**Exhibit10(aa)**

 

**AMENDMENT NO. 1 TO CREDIT AGREEMENT**

 

ThisAmendment No. 1 to Credit Agreement (this “Amendment”) is dated asof April     , 2009, by and among THE DAYTON POWER ANDLIGHT COMPANY, an Ohio corporation (the “Borrower”), the lendinginstitutions party to the Credit Agreement, as hereinafter defined (the “Lenders”),and KEYBANK NATIONAL ASSOCIATION, a national banking association, asadministrative agent for the Lenders (the “Administrative Agent”).

 

WHEREAS,the Borrower, the Administrative Agent and the Lenders are parties to thatcertain Credit Agreement, dated as of November 21, 2006, which provides,among other things, for revolving loans, all upon certain terms and conditionsstated therein (as amended, restated or otherwise modified from time to time,the “Credit Agreement”);

 

WHEREAS,the Borrower has requested, and the Administrative Agent and the Lenders haveagreed, to amend the Credit Agreement to modify certain provisions thereof;

 

NOW,THEREFORE, in consideration of the premises and of the mutual covenants hereincontained and for other valuable considerations, the Borrower, theAdministrative Agent and the Lenders hereby agree as follows:

 

# Section 1.  Definitions.  Each capitalized term used herein and nototherwise defined in this Amendment shall be defined in accordance with theCredit Agreement.

 

# Section 2.  Amendments to Credit Agreement.

 

## 2.1           Amendments to Section 1.1.  Section 1.1 of the Credit Agreement ishereby amended to amend and restate the definitions of  “Applicable Facility Fee Rate,” “ApplicableMargin,” “Base Rate” and “Unfunded Liabilities” in theirentirety as follows:

 

“Applicable Facility Fee Rate” means,on any date of determination, a rate that is determined based upon the S&PRating, the Moody’s Rating or the Fitch Rating, as follows:

 
| **S&P Rating** | ** ** | **Moody’s Rating** | ** ** | **Fitch Rating** | ** ** | **Applicable Facility  Fee Rate** |
|-------------------------|------------|------------------------------|------------|-----------------------|------------|---------------------------------------------|
| A– or higher       |       | A3 or higher                 |       | A– or higher     |       | 30.00 basis points                          |
| BBB+                    |       | Baa1                         |       | BBB+                  |       | 35.00 basis points                          |
| BBB                     |       | Baa2                         |       | BBB                   |       | 40.00 basis points                          |
| BBB–               |       | Baa3                         |       | BBB–             |       | 50.00 basis points                          |
| Lower than BBB-         |       | Lower than Baa3              |       | Lower than BBB-       |       | 62.50 basis points                          |

 

If at any time each Rating Agency issues adifferent rating, then the Applicable Facility Fee Rate shall be determinedbased on the intermediate rating at such time. If at any time two Rating Agencies issue the same rating, which isdifferent than the other Rating Agency, the rating issued by such other RatingAgency shall be disregarded, and the Applicable Facility Fee Rate shall bedetermined based on the two identical ratings at such time.  If there is no S&P Rating and FitchRating, then the Applicable Facility Fee Rate shall be determined based on theMoody’s Rating.  If there is no Moody’sRating and Fitch Rating, then the Applicable Facility Fee Rate 

 

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shall be determined based onthe S&P Rating.  If there is no Moody’sRating and S&P Rating, then the Applicable Facility Fee Rate shall bedetermined based on the Fitch Rating.  Ifat any time only two Rating Agencies issue a rating and there is a differenceof two or more rating levels between such Rating Agencies, then the ApplicableFacility Fee Rate****shall be determined based on theintermediate rating levels at the midpoint between the ratings issued by suchRating Agencies at such time or, if there is no midpoint, based on the higherintermediate level.  If (i) there isno S&P Rating, Moody’s Rating and Fitch Rating or (ii) an Event ofDefault has occurred and is continuing, the Applicable Facility Fee Rate shallbe the highest rate per annum indicated therefor in the above table.  The S&P Rating, Moody’s Rating and FitchRating in effect on any date for purposes of determining the ApplicableFacility Fee Rate shall be that S&P Rating, Moody’s Rating and Fitch Ratingin effect at the close of business on such date.  Each change in the Applicable Facility FeeRate resulting from a publicly announced change in the S&P Rating, theFitch Rating and/or the Moody’s Rating shall be effective during the periodcommencing on the date of the public announcement thereof and ending on thedate immediately preceding the effective date of the next change.

 

 “ApplicableMargin” means, on any date of determination, a rate that is determined,based upon the S&P Rating, the Moody’s Rating or the Fitch Rating, asfollows:

 
| **S&P  Rating** | ** ** | **Moody’s Rating** | ** ** | **Fitch Rating**  | ** ** | **Applicable  Margin for  Eurodollar Loans** | ** ** | **Applicable  Margin for Base  Rate Loans** |
|---------------------|------------|-------------------------|------------|-------------------|------------|----------------------------------------------|------------|---------------------------------------------|
| A– or higher   |       | A3 or higher            |       | A– or higher |       | 200.00 basis points                          |       | 100.0 basis points                          |
| BBB+                |       | Baa1                    |       | BBB+              |       | 225.00 basis points                          |       | 125.0 basis points                          |
| BBB                 |       | Baa2                    |       | BBB               |       | 250.00 basis points                          |       | 150.0 basis points                          |
| BBB-                |       | Baa3                    |       | BBB-              |       | 275.00 basis points                          |       | 175.0 basis points                          |
| Lower than BBB-     |       | Lower than Baa3         |       | Lower than BBB-   |       | 300.00 basis points                          |       | 200.0 basis points                          |

 

If at any time each Rating Agency issues adifferent rating, then the Applicable Margin shall be determined based on theintermediate rating at such time.  If atany time two Rating Agencies issue the same rating, which is different than theother Rating Agency, the rating issued by such other Rating Agency shall bedisregarded, and the Applicable Margin shall be determined based on the twoidentical ratings at such time.  If thereis no S&P Rating and Fitch Rating, then the Applicable Margin shall bedetermined based on the Moody’s Rating. If there is no Moody’s Rating and Fitch Rating, then the ApplicableMargin shall be determined based on the S&P Rating.  If there is no Moody’s Rating and S&PRating, then the Applicable Margin shall be determined based on the FitchRating.  If at any time only two RatingAgencies issue a rating and there is a difference of two or more rating levelsbetween such Rating Agencies, then the Applicable Margin shall be determinedbased on the intermediate rating levels at the midpoint between the ratingsissued by such Rating Agencies at such time or, if there is no midpoint, basedon the higher intermediate level.  If (i) thereis no S&P Rating, Moody’s Rating and Fitch Rating or (ii) an Event ofDefault has occurred and is continuing, the Applicable Margin shall be thehighest rate per annum indicated therefor in the above table.  The S&P Rating, Moody’s Rating and FitchRating in effect on any date for purposes of determining the Applicable Marginshall be that S&P Rating, Moody’s Rating and Fitch Rating in effect at theclose of business on such date.  

 

2

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Each change in theApplicable Margin resulting from a publicly announced change in the S&PRating, the Fitch Rating and/or the Moody’s Rating shall be effective duringthe period commencing on the date of the public announcement thereof and endingon the date immediately preceding the effective date of the next change.

 

“Base Rate” means, for any day, a fluctuating interest rateper annum as shall be in effect from time to time which rate per annum shall atall times be equal to the greatest of:  (i) therate of interest established by KeyBank in Cleveland, Ohio, from time to time,as its “prime rate,” whether or not publicly announced, which interest rate mayor may not be the lowest rate charged by it for commercial loans or otherextensions of credit; (ii) the Federal Funds Effective Rate in effect fromtime to time, determined one Business Day in arrears, plus 1/2 of 1% perannum; and (iii) the Adjusted Eurodollar Rate that would be applicable fora Eurodollar Loan requested two Business Days prior to such date with a onemonth interest period, plus 1.00% per annum.

 

“Unfunded Liabilities” means theamount, if any, by which the present value of all vested and unvested accruedbenefits under all Single Employer Plans exceeds the fair market value of allsuch Plan assets allocable to such benefits, all as set forth in the then mostrecent annual actuarial valuation report for such Plans provided to theBorrower or any of its Subsidiaries using the actuarial assumptions set forthin such report and permitted by applicable law or, in the context of a noticeof intent to terminate, or termination of, a Plan, determined as of the date ofthe Plan’s termination using PBGC actuarial assumptions for Plan terminations.

 

## 2.2           Amendments to Section 9.1.  Section 9.1(i) of the CreditAgreement is hereby amended and restated in its entirety as follows:

##  

### (i)            ERISA:  (i) any member of the Borrower’sControlled Group shall fail to pay when due an amount or amounts aggregating inexcess of $30,000,000 which it shall have become liable to pay under Title IVof ERISA, or notice of intent to terminate a Plan or Plans of such Borrowerwhich in the aggregate have Unfunded Liabilities in excess of $30,000,000 shallbe filed under Title IV of ERISA by such Borrower or any member of theControlled Group, any plan administrator of the Plan or Plans or anycombination of the foregoing or any Reportable Event that would reasonably beexpected to have a Material Adverse Effect shall occur in connection with anyPlan; (ii) the Borrower or any member of the Controlled Group shall havebeen notified by the sponsor of a Multiemployer Plan that it has incurredwithdrawal liability to such Multiemployer Plan in an amount that, whenaggregated with all other amounts required to be paid to Multiemployer Plans bythe Borrower or any other member of the Controlled Group as withdrawalliability (determined as of the date of such notification), exceeds $10,000,000or requires payment exceeding $10,000,000 per annum; or (iii) the Borroweror any other member of the Controlled Group shall have been notified by thesponsor of a Multiemployer Plan that such Multiemployer Plan is inreorganization or is being terminated, within the meaning of Title IV of ERISA,if as a result of such reorganization or termination the aggregate annualcontribution of the Borrower and the other members of the Controlled Group(taken as a whole) to all Multiemployer Plans that are then in reorganizationor being terminated have been or will be increased over the amounts contributedto such Multiemployer Plans for the respective plan years of each suchMultiemployer Plan immediately preceding the plan in year in which thereorganization or termination occurs by an amount exceeding $10,000,000; or

###  

# Section 3.  Effectiveness.

#  

## 3.1           Conditions Precedent.  The effectiveness of this Amendment issubject to the satisfaction of the following conditions precedent:

 

3

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### (i)            Amendment Executed.  This Amendment shall have been executed by theBorrower, the Administrative Agent and the Required Lenders, and counterpartshereof as so executed shall have been delivered to the Administrative Agent.

###  

### (ii)           Fees, etc.  The Borrower shall have paid (i) anamendment fee to the Administrative Agent, for the pro rata benefit of eachLender executing this Amendment based on the Commitment of such Lender, in anamount equal to 25 basis points times the amount of such Lender’s Commitment,(ii) to the Administrative Agent for its own account, the fees separatelyagreed to between the Borrower and the Administrative Agent, and (iii) allreasonable out-of-pocket fees and expenses of the Administrative Agent and ofspecial counsel to the Administrative Agent in connection with the preparation,negotiation, execution and delivery of this Amendment.

###  

## 3.2           Effective Date.  This Amendment shall be effective on the dateupon which the conditions precedent set forth in Section 3.1 above aresatisfied.  Unless otherwise specificallyset forth herein, each of the amendments and other modifications set forth inthis Amendment shall be effective on and after such date.

##  

# Section 4.  Representations and Warranties.  The Borrower hereby represents and warrantsto the Administrative Agent and the Lenders that (a) it has the legalpower and authority to execute and deliver this Amendment, (b) the officerexecuting this Amendment on its behalf has been duly authorized to execute anddeliver the same and bind it with respect to the provisions hereof, (c) noDefault or Event of Default exists under the Credit Agreement, nor will anyoccur immediately after the execution and delivery of this Amendment, and (d) asof the date hereof, such it has no claim or offset against, or defense orcounterclaim to, its obligations or liabilities under the Credit Agreement orany other Credit Document.

 

# Section 5.  Miscellaneous.

 

## 5.1           Credit Agreement Unaffected.  Each reference that is made in the CreditAgreement or any Credit Document to the Credit Agreement shall hereafter beconstrued as a reference to the Credit Agreement, as amended hereby.  Except as herein otherwise specificallyprovided, all provisions of the Credit Agreement shall remain in full force andeffect and be unaffected hereby.  ThisAmendment is a Credit Document.

##  

## 5.2           Counterparts.  This Amendment may beexecuted in any number of counterparts, by different parties hereto in separatecounterparts and by facsimile signature, each of which when so executed anddelivered shall be deemed to be an original and all of which taken togethershall constitute but one and the same agreement.

##  

## 5.3           Expenses.  The Borrower agrees to pay on demand allcosts and expenses incurred by the Administrative Agent in connection with thepreparation, negotiation and execution of this Amendment, including withoutlimitation, the reasonable costs, fees, expenses and disbursements of theAdministrative Agent’s legal counsel.

##  

## 5.4           Severability.  Any term or provision of this Amendment heldby a court of competent jurisdiction to be invalid or unenforceable shall notimpair or invalidate the remainder of this Amendment, and the effect thereofshall be confined to the term or provision so held to be invalid orunenforceable.

 

4

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## 5.5           Entire Agreement.  This Amendment is specifically limited to thematters expressly set forth herein.  ThisAmendment and all other instruments, agreements and documents executed anddelivered in connection with this Amendment embody the final, entire agreementamong the parties hereto with respect to the subject matter hereof andsupersede any and all prior commitments, agreements, representations andunderstandings, whether written or oral, relating to the matters covered bythis Amendment, and may not be contradicted or varied by evidence of prior,contemporaneous or subsequent oral agreements or discussions of the partieshereto.  There are no oral agreementsamong the parties hereto relating to the subject matter hereof or any othersubject matter relating to the Credit Agreement.

##  

## 5.6           Governing Law.  The rights and obligations of all partieshereto shall be governed by the laws of the State of New York, without regardto principles of conflicts of laws.

##  

## 5.7           JURY TRIAL WAIVER.  THE BORROWER, THE ADMINISTRATIVE AGENT ANDEACH OF THE LENDERS HEREBY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE INRESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONGTHE BORROWER, THE ADMINISTRATIVE AGENT AND THE LENDERS, OR ANY THEREOF, ARISINGOUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIPESTABLISHED AMONG THEM IN CONNECTION WITH THIS AMENDMENT OR ANY NOTE OR OTHERINSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITHOR THE TRANSACTIONS RELATED THERETO.

##  

[Signature Pages Follow.]

 

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|   | THE  DAYTON POWER AND LIGHT COMPANY                       |
|--------|-----------------------------------------------------------|
|   |                                                      |
|   | By:                                                       |   |
|   | Name:                                                     |   |
|   | Title:                                                    |   |
|   |                                                      |
|   | KEYBANK  NATIONAL ASSOCIATION,                            |
|   | *as a Lender, LC Issuer and as  the Administrative Agent* |
|   |                                                      |
|   | By:                                                       |   |
|   | Name:                                                     |   |
|   | Title:                                                    |   |
|   |                                                      |
|   | JPMORGAN  CHASE BANK, N.A.                                |
|   |                                                      |
|   | By:                                                       |   |
|   | Name:                                                     |   |
|   | Title:                                                    |   |
|   |                                                      |
|   |                                                      |
|   | FIFTH  THIRD BANK                                         |
|   |                                                      |
|   | By:                                                       |   |
|   | Name:                                                     |   |
|   | Title:                                                    |   |

 

6

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**CREDIT AGREEMENT**

 

**Among**

 

**THE DAYTON POWER AND LIGHT COMPANY*as Borrower***

 

**THE LENDING INSTITUTIONS NAMED THEREIN*as Lenders***

 

**And**

 

**KEYBANK NATIONAL ASSOCIATION*as an LC Issuer, the Administrative Agentand**Lead Arranger***

 

 

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**dated as of****November 21****, 2006**

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**$220,000,000 Revolving Facility**

 

 

 

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| ARTICLE  I.       | DEFINITIONS  AND TERMS                                           | 6  |
|-------------------|------------------------------------------------------------------|----|
| Section 1.1  | Certain  Defined Terms                                           | 6  |
| Section 1.2  | Computation  of Time Periods                                     | 24 |
| Section 1.3  | Accounting  Terms                                                | 25 |
| Section 1.4  | Terms  Generally                                                 | 25 |
| ARTICLE  II.      | AMOUNT  AND TERMS OF LOANS                                       | 25 |
| Section 2.1  | Establishment  of the Credit Facility                            | 25 |
| Section 2.2  | Commitments  for Loans                                           | 25 |
| Section 2.3  | Borrowing,  Continuation or Conversion of Loans                  | 25 |
| Section 2.4  | Letters  of Credit                                               | 26 |
| Section 2.5  | Funding  Obligations; Disbursement of Funds                      | 31 |
| Section 2.6  | Evidence  of Obligations                                         | 32 |
| Section 2.7  | Interest                                                         | 32 |
| Section 2.8  | Increased  Costs; Illegality                                     | 34 |
| Section 2.9  | Breakage  Compensation                                           | 35 |
| Section 2.10 | Increased  Costs to LC Issuers                                   | 36 |
| Section 2.11 | Change  of Lending Office; Replacement of Lenders                | 36 |
| ARTICLE  III.     | FEES;  COMMITMENTS                                               | 37 |
| Section 3.1  | Fees                                                             | 37 |
| Section 3.2  | Increase  in Commitments                                         | 38 |
| Section 3.3  | Voluntary  Termination/Reduction of Commitments                  | 39 |
| Section 3.4  | Termination  of Commitments                                      | 39 |
| ARTICLE  IV.      | PAYMENTS                                                         | 39 |
| Section 4.1  | Repayment  of Loans                                              | 39 |
| Section 4.2  | Voluntary  Prepayments                                           | 39 |
| Section 4.3  | Mandatory  Payments and Prepayments                              | 40 |
| Section 4.4  | Method  and Place of Payment                                     | 41 |
| Section 4.5  | Net  Payments                                                    | 41 |
| ARTICLE  V.       | CONDITIONS  PRECEDENT                                            | 43 |
| Section 5.1  | Conditions  Precedent at Closing Date                            | 43 |
| Section 5.2  | Conditions  Precedent to the Making of Loans                     | 44 |
| Section 5.3  | Conditions  Precedent to the Conversion or Continuation of Loans | 45 |
| ARTICLE  VI.      | REPRESENTATIONS  AND WARRANTIES                                  | 45 |
| Section 6.1  | Corporate  Status                                                | 45 |
| Section 6.2  | Corporate  Power and Authority                                   | 46 |
|                   |                                                                  |    |  |

 

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| Section 6.3  | No  Violation                                                | 46 |
|-------------------|--------------------------------------------------------------|----|
| Section 6.4  | Governmental  Approvals                                      | 46 |
| Section 6.5  | Litigation,  etc.                                            | 46 |
| Section 6.6  | Use  of Proceeds; Margin Regulations                         | 47 |
| Section 6.7  | Financial  Statements                                        | 47 |
| Section 6.8  | Solvency                                                     | 47 |
| Section 6.9  | No  Material Adverse Change                                  | 47 |
| Section 6.10 | Tax  Returns and Payments                                    | 47 |
| Section 6.11 | Title  to Properties                                         | 48 |
| Section 6.12 | Lawful  Operations; Compliance with Agreements               | 48 |
| Section 6.13 | Environmental  Matters                                       | 48 |
| Section 6.14 | ERISA                                                        | 48 |
| Section 6.15 | Intellectual  Property                                       | 49 |
| Section 6.16 | Investment  Company Act; Federal Power Act                   | 49 |
| Section 6.17 | True  and Complete Disclosure                                | 49 |
| ARTICLE  VII.     | AFFIRMATIVE  COVENANTS                                       | 49 |
| Section 7.1  | Reporting  Requirements                                      | 50 |
| Section 7.2  | Books,  Records and Inspections                              | 51 |
| Section 7.3  | Insurance                                                    | 51 |
| Section 7.4  | Payment  of Taxes and Claims                                 | 51 |
| Section 7.5  | Preservation  of Existence, etc.                             | 52 |
| Section 7.6  | Good  Repair                                                 | 52 |
| Section 7.7  | Compliance  with Statutes, Regulations, Orders, Restrictions | 52 |
| Section 7.8  | Fiscal  Years, Fiscal Quarters                               | 52 |
| Section 7.9  | Use  of Proceeds                                             | 52 |
| Section 7.10 | Senior  Debt                                                 | 52 |
| ARTICLE  VIII.    | NEGATIVE  COVENANTS                                          | 53 |
| Section 8.1  | Changes  in Business                                         | 53 |
| Section 8.2  | Merger,  Consolidation, Asset Sales                          | 53 |
| Section 8.3  | Liens                                                        | 54 |
| Section 8.4  | Investments                                                  | 54 |
| Section 8.5  | Financial  Covenant                                          | 55 |
| Section 8.6  | Transactions  with Affiliates                                | 55 |
| Section 8.7  | Material  Agreements                                         | 55 |
| Section 8.8  | Use  of Proceeds/Margin Regulations                          | 55 |
|                   |                                                              |    |  |

 

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| Section 8.9   | No  Dividend Restrictions                                               | 55 |
|--------------------|-------------------------------------------------------------------------|----|
| Section 8.10  | Swap  Agreements                                                        | 56 |
| ARTICLE  IX.       | EVENTS  OF DEFAULT                                                      | 56 |
| Section 9.1   | Events  of Default                                                      | 56 |
| Section 9.2   | Acceleration;  Remedies                                                 | 58 |
| Section 9.3   | Application  of Liquidation Proceeds                                    | 58 |
| ARTICLE  X.        | THE  ADMINISTRATIVE AGENT                                               | 59 |
| Section 10.1  | Appointment                                                             | 59 |
| Section 10.2  | Delegation  of Duties                                                   | 60 |
| Section 10.3  | Exculpatory  Provisions                                                 | 60 |
| Section 10.4  | Reliance  by Administrative Agent                                       | 60 |
| Section 10.5  | Notice  of Default                                                      | 60 |
| Section 10.6  | Non-Reliance                                                            | 61 |
| Section 10.7  | Indemnification                                                         | 61 |
| Section 10.8  | The  Administrative Agent in Individual Capacity                        | 61 |
| Section 10.9  | Successor  Administrative Agent                                         | 62 |
| Section 10.10 | Other  Agents                                                           | 62 |
| ARTICLE  XI.       | MISCELLANEOUS                                                           | 62 |
| Section 11.1  | Payment  of Expenses                                                    | 62 |
| Section 11.2  | Right  of Setoff                                                        | 64 |
| Section 11.3  | Notices                                                                 | 64 |
| Section 11.4  | Benefit  of Agreement                                                   | 65 |
| Section 11.5  | No  Waiver; Remedies Cumulative                                         | 67 |
| Section 11.6  | Payments  Pro Rata; Sharing of Setoffs                                  | 68 |
| Section 11.7  | Governing  Law; Submission to Jurisdiction; Venue; Waiver of Jury Trial | 69 |
| Section 11.8  | Counterparts                                                            | 69 |
| Section 11.9  | Integration                                                             | 69 |
| Section 11.10 | Headings  Descriptive                                                   | 70 |
| Section 11.11 | Amendment  or Waiver                                                    | 70 |
| Section 11.12 | Survival  of Indemnities                                                | 71 |
| Section 11.13 | Domicile  of Loans                                                      | 71 |
| Section 11.14 | Confidentiality                                                         | 71 |
| Section 11.15 | Lender  Register                                                        | 72 |
| Section 11.16 | General  Limitation of Liability                                        | 72 |
| Section 11.17 | Limitations  on Liability of the LC Issuers                             | 72 |
|                    |                                                                         |    |  |

 

4

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| Section 11.18 | No  Duty                                     | 73 |
|--------------------|----------------------------------------------|----|
| Section 11.19 | Lenders  and Agent Not Fiduciary to Borrower | 73 |
| Section 11.20 | Survival  of Representations and Warranties  | 73 |
| Section 11.21 | Severability                                 | 73 |
| Section 11.22 | Independence  of Covenants                   | 73 |
| Section 11.23 | Interest  Rate Limitation                    | 74 |
| Section 11.24 | Treasury  Regulations                        | 74 |
| Section 11.25 | USA Patriot Act                              | 74 |

 
| Exhibit A   | -      | Revolving  Note                                   |
|------------------|--------|---------------------------------------------------|
| Exhibit B-1 | -      | Notice  of Borrowing, Continuation or Conversion  |
| Exhibit B-2 |   | LC  Request                                       |
| Exhibit C   | -      | Compliance  Certificate                           |
| Exhibit D   | -      | Closing  Certificate                              |
| Exhibit E   | -      | Assignment  Agreement                             |
| Exhibit F   | -      | Legal  Opinion of General Counsel of the Borrower |

 

5

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This CREDIT AGREEMENT, datedas of November 21, 2006, is entered into by and among the following:

 

(i)            THE DAYTON POWER AND LIGHT COMPANY, an Ohiocorporation (the “Borrower”);

 

(ii)           the Lenders, defined below,from time to time party hereto; and

 

(iii)          KEYBANKNATIONAL ASSOCIATION, a national banking association, as the AdministrativeAgent, defined below, and Lead Arranger.

 

RECITALS:

 

A.            The Borrower has applied tothe Lenders for a credit facility to replace its existing senior debt facilityand to provide working capital and funds for other lawful purposes.

 

B.            Subject to and upon theterms and conditions set forth herein, the Lenders are willing to makeavailable to the Borrower the credit facility provided for herein.

 

AGREEMENT:

 

In consideration of thepremises and the mutual covenants contained herein, the parties hereto agree asfollows:

 

# ARTICLE I.

#  

# DEFINITIONS AND TERMS

#  

## Section 1.1             Certain Defined Terms.  As used herein, the following terms shallhave the meanings herein specified unless the context otherwise requires:

##  

“Acquisition” meansany acquisition (a) on a going concern basis (whether by purchase, leaseor otherwise) of assets constituting a business or a division or line ofbusiness of a Person that is not a Subsidiary of the Borrower, and (b) ofa majority of the outstanding equity or other similar interests in any suchPerson (whether by merger, stock purchase or otherwise).

 

“Adjusted Eurodollar Rate”means, with respect to each Interest Period for a Eurodollar Loan, (a) therate per annum appearing on the applicable electronic page of Reuters orany successor to or substitute for such service, providing rate quotationscomparable to those currently provided by such service, as determined by theAdministrative Agent from time to time for purposes of providing quotations ofinterest rates applicable to Dollar deposits in the London interbank market),at approximately 11:00 a.m. (London time) two Business Days prior to thecommencement of such Interest Period, as the rate for Dollar deposits with amaturity comparable to such Interest Period, divided (and rounded to thenearest one one hundredth of 1%) by (b) a percentage equal to 100% minusthe then stated maximum rate of all reserve requirements (including, withoutlimitation, any marginal, emergency, supplemental, special or other reservesand without benefit of credits for proration, exceptions or offsets that may beavailable from time to time) applicable to any member bank of the FederalReserve System in respect of Eurocurrency liabilities as defined in RegulationD (or any successor category of liabilities under Regulation D); *provided, however*, that if the rate referred to in clause (a) aboveis not available at any such time for any reason, then the rate referred to inclause (a) shall instead be the average (rounded to the nearest one onehundredth of 1%) of the rates at which Dollar deposits of $5,000,000 areoffered to 

 

6

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theReference Banks in the London interbank market at approximately 11:00 a.m.(London time), two Business Days prior to the commencement of such InterestPeriod, for contracts that would be entered into at the commencement of suchInterest Period.

 

“Administrative Agent”means KeyBank in its capacity as administrative agent for the Lenders, togetherwith any successor to the Administrative Agent appointed pursuant to Section 10.9.

 

“Affiliate” means,with respect to any Person, any other Person directly or indirectlycontrolling, controlled by, or under direct or indirect common control withsuch Person, or, in the case of any Lender that is an investment fund, theinvestment advisor thereof and any investment fund having the same investmentadvisor.  A Person shall be deemed tocontrol a second Person if such first Person possesses, directly or indirectly,the power (a) to vote 10% or more of the securities having ordinary votingpower for the election of directors or managers of such second Person or (b) todirect or cause the direction of the management and policies of such secondPerson, whether through the ownership of voting securities, by contract orotherwise.  Notwithstanding theforegoing, (i) a director, officer or employee of a Person shall not,solely by reason of such status, be considered an Affiliate of such Person; and(ii) neither the Administrative Agent nor any Lender shall in any event beconsidered an Affiliate of the Borrower or any of its Subsidiaries.

 

“Agent Fee Letter”means the Agent Fee Letter, dated as of the date hereof, between the AdministrativeAgent and the Borrower, as the same may from time to time be amended, restated,supplemented or otherwise modified.

 

“Aggregate RevolvingFacility Exposure” means, at any time, the sum of (a) the aggregateprincipal amounts of all Loans outstanding at such time and (b) theaggregate amount of the LC Outstandings at such time.

 

“Agreement” meansthis Credit Agreement, as the same may from time to time be amended, restated,supplemented or otherwise modified.

 

“Applicable Facility FeeRate” means, on any date of determination, a rate that is determined basedupon the S&P Rating, the Moody’s Rating or the Fitch Rating, as follows:

 
| **S&P  Rating** | ** ** | **Moody’s Rating** | ** ** | **Fitch Rating** | ** ** | **Applicable Facility  Fee Rate** |
|---------------------|------------|-------------------------|------------|------------------|------------|-----------------------------------|
| A or higher         |       | A2 or higher            |       | A or higher      |       | 6.00 basis points                 |
| A–             |       | A3                      |       | A–          |       | 7.00 basis points                 |
| BBB+                |       | Baa1                    |       | BBB+             |       | 8.00 basis points                 |
| BBB                 |       | Baa2                    |       | BBB              |       | 10.00 basis points                |
| BBB–           |       | Baa3                    |       | BBB–        |       | 12.50 basis points                |
| Lower than BBB-     |       | Lower than Baa3         |       | Lower than BBB-  |       | 17.50 basis points                |

 

If at any time each Rating Agencyissues a different rating, then the Applicable Facility Fee Rate shall bedetermined based on the intermediate rating at such time.  If at any time two Rating Agencies issue thesame rating, which is different than the other Rating Agency, the rating issuedby such other 

 

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RatingAgency shall be disregarded, and the Applicable Facility Fee Rate shall bedetermined based on the two identical ratings at such time.  If there is no S&P Rating and Fitch Rating,then the Applicable Facility Fee Rate shall be determined based on the Moody’sRating.  If there is no Moody’s Ratingand Fitch Rating, then the Applicable Facility Fee Rate shall be determinedbased on the S&P Rating.  If there isno Moody’s Rating and S&P Rating, then the Applicable Facility Fee Rateshall be determined based on the Fitch Rating. If at any time only two Rating Agencies issue a rating and there is adifference of two or more rating levels between such Rating Agencies, then theApplicable Facility Fee Rate****shall bedetermined based on the intermediate rating levels at the midpoint between theratings issued by such Rating Agencies at such time or, if there is nomidpoint, based on the higher intermediate level.  If (i) there is no S&P Rating, Moody’sRating and Fitch Rating or (ii) an Event of Default has occurred and iscontinuing, the Applicable Facility Fee Rate shall be the highest rate perannum indicated therefor in the above table. The S&P Rating, Moody’s Rating and Fitch Rating in effect on anydate for purposes of determining the Applicable Facility Fee Rate shall be thatS&P Rating, Moody’s Rating and Fitch Rating in effect at the close ofbusiness on such date.  Each change inthe Applicable Facility Fee Rate resulting from a publicly announced change inthe S&P Rating, the Fitch Rating and/or the Moody’s Rating shall beeffective during the period commencing on the date of the public announcementthereof and ending on the date immediately preceding the effective date of the nextchange.

 

“Applicable LendingOffice” means, with respect to each Lender, the office or officesdesignated by such Lender to the Administrative Agent as such Lender’s lendingoffice or offices for purposes of this Agreement.

 

“Applicable Margin”means, on any date of determination, a rate that is determined, based upon theS&P Rating, the Moody’s Rating or the Fitch Rating, as follows:

 
| **S&P  Rating** | ** ** | **Moody’s Rating** | ** ** | **Fitch Rating** | ** ** | **Applicable Margin  for Eurodollar  Loans** | ** ** | **Applicable  Margin for Base  Rate Loans** |
|---------------------|------------|-------------------------|------------|------------------|------------|----------------------------------------------|------------|---------------------------------------------|
| A or higher         |       | A2 or higher            |       | A or higher      |       | 19.00 basis points                           |       | 0.0 basis points                            |
| A–             |       | A3                      |       | A–          |       | 23.00 basis points                           |       | 0.0 basis points                            |
| BBB+                |       | Baa1                    |       | BBB+             |       | 27.00 basis points                           |       | 0.0 basis points                            |
| BBB                 |       | Baa2                    |       | BBB              |       | 35.00 basis points                           |       | 0.0 basis points                            |
| BBB-                |       | Baa3                    |       | BBB-             |       | 47.50 basis points                           |       | 0.0 basis points                            |
| Lower than BBB-     |       | Lower than Baa3         |       | Lower than BBB-  |       | 60.00 basis points                           |       | 0.0 basis points                            |

 

If at any time each RatingAgency issues a different rating, then the Applicable Margin shall bedetermined based on the intermediate rating at such time.  If at any time two Rating Agencies issue thesame rating, which is different than the other Rating Agency, the rating issuedby such other Rating Agency shall be disregarded, and the Applicable Marginshall be determined based on the two identical ratings at such time.  If there is no S&P Rating and FitchRating, then the Applicable Margin shall be determined based on the Moody’sRating.  If there is no Moody’s Ratingand Fitch Rating, then the Applicable Margin shall be determined based on theS&P Rating.  If there is no Moody’sRating and S&P Rating, then the Applicable Margin shall be determined basedon the Fitch Rating.  If at any time onlytwo Rating Agencies issue a rating and there is a difference of two or morerating levels between such Rating Agencies, then the Applicable Margin shall bedetermined based on the intermediate rating levels 

 

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atthe midpoint between the ratings issued by such Rating Agencies at such timeor, if there is no midpoint, based on the higher intermediate level.  If (i) there is no S&P Rating, Moody’sRating and Fitch Rating or (ii) an Event of Default has occurred and iscontinuing, the Applicable Margin shall be the highest rate per annum indicatedtherefor in the above table.  The S&PRating, Moody’s Rating and Fitch Rating in effect on any date for purposes ofdetermining the Applicable Margin shall be that S&P Rating, Moody’s Ratingand Fitch Rating in effect at the close of business on such date.  Each change in the Applicable Marginresulting from a publicly announced change in the S&P Rating, the FitchRating and/or the Moody’s Rating shall be effective during the periodcommencing on the date of the public announcement thereof and ending on thedate immediately preceding the effective date of the next change.

 

“Applicable UtilizationFee Rate” means, on any date of determination, a rate that is determinedbased upon the S&P Rating, the Moody’s Rating or the Fitch Rating, asfollows:

 
| **S&P  Rating**  | ** ** | **Moody’s Rating** | ** ** | **Fitch Rating**     | ** ** | **Applicable Facility  Fee Rate** |
|----------------------|------------|-------------------------|------------|----------------------|------------|-----------------------------------|
| A or higher          |       | A2 or higher            |       | A or higher          |       | 5.00 basis points                 |
| A–              |       | A3                      |       | A–              |       | 5.00 basis points                 |
| BBB+                 |       | Baa1                    |       | BBB+                 |       | 5.00 basis points                 |
| BBB                  |       | Baa2                    |       | BBB                  |       | 5.00 basis points                 |
| BBB–            |       | Baa3                    |       | BBB–            |       | 5.00 basis points                 |
| Lower than BBB– |       | Lower than Baa3         |       | Lower than BBB– |       | 10.00 basis points                |

 

If at any time each RatingAgency issues a different rating, then the Applicable Utilization Fee Rateshall be determined based on the intermediate rating at such time.  If at any time two Rating Agencies issue thesame rating, which is different than the other Rating Agency, the rating issuedby such other Rating Agency shall be disregarded, and the ApplicableUtilization Fee Rate shall be determined based on the two identical ratings atsuch time.  If there is no S&P Ratingand Fitch Rating, then the Applicable Utilization Fee Rate shall be determinedbased on the Moody’s Rating.  If there isno Moody’s Rating and Fitch Rating, then the Applicable Utilization Fee Rateshall be determined based on the S&P Rating.  If there is no Moody’s Rating and S&PRating, then the Applicable Utilization Fee Rate shall be determined based onthe Fitch Rating.  If at any time onlytwo Rating Agencies issue a rating and there is a difference of two or morerating levels between such Rating Agencies, then the Applicable Utilization FeeRate****shall be determined based on theintermediate rating levels at the midpoint between the ratings issued by suchRating Agencies at such time or, if there is no midpoint, based on the higherintermediate level.  If (i) there isno S&P Rating, Moody’s Rating and Fitch Rating or (ii) an Event ofDefault has occurred and is continuing, the Applicable Utilization Fee Rateshall be the highest rate per annum indicated therefor in the above table.  The S&P Rating, Moody’s Rating and FitchRating in effect on any date for purposes of determining the ApplicableUtilization Fee Rate shall be that S&P Rating, Moody’s Rating and FitchRating in effect at the close of business on such date.  Each change in the Applicable Utilization FeeRate resulting from a publicly announced change in the S&P Rating, theFitch Rating and/or the Moody’s Rating shall be effective during the periodcommencing on the date of the public announcement thereof and ending on thedate immediately preceding the effective date of the next change.

 

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“Approved Fund” meansa fund that is administered or managed by a Lender or an Affiliate of a Lender.

 

“Asset Sale” meansthe sale, transfer or other disposition (including by means of Sale andLease-Back Transactions, and by means of mergers, consolidations, andliquidations of a corporation, partnership or limited liability company of theinterests therein of the Borrower or any of its Subsidiaries) by the Borroweror any of its Subsidiaries to any Person of any of their respective assets, *provided* that the term Asset Sale specifically excludes anysales, transfers or other dispositions of inventory, or obsolete or excessfurniture, fixtures, equipment or other Property, real or personal, tangible orintangible, in each case in the ordinary course of business.

 

“Assignment Agreement”means an Assignment Agreement substantially in the form of Exhibit E.

 

“Augmenting Lender”has the meaning provided in Section 3.2(a).

 

“Authorized Officer”means any of the following officers of the Borrower: the Chief ExecutiveOfficer, the Chief Financial Officer, the President, the Chief OperatingOfficer, any Group Vice President, any Vice President or the Treasurer.

 

“Bankruptcy Code”means Title 11 of the United States Code entitled “Bankruptcy,” as now orhereafter in effect, or any successor thereto.

 

“Base Rate” means,for any period, a fluctuating interest rate per annum as shall be in effectfrom time to time which rate per annum shall at all times be equal to thegreater of (a) the rate of interest established by KeyBank in Cleveland,Ohio, from time to time, as its prime rate, whether or not publicly announced,which interest rate may or may not be the lowest rate charged by it forcommercial loans or other extensions of credit; and (b) the Federal FundsEffective Rate in effect from time to time, determined one Business Day inarrears, *plus* 1/2 of 1% per annum.

 

“Base Rate Loan”means each Loan bearing interest at a rate based upon the Base Rate.

 

“Borrower” has themeaning provided in the first paragraph of this Agreement.

 

“Borrowing” means theincurrence of Loans consisting of one Type of Loan, by the Borrower from all ofthe Lenders on a *pro rata* basis on a given date(or resulting from Conversions or Continuations on a given date), having in thecase of Eurodollar Loans the same Interest Period.

 

“Business Day” means,(a) for all purposes other than as covered by clause (b) below, anyday that is not a Saturday, Sunday or day on which commercial banks in the cityin which the Payment Office is located are authorized or required by law orother governmental actions to close and (b) with respect to all noticesand determinations in connection with, and payments of principal and intereston, Eurodollar Loans, any day that is a Business Day described in clause (a) andthat is also a day for trading by and between banks in Dollar deposits in theLondon interbank market.

 

“Capital Lease”means, as applied to any Person, any lease of any Property (whether real,personal or mixed) by such Person, as lessee, that, in conformity with GAAP, isaccounted for as a capital lease on the balance sheet of that Person.

 

“Capitalized LeaseObligations” means all obligations under Capital Leases of the Borrower orany of its Subsidiaries in each case taken at the amount thereof accounted foras liabilities and identified 

 

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as“capital lease obligations” (or any similar words) on a consolidated balancesheet of the Borrower and its Subsidiaries prepared in accordance with GAAP.

 

“Cash Equivalents”means any of the following:

 

(a)           securities issued or directly and fully guaranteedor insured by the United States of America or any agency or instrumentalitythereof (*provided* that the full faith and creditof the United States of America is pledged in support thereof) havingmaturities of not more than one year from the date of acquisition;

 

(b)           Dollar denominated time deposits, certificates ofdeposit and bankers’ acceptances of (i) any Lender or (ii) any bankwhose short-term commercial paper rating from S&P is at least A-1 or theequivalent thereof or from Moody’s is at least P-1 or the equivalent thereof(any such bank, an “Approved Bank”), in each case with maturities of notmore than three months from the date of acquisition;

 

(c)           commercial paper issued by any Lender or ApprovedBank or by the parent company of any Lender or Approved Bank and commercialpaper issued by, or guaranteed by, any industrial or financial company with ashort- term commercial paper rating of at least A-1 or the equivalent thereofby S&P or at least P-1 or the equivalent thereof by Moody’s, or guaranteedby any industrial company with a long term unsecured debt rating of at least Aor A2, or the equivalent of each thereof, from S&P or Moody’s, as the casemay be, and in each case maturing within 90 days after the date of acquisition;

 

(d)           fully collateralized repurchase agreements enteredinto with any Lender or Approved Bank having a term of not more than 30 daysand covering securities described in clause (a) above;

 

(e)           investments in money market funds substantially allthe assets of which are comprised of securities of the types described inclauses (a) through (d) above;

 

(f)            investments in money market funds access to which isprovided as part of “sweep” accounts maintained with a Lender or an ApprovedBank;

 

(g)           investments in industrial development revenue bondsthat (i) “re-set” interest rates not less frequently than quarterly, (ii) areentitled to the benefit of a remarketing arrangement with an established  broker dealer, and (iii) are supportedby a direct pay letter of credit covering principal and accrued interest thatis issued by an Approved Bank;

 

(h)           investments in pooled funds or investment accountsconsisting of investments of the nature described in the foregoing clause (g);and

 

(i)            other investments not specifically described in anyof clauses (a) through (h) above that have been approved in writingby the Administrative Agent.

 

“CERCLA” means theComprehensive Environmental Response, Compensation, and Liability Act of 1980,as the same may be amended from time to time, 42 U.S.C. § 9601 *et seq*.

 

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“Changeof Control” means any of the following:

 

(a)           during any 12-month period (or, if less, during theperiod beginning on the Closing Date and ending on the date of determination),individuals who at the beginning of such period constituted the Parent’s****Board of Directors (together with any new directors whoseelection by the Parent’s Board of Directors or whose nomination for election bythe Parent’s****shareholders was approved by avote of a majority of the directors who either were directors at the beginningof such period or whose election or nomination was previously so approved)cease for any reason to constitute a majority of the Board of Directors of theParent;

 

(b)           any “person” or “group” (as such terms are used inSections 13(d) and 14(d) of the 1934 Act, but excluding anyemployee benefit plan of such person or its subsidiaries, and any person orentity acting in its capacity as trustee, agent or other fiduciary oradministrator of any such plan) becomes the “beneficial owner” (as defined in Rules 13d-3and 13d-5 under the 1934 Act, except that a person or group shall be deemed tohave “beneficial ownership” of all securities that such person or group has theright to acquire (such right, an “option right”), whether such right isexercisable immediately or only after the passage of time), directly orindirectly, of 20% or more of the equity securities of the Parent entitled tovote for members of the board of directors or equivalent governing body of theParent on a fully-diluted basis (and taking into account all such securitiesthat such person or group has the right to acquire pursuant to any optionright); or

 

(c)           the Parent shall cease to own, free and clear of allLiens and other encumbrances and on a fully diluted basis, 100% of theoutstanding shares of all classes of stock of the Borrower ordinarily havingthe right to vote at an election of directors, or any contingency shall occurthat causes any class of stock of the Borrower, the shares of which are notowned by the Parent, to have the right to vote at an election of directors.

 

“Closing Date” meansthe date on which the conditions specified in Section 5.1 are satisfied.

 

“Closing Fee Letter”means the Closing Fee Letter, dated as of the date hereof, between the Borrowerand the Administrative Agent, for the benefit of the Lenders, as the same mayfrom time to time be amended, restated, supplemented or otherwise modified.

 

“Code” means theInternal Revenue Code of 1986, as amended from time to time, and theregulations promulgated thereunder.

 

“Commercial Letter ofCredit” means any letter of credit or similar instrument issued for thepurpose of providing the primary payment mechanism in connection with thepurchase of materials, goods or services in the ordinary course of business.

 

“Commitment” means,with respect to each Lender, its obligation to make Loans to the Borrower fromtime to time pursuant to Section 2.1, in an aggregate principal amount atany one time outstanding not to exceed the amount, if any, set forth oppositesuch Lender’s name on Annex I as its “Commitment” or in the case ofany Lender that becomes a party hereto pursuant to an Assignment Agreement, theobligation of such Lender to make Loans in an aggregate principal amount at anyone time outstanding not to exceed the amount set forth as the “Amount ofAssigned Share” in each Assignment Agreement to which such Lender is a partythereto as the assignee, as any such Commitments may be reduced from time totime pursuant to Section 3.3, 3.4 and/or 9.2, increased from time to timepursuant to Section 3.2, and/or adjusted from time to time as a result ofassignments to or from such Lender pursuant to Section 11.4.

 

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“Compliance Certificate”means a certificate, substantially in the form of the attached Exhibit C.

 

“Consolidated Net Income”means, for any period, the net income (or loss), without deduction for minorityinterests, of the Borrower and its Subsidiaries on a consolidated basis forsuch period taken as a single accounting period determined in conformity withGAAP.

 

“Consolidated Net Worth”means, at any time, all amounts that, in conformity with GAAP, would beincluded under the caption “total stockholders’ equity” (or any like caption)on a consolidated balance sheet of the Borrower as of such time, *provided* that in no event shall Consolidated Net Worthinclude any amounts in respect of Redeemable Stock.

 

“Consolidated TangibleAssets” means at any time the consolidated total assets of the Borrower andits Subsidiaries calculated on a consolidated basis as of such time, butexcluding therefrom goodwill, patents, patent applications, permits,trademarks, trade names, copyrights, licenses, franchises, experimental expense,organizational expense, unamortized debt discount and expense, the excess ofcost of shares acquired over book value of related assets and such other assetsthat are properly classified as “intangible assets” in accordance with GAAP.

 

“Consolidated TotalCapitalization” means the sum of Consolidated Total Debt and ConsolidatedNet Worth and, to the extent nototherwise included, preferred stock of the Borrower.

 

“Consolidated Total Debt”means the sum (without duplication) of all Indebtedness of the Borrower and ofeach of its Subsidiaries, all as determined on a consolidated basis.

 

“Continue”, “Continuation”and “Continued” each refers to a continuation of Eurodollar Loans for anadditional Interest Period as provided in Section 2.3.

 

“Controlled Group” meansall members of a controlled group of corporations or other business entitiesand all trades or businesses (whether or not incorporated) under common controlthat, together with the Borrower or any of its Subsidiaries, are treated as asingle employer under Section 414 of the Code.

 

“Convert”, “Conversion”and “Converted” each refers to a conversion of Loans of one Type intoLoans of another Type, pursuant to Section 2.3.

 

“Credit Documents”means this Agreement, the Notes, if any, the Agent Fee Letter, the Closing FeeLetter, each Letter of Credit and each other LC Document.

 

“Credit Event” meansany Borrowing, Conversion, Continuation or any LC Issuance.

 

“Credit Facility”means the credit facility established under this Agreement pursuant to which (a) theLenders shall make Loans to the Borrower, and shall participate in LCIssuances, pursuant to the Commitment of each such Lender, and (b) each LCIssuer shall issue Letters of Credit for the account of the Borrower inaccordance with the terms of this Agreement.

 

“Default” means anyevent, act or condition that with notice or lapse of time, or both, wouldconstitute an Event of Default.

 

“Defaulting Lender”means any Lender with respect to which a Lender Default is in effect.

 

“Dollars” and thesign “$” each means lawful money of the United States.

 

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“Eligible Assignee”means (a) a Lender (other than a Defaulting Lender), (b) an Affiliateof a Lender (other than a Defaulting Lender), (c) an Approved Fund, and (d) anyother Person (other than a natural person) approved by (i) theAdministrative Agent, and (ii) unless an Event of Default has occurred andis continuing, the Borrower (each such approval not to be unreasonably withheldor delayed); *provided* that notwithstanding theforegoing, “Eligible Assignee” shall not include the Borrower or any ofthe Affiliates or Subsidiaries of the Borrower.

 

“Energy-Related Business”means any business engaged in or directly related to:  (a) the production, sale, brokerage,management, transportation, delivery or other provision of energy products,including but not limited to, electricity, natural gas, oil, coal, propane andrenewable energy producing materials, (b) the provision of energyconservation services, including, but not limited to, energy audits,installation of energy conservation devices, energy efficient equipment andrelated systems, (c) the provision of services and equipment in connectionwith the procurement of such energy products or conservation of energy, (d) engineering,consulting, construction, operational or maintenance services in connectionwith such energy products, the conservation of energy or with equipmentutilizing such energy products or (e) the manufacturing of equipment usedin connection with energy production or conservation.

 

“Environmental Claims”means any and all administrative, regulatory or judicial actions, suits,demands, demand letters, claims, liens, notices of non-compliance or violation,investigations or proceedings relating in any way to any Environmental Law orany permit issued under any such law, including, without limitation, (a) anyand all claims by governmental or regulatory authorities for enforcement,cleanup, removal, response, remedial or other actions or damages pursuant toany applicable Environmental Law, and (b) any and all claims by any thirdparty seeking damages, contribution, indemnification, cost recovery,compensation or injunctive relief resulting from the storage, treatment orRelease (as defined in CERCLA) of any Hazardous Materials or arising fromalleged injury or threat of injury to health, safety or the environment.

 

“Environmental Law”means any applicable Federal, state, foreign or local statute, law, rule,regulation, ordinance, code, binding and enforceable guideline, binding andenforceable written policy and rule of common law now or hereafter ineffect and in each case as amended, and any binding and enforceable judicial oradministrative interpretation thereof, including, without limitation, anyjudicial or administrative order, consent, decree or judgment issued to orrendered against the Borrower or any of its Subsidiaries relating to theenvironment, employee health and safety or Hazardous Materials, including,without limitation, CERCLA; RCRA; the Federal Water Pollution Control Act, 33U.S.C. § 1251 *et seq*.; the Clean Air Act,42 U.S.C. § 7401 *et seq*.;the Safe Drinking Water Act, 42 U.S.C. § 300f *et seq*.;the Oil Pollution Act of 1990, 33 U.S.C. § 2701 *et seq*.;the Emergency Planning and the Community Right-to-Know Act of 1986, 42 U.S.C. §11001 *et seq*., the Hazardous MaterialTransportation Act, 49 U.S.C. § 5101 *et seq*. andthe Occupational Safety and Health Act, 29 U.S.C. § 651 *et seq*.(to the extent it regulates occupational exposure to Hazardous Materials); andany state and local or foreign counterparts or equivalents, in each case asamended from time to time.

 

“ERISA” means theEmployee Retirement Income Security Act of 1974, as amended from time to time,and the regulations promulgated thereunder.

 

“Eurodollar Loans”means each Loan bearing interest at a rate based on the Adjusted EurodollarRate.

 

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

 

“Exemption Certificate”has the meaning provided in Section 4.5(b)(ii).

 

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“Existing CreditAgreement” means the Credit Agreement, dated as of May 31, 2005, amongthe Borrower, the lenders party thereto, and KeyBank, as administrative agent.

 

“Facility Fees” hasthe meaning provided in Section 3.1(a).

 

“Federal Funds EffectiveRate” means, for any period, a fluctuating interest rate equal for each dayduring such period to the weighted average of the rates on overnight FederalFunds transactions with members of the Federal Reserve System arranged byFederal Funds brokers, as published for such day (or, if such day is not aBusiness Day, for the next preceding Business Day) by the Federal Reserve Bankof New York, or, if such rate is not so published for any day that is aBusiness Day, the average of the quotations for such day on such transactionsreceived by the Administrative Agent from three Federal Funds brokers ofrecognized standing selected by the Administrative Agent.

 

“Fees” means allamounts payable pursuant to, or referred to in, Section 3.1, together withany other fees payable pursuant to this Agreement or any other Credit Document.

 

“Fitch” means FitchInvestors Service Inc. and its successors.

 

“Fitch Rating” means,on any date of determination, the rating accorded the Borrower’s seniorunsecured long-term debt by Fitch (or if the Obligations are secured, therating accorded to the Borrower’s senior secured long-term debt by Fitch), orif such rating is unavailable, the Borrower’s long-term issuer default ratingaccorded to it by Fitch.

 

“FPA” means theFederal Power Act, as amended, and all rules and regulations promulgatedthereunder.

 

“GAAP” meansgenerally accepted accounting principles in the United States of America as ineffect from time to time.

 

“Governmental Authority”means any nation or government, any state or other political subdivisionthereof, any agency, authority, instrumentality, regulatory body, court,administrative tribunal, central bank or other entity exercising executive,legislative, judicial, taxing, regulatory or administrative powers or functionsof or pertaining to government.

 

“Guaranty Obligations”means as to any Person (without duplication) any obligation of such Personguaranteeing any Indebtedness (“primary Indebtedness”) of any otherPerson (the “primary obligor”) in any manner, whether directly orindirectly, including, without limitation, any obligation of such Person,whether or not contingent, (a) to purchase any such primary Indebtednessor any Property constituting direct or indirect security therefor, (b) toadvance or supply funds (i) for the purchase or payment of any suchprimary Indebtedness or (ii) to maintain working capital or equity capitalof the primary obligor or otherwise to maintain the net worth or solvency ofthe primary obligor, (c) to purchase Property, securities or servicesprimarily for the purpose of assuring the owner of any such primaryIndebtedness of the ability of the primary obligor to make payment of suchprimary Indebtedness, or (d) otherwise to assure or hold harmless theowner of such primary Indebtedness against loss in respect thereof, *provided, however*, that the term Guaranty Obligation shallnot include endorsements of instruments for deposit or collection in theordinary course of business.  The amountof any Guaranty Obligation shall be deemed to be an amount equal to the statedor determinable amount of the primary Indebtedness in respect of which suchGuaranty Obligation is made or, if not stated or determinable, the maximumreasonably anticipated liability in respect thereof (assuming such Person isrequired to perform thereunder) as determined by such Person in good faith.

 

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“Hazardous Materials”means (a) any petrochemical or petroleum products, radioactive materials,asbestos in any form that is or could become friable, urea formaldehyde foaminsulation, transformers or other equipment that contain dielectric fluidcontaining levels of polychlorinated biphenyls, and radon gas; and (b) anychemicals, materials or substances defined as or included in the definition of “hazardoussubstances”, “hazardous wastes”, “hazardous materials”, “restricted hazardousmaterials”, “extremely hazardous wastes”, “restrictive hazardous wastes”, “toxicsubstances”, “toxic pollutants”, “contaminants” or “pollutants”, or words ofsimilar meaning and regulatory effect, under any applicable Environmental Law.

 

“Increasing Lender”has the meaning provided in Section 3.2(a).

 

“Indebtedness” means,with respect to any Person, all of the following (without duplication):

 

(a)           all indebtedness of such Person for borrowed money;

 

(b)           all bonds, notes, debentures and similar debtsecurities of such Person;

 

(c)           the deferred purchase price of capital assets orservices that in accordance with GAAP would be shown on the liability side ofthe balance sheet of such Person;

 

(d)           non-contingent obligations to reimburse any otherPerson in respect of amounts paid under a letter of credit or similarinstrument to the extent that such reimbursement obligations remain outstandingafter such obligations become non-contingent;

 

(e)           all obligations, contingent or otherwise, of suchPerson in respect of bankers’ acceptances;

 

(f)            all Indebtedness of a second Person secured by anyLien on any Property owned by such first Person, whether or not suchIndebtedness has been assumed;

 

(g)           all Capitalized Lease Obligations of such Person;

 

(h)           the present value, determined on the basis of theimplicit interest rate, of all basic rental obligations under all SyntheticLeases of such Person;

 

(i)            the full outstanding balance of trade receivables,notes or other instruments sold with full recourse (and the portion thereofsubject to potential recourse, if sold with limited recourse), other than inany such case any thereof sold solely for purposes of collection of delinquentaccounts;

 

(j)            the stated value, or liquidation value if higher, ofall Redeemable Stock of such Person; and

 

(k)           all Guaranty Obligations of such Person;

 

*provided,however*, that (i) neither trade payables nor other similar accruedexpenses, in each case arising in the ordinary course of business, norobligations in respect of insurance policies or performance or surety bondsthat themselves are not guarantees of Indebtedness (nor drafts, acceptances orsimilar instruments evidencing the same nor obligations in respect of lettersof credit supporting the payment of the same), shall constitute Indebtedness;and (ii) the Indebtedness of any Person shall in any event include(without duplication) the Indebtedness of any other entity (including anygeneral partnership in which 

 

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suchPerson is a general partner) to the extent such Person is liable thereon as aresult of such Person’s ownership interest in or other relationship with suchentity, except to the extent the terms of such Indebtedness provide expresslythat such Person is not liable thereon.

 

“Interest Period”means, with respect to each Eurodollar Loan, a period of one, two, three or sixmonths as selected by the Borrower, *provided* that (a) theinitial Interest Period for any Borrowing of Eurodollar Loans shall commence onthe date of such Borrowing (the date of a Borrowing resulting from a Conversionor Continuation shall be the date of such Conversion or Continuation) and eachInterest Period occurring thereafter in respect of such Borrowing shallcommence on the day on which the next preceding Interest Period expires; (b) ifany Interest Period begins on a day for which there is no numericallycorresponding day in the calendar month at the end of such Interest Period,such Interest Period shall end on the last Business Day of such calendar month;(c) if any Interest Period would otherwise expire on a day that is not aBusiness Day, such Interest Period shall expire on the next succeeding BusinessDay, provided that if any Interest Period would otherwise expire on a day thatis not a Business Day but is a day of the month after which no further BusinessDay occurs in such month, such Interest Period shall expire on the next precedingBusiness Day; (d) no Interest Period for any Eurodollar Loan may beselected that would end after the Maturity Date; and (e) if, upon theexpiration of any Interest Period, the Borrower has failed to (or may not)elect a new Interest Period to be applicable to the respective Borrowing ofEurodollar Loans as provided above, the Borrower shall be deemed to haveelected to Convert such Borrowing to a Base Rate Loan effective as of theexpiration date of such current Interest Period.

 

“Investment” means (a) anydirect or indirect purchase or other acquisition by the Borrower or any of itsSubsidiaries of any of the capital stock or other equity interest of any otherPerson, including any partnership or joint venture interest in such Person; (b) anyloan or advance to, guarantee or assumption of debt or purchase or otheracquisition of any other debt (other than accounts receivable arising in theordinary course of business on terms customary in the trade) of, any Person bythe Borrower or any of its Subsidiaries; or (c) any purchase or otheracquisition (in one transaction or a series of transactions) of assets ofanother Person that constitute a business unit or all or a substantial part ofthe business of, such Person.

 

“KeyBank” meansKeyBank National Association, a national banking association, together with itssuccessors and assigns.

 

“LC Commitment Amount”means $50,000,000.

 

“LC Documents” means,with respect to any Letter of Credit, any documents executed in connection withsuch Letter of Credit, including the Letter of Credit itself.

 

“LC Fee” means any ofthe fees payable pursuant to Section 3.1(c) or Section 3.1(d) inrespect of Letters of Credit.

 

“LC Issuance” meansthe issuance of any Letter of Credit by any LC Issuer for the account of theBorrower in accordance with the terms of this Agreement, and shall include anyamendment thereto that increases the Stated Amount thereof or extends theexpiry date of such Letter of Credit.

 

“LC Issuer” meansKeyBank or any of its Affiliates, or such other Lender that is requested by theBorrower and agrees to be an LC Issuer hereunder and is approved by theAdministrative Agent.

 

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“LC Outstandings”means, at any time, the sum, without duplication, of (a) the aggregateStated Amount of all outstanding Letters of Credit and (b) the aggregateamount of all Unpaid Drawings with respect to Letters of Credit.

 

“LC Participant” hasthe meaning provided in Section 2.4(g)(i).

 

“LCParticipation” has the meaning provided in Section 2.4(g)(i).

 

“LC Request” has themeaning provided in Section 2.4(b).

 

“Leaseholds” means,with respect to any Person, all the right, title and interest of such Person aslessee or licensee in, to and under leases or licenses of land, improvementsand/or fixtures.

 

“Lenders” means thePersons listed on Annex I and any other Person that becomes a partyhereto pursuant to an Assignment Agreement, other than any such Person thatceases to be a party hereto pursuant to an Assignment Agreement.

 

“Lender Default”means (a) the refusal (which has not been retracted) of a Lender inviolation of the requirements of this Agreement to make available its portionof any incurrence of Loans or (b) a Lender having notified theAdministrative Agent and/or the Borrower that it does not intend to comply withits obligations under Section 2.2.

 

“Lender Register” hasthe meaning provided in Section 11.15.

 

“Letter of Credit”means any Standby Letter of Credit or Commercial Letter of Credit, in each caseissued by any LC Issuer under this Agreement pursuant to Section 2.4 forthe account of the Borrower.

 

“Lien” means anymortgage, pledge, security interest, encumbrance, lien or charge of any kind(including any agreement to give any of the foregoing, any conditional sale orother title retention agreement or any lease in the nature thereof).

 

“Loan” has themeaning provided in Section 2.2.

 

“Margin Stock” hasthe meaning provided in Regulation U.

 

“Material Adverse Effect”means any or all of the following:  (a) amaterial adverse effect on the business, operations, Property, assets,liabilities, financial or other condition, or prospects of the Borrower and itsSubsidiaries, taken as a whole, or when used with reference to any otherPerson, such Person and its Subsidiaries, taken as a whole, as the case may be;(b) a material adverse effect on the ability of the Borrower to performits obligations under the Credit Documents to which it is a party; (c) amaterial adverse effect on the ability of the Borrower and its Subsidiaries,taken as a whole, to pay their liabilities and obligations as they mature orbecome due; or (d) a material adverse effect on the validity,effectiveness or enforceability, as against the Borrower, of any of the CreditDocuments to which it is a party.

 

“Maturity Date” meansthe earlier to occur of (a) November 21, 2011, or (b) the dateon which (i) the Total Commitment is terminated pursuant to Section 9.2(a) and/or(ii) all Loans and other Obligations are declared due and payable pursuantto Section 9.2(b).

 

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“Minimum Borrowing Amount”means (a) for Base Rate Loans, $1,000,000, with minimum incrementsthereafter of $500,000, and (b) for Eurodollar Loans, $5,000,000, withminimum increments thereafter of $500,000.

 

“Moody’s” means Moody’sInvestors Service, Inc. and its successors.

 

“Moody’s Rating”means, on any date of determination, the rating accorded the Borrower’s seniorunsecured long-term debt by Moody’s (or if the Obligations are secured, therating accorded to the Borrower’s senior secured long-term debt by Moody’s), orif such rating is unavailable, the Borrower’s long-term issuer credit ratingaccorded to it by Moody’s.

 

“Multiemployer Plan”means a Plan maintained pursuant to a collective bargaining agreement or anyother arrangement as to which the Borrower or any member of the ControlledGroup is a party to which more than one employer is obligated to makecontributions.

 

“1933 Act” means theSecurities Act of 1933, as amended.

 

“1934 Act” means theSecurities Exchange Act of 1934, as amended.

 

“Non-Defaulting Lender”means each Lender other than a Defaulting Lender.

 

“Non-Increasing Lender”has the meaning provided in Section 3.2(b).

 

“Note” has themeaning provided in Section 2.6(d).

 

“Notice of Borrowing,Continuation or Conversion” has the meaning provided in Section 2.3(b).

 

“Notice Office” meansthe office of the Administrative Agent at 127 Public Square, Cleveland, Ohio44114, Attention: Yvette M. Dyson-Owens (facsimile: (216) 689-5962), or suchother office of the Administrative Agent, as the Administrative Agent maydesignate to the Borrower from time to time.

 

“Obligations” meansall amounts, direct or indirect, contingent or absolute, of every type ordescription, and at any time existing, owing by the Borrower to theAdministrative Agent or any Lender or any LC Issuer pursuant to the terms ofthis Agreement or any other Credit Document (including, without limitation,interest and fees that accrue after the commencement by or against the Borrowerof any insolvency proceeding, regardless of whether such interest and fees areallowed claims in such proceeding and any and all indemnification obligationshereunder).

 

“Operating Lease”means, with respect to any Person, any lease of any Property (whether real,personal or mixed) by such Person as lessee that, in conformity with GAAP, isnot accounted for as a Capital Lease on the balance sheet of such Person.

 

“Parent” means DPLInc., an Ohio corporation.

 

“Payment Office”means the office of the Administrative Agent at 127 Public Square, Cleveland,Ohio 44114, Attention: Yvette M. Dyson-Owens (facsimile: (216) 689-5962), orsuch other office of the Administrative Agent, as the Administrative Agent maydesignate to the Borrower from time to time.

 

“PBGC” means thePension Benefit Guaranty Corporation established pursuant to Section 4002of ERISA, or any successor thereto.

 

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“Percentage” means,at any time for any Lender, the percentage obtained by dividing such Lender’sCommitment by the Total Commitment, *provided,* thatif the Total Commitment has been terminated, the Percentage for each Lendershall be determined by dividing such Lender’s Commitment immediately prior tosuch termination by the Total Commitment immediately prior to such termination.

 

“Permitted Acquisition”means and includes any Acquisition as to which all of the following conditionsare satisfied:  (a) such Acquisition(i) involves a line or lines of an Energy-Related Business, and (ii) involvesa Person or a line or lines of business that are located and operated in theUnited States; (b) no Default or Event of Default shall exist prior to orimmediately after giving effect to such Acquisition; (c) such Acquisitionis not being consummated on a hostile basis and has been approved by the Boardof Directors of the target Person and no material challenge to such Acquisitionshall be pending or threatened by any shareholder or director of the seller orPerson to be acquired, and (d) as of the date of the consummation of suchAcquisition, all approvals required in connection therewith shall have beenobtained.

 

“Permitted Liens”means Liens permitted by Section 8.3.

 

“Permitted RestrictiveCovenant” means (a) any covenant or restriction contained in thisAgreement, (b) any covenant or restriction contained in any otheragreement that is less burdensome than any covenant or restriction contained inthis Agreement, (c) in the case of transfers by any Subsidiary of theBorrower to the Borrower or another Subsidiary of the Borrower of any propertyor assets, any agreement setting forth customary restrictions on thesubletting, assignment or transfer of any property or asset that is a lease,license or conveyance of similar property or assets; (d) in the case oftransfers by any Subsidiary of the Borrower to the Borrower or anotherSubsidiary of the Borrower of any property or assets, any agreement with theholder of a Lien otherwise permitted to exist under Section 8.3(e)(ii) restrictingon customary terms the transfer of any property or assets subject thereto; (e) anyagreement evidencing or setting forth the terms of any refunding, refinancingor replacement Indebtedness the incurrence of which is not prohibited by thisAgreement that contains any such restrictions to the extent such restrictionsare no less favorable to the Borrower or any of its Subsidiaries or to therights or interest of the Lenders than the terms in effect in the Indebtednessbeing so refunded, refinanced or replaced immediately prior to such refunding,refinancing or replacement; (f) any agreement that has been entered intoby the Borrower or any of its Subsidiaries for the sale, lease, transfer orother disposition of any of its property or assets so long as such sale, lease,transfer or other disposition is otherwise permitted to be made under Section 8.2;and (g) any agreement evidencing Indebtedness outstanding on the date aPerson first becomes a Subsidiary of the Borrower; *provided*,that such agreement was not created in contemplation of the purchase or otheracquisition of such Person by the Borrower or any of its Subsidiaries and doesnot extend to or cover any property or assets other than the property or assetsof the Person becoming such Subsidiary.

 

“Person” means anyindividual, partnership, joint venture, firm, corporation, limited liabilitycompany, association, trust or other entity or any government or politicalsubdivision or any agency, department or instrumentality thereof.

 

“Plan” means an employeepension benefit plan that is covered by Title IV of ERISA or subject to minimumfunding standards under Section 412 of the Code as to which the Borroweror any member of the Controlled Group may have any liability.

 

“Property” means,with respect to any Person, any and all property, whether real, personal,tangible, intangible, or mixed, of such Person, or other assets owned, leasedor operated by such Person.

 

“Rating Agency” meansany of Fitch, Moody’s or S&P.

 

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“RCRA” means theResource Conservation and Recovery Act, as the same may be amended from time totime, 42 U.S.C. § 6901 et seq.

 

“Real Property”means, with respect to any Person, all of the right, title and interest of suchPerson in and to land, improvements and fixtures, including Leaseholds.

 

“Redeemable Stock”means, with respect to any Person, any capital stock or similar equityinterests of such Person that (a) is by its terms subject to mandatoryredemption, in whole or in part, pursuant to a sinking fund, scheduledredemption or similar provisions, at any time prior to the latest MaturityDate; or (b) otherwise is required to be repurchased or retired on ascheduled date or dates, upon the occurrence of any event or circumstance, atthe option of the holder or holders thereof, or otherwise, at any time prior tothe latest Maturity Date under this Agreement, other than any such repurchaseor retirement occasioned by a “change of control” or similar event.

 

“Reference Banks”means (a) KeyBank and (b) any other Lender or Lenders selected as aReference Bank by the Administrative Agent.

 

“Regulation D” meansRegulation D of the Board of Governors of the Federal Reserve System as fromtime to time in effect and any successor to all or a portion thereofestablishing reserve requirements.

 

“Regulation U” meansRegulation U of the Board of Governors of the Federal Reserve System as fromtime to time in effect and any successor to all or a portion thereofestablishing margin requirements.

 

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

 

“Reportable Event”means a reportable event as defined in Section 4043 of ERISA and the regulationsissued under such section, with respect a Plan, excluding, however, such eventsas to which the PBGC has by regulations waived the requirement of Section 4043(a) ofERISA that it be notified within 30 days of the occurrence of such event; *provided, however*, that a failure to meet the minimumfunding standard of Section 412 of the Code and of Section 302 ofERISA shall be a Reportable Event regardless of the issuance any such waiver ofthe notice requirement in accordance with either Section 4043(a) ofERISA or Section 412(d) of the Code.

 

“Required Lenders”means, (a) if there are no more than two Lenders, both Lenders or, (b) ifthere are more than two Lenders, Non-Defaulting Lenders whose RevolvingFacility Exposure and Unutilized Commitment constitute at least 51% of the sumof the Aggregate Revolving Facility Exposure and Unutilized Commitments ofNon-Defaulting Lenders.

 

“Revolving FacilityExposure” means, for any Lender at any time, the sum of (a) theprincipal amount of Loans made by such Lender and outstanding at such time, and(b) such Lender’s share of the LC Outstandings at such time.

 

“S&P” meansStandard & Poor’s Ratings Group, a division of McGraw Hill, Inc.,and its successors.

 

“S&P Rating”means, on any date of determination, the rating accorded to the Borrower’ssenior unsecured long-term debt by S&P (or if the Obligations are secured,the rating accorded to the Borrower’s senior secured long-term debt byS&P).

 

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“Sale and Lease-BackTransaction” means any arrangement with any Person providing for theleasing by the Borrower or any Subsidiary of the Borrower of any Property(except for temporary leases for a term, including any renewal thereof, of notmore than one year and except for leases between the Borrower and a Subsidiaryof the Borrower or between Subsidiaries of the Borrower), which Property hasbeen or is to be sold or transferred by the Borrower or such Subsidiary to suchPerson.

 

“SEC” means theUnited States Securities and Exchange Commission.

 

“SEC Regulation D”means Regulation D as promulgated under the 1933 Act, as the same may be ineffect from time to time.

 

“Single Employer Plan”means a Plan maintained by the Borrower or any member of the Controlled Groupfor employees of the Borrower or any member of the Controlled Group.

 

“Standard Permitted Liens”means the following:

 

(a)           Liens for taxes not yet delinquent or Liens fortaxes being contested in good faith and by appropriate proceedings for whichadequate reserves in accordance with GAAP have been established;

 

(b)           Liens in respect of Property or assets imposed bylaw that were incurred in the ordinary course of business, such as carriers’,warehousemen’s, materialmen’s and mechanics’ Liens and other similar Liensarising in the ordinary course of business, that (i) do not secure paymentobligations more than 60 days past due; (ii) do not, in the aggregate,materially detract from the value of such Property or assets or materiallyimpair the use thereof in the operation of the business of the Borrower or anyof its Subsidiaries and do not secure any Indebtedness; or (iii) arecontested in good faith by appropriate proceedings and for which adequatereserves shall have been set aside on the books of the Borrower or itsrespective Subsidiary, as the case may be;

 

(c)           bankers’ Liens and rights of setoff arising byoperation of law and contractual rights of setoff;

 

(d)           Liens arising from judgments, decrees or attachmentsin circumstances not constituting an Event of Default under Section 9.1(g);

 

(e)           Liens (other than any Lien imposed by ERISA)incurred or deposits made in the ordinary course of business in connection withworkers’ compensation, unemployment insurance and other types of socialsecurity; and mechanic’s Liens, carrier’s Liens, and other Liens to secure theperformance of tenders, statutory obligations, contract bids, governmentcontracts, performance and return-of-money bonds and other similar obligations,incurred in the ordinary course of business (exclusive of obligations inrespect of the payment for borrowed money), whether pursuant to statutoryrequirements, common law or consensual arrangements;

 

(f)            leases or subleases granted in the ordinary courseof business to others not interfering in any material respect with the businessof the Borrower or any of its Subsidiaries and any interest or title of alessor under any lease not in violation of this Agreement;

 

(g)           easements, rights-of-way, zoning or otherrestrictions, charges, encumbrances, defects in title, prior rights of otherPersons, and obligations contained in similar instruments, in each case that donot involve, and are not likely to involve at any future time, eitherindividually or in the aggregate, (i) a substantial and prolongedinterruption or disruption of the business 

 

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activities of the Borrowerand its Subsidiaries considered as an entirety, or (ii) a Material AdverseEffect;

 

(h)           precautionary filing of Uniform Commercial Codefinancing statements by lessors in connection with Operating Leases;

 

(i)            Liens arising from the rights of lessors underleases (including financing statements regarding Property subject to lease)permitted under this Agreement, *provided* thatsuch Liens are only in respect of the Property subject to, and secure only, therespective lease (and any other lease with the same or an affiliated lessor);and

 

(j)            rights of consignors of goods, whether or notperfected by the filing of a financing statement under the UCC.

 

“Standby Letter of Credit”means any standby letter of credit issued for the purpose of supporting workerscompensation, liability insurance, releases of contract retention obligations,contract performance guarantee requirements and other bonding obligations orfor other lawful purposes.

 

“Stated Amount” ofeach Letter of Credit shall mean the maximum amount available to be drawnthereunder (regardless of whether any conditions or other requirements fordrawing could then be met).

 

“Subsidiary” means, withrespect to any Person, (a) any corporation more than 50% of whose stock ofany class or classes having by the terms thereof ordinary voting power to electa majority of the directors of such corporation (irrespective of whether at thetime stock of any class or classes of such corporation shall have or might havevoting power by reason of the happening of any contingency) is at the timeowned by such Person directly or indirectly through Subsidiaries and (b) anypartnership, limited liability company, association, joint venture or otherentity in which such Person directly or indirectly through Subsidiaries, hasmore than a 50% equity interest at the time or in which the Borrower, one ormore other Subsidiaries of the Borrower, or the Borrower and one or moreSubsidiaries of the Borrower, directly or indirectly, has the power to directthe policies, management and affairs thereof. Unless otherwise expressly provided*,* allreferences herein to “Subsidiary” shall mean a Subsidiary of the Borrower.

 

“Substantial Portion”means, with respect to the Property of the Borrower and its Subsidiaries,Property that (a) represents more than 10% of the Consolidated TangibleAssets of the Borrower and its Subsidiaries as would be shown in theconsolidated financial statements of the Borrower and its Subsidiaries as atthe beginning of the twelve-month period ending with the month in which suchdetermination is made or (b) is responsible for more than 10% of theconsolidated net sales or of the Consolidated Net Income of the Borrower andits Subsidiaries as reflected in the financial statements referred to in clause(a) above.

 

“Swap Agreement”means (a) any and all rate swap transactions, basis swaps, creditderivative transactions, forward rate transactions, commodity swaps, commodityoptions, forward commodity contracts, equity or equity index swaps or options,bond or bond price or bond index swaps or options or forward bond or forwardbond price or forward bond index transactions, interest rate options, forwardforeign exchange transactions, cap transactions, floor transactions, collartransactions, currency swap transactions, cross-currency rate swaptransactions, currency options, spot contracts, or any other similartransactions or any combination of any of the foregoing (including any optionsto enter into any of the foregoing), irrespective of whether any suchtransaction is governed by or subject to any master agreement, and (b) anyand all transactions of any kind, and the related confirmations, that aresubject to the terms and conditions of, or governed by, any form of masteragreement published by the International 

 

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Swapsand Derivatives Association, Inc., any International Foreign ExchangeMaster Agreement, or any other master agreement (any such master agreement,together with any related schedules, a “Master Agreement”), includingany such obligations or liabilities under any Master Agreement.

 

“Synthetic Lease”means any lease (a) that is accounted for by the lessee as an OperatingLease, and (b) under which the lessee is intended to be the “owner” of theleased Property for Federal income tax purposes.

 

“Taxes” has themeaning provided in Section 4.5(a).

 

“Total Commitment”means the sum of the Commitments of the Lenders.

 

“Type” means any typeof Loan determined with respect to the interest option applicable thereto, *i.e.*, a Base Rate Loan or Eurodollar Loan.

 

“UCC” means theUniform Commercial Code as in effect from time to time.  Unless otherwise specified, the UCC shallrefer to the UCC as in effect in the State of Ohio.

 

“Unfunded Liabilities”means the amount, if any, by which the present value of all vested and unvestedaccrued benefits under all Single Employer Plans exceeds the fair market valueof all such Plan assets allocable to such benefits, all determined as of thethen most recent valuation date for such Plans using PBGC actuarial assumptionsfor single employer plan terminations.

 

“United States” and “U.S.”each means United States of America.

 

“Unpaid Drawing”means, with respect to any Letter of Credit, the aggregate amount of the drawsmade on such Letter of Credit that have not been reimbursed by the Borrower orconverted to a Loan pursuant to Section 2.4(f)(i), and, in each case, allinterest that accrues thereon pursuant to this Agreement.

 

“Unutilized Commitment”means, at any time, with respect to any Lender, the excess of (a) suchLender’s Commitment at such time over (b) such Lender’s Revolving FacilityExposure at such time.

 

“Unutilized TotalCommitment” means, at any time, the excess of (a) the Total Commitmentat such time over (b) the Aggregate Revolving Facility Exposure at suchtime.

 

“USA Patriot Act”means the Uniting and Strengthening America by Providing Appropriate Tools Requiredto Intercept and Obstruct Terrorism (USA PATRIOT Act) Act of 2001.

 

“Utilization Fees”has the meaning provided in Section 3.1(b).

 

“Wholly-Owned Subsidiary”means each Subsidiary of the Borrower at least 95% of whose capital stock,equity interests and partnership interests, other than director’s qualifyingshares or similar interests, are owned directly or indirectly by the Borrower.

 

## Section 1.2             Computation of Time Periods.  In this Agreement in the computation ofperiods of time from a specified date to a later specified date, the word “from”means “from and including,” the words “to” and “until” each means “to butexcluding,” and the word “through” means “through and including.”

 

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## Section 1.3             Accounting Terms.  Except as otherwise specifically providedherein, all terms of an accounting or financial nature shall be construed inaccordance with GAAP, as in effect from time to time.

##  

## Section 1.4             Terms Generally.  The definitions of terms herein shall applyequally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronounshall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including”shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to havethe same meaning and effect as the word “shall”.  Unless the context requires otherwise, (a) any definition of or reference to any agreement,instrument or other document herein shall be construed as referring to suchagreement, instrument or other document as from time to time amended, restated,supplemented or otherwise modified (subject to any restrictions on suchamendments, restatements, supplements or modifications set forth herein), (b) any reference herein to any Person shall beconstrued to include such Person’s successors and assigns, (c) thewords “herein”, “hereof” and “hereunder”, and words of similar import, shall beconstrued to refer to this Agreement in its entirety and not to any particularprovision hereof, (d) all references herein toSections, Annexes, Schedules and Exhibits shall be construed to refer toSections of, and Annexes, Schedules and Exhibits to, this Agreement, and (e) the words “asset” and “property” (or “Property”)shall be construed to have the same meaning and effect and to refer to any andall Real Property, tangible and intangible assets and properties, includingcash, securities, accounts and contract rights, and interests in any of theforegoing.

##  

# ARTICLE II.

#  

# AMOUNT AND TERMS OF LOANS

#  

## Section 2.1             Establishment of the CreditFacility.  On theClosing Date, and subject to and upon the terms and conditions set forth inthis Agreement and the other Credit Documents, the Administrative Agent, theLenders, and each LC Issuer agree to establish the Credit Facility for thebenefit of the Borrower; *provided*,*however*, that at no time will (i) theAggregate Credit Facility Exposure exceed the Total Credit Facility Amount, or (ii) theCredit Facility Exposure of any Lender exceed the aggregate amount of suchLender’s Commitment.

##  

## Section 2.2             Commitments for Loans.  Subject to and upon the terms and conditionsherein set forth, each Lender severally agrees to make a revolving loan orrevolving loans (each a “Loan” and, collectively, the “Loans”) tothe Borrower, which Loans (a) may be incurredby the Borrower at any time and from time to time on and after the Closing Dateand prior to the Maturity Date; (b) except asotherwise provided herein, may, at the option of the Borrower, be incurred andmaintained as, or Converted into, Loans that are Base Rate Loans or EurodollarLoans, in each case denominated in Dollars, *provided* thatall Loans made as part of the same Borrowing shall, unless otherwisespecifically provided herein, consist of Loans of the same Type; (c) may be repaid or prepaid and re-borrowed inaccordance with the provisions hereof; and (d) shall not be made if, aftergiving effect to any such Loan, (i) the Revolving Facility Exposure of anyLender would exceed such Lender’s Commitment, (ii) the Aggregate RevolvingFacility Exposure would exceed the Total Commitment, or (iii) the Borrowerwould be required to prepay Loans or cash collateralize Letters of Creditpursuant to 4.3(a).

##  

## Section 2.3             Borrowing,Continuation or Conversion of Loans.

##  

### (a)           Borrowings, Continuationsand Conversions.  TheBorrower may, in accordance with the provisions set forth in this Section andsubject to the other terms and conditions of this Agreement, (i) requestBorrowings, (ii) Convert all or a portion of the outstanding principalamount of Loans of one Type into a Borrowing or Borrowings of another Type ofLoans that can be made pursuant to the terms of 

 

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### this Agreement and (iii) Continuea Borrowing of Eurodollar Loans at the end of the applicable Interest Period asa new Borrowing of Eurodollar Loans with a new Interest Period, *provided* that (A) any Conversion of Eurodollar Loansinto Base Rate Loans shall be made on, and only on, the last day of an InterestPeriod for such Eurodollar Loans, (B) Base Rate Loans may only beConverted into Eurodollar Loans if no Default under Section 9.1(a) orEvent of Default is in existence on the date of the Conversion unless theRequired Lenders otherwise agree, and (C) Base Rate Loans may not beConverted into Eurodollar Loans during any period when such Conversion is notpermitted under Section 2.8.

###  

### (b)           Notice of Borrowings,Continuation and Conversion.  Each Borrowing, Continuation or Conversion ofa Loan shall be made upon notice in the form provided for below, which noticeshall be provided by the Borrower to the Administrative Agent at the NoticeOffice not later than (i) in the case of each Borrowing of or Continuationof or Conversion into a Eurodollar Loan, 12:00 noon (local time at its NoticeOffice) at least three Business Days’ prior to the date of such Borrowing,Continuation or Conversion and (ii) in the case of each Borrowing of orConversion into a Base Rate Loan, 12:00 noon (local time at its Notice Office)on the proposed date of such Borrowing or Conversion.  Each such request shall be made by anAuthorized Officer delivering written notice of such request substantially inthe form of Exhibit B (each such notice, a “Notice of Borrowing,Continuation or Conversion”) or by telephone (to be confirmed immediatelyin writing by delivery of an Authorized Officer of a Notice of Borrowing,Continuation or Conversion), and in any event each such request shall beirrevocable and shall specify (A) the aggregate principal amount of theLoans to be made (which shall be in the Minimum Borrowing Amount) pursuant tosuch Borrowing or, if applicable, the Borrowings to be Continued or Converted, (B) thedate of the Borrowing, Continuation or Conversion (which shall be a BusinessDay), (C) whether the Borrowing will consist of Base Rate Loans orEurodollar Loans or, in the case of a Continuation or Conversion, the Loans tobe Continued or Converted, and (D) if applicable, the initial InterestPeriod thereto or, in the case of a Continuation, the new Interest Period.  Without in any way limiting the obligation ofthe Borrower to confirm in writing any telephonic notice permitted to be givenhereunder, the Administrative Agent may act prior to receipt of writtenconfirmation without liability upon the basis of such telephonic noticebelieved by the Administrative Agent in good faith to be from an AuthorizedOfficer entitled to give telephonic notices under this Agreement on behalf ofthe Borrower.  In each such case, theAdministrative Agent’s record of the terms of such telephonic notice shall beconclusive absent manifest error.

###  

### (c)           Minimum Borrowing Amount.  The aggregate principal amount of eachBorrowing by the Borrower shall not be less than the Minimum BorrowingAmount.  No partial Conversion of aBorrowing of Eurodollar Loans shall reduce the outstanding principal amount ofthe Eurodollar Loans made pursuant to such Borrowing to less than the MinimumBorrowing Amount applicable thereto.

###  

### (d)           Maximum Borrowings.  More than one Borrowing may be incurred bythe Borrower on any day, *provided* that****(i) if there are twoor more Borrowings on a single day by the Borrower that consist of EurodollarLoans, each such Borrowing shall have a different initial Interest Period, and****(ii) at no time shallthere be more than six Borrowings of Eurodollar Loans outstanding hereunder.

###  

### (e)           Notice to Lenders. TheAdministrative Agent shall promptly give each Lender written notice (ortelephonic notice promptly confirmed in writing) of (i) each proposedBorrowing, (ii) such Lender’s proportionate share thereof and (iii) theother matters covered by the Notice of Borrowing, Continuation or Conversionrelating thereto.

###  

## Section 2.4             Letters of Credit.

##  

(a)           LC Issuances.  Subject to and upon the terms and conditionsset forth herein, the Borrower may request an LC Issuer at any time and fromtime to time to issue, for the account of 

 

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the Borrower, and each LCIssuer agrees to issue from time to time, Letters of Credit in a formacceptable to such LC Issuer and the Administrative Agent and denominated andpayable in Dollars; *provided*, *however*, that notwithstanding theforegoing, no LC Issuance shall be made if, after giving effect thereto, (i) theLC Outstandings would exceed the LC Commitment Amount, (ii) the RevolvingFacility Exposure of any Lender would exceed such Lender’s Commitment, (iii) theAggregate Revolving Facility Exposure would exceed the Total Commitment, or (iv) theBorrower would be required to prepay Loans or cash collateralize Letters ofCredit pursuant to Section 4.3(a). Subject to Section 2.4(c), eachLetter of Credit shall have an expiry date (including any renewal periods)occurring not later than the earlier of (y) one year from the date ofissuance thereof, or (z) 30 Business Days prior to the Maturity Date.

 

(b)           LC Requests.  Whenever the Borrower desires that a Letterof Credit be issued for its account, the Borrower shall give the AdministrativeAgent and the applicable LC Issuer written or telephonic notice (in the case oftelephonic notice, promptly confirmed in writing if so requested by theAdministrative Agent) which, if in the form of written notice, shall besubstantially in the form of Exhibit B-2 (each such request, a “LCRequest”), or transmit by electronic communication (if arrangements fordoing so have been approved by the applicable LC Issuer), prior to 11:00 A.M.(local time at the Notice Office) at least three Business Days (or such shorterperiod as may be acceptable to the relevant LC Issuer) prior to the proposeddate of issuance (which shall be a Business Day), which LC Request shallinclude such supporting documents that such LC Issuer customarily requires inconnection therewith.  In the event ofany inconsistency between any of the terms or provisions of any LC Document andthe terms and provisions of this Agreement respecting Letters of Credit, the termsand provisions of this Agreement shall control.

 

(c)           Auto-Renewal Letters of Credit.  If the Borrower so requests in any applicableLC Request, each LC Issuer shall agree to issue a Letter of Credit that hasautomatic renewal provisions; *provided*,*however*, that any Letter ofCredit that has automatic renewal provisions must permit such LC Issuer toprevent any such renewal at least once in each twelve-month period (commencingwith the date of issuance of such Letter of Credit) by giving prior notice tothe beneficiary thereof not later than a day in each such twelve-month periodto be agreed upon at the time such Letter of Credit is issued.  Once any such Letter of Credit that hasautomatic renewal provisions has been issued, the Lenders shall be deemed tohave authorized (but may not require) such LC Issuer to permit the renewal ofsuch Letter of Credit at any time to an expiry date not later than 30 BusinessDays prior to the Maturity Date; *provided*,*however*, that such LC Issuershall not permit any such renewal if (i) such LC Issuer has determinedthat it would have no obligation at such time to issue such Letter of Credit inits renewed form under the terms hereof, or (ii) it has received notice(which may be by telephone or in writing) on or before the day that is twoBusiness Days before the date that such LC Issuer is permitted to send a noticeof non-renewal from the Administrative Agent, any Lender or the Borrower thatone or more of the applicable conditions specified in Section 5.2 is notthen satisfied.

 

(d)           Applicability of ISP98 and UCP.  Unless otherwise expressly agreed by theapplicable LC Issuer and the Borrower, when a Letter of Credit is issued, (i) therules of the “International Standby Practices 1998” published by theInstitute of International Banking Law & Practice (or such laterversion thereof as may be in effect at the time of issuance) shall apply toeach Standby Letter of Credit, and (ii) the rules of the UniformCustoms and Practice for Documentary Credits, as most recently published by theInternational Chamber of Commerce at the time of issuance (including theInternational Chamber of Commerce’s decision published by the Commission onBanking Technique and Practice on April 6, 1998 regarding the Europeansingle currency (euro)) shall apply to each Commercial Letter of Credit.

 

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(e)           Notice of LC Issuance.  Each LC Issuer shall, on the date of each LCIssuance by it, give the Administrative Agent, each applicable Lender and theBorrower written notice of such LC Issuance, accompanied by a copy to theAdministrative Agent of the Letter of Credit or Letters of Credit issued byit.  Each LC Issuer shall provide to theAdministrative Agent a quarterly (or monthly if requested by any applicableLender) summary describing each Letter of Credit issued by such LC Issuer andthen outstanding and an identification for the relevant period of the dailyaggregate LC Outstandings represented by Letters of Credit issued by such LCIssuer.

 

(f)            Reimbursement Obligations.

 

(i)            The Borrower hereby agrees to reimburse each LCIssuer, by making payment directly to such LC Issuer in immediately availablefunds at the payment office of such LC Issuer, for any Unpaid Drawing withrespect to any Letter of Credit immediately after, and in any event on the dateon which, such LC Issuer notifies the Borrower of such payment or disbursement(which notice to the Borrower shall be delivered reasonably promptly after anysuch payment or disbursement), such payment to be made in Dollars, withinterest on the amount so paid or disbursed by such LC Issuer, to the extentnot reimbursed prior to 1:00 P.M. (local time at the payment office of theapplicable LC Issuer) on the date of such payment or disbursement, from andincluding the date paid or disbursed to but not including the date such LCIssuer is reimbursed therefor at a rate per annum that shall be the rate thenapplicable to Loans pursuant to Section 2.09(a)(i) that are Base RateLoans or, if not reimbursed on the date of such payment or disbursement, at theDefault Rate, any such interest also to be payable on demand.  If by 11:00 A.M. on the Business Dayimmediately following notice to it of its obligation to make reimbursement inrespect of an Unpaid Drawing, the Borrower has not made such reimbursement outof its available cash on hand or, in the case of the Borrower, acontemporaneous Borrowing hereunder (if such Borrowing is otherwise availableto the Borrower), (x) the Borrower will in each case be deemed to havegiven a Notice of Borrowing for Loans that are Base Rate Loans in an aggregateprincipal amount sufficient to reimburse such Unpaid Drawing (and theAdministrative Agent shall promptly give notice to the Lenders of such deemedNotice of Borrowing), (y) the Lenders shall, unless they are legallyprohibited from doing so, make the Loans contemplated by such deemed Notice ofBorrowing (which Loans shall be considered made under Section 2.02), and (z) theproceeds of such Loans shall be disbursed directly to the applicable LC Issuerto the extent necessary to effect such reimbursement and repayment of theUnpaid Drawing, with any excess proceeds to be made available to the Borrowerin accordance with the applicable provisions of this Agreement.

 

(ii)           Obligations Absolute.  The Borrower’s obligation under this Section toreimburse each LC Issuer with respect to Unpaid Drawings (including, in eachcase, interest thereon) shall be absolute and unconditional under any and allcircumstances and irrespective of any setoff, counterclaim or defense to paymentthat the Borrower may have or have had against such LC Issuer, theAdministrative Agent or any Lender, including, without limitation, any defensebased upon the failure of any drawing under a Letter of Credit to conform tothe terms of the Letter of Credit or any non-application or misapplication bythe beneficiary of the proceeds of such drawing; *provided*, *however*,that the Borrower shall not be obligated to reimburse an LC Issuer for anywrongful payment made by such LC Issuer under a Letter of Credit as a result ofacts or omissions constituting willful misconduct or gross negligence on thepart of such LC Issuer.

 

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(g)           LC Participations.

 

(i)            Immediately upon each LC Issuance, the LC Issuer ofsuch Letter of Credit shall be deemed to have sold and transferred to eachLender with a Commitment, and each such Lender (each an “LC Participant”)shall be deemed irrevocably and unconditionally to have purchased and receivedfrom such LC Issuer, without recourse or warranty, an undivided interest andparticipation (an “LC Participation”), to the extent of such Lender’sPercentage of the Stated Amount of such Letter of Credit in effect at such timeof issuance, in such Letter of Credit, each substitute Letter of Credit, eachdrawing made thereunder, the obligations of the Borrower under this Agreementwith respect thereto (although LC Fees relating thereto shall be payabledirectly to the Administrative Agent for the account of the Lenders as providedin Section 3.1(c) and the LC Participants shall have no right toreceive any portion of any fees of the nature contemplated by Section 3.1(d) orin the Agent Fee Letter), the obligations of the Borrower under any LCDocuments pertaining thereto, and any security for, or guaranty pertaining to,any of the foregoing.

 

(ii)           In determining whether to pay under any Letter ofCredit, an LC Issuer shall not have any obligation relative to the LCParticipants other than to determine that any documents required to be deliveredunder such Letter of Credit have been delivered and that they appear to complyon their face with the requirements of such Letter of Credit.  Any action taken or omitted to be taken by anLC Issuer under or in connection with any Letter of Credit, if taken or omittedin the absence of gross negligence or willful misconduct, shall not create forsuch LC Issuer any resulting liability.

 

(iii)          If an LC Issuer makes any payment under any Letterof Credit and the Borrower shall not have reimbursed such amount in full tosuch LC Issuer pursuant to Section 2.4(f), such LC Issuer shall promptlynotify the Administrative Agent, and the Administrative Agent shall promptlynotify each LC Participant of such failure, and each LC Participant shallpromptly and unconditionally pay to the Administrative Agent for the account ofsuch LC Issuer, the amount of such LC Participant’s Percentage of such paymentin Dollars and in same-day funds; *provided*,*however*, that no LC Participantshall be obligated to pay to the Administrative Agent its Percentage of suchunreimbursed amount for any wrongful payment made by such LC Issuer under aLetter of Credit as a result of acts or omissions constituting willfulmisconduct or gross negligence on the part of such LC Issuer.  If the Administrative Agent so notifies anyLC Participant required to fund a payment under a Letter of Credit prior to11:00 A.M. (local time at its Notice Office) on any Business Day, such LCParticipant shall make available to the Administrative Agent for the account ofthe relevant LC Issuer such LC Participant’s Percentage of the amount of suchpayment on such Business Day in same-day funds. If and to the extent such LC Participant shall not have so made itsPercentage of the amount of such payment available to the Administrative Agentfor the account of the relevant LC Issuer, such LC Participant agrees to pay tothe Administrative Agent for the account of such LC Issuer, forthwith ondemand, such amount, together with interest thereon, for each day from suchdate until the date such amount is paid to the Administrative Agent for theaccount of such LC Issuer at the Federal Funds Effective Rate.  The failure of any LC Participant to makeavailable to the Administrative Agent for the account of the relevant LC Issuerits Percentage of any payment under any Letter of Credit shall not relieve anyother LC Participant of its obligation hereunder to make available to theAdministrative Agent for the account of such LC Issuer its Percentage of anypayment under any Letter of Credit on the date required, as specified above,but no LC Participant shall be responsible for the failure of any other LCParticipant to make available to the 

 

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Administrative Agent for theaccount of such LC Issuer such other LC Participant’s Percentage of any suchpayment.

 

(iv)          Whenever an LC Issuer receives a payment of areimbursement obligation as to which the Administrative Agent has received forthe account of such LC Issuer any payments from the LC Participants pursuant tosubpart (iii) above, such LC Issuer shall pay to the Administrative Agentand the Administrative Agent shall promptly pay to each LC Participant that haspaid its Percentage thereof, in same-day funds, an amount equal to such LCParticipant’s Percentage of the principal amount thereof and interest thereonaccruing after the purchase of the respective LC Participations, as and to theextent so received.

 

(v)           The obligations of the LC Participants to makepayments to the Administrative Agent for the account of each LC Issuer withrespect to Letters of Credit shall be irrevocable and not subject tocounterclaim, set-off or other defense or any other qualification or exceptionwhatsoever and shall be made in accordance with the terms and conditions ofthis Agreement under all circumstances, including, without limitation, any ofthe following circumstances:

 

(A)          any lack of validity orenforceability of this Agreement or any of the other Credit Documents;

 

(B)           the existence of any claim,set-off defense or other right that the Borrower may have at any time against abeneficiary named in a Letter of Credit, any transferee of any Letter of Credit(or any Person for whom any such transferee may be acting), the AdministrativeAgent, any LC Issuer, any Lender, or other Person, whether in connection withthis Agreement, any Letter of Credit, the transactions contemplated herein orany unrelated transactions (including any underlying transaction between theBorrower and the beneficiary named in any such Letter of Credit), other thanany claim that the Borrower may have against any applicable LC Issuer for grossnegligence or willful misconduct of such LC Issuer in making payment under anyapplicable Letter of Credit;

 

(C)           any draft, certificate orother document presented under the Letter of Credit proving to be forged,fraudulent, invalid or insufficient in any respect or any statement thereinbeing untrue or inaccurate in any respect;

 

(D)          the surrender or impairmentof any security for the performance or observance of any of the terms of any ofthe Credit Documents; or

 

(E)           the occurrence of anyDefault or Event of Default.

 

(vi)          To the extent any LC Issuer is not indemnified bythe Borrower, the LC Participants will reimburse and indemnify such LC Issuer,in proportion to their respective Percentages, for and against any and allliabilities, obligations, losses, damages, penalties, claims, actions,judgments, costs, expenses or disbursements of whatsoever kind or nature thatmay be imposed on, asserted against or incurred by such LC Issuer in performingits respective duties in any way related to or arising out of LC Issuances byit; *provided*, *however*, that no LC Participants shall beliable for any portion of such liabilities, obligations, losses, damages,penalties, claims, actions, judgments, 

 

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costs, expenses ordisbursements resulting from such LC Issuer’s gross negligence or willfulmisconduct.

 

## Section 2.5             FundingObligations; Disbursement of Funds.

 

### (a)           Several Nature of FundingObligations.  TheCommitments of each Lender hereunder and the obligation of each Lender to makeLoans and acquire and fund LC Participations, as the case may be, are severaland not joint obligations.  No Lendershall be responsible for any default by any other Lender in its obligation tomake Loans or fund any participation hereunder and each Lender shall beobligated to make the Loans provided to be made by it and fund itsparticipations required to be funded by it hereunder, regardless of the failureof any other Lender to fulfill any of its Commitments hereunder.  Nothing herein and no subsequent terminationof the Commitments pursuant to Section 3.4 shall be deemed to relieve anyLender from its obligation to fulfill its commitments hereunder and inexistence from time to time or to prejudice any rights that the Borrower mayhave against any Lender as a result of any default by such Lender hereunder.

###  

### (b)           Borrowings *Pro Rata*.  All Loans made, and LC Participationsacquired by each Lender, shall be made or acquired, as the case may be, on a *pro rata* basis based upon each Lender’s Percentage of theamount of such Borrowing or Letter of Credit in effect on the date theapplicable Borrowing is to be made or the Letter of Credit is to be issued.

###  

### (c)           Notice to Lenders. TheAdministrative Agent shall promptly give each Lender, as applicable, writtennotice (or telephonic notice promptly confirmed in writing) of each proposedBorrowing, or Conversion or Continuation thereof, and LC Issuance, and of suchLender’s proportionate share thereof or participation therein and of the othermatters covered by the Notice of Borrowing, Continuation or Conversion, or LCRequest, as the case may be, relating thereto.

###  

### (d)           Funding of Loans.  No later than 2:00 P.M. (local time atthe Payment Office) on the date specified in each Notice of Borrowing,Continuation or Conversion, each Lender will make available its *pro rata* share, if any, of each Borrowing requested to bemade on such date in the manner provided below. All amounts shall be made available to the Administrative Agent inDollars and immediately available funds at the Payment Office and theAdministrative Agent promptly will make available to the Borrower by depositingto its account at the Payment Office the aggregate of the amounts so madeavailable in the type of funds received.

###  

### (e)           Advance Funding.  Unless the Administrative Agent shall havebeen notified by any Lender prior to the date of Borrowing that such Lenderdoes not intend to make available to the Administrative Agent its portion ofthe Borrowing or Borrowings to be made on such date, the Administrative Agentmay assume that such Lender has made such amount available to theAdministrative Agent on such date of Borrowing, and the Administrative Agent,in reliance upon such assumption, may (in its sole discretion and without anyobligation to do so) make available to the Borrower a correspondingamount.  If such corresponding amount isnot in fact made available to the Administrative Agent by such Lender and theAdministrative Agent has made available same to the Borrower, theAdministrative Agent shall be entitled to recover such corresponding amountfrom such Lender.  If such Lender doesnot pay such corresponding amount forthwith upon the Administrative Agent’sdemand therefor, the Administrative Agent shall promptly notify the Borrower,and the Borrower shall immediately pay such corresponding amount to theAdministrative Agent.  The AdministrativeAgent shall also be entitled to recover from such Lender or the Borrower, asthe case may be, interest on such corresponding amount in respect of each dayfrom the date such corresponding amount was made available by theAdministrative Agent to the Borrower to the date such corresponding amount isrecovered by the Administrative Agent, at a rate per annum equal to (x) ifpaid by such Lender, the 

 

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### overnight Federal FundsEffective Rate or (y) if paid by the Borrower, the then applicable rate ofinterest, calculated in accordance with Section 2.7, for the respectiveLoans (but without any requirement to pay any amounts in respect thereofpursuant to Section 2.7).

###  

### (f)            Rights Not Prejudiced. Nothingherein and no subsequent termination of the Commitments pursuant to Section 3.3or 3.4 shall be deemed to relieve any Lender from its obligation to fulfill itscommitments hereunder and in existence from time to time or to prejudice anyrights that the Borrower may have against any Lender as a result of any defaultby such Lender hereunder.

###  

## Section 2.6             Evidence ofObligations.

##  

### (a)           Loan Accounts of Lenders.  The Obligations of the Borrower owing to eachLender shall be evidenced by, and each Lender shall maintain in accordance withits usual practice, an account or accounts established by such Lender, whichaccount or accounts shall include the amounts of principal and interest payableand paid to such Lender from time to time hereunder.

###  

### (b)           Loan Accounts ofAdministrative Agent.  TheAdministrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, the Typethereof and the Interest Period and applicable interest rate if such Loan is aEurodollar Loan, (ii) the amount of any principaldue and payable or to become due and payable from the Borrower to each Lenderhereunder, and (iii) the amount of any sumreceived by the Administrative Agent hereunder for the account of the Lendersand each Lender’s share thereof.

###  

### (c)           Effect of Loan Accounts.  The entries made in the accounts maintainedpursuant to Section 2.6(a) and (b) shall be *prima facie*evidence of the existence and amounts of the obligations recorded therein; *provided*, that the failure of any Lender or theAdministrative Agent to maintain such accounts or any error therein shall notin any manner affect the obligation of the Borrower to repay or prepay theLoans or any other amounts in accordance with the terms of this Agreement.

###  

### (d)           Notes.  Upon request of any Lender, the Borrower’sobligation to pay the principal of, and interest on, the Loans made to it byeach Lender shall be evidenced  by a promissory noteof the Borrower substantially in the form of Exhibit A with blanksappropriately completed in conformity herewith (each a “Note” and,collectively, the “Notes”), *provided*thatthe decision of any Lender not to request a Note shall in no way detract fromthe Borrower’s obligation to repay the Loans and other amounts owing by theBorrower to such Lender.  Any Note issuedby the Borrower to a Lender shall:  (i) be executed by the Borrower; (ii) be payable to the order of such Lender and bedated on or prior to the Closing Date; (iii) bepayable in the principal amount of the Loans evidenced thereby; (iv) mature on the Maturity Date; (v) bear interest as provided in Section 2.7 inrespect of the Base Rate Loans or Eurodollar Loans, as the case may be,evidenced thereby; (vi) be subject to mandatoryprepayment as provided in Section 4.3; and (vii) beentitled to the benefits of this Agreement and the other Credit Documents.

###  

## Section 2.7             Interest.

##  

### (a)           Interest on Base Rate Loans.  During such periods as a Loan is a Base RateLoan, it shall bear interest at a fluctuating rate per annum that shall at alltimes be equal to the Base Rate in effect from time to time *plus* the Applicable Margin in effect from time to time forsuch Loan.

###  

### (b)           Interest on Eurodollar Loans.  During such periods as a Loan is a EurodollarLoan, it shall bear interest at a rate per annum that shall at all times duringan Interest Period therefor be the relevant Adjusted Eurodollar Rate for suchEurodollar Loan for such Interest Period *plus* theApplicable Margin in effect from time to time for such Loan.

 

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### (c)           Default Interest.  Notwithstanding the above provisions, if aDefault under Section 9.1(a) or an Event of Default has occurred andis continuing, then, upon written notice by the Administrative Agent (whichnotice the Administrative Agent shall give at the direction of the RequiredLenders), (i) all outstanding amounts of principal and, to the extentpermitted by law, all overdue interest, in respect of each Loan shall bearinterest, payable on demand, at a rate per annum equal to 2% per annum abovethe interest rate that is or would be applicable from time to time pursuant to Section 2.7(a),and (ii) the LC Fees shall be increased by an additional 2% per annum inexcess of the LC Fees otherwise applicable thereto.  If any amount (other than the principal ofand interest on the Loans) payable by the Borrower under the Credit Documentsis not paid when due, upon written notice by the Administrative Agent (whichnotice the Administrative Agent shall give at the direction of the RequiredLenders), such amount shall bear interest, payable on demand, at a rate perannum equal to 2% per annum above the interest rate that is or would beapplicable from time to time pursuant to Section 2.7(a).

###  

### (d)           Accrual andPayment of Interest.  Interestshall accrue from and including the date of any Borrowing to but excluding thedate of any prepayment or repayment thereof and shall be payable:

###  

#### (i)            in respect of each Base RateLoan, in arrears on the last Business Day of each December, March, June andSeptember and on the Maturity Date;

####  

#### (ii)           in respect of eachEurodollar Loan, on the last day of each Interest Period applicable theretoand, in the case of an Interest Period in excess of three months, on the datesthat are successively 90 days after the commencement of such Interest Periodand on the Maturity Date;

####  

#### (iii)          in respect of any repaymentor prepayment of any Loan (other than a prepayment of a Base Rate Loan), on thedate of such repayment or prepayment;

####  

#### (iv)          in respect of any Conversionof any Eurodollar Loan prior to the end of the current Interest Periodtherefor, on the effective date of such Conversion; and

####  

#### (v)           in respect of any interestpayment pursuant to Section 2.7(c), on demand.

####  

### (e)           Computations of Interest.  All computations of interest on EurodollarLoans and other amounts (other than Base Rate Loans) hereunder shall be made onthe actual number of days elapsed over a year of 360 days, and all computationsof interest on Base Rate Loans and Unpaid Drawings hereunder shall be made onthe actual number of days elapsed over a year of 365 or 366 days, asapplicable.

###  

### (f)            Information as to InterestRates.  The Administrative Agent upondetermining the interest rate for any Borrowing or any change in interest rateapplicable to any Borrowing as a result of a change in the Applicable Margin, achange in the Base Rate, the implementation of the default rate or otherwise,shall promptly notify the Borrower and the Lenders thereof, *provided* that (i) any such change shall be immediatelyeffective as and when such change occurs without regard to when theAdministrative Agent provides any such notice, and (ii) the failure of theAdministrative Agent to give any such notice shall in no way detract from oraffect the obligation of the Borrower to pay interest at the changed rate.  If the Administrative Agent is unable todetermine the Adjusted Eurodollar Rate for any Borrowing of Eurodollar Loansbased on the quotation service referred to in clause (i) of the definitionof the term Adjusted Eurodollar Rate, it will promptly so notify the ReferenceBanks and each Reference Bank will furnish the Administrative Agent timelyinformation for the purpose of determining the Adjusted Eurodollar Rate forsuch Borrowing.  If any one or more ofthe Reference Banks shall not timely furnish such information, theAdministrative Agent shall determine the Adjusted Eurodollar Rate for suchBorrowing on the basis of timely information furnished by the remainingReference Banks.

 

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## Section 2.8             IncreasedCosts; Illegality.

##  

### (a)           If (x) in the case ofclause (i) below, the Administrative Agent or (y) in the case ofclauses (ii) and (iii) below, any Lender, shall have determined on areasonable basis (which determination shall, absent manifest error, be finaland conclusive and binding upon all parties hereto):

###  

#### (i)            on any date for determiningthe Adjusted Eurodollar Rate for any Interest Period that, by reason of anychanges arising after the Closing Date affecting the London interbank market,adequate and fair means do not exist for ascertaining the applicable interestrate on the basis provided for in the definition of Adjusted Eurodollar Rate;or

####  

#### (ii)           at any time, that suchLender shall incur increased costs or reductions in the amounts received or receivablehereunder in an amount that such Lender deems material with respect to anyEurodollar Loans (other than any increased cost or reduction in the amountreceived or receivable resulting from the imposition of or a change in the rateof taxes or similar charges) because of (x) any change since the ClosingDate in any applicable law, governmental rule, regulation, guideline, order orrequest (whether or not having the force of law), or in the interpretation oradministration thereof and including the introduction of any new law orgovernmental rule, regulation, guideline, order or request (such as, forexample, but not limited to, a change in official reserve requirements, but, inall events, excluding reserves includable in the Adjusted Eurodollar Ratepursuant to the definition thereof) and/or (y) other circumstancesadversely affecting the London interbank market or the position of such Lenderin such market; or

####  

#### (iii)          at any time, that the makingor continuance of any Eurodollar Loan has become unlawful by compliance by suchLender in good faith with any change since the Closing Date in any law,governmental rule, regulation, guideline or order, or the interpretation orapplication thereof, or would conflict with any thereof not having the force oflaw but with which such Lender customarily complies or has become impracticableas a result of a contingency occurring after the Closing Date that materiallyadversely affects the London interbank market;

####  

*then*, and in each such event, such Lender (or the AdministrativeAgent in the case of clause (i) above) shall (x) on or promptlyfollowing such date or time and (y) within 10 Business Days of the date onwhich such event no longer exists give notice (by telephone confirmed inwriting) to the Borrower and to the Administrative Agent of such determination(which notice the Administrative Agent shall promptly transmit to each of theother Lenders).  Thereafter (x) inthe case of clause (i) above, Eurodollar Loans shall no longer beavailable until such time as the Administrative Agent notifies the Borrower andthe Lenders that the circumstances giving rise to such notice by theAdministrative Agent no longer exist, and any Notice of Borrowing, Continuationor Conversion given by the Borrower with respect to Eurodollar Loans that havenot yet been incurred, Converted or Continued shall be deemed rescinded by theBorrower or, in the case of a Notice of Borrowing, Continuation or Conversion,shall, at the option of the Borrower, be deemed converted into a Notice ofBorrowing, Continuation or Conversion for Base Rate Loans to be made on thedate of Borrowing contained in such Notice of Borrowing, Continuation orConversion, (y) in the case of clause (ii) above, the Borrower shallpay to such Lender, upon written demand therefor, such additional amounts (inthe form of an increased rate of, or a different method of calculating,interest or otherwise as such Lender shall determine) as shall be required tocompensate such Lender, for such increased costs or reductions in amountsreceivable hereunder (a written notice as to the additional amounts owed tosuch Lender, showing the basis for the calculation thereof, which basis must bereasonable, submitted to the Borrower by such Lender shall, absent manifesterror, be final and conclusive and binding upon all parties hereto) and (z) inthe case of clause (iii) above, the Borrower shall

 

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take one of the actions specified in Section 2.8(b) aspromptly as possible and, in any event, within the time period required by law.

 

### (b)           At any time that anyEurodollar Loan is affected by the circumstances described in Section 2.8(a)(ii) or(iii), the Borrower may (and in the case of a Eurodollar Loan affected pursuantto Section 2.8(a)(iii) the Borrower shall) either(i) if the affected Eurodollar Loan is then being made pursuant toa Borrowing, by giving the Administrative Agent telephonic notice (confirmedpromptly in writing) thereof on the same date that the Borrower was notified bya Lender pursuant to Section 2.8(a)(ii) or (iii), cancel suchBorrowing, convert the related Notice of Borrowing, Continuation or Conversioninto one requesting a Borrowing of Base Rate Loans or require the affectedLender to make its requested Loan as a Base Rate Loan, or (ii) ifthe affected Eurodollar Loan is then outstanding, upon at least one BusinessDay’s notice to the Administrative Agent, require the affected Lender toConvert each such Eurodollar Loan into a Base Rate Loan, *provided*that if more than one Lender is affected at any time, then all affected Lendersmust be treated the same pursuant to this Section 2.8(b).

###  

### (c)           If any Lender shall havedetermined that after the Closing Date, the adoption of any applicable law, rule orregulation regarding capital adequacy, or any change therein, or any change inthe interpretation or administration thereof by any governmental authority,central bank or comparable agency charged by law with the interpretation oradministration thereof, or compliance by such Lender or its parent corporationwith any request or directive regarding capital adequacy (whether or not havingthe force of law) of any such authority, central bank, or comparable agency, ineach case made subsequent to the Closing Date, has or would have the effect ofreducing by an amount reasonably deemed by such Lender to be material the rateof return on such Lender’s or its parent corporation’s capital or assets as aconsequence of such Lender’s commitments or obligations hereunder to a levelbelow that which such Lender or its parent corporation could have achieved butfor such adoption, effectiveness, change or compliance (taking intoconsideration such Lender’s or its parent corporation’s policies with respectto capital adequacy), then from time to time, within 15 days after demand bysuch Lender (with a copy to the Administrative Agent), the Borrower shall payto such Lender such additional amount or amounts as will compensate such Lenderor its parent corporation for such reduction. Each Lender, upon determining in good faith that any additional amountswill be payable pursuant to this Section 2.8(c), will give prompt writtennotice thereof to the Borrower, which notice shall set forth, in reasonabledetail, the basis of the calculation of such additional amounts, which basismust be reasonable, although the failure to give any such notice shall notrelease or diminish any of the Borrower’s obligations to pay additional amountspursuant to this Section 2.6(c) upon the subsequent receipt of suchnotice.

###  

### (d)           Notwithstanding anything inthis Agreement to the contrary,  no Lender shall beentitled to compensation or payment or reimbursement of other amounts under Section 2.8or 4.5 for any amounts incurred or accruing prior to the Closing Date or morethan 270 days prior to the giving of notice to the Borrower of additional costsor other amounts of the nature described in such Sections.

###  

## Section 2.9             Breakage Compensation.  The Borrower shall compensate each applicableLender, upon its written request (which request shall set forth the detailedbasis for requesting and the method of calculating such compensation), for allreasonable losses, costs, expenses and liabilities (including, withoutlimitation, any loss, cost, expense or liability incurred by reason of theliquidation or reemployment of deposits or other funds required by such Lenderto fund its Eurodollar Loans that such Lender may sustain):  (i) if for any reason (other thana default by such Lender or the Administrative Agent) a Borrowing of EurodollarLoans does not occur on a date specified therefor in a Notice of Borrowing,Conversion or Continuation (whether or not withdrawn by the Borrower); (ii) if any repayment, prepayment, Conversion orContinuation of any of its Eurodollar Loans occurs on a date that is not thelast day of an Interest Period applicable thereto; (iii) ifany prepayment of any of its Eurodollar Loans is not made on any date specifiedin a notice of prepayment given by the Borrower; (iv) asa result 

 

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## of an assignment by a Lenderof any Eurodollar Loan other than on the last day of the Interest Periodapplicable thereto pursuant to a request by the Borrower pursuant to Section 2.8(b);or (v) as a consequence of (x) any otherdefault by the Borrower to repay or prepay its Eurodollar Loans when requiredby the terms of this Agreement or (y) an election made pursuant to Section 2.8(b).  The Borrower shall pay such Lender the amountshown as due on any such request within 10 days after receipt thereof.

##  

## Section 2.10           Increased Coststo LC Issuers.  If afterthe Closing Date, the adoption of any applicable law, rule or regulation,or any change therein, or any change in the interpretation or administrationthereof by any Governmental Authority, central bank or comparable agencycharged with the interpretation or administration thereof, or compliance by anyLC Issuer or any Lender with any request or directive (whether or not havingthe force of law) by any such authority, central bank or comparable agency (ineach case made subsequent to the Closing Date) shall either (i) impose,modify or make applicable any reserve, deposit, capital adequacy or similarrequirement against Letters of Credit issued by such LC Issuer or such Lender’sparticipation therein, or (ii) impose on such LC Issuer or any Lender anyother conditions affecting this Agreement, any Letter of Credit or such Lender’sparticipation therein; and the result of any of the foregoing is to increasethe cost to such LC Issuer or such Lender of issuing, maintaining orparticipating in any Letter of Credit, or to reduce the amount of any sumreceived or receivable by such LC Issuer or such Lender hereunder (other thanany increased cost or reduction in the amount received or receivable resultingfrom the imposition of or a change in the rate of taxes or similar charges),then, upon demand to the Borrower by such LC Issuer or such Lender (a copy ofwhich notice shall be sent by such LC Issuer or such Lender to theAdministrative Agent), the Borrower shall pay to such LC Issuer or such Lendersuch additional amount or amounts as will compensate any such LC Issuer or suchLender for such increased cost or reduction. A certificate submitted to the Borrower by any LC Issuer or any Lender,as the case may be (a copy of which certificate shall be sent by such LC Issueror such Lender to the Administrative Agent), setting forth, in reasonabledetail, the basis for the determination of such additional amount or amountsnecessary to compensate any LC Issuer or such Lender as aforesaid shall beconclusive and binding on the Borrower absent manifest error, although thefailure to deliver any such certificate shall not release or diminish theBorrower’s obligations to pay additional amounts pursuant to this Section 3.04.

##  

## Section 2.11           Change ofLending Office; Replacement of Lenders.

##  

### (a)           Each Lender agrees that,upon the occurrence of any event giving rise to the operation of Section 2.8(a)(ii) or(iii) or 2.8(c) with respect to such Lender, it will, if requested bythe Borrower, use reasonable efforts (subject to overall policy considerationsof such Lender) to designate another Applicable Lending Office for any Loans orCommitment affected by such event, *provided* thatsuch designation is made on such terms that such Lender and its ApplicableLending Office suffer no economic, legal or regulatory disadvantage, with theobject of avoiding the consequence of the event giving rise to the operation ofany such Section.

###  

### (b)           If any Lender requests anycompensation, reimbursement or other payment under Section 2.8(a)(ii) or(iii), 2.8(c) or 3.2(b) with respect to such Lender, or if any Lenderis a Defaulting Lender, then the Borrower may, at its sole expense and effort,upon notice to such Lender and the Administrative Agent, require such Lender toassign and delegate, without recourse (in accordance with the restrictionscontained in Section 11.4(c)), all its interests, rights and obligationsunder this Agreement to an Eligible Assignee that shall assume suchobligations; *provided* that(i) the Borrower shall have received the prior written consent ofthe Administrative Agent, which consent shall not be unreasonably withheld, (ii) such Lender shall have received payment of anamount equal to the outstanding principal of its Loans, accrued interestthereon, accrued fees and all other amounts payable to it hereunder, from theassignee (to the extent of such outstanding principal and accrued interest andfees) or the Borrower (in the case of all other amounts, including any breakagecompensation under Section 2.7 and any amounts 

 

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### accrued and owing to suchLender under Section 2.8(a)(ii) or (iii), 2.8(c) or 3.2(b)), and (iii) in the case of any such assignment resultingfrom a claim for compensation, reimbursement or other payments required to bemade under Section 2.8(a)(ii) or (iii), 2.8(c) or 3.2(b) withrespect to such Lender, such assignment will result in a reduction in suchcompensation, reimbursement or payments. A Lender shall not be required to make any such assignment anddelegation if, prior thereto, as a result of a waiver by such Lender orotherwise, the circumstances entitling the Borrower to require such assignmentand delegation cease to apply.

###  

### (c)           Nothing in this Section 2.11shall affect or postpone any of the obligations of the Borrower or the right ofany Lender provided in Section 2.8.

###  

# ARTICLE III.

 

# FEES; COMMITMENTS

 

## Section 3.1             Fees.

##  

### (a)           Facility Fees.  The Borrower agrees to pay to theAdministrative Agent facility fees (“Facility Fees”) for the account ofeach Non-Defaulting Lender that has a Commitment for the period from theClosing Date to the Maturity Date, computed for each day at a rate per annumequal to the Applicable Facility Fee Rate in effect for such day times theamount of such Non-Defaulting Lender’s Commitment in effect on such day.  Facility Fees shall be due and payable inarrears on the last Business Day of each December, March, June and September andon the Maturity Date.

###  

### (b)           Utilization Fee.  The Borrower agrees to pay to theAdministrative Agent utilization fees (the “Utilization Fees”) for theaccount of each Non-Defaulting Lender that has a Commitment for each day onwhich the Aggregate Revolving Facility Exposure exceeds 50% of the TotalCommitment, computed for each such day at a rate per annum equal to theApplicable Utilization Fee Rate times the Revolving Facility Exposure of suchNon-Defaulting Lender on such day. Utilization Fees, if any, shall be due and payable quarterly in arrearson the last Business Day of each December, March, June and September andon the Maturity Date.

###  

### (c)           LC Fees.

###  

#### (i)            Standby Letters of Credit.  The Borrower agrees to pay to theAdministrative Agent, for the ratable benefit of each Lender with a Commitmentbased upon each such Lender’s Percentage, a fee in respect of each Letter ofCredit issued hereunder that is a Standby Letter of Credit for the period fromthe date of issuance of such Letter of Credit until the expiration date thereof(including any extensions of such expiration date that may be made at theelection of the account party or the beneficiary), computed for each day at arate per annum equal to (A) the Applicable Margin for Loans that areEurodollar Loans in effect on such day times (B) the Stated Amount of suchLetter of Credit on such day.  Theforegoing fees shall be payable quarterly in arrears on the last Business Dayof each December, March, June and September and on the Maturity Date.

####  

#### (ii)           Commercial Letters of Credit.  The Borrower agrees to pay to theAdministrative Agent for the ratable benefit of each Lender based upon eachsuch Lender’s Percentage, a fee in respect of each Letter of Credit issuedhereunder that is a Commercial Letter of Credit in an amount equal to (A) theApplicable Margin for Loans that are Eurodollar Loans in effect on the date ofissuance times (B) the Stated Amount of such Letter of Credit.  The foregoing fees shall be payable on thedate of issuance of such Letter of Credit.

 

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### (d)           Fronting Fees.  The Borrower agrees to pay directly to eachLC Issuer, for its own account, a fee in respect of each Letter of Creditissued by it, payable on the date of issuance (or any increase in the amount,or renewal or extension) thereof, computed at the rate of 0.125% per annum onthe Stated Amount thereof for the period from the date of issuance (or increase,renewal or extension) to the expiration date thereof (including any extensionsof such expiration date which may be made at the election of the beneficiarythereof).

###  

### (e)           Additional Charges of LCIssuer.  The Borrower agrees to paydirectly to each LC Issuer upon each LC Issuance, drawing under, or amendment,extension, renewal or transfer of, a Letter of Credit issued by it such amountas shall at the time of such LC Issuance, drawing under, amendment, extension,renewal or transfer be the processing charge that such LC Issuer is customarilycharging for issuances of, drawings under or amendments, extensions, renewalsor transfers of, letters of credit issued by it.

###  

### (f)            Other Fees.  The Borrower shall pay to the AdministrativeAgent, on the Closing Date and thereafter, for its own account and/or fordistribution to the Lenders, such fees as heretofore agreed by the Borrower andthe Administrative Agent or the Lenders as set forth in the Agent Fee Letter,the Closing Fee Letter or any other similar agreement.

###  

### (g)           Computations of Fees.  All computations of Facility Fees,Utilization Fees, LC Fees and other Fees hereunder shall be made on the actualnumber of days elapsed over a year of 360 days.

###  

## Section 3.2             Increase inCommitments.

##  

### (a)           At any time after theClosing Date, the Borrower may, by written notice to the Administrative Agent,request that the Total Commitment be increased by an amount not to exceed$50,000,000 in the aggregate for all such increases from the Closing Date untilthe Maturity Date, *provided* thatno Default or Event of Default has occurred and is continuing at the time ofsuch request and on the date of any such increase.  The Administrative Agent shall deliver a copyof such request to each Lender.  TheBorrower shall set forth in such request the amount of the requested increasein the Total Commitment (which shall be in minimum increments of $10,000,000and a minimum amount of $10,000,000) and the date on which such increase isrequested to become effective (which shall be not less than 10 Business Daysnor more than 60 days after the date of such notice and that, in any event,must be at least 60 days prior to the Maturity Date).  The Borrower may arrange for one or morebanks or other entities that are Eligible Assignees to provide a Commitmenthereunder pursuant to this Section 3.2(a) (each such Person soagreeing being an “Augmenting Lender”) and/or the Borrower may offer toeach Lender the opportunity to increase its Commitment by its Percentage of theproposed increased amount.  Each Lendershall, by notice to the Borrower and the Administrative Agent given not morethan 10 days after the date of the Administrative Agent’s notice, either agreeto increase its Commitment by all or a portion of the offered amount (each suchLender so agreeing being an “Increasing Lender”) or decline to increaseits Commitment (and any such Lender that does not deliver such a notice withinsuch period of 10 days shall be deemed to have declined to increase itsCommitment and each Lender so declining or being deemed to have declined beinga “Non-Increasing Lender”).  EachAugmenting Lender shall execute all such documentation as the AdministrativeAgent shall reasonably specify to evidence its Commitment and/or its status asa Lender with a Commitment hereunder. Any increase in the Total Commitment may be made in an amount that isless than the increase requested by the Borrower if the Borrower is unable toarrange for, or chooses not to arrange for, Augmenting Lenders.

###  

### (b)           Each of the parties heretoagrees that the Administrative Agent may take any and all actions as may bereasonably necessary to ensure that after giving effect to any increase in theTotal Commitment pursuant to this Section 3.2(b), the outstanding Loans(if any) are held by the Lenders with 

 

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### Commitments in accordancewith their new Percentages. This may be accomplished at the discretion of theAdministrative Agent:  (w) byrequiring the outstanding Loans to be prepaid with the proceeds of newBorrowings; (x) by causing the Non-Increasing Lenders to assign portionsof their outstanding Loans to Increasing Lenders and Augmenting Lenders; (y) bypermitting the Borrowings outstanding at the time of any increase in the TotalCommitment pursuant to this Section 3.2(b) to remain outstandinguntil the last days of the respective Interest Periods therefor, even thoughthe Lenders would hold such Borrowings other than in accordance with their newPercentages; or (z) by any combination of the foregoing.  Anyprepayment or assignment described in this paragraph (ii) shall be subjectto Section 2.7 hereof but otherwise without premium or penalty.  In addition, in connection with any increasein the Total Commitment pursuant to this Section the Administrative Agentmay, in consultation with the Borrower, appoint any Lender as a SyndicationAgent, Documentation Agent, Co-Agent or other similar title.

###  

## Section 3.3             VoluntaryTermination/Reduction of Commitments.  Upon at least three Business Days’ priorirrevocable written notice (or telephonic notice confirmed in writing) to theAdministrative Agent at the Notice Office (which notice the AdministrativeAgent shall promptly transmit to each of the Lenders), the Borrower shall havethe right to:

##  

### (a)           terminate in whole the TotalCommitment, *provided* that (i) alloutstanding Loans and Unpaid Drawings are contemporaneously prepaid inaccordance with Section 4.2, and (ii) either  there are no outstanding Letters of Credit or  the Borrower shall contemporaneously cause alloutstanding Letters of Credit to be surrendered for cancellation (any suchLetters of Credit to be replaced by letters of credit issued by other financialinstitutions acceptable to each LC Issuer and the Lenders); or

###  

### (b)           partially and permanentlyreduce the Unutilized Total Commitment, *provided* that (i) any such reduction shall apply toproportionately and permanently reduce the Commitment of each of the Lenders;  (ii) such reduction shall apply to proportionatelyand permanently reduce the LC Commitment Amount, but only to the extent thatthe Unused Total Commitment would be reduced below any such limits; (iii) nosuch reduction shall be permitted if the Borrower would be required to make amandatory prepayment of Loans or cash collateralize Letters of Credit pursuantto Section 4.3(a), and (iv) any partialreduction of the Unutilized Total Commitment pursuant to this Section 3.3(b) shallbe in the amount of at least $10,000,000 (or, if greater, in integral multiplesof $500,000).

###  

## Section 3.4             Termination of Commitments.  The Total Commitment (and the Commitment ofeach Lender) shall terminate on the Maturity Date.

##  

# ARTICLE IV.

 

# PAYMENTS

 

## Section 4.1             Repayment of Loans.  The Borrower shall repay the aggregateprincipal amount of each outstanding Loan to the Administrative Agent for theratable account of the Lenders on the earlier of (a) 364 days after thedate such Loan is made or deemed made and (b) the Maturity Date.

##  

## Section 4.2             Voluntary Prepayments.  The Borrower shall have the right to prepayany of its Loans, in whole or in part, without premium or penalty (except asspecified below), from time to time on the following terms and conditions:

##  

### (a)           the Borrower shall give theAdministrative Agent at the Notice Office written or telephonic notice (in thecase of telephonic notice, promptly confirmed in writing if so requested by theAdministrative Agent) of its intent to prepay the Loans, the amount of suchprepayment and (in the case of Eurodollar Loans) the specific Borrowing(s) pursuantto which made, which notice shall be received by 

 

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### the Administrative Agent by (i) 12:00noon (local time at the Notice Office) three Business Days prior to the date ofsuch prepayment, in the case of any prepayment of Eurodollar Loans, or (ii) 12:00noon (local time at the Notice Office) one Business Day prior to the date ofsuch prepayment, in the case of any prepayment of Base Rate Loans, and whichnotice shall promptly be transmitted by the Administrative Agent to each of theLenders;

###  

### (b)           in the case of prepayment ofany Borrowings, each partial prepayment of any such Borrowing shall be in anaggregate principal of at least $2,000,000 or an integral multiple of$1,000,000 in excess thereof, in the case of Base Rate Loans, and at least$1,000,000 or an integral multiple of $500,000 in excess thereof, in the caseof Eurodollar Loans;

###  

### (c)           no partial prepayment of anyLoans made pursuant to a Borrowing shall reduce the aggregate principal amountof such Loans outstanding pursuant to such Borrowing to an amount less than theMinimum Borrowing Amount applicable thereto;

###  

### (d)           each prepayment in respectof any Loans made pursuant to a Borrowing shall be applied *pro rata*among such Loans; and

###  

### (e)           each prepayment ofEurodollar Loans pursuant to this Section 4.2 on any date other than thelast day of the Interest Period applicable thereto, in the case of EurodollarLoans shall be accompanied by any amounts payable in respect thereof under Section 2.7.

###  

## Section 4.3             MandatoryPayments and Prepayments.  TheLoans shall be subject to mandatory repayment or prepayment in accordance withthe following provisions:

##  

### (a)           Mandatory Payments. The Loansshall be subject to mandatory repayment or prepayment (in the case of anypartial prepayment conforming to the requirements as to the amounts of partialprepayments set forth in Section 4.2(b))), and the LC Outstandings shallbe subject to cash collateralization requirements, in accordance with thefollowing provisions:

###  

#### (i)            Maturity Date.  The entire principal amount of alloutstanding Loans shall be repaid in full on the Maturity Date.

####  

#### (ii)           Loans Exceed the Commitments.  If on any date (after giving effect to anyother payments on such date) (A) the Aggregate Credit Facility Exposureexceeds the Total Credit Facility Amount, or (B) the Revolving FacilityExposure of any Lender exceeds such Lender’s Commitment, *then*,in the case of each of the foregoing, the Borrower shall, on such day, prepayon such date the principal amount of Loans and, after Loans have been paid infull, Unpaid Drawings, in an aggregate amount at least equal to such excess.

####  

#### (iii)          LC Outstandings Exceed LCCommitment  If on anydate the LC Outstandings exceed the LC Commitment Amount, *then*the Borrower shall, on such day, pay to the Administrative Agent an amount incash equal to such excess and the Administrative Agent shall hold such paymentas security for the reimbursement obligations of the Borrower hereunder inrespect of Letters of Credit pursuant to a cash collateral agreement to beentered into in form and substance reasonably satisfactory to theAdministrative Agent, each LC Issuer and the Borrower (which shall permitcertain investments in Cash Equivalents satisfactory to the Administrative Agent,each LC Issuer and the Borrower until the proceeds are applied to any UnpaidDrawings or to any other Obligations in accordance with any such cashcollateral agreement).

 

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### (b)           Particular Loans to be Prepaid.  With respect to each repayment or prepaymentof Loans required by this Section 4.3, the Borrower shall designate theTypes of Loans that are to be repaid or prepaid and the specific Borrowing(s) pursuantto which such repayment or prepayment is to be made, *provided*that (i) the Borrower shall first so designateall Loans that are Base Rate Loans and Eurodollar Loans with Interest Periodsending on the date of repayment or prepayment prior to designating any otherEurodollar Loans for repayment or prepayment, (ii) ifthe outstanding principal amount of Eurodollar Loans made pursuant to aBorrowing is reduced below the applicable Minimum Borrowing Amount as a resultof any such repayment or prepayment, then all the Loans outstanding pursuant tosuch Borrowing shall be Converted into Base Rate Loans, and(iii) each repayment and prepayment of any Loans made pursuant to aBorrowing shall be applied *pro rata* amongsuch Loans. In the absence of a designation by the Borrower as described in thepreceding sentence, the Administrative Agent shall, subject to the above, makesuch designation in its sole discretion with a view, but no obligation, tominimize breakage costs owing under Section 2.7. Any repayment orprepayment of Eurodollar Loans pursuant to this Section 4.3 shall in allevents be accompanied by such compensation as is required by Section 2.7.

###  

## Section 4.4             Method and Place of Payment.

##  

### (a)           Except as otherwisespecifically provided herein, all payments under this Agreement shall be madeto the Administrative Agent for the ratable (based on its *pro rata*share) account of the Lenders entitled thereto, not later than 12:00 noon(local time at the Payment Office) on the date when due and shall be made atthe Payment Office in immediately available funds and in lawful money of theUnited States of America, it being understood that written notice by theBorrower to the Administrative Agent to make a payment from the funds in theBorrower’s account at the Payment Office shall constitute the making of suchpayment to the extent of such funds held in such account.  Any payments under this Agreement that aremade later than 12:00 noon (local time at the Payment Office) shall be deemedto have been made on the next succeeding Business Day. Whenever any payment tobe made hereunder shall be stated to be due on a day that is not a BusinessDay, the due date thereof shall be extended to the next succeeding Business Dayand, with respect to payments of principal, interest shall be payable duringsuch extension at the applicable rate in effect immediately prior to suchextension.

###  

### (b)           If at any time insufficientfunds are received by and available to the Administrative Agent to pay fullyall amounts of principal, interest and Fees then due hereunder and an Event ofDefault is not then in existence, such funds shall be applied (i) *first*, towardspayment of interest and Fees then due hereunder, ratably among the partiesentitled thereto in accordance with the amounts of interest and Fees then dueto such parties, and (ii) *second*,towards payment of principal then due hereunder, ratably among the partiesentitled thereto in accordance with the amounts of principal then due to suchparties.

###  

## Section 4.5             Net Payments.

##  

### (a)           All payments made by theBorrower hereunder, under any Note or any other Credit Document, will be madewithout setoff, counterclaim or other defense. Except as provided for in Section 4.5(b), all such payments will bemade free and clear of, and without deduction or withholding for, any presentor future taxes, levies, imposts, duties, fees, assessments or other charges ofwhatever nature now or hereafter imposed by any jurisdiction or by anypolitical subdivision or taxing authority thereof or therein with respect tosuch payments (but excluding any tax imposed on or measured by the net incomeor net profits of a Lender pursuant to the laws of the jurisdiction under whichsuch Lender is organized or the jurisdiction in which the Applicable LendingOffice of such Lender is located or any subdivision thereof or therein) and allinterest, penalties or similar liabilities with respect to such non-excludedtaxes, levies imposts, duties, fees, assessments or other charges (all suchnon-excluded taxes, levies, imposts, duties, fees assessments or other chargesbeing referred to collectively as “Taxes”).  If any Taxes are so levied or imposed, theBorrower agrees to pay the full amount of such Taxes and such 

 

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### additional amounts as may benecessary so that every payment by it of all amounts due hereunder, under anyNote or under any other Credit Document, after withholding or deduction for oron account of any Taxes, will not be less than the amount provided for hereinor in such Note or in such other Credit Document.  Subject to Section 2.8(d), the Borrowerwill furnish to the Administrative Agent within 45 days after the date thepayment of any Taxes (or any withholding or deduction on account thereof) ismade, certified copies of tax receipts, or other evidence satisfactory to theLender, evidencing such payment by the Borrower.  The Borrower will indemnify and hold harmlessthe Administrative Agent and each Lender, and reimburse the AdministrativeAgent or such Lender upon its written request, for the amount of any Taxeslevied against, imposed on, or paid by the Administrative Agent or any Lenderwithin 30 days of any written request therefor.

###  

### (b)           Each Lender that is notincorporated under the laws of the United States of America or any Statethereof (each a “Non-U.S. Lender”) agrees to provide to the Borrower andthe Administrative Agent on or prior to the Closing Date, or in the case of aLender that is an assignee or transferee of an interest under this Agreementpursuant to Section 11.4 (unless the respective Lender was already aLender hereunder immediately prior to such assignment or transfer and suchLender is in compliance with the provisions of this Section 4.5(b)), onthe date of such assignment or transfer to such Lender, and from time to timethereafter if required by the Borrower or the Administrative Agent: (i) an accurate and complete original signed copy ofInternal Revenue Service Form W-8BEN, W-8ECI, W-8EXP or W-8IMY (orsuccessor, substitute or other appropriate form and, in the case of Form W-8IMY,any related documentation necessary to establish the claimed exemption)certifying to such Lender’s entitlement to a complete exemption from U.S.withholding tax with respect to payments to be made under this Agreement, anyNote or any other Credit Document, and (ii) in the case of a Lenderseeking to qualify for the portfolio interest exemption, a certificate in formand substance acceptable to the Administrative Agent (any such certificate, an “ExemptionCertificate”) certifying to such Lender’s entitlement to suchexemption.  In addition, each Lenderagrees that from time to time after the Closing Date, when a lapse in time orchange in circumstances renders the previous certification obsolete orinaccurate in any material respect, it will deliver to the Borrower and theAdministrative Agent a new accurate and complete original signed copy of theapplicable Internal Revenue Service Form, including any related documentationor Exemption Certificate, and such other forms as may be required to confirm orestablish the entitlement of such Lender to a continued exemption from U.S.withholding tax with respect to payments under this Agreement, any Note or anyother Credit Document.  Notwithstandinganything to the contrary contained in Section 4.5(a), but subject to Section 11.4(c) andthe immediately succeeding sentence, (x) the Borrower shall be entitled,to the extent it is required to do so by law, to deduct or withhold Taxesimposed by the United States (or any political subdivision or taxing authoritythereof or therein) from interest, fees or other amounts payable hereunder forthe account of any Non-U.S. Lender that has not provided to the Borrower suchforms or such Exemption Certificate and related documentation that establish acomplete exemption from such deduction or withholding and (y) the Borrowershall not be obligated pursuant to Section 4.5(a) to gross-uppayments to be made to a Lender in respect of Taxes imposed by the UnitedStates or any additional amounts with respect thereto (I) to the extentsuch Taxes result from a Lender’s failure to provide the Borrower the InternalRevenue Service forms required to be provided to the Borrower pursuant to this Section 4.5(b) or(II) to the extent that such forms do not establish a complete exemptionfrom withholding of such Taxes at the time the Lender first became a Lenderunder this Agreement.  The Borroweragrees to pay additional amounts and indemnify each Lender in the manner setforth in Section 4.5(a) (without regard to the identity of thejurisdiction requiring the deduction or withholding) in respect of any Taxesdeducted or withheld by it as a result of any changes after the Closing Date inany applicable law, treaty, governmental rule, regulation, guideline or order,or in the interpretation thereof, relating to the deducting or withholding ofincome or similar Taxes.

 

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### (c)           The Borrower will indemnifyand hold harmless the Administrative Agent and each Lender, and reimburse eachupon its written request within 30 days thereof, for the amount of anydocumentary, excise, stamp, property or other similar taxes, duties, fees,assessments or other charges imposed with respect to the execution, delivery,filing or enforcement of any Credit Document.

###  

### (d)           If any Lender, in its soleopinion, determines that it has finally and irrevocably received or beengranted a refund in respect of any Taxes paid as to which indemnification hasbeen paid by the Borrower pursuant to this Section, it shall promptly remitsuch refund (including any interest received in respect thereof), net of allout-of-pocket costs and expenses; *provided*, thatthe Borrower agrees to promptly return any such refund (plus interest) to suchLender if such Lender is required to repay such refund to the relevant taxingauthority. Any such Lender shall provide the Borrower with a copy of any noticeof assessment from the relevant taxing authority (redacting any unrelatedconfidential information contained therein) requiring repayment of such refund.  Nothingcontained herein shall impose an obligation on any Lender to apply for any suchrefund.

###  

### (e)           If the Borrower is requiredto pay additional amounts to the Administrative Agent or any Lender pursuant tothis Section 4.5, then the Administrative Agent or such Lender shall usereasonable efforts (consistent with legal and regulatory restrictions) tochange the jurisdiction of its office, branch, subsidiary or affiliate, or takeother appropriate action, so as to eliminate any additional payment by the Borrowerthat may thereafter accrue, if such change or other action, in the judgment ofthe Administrative Agent or such Lender, as the case may be, is not otherwisedisadvantageous to the Administrative Agent or such Lender.

###  

# ARTICLE V.

 

# CONDITIONS PRECEDENT

 

## Section 5.1             Conditions Precedent atClosing Date.  ThisAgreement shall become effective upon the satisfaction of each of the followingconditions:

##  

### (a)           Credit Agreement.  This Agreement shall have been executed bythe Borrower, the Administrative Agent, each LC Issuer and each of the Lenders.

###  

### (b)           Notes.  The Borrower shall have executed anddelivered to the Administrative Agent a Note for the account of each Lenderthat has requested a Note.

###  

### (c)           Fees and Expenses.  The Borrower shall have (i) executed anddelivered to the Administrative Agent the Agent Fee Letter and the Closing FeeLetter and (ii) paid or caused to be paid all Fees required to be paid byit on the Closing Date pursuant to Section 3.1 and all reasonable fees andexpenses of the Administrative Agent and of special counsel to theAdministrative Agent that have been invoiced at least two Business Days priorto such date in connection with the preparation, negotiation, execution anddelivery of this Agreement and the other Credit Documents and the consummationof the transactions contemplated hereby and thereby.

###  

### (d)           Corporate Resolutions andApprovals.  TheAdministrative Agent shall have received certified copies of the resolutions ofthe Board of Directors of the Borrower, approving the Credit Documents, and ofall documents evidencing other necessary corporate action, governmentalapprovals, if any, and other consents or approvals with respect to theexecution, delivery and performance by the Borrower of the Credit Documents.

 

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### (e)           Incumbency Certificates.  The Administrative Agent shall have receiveda certificate of the Secretary or an Assistant Secretary of the Borrower,certifying the names and true signatures of the officers of the Borrowerauthorized to sign the Credit Documents and any other documents to which theBorrower is a party that may be executed and delivered in connection herewith.

###  

### (f)            Corporate Charter and GoodStanding Certificates.  TheAdministrative Agent shall have received: (i) an original certified copy of the Articles of Incorporation ofthe Borrower and any and all amendments and restatements thereof, certified asof a recent date by the relevant Secretary of State and certified by theSecretary or an Assistant Secretary of the Borrower as being true, correct andcomplete and in full force and effect as of the Closing Date; (ii) thecode of regulations of the Borrower and any and all amendments and restatementsthereof certified by the Secretary or an Assistant Secretary of the Borrower asbeing true, correct, and complete and in full force and effect as of theClosing Date; and (iii) an original good standing certificate from theSecretary of State of the state of incorporation, dated as of a recent date,certifying as to the good standing of the Borrower.

###  

### (g)           Opinions of Counsel.  The Administrative Agent shall have receivedopinions of counsel, which shall be addressed to the Administrative Agent andeach of the Lenders and dated the Closing Date, from the General Counsel of theBorrower, in substantially the form of Exhibit F.

###  

### (h)           Existing Credit Agreement.  The Borrower shall have terminated thecommitments of the lenders under each of the Existing Credit Agreement, repaidany borrowings thereunder and terminated or released all Liens granted inconnection therewith and provided evidence, in form and substance satisfactoryto the Administrative Agent, of the same to the Administrative Agent.

###  

### (i)            Financial Statements.  The Administrative Agent and the Lenders shallhave received the financial statements referred to in Section 6.7(a),which financial statements shall be acceptable to the Administrative Agent andthe Lenders.

###  

### (j)            Borrower’s ClosingCertificate.  TheAdministrative Agent shall have received a certificate in the form attachedhereto as Exhibit D, dated the Closing Date, of an AuthorizedOfficer of the Borrower to the effect that, at and as of the Closing Date andboth before and after giving effect to the initial Borrowings hereunder, ifany, on the Closing Date, and the application of the proceeds thereof:  (i) all conditions set forth in Section 5.1have been satisfied; (ii) no Default or Event of Default has occurred oris continuing; and (iii) all representations and warranties of theBorrower contained herein or in the other Credit Documents are true and correctin all material respects with the same effect as though such representationsand warranties had been made on and as of the Closing Date, except that as toany such representations and warranties that expressly relate to an earlierspecified date, such representations and warranties are only represented ashaving been true and correct in all material respects as of the date when made.

###  

## Section 5.2             ConditionsPrecedent to the Making of Loans.

##  

### (a)           The obligationsof the Lenders and each LC Issuer to make or participate in each Loan and/or LCIssuance are subject, at the time thereof, to the satisfaction of the followingconditions:

###  

#### (i)            Notice of Borrowing,Continuation or Conversion.  The Administrative Agent (and in the case ofsubpart (B) below, the applicable LC Issuer) shall have received, asapplicable, (A) a Notice of Borrowing, Continuation or Conversion meetingthe requirements of Section 2.3 with respect to the Borrowing of a Loan, or(B) an LC Request meeting the requirements of Section 2.4(b) withrespect to each LC Issuance.

 

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#### (ii)           No Default; Representationsand Warranties.  At the timeof the making of a Loan to the Borrower or LC Issuance and after giving effectthereto, (A) there shall exist no Default orEvent of Default, (B) all representations andwarranties of the Borrower contained herein (other than the representation andwarranty contained in Section 6.9) or in the other Credit Documents shallbe true and correct in all material respects with the same effect as thoughsuch representations and warranties had been made on and as of the date suchLoan is made, except to the extent that such representations and warrantiesexpressly relate to an earlier specified date, in which case suchrepresentations and warranties shall have been true and correct in all materialrespects as of the date when made, and (C) the aggregate of the principalamount of all outstanding Loans and LC Outstandings shall not exceed the amountauthorized under the Borrower’s order of The Public Utilities Commission ofOhio (or any successor thereto) in effect at such time that authorizes theBorrower to incur Indebtedness hereunder.

####  

#### (iii)          Other Documents. The Borrowershall have delivered to the Administrative Agent copies of such approvals andother documents as the Administrative Agent, the LC Issuer or any Lender(through the Administrative Agent) may reasonably request.

####  

### (b)           The acceptance of thebenefits of each Loan shall constitute a representation and warranty by theBorrower to each of the Lenders and each LC Issuer that all of the applicable conditionsspecified in Sections 5.1 and 5.2 have been satisfied as of the timesreferred to in such Sections.  All of thecertificates, legal opinions and other documents and papers referred to in thisArticle V, unless otherwise specified, shall be delivered to theAdministrative Agent for the account of each of the Administrative Agent andthe Lenders and, except for the Notes, in sufficient counterparts for theAdministrative Agent and the Lenders, and the Administrative Agent willpromptly distribute to the Lenders their respective Notes and the copies ofsuch other certificates, legal opinions and documents.

###  

## Section 5.3             Conditions Precedent to theConversion or Continuation of Loans.  The obligations of the Lenders to Convert orContinue any Loan are subject, at the time thereof, to the receipt by theAdministrative Agent of a Notice of Borrowing, Continuation or Conversionmeeting the requirements of Section 2.3 with respect to the Conversion orContinuation, as applicable, of a Loan.

##  

# ARTICLE VI.

 

# REPRESENTATIONS AND WARRANTIES

 

To induce the Lenders andeach LC Issuer to enter into this Agreement and to make the Loans and to issueand to participate in the Letters of Credit provided for herein, the Borrowermakes the following representations and warranties to, and agreements with, theLenders and each LC Issuer, all of which shall survive the execution anddelivery of this Agreement and the making of each Loan:

 

## Section 6.1             Corporate Status.  Each of the Borrower and its Subsidiaries (a) is a duly organized or formed and validlyexisting corporation, partnership or limited liability company, as the case maybe, in good standing under the laws of the jurisdiction of its formation andhas the corporate, partnership or limited liability company power andauthority, as applicable, to own its Property and assets and to transact thebusiness in which it is engaged, and (b) hasbeen duly qualified and is authorized to do business in all jurisdictions whereit is required to be so qualified except where the failure to be so qualifiedwould not have a Material Adverse Effect. Each Subsidiary of the Borrower (and the direct and indirect ownershipinterest of the Borrower therein) as of the date hereof and the jurisdiction ofincorporation of Borrower and each such Subsidiary as of the date hereof islisted on Schedule 6.1.

 

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## Section 6.2             Corporate Power andAuthority.  TheBorrower has the corporate or other organizational power and authority toexecute, deliver and carry out the terms and provisions of the Credit Documentsto which it is party and has taken all necessary corporate or otherorganizational action to authorize the execution, delivery and performance ofthe Credit Documents to which it is party. The Borrower has duly executed and delivered each Credit Document towhich it is party and each Credit Document to which it is party constitutes thelegal, valid and binding agreement or obligation of the Borrower enforceable inaccordance with its terms, except to the extent that the enforceability thereofmay be limited by applicable bankruptcy, insolvency, reorganization, moratoriumor other similar laws generally affecting creditors’ rights and by equitableprinciples (regardless of whether enforcement is sought in equity or at law).

##  

## Section 6.3             No Violation.  Neither the execution, delivery andperformance by the Borrower of the Credit Documents to which it is party norcompliance with the terms and provisions thereof (a) willcontravene any provision of any law, statute, rule, regulation, order, writ,injunction or decree of any Governmental Authority applicable to the Borroweror its properties and assets, (b) will conflictwith or result in any breach of, any of the terms, covenants, conditions or provisionsof, or constitute a default under, or result in the creation or imposition of(or the obligation to create or impose) any Lien upon any of the Property orassets of the Borrower pursuant to the terms of any material promissory note,bond, debenture, indenture, mortgage, deed of trust, credit or loan agreement,or any other agreement or other instrument, to which the Borrower is a party orby which it or any of its Property or assets are bound or to which it may besubject, or (c) will violate any provision ofthe certificate or articles of incorporation, regulations or bylaws, or othercharter documents of the Borrower.

##  

## Section 6.4             Governmental Approvals.  No order, consent, approval, license,authorization, or validation of, or filing, recording or registration with, orexemption by, any Governmental Authority is required in connection with (i) anyextension of credit hereunder when made, (ii) the execution, delivery andperformance by the Borrower of any Credit Document to which it is a party or (iii) thelegality, validity, binding effect or enforceability of any Credit Document towhich the Borrower is a party, except for orders, consents, approvals,licenses, authorizations, validations, filings, recordings, registrationsand/or exemptions required with respect to such extension of credit that havebeen obtained or made and are in full force and effect at the time of suchextension of credit.

##  

## Section 6.5             Litigation, etc.

##  

### (a)           There are no actions, suitsor proceedings pending or, to, the knowledge of the Borrower, threatened withrespect to the Borrower or any of its Subsidiaries (i) thathave, or could reasonably be expected to have, a Material Adverse Effect exceptas set forth on Schedule 6.5, or (ii) thatquestion the validity or enforceability of any of the Credit Documents, or ofany action to be taken by any of the Borrower pursuant to any of the CreditDocuments.

###  

### (b)           No action, suit, proceedingor investigation has been instituted, or to the knowledge of the Borrower orany of its Subsidiaries, threatened, and no rule, regulation, order, judgmentor decree has been issued or proposed to be issued by any GovernmentalAuthority that, solely as a result of the incurrence of Indebtedness or theentering into this Agreement or any other Credit Document or any transactioncontemplated hereby or thereby, would cause or deem the Administrative Agent orthe Lenders or any Affiliate of any of them to be subject to, or not exemptedfrom, regulation under the FPA.

 

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## Section 6.6             Use ofProceeds; Margin Regulations.

##  

### (a)           The proceeds of all Loansand LC Issuances will be utilized to provide working capital and funds forgeneral corporate and other lawful purposes not inconsistent with therequirements of this Agreement (including, without limitation, to backstop theissuance of commercial paper).

###  

### (b)           The Borrower is not engagedin the business of extending credit for the purpose of purchasing or carryingany Margin Stock.  At no time would morethan 25% of the value of the assets of the Borrower or its consolidatedSubsidiaries that are subject to any “arrangement” (as such term is used in Section 221.2(g) ofsuch Regulation U) hereunder be represented by Margin Stock.

###  

## Section 6.7             Financial Statements.  The Borrower hasfurnished to the Lenders and the Administrative Agent complete and correctcopies of (a) the audited consolidated balancesheets of the Borrower and its consolidated Subsidiaries as of December 31,2005 and the related audited consolidated statements of income, shareholders’equity, and cash flows of the Borrower and its consolidated Subsidiaries forthe fiscal years then ended, accompanied by the report thereon of KPMG LLP; and (b) the condensed consolidated balance sheets ofthe Borrower and its consolidated Subsidiaries as of September 30, 2006,and the related condensed consolidated statements of income and of cash flowsof the Borrower and its consolidated Subsidiaries for the fiscal period thenended.  All such financial statementshave been prepared in accordance with GAAP, consistently applied (except asstated therein), and fairly present in all material respects the financialposition of the entities described in such financial statements as of therespective dates indicated and the consolidated results of their operations andcash flows for the respective periods indicated, subject in the case of anysuch financial statements that are unaudited, to normal audit adjustments, noneof which shall be material.  As of theClosing Date, the Borrower and its Subsidiaries do not have any material orsignificant contingent liability (other than any liability incident to anylitigation, arbitration or proceeding that could not reasonably be expected tohave a Material Adverse Effect) that is not reflected in the foregoingfinancial statements or the notes thereto in accordance with GAAP.

##  

## Section 6.8             Solvency.  The Borrower is not insolvent as defined inany applicable state or federal statute, nor will the Borrower be renderedinsolvent by the execution and delivery of this Agreement or any of the CreditDocuments to the Administrative Agent, each LC Issuer and the Lenders.

##  

## Section 6.9             No Material Adverse Change.  At no time during the period from December 31,2005 through the date of this Agreement has there been a change in thefinancial or other condition, business, affairs or prospects of the Borrowerand its Subsidiaries taken as a whole, or their properties and assetsconsidered as an entirety, except for  changes noneof which, individually or in the aggregate, has had or could reasonably beexpected to have, a Material Adverse Effect.

##  

## Section 6.10           Tax Returns and Payments.  The Borrower and each of its Subsidiaries hasfiled all federal income tax returns and all other material tax returns,domestic and foreign, required to be filed by it and has paid all materialtaxes and assessments payable by it that have become due, other than those notyet delinquent and except for those contested in good faith.  The Borrower and each of its Subsidiaries hasestablished on its books such charges, accruals and reserves in respect oftaxes, assessments, fees and other governmental charges for all fiscal periodsas are required by GAAP.  The Borrowerdoes not know of any proposed assessment for additional federal, foreign orstate taxes for any period, or of any basis therefor, that, individually or inthe aggregate, taking into account such charges, accruals and reserves inrespect thereof as the Borrower and its Subsidiaries have made, could reasonablybe expected to have a Material Adverse Effect.

 

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## Section 6.11           Title to Properties.  The Borrower and each of its Subsidiaries hasgood and marketable title, in the case of Real Property, and good title (orvalid Leaseholds, in the case of any leased Property), in the case of all otherProperty, to all of its material properties and assets free and clear of Liensother than Liens permitted under Section 8.3.  The interests of the Borrower and each of itsSubsidiaries in the properties reflected in the most recent balance sheetreferred to in Section 6.7, taken as a whole, were sufficient, in thejudgment of the Borrower, as of the date of such balance sheet for purposes ofthe ownership and operation of the businesses conducted by the Borrower andsuch Subsidiaries.

##  

## Section 6.12           Lawful Operations;Compliance with Agreements.  The Borrower and each of itsSubsidiaries:  (a) holds allnecessary federal, state and local governmental licenses, registrations, certifications,permits and authorizations necessary to conduct its business; (b) is in full compliance with all materialrequirements imposed by law, regulation or rule, whether federal, state orlocal, that are applicable to it, its operations, or its properties and assets,including without limitation, applicable requirements of Environmental Laws;and (c) is in full compliance with all material terms, covenants andconditions of any promissory note, bond, debenture, indenture, mortgage, deedof trust, credit or loan agreement, or any other agreement or other instrument,to which it is a party or by which it or any of its Property or assets arebound or to which it may be subject, except in the case of clause (a), (b) or(c) of this Section 6.12 for any failure to obtain and maintain ineffect, or noncompliance, that, individually or in the aggregate, could notreasonably be expected to have a Material Adverse Effect.

##  

## Section 6.13           Environmental Matters.  The Borrower andeach of its Subsidiaries is in compliance with all Environmental Laws governingits business, except to the extent that any such failure to comply (togetherwith any resulting penalties, fines or forfeitures) would not reasonably beexpected to have a Material Adverse Effect. All licenses, permits, registrations or approvals required for theconduct of the business of the Borrower and each of its Subsidiaries under anyEnvironmental Law have been secured and the Borrower and each of itsSubsidiaries is in substantial compliance therewith, except for such licenses,permits, registrations or approvals the failure to secure or to complytherewith is not reasonably likely to have a Material Adverse Effect.  Neither the Borrower nor any of itsSubsidiaries has received written notice, or otherwise knows, that it is in anyrespect in noncompliance with, breach of or default under any applicable writ,order, judgment, injunction, or decree to which the Borrower or such Subsidiaryis a party or that would affect the ability of the Borrower or such Subsidiaryto operate any Real Property and no event has occurred and is continuing that,with the passage of time or the giving of notice or both, would constitutenoncompliance, breach of or default thereunder, except in each such case, suchnoncompliance, breaches or defaults as would not reasonably be expected to, inthe aggregate, have a Material Adverse Effect. There are no Environmental Claims pending or, to the best knowledge ofthe Borrower, threatened wherein an unfavorable decision, ruling or findingwould reasonably be expected to have a Material Adverse Effect.  There are no facts, circumstances, conditionsor occurrences on any Real Property now or at any time owned, leased oroperated by the Borrower or any of its Subsidiaries or on any Property adjacentto any such Real Property, that are known by the Borrower or as to which theBorrower or any such Subsidiary has received written notice, that couldreasonably be expected:  (i) to form the basis of anEnvironmental Claim against the Borrower or any of its Subsidiaries or any RealProperty of the Borrower or any of its Subsidiaries; or (ii) tocause such Real Property to be subject to any restrictions on the ownership,occupancy, use or transferability of such Real Property under any EnvironmentalLaw, except in each such case, such Environmental Claims or restrictions thatindividually or in the aggregate would not reasonably be expected to have aMaterial Adverse Effect.

##  

## Section 6.14           ERISA.

##  

### (a)           Each Plan complies in allmaterial respects with all applicable requirements of law and regulations, noReportable Event has occurred with respect to any Plan, neither the Borrowernor any 

 

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### other member of theControlled Group has withdrawn from any Plan or initiated steps to do so, andno steps have been taken to reorganize or terminate any Plan.

###  

### (b)           Neither the Borrower nor anyof its Subsidiaries is an entity deemed to hold “plan assets” within themeaning of 29 C.F.R. § 2510.3-101 of an employee benefit plan (as defined in Section 3(3) ofERISA) which is subject to Title I of ERISA or any plan (within the meaning of Section 4975of the Code), and neither the execution of this Agreement nor the making ofLoans hereunder gives rise to a prohibited transaction within the meaning of Section 406of ERISA or Section 4975 of the Code.

###  

## Section 6.15           Intellectual Property.  The Borrower and each of its Subsidiaries hasobtained or has the right to use all material patents, trademarks, servicemarks, trade names, copyrights, licenses and other rights with respect to theforegoing necessary for the present and planned future conduct of its business,without any known conflict with the rights of others, except for such patents,trademarks, service marks, trade names, copyrights, licenses and rights, theloss of which, and such conflicts, that in any such case individually or in theaggregate would not reasonably be expected to have a Material Adverse Effect.

##  

## Section 6.16           Investment Company Act;Federal Power Act.  None of the Borrower or any of its Subsidiaries issubject to regulation with respect to the creation or incurrence ofIndebtedness under the Investment Company Act of 1940, as amended.  None of the Borrower or any of itsSubsidiaries, or any Affiliate of any of them, is subject to regulation under the FPA or under applicable state orother laws and regulations respecting the rates or the financial ororganizational regulation of electric utilities, as a result of the creation or incurrence of the Obligations orthe entering into this Agreement or any other Credit Document or theconsummation of any transaction contemplated hereby or thereby.

##  

## Section 6.17           True and Complete Disclosure.  All factual information (taken as a whole)heretofore or contemporaneously furnished by or on behalf of the Borrower orany of its Subsidiaries in writing to the Administrative Agent or any Lenderfor purposes of or in connection with this Agreement or any transactioncontemplated herein is, and all other such factual information (taken as awhole) hereafter furnished by or on behalf of such Person in writing to anyLender will be, true and accurate in all material respects on the date as ofwhich such information is dated or certified and not incomplete by omitting tostate any material fact necessary to make such information (taken as a whole)not misleading at such time in light of the circumstances under which suchinformation was provided, except that any such future information consisting ofpro forma information and financial projections prepared by the Borrower isonly represented herein as being based on good faith estimates and assumptionsbelieved by such Persons to be reasonable at the time made, it being recognizedby the Lenders that such projections as to future events are not to be viewedas facts and that actual results during the period or periods covered by anysuch projections may differ materially from the projected results.

##  

# ARTICLE VII.

 

# AFFIRMATIVE COVENANTS

 

The Borrower herebycovenants and agrees that on the Closing Date and thereafter so long as thisAgreement is in effect and until such time as the Total Commitment has beenterminated, no Notes remain outstanding and the Loans, together with interest,Fees and all other Obligations incurred hereunder and under the other CreditDocuments, have been paid in full:

 

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## Section 7.1             ReportingRequirements.

 

TheBorrower will furnish to each Lender and the Administrative Agent:

 

### (a)           Annual Financial Statements.  As soon as available and in any event within90 days after the close of each fiscal year of the Borrower, commencing withthe fiscal year ending December 31, 2006, the consolidated andconsolidating balance sheets of the Borrower and its consolidated Subsidiariesas at the end of such fiscal year and the related consolidated andconsolidating statements of income, of stockholders’ equity and of cash flowsfor such fiscal year, in each case setting forth comparative figures for thepreceding fiscal year, all in reasonable detail and accompanied by an opinionwith respect to such consolidated financial statements of independent publicaccountants of recognized national standing selected by the Borrower, whichopinion shall be unqualified and shall (i) statethat such accountants audited such consolidated financial statements inaccordance with generally accepted auditing standards, that such accountantsbelieve that such audit provides a reasonable basis for their opinion, and thatin their opinion such consolidated financial statements present fairly, in allmaterial respects, the consolidated financial position of the Borrower and itsconsolidated Subsidiaries as at the end of such fiscal year and theconsolidated results of their operations and cash flows for such fiscal year inconformity with generally accepted accounting principles, or (ii) contain such statements as are customarilyincluded in unqualified reports of independent accountants in conformity withthe recommendations and requirements of the American Institute of CertifiedPublic Accountants (or any successor organization).

###  

### (b)           Quarterly FinancialStatements.  As soon asavailable and in any event within 45 days after the close of each of the firstthree quarterly accounting periods in each fiscal year of the Borrower, theunaudited consolidated and consolidating balance sheets of the Borrower and itsconsolidated Subsidiaries as at the end of such quarterly period and therelated unaudited consolidated and consolidating statements of income and ofcash flows for such quarterly period and/or for the fiscal year to date, andsetting forth, in the case of such unaudited consolidated statements of incomeand of cash flows, comparative figures for the related periods in the priorfiscal year, and that shall be certified on behalf of the Borrower by the ChiefFinancial Officer or other Authorized Officer, subject to changes resultingfrom normal year-end audit adjustments.

###  

### (c)           Officer’s ComplianceCertificates.  At the timeof the delivery of the financial statements provided for in Sections 7.1(a) and(b), a Compliance Certificate signed by an Authorized Officer, which shallinclude calculations of the financial covenants set forth in Section 8.5.

###  

### (d)           Notice of Default,Litigation or Material Adverse Effect.  Promptly, and in any event within threeBusiness Days, in the case of clause (i) below, or five Business Days,after the Borrower or any of its Subsidiaries obtains knowledge thereof, noticeof (i) the occurrence of any event that constitutes a Default or Event ofDefault, which notice shall specify the nature thereof, the period of existencethereof and what action the Borrower has taken or proposes to take with respectthereto, and (ii) the commencement of, or any other material developmentconcerning, any litigation, governmental or regulatory proceeding pendingagainst the Borrower or any of its Subsidiaries, or any other event that couldreasonably be expected to have a Material Adverse Effect.

###  

### (e)           ERISA.  As soon as possible and in any event withinten days after the Borrower knows that any Reportable Event has occurred withrespect to any Plan, a statement, signed by an Authorized Officer, describingsuch Reportable Event and the action that the Borrower proposes to take withrespect thereto.

 

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### (f)            Single Employer Plans. Within 270days after the close of each fiscal year of the Borrower, the Borrower willdeliver to each of the Lenders a statement of the Unfunded Liabilities,certified as correct by an actuary enrolled under ERISA.

###  

### (g)           Environmental Notices.  Promptly, and in any event within 10 daysafter receipt thereof by the Borrower or any Subsidiary of the Borrower, a copyof (a) any notice or claim to the effect that the Borrower or any of itsSubsidiaries is or may be liable to any Person as a result of the release bythe Borrower, any of its Subsidiaries, or any other Person of any HazardousMaterials into the environment, and (b) any notice alleging any violationof any Environmental Law by the Borrower or any of its Subsidiaries, which inthe case of either (a) or (b) above could reasonably be expected tohave a Material Adverse Affect.

###  

### (h)           Annual and QuarterlyReports, Proxy Statements and other Reports Delivered to Stockholders Generally.  Promptly after transmission thereof to itsstockholders, copies of all annual, quarterly and other reports and all proxystatements that the Borrower furnishes to its stockholders generally.

###  

### (i)            Other Information.  Promptly, but in any event within 10 BusinessDays upon request therefor, such other information or documents (financial orotherwise) relating to the Borrower or any of its Subsidiaries as theAdministrative Agent or any Lender (through the Administrative Agent) mayreasonably request from time to time.

###  

## Section 7.2             Books, Records andInspections.  TheBorrower will, and will cause each of its Subsidiaries to, (a) keepproper books of record and account, in which full and correct entries shall bemade of all financial transactions and the assets and business of the Borroweror such Subsidiaries, as the case may be, in accordance with GAAP; and (b) permit, upon at least two Business Days’ noticeto the Chief Financial Officer of the Borrower, officers and designatedrepresentatives of the Administrative Agent or any of the Lenders to visit andinspect any of the properties or assets of the Borrower and any of itsSubsidiaries in whomsoever’s possession (but only to the extent the Borrower orsuch Subsidiary has the right to do so to the extent in the possession ofanother Person), to examine the books of account of the Borrower and any of itsSubsidiaries, and make copies thereof and take extracts therefrom, and todiscuss the affairs, finances and accounts of the Borrower and of any of its Subsidiarieswith, and be advised as to the same by, its and their officers and independentaccountants and independent actuaries, if any, all at such reasonable times andintervals and to such reasonable extent as the Administrative Agent or any ofthe Lenders may request. All costs and expenses incurred by the AdministrativeAgent or any Lender in connection with any of the foregoing shall be paid bythe Administrative Agent or such Lender, as the case may be, unless an Event ofDefault shall have occurred and be continuing at the time such costs and/orexpenses are incurred, in which case all such costs and expenses shall be paidby the Borrower.

##  

## Section 7.3             Insurance.  The Borrower will, and will cause each of itsSubsidiaries to, (i) maintain insurancecoverage by such insurers and in such forms and amounts and against such risksas are generally consistent with the insurance coverage maintained by theBorrower and its Subsidiaries at the date hereof, and (ii) forthwithupon any Lender’s written request, furnish to such Lender such informationabout such insurance as such Lender may from time to time reasonably request,which information shall be prepared in form and detail satisfactory to suchLender and certified by an Authorized Officer.

##  

## Section 7.4             Payment of Taxes and Claims.  The Borrower will pay and discharge, and willcause each of its Subsidiaries to pay and discharge, all taxes, assessments andgovernmental charges or levies imposed upon it or upon its income or profits,or upon any properties belonging to it, prior to the 

 

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## date on which penaltiesattach thereto, and all lawful claims that, if unpaid, might become a Lien orcharge upon any properties of the Borrower or any of its Subsidiaries;*provided* that neither the Borrower nor any of itsSubsidiaries shall be required to pay any such tax, assessment, charge, levy orclaim that is being contested in good faith and by proper proceedings if it hasmaintained adequate reserves with respect thereto in accordance with GAAP.  Without limiting the generality of theforegoing, the Borrower will, and will cause each of its Subsidiaries to, payin full all of its wage obligations to its employees in accordance with theFair Labor Standards Act (29 U.S.C. Sections 206-207) and any comparableprovisions of applicable law.

##  

## Section 7.5             Preservation of Existence,etc.  The Borrower will, and willcause each of its Subsidiaries to, (a) preserve, renew and maintain infull force and effect its legal existence and good standing under the laws ofthe jurisdiction of its organization except in a transaction permitted by Section 8.2;(b) take all reasonable action to maintain all rights, privileges,permits, licenses and franchises necessary or desirable in the normal conductof its business, except to the extent that failure to do so could notreasonably be expected to have a Material Adverse Effect; and (c) preserveor renew all of its registered patents, trademarks, trade names and servicemarks, the non-preservation of which could reasonably be expected to have aMaterial Adverse Effect.

##  

## Section 7.6             Good Repair.  The Borrower will, and will cause each of itsSubsidiaries to, ensure that its material properties and equipment used oruseful in its business in whomsoever’s possession they may be, are kept in goodrepair, working order and condition, normal wear and tear excepted, and thatfrom time to time there are made in such properties and equipment all needfuland proper repairs, renewals, replacements, extensions, additions, bettermentsand improvements, thereto, to the extent and in the manner customary forcompanies in similar businesses.

##  

## Section 7.7             Compliance with Statutes,Regulations, Orders, Restrictions.  The Borrower will, and will cause each of itsSubsidiaries to, comply, in all material respects, with all applicablestatutes, regulations and orders of, and all applicable restrictions imposedby, all Governmental Authorities, in respect of the conduct of its business andthe ownership of its Property, including, without limitation, ERISA and allapplicable Environmental Laws other than those the noncompliance with whichwould not have, and that would not be reasonably expected to have, a MaterialAdverse Effect.

##  

## Section 7.8             Fiscal Years, Fiscal Quarters.  The Borrower shall not change any of its orany of its Subsidiaries’ fiscal years or fiscal quarters (other than the fiscalyear or fiscal quarters of a Person that becomes a Subsidiary, made at the timesuch Person becomes a Subsidiary to conform to the Borrower’s fiscal year andfiscal quarters).

##  

## Section 7.9             Use of Proceeds.  The Borrower will, and will cause each of itsSubsidiaries to, use LC Issuances and the proceeds of all Loans for workingcapital and for general corporate and other lawful purposes not inconsistentwith the requirements of this Agreement (including, without limitation, tobackstop the issuance of commercial paper).

##  

## Section 7.10           Senior Debt.  The Borrower will at all times ensure that (a) the claims of the Lenders in respect of theObligations of the Borrower will not be subordinate to, and will in allrespects rank at least *pari passu* withor senior to, the claims of every unsecured creditor of the Borrower, and (b) any Indebtedness of the Borrower that issubordinated in any manner to the claims of any other creditor of the Borrowerwill be subordinated in like manner to such claims of the Lenders.

 

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# ARTICLE VIII.

 

# NEGATIVE COVENANTS

 

The Borrower herebycovenants and agrees that on the Closing Date and thereafter for so long asthis Agreement is in effect and until such time as the Total Commitment hasbeen terminated, no Notes remain outstanding and the Loans, together withinterest, Fees and all other Obligations incurred hereunder and under the otherCredit Documents, have been paid in full:

 

## Section 8.1             Changes in Business.  Neither the Borrower nor any of itsSubsidiaries will engage in any business if, as a result, the general nature ofthe business, taken on a consolidated basis, that would then be engaged in bythe Borrower and its Subsidiaries, would be substantially changed from thegeneral nature of the business engaged in by the Borrower and its Subsidiarieson the Closing Date.

##  

## Section 8.2             Merger, Consolidation, AssetSales.  The Borrower will not, andwill not permit any of its Subsidiaries to, (a) wind up, liquidate ordissolve its affairs, (b) enter into any transaction of merger orconsolidation, (c) make or otherwise effect any Asset Sale, or (d) agreeto do any of the foregoing at any future time, except that the following shallbe permitted:

##  

#### (i)            a Subsidiary of the Borrowermay merge with the Borrower, *provided* thatthe surviving Person in any such merger shall be the Borrower;

####  

#### (ii)           any Subsidiary of the Borrowermay merge with another Subsidiary of the Borrower;

####  

#### (iii)          any Subsidiary of theBorrower may merge with any Person (other than the Borrower or any otherSubsidiary of the Borrower), *provided* that (A) thesurviving Person in any such merger shall be such Subsidiary and (B) immediatelybefore and after such merger there shall not exist any Default or Event ofDefault;

####  

#### (iv)          the Borrower may merge withany Person (other than a Subsidiary of the Borrower), *provided*that (A) the surviving Person in any such merger shall be the Borrower and(B) immediately before and after such merger there shall not exist anyDefault or Event of Default;

####  

#### (v)           any Subsidiary of theBorrower may make or effect any Asset Sale to the Borrower or anotherWholly-Owned Subsidiary of the Borrower;

####  

#### (vi)          the Borrower may wind up,voluntarily liquidate or dissolve any Subsidiary if (A) such Subsidiary isnot a “Significant Subsidiary” (as defined in Regulation S-X under the 1933Act), and (B) the winding up, voluntary liquidation or dissolution of suchSubsidiary will not result in an Event of Default hereunder or otherwise have aMaterial Adverse Effect;

####  

#### (vii)         in addition to any AssetSale permitted pursuant to any other subpart in this Section 8.2, theBorrower and its Subsidiaries may make or effect other Asset Sales so long as (A) theaggregate amount (based upon the fair market value of the assets) of allProperty sold or otherwise disposed pursuant to all such Asset Sales on andafter the Closing Date does not constitute a Substantial Portion of theProperty of the Borrower and its Subsidiaries at the time of and after givingeffect to any such Asset Sale and (B) at least 80% of the totalconsideration received by the Borrower or any of its Subsidiaries, asapplicable, for such Asset Sale or series of Asset Sales consists of cash orCash Equivalents;

 

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#### (viii)        the Borrower and itsSubsidiaries shall be permitted to create, incur, assume and suffer to existLiens permitted pursuant to Section 8.3; and

####  

#### (ix)           the Borrower and itsSubsidiaries shall be permitted to make and dispose of the Investmentspermitted pursuant to Section 8.4.

####  

## Section 8.3             Liens.  The Borrower will not, and will not permitany of its Subsidiaries to, create, incur, assume or suffer to exist any Lienupon or with respect to any Property or assets of any kind (real or personal,tangible or intangible) of the Borrower or any such Subsidiary whether nowowned or hereafter acquired, or sell any such Property or assets subject to anunderstanding or agreement, contingent or otherwise, to repurchase suchProperty or assets (including, without limitation, sales of accounts receivableor notes with or without recourse to the Borrower or any of its Subsidiaries,other than for purposes of collection of delinquent accounts in the ordinarycourse of business) or assign any right to receive income, or file or permitthe filing of any financing statement under the UCC or any other similar noticeof Lien under any similar recording or notice statute, except that theforegoing restrictions shall not apply to:

##  

### (a)           the Standard PermittedLiens;

###  

### (b)           Liens (i) inexistence on the Closing Date that are listed, and the Indebtedness securedthereby and the Property subject thereto on the Closing Date described, on Schedule 8.3,or (ii) arising out of the refinancing,extension, renewal or refunding of any Indebtedness secured by any such Liens, *provided* that the principal amount of such Indebtedness isnot increased and such Indebtedness is not secured by any additional assets;

###  

### (c)           Liens on Property of theBorrower securing the Borrower’s First Mortgage Bonds issued pursuant to theIndenture, dated as of October 1, 1935, as amended, supplemented orotherwise modified from time to time, between the Borrower and The Bank of NewYork;

###  

### (d)           Liens on Property of theBorrower in connection with collateralized pollution control bonds;

###  

### (e)           any (i) Lien  existing on any Property at the time such Property isacquired by the Borrower or any of its Subsidiaries or on any Property of anyPerson at the time such Person becomes, or is merged into, a Subsidiary of theBorrower, *provided* that (A) suchLien is not created in contemplation of or in connection with such acquisitionor such Person becoming, or being merged into, such Subsidiary, as the case maybe, (B) such Lien shall not attach or apply toany other Property or assets of the Borrower or any of its Subsidiaries, and (C) such Lien shall secure only thoseobligations that it secures on the date of such acquisition or the date suchPerson becomes, or is merged into, such Subsidiary, as the case may be, and anyextension or refinancing thereof, so long as the aggregate principal amount soextended or refinanced is not increased, and (ii) Lien securingIndebtedness in respect of purchase money obligations for the acquisition,lease, construction or improvement of fixed assets or Capital LeaseObligations, *provided*that (A) such Lienonly attaches to such fixed assets being acquired, leased, constructed orimproved and (B) the Indebtedness secured by such Lien does not exceed thecost or fair market value, whichever is lower, of the fixed assets beingacquired, leased, constructed or improved on the date of acquisition, lease,construction or improvement; *provided, however*,that the aggregate principal amount of Indebtedness at any time outstandingsecured by a Lien described in this subsection (e) shall not exceed anamount equal to 5% of the Consolidated Tangible Assets at such time.

###  

## Section 8.4             Investments.  The Borrower will not, and will not permitany of its Subsidiaries to, make or hold any Investments, except (a) Investmentsheld by the Borrower or any of its Subsidiaries

 

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## in cash or Cash Equivalents;(b) Investments of the Borrower in any of its Subsidiaries; (c) Investmentsof a Subsidiary of the Borrower in the Borrower or another Subsidiary of theBorrower; (d) Permitted Acquisitions; (e) Investments by the Borrowerand its Subsidiaries in account debtors received in connection with thebankruptcy or reorganization, or in settlement of the delinquent obligations offinancially troubled suppliers or customers, in the ordinary course ofbusiness; (f) promissory notes, earn-outs, other contingent paymentobligations and other non-cash consideration received by Borrower or any of itsSubsidiaries as partial payment of the total consideration of any Asset Salemade in accordance with Section 8.2(vii); (g) loans and advances bythe Borrower and its Subsidiaries to their respective employees in an aggregateamount not to exceed $1,000,000, at any time outstanding; (h) Investmentscomprised of the purchase of receivables from other energy marketers asrequired from time to time by one or more applicable Governmental Authorities; (i) otherInvestments held by the Borrower or its Subsidiaries on the Closing Date thatare listed on Schedule 8.4; and (j) Investments by theBorrower and its Subsidiaries not otherwise permitted under this Section 8.4in an aggregate amount not to exceed $5,000,000, at any time.

##  

## Section 8.5             Financial Covenant.  The Borrower will not at any time permit theratio of (i) Consolidated Total Debt to (ii) Consolidated Total Capitalization to exceed0.65 to 1.00.

##  

## Section 8.6             Transactions with Affiliates.  The Borrower will not, and will not permitany of its Subsidiaries to, enter into any transaction or series oftransactions with any Affiliate (other than, in the case of the Borrower, anySubsidiary of the Borrower, and in the case of a Subsidiary of the Borrower,the Borrower or another Subsidiary of the Borrower) other than in the ordinarycourse of business of and pursuant to the reasonable requirements of theBorrower’s or such Subsidiary’s business and upon fair and reasonable terms noless favorable to the Borrower or such Subsidiary than would be obtained in acomparable arm’s-length transaction with a Person other than an Affiliate,except (i) sales of goods to an Affiliate foruse or distribution outside the United States that in the good faith judgmentof the Borrower complies with any applicable legal requirements of the Code, or (ii) agreements and transactions with and paymentsto officers, directors and shareholders that are either (A) enteredinto in the ordinary course of business and not prohibited by any of theprovisions of this Agreement, or (B) enteredinto outside the ordinary course of business, approved by the directors orshareholders of the Borrower, and not prohibited by any of the provisions ofthis Agreement.

##  

## Section 8.7             Material Agreements.  Neither the Borrower nor any Subsidiary ofthe Borrower shall default in the performance, observance or fulfillment of anyof the obligations, covenants or conditions contained in any agreement, instrumentor other document to which the Borrower or such Subsidiary, as applicable, is aparty, which default could reasonably be expected to have a Material AdverseEffect.

##  

## Section 8.8             Use of Proceeds/MarginRegulations.  TheBorrower will not, and will not permit any of its Subsidiaries to, use any partof the proceeds of any Borrowing, directly or indirectly, to purchase or carryMargin Stock, or to extend credit to others for the purpose of purchasing orcarrying any Margin Stock, in violation of any of the provisions of RegulationT, U or X of the Board of Governors of the Federal Reserve System.

##  

## Section 8.9             No Dividend Restrictions.  The Borrower shall not permit any of itsSubsidiaries to enter into any agreement or otherwise create or cause or permitto exist or become effective any consensual restriction limiting the ability(whether by covenant, event of default or otherwise) of such Subsidiary to (i) paydividends or make any other distributions on shares of such Subsidiary’scapital stock held by the Borrower or any other Subsidiary of the Borrower or (ii) payany other obligation owed to the Borrower or any other Subsidiary of theBorrower, *provided*, *however*,that this clause (ii) shall not apply to Permitted Restrictive Covenants.

 

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## Section 8.10           Swap Agreements.  The Borrower will not, and will not permitany of its Subsidiaries to, enter into any Swap Agreement other than SwapAgreements pursuant to which the Borrower or such Subsidiary has hedged itsreasonably estimated interest rate, foreign currency or commodity exposure, andnot for speculative purposes.

##  

# ARTICLE IX.

 

# EVENTS OF DEFAULT

 

## Section 9.1             Events of Default.  Any of the following specified events shallconstitute an Event of Default (each an “Event of Default”):

##  

### (a)           Payments:  the Borrower shall (i) defaultin the payment when due (whether at maturity, on a date fixed for a scheduledrepayment, on a date on which a required prepayment is to be made, uponacceleration or otherwise) of any principal of the Loans or any reimbursementobligation in respect of any Unpaid Drawing; or (ii) default,and such default shall continue for five or more days, in the payment when dueof any interest on the Loans or any Fees or any other amounts owing hereunderor under any other Credit Document;

###  

### (b)           Representations:  any representation, warranty or statementmade by the Borrower herein or in any other Credit Document (other thanpursuant to Section 6.14(b)) or in any statement or certificate deliveredor required to be delivered pursuant hereto or thereto shall prove to be untruein any material respect on the date as of which made or deemed made;

###  

### (c)           Certain Covenants:  the Borrower shall default in the dueperformance or observance by it of any term, covenant or agreement contained inSection 7.1, 7.2(b), 7.5, 7.9 or 7.10 or Article VIII of thisAgreement;

###  

### (d)           Other Covenants:  the Borrower shall default in the dueperformance or observance by it of any term, covenant or agreement contained inthis Agreement or any other Credit Document, other than those referred to in Section 9.1(a),(b) or (c) above, and such default is not remedied within 30 daysafter the date on which the Borrower receiveswritten notice of such default from the Administrative Agent or any Lender (anysuch notice to be identified as a “notice of default” and to refer specificallyto this paragraph);

###  

### (e)           Cross DefaultUnder Other Agreements:  theBorrower or any of its Subsidiaries shall (i) defaultin any payment with respect to any Indebtedness (other than the Obligations),and all grace periods applicable to such payment shall have expired, in anaggregate amount in excess of $10,000,000, regardless of whether the holder orholders of said Indebtedness (or a trustee or agent on behalf of such holder orholders) exercises its rights, if any, to cause such Indebtedness to become dueand payable prior to its stated maturity; or (ii) defaultin the observance or performance of any agreement or condition relating to anysuch Indebtedness or contained in any instrument or agreement evidencing,securing or relating thereto (and all grace periods applicable to suchobservance, performance or condition shall have expired), or any other eventshall occur or condition exist, the effect of which default or other event orcondition is to cause, or to permit the holder or holders of such Indebtedness(or a trustee or agent on behalf of such holder or holders) to cause any suchIndebtedness to become due prior to its stated maturity, or any suchIndebtedness of the Borrower or any of its Subsidiaries shall be declared to bedue and payable, or shall be required to be prepaid (other than by a regularlyscheduled required prepayment or redemption, prior to the stated maturitythereof).

 

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### (f)            Invalidity of CreditDocuments:  anymaterial provision of any Credit Document, at any time after its execution anddelivery and for any reason other than as expressly permitted hereunder orunder such Credit Document or satisfaction in full of all the Obligations,ceases to be in full force and effect; or the Borrower or any other Person(other than the Administrative Agent or any Lender) contests in any manner thevalidity or enforceability of any provision of any Credit Document; or theBorrower denies in writing that it has any or further liability or obligationunder any Credit Document, or purports to revoke, terminate or rescind anyCredit Document;

###  

### (g)           Judgments:  one or morejudgments, orders or decrees shall be entered against the Borrower and/or anyof its Subsidiaries involving a liability (other than a liability covered byinsurance, as to which the carrier has adequate claims paying ability and hasnot effectively reserved its rights) of $10,000,000 or more in the aggregatefor all such judgments, orders and decrees for the Borrower and itsSubsidiaries, and any such judgments or orders or decrees shall not have beenvacated, discharged or stayed or bonded pending appeal within 30 days from theentry thereof;

###  

### (h)           Bankruptcy:  any of the following shall occur:

###  

#### (i)            the Borrower or any of itsSubsidiaries (the Borrower and each such Subsidiary, each a “Principal Party”)shall commence a voluntary case concerning itself under the Bankruptcy Code;

####  

#### (ii)           an involuntary case iscommenced against any Principal Party under the Bankruptcy Code and thepetition is not dismissed within 60 days after commencement of the case;

####  

#### (iii)          a custodian (as defined inthe Bankruptcy Code) is appointed for, or takes charge of, a SubstantialPortion of the Property of any Principal Party;

####  

#### (iv)          any Principal Partycommences (including by way of applying for or consenting to the appointmentof, or the taking of possession by, a rehabilitator, receiver, custodian, trustee,conservator or liquidator (collectively, a “conservator”) of itself orall or a Substantial Portion of its Property) any other proceeding under anyreorganization, arrangement, adjustment of debt, relief of debtors,dissolution, insolvency, liquidation, rehabilitation, conservatorship orsimilar law of any jurisdiction whether now or hereafter in effect relating tosuch Principal Party;

####  

#### (v)           any such proceeding of thetype set forth in clause (iv) above is commenced against any PrincipalParty to the extent such proceeding is consented to by such Person or remainsundismissed for a period of 60 days;

####  

#### (vi)          any Principal Party isadjudicated insolvent or bankrupt;

####  

#### (vii)         any order of relief or otherorder approving any such case or proceeding is entered;

####  

#### (viii)        any Principal Party suffersany appointment of any conservator or the like for it or any SubstantialPortion of its Property that continues undischarged or unstayed for a period of60 days;

####  

#### (ix)           any Principal Party makes ageneral assignment for the benefit of creditors;

####  

#### (x)            any Principal Partygenerally does not pay its debts as such debts become due; or

 

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#### (xi)           any corporate (or similarorganizational) action is taken by any Principal Party for the purpose ofeffecting any of the foregoing;

####  

### (i)            ERISA:  (i) theUnfunded Liabilities of all Single Employer Plans shall exceed in the aggregate$30,000,000 or any Reportable Event that would reasonably be expected to have aMaterial Adverse Effect shall occur in connection with any Plan; (ii) theBorrower or any member of the Controlled Group shall have been notified by thesponsor of a Multiemployer Plan that it has incurred withdrawal liability tosuch Multiemployer Plan in an amount that, when aggregated with all otheramounts required to be paid to Multiemployer Plans by the Borrower or any othermember of the Controlled Group as withdrawal liability (determined as of thedate of such notification), exceeds $10,000,000 or requires payment exceeding $10,000,000per annum; or (iii) the Borrower or any other member of the ControlledGroup shall have been notified by the sponsor of a Multiemployer Plan that suchMultiemployer Plan is in reorganization or is being terminated, within themeaning of Title IV of ERISA, if as a result of such reorganization ortermination the aggregate annual contribution of the Borrower and the othermembers of the Controlled Group (taken as a whole) to all Multiemployer Plansthat are then in reorganization or being terminated have been or will beincreased over the amounts contributed to such Multiemployer Plans for therespective plan years of each such Multiemployer Plan immediately preceding theplan in year in which the reorganization or termination occurs by an amount exceeding$10,000,000; or

###  

### (j)            Change of Control:  there occurs a Change of Control.

###  

## Section 9.2             Acceleration; Remedies.  Upon the occurrence of any Event of Default,and at any time thereafter, if any Event of Default shall then be continuing,the Administrative Agent shall, upon the written request of the RequiredLenders, by written notice to the Borrower, take any or all of the followingactions, without prejudice to the rights of the Administrative Agent or anyLender to enforce its claims against the Borrower in any manner permitted underapplicable law:

##  

### (a)           declare the Total Commitmentterminated, whereupon the Commitment of each Lender shall forthwith terminateimmediately without any other notice of any kind;

###  

### (b)           declare the principal of andany accrued interest in respect of all Loans, all Unpaid Drawings and all otherObligations owing hereunder to be, whereupon the same shall become, forthwithdue and payable without presentment, demand, protest or other notice of anykind, all of which are hereby waived by the Borrower;

###  

### (c)           terminate any Letter ofCredit that may be terminated in accordance with its terms; and/or

###  

### (d)           exercise any other right orremedy available under any of the Credit Documents or applicable law;

###  

*provided* that, if an Event of Default specified in Section 9.1(h) (otherthan Section 9.1(h)(x)) shall occur, the result that would occur upon thegiving of written notice by the Administrative Agent as specified in clauses (a) and/or(b) above shall occur automatically without the giving of any such notice.

 

## Section 9.3             Application of LiquidationProceeds.  All moniesreceived by the Administrative Agent or any Lender from the exercise ofremedies hereunder or under the other Credit Documents or under any otherdocuments relating to this Agreement shall, unless otherwise required by theterms of the other Credit Documents or by applicable law, be applied asfollows:

 

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### (a)           *first*, to thepayment of all expenses (to the extent not otherwise paid by the Borrower)incurred by the Administrative Agent and the Lenders in connection with theexercise of such remedies, including, without limitation, all reasonable costsand expenses of collection, reasonable documented attorneys’ fees, court costsand any foreclosure expenses;

###  

### (b)           *second*, to thepayment *pro rata* of interest then accrued on theoutstanding Loans and Unpaid Drawings;

###  

### (c)           *third*, to thepayment *pro rata* of any fees then accrued andpayable to the Administrative Agent or any Lender under this Agreement inrespect of the Loans and/or Letters of Credit;

###  

### (d)           *fourth*, to thepayment *pro rata* of  theprincipal balance then owing on the outstanding Loans and Unpaid Drawings;

###  

### (e)           *fifth*, to thepayment to the Lenders of any amounts then accrued and unpaid underSections 2.6, 2.7, and 4.5, and if such proceeds are insufficient to paysuch amounts in full, to the payment of such amounts *pro rata*;

###  

### (f)            *sixth*, to theAdministrative Agent for the benefit of each LC Issuer to cash collateralizethe Stated Amount of outstanding Letters of Credit;

###  

### (g)           *seventh*, to thepayment *pro rata* of all other amounts owed bythe Borrower to the Administrative Agent or any Lender or LC Issuer under thisAgreement or any other Credit Document; and

###  

### (h)           *finally*, any remainingsurplus after all of the Obligations have been paid in full, to the Borrower orto whomsoever shall be lawfully entitled thereto.

###  

# ARTICLE X.

 

# THE ADMINISTRATIVE AGENT

 

## Section 10.1           Appointment.  Each Lender hereby irrevocably designates andappoints KeyBank as Administrative Agent to act as specified herein and in theother Credit Documents, and each such Lender hereby irrevocably authorizesKeyBank as the Administrative Agent for such Lender, to take such action on itsbehalf under the provisions of this Agreement and the other Credit Documentsand to exercise such powers and perform such duties as are expressly delegatedto the Administrative Agent by the terms of this Agreement and the other CreditDocuments, together with such other powers as are reasonably incidentalthereto. The Administrative Agent agrees to act as such upon the expressconditions contained in this Article X. Notwithstanding any provision to the contrary elsewhere in thisAgreement, the Administrative Agent shall not have any duties orresponsibilities, except those expressly set forth herein or in the otherCredit Documents, nor any fiduciary relationship with any Lender or LC Issuer,and no implied covenants, functions, responsibilities, duties, obligations orliabilities shall be read into this Agreement or otherwise exist against theAdministrative Agent.  The provisions ofthis Article X are solely for the benefit of the Administrative Agent, andthe Lenders, and neither the Borrower nor any of its Subsidiaries shall haveany rights as a third party beneficiary of any of the provisions hereof.  In performing its functions and duties underthis Agreement, the Administrative Agent shall act solely as agent of theLenders and does not assume and shall not be deemed to have assumed anyobligation or relationship of agency or trust with or for the Borrower or anyof its Subsidiaries.

 

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## Section 10.2           Delegation of Duties.  The Administrative Agent may execute any ofits duties under this Agreement or any other Credit Document by or throughagents or attorneys-in-fact and shall be entitled to advice of counselconcerning all matters pertaining to such duties. The Administrative Agentshall not be responsible for the negligence or misconduct of any agents orattorneys-in-fact selected by it with reasonable care except to the extentotherwise required by Section 10.3.

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## Section 10.3           Exculpatory Provisions.  Neither the Administrative Agent nor any ofits respective officers, directors, employees, agents, attorneys-in-fact oraffiliates shall be (i) liable for any action lawfully taken or omitted tobe taken by it or such Person under or in connection with this Agreement or anyother Credit Document (except for its or such Person’s own gross negligence orwillful misconduct) or (ii) responsible in any manner to any of theLenders for any recitals, statements, representations or warranties made by theBorrower or any of its Subsidiaries or any of their respective officerscontained in this Agreement, any other Credit Document or in any certificate,report, statement or other document referred to or provided for in, or receivedby the Administrative Agent under or in connection with, this Agreement or anyother Credit Document or for any failure of the Borrower or any Subsidiary ofthe Borrower or any of their respective officers to perform its obligationshereunder or thereunder.  TheAdministrative Agent shall not be under any obligation to any Lender toascertain or to inquire as to the observance or performance of any of theagreements contained in, or conditions of, this Agreement, or to inspect theproperties, books or records of the Borrower or any of its Subsidiaries.  The Administrative Agent shall not beresponsible to any Lender for the effectiveness, genuineness, validity,enforceability, collectability or sufficiency of this Agreement or any CreditDocument or for any representations, warranties, recitals or statements madeherein or therein or made in any written or oral statement or in any financialor other statements, instruments, reports, certificates or any other documentsin connection herewith or therewith furnished or made by the AdministrativeAgent to the Lenders or by or on behalf of the Borrower or any of its Subsidiariesto the Administrative Agent or any Lender or be required to ascertain orinquire as to the performance or observance of any of the terms, conditions,provisions, covenants or agreements contained herein or therein or as to theuse of the proceeds of the Loans or of the existence or possible existence ofany Default or Event of Default.

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## Section 10.4           Reliance by AdministrativeAgent.  The Administrative Agent shallbe entitled to rely, and shall be fully protected in relying, upon any note,writing, resolution, notice, consent, certificate, affidavit, letter,cablegram, telegram, e-mail or other electronic transmission, facsimiletransmission, telex or teletype message, statement, order or other document orconversation believed by it, in good faith, to be genuine and correct and tohave been signed, sent or made by the proper Person or Persons and upon adviceand statements of legal counsel (including, without limitation, counsel to theBorrower or any of its Subsidiaries), independent accountants and other expertsselected by the Administrative Agent. The Administrative Agent shall be fully justified in failing or refusingto take any action under this Agreement or any other Credit Document unless itshall first receive such advice or concurrence of the Required Lenders as itdeems appropriate or it shall first be indemnified to its satisfaction by theLenders against any and all liability and expense that may be incurred by it byreason of taking or continuing to take any such action.  The Administrative Agent shall in all casesbe fully protected in acting, or in refraining from acting, under thisAgreement and the other Credit Documents in accordance with a request of theRequired Lenders (or all of the Lenders, or all of the Lenders (other than anyDefaulting Lender), as applicable, as to any matter that, pursuant to Section 11.11,can only be effectuated with the consent of all Lenders, or all Lenders (otherthan any Defaulting Lender), as the case may be), and such request and anyaction taken or failure to act pursuant thereto shall be binding upon all theLenders.

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## Section 10.5           Notice of Default.  The Administrative Agent shall not be deemedto have knowledge or notice of the occurrence of any Default or Event ofDefault hereunder unless the Administrative Agent has received notice from aLender or the Borrower referring to this Agreement, describing such Default orEvent of Default and stating that such notice is a “notice of default.” If the 

 

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## Administrative Agentreceives such a notice, the Administrative Agent shall give prompt noticethereof to the Lenders.  TheAdministrative Agent shall take such action with respect to such Default orEvent of Default as shall be reasonably directed by the Required Lenders, *provided* that unless and until the Administrative Agentshall have received such directions, the Administrative Agent may (but shallnot be obligated to) take such action, or refrain from taking such action, withrespect to such Default or Event of Default as it shall deem advisable in thebest interests of the Lenders.

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## Section 10.6           Non-Reliance.  Each Lender expressly acknowledges thatneither the Administrative Agent nor any of its officers, directors, employees,agents, attorneys-in-fact or Affiliates have made any representations orwarranties to it and that no act by the Administrative Agent hereinafter taken,including any review of the affairs of the Borrower or any of its respectiveSubsidiaries, shall be deemed to constitute any representation or warranty bythe Administrative Agent to any Lender. Each Lender represents to the Administrative Agent that it has,independently and without reliance upon the Administrative Agent, or any otherLender, and based on such documents and information as it has deemedappropriate, made its own appraisal of and investigation into the business,assets, operations, property, financial and other conditions, prospects andcreditworthiness of the Borrower and its respective Subsidiaries and made itsown decision to make its Loans hereunder and enter into this Agreement.  Each Lender also represents that it will,independently and without reliance upon the Administrative Agent, or any otherLender, and based on such documents and information as it shall deemappropriate at the time, continue to make its own credit analysis, appraisalsand decisions in taking or not taking action under this Agreement, and to makesuch investigation as it deems necessary to inform itself as to the business,assets, operations, property, financial and other conditions, prospects andcreditworthiness of the Borrower and its Subsidiaries.  The Administrative Agent shall not have anyduty or responsibility to provide any Lender with any credit or otherinformation concerning the business, operations, assets, property, financialand other conditions, prospects or creditworthiness of the Borrower or any ofits Subsidiaries that may come into the possession of the Administrative Agentor any of its officers, directors, employees, agents, attorneys-in-fact orAffiliates.

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## Section 10.7           Indemnification.  The Lenders agree to indemnify theAdministrative Agent and its Related Parties ratably according to theirrespective Loans and Percentages of the Unutilized Total Commitment, from andagainst any and all liabilities, obligations, losses, damages, penalties,actions, judgments, suits, costs, reasonable expenses or disbursements of anykind whatsoever that may at any time (including, without limitation, at anytime following the payment of the Obligations) be imposed on, incurred by orasserted against the Administrative Agent or such Related Party in any wayrelating to or arising out of this Agreement or any other Credit Document, orany documents contemplated by or referred to herein or the transactionscontemplated hereby or any action taken or omitted to be taken by theAdministrative Agent or such Related Party under or in connection with any ofthe foregoing, but only to the extent that any of the foregoing is not paid bythe Borrower, *provided* that no Lender shall beliable to the Administrative Agent or such Related Party for the payment of anyportion of such liabilities, obligations, losses, damages, penalties, actions,judgments, suits, costs, expenses or disbursements to the extent resultingsolely from the Administrative Agent’s or such Related Party’s gross negligenceor willful misconduct.  If any indemnityfurnished to the Administrative Agent or any Related Party for any purposeshall, in the opinion of the Administrative Agent, be insufficient or becomeimpaired, the Administrative Agent may call for additional indemnity and cease,or not commence, to do the acts indemnified against until such additionalindemnity is furnished.  The agreementsin this Section 10.7 shall survive the payment of all Obligations.

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## Section 10.8           The Administrative Agent inIndividual Capacity.  TheAdministrative Agent and its Affiliates may make loans to, accept deposits fromand generally engage in any kind of business with the Borrower, its Subsidiariesand their Affiliates as though not acting as Administrative Agenthereunder.  With respect to the Loansmade by it and all Obligations owing to it, the Administrative Agent shall have

 

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## the same rights and powersunder this Agreement as any Lender and may exercise the same as though it werenot the Administrative Agent, and the terms “Lender” and “Lenders” shallinclude the Administrative Agent in its individual capacity.

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## Section 10.9           Successor AdministrativeAgent.  The Administrative Agent mayresign at any time upon not less than 30 days notice to the Lenders, each LCIssuer and the Borrower.  Upon receipt ofany such notice of resignation, the Required Lenders shall have the right toappoint a successor, *provided* that,so long as no Event of Default shall have occurred and be continuing, theBorrower shall have the right to consent to any such successor AdministrativeAgent, such consent not to be unreasonably withheld.  If no such successor shall have been soappointed by the Required Lenders and shall have accepted such appointmentwithin 30 days after the retiring Administrative Agent gives notice of itsresignation, then the retiring Administrative Agent may on behalf of theLenders and each LC Issuer, appoint a successor Administrative Agent, *provided* that if the Administrative Agent shall notify theBorrower and the Lenders that no such successor is willing to accept suchappointment, then such resignation shall nonetheless become effective inaccordance with such notice and (i) the retiring Administrative Agentshall be discharged from its duties and obligations hereunder and under theother Credit Documents (except that in the case of any collateral security heldby the Administrative Agent on behalf of the Lenders or any LC Issuer under anyof the Credit Documents, the retiring Administrative Agent shall continue tohold such collateral security for the benefit of the Lenders until such time asa successor Administrative Agent is appointed) and (ii) all payments,communications and determinations provided to be made by, to or through theAdministrative Agent shall instead be made by or to each Lender and LC Issuerdirectly, until such time as the Required Lenders (with the consent of theBorrower, if applicable) appoint a successor Administrative Agent as providedfor above in this paragraph.  Upon theacceptance of a successor’s appointment as Administrative Agent hereunder, suchsuccessor shall succeed to and become vested with all of the rights, powers,privileges and duties of the retiring (or retired) Administrative Agent, andthe retiring Administrative Agent shall be discharged from all of its dutiesand obligations hereunder or under the other Credit Documents (if not alreadydischarged therefrom as provided above in this paragraph).  The fees payable by the Borrower to asuccessor Administrative Agent shall be the same as those payable to itspredecessor unless otherwise agreed between the Borrower and suchsuccessor.  After the retiringAdministrative Agent’s resignation hereunder and under the other CreditDocuments, the provisions of this Article and Section 11.1 shallcontinue in effect for the benefit of such retiring Administrative Agent, itssub-agents and their respective Related Parties in respect of any actions takenor omitted to be taken by any of them while the retiring Administrative Agentwas acting as Administrative Agent.

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## Section 10.10         Other Agents.  Any Lender identified herein as a Co-Agent,Syndication Agent, Documentation Agent, Co-Documentation Agent, Managing Agent,Manager, Lead Arranger, Arranger or any other corresponding title, other than “AdministrativeAgent,” shall have no right, power, obligation, liability, responsibility orduty under this Agreement or any other Credit Document except those applicableto all Lenders as such. Each Lender acknowledges that it has not relied, andwill not rely, on any Lender so identified in deciding to enter into thisAgreement or in taking or not taking any action hereunder.

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# ARTICLE XI.

 

# MISCELLANEOUS

 

## Section 11.1           Payment ofExpenses.

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### (a)           Irrespective of whether thetransactions contemplated hereby are consummated, the Borrower agrees to pay(or reimburse the Administrative Agent for) all reasonable out-of-pocket costs 

 

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### and expenses of theAdministrative Agent in connection with the negotiation, preparation,syndication, administration and execution and delivery of the Credit Documentsand the documents and instruments referred to therein and the syndication ofthe Commitments, including, without limitation, the reasonable fees anddisbursements of counsel to the Administrative Agent and its Affiliates.

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### (b)           The Borrower agrees to pay,or reimburse the Administrative Agent for, all reasonable out-of-pocket costsand expenses of the Administrative Agent in connection with any amendment,waiver, consent or other modification of or relating to any of the CreditDocuments, including, without limitation, the reasonable fees and disbursementsof counsel to the Administrative Agent.

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### (c)           The Borrower agrees to pay,or reimburse the Administrative Agent and the Lenders for, all reasonableout-of-pocket costs and expenses of the Administrative Agent and the Lenders inconnection with the enforcement of any of the Credit Documents  or the other documents and instrumentsreferred to therein, including, without limitation,  thereasonable fees and disbursements of each counsel to the Administrative Agentand any Lender (including allocated costs of internal counsel).

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### (d)           Without limitation of thepreceding Section 11.1(c), in the event of the bankruptcy, insolvency,rehabilitation or other similar proceeding in respect of the Borrower or any ofits Subsidiaries, the Borrower agrees to pay all costs of collection anddefense, including reasonable attorneys’ fees in connection therewith and inconnection with any appellate proceeding or post-judgment action involvedtherein, which shall be due and payable together with all required service oruse taxes.

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### (e)           Without duplication of anyof the Borrower’s obligations under Section 4.5(c), the Borrower agrees topay and hold the Administrative Agent and each of the Lenders harmless from andagainst any and all present and future stamp and other similar taxes withrespect to the foregoing matters and save the Administrative Agent and each ofthe Lenders harmless from and against any and all liabilities with respect toor resulting from any delay or omission (other than to the extent attributableto any such indemnified Person) to pay such taxes.

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### (f)            The Borrower agrees toindemnify the Administrative Agent, each Lender, and their respective RelatedParties (collectively, the “Indemnitees”) from and hold each of themharmless against any and all losses, liabilities, claims, damages or expensesreasonably incurred by any of them as a result of, or arising out of, or in anyway related to, or by reason of

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#### (i)            any investigation,litigation or other proceeding (whether or not any Lender is a party thereto)related to the entering into and/or performance of any Credit Document or theuse of the proceeds of any Loans hereunder or the consummation of anytransactions contemplated in any Credit Document, other than any suchinvestigation, litigation or proceeding arising out of transactions solelybetween or among one or more of the Lenders and/or the Administrative Agent(except any such investigation, litigation or other proceeding brought by oneor more Lenders against or involving the Administrative Agent), transactionssolely involving the assignment by a Lender of all or a portion of its Loansand Commitments, or the granting of participations therein, as provided in thisAgreement, or arising solely out of any examination of a Lender by anyregulatory or other governmental authority having jurisdiction over it, or

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#### (ii)           the actual or allegedpresence of Hazardous Materials in the air, surface water or groundwater or onthe surface or subsurface of any Real Property owned, leased or at any timeoperated by the Borrower or any of its Subsidiaries, the release, generation,storage, transportation, handling or disposal of Hazardous Materials at anylocation, whether or not owned or operated by the Borrower or any of itsSubsidiaries, if the Borrower or any such Subsidiary could have or is allegedto have any responsibility in respect thereof, the non-compliance of any 

 

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#### such Real Property with foreign, federal,state and local laws, regulations and ordinances (including, withoutlimitation, applicable permits thereunder) applicable thereto, or anyEnvironmental Claim asserted against the Borrower or any of its Subsidiaries,in respect of any such Real Property,

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including, in each case, without limitation, the reasonabledocumented fees and disbursements of counsel incurred in connection with anysuch investigation, litigation or other proceeding (but excluding in each caseunder this clause (f) any such losses, liabilities, claims, damages orexpenses to the extent incurred by reason of the gross negligence or willfulmisconduct of the Person to be indemnified or of any other Indemnitee who issuch Person or an Affiliate of such Person). To the extent that the undertakingto indemnify, pay or hold harmless any Person set forth in the precedingsentence may be unenforceable because it is violative of any law or publicpolicy, the Borrower shall make the maximum contribution to the payment andsatisfaction of each of the indemnified liabilities that is permissible underapplicable law.

 

## Section 11.2           Right of Setoff.  In addition to any rights now or hereaftergranted under applicable law or otherwise, and not by way of limitation of anysuch rights, upon the occurrence and during the continuance of an Event ofDefault, each Lender and each LC Issuer is hereby authorized at any time orfrom time to time, without presentment, demand, protest or other notice of anykind to the Borrower or to any other Person, any such notice being herebyexpressly waived, to set off and to appropriate and apply any and all deposits(general or special) and any other Indebtedness at any time held or owing bysuch Lender or such LC Issuer (including, without limitation, by branches,agencies and Affiliates of such Lender or LC Issuer wherever located) to or forthe credit or the account of the Borrower against and on account of theObligations and liabilities of the Borrower to such Lender or LC Issuer underthis Agreement or under any of the other Credit Documents, including, withoutlimitation, all interests in Obligations of the Borrower purchased by suchLender pursuant to Section 11.4(c), and all other claims of any nature ordescription arising out of or connected with this Agreement or any other CreditDocument, irrespective of whether such Lender or LC Issuer shall have made anydemand hereunder and although such Obligations, liabilities or claims, or anyof them, shall be contingent or unmatured. Each Lender and LC Issuer agrees promptly to notify the Borrower afterany such set off and application, *provided, however,*that the failure to give such notice shall not affect the validity of such setoff and application.

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## Section 11.3           Notices.

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### (a)           Generally.  Except in the case of notices and othercommunications expressly permitted to be given by telephone (and except asprovided in subparagraph (c) below), all notices and other communicationsprovided for herein shall be in writing and shall be delivered by hand orovernight courier service, mailed by certified or registered mail or sent bytelecopier as follows:

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#### (i)            if to the Borrower, to TheDayton Power and Light Company, 1065 Woodman Drive, Dayton, Ohio  45432, Attention: Joseph R. Boni III(Telecopier No. (937) 259-7147; Telephone No. (937) 259-7230);

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#### (ii)           if to the AdministrativeAgent, to KeyBank National Association, 127 Public Square, Cleveland,Ohio 44114, Attention: Yvette M. Dyson-Owens (Telecopier No. (216) 689-5962;Telephone No. (216) 689-4358); and

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#### (iii)          if to a Lender, to it at itsaddress (or telecopier number) set forth on Annex I hereto or, inthe case of any Lender that becomes a party to this Agreement by way ofassignment under Section 11.4 of this Agreement, to it at the address setforth in the Assignment Agreement to which it is a party;

 

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### (b)           Receipt of Notices.  Notices and communications sent by hand orovernight courier service, or mailed by certified or registered mail, shall bedeemed to have been given when received; notices sent by telecopier shall bedeemed to have been given when sent and receipt has been confirmed bytelephone.  Notices delivered throughelectronic communications to the extent provided in subparagraph (c) below,shall be effective as provided in such subparagraph (c).

 

### (c)           Electronic Communications.  Notices and other communications to theAdministrative Agent, an LC Issuer or any Lender pursuant to Section 7.1(a),(b), (c), (h), (i) or (j) may be delivered or furnished by electroniccommunication (including e-mail and Internet or intranet websites) pursuant toprocedures approved by the Administrative Agent.  The Administrative Agent or the Borrower may,in its discretion, agree to accept notices and other communications to ithereunder by electronic communications pursuant to procedures approved by it,provided that approval of such procedures may be limited to particular noticesor communications. Unless the Administrative Agent otherwise prescribes, (i) noticesand other communications sent to an e-mail address shall be deemed receivedupon the sender’s receipt of an acknowledgement from the intended recipient(such as by the “return receipt requested” function, as available, returne-mail or other written acknowledgement), *provided* thatif such notice or other communication is not sent during the normal business hoursof the recipient, such notice or communication shall be deemed to have beensent at the opening of business on the next business day for the recipient, and(ii) notices or communications posted to an Internet or intranet websiteshall be deemed received upon the deemed receipt by the intended recipient atits e-mail address as described in the foregoing clause (i) ofnotification that such notice or communication is available and identifying thewebsite address therefor.

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### (d)           Change of Address.  Any party hereto may change its address ortelecopier number for notices and other communications hereunder by notice toeach of the other parties hereto.

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## Section 11.4           Benefit of Agreement.

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### (a)           Successors and Assigns Generally.  This Agreement shall be binding upon andinure to the benefit of and be enforceable by the parties hereto and theirrespective successors and assigns, *provided* thatthe Borrower may not assign or transfer any of its rights or obligationshereunder without the prior written consent of all the Lenders (other than anyDefaulting Lender), and, *provided, further*,that any assignment by a Lender of its rights and obligations hereunder shallbe effected in accordance with Section 11.4(c).

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### (b)           Participations.  Notwithstanding the foregoing, each Lendermay at any time grant participations in any of its rights hereunder or underany of the Notes to any Person (other than the Borrower or any of itsAffiliates or a natural Person), *provided* thatin the case of any such participation,

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#### (i)            the participant shall not have any rights under thisAgreement or any of the other Credit Documents, including, without limitation,rights of consent, approval or waiver (the participant’s rights against suchLender in respect of such participation to be those set forth in the agreementexecuted by such Lender in favor of the participant relating thereto),

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#### (ii)           such Lender’s obligations under this Agreement (including,without limitation, its Commitment hereunder) shall remain unchanged,

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#### (iii)          such Lender shall remain solely responsible to the otherparties hereto for the performance of such obligations,

 

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#### (iv)          such Lender shall remain the holder of any Note for allpurposes of this Agreement, and

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#### (v)           the Borrower, the Administrative Agent, and the otherLenders shall continue to deal solely and directly with the selling Lender inconnection with such Lender’s rights and obligations under this Agreement, andall amounts payable by the Borrower hereunder shall be determined as if suchLender had not sold such participation, except that the participant shall beentitled to the benefits of Sections 2.6, 2.7 and 4.5 of this Agreement tothe extent that such Lender would be entitled to such benefits if the participationhad not been entered into or sold (*provided* thatthe participant shall only be entitled to the benefits of Section 4.5 tothe extent that it complies with the requirements of that section as though itwere a Lender),

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and, *provided further*,that no Lender shall transfer, grant or sell any participation under which theparticipant shall have rights to approve any amendment to or waiver of thisAgreement or any other Credit Document except to the extent such amendment orwaiver would (w) extend the final scheduled maturity of the Loans in whichsuch participant is participating, or reduce the rate or extend the time ofpayment of interest or Fees thereon (except in connection with a waiver of theapplicability of any post-default increase in interest rates), or reduce theprincipal amount thereof, or increase such participant’s participating interestin any Commitment over the amount thereof then in effect (it being understoodthat a waiver of any Default or Event of Default shall not constitute a changein the terms of any such Commitment), (x) release any guarantor from itsguaranty of any of the Obligations, except strictly in accordance with theterms of the Credit Documents, or (y) consent to the assignment ortransfer by the Borrower of any of its rights and obligations under thisAgreement.

 

### (c)           Assignments by Lenders.  Any Lender may assign all, or if less thanall, a fixed portion, of its Loans, LC Participations and/or Commitment and itsrights and obligations hereunder to one or more Eligible Assignees, each ofwhich shall become a party to this Agreement as a Lender by execution of anAssignment Agreement, *provided* that

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#### (i)            except in the case of (x) an assignment of theentire remaining amount of the assigning Lender’s Loans and/or Commitment or (y) anassignment to another Lender, an Affiliate of such Lender or an Approved Fundwith respect to such Lender, the aggregate amount of each such assignment ofsuch Commitment (which for this purpose includes the Loans outstandingthereunder), shall not be less than $5,000,000 (or, if greater, in integralmultiples of $1,000,000),

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#### (ii)           in the case of any assignment to an Eligible Assignee atthe time of any such assignment the Lender Register shall be deemed modified toreflect the Commitments of such new Lender and of the existing Lenders,

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#### (iii)          upon surrender of the old Notes, if any, upon request ofthe new Lender, new Notes will be issued, at the Borrower’s expense, to suchnew Lender and to the assigning Lender, such new Notes to be in conformity withthe requirements of Section 2.6 (with appropriate modifications) to theextent needed to reflect the revised Commitments,

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#### (iv)          unless waived by the Administrative Agent, theAdministrative Agent shall receive at the time of each such assignment, from theassigning or assignee Lender, the payment of a non-refundable assignment fee of$3,500,

 

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and, *provided further*,that such transfer or assignment will not be effective until the AssignmentAgreement in respect thereof is recorded by the Administrative Agent on theLender Register maintained by it as provided herein.

 

To the extent of anyassignment pursuant to this Section 11.4(c) the assigning Lendershall be relieved of its obligations hereunder with respect to its assignedCommitments.

 

At the time of eachassignment pursuant to this Section 11.4(c) to a Person that is notalready a Lender hereunder and that is not a United States Person (as such termis defined in Section 7701(a)(30) of the Code) for Federal income taxpurposes, the respective assignee Lender shall provide to the Borrower and theAdministrative Agent the appropriate Internal Revenue Service Forms (and, ifapplicable, an Exemption Certificate) described in Section 4.5(b).  To the extent that an assignment of all orany portion of a Lender’s Commitment and related outstanding Obligationspursuant to this Section 11.4(c) would, at the time of suchassignment, result in increased costs under Section 4.5 from those beingcharged by the respective assigning Lender prior to such assignment, then theBorrower shall not be obligated to pay such increased costs (although theBorrower shall be obligated to pay any other increased costs of the typedescribed above resulting from changes after the date of the respectiveassignment).

 

Nothing in this Section 11.4(c) shallprevent or prohibit (i) any Lender that is a bank, trust company or otherfinancial institution from pledging its Notes or Loans to a Federal ReserveBank in support of borrowings made by such Lender from such Federal ReserveBank, or (ii) any Lender that is a trust, limited liability company,partnership or other investment company from pledging its Notes or Loans to atrustee or agent for the benefit of holders of certificates or debt securitiesissued by it.  No such pledge, or anyassignment pursuant to or in lieu of an enforcement of such a pledge, shallrelieve the transferor Lender from its obligations hereunder.

 

### (d)           No SEC Registration or Blue SkyCompliance.  Notwithstanding anyother provisions of this Section 11.4, no transfer or assignment of theinterests or obligations of any Lender hereunder or any grant of participationtherein shall be permitted if such transfer, assignment or grant would requirethe Borrower to file a registration statement with the SEC or to qualify theLoans under the “Blue Sky” laws of any State.

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### (e)           Representations of Lenders.  Each Lender initially party to this Agreementhereby represents, and each Person that becomes a Lender pursuant to an assignmentpermitted by this Section 11.4 will, upon its becoming party to thisAgreement, represent that it is a commercial lender, other financialinstitution or other “accredited” investor (as defined in SEC Regulation D)that makes or acquires loans in the ordinary course of its business and that itwill make or acquire Loans for its own account in the ordinary course of suchbusiness, *provided* that subject to the precedingSections 11.4(b) and (c), the disposition of any promissory notes orother evidences of or interests in Indebtedness held by such Lender shall atall times be within its exclusive control.

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## Section 11.5           No Waiver; Remedies Cumulative.  No failure or delay on the part of theAdministrative Agent or any Lender in exercising any right, power or privilegehereunder or under any other Credit Document and no course of dealing betweenthe Borrower and the Administrative Agent or any Lender shall operate as awaiver thereof; nor shall any single or partial exercise of any right, power orprivilege hereunder or under any other Credit Document preclude any other orfurther exercise thereof or the exercise of any other right, power or privilegehereunder or thereunder.  No notice to ordemand on the Borrower in any case shall entitle the Borrower to any other orfurther notice or demand in similar or other circumstances or constitute awaiver of the rights of the Administrative Agent or the Lenders to any other orfurther action in any circumstances without notice or demand.  Without limiting the generality of theforegoing, the making of a Loan or any LC Issuance shall not be construed as awaiver of any Default 

 

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## or Event of Default,regardless of whether the Administrative Agent, any Lender or any LC Issuer mayhave had notice or knowledge of such Default or Event of Default at thetime.  The rights and remedies hereinexpressly provided are cumulative and not exclusive of any rights or remediesthat the Administrative Agent or any Lender would otherwise have.

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## Section 11.6           Payments *Pro Rata*; Sharing of Setoffs.

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### (a)           The Administrative Agent agrees thatpromptly after its receipt of each payment from or on behalf of the Borrower inrespect of any Obligations, it shall distribute such payment to the Lenders(other than any Lender that has expressly waived in writing its right toreceive its *pro rata* share thereof) *pro rata* based upon their respective shares, if any, of theObligations with respect to which such payment was received.  As to any such payment received by theAdministrative Agent prior to 1:00 P.M. (local time at the Payment Office)in funds that are immediately available on such day, the Administrative Agentwill use all reasonable efforts to distribute such payment in immediatelyavailable funds on the same day to the Lenders as aforesaid.

###  

### (b)           Each of the Lenders agrees that, ifit should receive any amount hereunder (whether by voluntary payment, byrealization upon security, by the exercise of the right of setoff or banker’slien, by counterclaim or cross action, by the enforcement of any right underthe Credit Documents, or otherwise) that is applicable to the payment of theprincipal of, or interest on, the Loans, LC Participations or Fees (other thanFees that are intended to be paid solely to the Administrative Agent or an LCIssuer and amounts payable to a Lender under Sections 2.8, 2.9 or 2.10), of asum that with respect to the related sum or sums received by other Lenders isin a greater proportion than the total of such Obligation then owed and due tosuch Lender bears to the total of such Obligation then owed and due to all ofthe Lenders immediately prior to such receipt, then such Lender receiving suchexcess payment shall purchase for cash without recourse or warranty from the otherLenders an interest in the Obligations to such Lenders in such amount as shallresult in a proportional participation by all of the Lenders in such amount, *provided* that (i) if all orany portion of such excess amount is thereafter recovered from such Lender,such purchase shall be rescinded and the purchase price restored to the extentof such recovery, but without interest, and (ii) theprovisions of this Section 11.6(b) shall not be construed to apply toany payment made by the Borrower pursuant to and in accordance with the expressterms of this Agreement, or any payment obtained by a Lender as considerationfor the assignment of or sale of a participation in any of its Loans to anyassignee or participant pursuant to Section 11.4, other than to theBorrower or any Subsidiary or Affiliate thereof (as to which the provisions ofthis Section 11.6(b) shall apply). The Borrower consents to the foregoing and agrees, to the extent it mayeffectively do so under applicable law, that any Lender acquiring aparticipation pursuant to the foregoing arrangements may exercise against theBorrower rights of set-off and counterclaim with respect to such participationas fully as if such Lender were a direct creditor of the Borrower in the amountof such participation.

###  

### (c)           Notwithstanding anything to thecontrary contained herein, the provisions of the preceding Sections 11.6(a) and(b) shall be subject to the express provisions of this Agreement thatrequire, or permit, differing payments to be made to Lenders that are notDefaulting Lenders, as opposed to Defaulting Lenders.

###  

### (d)           If any Lender shall fail to make anypayment required to be made by it to the Administrative Agent pursuant to Section 2.3(b),then the Administrative Agent may, in its discretion (notwithstanding anycontrary provision of this Agreement), apply any amounts thereafter received bythe Administrative Agent for the account of such Lender to satisfy such Lender’sobligations to the Administrative Agent under such Sections until all suchunsatisfied obligations are fully paid.

 

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## Section 11.7           Governing Law;Submission to Jurisdiction; Venue; Waiver of Jury Trial.

##  

### (a)           THIS AGREEMENT AND THE OTHER CREDITDOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER ANDTHEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OFTHE STATE OF NEW YORK.  TO THE FULLESTEXTENT PERMITTED BY LAW, THE BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLYWAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY JURISDICTION OTHER THAN THESTATE OF NEW YORK GOVERNS THIS AGREEMENT OR ANY OF THE OTHER CREDITDOCUMENTS.  Any legal action orproceeding with respect to this Agreement or any other Credit Document may bebrought in the Supreme Court of the State of New York sitting in New YorkCounty or in the United States District Court of the Southern District of NewYork, and, by execution and delivery of this Agreement, the Borrower herebyirrevocably accepts for itself and in respect of its Property, generally andunconditionally, the jurisdiction of the aforesaid courts.  The Borrower hereby further irrevocablyconsents to the service of process out of any of the aforementioned courts inany such action or proceeding by the mailing of copies thereof by registered orcertified mail, postage prepaid, to the Borrower at its address for noticespursuant to Section 11.3, such service to become effective 30 days aftersuch mailing or at such earlier time as may be provided under applicablelaw.  Nothing herein shall affect theright of the Administrative Agent or any Lender to serve process in any othermanner permitted by law or to commence legal proceedings or otherwise proceedagainst the Borrower in any other jurisdiction.

###  

### (b)           The Borrower hereby irrevocablywaives any objection that it may now or hereafter have to the laying of venueof any of the aforesaid actions or proceedings arising out of or in connectionwith this Agreement or any other Credit Document brought in the courts referredto in Section 11.7(a) above and hereby further irrevocably waives andagrees not to plead or claim in any such court that any such action orproceeding brought in any such court has been brought in an inconvenient forum.

###  

### (c)           **EACH OF THE PARTIES TOTHIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANYACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENTOR ANY OF THE OTHER CREDIT DOCUMENTS (INCLUDING, WITHOUT LIMITATION, ANYAMENDMENTS, WAIVERS OR OTHER MODIFICATIONS RELATING TO ANY OF THE FOREGOING),OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.  EACH PARTY HERETO HEREBY (A) CERTIFIESTHAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OFLITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, AND (B) ACKNOWLEDGESTHAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THISAGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THISPARAGRAPH**.

###  

## Section 11.8           Counterparts.  This Agreement may be executed in any numberof counterparts and by the different parties hereto on separate counterparts,each of which when so executed and delivered shall be an original, but all ofwhich shall together constitute one and the same agreement.

##  

## Section 11.9           Integration.  This Agreement, the other Credit Documentsand any separate letter agreements with respect to fees payable to theAdministrative Agent, for its own account and benefit and/or for the account,benefit of, and distribution to, the Lenders, constitute the entire contractamong the parties relating to the subject matter hereof and thereof andsupersede any and all previous agreements and understandings, oral or written,relating to the subject matter hereof or thereof.

 

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## Section 11.10         Headings Descriptive.  The headings of the several sections andother portions of this Agreement are inserted for convenience only and shallnot in any way affect the meaning or construction of any provision of thisAgreement.

##  

## Section 11.11         Amendment or Waiver.

##  

### (a)           Neither this Agreement nor any otherCredit Document, nor the terms hereof or thereof, may be amended, changed,waived or otherwise modified unless such amendment, change, waiver or othermodification is in writing and signed by the Borrower and the AdministrativeAgent, and also signed (or consented to in writing by) the Required Lenders, *provided* that

###  

#### (i)            no change in, or waiver or other modification otherwise affecting,the amount or time of any scheduled or mandatory reduction in or termination ofthe Total Commitment provided for in Section 3.3 to which a Lender shallbe entitled, shall be made without the written consent of each Lender;

####  

#### (ii)           no change, waiver or other modification shall:

####  

##### (A)          increase (1) the Commitment of any Lender hereunder,without the written consent of such Lender, or (2) the Total Commitment,without the consent of all of the Lenders;

#####  

##### (B)           extend or postpone the Maturity Date or any other maturitydate provided for herein that is applicable to any Loan of any Lender, extendor postpone any scheduled expiration or termination date provided for hereinthat is applicable to a Commitment of any Lender, or extend or postpone theexpiration date of any Letter of Credit as to which such Lender is an LCParticipant beyond the latest expiration date for a Letter of Credit providedfor herein, without the written consent of such Lender;

#####  

##### (C)           reduce the principal amount of any Loan made by any Lender,or reduce the rate or extend the time of payment of, or excuse the payment of,interest thereon (other than as a result of waiving the applicability of anypost-default increase in interest rates), without the written consent of suchLender; or

#####  

##### (D)          reduce the amount of any Unpaid Drawings as to which anyLender is an LC Participate, or reduce the rate or extend the time of paymentof, or excuse the payment of, interest thereon (other than as a result ofwaiving the applicability of any post-default increase in interest rates),without the written consent of such Lender; or

#####  

##### (E)           reduce the rate or extend the time of payment of, orexcuse the payment of, any Fees to which any Lender is entitled hereunder,without the written consent of such Lender; and

#####  

#### (iii)                               no change,waiver or other modification or termination shall, without the written consentof each Lender (other than a Defaulting Lender) affected thereby,

####  

##### (A)          release the Borrower from any obligations as a guarantor ofits Subsidiaries’ obligations under any Credit Document, except in accordancewith the express terms of this Agreement;

 

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##### (B)           amend, modify or waive any provision of this Section 11.11,or Section 9.3, 10.7, 11.1, 11.4 or 11.6, or any other provision of any ofthe Credit Documents pursuant to which the consent or approval of all Lenders,or a number or specified percentage or other required grouping of Lenders is bythe terms of such provision explicitly required;

#####  

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

#####  

##### (D)          consent to the assignment or transfer by the Borrower ofany of its rights and obligations under this Agreement, except in accordancewith the express terms of this Agreement.

#####  

Any waiver, consent, amendment or other modificationwith respect to this Agreement given or made in accordance with this Section 11.11shall be effective only in the specific instance and for the specific purposefor which it was given or made.

 

### (b)           No provision of Section 2.4 orany other provision in this Agreement specifically relating to Letters ofCredit may be amended without the consent of any LC Issuer adversely affectedthereby.

###  

### (c)           No provision of Article X may beamended without the consent of the Administrative Agent.

###  

## Section 11.12         Survival of Indemnities.  All indemnities set forth herein including,without limitation, in Section 2.8, 2.9, 2.10, 4.5, 10.7 or 11.1 shallsurvive the execution and delivery of this Agreement and the making andrepayment of Loans.

##  

## Section 11.13         Domicile of Loans.  Each Lender may transfer and carry its Loansat, to or for the account of any branch office, subsidiary or affiliate of suchLender, *provided* that the Borrower shall not beresponsible for costs arising under Section 2.8 resulting from any suchtransfer (other than a transfer pursuant to Section 2.11) to the extentnot otherwise applicable to such Lender prior to such transfer.

##  

## Section 11.14         Confidentiality.

##  

### (a)           The Administrative Agent, each LC Issuerand the Lenders each agrees to maintain the confidentiality of all ConfidentialInformation (as defined below), except that Confidential Information may bedisclosed (i) to its and its Affiliates’directors, officers, employees and agents, including accountants, legal counseland other advisors (it being understood that the Persons to whom suchdisclosure is made will be informed of the confidential nature of suchConfidential Information and instructed to keep such Confidential Informationconfidential), (ii) to any direct or indirectcontractual counterparty in any swap, hedge or similar agreement (or to anysuch contractual counterparty’s professional advisor, so long as suchcontractual counterparty (or such professional advisor) agrees to be bound bythe provisions of this Section 11.14, (iii) tothe extent requested by any regulatory authority, (iv) tothe extent required by applicable laws or regulations or by any subpoena orsimilar legal process, (v) to any other partyto this Agreement, (vi) to any other creditorof the Borrower that is a direct or intended beneficiary of any of the CreditDocuments, (vii) in connection with theexercise of any remedies hereunder or under any of the other Credit Documents,or any suit, action or proceeding relating to this Agreement or any of theother Credit Documents or the enforcement of rights hereunder or thereunder, (viii) subject to an agreement containing provisionssubstantially the same as those of this Section 11.14, to any assignee ofor participant in, or any prospective assignee of or participant in, any of itsrights or obligations under this Agreement, (ix) withthe consent of the Borrower, or (x) to theextent 

 

71

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### such ConfidentialInformation (A) becomes publicly available other than as a result of abreach of this Section 11.14, or (B) becomes available to theAdministrative Agent, any LC Issuer or any Lender on a non-confidential basisfrom a source other than the Borrower.

###  

### (b)           As used in this Section, “ConfidentialInformation” shall mean all information received from the Borrower relatingto the Borrower or its business, other than any such information that isavailable to the Administrative Agent, any LC Issuer or any Lender on anon-confidential basis prior to disclosure by the Borrower, *provided* that in the case of information received from theBorrower after the Closing Date, such information is clearly identified at thetime of delivery as confidential.

###  

## Section 11.15         Lender Register.  The Borrower hereby designates theAdministrative Agent to serve as its agent, solely for purposes of this Section 11.15,to maintain a register (the “Lender Register”) on or in which it willrecord the names and addresses of the Lenders, and the Commitments from time totime of each of the Lenders, the Loans made to the Borrower by each of theLenders and each repayment and prepayment in respect of the principal amount ofsuch Loans of each such Lender.  Failureto make any such recordation, or (absent manifest error) any error in suchrecordation, shall not affect the Borrower’s obligations in respect of suchLoans.  With respect to any Lender, thetransfer of the Commitment of such Lender and the rights to the principal of,and interest on, any Loan made pursuant to such Commitment shall not beeffective until such transfer is recorded on the Lender Register maintained bythe Administrative Agent with respect to ownership of such Commitment and Loansand prior to such recordation all amounts owing to the transferor with respectto such Commitment and Loans shall remain owing to the transferor.  The registration of assignment or transfer ofall or part of any Commitments and Loans shall be recorded by theAdministrative Agent on the Lender Register only upon the acceptance by theAdministrative Agent of a properly executed and delivered Assignment Agreementpursuant to Section 11.4(c).  TheBorrower agrees to indemnify the Administrative Agent from and against any andall losses, claims, damages and liabilities of whatsoever nature that may beimposed on, asserted against or incurred by the Administrative Agent inperforming its duties under this Section 11.15, except to the extentattributable to the gross negligence or willful misconduct of theAdministrative Agent. The Lender Register shall be available for inspection bythe Borrower or any Lender at any reasonable time and from time to time uponreasonable prior notice.

##  

## Section 11.16         General Limitation of Liability.  No claim may be made by the Borrower, any Lender,the Administrative Agent, any LC Issuer or any other Person against theAdministrative Agent, any LC Issuer or any other Lender or the Affiliates,directors, officers, employees, attorneys or agents of any of them for anydamages other than actual compensatory damages in respect of any claim forbreach of contract or any other theory of liability arising out of or relatedto the transactions contemplated by this Agreement or any of the other CreditDocuments, or any act, omission or event occurring in connection therewith; andthe Borrower, each Lender, the Administrative Agent and each LC Issuer hereby,to the fullest extent permitted under applicable law, waives, releases andagrees not to sue or counterclaim upon any such claim for any special, consequentialor punitive damages, whether or not accrued and whether or not known orsuspected to exist in its favor.

##  

## Section 11.17         Limitations on Liability of the LCIssuers.  The Borrower assumes allrisks of the acts or omissions of any beneficiary or transferee of any Letterof Credit with respect to its use of such Letters of Credit.  Neither any LC Issuer nor any of its officersor directors shall be liable or responsible for: (a) the use that may bemade of any Letter of Credit or any acts or omissions of any beneficiary ortransferee in connection therewith; (b) the validity, sufficiency orgenuineness of documents, or of any endorsement thereon, even if such documentsshould prove to be in any or all respects invalid, insufficient, fraudulent orforged; (c) payment by an LC Issuer against presentation of documents thatdo not comply with the terms of a Letter of Credit, including failure of anydocuments to bear any reference or adequate reference to such Letter of Credit;or (d) any other circumstances whatsoever in making or 

 

72

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## failing to make paymentunder any Letter of Credit, *except*that the Borrower shall have a claim against an LC Issuer, and an LC Issuershall be liable to the Borrower, to the extent of any direct, but notconsequential, damages suffered by the Borrower that the Borrower proves werecaused by (i) such LC Issuer’s willful misconduct or gross negligence indetermining whether documents presented under a Letter of Credit comply withthe terms of such Letter of Credit or (ii) such LC Issuer’s willfulfailure to make lawful payment under any Letter of Credit after thepresentation to it of documentation strictly complying with the terms andconditions of such Letter of Credit.  Infurtherance and not in limitation of the foregoing, an LC Issuer may acceptdocuments that appear on their face to be in order, without responsibility forfurther investigation.

##  

## Section 11.18         No Duty.  All attorneys, accountants, appraisers,consultants and other professional Persons (including, without limitation, thefirms or other entities on behalf of which any such Person may act) retained bythe Administrative Agent or any Lender with respect to the transactionscontemplated by the Credit Documents shall have the right to act exclusively inthe interest of the Administrative Agent or such Lender, as the case may be,and shall have no duty of disclosure, duty of loyalty, duty of care, or otherduty or obligation of any type or nature whatsoever to the Borrower, to any ofits Subsidiaries, or to any other Person, with respect to any matters withinthe scope of such representation or related to their activities in connectionwith such representation.  The Borroweragrees, on behalf of itself and its Subsidiaries, not to assert any claim orcounterclaim against any such Persons with regard to such matters, all suchclaims and counterclaims, now existing or hereafter arising, whether known orunknown, foreseen or unforeseeable, being hereby waived, released and foreverdischarged.

##  

## Section 11.19         Lenders and Agent Not Fiduciary toBorrower.  The relationship among theBorrower and its Subsidiaries, on the one hand, and the Administrative Agent,each LC Issuer and the Lenders, on the other hand, is solely that of debtor andcreditor, and the Administrative Agent, each LC Issuer and the Lenders have nofiduciary or other special relationship with the Borrower and its Subsidiaries,and no term or provision of any Credit Document, no course of dealing, nowritten or oral communication, or other action, shall be construed so as todeem such relationship to be other than that of debtor and creditor.

##  

## Section 11.20         Survival of Representations andWarranties.  All representations andwarranties herein shall survive the making of Loans and all LC Issuanceshereunder, the execution and delivery of this Agreement, the Notes and theother documents (the forms of which are attached as Exhibits hereto), the issueand delivery of the Notes, any disposition thereof by any holder thereof, andany investigation made by the Administrative Agent or any Lender or any otherholder of any of the Notes or on its behalf. All statements contained in any certificate or other document deliveredto the Administrative Agent or any Lender or any holder of any Notes by or onbehalf of the Borrower or of its Subsidiaries pursuant hereto or otherwisespecifically for use in connection with the transactions contemplated herebyshall constitute representations and warranties by the Borrower hereunder, madeas of the respective dates specified therein or, if no date is specified, as ofthe respective dates furnished to the Administrative Agent or any Lender.

##  

## Section 11.21         Severability.  Any provision of this Agreement held to beinvalid, illegal or unenforceable in any jurisdiction shall, as to suchjurisdiction, be ineffective to the extent of such invalidity, illegality orunenforceability without affecting the validity, legality and enforceability ofthe remaining provisions hereof; and the invalidity of a particular provisionin a particular jurisdiction shall not invalidate such provision in any otherjurisdiction.

##  

## Section 11.22         Independence of Covenants.  All covenants hereunder shall be givenindependent effect so that if a particular action, event, condition orcircumstance is not permitted by any of such covenants, the fact that it wouldbe permitted by an exception to, or would otherwise be within the 

 

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## limitations or restrictionsof, another covenant, shall not avoid the occurrence of a Default or an Eventof Default if such action is taken or event, condition or circumstance exists.

##  

## Section 11.23         Interest Rate Limitation.  Notwithstanding anything herein to thecontrary, if at any time the interest rate applicable to any Loan, togetherwith all fees, charges and other amounts that are treated as interest on suchLoan under applicable law (collectively the “Charges”), shall exceed themaximum lawful rate (the “Maximum Rate”) that may be contracted for,charged, taken, received or reserved by the Lender holding such Loan inaccordance with applicable law, the rate of interest payable in respect of suchLoan hereunder, together with all Charges payable in respect thereof, shall belimited to the Maximum Rate and, to the extent lawful, the interest and Chargesthat would have been payable in respect of such Loan but were not payable as aresult of the operation of this Section shall be cumulated and theinterest and Charges payable to such Lender in respect of other Loans orperiods shall be increased (but not above the Maximum Rate therefor) until suchcumulated amount, together with interest thereon at the Base Rate to the dateof repayment, shall have been received by such Lender.

##  

## Section 11.24         Treasury Regulations.  The Borrower acknowledges that theAdministrative Agent and/or one or more of the Lenders may treat the Loans aspart of a transaction that is subject to Treasury Regulation Section 1.6011-4or Section 301.6112-1, and the Administrative Agent and such Lender orLenders, as applicable, may file such IRS forms or maintain such lists andother records as they may determine is required by such Treasury Regulations.

##  

## Section 11.25         USA Patriot Act.  Each Lender subject to the USA Patriot Acthereby notifies the Borrower that pursuant to the requirements of the USAPatriot Act, it is required to obtain, verify and record information thatidentifies the Borrower, which information includes the name and address of theBorrower and other information that will allow such Lender to identify theBorrower in accordance with the USA Patriot Act.

##  

[Remainder of page intentionally left blank; signature pages follow.]

 

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IN WITNESS WHEREOF, each ofthe parties hereto has caused a counterpart of this Agreement to be dulyexecuted and delivered as of the date first above written.

 
|   |   | THE DAYTON POWER AND LIGHT COMPANY                        |
|--------|--------|-----------------------------------------------------------|
|   |   |                                                      |
|   |   | By:                                                       |   |
|   |   | Name:                                                     |   |
|   |   | Title:                                                    |   |
|   |   |                                                      |
|   |   | KEYBANK NATIONAL ASSOCIATION,                             |
|   |   | *as a Lender, LC Issuer and as  the Administrative Agent* |
|   |   |                                                      |
|   |   | By:                                                       |   |
|   |   | Name:                                                     |   |
|   |   | Title:                                                    |   |
|   |   |                                                      |
|   |   | JPMORGAN CHASE BANK, N.A.                                 |
|   |   |                                                      |
|   |   | By:                                                       |   |
|   |   | Name:                                                     |   |
|   |   | Title:                                                    |   |
|   |   |                                                      |
|   |   |                                                      |
|   |   | FIFTH THIRD BANK                                          |
|   |   |                                                      |
|   |   |                                                      |
|   |   | By:                                                       |   |
|   |   | Name:                                                     |   |
|   |   | Title:                                                    |   |

 

Signature Page

to

The Dayton Power and LightCompany Credit Agreement

 

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ANNEX I

 

INFORMATION AS TO LENDERS

 
| **Name  of Lender**           | ** ** | **Commitments**                  | ** ** | **Notice Address**                                                                                                                                 |
|-------------------------------|------------|----------------------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------|
|                          |       |                             |       |                                                                                                                                               |
| KeyBank  National Association |       | Commitment:

 

$80,000,000 |       | KeyBank  National Association  127 Public Square  Cleveland, Ohio 44114  Facsimile: (216) 689-5962  Attention: Yvette M. Dyson-Owens               |
|                          |       |                             |       |                                                                                                                                               |
| JPMorgan  Chase Bank, N.A.    |       | Commitment:

 

$70,000,000 |       | JPMorgan  Chase Bank, N.A.  10 S. Dearborn, Floor 7  Mail Code IL1-0010  Chicago, Illinois 60603  Facsimile: (312) 385-7096  Attention: Joyce King |
|                          |       |                             |       |                                                                                                                                               |
| Fifth  Third Bank             |       | Commitment:

 

$70,000,000 |       | Fifth  Third Bank  5050 Kingsley Drive  1 MOC 2B  Cincinnati, Ohio 45263                                                                           |

 

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EXHIBITA

 

REVOLVING NOTE

 
| $      |   | Cleveland, Ohio              |
|--------|--------|------------------------------|
|   |   | , 20     |

 

FOR VALUE RECEIVED, theundersigned, THE DAYTON POWER AND LIGHT COMPANY, an Ohio corporation (herein,together with its successors and assigns, the “Borrower”), herebypromises to pay to the order of                                 (the“Lender”), in lawful money of the United States of America and inimmediately available funds, at the Payment Office (such term and certain othercapitalized terms used herein without definition shall have the meaningsascribed thereto in the Credit Agreement referred to below) of KeyBank NationalAssociation (the “Administrative Agent”), the principal sum of                         DOLLARSAND 00/100 ($                      )or, if less, the then unpaid principal amount of all Loans made by the Lenderto the Borrower pursuant to the Credit Agreement, on the Maturity Date.

 

The Borrower promises alsoto pay interest in like currency and funds at the Payment Office on the unpaidprincipal amount of each Loan made by the Lender from the date of such Loanuntil paid at the rates and at the times provided in Section 2.7 of theCredit Agreement.

 

This Note is one of theNotes referred to in the Credit Agreement, dated as of November 21, 2006,among the Borrower, the lending institutions from time to time party thereto(including the Lender), and the Administrative Agent (as the same may from timeto time be amended, restated, supplemented or otherwise modified, the “CreditAgreement”), and is entitled to the benefits thereof and of the otherCredit Documents.  As provided in theCredit Agreement, this Note is subject to mandatory prepayment prior to theMaturity Date, in whole or in part.

 

In case an Event of Defaultshall occur and be continuing, the principal of and accrued interest on thisNote may be declared to be due and payable in the manner and with the effectprovided in the Credit Agreement.

 

TheBorrower hereby waives presentment, demand, protest or notice of any kind inconnection with this Note.  No failure toexercise, or delay in exercising, any rights hereunder on the part of theholder hereof shall operate as a waiver of any such rights.

 

THISNOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THESTATE OF NEW YORK.

 

**THE BORROWER HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY INANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS NOTEOR ANY OF THE OTHER CREDIT DOCUMENTS (INCLUDING, WITHOUT LIMITATION, ANYAMENDMENTS, WAIVERS OR OTHER MODIFICATIONS RELATING TO ANY OF THE FOREGOING),OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.**

 

INWITNESS WHEREOF, the undersigned has duly executed this Note as of the datefirst written above.

 

E-2

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|   |   | THE  DAYTON POWER AND LIGHT COMPANY |
|--------|--------|-------------------------------------|
|   |   |                                |
|   |   |                                |
|   |   | By:                                 |   |
|   |   | Name:                               |   |
|   |   | Title:                              |   |

 

E-3

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EXHIBITB-1

 

NOTICE OF BORROWING, CONTINUATION ORCONVERSION

 
|   | ,  200     |
|--------|--------------------------------|

 

KeyBank National Association,as Administrative Agent for the Lenders partyto the Credit Agreement referred to below127 Public SquareCleveland, Ohio 44114Attention:  Yvette M. Dyson-Owens

 

*Re:          Notice ofBorrowing, Continuation or Conversion*

* *

Ladies and Gentlemen:

 

[For a Borrowing:

 

The undersigned, The DaytonPower and Light Company, an Ohio corporation (the “Company”), refers tothe Credit Agreement, dated as of November 21, 2006 (as amended, modifiedor supplemented from time to time, the “Credit Agreement,” the termsdefined therein being used herein as therein defined), among the Company, asBorrower, the lending institutions from time to time party thereto (the “Lenders”),and KeyBank National Association, as Administrative Agent for such Lenders, andhereby gives you notice, irrevocably, pursuant to Section 2.3(b) ofthe Credit Agreement, that the undersigned hereby requests one or moreBorrowings under the Credit Agreement, and in that connection therewith setsforth in the schedule attached hereto the information relating to each suchBorrowing (collectively the “Proposed Borrowing”) as required by Section 2.3(b) ofthe Credit Agreement.

 

The undersigned herebyspecifies that the Proposed Borrowing will consist of Loans as indicated in theschedule attached hereto.

 

The undersigned herebycertifies that the following statements are true on the date hereof, and willbe true on the date of the Proposed Borrowing:

 

(A)          the representations and warranties of the Borrowercontained in the Credit Agreement (other than the representation and warrantycontained in Section 6.9 of the Credit Agreement) and the other CreditDocuments are and will be true and correct in all material respects, before andafter giving effect to the Proposed Borrowing and to the application of theproceeds thereof, as though made on such date, except to the extent that suchrepresentations and warranties expressly relate to an earlier specified date,in which case such representations and warranties were true and correct in allmaterial respects as of the date when made; and

 

(B)           no Default or Event of Default has occurred and iscontinuing, or would result from such Proposed Borrowing or from theapplication of the proceeds thereof.

 

[Fora Continuation:

 

The undersigned, The DaytonPower and Light Company, an Ohio corporation (the “Company”), refers tothe Credit Agreement, dated as of November 21, 2006 (as amended, modifiedor supplemented from time to time, the “Credit Agreement,” the termsdefined therein being used herein as therein 

 

E-4

----

 

defined),among the Company, as Borrower, the lending institutions from time to timeparty thereto (the “Lenders”), and KeyBank National Association, asAdministrative Agent for such Lenders, and hereby gives you notice,irrevocably, pursuant to Section 2.3(b) of the Credit Agreement, thatthe undersigned hereby requests one or more Continuations of Loans, consistingof one Type of Loan, pursuant to Section 2.3(a) of the CreditAgreement, and in that connection therewith sets forth in the schedule attachedhereto the information relating to each such Continuation.]

 

[For a Conversion:

 

The undersigned, The DaytonPower and Light Company, an Ohio corporation (the “Company”), refers tothe Credit Agreement, dated as of November 21, 2006 (as amended, modifiedor supplemented from time to time, the “Credit Agreement,” the termsdefined therein being used herein as therein defined), among the Company, asBorrower, the lending institutions from time to time party thereto (the “Lenders”),and KeyBank National Association, as Administrative Agent for such Lenders, andhereby gives you notice, irrevocably, pursuant to Section 2.3(b) ofthe Credit Agreement, that the undersigned hereby requests one or moreConversions of Loans, consisting of one Type of Loan, into Loans of anotherType, pursuant to Section 2.3(a) of the Credit Agreement, and in thatconnection therewith sets forth in the schedule attached hereto the informationrelating to each such Conversion.]

 
|   |   | Very  truly yours,                  |
|--------|--------|-------------------------------------|
|   |   |                                |
|   |   | THE  DAYTON POWER AND LIGHT COMPANY |
|   |   |                                |
|   |   | By:                                 |   |
|   |   | Name:                               |   |
|   |   | Title:                              |   |

 

E-5

----

 

BORROWING SCHEDULE

 

Proposed Borrowing #1:

 
| **Business  Day** | ** ** | ** **            | ** ** | ** **    | ** ** | **Interest Period**   | ** **  |
|-------------------|------------|-----------------------|------------|---------------|------------|-----------------------|-------------|
| **of**            | ** ** | ** **            | ** ** | **Aggregate** | ** ** | **if Loans are**      | ** **  |
| **Proposed**      | ** ** | **Type of**           | ** ** | **Amount**    | ** ** | **Eurodollar**        | ** **  |
| **Borrowing**     | ** ** | **Loans**             | ** ** | **of Loans**  | ** ** | **Loans**             | ** **  |
|              |       | Base  Rate Loans      |       |          |       | One  Month            |        |
|              |       |                  |       |          |       |                  |        |
|              |       | Eurodollar  Loans     |       |          |       | Two  Months           |        |
|              |       |                  |       |          |       |                  |        |
|              |       |                  |       |          |       | Three  Months         |        |
|              |       |                  |       |          |       |                  |        |
| , 200             |       | [Circle one of above] |       | $             |       |                  | Six  Months |   |
|              |       |                  |       |          |       |                  |        |
|              |       |                  |       |          |       | [Circle one of above] |        |
|                   |            |                       |            |               |            |                       |             |  |

 

Proposed Borrowing #2:

 
| **Business Day** | ** ** | ** **            | ** ** | ** **        | ** ** | **Interest Period**   | ** **  |
|-----------------------|------------|-----------------------|------------|-------------------|------------|----------------------------|-------------|
| **of**                | ** ** | ** **            | ** ** | **Aggregate**     | ** ** | **if Loans are** | ** **  |
| **Proposed**          | ** ** | **Type of**      | ** ** | **Amount**        | ** ** | **Eurodollar**             | ** **  |
| **Borrowing**         | ** ** | **Loans**             | ** ** | **of Loans** | ** ** | **Loans**                  | ** **  |
|                  |       | Base  Rate Loans      |       |              |       | One  Month                 |        |
|                  |       |                  |       |              |       |                       |        |
|                  |       | Eurodollar  Loans     |       |              |       | Two  Months                |        |
|                  |       |                  |       |              |       |                       |        |
|                  |       |                  |       |              |       | Three  Months              |        |
|                  |       |                  |       |              |       |                       |        |
| , 200                 |       | [Circle one of above] |       | $                 |       |                       | Six  Months |   |
|                  |       |                  |       |              |       |                       |        |
|                  |       |                  |       |              |       | [Circle one of above]      |        |
|                       |            |                       |            |                   |            |                            |             |  |

 

E-6

----

 

CONTINUATION SCHEDULE

 

Proposed Continuation #1

[ofthe Loans described in the first table below

intothe Loans described in the second table below]

 
| ** **                  | ** ** | ** **        | ** ** | **Aggregate**     | ** ** | ** **               | ** **  |
|-----------------------------|------------|-------------------|------------|-------------------|------------|--------------------------|-------------|
| ** **                  | ** ** | ** **        | ** ** | **Amount**        | ** ** | **Interest Period** | ** **  |
| **Date of Loans** | ** ** | **Type of Loans** | ** ** | **of Loans** | ** ** | **of Loans**        | ** **  |
|                        |       | Eurodollar  Loans |       |              |       | One  Month               |        |
|                        |       |              |       |              |       |                     |        |
|                        |       |              |       |              |       | Two  Months              |        |
|                        |       |              |       |              |       |                     |        |
| , 200                       |       |              |       |              |       | Three  Months            |        |
|                        |       |              |       |              |       |                     |        |
|                        |       |              |       | $                 |       |                     | Six  Months |   |
|                        |       |              |       |              |       |                     |        |
|                        |       |              |       |              |       | [Circle one of above]    |        |
|                             |            |                   |            |                   |            |                          |             |  |

 
| ** **                  | ** ** | ** **                  | ** ** | **Aggregate**     | ** ** | ** **               | ** ** |
|-----------------------------|------------|-----------------------------|------------|-------------------|------------|--------------------------|------------|
| ** **                  | ** ** | ** **                  | ** ** | **Amount**        | ** ** | **Interest Period** | ** ** |
| **Date of Loans** | ** ** | **Type of Loans** | ** ** | **of Loans** | ** ** | **of Loans**        | ** ** |
|                        |       | Eurodollar Loans            |       |              |       | One Month                |       |
|                        |       |                        |       |              |       |                     |       |
|                        |       |                        |       |              |       | Two Months               |       |
|                        |       |                        |       |              |       |                     |       |
| , 200                       |       |                        |       |              |       | Three Months             |       |
|                        |       |                        |       |              |       |                     |       |
|                        |       |                        |       | $                 |       |                     | Six Months |   |
|                        |       |                        |       |              |       |                     |       |
|                        |       |                        |       |              |       | [Circle one of above]    |       |
|                             |            |                             |            |                   |            |                          |            |  |

 

E-7

----

 

Proposed Continuation #2

[ofthe Loans described in the first table below

intothe Loans described in the second table below]

 
| ** **                  | ** ** | ** **                  | ** ** | **Aggregate**     | ** ** | ** **               | ** **  |
|-----------------------------|------------|-----------------------------|------------|-------------------|------------|--------------------------|-------------|
| ** **                  | ** ** | ** **                  | ** ** | **Amount**        | ** ** | **Interest Period** | ** **  |
| **Date of Loans** | ** ** | **Type of Loans** | ** ** | **of Loans** | ** ** | **of Loans**        | ** **  |
|                        |       | Eurodollar  Loans           |       |              |       | One  Month               |        |
|                        |       |                        |       |              |       |                     |        |
|                        |       |                        |       |              |       | Two  Months              |        |
|                        |       |                        |       |              |       |                     |        |
| , 200                       |       |                        |       |              |       | Three  Months            |        |
|                        |       |                        |       |              |       |                     |        |
|                        |       |                        |       | $                 |       |                     | Six  Months |   |
|                        |       |                        |       |              |       |                     |        |
|                        |       |                        |       |              |       | [Circle one of above]    |        |
|                             |            |                             |            |                   |            |                          |             |  |

 
| ** **                  | ** ** | ** **                  | ** ** | **Aggregate**     | ** ** | ** **               | ** **  |
|-----------------------------|------------|-----------------------------|------------|-------------------|------------|--------------------------|-------------|
| ** **                  | ** ** | ** **                  | ** ** | **Amount**        | ** ** | **Interest Period** | ** **  |
| **Date of Loans** | ** ** | **Type of Loans** | ** ** | **of Loans** | ** ** | **of Loans**        | ** **  |
|                        |       | Eurodollar  Loans           |       |              |       | One  Month               |        |
|                        |       |                        |       |              |       |                     |        |
|                        |       |                        |       |              |       | Two  Months              |        |
|                        |       |                        |       |              |       |                     |        |
| , 200                       |       |                        |       |              |       | Three  Months            |        |
|                        |       |                        |       |              |       |                     |        |
|                        |       |                        |       | $                 |       |                     | Six  Months |   |
|                        |       |                        |       |              |       |                     |        |
|                        |       |                        |       |              |       | [Circle one of above]    |        |
|                             |            |                             |            |                   |            |                          |             |  |

 

E-8

----

 

CONVERSION SCHEDULE

 

Proposed Conversion #1

[ofthe Loans described in the first table below

intothe Loans described in the second table below]

 
| ** **                  | ** ** | ** **                  | ** ** | **Aggregate**     | ** ** | **Interest Period**   | ** **  |
|-----------------------------|------------|-----------------------------|------------|-------------------|------------|----------------------------|-------------|
| ** **                  | ** ** | ** **                  | ** ** | **Amount**        | ** ** | **if Loans are** | ** **  |
| **Date of Loans** | ** ** | **Type of Loans** | ** ** | **of Loans** | ** ** | **Eurodollar Loans**  | ** **  |
|                        |       | Base  Rate Loans            |       |              |       | One  Month                 |        |
|                        |       |                        |       |              |       |                       |        |
|                        |       | Eurodollar  Loans           |       |              |       | Two  Months                |        |
|                        |       |                        |       |              |       |                       |        |
|                        |       |                        |       |              |       | Three  Months              |        |
|                        |       |                        |       |              |       |                       |        |
| , 200                       |       | [Circle one of Above]       |       | $                 |       |                       | Six  Months |   |
|                        |       |                        |       |              |       |                       |        |
|                        |       |                        |       |              |       | [Circle one of above]      |        |
|                             |            |                             |            |                   |            |                            |             |  |

 
| ** **        | ** ** | ** **            | ** ** | **Aggregate** | ** ** | **Interest Period**   | ** ** |
|-------------------|------------|-----------------------|------------|---------------|------------|-----------------------|------------|
| ** **        | ** ** | ** **            | ** ** | **Amount**    | ** ** | **if Loans are**      | ** ** |
| **Date of Loans** | ** ** | **Type of Loans**     | ** ** | **of Loans**  | ** ** | **Eurodollar Loans**  | ** ** |
|              |       | Base Rate Loans       |       |          |       | One Month             |       |
|              |       |                  |       |          |       |                  |       |
|              |       | Eurodollar Loans      |       |          |       | Two Months            |       |
|              |       |                  |       |          |       |                  |       |
|              |       |                  |       |          |       | Three Months          |       |
|              |       |                  |       |          |       |                  |       |
| , 200             |       | [Circle one of Above] |       | $             |       |                  | Six Months |   |
|              |       |                  |       |          |       |                  |       |
|              |       |                  |       |          |       | [Circle one of above] |       |
|                   |            |                       |            |               |            |                       |            |  |

 

E-9

----

 

Proposed Conversion #2

[ofthe Loans described in the first table belowinto the Loans described in the second table below]

 
| ** **                  | ** ** | ** **                  | ** ** | **Aggregate**     | ** ** | **Interest Period**   | ** **  |
|-----------------------------|------------|-----------------------------|------------|-------------------|------------|----------------------------|-------------|
| ** **                  | ** ** | ** **                  | ** ** | **Amount**        | ** ** | **if Loans are** | ** **  |
| **Date of Loans** | ** ** | **Type of Loans** | ** ** | **of Loans** | ** ** | **Eurodollar Loans**  | ** **  |
|                        |       | Base  Rate Loans            |       |              |       | One  Month                 |        |
|                        |       |                        |       |              |       |                       |        |
|                        |       | Eurodollar  Loans           |       |              |       | Two  Months                |        |
|                        |       |                        |       |              |       |                       |        |
|                        |       |                        |       |              |       | Three  Months              |        |
|                        |       |                        |       |              |       |                       |        |
| , 200                       |       | [Circle one of Above]       |       | $                 |       |                       | Six  Months |   |
|                        |       |                        |       |              |       |                       |        |
|                        |       |                        |       |              |       | [Circle one of above]      |        |
|                             |            |                             |            |                   |            |                            |             |  |

 
| ** **                  | ** ** | ** **                  | ** ** | **Aggregate**     | ** ** | **Interest Period**   | ** **  |
|-----------------------------|------------|-----------------------------|------------|-------------------|------------|----------------------------|-------------|
| ** **                  | ** ** | ** **                  | ** ** | **Amount**        | ** ** | **if Loans are** | ** **  |
| **Date of Loans** | ** ** | **Type of Loans** | ** ** | **of Loans** | ** ** | **Eurodollar Loans**  | ** **  |
|                        |       | Base  Rate Loans            |       |              |       | One  Month                 |        |
|                        |       |                        |       |              |       |                       |        |
|                        |       | Eurodollar  Loans           |       |              |       | Two  Months                |        |
|                        |       |                        |       |              |       |                       |        |
|                        |       |                        |       |              |       | Three  Months              |        |
|                        |       |                        |       |              |       |                       |        |
| , 200                       |       | [Circle one of Above]       |       | $                 |       |                       | Six  Months |   |
|                        |       |                        |       |              |       |                       |        |
|                        |       |                        |       |              |       | [Circle one of above]      |        |
|                             |            |                             |            |                   |            |                            |             |  |

 

E-10

----

 

EXHIBITB-2

 

LC REQUEST

 
|   | , 20     |
|--------|------------------------------|

 

KeyBankNational Association,as Administrative Agent for the Lenders partyto the Credit Agreement referred to below127 Public SquareCleveland, Ohio 44114Attention:  Yvette M. Dyson-Owens

 

Ladiesand Gentlemen:

 

The undersigned, The DaytonPower and Light Company, an Ohio corporation (the “Company”), refers tothe Credit Agreement, dated as of November 21, 2006 (as amended, modifiedor supplemented from time to time, the “Credit Agreement,” the termsdefined therein being used herein as therein defined), among the Company, asBorrower, the lending institutions from time to time party thereto (the “Lenders”),and KeyBank National Association, as Administrative Agent for such Lenders.

 

Pursuant to Section 2.4(b) ofthe Credit Agreement, the undersigned hereby requests that KeyBank NationalAssociation, as LC Issuer, issue a Letter of Credit on                          ,20     (the “Date of Issuance”) in the aggregateface amount of$                          ,for the account of the Borrower.

 

The beneficiary of therequested Letter of Credit will be                    ,and such Letter of Credit will be in support of                       and will have a stated termination date of                          .

 

The undersigned herebycertifies that the following statements are true on the date hereof, and willbe true on the Date of Issuance:

 

(A)          the representations and warranties of the Credit Partiescontained in the Credit Agreement (other than the representation and warrantycontained in Section 6.9 of the Credit Agreement) and the other CreditDocuments are and will be true and correct in all material respects, before andafter giving effect to the issuance of the Letter of Credit, as though made onsuch date, except to the extent that such representations and warrantiesexpressly relate to an earlier specified date, in which case suchrepresentations and warranties were true and correct in all material respectsas of the date when made; and

 

(B)           no Default or Event of Default has occurred and iscontinuing, or would result after giving effect to the issuance of the Letterof Credit requested hereby.

 

Copies of all documentationwith respect to the supported transaction are attached hereto.

 

 
|   |   | Very  truly yours,                  |
|--------|--------|-------------------------------------|
|   |   |                                |
|   |   | THE  DAYTON POWER AND LIGHT COMPANY |
|   |   |                                |
|   |   |                                |
|   |   | By:                                 |   |
|   |   |                                | Name: |
|   |   |                                | Title: |

 

E-11

----

 

EXHIBITC

 

COMPLIANCE CERTIFICATE

 

For Fiscal Quarter ended                                   

 

THE UNDERSIGNED HEREBY CERTIFIES THAT:

 

(1)           I am the duly elected                                              of THE DAYTON POWER AND LIGHT COMPANY, an Ohio corporation (the “Borrower”);

 

(2)           I am familiar with the termsof that certain Credit Agreement, dated as of November 21, 2006, among theundersigned, the Lenders, as defined in the Credit Agreement, and KeyBankNational Association, as Administrative Agent (as the same may from time totime be amended, restated, supplemented or otherwise modified, the “CreditAgreement”, the terms defined therein being used herein as thereindefined), and the terms of the other Credit Documents, and I have made, or havecaused to be made under my supervision, a review in reasonable detail of thetransactions and condition of the Borrower and its Subsidiaries during theaccounting period covered by the attached financial statements;

 

(3)           The review described inparagraph (2) above did not disclose, and I have no knowledge of, theexistence of any condition or event that constitutes or constituted a Defaultor Event of Default, at the end of the accounting period covered by theattached financial statements or as of the date of this Certificate;

 

(4)           The Borrower herebyrepresents that the representations and warranties made by the Borrowercontained in the Credit Agreement (other than the representation and warrantycontained in Section 6.9 of the Credit Agreement) and each other CreditDocument are true and correct in all material respects as though made on and asof the date hereof, except to the extent that such representations andwarranties expressly relate to an earlier specified date, in which case suchrepresentations and warranties were true and correct in all material respectsas of the date when made; and

 

(5)           Set forth on Attachment Ihereto are calculations of the covenants set forth in Sections 8.5 of theCredit Agreement, which calculations show compliance with the terms thereof.

 

IN WITNESS WHEREOF, I havesigned this certificate on                              ,20    .

 
|   | THE  DAYTON POWER AND LIGHT COMPANY |
|--------|-------------------------------------|
|   |                                |
|   |                                |
|   | By:                                 |   |
|   | Name:                               |   |
|   | Title:                              |   |

 

E-12

----

 

EXHIBITD

 

CLOSING CERTIFICATE

 

Pursuant to Section 5.1(j) of theCredit Agreement, dated as of November 21, 2006 (the “Credit Agreement”;all capitalized terms used herein have the meaning given to them in the CreditAgreement unless otherwise defined herein), among THE DAYTON POWER AND LIGHTCOMPANY, an Ohio corporation (the “Borrower”), the lending institutionsparty thereto (collectively, the “Lenders”) and KEYBANK NATIONALASSOCIATION, as administrative agent for the Lenders under the Credit Agreement(“Agent”), the undersigned, being the duly elected, qualified and acting                                          of the Borrower hereby certifies on behalf of the Borrower as follows:

 

1.             all conditions precedent setforth in Section 5.1 of the Credit Agreement have been satisfied;

 

2.             both before and after givingeffect to any Borrowings made on the date hereof and the application of theproceeds thereof, no Default or Event of Default has occurred or is continuing;and

 

3.             both before and after givingeffect to any Borrowings made on the date hereof and the application of theproceeds thereof, all representations and warranties of the Borrower containedin the Credit Agreement and in the other Credit Documents are true and correctin all material respects with the same effect as though such representationsand warranties had been made on and as of the date hereof, except that, as toany such representations and warranties that expressly relate to an earlierspecified date, such representations and warranties are only represented ashaving been true and correct in all material respects as of the date when made.

 

IN WITNESS WHEREOF, theundersigned has executed this Certificate on November 21, 2006.

 
|   | THE  DAYTON POWER AND LIGHT COMPANY |
|--------|-------------------------------------|
|   |                                |
|   |                                |
|   | By:                                 |   |
|   | Name:                               |   |
|   | Title:                              |   |

 

E-13

----

 

EXHIBITE

 

ASSIGNMENT AGREEMENT

 

DATE:                 

 

Reference is made to theCredit Agreement described in Item 2 of Annex I annexed hereto (as the same mayfrom time to time be amended, restated, supplemented or otherwise modified, the“Credit Agreement”).  Unlessdefined in Annex I attached hereto, terms defined in the Credit Agreement areused herein as therein defined.

 

                            (the “Assignor”) and                            (the “Assignee”) hereby agree as follows:

 

1.             The Assignor hereby sellsand assigns to the Assignee without recourse and without representation orwarranty (other than as expressly provided herein), and the Assignee herebypurchases and assumes from the Assignor, that interest in and to all of theAssignor’s rights and obligations under the Credit Agreement as of the datehereof that represents the percentage interest specified in Item 4 of Annex I(the “Assigned Share”) of all of Assignor’s outstanding rights andobligations under the Credit Agreement indicated in Item 4 of Annex I,including, without limitation, all rights and obligations with respect to theAssigned Share of the Assignor’s Commitment and of the Loans and the Notes heldby the Assignor.  After giving effect tosuch sale and assignment, the Assignee’s Commitment will be as set forth inItem 4 of Annex I.

 

2.             The Assignor (i) representsand warrants that it is duly authorized to enter into and perform the terms ofthis Assignment Agreement, that it is the legal and beneficial owner of theinterest being assigned by it hereunder and that such interest is free andclear of any liens or security interests; (ii) makes no representation orwarranty and assumes no responsibility with respect to any statements,warranties or representations made in or in connection with the CreditAgreement or the other Credit Documents or the execution, legality, validity,enforceability, genuineness, sufficiency or value of the Credit Agreement orthe other Credit Documents or any other instrument or document furnishedpursuant thereto; and (iii) makes no representation or warranty andassumes no responsibility with respect to the financial condition of theBorrower or any of its Subsidiaries or the performance or observance by theBorrower of any of its obligations under the Credit Agreement or the otherCredit Documents or any other instrument or document furnished pursuantthereto.

 

3.             The Assignee (i) representsand warrants that it is duly authorized to enter into and perform the terms ofthis Assignment Agreement; (ii) confirms that it has received a copy ofthe Credit Agreement and the other Credit Documents, together with copies ofthe financial statements referred to therein and such other documents and informationas it has deemed appropriate to make its own credit analysis and decision toenter into this Assignment Agreement; (iii) agrees that it will,independently and without reliance upon the Administrative Agent, the Assignoror any other Lender and based on such documents and information as it shalldeem appropriate at the time, continue to make its own credit decisions intaking or not taking action under the Credit Agreement; (iv) appoints andauthorizes each Agent to take such action as agent on its behalf and toexercise such powers under the Credit Agreement and the other Credit Documentsas are delegated to such Agent by the terms thereof, together with such powersas are reasonably incidental thereto; [and] (v) agrees that it willperform in accordance with their terms all of the obligations that by the termsof the Credit Agreement are required to be performed by it as 

 

E-14

----

 

aLender**[; and (vi) to the extent legally entitled todo so, attaches the forms described in Section 4.5(b)(ii) of theCredit Agreement]**(1).

 

4.             Following the execution ofthis Assignment Agreement by the Assignor and the Assignee, an executedoriginal hereof (together with all attachments) will be delivered to theAdministrative Agent. The effective date of this Assignment Agreement shall bethe date of execution hereof by the Assignor, the Assignee and the consenthereof by the Administrative Agent and the receipt by the Administrative Agentof the administrative fee referred to in Section 11.4(c) of theCredit Agreement, unless otherwise specified in Item 5 of Annex I hereto (the “SettlementDate”).

 

5.             Upon the delivery of a fullyexecuted original hereof to the Administrative Agent, as of the SettlementDate, (i) the Assignee shall be a party to the Credit Agreement and, tothe extent provided in this Assignment Agreement, shall have the rights andobligations of a Lender thereunder and under the other Credit Documents and (ii) theAssignor shall, to the extent provided in this Assignment Agreement, relinquishits rights and be released from its obligations under the Credit Agreement andthe other Credit Documents.

 

6.             It is agreed that upon theeffectiveness hereof, the Assignee shall be entitled to (x) all intereston the Assigned Share of the Loans at the rates specified in Item 6 of Annex I,and (y) all Facility Fees (if applicable) on the Assigned Share of theCommitment at the rate specified in Item 7 of Annex I, that, in each case,accrue on and after the Settlement Date, such interest and, if applicable,Facility Fees, to be paid by the Administrative Agent, upon receipt thereoffrom the Borrower, directly to the Assignee. It is further agreed that allpayments of principal made by the Borrower on the Assigned Share of the Loansthat occur on and after the Settlement Date will be paid directly by theAdministrative Agent to the Assignee. Upon the Settlement Date, the Assignee shall pay to the Assignor anamount specified by the Assignor in writing that represents the Assigned Shareof the principal amount of the respective Loans made by the Assignor pursuantto the Credit Agreement that are outstanding on the Settlement Date, net of anyclosing costs, and that are being assigned hereunder. The Assignor and theAssignee shall make all appropriate adjustments in payments under the CreditAgreement for periods prior to the Settlement Date directly between themselveson the Settlement Date.

 

7.             THIS ASSIGNMENT AGREEMENTSHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATEOF NEW YORK.

 

*  *  *

 

IN WITNESS WHEREOF, theparties hereto have caused this Assignment Agreement to be executed by theirrespective officers thereunto duly authorized, as of the date first abovewritten.

 

| [NAME OF ASSIGNOR], |   | [NAME OF ASSIGNEE], |
|---------------------|--------|---------------------|
| as Assignor         |   | as Assignee         |
|                |   |                |
|                |   |                |
| By:                 |   |                | By: |   |
| Name:               |   |                | Name: |   |
| Title:              |   |                | Title: |   |

 

----

(1)           If the Assignee is organizedunder the laws of a jurisdiction outside the United States.

 

E-15

----

 

[Consented to](2) and Accepted:

 
| KEYBANK  NATIONAL ASSOCIATION,      |   |
|-------------------------------------|--------|
| as Administrative Agent             |   |
|                                |   |
| By:                                 |   |   |
| Name:                               |   |   |
| Title:                              |   |   |
|                                |   |
| [Consented  to:](3)                 |   |
|                                |   |
| THE  DAYTON POWER AND LIGHT COMPANY |   |
|                                |   |
| By:                                 |   |   |
| Name:                               |   |   |
| Title:                              |   |   |

 

----

(2)           To be added only if theconsent of the Administrative Agent is required by the terms of the CreditAgreement.

(3)           To be added only if theconsent of the Borrower is required by the terms of the Credit Agreement.

 

E-16

----

 

ANNEX I

TO

ASSIGNMENT AND ASSUMPTION AGREEMENT

 

1.             The Borrower:

 

THE DAYTON POWER AND LIGHT COMPANY

 

2.             Name and Dateof Credit Agreement:

 

Credit Agreement, dated as of November 21,2006, among The Dayton Power and Light Company, the Lenders from time to timeparty thereto, and KeyBank National Association, as Administrative Agent.

 

3.             Date ofAssignment Agreement:

 

                    ,            

 

4.             Amounts (as ofdate of item #3 above):

 
| ** **                       | ** ** | **Commitment**                       | ** **                           | **Loans**                            | ** ** |
|----------------------------------|------------|--------------------------------------|--------------------------------------|--------------------------------------|------------|
| Aggregate Amount for all Lenders |       | $                                    |        |                                 | $          |        |   |
| Assigned Share                   |       |        | %                                    |        | %          |
| Amount of Assigned Share         |       | $                                    |        |                                 | $          |        |   |
| Amount Retained by Assignor      |       | $                                    |        |                                 | $          |        |   |

 

5.             SettlementDate:

 

                    ,            

 
| 6.             Rate of Interest |                                                                                                                                                   |
|---------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|
| to  the Assignee:                                                                           | As set forth in  Section 2.7 of the Credit Agreement (unless otherwise agreed to by the  Assignor and the Assignee).(4)                           |
|                                                                                        |                                                                                                                                                   |
| 7.             Fees:            | As set forth in  Section 3.1(a), (b) and (c) of the Credit Agreement (unless  otherwise agreed to by the Assignor and the Assignee).(5) |

 

----

(4)           The Borrower and the Administrative Agent shalldirect the entire amount of the interest to the Assignee at the rate set forthin Section 2.7 of the Credit Agreement, with the Assignor and Assigneeeffecting any agreed upon sharing of interest through payments by the Assigneeto the Assignor.

(5)           The Borrower and the Administrative Agent shalldirect the entire amount of the Fees payable to the Assignor to the Assigneepursuant to Sections 3.1(a), (b) and (c) of the Credit Agreement atthe respective rates set forth in the Credit Agreement, with the Assignor andthe Assignee effecting any agreed upon sharing of Facility Fees through paymentby the Assignee to the Assignor.

 

E-17

----

 

8.             Notices:

 

| **ASSIGNOR:**   | ** ** | **ASSIGNEE:**   |
|-----------------|------------|-----------------|
|            |       |            |
|            |       |            |
|            |       |            |
| Attention:      |       | Attention:      |
| Telephone  No.: |       | Telephone  No.: |
| Facsimile  No.: |       | Facsimile  No.: |

 

9.             PaymentInstructions:

 

| **ASSIGNOR:**   | ** ** | **ASSIGNEE:**   |
|-----------------|------------|-----------------|
|            |       |            |
|            |       |            |
|            |       |            |
| ABA  No.        |       | ABA  No.        |
| Account  No.:   |       | Account  No.:   |
| Reference:      |       | Reference:      |
| Attention:      |       | Attention:      |
| Telephone  No.: |       | Telephone  No.: |
| Facsimile  No.: |       | Facsimile  No.: |

 

E-18

----

 

EXHIBITF

 

(Legal Opinion of GeneralCounsel of the Borrower)

 

See attached.

 

E-19

----

 

TABLE OF CONTENTS

 
| ** ** | **Page**   |
|------------|------------|
| ** ** | ** ** |
| ** ** | ** ** |

 

----

 

CLOSING CERTIFICATE

 

Pursuant to Section 5.1(j) of theCredit Agreement, dated as of November 21, 2006 (the “Credit Agreement”;all capitalized terms used herein have the meaning given to them in the CreditAgreement unless otherwise defined herein), among THE DAYTON POWER AND LIGHTCOMPANY, an Ohio corporation (the “Borrower”), the lending institutionsparty thereto (collectively, the “Lenders”) and KEYBANK NATIONALASSOCIATION, as administrative agent for the Lenders under the Credit Agreement(“Agent”), the undersigned, being the duly elected, qualified and actingTreasurer of the Borrower hereby certifies on behalf of the Borrower asfollows:

 

1.             all conditions precedent set forth in Section 5.1of the Credit Agreement have been satisfied;

 

2.             both before and after giving effect to any Borrowingsmade on the date hereof and the application of the proceeds thereof, no Defaultor Event of Default has occurred or is continuing; and

 

3.             both before and after giving effect to any Borrowingsmade on the date hereof and the application of the proceeds thereof, allrepresentations and warranties of the Borrower contained in the CreditAgreement and in the other Credit Documents are true and correct in allmaterial respects with the same effect as though such representations andwarranties had been made on and as of the date hereof, except that, as to anysuch representations and warranties that expressly relate to an earlierspecified date, such representations and warranties are only represented ashaving been true and correct in all material respects as of the date when made.

 

IN WITNESS WHEREOF, theundersigned has executed this Certificate on November 21, 2006.

 
|   | THE  DAYTON POWER AND LIGHT COMPANY |
|--------|-------------------------------------|
|   |                                |
|   |                                |
|   | By:                                 |   |
|   | Name:   Joseph R. Boni III     |
|   | Title:     Treasurer |

 

----

 

November 21, 2006

 

KeyBankNational Association

asAdministrative Agent under the

CreditAgreement referred to below

 

-and-

 

Eachof the Lenders a party to

theCredit Agreement referred

tobelow

 

Ladiesand Gentlemen:

 

Iam the Vice President, General Counsel and Corporate Secretary of The DaytonPower and Light Company, an Ohio corporation (the “Company”).  In such capacity, I have reviewed the CreditAgreement dated as of November 21, 2006 (the “Credit Agreement”) among theCompany, the lending institutions party thereto (the “Lenders”) and KeyBankNational Association, as Administrative Agent.

 

Iam rendering this opinion to you, at the request of the Company, pursuant to Section 5.1(g) ofthe Credit Agreement.  Unless otherwisedefined herein, terms defined in the Credit Agreement are used herein astherein defined.

 

Inconnection with this opinion, I have examined the following:

 

(i)            theCredit Agreement;

 

(ii)           theseparate promissory notes issued on the date hereof (the “Notes” and, togetherwith the Credit Agreement, the “Loan Documents”) payable to the order ofcertain of the Lenders executed and delivered by the Company pursuant to Section 5.1(b) ofthe Credit Agreement; and

 

(iii)          suchcorporate records of the Company, such certificates of officers of the Companyand of governmental authorities, and such matters of law as I have considerednecessary under the circumstances.

 

----

 

Inrendering this opinion, I have assumed the genuineness of all signatures (otherthan the signatures of the officers of the Company executing the Loan Documentson behalf of the Company) and the authenticity of all documents submitted to meas originals and the conformity to the original of all documents submitted tome as certified or photostatic copies. Moreover, I have assumed the following:

 

A.            eachcertificate issued by any governmental authority is accurate, correct, completeand authentic;

 

B.            allnatural persons are legally competent and have sufficient legal capacity;

 

C.            eachof the parties to the Loan Documents (other than the Company) has the requisitepower and authority to execute, deliver and perform each of the Loan Documentsto which it is a party, and each of the Loan Documents has been dulyauthorized, executed and delivered by each of the parties thereto (other thanthe Company);

 

D.            each of the LoanDocuments constitutes a legal, valid and binding obligation of each of theparties thereto (other than the Company), enforceable against such party inaccordance with its terms;

 

E.             anyrequired consent, approval or authorization of, notice or declaration to,license from, or filing or registration with any governmental authority whichany party to the Loan Documents (other than the Company) is required to obtain,give or make has been duly obtained, given or made, as appropriate, and anyapplicable notice or appeal period has passed;

 

F.             exceptas set forth in the Loan Documents and the other agreements, documents andinstruments executed and delivered in connection therewith, there is noagreement or understanding (written or oral) between or among any of theparties to the Loan Documents, and there is no usage of trade or course ofprior dealing between or among such parties, which would, in either case,define, supplement, modify or qualify the terms of any of the Loan Documents;

 

G.            theconduct of the parties to the Loan Documents has complied with any requirementof good faith, fair dealing and conscionability; such parties will performtheir obligations thereunder 

 

2

----

 

reasonably, in good faith and with fair dealing; and such parties willact reasonably, in good faith and with fair dealing in taking action,exercising discretion or making determinations thereunder; and

 

H.            therehas not been any mutual mistake of fact, fraud, duress or undue influence inconnection with the execution and delivery of the Loan Documents.

 

Inaddition, I have assumed the accuracy and correctness of (i) allstatements of fact contained in certificates of officers of the Company, (ii) allstatements of fact contained in certificates of governmental authorities and (iii) allstatements of fact and factual representations and warranties contained in theLoan Documents.  I have not reviewed the docketsor records of any court or other governmental authority.  Nothing contrary to the facts contained insuch certificates, statements or representations and warranties, however, hascome to my attention. Whenever this opinion with respect to the existence orabsence of facts is stated to be based upon my knowledge or awareness, it isintended to signify that no information has come to my attention that wouldgive me actual knowledge of the existence or absence of such facts.  However, I have not undertaken anyindependent investigation to determine the existence or absence of such facts,and no inference as to my knowledge of the existence or absence of such factsshould be drawn from my participation in the transactions contemplated by theCredit Agreement.

 

Myopinion is limited solely to matters governed by the laws of the State of Ohioand the federal laws of the United States.

 

Basedupon, and subject to, the foregoing, it is my opinion that:

 

(a)           The Company is acorporation duly incorporated, validly existing and in good standing under thelaws of the State of Ohio with the requisite corporate power and authority toexecute and deliver, and to perform its obligations under, the Loan Documentsand to conduct the business in which it is now engaged.

 

(b)           The execution, delivery andperformance by the Company of the Loan Documents has been duly authorized byall necessary corporate action on its part and does not: (i) violate orcontravene the Articles of Incorporation or Regulations of the Company; (ii) violateor contravene any applicable law, rule or regulation of the State of Ohioor any applicable federal law, rule or regulation or any order, writ,judgment, injunction, decree or award known to me which is binding on theCompany or any of its Subsidiaries; or (iii) violate or contravene anymaterial indenture, instrument or 

 

3

----

 

agreementto which the Company or any of its Subsidiaries is a party or is subject or bywhich the Company or any of its Subsidiaries or any of their properties isbound or conflict with or constitute a default under any such indenture,instrument or agreement or result in, or require, the creation or imposition ofany Lien in or on any property of the Company or any of its Subsidiariespursuant to any such indenture, instrument or agreement.

 

(c)           Each of the Loan Documents has beenduly executed and delivered by the Company and constitutes under the laws ofthe State of Ohio and the federal laws of the United States a legal, valid andbinding obligation of the Company, enforceable in accordance with its terms.

 

(d)           No authorizationfrom, approval or consent of, notice or declaration to, license from, orregistration or filing with, any governmental authority or regulatory body ofthe State of Ohio or any federal governmental authority or regulatory body isrequired on the part of the Company in connection with the execution anddelivery by the Company of the Loan Documents or the performance by the Companyof its obligations thereunder or the legality, validity, binding effect orenforceability of any of the Loan Documents, other than authorizations andapprovals that have been obtained and are in full force and effect.

 

(e)           Neither the Company nor anySubsidiary is a “holding company” within the meaning of the Public UtilityHolding Company Act of 2005.

 

(f)            Other than as set forth in Schedule6.5 to the Credit Agreement, I am not aware of any action, suit or proceedingbefore or by any court, any other governmental authority or any arbitrationpanel pending or threatened against or affecting the Company or any of itsSubsidiaries which would have a Material Adverse Effect or which seeks torestrain or enjoin, or questions the execution, delivery or performance of, theLoan Documents.

 

(g)           The borrowings by the Borrower underthe Credit Agreement and the application of the proceeds thereof as provided inthe Credit Agreement will not violate Regulation T, U or X of the Board ofGovernors of the Federal Reserve System.

 

(h)           The Borrower is not required toregister as an “investment company” (under, and as defined in, the InvestmentCompany Act of 1940, as amended (the “1940 Act”)) and is not a companycontrolled by a company required to register as such under the 1940 Act.

 

4

----

 

(i)            The Borrower is regulated as apublic utility by the Federal Energy Regulatory Commission and by the PublicUtilities Commission of Ohio.

 

Thisopinion is subject to the following qualifications and limitations:

 

(1)           Theenforceability of the Loan Documents may be limited by applicable bankruptcy,insolvency, fraudulent conveyance or transfer, reorganization, moratorium,rearrangement, liquidation, conservatorship or other laws affecting the rightsof creditors generally.

 

(2)           Theenforceability of the Loan Documents and the availability of specificperformance, injunctive relief and other forms of equitable relief are subjectto general principles of equity (regardless of whether considered in aproceeding in equity or at law), commercial reasonableness, public policy andconscionability.

 

(3)           No opinion isexpressed with respect to the enforceability under the laws of the State ofOhio of any provision of the Loan Documents which purports to require payment orreimbursement of attorneys’ fees or litigation expenses of another party.

 

(4)           No opinion isexpressed with respect to the title (or the quality or character thereof) toany property or the existence or absence of any lien or encumbrance thereon.

 

(5)           No opinion isexpressed with respect to any provision of the Loan Documents that purports to:

 

(i)            release,exculpate, hold harmless, exempt a party from, require indemnification orcontribution or prohibit future business activity to the extent such release,exculpation, hold harmless, exemption, indemnity, contribution or prohibitionis contrary to public policy;

 

(ii)           providethe right to exercise remedies upon the occurrence of a non-material breach ofthe Loan Documents (including material breaches of non-material provisionsthereof);

 

5

----

 

(iii)          define,waive or set standards for good faith, reasonableness, commercialreasonableness, fair dealing or diligence;

 

(iv)          governthe election of remedies or provide that remedies are cumulative; or

 

(v)           requirethe payment or reimbursement of any fee, cost or expense that may be deemed tobe unreasonable in nature or amount.

 

(6)           No opinion isexpressed with respect to:

 

(i)            compliance with any registration,filing, notification, anti-fraud or other provision of any federal or statesecurities law, rule or regulation;

 

(ii)           the enforceability of (x) provisionswhich purport to establish evidentiary standards; (y) provisions relatingto waiver of rights or remedies (or the delay or omission of enforcementthereof), disclaimers, liability limitations, releases of legal or equitablerights (including the right to a jury trial), submission to the jurisdictionand venue of any court, liquidated damages (including provisions which mayoperate as a penalty) or the creation of rights and remedies not permittedunder applicable law or contrary to public policy; or (z) provisions whichpurport to prohibit, restrict or limit the ability of a person to transferrights or interests in property;

 

(iii)          the enforceability of any provisionthat purports to preclude amendment or modification of the Loan Documentsorally or through conduct, custom or course of performance, action or dealing;

 

(iv)          matters relating to employee benefitlaws and regulations (including the Employee Retirement Income Security Act of1974, as amended) or federal, state or local tax laws and regulations;

 

(v)           any provision of the Loan Documentswhich requires the payment of interest on interest; or

 

6

----

 

(vi)          federal or state antitrust, unfaircompetition or similar laws and regulations.

 

No opinion may be inferred or implied beyond the matters expresslystated herein.  The opinions that areexpressed herein are solely for your benefit in connection with thetransactions contemplated by the Credit Agreement and may not be relied upon inany manner for any other purpose or by any other person (other than yourpermitted assigns or participants under the Credit Agreement).  This opinion is as of its date, and Idisclaim any undertaking or obligation to advise you of changes that hereaftermay be brought to my attention.

 

Very truly yours,

 

 

7

----

 

**THE DAYTON POWER AND LIGHT COMPANY**

 

**CORPORATE SECRETARY’S CERTIFICATE**

 

 

Pursuant to Sections 5.1(d),(e) and (f) of the Credit Agreement, dated as of November 21,2006 (the “Credit Agreement”; all capitalized terms used herein have themeaning given to them in the Credit Agreement unless otherwise defined herein),among THE DAYTON POWER AND LIGHT COMPANY, an Ohio corporation (the “Borrower”),the lending institutions party thereto (collectively, the “Lenders”) andKEYBANK NATIONAL ASSOCIATION, as administrative agent for the Lenders under theCredit Agreement (“Agent”), I, Miggie E. Cramblit, the duly elected andqualified Vice President, General Counsel and Corporate Secretary of theBorrower, do hereby certify as follows:

 

1.             Attached hereto as Exhibit A-1 is a true, correctand complete copy of a certain resolution adopted by the Board of Directors ofthe Borrower at a meeting duly called and held on November 16, 2006, atwhich a quorum was present and acting throughout, that grant the authority forofficers to approve the Credit Documents, and such resolution has notthereafter been modified or rescinded and is in full force and effect on thedate hereof.  Attached as Exhibit A-2hereto are true, correct and complete copies of all of the other documentsevidencing other necessary corporate action, governmental approvals or otherconsents or approvals with respect to the execution, delivery and performanceby the Borrower of the Credit Documents.

 

2.             The person named below is on the date hereof, and hasbeen at all times pertinent hereto, a duly elected, qualified and actingofficer of the Borrower, holding the office set forth opposite his name, andthe signature appearing opposite the name of such person is his genuinesignature.  Furthermore, said officershall be considered to be an Authorized Officer who is authorized to sign theCredit Documents and any other documents to which the Borrower is a party.  You may rely on the authority granted in thiscertificate until notified in writing by the Borrower of any change.

 
| **Name**            | ** ** | **Title** | ** ** | **Signature** |
|---------------------|------------|-----------|------------|---------------|
|                |       |      |       |          |
| Joseph  R. Boni III |       | Treasurer |       |          |

 

 

3.             Attached hereto as Exhibit Bis a true, correct and complete original copy of the Amended Articles ofIncorporation of the Borrower and all amendments thereto, certified by the OhioSecretary of State.  There has been noamendment to the Amended Articles of Incorporation of the Borrower since thedate of the Ohio Secretary of State’s certificate attached hereto as Exhibit B,and the Amended Articles of Incorporation of the Borrower are in full force andeffect as of the date hereof.

 

----

 

4.             Attached hereto as Exhibit C is a true, correct andcomplete copy of the Regulations of the Borrower, which have not been modifiedsince April 9, 1981, and which are in full force and effect as of the datehereof.

 

5.             Attached hereto as Exhibit D is a true, correct andcomplete copy of a Good Standing Certificate from the Ohio Secretary of Statedated as of November     , 2006, certifying the goodstanding of the Borrower.

 

IN WITNESS WHEREOF, theundersigned has signed this certificate as of this 21st day ofNovember, 2006.

 

 
|   |                                                     |
|--------|----------------------------------------------------------|
|   | Miggie E. Cramblit                                       |
|   | Vice President, General  Counsel and Corporate Secretary |

 

The person named below ison the date hereof, and has been at all times pertinent hereto, a duly elected,qualified and acting officer of the Borrower, holding the office or offices setforth opposite her name and the signature appearing opposite the name of suchperson is her genuine signature. Furthermore, said officer shall be considered to be an Authorized Officerwho is authorized to sign the Credit Documents to which the Borrower is aparty.  You may rely on the authoritygranted in this certificate until notified in writing by the Borrower of anychange.

 
| **Name**           | ** ** | **Title**                                                | ** ** | **Signature** |
|--------------------|------------|----------------------------------------------------------|------------|---------------|
|               |       |                                                     |       |          |
| Miggie E. Cramblit |       | Vice President, General  Counsel and Corporate Secretary |       |          |

 

 
|   |               |
|--------|--------------------|
|   | Joseph R. Boni III |
|   | Treasurer          |

 

----

 

**Exhibit A-1**

 

----

 

**Exhibit A-2**

 

----

 

**Exhibit B**

 

----

 

**Exhibit C**

 

----

 

**Exhibit D**

 

----

 

# **SCHEDULE 6.1**

 

## **SUBSIDIARIES**

 

TheBorrower holds shares of interest in the following Subsidiaries, all of whichare wholly-owned:

 

(a)                                  DPL RTCManagement Company, an Ohio corporation that owned and managed regulatorytransition fees.  It currently does no business.

 

(b)                                 DPL GTCManagement Company, an Ohio corporation that owned and managed customertransition fees.  It currently does nobusiness.

 

(c)                                  DPL FinanceCompany, Inc., a Delaware corporation that provides financingopportunities among affiliated companies.

 

(d)                                 DPL EM, LLC, aDelaware limited liability company that owns and manages emission credits.

 

----

 

**SCHEDULE 6.5**

 

**PENDING OR THREATENEDLITIGATION, ARBITRATIONS, GOVERNMENTALINVESTIGATIONS, PROCEEDINGS OR INQUIRIES**

 
| **A.**        |                                                   |
|---------------|--------------------------------------------------------|
|          |                                                   |
| Name:         | Sierra  Club v. The Dayton Power and Light Company     |
|          | (“DP&L”)                                 |
|          |                                                   |
| Court:        | U.S.  District Court for the Southern District of Ohio |
|          |                                                   |
| Case  No.:    | 04-CV-905                                              |
|          |                                                   |
| Filing  Date: | September 21,  2004                               |

 

Thisis a civil action which, as amended, covers alleged violations of the Clean AirAct at the Stuart Electric Generating Station. Discovery is pending, and DP&L and its partners intend to vigorouslydefend this matter.

 
| **B.**           |                                                               |
|------------------|--------------------------------------------------------------------|
|             |                                                               |
| Name:            | South  Dayton Landfill                                             |
|             |                                                               |
| Agency:          | United  States Environmental Protection Agency (“USEPA”) |
|             |                                                               |
| Issue:           | Superfund  Site                                                    |
|             |                                                               |
| Alleged Damages: | Estimated  clean-up cost is unknown.                               |

 

USEPAalleges DP&L is a potentially responsible party among numerous others andmay share in the cost of the clean-up activities.  DP&L has not joined the PRP group formedfor this site because available information does not demonstrate that DP&Lcontributed hazardous waste to this site.

 
| **C.**        |                                                                     |
|---------------|--------------------------------------------------------------------------|
|          |                                                                     |
| Matter:       | Investigation  by Public Utilities Commission of Ohio (“PUCO”) |
|          |                                                                     |
| Agency:       | PUCO                                                                     |
|          |                                                                     |
| Respondent:   | DP&L  and other public utilities                                     |
|          |                                                                     |
| Filing  Date: | March 20,  2003                                                     |

 

----

 
| Issue: | Desirability,  feasibility and timing for declaring retail ancillary, metering, billing  and/or collection services are competitive retail electric services in Ohio  that consumers may obtain from any supplier |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

DP&Lhas filed its comments with this case. The PUCO has not issued findings or orders to date.

 
| **D.**           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| Name:            | DP&L,  DPL Inc. and MVE, Inc. v. Forster, et al.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| Court:           | Montgomery  County Court of Common Pleas                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| Case  No.        | 04-CV-5657                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| Filing  Date:    | August 24,  2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| Issue:           | DP&L,  its corporate and affiliate filed this action in the Montgomery County Court  of Common Pleas, Dayton, Ohio, asserting legal claims against  Messrs. Forster and Koziar and Ms. Muhlenkamp relating to the  termination of the Valley Partners Agreements, challenging the validity of  the purported amendments to the deferred compensation plans and to the  employment and consulting agreements with Messrs. Forster and Koziar and  Ms. Muhlenkamp, and with the propriety of the distributions from the  plans to these defendants. Discovery is pending. Trial is scheduled to  commence April 30, 2007. |
|             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| **E.**           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| Matter:          | Pending  informal inquiries by Securities and Exchange Commission                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|             | Pending  investigation by U.S. Attorney’s Office for Southern District of Ohio assisted  by FBI                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| Issue:           | The  recent resignation and/or retirement of selected executive officers and  matters raised in the internal memorandum of DP&L’s previous controller  to DPL Inc.’s Board of Directors including, but not limited to, allegations  concerning disclosure and reporting matters, executive compensation,  destruction of DP&L’s property and violation of fiduciary  responsibilities                                                                                                                                                                                                                                         |
|             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| Amount  at risk: | Unknown                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |

 

2

----

 

DPLInc. and DP&L are currently subject to investigations/inquiries by the SECand the FBI on behalf of the U.S. Attorney’s Office and have pledged theircomplete cooperation.

 
| **F.**            |                                 |
|-------------------|--------------------------------------|
|              |                                 |
| Name:             | Tremont  City Landfill               |
|              |                                 |
| Agency:           | USEPA                                |
|              |                                 |
| Issue:            | Superfund  Site                      |
|              |                                 |
| Alleged  Damages: | Estimated  clean-up cost is unknown. |

 

USEPAalleges DP&L is a potentially responsible party among numerous others andmay share in the cost of the clean up activities.  DP&L has not joined the PRP group formedfor this site because available information does not demonstrate that DP&Lcontributed hazardous waste to this site.

 

**G.**

 
| Name:         | Forster  et al. v. AlpInvest/Lexington 2005, LLC, et al.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|---------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| Court:        | New  York state court                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| Case  No.:    | 05/600926                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| Filing  Date: | March 15,  2005                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| Issue:        | Mr. Forster  and Ms. Muhlenkamp filed a lawsuit in New York state court against the  purchasers of the DPL private equity portfolio and against DP&L’s outside  counsel regarding purported entitlements in connection with the purchase of  the portfolio. While DP&L is not a defendant in this case, we have  acknowledged indemnity obligations. DP&L, DPL Inc. and MVE, Inc.  jointly filed a Motion for Preliminary Injunction on March 28, 2005 in  the Ohio litigation (See F. above) since there is substantial identity of  issues between these cases. The trial court has stayed all activity on this  case until the conclusion of the analogous Ohio litigation (See D. above). |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| **H.**        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| Name:         | Application  for Rate Stabilization Surcharge                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| Agency:       | PUCO                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |

 

3

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| Date:   | April 4,  2005                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Issue:  | Pursuant  to its PUCO-approved stipulation to extend the market development period  through December 31, 2005, DP&L was authorized to seek a rate  stabilization surcharge for an amount not to exceed 11% of generation rates  to reflect increased costs associated with fuel, environmental compliance,  taxes, regulatory charges and security measures. On April 4, 2005,  DP&L filed its rate stabilization surcharge request. If approved as  filed, the surcharge would produce approximately $76 million in additional  revenues in 2006. This rate was approved by the PUCO in late 2005 and is  currently under appeal to the Ohio Supreme Court. |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| **I.**  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Name    | Ohio  Franchise Tax                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Agency: | Ohio  Department of Taxation; Board of Tax Appeals                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Date:   | February 13,  2006                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Issue:  | Ohio  Department of Tax has assessed DP&L for tax years 2004 and audit  adjustment of $90.8 million. DP&L has petitions for reassessment and a  request for corrected assessments. On October 12, 2006 DP&L signed a  memorandum of understanding that limits our potential exposure after all  judicial proceedings are completed to a maximum of $50.7 million. DP&L  plans to vigorously defend this matter.                                                                                                                                                                                                                                           |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| **J.**  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Name:   | Fair  Labor Standards Act Claim                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Agency: | Department  of Labor                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Date:   | September 2006                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Issue:  | DP&L  became aware of an unasserted claim regarding the calculation of overtime  rates for our unionized workforce. DP&L will vigorously defend any claim  made if and when asserted.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |

 

4

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**SCHEDULE 8.3**

 

**LIENS**

 

None.

 

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**SCHEDULE 8.4**

 

**EXISTING INVESTMENTS**

 

**Deposits and Deposit Accounts**

 

Lease, utility or other similar deposits made in theordinary course of business.  Depositsand deposit accounts made with financial institutions in the ordinary course ofbusiness.

** **

**Employee Advances**

 

Payroll, travel and similar advances to cover mattersexpected at the time of such advances ultimately to be treated as expenses foraccounting purposes and that are made in the ordinary course of business.

 

Various loans and advances to employees for officeequipment, tuition, and moving expenses made in the ordinary course ofbusiness.

 

## **Equityin certain non-Subsidiaries**

 

4.9% equity ownershipinterest in an electric generation company. As of September 30, 2006, DP&L could be responsible for therepayment of 4.9%, or $21.8 million, of a $445 million debt obligation ofsuch entity that matures in 2026.

 

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