be
indemnified). Such expenses shall be reimbursed by the Borrower upon
presentation of a statement of account, which statement shall be conclusive
absent manifest error.

SECTION 11.6. Amendments, Waivers and Consents.

Neither this Agreement, nor any other Credit Document nor any of the terms
hereof or thereof may be amended, changed, waived, discharged or terminated
unless such amendment, change, waiver, discharge or termination is in writing
and signed by the Required Lenders and the Borrower; provided that no amendment,
waiver or consent shall, unless in writing and signed by the Fronting Bank in
addition to the Required Lenders and the Borrower, affect the rights or duties
of the Fronting Bank under this Agreement or any other Credit Document, and
provided further, that no such amendment, change, waiver, discharge or
termination shall without the consent of each Lender affected thereby:

(a) extend the Maturity Date, or postpone or extend the time for any payment or
prepayment of principal, except as provided in Section 2.7;

(b) reduce the rate or extend the time of payment of interest (other than as a
result of waiving the applicability of any post-default increase in interest
rates) thereon or fees or other amounts payable hereunder;

(c) reduce or waive the principal amount of any Advance;

(d) increase or extend the Commitment (it being understood and agreed that a
waiver of any Default or Event of Default shall not constitute a change in the
terms of any Commitment of any Lender);

 

58

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

(e) release the Borrower from its obligations under the Credit Documents;

(f) amend, modify or waive any provision of this Section 11.6 or Section 3.6,
3.8, 4.1, 4.2, 4.3, 4.4, 9.1(a), 11.2, 11.3 or 11.5;

(g) reduce any percentage specified in, or otherwise modify, the definition of
Required Lenders; or

(h) consent to the assignment or transfer by the Borrower of any of its rights
and obligations under (or in respect of) the Credit Documents.

Notwithstanding the foregoing, this Agreement may be amended and restated
without the consent of any Lender or the Agent if, upon giving effect to such
amendment and restatement, such Lender or the Agent, as the case may be, shall
no longer be a party to this Agreement (as so amended and restated) or have any
Commitment or other obligation hereunder and shall have been paid in full all
amounts payable hereunder to such Lender or the Agent, as the case may be. No
provision of Section 10 may be amended or modified without the consent of the
Agent.

Notwithstanding the fact that the consent of all the Lenders is required in
certain circumstances as set forth above, each Lender is entitled to vote as
such Lender sees fit on any reorganization plan that affects the Extensions of
Credit, and each Lender acknowledges that the provisions of Section 1126(c) of
the Bankruptcy Code supersedes the unanimous consent provisions set forth
herein.

SECTION 11.7. Counterparts/Telecopy.

This Agreement may be executed in any number of counterparts, each of which
where so executed and delivered shall be an original, but all of which shall
constitute one and the same instrument. Delivery of executed counterparts by
telecopy shall be as effective as an original and shall constitute a
representation that an original will be delivered.

SECTION 11.8. Headings.

The headings of the Sections and subsections hereof are provided for convenience
only and shall not in any way affect the meaning or construction of any
provision of this Agreement.

SECTION 11.9. Defaulting Lender.

Each Lender understands and agrees that if such Lender is a Defaulting Lender
then it shall not be entitled to vote on any matter requiring the consent of the
Required Lenders or to object to any matter requiring the consent of all the
Lenders; provided, however, that all other benefits and obligations under the
Credit Documents shall apply to such Defaulting Lender.

SECTION 11.10. Confidentiality.

Each of the Agent, each Lender and the Fronting Bank agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed by such Person (i) to its Affiliates and to its and its
Affiliates’ respective partners, directors,

 

59

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

officers, employees, agents, advisors and other representatives (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such
Information confidential), (ii) to the extent requested by any regulatory
authority purporting to have jurisdiction over it (including any self-regulatory
authority, such as the National Association of Insurance Commissioners),
(iii) to the extent required by applicable laws or regulations or by any
subpoena or similar legal process, (iv) to any other party hereto, (v) in
connection with the exercise of any remedies hereunder or under any other Credit
Document or any action or proceeding relating to this Agreement or any other
Credit Document or the enforcement of rights hereunder or thereunder,
(vi) subject to an agreement containing provisions substantially the same as
those of this Section, to (A) any assignee of or participant, or any prospective
assignee of or participant in, any of its rights or obligations under this
Agreement or (B) any actual or prospective counterparty (or its advisors) to any
swap or derivative transaction relating to the Borrower and its obligations,
(vii) with the consent of the Borrower or (viii) to the extent such Information
(A) becomes publicly available other than as a result of a breach of this
Section or (B) becomes available to the Agent, any Lender, the Fronting Bank or
any of their respective Affiliates on a nonconfidential basis from a source
other than the Borrower. Notwithstanding anything in this Agreement to the
contrary, the Borrower, the Agent, the Fronting Bank and each Lender (and each
officer, director, employee, agent and advisor of each such Person) shall not be
limited from disclosing the US tax treatment or the US tax structure of the
transactions contemplated hereby. For purposes of this Section, “Information”
means all information received from the Borrower or any of its Subsidiaries
relating to the Borrower or any of its Subsidiaries or any of their respective
businesses, other than any such information that is available to the Agent, any
Lender or the Fronting Bank on a nonconfidential basis prior to disclosure by
the Borrower or any of its Subsidiaries, provided that, in the case of
information received from the Borrower or any of its Subsidiaries after the date
hereof, such information is clearly identified at the time of delivery as
confidential. Any Person required to maintain the confidentiality of Information
as provided in this Section shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of care to
maintain the confidentiality of such Information as such Person would accord to
its own confidential information.

SECTION 11.11. Survival of Indemnification and Representations and Warranties.

All indemnities set forth herein and all representations and warranties made
herein shall survive the execution and delivery of this Agreement, the making of
Extensions of Credit and the repayment of the Borrowings and other obligations
and the termination of the Commitments hereunder.

SECTION 11.12. Governing Law; Venue.

(a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Any legal
action or proceeding with respect to this Agreement or any other Credit Document
may be brought in the courts of the State of New York, or of the United States
for the Southern District of New York, and, by execution and delivery of this
Agreement, all parties hereto hereby irrevocably accept for

 

60

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

themselves and in respect of their property, generally and unconditionally, the
jurisdiction of such courts. All parties hereto further irrevocably consent to
the service of process out of any of the aforementioned courts in any such
action or proceeding by the mailing of copies thereof by registered or certified
mail, postage prepaid, to each at the address for notices pursuant to
Section 11.1, such service to become effective 30 days after such mailing.
Nothing herein shall affect the right of a Lender to serve process in any other
manner permitted by law or to commence legal proceedings or to otherwise proceed
against the Borrower in any other jurisdiction.

(b) All parties hereto hereby irrevocably waive any objection that each may now
or hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement or any other
Credit Document brought in the courts referred to in subsection (i) hereof and
hereby further irrevocably waive and agree not to plead or claim in any such
court that any such action or proceeding brought in any such court has been
brought in an inconvenient forum.

SECTION 11.13. Waiver of Jury Trial; Waiver of Consequential Damages.

EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY. THE BORROWER AGREES NOT TO ASSERT ANY CLAIM
AGAINST THE AGENT, THE FRONTING BANK, ANY LENDER, ANY OF THEIR SUBSIDIARIES,
AFFILIATES, OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS
OR AGENTS, ON ANY THEORY OF LIABILITY, FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR
PUNITIVE DAMAGES ARISING OUT OF OR OTHERWISE RELATING TO ANY OF THE TRANSACTIONS
CONTEMPLATED HEREIN.

SECTION 11.14. Time.

All references to time herein shall be references to Eastern Standard Time or
Eastern Daylight Time, as the case may be, unless specified otherwise.

SECTION 11.15. Severability.

If any provision of any of the Credit Documents is determined to be illegal,
invalid or unenforceable, such provision shall be fully severable and the
remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.

SECTION 11.16. Assurances.

The Borrower agrees, upon the request of the Agent, to promptly take such
actions, as reasonably requested, as are necessary to carry out the intent of
this Agreement and the other Credit Documents.

 

61

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

SECTION 11.17. Entirety.

This Agreement together with the other Credit Documents represent the entire
agreement of the parties hereto and thereto, and supersede all prior agreements
and understandings, oral or written, if any, including any commitment letters or
correspondence relating to the Credit Documents or the transactions contemplated
herein and therein.

[Remainder of Page Intentionally Left Blank; Signature Pages Follow]

 

62

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

S-1

 

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

 

WISCONSIN GAS LLC By  

/s/ Jeffrey West

  Jeffrey West   Vice President and Treasurer

 

[Signature Page to the Wisconsin Gas Credit Agreement]

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

S-2

 

CITIBANK, N.A., as Agent and as Lender By  

/s/ Wajeeh Faheen

  Name: Wajeeh Faheen   Title: Vice President

 

[Signature Page to the Wisconsin Gas Credit Agreement]

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

S-3

 

U.S. BANK NATIONAL ASSOCIATION,

as Fronting Bank and as Lender

By  

/s/ David Hirsch

  Name: David Hirsch   Title: Vice President

 

[Signature Page to the Wisconsin Gas Credit Agreement]

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

S-4

 

JPMORGAN CHASE BANK, N.A., as Lender By  

/s/ Michael J. DeForge

  Name: Michael J. DeForge   Title: Vice President

 

[Signature Page to the Wisconsin Gas Credit Agreement]

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

S-5

 

WACHOVIA BANK, NATIONAL ASSOCIATION, as Lender By  

/s/ Shawn Young

  Name: Shawn Young   Title: Vice President

 

[Signature Page to the Wisconsin Gas Credit Agreement]

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

S-6

 

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., CHICAGO BRANCH, as Lender By  

/s/ Tsuguyuki Umene

  Name: Tsuguyuki Umene   Title: Deputy General Manager

 

[Signature Page to the Wisconsin Gas Credit Agreement]

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

S-7

 

BNP PARIBAS, as Lender By  

/s/ Francis J. DeLaney

  Name: Francis J. DeLaney   Title: Managing Director By  

/s/ Mark A. Renaud

  Name: Mark A. Renaud   Title: Managing Director

 

[Signature Page to the Wisconsin Gas Credit Agreement]

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

S-8

 

WILLIAM STREET COMMITMENT CORPORATION

(Recourse only to assets of

William Street Commitment Corporation), as Lender

By  

/s/ Mark Walton

  Name: Mark Walton   Title: Assistant Vice President

 

[Signature Page to the Wisconsin Gas Credit Agreement]

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

S-9

 

LASALLE BANK NA, as Lender By  

/s/ Sean P. Drinan

  Name: Sean P. Drinan   Title: Senior Vice President

 

[Signature Page to the Wisconsin Gas Credit Agreement]

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

S-10

 

MORGAN STANLEY BANK, as Lender By  

/s/ Daniel Twenge

  Name: Daniel Twenge   Title: Vice President

 

[Signature Page to the Wisconsin Gas Credit Agreement]

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

S-11

 

UBS LOAN FINANCE LLC, as Lender By  

/s/ Richard L. Tavrow

  Name: Richard L. Tavrow   Title: Director By  

/s/ Irja R. Otsa

  Name: Irja R. Otsa   Title: Associate Director

 

[Signature Page to the Wisconsin Gas Credit Agreement]

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

S-12

 

BARCLAYS BANK PLC, as Lender By  

/s/ Sydney Dennis

  Name: Sydney Dennis   Title: Director

 

[Signature Page to the Wisconsin Gas Credit Agreement]

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

S-13

 

LEHMAN BROTHERS BANK, FSB, as Lender By  

/s/ Gary T. Taylor

  Name: Gary T. Taylor   Title: Senior Vice President

 

[Signature Page to the Wisconsin Gas Credit Agreement]

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

S-14

 

BANK OF AMERICA, N.A., as Lender By  

/s/ Kevin Wagley

  Name: Kevin Wagley   Title: Senior Vice President

 

[Signature Page to the Wisconsin Gas Credit Agreement]

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

S-15

 

DEUTSCHE BANK AG NEW YORK BRANCH,

as Lender

By  

/s/ Frederick W. Laird

  Name: Frederick W. Laird   Title: Managing Director By  

/s/ Vincent Wong

  Name: Vincent Wong   Title: Vice President

 

[Signature Page to the Wisconsin Gas Credit Agreement]

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

S-16

 

THE BANK OF NEW YORK, as Lender By  

/s/ Richard K. Fronapfel, Jr.

  Name: Richard K. Fronapfel, Jr.   Title: Vice President

 

[Signature Page to the Wisconsin Gas Credit Agreement]

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

S-17

 

M&I MARSHALL & ILSLEY BANK, as Lender By  

/s/ Leo D. Freeman

  Name: Leo D. Freeman   Title: Vice President By  

/s/ James R. Miller

  Name: James R. Miller   Title: Vice President

 

[Signature Page to the Wisconsin Gas Credit Agreement]

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

S-18

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Lender

By  

/s/ Mark H. Halldorson

  Name: Mark H. Halldorson   Title: Vice President By  

/s/ Jennifer D. Barrett

  Name: Jennifer D. Barrett   Title: Vice President & Loan Team Manager

 

[Signature Page to the Wisconsin Gas Credit Agreement]

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

S-19

 

THE NORTHERN TRUST COMPANY, as Lender By  

/s/ Peter Hallan

  Name: Peter Hallan   Title: Vice President

 

[Signature Page to the Wisconsin Gas Credit Agreement]

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

S-20

 

SUN TRUST BANK, as Lender By  

/s/ Sean M. Roche

  Name: Sean M. Roche   Title: Vice President

 

[Signature Page to the Wisconsin Gas Credit Agreement]

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

S-21

 

MIZUHO CORPORATE BANK, LTD., as Lender By  

/s/ Raymond Ventura

  Name: Raymond Ventura   Title: Deputy General Manager

 

[Signature Page to the Wisconsin Gas Credit Agreement]

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

S-22

 

COMERICA BANK, as Lender By  

/s/ Heather Whiting

  Name: Heather Whiting   Title: Assistant Vice President

 

[Signature Page to the Wisconsin Gas Credit Agreement]

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

S-23

 

ASSOCIATED BANK, NATIONAL ASSOCIATION,

as Lender

By  

/s/ Stephen E. Pasowicz

  Name: Stephen E. Pasowicz   Title: Vice President

 

[Signature Page to the Wisconsin Gas Credit Agreement]

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

SCHEDULE I

COMMITMENT PERCENTAGES

 

Lender

 

Commitment Percentage

 

Commitment

Citibank, N.A.     JPMorgan Chase Bank, N.A.     U.S. Bank National Association
    Wachovia Bank, National Association     Associated Bank, National
Association     The Bank of Tokyo-Mitsubishi UFJ, Ltd., Chicago Branch    
Barclays Bank PLC     Bank of America, N.A.     The Bank of New York     BNP
Paribas     Comerica Bank     Deutsche Bank AG New York Branch     William
Street Commitment Corporation     LaSalle Bank NA     Lehman Brothers Bank, FSB
    Morgan Stanley Bank     M&I Marshall & Ilsley Bank     The Northern Trust
Company     Wells Fargo Bank, National Association     Sun Trust Bank     Mizuho
Corporate Bank, Ltd.     UBS Loan Finance LLC     Total    

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

SCHEDULE II

ADDRESSES FOR NOTICES

The information in this schedule has been omitted as it contains personal
contact information.

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

EXHIBIT A

Form of Notice of Borrowing

 

To: Citibank, N.A., as Agent

 

Re: Credit Agreement, dated as of March 30, 2006 (as the same may be amended,
modified, extended or restated from time to time, the “Credit Agreement”), among
Wisconsin Gas LLC (the “Borrower”), the lenders party thereto, Citibank, N.A.,
as agent, and U.S. Bank National Association, as fronting bank

DATE:                     , 200  

 

1. This Notice of Borrowing is made pursuant to the terms of the Credit
Agreement. All capitalized terms used herein unless otherwise defined shall have
the meanings set forth in the Credit Agreement.

 

2. Please be advised that the Borrower is requesting a Borrowing in the amount
of $             to be funded on                     ,          at the interest
rate option set forth in paragraph 3 below.

 

3. The interest rate option applicable to the requested Borrowing shall be equal
to:

 

  A. the Base Rate

 

  B. the Eurodollar Rate for an Interest Period of:

               one month

               two months

               three months

               six months

 

4. On the date of the requested Borrowing, immediately after giving effect to
the funding and the application thereof, the aggregate amount of Advances
outstanding will be $            , which is less than or equal to the aggregate
Commitments.

 

5. On and as of the date of the requested Borrowing, immediately after giving
effect to the funding and the application thereof, the representations and
warranties made by the Borrower in any Credit Document are true and correct in
all material respects except to the extent they expressly relate to an earlier
date.

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

6. No Default or Event of Default has occurred and is continuing or will be
caused by giving effect to this Notice of Borrowing.

 

WISCONSIN GAS LLC

By

 

 

  Name:   Title:

 

A-2

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

EXHIBIT B

Form of Notice of Continuation/Conversion

 

To: Citibank, N.A., as Agent

 

Re: Credit Agreement, dated as of March 30, 2006 (as the same may be amended,
modified, extended or restated from time to time, the “Credit Agreement”), among
Wisconsin Gas LLC (the “Borrower”), the lenders party thereto, Citibank, N.A.,
as agent, and U.S. Bank National Association, as fronting bank

DATE:                     , 200  

 

1. This Notice of Continuation/Conversion is made pursuant to the terms of the
Credit Agreement. All capitalized terms used herein unless otherwise defined
shall have the meanings set forth in the Credit Agreement.

 

2. Please be advised that the Borrower is requesting that a portion of the
current outstanding Advances, in the amount of $            , be continued or
converted at the interest rate option set forth in paragraph 3 below.

 

3. The interest rate option applicable to the continuation or conversion of all
or part of the existing Advances shall be equal to:

 

  A. the Base Rate

 

  B. the Eurodollar Rate for an Interest Period of

             one month

             two months

             three months

             six months

 

4. Subsequent to the continuation or conversion of the Advances, as requested
herein, the aggregate amount of Advances outstanding will be $            ,
which is less than or equal to the aggregate Commitments.

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

5. No Default or Event of Default has occurred and is continuing or would be
caused by giving effect to this Notice of Continuation/Conversion.

 

WISCONSIN GAS LLC

By

 

 

  Name:   Title:

 

B-2

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

EXHIBIT C

Form of Officer’s Certificate

 

To: Citibank, N.A., as Agent

 

Re: Credit Agreement, dated as of March 30, 2006 (as the same may be amended,
modified, extended or restated from time to time, the “Credit Agreement”), among
Wisconsin Gas LLC (the “Borrower”), the lenders party thereto, Citibank, N.A.,
as agent, and U.S. Bank National Association, as fronting bank

DATE:                     , 200  

Pursuant to the terms of the Credit Agreement, I,
                                          [Chief Financial
Officer/Treasurer/Assistant Treasurer] of Wisconsin Gas LLC hereby certify that,
as of the fiscal quarter ending                     ,         , the statements
below are accurate and complete in all respects (all capitalized terms used
below shall have the meanings set forth in the Credit Agreement):

A. Attached hereto as Schedule I are (x) calculations (calculated as of the date
of the financial statements referred to in paragraph C. below) demonstrating
compliance by the Borrower with the financial covenant contained in Section 7.2
of the Credit Agreement and (y) Borrower’s long-term senior unsecured debt
ratings as of the date hereof.

B. No Default or Event of Default under the Credit Agreement has occurred and is
continuing, except as indicated on a separate page attached hereto, together
with an explanation of the action taken or proposed to be taken by the Borrower
with respect thereto.

C. The quarterly/annual financial statements for the fiscal quarter/year ended
                        , which accompany this certificate, fairly present in
all material respects the financial condition of the Borrower and its
Subsidiaries and have been prepared in accordance with GAAP, subject to changes
resulting from normal year-end audit adjustments.

 

[NAME OF OFFICER] By  

 

  [Chief Financial Officer/Treasurer/Assistant Treasurer]

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

SCHEDULE I

to EXHIBIT C

 

Total Funded Debt to Capitalization Ratio   

1.      Total Funded Debt

   $                     

2.      Net Worth

   $                     

3.      Capitalization (Line 1 plus Line 2)

   $                     

4.      Total Funded Debt to Capitalization Ratio (Line 1 divided by Line 3):

                          : 1.0 Maximum Permitted Total Funded Debt to
Capitalization Ratio:                   0.65 : 1.0

Borrower’s long-term senior unsecured debt ratings

  

1.      Moody’s

  

2.      S&P

  

3.      Fitch

  

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

EXHIBIT D

Form of Assignment Agreement

ASSIGNMENT AGREEMENT

Reference is made to that certain Credit Agreement, dated as of March 30, 2006
(as the same may be amended, modified, extended or restated from time to time,
the “Credit Agreement”), among Wisconsin Gas LLC (the “Borrower”), the lenders
party thereto, Citibank, N.A., as agent, and U.S. Bank National Association, as
fronting bank. Capitalized terms used herein shall have the meanings ascribed
thereto in the Credit Agreement.

1. The Assignor hereby sells and assigns to the Assignee, without recourse and
without representation and warranty except as expressly set forth herein, and
the Assignee hereby purchases and assumes from the Assignor, without recourse
and without representation and warranty except as expressly set forth herein,
the interests set forth below (the “Assigned Interest”) in the Assignor’s rights
and obligations under the Credit Agreement, including, without limitation, the
interests set forth below in the Commitment Percentage of the Assignor on the
Effective Date (as defined below) and the Advances owing to the Assignor in
connection with the Assigned Interest that is outstanding on the Effective Date.
The purchase of the Assigned Interest shall be at par (unless otherwise agreed
to by the Assignor and the Assignee) and periodic payments made with respect to
the Assigned Interest that (i) accrued prior to the Effective Date shall be
remitted to the Assignor and (ii) accrue from and after the Effective Date shall
be remitted to the Assignee.

2. The Assignor (i) represents and warrants to the Assignee that it is the legal
and beneficial owner of the Assigned Interest and that the Assigned Interest has
not previously been transferred or encumbered and is free and clear of any
adverse claim created by the Assignor; (ii) makes no representation or warranty
and assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Documents or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Credit Documents or any other instrument or document furnished pursuant
thereto; and (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any of its obligations under the
Credit Documents or any other instrument or document furnished pursuant thereto.

3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements referred to in
Section 7.1 thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment; (ii) agrees that it will, independently and without reliance upon
the Agent, the Assignor or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Credit Agreement;
(iii) confirms that it is an Eligible Assignee; (iv) appoints and authorizes the
Agent to take such action as agent on its behalf and to exercise such powers and
discretion under the Credit Agreement as are delegated to the Agent by the terms
thereof, together with such powers and discretion as are reasonably incidental
thereto; (v) agrees that it will perform in accordance with their terms all of
the obligations that by the terms of the Credit Agreement are required to be
performed by it as a Lender, and (f) attaches any U.S. Internal Revenue Service
or other forms required under Section 4.4.

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

4. Following the execution of this Assignment, it will be delivered to the
Agent, together with the transfer fee required pursuant to Section 11.3(b) of
the Credit Agreement, for acceptance and recording by the Agent. The effective
date for this Assignment (the “Effective Date”) shall be the date of acceptance
hereof by the Agent and the Borrower, as applicable, unless otherwise specified
herein.

5. Upon the consent of the Borrower and the Agent, as applicable, as of the
Effective Date, (i) the Assignee shall be a party to the Credit Agreement and,
to the extent provided in this Assignment, have the rights and obligations of a
Lender thereunder and (ii) the Assignor shall, to the extent provided in this
Assignment, relinquish its rights and be released from its obligations under the
Credit Agreement.

6. This Assignment shall be governed by, and construed in accordance with, the
laws of the State of New York.

7. This Assignment may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.

8. Terms of Assignment

 

(a)    Legal Name of Assignor:

                           

(b)    Legal Name of Assignee:

                           

(c)    Effective Date of Assignment:

                           

(d)    Commitment Percentage Assigned:

                        %

(e)    Total Advances outstanding as of Effective Date

   $                    

(f)     Principal Amount of Advances assigned on Effective Date (the amount set
forth in (v) multiplied by the percentage set forth in (iv))

   $                    

(g)    Commitment

   $                    

(h)    Principal Amount of Commitment assigned on Effective Date (the amount set
forth in (g) multiplied by the percentage set forth in (d)

  

$                    

 

D-2

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

The terms set forth above are hereby agreed to:
                                         , as Assignor By  

 

  Name:   Title:                                          , as Assignee By  

 

  Name:   Title:

 

CONSENTED TO (if applicable): WISCONSIN GAS LLC By  

 

  Name:   Title: CITIBANK, N.A., as Agent By  

 

  Name:   Title:

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

EXHIBIT E

Form of Request for Issuance

REQUEST FOR ISSUANCE

[Date]

 

To: Citibank, N.A., as Agent

U.S. Bank National Association, as Fronting Bank

 

Re: Credit Agreement, dated as of March 30, 2006 (as the same may be amended,
modified, extended or restated from time to time, the “Credit Agreement”), among
Wisconsin Gas LLC, the lenders party thereto, Citibank, N.A., as agent, and U.S.
Bank National Association, as fronting bank

DATE:                     , 200  

Ladies and Gentlemen:

The undersigned, Wisconsin Gas LLC (the “Borrower”), refers to the Credit
Agreement (the terms defined therein being used herein as therein defined), and
hereby gives you notice, irrevocably, pursuant to Section 2.8(a) of the Credit
Agreement, that the undersigned hereby requests the issuance of a Letter of
Credit, and in connection therewith sets forth below the terms on which such
Letter of Credit is to be issued:

 

  (i) the requested date of issuance, or date of effectiveness, in the case of
an extension, modification or amendment to a Letter of Credit, which day is a
Business Day, is                         ;

 

  (ii) the requested stated amount of such Letter of Credit is             ;

 

  (iii) the beneficiary of the Letter of Credit requested hereby is
            , with an address at                         ;

 

  (iv) (a) the conditions under which a drawing may be made under such Letter of
Credit are as follows:1

(b) the documentation required in respect of such Letter of Credit is as
follows:                                          ; and

 

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

1 If a Request for Issuance is submitted for an extension, modification or
amendment of a Letter of Credit, it shall be accompanied by the consent of the
beneficiary of such Letter of Credit.

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

  (v) the expiration date of the Letter of Credit requested hereby (which shall
be no later than one year following the date of such issuance) is
                    .2

Upon the issuance of the Letter of Credit by the Fronting Bank in response to
this request, the Borrower shall be deemed to have represented and warranted
that the applicable conditions to an issuance of a Letter of Credit that are
specified in Article V of the Credit Agreement have been satisfied.

 

Very truly yours, WISCONSIN GAS LLC By  

 

  Name:   Title:

 

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

2 Modify request as appropriate if used in connection with the extension,
modification or amendment of a Letter of Credit.