Document:

Exhibit 10.21

 

EXECUTION COPY

 

AMENDMENT NO. 1 TO THE PLEDGE
AGREEMENT

 

AMENDMENT NO. 1 TO THE PLEDGE AGREEMENT (this “Amendment No. 1”) dated as of January 12, 2005 between
ITC HOLDINGS CORP., a Michigan corporation duly organized and validly existing
under the law of the State of Michigan (the “Borrower”)
and CANADIAN IMPERIAL BANK OF COMMERCE, as administrative agent (in such
capacity, the “Administrative Agent”).

 

The Borrower and the Administrative Agent are
parties to a Pledge Agreement dated as of March 19, 2004 (as heretofore
modified and supplemented and in effect on the date hereof, the “Pledge Agreement”) and wish to amend the Pledge Agreement
upon the terms and conditions as hereinafter provided in connection with the
amendment and restatement of the Revolving Credit Agreement referred to in the
Pledge Agreement (the “Amended and Restated
Credit Agreement”). Accordingly, the parties hereto hereby agree,
with effect as of the Amendment Effective Date (as defined in the Amended and
Restated Credit Agreement), to amend the Pledge Agreement, as follows:

 

Section 1. 
Definitions.  Except as otherwise defined in this Amendment
No. 1, terms defined in the Pledge Agreement are used herein as defined
therein.

 

Section 2. 
Amendments to the Pledge Agreement.  The Pledge Agreement shall be amended as
follows:

 

2.1.  The
first recital of the Pledge Agreement shall be amended and restated in its
entirety to read as follows:

 

“The Borrower, certain lenders and CIBC, as
administrative agent, are parties to a Revolving Credit Agreement dated as of March 19,
2004 (as modified and supplemented and in effect from time to time, the “Revolving
Credit Agreement”), providing, subject to the terms and conditions thereof,
for extensions of credit (by making of loans and issuing letters of credit) to
be made by said lenders to the Borrower in an aggregate principal or face
amount not exceeding $47,500,000, subject to increase to $50,000,000 as
provided therein.”

 

2.2.  Annex
I to the Pledge Agreement shall be amended and restated in its entirety by
substituting therefor Annex I to this Amendment No. 1.

 

Section 3. 
Effectiveness.  This Amendment No. 1 shall become effective
on the Amendment Effective Date.

 

Section 4. 
Miscellaneous.  Except as herein provided, the Pledge Agreement
shall remain unchanged and in full force and effect.  This Amendment No. 1 may be executed in any
number of counterparts, all of which taken together shall constitute one and
the same

 

 

amendatory
instrument and any of the parties hereto may execute this Amendment No. 1 by
signing any such counterpart.  This
Amendment No. 1 shall be governed by, and construed in accordance with, the law
of the State of New York.

 

 

IN WITNESS WHEREOF, the parties hereto have
caused this Amendment No. 1 to be duly executed by their respective authorized
officers as of the day and year first above written.

 

	
   

  	
  ITC HOLDINGS CORP.,
  as the Borrower

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CANADIAN IMPERIAL BANK
  OF COMMERCE,
  as Administrative Agent

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

Annex I

 

PLEDGED
STOCK

 

	
  Issuer

  	
   

  	
  Certificate

  No.

  	
   

  	
  Registered

  Owner

  	
   

  	
  Number of

  Shares

  	
   

  	
  Percentage of Issued &

  Outstanding Shares

  	
   

  
	
  International Transmission Company

  	
   

  	
  2

  	
   

  	
  ITC Holdings

  Corp.

  	
   

  	
  67

  	
   

  	
  6 and 2/3%

  	
   

  
	
  International Transmission Company

  	
   

  	
  4

  	
   

  	
  ITC Holdings

  Corp.

  	
   

  	
  33

  	
   

  	
  3 and 1/3%

  	
   

  
	
  International Transmission Company

  	
   

  	
  6

  	
   

  	
  ITC Holdings

  Corp.

  	
   

  	
  33

  	
   

  	
  3 and 1/3%

  	
   

  
	
  International Transmission Company

  	
   

  	
  8

  	
   

  	
  ITC Holdings

  Corp.

  	
   

  	
  25

  	
   

  	
  2 and 1/2%

  	
   

  
	
  Total

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  158

  	
   

  	
  15 5/6%Exhibit 10.22

EXECUTION COPY

 

 

REVOLVING
CREDIT AGREEMENT,

 

 

dated as
of  July 16, 2003,

 

 

among

 

 

INTERNATIONAL
TRANSMISSION COMPANY,

as the Borrower,

 

VARIOUS
FINANCIAL INSTITUTIONS AND OTHER

PERSONS
FROM TIME TO TIME PARTIES HERETO,

as the
Lenders,

 

 

CANADIAN
IMPERIAL BANK OF COMMERCE,

as the Administrative Agent

 

 

and

 

 

CREDIT
SUISSE FIRST BOSTON,

CAYMAN ISLANDS BRANCH,

as Documentation Agent and Arranger

 

 

supported
by

FIRST MORTGAGE BONDS, SERIES B

 

 

	
  ARTICLE 1 DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  1.1

  	
  Defined Terms.

  	
   

  
	
   

  	
   

  	
   

  
	
  1.2

  	
  Accounting and
  Financial Determinations.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2 AMOUNT AND TERMS OF CREDIT

  	
   

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Commitments.

  	
   

  
	
   

  	
   

  	
   

  
	
  2.2

  	
  Minimum
  Amount of Each Borrowing; Maximum Number of Borrowings.

  	
   

  
	
   

  	
   

  	
   

  
	
  2.3

  	
  Notice of Borrowing.

  	
   

  
	
   

  	
   

  	
   

  
	
  2.4

  	
  Disbursement of Funds.

  	
   

  
	
   

  	
   

  	
   

  
	
  2.5

  	
  Repayment of
  Loans; Evidence of Debt.

  	
   

  
	
   

  	
   

  	
   

  
	
  2.6

  	
  Changes in
  Type of Revolving Credit Loan.

  	
   

  
	
   

  	
   

  	
   

  
	
  2.7

  	
  Pro Rata Borrowings.

  	
   

  
	
   

  	
   

  	
   

  
	
  2.8

  	
  Interest and Fees.

  	
   

  
	
   

  	
   

  	
   

  
	
  2.9

  	
  Interest Periods.

  	
   

  
	
   

  	
   

  	
   

  
	
  2.10

  	
  Increased Costs,
  Illegality, etc.

  	
   

  
	
   

  	
   

  	
   

  
	
  2.11

  	
  Compensation.

  	
   

  
	
   

  	
   

  	
   

  
	
  2.12

  	
  Change of Lending Office.

  	
   

  
	
   

  	
   

  	
   

  
	
  2.13

  	
  Notice of Certain Costs.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3 FEES; COMMITMENTS

  	
   

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Fees.

  	
   

  
	
   

  	
   

  	
   

  
	
  3.2

  	
  Voluntary
  Reduction of Revolving Credit Commitments.

  	
   

  
	
   

  	
   

  	
   

  
	
  3.3

  	
  Commitment Increases.

  	
   

  
	
   

  	
   

  	
   

  
	
  3.4

  	
  Mandatory
  Termination of Commitments.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4 PAYMENTS

  	
   

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Prepayments.

  	
   

  
	
   

  	
   

  	
   

  
	
  4.2

  	
  Method and Place of
  Payment.

  	
   

  
	
   

  	
   

  	
   

  
	
  4.3

  	
  Net Payments.

  	
   

  
	
   

  	
   

  	
   

  
	
  4.4

  	
  Computations of
  Interest and Fees.

  	
   

  
	
   

  	
   

  	
   

  
	
  4.5

  	
  Payments
  made under the First Mortgage Bond, Series B

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5 CONDITIONS PRECEDENT

  	
   

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Conditions
  Precedent to Initial Borrowing.

  	
   

  
	
   

  	
   

  	
   

  
	
  5.2

  	
  Conditions
  Precedent to All Credit Events.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6 REPRESENTATIONS AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  Organizational Status.

  	
   

  

 

i

 

	
  6.2

  	
  Capacity, Power and
  Authority.

  	
   

  
	
   

  	
   

  	
   

  
	
  6.3

  	
  No Violation.

  	
   

  
	
   

  	
   

  	
   

  
	
  6.4

  	
  Litigation.

  	
   

  
	
   

  	
   

  	
   

  
	
  6.5

  	
  Governmental Approvals.

  	
   

  
	
   

  	
   

  	
   

  
	
  6.6

  	
  True and Complete
  Disclosure.

  	
   

  
	
   

  	
   

  	
   

  
	
  6.7

  	
  Financial
  Condition; Financial Statements.

  	
   

  
	
   

  	
   

  	
   

  
	
  6.8

  	
  Tax Returns and Payments.

  	
   

  
	
   

  	
   

  	
   

  
	
  6.9

  	
  Environmental Matters.

  	
   

  
	
   

  	
   

  	
   

  
	
  6.10

  	
  Properties.

  	
   

  
	
   

  	
   

  	
   

  
	
  6.11

  	
  Pension and Welfare
  Plans.

  	
   

  
	
   

  	
   

  	
   

  
	
  6.12

  	
  Regulations U and X.

  	
   

  
	
   

  	
   

  	
   

  
	
  6.13

  	
  Investment Company Act.

  	
   

  
	
   

  	
   

  	
   

  
	
  6.14

  	
  No Material Adverse
  Change.

  	
   

  
	
   

  	
   

  	
   

  
	
  6.15

  	
  Deemed
  Repetition of Representations and Warranties.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7 AFFIRMATIVE COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  Information Covenants.

  	
   

  
	
   

  	
   

  	
   

  
	
  7.2

  	
  Books, Record and
  Inspections.

  	
   

  
	
   

  	
   

  	
   

  
	
  7.3

  	
  Maintenance of Insurance.

  	
   

  
	
   

  	
   

  	
   

  
	
  7.4

  	
  Payment of Taxes.

  	
   

  
	
   

  	
   

  	
   

  
	
  7.5

  	
  Organizational Existence.

  	
   

  
	
   

  	
   

  	
   

  
	
  7.6

  	
  Compliance
  with Statutes, Obligations, etc.

  	
   

  
	
   

  	
   

  	
   

  
	
  7.7

  	
  Good Repair.

  	
   

  
	
   

  	
   

  	
   

  
	
  7.8

  	
  Transactions with
  Affiliates.

  	
   

  
	
   

  	
   

  	
   

  
	
  7.9

  	
  End of Fiscal
  Years; Fiscal Quarters.

  	
   

  
	
   

  	
   

  	
   

  
	
  7.10

  	
  Use of Proceeds.

  	
   

  
	
   

  	
   

  	
   

  
	
  7.11

  	
  Changes in Business.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8 NEGATIVE COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Limitation on Liens.

  	
   

  
	
   

  	
   

  	
   

  
	
  8.2

  	
  Limitation on
  Fundamental Changes.

  	
   

  
	
   

  	
   

  	
   

  
	
  8.3

  	
  Limitation on Dividends.

  	
   

  
	
   

  	
   

  	
   

  
	
  8.4

  	
  Debt to Capitalization
  Ratio.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9 EVENTS OF DEFAULT

  	
   

  
	
   

  	
   

  	
   

  
	
  9.1

  	
  Payments.

  	
   

  

 

ii

 

	
  9.2

  	
  Representations, etc.

  	
   

  
	
   

  	
   

  	
   

  
	
  9.3

  	
  Covenants.

  	
   

  
	
   

  	
   

  	
   

  
	
  9.4

  	
  Default Under Other
  Agreements.

  	
   

  
	
   

  	
   

  	
   

  
	
  9.5

  	
  Bankruptcy, etc.

  	
   

  
	
   

  	
   

  	
   

  
	
  9.6

  	
  Security Documents.

  	
   

  
	
   

  	
   

  	
   

  
	
  9.7

  	
  Judgments.

  	
   

  
	
   

  	
   

  	
   

  
	
  9.8

  	
  Change of Ownership.

  	
   

  
	
   

  	
   

  	
   

  
	
  9.9

  	
  Pension Plans.

  	
   

  
	
   

  	
   

  	
   

  
	
  9.10

  	
  Remedies.

  	
   

  
	
   

  	
   

  	
   

  
	
  9.11

  	
  Remedies Cumulative.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10 THE ADMINISTRATIVE AGENT

  	
   

  
	
   

  	
   

  	
   

  
	
  10.1

  	
  Appointment.

  	
   

  
	
   

  	
   

  	
   

  
	
  10.2

  	
  Delegation of Duties.

  	
   

  
	
   

  	
   

  	
   

  
	
  10.3

  	
  Exculpatory Provisions.

  	
   

  
	
   

  	
   

  	
   

  
	
  10.4

  	
  Reliance by
  Administrative Agent.

  	
   

  
	
   

  	
   

  	
   

  
	
  10.5

  	
  Notice of Default.

  	
   

  
	
   

  	
   

  	
   

  
	
  10.6

  	
  Non-Reliance
  on Administrative Agent and Other Lenders.

  	
   

  
	
   

  	
   

  	
   

  
	
  10.7

  	
  Indemnification.

  	
   

  
	
   

  	
   

  	
   

  
	
  10.8

  	
  Administrative
  Agent in Its Individual Capacity.

  	
   

  
	
   

  	
   

  	
   

  
	
  10.9

  	
  Successor
  Agent.

  	
   

  
	
   

  	
   

  	
   

  
	
  10.10

  	
  Borrower as a Lender.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 11 MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  11.1

  	
  Amendments and Waivers.

  	
   

  
	
   

  	
   

  	
   

  
	
  11.2

  	
  Notices.

  	
   

  
	
   

  	
   

  	
   

  
	
  11.3

  	
  No Waiver;
  Cumulative Remedies.

  	
   

  
	
   

  	
   

  	
   

  
	
  11.4

  	
  Survival
  of Representations and Warranties.

  	
   

  
	
   

  	
   

  	
   

  
	
  11.5

  	
  Payment of Expenses
  and Taxes.

  	
   

  
	
   

  	
   

  	
   

  
	
  11.6

  	
  Successors
  and Assigns; Participations and Assignments.

  	
   

  
	
   

  	
   

  	
   

  
	
  11.7

  	
  Replacements
  of Lenders under Certain Circumstances.

  	
   

  
	
   

  	
   

  	
   

  
	
  11.8

  	
  Adjustments; Set-off.

  	
   

  
	
   

  	
   

  	
   

  
	
  11.9

  	
  Marshalling;
  Payments Set Aside.

  	
   

  
	
   

  	
   

  	
   

  
	
  11.10

  	
  Counterparts.

  	
   

  
	
   

  	
   

  	
   

  
	
  11.11

  	
  Severability.

  	
   

  

 

iii

 

	
  11.12

  	
  Integration.

  	
   

  
	
   

  	
   

  	
   

  
	
  11.13

  	
  Governing Law.

  	
   

  
	
   

  	
   

  	
   

  
	
  11.14

  	
  Submission to
  Jurisdiction; Waivers.

  	
   

  
	
   

  	
   

  	
   

  
	
  11.15

  	
  Acknowledgements.

  	
   

  
	
   

  	
   

  	
   

  
	
  11.16

  	
  Waivers of Jury Trial.

  	
   

  
	
   

  	
   

  	
   

  
	
  11.17

  	
  Confidentiality.

  	
   

  
	
   

  	
   

  	
   

  
	
  11.18

  	
  Treatment of
  Revolving Credit Loans.

  	
   

  

 

iv

 

	
  SCHEDULES:

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule I

  	
  Commitments

  	
   

  
	
  Schedule II

  	
  Environmental
  Matters

  	
   

  
	
  Schedule III

  	
  Pension
  and Welfare Matters

  	
   

  
	
  Schedule IV

  	
  Outstanding
  Liens on Closing Date

  	
   

  
	
  Schedule V

  	
  Senior
  Management

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBITS:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  Form
  of Notice of Borrowing

  	
   

  
	
  Exhibit B

  	
  Form
  of Notice of Continuation

  	
   

  
	
  Exhibit C

  	
  Form
  of Closing Certificate

  	
   

  
	
  Exhibit D

  	
  Form
  of First Mortgage Bond, Series B

  	
   

  
	
  Exhibit E

  	
  Form
  of New Lender Supplement

  	
   

  
	
  Exhibit F

  	
  Form
  of Commitment Increase Supplement

  	
   

  
	
  Exhibit G

  	
  Form
  of Compliance Certificate

  	
   

  

 

v

 

REVOLVING CREDIT AGREEMENT,
dated as of July 16, 2003, among INTERNATIONAL TRANSMISSION COMPANY, a Michigan
corporation (the “Borrower”),
various financial institutions and other Persons from time to time parties
hereto as lenders (each a “Lender” and,
collectively, the “Lenders”) and
CANADIAN IMPERIAL BANK OF COMMERCE (“CIBC”), as administrative agent (in such
capacity, the “Administrative Agent”).

 

The Borrower has requested
that the Lenders make senior loans to it in an aggregate principal amount not
exceeding $15,000,000 (subject to increase to $25,000,000 as provided herein)
at any one time outstanding, payment of such loans to be supported by the
Borrower’s First Mortgage Bonds, Series B (as hereinafter defined).  The Lenders are prepared to make such loans
upon the terms and conditions hereof, and, accordingly, the parties hereto
agree as follows:

 

ARTICLE 1

DEFINITIONS

 

As used herein, the following terms shall have the
meanings specified in this Article 1 unless the context otherwise requires
(it being understood that defined terms in this Agreement shall include in the
singular number the plural and in the plural the singular):

 

1.1          Defined Terms.

 

“ABR” shall
mean, for any day, a rate per annum equal to the greater of (a) the rate of
interest (however designated) established by the Administrative Agent as its
base rate in effect at its principal office in New York, New York and (b) the
Federal Funds Effective Rate in effect on such day plus 0.5%.  Any change in the ABR due to a change in any
of the foregoing rates shall be effective as of the opening of business on the
effective date of such change in such rate.

 

“ABR Loan” shall
mean each Loan bearing interest at the rate provided in Section 2.8(a).

 

“Administrative Agent”
shall have the meaning provided in the preamble to this Agreement and shall
include such other financial institution as may be appointed as the successor
administrative agent in the manner and to the extent described in
Section 10.9.

 

“Administrative Agent’s
Office” shall mean the office of the Administrative Agent located at
425 Lexington Avenue, New York, New York 
10017 or such other office as the Administrative Agent may hereafter
designate in writing as such to the Borrower and the Lenders.

 

“Affiliate”
shall mean, with respect to any Person, (a) any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with such Person, and (b) any other Person in which such Person
directly or indirectly through Subsidiaries has a 10% or greater equity
interest.  A Person shall be deemed to
control a Person if such Person possesses, directly or indirectly, the power
(i) to vote 10% or more of the Voting Stock having ordinary voting power
for the election of directors (or the equivalent) of such other Person or
(ii) to direct or cause the direction of the management and policies of
such other Person, whether through the ownership of Capital Stock, by contract
or otherwise.

 

 

“Agreement”
shall mean this Revolving Credit Agreement, as the same may be amended,
modified, supplemented, restated or replaced from time to time.

 

“Applicable Margin”
shall mean, for any day,
with respect to any ABR Loan or LIBOR Loan, as the case may be, the
applicable rate per annum set forth below under the caption “ABR Spread”
or “LIBOR Spread, respectively, based upon the ratings by Moody’s (as defined
below in this definition) and S&P (as defined below in this definition),
respectively, applicable on such date to the First Mortgage Bonds, Series B:

 

	
  First Mortgage Bonds, Series B

  Ratings:

  	
   

  	
  ABR

  Spread

  	
   

  	
  LIBOR

  Spread

  	
   

  
	
  Category 1
  

  A+/A1 or higher

  	
   

  	
  Nil

  	
   

  	
  0.85%

  	
   

  
	
  Category 2
  

  A/A2

  	
   

  	
  Nil

  	
   

  	
  0.95%

  	
   

  
	
  Category 3
  

  A-/A3

  	
   

  	
  0.05%

  	
   

  	
  1.05%

  	
   

  
	
  Category 4
  

  BBB+/Baa1

  	
   

  	
  0.25%

  	
   

  	
  1.25%

  	
   

  
	
  Category 5
  

  BBB/Baa2

  	
   

  	
  0.35%

  	
   

  	
  1.35%

  	
   

  
	
  Category 6
  

  BBB-/Baa3

  	
   

  	
  0.50%

  	
   

  	
  1.50%

  	
   

  
	
  Category 7
  

  BB+/Ba1 or lower

  	
   

  	
  1.00%

  	
   

  	
  2.00%

  	
   

  

 

For purposes of this definition, (i) ”Moody’s” means Moody’s
Investors Service, Inc., (ii) “S&P” means Standard & Poor’s
Ratings Services, a Division of The McGraw-Hill Companies, Inc., (iii) if
either Moody’s or S&P shall not have in effect a rating for the First
Mortgage Bonds, Series B (other than by reason of the circumstances referred to
in the last sentence of this definition), then such rating agency shall be deemed
to have established a rating in Category 7; (iv) if the ratings
established or deemed to have been established by Moody’s and S&P for the
First Mortgage Bonds, Series B shall fall within different Categories, the
Applicable Margin shall be based on the higher of the two ratings unless one of
the two ratings is two or more Categories lower than the other, in which case
the Applicable Margin shall be determined by reference to the median Category
or the higher of the two Categories between which the median would fall and
(v) if the ratings established or deemed to have been established by Moody’s
and S&P for the First Mortgage Bonds, Series B shall be changed (other than
as a result of a change in the rating system of Moody’s or S&P), such
change shall be effective as of the date on which it is first announced by the
applicable rating agency.  Each change in
the Applicable Margin shall apply during the period commencing on the effective
date of such change and ending on the date immediately preceding the effective
date of the next such change.  If the
rating system of 

 

2

 

Moody’s or S&P shall
change, or if either such rating agency shall cease to be in the business of
rating corporate debt obligations, the Borrower and the Lenders shall negotiate
in good faith to amend this definition to reflect such changed rating system or
the unavailability of ratings from such rating agency and, pending the
effectiveness of any such amendment, the Applicable Margin shall be determined
by reference to the rating most recently in effect prior to such change or
cessation.

 

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

 

“Arranger” shall mean Credit Suisse First
Boston, Cayman Islands Branch.

 

“Assignee” shall
have the meaning provided in Section 11.6(a)(ii).

 

“Assignment and Acceptance”
shall mean the assignment and acceptance agreement delivered by each Assignee
pursuant to Section 11.6(a)(ii).

 

“Assignment
Effective Date” shall have the meaning provided in 11.6(a)(ii).

 

“Authorized Officer”
shall mean the Chief Executive Officer, the President, any Executive Vice-President,
any Senior Executive Vice President, any Senior Vice-President, the Chief
Financial Officer, the Treasurer or General Counsel of the Borrower or any
other senior officer of the Borrower designated as such in writing to the
Administrative Agent by the Borrower.

 

“Available Revolving Credit
Commitment” shall mean, with respect to any Lender, an amount equal
to the excess, if any, of (a) the amount of such Lender’s Revolving Credit
Commitment over (b) the sum of the aggregate principal amount of all
Revolving Credit Loans of such Lender then outstanding.

 

“Bankruptcy Code”
shall have the meaning provided in Section 9.5.

 

“Borrower” shall
have the meaning provided in the recitals to this Agreement.

 

“Borrowing”
shall mean the incurrence of one Type of Revolving Credit Loan on a given date
(or resulting from conversions or continuations on a given date) having, in the
case of LIBOR Loans, the same Interest Period (provided that ABR Loans incurred
pursuant to Section 2.10(b) shall be considered part of any related
Borrowing of LIBOR Loans).

 

“Business” shall have the meaning provided in
Section 7.11.

 

“Business Day”
shall mean (a) for all purposes other than as covered by clause (b)
below, any day excluding Saturday, Sunday and any day that shall be in the City
of New York a legal holiday or a day on which banking institutions are
authorized or required by law or other governmental actions to close, and
(b) with respect to all notices and determinations in 

 

3

 

connection with, and payments of principal and interest on, LIBOR Loans,
any day that is a Business Day described in clause (a) excluding any day
that shall be in the City of London a legal holiday or a day on which banking
institutions are authorized or required by law or other governmental actions to
close.

 

“Capital Lease”,
as applied to any Person, shall mean any lease of any property (whether real,
personal or mixed) by that Person as lessee that, in conformity with GAAP, is,
or is required to be, accounted for as a finance lease obligation on the
balance sheet of that Person.

 

“Capital
Stock” shall mean
common shares, preferred shares or other equivalent equity interests (howsoever
designated) of capital stock of a corporation, equity preferred or common
interests or membership interests in a limited liability company, limited or
general partnership interests in a partnership or any other equivalent of such
ownership interest.

 

“Capitalized Lease
Obligations” shall mean, as applied to any Person, all obligations
under Capital Leases of such Person and its Subsidiaries, in each case taken at
the amount thereof accounted for as liabilities in accordance with GAAP.

 

“Change of Ownership”
shall mean and be deemed to have occurred if (a) the Sponsors shall at any time
not own, in the aggregate, directly or indirectly, beneficially and of record,
at least 35% of the issued and outstanding Voting Stock of Holdco (other than
as a result of one or more widely distributed offerings of Holdco’s Voting
Stock by Holdco or one or more widely distributed offerings of the Voting Stock
of a direct or indirect parent of Holdco by such parent, as the case may be);
and/or (b) Holdco shall at any time not own, in the aggregate, directly or
indirectly, beneficially and of record, all of the issued and outstanding
Voting Stock of the Borrower; and/or (c) any person, entity or group of
Persons “acting in concert” (as contemplated by the Securities Act and as interpreted by applicable law) shall at
any time have acquired direct or indirect beneficial ownership of a percentage
of the issued and outstanding Voting Stock of Holdco that exceeds the
percentage of such Voting Stock then directly or indirectly beneficially owned,
in the aggregate, by the Permitted Holders.

 

“Closing Date”
shall mean July 16, 2003.

 

“Code”
shall mean the Internal Revenue Code of 1986, and the regulations thereunder,
in each case as amended, reformed or otherwise modified from time to time.

 

“Commitment Increase Supplement”
shall have the meaning provided for in Section 3.3(d).

 

“Compliance Certificate”
shall have the meaning provided in Section 7.1(c).

 

“Confidential Information”
shall have the meaning provided in Section 11.17.

 

“Control”, “Controls”
and “Controlled”, when used with respect to any Person, shall mean the power to
direct the management and policies of such Person, directly or indirectly,
whether through ownership of Voting Stock, by contract or otherwise.

 

4

 

“Controlled Group”
shall mean all members of a controlled group of corporations and all members of
a controlled group of trades or businesses (whether or not incorporated) under
common control which, together with the Borrower, are treated as a single
employer under Section 414(b) or 414(c) of the Code or Section 4001 of ERISA.

 

“Credit Documents”
shall mean this Agreement and the First Mortgage Bonds, Series B held by the
Administrative Agent.

 

“Credit Event”
shall mean and include the making (but not the continuation) of a Revolving
Credit Loan.

 

“Debt to Capitalization
Ratio” shall mean, as of any date of determination, the ratio of (a)
Total Debt for the relevant Test Period to (b) Total Capitalization for such
Test Period.

 

“Default”
shall mean any event, act or condition that with notice or lapse of time, or
both, would constitute an Event of Default.

 

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

 

“Dollars” and “$” shall mean lawful currency of the United States.

 

“Environmental Claims”
shall mean any and all administrative, regulatory or judicial actions, suits,
demands, demand letters, claims, liens, notices of non-compliance,
investigations (other than internal reports prepared by the Borrower or any of
its Subsidiaries (a) in the ordinary course of such Person’s business or
(b) as required in connection with a financing transaction or an
acquisition or disposition of real estate) or proceedings relating in any way
to any Environmental Law or any permit issued, or any approval given, under any
such Environmental Law (hereinafter, “Claims”),
including (i) any and all Claims by governmental or regulatory authorities
for enforcement, cleanup, removal, response, remedial or other actions or
damages pursuant to any applicable Environmental Law and (ii) any and all
Claims by any third party seeking damages, contribution, indemnification, cost
recovery, compensation or injunctive relief resulting from Hazardous Materials
or arising from alleged injury or threat of injury to health, safety (with
respect to Hazardous Materials or conditions in the environment) or the
environment.

 

“Environmental Law”
shall mean any applicable federal, provincial, state, foreign or local statute,
law, rule, regulation, ordinance, code and rule of common law now or hereafter
in effect and in each case as amended, and any binding judicial or
administrative interpretation thereof, including any binding judicial or
administrative order, consent decree or judgment, relating to the environment,
human health or safety (with respect to Hazardous Materials or conditions in
the environment) or Hazardous Materials.

 

“ERISA”
shall mean the Employee Retirement Income Security Act of 1974, as amended, and
any successor statute thereto of similar import, together with the regulations
thereunder, in each case as in effect from time to time.  References to Sections of ERISA also refer to
any successor Sections thereto.

 

5

 

“Event of Default”
shall have the meaning provided in Article 9.

 

“Federal Funds Effective
Rate” shall mean, for any day, the weighted average of the per annum
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for the day of such transactions received by the Administrative
Agent from three federal funds brokers of recognized standing selected by it.

 

“Fees” shall
mean all amounts payable pursuant to, or referred to in, Section 3.1.

 

“Finance
Parties” shall mean
the Administrative Agent and the Lenders.

 

“First Mortgage
Bond, Series B” shall mean the First Mortgage Bonds, Series B,
substantially in the form of Exhibit D hereto, issued by the Borrower on the
Closing Date pursuant to the First Mortgage and Deed of Trust dated as of July
15, 2003 entered into by the Borrower and BNY Midwest Trust Company, as trustee
and the Second Supplemental Indenture dated as of July 15, 2003 entered into by
the Borrower and BNY Midwest Trust Company, as trustee.

 

“Fiscal Quarter”
shall mean, with respect to each fiscal year of the Borrower and each of its
Subsidiaries, (a) the first to third, inclusive, calendar months of such
fiscal year, (b) the fourth to sixth, inclusive, calendar months of such
fiscal year, (c) the seventh to ninth, inclusive, calendar months of such
fiscal year and (d) the tenth to twelfth, inclusive, calendar months of
such fiscal year.

 

“F.R.S. Board”
shall mean the Board of Governors of the Federal Reserve System or any
successor thereto.

 

“Funding Office”
shall mean the office of the Administrative Agent located 425 Lexington Avenue,
New York, New York 10017, or such other office as the Administrative Agent may
hereafter designate in writing as such to the Borrower and the Lenders.

 

“GAAP” shall
mean generally accepted accounting principles in the United States as in effect
from time to time; provided, that if there occurs after the date hereof any
change in GAAP from that used in the preparation of the financial statements
referred to in Sections 5.1(k)(i) and (ii) or that affects in any respect the
calculation of any covenant contained in Article 8, the Lenders and the
Borrower shall negotiate in good faith amendments to the provisions of this
Agreement that relate to the calculation of such covenant with the intent of
having the respective positions of the Lenders and the Borrower after such
change in GAAP conform as nearly as possible to their respective positions as
of the date of this Agreement and, until any such amendments have been agreed
upon, the covenants in Article 8 shall be calculated as if no such change
in GAAP has occurred.

 

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

 

6

 

“Guarantee Obligations”
shall mean, as to any Person, any obligation of such Person guaranteeing or
intended to guarantee any Indebtedness of any other Person (the “primary obligor”) in any manner, whether directly or
indirectly, including any obligation of such Person, whether or not contingent,
(a) to purchase any such Indebtedness or any property constituting direct
or indirect security therefor, (b) to advance or supply funds (i) for
the purchase or payment of any such Indebtedness or (ii) to maintain
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency of the primary obligor, (c) to purchase
property, securities or services primarily for the purpose of assuring the
owner of any such Indebtedness of the ability of the primary obligor to make
payment of such Indebtedness or (d) otherwise to assure or hold harmless
the owner of such Indebtedness against loss in respect thereof; provided that,
the term “Guarantee Obligations” shall not include endorsements of instruments
for deposit or collection in the ordinary course of business.  The amount of any Guarantee Obligation shall
be deemed to be an amount equal to the stated or determinable amount of the
Indebtedness in respect of which such Guarantee Obligation is made or, if not
stated or determinable, the maximum reasonably anticipated liability in respect
thereof (assuming such Person is required to perform thereunder) as determined
by such Person in good faith or, if the Guarantee Obligation is expressly
limited to a specified amount, such specified amount.

 

“Hazardous Material”
shall mean (a) any petroleum or petroleum products, radioactive materials,
friable asbestos, urea formaldehyde foam insulation, transformers or other
equipment that contain dielectric fluid containing regulated levels of polychlorinated
biphenyls, and radon gas; (b) any chemicals, materials or substances defined as
or included in the definition of “hazardous substances”, “hazardous waste”, “hazardous
materials”, “extremely hazardous waste”, “restricted hazardous waste”, “toxic
substances”, “toxic pollutants”, “contaminants”, or “pollutants”, or words of
similar import, under any applicable Environmental Law; and (c) any other
chemical, material or substance, exposure to which is prohibited, limited or
regulated by any Governmental Authority.

 

“Hostile Take-Over Bid” shall
mean an offer to purchase a controlling interest in any Person by the Borrower
or any of its Subsidiaries or in which the Borrower or any of its Subsidiaries
is involved, in respect of which the board of directors (or equivalent
governing body for such entity) of the target entity has recommended against
acceptance of such offer to the target entity’s shareholders or equity holders
or which is similarly opposed or contested.

 

“Holdco”
means ITC Holdings Corp., a newly-formed Michigan corporation.

 

“including”
and “include” shall mean including
without limiting the generality of any description preceding such term, and,
for purposes of each Credit Document, the parties hereto agree that the rule of
ejusdem generis shall not be applicable to limit a general statement, which is
followed by or referable to an enumeration of specific matters, to matters
similar to the matters specifically mentioned.

 

“Indebtedness”
of any Person shall mean (a) all indebtedness of such Person for borrowed
money, (b) the deferred purchase price of assets or services that in
accordance with GAAP would be classified as a liability on the balance sheet of
such Person, (c) the face amount of all letters of credit issued for the
account of such Person and, without duplication, all drafts 

 

7

 

drawn thereunder, (d) all Indebtedness of a second Person secured
by any Lien on any property owned by such first Person, whether or not such
Indebtedness has been assumed, (e) all Capitalized Lease Obligations of
such Person, (f) all existing payment obligations of such Person under
interest rate swap, cap or collar agreements, interest rate future or option
contracts, currency swap agreements, currency future or option contracts and
other similar agreements, (g) all existing payment obligations of such
Person under commodity future contracts and other similar agreements and
(h) without duplication, all Guarantee Obligations of such Person;
provided that, Indebtedness shall not include current payables and accrued
expenses, in each case arising in the ordinary course of business.

 

“Interest Period”
shall mean, with respect to any Revolving Credit Loan, the interest period
applicable thereto, as determined pursuant to Section 2.9.

 

“Lender” and “Lenders” shall have the respective meanings provided in the
preamble to this Agreement.

 

“Lender Default”
shall mean a Lender having notified the Administrative Agent and/or the
Borrower that it does not intend to comply with the obligations under
Section 2.1(a) as a result of the control of such Lender being
assumed by any regulatory authority or the appointment of a receiver or
conservator with respect to such Lender at the direction or request of any
regulatory agency or authority.

 

“LIBOR” shall
mean, with respect to each LIBOR Period for each LIBOR Loan, a rate per annum,
expressed on the basis of a 360 day year, equal to the annual interest rate for
deposits of Dollars for a maturity most nearly comparable to such LIBOR Period
which appears on page 3750 of the Dow Jones Telerate Screen as of 11:00 a.m.
(London time) on the second Business Day prior to the commencement of such
LIBOR Period; provided that, if such Dow Jones Telerate Screen rate is not
available on such day, then the annual interest rate for deposits of Dollars
for a maturity most nearly comparable to such LIBOR Period which appears on the
LIBOR page of the Reuters Screen as of 11:00 a.m. (London time) on the second
Business Day prior to the commencement of such LIBOR Period; and provided
further that if such Reuters Screen rate is not available on such day, then the
interest rate at which the Administrative Agent is offered deposits of Dollars
by leading banks in the London interbank market as of 11:00 a.m. (London time)
on the second Business Day prior to the commencement of such LIBOR Period, for
delivery on the first day of such LIBOR Period for the number of days comprised
in such LIBOR Period and in an amount comparable to the amount of such LIBOR
Loan.

 

“LIBOR Loan”
shall mean each Loan bearing interest at the rate provided in
Section 2.8(b).

 

“LIBOR Period”
shall mean, with respect to a LIBOR Loan, the interest period selected by the
Borrower for such LIBOR Loan in accordance with Section 2.9.

 

“Lien” shall
mean any mortgage, pledge, security interest, hypothecation, assignment by way
of security, lien (statutory or other) or similar encumbrance (including any
agreement to give any of the foregoing, any conditional sale or other title
retention agreement or any lease in the nature thereof).

 

8

 

“Material Adverse Effect”
shall mean a circumstance or condition affecting the business, assets,
operations, properties or financial condition of the Borrower and its Subsidiaries
taken as a whole that would materially adversely affect (a) the ability of
the Borrower to perform its obligations under this Agreement and the other
Credit Documents or (b) the rights and remedies of the Lenders under the
Credit Documents.

 

“Minimum Borrowing Amount”
shall mean $500,000.

 

“Moody’s” shall
mean Moody’s Investors Service, Inc. or any successor by merger or
consolidation to its business.

 

“New Lender”
shall have the meaning provided in Section 3.3.

 

“New Lender
Supplement” shall have the meaning provided in Section 3.3.

 

“Non-U.S. Lender”
shall mean any Lender that is not a “United States person”, as defined under
Section 7701(a)(30) of the Code.

 

“Notice of Borrowing”
shall have the meaning provided in Section 2.3(a).

 

“Notice of Continuation”
shall have the meaning provided in Section 2.6(a).

 

“Organic
Document” shall mean,
relative to any Person, its certificate of incorporation, by-laws, certificate
of partnership, partnership agreement, certificate of formation, limited
liability agreement, operating agreement and all shareholder agreements, voting
trusts and similar arrangements applicable to any of such Person’s Capital
Stock.

 

“Participant”
shall have the meaning provided in Section 11.6(a)(i).

 

“Pension Plan”
shall mean a “pension plan”, as such term is defined in Section 3(2) of ERISA,
which is subject to Title IV of ERISA (other than a multiemployer plan as
defined in Section 4001(a)(3) of ERISA), and to which the Borrower or any
corporation, trade or business that is, along with the Borrower, a member of a
Controlled Group, is a contributing employer or a sponsor.

 

“Permitted
Holders” shall mean,
collectively, the Sponsors and Senior Management.

 

“Permitted Liens”
shall mean (a) Liens for taxes, assessments, customs duties or
governmental charges or claims not yet due or which are being contested in good
faith and by appropriate proceedings for which appropriate provisions have been
established in accordance with GAAP; (b) Liens in respect of property or
assets of the Borrower or any of its Subsidiaries imposed by law, such as
carriers’, warehousemen’s and or mechanics’ Liens, and other similar Liens
arising in the ordinary course of business and Liens arising under zoning laws
and ordinances and municipal bylaws and regulations, in each case so long as
such Liens arise in the ordinary course of business and do not individually or
in the aggregate have a Material Adverse Effect; (c) Liens arising from
judgments or decrees in circumstances not constituting an Event of Default under
Section 9.7; (d) Liens (other than those arising by Requirement of
Law that are not permitted by clause (a) of this definition) incurred or
deposits made in connection with workers’ 

 

9

 

compensation, unemployment insurance and other types of social
security, or to secure the performance of tenders, statutory obligations,
surety and appeal bonds, bids, leases, government contracts, performance and
return-of-money bonds and other similar obligations incurred in the ordinary
course of business; (e) ground leases in respect of real property on which
facilities owned or leased by the Borrower or any of its Subsidiaries are
located; (f) easements, rights-of-way, restrictive covenants or
agreements, minor defects or irregularities in title and other similar charges
or encumbrances not interfering in any material respect with the business of
the Borrower and its Subsidiaries taken as a whole; (g) any interest or
title of a lessor or secured by a lessor’s interest under any lease permitted
by this Agreement; (h) Liens incurred by the licensing of trademarks by the
Borrower or any of its Subsidiaries to others in the ordinary course of
business; and (i) leases or subleases granted to others, not
interfering in any material respect with the business of the Borrower and its
Subsidiaries taken as a whole.

 

“Person” shall
mean any individual, partnership, joint venture, firm, corporation, limited
liability company, association, trust or other enterprise or any Governmental
Authority.

 

“Real Estate”
shall have the meaning provided in Section 7.1(e).

 

“Register” shall
have the meaning provided in Section 11.6(c).

 

“Required Lenders”
shall mean, at any date, Lenders having or holding more than 50% of the Total
Revolving Credit Commitment at such date (provided that in the case of a
Defaulting Lender, for this purpose only, its Revolving Credit Commitment shall
be deemed to be equal to the outstanding principal amount of all Revolving
Credit Loans of such Defaulting Lender at such date) or, if the Revolving
Credit Commitments have terminated, more than 50% of the outstanding principal
amount of all Revolving Credit Loans on such date.

 

“Requirement of Law”
shall mean, as to any Person, the Certificate of Incorporation and By-Laws or
other organizational or governing documents of such Person, and any law,
treaty, rule, regulation, guideline, policy or determination of an arbitrator
or a court or other Governmental Authority, in each case applicable to or
binding upon such Person or any of its property or assets or to which such
Person or any of its property or assets is subject and whether or not having
the force of law.

 

“Revolving Credit
Commitment” shall mean, (a) with respect to each Lender that is
a Lender on the date hereof, the amount set forth on Schedule I as such Lender’s
“Revolving Credit Commitment”, (b) in the case of any Lender that becomes
a Lender after the date hereof by assignment, the amount specified as such
Lender’s “Revolving Credit Commitment” in the Assignment and Acceptance
contemplated in Section 11.6 pursuant to which such Lender assumed a
portion of the Total Revolving Credit Commitment, and (c) in the case of any
Lender that becomes a Lender after the date hereof pursuant to Section 3.3, the
amount specified as such Lender’s “Revolving Credit Commitment” in the New
Lender Supplement in Section 3.3 pursuant to which such Lender assumed a
Revolving Credit Commitment, in each case (i) subject to the proviso set
forth in Section 2.1(a), and (ii) as the same may be changed from
time to time pursuant to the terms hereof (including pursuant to
Sections 3.2 and 11.6).

 

10

 

“Revolving Credit
Commitment Percentage” shall mean, at any time, for each Lender, the
percentage obtained by dividing (a) such Lender’s Revolving Credit
Commitment by (b) the Total Revolving Credit Commitment; provided that at
any time when the Total Revolving Credit Commitment shall have been terminated,
each Lender’s Revolving Credit Commitment Percentage shall be the percentage
obtained by dividing (c) such Lender’s Revolving Credit Exposure by
(d) the aggregate amount of the Revolving Credit Exposures of all the
Lenders.

 

“Revolving Credit Loan”
shall have the meaning provided in Section 2.1(a).

 

“Revolving Credit Maturity
Date” shall mean February 28, 2006, or, if earlier, the date on
which the Revolving Credit Commitments shall have terminated and no Revolving
Credit Loans shall be outstanding.

 

“S&P” shall
mean Standard & Poor’s Ratings Service or any successor by merger or
consolidation to its business.

 

“Second Supplemental
Indenture” shall mean the indenture dated as of the Closing Date
supplementing the First Mortgage and Deed of Trust dated as of July 15, 2003
between the Borrower and The Bank of New York, as trustee.

 

“Securities
Act” shall mean the Securities Act of 1933, as amended.

 

“Senior
Management” shall
mean those Persons listed in Schedule V.

 

“Sponsors”
shall mean Kohlberg Kravis Roberts & Co. and Trimaran Capital Partners,
along with their respective Affiliates.

 

“Subsidiary” of
any Person shall mean and include (a) any corporation more than 50% of
whose stock of any class or classes having by the terms thereof ordinary voting
power to elect a majority of the directors of such corporation (irrespective of
whether or not at the time stock or issued share capital of any class or
classes of such corporation shall have or might have voting power by reason of
the happening of any, contingency) is at the time owned by such Person directly
or indirectly through Subsidiaries and (b) any partnership, association,
joint venture or other entity in which such Person directly or indirectly
through Subsidiaries has more than a 50% equity interest and more than a 50%
voting interest at the time and (c) any other corporation, partnership,
joint venture or other entity (i) the accounts of which would be
consolidated with those of such Person in such Person’s consolidated financial
statements if such statements were prepared in accordance with GAAP and
(ii) that is controlled (as defined in clause (b) of the definition
of such term in the definition of the term “Affiliate”) by such Person.  Unless otherwise expressly provided, all
references herein to a “Subsidiary” shall mean a Subsidiary of the Borrower.

 

“Successor Borrower”
shall have the meaning provided in Section 8.2(a).

 

“Taxes” shall have the meaning
provided in Section 4.3(a)(i).

 

“Test Period”
shall mean, for any determination under this Agreement, the four consecutive
Fiscal Quarters of the Borrower then last ended.

 

11

 

“Total
Capitalization” shall mean, as of any date of determination, the
sum, without duplication, of (a) Total Debt and (b) the consolidated net
shareholders equity of the Borrower as determined in accordance with GAAP.

 

“Total Debt”
shall mean, as of any date of determination, (a) the sum, without
duplication, of (i) all Indebtedness of the Borrower and its Subsidiaries
for borrowed money outstanding on such date, (ii) all Capitalized Lease
Obligations of the Borrower and its Subsidiaries outstanding on such date and
(iii) all Indebtedness of the Borrower and its Subsidiaries of the types
described in clauses (b) and (d) of the definition of Indebtedness (but in the
case of clause (d), only to the extent such Indebtedness is assumed by the
Borrower or any Subsidiary), all calculated on a consolidated basis in
accordance with GAAP and to the extent reflected as Indebtedness on the
consolidated balance sheet of the Borrower in accordance with GAAP minus (b) the aggregate amount of cash held by the Borrower
and its Subsidiaries as at such date and included in the cash accounts listed
on the consolidated balance sheet of the Borrower and its Subsidiaries and
deposited with the Administrative Agent to the extent the use thereof for
application to payment of Indebtedness of the Borrower and its Subsidiaries is
not prohibited by law or any contract to which the Borrower or any of its
Subsidiaries is a party.

 

“Total Revolving Credit
Commitment” shall mean the sum of the Revolving Credit Commitments
of all the Lenders, which as of the Closing Date was $15,000,000.

 

“Transactions” shall mean the execution, delivery
and performance by the Borrower of this Agreement and the other Credit Documents,
including the issuance of the First Mortgage Bond, Series B to the
Administrative Agent in the aggregate principal amount of $15,000,000, the
borrowing of the Revolving Credit Loans and the use of the proceeds thereof.

 

“Transferee”
shall have the meaning provided in Section 11.6(e).

 

“Type” shall
mean as to any Revolving Credit Loan, its nature as an ABR Loan or a LIBOR
Loan.

 

“United States”
and “US” shall mean the United States of
America.

 

“Voting Stock”
shall mean Capital Stock of a Person which carries voting rights or the right
to Control such Person under any circumstances; provided that Capital Stock
which carries the right to vote or Control conditionally upon the happening of
an event shall not be considered Voting Stock until the occurrence of such
event and then only during the continuance of such event.

 

“Welfare Plan”
shall mean a “welfare plan”, as such term is defined in Section 3(1) of ERISA.

 

1.2          Accounting and Financial
Determinations.

 

(a)           Unless
otherwise specified, all accounting terms used herein shall be interpreted, and
all accounting determinations and computations hereunder shall be made, in
accordance with GAAP.  Unless otherwise
expressly provided herein, all financial covenants and defined financial terms
shall be computed on a consolidated basis for the Borrower and the Restricted 

 

12

 

Subsidiaries, in each case without duplication.  Such computations shall not give effect to
adjustments in component amounts required or permitted by the Financial
Accounting Standards Board Statements of Financial Accounting Standards Nos.
141 and 142, and related authoritative pronouncements, as a result of the
Transactions or the amortization or write off of any amounts in connection
therewith and related financing thereof.

 

(b)           For
purposes of computing the ratios referred to in Section 8.4, such ratio (and
any financial calculations or components required to be made or included
therein) shall be determined, with respect to the relevant Test Period, after
giving pro forma effect to each acquisition and
disposition of a Person, business or asset consummated after the Closing Date
and during such period, together with all transactions relating thereto
consummated during such period (including any incurrence, assumption,
refinancing or repayment of Indebtedness), as if such acquisition, disposition
and related transactions had been consummated on the first day of such Test
Period, in each case (i) based on historical results accounted for in accordance
with GAAP and (ii) prepared in accordance with Regulation S-X under the
Securities Act, as in effect on the Closing Date, to the extent applicable.

 

ARTICLE 2

AMOUNT AND TERMS OF CREDIT

 

2.1          Commitments.

 

(a)           Subject
to and upon the terms and conditions herein set forth, each Lender severally
agrees to make a loan or loans (each a “Revolving Credit Loan”
and, collectively, the “Revolving Credit Loans”)
to the Borrower, which Revolving Credit Loans (i) shall be made at any
time and from time to time on and after the Closing Date and prior to the
Revolving Credit Maturity Date, (ii) may, at the option of the Borrower,
be incurred and maintained as, and/or converted into, ABR Loans or LIBOR Loans
(provided that all Revolving Credit Loans made by each of the Lenders pursuant
to the same Borrowing shall, unless otherwise specifically provided herein,
consist entirely of Revolving Credit Loans of the same Type), (iii) may be
repaid and reborrowed in accordance with the provisions hereof and shall be
repaid in full on the Revolving Credit Maturity Date, (iv) for any such
Lender at any time, shall not result in such Lender’s Revolving Credit Exposure
at such time exceeding such Lender’s Revolving Credit Commitment at such time
and (v) after giving effect thereto and to the application of the proceeds
thereof, shall not result at any time in the aggregate amount of the Lenders’
Revolving Credit Exposures at such time exceeding the Total Revolving Credit
Commitment then in effect.  As of the
Closing Date, the Total Revolving Credit Commitment will be $15,000,000.

 

(b)           The
Borrower shall use the proceeds from the Revolving Credit Loans (i) for
general corporate purposes and (ii) to finance day-to-day operating
requirements; provided that, notwithstanding any of the foregoing, none of the
proceeds from Revolving Credit Loans may be used to finance any Hostile Take-Over
Bid.

 

2.2          Minimum Amount of Each
Borrowing; Maximum Number of Borrowings.

 

The aggregate principal amount of each Borrowing of
Revolving Credit Loans shall be in a multiple of $100,000 and shall not be less
than the Minimum Borrowing Amount.  More
than 

 

13

 

one Borrowing may be incurred on any date; provided that at no time
shall there be outstanding more than 15 Borrowings of LIBOR Loans under this
Agreement.

 

2.3          Notice of Borrowing.

 

(a)           Whenever
the Borrower desires to incur Revolving Credit Loans hereunder, it shall give
the Administrative Agent at the locations set forth in Section 11.2, (i)
written notice (or telephonic notice promptly confirmed in writing) prior to
12:00 noon (New York time) at least three Business Days prior to the proposed
day of each Borrowing of LIBOR Loans and (ii) written notice (or telephonic
notice promptly confirmed in writing) prior to 10:00 a.m. (New York time) on
the proposed day of each Borrowing of ABR Loans.  Each such Notice of Borrowing, except as
otherwise expressly provided in Section 2.10, shall be irrevocable and
shall specify (i) the aggregate principal amount of the Revolving Credit
Loans to be made pursuant to such Borrowing, (ii) the date of Borrowing
(which shall be a Business Day), (iii) whether the Borrowing shall consist of
ABR Loans or LIBOR Loans, (iv) if such Borrowing shall consist of LIBOR Loans,
the Interest Period to be initially applicable thereto and (v) the number
and location of the account to which funds are to be disbursed.  The Administrative Agent shall promptly give
each Lender written notice (or telephonic notice promptly confirmed in writing)
of each proposed Borrowing of Revolving Credit Loans, of such Lender’s
proportionate share thereof and of the other matters covered by the related
Notice of Borrowing.

 

(b)           Without
in any way limiting the obligation of the Borrower to confirm in writing any
notice it may give hereunder by telephone, the Administrative Agent may act
prior to receipt of written confirmation without liability upon the basis of
such telephonic notice believed by the Administrative Agent in good faith to be
from an Authorized Officer of the Borrower. 
In each such case the Borrower hereby waives the right to dispute the
Administrative Agent’s record of the terms of any such telephonic notice.

 

2.4          Disbursement of Funds.

 

(a)           No
later than 12:00 Noon (New York time) on the date specified in each Notice of
Borrowing, each Lender will make available its pro rata
portion, if any, of each Borrowing requested to be made on such date in the
manner provided below.

 

(b)           Each
Lender shall make available all amounts it is to fund under any Borrowing in
immediately available funds to the Administrative Agent at the Funding Office
and the Administrative Agent will make available to the Borrower by depositing
such funds as specified in the applicable Notice of Borrowing, the aggregate of
the amounts so made available.  Unless
the Administrative Agent shall have been notified by any Lender prior to the
date of any such Borrowing that such Lender does not intend to make available
to the Administrative Agent its portion of the Borrowing or Borrowings to be
made on such date, the Administrative Agent may assume that such Lender has
made such amount available to the Administrative Agent on such date of
Borrowing, and the Administrative Agent, in reliance upon such assumption, may
(in its sole discretion and without any obligation to do so) make available to
the Borrower a corresponding amount.  If
such corresponding amount is not in fact made available to the Administrative
Agent by such Lender and the Administrative Agent has made available same to
the Borrower, the Administrative Agent shall be entitled to recover such
corresponding amount 

 

14

 

from such Lender. 
If such Lender does not pay such corresponding amount forthwith upon the
Administrative Agent’s demand therefor, the Administrative Agent shall promptly
notify the Borrower, and the Borrower shall immediately pay such corresponding
amount to the Administrative Agent.  The
Administrative Agent shall also be entitled to recover from such Lender or the
Borrower, as the case may be, interest on such corresponding amount in respect
of each day from the date such corresponding amount was made available by the
Administrative Agent to the Borrower to the date such corresponding amount is
recovered by the Administrative Agent, at a rate per annum equal to (i) if
paid by such Lender, at the Federal Funds Effective Rate or (ii) if paid
by the Borrower, the then-applicable rate of interest, calculated in accordance
with Section 2.8, for the respective Revolving Credit Loans.

 

(c)           Nothing
in this Section 2.4 shall be deemed to relieve any Lender from its
obligation to fulfill its commitments hereunder or to prejudice any rights that
the Borrower may have against any Lender as a result of any default by such
Lender hereunder (it being understood, however, that no Lender shall be
responsible for the failure of any other Lender to fulfill its commitments
hereunder).

 

2.5          Repayment of Loans;
Evidence of Debt.

 

(a)           The
Borrower shall repay to the Administrative Agent, for the benefit of the
Lenders, on the Revolving Credit Maturity Date, the then-unpaid Revolving
Credit Loans.

 

(b)           Each
Lender shall maintain in accordance with its usual practice an account or
accounts evidencing the Indebtedness of the Borrower to the appropriate lending
office of such Lender resulting from each Revolving Credit Loan made by such
lending office of such Lender from time to time, including the amounts and
currency of principal and interest payable and paid to such lending office of
such Lender from time to time under this Agreement.

 

(c)           The
Administrative Agent shall maintain the Register pursuant to Section 11.6,
and a sub-account for each Lender, in which Register and sub-accounts (taken
together) shall be recorded (i) the amount of each Revolving Credit Loan
made hereunder, the Type of each Revolving Credit Loan made and the Interest
Period applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from the Borrower to each Lender
hereunder and (iii) the amount of any sum received by the Administrative
Agent hereunder from the Borrower and each Lender’s share thereof.

 

(d)           The
entries made in the Register and accounts and subaccounts maintained pursuant
to paragraphs (c) and (d) of this Section shall, to the extent permitted
by applicable law, be prima facie
evidence of the existence and amounts of the obligations of the Borrower
therein recorded; provided that the
failure of any Lender or the Administrative Agent to maintain such account,
such Register or such subaccount, as applicable, or any error therein, shall
not in any manner affect the obligation of the Borrower to repay (with
applicable interest) the Revolving Credit Loans made to the Borrower by such
Lender in accordance with the terms of this Agreement.  In the event that there is an inconsistency
between the accounts maintained by a Lender pursuant to Section 2.5(c) and
the Register maintained by the Administrative Agent pursuant to Section 11.6,
the said Register shall prevail.

 

15

 

(e)           All
payments to be made by the Administrative Agent to any Lender hereunder shall
be made in accordance with the payment instructions of such Lender set forth on
the signature page of such Lender hereunder or, if such Lender is an Assignee,
set forth in the Assignment and Acceptance of such Lender.

 

2.6          Changes in Type of
Revolving Credit Loan.

 

(a)           The
Borrower shall have the option on any Business Day to convert all or a portion
equal to at least the Minimum Borrowing Amount of the outstanding principal
amount of Revolving Credit Loans of one Type into a Borrowing or Borrowings of
another permitted Type or to continue the outstanding principal amount of any
LIBOR Loans as LIBOR Loans for an additional Interest Period; provided that
(i) no partial continuation of LIBOR Loans shall reduce the outstanding
principal amount of LIBOR Loans made pursuant to a single Borrowing to less
than the Minimum Borrowing Amount, (ii) ABR Loans may not be converted into
LIBOR Loans, if a Default or Event of Default is in existence on the date of
the proposed conversion and the Administrative Agent has or the Required
Lenders have determined in its or their sole discretion not to permit such
conversion, (iii) LIBOR Loans may not be continued as LIBOR Loans for an
additional Interest Period if a Default or Event of Default is in existence on
the date of the proposed continuation and the Administrative Agent has or the
Required Lenders have determined in its or their sole discretion not to permit
such continuation, (iv) no Interest Period in excess of one month may be
selected for any LIBOR Loan if a Default or Event of Default is in existence on
the date of the proposed continuation and the Administrative Agent has or the Required
Lenders have determined in its or their sole discretion not to permit such
longer Interest Period (v) Borrowings resulting from continuations or
conversions pursuant to this Section 2.6 shall be limited in number as
provided in Section 2.2 and (vi) the outstanding principal amount of a
Revolving Credit Loan of one Type may not be converted into a Borrowing of
another permitted Type until the end of the current Interest Period for such
Revolving Credit Loan.  Each such
continuation or conversion shall be effected by the Borrower by giving the
Administrative Agent at the location set forth in Section 11.2 prior to 12:00
Noon (New York time) at least three Business Days’ prior written notice
substantially in the form of Exhibit B (or telephonic notice promptly confirmed
in writing) (each a “Notice of Continuation”)
specifying the Revolving Credit Loans to be so continued or converted, the Type
of Revolving Credit Loans to be continued or converted into and, if such
Revolving Credit Loans are to be converted or continued as LIBOR Loans, the
Interest Period to be initially applicable thereto.  The Administrative Agent shall give each
Lender notice as promptly as practicable of any such proposed continuation or
conversion affecting any of its Revolving Credit Loans.  This Section shall not be construed to permit
the Borrower to change the currency of any Borrowing.

 

(b)           If
any Default or Event of Default is in existence at the time of any proposed
continuation of any LIBOR Loans and the Administrative Agent has or the
Required Lenders have determined in its or their sole discretion not to permit
such continuation, such LIBOR Loans shall be automatically converted on the
last day of the current Interest Period into ABR Loans.

 

(c)           If
upon the expiration of any Interest Period in respect of LIBOR Loans, the
Borrower has failed to elect a new Interest Period to be applicable thereto as
provided in 

 

16

 

paragraph (a) above, the Borrower shall be deemed to
have elected to convert such Borrowing of LIBOR Loans, as the case may be, into
a Borrowing of ABR Loans, as the case may be, effective as of the expiration
date of such current Interest Period.

 

2.7          Pro
Rata Borrowings.

 

Each Borrowing
of Revolving Credit Loans under this Agreement shall be made by the Lenders pro rata on the basis of their then-applicable Revolving
Credit Commitment Percentage; provided that the Administrative Agent may adjust
the proportions of the Lenders with respect to any Borrowing to be made by such
Lenders to ensure that no Lender’s Revolving Credit Exposure (after granting
its portion of such Borrowing) exceeds its Revolving Credit Commitment.  It is understood that no Lender shall be
responsible for any default by any other Lender in its obligation to make
Revolving Credit Loans hereunder and that each Lender shall be obligated to
make the Revolving Credit Loans provided to be made by it hereunder, regardless
of the failure of any other Lender to fulfill its commitments hereunder.

 

2.8          Interest
and Fees.

 

(a)           The
unpaid principal amount of each ABR Loan shall bear interest from the date of
the Borrowing thereof until maturity (whether by acceleration or otherwise and
both before and after default and judgment) at a rate per annum that shall at
all times be equal to the Applicable Margin for ABR Loans plus the ABR in
effect from time to time.

 

(b)           The
unpaid principal amount of each LIBOR Loan shall bear interest from the date of
the Borrowing thereof until maturity (whether by acceleration or otherwise and
both before and after default and judgment) at a rate per annum that shall at
all times be equal to the Applicable Margin for LIBOR Loans plus the relevant
LIBOR.

 

(c)           If
all or a portion of (i) the principal amount of any Revolving Credit Loan
or (ii) any interest thereon or fees payable hereunder shall not be paid
when due (whether at the stated maturity, by acceleration or otherwise), such
overdue amount shall bear interest at a rate per annum that is (x) in the case
of overdue principal, equal to the rate that would otherwise be applicable
thereto plus, to the extent permitted by applicable law, 2.00% (after as well
as before maturity and judgment), (y) in the case of any overdue interest with
respect to any Revolving Credit Loan, equal to the rate of interest applicable
to such Revolving Credit Loan plus, to the extent permitted by applicable law,
2.00%, or (z) in the case of any overdue fees or other amounts owing hereunder,
equal to the rate of interest then applicable to Revolving Credit Loans
maintained as ABR Loans plus 2.00%, in each case from and including the date of
such non-payment to but excluding the date on which such amount is paid in full
(after as well as before maturity and judgment).  All interest payable pursuant to this Section 2.8(c)
shall be payable upon demand.

 

(d)           Interest
on each Revolving Credit Loan shall accrue from and including the date of any
Borrowing to but excluding the date of any repayment thereof and shall, except
as otherwise provided pursuant to Section 2.8(c), be payable (i) in
respect of each ABR Loan, quarterly in arrears on the last Business Day of each
of March, June, September and December, (ii) in respect of each LIBOR
Loan, on the last day of each Interest Period applicable thereto and, 

 

17

 

in the case of an Interest Period in excess of three
months, on each date occurring at three-month intervals after the first day of
such Interest Period, (iii) in respect of each Revolving Credit Loan on any
prepayment (on the amount prepaid), at maturity (whether by acceleration or
otherwise) and, after such maturity, on demand.

 

(e)           All
computations of interest hereunder shall be made in accordance with
Section 4.4.

 

(f)            The
Administrative Agent, upon determining the interest rate for any Borrowing of
LIBOR Loans, shall promptly notify the Borrower and the relevant Lenders
thereof.  Each such determination shall,
absent clearly demonstrable error, be final and conclusive and binding on all
parties hereto.

 

2.9          Interest Periods.

 

At the time
the Borrower gives a Notice of Borrowing or Notice of Continuation in respect
of the making of, or conversion into or continuation as, a Borrowing of LIBOR
Loans prior to 10:00 a.m. (New York time) on the third Business Day prior to
the applicable date of making or conversion or continuation of such LIBOR
Loans, the Borrower shall have the right to elect by giving the Administrative
Agent written notice of (or telephonic notice promptly confirmed in writing)
the LIBOR Period applicable to such Borrowing, which Interest Period shall, at
the option of the Borrower, be one, two, three or six months.  Notwithstanding anything to the contrary
contained above:

 

(a)           the
initial LIBOR Period for any Borrowing of LIBOR Loans shall commence on the
date of such Borrowing (including the date of any conversion from a Borrowing
of ABR Loans) and each LIBOR Period occurring thereafter in respect of such
Borrowing shall commence on the day on which the next preceding LIBOR Period
expires;

 

(b)           if
any LIBOR Period relating to a Borrowing of LIBOR Loans begins on the last
Business Day of a calendar month or begins on a day for which there is no
numerically corresponding day in the calendar month at the end of such LIBOR
Period, such LIBOR Period shall end on the last Business Day of the calendar
month at the end of such LIBOR Period;

 

(c)           if
any LIBOR Period would otherwise expire on a day that is not a Business Day,
such LIBOR Period shall expire on the next succeeding Business Day; provided
that if any LIBOR Period in respect of a LIBOR Loan would otherwise expire on a
day that is not a Business Day but is a day of the month after which no further
Business Day occurs in such month, such LIBOR Period shall expire on the next
preceding Business Day; and

 

(d)           the
Borrower shall not be entitled to elect any LIBOR Period in respect of any
LIBOR Loan if such LIBOR Period would extend beyond the applicable Revolving
Credit Maturity Date of such LIBOR Loan.

 

18

 

2.10        Increased
Costs, Illegality, etc.

 

(a)           In
the event that any Lender shall have reasonably determined (which determination
shall, absent clearly demonstrable error, be final and conclusive and binding
upon all parties hereto):

 

(i)            on
any date for determining LIBOR for a Borrowing of LIBOR Loans for any Interest
Period that by reason of any changes arising on or after the date hereof
affecting the London interbank market (x) deposits in Dollars in the principal
amounts of the Revolving Credit Loans comprising such Borrowing are not readily
available to such Lender in the London interbank market or (y) adequate and
fair means do not exist for ascertaining the applicable interest rate on the
basis provided for in the definition of LIBOR; or

 

(ii)           at
any time, that such Lender shall incur increased costs or reductions in the
amounts received or receivable hereunder with respect to any LIBOR Loans (other
than any such increase or reduction attributable to taxes) because of
(x) any change since the date hereof in any applicable law, governmental
rule, regulation, guideline or order (or in the interpretation or
administration thereof and including the introduction of any new law or
governmental rule, regulation, guideline or order), such as, for example, but not
limited to, a change in official reserve requirements (including any reserve
requirements specified under regulations issued from time to time by the F.R.S.
Board and then applicable to assets or liabilities consisting of and including “Eurocurrency
Liabilities” as therein defined), and/or (y) other circumstances affecting
the London interbank market; or

 

(iii)          at
any time, that the making or continuance of any LIBOR Loan has become unlawful
by compliance by such Lender in good faith with any law, governmental rule,
regulation, guideline or order (or would conflict with any such governmental
rule, regulation, guideline or order not having the force of law even though
the failure to comply therewith would not be unlawful), or has become
impracticable as a result of a contingency occurring after the date hereof that
materially and adversely affects the London interbank market;

 

then, and in any such event, such Lender shall within
a reasonable time thereafter give notice (if by telephone confirmed in writing)
to the Borrower and to the Administrative Agent of such determination (which
notice the Administrative Agent shall promptly transmit to each of the other
Lenders).  Thereafter (x) in the
case of clause (i) above, LIBOR Loans shall no longer be available from
such Lender (and such Lender’s obligation to make such Revolving Credit Loans
shall be suspended) until such time as such Lender notifies the Administrative
Agent, the Borrower and the Lenders that the circumstances giving rise to such
notice by the Administrative Agent no longer exist (which notice such Lender
agrees to give at such time when such circumstances no longer exist), and any
Notice of Borrowing or Notice of Continuation given by the Borrower with
respect to LIBOR Loans that have not yet been incurred shall be deemed, with
respect to such Lender only, to be a Notice of Borrowing or Notice of
Continuation for ABR Loans, (y) in the case of clause (ii) above, the
Borrower shall pay to such Lender, promptly after receipt of written demand
therefor, such additional amounts (in the form of an increased rate of, 

 

19

 

or a different method of calculating, interest or
otherwise as such Lender in its reasonable discretion shall determine) as shall
be required to compensate such Lender for such increased costs or reductions in
amounts receivable hereunder (it being agreed that a written notice as to the
additional amounts owed to such Lender, showing in reasonable detail the basis
for the calculation thereof, submitted to the Borrower by such Lender shall,
absent clearly demonstrable error, be final and conclusive and binding upon all
parties hereto) other than any such increase or reduction attributable to taxes
(z) in the case of clause (iii) above, the Borrower shall take one of
the actions specified in Section 2.10(b) as promptly as possible and, in
any event, within the time period required by law.

 

(b)           At
any time that any LIBOR Loan is affected by the circumstances described in
Section 2.10(a)(ii) or 2.10(a)(iii), the Borrower may (and in the case of
a LIBOR Loan affected pursuant to Section 2.10(a)(iii) shall) either
(i) if the affected LIBOR Loan is then being made pursuant to a Credit
Event or Borrowing by way of conversion into a LIBOR Loan, cancel said Credit
Event or Borrowing by giving the Administrative Agent telephonic notice
(confirmed promptly in writing) thereof on the same date that the Borrower was
notified by a Lender pursuant to Section 2.10(a)(ii) or 2.10(a)(iii), or
(ii) if the affected LIBOR Loan is then outstanding, upon at least three
Business Days notice to the Administrative Agent, require the affected Lender
to convert each such LIBOR Loan into an ABR Loan; provided that if more than
one Lender is affected at any time, then all affected Lenders must be treated
in the same manner pursuant to this Section 2.10(b).

 

(c)           If,
after the date hereof, the adoption of any applicable law, rule or regulation
regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any Governmental Authority, or
compliance by a Lender or its parent with any request or directive made or
adopted after the date hereof regarding capital adequacy (whether or not having
the force of law) of any such Governmental Authority, has or would have the
effect of reducing the rate of return on such Lender’s or its parent’s capital
or assets as a consequence of such Lender’s commitments or obligations
hereunder to a level below that which such Lender or its parent could have
achieved but for such adoption, effectiveness, change or compliance (taking
into consideration such Lender’s or its parent’s policies with respect to
capital adequacy), then from time to time, promptly after demand by such Lender
(with a copy to the Administrative Agent), the Borrower shall pay to such
Lender such additional amount or amounts as will compensate such Lender or its
parent for such reduction, it being understood and agreed, however, that a
Lender shall not be entitled to such compensation as a result of such Lender’s
compliance with, or pursuant to any request or directive to comply with, any
such law, rule or regulation as in effect on the date hereof.  Each Lender, upon determining in good faith
that any additional amounts will be payable pursuant to this
Section 2.10(c), will give prompt written notice thereof to the Borrower,
which notice shall set forth in reasonable detail the basis of the calculation
of such additional amounts, although the failure to give any such notice shall
not, subject to Section 2.13, release or diminish any of the Borrower’s
obligations to pay additional amounts pursuant to this Section 2.10(c)
upon receipt of such notice.

 

2.11        Compensation.

 

If
(a) any payment of principal of any LIBOR Loan, or any continuation of any
LIBOR Loan, is made by the Borrower (or a replacement Lender in the case of
Section 11.7) to or for the 

 

20

 

account of a
Lender other than on the last day of the Interest Period for such LIBOR Loan
pursuant to Section 2.5, 2.6, 2.10, 4.1 or 11.7, as a result of
acceleration of the maturity of the Revolving Credit Loans pursuant to
Article 9 or for any other reason, (b) any Borrowing of LIBOR Loans
is not made as a result of a withdrawn Notice of Borrowing, (c) any ABR
Loan is not converted into a LIBOR Loan as a result of a withdrawn Notice of
Continuation, (d) any LIBOR Loan is not continued as a LIBOR Loan as a
result of a withdrawn Notice of Continuation or (e) any prepayment of
principal of any LIBOR Loan is not made as a result of a withdrawn notice of
prepayment pursuant to Section 4.1, the Borrower shall, after receipt of a
written request by such Lender (which request shall set forth in reasonable
detail the basis for requesting such amount), pay to the Administrative Agent
for the account of such Lender any amounts required to compensate such Lender
for any additional losses, costs or expenses that such Lender may reasonably
incur as a result of such payment, failure to convert, failure to continue or
failure to prepay, including any loss, cost or expense (excluding loss of
anticipated profits) actually incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by any Lender to fund or
maintain such LIBOR Loan.

 

2.12        Change of Lending Office.

 

Each Lender
agrees that, upon the occurrence of any event giving rise to the operation of
Section 2.10(a)(ii), 2.10(a)(iii), 2.10(b) or 4.3 with respect to such
Lender, it will, if requested by the Borrower, use reasonable efforts (subject
to overall policy considerations of such Lender) to designate another lending
office for any Revolving Credit Loans affected by such event; provided that
such designation is made on such terms that such Lender and its lending office
suffer no economic, legal or regulatory disadvantage, with the object of
avoiding the consequence of the event giving rise to the operation of any such
Section.  Nothing in this
Section 2.12 shall affect or postpone any of the obligations of the
Borrower or the right of any Lender provided in Section 2.10 or 4.3.

 

2.13        Notice of Certain Costs.

 

Notwithstanding
anything in this Agreement to the contrary, to the extent any notice required
by Section 2.10, 2.11 or 4.3 is given by any Lender more than 180 days
after such Lender has knowledge (or should have had knowledge) of the
occurrence of the event giving rise to the additional cost, reduction in
amounts, loss, tax or other additional amounts described in such Sections, such
Lender shall not be entitled to compensation under Section 2.10, 2.11 or
4.3, as the case may be, for any such amounts incurred or accruing prior to the
giving of such notice to the Borrower.

 

ARTICLE 3

FEES; COMMITMENTS

 

3.1          Fees.

 

(a)           The
Borrower agrees to pay to the Administrative Agent, for the account of each
Lender (in each case pro rata
according to the respective Available Revolving Credit Commitments of all such
Lenders), a commitment fee for each day from and including the Closing Date to
but excluding the Revolving Credit Maturity Date on the average daily closing 

 

21

 

balances of the unused amount of the Total Revolving
Credit Commitment.  Such commitment fee
shall be payable in arrears (i) on the last Business Day of each of March, June,
September and December (for the three-month period (or portion thereof) ended
on such day) and (ii) on the Revolving Credit Maturity Date (for the period
ended on such date for which no payment has been received pursuant to
clause (i) above), and shall be computed during such period at the rate of
0.50% per annum on the average daily closing balances of the unused amount of
the Total Revolving Credit Commitment. 
Notwithstanding the foregoing, the Borrower shall not be obligated to
pay any amounts to any Defaulting Lender pursuant to this Section 3.1.

 

(b)           The
Borrower agrees to pay to the Administrative Agent, for the benefit of the
Administrative Agent, the fees for acting as administrative agent in the
amounts and on the dates previously agreed to in writing by the Borrower and
the Administrative Agent, as amended from time to time by agreement between the
Administrative Agent and the Borrower.

 

(c)           The
Borrower agrees to pay on the Closing Date to the Arranger, for the benefit of
the Lenders, the fees in the amounts previously agreed to in writing by the
Borrower and the Arranger and referred to in the term sheet for the financing
contemplated hereby.

 

3.2          Voluntary Reduction of
Revolving Credit Commitments.

 

Upon at least two
Business Days’ prior written notice (or telephonic notice promptly confirmed in
writing) to the Administrative Agent at the Administrative Agent’s Office
(which notice the Administrative Agent shall promptly transmit to each of the
Lenders), the Borrower shall have the right, without premium or penalty, on any
day, to permanently terminate or reduce the Total Revolving Credit Commitment
in whole or in part; provided that (i) any such reduction shall apply
proportionately and permanently to reduce the Revolving Credit Commitment of each
of the Lenders, (ii) any partial reduction pursuant to this
Section 3.2 shall be in the amount of at least $1,000,000 and (iii) after
giving effect to any such partial reduction of the Total Revolving Credit
Commitment, the Total Revolving Credit Commitment shall be at least $5,000,000.

 

3.3          Commitment
Increases.

 

(a)           In
the event that the Borrower wishes to increase the Total Revolving Credit
Commitment, it shall notify the Administrative Agent in writing of the amount
(the “Offered Increase Amount”) of
such proposed increase (such notice, a “Commitment
Increase Notice”).

 

(b)           The
Borrower may, at its election, (i) offer one or more of the Lenders the
opportunity to participate in all or a portion of the Offered Increase Amount
pursuant to paragraph (d) below and/or (ii) with the consent of the
Administrative Agent (which consent shall not be unreasonably withheld), offer
one or more additional banks, financial institutions or other entities the
opportunity to participate in all or a portion of the Offered Increase Amount
pursuant to paragraph (c) below.  Each
Commitment Increase Notice shall specify which Lenders and/or banks, financial
institutions or other entities the Borrower desires to participate in such Commitment
Increase.  The Borrower or, if requested
by the Borrower, the Administrative Agent, will notify such Lenders and/or
banks, financial institutions or other entities of such offer.

 

22

 

(c)           Any
additional bank, financial institution or other entity which the Borrower
selects to offer participation in the increased Commitments and which elects to
become a party to the Agreement and provide a Commitment in an amount so
offered and accepted by it pursuant to Section 3.3(a)(ii) shall execute a New
Lender Supplement (each a “New Lender
Supplement”) with the Borrower and the Administrative Agent,
substantially in the form of Exhibit E, whereupon such bank, financial
institution or other entity (herein called a “New
Lender”) shall become a Lender for all purposes and to the same
extent as if originally a party hereto and shall be bound by and entitled to
the benefits of this Agreement, and Schedule I shall be deemed to be amended to
add the name and Commitment of such New Lender.

 

(d)           Any
Lender which accepts an offer to it by the Borrower to increase its Commitment
pursuant to Section 3.3(b)(i) shall, in each case, execute a Commitment
Increase Supplement (each a “Commitment
Increase Supplement”) with the Borrower and the Administrative
Agent, substantially in the form of Exhibit F, whereupon such Lender shall be
bound by and entitled to the benefits of this Agreement with respect to the
full amount of its Commitment as so increased, and Schedule I shall be deemed
to be amended to increase the Commitment of such Lender.

 

(e)           If
on the date upon which a bank, financial institution or other entity becomes a
New Lender pursuant to subsection 3.3(c) or a Lender increases its Commitment
pursuant to Section 3.3(d), there is an unpaid principal amount of Revolving
Credit Loans, the Borrower shall borrow Revolving Credit Loans from the Lenders
and/or (subject to compliance by the Borrower with Section 2.11) prepay
Revolving Credit Loans of the Lenders such that, after giving effect thereto,
the Revolving Credit Loans (including, without limitation, the Types thereof
and Interest Periods with respect thereto) shall be held by the Lenders
(including for such purposes the New Lenders) pro rata according to their
respective Revolving Credit Commitment Percentages.

 

(f)            Notwithstanding
anything to the contrary in this Section 3.3, prior to each New Lender
Supplement and Commitment Increase Supplement becoming effective, and as
condition precedents to such effectiveness, (i) the Borrower shall issue to the
Administrative Agent additional First Mortgage Bonds, Series B in such
aggregate principal amount as shall be required in order to cause the aggregate
face amount of First Mortgage Bonds, Series B held by the Administrative Agent
to be at least equal to the Total Revolving Credit Commitment after giving
effect to such effectiveness, (ii) the Borrower shall furnish to the
Administrative Agent copies of all documents required to be delivered to the
trustee under the Second Supplemental Indenture in connection with the issuance
of such First Mortgage Bonds, Series B and (iii) the Borrower shall furnish to
the Administrative Agent such evidence of legal and corporate authority
(including the approval by [FERC] and legal opinions from counsel to the
Borrower) as the Administrative Agent may request in connection with such New
Lender Supplement or Commitment Increase Supplement, as the case may be.  Notwithstanding anything to the contrary in
this Section 3.3, in no event shall any transaction effected pursuant to this
subsection cause the Total Revolving Credit Commitment to exceed $25,000,000 or
to increase in an amount of less than $1,000,000.

 

(g)           Both
on the date that the Borrower delivers a Commitment Increase Notice and the
date that the Total Revolving Credit Commitment is increased as a result
thereof, the 

 

23

 

Borrower shall be deemed to represent and warrant that
(both before and immediately after giving effect to such increase) all
representations and warranties made by the Borrower herein are true and correct
and no Default or Event of Default exists.

 

3.4          Mandatory
Termination of Commitments.

 

The Total
Revolving Credit Commitment shall terminate at 5:00 p.m. (New York time)
on the Revolving Credit Maturity Date.

 

ARTICLE 4

PAYMENTS

 

4.1          Prepayments.

 

The Borrower shall
have the right to prepay any Borrowing, without premium or penalty, in whole or
in part at any time and from time to time. 
Such prepayment of Revolving Credit Loans shall be subject to the
following conditions: (a) the Borrower shall give the Administrative Agent
at the Administrative Agent’s Office written notice (or telephonic notice
promptly confirmed in writing) of its intent to make such prepayment, the
amount of such prepayment and (in the case of LIBOR Loans) the specific
Borrowing(s) to be prepaid, which notice shall be given by the Borrower no
later than 10:00 a.m. (New York time) three Business Days prior to the
date of such prepayment and shall promptly be transmitted by the Administrative
Agent to each of the Lenders; (b) each partial prepayment shall be in an
amount that is a multiple of $100,000 and in an aggregate principal amount of
at least $5,000,000; provided that no partial prepayment of LIBOR Loans made
pursuant to a single Borrowing shall reduce the outstanding LIBOR Loans made
pursuant to such Borrowing to an amount less than the Minimum Borrowing Amount
for LIBOR Loans; and (c) any prepayment of LIBOR Loans pursuant to this
Section 4.1 on any day other than the last day of an Interest Period
applicable thereto shall be subject to compliance by the Borrower with the
applicable provisions of Section 2.11; provided further that at the
Borrower’s election in connection with any prepayment pursuant to this
Section 4.1, such prepayment shall not be applied to any Revolving Credit
Loan of a Defaulting Lender.  Each prepayment of a Borrowing shall be
applied ratably to the Revolving Credit Loans included in the prepaid Borrowing.

 

4.2          Method and Place of
Payment.

 

(a)           Except
as otherwise specifically provided herein, all payments to be made by the
Borrower under this Agreement shall be made, without set-off, counterclaim or
deduction of any kind, to the Administrative Agent for the ratable account
of all the Lenders not later than 12:00 Noon (New York time) on the date when
due.  Such payments shall be made in
immediately available funds at the Funding Office, it being understood that
written or facsimile notice by the Borrower to the Administrative Agent to make
a payment from the funds in the Borrower’s account at the Funding Office shall
constitute the making of such payment to the extent of such funds held in such
account.  The Administrative Agent will
thereafter cause to be distributed on the same day (if payment was actually
received by the Administrative Agent prior to 2:00 p.m. (New York time) on such
day, otherwise the next Business Day) like funds relating to the 

 

24

 

payment of principal or interest or Fees ratably to
the Lenders entitled thereto.  A payment
shall be deemed to have been made by the Administrative Agent on the date on
which it is required to be made under this Agreement if the Administrative
Agent has, on or before such date, taken steps to make such payment in
accordance with the regulations or operating procedures of the clearing or
settlement system used by the Administrative Agent in order to make such
payment.

 

(b)           Any
payments under this Agreement that are made later than 2:00 p.m. (New York
time) shall be deemed to have been made on the next succeeding Business
Day.  Whenever any payment to be made
hereunder shall be stated to be due on a day that is not a Business Day, the
due date thereof shall be extended to the next succeeding Business Day and,
with respect to payments of principal, interest shall be payable during such
extension at the applicable rate in effect immediately prior to such extension.

 

4.3          Net Payments.

 

(a)           (i)            All
payments made by the Borrower under each Credit Document shall be made free and
clear of, and without deduction or withholding for or on account of, any
current or future income, stamp or other taxes, levies, imposts, duties,
charges, fees, deductions or withholdings, now or hereafter imposed, levied,
collected, withheld or assessed by any Governmental Authority, excluding (i)
net income taxes and franchise taxes (imposed in lieu of net income taxes)
imposed on the Administrative Agent or any Lender and (ii) any taxes imposed on
the Administrative Agent or any Lender as a result of a current or former
connection between the Administrative Agent or such Lender and the jurisdiction
of the Governmental Authority imposing such tax or any political subdivision or
taxing authority thereof or therein (other than any such connection arising
solely from the Administrative Agent or such Lender having executed, delivered
or performed its obligations or received a payment under, or enforced, this
Agreement) (“Taxes”) except to the extent that
such deduction or withholding is required by any applicable law, as modified by
the administrative practice of any relevant Governmental Authority then in
effect.  If any such Taxes are required
to be withheld from any amounts payable to the Administrative Agent or any
Lender hereunder, the Borrower shall:

 

(A)          promptly
notify the Administrative Agent of such requirement;

 

(B)           promptly
pay to the relevant Governmental Authority when due the full amount required to
be deducted or withheld (including the full amount of Taxes required to be
deducted or withheld from any additional amount paid by such Borrower to the
Administrative Agent or such Lender under this Section 4.3(a);

 

(C)           as
promptly as possible thereafter, forward to the Administrative Agent and such
Lender an official receipt (or a certified copy), or other documentation
reasonably acceptable to the Administrative Agent and such Lender, evidencing
such payment to such Governmental Authority; and

 

(D)          pay
to the Administrative Agent or such Lender, in addition to the payment to which
the Administrative Agent or such Lender is otherwise entitled under this
Agreement, such additional amount as is necessary to ensure that the 

 

25

 

net amount actually
received by the Administrative Agent or such Lender (free and clear of any such
Taxes, whether assessed against the Borrower, the Administrative Agent or such
Lender) will equal the full amount the Administrative Agent or such Lender
would have received had no such deduction or withholding been required.

 

(ii)           If
the Borrower fails to pay to the relevant Governmental Authority when due any
Taxes that it was required to deduct or withhold under this Section 4.3(a) in
respect of any payment to or for the benefit of the Administrative Agent or any
Lender under this Agreement or fails to furnish the Administrative Agent or
such Lender, as applicable, with the documentation referred to in Section
4.3(a) when required to do so, the Borrower shall forthwith on demand fully
indemnify the Administrative Agent or such Lender for any incremental taxes,
interest, costs or penalties that may become payable by the Administrative
Agent or such Lender as a result of such failure.

 

(iii)          The
Borrower’s obligations under this Section 4.3(a) shall survive the termination
of this Agreement and the payment of the Revolving Credit Loans and all other
amounts payable hereunder.

 

(b)           Notwithstanding
Section 4.3(a), the Borrower shall not be required to indemnify or pay any
additional amounts in respect of withholding tax applicable to any amount payable
under this Agreement pursuant to Section 4.3(a) above to any Non-U.S.
Lender, except if any such Revolving Credit Loans were assigned, participated
or transferred to such Non-U.S. Lender at the request of the Borrower or were
assigned, participated or transferred to such Non-U.S. Lender following the
occurrence of and during the continuance of an Event of Default pursuant to
Section 9.1 or 9.5.

 

(c)           Each
Non-U.S. Lender shall:

 

(i)            deliver
to the Borrower and the Administrative Agent two copies of either (x) in the
case of a Non-U.S. Lender claiming exemption from U.S. Federal withholding tax
under Section 871(h) or 881(c) of the Code with respect to payments of “portfolio
interest”, United States Internal Revenue Service Form W-8BEN, (together with a
certificate representing that such Non-U.S. Lender is not a bank for purposes
of Section 881(c) of the Code, is not a 10-percent shareholder (within the
meaning of Section 871(h)(3)(B) of the Code) of the Borrower and is not a
controlled foreign corporation related to the Borrower (within the meaning of
Section 864(d)(4) of the Code)), or (y) Internal Revenue Service Form
W-8BEN or W-8ECI, in each case properly completed and duly executed by such
Non-U.S. Lender claiming complete exemption from, or reduced rate of, U.S.
Federal withholding tax on payments by the Borrower under this Agreement;

 

(ii)           deliver
to the Borrower and the Administrative Agent two further copies of any such
form or certification (or any applicable successor form) on or before the date
that any such form or certification expires or becomes obsolete and after the
occurrence of any event requiring a change in the most recent form previously
delivered by it to the Borrower; and

 

26

 

(iii)          obtain
such extensions of time for filing and complete such forms or certifications as
may reasonably be requested in writing by the Borrower or the Administrative
Agent;

 

unless, in any such case, any change in treaty, law or
regulation, has occurred prior to the date on which any such delivery would
otherwise be required that renders any such form inapplicable or would prevent
such Lender from duly completing and delivering any such form with respect to
it and such Lender so advises the Borrower and the Administrative Agent.  Each Person that shall become a Participant
pursuant to Section 11.6 or a Lender pursuant to Section 11.6 shall, upon the
effectiveness of the related transfer, be required to provide all the forms and
statements required pursuant to this Section 4.3(c), provided that in the case
of a Participant such Participant shall furnish all such required forms and
statements to the Lender from which the related participation shall have been
purchased.

 

(d)           If
the Borrower determines in good faith that a reasonable basis exists for
contesting any taxes for which indemnification has been demanded hereunder, the
relevant Lender or the Administrative Agent, as applicable, shall cooperate
with the Borrower in challenging such taxes at the Borrower’s expense if so
requested by the Borrower.  If any Lender
or the Administrative Agent, as applicable, receives a refund of, or credit
for, a Tax for which a payment has been made by the Borrower pursuant to this
Agreement, which refund or credit in the good faith judgment of such Lender or
the Administrative Agent, as the case may be, is attributable to such payment
made by the Borrower, then the Lender or the Administrative Agent, as the case
may be, shall reimburse the Borrower for such amount as the Lender or the
Administrative Agent, as the case may be, determines to be the proportion of
the refund or credit as will leave it, after such reimbursement, in no better
or worse position than it would have been in if the payment had not been
required.  A Lender or Administrative
Agent shall claim any refund or credit that it determines is available to it,
unless it concludes in its reasonable discretion that it would be adversely
affected by making such a claim.  Neither
such Lender nor the Administrative Agent shall be obliged to disclose any
information regarding its tax affairs or computations to the Borrower in
connection with this paragraph (d) or any other provision of this
Section 4.3.

 

4.4          Computations
of Interest and Fees.

 

(a)           Interest
on LIBOR Loans, ABR Loans accruing interest at the Federal Funds Effective Rate
and Fees accruing pursuant to Section 3.1(a) shall be calculated on the basis
of a 360 day year for the actual days elapsed.  Interest on all other ABR Loans and interest
on overdue interest shall be calculated on the basis of a 365-day year for the
actual days elapsed.

 

(b)           All
interest payments to be made under this Agreement shall be paid without
allowance or deduction for deemed re-investment or otherwise, both before and
after maturity and before and after default and/or judgment, if any, until
payment of the amount on which such interest is accruing, and interest will
accrue on overdue interest, if any.

 

(c)           The
amount of costs and expenses required to be paid or reimbursed by the Borrower
pursuant to Section 11.5 or any other provision of this Agreement or any
other Credit

 

27

Document
shall bear interest until paid, as well after as before demand, default,
maturity and judgment, at the highest rate provided for in Section 2.8(c).

 

(d)           If interest is not paid on the indebtedness
of the Borrower to the Lenders hereunder, or any part thereof, as and when
interest is due and payable hereunder, unpaid interest shall bear interest
until paid, as well after as before demand, default, maturity and judgment, at
the rates provided for in Section 2.8(c).

 

4.5           Payments
made under the First Mortgage Bonds, Series B

 

(a)           All payments of
principal of First Mortgage Bonds, Series B made to the Administrative Agent
shall be applied to the payment of the principal amount of the Revolving Credit
Loans then due and payable as if such payment were made by the Borrower
hereunder.

 

(b)           All
payments of interest of First Mortgage Bonds, Series B made to the
Administrative Agent shall be applied (i) first, to the payment of interest on
Revolving Credit Loans, to the extent such interest is then due and payable
hereunder, as if such payment were made by the Borrower hereunder, (ii) second,
to the payment of fees hereunder, to the extent such fees are then due and
payable hereunder, as if such payment were made by the Borrower hereunder and
(iii) third, to the payment of any other amounts then due and payable by the
Borrower hereunder, as if such payment were made by the Borrower hereunder
(and, if insufficient are available to pay all such other amounts then due and
payable, such payment shall be applied ratably to the payment of such other
amounts then due and payable.

 

ARTICLE 5

CONDITIONS PRECEDENT

 

5.1           Conditions
Precedent to Initial Borrowing.

 

The initial Borrowing
under this Agreement is subject to the satisfaction of the following conditions
precedent:

 

(a)           Credit Documents.  The
Administrative Agent shall have received (i) this Agreement, executed and
delivered by a duly authorized officer of each of the parties hereto and
(ii) a duly issued and authenticated First Mortgage Bond, Series B in the
aggregate principal amount of $15,000,000

 

(b)           Closing Certificate. 
The Administrative Agent shall have received a certificate of the
Borrower, dated the Closing Date, substantially in the form of Exhibit C, with
appropriate insertions, executed by the President or any Vice President and the
Secretary or any Assistant Secretary of the Borrower.

 

(c)           Proceedings of the Borrower. 
The Administrative Agent shall have received a copy of the resolutions,
in form and substance satisfactory to the Administrative Agent, of the Board of
Directors of each of the Borrower (or a duly authorized committee thereof)
authorizing (a) the execution, delivery and performance of

 

28

 

the Credit
Documents (and any agreements relating thereto) to which it is a party and
(b) the extensions of credit contemplated hereunder.

 

(d)           Organic Documents. 
The Administrative Agent shall have received true and complete copies of
the articles of incorporation and by-laws of the Borrower and a certificate of
good standing with respect to the Borrower issued by its jurisdiction of
incorporation or organization.

 

(e)           Fees.  The
Administrative Agent shall have received the fees referred to in Section 3.1(c)
to be received on the Closing Date.

 

(f)            Legal Opinions.  The
Administrative Agent shall have received in form and substance reasonably
satisfactory to it the executed legal opinions of (i) counsel to the Borrower
with respect to the status and capacity of the Borrower, the due authorization,
execution and delivery of the Credit Documents by the Borrower, the validity,
binding effect, legality and enforceability of the Credit Documents, compliance
with the Organic Documents of the Borrower and with applicable law and such
other matters as the Arranger may reasonably request in form and substance
satisfactory to the Arranger and (ii) special Michigan counsel to the Borrower
with respect to the status and capacity of the Borrower, the due authorization,
execution and delivery of the Credit Documents by the Borrower, the validity,
binding effect, legality and enforceability of the Credit Documents, compliance
with the Organic Documents of the Borrower and with applicable law and such
other matters as the Arranger may reasonably request in form and substance
satisfactory to the Arranger.

 

(g)           Opinion of Special New York
Counsel to the Arranger.  An opinion, in form and substance reasonable
satisfactory to the Arranger of Milbank, Tweed, Hadley & McCloy, LLP,
special New York counsel to the Arranger (and the Arranger hereby instructs
such counsel to deliver such
opinion to the Lenders).

 

(h)           Repayment of Existing Indebtedness.  Evidence that the principal of and interest on, and all other amounts
owing in respect of, the Indebtedness (including any contingent or other
amounts payable in respect of letters of credit) outstanding under the Credit
Agreement dated as of February 28, 2003 between the Borrower, the lenders
party thereto, and Canadian Imperial bank of Commerce, as the administrative
agent, shall have been repaid on the Closing Date, that any commitments to
extend credit under the agreements or instruments relating to such Indebtedness
shall have been canceled or terminated and that all guarantees in respect of,
and all Liens securing, any such Indebtedness shall have been released (or
arrangements for such release satisfactory to the Required Lenders shall have
been made).

 

5.2           Conditions
Precedent to All Credit Events.

 

The agreement of each
Lender to make any Revolving Credit Loan requested to be made by it on any date
(including its initial Revolving Credit Loans) is subject to the satisfaction
of the following conditions precedent:

 

29

 

(a)           No Default; Representations and Warranties True and Correct.  At the time of each Credit Event and also
after giving effect thereto (i) there shall exist no Default or Event of
Default and (ii) all representations and warranties made by the Borrower
contained herein or in the other Credit Documents shall be true and correct in
all material respects with the same effect as though such representations and
warranties had been made on and as of the date of such Credit Event (except
where such representations and warranties expressly relate to an earlier date,
in which case such representations and warranties shall have been true and
correct in all material respects as of such earlier date).

 

(b)           Notice
of Borrowing. 
Prior to the making of each Revolving Credit Loan, the
Administrative Agent shall have received a Notice of Borrowing (whether in
writing or by telephone) meeting the requirements of Section 2.3.

 

The acceptance of the
benefits of each Credit Event shall constitute a representation and warranty by
the Borrower to each of the Lenders that all the applicable conditions
specified above exist as of that time.

 

ARTICLE 6

REPRESENTATIONS AND WARRANTIES

 

In order to induce the
Lenders to enter into this Agreement and to make the Revolving Credit Loans as
provided for herein, the Borrower (as to itself and each of its Subsidiaries)
makes the following representations and warranties to, and agreements with, the
Lenders, all of which shall survive the execution and delivery of this
Agreement and the making of the Revolving Credit Loans.

 

6.1           Organizational
Status.

 

The Borrower is validly
organized and existing and in good standing under the laws of the state or
jurisdiction of its incorporation or organization, is duly qualified to do
business and is in good standing as a foreign entity in each jurisdiction where
the nature of its business requires such qualification (except where the
failure to be so qualified could not reasonably be expected to result in a
Material Adverse Effect), and has full power and authority and holds all
requisite governmental licenses, permits and other approvals to enter into and
perform its obligations under each Credit Document to which it is a party, to
own and hold under lease its property and to conduct its business substantially
as currently conducted by it.

 

6.2           Capacity,
Power and Authority.

 

The Borrower has the
capacity, power and authority to execute, deliver and carry out the terms and
provisions of the Credit Documents to which it is a party and has taken all
necessary action, partnership, corporate or otherwise, to authorize the
execution, delivery and performance of the Credit Documents to which it is a
party.  The Borrower has duly executed
and delivered each Credit Document to which it is a party and each such Credit
Document constitutes the legal, valid and binding obligation of the Borrower
enforceable in accordance with its terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency or similar laws affecting creditors’
rights generally and subject to general principles of equity.

 

30

 

6.3           No Violation.

 

Neither the execution,
delivery nor performance by the Borrower of the Credit Documents to which it is
a party nor compliance with the terms and provisions thereof and the other
transactions contemplated therein will (a) contravene any applicable
provision of any material law, statute, rule, regulation, order, writ,
injunction or decree of any court or Governmental Authority, (b) result in
any breach of any of the terms, covenants, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of (or the
obligation to create or impose) any Lien upon any of the property or assets of
the Borrower or any of its Subsidiaries pursuant to, the terms of any material
indenture, loan agreement, lease agreement, mortgage, deed of trust, agreement
or other material instrument to which the Borrower or any of its Subsidiaries
is a party or by which it or any of its property or assets is bound or
(c) violate any provision of the Borrower’s Organic Documents.

 

6.4           Litigation.

 

There are no actions,
suits or proceedings pending or, to the knowledge of the Borrower or any
Subsidiary (after due internal inquiry), threatened with respect to the
Business, the Borrower or any of its Subsidiaries that could reasonably be
expected to result in a Material Adverse Effect.

 

6.5           Governmental
Approvals.

 

No order, consent,
approval, license, authorization, or validation of, or filing, recording or
registration with, or exemption by, or notice to, any Governmental Authority
(other than those that have been, or on the Closing Date will be, obtained and
in full force and effect) is required to authorize or is required in connection
with (a) the execution, delivery and performance of any Credit Document or
(b) the legality, validity, binding effect or enforceability of any Credit
Document.

 

6.6           True
and Complete Disclosure.

 

To the knowledge of the
Borrower, after due inquiry:

 

(a)           All
factual information and data (taken as a whole) heretofore or contemporaneously
furnished (other than any projections and pro forma financial information), by
or on behalf of the Borrower or any of its Subsidiaries or any of their respective authorized
consultants, agents or representatives in writing to the Administrative Agent
and/or any Lender on or before the Closing Date (including all information
contained in the Credit Documents) for purposes of or in connection with this
Agreement or any transaction contemplated herein was true and complete in all
material respects on the date as of which such information or data is dated or
certified and did not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements contained
therein, taken as a whole, not materially misleading at such time in light of
the circumstances under which such statements were made.

 

31

 

(b)           The
projections and pro forma financial information contained in the information
and data referred to in paragraph (a) above were prepared in good faith
based upon assumptions believed by such Persons to be reasonable at the time
made, it being recognized by the Lenders that such projections as to future
events are not to be viewed as facts and that actual results during the period
or periods covered by any such projections may differ from the projected
results.

 

6.7           Financial
Condition; Financial Statements.

 

The Borrower has
heretofore furnished to the Lenders its consolidated balance sheet and
statements of income, stockholders’ equity and cash flows as of and for the
fiscal year ended December 31, 2002, reported on by independent public
accountants of recognized national standing. 
Such financial statements present fairly in all material respects the
consolidated financial position of the Borrower and its Subsidiaries at the
respective dates of said statements and the results of operations for the
respective periods covered thereby.  All
such financial statements have been prepared in accordance with GAAP
consistently applied except to the extent provided in the notes to said
financial statements.  All balance
sheets, all statements of income and of cash flow and all other financial
information of each of the Borrower and its Subsidiaries furnished pursuant to Section 7.1
have been and will for periods following the Closing Date be prepared in
accordance with GAAP consistently applied, and do or will present fairly the
consolidated financial condition of the Persons covered thereby as at the dates
thereof and the results of their operations for the periods then ended.

 

6.8           Tax
Returns and Payments.

 

Each of the Borrower and
its Subsidiaries has filed all material tax returns, domestic and foreign,
required to be filed by it and has paid all material taxes and assessments
payable by it that have become due, other than those not yet delinquent or
contested in good faith.  The Borrower
and each of its respective Subsidiaries have paid, or have provided adequate
reserves (in the good faith judgment of the management of the Borrower) in
accordance with GAAP for the payment of, all material income taxes applicable
for all prior fiscal years and for the current fiscal year to the Closing Date.

 

6.9           Environmental Matters.

 

Except as set forth in Schedule II:

 

(a)           Other
than instances of noncompliance that could not reasonably be expected to have a
Material Adverse Effect: (i) the Borrower and each of its Subsidiaries are in
compliance with all Environmental Laws in all jurisdictions in which the
Borrower and each of its Subsidiaries are currently doing business (including
having obtained all material permits required under Environmental Laws) and
(ii) the Borrower will comply and cause each of its Subsidiaries to comply with
all such Environmental Laws (including all permits required under Environmental
Laws); and

 

(b)           Neither
the Borrower nor any of its Subsidiaries has treated, stored, transported or
disposed of Hazardous Materials at or from any currently or formerly

 

32

 

owned Real Estate
or facility relating to its business in a manner that could reasonably be
expected to have a Material Adverse Effect.

 

6.10         Properties.

 

The Borrower and each of
its Subsidiaries has good title to or a leasehold or easement interest in all
of its properties that are necessary for the operation of its respective
business as currently conducted and as proposed to be conducted, free and clear
in each case of all Liens (other than any Liens permitted by this Agreement)
except where the failure to have such good title could not reasonably be
expected to have a Material Adverse Effect.

 

6.11         Pension and Welfare Plans.

 

During the twelve-consecutive-month
period prior to the Closing Date and prior to the date of any Credit Event
hereunder, except as could not reasonably be expected have a Material Adverse
Effect, (a) no steps have been taken to terminate any Pension Plan, (b) no contribution
failure has occurred with respect to any Pension Plan sufficient to give rise
to a Lien under Section 302(f) of ERISA, (c) no condition exists or event
or transaction has occurred with respect to any Pension Plan which might result
in the incurrence by the Borrower or any member of the Controlled Group of any
liability, fine or penalty and (d) except as disclosed in Schedule III,
neither the Borrower nor any member of the Controlled Group has any contingent
liability with respect to any post-retirement benefit under a Welfare Plan,
other than liability for continuation coverage described in Part 6 of Title I
of ERISA.

 

6.12         Regulations
U and X.

 

Neither the making of any Revolving Credit
Loan hereunder nor the use of the proceeds thereof will violate the provisions
of F.R.S. Board Regulation U or Regulation X.

 

6.13         Investment
Company Act.

 

Neither the Borrower nor any of its
Subsidiaries is an “investment company” within the meaning of the Investment
Company Act of 1940, as amended.

 

6.14         No Material Adverse Change.

 

There has been no
material adverse change in the business, assets, operations, property or
financial condition of the Borrower and its Subsidiaries taken as a whole since
December 31, 2002.

 

6.15         Deemed
Repetition of Representations and Warranties.

 

The representations and
warranties set out in Section 6.1 to 6.15 inclusive will be deemed to be
repeated by the Borrower as of the date of each request for a new Borrowing by
the Borrower (including conversions and continuations of Borrowings) and as of
the date on which a Successor Borrower assumes all of the obligations of the
Borrower under the Credit Documents pursuant to Section 8.2(a) (but after
giving effect to such assumption), except to the extent that on or prior to
such date (a) the Borrower has advised the Administrative Agent in writing
of a

 

33

 

variation in any such
representation or warranty, and (b) the Required Lenders have approved
such variation, and except where such representations and warranties expressly
relate to an earlier date, in which case such representations and warranties
shall have been true and correct in all material respects as of such earlier
date.

 

ARTICLE 7

AFFIRMATIVE COVENANTS

 

The Borrower (on its own
behalf and on behalf of each of its Subsidiaries) hereby covenants and agrees
that on the Closing Date and thereafter, for so long as this Agreement is in
effect and until the Revolving Commitment Maturity Date:

 

7.1           Information
Covenants.

 

The Borrower will furnish
to each Lender and the Administrative Agent:

 

(a)           Annual Financial Statements. 
As soon as available and in any event on or before the date that is
90 days after the end of each fiscal year of the Borrower, the
consolidated balance sheet of the Borrower and its Subsidiaries as at the end
of such fiscal year and the related consolidated statement of operations and
cash flows for such fiscal year prepared in accordance with GAAP, setting forth
comparative consolidated figures for the preceding fiscal year, and certified
by independent chartered accountants of recognized national standing whose
opinion shall not be qualified as to the scope of audit or as to the status of
the Borrower or any of its Subsidiaries as a going concern, together in any
event with a certificate of such accounting firm stating that in the course of
its regular audit of the business of the Borrower and its Subsidiaries, which
audit was conducted in accordance with generally accepted auditing standards,
such accounting firm has obtained no knowledge of any Default or Event of
Default relating to Section 8.4 that has occurred and is continuing or, if
in the opinion of such accounting firm such a Default or Event of Default has
occurred and is continuing, a statement as to the nature thereof.

 

(b)           Quarterly Financial Statements.  As soon as available and in any event on or
before the date that is 45 days after the end of each of the first three Fiscal
Quarters in each fiscal year of the Borrower, the consolidated balance sheet of
the Borrower and its Subsidiaries as at the end of such Fiscal Quarter and the
related consolidated statement of operations for such Fiscal Quarter and for
the elapsed portion of the fiscal year ended with the last day of such Fiscal
Quarter, and the related consolidated statement of cash flows for such Fiscal
Quarter and for the elapsed portion of the fiscal year ended with the last day
of such Fiscal Quarter, and, other than any Fiscal Quarter ending during the
fiscal year 2003, setting forth comparative consolidated figures for the
related periods in the prior fiscal year or, in the case of such consolidated
balance sheet, for the last day of the prior fiscal year, and prepared in
accordance with GAAP, all of which shall be certified by an Authorized Officer
of the Borrower, subject to changes resulting from audit and normal year-end
audit adjustments.

 

34

 

(c)           Officer’s Certificates. 
At the time of the delivery of the financial statements provided for in
Sections 7.1(a) and (b), a certificate of an Authorized Officer of the
Borrower in substantially the form of Exhibit G (a “Compliance Certificate”) to the effect that no Default or
Event of Default exists or, if any Default or Event of Default does exist,
specifying the nature and extent thereof, which certificate shall be in form
and detail satisfactory to the Administrative Agent, acting reasonably, and
setting forth the calculations required to establish whether the Borrower was
in compliance with the provisions of Section 8.4 as at the end of such
fiscal year or period, as the case may be.

 

(d)           Notice of Default or Litigation.  Promptly after an Authorized Officer of the
Borrower or any of its Subsidiaries obtains knowledge thereof, notice of
(i) the occurrence of any event that constitutes a Default or Event of
Default, which notice shall specify the nature thereof, the period of existence
thereof and what action the Borrower proposes to take with respect thereto and
(ii) any litigation or governmental proceeding pending or threatened
against the Borrower or any of its Subsidiaries that could reasonably be
expected to result in a Material Adverse Effect, together with a certificate of
the Chief Financial Officer of the Borrower (in detail reasonably satisfactory
to the Administrative Agent) setting forth the calculations required to
establish whether the Borrower and its Subsidiaries are in pro forma compliance
with Section 8.4 of this Agreement.

 

(e)           Environmental Matters. 
Promptly after an Authorized Officer of the Borrower or any of its
Subsidiaries obtains knowledge or notice of any one or more of the following
environmental matters, unless such environmental matters would not,
individually or when aggregated with all other such matters, be reasonably
expected to result in a Material Adverse Effect:

 

(i)            Any
pending or threatened Environmental Claim against the Borrower or any of its
Subsidiaries or any Real Estate (as defined below);

 

(ii)           Any
condition or occurrence that (x) results in non-compliance by the Borrower
or any of its Subsidiaries with any applicable Environmental Law or
(y) could reasonably be anticipated to form the basis of an Environmental
Claim against the Borrower or any of its Subsidiaries or any Real Estate;

 

(iii)          Any
condition or occurrence on any Real Estate that could reasonably be anticipated
to cause such Real Estate to be subject to any restrictions on the ownership,
occupancy, use or transferability of such Real Estate under any Environmental
Law; and

 

(iv)          The
taking of any removal or remedial action in response to the actual or alleged
presence of any Hazardous Material on any Real Estate.

 

All
such notices shall describe in reasonable detail the nature of the claim,
investigation, condition, occurrence or removal or remedial action and
Borrower’s response thereto.  The term “Real Estate” shall mean land, buildings and improvements

 

35

 

owned
or leased by the Borrower or any of its Subsidiaries, but excluding all
operating fixtures and equipment, whether or not incorporated into
improvements.

 

(f)            Pension Plans.  Promptly after an Authorized Officer of the
Borrower or any of its Subsidiaries obtains knowledge thereof where the
liability, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect, notice of and copies of all documentation
relating to (i) the institution of any steps by any Person to terminate any
Pension Plan, (ii) the failure to make a required contribution to any Pension
Plan if such failure is sufficient to give rise to a Lien under Section 302(f)
of ERISA, (iii) the taking of any action with respect to a Pension Plan which
could result in the requirement that the Borrower or any of its Subsidiaries
furnish a bond or other security to such Pension Plan, or (iv) the occurrence
of any event with respect to any Pension Plan which could result in the
incurrence by the Borrower or any of its Subsidiaries of any material
liability, fine or penalty.

 

(g)           Other Information. 
Promptly upon filing thereof, copies of any filings or registration
statements with, and reports to, any Governmental Authority in any relevant
jurisdiction by the Borrower or any of its Subsidiaries pursuant to applicable
securities laws (other than amendments to any registration statement (to the
extent such registration statement, in the form it becomes effective, is
delivered to the Lenders), exhibits to any registration statement) and copies
of all financial statements, proxy statements, notices and reports that the
Borrower or any of its Subsidiaries shall send to the holders of any publicly
issued securities of the Borrower and/or any of its Subsidiaries in their
capacity as such holders (in each case to the extent not theretofore delivered
to the Lenders pursuant to this Agreement) and, with reasonable promptness,
such other information (financial or otherwise) as the Administrative Agent on
its own behalf or on behalf of any Lender may reasonably request in writing
from time to time.

 

7.2           Books, Record and Inspections.

 

The Borrower will, and
will cause each of its Subsidiaries to, (i) permit officers and designated
representatives of the Administrative Agent or the Required Lenders to visit
and inspect any of the properties or assets of the Borrower and its Subsidiaries
in whomever’s possession to the extent that it is within the Borrower’s or such
Subsidiary’s control to permit such inspection, and to examine the books of
account of the Borrower and any such Subsidiary and discuss the affairs,
finances and accounts of the Borrower and of any such Subsidiary with, and be
advised as to the same by, its and their officers and independent accountants,
and (ii) permit officers and designated representatives of Lenders to view
copies of contracts of the Borrower and its Subsidiaries (subject to reasonable
confidentiality arrangements established by the Borrower), all at such
reasonable times during normal business hours and intervals and to such
reasonable extent as the Administrative Agent, the Required Lenders or the Lenders,
as the case may be, may desire.

 

7.3           Maintenance of Insurance.

 

The Borrower will, and
will cause each of its Subsidiaries to, at all times maintain in full force and
effect, with insurance companies that the Borrower believes (in the good faith

 

36

 

judgment of the
management of the Borrower) are financially sound and responsible at the time
the relevant coverage is placed or renewed, insurance in at least such amounts
and against at least such risks (and with such risk retentions) as are usually
insured against in the same general area by companies engaged in the same or a
similar business.

 

7.4           Payment
of Taxes.

 

The Borrower will pay and
discharge, and will cause each of its Subsidiaries to pay and discharge, all
material taxes, assessments and governmental charges or levies imposed upon it
or upon its capital, income or profits, or upon any properties belonging to it,
prior to the date on which material penalties attach thereto, and all lawful
material claims that, if unpaid, could reasonably be expected to become a
material Lien upon any properties of the Borrower or any of its Subsidiaries;
provided that neither the Borrower nor any of its Subsidiaries shall be
required to pay any such tax, assessment, charge, levy or claim that is being
contested in good faith and by proper proceedings if it has maintained adequate
reserves (in the good faith judgment of the management of the Borrower) with
respect thereto in accordance with GAAP.

 

7.5           Organizational
Existence.

 

The Borrower will do, and
will cause each of its Subsidiaries to do, or cause to be done, all things
necessary to preserve and keep in full force and effect its existence and its
corporate or other organizational rights and authority, except to the extent
that the failure to do so could not reasonably be expected to have a Material
Adverse Effect; provided that Borrower and its Subsidiaries may consummate any
transaction permitted under Section 8.2.

 

7.6           Compliance
with Statutes, Obligations, etc.

 

The Borrower will, and
will cause each of its Subsidiaries to, comply with all applicable laws, rules,
regulations and orders (including Environmental Laws), except to the extent the
failure to do so could not reasonably be expected to have a Material Adverse
Effect.

 

7.7           Good
Repair.

 

The Borrower will, and
will cause each of its Subsidiaries to, ensure that its properties and
equipment used or useful in its business in whomever’s possession they may be
to the extent that it is within the Borrower’s or its Subsidiary’s control to
cause the same, are kept in good repair, working order and condition, normal
wear and tear excepted, and that from time to time there are made in such
properties and equipment all needful and proper repairs, renewals, replacements,
extensions, additions, betterments and improvements thereto, to the extent and
in the manner customary for companies in similar businesses and consistent with
third party leases, except in each case to the extent the failure to do so
could not be reasonably expected to have a Material Adverse Effect.

 

7.8           Transactions with Affiliates.

 

The Borrower will
conduct, and will cause each of its Subsidiaries to conduct, all transactions
with any of its Affiliates on terms that are substantially as favorable to the
Borrower or such Subsidiary as it would obtain in a comparable arm’s-length
transaction with a Person that

 

37

 

is not an Affiliate;
provided that the foregoing restrictions shall not apply to (a) the
payment of customary annual fees to the Permitted Holders for management,
consulting and financial services rendered to the Borrower and its Subsidiaries
and customary investment banking fees paid to the Sponsors for services
rendered to the Borrower and its Subsidiaries in connection with divestitures,
acquisitions, financings and other transactions (b) transactions in the
ordinary course of business at prices and on terms and conditions not less
favorable to the Borrower or such Subsidiary than could be obtained on an arm’s
length basis from unrelated third parties, (c) transactions between and among
the Borrower and its wholly owned Subsidiaries that do not involve any other
Affiliate and (d) transactions permitted by Section 8.4.

 

7.9           End of Fiscal Years; Fiscal Quarters.

 

The Borrower will, for
financial reporting purposes, cause (a) each of its, and each of its
Subsidiaries’, fiscal years to be comprised of twelve calendar months ending on
December 31 of each year and (b) each of its, and each of its Subsidiaries’,
Fiscal Quarters to end on dates consistent with such fiscal year-end; provided
that the Borrower may, upon written notice to the Administrative Agent, change
the financial reporting convention specified above to any other financial
reporting convention reasonably acceptable to the Administrative Agent, in
which case the Borrower and the Administrative Agent will, and are hereby
authorized by the Lenders to, make any adjustments to this Agreement that are
necessary in order to reflect such change in financial reporting.

 

7.10         Use of Proceeds.

 

The Borrower will use the
proceeds of all the Revolving Credit Loans only for the purposes set forth in Section 2.1(b).

 

7.11         Changes
in Business.

 

From the Closing Date,
the Borrower and its Subsidiaries taken as a whole will not fundamentally and
substantively alter the character of their business taken as a whole from the
business conducted by the Borrower and its Subsidiaries taken as a whole on the
Closing Date following the consummation of the Transactions and other business
activities incidental or related to any of the foregoing (the “Business”).

 

ARTICLE 8

NEGATIVE COVENANTS

 

The Borrower (on its own
behalf and on behalf of each of its Subsidiaries) hereby covenants and agrees
that on the Closing Date and thereafter until the Revolving Commitment Maturity
Date:

 

8.1           Limitation
on Liens.

 

The Borrower will not,
and will not permit any of its Subsidiaries to, create, incur, assume or suffer
to exist any Lien upon any property or assets of any kind (real or personal,
tangible or intangible) of the Borrower or any of its Subsidiaries, whether now
owned or hereafter acquired, except:

 

38

 

(a)           Permitted
Liens;

 

(b)           Liens
securing indebtedness incurred within 180 days of the acquisition, construction
or improvement of fixed or capital assets to finance the acquisition,
construction or improvement of such fixed or capital assets; provided that the
principal amount of such Indebtedness is not increased above the principal
amount thereof outstanding immediately prior to such refinancing, refunding,
renewal or extension;

 

(c)           Liens
existing on the Closing Date and as set out on Schedule IV;

 

(d)           Liens
existing on the assets of any Person that becomes a Subsidiary, or existing on
assets acquired; provided that such Liens attach at all times only to the same
assets that such Liens attached to and secure only the same Indebtedness that
such Liens secured, immediately prior to such acquisition;

 

(e)           (i) Liens
placed upon the Capital Stock or assets of any Subsidiary acquired to secure
Indebtedness of the Borrower or any Subsidiary incurred in connection with such
acquisition and (ii) Liens placed upon the assets of such Subsidiary
acquired pursuant to an acquisition to secure a guarantee by such Subsidiary of
any such Indebtedness of the Borrower or any Subsidiary;

 

(f)            the
replacement, extension or renewal of any Lien permitted by clauses (a) through
(e) above upon or in the same assets theretofore subject to such Lien or the
replacement, extension or renewal (without increase in the amount or change in
any direct or contingent obligor except to the extent otherwise permitted
hereunder) of the Indebtedness secured thereby; and

 

(g)           additional
Liens so long as the aggregate principal amount of the obligations so secured
during the term of this Agreement does not exceed $10,000,000 at any time
except with respect to the First Mortgage Bonds, Series B.

 

8.2           Limitation
on Fundamental Changes.

 

The Borrower will not
enter into any merger or consolidation, or liquidate, wind up or dissolve
itself (or suffer any liquidation or dissolution), or convey, sell, lease,
assign, transfer or otherwise dispose of, all or substantially all its business
units, assets or other properties, except that:

 

(a)           any
Subsidiary of the Borrower or any other Person may be merged or consolidated
(including by way of liquidation or winding up) with or into the Borrower;
provided that (i) the Borrower shall be the continuing or surviving entity or
the Person formed by or surviving any such merger or consolidation (if other
than the Borrower) shall be an entity organized or existing under the laws of
the United States or any State thereof (the Borrower or such Person, as the
case may be, being herein referred to as the “Successor
Borrower”), (ii) the Successor Borrower shall expressly assume all
the obligations of the Borrower under this Agreement and the other Credit
Documents pursuant to a supplement hereto or thereto in form and substance
reasonably satisfactory to the Administrative Agent, (iii) no Default or Event
of Default is then existing and no

 

39

 

Default or Event
of Default would result from the consummation of such merger or consolidation,
(iv) the Successor Borrower shall be in compliance, on a pro forma basis after
giving effect to such merger or consolidation, with the covenants set forth in Section 8.4
as such covenants are recomputed as at the last day of the most recently ended
Test Period under each such Section as if such merger or consolidation had
occurred on the first day of such Test Period and (v) the Borrower shall have
delivered to the Administrative Agent an officer’s certificate, in form and
substance reasonably satisfactory to the Administrative Agent, certifying the
compliance referred to in clause (iv) above and stating that such merger or
consolidation and such supplement to this Agreement comply with this Agreement
and a legal opinion (in form and substance reasonably satisfactory to the
Administrative Agent) with respect to the Credit Documents to be delivered, if
any, pursuant to clause (ii) above; provided further that if the foregoing are
satisfied, the Successor Borrower (if other than the Borrower) will succeed to,
and be substituted for, the Borrower under this Agreement; and

 

(b)           the
Borrower may enter into any merger or consolidation for the purpose of changing
its organizational form from a corporation to a limited liability company or
from a limited liability company to a corporation; provided that such change
has no adverse affect on the rights of the Finance Parties.

 

8.3           Limitation
on Dividends.

 

If any Default or Event
of Default then exists or would result therefrom, the Borrower will not declare
or pay any distributions (other than distributions payable solely in its
Capital Stock) or return any capital to its shareholders or make any other
distribution, payment or delivery of property or cash to its shareholders as
such, or redeem, retire, purchase or otherwise acquire, directly or indirectly,
for consideration, any of its Capital Stock or the Capital Stock of any direct
or indirect shareholder of the Borrower now or hereafter outstanding (or any
warrants for or options or stock appreciation rights in respect of any of its
Capital Stock), or set aside any funds for any of the foregoing purposes, or
permit any of its Subsidiaries to purchase or otherwise acquire for
consideration any Capital Stock of the Borrower, now or hereafter outstanding
(or any options or warrants or stock appreciation rights issued by such Person
with respect to its Capital Stock).

 

8.4           Debt
to Capitalization Ratio.

 

The Borrower will not
permit the Debt to Capitalization Ratio to be greater than 60% at any time on
or after the Closing Date.

 

40

 

ARTICLE 9

EVENTS OF DEFAULT

 

Each of the following
specified events or occurrences described in Sections 9.1 through 9.9 below
shall constitute an “Event of Default”:

 

9.1           Payments.

 

The Borrower shall
(a) default in the payment when due of any principal of the Revolving
Credit Loans or (b) default, and such default shall continue for five or
more days, in the payment when due of any interest on the Revolving Credit
Loans or any Fees or of any other amounts owing hereunder or under any other
Credit Document.

 

9.2           Representations,
etc.

 

Any representation,
warranty or statement made or deemed made by the Borrower herein or in the
First Mortgage Bonds, Series B or any certificate delivered or required to be
delivered pursuant hereto or thereto shall prove to be untrue in any material
respect on the date as of which made or deemed made (it being understood that,
for purposes of the foregoing, the truth of the representations and warranties
set forth in Section 6.6 shall be determined without reference to the
knowledge of the Borrower).

 

9.3           Covenants.

 

The Borrower shall
(a) default in the due performance or observance by it of any term,
covenant or agreement contained in Section 7.1(d), Section 7.11 or Article 8,
or (b) default in the due performance or observance by it of any term,
covenant or agreement (other than those referred to in Section 9.1 or 9.2
or clause (a) of this Section 9.3) contained in this Agreement, or
the First Mortgage Bonds, Series B and such default shall continue unremedied
for a period of at least 30 days after the receipt of written notice by
the Borrower from the Administrative Agent or the Required Lenders.

 

9.4           Default Under Other Agreements.

 

(a)           The Borrower or any of
its Subsidiaries shall (i) default in any payment with respect to any
Indebtedness, in excess of $15,000,000 in the aggregate, beyond the period of
grace, if any, provided in the instrument or agreement under which such
Indebtedness was created or (ii) default in the observance or performance
of any agreement or condition relating to any such Indebtedness or contained in
any instrument or agreement evidencing, securing or relating thereto beyond the
period of grace, if any, provided in the instrument or agreement under which such
Indebtedness was created, or any other event shall occur or condition exist,
the effect of which default or other event or condition is to cause, or to
permit the holder or holders of such Indebtedness (or a trustee or agent on
behalf of such holder or holders) to cause, any such Indebtedness to become due
prior to its stated maturity; or

 

(b)           without limiting the
provisions of clause (a) above, any such Indebtedness shall be declared to
be due and payable, or required to be prepaid other than by a regularly
scheduled required prepayment or as a mandatory prepayment, prior to the stated
maturity thereof.

 

41

 

9.5           Bankruptcy,
etc.

 

The Borrower or any
Subsidiary shall commence a voluntary case concerning itself under the Bankruptcy Code as now or hereafter
in effect, or any successor thereto or any similar legislation in any other
applicable jurisdiction (collectively, the “Bankruptcy
Code”); or an involuntary case is commenced against the Borrower or
any Subsidiary and the petition or application is not contested within 10 days
after commencement of the case; or an involuntary case is commenced against the
Borrower or any Subsidiary and the petition or application is not dismissed
within 45 days after commencement of the case; or a receiver, trustee,
liquidator, custodian or similar official is appointed for, or takes charge of,
all or substantially all of the property of the Borrower or any Subsidiary or
the Borrower or any Subsidiary commences any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law of any jurisdiction
whether now or hereafter in effect relating to the Borrower or any Subsidiary
itself; or there is commenced against the Borrower or any Subsidiary any such
proceeding that remains undismissed for a period of 45 days; or the
Borrower or any Subsidiary is adjudicated insolvent or bankrupt; or any order
of relief or other order approving any such case or proceeding is entered; or
the Borrower or any Subsidiary makes a general assignment for the benefit of
creditors, files under the Bankruptcy Act or takes a
similar action under the Bankruptcy Act; or any
corporate or similar action is taken by the Borrower or any Subsidiary for the
purpose of effecting any of the foregoing; or the Borrower or any Subsidiary is
unable to pay its debts as they fall due, or makes a general assignment for the
benefit of or a composition with its creditors generally; or the Borrower or
any Subsidiary takes any corporate or similar action or other steps are taken
or legal proceedings are started for its winding-up, dissolution,
administration or insolvent re-organization or for the appointment of a
liquidator, administrator or administrative receiver of it.

 

9.6           Security
Documents.

 

The First Mortgage Bonds,
Series B held by the Administrative Agent or any material provision thereof
shall cease to be in full force or effect (other than pursuant to the terms
hereof or thereof or as a result of acts or omissions of the Administrative
Agent or any Lender) or the Borrower shall deny or disaffirm in writing its
obligations under the First Mortgage Bonds, Series B held by the Administrative
Agent.

 

9.7           Judgments.

 

One or more judgments or
decrees shall be entered against the Borrower or any of its Subsidiaries
involving a liability of $15,000,000 or more in the aggregate for all such
judgments and decrees for the Borrower and its Subsidiaries (to the extent not
paid or fully covered by insurance provided by a carrier not disputing
coverage) and any such judgments or decrees shall not have been satisfied,
vacated, discharged or stayed or bonded pending appeal within 60 days from
the entry thereof.

 

9.8           Change
of Ownership.

 

A Change of Ownership
shall occur.

 

42

 

9.9           Pension
Plans.

 

Any of the following
events shall occur with respect to any Pension Plan: (a) the institution of any
steps by the Borrower or any other Person to terminate a Pension Plan if, as a
result of such termination, the Borrower or any such member could be required
to make a contribution to such Pension Plan, or could reasonably expect to
incur a liability or obligation to such Pension Plan in respect of such
termination; or (b) a contribution failure occurs with respect to any Pension
Plan sufficient to give rise to a Lien under section 302(f) of ERISA,
where in each case under clauses (a) or (b) such contribution, liability,
obligation or Lien would reasonably be expected to have a Material Adverse
Effect.

 

9.10         Remedies.

 

Upon the occurrence of
any Event of Default described above, and in any such event, and at any time
thereafter, if any Event of Default shall then be continuing, the
Administrative Agent shall, upon the written request of the Required Lenders,
by written notice to the Borrower, take any or all of the following actions,
without prejudice to the rights of the Administrative Agent to enforce its
claims against the Borrower, except as otherwise specifically provided for in
this Agreement (provided that, if an Event of Default specified in Section 9.5
shall occur with respect to the Borrower, the result that would occur upon the
giving of written notice by the Administrative Agent as specified in
clauses (i), and (ii) below shall occur automatically without the giving
of any such notice):  (i) declare
the Total Revolving Credit Commitment terminated, whereupon the Revolving
Credit Commitments of each Lender shall forthwith terminate immediately and any
Fees theretofore accrued shall forthwith become due and payable without any
other notice of any kind; (ii) declare the principal of and any accrued
interest in respect of all Revolving Credit Loans and all obligations owing
hereunder to be, whereupon the same shall become, forthwith due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Borrower; and/or (iii) exercise any other
remedies that may be available under the Credit Documents or applicable law.

 

9.11         Remedies
Cumulative.

 

The rights and remedies
of the Administrative Agent and the Lenders under this Agreement and the other
Credit Documents are cumulative and are in addition to and not in substitution
for any rights or remedies provided by law or by equity, and any single or
partial exercise by the Lenders of any right or remedy for a default or breach
of any term, covenant, condition or agreement herein contained shall not be
deemed to be a waiver of or to alter, affect, or prejudice any other right or
remedy or other rights or remedies to which the Lenders may be lawfully
entitled for the same default or breach, and any waiver by the Administrative
Agent or the Lenders of the strict observance, performance or compliance with
any term, covenant, condition or agreement herein contained, and any indulgence
granted by the Administrative Agent or the Lenders shall be deemed not to be a
waiver of any subsequent default.  In the
event that the Administrative Agent or the Lenders shall have proceeded to enforce
any such right, remedy or power contained herein or in the other Credit
Documents and such proceedings shall have been discontinued or abandoned for
any reason, by written agreement between the Lenders and the Borrower, then in
each such event the Borrower and the Lenders shall be restored to their former
positions and the rights, remedies and powers of the Lenders shall continue as
if no such proceedings had been taken.

 

43

 

ARTICLE 10

THE ADMINISTRATIVE AGENT

 

10.1         Appointment.

 

Each Lender hereby
irrevocably designates and appoints the Administrative Agent as the agent of
such Lender under this Agreement and the other Credit Documents, and each such
Lender irrevocably authorizes the Administrative Agent, in such capacity, to
take such action on its behalf under the provisions of this Agreement and the
other Credit Documents and to exercise such powers and perform such duties as
are expressly delegated to the Administrative Agent by the terms of this Agreement
and the other Credit Documents, together with such other powers as are
reasonably incidental thereto (including the power to execute documents on
behalf of the Lenders).  Notwithstanding
any provision to the contrary elsewhere in this Agreement, the Administrative
Agent shall not have any duties or responsibilities, except those expressly set
forth herein, or any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities
shall be read into this Agreement or any other Credit Document or otherwise
exist against the Administrative Agent. 
The Documentation Agent and Arranger, in its capacities as such, shall
not have any obligations, duties or responsibilities under any Credit Document.

 

10.2         Delegation
of Duties.

 

The Administrative Agent
may execute any of its duties under this Agreement and the other Credit
Documents by or through agents or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining to such duties.  The Administrative Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys in-fact
selected by it with reasonable care.

 

10.3         Exculpatory
Provisions.

 

Neither the
Administrative Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates shall be (a) liable for any action
lawfully taken or omitted to be taken by it or such Person under or in
connection with this Agreement or any other Credit Document (except for its or
such Person’s own gross negligence or wilful misconduct as determined by a
final judgment of a court of competent jurisdiction) or (b) responsible in
any manner to any of the Lenders for any recitals, statements, representations
or warranties made by the Borrower or any officer, employee, agent or
consultant thereof contained in this Agreement or any other Credit Document or
in any certificate, report, statement or other document referred to or provided
for in, or received by the Administrative Agent under or in connection with,
this Agreement or any other Credit Document or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Credit Document or for any failure of the Borrower to perform its
obligations hereunder or thereunder.  The
Administrative Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Credit
Document, or to inspect the properties, books or records of the Borrower.  The Administrative Agent shall not be under
any obligation to any Lender to obtain the consent of any Person which is
required in connection with an assignment by such Lender pursuant to

 

44

 

Section 11.6(a)(ii)
or to ascertain whether a particular assignment by a Lender pursuant to Section 11.6(a)(ii)
requires the consent of any particular Person.

 

10.4         Reliance
by Administrative Agent.

 

The Administrative Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
writing, resolution, notice, consent, certificate, affidavit, letter, telecopy,
telex or teletype message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including counsel to the Borrower), independent accountants and other experts
selected by the Administrative Agent. 
The Administrative Agent may deem and treat the Lender specified in the
Register with respect to any amount owing hereunder as the owner thereof for
all purposes unless a written notice of assignment, negotiation or transfer thereof
shall have been filed with the Administrative Agent.  The Administrative Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Credit Document unless it shall first receive such advice or concurrence
of the Required Lenders (or each of the Lenders if required pursuant to Section 11.1)
as it deems appropriate or it shall first be indemnified to its satisfaction by
the Lenders against any and all liability and expense that may be incurred by
it by reason of taking or continuing to take any such action.  The Administrative Agent shall in all cases
be fully protected in acting, or in refraining from acting, under this
Agreement and the other Credit Documents in accordance with a request of the
Required Lenders (or each of the Lenders if required pursuant to Section 11.1),
and such request and any action taken or failure to act pursuant thereto shall
be binding upon all the Lenders and all future holders of the Revolving Credit
Loans.

 

10.5         Notice
of Default.

 

The Administrative Agent
shall not be deemed to have knowledge or notice of the occurrence of any
Default or Event of Default hereunder unless the Administrative Agent has
received notice from a Lender or the Borrower referring to this Agreement, describing
such Default or Event of Default and stating that such notice is a “notice of
default”.  In the event that the
Administrative Agent receives such a notice, the Administrative Agent shall
give notice thereof to the other Finance Parties.  The Administrative Agent shall take such
action with respect to such Default or Event of Default as shall be reasonably
directed by the Required Lenders (or each of the Lenders if required pursuant
to Section 11.1); provided that unless and until the Administrative Agent
shall have received such directions, the Administrative Agent may (but shall
not be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable in the
best interests of the Lenders (except to the extent that this Agreement
requires that such action be taken only with the approval of the Required
Lenders or each of the Lenders, as applicable).

 

10.6         Non-Reliance
on Administrative Agent and Other Lenders.

 

Each Lender expressly
acknowledges that neither the Administrative Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates has made any
representations or warranties to it and that no act by the Administrative Agent
hereinafter taken, including any review of the affairs of the Borrower, shall
be deemed to constitute any

 

45

 

representation or
warranty by the Administrative Agent to any Lender.  Each Lender represents to the Administrative
Agent that it has, independently and without reliance upon the Administrative
Agent or any other Lender, and based on such documents and information as it
has deemed appropriate, made its own appraisal of and investigation into the
business, operations, property, financial and other condition and
creditworthiness of the Borrower and made its own decision to make its
Revolving Credit Loans hereunder and enter into this Agreement.  Each Lender also represents that it will,
independently and without reliance upon the Administrative Agent or any other
Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement and the other
Credit Documents, and to make such investigation as it deems necessary to
inform itself as to the business, operations, property, financial and other
condition and creditworthiness of the Borrower. 
Except for notices, reports and other documents expressly required to be
furnished to the Lenders by the Administrative Agent hereunder, the
Administrative Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, assets, operations,
properties, financial condition, prospects or creditworthiness of the Borrower
that may come into the possession of the Administrative Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates.

 

10.7         Indemnification.

 

(a)           The Lenders agree to
indemnify the Administrative Agent in its capacity as such (to the extent not
reimbursed by the Borrower forthwith on demand, without any obligation to seek
recovery from the Borrower first, and without limiting the obligation of the
Borrower to do so), ratably according to their respective portions of the
Revolving Credit Exposure in effect on the date on which indemnification is
sought (or, if indemnification is sought after the date upon which the
Revolving Credit Commitments shall have terminated and the Revolving Credit
Loans shall have been paid in full, ratably in accordance with their respective
portions of the Revolving Credit Exposure in effect immediately prior to such
date), from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever that may at any time (including at any time following the
payment of the Revolving Credit Loans) be imposed on, incurred by or asserted
against the Administrative Agent in any way relating to or arising out of, the
Revolving Credit Commitments, this Agreement, any of the other Credit Documents
or any documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby or any action taken or omitted by
the Administrative Agent under or in connection with any of the foregoing,
provide that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the Administrative
Agent’s gross negligence or wilful misconduct as determined by a final judgment
of a court of competent jurisdiction. 
The agreements in this Section 10.7 shall survive the payment of
the Revolving Credit Loans and all other amounts payable hereunder.

 

10.8         Administrative
Agent in Its Individual Capacity.

 

The Administrative Agent
and its Affiliates may make loans to, accept deposits from and generally engage
in any kind of business with the Borrower as though the Administrative Agent

 

46

 

were not the
Administrative Agent hereunder and under the other Credit Documents.  With respect to the Revolving Credit Loans
made by it, the Administrative Agent shall have the same rights and powers
under this Agreement and the other Credit Documents as any Lender and may
exercise the same as though it were not the Administrative Agent, and the terms
“Lender” and “Lenders” shall include the Administrative Agent in its individual
capacity.

 

10.9         Successor
Agent.

 

The Administrative Agent
may resign as Administrative Agent upon 20 days prior written notice to
the Lenders and the Borrower.  If the
Administrative Agent is in default of its obligations under this Agreement and
the Required Lenders deem it advisable, the Lenders may terminate the
Administrative Agent’s authority to act on behalf of the Lenders pursuant to
this Article 10 upon 20 days prior written notice.  If the Administrative Agent shall resign or
be terminated as Administrative Agent under this Agreement and the other Credit
Documents, then the Required Lenders shall appoint from among the Lenders a
successor agent for the Lenders, which successor agent shall be approved by the
Borrower (which approval shall not be unreasonably withheld), whereupon such
successor agent shall succeed to the rights, powers and duties of the
Administrative Agent, and the term “Administrative Agent” shall mean such
successor agent effective upon such appointment and approval, and the former
Administrative Agent’s rights, powers and duties as Administrative Agent shall
be terminated, without any other or further act or deed on the part of such
former Administrative Agent or any of the parties to this Agreement or any
holders of the Revolving Credit Loans. 
After any retiring Administrative Agent’s resignation or termination as
Administrative Agent, the provisions of this Article 10 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement and the other Credit Documents.

 

10.10       Borrower
as a Lender.

 

Notwithstanding any other
provision hereof, any Lender that is the Borrower or an Affiliate of the
Borrower shall not be entitled to attend or be represented at any meeting of
Lenders.

 

ARTICLE 11

MISCELLANEOUS

 

11.1         Amendments
and Waivers.

 

Neither this Agreement
nor any other Credit Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this Section 11.1.  The Administrative Agent may, without the
consent of the Lenders, enter into technical, minor or administrative
amendments.  The Required Lenders may
from time to time (a) enter into with the Borrower and Administrative
Agent, as applicable, written amendments, supplements or modifications hereto
and to the other Credit Documents for the purpose of adding or amending any
provisions to this Agreement or the other Credit Documents or changing in any
manner the rights of the Lenders or of the Borrower hereunder or thereunder,
(b) waive, on such terms and conditions as the Required Lenders or the
Administrative Agent, as the case may be, may specify in such instrument, any
of the requirements of this Agreement or the other Credit

 

47

 

Documents or any Default
or Event of Default and its consequences; provided that no such waiver and no
such amendment, supplement or modification shall directly (i) forgive any
portion of, or extend or waive the final scheduled maturity date of, any
Revolving Credit Loan, or reduce the stated rate of, forgive any portion of or
extend the date for the payment of any interest or fee payable hereunder (other
than as a result of waiving the applicability of any post-default increase in
interest rates) or extend the final expiration date of any Lender’s Revolving
Credit Commitment or increase the amount of any of the Revolving Credit
Commitments of any Lender or amend Section 3.2, in each case without the
written consent of each Lender whose Revolving Credit Loan, interest, fee or
Revolving Credit Commitment is changed as set forth above thereby, or
(ii) amend, modify or waive any provision of this Section 11.1 or
reduce the percentages specified in the definitions of the terms “Required
Lenders” or consent to the assignment or transfer by the Borrower of its rights
and obligations under any Credit Document to which it is a party (except as
permitted pursuant to Section 8.2), in each case without the written
consent of each Lender, or (iii) amend, modify or waive any provision of Article 10
without the written consent of the then-current Administrative Agent, or (iv)
amend Section 4.2(a) to the extent that it relates to payments for the
ratable account of Lenders without the written consent of each Lender directly
and adversely affected thereby, in each case without the written consent of all
the Lenders except as otherwise specifically provided in this Section 11.1
and provided further that at any time that no Default or Event of Default has
occurred and is continuing, the Revolving Credit Commitment of any Lender may
be increased for any purpose permitted hereunder, with the consent of such
Lender, the Borrower and the Administrative Agent (which consent, in the case
of the Administrative Agent, shall not be unreasonably withheld) and without
the consent of the Required Lenders, as provided for in this Section 11.1.

 

Any such waiver and any
such amendment, supplement or modification shall apply equally to each of the
affected Lenders and shall be binding upon the Borrower, such Lenders, the
Administrative Agent and all future holders of the affected Revolving Credit
Loans.  In the case of any waiver, the
Borrower, the Lenders and the Administrative Agent shall be restored to their
former positions and rights hereunder and under the other Credit Documents, and
any Default or Event of Default waived shall be deemed to be cured and not
continuing, it being understood that no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right consequent
thereon.

 

11.2         Notices.

 

All notices, requests and
demands to or upon the respective parties hereto to be effective shall be in
writing (including by facsimile transmission) and, unless otherwise expressly
provided herein, if mailed and properly addressed with postage prepaid or if
properly addressed and sent by pre-paid courier service, shall be deemed given
when received and, if transmitted by facsimile, shall be deemed given when the
confirmation of transmission thereof is received by the transmitter, in each
case addressed as follows in the case of the Borrower, the Administrative Agent
and as set forth on Schedule I in the case of each Lender (or as set forth
in the Assignment and Acceptance or New Lender Supplement of any Lender which
is an Assignee) or to such other address as may be hereafter notified by the
respective parties hereto:

 

48

 

(a)           The
Borrower:

International Transmission Company

1901 South Wagner

Ann Arbor, MI 48103-9715

Attention: John Flynn, Esq.

Facsimile No.:

with a copy to:

Simpson Thacher & Bartlett

425 Lexington Avenue

New York, NY 10017-3954

Attention: James Cross

Facsimile No.: (212) 455-2502

 

(b)           The
Administrative Agent:

Canadian Imperial Bank of Commerce

425 Lexington Avenue, 8th Floor

New York, NY 10017

Attention: April Varner

Facsimile No.:  (212) 856-3763

 

provided
that any notice, request or demand to or upon the Administrative Agent or the
Lenders pursuant to Sections 2.3, 2.6, 2.10, 3.2 and 4.1 shall not be
effective until received.

 

11.3         No
Waiver; Cumulative Remedies.

 

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

 

11.4         Survival of Representations and Warranties.

 

All representations and
warranties made hereunder, in the other Credit Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of
the Revolving Credit Loans hereunder.

 

49

 

11.5         Payment of Expenses and Taxes.

 

The Borrower agrees
(a) to pay or reimburse the Arranger and the Administrative Agent for all
their reasonable and documented out-of-pocket costs and expenses incurred in
connection with the development, preparation and execution of, and any
amendment, supplement or modification to, this Agreement and the other Credit
Documents and any other documents prepared in connection herewith or therewith,
and the consummation and administration of the transactions contemplated hereby
and thereby (including the syndication of the Revolving Credit Commitments),
including the reasonable fees, disbursements and other charges of counsel to
the Administrative Agent, (b) to pay or reimburse each Lender and the
Administrative Agent for all its reasonable and documented costs and expenses
incurred in connection with the enforcement or preservation of any rights
under, or “workout” or restructuring of, this Agreement, the other Credit
Documents and any such other documents, including the reasonable fees,
disbursements and other charges of counsel to each Lender and of counsel to the
Administrative Agent, (c) to pay, indemnify, defend and hold harmless each
Lender and the Administrative Agent from, any and all recording and filing fees
and any and all liabilities with respect to, or resulting from any delay in
paying, stamp, excise and other similar taxes, if any, that may be payable or
determined to be payable in connection with the execution and delivery of, or
consummation or administration of any of the transactions contemplated by, or
any amendment, supplement or modification of, or any waiver or consent under or
in respect of, this Agreement, the other Credit Documents and any such other
documents, and (d) to pay, indemnify, defend and hold harmless each
Lender, the Arranger and the Administrative Agent and their respective
directors, officers, employees, trustee, agents and Affiliates (collectively,
the “Indemnitees”) from and against any and all other liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever (including reasonable and documented
fees, disbursements and other charges of counsel incurred in connection with
any investigative, administrative or judicial proceeding commenced or
threatened by any Person, whether or not any such Indemnitee shall be
designated as a party or potential party thereto, and any fees or expenses
incurred by any Indemnitee in enforcing this indemnity), whether direct,
indirect or consequential, whether based on strict liability or negligence, and
whether based on any federal, provincial or foreign laws, statutes, rules,
regulations or guidelines (including Environmental Laws), common law, equity,
contract or otherwise that may be imposed on, incurred by or asserted against
any Indemnitee, in any manner arising out of or relating to (i) this
Agreement, the other Credit Documents and any other agreements or documents
contemplated hereby or thereby, the other transactions contemplated hereby
(including the execution, delivery, enforcement, performance and administration
of any of the Credit Documents and the breach by the Borrower of, or default by
the Borrower under, any of the provisions of any of the Credit Documents,
(ii) the violation of, non-compliance with or liability under, any
Environmental Law applicable to the operations of the Borrower or any of its
Subsidiaries or applicable to any of the Real Estate, or (iii) any
Environmental Claim or any Hazardous Materials relating to or arising from,
directly or indirectly, any past or present activity, operation, land
ownership, possession or control, or practice of, the Borrower or any of its
Subsidiaries from time to time (all the foregoing in this clause (d),
collectively, the “indemnified  liabilities”); provided that the Borrower shall have no
obligation hereunder to any Indemnitee with respect to indemnified liabilities
arising from the gross negligence or wilful misconduct of such Indemnitee as
determined by a final judgment of a court of competent jurisdiction and
provided further that the Borrower shall have no obligation hereunder to any
Indemnitee with respect to claims to the

 

50

 

extent relating to
disputes among the Lenders, any of the Arranger and/or the Administrative
Agent.  The agreements in this Section 11.5
shall survive repayment of the Revolving Credit Loans and all other amounts
payable hereunder.

 

Each of the Lenders, the
Arranger and the Administrative Agent agree that any and all of their
respective rights under this Agreement, the other Credit Documents and any
other agreements contemplated hereby and thereby, including recourse for any
obligation or claim for any indemnification thereunder, is limited to recourse
to the Borrower and its assets as contemplated hereby, and none of the direct
or indirect limited partners, partners, shareholders, members of the Borrower
or any of their respective employees, directors or officers shall have any
obligations or liability, or be subject to any recourse, in respect of any such
obligations or claims hereunder or thereunder.

 

11.6         Successors
and Assigns; Participations and Assignments.

 

(a)           This Agreement shall be
binding upon and inure to the benefit of, the Borrower, the Lenders, the
Administrative Agent and their respective successors and assigns, except that,
subject to Section 8.2(a), the Borrower may not assign or transfer any of
its rights or obligations under this Agreement without the prior written
consent of each Lender.

 

(i)            Any
Lender may, in the ordinary course of its business and in accordance with
applicable law, at any time sell to one or more banks or other entities (“Participants”) participating interests in any Revolving
Credit Loan owing to such Lender, any Revolving Credit Commitment of such
Lender or any other interest of such Lender hereunder and under the other
Credit Documents.  In the event of any
such sale by a Lender of a participating interest to a Participant, such
Lender’s obligations under this Agreement to the other parties to this
Agreement shall remain unchanged, such Lender shall remain solely responsible
for the performance thereof, such Lender shall remain the holder of any such
Revolving Credit Loan for all purposes under this Agreement and the other
Credit Documents, and the Borrower and the Administrative Agent shall continue
to deal solely and directly with such Lender in connection with such Lender’s
rights and obligations under this Agreement and the other Credit
Documents.  In no event shall any
Participant under any such participation have any right to approve any
amendment or waiver of any provision of any Credit Document, or any consent to
any departure by the Borrower therefrom, except to the extent that such
amendment, waiver or consent would directly forgive any principal of any
Revolving Credit Loan or reduce the stated rate, or forgive any portion, or
postpone the date for the payment, of any principal, interest or fee payable
hereunder (other than as a result of waiving the applicability of any
post-default increase in interest rates), increase the aggregate amount of the
Revolving Credit Commitments of any Lender, postpone the date of the final
scheduled maturity of any Revolving Credit Loan, in each case to the extent
subject to such participation.  The
Borrower agrees that if amounts outstanding under this Agreement are due or
unpaid, or shall have been declared or shall have become due and payable upon
the occurrence of an Event of Default, each Participant shall, to the maximum
extent permitted by applicable law, be deemed to have the right of setoff in
respect of its participating interest in amounts owing under this Agreement to
the same extent as if the amount of its participating interest were owing
directly to it as a Lender

 

51

 

under this
Agreement; provided that, in purchasing such participating interest, such
Participant shall be deemed to have agreed to share with the Lenders the
proceeds thereof as provided in Section 11.8 as fully as if it were a
Lender hereunder.  The Borrower also
agrees that each Participant shall be entitled to the benefits of Sections 2.10,
2.11 and 4.3 with respect to its participation in the Revolving Credit
Commitments and the Revolving Credit Loans outstanding from time to time as if
it were a Lender; provided that no Participant shall be entitled to receive any
greater amount pursuant to any such Section than the transferor Lender
would have been entitled to receive in respect of the amount of the
participation transferred by such transferor Lender to such Participant had no
such transfer occurred.

 

(ii)           Any
Lender may, in the ordinary course of its business and in accordance with
applicable law, at any time and from time to time assign to (A) any Lender
or any Affiliate thereof or Approved Fund with respect thereto (with the
consent of the Borrower if any increased costs would result therefrom) or,
(B) with the consent of the Borrower and the Administrative Agent (which
in each case shall not be unreasonably withheld or delayed, it being understood
that, without limitation, the Borrower shall have the right to withhold its
consent to any assignment if, in order for such assignment to comply with
applicable law, the Borrower would be required to obtain the consent of, or
make any filing or registration with, any Governmental Authority), to an
additional bank or fund that is regularly engaged in making, purchasing or
investing in loans or securities or a financial institution (an “Assignee”) all or any part of its rights and obligations
under this Agreement and the other Credit Documents pursuant to an Assignment
and Acceptance, substantially in the form prescribed from time to time by the
Loan Syndications and Trading Association, with such modifications as the
Administrative Agent shall require from time to time, executed by such Assignee
and such assigning Lender (and, in the case of an Assignee that is not then a
Lender, an Affiliate thereof or an Approved Fund with respect thereto, by the
Borrower and the Administrative Agent) and delivered to the Administrative
Agent for its acceptance and recording in the Register; provided that, except
in the case of an assignment of all of a Lender’s interests under this
Agreement, unless otherwise agreed to by the Administrative Agent, no such
assignment to an Assignee (other than any Lender, any Affiliate thereof or any
Approved Fund with respect thereto) and its Affiliates shall be in an aggregate
principal amount less than $2,500,000 in respect of Revolving Credit
Loans.  Upon such execution, delivery,
acceptance and recording (referred to as the “Assignment
Effective Date”), (x) the Assignee thereunder shall be a party
hereto and, to the extent provided in such Assignment and Acceptance, have the
rights and obligations of a Lender hereunder with a Revolving Credit Commitment
as set forth therein and (y) the assigning Lender thereunder shall, to the
extent provided in such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender’s
rights and obligations under this Agreement, such assigning Lender shall cease
to be a party hereto).  Notwithstanding
any provision of this Agreement to the contrary, the consent of the Borrower
shall not be required for any assignment that occurs at any time when any Event
of Default shall have occurred and be continuing.

 

52

 

(b)           Nothing herein shall
prohibit any Lender from pledging or assigning all or any portion of its
Revolving Credit Loans to any Federal Reserve Bank in accordance with
applicable law, and any Lender that is an investment fund that invests in bank
loans may, without the consent of the Borrower or the Administrative Agent,
pledge or assign all or any portion of its Revolving Credit Loans and
promissory notes evidencing such Revolving Credit Loans to any trustee or any
other representative of holders of obligations owed or securities issued by
such investment fund as security for such obligations or securities; provided
that no such pledge or assignment shall release a Lender from any of its
obligations hereunder, substitute any such pledgee or assignee for such Lender
as party hereto or increase the obligations of the Borrower hereunder.  In order to facilitate such pledge or assignment,
the Borrower hereby agrees that, upon request of any Lender at any time and
from time to time after the Borrower has made its initial borrowing hereunder,
the Borrower shall provide to such Lender, at the Borrower’s own expense, a
promissory note in form satisfactory to such Lender, acting reasonably,
evidencing the Revolving Credit Loans owing to such Lender.

 

(c)           The Administrative
Agent, on behalf of the Borrower, shall maintain at the address of the
Administrative Agent referred to in Section 11.2 a copy of each Assignment
and Acceptance and New Lender Supplement delivered to it and a register (the “Register”) for the recordation of the names and addresses of
the Lenders and the Revolving Credit Commitment of, and principal amount of the
Revolving Credit Loans (whether or not evidenced by a promissory note) owing
to, each Lender from time to time. 
Notwithstanding Section 2.5, the entries in the Register shall be
conclusive, in the absence of manifest error, and the Borrower, the
Administrative Agent and the Lenders shall treat each Person whose name is
recorded in the Register as the owner of a Revolving Credit Loan or other
obligation hereunder as the owner thereof for all purposes of this Agreement
and the other Credit Documents, notwithstanding any notice to the contrary.  Any assignment of any Revolving Credit Loan
or other obligation hereunder (whether or not evidenced by a promissory note)
shall be effective only upon appropriate entries with respect thereto being
made in the Register.  Any assignment of
all or part of a Revolving Credit Loan evidenced by a promissory note shall be
registered on the Register only upon surrender for registration of assignment
or transfer of such promissory note evidencing such Revolving Credit Loan,
accompanied by a duly executed Assignment and Acceptance, and thereupon one or
more new promissory notes in the same aggregate principal amount shall be
issued to the designated Assignee and the old promissory notes shall be
returned by the Administrative Agent to the Borrower marked “cancelled”.  The Register shall be available for
inspection by the Borrower at any reasonable time and from time to time upon
reasonable prior notice.

 

(d)           The Administrative
Agent shall (i) upon its receipt of an Assignment and Acceptance executed
by an assigning Lender and an Assignee (and, in the case of an Assignee that is
not then a Lender, an Affiliate thereof or an Approved Fund with respect
thereto, by the Borrower, together with payment to the Administrative Agent of
a registration and processing fee of $3,500, promptly accept such Assignment
and Acceptance and (ii) on the effective date determined pursuant thereto
record the information contained therein in the Register.

 

(e)           Subject to Section 11.17,
the Borrower authorizes each Lender to disclose to any Participant or Assignee
(each, a “Transferee”) and any prospective
Transferee any and all information in such Lender’s possession concerning the
Borrower and its Affiliates that has been

 

53

 

delivered
to such Lender by or on behalf of the Borrower pursuant to this Agreement or
which has been delivered to such Lender by or on behalf of the Borrower in
connection with such Lender’s credit evaluation of the Borrower and its
Affiliates prior to becoming a party to this Agreement; provided that neither
the Administrative Agent nor any Lender shall provide to any Transferee or
prospective Transferee any of the Confidential Information unless such person
shall have previously executed a Confidentiality Agreement substantially in the
form prescribed from time to time by the Loan Sales and Trading Association.

 

11.7         Replacements
of Lenders under Certain Circumstances.

 

(a)           The Borrower shall be
permitted to replace any Lender that (a) requests reimbursement for
amounts owing pursuant to Section 2.10 or 4.3, (b) is affected in the
manner described in Section 2.10(a)(iii) and as a result thereof any of
the actions described in such Section is required to be taken or
(c) becomes a Defaulting Lender, with a replacement bank or other financial
institution; provided that (i) such replacement does not conflict with any
Requirement of Law, (ii) no Event of Default shall have occurred and be
continuing at the time of such replacement, (iii) the replacement bank or
institution shall purchase, at par, all Revolving Credit Loans and other
amounts (other than any disputed amount) pursuant to Section 2.10, 2.11 or
4.3, as the case may be, owing to such replaced Lender prior to the date of
replacement or as a result of such replacement, (iv) the replacement bank
or institution, if not already a Lender, and the terms and conditions of such
replacement, shall be reasonably satisfactory to the Administrative Agent,
(v) the replaced Lender shall be obligated to make such replacement in
accordance with the provisions of Section 11.6 (provided that the Borrower
shall be obligated to pay the registration and processing fee referred to
therein) and (vi) any such replacement shall not be deemed to be a waiver
of any rights that the Borrower, the Administrative Agent or any other Lender
shall have against the replaced Lender.

 

(b)           In the event that
S&P or Moody’s shall, after the date that any Lender with a Revolving
Credit Commitment becomes a Lender, downgrade the long-term certificate of
deposit rating or long-term senior unsecured debt rating of such Lender, and
the resulting rating shall be below BBB- or Baa3 respectively, then the
Borrower shall have the right, but not the obligation, upon notice to such
Lender and the Administrative Agent, to replace such Lender with an Assignee in
accordance with and subject to the restrictions contained in Section 11.6,
and such Lender hereby agrees to transfer and assign without recourse (in
accordance with and subject to the restrictions contained in Section 11.6)
all its interests, rights and obligations in respect of its Revolving Credit
Commitment under this Agreement to such Assignee; provided that (i) no
such assignment shall conflict with any law, regulation or order of any
governmental authority and (ii) such Assignee shall pay to such Lender in
immediately available funds on the date of such assignment the principal of and
interest and fees (if any) accrued to the date of payment on the Revolving
Credit Loans made by such Lender hereunder and all other amounts accrued for
such Lender’s account or owed to it hereunder.

 

11.8         Adjustments;
Set-off.

 

(a)           Upon termination of the
Total Revolving Credit Commitment and each Lender’s Revolving Credit
Commitment, the Administrative Agent shall calculate each Lender’s Revolving
Credit Commitment Percentage based on such Lender’s Revolving Credit Exposure
at

 

54

 

such
time.  If any Lender’s Revolving Credit
Commitment Percentage calculated on such basis is greater than the ratio of
such Lender’s Revolving Credit Commitment to the Total Revolving Credit
Commitment (such Lender, a “Selling Lender”),
then each of the other Lenders’ whose Revolving Credit Commitment Percentage
calculated on the basis of Revolving Credit Exposure is less than such other
Lender’s Revolving Credit Commitment Percentage calculated on the basis of its
Revolving Credit Commitment (each such other Lender, a “Purchasing
Lender”) shall purchase for cash from the Selling Lender, without
recourse or representation or warranty (other than as to ownership and no Liens
or claims by any Person), an interest in the Revolving Credit Exposure of the
Selling Lender at par in such amount as would result in a pro rata
participation (based on Revolving Credit Commitments) by each Lender, in the
aggregate Revolving Credit Exposure of all the Lenders.  The Administrative Agent, upon consultation
with the applicable Lenders, shall have the power to settle any documentation
required to evidence any such purchase and, if deemed advisable by the
Administrative Agent, to execute any document as attorney for any Lender in
order to complete any such purchase.  The
Borrower acknowledges that the foregoing arrangements are to be settled by the
Lenders among themselves, and the Borrower expressly consents to the foregoing
arrangements among the Lenders.  The
Administrative Agent shall recalculate each Lender’s Revolving Credit
Commitment Percentage from time to time after termination of the Total Revolving
Credit Commitment and each Lender’s Revolving Credit Commitment on the basis
hereinbefore provided and the Lenders shall adjust their respective Revolving
Credit Commitment Percentages from time to time in accordance with this Section 11.8(a)
as may be required.

 

(b)           After the occurrence and
during the continuance of an Event of Default, in addition to any rights and
remedies of the Lenders provided by law, each Lender shall have the right,
without prior notice to the Borrower, any such notice being expressly waived by
the Borrower to the extent permitted by applicable law, upon any amount
becoming due and payable by the Borrower hereunder (whether at the stated
maturity, by acceleration or otherwise) to set-off and appropriate and apply
against such amount any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by such Lender or
any branch or agency thereof to or for the credit or the account of the
Borrower.  Each Lender agrees promptly to
notify the Borrower and the Administrative Agent after any such set-off and
application made by such Lender, provided that the failure to give such notice
shall not affect the validity of such set-off and application.

 

(c)           If any Finance Party
shall obtain any payment or other recovery (whether voluntary, involuntary, by
application of setoff or otherwise) on account of any Credit Event (other than
pursuant to the terms of Section 2.10, 2.11 or 4.3) in excess of its pro
rata share of payments obtained by all Finance Parties, such Finance Party
shall purchase from the other Finance Parties such participations in Credit
Events made by them as shall be necessary to cause such purchasing Finance
Party to share the excess payment
or other recovery ratably (to the extent such other Finance Parties were
entitled to receive a portion of such payment or recovery) with each of them;
provided that if all or any portion of the excess payment or other recovery is
thereafter recovered from such purchasing Finance Party, the purchase shall be
rescinded and each Finance Party which has sold a participation to the
purchasing Finance Party shall repay to the purchasing Finance Party the
purchase price to the ratable extent of such recovery together

 

55

 

with
an amount equal to such selling Finance Party’s ratable share (according to the
proportion of (a) the amount of such selling Finance Party’s required repayment
to the purchasing Finance Party to (b) total amount so recovered from the
purchasing Finance Party) of any interest or other amount paid or payable by
the purchasing Finance Party in respect of the total amount so recovered.  The Borrower agrees that any Finance Party
purchasing a participation from another Finance Party pursuant to this Section may,
to the fullest extent permitted by law, exercise all its rights of payment
(including pursuant to clause (b) above) with respect to such participation as
fully as if such Finance Party were the direct creditor of the Borrower in the
amount of such participation.  If under
any applicable bankruptcy, insolvency or other similar law any Finance Party
receives a secured claim in lieu of a setoff to which this Section applies,
such Finance Party shall, to the extent practicable, exercise its rights in
respect of such secured claim in a manner consistent with the rights of the
Lenders entitled under this Section to share in the benefits of any
recovery on such secured claim.

 

11.9         Marshalling;
Payments Set Aside.

 

Neither the
Administrative Agent nor any Lender shall be under any obligation to marshal
any assets in favor of the Borrower or any other party or against or in payment
of any or all of the Borrower’s obligations hereunder.  To the extent that the Borrower makes a
payment or payments to the Administrative Agent or Lenders (or to the
Administrative Agent for the benefit of Lenders), or the Administrative Agent
or Lenders enforce any security interests or exercise their rights of setoff,
and such payment or payments or the proceeds of such enforcement or setoff or
any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, receiver or
any other party under any bankruptcy law, any other provincial, state or
federal law, common law or any equitable cause, then, to the extent of such
recovery, the obligation or part thereof originally intended to be satisfied,
and all Liens, rights and remedies therefor or related thereto, shall be
revived and continued in full force and effect as if such payment or payments
had not been made or such enforcement or setoff had not occurred.

 

11.10       Counterparts.

 

This Agreement may be
executed by one or more of the parties to this Agreement on any number of
separate counterparts (including by facsimile transmission), and all of said
counterparts taken together shall be deemed to constitute one and the same instrument.  A set of the copies of this Agreement signed
by all the parties shall be lodged with the Borrower and the Administrative
Agent.

 

11.11       Severability.

 

Any provision of this
Agreement that is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.

 

56

 

11.12       Integration.

 

This Agreement and the
other Credit Documents represent the agreement of the Borrower, the
Administrative Agent and the Lenders with respect to the subject matter hereof,
and there are no promises, undertakings, representations or warranties by the
Administrative Agent or any Lender relative to subject matter hereof not
expressly set forth or referred to herein or in the other Credit Documents.

 

11.13       Governing Law.

 

THIS AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK
AND THE LAWS OF THE UNITED STATES APPLICABLE THEREIN (EXCLUDING ANY CONFLICT OF
LAWS RULE OR PRINCIPLE WHICH MIGHT REFER SUCH CONSTRUCTION TO THE LAWS OF
ANOTHER JURISDICTION).

 

11.14       Submission
to Jurisdiction; Waivers.

 

The Borrower hereby
irrevocably and unconditionally:

 

(a)           submits
for itself and its property in any legal action or proceeding relating to this
Agreement and the other Credit Documents to which it is a party, or for
recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the courts of the State of New York;

 

(b)           consents
that any such action or proceeding may be brought in such courts and waives any
objection that it may now or hereafter have to the venue of any such action or
proceeding in any such court or that such action or proceeding was brought in
an inconvenient court and agrees not to plead or claim the same;

 

(c)           agrees
that service of process in any such action or proceeding may be effected in
accordance with the local rules of civil procedure or by mailing a copy thereof
by registered or certified mail (or any substantially similar form of mail),
postage prepaid, to the Borrower at its address set forth in Section 11.2
or at such other address of which the Administrative Agent shall have been
notified pursuant thereto;

 

(d)           agrees
that nothing herein shall affect the right to effect service of process in any
other manner permitted by law or shall limit the right to sue in any other
jurisdiction; and

 

(e)           waives,
to the maximum extent not prohibited by law, any right it may have to claim or
recover in any legal action or proceeding referred to in this Section 11.14
any special, exemplary, punitive or consequential damages.

 

57

11.15      Acknowledgements.

 

The Borrower
hereby acknowledges that:

 

(a)           it
has been advised by counsel in the negotiation, execution and delivery of this
Agreement and the other Credit Documents to which it is a party;

 

(b)           neither
the Administrative Agent nor any Lender (in any capacity) has any fiduciary
relationship with or duty to the Borrower arising out of or in connection with
this Agreement or any of the other Credit Documents to which it is a party, and
the relationship between Administrative Agent and Lenders, on one hand, and the
Borrower, on the other hand, in connection herewith or therewith is solely that
of debtor and creditor; and

 

(c)           no
joint venture is created hereby or by the other Credit Documents to which the
Borrower is a party or otherwise exists by virtue of the transactions
contemplated hereby among the Lenders or among the Borrower and the Lenders.

 

11.16      Waivers
of Jury Trial.

 

THE BORROWER,
THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT
OR ANY OTHER CREDIT DOCUMENT TO WHICH IT IS A PARTY AND FOR ANY COUNTERCLAIM
THEREIN.

 

11.17      Confidentiality.

 

The
Administrative Agent and each Lender shall hold all non-public information
furnished by or on behalf of the Borrower in connection with such Lender’s
evaluation of whether to become a Lender hereunder or obtained by such Lender
or the Administrative Agent pursuant to the requirements of this Agreement (“Confidential Information”), in accordance with its customary
procedure for handling confidential information of this nature and (in the case
of a Lender that is a bank) in accordance with safe and sound banking practices
and in any event may make disclosure as required or requested by any
Governmental Authority, representatives thereof or any nationally recognized
rating agency that requires access to information about such Lender’s
investment portfolio in connection with ratings issued with respect to such
Lender or pursuant to legal process or to such Lender’s or the Administrative
Agent’s lawyers, professional advisors or independent auditors or Affiliates;
provided that, unless specifically prohibited by applicable law or court order,
each Lender and the Administrative Agent shall notify the Borrower of any
request by any governmental agency or representative thereof (other than any
such request in connection with an examination of the financial condition or
regulatory compliance of such Lender by such Governmental Authority or in
connection with ratings by such rating agency with respect to such Lender) for
disclosure of any such non-public information prior to disclosure of such
information, and provided further that
in no event shall any Lender or the Administrative Agent be obligated or
required to return any materials furnished by the Borrower or any Subsidiary of
the Borrower.  Each Lender and the
Administrative Agent agrees that it will not provide to prospective Transferees
or to prospective

 

58

 

direct or indirect contractual counterparties in swap agreements to be
entered into in connection with Revolving Credit Loans made hereunder any of
the Confidential Information unless such Person shall have previously executed
a Confidentiality Agreement substantially in the form prescribed from time to
time by the Loan Sales and Trading Association. 
Notwithstanding anything herein to the contrary, any party to this
Agreement (and any employee, representative, or other agent of any party to
this Agreement) may disclose to any and all persons, without limitation of any
kind, the tax treatment and tax structure of the transactions contemplated by
this Agreement, and all materials of any kind (including opinions or other tax
analyses) related to such tax treatment and tax structure.  Further, each party hereto acknowledges that
it has no proprietary rights to any tax matter or tax idea related to the
transactions contemplated by this Agreement. 
For this purpose the tax treatment of the transactions contemplated by
this Agreement is the purported or claimed U.S. federal income tax treatment of
such transactions and the tax structure of such transactions is any fact that
may be relevant to understanding the purported or claimed U.S. federal income
tax treatment of such transaction.

 

11.18      Treatment
of Revolving Credit Loans.

 

(a)  The Borrower does not intend to treat the
Revolving Credit Loans and related transactions as being a “reportable
transaction” (within the meaning of Treasury Regulation Section 1.6011-4).  In the event the Borrower determines to take
any action inconsistent with such intention, it will promptly notify the
Administrative Agent thereof.

 

(b)  The Borrower acknowledges that the
Administrative Agent and one or more of the Lenders may treat its Revolving
Credit Loans as part of a transaction that is subject to Treasury Regulation
Section 1.6011-4 or Section 301.6112-1, and the Administrative Agent and such
Lender or Lenders, as applicable, may file such IRS forms or maintain such
lists and other records as they may determine is required by such Treasury
Regulations.

 

59

 

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

 

	
   

  	
  INTERNATIONAL TRANSMISSION

  COMPANY,
as the Borrower

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CANADIAN
  IMPERIAL BANK OF

  COMMERCE,

  as the Administrative Agent and as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CREDIT SUISSE FIRST BOSTON,

  CAYMAN ISLANDS BRANCH,
as a Lender and as Documentation Agent and

  Arranger 

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

60

 

SCHEDULE
I

COMMITMENTS

 

	
  LENDER

  	
   

  	
  REVOLVING

  CREDIT

  COMMITMENT

  	
   

  	
  REVOLVING CREDIT

  COMMITMENT

  PERCENTAGE

  	
   

  
	
  Credit Suisse First Boston

  	
   

  	
  $

  	
  10,000,000

  	
   

  	
  66.67

  	
  %

  
	
  Canadian Imperial Bank of Commerce

  	
   

  	
  $

  	
  5,000,000

  	
   

  	
  33.33

  	
  %

  
	
  Total amount

  	
   

  	
  $

  	
  15,000,000

  	
   

  	
   

  	
   

  

 

 

SCHEDULE
II

ENVIRONMENTAL MATTERS

 

None.

 

 

SCHEDULE
III

PENSION AND WELFARE MATTERS

 

Certain
employees under the following plans will be entitled to post-retirement
benefits which are not required under continuation coverage:

 

ITC Welfare
Benefits Plan

 

ITC Post
Retiree Medical Trust

 

ITC Management
Supplemental Benefit Plan

 

 

SCHEDULE
IV

OUTSTANDING LIENS ON CLOSING DATE

 

	
  Secured Party

  	
   

  	
  Description
  of Indebtedness

  
	
   

  	
   

  	
   

  
	
  BNY Midwest
  Trust Company, Trustee

  	
   

  	
  First
  Mortgage Bonds issued pursuant to the First Mortgage and Deed of Trust, dated
  July 16, 2003 and all Supplemental Indentures thereto.

  

 

 

SCHEDULE
V

SENIOR
MANAGEMENT

 

Joseph L.
Welch, President and Chief Executive Officer

 

Linda Blair, Vice President – Policy & Business
Development

 

Larry Burneel,
Vice President – Federal Affairs

 

Jim Cyrulewski, Vice President – Operations Manager, MEPCC

 

Joseph R. Dudak, Vice President – Resource and Asset Management

 

John H. Flynn,
Vice President and General Counsel

 

Edward M.
Rahill, Vice President – Finance and Chief Financial Officer

 

Richard
Shultz, Vice President – Engineering

 

 

EXHIBIT A

 

[Form of Notice of Borrowing]

 

NOTICE OF BORROWING

 

TO:         [        ]

Attention:  [        ]

Facsimile No.: [        ]

 

Pursuant to
the Revolving Credit Agreement, dated as of July 16, 2003 (as the same may be
amended, modified, supplemented, restated or replaced from time to time, the “Revolving Credit Agreement”; the terms
defined therein and not otherwise defined herein being used herein as therein
defined), among International Transmission Company, a Michigan corporation (the
“Borrower”), the Lenders, and
Canadian Imperial Bank of Commerce, as the Administrative Agent, this
represents the Borrower’s request to borrow as follows:

 

Revolving Credit Loan:

 

1.     Date of borrowing:

 

2.     Amount of borrowing:

 

3.     Lender(s):               Lenders,
in accordance with their Revolving Credit Commitments under the Revolving
Credit Agreement

 

4.     Interest rate option:

 

Please wire
transfer the proceeds of the Borrowing in accordance with the funds flow
memorandum delivered under separate cover.

 

The
undersigned officer, to the best of his or her knowledge, in his or her
capacity as an officer of the Borrower certifies that:

 

(i)            All
representations and warranties made by the Borrower contained in the Revolving
Credit Agreement and in the other Credit Documents are true and correct in all
material respects with the same effect as though such representations and
warranties had been made on and as of the date hereof (except where such
representations and warranties expressly relate to an earlier date, in which
case such representations and warranties are true and correct in all material
respects as of such earlier date); and

 

(ii)           No
event has occurred and is continuing or would result from the consummation of
the Borrowing contemplated hereby that would constitute a Default or an Event
of Default.

 

 

Dated:

 

	
   

  	
  INTERNATIONAL TRANSMISSION

  COMPANY

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

EXHIBIT
B

 

[Form of Notice of Continuation]

 

TO:                         Canadian Imperial Bank of
Commerce, as Administrative Agent under the Credit Agreement (as defined below)

425 Lexington Avenue

New York, NY  10017

Attention:  April Varner

Facsimile No.:  (212) 856-3763

 

Pursuant to the Credit Agreement, dated as of July 16, 2003 (as the
same may be amended, modified, supplemented, restated or replaced from time to
time, the “Credit Agreement”; the
terms defined therein and not otherwise defined herein being used herein as
therein defined), among International Transmission Company, a Michigan
corporation (the “Borrower”), the
various financial institutions and other persons from time to time referred to
as “Lenders” in the Credit Agreement (the “Lenders”),
Canadian Imperial Bank of Commerce, as the Administrative Agent and Credit
Suisse First Boston, Cayman Islands Branch as Documentation Agent and Arranger,
this represents the Borrower’s request to continue Revolving Credit Loans as
follows:

 

1.             Date of continuation or conversion:

 

                                          ,                      

 

2.             Amount of Revolving Credit Loans being continued or
converted:

 

$                                                 

 

3.             Nature of continuation or conversion:

 

	
           

  	
   

  	
  a.

  	
   

  	
  Conversion of a LIBOR Loan as an ABR Loan

  
	
           

  	
   

  	
  b.

  	
   

  	
  Conversion of an ABR Loan as a LIBOR Loan

  
	
           

  	
   

  	
  c.

  	
   

  	
  Continuation (rollover) of LIBOR Loans as LIBOR Loans

  

 

4.             If
Revolving Credit Loans are being continued as or converted into LIBOR Loans,
the duration of the new Interest Period that commences on the continuation or
conversion date:

 

                 month(s)

 

The undersigned officer, to the best of his or her knowledge, in his or
her capacity as an officer of the Borrower, certifies that:

 

 

(i)            All
representations and warranties made by the Borrower contained in the Credit
Agreement and in the other Credit Documents are true and correct in all
material respects with the same effect as though such representations and
warranties had been made on and as of the date hereof (except where such
representations and warranties expressly relate to an earlier date, in which
case such representations and warranties are true and correct in all material
respects as of such earlier date); and

 

(ii)           No
event has occurred and is continuing or would result from the consummation of
the Borrowing contemplated hereby that would constitute a Default or an Event
of Default.

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INTERNATIONAL TRANSMISSION

  COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

EXHIBIT C

 

[Form of Closing Certificate]

 

CLOSING CERTIFICATE

 

INTERNATIONAL TRANSMISSION COMPANY

 

TO:         The
Lenders and the Administrative Agent (each, as defined below)

 

RE:         Revolving
Credit Agreement, dated as of July 16, 2003 (as the same may be amended,
modified, supplemented, restated or replaced from time to time, the “Revolving Credit Agreement”; the terms
defined therein and not otherwise defined herein being used herein as therein
defined), among International Transmission Company, a Michigan corporation (the
“Borrower”), the Lenders, and
Canadian Imperial Bank of Commerce, as the Administrative Agent.

 

The
undersigned, an Authorized Officer of the Borrower, hereby certifies to the
best of my knowledge, information and belief, for and on behalf of the
Borrower, and not in my personal capacity, in connection with the initial
Borrowing on this date under the Revolving Credit Agreement, that:

 

1.             the
conditions precedent set forth in the Revolving Credit Agreement were satisfied
as of the Closing Date;

 

2.             attached
to this certificate as Schedule A is a correct and complete copy of all of the
by-laws of the Borrower and such by-laws are in full force and effect at the
date hereof and neither the directors nor the shareholders of the Borrower have
passed, confirmed or consented to any amendments or variations to such by-laws;

 

3.             attached
to this certificate as Schedule B is a correct and complete copy of a
resolution of the board of directors of the Borrower, dated [        ],
2003, which resolution is in full force and effect, unamended, at the date
hereof; and

 

4.             the
following persons are duly elected or appointed directors and/or officers of
the Borrower and a specimen signature of each such person is as set out
opposite his or her name below:

 

 

the following persons are duly elected or appointed directors and/or
officers of the Borrower and a specimen signature of each such person is as set
out opposite his or her name below:

 

	
  [Joseph Welch

  	
   

  
	
  President and Chief Executive

  	
   

  
	
  Officer]

  	
   

  	
   

  
	
   

  	
   

  
	
  [John Flynn

  	
   

  
	
  Secretary, Vice President and

  	
   

  
	
  General Counsel]

  	
   

  	
   

  
	
   

  	
   

  
	
  Dated:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  [Joseph Welch

  
	
   

  	
  President and Chief Executive Officer]

  

 

I,                          ,                                of
the Borrower, DO HEREBY CERTIFY that                          has
been duly elected (or appointed) and has duly qualified as, and on this day is,
the                               of
the Borrower, and the signature above is his genuine signature.

 

IN WITNESS
WHEREOF, I have signed this Certificate this     day
of July, 2003.

 

	
   

  	
   

  	
   

  
	
   

  	
  [John Flynn

  
	
   

  	
  Secretary]

  

 

 

EXHIBIT D

 

[Form
of First Mortgage Bond, Series B]

 

SERIES B BOND

 

THIS SECURITY IS NOT TRANSFERABLE EXCEPT TO A SUCCESSOR ADMINISTRATIVE
AGENT UNDER THE CREDIT AGREEMENT DATED AS OF JULY 16, 2003 AMONG INTERNATIONAL
TRANSMISSION COMPANY, THE LENDERS PARTY THERETO, THE ADMINISTRATIVE AGENT
REFERRED TO THEREIN AND THE OTHER PARTIES THERETO FROM TIME TO TIME, AS AMENDED
FROM TIME TO TIME.

 

THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT, AS AMENDED FROM REGISTRATION UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND THIS SECURITY
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.  EACH PURCHASER OF THIS SECURITY IS HEREBY
NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM
THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY
RULE 144A THEREUNDER.

 

THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT
(A) THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED, ONLY (I) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES OR (II) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT, IN EACH OF CASES (I) AND (II) IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE
HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF
THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.

 

IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH
TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES
WITH THE FOREGOING RESTRICTIONS.

 

 

INTERNATIONAL TRANSMISSION COMPANY

FIRST MORTGAGE BONDS, SERIES B DUE FEBRUARY 28, 2006

$15,000,000

No. 1

 

INTERNATIONAL TRANSMISSION COMPANY, a corporation duly organized and
existing under the laws of the State of Michigan (herein called the “Company,” which term includes any successor
under the Indenture hereinafter referred to), for value received, hereby
promises to pay to the Administrative Agent under the Credit Agreement referred
to below, or registered assigns, the principal sum of FIFTEEN MILLION DOLLARS
($15,000,000) on February 28, 2006, or such lesser principal amount of loans as
may be outstanding on said date under the Credit Agreement, and to pay interest
thereon from July 16, 2003, or such later date as the Credit Agreement shall be
executed and delivered, or from the most recent Interest Payment Date to which
interest has been paid or duly provided for, in arrears, at such rate per annum
on each Interest Payment Date and at maturity as shall, except to the extent
payment has been made in respect of the Company’s obligations under the Credit
Agreement as discussed below, cause the amount of interest payable on this
Series B Bonds to equal the amount of interest, fees and other amounts
(excluding principal) payable on such Interest Payment Date under the Credit
Agreement.  The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date (as defined
below) will, as provided in such Indenture, be paid to the Person in whose name
the Series B Bonds are registered at the close of business on the Regular
Record Date for such interest, fees and other amounts (excluding principal).
Any such interest not so punctually paid or duly provided for will forthwith
cease to be payable to the Holder on such Regular Record Date and may be paid
to the Person in whose name this Series B Bond is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given as provided in the
Indenture.

 

Payment of the principal of and interest and any other amounts due on
the Series B Bonds will be made at the office or agency of the Company
maintained for that purpose in the City of New York, State of New York or at
the office or place of business of the Trustee or its successor in trust under
the Original Indenture hereinafter referenced, in such coin or currency of the
United States of America as at the time of payment is legal tender for the
payment of public and private debts; provided, however, that at the option of
the Company payments of interest may be made by check mailed to the address of
the Person entitled thereto as such address shall appear in the Security Register
Holders must surrender Series B Bonds to a Paying Agent to collect
principal payments.

 

The Series B Bonds have been issued in
connection with the Credit Agreement dated as of July 16, 2003 (as amended from
time to time, the “Credit Agreement”) among the Company, the lenders
party thereto (the “Lenders”), the administrative agent referred to
therein (including and successor administrative agent, the “Administrative
Agent”) and any other parties thereto from time to time, to secure payment
when due of all obligations of the Company under the Credit Agreement.  Nothing contained in the Series B Bonds shall
be deemed to prejudice the rights and remedies of the Lenders or the
Administrative Agent, or the obligations of the Company, under the Credit
Agreement.

 

 

For purposes of the term “Interest Payment
Date” as used in the Series B Bonds, interest shall be payable on the same
dates as interest, fees and other amounts are payable from time to time under
the Credit Agreement until the maturity of the Series B Bonds, or until the
payment of all the Company’s obligations and the termination of the Lenders’
commitments under the Credit Agreement, or if the Company defaults in the
payment of principal or interest due on the Series B Bonds, until such
principal and interest shall have been paid in full and the Company’s
obligations with respect thereto discharged as provided in the Indenture.  The amount of interest, fees and other
amounts payable from time to time under the Credit Agreement, the bases on
which such interest, fees and other amounts are calculated and the dates on
which such interest, fees and amounts are payable are set forth in the Credit
Agreement.

 

A payment of the principal, interest, fees or
other amounts made in respect of the Company’s obligations under the Credit
Agreement shall be deemed a payment in respect of the respective obligations
under the Series B Bonds.  The obligation
of the Company to make payments with respect to principal of and interest on
the Series B Bonds shall be fully satisfied and discharged to the extent that,
at any time that such payment shall be due, the Company shall have paid fully
the then due principal, interest, fees and other amounts, as the case may be,
due under the Credit Agreement.  The
Series B Bonds shall be automatically deemed fully paid and cancelled upon
payment in full of all outstanding amounts owing under the Credit Agreement and
termination of the commitments thereunder.

 

The Trustee may conclusively presume that the
obligation of the Company to pay the principal of an interest on the Series B
Bonds shall have been fully satisfied and discharged unless and until it shall
have received a written notice from the Administrative Agent, signed by an
authorized officer of the Administrative Agent, stating that the payment of
principal and interest of the Series B Bonds has not been fully paid when due
and specifying the amount of the funds required to make such payment.

 

Before any transfer of this Series B Bond by
the registered holder or its legal representative will be recognized or given
effect by the Company or the Trustee, the registered holder shall note the
amounts of all reductions in the Lenders’ commitments under the Credit
Agreement, and shall notify the Company and the Trustee of the name and address
of the transferee and shall afford the Company and the Trustee the opportunity
to verify the notation of such reductions.

 

Reference is hereby made to the further provisions of the Series B
Bonds set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.

 

Unless the certificate of authentication hereon has been manually
executed by or on behalf of the Trustee under the Indenture (hereinafter
referenced), this Series B Bond shall not be entitled to any benefits under the
Indenture (hereinafter referenced), or be valid or obligatory for any purpose.

 

 

IN WITNESS
WHEREOF, INTERNATIONAL TRANSMISSION COMPANY has caused this Series B Bond
to be duly executed.

 

 

	
  Dated: July 16, 2003

  	
  INTERNATIONAL TRANSMISSION

  COMPANY

  	 

	
   

  	
   

  	 

	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	 

	
   

  	
   

  	
  Title:

  	 

					

 

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

 

This is one of
the Series B Bonds of the series designated therein referred to in the
within-mentioned Indenture.

 

 

	
  Date: July 16, 2003

  	
  BNY MIDWEST TRUST COMPANY,

  	 

	
   

  	
  as Trustee,

  	 

	
   

  	
   

  	 

	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	 

	
   

  	
  Title:

  	 

					

 

 

REVERSE OF SERIES B BOND

 

This First Mortgage Bond, Series B is one of the duly authorized
issue of debentures, bonds, notes or other evidences of indebtedness of the
Company (herein sometimes referred to as the “Series B
Bonds”), of the series hereinafter specified, all issued or to be
issued under and pursuant to the Original Indenture dated as of July 15, 2003,
as supplemented by the First Supplemental Indenture and the Second Supplemental
Indenture, each dated as of July 15, 2003 (as so supplemented, the “Indenture”), duly executed and delivered by
the Company and BNY Midwest Trust Company, as Trustee (herein called the “Trustee,” which term includes any successor
trustee under the Indenture), to which Indenture and any other indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, obligations, duties and immunities thereunder of the Trustee and any
agent of the Trustee, any Paying Agent, the Company and the Holders of the
Series B Bonds and of the terms upon which the Series B Bonds are
issued and are to be authenticated and delivered.  This Security is one of the series designated
on the face hereof, which series is initially limited in aggregate principal
amount to $15,000,000 issued on the Issue Date; provided that the Company may
from time to time or at any time, without the consent of the Holders of the
Series B Bonds issue additional Securities, including additional Series B
Bonds up to the amount permitted under the Indenture, which additional Series B
Bonds shall, if issued, increase the aggregate principal amount of, and shall
be consolidated and form a single series with, the Series B Bonds issued on the
Issue Date such that the Company’s obligations to pay the principal amount of
all Series B Bonds outstanding at any time shall not exceed the Company’s
obligations to pay the aggregate pincipal amount of loans outstanding under the
Credit Agreement at such time, and the Company shall not be obligated to pay
interest on the Series B Bonds in excess of the interest, fees and other
amounts (excluding principal) payable by the Company under the Credit
Agreement.  By the terms of the
Indenture, additional Securities of other separate series, which may vary as to
date, aggregate principal amount, Stated Maturity, interest rate or method of
calculating the interest rate, redemption provisions and in other respects as
therein provided, may be issued in an unlimited amount.

 

The Series B Bonds may not be redeemed in whole or in part, provided,
that nothing contained in this Series B Bond or in the Indenture shall limit
the right of the Company to prepay loans under the Credit Agreement having the
effect on the principal amount of the Series B Bonds set forth on the face
hereof.

 

The Indenture contains provisions for defeasance of (a) the entire
indebtedness of the Series B Bonds and (b) certain restrictive
covenants upon compliance by the Company with certain conditions set forth in
the Indenture.

 

If an Event of Default with respect to the Series B Bonds shall
occur and be continuing, the unpaid principal of the Series B Bonds may be
declared due and payable in the manner and with the effect provided in the
Indenture.  Further, notwithstanding
whether there is otherwise a default or Event of Default under the Series B
Bonds, if the maturity of the loans under the Credit Agreement is accelerated
as provided in the Credit Agreement, there shall immediately be an Event of
Default with respect to the Series B Bonds and the unpaid principal of the
Series B Bonds shall thereupon become immediately due and payable without any
action by the Holders

 

 

of any Series B Bonds or any other Securities, and without presentment,
demand, protest or any other notice of any kind, all of which are hereby waived
by the Company.

 

The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with
the consent of the Holders of a majority in aggregate principal amount of the
Securities at the time Outstanding of all series to be affected (voting as a
class). The Indenture also contains provisions permitting the Holders of
specified percentages in principal amount of the Securities of each
series at the time Outstanding, on behalf of the Holders of all Securities
of such series, to waive compliance by the Company with certain provisions of
the Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of the Securities of
this series shall be conclusive and binding upon such Holder and upon all future
Holders of the Securities of this series and of any Securities of this
series issued upon the registration of transfer hereof or in exchange herefor
or in lieu hereof, whether or not notation of such consent or waiver is made
upon the Securities of this series.

 

No reference herein to the Indenture and no provision of the
Series B Bonds or of the Indenture shall alter or impair the obligation of
the Company, which is absolute and unconditional, to pay the principal of (and
premium, if any) and interest, if any, on the Series B Bonds at the times,
place and rate, and in the coin or currency, herein prescribed. As provided in
the Indenture and subject to certain limitations therein set forth, the
transfer of the Series B Bonds is registrable in the Security Register,
upon surrender of the Series B Bonds for registration of transfer at the
office or agency of the Company in any place where the principal of (and
premium, if any) and interest, if any, on the Series B Bonds are payable,
duly endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Series B Bonds of like tenor, of authorized denominations and for
the same aggregate principal amount, will be issued to the designated
transferee or transferees.

 

The Series B Bonds are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof.  As provided in the Indenture and subject to
certain limitations therein set forth, the Series B Bonds are exchangeable
for a like aggregate principal amount of Series B Bonds of like tenor of a
different authorized denomination, as requested by the Holder surrendering the
same.

 

No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.

 

Prior to due presentment of the Series B Bonds for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name the Series B Bonds are registered as
the owner hereof for all purposes, whether or not the Series B

 

 

Bonds be overdue, and neither the Company, the Trustee nor any such
agent shall be affected by notice to the contrary.

 

The Series B Bonds are not subject to any sinking fund.

 

The Series B Bonds are entitled to the benefit of the Lien under
the Indenture.

 

Each Holder, by accepting a Series B Bond, agrees to be bound by
all the terms and provisions of the Indenture, as the same may be amended from
time to time in accordance with its terms.

 

This Series B Bond shall be governed by and construed in
accordance with the law of the State of New York, except, if the Indenture
governing this Series B Bond shall become qualified and shall become subject to
the Trust Indenture Act, to the extent that the Trust Indenture Act shall be
applicable, and except to the extent that the law of any jurisdiction wherein
any portion of the Mortgaged Property is located shall mandatorily govern the
creation of a mortgage lien on and security interest in, or perfection,
priority or enforcement of the Lien of the Indenture or exercise of remedies
with respect to, such portion of the Mortgaged Property.

All capitalized terms used but not defined in this Series B Bond
shall have the meanings assigned to them in the Indenture.

 

 

TRANSFER NOTICE

 

FOR VALUE
RECEIVED the undersigned registered holder hereby sell(s), assign(s) and
transfer(s) unto

 

Insert Taxpayer Identification No.

 

 

 

 

please print or typewrite name and address including zip code of
assignee

 

 

 

the within Series B Bond and all rights thereunder, hereby
irrevocably constituting and appointing

 

 

 

attorney to transfer said Series B Bond on the books of the
Security Registrar with full power of substitution in the premises.

 

 

In connection with any transfer of this Certificate occurring prior to
the date that is the earlier of the date of an effective Registration Statement
or the date two years after the later of the original issuance of this Security
or the last date on which this Security was held by International Transmission
Company or any affiliate of International Transmission Company, the undersigned
confirms that without utilizing any general solicitation or general advertising
that pursuant to an exemption from registration under the Securities Act of
1933, as amended:

 

[Check One]

 

o (a) the Series B
Bonds are being transferred to a person whom we reasonably believe is a “qualified
institutional buyer” (as defined in Rule 144A under the Securities Act of 1933,
as amended) (a “QIB”) that purchases for its own account or for the account of
one or more QIBs to whom notice has been given that the resale, pledge or
transfer is being made in reliance on Rule 144A under the Securities Act;

 

or

 

o (b) the Series B
Bonds are being transferred other than in accordance with (a) above and
documents are being furnished that comply with the conditions of transfer set
forth in this Series B Bond and the Indenture.

 

 

The Security Registrar shall not be obligated to register this Security
in the name of any Person other than the Holder hereof unless and until the conditions
to any such transfer of registration set forth herein and in Section 207 of the
Second Supplemental Indenture shall have been satisfied.

 

	
  Date: [                   ,     ]

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  NOTE:  The signature must
  correspond with the name as written upon the face of the within-mentioned
  instrument in every particular, without alteration or any change whatsoever.

  
	
   

  	
   

  
	
  Signature Guarantee:

  	
   

  	
   

  
						

 

SIGNATURE GUARANTEE

 

Signatures must be guaranteed by an “eligible guarantor institution”
meeting the requirements of the Security Registrar, which requirements include
membership or participation in the Security Transfer Agent Medallion Program (“STAMP”)
or such other “signature guarantee program” as may be determined by the
Security Registrar in addition to, or in substitution of, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.

 

 

EXHIBIT E

 

[Form
of New Lender Supplement]

 

Reference is
made to the REVOLVING CREDIT AGREEMENT, dated
as of July 16, 2003, among INTERNATIONAL TRANSMISSION COMPANY, a Michigan
corporation (the “Borrower”),
various financial institutions and other Persons from time to time parties
referred to as lenders (the “Lenders”) and
CANADIAN IMPERIAL BANK OF COMMERCE (“CIBC”), as administrative agent (in such
capacity, the “Administrative Agent”).
Capitalized terms used and not defined herein have the respective meanings
assigned thereto in the Credit Agreement.

 

Upon execution
and delivery of this New Lender Supplement by the parties hereto as provided in
Section 3.3 of the Credit Agreement and subject to the conditions precedent set
forth in said section, the undersigned hereby becomes a Lender thereunder
having the Revolving Credit Commitments set forth opposite it signature below,
effective as of the date hereof.

 

This New
Lender Supplement shall be construed in accordance with and governed by the law
of the State of New York.  This New
Lender Supplement may be executed by one or more of the parties hereto on any
number of separate counterparts, and all of said counterparts taken together
shall be deemed to constitute one and the same instrument.  Delivery of an executed signature page hereof
by facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof.

 

All notices,
requests and demands to or upon the respective parties hereto to be effective
shall be in writing to such address listed below or as may be hereafter
notified by the respective parties hereto:

 

(a)           The
Borrower:

 

International Transmission Company

1901 South Wagner

Ann Arbor, MI 48103-9715

 

Attention: John Flynn, Esq.

Facsimile No.:

 

with a copy to:

 

Simpson Thacher & Bartlett

425 Lexington Avenue

New York, NY 10017-3954

 

Attention: James Cross

Facsimile No.: (212) 455-2502

 

 

(b)           The
Administrative Agent:

 

Canadian Imperial Bank of Commerce

425 Lexington Avenue, 8th Floor

New York, NY 10017

 

Attention: April Varner

Facsimile No.:  (212) 856-3763

 

IN WITNESS WHEREOF, the parties hereto have
caused this New Lender Supplement to be duly executed and delivered by their
proper and duly authorized officers as of this      day
of         , 200  .

 

	
  Revolving
  Credit Commitments:

  	
   

  	
   

  
	
   

  	
  Name of Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
  Accepted and agreed:

  	
   

  
	
  INTERNATIONAL TRANSMISSION COMPANY

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  
	
   

  	
   

  
	
  CANADIAN IMPERIAL BANK OF COMMERCE

  	
   

  
	
  as Administrative Agent

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  
							

 

 

 

EXHIBIT F

 

[Form
of Commitment Increase Supplement]

 

SUPPLEMENT,
dated                          ,
to Revolving Credit Agreement, dated as of July 16, 2003 (as the same may be
amended, modified, supplemented, restated or replaced from time to time, the “Credit
Agreement”; the terms defined therein and not otherwise defined herein being
used herein as therein defined), among International Transmission Company, a
Michigan corporation (the “Borrower”), the Lenders, and Canadian Imperial Bank
of Commerce, as the Administrative Agent.

 

W I T N E S S
E T H :

 

WHEREAS, the
Credit Agreement provides in Section 3.3(d) thereof that any Lender with (when
applicable) the consent of the Borrower may increase the amount of its
Commitment by executing and delivering to the Borrower and the Administrative
Agent a supplement to the Credit Agreement in substantially the form of this
Supplement; and

 

WHEREAS, the
undersigned now desires to increase the amount of its Commitment under the
Credit Agreement;

 

NOW THEREFORE,
the undersigned hereby agrees as follows:

 

1.                The
undersigned agrees, subject to the terms and conditions of the Credit
Agreement, that on the effective date of this Supplement, it shall have its
Commitment increased by $                       ,
thereby making the amount of its Commitment $                               .

 

2.                Terms
defined in the Credit Agreement shall have their defined meanings when used herein.

 

 

IN WITNESS
WHEREOF, the undersigned has caused this Supplement to be executed and
delivered by a duly authorized officer on the date first above written.

 

	
   

  	
  [NAME OF LENDER]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
  Accepted this      day
  of

  	
   

  
	
                           ,      .

  	
   

  
	
   

  	
   

  
	
  INTERNATIONAL TRANSMISSION COMPANY

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Accepted this      day
  of

  	
   

  
	
                           ,      .

  	
   

  
	
   

  	
   

  
	
  CANADIAN IMPERIAL BANK OF

  	
   

  
	
  COMMERCE, as Administrative Agent

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  

 

 

EXHIBIT G

 

[Form
of Compliance Certificate]

 

TO:         The
Lenders and the Administrative Agent

 

The undersigned, an Authorized Officer of International Transmission
Company (the “Borrower”), in such capacity and not personally, hereby certifies
to the best of my knowledge, information and belief that:

 

1.             I
am the duly appointed                                                                                                   of
the Borrower named in the Credit Agreement, dated as of July 16, 2003 (as the
same may be amended, modified, supplemented, restated or replaced from time to
time, the “Credit Agreement”),
among International Transmission Company, a Michigan corporation (the “Borrower”), the Lenders, Canadian Imperial
Bank of Commerce, as the Administrative Agent and Credit Suisse First Boston,
Cayman Islands Branch as Documentation Agent and Arranger and as such I am
providing this certificate for and on behalf of the Borrower pursuant to
Section 7.1(c) of the Credit Agreement. Unless the context otherwise requires,
capitalized terms in the Credit Agreement which appear herein without
definitions shall have the meanings ascribed thereto in the Credit Agreement.

2.             I
am familiar with and have examined the provisions of the Credit Agreement
including those of Articles 6, 7, 8 and 9 therein and have reviewed and am
familiar with the contents of this certificate.

3.             Delivered
herewith are the financial statements required to be delivered pursuant to
Section 7.1[(a)] [(b)] of the Credit Agreement.

4.             No
Default or Event of Default has occurred and is continuing as of the date
hereof [or if any Default or Event of Default does exist, specify the nature
and extent thereof].

5.             As
of the last day of the Fiscal Quarter ending                      ,
the financial ratios referred to in Section 8.4 of the Credit Agreement is              %
and was calculated as set forth in Schedule I.

 

Dated this day of                      ,                             .

 

	
   

  	
   

  
	
  [Name and Title]

  

 

 

Schedule I

 

Debt to Capitalization Ratio

 

	
  1. Total Debt for the relevant Test Period.

  	
   

  	
  $

  	
   

  	
   

  
	
  2. Total Capitalization for such Test
  Period.

  	
   

  	
   

  	
   

  
	
  (a)           Total Debt

  	
   

  	
  $

  	
   

  	
   

  
	
  (b)           Consolidated net
  shareholders equity of the Borrower

  	
   

  	
  $

  	
   

  	
   

  
	
  (c)           Total Capitalization:
  The sum of Items 2(a) and 2(b)

  	
   

  	
  $

  	
   

  	
   

  
	
  3.             DEBT TO
  CAPITALIZATION RATIO: the ratio of Item 1 toItem 2

  	
   

  	
   

  	
  %

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00084-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00084-of-00352.parquet"}]]