Exhibit 10.1

EXECUTION COPY

Published Cusip Number: 74531NAG7

 

 

 

CREDIT AGREEMENT

dated as of

February 4, 2013

among

PUGET SOUND ENERGY, INC.

The Lenders Party Hereto

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Administrative Agent

THE ROYAL BANK OF SCOTLAND PLC,

as Syndication Agent

and

BANK OF AMERICA, N.A.,

BARCLAYS BANK PLC,

COBANK, ACB,

EXPORT DEVELOPMENT CANADA,

and

JPMORGAN CHASE BANK, N.A.,

as Co-Documentation Agents

 

 

 

WELLS FARGO SECURITIES, LLC,

RBS SECURITIES INC.,

BARCLAYS BANK PLC,

COBANK, ACB,

EXPORT DEVELOPMENT CANADA,

J.P. MORGAN SECURITIES LLC,

and

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,

as Joint Lead Arrangers and Joint Bookrunners

 

 

 

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Table of Contents

 

ARTICLE I  

Definitions

     1   

SECTION 1.01.

 

Defined Terms

     1   

SECTION 1.02.

 

Classification of Loans and Borrowings

     26   

SECTION 1.03.

 

Terms Generally

     26   

SECTION 1.04.

 

Accounting Terms; GAAP; Pro Forma Calculations

     27   

SECTION 1.05.

 

Status of Obligations

     28    ARTICLE II  

The Credits

     28   

SECTION 2.01.

 

Commitments

     28   

SECTION 2.02.

 

Loans and Borrowings

     28   

SECTION 2.03.

 

Requests for Borrowings

     29   

SECTION 2.04.

 

[Intentionally Omitted]

     30   

SECTION 2.05.

 

Swingline Loans

     30   

SECTION 2.06.

 

Liquidity Letters of Credit

     31   

SECTION 2.07.

 

Energy Hedging Letters of Credit

     35   

SECTION 2.08.

 

Funding of Borrowings

     40   

SECTION 2.09.

 

Interest Elections

     40   

SECTION 2.10.

 

Termination and Reduction of Commitments

     41   

SECTION 2.11.

 

Repayment of Loans; Evidence of Debt

     42   

SECTION 2.12.

 

Prepayment of Loans

     42   

SECTION 2.13.

 

Fees

     43   

SECTION 2.14.

 

Interest

     44   

SECTION 2.15.

 

Alternate Rate of Interest

     45   

SECTION 2.16.

 

Increased Costs; Illegality

     45   

SECTION 2.17.

 

Break Funding Payments

     47   

SECTION 2.18.

 

Taxes

     47   

SECTION 2.19.

 

Payments Generally; Allocations of Proceeds; Pro Rata Treatment; Sharing of
Set-offs

     50   

SECTION 2.20.

 

Mitigation Obligations; Replacement of Lenders

     52   

SECTION 2.21.

 

Liquidity Facility Expansion Option

     53   

SECTION 2.22.

 

Energy Hedging Facility Expansion Option

     54   

SECTION 2.23.

 

Defaulting Lenders

     55    ARTICLE III  

Representations and Warranties

     56   

SECTION 3.01.

 

Existence, Qualification and Power; Compliance with Laws

     56   

SECTION 3.02.

 

Binding Effect

     57   

SECTION 3.03.

 

Authorization; No Contravention

     57   

SECTION 3.04.

 

Governmental Authorization; Other Consents

     57   

SECTION 3.05.

 

Taxes

     57   

SECTION 3.06.

 

No Default

     57   

SECTION 3.07.

 

Financial Statements; No Material Adverse Effect; Indebtedness

     58   

SECTION 3.08.

 

Ranking

     58   

SECTION 3.09.

 

Ownership of Assets

     58   

SECTION 3.11.

 

Insurance

     58   

SECTION 3.12.

 

Disclosure

     58   

SECTION 3.13.

 

Subsidiaries; Equity Interests

     59   

 

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Table of Contents

continued

 

SECTION 3.14.

 

No Dividend Restrictions

     59   

SECTION 3.15.

 

Litigation

     59   

SECTION 3.16.

 

Solvency

     59   

SECTION 3.17.

 

Margin Regulations; Investment Company Act; USA PATRIOT Act

     59   

SECTION 3.18.

 

ERISA Compliance

     60   

SECTION 3.19.

 

Environmental Compliance

     60   

SECTION 3.20.

 

Labor Disputes

     61   

SECTION 3.21.

 

Affiliate Transactions

     61    ARTICLE IV  

Conditions

     61   

SECTION 4.01.

 

Effective Date

     61   

SECTION 4.02.

 

Each Credit Event

     62    ARTICLE V  

Affirmative Covenants

     63   

SECTION 5.01.

 

Financial Statements

     63   

SECTION 5.02.

 

Compliance Certificate

     64   

SECTION 5.03.

 

Notices

     64   

SECTION 5.04.

 

Compliance with Laws

     65   

SECTION 5.05.

 

Preservation of Existence, Etc.

     65   

SECTION 5.06.

 

Compliance with Environmental Laws

     65   

SECTION 5.07.

 

Maintenance of Properties; Ownership of Subsidiaries

     66   

SECTION 5.08.

 

Maintenance of Insurance

     66   

SECTION 5.09.

 

Use of Proceeds

     66   

SECTION 5.10.

 

Payment of Obligations

     66   

SECTION 5.11.

 

Cooperation

     66   

SECTION 5.12.

 

Books and Records

     66   

SECTION 5.13.

 

Financing Documents; Material Documents

     66   

SECTION 5.14.

 

Maintenance of Ratings

     67   

SECTION 5.15.

 

Inspection Rights

     67    ARTICLE VI  

Negative Covenants

     67   

SECTION 6.01.

 

Liens

     67   

SECTION 6.02.

 

Dispositions

     70   

SECTION 6.03.

 

Investments

     71   

SECTION 6.04.

 

Fundamental Changes

     72   

SECTION 6.05.

 

Nature of Business

     72   

SECTION 6.06.

 

Transactions with Affiliates; Management Fees

     73   

SECTION 6.07.

 

Accounting Changes

     73   

SECTION 6.08.

 

Restrictive Agreements

     73   

SECTION 6.09.

 

Financial Covenant

     74   

SECTION 6.10.

 

Preservation of Rights

     74    ARTICLE VII  

Events of Default

     74    ARTICLE VIII  

The Administrative Agent

     77   

 

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Table of Contents

continued

 

ARTICLE IX  

Miscellaneous

     79   

SECTION 9.01.

 

Notices

     80   

SECTION 9.02.

 

Waivers; Amendments

     80   

SECTION 9.03.

 

Expenses; Indemnity; Damage Waiver

     82   

SECTION 9.04.

 

Successors and Assigns

     83   

SECTION 9.05.

 

Survival

     86   

SECTION 9.06.

 

Counterparts; Integration; Effectiveness

     87   

SECTION 9.07.

 

Severability

     87   

SECTION 9.08.

 

Right of Setoff

     87   

SECTION 9.09.

 

Governing Law; Jurisdiction; Consent to Service of Process

     87   

SECTION 9.10.

 

WAIVER OF JURY TRIAL

     88   

SECTION 9.11.

 

Headings

     88   

SECTION 9.12.

 

Confidentiality

     88   

SECTION 9.13.

 

USA PATRIOT Act

     89   

SECTION 9.14.

 

Interest Rate Limitation

     89   

SECTION 9.15.

 

No Advisory or Fiduciary Responsibility

     89    SCHEDULES:      Schedule 1.01(a)  

–       Existing Indebtedness

          

Schedule 1.01(b)  

–       Permitted Holders

          

Schedule 2.01  

–       Commitments

          

Schedule 2.06(k)  

–       Existing Liquidity Letters of Credit

          

Schedule 3.04  

–       Regulatory Approvals

          

Schedule 3.13(a)  

–       Subsidiaries

          

Schedule 3.13(b)  

–       Subsidiaries Jurisdictions of Organization

          

Schedule 3.14  

–       Existing Dividend Restrictions

          

Schedule 3.15  

–       Litigation

          

Schedule 3.19  

–       Environmental Matters

          

Schedule 3.21  

–       Affiliate Transactions

          

Schedule 5.07  

–       Properties and Assets

          

Schedule 6.01(b)  

–       Existing Liens

          

Schedule 6.03(l)  

–       Investments

          

EXHIBITS:      Exhibit A  

–       Form of Assignment and Assumption

          

Exhibit B  

–       [Reserved]

          

Exhibit C  

–       Form of Increasing Lender Supplement

          

Exhibit D  

–       Form of Augmenting Lender Supplement

          

Exhibit E  

–       List of Closing Documents

          

Exhibit F  

–       Form of Revolving Loan Note

          

Exhibit G-1  

–       Form of U.S. Tax Certificate (Non-U.S. Lenders That Are Not
Partnerships)

          

Exhibit G-2  

–       Form of U.S. Tax Certificate (Non-U.S. Lenders That Are Partnerships)

          

Exhibit G-3  

–       Form of U.S. Tax Certificate (Non-U.S. Participants That Are Not
Partnerships)

          

Exhibit G-4  

–       Form of U.S. Tax Certificate (Non-U.S. Participants That Are
Partnerships)

          

Exhibit H  

–       Form of Solvency Certificate

          

Exhibit I  

–       Terms of Subordination

          

 

iii

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CREDIT AGREEMENT (this “Agreement”) dated as of February 4, 2013 among PUGET
SOUND ENERGY, INC., the LENDERS from time to time party hereto, WELLS FARGO
BANK, NATIONAL ASSOCIATION, as Administrative Agent, THE ROYAL BANK OF SCOTLAND
PLC, as Syndication Agent, and BANK OF AMERICA, N.A., BARCLAYS BANK PLC, COBANK,
ACB, EXPORT DEVELOPMENT CANADA and JPMORGAN CHASE BANK, N.A., as
Co-Documentation Agents.

The parties hereto agree as follows:

ARTICLE I

Definitions

SECTION 1.01. Defined Terms. As used in this Agreement, the following terms have
the meanings specified below:

“ABR” when used in reference to any Loan or Borrowing, refers to a Loan, or the
Loans comprising such Borrowing, bearing interest at a rate determined by
reference to the Alternate Base Rate.

“Adjusted LIBO Rate” means, with respect to any Eurodollar Borrowing for any
Interest Period, an interest rate per annum (rounded upwards, if necessary, to
the next 1/100 of 1%) equal to (a) the LIBO Rate for such Interest Period
multiplied by (b) the Statutory Reserve Rate.

“Administrative Agent” means Wells Fargo Bank, National Association, in its
capacity as administrative agent for the Lenders hereunder.

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

“Affiliate” means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.

“Affiliate Service Agreements” means any contract or agreement between the
Borrower or any Subsidiary and an Affiliate thereof providing for accounting,
tax, treasury, intercompany services or other professional services to the
Borrower or any Subsidiary.

“Alternate Base Rate” means, for any day, a rate per annum equal to the greatest
of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective
Rate in effect on such day plus  1/2 of 1% and (c) the Adjusted LIBO Rate for a
one month Interest Period on such day (or if such day is not a Business Day, the
immediately preceding Business Day) plus 1%, provided that, for the avoidance of
doubt, the Adjusted LIBO Rate for any day shall be based on the rate appearing
on Reuters Screen LIBOR01 Page (or on any successor or substitute page of such
page) at approximately 11:00 a.m. London time on such day. Any change in the
Alternate Base Rate due to a change in the Prime Rate, the Federal Funds
Effective Rate or the Adjusted LIBO Rate shall be effective from and including
the effective date of such change in the Prime Rate, the Federal Funds Effective
Rate or the Adjusted LIBO Rate, respectively.

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“Annual Report” means the audited consolidated financial statements of the
Borrower and its Subsidiaries for the fiscal year ending December 31, 2011.

“Applicable Percentage” means, (a) with respect to any Liquidity Lender, with
respect to Liquidity Revolving Loans, Liquidity LC Exposure or Swingline Loans,
the percentage equal to a fraction the numerator of which is such Liquidity
Lender’s Liquidity Commitment and the denominator of which is the Liquidity
Aggregate Commitment of all Liquidity Lenders (or, if the Liquidity Commitments
have terminated or expired, the Applicable Percentages shall be determined based
upon the Liquidity Commitments most recently in effect, giving effect to any
assignments) and (b) with respect to any Energy Hedging Lender, with respect to
Energy Hedging Loans or Energy Hedging LC Exposure, the percentage equal to a
fraction the numerator of which is such Energy Hedging Lender’s Energy Hedging
Commitment and the denominator of which is the Energy Hedging Aggregate
Commitment of all Energy Hedging Lenders (or, if the Energy Hedging Commitments
have terminated or expired, the Applicable Percentages shall be determined based
upon the Energy Hedging Commitments most recently in effect, giving effect to
any assignments); provided that, in each case of (a) and (b) above, in the case
of Section 2.23 when a Defaulting Lender shall exist, any such Defaulting
Lender’s Commitment shall be disregarded in the calculation.

“Applicable Rate” means, for any day, with respect to any Eurodollar Loan or any
ABR Loan or with respect to the facility fees payable hereunder, as the case may
be, the applicable rate per annum set forth below under the caption “Eurodollar
Spread for Eurodollar Loans”, “ABR Spread for ABR Loans” or “Commitment Fee
Rate”, as the case may be, based upon the Pricing Level applicable on such date:

 

Pricing Level   Commitment

Fee Rate

  Eurodollar Spread

for Eurodollar Loans

  ABR Spread for

ABR Loans

I   0.125%   1.125%   0.125% II   0.175%   1.250%   0.250% III   0.225%   1.500%
  0.500% IV   0.275%   1.750%   0.750% V   0.350%   2.000%   1.000%

For purposes of the foregoing:

(i) changes in the Eurodollar Spread for Eurodollar Loans, ABR Spread for ABR
Loans and the Commitment Fee Rate resulting from a change in the Pricing Level
shall become effective on the effective date of any change in the Senior Debt
Rating from S&P or Moody’s, or on the occurrence of an Event of Default;

(ii) in the event of a split in the Senior Debt Rating from S&P and Moody’s that
would otherwise result in the application of more than one Pricing Level (had
the provisions regarding the applicability of other Pricing Levels contained in
the definitions thereof not been given effect), then the Eurodollar Spread for
Eurodollar Loans, ABR Spread for ABR Loans and the Commitment Fee Rate shall be
determined as follows:

 

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(x) if the split in the Senior Debt Rating is one Pricing Level, then the higher
Senior Debt Rating will be the applicable Pricing Level,

(y) if the split in the Senior Debt Rating is two Pricing Levels, the midpoint
between the two will be the applicable Pricing Level, and

(z) if the split in the Senior Debt Rating is more than two Pricing Levels, the
Pricing Level will be the Pricing Level immediately below the higher Pricing
Level;

if either (but not both) Moody’s or S&P shall cease to be in the business of
rating corporate debt obligations, the Pricing Levels shall be determined on the
basis of the ratings provided by the other rating agency; and

(iii) if at any time the long term unsecured senior debt of the Borrower is
unrated by Moody’s and S&P, the Pricing Level will be Pricing Level V; provided
that if the reason that there is no such Senior Debt Rating results from Moody’s
and S&P ceasing to issue debt ratings generally, then the Borrower and the
Administrative Agent may select another nationally-recognized rating agency to
substitute for Moody’s and S&P for purposes of the foregoing pricing grid (and
all references herein to Moody’s and S&P, as applicable, shall refer to such
substitute rating agency), and until a substitute nationally-recognized rating
agency is so selected, the Pricing Level shall be determined by reference to the
Senior Debt Rating most recently in effect prior to cessation.

“Approved Bank” has the meaning specified in clause (c) of the definition of
“Cash Equivalents”.

“Approved Fund” has the meaning assigned to such term in Section 9.04.

“Assignment and Assumption” means an assignment and assumption agreement entered
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 9.04), and accepted by the Administrative Agent, in the form
of Exhibit A or any other form approved by the Administrative Agent.

“Attributable Receivables Indebtedness” at any time shall mean the principal
amount of Indebtedness which (a) if a Receivables Facility is structured as a
secured lending agreement, constitutes the principal amount of such Indebtedness
or (b) if a Receivables Facility is structured as a purchase agreement, would be
outstanding at such time under the Receivables Facility if the same were
structured as a secured lending agreement rather than a purchase agreement.

“Authorized Officer” means the chief executive officer, president, chief
financial officer, chief accounting officer, vice president finance, treasurer
or assistant treasurer or other similar officer of the Borrower or any
Subsidiary and, as to any document delivered on the Effective Date, any
secretary or assistant secretary of the Borrower or any Subsidiary.

“Available Revolving Commitment” means, at any time with respect to any Lender,
the aggregate of the Liquidity Commitment and the Energy Hedging Commitment of
such Lender then in effect minus the Revolving Credit Exposure of such Lender at
such time; it being understood and agreed that any Lender’s Swingline Exposure
shall not be deemed to be a component of the Revolving Credit Exposure for
purposes of calculating the commitment fee under Section 2.13(a).

“Availability Period” means the Liquidity Availability Period and/or the Energy
Hedging Availability Period, as the context may require.

 

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“Banking Services” means each and any of the following bank services provided to
the Borrower by any Lender or any of its Affiliates: (a) credit cards for
commercial customers (including, without limitation, commercial credit cards and
purchasing cards), (b) stored value cards and (c) treasury management services
(including, without limitation, controlled disbursement, automated clearinghouse
transactions, return items, overdrafts and interstate depository network
services).

“Banking Services Agreement” means any agreement entered into by the Borrower or
any Subsidiary in connection with Banking Services.

“Banking Services Obligations” means any and all obligations of the Borrower or
any Subsidiary, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor) in connection with Banking
Services.

“Bankruptcy Event” means, with respect to any Person, such Person becomes the
subject of a bankruptcy or insolvency proceeding, or has had a receiver,
conservator, trustee, administrator, custodian, assignee for the benefit of
creditors or similar Person charged with the reorganization or liquidation of
its business appointed for it, or, in the good faith determination of the
Administrative Agent, has taken any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any such proceeding or appointment,
provided that a Bankruptcy Event shall not result solely by virtue of any direct
or indirect ownership interest, or the acquisition of any direct or indirect
ownership interest, in such Person by a Governmental Authority or
instrumentality thereof, provided, further, that such ownership interest does
not result in or provide such Person with immunity from the jurisdiction of
courts within the United States or from the enforcement of judgments or writs of
attachment on its assets or permit such Person (or such Governmental Authority
or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or
agreements made by such Person.

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

“Borrower” means Puget Sound Energy, Inc., a Washington corporation.

“Borrower Group” means the Borrower and the Operating Companies and “Borrower
Group Member” means any of the Borrower or any Operating Company.

“Borrowing” means a Liquidity Borrowing and/or an Energy Hedging Borrowing, as
the context may require.

“Borrowing Request” means a request by the Borrower for a Borrowing in
accordance with Section 2.03.

“Business Day” means any day that is not a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
remain closed; provided that, when used in connection with a Eurodollar Loan,
the term “Business Day” shall also exclude any day on which banks are not open
for dealings in Dollars in the London interbank market.

“Capital Lease Obligations” of any Person means the obligations of such Person
to pay rent or other amounts under any lease of (or other arrangement conveying
the right to use) property, or a combination thereof, which obligations are
required to be classified and accounted for as capital leases on a balance sheet
of such Person under GAAP, and the amount of such obligations shall be the
capitalized amount thereof determined in accordance with GAAP; provided,
however, that in the event that changes

 

4

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in GAAP occur after the Effective Date, the effect of which is to cause leases
of the type in effect as of December 31, 2011 and treated as operating leases
under GAAP as of December 31, 2011 to be reclassified as capital leases under
GAAP, the definition of Capital Lease Obligation shall exclude any such
reclassified leases.

“Cash Equivalents” means any of the following types of Investments, to the
extent owned by the Borrower or any Subsidiary:

(a) Dollars held by it from time to time in the ordinary course of business;

(b) readily marketable obligations issued or directly and fully guaranteed or
insured by the government or any agency or instrumentality of the United States
and having maximum maturities of not more than one (1) year from the date of
acquisition thereof;

(c) investments in certificates of deposit, banker’s acceptances and time
deposits maturing within one hundred eighty (180) days from the date of
acquisition thereof issued or guaranteed by or placed with, and money market
deposit accounts issued or offered by, any domestic office of any commercial
bank organized under the laws of the United States of America or any State
thereof which has a combined capital and surplus and undivided profits of not
less than $1,000,000,000 (such bank, an “Approved Bank”);

(d) commercial paper and variable or fixed rate notes issued by an Approved Bank
or commercial paper and variable or fixed rate notes issued by, or guaranteed
by, a corporation rated A-1 (or the equivalent thereof) or better by S&P or P-1
(or the equivalent thereof) or better by Moody’s, in each case with maximum
maturities of not more than two hundred seventy (270) days from the date of
acquisition thereof; provided that, no more than $50,000,000 in the aggregate of
such commercial paper per issuer shall be outstanding at any time;

(e) repurchase agreements fully secured by obligations described in clause
(b) above with any Approved Bank; and

(f) Investments with maximum maturities of twelve (12) months or less from the
date of acquisition in (i) money market funds rated AAA (or the equivalent
thereof) or better by S&P or Aaa (or the equivalent thereof) or better by
Moody’s that are registered under the Investment Company Act of 1940, as
amended, and the portfolios of which are limited solely to Investments of the
character, quality and maturity described in the foregoing clauses (b), (c),
(d) and (e) or (ii) the Federal Municipal Obligations Fund (or its successors)
so long as such fund is rated AA (or the equivalent thereof) or better by S&P or
Fitch Ratings Ltd. at the time of such Investment.

“CFO” means the chief financial officer of the Borrower or person holding a
similar position.

“Change in Control” means the Permitted Holders shall fail to (i) own and
control directly or indirectly, in the aggregate more than 50.1% of the issued
and outstanding common Equity Interests in the Parent or the Borrower and
(ii) control the board of directors (or comparable governing body) of the Parent
or the Borrower, as the case may be.

“Change in Law” means (a) the adoption of any law, rule, regulation or treaty
after the date of this Agreement, (b) any change in any law, rule, regulation or
treaty or in the interpretation or application thereof by any Governmental
Authority after the date of this Agreement or (c) compliance by any Lender or
any Issuing Bank (or, for purposes of Section 2.16(b), by any lending office of
such Lender

 

5

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or by such Lender’s or such Issuing Bank’s holding company, if any) with any
request, guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this
Agreement; provided, however, that notwithstanding anything herein to the
contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and
all requests, rules, guidelines or directives thereunder or issued in connection
therewith, and (ii) all requests, rules, guidelines, requirements and directives
promulgated by the Bank for International Settlements, the Basel Committee on
Banking Supervision (or any successor or similar authority) or the United States
or foreign regulatory authorities, in each case pursuant to Basel III, shall in
each case be deemed to be a “Change in Law”, regardless of the date enacted,
adopted or issued.

“Class”, when used in reference to any Liquidity Loan or Liquidity Borrowing,
refers to whether such Liquidity Loan, or the Liquidity Loans comprising such
Liquidity Borrowing, are Revolving Loans or Swingline Loans.

“Code” means the Internal Revenue Code of 1986.

“Co-Documentation Agent” means each of Bank of America, N.A., Barclays Bank PLC,
CoBank, ACB, Export Development Canada and JPMorgan Chase Bank, N.A., in its
capacity as co-documentation agent for the credit facility evidenced by this
Agreement.

“Commitment” means, any Liquidity Commitment and/or any Energy Hedging
Commitment, as the context may require.

“Consolidated Current Liabilities” means, at any date, all amounts (without
duplication that would, in conformity with GAAP, be set forth opposite the
caption “total current liabilities” (or any like caption) on a consolidated
balance sheet of the Borrower and its Subsidiaries at such date (other than
(i) the current portion of any funded Indebtedness, (ii) without duplication of
clause (i) above, all Indebtedness consisting of revolving loans to the extent
otherwise included therein, (iii) unrealized losses on derivative instruments,
(iv) any current portion of deferred taxes, (v) accrued expenses related to
taxes and interest, (vi) purchased gas adjustment payables and (vii) all amounts
set forth opposite the caption “other current liabilities” on the consolidated
balance sheet of the Borrower and its Subsidiaries for the relevant period).

“Consolidated Tangible Net Assets” means at any date, the total of all assets of
the Borrower Group (including revaluations thereof as a result of commercial
appraisals, price level restatement or otherwise) as set forth on the balance
sheet most recently delivered to the Lenders pursuant to Section 5.01 net of
applicable reserves and deductions but excluding goodwill, trade names,
trademarks, unamortized debt discount and all other like intangible assets
(which term shall not be construed to include such revaluations) less the
aggregate of the Consolidated Current Liabilities of the Borrower Group
appearing on such balance sheet.

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

“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
“Controlling” and “Controlled” have meanings correlative thereto.

“Credit Event” means a Borrowing, the issuance of a Letter of Credit, an LC
Disbursement or any of the foregoing.

 

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“Credit Party” means the Administrative Agent, the Issuing Bank, the Swingline
Lender or any other Lender.

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

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

“Defaulting Lender” means any Lender that (a) has failed, within two
(2) Business Days of the date required to be funded or paid, to (i) fund any
portion of its Loans, (ii) fund any portion of its participations in Letters of
Credit or Swingline Loans or (iii) pay over to any Credit Party any other amount
required to be paid by it hereunder, unless, in the case of clause (i) above,
such Lender notifies the Administrative Agent in writing that such failure is
the result of such Lender’s good faith determination that a condition precedent
to funding (specifically identified and including the particular default, if
any) has not been satisfied, (b) has notified the Borrower or any Credit Party
in writing, or has made a public statement to the effect, that it does not
intend or expect to comply with any of its funding obligations under this
Agreement (unless such writing or public statement indicates that such position
is based on such Lender’s good faith determination that a condition precedent
(specifically identified and including the particular default, if any) to
funding a loan under this Agreement cannot be satisfied) or generally under
other agreements in which it commits to extend credit, (c) has failed, within
three (3) Business Days after request by the Administrative Agent, the Issuing
Bank or the Swingline Lender, acting in good faith, to provide a certification
in writing from an authorized officer of such Lender that it will comply with
its obligations to fund prospective Loans and participations in then outstanding
Letters of Credit and Swingline Loans under this Agreement, provided that such
Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon
such Credit Party’s receipt of such certification in form and substance
reasonably satisfactory to it and the Administrative Agent, or (d) has become
the subject of a Bankruptcy Event.

“Disposition” or “Dispose” means the sale, assignment, transfer or other
disposition (including any Sale and Leaseback Transaction and any termination of
business lines) of any property by the Borrower or any of its Subsidiaries to
any Person, including any sale, assignment, transfer or other disposal, with or
without recourse, of any notes or accounts receivable or any rights and claims
associated therewith.

“Dollars” or “$” refers to lawful money of the United States of America.

“Effective Date” means the date on which the conditions specified in
Section 4.01 are satisfied (or waived in accordance with Section 9.02).

“Energy Hedging Aggregate Commitment” means the aggregate of the Energy Hedging
Commitments of all of the Energy Hedging Lenders, as reduced or increased from
time to time pursuant to the terms and conditions hereof. As of the Effective
Date, the Energy Hedging Aggregate Commitment is $350,000,000.

“Energy Hedging Augmenting Lender” has the meaning assigned to such term in
Section 2.22.

 

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“Energy Hedging Availability Period” means the period from and including the
Effective Date to but excluding the earlier of the Maturity Date and the date of
termination of the Energy Hedging Commitments.

“Energy Hedging Borrowing” means Energy Hedging Loans of the same Type, made,
converted or continued on the same date and, in the case of Eurodollar Loans, as
to which a single Interest Period is in effect.

“Energy Hedging Commitment” means, with respect to each Energy Hedging Lender,
the commitment of such Energy Hedging Lender, to make Energy Hedging Loans and
to acquire participations in Energy Hedging Letters of Credit hereunder,
expressed as an amount representing the maximum aggregate amount of such Energy
Hedging Lender’s Energy Hedging Revolving Credit Exposure hereunder, as such
commitment may be (a) reduced or terminated from time to time pursuant to
Section 2.10, (b) increased from time to time pursuant to Section 2.22 and
(c) reduced or increased from time to time pursuant to assignments by or to such
Lender pursuant to Section 9.04. The initial amount of each Energy Hedging
Lender’s Energy Hedging Commitment is set forth on Schedule 2.01, or in the
Assignment and Assumption or other documentation contemplated hereby pursuant to
which such Energy Hedging Lender shall have assumed its Energy Hedging
Commitment, as applicable.

“Energy Hedging Increasing Lender” has the meaning assigned to such term in
Section 2.22.

“Energy Hedging Issuing Bank” means (a) Wells Fargo Bank, National Association,
(b) The Royal Bank of Scotland plc and (c) any other Energy Hedging Lender or
Energy Hedging Lenders reasonably acceptable to the Borrower and the
Administrative Agent that agrees to issue Energy Hedging Letters of Credit
hereunder, and its successors in such capacity as provided in Section 2.07(i).
Each Energy Hedging Issuing Bank may, in its discretion, arrange for one or more
Energy Hedging Letters of Credit to be issued by Affiliates of such Energy
Hedging Issuing Bank, in which case the term “Energy Hedging Issuing Bank” shall
include any such Affiliate with respect to Energy Hedging Letters of Credit
issued by such Affiliate. Notwithstanding the foregoing, (x) the aggregate face
amount of all Energy Hedging Letters of Credit issued by Wells Fargo Bank,
National Association shall not exceed $37,500,000 and (y) the aggregate face
amount of all Energy Hedging Letters of Credit issued by The Royal Bank of
Scotland plc shall not exceed $37,500,000.

“Energy Hedging LC Collateral Account” has the meaning assigned to such term in
Section 2.07(j).

“Energy Hedging LC Disbursement” means a payment made by an Energy Hedging
Issuing Bank pursuant to an Energy Hedging Letter of Credit.

“Energy Hedging LC Exposure” means, at any time, the sum of (a) the aggregate
undrawn amount of all outstanding Energy Hedging Letters of Credit at such time
plus (b) the aggregate amount of all Energy Hedging LC Disbursements that have
not yet been reimbursed by or on behalf of the Borrower at such time. The Energy
Hedging LC Exposure of any Energy Hedging Lender at any time shall be its
Applicable Percentage of the total Energy Hedging LC Exposure at such time.

“Energy Hedging Lenders” means the Persons listed on Schedule 2.01 and any other
Person that shall have become an Energy Hedging Lender hereunder pursuant to
Section 2.22 or pursuant to an Assignment and Assumption, other than any such
Person that ceases to be a party hereto pursuant to an Assignment and
Assumption.

 

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“Energy Hedging Letter of Credit” means any standby letter of credit issued
pursuant to Section 2.07 of this Agreement.

“Energy Hedging Loans” means the loans made by the Energy Hedging Lenders to the
Borrower pursuant to Sections 2.01(b) and 2.22 of this Agreement.

“Energy Hedging Revolving Credit Exposure” means, with respect to any Energy
Hedging Lender at any time, the sum of the outstanding principal amount of such
Energy Hedging Lender’s Energy Hedging Loans and its Energy Hedging LC Exposure
at such time.

“Environmental Laws” means any and all federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, initiatives,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution, the protection of the
environment, natural resources, or, to the extent relating to exposure to
Hazardous Materials, human health or safety or to the release of any Hazardous
Materials into the environment, including air emissions and discharges to waste
or public systems.

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

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

“Equity Interests” means, with respect to any Person, all of the shares,
membership interests, rights, participations or other equivalents (however
designated) of capital stock of (or other ownership or profit interests or units
in) such Person and all of the warrants, options or other rights for the
purchase, acquisition or exchange from such Person of any of the foregoing
(including through convertible securities).

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

“ERISA Affiliate” means any trade or business (whether or not incorporated)
that, together with the Borrower, is treated as a single employer under
Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of
ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.

“ERISA Event” means (a) any reportable event, as defined in Section 4043 of
ERISA, or the regulations issued thereunder, with respect to a Plan, that the
Administrative Agent determines in good faith constitutes (i) grounds for the
termination of any Plan by the PBGC or the appointment of a trustee to
administer or liquidate any Plan, or (ii) a failure to make required minimum
contributions (other than an event for which the 30-day notice period is waived)
shall have occurred and be continuing; (b) the existence with respect to any
Plan of an “unpaid minimum required contribution” which means, with respect to
any plan year, any minimum required contribution under Section 430 of the Code
for the plan year which is not paid on or before the due date (as determined
under Section 430(j)(1) of the Code) for the plan year; (c) the filing pursuant
to Section 412(c) of the Code or Section 302(c) of ERISA of an

 

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application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of notice of the intention to terminate any Plan or Plans or to
appoint a trustee to administer any Plan; (f) the incurrence by the Borrower or
any of its ERISA Affiliates of any liability with respect to the withdrawal or
partial withdrawal of the Borrower or any of its ERISA Affiliates from any Plan
or Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate
from any Multiemployer Plan of notice of (i) the imposition upon the Borrower or
any of its ERISA Affiliates of Withdrawal Liability or (ii) a determination that
such Multiemployer Plan is, or is expected to be, insolvent or in
reorganization, within the meaning of Title IV of ERISA.

“Eurodollar”, when used in reference to any Loan or Borrowing, means that such
Loan, or the Loans comprising such Borrowing, bears interest at a rate
determined by reference to the Adjusted LIBO Rate.

“Event of Default” has the meaning assigned to such term in Article VII.

“Excluded Taxes” means, with respect to any payment made by the Borrower under
any Financing Document, any of the following Taxes imposed on or with respect to
a Recipient:

(a) income or franchise Taxes imposed on (or measured by) net income by the
United States of America, or by the jurisdiction under the laws of which such
Recipient is organized or in which its principal office is located or, in the
case of any Lender, in which its applicable lending office is located,

(b) any branch profits Taxes imposed by the United States of America or any
similar Taxes imposed by any other jurisdiction in which the Borrower is
located,

(c) in the case of a Non U.S. Lender (other than an assignee pursuant to a
request by the Borrower under Section 2.20(b)), any U.S. federal withholding
Taxes resulting from any law in effect (including FATCA) on the date such Non
U.S. Lender becomes a party to this Agreement (or designates a new lending
office) or is attributable to such Non U.S. Lender’s failure to comply with
Section 2.18(f), except to the extent that such Non U.S. Lender (or its
assignor, if any) was entitled, at the time of designation of a new lending
office (or assignment), to receive additional amounts from the Borrower with
respect to such withholding Taxes pursuant to Section 2.18(a); and

(d) any Business and Occupation Taxes imposed by the State of Washington.

“Existing Parent Credit Agreement” that certain Credit Agreement, dated as of
February 10, 2012, among the Parent, the lenders from time to time parties
thereto and JPMorgan Chase Bank, N.A., as administrative agent, as amended,
restated, supplemented or otherwise modified prior to the date hereof.

“Existing Borrower Credit Agreement” that certain Credit Agreement, dated as of
February 6, 2009, among the Borrower, the lenders from time to time parties
thereto and Barclays Bank PLC, as facility agent, as amended, restated,
supplemented or otherwise modified prior to the date hereof.

“Existing Indebtedness” means (a) Indebtedness of the Borrower or any Subsidiary
that is outstanding on the Effective Date and listed on Schedule 1.01(a) and
(b) any Permitted Refinancing Indebtedness thereof.

 

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“Existing Liquidity Issuing Bank” means, with respect to any Existing Liquidity
Letter of Credit, the issuer of such Existing Liquidity Letter of Credit as set
forth on Schedule 2.06(k).

“Existing Liquidity Letter of Credit” shall mean each of the letters of credit
described by applicant, date of issuance, letter of credit number, amount,
beneficiary and the date of expiry on Schedule 2.06(k).

“Extraordinary Taxes” means taxes paid in connection with Dispositions and other
non-recurring events.

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version that is substantially comparable
and not materially more onerous to comply with), and any (current or future)
regulations or official interpretations thereof.

“Federal Funds Effective Rate” means, for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight
federal funds transactions with members of the federal Reserve System arranged
by federal funds brokers, as published on the next succeeding Business Day by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day that is a Business Day, the average (rounded upwards, if necessary, to
the next 1/100 of 1%) of the quotations for such day for such transactions
received by the Administrative Agent from three federal funds brokers of
recognized standing selected by it.

“Financial Officer” means the chief financial officer, principal accounting
officer, vice president finance, treasurer or assistant treasurer of the
Borrower.

“Financing Documents” means (i) this Agreement, (ii) any promissory notes issued
pursuant to Section 2.11(e) of this Agreement, (iii) Interest Hedge Agreements
with any Interest Rate Hedge Bank (iv) any Letter of Credit applications and
(v) all other agreements, instruments, documents and certificates identified in
Section 4.01 executed and delivered to, or in favor of, the Administrative Agent
or any Lenders and including all other pledges, powers of attorney, consents,
assignments, contracts, notices, letter of credit agreements and all other
written matter whether heretofore, now or hereafter executed by or on behalf of
the Borrower, or any employee of the Borrower, and delivered to the
Administrative Agent or any Lender in connection with this Agreement or the
transactions contemplated hereby. Any reference in this Agreement or any other
Financing Document to a Financing Document shall include all appendices,
exhibits or schedules thereto, and all amendments, restatements, supplements or
other modifications thereto, and shall refer to this Agreement or such Financing
Document as the same may be in effect at any and all times such reference
becomes operative.

“GAAP” means generally accepted accounting principles in the United States of
America.

“Governmental Authority” means the government of the United States of America,
any other nation or any political subdivision thereof, whether state or local,
and any agency, authority, instrumentality, regulatory body, court, central bank
or other entity exercising executive, legislative, judicial, taxing, regulatory
or administrative powers or functions of or pertaining to government, including,
without limitation, the Washington Utilities and Transportation Commission.

“Guarantee” means, as to any Person, without duplication, (a) any obligation,
contingent or otherwise, of such Person guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other monetary obligation payable or
performable by another Person (the “Primary

 

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Obligor”) in any manner, whether directly or indirectly, and including any
obligation of such Person, direct or indirect, (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or
other monetary obligation or to purchase (or to advance or supply funds for the
purchase of) any security for the payment thereof, (ii) to purchase or lease
property, securities or services for the purpose of assuring the obligee in
respect of such Indebtedness or other monetary obligation of the payment or
performance of such Indebtedness or other monetary obligation, (iii) to maintain
working capital, equity capital or any other financial statement condition or
liquidity or level of income or cash flow of the Primary Obligor so as to enable
the Primary Obligor to pay such Indebtedness or other monetary obligation,
(iv) as an account party in respect of any letter of credit or letter of
guaranty issued to support such Indebtedness or monetary obligation or
(v) entered into for the purpose of assuring in any other manner the obligee in
respect of such Indebtedness or other monetary obligation of the payment or
performance thereof or to protect such obligee against loss in respect thereof
(in whole or in part), or (b) any Lien on any assets of such Person securing any
Indebtedness or other monetary obligation of any other Person, whether or not
such Indebtedness or other monetary obligation is assumed by such Person (or any
right, contingent or otherwise, of any holder of such Indebtedness to obtain any
such Lien); provided that the term “Guarantee” shall not include endorsement for
a collection or deposit in the ordinary course of business. The amount of any
Guarantee shall be deemed to be an amount equal to the stated or determinable
amount of the related primary obligation, or portion thereof, in respect of
which such Guarantee is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof as determined by the
guaranteeing Person in good faith. The term “Guarantee” as a verb has a
corresponding meaning.

“Hazardous Materials” means all explosive or radioactive substances or wastes
and all hazardous or toxic substances, wastes or pollutants, including petroleum
or petroleum distillates, asbestos or asbestos-containing materials, toxic mold,
polychlorinated biphenyls, radon gas, infectious or medical wastes and all other
such substances or wastes defined in or otherwise regulated as “hazardous” or
“toxic” wastes or substances under applicable Environmental Law.

“Hybrid Debt Securities” means (a) any securities, trust preferred securities,
or deferrable interest subordinated debt, which, in each such case, provides for
the optional or mandatory deferral of interest or distributions, issued by any
Borrower Group Member, or (b) Equity Interests of any business trusts, limited
liability companies, limited partnerships or similar entities (i) substantially
all of the Equity Interests of which are owned (either directly or indirectly
through one or more Subsidiaries) at all times by any Borrower Group Member,
(ii) that have been formed for the purpose of issuing securities, trust
preferred securities or deferrable interest subordinated debt of the type
described in clause (a) above, and (iii) substantially all the assets of which
consist of (x) subordinated debt issued by any Borrower Group Member, and
(y) payments made from time to time on such subordinated debt.

“Immaterial Subsidiary” means any Subsidiary (a) designated on the Effective
Date on Schedule 3.13 or designated as such by the Borrower after the Effective
Date in a notice delivered to the Administrative Agent and (b) whose total
assets (excluding intercompany receivables) at the relevant time of
determination have a gross asset value of less than 1% of total assets
(excluding intercompany receivables) of the Borrower and its Subsidiaries on a
consolidated basis as set forth on the most recent financial statements
delivered pursuant to Sections 4.01(c) or 5.01(a) and whose total consolidated
revenues for the twelve (12) months ending at the relevant time of determination
are less than 1% of total consolidated revenue of the Borrower and its
Subsidiaries as set forth on the most recent financial statements delivered
pursuant to Sections 4.01(c) or 5.01(a); provided that at no time shall all
Immaterial Subsidiaries so designated pursuant to this definition have in the
aggregate (x) total assets (excluding intercompany receivables) at the relevant
time of determination having a gross asset value in excess of 5% of total assets
(excluding intercompany receivables) of the Borrower and its Subsidiaries on a
consolidated basis as set forth on the most recent financial statements
delivered pursuant to Sections

 

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4.01(c) or 5.01(a) or (y) total consolidated revenues for the twelve (12) months
ending at the relevant time of determination in excess of 5% of total
consolidated revenue of the Borrower and its Subsidiaries on a consolidated
basis as set forth on the most recent financial statements delivered pursuant to
Sections 4.01(c) and 5.01(a); provided, further, that (1) in the event that a
Subsidiary no longer qualifies as an Immaterial Subsidiary pursuant to clause
(b) above, the Borrower shall advise the Administrative Agent thereof in a
notice delivered to the Administrative Agent and (2) in the event that the
Subsidiaries designated as Immaterial Subsidiaries pursuant to this definition
at the relevant time of determination in the aggregate do not comply with the
first proviso in this definition, the Borrower shall designate one of more of
such Subsidiaries as a Subsidiary which is not an Immaterial Subsidiary in a
notice delivered to the Administrative Agent.

“Indebtedness” of any Person means, without duplication, (a) all obligations of
such Person for borrowed money, (b) all obligations of such Person evidenced by
bonds, debentures, notes or similar instruments, including, without limitation,
Hybrid Debt Securities, (c) all obligations of such Person upon which interest
charges are customarily paid, (d) all obligations of such Person under
conditional sale or other title retention agreements relating to property
acquired by such Person, (e) all obligations of such Person in respect of the
deferred purchase price of property or services (excluding current accounts
payable incurred in the ordinary course of business), (f) 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 property owned or
acquired by such Person, whether or not the Indebtedness secured thereby has
been assumed, (g) all Guarantees by such Person of Indebtedness of others,
(h) all Capital Lease Obligations of such Person, (i) all obligations,
contingent or otherwise, of such Person as an account party in respect of
letters of credit and letters of guaranty, (j) all obligations, contingent or
otherwise, of such Person in respect of bankers’ acceptances, (k) net
obligations of such Person under any Interest Hedging Agreement (the amount of
any such net obligation to be the amount that is or would be payable upon
settlement, liquidation, termination or acceleration thereof at the time of
calculation), (l) all Attributable Receivables Indebtedness of such Person,
(m) all obligations of such Person under Sale and Leaseback Transactions and
(n) all obligations of such Person to purchase, redeem, retire, defease or
otherwise make any payment in respect of any Redeemable Equity Interests in such
Person or any other Person or any warrants, rights or options to acquire such
Equity Interests, valued, in the case of Redeemable Preferred Interests, at the
greater of its voluntary or involuntary liquidation preference plus accrued and
unpaid dividends; The Indebtedness of any Person shall include the Indebtedness
of any other entity (including any partnership in which such Person is a general
partner) to the extent such Person is liable therefor as a result of such
Person’s ownership interest in or other relationship with such entity, except to
the extent the terms of such Indebtedness provide that such Person is not liable
therefor. For greater certainty, “Indebtedness” shall not include Indebtedness
in an amount equal to the aggregate amount of cash held by the Borrower and its
Subsidiaries and included in the cash accounts listed on the consolidated
balance sheet of the Borrower and its Subsidiaries and deposited with the
Administrative Agent for the repayment or refinancing of outstanding
Indebtedness of the Borrower and its Subsidiaries (other than equity securities
that are mandatorily redeemable 91 or more days after the Maturity Date and that
are Hybrid Debt Securities or otherwise classified as hybrid securities by
Moody’s and S&P) within 90 days of the date of determination; provided that the
use thereof is not prohibited by law or any contract to which the Borrower or
any of its Subsidiaries is a party.

“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or
with respect to any payment made by the Borrower under any Financing Document
and (b) Other Taxes.

“Information Memorandum” means the Confidential Information Memorandum dated
January 2013 relating to the Borrower and the Transactions.

 

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“Intercompany Loans” means loans, advances or other extensions of credit by any
member of the Borrower Group to any other member of the Borrower Group.

“Interest Election Request” means a request by the Borrower to convert or
continue a Borrowing in accordance with Section 2.09.

“Interest Hedging Agreements” means any rate swap, cap or collar agreement or
similar arrangement between the Borrower and one or more interest rate hedge
providers designed to protect such Person against fluctuations in interest
rates. For purposes of this Agreement and the other Financing Documents, the
Indebtedness at any time of the Borrower under an Interest Hedging Agreement
shall be determined at such time in accordance with the methodology set forth in
such Interest Hedging Agreement.

“Interest Payment Date” means (a) with respect to any ABR Loan (other than a
Swingline Loan), the last day of each March, June, September and December and
the Maturity Date, (b) with respect to any Eurodollar Loan, the last day of the
Interest Period applicable to the Borrowing of which such Loan is a part and, in
the case of a Eurodollar Borrowing with an Interest Period of more than three
months’ duration, each day prior to the last day of such Interest Period that
occurs at intervals of three months’ duration after the first day of such
Interest Period and the Maturity Date and (c) with respect to any Swingline
Loan, the day that such Loan is required to be repaid pursuant to Section 2.11
and the Maturity Date.

“Interest Period” means with respect to any Eurodollar Borrowing, the period
commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter (or nine or twelve months thereafter, if agreed in writing by each
applicable Lender), as the Borrower may elect; provided that (a) if any Interest
Period would end on a day other than a Business Day, such Interest Period shall
be extended to the next succeeding Business Day unless, in the case of a
Eurodollar Borrowing only, such next succeeding Business Day would fall in the
next calendar month, in which case such Interest Period shall end on the next
preceding Business Day and (b) any Interest Period pertaining to a Eurodollar
Borrowing that commences on the last Business Day of a calendar month (or on a
day for which there is no numerically corresponding day in the last calendar
month of such Interest Period) shall end on the last Business Day of the last
calendar month of such Interest Period. For purposes hereof, the date of a
Borrowing initially shall be the date on which such Borrowing is made and, in
the case of a Borrowing, thereafter shall be the effective date of the most
recent conversion or continuation of such Borrowing.

“Interest Rate Hedge Bank” means any Person that is a Lender or an Affiliate of
a Lender at the time it enters into an Interest Hedging Agreement, in its
capacity as a party thereto.

“Investment” means, as to any Person, any direct or indirect acquisition or
investment by such Person, whether by means of (a) the purchase or other
acquisition of Equity Interests, Indebtedness or other securities of another
Person, (b) a loan, advance or capital contribution to, Guarantee or assumption
of Indebtedness of, or purchase or other acquisition of any other debt or Equity
Interest in, another Person, including any partnership or joint venture interest
in such other Person or (c) the purchase or other acquisition (in one
transaction or a series of transactions) of all or substantially all of the
property and assets or business of another Person or assets constituting a
business unit, line of business or division of such Person. For purposes of
covenant compliance, the amount of any Investment shall be the amount actually
invested, without adjustment for subsequent increases or decreases in the value
of such Investment.

“IRS” means the United States Internal Revenue Service.

 

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“Issuing Bank” means any Liquidity Issuing Bank and/or any Energy Hedging
Issuing Bank, as the context may require.

“Laws” means, collectively, all international, foreign, federal, state and local
statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case whether or not having the force of law.

“LC Disbursement” means any Liquidity LC Disbursement and/or any Energy Hedging
LC Disbursement, as the context may require.

“LC Exposure” means, the Liquidity LC Exposure and/or the Energy Hedging LC
Exposure, as the context may require.

“Lender Parent” means, with respect to any Lender, any Person as to which such
Lender is, directly or indirectly, a subsidiary.

“Lenders” means any Liquidity Lender and/or any Energy Hedging Lender, as the
context may require. Unless the context otherwise requires, the term “Lenders”
includes the Swingline Lender.

“Letter of Credit” means any Liquidity Letter of Credit and/or any Energy
Hedging Letter of Credit, as the context may require.

“Leverage Ratio” means, as of any date of determination, the ratio of (a) Total
Funded Indebtedness at such date, to (b) Total Capitalization at such date.

“LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest
Period, the rate appearing on Reuters Screen LIBOR01 Page (or on any successor
or substitute page of such service, or any successor to or substitute for such
service, providing rate quotations comparable to those currently provided on
such page of such service, as determined by the Administrative Agent from time
to time for purposes of providing quotations of interest rates applicable to
deposits in Dollars in the London interbank market) at approximately 11:00 a.m.,
London time, two (2) Business Days prior to the commencement of such Interest
Period, as the rate for deposits in Dollars with a maturity comparable to such
Interest Period. In the event that such rate is not available at such time for
any reason, then the “LIBO Rate” with respect to such Eurodollar Borrowing for
such Interest Period shall be the rate at which deposits in Dollars in an amount
comparable to the Loans then requested and for a maturity comparable to such
Interest Period are offered by the principal London office of the Administrative
Agent in immediately available funds in the London interbank market at
approximately 11:00 a.m., London time, two (2) Business Days prior to the
commencement of such Interest Period.

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge, or preference,
priority or other security interest or preferential arrangement, of any kind or
nature whatsoever (including any conditional sale or other title retention
agreement, any easement, right of way or other encumbrance on title to real
property, and any Capital Lease Obligation having substantially the same
economic effect as any of the foregoing).

 

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“Liquidity Aggregate Commitment” means the aggregate of the Liquidity
Commitments of all of the Liquidity Lenders, as reduced or increased from time
to time pursuant to the terms and conditions hereof. As of the Effective Date,
the Liquidity Aggregate Commitment is $650,000,000.

“Liquidity Augmenting Lender” has the meaning assigned to such term in
Section 2.21.

“Liquidity Availability Period” means the period from and including the
Effective Date to but excluding the earlier of the Maturity Date and the date of
termination of the Liquidity Commitments.

“Liquidity Borrowing” means (a) Liquidity Revolving Loans of the same Type,
made, converted or continued on the same date and, in the case of Eurodollar
Loans, as to which a single Interest Period is in effect or (b) a Swingline
Loan.

“Liquidity Commitment” means, with respect to each Liquidity Lender, the
commitment of such Liquidity Lender, to make Liquidity Revolving Loans and to
acquire participations in Liquidity Letters of Credit and Swingline Loans
hereunder, expressed as an amount representing the maximum aggregate amount of
such Liquidity Lender’s Liquidity Revolving Credit Exposure hereunder, as such
commitment may be (a) reduced or terminated from time to time pursuant to
Section 2.10, (b) increased from time to time pursuant to Section 2.21 and
(c) reduced or increased from time to time pursuant to assignments by or to such
Lender pursuant to Section 9.04. The initial amount of each Liquidity Lender’s
Liquidity Commitment is set forth on Schedule 2.01, or in the Assignment and
Assumption or other documentation contemplated hereby pursuant to which such
Liquidity Lender shall have assumed its Liquidity Commitment, as applicable.

“Liquidity Increasing Lender” has the meaning assigned to such term in
Section 2.21.

“Liquidity Issuing Bank” means (a) solely with respect to any Existing Liquidity
Letter of Credit, the applicable Existing Liquidity Issuing Bank, (b) Wells
Fargo Bank, National Association and (c) any other Liquidity Lender or Liquidity
Lenders reasonably acceptable to the Borrower and the Administrative Agent that
agrees to issue Liquidity Letters of Credit hereunder, and its successors in
such capacity as provided in Section 2.06(i). Each Liquidity Issuing Bank may,
in its discretion, arrange for one or more Liquidity Letters of Credit to be
issued by Affiliates of such Liquidity Issuing Bank, in which case the term
“Liquidity Issuing Bank” shall include any such Affiliate with respect to
Liquidity Letters of Credit issued by such Affiliate.

“Liquidity LC Collateral Account” has the meaning assigned to such term in
Section 2.06(j).

“Liquidity LC Disbursement” means a payment made by a Liqudity Issuing Bank
pursuant to a Liquidity Letter of Credit.

“Liquidity LC Exposure” means, at any time, the sum of (a) the aggregate undrawn
amount of all outstanding Liquidity Letters of Credit at such time plus (b) the
aggregate amount of all Liquidity LC Disbursements that have not yet been
reimbursed by or on behalf of the Borrower at such time. The Liquidity LC
Exposure of any Liquidity Lender at any time shall be its Applicable Percentage
of the total Liquidity LC Exposure at such time.

“Liquidity Lenders” means the Persons listed on Schedule 2.01 and any other
Person that shall have become a Liquidity Lender hereunder pursuant to
Section 2.21 or pursuant to an Assignment and Assumption, other than any such
Person that ceases to be a party hereto pursuant to an Assignment

 

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and Assumption. Unless the context otherwise requires, the term “Liquidity
Lenders” includes the Swingline Lender.

“Liquidity Letter of Credit” means, as the context may require (a) any Existing
Liquidity Letter of Credit and/or (b) any standby letter of credit issued
pursuant to Section 2.06 of this Agreement.

“Liquidity Loans” means the loans made by the Liquidity Lenders to the Borrower
pursuant to Section 2.01(a) and 2.21 of this Agreement.

“Liquidity Revolving Credit Exposure” means, with respect to any Liquidity
Lender at any time, the sum of the outstanding principal amount of such
Liquidity Lender’s Liquidity Revolving Loans and its Liquidity LC Exposure and
Swingline Exposure at such time.

“Liquidity Revolving Loan” means a Liquidity Loan made pursuant to
Section 2.01(a).

“Loans” means any Liquidity Loan, any Energy Hedging Loan and/or any Swingline
Loan, as the context may require.

“Management Fees” means, for any period, the aggregate amount of all payments
(including all fees, salaries and other compensation, but excluding amounts
payable under Affiliate Service Agreements) paid or incurred by the Borrower and
its Subsidiaries during such period to any of their Affiliates and not otherwise
a Restricted Payment; provided that Management Fees shall not include amounts
payable to an Affiliate (i) in its capacity as a Lender pursuant to this
Agreement or any Financing Document, (ii) in its capacity as an interest rate
hedge provider pursuant to an Interest Hedging Agreement to the extent such
Interest Hedging Agreement complies with Section 6.06(a)(i) or (iii) in its
capacity as a lender pursuant to other Indebtedness permitted under this
Agreement to the extent such arrangements comply with Section 6.06(a)(i) and
such Affiliate is not an arranger, agent or underwriter of such Indebtedness.

“Material Adverse Effect” means a material adverse effect on (a) the business,
assets, operations, condition (financial or otherwise) of the Borrower and the
Subsidiaries taken as a whole, (b) the validity or enforceability of this
Agreement or any and all other Financing Documents or the rights or remedies of
the Administrative Agent and the Lenders thereunder, (c) the ability of the
Borrower to perform any of its obligations under this Agreement or any Financing
Document, or (d) the material rights or remedies of the Administrative Agent and
the Lenders under this Agreement or any Financing Document.

“Material Communications” means, with respect to any Contractual Obligation, any
communication by the Borrower or any of its Subsidiaries with any Governmental
Authority or any party to such Contractual Obligation regarding an event or
circumstance that could reasonably be expected to result in a Material Adverse
Effect.

“Material Indebtedness/Material Swap Obligations” means (a) Indebtedness (other
than the Loans and Letters of Credit), or (b) obligations in respect of one or
more Swap Agreements, of any one or more of the Borrower and its Subsidiaries,
in the case of (a) or (b), in an aggregate principal amount exceeding
$50,000,000. For purposes of determining Material Indebtedness/Material Swap
Obligation, the “principal amount” of the obligations of the Borrower or any
Subsidiary in respect of any Swap Agreement at any time shall be the maximum
aggregate amount (giving effect to any netting agreements) that the Borrower or
such Subsidiary would be required to pay if such Swap Agreement were terminated
at such time.

 

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“Material Notices” means, with respect to any material Contractual Obligation,
any notice sent or received by the Borrower or any of its Subsidiaries regarding
a material event or circumstance, including the occurrence of any default under
such Contractual Obligation or termination of such Contractual Obligation or any
other development that could reasonably be expected to result in a Material
Adverse Effect.

“Maturity Date” means February 4, 2018.

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

“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3)
of ERISA.

“Net Cash Proceeds” means with respect to any Disposition by any member of the
Borrower Group or any issuance of Indebtedness by any member of the Borrower
Group, the gross proceeds of all cash actually received by such Borrower Group
Member in connection with such Disposition or Issuance; provided that (i) Net
Cash Proceeds shall be net of: (a) the amount of any legal, advisory, title,
transfer and recording tax expenses, commissions and other fees and expenses
paid by the Borrower or the applicable Subsidiary in connection with such
transaction and (b) any federal, state and local income or other taxes estimated
to be payable by Puget Holdings, the Parent, the Borrower or the applicable
Subsidiary as a result of such transaction (but only to the extent that such
estimated taxes are in fact paid to the relevant federal, state or local
Governmental Authority when due; provided that at the time such taxes are paid,
an amount equal to the amount, if any, by which such estimated taxes exceed the
amount of taxes actually paid shall constitute “Net Cash Proceeds” for all
purposes hereunder), (ii) with respect to any Disposition, Net Cash Proceeds
shall be net of any repayments by the Borrower or the applicable Subsidiary of
Indebtedness to the extent that (x) such Indebtedness is secured by a Lien
permitted by Section 6.01 on the Property that is the subject of such
Disposition and (y) the transferee of (or holder of a Lien on) such Property
requires that such Indebtedness be repaid, (iii) for all Dispositions, Net Cash
Proceeds shall be net of any earn out or other similar obligation owed by the
Borrower or applicable Subsidiary in connection with the acquisition thereof,
(iv) Net Cash Proceeds shall be net of any reserve for adjustment in respect of
(x) the sale price of such asset or assets established in accordance with GAAP
and (y) any liabilities (other than taxes deducted pursuant to clause (b) above)
associated with such asset or assets and retained by any Borrower Group Member
after such sale or other disposition thereof, including pension and other
postemployment benefit liabilities and liabilities related to environmental
matters or with respect to any indemnification obligations associated with such
transaction, and it being understood that “Net Cash Proceeds” shall include
(A) any cash or Cash Equivalents received upon the Disposition of any non-cash
consideration by any Borrower Group Member in any such Disposition and (B) upon
the reversal (without the satisfaction of any applicable liabilities in cash in
a corresponding amount) of any reserve described in this clause (iv) or if such
liabilities have not been satisfied in cash and the remaining amount of such
reserve is not reversed within 365 days after such Disposition, the remaining
amount of such reserve and (v) if the applicable cash payments are in the first
instance received by a Subsidiary that is not a wholly-owned Subsidiary, the
related Net Cash Proceeds shall be net of the proportionate share of the common
Equity Interests of such Subsidiary (and of any intermediate Subsidiary) owned
by Persons that are not wholly-owned Subsidiaries of the Borrower.

“Non-U.S. Lender” means a Lender that is not a U.S. Person.

“Obligations” means all unpaid principal of and accrued and unpaid interest on
the Loans, all LC Exposure, all accrued and unpaid fees and all expenses,
reimbursements, indemnities and other obligations and indebtedness (including
interest and fees accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or

 

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allowable in such proceeding), obligations and liabilities of the Borrower to
any of the Lenders, the Administrative Agent, any Issuing Bank or any
indemnified party, individually or collectively, existing on the Effective Date
or arising thereafter, direct or indirect, joint or several, absolute or
contingent, matured or unmatured, liquidated or unliquidated, secured or
unsecured, arising by contract, operation of law or otherwise, arising or
incurred under this Agreement or any of the other Financing Documents or to the
Lenders or any of their Affiliates under any Swap Agreement or any Banking
Services Agreement or in respect of any of the Loans made or reimbursement or
other obligations incurred or any of the Letters of Credit or other instruments
at any time evidencing any thereof.

“Operating Company” means each Subsidiary of the Borrower other than any
Immaterial Subsidiary and for the avoidance of doubt, the term Operating Company
shall include Puget Western, Inc.

“Organizational Documents” means, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement or limited liability
company agreement; and (c) with respect to any partnership, joint venture, trust
or other form of business entity, the partnership, joint venture or other
applicable agreement of formation or organization and any agreement, instrument,
filing or notice with respect thereto filed in connection with its formation or
organization with the applicable Governmental Authority in the jurisdiction of
its formation or organization and, if applicable, any certificate or articles of
formation or organization of such entity.

“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as
a result of a present or former connection between such Recipient and the
jurisdiction imposing such Taxes (other than a connection arising from such
Recipient having executed, delivered, enforced, become a party to, performed its
obligations under, received payments under, received or perfected a security
interest under, or engaged in any other transaction pursuant to, any Financing
Document, or sold or assigned an interest in any Financing Document).

“Other Hedging Agreements” means any swap, cap or collar agreement or similar
arrangement entered into by any Borrower Group Member designed to protect any
Borrower Group Member against fluctuations in currency exchange rates or
commodity prices.

“Other Taxes” means any present or future stamp, court, documentary, intangible,
recording, filing or similar excise or property Taxes that arise from any
payment made under, from the execution, delivery, performance, enforcement or
registration of, or from the registration, receipt or perfection of a security
interest under, or otherwise with respect to, any Financing Document, except any
such Taxes that are Other Connection Taxes imposed with respect to an assignment
(other than an assignment under Section 2.20(b)).

“Parent” means Puget Energy, Inc., a Washington corporation.

“Parent Holdco” means the Person that is the direct owner of 100% of the Equity
Interests of the Parent, which as of the Effective Date, is Puget Equico LLC, a
Washington limited liability company; provided, that the Parent shall be a
direct or indirect wholly-owned Subsidiary of Puget Holdings.

“Parent Holdco Holdco” means the Person that is the direct owner of 100% of the
Equity Interests of the Parent Holdco.

“Participant” has the meaning assigned to such term in Section 9.04(c).

 

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“Participant Register” has the meaning assigned to such term in Section 9.04(c).

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA and any successor entity performing similar functions.

“Permitted Acquisition” means an acquisition consummated by or through the
Borrower (including any newly formed wholly-owned Subsidiary of the Borrower (a
“Newco”)), of all or substantially all, of the assets of or shares or other
Equity Interests in a Person, or division or line of business of a Person (other
than inventory, leases, materials and equipment in the ordinary course of
business), in each case that is engaged in substantially the same general line
of business or businesses as those in which the Borrower (not including any of
its Subsidiaries for this purpose) is engaged or businesses reasonably related,
complementary or ancillary thereto; provided that:

(i) such acquisition shall be consensual and shall have been approved by the
board of directors (or similar governing body) of the Person whose Equity
Interests or assets are proposed to be acquired and shall not have been preceded
by an unsolicited tender offer for such Equity Interests by, or proxy contest
initiated by, Borrower or any of its Subsidiaries;

(ii) the Borrower shall be the surviving corporation;

(iii) an Authorized Officer of the Borrower shall have delivered a certificate
substantially in the form of Exhibit H, attesting to the Solvency of the
Borrower and its Subsidiaries (taken as a whole, including the acquired Person
or assets, after giving effect to such acquisition);

(iv) any Liens assumed in connection with such acquisition are otherwise
permitted under Section 6.01;

(v) all Regulatory Approvals in connection with such acquisition shall have been
duly obtained, taken, given or made;

(vi) [reserved];

(vii) no Default or Event of Default shall exist immediately prior to such
acquisition or, after giving effect to such acquisition, shall have occurred and
be continuing, or would result from the consummation of the proposed
acquisition; and

(viii) the Borrower and the Subsidiaries are in compliance, on a pro forma basis
reasonably acceptable to the Administrative Agent after giving effect to such
acquisition (but without giving effect to any synergies or cost savings), with
the covenants contained in Section 6.09 recomputed as of the last day of the
most recently ended fiscal quarter of the Borrower for which financial
statements are available, as if such acquisition (and any related incurrence or
repayment of Indebtedness, with any new Indebtedness being deemed to be
amortized over the applicable testing period in accordance with its terms) had
occurred on the first day of each relevant period for testing such compliance
and, if the aggregate consideration paid in respect of such acquisition exceeds
$500,000,000, the Borrower shall have delivered to the Administrative Agent a
certificate of a Financial Officer of the Borrower to such effect, together with
all relevant financial information, statements and projections requested by the
Administrative Agent.

“Permitted Holders” means the Persons listed on Schedule 1.01(b) hereto.

 

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“Permitted Refinancing Indebtedness” means any Indebtedness of any Borrower
Group Member, as applicable, issued in exchange for, or the Net Cash Proceeds of
which are used to refund, refinance, replace, defease or discharge Existing
Indebtedness; provided, that:

(i) The principal amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness does not exceed the principal amount (or accreted
value, if applicable) of and any unfunded commitment under the Indebtedness
extended, refinanced, renewed, replaced, defeased or refunded (plus (x) all
refinancing fees and expenses incurred in connection therewith including,
without limitation, underwriting fees, closing fees, agency fees, premiums,
make-whole amounts or original issue discount and LIBOR breakage costs due in
accordance with Section 2.17 of this Agreement and other reasonable
out-of-pocket expenses incurred by the Borrower and (y) an amount equal to any
termination payment paid pursuant to an Interest Hedging Agreement which has
been terminated by the Borrower in connection with the incurrence of any
Permitted Refinancing Indebtedness);

(ii) Such Permitted Refinancing Indebtedness has weighted average life to
maturity equal to or greater than the weighted average life to maturity of, the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded;

(iii) If the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is subordinated in right of payment to this Agreement, such
Permitted Refinancing Indebtedness is subordinated in right of payment to this
Agreement on terms, taken as whole, at least as favorable to the Lenders as the
subordination terms contained in the documentation governing the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded; provided
that a certificate of an Authorized Officer of the Borrower is delivered to the
Administrative Agent at least five (5) Business Days (or such shorter period as
the Administrative Agent may reasonably agree) prior to the incurrence of such
Indebtedness, together with a reasonably detailed description of the material
terms and conditions of such subordination terms or drafts of the documentation
relating thereto, stating that the Borrower has determined in good faith that
such terms and conditions satisfy the foregoing requirement shall be conclusive
evidence that such terms and conditions satisfy the foregoing requirement unless
the Administrative Agent notifies the Borrower within such period that it
disagrees with such determination (including a reasonable description of the
basis upon which it disagrees);

(iv) Such Indebtedness is incurred by the Person who is the obligor on the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded;

(v) The Permitted Refinancing Indebtedness is not secured by any collateral not
granted to the holders of the Indebtedness being financed, renewed, replaced,
defeased or refunded; and

(vi) Such Permitted Refinancing Indebtedness shall have terms which shall be no
more restrictive taken as a whole, and shall not, taken as a whole, be
materially less favorable, in any respect on the Borrower or the Operating
Companies than the provisions of the Indebtedness being refinanced, renewed,
replaced, defeased or refunded; provided, however, that the foregoing
requirements shall not apply to pricing terms in respect of any Indebtedness
being so refinanced so long as such pricing is consistent with then prevailing
market pricing.

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

 

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“Plan” means any employee pension benefit plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the Code or
Section 302 of ERISA, and in respect of which the Borrower or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

“Preferred Interests” means, with respect to any Person, Equity Interests issued
by such Person that are entitled to a preference or priority over any other
Equity Interests issued by such Person upon any distribution of such Person’s
property and assets, whether by dividend or upon liquidation.

“Pricing Level” means Pricing Level I, Pricing Level II, Pricing Level III,
Pricing Level IV or Pricing Level V, as the context may require.

“Pricing Level I” means any time when (a) no Event of Default has occurred and
is continuing, and (b) the Senior Debt Rating is A- or higher by S&P or A3 or
higher by Moody’s.

“Pricing Level II” means any time when (a) no Event of Default has occurred and
is continuing, (b) the Senior Debt Rating is BBB+ or higher by S&P or Baa1 or
higher by Moody’s and (c) Pricing Level I does not apply.

“Pricing Level III” means any time when (a) no Event of Default has occurred and
is continuing, (b) the Senior Debt Rating is BBB or higher by S&P or Baa2 or
higher by Moody’s and (c) none of Pricing Levels I or II is applicable.

“Pricing Level IV” means any time when (a) no Event of Default has occurred and
is continuing, (b) the Senior Debt Rating is BBB- or higher by S&P or Baa3 or
higher by Moody’s and (c) none of Pricing Levels I, II or III is applicable.

“Pricing Level V” means any time when none of Pricing Levels I, II, III and IV
is applicable.

“Prime Rate” means, at any time, the rate of interest per annum publicly
announced or otherwise identified from time to time by Wells Fargo Bank,
National Association at its principal office in San Francisco, California as its
prime rate. Each change in the Prime Rate shall be effective as of the opening
of business on the day such change in the Prime Rate occurs. The parties hereto
acknowledge that the rate announced publicly by Wells Fargo Bank, National
Association as its Prime Rate is an index or base rate and shall not necessarily
be its lowest or best rate charged to its customers or other banks.

“Pro Forma Basis” means, with respect to any event, that the Borrower is in
compliance on a pro forma basis with the applicable covenant, calculation or
requirement herein recomputed as if the event with respect to which compliance
on a Pro Forma Basis is being tested had occurred on the first day of the four
fiscal quarter period most recently ended on or prior to such date for which
financial statements have been delivered pursuant to Section 5.01.

“Property” means any right or interest in or to property of any kind whatsoever,
whether real or personal, or mixed and whether tangible or intangible, and
including, for the avoidance of doubt, revenues and contractual rights.

“Puget Holdings” means Puget Holdings LLC, a Delaware limited liability company.

“Quarter End Date” means March 31, June 30, September 30 and December 31 of each
year.

 

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“Receivables Facility” means any receivables or securitization facility or
facilities made available to the Borrower or any of its Subsidiaries pursuant to
which assets and related security are sold, pledged or otherwise transferred to
one or more special purpose entities and thereafter to certain investors or
creditors.

“Recipient” means, as applicable, (a) the Administrative Agent, (b) any Lender
(and, in the case of a Lender that is classified as a partnership for
U.S. federal tax purposes, a Person treated as the beneficial owner thereof for
U.S. federal tax purposes) and (c) any Issuing Bank.

“Redeemable” means, with respect to any Equity Interest, any such Equity
Interest that (a) the issuer has undertaken to redeem at a fixed or determinable
date or dates, whether by operation of a sinking fund or otherwise, or upon the
occurrence of a condition not solely within the control of the issuer or (b) is
redeemable at the option of the holder.

“Register” has the meaning assigned to such term in Section 9.04(b).

“Regulatory Approval” means (a) any authorization, consent, approval, license,
ruling, permit, tariff, certification, waiver, exemption, filing required by
chapter 80.08 or 80.12 RCW, variance, order, judgment or decree of, by, or by
any Borrower Group Member, the Parent, Parent Holdco (to the extent such Person
is not Puget Holdings), Parent Holdco Holdco (to the extent such Person is not
Puget Holdings) or Puget Holdings with, (b) any required notice by any Borrower
Group Member, (c) any declaration containing material obligations of any
Borrower Group Member made by or filed with, or (d) any Borrower Group Member
registration by or with, any Governmental Authority.

“Related Parties” means, with respect to any specified Person, such Person’s
Affiliates and the respective directors, officers, employees, agents and
advisors of such Person and such Person’s Affiliates.

“Required Lenders” means at any time, subject to Section 2.23(b), Lenders having
Revolving Credit Exposures and unused Commitments representing more than 50% of
the sum of the total Revolving Credit Exposures and Available Revolving
Commitments at such time.

“Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property, other than common Equity Interests in the
Borrower) on account of any Equity Interest of any Borrower Group Member, or any
payment (whether in cash, securities or other property), including any sinking
fund or similar deposit, on account of the purchase, redemption, retirement,
defeasance, acquisition, cancellation or termination of any such Equity
Interest, or on account of any return of capital to the Borrower’s stockholders,
partners or members (or the equivalent Persons thereof); provided that payments
made to Affiliates pursuant to transactions permitted by Section 6.06(a) shall
not constitute Restricted Payments.

“Revolving Credit Exposure” means, with respect to any Lender at any time, the
sum of the outstanding principal amount of such Lender’s Liquidity Revolving
Credit Exposure and Energy Hedging Revolving Credit Exposure at such time.

“Revolving Loan” means any Liquidity Revolving Loan and/or any Energy Hedging
Loan, as the context may require.

“S&P” means Standard & Poor’s Ratings Services, a Standard & Poor’s Financial
Services LLC business.

 

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“Sale and Leaseback Transaction” means any sale or other transfer of any
property or asset by any Person with the intent to lease such property or asset
as lessee.

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

“Senior Debt Rating” means at any date, the credit rating identified by S&P or
Moody’s as the credit rating which (a) it has assigned to long term unsecured
senior debt of the Borrower or (b) it would assign to long term unsecured senior
debt of the Borrower were the Borrower to issue or have outstanding any long
term unsecured senior debt on such date.

“Solvent” means, in reference to the Borrower, (a) the fair value of the assets
of the Borrower, at a fair valuation, will exceed its debts and liabilities,
subordinated, contingent or otherwise; (b) the present fair saleable value of
the property of the Borrower will be greater than the amount that will be
required to pay the probable liability of its debts and other liabilities,
subordinated, contingent or otherwise, as such debts and other liabilities
become absolute and matured; (c) the Borrower will be able to pay its debts and
liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured; and (d) the Borrower will not have
unreasonably small capital with which to conduct the business in which it is
engaged as such business is now conducted and is proposed to be conducted after
the Effective Date.

“Statutory Reserve Rate” means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject for
eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in
Regulation D of the Board). Such reserve percentages shall include those imposed
pursuant to such Regulation D of the Board. Eurodollar Loans shall be deemed to
constitute eurocurrency funding and to be subject to such reserve requirements
without benefit of or credit for proration, exemptions or offsets that may be
available from time to time to any Lender under such Regulation D of the Board
or any comparable regulation. The Statutory Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.

“Subordinated Indebtedness” means any Indebtedness of the Borrower or any
Subsidiary the payment of which is subordinated to payment of the obligations
under the Financing Documents.

“Subordinated Indebtedness Documents” means any document, agreement or
instrument evidencing any Subordinated Indebtedness or entered into in
connection with any Subordinated Indebtedness.

“subsidiary” means, with respect to any Person (the “parent”) at any date, any
corporation, limited liability company, partnership, association or other entity
the accounts of which would be consolidated with those of the parent in the
parent’s consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such
date, owned, Controlled or held, or (b) that is, as of such date, otherwise
Controlled, by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent.

“Subsidiary” means any subsidiary of the Borrower.

 

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“Swap Agreement” means any agreement with respect to any swap, forward, future
or derivative transaction or option or similar agreement involving, or settled
by reference to, one or more rates, currencies, commodities, equity or debt
instruments or securities, or economic, financial or pricing indices or measures
of economic, financial or pricing risk or value or any similar transaction or
any combination of these transactions; provided that no phantom stock or similar
plan providing for payments only on account of services provided by current or
former directors, officers, employees or consultants of the Borrower or the
Subsidiaries shall be a Swap Agreement.

“Swingline Exposure” means, at any time, the aggregate principal amount of all
Swingline Loans outstanding at such time. The Swingline Exposure of any Lender
at any time shall be its Applicable Percentage of the total Swingline Exposure
at such time.

“Swingline Lender” means Wells Fargo Bank, National Association, in its capacity
as lender of Swingline Loans hereunder.

“Swingline Loan” means a Loan made pursuant to Section 2.05.

“Syndication Agent” means The Royal Bank of Scotland plc in its capacity as
syndication agent for the credit facility evidenced by this Agreement.

“Tax-Free Debt” means Indebtedness of the Borrower to a state, territory or
possession of the United States or any political subdivision thereof issued in a
transaction in which such state, territory, possession or political subdivision
issued obligations the interest on which is excludable from gross income
pursuant to the provisions of Section 103 of the Code (or similar provisions),
as in effect at the time of issuance of such obligations, and debt to a bank
issuing a Letter of Credit with respect to the principal of or interest on such
obligations.

“Taxes” or “Tax” means any present or future taxes, levies, imposts, duties,
deductions, withholdings, assessments, fees or other charges imposed by any
Governmental Authority, including any interest, additions to tax or penalties
applicable thereto.

“Total Capitalization” means, at any time, the sum, without duplication, of
(a) Total Shareholders’ Equity at such time and (b) Total Funded Indebtedness at
such time.

“Total Funded Indebtedness” means, for the Borrower and its Subsidiaries,
without duplication, on a consolidated basis, the sum of (a) all Indebtedness of
such Person for borrowed money, except to the extent such Indebtedness is
“non-recourse” to such Person or recourse for payment of such Indebtedness is
limited to specific assets of such Person (whether or not included on a
consolidated balance sheet of such Person), (b) the principal portion of all
obligations of such Person under Capital Lease Obligations, (c) all unreimbursed
obligations relative to draws on all letters of credit issued to support
Indebtedness of the kinds referred to in clauses (a) and (b) above, (d) all
Guarantees of such Person with respect to Indebtedness and obligations of the
type described in clauses (a) through (c) hereof of another Person; provided
that such Guarantees are required to be reported as liabilities on a balance
sheet of such Person prepared in accordance with GAAP (and without duplication
of any liability already appearing as a liability on such balance sheet); and
provided, further that, in the event a Guarantee is limited as to dollar amount,
such Guarantee shall not exceed such limitation and (e) all Indebtedness and
obligations of the type described in clauses (a), (b), and (c) hereof of another
Person, secured by a Lien on any property of such Person whether or not such
Indebtedness or obligations has been assumed by such Person. Notwithstanding the
foregoing, Total Funded Indebtedness (i) shall not include (x) trust preferred
securities, if any, (y) interest on Indebtedness that is accrued in the ordinary
course of business and (z) any intercompany Indebtedness between the Borrower
and any of its Subsidiaries or among any of its Subsidiaries and (ii) shall
include intercompany Indebtedness (or Equity Interests having the
characteristics of Indebtedness) owing to any direct or indirect parent of the
Borrower.

 

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“Total Shareholders’ Equity” means, at any time, the amount of total common
shareholders’ equity of the Borrower and its Subsidiaries (determined on a
consolidated basis without duplication in accordance with GAAP) plus (a) the
cumulative non-cash mark-to-market charges (net of taxes) recognized by the
Borrower and its Subsidiaries in all periods; minus (b) the cumulative non-cash
mark-to-market gains (net of taxes) recognized by the Borrower and its
Subsidiaries in all periods in each case calculated exclusive of the effect on
the Borrower’s accumulated other comprehensive income/loss of the ongoing
application of Accounting Standards Codification Topic 815.

“Transactions” means the execution, delivery and performance by the Borrower of
this Agreement and the other Financing Documents, the borrowing of Loans and
other credit extensions, the use of the proceeds thereof and the issuance of
Letters of Credit hereunder.

“Type”, when used in reference to any Loan or Borrowing, refers to whether the
rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.

“U.S. Person” means a “United States person” within the meaning of
Section 7701(a)(30) of the Code.

“U.S. Tax Certificate” has the meaning assigned to such term in
Section 2.18(f)(ii)(D)(2).

“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as such terms are
defined in Part I of Subtitle E of Title IV of ERISA.

“Withholding Agent” means the Borrower and the Administrative Agent.

SECTION 1.02. Classification of Loans and Borrowings. For purposes of this
Agreement, Loans may be classified and referred to by Class (e.g., a “Revolving
Loan”) or by Type (e.g., a “Eurodollar Loan”) or by Class and Type (e.g., a
“Eurodollar Revolving Loan”). Borrowings also may be classified and referred to
by Class (e.g., a “Revolving Borrowing”) or by Type (e.g., a “Eurodollar
Borrowing”) or by Class and Type (e.g., a “Eurodollar Borrowing”).

SECTION 1.03. Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words “include”, “includes” and “including” shall
be deemed to be followed by the phrase “without limitation”. The word “will”
shall be construed to have the same meaning and effect as the word “shall”. The
word “law” shall be construed as referring to all statutes, rules, regulations,
codes and other laws (including official rulings and interpretations thereunder
having the force of law or with which affected Persons customarily comply), and
all judgments, orders and decrees, of all Governmental Authorities. Unless the
context requires otherwise (a) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended, restated,
supplemented or otherwise modified (subject to any restrictions on such
amendments, restatements, supplements or modifications set forth herein),
(b) any definition of or reference to any statute, rule or regulation shall be
construed as referring thereto as from time to time amended, supplemented or
otherwise modified

 

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(including by succession of comparable successor laws), (c) any reference herein
to any Person shall be construed to include such Person’s successors and assigns
(subject to any restrictions on assignment set forth herein) and, in the case of
any Governmental Authority, any other Governmental Authority that shall have
succeeded to any or all functions thereof, (d) the words “herein”, “hereof” and
“hereunder”, and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (e) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement, (f) the words “asset” and “property” shall be construed to have
the same meaning and effect and to refer to any and all tangible and intangible
assets and properties, including cash, securities, accounts and contract rights,
and (g) all actions by specified officers of a Person shall be deemed to be
taken by such specified officer solely in such specified officer’s capacity as
such officer.

SECTION 1.04. Accounting Terms; GAAP; Pro Forma Calculations. (a) Except as
otherwise expressly provided herein, all terms of an accounting or financial
nature shall be construed in accordance with GAAP, as in effect from time to
time; provided that, if the Borrower notifies the Administrative Agent that the
Borrower requests an amendment to any provision hereof to eliminate the effect
of any change occurring after the date hereof in GAAP or in the application
thereof on the operation of such provision (or if the Administrative Agent
notifies the Borrower that the Required Lenders request an amendment to any
provision hereof for such purpose) (including, without limitation, any change in
GAAP resulting in any operating lease being reclassified as a capital lease),
regardless of whether any such notice is given before or after such change in
GAAP or in the application thereof, then such provision shall be interpreted on
the basis of GAAP as in effect and applied immediately before such change shall
have become effective until such notice shall have been withdrawn or such
provision amended in accordance herewith. Notwithstanding any other provision
contained herein, all terms of an accounting or financial nature used herein
shall be construed, and all computations of amounts and ratios referred to
herein shall be made (i) except with respect to the revaluation of Indebtedness
or liabilities to the extent reflected on the Borrower’s audited consolidated
balance sheet for the fiscal year ending December 31, 2011, without giving
effect to any election under Accounting Standards Codification 825-10-25
(previously referred to as Statement of Financial Accounting Standards (“ASC”)
159) (or any other Accounting Standards Codification or Financial Accounting
Standard having a similar result or effect) to value any Indebtedness or other
liabilities of the Borrower or any Subsidiary at “fair value”, as defined
therein and (ii) without giving effect to any treatment of Indebtedness in
respect of convertible debt instruments under ASC 470-20-15 (previously referred
to as Financial Accounting Standards Board Staff Position APB 14-1) to value any
such Indebtedness in a reduced or bifurcated manner as described therein, and
such Indebtedness shall at all times be valued at the full stated principal
amount thereof.

(b) All pro forma computations required to be made hereunder giving effect to
any acquisition or disposition, or issuance, incurrence or assumption of
Indebtedness, or other transaction shall in each case be calculated giving pro
forma effect thereto (and, in the case of any pro forma computation made
hereunder to determine whether such acquisition or disposition, or issuance,
incurrence or assumption of Indebtedness, or other transaction is permitted to
be consummated hereunder, to any other such transaction consummated since the
first day of the period covered by any component of such pro forma computation
and on or prior to the date of such computation) as if such transaction had
occurred on the first day of the period of four consecutive fiscal quarters
ending with the most recent fiscal quarter for which financial statements shall
have been delivered pursuant to Section 5.01(a) or 5.01(b) (or, prior to the
delivery of any such financial statements, ending with the last fiscal quarter
included in the financial statements referred to in Section 3.07(a)), and, to
the extent applicable, to the historical earnings and cash flows associated with
the assets acquired or disposed of (but without giving effect to any synergies
or cost savings) and any related incurrence or reduction of Indebtedness, all in
accordance with Article 11 of Regulation S-X under the Securities Act. If any
Indebtedness bears a

 

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floating rate of interest and is being given pro forma effect, the interest on
such Indebtedness shall be calculated as if the rate in effect on the date of
determination had been the applicable rate for the entire period (taking into
account any Swap Agreement applicable to such Indebtedness).

SECTION 1.05. Status of Obligations. In the event that the Borrower shall at any
time issue or have outstanding any Subordinated Indebtedness, the Borrower shall
take all such actions as shall be necessary to cause the Obligations to
constitute senior indebtedness (however denominated) in respect of such
Subordinated Indebtedness and to enable the Administrative Agent and the Lenders
to have and exercise any payment blockage or other remedies available or
potentially available to holders of senior indebtedness under the terms of such
Subordinated Indebtedness. Without limiting the foregoing, the Obligations are
hereby designated as “senior indebtedness” and as “designated senior
indebtedness” and words of similar import under and in respect of any indenture
or other agreement or instrument under which such Subordinated Indebtedness is
outstanding and are further given all such other designations as shall be
required under the terms of any such Subordinated Indebtedness in order that the
Lenders may have and exercise any payment blockage or other remedies available
or potentially available to holders of senior indebtedness under the terms of
such Subordinated Indebtedness.

ARTICLE II

The Credits

SECTION 2.01. Commitments.

(a) The Liquidity Facility. Subject to the terms and conditions set forth
herein, each Lender agrees to make Liquidity Revolving Loans to the Borrower in
Dollars from time to time during the Availability Period in an aggregate
principal amount that will not result in (i) the amount of such Lender’s
Liquidity Revolving Credit Exposure exceeding such Lender’s Liquidity Commitment
or (ii) the sum of the total Liquidity Revolving Credit Exposures exceeding the
Liquidity Aggregate Commitment. Within the foregoing limits and subject to the
terms and conditions set forth herein, the Borrower may borrow, prepay and
reborrow Liquidity Revolving Loans.

(b) The Energy Hedging Facility. Subject to the terms and conditions set forth
herein, each Lender agrees to make Energy Hedging Loans to the Borrower in
Dollars from time to time during the Availability Period in an aggregate
principal amount that will not result in (i) the amount of such Lender’s Energy
Hedging Revolving Credit Exposure exceeding such Lender’s Energy Hedging
Commitment or (ii) the sum of the total Energy Hedging Revolving Credit
Exposures exceeding the Energy Hedging Aggregate Commitment. Within the
foregoing limits and subject to the terms and conditions set forth herein, the
Borrower may borrow, prepay and reborrow Energy Hedging Loans.

SECTION 2.02. Loans and Borrowings.

(a) Each Loan shall be made as follows:

(i) Each Liquidity Loan (other than a Swingline Loan) shall be made as part of a
Liquidity Borrowing consisting of Liquidity Loans of the same Class and Type
made by the Liquidity Lenders ratably in accordance with their respective
Liquidity Commitments. The failure of any Liquidity Lender to make any Liquidity
Loan required to be made by it shall not

 

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relieve any other Liquidity Lender of its obligations hereunder; provided that
the Liquidity Commitments of the Liquidity Lenders are several and no Liquidity
Lender shall be responsible for any other Liquidity Lender’s failure to make
Liquidity Loans as required. Any Swingline Loan shall be made in accordance with
the procedures set forth in Section 2.05; and

(ii) Each Energy Hedging Loan shall be made as part of an Energy Hedging
Borrowing consisting of Energy Hedging Loans of the same Type made by the Energy
Hedging Lenders ratably in accordance with their respective Energy Hedging
Commitments. The failure of any Energy Hedging Lender to make any Energy Hedging
Loan required to be made by it shall not relieve any other Energy Hedging Lender
of its obligations hereunder; provided that the Energy Hedging Commitments of
the Energy Hedging Lenders are several and no Energy Hedging Lender shall be
responsible for any other Energy Hedging Lender’s failure to make Energy Hedging
Loans as required.

(b) Subject to Section 2.14, each Borrowing shall be comprised entirely of ABR
Loans or Eurodollar Loans as the Borrower may request in accordance herewith;
provided that, except to the extent the Administrative Agent shall have received
an indemnification substantially consistent with the terms of Section 2.17 not
less than three (3) Business Days prior to the Effective Date, all Borrowings
made on the Effective Date must be made as ABR Borrowings but may be converted
into Eurodollar Borrowings in accordance with Section 2.09. Each Swingline Loan
shall be an ABR Loan. Each Lender at its option may make any Eurodollar Loan by
causing any domestic or foreign branch or Affiliate of such Lender to make such
Loan (and in the case of an Affiliate, the provisions of Sections 2.15, 2.16,
2.17 and 2.18 shall apply to such Affiliate to the same extent as to such
Lender); provided that any exercise of such option shall not affect the
obligation of the Borrower to repay such Loan in accordance with the terms of
this Agreement.

(c) At the commencement of each Interest Period for any Eurodollar Borrowing,
such Borrowing shall be in an aggregate amount that is an integral multiple of
$100,000 and not less than $5,000,000. At the time that each ABR Revolving
Borrowing is made, such Borrowing shall be in an aggregate amount that is an
integral multiple of $100,000 and not less than $1,000,000; provided that an ABR
Revolving Borrowing may be in an aggregate amount that is equal to the entire
unused balance of the Liquidity Aggregate Commitment or Energy Hedging Aggregate
Commitment, as applicable, or that is required to finance the reimbursement of,
as applicable, a Liquidity LC Disbursement as contemplated by Section 2.06(e) or
Energy Hedging LC Disbursement as contemplated by Section 2.07(e). Each
Swingline Loan shall be in an amount that is an integral multiple of $100,000
and not less than $1,000,000. Borrowings of more than one Type and Class may be
outstanding at the same time; provided that there shall not at any time be
(x) more than a total of ten (10) Eurodollar Liquidity Borrowings outstanding
and (y) more than a total of ten (10) Eurodollar Energy Hedging Borrowings
outstanding.

(d) Notwithstanding any other provision of this Agreement, the Borrower shall
not be entitled to request, or to elect to convert or continue, any Borrowing if
the Interest Period requested with respect thereto would end after the Maturity
Date.

SECTION 2.03. Requests for Borrowings. To request a Borrowing, the Borrower
shall notify the Administrative Agent of such request by telephone (a) in the
case of a Eurodollar Borrowing, not later than 1:00 p.m., New York City time,
three (3) Business Days before the date of the proposed Borrowing or (b) in the
case of an ABR Borrowing, not later than 1:00 p.m., New York City time, on the
same Business Day as the date of the proposed Borrowing. Each such telephonic
Borrowing Request shall be irrevocable and shall be confirmed promptly by hand
delivery, telecopy or electronic transmission to the Administrative Agent of a
written Borrowing Request in a form approved by the Administrative Agent and
signed by the

 

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Borrower. Each such telephonic and written Borrowing Request shall specify the
following information in compliance with Section 2.02:

(i) the aggregate amount of the requested Borrowing;

(ii) the date of such Borrowing, which shall be a Business Day;

(iii) whether such Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing;

(iv) whether such Borrowing is to be a Liquidity Borrowing or an Energy Hedging
Borrowing;

(v) in the case of a Eurodollar Borrowing, the initial Interest Period to be
applicable thereto, which shall be a period contemplated by the definition of
the term “Interest Period”; and

(vi) the location and number of the Borrower’s account to which funds are to be
disbursed, which shall comply with the requirements of Section 2.08.

If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed
to have selected an Interest Period of one month’s duration. Promptly following
receipt of a Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each Lender of the details thereof and of the
amount of such Lender’s Loan to be made as part of the requested Borrowing.

SECTION 2.04. [Intentionally Omitted].

SECTION 2.05. Swingline Loans. (a) Subject to the terms and conditions set forth
herein, the Swingline Lender agrees to make Swingline Loans in Dollars to the
Borrower from time to time during the Liquidity Availability Period, in an
aggregate principal amount at any time outstanding that will not result in
(i) the aggregate principal amount of outstanding Swingline Loans exceeding
$75,000,000 or (ii) the sum of the total Liquidity Revolving Credit Exposures
exceeding the Liquidity Aggregate Commitment; provided that the Swingline Lender
shall not be required to make a Swingline Loan to refinance an outstanding
Swingline Loan. Within the foregoing limits and subject to the terms and
conditions set forth herein, the Borrower may borrow, prepay and reborrow
Swingline Loans.

(b) To request a Swingline Loan, the Borrower shall notify the Administrative
Agent of such request by telephone (confirmed by telecopy or electronic
transmission), not later than 1:00 p.m., New York City time, on the day of a
proposed Swingline Loan. Each such notice shall be irrevocable and shall specify
the requested date (which shall be a Business Day), the amount of the requested
Swingline Loan and identify the account, including routing information, where
such Swingline Loan shall be deposited. The Administrative Agent will promptly
advise the Swingline Lender of any such notice received from the Borrower. The
Swingline Lender shall make each Swingline Loan available to the Borrower by
means of a credit or other transfer to a general deposit account of the Borrower
in immediately available funds as directed by the Borrower (or, in the case of a
Swingline Loan made to finance the reimbursement of a Liquidity LC Disbursement
as provided in Section 2.06(e), by remittance to the applicable Liquidity
Issuing Bank) by 3:00 p.m., New York City time, on the requested date of such
Swingline Loan.

 

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(c) The Swingline Lender may by written notice given to the Administrative Agent
not later than 10:00 a.m., New York City time, on any Business Day require the
Liquidity Lenders to acquire participations on such Business Day in all or a
portion of the Swingline Loans outstanding. Such notice shall specify the
aggregate amount of Swingline Loans in which Liquidity Lenders will participate.
Promptly upon receipt of such notice, the Administrative Agent will give notice
thereof to each Liquidity Lender, specifying in such notice such Liquidity
Lender’s Applicable Percentage of such Swingline Loan or Loans. Each Liquidity
Lender hereby absolutely and unconditionally agrees, upon receipt of notice as
provided above, to pay to the Administrative Agent, for the account of the
Swingline Lender, such Liquidity Lender’s Applicable Percentage of such
Swingline Loan or Loans. Each Liquidity Lender acknowledges and agrees that its
obligation to acquire participations in Swingline Loans pursuant to this
paragraph is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a Default
or reduction or termination of the Liquidity Commitments, and that each such
payment shall be made without any offset, abatement, withholding or reduction
whatsoever. Each Liquidity Lender shall comply with its obligation under this
paragraph by wire transfer of immediately available funds, in the same manner as
provided in Section 2.08 with respect to Liquidity Loans made by such Liquidity
Lender (and Section 2.08 shall apply, mutatis mutandis, to the payment
obligations of the Liquidity Lenders), and the Administrative Agent shall
promptly pay to the Swingline Lender the amounts so received by it from the
Liquidity Lenders. The Administrative Agent shall notify the Borrower of any
participations in any Swingline Loan acquired pursuant to this paragraph, and
thereafter payments in respect of such Swingline Loan shall be made to the
Administrative Agent and not to the Swingline Lender. Any amounts received by
the Swingline Lender from the Borrower (or other party on behalf of the
Borrower) in respect of a Swingline Loan after receipt by the Swingline Lender
of the proceeds of a sale of participations therein shall be promptly remitted
to the Administrative Agent; any such amounts received by the Administrative
Agent shall be promptly remitted by the Administrative Agent to the Liquidity
Lenders that shall have made their payments pursuant to this paragraph and to
the Swingline Lender, as their interests may appear; provided that any such
payment so remitted shall be repaid to the Swingline Lender or to the
Administrative Agent, as applicable, if and to the extent such payment is
required to be refunded to the Borrower for any reason. The purchase of
participations in a Swingline Loan pursuant to this paragraph shall not relieve
the Borrower of any default in the payment thereof.

SECTION 2.06. Liquidity Letters of Credit.

(a) General. Subject to the terms and conditions set forth herein, the Borrower
may request the issuance by a Liquidity Issuing Bank (other than an Existing
Liquidity Issuing Bank) of, and such Liquidity Issuing Bank commits to issue,
Letters of Credit (each, a “Liquidity Letter of Credit”) denominated in Dollars,
in a form reasonably acceptable to the Administrative Agent and the applicable
Liquidity Issuing Bank, at any time and from time to time during the Liquidity
Availability Period. In the event of any inconsistency between the terms and
conditions of this Agreement and the terms and conditions of any form of letter
of credit application or other agreement submitted by the Borrower to, or
entered into by the Borrower with, the Liquidity Issuing Bank relating to any
Liquidity Letter of Credit, the terms and conditions of this Agreement shall
control. Subject to the terms and conditions set forth herein, no Liquidity
Issuing Bank shall be obligated to issue, amend or increase any Liquidity Letter
of Credit if:

(i) any order, judgment or decree of any Governmental Authority or arbitrator
shall by its terms purport to enjoin or restrain such Liquidity Issuing Bank
from issuing such Liquidity Liquidity Letter of Credit, or any law applicable to
such Liquidity Issuing Bank or any request or directive (whether or not having
the force of law) from any Governmental Authority with jurisdiction over such
Liquidity Issuing Bank shall prohibit, or request that such Liquidity Issuing

 

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Bank refrain from, such issuance of letters of credit generally, or such
Liquidity Letter of Credit in particular, or shall impose upon such Liquidity
Issuing Bank with respect to such Liquidity Letter of Credit any restriction,
reserve or capital requirement (for which such Liquidity Issuing Bank is not
otherwise compensated hereunder) not in effect on the Effective Date, or shall
impose upon such Liquidity Issuing Bank any unreimbursed loss, cost or expense
which was not applicable on the Effective Date and which such Liquidity Issuing
Bank in good faith deems material to it; or

(ii) the issuance of such Liquidity Letter of Credit would violate one or more
policies of such Liquidity Issuing Bank applicable to letters of credit
generally.

(b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To
request the issuance of a Liquidity Letter of Credit (or the amendment, renewal
or extension of an outstanding Liquidity Letter of Credit), the Borrower shall
hand deliver or telecopy (or transmit by electronic communication, if
arrangements for doing so have been approved by the applicable Liquidity Issuing
Bank) to the Liquidity Issuing Bank and the Administrative Agent (reasonably in
advance of the requested date of issuance, amendment, renewal or extension) a
notice requesting the issuance of a Liquidity Letter of Credit, or identifying
the Liquidity Letter of Credit to be amended, renewed or extended, and
specifying the date of issuance, amendment, renewal or extension (which shall be
a Business Day), the date on which such Liquidity Letter of Credit is to expire
(which shall comply with paragraph (c) of this Section), the amount of such
Liquidity Letter of Credit, the name and address of the beneficiary thereof and
such other information as shall be necessary to prepare, amend, renew or extend
such Liquidity Letter of Credit. If requested by the applicable Liquidity
Issuing Bank, the Borrower also shall submit a letter of credit application in a
form acceptable to the Liquidity Issuing Bank. A Liquidity Letter of Credit
shall be issued, amended, renewed or extended only if (and upon issuance,
amendment, renewal or extension of each Letter of Credit the Borrower shall be
deemed to represent and warrant that), after giving effect to such issuance,
amendment, renewal or extension (A) the aggregate Liquidity LC Exposure would
not exceed $25,000,000 and (B) the sum of the total Liquidity Revolving Credit
Exposures shall not exceed the Liquidity Aggregate Commitment.

(c) Expiration Date. Each Liquidity Letter of Credit shall expire at or prior to
the close of business on the earlier of (i) the date one year after the date of
the issuance of such Liquidity Letter of Credit (or, in the case of any renewal
or extension thereof, one year after such renewal or extension) and (ii) the
date that is five (5) Business Days prior to the Maturity Date provided that any
Liquidity Letter of Credit with a one-year tenor may provide for the renewal
thereof for additional one-year periods (which shall in no event extend beyond
the date referred to in clause (ii) above).

(d) Participations. (i) On the Effective Date with respect to each Existing
Liquidity Letter of Credit and (ii) by the issuance of any other Liquidity
Letter of Credit (or an amendment to such Liquidity Letter of Credit increasing
the amount thereof), and without any further action on the part of the
applicable Liquidity Issuing Bank or the Liquidity Lenders, the applicable
Liquidity Issuing Bank hereby grants to each Liquidity Lender, and each
Liquidity Lender hereby acquires from such Liquidity Issuing Bank, a
participation in such Liquidity Letter of Credit equal to such Liquidity
Lender’s Applicable Percentage of the aggregate amount available to be drawn
under such Liquidity Letter of Credit. In consideration and in furtherance of
the foregoing, each Liquidity Lender hereby absolutely and unconditionally
agrees to pay to the Administrative Agent, for the account of the applicable
Liquidity Issuing Bank, such Liquidity Lender’s Applicable Percentage of each
Liquidity LC Disbursement made by the Liquidity Issuing Bank and not reimbursed
by the Borrower on the date due as provided in paragraph (e) of this Section, or
of any reimbursement payment required to be refunded to the Borrower for any
reason. Each Liquidity Lender acknowledges and agrees that its obligation to
acquire participations pursuant to this paragraph in respect of Liquidity
Letters of Credit is absolute and

 

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unconditional and shall not be affected by any circumstance whatsoever,
including any amendment, renewal or extension of any Liquidity Letter of Credit
or the occurrence and continuance of a Default or reduction or termination of
the Liquidity Commitments, and that each such payment shall be made without any
offset, abatement, withholding or reduction whatsoever.

(e) Reimbursement. If any Liquidity Issuing Bank shall make any Liquidity LC
Disbursement in respect of a Liquidity Letter of Credit, the Borrower shall
reimburse such Liquidity LC Disbursement by paying to the Administrative Agent
in Dollars the amount equal to such Liquidity LC Disbursement, calculated as of
the date the Liquidity Issuing Bank made such Liquidity LC Disbursement not
later than 1:00 p.m., New York City time, on the date that such Liquidity LC
Disbursement is made, if the Borrower shall have received notice of such
Liquidity LC Disbursement prior to 10:00 a.m., New York City time, on such date,
or, if such notice has not been received by the Borrower prior to such time on
such date, then not later than 1:00 p.m., New York City time, on the Business
Day immediately following the day that the Borrower receives such notice, if
such notice is not received prior to such time on the day of receipt; provided
that, if such Liquidity LC Disbursement is not less than $1,000,000, the
Borrower may, subject to the conditions to borrowing set forth herein, request
in accordance with Section 2.03 or 2.05 that such payment be financed with an
ABR Revolving Liquidity Borrowing or Swingline Loan in an equivalent amount of
such Liquidity LC Disbursement and, to the extent so financed, the Borrower’s
obligation to make such payment shall be discharged and replaced by the
resulting ABR Revolving Liquidity Borrowing or Swingline Loan. If the Borrower
fails to make such payment when due, the Administrative Agent shall notify each
Liquidity Lender of the applicable Liquidity LC Disbursement, the payment then
due from the Borrower in respect thereof and such Liquidity Lender’s Applicable
Percentage thereof. Promptly following receipt of such notice, each Liquidity
Lender shall pay to the Administrative Agent its Applicable Percentage of the
payment then due from the Borrower, in the same manner as provided in
Section 2.08 with respect to Liquidity Loans made by such Liquidity Lender (and
Section 2.08 shall apply, mutatis mutandis, to the payment obligations of the
Liquidity Lenders), and the Administrative Agent shall promptly pay to the
applicable Liquidity Issuing Bank the amounts so received by it from the
Liquidity Lenders. Promptly following receipt by the Administrative Agent of any
payment from the Borrower pursuant to this paragraph, the Administrative Agent
shall distribute such payment to the applicable Liquidity Issuing Bank or, to
the extent that Liquidity Lenders have made payments pursuant to this paragraph
to reimburse such Liquidity Issuing Bank, then to such Liquidity Lenders and
such Liquidity Issuing Bank as their interests may appear. Any payment made by a
Liquidity Lender pursuant to this paragraph to reimburse the applicable
Liquidity Issuing Bank for any Liquidity LC Disbursement (other than the funding
of ABR Liquidity Revolving Loans or a Swingline Loan as contemplated above)
shall not constitute a Liquidity Loan and shall not relieve the Borrower of its
obligation to reimburse such Liquidity LC Disbursement.

(f) Obligations Absolute. The Borrower’s obligation to reimburse Liquidity LC
Disbursements as provided in paragraph (e) of this Section shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Liquidity
Letter of Credit or this Agreement, or any term or provision therein, (ii) any
draft or other document presented under a Liquidity Letter of Credit proving to
be forged, fraudulent or invalid in any respect or any statement therein being
untrue or inaccurate in any respect, (iii) payment by the applicable Liquidity
Issuing Bank under a Liquidity Letter of Credit against presentation of a draft
or other document that does not comply with the terms of such Liquidity Letter
of Credit, or (iv) any other event or circumstance whatsoever, whether or not
similar to any of the foregoing, that might, but for the provisions of this
Section, constitute a legal or equitable discharge of, or provide a right of
setoff against, the Borrower’s obligations hereunder. Neither the Administrative
Agent, the Liquidity Lenders nor the applicable Liquidity Issuing Bank, nor any
of their Related Parties, shall have any liability or responsibility by reason
of or in connection with the issuance or transfer of any Liquidity Letter of
Credit or any payment

 

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or failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Liquidity Letter of Credit
(including any document required to make a drawing thereunder), any error in
interpretation of technical terms or any consequence arising from causes beyond
the control of such Liquidity Issuing Bank; provided that the foregoing shall
not be construed to excuse such Liquidity Issuing Bank from liability to the
Borrower to the extent of any direct damages (as opposed to consequential
damages, claims in respect of which are hereby waived by the Borrower to the
extent permitted by applicable law) suffered by the Borrower that are caused by
such Liquidity Issuing Bank’s failure to exercise care when determining whether
drafts and other documents presented under a Liquidity Letter of Credit comply
with the terms thereof. The parties hereto expressly agree that, in the absence
of gross negligence or willful misconduct on the part of any Liquidity Issuing
Bank (as finally determined by a court of competent jurisdiction), such
Liquidity Issuing Bank shall be deemed to have exercised care in each such
determination. In furtherance of the foregoing and without limiting the
generality thereof, the parties agree that, with respect to documents presented
which appear on their face to be in substantial compliance with the terms of a
Liquidity Letter of Credit, the Liquidity Issuing Bank may, in their respective
sole discretion, either accept and make payment upon such documents without
responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Liquidity Letter of Credit.

(g) Disbursement Procedures. Each Liquidity Issuing Bank shall, promptly
following its receipt thereof, examine all documents purporting to represent a
demand for payment under a Liquidity Letter of Credit. Each Liquidity Issuing
Bank shall promptly notify the Administrative Agent and the Borrower by
telephone (confirmed by telecopy or electronic transmission) of such demand for
payment and whether such Liquidity Issuing Bank has made or will make a
Liquidity LC Disbursement thereunder; provided that any failure to give or delay
in giving such notice shall not relieve the Borrower of its obligation to
reimburse such Liquidity Issuing Bank and the Liquidity Lenders with respect to
any such Liquidity LC Disbursement.

(h) Interim Interest. If any Liquidity Issuing Bank shall make any Liquidity LC
Disbursement, then, unless the Borrower shall reimburse such Liquidity LC
Disbursement in full on the date such Liquidity LC Disbursement is made, the
unpaid amount thereof shall bear interest, for each day from and including the
date such Liquidity LC Disbursement is made to but excluding the date that the
Borrower reimburses such Liquidity LC Disbursement, at the rate per annum then
applicable to ABR Loans; provided that, if the Borrower fails to reimburse such
Liquidity LC Disbursement when due pursuant to paragraph (e) of this Section,
then Section 2.14(c) shall apply. Interest accrued pursuant to this paragraph
shall be for the account of the applicable Liquidity Issuing Bank, except that
interest accrued on and after the date of payment by any Liquidity Lender
pursuant to paragraph (e) of this Section to reimburse the applicable Liquidity
Issuing Bank shall be for the account of such Liquidity Lender to the extent of
such payment.

(i) Replacement of Liquidity Issuing Bank. Any Liquidity Issuing Bank may be
replaced at any time by written agreement among the Borrower, the Administrative
Agent, the replaced Liquidity Issuing Bank and the successor Liquidity Issuing
Bank. The Administrative Agent shall notify the Liquidity Lenders of any such
replacement of a Liquidity Issuing Bank. At the time any such replacement shall
become effective, the Borrower shall pay all unpaid fees accrued for the account
of the replaced Liquidity Issuing Bank pursuant to Section 2.13(b). From and
after the effective date of any such replacement, (i) the successor Liquidity
Issuing Bank shall have all the rights and obligations of the applicable
Liquidity Issuing Bank under this Agreement with respect to Liquidity Letters of
Credit to be issued thereafter and (ii) references herein to the term “Liquidity
Issuing Bank” shall be deemed to refer to such successor or to any previous
related Liquidity Issuing Bank, or to such successor and all previous

 

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related Liquidity Issuing Banks, as the context shall require. After the
replacement of a Liquidity Issuing Bank hereunder, the replaced Liquidity
Issuing Bank shall remain a party hereto and shall continue to have all the
rights and obligations of a Liquidity Issuing Bank under this Agreement with
respect to Liquidity Letters of Credit then outstanding and issued by it prior
to such replacement, but shall not be required to issue additional Liquidity
Letters of Credit.

(j) Cash Collateralization. If any Event of Default shall occur and be
continuing, on the Business Day that the Borrower receives notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Liquidity Lenders with Liquidity LC Exposure representing
greater than 50% of the total Liquidity LC Exposure) demanding the deposit of
cash collateral pursuant to this paragraph, the Borrower shall deposit in an
account with the Administrative Agent, in the name of the Administrative Agent
and for the benefit of the Liquidity Lenders (the “Liquidity LC Collateral
Account”), an amount in cash equal to 105% of the amount of the Liquidity LC
Exposure as of such date plus any accrued and unpaid interest thereon; provided
that the obligation to deposit such cash collateral shall become effective
immediately, and such deposit shall become immediately due and payable, without
demand or other notice of any kind, upon the occurrence of any Event of Default
with respect to the Borrower described in clause (h) or (i) of Article VII. Such
deposit shall be held by the Administrative Agent as collateral for the payment
and performance of the Obligations arising from Liquidity Borrowings and
Liquidity LC Exposure. The Administrative Agent shall have exclusive dominion
and control, including the exclusive right of withdrawal, over such account (and
the Borrower hereby grants the Administrative Agent a security interest in the
Liquidity LC Collateral Account). Other than any interest earned on the
investment of such deposits, which investments shall be made at the option and
sole discretion of the Administrative Agent and at the Borrower’s risk and
expense, such deposits shall not bear interest. Interest or profits, if any, on
such investments shall accumulate in such account. Moneys in such account shall
be applied by the Administrative Agent to reimburse the applicable Liquidity
Issuing Bank for Liquidity LC Disbursements for which it has not been reimbursed
and, to the extent not so applied, shall be held for the satisfaction of the
reimbursement obligations of the Borrower for the Liquidity LC Exposure at such
time or, if the maturity of the Liquidity Loans has been accelerated (but
subject to the consent of applicable Liquidity Lenders with Liquidity LC
Exposure representing greater than 50% of the total Liquidity LC Exposure), be
applied to satisfy other Obligations. If the Borrower is required to provide an
amount of cash collateral hereunder as a result of the occurrence of an Event of
Default, such amount (to the extent not applied as aforesaid) shall be returned
to the Borrower within three (3) Business Days after all Events of Default have
been cured or waived.

(k) Existing Liquidity Letters of Credit. The Borrower’s reimbursement
obligations in respect of each Existing Liquidity Letter of Credit, and each
Liquidity Lender’s participation obligations in connection therewith, shall be
governed by the terms of this Agreement. The Existing Liquidity Letters of
Credit shall, as of the Effective Date, be deemed to have been issued as
Liquidity Letters of Credit hereunder and subject to and governed by the terms
of this Agreement.

SECTION 2.07. Energy Hedging Letters of Credit.

(a) General. Subject to the terms and conditions set forth herein, the Borrower
may request the issuance by an Energy Hedging Issuing Bank of, and each Energy
Hedging Issuing Bank commits to issue, Letters of Credit (each, an “Energy
Hedging Letter of Credit”) denominated in Dollars, in a form reasonably
acceptable to the Administrative Agent and the applicable Energy Hedging Issuing
Bank, at any time and from time to time during the Energy Hedging Availability
Period. In the event of any inconsistency between the terms and conditions of
this Agreement and the terms and conditions of any form of letter of credit
application or other agreement submitted by the Borrower to, or entered into

 

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by the Borrower with, the Energy Hedging Issuing Bank relating to any Energy
Hedging Letter of Credit, the terms and conditions of this Agreement shall
control. Subject to the terms and conditions set forth herein, no Energy Hedging
Issuing Bank shall be obligated to issue, amend or increase any Energy Hedging
Letter of Credit if:

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

(ii) the issuance of such Energy Hedging Letter of Credit would violate one or
more policies of such Energy Hedging Issuing Bank applicable to letters of
credit generally.

(b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To
request the issuance of an Energy Hedging Letter of Credit (or the amendment,
renewal or extension of an outstanding Energy Hedging Letter of Credit), the
Borrower shall hand deliver or telecopy (or transmit by electronic
communication, if arrangements for doing so have been approved by the applicable
Energy Hedging Issuing Bank) to the Energy Hedging Issuing Bank and the
Administrative Agent (reasonably in advance of the requested date of issuance,
amendment, renewal or extension) a notice requesting the issuance of an Energy
Hedging Letter of Credit, or identifying the Energy Hedging Letter of Credit to
be amended, renewed or extended, and specifying the date of issuance, amendment,
renewal or extension (which shall be a Business Day), the date on which such
Energy Hedging Letter of Credit is to expire (which shall comply with
paragraph (c) of this Section), the amount of such Energy Hedging Letter of
Credit, the name and address of the beneficiary thereof and such other
information as shall be necessary to prepare, amend, renew or extend such Energy
Hedging Letter of Credit. If requested by the applicable Energy Hedging Issuing
Bank, the Borrower also shall submit a letter of credit application in a form
acceptable to the Energy Hedging Issuing Bank. An Energy Hedging Letter of
Credit shall be issued, amended, renewed or extended only if (and upon issuance,
amendment, renewal or extension of each Letter of Credit the Borrower shall be
deemed to represent and warrant that), after giving effect to such issuance,
amendment, renewal or extension (A) the aggregate Energy Hedging LC Exposure
would not exceed $75,000,000 and (B) the sum of the total Energy Hedging
Revolving Credit Exposures shall not exceed the Energy Hedging Aggregate
Commitment.

(c) Expiration Date. Each Energy Hedging Letter of Credit shall expire at or
prior to the close of business on the earlier of (i) the date one year after the
date of the issuance of such Energy Hedging Letter of Credit (or, in the case of
any renewal or extension thereof, one year after such renewal or extension) and
(ii) the date that is five (5) Business Days prior to the Maturity Date provided
that any Energy Hedging Letter of Credit with a one-year tenor may provide for
the renewal thereof for additional one-year periods (which shall in no event
extend beyond the date referred to in clause (ii) above).

(d) Participations. By the issuance of an Energy Hedging Letter of Credit (or an
amendment to an Energy Hedging Letter of Credit increasing the amount thereof)
and without any further

 

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action on the part of the applicable Energy Hedging Issuing Bank or the Energy
Hedging Lenders, the applicable Energy Hedging Issuing Bank hereby grants to
each Energy Hedging Lender, and each Energy Hedging Lender hereby acquires from
such Energy Hedging Issuing Bank, a participation in such Energy Hedging Letter
of Credit equal to such Energy Hedging Lender’s Applicable Percentage of the
aggregate amount available to be drawn under such Energy Hedging Letter of
Credit. In consideration and in furtherance of the foregoing, each Energy
Hedging Lender hereby absolutely and unconditionally agrees to pay to the
Administrative Agent, for the account of the applicable Energy Hedging Issuing
Bank, such Energy Hedging Lender’s Applicable Percentage of each Energy Hedging
LC Disbursement made by the Energy Hedging Issuing Bank and not reimbursed by
the Borrower on the date due as provided in paragraph (e) of this Section, or of
any reimbursement payment required to be refunded to the Borrower for any
reason. Each Energy Hedging Lender acknowledges and agrees that its obligation
to acquire participations pursuant to this paragraph in respect of Energy
Hedging Letters of Credit is absolute and unconditional and shall not be
affected by any circumstance whatsoever, including any amendment, renewal or
extension of any Energy Hedging Letter of Credit or the occurrence and
continuance of a Default or reduction or termination of the Energy Hedging
Commitments, and that each such payment shall be made without any offset,
abatement, withholding or reduction whatsoever.

(e) Reimbursement. If any Energy Hedging Issuing Bank shall make any Energy
Hedging LC Disbursement in respect of an Energy Hedging Letter of Credit, the
Borrower shall reimburse such Energy Hedging LC Disbursement by paying to the
Administrative Agent in Dollars the amount equal to such Energy Hedging LC
Disbursement, calculated as of the date the Energy Hedging Issuing Bank made
such Energy Hedging LC Disbursement not later than 1:00 p.m., New York City
time, on the date that such Energy Hedging LC Disbursement is made, if the
Borrower shall have received notice of such Energy Hedging LC Disbursement prior
to 10:00 a.m., New York City time, on such date, or, if such notice has not been
received by the Borrower prior to such time on such date, then not later than
1:00 p.m., New York City time, on the Business Day immediately following the day
that the Borrower receives such notice, if such notice is not received prior to
such time on the day of receipt; provided that, if such Energy Hedging LC
Disbursement is not less than $1,000,000, the Borrower may, subject to the
conditions to borrowing set forth herein, request in accordance with
Section 2.03 that such payment be financed with an ABR Revolving Energy Hedging
Borrowing in an equivalent amount of such Energy Hedging LC Disbursement and, to
the extent so financed, the Borrower’s obligation to make such payment shall be
discharged and replaced by the resulting ABR Revolving Energy Hedging Borrowing.
If the Borrower fails to make such payment when due, the Administrative Agent
shall notify each Energy Hedging Lender of the applicable Energy Hedging LC
Disbursement, the payment then due from the Borrower in respect thereof and such
Energy Hedging Lender’s Applicable Percentage thereof. Promptly following
receipt of such notice, each Energy Hedging Lender shall pay to the
Administrative Agent its Applicable Percentage of the payment then due from the
Borrower, in the same manner as provided in Section 2.08 with respect to Energy
Hedging Loans made by such Energy Hedging Lender (and Section 2.08 shall apply,
mutatis mutandis, to the payment obligations of the Energy Hedging Lenders), and
the Administrative Agent shall promptly pay to the applicable Energy Hedging
Issuing Bank the amounts so received by it from the Energy Hedging Lenders.
Promptly following receipt by the Administrative Agent of any payment from the
Borrower pursuant to this paragraph, the Administrative Agent shall distribute
such payment to the applicable Energy Hedging Issuing Bank or, to the extent
that Energy Hedging Lenders have made payments pursuant to this paragraph to
reimburse such Energy Hedging Issuing Bank, then to such Energy Hedging Lenders
and such Energy Hedging Issuing Bank as their interests may appear. Any payment
made by an Energy Hedging Lender pursuant to this paragraph to reimburse the
applicable Energy Hedging Issuing Bank for any Energy Hedging LC Disbursement
(other than the funding of ABR Revolving Loans as contemplated above) shall not
constitute an Energy Hedging Loan and shall not relieve the Borrower of its
obligation to reimburse such Energy Hedging LC Disbursement.

 

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(f) Obligations Absolute. The Borrower’s obligation to reimburse Energy Hedging
LC Disbursements as provided in paragraph (e) of this Section shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Energy Hedging
Letter of Credit or this Agreement, or any term or provision therein, (ii) any
draft or other document presented under an Energy Hedging Letter of Credit
proving to be forged, fraudulent or invalid in any respect or any statement
therein being untrue or inaccurate in any respect, (iii) payment by the
applicable Energy Hedging Issuing Bank under an Energy Hedging Letter of Credit
against presentation of a draft or other document that does not comply with the
terms of such Energy Hedging Letter of Credit, or (iv) any other event or
circumstance whatsoever, whether or not similar to any of the foregoing, that
might, but for the provisions of this Section, constitute a legal or equitable
discharge of, or provide a right of setoff against, the Borrower’s obligations
hereunder. Neither the Administrative Agent, the Energy Hedging Lenders nor the
applicable Energy Hedging Issuing Bank, nor any of their Related Parties, shall
have any liability or responsibility by reason of or in connection with the
issuance or transfer of any Energy Hedging Letter of Credit or any payment or
failure to make any payment thereunder (irrespective of any of the circumstances
referred to in the preceding sentence), or any error, omission, interruption,
loss or delay in transmission or delivery of any draft, notice or other
communication under or relating to any Energy Hedging Letter of Credit
(including any document required to make a drawing thereunder), any error in
interpretation of technical terms or any consequence arising from causes beyond
the control of such Energy Hedging Issuing Bank; provided that the foregoing
shall not be construed to excuse such Energy Hedging Issuing Bank from liability
to the Borrower to the extent of any direct damages (as opposed to consequential
damages, claims in respect of which are hereby waived by the Borrower to the
extent permitted by applicable law) suffered by the Borrower that are caused by
such Energy Hedging Issuing Bank’s failure to exercise care when determining
whether drafts and other documents presented under an Energy Hedging Letter of
Credit comply with the terms thereof. The parties hereto expressly agree that,
in the absence of gross negligence or willful misconduct on the part of any
Energy Hedging Issuing Bank (as finally determined by a court of competent
jurisdiction), such Energy Hedging Issuing Bank shall be deemed to have
exercised care in each such determination. In furtherance of the foregoing and
without limiting the generality thereof, the parties agree that, with respect to
documents presented which appear on their face to be in substantial compliance
with the terms of an Energy Hedging Letter of Credit, the Energy Hedging Issuing
Bank may, in their respective sole discretion, either accept and make payment
upon such documents without responsibility for further investigation, regardless
of any notice or information to the contrary, or refuse to accept and make
payment upon such documents if such documents are not in strict compliance with
the terms of such Energy Hedging Letter of Credit.

(g) Disbursement Procedures. Each Energy Hedging Issuing Bank shall, promptly
following its receipt thereof, examine all documents purporting to represent a
demand for payment under an Energy Hedging Letter of Credit. Each Energy Hedging
Issuing Bank shall promptly notify the Administrative Agent and the Borrower by
telephone (confirmed by telecopy or electronic transmission) of such demand for
payment and whether such Energy Hedging Issuing Bank has made or will make an
Energy Hedging LC Disbursement thereunder; provided that any failure to give or
delay in giving such notice shall not relieve the Borrower of its obligation to
reimburse such Energy Hedging Issuing Bank and the Energy Hedging Lenders with
respect to any such Energy Hedging LC Disbursement.

(h) Interim Interest. If any Energy Hedging Issuing Bank shall make any Energy
Hedging LC Disbursement, then, unless the Borrower shall reimburse such Energy
Hedging LC Disbursement in full on the date such Energy Hedging LC Disbursement
is made, the unpaid amount thereof shall bear interest, for each day from and
including the date such Energy Hedging LC Disbursement is made to but excluding
the date that the Borrower reimburses such Energy Hedging LC Disbursement, at
the rate per annum then applicable to ABR Loans; provided that, if the Borrower
fails to reimburse such Energy Hedging LC Disbursement when due pursuant to
paragraph (e) of this Section,

 

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then Section 2.14(c) shall apply. Interest accrued pursuant to this paragraph
shall be for the account of the applicable Energy Hedging Issuing Bank, except
that interest accrued on and after the date of payment by any Energy Hedging
Lender pursuant to paragraph (e) of this Section to reimburse the applicable
Energy Hedging Issuing Bank shall be for the account of such Energy Hedging
Lender to the extent of such payment.

(i) Replacement of Energy Hedging Issuing Bank. Any Energy Hedging Issuing Bank
may be replaced at any time by written agreement among the Borrower, the
Administrative Agent, the replaced Energy Hedging Issuing Bank and the successor
Energy Hedging Issuing Bank. The Administrative Agent shall notify the Energy
Hedging Lenders of any such replacement of an Energy Hedging Issuing Bank. At
the time any such replacement shall become effective, the Borrower shall pay all
unpaid fees accrued for the account of the replaced Energy Hedging Issuing Bank
pursuant to Section 2.13(b). From and after the effective date of any such
replacement, (i) the successor Energy Hedging Issuing Bank shall have all the
rights and obligations of the applicable Energy Hedging Issuing Bank under this
Agreement with respect to Energy Hedging Letters of Credit to be issued
thereafter and (ii) references herein to the term “Energy Hedging Issuing Bank”
shall be deemed to refer to such successor or to any previous related Energy
Hedging Issuing Bank, or to such successor and all previous related Energy
Hedging Issuing Banks, as the context shall require. After the replacement of an
Energy Hedging Issuing Bank hereunder, the replaced Energy Hedging Issuing Bank
shall remain a party hereto and shall continue to have all the rights and
obligations of an Energy Hedging Issuing Bank under this Agreement with respect
to Energy Hedging Letters of Credit then outstanding and issued by it prior to
such replacement, but shall not be required to issue additional Energy Hedging
Letters of Credit.

(j) Cash Collateralization. If any Event of Default shall occur and be
continuing, on the Business Day that the Borrower receives notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Energy Hedging Lenders with Energy Hedging LC Exposure
representing greater than 50% of the total Energy Hedging LC Exposure) demanding
the deposit of cash collateral pursuant to this paragraph, the Borrower shall
deposit in an account with the Administrative Agent, in the name of the
Administrative Agent and for the benefit of the Energy Hedging Lenders (the
“Energy Hedging LC Collateral Account”), an amount in cash equal to 105% of the
amount of the Energy Hedging LC Exposure as of such date plus any accrued and
unpaid interest thereon; provided that the obligation to deposit such cash
collateral shall become effective immediately, and such deposit shall become
immediately due and payable, without demand or other notice of any kind, upon
the occurrence of any Event of Default with respect to the Borrower described in
clause (h) or (i) of Article VII. Such deposit shall be held by the
Administrative Agent as collateral for the payment and performance of the
Obligations arising from Energy Hedging Borrowings and Energy Hedging LC
Exposure. The Administrative Agent shall have exclusive dominion and control,
including the exclusive right of withdrawal, over such account (and the Borrower
hereby grants the Administrative Agent a security interest in the Energy Hedging
LC Collateral Account). Other than any interest earned on the investment of such
deposits, which investments shall be made at the option and sole discretion of
the Administrative Agent and at the Borrower’s risk and expense, such deposits
shall not bear interest. Interest or profits, if any, on such investments shall
accumulate in such account. Moneys in such account shall be applied by the
Administrative Agent to reimburse the applicable Energy Hedging Issuing Bank for
Energy Hedging LC Disbursements for which it has not been reimbursed and, to the
extent not so applied, shall be held for the satisfaction of the reimbursement
obligations of the Borrower for the Energy Hedging LC Exposure at such time or,
if the maturity of the Energy Hedging Loans has been accelerated (but subject to
the consent of applicable Energy Hedging Lenders with Energy Hedging LC Exposure
representing greater than 50% of the total Energy Hedging LC Exposure), be
applied to satisfy other Obligations. If the Borrower is required to provide an
amount of cash collateral hereunder as a result of the occurrence of an Event of
Default, such amount (to the extent not applied as aforesaid) shall be

 

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returned to the Borrower within three (3) Business Days after all Events of
Default have been cured or waived.

SECTION 2.08. Funding of Borrowings. (a) Each Lender shall make each Loan to be
made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 3:00 p.m., New York City time, to the account of
the Administrative Agent most recently designated by it for such purpose by
notice to the Lenders in an amount equal to such Lender’s Applicable Percentage;
provided that Swingline Loans shall be made as provided in Section 2.05. The
Administrative Agent will make such Loans available to the Borrower in
immediately available funds by promptly crediting or otherwise transferring the
amounts so received, in like funds, to an account of the Borrower designated by
the Borrower in the applicable Borrowing Request; provided that ABR Liquidity
Revolving Loans made to finance the reimbursement of a Liquidity LC Disbursement
as provided in Section 2.06(e) and ABR Energy Hedging Loans made to finance the
reimbursement of an Energy Hedging LC Disbursement as provided in
Section 2.07(e) shall, in each case, be remitted by the Administrative Agent to
the applicable Issuing Bank.

(b) Unless the Administrative Agent shall have received notice from a Lender
prior to the proposed time of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender’s share of such Borrowing, the
Administrative Agent may assume that such Lender has made such share available
on such date in accordance with paragraph (a) of this Section and may, in
reliance upon such assumption, make available to the Borrower a corresponding
amount. In such event, if a Lender has not in fact made its share of the
applicable Borrowing available to the Administrative Agent, then the applicable
Lender and the Borrower severally agree to pay to the Administrative Agent
forthwith on demand such corresponding amount with interest thereon, for each
day from and including the date such amount is made available to the Borrower to
but excluding the date of payment to the Administrative Agent, at (i) in the
case of such Lender, the greater of the Federal Funds Effective Rate and a rate
reasonably determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation or (ii) in the case of the Borrower,
the interest rate applicable to ABR Loans. If such Lender pays such amount to
the Administrative Agent, then such amount shall constitute such Lender’s Loan
included in such Borrowing.

SECTION 2.09. Interest Elections. (a) Each Borrowing initially shall be of the
Type specified in the applicable Borrowing Request and, in the case of a
Eurodollar Borrowing, shall have an initial Interest Period as specified in such
Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing
to a different Type or to continue such Borrowing and, in the case of a
Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in
this Section. The Borrower may elect different options with respect to different
portions of the affected Borrowing, in which case each such portion shall be
allocated ratably among the Lenders holding the Loans comprising such Borrowing,
and the Loans comprising each such portion shall be considered a separate
Borrowing. This Section shall not apply to Swingline Borrowings, which may not
be converted or continued.

(b) To make an election pursuant to this Section, the Borrower shall notify the
Administrative Agent of such election by telephone by the time that a Borrowing
Request would be required under Section 2.03 if the Borrower were requesting a
Revolving Borrowing of the Type resulting from such election to be made on the
effective date of such election. Each such telephonic Interest Election Request
shall be irrevocable and shall be confirmed promptly by hand delivery, telecopy
or electronic transmission to the Administrative Agent of a written Interest
Election Request in a form approved by the Administrative Agent and signed by
the Borrower. Notwithstanding any contrary provision herein, this Section shall
not be construed to permit the Borrower to (i) elect an Interest Period for
Eurodollar Loans that does not comply with Section 2.02(d) or (ii) convert any
Borrowing to a

 

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Borrowing of a Type not available under the Class of Commitments pursuant to
which such Borrowing was made.

(c) Each telephonic and written Interest Election Request shall specify the
following information in compliance with Section 2.02:

(i) the Borrowing to which such Interest Election Request applies and, if
different options are being elected with respect to different portions thereof,
the portions thereof to be allocated to each resulting Borrowing (in which case
the information to be specified pursuant to clauses (iii) and (iv) below shall
be specified for each resulting Borrowing);

(ii) the effective date of the election made pursuant to such Interest Election
Request, which shall be a Business Day;

(iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing; and

(iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period
to be applicable thereto after giving effect to such election, which Interest
Period shall be a period contemplated by the definition of the term “Interest
Period”.

If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month’s duration.

(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender’s portion of each resulting Borrowing.

(e) If the Borrower fails to deliver a timely Interest Election Request with
respect to a Eurodollar Borrowing prior to the end of the Interest Period
applicable thereto, then, unless such Borrowing is repaid as provided herein, at
the end of such Interest Period such Borrowing shall be converted to an ABR
Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default
has occurred and is continuing and the Administrative Agent, at the request of
the Required Lenders, so notifies the Borrower, then, so long as an Event of
Default is continuing (i) no outstanding Revolving Borrowing may be converted to
or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar
Borrowing shall be converted to an ABR Borrowing at the end of the Interest
Period applicable thereto.

SECTION 2.10. Termination and Reduction of Commitments. (a) Unless previously
terminated, the Commitments shall terminate on the Maturity Date.

(b) The Borrower may at any time terminate, or from time to time reduce, the
Liquidity Commitments and/or the Energy Hedging Commitments; provided that
(i) each reduction of the Commitments shall be in an amount that is an integral
multiple of $1,000,000 and not less than $10,000,000, (ii) the Borrower shall
not terminate or reduce the Liquidity Commitments if, after giving effect to any
concurrent prepayment of the Liquidity Loans in accordance with Section 2.12,
the sum of the Liquidity Revolving Credit Exposures would exceed the Liquidity
Aggregate Commitment and (iii) the Borrower shall not terminate or reduce the
Energy Hedging Commitments if, after giving effect to any concurrent prepayment
of the Energy Hedging Loans in accordance with Section 2.12, the sum of the
Energy Hedging Revolving Credit Exposures would exceed the Energy Hedging
Aggregate Commitment.

 

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(c) The Borrower shall notify the Administrative Agent of any election to
terminate or reduce the Commitments under paragraph (b) of this Section at least
three (3) Business Days prior to the effective date of such termination or
reduction, specifying such election and the effective date thereof. Promptly
following receipt of any notice, the Administrative Agent shall advise the
Lenders of the contents thereof. Each notice delivered by the Borrower pursuant
to this Section shall be irrevocable; provided that a notice of termination of
the Commitments delivered by the Borrower may state that such notice is
conditioned upon the effectiveness of other credit facilities, in which case
such notice may be revoked by the Borrower (by notice to the Administrative
Agent on or prior to the specified effective date) if such condition is not
satisfied. Any termination or reduction of the Commitments shall be permanent.
Each reduction of the Commitments shall be made ratably among the Lenders in
accordance with their respective Commitments.

SECTION 2.11. Repayment of Loans; Evidence of Debt. (a) The Borrower hereby
unconditionally promises to pay (i) to the Administrative Agent for the account
of each Lender the then unpaid principal amount of each Revolving Loan on the
Maturity Date and (ii) to the Swingline Lender the then unpaid principal amount
of each Swingline Loan on the earlier of the Maturity Date and the last day of
the first calendar month that is at least two (2) Business Days after such
Swingline Loan is made; provided that on each date that a Liquidity Revolving
Borrowing is made, the Borrower shall repay all Swingline Loans then
outstanding.

(b) Each Lender shall maintain in accordance with its usual practice an account
or accounts evidencing the indebtedness of the Borrower to such Lender resulting
from each Loan made by such Lender, including the amounts of principal and
interest payable and paid to such Lender from time to time hereunder.

(c) The Administrative Agent shall maintain accounts in which it shall record
(i) the amount of each Loan made hereunder, the Class and Type thereof, whether
such Loan is a Liquidity Loan or an Energy Hedging Loan and the Interest Period
applicable thereto, (ii) the amount of any principal or interest due and payable
or to become due and payable from the Borrower to each Lender hereunder and
(iii) the amount of any sum received by the Administrative Agent hereunder for
the account of the Lenders and each Lender’s share thereof.

(d) The entries made in the accounts maintained pursuant to paragraph (b) or
(c) of this Section shall be prima facie evidence of the existence and amounts
of the obligations recorded therein; provided that the failure of any Lender or
the Administrative Agent to maintain such accounts or any error therein shall
not in any manner affect the obligation of the Borrower to repay the Loans in
accordance with the terms of this Agreement.

(e) Any Lender may request that Loans made by it be evidenced by a promissory
note in substantially the form of Exhibit F. In such event, the Borrower shall
prepare, execute and deliver to such Lender a promissory note payable to the
order of such Lender (or, if requested by such Lender, to such Lender and its
registered assigns) and in a form approved by the Administrative Agent.
Thereafter, the Loans evidenced by such promissory note and interest thereon
shall at all times (including after assignment pursuant to Section 9.04) be
represented by one or more promissory notes in such form payable to the order of
the payee named therein (or, if such promissory note is a registered note, to
such payee and its registered assigns).

SECTION 2.12. Prepayment of Loans. (a) The Borrower shall have the right at any
time and from time to time to prepay any Borrowing in whole or in part, subject
to prior notice in accordance with the provisions of this

 

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Section 2.12. The Borrower shall notify the Administrative Agent (and, in the
case of prepayment of a Swingline Loan, the Swingline Lender) by telephone
(confirmed by telecopy or electronic transmission) of any prepayment hereunder
(i) in the case of prepayment of a Eurodollar Borrowing, not later than
1:00 p.m., New York City time, three (3) Business Days before the date of
prepayment, (ii) in the case of prepayment of an ABR Borrowing, not later than
1:00 p.m., New York City time, one (1) Business Day before the date of
prepayment or (iii) in the case of prepayment of a Swingline Loan, not later
than 1:00 p.m., New York City time, on the date of prepayment. Each such notice
shall be irrevocable and shall specify the prepayment date and the principal
amount of each Borrowing or portion thereof to be prepaid; provided that, if a
notice of prepayment is given in connection with a conditional notice of
termination of the Commitments as contemplated by Section 2.10, then such notice
of prepayment may be revoked if such notice of termination is revoked in
accordance with Section 2.10. Promptly following receipt of any such notice
relating to a Borrowing, the Administrative Agent shall advise the Lenders of
the contents thereof. Each partial prepayment of any Borrowing shall be in an
amount that would be permitted in the case of an advance of a Borrowing of the
same Type as provided in Section 2.02. Each prepayment of a Borrowing shall be
applied ratably to the Loans included in the prepaid Borrowing. Prepayments
shall be payable without penalty or premium and shall be accompanied by
(i) accrued interest to the extent required by Section 2.14 and (ii) break
funding payments pursuant to Section 2.17.

(b) If at any time (i) the sum of the aggregate principal amount of all of the
Liquidity Revolving Credit Exposures exceeds the Liquidity Aggregate Commitment,
the Borrower shall immediately repay Liquidity Borrowings or cash collateralize
Liquidity LC Exposure in an account with the Administrative Agent pursuant to
Section 2.06(j), as applicable, in an aggregate principal amount sufficient to
cause the aggregate principal amount of all Liquidity Revolving Credit Exposures
to be less than or equal to the Liquidity Aggregate Commitment or (ii) the sum
of the aggregate principal amount of all of the Energy Hedging Revolving Credit
Exposures exceeds the Energy Hedging Aggregate Commitment, the Borrower shall
immediately repay Energy Hedging Borrowings or cash collateralize Energy Hedging
LC Exposure in an account with the Administrative Agent pursuant to
Section 2.07(j), as applicable, in an aggregate principal amount sufficient to
cause the aggregate principal amount of all Energy Hedging Revolving Credit
Exposures to be less than or equal to the Energy Hedging Aggregate Commitment.

SECTION 2.13. Fees. (a) The Borrower agrees to pay to the Administrative Agent
for the account of each Lender a commitment fee, which shall accrue at the
“Commitment Fee Rate”, as set forth in the definition of Applicable Rate, on the
average daily amount of the Available Revolving Commitment of such Lender during
the period from and including the Effective Date to but excluding the date on
which such Commitment terminates; provided that for purposes of calculating the
Available Revolving Commitment of each such Lender, the Swingline Exposure of
such Lender shall not be included in the Revolving Credit Exposure for such
Lender. Accrued fees shall be payable in arrears on the last day of March, June,
September and December of each year and on the date on which the Commitments
terminate, commencing on the first such date to occur after the date hereof;
provided that any commitment fees accruing after the date on which the
Commitments terminate shall be payable on demand. All commitment fees shall be
computed on the basis of a year of 360 days and shall be payable for the actual
number of days elapsed (including the first day but excluding the last day).

(b) The Borrower agrees to pay (i) to the Administrative Agent for the account
of each Lender a participation fee with respect to its participations in Letters
of Credit, which shall accrue at the same Applicable Rate used to determine the
interest rate applicable to Eurodollar Loans on the average daily amount of such
Lender’s LC Exposure (excluding any portion thereof attributable to unreimbursed
LC Disbursements) during the period from and including the Effective Date to but
excluding the later of the date on which such Lender’s Commitment terminates and
the date on which

 

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such Lender ceases to have any LC Exposure and (ii) to each Issuing Bank for its
own account a fronting fee, which shall accrue at a rate per annum mutually
agreed upon between the Borrower and the Issuing Bank on the average daily
amount of the LC Exposure (excluding any portion thereof attributable to
unreimbursed LC Disbursements) attributable to Letters of Credit issued by the
Issuing Bank during the period from and including the Effective Date to but
excluding the later of the date of termination of the Commitments and the date
on which there ceases to be any LC Exposure, as well as the Issuing Bank’s
standard fees and commissions with respect to the issuance, amendment,
cancellation, negotiation, transfer, presentment, renewal or extension of any
Letter of Credit or processing of drawings thereunder. Unless otherwise
specified above, participation fees and fronting fees accrued through and
including the last day of March, June, September and December of each year shall
be payable on the third (3rd) Business Day following such last day, commencing
on the first such date to occur after the Effective Date; provided that all such
fees shall be payable on the date on which the Commitments terminate and any
such fees accruing after the date on which the Commitments terminate shall be
payable on demand. Any other fees payable to an Issuing Bank pursuant to this
paragraph shall be payable within ten (10) days after demand. All participation
fees and fronting fees shall be computed on the basis of a year of 360 days and
shall be payable for the actual number of days elapsed (including the first day
but excluding the last day).

(c) The Borrower agrees to pay to the Administrative Agent, for its own account,
fees payable in the amounts and at the times separately agreed upon between the
Borrower and the Administrative Agent.

(d) All fees payable hereunder shall be paid on the dates due, in immediately
available funds, to the Administrative Agent (or to the Issuing Bank, in the
case of fees payable to it) for distribution, in the case of commitment fees and
participation fees, to the applicable Lenders. Fees paid shall not be refundable
under any circumstances.

SECTION 2.14. Interest. (a) The Loans comprising each ABR Borrowing (including
each Swingline Loan) shall bear interest at the Alternate Base Rate plus the
Applicable Rate.

(b) The Loans comprising each Eurodollar Borrowing shall bear interest at the
Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the
Applicable Rate.

(c) Notwithstanding the foregoing, if any principal of or interest on any Loan
or any fee or other amount payable by the Borrower hereunder is not paid when
due, whether at stated maturity, upon acceleration or otherwise, such overdue
amount shall bear interest, after as well as before judgment, at a rate per
annum equal to (i) in the case of overdue principal of any Loan, 2% plus the
rate otherwise applicable to such Loan as provided in the preceding paragraphs
of this Section or (ii) in the case of any other amount, 2% plus the rate
applicable to ABR Loans as provided in paragraph (a) of this Section.

(d) Accrued interest on each Loan shall be payable in arrears on each Interest
Payment Date for such Loan and, in the case of Revolving Loans, upon termination
of the Commitments; provided that (i) interest accrued pursuant to paragraph (c)
of this Section shall be payable on demand, (ii) in the event of any repayment
or prepayment of any Loan (other than a prepayment of an ABR Revolving Loan
prior to the end of the Availability Period), accrued interest on the principal
amount repaid or prepaid shall be payable on the date of such repayment or
prepayment and (iii) in the event of any conversion of any Eurodollar Loan prior
to the end of the current Interest Period therefor, accrued interest on such
Loan shall be payable on the effective date of such conversion.

 

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(e) All interest hereunder shall be computed on the basis of a year of 360 days,
except that interest computed by reference to the Alternate Base Rate at times
when the Alternate Base Rate is based on the Prime Rate shall be computed on the
basis of a year of 365 days (or 366 days in a leap year), and in each case shall
be payable for the actual number of days elapsed (including the first day but
excluding the last day). The applicable Alternate Base Rate, Adjusted LIBO Rate
or LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.

SECTION 2.15. Alternate Rate of Interest. If prior to the commencement of any
Interest Period for a Eurodollar Borrowing:

(a) the Administrative Agent determines (which determination shall be conclusive
absent manifest error) that adequate and reasonable means do not exist for
ascertaining the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such
Interest Period; or

(b) the Administrative Agent is advised by the Required Lenders that the
Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period
will not adequately and fairly reflect the cost to such Lenders (or Lender) of
making or maintaining their Loans (or its Loan) included in such Borrowing for
such Interest Period;

then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy or electronic transmission as promptly as
practicable thereafter and, until the Administrative Agent notifies the Borrower
and the Lenders that the circumstances giving rise to such notice no longer
exist (and the Administrative Agent shall use commercially reasonable efforts to
provide such notice promptly following such circumstances no longer existing as
determined by the Administrative Agent in its sole discretion (or, in the case
of clause (b) above, promptly following the Administrative Agent being advised
thereof by the Required Lenders)), (i) any Interest Election Request that
requests the conversion of any Borrowing to, or continuation of any Borrowing
as, a Eurodollar Borrowing shall be ineffective and any such Eurodollar
Borrowing shall be repaid on the last day of the then current Interest Period
applicable thereto and (ii) if any Borrowing Request requests a Eurodollar
Borrowing, such Borrowing shall be made as an ABR Borrowing.

SECTION 2.16. Increased Costs; Illegality. (a) If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special deposit, compulsory
loan, insurance charge or similar requirement against assets of, deposits with
or for the account of, or credit extended by, any Lender (except any such
reserve requirement reflected in the Adjusted LIBO Rate) or any Issuing Bank;

(ii) impose on any Lender or any Issuing Bank or the London interbank market any
other condition, cost or expense affecting this Agreement or Eurodollar Loans
made by such Lender or any Letter of Credit or participation therein; or

(iii) subject any Recipient to any Taxes on its loans, loan principal, letters
of credit, commitments, or other obligations, or its deposits, reserves, other
liabilities or capital attributable thereto (other than (A) Indemnified Taxes,
(B) Excluded Taxes and (C) Other Connection Taxes on gross or net income,
profits, or revenue (including value-added or similar Taxes));

and the result of any of the foregoing shall be to increase the cost to such
Lender or such other Recipient of making or maintaining any Loan (or of
maintaining its obligation to make any such Loan) or to

 

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increase the cost to such Lender, the Issuing Bank or such other Recipient of
participating in, issuing or maintaining any Letter of Credit or to reduce the
amount of any sum received or receivable by such Lender, the Issuing Bank or
such other Recipient hereunder (whether of principal, interest or otherwise),
then the Borrower will pay to such Lender, the Issuing Bank or such other
Recipient, as the case may be, such additional amount or amounts as will
compensate such Lender, the Issuing Bank or such other Recipient, as the case
may be, for such additional costs incurred or reduction suffered.

(b) If any Lender or any Issuing Bank determines that any Change in Law
regarding capital or liquidity requirements has or would have the effect of
reducing the rate of return on such Lender’s or the Issuing Bank’s capital or on
the capital of such Lender’s or the Issuing Bank’s holding company, if any, as a
consequence of this Agreement or the Loans made by, or participations in Letters
of Credit held by, such Lender, or the Letters of Credit issued by the Issuing
Bank, to a level below that which such Lender or the Issuing Bank or such
Lender’s or the Issuing Bank’s holding company could have achieved but for such
Change in Law (taking into consideration such Lender’s or the Issuing Bank’s
policies and the policies of such Lender’s or the Issuing Bank’s holding company
with respect to capital adequacy and liquidity), then from time to time the
Borrower will pay to such Lender or the Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or the Issuing Bank
or such Lender’s or the Issuing Bank’s holding company for any such reduction
suffered.

(c) A certificate of a Lender or an Issuing Bank setting forth the amount or
amounts necessary to compensate such Lender or the Issuing Bank or its holding
company, as the case may be, as specified in paragraph (a) or (b) of this
Section shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay such Lender or the Issuing Bank, as the
case may be, the amount shown as due on any such certificate within ten
(10) days after receipt thereof.

(d) Failure or delay on the part of any Lender or any Issuing Bank to demand
compensation pursuant to this Section shall not constitute a waiver of such
Lender’s or the Issuing Bank’s right to demand such compensation; provided that
the Borrower shall not be required to compensate a Lender or an Issuing Bank
pursuant to this Section for any increased costs or reductions incurred more
than 270 days prior to the date that such Lender or the Issuing Bank, as the
case may be, notifies the Borrower of the Change in Law giving rise to such
increased costs or reductions and of such Lender’s or the Issuing Bank’s
intention to claim compensation therefor; provided further that, if the Change
in Law giving rise to such increased costs or reductions is retroactive, then
the 270-day period referred to above shall be extended to include the period of
retroactive effect thereof.

(e) If any Lender determines that any Law has made it unlawful, or that any
Governmental Authority has asserted that it is unlawful, for any Lender or its
lending office to make, maintain or fund Loans whose interest is determined by
reference to the LIBO Rate, or to determine or charge interest rates based upon
the LIBO Rate, or any Governmental Authority has imposed material restrictions
on the authority of such Lender to purchase or sell, or to take deposits of,
Dollars in the London interbank market, then, on notice thereof by such Lender
to the Borrower through the Administrative Agent, (i) any obligation of such
Lender to make or continue Eurodollar Loans or to convert ABR Loans to
Eurodollar Loans shall be suspended, and (ii) if such notice asserts the
illegality of such Lender making or maintaining ABR Loans the interest rate on
which is determined by reference to the LIBO Rate component of the Alternate
Base Rate, the interest rate on which ABR Loans of such Lender shall, if
necessary to avoid such illegality, be determined by the Administrative Agent
without reference to the LIBO Rate component of the Alternate Base Rate, in each
case until such Lender notifies the Administrative Agent and the Borrower that
the circumstances giving rise to such determination no longer exist. Upon
receipt of such notice, (x) the Borrower shall, upon demand from such Lender
(with a copy to the Administrative Agent), prepay or, if applicable, convert all
Eurodollar Loans of such Lender to ABR Loans (the interest rate on which ABR
Loans of such Lender shall, if necessary to avoid such

 

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illegality, be determined by the Administrative Agent without reference to the
LIBO Rate component of the Alternate Base Rate), either on the last day of the
Interest Period therefor, if such Lender may lawfully continue to maintain such
Eurodollar Loans to such day, or immediately, if such Lender may not lawfully
continue to maintain such Eurodollar Loans and (y) if such notice asserts the
illegality of such Lender determining or charging interest rates based upon the
LIBO Rate, the Administrative Agent shall during the period of such suspension
compute the Alternate Base Rate applicable to such Lender without reference to
the LIBO Rate component thereof until the Administrative Agent is advised in
writing by such Lender that it is no longer illegal for such Lender to determine
or charge interest rates based upon the LIBO Rate (and such Lender shall use
commercially reasonable efforts to provide such notice promptly following such
circumstances no longer existing as determined by such Lender in its sole
discretion). Upon any such prepayment or conversion, the Borrower shall also pay
accrued interest on the amount so prepaid or converted.

SECTION 2.17. Break Funding Payments. In the event of (a) the payment of any
principal of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default or as a
result of any prepayment pursuant to Section 2.12), (b) the conversion of any
Eurodollar Loan other than on the last day of the Interest Period applicable
thereto, (c) the failure to borrow, convert, continue or prepay any Eurodollar
Loan on the date specified in any notice delivered pursuant hereto (regardless
of whether such notice may be revoked under Section 2.12 and is revoked in
accordance therewith) or (d) the assignment of any Eurodollar Loan other than on
the last day of the Interest Period applicable thereto as a result of a request
by the Borrower pursuant to Section 2.20, then, in any such event, the Borrower
shall compensate each Lender for the loss, cost and expense attributable to such
event. Such loss, cost or expense to any Lender shall be deemed to include an
amount determined by such Lender to be the excess, if any, of (i) the amount of
interest which would have accrued on the principal amount of such Loan had such
event not occurred, at the Adjusted LIBO Rate that would have been applicable to
such Loan, for the period from the date of such event to the last day of the
then current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period for
such Loan), over (ii) the amount of interest which would accrue on such
principal amount for such period at the interest rate which such Lender would
bid were it to bid, at the commencement of such period, for deposits in Dollars
of a comparable amount and period from other banks in the eurodollar market. A
certificate of any Lender setting forth any amount or amounts that such Lender
is entitled to receive pursuant to this Section shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall pay
such Lender the amount shown as due on any such certificate within ten (10) days
after receipt thereof.

SECTION 2.18. Taxes. (a) Withholding of Taxes; Gross-Up. Each payment by the
Borrower under any Financing Document shall be made without withholding for any
Taxes, unless such withholding is required by any law. If any Withholding Agent
determines, in its sole discretion exercised in good faith, that it is so
required to withhold Taxes, then such Withholding Agent may so withhold and
shall timely pay the full amount of withheld Taxes to the relevant Governmental
Authority in accordance with applicable law. If such Taxes are Indemnified
Taxes, then the amount payable by the Borrower shall be increased as necessary
so that, net of such withholding (including such withholding applicable to
additional amounts payable under this Section), the applicable Recipient
receives the amount it would have received had no such withholding been made.

(b) Payment of Other Taxes by the Borrower. The Borrower shall timely pay any
Other Taxes to the relevant Governmental Authority in accordance with applicable
law.

(c) Evidence of Payments. As soon as practicable after any payment of
Indemnified Taxes by the Borrower to a Governmental Authority, the Borrower
shall deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.

 

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(d) Indemnification by the Borrower. The Borrower shall indemnify each Recipient
for any Indemnified Taxes that are paid or payable by such Recipient in
connection with any Financing Document (including amounts paid or payable under
this Section 2.18(d)) and any reasonable expenses arising therefrom or with
respect thereto, whether or not such Indemnified Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority. The indemnity under
this Section 2.18(d) shall be paid within ten (10) days after the Recipient
delivers to the Borrower a certificate stating the amount of any Indemnified
Taxes so paid or payable by such Recipient and describing the basis of the
indemnity claim. Such certificate shall be conclusive of the amount so payable
absent manifest error. Such Recipient shall deliver a copy of such certificate
to the Administrative Agent.

(e) Indemnification by the Lenders. Each Lender shall severally indemnify the
Administrative Agent for any Taxes (but, in the case of any Indemnified Taxes,
only to the extent that the Borrower has not already indemnified the
Administrative Agent for such Indemnified Taxes and without limiting the
obligation of the Borrower to do so) attributable to such Lender that are paid
or payable by the Administrative Agent or the Borrower (as applicable) in
connection with any Financing Document and any reasonable expenses arising
therefrom or with respect thereto, whether or not such Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority. The
indemnity under this Section 2.18(e) shall be paid within ten (10) days after
the Administrative Agent delivers to the applicable Lender a certificate stating
the amount of Taxes so paid or payable by the Administrative Agent. Such
certificate shall be conclusive of the amount so paid or payable absent manifest
error.

(f) Status of Lenders. (i) Any Lender that is entitled to an exemption from, or
reduction of, any applicable withholding Tax with respect to any payments under
any Financing Document shall deliver to the Borrower and the Administrative
Agent, at the time or times reasonably requested by the Borrower or the
Administrative Agent, such properly completed and executed documentation
prescribed by law or reasonably requested by the Borrower or the Administrative
Agent as will permit such payments to be made without, or at a reduced rate of,
withholding. In addition, any Lender, if requested by the Borrower or the
Administrative Agent, shall deliver such other documentation prescribed by law
or reasonably requested by the Borrower or the Administrative Agent as will
enable the Borrower or the Administrative Agent to determine whether or not such
Lender is subject to any withholding (including backup withholding) or
information reporting requirements. Notwithstanding anything to the contrary in
the preceding two sentences, the completion, execution and submission of such
documentation (other than such documentation set forth in Section 2.18(f)(ii)
(A) through (E) below) shall not be required if in the Lender’s judgment such
completion, execution or submission would subject such Lender to any material
unreimbursed cost or expense or would materially prejudice the legal or
commercial position of such Lender. Upon the reasonable request of the Borrower
or the Administrative Agent, any Lender shall update any form or certification
previously delivered pursuant to this Section 2.18(f). If any form or
certification previously delivered pursuant to this Section expires or becomes
obsolete or inaccurate in any respect with respect to a Lender, such Lender
shall promptly (and in any event within ten (10) days after such expiration,
obsolescence or inaccuracy) notify the Borrower and the Administrative Agent in
writing of such expiration, obsolescence or inaccuracy and update the form or
certification if it is legally eligible to do so.

(ii) Without limiting the generality of the foregoing, if the Borrower is a
U.S. Person, any Lender with respect to the Borrower shall, if it is legally
eligible to do so, deliver to the Borrower and the Administrative Agent (in such
number of copies reasonably requested by the Borrower and the Administrative
Agent) on or prior to the date on which such Lender becomes a party hereto, duly
completed and executed copies of whichever of the following is applicable:

 

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(A) in the case of a Lender that is a U.S. Person, IRS Form W-9 certifying that
such Lender is exempt from U.S. federal backup withholding tax;

(B) in the case of a Non-U.S. Lender claiming the benefits of an income tax
treaty to which the United States is a party (1) with respect to payments of
interest under any Financing Document, IRS Form W-8BEN establishing an exemption
from, or reduction of, U.S. federal withholding Tax pursuant to the “interest”
article of such tax treaty and (2) with respect to any other applicable payments
under any Financing Document, IRS Form W-8BEN establishing an exemption from, or
reduction of, U.S. federal withholding Tax pursuant to the “business profits” or
“other income” article of such tax treaty;

(C) in the case of a Non-U.S. Lender for whom payments under any Financing
Document constitute income that is effectively connected with such Lender’s
conduct of a trade or business in the United States, IRS Form W-8ECI;

(D) in the case of a Non-U.S. Lender claiming the benefits of the exemption for
portfolio interest under Section 881(c) of the Code both (1) IRS Form W-8BEN and
(2) a certificate substantially in the form of Exhibit G (a “U.S. Tax
Certificate”) to the effect that such Lender is not (a) a “bank” within the
meaning of Section 881(c)(3)(A) of the Code, (b) a “10 percent shareholder” of
the Borrower within the meaning of Section 881(c)(3)(B) of the Code, (c) a
“controlled foreign corporation” described in Section 881(c)(3)(C) of the Code
and (d) conducting a trade or business in the United States with which the
relevant interest payments are effectively connected;

(E) in the case of a Non-U.S. Lender that is not the beneficial owner of
payments made under this Agreement (including a partnership or a participating
Lender) (1) an IRS Form W-8IMY on behalf of itself and (2) the relevant forms
prescribed in clauses (A), (B), (C), (D) and (F) of this paragraph (f)(ii) that
would be required of each such beneficial owner or partner of such partnership
if such beneficial owner or partner were a Lender; provided, however, that if
the Lender is a partnership and one or more of its partners are claiming the
exemption for portfolio interest under Section 881(c) of the Code, such Lender
may provide a U.S. Tax Certificate on behalf of such partners; or

(F) any other form prescribed by law as a basis for claiming exemption from, or
a reduction of, U.S. federal withholding Tax together with such supplementary
documentation necessary to enable the Borrower or the Administrative Agent to
determine the amount of Tax (if any) required by law to be withheld.

(iii) If a payment made to a Lender under any Financing Document would be
subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to
fail to comply with the applicable reporting requirements of FATCA (including
those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such
Lender shall deliver to the Withholding Agent, at the time or times prescribed
by law and at such time or times reasonably requested by the Withholding Agent,
such documentation prescribed by applicable law (including as prescribed by
Section 1471(b)(3)(C)(i) of the Code) and such additional documentation
reasonably requested by the Withholding Agent as may be necessary for the
Withholding Agent to comply with its obligations under FATCA, to determine
whether such Lender is in compliance with such

 

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Lender’s obligations under FATCA and, as necessary, to determine the amount to
deduct and withhold from such payment. Solely for purposes of this
Section 2.18(f)(iii), “FATCA” shall include any amendments made to FATCA after
the date of this Agreement.

(g) Treatment of Certain Refunds. If any party determines, in its sole
discretion exercised in good faith, that it has received a refund of any Taxes
as to which it has been indemnified pursuant to this Section 2.18 (including
additional amounts paid pursuant to this Section 2.18), it shall pay to the
indemnifying party an amount equal to such refund (but only to the extent of
indemnity payments made under this Section with respect to the Taxes giving rise
to such refund), net of all out-of-pocket expenses (including any Taxes) of such
indemnified party and without interest (other than any interest paid by the
relevant Governmental Authority with respect to such refund). Such indemnifying
party, upon the request of such indemnified party, shall repay to such
indemnified party the amount paid to such indemnified party pursuant to the
previous sentence (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) in the event such indemnified party is required
to repay such refund to such Governmental Authority. Notwithstanding anything to
the contrary in this Section 2.18(g), in no event will any indemnified party be
required to pay any amount to any indemnifying party pursuant to this
Section 2.18(g) if such payment would place such indemnified party in a less
favorable position (on a net after-Tax basis) than such indemnified party would
have been in if the indemnification payments or additional amounts giving rise
to such refund had never been paid. This Section 2.18(g) shall not be construed
to require any indemnified party to make available its Tax returns (or any other
information relating to its Taxes which it deems confidential) to the
indemnifying party or any other Person.

(h) Issuing Bank. For purposes of Sections 2.18(e) and (f), the term “Lender”
includes the Issuing Banks.

SECTION 2.19. Payments Generally; Allocations of Proceeds; Pro Rata Treatment;
Sharing of Set-offs.

(a) The Borrower shall make each payment required to be made by it hereunder
(whether of principal, interest, fees or reimbursement of LC Disbursements, or
of amounts payable under Section 2.16, 2.17 or 2.18, or otherwise) prior to 1:00
p.m., New York City time on the date when due, in immediately available funds,
without set-off or counterclaim. Any amounts received after such time on any
date may, in the discretion of the Administrative Agent, be deemed to have been
received on the next succeeding Business Day for purposes of calculating
interest thereon. All such payments shall be made to the Administrative Agent at
its offices at 1525 West W.T. Harris Blvd., MACD1109-019, Charlotte, North
Carolina 28262, except payments to be made directly to an Issuing Bank or
Swingline Lender as expressly provided herein and except that payments pursuant
to Sections 2.16, 2.17, 2.18 and 9.03 shall be made directly to the Persons
entitled thereto. The Administrative Agent shall distribute any such payments
received by it for the account of any other Person to the appropriate recipient
promptly following receipt thereof. If any payment hereunder shall be due on a
day that is not a Business Day, the date for payment shall be extended to the
next succeeding Business Day, and, in the case of any payment accruing interest,
interest thereon shall be payable for the period of such extension. All payments
hereunder shall be made in Dollars.

(b) Any payments received by the Administrative Agent (i) not constituting a
specific payment of principal, interest, fees or other sum payable under the
Financing Documents (which shall be applied as specified by the Borrower) or
(ii) after an Event of Default has occurred and is continuing and the
Administrative Agent so elects or the Required Lenders so direct, such funds
shall be applied ratably first, to pay any fees, indemnities, or expense
reimbursements including amounts then due to the Administrative Agent and any
Issuing Bank from the Borrower, second, to pay any fees or expense

 

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reimbursements then due to the Lenders from the Borrower, third, to pay interest
then due and payable on the Loans ratably, fourth, to prepay principal on the
Loans and unreimbursed LC Disbursements and any other amounts owing with respect
to Banking Services Obligations ratably, fifth, to pay an amount to the
Administrative Agent equal to one hundred five percent (105%) of the aggregate
undrawn face amount of all outstanding Letters of Credit and the aggregate
amount of any unpaid LC Disbursements, to be held as cash collateral for such
Obligations, and sixth, to the payment of any other Obligation due to the
Administrative Agent or any Lender by the Borrower. Notwithstanding anything to
the contrary contained in this Agreement, unless so directed by the Borrower, or
unless a Default is in existence, none of the Administrative Agent or any Lender
shall apply any payment which it receives to any Eurodollar Loan under the
Liquidity Commitments or Energy Hedging Commitments, as applicable, except
(a) on the expiration date of the Interest Period applicable to any such
Eurodollar Loan or (b) in the event, and only to the extent, that there are no
outstanding ABR Loans under the Liquidity Commitments or Energy Hedging
Commitments, as applicable, and, in any event, the Borrower shall pay the break
funding payment required in accordance with Section 2.17. The Administrative
Agent and the Lenders shall have the continuing and exclusive right to apply and
reverse and reapply any and all such proceeds and payments to any portion of the
Obligations.

(c) (i) At the election of the Administrative Agent, in connection with the
Liquidity Commitments, payments of principal, interest, Liquidity LC
Disbursements, fees, premiums, reimbursable expenses (including, without
limitation, all reimbursement for fees and expenses pursuant to Section 9.03),
and other sums payable under the Financing Documents, may be paid from the
proceeds of Liquidity Borrowings made hereunder whether made following a request
by the Borrower pursuant to Section 2.03 or a deemed request as provided in this
Section. The Borrower hereby irrevocably authorizes the Administrative Agent to
make a Liquidity Borrowing for the purpose of paying each payment of principal,
interest and fees as it becomes due hereunder or any other amount due under the
Financing Documents and agrees that all such amounts charged shall constitute
Liquidity Loans (including Swingline Loans) and that all such Liquidity
Borrowings shall be deemed to have been requested pursuant to Section 2.03 or
2.05, as applicable.

(ii) At the election of the Administrative Agent, in connection with the Energy
Hedging Commitments, payments of principal, interest, Energy Hedging LC
Disbursements, fees, premiums, reimbursable expenses (including, without
limitation, all reimbursement for fees and expenses pursuant to Section 9.03),
and other sums payable under the Financing Documents, may be paid from the
proceeds of Energy Hedging Borrowings made hereunder whether made following a
request by the Borrower pursuant to Section 2.03 or a deemed request as provided
in this Section. The Borrower hereby irrevocably authorizes the Administrative
Agent to make an Energy Hedging Borrowing for the purpose of paying each payment
of principal, interest and fees as it becomes due hereunder or any other amount
due under the Financing Documents and agrees that all such amounts charged shall
constitute Energy Hedging Loans and that all such Energy Hedging Borrowings
shall be deemed to have been requested pursuant to Section 2.03.

(d) If any Lender shall, by exercising any right of set-off or counterclaim or
otherwise, obtain payment in respect of any principal of or interest on any of
its Loans or participations in LC Disbursements or Swingline Loans resulting in
such Lender receiving payment of a greater proportion of the aggregate amount of
its Loans and participations in LC Disbursements and Swingline Loans and accrued
interest thereon than the proportion received by any other Lender, then the
Lender receiving such greater proportion shall purchase (for cash at face value)
participations in the Loans and participations in LC Disbursements and Swingline
Loans of other Lenders to the extent necessary so that the benefit of all such
payments shall be shared by the Lenders ratably in accordance with the aggregate
amount of principal of and accrued interest on their respective Revolving Loans
and participations in LC Disbursements and Swingline Loans; provided that (i) if
any such participations are purchased and all or

 

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any portion of the payment giving rise thereto is recovered, such participations
shall be rescinded and the purchase price restored to the extent of such
recovery, without interest, and (ii) the provisions of this paragraph shall not
be construed to apply to any payment made by the Borrower pursuant to and in
accordance with the express terms of this Agreement or any payment obtained by a
Lender as consideration for the assignment of or sale of a participation in any
of its Loans or participations in LC Disbursements and Swingline Loans to any
assignee or participant, other than to the Borrower or any Subsidiary or
Affiliate thereof (as to which the provisions of this paragraph shall apply).
The Borrower consents to the foregoing and agrees, to the extent it may
effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the
Borrower rights of set-off and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of the Borrower in the amount
of such participation.

(e) Unless the Administrative Agent shall have received notice from the Borrower
prior to the date on which any payment is due to the Administrative Agent for
the account of the applicable Lenders or the Issuing Bank hereunder that the
Borrower will not make such payment, the Administrative Agent may assume that
the Borrower has made such payment on such date in accordance herewith and may,
in reliance upon such assumption, distribute to the applicable Lenders or the
Issuing Bank, as the case may be, the amount due. In such event, if the Borrower
has not in fact made such payment, then each of the applicable Lenders or the
Issuing Bank, as the case may be, severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such
Lender or Issuing Bank with interest thereon, for each day from and including
the date such amount is distributed to it to but excluding the date of payment
to the Administrative Agent, at the greater of the Federal Funds Effective Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation.

(f) If any Lender shall fail to make any payment required to be made by it
pursuant to Section 2.05(c), 2.06(d) or (e), 2.07(d) or (e), 2.08(b), 2.19(e) or
9.03(c), then the Administrative Agent may, in its discretion (notwithstanding
any contrary provision hereof), (i) apply any amounts thereafter received by the
Administrative Agent for the account of such Lender and for the benefit of the
Administrative Agent, the Swingline Lender or the Issuing Bank to satisfy such
Lender’s obligations to it under such Section until all such unsatisfied
obligations are fully paid and/or (ii) hold any such amounts in a segregated
account as cash collateral for, and application to, any future funding
obligations of such Lender under any such Section; in the case of each of
clauses (i) and (ii) above, in any order as determined by the Administrative
Agent in its discretion.

SECTION 2.20. Mitigation Obligations; Replacement of Lenders. (a) If any Lender
requests compensation under Section 2.16, or the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for the account of
any Lender pursuant to Section 2.18, then such Lender shall use reasonable
efforts to designate a different lending office for funding or booking its Loans
hereunder or to assign its rights and obligations hereunder to another of its
offices, branches or affiliates, if, in the judgment of such Lender, such
designation or assignment (i) would eliminate or reduce amounts payable pursuant
to Section 2.16 or 2.18, as the case may be, in the future and (ii) would not
subject such Lender to any unreimbursed cost or expense and would not otherwise
be disadvantageous to such Lender. The Borrower hereby agrees to pay all
reasonable costs and expenses incurred by any Lender in connection with any such
designation or assignment.

(b) If (i) any Lender requests compensation under Section 2.16, (ii) the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.18 or
(iii) any Lender becomes a Defaulting Lender, then the Borrower may, at its sole
expense and effort, upon notice to such Lender and the Administrative Agent,
require such

 

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Lender to assign and delegate, without recourse (in accordance with and subject
to the restrictions contained in Section 9.04), all its interests, rights and
obligations under the Financing Documents to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that (i) the Borrower shall have received the prior
written consent of the Administrative Agent (and if a Revolving Commitment is
being assigned, the Issuing Banks), which consent shall not unreasonably be
withheld, (ii) such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans and participations in LC Disbursements and
Swingline Loans, accrued interest thereon, accrued fees and all other amounts
payable to it hereunder, from the assignee (to the extent of such outstanding
principal and accrued interest and fees) or the Borrower (in the case of all
other amounts) and (iii) in the case of any such assignment resulting from a
claim for compensation under Section 2.16 or payments required to be made
pursuant to Section 2.18, such assignment will result in a reduction in such
compensation or payments. A Lender shall not be required to make any such
assignment and delegation if, prior thereto, as a result of a waiver by such
Lender or otherwise, the circumstances entitling the Borrower to require such
assignment and delegation cease to apply.

SECTION 2.21. Liquidity Facility Expansion Option. The Borrower may from time to
time elect to increase the Liquidity Commitments in minimum increments of
$50,000,000 so long as, after giving effect thereto, the aggregate amount of
such increases does not exceed $300,000,000. The Borrower may arrange for any
such increase to be provided by one or more Liquidity Lenders (each Liquidity
Lender so agreeing to an increase in its Liquidity Commitment, a “Liquidity
Increasing Lender”), or by one or more new banks, financial institutions or
other entities (each such new bank, financial institution or other entity, a
“Liquidity Augmenting Lender”), to increase their existing Liquidity Commitments
or extend Liquidity Commitments, as the case may be; provided that (i) each
Liquidity Increasing Lender and each Liquidity Augmenting Lender shall be
subject to the approval of the Administrative Agent, the Swingline Lender and
each Liquidity Issuing Bank (such approval not to be unreasonably withheld),
(ii) (x) in the case of a Liquidity Increasing Lender, the Borrower and such
Liquidity Increasing Lender execute an agreement substantially in the form of
Exhibit C hereto, and (y) in the case of a Liquidity Augmenting Lender, the
Borrower and such Liquidity Augmenting Lender execute an agreement substantially
in the form of Exhibit D hereto. No consent of any Liquidity Lender (other than
the Liquidity Lenders participating in the increase) shall be required for any
increase in Liquidity Commitments pursuant to this Section 2.21. Increases and
new Liquidity Commitments created pursuant to this Section 2.21 shall become
effective on the date agreed by the Borrower, the Administrative Agent and the
relevant Liquidity Increasing Lenders or Liquidity Augmenting Lenders, and the
Administrative Agent shall notify each Liquidity Lender thereof. Notwithstanding
the foregoing, no increase in the Liquidity Commitments (or in the Liquidity
Commitment of any Liquidity Lender) shall become effective under this paragraph
unless, (i) on the proposed date of the effectiveness of such increase, (A) the
conditions set forth in paragraphs (a) and (b) of Section 4.02 shall be
satisfied or waived by the Required Lenders and the Administrative Agent shall
have received a certificate to that effect dated such date and executed by a
Financial Officer of the Borrower and (B) the Borrower shall be in compliance
(on a Pro Forma Basis reasonably acceptable to the Administrative Agent) with
the covenant contained in Section 6.09 and (ii) the Administrative Agent shall
have received documents consistent with those delivered on the Effective Date as
to the corporate power and authority of the Borrower to borrow hereunder after
giving effect to such increase. On the effective date of any increase in the
Liquidity Commitments being made, (i) each relevant Liquidity Increasing Lender
and Liquidity Augmenting Lender shall make available to the Administrative Agent
such amounts in immediately available funds as the Administrative Agent shall
determine, for the benefit of the other Liquidity Lenders, as being required in
order to cause, after giving effect to such increase and the use of such amounts
to make payments to such other Liquidity Lenders, each Liquidity Lender’s
portion of the outstanding Liquidity Revolving Loans of all the Liquidity
Lenders to equal its Applicable Percentage of such outstanding Liquidity
Revolving Loans, and (ii) the Borrower shall be deemed to have

 

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repaid and reborrowed all outstanding Liquidity Revolving Loans as of the date
of any increase in the Liquidity Commitments (with such reborrowing to consist
of the Types of Liquidity Revolving Loans, with related Interest Periods if
applicable, specified in a notice delivered by the Borrower, in accordance with
the requirements of Section 2.03). The deemed payments made pursuant to
clause (ii) of the immediately preceding sentence shall be accompanied by
payment of all accrued interest on the amount prepaid and, in respect of each
Eurodollar Loan, shall be subject to indemnification by the Borrower pursuant to
the provisions of Section 2.17 if the deemed payment occurs other than on the
last day of the related Interest Periods. Nothing contained in this Section 2.21
shall constitute, or otherwise be deemed to be, a commitment on the part of any
Liquidity Lender to increase its Liquidity Commitment hereunder at any time.

SECTION 2.22. Energy Hedging Facility Expansion Option. The Borrower may from
time to time elect to increase the Energy Hedging Commitments in minimum
increments of $50,000,000 so long as, after giving effect thereto, the aggregate
amount of such increases does not exceed $150,000,000. The Borrower may arrange
for any such increase to be provided by one or more Energy Hedging Lenders (each
Energy Hedging Lender so agreeing to an increase in its Energy Hedging
Commitment, an “Energy Hedging Increasing Lender”), or by one or more new banks,
financial institutions or other entities (each such new bank, financial
institution or other entity, an “Energy Hedging Augmenting Lender”), to increase
their existing Energy Hedging Commitments or extend Energy Hedging Commitments,
as the case may be; provided that (i) each Energy Hedging Increasing Lender and
each Energy Hedging Augmenting Lender shall be subject to the approval of the
Administrative Agent and each Energy Hedging Issuing Bank (such approval not to
be unreasonably withheld), (ii) (x) in the case of an Energy Hedging Increasing
Lender, the Borrower and such Energy Hedging Increasing Lender execute an
agreement substantially in the form of Exhibit C hereto, and (y) in the case of
an Energy Hedging Augmenting Lender, the Borrower and such Energy Hedging
Augmenting Lender execute an agreement substantially in the form of Exhibit D
hereto. No consent of any Energy Hedging Lender (other than the Energy Hedging
Lenders participating in the increase) shall be required for any increase in
Energy Hedging Commitments pursuant to this Section 2.22. Increases and new
Energy Hedging Commitments created pursuant to this Section 2.22 shall become
effective on the date agreed by the Borrower, the Administrative Agent and the
relevant Energy Hedging Increasing Lenders or Energy Hedging Augmenting Lenders,
and the Administrative Agent shall notify each Energy Hedging Lender thereof.
Notwithstanding the foregoing, no increase in the Energy Hedging Commitments (or
in the Energy Hedging Commitment of any Energy Hedging Lender) shall become
effective under this paragraph unless, (i) on the proposed date of the
effectiveness of such increase, (A) the conditions set forth in paragraphs (a)
and (b) of Section 4.02 shall be satisfied or waived by the Required Lenders and
the Administrative Agent shall have received a certificate to that effect dated
such date and executed by a Financial Officer of the Borrower and (B) the
Borrower shall be in compliance (on a Pro Forma Basis reasonably acceptable to
the Administrative Agent) with the covenant contained in Section 6.09 and
(ii) the Administrative Agent shall have received documents consistent with
those delivered on the Effective Date as to the corporate power and authority of
the Borrower to borrow hereunder after giving effect to such increase. On the
effective date of any increase in the Energy Hedging Commitments being made,
(i) each relevant Energy Hedging Increasing Lender and Energy Hedging Augmenting
Lender shall make available to the Administrative Agent such amounts in
immediately available funds as the Administrative Agent shall determine, for the
benefit of the other Energy Hedging Lenders, as being required in order to
cause, after giving effect to such increase and the use of such amounts to make
payments to such other Energy Hedging Lenders, each Energy Hedging Lender’s
portion of the outstanding Energy Hedging Loans of all the Energy Hedging
Lenders to equal its Applicable Percentage of such outstanding Energy Hedging
Loans, and (ii) the Borrower shall be deemed to have repaid and reborrowed all
outstanding Energy Hedging Loans as of the date of any increase in the Energy
Hedging Commitments (with such reborrowing to consist of the Types of Energy
Hedging Loans, with related

 

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Interest Periods if applicable, specified in a notice delivered by the Borrower,
in accordance with the requirements of Section 2.03). The deemed payments made
pursuant to clause (ii) of the immediately preceding sentence shall be
accompanied by payment of all accrued interest on the amount prepaid and, in
respect of each Eurodollar Loan, shall be subject to indemnification by the
Borrower pursuant to the provisions of Section 2.17 if the deemed payment occurs
other than on the last day of the related Interest Periods. Nothing contained in
this Section 2.22 shall constitute, or otherwise be deemed to be, a commitment
on the part of any Energy Hedging Lender to increase its Energy Hedging
Commitment hereunder at any time.

SECTION 2.23. Defaulting Lenders. Notwithstanding any provision of this
Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the
following provisions shall apply for so long as such Lender is a Defaulting
Lender:

(a) fees shall cease to accrue on the Available Revolving Commitment of such
Defaulting Lender pursuant to Section 2.13(a);

(b) the Commitment and Revolving Credit Exposure of such Defaulting Lender shall
not be included in determining whether the Required Lenders have taken or may
take any action hereunder (including any consent to any amendment, waiver or
other modification pursuant to Section 9.02); provided, that this clause (b)
shall not apply to the vote of a Defaulting Lender in the case of an amendment,
waiver or other modification requiring the consent of such Lender or each Lender
affected thereby;

(c) if any Swingline Exposure or LC Exposure exists at the time such Lender
becomes a Defaulting Lender then:

(i) so long as no Default shall be continuing, all or any part of the Swingline
Exposure and LC Exposure of such Defaulting Lender shall be reallocated among
the non-Defaulting Lenders in accordance with their respective Applicable
Percentages but only to the extent the sum of all non-Defaulting Lenders’
Revolving Credit Exposures plus such Defaulting Lender’s Swingline Exposure and
LC Exposure does not exceed the total of all non-Defaulting Lenders’
Commitments;

(ii) if the reallocation described in clause (i) above cannot, or can only
partially, be effected, the Borrower shall within one (1) Business Day following
notice by the Administrative Agent (x) first, prepay such Swingline Exposure and
(y) second, cash collateralize for the benefit of the Issuing Bank only the
Borrower’s obligations corresponding to such Defaulting Lender’s LC Exposure
(after giving effect to any partial reallocation pursuant to clause (i) above)
in accordance with the procedures set forth in Section 2.06(j) or
Section 2.07(j), as applicable, for so long as such LC Exposure is outstanding;

(iii) if the Borrower cash collateralizes any portion of such Defaulting
Lender’s LC Exposure pursuant to clause (ii) above, the Borrower shall not be
required to pay any fees to such Defaulting Lender pursuant to Section 2.13(b)
with respect to such Defaulting Lender’s LC Exposure during the period such
Defaulting Lender’s LC Exposure is cash collateralized;

(iv) if the LC Exposure of the non-Defaulting Lenders is reallocated pursuant to
clause (i) above, then the fees payable to the Lenders pursuant to
Sections 2.13(a) and Section 2.13(b) shall be adjusted in accordance with such
non-Defaulting Lenders’ Applicable Percentages; and

 

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(v) if all or any portion of such Defaulting Lender’s LC Exposure is neither
reallocated nor cash collateralized pursuant to clause (i) or (ii) above, then,
without prejudice to any rights or remedies of any Issuing Bank or any other
Lender hereunder, all letter of credit fees payable under Section 2.13(b) with
respect to such Defaulting Lender’s LC Exposure shall be payable to the Issuing
Bank until and to the extent that such LC Exposure is reallocated and/or cash
collateralized; and

(d) so long as such Lender is a Defaulting Lender, the Swingline Lender shall
not be required to fund any Swingline Loan and the Issuing Banks shall not be
required to issue, amend or increase any Letter of Credit, unless it is
satisfied that the related exposure and the Defaulting Lender’s then outstanding
LC Exposure will be 100% covered by the Commitments of the non-Defaulting
Lenders and/or cash collateral will be provided by the Borrower in accordance
with Section 2.23(c), and participating interests in any such newly made
Swingline Loan or any newly issued or increased Letter of Credit shall be
allocated among non-Defaulting Lenders in a manner consistent with
Section 2.23(c)(i) (and such Defaulting Lender shall not participate therein).

If (i) a Bankruptcy Event with respect to a Lender Parent of any Lender shall
occur following the date hereof and for so long as such event shall continue or
(ii) the Swingline Lender or the Issuing Banks have a good faith belief that any
Lender has defaulted in fulfilling its obligations under one or more other
agreements in which such Lender commits to extend credit, the Swingline Lender
shall not be required to fund any Swingline Loan and the Issuing Banks shall not
be required to issue, amend or increase any Letter of Credit, unless the
Swingline Lender or the Issuing Bank, as the case may be, shall have entered
into arrangements with the Borrower or such Lender, satisfactory to the
Swingline Lender or the Issuing Bank, as the case may be, to defease any risk to
it in respect of such Lender hereunder.

In the event that the Administrative Agent, the Borrower, the Swingline Lender
and the Issuing Banks each agrees that a Defaulting Lender has adequately
remedied all matters that caused such Lender to be a Defaulting Lender, then the
Swingline Exposure and LC Exposure of the Lenders shall be readjusted to reflect
the inclusion of such Lender’s Revolving Commitment and on such date such Lender
shall purchase at par such of the Loans of the other Lenders (other than
Swingline Loans) as the Administrative Agent shall determine may be necessary in
order for such Lender to hold such Loans in accordance with its Applicable
Percentage.

ARTICLE III

Representations and Warranties

The Borrower hereby represents and warrants to the Lenders that:

SECTION 3.01. Existence, Qualification and Power; Compliance with Laws. The
Borrower, and each of the Operating Companies and, in the case of clause
(e) only, each of the other Subsidiaries, of the Borrower, (a) is a Person duly
organized or formed, validly existing under the Laws of the jurisdiction of its
incorporation or organization, (b) has all requisite power and authority to
(i) own or lease its material assets and carry on its business and (ii) in the
case of the Borrower, execute, deliver and perform its obligations under the
Financing Documents to which it is a party, (c) is duly organized and validly
existing under the Laws of the jurisdiction of its incorporation or organization
and of each other jurisdiction where its ownership, lease or operation of
material Properties or the conduct of its business as now conducted requires
such qualification, (d) is in compliance in all material respects with all Laws,
orders, writs, injunctions and orders and (e) has all requisite Regulatory
Approvals to own its material Properties and operate its business as currently
conducted, in the case of the foregoing clauses (c) through (e), except for such
matters that could not reasonably be expected to result in a Material Adverse
Effect.

 

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SECTION 3.02. Binding Effect. This Agreement and each other Financing Document
has been duly executed and delivered by the Borrower. This Agreement and each
other Financing Document constitute the legal, valid and binding obligation of
Borrower enforceable against the Borrower in accordance with its terms, except
as such enforceability may be limited by Debtor Relief Laws and by general
principles of equity.

SECTION 3.03. Authorization; No Contravention. The execution, delivery and
performance by the Borrower of this Agreement and each other Financing Document
are within the Borrower’s corporate or other powers, have been duly authorized
by all necessary corporate or other organizational action, and do not and will
not (a) contravene the terms of any of the Borrower’s Organizational Documents,
(b) conflict with or result in any breach or contravention of, or the creation
of any Lien under (other than as permitted by Section 6.01), or require any
payment to be made under (i) any Contractual Obligation to which the Borrower or
any of its Subsidiaries is a party or affecting the Borrower or any of its
Subsidiaries or the properties of the Borrower or any of its Subsidiaries or
(ii) any material order, injunction, writ or decree of any Governmental
Authority or any arbitral award to which the Borrower or any of its Subsidiaries
or any of their property is subject or (c) violate any applicable Law, in the
case of the foregoing clauses (b) and (c), except for such matters that could
not reasonably be expected to result in a Material Adverse Effect.

SECTION 3.04. Governmental Authorization; Other Consents. Other than as
specified in Schedule 3.04, there is no Regulatory Approval and there is no
approval, consent, exemption, authorization, or other action by, or notice to,
or filing with any other Person that is necessary or required in connection with
(a) the execution, delivery or performance by, or enforcement against, the
Borrower of this Agreement or any other Financing Document to which it is a
party and the consummation of the transactions contemplated hereby and thereby
or (b) the ability of the Operating Companies to operate their businesses as
currently operated, except for the Regulatory Approvals and the other approvals,
consents, exemptions, authorizations, actions, notices and filings which have
been duly obtained, taken, given or made and are in full force and effect.

SECTION 3.05. Taxes. The income tax of the Borrower and its Subsidiaries is
included in a consolidated tax return for U.S. federal income tax purposes, of
which Puget Holdings is the “common parent” (within the meaning of Section 1504
of the Code) of such group.

Each Borrower Group Member has filed all tax returns and reports required to be
filed, and has paid all income taxes and other material taxes, assessments, fees
and other governmental charges levied or imposed upon it or its properties,
income or assets otherwise due and payable, except in each case those (a) which
are not yet due and payable, or (b) which are being contested in good faith by
appropriate proceedings diligently conducted and for which adequate reserves
have been provided in accordance with GAAP.

SECTION 3.06. No Default. Neither the Borrower nor any Subsidiary is in default
under or with respect to, any material Contractual Obligation, except for any
such default which could not reasonably be expected to result in a Material
Adverse Effect. No Default has occurred and is continuing.

 

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SECTION 3.07. Financial Statements; No Material Adverse Effect; Indebtedness.
(a) The financial statements furnished pursuant to Section 4.01(c) fairly
present in all material respects the financial condition of the Borrower and its
Subsidiaries as of the dates thereof and their results of operations for the
period covered thereby in accordance with GAAP, consistently applied throughout
the periods covered thereby. As of the date of such financial statements,
(i) there has been no sale, transfer or other disposition by the Borrower or any
of its Subsidiaries of any material part of the business or Property of the
Borrower and its Subsidiaries, taken as a whole, (ii) there has been no purchase
or other acquisition by the Borrower or any of its Subsidiaries of any business
or Property (including any Equity Interests of any other Person) material in
relation to the consolidated financial condition of the Borrower and its
consolidated Subsidiaries (taken as a whole) and (iii) the Borrower and the
Operating Companies did not have any material contingent liabilities, material
liabilities for Taxes, material and unusual forward or long-term commitments or
material and unrealized or anticipated losses from any unfavorable commitments,
except as referred to or reflected or provided for in such financial statements
or as arising solely from the execution and delivery of the Financing Documents,
in each case, which is not reflected in the foregoing financial statements or in
the notes thereto or has not otherwise been disclosed in writing to the Lenders
prior to the Effective Date.

(b) Since December 31, 2011, there has been no event or circumstance, either
individually or in the aggregate, that has resulted in or could reasonably be
expected to result in, on or after the Effective Date, a Material Adverse
Effect.

SECTION 3.08. Ranking. The Financing Documents rank and will at all times rank
at least pari passu with all other senior, unsecured Indebtedness of the
Borrower, whether now existing or hereafter outstanding.

SECTION 3.09. Ownership of Assets. (a) (i) Each Borrower Group Member owns and
(to the extent applicable) has good and defensible title to its material
Properties and assets, in each case free and clear of all Liens other than Liens
permitted pursuant to Section 6.01 and (ii) each Borrower Group Member has good
and defensible title in fee simple to, or valid leasehold or license interests
in, or easements or other limited property interests in, all material real
property necessary in the ordinary conduct of its business, free and clear of
all Liens except for Liens permitted pursuant to Section 6.01, and, in each
case, subject to such exceptions, defects and qualifications as do not
(x) affect the value of any such properties of such Borrower Group Member in any
material respect or (y) affect the use made or proposed to be made of such
properties by the Borrower or any such Operating Company in any material
respect.

(b) No Borrower Group Member has pledged, assigned, sold, granted a Lien on or
security interest in, or otherwise conveyed any of its Properties, assets or
revenues, other than Liens permitted pursuant to Section 6.01 or Dispositions
not precluded by this Agreement.

SECTION 3.10. [Intentionally Omitted].

SECTION 3.11. Insurance. All insurance required to be obtained by the Borrower
Group Members pursuant to Section 5.08 has been obtained and is in full force
and effect, and all premiums then due and payable on all such insurance have
been paid.

SECTION 3.12. Disclosure. No report, financial statement, certificate or other
written information (including the Information Memorandum) furnished by or on
behalf of the Borrower or any of its Subsidiaries to the Administrative

 

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Agent or any Lender in connection with the transactions contemplated hereby and
the negotiation of this Agreement or delivered hereunder or any other Financing
Documents (as modified or supplemented by other information so furnished) at the
time so furnished when taken as a whole contains any material misstatement of
fact or omits to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
materially misleading, except as could not reasonably be expected to result in a
Material Adverse Effect; provided, that with respect to any projected financial
information, forecasts, estimates or forward-looking information, the Borrower
represents only that such information and materials have been prepared in good
faith on the basis of the assumptions stated therein, which assumptions were
believed to be reasonable at the time of preparation of such forecasts, and no
representation or warranty is made as to the actual attainability of any such
forecasts.

SECTION 3.13. Subsidiaries; Equity Interests. (a) As of the Effective Date, the
Borrower has no other Subsidiaries other than those listed in Schedule 3.13(a).
All of the outstanding Equity Interests in such Subsidiaries have been validly
issued, are fully paid and non-assessable and all Equity Interests owned by the
Borrower are owned free and clear of all Liens except those Liens, if any,
permitted by Section 6.01. As of the Effective Date, Schedule 3.13(b) (a) sets
forth the name and jurisdiction of each such Subsidiary and (b) sets forth the
ownership interest of the Borrower and any other Subsidiary in each such
Subsidiary, including the percentage of such ownership.

SECTION 3.14. No Dividend Restrictions. Except as set forth in Schedule 3.14 or
as permitted by this Agreement, there are no contractual or regulatory
restrictions limiting the ability of any Operating Company from making
distributions, dividends or other return on capital to the Borrower in an amount
sufficient to satisfy the Obligations under the Financing Documents.

SECTION 3.15. Litigation. There are no actions, suits, proceedings, disputes or
known claims pending or, to the knowledge of the Borrower, threatened in writing
or contemplated, at law, in equity, in arbitration or before any Governmental
Authority, by or against the Borrower or any of its Subsidiaries or against any
of their properties or revenues, except as set forth in Schedule 3.15, or which
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.

SECTION 3.16. Solvency. Prior to and after giving effect to the transactions
contemplated by the Financing Documents, the Borrower, on a consolidated basis
with its Subsidiaries, is Solvent.

SECTION 3.17. Margin Regulations; Investment Company Act; USA PATRIOT Act.

(a) The Borrower is not engaged nor will it engage, principally or as one of its
important activities, in the business of purchasing or carrying margin stock
(within the meaning of Regulation T, U and X issued by the FRB), or extending
credit for the purpose of purchasing or carrying margin stock.

(b) No Borrower Group Member is or, after giving effect to the transactions
contemplated hereby, will be an “investment company” as defined in and subject
to regulation under the Investment Company Act of 1940.

 

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(c) The making of the Loans and the use of the proceeds thereof shall not
violate the Trading With the Enemy Act, as amended, or any of the foreign assets
control regulations of the U.S. Treasury Department (31 C.F.R., Subtitle B,
Chapter V, as amended) or any enabling legislation or executive order relating
thereto and each Borrower Group Member is in compliance with the U.S. Executive
Order 13224 of September 24, 2001 Blocking Property and Prohibiting Transactions
With Persons Who Commit, Threaten to Commit or Support Terrorism (66 Fed. Reg.
49, 079 (2001)) (the “Anti-Terrorism Order”) and the provisions of Public Law
107-56 (the “USA PATRIOT Act”).

SECTION 3.18. ERISA Compliance. (a) Except as could not, either individually or
in the aggregate, reasonably be expected to result in a Material Adverse Effect,
each Plan is in compliance with the applicable provisions of ERISA, the Code and
other federal or state Laws.

(b)(i) No ERISA Event has occurred during the five-year period prior to the date
on which this representation is made or deemed made with respect to any Plan;
(ii) the Borrower, neither the Borrower nor any ERISA Affiliate has incurred, or
reasonably expects to incur, any liability (and no event has occurred which,
with the giving of notice under Section 4219 of ERISA, would result in such
liability) under Sections 4201 or 4243 of ERISA with respect to a Multiemployer
Plan; and (iii) neither the Borrower nor any ERISA Affiliate has engaged in a
transaction that could reasonably be subject to Sections 4069 or 4212(c) of
ERISA, except, with respect to each of the foregoing clauses (i) through
(iii) of this Section 3.18(b), as could not reasonably be expected, individually
or in the aggregate, to result in a Material Adverse Effect.

SECTION 3.19. Environmental Compliance. Except as expressly set forth in the
Annual Report or the Form 10-Q reports of the Borrower during its fiscal year
ended December 31, 2012:

(a) Except as specified in Schedule 3.19, there are no claims, actions, suits,
or proceedings in respect of or affecting the Borrower or any of its
Subsidiaries (or any of their respective Properties) alleging potential
liability or responsibility for violation of, or otherwise relating to, any
Environmental Law that could, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect.

(b) Except as specified in Schedule 3.19, the properties owned, leased or
operated by the Borrower and the Operating Companies do not contain any
Hazardous Materials in amounts or concentrations which (i) constitute, or
constituted a violation of, (ii) require remedial action under, or (iii) could
give rise to liability under, Environmental Laws, which violations, remedial
actions and liabilities, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect.

(c) Except as specified in Schedule 3.19, none of the Borrower or any of the
Operating Companies is undertaking, and has not completed, either individually
or together with other potentially responsible parties, any investigation or
assessment or remedial or response action relating to any actual or threatened
release, discharge or disposal of Hazardous Materials at any site, location or
operation, either voluntarily or pursuant to the order of any Governmental
Authority or the requirements of any Environmental Law except for such
investigation or assessment or remedial or response action that, individually or
in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect.

(d) Except as specified in Schedule 3.19, all Hazardous Materials generated,
used, treated, handled or stored at, or transported to or from, any property
currently or formerly owned or operated by any of the Borrower or the Operating
Companies have been disposed of in a manner not reasonably expected to result,
individually or in the aggregate, in a Material Adverse Effect.

 

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(e) Except as set forth in Schedule 3.19, and except as could not reasonably be
expected to result, individually or in the aggregate, in a Material Adverse
Effect, none of the Borrower or any of the Operating Companies has contractually
assumed, with a Governmental Authority or otherwise, any liability or obligation
under or relating to any Environmental Law.

SECTION 3.20. Labor Disputes. No labor dispute with the Borrower or any of its
Subsidiaries exists or is imminent that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect.

SECTION 3.21. Affiliate Transactions. Except as specified on Schedule 3.21 or
permitted by Section 6.06, no Borrower Group Member has, directly or indirectly,
entered into any transaction since December 31, 2011 or that is in effect on
December 31, 2011 and that is otherwise permitted hereunder with or for the
benefit of any Affiliate.

ARTICLE IV

Conditions

SECTION 4.01. Effective Date. The obligations of the Lenders to make Loans and
of any Issuing Bank to issue Letters of Credit hereunder shall not become
effective until the date on which each of the following conditions is satisfied
(or waived in accordance with Section 9.02):

(a) The Administrative Agent (or its counsel) shall have received from each
party hereto either (i) a counterpart of this Agreement signed on behalf of such
party or (ii) written evidence satisfactory to the Administrative Agent (which
may include telecopy or electronic transmission of a signed signature page of
this Agreement) that such party has signed a counterpart of this Agreement.

(b) The Administrative Agent shall have received a favorable written opinion
(addressed to the Administrative Agent and the Lenders and dated the Effective
Date) of Perkins Coie LLP, counsel for the Borrower, in form and substance
reasonably acceptable to the Administrative Agent, and covering such other
matters relating to the Borrower, the Financing Documents or the Transactions as
the Administrative Agent shall reasonably request. The Borrower hereby requests
such counsel to deliver such opinion.

(c) The Lenders shall have received (i) satisfactory audited consolidated
financial statements of the Borrower for the two most recent fiscal years ended
prior to the Effective Date as to which such financial statements are available
and (ii) satisfactory unaudited interim consolidated financial statements of the
Borrower for each quarterly period ended subsequent to the date of the latest
financial statements delivered pursuant to clause (i) of this paragraph as to
which such financial statements are publicly available.

(d) The Administrative Agent shall have received (i) such documents and
certificates as the Administrative Agent or its counsel may reasonably request
relating to the organization, existence and good standing of the Borrower, the
authorization of the Transactions and any other legal matters

 

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relating to the Borrower, the Financing Documents or the Transactions, all in
form and substance satisfactory to the Administrative Agent and its counsel and
as further described in the list of closing documents attached as Exhibit E and
(ii) to the extent requested by any of the Lenders, all documentation and other
information required by bank regulatory authorities under applicable
“know-your-customer” and anti-money laundering rules and regulations, including
the USA PATRIOT Act.

(e) The Administrative Agent shall have received a certificate, dated the
Effective Date and signed by the President, a Vice President or a Financial
Officer of the Borrower, confirming compliance with the conditions set forth in
paragraphs (a) and (b) of Section 4.02.

(f) The Administrative Agent shall have received a certificate, dated the
Effective Date and signed by the chief financial officer or the vice president
finance and treasurer, of the Borrower, confirming the solvency of the Borrower
and its Subsidiaries, on a consolidated basis, after giving effect to each
element of the Transactions.

(g) The Administrative Agent shall have received evidence satisfactory to it
that the Existing Borrower Credit Agreement shall have been terminated and
cancelled and all indebtedness thereunder shall have been fully repaid (except
to the extent being so repaid with the initial Loans) and any and all liens
thereunder shall have been terminated and released.

(h) The Administrative Agent shall have received evidence satisfactory to it
that the Parent has delivered to JPMorgan Chase Bank, N.A., as “Administrative
Agent” under the Existing Parent Credit Agreement, an irrevocable notice
pursuant to Section 2.09 of the Existing Parent Credit Agreement indicating that
the Parent has elected to reduce the “Aggregate Commitment” under the Existing
Parent Credit Agreement by an aggregate amount of at least $200,000,000
(resulting in an “Aggregate Commitment” thereunder not to exceed $800,000,000).

(i) The Administrative Agent shall have received evidence reasonably
satisfactory to it that all governmental and third party approvals necessary or,
in the discretion of the Administrative Agent, advisable in connection with the
Transactions and the continuing operations of the Borrower and its Subsidiaries
have been obtained and are in full force and effect.

(j) The Administrative Agent, the Lenders and the Joint Lead Arrangers shall
have received all fees and other amounts due and payable on or prior to the
Effective Date, including, to the extent invoiced, reimbursement or payment of
all out-of-pocket expenses required to be reimbursed or paid by the Borrower
hereunder.

(k) The Administrative Agent (or its counsel) shall have received from each
party thereto such other documents listed on Exhibit E hereto.

The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding.

SECTION 4.02. Each Credit Event. The obligation of each Lender to make a Loan on
the occasion of any Borrowing, and of any Issuing Bank to issue, amend, renew or
extend any Letter of Credit, is subject to the satisfaction of the following
conditions:

(a) The representations and warranties of the Borrower set forth in this
Agreement shall be true and correct in all material respects (other than to the
extent qualified by materiality or “Material Adverse Effect”, in which case,
such representations and warranties shall be true and correct) on and as of the
date of such Borrowing or the date of issuance, amendment, renewal or extension
of such Letter of Credit, as applicable (or to the extent that such
representations and warranties specifically refer to an earlier date, as of such
earlier date).

 

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(b) At the time of and immediately after giving effect to such Borrowing or the
issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, no Default or Event of Default shall have occurred and be
continuing.

Each Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute a representation and warranty by the
Borrower on the date thereof as to the matters specified in paragraphs (a) and
(b) of this Section.

ARTICLE V

Affirmative Covenants

Until the Commitments have expired or been terminated and the principal of and
interest on each Loan and all fees payable hereunder shall have been paid in
full and all Letters of Credit shall have expired or terminated and all LC
Disbursements shall have been reimbursed, the Borrower covenants and agrees with
the Lenders that the Borrower will, and will cause its Subsidiaries to:

SECTION 5.01. Financial Statements. Deliver to the Administrative Agent (for
prompt further distribution to each Lender):

(a) as soon as available, but in any event within ninety (90) days after the end
of each fiscal year of the Borrower or as otherwise earlier required by the SEC,
from and after the Effective Date, a consolidated balance sheet of the Borrower
and its consolidated Subsidiaries as at the end of such fiscal year, and the
related consolidated statements of income or operations, stockholders’ equity
and cash flows for such fiscal year, setting forth in each case in comparative
form the figures for the previous fiscal year, all in reasonable detail and
prepared in accordance with GAAP, audited and accompanied by (i) a report and
opinion by any firm of independent registered public accounting of nationally
recognized standing (or any other independent registered public accounting firm
acceptable to the Administrative Agent in its sole discretion), which report and
opinion shall be prepared in accordance with GAAP, shall not be subject to any
“going concern” or like qualification or exception or any qualification or
exception as to the scope of such audit and shall state that said consolidated
financial statements fairly present the consolidated financial condition and
results of operations of the Borrower and its consolidated Subsidiaries as at
the end of, and for, such fiscal year in accordance with GAAP;

(b) as soon as available, but in any event within forty-five (45) days after the
end of each of the first three (3) fiscal quarters of each fiscal year of the
Borrower or as otherwise earlier required by the SEC, from and after the
Effective Date, an unaudited consolidated balance sheet of the Borrower and its
consolidated Subsidiaries as at the end of each such fiscal quarter, and the
related (i) consolidated statements of income or operations for such fiscal
quarter and for the portion of the fiscal year then ended and (ii) consolidated
statements of cash flows for the portion of the fiscal year then ended, setting
forth in each case in comparative form the figures for the corresponding fiscal
quarter of the previous fiscal year and the corresponding portion of the
previous fiscal year, all in reasonable detail and certified by an Authorized
Officer as fairly presenting in all material respects the financial condition,
results of operations, stockholders’ equity and cash flows of the Borrower and
its consolidated Subsidiaries in accordance with GAAP, subject only to normal
year-end audit adjustments and the absence of footnotes;

 

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(c) [Intentionally Omitted];

(d) promptly after the same become publicly available, notice of all
registration statements, regular periodic reports and press releases filed by
the Borrower or any Subsidiary with the SEC, or any Governmental Authority
succeeding to any or all of the functions of the SEC, or with any national
securities exchange;

(e) such other information regarding the Borrower Group Members as the
Administrative Agent or any Lender may reasonably request for the Administrative
Agent or such Lender to carry out and be satisfied with the “know your customer”
and anti-money laundering rules and regulations, including, without limitation,
the USA PATRIOT Act or other checks required to be carried out by local
regulatory authorities; and

(f) such other information regarding the Borrower and its Subsidiaries as the
Administrative Agent or any Lender may reasonably request and which is
reasonably available to the Borrower and its Subsidiaries.

SECTION 5.02. Compliance Certificate. Deliver to the Administrative Agent and
each Lender, (a) concurrently with any delivery of financial statements under
Section 5.01(a) or Section 5.01(b), a certificate of an Authorized Officer
(i) certifying as to whether a Default has occurred and, if a Default has
occurred, specifying the details thereof and any action taken or proposed to be
taken with respect thereto, (ii) setting forth reasonably detailed calculations
demonstrating compliance with Section 6.09, and (iii) stating whether any change
in GAAP applicable to the financial statements or in the application thereof has
occurred since the date of the audited financial statements referred to in
Section 4.01(c) or, if more recent, Section 5.01(a), (and except as described in
the financial statements provided pursuant to Section 4.01(c), or
Section 5.01(a) or Section 5.01(b)) and, if any such change has occurred,
specifying the effect of such change on the financial statements accompanying
such certificate, and (b) concurrently with any delivery of financial statements
under Section 5.01(a), a certificate of the accounting firm that reported on
such financial statements stating whether they obtained knowledge during the
course of their examination of such financial statements of any Default under
Section 6.09 (which certificate may be limited to the extent required by
accounting rules or guidelines and in any event shall be limited to Defaults
insofar as they may relate to accounting matters).

SECTION 5.03. Notices. Promptly, but in any event within five (5) Business Days,
after the Borrower has obtained knowledge thereof and in the case of clauses
(a) through (d), unless prohibited by applicable Law, notify or deliver to the
Administrative Agent (for prompt notification or delivery to each Lender):

(a) copies of any written notice received by the Borrower regarding any actual
or threatened dispute, litigation, investigation, proceeding or suspension with
respect to the Borrower or any of its Subsidiaries by or before any court or any
Governmental Authority which could reasonably be expected to result in a
Material Adverse Effect;

(b) copies of all Material Notices and Material Communications received by the
Borrower or any of its Subsidiaries in connection with any material Contractual
Obligation or from any Governmental Authority which could reasonably be expected
to result in a Material Adverse Effect;

 

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(c) details of (i) the transfer of more than 5% of any Equity Interests of the
Borrower or any Borrower Group Member except for any such transfers between
Operating Companies or (ii) changes in the composition of the board of directors
or executive management of the Borrower or any Borrower Group Member; provided,
the board of directors of the Borrower shall have at least one independent
director;

(d) details of any other events or circumstances that results in or would
reasonably be expected to result in a Material Adverse Effect;

(e) details of any Default or Event of Default; and

(f) details of each change to the Senior Debt Rating.

Each notice pursuant to this Section shall be accompanied by a written statement
of an Authorized Officer of the Borrower (x) that such notice is being delivered
pursuant to Section 5.03(a), (b), (c), (d) or (e) (as applicable) and
(y) setting forth details of the occurrence referred to therein and stating what
action the Borrower has taken and proposes to take with respect thereto.

SECTION 5.04. Compliance with Laws.

(a) The Borrower will, and will cause each of its Subsidiaries to, comply with
all applicable laws, including, without limitation, ERISA and all other employee
benefit laws and shall from time to time obtain and renew, and shall comply
with, each Regulatory Approval as is or in the future shall be necessary for the
operation of its business under applicable Laws (except for any non-compliance
which could not reasonably be expected to result in a Material Adverse Effect).

(b) The Borrower and each Subsidiary of the Borrower shall not petition, request
or take any legal or administrative action that seeks to amend, supplement or
modify any Regulatory Approval in any material respect unless such amendment,
supplement or modification could not reasonably be expected to result in a
Material Adverse Effect. The Borrower shall promptly upon receipt by it or any
of its Subsidiaries or upon publication furnish to the Administrative Agent and
each Lender a copy (certified by an Authorized Officer of the Borrower) of each
amendment, supplement or modification to any such Regulatory Approval.

SECTION 5.05. Preservation of Existence, Etc. Preserve, renew and maintain in
full force and effect its legal existence under the Laws of the jurisdiction of
its organization, except as expressly permitted by Section 6.04; and (b) take
all reasonable action to maintain all rights, privileges (including its status
as validly existing), permits, licenses and franchises necessary in the normal
conduct of its business, except such rights, privileges, permits, licenses or
franchise which, if not maintained, could not reasonably be expected to result
in a Material Adverse Effect.

SECTION 5.06. Compliance with Environmental Laws. Except as specified in
Schedule 3.19 and except, and in each case, to the extent that the failure to do
so could not reasonably be expected to result in, individually or in the
aggregate, a Material Adverse Effect: (i) comply, and take all reasonable
actions to cause all lessees and other Persons operating or occupying its
properties to comply, with all applicable Environmental Laws and Environmental
Permits; (ii) obtain and renew all Environmental Permits reasonably necessary
for its operations and properties; and (iii) in each case to the extent required
by Environmental Laws, conduct any investigation, study, sampling and testing,
and undertake any cleanup, removal, remedial or other action reasonably
necessary to remove and clean up all Hazardous Materials from any of its
properties, to the extent required by the requirements of all Environmental
Laws.

 

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SECTION 5.07. Maintenance of Properties; Ownership of Subsidiaries. Except as
contemplated by Schedule 5.07, and except to the extent that the failure to do
so could not reasonably be expected to result in a Material Adverse Effect,
(i) maintain, preserve and protect all of its material Properties and equipment
necessary in the operation of its business in good working order, repair and
condition, ordinary wear and tear excepted and casualty or condemnation
excepted, and (ii) make all necessary renewals, replacements, modifications,
improvements, upgrades, extensions and additions thereof or thereto in
accordance with prudent industry practice; and

SECTION 5.08. Maintenance of Insurance. Maintain insurance with financially
sound and reputable insurance companies with respect to all of its Properties
and assets, as is usually carried by companies engaged in similar business and
as is consistent with the prudent operation of its business; provided, however,
neither the Borrower nor any Borrower Group Member shall be prohibited from self
insuring to the extent that such self-insurance is consistent with the prudent
operation of its business and companies engaged in similar businesses.

SECTION 5.09. Use of Proceeds. The Borrower shall use the proceeds of (a) the
Liquidity Loans and Liquidity Letters of Credit to (i) refinance certain
existing Indebtedness of the Borrower and its Subsidiaries, (ii) pay fees,
commissions and expenses in connection with the Transactions, (iii) finance
ongoing working capital requirements and other general corporate purposes and
(iv) support the energy purchases and hedging activities of the Borrower to the
extent there is not availability under Energy Hedging Commitments, and (b) the
Energy Hedging Loans and Energy Hedging Letters of Credit to (i) support the
energy purchases and hedging activities of the Borrower and (ii) finance ongoing
working capital requirements and other general corporate purposes to the extent
there is not availability under Liquidity Commitments.

SECTION 5.10. Payment of Obligations. Pay, discharge or otherwise satisfy as the
same shall become due and payable, all its obligations and liabilities in
respect of material Taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or in respect of its Property,
except to the extent that the failure to do so could not reasonably be expected
to result in a Material Adverse Effect.

SECTION 5.11. Cooperation. Perform such acts as are reasonably requested by the
Administrative Agent to carry out the intent of, and transactions contemplated
by, this Agreement and the other Financing Documents.

SECTION 5.12. Books and Records. Maintain proper books of record and account, in
which entries that are full, true and correct in all material respects and are
in conformity with GAAP consistently applied shall be made of all material
transactions and matters involving the assets and business of the Borrower or
such Subsidiary, as the case may be.

SECTION 5.13. Financing Documents; Material Documents.

 

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(a) Perform and observe all of its covenants and obligations pursuant to any
material Contractual Obligation to which it is a party or pursuant to which it
has any obligations, except to the extent that the failure to do so could not
reasonably be expected to result in a Material Adverse Effect;

(b) Take all reasonable and necessary action to prevent the termination or
cancellation of any Financing Document or other material Contractual Obligation
in accordance with the terms of such Financing Document or other material
Contractual Obligation or otherwise, except to the extent, in the case of any
material Contractual Obligation, that the failure to do so could not reasonably
be expected to result in a Material Adverse Effect; and

(c) enforce against the relevant party to a material Contractual Obligation
(other than the Lenders or Agents) such covenants of such material Contractual
Obligation in accordance with its terms, except to the extent that the failure
to do so could not reasonably be expected to result in a Material Adverse
Effect.

SECTION 5.14. Maintenance of Ratings. From and after the Effective Date, the
Borrower will maintain monitored public ratings on its senior unsecured debt
from S&P and Moody’s to the extent Moody’s and S&P issue debt ratings generally;
provided, if Moody’s and S&P cease to issue debt ratings generally, then the
Borrower and the Administrative Agent may select another nationally-recognized
rating agency to substitute for Moody’s and S&P for purposes of the foregoing,
and the foregoing shall not apply until a substitute nationally-recognized
rating agency is so selected.

SECTION 5.15. Inspection Rights. At any reasonable time and from time to time
upon reasonable notice (but no more than once at the Borrower’s expense in any
fiscal year so long as no Event of Default has occurred and is continuing),
permit or arrange for the Administrative Agent (and permit any Lender to
accompany the Administrative Agent), to examine and make copies of and abstracts
from the records and books of account of, and the properties of, the Borrower
and each of its Subsidiaries, and to discuss the affairs, finances and accounts
of the Borrower and its Subsidiaries with the Borrower and its Subsidiaries and
their respective officers, directors and accountants (provided that (i) so long
as no Event of Default has occurred and is continuing, a representative of the
Borrower may be present for any communication with the independent public
accountants and (ii) the Borrower reserves the right to restrict access to any
generating facilities in accordance with reasonably adopted procedures relating
to safety and security, and to the extent reasonably requested to maintain
normal operations of the Borrower or any of its Subsidiaries).

ARTICLE VI

Negative Covenants

Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees payable hereunder have been paid in full and
all Letters of Credit have expired or terminated and all LC Disbursements shall
have been reimbursed, the Borrower covenants and agrees with the Lenders that
the Borrower shall not, nor shall it permit any of the Operating Companies, to:

SECTION 6.01. Liens. Create, incur, assume or suffer to exist any Lien upon any
of its material Property, assets or revenues, whether now owned or hereafter
acquired, other than the following:

 

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(a) Liens for the benefit of the Credit Parties pursuant to any Financing
Documentation;

(b)(i) Liens existing on the Effective Date and listed on Schedule 6.01(b) or
(ii) Liens securing any Existing Indebtedness contemplated by clause (b) of the
definition thereof; provided, in the case of this clause (ii), that such Lien
shall apply only to Property (whether now owned or after-acquired) of a type
that is subject to a Lien securing the corresponding Existing Indebtedness
referred to in clause (a) of the definition thereof (including the proceeds
thereof) and shall not extend to any other Property;

(c) Liens for taxes, assessments or governmental charges imposed on the Borrower
or any Subsidiary or any of their property by any Governmental Authority which
are not yet due and payable or which are being contested in good faith and by
appropriate proceedings diligently conducted, if adequate reserves with respect
thereto are maintained on the books of the Borrower or such Subsidiary, to the
extent required by and in accordance with GAAP;

(d) Liens of carriers, warehousemen, mechanics, materialmen, repairmen,
construction contractors, statutory liens of landlords or other like liens
arising in the ordinary course of business which secure amounts not yet due and
payable or which are being contested in good faith and by appropriate
proceedings diligently conducted, if Person to the extent required by and in
accordance with GAAP;

(e) pledges or deposits in the ordinary course of business (i) in connection
with workers’ compensation, unemployment insurance and other social security
legislation or (ii) required to secure performance bids, tenders, trade
contracts, performance bonds, statutory obligations, leases, government
contracts, surety and appeals bonds, indemnity, performance or other similar
bonds in connection with judicial or administrative proceedings and other
obligations of a like nature (exclusive of obligations for borrowed money);

(f) easements, rights-of-way, licenses, restrictions, encroachments, protrusions
and other similar encumbrances and minor title defects affecting real property
which, in the aggregate, do not in any case materially interfere with the
ordinary conduct of the business of any Borrower Group Member;

(g) Liens securing judgments that do not involve any material risk of forfeiture
of any assets of any of the Borrower Group Members or any Financing Document
that do not exceed $50,000,000 in the aggregate and that within ten (10) days
are being contested in good faith and by appropriate proceedings diligently
conducted, if adequate reserves with respect thereto are maintained on the books
of the applicable Person in accordance with GAAP for the payment of money not
constituting an Event of Default under clause (k) of Article VII;

(h) Liens securing payment of Tax-Free Debt and credit enhancement obligations
related to such Tax-Free Debt; provided that (i) any claims in respect of the
principal balance of the obligations being secured thereby shall not exceed
$250,000,000 in the aggregate at any time, and (ii) each such Lien shall extend
only to the property, and proceeds thereof, being financed by the Tax-Free Debt
secured thereby;

(i) Liens for purchase money security interests or Capital Lease Obligations
which are secured solely by the assets acquired (and proceeds and products
thereof), up to $150,000,000 in the aggregate; provided that such Lien arises
prior to or within 60 days after such acquisition or the incurrence of such
Capital Lease Obligation;

 

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(j) zoning, building and other generally applicable land use restrictions,
which, in the aggregate, do not in any case materially interfere with the
ordinary conduct of the business of the Borrower and the Operating Companies
taken as a whole;

(k) licenses of intellectual property entered into in the ordinary course of
business;

(l) Liens that have been placed by a third party on the fee title of leased real
property or property over which any Borrower Group Member has easement, license
or similar rights, and subordination or similar agreements relating thereto;

(m) bankers’ liens, rights of setoff and other similar liens existing solely
with respect to cash and Cash Equivalents on deposit in one or more accounts
maintained by any Borrower Group Member arising in the ordinary course of
business from netting services, overdraft protection, Banking Services
Obligations and otherwise in connection with the maintenance of deposit,
securities and commodities accounts;

(n) Liens solely on any cash earnest money or other deposits made by Borrower or
any of its Subsidiaries in connection with any Permitted Acquisition, letter of
intent or purchase agreement permitted hereunder;

(o) purported Liens evidenced by the filing of precautionary UCC financing
statements relating solely to operating leases of personal property or
consignments or similar arrangements entered into in the ordinary course of
business;

(p) Liens on (i) insurance policies and the proceeds thereof securing the
financing of the premiums with respect thereto to the extent securing
Indebtedness owed to any Person providing property, casualty, business
interruption or liability insurance to the Borrower or any Operating Company of
the Borrower so long as such Indebtedness shall not be in excess of the unpaid
costs of, and shall be incurred only to defer the cost of, such insurance for
the annual period in which such Indebtedness is incurred and in any event, not
in excess of $5,000,000 at any time (“Permitted Premium Financing
Indebtedness”), (ii) dividends and rebates and other identifiable proceeds
therefrom which may become payable under insurance policies and loss payments
which reduce the incurred premiums on such insurance policies, (iii) rights
which may arise under state insurance guarantee funds relating to any such
insurance policy, in each case securing Permitted Premium Financing Indebtedness
and (iv) pledges or deposits of cash and Cash Equivalents securing deductibles,
self-insurance, co-payment, co-insurance, retentions or similar obligations to
providers of property, casualty or liability insurance in the ordinary course of
business; provided, however, that claims in respect of such Liens shall not
exceed $5,000,000 in the aggregate at any time;

(q) Liens in favor of customs and revenue authorities arising as a matter of law
to secure payment of customs duties in connection with the importation of goods
in the ordinary course of business;

(r) Liens on conservation investment assets as security for obligations incurred
in financing or refinancing bondable conservation investments in accordance with
the laws of the State of Washington;

(s) any Lien existing on any property or asset prior to the acquisition thereof
by the Borrower or any Subsidiary or existing on any property or asset of any
Person that becomes a Subsidiary after the date hereof pursuant to a Permitted
Acquisition (or on such Person’s assets) prior to the time such Person becomes a
Subsidiary; provided that (i) such Lien is not created in contemplation of or in

 

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connection with such acquisition or such Person becoming a Subsidiary, as the
case may be, (ii) such Lien shall not apply to any other property or assets of
the Borrower or any other Subsidiary (other than the proceeds of such property
or assets), (iii) such Lien shall secure only those obligations which it secures
on the date of such acquisition or the date such Person becomes a Subsidiary, as
the case may be, and extensions, renewals and replacements thereof that do not
increase the outstanding principal amount thereof and (iv) such Lien, together
with any other Liens incurred pursuant to this paragraph (s) shall not secure
Indebtedness or other obligations in excess of $250,000,000 in the aggregate;

(t) other Liens securing Indebtedness and other obligations in an aggregate
amount not to exceed $100,000,000 at any time;

(u) Liens securing Indebtedness or arising in connection with Receivables
Facilities, provided, that the sum (without duplication) of all such
Indebtedness, plus the aggregate investment or claim held at any time by all
purchasers, assignees or other transferees of (or of interests in) receivables
and other rights to payment in all Receivables Facilities shall not at any time
exceed $250,000,000; and

(v) Liens pursuant to (i) the Borrower’s First and Refunding Mortgage, dated as
of June 2, 1924 (as supplemented and amended, the “Existing 1924 Mortgage”), as
described therein, (ii) PSE’s Indenture of First Mortgage, dated as of April 1,
1957 (as supplemented and amended, the “Existing 1957 Mortgage”), as described
therein, (iii) the Borrower’s Indenture, dated as of December 1, 1997 (as
supplemented and amended, the “Existing 1997 Indenture”), as described therein,
and (iv) any replacement indenture in respect of the Existing 1924 Mortgage, the
Existing 1957 Mortgage or the Existing 1997 Indenture, and any supplements
thereto, so long as (1) any such Liens under any such replacement indenture
apply to the property or assets of PSE in a manner substantially consistent with
the terms of the Existing 1924 Mortgage, the Existing 1957 Mortgage or the
Existing 1997 Indenture, as applicable, and (2) the borrowing capacity and other
restrictions on the Borrower’s ability to incur any obligations under any such
replacement indenture are substantially the same as those set forth in the
Existing 1924 Mortgage, the Existing 1957 Mortgage or the Existing 1997
Indenture, as applicable;

SECTION 6.02. Dispositions. Make any Disposition or enter into any agreement to
make any Disposition, except:

(a) Dispositions in the ordinary course of business (including Dispositions of
obsolete or worn out or surplus property no longer required or useful in the
business or operations of the Borrower or any of its Subsidiaries);

(b) Dispositions of assets and businesses specified on Schedule 5.07;

(c) Dispositions of Investments in Cash Equivalents in the ordinary course of
business;

(d) Dispositions of assets which individually or in the aggregate are less than
20% of the Consolidated Tangible Net Assets as of the Effective Date and for
which no less than 80% of the proceeds received therefor are in cash or Cash
Equivalents;

(e) Dispositions constituting a Lien permitted pursuant to Section 6.01;

(f) the sale or issuance of any Subsidiary’s Equity Interests to the Borrower;

(g) Dispositions of assets in connection with any transaction permitted by
Section 6.04;

 

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(h) assignments and licenses of intellectual property or other intangibles of
the Borrower Group Members in the ordinary course of business;

(i) any Disposition of any asset or interest therein in exchange for utility
plant, equipment or other utility assets (other than notes or other obligations)
in each case equal to the fair market value (as determined in good faith by the
Borrower) of such asset or interest therein; provided, however, that the fair
market value of any such assets or interests Disposed of under this paragraph
(i) shall not exceed $10,000,000 in the aggregate in any fiscal year;

(j) [Intentionally Omitted];

(k) the Disposition of substantially all of the electric distribution assets of
the Borrower located in Jefferson County, Washington, pursuant to that certain
Asset Sale Agreement, dated as of June 11, 2010, by and between Public Utility
District No.1 of Jefferson County, a public utility district organized under the
laws of the state of Washington and the Borrower, as in effect as of the
Effective Date; provided, that the Borrower shall receive net cash proceeds of
not less than the fair market value of the assets subject to such Disposition as
reasonably determined by the board of directors of the Borrower in good faith in
net cash proceeds; and

(l) the sale, assignment or other transfer of accounts receivable or other
rights to payment pursuant to any Receivables Facility.

In the case of any of the foregoing Dispositions, the Borrower and the
Subsidiaries are in compliance, on a Pro Forma Basis after giving effect to such
Disposition with the covenant contained in Section 6.09 recomputed as of the
last day of the most recently ended fiscal quarter of the Borrower for which
financial statements are available, as if such Disposition (and any related
repayment of Indebtedness) had occurred on the first day of each relevant period
for testing such compliance.

SECTION 6.03. Investments. Make or hold any Investments, except:

(a) Investments by the Borrower or an Operating Company in cash and Cash
Equivalents;

(b) Investments by the Borrower in Interest Hedging Agreements;

(c) Investments by any other Operating Companies in Other Hedging Agreements
entered into in the ordinary course of business and not for speculative
purposes;

(d) Intercompany Loans from the Borrower to any Operating Company;

(e) Equity Interests in (x) Subsidiaries in existence on the date hereof,
(y) Operating Companies acquired or created after the Effective Date in
connection with Permitted Acquisitions, and (z) Subsidiaries consisting of
Immaterial Subsidiaries;

(f) Permitted Acquisitions;

(g) Investments received in connection with the bankruptcy or reorganization of,
or settlement of delinquent accounts and disputes with, customers and supplies,
in each case in the ordinary course of business;

 

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(h) extensions of trade credit in the ordinary course of business;

(i) Investments made as a result of the receipt of non-cash consideration from a
Disposition in compliance with Section 6.02;

(j) Investments made by any Person that becomes a Subsidiary after the date
hereof; provided that such Investment exists at the time such Person becomes a
Subsidiary and are not made in contemplation of or in connection with such
Person becoming a Subsidiary;

(k) loans and advances made in the ordinary course of business to their
respective employees, officers and directors so long as the aggregate principal
amount thereof at any time outstanding (excluding temporary advances in the
ordinary course of business) shall not exceed $3,000,000;

(l) Investments existing on the date hereof and identified on Schedule 6.03(l);
and

(m) in addition to Investments permitted by clauses (a) through (l) above so
long as no Default or Event of Default shall exist immediately prior thereto or
after giving effect thereto, additional Investments so long as the aggregate
amount invested, loaned or advanced pursuant to this clause (m) does not exceed
$100,000,000 in the aggregate at any time outstanding.

SECTION 6.04. Fundamental Changes. Merge, dissolve, liquidate, consolidate with
or into another Person, or Dispose of (whether in one transaction or in a series
of transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to or in favor of any Person, except for (a) Permitted
Acquisitions, (b) Dispositions permitted under Section 6.02, (c) the liquidation
or dissolution of any Immaterial Subsidiary and (d) if at the time thereof and
immediately after giving effect thereto no Event of Default or Default shall
have occurred and be continuing, (i) the merger, amalgamation or consolidation
of any Borrower Group Member into or with the Borrower in a transaction in which
the Borrower is the surviving corporation, and (ii) the merger, amalgamation or
consolidation of any Borrower Group Member into or with any other Borrower Group
Member or the liquidation or dissolution of any Borrower Group Member (other
than the Borrower) into any other Borrower Group Member; provided, however, that
in any merger or amalgamation or consolidation involving the Borrower or any
liquidation or dissolution of any Borrower Group Member into the Borrower, the
Borrower shall be the surviving corporation.

SECTION 6.05. Nature of Business. (a) Engage in any line of business
substantially different from those lines of business conducted by the Borrower
Group Members on the Effective Date or in connection with any Permitted
Acquisition or any business reasonably related, complimentary or ancillary
thereto.

(b) In the case of the Borrower from and after the Effective Date, conduct,
transact or otherwise engage in any business or operations other than those
reasonably related to (A) its ownership of the Equity Interests of its
Subsidiaries, (B) the maintenance of its legal existence, (C) the performance of
this Agreement and the other Financing Documents, and (D) any transaction that
the Borrower is expressly permitted to enter into or consummate under this
Agreement.

(c) Terminate or amend, waive, modify or supplement any of the provisions of its
Organizational Documents or consent to any such termination, amendment, waiver,
modification or supplement, unless any of the foregoing actions could not
reasonably be expected to result in a Material Adverse Effect.

 

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SECTION 6.06. Transactions with Affiliates; Management Fees. (a) Enter into any
transaction of any kind with any Affiliate (including Affiliate Service
Agreements), whether or not in the ordinary course of business, other than
(i) on terms substantially as favorable to the Borrower Group Member as would be
obtainable by such Borrower Group Member at the time in a comparable
arm’s-length transaction with a Person other than an Affiliate,
(ii) Intercompany Loans to the extent permitted under Section 6.03, (iii) as
approved or required by any Governmental Authority or as required by applicable
Law, and (iv) the payment of Management Fees permitted by clause (b) below.

(b) Pay any Management Fees or enter into or permit to exist any agreement or
arrangement for the payment of Management Fees, unless such fees are expressly
subordinated to the Obligations on the terms set forth in Exhibit I.

SECTION 6.07. Accounting Changes. Make any change in its fiscal year except to
the extent required by applicable Law and/or GAAP. In such event, the Borrower
may, upon written notice to the Administrative Agent, change its fiscal year to
any other fiscal year reasonably acceptable to the Administrative Agent, in
which case, the Borrower and the Administrative Agent will, and are hereby
authorized by the Lenders to, make any adjustments to this Agreement that are
necessary to reflect such change in fiscal year arising as a result of such
change in applicable Law.

SECTION 6.08. Restrictive Agreements. Directly or indirectly, enter into, or
incur or permit to exist any agreement or other arrangement that prohibits,
restricts or imposes any condition upon (a) the ability of any Borrower Group
Member to create, incur or permit to exist any Lien upon any of its material
Property or assets (except as permitted under Section 6.01), or (b) the ability
of the Borrower or any other wholly-owned Subsidiary to pay dividends or other
distributions with respect to, or to return capital in respect of its common
Equity Interests or to make or repay loans or advances to any Borrower Group
Member or to Guarantee Indebtedness of any Borrower Group Member; provided that
the foregoing shall not apply to:

(i) prohibitions, restrictions and conditions imposed by applicable Laws, any
Governmental Authority or this Agreement;

(ii) prohibitions, restrictions and conditions identified on Schedule 3.14 or
otherwise resulting from or relating to Existing Indebtedness (without
amendment, modification or waiver, other than in connection with Permitted
Refinancing Indebtedness) or prohibitions, restrictions and conditions not more
restrictive taken as a whole than such provisions in agreements entered into
after the Effective Date to evidence or govern Indebtedness that is permitted by
this Agreement;

(iii) provisions of the type described in clause (a) above imposed by the holder
of any Lien permitted by Section 6.01(d), (e), (h), (i), (m), (n), (r) and
(s) but solely with respect to the property purported to be encumbered by such
Lien;

(iv) any agreement in effect at the time any Person becomes a Subsidiary
pursuant to a Permitted Acquisition and not in contemplation of, or in
connection with, such Person becoming a Subsidiary and only relating to or in
connection with the Property or assets of such Person (and any extensions,
renewals, or replacements of such agreement so long as any restrictions and
conditions in such extended, renewed or replaced agreement are not more
restrictive than the applicable original agreement or extend to additional
Property);

 

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(v) customary restrictions and conditions contained in agreements relating to
any Disposition of any asset or property; provided that such restrictions and
conditions only apply to the asset or property to be sold, assigned or
transferred and such sale, assignment or transfer is permitted by Section 6.02;
and

(vi) customary provisions restricting assignment or transfer of any agreement
entered into in the ordinary course of business.

SECTION 6.09. Financial Covenant. The Borrower will not permit the Leverage
Ratio to be greater than 0.65 to 1.00 at any time.

SECTION 6.10. Preservation of Rights. Assign, cancel, terminate, waive any
material default under, material breach of or material right under, or
materially amend, supplement or modify or give any material consent under
(including any consent or assignment of), any Financing Document or material
Contractual Obligation, except, other than in the case of any Financing
Document, to the extent that any such action would not reasonably be expected to
result in a Material Adverse Effect.

ARTICLE VII

Events of Default

If any of the following events (“Events of Default”) shall occur:

(a) the Borrower shall fail to pay (i) any principal of any Loan when and as the
same shall become due or (ii) any reimbursement obligation in respect of any LC
Disbursement when and as the same shall become due and payable (and such failure
under this clause (ii) shall continue unremedied for a period of one
(1) Business Day), in each case, whether at the due date thereof or at a date
fixed for prepayment thereof or otherwise;

(b) the Borrower shall fail to pay any interest on any Loan or any fee or any
other amount (other than an amount referred to in clause (a) of this Article)
payable under this Agreement or any other Financing Document, when and as the
same shall become due and payable, and such failure shall continue unremedied
for a period of three (3) Business Days;

(c) any representation or warranty made or deemed made by or on behalf of the
Borrower or any Subsidiary in or in connection with this Agreement or any other
Financing Document or any amendment or modification hereof or thereof or waiver
hereunder or thereunder, or in any report, certificate, financial statement or
other document furnished pursuant to or in connection with this Agreement or any
other Financing Document or any amendment or modification thereof or waiver
thereunder, shall prove to have been incorrect in any material respect when made
or deemed made;

(d) the Borrower shall fail to observe or perform any covenant, condition or
agreement contained in Section 5.03, 5.05 or 5.09 or in Article VI (other than
Sections 6.05(a), 6.05(b), 6.06 and 6.07);

(e) The Borrower or any Subsidiary fails to perform or observe any other
covenant, condition or agreement (not specified in clauses (a), (b) or (d) of
this Article VII) contained in any Financing Document on its part to be
performed or observed and such failure continues for thirty

 

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(30) days after notice thereof to the Borrower by the Administrative Agent or
the Borrower having knowledge thereof; provided that if such failure is capable
of remedy but by its nature cannot reasonably be cured within such period, the
Borrower shall have such additional time not exceeding an additional sixty
(60) days as may be necessary to cure such failure so long as the Borrower is
proceeding diligently to cure such failure and such additional cure period could
not reasonably be expected to result in a Material Adverse Effect;

(f) the Borrower or any Subsidiary shall fail to make any payment (whether of
principal or interest and regardless of amount) in respect of any Material
Indebtedness/Material Swap Obligation, when and as the same shall become due and
payable (after giving effect to any applicable grace or cure period);

(g) any event or condition occurs that results in any Material
Indebtedness/Material Swap Obligation becoming due prior to its scheduled
maturity (other than Swap Agreements which become due as a result of the
voluntary prepayment of referenced debt described in such Swap Agreements) or
that enables or permits (with or without the giving of notice, the lapse of time
or both) the holder or holders of any Material Indebtedness/Material Swap
Obligation or any trustee or agent on its or their behalf to cause any Material
Indebtedness/Material Swap Obligation to become due, or to require the
prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled
maturity; provided that this clause (g) shall not apply to secured Indebtedness
that becomes due as a result of the voluntary sale or transfer of the property
or assets securing such Indebtedness;

(h) an involuntary proceeding shall be commenced or an involuntary petition
shall be filed seeking (i) liquidation, reorganization or other relief in
respect of the Borrower or any Subsidiary (other than any Immaterial Subsidiary)
or its debts, or of a substantial part of its assets, under any federal, state
or foreign bankruptcy, insolvency, receivership or similar law now or hereafter
in effect or (ii) the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the Borrower or any Subsidiary
(other than any Immaterial Subsidiary) or for a substantial part of its assets,
and, in any such case, such proceeding or petition shall continue undismissed
for sixty (60) days or an order or decree approving or ordering any of the
foregoing shall be entered;

(i) the Borrower or any Subsidiary (other than any Immaterial Subsidiary) shall
(i) voluntarily commence any proceeding or file any petition seeking
liquidation, reorganization or other relief under any federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in effect,
(ii) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or petition described in clause (h) of this
Article, (iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for the Borrower or any
Subsidiary (other than any Immaterial Subsidiary) or for a substantial part of
its assets, (iv) file an answer admitting the material allegations of a petition
filed against it in any such proceeding, (v) make a general assignment for the
benefit of creditors or (vi) take any action for the purpose of effecting any of
the foregoing;

(j) (i) the Borrower or any Subsidiary (other than any Immaterial Subsidiary)
shall become unable, admit in writing its inability or fail generally to pay its
debts as they become due or (ii) any writ or warrant of attachment or execution
or similar process is issued or levied against all or any material part of the
property of the Borrower and its Subsidiaries (other than any Immaterial
Subsidiary), taken as a whole, and is not released, vacated or fully bonded
within thirty (30) days after its issue or levy;

(k) one or more judgments for the payment of money in an aggregate amount in
excess of $50,000,000 shall be rendered against the Borrower, any Subsidiary or
any combination thereof

 

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and the same shall remain undischarged for a period of sixty (60) consecutive
days during which execution shall not be effectively stayed, or any action shall
be legally taken by a judgment creditor to attach or levy upon any assets of the
Borrower or any Subsidiary to enforce any such judgment;

(l) an ERISA Event shall have occurred that, in the opinion of the Required
Lenders, when taken together with all other ERISA Events that have occurred,
could reasonably be expected to result in a Material Adverse Effect;

(m) a Change in Control shall occur;

(n) the occurrence of any “default”, as defined in any Financing Document (other
than this Agreement) or the breach of any of the terms or provisions of any
Financing Document (other than this Agreement), which default or breach
continues beyond any period of grace therein provided; or

(o) any material provision of any Financing Document for any reason ceases to be
valid, binding and enforceable in accordance with its terms (or the Borrower or
any Subsidiary shall challenge the enforceability of any Financing Document or
shall assert in writing, or engage in any action or inaction based on any such
assertion, that any provision of any of the Financing Documents has ceased to be
or otherwise is not valid, binding and enforceable in accordance with its
terms);

(p) at any time, any financial statements to be delivered pursuant to
Section 5.01 shall be qualified by the auditors and such qualification could
reasonably be expected to result in a Material Adverse Effect;

(q) the termination, transfer, revocation or modification of any material
contracts or leases to which the Borrower or any Subsidiary is a party, the
result of which could reasonably be expected to result in a Material Adverse
Effect and such termination, transfer, revocation or modification remains in
effect for a period of more than thirty (30) days after the occurrence thereof;

(r) the “Aggregate Commitment” under the Existing Parent Agreement shall not
have been reduced in an aggregate amount of at least $200,000,000 (resulting in
an “Aggregate Commitment” thereunder not to exceed $800,000,000) within five
(5) Business Days of the Effective Date;

then, and in every such event (other than an event with respect to the Borrower
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower, take either or
both of the following actions, at the same or different times: (i) terminate the
Commitments, and thereupon the Commitments shall terminate immediately, and
(ii) declare the Loans then outstanding to be due and payable in whole (or in
part, in which case any principal not so declared to be due and payable may
thereafter be declared to be due and payable), and thereupon the principal of
the Loans so declared to be due and payable, together with accrued interest
thereon and all fees and other Obligations of the Borrower accrued hereunder and
under the other Financing Documents, shall become due and payable immediately,
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Borrower; and in case of any event with respect to the
Borrower described in clause (h) or (i) of this Article, the Commitments shall
automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and all fees and other Obligations
accrued hereunder and under the other Financing Documents, shall automatically
become due and payable, without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by the Borrower. Upon the occurrence
and during the continuance of an Event of Default, the Administrative Agent may,
and at the request of the Required Lenders shall, exercise any rights and
remedies provided to the Administrative Agent under the Financing Documents or
at law or equity.

 

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ARTICLE VIII

The Administrative Agent

Each of the Lenders and the Issuing Banks hereby irrevocably appoints the
Administrative Agent as its agent and authorizes the Administrative Agent to
take such actions on its behalf, including execution of the other Financing
Documents, and to exercise such powers as are delegated to the Administrative
Agent by the terms of the Financing Documents, together with such actions and
powers as are reasonably incidental thereto. The provisions of this Article are
solely for the benefit of the Administrative Agent, the Lenders and the Issuing
Banks, and neither the Borrower nor any Operating Company shall have rights as a
third party beneficiary of any of such provisions. It is understood and agreed
that the use of the term “agent” herein or in any other Financing Documents (or
any other similar term) with reference to the Administrative Agent is not
intended to connote any fiduciary or other implied (or express) obligations
arising under agency doctrine of any applicable law. Instead such term is used
as a matter of market custom, and is intended to create or reflect only an
administrative relationship between contracting parties.

The bank serving as the Administrative Agent hereunder shall have the same
rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with the Borrower or any Subsidiary or other Affiliate
thereof as if it were not the Administrative Agent hereunder.

The Administrative Agent shall not have any duties or obligations except those
expressly set forth in the Financing Documents. Without limiting the generality
of the foregoing, (a) the Administrative Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing, (b) the Administrative Agent shall not have any duty to take
any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated by the Financing
Documents that the Administrative Agent is required to exercise in writing as
directed by the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in
Section 9.02); provided that the Administrative Agent shall not be required to
take any action that, in its opinion or the opinion of its counsel, may expose
the Administrative Agent to liability or that is contrary to any Finance
Document or applicable law, including for the avoidance of doubt any action that
may be in violation of the automatic stay under any Debtor Relief Law or that
may effect a forfeiture, modification or termination of property of a Defaulting
Lender in violation of any Debtor Relief Law, and (c) except as expressly set
forth in the Financing Documents, the Administrative Agent shall not have any
duty to disclose, and shall not be liable for the failure to disclose, any
information relating to the Borrower or any of its Subsidiaries that is
communicated to or obtained by the bank serving as Administrative Agent or any
of its Affiliates in any capacity. The Administrative Agent shall not be liable
for any action taken or not taken by it with the consent or at the request of
the Required Lenders (or such other number or percentage of the Lenders as shall
be necessary under the circumstances as provided in Section 9.02) or in the
absence of its own gross negligence or willful misconduct as determined by a
court of competent jurisdiction by final and nonappealable judgment. The
Administrative Agent shall not be responsible for or have any duty to ascertain
or inquire into (i) any statement, warranty or representation made in or in
connection with any Financing Document, (ii) the contents of any certificate,
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in connection with any Financing Document, (iii) the performance or observance
of any of the covenants, agreements or other terms or conditions set forth in
any Financing Document, (iv) the validity, enforceability, effectiveness or
genuineness of any Financing Document or any other agreement, instrument or
document or (v) the satisfaction of any condition set forth in Article IV or
elsewhere in any Financing Document, other than to confirm receipt of items
expressly required to be delivered to the Administrative Agent.

The Administrative Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing (including any electronic
message, Internet or intranet website posting or other distribution) believed by
it to be genuine and to have been signed or sent by the proper Person. The
Administrative Agent also may rely upon any statement made to it orally or by
telephone and believed by it to be made by the proper Person, and shall not
incur any liability for relying thereon. In determining compliance with any
condition hereunder to the making of a Loan, or the issuance, extension, renewal
or increase of a Letter of Credit, that by its terms must be fulfilled to the
satisfaction of a Lender or an Issuing Bank, the Administrative Agent may
presume that such condition is satisfactory to such Lender or such Issuing Bank
unless the Administrative Agent shall have received notice to the contrary from
such Lender or such Issuing Bank prior to the making of such Loan or the
issuance of such Letter of Credit. The Administrative Agent may consult with
legal counsel (who may be counsel for the Borrower), independent accountants and
other experts selected by it, and shall not be liable for any action taken or
not taken by it in accordance with the advice of any such counsel, accountants
or experts.

The Administrative Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default hereunder unless the
Administrative Agent has received written notice from a Lender or the Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a “notice of default”. In the event that the
Administrative Agent receives such a notice, the Administrative Agent shall give
prompt notice thereof to the Lenders. The Administrative Agent shall take such
action with respect to such Default or Event of Default as shall be reasonably
directed by the Required Lenders; provided, however, that unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Lenders except to the extent that
this Agreement expressly requires that such action be taken, or not taken, only
with the consent or upon the authorization of the Required Lenders, or all of
the Lenders, as the case may be.

The Administrative Agent may perform any and all its duties and exercise its
rights and powers by or through any one or more sub-agents appointed by the
Administrative Agent. The Administrative Agent and any such sub-agent may
perform any and all its duties and exercise its rights and powers through their
respective Related Parties. The exculpatory provisions of the preceding
paragraphs shall apply to any such sub-agent and to the Related Parties of the
Administrative Agent and any such sub-agent, and shall apply to their respective
activities in connection with the syndication of the credit facilities provided
for herein as well as activities as Administrative Agent.

Subject to the appointment and acceptance of a successor Administrative Agent as
provided in this paragraph, the Administrative Agent may resign at any time by
notifying the Lenders, the Issuing Banks and the Borrower. Upon any such
resignation, the Required Lenders shall have the right, in consultation with the
Borrower, to appoint a successor. If no successor shall have been so appointed
by the Required Lenders and shall have accepted such appointment within thirty
(30) days after the retiring Administrative Agent gives notice of its
resignation, then the retiring Administrative Agent may, on behalf of the
Lenders and the Issuing Banks, appoint a successor Administrative Agent which
shall be a

 

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bank with an office in the United States, or an Affiliate of any such bank. Upon
the acceptance of its appointment as Administrative Agent hereunder by a
successor, such successor shall succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Administrative Agent, and
the retiring Administrative Agent shall be discharged from its duties and
obligations hereunder. The fees payable by the Borrower to a successor
Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed between the Borrower and such successor. After the
Administrative Agent’s resignation hereunder, the provisions of this Article and
Section 9.03 shall continue in effect for the benefit of such retiring
Administrative Agent, its sub-agents and their respective Related Parties in
respect of any actions taken or omitted to be taken by any of them while it was
acting as Administrative Agent.

Any resignation by Wells Fargo Bank, National Association, as Administrative
Agent pursuant to this Article shall also constitute its resignation as Issuing
Bank and Swingline Lender. Upon the acceptance of a successor’s appointment as
Administrative Agent hereunder, (i) such successor shall succeed to and become
vested with all of the rights, powers, privileges and duties of the retiring
Issuing Bank and Swingline Lender and (ii) the retiring Issuing Bank and
Swingline Lender shall be discharged from all of their respective duties and
obligations hereunder or under the other Financing Documents.

Each Lender and each Issuing Bank expressly acknowledges that neither the
Administrative Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates has made any representation or warranty to it
and that no act by the Administrative Agent hereinafter taken, including any
review of the affairs of the Borrower and any Operating Company, shall be deemed
to constitute any representation or warranty by the Administrative Agent to any
Lender. Each Lender and each Issuing Bank acknowledges that it has,
independently and without reliance upon the Administrative Agent or any other
Lender or any of their Related Parties and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender and each Issuing Bank also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender or any of their Related Parties and
based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement, any other Financing Document or any related
agreement or any document furnished hereunder or thereunder.

None of the Lenders, if any, identified in this Agreement as a Syndication
Agent, Co-Documentation Agent, Joint Lead Arranger or Joint Bookrunner shall
have any right, power, obligation, liability, responsibility or duty under this
Agreement other than those applicable to all Lenders as such. Without limiting
the foregoing, none of such Lenders shall have or be deemed to have a fiduciary
relationship with any Lender. Each Lender hereby makes the same acknowledgments
with respect to the relevant Lenders in their respective capacities as
Syndication Agent or Co-Documentation Agents, as applicable, as it makes with
respect to the Administrative Agent in the preceding paragraph.

The Lenders are not partners or co-venturers, and no Lender shall be liable for
the acts or omissions of, or (except as otherwise set forth herein in case of
the Administrative Agent) authorized to act for, any other Lender. The
Administrative Agent shall have the exclusive right on behalf of the Lenders to
enforce the payment of the principal of and interest on any Loan after the date
such principal or interest has become due and payable pursuant to the terms of
this Agreement.

 

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ARTICLE IX

Miscellaneous

SECTION 9.01. Notices. (a) Except in the case of notices and other
communications expressly permitted to be given by telephone (and subject to
paragraph (b) below), all notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by telecopy, as follows:

(i) if to the Borrower, to it at Puget Sound Energy, Inc., 10885 N.E. 4th
Street, Bellevue, Washington 98004-5591, Attention of Vice President Finance and
Treasurer, (Telecopy No. 425-462-3300), (Telephone No. 425-462-3870);

(ii) if to the Administrative Agent, to it at Wells Fargo Bank, National
Association, 1525 West W.T. Harris Blvd., MACD1109-019, Charlotte, North
Carolina 28262 (Telecopy No. 704-715-0017), (Telephone No. 704-590-2714),
(Email: Kimberly.Goya@wellsfargo.com);

(iii) if to the Swingline Lender, to it at Wells Fargo Bank, National
Association, 1525 West W.T. Harris Blvd., MACD1109-019, Charlotte, North
Carolina 28262 (Telecopy No. 704-715-0017), (Telephone No. 704-590-2714),
(Email: Kimberly.Goya@wellsfargo.com); and

(iv) if to any other Lender, to it at its address (or telecopy number) set forth
in its Administrative Questionnaire.

(b) Notices and other communications to the Lenders hereunder may be delivered
or furnished by electronic communications pursuant to procedures approved by the
Administrative Agent; provided that the foregoing shall not apply to notices
pursuant to Article II unless otherwise agreed by the Administrative Agent and
the applicable Lender. The Administrative Agent or the Borrower may, in its
discretion, agree to accept notices and other communications to it hereunder by
electronic communications pursuant to procedures approved by it; provided that
approval of such procedures may be limited to particular notices or
communications.

(c) Any party hereto may change its address or telecopy number for notices and
other communications hereunder by notice to the other parties hereto. All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt if received by the recipient during its normal business hours.

SECTION 9.02. Waivers; Amendments. (a) No failure or delay by the Administrative
Agent, any Issuing Bank or any Lender in exercising any right or power hereunder
or under any other Financing Document shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Administrative Agent, the Issuing
Banks and the Lenders hereunder and under the other Financing Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of this Agreement or consent to any
departure by the Borrower therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) of this Section, and then such waiver
or consent shall be effective only in the specific instance and for the purpose
for which given. Without limiting the generality of the foregoing, the making of
a Loan or issuance of a Letter of Credit shall not be construed as a waiver of
any Default, regardless of whether the Administrative Agent, any Lender or any
Issuing Bank may have had notice or knowledge of such Default at the time.

 

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(b) Neither this Agreement nor any provision hereof may be waived, amended or
modified except pursuant to an agreement or agreements in writing entered into
by the Borrower and the Required Lenders or by the Borrower and the
Administrative Agent with the consent of the Required Lenders; provided that no
such agreement shall (i) increase the Commitment of any Lender without the
written consent of such Lender, (ii) reduce the principal amount of any Loan or
LC Disbursement or reduce the rate of interest thereon, or reduce any fees
payable hereunder, without the written consent of each Lender directly affected
thereby, (iii) postpone the scheduled date of payment of the principal amount of
any Loan or LC Disbursement, or any interest thereon, or any fees payable
hereunder, or reduce the amount of, waive or excuse any such payment, or
postpone the scheduled date of expiration of any Commitment, without the written
consent of each Lender directly affected thereby, (iv) change Section 2.19(b) or
(d) in a manner that would alter the pro rata sharing of payments required
thereby, without the written consent of each Lender, (v) change Section 2.06(c)
or 2.07(c) without the written consent of each Lender or (vi) change any of the
provisions of this Section or the definition of “Required Lenders” or any other
provision hereof specifying the number or percentage of Lenders required to
waive, amend or modify any rights hereunder or make any determination or grant
any consent hereunder, without the written consent of each Lender; provided
further that no such agreement shall extend the Liquidity Availability Period
without the written consent of each Liquidity Issuing Bank (other than the
Existing Liquidity Issuing Banks) or the Energy Hedging Availability Period
without the written consent of each Energy Hedging Issuing Bank.

(c) Notwithstanding the foregoing (but subject to the limitations set forth in
Sections 9.02(b)(i), 9.02(b)(ii) and 9.02(b)(iii)), this Agreement and any other
Financing Document may be amended (or amended and restated) with the written
consent of the Required Lenders, the Administrative Agent and the Borrower
(x) to add one or more credit facilities to this Agreement and to permit
extensions of credit from time to time outstanding thereunder and the accrued
interest and fees in respect thereof to share ratably in the benefits of this
Agreement and the other Financing Documents with the Revolving Loans and the
accrued interest and fees in respect thereof and (y) to include appropriately
the Lenders holding such credit facilities in any determination of the Required
Lenders and Lenders.

(d) [Intentionally Omitted].

(e) If, in connection with any proposed amendment, waiver or consent requiring
the consent of “each Lender” or “each Lender directly affected thereby,” the
consent of the Required Lenders is obtained, but the consent of other necessary
Lenders is not obtained (any such Lender whose consent is necessary but not
obtained being referred to herein as a “Non-Consenting Lender”), then the
Borrower may elect to replace a Non-Consenting Lender as a Lender party to this
Agreement, provided that, concurrently with such replacement, (i) another bank
or other entity which is reasonably satisfactory to the Borrower, the
Administrative Agent, the Swingline Lender (if such bank or entity is replacing
a Liquidity Lender), each Liquidity Issuing Bank (if such bank or entity is
replacing a Liquidity Lender) and each Energy Hedging Issuing Bank (if such bank
or entity is replacing an Energy Hedging Lender) shall agree, as of such date,
to purchase for cash at par the Loans and other Obligations due to the
Non-Consenting Lender pursuant to an Assignment and Assumption and to become a
Lender for all purposes under this Agreement and to assume all obligations of
the Non-Consenting Lender to be terminated as of such date and to comply with
the requirements of clause (b) of Section 9.04, and (ii) the Borrower shall pay
to such Non-Consenting Lender in same day funds on the day of such replacement
(1) all interest, fees and other amounts then accrued but unpaid to such
Non-Consenting Lender by the Borrower hereunder to and including the date of
termination, including without limitation payments due to such Non-Consenting
Lender under Sections 2.16 and 2.18, and (2) an amount, if any, equal to the
payment which would have been due to such Lender on the day of such replacement
under Section 2.17 had the Loans of such Non-Consenting Lender been prepaid on
such date rather than sold to the replacement Lender.

 

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(f) Notwithstanding anything to the contrary herein the Administrative Agent
may, with the consent of the Borrower only, amend, modify or supplement this
Agreement or any of the other Financing Documents to cure any ambiguity,
omission, mistake, defect or inconsistency.

SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower shall pay
(i) all reasonable out-of-pocket expenses incurred by the Administrative Agent
and its Affiliates, including the reasonable fees, charges and disbursements of
counsel for the Administrative Agent, in connection with the syndication and
distribution (including, without limitation, via the internet or through a
service such as SyndTrak) of the credit facilities provided for herein, the
preparation and administration of this Agreement and the other Financing
Documents or any amendments, modifications or waivers of the provisions hereof
or thereof (whether or not the transactions contemplated hereby or thereby shall
be consummated), (ii) all reasonable out-of-pocket expenses incurred by the
Issuing Banks in connection with the issuance, amendment, renewal or extension
of any Letter of Credit or any demand for payment thereunder and (iii) all
out-of-pocket expenses incurred by the Administrative Agent, any Issuing Bank or
any Lender, including the fees, charges and disbursements of any counsel for the
Administrative Agent, any Issuing Bank or any Lender, in connection with the
enforcement or protection of its rights in connection with this Agreement and
any other Financing Document, including its rights under this Section, or in
connection with the Loans made or Letters of Credit issued hereunder, including
all such out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit.

(b) The Borrower shall indemnify the Administrative Agent, each Issuing Bank,
each Lender and each Joint Lead Arranger, and each Related Party of any of the
foregoing Persons (each such Person being called an “Indemnitee”) against, and
hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities, penalties and related expenses, including the fees, charges and
disbursements of any counsel for any Indemnitee, incurred by or asserted against
any Indemnitee arising out of, in connection with, or as a result of (i) the
execution or delivery of any Financing Document or any agreement or instrument
contemplated thereby, the performance by the parties hereto of their respective
obligations thereunder or the consummation of the Transactions or any other
transactions contemplated hereby, (ii) any Loan or Letter of Credit or the use
of the proceeds therefrom (including any refusal by any Issuing Bank to honor a
demand for payment under a Letter of Credit if the documents presented in
connection with such demand do not strictly comply with the terms of such Letter
of Credit), (iii) any actual or alleged presence or release of Hazardous
Materials on or from any property owned or operated by the Borrower or any of
its Subsidiaries, or any Environmental Liability related in any way to the
Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory, whether brought by a third
party or by the Borrower or any of its Subsidiaries, and regardless of whether
any Indemnitee is a party thereto; provided that such indemnity shall not, as to
any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities, penalties or related expenses are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted from
the gross negligence or willful misconduct of such Indemnitee or the material
breach in bad faith by any Indemnitee of its express obligations hereunder
pursuant to a claim initiated by Borrower. This Section 9.03(b) shall not apply
with respect to Taxes other than any Taxes that represent losses or damages
arising from any non-Tax claim.

(c) To the extent that the Borrower fails to pay any amount required to be paid
by it to the Administrative Agent, any Issuing Bank or the Swingline Lender
under paragraph (a) or (b) of this Section, each Lender severally agrees to pay
to the Administrative Agent, and each Lender agrees to pay to the Issuing Bank
or the Swingline Lender, as the case may be, such Lender’s Applicable Percentage
(determined as of the time that the applicable unreimbursed expense or indemnity
payment is sought) of

 

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such unpaid amount (it being understood that the Borrower’s failure to pay any
such amount shall not relieve the Borrower of any default in the payment
thereof); provided that the unreimbursed expense or indemnified loss, claim,
damage, liability or related expense, as the case may be, was incurred by or
asserted against the Administrative Agent, the Issuing Bank or the Swingline
Lender in its capacity as such.

(d) To the extent permitted by applicable law, the Borrower shall not assert,
and hereby waives, any claim against any Indemnitee (i) except to the extent a
court of competent jurisdiction determines in a final and non appealable
judgment that such damage is the result of such Indemnitiee’s gross negligence
or willful misconduct, for any damages arising from the use by others of
information or other materials obtained through telecommunications, electronic
or other information transmission systems (including the Internet), or (ii) on
any theory of liability, for special, indirect, consequential or punitive
damages (as opposed to direct or actual damages) arising out of, in connection
with, or as a result of, this Agreement, any other Financing Document or any
agreement or instrument contemplated hereby or thereby, the Transactions, any
Loan or Letter of Credit or the use of the proceeds thereof.

(e) All amounts due under this Section shall be payable not later than fifteen
(15) days after written demand therefor.

SECTION 9.04. Successors and Assigns. (a) The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby (including any Affiliate of
any Issuing Bank that issues any Letter of Credit), except that (i) the Borrower
may not assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of each Lender (and any attempted assignment
or transfer by the Borrower without such consent shall be null and void) and
(ii) no Lender may assign or otherwise transfer its rights or obligations
hereunder except in accordance with this Section. Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby
(including any Affiliate of any Issuing Bank that issues any Letter of Credit),
Participants (to the extent provided in paragraph (c) of this Section) and, to
the extent expressly contemplated hereby, the Related Parties of each of the
Administrative Agent, the Issuing Banks and the Lenders) any legal or equitable
right, remedy or claim under or by reason of this Agreement.

(b) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender
may assign to one or more assignees all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitments
and the Loans at the time owing to it) with the prior written consent (such
consent not to be unreasonably withheld or delayed) of:

(A) the Borrower (provided that the Borrower shall be deemed to have consented
to any such assignment unless it shall object thereto by written notice to the
Administrative Agent within five (5) Business Days after having received notice
thereof); provided, further, that no consent of the Borrower shall be required
for an assignment to a Lender, an Affiliate of a Lender, an Approved Fund or, if
an Event of Default has occurred and is continuing, any other assignee;

(B) the Administrative Agent (provided, that no consent of the Administrative
Agent shall be required for an assignment to a Lender, an Affiliate of a Lender
or an Approved Fund);

(C) with respect to assignments of Liquidity Commitments and Liquidity Loans,
the Liquidity Issuing Banks and the Swingline Lender (provided, that no consent
of the Liquidity Issuing Banks and the Swingline Lender shall be required for an
assignment to a Liquidity Lender, an Affiliate of a Liquidity Lender or an
Approved Fund of a Liquidity Lender); and

 

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(D) with respect to assignments of Energy Hedging Commitments and Energy Hedging
Loans, the Energy Hedging Issuing Banks (provided, that no consent of the Energy
Hedging Issuing Banks shall be required for an assignment to an Energy Hedging
Lender, an Affiliate of an Energy Hedging Lender or an Approved Fund of an
Energy Hedging Lender);

provided that (x) no assignment to the Borrower or any Affiliate of the Borrower
shall be permitted and (y) any assignment made in violation of this proviso
shall be void ab initio.

(i) Assignments shall be subject to the following additional conditions:

(A) except in the case of an assignment to a Lender or an Affiliate of a Lender
or an Approved Fund or an assignment of the entire remaining amount of the
assigning Lender’s Commitment or Loans of any Class, the amount of the
Commitment or Loans of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Assumption with respect to such
assignment is delivered to the Administrative Agent) shall not be less than
$5,000,000 (in the case of Commitments and Revolving Loans) unless each of the
Borrower and the Administrative Agent otherwise consent, provided that no such
consent of the Borrower shall be required if an Event of Default has occurred
and is continuing;

(B) each partial assignment shall be made as an assignment of a proportionate
part of all the assigning Lender’s rights and obligations under this Agreement,
provided that this clause shall not be construed to prohibit the assignment of a
proportionate part of all the assigning Lender’s rights and obligations in
respect of one Class of Commitments or Loans;

(C) the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Assumption, together with a processing
and recordation fee of $3,500, such fee to be paid by either the assigning
Lender or the assignee Lender or shared between such Lenders;

(D) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire in which the assignee
designates one or more credit contacts to whom all syndicate-level information
(which may contain material non-public information about the Borrower and its
affiliates and their Related Parties or their respective securities) will be
made available and who may receive such information in accordance with the
assignee’s compliance procedures and applicable laws, including federal and
state securities laws; and

(E) without the prior written consent of the Administrative Agent, no assignment
shall be made to a prospective assignee that bears a relationship to the
Borrower described in Section 108(e)(4) of the Code.

For the purposes of this Section 9.04(b), the term “Approved Fund” has the
following meaning:

 

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

(ii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv)
of this Section, from and after the effective date specified in each Assignment
and Assumption the assignee thereunder shall be a party hereto and, to the
extent of the interest assigned by such Assignment and Assumption, have the
rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Assumption, be released from its obligations under this Agreement
(and, in the case of an Assignment and Assumption covering all of the assigning
Lender’s rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue to be entitled to the benefits of
Sections 2.16, 2.17, 2.18 and 9.03). Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this
Section 9.04 shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
paragraph (c) of this Section.

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

(iv) Upon its receipt of a duly completed Assignment and Assumption executed by
an assigning Lender and an assignee, the assignee’s completed Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in paragraph (b) of this Section and
any written consent to such assignment required by paragraph (b) of this
Section, the Administrative Agent shall accept such Assignment and Assumption
and record the information contained therein in the Register; provided that if
either the assigning Lender or the assignee shall have failed to make any
payment required to be made by it pursuant to Section 2.05(c), 2.06(d) or (e),
2.07(d) or (e), 2.08(b), 2.19(e) or 9.03(c), the Administrative Agent shall have
no obligation to accept such Assignment and Assumption and record the
information therein in the Register unless and until such payment shall have
been made in full, together with all accrued interest thereon. No assignment
shall be effective for purposes of this Agreement unless it has been recorded in
the Register as provided in this paragraph.

(c) Any Lender may, without the consent of the Borrower, the Administrative
Agent, Issuing Banks or the Swingline Lender, sell participations to one or more
banks or other entities (a “Participant”) in all or a portion of such Lender’s
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans owing to it); provided that (A) such Lender’s
obligations under this Agreement shall remain unchanged; (B) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations; and (C) the Borrower, the Administrative Agent, the Issuing
Banks and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender’s rights and obligations under this
Agreement;

 

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provided, further that no participation may be sold to the Borrower or any
Affiliate of the Borrower. Any agreement or instrument pursuant to which a
Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 9.02(b) that affects such Participant.
The Borrower agrees that each Participant shall be entitled to the benefits of
Sections 2.16, 2.17 and 2.18 (subject to the requirements and limitations
therein, including the requirements under Section 2.18(f) (it being understood
that the documentation required under Section 2.18(f) shall be delivered to the
participating Lender)) to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to paragraph (b) of this Section;
provided that such Participant (A) agrees to be subject to the provisions of
Sections 2.19 and 2.20 as if it were an assignee under paragraph (b) of this
Section; and (B) shall not be entitled to receive any greater payment under
Sections 2.16 or 2.18, with respect to any participation, than its participating
Lender would have been entitled to receive, except to the extent such
entitlement to receive a greater payment results from a Change in Law that
occurs after the Participant acquired the applicable participation. To the
extent permitted by law, each Participant also shall be entitled to the benefits
of Section 9.08 as though it were a Lender, provided such Participant agrees to
be subject to Section 2.19(d) as though it were a Lender. Each Lender that sells
a participation shall, acting solely for this purpose as a non-fiduciary agent
of the Borrower, maintain a register on which it enters the name and address of
each Participant and the principal amounts (and stated interest) of each
Participant’s interest in the Loans or other obligations under this Agreement
(the “Participant Register”); provided that no Lender shall have any obligation
to disclose all or any portion of the Participant Register to any Person
(including the identity of any Participant or any information relating to a
Participant’s interest in any Commitments, Loans, Letters of Credit or its other
obligations under any Financing Document) except to the extent that such
disclosure is necessary to establish that such Commitment, Loan, Letter of
Credit or other obligation is in registered form under Section 5f.103-1(c) of
the United States Treasury Regulations. The entries in the Participant Register
shall be conclusive absent demonstrable error, and such Lender shall treat each
person whose name is recorded in the Participant Register as the owner of such
participation for all purposes of this Agreement notwithstanding any notice to
the contrary.

(d) Any Lender may at any time pledge or assign a security interest in all or
any portion of its rights under this Agreement to secure obligations of such
Lender, including without limitation any pledge or assignment to secure
obligations to a Federal Reserve Bank or any other central banking authority,
and this Section shall not apply to any such pledge or assignment of a security
interest; provided that no such pledge or assignment of a security interest
shall release a Lender from any of its obligations hereunder or substitute any
such pledgee or assignee for such Lender as a party hereto.

SECTION 9.05. Survival. All covenants, agreements, representations and
warranties made by the Borrower in the Financing Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Financing Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Financing Documents and the making of any Loans and issuance of
any Letters of Credit, regardless of any investigation made by any such other
party or on its behalf and notwithstanding that the Administrative Agent, any
Issuing Bank or any Lender may have had notice or knowledge of any Default or
incorrect representation or warranty at the time any credit is extended
hereunder, and shall continue in full force and effect as long as the principal
of or any accrued interest on any Loan or any fee or any other amount payable
under this Agreement or any other Financing Document is outstanding and unpaid
or any Letter of Credit is outstanding and so long as the Commitments have not
expired or terminated. The provisions of Sections 2.16, 2.17, 2.18 and 9.03 and
Article VIII shall survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby, the repayment of the
Loans, the expiration or termination of the Letters of Credit and the
Commitments or the termination of this Agreement or any other Financing Document
or any provision hereof or thereof.

 

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SECTION 9.06. Counterparts; Integration; Effectiveness. This Agreement may be
executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement, the other
Financing Documents and any separate letter agreements with respect to fees
payable to the Administrative Agent constitute the entire contract among the
parties relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof. Except as provided in Section 4.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page of this Agreement by facsimile or other electronic imaging
shall be effective as delivery of a manually executed counterpart of this
Agreement.

SECTION 9.07. Severability. Any provision of any Financing Document held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions thereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

SECTION 9.08. Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Lender and each of its Affiliates is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final and in whatever currency denominated) at any time held and other
obligations at any time owing by such Lender or Affiliate to or for the credit
or the account of the Borrower against any of and all of the Obligations held by
such Lender, irrespective of whether or not such Lender shall have made any
demand under the Financing Documents and although such obligations may be
unmatured. The rights of each Lender under this Section are in addition to other
rights and remedies (including other rights of setoff) which such Lender may
have.

SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process.
(a) This Agreement shall be construed in accordance with and governed by the law
of the State of New York.

(b) The Borrower hereby irrevocably and unconditionally submits, for itself and
its property, to the nonexclusive jurisdiction of the Supreme Court of the State
of New York sitting in the Borough of Manhattan and of the United States
District Court of the Southern District of New York located in the Borough of
Manhattan, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to any Financing Document, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement or any other Financing Document shall
affect any right that the Administrative Agent, any Issuing Bank or any Lender
may otherwise have to bring any action or proceeding relating to this Agreement
or any other Financing Document against the Borrower or its properties in the
courts of any jurisdiction.

 

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(c) The Borrower hereby irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection which it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement or any other Financing Document in any
court referred to in paragraph (b) of this Section. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.

(d) Each party to this Agreement irrevocably consents to service of process in
the manner provided for notices in Section 9.01. Nothing in this Agreement or
any other Financing Document will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.

SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT, ANY OTHER FINANCING DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.

SECTION 9.11. Headings. Article and Section headings and the Table of Contents
used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.

SECTION 9.12. Confidentiality. Each of the Administrative Agent, the Issuing
Banks and the Lenders agrees to maintain the confidentiality of the Information
(as defined below), except that Information may be disclosed (a) to its and its
Affiliates’ directors, officers, employees and agents, including accountants,
legal counsel and other advisors (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), (b) to the
extent requested or required by any regulatory authority (including any
self-regulatory authority, such as the National Association of Insurance
Commissioners), (c) to the extent required by applicable laws or regulations or
by any subpoena or similar legal process, (d) to any other party to this
Agreement, (e) in connection with the exercise of any remedies under this
Agreement or any other Financing Document or any suit, action or proceeding
relating to this Agreement or any other Financing Document or the enforcement of
rights hereunder or thereunder, (f) subject to an agreement containing
provisions substantially the same as those of this Section, to (i) any assignee
of or Participant in, or any prospective assignee of or Participant in, any of
its rights or obligations under this Agreement or (ii)any actual or prospective
counterparty (or its advisors) to any swap or derivative transaction relating to
the Borrower and its obligations, (g) with the consent of the Borrower or (h) to
the extent such Information (i) becomes publicly available other than as a
result of a breach of this Section or (ii) becomes available to the

 

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Administrative Agent, any Issuing Bank or any Lender on a nonconfidential basis
from a source other than the Borrower. For the purposes of this Section,
“Information” means all information received from the Borrower relating to the
Borrower or its business, other than any such information that is available to
the Administrative Agent, any Issuing Bank or any Lender on a nonconfidential
basis prior to disclosure by the Borrower; provided that, in the case of
information received from the Borrower 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 9.13. USA PATRIOT Act. Each Lender that is subject to the requirements
of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the “Act”) hereby notifies the Borrower that pursuant to the
requirements of the Act, it is required to obtain, verify and record information
that identifies the Borrower, which information includes the name and address of
the Borrower and other information that will allow such Lender to identify the
Borrower in accordance with the Act.

SECTION 9.14. Interest Rate Limitation. Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together with
all fees, charges and other amounts which are treated as interest on such Loan
under applicable law (collectively the “Charges”), shall exceed the maximum
lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken,
received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.

SECTION 9.15. No Advisory or Fiduciary Responsibility. In connection with all
aspects of each transaction contemplated hereby (including in connection with
any amendment, waiver or other modification hereof or of any other Financing
Document), the Borrower acknowledges and agrees that: (i) (A) the arranging and
other services regarding this Agreement provided by the Lenders are arm’s-length
commercial transactions between the Borrower and its Affiliates, on the one
hand, and the Lenders and their Affiliates, on the other hand, (B) the Borrower
has consulted its own legal, accounting, regulatory and tax advisors to the
extent it has deemed appropriate, and (C) the Borrower is capable of evaluating,
and understands and accepts, the terms, risks and conditions of the transactions
contemplated hereby and by the other Financing Documents; (ii) (A) each of the
Lenders and their Affiliates is and has been acting solely as a principal and,
except as expressly agreed in writing by the relevant parties, has not been, is
not, and will not be acting as an advisor, agent or fiduciary for the Borrower
or any of its Affiliates, or any other Person and (B) no Lender or any of its
Affiliates has any obligation to the Borrower or any of its Affiliates with
respect to the transactions contemplated hereby except those obligations
expressly set forth herein and in the other Financing Documents; and (iii) each
of the Lenders and their respective Affiliates may be engaged in a broad range
of transactions that involve interests that differ from those of the Borrower
and its Affiliates, and no Lender or any of its Affiliates has any obligation to
disclose any of such interests to the Borrower or its Affiliates. To the fullest
extent permitted by law, the Borrower hereby waives and releases any claims that
it may have against each of the Lenders and their Affiliates with respect to any
breach or alleged breach of agency or fiduciary duty in connection with any
aspect of any transaction contemplated hereby.

[Signature Pages Follow]

 

89

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

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

 

PUGET SOUND ENERGY, INC., as the

Borrower

By:   /s/ Donald E. Gaines   Name: Donald E. Gaines   Title: Vice President
Finance and Treasurer

 

Signature Page to

Credit Agreement

(Puget Sound Energy, Inc.)

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

WELLS FARGO BANK, NATIONAL

ASSOCIATION,

as a Lender and as Administrative Agent

By:   /s/ Yann Blindert   Name: Yann Blindert   Title: Director

 

Signature Page to

Credit Agreement

(Puget Sound Energy, Inc.)

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

THE ROYAL BANK OF SCOTLAND PLC,

individually as a Lender and as Syndication Agent

By:   /s/ Andrew N Taylor   Name: Andrew N Taylor   Title: Vice President

 

Signature Page to

Credit Agreement

(Puget Sound Energy, Inc.)

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

BARCLAYS BANK PLC, as a Lender By:   /s/ Ann E. Sutton   Name: Ann E. Sutton  
Title: Director THE BANK OF NOVA SCOTIA, as a Lender By:   /s/ Thane Rattew  
Name: Thane Rattew   Title: Managing Director

NATIONAL COOPERATIVE SERVICES

CORPORATION, as a Lender

By:   /s/ Daniel Lyzinski   Name: Daniel Lyzinski   Title: Assistant Secretary
Treasurer

THE BANK OF NEW YORK MELLON, as a

Lender

By:   /s/ Mark W. Rogers   Name: Mark W. Rogers   Title: Vice President

KEYBANK NATIONAL ASSOCIATION, as a

Lender

By:   /s/ Keven D. Smith   Name: Keven D. Smith   Title: Senior Vice President
JPMORGAN CHASE BANK, N.A., as a Lender By:   /s/ Helen D. Davis   Name: Helen D.
Davis   Title: Vice President

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

FIFTH THIRD BANK, as a Lender By:   /s/ P. Ann Daniel   Name: P. Ann Daniel  
Title: Assistant Vice President

EXPORT DEVELOPMENT CANADA, as a

Lender

By:   /s/ James Babbitt   Name: James Babbitt   Title: Sr. Project Finance
Manager By:   /s/ Simon Lee   Name: Simon Lee   Title: Project Finance Manager
COBANK, ACB, as a Lender By:   /s/ Josh Batchelder   Name: Josh Batchelder  
Title: Vice President

CANADIAN IMPERIAL BANK OF

COMMERCE, NEW YORK AGENCY, as a

Lender

By:   /s/ Robert Casey   Name: Robert Casey   Title: Executive Director

CANADIAL IMPERIAL BANK OF

COMMERCE, NEW YORK AGENCY, as a

Lender

By:   /s/ Jonathan Kim   Name: Jonathan Kim   Title: Executive Director

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

BANK OF AMERICA, N.A., as a Lender By:   /s/ Stephen Maloney   Name: Stephen
Maloney   Title: Senior Vice President ROYAL BANK OF CANADA, as a Lender By:  
/s/ Frank Lambrinos   Name: Frank Lambrinos   Title: Authorized Signatory TD
BANK, N.A., as a Lender By:   /s/ David Perlman   Name: David Perlman   Title:
Senior Vice President UNION BANK, N.A., as a Lender By:   /s/ Jeff Fesenmaier  
Name: Jeff Fesenmaier   Title: Director SUNTRUST BANK, as a Lender By:   /s/
Andrew Johnson   Name: Andrew Johnson   Title: Director

U.S. BANK NATIONAL ASSOCIATION, as a

Lender

By:   /s/ Holland H. Williams   Name: Holland H. Williams   Title: AVP &
Portfolio Manager

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

ASSOCIATED BANK, N.A., as a Lender By:   /s/ Yolanda Meza   Name: Yolanda Meza  
Title: Vice President

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

EXHIBIT A

ASSIGNMENT AND ASSUMPTION

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

For an agreed consideration, the Assignor hereby irrevocably sells and assigns
to the Assignee, and the Assignee hereby irrevocably purchases and assumes from
the Assignor, subject to and in accordance with the Standard Terms and
Conditions and the Credit Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below (i) all of the Assignor’s rights and
obligations in its capacity as a Lender under the Credit Agreement and any other
documents or instruments delivered pursuant thereto to the extent related to the
amount and percentage interest identified below of all of such outstanding
rights and obligations of the Assignor under the respective facilities
identified below (including any letters of credit, guarantees, and swingline
loans included in such facilities) and (ii) to the extent permitted to be
assigned under applicable law, all claims, suits, causes of action and any other
right of the Assignor (in its capacity as a Lender) against any Person, whether
known or unknown, arising under or in connection with the Credit Agreement, any
other documents or instruments delivered pursuant thereto or the loan
transactions governed thereby or in any way based on or related to any of the
foregoing, including contract claims, tort claims, malpractice claims, statutory
claims and all other claims at law or in equity related to the rights and
obligations sold and assigned pursuant to clause (i) above (the rights and
obligations sold and assigned pursuant to clauses (i) and (ii) above being
referred to herein collectively as the “Assigned Interest”). Such sale and
assignment is without recourse to the Assignor and, except as expressly provided
in this Assignment and Assumption, without representation or warranty by the
Assignor.

 

1.      Assignor:

  ___________________________

2.      Assignee:

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

3.      Borrower:

  Puget Sound Energy, Inc., a Washington corporation

4.      Administrative Agent:

  Wells Fargo Bank, National Association, as the administrative agent under the
Credit Agreement

5.      Credit Agreement:

  The Credit Agreement dated as of February 4, 2013 among Puget Sound Energy,
Inc., the Lenders parties thereto and Wells Fargo Bank, National Association, as
Administrative Agent

 

 

1  Select as applicable.

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

6. Assigned Interest:

 

Facility Assigned2   Aggregate Amount of Commitment/Loans for all Lenders  

Amount of

Commitment/

Loans Assigned

 

Percentage Assigned

of

Commitment/Loans3

    $   $   %                      $   $   %                      $   $  
%                 

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

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

 

ASSIGNOR

 

[NAME OF ASSIGNOR]

By:       Title:

 

ASSIGNEE

 

[NAME OF ASSIGNEE]

By:       Title:

 

2  Fill in the appropriate terminology for the types of facilities under the
Credit Agreement that are being assigned under this Assignment (e.g., “Liquidity
Commitment”, “Energy Hedging Commitment”, etc.).

3  Set forth, so at least 9 decimals, as a percentage of the Liquidity
Commitment/Liquidity Loans of all Liquidity Lenders thereunder and/or as a
percentage of the Energy Hedging Commitment/Energy Hedging Loans of all Energy
Hedging Lenders thereunder, as applicable.

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

[Consented to and Accepted:

 

WELLS FARGO BANK, NATIONAL

ASSOCIATION, as Administrative Agent [, as

Swingline Lender and as a Liquidity Issuing Bank]

/ [and as an Energy Hedging Issuing Bank]

By:       Name:   Title:

 

THE ROYAL BANK OF SCOTLAND PLC, as an

Energy Hedging Issuing Bank

By:         

Name:

Title:]4

[Consented to:

 

PUGET SOUND ENERGY, INC.

By:      

Name:

Title: ]5

 

 

4  To be added only if the consent of the Administrative Agent, the Swingline
Lender and the Liquidity Issuing Banks and/or Energy Hedging Issuing Banks is
required by the terms of the Credit Agreement

5  To be added only if the consent of the Borrower is required by the terms of
the Credit Agreement.

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

ANNEX I

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

1. Representations and Warranties.

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

1.2. Assignee. The Assignee (a) represents and warrants that (i) it has full
power and authority, and has taken all action necessary, to execute and deliver
this Assignment and Assumption and to consummate the transactions contemplated
hereby and to become a Lender under the Credit Agreement, (ii) it satisfies the
requirements, if any, specified in the Credit Agreement that are required to be
satisfied by it in order to acquire the Assigned Interest and become a Lender,
(iii) from and after the Effective Date, it shall be bound by the provisions of
the Credit Agreement as a Lender thereunder and, to the extent of the Assigned
Interest, shall have the obligations of a Lender thereunder, (iv) it has
received a copy of the Credit Agreement, together with copies of the most recent
financial statements delivered pursuant to Section 5.01 thereof, as applicable,
and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this Assignment and
Assumption and to purchase the Assigned Interest on the basis of which it has
made such analysis and decision independently and without reliance on the
Administrative Agent, the Assignor or any other Lender, and (v) if it is a
Non-U.S. Lender, attached to the Assignment and Assumption is any documentation
required to be delivered by it pursuant to the terms of the Credit Agreement,
duly completed and executed by the Assignee; and (b) agrees that (i) it will,
independently and without reliance on the Administrative Agent, the Assignor or
any other 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 Financing Documents, and (ii) it will perform in
accordance with their terms all of the obligations which by the terms of the
Financing Documents are required to be performed by it as a Lender.

(b) agrees that (i) it will, independently and without reliance on the
Administrative 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 Financing
Documents, and (ii) it will perform in accordance with their terms all of the
obligations which by the terms of the Financing Documents are required to be
performed by it as a Lender.

2. Payments. From and after the Effective Date, the Administrative Agent shall
make all payments in respect of the Assigned Interest (including payments of
principal, interest, fees and other amounts) to the Assignor for amounts which
have accrued to but excluding the Effective Date and to the Assignee for amounts
which have accrued from and after the Effective Date.

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

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

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

EXHIBIT B

[RESERVED]

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

EXHIBIT C

FORM OF INCREASING LENDER SUPPLEMENT

[LIQUIDITY INCREASING LENDER SUPPLEMENT]1 / [ENERGY HEDGING INCREASING LENDER
SUPPLEMENT]2, dated             , 20     (this “Supplement”), by and among each
of the signatories hereto, to the Credit Agreement, dated as of February 4, 2013
(as amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”), among Puget Sound Energy, Inc. (the “Borrower”), the
Lenders party thereto and Wells Fargo Bank, National Association, as
administrative agent (in such capacity, the “Administrative Agent”).

W I T N E S S E T H

WHEREAS, pursuant to [Section 2.21] / [Section 2.22] of the Credit Agreement,
the Borrower has the right, subject to the terms and conditions thereof, to
effectuate from time to time an increase in the [Liquidity Aggregate Commitment]
/ [Energy Hedging Aggregate Commitment] under the Credit Agreement by requesting
one or more [Liquidity Lenders] / [Energy Hedging Lenders] to increase the
amount of its [Liquidity Commitment] / [Energy Hedging Commitment] and/or to
participate in such a tranche;

WHEREAS, the Borrower has given notice to the Administrative Agent of its
intention to increase the [Liquidity Aggregate Commitment] / [Energy Hedging
Aggregate Commitment] pursuant to such [Section 2.21] / [Section 2.22]; and

WHEREAS, pursuant to [Section 2.21] / [Section 2.22] of the Credit Agreement,
the undersigned [Liquidity Increasing Lender] / [Energy Hedging Increasing
Lender] now desires to increase the amount of its [Liquidity Commitment with
respect to Liquidity Revolving Loans] / [Energy Hedging Commitment with respect
to Energy Hedging Revolving Loans] under the Credit Agreement by executing and
delivering to the Borrower and the Administrative Agent this Supplement;

NOW, THEREFORE, each of the parties hereto hereby agrees as follows:

1. The undersigned [Liquidity Increasing Lender] / [Energy Hedging Increasing
Lender] agrees, subject to the terms and conditions of the Credit Agreement,
that on the date of this Supplement it shall have its [Liquidity Commitment with
respect to Liquidity Revolving Loans] / [Energy Hedging Commitment with respect
to Energy Hedging Revolving Loans] increased by $[            ], thereby making
the aggregate amount of its total [Liquidity Commitment] / [Energy Hedging
Commitment] equal to $[            ].

2. The Borrower hereby represents and warrants that the representations and
warranties of the Borrower set forth in the Credit Agreement are true and
correct in all material respects (other than to the extent qualified by
materiality or “Material Adverse Effect”, in which case, such representations
and warranties shall be true and correct) on and as of the date hereof (or to
the extent that such representations and warranties specifically refer to an
earlier date, as of such earlier date).

3. The Borrower hereby represents and warrants that no Default or Event of
Default has occurred and is continuing on and as of the date hereof.

 

1  Applicable if increase is being made pursuant to Section 2.21 of the Credit
Agreement.

2  Applicable if increase is being made pursuant to Section 2.22 of the Credit
Agreement.

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

4. Terms defined in the Credit Agreement shall have their defined meanings when
used herein.

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

6. This Supplement 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 document.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

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

IN WITNESS WHEREOF, each of the undersigned has caused this Supplement to be
executed and delivered by a duly authorized officer on the date first above
written.

 

[INSERT NAME OF INCREASING LENDER] By:     Name: Title:

Accepted and agreed to as of the date first written above:

 

PUGET SOUND ENERGY, INC. By:     Name: Title:

Acknowledged as of the date first written above:

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Administrative Agent [, as Swingline Lender and as a Liquidity Issuing Bank]
/ [and as an Energy Hedging Issuing Bank]

 

By:     Name: Title:

[THE ROYAL BANK OF SCOTLAND PLC,

as an Energy Hedging Issuing Bank

By:     Name: Title:]

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

EXHIBIT D

FORM OF AUGMENTING LENDER SUPPLEMENT

[LIQUIDITY AUGMENTING LENDER SUPPLEMENT]1 / [ENERGY HEDGING AUGMENTING LENDER
SUPPLEMENT]2, dated                     , 20     (this “Supplement”), to the
Credit Agreement, dated as of February 4, 2013 (as amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”),
among Puget Sound Energy, Inc. (the “Borrower”), the Lenders party thereto and
Wells Fargo Bank, National Association, as administrative agent (in such
capacity, the “Administrative Agent”).

W I T N E S S E T H

WHEREAS, the Credit Agreement provides in [Section 2.21] / [Section 2.22]
thereof that any bank, financial institution or other entity may extend
[Liquidity Aggregate Commitment] / [Energy Hedging Aggregate Commitment] under
the Credit Agreement subject to the approval of the Borrower, the Administrative
Agent[, the Swingline Lender and the Liquidity Issuing Banks] / [and the Energy
Hedging Issuing Banks] by executing and delivering to the Borrower and the
Administrative Agent a supplement to the Credit Agreement in substantially the
form of this Supplement; and

WHEREAS, the undersigned [Liquidity Augmenting Lender] / [Energy Hedging
Augmenting Lender] was not an original party to the Credit Agreement but now
desires to become a party thereto;

NOW, THEREFORE, each of the parties hereto hereby agrees as follows:

1. The undersigned [Liquidity Augmenting Lender] / [Energy Hedging Augmenting
Lender] agrees to be bound by the provisions of the Credit Agreement and agrees
that it shall, on the date of this Supplement, become a Lender for all purposes
of the Credit Agreement to the same extent as if originally a party thereto,
with a [Liquidity Commitment] / [Energy Hedging Commitment] of $[            ].

2. The undersigned [Liquidity Augmenting Lender] / [Energy Hedging Augmenting
Lender] (a) represents and warrants that it is legally authorized to enter into
this Supplement; (b) confirms that it has received a copy of the Credit
Agreement, together with copies of the most recent financial statements
delivered pursuant to Section 5.01 thereof, as applicable, and has reviewed such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Supplement; (c) agrees that it
will, independently and without reliance upon the Administrative 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 decisions in taking or
not taking action under the Credit Agreement or any other instrument or document
furnished pursuant hereto or thereto; (d) appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers and discretion under the Credit Agreement or any other instrument or
document furnished pursuant hereto or thereto as are delegated to the
Administrative Agent by the terms thereof, together with such powers as are
incidental thereto; and (e) agrees that it will be bound by the provisions of
the Credit Agreement and will perform in accordance with its terms all the
obligations which by the terms of the Credit Agreement are required to be
performed by it as a Lender.

 

 

1  Applicable if augmenting lender is being joined pursuant to Section 2.21 of
the Credit Agreement.

2  Applicable if augmenting lender is being joined pursuant to Section 2.22 of
the Credit Agreement.

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

3. The undersigned’s address for notices for the purposes of the Credit
Agreement is as follows:

[            ]

[            ]

[            ]

2. The Borrower hereby represents and warrants that the representations and
warranties of the Borrower set forth in the Credit Agreement are true and
correct in all material respects (other than to the extent qualified by
materiality or “Material Adverse Effect”, in which case, such representations
and warranties shall be true and correct) on and as of the date hereof (or to
the extent that such representations and warranties specifically refer to an
earlier date, as of such earlier date).

3. The Borrower hereby represents and warrants that no Default or Event of
Default has occurred and is continuing on and as of the date hereof.

4. Terms defined in the Credit Agreement shall have their defined meanings when
used herein.

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

6. This Supplement 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 document.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

107

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

IN WITNESS WHEREOF, each of the undersigned has caused this Supplement to be
executed and delivered by a duly authorized officer on the date first above
written.

 

[INSERT NAME OF AUGMENTING LENDER] By:      

Name:   Title:  

Accepted and agreed to as of the date first written above:

 

PUGET SOUND ENERGY, INC. By:    

Name:   Title:  

Acknowledged as of the date first written above:

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Administrative Agent [, as Swingline Lender and as a Liquidity Issuing Bank]
/ [and as an Energy

Hedging Issuing Bank]

 

By:    

Name:   Title:  

 

[THE ROYAL BANK OF SCOTLAND PLC,

as an Energy Hedging Issuing Bank

By:    

Name:   Title:]  

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

EXHIBIT E

LIST OF CLOSING DOCUMENTS

[ATTACHED]

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

EXHIBIT F

FORM OF REVOLVING LOAN NOTE

[LIQUIDITY REVOLVING LOAN NOTE] / [ENERGY HEDGING REVOLVING LOAN NOTE]

 

$____________    [DATE]

FOR VALUE RECEIVED, the undersigned, PUGET SOUND ENERGY, INC., a Washington
corporation (the “Borrower”), HEREBY UNCONDITIONALLY PROMISES TO PAY to the
order of [LENDER NAME] (the “Lender”) the aggregate unpaid principal amount of
all [Liquidity Revolving Loans] / [Energy Hedging Revolving Loans] made by the
Lender to the Borrower pursuant to the “Credit Agreement” (as defined below) on
the Maturity Date or on such earlier date as may be required by the terms of the
Credit Agreement. Capitalized terms used herein and not otherwise defined herein
are as defined in the Credit Agreement.

The undersigned Borrower promises to pay interest on the unpaid principal amount
of each [Liquidity Revolving Loan] / [Energy Hedging Revolving Loan] made to it
from the date of such [Liquidity Revolving Loan] / [Energy Hedging Revolving
Loan] until such principal amount is paid in full at a rate or rates per annum
determined in accordance with the terms of the Credit Agreement. Interest
hereunder is due and payable at such times and on such dates as set forth in the
Credit Agreement.

At the time of each [Liquidity Revolving Loan] / [Energy Hedging Revolving
Loan], and upon each payment or prepayment of principal of each [Liquidity
Revolving Loan] / [Energy Hedging Revolving Loan], the Lender shall make a
notation either on the schedule attached hereto and made a part hereof, or in
such Lender’s own books and records, in each case specifying the amount of such
[Liquidity Revolving Loan] / [Energy Hedging Revolving Loan], the respective
Interest Period thereof (in the case of Eurodollar Loans) or the amount of
principal paid or prepaid with respect to such Revolving Loan, as applicable;
provided that the failure of the Lender to make any such recordation or notation
shall not affect the Obligations of the undersigned Borrower hereunder or under
the Credit Agreement.

This Note is one of the notes referred to in, and is entitled to the benefits
of, that certain Credit Agreement dated as of February 4, 2013 by and among the
Borrower, the financial institutions from time to time parties thereto as
Lenders and Wells Fargo Bank, National Association, as Administrative Agent (as
the same may be amended, restated, supplemented or otherwise modified from time
to time, the “Credit Agreement”). The Credit Agreement, among other things,
(i) provides for the making of [Liquidity Revolving Loans] / [Energy Hedging
Revolving Loans] by the Lender to the undersigned Borrower from time to time in
an aggregate amount not to exceed at any time outstanding such Lender’s
[Liquidity Commitment] / [Energy Hedging Commitment], the indebtedness of the
undersigned Borrower resulting from each such [Liquidity Revolving Loan] /
[Energy Hedging Revolving Loan] to it being evidenced by this Note, and
(ii) contains provisions for acceleration of the maturity hereof upon the
happening of certain stated events and also for prepayments of the principal
hereof prior to the maturity hereof upon the terms and conditions therein
specified.

Demand, presentment, protest and notice of nonpayment and protest are hereby
waived by the Borrower. Whenever in this Note reference is made to the
Administrative Agent, the Lender or the Borrower, such reference shall be deemed
to include, as applicable, a reference to their respective successors and
assigns. The provisions of this Note shall be binding upon and shall inure to
the benefit of said successors and assigns. The Borrower’s successors and
assigns shall include, without limitation, a receiver, trustee or debtor in
possession of or for the Borrower.

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

This Note shall be construed in accordance with and governed by the law of the
State of New York.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

PUGET SOUND ENERGY, INC. By:     Name: Title:

 

Signature Page to Note

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

SCHEDULE OF LOANS AND PAYMENTS OR PREPAYMENTS

 

Date   

Amount of

Loan

  

Interest

Period/Rate

  

Amount of

Principal

Paid or

Prepaid

  

Unpaid

Principal

Balance

  

Notation

Made By

                                                                               
                                                                               
                                                                               
                                                                               
                                                                               
                                                                               
                                                                               
                                                                                
                                                                               
                                                                                
                                                                               
                                                                                
                                                                               
                                                                                
                                                                               
                                                                                
                                                                               
                                      

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EXHIBIT G-1

FORM OF U.S. TAX CERTIFICATE

(For Non-U.S. Lenders That Are Not Partnerships For U.S. federal Income Tax
Purposes)

Reference is hereby made to the Credit Agreement dated as of February 4, 2013
(as amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”), among Puget Sound Energy, Inc. (the “Borrower”), the
Lenders party thereto and Wells Fargo Bank, National Association, as
administrative agent (in such capacity, the “Administrative Agent”).

Pursuant to the provisions of Section 2.18 of the Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record and beneficial owner
of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of
which it is providing this certificate, (ii) it is not a bank within the meaning
of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder
of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, (iv) it
is not a controlled foreign corporation related to the Borrower as described in
Section 881(c)(3)(C) of the Code and (v) the interest payments in question are
not effectively connected with the undersigned’s conduct of a U.S. trade or
business.

The undersigned has furnished the Administrative Agent and the Borrower with a
certificate of its non-U.S. person status on IRS Form W-8BEN. By executing this
certificate, the undersigned agrees that (1) if the information provided on this
certificate changes, the undersigned shall promptly so inform the Borrower and
the Administrative Agent and (2) the undersigned shall have at all times
furnished the Borrower and the Administrative Agent with a properly completed
and currently effective certificate in either the calendar year in which each
payment is to be made to the undersigned, or in either of the two calendar years
preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement.

 

[NAME OF LENDER] By:     Name: Title:

Date:                     , 20[    ]

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EXHIBIT G-2

FORM OF U.S. TAX CERTIFICATE

(For Non-U.S. Lenders That Are Partnerships For U.S. Federal Income Tax
Purposes)

Reference is hereby made to the Credit Agreement dated as of February 4, 2013
(as amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”), among Puget Sound Energy, Inc. (the “Borrower”), the
Lenders party thereto and Wells Fargo Bank, National Association, as
administrative agent (in such capacity, the “Administrative Agent”).

Pursuant to the provisions of Section 2.18 of the Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record owner of the Loan(s)
(as well as any Note(s) evidencing such Loan(s)) in respect of which it is
providing this certificate, (ii) its partners/members are the sole beneficial
owners of such Loan(s) (as well as any Note(s) evidencing such Loan(s)),
(iii) with respect to the extension of credit pursuant to this Credit Agreement,
neither the undersigned nor any of its partners/members is a bank extending
credit pursuant to a loan agreement entered into in the ordinary course of its
trade or business within the meaning of Section 881(c)(3)(A) of the Code,
(iv) none of its partners/members is a ten percent shareholder of the Borrower
within the meaning of Section 871(h)(3)(B) of the Code, (v) none of its
partners/members is a controlled foreign corporation related to the Borrower as
described in Section 881(c)(3)(C) of the Code, and (vi) the interest payments in
question are not effectively connected with the undersigned’s or its
partners/members’ conduct of a U.S. trade or business.

The undersigned has furnished the Administrative Agent and the Borrower with IRS
Form W-8IMY accompanied by an IRS Form W-8BEN from each of its partners/members
claiming the portfolio interest exemption. By executing this certificate, the
undersigned agrees that (1) if the information provided on this certificate
changes, the undersigned shall promptly so inform the Borrower and the
Administrative Agent and (2) the undersigned shall have at all times furnished
the Borrower and the Administrative Agent with a properly completed and
currently effective certificate in either the calendar year in which each
payment is to be made to the undersigned, or in either of the two calendar years
preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement.

 

[NAME OF LENDER] By:     Name: Title:

Date:                     , 20[    ]

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EXHIBIT G-3

FORM OF U.S. TAX CERTIFICATE

(For Non-U.S. Participants That Are Not Partnerships For U.S. Federal Income Tax
Purposes)

Reference is hereby made to the Credit Agreement dated as of February 4, 2013
(as amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”), among Puget Sound Energy, Inc. (the “Borrower”), the
Lenders party thereto and Wells Fargo Bank, National Association, as
administrative agent (in such capacity, the “Administrative Agent”).

Pursuant to the provisions of Section 2.18 of the Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record and beneficial owner
of the participation in respect of which it is providing this certificate,
(ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code,
(iii) it is not a ten percent shareholder of the Borrower within the meaning of
Section 871(h)(3)(B) of the Code, (iv) it is not a controlled foreign
corporation related to the Borrower as described in Section 881(c)(3)(C) of the
Code, and (v) the interest payments in question are not effectively connected
with the undersigned’s conduct of a U.S. trade or business.

The undersigned has furnished its participating Lender with a certificate of its
non- U.S. person status on IRS Form W-8BEN. By executing this certificate, the
undersigned agrees that (1) if the information provided on this certificate
changes, the undersigned shall promptly so inform such Lender in writing and
(2) the undersigned shall have at all times furnished such Lender with a
properly completed and currently effective certificate in either the calendar
year in which each payment is to be made to the undersigned, or in either of the
two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement.

 

[NAME OF PARTICIPANT] By:     Name: Title:

Date:                     , 20[    ]

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EXHIBIT G-4

FORM OF U.S. TAX CERTIFICATE

(For Non-U.S. Participants That Are Partnerships For U.S. federal Income Tax
Purposes)

Reference is hereby made to the Credit Agreement dated as of February 4, 2013
(as amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”), among Puget Sound Energy, Inc. (the “Borrower”), the
Lenders party thereto and Wells Fargo Bank, National Association, as
administrative agent (in such capacity, the “Administrative Agent”).

Pursuant to the provisions of Section 2.18 of the Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record owner of the
participation in respect of which it is providing this certificate, (ii) its
partners/members are the sole beneficial owners of such participation,
(iii) with respect such participation, neither the undersigned nor any of its
partners/members is a bank extending credit pursuant to a loan agreement entered
into in the ordinary course of its trade or business within the meaning of
Section 881(c)(3)(A) of the Code, (iv) none of its partners/members is a ten
percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B)
of the Code, (v) none of its partners/members is a controlled foreign
corporation related to the Borrower as described in Section 881(c)(3)(C) of the
Code, and (vi) the interest payments in question are not effectively connected
with the undersigned’s or its partners/members’ conduct of a U.S. trade or
business.

The undersigned has furnished its participating Lender with IRS Form W-8IMY
accompanied by an IRS Form W-8BEN from each of its partners/members claiming the
portfolio interest exemption. By executing this certificate, the undersigned
agrees that (1) if the information provided on this certificate changes, the
undersigned shall promptly so inform such Lender and (2) the undersigned shall
have at all times furnished such Lender with a properly completed and currently
effective certificate in either the calendar year in which each payment is to be
made to the undersigned, or in either of the two calendar years preceding such
payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement.

 

[NAME OF PARTICIPANT] By:     Name: Title:

Date:                     , 20[    ]

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EXHIBIT H

FORM OF SOLVENCY CERTIFICATE

I, [                            ], the [                            ] of Puget
Sound Energy, Inc., a Washington corporation, (the “Borrower”) with
responsibility for financial matters of the Borrower, hereby certify, in my
capacity as such and not in my individual capacity, on behalf of the Borrower
that I am the [                            ] of the Borrower, that I am familiar
with the properties, businesses, assets, finances and operations of the Borrower
Group and that I am duly authorized to execute this Solvency Certificate on
behalf of the Borrower, which is being delivered pursuant to the Credit
Agreement, dated as of February 4, 2013 (as amended, restated, supplemented
and/or modified and in effect from time to time, the “Credit Agreement”), among
the Borrower, the Lenders party thereto from time to time and Wells Fargo Bank,
National Association, as Administrative Agent. Capitalized terms used herein but
not defined herein shall have the meanings assigned thereto in the Credit
Agreement.

In reaching the conclusions set forth in this Solvency Certificate, I have
carefully reviewed the Financing Documents and the contents of this Solvency
Certificate and, in connection herewith, have taken into consideration all
things necessary or material, and I have made appropriate inquiries and
investigation with responsible officers and employees of the members of the
Borrower Group, in order to make the above and the following certifications.

I hereby further certify that:

l. To the best of my knowledge, on the date hereof, immediately after giving
effect to the consummation of the Permitted Acquisition, the fair value of the
property of the Borrower and its Subsidiaries, taken as a whole, is greater than
the total amount of liabilities (including contingent liabilities) of the
Borrower and its Subsidiaries. With respect to any contingent liabilities, the
amount of contingent liabilities on the date hereof shall be computed as the
amount that, in light of all of the facts and circumstances existing on the date
hereof, represents the amount that can reasonably be expected to become an
actual or matured liability.

2. To the best of my knowledge, on the date hereof, immediately after giving
effect to the consummation of the Permitted Acquisition, the present fair
saleable value of the assets of the Borrower and its Subsidiaries, taken as a
whole, is not less than the amount that will be required to pay the probable
liabilities of the Borrower and its Subsidiaries on their debts as they become
absolute and matured.

3. As of the date hereof, neither the Borrower nor any of its Subsidiaries
intends to incur, nor believes that it will incur, including after giving effect
to the consummation of the Permitted Acquisition, debts or liabilities beyond
the ability of the Borrower and its Subsidiaries, taken as whole, to pay such
debts or liabilities as they mature.

4. To the best of my knowledge, on the date hereof, immediately after giving
effect to the consummation of the Permitted Acquisition, the Borrower and its
Subsidiaries, taken as a whole, is neither engaged in business or in a
transaction, nor about to engage in business or in a transaction, for which the
property of the Borrower and its Subsidiaries, taken as a whole, would
constitute unreasonably small capital.

5. As of the date hereof, after giving effect to the transactions contemplated
by the Permitted Acquisition, the Borrower and the Subsidiaries are in
compliance, on a pro forma basis reasonably acceptable to the Administrative
Agent after giving effect to such Permitted Acquisition (but without giving
effect to any synergies or cost savings), with the covenants contained in
Section 6.09 of the Credit Agreement recomputed as of the last day of the most
recently ended fiscal quarter of the

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Borrower for which financial statements are available, as if such Permitted
Acquisition (and any related incurrence or repayment of Indebtedness, with any
new Indebtedness being deemed to be amortized over the applicable testing period
in accordance with its terms) had occurred on the first day of each relevant
period for testing such compliance.

6. As of the date hereof, no Default or Event of Default shall exist immediately
prior to such Permitted Acquisition or, after giving effect to such Permitted
Acquisition, shall have occurred and be continuing, or would result from the
consummation of the proposed Permitted Acquisition.

[SIGNATURE PAGES FOLLOW]

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Dated:                     , 20[    ]

 

PUGET SOUND ENERGY, INC. By:     Name:   Title:  Chief Financial Officer

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EXHIBIT I

TERMS OF SUBORDINATION

[ATTACHED]