Exhibit 10.1

 

[EXECUTION VERSION]

 

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

 

TXU ENERGY COMPANY LLC

TXU ELECTRIC DELIVERY COMPANY,

as Borrowers

 

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

 

REVOLVING CREDIT AGREEMENT

 

Dated as of August 12, 2005

 

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

 

CITIBANK, N.A.,

as Administrative Agent

 

CITIBANK, N.A.,

JPMORGAN CHASE BANK, N.A.,

CALYON NEW YORK BRANCH,

DEUTSCHE BANK AG NEW YORK BRANCH,

and WACHOVIA BANK, NATIONAL ASSOCIATION,

as Fronting Banks

 

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

 

CITIGROUP GLOBAL MARKETS INC.

Lead Arranger and Sole Bookrunner

 

JPMORGAN CHASE BANK, N.A.

CALYON NEW YORK BRANCH

DEUTSCHE BANK AG NEW YORK BRANCH

and WACHOVIA BANK, NATIONAL ASSOCIATION

Syndication Agents

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

TABLE OF CONTENTS

 

     Page

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

Article I DEFINITIONS; CONSTRUCTION

   1

  SECTION 1.01. Defined Terms.

   1

  SECTION 1.02. Terms Generally.

   17

Article II THE CREDITS

   17

  SECTION 2.01. Commitments.

   17

  SECTION 2.02. Loans.

   18

  SECTION 2.03. Borrowing Procedure.

   19

  SECTION 2.04. Fees.

   19

  SECTION 2.05. Repayment of Loans; Evidence of Indebtedness.

   20

  SECTION 2.06. Interest on Loans.

   21

  SECTION 2.07. Alternate Rate of Interest.

   21

  SECTION 2.08. Termination and Reduction of Commitments.

   22

  SECTION 2.09. Prepayment.

   22

  SECTION 2.10. Reserve Requirements; Change in Circumstances.

   23

  SECTION 2.11. Change in Legality.

   25

  SECTION 2.12. Pro Rata Treatment.

   25

  SECTION 2.13. Sharing of Setoffs.

   26

  SECTION 2.14. Payments.

   26

  SECTION 2.15. Taxes.

   27

  SECTION 2.16. Assignment of Commitments Under Certain Circumstances.

   29

  SECTION 2.17. Letters of Credit.

   30

Article III REPRESENTATIONS AND WARRANTIES

   34

  SECTION 3.01. Organization; Powers.

   34

  SECTION 3.02. Authorization.

   34

  SECTION 3.03. Enforceability.

   34

  SECTION 3.04. Governmental Approvals.

   34

  SECTION 3.05. Financial Statements.

   34

  SECTION 3.06. Litigation.

   35

  SECTION 3.07. Federal Reserve Regulations.

   35

  SECTION 3.08. Investment Company Act; Public Utility Holding Company Act.

   35

  SECTION 3.09. No Material Misstatements.

   36

  SECTION 3.10. Taxes.

   36

  SECTION 3.11. Employee Benefit Plans.

   36

  SECTION 3.12. Significant Subsidiaries.

   36

  SECTION 3.13. Environmental Matters.

   37

  SECTION 3.14. Solvency.

   37

Article IV CONDITIONS

   37

  SECTION 4.01. Initial Extensions of Credit.

   37

  SECTION 4.02. Conditions for All Extensions of Credit.

   39

Article V COVENANTS

   40

  SECTION 5.01. Existence.

   40

  SECTION 5.02. Compliance With Laws; Business and Properties.

   40

 

i

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

  SECTION 5.03. Financial Statements, Reports, Etc.

   40

  SECTION 5.04. Insurance.

   42

  SECTION 5.05. Taxes, Etc.

   42

  SECTION 5.06. Maintaining Records; Access to Properties and Inspections.

   42

  SECTION 5.07. ERISA.

   42

  SECTION 5.08. Use of Proceeds.

   42

  SECTION 5.09. Consolidations, Mergers, Sales and Acquisitions of Assets and
Investments in Subsidiaries.

   42

  SECTION 5.10. Limitations on Liens.

   43

  SECTION 5.11. Fixed Charge Coverage Ratio.

   46

  SECTION 5.12. Debt to Total Capitalization Ratio.

   46

  SECTION 5.13. Restrictive Agreements.

   46

Article VI EVENTS OF DEFAULT

   46

Article VII THE AGENT

   49

Article VIII MISCELLANEOUS

   52

  SECTION 8.01. Notices.

   52

  SECTION 8.02. Survival of Agreement.

   52

  SECTION 8.03. Binding Effect.

   52

  SECTION 8.04. Successors and Assigns.

   53

  SECTION 8.05. Expenses; Indemnity.

   55

  SECTION 8.06. Right of Setoff.

   57

  SECTION 8.07. Applicable Law.

   58

  SECTION 8.08. Waivers; Amendment.

   58

  SECTION 8.09. Entire Agreement.

   59

  SECTION 8.10. Severability.

   59

  SECTION 8.11. Counterparts.

   59

  SECTION 8.12. Headings.

   59

  SECTION 8.13. Interest Rate Limitation.

   59

  SECTION 8.14. Jurisdiction; Venue.

   60

  SECTION 8.15. Confidentiality.

   60

 

ii

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

EXHIBITS AND SCHEDULES

 

Exhibit A

  -   Form of Assignment and Acceptance

Exhibit B

  -   Form of Borrowing Request

Exhibit C

  -   Form of Request for Issuance

Exhibit D

  -   Form of Prepayment Notice

Schedule 2.01

  -   Commitments

Schedule 2.17(i)

  -   Fronting Bank LC Limits

Schedule 5.13

  -   Restrictive Agreements

 

iii

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

REVOLVING CREDIT AGREEMENT (this “Agreement”), dated as of August 12, 2005,
among TXU Energy Company LLC, a Delaware limited liability company (“Energy”),
TXU Electric Delivery Company, a Texas corporation (“Delivery” and, together
with Energy, the “Borrowers”, and each individually, a “Borrower”), the lenders
listed in Schedule 2.01 (together with their successors and assigns, the
“Lenders”), Citibank, N.A. (“Citibank”), as administrative agent for the Lenders
(in such capacity, the “Agent”) and as a fronting bank for letters of credit
issued hereunder, and JPMorgan Chase Bank, N.A., Calyon New York Branch,
Deutsche Bank AG New York Branch and Wachovia Bank, National Association, as
fronting banks for letters of credit issued hereunder.

 

WITTNESETH:

 

WHEREAS, the Borrowers have requested that the Lenders and the Fronting Banks
provide the revolving credit and letter of credit facilities hereinafter
described in the amounts and on the terms and conditions set forth herein; and

 

WHEREAS, the Lenders and the Fronting Banks have agreed to provide such
facilities on the terms and conditions set forth herein, and Citibank has agreed
to act as Agent on behalf of the Lenders and the Fronting Banks on such terms
and conditions.

 

NOW, THEREFORE, the parties hereto agree as follows:

 

ARTICLE I

DEFINITIONS; CONSTRUCTION

 

SECTION 1.01. Defined Terms.

 

As used in this Agreement, the following terms shall have the meanings specified
below:

 

“ABR Borrowing” shall mean a Borrowing comprised of ABR Loans.

 

“ABR Loan” shall mean any Loan bearing interest at a rate determined by
reference to the Alternate Base Rate in accordance with the provisions of
Article II or any Eurodollar Loan converted (pursuant to Section 2.03, 2.07 or
2.11(a)(ii)) to a loan bearing interest at a rate determined by reference to the
Alternate Base Rate.

 

“Acquisition Date” shall mean the date as of which a person or group of related
persons first acquires more than 30% of any outstanding class of Voting Shares
of TXU (within the meaning of Section 13(d) or 14(d) of the Exchange Act, and
the applicable rules and regulations thereunder).

 

“Administrative Fees” shall have the meaning assigned to such term in Section
2.04(c).

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

“Affiliate” shall mean, when used with respect to a specified person, another
person that directly or indirectly controls or is controlled by or is under
common control with the person specified.

 

“Agent” shall have the meaning given such term in the preamble hereto.

 

“Agreement” shall have the meaning given such term in the preamble hereto.

 

“Alternate Base Rate” shall mean, for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the greater of (i) the
Federal Funds Effective Rate in effect on such day plus 1/2 of 1% and (ii) the
Prime Rate in effect on such day. For purposes hereof, “Prime Rate” shall mean
the rate of interest per annum publicly announced from time to time by Citibank
as its prime rate in effect at its principal office in New York City; each
change in the Prime Rate shall be effective on the date such change is publicly
announced as effective; and “Federal Funds Effective Rate” shall mean, for any
day, the weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds brokers, as
released on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so released for any day which is a Business Day,
the arithmetic average (rounded upwards to the next 1/100th of 1%), as
determined by Citibank, of the quotations for the day of such transactions
received by Citibank from three Federal funds brokers of recognized standing
selected by it. If for any reason Citibank shall have determined (which
determination shall be conclusive absent manifest error; provided that Citibank
shall, upon request, provide to the applicable Borrower a certificate setting
forth in reasonable detail the basis for such determination) that it is unable
to ascertain the Federal Funds Effective Rate for any reason, including the
inability of Citibank to obtain sufficient quotations in accordance with the
terms thereof, the Alternate Base Rate shall be determined without regard to
clause (i) of the first sentence of this definition until the circumstances
giving rise to such inability no longer exist. Any change in the Alternate Base
Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall
be effective on the effective date of such change in the Prime Rate or the
Federal Funds Effective Rate, respectively.

 

“Applicable Margin” shall mean, for any Type of Loan made to any Borrower at any
time, the percentage per annum set forth below corresponding to such Type of
Loan in the column under the Applicable Rating Level of such Borrower at such
time. The Applicable Margins set forth below with respect to each Applicable
Rating Level shall be increased by the percentage set forth below in the row
designated “Utilization Fee” during any period (and for only such period) in
which Outstanding Credits are at least 50% of the aggregate amount of the
Commitments available. At any time an Event of Default has occurred and is
continuing with respect to any Borrower, the Applicable Margins set forth below
for such Borrower shall be increased for each Applicable Rating Level by 2.00%.

 

Applicable

Rating Level

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

   1

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

    2

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

    3

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

    4

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

    5

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

 

Percentage Per Annum

                              

Eurodollar Loan

   0.275 %   0.350 %   0.425 %   0.575 %   0.800 %

ABR Loan

   0 %   0 %   0 %   0 %   0 %

Utilization Fee

   0.125 %   0.125 %   0.125 %   0.125 %   0.125 %

 

2

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

“Applicable Rating Level” shall mean, for any Borrower at any time, the level
set forth below in the row next to the then applicable Debt Ratings of such
Borrower. If there is a difference of one level in the Debt Ratings of such
Borrower, then the higher Debt Rating shall be used for purposes of determining
the Applicable Rating Level for such Borrower, and if there is a difference of
more than one level in the Debt Ratings for such Borrower, then the Debt Rating
one level higher than the lower Debt Rating will be used for purposes of
determining the Applicable Rating Level of such Borrower. Any change in the
Applicable Rating Level of any Borrower shall be effective on the date on which
the applicable rating agency announces any change in the applicable Debt Rating
of such Borrower.

 

S&P Debt Rating Moody’s Debt Rating

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

 

Applicable Rating Level

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

A - or better

A3 or better

  1

BBB+

Baa1

  2

BBB

Baa2

  3

BBB-

Baa3

  4

Below BBB-*

Below Baa3*

  5

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

* or unrated

 

“Assignment and Acceptance” shall mean an assignment and acceptance entered into
by a Lender and an assignee in the form of Exhibit A.

 

“Available Commitment” shall mean, for each Lender, the excess of such Lender’s
Commitment over such Lender’s Outstanding Credits. “Available Commitments” shall
refer to the aggregate of the Lenders’ Available Commitments.

 

“Board” shall mean the Board of Governors of the Federal Reserve System of the
United States.

 

“Borrower” and “Borrowers” each shall have the meaning given such term in the
preamble hereto.

 

3

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

“Borrower Information” shall have the meaning given to such term in Section
3.05(b).

 

“Borrowing” shall mean a group of Loans of a single Type made by the Lenders on
a single date and as to which a single Interest Period is in effect.

 

“Borrowing Request” shall mean a request made pursuant to Section 2.03 in the
form of Exhibit B.

 

“Business Day” shall mean any day (other than a day that is a Saturday, Sunday
or legal holiday in the State of New York) on which banks are open for business
in New York City; provided, however, 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 dollar deposits in the London interbank
market.

 

“Cash Collateral Account” shall have the meaning assigned to such term in
Article VI.

 

a “Change in Control” shall be deemed to have occurred if (i) any person or
“group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act, as
amended) shall acquire beneficial ownership of more than 30% of any outstanding
class of Voting Shares of TXU unless such acquisition shall have been approved
prior to the applicable Acquisition Date by a majority of Disinterested
Directors of TXU or (ii) during any period of 12 consecutive months, a majority
of the members of the board of directors of TXU cease to be composed of
individuals (A) who were members of board of directors of TXU on the first day
of such period, (B) whose election or nomination to the board of directors of
TXU was approved by individuals referred to in clause (i) above constituting at
the time of such election or nomination at least a majority of the board of
directors of TXU or (C) whose election or nomination to the board of directors
of TXU was approved by individuals referred to in clauses (i) and (ii) above
constituting at the time of such election or nomination at least a majority of
the board of directors of TXU.

 

“Citibank” shall have the meaning given such term in the preamble hereto.

 

“Code” shall mean the Internal Revenue Code of 1986, as the same may be amended
from time to time.

 

“Commission” shall mean the Public Utility Commission of the State of Texas.

 

“Commitment” shall mean, with respect to any Lender, the commitment of such
Lender set forth in Schedule 2.01 hereto to make Loans and to purchase
participations in Letters of Credit, as such Commitment may be permanently
terminated or reduced from time to time pursuant to Section 2.08 or modified
from time to time pursuant to Section 8.04. The Commitment of each Lender shall
automatically and permanently terminate on the Commitment Termination Date if
not terminated earlier pursuant to the terms hereof. “Commitments” shall mean
the aggregate of the Lenders’ Commitments.

 

“Commitment Termination Date” shall mean August 12, 2008.

 

4

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

“Consolidated Earnings Available for Fixed Charges” shall mean, for any Borrower
for any twelve-month period, (i) consolidated net income, calculated after
deducting preferred stock dividends and preferred securities distributions of
Subsidiaries of such Borrower, but before any extraordinary items and before the
effect in such twelve-month period of any change in GAAP becoming effective
after December 31, 2004 less (ii) allowances for equity funds used during
construction to the extent that such allowances, taken as a whole, increased
such consolidated net income, plus (iii) provisions for Federal income taxes, to
the extent that such provisions, taken as a whole, decreased such consolidated
net income, plus (iv) Consolidated Fixed Charges, less (v) revenues arising from
competitive transition charges, plus (vi) depreciation and amortization, all
determined for such twelve-month period with respect to such Borrower and its
Consolidated Subsidiaries on a consolidated basis; provided, however, that in
computing Consolidated Earnings Available for Fixed Charges for any twelve-month
period, the following shall be added to the extent that the following decreased
consolidated net income: (A) any non-cash book losses or charges, (B) any cash
charges, in an amount of up to $500,000,000 (calculated on an aggregate basis
throughout the term of this Agreement), as a result of (1) rulings by federal or
state regulatory bodies having jurisdiction over such Borrower or its
Consolidated Subsidiaries, (2) the early retirement, repurchase or termination
of debt or other securities or financing arrangements, including premiums,
relating to liability management activities and (3) initiatives implemented
pursuant to the performance improvement programs of TXU and its Subsidiaries as
described by TXU in the Spring of 2004, including, but not limited to, severance
costs, plant or mine closings, asset dispositions, restructuring charges and
transaction costs and (C) any losses incurred in connection with Preferred
Membership Interest Repurchases.

 

“Consolidated Fixed Charges” shall mean, for any Borrower for any twelve-month
period, the sum (without duplication) of (i) interest expense (excluding any
such expense (A) in respect of the amortization of debt discount relating to the
Preferred Membership Interests, (B) incurred in connection with Preferred
Membership Interest Repurchases, (C) in respect of Qualified Transition Bonds
(including interest rate swaps entered into by any Qualified Transition Bond
Issuer in connection with Qualified Transition Bonds issued by such Qualified
Transition Bond Issuer), (D) in the case of Delivery, in respect of
generation-related regulatory assets to the extent reimbursed by Energy and (E)
incurred in connection with any charges, write-offs or premiums resulting from
the early retirement of debt relating to liability management activities, in
each case to the extent included in the calculation of interest expense) and
(ii) preferred stock dividends and preferred securities distributions (excluding
any such dividends or distributions incurred in connection with Preferred
Membership Interest Repurchases), all determined for such twelve-month period
with respect to such Borrower and its Consolidated Subsidiaries on a
consolidated basis.

 

“Consolidated Senior Debt” shall mean, for any Borrower, the Senior Debt of such
Borrower and its Consolidated Subsidiaries determined on a consolidated basis,
excluding, however, in the case of Energy, up to $400,000,000 in the aggregate
at any time of determination of such Senior Debt described in clause (iii) of
the definition of “Senior Debt”.

 

5

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

“Consolidated Shareholders’ Equity” shall mean, for each Borrower, the sum
(without duplication) of (i) total common stock or common members’ interest plus
(ii) preferred and preference stock or preferred members’ interest not subject
to mandatory redemption, each (in the case of clauses (i) and (ii)) determined
with respect to such Borrower and its Consolidated Subsidiaries on a
consolidated basis, plus (iii) Equity-Credit Preferred Securities in an
aggregate liquidation preference amount not in excess of (A) $1,000,000,000, in
the case of Energy, and (B) $850,000,000, in the case of Delivery, plus (iv)
Preferred Membership Interests; provided, however, that in computing
Consolidated Shareholders’ Equity at any time, the following shall be added to
the extent that the following decreased total common stock or common members’
interest: (1) any cash and non-cash charges, in an amount of up to $750,000,000
(calculated on an aggregate basis throughout the term of this Agreement), as a
result of (x) rulings by federal or state regulatory bodies having jurisdiction
over such Borrower or its Consolidated Subsidiaries, (y) the early retirement,
repurchase or termination of debt or other securities or financing arrangements,
including premiums, relating to liability management activities and (z)
initiatives implemented pursuant to the performance improvement programs of TXU
and its Subsidiaries as described by TXU in Spring 2004, including, but not
limited to, severance costs, plant or mine closings, asset dispositions,
restructuring charges and transaction costs and (2) any losses incurred in
connection with Preferred Membership Interest Repurchases.

 

“Consolidated Subsidiary” of any person shall mean at any date any Subsidiary or
other entity the accounts of which would be consolidated with those of such
person in such person’s consolidated financial statements as of such date.

 

“Consolidated Total Capitalization” of any Borrower shall mean the sum of (i)
Consolidated Shareholders’ Equity of such Borrower and (ii) Consolidated Senior
Debt of such Borrower.

 

“Controlled Group” shall mean all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with either Borrower, are treated as a single employer under
Section 414(b) or 414(c) of the Code.

 

“Debt Ratings” shall mean, with respect to any Borrower, the ratings (whether
explicit or implied) assigned by S&P and Moody’s to the senior unsecured
non-credit enhanced long term debt of such Borrower.

 

“Default” shall mean any event or condition, which upon notice, lapse of time or
both would constitute an Event of Default.

 

“Delivery” shall have the meaning set forth in the preamble hereto.

 

“Delivery Mortgage” shall mean the Mortgage and Deed of Trust, dated as of
December 1, 1983, from TXU Electric Company to Irving Trust Company (now The
Bank of New York), Trustee, as amended and supplemented from time to time and as
assumed by Delivery.

 

6

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

“Disinterested Director” shall mean any member of the board of directors of TXU
who is not affiliated, directly or indirectly, with, or appointed by, a person
or group of related persons (other than TXU, any Subsidiary of TXU, or any
pension, savings or other employee benefit plan for the benefit of employees of
TXU and/or any Subsidiary of TXU) acquiring the beneficial ownership of more
than 30% of the outstanding Voting Shares of TXU (within the meaning of Section
13(d) or 14(d) of the Exchange Act, and the applicable rules and regulations
thereunder) and who either was a member of the board of directors of TXU prior
to the Acquisition Date or was recommended for election by a majority of the
Disinterested Directors in office prior to the Acquisition Date.

 

“dollars” or “$” shall mean lawful money of the United States of America.

 

“Energy” shall have the meaning set forth in the preamble hereto.

 

“Equity-Credit Preferred Securities” shall mean securities, however denominated,
(i) issued by any Borrower or a Consolidated Subsidiary of any Borrower, (ii)
that are not subject to mandatory redemption or the underlying securities, if
any, of which are not subject to mandatory redemption, (iii) that are perpetual
or mature no less than 30 years from the date of issuance, (iv) the indebtedness
issued in connection with which, including any guaranty, is subordinate in right
of payment to the unsecured and unsubordinated indebtedness of the issuer of
such indebtedness or guaranty, and (v) the terms of which permit the deferral of
the payment of interest or distributions thereon to a date occurring after the
Commitment Termination Date.

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as the
same may be amended from time to time.

 

“ERISA Affiliate” shall mean any trade or business (whether or not incorporated)
that is a member of a group of (i) organizations described in Section 414(b) or
(c) of the Code and (ii) solely for purposes of the Lien created under Section
412(n) of the Code, organizations described in Section 414(m) or (o) of the Code
of which the applicable Borrower is a member.

 

“ERISA Event” shall mean (i) any Reportable Event; (ii) the adoption of any
amendment to a Plan that would require the provision of security pursuant to
Section 401(a)(29) of the Code or Section 307 of ERISA; (iii) the incurrence of
any liability under Title IV of ERISA with respect to the termination of any
Plan or the withdrawal or partial withdrawal of any Borrower or any of its ERISA
Affiliates from any Plan or Multiemployer Plan; (iv) the receipt by any Borrower
or any ERISA Affiliate from the PBGC of any notice relating to the intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan; (v)
the receipt by any Borrower or any ERISA Affiliate of any notice concerning the
imposition of Withdrawal Liability or a determination that a Multiemployer Plan
is, or is expected to be, insolvent or in reorganization, within the meaning of
Title IV of ERISA; (vi) the occurrence of a nonexempt “prohibited transaction”
as defined in Section 4975(c) of the Code or Section 406 of ERISA with respect
to which any Borrower or any of its Subsidiaries is liable; and (vii) any other
similar event or condition with respect to a Plan or Multiemployer Plan that
could result in liability of any Borrower other than a liability to pay premiums
or benefits when due.

 

7

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

“Eurodollar Borrowing” shall mean a Borrowing comprised of Eurodollar Loans.

 

“Eurodollar Loan” shall mean any Loan bearing interest at a rate determined by
reference to the LIBO Rate in accordance with the provisions of Article II.

 

“Event of Default” shall have the meaning assigned to such term in Article VI.

 

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

“Extension of Credit” shall mean (i) the making of a Loan or (ii) the issuance
of a Letter of Credit or the amendment of any Letter of Credit having the effect
of extending the stated termination date thereof or increasing the maximum
amount available to be drawn thereunder.

 

“Facility Fee” shall have the meaning assigned to such term in Section 2.04(a).

 

“Facility Fee Percentage” shall mean, at any time, the percentage per annum set
forth below in the column under the Applicable Rating Level of the Borrower with
the lower Applicable Rating Level at such time.

 

Applicable Rating Level

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

   1

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

    2

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

    3

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

    4

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

    5

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

 

Percentage Per annum

                              

Facility Fee

   0.100 %   0.125 %   0.150 %   0.175 %   0.200 %

 

“Federal Funds Effective Rate” shall have the meaning set forth in the
definition of “Alternate Base Rate”.

 

“Fees” shall mean the Facility Fee, the Administrative Fees, the Fronting Fee,
the LC Fee and any other fees provided for in the Letter Agreements.

 

“Financial Officer” of any corporation or limited liability company shall mean
the chief financial officer, principal accounting officer, treasurer, associate
or assistant treasurer, or any responsible officer designated by one of the
foregoing persons, of such corporation or limited liability company.

 

“First Mortgage” shall mean (i) the Delivery Mortgage, (ii) any mortgage and
deed of trust entered into by Delivery in order to refund or replace, or in
substitution for, the Delivery Mortgage, and (iii) if and for so long as any
first mortgage bonds are issued and outstanding under the Delivery Mortgage, any
other indenture or instrument of Delivery pursuant to which Delivery issues debt
securities secured directly or indirectly by (A) the Lien created by the
Delivery Mortgage and/or (B) any property of Delivery.

 

8

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

“Fronting Banks” shall mean (i) Citibank, JPMorgan Chase Bank, N.A., Calyon New
York Branch, Deutsche Bank AG New York Branch and Wachovia Bank, National
Association and (ii) any Affiliate of any person listed in clause (i) and (iii)
any other Lender or Affiliate of any Lender, in each case, having a long-term
credit rating acceptable to the Borrowers (and, in the case of any such
Affiliate, being otherwise reasonably acceptable to the Borrowers) that delivers
an instrument in form and substance satisfactory to the Borrowers and the Agent
whereby such other Lender or Affiliate agrees to act as a “Fronting Bank”
hereunder and states the amount of its LC Fronting Bank Commitment.

 

“Fronting Fee” shall have the meaning assigned to such term in Section 2.04(d).

 

“GAAP” shall mean generally accepted accounting principles, applied on a
consistent basis.

 

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

 

“Holdings” shall mean TXU US Holdings Company, a Texas corporation, and its
successors.

 

“Indebtedness” of any person shall mean (without duplication) all liabilities,
obligations and indebtedness (whether contingent or otherwise) of such person
(i) for borrowed money or evidenced by bonds, indentures, notes or other similar
instruments, (ii) to pay the deferred purchase price of property or services,
(iii) as lessee under leases that are recorded as capital leases, (iv) under
reimbursement agreements or similar agreements with respect to the issuance of
letters of credit (other than obligations in respect of letters of credit opened
to provide for the payment of goods or services purchased in the ordinary course
of business), (v) in respect of Indebtedness of others secured by (or for which
the holder of such Indebtedness has an existing right, contingent or otherwise,
to be secured by) a mortgage, lien, pledge, charge or other encumbrance on any
asset of such person (with the Indebtedness of such person described in this
clause (v) to be valued at the book value, net of accumulated depreciation, of
such asset of such person securing such Indebtedness of others), (vi) all net
payment obligations of such person in respect of interest rate swap agreements,
currency swap agreements and other similar agreements designed to hedge against
fluctuations in interest rates or foreign exchange rates and (vii) under direct
or indirect guaranties in respect of, and to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, liabilities,
obligations or indebtedness of others of the kinds referred to in clauses (i)
through (vi) above; provided, however, that for all purposes, the following
shall be excluded from the definition of “Indebtedness”: (A) Qualified
Transition Bonds (including, with respect to any Borrower, interest rate swaps
entered into by any Qualified Transition Bond Issuer of such Borrower in
connection with Qualified Transition Bonds issued by such Qualified Transition
Bond Issuer), (B) amounts payable from one Borrower to the other in connection
with nuclear decommissioning costs, retail clawback or other regulatory
transition issues and (C) any Indebtedness defeased by such person or by any
Subsidiary of such person.

 

9

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

“Interest Payment Date” shall mean, with respect to any Loan, the last day of
the Interest Period applicable thereto and, in the case of a Eurodollar Loan
with an Interest Period of more than three months’ duration, each day that would
have been an Interest Payment Date for such Loan had successive Interest Periods
of three months’ duration or 90 days’ duration, as the case may be, been
applicable to such Loan and, in addition, the date of any prepayment of such
Loan or conversion of such Loan to a Loan of a different Type.

 

“Interest Period” shall mean (i) as to any Eurodollar Borrowing, the period
commencing on the date of such Borrowing and ending on the numerically
corresponding day (or, if there is no numerically corresponding day, on the last
day) in the calendar month that is 1, 2, 3 or 6 months thereafter; provided
that, in the case of any Eurodollar Borrowing made during the 30-day period
ending on the Commitment Termination Date, such period may end on the seventh or
fourteenth day thereafter, as the relevant Borrower may elect and (ii) as to any
ABR Borrowing, the period commencing on the date of such Borrowing and ending on
the earliest of (A) the next succeeding March 31, June 30, September 30 or
December 31, (B) the Commitment Termination Date, and (C) the date such
Borrowing is repaid or prepaid in accordance with Section 2.05, Section 2.08(d)
or Section 2.09; provided, however, that 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 Eurodollar Loans 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. Interest
shall accrue from and including the first day of an Interest Period to but
excluding the last day of such Interest Period.

 

“LC Fee” shall have the meaning assigned to such term in Section 2.04(d).

 

“LC Fronting Bank Commitment” shall mean, with respect to any Fronting Bank, the
aggregate stated amount of all Letters of Credit that such Fronting Bank agrees
to issue, as modified from time to time pursuant to agreement among such
Fronting Bank, the Borrowers and the Agent. With respect to each person that is
a Fronting Bank on the date hereof, such Fronting Bank’s LC Fronting Bank
Commitment shall equal such Fronting Bank’s “LC Fronting Bank Commitment” listed
on Schedule 2.17(i) and, with respect to any person that becomes a Fronting Bank
after the date hereof, such person’s LC Fronting Bank Commitment shall equal the
amount agreed upon between the Borrower and such person at the time such person
becomes a Fronting Bank.

 

“LC Outstandings” shall mean, on any date of determination, the sum of (i) the
undrawn stated amounts of all Letters of Credit that are outstanding on such
date and (ii) the aggregate principal amount of all unpaid reimbursement
obligations of the Borrowers on such date with respect to payments made by the
Fronting Banks under Letters of Credit (excluding reimbursement obligations that
have been repaid with the proceeds of any Loan). A Lender’s “LC Outstandings”
shall mean such Lender’s participation interest in undrawn Letters of Credit and
its Percentage of all unpaid reimbursement obligations in respect of the Letters
of Credit.

 

10

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

“LC Payment Notice” shall have the meaning assigned to such term in Section
2.17(d).

 

“Lenders” shall have the meaning given such term in the preamble hereto.

 

“Letter Agreements” shall mean (i) the Commitment Letter, dated June 15, 2005,
among Energy, Citigroup Global Markets Inc. and Citibank and (ii) the Fee
Letter, dated June 15, 2005, among Energy, Citigroup Global Markets Inc. and
Citibank, each as amended, modified or supplemented from time to time.

 

“Letter of Credit” shall mean a letter of credit that is issued by a Fronting
Bank pursuant to a Request for Issuance, as such letter of credit may from time
to time be amended, modified or extended in accordance with the terms of this
Agreement.

 

“LIBO Rate” shall mean, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Page 3750 of the Telerate Service (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 Citibank from
time to time for purposes of providing quotations of interest rates applicable
to dollar deposits in the London interbank market) at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such Interest Period
as the rate for dollar deposits with a maturity comparable to such Interest
Period. In the event that such rate is not 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 dollar deposits of $5,000,000 and for
a maturity comparable to such Interest Period are offered by the principal
London office of Citibank in immediately available funds in the London interbank
market at approximately 11:00 a.m. London time, two Business Days prior to the
commencement of such Interest Period.

 

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

 

“Loan” shall mean a revolving loan made pursuant to Section 2.02, whether made
as a Eurodollar Loan or as an ABR Loan.

 

“Margin Regulations” shall mean Regulations T, U and X of the Board as from time
to time in effect, and all official rulings and interpretations thereunder or
thereof.

 

“Margin Stock” shall have the meaning given such term under Regulation U of the
Board.

 

“Material Adverse Change” shall mean, with respect to any Borrower, a materially
adverse change in the business, assets, operations or financial condition of
such Borrower and its Subsidiaries taken as a whole that makes such Borrower
unable to perform any of its obligations under this Agreement or that impairs
the rights of, or benefits available to, the Lenders or any Fronting Bank under
this Agreement.

 

11

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

“Moody’s” shall mean Moody’s Investors Service, Inc.

 

“Multiemployer Plan” shall mean a multiemployer plan as defined in Section
4001(a)(3) of ERISA to which any Borrower or any ERISA Affiliate is making, or
accruing an obligation to make, contributions, or has within any of the
preceding five plan years made, or accrued an obligation to make, contributions.

 

“Operating Agreements” shall mean (i) the Operating Agreement, dated April 28,
1978, as amended by the Modification of Operating Agreement, dated April 20,
1979, among TXU Mining and Holdings (formerly TXU Electric Company, successor to
Dallas Power & Light Company, Texas Electric Service Company and Texas Power &
Light Company) and Energy, TXU Energy Retail Company LP and TXU Generation
Company LP (pursuant to the Assumption Agreement, dated December 31, 2001, by
and among Holdings, Energy, TXU Energy Retail Company LP and TXU Generation
Company LP) (“TXU Mining Operating Agreement”), and as it may be amended from
time to time, or (ii) the Operating Agreement, dated December 15, 1976, between
TXU Fuel and Dallas Power & Light Company, Texas Electric Service Company and
Texas Power & Light Company (“TXU Fuel Operating Agreement”), as it may be
amended from time to time; provided that no amendment of the TXU Mining
Operating Agreement or the TXU Fuel Operating Agreement shall increase the scope
of any Lien permitted under Section 5.10(j).

 

“Outstanding Credits” of any Lender shall mean, on any date of determination, an
amount equal to (i) the aggregate principal amount of all outstanding Loans made
by such Lender plus (ii) such Lender’s LC Outstandings on such date.

 

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

 

“Percentage” shall mean, for any Lender on any date of determination, the
percentage obtained by dividing such Lender’s Commitment on such date by the
Total Commitment on such date.

 

“Permitted Encumbrances” shall mean, as to any person at any date, any of the
following:

 

(a) (i) Liens for taxes, assessments or governmental charges not then delinquent
and Liens for workers’ compensation awards and similar obligations not then
delinquent and undetermined Liens or charges incidental to construction, Liens
for taxes, assessments or governmental charges then delinquent but the validity
of which is being contested at the time by such person in good faith against
which an adequate reserve has been established, with respect to which levy and
execution thereon have been stayed and continue to be stayed and that do not
impair the use of the property or the operation of such person’s business, (ii)
Liens incurred or created in connection with or to secure the performance of
bids, tenders, contracts (other than for the payment of money), leases,

 

12

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

statutory obligations, surety bonds or appeal bonds, and mechanics’ or
materialmen’s Liens, assessments or similar encumbrances, the existence of which
does not impair the use of the property subject thereto for the purposes for
which it was acquired, and other Liens of like nature incurred or created in the
ordinary course of business;

 

(b) Liens securing indebtedness, neither assumed nor guaranteed by such person
nor on which it customarily pays interest, existing upon real estate or rights
in or relating to real estate acquired by such person for any substation,
transmission line, transportation line, distribution line, right of way or
similar purpose;

 

(c) rights reserved to or vested in any municipality or public authority by the
terms of any right, power, franchise, grant, license or permit, or by any
provision of law, to terminate such right, power, franchise, grant, license or
permit or to purchase or recapture or to designate a purchaser of any of the
property of such person;

 

(d) rights reserved to or vested in others to take or receive any part of the
power, gas, oil, coal, lignite or other minerals or timber generated, developed,
manufactured or produced by, or grown on, or acquired with, any property of such
person and Liens upon the production from property of power, gas, oil, coal,
lignite or other minerals or timber, and the by-products and proceeds thereof,
to secure the obligations to pay all or a part of the expenses of exploration,
drilling, mining or development of such property only out of such production or
proceeds;

 

(e) easements, restrictions, exceptions or reservations in any property and/or
rights of way of such person for the purpose of roads, pipe lines, substations,
transmission lines, transportation lines, distribution lines, removal of oil,
gas, lignite, coal or other minerals or timber, and other like purposes, or for
the joint or common use of real property, rights of way, facilities and/or
equipment, and defects, irregularities and deficiencies in titles of any
property and/or rights of way, which do not materially impair the use of such
property and/or rights of way for the purposes for which such property and/or
rights of way are held by such person;

 

(f) rights reserved to or vested in any municipality or public authority to use,
control or regulate any property of such person;

 

(g) any obligations or duties, affecting the property of such person, to any
municipality or public authority with respect to any franchise, grant, license
or permit;

 

(h) as of any particular time any controls, Liens, restrictions, regulations,
easements, exceptions or reservations of any municipality or public authority
applying particularly to space satellites or nuclear fuel;

 

(i) any judgment Lien against such person securing a judgment for an amount not
exceeding 25% of Consolidated Shareholders’ Equity of such person, so long as
the finality of such judgment is being contested by appropriate proceedings
conducted in good faith and execution thereon is stayed;

 

13

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

(j) any Lien arising by reason of deposits with or giving of any form of
security to any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, for
any purpose at any time as required by law or governmental regulation as a
condition to the transaction of any business or the exercise of any privilege or
license, or to enable such person to maintain self-insurance or to participate
in any fund for liability on any insurance risks or in connection with workers’
compensation, unemployment insurance, old age pensions or other social security
or to share in the privileges or benefits required for companies participating
in such arrangements; or

 

(k) any landlords’ Lien on fixtures or movable property located on premises
leased by such person in the ordinary course of business so long as the rent
secured thereby is not in default.

 

“person” shall mean any natural person, corporation, business trust, joint
venture, association, company, limited liability company, partnership or
government, or any agency or political subdivision thereof.

 

“Plan” shall mean any employee pension benefit plan described under Section 3(2)
of ERISA (other than a Multiemployer Plan) subject to the provisions of Title IV
of ERISA that is maintained by any Borrower or any ERISA Affiliate.

 

“Preferred Membership Interest Repurchases” shall mean the repurchase by TXU of
Preferred Membership Interests and any subsequent purchase or purchases of
Preferred Membership Interests by any affiliate of TXU.

 

“Preferred Membership Interests” shall mean the $750,000,000 aggregate
liquidation preference amount of exchangeable preferred membership interests in
Energy.

 

“Prepayment Notice” shall have the meaning given such term in Section 2.09(a).

 

“Qualified Transition Bond Issuer” shall mean, with respect to any Borrower, (i)
TXU Electric Delivery Transition Bond Company LLC (formerly known as Oncor
Electric Delivery Transition Bond Company LLC), (ii) such Borrower, (iii) a
Subsidiary of such Borrower formed and operating solely for the purpose of (A)
purchasing and owning transition property created under a “financing order” (as
such term is defined in the Texas Utilities Code) issued by the Commission, (B)
issuing such securities pursuant to such order, (C) pledging its interests in
such transition property to secure such securities and (D) engaging in
activities ancillary to those described in (A), (B) and (C) or (iv) any directly
or indirectly held Subsidiary of such Borrower formed and operating for purposes
that include owning TXU Electric Delivery Transition Bond Company LLC.

 

“Qualified Transition Bonds” of any Borrower shall mean securities, however
denominated, that are (i) issued by a Qualified Transition Bond Issuer of such
Borrower, (ii) secured by or otherwise payable from transition charges
authorized pursuant to the financing order referred to in clause (iii)(A) of the
definition of “Qualified Transition Bond Issuer”, and (iii) non-recourse to such
Borrower or any of its Consolidated Subsidiaries (other than the issuer of such
securities).

 

14

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

“Register” shall have the meaning given such term in Section 8.04(d).

 

“Reportable Event” shall mean any reportable event as defined in Sections
4043(c)(1)-(8) of ERISA or the regulations issued thereunder (other than a
reportable event for which the 30 day notice requirement has been waived) with
respect to a Plan (other than a Plan maintained by an ERISA Affiliate that is
considered an ERISA Affiliate only pursuant to subsection (m) or (o) of Code
Section 414).

 

“Request for Issuance” shall mean a request for issuance of a Letter of Credit
pursuant to Section 2.17(a), in a form substantially similar to Exhibit C, if
Citibank is the applicable Fronting Bank, and, in the case of any other Fronting
Bank, the form that is customary for such Fronting Bank.

 

“Required Lenders” shall mean, at any time, Lenders having Commitments
representing in excess of 50% of the Total Commitment or, (i) for purposes of
acceleration pursuant to clause (ii) of the first paragraph of Article VI, or
(ii) if the Total Commitment has been terminated, Lenders with Outstanding
Credits in excess of 50% of the aggregate amount of Outstanding Credits.

 

“Responsible Officer” of any corporation shall mean any executive officer or
Financial Officer of such corporation and any other officer or similar official
thereof responsible for the administration of the obligations of such
corporation in respect of this Agreement.

 

“S&P” shall mean Standard & Poor’s Ratings Services (a division of The
McGraw-Hill Companies, Inc.).

 

“SEC” shall mean the Securities and Exchange Commission.

 

“Senior Debt” of any person shall mean (without duplication) (i) all
Indebtedness of such person described in clauses (i) through (iii) of the
definition of “Indebtedness”, (ii) all Indebtedness of such person described in
clause (iv) of the definition of “Indebtedness” in respect of unreimbursed
drawings under letters of credit described in such clause (iv), and (iii) all
direct or indirect guaranties of such person in respect of, and to purchase or
otherwise acquire, or otherwise to assure a creditor against loss in respect of,
liabilities, obligations or indebtedness of others of the kinds referred to in
clauses (i) and (ii) above; provided, however, that in calculating “Senior Debt”
of any Borrower, (A) the aggregate amount of Preferred Membership Interests
outstanding shall be excluded and (B) any amount of Equity Credit-Preferred
Securities not included in the definition of “Consolidated Shareholders Equity”
shall be included.

 

“Significant Disposition” shall mean a sale, lease, disposition or other
transfer by a person, or any Subsidiary of such person, during any 12-month
period commencing on or after the date hereof, of assets constituting, either
individually or in the aggregate with all other assets sold, leased, disposed or
otherwise transferred by such person or any Subsidiary thereof during such
period, 10% or more of the assets of such person and its Subsidiaries taken as a
whole, excluding any such sale, lease, disposition or other transfer to a Wholly
Owned Subsidiary of such person.

 

15

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

“Significant Subsidiary” shall mean, with respect to any Borrower at any time,
any Subsidiary of such Borrower that as of such time has total assets in excess
of 10% of the total assets of such Borrower and its Consolidated Subsidiaries.

 

“Solvent” shall mean, with respect to any person as of a particular date, that
on such date such person is able to pay its debts and other liabilities,
contingent obligations and other commitments as they mature in the normal course
of business. In computing the amount of contingent liabilities at any time, it
is intended that such liabilities will be computed as the amount which, in light
of all the facts and circumstances existing at such time, represents the amount
that can reasonably be expected to become an actual or matured liability.

 

“Stated Amount” shall mean the maximum amount available to be drawn by a
beneficiary under a Letter of Credit.

 

“Subsidiary” shall mean, with respect to any person (the “parent”), any
corporation or other entity of which securities or other ownership interests
having ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions are at the time directly or
indirectly owned by such parent; provided, however, that Qualified Transition
Bond Issuers and Subsidiaries of Qualified Transition Bond Issuers shall not be
deemed to be Subsidiaries of any Borrower.

 

“Substantial” shall mean, for any Borrower, an amount in excess of 10% of the
consolidated assets of such Borrower and its Consolidated Subsidiaries taken as
a whole.

 

“Total Commitment” shall mean, at any time, the aggregate amount of Commitments
of all the Lenders, as in effect at such time. The initial amount of the Total
Commitment is $1,000,000,000.

 

“TXU” shall mean TXU Corp., a Texas corporation, and its successors.

 

“TXU Fuel” shall mean TXU Fuel Company, a Texas corporation, and its successors.

 

“TXU Mining” shall mean TXU Mining Company LP, a Texas limited partnership, and
its successors.

 

“Type”, when used in respect of any Loan or Borrowing, shall refer to the Rate
by reference to which interest on such Loan or on the Loans comprising such
Borrowing is determined. For purposes hereof, “Rate” shall include the LIBO Rate
and the Alternate Base Rate.

 

“Voting Shares” shall mean, as to shares or other equity interests of a
particular corporation or other type of person, outstanding shares of stock or
other equity interests of any class of such corporation or other person entitled
to vote in the election of directors or other comparable managers of such
person, excluding shares or other interests entitled so to vote only upon the
happening of some contingency.

 

16

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

“Wholly Owned Subsidiary” of any person shall mean any Consolidated Subsidiary
of such person all the shares of common stock and other voting capital stock or
other voting ownership interests having ordinary voting power to vote in the
election of the board of directors or other governing body performing similar
functions (except directors’ qualifying shares) of which are at the time
directly or indirectly owned by such person.

 

“Withdrawal Liability” shall mean liability of a Borrower established under
Section 4201 of ERISA as a result of a complete or partial withdrawal from a
Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title
IV of ERISA.

 

SECTION 1.02. Terms Generally.

 

The definitions in Section 1.01 shall apply equally to both 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.” All references herein to Articles, Sections,
Exhibits and Schedules shall be deemed references to Articles and Sections of,
and Exhibits and Schedules to, this Agreement unless the context shall otherwise
require. 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, however, that for purposes of determining
compliance with any covenant set forth in Article V, such terms shall be
construed in accordance with GAAP as in effect on the date hereof applied on a
basis consistent with the application used in preparing any Borrower’s audited
financial statements referred to in Section 3.05.

 

ARTICLE II

THE CREDITS

 

SECTION 2.01. Commitments.

 

(a) Subject to the terms and conditions and relying upon the representations and
warranties herein set forth, each Lender and each Fronting Bank (as applicable)
agrees, severally and not jointly, as follows: (i) each Lender agrees to make
Loans to any Borrower at any time and from time to time until the Commitment
Termination Date up to the amount of such Lender’s Available Commitment, (ii)
each Fronting Bank agrees to issue Letters of Credit for the account of any
Borrower at any time and from time to time until the fifth Business Day
preceding the Commitment Termination Date in an aggregate stated amount at any
time outstanding not to exceed such Fronting Bank’s LC Fronting Bank Commitment,
and (iii) each Lender agrees to purchase participations in such Letters of
Credit as more fully set forth in Section 2.17. Notwithstanding the foregoing,
at no time shall (A) the aggregate amount of Outstanding Credits exceed the
aggregate amount of the Lenders’ Commitments, (B) any Lender’s Outstanding
Credits exceed the amount of such Lender’s Commitment, (C) any Fronting Bank
make any Extension of Credit relating to a Letter of Credit if such Extension of
Credit would cause (x) the aggregate amount of Outstanding Credits to exceed the
aggregate amount of the Lenders’ Commitments or (y) the aggregate LC
Outstandings relating to such

 

17

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

Fronting Bank to exceed such Fronting Bank’s LC Fronting Bank Commitment and (D)
any Extension of Credit be made to Delivery if such Extension of Credit would
cause the amount of Outstanding Credits to Delivery to exceed $800,000,000.

 

(b) Within the foregoing limits, the Borrowers may borrow, pay or prepay Loans
and request new Extensions of Credit on and after the date hereof and prior to
the Commitment Termination Date subject to the terms, conditions and limitations
set forth herein.

 

SECTION 2.02. Loans.

 

(a) Each Loan shall be made as part of a Borrowing consisting of Loans made by
the Lenders ratably in accordance with their respective Commitments; provided,
however, that the failure of any Lender to make any Loan shall not in itself
relieve any other Lender of its obligation to lend hereunder (it being
understood, however, that no Lender shall be responsible for the failure of any
other Lender to make any Loan required to be made by such other Lender). The
Loans comprising any Borrowing shall be in an aggregate principal amount that is
an integral multiple of $5,000,000 and not less than $25,000,000 (or an
aggregate principal amount equal to the remaining balance of the Available
Commitments).

 

(b) Each Borrowing shall be comprised entirely of Eurodollar Loans or ABR Loans,
as the applicable Borrower may request pursuant to Section 2.03. Each Lender may
at its option make any Eurodollar Loan by causing any domestic or foreign branch
or Affiliate of such Lender to make such Loan; provided that any exercise of
such option shall not affect the obligation of any Borrower to repay such Loan
in accordance with the terms of this Agreement. Borrowings of more than one Type
may be outstanding at the same time.

 

(c) Subject to subsection (d) below, each Lender shall make each Loan to be made
by it hereunder on the proposed date thereof by wire transfer of immediately
available funds to the Agent in New York, New York, not later than noon, New
York City time, and the Agent shall by 2:00 p.m., New York City time, credit the
amounts so received to the account or accounts specified from time to time in
one or more notices delivered by the applicable Borrower to the Agent or, if a
Borrowing shall not occur on such date because any condition precedent herein
specified shall not have been met, return the amounts so received to the
respective Lenders. Loans shall be made by the Lenders pro rata in accordance
with Section 2.12. Unless the Agent shall have received notice from a Lender
prior to the date of any Borrowing that such Lender will not make available to
the Agent such Lender’s portion of such Borrowing, the Agent may assume that
such Lender has made such portion available to the Agent on the date of such
Borrowing in accordance with this subsection (c) and the Agent may, in reliance
upon such assumption, make available to the applicable Borrower on such date a
corresponding amount. If and to the extent that such Lender shall not have made
such portion available to the Agent, such Lender and the applicable Borrower
(without waiving any claim against such Lender for such Lender’s failure to make
such portion available) severally agree to repay to the Agent forthwith on
demand such corresponding amount together with interest thereon, for each day
from the date such amount is made available to such Borrower until the date such
amount is repaid to the Agent, at (i) in the case of such Borrower, the interest
rate applicable at the time to the Loans comprising such Borrowing and (ii) in
the case of such Lender, the Federal Funds Effective Rate. If such Lender shall
repay to the Agent such corresponding amount, such amount shall constitute such
Lender’s Loan as part of such Borrowing for purposes of this Agreement.

 

18

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

(d) A Borrower may refinance all or any part of any Borrowing with a Borrowing
of the same or a different Type, subject to the conditions and limitations set
forth in this Agreement. Any Borrowing or part thereof so refinanced shall be
deemed to be repaid or prepaid in accordance with Section 2.05 or 2.09, as
applicable, with the proceeds of a new Borrowing, and the proceeds of the new
Borrowing, to the extent they do not exceed the principal amount of the
Borrowing being refinanced, shall not be paid by the Lenders to the Agent or by
the Agent to such Borrower pursuant to subsection (c) above.

 

SECTION 2.03. Borrowing Procedure.

 

In order to request a Borrowing, a Borrower shall hand deliver or send via
facsimile to the Agent a duly completed Borrowing Request (i) in the case of a
Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three
Business Days before such Borrowing, and (ii) in the case of an ABR Borrowing,
not later than 11:00 a.m., New York City time, one Business Day before such
Borrowing. Such notice shall be irrevocable and shall in each case specify (A)
whether the Borrowing then being requested is to be a Eurodollar Borrowing or an
ABR Borrowing, (B) the date of such Borrowing (which shall be a Business Day)
and the amount thereof, and (C) if such Borrowing is to be a Eurodollar
Borrowing, the Interest Period with respect thereto, which shall not end after
the Commitment Termination Date. If no election as to the Type of Borrowing is
specified in any such notice, then the requested Borrowing shall be deemed an
ABR Borrowing. If no Interest Period with respect to any Eurodollar Borrowing is
specified in any such notice, then the Borrower shall be deemed to have selected
an Interest Period of one month’s duration (subject to the limitations set forth
in the definition of “Interest Period”). If a Borrower shall not have given
notice in accordance with this Section of its election to refinance a Borrowing
prior to the end of the Interest Period in effect for such Borrowing, then such
Borrower shall (unless such Borrowing is repaid at the end of such Interest
Period) be deemed to have given notice of an election to refinance such
Borrowing with an ABR Borrowing. Notwithstanding any other provision of this
Agreement to the contrary, no Borrowing shall be requested if the Interest
Period with respect thereto would end after the Commitment Termination Date. The
Agent shall promptly advise the Lenders of any notice given pursuant to this
Section and of each Lender’s portion of the requested Borrowing.

 

SECTION 2.04. Fees.

 

(a) Energy agrees to pay to each Lender, through the Agent, on each March 31,
June 30, September 30 and December 31 (with the first payment being due on
September 30, 2005) and on each date on which the Commitment of such Lender
shall be terminated or reduced as provided herein, a facility fee (a “Facility
Fee”), at a rate per annum equal to the Facility Fee Percentage from time to
time in effect on the Commitment of such Lender (without regard to usage) during
the preceding quarter (or other period commencing on the date of this Agreement
or ending on the Commitment Termination Date or any date on which the Commitment
of such Lender shall be terminated).

 

19

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

(b) All Facility Fees shall be computed on the basis of the actual number of
days elapsed in a year of 360 days. The Facility Fees due to each Lender shall
commence to accrue on the date of this Agreement, and shall cease to accrue on
the date of termination of such Lender’s Commitment, as provided herein.

 

(c) Energy agrees to pay the Agent the fees from time to time payable to it in
its capacity as Agent pursuant to the Letter Agreements (the “Administrative
Fees”).

 

(d) Each Borrower for the account of which a Letter of Credit is issued agrees
to pay the Agent, for the account of the Fronting Bank that issued such Letter
of Credit, a fronting fee equal to 0.125% of the stated amount of such Letter of
Credit (a “Fronting Fee”) and such other charges with respect to such Letter of
Credit as are agreed upon with such Fronting Bank and as are customary. Each
Borrower for the account of which a Letter of Credit is issued agrees to pay to
the Agent for the account of the Lenders a fee (the “LC Fee”) on the face amount
of each Letter of Credit issued by any Fronting Bank for the account of such
Borrower, calculated at a rate per annum equal to the Applicable Margin for
Eurodollar Loans (regardless of whether any such Loans are then outstanding).
All Fronting Fees and LC Fees shall be computed on the basis of the actual
number of days that each such Letter of Credit is outstanding, assuming a year
of 360 days, payable in arrears on each March 31, June 30, September 30 and
December 31, and on the date that such Letter of Credit expires or is drawn in
full.

 

(e) All Fees shall be paid on the dates due, in immediately available funds, to
the Agent for distribution, if and as appropriate, among the Lenders. Once paid,
none of the Fees shall be refundable under any circumstances.

 

SECTION 2.05. Repayment of Loans; Evidence of Indebtedness.

 

(a) The outstanding principal balance of each (i) Eurodollar Loan shall be due
and payable on the last day of the Interest Period applicable thereto and on the
Commitment Termination Date and (ii) ABR Loan shall be due and payable on the
Commitment Termination Date.

 

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

 

(c) The Agent shall maintain accounts in which it will record (i) the amount of
each Extension of Credit made hereunder, the Type of each Loan made and the
Interest Period applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from each Borrower to each Lender
hereunder and (iii) the amount of any sum received by the Agent hereunder from
each Borrower and each Lender’s share thereof.

 

(d) The entries made in the accounts maintained pursuant to subsections (b) and
(c) above shall, to the extent permitted by applicable law, be prima facie
evidence of the existence and amounts of the obligations therein recorded;
provided, however, that the failure of any Lender or the Agent to maintain such
accounts or any error therein shall not in any manner affect the obligations of
the Borrowers to repay the Outstanding Credits in accordance with their terms.

 

20

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

SECTION 2.06. Interest on Loans.

 

(a) The Loans comprising each Eurodollar Borrowing shall bear interest (computed
on the basis of the actual number of days elapsed over a year of 360 days) at a
rate per annum equal to the LIBO Rate for the Interest Period in effect for such
Borrowing plus the Applicable Margin from time to time in effect for Eurodollar
Borrowings.

 

(b) The Loans comprising each ABR Borrowing shall bear interest (computed on the
basis of the actual number of days elapsed over a year of (i) 365 or 366 days,
as the case may be, for periods during which the Alternate Base Rate is
determined by reference to the Prime Rate and (ii) 360 days for other periods)
at a rate per annum equal to the Alternate Base Rate plus the Applicable Margin
from time to time in effect for ABR Borrowings.

 

(c) Interest on each Loan shall be payable on each Interest Payment Date
applicable to such Loan except as otherwise provided in this Agreement. The
applicable LIBO Rate or Alternate Base Rate for each Interest Period or day
within an Interest Period, as the case may be, shall be determined by Citibank,
and such determination shall be conclusive absent manifest error; provided that
Citibank shall, upon request, provide to the applicable Borrower a certificate
setting forth in reasonable detail the basis for such determination.

 

SECTION 2.07. Alternate Rate of Interest.

 

In the event, and on each occasion, that on the day two Business Days prior to
the commencement of any Interest Period for a Eurodollar Borrowing the Agent
shall have determined (i) that dollar deposits in the principal amounts of the
Eurodollar Loans comprising such Borrowing are not generally available in the
London interbank market or (ii) that reasonable means do not exist for
ascertaining the LIBO Rate, the Agent shall, as soon as practicable thereafter,
give facsimile notice of such determination to the Borrowers and the Lenders. In
the event of any such determination under clause (i) or (ii) above, until the
Agent shall have advised the Borrowers and the Lenders that the circumstances
giving rise to such notice no longer exist, any request by a Borrower for a
Eurodollar Borrowing pursuant to Section 2.03 shall be deemed to be a request
for an ABR Borrowing. In the event the Required Lenders notify the Agent that
the rates at which dollar deposits are being offered will not adequately and
fairly reflect the cost to such Lenders of making or maintaining Eurodollar
Loans during such Interest Period, the Agent shall notify the applicable
Borrower of such notice and until the Required Lenders shall have advised the
Agent that the circumstances giving rise to such notice no longer exist, any
request by such Borrower for a Eurodollar Borrowing shall be deemed a request
for an ABR Borrowing. Each determination by the Agent hereunder shall be made in
good faith and shall be conclusive absent manifest error; provided that the
Agent, shall, upon request, provide to the applicable Borrower a certificate
setting forth in reasonable detail the basis for such determination.

 

21

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

SECTION 2.08. Termination and Reduction of Commitments.

 

(a) The Commitments shall terminate automatically on the Commitment Termination
Date.

 

(b) Upon at least two Business Days’ prior irrevocable written notice to the
Agent, the Borrowers, acting jointly, may, without premium or penalty, at any
time in whole permanently terminate, or from time to time in part permanently
reduce, the Commitments; provided, however, that (i) each partial reduction of
the Commitments shall be in an integral multiple of $10,000,000 and in a minimum
principal amount of $10,000,000 and (ii) no such termination or reduction shall
be made that would reduce the Commitments to an amount less than (1) the
aggregate amount of Outstanding Credits on the date of such termination or
reduction (after giving effect to any prepayment made pursuant to Section 2.09)
or (2) $50,000,000, unless the result of such termination or reduction referred
to in this clause (2) is to reduce the Commitments to $0. The Agent shall advise
the Lenders of any notice given pursuant to this subsection (b) and of each
Lender’s portion of any such termination or reduction of the Commitments.

 

(c) Each reduction in the Commitments shall be made ratably among the Lenders in
accordance with their respective Commitments. Energy shall pay to the Agent for
the account of the Lenders, on the date of each termination or reduction of the
Commitments, the Facility Fee on the amount of the Commitments so terminated or
reduced, in each case accrued through the date of such termination or reduction.

 

(d) Upon at least one Business Day’s prior written notice to the Agent, any
Borrower may at any time terminate the Commitment available to it, without
premium or penalty (other than as described in Section 8.05(b)(ii)), on the date
of such termination, provided that (i) all Advances made to such Borrower shall
have been repaid or prepaid in full, all Letters of Credit issued for the
account of such Borrower shall have been cancelled and terminated and all
amounts due and owing by such Borrower hereunder shall have been paid in full
and (ii) any and all obligations of such Borrower that survive such termination
shall be assumed by the remaining Borrower. On and as of the date of termination
of the Commitment available to any Borrower pursuant to this subsection (d),
such Borrower shall be deemed no longer to be a party to this Agreement and
shall have no continuing rights or obligations hereunder and all references
herein to the Borrowers or any Borrower shall be deemed to be a reference to the
remaining Borrower.

 

SECTION 2.09. Prepayment.

 

(a) Each Borrower shall have the right at any time and from time to time to
prepay any Borrowing, in whole or in part, upon giving a written notice
substantially in the form of Exhibit D (a “Prepayment Notice”) via facsimile (or
telephone notice promptly confirmed by facsimile) to the Agent: (i) before 11:00
a.m., New York City time, three Business Days prior to prepayment, in the case
of Eurodollar Loans, and (ii) before 11:00 a.m., New York City time, one
Business Day prior to prepayment, in the case of ABR Loans; provided, however,
that each partial prepayment shall be in an amount which is an integral multiple
of $10,000,000 and not less than $10,000,000.

 

22

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

(b) Each Prepayment Notice shall specify the prepayment date and the principal
amount of each Borrowing (or portion thereof) to be prepaid, shall be
irrevocable and shall commit the Borrower to prepay such Borrowing (or portion
thereof) by the amount stated therein on the date stated therein. All
prepayments under this Section shall be subject to Section 8.05 but otherwise
without premium or penalty. All prepayments under this Section shall be
accompanied by accrued interest on the principal amount being prepaid to the
date of payment.

 

SECTION 2.10. Reserve Requirements; Change in Circumstances.

 

(a) Notwithstanding any other provision herein, if after the date of this
Agreement any change in applicable law or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the force of
law) shall change the basis of taxation of payments to any Lender or any
Fronting Bank hereunder (except for changes in respect of taxes on the overall
net income of such Lender or such Fronting Bank (as the case may be) or its
lending office imposed by the jurisdiction in which such Lender’s or such
Fronting Bank’s (as the case may be) principal executive office or lending
office is located), or shall result in the imposition, modification or
applicability of any reserve, special deposit or similar requirement against
assets of, deposits with or for the account of or credit extended by any Lender
or such Fronting Bank (as the case may be) or shall result in the imposition on
any Lender, any Fronting Bank or the London interbank market of any other
condition affecting this Agreement, such Lender’s Commitment or any Extension of
Credit (other than an ABR Loan) made by such Lender or such Fronting Bank, and
the result of any of the foregoing shall be to increase the cost to such Lender
or such Fronting Bank (as the case may be) of making or maintaining any
Outstanding Credit (other than an ABR Loan) or to reduce the amount of any sum
received or receivable by such Lender or such Fronting Bank (as the case may be)
hereunder (whether of principal, interest or otherwise) by an amount deemed by
such Lender or such Fronting Bank (as the case may be) to be material, then the
applicable Borrower or, if the foregoing circumstances do not relate to a
particular Borrowing, Energy shall, upon receipt of the notice and certificate
provided for in subsection (c) below promptly pay to such Lender or such
Fronting Bank (as the case may be) such additional amount or amounts as will
compensate such Lender or such Fronting Bank (as the case may be) for such
additional costs incurred or reduction suffered.

 

(b) If any Lender or Fronting Bank shall have determined that the adoption of
any law, rule, regulation or guideline arising out of the July 1988 report of
the Basle Committee on Banking Regulations and Supervisory Practices entitled
“International Convergence of Capital Measurement and Capital Standards,” or the
adoption after the date hereof of any other law, rule, regulation or guideline
regarding capital adequacy, or any change in any of the foregoing or in the
interpretation or administration of any of the foregoing by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender or Fronting Bank (or any
lending office of such Lender or such Fronting Bank) or any Lender’s or any
Fronting Bank’s holding company with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of reducing the rate of
return on such Lender’s or such Fronting Bank’s (as the case may be) capital or
on the capital of such Lender’s or such Fronting Bank’s (as the case may be)
holding company, if any, as a consequence of this Agreement, such Lender’s
Commitment or the Extensions of Credit made by

 

23

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

such Lender or such Fronting Bank (as the case may be) pursuant hereto to a
level below that which such Lender or such Fronting Bank (as the case may be) or
such Lender’s or such Fronting Bank’s (as the case may be) holding company could
have achieved but for such adoption, change or compliance (taking into
consideration such Lender’s or such Fronting Bank’s (as the case may be)
policies and the policies of such Lender’s or such Fronting Bank’s (as the case
may be) holding company with respect to capital adequacy) by an amount deemed by
such Lender or such Fronting Bank (as the case may be) to be material, then from
time to time such additional amount or amounts as will compensate such Lender or
such Fronting Bank (as the case may be) for any such reduction suffered will be
paid to such Lender or such Fronting Bank (as the case may be) by the applicable
Borrower or, if the foregoing circumstances do not relate to a particular
Borrower, by Energy. It is acknowledged that this Agreement is being entered
into by the Lenders and the Fronting Banks on the understanding that neither the
Lenders nor the Fronting Banks will be required to maintain capital against
their Commitments or agreements to issue Letters of Credit, as the case may be,
under currently applicable laws, regulations and regulatory guidelines. In the
event the Lenders or any Fronting Bank shall otherwise determine that such
understanding is incorrect, it is agreed that the Lenders or the Fronting Banks,
as the case may be, will be entitled to make claims under this subsection (b)
based upon market requirements prevailing on the date hereof for commitments
under comparable credit facilities against which capital is required to be
maintained.

 

(c) A certificate of each Lender or the applicable Fronting Bank setting forth
such amount or amounts as shall be necessary to compensate such Lender or such
Fronting Bank (as the case may be) or its holding company as specified in
subsection (a) or (b) above, as the case may be, and containing an explanation
in reasonable detail of the manner in which such amount or amounts shall have
been determined, shall be delivered to the applicable Borrower or the Borrowers,
as the case may be, and shall be conclusive absent manifest error. The
applicable Borrower shall pay each Lender or Fronting Bank (as the case may be)
the amount shown as due on any such certificate delivered by it within 10 days
after its receipt of the same. Each Lender and each Fronting Bank shall give
prompt notice to the applicable Borrower of any event of which it has knowledge,
occurring after the date hereof, that it has determined will require
compensation by such Borrower pursuant to this Section; provided, however, that
failure by such Lender or such Fronting Bank to give such notice shall not
constitute a waiver of such Lender’s or such Fronting Bank’s (as the case may
be) right to demand compensation hereunder.

 

(d) Failure on the part of any Lender or Fronting Bank to demand compensation
for any increased costs or reduction in amounts received or receivable or
reduction in return on capital with respect to any period shall not constitute a
waiver of such Lender’s or such Fronting Bank’s (as the case may be) right to
demand compensation with respect to such period or any other period; provided,
however, that no Lender or Fronting Bank shall be entitled to compensation under
this Section for any costs incurred or reductions suffered with respect to any
date unless it shall have notified the applicable Borrower that it will demand
compensation for such costs or reductions under subsection (c) above not more
than 90 days after the later of (i) such date and (ii) the date on which it
shall have become aware of such costs or reductions. The protection of this
Section shall be available to each Lender and each Fronting Bank regardless of
any possible contention of the invalidity or inapplicability of the law, rule,
regulation, guideline or other change or condition which shall have occurred or
been imposed.

 

24

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

(e) Each Lender and each Fronting Bank agrees that it will designate a different
lending office if such designation will avoid the need for, or reduce the amount
of, such compensation and will not, in the reasonable judgment of such Lender or
such Fronting Bank (as the case may be), be disadvantageous to such Lender or
such Fronting Bank (as the case may be).

 

SECTION 2.11. Change in Legality.

 

(a) Notwithstanding any other provision herein, if any change in any law or
regulation or in the interpretation thereof by any Governmental Authority
charged with the administration or interpretation thereof shall make it unlawful
for any Lender to make or maintain any Eurodollar Loan or to give effect to its
obligations as contemplated hereby with respect to any Eurodollar Loan, then, by
written notice to the Borrowers and to the Agent, such Lender may:

 

(i) declare that Eurodollar Loans will not thereafter be made by such Lender
hereunder, whereupon any request for a Eurodollar Borrowing shall, as to such
Lender only, be deemed a request for an ABR Loan unless such declaration shall
be subsequently withdrawn (any Lender delivering such a declaration hereby
agreeing to withdraw such declaration promptly upon determining that such event
of illegality no longer exists); and

 

(ii) require that all outstanding Eurodollar Loans made by it be converted to
ABR Loans, in which event all such Eurodollar Loans shall be automatically
converted to ABR Loans as of the effective date of such notice as provided in
subsection (b) below.

 

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

 

(b) For purposes of this Section, a notice by any Lender shall be effective as
to each Eurodollar Loan, if lawful, on the last day of the Interest Period
currently applicable to such Eurodollar Loan; in all other cases such notice
shall be effective on the date of receipt.

 

SECTION 2.12. Pro Rata Treatment.

 

Except as required under Sections 2.10 and 2.15, each Extension of Credit, each
payment or prepayment of principal of any Borrowing, each payment of interest on
the Loans, each payment of a reimbursement obligation in respect of a drawn
Letter of Credit, each payment of the Facility Fees, each reduction of the Total
Commitment and each refinancing or conversion of any Borrowing with a Borrowing
of any Type, shall be allocated pro rata among the Lenders in accordance with
their respective Commitments (or, if such Commitments shall have expired or been
terminated, in accordance with the respective principal amounts of their
Outstanding Credits). For purposes of determining the Available Commitments of
the Lenders at any time, the LC Outstandings shall be deemed to have utilized
the Commitments of the Lenders pro rata in accordance with their respective
Commitments at such time. Each Lender agrees that in computing such Lender’s
portion of any Extension of Credit to be made hereunder, the Agent may, in its
discretion, round each Lender’s percentage of such Extension of Credit to the
next higher or lower whole dollar amount.

 

25

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

SECTION 2.13. Sharing of Setoffs.

 

Each Lender agrees that if it shall, through the exercise of a right of banker’s
lien, setoff or counterclaim, or pursuant to a secured claim under Section 506
of Title 11 of the United States Bankruptcy Code or other security or interest
arising from, or in lieu of, such secured claim, received by such Lender under
any applicable bankruptcy, insolvency or other similar law or otherwise, or by
any other means, obtain payment (voluntary or involuntary) in respect of any
Loans or LC Outstandings as a result of which the unpaid principal portion of
its Loans and LC Outstandings shall be proportionately less than the unpaid
principal portion of the Loans and LC Outstandings of any other Lender, it shall
be deemed simultaneously to have purchased from such other Lender at face value,
and shall promptly pay to such other Lender the purchase price for, a
participation in the Loans or LC Outstandings of such other Lender, so that the
aggregate unpaid principal amount of the Loans and LC Outstandings and
participations in the Loans and LC Outstandings held by each Lender shall be in
the same proportion to the aggregate unpaid principal amount of all Loans and LC
Outstandings then outstanding as the principal amount of its Loans and LC
Outstandings prior to such exercise of banker’s lien, setoff or counterclaim or
other event was to the principal amount of all Loans and LC Outstandings
outstanding prior to such exercise of banker’s lien, setoff or counterclaim or
other event; provided, however, that, if any such purchase or purchases or
adjustments shall be made pursuant to this Section and the payment giving rise
thereto shall thereafter be recovered, such purchase or purchases or adjustments
shall be rescinded to the extent of such recovery and the purchase price or
prices or adjustment restored without interest. Each Borrower expressly consents
to the foregoing arrangements and agrees that any Lender holding a participation
in a Loan or any LC Outstandings deemed to have been so purchased may exercise
any and all rights of banker’s lien, setoff or counterclaim with respect to any
and all moneys owing by such Borrower to such Lender by reason thereof as fully
as if such Lender had made an Extension of Credit in the amount of such
participation.

 

SECTION 2.14. Payments.

 

(a) Each Borrower shall make each payment (including principal of or interest on
any Outstanding Credit or any Fees or other amounts) hereunder from an account
in the United States not later than 12:00 noon, New York City time, on the date
when due in dollars to the Agent at its offices at Two Penns Way, Suite 200, New
Castle, DE 19720, Attention: Bank Loan Syndications, in immediately available
funds. Each such payment shall be made without off-set, deduction or
counterclaim, provided, that the foregoing shall not constitute a relinquishment
or waiver of such Borrower’s rights to any independent claim that such Borrower
may have against the Agent, any Fronting Bank or any Lender.

 

(b) Whenever any payment (including principal of or interest on any Outstanding
Credit or any Fees or other amounts) hereunder shall become due, or otherwise
would occur, on a day that is not a Business Day, such payment may be made on
the next succeeding Business Day, and such extension of time shall in such case
be included in the computation of interest or Fees, if applicable.

 

26

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

SECTION 2.15. Taxes.

 

(a) Any and all payments of principal and interest on any of the Outstanding
Credits or of any Fees or indemnity or expense reimbursements by a Borrower
hereunder (“Borrower Payments”) shall be made, in accordance with Section 2.14,
free and clear of and without deduction for any and all current or future United
States Federal, state and local taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect to such Borrower Payments, but
only to the extent reasonably attributable to such Borrower Payments, excluding
(i) income taxes imposed on the net income of the Agent, any Fronting Bank or
any Lender (or any transferee or assignee thereof, including a participation
holder (any such entity a “Transferee”)) and (ii) franchise taxes imposed on the
net income of the Agent, any Fronting Bank or any Lender (or Transferee), in
each case by the jurisdiction under the laws of which the Agent, such Fronting
Bank or such Lender (or Transferee) is organized or doing business through
offices or branches located therein, or any political subdivision thereof (all
such nonexcluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities, collectively or individually, “Taxes”). If any Borrower shall be
required to deduct any Taxes from or in respect of any sum payable hereunder to
any Lender (or any Transferee) or the Agent or any Fronting Bank, (i) the sum
payable shall be increased by the amount (an “additional amount”) necessary so
that after making all required deductions (including deductions applicable to
additional amounts payable under this Section) such Lender (or Transferee) or
the Agent or such Fronting Bank (as the case may be) shall receive an amount
equal to the sum it would have received had no such deductions been made, (ii)
such Borrower shall make such deductions and (iii) such Borrower shall pay the
full amount deducted to the relevant Governmental Authority in accordance with
applicable law.

 

(b) In addition, each Borrower shall pay to the relevant United States
Governmental Authority in accordance with applicable law any current or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies that arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or the
Letter Agreements (“Other Taxes”).

 

(c) Each Borrower shall indemnify each Lender (or Transferee thereof), the Agent
and each Fronting Bank for the full amount of Taxes and Other Taxes with respect
to Borrower Payments paid by such person, and any liability (including
penalties, interest and expenses (including reasonable attorney’s fees and
expenses)) arising therefrom or with respect thereto, whether or not such Taxes
or Other Taxes were correctly or legally asserted by the relevant United States
Governmental Authority. A certificate setting forth and containing an
explanation in reasonable detail of the manner in which such amount shall have
been determined and the amount of such payment or liability prepared by a
Lender, a Fronting Bank or the Agent on their behalf, absent manifest error,
shall be final, conclusive and binding for all purposes. Such indemnification
shall be made within 30 days after the date the Lender (or Transferee) or the
Agent or the Fronting Bank, as the case may be, makes written demand therefor.

 

(d) If a Lender (or Transferee) or the Agent or a Fronting Bank shall become
aware that it is entitled to claim a refund from a United States Governmental
Authority in respect of Taxes or Other Taxes as to which it has been indemnified
by a Borrower, or with respect to which a Borrower has paid additional amounts,
pursuant to this Section, it shall promptly notify

 

27

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

such Borrower of the availability of such refund claim and shall, within 30 days
after receipt of a request by such Borrower, make a claim to such United States
Governmental Authority for such refund at such Borrower’s expense. If a Lender
(or Transferee) or the Agent or a Fronting Bank receives a refund (including
pursuant to a claim for refund made pursuant to the preceding sentence) in
respect of any Taxes or Other Taxes as to which it has been indemnified by a
Borrower or with respect to which a Borrower had paid additional amounts
pursuant to this Section, it shall within 30 days from the date of such receipt,
pay over such refund to such Borrower (but only to the extent of indemnity
payments made, or additional amounts paid, by such Borrower under this Section
with respect to the Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses of such Lender (or Transferee) or the Agent or such
Fronting Bank and without interest (other than interest paid by the relevant
United States Governmental Authority with respect to such refund); provided,
however, that such Borrower, upon the request of such Lender (or Transferee) or
the Agent or such Fronting Bank, agrees to repay the amount paid over to such
Borrower (plus penalties, interest or other charges) to such Lender (or
Transferee) or the Agent or such Fronting Bank in the event such Lender (or
Transferee) or the Agent or such Fronting Bank is required to repay such refund
to such United States Governmental Authority.

 

(e) As soon as practicable, but in any event within 30 days, after the date of
any payment of Taxes or Other Taxes by a Borrower to the relevant United States
Governmental Authority, such Borrower will deliver to the Agent, at its address
referred to in Section 8.01, the original or a certified copy of a receipt
issued by such United States Governmental Authority evidencing payment thereof.

 

(f) Without prejudice to the survival of any other agreement contained herein,
the agreements and obligations contained in this Section shall survive the
payment in full of the principal of and interest on all Outstanding Credits
hereunder.

 

(g) Each of the Agent, each Fronting Bank and each Lender (or Transferee) that
is organized under the laws of a jurisdiction other than the United States, any
State thereof or the District of Columbia (a “Non-U.S. Lender” or “Non U.S.
Agent”, as applicable) shall deliver to the Borrowers and the Agent two copies
of either United States Internal Revenue Service Form W-8BEN or Form W-8ECI,
properly completed and duly executed by such Non-U.S. Lender claiming complete
exemption from, or reduced rate of, United States Federal withholding tax on
payments by any Borrower under this Agreement. Such forms shall be delivered by
each Non-U.S. Lender on or before the date it becomes a party to this Agreement
(or, in the case of a Transferee that is a participation holder, on or before
the date such participation holder becomes a Transferee hereunder) and on or
before the date, if any, such Non-U.S. Lender changes its applicable lending
office by designating a different lending office (a “New Lending Office”). In
addition, each Non-U.S. Lender shall deliver such forms promptly upon the
obsolescence or invalidity of any form previously delivered by such Non-U.S.
Lender. Notwithstanding any other provision of this subsection (g), a Non-U.S.
Lender shall not be required to deliver any form pursuant to this subsection (g)
that such Non-U.S. Lender is not legally able to deliver.

 

(h) A Borrower shall not be required to indemnify any Non-U.S. Lender or
Non-U.S. Agent (including any Transferee), or to pay any additional amounts to
any Non-U.S. Lender or Non-U.S. Agent (including any Transferee), in respect of
United States Federal, state or local

 

28

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

withholding tax pursuant to subsection (a) or (c) above to the extent that (i)
the obligation to withhold amounts with respect to United States Federal, state
or local withholding tax existed on the date such Non-U.S. Lender became a party
to this Agreement (or, in the case of a Transferee that is a participation
holder, on the date such participation holder became a Transferee hereunder) or,
with respect to payments to a New Lending Office, the date such Non-U.S. Lender
designated such New Lending Office with respect to an Extension of Credit;
provided, however, that this clause (i) shall not apply to any Transferee or New
Lending Office that becomes a Transferee or New Lending Office as a result of an
assignment, participation, transfer or designation made at the request of such
Borrower; and provided further, however, that this clause (i) shall not apply to
the extent the indemnity payment or additional amounts any Transferee, or any
Fronting Bank or any Lender (or Transferee) through a New Lending Office, would
be entitled to receive (without regard to this clause (i)) do not exceed the
indemnity payment or additional amounts that the person making the assignment,
participation or transfer to such Transferee, or such Fronting Bank or Lender
(or Transferee) making the designation of such New Lending Office, would have
been entitled to receive in the absence of such assignment, participation,
transfer or designation or (ii) the obligation to pay such additional amounts or
such indemnity payments would not have arisen but for a failure by such Non-U.S.
Lender (including any Transferee) to comply with the provisions of subsection
(g) above and (i) below.

 

(i) Any Fronting Bank or any Lender (or Transferee) claiming any indemnity
payment or additional amounts payable pursuant to this Section shall use
reasonable efforts (consistent with legal and regulatory restrictions) to file
any certificate or document reasonably requested in writing by a Borrower or to
change the jurisdiction of its applicable lending office if the making of such a
filing or change would avoid the need for or reduce the amount of any such
indemnity payment or additional amounts that may thereafter accrue and would
not, in the good faith determination of such Fronting Bank or such Lender (or
Transferee) (as the case may be), be otherwise disadvantageous to such Fronting
Bank or such Lender (or Transferee) (as the case may be).

 

(j) Nothing contained in this Section shall require any Lender (or Transferee)
or the Agent or any Fronting Bank to make available to such Borrower any of its
tax returns (or any other information) that it deems to be confidential or
proprietary.

 

(k) Notwithstanding anything herein to the contrary, the indemnification
obligations under this Section shall, to the extent practicable, be allocated
between the Borrowers based upon their relative liability for the interest, fee
or other payments in respect of which such indemnification obligations arise.

 

SECTION 2.16. Assignment of Commitments Under Certain Circumstances.

 

In the event that any Lender shall have delivered a notice or certificate
pursuant to Section 2.10(c) or 2.11(a), or any Borrower shall be required to
make additional payments to any Lender under Section 2.15, the Borrowers shall
have the right, at their own expense, upon notice to such Lender and the Agent,
to require such Lender to transfer and assign without recourse (in accordance
with and subject to the restrictions contained in Section 8.04) all such
Lender’s interests, rights and obligations contained hereunder to another
financial institution approved by

 

29

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

the Agent and the Borrowers (which approval shall not be unreasonably withheld)
which shall assume such obligations; provided that (i) no such assignment shall
conflict with any law, rule or regulation or order of any Governmental Authority
and (ii) the assignee shall pay to the affected Lender in immediately available
funds on the date of such assignment the principal of and interest accrued to
the date of payment on the Loans made by it hereunder and all other amounts
accrued for its account or owed to it hereunder and the Borrowers shall pay the
processing and recordation fee due pursuant to Section 8.04.

 

SECTION 2.17. Letters of Credit.

 

(a) Subject to the terms and conditions hereof, each Letter of Credit shall be
issued (or the stated maturity thereof extended or terms thereof modified or
amended) on not less than three Business Days’ prior notice thereof by the
delivery by a Borrower of a Request for Issuance to the Agent (which shall
promptly distribute copies thereof to the Lenders) and the Fronting Bank
designated by such Borrower. Each Request for Issuance shall identify the
Borrower for the account of which the Letter of Credit is proposed to be issued
and the relevant Fronting Bank and shall specify (i) the date (which shall be a
Business Day) of issuance of such Letter of Credit (or the date of effectiveness
of such extension, modification or amendment) and the stated expiry date thereof
(which shall be no later than the fifth Business Day preceding the Commitment
Termination Date), (ii) the proposed stated amount (denominated in dollars) of
such Letter of Credit (which shall not be less than $1,000,000, unless otherwise
agreed to by the applicable Fronting Bank), (iii) the name and address of the
beneficiary of such Letter of Credit and (iv) a statement of drawing conditions
applicable to such Letter of Credit, whether such Letter of Credit is a
documentary letter of credit, a financial standby letter of credit or a
performance standby letter of credit, and if such Request for Issuance relates
to an amendment or modification of a Letter of Credit, it shall be accompanied
by the consent of the beneficiary of the Letter of Credit thereto; provided,
however, that if the terms of any Request for Issuance shall conflict with the
terms of this Agreement, the terms of this Agreement shall govern. Each Request
for Issuance shall be irrevocable unless modified or rescinded by the Borrower
that delivered such request not less than two days prior to the proposed date of
issuance (or effectiveness) specified therein. Not later than 12:00 noon (New
York City time) on the proposed date of issuance (or effectiveness) specified in
such Request for Issuance, and upon fulfillment of the applicable conditions
precedent and the other requirements set forth herein, the applicable Fronting
Bank shall issue (or extend, amend or modify) such Letter of Credit and provide
notice and a copy thereof to the Agent, which shall promptly furnish copies
thereof to the Lenders. Each Lender shall, upon the issuance of any Letter of
Credit, acquire a participation interest in such Letter of Credit, automatically
and without any action on its part or the part of the applicable Fronting Bank,
whereby such Lender shall become obligated to perform such obligations in
respect of such Letter of Credit as are expressly set forth herein. No Fronting
Bank shall at any time be obligated to issue any Letter of Credit if such
issuance would conflict with any applicable requirement of law.

 

(b) No Letter of Credit shall be requested or issued hereunder if, after the
issuance thereof, the Outstanding Credits would exceed the Commitments.

 

(c) Each of the Borrowers hereby agrees to pay to the Agent for the account of
each Fronting Bank and, if they shall have funded participations in the
reimbursement obligations of

 

30

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

such Borrower pursuant to subsection (d) below, the Lenders, on demand made by
such Fronting Bank to such Borrower, on and after each date on which such
Fronting Bank shall pay any amount under any Letter of Credit issued by such
Fronting Bank for the account of such Borrower, a sum equal to the amount so
paid plus interest on such amount from the date so paid by such Fronting Bank
until repayment to such Fronting Bank in full at a fluctuating interest rate per
annum equal to the Alternate Base Rate plus the Applicable Margin for ABR Loans
plus, if any amount paid by such Fronting Bank under a Letter of Credit is not
reimbursed by such Borrower within three Business Days, 2%.

 

(d) If any Fronting Bank shall not have been reimbursed in full by a Borrower
for any payment made by such Fronting Bank under a Letter of Credit issued by
such Fronting Bank for the account of such Borrower on the date of such payment,
such Fronting Bank shall give the Agent prompt notice thereof (an “LC Payment
Notice”) no later than 10:00 a.m. (New York City time) on the Business Day
immediately succeeding the date of such payment by such Fronting Bank. The Agent
shall forward to each Lender a copy of such LC Payment Notice no later than
12:00 noon on the date on which such LC Payment Notice is received from such
Fronting Bank. Notwithstanding any provision of this Agreement to the contrary,
each Lender severally agrees to fund its participation in the reimbursement
obligation of the Borrower to each Fronting Bank by paying to the Agent for the
account of such Fronting Bank an amount equal to such Lender’s Percentage of
such unreimbursed amount paid by such Fronting Bank, plus interest on such
amount at a rate per annum equal to the Federal Funds Effective Rate from the
date of the payment by such Fronting Bank to the date of payment to such
Fronting Bank by such Lender. Each such payment by a Lender shall be made not
later than 3:00 p.m. (New York City time) on the later to occur of (i) the
Business Day immediately following the date of such payment by such Fronting
Bank and (ii) the Business Day on which the Lender shall have received an LC
Payment Notice from such Fronting Bank. Each Lender’s obligation to make each
such payment to the Agent for the account of each Fronting Bank shall be several
and shall not be affected by the occurrence or continuance of a Default or Event
of Default or the failure of any other Lender to make any payment under this
subsection (d). Each Lender further agrees that each such payment shall be made
without any offset, abatement, withholding or reduction whatsoever.

 

(e) The failure of any Lender to make any payment to the Agent for the account
of any Fronting Bank in accordance with subsection (d) above shall not relieve
any other Lender of its own obligation to make any similar payment to the Agent,
but no Lender shall be responsible for the failure of any other Lender to make
any such payment. If any Lender (a “non-performing Lender”) shall fail to make
any payment to the Agent for the account of any Fronting Bank in accordance with
subsection (d) above within five Business Days after the LC Payment Notice
relating thereto, then, for so long as such failure shall continue, (i) such
Fronting Bank shall be deemed to be a Lender hereunder owed a Loan, and for
purposes of voting rights hereunder, having a Commitment increased by an amount
equal to the outstanding principal amount due and payable by such non-performing
Lender to the Agent for the account of such Fronting Bank pursuant to subsection
(d) above and (ii) for purposes of voting rights hereunder, the Commitment of
such non-performing Lender shall be reduced in an amount equal to such
outstanding principal amount due and payable by such non-performing Lender. Any
non-performing Lender and the Borrower for the account of which the relevant
Letter of Credit was issued (without waiving any claim against such Lender for
such Lender’s failure to fund a participation in the reimbursement obligations
of such Borrower under subsection (d) above)

 

31

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

severally agree to pay to the Agent for the account of the applicable Fronting
Bank forthwith on demand such amount, together with interest thereon for each
day from the date such Lender would have funded its participation had it
complied with the requirements of subsection (d) above until the date such
amount is paid to the Agent at (A) in the case of such Borrower, the interest
rate applicable at the time to ABR Loans (or the interest rate that would be
applicable if ABR Loans were outstanding) and (B) in the case of such Lender,
the Federal Funds Effective Rate.

 

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

 

(i) any lack of validity or enforceability of this Agreement or any other
agreement or instrument relating hereto or to such Letter of Credit;

 

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

 

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

 

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

 

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

 

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

 

(g) Each Borrower assumes all risks of the acts and omissions of any beneficiary
or transferee of any Letter of Credit issued for the account of such Borrower.
Neither any Fronting Bank, any Lender nor any of their respective officers,
directors, employees, agents or Affiliates shall be liable or responsible for
(i) the use that may be made of such Letter of Credit or any acts or omissions
of any beneficiary or transferee thereof in connection therewith; (ii) the
validity, sufficiency or genuineness of documents, or of any endorsement
thereon, even if such documents should prove to be in any or all respects
invalid, insufficient, fraudulent or forged; (iii) payment by any Fronting Bank
against presentation of documents that do not comply with the terms of such
Letter of Credit, including failure of any documents to bear any reference or
adequate reference to such Letter of Credit; or (iv) any other circumstances
whatsoever in making or

 

32

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

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

 

(h) If there shall be more than one Fronting Bank that has issued a Letter of
Credit at any time hereunder, each such Fronting Bank shall, with respect to the
Letters of Credit issued by it and the reimbursement obligations owing to it, be
regarded hereunder as the “Fronting Bank” and shall have all of the rights,
interests, protections and obligations of the “Fronting Bank” hereunder with
respect to such Letters of Credit and reimbursement obligations and all matters
relating thereto. Whenever any action may be, or is required to be, taken by the
Fronting Bank hereunder, each Fronting Bank may, or shall, take such action only
in respect of the Letters of Credit issued by it and the reimbursement
obligations owing to it. Whenever the consent of the Fronting Bank is required
hereunder with respect to any proposed action, the consent of each Fronting Bank
of a Letter of Credit that is then outstanding, or in respect of which
reimbursement obligations remain outstanding, shall be required for such
proposed action to be taken. Any notice to be provided to the Fronting Bank
shall be provided to each Fronting Bank of a Letter of Credit that is then
outstanding, or in respect of which reimbursement obligations remain
outstanding, and each such Fronting Bank shall have the right to request any
information, and take any other action, as the Fronting Bank is permitted to do
hereunder. The protections accorded the Fronting Bank hereunder shall inure to
the benefit of each Fronting Bank, regardless of whether any Letter of Credit
issued by any such Fronting Bank or any reimbursement obligations in respect
thereof are outstanding at the time the benefits of such protections are
asserted.

 

(i) No Fronting Bank shall at any time be obligated to issue any Letter of
Credit if such issuance would result in the aggregate of the Stated Amounts of
all Letters of Credit issued by such Fronting Bank exceeding such Fronting
Bank’s LC Fronting Bank Commitment.

 

33

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

ARTICLE III

REPRESENTATIONS AND WARRANTIES

 

Each Borrower (or, if a representation and warranty relates to only a specific
Borrower, such Borrower) represents and warrants to each Lender and each
Fronting Bank as follows:

 

SECTION 3.01. Organization; Powers.

 

Such Borrower (i) is (in the case of Delivery) a corporation or (in the case of
Energy) a limited liability company, duly organized (in the case of Delivery) or
formed (in the case of Energy), validly existing and in good standing under the
laws of the jurisdiction of its organization or formation (as the case may be),
(ii) has all requisite power and authority to own its property and assets and to
carry on its business as now conducted and as proposed to be conducted, (iii) is
qualified to do business in every jurisdiction where such qualification is
required, except where the failure so to qualify would not result in a Material
Adverse Change, and (iv) has the (in the case of Delivery) corporate or (in the
case of Energy) limited liability company power and authority to execute,
deliver and perform its obligations under this Agreement and to request and
receive Extensions of Credit hereunder.

 

SECTION 3.02. Authorization.

 

The execution, delivery and performance by such Borrower of this Agreement and
the Extensions of Credit hereunder (i) have been duly authorized by all
requisite corporate (in the case of Delivery) or limited liability company (in
the case of Energy) action and (ii) will not (A) violate (x) any provision of
any law, statute, rule or regulation (including, without limitation, the Margin
Regulations) or of the certificate of incorporation or other constitutive
documents (including the limited liability company agreement) or by-laws of such
Borrower or any of its Subsidiaries to which such Borrower is subject, (y) any
order of any Governmental Authority or (z) any provision of any indenture,
agreement or other instrument to which such Borrower or any of its Subsidiaries
is a party or by which it or any of its property is or may be bound, (B) be in
conflict with, result in a breach of or constitute (alone or with notice or
lapse of time or both) a default under any such indenture, agreement or other
instrument or (C) result in the creation or imposition of any Lien upon any
property or assets of such Borrower.

 

SECTION 3.03. Enforceability.

 

This Agreement constitutes a legal, valid and binding obligation of such
Borrower enforceable in accordance with its terms except to the extent that
enforcement may be limited by bankruptcy, insolvency or similar laws affecting
the enforcement of creditors’ rights generally.

 

SECTION 3.04. Governmental Approvals.

 

No action, consent or approval of, registration or filing with or other action
by any Governmental Authority is or will be required in connection with the
execution, delivery and performance by such Borrower of this Agreement, except
those as have been duly obtained and as are (i) in full force and effect, (ii)
sufficient for their purpose and (iii) not subject to any pending or, to the
knowledge of such Borrower, threatened appeal or other proceeding seeking
reconsideration or review thereof.

 

SECTION 3.05. Financial Statements.

 

(a) The consolidated balance sheet of such Borrower and its Consolidated
Subsidiaries as of December 31, 2004 and the related consolidated statements of
income, retained earnings and cash flows for the fiscal year then ended,
reported on by Deloitte &

 

34

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

Touche LLP, and set forth in Delivery’s Annual Report on Form 10-K and in
Energy’s Annual Report on Form 10-K/A, copies of which have been made available
to each of the Lenders and the Fronting Banks, present fairly, in all material
respects, the consolidated financial position of such Borrower and its
Consolidated Subsidiaries as of such date and their consolidated results of
operations and cash flows for the period ending on such date in conformity with
GAAP.

 

(b) Except as set forth in the financial statements or other reports of the type
referred to in Section 5.03 hereof and that have been made available to the
Lenders and the Fronting Banks on or prior to the date of this Agreement
(collectively, the “Borrower Information”), since December 31, 2004, there has
been no Material Adverse Change with respect to such Borrower, other than as a
result of the matters excluded from the computation of Consolidated Earnings
Available for Fixed Charges as set forth in the definition thereof.

 

SECTION 3.06. Litigation.

 

Except as set forth in the Borrower Information, there is no action, suit or
arbitral or governmental proceeding pending against, or to the knowledge of such
Borrower threatened against or affecting, such Borrower or any of its
Subsidiaries before any court or arbitrator or any governmental body, agency or
official in which there is a reasonable possibility of an adverse decision that
could result in a Material Adverse Change.

 

SECTION 3.07. Federal Reserve Regulations.

 

(a) Neither such Borrower nor any of its Subsidiaries is engaged principally, or
as one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying Margin Stock.

 

(b) No part of the proceeds of any Extension of Credit will be used by such
Borrower, whether directly or indirectly, and whether immediately, incidentally
or ultimately, to purchase or carry Margin Stock or to refund indebtedness
originally incurred for such purpose, or for any other purpose which entails a
violation of, or which is inconsistent with, the provisions of the Margin
Regulations.

 

(c) Not more than 25% of the value of the assets of any Borrower subject to the
restrictions of Sections 5.09 and 5.10 is represented by Margin Stock.

 

SECTION 3.08. Investment Company Act; Public Utility Holding Company Act.

 

(a) Neither such Borrower nor any of its Subsidiaries is an “investment company”
as defined in, or subject to regulation under, the Investment Company Act of
1940.

 

(b) Such Borrower and each of its Subsidiaries is exempt from all provisions of
the Public Utility Holding Company Act of 1935 and rules and regulations
thereunder, except for Sections 9(a)(2) and 33 of such Act and the rules and
regulations thereunder, and the execution and delivery by such Borrower of this
Agreement and the performance of its obligations hereunder do not violate any
provision of such Act or any rule or regulation thereunder.

 

35

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

SECTION 3.09. No Material Misstatements.

 

No report, financial statement or other written information furnished by or on
behalf of such Borrower to the Agent, any Fronting Bank or any Lender pursuant
to or in connection with this Agreement contains or will contain any material
misstatement of fact or omits or will omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under which
they were or will be made, not misleading; provided that, with respect to
projections and forward looking statements, such Borrower represents only that
such information was prepared in good faith based upon assumptions and estimates
believed to be reasonable at the time made and notes that whether or not such
projections or forward looking statements are in fact achieved will depend upon
future events some of which are not within the control of either Borrower and
actual results may vary from the projections and such variations may be material
and, accordingly, such Borrower gives no representation and warranty that such
projections and forward looking statements will be achieved.

 

SECTION 3.10. Taxes.

 

Such Borrower and its Subsidiaries have filed or caused to be filed within 3
days of the date on which due, all material Federal, state and local tax returns
which to their knowledge are required to be filed by them, and have paid or
caused to be paid all material taxes shown to be due and payable on such returns
or on any assessments received by them, other than any taxes or assessments the
validity of which is being contested in good faith by appropriate proceedings
and with respect to which appropriate accounting reserves have to the extent
required by GAAP been set aside.

 

SECTION 3.11. Employee Benefit Plans.

 

With respect to each Plan, such Borrower and its ERISA Affiliates are in
compliance in all material respects with the applicable provisions of ERISA and
the Code and the final regulations and published interpretations thereunder. No
ERISA Event has occurred that alone or together with any other ERISA Event has
resulted or could reasonably be expected to result in a Material Adverse Change.
Neither such Borrower nor any ERISA Affiliate has incurred any Withdrawal
Liability that could result in a Material Adverse Change. Neither such Borrower
nor any ERISA Affiliate has received any notification that any Multiemployer
Plan is in reorganization or has been terminated within the meaning of Title IV
of ERISA, which such reorganization or termination could result in a Material
Adverse Change, and no Multiemployer Plan is reasonably expected to be in
reorganization or to be terminated where such reorganization or termination has
resulted or can reasonably be expected to result, through an increase in the
contributions required to be made to such Plan or otherwise, in a Material
Adverse Change.

 

SECTION 3.12. Significant Subsidiaries.

 

Each of such Borrower’s Significant Subsidiaries is a corporation, limited
liability company or other type of person duly incorporated or formed (as the
case may be), validly existing and in good standing under the laws of its
jurisdiction of incorporation, organization or formation (as the case may be)
and has all corporate, limited liability company, partnership or other (as the
case may be) powers necessary to carry on its business substantially as now

 

36

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

conducted. Each of such Borrower’s Significant Subsidiaries has all material
governmental licenses, authorizations, consents and approvals required to carry
on its business substantially as now conducted.

 

SECTION 3.13. Environmental Matters.

 

Except as set forth in or contemplated by the Borrower Information, such
Borrower and each of its Subsidiaries has complied in all material respects with
all Federal, state, local and other statutes, ordinances, orders, judgments,
rulings and regulations relating to environmental pollution or to environmental
or nuclear regulation or control, except to the extent that failure to so comply
could not reasonably be expected to result in a Material Adverse Change. Except
as set forth in or contemplated by such Borrower Information, neither such
Borrower nor any of its Subsidiaries has received notice of any material failure
so to comply, except where such failure could not reasonably be expected to
result in a Material Adverse Change. Except as set forth in or contemplated by
such Borrower Information, the facilities of such Borrower or any of its
Subsidiaries, as the case may be, are not used to manage any hazardous wastes,
hazardous substances, hazardous materials, toxic substances, toxic pollutants or
substances similarly denominated, as those terms or similar terms are used in
the Resource Conservation and Recovery Act, the Comprehensive Environmental
Response Compensation and Liability Act, the Hazardous Materials Transportation
Act, the Toxic Substance Control Act, the Clean Air Act, the Clean Water Act or
any other applicable law relating to environmental pollution, or any nuclear
fuel or other radioactive materials, in violation in any material respect of any
law or any regulations promulgated pursuant thereto, except to the extent that
such violations could not reasonably be expected to result in a Material Adverse
Change. Except as set forth in or contemplated by such Borrower Information,
such Borrower is aware of no events, conditions or circumstances involving
environmental pollution or contamination that could reasonably be expected to
result in a Material Adverse Change.

 

SECTION 3.14. Solvency.

 

Such Borrower is Solvent.

 

ARTICLE IV

CONDITIONS

 

The obligations of the Lenders and the Fronting Banks to make Extensions of
Credit hereunder are subject to the satisfaction of the following conditions:

 

SECTION 4.01. Initial Extensions of Credit.

 

The Commitment of each Lender to make its initial Loan and of each Fronting Bank
to issue its initial Letter of Credit on or after the date hereof is subject to
the conditions that on or prior to the date of such Extension of Credit:

 

(a) The Agent shall have received favorable written legal opinions of (i) (A)
David P. Poole, Senior Vice President and Associate General Counsel of TXU
Business Services Company or a General Counsel or Associate General Counsel or a
local counsel of the applicable

 

37

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

Borrower, and (B) Thelen Reid & Priest LLP, counsel to the Borrowers, and (ii)
King & Spalding LLP, special New York counsel to the Agent, in each case dated
the date hereof, addressed to the Agent, the Fronting Bank and the Lenders and
in form and substance satisfactory to the Agent.

 

(b) The Agent shall have received (i) a copy of the certificate of incorporation
or formation (as the case may be), including all amendments thereto, of each
Borrower, certified as of a recent date by the Secretary of State of the state
of incorporation or formation (as the case may be) of such Borrower, and a
certificate as to the good standing of each Borrower as of a recent date from
such Secretary of State; (ii) a certificate of the Secretary or an Assistant
Secretary or analogous officer of each Borrower, dated the date of this
Agreement and certifying (A) that attached thereto is a true and complete copy
of the bylaws (in the case of Delivery) or limited liability company agreement
(in the case of Energy) of such Borrower as in effect on such date and at all
times since a date prior to the date of the resolutions described in clause (B)
below, (B) that attached thereto are true and complete copies of resolutions
duly adopted by the board of directors or managers (or any duly authorized
committee thereof) of such Borrower authorizing the execution and delivery by
such Borrower of this Agreement, the Extensions of Credit to be made hereunder
and the performance by such Borrower of all of its obligations hereunder, and
that such resolutions have not been modified, rescinded or amended and are in
full force and effect, (C) that the certificate of incorporation or formation
(as the case may be) referred to in clause (i) above has not been amended since
the date of the last amendment thereto shown on the certificate of good standing
furnished pursuant to such clause (i) and (D) as to the incumbency and specimen
signature of each officer executing this Agreement and any other document
delivered in connection herewith on behalf of such Borrower; (iii) a certificate
of another officer of such Borrower as to the incumbency and specimen signature
of the Secretary or Assistant Secretary or analogous officer executing the
certificate pursuant to (ii) above; and (iv) a certificate of a Responsible
Officer of each Borrower, dated the date of this Agreement, stating that (A) no
action, consent or approval of, registration or filing with or other action by
any Governmental Authority is or will be required in connection with the
execution, delivery and performance by such Borrower of this Agreement, except
those as have been duly obtained and as are (1) in full force and effect, (2)
sufficient for their purpose and (3) not subject to any pending or, to the
knowledge of such person, threatened appeal or other proceeding seeking
reconsideration or review thereof, and (B) the representations and warranties
set forth in Article III hereof are true and correct in all material respects on
and as of the date hereof, and (C) no Event of Default or Default has occurred
and is continuing on the date hereof.

 

(c) The Agent shall have received such other approvals, opinions, certificates,
instruments and documents as the Agent, any Fronting Bank or any of the Lenders
may have reasonably requested, in form satisfactory to the Agent and the
requesting Fronting Bank or Lender (if applicable).

 

(d) The Lenders, the Fronting Bank, the Agent and the Joint Lead Arrangers named
in the Letter Agreements shall have received payment of all fees and
reimbursements of all expenses for which invoices have been presented as and
when due on or prior to the date of the initial Extension of Credit pursuant to
the terms of this Agreement or the Letter Agreements.

 

38

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

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

 

SECTION 4.02. Conditions for All Extensions of Credit.

 

The Commitment of each Lender to make each Loan to any Borrower and of each
Fronting Bank to make each Extension of Credit relating to a Letter of Credit
issued for the benefit of any Borrower shall be subject to the satisfaction of
the following conditions precedent on the date of such Extension of Credit:

 

(a) The Agent and the relevant Fronting Bank, if applicable, shall have received
from such Borrower a notice requesting such Extension of Credit as required by
Section 2.03 or Section 2.17, as applicable.

 

(b) The representations and warranties of such Borrower set forth in Article III
hereof (except, in the case of any Extension of Credit that does not increase
the aggregate principal amount of the Outstanding Credits to such Borrower, the
representations set forth in Sections 3.05(b), 3.06, 3.11 and 3.13 and except,
in the case of any Extension of Credit that is to be used to repay commercial
paper, the representation set forth in Section 3.05(b)) shall be true and
correct in all material respects on and as of the date of such Extension of
Credit with the same effect as though made on and as of such date, except to the
extent such representations and warranties expressly relate to an earlier date.
Notwithstanding the foregoing, the representations and warranties set forth in
Section 3.05(b) shall not be required to be made pursuant to this subsection (b)
by (i) Delivery or (ii) Energy, if, at the time of such Extension of Credit,
Energy’s Applicable Rating Level is at Level 1, 2 or 3; provided that, if clause
(ii) of the proviso to Section 4.02(b) of that certain Amended and Restated
Revolving Credit Agreement, dated as of March 31, 2005, among the Borrowers, as
borrowers, the lenders party thereto, JPMorgan Chase Bank, N.A., as
administrative agent and as a fronting bank, and Citibank, Wachovia Bank,
National Association, Bank of America, N.A. and Caylon New York Branch, as
fronting banks, is amended such that the “Applicable Rating Level” threshold set
forth therein is lowered below that in effect on the date hereof, then the
Applicable Rating Level threshold set forth in clause (ii) of this sentence
shall be simultaneously amended to reflect the same such change.

 

(c) At the time of and immediately after such Extension of Credit, no Default or
Event of Default affecting such Borrower shall have occurred and be continuing
at the time of such Extension of Credit or would result from the making of such
Extension of Credit.

 

(d) The Agent shall have received a certificate of a Responsible Officer of such
Borrower certifying that the matters set forth in subsections (b) and (c) above
are true and correct as of such date.

 

Each Extension of Credit shall be deemed to constitute a representation and
warranty by the Borrower for which such Extension of Credit was made on the date
of such Extension of Credit as to the matters specified in subsections (b) and
(c) above.

 

39

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

ARTICLE V

COVENANTS

 

Each Borrower agrees that, so long as any Lender has any Commitment hereunder,
any Fronting Bank has any obligation to issue Letters of Credit hereunder, any
Letter of Credit remains available to be drawn or any amount payable hereunder
remains unpaid:

 

SECTION 5.01. Existence.

 

It will, and will cause each of its Significant Subsidiaries to, do or cause to
be done all things necessary to preserve and keep in full force and effect its
existence and all rights, licenses, permits, franchises and authorizations
necessary or desirable in the normal conduct of its business except as otherwise
permitted pursuant to Section 5.09.

 

SECTION 5.02. Compliance With Laws; Business and Properties.

 

It will, and will cause each of its Subsidiaries to, comply with all applicable
material laws, rules, regulations and orders of any Governmental Authority,
whether now in effect or hereafter enacted, except where the validity or
applicability of such laws, rules, regulations or orders is being contested by
appropriate proceedings in good faith; and at all times maintain and preserve
all property material to the conduct of its business and keep such property in
good repair, working order and condition and from time to time make, or cause to
be made, all needful and proper repairs, renewals, additions, improvements and
replacements thereto necessary in order that the business carried on in
connection therewith may be properly conducted at all times.

 

SECTION 5.03. Financial Statements, Reports, Etc.

 

It will furnish to the Agent, each Lender and each Fronting Bank:

 

(a) as soon as available and in any event within 120 days after the end of each
fiscal year of such Borrower, a consolidated balance sheet of such Borrower and
its Consolidated Subsidiaries as of the end of such fiscal year and the related
consolidated statements of income, retained earnings and cash flows for such
fiscal year, setting forth in each case in comparative form the figures for the
previous fiscal year, all reported on in a manner reasonably acceptable to the
SEC by Deloitte & Touche LLP or other independent public accountants of
nationally recognized standing;

 

(b) as soon as available and in any event within 75 days after the end of each
of the first three quarters of each fiscal year of such Borrower, a consolidated
balance sheet of such Borrower and its Consolidated Subsidiaries as of the end
of such quarter and the related consolidated statements of income for such
quarter, for the portion of such Borrower’s fiscal year ended at the end of such
quarter, and for the twelve months ended at the end of such quarter, and the
related consolidated statement of cash flows for the portion of such Borrower’s
fiscal year ended at the end of such quarter, setting forth comparative figures
for previous dates and periods to the extent required in Form 10-Q, all
certified (subject to normal year-end adjustments) as to fairness of
presentation, GAAP and consistency by a Financial Officer of such Borrower;

 

40

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

(c) simultaneously with any delivery of each set of financial statements
referred to in subsections (a) and (b) above a certificate of a Financial
Officer of such Borrower (i) setting forth in reasonable detail the calculations
required to establish whether such Borrower was in compliance with the
requirements of Sections 5.11 and 5.12 on the date of such financial statements,
and (ii) stating whether any Default or Event of Default exists on the date of
such certificate and, if any Default or Event of Default then exists, setting
forth the details thereof and the action that such Borrower is taking or
proposes to take with respect thereto;

 

(d) simultaneously with the delivery of each set of financial statements
referred to in subsection (a) above, a statement of the firm of independent
public accountants that reported on such statements (i) stating whether anything
has come to their attention to cause them to believe that any Default or Event
of Default existed on the date of such statements and (ii) confirming the
calculations set forth in the Financial Officer’s certificate delivered
simultaneously therewith pursuant to subsection (c) above;

 

(e) forthwith upon becoming aware of the occurrence of any Default or Event of
Default, a certificate of a Financial Officer of the affected Borrower setting
forth the details thereof and the action that such Borrower is taking or
proposes to take with respect thereto;

 

(f) promptly upon the filing thereof, copies of each final prospectus (other
than a prospectus included in any registration statement on Form S-8 or its
equivalent or with respect to a dividend reinvestment plan) and all reports on
Forms 10-K, 10-Q and 8-K and similar reports that such Borrower shall have filed
with the SEC, or any Governmental Authority succeeding to any of or all the
functions of the SEC;

 

(g) if and when any member of the Controlled Group (i) gives or is required to
give notice to the PBGC of any Reportable Event with respect to any Plan that
might constitute grounds for a termination of such Plan under Title IV of ERISA,
or knows that the plan administrator of any Plan has given or is required to
give notice of any such Reportable Event, a copy of the notice of such
Reportable Event given or required to be given to the PBGC; (ii) receives notice
from a proper representative of a Multiemployer Plan of complete or partial
Withdrawal Liability being imposed upon such member of the Controlled Group
under Title IV of ERISA, a copy of such notice; or (iii) receives notice from
the PBGC under Title IV of ERISA of an intent to terminate, or appoint a trustee
to administer, any Plan, a copy of such notice; and

 

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

 

As promptly as practicable after delivering each set of financial statements as
required in subsection (a) above, each Borrower shall make available a copy of
the consolidating workpapers used by such Borrower in preparing such
consolidated statements to each Fronting Bank and each Lender that shall have
requested such consolidating workpapers. Each Lender and Fronting Bank that
receives such consolidating workpapers shall hold them in confidence as required
by Section 8.15; provided that neither any Lender nor any Fronting Bank may
disclose such consolidating workpapers to any other person pursuant to clause
(iv) of Section 8.15.

 

41

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

SECTION 5.04. Insurance.

 

It will, and will cause each of its Subsidiaries to, maintain such insurance or
self insurance, to such extent and against such risks, including fire and other
risks insured against by extended coverage, as is customary with companies
similarly situated and in the same or similar businesses.

 

SECTION 5.05. Taxes, Etc.

 

It will, and will cause each of its Subsidiaries to, pay and discharge promptly
when due all material taxes, assessments and governmental charges imposed upon
it or upon its income or profits or in respect of its property, as well as all
other material liabilities, in each case before the same shall become delinquent
or in default and before penalties accrue thereon, unless and to the extent that
the same are being contested in good faith by appropriate proceedings and
adequate reserves with respect thereto shall, to the extent required by GAAP,
have been set aside.

 

SECTION 5.06. Maintaining Records; Access to Properties and Inspections.

 

It will, and will cause each of its Subsidiaries to, maintain financial records
in accordance with GAAP and, upon reasonable notice and at reasonable times,
permit authorized representatives designated by any Lender or any Fronting Bank
to visit and inspect its properties and to discuss its affairs, finances and
condition with its officers.

 

SECTION 5.07. ERISA.

 

It will, and will cause each of its Subsidiaries that are members of the
Controlled Group to, comply in all material respects with the applicable
provisions of ERISA and the Code except where any noncompliance, individually or
in the aggregate, would not result in a Material Adverse Change.

 

SECTION 5.08. Use of Proceeds.

 

It will not, and will not cause or permit any of its Subsidiaries to, use the
proceeds of the Loans or the Letters of Credit for purposes other than for
working capital and other general corporate purposes, including the making of
advances to Affiliates of the Borrowers and the refinancing of short-term
borrowings used for working capital and other general corporate purposes.

 

SECTION 5.09. Consolidations, Mergers, Sales and Acquisitions of Assets and
Investments in Subsidiaries.

 

(a) It will not, and will not permit any of its Significant Subsidiaries to,
consolidate or merge with or into any person unless (i) in the case of any such
transaction involving such Borrower, the surviving person is such Borrower or
another person formed under the laws of a State of the United States of America
and assumes or is responsible, by operation of law, for all the obligations of
such Borrower hereunder and (ii) in the case of any such transaction involving
any such Significant Subsidiary, the survivor is such Borrower, such Significant
Subsidiary or a Wholly Owned Subsidiary of such Borrower (or a person which as a
result of such transaction becomes a Wholly Owned Subsidiary of such Borrower).

 

42

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

(b) It will not, and will not permit any of its Significant Subsidiaries to,
make a Significant Disposition to any person unless (i) such Significant
Disposition is made to such Borrower, a Wholly Owned Subsidiary of such Borrower
or a person that, as a result of such transaction, becomes a Wholly Owned
Subsidiary of such Borrower, (ii) in the case of Energy, such Significant
Disposition (A) is comprised of a sale by such Borrower, in an initial public
offering, of up to 20% of the equity interests in any Subsidiary comprising
generating assets of such Borrower, (B) is made by such Borrower of up to 50% of
the common stock, common members’ interests or partnership interests in TXU
Generation Company LP (provided that it shall be a condition precedent to any
such Significant Disposition that, immediately following such Significant
Disposition, such Borrower shall be in pro forma compliance with Sections 5.11
and 5.12), and (C) is made by such Borrower of interests in the Comanche Peak
nuclear power generation plant, to the extent that the consideration for such
Significant Disposition is non-cash, (iii) such Significant Disposition is made
in connection with outsourcing arrangements in connection with Capgemini Energy
L.P. and its successors and assigns, or any similar provider of outsourcing
services properly substituted therefor and its successors and assigns, (iv) such
Significant Disposition is related to the formation or operation of an energy
marketing and trading vehicle in which Energy owns an interest, or will own an
interest, upon the formation of such energy marketing and trading vehicle, (v)
the proceeds of such Significant Disposition are reinvested in the business of
such Borrower or any of its Subsidiaries or are used to reduce the indebtedness
of such Borrower or any of its Subsidiaries, (vi) such Significant Disposition
is made by TXU Generation Company LP of gas-fired plants or combustion turbines,
as announced by TXU on February 1, 2005, (vii) such Significant Disposition is
of any Qualified Transition Bond Issuer; or (viii) such Significant Disposition
is made by TXU of the Pedricktown, New Jersey 122 megawatt power production
facility and related assets and properties pursuant to the agreement entered
into on May 4, 2005, in connection with the plan initiated by Energy in the
second fiscal quarter of 2004 and announced in Energy’s Form 10-Q filed with the
Securities and Exchange Commission on August 13, 2004.

 

(c) Notwithstanding anything to the contrary contained in this Section, (i) such
Borrower will not in any event permit any such consolidation, merger, sale,
lease or transfer if any Default or Event of Default relating to such Borrower
shall have occurred and be continuing at the time of or after giving effect to
such transaction, (ii) neither any Borrower nor any of its Subsidiaries will
engage to a Substantial extent in businesses other than those currently
conducted by them and other businesses reasonably related thereto, (iii) neither
any Borrower nor any of its Subsidiaries will acquire any Subsidiary or make any
investment in any Subsidiary if, upon giving effect to such acquisition or
investment, as the case may be, such Borrower would not be in compliance with
the covenants set forth in Sections 5.11 and 5.12 and (iv) nothing in this
Section shall prohibit any sales of assets permitted by Section 5.10(d).

 

SECTION 5.10. Limitations on Liens.

 

Neither such Borrower nor any Significant Subsidiary thereof will create or
assume or permit to exist any Lien in respect of any property or assets of any
kind (real or personal, tangible or intangible) of such Borrower or any such
Significant Subsidiary, or sell any such

 

43

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

property or assets subject to an understanding or agreement, contingent or
otherwise, to repurchase such property or assets, or sell, or permit any
Significant Subsidiary thereof to sell, any accounts receivable; provided that
the provisions of this Section shall not prevent or restrict the creation,
assumption or existence of:

 

(a) any Lien in respect of any such property or assets of any Significant
Subsidiary of such Borrower to secure indebtedness owing by it to such Borrower
or any Wholly Owned Subsidiary of such Borrower; or

 

(b) Liens (including capital leases) in respect of property acquired by such
Borrower or any Significant Subsidiary thereof, to secure the purchase price, or
the cost of construction and development, of such property (or to secure
indebtedness incurred prior to, at the time of, or within 120 days after the
later of the acquisition of such property and the commencement of operation of
such property for the purpose of financing the acquisition, or the cost of
construction and development, of such property), or Liens existing on any such
property at the time of acquisition of such property by such Borrower or such
Significant Subsidiary, whether or not assumed, or any Lien in respect of
property of any person existing at the time such person becomes a Subsidiary of
such Borrower; or agreements to acquire any property or assets under conditional
sale agreements or other title retention agreements, or capital leases in
respect of any other property; provided that

 

(A) the aggregate principal amount of Indebtedness secured by all Liens in
respect of any such property shall not exceed the cost (as determined by the
board of directors or analogous governing body of such Borrower or such
Significant Subsidiary, as the case may be) of such property at the time of
acquisition thereof (or (x) in the case of property covered by a capital lease,
the fair market value, as so determined, of such property at the time of such
transaction, or (y) in the case of a Lien in respect of property existing at the
time such person becomes a Subsidiary of such Borrower the fair market value, as
so determined of such property at such time), and

 

(B) at the time of the acquisition of the property by such Borrower or such
Significant Subsidiary, or at the time such person becomes a Subsidiary of such
Borrower, as the case may be, every such Lien shall apply and attach only to the
property originally subject thereto and fixed improvements constructed thereon;
or

 

(c) refundings or extensions of any Lien permitted in the foregoing subsection
(b) for amounts not exceeding the principal amount of the Indebtedness so
refunded or extended or the fair market value (as determined by the board of
directors (or analogous governing body) of such Borrower or such Significant
Subsidiary, as the case may be) of the property theretofore subject to such
Lien, whichever shall be lower, in each case at the time of such refunding or
extension; provided that such Lien shall apply only to the same property
theretofore subject to the same and fixed improvements constructed thereon; or

 

(d) sales subject to understandings or agreements to repurchase; provided that
the aggregate sales price for all such sales (other than sales to any
governmental instrumentality in

 

44

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

connection with such instrumentality’s issuance of indebtedness, including
without limitation industrial development bonds and pollution control bonds, on
behalf of such Borrower or any Significant Subsidiary thereof) made in any one
calendar year shall not exceed $50,000,000 in the aggregate for the Borrowers
and their respective Significant Subsidiaries; or

 

(e) any production payment or similar interest which is dischargeable solely out
of natural gas, coal, lignite, oil or other mineral to be produced from the
property subject thereto and to be sold or delivered by such Borrower or any
Significant Subsidiary thereof; or

 

(f) any Lien, including in connection with sale-leaseback transactions, created
or assumed by such Borrower or any Significant Subsidiary thereof on natural
gas, coal, lignite, oil or other mineral properties or nuclear fuel owned or
leased by such Borrower or such Subsidiary, to secure loans to such Borrower or
such Subsidiary in an aggregate amount not to exceed $400,000,000 in the
aggregate for the Borrowers and their respective Significant Subsidiaries;
provided that neither such Borrower nor any Subsidiary of such Borrower shall
assume or guarantee such financings; or

 

(g) any Lien (whenever incurred) on assets owned by such Borrower or any
Subsidiary thereof as of the date hereof and any fuel, operating and maintenance
or similar contract related thereto securing Indebtedness of such Borrower or
Subsidiary in an aggregate amount not to exceed 10% of consolidated assets of
such Borrower; or

 

(h) leases (other than capital leases) now or hereafter existing and any
renewals and extensions thereof under which such Borrower or any Significant
Subsidiary thereof may acquire or dispose of any of its property, subject,
however, to the terms of Section 5.09; or

 

(i) any Lien created or to be created by the First Mortgage; or

 

(j) any Lien on the rights of TXU Mining or TXU Fuel existing under their
respective Operating Agreements; or

 

(k) pledges or sales by any such Borrower or any Subsidiary of any Borrower of
its accounts receivable including customers’ installment paper; or

 

(l) the pledge of current assets, in the ordinary course of business, to secure
current liabilities; or

 

(m) Permitted Encumbrances; or

 

(n) the Liens in favor of the Agent on funds in the Cash Collateral Account and
on the Cash Collateral Account to secure the reimbursement obligations of the
Borrowers in respect of Letters of Credit and comparable Liens created to secure
reimbursement obligations for other letters of credit issued for the account of
any Borrower or any of its Subsidiaries; or

 

(o) any Lien incurred in connection with the issuance of Qualified Transition
Bonds.

 

45

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

SECTION 5.11. Fixed Charge Coverage Ratio.

 

Such Borrower will not, as of the end of each quarter of each fiscal year of
such Borrower, permit the ratio of (x) its Consolidated Earnings Available for
Fixed Charges for the twelve months then ended to (y) its Consolidated Fixed
Charges for the twelve months then ended to be less than 2.00 to 1.00, in the
case of Energy, and 1.75 to 1.00, in the case of Delivery.

 

SECTION 5.12. Debt to Total Capitalization Ratio.

 

Such Borrower will not, as of the end of each quarter of each fiscal year of
such Borrower, permit the ratio of its Consolidated Senior Debt to its
Consolidated Total Capitalization to be greater than 0.60 to 1.00, in the case
of Energy, and 0.65 to 1.00, in the case of Delivery.

 

SECTION 5.13. Restrictive Agreements.

 

Energy will not permit TXU Generation Company LP, TXU Energy Retail Company LP
or any of their respective Significant Subsidiaries (the “Subject Subsidiaries”)
to enter into any agreement restricting the ability of any Subject Subsidiary to
make payments, directly or indirectly, to Energy by way of dividends, advances,
repayments of loans or advances, reimbursements of management and other
intercompany charges, expenses and accruals or other returns on investments or
any other agreement or arrangement that restricts the ability of such Subject
Subsidiary to make any payment, directly or indirectly, to Energy other than
pursuant to the terms of preferred stock or Equity-Credit Preferred Securities
issued by such Subject Subsidiary, if the effect of such agreement is to subject
such Subject Subsidiary to restrictions on such payments greater than those to
which such Subject Subsidiary is subject on the date of this Agreement. All such
existing restrictive agreements are listed on Schedule 5.13 hereto.

 

ARTICLE VI

EVENTS OF DEFAULT

 

In case of the happening of any of the following events (each an “Event of
Default”) with respect to a Borrower:

 

(a) any representation or warranty made or deemed made by such Borrower in or in
connection with the execution and delivery of this Agreement or the Extensions
of Credit hereunder shall prove to have been false or misleading in any material
respect when so made, deemed made or furnished;

 

(b) default shall be made by such Borrower in the payment of any principal of
any Outstanding Credit when and as the same shall become due and payable,
whether at the due date thereof or at a date fixed for prepayment thereof or by
acceleration thereof or otherwise;

 

(c) default shall be made by such Borrower in the payment of any interest on any
Outstanding Credit or any Fee or any other amount (other than an amount referred
to in subsection (b) above) due hereunder, when and as the same shall become due
and payable, and such default shall continue unremedied for a period of five
days;

 

46

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

(d) default shall be made by such Borrower in the due observance or performance
of any covenant, condition or agreement contained in Section 5.01, 5.11 or 5.12;

 

(e) default shall be made by such Borrower (i) in the due observance or
performance of any covenant, condition or agreement contained in Section 5.09
and such default shall continue unremedied for a period of 5 days or (ii) in the
due observance or performance of any covenant, condition or agreement contained
herein (other than those specified in (b), (c), (d) or (e)(i) above) or in the
Letter Agreements and such default shall continue unremedied for a period of 30
days after notice thereof from the Agent at the request of any Lender or any
Fronting Bank to such Borrower;

 

(f) (i) TXU shall no longer own, directly or indirectly, 80% of the outstanding
common stock or common members’ interest in such Borrower or any permitted
successor to such Borrower (which shall constitute an Event of Default for the
Borrower in which TXU has ceased to own, directly or indirectly, 80% of such
common stock or common members’ interest), or (ii) Energy shall no longer own,
directly or indirectly, (A) 100% of the common stock, common members’ interest
or partnership interests in TXU Energy Retail Company LP or (B) 50% of the
common stock, common members’ interest or partnership interests in TXU
Generation Company LP (which, in the case of either (A) or (B), shall constitute
an Event of Default for Energy only);

 

(g) such Borrower or any Subsidiary thereof shall (i) fail to pay any principal
or interest, regardless of amount, due in respect of any Indebtedness in a
principal amount in excess of $50,000,000, when and as the same shall become due
and payable, subject to any applicable grace periods, or (ii) fail to observe or
perform any other term, covenant, condition or agreement contained in any
agreement or instrument evidencing or governing any such Indebtedness if the
effect of any failure referred to in this clause (ii) is to cause, or to permit
the holder or holders of such Indebtedness or a trustee on its or their behalf
to cause, such Indebtedness to become accelerated or due prior to its stated
maturity;

 

(h) an involuntary proceeding shall be commenced or an involuntary petition
shall be filed in a court of competent jurisdiction seeking (i) relief in
respect of such Borrower or any Significant Subsidiary thereof, or of a
substantial part of the property or assets of such Borrower or any Significant
Subsidiary thereof, under Title 11 of the United States Bankruptcy Code, as now
constituted or hereafter amended, or any other Federal or state bankruptcy,
insolvency, receivership or similar law, (ii) the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for such
Borrower or any Significant Subsidiary thereof or for a substantial part of the
property or assets of such Borrower or any Significant Subsidiary thereof or
(iii) the winding up or liquidation of such Borrower or any Significant
Subsidiary thereof; and such proceeding or petition shall continue undismissed
for 60 days or an order or decree approving or ordering any of the foregoing
shall be entered;

 

(i) such Borrower or any Significant Subsidiary thereof shall (i) voluntarily
commence any proceeding or file any petition seeking relief under Title 11 of
the United States

 

47

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

Bankruptcy Code, as now constituted or hereafter amended, or any other Federal
or state bankruptcy, insolvency, receivership or similar law, (ii) consent to
the institution of, or fail to contest in a timely and appropriate manner, any
proceeding or the filing of any petition described in (h) above, (iii) apply for
or consent to the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for such Borrower or any Significant Subsidiary
thereof or for a substantial part of the property or assets of it or such
Significant Subsidiary, (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, (vi) become unable, admit in writing
its inability or fail generally to pay its debts as they become due or (vii)
take any action for the purpose of effecting any of the foregoing;

 

(j) a Change in Control shall occur (which shall constitute an Event of Default
for each Borrower);

 

(k) one or more judgments or orders for the payment of money in an aggregate
amount in excess of $50,000,000 shall be rendered against such Borrower or any
Subsidiary thereof or any combination thereof and such judgment or order shall
remain undischarged or unstayed for a period of 30 days, or any action shall be
legally taken by a judgment creditor to levy upon assets or properties of such
Borrower or any Subsidiary thereof to enforce any such judgment or order;

 

(l) an ERISA Event or ERISA Events shall have occurred that reasonably could be
expected to result in a Material Adverse Change with respect to such Borrower;

 

then, and in every such event, and at any time thereafter during the continuance
of such event, the Agent, at the request of the Required Lenders, shall, by
notice to the affected Borrower(s), take one or all of the following actions, at
the same or different times: (i) terminate forthwith the right of such affected
Borrower(s) to request and receive Extensions of Credit; and (ii) declare the
Loans of the affected Borrower(s) then outstanding to be forthwith due and
payable in whole or in part, whereupon the principal of the Loans so declared to
be due and payable, together with accrued interest thereon and any unpaid
accrued Fees and all other liabilities of such Borrower(s) accrued hereunder,
shall become forthwith due and payable, without presentment, demand, protest or
any other notice of any kind, all of which are hereby expressly waived, anything
contained herein to the contrary notwithstanding; provided that in the case of
any event described in subsection (h) or (i) above affecting any Borrower, the
right of such Borrower to request and receive Extensions of Credit shall
automatically terminate and the principal of the Loans then outstanding of such
Borrower, together with accrued interest thereon and any unpaid accrued Fees and
all other liabilities of such Borrower accrued hereunder shall automatically
become due and payable, without presentment, demand, protest or any other notice
of any kind, all of which are hereby expressly waived by such Borrower, anything
contained herein to the contrary notwithstanding.

 

Notwithstanding anything to the contrary contained herein, no notice given or
declaration made by the Agent pursuant to this Article VI shall affect (i) the
obligation of any Fronting Bank to make any payment under any Letter of Credit
issued by such Fronting Bank in accordance with the terms of such Letter of
Credit or (ii) the obligations of each Lender in respect of each such Letter of
Credit; provided, however, that upon the occurrence and during the continuance
of

 

48

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

any Event of Default affecting any Borrower, the Agent shall at the request, or
may with the consent, of the Required Lenders, upon notice to such Borrower,
require such Borrower to deposit with the Agent an amount in the cash collateral
account (the “Cash Collateral Account”) described below equal to the aggregate
maximum amount available to be drawn under all Letters of Credit issued for the
account of such Borrower and outstanding at such time. Such Cash Collateral
Account shall at all times be free and clear of all rights or claims of third
parties. The Cash Collateral Account shall be maintained with the Agent in the
name of, and under the sole dominion and control of, the Agent, and amounts
deposited in the Cash Collateral Account shall bear interest at a rate equal to
the rate generally offered by Citibank for deposits equal to the amount
deposited by such Borrower in the Cash Collateral Account, for a term to be
determined by the Agent in its sole discretion. Each Borrower hereby grants to
the Agent for the benefit of the Fronting Banks and the Lenders a Lien on, and
hereby assigns to the Agent for the benefit of the Fronting Banks and the
Lenders all of its right, title and interest in, the Cash Collateral Account and
all funds from time to time on deposit therein to secure its reimbursement
obligations in respect of Letters of Credit issued for its account. If any
drawings then outstanding or thereafter made are not reimbursed in full
immediately upon demand or, in the case of subsequent drawings, upon being made,
then, in any such event, the Agent may apply the amounts then on deposit in the
Cash Collateral Account, in such priority as the Agent shall elect, toward the
payment in full of any or all of any Borrower’s obligations hereunder as and
when such obligations shall become due and payable, regardless of whether the
amounts to be so applied were deposited by the Borrower for the account of which
the Letter(s) of Credit then being drawn were issued. Upon payment in full,
after the termination of the Letters of Credit, of all such obligations, the
Agent will repay and reassign to the relevant Borrowers any cash then on deposit
in the Cash Collateral Account and the Lien of the Agent on the Cash Collateral
Account and the funds therein shall automatically terminate.

 

ARTICLE VII

THE AGENT

 

(a) In order to expedite the transactions contemplated by this Agreement,
Citibank is hereby appointed to act as Agent on behalf of the Lenders and the
Fronting Banks. Each Lender and each Fronting Bank hereby irrevocably authorizes
the Agent to take such actions on behalf of such Lender and such Fronting Bank
and to exercise such powers as are specifically delegated to the Agent by the
terms and provisions hereof, together with such actions and powers as are
reasonably incidental thereto. The Agent is hereby expressly authorized by the
Lenders and the Fronting Banks, without hereby limiting any implied authority,
(i) to receive on behalf of the Lenders and the Fronting Banks all payments of
principal of and interest on the Outstanding Credits and all other amounts due
to the Lenders and the Fronting Banks hereunder, and promptly to distribute to
each Lender and each Fronting Bank, its proper share of each payment so
received; (ii) to give notice on behalf of each Lender and each Fronting Bank to
the Borrowers of any Event of Default of which the Agent has actual knowledge
acquired in connection with its agency hereunder; and (iii) to distribute to
each Lender and each Fronting Bank copies of all notices, financial statements
and other materials delivered by the Borrowers pursuant to this Agreement as
received by the Agent.

 

49

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

(b) Neither the Agent nor any of its directors, officers, employees or agents
shall be liable as such for any action taken or omitted by any of them except
for its or his or her own gross negligence or willful misconduct, or be
responsible for any statement, warranty or representation herein or the contents
of any document delivered in connection herewith, or be required to ascertain or
to make any inquiry concerning the performance or observance by the Borrowers of
any of the terms, conditions, covenants or agreements contained in this
Agreement. The Agent shall not be responsible to the Lenders or the Fronting
Banks for the due execution, genuineness, validity, enforceability or
effectiveness of this Agreement or other instruments or agreements. The Agent
may deem and treat the Lender or the Fronting Bank that makes any Extension of
Credit as the holder of the indebtedness resulting therefrom for all purposes
hereof until it shall have received notice from such Lender or such Fronting
Bank, given as provided herein, of the transfer thereof. The Agent shall in all
cases be fully protected in acting, or refraining from acting, in accordance
with written instructions signed by the Required Lenders and, except as
otherwise specifically provided herein, such instructions and any action or
inaction pursuant thereto shall be binding on all the Lenders and the Fronting
Banks. The Agent shall, in the absence of knowledge to the contrary, be entitled
to rely on any instrument or document believed by it in good faith to be genuine
and correct and to have been signed or sent by the proper person or persons.
Neither the Agent nor any of its directors, officers, employees or agents shall
have any responsibility to the Borrowers on account of the failure of or delay
in performance or breach by any Lender or any Fronting Bank of any of its
obligations hereunder or to any Lender or any Fronting Bank on account of the
failure of or delay in performance or breach by any other Lender, any Fronting
Bank or any Borrower of any of their respective obligations hereunder or in
connection herewith. The Agent may execute any and all duties hereunder by or
through agents or employees and shall be entitled to rely upon the advice of
legal counsel selected by it with respect to all matters arising hereunder and
shall not be liable for any action taken or suffered in good faith by it in
accordance with the advice of such counsel.

 

(c) The Lenders and the Fronting Banks hereby acknowledge that the Agent shall
not be under any duty to take any discretionary action permitted to be taken by
it pursuant to the provisions of this Agreement unless it shall be requested in
writing to do so by the Required Lenders.

 

(d) Subject to the appointment and acceptance of a successor Agent as provided
below, the Agent may resign at any time by notifying the Lenders, the Fronting
Banks and the Borrowers. Upon any such resignation, the Required Lenders shall
have the right to appoint a successor Agent acceptable to the Borrowers. If no
successor shall have been so appointed by the Required Lenders and shall have
accepted such appointment within 30 days after the Agent gives notice of its
resignation, then the Agent may, on behalf of the Lenders and the Fronting
Banks, appoint a successor Agent, having a combined capital and surplus of at
least $500,000,000 or an Affiliate of any such bank. Upon the acceptance of any
appointment as Agent hereunder by a successor bank, such successor shall succeed
to and become vested with all the rights, powers, privileges and duties of the
retiring Agent and the Agent shall be discharged from its duties and obligations
hereunder. After the Agent’s resignation hereunder, the provisions of this
Article and Section 8.05 shall continue in effect for its benefit in respect of
any actions taken or omitted to be taken by it while it was acting as the Agent.

 

50

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

(e) With respect to the Extensions of Credit made by it hereunder, the Agent, in
its individual capacity and not as Agent, shall have the same rights and powers
as any other Lender and may exercise the same as though it were not the Agent,
and the Agent and its Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Borrowers or any Subsidiary or
other Affiliate thereof as if it were not Agent.

 

(f) Each Lender agrees (i) to reimburse the Agent, on demand, in the amount of
its pro rata share (based on its Commitment hereunder or, if the Commitments
shall have been terminated, the amount of its percentage of Outstanding Credits)
of any expenses incurred for the benefit of the Lenders or the Fronting Banks,
in its role as Agent, including counsel fees and compensation of agents and
employees paid for services rendered on behalf of the Lenders or the Fronting
Banks, which shall not have been reimbursed by the Borrowers and (ii) to
indemnify and hold harmless the Agent and any of its directors, officers,
employees or agents, on demand, in the amount of such pro rata share, from and
against any and all liabilities, taxes, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against it in
any way relating to or arising out of this Agreement or any action taken or
omitted by it under this Agreement to the extent the same shall not have been
reimbursed by the Borrowers; provided that neither any Lender nor any Fronting
Bank shall be liable to the Agent for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the gross negligence or willful
misconduct of the Agent or any of its directors, officers, employees or agents.
Each Lender and each Fronting Bank agrees that any allocation made in good faith
by the Agent of expenses or other amounts referred to in this subsection (f)
shall be conclusive and binding for all purposes.

 

(g) Each Lender and each Fronting Bank acknowledges that it has, independently
and without reliance upon the Agent or any other Lender or Fronting Bank, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Lender and
each Fronting Bank also acknowledges that it will, independently and without
reliance upon the Agent or any other Lender or Fronting Bank, 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 or any related agreement or any document furnished hereunder
or thereunder.

 

(h) Neither Citigroup Global Markets Inc., by virtue of its designation as “Lead
Arranger and Sole Bookrunner” on the cover page of this Agreement, nor any of
Citibank, N.A., JPMorgan Chase Bank, N.A., Calyon New York Branch, Deutsche Bank
AG New York Branch, and Wachovia Bank, National Association, by virtue of its
designation as “Syndication Agents” on the cover page of this Agreement, shall
have any duties, liabilities, obligations or responsibilities under this
Agreement other than, if applicable, as a Lender or as a Fronting Bank
hereunder.

 

51

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

ARTICLE VIII

MISCELLANEOUS

 

SECTION 8.01. Notices.

 

Notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed or sent by
facsimile, as follows:

 

(a) if to any Borrower, to such Borrower c/o TXU Business Services Company,
Energy Plaza, 1601 Bryan Street, Dallas, TX 75201, Attention: Treasurer
(Facsimile No. 214-812-4097);

 

(b) if to Citibank, as Agent, to Two Penns Way, Suite 200, New Castle, DE 19720,
Attention: Bank Loan Syndications (Facsimile No. 212-994-0961);

 

(c) if to (i) Citibank, as a Fronting Bank, to it at 388 Greenwich Street, 21st
Floor, New York, NY 10013 Attn: Sarah Terner (Facsimile No. 212-816-8098); and

 

(d) if to a Lender, to it at its address (or facsimile number) set forth in the
Register or in the Assignment and Acceptance pursuant to which such Lender
became a party 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 delivered by hand or overnight courier service or sent by
facsimile or electronic mail to such party as provided in this Section or in
accordance with the latest unrevoked direction from such party given in
accordance with this Section.

 

SECTION 8.02. Survival of Agreement.

 

All covenants, agreements, representations and warranties made by the Borrowers
herein and in the certificates or other instruments prepared or delivered in
connection with or pursuant to this Agreement shall be considered to have been
relied upon by the Lenders and the Fronting Banks and shall survive the making
by the Lenders and the Fronting Banks of the Extensions of Credit regardless of
any investigation made by the Lenders or the Fronting Banks or on their behalf,
and shall continue in full force and effect as long as there are any Outstanding
Credits or any Fee or any other amount payable under this Agreement is
outstanding and unpaid or the Commitments have not been terminated or any Letter
of Credit is available to be drawn.

 

SECTION 8.03. Binding Effect.

 

This Agreement shall become effective when it shall have been executed by the
Borrowers, the Fronting Banks and the Agent and when the Agent shall have
received copies hereof (via facsimile or otherwise) which, when taken together,
bear the signature of each Lender, and thereafter shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, except that the Borrowers shall not have the right to assign any rights
hereunder or any interest herein without the prior consent of all the Lenders
and the Fronting Banks.

 

52

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

SECTION 8.04. Successors and Assigns.

 

(a) Whenever in this Agreement any of the parties hereto is referred to, such
reference shall be deemed to include the successors and assigns of such party;
and all covenants, promises and agreements by or on behalf of any party that are
contained in this Agreement shall bind and inure to the benefit of its
successors and assigns.

 

(b) Each Lender may assign to one or more assignees all or a portion of its
interests, rights and obligations under this Agreement (including all or a
portion of its Commitment and its Outstanding Credits); provided, however, that
(i) the Borrowers (unless an Event of Default shall have occurred and be
continuing), the Agent (except in the case of an assignment to a Lender) and the
Fronting Banks must give their prior written consent (which shall not be
unreasonably withheld) to such assignment (except in the case of an assignment
by a Lender to an Affiliate of such Lender), (ii) the amount of the Commitment
of the assigning Lender subject to each such assignment (determined as of the
date the Assignment and Acceptance with respect to such assignment is delivered
to the Agent) shall not be less than $5,000,000 or, if the amount of the
Commitment of the assigning Lender is less than $5,000,000, the aggregate amount
of such Lender’s Commitment, (iii) each such assignment shall be of a constant,
and not a varying, percentage of all the assigning Lender’s rights and
obligations under this Agreement and (iv) the parties to each such assignment
shall execute and deliver to the Agent an Assignment and Acceptance, and a
processing and recordation fee of $3,500. Upon acceptance and recording pursuant
to Section 8.04(e), from and after the effective date specified in each
Assignment and Acceptance, which effective date shall be at least five Business
Days after the execution thereof unless otherwise agreed by the Agent (the
Borrowers to be given reasonable notice of any shorter period), (A) the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned
by such Assignment and Acceptance, have the rights and obligations of a Lender
under this Agreement and (B) the assigning Lender thereunder shall, to the
extent of the interest assigned by such Assignment and Acceptance, be released
from its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an 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 2.10, 2.15
and 8.05 afforded to such Lender prior to its assignment as well as to any Fees
accrued for its account hereunder and not yet paid)).

 

(c) By executing and delivering an Assignment and Acceptance, the assigning
Lender thereunder and the assignee thereunder shall be deemed to confirm to and
agree with each other and the other parties hereto as follows: (i) such
assigning Lender warrants that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim; (ii) except
as set forth in (i) above, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement, or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto or the financial condition of the Borrowers or the performance or
observance by the Borrowers of any obligations under this Agreement or any other
instrument or document furnished pursuant hereto; (iii) such assignor and such
assignee represents and warrants that it is legally authorized to enter into
such Assignment and Acceptance; (iv) such assignee confirms that it has received
a copy of this Agreement, together with copies of the most

 

53

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

recent financial statements delivered pursuant to Section 5.03 and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (v) such
assignee will independently and without reliance upon the Agent, such assigning
Lender or any other Lender or Fronting Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement; (vi) such
assignee appoints and authorizes the Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement as are delegated to the
Agent by the terms hereof, together with such powers as are reasonably
incidental thereto; and (vii) such assignee agrees that it will perform in
accordance with their terms all the obligations which by the terms of this
Agreement are required to be performed by it as a Lender.

 

(d) The Agent shall maintain at one of its offices in the City of New York a
copy of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and the principal amount of the Outstanding Credits of, each Lender pursuant to
the terms hereof from time to time (the “Register”). The entries in the Register
shall be conclusive in the absence of manifest error and the Borrowers, the
Fronting Banks, the Agent and the Lenders may 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. The Register shall be available for inspection
by each party hereto, at any reasonable time and from time to time upon
reasonable prior notice.

 

(e) Upon its receipt of a duly completed Assignment and Acceptance executed by
an assigning Lender and an assignee, the processing and recordation fee referred
to in subsection (b) above and, if required, the written consent of the
Borrowers, the Fronting Banks and the Agent to such assignment, the Agent shall
(i) accept such Assignment and Acceptance and (ii) record the information
contained therein in the Register.

 

(f) Each Lender may without the consent of the Borrowers or the Agent sell
participations to one or more banks or other entities in all or a portion of its
rights and/or obligations under this Agreement (including all or a portion of
its Commitment, its Loans and its LC Outstandings); provided, however, that (i)
such Lender’s obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) each participating bank or other entity
shall be entitled to the benefit of the cost protection provisions contained in
Sections 2.10, 2.15 and 8.05 to the same extent as if it were the selling Lender
(and limited to the amount that could have been claimed by the selling Lender
had it continued to hold the interest of such participating bank or other
entity), except that all claims made pursuant to such Sections shall be made
through such selling Lender, and (iv) the Borrowers, the Agent, the Fronting
Banks and the other Lenders shall continue to deal solely and directly with such
selling Lender in connection with such Lender’s rights and obligations under
this Agreement, and such Lender shall retain the sole right to enforce the
obligations of the Borrowers under this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement (other than
amendments, modifications or waivers (x) decreasing any fees payable hereunder
or the amount of principal of, or the rate at which interest is payable on, the
Outstanding Credits, (y) extending any principal payment date or date fixed for
the payment of interest on the Outstanding Credits or (z) extending the
Commitments).

 

54

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

(g) Any Lender or participant may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section,
disclose to the assignee or participant or proposed assignee or participant any
information relating to the Borrowers furnished to such Lender by or on behalf
of the Borrowers; provided that, prior to any such disclosure, each such
assignee or participant or proposed assignee or participant shall execute an
agreement whereby such assignee or participant shall agree (subject to customary
exceptions) to preserve the confidentiality of any such information.

 

(h) The Borrowers shall not assign or delegate any rights and duties hereunder
without the prior written consent of all Lenders, and any attempted assignment
or delegation (except as a consequence of a transaction expressly permitted
under Section 5.09) by a Borrower without such consent shall be void.

 

(i) Any Lender may at any time pledge all or any portion of its rights under
this Agreement to a Federal Reserve Bank; provided that no such pledge shall
release any Lender from its obligations hereunder or substitute any such Bank
for such Lender as a party hereto. In order to facilitate such an assignment to
a Federal Reserve Bank, each Borrower shall, at the request of the assigning
Lender, duly execute and deliver to the assigning Lender a promissory note or
notes evidencing the Loans made to such Borrower by the assigning Lender
hereunder.

 

(j) Subject to the appointment and acceptance of a successor Fronting Bank as
provided below, any Fronting Bank may resign at any time by notifying the
Lenders and the Borrowers. Upon any such resignation, the Required Lenders shall
have the right to appoint a successor Fronting Bank acceptable to the Borrowers.
If no successor shall have been so appointed by the Required Lenders and shall
have accepted such appointment within 30 days after the retiring Fronting Bank
gives notice of its resignation, then the retiring Fronting Bank may appoint a
successor Fronting Bank, having a combined capital and surplus of at least
$500,000,000 or an Affiliate of any such bank. Upon the acceptance of any
appointment as Fronting Bank hereunder by a successor bank, such successor shall
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Fronting Bank and the retiring Fronting Bank shall be discharged
from its duties and obligations hereunder. After a Fronting Bank’s resignation
hereunder, the provisions of Sections 2.10, 2.15 and 8.05 shall continue in
effect for its benefit in respect of any actions taken or omitted to be taken by
it while it was acting as Fronting Bank.

 

SECTION 8.05. Expenses; Indemnity.

 

(a) Energy agrees to pay all reasonable out-of-pocket expenses (including
reasonable fees, charges and disbursements of one counsel, unless in the good
faith opinion of the Agent or such counsel, it would be inappropriate under
applicable standards of legal professional conduct, due to an actual or
potential conflict of interest, to have only one counsel) incurred by the Agent
in connection with the preparation, execution and delivery of this Agreement or
in connection with any amendments, modifications or waivers of the provisions
hereof (but only if such amendments, modifications or waivers are requested by a
Borrower) (whether or not the transactions hereby contemplated are consummated),
or incurred by the Agent or any Lender in connection with the enforcement of
their rights in connection with this Agreement (including in respect of workouts
and restructurings) or in connection with the Extensions of Credit made

 

55

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

hereunder, including the reasonable fees and disbursements of one counsel
(unless in the good faith opinion of the Agent or such counsel, it would be
inappropriate under applicable standards of legal professional conduct, due to
an actual or potential conflict of interest, to have only one counsel) for the
Agent or, in the case of enforcement following an Event of Default, the Lenders.
In addition to the foregoing, each Borrower for the account of which a Letter of
Credit is issued shall pay or reimburse the Fronting Bank that issued such
Letter of Credit for such reasonable, normal and customary costs and expenses as
are incurred or charged by such Fronting Bank in issuing, negotiating, effecting
payment under, amending or otherwise administering such Letter of Credit.

 

(b) Each Borrower agrees to indemnify each Lender and each Fronting Bank against
any loss, calculated in accordance with the next sentence, or reasonable expense
that such Lender or such Fronting Bank may sustain or incur as a consequence of
(i) any failure by such Borrower to borrow or to refinance, convert or continue
any Loan hereunder (including as a result of such Borrower’s failure to fulfill
any of the applicable conditions set forth in Article IV) after irrevocable
notice of such borrowing, refinancing, conversion or continuation has been given
pursuant to Section 2.03, (ii) any payment, prepayment or conversion of a
Eurodollar Loan of such Borrower, or assignment of a Eurodollar Loan of such
Borrower required by any other provision of this Agreement or otherwise made or
deemed made, on a date other than the last day of the Interest Period, if any,
applicable thereto, (iii) any default in payment or prepayment of the principal
amount of any Outstanding Credit or any part thereof or interest accrued
thereon, as and when due and payable (at the due date thereof, whether by
scheduled maturity, acceleration, irrevocable notice of prepayment or otherwise)
or (iv) the occurrence of any Event of Default relating to such Borrower,
including, in each such case, any loss or reasonable expense sustained or
incurred or to be sustained or incurred by such Lender in liquidating or
employing deposits from third parties, or with respect to commitments made or
obligations undertaken with third parties, to effect or maintain any Loan
hereunder or any part thereof as a Eurodollar Loan. Such loss shall include an
amount equal to the excess, if any, as reasonably determined by such Lender, of
(x) its cost of obtaining the funds for the Loan being paid, prepaid,
refinanced, converted or not borrowed (assumed to be the LIBO Rate for the
period from the date of such payment, prepayment, refinancing or failure to
borrow or refinance to the last day of the Interest Period for such Loan (or, in
the case of a failure to borrow or refinance, the Interest Period for such Loan
that would have commenced on the date of such failure) over (y) the amount of
interest (as reasonably determined by such Lender) that would be realized by
such Lender in reemploying the funds so paid, prepaid or not borrowed or
refinanced for such period or Interest Period, as the case may be.

 

(c) Delivery agrees to indemnify the Agent, the Fronting Banks, each Lender,
each of their Affiliates and the directors, officers, employees and agents of
the foregoing (each such person being called an “Indemnitee”) against, and to
hold each Indemnitee harmless from, any and all costs, losses, claims, damages,
liabilities and related expenses, including reasonable fees and expenses of one
counsel for all Indemnitees (unless in the good faith opinion of the Agent or
such counsel, it would be inappropriate under applicable standards of legal
professional conduct, due to an actual or potential conflict of interest, to
have only one counsel), incurred by or asserted against any Indemnitee arising
out of Delivery’s acts or omissions in connection with (i) the preparation,
execution, delivery, enforcement, performance and administration of this
Agreement, (ii) the use of the proceeds of the Extensions of Credit or (iii) any
claim, litigation,

 

56

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

investigation or proceeding relating to any of the foregoing, whether or not any
Indemnitee is a party thereto, including any of the foregoing arising from the
negligence, whether sole or concurrent, on the part of any Indemnitee. If and to
the extent that the Indemnitees are not indemnified by Delivery pursuant to the
preceding sentence, Energy agrees to indemnify the Indemnitees against, and to
hold each Indemnitee harmless from, any and all costs, losses, claims, damages,
liabilities and related expenses, including reasonable counsel fees and
expenses, incurred by or asserted against any Indemnitee arising out of the
Borrower’s acts or omissions in connection with (i) the preparation, execution,
delivery, enforcement, performance and administration of this Agreement, (ii)
the use of the proceeds of the Extensions of Credit or (iii) any claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether or not any Indemnitee is a party thereto, including any of the foregoing
arising from the negligence, whether sole or concurrent, on the part of any
Indemnitee. Notwithstanding the foregoing, such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses (i) are determined by a final judgment of a
court of competent jurisdiction to have resulted from the gross negligence or
willful misconduct of such Indemnitee or (ii) result from any litigation brought
by such Indemnitee against the Borrowers or by any Borrower against such
Indemnitee, in which a final, nonappealable judgment has been rendered against
such Indemnitee; provided, further, that each Borrower agrees that it will not,
nor will it permit any Subsidiary to, without the prior written consent of each
Indemnitee, settle, compromise or consent to the entry of any judgment in any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification could be sought under the indemnification provisions of this
subsection (c) (whether or not any Indemnitee is an actual or potential party to
such claim, action, suit or proceeding), unless such settlement, compromise or
consent does not include any statement as to an admission of fault, culpability
or failure to act by or on behalf of any Indemnitee and does not involve any
payment of money or other value by any Indemnitee or any injunctive relief or
factual findings or stipulations binding on any Indemnitee.

 

(d) The provisions of this Section shall remain operative and in full force and
effect regardless of the expiration of the term of this Agreement, the
consummation of the transactions contemplated hereby, the repayment of any of
the Outstanding Credits, the invalidity or unenforceability of any term or
provision of this Agreement or any investigation made by or on behalf of the
Agent, any Lender or any Fronting Bank. All amounts due under this Section shall
be payable on written demand therefor.

 

(e) A certificate of any Lender, any Fronting Bank or the Agent setting forth
any amount or amounts that such Lender, such Fronting Bank or such Agent is
entitled to receive pursuant to subsection (b) above and containing an
explanation in reasonable detail of the manner in which such amount or amounts
shall have been determined shall be delivered to the appropriate Borrower and
shall be conclusive absent manifest error.

 

SECTION 8.06. Right of Setoff.

 

If an Event of Default shall have occurred and be continuing, each Lender and
each Fronting Bank 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) at any time held and
other indebtedness at any time owing by such Lender or such Fronting Bank to or
for the credit or the account of the applicable Borrower against any

 

57

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

of and all the obligations of such Borrower now or hereafter existing under this
Agreement held by such Lender or such Fronting Bank (as the case may be),
irrespective of whether or not such Lender or such Fronting Bank (as the case
may be), shall have made any demand under this Agreement and although such
obligations may be unmatured. The rights of each Lender and each Fronting Bank
under this Section are in addition to other rights and remedies (including other
rights of setoff) which such Lender or such Fronting Bank may have.

 

SECTION 8.07. Applicable Law.

 

THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK.

 

SECTION 8.08. Waivers; Amendment.

 

(a) No failure or delay of the Agent, any Fronting Bank or any Lender in
exercising any power or right hereunder 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 Agent, the Fronting Banks and the
Lenders hereunder 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 therefrom shall in any event be effective unless the
same shall be permitted by subsection (b) below, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice or demand on any Borrower or any Subsidiary in any case shall
entitle such party to any other or further notice or demand in similar or other
circumstances.

 

(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 Borrowers and the Required Lenders; provided, however, that no such
agreement shall (i) decrease the principal amount of, or extend the maturity of
or any scheduled principal payment date or date for the payment of any interest
on, any Loan or reimbursement obligation in respect of a Letter of Credit or
date for the payment of any Facility Fee or LC Fee, or waive or excuse any such
payment or any part thereof, or decrease the rate of interest on any Loan or any
reimbursement obligation in respect of a Letter of Credit, without the prior
written consent of each Lender affected thereby, (ii) increase the Commitment of
any Lender, decrease the Facility Fee or decrease the LC Fee payable to any
Lender without the prior written consent of such Lender, or (iii) amend or
modify the provisions of Section 2.12, Section 2.13 or Section 8.04(h), the
provisions of this Section or the definition of the “Required Lenders”, without
the prior written consent of each Lender; provided further, however, that no
such agreement shall amend, modify or otherwise affect the rights or duties of
the Agent or any Fronting Bank hereunder without the prior written consent of
the Agent or the applicable Fronting Bank, as the case may be. Each Lender and
each Fronting Bank shall be bound by any waiver, amendment or modification
authorized by this Section, and any consent by any Lender, the Agent or any
Fronting Bank pursuant to this Section shall bind any assignee of its rights and
interests hereunder.

 

58

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

SECTION 8.09. Entire Agreement.

 

This Agreement (including the schedules and exhibits hereto) and the Letter
Agreements represent the entire contract among the parties relative to the
subject matter hereof and thereof. Any previous agreement, whether written or
oral, among the parties with respect to the subject matter hereof, is superseded
by this Agreement and the Letter Agreements. There are no unwritten oral
agreements between the parties. Nothing in this Agreement, expressed or implied,
is intended to confer upon any party other than the parties hereto any rights,
remedies, obligations or liabilities under or by reason of this Agreement.

 

SECTION 8.10. Severability.

 

In the event any one or more of the provisions contained in this Agreement
should be held invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby. The parties shall endeavor in
good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.

 

SECTION 8.11. Counterparts.

 

This Agreement may be executed in two or more counterparts, each of which shall
constitute an original but all of which when taken together shall constitute but
one contract, and shall become effective as provided in Section 8.03.

 

SECTION 8.12. 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 are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.

 

SECTION 8.13. Interest Rate Limitation.

 

(a) Notwithstanding anything herein to the contrary, if at any time the
applicable interest rate, together with all fees and charges which are treated
as interest under applicable law (collectively the “Charges”), as provided for
herein or in any other document executed in connection herewith, or otherwise
contracted for, charged, received, taken or reserved by any Lender or any
Fronting Bank, shall exceed the maximum lawful rate (the “Maximum Rate”) which
may be contracted for, charged, taken, received or reserved by such Lender or
such Fronting Bank (as the case may be) in accordance with applicable law, the
rate of interest payable on the Outstanding Credits of such Lender or such
Fronting Bank (as the case may be), together with all Charges payable to such
Lender or such Fronting Bank (as the case may be), shall be limited to the
Maximum Rate.

 

(b) If the amount of interest, together with all Charges, payable for the
account of any Lender or any Fronting Bank in respect of any interest
computation period is reduced pursuant to subsection (a) above and the amount of
interest, together with all Charges, payable for such Lender’s or such Fronting
Bank’s (as the case may be) account in respect of any subsequent

 

59

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

interest computation period, would be less than the Maximum Rate, then the
amount of interest, together with all Charges, payable for such Lender’s or such
Fronting Bank’s (as the case may be) account in respect of such subsequent
interest computation period shall, to the extent permitted by applicable law, be
automatically increased to such Maximum Rate; provided that at no time shall the
aggregate amount by which interest paid for the account of any Lender or any
Fronting Bank has been increased pursuant to this subsection (b) exceed the
aggregate amount by which interest, together with all Charges, paid for its
account has theretofore been reduced pursuant to subsection (a) above.

 

SECTION 8.14. Jurisdiction; Venue.

 

(a) Each Borrower hereby irrevocably and unconditionally submits, for itself and
its property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement, 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.
Subject to the foregoing and to subsection (b) below, nothing in this Agreement
shall affect any right that any party hereto may otherwise have to bring any
action or proceeding relating to this Agreement against any other party hereto
in the courts of any jurisdiction.

 

(b) Each Borrower hereby irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection which it may now or
thereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement in any New York State court or Federal
court of the United States of America sitting in New York City. 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.

 

SECTION 8.15. Confidentiality.

 

The Agent, each Lender and each Fronting Bank shall use its best efforts to hold
in confidence all information, memoranda, or extracts furnished to the Agent or
to such Lender or such Fronting Bank (as the case may be) (directly or through
the Agent) by the Borrowers hereunder or in connection with the negotiation
hereof; provided that the Agent, such Lender and such Fronting Bank may disclose
any such information, memoranda or extracts (i) to its Affiliates, accountants
or counsel, (ii) to any regulatory agency having authority to examine the Agent,
such Lender or such Fronting Bank (as the case may be), (iii) as required by any
legal or governmental process or otherwise by law including in connection with
the exercise of remedies following an Event of Default, (iv) except as provided
in the last sentence of Section 5.03, to any person to which such Lender sells
or proposes to sell an assignment or a participation in its Outstanding Credits
hereunder, if such other person agrees for the benefit of the Borrowers to
comply with the provisions of this Section and (v) to the extent that such
information,

 

60

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

memoranda or extracts shall be publicly available or shall have become known to
the Agent, such Lender or such Fronting Bank (as the case may be) independently
of any disclosure by any Borrower hereunder or in connection with the
negotiation hereof. Notwithstanding the foregoing, any Lender may disclose the
provisions of this Agreement, the amounts, maturities and interest rates of its
Outstanding Credits, and any Fees to which it is entitled, to any purchaser or
potential purchaser of such Lender’s interest in any Outstanding Credits.
Notwithstanding any other provision in this Agreement, the Agent hereby confirms
that the Borrowers and the representatives of any Borrower shall not be limited
from disclosing the U.S. tax treatment or the U.S. tax structure of the
transactions contemplated by this Agreement.

 

SECTION 8.16. Electronic Communications.

 

(a) Each Borrower hereby agrees that it will provide to the Agent all
information, documents and other materials that it is obligated to furnish to
the Agent pursuant to Section 5.03 (collectively, the “Communications”) by
transmitting the Communications in Microsoft Word, Adobe Portable Document
Format (PDF) or other electronic/soft medium format that is reasonably
acceptable to the Agent to oploanswebadmin@citigroup.com or faxing the
Communications to 212-994-0848. In addition, each Borrower agrees to continue to
provide the Communications to the Agent in the manner otherwise specified in
this Agreement, but only to the extent reasonably requested by the Agent.

 

(b) Each Borrower further agrees that the Agent may make the Communications
available to the Lenders and the Fronting Banks by posting the Communications on
Intralinks, Fixed Income Direct or a substantially similar electronic
transmission systems (the “Platform”). Each Borrower acknowledges that the
distribution of material through an electronic medium is not necessarily secure
and that there are confidentiality and other risks associated with such
distribution.

 

(c) THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE”. THE AGENT PARTIES (AS
DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE
COMMUNICATIONS, OR THE ADEQUACY OF THE PLATFORM AND EXPRESSLY DISCLAIM LIABILITY
FOR ERRORS OR OMISSIONS IN THE COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS,
IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD
PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY THE AGENT
PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR THE PLATFORM. IN NO EVENT SHALL
THE AGENT OR ANY OF ITS AFFILIATES OR ANY OF THEIR RESPECTIVE OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS, ADVISORS OR REPRESENTATIVES (COLLECTIVELY, “AGENT
PARTIES”) HAVE ANY LIABILITY TO ANY BORROWER, ANY LENDER OR FRONTING BANK OR ANY
OTHER PERSON OR ENTITY FOR DAMAGES OF ANY KIND, INCLUDING, WITHOUT LIMITATION,
DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR
EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF ANY BORROWER’S
OR THE AGENT’S TRANSMISSION OF THE COMMUNICATIONS THROUGH THE PLATFORM, EXCEPT
TO THE EXTENT THE LIABILITY OF ANY AGENT PARTY IS FOUND IN A

 

61

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

FINAL NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE
RESULTED PRIMARILY FROM SUCH AGENT PARTY’S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT.

 

(d) The Agent agrees that the receipt of the Communications by the Agent at its
e-mail address set forth above shall constitute effective delivery of the
Communications to the Agent for purposes of this Agreement. Each Lender and each
Fronting Bank agrees that notice to it (as provided in the next sentence)
specifying that the Communications have been posted to the Platform shall
constitute effective delivery of the Communications to such Lender or Fronting
Bank for purposes of this Agreement. Each Lender and each Fronting Bank agrees
to notify the Agent in writing (including by electronic communication) from time
to time of such Lender’s or Fronting Bank’s e-mail address to which the
foregoing notice may be sent by electronic transmission and that the foregoing
notice may be sent to such e-mail address.

 

(e) Nothing herein shall prejudice the right of the Agent or any Lender or
Fronting Bank to give any notice or other communication pursuant to this
Agreement in any other manner specified in this Agreement.

 

[Signatures To Follow]

 

62

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

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.

 

TXU ENERGY COMPANY LLC

By

 

 

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

Name:

   

Title:

   

TXU ELECTRIC DELIVERY COMPANY

By

 

 

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

Name:

   

Title:

   

 

S-1

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

CITIBANK, N.A., as Agent, as a Fronting Bank and

as a Lender

By

 

 

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

Name:

   

Title:

   

 

S-2

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

BANK OF AMERICA, N.A., as a Lender

By

 

 

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

Name:

   

Title:

   

 

S-3

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

JPMORGAN CHASE BANK, N.A., as a Fronting

Bank and as a Lender

By

 

 

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

Name:

   

Title:

   

 

S-4

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

CALYON NEW YORK BRANCH, as a Fronting

Bank and as a Lender

By

 

 

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

Name:

   

Title:

   

 

S-5

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

DEUTSCHE BANK AG NEW YORK BRANCH,

as a Fronting Bank and as a Lender

By

 

 

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

Name:

   

Title:

   

 

S-6

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

LEHMAN BROTHERS BANK, FSB, as a Lender

By

 

 

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

Name:

   

Title:

   

 

S-7

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

MERRILL LYNCH BANK USA, as a Lender

By

 

 

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

Name:

   

Title:

   

 

S-8

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

UBS LOAN FINANCE LLC, as a Lender

By

 

 

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

Name:

   

Title:

   

 

S-9

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

WACHOVIA BANK, NATIONAL ASSOCIATION,

as a Fronting Bank and as a Lender

By

 

 

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

Name:

   

Title:

   

 

S-10

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

CREDIT SUISSE, CAYMAN ISLANDS BRANCH,

as a Lender

By

 

 

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

Name:

   

Title:

   

 

S-11

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

BARCLAYS BANK PLC, as a Lender

By

 

 

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

Name:

   

Title:

   

 

S-12

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

WILLIAM STREET COMMITMENT CORPORATION,

as a Lender

By

 

 

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

Name:

   

Title:

   

 

S-13

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

MELLON BANK, N.A., as a Lender

By

 

 

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

Name:

   

Title:

   

 

S-14

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

EXHIBIT A

 

Form of Assignment and Acceptance

 

ASSIGNMENT AND ACCEPTANCE

 

[Date]

 

Reference is made to the Revolving Credit Agreement, dated as of August 12, 2005
(as amended, modified, extended or restated from time to time, the “Agreement”),
among TXU Energy Company LLC, TXU Electric Delivery Company (collectively, the
“Borrowers”), the lenders party thereto (the “Lenders”), Citibank, N.A., as
agent for the Lenders and as fronting bank for the letters of credit issued
thereunder, and the other Lenders that agree to act as fronting banks
thereunder. Terms defined in the Agreement are used herein with the same
meanings.

 

1. The Assignor hereby sells and assigns, without recourse, to the Assignee, and
the Assignee hereby purchases and assumes, without recourse, from the Assignor,
effective as of the Effective Date (as defined below, the interests set forth on
the reverse hereof (the “Assigned Interest”) in the Assignor’s rights and
obligations under the Agreement, including, without limitation, the interests
set forth on the reverse hereof in the Commitment of the Assignor on the
Effective Date and the Loans owing to the Assignor that are outstanding on the
Effective Date, together with unpaid interest accrued on the assigned Loans to
the Effective Date and the amount, if any, set forth on the reverse hereof of
the Fees accrued to the Effective Date for the account of the Assignor. Each of
the Assignor and the Assignee hereby makes and agrees to be bound by all the
representations, warranties and agreements set forth in Section 8.04 of the
Agreement, a copy of which has been received by each such party. From and after
the Effective Date, (i) the Assignee shall be a party to and be bound by the
provisions of the Agreement and, to the extent of the interests assigned by this
Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and (ii) the Assignor shall, to the extent of the interests assigned
by this Assignment and Acceptance, relinquish its rights and be released from
its obligations under the Agreement.

 

2. This Assignment and Acceptance is being delivered to the Agent together with
(i) if the Assignee is organized under the laws of a jurisdiction outside the
United States, the forms specified in Section 2.15(g) of the Agreement, duly
completed and executed by such Assignee and (ii) a processing and recordation
fee of $3,500.

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

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

 

Date of Assignment:

 

Legal Name of Assignor:

 

Legal Name of Assignee:

 

Assignee’s Address for Notices:

 

 

Effective Date of Assignment

(may not be fewer than 5 Business

Days after the Date of Assignment

unless otherwise agreed by the Agent) (the “Effective Date”):

 

Facility

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

   Principal
Amount
Assigned

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

   Percentage Assigned of
Facility/Commitment (set forth, to at least
8 decimals, as a percentage of the Facility
and the aggregate Commitments of all
Lenders thereunder

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

Commitment Assigned:

   $                              %

Loans:

   $                             %

Fees Assigned (if any):

   $                             %

 

A-2

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

The terms set forth and on the reverse side hereof are hereby
agreed to:   Accepted:

[ASSIGNOR], as

Assignor

  TXU ENERGY COMPANY LLC

By

 

                    , as

  By  

 

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

Name:

      Name:    

Title:

      Title:    

[ASSIGNEE], as Assignee,

  TXU ELECTRIC DELIVERY COMPANY

By

 

                    , as

  By  

 

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

Name:

      Name:    

Title:

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

 

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

        Name:             Title:    

 

A-3

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

EXHIBIT B

Form of Borrowing Request

 

BORROWING REQUEST

 

[Date]

 

Citibank, N.A.

as agent for the Lenders referred to below

Two Penns Way, Suite 200

New Castle, DE 19720

Attention:

  Bank Loan Syndications

Facsimile:

  212-994-0961

 

Ladies and Gentlemen:

 

The undersigned, [TXU Energy Company LLC] [TXU Electric Delivery Company] (the
“Borrower”), refers to the Revolving Credit Agreement, dated as of August 12,
2005 (as it may hereafter be amended, modified, extended or restated from time
to time, the “Agreement”), among the Borrower, [TXU Energy Company LLC] [TXU
Electric Delivery Company], the lenders party thereto (the “Lenders”), Citibank,
N.A., as agent for the Lenders and as fronting bank for the letters of credit
issued thereunder, and the other Lenders that agree to act as fronting banks
thereunder. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Agreement. The Borrower hereby
gives you notice pursuant to Section 2.03 of the Agreement that it requests a
Borrowing under the Agreement, and in that connection sets forth below the terms
on which such Borrowing is requested to be made:

 

(A)

  Date of Borrowing (which is a Business Day)    ______________

(B)

  Principal amount of Borrowing1    ______________

(C)

  Interest rate basis2    ______________

(D)

  Interest Period and the last day thereof3    ______________

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

1 Not less than $25,000,000 (and in integral multiples of $5,000,000) or greater
than the Total Commitment then available.

2 Eurodollar Loan or ABR Loan.

3 Which shall be subject to the definition of “Interest Period” and end not
later than the Commitment Termination Date.

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

Upon acceptance of any or all of the Loans made by the Lenders in response to
this request, the Borrower shall be deemed to have represented and warranted
that the applicable conditions to lending specified in Article IV of the
Agreement have been satisfied.

 

Very truly yours,

[TXU ENERGY COMPANY LLC]

[TXU ELECTRIC DELIVERY COMPANY]

By

 

 

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

Name:

   

Title:

   

 

B-2

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

EXHIBIT C

Form of Request for Issuance by Citibank, N.A.

 

[see attached]

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

EXHIBIT D

Form of Prepayment Notice

 

PREPAYMENT NOTICE

 

[Date]

 

Citibank, N.A.

as agent for the Lenders referred to below

Two Penns Way, Suite 200

New Castle, DE 19720

Attention:

  Bank Loan Syndications

Facsimile:

  212-994-0961

 

Ladies and Gentlemen:

 

The undersigned, [TXU Energy Company LLC] [TXU Electric Delivery Company] (the
“Borrower”), refers to the Revolving Credit Agreement, dated as of August 12,
2005 (as it may hereafter be amended, modified, extended or restated from time
to time, the “Agreement”), among the Borrower, [TXU Energy Company LLC] [TXU
Electric Delivery Company], the lenders party thereto (the “Lenders”), Citibank,
N.A., as agent for the Lenders and as fronting bank for the letters of credit
issued thereunder, and the other Lenders that agree to act as fronting banks
thereunder. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Agreement. The Borrower hereby
gives you irrevocable notice of prepayment pursuant to Section 2.09 of the
Agreement and, in that connection, acknowledges that it is committed hereby to
prepay the Borrowing (or portion thereof) identified below by the amount and on
the date stated below, and that such prepayment will be accompanied by accrued
interest on the principal amount being prepaid to the date of prepayment.

 

  (A) Principal amount to be prepaid1

  (B) Date of prepayment (which is a Business Day)

 

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

1 If a partial prepayment, not less than $10,000,000 and in integral multiples
of $10,000,000.

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

Very truly yours,

[TXU Energy Company LLC]

[TXU Electric Delivery Company]

By

 

 

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

Name:

   

Treasurer:

   

 

D-2

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

SCHEDULE 2.01

 

COMMITMENTS

 

NAME OF LENDER

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

   COMMITMENT

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

Citibank, N.A.

   $ 135,000,000

Bank of America, N.A.

   $ 85,000,000

JPMorgan Chase Bank, N.A

   $ 85,000,000

Calyon New York Branch

   $ 85,000,000

Deutsche Bank AG New York Branch

   $ 85,000,000

Lehman Brothers Bank, FSB

   $ 85,000,000

Merrill Lynch Bank USA

   $ 85,000,000

UBS Loan Finance LLC

   $ 85,000,000

Wachovia Bank, National Association

   $ 85,000,000

Credit Suisse, Cayman Islands Branch

   $ 70,000,000

Barclays Bank PLC

   $ 70,000,000

William Street Commitment Corporation

   $ 35,000,000

Mellon Bank, N.A.

   $ 10,000,000

Total:

   $ 1,000,000,000

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

SCHEDULE 2.17(i)

 

LC FRONTING BANK COMMITMENTS

 

Fronting Bank

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

  

LC Fronting

Bank Commitment

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

Citibank, N.A.

   $ 200,000,000

JPMorgan Chase Bank, N.A.

   $ 200,000,000

Calyon New York Branch

   $ 200,000,000

Deutsche Bank AG New York Branch

   $ 200,000,000

Wachovia Bank, National Association

   $ 200,000,000

Total:

   $ 1,000,000,000

 

D-2

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

SCHEDULE 5.13

 

RESTRICTIVE AGREEMENTS

 

Delivery Mortgage