Document:

Exhibit
10.5

EXECUTION COPY

$2,000,000,000

AMENDED AND
RESTATED CREDIT AGREEMENT

dated as of

June 29, 2006

among

Cinergy Corp.,

The Cincinnati Gas & Electric Company,

PSI Energy, Inc.,

The Union Light, Heat and Power Company,

The Banks Listed
Herein,

Barclays Bank PLC,

as Administrative Agent

and

JPMorgan Chase
Bank, N.A.,

as Syndication Agent

Barclays Capital,

the investment banking division of Barclays Bank PLC, and

J.P. Morgan Securities Inc.

Joint Lead Arrangers and

Joint Bookrunners

Banc of America Securities
LLC,

Citigroup Global Markets Inc. and

Wachovia Capital Markets, LLC

Documentation Agents

 

TABLE OF CONTENTS

	
  

  	
   

  	
   

  	
   

  	
  Page

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Article 1

  Definitions

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 1.01.

  	
   

  	
  Definitions

  	
   

  	
  1

  	
   

  
	
  Section 1.02.

  	
   

  	
  Accounting Terms and Determinations

  	
   

  	
  12

  	
   

  
	
  Section 1.03.

  	
   

  	
  Types of Borrowings

  	
   

  	
  13

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Article 2

  The Credits

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 2.01.

  	
   

  	
  Commitments to Lend

  	
   

  	
  13

  	
   

  
	
  Section 2.02.

  	
   

  	
  Notice of Borrowings

  	
   

  	
  14

  	
   

  
	
  Section 2.03.

  	
   

  	
  Notice to Banks; Funding of Loans

  	
   

  	
  15

  	
   

  
	
  Section 2.04.

  	
   

  	
  Registry; Notes

  	
   

  	
  16

  	
   

  
	
  Section 2.05.

  	
   

  	
  Maturity of Loans; Effect of Cash
  Collateralization of Letters of Credit

  	
   

  	
  16

  	
   

  
	
  Section 2.06.

  	
   

  	
  Interest Rates

  	
   

  	
  17

  	
   

  
	
  Section 2.07.

  	
   

  	
  Fees

  	
   

  	
  18

  	
   

  
	
  Section 2.08.

  	
   

  	
  Optional Termination or Reduction of Commitments
  and Maximum Availabilities

  	
   

  	
  18

  	
   

  
	
  Section 2.09.

  	
   

  	
  Method of Electing Interest Rates

  	
   

  	
  19

  	
   

  
	
  Section 2.10.

  	
   

  	
  Mandatory Termination of Commitments

  	
   

  	
  20

  	
   

  
	
  Section 2.11.

  	
   

  	
  Optional Prepayments

  	
   

  	
  20

  	
   

  
	
  Section 2.12.

  	
   

  	
  General Provisions as to Payments

  	
   

  	
  20

  	
   

  
	
  Section 2.13.

  	
   

  	
  Funding Losses

  	
   

  	
  21

  	
   

  
	
  Section 2.14.

  	
   

  	
  Computation of Interest and Fees

  	
   

  	
  22

  	
   

  
	
  Section 2.15.

  	
   

  	
  Letters of Credit.

  	
   

  	
  22

  	
   

  
	
  Section 2.16.

  	
   

  	
  Regulation D Compensation

  	
   

  	
  26

  	
   

  
	
  Section 2.17.

  	
   

  	
  Increase In Commitments; Additional Banks

  	
   

  	
  26

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Article 3

  Conditions

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 3.01.

  	
   

  	
  Effectiveness

  	
   

  	
  27

  	
   

  
	
  Section 3.02.

  	
   

  	
  Borrowings and Issuance of Letters of Credit

  	
   

  	
  29

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Article 4

  Representations and Warranties

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 4.01.

  	
   

  	
  Organization and Power

  	
   

  	
  30

  	
   

  

 

 i
 

 

 

	
  Section 4.02.

  	
   

  	
  Corporate and Governmental Authorization; No
  Contravention

  	
   

  	
  30

  	
   

  
	
  Section 4.03.

  	
   

  	
  Binding Effect

  	
   

  	
  30

  	
   

  
	
  Section 4.04.

  	
   

  	
  Financial Information

  	
   

  	
  30

  	
   

  
	
  Section 4.05.

  	
   

  	
  Regulation U

  	
   

  	
  31

  	
   

  
	
  Section 4.06.

  	
   

  	
  Litigation

  	
   

  	
  31

  	
   

  
	
  Section 4.07.

  	
   

  	
  Compliance with Laws

  	
   

  	
  31

  	
   

  
	
  Section 4.08.

  	
   

  	
  Taxes

  	
   

  	
  32

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Article 5

  Covenants

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 5.01.

  	
   

  	
  Information

  	
   

  	
  32

  	
   

  
	
  Section 5.02.

  	
   

  	
  Payment of Taxes

  	
   

  	
  34

  	
   

  
	
  Section 5.03.

  	
   

  	
  Maintenance of Property; Insurance

  	
   

  	
  34

  	
   

  
	
  Section 5.04.

  	
   

  	
  Maintenance of Existence

  	
   

  	
  34

  	
   

  
	
  Section 5.05.

  	
   

  	
  Compliance with Laws

  	
   

  	
  35

  	
   

  
	
  Section 5.06.

  	
   

  	
  Books and Records

  	
   

  	
  35

  	
   

  
	
  Section 5.07.

  	
   

  	
  Negative Pledge

  	
   

  	
  35

  	
   

  
	
  Section 5.08.

  	
   

  	
  Consolidations, Mergers and Sales of Assets

  	
   

  	
  37

  	
   

  
	
  Section 5.09.

  	
   

  	
  Use of Proceeds

  	
   

  	
  37

  	
   

  
	
  Section 5.10.

  	
   

  	
  Indebtedness/Capitalization Ratio.

  	
   

  	
  37

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Article 6

  Defaults

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 6.01.

  	
   

  	
  Events of Default

  	
   

  	
  37

  	
   

  
	
  Section 6.02.

  	
   

  	
  Notice of Default

  	
   

  	
  40

  	
   

  
	
  Section 6.03.

  	
   

  	
  Cash Cover

  	
   

  	
  40

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Article 7

  The Administrative Agent

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 7.01.

  	
   

  	
  Appointment and Authorization

  	
   

  	
  40

  	
   

  
	
  Section 7.02.

  	
   

  	
  Administrative Agent and Affiliates.

  	
   

  	
  40

  	
   

  
	
  Section 7.03.

  	
   

  	
  Action by Administrative Agent

  	
   

  	
  41

  	
   

  
	
  Section 7.04.

  	
   

  	
  Consultation with Experts

  	
   

  	
  41

  	
   

  
	
  Section 7.05.

  	
   

  	
  Liability of Administrative Agent

  	
   

  	
  41

  	
   

  
	
  Section 7.06.

  	
   

  	
  Indemnification

  	
   

  	
  41

  	
   

  
	
  Section 7.07.

  	
   

  	
  Credit Decision

  	
   

  	
  42

  	
   

  
	
  Section 7.08.

  	
   

  	
  Successor Administrative Agent

  	
   

  	
  42

  	
   

  
	
  Section 7.09.

  	
   

  	
  Administrative Agent’s Fee

  	
   

  	
  42

  	
   

  
	
  Section 7.10.

  	
   

  	
  Other Agents

  	
   

  	
  42

  	
   

  

 

 ii
 

 

 

	
  

  	
   

  	
  Article 8

  Change in Circumstances

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 8.01.

  	
   

  	
  Basis for Determining Interest Rate Inadequate or
  Unfair

  	
   

  	
  43

  	
   

  
	
  Section 8.02.

  	
   

  	
  Illegality

  	
   

  	
  43

  	
   

  
	
  Section 8.03.

  	
   

  	
  Increased Cost and Reduced Return

  	
   

  	
  44

  	
   

  
	
  Section 8.04.

  	
   

  	
  Taxes

  	
   

  	
  45

  	
   

  
	
  Section 8.05.

  	
   

  	
  Base Rate Loans Substituted for Affected
  Euro-Dollar Loans

  	
   

  	
  47

  	
   

  
	
  Section 8.06.

  	
   

  	
  Substitution of Bank; Termination Option

  	
   

  	
  48

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Article 9

  Miscellaneous

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 9.01.

  	
   

  	
  Notices

  	
   

  	
  49

  	
   

  
	
  Section 9.02.

  	
   

  	
  No Waivers

  	
   

  	
  49

  	
   

  
	
  Section 9.03.

  	
   

  	
  Expenses; Indemnification

  	
   

  	
  49

  	
   

  
	
  Section 9.04.

  	
   

  	
  Sharing of Set-offs

  	
   

  	
  50

  	
   

  
	
  Section 9.05.

  	
   

  	
  Amendments and Waivers

  	
   

  	
  50

  	
   

  
	
  Section 9.06.

  	
   

  	
  Successors and Assigns

  	
   

  	
  51

  	
   

  
	
  Section 9.07.

  	
   

  	
  Collateral

  	
   

  	
  53

  	
   

  
	
  Section 9.08.

  	
   

  	
  Confidentiality

  	
   

  	
  53

  	
   

  
	
  Section 9.09.

  	
   

  	
  Governing Law; Submission to Jurisdiction

  	
   

  	
  53

  	
   

  
	
  Section 9.10.

  	
   

  	
  Counterparts; Integration

  	
   

  	
  53

  	
   

  
	
  Section 9.11.

  	
   

  	
  WAIVER OF JURY TRIAL

  	
   

  	
  54

  	
   

  
	
  Section 9.12.

  	
   

  	
  USA Patriot Act

  	
   

  	
  54

  	
   

  

 

COMMITMENT SCHEDULE

PRICING SCHEDULE

	
  EXHIBIT A -

  	
  Note

  
	
  EXHIBIT B-1 -

  	
  Opinion of Internal Counsel of the Borrower

  
	
  EXHIBIT B-2 -

  	
  Opinion of Special Counsel for the Borrower

  
	
  EXHIBIT C -

  	
  Opinion of Davis Polk & Wardwell, Special
  Counsel for the Agents

  
	
  EXHIBIT D -

  	
  Assignment and Assumption Agreement

  
	
  EXHIBIT E -

  	
  Extension Agreement

  
	
  EXHIBIT F -

  	
  Notice of Issuance

  
	
  EXHIBIT G -

  	
  Approved Form of Letter of Credit

  

 

 iii

 

AMENDED AND
RESTATED CREDIT AGREEMENT

AGREEMENT dated as of June 29, 2006 among CINERGY
CORP., THE CINCINNATI GAS & ELECTRIC COMPANY, PSI ENERGY, INC., THE UNION
LIGHT, HEAT AND POWER COMPANY, the BANKS listed on the signature pages hereof,
BARCLAYS BANK PLC, as Administrative Agent, and JPMORGAN CHASE BANK, N.A., as
Syndication Agent.

W I T N E S S E T H:

WHEREAS, the Borrowers, the Banks party hereto, and
the Agents are parties to a Five-Year Senior Revolving Credit Agreement dated
as of September 9, 2005 (as amended and/or restated to the Effective Date (as
defined below), the “Existing Agreement”);
and

WHEREAS, the parties hereto wish to modify the
Existing Agreement in a number of respects, as more fully set forth below;

NOW, THEREFORE, the parties hereto hereby agree that,
on and as of the Effective Date, the Existing Agreement is hereby amended and
restated in its entirety as follows:

ARTICLE 1

Definitions

Section 1.01.   Definitions.   The following terms, as used herein, have the
following meanings:

“Additional Bank”
means any financial institution that becomes a Bank for purposes hereof
pursuant to Section 2.17 or 8.06.

“Administrative
Agent” means Barclays Bank PLC in its capacity as administrative
agent for the Banks hereunder, and its successors in such capacity.

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

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

 

ownership of voting securities, by contract or
otherwise. Unless otherwise specified, “Affiliate”
means an Affiliate of the Borrower.

“Agent” means
any of the Administrative Agent, the Syndication Agent or the Documentation
Agents.

“Agreement” means the Existing
Agreement as amended and restated by this Amended Agreement and as the same may
be further amended from time to time after the date hereof.

“Amended Agreement” means this
Amended and Restated Credit Agreement dated as of June 29, 2006.

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

“Appropriate Share”
has the meaning set forth in Section 8.03(d).

“Approved Fund”
means any Fund that is administered or managed by (i) a Bank, (ii) an Affiliate
of a Bank or (iii) an entity or an Affiliate of an entity that administers or
manages a Bank.

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

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

“Availability Percentage”
means, with respect to each Borrower, at any time, the percentage which such
Borrower’s Maximum Availability bears to the aggregate Maximum Availabilities
of all Borrowers, all determined as of such time.

“Bank”
means each bank or other financial institution listed on the signature pages
hereof, each Additional Bank, each Assignee which becomes a Bank pursuant to
Section 9.06(c), and their respective successors. Each reference herein to a “Bank”
shall, unless the context otherwise requires, include each Issuing Bank in such
capacity.

“Barclays” means
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 

 1
 

 

plus 1/2 of 1%. Each change in the Base Rate shall
take effect simultaneously with the corresponding change in the rates described
in clause (a) or clause (b) above, as the case may be.

“Base Rate Loan”
means (i) a Loan which bears interest at the Base Rate pursuant to the
applicable Notice of Borrowing or Notice of Interest Rate Election or the
provisions of Article 8 or (ii) an overdue amount which was a Base Rate Loan
immediately before it became overdue.

“Borrower” means
each of Cinergy, CG&E, PSI Energy and ULH&P; collectively, the “Borrowers”. References herein to “the Borrower” in
connection with any Loan or Group of Loans or any Letter of Credit hereunder
are to the particular Borrower to which such Loan or Loans are made or proposed
to be made or at whose request and for whose account such Letter of Credit is
issued or proposed to be issued.

“Borrowing”
has the meaning set forth in Section 1.03.

“CG&E” means
the Cincinnati Gas & Electric Company, an Ohio corporation. CG&E is
currently doing business under the name Duke Energy Ohio, Inc., and intends to
change its legal name to Duke Energy Ohio, Inc. effective October 1, 2006.

“CG&E First Mortgage
Trust Indenture” means 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.

“Cinergy” means
Cinergy Corp., a Delaware corporation.

“Commitment”
means (i) with respect to any Bank listed on the signature pages hereof, the
amount set forth opposite its name on the Commitment Schedule as its Commitment
and (ii) with respect to each Additional Bank or Assignee which becomes a bank
pursuant to Sections 2.17, 8.06 and 9.06(c), the amount of the Commitment
thereby assumed by it, in each case as such amount may from time to time be
reduced pursuant to Section 2.08, 2.10, 8.06 or 9.06(c) or increased pursuant
to Section 2.17, 8.06 or 9.06(c).

“Commitment Schedule”
means the Commitment Schedule attached hereto.

“Commitment
Termination Date” means, for each Bank, June 29, 2011, as such date
may be extended from time to time with respect to such Bank 

 2
 

 

pursuant to Section 2.01(c) or, if such day is not a
Euro-Dollar Business Day, the next preceding Euro-Dollar Business Day.

“Company” means
Duke Energy Corporation, a Delaware corporation, originally incorporated as
Deer Holding Corporation, a Delaware corporation.

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

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

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

“Credit Exposure”
means, with respect to any Bank at any time, (i) the amount of its Commitment
(whether used or unused) at such time or (ii) if its Commitment has terminated,
the aggregate outstanding principal amount of its Loans and the aggregate
amount of its Letter of Credit Liabilities at such time.

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

“Departing Bank”
means any Person which is a “Lender” under the Existing Agreement but does not
have a Commitment under this Amended Agreement.

“Documentation Agent”
means each of Banc of America Securities LLC, Citigroup Global Markets Inc. and
Wachovia Capital Markets, LLC, in its 

 3
 

 

capacity as a documentation agent in connection with
the credit facility provided under this Agreement.

“Domestic Business
Day” means any day except a Saturday, Sunday or other day on which
commercial banks in New York City or, with respect to any Letter of Credit
issued or to be issued in the State of North Carolina, in the State of North
Carolina are authorized by law to close.

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

“Effective Date”
means the date this Amended Agreement becomes effective in accordance with
Section 3.01.

“Endowment”
means the Duke Endowment, a charitable common law trust established by James B.
Duke by Indenture dated December 11, 1924.

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

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

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

 4
 

 

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

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

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

“Euro-Dollar
Loan” means (i) a Loan which bears interest at a Euro-Dollar Rate
pursuant to the applicable Notice of Borrowing or Notice of Interest Rate
Election or (ii) an overdue amount which was a Euro-Dollar Loan immediately
before it became overdue.

“Euro-Dollar Margin”
means the applicable rate per annum determined in accordance with the Pricing
Schedule.

“Euro-Dollar Rate”
means a rate of interest determined pursuant to Section 2.06(b) on the basis of
a London Interbank Offered Rate.

“Euro-Dollar
Reference Banks” means the principal London offices of Barclays and
JPMorgan Chase Bank, N.A.

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

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

“Existing Agreement”
has the meaning set forth in the Recitals.

“Facility Fee Rate”
has the meaning set forth in the Pricing Schedule.

“Federal Funds Rate” means, for any day, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100th of 1%) equal to
the weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Domestic
Business Day next succeeding such day; provided
that (i) if such day is not a Domestic Business 

 5
 

 

Day, the Federal Funds Rate for such day shall be such
rate on such transactions on the next preceding Domestic Business Day as so
published on the next succeeding Domestic Business Day and (ii) if no such rate
is so published on such next succeeding Domestic Business Day, the Federal
Funds Rate for such day shall be the average rate quoted to Barclays on such
day on such transactions as determined by the Administrative Agent.

“Final Maturity Date”
means, for each Bank, the first anniversary of its Commitment Termination Date
or, if such day is not a Euro-Dollar Business Day, the next preceding
Euro-Dollar Business Day.

“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.

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

“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.

“Increased Commitments” has the
meaning set forth in Section 2.17.

“Indebtedness”
of any Person means at any date, without duplication, (i) all obligations of
such Person for borrowed money, (ii) all indebtedness of such Person for the
deferred purchase price of property or services purchased (excluding current
accounts payable incurred in the ordinary course of business), (iii) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired, (iv) all indebtedness
under leases which shall have been or should be, in accordance with generally
accepted accounting principles, recorded as capital leases in respect of which
such Person is liable as lessee, (v) the face amount of all outstanding letters
of credit issued for 

 6
 

 

the account of such Person (other than letters of
credit relating to indebtedness included in Indebtedness of such Person
pursuant to another clause of this definition) and, without duplication, the
unreimbursed amount of all drafts drawn thereunder, (vi) indebtedness secured
by any Lien on property or assets of such Person, whether or not assumed (but
in any event not exceeding the fair market value of the property or asset),
(vii) all direct guarantees of Indebtedness referred to above of another
Person, (viii) all amounts payable in connection with mandatory redemptions or
repurchases of preferred stock or member interests or other preferred or
priority equity interests and (ix) any obligations of such Person (in the
nature of principal or interest) in respect of acceptances or similar
obligations issued or created for the account of such Person.

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

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

(b)    any
Interest Period which begins on the last Euro-Dollar Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall end on the last
Euro-Dollar Business Day of a calendar month;

provided  further that: (x) no Interest Period
applicable to any Loan of any Bank which begins before such Bank’s Commitment
Termination Date may end after such Bank’s Commitment Termination Date; and (y)
no Interest Period applicable to any Loan of any Bank may end after such Bank’s
Final Maturity Date.

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

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

 7
 

 

“Issuing Bank”
means (i) each of Barclays, JPMorgan Chase Bank, N.A. and Wachovia Bank,
National Association, and (ii) any other Bank that may agree to issue letters
of credit hereunder, in each case as issuer of a Letter of Credit hereunder. No
Issuing Bank shall be obligated to issue any Letter of Credit hereunder if,
after giving effect thereto, the aggregate Letter of Credit Liabilities in
respect of all Letters of Credit issued by such Issuing Bank hereunder would
exceed (i) in the case of any Issuing Bank named in clause (i) of the preceding
sentence, $500,000,000 (as such amount may be modified from time to time by
agreement between Cinergy and such Issuing Bank) or (ii) with respect to any
other Issuing Bank, such amount (if any) as may be agreed for this purpose from
time to time by such Issuing Bank and Cinergy. For avoidance of doubt, the
limitations in the preceding sentence are for the exclusive benefit of the
respective Issuing Banks, are incremental to the other limitations specified
herein on the availability of Letters of Credit and do not affect such other
limitations.

“Letter of Credit”
means a letter of credit issued or to be issued hereunder by an Issuing Bank in
accordance with Section 2.15.

“Letter of Credit
Liabilities” means, for any Bank and at any time, such Bank’s
ratable participation in the sum of (x) the amounts then owing by all Borrowers
in respect of amounts drawn under Letters of Credit and (y) the aggregate
amount then available for drawing under all Letters of Credit.

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

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

“London Interbank
Offered Rate” has the meaning set forth in Section 2.06(b).

“Material Debt”
means, with respect to any Borrower, Indebtedness of such Borrower or any of
its Material Subsidiaries in an aggregate principal amount exceeding
$150,000,000 and, in the case of Cinergy, Indebtedness of any of its Material
Subsidiaries incurred under this Agreement.

 8
 

 

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

“Material Subsidiary”
means at any time, with respect to any Borrower, any Subsidiary of such
Borrower that is a “significant subsidiary” (as such term is defined on the
Effective Date in Regulation S-X of the Securities and Exchange Commission (17
CFR 210.1-02(w)), but treating all references therein to the “registrant” as
references to such Borrower).

“Maximum Availability”
means, (i) in the case of Cinergy, an amount equal to the aggregate amount of
the Commitments then in effect and (ii) in the case of each of CG&E, PSI
Energy and ULH&P, an amount equal to the lesser of (x) the aggregate amount
of the Commitments then in effect and (y) $500,000,000 (for CG&E or PSI
Energy) or $100,000,000 (for ULH&P), as such amounts may be reduced from
time to time pursuant to Section 2.08. In the event of an increase in the Commitments
pursuant to Section 2.17, the respective amounts set forth in clause (ii)(y)
above shall be increased for each Borrower by an amount equal to its
Availability Percentage immediately prior to such increase multiplied by the
amount of such increase.

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

“Mortgage Indenture”
means, in the case of each of CG&E, PSI Energy and ULH&P, the CG&E
First Mortgage Trust Indenture, PSI Energy First Mortgage Trust Indenture or
ULH&P First Mortgage Trust Indenture, respectively.

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

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

“Notice of Interest
Rate Election” has the meaning set forth in Section 2.09(b).

“Notice of Issuance”
has the meaning set forth in Section 2.15(b).

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

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

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

 9
 

 

“Percentage”
means, with respect to any Bank at any time, the percentage which the amount of
its Commitment at such time represents of the aggregate amount of all the
Commitments at such time.

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

“Plan”
means at any time an employee pension benefit plan which is covered by Title IV
of ERISA or subject to the minimum funding standards under Section 412 of the Internal
Revenue Code and is either (i) maintained by a member of the ERISA Group for
employees of a member of the ERISA Group or (ii) maintained pursuant to a
collective bargaining agreement or any other arrangement under which more than
one employer makes contributions and to which a member of the ERISA Group is
then making or accruing an obligation to make contributions or has within the
preceding five plan years made contributions.

“Pricing Schedule”
means the Pricing Schedule attached hereto.

“PSI Energy”
means PSI Energy, Inc., an Indiana corporation. PSI Energy is currently doing
business under the name Duke Energy Indiana, Inc., and intends to change its
legal name to Duke Energy Indiana, Inc. effective October 1, 2006.

“PSI Energy First Mortgage
Trust Indenture” means the first mortgage trust indenture, dated as
of September 1, 1939, between PSI Energy (formerly known as Public Service
Company of 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.

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

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

“Reimbursement
Obligation” means, at any time, the obligation of the Borrower then
outstanding under Section 2.15 to reimburse the Issuing Bank for amounts paid
by the Issuing Bank in respect of any one or more drawings under a Letter of
Credit.

 10
 

 

“Removed Borrower”
has the meaning set forth in Section 9.05(b)

“Required Banks”
means, at any time, Banks having at least 51% in aggregate amount of the Credit
Exposures at such time.

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

“Revolving Credit
Period” means, with respect to any Bank,
the period from and including the Effective Date to but not including its
Commitment Termination Date.

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

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

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

“Syndication Agent”
means JPMorgan Chase Bank, N.A., in its capacity as syndication agent in
respect of this Agreement.

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

“Trust”
means The Doris Duke Trust, a trust established by James B. Duke by Indenture
dated December 11, 1924 for the benefit of certain relatives.

“ULH&P”
means The Union Light, Heat and Power Company, a Kentucky corporation.
ULH&P is currently doing business under the name Duke 

 11
 

 

Energy Kentucky, Inc., and intends to change its legal
name to Duke Energy Kentucky, Inc. effective October 1, 2006.

“ULH&P First Mortgage
Trust Indenture” means the first mortgage trust indenture, dated as
of February 1, 1949, between ULH&P 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.

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

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

“Utilization”
has the meaning set forth in the Pricing Schedule.

Section 1.02.   Accounting Terms
and Determinations.   Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with generally accepted accounting principles as in effect from time
to time, applied on a basis consistent (except for changes concurred in by the
relevant Borrower’s independent public accountants) with the most recent
audited consolidated financial statements of such Borrower and its Consolidated
Subsidiaries delivered to the Banks.

Section 1.03.   Types of
Borrowings.   The term “Borrowing” denotes the aggregation of Loans
of one or more Banks to be made to a single Borrower pursuant to Article 2 on a
single date and for a single Interest Period. Borrowings are classified for
purposes of this Agreement by reference to the pricing of Loans comprising such
Borrowing (e.g., a “Euro-Dollar Borrowing” is a Borrowing
comprised of Euro Dollar Loans).

ARTICLE 2

The Credits

Section 2.01.   Commitments to
Lend.   (a) Revolving Credit Loans. During
its Revolving Credit Period, each Bank severally agrees, on the terms and
conditions set forth in this Agreement, to make loans to each Borrower pursuant

 12
 

 

to this subsection from time to time; provided that, immediately after each such loan is made, (i)
the aggregate outstanding principal amount of such Bank’s Loans to all
Borrowers plus the aggregate amount of such Bank’s Letter of Credit Liabilities
shall not exceed its Commitment and (ii) the aggregate outstanding principal
amount of Loans to any Borrower plus the aggregate amount of Letter of Credit
Liabilities for the account of such Borrower shall not exceed the Maximum
Availability of such Borrower. Each Borrowing under this subsection shall be in
an aggregate principal amount of $10,000,000 or any larger multiple of
$1,000,000 (except that any such Borrowing may be in the aggregate amount
available in accordance with Section 3.02(b)) and shall be made from the
several Banks ratably in proportion to their respective Commitments in effect
on the date of Borrowing; provided
that, if the Interest Period selected by the Borrower for a Borrowing would
otherwise end after the Commitment Termination Dates of some but not all Banks,
the Borrower may in its Notice of Borrowing elect not to borrow from those
Banks whose Commitment Termination Dates fall prior to the end of such Interest
Period. Within the foregoing limits, the Borrowers may borrow under this
subsection (a), or to the extent permitted by Section 2.11, prepay Loans and
reborrow at any time during the Revolving Credit Periods under this subsection
(a).

(b)   Term Loans.   Each
Bank severally agrees, on the terms and conditions set forth in this Agreement,
to make a loan to each Borrower on its Commitment Termination Date; provided that, immediately after each such loan is made, (i)
the aggregate outstanding principal amount of such Bank’s Loans to all
Borrowers plus the aggregate amount of such Bank’s Letter of Credit Liabilities
shall not exceed its Commitment and (ii) the aggregate outstanding principal
amount of such Bank’s Loans to any Borrower plus the aggregate amount of such
Bank’s Letter of Credit Liabilities for the account of such Borrower shall not
exceed such Bank’s Percentage of the Maximum Availability of such Borrower; and
provided  further that
no Bank shall be obligated to make a loan pursuant to this subsection if any
Commitment shall have been extended pursuant to Section 2.01(c) to a date later
than the Commitment Termination Date of such Bank. Each Borrowing under this
Section 2.01(b) shall be made from the several Banks having the same Commitment
Termination Date ratably in proportion to their respective Commitments.

(c)   Extension of Commitments.   Cinergy
may, upon notice to the Administrative Agent not less than 60 days but no more
than 90 days prior to any anniversary of the Effective Date, propose to extend
the Commitment Termination Dates for an additional one-year period measured
from the Commitment Termination Dates then in effect. The Administrative Agent
shall promptly notify the Banks of receipt of such request. Each Bank shall
endeavor to respond to such request, whether affirmatively or negatively (such
determination in the sole discretion of such Bank), by notice to Cinergy and
the Administrative Agent within 30 days. Subject to the execution by the
Borrowers, 

 13
 

 

the Administrative Agent and such Banks of a duly
completed Extension Agreement in substantially the form of Exhibit E, the
Commitment Termination Date applicable to the Commitment of each Bank so
affirmatively notifying Cinergy and the Administrative Agent shall be extended
for the period specified above; provided
that no Commitment Termination Date of any Bank shall be extended unless Banks
having Commitments in an aggregate amount equal to at least 51% in aggregate
amount of the Commitments in effect at the time any such extension is requested
shall have elected so to extend their Commitments. Any Bank which does not give
such notice to Cinergy and the Administrative Agent shall be deemed to have
elected not to extend as requested, and the Commitment of each non-extending
Bank shall terminate on its Commitment Termination Date determined without
giving effect to such requested extension. Cinergy may, in accordance with
Section 8.06, designate another bank or other financial institution (which may
be, but need not be, an extending Bank) to replace a non-extending Bank.

Section 2.02.   Notice of
Borrowings.   The Borrower shall give
the Administrative Agent notice (a “Notice of
Borrowing”) not later than 11:00 A.M. (New York City time) on (x)
the date of each Base Rate Borrowing and (y) the third Euro-Dollar
Business Day before each Euro-Dollar Borrowing, specifying:

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

(b)    the
aggregate amount of such Borrowing;

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

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

Section 2.03.   Notice to Banks;
Funding of Loans.   (a) Upon receipt of a Notice of Borrowing, the Administrative
Agent shall promptly notify each Bank of the contents thereof and of such Bank’s
share (if any) of such Borrowing and such Notice of Borrowing shall not
thereafter be revocable by the Borrower.

(b)    Not later
than 1:00 P.M. (New York City time) on the date of each Borrowing, each Bank
participating therein shall (except as provided in subsection (c) of this
Section) make available its share of such Borrowing, in Federal or other funds
immediately available in New York City, to the Administrative Agent at its
address specified in or pursuant to Section 9.01. Unless the Administrative
Agent determines that any applicable condition 

 14
 

 

specified in Article 3 has not been satisfied, the
Administrative Agent will make the funds so received from the Banks available
to the Borrower at the Administrative Agent’s aforesaid address.

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

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

Section 2.04.   Registry; Notes.   (a) The
Administrative Agent shall maintain a register (the “Register”) on which it will record the Commitment of each
Bank, each Loan made by such Bank and each repayment of any Loan made by such
Bank. Any such recordation by the Administrative Agent on the Register shall be
conclusive, absent manifest error. Failure to make any such recordation, or any
error in such recordation, shall not affect the Borrowers’ obligations
hereunder.

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

 15
 

 

(c)    Each Bank
shall record the date, amount and maturity of each Loan made by it and the date
and amount of each payment of principal made by the Borrower with respect
thereto, and each Bank receiving a Note pursuant to this Section, if such Bank
so elects in connection with any transfer or enforcement of its Note, may
endorse on the schedule forming a part thereof appropriate notations to
evidence the foregoing information with respect to each such Loan then
outstanding; provided that the
failure of such Bank to make any such recordation or endorsement shall not
affect the obligations of any Borrower hereunder or under the Notes. Such Bank
is hereby irrevocably authorized by each Borrower so to endorse its Note and to
attach to and make a part of its Note a continuation of any such schedule as
and when required.

Section 2.05.   Maturity of
Loans; Effect of Cash Collateralization of Letters of Credit.   (a) Each Revolving
Credit Loan made by any Bank shall mature, and the principal amount thereof
shall be due and payable together with accrued interest thereon, on the
Commitment Termination Date of such Bank.

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

(c)    If any
provision of any debt instrument or other agreement or instrument binding upon
any Borrower, including without limitation this Agreement, would be contravened
by any deposit required hereunder to cash collateralize any Letter of Credit
Liabilities of such Borrower, such Borrower shall either (x) obtain a waiver of
such provision, (y) prepay the debt incurred under such debt instrument and
terminate such debt instrument or (z) make other arrangements satisfactory to
the Required Banks; it being understood and agreed that the risk of any such
contravention shall be borne solely by the Borrowers and not by the Banks and
shall in no event constitute a defense available to any Borrower for
nonperformance of its obligations hereunder.

Section 2.06.   Interest Rates.   (a) Each Base Rate
Loan shall bear interest on the outstanding principal amount thereof, for each
day from the date such Loan is made until it becomes due, at a rate per annum
equal to the Base Rate for such day. Such interest shall be payable quarterly
in arrears on each Quarterly Payment Date, at maturity and on the date of
termination of the Commitments in their entirety. Any overdue principal of or
overdue interest on any Base Rate Loan shall bear interest, payable on demand,
for each day until paid at a rate per annum equal to the sum of 1% plus the
Base Rate for such day.

(b)    Each Euro-Dollar
Loan shall bear interest on the outstanding principal amount thereof, for each
day during each Interest Period applicable thereto, at a rate per annum equal
to the sum of the Euro-Dollar Margin for such day plus the London
Interbank Offered Rate applicable to such Interest Period. 

 16
 

 

Such interest shall be payable for each Interest
Period on the last day thereof and, if such Interest Period is longer than
three months, at intervals of three months after the first day thereof.

The “London Interbank Offered Rate” applicable
to any Interest Period means the rate appearing on Page 3750 of the Telerate
Service Company (or on any successor or substitute page of such service, or any
successor to or substitute for such service, providing rate quotations
comparable to those currently provided on such page of the Telerate Service, as
may be nominated by the British Bankers’ Association for purposes of providing
quotations of interest rates applicable to dollar deposits in the London
interbank market) as of 11:00 A.M. (London time) two Euro-Dollar Business Days
prior to the commencement of such Interest Period, as the rate for dollar
deposits with a maturity comparable to such Interest Period. In the event that
such rate is not so available at such time for any reason, then the “London Interbank Offered Rate” for such
Interest Period shall be the average (rounded upward, if necessary, to the next
higher 1/16 of 1%) of the respective rates per annum at which deposits in
dollars are offered to each of the Euro-Dollar Reference Banks in the London
interbank market at approximately 11:00 A.M. (London time) two Euro-Dollar
Business Days before the first day of such Interest Period in an amount
approximately equal to the principal amount of the Loan of such Euro-Dollar
Reference Bank to which such Interest Period is to apply and for a period of
time comparable to such Interest Period. If any Euro-Dollar Reference Bank does
not furnish a timely quotation, the Administrative Agent shall determine the
relevant interest rate on the basis of the quotation furnished by the remaining
Euro-Dollar Reference Bank or, if none of such quotations is available on a
timely basis, the provisions of Section 8.01 shall apply.

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

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

Section 2.07.   Fees.   (a) Facility Fees. Cinergy shall pay
to the Administrative Agent, for the account of the Banks ratably in proportion
to their 

 17
 

 

Credit Exposures, a facility fee calculated for each
day at the Facility Fee Rate for such day (determined in accordance with the
Pricing Schedule) on the aggregate amount of the Credit Exposures on such day; 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, agrees to pay
upon demand to the Administrative Agent for the account of each Bank the amount
of such unpaid facility fee multiplied by the percentage which the Maximum
Availability applicable to such Borrower represents of the aggregate
Commitments (it being understood that Cinergy shall remain liable for any
unpaid amounts). Such facility fee shall accrue for each day from and including
the Effective Date but excluding the day on which the Credit Exposures are
reduced to zero.

(b)   Letter of Credit Fees.   The
Borrower shall pay to the Administrative Agent (i) for the account of the Banks
ratably a letter of credit fee accruing daily on the aggregate amount then
available for drawing under all outstanding Letters of Credit at a rate per
annum equal to the then applicable Euro-Dollar Margin and (ii) for the account
of each Issuing Bank a letter of credit fronting fee accruing daily on the
aggregate amount then available for drawing under all Letters of Credit issued
by such Issuing Bank at a rate per annum of 0.125% (or such other rate as may
be mutually agreed from time to time by the Borrower and such Issuing Bank).

(c)   Payments.   Accrued
fees under this Section for the account of any Bank shall be payable quarterly
in arrears on each Quarterly Payment Date and upon such Bank’s Commitment
Termination Date and Final Maturity Date (and, if later, the date the Credit
Exposure of such Bank is reduced to zero).

Section 2.08.   Optional
Termination or Reduction of Commitments and Maximum Availabilities.   (a) Cinergy may,
upon at least three Domestic Business Days’ notice to the Administrative Agent,
(i) terminate the Commitments at any time, if no Loans or Letter of Credit
Liabilities are outstanding at such time, or (ii) ratably reduce from time to
time by an aggregate amount of $10,000,000 or any larger multiple of $1,000,000
the aggregate amount of the Commitments in excess of the aggregate Utilization.

(b)    Each
Borrower, other than Cinergy, may, upon at least three Domestic Business Days’
notice to the Administrative Agent, reduce its Maximum Availability (i) to
zero, if no Loans to it or Letter of Credit Liabilities for its account are
outstanding or (ii) by an amount of $10,000,000 or any larger multiple of
$1,000,000 so long as, after giving effect to such reduction, its Maximum
Availability is not less than the sum of the aggregate principal amount of
Loans outstanding to it and the aggregate Letter of Credit Liabilities
outstanding for its account. Upon any reduction in the Maximum Availability of 

 18
 

 

a Borrower to zero pursuant to this Section 2.08(b),
such Borrower shall cease to be a Borrower hereunder.

Section 2.09.   Method of
Electing Interest Rates.   (a) The Loans included in each Borrowing shall bear interest
initially at the type of rate specified by the Borrower in the applicable
Notice of Borrowing. Thereafter, the Borrower may from time to time elect to
change or continue the type of interest rate borne by each Group of Loans
(subject in each case to the provisions of Article 8 and the last sentence of
this subsection (a)), as follows:

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

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

Each such election
shall be made by delivering a notice (a “Notice
of Interest Rate Election”) to the Administrative Agent not later
than 11:00 A.M. (New York City time) on the third Euro-Dollar Business
Day before the conversion or continuation selected in such notice is to be
effective. A Notice of Interest Rate Election may, if it so specifies, apply to
only a portion of the aggregate principal amount of the relevant Group of
Loans; provided that (i) such
portion is allocated ratably among the Loans comprising such Group and (ii) the
portion to which such notice applies, and the remaining portion to which it
does not apply, are each $10,000,000 or any larger multiple of $1,000,000.

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

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

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

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

 19

 

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

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

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

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

Section 2.10.   Mandatory
Termination of Commitments.   The
Commitment of each Bank shall terminate on such Bank’s Commitment Termination
Date.

Section 2.11.   Optional
Prepayments.   (a) The Borrower may (i) upon notice to the Administrative
Agent not later than 11:00 A.M. (New York City time) on any Domestic Business
Day prepay on such Domestic Business Day any Group of Base Rate Loans and (ii)
upon at least three Euro-Dollar Business Days’ notice to the
Administrative Agent not later than 11:00 A.M. (New York City time) prepay any
Group of Euro-Dollar Loans, in each case in whole at any time, or from
time to time in part in amounts aggregating $5,000,000 or any larger multiple
of $1,000,000, by paying the principal amount to be prepaid together with accrued
interest thereon to the date of prepayment and together with any additional
amounts payable pursuant to Section 2.13. Each such optional prepayment shall
be applied to prepay ratably the Loans of the several Banks included in such
Group or Borrowing.

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

Section 2.12.   General
Provisions as to Payments.   (a) The Borrower shall make each payment of principal of, and
interest on, the Loans and of fees hereunder, not later than 1:00 P.M. (New
York City time) on the date when due, in Federal or other funds immediately
available in New York City, to the Administrative Agent at its address referred
to in Section 9.01 and without 

 20
 

 

reduction by reason of any set-off, counterclaim or
deduction of any kind. The Administrative Agent will promptly distribute to
each Bank in like funds its ratable share of each such payment received by the
Administrative Agent for the account of the Banks. Whenever any payment of
principal of, or interest on, the Base Rate Loans or Letter of Credit
Liabilities or of fees shall be due on a day which is not a Domestic Business
Day, the date for payment thereof shall be extended to the next succeeding
Domestic Business Day. Whenever any payment of principal of, or interest on,
the Euro-Dollar Loans shall be due on a day which is not a Euro-Dollar
Business Day, the date for payment thereof shall be extended to the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar
Business Day falls in another calendar month, in which case the date for
payment thereof shall be the next preceding Euro-Dollar Business Day. If
the date for any payment of principal is extended by operation of law or
otherwise, interest thereon shall be payable for such extended time.

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

Section 2.13.   Funding Losses.   If the Borrower makes any payment of principal with
respect to any Euro-Dollar Loan or any Euro-Dollar Loan is converted to a Base
Rate Loan or continued as a Euro-Dollar Loan for a new Interest Period
(pursuant to Article 2, 6 or 8 or otherwise) on any day other than the last day
of an Interest Period applicable thereto, or if the Borrower fails to borrow,
prepay, convert or continue any Euro-Dollar Loans after notice has been given to
any Bank in accordance with Section 2.03(a), 2.09(c) or 2.11(b), the Borrower
shall reimburse each Bank within 15 days after demand for any resulting loss or
expense incurred by it (or by an existing or prospective Participant in the
related Loan), including (without limitation) any loss incurred in obtaining,
liquidating or employing deposits from third parties, but excluding loss of
margin for the period after any such payment or conversion or failure to
borrow, prepay, convert or continue; provided
that such Bank shall have delivered to the Borrower a certificate setting forth
in reasonable detail the calculation of the amount of such loss or expense,
which certificate shall be conclusive in the absence of manifest error.

 21
 

 

Section 2.14.   Computation of
Interest and Fees.   Interest
based on the Base Rate and facility fees hereunder shall be computed on the
basis of a year of 365 days (or 366 days in a leap year) and paid for the
actual number of days elapsed (including the first day but excluding the last
day). All other interest and Letter of Credit fees shall be computed on the
basis of a year of 360 days and paid for the actual number of days elapsed
(including the first day but excluding the last day).

Section 2.15.   Letters of
Credit.

(a)    Subject to
the terms and conditions hereof, each Issuing Bank agrees to issue Letters of
Credit hereunder from time to time before its Commitment Termination Date upon
the request and for the account of any Borrower; provided
that, immediately after each Letter of Credit is issued, (i) the Utilization
shall not exceed the aggregate amount of the Commitments, (ii) the aggregate
outstanding principal amount of Loans to any Borrower plus the aggregate amount
of Letter of Credit Liabilities for the account of such Borrower shall not
exceed the Maximum Availability of such Borrower and (iii) the aggregate amount
of the Letter of Credit Liabilities shall not exceed $1,000,000,000. Upon the
date of issuance by the Issuing Bank of a Letter of Credit, the Issuing Bank
shall be deemed, without further action by any party hereto, to have sold to
each Bank, and each Bank shall be deemed, without further action by any party
hereto, to have purchased from the Issuing Bank, a participation in such Letter
of Credit and the related Letter of Credit Liabilities in the proportion its
Commitment bears to the aggregate Commitments; provided
that (i) if the scheduled Commitment Termination Date of a Bank falls prior to
the expiry date of a Letter of Credit then outstanding and the Commitments of
the other Banks are extended on such date in accordance with Section 2.01(c),
such Bank’s participation in such Letter of Credit shall terminate on its
Commitment Termination Date, and the participations of the other Banks therein
shall be redetermined pro rata in proportion to their Commitments after giving
effect to the termination of the Commitment of such former Bank; and (ii) in
the event that the Commitments of the other Banks are not extended in
accordance with Section 2.01(c), then such Bank’s participation in all Letters
of Credit shall remain at the level existing prior to the proposed extension,
regardless of whether the expiry of any such Letters of Credit extends beyond
such Bank’s Commitment Termination Date. If and to the extent necessary to
permit redetermination of the participations in Letters of Credit pursuant to
clause (i) of the foregoing proviso within the limits of the Commitments which
are not terminated, the Borrowers shall prepay on such date all or a portion of
the outstanding Loans and/or secure cancellation of outstanding Letters of
Credit, and such redetermination and termination of participations in
outstanding Letters of Credit shall be conditioned upon their having done so.

(b)    The
Borrower shall give the Issuing Bank notice at least three Domestic Business
Days prior to the requested issuance of a Letter of Credit, or in 

 22
 

 

the case of a Letter of Credit substantially in the
form of Exhibit G, at least one Business Day prior to the requested issuance of
such Letter of Credit, specifying the date such Letter of Credit is to be
issued and describing the terms of such Letter of Credit (such notice,
including any such notice given in connection with the extension of a Letter of
Credit, a “Notice of Issuance”),
substantially in the form of Exhibit F, appropriately completed. Upon receipt
of a Notice of Issuance, the Issuing Bank shall promptly notify the
Administrative Agent, and the Administrative Agent shall promptly notify each
Bank of the contents thereof and of the amount of such Bank’s participation in
such Letter of Credit. The issuance by the Issuing Bank of each Letter of
Credit shall, in addition to the conditions precedent set forth in Article 3,
be subject to the conditions precedent that such Letter of Credit shall be
denominated in U.S. dollars and shall be in such form and contain such terms as
shall be reasonably satisfactory to the Issuing Bank. Unless otherwise notified
by the Administrative Agent, the Issuing Bank may, but shall not be required
to, conclusively presume that all conditions precedent set forth in Article 3
have been satisfied. The Borrower shall also pay to each Issuing Bank for its
own account issuance, drawing, amendment and extension charges in the amounts
and at the times as agreed between the Borrower and such Issuing Bank. Except
for non-substantive amendments to any Letter of Credit for the purpose of
correcting errors or ambiguities or to allow for administrative convenience
(which amendments each Issuing Bank may make in its discretion with the consent
of the Borrower), the amendment, extension or renewal of any Letter of Credit
shall be deemed to be an issuance of such Letter of Credit. If any Letter of
Credit contains a provision pursuant to which it is deemed to be automatically
renewed unless notice of termination is given by the Issuing Bank of such
Letter of Credit, the Issuing Bank shall timely give notice of termination if
(i) as of close of business on the seventeenth day prior to the last day upon
which the Issuing Bank’s notice of termination may be given to the
beneficiaries of such Letter of Credit, the Issuing Bank has received a notice
of termination from the Borrower or a notice from the Administrative Agent that
the conditions to issuance of such Letter of Credit have not been satisfied or
(ii) the renewed Letter of Credit would have a term not permitted by subsection
(c) below.

(c)    No Letter
of Credit shall have a term extending beyond the first anniversary of the
Commitment Termination Date of the applicable Issuing Bank.

(d)    Upon
receipt from the beneficiary of any applicable Letter of Credit of any notice
of a drawing under such Letter of Credit, the Issuing Bank shall notify the
Administrative Agent and the Administrative Agent shall promptly notify the
Borrower and each other Bank as to the amount to be paid as a result of such
demand or drawing and the payment date. The Borrower shall be irrevocably and
unconditionally obligated forthwith to reimburse the Issuing Bank for any
amounts paid by the Issuing Bank upon any drawing under any Letter of Credit
without presentment, demand, protest or other formalities of any kind. All such

 23
 

 

amounts paid by the Issuing Bank and remaining unpaid
by the Borrower shall bear interest, payable on demand, for each day until paid
at a rate per annum equal to the Base Rate for such day plus, if such amount
remains unpaid for more than two Domestic Business Days, 1%. In addition, each
Bank will pay to the Administrative Agent, for the account of the applicable
Issuing Bank, immediately upon such Issuing Bank’s demand at any time during
the period commencing after such drawing until reimbursement therefor in full
by the Borrower, an amount equal to such Bank’s ratable share of such drawing
(in proportion to its participation therein), together with interest on such
amount for each day from the date of the Issuing Bank’s demand for such payment
(or, if such demand is made after 12:00 Noon (New York City time) on such date,
from the next succeeding Domestic Business Day) to the date of payment by such
Bank of such amount at a rate of interest per annum equal to the Federal Funds
Rate and, if such amount remains unpaid for more than five Domestic Business
Days after the Issuing Bank’s demand for such payment, at a rate of interest
per annum equal to the Base Rate plus 1%. The Issuing Bank will pay to each
Bank ratably all amounts received from the Borrower for application in payment
of its reimbursement obligations in respect of any Letter of Credit, but only
to the extent such Bank has made payment to the Issuing Bank in respect of such
Letter of Credit pursuant hereto.

(e)    The
obligations of the Borrower and each Bank under subsection 2.15(d) above shall
be absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement, under all circumstances
whatsoever, including without limitation the following circumstances:

(i)     the use
which may be made of the Letter of Credit by, or any acts or omission of, a
beneficiary of a Letter of Credit (or any Person for whom the beneficiary may
be acting);

(ii)    the
existence of any claim, set-off, defense or other rights that the Borrower may
have at any time against a beneficiary of a Letter of Credit (or any Person for
whom the beneficiary may be acting), the Banks (including the Issuing Bank) or
any other Person, whether in connection with this Agreement or the Letter of
Credit or any document related hereto or thereto or any unrelated transaction;

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

(iv)   payment
under a Letter of Credit to the beneficiary of such Letter of Credit against
presentation to the Issuing Bank of a draft or 

 24
 

 

certificate that does not comply with the terms of the
Letter of Credit; provided that
the determination by the Issuing Bank to make such payment shall not have been
the result of its willful misconduct or gross negligence; or

(v)    any other
act or omission to act or delay of any kind by any Bank (including the Issuing
Bank), the Administrative Agent or any other Person or any other event or
circumstance whatsoever that might, but for the provisions of this subsection
(v), constitute a legal or equitable discharge of the Borrower’s or the Bank’s
obligations hereunder.

(f)     The
Borrower hereby indemnifies and holds harmless each Bank (including the Issuing
Bank) and the Administrative Agent from and against any and all claims,
damages, losses, liabilities, costs or expenses which such Bank or the
Administrative Agent may incur (including, without limitation, any claims,
damages, losses, liabilities, costs or expenses which the Issuing Bank may
incur by reason of or in connection with (i) the failure of any other Bank to
fulfill or comply with its obligations to such Issuing Bank hereunder (but
nothing herein contained shall affect any rights the Borrower may have against
such defaulting Bank) or (ii) any litigation arising with respect to this
Agreement (whether or not the Issuing Bank shall prevail in such litigation)),
and none of the Banks (including the Issuing Bank) nor the Administrative Agent
nor any of their officers or directors or employees or agents shall be liable
or responsible, by reason of or in connection with the execution and delivery
or transfer of or payment or failure to pay under any Letter of Credit,
including without limitation any of the circumstances enumerated in subsection
2.15(e) above, as well as (i) any error, omission, interruption or delay in
transmission or delivery of any messages, by mail, cable, telegraph, telex or
otherwise, (ii) any loss or delay in the transmission of any document required
in order to make a drawing under a Letter of Credit and (iii) any consequences
arising from causes beyond the control of the Issuing Bank, including, without
limitation, any government acts or any other circumstances whatsoever, in
making or failing to make payment under such Letter of Credit; provided that the Borrower shall not be
required to indemnify the Issuing Bank for any claims, damages, losses,
liabilities, costs or expenses, and the Borrower shall have a claim for direct
(but not consequential) damage suffered by it, to the extent found by a court
of competent jurisdiction to have been caused by (x) the willful misconduct or
gross negligence of the Issuing Bank in determining whether a request presented
under any Letter of Credit complied with the terms of such Letter of Credit or
(y) the Issuing Bank’s failure to pay under any Letter of Credit after the
presentation to it of a request strictly complying with the terms and
conditions of the Letter of Credit. Nothing in this subsection 2.15(f) is
intended to limit the obligations of the Borrower under any other provision of
this Agreement. To the extent the Borrower does not indemnify the Issuing Bank
as required by this subsection, the Banks agree to do so ratably in accordance
with their Commitments.

 25
 

 

(g)    The
Issuing Bank shall act on behalf of the Banks with respect to any Letters of
Credit issued by it and the documents associated therewith, and the Issuing
Bank shall have all of the benefits and immunities (i) provided to the
Administrative Agent in Article 7 (other than Sections 7.08 and 7.09) with
respect to any acts taken or omissions suffered by the Issuing Bank in
connection with Letters of Credit issued by it or proposed to be issued by it
and the applications and agreements for letters of credit pertaining to such
Letters of Credit as fully as if the term “Administrative Agent” as used in
Article 7 included the Issuing Bank with respect to such acts or omissions and
(ii) as additionally provided herein with respect to the Issuing Bank.

Section 2.16.   Regulation D
Compensation.   In the
event that a Bank is required to maintain reserves of the type contemplated by
the definition of “Euro-Dollar Reserve Percentage”, such Bank
may require the Borrower to pay, contemporaneously with each payment of
interest on the Euro-Dollar Loans, additional interest on the related
Euro-Dollar Loan of such Bank at a rate per annum determined by such Bank
up to but not exceeding the excess of (i) (A) the applicable London Interbank
Offered Rate divided by (B) one minus
the Euro-Dollar Reserve Percentage over (ii) the applicable London
Interbank Offered Rate. Any Bank wishing to require payment of such additional
interest (x) shall so notify the Borrower and the Administrative Agent, in
which case such additional interest on the Euro-Dollar Loans of such Bank
shall be payable to such Bank at the place indicated in such notice with
respect to each Interest Period commencing at least three Euro-Dollar
Business Days after the giving of such notice and (y) shall notify the Borrower
at least three Euro-Dollar Business Days prior to each date on which
interest is payable on the Euro-Dollar Loans of the amount then due it
under this Section. Each such notification shall be accompanied by such
information as the Borrower may reasonably request.

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

Section 2.17.   Increase In
Commitments; Additional Banks.   (a)
Subsequent to the Effective Date, Cinergy may, upon at least 30 days’ notice to
the Administrative Agent (which shall promptly provide a copy of such notice to
the Banks), propose to increase the aggregate amount of the Commitments, provided that after giving effect to any such increase, the
total Commitments shall 

 26
 

 

not exceed $2,500,000,000 (the amount of any such
increase, the “Increased Commitments”). Each Bank
party to this Agreement at such time shall have the right (but no obligation), for
a period of 15 days following receipt of such notice, to elect by notice to
Cinergy and the Administrative Agent to increase its Commitment hereunder.

(b)    If any
Bank party to this Agreement shall not elect to increase its Commitment
pursuant to subsection (a) of this Section, Cinergy may designate another bank
or other lenders (which may be, but need not be, one or more of the existing
Banks) which at the time agree to (i) in the case of any such lender that is an
existing Bank, increase its Commitment and (ii) in the case of any other such
lender (an “Additional Bank”), become a party
to this Agreement. The sum of the increases in the Commitments of the existing
Banks pursuant to this subsection (b) plus the Commitments of the Additional
Banks shall not in the aggregate exceed the unsubscribed amount of the
Increased Commitments.

(c)    An
increase in the aggregate amount of the Commitments pursuant to this Section
2.17 shall become effective upon the receipt by the Administrative Agent of an
agreement in form and substance satisfactory to the Administrative Agent signed
by the Borrowers, by each Additional Bank and by each other Bank whose
Commitment is to be increased, setting forth the new Commitments of such Banks
and setting forth the agreement of each Additional Bank to become a party to
this Agreement and to be bound by all the terms and provisions hereof, together
with such evidence of appropriate corporate authorization on the part of the
Borrower with respect to the Increased Commitments and such opinions of counsel
for the Borrower with respect to the Increased Commitments as the
Administrative Agent may reasonably request.

Upon any increase in the aggregate amount of the
Commitments pursuant to this Section 2.17, (i) the respective Letter of Credit
Liabilities of the Banks shall be redetermined as of the effective date of such
increase and (ii) within five Domestic Business Days, in the case of any Base
Rate Loans then outstanding, and at the end of the then current Interest Period
with respect thereto, in the case of any Euro-Dollar Loans then outstanding,
the Borrower shall prepay such Group of Loans in its entirety and, to the
extent the Borrower elects to do so and subject to the conditions specified in
Article 3, the Borrower shall reborrow Revolving Credit Loans from the Banks in
proportion to their respective Commitments after giving effect to such
increase, until such time as all outstanding Revolving Credit Loans are held by
the Banks in such proportion.

 27
 

 

ARTICLE 3

Conditions

Section 3.01.   Effectiveness.   This Amended Agreement shall become effective on the
date that each of the following conditions shall have been satisfied (or waived
in accordance with Section 9.05).

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

(b)    receipt by
the Administrative Agent of (i) an opinion of internal counsel of each
Borrower, substantially in the form of Exhibit B-1 hereto and (ii) an opinion
of Robinson, Bradshaw & Hinson, P.A., special counsel for the Borrowers,
substantially in the form of Exhibit B-2 hereto, and, in each case, covering
such additional matters relating to the transactions contemplated hereby as the
Required Banks may reasonably request;

(c)    receipt by
the Administrative Agent of an opinion of Davis Polk & Wardwell, special
counsel for the Agents, substantially in the form of Exhibit C hereto and
covering such additional matters relating to the transactions contemplated
hereby as the Required Banks may reasonably request;

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

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

(f)     receipt
by the Administrative Agent of evidence satisfactory to it of the payment of
all principal of and interest on any “Advances” (as defined in the Existing Agreement)
made by any Departing Bank outstanding under the Existing Agreement; and

(g)    receipt by
the Administrative Agent for the account of the Banks of participation fees as
heretofore mutually agreed by Cinergy and the Administrative Agent;

 28
 

 

provided that this
Agreement shall not become effective or be binding on any party hereto unless
all of the foregoing conditions are satisfied not later than July 15, 2006. The
Administrative Agent shall promptly notify Cinergy and the Banks of the
Effective Date, and such notice shall be conclusive and binding on all parties
hereto.

On the Effective Date, the Existing Agreement will be
automatically amended and restated in its entirety to read as set forth herein.
On and after the Effective Date, the rights and obligations of the parties
hereto shall be governed by this Amended Agreement; provided that
the rights and obligations of the parties hereto with respect to the period
prior to the Effective Date shall continue to be governed by the provisions of
the Existing Agreement. The Administrative Agent shall promptly notify the
Borrowers and each Bank of the effectiveness of this Amended Agreement, and
such notice shall be conclusive and binding on all parties hereto. The
Commitment of any Person which has a Commitment under the Existing Agreement
but not under this Amended Agreement shall terminate on the Effective Date, and
all accrued fees and other amounts payable to such Person shall be due on the
Effective Date.

On the Effective Date, (i) the respective participations
of the Banks in any “Letters of Credit” (as defined in the Existing Agreement)
outstanding under the Existing Agreement shall be redetermined on the basis of
their respective Commitments under this Amended Agreement as if issued
hereunder on the Effective Date, and any such “Letters of Credit” shall be
Letters of Credit hereunder and (ii) within five Domestic Business Days of the
Effective Date, in the case of any “Base Rate Advances” (as defined in the
Existing Agreement) made under the Existing Agreement and outstanding on the
Effective Date, and at the end of the then current “Interest Period” (as
defined in the Existing Agreement) with respect thereto, in the case of any “Eurodollar
Rate Advances” (as defined in the Existing Agreement) then outstanding under
the Existing Agreement, the Borrower shall prepay the same in their entirety
and, to the extent the Borrower elects to do so and subject to the conditions
specified in this Article 3, the Borrower shall reborrow Revolving Credit Loans
from the Banks in proportion to their respective Commitments under this Amended
Agreement, until such time as all outstanding principal amounts are held by the
Banks in such proportion.

Section 3.02.   Borrowings and
Issuance of Letters of Credit.   The
obligation of any Bank to make a Loan on the occasion of any Borrowing and the
obligation of any Issuing Bank to issue (or renew or extend the term of) any
Letter of Credit is subject to the satisfaction of the following conditions:

(a)    receipt by
the Administrative Agent of a Notice of Borrowing as required by Section 2.02
or receipt by the Issuing Bank of a Notice of Issuance as required by Section
2.15(b), as the case may be;

 29
 

 

(b)    the fact
that, immediately after such Borrowing or issuance of such Letter of Credit,
(i) the Utilization will not exceed the aggregate amount of the Commitments,
(ii) the aggregate outstanding principal amount of Loans to the Borrower plus
the aggregate amount of Letter of Credit Liabilities for the account of the
Borrower will not exceed the Maximum Availability of such Borrower and (iii) in
the case of an issuance of a Letter of Credit the aggregate amount of the
Letter of Credit Liabilities shall not exceed $1,000,000,000;

(c)    the fact
that, immediately after such Borrowing or issuance of such Letter of Credit, no
Default with respect to the Borrower shall have occurred and be continuing; and

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

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

ARTICLE 4

Representations and Warranties

Each Borrower, severally but not jointly, represents
and warrants that:

Section 4.01.   Organization and
Power.   Such Borrower is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has all requisite powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted and is duly qualified to do business in each
jurisdiction where such qualification is required, except where the failure so
to qualify would not have a material adverse effect on the business, financial
position or results of operations of such Borrower and its consolidated
Subsidiaries, considered as a whole.

Section 4.02.   Corporate and
Governmental Authorization; No Contravention.   The
execution, delivery and performance by such Borrower of this Agreement and the
Notes are within such Borrower’s powers, have been duly authorized by all
necessary company action, require no action by or in respect of, or filing
with, any governmental body, agency or official (except for consents,
authorizations or filings which have been obtained or made, as the case may be,
and are in full force and effect) and do not contravene, or constitute a
default under, any provision of applicable law or regulation or of the articles
of incorporation, by-laws, certificate of formation or the limited
liability company 

 30
 

 

agreement of such Borrower or of any agreement,
judgment, injunction, order, decree or other instrument binding upon such
Borrower or result in the creation or imposition of any Lien on any asset of
such Borrower or any of its Material Subsidiaries.

Section 4.03.   Binding Effect.   This Agreement constitutes a valid and binding
agreement of such Borrower and each Note, if and when executed and delivered by
it in accordance with this Agreement, will constitute a valid and binding
obligation of such Borrower, in each case enforceable in accordance with its
terms, except as the same may be limited by bankruptcy, insolvency or similar
laws affecting creditors’ rights generally and by general principles of equity.

Section 4.04.   Financial
Information.   (a) The consolidated balance sheet of such Borrower and its
Consolidated Subsidiaries as of December 31, 2005 and the related consolidated
statements of income, cash flows, capitalization and retained earnings for the
fiscal year then ended, reported on by Deloitte & Touche, copies of which
have been delivered to each of the Banks by using such Borrower’s IntraLinks
site, fairly present, in conformity with generally accepted accounting
principles, the consolidated financial position of such Borrower and its
Consolidated Subsidiaries as of such date and their consolidated results of
operations and cash flows for such fiscal year.

(b)    The
unaudited consolidated balance sheet of such Borrower and its Consolidated
Subsidiaries as of March 31, 2006 and the related unaudited consolidated
statements of income and cash flows for the three months then ended, copies of
which have been delivered to each of the Banks by using such Borrower’s
IntraLinks site, fairly present, in conformity with generally accepted
accounting principles applied on a basis consistent with the financial
statements referred to in subsection (a) of this Section, the consolidated
financial position of such Borrower and its Consolidated Subsidiaries as of
such date and their consolidated results of operations and changes in financial
position for such three-month period (subject to normal year-end
adjustments and the absence of footnotes).

(c)    Since
December 31, 2005, there has been no material adverse change in the business,
financial position or results of operations of such Borrower and its
Consolidated Subsidiaries, considered as a whole.

Section 4.05.   Regulation U.   Such Borrower and its Material Subsidiaries are not
engaged in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation U issued by the Board
of Governors of the Federal Reserve System) and no proceeds of any Borrowing by
and no issuance of Letters of Credit for the account of such Borrower will be
used to purchase or carry any margin stock or to extend credit to others for
the purpose of purchasing or carrying any margin stock. Not more than 

 31
 

 

25% of the value of the assets of such Borrower and
its Material Subsidiaries is represented by margin stock.

Section 4.06.   Litigation.   Except as disclosed in the Borrower’s annual report
on Form 10-K for the fiscal year ended December 31, 2005 and its quarterly
report on Form 10-Q for the period ended March 31, 2006, there is no action,
suit or proceeding pending against, or to the knowledge of such Borrower
threatened against or affecting, such Borrower or any of its Subsidiaries
before any court or arbitrator or any governmental body, agency or official
which would be likely to be decided adversely to such Borrower or such Subsidiary
and, as a result, have a material adverse effect upon the business,
consolidated financial position or results of operations of such Borrower and
its Consolidated Subsidiaries, considered as a whole, or which in any manner
draws into question the validity of this Agreement or any Note.

Section 4.07.   Compliance with
Laws.   Such Borrower and each of its
Material Subsidiaries is in compliance in all material respects with all
applicable laws, ordinances, rules, regulations and requirements of governmental
authorities (including, without limitation, ERISA and Environmental Laws)
except where (i) non-compliance would not have a material adverse effect on the
business, financial position or results of operations of such Borrower and its
Consolidated Subsidiaries, considered as a whole, or (ii) the necessity of
compliance therewith is contested in good faith by appropriate proceedings.

Section 4.08.   Taxes.   Such Borrower and its Material Subsidiaries have
filed all United States Federal income tax returns and all other material tax
returns which are required to be filed by them and have paid all taxes due
pursuant to such returns or pursuant to any assessment received by such
Borrower or any such Material Subsidiary except (i) where nonpayment would not
have a material adverse effect on the business, financial position or results
of operations of such Borrower and its Consolidated Subsidiaries, considered as
a whole, or (ii) where the same are contested in good faith by appropriate
proceedings. The charges, accruals and reserves on the books of such Borrower
and its Material Subsidiaries in respect of taxes or other governmental charges
are, in the opinion of such Borrower, adequate.

ARTICLE 5

Covenants

Each Borrower, severally but not jointly, agrees that,
so long as any Bank has any Commitment hereunder with respect to such Borrower
or any amount payable hereunder remains unpaid by such Borrower or any Letter
of Credit Liabilities remain outstanding:

 32
 

 

Section 5.01.   Information.   Such Borrower will deliver to each of the Banks:

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

(b)    as soon as
available and in any event within 75 days after the end of each of the first
three quarters of each fiscal year of such Borrower, a consolidated balance
sheet of such Borrower and its Consolidated Subsidiaries as of the end of such
quarter and the related consolidated statements of income and cash flows for such
quarter and for the portion of such Borrower’s fiscal year ended at the end of
such quarter, setting forth in each case in comparative form the figures for
the corresponding quarter and the corresponding portion of such Borrower’s
previous fiscal year, all certified (subject to normal year-end
adjustments) as to fairness of presentation, generally accepted accounting
principles and consistency by an Approved Officer of such Borrower;

(c)    simultaneously
with the delivery of each set of financial statements referred to in clauses
(a) and (b) above, a certificate of an Approved Officer of such Borrower (i)
setting forth in reasonable detail the calculations required to establish
whether such Borrower was in compliance with the requirements of Section 5.10 on
the date of such financial statements and (ii) stating whether any Default
exists on the date of such certificate and, if any Default then exists, setting
forth the details thereof and the action which such Borrower is taking or
proposes to take with respect thereto;

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

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

 33
 

 

(f)     if and
when any member of such Borrower’s ERISA Group (i) gives or is required to give
notice to the PBGC of any “reportable event”
(as defined in Section 4043 of ERISA) with respect to any Material Plan which
might constitute grounds for a termination of such Plan under Title IV of
ERISA, or knows that the plan administrator of any Material Plan has given or
is required to give notice of any such reportable event, a copy of the notice
of such reportable event given or required to be given to the PBGC; (ii)
receives notice of complete or partial withdrawal liability under Title IV of
ERISA or notice that any Material Plan is in reorganization, is insolvent or
has been terminated, a copy of such notice; (iii) receives notice from the PBGC
under Title IV of ERISA of an intent to terminate, impose material liability
(other than for premiums under Section 4007 of ERISA) in respect of, or appoint
a trustee to administer any Plan, a copy of such notice; (iv)applies for a
waiver of the minimum funding standard under Section 412 of the Internal
Revenue Code, a copy of such application; (v) gives notice of intent to
terminate any Material Plan under Section 4041(c) of ERISA, a copy of such
notice and other information filed with the PBGC; (vi) gives notice of
withdrawal from any Material Plan pursuant to Section 4063 of ERISA, a copy of
such notice; or (vii) fails to make any payment or contribution to any Material
Plan or makes any amendment to any Material Plan which has resulted or could
result in the imposition of a Lien or the posting of a bond or other security,
a certificate of the chief financial officer or the chief accounting officer of
such Borrower setting forth details as to such occurrence and action, if any,
which such Borrower or applicable member of the ERISA Group is required or
proposes to take; and

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

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

Section 5.02.   Payment of
Taxes.   Such Borrower will pay and
discharge, and will cause each of its Material Subsidiaries to pay and
discharge, at or before maturity, all their tax liabilities, except where (i)
nonpayment would not have a 

 34
 

 

material adverse effect on the business, financial
position or results of operations of such Borrower and its Consolidated
Subsidiaries, considered as a whole, or (ii) the same may be contested in good
faith by appropriate proceedings, and will maintain, and will cause each of its
Material Subsidiaries to maintain, in accordance with generally accepted
accounting principles, appropriate reserves for the accrual of any of the same.

Section 5.03.   Maintenance of
Property; Insurance.   (a) Such Borrower will keep, and will cause each of its
Material Subsidiaries to keep, all property useful and necessary in its
business in good working order and condition, ordinary wear and tear excepted.

(b)    Such Borrower
will, and will cause each of its Material Subsidiaries to, maintain (either in
the name of such Borrower or in such Subsidiary’s own name) with financially
sound and responsible insurance companies, insurance on all their respective
properties in at least such amounts and against at least such risks (and with
such risk retention) as are usually insured against by companies of established
repute engaged in the same or a similar business; provided that self-insurance by such Borrower or any
such Material Subsidiary, shall not be deemed a violation of this covenant to
the extent that companies engaged in similar businesses and owning similar
properties self-insure; and will furnish to the Banks, upon request from
the Administrative Agent, information presented in reasonable detail as to the
insurance so carried.

Section 5.04.   Maintenance of
Existence.   Such Borrower will
preserve, renew and keep in full force and effect, and will cause each of its
Material Subsidiaries to preserve, renew and keep in full force and effect
their respective corporate or other legal existence and their respective
rights, privileges and franchises material to the normal conduct of their
respective businesses; provided
that nothing in this Section 5.04 shall prohibit the termination of any right,
privilege or franchise of such Borrower or any such Material Subsidiary or of
the corporate or other legal existence of any such Material Subsidiary, or the
change in form of organization of such Borrower or any such Material
Subsidiary, if such Borrower in good faith determines that such termination or
change is in the best interest of such Borrower, is not materially
disadvantageous to the Banks and, in the case of a change in the form of
organization of such Borrower, the Administrative Agent has consented thereto.

Section 5.05.   Compliance with
Laws.   Such Borrower will comply, and
cause each of its Material Subsidiaries to comply, in all material respects
with all applicable laws, ordinances, rules, regulations, and requirements of
governmental authorities (including, without limitation, ERISA and Environmental
Laws) except where (i) noncompliance would not have a material adverse effect
on the business, financial position or results of operations of such Borrower
and its 

 35
 

 

Consolidated Subsidiaries, considered as a whole, or
(ii) the necessity of compliance therewith is contested in good faith by
appropriate proceedings.

Section 5.06.   Books and
Records.   Such Borrower will keep,
and will cause each of its Material Subsidiaries to keep, proper books of
record and account in which full, true and correct entries shall be made of all
financial transactions in relation to its business and activities in accordance
with its customary practices; and will permit, and will cause each such
Material Subsidiary to permit, representatives of any Bank at such Bank’s
expense (accompanied by a representative of such Borrower, if such Borrower so
desires) to visit any of their respective properties, to examine any of their
respective books and records and to discuss their respective affairs, finances
and accounts with their respective officers, employees and independent public
accountants, all upon such reasonable notice, at such reasonable times and as
often as may reasonably be desired.

Section 5.07.   Negative Pledge.   Such Borrower will not create, assume or suffer to
exist any Lien on any asset now owned or hereafter acquired by it, except:

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

(b)    the Lien
of such Borrower’s Mortgage Indenture (if any) securing Indebtedness
outstanding on the Effective Date or issued hereafter;

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

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

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

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

 36

 

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

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

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

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

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

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

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

(n)    Liens
securing obligations under Hedging Agreements entered into to protect against
fluctuations in interest rates or exchange rates or commodity 

 37
 

 

prices and not for speculative purposes, provided that
such Liens run in favor of a Bank hereunder or a Person who was, at the time of
issuance, a Bank; and

(o)    Liens not
otherwise permitted by the foregoing clauses of this Section on assets of such
Borrower securing obligations in an aggregate principal or face amount at any
date not to exceed (i) in the case of each of Cinergy, CG&E and PSI Energy,
$150,000,000 and (ii) in the case of ULH&P, $50,000,000.

Section 5.08.   Consolidations, Mergers and
Sales of Assets.   Such
Borrower will not (i) consolidate or merge with or into any other Person or
(ii) sell, lease or otherwise transfer, directly or indirectly, Substantial
Assets to any Person (other than a Subsidiary); provided that such Borrower may merge with another Person if
such Borrower is the Person surviving such merger and, after giving effect
thereto, no Default shall have occurred and be continuing.

Section 5.09.   Use of Proceeds.   The proceeds of the Loans made under this Agreement
will be used by such Borrower for its general corporate purposes, including
liquidity support for outstanding commercial paper and acquisitions. None of
such proceeds will be used, directly or indirectly, for the purpose, whether
immediate, incidental or ultimate, of buying or carrying any “margin stock” within the meaning of
Regulation U.

Section 5.10.   Indebtedness/Capitalization
Ratio.   The ratio of Consolidated
Indebtedness of such Borrower to Consolidated Capitalization of such Borrower
will at no time exceed 65%.

Article 6

Defaults

Section 6.01.   Events of
Default.   If one or more of the
following events (“Events of Default”)
with respect to a particular Borrower shall have occurred and be continuing:

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

(b)    such
Borrower shall fail to observe or perform any covenant contained in Sections
5.04, 5.07, 5.08, 5.10 or the second sentence of5.09, inclusive;

(c)    such
Borrower shall fail to observe or perform any covenant or agreement contained
in this Agreement (other than those covered by clause (a) or 

 38
 

 

(b) above) for 30 days after notice thereof has been
given to such Borrower by the Administrative Agent at the request of any Bank;

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

(e)    such
Borrower or any of its Material Subsidiaries shall fail to make any payment in
respect of Material Debt (other than Loans to and Reimbursement Obligations of
such Borrower hereunder) when due or within any applicable grace period;

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

(g)    such
Borrower or any of its Material Subsidiaries shall commence a voluntary case or
other proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a general assignment
for the benefit of creditors, or shall admit in writing its inability to, or
shall fail generally to, pay its debts as they become due, or shall take any
corporate action to authorize any of the foregoing;

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

(i)     any
member of such Borrower’s ERISA Group shall fail to pay when due an amount or
amounts aggregating in excess of $25,000,000 which it shall have become liable
to pay to the PBGC or to a Plan under Title IV of ERISA; or notice of intent to
terminate a Plan or Plans of such ERISA Group having aggregate Unfunded Vested
Liabilities in excess of $50,000,000 (collectively, a “Material Plan”) shall be filed under Title
IV of ERISA by any 

 39
 

 

member of such ERISA Group, any plan administrator or
any combination of the foregoing; or the PBGC shall institute proceedings under
Title IV of ERISA to terminate or to cause a trustee to be appointed to
administer any such Material Plan or a proceeding shall be instituted by a
fiduciary of any such Material Plan against any member of such ERISA Group to
enforce Section 515 or 4219(c)(5) of ERISA and such proceeding shall not have
been dismissed within 90 days thereafter; or a condition shall exist by reason
of which the PBGC would be entitled to obtain a decree adjudicating that any
such Material Plan must be terminated;

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

(k)    any person
or group of persons (within the meaning of Section 13 or 14 of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”))
other than trustees and participants in employee benefit plans of the Company
and its Subsidiaries or the Endowment or Trust, shall have acquired beneficial
ownership (within the meaning of Rule 13d-3 promulgated by the Securities and
Exchange Commission under the Exchange Act) of 50% or more of the outstanding
shares of common stock of the Company; during any period of twelve consecutive
calendar months, individuals who were directors of the Company on the first day
of such period (together with any successors nominated or appointed by such
directors in the ordinary course) shall cease to constitute a majority of the
board of directors of the Company; or such Borrower shall cease to be a
Subsidiary of the Company; or

(l)     with
respect to Cinergy only, any of CG&E, PSI Energy or ULH&P shall cease
to be a Subsidiary of Cinergy;

then, and in every such event, the Administrative
Agent shall (i) if requested by Banks having more than 66-2/3% in aggregate
amount of the Commitments, by notice to such Borrower terminate the Commitments
as to such Borrower and they shall thereupon terminate, and such Borrower shall
no longer be entitled to borrow hereunder, and the Maximum Availability of such
Borrower shall be $0, and (ii) if requested by Banks holding more than 66-2/3%
in aggregate principal amount of the Loans and Reimbursement Obligations of
such Borrower, by notice to such Borrower declare such Loans and Reimbursement
Obligations (together with accrued interest thereon) to be, and such Loans and
Reimbursement Obligations (together with accrued interest thereon) shall
thereupon become, immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by each
Borrower; provided that in the
case of any of the Events of Default specified in clause (g) or (h) above with
respect to such Borrower, without any notice to such Borrower or any other 

 40
 

 

act by the Administrative Agent or the Banks, the
Commitments shall thereupon terminate with respect to such Borrower and the
Loans and Reimbursement Obligations of such Borrower (together with accrued
interest thereon) shall become immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
each Borrower.

Section 6.02.   Notice of Default.   The Administrative Agent shall give notice to a
Borrower under Section 6.01(c) promptly upon being requested to do so by any
Lender and shall thereupon notify all the Lenders thereof.

Section 6.03.   Cash Cover.   Each Borrower agrees, in addition to the provisions
of Section 6.01 hereof, that upon the occurrence and during the continuance of
any Event of Default with respect to such Borrower, it shall, if requested by
the Administrative Agent upon the instruction of the Banks having at least 66
2/3% in the aggregate amount of the Commitments (or, if the Commitments shall
have been terminated, holding at least 66 2/3% of the Letter of Credit
Liabilities for the account of such Borrower), deposit with the Administrative
Agent an amount in immediately available funds (which funds shall be held as
collateral pursuant to arrangements mutually satisfactory to the Administrative
Agent and such Borrower) equal to the aggregate amount available for drawing
under all Letters of Credit for the account of such Borrower then outstanding
at such time; provided that upon
the occurrence of any Event of Default specified in Section 6.01(g) or 6.01(h)
with respect to such Borrower, such Borrower shall pay such amount forthwith
without any notice or demand or any other act by the Administrative Agent or
the Banks.

Article 7

The Administrative Agent

Section 7.01.   Appointment and Authorization.   Each Bank irrevocably appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement and the Notes as are delegated to the
Administrative Agent by the terms hereof or thereof, together with all such
powers as are reasonably incidental thereto.

Section 7.02.   Administrative Agent and
Affiliates.   Barclays shall have the same rights and powers under this Agreement
as any other Bank and may exercise or refrain from exercising the same as
though it were not the Administrative Agent, and Barclays. and its affiliates
may accept deposits from, lend money to, and generally engage in any kind of
business with any Borrower or any Subsidiary or affiliate of any Borrower as if
it were not the Administrative Agent hereunder.

 41
 

 

Section 7.03.   Action by Administrative
Agent.   The obligations of the
Administrative Agent hereunder are only those expressly set forth herein.
Without limiting the generality of the foregoing, the Administrative Agent
shall not be required to take any action with respect to any Default, except as
expressly provided in Article 6.

Section 7.04.   Consultation with Experts.   The Administrative Agent may consult with legal
counsel (who may be counsel for a Borrower), independent public accountants and
other experts selected by it and shall not be liable for any action taken or
omitted to be taken by it in good faith in accordance with the advice of such
counsel, accountants or experts.

Section 7.05.   Liability of Administrative
Agent.   Neither the Administrative
Agent nor any of its affiliates nor any of their respective directors,
officers, agents or employees shall be liable to any Bank for any action taken
or not taken by it in connection herewith (i) with the consent or at the
request of the Required Banks or (ii) in the absence of its own gross
negligence or willful misconduct. Neither the Administrative Agent nor any of
its affiliates nor any of their respective directors, officers, agents or
employees shall be responsible for or have any duty to ascertain, inquire into
or verify (i) any statement, warranty or representation made in connection with
this Agreement or any borrowing hereunder; (ii) the performance or observance
of any of the covenants or agreements of any Borrower; (iii) the satisfaction
of any condition specified in Article 3, except receipt of items required to be
delivered to the Administrative Agent; or (iv) the validity, effectiveness or
genuineness of this Agreement, the Notes or any other instrument or writing
furnished in connection herewith. The Administrative Agent shall not incur any
liability by acting in reliance upon any notice, consent, certificate,
statement, or other writing (which may be a bank wire, telex or similar
writing) believed by it in good faith to be genuine or to be signed by the proper
party or parties. Without limiting the generality of the foregoing, the use of
the term “agent” in this Agreement with reference to the Administrative Agent
is not intended to connote any fiduciary or other implied (or express)
obligations arising under agency doctrine of any applicable law. Instead, such
term is used merely as a matter of market custom and is intended to create or
reflect only an administrative relationship between independent contracting
parties.

Section 7.06.   Indemnification.   Each Bank shall, ratably in accordance with its
Commitment, indemnify the Administrative Agent, its affiliates and their
respective directors, officers, agents and employees (to the extent not
reimbursed by the Borrowers) against any cost, expense (including counsel fees
and disbursements), claim, demand, action, loss or liability (except such as
result from such indemnitees’ gross negligence or willful misconduct) that such
indemnitees may suffer or incur in connection with this Agreement or any action
taken or omitted by such indemnitees thereunder.

 42
 

 

Section 7.07.   Credit Decision.   Each Bank acknowledges that it has, independently and
without reliance upon any Agent or any other Bank, and based on such documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Bank also acknowledges that it
will, independently and without reliance upon any Agent or any other Bank, and
based on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking any action
under this Agreement.

Section 7.08.   Successor Administrative
Agent.   The Administrative Agent
may resign at any time by giving notice thereof to the Banks and the Borrowers.
Upon any such resignation, (i) Cinergy, with the consent of the Required Banks
(such consent not to be unreasonably withheld or delayed), or (ii) if an Event
of Default has occurred and is continuing, then the Required Banks, shall have
the right to appoint a successor Administrative Agent. If no successor
Administrative Agent shall have been so appointed, and shall have accepted such
appointment, within 30 days after the retiring Administrative Agent gives
notice of resignation, then the retiring Administrative Agent may, on behalf of
the Banks, appoint a successor Administrative Agent, which shall be a
commercial bank organized or licensed under the laws of the United States of
America or of any State thereof and having a combined capital and surplus of at
least $250,000,000. Upon the acceptance of its appointment as Administrative
Agent hereunder by a successor Administrative Agent, such successor
Administrative Agent shall thereupon succeed to and become vested with all the
rights and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations hereunder;
provided that if such successor
Administrative Agent is appointed without the consent of Cinergy, such
successor Administrative Agent may be replaced by Cinergy with the consent of
the Required Banks so long as no Event of Default has occurred and is
continuing at the time. After any retiring Administrative Agent’s resignation
hereunder as Administrative Agent, the provisions of this Article shall inure
to its benefit as to any actions taken or omitted to be taken by it while it
was Administrative Agent.

Section 7.09.   Administrative Agent’s Fee.   Cinergy shall pay to the Administrative Agent for its
own account fees in the amounts and at the times previously agreed upon between
Cinergy and the Administrative Agent.

Section 7.10.   Other Agents.   None of the Syndication Agent or the Documentation
Agents, in their capacity as such, shall have any duties or obligations of any
kind under this Agreement.

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Article 8

Change in Circumstances

Section 8.01.   Basis for
Determining Interest Rate Inadequate or Unfair.   If
on or prior to the first day of any Interest Period for any Euro-Dollar
Borrowing:

(a)    the
Administrative Agent is advised by the Euro-Dollar Reference Banks that
deposits in dollars (in the applicable amounts) are not being offered to the
Euro-Dollar Reference Banks in the relevant market for such Interest Period, or

(b)    Banks
having 66-2/3% or more of the aggregate amount of the affected Loans advise the
Administrative Agent that the London Interbank Offered Rate as determined by
the Administrative Agent will not adequately and fairly reflect the cost to
such Banks of funding their Euro-Dollar Loans for such Interest Period,

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

Section 8.02.   Illegality.   If on or after the date of this Agreement, the
adoption of any applicable law, rule or regulation, or any change in any
applicable law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by any Bank (or its Euro-Dollar Lending Office) with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency shall make it unlawful or
impossible for any Bank (or its Euro-Dollar Lending Office) to make,
maintain or fund any of its Euro-Dollar Loans and such Bank shall so
notify the Administrative Agent, the Administrative Agent shall forthwith give
notice thereof to the other Banks and the Borrowers, whereupon until such Bank
notifies the Borrowers and the Administrative Agent that the circumstances
giving rise to such suspension no longer exist, the obligation of such Bank to
make Euro-Dollar Loans, or to continue or convert outstanding Loans as or
into Euro-Dollar Loans, shall be suspended. Before giving any notice 

 44
 

 

to the Administrative Agent pursuant to this Section,
such Bank shall designate a different Euro-Dollar Lending Office if such
designation will avoid the need for giving such notice and will not be
otherwise disadvantageous to such Bank in the good faith exercise of its
discretion. If such notice is given, each Euro-Dollar Loan of such Bank then
outstanding shall be converted to a Base Rate Loan either (a) on the last day
of the then current Interest Period applicable to such Euro-Dollar Loan if such
Bank may lawfully continue to maintain and fund such Loan to such day or (b)
immediately if such Bank shall determine that it may not lawfully continue to
maintain and fund such Loan to such day.

Section 8.03.   Increased Cost
and Reduced Return.   (a) If on or after the date of this Agreement, the adoption of
any applicable law, rule or regulation, or any change in any applicable law,
rule or regulation, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance by any
Bank (the terms “Bank” and “Issuing Bank” shall include, for purposes of this
Section 8.03, the holding company of any Issuing Bank) (or its Applicable
Lending Office) with any request or directive (whether or not having the force
of law) issued on or after such date of any such authority, central bank or
comparable agency shall impose, modify or deem applicable any reserve, special
deposit or similar requirement (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve System,
but excluding with respect to any Euro-Dollar Loan any such requirement
included in an applicable Euro-Dollar Reserve Percentage) against assets
of, deposits with or for the account of, or credit extended by, any Bank (or
its Applicable Lending Office) or shall impose on any Bank (or its Applicable
Lending Office) or on the London interbank market any other condition (other
than in respect of Taxes or Other Taxes) affecting its Euro-Dollar Loans, its
Note or its obligation to make Euro-Dollar Loans or its obligations hereunder
in respect of Letters of Credit and the result of any of the foregoing is to
increase the cost to such Bank (or its Applicable Lending Office) of making or
maintaining any Euro-Dollar Loan or of issuing or participating in any Letter
of Credit, or to reduce the amount of any sum received or receivable by such
Bank (or its Applicable Lending Office) under this Agreement or under its Note
with respect thereto, by an amount deemed by such Bank to be material, then,
within 15 days after demand by such Bank (with a copy to the Administrative
Agent), each Borrower shall pay to such Bank its Appropriate Share of such
additional amount or amounts as will compensate such Bank for such increased
cost or reduction; provided that
no such amount shall be payable with respect to any period commencing more than
90 days prior to the date such Bank first notifies the Borrowers of its
intention to demand compensation therefor under this Section 8.03(a).

(b)    If any
Bank shall have determined that, on or after the date of this Agreement, the
adoption of any applicable law, rule or regulation regarding 

 45
 

 

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

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

(d)    The “Appropriate Share” of a Borrower with respect to any amount
payable hereunder is the sum of (i) to the extent such amount is properly
allocable to Loans and Letters of Credit outstanding hereunder, the portion of
such amount properly allocable to the Loans and Letter of Credit outstanding to
or for the account of such Borrower, and (ii) to the extent such amount is not
properly allocable to Loans and Letters of Credit outstanding hereunder, the
Appropriate Share shall be the product of the Availability Percentage of such
Borrower and such amount.

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

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

 46
 

 

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

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

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

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

(c)    Each
Borrower agrees to indemnify each Bank and the Administrative Agent for its Appropriate
Share of the full amount of Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed or asserted by any jurisdiction on
amounts payable under this Section 8.04) paid by such Bank or the
Administrative Agent (as the case may be) and any liability 

 47
 

 

(including penalties, interest and expenses) arising
therefrom or with respect thereto. This indemnification shall be paid within 15
days after such Bank or the Administrative Agent (as the case may be) makes
demand therefor.

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

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

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

(g)    If any
Bank or the Administrative Agent receives a refund (including a refund in the
form of a credit against taxes that are otherwise payable by the Bank or the
Administrative Agent) of any Taxes or Other Taxes for which any Borrower has
made a payment under Section 8.04(b) or (c) and such refund was received from
the taxing authority which originally imposed such Taxes or Other Taxes, such
Bank or the Administrative Agent agrees to reimburse such Borrower to the
extent of such refund; provided
that nothing contained in this 

 48
 

 

paragraph (g) shall require any Bank or the
Administrative Agent to seek any such refund or make available its tax returns
(or any other information relating to its taxes which it deems to be
confidential).

Section 8.05.   Base Rate Loans
Substituted for Affected Euro-Dollar Loans.   If
(i) the obligation of any Bank to make or to continue or convert outstanding
Loans as or into Euro-Dollar Loans has been suspended pursuant to Section
8.02 or (ii) any Bank has demanded compensation under Section 8.03(a) or 8.04
with respect to its Euro-Dollar Loans and the Borrower shall, by at least five
Euro-Dollar Business Days’ prior notice to such Bank through the
Administrative Agent, have elected that the provisions of this Section shall
apply to such Bank, then, unless and until such Bank notifies the Borrowers
that the circumstances giving rise to such suspension or demand for
compensation no longer apply:

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

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

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

Section 8.06.   Substitution of
Bank; Termination Option.   If (i)
the obligation of any Bank to make or to convert or continue outstanding Loans
as or into Euro-Dollar Loans has been suspended pursuant to Section 8.02, (ii)
any Bank has demanded compensation under Section 8.03 or 8.04, (iii) any Bank
exercises its right not to extend its Commitment Termination Date pursuant to
Section 2.01(c) or (iv) Investment Grade Status ceases to exist as to any Bank,
then:

(a)    Cinergy
shall have the right, with the assistance of the Administrative Agent, to
designate a substitute bank or banks (which may be one or more of the Banks)
mutually satisfactory to Cinergy, the Administrative Agent and the Issuing
Banks (whose consent shall not be unreasonably withheld or delayed) to purchase
for cash, pursuant to an Assignment and Assumption Agreement in substantially
the form of Exhibit D hereto, the outstanding Loans of such Bank and assume the
Commitment and Letter of Credit Liabilities of such 

 49
 

 

Bank, without recourse to or warranty by, or expense
to, such Bank, for a purchase price equal to the principal amount of all of
such Bank’s outstanding Loans and funded Letter of Credit Liabilities plus any
accrued but unpaid interest thereon and the accrued but unpaid fees in respect
of such Bank’s Commitment hereunder and all other amounts payable by the
Borrowers to such Bank hereunder plus such amount, if any, as would be payable
pursuant to Section 2.13 if the outstanding Loans of such Bank were prepaid in
their entirety on the date of consummation of such assignment; and

(b)    if at the
time Investment Grade Status exists as to the Borrowers, Cinergy may elect to
terminate this Agreement as to such Bank; provided
that (i) Cinergy notifies such Bank through the Administrative Agent of such
election at least three Euro-Dollar Business Days before the effective
date of such termination, (ii) the Borrowers repay or prepay the principal
amount of all outstanding Loans made by such Bank plus any accrued but unpaid
interest thereon and the accrued but unpaid fees in respect of such Bank’s
Commitment hereunder plus all other amounts payable by the Borrower to such
Bank hereunder, not later than the effective date of such termination and (iii)
if at the effective date of such termination, any Letter of Credit Liabilities
are outstanding, the conditions specified in Section 3.02 would be satisfied
(after giving effect to such termination) were the related Letters of Credit
issued on such date. Upon satisfaction of the foregoing conditions, the
Commitment of such Bank shall terminate on the effective date specified in such
notice, its participation in any outstanding Letters of Credit shall terminate
on such effective date and the participations of the other Banks therein shall
be redetermined as of such date as if such Letters of Credit had been issued on
such date.

Article 9

Miscellaneous

Section 9.01.   Notices.   All notices, requests and other communications to any
party hereunder shall be in writing (including bank wire, telex, facsimile
transmission or similar writing) and shall be given to such party: (x) in the
case of any Borrower or the Administrative Agent, at its address or telecopy or
telex number set forth on the signature pages hereof, (y) in the case of any
Bank, at its address or telecopy or telex number set forth in its
Administrative Questionnaire or (z) in the case of any party, such other
address or telecopy or telex number as such party may hereafter specify for the
purpose by notice to the Administrative Agent and the Borrowers. Each such
notice, request or other communication shall be effective (i) if given by
telecopy or telex, when such telecopy or telex is transmitted to the telecopy
or telex number specified in this Section and the appropriate answerback or
confirmation slip, as the case may be, is received or (ii) if given by any
other means, when delivered at the address specified in this 

 50
 

 

Section; provided
that notices to the Administrative Agent or any Issuing Bank under Article 2 or
Article 8 shall not be effective until delivered.

Section 9.02.   No Waivers.   No failure or delay by the Administrative Agent or
any Bank in exercising any right, power or privilege hereunder or under any
Note shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein provided shall
be cumulative and not exclusive of any rights or remedies provided by law.

Section 9.03.   Expenses;
Indemnification.   (a) Each Borrower shall pay (i) its Appropriate Share of all
reasonable out-of-pocket expenses of the Administrative Agent,
including reasonable fees and disbursements of special counsel for the Agents,
in connection with the preparation of this Agreement, any waiver or consent
hereunder or any amendment hereof or any Default or alleged Default with
respect to such Borrower hereunder and (ii) if an Event of Default with respect
to such Borrower occurs, all reasonable out-of-pocket expenses
incurred by the Administrative Agent or any Bank, including reasonable fees and
disbursements of counsel, in connection with such Event of Default and
collection and other enforcement proceedings resulting therefrom.

(b)    Each
Borrower agrees to indemnify each Agent and each Bank, their respective
affiliates and the respective directors, officers, agents and employees of the
foregoing (each an “Indemnitee”)
and hold each Indemnitee harmless from and against any and all liabilities,
losses, damages, costs and expenses of any kind, including, without limitation,
the reasonable fees and disbursements of counsel, which may be incurred by such
Indemnitee in connection with any investigative, administrative or judicial
proceeding (whether or not such Indemnitee shall be designated a party thereto)
relating to or arising out of this Agreement or any actual or proposed use of
proceeds of Loans hereunder, in each case to the extent of such Borrower’s
Appropriate Share; provided that
no Indemnitee shall have the right to be indemnified hereunder for such
Indemnitee’s own gross negligence or willful misconduct as determined by a
court of competent jurisdiction.

Section 9.04.   Sharing of Set-offs.   Each Bank agrees that if it shall, by exercising any
right of set-off or counterclaim or otherwise, receive payment of a
proportion of the aggregate amount then due with respect to the Loans and
Letter of Credit Liabilities held by it which is greater than the proportion
received by any other Bank in respect of the aggregate amount then due with
respect to the Loans and Letter of Credit Liabilities held by such other Bank,
the Bank receiving such proportionately greater payment shall purchase such
participations in the Loans and Letter of Credit Liabilities held by the other
Banks, and such other adjustments shall be made, as may be required so that all
such payments with respect to the Loans and Letter of Credit Liabilities held
by the Banks shall be 

 51
 

 

shared by the Banks pro rata; provided that nothing in this Section
shall impair the right of any Bank to exercise any right of set-off or
counterclaim it may have and to apply the amount subject to such exercise to
the payment of indebtedness of a Borrower other than its indebtedness under
this Agreement.

Section 9.05.   Amendments and
Waivers. (a)   Any
provision of this Agreement or the Notes may be amended or waived if, but only
if, such amendment or waiver is in writing and is signed by each Borrower and
the Required Banks (and, if the rights or duties of any Agent or any Issuing
Bank are affected thereby, by such Person); provided
that no such amendment or waiver shall (x) unless signed by each affected Bank,
(i) increase the Commitment of any Bank or subject any Bank to any additional
obligation, (ii) reduce the principal of or rate of interest on any Loan or the
amount to be reimbursed in respect of any Letter of Credit or any interest
thereon or any fees hereunder or (iii) postpone the date fixed for any payment
of principal of or interest on any Loan or for reimbursement in respect of any
Letter of Credit or interest thereon or any fees hereunder or for termination
of any Commitment or (y) unless signed by all Banks, (i) change the definition
of Required Banks or the provisions of this Section 9.05 or (ii) change the provisions
of Section 9.04.

(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 Loans made to such Borrower, (iii) cash collateralization of all amounts
available for drawing under Letters of Credit issued for the account of such
Borrower (or the amendment of such Letter 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 9.03 shall survive
such amendment.

Section 9.06.   Successors and
Assigns.   (a) The
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns and each
Indemnitee, except that no Borrower may assign or otherwise transfer any of its
rights under this Agreement without the prior written consent of all Banks.

(b)    Any Bank
may, with the consent (unless an Event of Default then exists) of Cinergy (such
consent not to be unreasonably withheld or delayed), at any time grant to one
or more banks or other institutions (each a “Participant”)
participating interests in its Commitment or any or all of its Loans and Letter
of Credit Liabilities; provided that
any Bank may, without the consent of any 

 52
 

 

Borrower, at any time grant participating interests in
its Commitment or any or all of its Loans and Letter of Credit Liabilities to
another Bank, an Approved Fund or an Affiliate of such transferor Bank. In the
event of any such grant by a Bank of a participating interest to a Participant,
whether or not upon notice to the Administrative Agent, such Bank shall remain
responsible for the performance of its obligations hereunder, and the
Borrowers, the Issuing Banks and the Administrative Agent shall continue to
deal solely and directly with such Bank in connection with such Bank’s rights
and obligations under this Agreement. Any agreement pursuant to which any Bank
may grant such a participating interest shall provide that such Bank shall
retain the sole right and responsibility to enforce the obligations of the
Borrowers hereunder including, without limitation, the right to approve any
amendment, modification or waiver of any provision of this Agreement; provided that such participation agreement
may provide that such Bank will not agree to any modification, amendment or
waiver of this Agreement described in clause (x) (i), (ii) or (iii) of Section
9.05(a) without the consent of the Participant. Each Borrower agrees that each
Participant shall, to the extent provided in its participation agreement, be
entitled to the benefits of Article 8 with respect to its participating
interest, subject to the performance by such Participant of the obligations of
a Bank thereunder. An assignment or other transfer which is not permitted by
subsection (c) or (d) below shall be given effect for purposes of this
Agreement only to the extent of a participating interest granted in accordance
with this subsection (b).

(c)    Any Bank
may at any time assign to one or more banks or other financial institutions
(each an “Assignee”) all, or a
proportionate part (equivalent to an initial Commitment of not less than
$10,000,000 (unless Cinergy and the Administrative Agent shall otherwise
agree)) of all, of its rights and obligations under this Agreement and its Note
(if any), and such Assignee shall assume such rights and obligations, pursuant
to an Assignment and Assumption Agreement in substantially the form of Exhibit
D hereto executed by such Assignee and such transferor Bank, with (and only
with and subject to) the prior written consent of the Issuing Banks, the
Administrative Agent (which shall not be unreasonably withheld or delayed) and,
so long as no Event of Default has occurred and is continuing, Cinergy (which
shall not be unreasonably withheld or delayed); provided that unless such assignment is of the entire right,
title and interest of the transferor Bank hereunder, after making any such
assignment such transferor Bank shall have a Commitment of at least $10,000,000
(unless Cinergy and the Administrative Agent shall otherwise agree). Upon
execution and delivery of such instrument of assumption and payment by such
Assignee to such transferor Bank of an amount equal to the purchase price
agreed between such transferor Bank and such Assignee, such Assignee shall be a
Bank party to this Agreement and shall have all the rights and obligations of a
Bank with a Commitment as set forth in such instrument of assumption, and the
transferor Bank shall be released from its obligations hereunder to a
corresponding extent, and no further consent 

 53
 

 

or action by any party shall be required. Upon the
consummation of any assignment pursuant to this subsection (c), the transferor
Bank, the Administrative Agent and the Borrowers shall make appropriate
arrangements so that, if required by the Assignee, a Note(s) is issued to the
Assignee. If the Assignee is not incorporated under the laws of the United
States of America or a state thereof, it shall, prior to the first date on
which interest or fees are payable hereunder for its account, deliver to the
Borrowers and the Administrative Agent certification as to exemption from
deduction or withholding of any United States federal income taxes in
accordance with Section 8.04. All assignments (other than assignments to
Affiliates) shall be subject to a transaction fee established by, and payable
by the transferor Bank to, the Administrative Agent for its own account (which
shall not exceed $5,000).

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

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

Section 9.07.   Collateral.   Each of the Banks represents to the Administrative
Agent and each of the other Banks that it in good faith is not relying upon any
“margin stock” (as defined in
Regulation U) as collateral in the extension or maintenance of the credit
provided for in this Agreement.

Section 9.08.   Confidentiality.   Each Agent and each Bank agrees to keep any
information delivered or made available by any Borrower pursuant to this
Agreement confidential from anyone other than persons employed or retained by
such Bank and its affiliates who are engaged in evaluating, approving,
structuring or administering the credit facility contemplated hereby; provided that nothing herein shall prevent
any Bank from disclosing such information (a) to any other Bank or any Agent,
(b) to any other Person if reasonably incidental to the administration of the
credit facility contemplated hereby, (c) upon the order of any court or
administrative agency, (d) upon the request or demand of any regulatory agency
or authority, (e) which had been publicly disclosed other than as a result of a
disclosure by any Agent or any Bank prohibited by this Agreement, (f) in
connection with any litigation to which any Agent, any Bank or its subsidiaries
or Parent may be a party, (g) to the extent necessary in connection 

 54
 

 

with the exercise of any remedy hereunder, (h) to such
Bank’s or any Agent’s legal counsel and independent auditors and (i) subject to
provisions substantially similar to those contained in this Section 9.08, to
any actual or proposed Participant or Assignee.

Section 9.09.   Governing Law; Submission to
Jurisdiction.   This
Agreement and each Note (if any) shall be construed in accordance with and
governed by the law of the State of New York. Each Borrower hereby submits to
the nonexclusive jurisdiction of the United States District Court for the
Southern District of New York and of any New York State court sitting in New
York City for purposes of all legal proceedings arising out of or relating to
this Agreement or the transactions contemplated hereby. Each Borrower
irrevocably waives, to the fullest extent permitted by law, any objection which
it may now or hereafter have to the laying of the venue of any such proceeding
brought in such a court and any claim that any such proceeding brought in such
a court has been brought in an inconvenient forum.

Section 9.10.   Counterparts; Integration.   This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument. This Agreement
constitutes the entire agreement and understanding among the parties hereto and
supersedes any and all prior agreements and understandings, oral or written,
relating to the subject matter hereof.

Section 9.11.   WAIVER OF JURY TRIAL.   EACH OF THE BORROWERS, THE AGENTS, THE ISSUING BANKS
AND THE BANKS, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE
LAW, HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.

Section 9.12.   USA Patriot Act.   Each Bank hereby notifies each Borrower 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 such
Borrower, which information includes the name and address of such Borrower and
other information that will allow such Bank to identify such Borrower in accordance
with the Act.

 55

 

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

	
  

  	
  CINERGY CORP.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Assistant Treasurer

  
	
   

  	
   

  	
  Address:

  	
  139 East Fourth Street

  Cincinnati, OH 45202

  
	
   

  	
   

  	
  Attention:

  	
  Stephen G. De May

  
	
   

  	
   

  	
  Telecopy number:

  	
  704-382-3288

  
	
   

  	
   

  	
  Taxpayer ID:

  	
  31-1385023

  
	
   

  	
   

  
	
   

  	
  THE CINCINNATI GAS & ELECTRIC COMPANY (d/b/a
  DUKE ENERGY OHIO, INC.)

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Assistant Treasurer

  
	
   

  	
   

  	
  Address:

  	
  139 East Fourth Street

  Cincinnati, OH 45202

  
	
   

  	
   

  	
  Attention:

  	
  Stephen G. De May

  
	
   

  	
   

  	
  Telecopy number:

  	
  704-382-3288

  
	
   

  	
   

  	
  Taxpayer ID:

  	
  31-0240030

  
	
   

  	
   

  
	
   

  	
  PSI ENERGY, INC. (d/b/a DUKE ENERGY INDIANA, INC.)

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Assistant Treasurer

  
	
   

  	
   

  	
  Address:

  	
  1000 East Main Street

  Plainfield, Indiana 46168

  
	
   

  	
   

  	
  Attention:

  	
  Stephen G. De May

  
	
   

  	
   

  	
  Telecopy number:

  	
  704-382-3288

  
	
   

  	
   

  	
  Taxpayer ID:

  	
  35-0594457

  

 

 

 

	
  

  	
  THE UNION LIGHT, HEAT AND POWER COMPANY (d/b/a DUKE
  ENERGY KENTUCKY, INC.)

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Assistant Treasurer

  
	
   

  	
   

  	
  Address:

  	
  139 East Fourth Street

  Cincinnati, OH 45202

  
	
   

  	
   

  	
  Attention:

  	
  Stephen G. De May

  
	
   

  	
   

  	
  Telecopy number:

  	
  704-382-3288

  
	
   

  	
   

  	
  Taxpayer ID:

  	
  31-0473080

  

 

 

 

	
  

  	
  BARCLAYS BANK PLC, as Administrative Agent, as an
  Issuing Bank and as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

 

	
  

  	
  JPMORGAN CHASE BANK, N.A., as Syndication Agent, as
  an Issuing Bank and as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

 

	
  

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

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

 

	
  

  	
  CITIBANK, N.A., as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

 

	
  

  	
  WACHOVIA BANK, NATIONAL ASSOCIATION, as an Issuing
  Bank and as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

 

	
  

  	
  ABN AMRO BANK N.V., as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

 

	
  

  	
  DEUTSCHE BANK AG NEW YORK BRANCH, as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

 

	
  

  	
  THE BANK OF TOKYO-MITSUBISHI, LTD., NEW YORK BRANCH,
  as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

 

	
  

  	
  UBS LOAN FINANCE LLC, as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

 

	
  

  	
  BNP PARIBAS, as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

 

	
  

  	
  CALYON NEW YORK BRANCH, as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

 

	
  

  	
  HSBC BANK USA, NATIONAL ASSOCIATION, as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

 

	
  

  	
  KEYBANK NATIONAL ASSOCIATION, as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

 

	
  

  	
  MIZUHO CORPORATE BANK, LTD., as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

 

	
  

  	
  MORGAN STANLEY BANK, as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

 

	
  

  	
  THE ROYAL BANK OF SCOTLAND PLC, NEW YORK BRANCH, as
  a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

 

	
  

  	
  WILLIAM STREET COMMITMENT CORPORATION, as a Lender

  
	
   

  	
   

  
	
   

  	
  (Recourse only to assets of William Street
  Commitment Corporation)

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

 

	
  

  	
  PNC BANK, NATIONAL ASSOCIATION, as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

 

	
  

  	
  UNION BANK OF CALIFORNIA, N.A., as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

 

	
  

  	
  LEHMAN BROTHERS BANK, FSB, as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

 

	
  

  	
  FIFTH THIRD BANK, as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

 

	
  

  	
  THE BANK OF NEW YORK, as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

 

	
  

  	
  MELLON BANK, N.A., as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

 

	
  

  	
  MERRILL LYNCH BANK USA, as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

 

	
  

  	
  THE BANK OF NOVA SCOTIA, as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

COMMITMENT
SCHEDULE

	
  Lender

  	
   

  	
  Commitment

  	
   

  
	
  Barclays Bank
  PLC

  	
   

  	
  $

  	
  141,000,000.00

  	
   

  
	
  JPMorgan Chase
  Bank, N.A.

  	
   

  	
  141,000,000.00

  	
   

  
	
  Bank of America,
  N.A.

  	
   

  	
  130,000,000.00

  	
   

  
	
  Citibank, N.A.

  	
   

  	
  130,000,000.00

  	
   

  
	
  Wachovia Bank,
  National Association

  	
   

  	
  130,000,000.00

  	
   

  
	
  ABN AMRO Bank
  N.V.

  	
   

  	
  82,000,000.00

  	
   

  
	
  Deutsche Bank AG
  New York Branch

  	
   

  	
  82,000,000.00

  	
   

  
	
  The Bank of
  Tokyo-Mitsubishi, Ltd., New York Branch

  	
   

  	
  82,000,000.00

  	
   

  
	
  UBS Loan Finance
  LLC

  	
   

  	
  82,000,000.00

  	
   

  
	
  BNP Paribas

  	
   

  	
  80,000,000.00

  	
   

  
	
  Calyon New York
  Branch

  	
   

  	
  80,000,000.00

  	
   

  
	
  HSBC Bank USA,
  National Association

  	
   

  	
  80,000,000.00

  	
   

  
	
  KeyBank National
  Association

  	
   

  	
  70,000,000.00

  	
   

  
	
  Mizuho Corporate
  Bank, Ltd.

  	
   

  	
  70,000,000.00

  	
   

  
	
  Morgan Stanley
  Bank

  	
   

  	
  70,000,000.00

  	
   

  
	
  The Royal Bank
  of Scotland plc, New York Branch

  	
   

  	
  70,000,000.00

  	
   

  
	
  William Street
  Commitment Corporation

  	
   

  	
  70,000,000.00

  	
   

  
	
  PNC Bank,
  National Association

  	
   

  	
  65,000,000.00

  	
   

  
	
  Union Bank of
  California, N.A.

  	
   

  	
  65,000,000.00

  	
   

  
	
  Lehman Brothers
  Bank, FSB

  	
   

  	
  60,000,000.00

  	
   

  
	
  Fifth Third Bank

  	
   

  	
  50,000,000.00

  	
   

  
	
  The Bank of New
  York

  	
   

  	
  50,000,000.00

  	
   

  
	
  Mellon Bank,
  N.A.

  	
   

  	
  40,000,000.00

  	
   

  
	
  Merrill Lynch
  Bank USA

  	
   

  	
  40,000,000.00

  	
   

  
	
  The Bank of Nova
  Scotia

  	
   

  	
  40,000,000.00

  	
   

  
	
  Total

  	
   

  	
  $

  	
  2,000,000,000.00

  	
   

  

 

 

Pricing Schedule

Each of “Euro-Dollar Margin” and “Facility Fee
Rate” means, for any date, the rate set forth below in the
applicable row and column corresponding to the column and “Utilization”
that exist on such date:

(basis points per
annum)

 

	
  Basis for Pricing

  	
   

  	
  at least A by S&P or A2 by Moody’s

  	
   

  	
  at least A- by S&P or A3 by Moody’s

  	
   

  	
  at least BBB+ by S&P or Baa1 by Moody’s

  	
   

  	
  at least BBB by S&P or Baa2 by Moody’s

  	
   

  	
  at least BBB- by S&P or Baa3 by Moody’s

  	
   

  	
  less than BBB- by S&P and less than
  Baa3 by Moody’s

  
	
  Facility Fee

  	
   

  	
  6.0

  	
   

  	
  7.0

  	
   

  	
  8.0

  	
   

  	
  10.0

  	
   

  	
  12.5

  	
   

  	
  17.5

  
	
  Euro-Dollar Margin

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Utilization =
  50%

  	
   

  	
  19.0

  	
   

  	
  23.0

  	
   

  	
  27.0

  	
   

  	
  35.0

  	
   

  	
  47.5

  	
   

  	
  60.0

  
	
  Utilization >
  50%

  	
   

  	
  24.0

  	
   

  	
  28.0

  	
   

  	
  32.0

  	
   

  	
  40.0

  	
   

  	
  52.5

  	
   

  	
  65.0

  

 

The
Euro-Dollar Margin for any Term Loan shall equal the sum of (i) the rate that
would otherwise be in effect based upon the table above and (ii) 12.5 basis
points.

The
“Utilization” applicable to any
date is the percentage equivalent of a fraction the numerator of which is the
sum of (i) the aggregate outstanding principal amount of the Loans to all
Borrowers determined at such time after giving effect, if one or more Loans are
being made at such time, to any substantially concurrent application of the
proceeds thereof to repay one or more other Loans plus (ii) the aggregate
amount of the Letter of Credit Liabilities of all Banks for the account of all
Borrowers at such time and the denominator of which is the aggregate amount of
the Commitments at such date. If for any reason any Loans or Letter of Credit
Liabilities remain outstanding following termination of the Commitments,
Utilization will be deemed to be 100%.

The
Facility Fee Rate at any date shall be determined on the basis of the credit
ratings of Cinergy at such date, while the Euro-Dollar Margin applicable at any
date for purposes of calculating interest on a Loan or fees in respect of a
Letter of Credit shall be based upon the credit ratings of the Borrower to
which such Loan is outstanding or for whose account such Letter of Credit was
issued. The credit ratings to be utilized for purposes of this Schedule are
those indicated for or assigned to the senior unsecured long-term debt
securities of the relevant Borrower without third-party credit enhancement, and
any rating indicated for or assigned to any other debt security of such
Borrower shall be disregarded. The ratings in effect for any day are those in
effect at the close of business on such 

 

day. A change in credit rating will result in an
immediate change in the applicable pricing. In the case of split ratings from
S&P and Moody’s, the rating to be used to determine the applicable pricing
is a rating one notch higher than the lower of the two.

 

EXHIBIT
A

NOTE

New York, New York

______ __, 20__

For value received, [Cinergy Corp., a Delaware] [The
Cincinnati Gas & Electric Company, an Ohio] [PSI Energy, Inc., an Indiana]
[The Union Light, Heat and Power Company, a Kentucky] corporation (the “Borrower”), promises to pay to the order of
                                    
(the “Bank”), for the account of
its Applicable Lending Office, the unpaid principal amount of each Loan made by
the Bank to the Borrower pursuant to the Credit Agreement referred to below on
the date specified in the Credit Agreement. The Borrower promises to pay
interest on the unpaid principal amount of each such Loan on the dates and at
the rate or rates provided for in the Credit Agreement. All such payments of
principal and interest shall be made in lawful money of the United States in
Federal or other immediately available funds at the office of Barclays Bank
PLC, 200 Park Avenue, New York, New York 10166.

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

This note is one of the Notes referred to in the
Amended and Restated Credit Agreement dated as of June 29, 2006 among Cinergy
Corp., The Cincinnati Gas & Electric Company, PSI Energy, Inc., The Union
Light, Heat and Power Company, the banks listed on the signature pages thereof,
Barclays Bank PLC, as Administrative Agent, and JPMorgan Chase Bank, N.A., as
Syndication Agent (as the same may be amended from time to time, the “Credit Agreement”). Terms defined in the
Credit Agreement are used herein with the same meanings. Reference is made to
the Credit Agreement for provisions for the prepayment hereof and the
acceleration of the maturity hereof.

 

 

	
  

  	
  [CINERGY CORP.] 

  
	
   

  	
   

  
	
   

  	
  [THE CINCINNATI GAS & ELECTRIC COMPANY]

  
	
   

  	
   

  
	
   

  	
  [PSI ENERGY, INC.]

  
	
   

  	
   

  
	
   

  	
   [THE UNION LIGHT,
  HEAT AND POWER COMPANY]

  
	
  

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  

 

 2
 

 

Note (cont’d)

LOANS AND PAYMENTS OF
PRINCIPAL

	
  Date

  	
  Amount

  of Loan

  	
  Type

  of Loan

  	
  Amount of

  Principal

  Repaid

  	
  Maturity Date

  	
  Notation

  Made By

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 3

EXHIBIT
B-1

OPINION
OF INTERNAL COUNSEL OF THE BORROWER

[Effective
Date]

To the Banks and
the Administrative Agent

Referred to Below

c/o Barclays Bank
PLC

as Administrative Agent

200 Park Avenue

New York, New York 10166

Ladies and Gentlemen:

I
am [title of internal counsel] of [Cinergy Corp.] [The Cincinnati Gas &
Electric Company] [PSI Energy, Inc.] [The Union Light, Heat and Power Company]
(the “Borrower”) and have acted as
its counsel in connection with the Amended and Restated Credit Agreement (the “Credit Agreement”), dated as of June 29,
2006, among Cinergy Corp., The Cincinnati Gas & Electric Company, PSI
Energy, Inc., The Union Light, Heat and Power Company (together with Cinergy
Corp., The Cincinnati Gas & Electric Company and PSI Energy, Inc., the “Borrowers”), the banks listed on the signature pages
thereof, Barclays Bank PLC, as Administrative Agent, and JPMorgan Chase Bank,
N.A., as Syndication Agent. Capitalized terms defined in the Credit Agreement
are used herein as therein defined. This opinion letter is being delivered
pursuant to Section 3.01(b) of the Credit Agreement.

In
such capacity, I or attorneys under my direct supervision have examined
originals or copies, certified or otherwise identified to my satisfaction, of
such documents, corporate records, certificates of public officials and other
instruments and have conducted such other investigations of fact and law as I
have deemed necessary or advisable for purposes of this opinion.

Upon
the basis of the foregoing, I am of the opinion that:

1.             The Borrower is [a Delaware] [an
Ohio] [an Indiana] [a Kentucky] corporation, validly existing and in good
standing under the laws of [Delaware] [Ohio] [Indiana] [Kentucky].

2.             The execution, delivery and
performance by the Borrower of the Credit Agreement and any Notes are within
the Borrower’s corporate powers, 

 

have been duly authorized by all necessary corporate
action, require no action by or in respect of, or filing with, any governmental
body, agency or official (except for [list exceptions], which have been
obtained or made, as the case may be, and are in full force and effect) and do
not contravene, or constitute a default under, any provision of applicable law
or regulation or of the articles of incorporation or by-laws of the Borrower
or, to my knowledge, of any agreement, judgment, injunction, order, decree or
other instrument binding upon the Borrower or, to my knowledge, result in the
creation or imposition of any Lien on any asset of the Borrower or any of its
Material Subsidiaries.

3.             The Credit Agreement and any Notes
executed and delivered as of the date hereof have been duly executed and
delivered by the Borrower.

4.             Except as disclosed in the Borrower’s
annual report on Form 10-K for the fiscal year ended December 31, 2005 and its
quarterly report on Form 10-Q for the period ended March 31, 2006, to my
knowledge (but without independent investigation), there is no action, suit or
proceeding pending or threatened against or affecting, the Borrower or any of
its Subsidiaries before any court or arbitrator or any governmental body,
agency or official, which would be likely to be decided adversely to the
Borrower or such Subsidiary and, as a result, to have a material adverse effect
upon the business, consolidated financial position or consolidated results of
operations of the Borrower and its Consolidated Subsidiaries, considered as a
whole, or which in any manner draws into question the validity of the Credit
Agreement or any Notes.

The
phrase “to my knowledge”, as used in the foregoing opinion, refers to my actual
knowledge without any independent investigation as to any such matters.

I
am a member of the Bar of the State of [Delaware] [Ohio] [Indiana] [Kentucky]
and do not express any opinion herein concerning any law other than the law of
the State of [Delaware] [Ohio] [Indiana] [Kentucky] and the federal law of the
United States of America.

The
opinions expressed herein are limited to the matters expressly stated herein,
and no opinion is to be inferred or may be implied beyond the matters expressly
so stated. This opinion is rendered to you in connection with the
above-referenced matter and may not be relied upon by you for any other
purpose, or relied upon by, or furnished to, any other Person, firm or
corporation without my prior written consent, except for Additional Banks and
Assignees. My opinions expressed herein are as of the date hereof, and I
undertake no obligation to advise you of any changes of applicable law or any
other matters that may come to my attention after the date hereof that may
affect my opinions expressed herein.

Very truly yours,

 

 2

EXHIBIT B-2

OPINION
OF

ROBINSON, BRADSHAW & HINSON, P.A.,

SPECIAL COUNSEL FOR THE BORROWER

[Effective
Date]

To the Banks and
the Administrative Agent

Referred to Below

c/o Barclays Bank
PLC

as Administrative Agent

200 Park Avenue

New York, New York 10166

Ladies and Gentlemen:

We
have acted as counsel to [Cinergy Corp., a Delaware] [The Cincinnati Gas &
Electric Company, an Ohio] [PSI Energy, Inc., an Indiana] [The Union Light,
Heat and Power Company, a Kentucky] corporation (the “Borrower”), in connection with the Amended
and Restated Credit Agreement (the “Credit
Agreement”), dated as of June 29, 2006, among Cinergy Corp., The
Cincinnati Gas & Electric Company, PSI Energy, Inc., The Union Light, Heat
and Power Company (together with Cinergy Corp., The Cincinnati Gas &
Electric Company and PSI Energy, Inc., the “Borrowers”),
the banks listed on the signature pages thereof, Barclays Bank PLC, as
Administrative Agent, and JPMorgan Chase Bank, N.A., as Syndication Agent.
Capitalized terms used herein and not defined shall have the meanings given to
them in the Credit Agreement. This opinion letter is being delivered pursuant
to Section 3.01(b) of the Credit Agreement.

In
connection with this opinion, we also examined originals, or copies identified
to our satisfaction, of such other documents and considered such matters of law
and fact as we, in our professional judgment, have deemed appropriate to render
the opinions contained herein. Where we have considered it appropriate, as to
certain facts we have relied, without investigation or analysis of any
underlying data contained therein, upon certificates or other comparable
documents of public officials and officers or other appropriate representatives
of the Borrower.

In
rendering the opinions contained herein, we have assumed, among other things,
that the Credit Agreement and any Notes to be executed (i) are within the
Borrower’s corporate powers, (ii) have been duly authorized by all necessary
corporate action, (iii) have been duly executed and delivered, (iv) require no 

 

action by or in respect of, or filing with, any
governmental body, agency of official and (v) do not contravene, or constitute
a default under, any provision of applicable law or regulation or of the
Borrower’s certificate of incorporation or by-laws or any agreement, judgment,
injunction, order, decree or other instrument binding upon the Borrower or
result in the creation or imposition of any Lien on any asset of the Borrower.
In addition, we have assumed that the Credit Agreement fully states the
agreement between the Borrower and the Banks with respect to the matters
addressed therein, and that the Credit Agreement constitutes a legal, valid and
binding obligation of each Bank, enforceable in accordance with its respective
terms.

The
opinions set forth herein are limited to matters governed by the laws of the
State of North Carolina and the federal laws of the United States, and no
opinion is expressed herein as to the laws of any other jurisdiction. For
purposes of our opinions, we have disregarded the choice of law provisions in
the Credit Agreement and, instead, have assumed with your permission that the
Credit Agreement and the Notes are governed exclusively by the internal,
substantive laws and judicial interpretations of the State of North Carolina.
We express no opinion concerning any matter respecting or affected by any laws
other than laws that a lawyer in North Carolina exercising customary
professional diligence would reasonably recognize as being directly applicable
to the Borrower, the Loans, or any of them.

Based
upon and subject to the foregoing and the further limitations and
qualifications hereinafter expressed, it is our opinion that the Credit
Agreement constitutes the legal, valid and binding obligation of the Borrower
and the Notes, if and when issued, will constitute legal, valid and binding
obligations of the Borrower, in each case, enforceable against the Borrower in
accordance with its terms.

The
opinions expressed above are subject to the following qualifications and limitations:

1.             Enforcement of the Credit Agreement
and the Notes is subject to the effect of applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and similar laws affecting
the enforcement of creditors’ rights generally.

2.             Enforcement of the Credit Agreement
and the Notes is subject to the effect of general principles of equity
(regardless of whether considered in a proceeding in equity or at law) by which
a court with proper jurisdiction may deny rights of specific performance, injunction,
self-help, possessory remedies or other remedies.

 2
 

 

3.             We do not express any opinion as to
the enforceability of any provisions contained in the Credit Agreement or any
Note that (i) purport to excuse a party for liability for its own acts, (ii)
purport to make void any act done in contravention thereof, (iii) purport to
authorize a party to act in its sole discretion, (iv) require waivers or
amendments to be made only in writing, (v) purport to effect waivers of
constitutional, statutory or equitable rights or the effect of applicable laws,
(vi) impose liquidated damages, penalties or forfeiture, or (vii) purport to
indemnify a party for its own negligence or willful misconduct. Indemnification
provisions in the Credit Agreement are subject to and may be rendered
unenforceable by applicable law or public policy, including applicable
securities law.

4.             We do not express any opinion as to
the enforceability of any provisions contained in the Credit Agreement or the
Notes purporting to require a party thereto to pay or reimburse attorneys’ fees
incurred by another party, or to indemnify another party therefor, which may be
limited by applicable statutes and decisions relating to the collection and
award of attorneys’ fees, including but not limited to North Carolina General
Statutes § 6-21.2.

5.             We do not express any opinion as to
the enforceability of any provisions contained in the Credit Agreement
purporting to waive the right of jury trial. Under North Carolina General
Statutes § 22B-10, a provision for the waiver of the right to a jury trial is
unconscionable and unenforceable.

6.             We do not express any opinion as to
the enforceability of any provisions contained in the Credit Agreement
concerning choice of forum or consent to the jurisdiction of courts, venue of
actions or means of service of process.

7.             It is likely that North Carolina
courts will enforce the provisions of the Credit Agreement providing for
interest at a higher rate resulting from a Default or Event of Default (a “Default Rate”) which rate is higher than
the rate otherwise stipulated in the Credit Agreement. The law, however,
disfavors penalties, and it is possible that interest at the Default Rate may
be held to be an unenforceable penalty, to the extent such rate exceeds the rate
applicable prior to a default under the Credit Agreement. Also, since North
Carolina General Statutes § 24-10.1 expressly provides for late charges, it is
possible that North Carolina courts, when faced specifically with the issue,
might rule that this statutory late charge preempts any other charge (such as
default interest) by a bank for delinquent payments. The only North Carolina
case which we have found that addresses this issue is a 1978 Court of Appeals
decision, which in our opinion is of limited precedential value, North Carolina National Bank v. Burnette,
38 N.C. App. 120, 247 S.E.2d 648 (1978), rev’d
on other grounds, 297 N.C. 524, 256 S.E.2d 388 (1979). While the
court in that case did allow interest after default (commencing with the date
requested in the complaint) at a rate six 

 3
 

 

percent in excess of pre-default interest, we are
unable to determine from the opinion that any question was raised as to this
being penal in nature, nor does the court address the possible question of the
statutory late charge preempting a default interest surcharge. Therefore, since
the North Carolina Supreme Court has not ruled in a properly presented case
raising issues of its possible penal nature and those of North Carolina General
Statutes § 24-10.1, we are unwilling to express an unqualified opinion that the
Default Rate of interest prescribed in the Credit Agreement is enforceable.

8.             We do not express any opinion as to
the enforceability of any provisions contained in the Credit Agreement relating
to evidentiary standards or other standards by which the Credit Agreement are
to be construed.

This
opinion letter is delivered solely for your benefit in connection with the
Credit Agreement and, except for any Additional Bank or any Assignee which
becomes a Bank pursuant to Section 2.17 or 9.06(c) of the Credit Agreement, may
not be used or relied upon by any other Person or for any other purpose without
our prior written consent in each instance. Our opinions expressed herein are
as of the date hereof, and we undertake no obligation to advise you of any
changes of applicable law or any other matters that may come to our attention
after the date hereof that may affect our opinions expressed herein.

Very truly yours,

 

 4

EXHIBIT C

OPINION
OF

DAVIS POLK & WARDWELL, SPECIAL COUNSEL

FOR THE AGENTS

[Effective
Date]

To the Banks and the
Administrative Agent

    Referred to Below

c/o Barclays Bank PLC,

as Administrative Agent

200 Park Avenue

New York, New York 10166

Dear Sirs:

We
have participated in the preparation of the Amended and Restated Credit
Agreement (the “Credit Agreement”)
dated as of June 29, 2006 among Cinergy Corp., a Delaware corporation, The
Cincinnati Gas & Electric Company, an Ohio corporation, PSI Energy, Inc.,
an Indiana corporation, The Union Light, Heat and Power Company, a Kentucky
corporation (together with Cinergy Corp., The Cincinnati Gas & Electric
Company and PSI Energy, Inc., the “Borrowers”,
each individually, a “Borrower”), the
banks listed on the signature pages thereof (the “Banks”), Barclays Bank PLC, as Administrative Agent (the “Administrative Agent”), and JPMorgan Chase
Bank, N.A., as Syndication Agent, and have acted as special counsel for the
Agents for the purpose of rendering this opinion pursuant to Section 3.01(c) of
the Credit Agreement. Terms defined in the Credit Agreement are used herein as
therein defined.

We
have examined originals or copies, certified or otherwise identified to our
satisfaction, of such documents, corporate records, certificates of public
officials and other instruments and have conducted such other investigations of
fact and law as we have deemed necessary or advisable for purposes of this
opinion.

Upon
the basis of the foregoing, we are of the opinion that:

1.             The execution, delivery and
performance by each Borrower of the Credit Agreement and the Notes are within
such Borrower’s corporate powers and have been duly authorized by all necessary
corporate action.

 

2.             The Credit Agreement constitutes a
valid and binding agreement of each Borrower and the Notes, if and when issued
by a Borrower, constitute valid and binding obligations of such Borrower
enforceable in accordance with their respective terms, except as the same may
be limited by bankruptcy, insolvency or similar laws affecting creditors’
rights generally and by general principles of equity.

In
giving the foregoing opinion, (i) we express no opinion as to the effect (if
any) of any law of any jurisdiction (except the State of New York) in which any
Bank is located which limits the rate of interest that such Bank may charge or
collect and (ii) we have relied, without independent investigation, as to all
matters governed by the laws of each of Delaware, Ohio, Indiana and Kentucky
upon the opinion of the internal counsel of the Borrower located in such
jurisdiction, dated [Effective Date], a copy of each of which has been
delivered to you.

This
opinion is rendered solely to you in connection with the above matter. This
opinion may not be relied upon by you for any other purpose or relied upon by
or furnished to any other person, firm or corporation without our prior written
consent, except for Additional Banks and all Participants.

Very truly yours,

 

 2

EXHIBIT D

ASSIGNMENT AND ASSUMPTION
AGREEMENT

AGREEMENT
dated as of _________, 20__ among [ASSIGNOR] (the “Assignor”), [ASSIGNEE] (the “Assignee”),
[CINERGY CORP.] and BARCLAYS BANK PLC, as Administrative Agent (the “Administrative Agent”).

W
I  T  N  E  S
S  E  T  H

WHEREAS,
this Assignment and Assumption Agreement (the “Agreement”) relates to the Amended and Restated Credit
Agreement dated as of June 29, 2006 among Cinergy Corp., The Cincinnati Gas
& Electric Company, PSI Energy, Inc., The Union Light, Heat and Power
Company (together with Cinergy Corp., The Cincinnati Gas & Electric Company
and PSI Energy, Inc., the “Borrowers”,
each individually, a “Borrower”), the
Assignor and the other Banks party thereto, as Banks, the Administrative Agent
and JPMorgan Chase Bank, N.A., as Syndication Agent (the “Credit Agreement”);

WHEREAS,
as provided under the Credit Agreement, the Assignor has a Commitment to make
Loans to the Borrowers and participate in Letters of Credit in an aggregate
principal amount at any time outstanding not to exceed $__________;(1)

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

WHEREAS,
Letters of Credit with a total amount available for drawing thereunder of
$__________ are outstanding at the date hereof; and

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

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

 

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

SECTION 1.            Definitions. All capitalized terms not
otherwise defined herein shall have the respective meanings set forth in the
Credit Agreement.

SECTION 2. Assignment.
The Assignor hereby assigns and sells to the Assignee all of the rights of the
Assignor under the Credit Agreement to the extent of the Assigned Amount, and
the Assignee hereby accepts such assignment from the Assignor and assumes all
of the obligations of the Assignor under the Credit Agreement to the extent of
the Assigned Amount, including the purchase from the Assignor of the
corresponding portion of the principal amount of the Loans made by, and Letter
of Credit Liabilities of, the Assignor outstanding at the date hereof. Upon the
execution and delivery hereof by the Assignor, the Assignee [, Cinergy Corp.]
[, the Issuing Banks] and the Administrative Agent, the payment of the amounts
specified in Section 3 required to be paid on the date hereof (i) the Assignee
shall, as of the date hereof, succeed to the rights and be obligated to perform
the obligations of a Bank under the Credit Agreement with a Commitment in an
amount equal to the Assigned Amount, and (ii) the Commitment of the Assignor
shall, as of the date hereof, be reduced by a like amount and the Assignor
released from its obligations under the Credit Agreement to the extent such
obligations have been assumed by the Assignee. The assignment provided for
herein shall be without recourse to the Assignor.

SECTION 3. Payments.
As consideration for the assignment and sale contemplated in Section 2 hereof,
the Assignee shall pay to the Assignor on the date hereof in Federal funds the
amount heretofore agreed between them.(2) It is understood that facility [and
Letter of Credit] fees accrued to the date hereof in respect of the Assigned
Amount are for the account of the Assignor and such fees accruing from and
including the date hereof are for the account of the Assignee. Each of the
Assignor and the Assignee hereby agrees that if it receives any amount under
the Credit Agreement which is for the account of the other party hereto, it
shall receive the same for the account of such other party to the extent of
such other party’s interest therein and shall promptly pay the same to such
other party.

SECTION 4. Consent
to Assignment. This Agreement is conditioned upon the consent of
[Cinergy Corp.,] [the Issuing Banks] and the Administrative Agent pursuant to
Section 9.06(c) of the Credit Agreement. The execution of this Agreement by
[Cinergy Corp.,] [the Issuing Banks] and the Administrative Agent is evidence
of this consent. Pursuant to Section 9.06(c) each Borrower agrees to execute
and deliver a Note, if required by the Assignee, payable to the order of the
Assignee to evidence the assignment and assumption provided for herein.

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

 2
 

 

SECTION 5. Non-reliance
on Assignor. The Assignor makes no representation or warranty in
connection with, and shall have no responsibility with respect to, the
solvency, financial condition, or statements of any Borrower, or the validity
and enforceability of the obligations of any Borrower in respect of the Credit
Agreement or any Note. The Assignee acknowledges that it has, independently and
without reliance on the Assignor, and based on such documents and information
as it has deemed appropriate, made its own credit analysis and decision to
enter into this Agreement and will continue to be responsible for making its
own independent appraisal of the business, affairs and financial condition of
each Borrower.

SECTION 6. Governing
Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.

SECTION 7. Counterparts.
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.

SECTION 8. Administrative
Questionnaire. Attached is an Administrative Questionnaire duly
completed by the Assignee.

 3
 

 

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

	
  

  	
  [ASSIGNOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  [ASSIGNEE]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  [CINERGY CORP.]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BARCLAYS BANK PLC, as Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  

 

 

 4

EXHIBIT E

EXTENSION
AGREEMENT

Barclays Bank PLC, as
Administrative

Agent under the Credit Agreement

referred to below

200 Park Avenue

New York, New York 10166

Ladies and Gentlemen:

Effective
as of [date], the undersigned hereby agrees to extend its Commitment and
Commitment Termination Date under the Amended and Restated Credit Agreement
dated as of June 29, 2006 among Cinergy Corp., The Cincinnati Gas &
Electric Company, PSI Energy, Inc., The Union Light, Heat and Power Company
(together with Cinergy Corp., The Cincinnati Gas & Electric Company and PSI
Energy, Inc., the “Borrowers”,
each individually, a “Borrower”), the
Banks party thereto, Barclays Bank PLC, as Administrative Agent, and JPMorgan
Chase Bank, N.A., as Syndication Agent (the “Credit
Agreement”) for one year to [date to which its Commitment
Termination Date is to be extended] pursuant to Section 2.01(c) of the Credit
Agreement. Terms defined in the Credit Agreement are used herein as therein
defined.

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

	
  

  	
  [NAME OF BANK]

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  

 

 

 

 

Agreed and Accepted:

	
  CINERGY CORP.

  
	
  as Borrower

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  

 

	
  THE CINCINNATI GAS &
 ELECTRIC COMPANY, 

  
	
  as Borrower

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  

 

	
  PSI ENERGY, INC.,

  as Borrower

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  

 

	
  THE UNION LIGHT, HEAT AND

  POWER COMPANY,

  as Borrower

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  

 

	
  BARCLAYS BANK PLC,

  as Administrative Agent

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  

 

 2

 

EXHIBIT F

NOTICE OF ISSUANCE

Date:                                                        

	
  To:

  	
  Barclays Bank PLC, as Administrative Agent

  
	
   

  	
  ______________, as Issuing Bank

  
	
   

  	
   

  
	
  From:

  	
  [Cinergy Corp.] [The Cincinnati Gas & Electric
  Company] [PSI Energy, Inc.] [The Union Light, Heat and Power Company]

  
	
   

  	
   

  
	
  Re:

  	
  Amended and Restated Credit Agreement dated as of
  June 29, 2006 (as amended from time to time, the “Credit Agreement”) among
  Cinergy Corp., The Cincinnati Gas & Electric Company, PSI Energy, Inc.,
  The Union Light, Heat and Power Company (together with Cinergy Corp., The
  Cincinnati Gas & Electric Company and PSI Energy, Inc., the “Borrowers”, each individually, a “Borrower”),
  the Banks party thereto and Barclays Bank PLC, as Administrative Agent

  

 

[Cinergy
Corp.] [The Cincinnati Gas & Electric Company] [PSI Energy, Inc.] [The
Union Light, Heat and Power Company] hereby gives
notice pursuant to Section 2.15(b) of the Credit Agreement that it requests the
above-named Issuing Bank to issue on or before ________________ a Letter of
Credit containing the terms attached hereto as Schedule I (the “Requested Letter of Credit”).

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

[Cinergy
Corp.] [The Cincinnati Gas & Electric Company] [PSI Energy, Inc.] [The
Union Light, Heat and Power Company] hereby represents and warrants to the
Issuing Bank, the Administrative Agent and the Banks that:

(a)                                  immediately
after the issuance of the Requested Letter of Credit, (i) the sum of the
aggregate amount of Letter of Credit Liabilities and the aggregate principal
amount of the Utilization will not exceed the aggregate amount of the
Commitments, (ii) the aggregate outstanding principal amount of Loans to any
Borrower plus the aggregate amount of Letter of Credit Liabilities for the
account of such Borrower shall not exceed the Maximum Availability of such
Borrower and (iii) the aggregate amount of the Letter of Credit Liabilities
shall not exceed $1,000,000,000;

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

 3
 

 

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

[Cinergy
Corp.] [The Cincinnati Gas & Electric Company] [PSI Energy, Inc.] [The
Union Light, Heat and Power Company] hereby authorizes the Issuing Bank to
issue the Requested Letter of Credit with such variations from the above terms
as the Issuing Bank may, in its discretion, determine are necessary and are not
materially inconsistent with this Notice of Issuance. The opening of the Requested
Letter of Credit and [Cinergy Corp.] [The Cincinnati Gas & Electric
Company] [PSI Energy, Inc.] [The Union Light, Heat and Power Company]’s
responsibilities with respect thereto are subject to [UCP 500] [ISP98] as
indicated above and the terms and conditions set forth in the Credit Agreement.

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

	
  

  	
  [CINERGY CORP.]

  
	
   

  	
   

  
	
   

  	
  [THE CINCINNATI GAS & ELECTRIC COMPANY]

  
	
   

  	
   

  
	
   

  	
  [PSI ENERGY, INC.]

  
	
   

  	
   

  
	
   

  	
  [THE UNION LIGHT, HEATAND POWER COMPANY]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
				

 

 4
 

 

SCHEDULE I

Application
and Agreement for 

Irrevocable Standby Letter of Credit

To:
____________________ (“Bank”)

Please TYPE information
in the fields below. We reserve the right to return illegible applications for
clarification.

	
  Date:

  	
   

  	
  The undersigned
  Applicant hereby requests Bank to issue and transmit by: 

  o
  Overnight Carrier     o
  Teletransmission     o
  Mail     o
  Other:

  
	
   

  L/C No.

  	
  (Bank Use Only)

  	
  Explain: 

   

  an Irrevocable Standby
  Letter of Credit (the “Credit”) substantially as set forth below. In issuing
  the Credit, Bank is expressly authorized to make such changes from the terms
  herein below set forth as it, in its sole discretion, may deem advisable.

  
	
   

  	
   

  	
   

  

 

	
  Applicant (Full name &
  address)

  	
  Advising Bank
  (Designate name & address only, if desired)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Beneficiary
  (Full name & address)

  	
  Currency and
  amount in figures:

  
	
   

  	
   

  
	
   

  	
  Currency and
  amount in words:

  
	
   

  	
   

  
	
   

  	
  Expiration Date:

  
	
   

  	
   

  
	
  Charges: the Bank’s charges are for our account; all
  other banking charges are to be paid by beneficiary.

  
	
   

  

 

	
   

  	
  Credit to be available for
  payment against Beneficiary’s draft(s) at sight drawn on Bank or its
  correspondent at Bank’s option accompanied by the following documents:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  o
  Statement, purportedly signed by the Beneficiary, reading as follows (please
  state below exact wording to appear on the statement):

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  o
  Other Documents

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  o
  Special Conditions (including, if Applicant has a preference, selection of
  UCP as herein defined or ISP98 as herein defined).

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  o
  Issue substantially in form of attached specimen. (Specimen must also be
  signed by applicant.)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

 5
 

 

 

	
   

  
	
  Complete only when the
  Beneficiary (Foreign Bank, or other Financial Institution) is to issue its
  undertaking based on this Credit.  o Request
  Beneficiary to issue and deliver their (specify type of undertaking) ________
  in favor of ________ for an amount not exceeding the amount specified above,
  effective immediately relative to (specify contract number or other pertinent
  reference) to expire on ________ . (This date must be at least 15 days prior
  to expiry date indicated above.) It is understood that if the Credit is
  issued in favor of any bank or other financial or commercial entity which has
  issued or is to issue an undertaking on behalf of the Applicant of the Credit
  in connection with the Credit, the Applicant hereby agrees to remain liable
  under this Application and Agreement in respect of the Credit (even after its
  stated expiry date) until Bank is released by such bank or entity.

  

 

Each
Applicant signing below affirms that it has fully read and agrees to this
Application. (Note: If a bank, trust company, or other financial institution
signs as Applicant or joint and several co-Applicant for its customer, or if
two Applicants jointly and severally apply, both parties sign below.) Documents
may be forwarded to the Bank by the beneficiary, or the negotiating bank, in
one mail. Bank may forward documents to Applicant’s customhouse broker, or
Applicant if specified above, in one mail. Applicant understands and agrees
that this Credit will be subject to the Uniform Customs and Practice for Documentary
Credits of the International Chamber of Commerce currently in effect, and in
use by Bank (“UCP”) or to the International Standby Practices of the
International Chamber of Commerce, Publication 590 or any subsequent version
currently in effect and in use by Bank (“ISP98”).

	
   

  	
   

  	
   

  
	
  (Print or type name of
  Applicant)

  	
   

  	
  (Print or type
  name of Applicant)

  
	
   

  	
   

  	
   

  
	
  (Address)

  	
   

  	
  (Address)

  
	
   

  	
   

  	
   

  
	
  Authorized
  Signature (Title)

  	
   

  	
  Authorized
  Signature (Title)

  
	
   

  	
   

  	
   

  
	
  Authorized
  Signature (Title)

  	
   

  	
  Authorized
  Signature (Title)

  
	
   

  	
   

  	
   

  
	
  Customer
  Contact:

  	
   

  	
  Phone:

  
	
   

  	
   

  	
   

  

 

	
  BANK USE ONLY

  
	
  NOTE:
  Application will NOT be processed if this
  section is not complete.

  
	
  Approved (Authorized
  Signature)

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Approved (Print name
  and title)

  	
  City:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Customer SIC Code:

  	
  Borrower Default Grade:

  	
  Telephone:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Charge DDA#:

  	
  Fee:

  	
  RC #:

  	
  CLAS Bank #:

  	
  CLAS Obligor #:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Other (please explain):

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

 6

 

EXHIBIT G

APPROVED FORM OF LETTER OF CREDIT

IRREVOCABLE
STANDBY LETTER OF CREDIT NO.

BENEFICIARY:

LADIES
AND GENTLEMEN:

WE
HEREBY ISSUE OUR IRREVOCABLE STANDBY LETTER OF CREDIT NUMBER _____________, IN
FAVOR OF [INSERT BENEFICIARY NAME], BY ORDER AND FOR THE ACCOUNT OF [CINERGY
CORP.] [THE CINCINNATI GAS & ELECTRIC COMPANY] [PSI ENERGY, INC.] [THE
UNION LIGHT, HEAT AND POWER COMPANY], [ON BEHALF OF [INSERT NAME OF [CINERGY
CORP.] [THE CINCINNATI GAS & ELECTRIC COMPANY] [PSI ENERGY, INC.] [THE
UNION LIGHT, HEAT AND POWER COMPANY]’S AFFILIATE OR SUBSIDIARY],] AT SIGHT FOR
UP TO _______________ U.S. DOLLARS ( ______________ UNITED STATES DOLLARS)
AGAINST THE FOLLOWING DOCUMENTS:

1)             A BENEFICIARY’S SIGNED CERTIFICATE
STATING “[[CINERGY CORP.] [THE CINCINNATI GAS & ELECTRIC COMPANY] [PSI
ENERGY, INC.] [THE UNION LIGHT, HEAT AND POWER COMPANY]/[INSERT NAME OF [CINERGY
CORP.] [THE CINCINNATI GAS & ELECTRIC COMPANY] [PSI ENERGY, INC.] [THE
UNION LIGHT, HEAT AND POWER COMPANY]’S AFFILIATE OR SUBSIDIARY]] IS IN DEFAULT
UNDER ONE OR MORE AGREEMENTS BETWEEN [[CINERGY CORP.] [THE CINCINNATI GAS &
ELECTRIC COMPANY] [PSI ENERGY, INC.] [THE UNION LIGHT, HEAT AND POWER COMPANY]/[INSERT
NAME OF [CINERGY CORP.] [THE CINCINNATI GAS & ELECTRIC COMPANY] [PSI
ENERGY, INC.] [THE UNION LIGHT, HEAT AND POWER COMPANY]’S AFFILIATE OR
SUBSIDIARY]] AND [INSERT BENEFICIARY’S NAME].”

OR

2)             A BENEFICIARY’S SIGNED CERTIFICATE
STATING “[INSERT BENEFICIARY’S NAME] HAS REQUESTED ALTERNATE SECURITY FROM [[CINERGY
CORP.] [THE CINCINNATI GAS & ELECTRIC COMPANY] [PSI ENERGY, INC.] [THE
UNION LIGHT, HEAT AND 

 7
 

 

POWER
COMPANY]/[INSERT NAME OF [CINERGY CORP.] [THE CINCINNATI GAS & ELECTRIC
COMPANY] [PSI ENERGY, INC.] [THE UNION LIGHT, HEAT AND POWER COMPANY]’S
AFFILIATE OR SUBSIDIARY]] AND [CINERGY CORP.] [THE CINCINNATI GAS &
ELECTRIC COMPANY] [PSI ENERGY, INC.] [THE UNION LIGHT, HEAT AND POWER COMPANY]/[INSERT
NAME OF [CINERGY CORP.] [THE CINCINNATI GAS & ELECTRIC COMPANY] [PSI
ENERGY, INC.] [THE UNION LIGHT, HEAT AND POWER COMPANY]’S AFFILIATE OR SUBSIDIARY]]
HAS NOT PROVIDED ALTERNATE SECURITY ACCEPTABLE TO [INSERT BENEFICIARY’S NAME]
AND THIS LETTER OF CREDIT HAS LESS THAN TWENTY DAYS UNTIL EXPIRY.”

AND

3)             A DRAFT STATING THE AMOUNT TO BE
DRAWN.

SPECIAL
CONDITIONS:

1.             PARTIAL DRAWINGS ARE PERMITTED.

2.             DOCUMENTS MUST BE PRESENTED AT OUR
COUNTER NO LATER THAN _________, WHICH IS THE EXPIRY DATE OF THIS STANDBY
LETTER OF CREDIT.

WE
HEREBY ENGAGE WITH YOU THAT ALL DRAFTS DRAWN UNDER AND IN COMPLIANCE WITH THE
TERMS OF THIS CREDIT WILL BE DULY HONORED IF DRAWN AND PRESENTED FOR PAYMENT AT
OUR OFFICE LOCATED AT ________________________ ON OR BEFORE THE EXPIRY DATE OF
THIS CREDIT.

EXCEPT
AS OTHERWISE EXPRESSLY STATED HEREIN, THIS CREDIT IS SUBJECT TO THE UNIFORM
CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS, 1993 REVISION, INTERNATIONAL
CHAMBER OF COMMERCE PUBLICATION NO. 500.

COMMUNICATIONS
WITH RESPECT TO THIS STANDBY LETTER OF CREDIT SHALL BE IN WRITING AND SHALL BE
ADDRESSED TO US AT ___________________, SPECIFICALLY REFERRING TO THE NUMBER OF
THIS STANDBY LETTER OF CREDIT.

VERY
TRULY YOURS

[ISSUING
BANK]

 

 8Exhibit
10.34

 

 

 

 

 

 

 

 

 

 

 

 

 

US GOLD
CORPORATION

 

&

 

2083089
Ontario Inc.

 

 

 

 

 

 

 

 

 

MANAGEMENT
SERVICE AGREEMENT

 

 

 

 

 

 

 

 

 

 

 

June
1, 2006

 

 

 

 

 

 

THIS AGREEMENT made as of the 1st day of June
2006,

 

BETWEEN:

2083089
ONTARIO INC., incorporated under

the
laws of Ontario, Canada (hereinafter called “208”)

 

&

 

U.S.
GOLD CORPORATION, incorporated under

the
laws of Colorado, U.S.A. (hereinafter called “US Gold”)

 

 

THE PARTIES HERETO AGREE AS
FOLLOWS:

 

1.               208 shall,
while this Agreement is in effect, supply US Gold with such services and
facilities (the “Services”) as US Gold may reasonably require from 208. The
Services shall include, but shall not be limited to, such assistance with the
following as may from time to time be agreed between the parties:

 

a)              Public and investor
relations;

b)             market analysis
and research;

c)              property evaluation;

d)             banking
management and investment advice;

e)              sales and
marketing;

f)                administrative
support; and

g)             such other
services as US Gold may from time to time reasonably request in order to
properly perform its functions as a mining exploration company.

 

2.               In
consideration of the Services to be provided by 208, US Gold shall pay to 208
the sum of $603,400 Canadian Dollars through the term of this Agreement,
December 31, 2006, unless terminated earlier as provided herein. This amount
shall be payable in seven equal monthly installments of $86,200, with the first
payment due on the date first above written. Remaining payments are due on the
first business day of each consecutive month beginning on July 3, 2006.

 

3.               208 hereby
covenants and agrees with US Gold that it shall supply the Services with a view
to:

a)              providing US
Gold and its subsidiaries with an efficient office (or offices) for the proper
conduct of its business and affairs; and

b)             enabling US
Gold to meet its business goals and objectives.

 

4.               The parties
hereto agree that 208 may charge US Gold, from time to time, additional amounts
on an actual cost recovery basis for necessary and reasonable expenses not
included in the budgeted amount set forth in Paragraph 2, but incurred by 208
or its affiliates (consultants or contractors), as the case may be, from the
effective date of this Agreement. US Gold shall review in good faith any
invoices for such additional amounts but shall not be obligated for such
additional amounts until and unless the invoices are approved by an independent
committee of the Board of Directors. Such additional expense may included, but
shall not be limited to, the following:

 

a)              General
overhead expenditures — rent, utilities, insurance;

b)             compensation
and benefits;

 

2

 

c)              office supplies
and equipment;

d)             leasehold
improvements;

e)              furniture and
fixtures;

f)                such other
expenses as US Gold may from time to time reasonably require in order to
properly perform its functions as a mining exploration company.

 

5.               It is hereby understood and
agreed that nothing herein contained shall in any way inhibit or restrict the
choice and discretion of the officers and directors of US Gold in conducting
its business or in appointing any person as an officer or director of US Gold.

6.               208 shall provide copies,
upon written request from US Gold, of its unaudited annual financial statements
to US Gold’s board of directors. In addition, 208 shall provide a quarterly
statement summarizing the expenditures made by 208 on behalf of US Gold, such
statements shall be provided within 15 days after the end of each quarter
ending June 30th, September 30th, and December 31st.

7.               Any notice given hereunder
shall be deemed to be given, if delivered personally to an officer of the party
to which the notice is to be given, transmitted by facsimile, or forwarded by
registered mail.

8.               The period of this Agreement
shall commence as of the date first above written and shall continue until December
31, 2006, or until terminated by 60 days’ prior written notice by any party
hereto at the sole discretion to the other parties hereto. In the event of any
such termination, 208 shall render a final invoice with respect to Services
provided hereunder and, subject to the provisions of paragraph 4 hereof, US
Gold shall pay such amount within 30 days of receipt of such invoice.

9.               US Gold
acknowledges and agrees that 208 may provide services to other parties not
mentioned herein, and that certain of those parties may also be engaged in the
mining business, including the exploration and development of mineral resource
properties.

 

10.         208 agrees that
all confidential information related to US Gold obtained by 208 in the
performance of this Agreement shall be held in confidence unless such
information is generally available to the public, or is established to be in
the public domain.

 

11.         This Agreement
shall endure to the benefit of and be binding upon the parties hereto and their
respective successors.

 

12.         The parties
shall meet within 45 days after the end of the calendar year to review the
operation of this Agreement, and to evaluate the fairness of the resulting
allocation of costs and expenses. In the course of those discussions and
utilizing the 2006 quarterly statements of expenditures, the parties shall
reconcile such expenses, and consider in good faith whether adjustments to the
provisions of this Agreement are appropriate.

 

13.         This Agreement
shall be interpreted and constructed in accordance with the laws of the
Province of Ontario, Canada.

 

3

 

IN WITNESS WHEREOF the
parties hereto have duly executed this Agreement as of the date and year first
above written.

 

 

	
  2083089 Ontario Inc.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Per: /s/ Stefan Spears

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  U.S. Gold Corporation

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Per: /s/ Leanne M. Baker

  	
   

  

 

 

 

4

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