Document:

Exhibit
10.1

 

 

$2,000,000,000

 

FIVE-YEAR
SENIOR

REVOLVING
CREDIT AGREEMENT

 

Dated as of
September 9, 2005

 

by and
among

 

CINERGY
CORP.,

THE
CINCINNATI GAS & ELECTRIC COMPANY,

PSI ENERGY,
INC.

THE UNION
LIGHT, HEAT AND POWER COMPANY

 

and

 

THE BANKS
NAMED HEREIN,

as Lenders,

 

JPMORGAN
CHASE BANK, N.A., 

as Syndication Agent

 

and

 

BARCLAYS
BANK PLC,

as Administrative Agent

and as LC Bank

 

 

BARCLAYS
CAPITAL, 

the investment banking division of

Barclays Bank PLC,

 

and

 

J.P. MORGAN
SECURITIES INC.,

as Joint Lead Arrangers and Bookrunners

 

 

TABLE OF
CONTENTS

 

	
  ARTICLE I DEFINITIONS AND ACCOUNTING TERMS

  	
   

  
	
   

  	
   

  
	
  SECTION 1.1.
  Certain Defined Terms

  	
   

  
	
  SECTION 1.2.
  Computation of Time Periods

  	
   

  
	
  SECTION 1.3.
  Accounting Terms

  	
   

  
	
   

  	
   

  
	
  ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES

  	
   

  
	
   

  	
   

  
	
  SECTION 2.1.
  The Commitments and Advances

  	
   

  
	
  SECTION 2.2. Making
  the Advances

  	
   

  
	
  SECTION 2.3.
  Facility Fee; Letter of Credit Risk Participation Fee; Other Fees

  	
   

  
	
  SECTION 2.4.
  Optional Reduction of the Commitments

  	
   

  
	
  SECTION 2.5.
  Mandatory Reduction of CG&E Sublimit; Increase in ULH&P Sublimit

  	
   

  
	
  SECTION 2.6.
  Repayment of Advances; Prepayment

  	
   

  
	
  SECTION 2.7. Conversion
  and Continuation Options

  	
   

  
	
  SECTION 2.8.
  Interest on Advances

  	
   

  
	
  SECTION 2.9.
  Additional Interest on Eurodollar Rate Advances

  	
   

  
	
  SECTION 2.10.
  Interest Rate Determination

  	
   

  
	
  SECTION 2.11.
  Increased Costs; Capital Adequacy

  	
   

  
	
  SECTION 2.12.
  Payments and Computations

  	
   

  
	
  SECTION 2.13. Taxes

  	
   

  
	
  SECTION 2.14.
  Sharing of Payments, Etc.

  	
   

  
	
  SECTION 2.15.
  Funding Indemnity

  	
   

  
	
  SECTION 2.16.
  Notice of Amounts Payable; Mitigation Obligations; Replacement of Lenders

  	
   

  
	
  SECTION 2.17.
  Total Commitment Increase

  	
   

  
	
  SECTION 2.18.
  Extension of Termination Date

  	
   

  
	
   

  	
   

  
	
  ARTICLE III LETTERS OF CREDIT

  	
   

  
	
   

  	
   

  
	
  SECTION 3.1. LC Bank

  	
   

  
	
  SECTION 3.2. Letters
  of Credit

  	
   

  
	
  SECTION 3.3.
  Reimbursement on Demand

  	
   

  
	
  SECTION 3.4.
  Advances for Unreimbursed LC Disbursements

  	
   

  
	
  SECTION 3.5.
  Participation; Reimbursement of LC Bank

  	
   

  
	
  SECTION 3.6.
  Obligations Absolute

  	
   

  
	
  SECTION 3.7.
  Liability of LC Bank and the Lenders

  	
   

  
	
  SECTION 3.8. Cash
  Collateralization of Letters of Credit

  	
   

  
	
  SECTION 3.9. Existing
  Letters of Credit

  	
   

  
	
   

  	
   

  
	
  ARTICLE IV CONDITIONS
  PRECEDENT

  	
   

  
	
   

  	
   

  
	
  SECTION 4.1.
  Conditions Precedent to Effective Date

  	
   

  
	
  SECTION 4.2.
  Conditions Precedent to All Extensions of Credit

  	
   

  
	
  SECTION 4.3. Reliance
  on Certificates

  	
   

  
	
   

  	
   

  
	
  ARTICLE V REPRESENTATIONS AND
  WARRANTIES

  	
   

  
	
   

  	
   

  
	
  SECTION 5.1.
  Representations and Warranties of the Borrowers

  	
   

  
	
   

  	
   

  
	
  ARTICLE VI COVENANTS OF THE
  BORROWERS

  	
   

  

 

i

 

	
  SECTION 6.1. General
  Affirmative Covenants of the Borrowers

  	
   

  
	
  SECTION 6.2. Negative
  Covenants of the Borrowers

  	
   

  
	
   

  	
   

  
	
  ARTICLE VII EVENTS OF DEFAULT

  	
   

  
	
   

  	
   

  
	
  SECTION 7.1. Events
  of Default

  	
   

  
	
   

  	
   

  
	
  ARTICLE VIII THE
  ADMINISTRATIVE AGENT

  	
   

  
	
   

  	
   

  
	
  SECTION 8.1.
  Authorization and Action

  	
   

  
	
  SECTION 8.2. Administrative Agent’s
  Reliance, Etc.

  	
   

  
	
  SECTION 8.3. Barclays
  and Affiliates

  	
   

  
	
  SECTION 8.4. Lender
  Credit Decision

  	
   

  
	
  SECTION 8.5.
  Indemnification

  	
   

  
	
  SECTION 8.6.
  Successor Administrative Agent

  	
   

  
	
   

  	
   

  
	
  ARTICLE IX MISCELLANEOUS

  	
   

  
	
   

  	
   

  
	
  SECTION 9.1.
  Amendments, Etc.

  	
   

  
	
  SECTION 9.2. Notices,
  Etc.

  	
   

  
	
  SECTION 9.3. No
  Waiver; Remedies

  	
   

  
	
  SECTION 9.4. Costs,
  Expenses and Taxes; Indemnification

  	
   

  
	
  SECTION 9.5. Right of
  Set-off

  	
   

  
	
  SECTION 9.6. Binding
  Effect

  	
   

  
	
  SECTION 9.7.
  Assignments, New Lenders and Participations

  	
   

  
	
  SECTION 9.8. No
  Recourse

  	
   

  
	
  SECTION 9.9. Consent
  to Jurisdiction; Waiver of Jury Trial

  	
   

  
	
  SECTION 9.10.
  Governing Law

  	
   

  
	
  SECTION 9.11.
  Execution in Counterparts

  	
   

  
	
  SECTION 9.12. Entire
  Agreement; Exhibits and Schedules

  	
   

  
	
  SECTION 9.13.
  Confidentiality

  	
   

  
	
  SECTION 9.14. USA
  PATRIOT Act

  	
   

  

 

	
  Schedule 1.1

  	
  -

  	
  Names, Addresses, Commitments and Commitment
  Percentages of Banks

  
	
  Schedule 2.5(b)

  	
  -

  	
  ULH&P Asset Transfer

  
	
  Schedule 3.9

  	
  -

  	
  Existing Letters of Credit

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  -

  	
  Form of Note

  
	
  Exhibit B

  	
  -

  	
  Form of Notice of Borrowing

  
	
  Exhibit C

  	
  -

  	
  Form of Opinion of J. William DuMond, Esq.,
  Senior Counsel of the Borrowers

  
	
  Exhibit D

  	
  -

  	
  Form of Opinion of Simpson Thacher &
  Bartlett LLP, special counsel to the Administrative Agent

  
	
  Exhibit E

  	
  -

  	
  Form of Assignment and Acceptance

  
	
  Exhibit F

  	
  -

  	
  Form of Long-Term Debt Designation

  

 

ii

 

FIVE-YEAR
SENIOR REVOLVING

CREDIT
AGREEMENT

 

FIVE-YEAR SENIOR REVOLVING CREDIT
AGREEMENT
dated as of September 9, 2005 (this “Agreement”), by and among:

 

a)                                                                                      CINERGY CORP., a Delaware
corporation (“Cinergy”);

 

b)                                                                                     THE CINCINNATI GAS &
ELECTRIC COMPANY, an Ohio corporation (“CG&E”);

 

c)                                                                                      PSI ENERGY, INC., an Indiana
corporation (“PSI ENERGY”)

 

d)                                                                                     THE UNION LIGHT, HEAT AND POWER
COMPANY, a Kentucky corporation (“ULH&P”).

 

e)                                                                                      the banks and other financial
institutions or entities listed on the signature pages hereof (the “Banks”) and other
Lenders (as hereinafter defined) from time to time party hereto;

 

f)                                                                                        JPMORGAN CHASE BANK, N.A. (“JPMCB”) as
Syndication Agent (in such capacity, the “Syndication Agent”); and

 

g)                                                                                     BARCLAYS BANK PLC (“Barclays”) as
Administrative Agent (in such capacity, the “Administrative Agent”) for the Lenders
hereunder and as LC Bank (as hereinafter defined).

 

W I T N E S
S E T H

 

WHEREAS, the Borrowers (as defined
herein) have requested the Banks to provide the credit facility hereinafter
described in the amounts and on the terms and conditions set forth herein, the
Banks have so agreed on the terms and conditions set forth herein, and the
Administrative Agent has agreed to act as agent for the Lenders on such terms
and conditions;

 

NOW, THEREFORE, the parties to this Agreement hereby agree as
follows:

 

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

 

SECTION 1.1.  Certain Defined Terms.

 

As used in this Agreement, the following terms shall have the following
meanings (such meanings to be equally applicable to both the singular and
plural forms of the terms defined):

 

“Advance”
means an advance by a Lender to any Borrower as part of a Borrowing and refers
to a Base Rate Advance or a Eurodollar Rate Advance, each of which shall be a “Type” of Advance.

 

“Affected Lender”
has the meaning specified in Section 2.16.

 

“Affiliate”
means, as to any Person, any trade or business (whether or not incorporated)
which is a member of a group of which such Person is a member and which is
under common control within the meaning of the regulations under Section 414
of the Code.

 

 

“Applicable
Lending Office” means, with respect to each Lender, such Lender’s
Domestic Lending Office, in the case of a Base Rate Advance, and such Lender’s
Eurodollar Lending Office, in the case of a Eurodollar Rate Advance.

 

“Applicable
Margin” means, for any Advance, the percentage rate per annum set forth in the appropriate
column below, as determined by reference to the Applicable Rating Level, plus 0.10% per annum during any period in which the Outstanding
Extensions of Credit exceed 50% of the Total Commitment: 

 

	
   

  	
   

  	
  Applicable Margin

  	
   

  
	
  Applicable

  Rating Level

  	
   

  	
  Base Rate

  Advances

  	
   

  	
  Eurodollar

  Advances

  	
   

  
	
  Level
  I

  	
   

  	
  0.000

  	
  %

  	
  0.220

  	
  %

  
	
  Level
  II

  	
   

  	
  0.000

  	
  %

  	
  0.350

  	
  %

  
	
  Level
  III

  	
   

  	
  0.000

  	
  %

  	
  0.425

  	
  %

  
	
  Level
  IV

  	
   

  	
  0.000

  	
  %

  	
  0.500

  	
  %

  
	
  Level
  V

  	
   

  	
  0.000

  	
  %

  	
  0.800

  	
  %

  

 

Any change in the Applicable Margin caused by a change in the
Applicable Rating Level shall take effect at the time such change in the
Applicable Rating Level shall occur.

 

“Applicable
Rating Level” shall be determined at any time and from time to
time on the basis of the then applicable Reference Ratings of the relevant
Borrower issued or maintained by the Rating Agencies (or Rating Agency, in the
case of only one Reference Rating) in accordance with the following table:

 

	
  Applicable

  Rating Level

  	
   

  	
  S&P

  	
   

  	
  Moody’s

  	
   

  
	
  Level I

  	
   

  	
  A- or higher

  	
   

  	
  A3 or higher

  	
   

  
	
  Level II

  	
   

  	
  BBB+

  	
   

  	
  Baa1

  	
   

  
	
  Level III

  	
   

  	
  BBB

  	
   

  	
  Baa2

  	
   

  
	
  Level IV

  	
   

  	
  BBB-

  	
   

  	
  Baa3

  	
   

  
	
  Level V

  	
   

  	
  BB+ or lower

  (or unrated)

  	
   

  	
  Ba1 or lower

  (or unrated)

  	
   

  

 

2

 

In the event of a “split” rating for a Borrower, the Applicable Rating
Level shall be determined on the basis of the higher of the two ratings then
applicable; provided that if the
two ratings are two or more levels apart, the Applicable Rating Level shall be
determined on the basis of the rating that is one level lower than the higher
of the two ratings then applicable; provided
further, that if both Moody’s and S&P shall have ceased to issue
or maintain Reference Ratings, then the Applicable Rating Level shall be
Level V.  The Applicable Rating
Level shall be redetermined as and when any change in the ratings used in the
determination thereof shall be announced by any Rating Agency.  For the avoidance of doubt, the Applicable
Rating Level as of the date of this Agreement (i) for Cinergy, is Level
III and (ii) for CG&E, PSI Energy and ULH&P, is Level II.

 

“Approved Fund”
means any Person (other than a natural Person) that is (or will be) engaged in
making, purchasing, holding or otherwise investing in commercial loans and
similar extensions of credit in the ordinary course of its business and that is
administered or managed by (a) a Lender, (b) an Affiliate of a Lender
or (c) an entity or an Affiliate of an entity that administers or manages
a Lender.

 

“Assignment and
Acceptance” means an assignment and acceptance in substantially
the form of Exhibit E hereto.

 

“Assignment
Effective Date” means the effective date of any Assignment and
Acceptance.

 

“Barclays”
has the meaning specified in the caption to this Agreement.

 

“Barclays
Capital” means Barclays Capital, the investment banking division
of Barclays Bank PLC.

 

“Base Rate”
means, for any day for which the same is to be calculated, the higher of (a) the
rate designated by Barclays from time to time as its prime rate in the United
States of America and (b) the Federal Funds Rate for such day plus 1/2 of
1%.  Each change in the Base Rate shall
take effect simultaneously with the corresponding change or changes in the
rates described in clause (a) or clause (b), above, or in the
Applicable Rating Level, as the case may be.

 

“Base Rate
Advance” means an Advance which bears interest as provided in Section 2.8(a).

 

“Borrower”
means each of Cinergy, CG&E, PSI Energy and ULH&P; collectively, the “Borrowers”.

 

“Borrowing”
means a borrowing consisting of simultaneous Advances of the same Type and
having the same Interest Period made by each of the Lenders pursuant to Section 2.1.

 

“Borrowing Date”
means any Business Day specified in a Notice of Borrowing as a date on which a
Borrower requests the Lenders to make Advances hereunder, or such Business Day
on which a Borrowing pursuant to Section 3.4 is made.

 

“Business Day”
means a day of the year on which banks are not required or authorized to close
in New York City and, if the applicable Business Day relates to any Eurodollar
Rate Advances, on which dealings are carried on in Eurodollars in the London
interbank market.

 

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

 

“Cash Account”
has the meaning specified in Section 7.1.

 

3

 

“CG&E First
Mortgage Trust Indenture” shall mean the first mortgage trust
indenture, dated as of August 1, 1936 between CG&E and The Bank of New
York (successor to Irving Trust Company), as trustee, as amended, modified or
supplemented from time to time, and any successor or replacement mortgage trust
indenture.

 

“CG&E
Outstanding Extensions of Credit” means, as of any day for the
determination thereof, (a) the aggregate principal amount of all Advances
made to CG&E outstanding on such day plus
(b) the LC Outstandings of CG&E on such day plus (c) the aggregate amount of all Unreimbursed LC
Disbursements of CG&E outstanding on such day.

 

“CG&E
Sublimit” means $500,000,000.

 

“Change of
Control” means (a) the acquisition of ownership, directly
or indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the
Securities and Exchange Commission thereunder as in effect on the date hereof),
of Capital Stock representing more than 35% of the aggregate ordinary voting
power represented by the issued and outstanding Capital Stock of Cinergy; (b) occupation
of a majority of the seats (other than vacant seats) on the board of directors
of such Borrower by Persons who were neither (i) nominated by the board of
directors of Cinergy or the applicable Borrower nor (ii) appointed by
directors so nominated; or (c) any of CG&E, PSI Energy or ULH&P
shall cease to be wholly-owned direct Subsidiaries of Cinergy (or, in the case
of ULH&P, so long as it is a wholly-owned direct Subsidiary of CG&E, a
wholly-owned indirect Subsidiary of Cinergy); provided,
that references to each Borrower in this definition of “Change of Control”
shall also refer to any successor entity as may be permitted by Section 6.2;
provided further, that the transaction
described in the Agreement and Plan of Merger by and among Duke Energy
Corporation, Cinergy, Deer Holding Corp., Deer Acquisition Corp., and Cougar
Acquisition Corp., dated as of May 8, 2005, as disclosed in Form 8-K
filed by Cinergy with the Securities and Exchange Commission on May 10,
2005, and other filings made by Cinergy at least five Business Days prior to
the Effective Date with respect to such transaction, shall not be considered a
Change of Control under subclause (a) or (b) above for purposes of
this Agreement.

 

“Code”
means the Internal Revenue Code of 1986, as amended from time to time.

 

“Commitment”
has the meaning specified in Section 2.1(a).

 

“Commitment Increase”
has the meaning specified in Section 2.17.

 

“Commitment Increase
Effective Date” has the meaning specified in Section 2.17.

 

“Commitment
Percentage” means, as to any Lender as of any date of
determination, the percentage describing such Lender’s pro rata share of the Commitments set
forth in the Register from time to time.

 

“Consolidated
Indebtedness” means, for any Borrower, as of the date of any
determination thereof, the principal amount then outstanding of all
Indebtedness of such Borrower and its Subsidiaries, determined on a
consolidated basis after elimination of inter-company items, less deposits of cash or cash equivalents in restricted
accounts relating to the proceeds of tax exempt bonds of such Borrower and its
Subsidiaries as of such date; provided
that Consolidated Indebtedness shall not include (i) Non-Recourse Debt or (ii) in
the case of Cinergy only, Indebtedness in respect of Preferred Trust
Securities.

 

“Consolidated
Net Worth” means, as of the date of any determination thereof,
all items that, in conformity with GAAP, would be included under shareholders’
equity on a consolidated balance sheet of the applicable Person at such date.

 

“Consolidated
Total Capitalization” means, as of the date of any determination
thereof, the sum of Consolidated Net Worth of the applicable Person at such
date, the Consolidated

 

4

 

Indebtedness of such Person at such date, and, to
the extent not otherwise included, preferred stock and mandatorily redeemable
preferred trust securities of such Person at such date.

 

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

 

“Default”
means any event, which, but for the giving of notice or lapse of time or both, would
constitute an Event of Default.

 

“Disclosure
Document” means (i) the Borrowers’ Annual Report on Form 10-K
for the fiscal year ended December 31, 2004 and any report of any Borrower
on Form 10-Q or Form 8-K filed since December 31, 2004 and five
Business Days prior to the Effective Date or (ii) for the purposes of
satisfying the requirements of Section 2.18(b)(ii) only, the
Borrowers’ Annual Report on Form 10-K for the most recently ended fiscal
year and any report of any Borrower on Form 10-Q or Form 8-K filed
since the filing of the Borrower’s Annual Report for the most recently ended
fiscal year and five Business Days prior to the effective date of the relevant
Termination Date extension.

 

“Domestic
Lending Office” means, with respect to any Lender, the office of
such Lender specified as its “Domestic Lending Office” opposite its name on Schedule 1.1
hereto or in the Assignment and Acceptance pursuant to which it became a
Lender, or such other office of such Lender as such Lender may from time to
time specify to the Borrowers and the Administrative Agent.

 

“Effective Date”
means the date on which all of the conditions specified in Section 4.1
hereof have been satisfied.

 

“Environmental
Law” means any and all statutes, laws, regulations, ordinances,
rules, judgments, orders, decrees, permits, concessions, grants, franchises,
licenses, agreements or other governmental restrictions relating to the
environment or the release of any materials into the environment.

 

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

 

“ERISA Affiliate”
means any trade or business (whether or not incorporated) that is under common
control with any Borrower within the meaning of Section 4001 of ERISA or
is part of a group which includes the Borrower and which is treated as a single
employer under Section 414 of the Code.

 

“ERISA Event”
means (a) the occurrence of any “reportable event”, as defined in Section 4043
of ERISA or the regulations issued thereunder with respect to a Plan (other
than an event for which the 30-day notice period is waived under PBGC Reg. §4043); (b) the occurrence of
any “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975
of the Code) with respect to a Plan; (c) the existence with respect to any
Plan of an “accumulated funding deficiency” (as defined in Section 412 of
the Code or Section 302 of ERISA), whether or not waived; (d) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of
ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (e) the incurrence by the Borrower or any of its
ERISA Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (f) the receipt by the borrower or any ERISA
Affiliate from the PBGC or a plan administrator of any notice relating to an
intention to terminate any Plan or Plans or to appoint a trustee to administer
any Plan; (g) the incurrence by the Borrower or any of its ERISA
Affiliates of any liability with respect to the “withdrawal” or “partial
withdrawal” (as such terms are defined respectively in Sections 4203 and 4205
of ERISA) from any Single Employer Plan or Multiemployer Plan; or (h) the
receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from

 

5

 

the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability (or that would reasonably be
expected to result in Withdrawal Liability) or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.

 

“Eurocurrency
Liabilities” has the meaning specified in Regulation D of
the Board of Governors of the Federal Reserve System, as in effect from time to
time.

 

“Eurodollar
Lending Office” means, with respect to any Lender, the office of
such Lender specified as its “Eurodollar Lending Office” opposite its name on Schedule 1.1
hereto (or, if no such office is specified, its Domestic Lending Office) or in
the Assignment and Acceptance pursuant to which it became a Lender, or such other
office of such Lender as such Lender may from time to time specify to the
Borrowers and the Administrative Agent.

 

“Eurodollar Rate”
means, for the Interest Period for each Eurodollar Rate Advance comprising part
of the same Borrowing, an interest rate per
annum equal to the average (rounded upward to the nearest whole
multiple of 1/100 of 1% per annum,
if such average is not such a multiple) of the rate per annum determined on the basis of the rate for deposits
in U.S. dollars for a period equal to such Interest Period commencing on the
first day of such Interest Period appearing on Page 3750 of the Telerate
screen as of 11:00 A.M., London time, two Business Days prior to the
beginning of such Interest Period.  In
the event that such rate does not appear on Page 3750 of the Telerate
screen (or otherwise on such screen), the “Eurodollar Rate” shall be determined by
reference to such other comparable publicly available service for displaying
eurodollar rates as may be selected by the Administrative Agent or, in the
absence of such availability, by reference to the rate at which the
Administrative Agent is offered U.S. dollar deposits at or about 11:00 A.M.,
New York City time, two Business Days prior to the beginning of such Interest
Period in the interbank eurodollar market where its eurodollar and foreign
currency and exchange operations are then being conducted for delivery on the
first day of such Interest Period for the number of days comprised therein.

 

“Eurodollar Rate
Advance” means an Advance which bears interest as provided in Section 2.8(b).

 

“Event of
Default” has the meaning specified in Section 7.1.

 

“Excepted
Subsidiaries” means CG&E, PSI Energy and ULH&P.

 

“Existing Credit
Agreements” means the Existing Five-Year Credit Agreement and
the Existing Three-Year Credit Agreement.

 

“Existing Letters of Credit”
means the letters of credit described on Schedule 3.9.

 

“Existing
Five-Year Credit Agreement” means the Five Year Senior Revolving
Credit Agreement, dated as of December 9, 2004, by and among Cinergy, the
lenders parties thereto and Barclays, as administrative agent for such lenders.

 

 “Existing Three-Year Credit Agreement”
means the Three Year Senior Revolving Credit Agreement, dated as of April 26,
2004, by and among Cinergy, the lenders parties thereto and Barclays, as
administrative agent for such lenders.

 

“Extension of
Credit” means (a) the making by any Lender of an Advance, (b) the
issuance of a Letter of Credit by the LC Bank or (c) the amendment of any
Letter of Credit having the effect of extending the stated termination date
thereof or increasing the LC Outstandings.

 

“Facility Fee”
has the meaning specified in Section 2.3(a).

 

“Federal Funds
Rate” means, for any day in any period, the rate set forth for
such day opposite the caption “Federal Funds
(Effective)” in the weekly statistical release designated as

 

6

 

“H.15(519)”,
or any successor publication, published by the Board of Governors of the
Federal Reserve System.

 

“Financing
Documents” means this Agreement and the Notes.

 

“Financing Lease”
means any lease of property, real or personal, the obligations of the lessee in
respect of which are required by GAAP to be capitalized on a balance sheet of
the lessee.

 

“GAAP”
means generally accepted accounting principles in the United States of America
in effect from time to time.

 

“Governmental
Authority” means any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to
government.

 

“Guarantee
Obligation” means, as to any Person (the “guaranteeing person”),
any obligation of such Person guaranteeing, or having the effect of
guaranteeing any Indebtedness, leases, dividends or other obligations (“primary obligations”)
of any other Person (the “primary
obligor”) in any manner, whether directly or indirectly,
contingently or otherwise. Guarantee Obligations shall include (but not be
limited to) any obligation of the guaranteeing person (i) to reimburse or
indemnify any bank, insurer or other Person in respect of payments made under
any letter of credit, demand guaranty or similar instrument issued by such
bank, insurer or other Person (ii) to purchase any primary obligation or
any property constituting direct or indirect security for any primary
obligation, (iii) to advance or supply funds for the purchase or payment
of any primary obligation, (iv) to advance or supply funds to maintain
working capital or the net worth or solvency of any primary obligor, (v) to
purchase property, securities or services primarily for the purpose of
providing funds to assure payment of any primary obligation or (vi) otherwise
to assure or hold harmless the creditor or beneficiary of any primary
obligation against loss; provided,
however, that the term Guarantee
Obligation shall not include endorsements of instruments for deposit or
collection in the ordinary course of business. The amount of any Guarantee
Obligation shall be deemed to be the lower of (a) an amount equal to the
stated or determinable amount of the related primary obligation and (b) the
maximum amount for which such guaranteeing person may be liable pursuant to the
terms of such Guarantee Obligation, unless such primary obligation and the
maximum amount for which such guaranteeing person may be liable are not stated
or determinable, in which case the amount of such Guarantee Obligation shall be
the guaranteeing person’s maximum reasonably anticipated liability in respect
thereof as determined in good faith.

 

“Hazardous
Materials” means any hazardous materials, hazardous wastes,
hazardous constituents, hazardous or toxic substances, petroleum products
(including crude oil or any fraction thereof), defined or regulated as such in
or under any Environmental Law.

 

“Hedging
Agreement” means, for any Person, any and all agreements,
devices or arrangements designed to protect such Person or any of its
Subsidiaries from the fluctuations of interest rates, exchange rates applicable
to such party’s assets, liabilities or exchange transactions, including, but
not limited to, dollar-denominated or cross-currency interest rate exchange
agreements, forward currency exchange agreements, interest rate cap or collar
protection agreements, commodity swap agreements, forward rate currency or
interest rate options, puts and warrants. 
Notwithstanding anything herein to the contrary, “Hedging Agreements”
shall also include fixed-for-floating interest rate swap agreements and similar
instruments.

 

“Indebtedness”
means, as to any Person, (a) all indebtedness of such Person for borrowed
money or for the deferred purchase price of property or services (other than
current trade liabilities incurred in the ordinary course of business and
payable in accordance with customary practices) or which is evidenced by a
note, bond, debenture or similar instrument, 

 

7

 

(b) all obligations of such Person under
Financing Leases, (c) all obligations of such Person in respect of bankers’
acceptances (or similar instruments) issued or created for the account of such
Person, and (d) all liabilities secured by any Lien on any property owned
by such Person even though such Person has not assumed or otherwise become
liable for the payment thereof.

 

“Increasing Lender”
has the meaning specified in Section 2.17.

 

“Interest Period”
means, for each Eurodollar Rate Advance comprising part of the same Borrowing, (a) initially,
the period commencing on the date of such Advance or conversion, as the case
may be, and ending on the last day of the period selected by the relevant
Borrower pursuant to the provisions below and (b) thereafter, each period
commencing on the last day of the next preceding Interest Period applicable to
such Eurodollar Rate Advance and ending on the last day of the period selected
by the relevant Borrower pursuant to the provisions below.  The duration of each such Interest Period
shall be one, two, three or six months as the relevant Borrower may select in
its Notice of Borrowing or Notice of Conversion, in the case of (a) above
or in its Notice of Continuation, in the case of (b) above; provided, however, that:

 

(i)                                     any Interest Period which would
otherwise end after the Termination Date shall end on the Termination Date;

 

(ii)                                  Interest Periods commencing on the
same date for Advances comprising part of the same Borrowing shall be of the
same duration;

 

(iii)                               any Interest Period commencing on
the last Business Day of any calendar month, or any day for which there is no numerically
corresponding day in the applicable subsequent calendar month, shall end on the
last Business Day of the applicable subsequent calendar month; and

 

(iv)                              whenever the last day of any
Interest Period would otherwise occur on a day other than a Business Day, the
last day of such Interest Period shall be extended to occur on the next
succeeding Business Day; provided,
that if such extension would cause the last day of such Interest Period to
occur in the next following calendar month, the last day of such Interest
Period shall occur on the next preceding Business Day.

 

“JPMCB”
has the meaning specified in the caption to this Agreement.

 

“LC Bank”
means Barclays, in its capacity as issuer of any Letter of Credit pursuant to Article III
hereof.

 

“LC Outstandings”
means, for any date of determination, the aggregate maximum amount available to
be drawn under all Letters of Credit outstanding on such date (assuming the
satisfaction of all conditions for drawing enumerated therein).

 

“LC Sublimit”
means, as of any day for the determination thereof, $500,000,000.

 

“Lenders”
means the Banks listed on the signature pages hereof, each other bank or
financial institution that shall become a party hereto pursuant to Section 9.7(a),
and, if and to the extent so provided in Section 3.5(d), the LC Bank.

 

“Letter of
Credit” means a letter of credit issued by the LC Bank pursuant
to Article III, as such letter of credit may from time to time be amended,
modified or extended in accordance with the terms of this Agreement.

 

8

 

“LIBOR Reserve
Percentage” of any Lender for the Interest Period for any
Eurodollar Rate Advance means the reserve percentage applicable during such
Interest Period or such term (or if more than one such percentage shall be so
applicable, the daily average of such percentages for those days in such
Interest Period or such term during which any such percentage shall be so
applicable) under regulations issued from time to time by the Board of
Governors of the Federal Reserve System (or any successor) for determining the
maximum reserve requirement (including, without limitation, any emergency,
supplemental or other marginal reserve requirement) for such Lender with
respect to liabilities or assets consisting of or including Eurocurrency
Liabilities having a term equal to such Interest Period or term, as the case
may be.

 

“Lien”
means any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), or preference, priority or other
security agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement and any Financing Lease having substantially the same economic effect
as any of the foregoing.

 

“Long-Term Debt Designation”
has the meaning specified in Section 2.6(c).

 

“Material
Adverse Effect” means, with respect to any Borrower, a material
adverse effect on (a) the business, operations, property or condition
(financial or otherwise) of such Borrower and its Subsidiaries taken as a
whole, (b) the ability of such Borrower to perform its obligations under
this Agreement, or (c) the validity or enforceability of this Agreement or
the rights or remedies of the Administrative Agent or the Lenders hereunder.

 

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

 

“Material
Subsidiary” means, any Subsidiary of Cinergy which (a) for
the most recent fiscal year of Cinergy accounted for more than 10% of the
consolidated revenues of Cinergy determined in accordance with GAAP or (b) as
of the end of such fiscal year, was the owner of more than 10% of the consolidated
assets of Cinergy determined in accordance with GAAP, all as shown on the
consolidated financial statements of Cinergy for such fiscal year; provided, that, notwithstanding the
foregoing, (i) CG&E, PSI Energy and ULH&P shall each be deemed “Material
Subsidiaries” of Cinergy and (ii) Cinergy Services, Inc. shall not be
deemed a “Material Subsidiary”.

 

“Maximum  Borrowing
Amount” means, (i) in the case of Cinergy, an amount equal
to the Total Commitment then in effect, (ii) in the case of CG&E, an
amount equal to the CG&E Sublimit then in effect, (iii) in the case of
PSI Energy, an amount equal to the PSI Energy Sublimit then in effect and (iv) in
the case of ULH&P, an amount equal to the ULH&P Sublimit then in
effect.

 

 “Moody’s” means Moody’s Investors Service, Inc.
or any successor thereto.

 

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

 

“New Lender”
has the meaning specified in Section 2.17.

 

“Non-Excluded Taxes” has the
meaning specified in Section 2.13(a).

 

9

 

“Non-Recourse Debt” means
Indebtedness of each Borrower or any of their respective Subsidiaries, in
respect of which no recourse may be had by the creditors under such
Indebtedness against such Borrower or such Subsidiary in its individual
capacity or against the assets of such Borrower or such Subsidiary, other than
assets which were purchased, constructed or developed by such Borrower or such
Subsidiary with the proceeds of such Indebtedness.

 

“Non-U.S. Lender” has the
meaning specified in Section 2.13(d).

 

“Note”
means any promissory note evidencing Advances.

 

“Notice of
Borrowing” has the meaning specified in Section 2.2(a).

 

“Notice of
Continuation” shall mean a notice from the Borrower electing the
continuation of Eurodollar Rate Advances in accordance with the provisions of Section 2.7(b).

 

“Notice of
Conversion” shall mean a notice from the Borrower electing the
conversion of Eurodollar Rate Advances to Base Rate Advances or Base Rate
Advances to Eurodollar Rate Advances, in each case, in accordance with the
provisions of Section 2.7(a).

 

“Other Taxes” has the meaning
specified in Section 2.13(b).

 

“Outstanding
Extensions of Credit” means, as of any day for the determination
thereof, (a) the aggregate principal amount of all Advances outstanding on
such day plus (b) the LC
Outstandings on such day plus (c) the
aggregate amount of all Unreimbursed LC Disbursements outstanding on such day.

 

“PBGC”
means the Pension Benefit Guaranty Corporation under Title IV of ERISA, or
any successor thereto.

 

“Person”
means an individual, partnership, corporation (including a business trust),
joint stock company, trust, unincorporated association, joint venture, limited
liability company or other entity, or a government or any political
subdivision, agency or instrumentality thereof.

 

 “Plan” means an employee pension benefit
plan as defined in Section 3(2) of ERISA and in respect of which any
Borrower or any ERISA Affiliate is (or, if such plan were terminated, would
under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of
ERISA.

 

“PSI Energy
First Mortgage Trust Indenture” shall mean the first mortgage
trust indenture, dated as of September 1, 1939 between PSI Energy (formerly
known as Public Service Company or Indiana, Inc. and successor by
consolidation to Public Service Company of Indiana) and LaSalle Bank National
Association (formerly known as LaSalle National Bank Company and successor, as
trustee, to First National Bank of Chicago), as trustee, as amended, modified
or supplemented from time to time, and any successor or replacement mortgage
trust indenture.

 

“PSI Energy
Outstanding Extensions of Credit” means, as of any day for the
determination thereof, (a) the aggregate principal amount of all Advances
made to PSI Energy outstanding on such day plus
(b) the LC Outstandings of PSI Energy on such day plus (c) the aggregate amount of all
Unreimbursed LC Disbursements of PSI Energy outstanding on such day.

 

“PSI Energy
Sublimit”
means $500,000,000.

 

“Preferred Trust
Securities”: means Cinergy’s 6.9% preferred trust securities,
due February 2007, or any other preferred trust securities issued on terms
substantially similar thereto; provided
that the amount of any such preferred trust securities issued and outstanding
until the Termination Date may not exceed $500,000,000 in the aggregate at any
time.

 

“Rating Agencies”
means, collectively, Moody’s and S&P; each, individually, a “Rating Agency”.

 

10

 

“Receivable
Financing Transaction” means any transaction or series of
transactions involving a sale for cash of accounts receivable, without recourse
based upon the collectibility of the receivables sold, by such Borrower or any of
its Subsidiaries to a Special Purpose Subsidiary and a subsequent sale or
pledge of such accounts receivable (or an interest therein) by such Special
Purpose Subsidiary, in each case without any guarantee by such Borrower or any
of its Subsidiaries (other than the Special Purpose Subsidiary).

 

 “Reference Ratings” means, with respect
to each Borrower, the ratings issued or maintained from time to time by the
Rating Agencies in respect of the senior non-credit-enhanced unsecured
long-term debt of such Borrower.

 

“Register”
has the meaning specified in Section 9.7(c).

 

“Removed
Borrower” has the meaning specified in Section 9.1(b).

 

“Required
Lenders” means Lenders having more than 50% of the Commitments;
provided, however, that if the Commitments shall have been terminated, “Required
Lenders” shall mean Lenders holding more than 50% of the then Outstanding
Extensions of Credit.

 

“Requirement of
Law” means, as to any Person, the certificate of incorporation
and by-laws or other organizational or governing documents of such Person, and
any law, treaty, rule or regulation or determination of an arbitrator or a
court or other Governmental Authority, in each case applicable to or binding
upon such Person or any of its property or to which such Person or any of its
property is subject.

 

“Responsible
Officer” means the chief executive officer, president, chief
financial officer, comptroller, vice-president, treasurer or assistant
treasurer of the applicable Person.

 

“Single Employer
Plan” means any Plan which is covered by Title IV of ERISA,
but which is not a Multiemployer Plan.

 

“S&P”
means Standard & Poor’s Ratings Group, or any successor thereto.

 

“Special Purpose
Subsidiary” means any Material Subsidiary of a Borrower created
by a Borrower for the sole purpose of facilitating a Receivable Financing
Transaction; provided, that such
Special Purpose Subsidiary shall cease to be a Special Purpose Subsidiary if at
any time such Special Purpose Subsidiary engages in any business other than
Receivable Financing Transactions and activities directly related thereto.

 

“SPV”
has the meaning specified in Section 9.7(f).

 

“Subsidiary”
means, as to any Person, a corporation, partnership or other entity: (i) of
which shares of stock or other ownership interests having ordinary voting power
(other than stock or such other ownership interests having such power only by
reason of the happening of a contingency) to elect a majority of the board of
directors or other managers of such corporation, partnership or other entity
are at the time owned, directly or indirectly through one or more
intermediaries by such Person and/or (ii) the management of which is
otherwise controlled, directly or indirectly through one or more intermediaries
by such Person.

 

“Termination
Date” means, as to any Lender, September 9, 2010, such
earlier date of termination in whole of the Commitments pursuant to Section 2.4
or 7.1, or such later date of termination as may be in effect pursuant to an
election pursuant to Section 2.18.

 

“Total
Commitment” has the meaning specified in Section 2.1(b).

 

“Type”
has the meaning specified in the definition of “Advance”.

 

“ULH&P First
Mortgage Trust Indenture” shall mean the first mortgage trust
indenture, dated as of February 1, 1949 between ULH&P and The Bank of
New York (successor to Irving

 

11

 

Trust Company), as trustee, as amended, modified or
supplemented from time to time, and any successor or replacement mortgage trust
indenture.

 

“ULH&P
Outstanding Extensions of Credit” means, as of any day for the
determination thereof, (a) the aggregate principal amount of all Advances
made to ULH&P
outstanding on such day plus (b) the
LC Outstandings of ULH&P on such day plus
(c) the aggregate amount of all Unreimbursed LC Disbursements of ULH&P
outstanding on such day.

 

“ULH&P
Sublimit” means $65,000,000, as such amount may be increased in
accordance with Section 2.5(b).

 

“Unreimbursed LC
Disbursement” means the unpaid obligation (or, if the context so
requires, the amount of such obligation) of any Borrower to reimburse the LC
Bank for a payment made by the LC Bank under a Letter of Credit for the account
of such Borrower, but shall not include any portion of such obligation that has
been repaid with the proceeds of, or converted to, Advances hereunder.

 

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

 

SECTION 1.2.  Computation of Time Periods.

 

In this Agreement in the computation of periods of time from a
specified date to a later specified date,
the word “from” means “from and including” and the words “to” and “until” each
means “to but excluding.”

 

SECTION 1.3.  Accounting Terms.

 

All accounting terms not specifically defined herein shall be construed
in accordance with GAAP consistent with those applied in the preparation of the
financial statements referred to in Section 5.1(d).

 

ARTICLE II

AMOUNTS AND TERMS OF THE ADVANCES

 

SECTION 2.1.  The Commitments and Advances.

 

(a)  Each Lender severally agrees, on
the terms and conditions hereinafter set forth, to make Advances to each
Borrower and to participate in the issuance of Letters of Credit (and the LC
Outstandings and Unreimbursed LC Disbursements thereunder) from time to time on
any Business Day during the period from the Effective Date until the
Termination Date in an aggregate amount not to exceed at any time outstanding
the amount set forth opposite such Lender’s name on Schedule 1.1 hereto
or, if such Lender has entered into one or more Assignment and Acceptances, set
forth for such Lender in the Register maintained by the Administrative Agent
pursuant to Section 9.7(c), as such amount may be reduced pursuant to Section 2.4
(such Lender’s “Commitment”).

 

(b)  The sum of the Commitments is
hereinafter referred to as the “Total Commitment”. The Total Commitment shall be in an
initial amount of $2,000,000,000, as the same may be reduced or increased from
time to time in accordance with Section 2.4 or Section 2.17 hereof.

 

(c)  Each Borrowing shall be in an
aggregate amount not less than $3,000,000 or an integral multiple of $1,000,000
in excess thereof and shall consist of Advances of the same Type made on the
same day by the Lenders ratably according to their respective Commitments.  Within the limits and

 

12

 

subject to the
conditions set forth herein, each Borrower may borrow, repay or prepay and
reborrow and request the issuance of Letters of Credit under the Commitments.

 

(d)  Notwithstanding anything contained
in this Agreement to the contrary, at no time shall (i) the Outstanding
Extensions of Credit exceed the Total Commitment as in effect at such time; (ii) the
CG&E Outstanding Extensions of Credit exceed the CG&E Sublimit; (iii) the
PSI Energy Outstanding Extensions of Credit exceed the PSI Energy Sublimit; or (iii) the
ULH&P Outstanding Extensions of Credit exceed the ULH&P Sublimit.

 

SECTION 2.2.  Making the Advances.

 

(a)  Each Borrowing shall be made on
notice given by the relevant Borrower to the Administrative Agent via facsimile
transmission in accordance with Section 9.2 hereof not later than 11:00 A.M.
(New York City time) on the Business Day that is: (i) three Business Days
prior to the Borrowing Date of the proposed Borrowing, in the case of a
Borrowing comprised of Eurodollar Rate Advances, or (ii) the Borrowing
Date of the proposed Borrowing, in the case of a Borrowing comprised of Base
Rate Advances. Each such notice of a Borrowing (a “Notice of Borrowing”)
shall be in substantially the form of Exhibit B hereto, specifying therein
the requested Borrowing Date of such Borrowing, the Type of Advances comprising
such Borrowing, the aggregate amount of such Borrowing, and the Interest Period
to be applicable thereto. Upon receipt of any Notice of Borrowing, the
Administrative Agent shall give to each Lender prompt notice thereof and the
Administrative Agent shall promptly notify each Lender and the Borrower of the
applicable interest rate pursuant to Section 2.8.

 

(b)  Each Lender shall, before 1:00 P.M.
(New York City time) on the Borrowing Date of such Borrowing, make available
for the account of its Applicable Lending Office to the Administrative Agent at
its address referred to in Section 9.2, in immediately available funds,
such Lender’s Commitment Percentage of such Borrowing. After the Administrative
Agent’s receipt of such funds and upon fulfillment of the applicable conditions
set forth in Article IV, the Administrative Agent will make such funds
available to the relevant Borrower at the Administrative Agent’s aforesaid
address or as otherwise directed by the Borrower.

 

(c)  Anything in Section 2.2(a),
above, to the contrary notwithstanding,

 

(i)                                     if any Lender shall notify the
Administrative Agent that the introduction of or any change in or in the
interpretation of any law or regulation makes it unlawful, or that any
central bank or other Governmental Authority asserts that it is unlawful, for
such Lender or its Eurodollar Lending Office to perform its obligations
hereunder to make Eurodollar Rate Advances or to fund or maintain Eurodollar
Rate Advances hereunder, the obligation of such Lender to make, fund or
maintain Eurodollar Rate Advances shall be suspended, and, until such Lender
shall notify the Administrative Agent that the circumstances causing such
suspension no longer exist, (1) each Advance by such Lender shall be a
Base Rate Advance, and (2) Cinergy shall have the right to replace such
Lender by causing such Lender to enter into one or more Assignments and
Acceptances in respect of its entire Commitment, the Advances held by it and
all other amounts owing to it in respect thereof with one or more banks or
other financial institutions selected by Cinergy with the consent of the
Administrative Agent (not to be unreasonably withheld), pursuant to Section 9.7
hereof. Each Lender agrees to enter into any such Assignments and Acceptances
as may be required by this clause (assuming the same are properly and
accurately completed);

 

(ii)                                  if the Administrative Agent shall
have determined in good faith and in its reasonable discretion (which
determination shall be conclusive and binding upon the Borrowers) that, by
reason of circumstances affecting the relevant market, adequate and reasonable
means do

 

13

 

not exist for ascertaining
the Eurodollar Rate for such Interest Period, the right of the Borrowers to
select Eurodollar Rate Advances for such Borrowing or any subsequent Borrowing
shall be suspended until the Administrative Agent shall notify the Borrowers
and the Lenders that the circumstances causing such suspension no longer exist,
and each Advance comprising such Borrowing shall be a Base Rate Advance; and

 

(iii)                               if Lenders having more than 50% of
the Commitments shall, at least one Business Day before the date of any
requested Borrowing, notify the Administrative Agent that the Eurodollar Rate
for Eurodollar Rate Advances comprising such Borrowing will not adequately
reflect the cost to such Lenders of making or funding their respective
Eurodollar Rate Advances for such Borrowing, the right of the Borrowers to
select Eurodollar Rate Advances for such Borrowing or any subsequent Borrowing
shall be suspended until the Administrative Agent shall notify the Borrowers
and the Lenders that the circumstances causing such suspension no longer exist,
and each Advance comprising such Borrowing shall be a Base Rate Advance.

 

(d)  Each Notice of Borrowing shall be
irrevocable and binding on the relevant Borrower. Unless the Administrative
Agent and the relevant Borrower shall have received written notice via
facsimile transmission from a Lender prior to (A) 5:00 P.M. (New York
City time) one Business Day prior to the date of any Eurodollar Rate Advance
Borrowing or (B) 12:00 noon (New York City time) on the date of any Base
Rate Advance Borrowing that such Lender will not make available to the
Administrative Agent such Lender’s ratable portion of such Borrowing, the Administrative
Agent may assume that such Lender has made such portion available to the
Administrative Agent on the date of such Borrowing in accordance with this Section 2.2
and the Administrative Agent may, in reliance upon such assumption, make
available to relevant Borrower on such date a corresponding amount. If and to
the extent that such Lender shall not have so made such ratable portion
available to the Administrative Agent, such Lender and the relevant 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 relevant Borrower until the date such
amount is repaid to the Administrative Agent, at (i) in the case of the
relevant Borrower, the interest rate applicable at the time to Advances
comprising such Borrowing and (ii) in the case of such Lender, the Federal
Funds Rate. If, prior to such time as the relevant Borrower shall have repaid
such amount, such Lender shall repay to the Administrative Agent such
corresponding amount with interest as aforesaid, such amount so repaid shall
constitute such Lender’s Advance as part of such Borrowing for purposes of this
Agreement as if made on the original date of such Borrowing.

 

(e)  The failure of any Lender to make
the Advance to be made by it as part of any Borrowing shall not relieve any
other Lender of its obligation, if any, hereunder to make its Advance on the
date of such Borrowing, but no Lender shall be responsible for the failure of
any other Lender to make the Advance to be made by such other Lender on the
date of any Borrowing.

 

SECTION 2.3.  Facility Fee; Letter of Credit
Risk Participation Fee; Other Fees.

 

(a)  Cinergy agrees to pay to the
Administrative Agent for the account of each Lender a facility fee (the “Facility Fee”) on the
average daily amount of such Lender’s Commitment (whether used or unused), from
the date hereof in the case of each Bank listed on the signature pages hereto
and from the effective date specified in the Assignment and Acceptance pursuant
to which it became a Lender in the case of any other Lender, until the
Termination Date, payable on the basis of the actual number of days elapsed and
a year of 360 days, in arrears on the last Business Day of March, June, September and
December in each year and on the Termination Date, at the rate per annum set forth below as determined by
reference to the Applicable Rating Level for Cinergy:

 

14

 

	
  Applicable

  Rating Level

  	
   

  	
  Facility

  Fee

  	
   

  
	
  Level
  I

  	
   

  	
  0.080

  	
  %

  
	
  Level
  II

  	
   

  	
  0.100

  	
  %

  
	
  Level
  III

  	
   

  	
  0.125

  	
  %

  
	
  Level
  IV

  	
   

  	
  0.150

  	
  %

  
	
  Level
  V

  	
   

  	
  0.200

  	
  %

  

 

; provided that if at any
time Cinergy shall fail to pay such Facility Fee within five days of the date
when such Facility Fee is due, each of CG&E, PSI Energy and ULH&P
severally, but not jointly, agree to pay upon demand to the Administrative
Agent for the account of each Lender the amount of such unpaid Facility Fee
multiplied by the percentage which the Maximum Borrowing Amount applicable to
such Borrower represents of the Total Commitment.

 

(b)  Each Borrower agrees to pay to the
Administrative Agent for the account of each Lender, ratably in accordance with
their respective Commitments, a letter of credit risk participation fee on the
average daily amount of LC Outstandings with respect to Letters of Credit
issued for its account, from the date hereof in the case of each Bank listed on
the signature pages hereto, and from the effective date specified in the
Assignment and Acceptance pursuant to which it became a Lender in the case of
any other Lender, until the Termination Date, payable (on the basis of the
actual number of days elapsed and a year of 360 days) on the last Business day
of March, June, September and December in each year and on the
Termination Date, at a rate per annum equal to the Applicable Margin for
Eurodollar Rate Advances then determined to be in effect for such Borrower plus, during any period from the
occurrence of an Event of Default under Section 7.1(a), to the day when
such Event of Default shall be cured or waived, 2% per annum.

 

(c)  The Borrowers shall pay to the
Administrative Agent, for its own account and for the account of the Lenders
such other fees as have been or may from time to time be agreed between them in
writing.

 

(d)  Any change in the Facility Fee or
letter of credit risk participation fee caused by a change in the Applicable
Rating Level shall take effect at the time such change in the Applicable Rating
Level shall occur.

 

(e)  Each Borrower shall pay to the LC
Bank a fronting fee and such other fees as such Borrower and the LC Bank shall
agree to from time to time in writing.

 

SECTION 2.4.  Optional Reduction of the
Commitments.

 

(a)  Cinergy shall have the right, upon
at least three Business Days’ irrevocable notice to the Administrative Agent,
to terminate in whole or permanently reduce ratably in part the Commitments by
either terminating in whole or in part the Total Commitment as Cinergy may
specify in such notice; provided,
that:

 

(i)                                     each such partial reduction shall
be in the aggregate amount of $10,000,000 or any integral multiple of
$1,000,000 in excess thereof and shall reduce ratably and permanently

 

15

 

the amount then in effect of
(A) the Commitments and (B) the Total Commitment, as specified by
Cinergy ;

 

(ii)                                  any such reduction shall be
accompanied by (i) the prepayment of Advances, together with all interest
thereon accrued to the date of such prepayment or repayment on the amount
prepaid or repaid and, in the case of prepayments of Eurodollar Rate Advances,
any amount payable to the Lenders pursuant to Section 2.15 and/or (ii) in
the case of any LC Outstandings, the deposit in cash in a cash collateral
account established with the Administrative Agent, on terms and conditions
satisfactory to the Administrative Agent and the LC Bank, in each case to the
extent, if any, that the Outstanding Extensions of Credit exceed the amount of
the Total Commitment as proposed to be reduced; and

 

(iii)                               Cinergy shall not have the right
to reduce the Total Commitment to an amount less than the aggregate then
existing LC Outstandings.

 

(b)  CG&E shall have the right,
upon at least three Business Days’ irrevocable notice to the Administrative
Agent, to permanently reduce or terminate the CG&E Sublimit in whole or in
part as CG&E may specify in such notice; provided
that:

 

(i)                                     each such partial reduction shall
be in the aggregate amount of $10,000,000 or any integral multiple of
$1,000,000 in excess thereof;

 

(ii)                                  any such reduction shall be
accompanied by (i) the prepayment of Advances, together with all interest
thereon accrued to the date of such prepayment or repayment on the amount
prepaid or repaid and, in the case of prepayments of Eurodollar Rate Advances,
any amount payable to the Lenders pursuant to Section 2.15 and/or (ii) in
the case of any LC Outstandings, the deposit in cash in a cash collateral
account established with the Administrative Agent, on terms and conditions
satisfactory to the Administrative Agent and the LC Bank, in each case to the
extent, if any, that the CG&E Outstanding Extensions of Credit exceed the
amount of the CG&E Sublimit as proposed to be reduced; and

 

(iii)                               CG&E shall not have the right
to reduce the CG&E Sublimit to an amount less than the aggregate then
existing LC Outstandings with respect to Letters of Credit issued for its
account.

 

(c)  PSI Energy shall have the right,
upon at least three Business Days’ irrevocable notice to the Administrative
Agent, to permanently reduce or terminate the PSI Energy Sublimit in whole or
in part as PSI Energy may specify in such notice; provided that:

 

(i)                                     each such partial reduction shall
be in the aggregate amount of $10,000,000 or any integral multiple of
$1,000,000 in excess thereof;

 

(ii)                                  any such reduction shall be
accompanied by (i) the prepayment of Advances, together with all interest
thereon accrued to the date of such prepayment or repayment on the amount
prepaid or repaid and, in the case of prepayments of Eurodollar Rate Advances,
any amount payable to the Lenders pursuant to Section 2.15 and/or (ii) (ii) in
the case of any LC Outstandings, the deposit in cash in a cash collateral
account established with the Administrative Agent, on terms and conditions satisfactory
to the Administrative Agent and the LC Bank, in each case to the extent, if
any, that the PSI Energy Outstanding Extensions of Credit exceed the amount of
the PSI Energy Sublimit as proposed to be reduced; and

 

16

 

(iii)                               PSI Energy shall not have the
right to reduce the PSI Energy Sublimit to an amount less than the aggregate
then existing LC Outstandings with respect to Letters of Credit issued for its
account.

 

(d)  ULH&P shall have the right,
upon at least three Business Days’ irrevocable notice to the Administrative
Agent, to permanently reduce or terminate the ULH&P Sublimit in whole or in
part as ULH&P may specify in such notice; provided
that:

 

(i)                                     each such partial reduction shall
be in the aggregate amount of $10,000,000 or any integral multiple of
$1,000,000 in excess thereof;

 

(ii)                                  any such reduction shall be
accompanied by (i) the prepayment of Advances, together with all interest
thereon accrued to the date of such prepayment or repayment on the amount
prepaid or repaid and, in the case of prepayments of Eurodollar Rate Advances,
any amount payable to the Lenders pursuant to Section 2.15 and/or (ii) (ii) in
the case of any LC Outstandings, the deposit in cash in a cash collateral
account established with the Administrative Agent, on terms and conditions
satisfactory to the Administrative Agent and the LC Bank, in each case to the
extent, if any, that the ULH&P Outstanding Extensions of Credit exceed the
amount of the ULH&P Sublimit as proposed to be reduced; and

 

(iii)                               ULH&P shall not have the right
to reduce the ULH&P Sublimit to an amount less than the aggregate then
existing LC Outstandings with respect to Letters of Credit issued for its
account.

 

SECTION 2.5.  Mandatory Reduction of CG&E Sublimit;
Increase in ULH&P Sublimit.

 

(a)  The CG&E Sublimit shall, upon
the disposition by CG&E or its Subsidiaries of all or substantially all of
the generation assets of CG&E and its Subsidiaries, other than to a direct
or indirect wholly-owned Subsidiary of CG&E, be permanently reduced to
$250,000,000. Such reduction shall be accompanied by (i) the prepayment of
Advances, together with all interest thereon accrued to the date of such
prepayment or repayment on the amount prepaid or repaid and, in the case of
prepayments of Eurodollar Rate Advances, any amount payable to the Lenders
pursuant to Section 2.15, and/or (ii) the deposit in cash in a cash
collateral account established with the Administrative Agent, on terms and
conditions satisfactory to the Administrative Agent and the LC Bank, in each
case to the extent, if any, that the CG&E Outstanding Extensions of Credit
exceed the amount of the CG&E Sublimit, as reduced.  Notwithstanding the above, the CG&E
Sublimit shall not be reduced if the Consolidated Net Worth of CG&E
following such disposition of generation assets is at least $1,000,000,000.

 

(b)  The ULH&P Sublimit may be increased to
$100,000,000 upon receipt by the Administrative Agent of a notice from a
Responsible Officer of ULH&P certifying that the transactions described in Schedule 2.5(b) have
been consummated.

 

SECTION 2.6.  Repayment of Advances; Prepayment.

 

(a)  Each Borrower shall repay the
outstanding principal amount of all Advances made to it no later than the
Termination Date.

 

(b)  Each Borrower may upon notice
given by such Borrower to the Administrative Agent via facsimile transmission
in accordance with Section 9.2 hereof not later than 11:00 A.M. (New
York City time) on the Business Day that is: (i) three Business Days prior
to the proposed prepayment of Eurodollar Rate Advances, or (ii) one
Business Day prior to the proposed prepayment of Base Rate Advances, stating
the proposed date and aggregate principal amount of the prepayment and if such
notice is given such 

 

17

 

Borrower shall,
prepay the outstanding principal amounts of the Advances made as part of the
same Borrowing in whole or ratably in part, together with accrued interest to
the date of such prepayment on the principal amount prepaid; provided, however,
that (A) each partial prepayment shall be in an aggregate principal amount
not less than $3,000,000 or any integral multiple of $1,000,000 in excess
thereof and (B) in the case of any such prepayment of a Eurodollar Rate
Advance, such Borrower shall be obligated to reimburse the Lenders in respect
thereof pursuant to Section 2.14 on the date of such prepayment.

 

(c)  Until such time as any Borrower
designates all or a portion of its Maximum Borrowing Amount as “long-term”
pursuant to a notice (each, a “Long-Term Debt Designation”)
substantially in the form of Exhibit F hereto, each Borrower designates
that Advances made to such Borrower which have not been designated as long term
shall be repayable within 365 days from the date of the Advance.  Any such Long-Term Debt Designation may
designate any outstanding Advance made to such Borrower as a long-term loan,
repayable more than 365 days from the date of the Advance but no later than the
Termination Date.  Designation of any
outstanding Advance as long-term shall not affect the Type of such Advance or
the Interest Rate Period applicable thereto.

 

SECTION 2.7.  Conversion and Continuation
Options.

 

(a)  The Borrower may elect from time
to time to convert Eurodollar Rate Advances to Base Rate Advances by giving the
Administrative Agent prior irrevocable notice of such election no later than
11:00 A.M., New York City time, on the Business Day of the proposed
conversion date, provided that
any such conversion of Eurodollar Rate Advances may only be made on the last
day of an Interest Period with respect thereto. 
The Borrower may elect from time to time to convert Base Rate Advances
to Eurodollar Rate Advances by giving the Administrative Agent prior
irrevocable notice of such election no later than 11:00 A.M., New York
City time, three Business Days prior to the proposed conversion date (which
notice shall specify the length of the initial Interest Period therefor), provided that no Base Rate Advance may be
converted into a Eurodollar Rate Advance when any Event of Default has occurred
and is continuing and the Administrative Agent or the Required Lenders have
determined in its or their sole discretion not to permit such conversions.  Upon receipt of any such notice the
Administrative Agent shall promptly notify each Lender thereof.

 

(b)  Any Eurodollar Rate Advance may be
continued as such upon the expiration of the then current Interest Period with
respect thereto by the Borrower giving irrevocable notice to the Administrative
Agent not later than 11:00 A.M., New York City time, three Business Days
prior to the last day of the then current Interest Period, of the length of the
next Interest Period to be applicable to such Advances, provided that no Eurodollar Rate Advance
may be continued as such when any Event of Default has occurred and is
continuing and the Administrative Agent has or the Required Lenders have
determined in its or their sole discretion not to permit such
continuations.  Upon receipt of any such
notice the Administrative Agent shall promptly notify each Lender thereof.

 

SECTION 2.8.  Interest on Advances.

 

Each Borrower shall pay interest on the unpaid principal amount of each
Advance made to it by each Lender under the Total Commitment from the date such
Advance is made until such principal amount shall be paid in full, at the
following rates per annum:

 

(a)  Base
Rate Advances.
If such Advance is a Base Rate Advance, a rate per
annum equal at all times to the sum of (i) the Base Rate in
effect from time to time and (ii) the Applicable Margin, payable on the
last Business Day of each March, June, September and December to
occur while such Advance is outstanding and on the date such Base Rate Advance
shall be paid in full; provided, however, that any amount of principal or
interest which is not paid when due (whether at stated maturity, by
acceleration or 

 

18

 

otherwise) shall
bear interest, from the date on which such amount is due until such amount is
paid in full, payable on demand, at a rate per
annum equal at all times to 2% per
annum plus the Base Rate in effect from time to time.

 

(b)  Eurodollar
Rate Advances.
If such Advance is a Eurodollar Rate Advance, a rate per annum equal at all times during the Interest Period for
such Advance to the sum of (i) the Eurodollar Rate for such Interest
Period plus (ii) the Applicable Margin, payable on the last day of such
Interest Period, and also, in the case of any Interest Period of six months’
duration, on that day of the third month of such Interest Period which
corresponds with the first day of such Interest Period (or, if any such month
does not have a corresponding day, then on the last day of such third month); provided, however,
that any amount of principal or interest which is not paid when due (whether at
stated maturity, by acceleration or otherwise) shall bear interest, from the
date on which such amount is due until such amount is paid in full, payable on
demand, at a rate per annum equal
at all times to 2% per annum
above the rate per annum required
to be paid on such Advance immediately prior to the date on which such amount
became due.

 

SECTION 2.9.  Additional Interest on Eurodollar
Rate Advances.

 

Each Borrower shall pay to each Lender, so long as such Lender shall be
required under regulations of the Board of Governors of the Federal Reserve
System to maintain reserves with respect to liabilities or assets consisting of
or including Eurocurrency Liabilities, additional interest on the unpaid
principal amount of each Eurodollar Rate Advance made to it by such Lender,
from the date of such Advance until such principal amount is paid in full, at
an interest rate per annum equal
at all times to the difference obtained by subtracting
(a) the Eurodollar Rate for the Interest Period for such Eurodollar Rate
Advance from (b) the rate obtained by dividing such Eurodollar Rate by a
percentage equal to 100% minus
the LIBOR Reserve Percentage of such Lender for such Interest Period or such
term, as the case may be, payable on each date on which interest is payable on
such Advance. Such additional interest shall be determined by such Lender and
notified to such Borrower through the Administrative Agent.

 

SECTION 2.10.  Interest Rate Determination.

 

The Administrative Agent shall give prompt notice to the Borrowers and
the Lenders of the applicable interest rate determined by the Administrative
Agent for purposes of Section 2.8(a) or Section 2.8(b).

 

SECTION 2.11.  Increased Costs; Capital Adequacy.

 

(a)  If, due to either (i) the
introduction of or any change in or in the interpretation of any law or
regulation after the date hereof, or (ii) the compliance with any
guideline or request from any central bank or other Governmental Authority
(whether or not having the force of law) issued or made after the date hereof,
there shall be reasonably incurred any increase in (A) the cost to any
Lender of agreeing to make or making, funding or maintaining Eurodollar Rate
Advances, or of participating in the issuance, maintenance or funding of any
Letter of Credit or any Unreimbursed LC Disbursement, or (B) the cost to
the LC Bank of issuing or maintaining any Letter of Credit or any Unreimbursed
LC Disbursement, then the relevant Borrower shall from time to time, upon
demand by such Lender or the LC Bank, as the case may be (with a copy of such
demand to the Administrative Agent), pay to the Administrative Agent for the
account of such Lender or the LC Bank, as the case may be, additional amounts
sufficient to compensate such Lender or the LC Bank, as the case may be, for
such increased cost.

 

(b)  If any Lender or the LC Bank
determines that (i) compliance with any law or regulation or any guideline
or request from any central bank or other Governmental Authority (whether or
not having the force of law) affects or would affect the amount of capital
required or expected to be maintained by such Lender, any Person controlling
such Lender or the LC Bank, whether directly, or indirectly as a

 

19

 

result of
commitments of any such Person controlling such Lender or the LC Bank (but
without duplication), and (ii) the amount of such capital is increased by
or based upon (A) the existence of such Lender’s or the LC Bank’s
commitment to lend or issue or participate in any Letter of Credit hereunder,
or (B) the participation in or issuance or maintenance of any Letter of
Credit or Advance or (C) other similar such commitments hereunder, then,
upon demand by such Lender, such Person controlling such Lender or the LC Bank,
the relevant Borrower shall immediately pay to the Administrative Agent for the
account of such Lender or the LC Bank from time to time as specified by such
Lender or the LC Bank additional amounts sufficient to compensate such Lender,
such Person controlling such Lender or the LC Bank in the light of such
circumstances, to the extent that such Lender, such Person controlling such
Lender or the LC Bank reasonably determines such increase in capital to be
allocable to the transactions contemplated hereby.

 

(c)  Each Borrower’s obligations under
this Section 2.11 shall survive the repayment of all amounts owing to the
Lenders, the LC Bank and the Administrative Agent under the Financing Documents
and the termination of the Commitments.

 

SECTION 2.12.  Payments and Computations.

 

(a)  Each Borrower shall make each
payment hereunder not later than 11:00 A.M. (New York City time) on the
day when due in U.S. dollars and without offset or counterclaim to the
Administrative Agent at its address referred to in Section 9.2 in same day
funds, and, in the case of a payment made to the Administrative Agent for the
account of the Lenders, such payment shall be deemed to have been received by
the Lenders upon receipt thereof by the Administrative Agent. The Administrative
Agent will promptly thereafter cause to be distributed like funds to the
Lenders entitled thereto for the account of their respective Applicable Lending
Offices, in each case to be applied in accordance with the terms of this
Agreement.

 

(b)  All computations of interest based
on the Base Rate (when based on the prime rate) shall be made by the
Administrative Agent on the basis of a year of 365 or 366 days, as the case may
be, and all computations of interest based on the Eurodollar Rate or Federal
Funds Rate (including the Base Rate when based on the Federal Funds Rate) shall
be made by the Administrative Agent, and all computations of interest pursuant
to Section 2.9 shall be made by a Lender, on the basis of a year of 360
days, in each case for the actual number of days (including the first day but
excluding the last day) occurring in the period for which such interest is
payable. Each determination by the Administrative Agent (or, in the case of Section 2.9,
by a Lender) of an interest rate hereunder shall be conclusive and binding for
all purposes, absent manifest error.

 

(c)  Whenever any payment hereunder
shall be stated to be due on a day other than a Business Day, such payment
shall be made on the next succeeding Business Day, and such extension of time
shall in such case be included in the computation of payment of interest or any
fee payable or contemplated hereunder, as the case may be; provided, however,
if such extension would cause payment of interest on or principal of Eurodollar
Rate Advances to be made in the next following calendar month, such payment
shall be made on the next preceding Business Day.

 

(d)  Unless the Administrative Agent
shall have received notice from a Borrower prior to the date on which any
payment is due to the Lenders hereunder that such Borrower will not make such
payment in full, the Administrative Agent may assume that such 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 Lender on such due date an amount equal to the amount then
due such Lender. If and to the extent such Borrower shall not have so made such
payment in full to the Administrative Agent, each Lender shall repay to the
Administrative Agent forthwith on demand such amount distributed to such Lender
together with interest thereon, for each day from the date such amount

 

20

 

is distributed to
such Lender until the date such Lender repays such amount to the Administrative
Agent, at the Federal Funds Rate.

 

SECTION 2.13.  Taxes.

 

(a)  Any and all payments by the
Borrowers hereunder shall be made, in accordance with Section 2.12, free
and clear of, and without deduction or withholding for or on account of, any
present or future income, stamp or other taxes, levies, imposts, duties,
charges, fees, deductions or withholdings, now or hereafter imposed, levied,
collected, withheld or assessed by any Governmental Authority, excluding net
income taxes, taxes on overall capital and franchise or capital taxes (imposed
in lieu of net income taxes) imposed on the Administrative Agent or any Lender
as a result of a present or former connection between the Administrative Agent
or such Lender and the jurisdiction of the Governmental Authority imposing such
tax or any political subdivision or taxing authority thereof or therein (other
than any such connection arising solely from the Administrative Agent or such
Lender having executed, delivered or performed its obligations or received a
payment under, or enforced, this Agreement). 
If any such non-excluded taxes, levies, imposts, duties, charges, fees,
deductions or withholdings (“Non-Excluded Taxes”) or Other Taxes (as defined below)
are required to be withheld from any amounts payable to the Administrative
Agent or any Lender hereunder, the amounts so payable to the Administrative
Agent or such Lender shall be increased to the extent necessary to yield to the
Administrative Agent or such Lender (after payment of all Non-Excluded Taxes
and Other Taxes) interest or any such other amounts payable hereunder at the
rates or in the amounts specified in this Agreement, provided,
however, that no Borrower shall be
required to increase any such amounts payable to any Lender with respect to any
Non-Excluded Taxes (i) that are attributable to such Lender’s failure to
comply with the requirements of paragraph (d) or (e) of this Section 2.13
at all times during the continuance of this agreement or (ii) that are
United States withholding taxes imposed on amounts payable to such Lender at
the time such Lender becomes a party to this Agreement, except to the extent
that such Lender’s assignor (if any) was entitled, at the time of assignment,
to receive additional amounts from such Borrower with respect to such
Non-Excluded Taxes pursuant to this paragraph.

 

(b)  In addition, each Borrower agrees
to pay any and all present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies arising from any payment
made hereunder or from the execution, delivery or enforcement of, or otherwise
with respect to, this Agreement (“Other Taxes”).

 

(c)  Whenever any Non-Excluded Taxes or
Other Taxes are payable by a Borrower, as promptly as possible thereafter such
Borrower shall send to the Administrative Agent for its own account or for the
account of the relevant Lender, as the case may be, a certified copy of an
original official receipt received by such Borrower showing payment thereof.  If such Borrower fails to pay any
Non-Excluded Taxes or Other Taxes when due to the appropriate taxing authority
or fails to remit to the Administrative Agent the required receipts or other
required documentary evidence, such Borrower shall indemnify the Administrative
Agent and the Lenders for any incremental taxes, interest or penalties that may
become payable by the Administrative Agent or any Lender as a result of any
such failure; provided no
Borrower shall be liable hereunder for any incremental taxes, interest or
penalties resulting from the failure to pay when due any Non-Excluded Taxes or
Other Taxes imposed directly on the Administrative Agent or any Lender if such
Borrower shall not have received written notice at least five Business Days prior
to the due date thereof.

 

(d)  Each Lender (or Transferee) that
is not a “U.S. Person” as defined in Section 7701(a)(30) of the Code (a “Non-U.S. Lender”)
shall deliver to the Borrowers and the Administrative Agent (or, in the case of
a Participant, to the Lender from which the related participation shall have
been purchased) two copies of either U.S. Internal Revenue Service Form W-8BEN
or Form W-8ECI, or, in the case of a Non-U.S. Lender claiming exemption
from U.S. federal withholding tax under Section 871(h) or 881(c)

 

21

 

of the Code with
respect to payments of “portfolio interest”, a statement substantially in the
form of Exhibit H and a Form W-8BEN, or any subsequent versions
thereof or successors thereto, properly completed and duly executed by such Non-U.S.
Lender claiming complete exemption from, or a reduced rate of, U.S. federal
withholding tax on all payments by the Borrowers under this Agreement.  Such forms shall be delivered by each Non-U.S.
Lender on or before the date it becomes a party to this Agreement (or, in the
case of any Participant, on or before the date such Participant purchases the
related participation).  In addition,
each Non-U.S. Lender shall deliver such forms promptly upon the obsolescence or
invalidity of any form previously delivered by such Non-U.S. Lender.  Each Non-U.S. Lender shall promptly notify
the Borrowers at any time it determines that it is no longer in a position to
provide any previously delivered certificate to the Borrowers (or any other
form of certification adopted by the U.S. taxing authorities for such
purpose).  Notwithstanding any other
provision of this paragraph, a Non-U.S. Lender shall not be required to deliver
any form pursuant to this paragraph that such Non-U.S. Lender is not legally
able to deliver.

 

(e)  A Lender that is entitled to an
exemption from or reduction of non-U.S. withholding tax under the law of the
jurisdiction in which any Borrower is located, or any treaty to which such
jurisdiction is a party, with respect to payments under this Agreement shall
deliver to such Borrower (with a copy to the Administrative Agent), at the time
or times prescribed by applicable law or reasonably requested by such Borrower,
such properly completed and executed documentation prescribed by applicable law
as will permit such payments to be made without withholding or at a reduced
rate, provided that such Lender
is legally entitled to complete, execute and deliver such documentation and in
such Lender’s judgment such completion, execution or submission would not
materially prejudice the legal position of such Lender.

 

(f)  The agreements in this Section 2.13
shall survive the termination of this Agreement and the payment of the Advances
and all other amounts payable hereunder. 
The Lenders and the Administrative Agent use commercially reasonable
efforts to avoid or mitigate any tax, duty or charge for which the Borrower may
be liable under this Section 2.13.

 

SECTION 2.14.  Sharing of Payments, Etc.

 

If any Lender shall obtain any payment (whether voluntary, involuntary,
through the exercise of any right of set-off or otherwise) on account of
principal or interest in respect of Advances owing to it or on account of any
fee, expense, indemnification or other obligation payable by any Borrower to
such Lender hereunder (other than pursuant to Sections 2.2(c)(i), 2.9,
2.11, 2.13, 2.16 and 9.7) and the ratio of the amount of such payment (a “non-pro rata payment”)
to the total amount of such interest, principal, fee, expense, indemnification
or other obligation then payable to it shall exceed the ratio of the amount of
the payment substantially coincidentally received by any other Lender on
account of principal or interest, in respect of such other Lender’s Advances or
such fee, expense, indemnification or other obligation to the total amount of
such interest, principal, fee, expense, indemnification or other obligation
then payable to such other Lender (a Lender being entitled to assume, in the
absence of knowledge to the contrary, that a payment received from the
Administrative Agent pursuant to Section 2.12(a) is not a non-pro rata payment), such Lender shall
forthwith purchase from each such other Lender such participation or
participations in the right of each such other Lender to receive such
principal, interest, fee, expense, indemnification or other obligation as shall
be necessary to cause such purchasing Lender to share such non-pro rata payment ratably (relative to the
amounts of such principal, interest, fee, expense, indemnification or other
obligation payable at the date of the obtaining of such non-pro rata payment to such Lender and each
such other Lender, respectively, unless the relevant Lenders shall agree as to
another basis for sharing), provided,
however, that if all or any
portion of such excess payment is thereafter recovered from such purchasing
Lender, such purchase from each Lender shall be rescinded and each such Lender
shall repay to the purchasing Lender the purchase price to the extent of such recovery
together with an amount equal to such Lender’s ratable share (according to the
proportion of

 

22

 

(a) the amount of such Lender’s required
repayment to (b) the total amount so recovered from the purchasing Lender)
of any interest or other amount paid or payable by the purchasing Lender in
respect of the total amount so recovered. Each Borrower agrees that any Lender
so purchasing a participation from another Lender pursuant to this Section 2.14
may, to the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off) with respect to such participation as fully as
if such Lender were the direct creditor of such Borrower in the amount of such
participation.

 

SECTION 2.15.  Funding Indemnity.

 

Each Borrower agrees to indemnify and hold harmless the Administrative
Agent and the Lenders from any loss or expense which they or any of them may
sustain or incur as a result of:

 

(a)  the failure of such Borrower to
make a Borrowing or a conversion into or continuation of Eurodollar Rate
Advances after having notified the Administrative Agent of its intention to do
so in accordance with Section 2.2 or 2.7, as applicable (whether by reason
of such Borrower’s election not to proceed with, or the non-fulfillment of any
applicable condition precedent to, such Borrowing);

 

(b)  the failure by such Borrower to
prepay any Advance or make any conversion from Eurodollar Rate Advances after
giving notice of its intention to do so pursuant to Section 2.6(b) or
2.7(a), as applicable;

 

(c)  the repayment or prepayment of any
Advance in whole or in part by such Borrower other than (i) on the last
day of the Interest Period applicable thereto, in the case of a Eurodollar Rate
Advance or (ii) on the date specified in a notice given in accordance with
Section 2.6(b) in the case of any Advance; or

 

(d)  the failure by such Borrower to
pay the principal of or interest on any Advance when due (whether at stated
maturity, upon acceleration or otherwise), including but not limited to any
such loss or expense arising from interest, fees or other amounts payable by
the Administrative Agent or any of the Lenders to lenders of funds obtained by
them in order to make and maintain the Advances hereunder.

 

SECTION 2.16.  Notice of Amounts Payable;
Mitigation Obligations; Replacement of Lenders.

 

(a)  In the event that the LC Bank or
any Lender becomes aware that any amounts are or will be owed to it pursuant to
Section 2.11, 2.13, or 2.15, then it shall promptly notify the relevant
Borrower thereof and, as soon as possible thereafter, such Lender shall submit
such Borrower a certificate indicating the amount owing to it and the
calculation thereof.  The amounts set
forth in such certificate shall be prima facie evidence of the obligations of
the Company hereunder; provided, however, that the failure of the Company to pay any amount
owing to any Lender pursuant to subsection 2.11, 2.13 or 2.15 shall not be
deemed to constitute a Default or an Event of Default hereunder to the extent
that the relevant Borrower is contesting in good faith its obligation to pay
such amount by ongoing discussions diligently pursued with such Lender or by
appropriate proceedings.  The Borrowers
shall not be required to compensate a Lender pursuant to Section 2.11,
2.13, or 2.15 suffered more than 180 days prior to the date that such Lender
notifies the relevant Borrower of the circumstances giving rise to such
additional amount owed and of such Lender’s intention to claim compensation
therefor (except that, if the circumstance giving rise to such additional
amount is retroactive, then the 180-day period referred to above shall be
extended to include the period of retroactive effect thereof).

 

(b)  If any Lender requests
compensation under Section 2.11, or requires any Borrower to pay any
additional amount to any Lender or any Governmental Authority for the account
of any Lender pursuant to Section 2.13, then such Lender shall use
commercially reasonable efforts to designate a different

 

23

 

lending office
for funding or booking its Advances hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if, in
the judgment of such Lender, such designation or assignment (i) would
eliminate or reduce amounts payable pursuant to Section 2.11 or 2.13,
as the case may be, in the future and (ii) would not subject such Lender
to any unreimbursed cost or expense and would not otherwise be disadvantageous
to such Lender.  Each Borrower hereby
agrees to pay all reasonable documented costs and expenses incurred by any
Lender in connection with any such designation or assignment.

 

(c)  If any Lender shall (i) fail
to repay within five Business Days of the date of the requested Advance any
amounts owing by such Lender pursuant to Section 2.2(d), (ii) make
any claim for compensation pursuant to Section 2.11 or 2.13 hereunder, or (iii) decline
to consent to any waiver or amendment of, or departure from, the terms of this
Agreement described in the first proviso to Section 9.1 (any such Lender
described in clause (i), (ii) or (iii) being herein referred to
as an “Affected Lender”),
such Borrower shall have the right to replace such Affected Lender by causing
such Affected Lender to enter into one or more Assignments and Acceptances (the
terms of which shall be reasonably acceptable to such Affected Lender) in
respect of its entire Commitment, the Advances held by it and all other amounts
owing to it in respect thereof (including pursuant to Section 2.15, unless
paid by such Borrower directly) with one or more banks or other financial
institutions selected by such Borrower with the consent of the Administrative
Agent (not to be unreasonably withheld) and the LC Bank (which consent may be
granted or withheld in the sole discretion of the LC Bank).  The effective date of any such Assignment and
Acceptance shall be such date as may be selected by such Borrower and the
relevant assignee(s), and all other matters relating to such Assignment and
Acceptance shall be governed by Section 9.7 hereof.  Each Lender agrees to enter into any such
Assignments and Acceptances as may be required by this Section (assuming
the same are properly and accurately completed) in the event such Lender
becomes an Affected Lender.

 

SECTION 2.17.  Total Commitment Increase.

 

Cinergy may, at any time by written notice to the Administrative Agent,
propose an increase in the Total Commitment (each such proposed increase being
a “Commitment Increase”) either by
having a Lender increase its Commitment then in effect (each an “Increasing Lender”) or by adding as
a Lender with a new Commitment a Person which is not then a Lender hereunder
(each a “New Lender”), subject, in the
case of a New Lender to the consent of the Administrative Agent (which consent
shall not be unreasonably withheld or delayed) and the LC Bank (which consent
may be granted or withheld in the sole discretion of the LC Bank), which notice
shall specify the name of each Increasing Lender and/or New Lender, as
applicable, the amount of the Commitment Increase and the portion thereof being assumed by each such Increasing Lender or
New Lender, and the date on which such Commitment Increase is to be effective
(the “Commitment Increase Effective Date”)
(which shall be a Business Day at least three Business Days after delivery of
such notice and 30 days prior to the Termination Date); provided, that:

 

(a)                                  the minimum amount of the increase
of the Commitment of any Increasing Lender, and the minimum amount of the
Commitment of any New Lender, as part of any Commitment Increase shall be
$5,000,000 or an integral multiple of $1,000,000 in excess thereof;

 

(b)                                 immediately after giving effect to
any Commitment Increase, the Total Commitment hereunder shall not exceed
$2,500,000,000;

 

(c)                                  no Default or Event of Default
shall have occurred and be continuing on the relevant Commitment Increase Date
or shall result from any Commitment Increase;

 

24

 

(d)                                 the Administrative Agent shall
have received (i) a copy of the resolutions, in form and substance
satisfactory to the Administrative Agent, of the Board of Directors or the
Executive Committee of the Board of Directors of Cinergy authorizing the
borrowings contemplated pursuant to such increase, certified by the Secretary
or an Assistant Secretary of Cinergy and (ii) from any New Lender, any
administrative information reasonably requested from the Administrative Agent;
and

 

(e)                                  as of any Commitment Increase
Effect Date the representations and warranties contained in Section 5.1
are true and correct in all material respects, as if made on and as of such
date (or, if any such representation or warranty is expressly stated to have
been made as of a specific date, as of such specific date);

 

Each Commitment Increase (and the increase of the Commitment of each
Increasing Lender and/or the new Commitment of each New Lender, as applicable,
resulting therefrom) shall become effective as of the relevant Commitment
Increase Date upon receipt by the Administrative Agent, on or prior to 11:00 a.m.,
New York City time, on such Commitment Increase Date, of (A) a certificate
of a duly authorized officer of Cinergy stating that the conditions with
respect to such Commitment Increase under this Section 2.17 have been
satisfied and (B) an agreement, in form and substance reasonably
satisfactory to Cinergy and the Administrative Agent, pursuant to which,
effective as of such Commitment Increase Date, the Commitment of each such
Increasing Lender shall be increased and/or each such New Lender shall
undertake a Commitment, duly executed by such Increasing Lender or New Lender,
as the case may be, and the Borrowers and acknowledged by each Person for whom
consent is required.  Upon the Administrative
Agent’s receipt of a fully executed agreement from each Increasing Lender
and/or New Lender referred to in clause (B) above, together with the
certificate referred to in clause (A) above, the Administrative Agent
shall record the information contained in each such agreement and give prompt
notice of the relevant Commitment Increase to the Borrowers and the Lenders
(including, if applicable, each New Lender). 
On each Commitment Increase Date, in the event Advances are then
outstanding, (i) each relevant Increasing Lender and New Lender shall make
available to the Administrative Agent such amounts in immediately available
funds as such Administrative Agent shall determine, for the benefit of the
other relevant Lenders, as being required in order to cause, after giving
effect to such increase and the application of such amounts to make payments to
such other relevant Lenders, the Advances to be held ratably by all Lenders in
accordance with their respective Commitments, (ii) the Borrowers shall be
deemed to have prepaid and reborrowed all outstanding Advances as of such
Commitment Increase Date (with such borrowing to consist of the Loans, with
related Interest Periods if applicable, specified in a notice delivered by the
applicable Borrower in accordance with the requirements hereof and (iii) Cinergy
shall pay to the relevant Lenders the amounts, if any, payable under Section 2.15
as a result of such prepayment. 
Notwithstanding the foregoing, no Lender shall be under any obligation
to increase the amount of its Commitment, and each Lender may, in its sole
discretion, decline a proposition to increase its Commitment.

 

SECTION 2.18.  Extension of Termination Date.

 

On two occasions, not more than 60 days and
not less than 45 days, prior to each anniversary of the Effective Date prior to
and including the Termination Date then in effect, the Borrower may by written
notice to the Administrative Agent request that the Termination Date be
extended for an additional one-year period. 
Each Lender may, in its sole discretion, agree or decline the requested
extension.  The Termination Date as to the Commitment of each consenting
Lender shall be extended for an additional one-year period as of the date of
such anniversary of the Effective Date, subject to (a) the consent of the
Required Lenders to each such extension request and (b) the following
statements made by each Borrower to the extent applicable to it shall be true
and correct as of the date of such request (and the giving of the applicable
notice shall constitute a representation and warranty that such statements are
true and correct as of such date):  (i) no
Default or Event of Default has occurred and is continuing and (ii) the

 

25

 

representations and warranties contained in Section 5.1 shall be
true and correct in all material respects. 
The Borrower shall be permitted to replace any non-consenting Lender
with a bank or financial institution acceptable to the Administrative Agent and
the LC Bank; provided that after giving effect to any extension of the Termination
Date, the outstanding Extensions of Credit shall not exceed the Total
Commitment then in effect.

 

ARTICLE III

LETTERS OF CREDIT

 

SECTION 3.1.  LC Bank.

 

(a)  Subject to the terms and
conditions hereof, each Borrower may from time to time request Barclays, as LC
Bank, to issue one or more Letters of Credit hereunder for the account of the
requesting Borrower. Any such request by any Borrower shall be notified to the
Administrative Agent at least two Business Days prior to the date upon which
such Borrower proposes that the LC Bank issue such Letter of Credit. At no
time, as a result of the issuance of any Letter of Credit hereunder, shall (i) the
aggregate face amount of all Letters of Credit outstanding exceed the LC
Sublimit then in effect, (ii) the Outstanding Extensions of Credit exceed
the Total Commitment then in effect, (iii) the CG&E Outstanding
Extensions of Credit exceed the CG&E Sublimit, (iv) the PSI Energy
Outstanding Extensions of Credit exceed the PSI Sublimit then in effect or (v) the
ULH&P Outstanding Extensions of Credit exceed the ULH&P Sublimit then
in effect.

 

SECTION 3.2.  Letters of Credit.

 

Each Letter of Credit shall be issued (or the stated maturity thereof
extended or terms thereof modified or amended) on not less than two Business
Days’ prior written notice thereof to the Administrative Agent (which shall
promptly distribute copies thereof to the Lenders) and the LC Bank. Each such
notice (a “Request for
Issuance”) shall specify (a) the date (which shall be a
Business Day) of issuance of such Letter of Credit (or the date of
effectiveness of such extension, modification or amendment) and the stated
expiry date thereof (which shall not be later than (i) the Termination
Date, in the case of any Letter of Credit issued during the period from the
Effective Date until the date that is the fourth anniversary thereof and (ii) one
year from the date of issuance of such Letter of Credit, in the case of any
Letter of Credit issued after the date which is the fourth anniversary of the
Effective Date; provided that no
Letter of Credit issued on or after the date which is 90 days prior to the
Termination Date shall have a stated expiry date which is later than the
Termination Date), (b) the proposed stated amount of such Letter of Credit
and (c) such other information as shall demonstrate compliance of such
Letter of Credit with the requirements specified therefor in this Agreement.
Each Request for Issuance shall be irrevocable unless modified or rescinded by
the relevant Borrower not less than two days prior to the proposed date of
issuance (or effectiveness) specified therein. If the LC Bank shall have
approved the form of such Letter of Credit (or such extension, modification or
amendment thereof), the LC Bank shall not later than 11:00 A.M. (New York
City time) on the proposed date specified in such Request for Issuance, and
upon fulfillment of the applicable conditions precedent and the other
requirements set forth herein and as otherwise agreed to between the LC Bank
and the relevant Borrower, issue (or extend, amend or modify) such Letter of
Credit and provide notice and a copy thereof to the Administrative Agent. The
Administrative Agent shall furnish (x) to each Lender, a copy of such notice
and (y) to each Lender that may so request, a copy of such Letter of
Credit.

 

SECTION 3.3.  Reimbursement on Demand.

 

Subject to the provisions of Section 3.4 hereof, each Borrower
hereby agrees to pay (whether with the proceeds of Advances made pursuant to
this Agreement or otherwise) to the LC Bank on demand (a) on and after
each date on which the LC Bank shall pay any amount under any Letter of Credit
issued for its account a sum equal to such amount so paid (which sum shall
constitute a demand loan from the

 

26

 

LC Bank to such Borrower from the date of such
payment by the LC Bank until so paid by such Borrower), plus (b) interest
on any amount remaining unpaid by such Borrower to the LC Bank under clause (a),
above, from the date such amount becomes payable on demand until payment in
full, at a rate per annum which is equal to 2% plus the then applicable Base
Rate until paid in full.

 

SECTION 3.4.  Advances for Unreimbursed LC
Disbursements.

 

If the LC Bank shall make any payment under any Letter of Credit and if
the conditions precedent set forth in Section 4.2 of this Agreement have
been satisfied as of the date of such honor, then, each Lender’s payment made
to the LC Bank pursuant to Section 3.5 hereof in respect of such
Unreimbursed LC Disbursement shall be deemed to constitute a Base Rate Advance
made for the account of such Borrower by such Lender.

 

SECTION 3.5.  Participation; Reimbursement of LC
Bank.

 

(a)  Upon the issuance of any Letter of
Credit by the LC Bank, the LC Bank hereby sells and transfers to each Lender,
and each Lender hereby acquires from the LC Bank, an undivided interest and
participation to the extent of such Lender’s Commitment Percentage in and to
such Letter of Credit, including the obligations of the LC Bank under and in
respect thereof and the relevant Borrower’s reimbursement and other obligations
in respect thereof, whether now existing or hereafter arising.

 

(b)  If the LC Bank shall not have been
reimbursed in full for any payment made by the LC Bank under any Letter of
Credit on the date of such payment, the LC Bank shall promptly notify the
Administrative Agent and the Administrative Agent shall promptly notify each
Lender of such non-reimbursement and the amount thereof. Upon receipt of such
notice from the Administrative Agent, each Lender shall pay to the
Administrative Agent for the account of the LC Bank an amount equal to such
Lender’s Commitment Percentage of such Unreimbursed LC Disbursement, plus
interest on such amount at a rate per annum equal to the Federal Funds Rate
from the date of such payment by the LC Bank to the date of payment to the LC
Bank by such Lender. All such payments by each Lender shall be made in United
States dollars and in same day funds not later than 3:00 P.M. (New York
City time) on the later to occur of (i) the Business Day immediately
following the date of such payment by the LC Bank and (ii) the Business
Day on which such Lender shall have received notice of such non-reimbursement;
provided, however, that if such notice is received by such Lender later than
11:00 A.M. (New York City time) on such Business Day, such payment shall
be payable on the next Business Day. Each Lender agrees that each such payment
shall be made without any offset, abatement, withholding or reduction
whatsoever. If a Lender shall have paid to the LC Bank its ratable portion of
any Unreimbursed LC Disbursement, together with all interest thereon required
by the second sentence of this subsection (b), such Lender shall be
entitled to receive its ratable share of all interest paid by the relevant
Borrower in respect of such Unreimbursed LC Disbursement. If such Lender shall
have made such payment to the LC Bank, but without all such interest thereon
required by the second sentence of this subsection (b), such Lender shall
be entitled to receive its ratable share of the interest paid by the relevant
Borrower in respect of such Unreimbursed LC Disbursement only from the date it
shall have paid all interest required by the second sentence of this subsection (b).

 

(c)  The failure of any Lender to make
any payment to the LC Bank in accordance with subsection (b) above,
shall not relieve any other Lender of its obligation to make payment, but
neither the LC Bank nor any Lender shall be responsible for the failure of any
other Lender to make such payment. If any Lender shall fail to make any payment
to the LC Bank in accordance with subsection (b) above, then such
Lender shall pay to the LC Bank forthwith on demand such corresponding amount
together with interest thereon, for each day until the date such amount is
repaid to the LC Bank at the Federal Funds Rate. Nothing herein shall in any
way limit, waive or otherwise reduce any claims that any party hereto may have
against any non-performing Lender.

 

27

 

(d)  If any Lender shall fail to make any payment
to the LC Bank in accordance with subsection (b) above, then, in
addition to other rights and remedies which the LC Bank may have, the
Administrative Agent is hereby authorized, at the request of the LC Bank, to
withhold and to apply to the payment of such amounts owing by such Lender to
the LC Bank and any related interest, that portion of any payment received by
the Administrative Agent that would otherwise be payable to such Lender. In
furtherance of the foregoing, if any Lender shall fail to make any payment to
the LC Bank in accordance with subsection (b), above, and such failure
shall continue for five Business Days following written notice of such failure
from the LC Bank to such Lender, the LC Bank may acquire, or transfer to a
third party in exchange for the sum or sums due from such Lender, such Lender’s
interest in the related Unreimbursed LC Disbursement and all other rights of
such Lender hereunder in respect thereof, without, however, relieving such
Lender from any liability for damages, costs and expenses suffered by the LC
Bank as a result of such failure, and prior to such transfer, the LC Bank shall
be deemed, for purposes of Section 2.14 and Article VII hereof, to be
a Lender hereunder owed an Advance in an amount equal to the outstanding
principal amount due and payable by such Lender to the Administrative Agent for
the account of such LC Bank pursuant to Section 3.5(b), above. The
purchaser of any such interest shall be deemed to have acquired an interest
senior to the interest of such Lender and shall be entitled to receive all
subsequent payments which the LC Bank or the Administrative Agent would
otherwise have made hereunder to such Lender in respect of such interest.

 

SECTION 3.6.  Obligations Absolute.

 

The
payment obligations of each Lender under Section 3.5(b) and of each
Borrower under Section 3.3 of this Agreement in respect of any payment
under any Letter of Credit and any Advance made under Section 3.4 shall be
unconditional and irrevocable, and shall be paid strictly in accordance with
the terms of this Agreement under all circumstances, including, without
limitation, the following circumstances:

 

(a)  any lack of validity or enforceability of any
Financing Document or any other agreement or instrument relating thereto or to
such Letter of Credit;

 

(b)  any amendment or waiver of, or any consent to
departure from, all or any of the Financing Documents;

 

(c)  the existence of any claim, set-off, defense
or other right which the relevant Borrower may have at any time against any
beneficiary, or any transferee, of such Letter of Credit (or any Persons for
whom any such beneficiary or any such transferee may be acting), the LC Bank,
or any other Person, whether in connection with this Agreement, the
transactions contemplated herein or by such Letter of Credit, or any unrelated
transaction;

 

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

 

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

 

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

 

28

 

SECTION 3.7.  Liability of LC Bank and the Lenders.

 

Each
Borrower assumes all risks of the acts and omissions of any beneficiary or
transferee of any Letter of Credit issued for its account. Neither the LC Bank,
the Lenders nor any of their respective officers, directors, employees, agents
or Affiliates shall be liable or responsible for (a) the use that may be
made of such Letter of Credit or any acts or omissions of any beneficiary or
transferee thereof in connection therewith; (b) the validity, sufficiency
or genuineness of documents, or of any endorsement thereon, even if such documents
should prove to be in any or all respects invalid, insufficient, fraudulent or
forged; (c) payment by the LC Bank against presentation of documents that
do not comply with the terms of such Letter of Credit, including failure of any
documents to bear adequate reference to such Letter of Credit; or (d) any
other circumstances whatsoever in making or failing to make payment under such
Letter of Credit, except that such Borrower or any Lender shall have the right
to bring suit against the LC Bank, and the LC Bank shall be liable to such
Borrower and any Lender, to the extent of any direct, as opposed to
consequential, damages suffered by such Borrower or such Lender which such
Borrower or such Lender proves were caused by the LC Bank’s willful misconduct
or gross negligence, including the LC Bank’s failure to make timely payment
under such Letter of Credit following the presentation to it by the beneficiary
thereof of a draft and accompanying certificate(s) which strictly comply with
the terms and conditions of such Letter of Credit. In furtherance and not in
limitation of the foregoing, the LC Bank may accept sight drafts and
accompanying certificates presented under the Letter of Credit issued by the LC
Bank that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary.
Notwithstanding the foregoing, no Lender shall be obligated to indemnify such
Borrower for damages caused by the LC Bank’s willful misconduct or gross
negligence, and the obligation of such Borrower to reimburse the Lenders
hereunder shall be absolute and unconditional, notwithstanding the gross
negligence or willful misconduct of the LC Bank.

 

SECTION 3.8.  Cash Collateralization of Letters of Credit.

 

If
any Letters of Credit issued under this Article III shall remain
outstanding as of the Termination Date as permitted by Section 3.2, each
relevant Borrower shall, (a) not less than ten days prior to the
Termination Date, deliver a notice to Administrative Agent and the LC Bank
identifying each such Letter of Credit, including the respective amounts, not
to exceed $50,000,000 in the aggregate, and stated expiry dates thereof and (b) not
less than five Business Days prior to the Termination Date, deposit in cash in
a cash collateral account established with the Administrative Agent, on terms
and conditions satisfactory to the Administrative Agent and the LC Bank, an
amount equal to the LC Outstandings with respect to such Letters of Credit,
which Letters of Credit shall be permitted to remain outstanding after the
Termination Date.  The obligations of the
Lenders under this Article III with respect to any such Letters of Credit
shall expire on the Termination Date; provided,
however, the obligations of such
Borrower under this Article III in respect of such Letters of Credit shall
survive the Termination Date and shall remain in effect until no such Letters
of Credit remain outstanding.

 

SECTION 3.9.  Existing Letters of Credit.

 

Each
of the letters of credit described on Schedule 3.9 hereto shall be deemed
to be issued and outstanding under this Agreement on and as of the Effective
Date.

 

29

 

ARTICLE IV

CONDITIONS PRECEDENT

 

SECTION 4.1.  Conditions Precedent to Effective Date.

 

This
Agreement shall not become effective, and no Extensions of Credit shall be made
hereunder, unless all of the conditions precedent set forth in this Section 4.1
shall have been satisfied:

 

(a)  The
Administrative Agent shall have received, with a copy for each Bank:

 

(i)                                     the certificate or articles of incorporation,
as then in effect, of each Borrower, certified by the Secretary or an Assistant
Secretary of such Borrower on the Effective Date;

 

(ii)                                  (A) a certificate of good standing of
each Borrower (other than PSI Energy) from its state of incorporation and (B) satisfactory
evidence of the status of PSI Energy as a duly organized and validly existing
corporation under the laws of the State of Indiana, dated, in each case, as of
a recent date;

 

(iii)                               the by-laws, as then in effect, of each
Borrower, certified by the Secretary or an Assistant Secretary of such Borrower
on the Effective Date;

 

(iv)                              the resolutions of the Board of Directors of
each Borrower, authorizing the execution and delivery of each Financing
Document to which it is a party, and the continuing performance of the
Financing Documents and the Borrowings herein provided for, certified by a
Secretary or Assistant Secretary of such Borrower on the Effective Date;

 

(v)                                 certified copies of all documents evidencing
other necessary corporate action and governmental and regulatory approvals
required to be obtained by each Borrower in connection with the execution and
delivery of the Financing Documents, and the continuing performance of the
Financing Documents and the Borrowings herein provided for, certified by the
Secretary or an Assistant Secretary of such Borrower on the Effective Date; and

 

(vi)                              a certificate of the Secretary or an
Assistant Secretary of each Borrower, dated the Effective Date, certifying the
names and true signatures of the officers of such Borrower authorized to sign
this Agreement and the other documents and instruments contemplated by this
Agreement.

 

(b)  The
Administrative Agent shall have received the Notes payable by each of the
Borrowers to the order of each Bank with respect to its proportionate share of
the Commitments.

 

(c)  The
Administrative Agent shall have received favorable opinions, dated the
Effective Date, of:

 

(i)                                     J. William DuMond, Esq., Senior Counsel
of the Borrowers, in substantially the form of Exhibit C; and

 

(ii)                                  Simpson Thacher & Bartlett LLP,
special counsel for the Administrative Agent, substantially in the form of Exhibit D
hereto.

 

(d)                                 The following statements shall be true and the
Administrative Agent shall have received, with a copy for each of the Banks, a
certificate of a Responsible Officer of each Borrower, dated as of the
Effective Date, stating that:

 

30

 

(i)                                     the representations and warranties set forth
in Section 5.1 of this Agreement are true and correct on and as of the
Effective Date as though made on and as of such date (except to the extent such
representations and warranties expressly relate to another date, in which case
such representations and warranties are true as of such other date), and

 

(ii)                                  no event has occurred and is continuing that
constitutes a Default or an Event of Default.

 

(e)  The
Borrowers shall have paid all fees under or referenced in Section 2.3 hereof,
to the extent then due and payable.

 

(f)  The
commitments of the lenders under the Existing Credit Agreements shall have been
terminated, no extensions of credit (other than the Existing Letters of Credit)
and no interest thereon shall be outstanding or other amounts be due and owing
thereunder.

 

(g)  The
Administrative Agent shall have received such other approvals, opinions or
documents as any Bank through the Administrative Agent may reasonably request.

 

SECTION 4.2.  Conditions Precedent to All Extensions of
Credit.

 

The
several obligations of the Lenders to make any Extension of Credit and of the
LC Bank to issue any Letter of Credit hereunder are subject to the satisfaction
of the following conditions precedent:

 

The
following statements made by each Borrower to the extent applicable to it and
with respect to Extensions of Credit made to it shall be true on the date such
Extension of Credit is made (and the giving of the applicable Notice of
Borrowing and the issuance by the LC Bank of any Letter of Credit at the
request of any Borrower shall constitute a representation and warranty by such
Borrower that such statements are true on the date such Extension of Credit is
made):

 

(i)                                     The representations and warranties of such
Borrower contained in Section 5.1 (other than the representations and
warranties contained in paragraphs (e), (f) and (k) thereof which shall be
deemed made only as of the Effective Date) are true and correct in all material
respects on and as of the date such Extension of Credit is made, before and
after giving effect to such Extension of Credit and to the application of the
proceeds thereof, as though made on and as of such date (except to the extent
such representations and warranties expressly relate to another date, in which
case such representations and warranties are true and correct in all material
respects as of such other date);

 

(ii)                                  No event has occurred and is continuing, or
would result from such Extension of Credit or the application of the proceeds
thereof, which constitutes an Event of Default or a Default by such Borrower or
its Subsidiaries (other than, in the case of CG&E, ULH&P); and

 

(iii)                               After giving effect to such Extension of
Credit and the application of the proceeds thereof, the Outstanding Extensions
of Credit do not exceed the Total Commitment, as determined on the date such
Extension of Credit is made and (A) in the case of an Extension of Credit
to CG&E, the CG&E Outstanding Extensions of Credit do not exceed the
CG&E Sublimit;  (B) in the case
of an Extension of Credit to PSI Energy, the PSI Energy Outstanding Extensions
of Credit do not exceed the PSI Energy Sublimit; and (C) in the case of an
Extension of Credit to ULH&P, the ULH&P Outstanding Extensions of
Credit do not exceed the ULH&P Sublimit.

 

31

 

SECTION 4.3.  Reliance on Certificates.

 

The
Administrative Agent and the Lenders shall be entitled to rely conclusively
upon the certificates delivered from time to time by officers of Borrowers as
to the names, incumbency, authority and signatures of the respective persons
named therein until such time as the Administrative Agent may receive a
replacement certificate, in form acceptable to the Administrative Agent, from
an officer of such Person identified to the Administrative Agent as having
authority to deliver such certificate, setting forth the names and true
signatures of the officers and other representatives of such Person thereafter
authorized to act on behalf of such Person.

 

ARTICLE V

REPRESENTATIONS AND WARRANTIES

 

SECTION 5.1.  Representations and Warranties of the
Borrowers.

 

Each
Borrower, severally but not jointly, hereby represents and warrants as follows:

 

(a)  Each
of such Borrower and its Material Subsidiaries (i) is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, (ii) has the corporate power and authority, and the legal
right, to own and operate its property, to lease the property it operates as
lessee and to conduct the business in which it is currently engaged, (iii) is
duly qualified as a foreign corporation and in good standing under the laws of
each jurisdiction where its ownership, lease or operation of property or the
conduct of its business requires such qualification except any such
jurisdiction where the failure to so qualify would not, in the aggregate,
reasonably be expected to have a Material Adverse Effect on such Borrower and (iv) is
in compliance with all Requirements of Law except to the extent that the
failure to comply therewith would not, in the aggregate, reasonably be expected
to have a Material Adverse Effect on such Borrower.

 

(b)  Such
Borrower has the corporate power and authority, and the legal right, to make,
deliver and perform the Financing Documents to which it is a party and to
borrow hereunder and has taken all necessary corporate action to authorize the
borrowings on the terms and conditions of this Agreement and to authorize the
execution, delivery and performance of the Financing Documents to which it is a
party. No consent or authorization of, filing with or other act by or in
respect of, any Governmental Authority or any other Person is required in
connection with the borrowings hereunder or with the execution, delivery,
performance, validity or enforceability of the Financing Documents to which it
is a party, except for consents, authorizations or filings which have been
obtained or made, as the case may be, and are in full force and effect. Each
Financing Document to which such Borrower is a party has been duly executed and
delivered on behalf of such Borrower. 
Each Financing Document to which it is or becomes a party upon execution
will constitute a legal, valid and binding obligation of such Borrower enforceable
against such Borrower in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the enforcement of creditors’ rights generally and by
general equitable principles (whether enforcement is sought by proceedings in
equity or at law).

 

(c)  The
execution, delivery and performance of the Financing Documents to which it is a
party, the borrowings and other Extensions of Credit hereunder and the use of
the proceeds thereof (i) will not violate any Requirement of Law or
Contractual Obligation of such Borrower or of any of its Subsidiaries, except
for such violations, if any, as would not result in a Material Adverse Effect
on such Borrower, and (ii) will not result in, or require, the creation or
imposition of any Lien on any of its or their respective properties or revenues
pursuant to any such Requirement of Law or Contractual Obligation.

 

32

 

(d)                           (i) The consolidated balance sheets of
Cinergy, CG&E, PSI Energy, ULH&P and their respective consolidated
Subsidiaries, each as at December 31, 2004 and the related consolidated
statements of income and of cash flows for the fiscal year ended on such date,
copies of which have heretofore been furnished to the Administrative Agent and
each Bank, are complete and correct in all material respects and present fairly
the consolidated financial condition of such Borrower and its consolidated
Subsidiaries as of such dates, and the consolidated results of their operations
and their consolidated cash flows for the fiscal year then ended.

 

(ii)                                  The consolidated balance sheets of Cinergy,
CG&E, PSI Energy, ULH&P and their respective consolidated Subsidiaries,
and the related consolidated statements of income and cash flows, each most
recently delivered pursuant to Section 6.1(a) are complete and
correct in all material respects and present fairly the consolidated financial
condition and the consolidated results of operations and consolidated cash
flows of such Borrower and its consolidated Subsidiaries as at and for the
periods ended on the dates therein indicated.

 

(iii)                               All such financial statements referred to in
subsection (i) and subsection (ii), above, as they relate to
such Borrower, including the related schedules and notes thereto, have been
prepared in accordance with GAAP applied consistently throughout the periods
involved (except as approved by Deloitte & Touche LLP (or such other
nationally recognized firm of independent certified public accountants) or a Responsible
Officer, as the case may be, and as disclosed therein) and, in the case of
quarterly financial statements, subject to normal year end audit adjustments
and to the fact that such financial statements may be abbreviated and may omit
footnotes or contain incomplete footnotes).

 

(e)  Except
as disclosed in any Disclosure Document, since December 31, 2004, there
has been no development or event which has had or would reasonably be expected
to have a Material Adverse Effect on such Borrower.

 

(f)  Except
as set forth in the financial statements referred to in Section 5.1(d)(i) or
in any Disclosure Document, no litigation, investigation or proceeding of or
before any arbitrator or Governmental Authority is pending or, to the knowledge
of such Borrower or any of its consolidated Subsidiaries, threatened by or
against such Persons or against any of its or their respective properties or
revenues which would reasonably be expected to have a Material Adverse Effect
on such Borrower.

 

(g)  Each
of such Borrower and its Subsidiaries has filed or caused to be filed all tax
returns which, to the knowledge of such Borrower, are required to be filed and
has paid all taxes shown to be due and payable on said returns or on any
assessments made against it or any of its property and all other taxes, fees or
other charges imposed on it or any of its property by any Governmental
Authority (other than any such taxes, fees or other charges (A) the amount
or validity of which are currently being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with GAAP have
been provided on the books of such Borrower or its Subsidiaries, as the case
may be, or (B) the failure to pay which, when aggregated, would not
reasonably be expected to have a Material Adverse Effect on such Borrower).

 

(h)  No
part of the proceeds of any Advances will be used for “purchasing” or “carrying”
any “margin stock” within the respective meanings of each of the quoted terms
under Regulation U of the Board of Governors of the Federal Reserve System as
now and from time to time hereafter in effect or for any purpose which violates
the provisions of such regulations of such Board of Governors.

 

(i)  No
ERISA Event has occurred or is reasonably expected to occur that, when taken
together with all other such ERISA Events for which liability is reasonably
expected to occur, would reasonably be expected to have a Material Adverse
Effect.  Except to the extent that it
would not reasonably be

 

33

 

expected to have a Material
Adverse Effect on such Borrower, neither such Borrower nor any ERISA Affiliate
is required to provide security to a Plan under Section 401(a)(29) of the
Code.  Each Plan (other than any
Multiemployer Plan) complies in form and operation with the applicable
provisions of ERISA and the Code, except as would not reasonably be expected to
have a Material Adverse Effect.

 

(j)  Such Borrower is not an “investment company”,
or a company “controlled” by an “investment company”, within the meaning of the
Investment Company Act of 1940, as amended. Other than the Public Utility
Holding Company Act of 1935, as amended, such Borrower is not subject to
regulation under any Federal or State statute or regulation which limits
its ability to incur Indebtedness.

 

(k)  Except as disclosed in any Disclosure
Document, such Borrower has complied with all Environmental Laws and has
obtained, maintained and complied with all permits, licenses and other
approvals required under any Environmental Law except to the extent that the
failure to do so would not reasonably be expected to have a Material Adverse
Effect on such Borrower.

 

ARTICLE VI

COVENANTS OF THE BORROWERS

 

SECTION 6.1.  General Affirmative Covenants of the
Borrowers.

 

So
long as this Agreement shall remain in effect, any Advance or any other amount
due hereunder shall remain unpaid, any Letter of Credit shall remain
outstanding or any Lender shall have any Commitment hereunder, each Borrower,
severally but not jointly, hereby agrees that it will, and (except in the case
of delivery of financial information, reports and notices) will cause each of
its Subsidiaries to, unless the Required Lenders shall otherwise consent in
writing:

 

(a)  Reporting Requirements. Furnish to each Lender (it being understood
that to the extent that such Borrower’s reports on Form 10-Q or Form 10-K
set forth the information called for in subsection (i) or (ii),
respectively, the delivery of such reports shall be deemed to satisfy the
requirements of such subsections):

 

(i)                                     as soon as available, and in any event within
75 days after the end of each of the first three quarters of each fiscal year
of such Borrower, the consolidated balance sheets of such Borrower and its
consolidated Subsidiaries, in each case as of the end of such quarter, and the related unaudited consolidated
statements of income and changes in cash flows for such portion of the fiscal
year through the end of such quarter, setting forth in each case in comparative
form the figures for the previous year (except that, in the case of the
unaudited consolidated balance sheets, comparison is between the figures as of
the fiscal quarter then ended versus the figures as of the immediately
preceding fiscal year-end), certified by a Responsible Officer of such Borrower
as having been prepared in accordance with GAAP consistent with those applied
in the preparation of the financial statements referred to in Section 5.1(d);

 

(ii)                                  as soon as available, and in any event within
120 days after the end of each fiscal year of such Borrower, after filing such
information on Form-10-K with the Securities and Exchange Commission, a copy of
the consolidated balance sheets of such Borrower, and its consolidated
Subsidiaries as at the end of such year, and the related consolidated
statements of income, changes in common equity and cash flows for such year,
certified by Deloitte & Touche LLP (or such other nationally
recognized firm of independent certified public accountants) as having been
prepared in accordance with GAAP, and setting forth in each case in comparative
form the figures for the previous year, reported on without a “going concern”
or like qualification or exception, or qualification arising out of the scope
of the audit;

 

34

 

(iii)                               within five days after the same are filed,
copies of all reports on Form 8-K (or any successor form) which such
Borrower or any its consolidated Subsidiaries may file with the Securities and
Exchange Commission or any successor or analogous Governmental Authority;

 

(iv)                              as soon as possible and in any event within
five Business Days after obtaining knowledge of the occurrence of any Event of
Default or Default by such Borrower or any of its Subsidiaries continuing on
the date of such statement, the statement of the Treasurer or an Assistant
Treasurer of such Borrower setting forth details of such Event of Default or
Default and the action which such Borrower proposes to take with respect
thereto;

 

(v)                                 promptly after becoming aware thereof, notice
as to the occurrence of any ERISA Event that, alone or together with any other
ERISA Events that have occurred, would reasonably be expected to have a
Material Adverse Effect on such Borrower;

 

(vi)                              to the extent not otherwise disclosed by such
Borrower in a report on Form 10-K, Form 10-Q or Form 8-K to be
filed with the Securities and Exchange Commission, promptly after becoming
aware thereof, notice as to any development or event which has had or would
reasonably be expected to have a Material Adverse Effect on such Borrower;

 

(vii)                           promptly after becoming aware thereof, notice
as to each decrease or increase in the Reference Ratings of any of the Rating
Agencies; and

 

(viii)                        simultaneously with any delivery of each set
of financial statements referred to in clauses (i) and (ii) above, a
certificate of a Responsible Officer of such Borrower (A) setting forth in
reasonable detail the calculations required to establish whether such Borrower
was in compliance with the requirements of Section 6.2(d) on the date
of such financial statements and (B) stating whether any Default or Event
of Default exists on the date of such certificate and, if any Default or Event
of Default then exists, setting forth the details thereof and the action which
such Borrower is taking or proposes to take with respect thereto.

 

Documents required to be delivered pursuant to
subparagraphs (i), (ii) or (iii) of this Section 6.1(a) shall
be deemed to have been delivered on the date on which such items are posted on
the Securities and Exchange Commission’s website on the Internet at
www.sec.gov, provided such
Borrower shall give notice of any such posting to the Administrative Agent (who
shall then give notice of any such posting to the Lenders) and documents
required to be delivered pursuant to subparagraph (viii) of this Section 6.1(a) shall
be deemed to have been delivered as of the date on which such documents are
delivered to the Administrative Agent to be posted on such Borrowers’ behalf on
the IntraLinks website at www.intralinks.com. 
To the extent that any documents required to be delivered under this Section 6.1(a) pertain
to more than one of the Borrowers, only one copy of such document shall be
required to be delivered.

 

(b)  Compliance with Laws, Etc. 
Comply in all material respects with all Requirements of Law, and all
applicable rules, regulations and orders thereunder (including, without
limitation, with respect to taxes, ERISA and Environmental Laws), noncompliance
with which would reasonably be expected to have a Material Adverse Effect on
such Borrower except Requirements of Law, rules, regulations and orders being
contested in good faith and by proper proceedings.

 

(c)  Preservation of Corporate Existence,
Etc. Continue to engage
in business of the same general type as now conducted by it and preserve, renew
and keep in full force and effect its corporate existence and take all
reasonable action to maintain all rights, privileges and franchises necessary
or desirable in the normal conduct of its business except as otherwise
permitted pursuant to Section 6.2(b) and except that any Subsidiary
that is not a Material Subsidiary may cease to exist or maintain any such

 

35

 

rights, privileges or
franchises if such Borrower reasonably determines such cessation to be
necessary, advisable or practical.

 

(d)  Taxes, Etc. Pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, all taxes, assessments and
governmental charges levied or imposed upon it or upon its income, profits or
property; provided, however, that
such Borrower or such Subsidiary, as the case may be, shall not be required to
pay or discharge or cause to be paid or discharged any such tax, assessment,
charge or claim (i) whose amount, applicability or validity is being
contested in good faith by appropriate procedures and reserves in conformity
with GAAP with respect thereto have been provided on the books of such Borrower
or such Subsidiary, as the case may be, or (ii) to the extent that the
failure to do so would not reasonably be expected to have a Material Adverse
Effect on such Borrower.

 

(e)  Inspection of Property; Books and
Records; Discussions.
With respect to such Borrower and each of its Material Subsidiaries, keep
proper books of records and accounts in which full, true and correct entries in
conformity with GAAP (except as not otherwise required to do so) and all
Requirements of Law shall be made of all dealings and transactions in relation
to its business and activities; and permit representatives of the
Administrative Agent and, if an Event of Default shall have occurred and be
continuing, each Lender (subject to receipt by such Borrower of reasonable
prior notice and such reasonable confidentiality agreement as may be required
by such Borrower), to visit and inspect any of its properties and examine and
make abstracts from any of its books and records, upon reasonable prior written
notice, at any reasonable time and as often as may reasonably be desired and to
discuss the business, operations, properties and financial and other condition
of such Borrower and its Subsidiaries with officers and employees of such
Borrower and its Subsidiaries.

 

(f)  Use of Proceeds. The Commitments, Letters of Credit and the
proceeds of the Advances hereunder shall be used by such Borrower only in
accordance with all Requirements of Law. 
In addition, the proceeds of the Advances shall be used by such Borrower
for general corporate purposes, including as liquidity support for such Borrower’s
commercial paper program, if any.

 

SECTION 6.2.  Negative Covenants of the Borrowers.

 

So
long as this Agreement shall remain in effect, any Advance or any other amount
due hereunder shall remain unpaid, any Letter of Credit shall remain outstanding
or any Lender shall have any Commitment hereunder, each Borrower, severally but
not jointly, hereby agrees that it will not (and shall not permit any of its
Subsidiaries to) without the prior written consent of the Required Lenders,
directly or indirectly:

 

(a)  Liens, Etc. Create, incur, assume or suffer to exist
any Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, except for:

 

(i)                                     Liens for taxes not yet due or which are
being contested in good faith by appropriate proceedings, provided that adequate reserves with
respect thereto are maintained on the books of such Borrower or its
Subsidiaries, as the case may be, in conformity with GAAP;

 

(ii)                                  carriers’, warehousemen’s, mechanics’,
materialmen’s, repairmen’s or other like Liens arising in the ordinary course
of business which are not overdue for a period of more than 60 days or which
are being contested in good faith by appropriate proceedings;

 

(iii)                               pledges or deposits in connection with
workers’ compensation, unemployment insurance and other social security
legislation, including any Lien securing letters of credit issued

 

36

 

in the ordinary course of business in
connection therewith and deposits securing liabilities to insurance carriers
under insurance and self-insurance programs;

 

(iv)                              deposits to secure the performance of bids,
trade contracts (other than for borrowed money), leases, statutory obligations,
surety and appeal bonds, performance bonds and other obligations of a like
nature incurred in the ordinary course of business;

 

(v)                                 easements, rights-of-way, restrictions and
other similar encumbrances incurred in the ordinary course of business which,
in the aggregate, are not substantial in amount and which do not in any case
materially detract from the value of the property subject thereto or materially
interfere with the ordinary conduct of the business of such Borrower or its
Subsidiaries;

 

(vi)                              attachment, judgment or other similar Liens
arising in connection with court or arbitration proceedings to the extent
covered by insurance or involving individually or in the aggregate, no more
than $50,000,000 at any one time in excess of the applicable insurance
coverage, provided that the same are discharged, or that execution or
enforcement thereof is stayed pending appeal, within 60 days or, in the case of
any stay of execution or enforcement pending appeal, within such lesser time
during which such appeal may be taken;

 

(vii)                           Liens securing obligations (other than
obligations representing Indebtedness for borrowed money) under operating,
reciprocal easement or similar agreements entered into in the ordinary course
of business;

 

(viii)                        statutory Liens and rights of offset arising
in the ordinary course of business of such Borrower and its Subsidiaries;

 

(ix)                                Liens on receivables and related assets
subject to a Receivable Financing Transaction;

 

(x)                                   Liens securing obligations under Hedging
Agreements entered into to protect against fluctuations in interest rates or
exchange rates or commodity prices and not for speculative purposes, provided
that such Liens run in favor of a Lender hereunder or a Person who was, at the
time of issuance, a Lender;

 

(xi)                                Liens on assets at the time such assets were
transferred (whether directly or indirectly) to Borrowers or their Subsidiaries
and were not created in anticipation thereof;

 

(xii)                             Liens on assets of any Subsidiary of such
Borrower (other than, (A) in the case of Cinergy, CG&E, PSI Energy,
ULH&P, and (B) in the case of CG&E, ULH&P) created to secure
Indebtedness owing by such Subsidiary to such Borrower or to any other
Subsidiary of such Borrower;

 

(xiii)                          Liens arising in connection with Financing
Leases in an aggregate amount not to exceed (A) in the case of Cinergy, $350,000,000,
(B) in the case of each of CG&E and PSI Energy, $175,000,00 and (C) in
the case of ULH&P, $75,000,000 (determined in accordance with GAAP and in
the same manner as the calculation of capitalized leases in a balance sheet of
the Borrower);

 

(xiv)                         Liens securing Indebtedness incurred to
finance or refinance the acquisition of assets acquired by such Borrower or any
of its Subsidiaries on or after January 1, 2005, if such Indebtedness is
incurred within 90 days following such acquisition; provided that such Liens
shall be confined solely to the assets so acquired (and improvements and
attachments thereto);

 

37

 

(xv)                            Liens securing Non-Recourse Debt of any
Subsidiary of any Borrower incurred to replace financing provided directly or
indirectly by such Borrower to such Subsidiary of such Borrower in the form of
inter-company loans or equity contributions, so long as the net proceeds of
such Non-Recourse Debt are contributed by such Subsidiary to such Borrower in
repayment of such financing provided by such Borrower;

 

(xvi)                         Liens on assets existing at the time of the
acquisition thereof by such Borrower or any Subsidiary of such Borrower; provided, that such Liens shall be
confined solely to the assets so acquired;

 

(xvii)                      Liens resulting from legal proceedings being
contested in good faith by appropriate proceedings by such Borrower or a
Subsidiary of such Borrower and as to which such Borrower or such Subsidiary,
as the case may be, shall have set aside on its books appropriate reserves in
accordance with (and to the extent required by) GAAP;

 

(xviii)                   in the case of each of CG&E, PSI Energy
and ULH&P, Liens existing or created under the CG&E First Mortgage
Trust Indenture, PSI Energy First Mortgage Trust Indenture or ULH&P First
Mortgage Trust Indenture, respectively; and

 

(xix)                           extensions, renewals or replacements of Liens
permitted by the foregoing clauses (i) - (xviii) above.

 

(xx)                              Liens not otherwise permitted by the
foregoing clauses of this Section 6.2(a) securing obligations in an
aggregate principal or face amount at any date not to exceed, (A) in the
case of each of Cinergy, CG&E and PSI Energy, $150,000,000 and (B) in
the case of ULH&P, $50,000,000;

 

provided that, no Borrower or any Subsidiary of any Borrower shall create,
incur, assume or suffer to exist any Lien upon any of the Capital Stock of
CG&E, PSI Energy or ULH&P.

 

(b)  Fundamental Change. Merge, consolidate or amalgamate, or
liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease, assign, transfer or otherwise dispose of,
all or substantially all of its property, business or assets, or make any
material (in the context of the overall business operations of such Borrower or
such Subsidiary, as the case may be) change in its present method of conducting
business, except that:

 

(i)                                     any Subsidiary of such Borrower may merge,
consolidate or amalgamate with or into such Borrower (provided that such Borrower shall be the
continuing or surviving corporation) or with or into any one or more
wholly-owned Subsidiaries of such Borrower;

 

(ii)                                  any Subsidiary of such Borrower may sell,
lease, transfer or otherwise dispose of any or all of its assets (upon
voluntary liquidation or otherwise) to such Borrower or any other Subsidiary of
such Borrower;

 

(iii)                               any Subsidiary of such Borrower (other than,
in the case of Cinergy, CG&E, PSI Energy and ULH&P) at the time of such
transaction may:

 

(A)  merge, consolidate or amalgamate with or into
any Person other than a Subsidiary of such Borrower or such Borrower and not (1) be
the continuing or surviving Person or (2) remain a Subsidiary of such
Borrower;

 

(B)  liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution);

 

38

 

(C)  convey, sell, lease, assign, transfer or
otherwise dispose of, all or substantially all of its property, business or
assets; or

 

(D)  make any material (in the context of the
overall business operations of such Borrower or such Subsidiary, as the case
may be) change in its present method of conducting business;

 

so long as, such Borrower would have been in
compliance with the covenants contained in Section 6.2(d) for the
prior four full fiscal quarters if such merger or consolidation had been
consummated on the first day of such four fiscal quarter period; and

 

(iv)                              such Borrower may merge or consolidate with
another Person other than a Subsidiary of such Borrower if:

 

(A)  such other Person is engaged in substantially
the same business as such Borrower;

 

(B)  either:

 

(1)                                  such Borrower is the survivor of such
transaction, or

 

(2)                                  a.  the
survivor of such transaction is a Person organized under the laws of any State
of the United States of America that effectively assumes such Borrower’s
obligations under the Financing Documents, whether by written instrument or by
operation of law;

 

b.  as of the date of the consummation of such
transaction the Reference Ratings of the survivor are at least investment grade
(i.e. BBB-, in the case of S&P, and Baa3, in the case of Moody’s); and

 

c.  in the case of the merger or consolidation of
CG&E, PSI Energy or ULH&P, the survivor of such transaction is a direct
wholly-owned subsidiary of Cinergy (or any successor of Cinergy permitted by this
Section 6.2(b)) (or, in the case of ULH&P, so long as it is a
wholly-owned direct Subsidiary of CG&E, a wholly-owned indirect Subsidiary
of Cinergy or any successor of Cinergy
permitted by this Section 6.2(b));

 

(C)  the survivor of such transaction shall have delivered to the
Administrative Agent such opinions or other documents or information as the
Administrative Agent (acting on its own behalf or on behalf of any Bank) and
its counsel may reasonably require; and

 

(D)  the survivor of such transaction would have been in compliance with the
covenants contained in Section 6.2(d) for the prior four full fiscal
quarters if such merger or consolidation had been consummated on the first day
of such four fiscal quarter period;

 

provided that, in the case of any transaction
otherwise permitted by this Section 6.2(b), both before and after giving
effect to such transaction no Default or Event of Default by such Borrower or
its Subsidiaries shall have occurred or be in existence.

 

39

 

Notwithstanding
the foregoing, the parties agree that the transaction described in the
Agreement and Plan of Merger by and among Duke Energy Corporation, Cinergy,
Deer Holding Corp., Deer Acquisition Corp., and Cougar Acquisition Corp., dated
as of May 8, 2005, as disclosed in Form 8-K filed by Cinergy with the
Securities and Exchange Commission on May 10, 2005, and other filings made
by Cinergy at least five Business Days prior to the Effective Date with respect
to such transaction, shall not be considered a fundamental change, subject to
the limitations of this Section 6.2(b).

 

(c)  Limitation on Restrictions on
Distributions from Subsidiaries.  Create or otherwise cause or
permit to exist or become effective any consensual encumbrance or consensual
restriction on the ability of any Subsidiary of such Borrower to pay dividends
or make any other distribution on its Capital Stock to such Borrower (other
than any encumbrance or restriction pursuant to an agreement or instrument in
effect on the Effective Date or any such identical encumbrance or restriction
as may be contained in an agreement or instrument entered into thereafter) to
the extent any such encumbrance or restriction would reasonably be expected to
have a Material Adverse Effect on such Borrower.

 

(d)  Financial
Covenants.

 

(i)                                     Ratio of Consolidated
Indebtedness to Consolidated Total Capitalization. Permit, on the last day of any period of
four consecutive fiscal quarters, the ratio of (i) Consolidated
Indebtedness of such Borrower at such time to (ii) Consolidated Total
Capitalization of such Borrower at such time to exceed 0.65 to 1.00.

 

(ii)                                  Consolidated Net Worth.

 

(A)  in the case of Cinergy, permit Consolidated
Net Worth of Cinergy at any time to be less than $2,000,000,000;

 

(B)  in the case of CG&E (so long as it
remains a Borrower), permit Consolidated Net Worth of CG&E at any time to
be less than $1,000,000,000, provided that
in the event that the CG&E Sublimit has been reduced to $250,000,000
pursuant to Section 2.5(a), then the foregoing reference to $1,000,000,000
shall be $500,000,000 from and after such date;

 

(C)  in the case of PSI Energy (so long as it
remains a Borrower), permit Consolidated Net Worth of PSI Energy at any time to
be less than $900,000,000; and

 

(D)  in the case of ULH&P (so long as it
remains a Borrower), permit Consolidated Net Worth of ULH&P at any time to
be less than $150,000,000, provided that
in the event that the ULH&P Sublimit has been increased to $100,000,000
pursuant to Section 2.5(b), then the foregoing reference to $150,000,000
shall be $200,000,000 from and after such date.

 

ARTICLE VII

EVENTS OF DEFAULT

 

SECTION 7.1.  Events of Default.

 

If
any of the following events (“Events of Default”) with respect to a particular
Borrower shall occur and be continuing:

 

40

 

(a)  Such
Borrower shall fail to pay any principal of any Advance or LC Outstanding when
due in accordance with the terms thereof and hereof; or such Borrower shall
fail to pay any interest on any Advance or LC Outstanding or any other amount
payable hereunder within five days after such interest or other amount becomes
due in accordance with the terms thereof or hereof; or

 

(b)  Any
representation or warranty made or deemed made by such Borrower herein or which
is contained in any certificate, document or financial or other statement
delivered at any time pursuant to this Agreement shall prove to have been
incorrect in any material respect on or as of the date made or deemed made; or

 

(c)  Such
Borrower shall default in the observance or performance of any agreement
contained in Section 6.1(a)(iv), 6.1(c) or 6.2; or

 

(d)  Such
Borrower shall default in the observance or performance of any other agreement
contained in this Agreement (other than as provided in paragraphs (a) through
(c) of this Section), and such default shall continue unremedied for a
period of 30 days from the time such Borrower receives notice of such default
from the Administrative Agent; or

 

(e)  Such
Borrower or any of its Subsidiaries shall (i) default in any payment of
principal of or interest on any of its Material Indebtedness, in each case
beyond the period of grace, if any, provided in the instrument or agreement
under which such Material Indebtedness was created; or (ii) default in the
observance or performance of any other agreement or condition relating to such
Material Indebtedness or contained in any instrument or agreement evidencing,
securing or relating to such Material Indebtedness, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of or beneficiary or
beneficiaries (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) of such Material Indebtedness to cause, with the
giving of notice if required, such Material Indebtedness to become due prior to
its stated maturity; provided that
this clause (e)(ii) shall not apply to secured Indebtedness which becomes
due as a result of the voluntary sale or transfer of the property or assets
securing such Indebtedness; or

 

(f)  (i) Such
Borrower or any of its Material Subsidiaries shall commence any case,
proceeding or other action (A) under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency, reorganization or
relief of debtors, seeking to have an order for relief entered with respect to
it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (B) seeking
appointment of a receiver, trustee, custodian or other similar official for it
or for all or any substantial part of its assets, or such Borrower or any of
its Material Subsidiaries shall make a general assignment for the benefit of
its creditors; or (ii) there shall be commenced against such Borrower or
any of its Material Subsidiaries any case, proceeding or other action of a
nature referred to in clause (i) above which (A) results in the
entry of an order for relief or any such adjudication or appointment; or (B) remains
undismissed, undischarged or unbonded for a period of 60 days; or (iii) there
shall be commenced against such Borrower or any of its Material Subsidiaries
any case, proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or any
substantial part of its assets which results in the entry of an order for any
such relief which shall not have been vacated, discharged, or stayed or bonded
pending appeal within 60 days from the entry thereof; or (iv) such
Borrower or any of its Material Subsidiaries shall take any action in
furtherance of, or indicating its consent to, approval of, or acquiescence in,
any of the acts set forth in clause (i), (ii), or (iii) above; or (v) such
Borrower or any of its Material Subsidiaries shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its debts as they
become due; or

 

41

 

(g)  An
ERISA Event shall have occurred, or any other event or condition shall occur or
exist with respect to any Plan, that when taken together with all other events
or conditions with respect to any Plan, would reasonably be expected to have a
Material Adverse Effect on such Borrower; or

 

(h)  One
or more judgments for the payment of money in an aggregate amount (to the
extent not covered by insurance) in excess of $50,000,000 for such Borrower
shall have been entered against such Borrower or any of its Subsidiaries and
all such judgments or decrees shall not have been paid, vacated, discharged,
stayed or bonded pending appeal within 60 days from the entry thereof; or

 

(i)  (i) Except
in a transaction otherwise permitted under Section 6.2(b) hereof, a
Change of Control of such Borrower shall occur;

 

THEN,
AND IN ANY SUCH CASE, the Administrative Agent shall at the request, or may
with the consent, of the Required Lenders, upon notice to such Borrower (i) declare
the Commitments and the obligation of each Lender to make Advances and to
participate in any as-yet unissued Letters of Credit to be terminated,
whereupon the same shall forthwith terminate, and/or (ii) declare the
Advances, all interest thereon and all other amounts payable or to become
payable under this Agreement by such Borrower, whether matured or unmatured,
fixed, liquidated, contingent or otherwise (including all interest thereon) to
be immediately due and payable, whereupon the same shall immediately become due
and payable without demand, presentment, protest or further notice of any kind,
all of which are hereby expressly waived by such Borrower; provided, however,
that upon the occurrence of any of the events described in subsection (f) of
this Section, (1) the Commitments and the obligation of each Lender to
make Advances and of each Lender to participate in as-yet unissued Letters of
Credit shall automatically be terminated in their entirety and (2) the
Advances, all such interest and all other amounts payable or to become payable
under this Agreement by such Borrower, whether matured or unmatured, fixed,
liquidated, contingent or otherwise (including all interest thereon) shall
immediately become due and payable without demand, presentment, protest or
further notice of any kind, all of which are hereby expressly waived by such
Borrower; provided no such
termination of the Commitments after an Event of Default shall reduce the Total
Commitment to an amount which is less than the CG&E Sublimit and/or the PSI
Energy Sublimit and/or the ULH&P Sublimit if such Event of Default does not
arise out of a Default by such Borrower or its Subsidiaries (other than, in the
case of CG&E, ULH&P).

 

Notwithstanding
anything to the contrary contained herein,

 

(i)                                     no notice given or declaration made by the
Administrative Agent pursuant to this Section 7.1 shall affect (i) the
obligation of the LC Bank to make any payment under any Letter of Credit in
accordance with the terms of such Letter of Credit or (ii) the obligations
of each Lender in respect of each such Letter of Credit; provided, however,
that upon the occurrence and during the continuance of any Event of Default,
such Borrower shall at such time deposit with the Administrative Agent an
amount in the cash account (the “Cash Account”) described below equal to the
then current LC Outstandings. Such Cash Account shall at all times be free and
clear of all rights or claims of third parties. The Cash Account shall be maintained
with the Administrative Agent in the name of, and under the sole dominion and
control of, the Administrative Agent, and amounts deposited in the Cash Account
shall bear interest at a rate equal to the rate generally offered by Barclays
for deposits equal to the amount deposited by such Borrower in the Cash Account
pursuant to this Section 7.1, for a term to be agreed to between such
Borrower and the Administrative Agent. If any drawings then outstanding or
thereafter made are not reimbursed in full immediately upon demand or, in the
case of subsequent drawings, upon being made, then, in any such event, the
Administrative Agent may apply the amounts then on deposit in the Cash Account,
in such priority as the Administrative Agent shall elect, toward the payment in
full of any or all of such Borrower’s obligations hereunder as and when such
obligations shall become due and payable. Upon payment in full, after the
termination of the

 

42

 

Letters of Credit, of all such obligations,
the Administrative Agent will repay to such Borrower any remaining cash then on
deposit in the Cash Account.  In
addition, if at any time the balance held in the Cash Account shall exceed the
sum of (x) the then current LC Outstandings plus (y) all other matured amounts
then currently due and owing hereunder, the Administrative Agent shall repay
such excess to such Borrower upon such Borrower’s written request; and

 

(ii)                                  In no event shall a Default or Event of
Default for either CG&E, PSI Energy or ULH&P result solely from the
occurrence of a Default or Event of Default by any other Borrower or their
respective Subsidiaries, or in the case of CG&E, from the occurrence of a
Default or Event of Default relating solely to ULH&P.

 

ARTICLE VIII

THE ADMINISTRATIVE AGENT

 

SECTION 8.1.  Authorization and Action.

 

Each
Lender and the LC Bank hereby appoints and authorizes the Administrative Agent
to take such action as agent on its behalf and to exercise such powers under
this Agreement as are delegated to the Administrative Agent by the terms
hereof, together with such powers as are reasonably incidental thereto. As to
any matters not expressly provided for by this Agreement (including, without
limitation, enforcement of this Agreement or collection of any amounts
outstanding hereunder), the Administrative Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining from
acting) upon the instructions of the Required Lenders (or, in the case of
certain matters arising under Article IX, the Lenders described therein)
and such instructions shall be binding upon all Lenders; provided,
however, that the Administrative Agent shall not be required to take
any action which exposes the Administrative Agent to personal liability or
which is contrary to this Agreement or applicable law. The Administrative Agent
agrees to give to each Lender prompt notice of each notice given to it by any
Borrower pursuant to the terms of this Agreement.

 

SECTION 8.2.  Administrative
Agent’s Reliance, Etc.

 

Neither
the Administrative Agent nor any of its directors, officers, agents or
employees shall be liable for any action taken or omitted to be taken by it or
them under or in connection with this Agreement, except for its or their own
gross negligence or willful misconduct. Without limitation of the generality of
the foregoing, the Administrative Agent: (a) may treat the payee of any
Note as the holder thereof until it receives written notice of the assignment
or transfer thereof signed by such payee and in form satisfactory to the
Administrative Agent; (b) may consult with legal counsel (including
counsel for the Borrowers), independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (c) makes no warranty or representation to any
Lender and shall not be responsible to any Lender for any statements,
warranties or representations made in or in connection with the Financing
Documents; (d) shall not have any duty to ascertain or to inquire as to
the performance or observance of any of the terms, covenants or conditions of
the Financing Documents by the Borrowers or to inspect the property (including
the books and records) of the Borrowers; (e) shall not be responsible to
any Lender for the due execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement, any Note, or any other instrument or
document furnished pursuant thereto; and (f) shall incur no liability
under or in respect of this Agreement by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telegram, cable,
telex or facsimile) believed by it to be genuine and signed or sent by the
proper party or parties.

 

43

 

SECTION 8.3.  Barclays and Affiliates.

 

With
respect to its Commitment and the Advances made by it, Barclays has the same
rights and powers under this Agreement as any other Lender and may exercise the
same as though Barclays were not the Administrative Agent; and the term Lender
or Lenders shall, unless otherwise expressly indicated, include Barclays in its
individual capacity. Barclays and its affiliates may accept deposits from, lend
money to, act as trustee under indentures of, and generally engage in any kind
of business with, the Borrowers or any of their Subsidiaries and any Person who
may do business with or own securities of the Borrowers or any such Subsidiary
of the Borrowers, all as if Barclays were not the Administrative Agent and
without any duty to account therefor to the Lenders.

 

SECTION 8.4.
 Lender Credit Decision.

 

Each
Lender acknowledges that it has, independently and without reliance upon the
Administrative Agent or any other Lender and based on the financial statements
referred to in Section 5.1(d)(i) and such other documents and information
as it has deemed appropriate, made its own credit analysis and decision to
enter into this Agreement. Each Lender also acknowledges that it will,
independently and without reliance upon the Administrative Agent or any other
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under this Agreement.

 

SECTION 8.5.  Indemnification.

 

The
Lenders agree to indemnify at any time the Administrative Agent (to the extent
not reimbursed by the Borrowers), ratably according to their respective
Commitment Percentages (and if an indemnified item (as defined below) is
incurred at any time after the termination of the Commitments and such
indemnified item is incurred, in the opinion of the Administrative Agent,
solely for the benefit of the Lenders having Advances outstanding to each of
them at such time, then ratably according to the respective principal amounts
of Advances outstanding to each of them at the date of payment by the
Administrative Agent of such indemnified item or, if not yet paid, at the date
of the assertion of the indemnified item), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever (each of the
foregoing being an “indemnified
item”) which may be imposed on, incurred by, or asserted against
the Administrative Agent in any way relating to or arising out of this
Agreement or any action taken or omitted by the Administrative Agent under this
Agreement; provided that no
Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Administrative Agent’s gross negligence or
willful misconduct. Without limitation of the foregoing, each Lender agrees to
reimburse the Administrative Agent promptly upon demand for its ratable share
(ratably in accordance with the first sentence of this Section 8.5) of any
out-of-pocket expenses (including counsel fees) incurred by the Administrative
Agent in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, to the extent that the Administrative
Agent is not reimbursed for such expenses by the Borrowers.

 

SECTION 8.6.  Successor Administrative Agent.

 

The
Administrative Agent may resign at any time by giving 30 days prior written
notice thereof to the Lenders and the Borrowers and may be removed at any time
with cause by the Required Lenders. Upon any such resignation or removal of the
Administrative Agent, the Required Lenders shall have the right to appoint a
successor Administrative Agent reasonably acceptable to the Borrowers. If no
successor Administrative Agent shall have been so appointed by the Required
Lenders and accepted by the Borrowers, and shall have accepted such
appointment, within 30 days after the retiring Administrative

 

44

 

Agent’s giving of notice of resignation or the Required Lenders’
removal of the retiring Administrative Agent, then the retiring Administrative
Agent may, on behalf of the Lenders, appoint a successor Administrative Agent,
which shall be a Lender. Upon the acceptance of any 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, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations under this Agreement. After any retiring
Administrative Agent’s resignation or removal hereunder as Administrative
Agent, the provisions of this Article VIII shall inure to its benefit as
to any actions taken or omitted to be taken by it while it was Administrative
Agent under this Agreement.

 

ARTICLE IX

MISCELLANEOUS

 

SECTION 9.1.  Amendments, Etc.

 

(a)  Except
as set forth in Section 9.1(b), no amendment or waiver of any provision of
this Agreement, nor consent to any departure by the Borrowers therefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Required Lenders, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given; provided,
however, that subject to the provisions of Section 2.16, no
such amendment, waiver or consent shall: (i) forgive the principal amount
or extend the final scheduled date of maturity of any Advance or Unreimbursed
LC Disbursement, reduce the stated rate of any interest or fee payable
hereunder (except in connection with the waiver of applicability of any
post-default increase in interest rates (which waiver shall be effective with
the consent of the Required Lenders)) or extend the scheduled date of any
payment thereof, or increase the amount or extend the expiration date of any
Lender’s Commitment, in each case without the written consent of each Lender
directly affected thereby; (ii) reduce any percentage specified in the
definition of Required Lenders or consent to the assignment or, except as
otherwise permitted by Section 6.2(b), transfer by any Borrower of any of
its rights and obligations under this Agreement and the other Financing
Documents, without the written consent of all Lenders; (iii) amend, modify
or waive any provision of this Agreement affecting the rights or duties of the
Administrative Agent without the written consent of the Administrative Agent;
or (iv) amend, modify or waive any provision of this Agreement affecting
the rights or duties of the LC Bank without the written consent of the LC
Bank.  Any such waiver and any such
amendment, supplement or modification shall apply equally to each of the
Lenders and shall be binding upon the Borrowers, the Lenders, the
Administrative Agent and all future holders of the Advances.  In the case of any waiver, the Borrowers, the
Lenders and the Administrative Agent shall be restored to their former position
and rights hereunder and under the other Financing Documents, and any Default
or Event of Default waived shall be deemed to be cured and not continuing; but
no such waiver shall extend to any subsequent or other Default or Event of
Default, or impair any right consequent thereon.

 

Notwithstanding the
foregoing, this Agreement may be amended (or amended and restated) to add one
or more additional credit facilities to this Agreement and to permit the
extensions of credit from time to time outstanding thereunder and the accrued
interest and fees in respect thereof to share ratably in the benefits of this
Agreement with the Extensions of Credit and the accrued interest and fees in
respect thereof with the written consent of the Required Lenders, the
Administrative Agent, the LC Bank and each Borrower to whom extensions of
credit thereunder would be made available.

 

(b)  This
Agreement may be amended by Cinergy to remove any of CG&E, PSI Energy or
ULH&P as a Borrower (a “Removed Borrower”) hereunder subject to: (i) the
receipt by the Administrative Agent of prior written notification from Cinergy
of such amendment, (ii) repayment in full of all Advances made to such
Borrower, (iii) cash collateralization of all reimbursement obligations in
respect of any Letters of Credit issued for the account of such Borrower (or
the amendment of such Letter

 

45

 

of Credit to provide for
Cinergy as the account party) and (iv) repayment in full of all other
amounts owing by such Borrower under this Agreement (it being agreed that any
such repayment shall be in accordance with the other terms of this
Agreement).  Upon the satisfaction of the
foregoing conditions the rights and obligations of such Removed Borrower
hereunder shall terminate; provided,
however, that the obligations of
such Removed Borrower under Section 9.4 shall survive such amendment.

 

SECTION 9.2.  Notices, Etc.

 

All
notices and other communications provided for hereunder shall be in writing
(including facsimile transmission) and (except when particular means are
specified) mailed, faxed or delivered:

 

(a)  if
to Cinergy, at its address at 139 East Fourth Street, Cincinnati, Ohio 45202, Attention:
Treasurer, telecopy:

(513) 287-2749;

 

(b)  if
to CG&E, at its address at 139 East Fourth Street, Cincinnati, Ohio 45202, Attention:
Treasurer, telecopy:

(513) 287-2749, with a copy to Cinergy, at its address at 139 East Fourth
Street, Cincinnati, Ohio 45202, Attention: Treasurer, telecopy: (513) 287-2749;

 

(c)  if
to PSI Energy, 139 East Fourth Street, Cincinnati, Ohio 45202, Attention:
Treasurer, telecopy: (513) 287-2749, with a copy to Cinergy, at its address at
139 East Fourth Street, Cincinnati, Ohio 45202, Attention: Treasurer, telecopy:
(513) 287-2749

 

(d)  if
to ULH&P, 139 East Fourth Street, Cincinnati, Ohio 45202, Attention:
Treasurer, telecopy: (513) 287-2749, with a copy to Cinergy, at its address at
139 East Fourth Street, Cincinnati, Ohio 45202, Attention: Treasurer, telecopy:
(513) 287-2749;

 

(e)  if
to the LC Bank, at the Domestic Lending Office of Barclays specified opposite
its name on Schedule 1.1 hereto;

 

(f)  if
to the Administrative Agent, c/o Barclays Capital Service LLC, 200 Cedar Knolls
Road, Whippany, NJ 07981, Attention May Wong, telecopy: (973) 576-3694;

 

(g)  if
to any Bank, at its Domestic Lending Office specified opposite its name on Schedule 1.1
hereto; and

 

(h)  if
to any Lender other than a Bank, at its Domestic Lending Office specified in
the Assignment and Acceptance pursuant to which it became a Lender;

 

or, as to each party, at such other address as shall be designated by
such party in a written notice to the other parties. All such notices and
communications shall, when mailed or facsimiled, be effective when deposited in
the mails or transmitted, respectively, except that notices and communications
to the Administrative Agent pursuant to Article II, III or IX shall
not be effective until received by the Administrative Agent. Without limitation
of the foregoing, the Administrative Agent shall be fully protected in acting
upon any notice or instruction received by it by telephone or by facsimile transmission
so long as the Administrative Agent reasonably believes such notice or
instruction to be genuine, but any such notice or instruction shall be promptly
confirmed in writing.  The Administrative
Agent and each Borrower may, in its discretion, agree to accept notices and
other communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided that
approval of such procedures may be limited to particular notices or
communications.

 

46

 

SECTION 9.3.  No Waiver; Remedies.

 

No
failure on the part of any Lender or the Administrative Agent to exercise, and
no delay in exercising, any right hereunder shall operate as a waiver thereof;
nor shall any single or partial exercise of any such right preclude any other
or further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.

 

SECTION 9.4.  Costs, Expenses and Taxes; Indemnification.

 

(a)  Each
Borrower agrees to pay on demand all reasonable costs and expenses in
connection with the preparation, execution, delivery, administration,
modification and amendment of this Agreement, any Note and any other documents
to be delivered hereunder, including, without limitation, the reasonable fees
and out-of-pocket expenses of counsel for the Administrative Agent with respect
thereto and with respect to advising the Administrative Agent as to its rights
and responsibilities under this Agreement and of the LC Bank with respect to
the execution, delivery, administration, modification and amendment of any
Letters of Credit to be issued by it hereunder relating to the performance by
such Borrower under this Agreement, and to reimburse and hold harmless the
Lenders, the LC Bank and the Administrative Agent for and against all of their
reasonable costs and expenses arising in connection with the enforcement or
preservation of rights and remedies under (whether in litigation, by
negotiation, in workouts, restructurings or other negotiations, or otherwise)
this Agreement, the Letters of Credit and any Note or in connection with the
transactions contemplated hereby and thereby against such Borrower, including
but not limited to the reasonable fees and expenses of counsel to the
Administrative Agent, each Lender and the LC Bank (provided
that the Borrowers shall not be obligated to reimburse for more than one law
firm (and in addition to such law firm, any local counsel engaged in each
relevant jurisdiction by such law firm) as counsel for the Administrative Agent
and the Lenders, except to the extent that multiple law firms are reasonably
required to and, in fact do represent the Administrative Agent and the Lenders,
or if an actual conflict between represented parties shall exist) and all stamp
taxes, recording taxes and fees and filing taxes and fees which may be payable
in respect thereof; provided that
the Borrowers shall not be required to reimburse the costs and expenses of any
Lender that arise out of any assignment or participation by such Lender
hereunder (other than any assignment pursuant to Section 2.16).

 

(b)  Each
Borrower shall further indemnify, reimburse and hold harmless the Lenders, the
LC Bank, the Administrative Agent and their respective officers, directors,
employees, affiliates, agents and controlling Persons (each, an “Indemnified Party”)
from and against any and all claims, damages, losses, costs and liabilities
(including but not limited to the reasonable fees and expenses of counsel to
each such Indemnified Party) which any of them may incur or which may be
claimed against any of them by any person or entity or in any investigative,
administrative or judicial proceeding (whether or not such Indemnified Party
shall be designated a party thereto) as a result of, in connection with, or
otherwise arising from the Commitments, the Advances, the Letters of Credit or
any actual or proposed use of the proceeds of the Extensions of Credit
hereunder relating to the performance of such Borrower under this Agreement; provided, that, no Indemnified Party shall
have the right to be indemnified hereunder for such Indemnified Party’s own
gross negligence or willful misconduct.

 

(c)  Any
request for reimbursement of any out-of-pocket expenses shall be accompanied by
reasonable documentation in respect thereof, including copies of invoices from
third parties, and in the case of charges for counsel, the invoice shall
include a breakdown of the hourly time and a short summary of services rendered
by date and service provider, a summary of the charges, hourly rate and total
hours provided by each service provider and a breakdown of reasonable
out-of-pocket expenses of counsel.

 

(d)  Notwithstanding
anything to the contrary herein, the obligations of each Borrower under this Section 9.4
shall be the joint and several obligation of Cinergy;  provided that the foregoing shall
not be construed as a guarantee of payment by Cinergy of any obligation of
another Borrower hereunder.

 

47

 

(e)  Each
Borrower’s obligations under this Section (including Cinergy’s joint and
several obligation with respect to the respect to each other Borrower) shall
survive the repayment of all amounts owing to the Lenders, the LC Bank and the Administrative
Agent under the Financing Documents and the termination of the
Commitments.  If and to the extent that
the obligations of any Borrower under this Section are unenforceable for
any reason, such Borrower agrees to make the maximum contribution to the
payment and satisfaction thereof which is permissible under applicable law.

 

SECTION 9.5.  Right of Set-off.

 

Upon
(a) the occurrence and during the continuance of any Event of Default
arising out a breach by a Borrower or its Subsidiaries and (b) the making
of the request or the granting of the consent specified by Section 7.1 to
authorize the Administrative Agent to declare the Advances due and payable
pursuant to the provisions of Section 7.1 (unless such Event of Default is
an Event of Default described in Section 7.1(f), in which case the
requirement of this clause (b) shall be inapplicable), each Lender and the
LC Bank and each of their respective Affiliates is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final), except in dedicated payroll accounts or in margin accounts, at any
time held and other indebtedness at any time owing by such Lender or the LC Bank
or such Affiliate to or for the credit or the account of such Borrower against
any and all of the obligations of such Borrower now or hereafter existing under
this Agreement, irrespective of whether or not such Lender or the LC Bank shall
have made any demand under this Agreement and although such obligations may be
unmatured. Each Lender and the LC Bank agrees promptly to notify such Borrower
after any such set-off and application made by such Lender or the LC Bank or
any of their respective Affiliates; provided
that, the failure to give such notice shall not affect the validity
of such set-off and application. The rights of each Lender or the LC Bank or
their respective Affiliates under this Section are in addition to other
rights and remedies (including, without limitation, other rights of set-off)
which such Lender or the LC Bank or their respective Affiliates may have.

 

SECTION 9.6.  Binding Effect.

 

This
Agreement shall become effective when it shall have been executed by each
Borrower and the Administrative Agent and when the Administrative Agent shall
have been notified by each Bank that such Bank has executed it and thereafter
shall be binding upon and inure to the benefit of each Borrower, the
Administrative Agent, the LC Bank and each Lender and their respective
successors and assigns, except that no Borrower shall have the right to assign
its rights or obligations hereunder or any interest herein without the prior
written consent of all of the Lenders.

 

SECTION 9.7.  Assignments, New Lenders and Participations.

 

(a)  Each
Lender may (i) with the consent of the LC Bank (which consent may be
granted or withheld in the sole discretion of the LC Bank) assign to one
or more Lenders, an affiliate of a Lender or an Approved Fund or (ii) with
the consent of Cinergy (which consent shall not be unreasonably withheld or
delayed and shall not be required while any Event of Default shall have
occurred and be continuing) and the Administrative Agent (which consent shall
not be unreasonably withheld or delayed) and the LC Bank (which consent may be
granted or withheld in the sole discretion of the LC Bank), assign to one or
more banks or other entities other than Lenders, an affiliate of a Lender or an
Approved Fund, all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its Commitment
and the Advances owing to it); provided, however, that (i) each such
assignment shall be of a constant, and not a varying, percentage of all of the
assigning Lender’s rights and obligations under this Agreement, (ii) the
amount of the Commitment of the assigning Lender being assigned pursuant to
each such assignment (determined as of the date of the Assignment and
Acceptance with respect to such assignment) shall not be less than $5,000,000
and shall be an integral multiple of

 

48

 

$1,000,000 in excess
thereof, unless (A) the amount of the Commitment being assigned is the
whole Commitment of the assigning Lender, (B) the Assignee shall, prior to
such assignment, already be a Lender hereunder, or (C) each of Cinergy and
the Administrative Agent otherwise consent (it being understood that no such
consent of Cinergy shall be required if an Event of Default shall have occurred
and be continuing), and (iii)  the parties to each such assignment shall
execute and deliver to the Administrative Agent, for its acceptance and
recording in the Register, an Assignment and Acceptance, and a processing and
recordation fee of $3,500 payable by the assigning Lender and/or the assignee
Lender (or, in the case of a replacement of a Lender pursuant to Section 2.2(c)(i) or
Section 2.16, payable by the relevant Borrower) with respect to the
administration and processing of the assignments of rights and obligations of
the assigning Lender to the assignee Lender hereunder. Upon such execution,
delivery, acceptance and recording, from and after the effective date specified
in each Assignment and Acceptance, which effective date shall be at least three
Business Days after the execution thereof, (x) the assignee thereunder
shall be a party hereto and, to the extent that rights and obligations
hereunder have been assigned to it pursuant to such Assignment and Acceptance,
have the rights and obligations of a Lender hereunder and (y) the Lender
assignor thereunder shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights (other than pursuant to Sections 2.11, 2.13 and 9.4, which
rights shall survive the execution and delivery of such Assignment and
Acceptance) and be released from its obligations under this Agreement (and, in
the case of an Assignment and Acceptance covering all or the remaining portion
of an assigning Lender’s rights and obligations under this Agreement, such
Lender shall cease to be a party hereto, except as to Sections 2.11, 2.13
and 9.4).  Any assignment or transfer by
a Lender of rights and obligations under this Agreement that does not comply
with this Section 9.7 shall be treated for purposes of this Agreement as a
sale by such Lender of a participation in such rights and obligations in
accordance with paragraph (e) of this Section 9.7.

 

(b)  By
executing and delivering an Assignment and Acceptance, the Lender assignor
thereunder and the assignee thereunder confirm to and agree with each other and
the other parties hereto as follows:

 

(i)                                     other than as provided in such Assignment and
Acceptance, such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or any other
instrument or document furnished pursuant hereto or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement
or any other instrument or document furnished pursuant hereto;

 

(ii)                                  such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to the financial
condition of the Borrowers or the performance or observance by the Borrowers of
any of their obligations under this Agreement or any other instrument or
document furnished pursuant hereto;

 

(iii)                               such assignee confirms that it has received a
copy of this Agreement, together with copies of the most recent financial
statements referred to in Section 5.1(d) and/or Section 6.1(a)(i) and
(ii) and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into such Assignment and
Acceptance;

 

(iv)                              such assignee will, independently and without
reliance upon the Administrative Agent, such assigning Lender or any other
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under this Agreement;

 

(v)                                 such assignee appoints and authorizes the
Administrative Agent to take such action as Administrative Agent on its behalf
and to exercise such powers under this Agreement as

 

49

 

are delegated to the Administrative Agent by
the terms hereof, together with such powers as are reasonably incidental
thereto; and

 

(vi)                              such assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of this
Agreement are required to be performed by it as a Lender.

 

(c)  The
Administrative Agent shall maintain at its address referred to in Section 9.2
a copy of each Assignment and Acceptance delivered to and accepted by it and a
register for the recordation of the names and addresses of the Lenders and the
Commitment of, and principal amount of the Advances owing to, each Lender from
time to time (the “Register”).
The entries in the Register shall be conclusive and binding for all purposes,
absent manifest error, and the Borrowers, the Administrative Agent and the
Lenders may treat each Person whose name is recorded in the Register as a
Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Borrowers or any Lender at any reasonable time
and from time to time upon reasonable prior notice.

 

(d)  Upon
its receipt of an Assignment and Acceptance executed by an assigning Lender and
an assignee consented to by Cinergy, the Administrative Agent shall, if such
Assignment and Acceptance has been completed and is in substantially the form
of Exhibit E hereto, (i) accept such Assignment and Acceptance, (ii) record
the information contained therein in the Register and (iii) give prompt
notice thereof to the Borrowers.

 

(e)  Each
Lender may sell participations to one or more banks or other entities (“Participants”) in or
to all or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitment and the
Advances owing to it); provided, however,
that (i) such Lender’s obligations under this Agreement (including,
without limitation, its Commitment to the Borrowers hereunder) shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) the
Borrowers, the Administrative Agent, the LC Bank and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender’s rights and obligations under this Agreement and (iv) the holder
of any such participation, other than an affiliate of such Lender, shall not be
entitled to require such Lender to take or omit to take any action hereunder,
except action (A) extending the time for payment of interest on, or the
principal amount of, the Advances, Unreimbursed LC Disbursements, (B) increasing
or extending such Lender’s Commitment or reducing the rate of interest payable
on the Advances, Unreimbursed LC Disbursements, (C) forgiving the payment
of interest on or principal of the Advances, Unreimbursed LC Disbursements or (D) reducing
the Facility Fee or letter of credit risk participation fee referred to in Section 2.3
hereof.  Each Borrower agrees that if
amounts outstanding under this Agreement are due and unpaid, or shall have been
declared or shall have become due and payable upon the occurrence of an Event
of Default by such Borrower or its Subsidiaries, each Participant shall be
deemed to have the right of set-off in respect of its participating interest in
amounts owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement; provided, that such
right of set-off shall be subject to the obligation of such Participant to
share with the Lenders, and the Lenders agree to share with such Participant,
as provided in Section 2.14.  Each
Borrower also agrees that each Participant shall be entitled to the benefits of
Sections 2.11, 2.13, 2.15 and 9.4 with respect to its participation
interest in the Commitments and the Advances outstanding from time to time; provided that no Participant shall be entitled to receive
any greater amount pursuant to such Sections 2.11, 2.13, 2.15 and 9.4 than the
transferor Lender would have been entitled to receive in respect of the amount
of the participation transferred by such transferor Lender to such Participant
if such transfer had not occurred.

 

(f)  Notwithstanding
anything to the contrary contained herein, any Lender (a “Granting Lender”) may
grant to a special purpose funding vehicle (an “SPV”) utilized by such Granting Lender
identified as such in writing from time to time by the Granting Lender to the
Administrative Agent and the Borrowers, the option to provide to the Borrowers
all or any part of any Advance that such Granting

 

50

 

Lender would otherwise be
obligated to make to the Borrowers pursuant to this Agreement; provided, that (i) such SPV is an “Accredited
investor” (as defined in Rule 501 of Regulation D under the Securities Act
of 1933, as amended), (ii) nothing herein shall constitute a commitment by
any such SPV to make any Advance, (iii) if such SPV elects not to exercise
such option or otherwise fails to provide all or any part of such Advance or
perform any other obligation of a “Lender” hereunder, the Granting Lender shall
be obligated to make such Advance or perform such other obligation pursuant to
the terms hereof and (iv) no SPV or Granting Lender shall be entitled to
receive any greater amount pursuant to Section 2.9, 2.11 or 2.13 than the
Granting Lender would have been entitled to receive had the Granting Lender not
otherwise granted such SPV the option to provide any Advance to the Borrowers.
The making of an Advance by an SPV hereunder shall utilize the Commitment of
the Granting Lender to the same extent, and as if, such Advance were made by
such Granting Lender. Each party hereto hereby agrees that no SPV shall be
liable for any indemnity or other payment obligation under this Agreement for
which a Lender would otherwise be liable so long as, and to the extent that,
the related Granting Lender provides such indemnity or makes such payment.

 

In
furtherance of the foregoing, each party hereto hereby agrees (which agreement
shall survive the termination of this Agreement) that, prior to the date that
is one year and one day after the payment in full of all outstanding commercial
paper or other senior indebtedness of any SPV, it will not institute against or
join any other person in instituting against such SPV any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under the
laws of the United States or any State thereof. Notwithstanding the foregoing,
the Granting Lender unconditionally agrees to indemnify the Borrowers, the
Administrative Agent and each Lender against all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be incurred by or
asserted against any Borrower, the Administrative Agent or such Lender, as the
case may be, arising as a consequence of any such forbearance or delay in the
initiation of any such proceeding against its SPV.

 

As
to any Advance or portion thereof made by it, each SPV shall have all the
rights that its Granting Lender would have had under this Agreement had such
Granting Lender made such Advance; provided, however, that each SPV shall have
granted to its Granting Lender an irrevocable power of attorney to deliver and
receive all communications and notices under this Agreement (and any related
documents), to receive all payments in respect of the Advances funded by it and
to exercise on such SPV’s behalf all of such SPV’s consent rights under this
Agreement and, as a result thereof, no other party hereto shall be required to
communicate with, make any payment to, or act on any instruction or demand of,
such SPV, it being understood that such SPV’s Granting Lender shall have the
exclusive rights of a “Lender” with respect to any Advance or portion thereof
made by an SPV by virtue of such power of attorney.

 

Notwithstanding
anything to the contrary contained in this Agreement any SPV may (i) with
notice to, but without the prior written consent of any other party hereto,
assign all or a portion of its interest in any Advances to the Granting Lender
or to any financial institution providing liquidity and/or credit support to or
for the account of such SPV to support the funding or maintenance of Advances
and (ii) disclose on a confidential basis any confidential information
relating to its Advances to any rating agency, commercial paper dealer or
provider of any surety, guarantee or credit or liquidity enhancement to such
SPV. This Section may not be amended without the prior written consent of
each Granting Lender, all or any part of whose Advance is being funded by an
SPV at the time of such amendment.

 

(g)  (i)                Any
Lender may, in connection with any assignment or participation, or proposed
assignment or participation, or any designation or grant to an SPV, or any
proposed designation or grant to an SPV, pursuant to this Section 9.7,
disclose to the assignee or participant, or proposed assignee or participant,
or designee or grantee, or proposed designee or grantee, any information
relating to the Borrowers furnished to such Lender by or on behalf of the
Borrowers; provided that, prior
to any such disclosure, the assignee or participant, or proposed assignee or

 

51

 

participant, or designee or grantee, or
proposed designee or grantee, shall agree to preserve the confidentiality of
any confidential information (except any such disclosure as may be required by
law) relating to the Borrowers, received by it from such Lender.

 

(ii)                                  In addition, each Borrower hereby
acknowledges and agrees that each Lender may share with any of its affiliates
any information relating to such Borrower or any of its Subsidiaries
(including, without limitation, any non-public information regarding the
creditworthiness of such Borrower and its Subsidiaries), provided, that any such Person shall be
subject to the provisions of this paragraph (g) to the same extent as
the applicable Lender.

 

(h)  Anything
in this Section 9.7 to the contrary notwithstanding, any Lender may assign
and pledge all or any portion of its Commitment and the Advances owing to it to
any Federal Reserve Bank (and its transferees) as collateral security pursuant
to Regulation A of the Board of Governors of the Federal Reserve System
and any Operating Circular issued by such Federal Reserve Bank. No such
assignment shall release the applicable Lender from its obligations hereunder.

 

(i)  Each
Borrower, upon receipt of written notice from the relevant Lender, agrees to
issue Notes to any Lender requiring Notes to facilitate transactions of the
type described in paragraph (h) above.

 

SECTION 9.8.  No Recourse.

 

No
recourse shall be had for the payment of any obligation or any claim arising
out of or relating to this Agreement against any incorporator, stockholder,
affiliate, officer or director of the Borrowers or any partner or employee
thereof. The provisions of this Section 9.8 shall be binding on the
parties hereto and their respective successors and assigns, and shall survive
the termination of this Agreement.

 

SECTION 9.9.  Consent to Jurisdiction; Waiver of Jury
Trial.

 

(a)  To
the fullest extent permitted by law, each Borrower hereby irrevocably (i) submits
to the non-exclusive jurisdiction of any New York State or Federal court
sitting in New York City and any appellate court from any thereof in any action
or proceeding arising out of or relating to this Agreement, and (ii) agrees
that all claims in respect of such action or proceeding may be heard and
determined in such New York State court or in such Federal court. Each Borrower
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding. Each
Borrower also irrevocably consents, to the fullest extent permitted by law, to
the service of any and all process in any such action or proceeding by the
mailing by certified mail of a copy of such process to such Borrower at its
address specified in Section 9.2. Each Borrower agrees, to the fullest
extent permitted by law, that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.

 

(b)  EACH
BORROWER, THE ADMINISTRATIVE AGENT, THE LC BANK AND THE LENDERS HEREBY
IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY NOTE, OR ANY
OTHER INSTRUMENT OR DOCUMENT DELIVERED HEREUNDER OR THEREUNDER.

 

SECTION 9.10.  Governing Law.

 

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

 

52

 

SECTION 9.11.  Execution in Counterparts.

 

This
Agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed shall
be deemed to be an original and all of which taken together shall constitute
one and the same agreement.

 

SECTION 9.12.  Entire Agreement; Exhibits and Schedules.

 

The Financing Documents, together with all other
instruments, agreements and certificates executed by the parties in connection
therewith or with reference thereto, embody the entire understanding and
agreement between the parties hereto and thereto with respect to the subject
matter hereof and thereof and supersede all prior agreements, understandings
and inducements, whether express or implied, oral or written.  Each of the Exhibits and each of the
Schedules attached hereto are incorporated into this Agreement and by this
reference made a part hereof.

 

SECTION 9.13.  Confidentiality.

 

Each of the Administrative Agent and each Lender
agrees to keep confidential all non-public information provided to it by any
Borrower, Subsidiary of any Borrower, the Administrative Agent or any Lender
pursuant to or in connection with this Agreement that is designated by the
provider thereof as confidential; provided that nothing herein shall
prevent the Administrative Agent or any Lender from disclosing any such
information (a) to the Administrative Agent, any other Lender or any
affiliate thereof directly involved in the negotiation or syndication of this
Agreement, (b) subject to an agreement to comply with the provisions of
this Section, to any actual or prospective assignee or Participant, (c) to
its employees, directors, agents, attorneys, accountants and other professional
advisors or those of any of its affiliates directly involved in the negotiation
or syndication of this Agreement, (d) upon the request or demand of any
Governmental Authority, (e) in response to any order of any court or other
Governmental Authority or as may otherwise be required pursuant to any Requirement
of Law, (f) if requested or required to do so in connection with any
litigation or similar proceeding, (g) that has been publicly disclosed, (h) to
the National Association of Insurance Commissioners or any similar organization
or any nationally recognized rating agency that requires access to information
about a Lender’s investment portfolio in connection with ratings issued with
respect to such Lender, or (i) in connection with the exercise of any
remedy hereunder or under any other Finance Document.

 

SECTION 9.14.  USA PATRIOT Act.  Each Lender hereby notifies
the Borrowers that pursuant to the requirements of the USA Patriot Act (Title
III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required
to obtain, verify and record information that identifies each Borrower, which
information includes the name and address of each Borrower and other
information that will allow such Lender to identify such Borrower in accordance
with the Act.

 

53

 

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

 

	
   

  	
  CINERGY CORP.

  
	
   

  	
  139 East Fourth Street

  
	
   

  	
  Cincinnati, Ohio 45202

  
	
   

  	
  Taxpayer ID: 31-1385023

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
    /s/ Wendy L. Aumiller

  	
   

  
	
   

  	
   

  	
  Name: Wendy L. Aumiller

  
	
   

  	
   

  	
  Title: Vice President and Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE CINCINNATI GAS & ELECTRIC COMPANY

  
	
   

  	
  139 East Fourth Street

  
	
   

  	
  Cincinnati, Ohio 45202

  
	
   

  	
  Taxpayer ID: 31-0240030

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
    /s/ Wendy L. Aumiller

  	
   

  
	
   

  	
   

  	
  Name: Wendy L. Aumiller

  
	
   

  	
   

  	
  Title: Vice President and Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PSI ENERGY, INC.

  
	
   

  	
  1000 East Main Street

  
	
   

  	
  Plainfield, Indiana 46168

  
	
   

  	
  Taxpayer ID: 35-0594457

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
    /s/ Wendy L. Aumiller

  	
   

  
	
   

  	
   

  	
  Name: Wendy L. Aumiller

  
	
   

  	
   

  	
  Title: Vice President and Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE UNION LIGHT, HEAT AND POWER COMPANY

  
	
   

  	
  139 East Fourth Street

  
	
   

  	
  Cincinnati, Ohio 45202

  
	
   

  	
  Taxpayer ID: 31-0473080

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
    /s/ Wendy L. Aumiller

  	
   

  
	
   

  	
   

  	
  Name: Wendy L. Aumiller

  
	
   

  	
   

  	
  Title: Vice President and Treasurer

  

 

 

	
   

  	
  BARCLAYS BANK PLC, as
  Administrative Agent, LC Bank

  and as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
    /s/ Sydney G. Dennis

  	
   

  
	
   

  	
   

  	
  Name: Sydney G. Dennis

  
	
   

  	
   

  	
  Title: Director

  
	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK, N.A.,
  as Syndication Agent and

  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
    /s/ Thomas L. Casey

  	
   

  
	
   

  	
   

  	
  Name: Thomas L. Casey

  
	
   

  	
   

  	
  Title: Vice President

  

 

2Unassociated Document

    
      

        

        DEFINITIVE
          JOINT VENTURE AGREEMENT

        

        

        

        by
          and
          between

        

        

        

        LIVESTAR
          ENTERTAINMENT GROUP, INC.

        

        

        

        and

        

        

        GLOBAL
          BANCORP, INC.

        

        

        

        December
          28, 2004

        

        

        
          
            
               

            

            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        

        

        DEFINITIVE
          JOINT VENTURE AGREEMENT

        

        This
          DEFINITIVE JOINT VENTURE AGREEMENT ("AGREEMENT") is made as of December
          28,
          2004, by and between GLOBAL BANCORP, INC., a Nevada corporation ("GBBI"),
          and
          LIVESTAR ENTERTAINMENT GROUP, INC., a Nevada corporation ("LVSG"). GBBI
          and LVSG
          are hereunder also referred to collectively as the "PARTIES" and individually
          as
          a "PARTY."

        

        A.
          LVSG
          is an entertainment holding company currently transitioning to a holding
          company
          structure.

        

        B.
          GBBI is
          development company with a focus on advanced digital media technologies
          including Video on Demand, Voice Over Internet (“VoIP”), and a smart card bank
          platform for future integrated commerce and e-commerce applications such
          as
          Web-Enabled ATMs (personal banking in the home). 

        

        C.
          The
          Parties desire to form a joint venture to pursue the Business, as hereafter
          defined.

        

        NOW
          THEREFORE, for valuable consideration, the receipt and adequacy of which
          are
          hereby acknowledged, the Parties hereby agree as follows:

        

        1.
          DEFINITIONS

        

        1.1
          "AFFILIATE" means any Person: (a) that is controlled by, controls, or is
          under
          common control with a Party (collectively, a "CONTROLLED PERSON"); or (b)
          that
          is controlled by, controls, or is under common control with any such Controlled
          Person, in each case for so long as such control continues; provided, however,
          that for purposes of Section 3.2 Affiliates of LVSG shall include Persons
          in
          which LVSG owns, directly or indirectly, at least thirty percent (30%)
          of the
          outstanding voting shares, regardless of whether such control actually
          exists.
          For purposes of this definition, "CONTROL" shall mean the possession, directly
          or indirectly, of power to direct or cause the direction of management
          or
          policies (whether through ownership of securities or other ownership interests,
          by contract or otherwise).

        

        1.2
          "APPLICABLE LAW" means, as to any Person, any statute, law, rule, regulation,
          directive, treaty, judgment, order, decree or injunction of any Governmental
          Authority that is applicable to or binding upon such Person or any of its
          properties.

        

                1.3
          "BOARD" means the
          board of directors of the Company.

        

                1.4
          "BUSINESS" means
          the business of the Company as described herein.

        

                1.5
          "BUSINESS DAY"
          means a day on which commercial banks in Nevada.

        

                1.6
          "CLOSING DATE" is
          defined in Section 3.2.

        

        1.7
          "COMMON STOCK" means common stock of the Company as authorized by the
          Articles.

        

                1.8
          "COMPANY" is
          defined in Section 3.1.

        

        1.9
          "COMPANY INTEREST" means, as to any Person, the percentage interest represented
          by the Securities then held by such Person divided by all then outstanding
          Securities (on an as-converted to Common Stock basis).

        

                1.10
          "CONFIDENTIAL
          INFORMATION" is defined in Section 5.1.

         

                1.11
          "DISCLOSING
          PARTY" is defined in Section 5.1.

        

                1.12
          "EFFECTIVE DATE"
          means the date of this Agreement.

        

                1.13
          "ESTABLISHMENT
          DATE" is defined in Section 3.1.

        

        1.14
          "GOVERNMENTAL AUTHORITY" means any domestic or foreign government, governmental
          authority, court, tribunal, agency or other regulatory, administrative
          or
          judicial agency, commission or organization, and any subdivision, branch
          or
          department of any of the foregoing.

        

                1.15
          "LAUNCH DATE" is
          defined in Section 3.1.

        

                1.16
          "PARTY" and
          "PARTIES" are defined in the opening paragraph of this Agreement.

        

        1.17
          "PERSON" means a natural individual, Governmental Authority, partnership,
          firm,
          corporation, or other business association.

        

                1.18
          "PRESIDENT"
          means the president of the Company.

        

                1.19
          "RECEIVING
          PARTY" is defined in Section 5.1.

        

        1.20
          "SECURITIES" means all outstanding shares of Common Stock, and any other
          equity
          securities of the Company or instruments exercisable for or convertible
          into
          Common Stock.

        

                1.21
          "TERRITORY"
          means the world.

        

                1.22
          "TERM" is
          defined in Section 7.1.

        

        1.23
          "TRANSACTION DOCUMENTS" means this Agreement, the Asset Purchase
          Agreement.

        

                1.24
          "TRANSFERRED
          SHARES" is defined in Section 3.2.

        

        1.25
          "ASSET PURCHASE AGREEMENT" means the Asset Purchase Agreement to be entered
          into
          between GBBI and the Company on the Closing Date in the form of attached
          Exhibit
          1.0.

        

        2.
          PURPOSE OF JOINT VENTURE

        

        The
          Parties hereby associate themselves in a joint venture relationship which
          shall
          have as its principal purpose the establishment and development of the
          Business.
          The Business will be limited initially to (1) developing, marketing and
          providing of a Voice Over IP service (“VoIP”) throughout the world, with initial
          rollout in Canada and the United States and (2) activities incidental
          thereto.

        

        

        

        3.
          ESTABLISHMENT AND CAPITALIZATION OF THE COMPANY

        

                3.1
          Establishment.
          The Parties agree that the joint venture contemplated by this Agreement
          shall be
          carried out exclusively through a newly-formed Nevada corporation initially
          established by both LVSG and GBBI (the "COMPANY"). The Company's corporate
          name
          shall be VOXBOX Telecom, Inc. The Parties shall use commercially reasonable
          efforts to cause the Establishment Date to occur on or before February
          1, 2005
          and the Launch Date to occur on or before a date to be agreed upon by the
          Parties after mutual discussions. For the purposes of this Agreement,
          "ESTABLISHMENT DATE" means the date on which the Company is established
          and
          "LAUNCH DATE" means the date on which the Company commences commercial
          operations.

        

                3.2
          Capitalization.

        

                    (a)
          Initial
          Capitalization. The Company shall, as of the Establishment Date, have authorized
          capital stock consisting of two classes of shares designated as Preferred
          Stock
          and Common Stock. The Company's initial equity shall be funded as
          follows:

        

                        (i)
          GBBI Initial
          Subscription. On or prior to the Establishment Date, GBBI shall subscribe
          for
          10,000 shares of Common Stock, representing a one-hundred-percent (100%)
          Company
          Interest, for an aggregate purchase price of the transfer of the rights
          to the
          VOXBOX service.

        

                        (ii)
          LVSG Purchase.
          On a date within fifteen (15) days after the Establishment Date mutually
          agreed
          by the Parties (the "CLOSING DATE"), 

        

        
          	 	
                  ·

                	
                  (a)GBBI
                    shall (x) sell to LVSG, and LVSG shall purchase from GBBI, 800
                    shares of
                    Common Stock representing a four percent (4%) Company Interest
                    (the
                    "TRANSFERRED SHARES") for an aggregate purchase price of $40,000
                    USD which
                    the parties acknowledge will be paid to GBBI by LVSG. ($4950
                    USD has been
                    paid in advance to GBBI prior the date of this Agreement and
                    the balance
                    of $35,050 USD will be owing to GBBI to be paid by June 28, 2005).
                    

                

        

        

        
          	 	
                  ·

                	
                  (b)
                    On or prior to the Closing Date, LVSG shall subscribe for 8,400
                    shares of
                    Common Stock, representing a forty five-percent (46%) Company
                    Interest the
                    (“Financing Purchase Shares”), for an aggregate purchase price of $420,000
                    USD in financing for the Company (the “Financing Purchase
                    Price”).

                

        

        

        
          	 	
                  o

                	
                  LVSG
                    shall provide the Company with the Financing Purchase Price $420,000.00
                    USD) as per 12 monthly payments of $35,000 USD as per the following
                    schedule (the “Financing Schedule”):

                

        

        
          	 	
                  o

                	
                  January
                    28, 2005

                

        

        
          	 	
                  o

                	
                  February
                    28, 2005

                

        

        
          	 	
                  o

                	
                  March
                    28, 2005

                

        

        
          	 	
                  o

                	
                  April
                    28, 2005

                

        

        
          	 	
                  o

                	
                  May
                    28, 2005

                

        

        
          	 	
                  o

                	
                  June
                    28, 2005

                

        

        
          	 	
                  o

                	
                  July
                    28, 2005

                

        

        
          	 	
                  o

                	
                  August
                    28, 2005

                

        

        
          	 	
                  o

                	
                  September
                    28, 2005

                

        

        
          	 	
                  o

                	
                  October
                    28, 2005

                

        

        
          	 	
                  o

                	
                  November
                    28, 2005

                

        

        
          	 	
                  o

                	
                  December
                    28, 2005

                

        

        

        
          	 	
                  ·

                	
                  The
                    Parties agree that if required by that LVSG may forward the Financing
                    Purchase Price in lesser or greater amounts and at more frequent
                    or less
                    frequent times as per the above Financing Schedule. The parties
                    agree that
                    if by June 28, 2005 LVSG has not provided a minimum of $140,000
                    of the
                    Financing Purchase Price that the Company will have the right
                    to seek
                    third party financing to acquire the pro-rated balance of the
                    Financing
                    Purchase Shares from LVSG that LVSG has not forwarded the subsequent
                    pro-rated Financing Purchase Price to the Company up to the date
                    of the
                    Deficient Payments Notice. If the Company elects to seek third
                    party
                    financing it will issue to LVSG a written notice of such election
                    herein
                    referred to as a “Deficient Payments Notice”. LVSG will have the right to
                    maintain its rights to the Financing Purchase Shares by advancing
                    to the
                    Company the amount equal to the Financing Purchase Price it should
                    have
                    made at the time of receipt of the Deficient Payment Notice plus
                    the early
                    advancement of the next payment as per the Financing Schedule
                    within 15
                    days of the receipt of the Deficient Payments
                    Notice.

                

        

        

        
          	 	
                  ·

                	
                  If
                    LVSG is not able to comply with the terms of Deficient Payments
                    Notice.
                    GBBI will have the right to sell to a third party the prorated
                    portion of
                    the Financing Purchase Shares issued to LVSG that LVSG has not
                    forwarded
                    the respective Financing Purchase Price for.

                

        

        

                    (b)
          Certain
          Deliveries. On or before the Closing Date, and as a condition to the purchase
          and sale of the Transferred Shares and the Financing Purchase
          Shares:

        

                        (i)
          the Establishment
          Date shall have occurred;

        

                        (ii)
          GBBI and the
          Company shall have executed and delivered the Asset Purchase Agreement
          to the
          Company and LVSG; 

        

                        (v)
          each Party shall
          have received one original of each of the fully executed Transaction
          Documents.

        

                    (c)
          Delivery of Share
          Certificates and Stock Powers. Promptly after the Closing Date, the Company
          shall:

         

        (i)
          deliver to GBBI share certificates representing the shares of Common Stock
          purchased by GBBI pursuant to this Section 3.2, and;

         

        (ii)
          deliver to the attorney of the Company certificates representing the shares
          of
          Common Stock purchased by LVSG pursuant to this Section 3.2, the representing
          the Financing Purchase Shares purchased by LVSG will be held in escrow
          with the
          attorney for the Company and delivered prorated to LVSG in increments as
          the
          Purchase Price funds are received by the Company from LVSG, and;

         

        (iii)
          on
          or before the Closing LVSG will also deliver to the attorney of the Company
          signature guaranteed stock powers (the “Stock Powers”) the Stock Powers will be
          used to allow transfer of the certificates issued to LVSG only in the event
          LVSG
          does not take possession of the certificates due its unforeseen inability
          to
          complete the Financing Purchase Price as described in this Section 3.2.
          

        3.3
          Financial Assistance.

         

                    (a)
          Financial
          Assistance. The Board may, by written notice to the Parties pursuant to
          the
          terms of this Agreement, request that the Parties provide additional financial
          assistance to the Company, including in the form of credit support or loans,
          and, in such event, if such Party agrees to provide such additional financial
          assistance (either directly or through its designees to the Board), such
          Party
          shall make such financial assistance available to the Company pro rata
          in
          accordance with its respective Company Interest and the Company Interests
          of all
          Parties so approving such financial assistance.

        

        4.
          OPERATION AND MANAGEMENT OF THE COMPANY

        

            4.1
          Operation
          of the Company. Each Party agrees to take all actions necessary to ensure
          that
          the Company shall be operated in accordance with the terms of this Agreement
          and
          the other Transaction Documents, including, without limitation, to vote
          all
          Securities held by it to effect the terms hereof.

        

            4.2
          Board of
          Directors. The Company will be managed by the Board in accordance with
          the terms
          of this Agreement and Applicable Law. The Board shall initially consist
          of five
          (2) Directors, one (1) of whom shall be appointed by LVSG and one (1) of
          whom
          shall be appointed by GBBI. 

        

            4.3
          Removal;
          Reappointment of Directors. Any Director may be removed for cause in accordance
          with Applicable Law. In addition, each Party having the right to appoint
          a
          Director pursuant to this Section 4 shall also have the right, in its sole
          discretion, to remove such Director at any time, effective upon delivery
          of
          written notice to the Company, the Director to be removed and to the other
          Party. In the case of a vacancy in the office of a Director for any reason
          (including removal pursuant to the preceding sentence), the vacancy shall
          be
          filled by the Party that appointed the Director in question.

        

            4.4
          Board
          Meetings. The President shall have the authority to convene Board meetings,
          including the authority to specify the time and place of such meetings.
          Directors may attend Board meetings in person or by any other means of
          attendance permitted under the Bylaws of the Company, provided, however,
          that
          (a) the Board shall meet at least once during each annual fiscal period
          and (b)
          written notice of all Board meetings shall be given in accordance with
          the
          Bylaws

        

            4.5
          Board
          Quorum; Resolutions. A quorum shall be deemed to exist for purposes of
          Board
          actions in accordance of the Bylaws of the Company Any action, determination
          or
          resolution of the Board shall require the affirmative vote of a majority
          of
          Directors present at a meeting at which a valid quorum pursuant to this
          Section
          4.5 is present.

        

            4.6
          Shareholders' Meetings. Shareholders of the Company shall receive notice
          of each
          shareholders' meeting in accordance with the Company Bylaws. The Company
          shall
          have at least one shareholders' meeting each calendar year. Such meeting
          will
          take place at such time and place as is determined by the Board. 

        

            4.7
          Financial
          Statements and Accounting Records. All financial statements shall be prepared
          in
          accordance with generally accepted accounting principles in the United
          States
          and in reasonable detail, and shall contain such financial data as LVSG
          and GBBI
          may deem necessary in order to keep the Parties advised of the Company's
          financial status. The Company shall, at LVSG's request, provide LVSG with
          such
          financial information as LVSG may reasonably deem necessary for purposes
          of
          complying with its periodic reporting obligations under U.S. securities
          law and
          shall cooperate with LVSG in connection therewith, including cooperating
          with
          the Company's accounting firm in preparing quarterly financial statements
          requested by LVSG; provided, that LVSG shall bear any costs incurred in
          preparing or providing such information, including, without limitation,
          in
          preparing quarterly financial statements for the Company and reconciling
          the
          Company's financial statements with U.S. generally accepted accounting
          principles for such purposes.

        

            4.8
          Right of
          Inspection. During the regular office hours of the Company, and upon reasonable
          notice to the Company, each Party that maintains at least a twenty percent
          (20%)
          Company Interest shall have (a) full access to all properties, books of
          account,
          and records of the Company, and (b) the right to make copies from such
          books and
          records at its own expense. Any information obtained by the Parties through
          exercise of rights granted under this Section 4.8 shall, to the extent
          constituting Confidential Information hereunder, be subject to the
          confidentiality provisions set forth in Section 5.1.

        

        5.
          ADDITIONAL COVENANTS

        

            5.1
          Confidentiality.

        

                (a)
          The Parties
          recognize that, in connection with the performance of this Agreement, each
          Party
          (in such capacity, the "DISCLOSING PARTY") may disclose "Confidential
          Information" (as defined below) to the other Party (the "RECEIVING PARTY").
          For
          purposes of this Agreement "CONFIDENTIAL INFORMATION" means (i) proprietary
          information (whether owned by the Disclosing Party or a third party to
          whom the
          Disclosing Party owes a non-disclosure obligation) regarding the Disclosing
          Party's business or (ii) information which is marked as confidential at
          the time
          of disclosure to the Receiving Party, or if in oral form, is identified
          as
          confidential at the time of oral disclosure and reduced in writing or other
          tangible (including electronic) form including a prominent confidentiality
          notice and delivered to the Receiving Party within thirty (30) days of
          disclosure. "Confidential Information" shall not include information which:
          (A)
          was known to the Receiving Party at the time of the disclosure by the Disclosing
          Party; (B) has become publicly known through no wrongful act of the Receiving
          Party; (C) has rightfully been received by the Receiving Party from a third
          party; or (D) has been independently developed by the Receiving Party.
          The
          Receiving Party agrees (x) not to use any such Confidential Information
          for any
          purpose other than in the performance of its obligations under this Agreement
          or
          any Transaction Document and (y) not to disclose any such Confidential
          Information, except (1) to its employees are reasonably required to have
          the
          Confidential Information in connection herewith or with any of the other
          Transaction Documents, (2) to its agent, representatives, lawyers and other
          advisers that have a need to know such Confidential Information and (3)
          pursuant
          to, and to the extent of, a request or order by a Governmental Authority.
          The
          Receiving Party agrees to take all reasonable measures to protect the secrecy
          and confidentiality of, and avoid disclosure or unauthorized use of, the
          Disclosing Party's Confidential Information.

        

        (        b)
          Each Party
          acknowledges and agrees that (i) its obligations under this Section 5.1
          are
          necessary and reasonable to protect the other Party and its business, (ii)
          any
          violation of these provisions could cause irreparable injury to the other
          Party
          for which money damages would be inadequate, and (iii) as a result, the
          other
          Party shall be entitled to obtain injunctive relief against the threatened
          breach of the provisions of this Section 5.1 without the necessity of proving
          actual damages. The Parties agree that the remedies set forth in this Section
          5.1 are in addition to and in no way preclude any other remedies or actions
          that
          may be available at law or under this Agreement.

        

            5.2
          Confidentiality of Agreement; Publicity. Each Party agrees that the terms
          and
          conditions of this Agreement and the Transaction Documents shall be treated
          as
          confidential information and that no reference thereto shall be made thereto
          without the prior written consent of the other Party (which consent shall
          not be
          unreasonably withheld) except (a) as required by Applicable Law including,
          without limitation, by the U.S. Securities and Exchange Commission (b)
          to its
          accountants, banks, financing sources, lawyers and other professional advisors,
          provided that such parties undertake in writing (or are otherwise bound
          by rules
          of professional conduct) to keep such information strictly confidential,
          (c) in
          connection with the enforcement of this Agreement, (d) in connection with
          a
          merger, acquisition or proposed merger or acquisition, or (e) pursuant
          to joint
          press releases prepared in good faith. The Parties will consult with each
          other,
          in advance, with regard to the terms of all proposed press releases, public
          announcements and other public statements with respect to the transactions
          contemplated hereby.

        

            5.3
          Noncompetition. During the Term, neither Party shall, directly or (other
          than
          through the Company) indirectly compete with the Company and its Business.
          In
          the event that this Agreement is terminated due to a Party's breach (including,
          without limitation, the breaching Party's obligations pursuant to this
          Section
          5.3 shall remain in effect for a period of twenty-four (24) months following
          such termination.

        

            5.4
          Regulatory Approvals. Each Party shall provide such assistance as the other
          Party may reasonably request in connection with such consents and approvals
          as
          may be necessary or appropriate in order to consummate the transactions
          contemplated under the Transaction Documents. 

        

        6.
          WARRANTIES OF THE PARTIES

        

            6.1
          Warranties of LVSG. LVSG hereby represents and warrants to GBBI that, as
          of the
          Effective Date and as of the Closing Date, the following statements are
          and
          shall be true and correct:

        

                (a)
          Organization.
          LVSG is a corporation duly organized and validly existing under the laws
          of
          Nevada, and has the corporate power and authority to enter into and perform
          this
          Agreement.

        

                (b)
          Authorization.
          All corporate action on the part of LVSG necessary for the authorization,
          execution and delivery of this Agreement and for the performance of all
          of its
          obligations hereunder and thereunder has been taken, and this Agreement
          when
          fully executed and delivered, shall each constitute a valid, legally binding
          and
          enforceable obligation of LVSG.

        

                (c)
          Government and
          Other Consents. Other than any licenses, permits, certifications or
          authorizations which may be required in connection with the Business, as
          to
          which LVSG makes no representation, no consent, authorization, license,
          permit,
          registration or approval of, or exemption or other action by, any Governmental
          Authority, or any other Person, is required in connection with LVSG's execution,
          delivery and performance of this Agreement, or if any such consent is required,
          LVSG has satisfied the applicable requirements.

        

                (d)
          Effect of
          Agreement. LVSG's execution, delivery and performance of this Agreement
          will not
          (i) violate the Articles of Incorporation of LVSG or any provision of Applicable
          Law, (ii) violate any judgment, order, writ, injunction or decree of any
          court
          applicable to LVSG, (iii) have any effect on the compliance of LVSG with
          any
          applicable licenses, permits or authorizations which would materially and
          adversely affect LVSG, (iv) result in the breach of, give rise to a right
          of
          termination, cancellation or acceleration of any obligation with respect
          to
          (presently or with the passage of time), or otherwise be in conflict with
          any
          term of, or affect the validity or enforceability of, any agreement or
          other
          commitment to which LVSG is a party and which would materially and adversely
          effect LVSG, or (v) result in the creation of any lien, pledge, mortgage,
          claim,
          charge or encumbrance upon any assets of LVSG; provided, however, that
          regulatory approval may be required in connection with conducting the Business
          and LVSG makes no representation with respect to any such
          approvals.

        

                (e)
          Litigation. There
          are no actions, suits or proceedings pending or, to LVSG's knowledge,
          threatened, against LVSG before any Governmental Authority which question
          LVSG's
          right to enter into or perform this Agreement, or which question the validity
          of
          this Agreement or any of the other Transaction Documents.

        

            6.2
          Warranties of GBBI. GBBI hereby represents and warrants to LVSG that, as
          of the
          Effective Date and as of the Closing Date, the following statements are
          and
          shall be true and correct:

        

                (a)
          Organization.
          GBBI is a corporation duly organized and validly existing under the laws
          of
          Nevada. GBBI has the corporate power and authority to enter into and perform
          this Agreement and the Asset Purchase Agreement.

        

                (b)
          Authorization.
          All corporate action on the part of GBBI necessary for the authorization,
          execution and delivery of this Agreement and the Asset Purchase Agreement
          and
          for the performance of all of its obligations hereunder and thereunder
          has been
          taken, and this Agreement and the Asset Purchase Agreement, when fully
          executed
          and delivered, shall each constitute a valid, legally binding and enforceable
          obligation of GBBI.

        

                (c)
          Government and
          Other Consents. Other than any licenses, permits or authorizations which
          may be
          required in connection with the Business, as to which GBBI makes no
          representation, no consent, authorization, license, permit, registration
          or
          approval of, or exemption or other action by, any Governmental Authority,
          or any
          other Person, is required in connection with GBBI's execution, delivery
          and
          performance of this Agreement or the Asset Purchase Agreement, or if any
          such
          consent is required, GBBI has satisfied any applicable
          requirements.

        

                (d)
          Effect of
          Agreement. GBBI's execution, delivery and performance of this Agreement
          and the
          Asset Purchase Agreement will not (i) violate the Certificate of Incorporation
          of GBBI or any provision of Applicable Law, (ii) violate any judgment,
          order,
          writ, injunction or decree of any court applicable to GBBI, (iii) have
          any
          effect on the compliance of GBBI with any applicable licenses, permits
          or
          authorizations which would materially and adversely affect GBBI, (iv) result
          in
          the breach of, give rise to a right of termination, cancellation or acceleration
          of any obligation with respect to (presently or with the passage of time),
          or
          otherwise be in conflict with, any term of, or affect the validity or
          enforceability of any agreement or other commitment to which GBBI is a
          party and
          which would materially and adversely affect GBBI, or (v) result in the
          creation
          of any lien, pledge, mortgage, claim, charge or encumbrance upon any assets
          of
          GBBI; provided, however, that regulatory approvals may be required in connection
          with conducting the Business and GBBI makes no representation with respect
          to
          any such approvals.

        

                (e)
          Litigation. There
          are no actions, suits or proceedings pending or, to GBBI's knowledge,
          threatened, against GBBI before any Governmental Authority which question
          GBBI's
          right to enter into or perform this Agreement or the Asset Purchase Agreement,
          or which question the validity of this Agreement or any of the other Transaction
          Documents.

        

        7.
          TERM
          AND TERMINATION

        

            7.1
          Term.
          This Agreement shall be effective as of the Effective Date, and shall continue
          in effect until terminated pursuant to Section 7.2 (the "TERM").

        

            7.2
          Termination. This Agreement may be terminated as follows:

        

                (a)
          Upon the mutual
          written agreement of LVSG and GBBI.

        

                (b)
          By either LVSG or
          GBBI, effective immediately upon written notice to the other Party, if
          the other
          Party breaches any material provision of this Agreement or of any of the
          other
          Transaction Documents and such breach continues for a period of thirty
          (30) days
          after the delivery of written notice of the default, describing the default
          in
          reasonable detail.

        

                (c)
          By either LVSG or
          GBBI, effective immediately upon written notice to the other Party and
          the
          Company, in the event that the other Party is dissolved, liquidated or
          declared
          bankrupt or a voluntary or involuntary bankruptcy filing is made by such
          Party.

        

            7.3
          Effect.
          Upon termination of this Agreement, the Parties shall negotiate in good
          faith a
          possible purchase by one or more Parties of all outstanding Securities
          held by
          the other Parties or the sale of the Company to a third party. In the event
          that, notwithstanding their good faith negotiations, the Parties are unable
          to
          agree upon such a purchase or sale within thirty (30) days of the notice
          of
          termination, the Parties shall cooperate to cause the Company to be liquidated
          as promptly as practical in accordance with Applicable Law. The rights
          and
          obligations of the Parties under Sections 5.1, 5.2, 5.3 (to the extent
          provided
          therein), this Section 7.3, and Sections 7.4, 7.5 and 8 shall survive any
          termination of this Agreement.

        

           7.4
          Return of
          Confidential Information. Upon the termination of this Agreement, each
          Party, at
          its own cost, shall promptly return to the Disclosing Party any and all
          documents and materials constituting or containing Confidential Information
          of
          the Disclosing Party which are in its possession or control, or at its
          option,
          shall destroy such documents and materials and certify such destruction
          in
          writing to the Disclosing Party.

        

            7.5
          Continuing Liability. Termination of this Agreement for any reason shall
          not
          release any Party from any liability or obligation which has already accrued
          as
          of the effective date of such termination, and shall not constitute a waiver
          or
          release of, or otherwise be deemed to prejudice or adversely affect, any
          rights,
          remedies or claims, whether for damages or otherwise, which a Party may
          have
          hereunder, at law, equity or otherwise or which may arise out of or in
          connection with such termination.

         

        8.
          GENERAL PROVISIONS

        

            8.1
          Governing
          Law. The validity, construction and enforceability of this Agreement shall
          be
          governed by and construed in accordance with the laws of Nevada. 

        

            8.2
          Notices
          and Other Communications. Any and all notices, requests, demands and other
          communications required or otherwise contemplated to be made under this
          Agreement shall be in writing and shall be provided by one or more of the
          following means and shall be deemed to have been duly given (a) if delivered
          personally, when received, (b) if transmitted by facsimile on the date
          of
          transmission with receipt of a transmittal confirmation, (c) if transmitted
          by
          facsimile, on the first (1st) Business Day following receipt of a transmittal
          confirmation, or (d) if by courier service, on the fourth (4th) Business
          Day
          following the date of deposit with such courier service, or such earlier
          delivery date
          as
          may be confirmed in writing to the sender by such courier service. All
          such
          notices, requests, demands and other communications shall be addressed
          as
          follows:

        

        If
          to
          LVSG:

        

        LiveStar
          Entertainment Group, Inc.

        Suite
          400
          62 West 8th Ave.

        Vancouver,
          B.C.

        V5Y
          1M&

        Attention:
          Ray Hawkins

        

        

        If
          to
          GBBI:

        

                        GLOBAL
          BANCORP,
          Inc.

                    Suite
          400 62 West 8th
          Ave.

                    Vancouver,
          B.C.

           
          V5Y 1M7

                                           
          Attention: Romeo (Ray) Prescott

        

        or
          to
          such other address or facsimile number as a Party may have specified to
          the
          other Party in writing delivered in accordance with this Section
          8.2.

        

            8.3
          Severability. If any provision in this Agreement shall be found or be held
          to be
          invalid or unenforceable then the meaning of said provision shall be construed,
          to the extent feasible, so as to render the provision enforceable, and
          if no
          feasible interpretation would save such provision, it shall be severed
          from the
          remainder of this Agreement which shall remain in full force and effect
          unless
          the severed provision is essential and material to the rights or benefits
          received by any Party. In such event, the Parties shall use best efforts
          to
          negotiate, in good faith, a substitute, valid and enforceable provision
          or
          agreement which most nearly affects the Parties' intent in entering into
          this
          Agreement.

        

            8.4
          References; Subject Headings. Unless otherwise indicated, references to
          Sections
          and Exhibits herein are to Sections of, and Exhibits to, this Agreement.
          The
          subject headings of the Sections of this Agreement are included for the
          purpose
          of convenience of reference only, and shall not affect the construction
          or
          interpretation of any of its provisions.

        

            8.5
          Further
          Assurances. The Parties shall each perform such acts, execute and deliver
          such
          instruments and documents, and do all such other things as may be reasonably
          necessary to accomplish the transactions contemplated in this
          Agreement.

        

            8.6
          Expenses.
          Each of the Parties will bear its own costs and expenses, including, without
          limitation, fees and expenses of legal counsel, accountants, brokers,
          consultants and other representatives used or hired in connection with
          the
          negotiation and preparation of this Agreement and consummation of the
          transactions contemplated hereby. All such expenses incurred by the Company
          shall be borne by the Company to the maximum extent permitted by Applicable
          Law
          including, without limitation, expenses relating to the formation of the
          Company, any transfer taxes for transfer of the Company stock to the Parties,
          registration charges, taxes, fees and expenses relating to required governmental
          or regulatory approvals, notary fees and legal fees and expenses.

        

             8.7
          No Waiver. No waiver of any term or
          condition of this Agreement shall be valid or binding on a Party unless
          the same
          shall have been set forth in a written document, specifically referring
          to this
          Agreement and duly signed by the waiving Party. The failure of a Party
          to
          enforce at any time any of the provisions of this Agreement, or the failure
          to
          require at any time performance by one or both of the other Parties of
          any of
          the provisions of this Agreement, shall in no way be construed to be a
          present
          or future waiver of such provisions, nor in any way affect the ability
          of a
          Party to enforce each and every such provision thereafter.

        

            8.8
          Entire
          Agreement; Amendments. The terms and conditions contained in this Agreement
          (including the Exhibits hereto) and the Transaction Documents constitute
          the
          entire agreement between the Parties and supersede all previous agreements
          and
          understandings, whether oral or written, between the Parties with respect
          to the
          subject matter hereof. No agreement or understanding amending this Agreement
          shall be binding upon any Party unless set forth in a written document
          which
          expressly refers to this Agreement and which is signed and delivered by
          duly
          authorized representatives of each Party.

        

            8.9
          Assignment. Neither Party shall assign this Agreement (a) without the other
          Party's prior written consent, except that a Party may assign this Agreement
          to
          a Person into which such Party has merged or which has otherwise succeeded
          to
          all or substantially all of such Party's business or assets and (b) which
          has
          assumed in writing or by operation of law, the assigning Party's obligations
          under this Agreement, provided, however, that the assigning Party shall
          remain
          liable for the assignee's performance of its obligations hereunder. This
          Agreement shall inure to the benefit of, and shall be binding upon, the
          Parties
          and their respective permitted successors and assigns.

        

            8.10
          No
          Agency. The Parties are independent contractors. Nothing contained herein
          or
          done in pursuance of this Agreement shall constitute any Party the agent
          of any
          other Party for any purpose or in any sense whatsoever.

        

            8.11
          No Beneficiaries.
          Nothing herein express or implied, is intended to or shall be construed
          to
          confer upon or give to any person, firm, corporation or legal entity, other
          than
          the Parties and their Affiliates who hold Securities, any interests, rights,
          remedies or other benefits with respect to or in connection with any agreement
          or provision contained herein or contemplated hereby.

        

            8.12
          Effective Date of Transaction Documents. The Transaction Documents other
          than
          this Agreement shall become effective concurrently with consummation, on
          the
          Closing Date, of the transactions described in Section 3.2.

        

            8.13
          Counterparts. This Agreement may be executed in any number of counterparts,
          and
          each counterpart shall constitute an original instrument, but all such
          separate
          counterparts shall constitute only one and the same instrument.

        

        IN
          WITNESS WHEREOF, the Parties have caused their respective duly authorized
          representatives to execute this Agreement as of the Effective Date.

        

        
          	
                  LIVESTAR
                    ENTERTAINMENT GROUP, INC. 

                	
                  GLOBAL
                    BANCORP, Inc.

                
	 	 
	 	 
	 	 
	
                  By:
                    Ray Hawkins       

                	
                  By: 
                    Ray
                    Prescott

                
	
                  Ray
                    Hawkins     

                	
                  Ray
                    Prescott

                
	
                  President
                    and CEO    

                	
                  President
                    and CEO 

                
	 	 

        

        

        

        

        EXHIBIT
          1.0

        

        Asset
          Purchase Agreement 

        By
          and
          Between

        Global
          Bancorp, Inc. and VOXBOX Telecom, Inc.

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