Exhibit 10.1


 


EXECUTION COPY


 


FINANCING AGREEMENT


 


 


Union Bank of California, N.A.


 


(as Agent and Lender)


 


 


The Other Lenders from Time to
Time Party Hereto


 


And


 


Aquila, Inc.


 


(as Borrower)


 


Dated as of October 22, 2004


 





















 


TABLE
OF CONTENTS


 


	
  SECTION 1  Definitions.

  	
   

  
	
  SECTION 2  Conditions Precedent.

  	
   

  
	
  SECTION 3  Revolving Loans.

  	
   

  
	
  SECTION 4  Periodic Reporting.

  	
   

  
	
  SECTION
  5  Applicable Laws

  	
   

  
	
  SECTION 6  Collateral.

  	
   

  
	
  SECTION
  7  Representations, Warranties and
  Covenants.

  	
   

  
	
  SECTION
  8  Interest, Fees and Expenses.

  	
   

  
	
  SECTION
  9  [Reserved].

  	
   

  
	
  SECTION
  10  Events of Default and Remedies.

  	
   

  
	
  SECTION
  11  Termination

  	
   

  
	
  SECTION
  12  Miscellaneous.

  	
   

  
	
  SECTION
  13  Agreement Between the Lenders.

  	
   

  
	
  SECTION
  14  Agency.

  	
   

  



 


EXHIBITS AND SCHEDULES


 


	
  Schedule
  I

  	
  Cash
  Equivalents

  
	
   

  	
   

  
	
  Exhibit
  A

  	
  Form
  of Revolving Loan Promissory Note

  
	
  Exhibit
  B

  	
  Form
  of Monthly Report

  
	
  Exhibit
  C

  	
  Form
  of Assignment and Transfer Agreement

  
	
  Exhibit
  D

  	
  Estimated
  percentage of funds held in the Blocked Accounts that do not relate to the
  Receivables, together with the related true-up provisions

  
	
  Exhibit
  E

  	
  Form
  of Power of Attorney

  



 





















 


FINANCING
AGREEMENT, dated as of October 22, 2004 (this “Agreement”) among
Aquila, Inc., a Delaware corporation (the “Company”), Union Bank of California, N.A. (“Union Bank”) acting in its capacity as agent for the lenders (in such capacity,
the “Agent”) and in its capacity as Lender (as defined below), and the other
lenders that from time to time become party hereto (each, a “Lender” and
collectively, the “Lenders”).


 


PRELIMINARY STATEMENTS


 


1.     The
Company has requested that the Lenders extend credit and other financial
accommodations on a secured basis to the Company in the form of revolving
credit advances.


 


2.     In
consideration of the foregoing and the mutual covenants herein contained and
for other good and valuable consideration the receipt and sufficiency of which
are hereby acknowledged, the parties hereto, intending to be legally bound,
hereby agree as follows:


 


SECTION
1.  Definitions.


 


1.1           Defined
Terms.  As used in this Agreement,
the following terms have the following meanings:


 


Additional Commitment has
the meaning set forth in Section 3.10.


 


Adverse Claim means a lien,
security interest, charge, or encumbrance, or other right or claim of any
Person.


 


Agent has the meaning set
forth in the preamble to this Agreement.


 


Agreement has the meaning set
forth in the preamble to this Agreement.


 


Applicable Reserve means the
sum of (i) any Operating Reserve and (ii) any Dilution Reserve.


 


Approved Fund means any fund
that is advised or managed by (a) a Lender, (b) an affiliate of a Lender or (c)
an entity or affiliate of an entity that administers or manages a Lender.


 


Assignment and Transfer Agreement
means the Assignment and Transfer Agreement in the form of Exhibit C hereto.


 





















 


Availability means at any
time the amount by which: (a) the lesser of (i) the Borrowing Base and (ii) the
Revolving Line of Credit exceeds (b) the outstanding aggregate amount of all
Obligations, including all Obligations with respect to Revolving Loans.


 


Base Rate means, for any day, a rate per annum
(rounded upwards, if necessary, to the nearest one one-hundredth of one percent
(0.01%)) equal to the greater of (a) the Prime Rate in effect on such day
and (b) the sum of (i) the Federal Funds Rate in effect for such day
plus (ii) one-half of one percent (0.50%). 
If for any reason the Agent shall have determined (which determination
shall be conclusive absent manifest error) that it is unable to ascertain the
Federal Funds Rate for any reason, the Base Rate shall be determined without
regard to clause (b) of the first sentence of this definition until the
circumstances giving rise to such inability no longer exist.


 


Base Rate Loans means any
loans or advances pursuant to this Agreement made or maintained at a rate of
interest based upon the Base Rate.


 


Blocked Account means a
deposit account into which the proceeds of Receivables are deposited and which
is subject to a Blocked Account Agreement pursuant to Section 2.1(r) or Section
3.4(b).


 


Blocked Account Agreement
means (i) the Blocked Account Agreement dated as of October 22, 2004 among
the Company, the Agent and The Northern Trust Company, (ii) the Blocked Account
Agreement dated as of October 22, 2004 among the Company, the Agent and
Commerce Bank, N.A., (iii) the Blocked Account Agreement dated as of
October 22, 2004 among the Company, the Agent and UMB Bank N.A., and (iv)
each other agreement in form and substance reasonably satisfactory to the Agent
entered into after the Closing Date among the Company, the Agent and any new
Blocked Account Bank.


 


Blocked Account Bank means
any depository bank or other financial institution at which a Blocked Account
is maintained.


 


Borrowing Base means as of
any date of determination an amount equal to (i) 80% of the Net Receivables
Pool Balance as of the date of the most recent Monthly Report, less (ii)
the Applicable Reserve as of such date of the determination, less (iii)
the aggregate amount of the portion of the Outstanding Balance of each Eligible
Receivable relating to sales or use taxes.


 


Business Day means any day
(other than a Saturday or Sunday) on which (i) banks are not authorized or
required to close in Kansas City, Missouri, Los Angeles, California or New
York, New York and (ii) if this definition of “Business Day” is utilized 


 


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in connection with LIBOR or LIBOR Loans, dealings in
United States dollar deposits are carried out in the London inter-bank market.


 


Capital Stock
means any and all shares, interests, participations or other equivalents
(however designated) of capital stock of a corporation, any and all equivalent
ownership interests in a Person (other than a corporation) and any and all
warrants or options to purchase any of the foregoing.


 


Cash Equivalents means
the cash equivalents specified on Schedule I.


 


Closing Date means the date
that this Agreement has been duly executed by the parties hereto and delivered
to the Agent and the conditions precedent set forth in Section 2.1 have been
satisfied or, if applicable, waived.


 


Closing Fee has the meaning set
forth in the Fee Letter.


 


Collateral means,
collectively, all present and future Receivables, Related Security and
Collections, in each case whether now owned by or owing to, or hereafter
acquired by or arising in favor of the Company and, without duplication, all
proceeds of the foregoing.


 


Collections means, with
respect to any Receivable, all cash collections and other cash proceeds of such
Receivable, including all Finance Charges or other related amounts accruing in
respect thereof and all cash proceeds of Related Security with respect to such
Receivable.


 


Commitment means each Lender’s
commitment in accordance with this Agreement to make Revolving Loans, in the
amount of its pro rata share of the Revolving Line of Credit set forth opposite
such Lender’s signature on the signature page to this Agreement, including any
Additional Commitment, plus or minus amounts assigned to or by such Lender in
any Assignment and Transfer Agreement, as such Commitment may be reduced or
adjusted from time to time in accordance with this Agreement.


 


Commitment Termination Date
means the earliest of (i) April 22, 2005 and (ii) the date of termination
of the Revolving Line of Credit pursuant to Section 3.3 or Section 10.2.


 


Company has the meaning set
forth in the preamble to this Agreement.


 


Compliance Certificate has the meaning set forth in
Section 7.6(k).


 


Consolidated refers to the consolidation of accounts
in accordance with GAAP.


 


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Consolidated Assets means on any date of
determination, all amounts that are or should, in accordance with GAAP, be
included under assets on a Consolidated balance sheet of any Person and its
Subsidiaries determined in accordance with GAAP.


 


Consolidated Interest Expense means, with reference
to any period, interest on all Debt of the Company and its Subsidiaries, as
determined on a consolidated basis in accordance with GAAP (except excluding
amortization of Debt issuance costs).


 


Consolidated Net Income means, with reference to any
period, the net income (or loss) of the Company and its Subsidiaries for such
period determined on a consolidated basis in accordance with GAAP (except
excluding extraordinary gains and losses).


 


Consolidated Net Worth means, as of any Covenant
Compliance Date, the amount of the common equity of the Company less
accumulated other comprehensive gains (or, if applicable, plus
accumulated other comprehensive losses) as of such day, determined on a
consolidated basis in accordance with GAAP.


 


Contract means the invoices, sales or supply
agreements, tariffs, rate schedules, or other writings that generate or
otherwise evidence Receivables arising from the sale of electric energy or
natural gas by the Company’s regulated distribution and retail operations in,
or Merchandise Receivables arising with respect to the Company’s operations in,
the States of Colorado, Kansas, Michigan, Missouri and Nebraska.


 


Covenant Compliance Date means the last date of each
Fiscal Quarter.


 


Credit Agreements means
collectively (i) the U.S. $110,000,000 Revolving Credit Agreement
dated as of September 20, 2004, among the Company, the lenders party thereto
and Credit Suisse First Boston, acting through its Cayman Islands Branch, as
administrative agent and (ii) the U.S. $220,000,000 Credit Agreement dated as
of September 20, 2004, among the Company, the lenders party thereto and Credit
Suisse First Boston, acting through its Cayman Islands Branch, as
administrative agent.


 


Credit and Collection Policy
means those credit and collection policies and practices in effect on the
Closing Date relating to Contracts and Receivables, as modified from time to
time in a manner not prohibited by the terms of this Agreement.


 


Cross-Aged Receivable means
any Receivable of an Obligor if at least 50% of the aggregate Outstanding
Balances of all Receivables of such Obligor are attributable to Defaulted
Receivables.


 


Debt means, with respect to any Person, the aggregate
principal amount of all obligations that, in accordance with GAAP consistently
applied and without duplication, 


 


4





















 


would be classified as debt on its Consolidated
balance sheet; provided, however, that with respect to the Company, “Debt”
excludes obligations to the extent that such obligations are cash
collateralized.


 


Default Notice means a “Default
Notice” under and as defined in a Blocked Account Agreement with a Blocked
Account Bank.


 


Default Rate of Interest
means a rate of interest per annum on any Obligations hereunder, equal to the
sum of: (a) two percent (2%) and (b) the applicable increment over the Base
Rate (as set forth in Section 8.1 hereof) plus the Base Rate, or the
applicable increment over LIBOR (as set forth in Section 8.8 hereof) plus
LIBOR, which the Agent shall be entitled to charge the Company on all
Obligations due to the Agent on behalf of the Lenders by the Company, as
further set forth in Section 10.2 of this Agreement.


 


Default Ratio means the ratio
(expressed as a percentage) computed as of the last day of each calendar month
based on the Monthly Report for such month of (i) the aggregate Outstanding
Balance of all Receivables that were Defaulted Receivables on such date or
would have been Defaulted Receivables on such date had they not been written
off the books of the Company during such month, over (ii) the aggregate
Outstanding Balance of all Receivables on such date.


 


Defaulted Receivable means a
Receivable: (i) as to which any payment, or part thereof, remains unpaid for 61
or more days from the original invoice date for such payment, (ii) as to which
the Obligor thereof has taken any action, or suffered any event to occur, of
the type described in Section 10.1(f), or (iii) which, consistent with the
Credit and Collection Policy, would be written off the Company’s books as
uncollectible.


 


Deposit Reserve means the
aggregate amount of all Deposits.


 


Deposits mean Related
Security provided by Obligors to the Company in the form of cash or immediately
available funds.


 


Dilution Reserve means, for
any date of determination, an amount equal to the product of (a) the
Outstanding Balance of all Receivables as of such date of determination, and
(b) the percentage representing the excess, if any (otherwise zero) of (i) the
percentage equivalent of a fraction, the numerator of which is the Three Month
Rolling Average Dilutions and the denominator of which is the Three Month
Average NRPB, over (ii) 5%.


 


Domestic Utility Business means the regulated
electric and natural gas assets and businesses owned and operated by the
Company in the United States.


 


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EBITDA means, for any period, the total of the
following calculated without duplication: (a) Consolidated Net Income (or loss)
of the Domestic Utility Business and the Telecommunications Business for such
period plus (b)(i) Consolidated Interest Expense, (ii) Federal, state,
county and local income and franchise Taxes, and (iii) depreciation,
amortization, unallocated corporate costs and other non-cash charges, in each
case, of such Domestic Utility Business and the Telecommunications Business for
such period, but only to the extent deducted in the determination of
Consolidated Net Income of the Domestic Utility Business and the
Telecommunications Business for such period less (c) all expenses of the
Company not related to the Domestic Utility Business, the Telecommunications
Business or the business conducted by Aquila Merchant Services, Inc. and its
Subsidiaries (except excluding (x) extraordinary gains and losses, (y)
$8,500,000 of payments in connection with the recombination of the Company and
Aquila Merchant Services, Inc. and (z) fees and expenses related to the
Amendment No. 1 to the Retired Credit Agreement).


 


Eligible Assignee means (i) a
Lender; (ii) an Approved Fund; (iii) a commercial bank organized under the laws
of the United States of America, or any State thereof, and having total assets
in excess of $250,000,000; (iv) a savings association or savings bank organized
under the laws of the United States of America, or any State thereof, and
having total assets in excess of $250,000,000; (v) a finance company, insurance
company or other financial institution or fund (whether a corporation,
partnership, trust or other entity) that is engaged in making, purchasing or
otherwise investing in commercial loans (or a size similar to the Loans) in the
ordinary course of its business and having (together with its affiliates) total
assets in excess of $250,000,000; and (vi) any other Person approved by the
Agent; provided, however, that neither the Company nor any
affiliate thereof shall qualify as an Eligible Assignee under this definition.


 


Eligible Receivable means, at
any time, a Receivable:


 


(i)            the Obligor of which (a) if a
natural person, maintains a service address within the United States, (b) if a
corporation or other business organization, maintains a place of business
within the United States, (c) is not an affiliate of the Company, and (d) is
not the United States, or any subdivision or agency thereof, and if the Obligor
thereof is a state government or municipality, or any subdivision or agency
thereof, the Company has complied with all applicable requirements of state law
to create and perfect the security interest of the Agent therein;


 


(ii)           which is not a Defaulted Receivable;


 


(iii)          which, according to the related
Contract, is required to be paid in full within 31 days of the original billing
date therefor or is a Merchandise 


 


6





















 


Receivable which, according
to the related Contract, is required to be paid in full within three years of
the original billing date therefor (and, in either case, has not had its
payment terms extended), but in the case of Merchandise Receivables, only to
the extent that the aggregate amount of Merchandise Receivables does not exceed
$2,000,000;


 


(iv)          which is an “account” or a “payment
intangible” within the meaning of Section 9-102(a) of both the New York UCC and
the Delaware UCC;


 


(v)           which is denominated and payable only
in United States dollars in the United States;


 


(vi)          which arises under a Contract that has
been duly authorized and which, together with such Receivable, is in full force
and effect and constitutes the legal, valid and binding obligation of the
Obligor of such Receivable enforceable against such Obligor in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or similar laws affecting the enforcement of
creditors’ rights generally and by general equitable principles;


 


(vii)         which, together with the related
Contract, does not contravene in any material respect any laws, rules or
regulations applicable thereto (including laws, rules and regulations relating
to truth in lending, fair credit billing, fair credit reporting, equal credit
opportunity, fair debt collection practices and privacy) and with respect to
which no party to the Contract related thereto is in violation of any such law,
rule or regulation in any material respect;


 


(viii)        that arises under a Contract that (a) does
not require the Obligor to consent to the transfer or assignment (including for
security) of the rights and duties under such Contract of the Company or any of
its assignees, and (b) does not contain a confidentiality provision that
purports to restrict the ability of any such assignee to exercise rights under
the agreement(s) effecting, relating to or governing such assignment, including
the right to review the Contract;


 


(ix)           that arises under a Contract that
contains an obligation to pay a specified sum of money, contingent only upon
the sale of electricity or natural gas, or the provision of other goods or
services by the Company and not by any other Person (in whole or in part);


 


(x)            that was generated or originated by
the Company in the ordinary course of the Company’s business;


 


7





















 


(xi)           that is not subject to any known
dispute or any right of rescission, set-off, counterclaim, any other defense
(including defenses arising out of violations of usury laws) of the applicable
Obligor against the Company or any other Adverse Claim, and the Obligor thereon
holds no contractual right as against the Company to cause Company to
repurchase the goods the sale of which shall have given rise to such
Receivable;


 


(xii)          as to which the Company has satisfied
and fully performed all obligations on its part with respect to such Receivable
required to be fulfilled by it, and no further action is required to be
performed by any Person with respect thereto other than (for yet-to-be invoiced
Receivables) issuance of an invoice for such Receivable, or payment thereon by
the applicable Obligor;


 


(xiii)         which satisfies all applicable
requirements of the Credit and Collection Policy;


 


(xiv)        which is not a Cross-Aged Receivable; and


 


(xv)         which, according to the related
Contract, the Obligor’s account is subject to a balanced or levelized payment
plan of the Company, but only to the extent that the amount of such Receivable
does not exceed the lower of (a) the Outstanding Balance of such Obligor’s
account and (b) the amount such Obligor would have owed to the Company if such
Obligor’s account was not subject to a balanced or levelized payment plan of
the Company.


 


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


 


Eurocurrency Liabilities has
the meaning assigned to that term in Regulation D of the Board of Governors of
the Federal Reserve System.


 


Eurocurrency Reserve Requirements
for any day, as applied to a LIBOR Loan, shall mean the aggregate (without
duplication) of the maximum rates of reserve requirements (expressed as a
decimal fraction) in effect with respect to the Agent or any present or future
Lender or participant on such day (including basic, supplemental, marginal and
emergency reserves under Regulation D or any other applicable regulations of
the Board of Governors of the Federal Reserve System or other governmental
authority having jurisdiction with respect thereto, as now and from time to
time in effect, dealing with reserve requirements prescribed for Eurocurrency
funding (currently referred to as Eurocurrency Liabilities)) maintained by the
Agent or any such Lenders or participants (such rate to be calculated to one
sixteenth of one percent (1/16 of 1%) or, if 


 


8





















 


such rate is not calculated to one sixteenth of one
percent (1/16 of 1%), to the next higher one sixteenth of one percent (1/16 of
1%)).


 


Event of Default has the
meaning set forth in Section 10.1 of this Agreement.


 


Excluded Receivable means the
obligation of an Obligor that would otherwise constitute a Receivable as
defined herein, but that (i) arises from the electric or gas utility operations
of the Company in the State of Iowa, Minnesota or South Dakota; (ii) is being
serviced by the Company for the benefit of Cornerstone Energy, Inc. pursuant to
the Billings and Other Services Agreement made as of September 30, 2002,
between the Company and Cornerstone Energy, Inc., or is identified in the books
and records of the Company as a receivable owing to the Company by Cornerstone
Energy, Inc.; (iii) is a Receivable of a category or class which the Company
has designated or identified, in writing (and in a manner reasonably acceptable
to the Agent) as a category or class that, as of the next reporting period
following delivery of a Monthly Report hereunder, is prospectively to be
classified as an Excluded Receivable hereunder (it being understood that following
such designation only newly originated Receivables, and not existing
outstanding Receivables, within such category or class will thereby become
Excluded Receivables); provided that the Agent shall have consented to
such designation or identification of such category or class (such consent not
to be unreasonably withheld); or (iv) is as of the Closing Date a Defaulted
Receivable.


 


Excluded Taxes means (i) any
income tax (including branch profits taxes, minimum taxes and taxes computed
under alternative methods, at least one of which is based on net income) or
franchise tax based on net income or any other tax upon or measured by income
or gross receipts imposed by the United States of America or by any state,
local or foreign jurisdiction as a result of a present or former connection
between such jurisdiction imposing such tax and the Indemnified Party
(including withholding taxes attributable to the treatment of the Indemnified
Party as having “effectively connected taxable income” within the meaning of
Section 1446(c) of the Internal Revenue Code of 1986, as amended); (ii) any
taxes, levies, imposts, duties, charges, or fees that would not have been
imposed but for the failure by such Indemnified Party to provide and keep
current any certification or other documentation required to qualify for an
exemption from or reduced rate thereof; (iii) any taxes, levies, imposts,
duties, charges, or fees to the extent of any credit or other benefit actually
realized by such Indemnified Party as a result thereof; and (iv) any taxes,
levies, imposts, duties, charges, or fees imposed as a result of a change by
any Indemnified Party of the office in which any interest under this Agreement
or in respect of any Receivable or Contract is held, accounted for or booked.


 


Federal Funds Rate means, for
any period, a fluctuating interest rate per annum equal for each day during
such period to the weighted average of the rates on overnight 


 


9





















 


Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day
(or, if such day is not a Business Day, for the next preceding Business Day) by
the Federal Reserve Bank of New York, or, if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.


 


Fee Letter means that certain
letter agreement between the Company and the Agent dated as of October 22,
2004.


 


Finance Charges means, with
respect to a Contract, any finance, interest, late payment charges or similar
charges owing by an Obligor pursuant to such Contract.


 


Fiscal Quarter means each consecutive three calendar
month period ending March 31, June 30, September 30 or December 31 of any
fiscal year.


 


GAAP means generally accepted
accounting principles in the United States of America as in effect from time to
time and for the period as to which such accounting principles are to apply.


 


Indemnified Amounts has the
meaning set forth in Section 7.7.


 


Indemnified Party has the
meaning set forth in Section 7.7.


 


Interest Period means:


 


(a)           with respect to any initial request
by the Company for a LIBOR Loan, a one month, two month or three month period
commencing on the borrowing or conversion date with respect to a LIBOR Loan and
ending one, two or three months thereafter, as applicable; and


 


(b)         thereafter with respect to any
continuation of, or conversion to, a LIBOR Loan, at the option of the Company, any one month, two month or three
month period commencing on the last day of the immediately preceding Interest
Period applicable to such LIBOR Loan and ending one, two or three months
thereafter, as applicable;


 


provided that the foregoing provisions relating to
Interest Periods are subject to the following:


 


(i)            if any Interest Period would
otherwise end on a day which is not a Working Day, that Interest Period shall
be extended to the next succeeding Working Day, unless the result of such
extension would extend such payment into 


 


10





















 


another
calendar month in which event such Interest Period shall end on the immediately
preceding Working Day;


 


(ii)           any Interest Period that begins on
the last Working Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month, at the end of such
Interest Period) shall end on the last Working Day of a calendar month; and


 


(iii)          for purposes of
determining the availability of Interest Periods, such Interest Periods shall
be deemed available if (x) Reuters quotes an applicable rate or the Agent
determines LIBOR, as provided in the definition of LIBOR, (y) LIBOR determined
by the Agent will adequately and fairly reflect the cost of maintaining or
funding its loans bearing interest at LIBOR, for such Interest
Period, and (z) such Interest Period will end on or before the Commitment
Termination Date.  If a requested
Interest Period shall be unavailable in accordance with the foregoing sentence,
the Agent shall so notify the Company and the Company thereafter may designate
a different Interest Period or, if no such other Interest Periods are
available, interest shall be calculated on the outstanding principal amount of
all Revolving Loans at the applicable per annum rate based upon the Base Rate.


 


Lenders has the meaning set
forth in the preamble to this Agreement.


 


LIBOR means, with respect to
any Interest Period, the rate per annum equal to the rate that appears on
Reuters Page LIBOR 01 (or on any successor or any substitute page of such
service, or any successor to or substitute for such service providing rate
quotations comparable to those currently provided on such page of such service,
as determined by the Agent from time to time for purposes of providing
quotations of interest rates applicable to Dollar deposits in the London
interbank market) at approximately 11 A.M. (London, England time) two (2)
Business Days before the first day of such Interest Period as the rate for
Dollar deposits with a maturity comparable to such Interest Period; provided,
however, that if such rate is not available at such time for any reason,
LIBOR shall be the rate per annum equal to the average rate per annum (rounded
upward to the nearest whole multiple of one one-hundredth of one percent
(0.01%) if such average is not such a multiple) at which deposits in Dollars
are offered to the Agent in the London interbank market as at
approximately 11 A.M. (London, England time) two (2) Business Days before the
first day of such Interest Period.


 


LIBOR Loan means any loans
made pursuant to this Agreement which are made or maintained at a rate of
interest based upon LIBOR, provided that (i) no Event of Default or
event that would constitute an Event of Default but for the requirement that
notice be given or time elapse has occurred and is continuing hereunder, which
has not 


 


11





















 


been waived in writing by the Required Lenders, and (ii)
no LIBOR Loan shall be made with an Interest Period that ends subsequent to the
date specified in the definition of Commitment Termination Date.


 


Liquidity
means as of any date of determination, without duplication, the aggregate
amount of (i) cash on deposit in the Blocked Accounts, (ii) cash and Cash
Equivalents on deposit in any account of the Company maintained with the Agent,
which cash, Cash Equivalents and accounts are not subject to any Adverse Claim
other than the lien of the Agent granted hereunder, (iii) cash and Cash
Equivalents on deposit in any domestic U.S. account of the Company not
maintained with the Agent, which cash, Cash Equivalents and accounts are not
subject to any Adverse Claim other than the lien of the Agent granted hereunder,
(iv) available unused borrowing capacity under the U.S. $110,000,000 Revolving
Credit Agreement dated as of September 20, 2004, among the Company, the lenders
party thereto and Credit Suisse First Boston, acting through its Cayman Islands
Branch, as administrative agent, provided, however, that the
Company shall have provided evidence reasonably satisfactory to the Agent of
the amount of availability under such Credit Agreement, and (v) available
unused borrowing capacity under this Agreement. 
For purposes of this definition of Liquidity, the terms “available” and
“availability” mean that as of any date of determination the conditions
precedent to borrow (other than the giving of a borrowing notice) as of such
date of determination have been satisfied or waived.


 


Liquidity
Event means the Company fails at any time to maintain at least $30,000,000 of
Liquidity.


 


Loan Documents means this
Agreement, the Promissory Notes (if any), any Blocked Account Agreements, the
Fee Letter, the other closing documents and any other ancillary loan and
security agreements executed from time to time in connection with this
Agreement, all as may be renewed, amended, extended, increased or supplemented
from time to time.


 


Material Adverse Effect means
an event or circumstance constituting or having a material adverse effect on
(i) the business, condition (financial or otherwise), assets, liabilities or
results of operations of the Company or its Domestic Utility Business, taken as
a whole, (ii) the ability of the Company to perform its obligations under this
Agreement or the Blocked Account Agreements, (iii) the legality, validity or
enforceability of this Agreement, the Blocked Account Agreements, or any
portions thereof, (iv) the Agent’s interest in the Collateral generally or in
any significant portion of the Collateral, or (v) the collectibility of the
Receivables generally or of any material portion of the Receivables and related
other Collateral.


 


12





















 


Material Subsidiary means, as at any time of
determination, each Subsidiary of the Company which, in the aggregate, as at
the end of the Fiscal Quarter immediately preceding such time of determination,
has Consolidated Assets equal to or greater than 10% of the total Consolidated Assets
of the Company and its Subsidiaries as at the end of such Fiscal Quarter, as
determined in accordance with GAAP; provided, that neither Aquila
Merchant Services, Inc. nor any of its Subsidiaries will constitute a Material
Subsidiaries for the purpose of this definition.


 


Merchandise Receivable means
a receivable generated by the sale or service of appliances or other goods
(other than natural gas).


 


Monthly Report means a
report, in substantially the form of Exhibit B, furnished by the Company to the
Agent pursuant to Section 4(b).


 


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


 


Net Receivables Pool Balance means at any time the
aggregate Outstanding Balance of the Eligible Receivables at such time, less
(i) the amount of the Deposit Reserve at such time, less (ii) the
aggregate amount of Finance Charges then due and owing with respect to all
Eligible Receivables, and less (iii) $20,000,000 for any date of
determination during the months of March and April, but only if the Company
fails to maintain, as of such date of determination, at least $100,000,000 of
Liquidity and the aggregate outstanding balance of Revolving Loans, as of such
date of determination, exceeds $50,000,000 in the aggregate.


 


Non-Recourse Debt means either (a) Debt as to which
the Company has no direct or indirect liability whether as primary obligor,
guarantor, surety, provider of collateral security or through any other right
or arrangement of any nature (including any election by the holder of such
indebtedness) providing direct or indirect assurance of payment or performance
of any such obligations in whole or in part, or (b) Debt of the Company that
funded the purchase or construction of Domestic Utility Business assets,
whereby the recourse of the lenders is limited solely to the assets purchased
or constructed with such Debt (and, therefore, the lenders are not
contractually entitled to recourse against the general assets of the Company if
an event of default were to occur with respect to such Debt).


 


Obligations means all
outstanding loans, advances and extensions of credit made by the Agent and/or
the Lenders to the Company, or to others for the Company’s account (including,
without limitation, all Revolving Loans), interest thereon, together with any
due but unpaid fees, indemnities and other amounts or obligations existing or
arising or owing by the Company pursuant to this Agreement.


 


13





















 


Obligor means a Person
obligated to make payments pursuant to a Contract.


 


Operating Reserve means the
amount determined by the Agent, from time to time, as an appropriate reserve in
its reasonable credit judgment.


 


Other Overadvances has the
meaning set forth in Section 8.1(b).


 


Out-of-Pocket Expenses means
all of the Agent’s (and the Lenders upon the occurrence of an Event of Default
which is not waived) present and future expenses incurred relating to this
Agreement or any other Loan Documents, whether incurred heretofore or
hereafter, which expenses shall include, without being limited to the cost of
syndication activities, administration, preparation of documentation, record
searches, all costs and expenses incurred by the Agent in opening bank
accounts, depositing checks, receiving and transferring funds, and wire
transfer charges, any charges imposed on the Agent due to returned items and “insufficient
funds” of deposited checks and the Agent’s and its consultants’ standard fees
relating thereto, travel, lodging and similar expenses of the Agent’s personnel
in connection with inspecting and monitoring the Collateral from time to time
hereunder, any applicable external counsel fees and disbursements, fees and
taxes relative to the filing of financing statements and all expenses, costs
and fees set forth in Section 10.3 of this Agreement, provided that the
Company will not be liable for any fees or expenses incurred by Union Bank or
its affiliates prior to September 8, 2004.


 


Outstanding Balance means,
with respect to any Receivable at any time, the then outstanding principal
balance thereof.


 


Overadvance Rate means a rate
equal to one-half of one percent (1/2%) per annum in excess of the applicable
rate of interest otherwise determined in accordance with Section 8.1(b) of this
Agreement.


 


Overadvances means the amount
by which (a) the sum of all outstanding Revolving Loans and advances made
hereunder exceeds (b) the lesser of (i) the Borrowing Base and (ii) the
Revolving Line of Credit.


 


P.O. Box means a locked
postal box located in a United States post office, which relates to a Blocked
Account, is subject to the control of a Blocked Account Bank, and is used by
Obligors to remit payments of Receivables.


 


Perfection Certificate means
the Perfection Certificate prepared by the Company and delivered to the Agent,
in the form provided to the Company by the Agent or its special counsel.


 


14





















 


Person means an individual,
partnership, limited partnership, limited liability partnership, limited
liability company, corporation (including a business trust), joint stock
company, trust, unincorporated association, joint venture or other entity.


 


Power of Attorney has the meaning set forth in
Section 6.6.


 


Prime Rate means the rate of interest per annum
adopted and announced from time to time by Union Bank as its prime commercial
lending rate at its primary lending office in the United States.  For purposes of this Agreement, any change in
the Base Rate due to a change in the Prime Rate shall be effective on the date
such change in the Prime Rate is adopted.


 


Promissory Note means a
promissory note substantially in the form of Exhibit A.


 


Receivable means the total
payment and other obligations owed to the Company (whether or not yet invoiced
to the customer) arising under a Contract, including that part of the total payment
that reflects distribution and transportation charges and any indebtedness,
obligation or interest constituting an account, chattel paper, instrument or
general intangible, and which are identified or designated in the books and
records of the Company (including its accounting system) as part of the Company’s
“Domestic Utilities” reporting segment, and further includes the obligation to
pay any Finance Charges with respect thereto; provided that Receivables
shall not include Excluded Receivables. 
Indebtedness and other rights and obligations arising from any one
transaction, including indebtedness and other rights and obligations
represented by an individual invoice, shall constitute a Receivable separate
from a Receivable consisting of the indebtedness and other rights and
obligations arising from any other transaction; provided, further
that any indebtedness, rights or obligations referred to in the immediately
preceding sentence shall be a Receivable regardless of whether the account
debtor or the Company treats such indebtedness, rights or obligations as a
separate payment obligation.


 


Records means, with respect
to any Receivable, all Contracts and other documents, books, records and other
information (including computer programs, tapes, disks, punch cards, data
processing software and related property and rights) relating to such
Receivable, any Related Security therefor and the related Obligor.


 


Related Security means with
respect to any Receivable constituting Collateral:


 


(i)            all of the Company’s interest in the
goods (including returned or repossessed goods), if any, the sale, financing or
lease of which gave rise to such Receivable and all insurance contracts with
respect thereto;


 


15





















 


(ii)           all other security interests or liens
and property subject thereto from time to time, if any, purporting to secure
payment of such Receivable, whether pursuant to the Contract related to such
Receivable or otherwise, together with all financing statements filed against
an Obligor as debtor and security agreements describing any collateral securing
such Receivable;


 


(iii)          all guaranties, letters of credit,
insurance, “supporting obligations” (within the meaning of Section 9-102(a) of
the UCC of all applicable jurisdictions) and other agreements or arrangements
of whatever character from time to time supporting or securing payment of such
Receivable whether pursuant to the Contract related to such Receivable or
otherwise;


 


(iv)          all service contracts and other contracts
and agreements solely associated with such Receivable;


 


(v)           all the Company’s rights, title and
interest in and to Records solely related to such Receivable;


 


(vi)          all of Company’s right, title and
interest in and to each Blocked Account, related P.O. Box and any and all
agreements related thereto (subject to the provisions set forth in Section
3.4(b)); and


 


(vii)         all proceeds of any of the foregoing.


 


Requested Overadvances has
the meaning set forth in Section 8.1(b).


 


Required Lenders means, on
any date of determination, Lenders who, collectively on such date (i) hold
outstanding Revolving Loans in the amount of 51% or more of the aggregate
outstanding Revolving Loans and (ii) if no Revolving Loans are outstanding,
hold aggregate Commitments under this Agreement in an amount of 51% or more of
the Revolving Line of Credit. 
Determination of those Lenders satisfying the criteria specified above
for action by the Required Lenders shall be made by the Agent and shall be
conclusive and binding on all parties absent manifest error.


 


Retired Credit Agreement means the Credit Agreement
dated as of April 9, 2003, among the Company, the several banks and other
financial institutions from time to time party thereto, and Credit Suisse First
Boston, acting through its Cayman Islands Branch, as administrative agent.


 


Revolving Line of Credit
means the aggregate Commitments of the Lenders to make loans and advances
pursuant to Section 3 of this Agreement, in the aggregate amount of
$125,000,000, provided, however, that if one or more additional
Lenders are 


 


16





















 


made party to this Agreement pursuant to Section 3.10, then “Revolving
Line of Credit” means the aggregate Commitments of the Lenders
(including the Additional Commitment) to make loans and advances pursuant to
Section 3 of this Agreement, in the maximum aggregate amount of up to
$150,000,000.


 


Revolving Loan Account means
the account on the Agent’s books, in the Company’s name, in which the Company
will be charged with all Obligations under this Agreement.


 


Revolving Loans means the
loans and advances made, from time to time, to or for the account of the
Company by the Agent, on behalf of the Lenders, pursuant to Section 3 of this
Agreement.


 


S&P means Standard &
Poor’s Ratings Services, a division of the McGraw-Hill Companies, Inc.


 


SEC Reports means the
periodic reports filed by the Company with the Securities and Exchange
Commission on a Form 10-K, 10-Q or 8-K or any successor forms thereto.


 


Settlement Date means the
date, weekly, and more frequently, at the discretion of the Agent, upon the
occurrence of an Event of Default or a continuing decline or increase of the
Revolving Loans, that the Agent and the Lenders shall settle amongst themselves
so that (a) the Agent shall not have, as the Agent, any money at risk and (b)
on such Settlement Date the Lenders shall have a pro rata amount of all
outstanding Revolving Loans, provided that each Settlement Date for a
Lender shall be a Business Day on which such Lender and its bank are open for
business.


 


Stated Maturity means, when used with respect to any
Debt, the date or dates specified in the instrument governing such Debt as the
fixed date or dates on which each then remaining installment, sinking fund,
serial maturity or other required payments of principal, including payment at
final maturity, in respect of such Debt, or any installment of interest
thereon, is due and payable.


 


Sweep Event means (i) any
breach of Section 4 or Section 7.2(h), (ii) the occurrence of an event
described in Section 10.1(f)(i)(B) but prior to the elapsing of the 45-day
period described therein, (iii) any breach of Section 5.01(l) of either Credit
Agreement or (iv) the occurrence of a Liquidity Event.


 


Subsidiaries of any Person means any corporation,
partnership, joint venture, limited liability company, trust or estate of which
(or in which) more than 50% of (i) the Capital Stock having ordinary voting
power to elect a majority of the Board of Directors of such corporation
(irrespective of whether, at the time, Capital Stock of any other class


 


17





















 


or classes of such corporation shall or might have
voting power upon the occurrence of’ any contingency), (ii) the interest in the
capital or profits of such partnership, joint venture or limited liability
company or (iii) the beneficial interest in such trust or estate is at the time
directly or indirectly owned or controlled by such Person (whether directly or
through one or more other subsidiaries) and one or more of its other
Subsidiaries or by one or more of such Person’s other Subsidiaries. Unless
otherwise expressly stated herein, all references to any Subsidiary are to
direct or indirect Subsidiaries of the Company.


 


Taxes means all federal, state,
municipal and other governmental taxes, levies, charges, claims and assessments
which are or may be due by the Company with respect to its business,
operations, Collateral or otherwise.


 


Telecommunications Business means the
telecommunications business conducted by Everest Global Technologies Group, LLC
and its Subsidiaries.


 


Three Month Rolling Average Dilutions
means, an amount, notified by the Agent to the Company in writing from time to
time following the Agent’s receipt of the Monthly Report or the Agent’s
completion of its most recent field audit of the Company, constituting the
average, for the three full calendar months ending prior to the Agent’s receipt
of the Monthly Report or the completion of such field audit, of the monthly
amount of historical returns, write-offs, discounts, claims, credits and
allowances in favor of Obligors on Receivables (provided, that for the
period from the Closing Date until the first such notification by the Agent as
aforesaid, Three Month Rolling Average Dilutions equals $0).


 


Three Month Rolling Average NRPB
means the average, for the same three full calendar months referred to in the
definition of Three Month Rolling Average Dilutions, of the Net Receivables
Pool Balance (less the aggregate amount of the portion of the Outstanding
Balance of each Eligible Receivable relating to sales or use taxes) as of the
end of each such month.


 


Total Capital means on any date (a) Debt of the
Company on such date plus (b) Consolidated Net Worth as of the end of
the most recent Fiscal Quarter.


 


Transferee has the meaning
set forth in Section 13.5(c).


 


UCC means the Uniform
Commercial Code as the same may be amended and in effect from time to time in
the specified jurisdiction.


 


Union Bank has the meaning set forth in the preamble
to this Agreement.


 


18





















 


Unused Facility Fee means a
fee equal to 0.50% per annum on the daily unused portion of the Revolving Line
of Credit.


 


Working Day means any
Business Day on which dealings in foreign currencies and exchanges between
banks may be transacted.


 


1.2           Rules
of Interpretation.  Unless otherwise
required by the context in which any term appears:  (a) capitalized terms used in this Agreement
have the meanings specified in Section 1.1; (b) the singular of a defined term
includes the plural; (c) references to “Sections,” “Schedules” or “Exhibits”
(if any) refer to sections, schedules or exhibits (if any) of this Agreement,
unless otherwise specified; (d) all references to a particular Person include a
reference to such Person’s successors and permitted assigns; (e) the words “herein,”
“hereof” and “hereunder” and words of similar import when used in this
Agreement refer to this Agreement as a whole and not to any particular section
or subsection of this Agreement; (f) all accounting terms not specifically
defined herein will be construed in accordance with GAAP, consistently applied,
and all terms used in Article 9 of the New York UCC, and not specifically
defined herein, are used herein as defined in such Article 9; (g) references to
this Agreement include a reference to all schedules and exhibits hereto, as the
same may be amended, modified, supplemented or replaced from time to time; (h)
references to any agreement, document or instrument mean a reference to such
agreement, document or instrument, and all appendices, annexes, schedules and
exhibits thereto, as in effect on the Closing Date or as the same may be
amended, modified, supplemented or replaced from time to time; (i) a reference
to any statute, regulation, proclamation, ordinance or law includes all
statutes, regulations, proclamations, ordinances or laws varying, consolidating
or replacing the same from time to time, and a reference to a statute includes
all regulations, policies, protocols, codes, proclamations and ordinances
issued or otherwise applicable under that statute unless, in any such case,
otherwise expressly provided in any such statute or in this Agreement; (j) the
use of the words “include,” “includes” and “including” in this Agreement to
refer to specific examples will be deemed to be followed by the phrase “without
limitation” or “but not limited to” and will not be construed to mean that the
examples given are an exclusive list of the topics covered; and (k) the use of
the word “or” will not be exclusive.


 


SECTION
2.  Conditions Precedent.


 


2.1           The
obligation of the Agent and the Lenders to make the initial loans hereunder is
subject to the satisfaction of, extension of or waiver of (in writing), on or
prior to, the Closing Date, the following conditions precedent:


 


(a)          [Reserved];


 


19





















 


(b)         A copy of the resolutions adopted by
the Board of Directors of the Company authorizing the Company’s execution,
delivery and performance of this Agreement and the other documents to be
delivered by it hereunder and the transactions contemplated hereby and thereby,
certified by its Secretary or Assistant Secretary;


 


(c)          A certificate of the Secretary or
Assistant Secretary of the Company certifying the names and true signatures of
at least two officers authorized on its behalf to sign this Agreement and the
other documents to be delivered by it hereunder and as to an attached true and
correct copy of Company’s bylaws;


 


(d)         Certificate of Incorporation of the
Company certified by the Secretary of State of the jurisdiction of its
incorporation on or within 30 days prior to the Closing Date;


 


(e)          Good standing certificates for the
Company issued by the Secretaries of State of the states of Delaware, Missouri,
Kansas, Michigan, Colorado and Nebraska;


 


(f)          Either (i) a counterpart of this
Agreement signed on behalf of each party hereto or (ii) written evidence
satisfactory to the Agent (which may include telecopy transmission of a signed
signature page of this Agreement) that such party has signed a counterpart of
this Agreement;


 


(g)         Receipt by Company and delivery to
Agent of any state and federal regulatory consents, waivers and approvals
necessary for the execution, delivery and performance of the Loan Documents;


 


(h)         A file-stamped copy of one or more
proper UCC termination statements, if any, necessary with respect to each
previously filed UCC financing statement, if any, that names the Company as
debtor and covers any of the Collateral;


 


(i)           UCC and federal tax and judgment lien
search results from the Delaware Secretary of State, the Missouri Secretary of
State, and the County Recorder’s office of Jackson County, Missouri, each dated
as of a date reasonably close to the Closing Date indicating that all or any
portion of the Collateral are not covered by any effective financing statement
or federal tax lien or judgment lien;


 


(j)           A certificate of the Company
certifying (i) that the representations and warranties made, or deemed to be
made, by the Company in connection with this Agreement or the Monthly Reports
are true and correct in all material respects; and (ii) as to the absence of
any Event of Default or event that would constitute an Event of Default but for
the requirement that notice be given or time elapse;


 


20





















 


(k)          The Agent must have received, on
behalf of itself and the Lenders, the fees to be received prior to the initial
extension of credit as agreed between the Agent and the Company, and Agent must
have received reimbursement of all agreed-upon costs and expenses (including
the reasonable fees and expenses of external counsel to the Agent to the extent
invoiced);


 


(l)           A favorable opinion of Leslie J.
Parrette, Jr., general counsel to the Company, in form and substance reasonably
satisfactory to Agent, as to such matters as the Agent reasonably may request;


 


(m)         A favorable opinion of Chadbourne &
Parke LLP, special counsel to the Agent, in form and substance reasonably
satisfactory to Agent, as to such matters as the Agent reasonably may request;


 


(n)         A favorable opinion of Hogan &
Hartson LLP, federal regulatory counsel to the Company, in form and substance
reasonably satisfactory to Agent, as to such matters as the Agent reasonably
may request;


 


(o)         A favorable opinion of regulatory
counsel to the Company in the states of Missouri, Kansas, Michigan, Colorado,
Nebraska, South Dakota, Iowa and Minnesota in form and substance reasonably
satisfactory to the Agent, as to such matters as the Agent reasonably may
request;


 


(p)         A favorable opinion of Morris, Nichols,
Arsht & Tunnell, special counsel to the Company, in form and substance
reasonably satisfactory to Agent, as to such matters as the Agent reasonably
may request;


 


(q)         A favorable opinion of Blackwell
Sanders Peper Martin LLP, special counsel to the Agent, in form and substance
reasonably satisfactory to Agent, as to such matters as the Agent reasonably
may request;


 


(r)          Executed copies of Blocked Account
Agreements for each Blocked Account;


 


(s)          For each Lender party hereto as of the
Closing Date that is not incorporated under the laws of the United States of
America or a state thereof, two duly completed copies of United States Internal
Revenue Service Form W-8ECI, certifying that such Lender is entitled to receive
payments under this Agreement without deduction or withholding of any United
States federal income taxes;


 


(t)          Such other information,
acknowledgements, documents and certificates as Agent may reasonably request in
form and substance reasonable satisfactory to Agent;


 


21





















 


(u)         Evidence of payment by the Company of
the Closing Fee due and payable to the Agent; and


 


(v)         A file-stamped copy
of (i) a proper UCC financing statement shall have been filed with the Delaware
Secretary of State naming the Company as debtor and the Agent as secured party
of record and covering the Collateral and (ii) a proper UCC financing statement
shall have been filed with the Illinois Secretary of State, New York Secretary
of State and Missouri Secretary of State naming the Company as
debtor and the Agent as secured party of record and covering the applicable
Blocked Account.


 


Upon
the execution of this Agreement and the initial disbursement of loans hereunder,
all of the above conditions precedent shall have been deemed satisfied except
as otherwise set forth hereinabove or as the Company and the Agent shall
otherwise agree in writing.


 


2.2           Conditions
to Each Extension of Credit.  Subject
to the terms of this Agreement, including without limitation the Agent’s rights
pursuant to Section 10.2 hereof, the agreement of the Agent on behalf of the
Lenders to make any extension of credit requested to be made by it to the
Company on any date (including without limitation, the initial extension of
credit) is subject to the satisfaction of the following conditions precedent:


 


(a)           Representations and Warranties
- Each of the representations and warranties made by the Company in or pursuant
to this Agreement shall be true and correct on and as of such date as if made
on and as of such date;


 


(b)           No Default - No Event of
Default or event that would constitute an Event of Default but for the
requirement that notice be given or time elapse shall have occurred and be
continuing on such date or after giving effect to the extension of credit
requested to be made on such date, including the occurrence of the event
described in Section 10.1(f) but prior to the elapsing of the 45-day period
described therein;


 


(c)           Borrowing Base - Except as may
be otherwise agreed to from time to time by the Agent and the Company in
writing and subject to Section 14.10, after giving effect to the extension of
credit requested to be made by the Company on such date, the aggregate
outstanding balance of the Revolving Loans owing by the Company will not exceed
the lesser of (i) the Revolving Line of Credit and (ii) the Borrowing Base; and


 


(d)           Borrowing Notice - A notice of
borrowing, as described in Section 3.1(b), in form and substance reasonably
acceptable to the Agent, and the information necessary for the Agent and the
Lenders to issue wire transfer instructions on behalf of the Company for the
loans and/or advances to be made under this Agreement including, but 


 


22





















 


not limited to, disbursement authorizations in form acceptable to the
Agent shall have been delivered to the Agent.


 


Each
borrowing by the Company hereunder shall constitute a representation and
warranty by the Company as of the date of such loan or advance that each of the
representations, warranties and covenants contained in this Agreement have been
satisfied and are true and correct, except as the Company and the Agent and/or
the Required Lenders shall otherwise agree herein or in a separate writing.


 


SECTION
3.  Revolving Loans.


 


3.1           (a)           The Agent and the Lenders agree,
subject to the terms and conditions of this Agreement, from time to time
(severally to the extent of their Commitment but subject to the Agent’s and the
Lenders’ right, but not obligation, to make Overadvances), to make loans and
advances to the Company on a revolving basis (i.e., subject to
the limitations set forth herein, the Company may borrow, repay and re-borrow
Revolving Loans at any time prior to the Commitment Termination Date).  Such loans and advances shall be in amounts
not to exceed the lesser of (a) the Availability and (b) the Revolving Line of
Credit; provided that the Agent and/or the Lenders shall not be required
to make any Revolving Loan or other extension of credit to the Company if,
after giving effect to such Revolving Loan or other extension of credit to the
Company, the aggregate outstanding balance of the Revolving Loans and other
extensions of credit owing by the Company would exceed the lesser of the
Borrowing Base and the Revolving Line of Credit.  All requests for loans and advances must be
received by an officer of the Agent no later than (i) 9:00 A.M., Pacific time,
of the Business Day on which any such Base Rate Loans and advances are required
or (ii) three Business Days prior to any requested LIBOR Loan.


 


(b)           (i) Whenever the Company requests the
Agent, on behalf of the Lenders, to make a Revolving Loan pursuant to this
Section 3, it shall give the Agent notice in writing or irrevocable telephonic
notice confirmed promptly in writing, specifying (A) the amount to be borrowed,
and (B) the requested borrowing date (which shall be a Business Day and shall
be prior to the Commitment Termination Date, or prior to any other effective
termination date of this Agreement, all as further set forth herein), and (C)
whether the requested Revolving Loan shall bear interest at the Base Rate or at
LIBOR, as further set forth herein, and (D) if LIBOR is to apply, the desired
initial Interest Period for such amount, and (E) the Borrowing Base applicable
as such time.  If the Company fails to
designate the proposed borrowing of a Revolving Loan as a Base Rate Loan or a
LIBOR Loan, in accordance with this Section 3.1, then the requested borrowing
shall be a Base Rate Loan.  If no
Interest Period is elected with respect to any requested borrowing of a LIBOR
Loan, then the requested Loan shall be made as a Base Rate Loan.  The procedure for Revolving Loans to be made
on a requested borrowing date may be 


 


23





















 


such other
procedure as is mutually satisfactory to the Company, the Agent and/or the
Lenders.  The Agent shall make loans and
advances by transfers of immediately available funds to the Company’s bank
account as specified in written instructions to be provided by the Company to
the Agent.


 


(ii)           Subject to Section 14.10 hereof,
should the Agent, on behalf of the Lenders, for any reason honor requests for
Overadvances, such Overadvance shall be made in the Agent’s sole discretion,
subject to any additional terms the Agent and/or the Required Lenders deem
necessary.  Requests for loans and
advances shall be made solely by the Company and shall be directed solely to
the Agent.


 


(c)           The Agent shall on any requested
borrowing date, and upon notice given by the Agent no later than 9:00 A.M.
Pacific time, request each Lender to make a Revolving Loan in an amount equal
to the product of the loan or advance requested pursuant to Section 3.1(b) and
such Lender’s Commitment over the Revolving Line of Credit.  Without limiting the liability and obligation
of each Lender to make such advances, the Company authorizes the Agent to
charge the Company’s Revolving Loan Account with the Agent to the extent
amounts received from the Lenders are not sufficient to repay in full the
amount of any such deficiency.


 


(d)           (i) Subject to Section 13.9, each
Lender shall maintain in accordance with its usual practice an account or
accounts evidencing the indebtedness of the Company to such Lender resulting
from each Revolving Loan made by such Lender from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time hereunder.


 


(ii)           As contemplated under Section 3.6,
the Agent shall also maintain the Revolving Loan Account in which it will
record (a) the amount of each Revolving Loan made hereunder, whether such
Revolving Loan bears interest at the Base Rate or at LIBOR and the Interest
Period with respect thereto, (b) the amount of any Obligations due and payable
or to become due and payable from the Company to each Lender hereunder and (c)
the amount of any sum received by the Agent hereunder from the Company and each
Lender’s share thereof.


 


(iii)          Any Lender may request that its
Revolving Loans be evidenced, in addition to the mechanisms evidencing
Revolving Loans described in clauses (i) and (ii) above, by a Promissory
Note.  In such event, the Company shall
prepare, execute and deliver to such Lender such Promissory Note payable to the
order of such Lender.  Thereafter, the
Revolving Loans evidenced by such Promissory Note and interest thereon shall at
all times (prior to any assignment pursuant to Section 13.9) be represented by
one or more Promissory Notes payable to the order of the payee named therein,
except to the extent that any such Lender 


 


24





















 


subsequently returns any
such Promissory Note for cancellation and requests that such Revolving Loans
once again be evidenced solely as described in paragraphs (i) and (ii) above.


 


(iv)          Subject to Section 3.7, the entries
maintained in the accounts maintained pursuant to paragraphs (i) and (ii) above
shall be prima facie evidence of the existence and amounts of the Obligations
therein recorded; provided, however, that the failure of the
Agent or any Lender to maintain such accounts or any error therein shall not in
any manner affect the obligation of the Company to repay the Obligations in
accordance with their terms.


 


3.2           In
no event shall the Lenders be required to make more than five advances in any
month.  Each advance hereunder shall be
in an aggregate principal amount of not less than $1,000,000 or an integral
multiple of $100,000 in excess thereof.


 


3.3           The
Company may, upon two Business Days’ notice to the Agent, irrevocably terminate
in whole or reduce in part, ratably across the Lenders’ Commitments, the unused
portion of the Revolving Line of Credit; provided that each partial
reduction must be in an amount equal to $1,000,000 or an integral multiple
thereof.  Once reduced the Revolving Line
of Credit may not be increased.


 


3.4           (a)
All amounts received by the Agent will be credited to the Revolving Loan
Account when the Agent is notified by its bank of its receipt of “collected
funds” at the Agent’s bank account in Los Angeles, California on the Business
Day of such notification if notified no later than 11:00 A.M. Pacific time or
on the next succeeding Business Day if so notified after 11:00 A.M. Pacific
time.  No checks, drafts or other
instrument received by the Agent shall constitute final payment to the Agent
and/or the Lenders unless and until such instruments have actually been
collected.


 


(b)         The Company shall maintain, in its name
and at its expense, all Blocked Accounts into which the Company shall promptly
cause to be deposited (including through related P.O. Boxes) all Collections
received by the Company.  The Agent
agrees to initially instruct the Blocked Account Banks to, until such time as a
contrary instruction is given by the Agent, comply with all instructions
regarding disposition of funds in the Blocked Account originated by or at the
direction of the Company.  If a Sweep
Event has occurred and is continuing or if an Event of Default has occurred and
has not been waived, the Agent may deliver a Default Notice to each Blocked
Account Bank (which Default Notice may, in the discretion of the Agent, be
accompanied by instructions to the related Blocked Account Bank to dispose of
all Collections of Receivables in the Blocked Accounts to one or more other
accounts designated by the Agent); provided that the Agent shall
concurrently deliver to the Company a copy of such Default Notice together with
a statement as to the nature of the Event of Default or 


 


25





















 


Sweep Event to
which such Default Notice relates.  If
the event giving rise to a Sweep Event (A) described in clause (i) of the
definition thereof is remedied by the Company within 2 Business Days following
notice thereof by the Agent to the Company, (B) described in clause (ii) of the
definition thereof is stayed or dismissed within 45 days, or (C) described in
clause (iv) of the definition thereof is remedied by the Company maintaining at
least $40,000,000 of Liquidity, then in each such case the Agent shall promptly
revoke such Default Notice.  If the Agent
has delivered a Default Notice to a Blocked Account Bank pursuant to the
foregoing, (i) the Agent shall direct the applicable Blocked Account Banks to
transfer (or, if applicable, transfer or cause the transfer from such other
account into which Collections have been deposited) to the Company funds in any
such Blocked Account (or other account to which the Agent has instructed
disposition of Collections, if applicable) not relating to the Receivables on
the second Business Day following receipt by the Agent of a report
substantially in the form of the Monthly Report identifying, in a manner
reasonably satisfactory to the Agent, the amount of such funds not relating to
the Receivables to be so transferred, (ii) the Company will deliver to the
Agent and the Blocked Account Banks such report referenced in clause (i) of
this Section 3.4(b) every second Business Day or on such other periodic basis
as reasonably requested by the Agent; provided that if the Company fails
to perform or comply with its obligations set forth in clause (ii) of this
Section 3.4(b) then, in lieu of complying with clause (i) of this Section
3.4(b), the Agent may direct the applicable Blocked Account Banks to transfer
(or, if applicable, transfer or cause the transfer from such other account into
which Collections have been deposited) to the Company funds in any such Blocked
Account (or other account to which the Agent has instructed disposition of
Collections, if applicable) based on the percentage for such month of the
amounts held in the Blocked Accounts representing the historical amounts of
such funds not relating to the Receivables (and subject to the true-up
mechanisms) as set forth on Exhibit D and (iii) the Agent shall direct the
applicable Blocked Account Bank to transfer all or any part of the total
available funds in the Blocked Accounts and apply or withhold such funds (other
than funds in the Blocked Accounts not related to the Receivables as provided
in clauses (i) and (ii) above) to an account designated by the Agent to prepay
or cash collateralize any and all of the Obligations.  Any such prepayment shall be applied as
follows:  first, to fees and
reimbursable expenses of the Agent then due and payable pursuant to any of the
Loan Documents; second, to interest then due and payable on Revolving
Loans; and third, to the principal balance of the Revolving Loans until
the same has been paid in full.  Except
in the case of prepayments made pursuant to clause (iii) above arising from a
Default Notice issued solely on account of a Liquidity Event, the Required
Lenders may in their sole discretion permanently reduce the Commitment by the
aggregate amount of any prepayment of the Obligations.


 


26





















 


3.5           The
Company agrees to notify the Agent of each matter that materially affects the
value, enforceability or collectibility of the Receivables, as a whole, in its
Monthly Report provided to the Agent hereunder, in such detail and format as
the Agent may reasonably require from time to time.


 


3.6           The
Agent shall maintain a Revolving Loan Account on its books in which the Company
will be charged with all loans and advances made by the Agent to it or for its
account, and with any other Obligations, including any and all costs, expenses
and reasonable attorney’s fees which the Agent is entitled to charge the
Company.  The Company will be credited
with all amounts received by the Agent and/or the Lenders from the Company or
from others for the Company’s account, including, as set forth above, all
amounts received by the Agent in payment of accounts, and such amounts will be
applied to payment of the Obligations as set forth herein.  In no event shall prior recourse to any
Receivables or other security granted to or by the Company be a prerequisite to
the Agent’s right to demand payment of any Obligation.  Further, it is understood that the Agent
and/or the Lenders shall have no obligation whatsoever to perform in any
respect any of the Contracts or other obligations relating to the Receivables.


 


3.7           After
the end of each month, the Agent shall promptly send the Company a statement of
the Revolving Loan Account showing the accounting for the charges, loans,
advances and other transactions occurring between the Agent and the Company
during that month.  The monthly
statements shall be deemed correct and binding upon the Company and shall
constitute an account stated between the Company and the Agent unless the Agent
receives a written statement of the exceptions within thirty (30) days of the
date of the monthly statement.


 


3.8           In
the event that the outstanding balance of Revolving Loans exceeds the lesser of
(a) the Borrowing Base, or (b) the Revolving Line of Credit, any such
nonconsensual Overadvance existing as of the end of any month shall be due and
payable to the Agent on behalf of the Lenders on the second Business Day
following the due date for delivery of the Monthly Report for such month.


 


3.9           The
proceeds of the Revolving Loans shall be available solely for general corporate
purposes of the Company and its Subsidiaries.


 


3.10         The
Company, and at the request of the Company the Agent, may arrange for one or
more additional Lenders to become party to this Agreement in order for such
additional Lenders to make available Revolving Loans in the maximum aggregate
amount of up to $25,000,000 in excess of the Commitment existing as of the
Closing Date (the “Additional Commitment”), provided that such
additional Lender or Lenders shall have been approved by the Agent and the
Company in their reasonable discretion 


 


27





















 


and shall have executed such further instruments and
documents as the Agent may reasonably deem desirable for such additional Lender
or Lenders to become party to this Agreement and make available Revolving Loans
in the maximum aggregate amount of the Additional Commitment.


 


SECTION
4.  Periodic Reporting.


 


(a)          Prior to the close of business on the
fifth Business Day of each month, the Company will prepare and forward to the
Agent an aging schedule relating to the Eligible Receivables, as of the close
of business on the last day of the immediately preceding month.


 


(b)         Prior to the close of business on the
15th Business Day of each month, the Company will prepare and forward to the
Agent (i) a Monthly Report, relating to each the Receivables, as of the close
of business on the last day of the immediately preceding month, together with
an analysis of the aging of the Eligible Receivables, (ii) if the Agent so
requests, a listing by Obligor of all Eligible Receivables, and (iii) the
calculation of the amount of Liquidity as of the date of such Monthly Report.


 


(c)          The Company will deliver the reports
required pursuant to this Section 4 with the specified information in
electronic format in such form reasonably satisfactory to the Agent.


 


SECTION 5.  Applicable Laws.  The Company, the Agent and each Lender
acknowledge that the provisions of this Agreement are subject to compliance
with applicable law and regulation, if any.


 


SECTION
6.  Collateral.


 


6.1           As
security for the prompt and complete payment, performance and observance of all
Obligations, the Company hereby grants, assigns, conveys, pledges, hypothecates
and transfers to the Agent, for itself and the benefit of the Lenders, a
continuing general lien upon, and security interest in, all of the Company’s
right, title and interest in, to and under all of the Collateral.


 


6.2           The
security interests granted hereunder shall extend and attach to all Collateral
which is owned by the Company or in which the Company has any interest, whether
held by the Company or others for its account.


 


6.3           The
rights and security interests granted to the Agent and the Lenders hereunder
are to continue in full force and effect, notwithstanding the termination of
this Agreement or the fact that the Revolving Loan Account may from time to
time be 


 


28





















 


temporarily in a credit position, until the final
payment in full to the Agent of all Obligations and the termination of this
Agreement and the Revolving Line of Credit. 
Any delay, or omission by the Agent to exercise any right hereunder
shall not be deemed a waiver thereof, or be deemed a waiver of any other right,
unless such waiver shall be in writing and signed by the Agent and the Lenders,
if applicable.  A waiver on any one
occasion shall not be construed as a bar to, or waiver of, any right or remedy
on any future occasion.


 


6.4           Notwithstanding
the Agent’s security interest in the Collateral, the Agent shall have the right
in its sole discretion to determine which rights, liens, security interests or
remedies the Agent shall at any time pursue, foreclose upon, relinquish,
subordinate, modify or take any other action with respect to, without in any
way modifying or affecting any of them, or any of the Agent’s and/or the
Lenders’ rights hereunder.


 


6.5           It
is expressly agreed by the Company that, anything herein to the contrary
notwithstanding, the Company shall remain liable under each of its Contracts to
observe and perform all the conditions and obligations to be observed and
performed by it thereunder.  Neither the
Agent nor any Lender shall be required or obligated in any manner to perform or
fulfill any of the obligations of the Company under or pursuant to any
Contract, or to make any payment, or to make any inquiry as to the nature or
the sufficiency of any payment received by it or the sufficiency of any
performance by any party under any Contract or Receivable, or to present or file
any claims, or to take any action to collect or enforce any performance or the
payment of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.


 


6.6           On
the Closing Date the Company shall execute and deliver to the Agent a power of
attorney (the “Power of Attorney”) substantially in the form attached
hereto as Exhibit E.  The power of
attorney granted pursuant to the Power of Attorney is a power coupled with an
interest and shall be irrevocable until the termination of this Agreement and
payment and satisfaction of all Obligations hereunder.  The powers conferred on the Agent, for the
benefit of Agent and Lenders, under the Power of Attorney are solely to protect
the Agent’s interests (for the benefit of the Agent and Lenders) in the
Collateral and shall not impose any duty upon the Agent or any Lender to
exercise any such powers.  The Agent
agrees that (a) it shall not exercise any power or authority granted under the
Power of Attorney unless an Event of Default has occurred and is continuing,
and (b) the Agent shall account for any moneys received by the Agent in respect
of any foreclosure on or disposition of Collateral pursuant to the Power of
Attorney provided that none of the Agent or any Lender shall have any duty as
to any Collateral, and the Agent and Lenders shall be accountable only for
amounts that they actually receive as a result of the exercise of such
powers.  NONE OF THE AGENT, LENDERS OR
THEIR RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR 


 


29





















 


REPRESENTATIVES SHALL BE RESPONSIBLE TO THE COMPANY
FOR ANY ACT OR FAILURE TO ACT UNDER ANY POWER OF ATTORNEY OR OTHERWISE, EXCEPT
IN RESPECT OF DAMAGES ATTRIBUTABLE SOLELY TO THEIR OWN BAD FAITH, GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT AS FINALLY DETERMINED BY A COURT OF COMPETENT
JURISDICTION, NOR FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL
DAMAGES.


 


6.7           The
Agent and each Lender shall use reasonable care with respect to the Collateral
in its possession or under its control. 
Neither the Agent nor any Lender shall have any other duty as to any
Collateral in its possession or control or in the possession or control of any
agent or nominee of the Agent or such Lender, or any income thereon or as to
the preservation of rights against prior parties or any other rights pertaining
thereto.


 


SECTION 7.  Representations, Warranties and Covenants.


 


7.1           The
Company represents and warrants as follows:


 


(a)          The Company (i) is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, (ii) has all requisite corporate power and legal right to own and
operate its property, to lease the property it leases, and to carry on its
business as now being conducted, and (iii) is duly qualified to do business,
and is in good standing, in every jurisdiction where the nature of its business
requires it to be so qualified and where the failure to be so qualified could
reasonably be expected to have a Material Adverse Effect.


 


(b)         The Company has all necessary corporate
power and authority to execute and deliver this Agreement and all other
instruments and documents to be delivered hereunder, and to perform its
obligations hereunder and thereunder and to enter into the transactions
contemplated hereby and thereby.  The
execution and delivery by the Company of this Agreement and the other
instruments and documents to be delivered hereunder to which it is a party, and
the performance of its obligations hereunder and thereunder and its entering
into the transactions contemplated hereby and thereby, have been duly
authorized by all necessary corporate action.


 


(c)          None of the execution and delivery by
the Company of this Agreement and the other Loan Documents to which it is a
party, and the performance of its obligations hereunder and thereunder and its
entering into the transactions contemplated hereby and thereby, will conflict
with or contravene, or result in a breach of or a default under, (i) the
Company’s certificate of incorporation or bylaws, or (ii) any material law,
rule or regulation applicable to it, or (iii) any material agreement or
instrument to which it is a party or by which it or any of its property is
bound or subject, or (iv) any material 


 


30





















 


order, regulation,
writ, judgment, injunction or decree of any court or governmental authority or
agency binding on or affecting it or any of its property; and the same will not
result in or require the creation of any material Adverse Claim upon or with
respect to any of its properties (except as contemplated under this Agreement).


 


(d)         No authorization or approval or other
action by, and no notice to or filing (other than informational filings) with,
any governmental authority or regulatory body is required for the due
execution, delivery and performance by the Company of this Agreement or any
other document or instrument to be delivered hereunder or for the validity or
enforceability hereof or thereof, except for (i) filing of the UCC financing
statement referred to in Section 2, which, at the time required in Section 2,
will have been duly made and be in full force and effect and (ii)
authorizations and approvals that have been received and are in full force and effect
as of the Closing Date.


 


(e)          This Agreement constitutes the legal,
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors’ rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
law).


 


(f)          Except as disclosed in SEC Reports
filed prior to the Closing Date, there are no actions, suits or proceedings
pending, or to the knowledge of the Company threatened, against or affecting
the Company or any subsidiary, or the property of the Company or of any
subsidiary, in any court, or before any arbitrator of any kind, or before or by
any governmental body, which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.  Neither the Company nor any subsidiary is in
default with respect to any order of any court, arbitrator or governmental body
except for defaults that could not reasonably be expected to have a Material
Adverse Effect.


 


(g)         Each Receivable is (i) together with
the Contract related thereto, legally and beneficially owned by the Company
free and clear of any Adverse Claim (except as created hereunder), and (ii) at
the time a security interest therein is granted hereunder, and to the extent
included at any time in the Net Receivables Pool Balance or identified as such
in any Monthly Report, an Eligible Receivable.


 


(h)         Each Monthly Report (if prepared by the
Company, or to the extent that information contained therein is supplied by the
Company), information, exhibit, financial statement, document, book, record or
report furnished at any time by the Company to the Agent or any Lender in
connection with this Agreement is accurate in all material respects as of its
date or (except as otherwise disclosed to the Agent or such 


 


31





















 


Lender, as the
case may be, at such time) as of the date so furnished, and no such document
contains any material misstatement of fact or omits to state a material fact or
any fact necessary to make the statements contained therein not misleading; provided
that, with respect to forward looking statements, the Company represents only
that such information was prepared in good faith based upon assumptions
believed to be reasonable at the time and notes that there can be no assurance
that such expectations, beliefs or projections will be achieved or accomplished
and that such projections are subject to an increasing degree of uncertainty as
they relate to later periods of time.


 


(i)           [Reserved].


 


(j)           The Company has, and is, not (i)
engaged in any non-exempt “prohibited transaction” as defined in Part 4 of
Title I(B) of ERISA; (ii) engaged in any proceeding in which the Pension
Benefit Guaranty Corporation shall seek appointment, or is appointed, as
trustee or administrator of any “plan,” as defined in ERISA; or (iii)
terminated or terminating any “plan,” as defined in Title IV of ERISA.  The Company does not have (A) any “accumulated
funding deficiency” as defined in Section 302(a)(2) of ERISA or (B) any “reportable
event” as defined in Section 4043(c) of ERISA for which the 30-day notice requirement
has not been waived by regulation.


 


(k)          The Company is not engaged
principally, or as one of its important activities, in the business of
extending credit for the purpose, whether immediate, incidental or ultimate, of
buying or carrying margin stock, as defined in Regulation U promulgated by the
Board of Governors of the Federal Reserve System from time to time, and no part
of the proceeds of any Revolving Loan hereunder will be used to buy or carry
any margin stock.  No part of the
proceeds of any Revolving Loan hereunder will be used to acquire stock of any
corporation the board of directors of which has publicly stated its opposition
to such acquisition or fails to endorse such acquisition.


 


(l)           This Agreement, together with the
filing of the financing statement contemplated by Section 2, is effective to,
and shall, create in favor of the Agent a valid and perfected first priority
security interest in each Receivable existing or hereafter arising and in the
Related Security and Collections with respect thereto, free and clear of any
Adverse Claim, except as created in connection herewith.  There have been duly filed all financing
statements or other similar instruments or documents necessary under the UCC (or
any comparable law) of all appropriate jurisdictions to perfect the Agent’s
security interest in that portion of the Collateral with respect to which a
financing statement can perfect a security interest.


 


(m)         The jurisdiction of organization,
principal places of business and chief executive office of the Company and the
offices where it keeps all of its Records are located at the address(es) listed
on the Perfection Certificate.  The
Company’s 


 


32





















 


organizational
number assigned to it by its jurisdiction of organization and the Company’s
Federal Employer Identification Number are correctly set forth on the
Perfection Certificate.  The Company has
not, within a period of five years prior to the Closing Date, (i) changed the
location of its principal place of business or chief executive office or its
organizational structure or the offices where it keeps all of its Records, (ii)
changed its “location” (within the meaning of Section 9-307 of the UCC as in
effect in all applicable jurisdictions), or (iii) become a “new debtor” (as
defined in Section 9-102(a)(56) of the UCC as in effect in all applicable
jurisdictions) with respect to a currently effective security agreement
previously entered into by any other Person. 
The Company has not changed its jurisdiction of organization.  The Company is a Delaware corporation and is
a “registered organization” (within the meaning of Section 9-102 of the UCC as
in effect in the State of Delaware).


 


(n)         The names and addresses of all the
Blocked Account Banks, together with the account numbers of the Blocked
Accounts at each such Blocked Account Bank, are listed in the Perfection
Certificate.  The Company has not granted
any Person, other than the Agent as contemplated by this Agreement, dominion
and control or “control” (within the meaning of Section 9-104 of the UCC of all
applicable jurisdictions) of any P.O. Box or Blocked Account, or the right to
take dominion and control or “control” (within the meaning of Section 9-104 of
the UCC of all applicable jurisdictions) of any such P.O. Box or Blocked
Account at a future time or upon the occurrence of a future event.  The Company has taken all steps necessary to
ensure that the Agent has “control” (within the meaning of Section 9-104 of the
UCC of all applicable jurisdictions) over all Blocked Accounts.  Except for proceeds of Excluded Receivables,
no funds other than the proceeds of Receivables are deposited to any Blocked
Account.


 


(o)         Except as disclosed in SEC Reports
filed prior to the Closing Date, the Company represents and warrants that since
June 30, 2004, no event has occurred that would have a Material Adverse Effect.


 


(p)         In the past five years, Company has not
changed its legal name, used any corporate or other names or assumed names
other than the name in which it has executed this Agreement other than as set
forth in the Perfection Certificate.


 


(q)         The Company is not, and after giving
effect to the transactions contemplated hereby, will not be (i) required to
register as, an “investment company” within the meaning of the Investment
Company Act of 1940, as amended; or (ii) a “holding company,” a “subsidiary
company” of a “holding company,” or an “affiliate” of a “holding company,” as
each such term is defined in the Public Utility Holding Company Act of 1935, as
amended.


 


33





















 


(r)          The Company has complied in all
material respects with all applicable statutes, rules, regulations, orders and
restrictions of any domestic or foreign government or any instrumentality or
agency thereof having jurisdiction over the conduct of its businesses or the
ownership of its property, except for any failure to comply with any of the
foregoing that could not reasonably be expected to have a Material Adverse
Effect.


 


(s)          To the best of the Company’s knowledge
and belief, each Receivable, together with the Contract related thereto, does
not contravene any laws, rules or regulations applicable thereto (including
laws, rules and regulations relating to truth in lending, fair credit billing,
fair credit reporting, equal credit opportunity, fair debt collection practices
or privacy), and no part of such Contract is in violation of any such law, rule
or regulation.


 


(t)          The Company has complied in all
material respects with the Credit and Collection Policy with regard to each
Receivable and the related Contract except where the failure to so comply could
not reasonably be expected to result in a Material Adverse Effect, and since
the Closing Date has not made any change to such Credit and Collection Policy
in a manner prohibited hereunder and as to which the Agent has been notified,
and if applicable, as to which the Agent has consented.


 


(u)         To the Company’s knowledge, each
Contract with respect to each Receivable is effective to create, and has
created, a legal, valid and binding obligation of the related Obligor to pay
the Outstanding Balance of the Receivable created thereunder and any accrued
interest thereon, enforceable against the Obligor in accordance with its terms,
except as such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws relating to or limiting creditors’ rights
generally and by general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).


 


(v)         The Company has determined that,
immediately after giving effect to each borrowing hereunder, the aggregate
outstanding principal amount of Revolving Loans does not exceed the lesser of
the Borrowing Base and the Revolving Line of Credit.


 


(w)         The Company has identified the
Receivables on its books and records (including any accounting system) as being
subject to a security interest in favor of the Agent in connection with this
Agreement, and the Receivables constitute a portion of the “Domestic Utilities”
reporting segment on the Company’s financial statements.


 


7.2           Affirmative
Covenants of the Company.  Until
termination of this Agreement and payment and satisfaction of all Obligations
hereunder, the Company will:


 


34





















 


(a)          Comply with all applicable laws,
rules, regulations and orders with respect to it, its business and properties
and all Receivables and related Contracts, except where the failure to do so
could not reasonably be expected to have a Material Adverse Effect.


 


(b)         Preserve and maintain its corporate
existence, rights, franchises and privileges in the jurisdiction of its
incorporation, and qualify and remain qualified in good standing as a foreign
corporation in each jurisdiction where the failure to preserve and maintain
such existence, rights, franchises, privileges and qualification could
reasonably be expected to have a Material Adverse Effect.


 


(c)          (1) At any time following reasonable
notice and during regular business hours in a manner not unreasonably
interfering with the Company’s operations, or (2) if an Event of Default has
occurred and is continuing (and in each case, subject to the provisions of
Section 8.3), permit the Agent, or its agents or representatives, to (i)
examine and make copies of and abstracts from all books, Records and documents
(including computer tapes and disks) in the possession or under the control of
the Company relating to Receivables (and including, following an Event of
Default, material that would constitute Records under the definition thereof
but for the fact that such material does not relate solely to the Receivables),
and such other documentation and information relating to said Receivables and
other Collateral as the Agent may reasonably require; (ii) visit the offices
and properties of the Company for the purpose of examining or auditing such
materials described in clause (i) above; and (iii) discuss matters relating to
Receivables or the Company’s performance hereunder with any of the officers or
employees of the Company having knowledge of such matters.


 


(d)         (i) Maintain and implement
administrative and operating procedures (including an ability to recreate
records evidencing Receivables in the event of the destruction of the originals
thereof), and keep and maintain all documents, books, records and other
information reasonably necessary or advisable for the collection of all
Receivables (including records adequate to permit the daily identification of
each new Receivable and all Collections of and adjustments to each existing
Receivable). The Company will give the Agent notice of any material change in
the administrative and operating procedures referred to in the previous
sentence.


 


(ii)           (A) On or prior to the Closing Date,
mark its books and records relating to the Receivables with a description of
the security interest created hereunder and (B) following the occurrence and
during the continuation of an Event of Default, upon the request of the Agent
deliver to the Agent all Contracts or copies thereof relating to the
Receivables to the extent permitted under applicable law, rules or regulations.


 


35





















 


(e)          At its expense, timely and fully
perform and comply in all material respects with provisions, covenants and
other promises required to be observed by it under the Contracts related to the
Receivables.


 


(f)          Establish and maintain, in favor of
the Agent for the benefit of the Lenders, a valid and perfected first priority
security interest in the Collateral to the full extent contemplated herein,
free and clear of any Adverse Claims other than Adverse Claims in favor of the
Agent for the benefit of the Lenders (including the filing of all financing
statements or other similar instruments or documents necessary under the UCC
(or any comparable law) of all appropriate jurisdictions to perfect the
interest in that portion of such Collateral with respect to which a security
interest may be perfected by filing a financing statement and such other action
to perfect, protect or more fully evidence the interest of the Agent for the
benefit of the Lenders as the Agent may reasonably request).


 


(g)         Comply in all material respects with
its Credit and Collection Policy in regard to each Receivable and the related
Contract.


 


(h)         Instruct all Obligors to remit all
Collections directly to a P.O. Box or Blocked Account.  The Company agrees to identify funds received
from Obligors to their related outstanding Receivables as promptly as feasible.  The Company will cause (i) all items from all
P.O. Boxes to be processed and deposited to a Blocked Account within three
Business Days after receipt in a P.O. Box and all proceeds from all P.O. Boxes
to be directly deposited into a Blocked Account, and (ii) all amounts deposited
to any Blocked Account relating to Excluded Receivables to be electronically
swept or otherwise transferred out of such Blocked Account within two Business
Days of being deposited therein, subject to the Agent’s exercise of its rights
under Section 3.4(b).  If any payments
relating to Receivables (other than those deposited directly into Blocked
Accounts) are remitted directly to the Company or any affiliate of the Company
or to any other bank through which the Company has an arrangement to accept
so-called “walk-in” payments, the Company will remit (or will cause all such
payments to be remitted) directly for deposit into a Blocked Account within two
Business Days following receipt thereof. 
The Company shall not grant the right to take dominion and control or “control”
(within the meaning of Section 9-104 of the UCC of all applicable
jurisdictions) of any P.O. Box or Blocked Account at a future time or upon the
occurrence of a future event to any Person, except to the Agent as contemplated
by this Agreement.  With respect to each
Blocked Account, the Company shall take all steps necessary to ensure that the
Agent has “control” (within the meaning of Section 9-104 of the UCC of all
applicable jurisdictions) over each such Blocked Account.


 


(i)           Provide the Agent with prior written
notice of any and all deposit accounts opened subsequent to the Closing Date
into which proceeds of any Receivables are 


 


36





















 


proposed to be
deposited, and prior to their use for such purpose the Company shall cause a
Blocked Account Agreement to be entered into with respect to such deposit
account and the proposed Blocked Account Bank shall be reasonably satisfactory
to the Agent.


 


(j)           File all tax returns and reports
required by law to be filed by it and will promptly pay and discharge, before
the same shall become delinquent, all taxes, assessments and governmental
charges or levies imposed upon it or upon its property, except any such taxes,
assessments, charges or levies (i) that are being diligently contested in good
faith by appropriate proceedings or (ii) subject to the last sentence of this
paragraph (j), the non-payment of which could not reasonably be expected to
have a Material Adverse Effect.  The
Company will pay when due any taxes payable in connection with the Receivables,
exclusive of taxes on or measured by income or gross receipts of the Agent or
any Lender.


 


(k)          Maintain with responsible insurance
companies or through the Company’s program of self-insurance, insurance against
at least such risks and in at least such amounts as is customarily maintained
by similar businesses, or as may be required by any applicable law, rule or
regulation, any governmental approval, or any order, writ, injunction or decree
of any court or governmental authority or agency.


 


(l)           At all times identify the Receivables
subject to the security interest in favor of the Agent for the benefit of the
Lenders created hereunder on its books and records (including its accounting
system) as being subject to a security interest in favor of the Agent in
connection with this Agreement, and as Receivables constituting a portion of
the “Domestic Utilities” reporting segment on the Company’s financial
statements.


 


(m)         Enter into transactions with affiliates
of the Company only upon standard terms and conditions and fair and reasonable
terms, no less favorable to the Company than the Company could obtain in a
comparable arms length transaction with an unrelated third party.


 


(n)         Until the Agent has advised the Company
to the contrary after the occurrence of an Event of Default, at its expense,
enforce, collect and receive all amounts owing on the Receivables in the
ordinary course of its business and handle the proceeds it so receives in
accordance with the terms hereof.


 


(o)         Comply with its obligations under each
Blocked Account Agreement.


 


(p)         Use the proceeds of each extension of
credit hereunder solely for the purposes set forth in Section 3.9.  The Company acknowledges that one or more of
the 


 


37





















 


Lenders may treat
its Revolving Loans as part of a transaction that is subject to Treasury
Regulation Section 301.6112-1, and such Lender or Lenders, as applicable, will
maintain the lists and other records required by such Treasury Regulation.


 


(q)         Upon the written request of the Agent
and at the sole expense of the Company, promptly and duly execute and deliver
any and all such further instruments and documents and take such further
actions as the Agent may reasonably deem desirable to obtain the full benefits
of this Agreement and of the rights and powers herein granted.  The Company also hereby authorizes the Agent,
for the benefit of Agent and Lenders, to file any such financing or
continuation statements without the signature of the Company to the extent
permitted by applicable law.


 


7.3           The
Company agrees to execute and deliver to the Agent, from time to time, solely
for the Agent’s convenience in maintaining a record of the Collateral, such
written statements, and schedules as the Agent may reasonably require,
designating, identifying or describing the Collateral. The Company’s failure,
however, to promptly give the Agent such statements, or schedules shall not
affect, diminish, modify or otherwise limit the Agent’s and/or the Lenders’
security interests in the Collateral.


 


7.4           [Reserved].


 


7.5           Until
termination of this Agreement and payment and satisfaction of all Obligations
hereunder, the Company agrees that, without the prior written consent of the
Agent, except as otherwise herein provided, the Company will not:


 


(a)          Sell, assign (by operation of law or
otherwise) or otherwise dispose of, or create or suffer to exist any Adverse
Claim upon or with respect to, any Collateral, or upon or with respect to any
P.O. Box or Blocked Account to which any Collections are sent, or assign any
right to receive income in respect thereof;


 


(b)         Extend, amend or otherwise modify the
terms of any Receivable, or amend, modify or waive any term or condition of any
Contract related thereto in a manner inconsistent with its past practices or
which could reasonably be expected to have a Material Adverse Effect;


 


(c)          Make any change in the character of
its business or in the Credit and Collection Policy, which change would, in either
case, impair the collectibility of any material portion of the Eligible
Receivables;


 


(d)         Make any change in its instructions to
Obligors regarding payments to be made to any P.O. Box or Blocked Account,
unless the Agent has received notice of such 


 


38





















 


addition,
termination or change and the new account shall have been subjected to the
provisions of a Blocked Account Agreement;


 


(e)          Except for proceeds of Excluded
Receivables (which shall be electronically swept or otherwise transferred out
of such Blocked Account within two Business Days of being deposited therein in
accordance with Section 7.2(h)), deposit or otherwise credit, or cause or
permit to be so deposited or credited, to any Blocked Account or related P.O.
Box cash or cash proceeds other than Collections, or otherwise commingle in any
such Blocked Account any general operating funds of the Company;


 


(f)          Change its name or type or
jurisdiction of organization (within the meaning of Sections 9-503 or 9-507 of
the UCC of all applicable jurisdictions) unless it shall have (i) given the
Agent at least 45 days’ prior notice thereof, and (ii) delivered to the Agent
all financing statements, instruments and other documents requested by the
Agent in connection with such change, event or relocation;


 


(g)         Permit the ratio (expressed as a
percentage) of Debt of the Company to Total Capital to exceed, on any Covenant
Compliance Date from December 31, 2004 through termination of this Agreement
and payment and satisfaction of all Obligations hereunder, 90%; or


 


(h)         Permit the ratio of (A) EBITDA to (B)
the aggregate amount of Consolidated Interest Expense accrued on Debt of the
Company on any Covenant Compliance Date for the period of four consecutive
Fiscal Quarters prior to such Covenant Compliance Date, to be less than, in
respect of any Covenant Compliance Date from December 31, 2004 to the
termination of this Agreement and payment and satisfaction of all Obligations
hereunder, 1.0 to 1.0.


 


In the Compliance Certificate delivered pursuant to Section 7.6(k)
following the conclusion of the sale of any asset (other than accounts
receivable) material to the Company and used in the Domestic Utility Business
permitted by Section 5.02(g) of the Credit Agreements, the Company shall
calculate the financial covenants set forth in Sections 7.5(g) and 7.5(h) on a
pro forma basis.  In calculating
financial covenants on a pro-forma basis, the Company will (A) exclude income,
Debt and other charges associated with the assets subject to such sale and (B)
give effect to the application of the net proceeds generated by such sale; provided,
that if the Company has not applied the net sale proceeds in the manner
contemplated in the calculations made pursuant to clause (B) prior to the
immediately following Covenant Compliance Date, the Company will not be
permitted to continue to give effect to the application of such net sale
proceeds.


 


7.6           Reporting
Requirements of the Company.  Until
the later of the Commitment Termination Date and the payment and satisfaction
of all Obligations 


 


39





















 


hereunder, the Company will, unless the Agent
otherwise consents in writing, furnish to the Agent (and the Agent shall
promptly disseminate to the Lenders):


 


(a)          as soon as available and in any event
within 60 days after the end of each of the first three quarters of each fiscal
year of the Company, consolidated balance sheets of the Company and its
consolidated subsidiaries as of the end of such quarter, and consolidated
statements of income and retained earnings of the Company and its consolidated
subsidiaries, each for the period commencing at the end of the previous fiscal
year and ending with the end of such quarter, certified by the chief financial officer,
chief accounting officer or treasurer of the Company, provided that
filing of the Company’s quarterly report on Form 10-Q with the Securities and
Exchange Commission will satisfy the foregoing requirement;


 


(b)         as soon as available and in any event
within 120 days after the end of each fiscal year of the Company, a copy of the
consolidated balance sheets of the Company and its consolidated subsidiaries as
of the end of such year and the related consolidated statements of income and
retained earnings of the Company and its consolidated subsidiaries for such
year, each reported on by nationally recognized independent public accountants,
provided, that filing of the Company’s annual report on Form 10-K with
the Securities and Exchange Commission will satisfy the foregoing requirement;


 


(c)          promptly after the sending or filing
thereof, copies of all periodic reports which the Company sends to any of its
security holders and copies of all periodic reports which the Company files
with the Securities and Exchange Commission, provided, that filing of
such reports with the Securities and Exchange Commission will satisfy the
foregoing requirement;


 


(d)         promptly after the filing or receiving
thereof, copies of all reports and notices with respect to any Reportable Event
as defined in Section 4043(c) of ERISA which the Company or any subsidiary
files under ERISA with the Internal Revenue Service, the Pension Benefit
Guaranty Corporation or the U.S. Department of Labor or which the Company or
any subsidiary receives from such corporation;


 


(e)          as soon as possible and in any event
within five days after the occurrence of each Liquidity Event or Event of
Default or each event which, with the giving of notice or lapse of time, would
constitute an Event of Default, the statement of the chief financial officer,
chief accounting officer or treasurer of the Company setting forth details of
such Liquidity Event or Event of Default or such other event and the action
which the Company proposes to take with respect thereto;


 


(f)          as soon as commercially practicable
prior to the effectiveness of any material change in, or material amendment to,
the Credit and Collection Policy, a copy


 


40





















 


of the Credit and
Collection Policy then in effect and a notice (i) indicating such change or
amendment, and (ii) if such proposed change or amendment would be reasonably
likely to have a Material Adverse Effect, requesting the Agent’s consent
thereto;


 


(g)         notice of (i) the entry of any material
adverse judgment, decree, rule or order or the institution of any material
litigation, arbitration proceeding, investigation or governmental, including
without limitation regulatory, proceeding against the Company and (ii) any
material adverse development in any previously disclosed litigation,
arbitration proceeding, investigation or governmental proceeding;


 


(h)         notice of the occurrence of any event
or condition that has had, or could reasonably be expected to have, a Material
Adverse Effect; and


 


(i)           notice of the occurrence of a default
or an event of default under any other agreement evidencing indebtedness for
borrowed monies, involving an aggregate principal amount outstanding of at
least $40,000,000, pursuant to which the Company is a debtor or an obligor;


 


(j)           notice of any downgrade in (or
withdrawal of) the Company’s senior unsecured debt rating by S&P or by
Moody’s;


 


(k)          concurrently with the delivery of the
financial statements referred to in Sections 7.6(a) and 7.6(b), a compliance
certificate of the chief financial officer or treasurer of the Company, in form
and substance satisfactory to the Agent (the “Compliance Certificate”)
showing compliance by the Company with the covenants contained in Sections
7.5(g) and 7.5(h); and


 


(l)           promptly, from time to time, such
other information, documents, records or reports respecting the Receivables or
the conditions or operations, financial or otherwise, of the Company as the
Agent reasonably may from time to time request in order to protect any Lender’s
or the Agent’s interests under or contemplated by this Agreement.


 


7.7           Indemnities
by the Company.  Without limiting any
other right which the Agent and each Lender and each of their respective
officers, directors, employees and agents (each, an “Indemnified Party”)
may have hereunder or under applicable law, the Company hereby agrees to
indemnify each Indemnified Party from and against any and all damages, losses,
claims, liabilities and related costs and expenses, including reasonable
attorneys’ fees and disbursements (all of the foregoing being collectively
referred to as “Indemnified Amounts”) awarded against or incurred by any
of them, whether prior to or from and after the Closing Date, whether direct,
indirect or consequential, arising out of or as a result of this Agreement or
in respect of any


 


41





















 


Receivable or any Contract, excluding, however, (a)
Indemnified Amounts to the extent resulting from gross negligence or willful
misconduct on the part of such Indemnified Party as determined by a final
judgment of a court of competent jurisdiction; or (b) any Excluded Taxes
incurred by such Indemnified Party arising out of or as a result of this
Agreement or in respect of any Receivable or any Contract; or (c) fees and
other costs and expenses related to the assignment of a Lender’s rights and
obligations under this Agreement as set forth in Section 13.9.  Without limiting the foregoing (but subject
to the restrictions described in the foregoing clauses (a), (b) and (c)), the
Company will indemnify each Indemnified Party for Indemnified Amounts relating
to or resulting from any of the following:


 


(i)            reliance on any representation or
warranty made by the Company (or any of its officers) under or in connection
with this Agreement, any Monthly Report or any other information or report
(except projections or any forward looking statements made in good faith)
delivered by the Company pursuant hereto, which was false or incorrect in any
material respect when made or deemed made;


 


(ii)           the failure by the Company to comply
with any applicable law, rule, order or regulation with respect to any Loan
Document and any Receivable or the related Contract, or the nonconformity of
any Receivable or the related Contract, or performance under the Loan
Documents, with any such applicable law, rule, order or regulation;


 


(iii)          the failure to maintain continuously,
in favor of the Agent for the benefit of the Lenders, a security interest in
the Collateral, free and clear of any Adverse Claim;


 


(iv)          the failure to file, or any delay in
filing, financing statements or other similar instruments or documents under
the UCC of any applicable jurisdiction or other applicable laws with respect to
any of the Collateral;


 


(v)           any dispute, claim, offset or defense
(other than the bankruptcy of the Obligor) of the Obligor to the payment of any
Receivable in, or purporting to be in, the Collateral (including a defense
based on this Agreement, other Loan Document, such Receivable or the related
Contract not being a legal, valid and binding obligation of such Obligor
enforceable against it in accordance with its terms), or any other claim
resulting from the sale of electricity, natural gas, or other goods or services
related to such Receivable or related Contract, or the furnishing or failure to
furnish such electricity, natural gas, or other goods or services;


 


42





















 


(vi)          any products liability claim arising
out of or in connection with goods or services which are the subject of any
Contract;


 


(vii)         the commingling of Collections of
Receivables at any time with other funds; and


 


(viii)        any other matter relating to the
financing transactions contemplated by this Agreement or the other Loan
Documents or by any document executed in connection with the transactions
contemplated by this Agreement or the other Loan Documents.


 


SECTION 8.  Interest, Fees and Expenses.


 


8.1           (a)  Interest on the Revolving Loans shall be
payable monthly as of the last day of each month.  Interest on Base Rate Loans shall be payable
in an amount equal to the Base Rate plus one-half of one percent (0.50%) per
annum on the average of the net balances owing by the Company to the Agent in
the Revolving Loan Account (excluding amounts relating to LIBOR Loans) at the
close of each day during such month.  In
the event of any change in said Base Rate, the rate hereunder for Base Rate
Loans shall change, as of the date of such change, so as to remain one-half of
one percent (0.50%) above the Base Rate. 
The rate hereunder for Base Rate Loans shall be calculated based on a
360 day year.  The Agent shall be
entitled to charge the Company’s Revolving Loan Account at the rate provided
for herein when due until all Obligations have been paid in full.


 


(b)         Notwithstanding any provision to the
contrary contained in this Section 8, in the event that the sum of the
outstanding Revolving Loans exceed the lesser of either (x) the maximum
aggregate amount available under Section 3 of this Agreement or (y) the Revolving
Line of Credit:  (A) as a result of
Revolving Loans advanced by the Agent at the request of the Company (herein “Requested
Overadvances”), for any one (1) or more days in any month, or (B) for any
other reason whatsoever (herein “Other Overadvances”) and such Other
Overadvances continue for five (5) or more days in any month, the average net
balance of all Revolving Loans for such month shall bear interest at the
Overadvance Rate.


 


(c)          Upon and after the occurrence of an
Event of Default and the giving of any required notice by the Agent in
accordance with the provisions of Section 10.2, all Obligations shall bear
interest at the Default Rate of Interest.


 


8.2           (a)
The Company will pay fees to the Agent pursuant to the Fee Letter at the times
specified therein.


 


43





















 


(a)          The Company will pay to the Agent (for
the benefit of the Lenders) the Unused Facility Fee, payable monthly in arrears
as of the last Business Day of each month following the Closing Date and, with
respect to the month on which the Commitment Termination Date occurs, payable
in arrears as of the Commitment Termination Date.  The Unused Facility Fee shall be calculated
based on the actual number of days elapsed in a year of 365 days per year.


 


8.3           The
Company shall pay the Agent’s standard charges and fees for the Agent’s
personnel and consultants used by the Agent for reviewing the books and records
of the Company and for verifying, testing, protecting, safeguarding, preserving
or disposing of all or any part of the Collateral (which fees shall be in
addition to any reasonable Out-of-Pocket Expenses) (i) in connection with not
more than 2 audits or inspections in any calendar year, and (ii) in all
circumstances after an Event of Default has occurred and is continuing.


 


8.4           The
Company hereby authorizes the Agent to charge the Revolving Loan Account with
the amount of all payments due hereunder as such payments become due.  The Company confirms that any charges which
the Agent may so make to the Revolving Loan Account as herein provided will be
made as an accommodation to the Company and solely at the Agent’s discretion.


 


8.5           In
the event that the Agent or any Lender (or any financial institution which may
become a Lender) or participant shall have determined in the exercise of its
reasonable business judgment that, subsequent to the Closing Date, any change
in applicable law, rule, regulation or guideline regarding capital adequacy, or
any change in the interpretation or administration thereof, or compliance by
the Agent or such Lender or such participant with any new request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on the Agent’s or such Lender’s or such participant’s
capital as a consequence of its obligations hereunder to a level below that
which the Agent or such Lender or such participant could have achieved but for
such adoption, change or compliance (taking into consideration the Agent or
such Lender or such participant’s policies with respect to capital adequacy) by
an amount reasonably deemed by the Agent or such Lender or such participant to
be material, then, from time to time, the Company shall pay no later than five
(5) Business Days following demand to the Agent or such Lender or such
participant such additional amount or amounts as will compensate the Agent’s or
such Lender’s or participant’s for such reduction.  In determining such amount or amounts, the
Agent or such Lender or participant may use any reasonable averaging or
attribution methods.  The protection of
this Section 8.5 shall be available to the Agent or such Lender or such
participant regardless of any possible contention of invalidity or
inapplicability with respect to the applicable law, regulation or condition. A
certificate of the Agent or such Lender or such participant setting forth such 


 


44





















 


amount or amounts as shall be necessary to compensate
the Agent or such Lender or participant with respect to this Section 8.5 and
the calculation thereof when delivered to the Company shall be conclusive on
the Company absent manifest error. 
Notwithstanding anything in this paragraph to the contrary, in the event
the Agent or such Lender or participant has exercised its rights pursuant to
this paragraph, and subsequent thereto determines that the additional amounts
paid by the Company in whole or in part exceed the amount which the Agent or
such Lender or such participant actually required to be made whole, the excess,
if any, shall be returned to the Company by the Agent or such Lender or such
participant.


 


8.6           In
the event that any applicable law, treaty, rule or governmental regulation, or
any change therein or in the interpretation or application thereof, or
compliance by the Agent or such Lender or such participant with any request or
directive (whether or not having the force of law) from any central bank or
other financial, monetary or other authority, shall:


 


(i)            subject the Agent or such Lender or
such participant to any tax of any kind whatsoever with respect to this
Agreement or change the basis of taxation of payments to the Agent or such
Lender or such participant of principal, fees, interest or any other amount
payable hereunder or under any other documents (except for Excluded Taxes);


 


(ii)           impose, modify or hold applicable any
reserve, special deposit, assessment or similar requirement against assets held
by, or deposits in or for the account of, advances or loans by, or other credit
extended by the Agent or such Lender or such participant by reason of or in
respect to this Agreement and the Loan Documents, including (without
limitation) pursuant to Regulation D of the Board of Governors of the Federal
Reserve System; or


 


(iii)          impose on the Agent or such Lender or
such participant any other condition with respect to this Agreement or any
other document, and the result of any of the foregoing is to increase the cost
to the Agent or such Lender or such participant of making, renewing or
maintaining its loans hereunder by an amount that the Agent or such Lender or
such participant deems to be material in the exercise of its reasonable
business judgment or to reduce the amount of any payment (whether of principal,
interest or otherwise) in respect of any of the loans by an amount that the
Agent or such Lender or such participant deems to be material in the exercise
of its reasonable business judgment,


 


then,
in any case the Company shall pay the Agent or such Lender or such participant,
within five (5) Business Days following its demand, such additional cost or
such reduction, as the case may be (including any additional tax or charge
which may be 


 


45





















 


imposed
upon the increased payment made pursuant to this Section 8.6 so that the Agent
or such Lender or participant receives the same amount it would have received
but for the imposition of such increased costs, tax or requirement).  The Agent or such Lender or such participant
shall certify the amount of such additional cost or reduced amount to the
Company and the calculation thereof and such certification shall be conclusive
upon the Company absent manifest error. 
Notwithstanding anything in this paragraph to the contrary, in the event
the Agent or such Lender or such participant has exercised its rights pursuant
to this paragraph, and subsequent thereto determine that the additional amounts
paid by the Company in whole or in part exceed the amount which the Agent or
such Lender or such participant actually required pursuant hereto, the excess,
if any, shall be returned to the Company by the Agent or such Lender or such
participant.


 


8.7           The
Company may request LIBOR Loans on the following terms and conditions:


 


(a)          The Company may elect, subsequent to
the Closing Date and from time to time thereafter, (i) to request any loan made
hereunder to be a LIBOR Loan as of the date of such loan or (ii) to convert
Base Rate Loans to LIBOR Loans, and may elect from time to time to convert
LIBOR Loans to Base Rate Loans by giving the Agent at least three (3) Business
Days’ prior irrevocable notice of such election, provided that any such
conversion of LIBOR Loans to Base Rate Loans shall only be made, subject to the
second following sentence, on the last day of an Interest Period with respect
thereto.  Should the Company elect to
convert Base Rate Loans to LIBOR Loans, it shall give the Agent at least three
Business Days’ prior irrevocable notice of such election.  If the last day of an Interest Period with
respect to a loan that is to be converted is not a Business Day or Working Day,
then such conversion shall be made on the next succeeding Business Day or
Working Day, as the case may be, and during the period from such last day of an
Interest Period to such succeeding Business Day, as the case may be, such loan
shall bear interest as if it were a Base Rate Loan.  All or any part of outstanding Base Rate
Loans then outstanding with respect to Revolving Loans may be converted to
LIBOR Loans as provided herein, provided that partial conversions shall
be in multiples in an aggregate principal amount of $1,000,000 or more.


 


(b)         Any LIBOR Loans may be continued as
such upon the expiration of an Interest Period, provided the Company so
notifies the Agent, at least three (3) Business Days’ prior to the expiration
of said Interest Period, and provided, further, that a LIBOR Loan
shall be automatically converted to a Base Rate Loan on the last day of an
Interest Period if an Event of Default or event that would constitute an Event
of Default but for the requirement that notice be given or time elapse is
continuing.  Absent such notification,
LIBOR Loans shall convert to Base Rate Loans on the last day of the applicable
Interest Period.  Each notice of
election, conversion or continuation furnished by the Company pursuant hereto
shall specify whether such election, conversion or 


 


46





















 


continuation is
for a one, two, or three month period. 
Notwithstanding anything to the contrary contained herein, the Agent (or
any participant or Lender, if applicable) shall not be required to purchase
United States Dollar deposits in the London interbank market or from any other
applicable LIBOR market or source or otherwise “match fund” to fund LIBOR
Loans, but any and all provisions hereof relating to LIBOR Loans shall be
deemed to apply as if the Agent (and any participant or Lender, if applicable)
had purchased such deposits to fund any LIBOR Loans.


 


(c)          The Company may request a LIBOR Loan,
convert any Base Rate Loan or continue any LIBOR Loan provided there is then no
Event of Default or event that would constitute an Event of Default but for the
requirement that notice be given or time elapse continuing that has not been
waived.


 


8.8           (a)  The LIBOR Loans shall bear interest for each
Interest Period with respect thereto on the unpaid principal amount thereof at
a rate per annum equal to LIBOR determined for each Interest Period in
accordance with the terms hereof, plus two and one-half percent (2.50%).


 


(b)         The Company may not have more than
three (3) LIBOR Loans outstanding at any given time.


 


8.9           (a)
Interest in respect of the LIBOR Loans shall be calculated on the basis of a
360 day year and shall be payable as of the end of each month.


 


(a)          The Agent shall, at the request of the
Company, deliver to the Company a statement showing the computations used in
determining any interest rate pursuant to this Section 8 hereof.


 


8.10         In
the event that the Agent or any Lender (or any financial institution which may
become a participant hereunder) shall have determined in the exercise of its
reasonable business judgment (which determination shall be conclusive and
binding upon the Company) that by reason of circumstances affecting the
interbank LIBOR market, adequate and reasonable means do not exist for
ascertaining LIBOR applicable for any Interest Period with respect to:  (a) a proposed loan that the Company has
requested be made as a LIBOR Loan; (b) a LIBOR Loan that will result from the
requested conversion of a Base Rate Loan into a LIBOR Loan; or (c) the
continuation of LIBOR Loans beyond the expiration of the then current Interest
Period with respect thereto, the Agent or such Lender shall forthwith give
written notice of such determination to the Company at least one Business Day
prior to, as the case may be, the requested borrowing date for such LIBOR Loan,
the conversion date of such Base Rate Loan or the last day of such Interest
Period; provided that if such circumstances exist with respect to less
than all Interest Periods, the Agent or such Lender shall so advise the Company
and the Company may 


 


47





















 


select such available Interest Periods.  If such notice is given (i) any requested
LIBOR Loan shall be made as a Base Rate Loan, (ii) any Base Rate Loan that was
to have been converted to a LIBOR Loan shall be continued as a Base Rate Loan,
and (iii) any outstanding LIBOR Loan shall be converted, on the last day of
then current Interest Period with respect thereto, to a Base Rate Loan.  Until such notice has been withdrawn by the
Agent or such Lender, no further LIBOR Loan shall be made nor shall the Company
have the right to convert a Base Rate Loan to a LIBOR Loan.


 


8.11         If
any payment on a LIBOR Loan becomes due and payable on a day other than a
Business Day or Working Day, the maturity thereof shall be extended to the next
succeeding Business Day or Working Day unless the result of such extension
would be to extend such payment into another calendar month in which event such
payment shall be made on the immediately preceding Business Day or Working Day.


 


8.12         Notwithstanding
any other provisions herein, if any law, regulation, treaty or directive or any
change therein, or in the interpretation or application thereof, shall make it
unlawful for the Agent or any Lender to make or maintain LIBOR Loans as
contemplated herein, the then outstanding LIBOR Loans, if any, shall be converted
automatically to Base Rate Loans as of the end of such month, or within such
earlier period as required by law. Any additional amounts necessary to
compensate the Agent or such Lender for any costs incurred by the Agent or such
Lender in making any conversion in accordance with this Section 8 including,
but not limited to, any interest or fees payable by the Agent or such Lender to
lenders of funds obtained by the Agent or such Lender in order to make or
maintain LIBOR Loans hereunder shall be deemed Obligations hereunder and may be
posted by the Agent to the Revolving Loan Account in the ordinary course.


 


8.13         The
Company agrees to indemnify and to hold the Agent and any Lender (including any
participant) harmless from any loss or expense which the Agent or such Lender
or such participant may sustain or incur as a consequence of:  (a) default by the Company in payment of the
principal amount of or interest on any LIBOR Loans, as and when the same shall
be due and payable in accordance with the terms of this Agreement, including,
but not limited to, any such loss or expense arising from interest or fees
payable by the Agent or such Lender or participant to lenders of funds obtained
by either of them in order to maintain the LIBOR Loans hereunder; (b) default
by the Company in making a borrowing or conversion after the Company has given
a notice in accordance with Section 8.7 hereof; (c) any prepayment of LIBOR
Loans on a day which is not the last day of the Interest Period applicable
thereto, including, without limitation, prepayments arising as a result of the
application of the proceeds of Collateral to the Revolving Loans; and (d)
default by the Company in making any prepayment after the Company had given
notice to the Agent thereof. The determination by the Agent and any Lender of
the amount of any such loss or expense, when set forth in a written notice to


 


48





















 


the Company, containing the Agent’s or such Lender’s
calculations thereof in reasonable detail, shall be conclusive on the Company
in the absence of manifest error. 
Calculation of all amounts payable under this paragraph with regard to
LIBOR Loans shall be made as though the Agent and any Lender had actually funded
the LIBOR Loans through the purchase of deposits in the relevant market and
currency, as the case may be, bearing interest at the rate applicable to such
LIBOR Loans in an amount equal to the amount of the LIBOR Loans and having a
maturity comparable to the relevant interest period; provided, however,
that the Agent or such Lender may fund each of the LIBOR Loans in any manner
the Agent or such Lender sees fit and the foregoing assumption shall be used
only for calculation of amounts payable under this paragraph.  In addition, notwithstanding anything to the
contrary contained herein, the Agent shall apply all proceeds of Collateral and
all other amounts received by it from or on behalf of the Company (i) initially
to the Base Rate Loans and (ii) subsequently to LIBOR Loans; provided, however,
(x) upon the occurrence of an Event of Default or (y) in the event the
aggregate amount of outstanding LIBOR Loans exceeds Availability, the Agent may
apply all such amounts received by it to the payment of Obligations in such
manner and in such order as the Agent may elect in its reasonable business
judgment.  In the event that any such
amounts are applied to Revolving Loans which are LIBOR Loans, such application
shall be treated as a prepayment of such loans and the Agent shall be entitled
to indemnification hereunder.  This
covenant shall survive termination of this Agreement and payment of the
outstanding Obligations.


 


8.14         Notwithstanding
anything to the contrary in this Agreement, in the event that, by reason of any
Regulatory Change (for purposes hereof “Regulatory Change” shall mean,
with respect to the Agent or any Lender, any change after the date of this
Agreement in United States federal, state or foreign law or regulations
(including, without limitation, Regulation D) or the adoption or making after
such date of any interpretation, directive or request applying to a class of
banks including the Agent or such Lender of or under any United States federal,
state or foreign law or regulations (whether or not having the force of law and
whether or not failure to comply therewith would be unlawful)), the Agent or
such Lender either (a) incurs any material additional costs based on or
measured by the excess above a specified level of the amount of a category of
deposits or other liabilities of such bank which includes deposits by reference
to which the interest rate on LIBOR Loans is determined as provided in this
Agreement or a category of extensions of credit or other assets of the Agent or
such Lender which includes LIBOR Loans, or (b) becomes subject to any material
restrictions on the amount of such a category of liabilities or assets which it
may hold, then, if the Agent or such Lender so elects by notice to the Company,
the obligation of the Agent or such Lender to make or continue, or to convert Base
Rate Loans into LIBOR Loans hereunder shall be suspended until such Regulatory
Change ceases to be in effect.


 


49





















 


8.15         If
the Agent or any Lender makes a claim for reimbursement from the Company under
Section 8.5, 8.6, 8.10, 8.12 or 8.13 within 90 days of the date the Agent or
Lender or participant (as applicable) obtains knowledge of the event giving
rise to the Obligation incurred under such Section and its effect under such
Section, the Agent shall post such Obligation to the Revolving Loan Account,
and absent such timely posting, the Agent or applicable Lender or participant
shall forfeit its right to claim reimbursement thereunder, and (b) use
reasonable efforts (including, if requested by the Company, reasonable efforts
to designate a different applicable office of the Agent or such Lender or
participant) to mitigate the amount of such losses, costs, expenses and
liabilities, if such efforts can be made and such mitigation can be
accomplished without the Agent or such Lender or participant suffering (i) any
economic disadvantage for which the Agent or such Lender or participant is not
indemnified by the Company under this Agreement or (ii) any legal or regulatory
disadvantage.


 


8.16         For
purposes of this Agreement and Section 8 hereof, any reference to the Agent
shall include any financial institution which may become a participant or
Lender subsequent to the Closing Date.


 


SECTION 9.  [Reserved].


 


SECTION 10.  Events of Default and Remedies.


 


10.1         Under
this Agreement, each of the following shall constitute an “Event of Default”:


 


(a)          The Company fails to make any payment
or deposit or comply with any instruction of the Agent permitted under this
Agreement with respect to such payment of (i) principal required by this
Agreement when due (including payments due under Section 3.8), or (ii) interest
or other Obligations within two Business Days of the date when due; or


 


(b)         The Company fails to perform or observe
any term, covenant or agreement set forth in (i) Sections 7.2(d), 7.2(g),
7.2(h), 7.2(k) or 7.5 or clauses (a), (b), (e) or (f) of Section 7.6 hereunder
and such failure remains unremedied for two Business Days following notice
thereof by the Agent to the Company, or (ii) Sections 7.5(g) or 7.5(h); or


 


(c)          (i) The Company commits fraud or makes
any intentional misrepresentation under or in connection with this Agreement
including in connection with any Monthly Report delivered pursuant hereto; or
(ii) without duplication, any representation or warranty made or deemed to be
made by the Company under or in 


 


50





















 


connection with
this Agreement or any Monthly Report delivered pursuant hereto proves to have
been false or incorrect which causes or constitutes a Material Adverse Effect;
or


 


(d)         The Company fails to perform or observe
any other term, covenant or agreement contained in this Agreement (other than
as referred to in Section 10.1(a) or (b)) on its part to be performed or
observed and any such failure remains unremedied for 30 days after notice
thereof has been given by the Agent to the Company; or


 


(e)          The valid and perfected first priority
security interest in the Collateral for any reason ceases to be in full force
and effect in favor of the Agent for the benefit of the Lenders except to the
extent expressly permitted by the terms of the applicable Loan Documents; or


 


(f)          (i)(A) The Company generally fails to
pay its debts as such debts become due, or admits in writing its inability to
pay its debts generally, or makes a general assignment for the benefit of
creditors; or (B) any proceeding is instituted by or against the Company
seeking to adjudicate it bankrupt or insolvent, or seeking liquidation, winding
up, reorganization, arrangement, adjustment, protection, relief, or composition
of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee, or other similar official for
it or for any substantial part of its property and, if instituted against the
Company, either such proceeding is not stayed or dismissed within 45 days or
any of the actions sought in such proceeding (including the entry of an order
for relief against it or the appointment of a receiver, trustee, custodian or
other similar official for it or for any substantial part of its property)
occurs; or (ii) the Company takes any corporate action to authorize any of the
actions set forth in clause (i) above in this subsection (f); or


 


(g)         The Default Ratio as at the last day of
any calendar month equals or exceeds 10%; or


 


(h)         The Company or any Material Subsidiary
shall (i) default in any payment (regardless of amount) of principal of,
premium, if any, or interest on any Debt having an aggregate principal amount
in excess of $40,000,000 (other than the Revolving Loans) beyond the grace
period, if any, provided in the instrument or agreement under which such Debt
was created or (ii) default in the observance or performance of any other
agreement or condition relating to any such Debt or contained in any instrument
or agreement evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or condition
is to cause, or to permit the holder or holders of such Debt (or a trustee or
agent on behalf of such holder or holders or beneficiary or beneficiaries) to
cause, with the giving of notice, if required, such Debt to become due prior to
its Stated Maturity; provided,  however, that any such 


 


51





















 


default by the
Company or any Material Subsidiary under Non-Recourse Debt will not constitute
an Event of Default unless such default also constitutes a default under other
recourse Debt of the Company or such Material Subsidiary in an aggregate
outstanding principal amount of $40,000,000 or more; and provided  further,
that, for the avoidance of doubt, any default by the Company or any Material
Subsidiary under any indebtedness which, but for being cash collateralized,
would have constituted Debt hereunder will not constitute an Event of Default
unless such default also constitutes a default under other recourse Debt of the
Company or such Material Subsidiary in an aggregate outstanding principal
amount of $40,000,000 or more.


 


10.2         Upon
the occurrence of an Event of Default, or event that would constitute an Event
of Default, but for the requirement that notice be given or time elapse, the
Agent, upon the written direction of the Required Lenders, shall declare that
the obligation of the Agent and/or the Lenders to make Revolving Loans shall
cease unless such Event of Default or other event is waived in writing by the
Required Lenders or cured to the Agent’s or the Required Lenders’ satisfaction
in the exercise of the Agent’s or the Lenders’ reasonable judgment. Upon the
occurrence of an Event of Default, the Agent in its sole discretion may, or
upon the written direction of the Required Lenders the Agent shall, declare
that:  (a) all Obligations shall become
immediately due and payable; (b) the Agent may charge the Company the Default
Rate of Interest on all then outstanding or thereafter incurred Obligations in
lieu of the interest provided for in Section 8 of this Agreement, provided
that, with respect to this clause (b) the Agent has given the Company written
notice of the Event of Default, provided  further, however,
that no notice is required if the Event of Default is the Event listed in
Section 10.1(f); and (c) the Agent may immediately terminate this Agreement
upon notice to the Company; provided, however, that upon the
occurrence of an Event of Default listed in Section 10.1(f), this Agreement
shall automatically terminate and all Obligations shall become due and payable,
without any action, declaration, notice or demand by the Agent.  The exercise of any option is not exclusive
of any other option, which may be exercised at any time by the Agent.


 


10.3         Immediately
upon the occurrence of any Event of Default, the Agent may, without prior
notice to the Company, to the extent permitted by applicable law or
regulation:  (a) remove from any premises
where same may be located any and all books and records, computers, electronic
media and software programs, documents, instruments, files and records to the
extent constituting Collateral (including any electronic records, contracts and
signatures solely pertaining thereto), and any receptacles or cabinets solely
containing such Collateral, as may be reasonably necessary to properly
administer and control the Receivables or the handling of collections and
realizations thereon; (b) bring suit, in the name of the Company or the Agent,
and generally shall have all other rights respecting said Receivables,
including without limitation the right to: 
accelerate or extend the time of payment, settle, compromise, release in
whole or in part 


 


52





















 


any amounts owing on any Receivables and issue credits
in the name of the Company or the Agent; (c) sell, assign and deliver the
Collateral, with or without advertisement, at public or private sale, for cash,
on credit or otherwise, at the Agent’s sole option and discretion, and the
Agent may bid or become a purchaser at any such sale, free from any right of
redemption, which right is hereby expressly waived by the Company; (d)
foreclose the security interests in the Collateral created herein or by the
Loan Documents by any available judicial procedure, or to take possession of
any or all of the Collateral, without judicial process; (e) exercise any other
rights and remedies provided in law, in equity, by contract or otherwise
including all rights and remedies of a secured party under the UCC; and (f),
notify Obligors and parties to the Contracts, that the Collateral and the
right, title and interest of the Company in and under the Collateral has been
assigned to the Agent, and that payments shall be made directly to the Agent
(upon the request of the Agent, the Company shall so notify the Obligors and
parties to the Contracts).  Subject to
applicable law and regulation, the Agent shall have the right, without notice
or advertisement, to sell, lease, or otherwise dispose of all or any part of
the Collateral, whether in its then condition or after further preparation or
processing, in the name of the Company or the Agent, or in the name of such
other party as the Agent may designate, either at public or private sale or at
any broker’s board, in lots or in bulk, for cash or for credit, with or without
warranties or representations (including but not limited to warranties of
title, possession, quiet enjoyment and the like), and upon such other terms and
conditions as the Agent in its sole discretion may deem advisable, and the
Agent shall have the right to purchase at any such sale.  Any action taken by the Agent pursuant to
this paragraph shall not affect commercial reasonableness of the sale.  If notice of intended disposition of any
Collateral is required by law, it is agreed that ten (10) days notice shall
constitute reasonable notification and full compliance with the law.  The net cash proceeds resulting from the
Agent’s exercise of any of the foregoing rights, (after deducting all charges,
costs and expenses, including reasonable external attorneys’ fees) shall be
applied by the Agent to the payment of the Obligations, whether due or to
become due, in such order as the Agent may elect, and the Company shall remain
liable to the Agent for any deficiencies, and the Agent in turn agrees to remit
to the Company or its successors or assigns, any surplus resulting
therefrom.  The enumeration of the
foregoing rights is not intended to be exhaustive and the exercise of any right
shall not preclude the exercise of any other rights, all of which shall be cumulative.  The Company hereby indemnifies the Agent and
holds the Agent harmless from any and all costs, expenses, claims, liabilities,
Out-of-Pocket Expenses or otherwise, incurred or imposed on the Agent by reason
of the exercise of any of its rights, remedies and interests hereunder,
including, without limitation, from any sale or transfer of Collateral,
preserving, maintaining or securing the Collateral, defending its interests in
Collateral (including pursuant to any claims brought by the Company, the Company
as debtor-in-possession, any secured or unsecured creditors of the Company, any
trustee or receiver in bankruptcy, or otherwise), and the Company hereby agrees
to so indemnify and hold the 


 


53





















 


Agent harmless, absent the Agent’s gross negligence or
willful misconduct as finally determined by a court of competent
jurisdiction.  The foregoing
indemnification shall survive termination of this Agreement until such time as
all Obligations (including the foregoing) have been finally and indefeasibly
paid in full.  In furtherance thereof the
Agent, may establish such reserves for Obligations hereunder (including any
contingent Obligations) as it may deem advisable in its reasonable business
judgment.


 


SECTION 11.  Termination.  Except as otherwise permitted herein, the
Agent may terminate this Agreement only as of the Commitment Termination
Date.  Notwithstanding the foregoing the
Agent may terminate this Agreement immediately upon the occurrence of an Event
of Default, provided, however, that if the Event of Default is an
event listed in Section 10.1(f) of this Agreement, this Agreement shall
terminate in accordance with Section 10.2. 
All Obligations shall become due and payable as of any termination
hereunder or under Section 10 hereof and, pending a final accounting, except as
otherwise provided in Section 3.4(b), the Agent may withhold any balances in
the Company’s account (unless supplied with an indemnity satisfactory to the
Agent) to cover all of the Obligations, whether absolute or contingent,
including, but not limited to, cash reserves for any contingent Obligations.
All of the Agent’s rights, liens and security interests shall continue after
any termination until all Obligations have been paid and satisfied in full.


 


SECTION 12.  Miscellaneous.


 


12.1         The
Company hereby waives diligence, notice of intent to accelerate, notice of
acceleration, demand, presentment and protest and any notices thereof as well
as notice of nonpayment.  No delay or
omission of the Agent or the Company to exercise any right or remedy hereunder,
whether before or after the happening of any Event of Default, shall impair any
such right or shall operate as a waiver thereof or as a waiver of any such
Event of Default.  No single or partial
exercise by the Agent of any right or remedy precludes any other or further
exercise thereof, or precludes any other right or remedy.


 


12.2         This
Agreement, the engagement letter dated September 21, 2004, between Union Bank
and the Company, as amended, and the Loan Documents executed and delivered in
connection therewith constitute the entire agreement between the Company and
the Agent;  supersede any prior
agreements; can be changed only by a writing signed by the Company, the Agent
and the Required Lenders (or by the Agent at the written request of the
Required Lenders), unless the consent of all Lenders is required pursuant to
Section 14.10 herein below, and shall bind and benefit the Company, the Lenders
and the Agent and their respective successors and assigns, and any such waiver
or consent shall be effective only in the specific instance and for the
specific purpose for which given.


 


54





















 


12.3         In
no event shall the Company, upon demand by the Agent for payment of any
Obligations relating hereto, by acceleration of the maturity thereof, or
otherwise, be obligated to pay interest and fees in excess of the amount
permitted by law.  Regardless of any
provision herein or in any agreement made in connection herewith, the Agent
shall never be entitled to receive, charge or apply, as interest on any
indebtedness relating hereto, any amount in excess of the maximum amount of
interest permissible under applicable law. 
If the Agent ever receives, collects or applies any such excess, it
shall be deemed a partial repayment of principal and treated as such; and if
principal is paid in full, any remaining excess shall be refunded to the
Company.  This paragraph shall control
every other provision hereof, the Loan Documents and of any other agreement
made in connection herewith.


 


12.4         If
any provision hereof or of any other agreement made in connection herewith is
held to be illegal or unenforceable, such provision shall be fully severable,
and the remaining provisions of the applicable agreement shall remain in full
force and effect and shall not be affected by such provision’s severance.  Furthermore, in lieu of any such provision,
there shall be added automatically as a part of the applicable agreement a
legal and enforceable provision as similar in terms to the severed provision as
may be possible.


 


12.5         THE COMPANY, THE LENDERS AND THE AGENT EACH HEREBY
WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF
THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREUNDER.  THE COMPANY HEREBY IRREVOCABLY WAIVES
PERSONAL SERVICE OF PROCESS AND CONSENTS TO SERVICE OF PROCESS BY CERTIFIED OR
REGISTERED MAIL, RETURN RECEIPT REQUESTED. 
IN NO EVENT WILL THE AGENT BE LIABLE FOR LOST PROFITS, CONSEQUENTIAL,
INCIDENTAL, PUNITIVE,  OR OTHER SPECIAL
DAMAGES.


 


12.6         Except
as otherwise herein provided, any notice or other communication required
hereunder shall be in writing (provided that, any electronic
communications from the Company with respect to any request, transmission,
document, electronic signature, electronic mail or facsimile transmission shall
be deemed binding on the Company for purposes of this Agreement; provided
further, that any such transmission shall not relieve the Company from
any other obligation hereunder to communicate further in writing), and shall be
deemed to have been validly served, given or delivered when hand delivered or
sent by facsimile, or three days after deposit in the United States mails, with
proper first class postage prepaid and addressed to the party to be notified or
to such other address as any party hereto may designate for itself by like
notice, as follows:


 


55





















 


(A)   if to Union Bank, as Agent
or Lender, at:


 


Union Bank of California,
N.A.

445 South Figueroa Street, Mail Code G13-300

Los Angeles, CA 90071

Attention:  Al Joseph

Facsimile:  (213) 236-6089

Telephone (for confirmation):  (213)
236-6063


 


(B)   if to the Company at:


 


Aquila Inc.

20 West Ninth Street

Kansas City, Missouri 64105

Attn:  Treasurer

Facsimile No.:  816-467-3591


 


12.7         THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT ANY OTHER LOAN DOCUMENT INCLUDES
AN EXPRESS ELECTION TO BE GOVERNED BY THE LAWS OF ANOTHER JURISDICTION.  EACH OF THE PARTIES HEREBY CONSENTS AND
AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN NEW YORK COUNTY, CITY OF NEW
YORK, NEW YORK, SHALL HAVE NON-EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY
CLAIMS OR DISPUTES BETWEEN THE COMPANY, THE AGENT AND LENDERS PERTAINING TO
THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS (EXCEPT TO
THE EXTENT THAT ANY OTHER LOAN DOCUMENT INCLUDES AN EXPRESS SUBMISSION TO
ANOTHER JURISDICTION AND VENUE), PROVIDED, THAT THE AGENT, LENDERS AND THE
COMPANY ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY
A COURT LOCATED OUTSIDE OF NEW YORK COUNTY, AND, PROVIDED FURTHER, NOTHING IN
THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE THE AGENT FROM BRINGING
SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE
COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT
OR OTHER COURT ORDER IN FAVOR OF THE AGENT. 
THE PARTIES EXPRESSLY SUBMIT AND CONSENT IN ADVANCE TO SUCH JURISDICTION
IN ANY ACTION OR 


 


56





















 


SUIT COMMENCED IN ANY SUCH COURT, AND THE PARTIES
HEREBY WAIVE ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENT TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH
COURT.  THE PARTIES HEREBY WAIVE PERSONAL
SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION
OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS
MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH PARTY AT THE
ADDRESS SET FORTH IN SECTION 12.6.


 


12.8         This
Agreement shall remain in full force and effect and continue to be effective
should any petition be filed by or against the Company for liquidation or
reorganization, should the Company become insolvent or make an assignment for
the benefit of any creditor or creditors or should a receiver or trustee be
appointed for all or any significant part of the Company’s assets, and shall
continue to be effective or to be reinstated, as the case may be, if at any
time payment and performance of the Obligations, or any part thereof, pursuant
to applicable law, is rescinded or reduced in amount, or must otherwise be
restored or returned by any obligee of the Obligations, whether as a “voidable
preference,” “fraudulent conveyance,” or otherwise, all as though such payment
or performance had not been made.  In the event that any payment, or any
part thereof, is rescinded, reduced, restored or returned, the Obligations
shall be reinstated and deemed reduced only by such amount paid and not so
rescinded, reduced, restored or returned.


 


12.9         This
Agreement shall become effective when it shall have been executed by the
Company and the Agent and when the Agent shall have been notified by each
Lender party to this Agreement as of the date hereof that such Lender has
executed it and the Closing Date shall have occurred and thereafter shall be
binding upon and inure to the benefit of the Company, the Agent and each such
Lender and their respective successors and assigns, except that the Company
shall not have the right to assign, transfer, hypothecate or otherwise convey
its rights or obligations hereunder or under any of the Loan Documents or any
interest herein or therein without the prior written consent of the Agent and
the Lenders.  Any such purported
assignment, transfer, hypothecation or other conveyance by the Company without
the prior written consent of the Agent and the Lenders shall be void.  The terms and provisions of this Agreement
are for the purpose of defining the relative rights and obligations of the
Company, Agent and Lenders with respect to the transactions contemplated
thereby and no Person shall be a third party beneficiary of any of the terms
and provisions of this Agreement or any of the Loan Documents.


 


57





















 


12.10       This
Agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed shall
be deemed to be an original and all of which taken together shall constitute
one and the same agreement.  Delivery of
an executed counterpart of a signature page to this Agreement by telecopier
shall be effective as delivery of a manually executed counterpart of this
Agreement.


 


SECTION 13.  Agreement Between the Lenders.


 


13.1         (a)
The Agent, for the account of the Lenders, shall disburse all loans and
advances to the Company and shall handle all collections of Collateral and
repayment of Obligations.  It is
understood that for purposes of advances to the Company and for purposes of
this Section 13 the Agent is using the funds of the Agent.


 


(b)         Each Lender shall, before
11:00 A.M. (Pacific time) on the date of such advance, make available to
the Agent at the Agent’s bank account in Los Angeles, California, in same day
funds, such Lender’s portion of such advance. 
Advances shall be made by the Lenders ratably in accordance with their
several Commitments.  After the Agent’s
receipt of such funds and upon fulfillment of the applicable conditions set
forth in Section 2, the Agent will make such funds available to the
Company.  Unless the Agent shall have
been notified in writing by any Lender prior to any advance to the Company that
such Lender will not make the amount which would constitute its share of the
borrowing on such date available to the Agent, the Agent may assume that such
Lender shall make such amount available to the Agent on a Settlement Date, and
the Agent may, in reliance upon such assumption, make available to the Company
a corresponding amount.  Each Lender’s
obligation to make the settlements to the Agent shall be absolute and
unconditional and shall not be affected by any circumstance, including, without
limitation, (i) any set-off, counterclaim, recoupment, defense or other right
which any such Lender or the Company may have against the Agent, the Company,
any other Lender or any other person for any reason whatsoever; (ii) the
occurrence or continuance of an Event of Default or event that would constitute
an Event of Default but for the requirement that notice be given or time
elapse; (iii) any adverse change in the condition (financial or otherwise) of
the Company; (iv) any breach of this Agreement or any other loan document by
the Company or any other Lender; or (v) any other circumstance, happening or
event whatsoever, whether or not similar to any of the foregoing.  A certificate of the Agent submitted to any
Lender with respect to any amount owing under this subsection shall be
conclusive, absent manifest error.  If
such Lender’s share of such borrowing is not in fact made available to the
Agent by such Lender on a Settlement Date, the Agent shall be entitled to
recover such amount with interest thereon at the rate per annum equal to the
Federal Funds Rate, plus one half of one percent (.50%) on demand, from such
Lender without prejudice to any rights which the Agent may have against the
Company hereunder.  Nothing contained in
this 


 


58





















 


subsection shall
relieve any Lender which has failed to make available its ratable portion of
any borrowing hereunder from its obligation to do so in accordance with the
terms hereof.  Nothing contained herein
shall be deemed to obligate the Agent to make available to the Company the full
amount of a requested advance when the Agent has any notice (written or
otherwise) that any of the Lenders will not advance its ratable portion
thereof.


 


13.2         On
each Settlement Date, the Agent and the Lenders shall each remit to the other,
in immediately available funds, all amounts necessary so as to ensure that, as
of the Settlement Date, the Lenders shall have their proportionate share of all
outstanding Obligations.


 


13.3         The
Agent shall forward to each Lender, at the end of each month, a copy of the
account statement rendered by the Agent to the Company.


 


13.4         The
Agent shall, after receipt of any interest and fees earned under this
Agreement, promptly remit to the Lenders: 
(a) their pro rata portion of all fees, provided, however,
that the Lenders (other than the Agent) shall (i) not share in the fees set
forth in the Fee Letter; and (ii) receive their share of the Unused Facility
Fee and the Closing Fee in accordance with their respective agreements with the
Agent; and (b) interest computed at the rate and as provided for in Section 8
of this Agreement on all outstanding amounts advanced by the Lenders on each
borrowing date, prior to adjustment, that are subsequent to the last remittance
by the Agent to the Lenders of the Company’s interest.


 


13.5         (a)
The Company acknowledges that the Lenders may sell participations to one or
more banks or other entities (a “participant”) in all or any portion of
the loans and extensions of credit made and to be made to the Company
hereunder.  The Company acknowledges that
in doing so, the Lenders may grant to such participants certain rights which
would require the participant’s consent to certain waivers, amendments and
other actions with respect to the provisions of this Agreement, provided
that the consent of any such participant shall not be required except for
matters requiring the consent of all Lenders hereunder as set forth in Section
14.10 hereof.  Each Participant shall be
entitled to the benefits of Sections 8.5, 8.6, 8.10, 8.12, 8.13 and 8.14 as if
it were a Lender; provided, however, that anything herein to the
contrary notwithstanding, the Company shall not, at any time, be obligated to
make under Sections 8.5, 8.6, 8.10, 8.12, 8.13 and 8.14 to the participants in
the rights and obligations of any Lender (together with such Lender) any
payment in excess of the amount the Company would have been obligated to pay
such Lender in respect of such interest had such participation not been sold.


 


(b)         In the event that any Lender sells
participations in a Registered Loan (as such term is defined in Section 13.9(c)
herein), such Lender shall maintain a register on which it enters the name of
all participants in the Registered Loans held by it (the 


 


59





















 


“Participant
Register”).  A Registered Loan (and
the registered note, if any, evidencing the same) may be participated in whole
or in part only by registration of such participation on the Participant
Register (and each registered note shall expressly so provide).  Any participation of such Registered Loan
(and the registered note, if any, evidencing the same) may be effected only by
the registration of such participation on the Participant Register.


 


(c)          The Company authorizes each Lender to
disclose to any participant or purchasing lender (each, a “Transferee”)
and any prospective Transferee any and all financial information in such Lender’s
possession concerning the Company and its affiliates which has been delivered to
such Lender by or on behalf of the Company pursuant to this Agreement or which
has been delivered to such Lender by or on behalf of the Company in connection
with such Lender’s credit evaluation of the Company and its affiliates prior to
entering into this Agreement, provided that such Transferee agrees to
hold such information in confidence in the ordinary course of its business
pursuant to Section 14.14.


 


13.6         The
Company hereby agrees that each Lender is solely responsible for its portion of
the Commitment and that neither the Agent nor any Lender shall be responsible
for, nor assumes any obligations for the failure of any Lender to make
available its portion of the Commitment. 
Further, should any Lender refuse to make available its portion of the
Commitment, then another Lender may, but without obligation to do so, increase,
unilaterally, its portion of the Commitment in which event the Company are so
obligated to that other Lender.


 


13.7         In
the event that the Agent, the Lenders or any one of them is sued or threatened
with suit by the Company or any one of them, or by any receiver, trustee,
creditor or any committee of creditors on account of any preference, voidable
transfer or lender liability issue, alleged to have occurred or been received
as a result of, or during the transactions contemplated under this Agreement,
then in such event any money paid in satisfaction or compromise of such suit,
action, claim or demand and any expenses, costs and attorneys’ fees paid or
incurred in connection therewith, whether by the Agent, the Lenders or any one
of them, shall be (i) in the case of any preference or voidable transfer issue,
shared proportionately by the Lenders and (ii) in the case of any lender
liability issue, (x) paid by the applicable Lender individually for its own
account or (y) if such lender liability lawsuit is brought or threatened
against the Agent, shared proportionately by the Lenders.  In addition, any costs, expenses, fees or
disbursements incurred by outside agencies or attorneys retained by the Agent
to effect collection or enforcement of any rights in the Collateral, including
enforcing, preserving or maintaining rights under this Agreement shall be
shared proportionately between and among the Lenders to the extent not
reimbursed by the Company or from the proceeds of Collateral.  The provisions of this paragraph shall not
apply to any suits, actions, 


 


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proceedings or claims that (x) predate the date of
this Agreement or (y) are based on transactions, actions or omissions that
predate the date of this Agreement.


 


13.8         Each
of the Lenders agrees with each other Lender that any money or assets of the
Company held or received by such Lender, no matter how or when received, shall
be applied to the reduction of the Obligations (to the extent permitted
hereunder) after (x) the occurrence of an Event of Default and (y) the election
by the Required Lenders to accelerate the Obligations.  In addition, the Company authorizes, and the
Lenders shall have the right, without notice, upon any amount becoming due and
payable hereunder, to set-off and apply against any and all property held by,
or in the possession of such Lender the Obligations due such Lenders.


 


13.9         (a)
Each Lender shall have the right at any time to assign to an Eligible Assignee
all or a portion of its rights and obligations under this Agreement (including,
without limitation, its obligations under the Revolving Loans).  The consent of the Company (which consent
shall not be unreasonably withheld or delayed) shall be required as a condition
to the effectiveness of any assignment pursuant to this Section 13.9 unless the
assignee is a Lender or an affiliate of a Lender or an Approved Fund; provided,
that such consent of the Company shall not be required if an Event of Default
has occurred and has not been waived. 
Upon execution of an Assignment and Transfer Agreement, the assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such assignment,
have the rights and obligations of the Agent as the case may be hereunder.  The Company shall, if necessary, execute any
documents reasonably required to effectuate the assignments.  Except in connection with an assignment to an
Approved Fund, no Lender may assign its interest in the loans and advances and
extensions of credit hereunder without the prior written consent of the
Agent.  Except as otherwise set forth in
Section 13.9(b), in the event that the Agent’s consent is required and such
consent is given to any such assignment by any other Lenders (i) the amount
being assigned shall in no event be less than the lesser of (x) $5,000,000 or
(y) the entire interest of such Lender hereunder, (ii) such assignment shall be
of a pro rata portion of all of such assigning Lender’s loans and Commitment
hereunder and (iii) the parties to such assignment shall execute and deliver to
the Agent an Assignment and Transfer Agreement, and, at the Agent’s election, a
processing and recording fee of $1,000 payable by the assignee to the Agent for
its own account; provided, however, that the Agent may, in its
reasonable discretion, waive any or all of the requirements set forth in
clauses (i), (ii) and (iii) set forth above.


 


(b)         Notwithstanding anything contained to
the contrary in this Section 13.9, a Lender may assign any or all of its rights
hereunder to an Approved Fund without (i) the consent of the Agent or the
Company or complying with any of the other restrictions set forth in Section
13.9(a)  above (including, but not
limited to, delivery of an executed Assignment and Transfer Agreement,
assignment of a minimum amount or payment of 


 


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any processing fee); provided, that (x) the failure of such
assigning Lender to deliver an Assignment and Transfer Agreement shall not
affect the legality, validity, or binding effect of such assignment; and (y)
the Agent and the Company may continue to deal solely and directly with the
assigning Lender, until an Assignment and Transfer Agreement has been delivered
to the Agent, on all matters arising out of or in relation to this Agreement
including, without limitation, the delivery of notices and other information
otherwise to be provided by the Agent and/or the Company to each such Lender
and all financial transactions.  Each
Lender represents and warrants to the Agent that each assignment by such Lender
to a related Approved Fund pursuant to this Section 13.9(b) shall be made to a
related Approved Fund that is able to perform its obligations as a Lender under
this Agreement.


 


(c)          The Agent, on behalf of the Company,
shall maintain at one of its offices a copy of each Assignment and Transfer
Agreement delivered to it and a register for the recordation of the names and
addresses of Lenders, and the Commitments of, and the Revolving Loans (the “Registered
Loans”) owing to, each Lender pursuant to the terms hereof from time to
time (the “Register”).  Any
Registered Loan (and the registered note, if any, evidencing the same) may be
assigned in whole or in part only by registration of such assignment on the
Register (and each registered note shall expressly so provide).  Other than in connection with an assignment
by a Lender to a related Approved Fund, the entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and the
Company, the Agent and the Lenders may treat each Person whose name is recorded
in the Register as a Lender hereunder for all purposes of this Agreement.  The Register shall be available for
inspection by the Company and any Lender at any reasonable time and from time
to time upon reasonable prior notice.  In
the case of any assignment by a Lender to a related Approved Fund, and which
assignment is not recorded in the Register, the assigning Lender shall maintain
a comparable register.


 


(d)         Upon its receipt of a duly completed
Assignment and Transfer Agreement executed by an assigning Lender and an
assignee, the assignee’s completed administrative questionnaire (unless the
assignee shall already be a Lender hereunder), the processing and recordation
fee referred to in paragraph (a) of this Section, if required, and any written
consent to such assignment required by paragraph (a) of this Section, if required,
the Agent shall accept such Assignment and Transfer Agreement and record the
information contained therein in the Register.


 


(e)          Subject to this Section 13, a
Registered Loan (and the registered note, if any, evidencing the same) may be
assigned or sold in whole or in part only by registration of such assignment or
sale on the Register (or a comparable register as set forth in Section 13.9(c))
(and each registered note shall expressly so provide).  Any assignment or sale of all or part of such
Registered Loan (and the registered note, if any, 


 


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evidencing the same) may be effected only by registration of such
assignment or sale on the Register (or a comparable register as set forth in
Section 13.9(c)), together with the surrender of the registered note, if any, evidencing
the same duly endorsed by (or accompanied by a written instrument of assignment
or sale duly executed by) the holder of such registered note, whereupon, at the
request of the designated assignee(s) or transferee(s), one or more new
registered notes in the same aggregate principal amount shall be issued to the
designated assignee(s) or transferee(s). 
Prior to the registration of assignment or sale of any Registered Loan
(and the registered note, if any, evidencing the same), the Agent shall treat
the Person in whose name such Registered Loan (and the registered note, if any,
evidencing the same) is registered as the owner thereof for the purpose of
receiving all payments thereon and for all other purposes, notwithstanding
notice to the contrary.


 


(f)          Any Lender may at any time pledge or
assign a security interest in all or any portion of its rights under this
Agreement to secure obligations of such Lender, to a Federal Reserve Bank, and
this Section shall not apply to any such pledge or assignment of a security
interest; provided, that no such pledge or assignment of a security
interest shall release a Lender from any of its obligations hereunder or
substitute any such pledgee or Assignee for such Lender as a party hereto.


 


SECTION 14.  Agency.


 


14.1         Each
Lender hereby irrevocably designates and appoints Union Bank as the Agent for
the Lenders under this Agreement and any ancillary loan documents and
irrevocably authorizes Union Bank as the Agent for such Lender, to take such
action on its behalf under the provisions of this Agreement and all ancillary
documents and to exercise such powers and perform such duties as are expressly
delegated to the Agent by the terms of this Agreement and all ancillary
documents together with such other powers as are reasonably incidental
thereto.  Notwithstanding any provision
to the contrary elsewhere in this Agreement, the Agent shall not have any
duties or responsibilities, except those expressly set forth herein, or any
fiduciary relationship with any Lender and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement and the ancillary documents or otherwise exist against the Agent.


 


14.2         The
Agent may execute any of its duties under this Agreement and all ancillary
documents by or through agents or attorneys-in-fact and shall be entitled to
the advice of counsel concerning all matters pertaining to such duties.


 


14.3         Neither
the Agent nor any of its officers, directors, employees, agents, or
attorneys-in-fact shall be (i) liable to any Lender for any action lawfully
taken or omitted to be taken by it or such person under or in connection with
this Agreement and all 


 


63





















 


ancillary documents (except for its or such person’s own gross
negligence or willful misconduct), or (ii) responsible in any manner to any of
the Lenders for any recitals, statements, representations or warranties made by
the Company or any officer thereof contained in this Agreement and all
ancillary documents or in any certificate, report, statement or other document
referred to or provided for in, or received by the Agent under or in connection
with, this Agreement and all ancillary documents or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement and
all ancillary documents or for any failure of the Company to perform their
obligations thereunder.  The Agent shall
not be under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement and all ancillary documents or to inspect the properties,
books or records of the Company.


 


14.4         The
Agent shall be entitled to rely, and shall be fully protected in relying, upon
any note, writing, resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, telecopy, telex or teletype message, statement, order or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper person or persons and upon advice
and statements of legal counsel (including, without limitation, counsel to the
Company), independent accountants and other experts selected by the Agent.  The Agent shall be fully justified in failing
or refusing to take any action under this Agreement and all ancillary documents
unless it shall first receive such advice or concurrence of the Lenders, or the
Required Lenders, as the case may be, as it deems appropriate or it shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action.  The Agent shall in
all cases be fully protected in acting, or in refraining from acting, under
this Agreement and all ancillary documents in accordance with a request of the
Lenders, or the Required Lenders, as the case may be, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders.


 


14.5         The
Agent shall not be deemed to have knowledge or notice of the occurrence of any
Event of Default or event that would constitute an Event of Default but for the
requirement that notice be given or time elapse hereunder unless the Agent has
received written notice from a Lender or the Company describing such Event of
Default or other event.  In the event
that the Agent receives such a notice, the Agent shall promptly give notice
thereof to the Lenders.  The Agent shall
take such action with respect to such Event of Default or other event as shall
be reasonably directed by the Lenders, or Required Lenders, as the case may be;
provided, that unless and until the Agent shall have received such
direction, the Agent may in the interim (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Event of
Default or other event as it shall deem advisable and in the best interests of
the Lenders.  In the event the Agent in
its sole discretion, or at the request of the Required 


 


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Lenders, continues to make Revolving Loans and advances under this
Agreement upon the occurrence of an Event of Default or event that would
constitute an Event of Default but for the requirement that notice be given or
time elapse, any such Revolving Loans and advances may be in such amounts
(subject to Section 14.10 hereof) and on such additional terms and conditions
as the Agent or the Required Lenders may deem appropriate.


 


14.6         Each
Lender expressly acknowledges that neither the Agent nor any of its officers,
directors, employees, agents or attorneys-in-fact has made any representations
or warranties to it and that no act by the Agent hereinafter taken, including
any review of the affairs of the Company shall be deemed to constitute any
representation or warranty by the Agent to any Lender.  Each Lender represents to the Agent that it
has, independently and without reliance upon the Agent or any other Lender and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Company and made its
own decision to enter into this Agreement. 
Each Lender also represents that it will, independently and without
reliance upon the Agent or any other Lender and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
analysis, appraisals and decisions in taking or not taking action under this
Agreement and to make such investigation as it deems necessary to inform itself
as to the business, operations, property, financial and other condition or
creditworthiness of the Company.  The
Agent, however, shall provide the Lenders with copies of all financial
statements, projections and business plans which come into the possession of
the Agent or any of its officers, employees, agents or attorneys-in-fact and
the Agent further agrees to comply with any reasonable request of a Lender in
respect of the Agent’s rights under applicable provisions hereof to obtain
information from and make inquires to the Company.


 


14.7         (a)
The Lenders agree to indemnify the Agent in its capacity as such (to the extent
not reimbursed by the Company and without limiting the obligation of the
Company to do so), from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements (including, without limitation, all Out-of-Pocket Expenses) of
any kind whatsoever (including negligence on the part of the Agent) which may
at any time be imposed on, incurred by or asserted against the Agent in any way
relating to or arising out of this Agreement or any ancillary documents or any
documents contemplated by or referred to herein or the transactions
contemplated hereby or any action taken or omitted by the Agent under or in
connection with any of the foregoing; provided, that no Lender shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
to the extent resulting from the Agent’s gross negligence or willful
misconduct. The agreements in this paragraph shall survive the payment of the
Obligations.


 


65





















 


(b)         The Agent will use its reasonable
business judgment in handling the collection of the Receivables, enforcement of
its rights hereunder and realization upon the Collateral but shall not be
liable to the Lenders for any action taken or omitted to be taken in good faith
or on the written advice of counsel.  The
Lenders expressly release the Agent from any and all liability and
responsibility (express or implied), for any loss, depreciation of or delay in
collecting or failing to realize on any Collateral, the Obligations and for any
mistake, omission or error in judgment in passing upon or accepting any
Collateral or in making (or in failing to make) examinations or audits or for
granting indulgences or extensions to the Company, any account debtor or any
guarantor, other than resulting from the Agent’s gross negligence or willful
misconduct.


 


14.8         The
Agent may make loans to, and generally engage in any kind of business with the
Company as though the Agent were not the Agent hereunder.  With respect to its loans made or renewed by
it or loan obligations hereunder as Lender, the Agent shall have the same
rights and powers, duties and liabilities under this Agreement as any Lender
and may exercise the same as though it was not the Agent and the terms “Lender”
and “Lenders” shall include the Agent in its individual capacity.


 


14.9         The
Agent may resign as the Agent upon 30 days’ notice to the Lenders and such
resignation shall be effective upon the appointment of a successor Agent.  If the Agent shall resign as Agent, then the
Lenders shall appoint a successor Agent for the Lenders with the consent of the
Company if no Event of Default has occurred and is continuing at such time,
such consent not to be unreasonably withheld or delayed.  Any successor Agent shall succeed to the
rights, powers and duties of the Agent and the term “Agent” shall mean such
successor agent effective upon its appointment, and the former Agent’s rights,
powers and duties as Agent shall be terminated, without any other or further
act or deed on the part of such former Agent or any of the parties to this
Agreement.  After any retiring Agent’s
resignation hereunder as the Agent the provisions of this Section 14 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was the Agent.


 


14.10       Notwithstanding
anything contained in this Agreement to the contrary, the Agent will not,
without the prior written consent of all Lenders affected thereby:  (a) amend this Agreement or any other Loan
Document to (i) reduce the interest rates or change the form in which interest
is paid; (ii) reduce or waive (x) any fees in which the Lenders share
hereunder, or (y) the repayment of any Obligations due the Lenders; (iii)
extend and scheduled payment date or the maturity of the Obligations; (iv)
alter or amend (x) Section 10.1 or this Section 14.10 or (y) the definitions of
Applicable Reserve, Eligible Receivable, Collateral, Approved Fund, Borrowing
Base, Excluded Receivables, Revolving Line of Credit, Availability,
Overadvances, Dilution Reserve or Required Lenders; or (v) increase the
Revolving Line of Credit or the advance percentages against Eligible
Receivables or alter or amend the Agent’s criteria for determining compliance


 


66





















 


with such definitions of Eligible Receivable if the
effect thereof is to increase Availability; or (b) except as otherwise required
in this Agreement, release any Collateral in excess of $500,000 during any
year.  Subject to the provisions of
Section 12.2 and the provisions of this Section 14.10, in all other respects
the Agent is authorized by each of the Lenders to take such actions or fail to
take such actions under this Agreement if the Agent, in its reasonable
discretion, deems such to be advisable and in the best interest of the
Lenders.  Notwithstanding any provision
to the contrary contained in this Agreement (including the provisions of
Section 12.2 and Section 14.10 hereof) the Agent is authorized to take such
actions or fail to take such actions in connection with (a) the exercise of (i)
any and all rights and remedies under this Agreement (including but not limited
to the exercise of rights and remedies under Section 10.2 of this Agreement)
and (ii) its discretion in determining compliance with the eligibility
requirements of Eligible Receivables and establishing reserves against Availability
in connection therewith and/or (b) curing any ambiguity, defect or
inconsistency in the terms of this Agreement; provided, that the Agent,
in its reasonable discretion, deems such to be advisable and in the best
interests of the Lenders.  In the event
the Agent terminates this Agreement pursuant to the terms hereof, the Agent
will cease making any loans or advances upon the effective date of termination
except for any loans or advances which the Agent deems, in its sole discretion,
to be reasonably required to maintain, protect or realize upon the Collateral.


 


14.11       [Reserved].


 


14.12       Each
Lender agrees that, notwithstanding the provisions of Section 11 of this
Agreement, any Lender may terminate this Agreement only as of the Commitment
Termination Date.  Within 30 days after
receipt of any such termination notice, the Agent shall, at its option, either
(i) give notice of termination to the Company hereunder or (ii) purchase, or
arrange for the purchase of, the Lender’s share of the Obligations hereunder
for the full amount thereof plus accrued interest and fees thereon.  Termination of this Agreement by any of the
Lenders as herein provided shall not affect the Lenders’ respective rights and
obligations under this Agreement incurred prior to the effective date of
termination as set forth in the preceding sentence.


 


14.13       If
the Agent is required at any time to return to the Company or to a trustee,
receiver, liquidator, custodian or other similar official any portion of the
payments made by the Company to the Agent as result of a bankruptcy or similar
proceeding with respect to the Company or any other person or entity or
otherwise, then each Lender shall, on demand of the Agent, forthwith return to
the Agent its ratable share of any such payments made to such Lender by the
Agent, together with its ratable share of interest and/or penalties, if any,
payable by the Lenders; this provision shall survive the termination of this
Agreement.


 


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14.14       The
Lenders agree to maintain the confidentiality of any non-public information
provided by the Company to them, in the ordinary course of their business, provided,
that the foregoing confidentiality provision shall terminate one (1) year after
the termination date of this Agreement, and provided, further,
that any such Lenders may disclose such information (i) to any applicable bank
regulatory and auditor personnel, rating agencies or insurance regulators, (ii)
upon the advice of their counsel, (iii) as may be required by order of any
court, law or regulation, including the disclosure of the tax treatment and tax
structure of the proposed credit facility or proper legal process to be
disclosed, (iv) to any transferee, assignee or participant which receives such
information having been made aware of the confidential nature thereof and
having agreed to abide by the provisions of this Section 14.14, (v) to its
employees, directors, agents, attorneys, accountants and other professional
advisors, and to employees and officers of its affiliates who agree to be bound
by the provisions of this Section 14.14 and who have a need for such
information in connection with this Agreement, or (vi) which has been publicly
disclosed other than in breach of this Agreement.  Anything herein to the contrary
notwithstanding, the parties hereto and any successor or assign (and any of
their employees, representatives or other agent of any of the foregoing) may
disclose to any and all Persons, without limitation of any kind, the “tax
treatment” and “tax structure” (in each case, within the meaning of Treasury
Regulation Section 1.6011-4) of the transactions contemplated herein and all
materials of any kind (including opinions or other tax analyses) that are or
have been provided to any of the foregoing relating to such tax treatment or
tax structure, and it is hereby confirmed that each of the foregoing have been
so authorized since the commencement of discussions regarding the transactions.


 


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IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be effective,
executed, accepted and delivered as of the date first written above by their
proper and duly authorized officers as of the date set forth above.


 


	
   

  	
  AQUILA, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Randy Miller

  	
   

  
	
   

  	
   

  	
  Title: Randy Miller

  
	
   

  	
   

  	
  Vice President, Finance
  and Treasurer

  



 


69





















 


	
  Commitment:

  	
   

  
	
   

  	
   

  
	
  $125,000,000

  	
  UNION
  BANK OF CALIFORNIA, N.A.

  (as Agent and Lender)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Henry Park

  
	
   

  	
   

  	
  Title: Senior Vice President

  



 


70