Document:

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                                                                   Exhibit 10.15

                 PRUDENTIAL SEVERANCE PLAN FOR SENIOR EXECUTIVES
                       (Effective as of June 16, 2000, and
                  Amended and Restated as of December 18, 2000)

     The Prudential Severance Plan for Senior Executives (the "Plan") was
established by The Prudential Insurance Company of America (the "Company"),
effective as of June 16, 2000, and is hereby amended and restated as of December
18, 2000. The Plan is intended to be, and shall be administered as, an employee
welfare benefit plan as defined in Section 3(1) of the Employee Retirement
Income Security Act of 1974, as amended.

                               Section 1 - Purpose
                               -------------------

     1.1 Except as otherwise provided in the Plan, this Plan does not provide
severance pay to any terminated Employee as a matter of right, and neither the
Company nor any Affiliated Company otherwise provides severance pay to
terminated Employees as a matter of right.

     1.2 Except as otherwise provided in the Plan, whether or not severance pay,
if any, is to be paid to a terminated Employee is a matter solely within the
discretion of the Company.

     1.3 The purpose of this Plan is to define those circumstances under which
the Company may pay severance to Eligible Employees.

                             Section 2 - Definitions
                             -----------------------

     2.1 "Affiliated Company" means any corporation which is a member of a
controlled group of corporations (within the meaning of Section 414(b) of the
Code) which includes the Company, any trade or business (whether or not
incorporated) which is under common control with the Company (within the meaning
of Section 414(c) of the Code), any organization included in the same affiliated
service group (within the meaning of Section 414(m) of the Code) as the Company,
and any other entity required to be aggregated with the Company pursuant to
regulations promulgated under Section 414(o) of the Code. Any such entity shall
be treated as an Affiliated Company only for the period while it is a member of
the controlled group or considered to be in such common control group.

     2.2 "Appeals Committee" means the committee that has been appointed
pursuant to Section 2.2 of the Prudential Severance Plan, which shall review and
make decisions on all appeals on denied claims for benefits pursuant to Section
5.3(b) of the Plan.

     2.3 "Base Pay" means Base Pay as defined in Section 2704(b) of the
Prudential Retirement Plan, as of the date of the Eligible Employee's Eligible
Termination.

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     2.4  "Board" means the Board of Directors of the Company.

     2.5  "Cause" means the following (as determined by the Company it its sole
discretion): dishonesty, fraud or misrepresentation; inability to obtain or
retain appropriate licenses; violation of any rule or regulation of any
regulatory agency or self-regulatory agency; violation of any policy or rule of
the Company or any Affiliated Company; commission of a crime; or any act or
omission detrimental to the conduct of the business of the Company or any
Affiliated Company.

     2.6  "Claims Committee" means the committee that has been appointed by the
Compensation Committee of the Board pursuant to Section 5.1 of the Prudential
Severance Plan, which shall review and make decisions on all claims pursuant to
Section 5.3(a) of the Plan.

     2.7  "Code" means the Internal Revenue Code of 1986, as amended.

     2.8  "Company" means The Prudential Insurance Company of America.

     (a)  2.9 "Eligible Compensation" means the sum of the following for the
Eligible Employee as of the date of the Eligible Termination:

          (i)   Base Pay;

          (ii)  the total of the most recent three years' annual incentive
payments, if any, made to the Eligible Employee under The Prudential Annual
Incentive Plan, as amended (or the equivalent thereof as determined by the
Company in its sole discretion), divided by three; provided, however, that if
the Eligible Employee has been eligible for only one or two such payments during
such recent three-year period, the total of such payments shall be divided by
one or two, respectively, instead of three; and provided further, however, that
if, in any of such years being considered, the Eligible Employee has been
eligible to be considered for the payment of such an amount and such amount is
determined to be zero under such plan, such zero amount will be counted for the
purpose of this calculation; and

          (iii) the amount, if any, that would be payable to the Eligible
Employee at plan under the Prudential Long-Term Performance Unit Plan that is
payable immediately after the date of the Eligible Employee's Eligible
Termination.

     2.10 "Eligible Employee" means an Employee of a Participating Company who
at the time he or she incurs an Eligible Termination is an Employee performing
services in the United States for a Participating Company.

     2.11 "Eligible Termination" means an Employee's involuntary termination of
employment with a Participating Company due to (i) the closing of an office or
business

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location, (ii) a reduction in force, (iii) a downsizing, (iv) the restructuring,
reorganization or reengineering of a business group, unit or department, or (v)
a job elimination; provided, however, that a termination of employment with a
Participating Company for any of the following reasons shall not constitute an
Eligible Termination:

     (A) transfer of any Employee to any (1) Affiliated Company, or (2) entity
which is controlled by the Company through the ownership of a majority of its
voting stock (or other equivalent ownership interest), either directly or
indirectly through one or more intermediaries;

     (B) voluntary termination of employment, unless the termination results
from:

          (1)  the Employee's participation in a voluntary separation program of
               a business group, unit or department; or

          (2)  the Employee's rejection of an offer of a new job with the
               Company, an Affiliated Company or an entity which is controlled
               by the Company through the ownership of a majority of its voting
               stock (or other equivalent ownership interest), either directly
               or indirectly through one or more intermediaries, under
               circumstances where his or her current job is no longer available
               (such as, the job was eliminated, the job or its scope was
               changed significantly, or the business location of the job has
               changed), where (a) the new position has base salary plus annual
               bonus at par (or the equivalent thereof) of less than 80% of the
               base salary plus annual bonus at par (or the equivalent thereof)
               of the current job, or (b) the commuting distance from the center
               of the Employee's town of residence to the center of the town of
               the new job's location is more than 49 miles, as determined by
               the Company in its sole discretion;

     (C) voluntary retirement;

     (D) death;

     (E) Cause;

     (F) inability to perform the basic requirements of his or her position with
or without reasonable accommodation due to physical or mental incapacity and
after the Employee's short-term disability benefits have expired under the terms
of The Prudential Welfare Benefits Plan; or

     (G) failure to return from an approved leave of absence.

Eligible Termination also shall not include an Employee's termination of
employment with a Participating Company as a result of a court decree,
outsourcing, sale (whether in whole or in part, of stock or assets), merger or
other combination, spin-off, reorganization, or liquidation, dissolution or
other winding up involving any Participating Company if such Employee receives a
job offer from any employer that is involved in such outsourcing, sale, merger
or other combination, spin-off, reorganization, or liquidation, dissolution or
other winding up.

     2.12 "Employee" means any individual who is compensated by the Company or
an Affiliated Company for services actually rendered as a regular full-time or
regular

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part-time (but not a temporary) common law employee and who, at the time of the
Eligible Termination, has attained one of the following levels or grades at the
Company (or the equivalent of such level or grade as determined by the Company
in its sole discretion): a level 82 or a grade 5, a level 84 or a grade 4, or a
level 86 or a grade 3 or 2; provided, however, that:

     (i)   any such employee (A) who is a sales employee covered by the terms of
           a collective bargaining agreement, (B) who is a non-management sales
           force employee employed in Individual Financial Services Retail
           and/or Prudential Property and Casualty Insurance Company and/or its
           affiliates (or in any successor organizations thereto) and who (I) is
           in training, pre-production, or (II) has been appointed to sell
           Company products, (C) who is a marketing assistant employed in
           Individual Financial Services Retail and/or Prudential Property and
           Casualty Insurance Company and/or its affiliates (or in any successor
           organizations thereto), or (D) whose level or grade at the Company or
           at an Affiliated Company is more senior than level 86 or grade 2 at
           the Company (or its equivalent as determined by the Company in its
           sole discretion);

     (ii)  any individual who performs services for the Company or an Affiliated
           Company but is not treated by the Company or the Affiliated Company,
           as the case may be, at the time of performance of services as an
           employee for federal tax purposes (regardless of any subsequent
           recharacterization); and

     (iii) any statutory employee of the Company or an Affiliated Company under
           Code Section 3121(d)(3);

shall not be an Employee (or eligible for benefits) under the Plan.

     2.13 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

     2.14 "Participating Company" means (a) the Company, (b) any U.S. Affiliated
Company that (i) participates in The Prudential Retirement Plan, or (ii) adopts
the Plan by action of its own board of directors (or if the Affiliated Company
does not have a board of directors, by other appropriate action), with the
consent of the Company, and (c) The WMF Group, Ltd. or its successor that is a
U.S. Affiliated Company.

     2.15 "Plan" means this Prudential Severance Plan for Senior Executives, as
from time to time amended.

     2.16 "Prudential Retirement Plan" means The Prudential Retirement Plan
Document, a component of The Prudential Merged Retirement Plan, as amended, but
not including the Prudential Securities Incorporated Cash Balance Pension Plan
Document, a component of The Prudential Merged Retirement Plan.

                                       4
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     2.17 "Agreement and General Release" means a written document that includes
a release of rights and claims from an Eligible Employee in a form that is
satisfactory to, and approved by, the Company.

     2.18 "Severance Pay" means the amount, if any, payable under Section 4 of
the Plan to an Eligible Employee.

     2.19 "Week of Eligible Compensation" means one fifty-second (1/52) of the
Eligible Employee's Eligible Compensation.

                       Section 3 - Grant of Severance Pay
                       ----------------------------------

     3.1 As to each Eligible Employee who has an Eligible Termination, Severance
Pay will be granted to such Eligible Employee in an amount determined in
accordance with Section 4.1 or Section 4.2 of the Plan, as the case may be.

     3.2 As to each Eligible Employee who has an Eligible Termination, the
determination of whether Severance Pay in addition to that provided under
Section 4.2(i) of the Plan will be granted to any Eligible Employee (or category
or group of Eligible Employees as defined by the Company) shall be made in the
sole discretion of the Company; provided, however, that as to an Eligible
Employee who is a level 82 or a grade 5, or a level 84 or a grade 4 at the
Company (or the equivalent of each such level or grade as determined by the
Company in its sole discretion) at the time of the Eligible Termination, in the
event that the Compensation Committee of the Board has reserved this discretion
to itself by means of a written resolution in accordance with the requirements
of the Company's by-laws and the Plan, such determination shall be made in the
sole discretion of the Compensation Committee of the Board; and provided
further, however, that as to an Eligible Employee who is a level 86 or a grade 3
or 2 at the Company (or the equivalent of such level or grade as determined by
the Company in its sole discretion) at the time of the Eligible Termination, in
the event that the Board has reserved this discretion to itself by means of a
written resolution, such determination shall be made in the sole discretion of
the Board.

     3.3 Agreement and General Release. Any Severance Pay payable to an Eligible
         -----------------------------
Employee under the Plan shall be conditioned upon the Eligible Employee signing
an Agreement and General Release and not exercising his or her right of
revocation under the Agreement and General Release. Any grant of Severance Pay
shall be null and void upon an Eligible Employee's failure to sign, or
subsequent revocation of, such Agreement and General Release. Any breach by an
Eligible Employee of an Agreement and General Release upon which any grant of
Severance Pay has been conditioned shall give the Company the right to terminate
any payment otherwise due and/or to the return of such Severance Pay, in
addition to any other remedy the Company may have.

                                       5
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              Section 4 - Determination of Amount of Severance Pay
              ----------------------------------------------------

     4.1 Amount of Severance Pay from Schedule. Except as otherwise provided in
         -------------------------------------
Section 4.2 and/or Section 4.3 of the Plan, as to each Eligible Employee who has
an Eligible Termination, Severance Pay will be granted to such Eligible Employee
in an amount equal to the product of the Eligible Employee's Week of Eligible
Compensation and the number of weeks determined in accordance with the schedule
in Appendix A of the Plan (with the result rounded up to the next higher $100
increment, unless the result is already a multiple of $100).

     4.2 Minimum Amount of Severance Pay. Except as otherwise provided in
         -------------------------------
Section 4.3 of the Plan, if the total amount of Severance Pay determined under
Section 4.2(i) and Section 4.2(ii) of the Plan exceeds the amount of Severance
Pay otherwise determined under Section 4.1 of the Plan, such greater amount
shall be payable to the Eligible Employee.

     (i) Under the Schedule. As to each Eligible Employee who has an Eligible
         ------------------
Termination, Severance Pay will be granted to such Eligible Employee in an
amount equal to the product of the Eligible Employee's Week of Eligible
Compensation and the number of weeks determined in accordance with the following
schedule (with the result rounded up to the next higher $100 increment, unless
the result is already a multiple of $100):

   ----------------------------------- ---------------------------------
     LEVEL OR GRADE AT THE COMPANY
          (OR ITS EQUIVALENT)                  NUMBER OF WEEKS
   ----------------------------------- ---------------------------------
            Level 82 or Grade 5                         52
   ----------------------------------- ---------------------------------
            Level 84 or Grade 4                         52
   ----------------------------------- ---------------------------------
          Level 86 or Grade 3 or 2                      52
   ----------------------------------- ---------------------------------

     (ii) Discretionary Amount. As to each Eligible Employee who has an Eligible
          --------------------
Termination, the Company shall determine, in its sole discretion, the amount of
Severance Pay, if any, in addition to that provided under Section 4.2(i) of the
Plan that shall be granted to an Eligible Employee, subject to the following
limitation: such additional Severance Pay shall not exceed the product of the
Eligible Employee's Week of Eligible Compensation and 26; provided, however,
that as to an Eligible Employee who is a level 82 or a grade 5, or a level 84 or
a grade 4 at the Company (or the equivalent of each such level or grade as
determined by the Company in its sole discretion) at the time of the Eligible
Termination, in the event that the Compensation Committee of the Board has
reserved this discretion to itself by means of a written resolution in
accordance with the requirements of the Company's by-laws and the Plan, such
determination shall be made in the sole discretion of the Compensation Committee
of the Board; and provided further, however, that as to an Eligible Employee who
is a

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level 86 or a grade 3 or 2 at the Company (or the equivalent of such level
or grade as determined by the Company in its sole discretion) at the time of the
Eligible Termination, in the event that the Board has reserved this discretion
to itself by means of a written resolution, such determination shall be made in
the sole discretion of the Board.

     4.3 Offsets and Maximum Amount of Severance Pay. Any Severance Pay payable
         -------------------------------------------
under Section 4.1 or Section 4.2 of the Plan, as the case may be, shall be
reduced by the following (with the result rounded up to the next higher $100
increment, unless the result is already a multiple of $100):

          (i)   as to any Eligible Employee who has attained eligibility for an
                Additional Retirement Benefit under Article XXVII of the
                Prudential Retirement Plan, the Base Amount of such Additional
                Retirement Benefit as defined in Section 2704(a) under the
                Prudential Retirement Plan;

          (ii)  any severance payment under the Prudential Severance Plan and/or
                the Prudential Severance Plan for Executives;

          (iii) as to any Eligible Employee who is employed in the Alternative
                Dispute Resolution area of the Policyowner Relations Division of
                Operations and Systems and has received a completion bonus, the
                amount of such completion bonus; and

          (iv)  any separation or other similar benefits of any kind from the
                Company or any Affiliated Company or any plan or program
                sponsored by the Company or any Affiliated Company (including,
                but not limited to, any separation provisions under an
                employment agreement and/or an offer letter);

for the same or a previous termination of employment, as determined by the
Company in its sole discretion; provided, however, that any such reduction will
not be made more than once under the Plan and under any other separation or
other similar benefits of any kind from the Company or any Affiliated Company or
any plan or program sponsored by the Company or any Affiliated Company
(including, but not limited to, the Prudential Severance Plan, the Prudential
Severance Plan for Executives and any separation provisions under an employment
agreement and/or an offer letter), as determined by the Company in its sole
discretion.

Notwithstanding anything to the contrary in the Plan, in no event, however, may
the Severance Pay granted to any Eligible Employee under the Plan (and under any
other plan or program of the Company and/or a Participating Company that
provides severance benefits, including, but not limited to, the Prudential
Severance Plan and/or the Prudential Severance Plan for Executives, as
determined by the Company in its sole discretion) for a given Eligible
Termination exceed the maximum permitted for employee welfare benefit

                                       7
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plans such as the Plan under Section 2510.3-2(b)(1)(ii) of Title 29 of the Code
of Federal Regulations (or any successor thereto).

     4.4 Reductions of Severance Pay. Any Severance Pay which the Company may
         ---------------------------
grant to an Eligible Employee may, in the sole discretion of the Company, be
reduced by any amounts owed by the Eligible Employee to the Company or the
Participating Company. The Eligible Employee's right to receive such Severance
Pay is conditioned upon his or her agreement to execute any documents deemed
necessary or appropriate by the Company to reduce the Severance Pay by any such
amounts owed.

     4.5 Repayment of Severance Pay upon Rehire. If an Eligible Employee who has
         --------------------------------------
incurred an Eligible Termination and been granted Severance Pay is rehired by
any Participating Company or Affiliated Company, the payment of Severance Pay
shall terminate immediately on the date of such rehire, and the Company may, in
its sole discretion, require the Eligible Employee to return any or all amounts
of Severance Pay that have been paid to the Eligible Employee.

     4.6 Form of Payment of Severance Pay, and Taxes. Payment of any Severance
         -------------------------------------------
Pay will be made in a lump sum as soon as practicable after the date of the
Eligible Employee's Eligible Termination, but not sooner than after receipt by
the Company of a fully executed Agreement and General Release and the exhaustion
of any revocation period thereunder. The Participating Company shall withhold
from any payments made pursuant to the Plan such amounts as may be required by
federal, state or local law.

                  Section 5 - Interpretation and Administration
                  ---------------------------------------------

     5.1 The Company and/or the Claims Committee, as the case may be, shall
maintain such procedures and records as each deems necessary or appropriate. The
plan year for keeping the records of the Plan shall be the calendar year.
Notwithstanding anything in the Plan to the contrary, whenever the Company takes
any action under the Plan, it shall do so as an exercise of a settlor function
and shall not be acting as a fiduciary.

     5.2 The Claims Committee, which shall be the Plan administrator, shall have
the exclusive right, power and authority to interpret, in its sole discretion,
any and all provisions of the Plan; and to consider and decide conclusively any
questions (whether of fact or otherwise) arising in connection with the
administration of the Plan or any claim for Severance Pay arising under the
Plan. Any decision or action of the Company or the Claims Committee, as the case
may be, shall be conclusive and binding.

     5.3 (a) Claims. All inquiries and claims respecting the Plan shall be in
             ------
writing directed to the Claims Committee at such address as may be specified
from time to time. In accordance with Section 5.4 of the Plan, the Claims
Committee may appoint itself, one or more of its number, or any employee in the
Human Resources Department

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of the Company to hear claims for benefits. In the case of a claim respecting
benefits paid or payable to an Eligible Employee, a written determination
granting or denying the claim shall be furnished to the claimant within 90 days
of the date on which the claim is filed. If special circumstances, including,
but not limited to, the advisability of a hearing, require a longer period, the
claimant will be notified in writing, prior to the expiration of the 90-day
period, of the reasons for an extension of time; provided, however, that no
extensions will be permitted beyond 90 days after expiration of the initial 90-
day period. A denial or partial denial of a claim shall be dated and signed by
the Claims Committee and shall clearly set forth the following information:

     (i)   the specific reason or reasons for the denial;

     (ii)  specific reference to pertinent Plan provisions on which the denial
is based;

     (iii) a description of any additional material or information necessary for
the claimant to perfect the claim and an explanation of why such material or
information is necessary; and

     (iv)  an explanation of the review procedure set forth in Section 5.3(b) of
the Plan.

If no written determination is furnished to the claimant, then the claim shall
be deemed denied and the review procedure described in Section 5.3(b) of the
Plan will become available to the claimant.

     (b) Appeals. A claimant may obtain review of an adverse benefit
         -------
determination by filing a written notice of appeal with the Appeals Committee
within sixty (60) days after the determination date or, if later, within sixty
(60) days after the receipt of a written notice denying the claim. Thereupon the
Appeals Committee shall appoint one or more persons in accordance with Section
5.4 of the Plan who shall conduct a full and fair review, which shall include
the appellant's right:

     (i)   to be represented by a spokesman;

     (ii)  to present a written statement of facts and of the appellant's
interpretation of any pertinent document, statute or regulation; and

     (iii) to receive a prompt written decision clearly setting forth findings
of fact and the specific reasons for the decision written in a manner calculated
to be understood by the appellant and containing specific references to
pertinent Plan provisions on which the decision is based.

A decision shall be rendered no more than sixty (60) days after receipt of the
request for review, except that such period may be extended for an additional
sixty (60) days if the person or persons reviewing the appeal determine that
special circumstances, including, but not limited to, the advisability of a
hearing, require such extension. The Appeals Committee may appoint itself, one
or more of its number, or any other person or persons whether or not connected
with the Company to review an appeal, in accordance with Section 5.4 of the
Plan.

                                       9
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     (c) Claimants must follow the claims procedures described in Sections
5.3(a) and 5.3(b) of the Plan before taking action in any other forum regarding
a claim for benefits under the Plan. Any suit or legal action initiated by a
claimant under the Plan must be brought by the claimant no later than one year
following a final decision on the claim for benefits by the Claims Committee
(including the decision on any appeal of the claim by the Appeals Committee).
This one-year statute of limitations on suits for benefits shall apply in any
forum where a claimant initiates such suit or legal action.

     5.4 The Company pursuant to action by the Executive Vice President of Human
Resources of the Company (or successor thereto), the Claims Committee and the
Appeals Committee shall each have the power to delegate their respective
responsibilities under the Plan to one or more of its members or officers, as
the case may be, or to employees or to other individuals or organizations, as
the case may be, by notifying them as to the duties and responsibilities
delegated. Each person to whom responsibilities are so delegated shall serve at
the pleasure of the entity or person making the delegation and, if an Employee,
without payment of additional compensation for such services. Any such person
may resign by delivering a written resignation to the entity or person that made
the delegation. Vacancies created by resignation, death or other cause may be
filled by the entity or person that made the delegation or the assigned
responsibility may be reassumed or redelegated by such entity or person.

                      Section 6 - Amendment and Termination
                      -------------------------------------

     6.1 The Company shall have the right to amend or terminate the Plan in any
respect and at any time without notice, and may do so pursuant to a written
resolution of the Compensation Committee of the Board.

     6.2 The Executive Vice President of Human Resources of the Company (or
successor thereto) or the Company's delegate or delegates appointed by such
officer in accordance with Section 5.4 of the Plan may adopt minor amendments to
the Plan without approval of the Compensation Committee of the Board that (i)
are necessary or advisable for purposes of compliance with applicable laws and
regulations, (ii) relate to administrative practices, or (iii) have an
insubstantial financial effect on Plan benefits and expenses.

                         Section 7 - General Provisions
                         ------------------------------

     7.1 Eligible Employee's Rights Unsecured and Unfunded. The Plan at all
         -------------------------------------------------
times shall be entirely unfunded. No assets of any Participating Company shall
be segregated or earmarked to represent the liability for benefits under the
Plan. The right of an Eligible Employee to receive a payment hereunder shall be
an unsecured claim against the general assets of the Participating Company that
was the employer of such Eligible Employee. All payments under the Plan shall be
made from the general assets of the Participating Company that was the most
recent employer of the Eligible Employee.

                                       10
<PAGE>

     7.2 No Guarantee of Benefits. Nothing contained in the Plan shall
         ------------------------
constitute a guarantee by a Participating Company or any other person or entity
that the assets of the Participating Company will be sufficient to pay any
benefit hereunder.

     7.3 No Enlargement of Employee Rights. The existence of this Plan or any
         ---------------------------------
payment of Severance Pay under the Plan shall not be deemed to constitute a
contract of employment between the Company or an Affiliated Company and any
Eligible Employee, nor shall it constitute a right to remain in the employ of
the Company or an Affiliated Company. Employment with the Company or an
Affiliated Company is employment-at-will and either party may terminate the
Employee's employment at any time, for any reason, with or without cause or
notice.

     7.4 Non-Alienation Provision. Except as set forth in Section 4.4 of the
         ------------------------
Plan, and subject to the provisions of applicable law, no interest of any person
or entity in, or right to receive a benefit or distribution under, the Plan
shall be subject in any manner to sale, transfer, assignment, pledge,
attachment, garnishment, or other alienation or encumbrance of any kind; nor may
such interest or right to receive a distribution be taken, either voluntarily or
involuntarily, for the satisfaction of the debts of, or other obligations or
claims against, such person or entity, including claims for alimony, support,
separate maintenance and claims in bankruptcy proceedings.

     7.5 Applicable Law. The Plan shall be construed and administered under the
         --------------
laws of the State of New Jersey, except to the extent that such laws are
preempted by ERISA.

     7.6 Excess Payments. If compensation, years of service or any other
         ---------------
relevant fact relating to any person is found to have been misstated, the Plan
benefit payable by the Participating Company to an Eligible Employee shall be
the Plan benefit that would have been provided on the basis of the correct
information. Any excess payments due to such misstatement, or due to any other
mistake of fact or law, shall be refunded to the Participating Company or
withheld by it from any further amounts otherwise payable under the Plan.

     7.7 Impact on Other Benefits. Amounts paid under the Plan shall not be
         ------------------------
included in an Eligible Employee's compensation for purposes of calculating
benefits under any other plan, program or arrangement sponsored by the Company
or a Participating Company, unless such plan, program or arrangement expressly
provides that amounts paid under the Plan shall be included.

     7.8 Usage of Terms and Headings. Words in the masculine gender shall
         ---------------------------
include the feminine and the singular shall include the plural, and vice versa,
unless qualified by the context. Any headings are included for ease of reference
only, and are not to be construed to alter the terms of the Plan.

                                       11
<PAGE>

     7.9 Supersession. The Plan, along with the Prudential Severance Plan,
         ------------
supersedes all statements, practices or policies, if any, with respect to
providing severance benefits to any Employee whose employment terminates on or
after June 16, 2000.

     7.10 Effective Date. The Plan shall be effective as to Eligible
          --------------
Terminations that occur on or after June 16, 2000, and the Plan as amended and
restated shall be effective as to Eligible Terminations that occur on or after
December 18, 2000.

     IN WITNESS WHEREOF, The Prudential Insurance Company of America has caused
this Plan to be executed and adopted as of the date first above written.

                                    THE PRUDENTIAL INSURANCE COMPANY
                                    OF AMERICA

Dated:  December  , 2000            By ______________________________________
                                       Michele S. Darling
                                       Executive Vice President, Human Resources

                                       12
<PAGE>

  Appendix A - Schedule under Section 4.1 of the Prudential Severance Plan for
  ----------------------------------------------------------------------------
                               Senior Executives
                               -----------------

  --------------------------------------------- ----------------------------
               YEARS OF SERVICE*                      NUMBER OF WEEKS
  --------------------------------------------- ----------------------------
                   1 OR LESS                                 6
  --------------------------------------------- ----------------------------

                       2                                     6
  --------------------------------------------- ----------------------------

                       3                                     9
  --------------------------------------------- ----------------------------

                       4                                    12
  --------------------------------------------- ----------------------------

                       5                                    15
  --------------------------------------------- ----------------------------

                       6                                    18
  --------------------------------------------- ----------------------------

                       7                                    21
  --------------------------------------------- ----------------------------

                       8                                    24
  --------------------------------------------- ----------------------------

                       9                                    27
  --------------------------------------------- ----------------------------

                       10                                   30
  --------------------------------------------- ----------------------------

                       11                                   33
  --------------------------------------------- ----------------------------

                       12                                   36
  --------------------------------------------- ----------------------------

                       13                                   39
  --------------------------------------------- ----------------------------
                       14                                   42
  --------------------------------------------- ----------------------------

                       15                                   45
  --------------------------------------------- ----------------------------

                       16                                   48
  --------------------------------------------- ----------------------------

                       17                                   51
  --------------------------------------------- ----------------------------

                       18                                   54
  --------------------------------------------- ----------------------------

                       19                                   57
  --------------------------------------------- ----------------------------

                       20                                   60
  --------------------------------------------- ----------------------------

                       21                                   63
  --------------------------------------------- ----------------------------

                       22                                   66
  --------------------------------------------- ----------------------------

                       23                                   69
  --------------------------------------------- ----------------------------

                       24                                   72
  --------------------------------------------- ----------------------------

                       25                                   75
  --------------------------------------------- ----------------------------

                   26 OR MORE                               78
  --------------------------------------------- ----------------------------

*Service is based on adjusted service date as defined in Section 402(e) of the
Prudential Retirement Plan, and rounded up to the next full year of service.

                                       13
<PAGE>

DRAFT 11/7/00 (5:00 PM)

SevPlanForSrExec2000Restatement11-7-00

                                       14<PAGE>

                                                                    EXHIBIT 10.1

                                  $537,500,000

                                     364-DAY
                                CREDIT AGREEMENT

                                   dated as of

                                 April 19, 2001

                                      among

                            DUKE CAPITAL CORPORATION,

                                   as Borrower
                                      --------

                             THE BANKS LISTED HEREIN

                                    as Banks
                                       -----

                                       and

                                  BANK ONE, NA

                             as Administrative Agent
                                --------------------

                         BANC ONE CAPITAL MARKETS, INC.

                       Lead Arranger and Sole Book Runner
                       ----------------------------------

<PAGE>

                                TABLE OF CONTENTS
                                 ---------------
<TABLE>
<CAPTION>

                                                                          PAGE
                                                                          ----
<S>               <C>                                                     <C>
ARTICLE 1         DEFINITIONS AND ACCOUNTING TERMS
   SECTION 1.01    Definitions............................................   1
   SECTION 1.02    Accounting Terms and Determinations....................  10
   SECTION 1.03    Types and Classes of Borrowings........................  10

ARTICLE 2         THE CREDITS
   SECTION 2.01    Commitments............................................  11
   SECTION 2.02    Notice of Borrowings...................................  12
   SECTION 2.03    Notice to Banks; Funding of Loans......................  12
   SECTION 2.04    Registry; Notes........................................  13
   SECTION 2.05    Maturity of Loans......................................  14
   SECTION 2.06    Interest Rates.........................................  14
   SECTION 2.07    Commitment Fees........................................  15
   SECTION 2.08    Optional Termination or Reduction of Commitments.......  15
   SECTION 2.09    Method of Electing Interest Rates......................  15
   SECTION 2.10    Mandatory Termination of Commitments...................  16
   SECTION 2.11    Optional Prepayments...................................  16
   SECTION 2.12    General Provisions as to Payments......................  17
   SECTION 2.13    Funding Losses.........................................  17
   SECTION 2.14    Computation of Interest and Fees.......................  18
   SECTION 2.15    Regulation D Compensation..............................  18
   SECTION 2.16    Facility LCs...........................................  18

ARTICLE 3         CONDITIONS
   SECTION 3.01    Effectiveness..........................................  23
   SECTION 3.02    Credit Extensions......................................  24

ARTICLE 4         REPRESENTATIONS AND WARRANTIES
   SECTION 4.01    Corporate Existence and Power..........................  25
   SECTION 4.02    Corporate and Governmental Authorization;
                     No Contravention.....................................  25
   SECTION 4.03    Binding Effect.........................................  25
   SECTION 4.04    Financial Information..................................  25
   SECTION 4.05    Regulation U...........................................  26
   SECTION 4.06    Litigation.............................................  26
   SECTION 4.07    Compliance with Laws...................................  26
   SECTION 4.08    Taxes..................................................  26
   SECTION 4.09    Public Utility Holding Company Act.....................  27
</TABLE>
                                       i
<PAGE>

<TABLE>
<CAPTION>

                                                                          PAGE
                                                                          ----
<S>               <C>                                                     <C>
ARTICLE 5         COVENANTS
   SECTION 5.01    Information...........................................  27
   SECTION 5.02    Payment of Taxes......................................  28
   SECTION 5.03    Maintenance of Property; Insurance....................  29
   SECTION 5.04    Maintenance of Existence..............................  29
   SECTION 5.05    Compliance with Laws..................................  29
   SECTION 5.06    Books and Records.....................................  29
   SECTION 5.07    Maintenance of Ownership of Principal Subsidiaries....  30
   SECTION 5.08    Negative Pledge.......................................  30
   SECTION 5.09    Consolidations, Mergers and Sales of Assets...........  31
   SECTION 5.10    Use of Proceeds.......................................  31
   SECTION 5.11    Transactions with Affiliates..........................  31
   SECTION 5.12    Indebtedness/Capitalization Ratio.....................  32
   SECTION 5.13    Post-closing Consents/Waivers.........................  32

ARTICLE 6         DEFAULTS
   SECTION 6.01    Events of Default.....................................  32
   SECTION 6.02    Notice of Default.....................................  35

ARTICLE 7         THE ADMINISTRATIVE AGENT
   SECTION 7.01    Appointment; Nature of Relationship...................  35
   SECTION 7.02    Administrative Agent and Affiliates...................  36
   SECTION 7.03    Action by Administrative Agent........................  36
   SECTION 7.04    Consultation with Experts.............................  36
   SECTION 7.05    Liability of Administrative Agent.....................  36
   SECTION 7.06    Indemnification.......................................  37
   SECTION 7.07    Credit Decision.......................................  37
   SECTION 7.08    Successor Administrative Agent........................  37
   SECTION 7.09    Administrative Agent's Fee............................  37

ARTICLE 8         CHANGE IN CIRCUMSTANCES
   SECTION 8.01    Basis for Determining Interest Rate Inadequate
                     or Unfair...........................................  38
   SECTION 8.02    Illegality............................................  38
   SECTION 8.03    Increased Cost and Reduced Return.....................  39
   SECTION 8.04    Taxes.................................................  40
   SECTION 8.05    Alternate Base Rate Loans Substituted for Affected
                     Euro-Dollar Loans...................................  42
   SECTION 8.06    Substitution of Bank..................................  43

ARTICLE 9         MISCELLANEOUS
   SECTION 9.01.   Notices...............................................  44
   SECTION 9.02    No Waivers............................................  44
   SECTION 9.03    Expenses; Indemnification.............................  44
</TABLE>
                                       ii
<PAGE>

<TABLE>
<CAPTION>

                                                                          PAGE
                                                                          ----
<S>               <C>                                                     <C>
SECTION 9.04 Sharing of Set-offs..................................         45
SECTION 9.05 Amendments and Waivers...............................         45
SECTION 9.06 Successors and Assigns...............................         45
SECTION 9.07 Collateral...........................................         47
SECTION 9.08 Confidentiality......................................         47
SECTION 9.09 Governing Law; Submission to Jurisdiction............         47
SECTION 9.10 Counterparts; Integration............................         47
SECTION 9.11 WAIVER OF JURY TRIAL.................................         47
SECTION 9.12 Payments Set Aside...................................         48
</TABLE>

                                      iii
<PAGE>

COMMITMENTS SCHEDULE
PRICING SCHEDULE
NOTICE ADDRESSES SCHEDULE
EXISTING LCS SCHEDULE

EXHIBIT A     -   Note
EXHIBIT B-1   -   Opinion of General Counsel of the Borrower
EXHIBIT B-2   -   Opinion of Special Counsel for the Borrower
EXHIBIT C     -   Assignment and Assumption Agreement
EXHIBIT D     -   Extension Agreement
EXHIBIT E     -   Facility LC Application
EXHIBIT F     -   Facility LC

                                       iv
<PAGE>

                            364-DAY CREDIT AGREEMENT

         364-DAY CREDIT AGREEMENT dated as of April 19, 2001 among DUKE CAPITAL
CORPORATION, the BANKS listed on the signature pages hereof and BANK ONE, NA, a
national banking association having its principal office in Chicago, Illinois,
as Administrative Agent.

         The parties hereto agree as follows:

1                                    ARTICLE

                        DEFINITIONS AND ACCOUNTING TERMS

2.1.     SECTION  Definitions. The following terms, as used herein, have the
following meanings:

         "Additional Bank" means any financial institution that becomes a Bank
for purposes hereof in connection with the replacement of a Bank pursuant to
Section 8.06.

         "Administrative Agent" means Bank One, NA, in its capacity as
administrative agent for the Banks hereunder, and its successors in such
capacity.

         "Administrative Questionnaire" means, with respect to each Bank, the
administrative questionnaire in the form submitted to such Bank by the
Administrative Agent and submitted to the Administrative Agent (with a copy to
the Borrower) duly completed by such Bank.

         "Affiliate" means (i) any Person that directly, or indirectly through
one or more intermediaries, controls the Borrower (a "Controlling Person") or
(ii) any Person (other than the Borrower or a Subsidiary) which is controlled by
or is under common control with a Controlling Person. As used herein, the term
"control" means possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through
the ownership of voting securities, by contract or otherwise.

         "Aggregate Commitment" means the aggregate of the Commitments of all
the Banks.

         "Aggregate Outstanding Credit Exposure" means, at any time, the
aggregate of the Outstanding Credit Exposure of all the Banks.

         "Alternate Base Rate" means, for any day, a rate of interest per annum
equal to the higher of (i) the Prime Rate for such day and (ii) the sum of the
Federal Funds Effective Rate for such day plus 1/2% per annum.

         "Alternate Base Rate Loan" means a Loan which, except as otherwise
provided in Section 2.06, bears interest at the Alternate Base Rate.

                                       1
<PAGE>

         "Applicable Lending Office" means, with respect to any Bank, (i) in the
case of its Alternate Base Rate Loans, its Domestic Lending Office and (ii) in
the case of its Euro-Dollar Loans, its Euro-Dollar Lending Office.

         "Applicable Margin" means, with respect to Euro-Dollar Borrowings at
any time, the percentage rate per annum which is applicable to such time with
respect to Euro-Dollar Borrowings as set forth in the Pricing Schedule.

         "Approved Officer" means the president, a vice president or the
treasurer or assistant treasurer of the Borrower or such other representative of
the Borrower as may be designated by any one of the foregoing with the consent
of the Administrative Agent.

         "Assignee" has the meaning set forth in Section 9.06(c).

         "Available Aggregate Commitment" means, at any time, the Aggregate
Commitment then in effect minus the Aggregate Outstanding Credit Exposure at
such time.

         "Bank" means each bank or other financial institution listed on the
signature pages hereof, each Additional Bank, each Assignee which becomes a Bank
pursuant to Section 9.06(c), and their respective successors.

         "Bank One" means Bank One, NA, a national banking association having
its principal office in Chicago, Illinois, in its individual capacity, and its
successors.

         "Borrower" means Duke Capital Corporation, a Delaware corporation, and
its successors.

         "Borrowing" has the meaning set forth in Section 1.03.

         "Cash Equivalents" means (i) securities issued or unconditionally
guaranteed by the United States of America or any agency or instrumentality
thereof, backed by the full faith and credit of the United States of America and
maturing within 30 days from the date of acquisition, (ii) commercial paper
issued by any Person organized under the laws of the United States of America,
maturing within 30 days from the date of acquisition and, at the time of
acquisition, having a rating of at least A-1 or the equivalent thereof by S&P or
at least P-1 or the equivalent thereof by Moody's, (iii) time deposits and
certificates of deposit maturing within 30 days from the date of issuance and
issued by a bank or trust company organized under the laws of the United States
of America or any state thereof that has combined capital and surplus of at
least $500,000,000 and that has (or is a subsidiary of a bank holding company
that has) a long-term unsecured debt rating of at least A or the equivalent
thereof by S&P or at least A2 or the equivalent thereof by Moody's, (iv)
repurchase obligations with a term not exceeding seven (7) days with respect to
underlying securities of the types described in clause (i) above entered into
with any bank or trust company meeting the qualifications specified in clause
(iii) above, and (v)

                                       2
<PAGE>

money market funds at least 95% of the assets of which are continuously invested
in securities of the type described in clause (i) above.

         "Class" refers to the determination whether a Loan is a Revolving
Credit Loan or a Term Loan.

         "Collateral Shortfall Amount" is defined in Section 6.01.

  "Commitment" means (i) with respect to each Bank listed on the signature pages
hereof, the amount set forth opposite the name of such Bank on the Commitment
Schedule, and (ii) with respect to each Additional Bank or Assignee which
becomes a bank pursuant to Sections 2.01(c) and 9.06(c), the amount of the
Commitment thereby assumed by it, in each case as such amount may from time to
time be reduced pursuant to Section 2.08, 2.10 or 9.06(c) or increased pursuant
to Section 8.06 or 9.06(c).

         "Commitment Fee Rate" means, on any day, the percentage rate per annum
applicable on such day as set forth in the Pricing Schedule.

         "Commitment Schedule" means the Schedule attached hereto identified as
such.

         "Commitment Termination Date" means, for each Bank, April 18, 2002, as
such date may be extended from time to time pursuant to Section 2.01(c) or, if
any such day is not a Euro-Dollar Business Day, the next preceding Euro-Dollar
Business Day.

         "Consolidated Capitalization" means the sum of (i) Consolidated
Indebtedness, (ii) consolidated common stockholders' equity as would appear on a
consolidated balance sheet of the Borrower and its Consolidated Subsidiaries
prepared in accordance with generally accepted accounting principles, (iii) the
aggregate liquidation preference of preferred stocks (other than preferred
stocks subject to mandatory redemption or repurchase) of the Borrower and its
Consolidated Subsidiaries upon involuntary liquidation, (iv) the aggregate
outstanding amount of all Equity Preferred Securities, and (v) minority
interests as would appear on a consolidated balance sheet of the Borrower and
its Consolidated Subsidiaries prepared in accordance with generally accepted
accounting principles.

         "Consolidated Indebtedness" means, at any date, all Indebtedness of
Borrower and its Consolidated Subsidiaries determined on a consolidated basis in
accordance with generally accepted accounting principles.

         "Consolidated Subsidiary" means, for any Person, at any date any
Subsidiary or other entity the accounts of which would be consolidated with
those of such Person in its consolidated financial statements if such statements
were prepared as of such date; unless otherwise specified "Consolidated
Subsidiary" means a Consolidated Subsidiary of the Borrower.

                                       3
<PAGE>

         "Credit Extension" means the issuance of a Facility LC hereunder or the
making of a Borrowing.

         "Credit Rating" is defined in the Pricing Schedule.

         "Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.

         "Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in Chicago, Illinois are authorized by law
to close.

         "Domestic Lending Office" means, as to each Bank, its office located at
its address set forth in its Administrative Questionnaire (or identified in its
Administrative Questionnaire as its Domestic Lending Office) or such other
office as such Bank may hereafter designate as its Domestic Lending Office by
notice to the Borrower and the Administrative Agent.

         "Effective Date" means the date this Agreement becomes effective in
accordance with Section 3.01.

         "Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges, releases of pollutants, contaminants, chemicals, or industrial,
toxic or hazardous substances or wastes into the environment including, without
limitation, ambient air, surface water, ground water, or land, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants, chemicals, or
industrial, toxic or hazardous substances or wastes.

         "Equity Preferred Securities" means any securities, however
denominated, (i) issued by the Borrower or any Consolidated Subsidiary of the
Borrower, (ii) that are not subject to mandatory redemption or the underlying
securities, if any, of which are not subject to mandatory redemption, (iii) that
are perpetual or mature no less than 20 years from the date of issuance, (iv)
the indebtedness issued in connection with which, including any guaranty, is
subordinated in right of payment to the unsecured and unsubordinated
indebtedness of the issuer of such indebtedness or guaranty, and (v) the terms
of which permit the deferral of interest or distributions thereon to a date
occurring after the Final Maturity Date.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

         "ERISA Group" means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with the Borrower, are treated as a single employer under
Section 414 of the Internal Revenue Code.

                                       4
<PAGE>

         "Euro-Dollar Base Rate" has the meaning set forth in Section 2.06(b).

         "Euro-Dollar Business Day" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.

         "Euro-Dollar Lending Office" means, as to each Bank, its office, branch
or affiliate located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its
Euro-Dollar Lending Office) or such other office, branch or affiliate of such
Bank as it may hereafter designate as its Euro-Dollar Lending Office by notice
to the Borrower and the Administrative Agent.

         "Euro-Dollar Loan" means a Loan which, except as otherwise provided in
Section 2.06, bears interest at the applicable Euro-Dollar Rate.

         "Euro-Dollar Rate" means a rate of interest determined pursuant to
Section 2.06(b) on the basis of a Euro-Dollar Base Rate.

         "Euro-Dollar Reserve Percentage" has the meaning set forth in Section
2.15.

         "Event of Default" has the meaning set forth in Section 6.01.

         "Existing LC" means a letter of credit listed on the Existing LCs
Schedule.

         "Existing LCs Schedule" means the Schedule attached hereto identified
as such.

         "Facility LC" means an Existing LC or a letter of credit issued
pursuant to Section 2.16(a).

         "Facility LC Application" is defined in Section 2.16(c).

         "Facility LC Collateral Account" is defined in Section 2.16(k).

         "Federal Funds Effective Rate" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Domestic Business Day, for the immediately preceding Domestic Business Day) by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day which is a Domestic Business Day, the average of the quotations at
approximately 10:00 a.m. (Chicago time) on such day on such transactions
received by the Administrative Agent from three Federal funds brokers of
recognized standing selected by the Administrative Agent in its sole discretion.

                                       5
<PAGE>

         "Final Maturity Date" means the one-year anniversary of the Commitment
Termination Date, as such date may be extended pursuant to Section 2.01(c).

         "Group of Loans" means at any time a group of Loans of the same Class
consisting of (i) all Alternate Base Rate Loans of such Class outstanding at
such time or (ii) all Euro-Dollar Loans of such Class having the same Interest
Period at such time, provided that, if a Loan of any particular Bank is
converted to or made as an Alternate Base Rate Loan pursuant to Article 8, such
Loan shall be included in the same Group or Groups of Loans from time to time as
it would have been if it had not been so converted or made.

         "Indebtedness" of any Person means at any date, without duplication,
(a) all obligations of such Person for borrowed money, (b) all indebtedness of
such Person for the deferred purchase price of property or services purchased,
(c) all indebtedness created or arising under any conditional sale or other
title retention agreement with respect to property acquired, (d) all
indebtedness under leases which shall have been or should be, in accordance with
generally accepted accounting principles, recorded as capital leases in respect
of which such Person is liable as lessee, (e) the face amount of letter of
credit indebtedness available or to be available to be drawn (other than letter
of credit obligations relating to indebtedness included in Indebtedness pursuant
to another clause of this definition) and, without duplication, the unreimbursed
amount of all drafts drawn thereunder, (f) indebtedness secured by any Lien on
property or assets of such Person, whether or not assumed (but in any event not
exceeding the fair market value of the property or asset), (g) all direct
guarantees and sureties in respect of indebtedness referred to in clauses (a)
through (f) above of another Person, (h) all amounts payable in connection with
mandatory redemptions or repurchases of preferred stock and (i) any obligations
of such Person (in the nature of principal or interest) in respect of
acceptances or similar obligations issued or created for the account of such
Person.

         "Interest Period" means, with respect to each Euro-Dollar Loan, the
period commencing on the date of borrowing specified in the applicable Notice of
Borrowing or on the date specified in an applicable Notice of Interest Rate
Election and ending one, two, three or six, or, if deposits of a corresponding
maturity are generally available in the London interbank market, nine or twelve,
months thereafter, as the Borrower may elect in such notice; provided that:

                  (a)      any Interest Period which would otherwise end on a
         day which is not a Euro-Dollar Business Day shall be extended to the
         next succeeding Euro-Dollar Business Day unless such Euro-Dollar
         Business Day falls in another calendar month, in which case such
         Interest Period shall end on the next preceding Euro-Dollar Business
         Day; and

                  (b)      any Interest Period which begins on the last
         Euro-Dollar Business 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 Euro-Dollar Business
         Day of a calendar month;

                                       6
<PAGE>

provided further that: (x) any Interest Period applicable to any Loan which
begins before the Commitment Termination Date and would otherwise end after the
Commitment Termination Date shall end on the Commitment Termination Date; and
(y) any Interest Period applicable to any Loan which would otherwise end after
the Final Maturity Date shall end on the Final Maturity Date.

         "Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, or any successor statute.

         "Investment Grade Status" exists as to any Person at any date if all
senior long-term unsecured debt securities of such Person outstanding at such
date which had been rated by S&P or Moody's are rated BBB- or higher by S&P or
Baa3 or higher by Moody's, as the case may be.

         "LC Fee" is defined in Section 2.16(d).

         "LC Issuer" means Bank One (or any subsidiary or affiliate of Bank One
designated by Bank One) in its capacity as issuer of Facility LCs hereunder,
First Union National Bank in its capacity as issuer of Facility LCs hereunder,
any other Bank listed as the issuer of an Existing LC on the Existing LCs
Schedule and any other Bank which accepts a designation by the Borrower and the
Administrative Agent as an LC Issuer hereunder.

         "LC Obligations" means, at any time, the sum, without duplication, of
(i) the aggregate undrawn stated amount under all Facility LCs outstanding at
such time plus (ii) the aggregate unpaid amount at such time of all
Reimbursement Obligations.

         "LC Payment Date" is defined in Section 2.16(e).

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

         "Loan" means a Revolving Credit Loan or a Term Loan made by a Bank
pursuant to Section 2.01.

         "Loan Documents" means this Agreement, the Facility LC Applications and
any Notes issued pursuant to Section 2.04.

         "Material Debt" means Indebtedness of the Borrower or any of its
Subsidiaries in an aggregate principal amount exceeding $100,000,000.

         "Material Plan" has the meaning set forth in Section 6.01(i).

                                       7
<PAGE>

         "Material Subsidiary" means at any time any Subsidiary of the Borrower
having, together with its Subsidiaries, consolidated assets in excess of 10% of
the total assets of the Borrower and its Consolidated Subsidiaries, determined
on a consolidated basis as of such time.

         "Modify" and "Modification" are defined in Section 2.16(a).

         "Moody's" means Moody's Investors Service, Inc.

         "Notes" means promissory notes of the Borrower, in the form required by
Section 2.04, evidencing the obligation of the Borrower to repay the Loans, and
"Note" means any one of such promissory notes issued hereunder.

         "Notice Addresses Schedule" means the Schedule attached hereto
identified as such.

         "Notice of Borrowing" has the meaning set forth in Section 2.02.

         "Notice of Interest Rate Election" has the meaning set forth in Section
2.09(a).

         "Obligations" means all unpaid principal of and accrued and unpaid
interest on the Loans, all Reimbursement Obligations, all accrued and unpaid
fees and all expenses, reimbursements, indemnities and other obligations of the
Borrower to the Banks or to any Bank, the Administrative Agent, any LC Issuer or
any indemnified party arising under the Loan Documents.

         "Outstanding Credit Exposure" means, as to any Bank at any time, the
sum of (i) the aggregate principal amount of its Loans outstanding at such time,
plus (ii) an amount equal to its Pro Rata Share of the LC Obligations at such
time.

         "Parent" means, with respect to any Bank, any Person controlling such
Bank.

         "Participant" has the meaning set forth in Section 9.06(b).

         "PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.

         "Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.

         "Plan" means at any time an employee pension benefit plan which is
covered by Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Internal Revenue Code and is either (i) maintained by a
member of the ERISA Group for employees of a member of the ERISA Group or (ii)
maintained pursuant to a collective bargaining agreement or

                                       8
<PAGE>

any other arrangement under which more than one employer makes contributions
and to which a member of the ERISA Group is then making or accruing an
obligation to make contributions or has within the preceding five plan years
made contributions.

         "Pricing Schedule" means the Schedule attached hereto identified as
such.

         "Prime Rate" means a rate per annum equal to the prime rate of interest
announced from time to time by Bank One or its parent (which is not necessarily
the lowest rate charged to any customer), changing when and as said prime rate
changes.
         "Principal Subsidiary" means each of Texas Eastern Transmission
Corporation, Algonquin Gas Transmission Company, PanEnergy Corp, and their
respective successors.

         "Pro Rata Share" means, with respect to a Bank, a portion equal to a
fraction the numerator of which is such Bank's Commitment and the denominator of
which is the Aggregate Commitment.

         "Quarterly Payment Date" means the first Domestic Business Day of each
January, April, July and October.

         "Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.

         "Reimbursement Date" has the meaning set forth in Section 2.16(f).

         "Reimbursement Obligations" means, at any time, the aggregate of all
obligations of the Borrower then outstanding under Section 2.16 to reimburse the
LC Issuers for amounts paid by the LC Issuers in respect of any one or more
drawings under Facility LCs.

         "Required Banks" means at any time Banks (i) having at least 51% of the
Aggregate Commitment or (ii) if all of the Commitments shall have been
terminated, having at least 51% of the Aggregate Outstanding Credit Exposure.

         "Revolving Credit Loan" means a loan made or to be made by a Bank
pursuant to Section 2.01(a); provided that, if any such loan or loans (or
portions thereof) are combined or subdivided pursuant to a Notice of Interest
Rate Election, the term "Revolving Credit Loan" shall refer to the combined
principal amount resulting from such combination or to each of the separate
principal amounts resulting from such subdivision, as the case may be.

         "Revolving Credit Period" means the period from and including the
Effective Date to but not including the Commitment Termination Date.

         "S&P" means Standard & Poor's Rating Services, a division of The
McGraw-Hill Companies, Inc.

                                       9
<PAGE>

         "Subsidiary" means, as to any Person, any corporation or other entity
of which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by such Person; unless
otherwise specified, "Subsidiary" means a Subsidiary of the Borrower.

         "Substantial Assets" means assets sold or otherwise disposed of in a
single transaction or a series of related transactions representing 25% or more
of the consolidated assets of the Borrower and its Consolidated Subsidiaries,
taken as a whole.

         "Term Loan" means a loan made or to be made by a Bank pursuant to
Section 2.01(b); provided that, if any such loan or loans (or portions thereof)
are combined or subdivided pursuant to a Notice of Interest Rate Election, the
term "Term Loan" shall refer to the combined principal amount resulting from
such combination or to each of the separate principal amounts resulting from
such subdivision, as the case may be.

         "Three-Year Credit Agreement" means the Three-Year Credit Agreement
dated as of April 19, 2001 among the Borrower, certain lenders and Bank One, NA,
as administrative agent, as such agreement may be amended or modified from time
to time.

         "Type" means, with respect to any Loan, its nature as an Alternate Base
Rate Loan or a Euro-Dollar Loan.

         "United States" means the United States of America, including the
States and the District of Columbia, but excluding its territories and
possessions.

         "Unfunded Vested Liabilities" means, with respect to any Plan at any
time, the amount (if any) by which (i) the present value of all benefits under
such Plan exceeds (ii) the fair market value of all Plan assets allocable to
such benefits, all determined as of the then most recent valuation date for such
Plan, but only to the extent that such excess represents a potential liability
of a member of the ERISA Group to the PBGC or the Plan under Title IV of ERISA.

2.2.     SECTION  Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with
generally accepted accounting principles as in effect from time to time, applied
on a basis consistent (except for changes concurred in by the Borrower's
independent public accountants) with the most recent audited consolidated
financial statements of the Borrower and its Consolidated Subsidiaries delivered
to the Banks.

2.3.     SECTION  Types and Classes of Borrowings. The term "Borrowing" denotes
the aggregation of Loans of the Banks to be made to the Borrower pursuant to
Article 2 on a single date and for a single Interest Period. Borrowings are
classified for purposes of this Agreement

                                       10
<PAGE>

either by reference to the pricing of Loans comprising such Borrowing (e.g., a
"Euro-Dollar Borrowing" is a Borrowing comprised of Euro-Dollar Loans) or by
reference to the Class of Loans comprising such Borrowing (e.g., a "Term
Borrowing" is a Borrowing comprised of Term Loans).

3                                    ARTICLE

4                                  THE CREDITS

4.1.     SECTION  Commitments

4.2.(a) Revolving Credit Loans; Facility LCs. During the Revolving Credit
Period, each Bank severally agrees, on the terms and conditions set forth in
this Agreement, (i) to make loans to the Borrower and (ii) to participate in
Facility LCs issued upon the request of the Borrower, from time to time,
provided that, after giving effect to the making of each such Revolving Credit
Loan and the issuance of each such Facility LC, such Bank's Outstanding Credit
Exposure shall not exceed its Commitment. Each Borrowing under this subsection
shall be in an aggregate principal amount of $10,000,000 or any larger multiple
of $1,000,000 (except that any such Borrowing may be in the aggregate amount
available in accordance with Section 3.02(b)) and shall be made from the Banks
ratably according to their Pro Rata Shares. Within the foregoing limits, the
Borrower may borrow under this subsection (a), or to the extent permitted by
Section 2.11, prepay Loans and reborrow at any time during the Revolving Credit
Period under this subsection (a). The Commitments to extend credit hereunder
shall expire on the Commitment Termination Date. The LC Issuers will issue
Facility LCs hereunder on the terms and conditions set forth in Section 2.16.

         (b)      Term Loans. Each Bank severally agrees, on the terms and
conditions set forth in this Agreement, to make a loan to the Borrower on the
Commitment Termination Date in an amount up to but not exceeding the amount of
its Revolving Credit Loans outstanding on the Commitment Termination Date. Each
Borrowing under this subsection (b) shall be made from the Banks ratably
according to their Pro Rata Shares.

         (c)      Extension of Commitments. On no more than two separate
occasions, the Borrower may, upon notice not less than 45 days but no earlier
than 60 days prior to the then current Commitment Termination Date to the
Administrative Agent (which shall notify each Bank of receipt of such request),
propose to extend the Revolving Credit Period for an additional 364 days
measured from the Commitment Termination Date then in effect. Each Bank shall
endeavor to respond to such request, whether affirmatively or negatively (such
determination in the sole discretion of such Bank), by notice to the Borrower
and the Administrative Agent not more than 45 days nor less than 30 days prior
to the Commitment Termination Date. Subject to the execution by the Borrower,
the Administrative Agent and such Banks of a duly completed Extension Agreement
in substantially the form of Exhibit D, the Commitment Termination Date
applicable to the Commitment of each Bank so affirmatively notifying the
Borrower and the Administrative Agent shall be extended for the period specified
above; provided that the Commitment Termination Date shall not be extended
unless Banks shall have elected so to extend their Commitments that have
Commitments constituting at least the greater of (i) 66 2/3% in

                                       11
<PAGE>

aggregate amount of the Commitments in effect at the time any such extension is
requested and (ii) the Aggregate Outstanding Credit Exposure on the Commitment
Termination Date prior to any extension thereof and after giving effect to any
repayment of Loans and/or termination of Facility LCs on such date. Any Bank
which does not give such notice to the Borrower and the Administrative Agent
shall be deemed to have elected not to extend as requested, and on the
Commitment Termination Date determined without giving effect to such requested
extension, the Commitment of each non-extending Bank shall terminate, the
participations of each non-extending Bank in Facility LCs shall terminate, and
the Borrower shall repay all Loans and other Obligations owing to such
non-extending Bank. The Borrower may, in accordance with Section 8.06, designate
another bank or other financial institution (which may be, but need not be, an
extending Bank) to replace a non-extending Bank. The Borrower may revoke its
proposal to extend the then current Commitment Termination Date by giving notice
of such revocation to the Administrative Agent (which shall notify each Bank of
such revocation) at any time prior to the then current Commitment Termination
Date and prior to execution by the Borrower of an Extension Agreement.

4.3.     SECTION  Notice of Borrowings. The Borrower shall give the
Administrative Agent notice (a "Notice of Borrowing") not later than 10:00 A.M.
(Chicago time) on (x) the date of each Alternate Base Rate Borrowing and (y) the
third Euro-Dollar Business Day before each Euro-Dollar Borrowing, specifying:

(a)      the date of such Borrowing, which shall be a Domestic Business Day in
the case of a Domestic Borrowing or a Euro-Dollar Business Day in the case of a
Euro-Dollar Borrowing,

(b)      the aggregate amount of such Borrowing,

(c)      whether the Loans comprising such Borrowing are to bear interest
initially at the Alternate Base Rate or a Euro-Dollar Rate,

(d)      the Class of Loans comprising such Borrowing, and

(e)      in the case of a Euro-Dollar Borrowing, the duration of the initial
Interest Period applicable thereto, subject to the provisions of the definition
of Interest Period.

4.4.     SECTION  Notice to Banks; Funding of Loans. (a) Upon receipt of a
Notice of Borrowing, the Administrative Agent shall promptly notify each Bank of
the contents thereof and of such Bank's share of such Borrowing and such Notice
of Borrowing shall not thereafter be revocable by the Borrower.

         (b)      Not later than 12:00 Noon (Chicago time) on the date of each
Borrowing, each Bank shall (except as provided in subsection (c) of this
Section) make available its share of such Borrowing, in Federal or other funds
immediately available in Chicago, to the Administrative Agent at its address
specified in or pursuant to Section 9.01. Unless the Administrative Agent
determines that any applicable condition specified in Article 3 has not been
satisfied, the

                                       12
<PAGE>

Administrative Agent will make the funds so received from the Banks available to
the Borrower at the Administrative Agent's aforesaid address.

         (c)      Unless the Administrative Agent shall have received notice
from a Bank prior to the date of any Borrowing that such Bank will not make
available to the Administrative Agent such Bank's share of such Borrowing, the
Administrative Agent may assume that such Bank has made such share available to
the Administrative Agent on the date of such Borrowing in accordance with
subsection (b) of this Section 2.03 and the Administrative Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Bank shall not have so made
such share available to the Administrative Agent, such Bank and, if such Bank
shall not have made such payment within two Domestic Business Days of demand
therefor, the Borrower severally agree to repay to the Administrative Agent
forthwith on demand such corresponding amount together with interest thereon,
for each day from the date such amount is made available to the Borrower until
the date such amount is repaid to the Administrative Agent, at (i) in the case
of the Borrower, a rate per annum equal to the higher of the Federal Funds
Effective Rate and the interest rate applicable thereto pursuant to Section 2.06
and (ii) in the case of such Bank, the Federal Funds Effective Rate. If such
Bank shall repay to the Administrative Agent such corresponding amount, such
amount so repaid shall constitute such Bank's Loan included in such Borrowing
for purposes of this Agreement.

         (d)      The failure of any Bank to make the Loan to be made by it as
part of any Borrowing shall not relieve any other Bank of its obligation
thereunder to make a Loan on the date of such Borrowing, but no Bank shall be
responsible for the failure of any other Bank to make a Loan to be made by such
other Bank.

4.5.     SECTION  Registry; Notes. (a) The Administrative Agent shall maintain a
register (the "Register") on which it will record the Commitment of each Bank,
each Loan made by such Bank and each repayment of any Loan made by such Bank.
Any such recordation by the Administrative Agent on the Register shall be
conclusive, absent manifest error. Failure to make any such recordation, or any
error in such recordation, shall not affect the Borrower's obligations
hereunder.

         (b)      The Borrower hereby agrees that, promptly upon the request of
any Bank at any time, the Borrower shall deliver to such Bank a duly executed
Note, in substantially the form of Exhibit A hereto, payable to the order of
such Bank and representing the obligation of the Borrower to pay the unpaid
principal amount of the Loans made to the Borrower by such Bank, with interest
as provided herein on the unpaid principal amount from time to time outstanding.

         (c)      Each Bank shall record the date, amount and maturity of each
Loan made by it and the date and amount of each payment of principal made by the
Borrower with respect thereto, and each Bank receiving a Note pursuant to this
Section, if such Bank so elects in connection with any transfer or enforcement
of its Note, may endorse on the schedule forming a part thereof appropriate
notations to evidence the foregoing information with respect to each

                                       13
<PAGE>

such Loan then outstanding; provided that the failure of such Bank to make any
such recordation or endorsement shall not affect the obligations of the Borrower
hereunder or under the Notes. Such Bank is hereby irrevocably authorized by the
Borrower so to endorse its Note and to attach to and make a part of its Note a
continuation of any such schedule as and when required.

4.6.     SECTION  Maturity of Loans. (a) Each Revolving Credit Loan made by any
Bank shall mature, and the principal amount thereof shall be due and payable
together with accrued interest thereon, on the Commitment Termination Date.

         (b)      The Term Loans of each Bank shall mature, and the principal
amount thereof shall be due and payable, together with accrued interest thereon,
on the Final Maturity Date.

4.7.     SECTION  Interest Rates. (a) Each Alternate Base Rate Loan shall bear
interest on the outstanding principal amount thereof for each day from the date
such Loan is made until it becomes due, at a rate per annum equal to the
Alternate Base Rate for such day. Such interest shall be payable quarterly in
arrears on each Quarterly Payment Date and at maturity. Any overdue principal of
or overdue interest on any Alternate Base Rate Loan shall bear interest, payable
on demand, for each day until paid at a rate per annum equal to the sum of 1%
plus the Alternate Base Rate for such day.

         (b)      Each Euro-Dollar Loan shall bear interest on the outstanding
principal amount thereof, for each day during each Interest Period applicable
thereto, at a rate per annum equal to the sum of the Applicable Margin for such
day plus the Euro-Dollar Base Rate applicable to such Interest Period. Such
interest shall be payable for each Interest Period on the last day thereof and,
if such Interest Period is longer than three months, at intervals of three
months after the first day thereof, and at maturity.

         "Euro-Dollar Base Rate" means, with respect to a Euro-Dollar Borrowing
for the relevant Interest Period, the applicable British Bankers' Association
Interest Settlement Rate for deposits in U.S. dollars appearing on Reuters
Screen FRBD as of 11:00 A.M. (London time) two Euro-Dollar Business Days prior
to the first day of such Interest Period, and having a maturity equal to such
Interest Period, provided that, (i) if Reuters Screen FRBD is not available to
the Administrative Agent for any reason, the applicable Euro-Dollar Base Rate
for the relevant Interest Period shall instead be the applicable British
Bankers' Association Interest Settlement Rate for deposits in U.S. dollars as
reported by any other generally recognized financial information service as of
11:00 A.M. (London time) two Euro-Dollar Business Days prior to the first day of
such Interest Period, and having a maturity equal to such Interest Period, and
(ii) if no such British Bankers' Association Interest Settlement Rate is
available to the Administrative Agent, the applicable Euro-Dollar Base Rate for
the relevant Interest Period shall instead be the rate determined by the
Administrative Agent to be the rate at which Bank One or one of its Affiliate
banks offers to place deposits in U.S. dollars with first-class banks in the
London interbank market approximately 11:00 A.M. (London time) two Euro-Dollar
Business Days prior to the first day of such Interest Period, in the approximate
amount of Bank One's relevant Euro-Dollar Loan and having a maturity equal to
such Interest Period.

                                       14
<PAGE>

         (c)      Any overdue principal of or overdue interest on any
Euro-Dollar Loan shall bear interest, payable on demand, for each day from and
including the date payment thereof was due to but excluding the date of actual
payment, at a rate per annum equal to the sum of 1% plus the higher of (i) the
Alternate Base Rate for such day and (ii) the sum of the Applicable Margin for
such day plus the Euro-Dollar Base Rate for such day.

         (d)      The Administrative Agent shall determine each interest rate
applicable to the Loans hereunder. The Administrative Agent shall give prompt
notice to the Borrower and the participating Banks by telecopy, telex or cable
of each rate of interest so determined, and its determination thereof shall be
conclusive in the absence of manifest error unless the Borrower raises an
objection thereto within five Domestic Business Days after receipt of such
notice.

4.8.     SECTION  Commitment Fees. The Borrower shall pay to the Administrative
Agent for the account of the Banks ratably according to their Pro Rata Shares a
commitment fee at the Commitment Fee Rate (determined daily in accordance with
the Pricing Schedule). Such commitment fee shall accrue from and including the
Effective Date to but excluding the Commitment Termination Date, on the daily
average Available Aggregate Commitment. Accrued commitment fees under this
Section shall be payable quarterly in arrears on each Quarterly Payment Date and
on the Commitment Termination Date.

4.9.     SECTION  Optional Termination or Reduction of Commitments. The Borrower
may, upon at least three Domestic Business Days' notice to the Administrative
Agent, (i) terminate the Commitments at any time, if no Loans are outstanding at
such time or (ii) ratably reduce from time to time by an aggregate amount of
$10,000,000 or any larger multiple of $1,000,000 the aggregate amount of the
Commitments in excess of the Aggregate Outstanding Credit Exposure.

4.10.    SECTION  Method of Electing Interest Rates. (a) The Loans included in
each Borrowing shall bear interest initially at the type of rate specified by
the Borrower in the applicable Notice of Borrowing. Thereafter, the Borrower may
from time to time elect to change or continue the type of interest rate borne by
each Group of Loans (subject in each case to the provisions of Article 8 and the
last sentence of this subsection (a)), as follows:

         (A)      if such Loans are Alternate Base Rate Loans, the Borrower may
         elect to convert such Loans to Euro-Dollar Loans as of any Euro-Dollar
         Business Day; and

         (B)      if such Loans are Euro-Dollar Loans, the Borrower may elect to
         convert such Loans to Alternate Base Rate Loans or elect to continue
         such Loans as Euro-Dollar Loans for an additional Interest Period,
         subject to Section 2.13 in the case of any such conversion or
         continuation effective on any day other than the last day of the then
         current Interest Period applicable to such Loans.

Each such election shall be made by delivering a notice (a "Notice of Interest
Rate Election") to the Administrative Agent not later than 10:00 A.M. (Chicago
time) on the third Euro-Dollar Business Day before the conversion or
continuation selected in such notice is to be effective. A Notice of Interest
Rate Election may, if it so specifies, apply to only a portion of the aggregate

                                       15
<PAGE>

principal amount of the relevant Group of Loans, provided that (i) such portion
is allocated ratably among the Loans comprising such Group and (ii) the portion
to which such notice applies, and the remaining portion to which it does not
apply, are each $10,000,000 or any larger multiple of $1,000,000.

         (b)      Each Notice of Interest Rate Election shall specify:

                  (i)      the Group of Loans (or portion thereof) to which such
         notice applies;

                  (ii)     the date on which the conversion or continuation
         selected in such notice is to be effective, which shall comply with the
         applicable clause of subsection 2.09(a) above;

                  (iii)    if the Loans comprising such Group are to be
         converted, the new Type of Loans and, if the Loans being converted are
         to be Euro-Dollar Loans, the duration of the next succeeding Interest
         Period applicable thereto; and

                  (iv)     if such Loans are to be continued as Euro-Dollar
         Loans for an additional Interest Period, the duration of such
         additional Interest Period.

Each Interest Period specified in a Notice of Interest Rate Election shall
comply with the provisions of the definition of the term "Interest Period."

         (c)      Promptly after receiving a Notice of Interest Rate Election
from the Borrower pursuant to subsection 2.09(a) above, the Administrative Agent
shall notify each Bank of the contents thereof and such notice shall not
thereafter be revocable by the Borrower. If no Notice of Interest Rate Election
is timely received prior to the end of an Interest Period for any Group of
Loans, the Borrower shall be deemed to have elected that such Group of Loans be
converted to Alternate Base Rate Loans as of the last day of such Interest
Period.

         (d)      An election by the Borrower to change or continue the rate of
interest applicable to any Group of Loans pursuant to this Section shall not
constitute a "Borrowing" subject to the provisions of Section 3.02.

4.11.    SECTION  Mandatory Termination of Commitments. The Commitment of each
Bank shall terminate on the Commitment Termination Date, and any Revolving
Credit Loans of such Bank then outstanding (together with accrued interest
thereon) shall be due and payable on such date; provided that such Revolving
Credit Loans shall be paid with the proceeds from the Term Loans if Term Loans
are made on the Commitment Termination Date.

4.12.    SECTION  Optional Prepayments. (a) The Borrower may (i) upon notice to
the Administrative Agent not later than 10:00 A.M. (Chicago time) on any
Domestic Business Day prepay on such Domestic Business Day any Group of
Alternate Base Rate Loans and (ii) upon at least three Euro-Dollar Business
Days' notice to the Administrative Agent not later than 10:00

                                       16
<PAGE>

A.M. (Chicago time) prepay any Group of Euro-Dollar Loans, in each case in whole
at any time, or from time to time in part in amounts aggregating $5,000,000 or
any larger multiple of $1,000,000, by paying the principal amount to be prepaid
together with accrued interest thereon to the date of prepayment and together
with any additional amounts payable pursuant to Section 2.13. Each such optional
prepayment shall be applied to prepay ratably the Loans of the several Banks
included in such Group or Borrowing.

         (b)      Upon receipt of a notice of prepayment pursuant to this
Section, the Administrative Agent shall promptly notify each Bank of the
contents thereof and of such Bank's share of such prepayment and such notice
shall not thereafter be revocable by the Borrower.

4.13.    SECTION  General Provisions as to Payments. (a) The Borrower shall make
each payment of principal of, and interest on, the Loans and of fees hereunder,
not later than 12:00 Noon (Chicago time) on the date when due, in Federal or
other funds immediately available in Chicago, to the Administrative Agent at its
address referred to in Section 9.01. The Administrative Agent will promptly
distribute to each Bank its ratable share of each such payment received by the
Administrative Agent for the account of the Banks. Whenever any payment of
principal of, or interest on, the Alternate Base Rate Loans, or of fees shall be
due on a day which is not a Domestic Business Day, the date for payment thereof
shall be extended to the next succeeding Domestic Business Day. Whenever any
payment of principal of, or interest on, the Euro-Dollar Loans shall be due on a
day which is not a Euro-Dollar Business Day, the date for payment thereof shall
be extended to the next succeeding Euro-Dollar Business Day unless such
Euro-Dollar Business Day falls in another calendar month, in which case the date
for payment thereof shall be the next preceding Euro-Dollar Business Day. If the
date for any payment of principal is extended by operation of law or otherwise,
interest thereon shall be payable for such extended time.

         (b)      Unless the Administrative Agent shall have received notice
from the Borrower prior to the date on which any payment is due to the Banks
hereunder that the Borrower will not make such payment in full, the
Administrative Agent may assume that the Borrower has made such payment in full
to the Administrative Agent on such date and the Administrative Agent may, in
reliance upon such assumption, cause to be distributed to each Bank on such due
date an amount equal to the amount then due such Bank. If and to the extent that
the Borrower shall not have so made such payment, each Bank shall repay to the
Administrative Agent forthwith on demand such amount distributed to such Bank
together with interest thereon, for each day from the date such amount is
distributed to such Bank until the date such Bank repays such amount to the
Administrative Agent, at the Federal Funds Effective Rate.

4.14.    SECTION  Funding Losses. If the Borrower makes any payment of principal
with respect to any Euro-Dollar Loan or any Euro-Dollar Loan is converted to a
Alternate Base Rate Loan or continued as a Euro-Dollar Loan for a new Interest
Period (pursuant to Article 2, 6 or 8 or otherwise) on any day other than the
last day of an Interest Period applicable thereto, or if the Borrower fails to
borrow, prepay, convert or continue any Euro-Dollar Loans after notice has been
given to any Bank in accordance with Section 2.03(a), 2.09(c) or 2.11(b), the
Borrower shall reimburse each Bank within 15 days after demand for any resulting
loss or expense

                                       17
<PAGE>

incurred by it (or by an existing or prospective Participant in the related
Loan), including (without limitation) any loss incurred in obtaining,
liquidating or employing deposits from third parties, but excluding loss of
margin for the period after any such payment or conversion or failure to borrow,
prepay, convert or continue, provided that such Bank shall have delivered to the
Borrower a certificate setting forth in reasonable detail the calculation of the
amount of such loss or expense, which certificate shall be conclusive in the
absence of manifest error.

4.15.    SECTION  Computation of Interest and Fees. Interest based on the Prime
Rate hereunder shall be computed on the basis of a year of 365 days (or 366 days
in a leap year) and paid for the actual number of days elapsed (including the
first day but excluding the last day). All other interest and fees (including
the LC Fees and fronting fees) shall be computed on the basis of a year of 360
days and paid for the actual number of days elapsed (including the first day but
excluding the last day).

4.16.    SECTION  Regulation D Compensation. In the event that a Bank is
required to maintain reserves of the type contemplated by the definition of
"Euro-Dollar Reserve Percentage", such Bank may require the Borrower to pay,
contemporaneously with each payment of interest on the Euro-Dollar Loans,
additional interest on the related Euro-Dollar Loan of such Bank at a rate per
annum determined by such Bank up to but not exceeding the excess of (i) (A) the
applicable Euro-Dollar Base Rate divided by (B) one minus the Euro-Dollar
Reserve Percentage over (ii) the applicable Euro-Dollar Base Rate. Any Bank
wishing to require payment of such additional interest (x) shall so notify the
Borrower and the Administrative Agent, in which case such additional interest on
the Euro-Dollar Loans of such Bank shall be payable to such Bank at the place
indicated in such notice with respect to each Interest Period commencing at
least three Euro-Dollar Business Days after the giving of such notice and (y)
shall notify the Borrower at least three Euro-Dollar Business Days prior to each
date on which interest is payable on the Euro-Dollar Loans of the amount then
due it under this Section. Each such notification shall be accompanied by such
information as the Borrower may reasonably request.

         "Euro-Dollar Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in Chicago with deposits exceeding five billion dollars in
respect of "Eurocurrency liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
Euro-Dollar Loans is determined or any category of extensions of credit or other
assets which includes loans by a non-United States office of any Bank to United
States residents).

4.17.    SECTION  Facility LCs.

(a)               Issuance; Existing LCs. Each LC Issuer hereby agrees, on the
terms and conditions set forth in this Agreement, to issue standby and trade
letters of credit and to renew, extend, increase, decrease or otherwise modify
each Facility LC ("Modify," and each such action a "Modification"), from time to
time during the Revolving Credit Period upon the request of the Borrower;
provided that immediately after each such Facility LC is issued or Modified, the
Aggregate Outstanding Credit Exposure shall not exceed the Aggregate Commitment.
No

                                       18
<PAGE>

Facility LC shall have an expiry date later than the Final Maturity Date. The
stated account party under any Facility LC may be the Borrower, a Subsidiary of
the Borrower or an Affiliate of the Borrower. By their execution of this
Agreement, the Borrower and each Bank listed as an issuer of an Existing LC on
the Existing LCs Schedule hereby agree that effective as of the Effective Date
(i) such Existing LC shall be a Facility LC under this Agreement and subject to
the terms hereof, (ii) such Bank shall be an LC Issuer hereunder with respect to
such Existing LC, and (iii) the prior reimbursement agreement or letter of
credit application of the Borrower and such Bank relating to such Existing LC is
replaced by this Agreement.

(b)               Participations. Upon the occurrence of the Effective Date,
with respect to each Existing LC, and upon the issuance or Modification by an LC
Issuer of a Facility LC in accordance with this Section 2.16, such LC Issuer
shall be deemed, without further action by any party hereto, to have
unconditionally and irrevocably sold to each Bank, and each Bank shall be
deemed, without further action by any party hereto, to have unconditionally and
irrevocably purchased from such LC Issuer, a participation in such Facility LC
(and each Modification thereof) and the related LC Obligations in proportion to
its Pro Rata Share.

(c)               Notice. Subject to Section 2.16(a), the Borrower shall give
the applicable LC Issuer and the Administrative Agent notice of the proposed
issuance or Modification of a Facility LC, substantially in the form of Exhibit
E (a "Facility LC Application") specifying the beneficiary, the proposed date of
issuance (or Modification) and the expiry date of such Facility LC, and
describing the proposed terms of such Facility LC, such duly completed Facility
LC Application to be received prior to 10:00 A.M. (Chicago time) on the Business
Day that is at least two Domestic Business Days prior to the proposed date of
issuance or Modification of each Facility LC or in the case of a Facility LC
substantially in the form of Exhibit F, at least one Domestic Business Day prior
to the proposed date of issuance or Modification. Upon receipt of such Facility
LC Application, such LC Issuer shall promptly notify the Administrative Agent,
and the Administrative Agent shall promptly notify each Bank, of the contents
thereof and of the amount of such Bank's participation in such proposed Facility
LC. The issuance or Modification by any LC Issuer of any Facility LC shall, in
addition to the conditions precedent set forth in Article 3 (the satisfaction of
which such LC Issuer shall have no duty to ascertain), be subject to the
condition precedent that such Facility LC shall be satisfactory to such LC
Issuer. In the event of any conflict between the terms of this Agreement and the
terms of any Facility LC Application, the terms of this Agreement shall control.
Subject to the foregoing conditions, the applicable LC Issuer will endeavor to
issue or Modify such Facility LC as soon as practicable after receiving such
Facility LC Application but in any event within two Domestic Business Days after
receiving such Facility LC Application or, in the case of a Facility LC
substantially in the form of Exhibit F, within one Domestic Business Day after
receiving such Facility LC Application.

(d)               LC Fees. The Borrower shall pay to the Administrative Agent,
for the account of the Banks ratably in accordance with their respective Pro
Rata Shares, a letter of credit fee at a per annum rate equal to the sum of (i)
the Applicable Margin for Euro-Dollar Loans in effect

                                       19
<PAGE>

from time to time plus (ii) 0.125% during any period following the Commitment
Termination Date plus (iii) if an Event of Default exists, 1%, on the average
daily undrawn stated amount under each Facility LC, such fee to be payable in
arrears on each Quarterly Payment Date and the Final Maturity Date (each such
fee described in this sentence an "LC Fee"). The Borrower shall also pay to each
LC Issuer for its own account (x) a fronting fee at a per annum rate equal to
0.10% on the average daily undrawn stated amount under each Facility LC issued
by such LC Issuer, such fee to be payable in arrears on each Quarterly Payment
Date and the Final Maturity Date and (y) documentary and processing charges in
connection with the issuance or Modification or transfer of and draws under
Facility LCs issued by such LC Issuer in accordance with such LC Issuer's
standard schedule for such charges as in effect from time to time (or such other
amounts as such LC Issuer and the Borrower may agree).

(e)               Administration; Reimbursement by Banks. Upon receipt from the
beneficiary of any Facility LC of any demand for payment under such Facility LC,
the applicable LC Issuer shall notify the Administrative Agent and the Borrower
and the Administrative Agent shall promptly notify each other Bank as to the
amount to be paid by such LC Issuer as a result of such demand and the proposed
payment date (the "LC Payment Date"). The responsibility of such LC Issuer to
the Borrower and each Bank shall be only to determine that the documents
(including each demand for payment) delivered under each Facility LC in
connection with such presentment shall be in conformity in all material respects
with such Facility LC. Each LC Issuer shall endeavor to exercise the same care
in the issuance and administration of its Facility LCs as it does with respect
to letters of credit in which no participations are granted, it being understood
that in the absence of any gross negligence or willful misconduct by such LC
Issuer, each Bank shall be unconditionally and irrevocably liable without regard
to the occurrence of any Default or any condition precedent whatsoever, to
reimburse such LC Issuer on demand for (i) such Bank's Pro Rata Share of the
amount of each payment made by such LC Issuer under each Facility LC to the
extent such amount is not reimbursed by the Borrower pursuant to Section 2.16(f)
below, plus (ii) interest on the foregoing amount to be reimbursed by such Bank,
for each day from the date of such LC Issuer's demand for such reimbursement
(or, if such demand is made after 10:00 A.M. (Chicago time) on such date, from
the next succeeding Domestic Business Day) to the date on which such Bank pays
the amount to be reimbursed by it, at a rate of interest per annum equal to the
Federal Funds Effective Rate for the first three days and, thereafter, at a rate
of interest equal to the rate applicable to Alternate Base Rate Borrowings.

(f)               Reimbursement by Borrower. The Borrower shall be irrevocably
and unconditionally obligated to reimburse the applicable LC Issuer for any
amounts to be paid by such LC Issuer upon any drawing under any Facility LC,
without presentment, demand, protest or other formalities of any kind; provided
that neither the Borrower nor any Bank shall hereby be precluded from asserting
any claim for direct (but not consequential) damages suffered by the Borrower or
such Bank to the extent, but only to the extent, caused by (i) the willful
misconduct or gross negligence of such LC Issuer in determining whether a
request presented under any Facility LC issued by it complied with the terms of
such Facility LC or (ii) such LC Issuer's

                                       20
<PAGE>

failure to pay under any Facility LC issued by it after the presentation to it
of a request strictly complying with the terms and conditions of such Facility
LC. The Borrower shall make such reimbursement (1) on or before 2:00 P.M.
(Chicago time) on the applicable LC Payment Date if the Borrower receives notice
of the related demand for payment no later than 10:00 A.M. (Chicago time) on
such LC Payment Date or (2) if the Borrower receives notice of the related
demand for payment later than 10:00 A.M. (Chicago time) on such LC Payment Date,
on or before 2:00 P.M. (Chicago time) on the next succeeding Domestic Business
Day (such date by which reimbursement must be made (the LC Payment Date under
clause (1) or the next succeeding Domestic Business Day under clause (2)) being
the "Reimbursement Date"). All such amounts paid by such LC Issuer and remaining
unpaid by the Borrower shall bear interest, payable on demand, for each day
until paid at a rate per annum equal to (x) the rate applicable to Alternate
Base Rate Borrowings for such day if such day falls on or before the applicable
Reimbursement Date and (y) the sum of 1% plus the rate applicable to Alternate
Base Rate Borrowings for such day if such day falls after such Reimbursement
Date. Such LC Issuer will pay to each Bank ratably in accordance with its Pro
Rata Share all amounts received by it from the Borrower for application in
payment, in whole or in part, of the Reimbursement Obligation in respect of any
Facility LC issued by such LC Issuer, but only to the extent such Bank has made
payment to such LC Issuer in respect of such Facility LC pursuant to Section
2.16(e). Subject to the terms and conditions of this Agreement (including
without limitation the submission of a Notice of Borrowing in compliance with
Section 2.02 and the satisfaction of the applicable conditions precedent set
forth in Article 3), the Borrower may request a Borrowing hereunder for the
purpose of satisfying any Reimbursement Obligation.

(g)               Obligations Absolute. The Borrower's obligations under this
Section 2.16 shall be absolute and unconditional under any and all circumstances
and irrespective of any setoff, counterclaim or defense to payment which the
Borrower may have or have had against any LC Issuer, any Bank or any beneficiary
of a Facility LC. The Borrower further agrees with the LC Issuers and the Banks
that the LC Issuers and the Banks shall not be responsible for, and the
Borrower's Reimbursement Obligation in respect of any Facility LC shall not be
affected by, among other things, the validity or genuineness of documents or of
any endorsements thereon, even if such documents should in fact prove to be in
any or all respects invalid, fraudulent or forged, or any dispute between or
among the Borrower, any of its Affiliates, the beneficiary of any Facility LC or
any financing institution or other party to whom any Facility LC may be
transferred or any claims or defenses whatsoever of the Borrower or of any of
its Affiliates against the beneficiary of any Facility LC or any such
transferee. No LC Issuer shall be liable for any error, omission, interruption
or delay in transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Facility LC. The Borrower agrees that any
action taken or omitted by any LC Issuer or any Bank under or in connection with
each Facility LC and the related drafts and documents, if done without gross
negligence or willful misconduct, shall be binding upon the Borrower and shall
not put any LC Issuer or any Bank under any liability to the Borrower. Nothing
in this Section 2.16(g) is intended to limit the right of the Borrower to make a
claim against any LC Issuer for damages as contemplated by the proviso to the
first sentence of Section 2.16(f).

                                       21
<PAGE>

(h)               Actions of LC Issuer. Each LC Issuer shall be entitled to
rely, and shall be fully protected in relying, upon any Facility LC, draft,
writing, resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document 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, independent accountants and other experts selected by such LC Issuer.
Each LC Issuer shall be fully justified in failing or refusing to take any
action under this Agreement unless it shall first have received such advice or
concurrence of the Required Banks as it reasonably deems appropriate or it shall
first be indemnified to its reasonable satisfaction by the Banks against any and
all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. Notwithstanding any other provision of this
Section 2.16, each LC Issuer shall in all cases be fully protected in acting, or
in refraining from acting, under this Agreement in accordance with a request of
the Required Banks, and such request and any action taken or failure to act
pursuant thereto shall be binding upon the Banks and any future holders of a
participation in any Facility LC.

(i)               Indemnification. The Borrower hereby agrees to indemnify and
hold harmless each Bank, each LC Issuer and the Administrative Agent, and their
respective directors, officers, agents and employees from and against any and
all claims and damages, losses, liabilities, costs or expenses which such Bank,
such LC Issuer or the Administrative Agent may incur (or which may be claimed
against such Bank, such LC Issuer or the Administrative Agent by any Person
whatsoever), including reasonable fees and disbursements of counsel, by reason
of or in connection with the issuance, execution and delivery or transfer of or
payment or failure to pay under any Facility LC or any actual or proposed use of
any Facility LC, including, without limitation, any claims, damages, losses,
liabilities, costs or expenses which any LC Issuer may incur by reason of or in
connection with (i) the failure of any other Bank to fulfill or comply with its
obligations to such LC Issuer hereunder (but nothing herein contained shall
affect any rights the Borrower may have against any defaulting Bank) or (ii) by
reason of or on account of any LC Issuer issuing any Facility LC which specifies
that the term "Beneficiary" included therein includes any successor by operation
of law of the named Beneficiary, but which Facility LC does not require that any
drawing by any such successor Beneficiary be accompanied by a copy of a legal
document, satisfactory to such LC Issuer, evidencing the appointment of such
successor Beneficiary; provided that the Borrower shall not be required to
indemnify any Bank, any LC Issuer or the Administrative Agent for any claims,
damages, losses, liabilities, costs or expenses to the extent, but only to the
extent, caused by (x) the willful misconduct or gross negligence of such LC
Issuer in determining whether a request presented under any Facility LC complied
with the terms of such Facility LC or (y) any LC Issuer's failure to pay under
any Facility LC after the presentation to it of a request strictly complying
with the terms and conditions of such Facility LC. Nothing in this Section
2.16(i) is intended to limit the obligations of the Borrower under any other
provision of this Agreement.

                                       22
<PAGE>

(j)               Banks' Indemnification. Each Bank shall, ratably in accordance
with its Pro Rata Share, indemnify each LC Issuer, its affiliates and their
respective directors, officers, agents and employees (to the extent not
reimbursed by the Borrower) against any cost, expense (including reasonable
counsel fees and disbursements), claim, demand, action, loss or liability
(except such as result from such indemnitees' gross negligence or willful
misconduct or such LC Issuer's failure to pay under any Facility LC of such LC
Issuer after the presentation to it of a request strictly complying with the
terms and conditions of such Facility LC) that such indemnitees may suffer or
incur in connection with this Section 2.16 or any action taken or omitted by
such indemnitees hereunder.

(k)               Facility LC Collateral Account. The Borrower agrees that it
will, upon the occurrence (i) of an Event of Default and (ii) (A) at the request
of the Administrative Agent with the consent of the Banks having Pro Rata Shares
of more than 66 2/3% pursuant to Section 6.01 or (B) at the request of the Banks
having Pro Rata Shares of more than 66 2/3% pursuant to Section 6.01 and until
the final expiration date of any Facility LC and thereafter as long as any
amount is payable to the LC Issuers or the Banks in respect of any Facility LC,
maintain a special collateral account pursuant to arrangements satisfactory to
the Administrative Agent (the "Facility LC Collateral Account") at the
Administrative Agent's office at the address specified pursuant to Section 9.01,
in the name of the Borrower but under the sole dominion and control of the
Administrative Agent, for the benefit of the Banks and in which such Borrower
shall have no interest other than as set forth in Section 6.01. The Borrower
hereby pledges, assigns and grants to the Administrative Agent, on behalf of and
for the ratable benefit of the Banks and the LC Issuers, a security interest in
all of the Borrower's right, title and interest in and to all funds which may
from time to time be on deposit in the Facility LC Collateral Account and all
investments thereof, interest and returns thereon and proceeds thereof to secure
the prompt and complete payment and performance of the Obligations. The
Administrative Agent will invest any funds on deposit from time to time in the
Facility LC Collateral Account in Cash Equivalents. Interest and returns
realized by such investments shall be credited to the Facility LC Collateral
Account and applied as required by Section 6.01. Nothing in this Section 2.16(k)
shall either obligate the Administrative Agent to require the Borrower to
deposit any funds in the Facility LC Collateral Account or limit the right of
the Administrative Agent to release any funds held in the Facility LC Collateral
Account in each case other than as required by Section 6.01.

(l)               Rights as a Bank. In its capacity as a Bank, each LC Issuer
shall have the same rights and obligations as any other Bank.

5                                    ARTICLE

6                                  CONDITIONS

6.1.     SECTION  Effectiveness. This Agreement shall become effective on the
date that each of the following conditions shall have been satisfied (or waived
in accordance with Section 9.05):
                                       23
<PAGE>

(a)               receipt by the Administrative Agent of counterparts hereof
signed by each of the parties hereto (or, in the case of any party as to which
an executed counterpart shall not have been received, receipt by the
Administrative Agent in form satisfactory to it of telegraphic, telecopy, telex
or other written confirmation from such party of execution of a counterpart
hereof by such party);

(b)               receipt by the Administrative Agent of an opinion of the
General Counsel to the Borrower substantially in the form of Exhibit B-1 hereto
and covering such additional matters relating to the transactions contemplated
hereby as the Required Banks may reasonably request;

(c)               receipt by the Administrative Agent of an opinion of Robinson,
Bradshaw & Hinson, P.A., special counsel for the Borrower, substantially in the
form of Exhibit B-2 hereto and covering such additional matters relating to the
transactions contemplated hereby as the Required Banks may reasonably request.;

(d)               receipt by the Administrative Agent of a certificate signed by
a Vice President, the Treasurer or the Controller of the Borrower, dated the
Effective Date, to the effect set forth in clauses (c) and (d) of Section 3.02;

(e)               receipt by the Administrative Agent of all documents it may
have reasonably requested prior to the date hereof relating to the existence of
the Borrower, the corporate authority for and the validity of this Agreement and
the Notes, and any other matters relevant hereto, all in form and substance
satisfactory to the Administrative Agent; and

provided that this Agreement shall not become effective or be binding on any
party hereto unless all of the foregoing conditions are satisfied not later than
April 30, 2001. The Administrative Agent shall promptly notify the Borrower and
the Banks of the Effective Date, and such notice shall be conclusive and binding
on all parties hereto.

6.2.     SECTION  Credit Extensions. The obligation of any Bank to make a Credit
Extension on the occasion of any Borrowing or issuance of a Facility LC is
subject to the satisfaction of the following conditions:

(a)               receipt by the Administrative Agent of a Notice of Borrowing
or receipt by the applicable LC Issuer and the Administrative Agent of a
Facility LC Application as required by Section 2.02 or 2.16, as the case may be;

(b)               the fact that, immediately after such Credit Extension the
Aggregate Outstanding Credit Exposure will not exceed the Aggregate Commitment;

(c)               the fact that, immediately after such Credit Extension, no
Default shall have occurred and be continuing; and

                                       24
<PAGE>

(d)               the fact that the representations and warranties of the
Borrower contained in this Agreement (except the representations and warranties
set forth in Sections 4.04(b) and 4.06) shall be true on and as of the date of
such Credit Extension.

         Each Credit Extension hereunder shall be deemed to be a representation
and warranty by the Borrower on the date of such Credit Extension as to the
facts specified in clauses (b), (c) and (d) of this Section.

7                                    ARTICLE

8                         REPRESENTATIONS AND WARRANTIES

         The Borrower represents and warrants that:

8.1.     SECTION  Corporate Existence and Power. The Borrower is a corporation
duly incorporated, validly existing and in good standing under the laws of
Delaware, and has all corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted and is duly qualified to do business as a foreign corporation in each
jurisdiction where such qualification is required, except where the failure so
to qualify would not have a material adverse effect on the business, financial
position or results of operations of the Borrower and its Consolidated
Subsidiaries, considered as a whole.

8.2.     SECTION  Corporate and Governmental Authorization; No Contravention.
The execution, delivery and performance by the Borrower of this Agreement and
the Notes are within the Borrower's corporate powers, have been duly authorized
by all necessary corporate action, require no action by or in respect of, or
filing with, any governmental body, agency or official and do not contravene, or
constitute a default under, any provision of applicable law or regulation or of
the articles of incorporation or by-laws of the Borrower or of any agreement
(subject to compliance with Section 5.13), judgment, injunction, order, decree
or other instrument binding upon the Borrower or result in the creation or
imposition of any Lien on any asset of the Borrower or any of its Material
Subsidiaries.

8.3.     SECTION  Binding Effect. This Agreement constitutes a valid and binding
agreement of the Borrower and each Note, if and when executed and delivered in
accordance with this Agreement, will constitute a valid and binding obligation
of the Borrower, in each case enforceable in accordance with its terms, except
as the same may be limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and by general principles of equity.

8.4.     SECTION  Financial Information. (a) The consolidated balance sheet of
the Borrower and its Consolidated Subsidiaries as of December 31, 2000 and the
related consolidated statements of income, cash flows, capitalization and
retained earnings for the fiscal year then ended, reported on by Deloitte &
Touche, copies of which have been delivered to each of the Banks, fairly
present, in conformity with generally accepted accounting principles, the
consolidated financial position of the Borrower and its Consolidated
Subsidiaries as of such date and their consolidated results of operations and
cash flows for such fiscal year.

                                       25
<PAGE>

         (b)      Since December 31, 2000, there has been no material adverse
change in the business, financial position or results of operations of the
Borrower and its Consolidated Subsidiaries, considered as a whole.

8.5.     SECTION  Regulation U. The Borrower and its Material Subsidiaries are
not engaged in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation U issued by the Board of
Governors of the Federal Reserve System) and no proceeds of any Credit Extension
by the Borrower will be used to purchase or carry any margin stock or to extend
credit to others for the purpose of purchasing or carrying any margin stock. Not
more than 25% of the value of the assets of the Borrower and its Material
Subsidiaries is represented by margin stock.

8.6.     SECTION  Litigation. Except as disclosed in the reports referred to in
Section 4.04, there is no action, suit or proceeding pending against, or to the
knowledge of the Borrower threatened against or affecting, the Borrower or any
of its Subsidiaries before any court or arbitrator or any governmental body,
agency or official which would be likely to be decided adversely to Borrower or
such Subsidiary and, as a result, have a material adverse effect upon the
business, consolidated financial position or results of operations of the
Borrower and its Consolidated Subsidiaries, considered as a whole, or which in
any manner draws into question the validity of this Agreement or any Note.

8.7.     SECTION  Compliance with Laws. The Borrower and each Material
Subsidiary is in compliance in all material respects with all applicable laws,
ordinances, rules, regulations and requirements of governmental authorities
(including, without limitation, ERISA and Environmental Laws) except where (i)
non-compliance would not have a material adverse effect on the business,
financial position or results of operations of the Borrower and its Consolidated
Subsidiaries, considered as a whole, or (ii) the necessity of compliance
therewith is contested in good faith by appropriate proceedings.

8.8.     SECTION  Taxes. The Borrower and its Material Subsidiaries have filed
all United States Federal income tax returns and all other material tax returns
which are required to be filed by them and have paid all taxes due pursuant to
such returns or pursuant to any assessment received by the Borrower or any
Material Subsidiary except (i) where nonpayment would not have a material
adverse effect on the business, financial position or results of operations of
the Borrower and its Consolidated Subsidiaries, considered as a whole or (ii)
where the same are contested in good faith by appropriate proceedings. The
charges, accruals and reserves on the books of the Borrower and its Material
Subsidiaries in respect of taxes or other governmental charges are, in the
opinion of the Borrower, adequate.

8.9.     SECTION  Public Utility Holding Company Act. The Borrower is not a
holding company under the Public Utility Holding Company Act of 1935, as
amended.

9                                    ARTICLE

10                                  COVENANTS

         The Borrower agrees that, so long as any Bank has any Commitment
hereunder or any amount payable hereunder remains unpaid or any Facility LC
remains outstanding:

                                       26
<PAGE>

10.1.    SECTION  Information. The Borrower will deliver to each of the Banks:

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

(b)               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 Borrower, a
consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as
of the end of such quarter and the related consolidated statements of income and
cash flows for such quarter and for the portion of the Borrower's fiscal year
ended at the end of such quarter, setting forth in each case in comparative form
the figures for the corresponding quarter and the corresponding portion of the
Borrower's previous fiscal year, all certified (subject to normal year-end
adjustments) as to fairness of presentation, generally accepted accounting
principles and consistency by an Approved Officer of the Borrower;

(c)               simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of an
Approved Officer of the Borrower stating whether any Default exists on the date
of such certificate and, if any Default then exists, setting forth the details
thereof and the action which the Borrower is taking or proposes to take with
respect thereto;

(d)               within five days after any officer of the Borrower with
responsibility relating thereto obtains knowledge of any Default, if such
Default is then continuing, a certificate of an Approved Officer of the Borrower
setting forth the details thereof and the action which the Borrower is taking or
proposes to take with respect thereto;

(e)               promptly upon the filing thereof copies of all registration
statements (other than the exhibits thereto and any registration statements on
Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or their
equivalents) which the Borrower shall have filed with the Securities and
Exchange Commission;

(f)               if and when any member of the ERISA Group (i) gives or is
required to give notice to the PBGC of any "reportable event" (as defined in
Section 4043 of ERISA) with respect to any Material Plan which might constitute
grounds for a termination of such Plan under Title IV of ERISA, or knows that
the plan administrator of any Material Plan has given or is required to give
notice of any such reportable event, a copy of the notice of such reportable
event given or required to be given to the PBGC; (ii) receives notice of
complete or partial withdrawal liability under Title IV of ERISA or notice that
any Material Plan is in reorganization, is

                                       27
<PAGE>

insolvent or has been terminated, a copy of such notice; (iii) receives notice
from the PBGC under Title IV of ERISA of an intent to terminate, impose material
liability (other than for premiums under Section 4007 of ERISA) in respect of,
or appoint a trustee to administer any Plan, a copy of such notice; (iv) applies
for a waiver of the minimum funding standard under Section 412 of the Internal
Revenue Code, a copy of such application; (v) gives notice of intent to
terminate any Material Plan under Section 4041(c) of ERISA, a copy of such
notice and other information filed with the PBGC; (vi) gives notice of
withdrawal from any Material Plan pursuant to Section 4063 of ERISA, a copy of
such notice; or (vii) fails to make any payment or contribution to any Material
Plan or makes any amendment to any Material Plan which has resulted or could
result in the imposition of a Lien or the posting of a bond or other security, a
certificate of the chief financial officer or the chief accounting officer of
the Borrower setting forth details as to such occurrence and action, if any,
which the Borrower or applicable member of the ERISA Group is required or
proposes to take; and

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

         Information required to be delivered pursuant to these Sections
5.01(a), 5.01(b) and 5.0.1(e) shall be deemed to have been delivered on the date
on which the Borrower provides notice to the Banks that such information has
been posted on the Securities and Exchange Commission website on the Internet at
sec.gov/edaux/searches.htm or at another website identified in such notice and
accessible by the Banks without charge; provided that (i) such notice may be
included in a certificate delivered pursuant to Section 5.01(c) and (ii) the
Borrower shall deliver paper copies of the information referred to in Sections
5.01(a), 5,01(b) and 5.01(e) to any Bank which requests such delivery.

10.2.    SECTION  Payment of Taxes. The Borrower will pay and discharge, and
will cause each Material Subsidiary to pay and discharge, at or before maturity,
all their tax liabilities, except where (i) nonpayment would not have a material
adverse effect on the business, financial position or results of operations of
the Borrower and its Consolidated Subsidiaries, considered as a whole, or (ii)
the same may be contested in good faith by appropriate proceedings, and will
maintain, and will cause each Material Subsidiary to maintain, in accordance
with generally accepted accounting principles, appropriate reserves for the
accrual of any of the same.

10.3.    SECTION  Maintenance of Property; Insurance. (a) The Borrower will
keep, and will cause each Material Subsidiary to keep, all property useful and
necessary in its business in good working order and condition, ordinary wear and
tear excepted.

         (b)      The Borrower will, and will cause each of its Material
Subsidiaries to, maintain (either in the name of the Borrower or in such
Subsidiary's own name) with financially sound and responsible insurance
companies, insurance on all their respective properties in at least such amounts
and against at least such risks (and with such risk retention) as are usually
insured against in the same general area by companies of established repute
engaged in the same or a similar business; provided that self-insurance by the
Borrower or any such Material Subsidiary

                                       28
<PAGE>

shall not be deemed a violation of this covenant to the extent that companies
engaged in similar businesses and owning similar properties in the same general
areas in which the Borrower or such Material Subsidiary operates self-insure;
and will furnish to the Banks, upon request from the Administrative Agent,
information presented in reasonable detail as to the insurance so carried.

10.4.    SECTION  Maintenance of Existence. The Borrower will preserve, renew
and keep in full force and effect, and will cause each Material Subsidiary to
preserve, renew and keep in full force and effect their respective corporate
existence and their respective rights, privileges and franchises material to the
normal conduct of their respective businesses; provided that nothing in this
Section 5.04 shall prohibit the termination of any right, privilege or franchise
of the Borrower or any Material Subsidiary or of the corporate existence of any
Material Subsidiary if the Borrower in good faith determines that such
termination is in the best interest of the Borrower and is not materially
disadvantageous to the Banks.

10.5.    SECTION  Compliance with Laws. The Borrower will comply, and cause each
Material Subsidiary to comply, in all material respects with all applicable
laws, ordinances, rules, regulations, and requirements of governmental
authorities (including, without limitation, ERISA and Environmental Laws) except
where (i) noncompliance would not have a material adverse effect on the
business, financial position or results of operations of the Borrower and its
Consolidated Subsidiaries, considered as a whole, or (ii) the necessity of
compliance therewith is contested in good faith by appropriate proceedings.

10.6.    SECTION  Books and Records. The Borrower will keep, and will cause each
Material Subsidiary to keep, proper books of record and account in which full,
true and correct entries shall be made of all financial transactions in relation
to its business and activities in accordance with its customary practices; and
will permit, and will cause each Material Subsidiary to permit, representatives
of any Bank at such Bank's expense (accompanied by a representative of the
Borrower, if the Borrower so desires) to visit any of their respective
properties, to examine any of their respective books and records and to discuss
their respective affairs, finances and accounts with their respective officers,
employees and independent public accountants, all upon such reasonable notice,
at such reasonable times and as often as may reasonably be desired.

10.7.    SECTION  Maintenance of Ownership of Principal Subsidiaries. The
Borrower will maintain ownership of all shares of the common stock of each
Principal Subsidiary, directly or indirectly through Subsidiaries, free and
clear of all Liens, provided that any Principal Subsidiary may merge with and
into the Borrower or another wholly-owned Subsidiary.

10.8.    SECTION  Negative Pledge. The Borrower will not create, assume or
suffer to exist any Lien on any asset now owned or hereafter acquired by it,
except:

(a)               Liens granted by the Borrower existing on the date of this
Agreement securing Indebtedness outstanding on the date of this Agreement in an
aggregate principal amount not exceeding $100,000,000;

                                       29
<PAGE>

(b)               any Lien on any asset of any corporation existing at the time
such corporation is merged or consolidated with or into the Borrower and not
created in contemplation of such event;

(c)               any Lien existing on any asset prior to the acquisition
thereof by the Borrower and not created in contemplation of such acquisition;

(d)               any Lien on any asset securing Indebtedness incurred or
assumed for the purpose of financing all or any part of the cost of acquiring
such asset, provided that such Lien attaches to such asset concurrently with or
within 180 days after the acquisition thereof;

(e)               any Lien arising out of the refinancing, extension, renewal or
refunding of any Indebtedness secured by any Lien permitted by any of the
foregoing clauses of this Section, provided that such Indebtedness is not
increased and is not secured by any additional assets;

(f)               Liens for taxes, assessments or other governmental charges or
levies not yet due or which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves or other appropriate
provisions are being maintained in accordance with generally accepted accounting
principles;

(g)               statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed by law, created in
the ordinary course of business and for amounts not past due for more than 60
days or which are being contested in good faith by appropriate proceedings which
are sufficient to prevent imminent foreclosure of such Liens, are promptly
instituted and diligently conducted and with respect to which adequate reserves
or other appropriate provisions are being maintained in accordance with
generally accepted accounting principles;

(h)               Liens incurred or deposits made in the ordinary course of
business (including, without limitation, surety bonds and appeal bonds) in
connection with workers' compensation, unemployment insurance and other types of
social security benefits or to secure the performance of tenders, bids, leases,
contracts (other than for the repayment of Indebtedness), statutory obligations
and other similar obligations or arising as a result of progress payments under
government contracts;

(i)               easements (including, without limitation, reciprocal easement
agreements and utility agreements), rights-of-way, covenants, consents,
reservations, encroachments, variations and other restrictions, charges or
encumbrances (whether or not recorded) affecting the use of real property;

(j)               Liens with respect to judgments and attachments which do not
result in an Event of Default;

                                       30
<PAGE>

(k)               Liens, deposits or pledges to secure the performance of bids,
tenders, contracts (other than contracts for the payment of money), leases
(permitted under the terms of this Agreement), public or statutory obligations,
surety, stay, appeal, indemnity, performance or other obligations arising in the
ordinary course of business;

(l)               Liens required by Section 2.16(k) and other similar customary
cash collateral requirements with respect to letters of credit upon the
occurrence of a default, including, without limitation, such requirements under
the Three-Year Credit Agreement; and

(m)               other Liens including Liens imposed by Environmental Laws
arising in the ordinary course of its business which (i) do not secure
Indebtedness, (ii) do not secure any obligation in an amount exceeding
$100,000,000 at any time at which Investment Grade Status does not exist as to
the Borrower and (iii) do not in the aggregate materially detract from the value
of its assets or materially impair the use thereof in the operation of its
business.

10.9.    SECTION  Consolidations, Mergers and Sales of Assets. The Borrower will
not (i) consolidate or merge with or into any other Person or (ii) sell, lease
or otherwise transfer, directly or indirectly, Substantial Assets to any Person
(other than a Subsidiary); provided that the Borrower may merge with another
Person if the Borrower is the corporation surviving such merger and, after
giving effect thereto, no Default shall have occurred and be continuing.

10.10.   SECTION  Use of Proceeds. The proceeds of the Loans made under this
Agreement will be used by the Borrower for its general corporate purposes,
including liquidity support for outstanding commercial paper. None of such
proceeds will be used, directly or indirectly, for the purpose, whether
immediate, incidental or ultimate, of buying or carrying any "margin stock"
within the meaning of Regulation U.

10.11.   SECTION  Transactions with Affiliates. The Borrower will not, and will
not permit any Subsidiary to, directly or indirectly, pay any funds to or for
the account of, make any investment in, lease, sell, transfer or otherwise
dispose of any assets, tangible or intangible, to, or participate in, or effect,
any transaction with, any Affiliate unless all such transactions between the
Borrower and its Subsidiaries on the one hand and any Affiliate on the other,
taken in the aggregate and not individually, shall be on an arms-length basis on
terms no less favorable to the Borrower or such Subsidiary than could have been
obtained from a third party who was not an Affiliate; provided that the
foregoing provisions of this Section shall not prohibit the Borrower and each
Subsidiary from (i) declaring or paying any lawful dividend so long as, after
giving effect thereto, no Default shall have occurred and be continuing, (ii)
issuing and maintaining letters of credit, guaranties and sureties as contingent
obligations on behalf of Affiliates, or (iii) the payment of funds and making of
capital contributions, loans and other transfers of money to Affiliates or to
other Persons, including payments made under letters of credit, guarantees and
sureties issued and maintained on behalf of Affiliates, provided that the
aggregate amount for all such payments and transfers does not exceed
$200,000,000 at any time outstanding.

10.12.   SECTION  Indebtedness/Capitalization Ratio. The ratio of Consolidated
Indebtedness to Consolidated Capitalization will at no time exceed 65%.

                                       31
<PAGE>

10.13.   SECTION  Post-closing Consents/Waivers. The Borrower agrees to obtain
and deliver to the Administrative Agent no later than September 1, 2001 (but in
any event prior to the occurrence of any Event of Default) waivers, amendments
or consents, in form and substance reasonably satisfactory to the Administrative
Agent, to the 364-Day Credit Agreement dated as of August 21, 2000 among the
Borrower, certain lenders and The Chase Manhattan Bank, as administrative agent,
and to the Five-Year Credit Agreement dated as of August 25, 1997 among the
Borrower, certain lenders and The Chase Manhattan Bank, as administrative agent,
to the extent either such agreement is still in effect, permitting the cash
collateralization provisions of this Agreement relating to LC Obligations.

11                                  ARTICLE

12                                  DEFAULTS

12.1.    SECTION  Events of Default. If one or more of the following events
("Events of Default") shall have occurred and be continuing:

(a)               the Borrower shall fail to pay when due any principal of any
Loan or Reimbursement Obligation or shall fail to pay, within five days of the
due date thereof, any interest, fees or any other amount payable hereunder;

(b)               the Borrower shall fail to observe or perform any covenant
contained in Sections 5.04, 5.08, 5.09, 5.12 or the second sentence of 5.10,
inclusive;

(c)               the Borrower shall fail to observe or perform any covenant or
agreement contained in this Agreement (other than those covered by clause (a) or
(b) above) for 30 days after notice thereof has been given to the Borrower by
the Administrative Agent at the request of any Bank;

(d)               any representation, warranty, certification or statement made
by the Borrower in this Agreement or in any certificate, financial statement or
other document delivered pursuant to this Agreement shall prove to have been
incorrect in any material respect when made (or deemed made);

(e)               the Borrower or any Subsidiary shall fail to make any payment
in respect of Material Debt (other than the Loans) when due or within any
applicable grace period;

(f)               any event or condition shall occur and shall continue beyond
the applicable grace or cure period, if any, provided with respect thereto so as
to result in the acceleration of the maturity of Material Debt;

(g)               the Borrower or any Material Subsidiary shall commence a
voluntary case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or any

                                       32
<PAGE>

substantial part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall admit in writing its inability to, or shall
fail generally to, pay its debts as they become due, or shall take any corporate
action to authorize any of the foregoing;

(h)               an involuntary case or other proceeding shall be commenced
against the Borrower or any Material Subsidiary seeking liquidation,
reorganization or other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and unstayed for a
period of 90 days; or an order for relief shall be entered against the Borrower
or any Material Subsidiary under the federal bankruptcy laws as now or hereafter
in effect;

(i)               any member of the ERISA Group shall fail to pay when due an
amount or amounts aggregating in excess of $25,000,000 which it shall have
become liable to pay to the PBGC or to a Plan under Title IV of ERISA; or notice
of intent to terminate a Plan or Plans having aggregate Unfunded Vested
Liabilities in excess of $50,000,000 (collectively, a "Material Plan") shall be
filed under Title IV of ERISA by any member of the ERISA Group, any plan
administrator or any combination of the foregoing; or the PBGC shall institute
proceedings under Title IV of ERISA to terminate or to cause a trustee to be
appointed to administer any Material Plan or a proceeding shall be instituted by
a fiduciary of any Material Plan against any member of the ERISA Group to
enforce Section 515 or 4219(c)(5) of ERISA and such proceeding shall not have
been dismissed within 90 days thereafter; or a condition shall exist by reason
of which the PBGC would be entitled to obtain a decree adjudicating that any
Material Plan must be terminated;

(j)               a judgment or other court order for the payment of money in
excess of $50,000,000 shall be rendered against the Borrower or any Material
Subsidiary and such judgment or order shall continue without being vacated,
discharged, satisfied or stayed or bonded pending appeal for a period of 45
days;

(k)               the Borrower shall cease to be a Subsidiary or Affiliate of
Duke Energy Corporation; or

(l)               an "Event of Default" as defined in the Three-Year Credit
Agreement shall have occurred and be continuing;

then, and in every such event, the Administrative Agent shall (i) if requested
by Banks having Pro Rata Shares of more than 66 2/3%, by notice to the Borrower
terminate the Commitments and they shall thereupon terminate, (ii) if requested
by Banks having Pro Rata Shares of more than 66 2/3%, by notice to the Borrower
declare the Loans and all Reimbursement Obligations (together

                                       33
<PAGE>

with accrued interest thereon) to be, and the Loans and all Reimbursement
Obligations shall thereupon become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower, and (iii) if requested by Banks having Pro Rata
Shares of more than 66 2/3%, by notice to the Borrower and in addition to the
continuing right to demand payment of all amounts payable under the Loan
Documents, make demand on the Borrower to pay, and the Borrower will, forthwith
upon such demand and without any further notice, act or demand, pay to the
Administrative Agent an amount in immediately available funds, which funds shall
be held in the Facility LC Collateral Account, equal to the difference of (x)
the amount of LC Obligations at such time, less (y) the amount on deposit in the
Facility LC Collateral Account at such time which is free and clear of all
rights and claims of third parties and has not been applied against the
Obligations (such difference, the "Collateral Shortfall Amount"); provided that
in the case of any of the Events of Default specified in clause (g) or (h) above
with respect to the Borrower, without any notice to the Borrower or any other
act by the Administrative Agent or the Banks, the Commitments shall thereupon
terminate and the Loans and all Reimbursement Obligations (together with accrued
interest thereon) shall become immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrower, and the Borrower will be and become thereby unconditionally
obligated, without any further notice, act or demand, to pay forthwith to the
Administrative Agent the Collateral Shortfall Amount, which funds shall be
deposited in the Facility LC Collateral Account.

         If at any time after the Banks have requested the Borrower to pay the
Administrative Agent funds to be held in the Facility LC Collateral Account, the
Administrative Agent determines that the Collateral Shortfall Amount at such
time is greater than zero, the Administrative Agent may make demand on the
Borrower to pay, and the Borrower will, forthwith upon such demand and without
any further notice or act, pay to the Administrative Agent the Collateral
Shortfall Amount, which funds shall be deposited in the Facility LC Collateral
Account.

         The Administrative Agent may at any time or from time to time after
funds are deposited in the Facility LC Collateral Account, apply such funds to
the payment of the LC Obligations and any other amounts as shall from time to
time have become due and payable by the Borrower to the Banks or the LC Issuers
under the Loan Documents.

         At any time while any Event of Default is continuing, neither the
Borrower nor any Person claiming on behalf of or through the Borrower shall have
any right to withdraw any of the funds held in the Facility LC Collateral
Account. After the sooner of (i) the Required Banks waiving the Event(s) of
Default that gave rise to requesting the Borrower to pay funds into the Facility
LC Collateral Account and (ii) all of the LC Obligations have been indefeasibly
paid in full and all Facility LCs have expired or terminated and the Aggregate
Commitment has been terminated, any funds remaining in the Facility LC
Collateral Account, including accrued interest, after application to any other
Obligations then due and owing to the Administrative Agent and the Banks, shall
be returned by the Administrative Agent to the Borrower or paid to

                                       34
<PAGE>

whomever may be legally entitled thereto at such time.

12.2.    SECTION  Notice of Default. The Administrative Agent shall give notice
to the Borrower under Section 6.01(c) promptly upon being requested to do so by
any Bank and shall thereupon notify all the Banks thereof.

13                                  ARTICLE

14                         THE ADMINISTRATIVE AGENT

14.1.    SECTION  Appointment; Nature of Relationship. Bank One is hereby
appointed by each of the Banks as its contractual representative (herein
referred to as the Administrative Agent) hereunder and under each other Loan
Document, and each of the Banks irrevocably authorizes the Administrative Agent
to act as the contractual representative of such Bank with the rights and duties
expressly set forth herein and in the other Loan Documents. The Administrative
Agent agrees to act as such contractual representative upon the express
conditions contained in this Article 7. Notwithstanding the use of the defined
term "Administrative Agent," it is expressly understood and agreed that the
Administrative Agent shall not have any fiduciary responsibilities to any Bank
by reason of this Agreement or any other Loan Document and that the
Administrative Agent is merely acting as the contractual representative of the
Banks with only those duties as are expressly set forth in this Agreement and
the other Loan Documents. In its capacity as the Banks' contractual
representative, the Administrative Agent (i) does not hereby assume any
fiduciary duties to any of the Banks, (ii) is a "representative" of the Banks
within the meaning of Section 9-105 of the Uniform Commercial Code and (iii) is
acting as an independent contractor, the rights and duties of which are limited
to those expressly set forth in this Agreement and the other Loan Documents.
Each of the Banks hereby agrees to assert no claim against the Administrative
Agent on any agency theory or any other theory of liability for breach of
fiduciary duty, all of which claims each Bank hereby waives.

         The Administrative Agent shall have and may exercise such powers under
the Loan Documents as are specifically delegated to the Administrative Agent by
the terms of each thereof, together with such powers as are reasonably
incidental thereto. The Administrative Agent shall have no implied duties to the
Banks, or any obligation to the Banks to take any action thereunder except any
action specifically provided by the Loan Documents to be taken by the
Administrative Agent.

14.2.    SECTION  Administrative Agent and Affiliates. Bank One shall have the
same rights and powers under this Agreement as any other Bank and may exercise
or refrain from exercising the same as though it were not the Administrative
Agent, and Bank One and its affiliates may accept deposits from, lend money to,
and generally engage in any kind of business with the Borrower or any Subsidiary
or affiliate of the Borrower as if it were not the Administrative Agent
hereunder.

14.3.    SECTION  Action by Administrative Agent. The obligations of the
Administrative Agent hereunder are only those expressly set forth herein.
Without limiting the generality of the

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<PAGE>

foregoing, the Administrative Agent shall not be required to take any action
with respect to any Default, except as expressly provided in Article 6.

14.4.    SECTION  Consultation with Experts. The Administrative Agent may
consult with legal counsel (who may be counsel for the Borrower), independent
public accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken by it in good faith in accordance with
the advice of such counsel, accountants or experts.

14.5.    SECTION  Liability of Administrative Agent. Neither the Administrative
Agent nor any of its affiliates nor any of their respective directors, officers,
agents or employees shall be liable to any Bank for any action taken or not
taken by it in connection herewith (i) with the consent or at the request of the
Required Banks or (ii) in the absence of its own gross negligence or willful
misconduct. Neither the Administrative Agent nor any of its affiliates nor any
of their respective directors, officers, agents or employees shall be
responsible for or have any duty to ascertain, inquire into or verify (i) any
statement, warranty or representation made in connection with this Agreement or
any borrowing hereunder; (ii) the performance or observance of any of the
covenants or agreements of the Borrower; (iii) the satisfaction of any condition
specified in Article 3, except receipt of items required to be delivered to the
Administrative Agent; or (iv) the validity, effectiveness or genuineness of this
Agreement, the Notes or any other instrument or writing furnished in connection
herewith. The Administrative Agent shall not incur any liability by acting in
reliance upon any notice, consent, certificate, statement, or other writing
(which may be a bank wire, telex or similar writing) believed by it in good
faith to be genuine or to be signed by the proper party or parties. Without
limiting the generality of the foregoing, the use of the term "agent" in this
Agreement with reference to the Administrative Agent is not intended to connote
any fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable law. Instead, such term is used merely as a matter of
market custom and is intended to create or reflect only an administrative
relationship between independent contracting parties.

14.6.    SECTION  Indemnification. Each Bank shall, ratably in accordance with
its Commitment, indemnify the Administrative Agent, its affiliates and their
respective directors, officers, agents and employees (to the extent not
reimbursed by the Borrower) against any cost, expense (including counsel fees
and disbursements), claim, demand, action, loss or liability (except such as
result from such indemnitees' gross negligence or willful misconduct) that such
indemnitees may suffer or incur in connection with this Agreement or any action
taken or omitted by such indemnitees thereunder.

14.7.    SECTION  Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Administrative Agent or any other
Bank, and based on such documents and information as it has deemed appropriate,
made its own credit analysis and decision to enter into this Agreement. Each
Bank also acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Bank, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking any action under this Agreement.

14.8.    SECTION  Successor Administrative Agent. The Administrative Agent may
resign at any time by giving notice thereof to the Banks and the Borrower. Upon
any such resignation, the Borrower, with the consent of the Required Banks (such
consent not to be unreasonably withheld

                                       36
<PAGE>

or delayed), shall have the right to appoint a successor Administrative Agent.
If no successor Administrative Agent shall have been so appointed, and shall
have accepted such appointment, within 30 days after the retiring Administrative
Agent gives notice of resignation, then the retiring Administrative Agent may,
on behalf of the Banks, appoint a successor Administrative Agent, which shall be
a commercial bank organized or licensed under the laws of the United States of
America or of any State thereof and having a combined capital and surplus of at
least $250,000,000. Upon the acceptance of its appointment as Administrative
Agent hereunder by a successor Administrative Agent, such successor
Administrative Agent shall thereupon succeed to and become vested with all the
rights and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder; provided that if such successor Administrative Agent is appointed
without the consent of the Borrower, such successor Administrative Agent may be
replaced by the Borrower with the consent of the Required Banks. After any
retiring Administrative Agent's resignation hereunder as Administrative Agent,
the provisions of this Article shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Administrative Agent.

14.9.    SECTION  Administrative Agent's Fee. The Borrower shall pay to the
Administrative Agent for its own account fees in the amounts and at the times
previously agreed upon between the Borrower and the Administrative Agent.

15                                 ARTICLE

16                          CHANGE IN CIRCUMSTANCES

16.1.    SECTION  Basis for Determining Interest Rate Inadequate or Unfair. If
on or prior to the first day of any Interest Period for any Euro-Dollar
Borrowing:

(a)               the Administrative Agent determines that deposits in dollars
(in the applicable amounts) are not being offered to the Administrative Agent in
the relevant market for such Interest Period, or

(b)               in the case of a Euro-Dollar Borrowing, Banks having 662/3% or
more of the aggregate amount of the affected Loans advise the Administrative
Agent that the Euro-Dollar Base Rate as determined by the Administrative Agent
will not adequately and fairly reflect the cost to such Banks of funding their
Euro-Dollar Loans for such Interest Period,

the Administrative Agent shall forthwith give notice thereof to the Borrower and
the Banks, whereupon until the Administrative Agent notifies the Borrower that
the circumstances giving rise to such suspension no longer exist, (i) the
obligations of the Banks to make Euro-Dollar Loans or to continue or convert
outstanding Loans as or into Euro-Dollar Loans shall be suspended and (ii) each
outstanding Euro-Dollar Loan shall be converted into a Alternate Base Rate Loan
on the last day of the then current Interest Period applicable thereto. Unless
the Borrower notifies the Administrative Agent at least one Domestic Business
Day before the date of any Euro-Dollar Borrowing for which a Notice of Borrowing
has previously been given that it elects not to borrow on such date, such
Borrowing shall instead be made as a Alternate Base Rate Borrowing.

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<PAGE>

16.2.    SECTION  Illegality. If, on or after the date of this Agreement, the
adoption of any applicable law, rule or regulation, or any change in any
applicable law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Bank (or its Euro-Dollar Lending Office) with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency shall make it unlawful or impossible for any Bank (or its
Euro-Dollar Leading Office) to make, maintain or fund any of its Euro-Dollar
Loans and such Bank shall so notify the Administrative Agent, the Administrative
Agent shall forthwith give notice thereof to the other Banks and the Borrower,
whereupon until such Bank notifies the Borrower and the Administrative Agent
that the circumstances giving rise to such suspension no longer exist, the
obligation of such Bank to make Euro-Dollar Loans, or to continue or convert
outstanding Loans as or into Euro-Dollar Loans, shall be suspended. Before
giving any notice to the Administrative Agent pursuant to this Section, such
Bank shall designate a different Euro-Dollar Lending Office if such designation
will avoid the need for giving such notice and will not be otherwise
disadvantageous to such Bank in the good faith exercise of its discretion. If
such notice is given, each Euro-Dollar Loan of such Bank then outstanding shall
be converted to a Alternate Base Rate Loan either (a) on the last day of the
then current Interest Period applicable to such Euro-Dollar Loan if such Bank
may lawfully continue to maintain and fund such Loan to such day or (b)
immediately if such Bank shall determine that it may not lawfully continue to
maintain and fund such Loan to such day.

16.3.    SECTION  Increased Cost and Reduced Return. (a) If on or after the date
of this Agreement, in the case of any Loan or Facility LC or any obligation to
make Loans or issue or maintain Facility LCs, the adoption of any applicable
law, rule or regulation, or any change in any applicable law, rule or
regulation, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank (or its
Applicable Lending Office) or any LC Issuer with any request or directive
(whether or not having the force of law) issued on or after such date of any
such authority, central bank or comparable agency shall impose, modify or deem
applicable any reserve, special deposit or similar requirement (including,
without limitation, any such requirement imposed by the Board of Governors of
the Federal Reserve System, but excluding with respect to any Euro-Dollar Loan
any such requirement included in an applicable Euro-Dollar Reserve Percentage)
against assets of, deposits with or for the account of, or credit extended by,
any Bank (or its Applicable Lending Office) or any LC Issuer or shall impose on
any Bank (or its Applicable Lending Office) or any LC Issuer or on the London
interbank market any other condition (other than in respect of Taxes or Other
Taxes) affecting its Euro-Dollar Loans, its Note, any Facility LC Application,
any Facility LCs, its obligation to make Euro-Dollar Loans or its obligation to
issue or to participate in Facility LCs and the result of any of the foregoing
is to increase the cost to such Bank (or its Applicable Lending Office) or such
LC Issuer of making or maintaining any Euro-Dollar Loan or Facility LC, or to
reduce the amount of any sum received or receivable by such Bank (or its
Applicable Lending Office) or such LC Issuer under this Agreement or under its
Note with

                                       38
<PAGE>

respect thereto, by an amount deemed by such Bank or such LC Issuer to be
material, then, within 15 days after demand by such Bank or such LC Issuer (with
a copy to the Administrative Agent), the Borrower shall pay to such Bank or such
LC Issuer such additional amount or amounts as will compensate such Bank or such
LC Issuer for such increased cost or reduction; provided that no such amount
shall be payable with respect to any period commencing more than 90 days prior
to the date such Bank or such LC Issuer first notifies the Borrower of its
intention to demand compensation therefor under this Section 8.03(a) unless such
increased cost or reduction is imposed on such Bank or such LC Issuer on a
retroactive basis.

         (b)      If any Bank or any LC Issuer shall have determined that, on or
after the date of this Agreement, the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change in any such law, rule or
regulation, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency given or made after the date of this
Agreement, has or would have the effect of reducing the rate of return on
capital of such Bank or LC Issuer (or its Parent) as a consequence of such
Bank's or LC Issuer's obligations hereunder to a level below that which such
Bank or LC Issuer (or its Parent) could have achieved but for such adoption,
change, request or directive (taking into consideration its policies with
respect to capital adequacy) by an amount deemed by such Bank or LC Issuer to be
material, then from time to time, within 15 days after demand by such Bank or LC
Issuer (with a copy to the Administrative Agent), the Borrower shall pay to such
Bank or LC Issuer such additional amount or amounts as will compensate such Bank
or LC Issuer (or its Parent) for such reduction; provided that no such amount
shall be payable with respect to any period commencing less than 30 days after
the date such Bank or LC Issuer first notifies the Borrower of its intention to
demand compensation under this Section 8.03(b).

         (c)      Each Bank and LC Issuer will promptly notify the Borrower and
the Administrative Agent of any event of which it has knowledge, occurring after
the date hereof, which will entitle such Bank or LC Issuer to compensation
pursuant to this Section and will designate a different Applicable Lending
Office if such designation will avoid the need for, or reduce the amount of,
such compensation and will not, in the judgment of such Bank or LC Issuer, be
otherwise disadvantageous to such Bank or LC Issuer. A certificate of any Bank
or LC Issuer claiming compensation under this Section and setting forth the
additional amount or amounts to be paid to it hereunder shall be conclusive in
the absence of manifest error. In determining such amount, such Bank or LC
Issuer may use any reasonable averaging and attribution methods.

16.4.    SECTION  Taxes. (a) For purposes of this Section 8.04, the following
terms have the following meanings:

         "Taxes" means any and all present or future taxes, duties, levies,
imposts, deductions, charges or withholdings with respect to any payment by the
Borrower pursuant to this Agreement or any Note or Facility LC Application, and
all liabilities with respect thereto,

                                       39
<PAGE>

excluding (i) in the case of each Bank, LC Issuer and the Administrative Agent,
taxes imposed on its income, net worth or gross receipts and franchise or
similar taxes imposed on it by a jurisdiction under the laws of which such Bank,
LC Issuer or the Administrative Agent (as the case may be) is organized or in
which its principal executive office is located or, in the case of each Bank, in
which its Applicable Lending Office is located and (ii) in the case of each Bank
and LC Issuer, any United States withholding tax imposed on such payments except
to the extent that such Bank and LC Issuer is subject to United States
withholding tax by reason of a U.S. Tax Law Change.

         "Other Taxes" means any present or future stamp or documentary taxes
and any other excise or property taxes, or similar charges or levies, which
arise from any payment made pursuant to this Agreement or under any Note or
Facility LC Application or from the execution or delivery of, or otherwise with
respect to, this Agreement or any Note or Facility LC Application.

         "U.S. Tax Law Change" means with respect to any Bank or Participant the
occurrence (x) in the case of each Bank listed on the signature pages hereof,
after the date of its execution and delivery of this Agreement and (y) in the
case of any other Bank, after the date such Bank shall have become a Bank
hereunder, and (z) in the case of each Participant, after the date such
Participant became a Participant hereunder, of the adoption of any applicable
U.S. federal law, U.S. federal rule or U.S. federal regulation relating to
taxation, or any change therein, or the entry into force, modification or
revocation of any income tax convention or treaty to which the United States is
a party.

         (b)      Any and all payments by the Borrower to or for the account of
any Bank, LC Issuer or the Administrative Agent hereunder or under any Note or
Facility LC Application shall be made without deduction for any Taxes or Other
Taxes; provided that, if the Borrower shall be required by law to deduct any
Taxes or Other Taxes from any such payments, (i) the sum payable shall be
increased as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 8.04) such
Bank, LC Issuer or the Administrative Agent (as the case may be) receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) the Borrower shall make such deductions, (iii) the Borrower shall pay the
full amount deducted to the relevant taxation authority or other authority in
accordance with applicable law and (iv) the Borrower shall furnish to the
Administrative Agent, at its address referred to in Section 9.01, the original
or a certified copy of a receipt evidencing payment thereof.

         (c)      The Borrower agrees to indemnify each Bank, LC Issuer and the
Administrative Agent for the full amount of Taxes or Other Taxes (including,
without limitation, any Taxes or Other Taxes imposed or asserted by any
jurisdiction on amounts payable under this Section 8.04) paid by such Bank, LC
Issuer or the Administrative Agent (as the case may be) and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto. This

                                       40
<PAGE>

indemnification shall be paid within 15 days after such Bank, LC Issuer or the
Administrative Agent (as the case may be) makes demand therefor.

         (d)      Each Bank organized under the laws of a jurisdiction outside
the United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Bank listed on the signature pages hereof and on
or prior to the date on which it becomes a Bank in the case of each other Bank,
and from time to time thereafter as required by law (but only so long as such
Bank remains lawfully able to do so), shall provide the Borrower two completed
and duly executed copies of Internal Revenue Service form W-8BEN or W-8ECI, as
appropriate, or any successor form prescribed by the Internal Revenue Service,
or other documentation reasonably requested by the Borrower, certifying that
such Bank is entitled to benefits under an income tax treaty to which the United
States is a party which exempts the Bank from United States withholding tax or
reduces the rate of withholding tax on payments of interest for the account of
such Bank or certifying that the income receivable pursuant to this Agreement is
effectively connected with the conduct of a trade or business in the United
States.

         (e)      For any period with respect to which a Bank has failed to
provide the Borrower with the appropriate form pursuant to Section 8.04(d)
(unless such failure is due to a U.S. Tax Law Change), such Bank shall not be
entitled to indemnification under Section 8.04(b) or 8.04(c) with respect to any
Taxes or Other Taxes which would not have been payable had such form been so
provided, provided that if a Bank, which is otherwise exempt from or subject to
a reduced rate of withholding tax, becomes subject to Taxes because of its
failure to deliver a form required hereunder, the Borrower shall take such steps
as such Bank shall reasonably request to assist such Bank to recover such Taxes
(it being understood, however, that the Borrower shall have no liability to such
Bank in respect of such Taxes).

         (f)      If the Borrower is required to pay additional amounts to or
for the account of any Bank pursuant to this Section 8.04, then such Bank will
take such action (including changing the jurisdiction of its Applicable Lending
Office) as in the good faith judgment of such Bank (i) will eliminate or reduce
any such additional payment which may thereafter accrue and (ii) is not
otherwise disadvantageous to such Bank.

         (g)       If any Bank or the Administrative Agent receives a refund
(including a refund in the form of a credit against taxes that are otherwise
payable by the Bank or the Administrative Agent) of any Taxes or Other Taxes for
which the Borrower has made a payment under Section 8.04(b) or (c) and such
refund was received from the taxing authority which originally imposed such
Taxes or Other Taxes, such Bank or the Administrative Agent agrees to reimburse
the Borrower to the extent of such refund, provided that nothing contained in
this paragraph (g) shall require any Bank or the Administrative Agent to make
available its tax returns (or any other information relating to its taxes which
it deems to be confidential).

16.5.    SECTION  Alternate Base Rate Loans Substituted for Affected Euro-Dollar
Loans. If (i) the obligation of any Bank to make or to continue or convert
outstanding Loans as or into

                                       41
<PAGE>

Euro-Dollar Loans has been suspended pursuant to Section 8.02 or (ii) any Bank
has demanded compensation under Section 8.03(a) or 8.04 with respect to its
Euro-Dollar Loans and the Borrower shall, by at least five Euro-Dollar Business
Days' prior notice to such Bank through the Administrative Agent, have elected
that the provisions of this Section shall apply to such Bank, then, unless and
until such Bank notifies the Borrower that the circumstances giving rise to such
suspension or demand for compensation no longer apply:

(a)               all Loans which would otherwise be made by such Bank as (or
continued as or converted to) Euro-Dollar Loans, as the case may be, shall
instead be Alternate Base Rate Loans (on which interest and principal shall be
payable contemporaneously with the related Euro-Dollar Loans of the other
Banks), and

(b)               after each of its Euro-Dollar Loans has been repaid, all
payments of principal which would otherwise be applied to repay such Loans shall
be applied to repay its Alternate Base Rate Loans instead.

If such Bank notifies the Borrower that the circumstances giving rise to such
suspension or demand for compensation no longer exist, the principal amount of
each such Alternate Base Rate Loan shall be converted into a Euro-Dollar Loan on
the first day of the next succeeding Interest Period applicable to the related
Euro-Dollar Loans of the other Banks.

16.6.    SECTION  Substitution of Bank. If (i) the obligation of any Bank to
make or to convert or continue outstanding Loans as or into Euro-Dollar Loans
has been suspended pursuant to Section 8.02, (ii) any Bank has demanded
compensation under Section 8.03 or 8.04, (iii) any Bank exercises its right not
to extend its Commitment Termination Date pursuant to Section 2.01(c), or (iv)
Investment Grade Status ceases to exist as to any Bank, then:

(a)               the Borrower shall have the right, with the assistance of the
Administrative Agent, to designate a substitute bank or banks (which may be one
or more of the Banks) mutually satisfactory to the Borrower and the
Administrative Agent (whose consent shall not be unreasonably withheld or
delayed) to purchase for cash, pursuant to an Assignment and Assumption
Agreement in substantially the form of Exhibit C hereto, the outstanding Loans,
Reimbursement Obligations and Facility LC participations of such Bank and assume
the Commitment of such Bank, without recourse to or warranty by, or expense to,
such Bank, for a purchase price equal to the principal amount of all of such
Bank's outstanding Loans and Reimbursement Obligations plus any accrued but
unpaid interest thereon and the accrued but unpaid fees in respect of such
Bank's Commitment and Facility LCs hereunder plus such amount, if any, as would
be payable pursuant to Section 2.13 if the outstanding Loans of such Bank were
prepaid in their entirety on the date of consummation of such assignment, and
the Borrower shall cause the termination or cancellation of all Facility LCs
issued by such Bank, not later than the date of consummation of such assignment;
and

(b)               if at the time Investment Grade Status exists as to the
Borrower and no Default and Event of Default then exists, the Borrower may elect
to terminate this Agreement as to such Bank, provided that (i) the Borrower
notifies such Bank through the Administrative Agent of

                                       42
<PAGE>

such election at least three Euro-Dollar Business Days before the effective date
of such termination, (ii) the Borrower repays or prepays the principal amount of
all outstanding Loans made by such Bank and Reimbursement Obligations of such
Bank plus any accrued but unpaid interest thereon and the accrued but unpaid
fees in respect of such Bank's Commitment and Facility LCs hereunder plus all
other amounts payable by the Borrower to such Bank hereunder, not later than the
effective date of such termination and (iii) the Borrower causes the termination
or cancellation of all Facility LCs issued by such Bank not later than the
effective date of such termination. Upon satisfaction of the foregoing
conditions, the Commitment of such Bank shall terminate on the effective date
specified in such notice.

17                                   ARTICLE

18                                MISCELLANEOUS

18.1.    SECTION  Notices. All notices, requests and other communications to any
party hereunder shall be in writing (including bank wire, telex, facsimile
transmission or similar writing) and shall be given to such party: (x) in the
case of the Borrower or the Administrative Agent, at its address or telecopy or
telex number set forth on the Notice Addresses Schedule, (y) in the case of any
Bank or LC Issuer, at its address or telecopy or telex number set forth in its
Administrative Questionnaire or the Notice Addresses Schedule or (z) in the case
of any party, such other address or telecopy or telex number as such party may
hereafter specify for the purpose by notice to the Administrative Agent and the
Borrower. Each such notice, request or other communication shall be effective
(i) if given by telecopy or telex, when such telecopy or telex is transmitted to
the telecopy or telex number specified in this Section and the appropriate
answerback or confirmation slip, as the case may be, is received, or (ii) if
given by any other means, when delivered at the address specified in this
Section; provided that notices to the Administrative Agent under Article 2 or
Article 3 shall not be effective until delivered.

18.2.    SECTION  No Waivers. No failure or delay by the Administrative Agent,
any LC Issuer or any Bank in exercising any right, power or privilege hereunder
or under any Note or Facility LC Application shall operate as a waiver thereof
nor shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.

18.3.    SECTION  Expenses; Indemnification. (a) The Borrower shall pay (i) all
reasonable out-of-pocket expenses of the Administrative Agent, including
reasonable fees and disbursements of special counsel for the Administrative
Agent, in connection with the preparation of this Agreement, any waiver or
consent hereunder or any amendment hereof or any Default or alleged Default
hereunder and (ii) if an Event of Default occurs, all reasonable out-of-pocket
expenses incurred by the Administrative Agent, any LC Issuer or any Bank,
including reasonable fees and disbursements of counsel, in connection with such
Event of Default and collection and other enforcement proceedings resulting
therefrom.

         (b)      The Borrower agrees to indemnify the Administrative Agent,
each LC Issuer and each Bank, their respective affiliates and the respective
directors, officers, agents and employees

                                       43
<PAGE>

of the foregoing (each an "Indemnitee") and hold each Indemnitee harmless from
and against any and all liabilities, losses, damages, costs and expenses of any
kind, including, without limitation, the reasonable fees and disbursements of
counsel, which may be incurred by such Indemnitee in connection with any
investigative, administrative or judicial proceeding (whether or not such
Indemnitee shall be designated a party thereto) relating to or arising out of
this Agreement or any actual or proposed use of proceeds of Loans hereunder;
provided that no Indemnitee shall have the right to be indemnified hereunder for
such Indemnitee's own gross negligence or willful misconduct as determined by a
court of competent jurisdiction.

18.4.    SECTION  Sharing of Set-offs. Each Bank agrees that if it shall, by
exercising any right of set-off or counterclaim or otherwise, receive payment of
a proportion of the aggregate amount then due with respect to the Obligations
held by it which is greater than the proportion received by any other Bank in
respect of the aggregate amount then due with respect to the Loans held by such
other Bank, the Bank receiving such proportionately greater payment shall
purchase such participations in the Obligations held by the other Banks, and
such other adjustments shall be made, as may be required so that all such
payments with respect to the Loans held by the Banks shall be shared by the
Banks pro rata; provided that nothing in this Section shall impair the right of
any Bank to exercise any right of set-off or counterclaim it may have and to
apply the amount subject to such exercise to the payment of indebtedness of the
Borrower other than its indebtedness under this Agreement.

18.5.    SECTION  Amendments and Waivers. Any provision of this Agreement or the
Notes may be amended or waived if, but only if, such amendment or waiver is in
writing and is signed by the Borrower and the Required Banks (and, if the rights
or duties of the Administrative Agent are affected thereby, by the
Administrative Agent and, if the rights or duties of an LC Issuer are affected
thereby, by such LC Issuer); provided that no such amendment or waiver shall,
unless signed by all the Banks, (i) increase or decrease the Commitment of any
Bank (except for a ratable decrease in the Commitments of all Banks) or subject
any Bank to any additional obligation, (ii) reduce the principal of or rate of
interest on any Obligations or any fees hereunder, (iii) postpone the date fixed
for any payment of principal of or interest on any Loan or interest thereon or
any fees hereunder or for termination of any Commitment or (iv) change the
percentage of the Commitments or of the aggregate Pro Rata Shares, or the number
of Banks, which shall be required for the Banks or any of them to take any
action under this Section or any other provision of this Agreement.

18.6.    SECTION  Successors and Assigns. (a) The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Borrower may not assign or
otherwise transfer any of its rights under this Agreement without the prior
written consent of all Banks.

         (b)      Any Bank may, with (unless an Event of Default then exists)
the consent of the Borrower (such consent not to be unreasonably withheld or
delayed), at any time grant to one or more banks or other institutions (each a
"Participant") participating interests in its Commitment or any or all of its
Obligations. In the event of any such grant by a Bank of a participating
interest to a Participant, whether or not upon notice to the Administrative
Agent, such Bank shall remain responsible for the performance of its obligations
hereunder, and the Borrower and the Administrative Agent shall continue to deal
solely and directly with such Bank in connection

                                       44
<PAGE>

with such Bank's rights and obligations under this Agreement. Any agreement
pursuant to which any Bank may grant such a participating interest shall provide
that such Bank shall retain the sole right and responsibility to enforce the
obligations of the Borrower hereunder including, without limitation, the right
to approve any amendment, modification or waiver of any provision of this
Agreement; provided that such participation agreement may provide that such Bank
will not agree to any modification, amendment or waiver of this Agreement
described in clause (i), (ii) or (iii) of Section 9.05 without the consent of
the Participant. The Borrower agrees that each Participant shall, to the extent
provided in its participation agreement, be entitled to the benefits of Article
8 with respect to its participating interest, subject to the performance by such
Participant of the obligations of a Bank thereunder. An assignment or other
transfer which is not permitted by subsection (c) or (d) below shall be given
effect for purposes of this Agreement only to the extent of a participating
interest granted in accordance with this subsection (b).

         (c)      Any Bank may at any time assign to one or more banks or other
financial institutions (each an "Assignee") all, or a proportionate part
(equivalent to an initial Commitment of not less than $10,000,000 (unless the
Borrower and the Administrative Agent shall otherwise agree)) of all, of its
rights and obligations under this Agreement and its Note (if any), and such
Assignee shall assume such rights and obligations, pursuant to an Assignment and
Assumption Agreement in substantially the form of Exhibit C hereto executed by
such Assignee and such transferor Bank, with (and only with and subject to) the
prior written consent of the Borrower (given in its sole discretion), provided
that an Event of Default does not exist, and the Administrative Agent (which
shall not be unreasonably withheld or delayed), provided that unless such
assignment is of the entire right, title and interest of the transferor Bank
hereunder, after making any such assignment such transferor Bank shall have a
Commitment of at least $10,000,000 (unless the Borrower and the Administrative
Agent shall otherwise agree). Upon execution and delivery of such instrument of
assumption and payment by such Assignee to such transferor Bank of an amount
equal to the purchase price agreed between such transferor Bank and such
Assignee, such Assignee shall be a Bank party to this Agreement and shall have
all the rights and obligations of a Bank with a Commitment as set forth in such
instrument of assumption, and the transferor Bank shall be released from its
obligations hereunder to a corresponding extent, and no further consent or
action by any party shall be required. Upon the consummation of any assignment
pursuant to this subsection (c), the transferor Bank, the Administrative Agent
and the Borrower shall make appropriate arrangements so that, if required by the
Assignee, a Note is issued to the Assignee. If the Assignee is not incorporated
under the laws of the United States of America or a state thereof it shall,
prior to the first date on which interest or fees are payable hereunder for its
account, deliver to the Borrower and the Administrative Agent certification as
to exemption from deduction or withholding of any United States federal income
taxes in accordance with Section 8.04. All assignments shall be subject to a
transaction fee established by, and payable by the transferor Bank to, the
Administrative Agent for its own account (which shall not exceed $4,000).

                                     45
<PAGE>

         (d)      Any Bank may at any time assign all or any portion of its
rights under this Agreement and its Note (if any) to a Federal Reserve Bank. No
such assignment shall release the transferor Bank from its obligations hereunder
or modify any such obligations.

         (e)      No Assignee, Participant or other transferee of any Bank's
rights (including any Applicable Lending Office other than such Bank's initial
Applicable Lending Office) shall be entitled to receive any greater payment
under Section 8.03 or 8.04 than such Bank would have been entitled to receive
with respect to the rights transferred, unless such transfer is made by reason
of the provisions of Section 8.02, 8.03 or 8.04 requiring such Bank to designate
a different Applicable Lending Office under certain circumstances or at a time
when the circumstances giving rise to such greater payment did not exist.

18.7.    SECTION  Collateral. Each of the Banks represents to the Administrative
Agent and each of the other Banks that it in good faith is not relying upon any
"margin stock" (as defined in Regulation U) as collateral in the extension or
maintenance of the credit provided for in this Agreement.

18.8.    SECTION  Confidentiality. The Administrative Agent and each Bank agree
to keep any information delivered or made available by the Borrower pursuant to
this Agreement confidential from anyone other than persons employed or retained
by such Bank and its affiliates who are engaged in evaluating, approving,
structuring or administering the credit facility contemplated hereby, provided
that nothing herein shall prevent any Bank from disclosing such information (a)
to any other Bank or to the Administrative Agent, (b) to any other Person if
reasonably incidental to the administration of the credit facility contemplated
hereby, (c) upon the order of any court or administrative agency, (d) upon the
request or demand of any regulatory agency or authority, (e) which had been
publicly disclosed other than as a result of a disclosure by the Administrative
Agent or any Bank prohibited by this Agreement, (f) in connection with any
litigation to which the Administrative Agent, any Bank or its subsidiaries or
Parent may be a party, (g) to the extent necessary in connection with the
exercise of any remedy hereunder, (h) to such Bank's or Administrative Agent's
legal counsel and independent auditors and (i) subject to provisions
substantially similar to those contained in this Section 9.08, to any actual or
proposed Participant or Assignee.

18.9.    SECTION  Governing Law; Submission to Jurisdiction. This Agreement and
each Note (if any) shall be construed in accordance with and governed by the law
of the State of New York. The Borrower hereby submits to the nonexclusive
jurisdiction of the United States District Court for the Southern District of
New York and of any New York State court sitting in New York City for purposes
of all legal proceedings arising out of or relating to this Agreement or the
transactions contemplated hereby. The Borrower irrevocably waives, to the
fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of the venue of any such proceeding brought in such a court
and any claim that any such proceeding brought in such a court has been brought
in an inconvenient forum.

18.10.   SECTION  Counterparts; Integration. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument. This
Agreement constitutes the entire

                                       46
<PAGE>

agreement and understanding among the parties hereto and supersedes any and all
prior agreements and understandings, oral or written, relating to the subject
matter hereof.

18.11.   SECTION  WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE ADMINISTRATIVE
AGENT AND THE BANKS, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER
APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

18.12.   SECTION  Payments Set Aside. To the extent that the Borrower makes a
payment to the Administrative Agent or any Bank, or the Administrative Agent or
any Bank exercises any right of set-off, and such payment or the proceeds of
such set-off or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including pursuant to any
settlement entered into by the Administrative Agent or such Bank in its
discretion) to be repaid by the Administrative Agent or such Bank (the "Repaying
Party") to a trustee, receiver or any other party, in connection with any
proceeding under any debtor relief law or otherwise, then (a) to the extent of
such recovery, the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such set-off had not occurred, and (b) each Bank
severally agrees to pay to the Repaying Party upon demand its applicable share
of any amount so recovered from or repaid by the Repaying Party, plus interest
thereon from the date of such demand to the date such payment is made at a rate
per annum equal to the Federal Funds Effective Rate from time to time in effect.

                                       47
<PAGE>

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

                                       DUKE CAPITAL CORPORATION

                                       By:
                                          --------------------------------------

                                       Name:
                                            ------------------------------------

                                       Title:
                                             -----------------------------------

                                       Address:  422 South Church Street
                                                      Charlotte, NC 28202-1904

                                            Attention:
                                            Telecopy number:
<PAGE>

                                       BANK ONE, NA, as Administrative Agent,
                                        LC Issuer and a Bank

                                       By:
                                          --------------------------------------

                                       Name:
                                            ------------------------------------

                                       Title:
                                             -----------------------------------

                                       2
<PAGE>

                                       FIRST UNION NATIONAL BANK,
                                        as Co-Syndication Agent and a Bank

                                       By:
                                          --------------------------------------

                                       Name:
                                            ------------------------------------

                                       Title:
                                             -----------------------------------

                                       3
<PAGE>

                                       WESTDEUTSCHE LANDESBANK GIROZENTRALE,
                                        as Co-Syndication Agent and a Bank

                                       By:
                                          --------------------------------------

                                       Name:
                                            ------------------------------------

                                       Title:
                                             -----------------------------------

                                       By:
                                          --------------------------------------

                                       Name:
                                            ------------------------------------

                                       Title:
                                             -----------------------------------

                                       4
<PAGE>

                                       DEUTSCHE BANK AG NEW YORK BRANCH AND/OR
                                        CAYMAN ISLANDS BRANCH, as Documentation
                                        Agent and a Bank

                                       By:
                                          --------------------------------------

                                       Name:
                                            ------------------------------------

                                       Title:

                                       By:
                                          --------------------------------------

                                       Name:
                                            ------------------------------------

                                       Title:
                                             -----------------------------------

                                       5
<PAGE>

                                       BAYERISCHE LANDESBANK GIROZENTRALE,
                                        CAYMAN ISLANDS BRANCH, as Co-Agent
                                        and a Bank

                                       By:
                                          --------------------------------------

                                       Name:
                                            ------------------------------------

                                       Title:
                                             -----------------------------------

                                       By:
                                          --------------------------------------

                                       Name:
                                            ------------------------------------

                                       Title:
                                             -----------------------------------

                                       6
<PAGE>

                                       ABN AMRO BANK N.V., as Co-Agent
                                        and a Bank

                                       By:
                                          --------------------------------------

                                       Name:
                                            ------------------------------------

                                       Title:
                                             -----------------------------------

                                       By:
                                          --------------------------------------

                                       Name:
                                            ------------------------------------

                                       Title:
                                             -----------------------------------

                                       7
<PAGE>

                                       BANK OF TOKYO-MITSUBISHI TRUST COMPANY,
                                        as Co-Agent and a Bank

                                       By:
                                          --------------------------------------

                                       Name:
                                            ------------------------------------

                                       Title:
                                             -----------------------------------

                                       8
<PAGE>

                                       WACHOVIA BANK, N.A., as Co-Agent
                                        and a Bank

                                       By:
                                          --------------------------------------

                                       Name:
                                            ------------------------------------

                                       Title:
                                             -----------------------------------

                                       9
<PAGE>

                                       UBS AG, STAMFORD BRANCH, as a Bank

                                       By:
                                          --------------------------------------

                                       Name:
                                            ------------------------------------

                                       Title:
                                             -----------------------------------

                                       By:
                                          --------------------------------------

                                       Name:
                                            ------------------------------------

                                       Title:
                                             -----------------------------------

                                       10
<PAGE>

                                       BNP PARIBAS, as a Bank

                                       By:
                                          --------------------------------------

                                       Name:
                                            ------------------------------------

                                       Title:
                                             -----------------------------------

                                       By:
                                          --------------------------------------

                                       Name:
                                            ------------------------------------

                                       Title:
                                             -----------------------------------

                                       11
<PAGE>

                                       TORONTO DOMINION (TEXAS), INC., as a Bank

                                       By:
                                          --------------------------------------

                                       Name:
                                            ------------------------------------

                                       Title:
                                             -----------------------------------

                                       12
<PAGE>

                                       BANCA COMMERCIALE ITALIANA - LOS ANGELES
                                        BRANCH, as a Bank

                                       By:
                                          --------------------------------------

                                       Name:
                                            ------------------------------------

                                       Title:
                                             -----------------------------------

                                       By:
                                          --------------------------------------

                                       Name:
                                            ------------------------------------

                                       Title:
                                             -----------------------------------

                                       13
<PAGE>

                                       CITIBANK, N.A., as a Bank

                                       By:
                                          --------------------------------------

                                       Name:
                                            ------------------------------------

                                       Title:
                                             -----------------------------------

                                       14
<PAGE>

                                       THE INDUSTRIAL BANK OF JAPAN, LIMITED, as
                                        a Bank

                                       By:
                                          --------------------------------------

                                       Name:
                                            ------------------------------------

                                       Title:
                                             -----------------------------------

                                       15
<PAGE>

                                       BARCLAYS BANK PLC, as a Bank

                                       By:
                                          --------------------------------------

                                       Name:
                                            ------------------------------------

                                       Title:
                                             -----------------------------------

                                       16
<PAGE>

                                       THE CHASE MANHATTAN BANK, as a Bank

                                       By:
                                          --------------------------------------

                                       Name:
                                            ------------------------------------

                                       Title:
                                             -----------------------------------

                                       17
<PAGE>

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

                                       By:
                                          --------------------------------------

                                       Name:
                                            ------------------------------------

                                       Title:
                                             -----------------------------------

                                       18
<PAGE>

                                       BANCO BILBAO VIZCAYA ARGENTARIA, as a
                                        Bank

                                       By:
                                          --------------------------------------

                                       Name:
                                            ------------------------------------

                                       Title:
                                             -----------------------------------

                                       By:
                                          --------------------------------------

                                       Name:
                                            ------------------------------------

                                       Title:
                                             -----------------------------------

                                       19
<PAGE>

                                       WESTPAC BANKING CORPORATION, as a Bank

                                       By:
                                          --------------------------------------

                                       Name:
                                            ------------------------------------

                                       Title:
                                             -----------------------------------

                                       20
<PAGE>

                            SUNTRUST BANK, as a Bank

                                       By:
                                          --------------------------------------

                                       Name:
                                            ------------------------------------

                                       Title:
                                             -----------------------------------

                                       21
<PAGE>

                              Commitments Schedule
                              --------------------

         Bank                                        Commitment
         ----                                        ----------

Bank One, N.A.                                       $50,000,000
First Union National Bank                            $50,000,000
Westdeutsche Landesbank Girozentrale                 $50,000,000
Deutsche Bank AG New York Branch and/or
   Cayman Islands Branch                             $50,000,000
Bayerische Landesbank Girozentrale                   $37,500,000
ABN AMRO Bank N.V.                                   $37,500,000
Bank of Tokyo-Mitsubishi
    Trust Company                                    $37,500,000
Wachovia Bank, N.A.                                  $37,500,000
UBS, AG, Stamford Branch                             $25,000,000
BNP Paribas                                          $25,000,000
Toronto Dominion (Texas), Inc.                       $25,000,000
Banca Commerciale Italiana -
   Los Angeles Branch                                $12,500,000
Citibank, N.A.                                       $12,500,000
The Industrial Bank of Japan, Limited                $12,500,000
Barclays Bank PLC                                    $12,500,000
The Chase Manhattan Bank                             $12,500,000
Bank of America, N.A.                                $12,500,000
Banco Bilbao Vizcaya Argentaria                      $12,500,000
Westpac Banking Corporation                          $12,500,000
SunTrust Bank                                        $12,500,000
                                            --------------------

Total                                               $537,500,000

                                       22
<PAGE>

<TABLE>
<CAPTION>

                                Pricing Schedule
                                ----------------

         The "Commitment Fee Rate" and the "Applicable Margin" for any day are
the respective percentages set forth below in the applicable row under the
column corresponding to the Status that exists on such day:

---------------------------------------------------------------------------------------------------
                        LEVEL I     LEVEL II    LEVEL III     LEVEL IV     LEVEL V     LEVEL VI
---------------------------------------------------------------------------------------------------
<S>                      <C>         <C>          <C>          <C>          <C>          <C>
Commitment Fee Rate      0.08%       0.09%        0.105%       0.125%       0.15%        0.20%
---------------------------------------------------------------------------------------------------
Applicable Margin        0.50%       0.55%        0.625%        0.75%        1.0%       1.375%
Utilization #33-1/3%
---------------------------------------------------------------------------------------------------
Applicable Margin       0.5625%     0.6125%      0.6875%       0.8125%    1.0625%      1.4375%
Utilization
>33-1/3% but #66-2/3%
---------------------------------------------------------------------------------------------------
Applicable Margin        0.625%      0.675%       0.75%        0.875%       1.125%       1.5%
Utilization >66-2/3%
---------------------------------------------------------------------------------------------------
</TABLE>

         For purposes of this Schedule, the following terms have the following
meanings:

         "Level I Status" exists at any date if, at such date, the Borrower is
rated "A+" or higher by S&P or "A1" or higher by Moody's.

         "Level II Status" exists at any date if, at such date, (i) the Borrower
is rated "A" or higher by S&P or "A2" or higher by Moody's and (ii) Level I
Status does not exist.

         "Level III Status" exists at any date if, at such date, (i) the
Borrower is rated "A-" or higher by S&P or "A3" or higher by Moody's and (ii)
neither Level I Status nor Level II Status exists.

         "Level IV Status" exists at any date if, at such date, (i) the Borrower
is rated "BBB+" by S&P or "Baa1" by Moody's and (ii) neither Level I Status,
Level II Status nor Level III Status exists.

         "Level V Status" exists at any date if, at such date, (i) the Borrower
is rated "BBB" by S&P or "Baa2" by Moody's and (ii) neither Level I Status,
Level II Status, Level III Status nor Level IV Status exists.

         "Level VI Status" exists at any date if, at such date, no other Status
exists.

         "Status" refers to the determination of which of Level I Status, Level
II Status, Level III Status, Level IV Status, Level V Status or Level VI Status
exists at any date.
<PAGE>

         "Utilization" means, at any date, the percentage equivalent of a
fraction (i) the numerator of which is the Aggregate Outstanding Credit Exposure
at such date and (ii) the denominator of which is the aggregate amount of the
Commitments at such date (or if such date is after the Commitment Termination
Date, the aggregate amount of the Commitments as in effect prior to their
termination on the Commitment Termination Date).

         The credit ratings to be utilized for purposes of this Schedule (a
"Credit Rating") are those indicated for or assigned to the senior unsecured
long-term debt securities of the Borrower without third-party credit
enhancement, and any rating indicated for or assigned to any other debt security
of the Borrower shall be disregarded. The ratings in effect for any day are
those in effect at the close of business on such day. A change in credit rating
will result in an immediate change in the applicable Status. In the case of
split ratings from S&P and Moody's, the rating to be used to determine the
applicable Status is the higher of the two.
<PAGE>

                            Notice Addresses Schedule
                            -------------------------

         DUKE CAPITAL CORPORATION

         422 South Church Street
         Charlotte, NC 28202-1904
                  Attention:        Grady S.  Carpenter, Jr.
                  Telephone:        (704) 382-7530
                  Facsimile:        (704) 382-9497
                  Electronic Mail:  gcarpent@duke-energy.com

         BANK ONE, N.A.

         Administrative Agent's Office, L/C Issuer and Bank One, N.A., Lending
         Office
         -------
         Bank One, N.A.
         1 Bank One Plaza
         15th Floor
         Suite IL1-0429
         Chicago, IL 60670
                  Attention:        Brian Zimmer
                  Telephone:        (312) 732-2169
                  Facsimile:        (312) 732-7455
                  Electronic Mail:  brian_j_zimmer@bankone.com
                  Account No.: (4811 5286 0000)
                  Ref: Duke Capital
                  ABA #071-000-013

         FIRST UNION NATIONAL BANK

         Credit Contact:
         --------------
         First Union National Bank
         201 S. College St.
         Charlotte, NC 28288
                  Attention:        Mitch Wilson
                  Telephone:        (704) 383-5642
                  Facsimile:        (704) 383-7611
                  Electronic Mail:
<PAGE>

         Administrative Contact:
         ----------------------
         First Union National Bank
         201 S. College St.
         Charlotte, NC 28288
                  Attention:        Chanue Micheal
                  Telephone:        (704) 715-1195
                  Facsimile:        (704) 383-7999
                  Electronic Mail:

         WESTDEUTSCHE LANDESBANK GIRONZENTRALE

         Credit Contact:
         --------------
         1211 Avenue of the Americas
         New York, NY 10036
                  Attention:        Felicia La Forgla
                  Telephone:        (212) 852-6323
                  Facsimile:        (212) 852-6307
                  Electronic Mail:

         Administrative Contact:
         ----------------------
         1211 Avenue of the Americas
         New York, NY 10036
                  Attention:        Philip Green
                  Telephone:        (212) 852-6323
                  Facsimile:        (212) 302-7946
                  Electronic Mail:

         DEUTSCHE BANK AG NEW YORK BRANCH AND/OR
            CAYMAN ISLANDS BRANCH

         Credit Contact:
         --------------
         Deutsche Bank AG New York Branch and/or
            Cayman Islands Branch
         31 West 52nd Street
         New York, NY 10019
                  Attention:        Joel Makowsky
                  Telephone:        (212) 469-7896
                  Facsimile:        (212) 469-5711
                  Electronic Mail: joel.makowsky@db.com
<PAGE>

         Administrative Contact:
         ----------------------
         Deutsche Bank AG New York Branch and/or
            Cayman Islands Branch
         31 West 52nd Street
         New York, NY 10019
                  Attention:        Noble Samuel
                                    Cheryl H. Mandelbaum
                  Telephone:        (212) 250-5374
                  Facsimile:        (212) 669-1707
                  Electronic Mail:  noble.samuel@db.com
                                    cheryl.mandelbaum@db.com

         BAYERISCHE LANDESBANK GIROZENTRALE,
            CAYMAN ISLANDS BRANCH

         Credit Contact:
         --------------
         Bayerische Landesbank Girozentrale,
            Cayman Islands Branch
         560 Lexington Avenue
         17th Floor
         New York, NY 10022
                  Attention:        Sean O'Sullivan
                  Telephone:        (212) 310-9913
                  Facsimile:        (212) 310-9868
                  Electronic Mail:  sosullivan@baylbny.com

         Administrative Contact:
         ----------------------
         Bayerische Landesbank Girozentrale,
            Cayman Islands Branch
         560 Lexington Avenue
         17th Floor
         New York, NY 10022
                  Attention:        Patricia Sanchez
                  Telephone:        (212) 310-9810
                  Facsimile:        (212) 310-9930
                  Electronic Mail:  psanchez@baylbny.com

                  Attention:        Carol Dussie
                  Telephone:        (212) 310-9846
                  Facsimile:        (212) 310-9930
                  Electronic Mail:  cdussie@baylbny.com
<PAGE>

         ABN AMRO BANK N.V.

         Credit Contact:
         --------------
         ABN AMRO Bank N.V.
         208 South LaSalle Street
         Suite 710
         Chicago, IL 60604-1003
                  Attention:        Jeffrey Dodd
                  Telephone:        (312) 992-5110
                  Facsimile:        (312) 992-5111
                  Electronic Mail:

         Administrative Contact:
         ----------------------
         ABN AMRO Bank N.V.
         208 South LaSalle Street
         Suite 1500
         Chicago, IL 60604-1003
                  Attention:        Loan Administration
                  Telephone:        (312) 992-5150
                  Facsimile:        (312) 992-5155
                  Electronic Mail:

         BANK OF TOKYO-MITSUBISHI TRUST COMPANY

         Credit Contact:
         --------------
         Bank of Tokyo-Mitsubishi Trust Company
         1251 Avenue of the Americas, 12th Floor
         New York, NY 10020-1104
                  Attention:        Nicholas R. Battista
                  Telephone:        (212) 782-4333
                  Facsimile:        (212) 782-4979
                  Electronic Mail:  nbattista@btmna.com

                  Attention:        Bill Rhodes
                  Telephone:        (212) 782-4580
                  Facsimile:        (212) 782-4979
                  Electronic Mail:  brhodes@btmna.com
<PAGE>

         Administrative Contact:
         ----------------------
         Bank of Tokyo-Mitsubishi Trust Company
         BTM Information Services, Inc.
         c/o Bank of Tokyo-Mitsubishi Trust Company
         1251 Avenue of the Americas, 12th Floor
         New York, NY 10020-1104
                  Attention:        Rolando Uv
                  Telephone:        (201) 413-8570
                  Facsimile:        (201) 521-2304
                                    (201) 521-2305
                  Electronic Mail:

         WACHOVIA BANK, N.A.

         Credit Contact:
         --------------
         Wachovia Bank, N.A.
         c/o Hann Pirio
         191 Peachtree Street
         28th Floor
         Atlanta, GA 30303
                  Attention:        Melonie Willis
                  Telephone:        (336) 735-5618
                  Facsimile:        (336) 735-5636
                  Electronic Mail:

         Administrative Contact:
         ----------------------
         Wachovia Bank, N.A.
         c/o Hann Pirio
         191 Peachtree Street
         28th Floor
         Atlanta, GA 30303
                  Attention:        Global Corporate Servicing
                  Telephone:
                  Facsimile:
                  Electronic Mail:
<PAGE>

         UBS, AG, STAMFORD BRANCH

         Credit Contact:
         --------------
         UBS AG, Stamford Branch
         677 Washington Blvd.
         6th Floor
         Stamford, CT 06901
                  Attention:        Jennifer Poccia
                  Telephone:        (203) 719-3834
                  Facsimile:        (203) 719-4176
                  Electronic Mail:  jennifer.poccia@ubsw.com

         Administrative Contact:
         ----------------------
         UBS AG, Stamford Branch
         677 Washington Blvd.
         6th Floor
         Stamford, CT 06901
                  Attention:        Jennifer Poccia
                  Telephone:        (203) 719-3834
                  Facsimile:        (203) 719-4176
                  Electronic Mail:  jennifer.poccia@ubsw.com

         BNP PARIBAS

         Credit Contact:
         --------------
         BNP Paribas
         Project Finance & Utilities Group
         787 7th Avenue
         New York, NY 10019
                  Attention:        Sean Finnegan
                  Telephone:        (212) 841-2310
                  Facsimile:        (212) 841-2052
                  Electronic Mail:  sean.finnegan@americas.bnpparibas.com

         Administrative Contact:
         ----------------------
         BNP Paribas
         919 Third Avenue
         New York, NY 10022-1278
                  Attention:        Tecla Hurley
                  Telephone:        (212) 471-6651
                  Facsimile:        (212) 471-6697
                  Electronic Mail:  tecla.hurley@americas.bnpparibas.com
<PAGE>

         TORONTO DOMINION (TEXAS), INC.

         Credit Contact:
         --------------
         Toronto Dominion (Texas), Inc.
         31 West 52nd Street, 18th Floor
         New York, NY 10016
                  Attention:        Suzanne Eberhard
                  Telephone:        (212) 827-7783
                  Facsimile:        (609) 730-8575
                  Electronic Mail:

         Administrative Contact:
         ----------------------
         Toronto Dominion (Texas), Inc.
         909 Fannin Street, 17th Floor
         Houston, TX 77010
                  Attention:        Carol Brandt
                  Telephone:        (713) 653-8204
                  Facsimile:        (713) 951-9921
                  Electronic Mail:  brandc@tdusa.com

         BANCA COMMERCIALE ITALIANA -
            LOS ANGELES BRANCH

         Credit Contact:
         --------------
         Banca Commerciale Italiana - Los Angeles Branch
         One William Street
         New York, New York 10004
                  Attention:        Hannah Plucinski
                  Telephone:        (212) 607-3863
                  Facsimile:        (212) 807-2124
                  Electronic Mail:  hplucinski@bci.it

         Administrative Contact:
         ----------------------
         Banca Commerciale Italiana - Los Angeles Branch
         One William Street
         New York, New York 10004
                  Attention:        Isabella Castrogiovanni
                  Telephone:        (212) 607-3522
                  Facsimile:        (212) 607-3807
                  Electronic Mail:
                  Attention:        Alex Papace
                  Telephone:        (212) 607-3531
                  Facsimile:        (212) 807-3897
                  Electronic Mail:
<PAGE>

         CITIBANK, N.A.

         Credit Contact:
         --------------
         Citibank, N.A.
         2 Penn's Way
         Newark, DE 19720
                  Attention:        Nick McKee
                  Telephone:        (212) 559-1503
                  Facsimile:        (212) 793-6130
                  Electronic Mail:  nick.mckee@citicorp.com

         Administrative Contact:
         ----------------------
         Citibank, N.A.
         2 Penn's Way
         Newark, DE 19720
                  Attention:        Tracy Pinkett
                  Telephone:        (302) 894-6078
                  Facsimile:        (302) 894-6120
                  Electronic Mail:  tracy.pinkett@citicorp.com

         THE INDUSTRIAL BANK OF JAPAN, LIMITED

         Credit Contact:
         --------------
         The Industrial Bank of Japan, Limited
         191 Peachtree Street N.E.
         Suite 3825
         Atlanta, GA 30303
                  Attention:        Bill LaDuca
                  Telephone:        (404) 524-8770 ext.  105
                  Facsimile:        (404) 524-8509
                  Electronic Mail:

         Administrative Contact:
         ----------------------
         The Industrial Bank of Japan, Limited
         1251 Avenue of the Americas
         New York, NY 10020-1104
                  Attention:        Christine Francese
                  Telephone:        (212) 282-4097
                  Facsimile:        (212) 282-4480
                  Electronic Mail:
<PAGE>

         BARCLAYS BANK PLC

         Credit Contact
         Barclays Capital
         222 Broadway, 8th Floor
         New York, NY 10038
                  Attention:        Michael J.  Brennon
                  Telephone:        (212) 412-2851
                  Facsimile:        (212) 412-6709
                  Electronic Mail:

                  Attention:        Sydney Dennis
                  Telephone:        (212) 412-2470
                  Facsimile:        (212) 412-7511
                  Electronic Mail:

         Administrative Contact:
         ----------------------
         Barclays Group Inc.  (USA)
         222 Broadway, 11th Floor
         New York, NY 10038
                  Attention:        Marsha Hamlette
                  Telephone:        (212) 412-4081
                  Facsimile:        (212) 412-5306/5307 or 5308
                  Electronic Mail:

         THE CHASE MANHATTAN BANK

         Credit Contact:
         --------------
         The Chase Manhattan Bank
         270 Park Avenue
         23rd Floor
         New York, NY 10017
                  Attention:        Paul Farrell
                  Telephone:        (212) 270-7653
                  Facsimile:        (212) 270-3089
                  Electronic Mail:  paul.v.farrell@chase.com
<PAGE>

         Administrative Contact:
         ----------------------
         The Chase Manhattan Bank
         270 Park Avenue
         23rd Floor
         New York, NY 10017
                  Attention:        Lynette Lang
                  Telephone:        (212) 552-7692
                  Facsimile:        (212) 552-5777
                  Electronic Mail:  lynette.lang@chase.com

         BANK OF AMERICA, N.A.

         Credit Contact:
         --------------
         Bank of America, N.A.
         100 North Tryon Street
         Mail Code NC1-007-16-13
         Charlotte, NC 28255
                  Attention:        Gretchen P. Burud
                  Telephone:        (704) 386-8394
                  Facsimile:        (704) 386-1319
                  Electronic Mail:  gretchen.burud@bankofamerica.com

         Administrative Contact:
         ----------------------
         Bank of America, N.A.
         Bank of America Plaza
         901 Main Street
         14th Floor, TX1-492-14-05
         Dallas, TX 75202-3714
                  Attention:        Nora J. Taylor
                  Telephone:        (214) 209-0175
                  Facsimile:        (214) 290-9440
                  Electronic Mail:  nora.j.taylor@bankofamerica.com

         BANCO BILBAO VIZCAYA ARGENTARIA

         Credit Contact:
         --------------
         Banco Bilboa Vizcaya Argentaria,
              New York Branch
         1345 Avenue of the Americas, 45th Floor
         New York, NY 10105
                  Attention:        Manual Sanchez
                  Telephone:        (212) 728-1511
                  Facsimile:        (212) 333-2904
                  Electronic Mail:
<PAGE>

                  Attention:        Franceso Alvarez
                  Telephone:        (212) 728-1634
                  Facsimile:        (212) 333-2904
                  Electronic Mail:

         Administrative Contact:
         ----------------------
         Banco Bilboa Vizcaya Argentaria,
              New York Branch
         1345 Avenue of the Americas, 45th Floor
         New York, NY 10105
                  Attention:        Francisco Miguens
                  Telephone:        (212) 728-1682
                  Facsimile:        (212) 333-2926
                  Electronic Mail:

         WESTPAC BANKING CORPORATION

         Credit Contact:
         --------------
         Westpac Banking Corporation
         575 Fifth Avenue
         39th Floor
         New York, NY 10017
                  Attention:        Tony Smith
                  Telephone:        (212) 551-1814
                  Facsimile:        (212) 551-1995
                  Electronic Mail:  tonysmith@westpac.com.au

         Administrative Contact:
         ----------------------
         Westpac Banking Corporation
         575 Fifth Avenue
         39th Floor
         New York, NY 10017
                  Attention:        Susan Wildstein
                  Telephone:        (212) 551-1960
                  Facsimile:        (212) 551-1998
                  Electronic Mail:  susanwildstein@westpac.com.au
<PAGE>

         SUNTRUST BANK

         Credit Contact:
         --------------
         SunTrust Bank
         Mail Code 1929
         303 Peachtree Street, 3rd Floor
         Atlanta, GA 30308
                  Attention:        Steven Newby
                  Telephone:        (404) 658-4916
                  Facsimile:        (404) 827-6270
                  Electronic Mail:  steven.newby@suntrust.com

         Administrative Contact:
         ----------------------
         SunTrust Bank
         Mail Code 1929
         303 Peachtree Street, 3rd Floor
         Atlanta, GA 30308
                  Attention:        Roshawn Orise
                  Telephone:        (404) 230-1939
                  Facsimile:        (404) 575-2730
                  Electronic Mail:  roshawn.orise@suntrust.com
<PAGE>

                              Existing LCs Schedule
                              ---------------------

                                      None.
<PAGE>

                                                                       EXHIBIT A
                                      NOTE
                                                              New York, New York

                                                                          , 2001
                                                              ------------

         For value received, Duke Capital Corporation, a Delaware corporation
(the "Borrower"), promises to pay to the order of
(the "Bank"), for the account of its Applicable Lending Office, the unpaid
principal amount of each Loan made by the Bank to the Borrower pursuant to the
Credit Agreement referred to below on the date specified in the Credit
Agreement. The Borrower promises to pay interest on the unpaid principal amount
of each such Loan on the dates and at the rate or rates provided for in the
Credit Agreement. All such payments of principal and interest shall be made in
lawful money of the United States in Federal or other immediately available
funds at the office of Bank One, NA, 1 Bank One Plaza, Chicago, Illinois.

         All Loans made by the Bank, the respective types and maturities thereof
and all repayments of the principal thereof shall be recorded by the Bank and,
the Bank, if the Bank so elects in connection with any transfer or enforcement
of its Note, may endorse on the schedule attached hereto appropriate notations
to evidence the foregoing information with respect to the Loans then
outstanding; provided that the failure of the Bank to make any such recordation
or endorsement shall not affect the obligations of the Borrower hereunder or
under the Credit Agreement.

         This note is one of the Notes referred to in the 364-Day Credit
Agreement dated as of        , 2001 among the Borrower, the banks listed on the
                     --------
signature pages thereof and Bank One, NA, as Administrative Agent (as the same
may be amended from time to time, the "Credit Agreement"). Terms defined in the
Credit Agreement are used herein with the same meanings. Reference is made to
the Credit Agreement for provisions for the prepayment hereof and the
acceleration of the maturity hereof.

                                            DUKE CAPITAL CORPORATION

                                            By

                                            Title:
<PAGE>

                                  Note (cont'd)

                         LOANS AND PAYMENTS OF PRINCIPAL

--------------------------------------------------------------------------------
                                           Amount of
               Amount          Type       Principal      Maturity     Notation
 Date         of Loan         of Loan       Repaid        Date         Made By
--------------------------------------------------------------------------------

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

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

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

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

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

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

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

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

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

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

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

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

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<PAGE>

                                                                     EXHIBIT B-1

                               OPINION OF GENERAL
                             COUNSEL OF THE BORROWER
<PAGE>

                                                                     EXHIBIT B-2

                               OPINION OF SPECIAL
                            COUNSEL FOR THE BORROWER
<PAGE>

                                                                       EXHIBIT C

                       ASSIGNMENT AND ASSUMPTION AGREEMENT

         AGREEMENT dated as of          , 200   among [ASSIGNOR] (the
                              ----------     --
"Assignor"), [ASSIGNEE] (the "Assignee"), DUKE CAPITAL CORPORATION (the
"Company") and BANK ONE, NA, a national banking association having its principal
office in Chicago, Illinois, as Administrative Agent (the "Administrative
Agent").

                               W I T N E S S E T H

         WHEREAS, this Assignment and Assumption Agreement (the "Agreement")
relates to the 364-Day Credit Agreement dated as of        , 2001 among the
                                                   -------
Company, the Assignor and the other Banks party thereto, as Banks, and the
Administrative Agent (the "Credit Agreement");

         WHEREAS, as provided under the Credit Agreement, the Assignor has a
Commitment to make Loans and to issue or participate in Facility LCs in an
aggregate principal amount at any time outstanding not to exceed $           ;*
                                                                  -----------

         WHEREAS, Loans made to the Borrower by the Assignor under the Credit
Agreement in the aggregate principal amount of $             are outstanding at
the date hereof;                                ------------

         WHEREAS, the Assignor holds participations in Facility LCs under the
Credit Agreement in the aggregate principal amount of $
outstanding on the date hereof; and                    ---------------

         WHEREAS, the Assignor proposes to assign to the Assignee all of the
rights of the Assignor under the Credit Agreement in respect of a portion of its
Commitment thereunder in an amount equal to $         (the "Assigned Amount"),
                                             ---------
together with a corresponding portion of its outstanding Committed Loans, and
the Assignee proposes to accept assignment of such rights and assume the
corresponding obligations from the Assignor on such terms;*

         NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:

         SECTION . Definitions. All capitalized terms not otherwise defined
herein shall have the respective meanings set forth in the Credit Agreement.

--------------------------------
         1 The asterisked provisions shall be appropriately revised in the event
of an assignment after the Commitment Termination Date.
<PAGE>

         SECTION . Assignment. The Assignor hereby assigns and sells to the
Assignee all of the rights of the Assignor under the Credit Agreement to the
extent of the Assigned Amount, and the Assignee hereby accepts such assignment
from the Assignor and assumes all of the obligations of the Assignor under the
Credit Agreement to the extent of the Assigned Amount, including the purchase
from the Assignor of the corresponding portion of the principal amount of the
Committed Loans made by the Assignor outstanding at the date hereof. Upon the
execution and delivery hereof by the Assignor, the Assignee, the Company and the
Administrative Agent and the payment of the amounts specified in Section 3
required to be paid on the date hereof (i) the Assignee shall, as of the date
hereof, succeed to the rights and be obligated to perform the obligations of a
Bank under the Credit Agreement with a Commitment in an amount equal to the
Assigned Amount, and (ii) the Commitment of the Assignor shall, as of the date
hereof, be reduced by a like amount and the Assignor released from its
obligations under the Credit Agreement to the extent such obligations have been
assumed by the Assignee. The assignment provided for herein shall be without
recourse to the Assignor.

         SECTION . Payments. As consideration for the assignment and sale
contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on the
date hereof in Federal funds the amount heretofore agreed between them.** It is
understood that facility fees accrued to the date hereof in respect of the
Assigned Amount are for the account of the Assignor and such fees accruing from
and including the date hereof are for the account of the Assignee. Each of the
Assignor and the Assignee hereby agrees that if it receives any amount under the
Credit Agreement which is for the account of the other party hereto, it shall
receive the same for the account of such other party to the extent of such other
party's interest therein and shall promptly pay the same to such other party.

         SECTION . Consent of the Borrower and the Administrative Agent. This
Agreement is conditioned upon the consent of the Borrower and the Administrative
Agent pursuant to Section 9.06(c) of the Credit Agreement. The execution of this
Agreement by the Borrower and the Administrative Agent is evidence of this
consent. Pursuant to Section 2.04(c) of the Credit Agreement the Borrower agrees
to execute and deliver a Note, if required by the Assignee, payable to the order
of the Assignee to evidence the assignment and assumption provided for herein.

         SECTION . Non-reliance on Assignor. The Assignor makes no
representation or warranty in connection with, and shall have no responsibility
with respect to, the solvency, financial condition, or statements of any
Borrower, or the validity and enforceability of the obligations of any Borrower
in respect of the Credit Agreement or any Note. The Assignee acknowledges that
it has, independently and without reliance on the Assignor, and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into

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

         2 Amount should combine principal together with accrued interest and
breakage compensation, if any, to be paid by the Assignee. It may be preferable
in an appropriate case to specify these amounts generically or by formula rather
than as a fixed sum.
<PAGE>

this Agreement and will continue to be responsible for making its own
independent appraisal of the business, affairs and financial condition of the
Borrowers.

         SECTION . Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.

         SECTION . Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.

         SECTION . Administrative Questionnaire. Attached is an Administrative
Questionnaire duly completed by the Assignee.

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

                                             [ASSIGNOR]

                                             By
                                                  Title:

                                             [ASSIGNEE]

                                             By
                                                  Title:
<PAGE>

                                            DUKE CAPITAL CORPORATION

                                            By
                                                Title:

                                            BANK ONE, NA, as
                                             Administrative Agent

                                            By
                                                Title:
<PAGE>

                                                                       EXHIBIT D

                               EXTENSION AGREEMENT

Bank One, NA, as Administrative
Agent under the Credit Agreement
referred to below
1 Bank One Plaza
Chicago, Illinois 60670

Ladies and Gentlemen:

         Effective as of [date], the undersigned hereby agrees to extend its
Commitment and Commitment Termination Date under the 364-Day Credit Agreement
dated as of        , 2001 among Duke Capital Corporation (the "Borrower"), the
           -------
banks parties thereto and Bank One, NA, as Administrative Agent (the "Credit
Agreement") for 364 days to [date to which its Commitment Termination Date is to
be extended] pursuant to Section 2.01(c) of the Credit Agreement. Terms defined
in the Credit Agreement are used herein as therein defined.

         This Extension Agreement shall be construed in accordance with and
governed by the law of the State of New York. This Extension Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument.

                                            [NAME OF BANK]

                                            By
                                                Title:
<PAGE>

Agreed and Accepted:

DUKE CAPITAL CORPORATION,
as Borrower

By
  -----------------------------------
     Title:

BANK ONE, NA,
as Administrative Agent

By
  -----------------------------------
    Title:
<PAGE>

                                                                       EXHIBIT E

                             FACILITY LC APPLICATION

                                                               Date:
                                                                    ------------

To:      Bank One, NA, as Administrative Agent
                                  as LC Issuer
                  ----------------

From:    Duke Capital Corporation

         Re: 364-Day Credit Agreement dated as of April 19, 2001 (as amended
         from time to time, the "Credit Agreement") among Duke Capital
         Corporation (the "Borrower"), the Banks parties thereto and Bank One,
         NA as Administrative Agent

     The Borrower hereby gives notice pursuant to Section 2.16(c) of the Credit
Agreement that the Borrower requests the above-named LC Issuer to issue on or
before                    a Facility LC containing the terms attached hereto as
      ------------------
Schedule 1 (the "Requested Letter of Credit").

     The Requested Letter of Credit will be subject to [UCP 500] [ISP98].

     The Borrower hereby represents and warrants to the LC Issuer, the
Administrative Agent and the Banks that:

(a)                                 ARTICLE

                                     immediately after the issuance of the
Requested Letter of Credit the Aggregate Outstanding Credit Exposure will not
exceed the Aggregate Commitment;

     (b) immediately after the issuance of the Requested Letter of Credit, no
         Default shall have occurred and be continuing; and

     (c) the representations and warranties contained in the Credit Agreement
         (except the representations and warranties set forth in Sections
         4.04(c) and 4.06 of the Credit Agreement) shall be true and correct on
         and as of the date of issuance of the Requested Letter of Credit.

     The Borrower hereby authorizes the LC Issuer to issue the Requested Letter
of Credit with such variations from the above terms as the LC Issuer may, in its
discretion, determine are necessary and are not materially inconsistent with
this Facility LC Application. The opening of the Requested Letter of Credit and
the Borrower's responsibilities with respect thereto are subject to [UCP 500]
[ISP98] as indicated above and the terms and conditions set forth in the Credit
Agreement.

                                       3
<PAGE>

     Terms used herein and not otherwise defined herein have the meanings
assigned to them in the Credit Agreement.

                                            DUKE CAPITAL CORPORATION

                                            By:
                                                --------------------------------
                                            Title:
                                                  ------------------------------

                                       4
<PAGE>

                                   SCHEDULE 1

Please issue an Irrevocable Letter of Credit as set forth below and forward same
to the Correspondent for the LC Issuer for delivery to the Beneficiary or, at
the LC Issuer's option, forward same directly to the Beneficiary as indicated
below (by check "X").

Transmit by:
o Courier o Air Mail o Full Telex/SWIFT o Other (specify in detail): ___________

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

Advising Bank (Name and Address)          For account of ___________ (Name and
(LC Issuer use only unless                                            Address)
Borrower designates advising bank)
_____                                     _______
--------------------------------------------------------------------------------
                                          Phone Number (___) _________
                                          Fax Number   (___) _________
--------------------------------------------------------------------------------
To Beneficiary (Name and Address)         Amount (Figures) _____________

_____                                     _______
--------------------------------------------------------------------------------
                                          (In Words) _____________
--------------------------------------------------------------------------------

                                          o +/- _______%
--------------------------------------------------------------------------------
                                          Expiry Date:___ At the counters of the
                                          LC Issuer
--------------------------------------------------------------------------------

Available against Beneficiary's draft(s) at sight drawn on the LC Issuer and
accompanied by the following document(s).

o Beneficiary's signed and dated statement stating that:____
o Automatically renewable for___ months or for ___days with a final
  expiration date of ___
o Copy(ies) of Beneficiary's commercial invoice (s)
  marked "unpaid": ____
o Other: ______
o The required letter of credit terms and conditions are attached.
o Special Conditions: _________

--------------------------------------------------------------------------------
Complete only when the Beneficiary's bank or Correspondent is to issue its
guarantee or undertaking based on the issued Letter of Credit.

o Request Beneficiary's bank to issue and deliver their____________(Specify type
of bid or performance bond, guarantee, undertaking or other)

o In favor of: Name(s) & Attention ____________
Address/Street ___________
Address/City ______ State____Country ________
Telephone (   )_________ Fax Number (  )____________

For an amount not exceeding that specified above, effective immediately and
expiring at their office on ___ (At least 30 days prior to Expiry Date above)

Cover________ .
     (specify number or bid or performance bond, etc.)

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

Drawings (Check where applicable):

o Partial drawings prohibited
o Multiple drawings prohibited
o Tele-facsimile drawings permitted

Charges: (Unless specified, all charges will be for Borrower's account) All
banking charges other than the LC Issuer's are for

o Beneficiary
o Borrower

Please include a brief description as to the purpose of the Requested Letter of
Credit: _______________
<PAGE>

Please issue the Requested Letter of Credit subject to: (check one)

o ISP98 or
o UCP 500. If no selection is made, the Requested Letter of Credit shall be
subject to the UCP 500.

                                            Duke Capital
                                            Corporation

                                            By:
                                                -----------------------
                                            Title:
                                                   --------------------

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