Document:

Exhibit 10.12

 

Term Sheet Proposal

 

This is a proposed term sheet for a possible lending
relationship between Blackhawk Biofuels, LLC (Borrower) and 1st Farm
Credit Services or its agent/assignee (Lender). The loan proposal described
below is conditioned upon completion and approval of loan underwriting
requirements leading to a loan commitment and conditions precedent contained
herein.

 

BLACKHAWK BIOFUELS, LLC

FREEPORT, IL

 

LOAN TERMS AND CONDITIONS

 

July 31, 2006

 

	
  Borrower:

  	
   

  	
  Blackhawk Biofuels, LLC

  
	
   

  	
   

  	
   

  
	
  Project Costs: 

  	
   

  	
  The total estimated cost of this 30 million gallon biodiesel
  production project is $58,000,000 per the Borrowers sources and uses
  estimates as found in the COMPILATION OF FORECASTED FINANCIAL STATEMENTS
  dated June 19, 2006.

  
	
   

  	
   

  	
   

  
	
  Minimum Equity Funding:

  	
   

  	
  The borrower will provide a minimum of $35,000,000 of equity
  contribution as follows: Member cash equity $35,000,000. All non-cash equity
  sources must be approved by lender.

  
	
   

  	
   

  	
   

  
	
  Construction Facility:

  	
   

  	
  1st Farm Credit Services will provide a single
  construction loan of a maximum of $25,000,000 or approximately $.83/gallon.

  
	
   

  	
   

  	
   

  
	
  Maturity Date:

  	
   

  	
  Maturity date of construction credit facility will be for 16 months
  based upon the loan closing date of those facilities.

  
	
   

  	
   

  	
   

  
	
  Purpose:

  	
   

  	
  The purpose of the loan is for the construction of a 30million gallon biodiesel and co-product production
  facility.

  

 

 

	
  Availability Period:

  	
   

  	
  The construction loan is available from the day of formal loan
  closing until the earlier of 60 days post construction or the maturity date.
  A third party engineer must certify confirmation of the end of the
  construction period.

  
	
   

  	
   

  	
   

  
	
  Construction Loan Interest Payments:

  	
   

  	
  Interest shall be calculated on the actual number of days each loan
  is outstanding on the basis of a year consisting of 365 days. Accrued
  construction interest is due quarterly from the month of closing.

  
	
   

  	
   

  	
   

  
	
  Construction Bonding:

  	
   

  	
  Construction bonding acceptable to the lender will be required.

  
	
   

  	
   

  	
   

  
	
  Term Facility:

  	
   

  	
  1st Farm Credit Services will provide a term loan of a
  maximum of $25,000,000 or approximately $.83/gallon.
  Upon completion of construction and with appropriate certification of the
  plant operation, the total outstanding construction loan balance will be
  converted into the term credit facility.

  
	
   

  	
   

  	
   

  
	
  Maturity Date:

  	
   

  	
  Maturity date of term credit facility will be for ten years based
  upon the loan closing date of those facilities.

  
	
   

  	
   

  	
   

  
	
  Purpose:

  	
   

  	
  The purpose of the loan is for the long term financing of a 30million gallon biodiesel and co-product production facility.

  
	
   

  	
   

  	
   

  
	
  Principal and Interest Payments:

  	
   

  	
  All principal payments are due quarterly along with interest
  (calculated on a 365 day basis) as will be described in the term loan
  facilities. The term loan amortization will be equal payments of principal
  and interest fully amortized on a 10 year schedule.

  
	
   

  	
   

  	
   

  
	
  Voluntary Prepayments:

  	
   

  	
  There will be a penalty if prepayment of the senior term facility
  indebtedness is paid in its entirety according to the following schedule: If
  within one year after the conversion to the term facility senior = 2 percent;
  If within the second year after the conversion to the senior term loan = 1
  percent.

  
	
   

  	
   

  	
   

  
	
  Operating Facility:

  	
   

  	
  1st Farm Credit Services will provide an operating Line of
  Credit of a maximum of $5,000,000.

  
	
   

  	
   

  	
   

  
	
  Maturity Date:

  	
   

  	
  Maturity date of operating Line of Credit facility will be 364-days
  from the loan closing date of those facilities.

  
	
   

  	
   

  	
   

  
	
  Purpose:

  	
   

  	
  General operating and risk management funding needs.

  

 

 

	
  Borrowing Base:

  	
   

  	
  Loan will be governed by a monthly borrowing base which will limit
  the outstanding balance under the loan to a maximum of 75% of the value of
  inventory at cost and receivables to be defined.

  
	
   

  	
   

  	
   

  
	
  Principal and Interest Payments:

  	
   

  	
  Principal will be due at loan maturity. Quarterly interest payments
  (calculated on a 365 day basis) required.

  
	
   

  	
   

  	
   

  
	
  Interest Rates:

  	
   

  	
  Construction/Term Loan: 

  1. The construction loan facility is eligible for the variable base rate of
  the 30-day LIBOR plus 350 bps, the construction period is defined as 16
  months from the date of loan closing not to exceed 60 days from the initial
  plant start-up.

  
	
   

  	
   

  	
  2. At conversion up to 50% of the term loan facility
  is eligible for the variable base rate at 30-day LIBOR plus 325 basis points.
  

  

  Variable rate incentive pricing:
 After receipt of the first annual
  audit report post conversion, variable rate reductions or premiums are
  offered based upon achievement of certain owner equity benchmarks and loan
  covenant compliance; as measured according to lenders underwriting methods.
  When owner equity is less than 50%; LIBOR + 350 bps

  When owner equity is >50% - <60%: LIBOR + 325 bps 

  When owner equity is >60% - <70%: LIBOR + 300 bps 

  When owner equity is >70%: LIBOR + 275 bps 

  

  Fixed Rate: 

  A minimum of 50% of the term facility will be required to be priced on fixed
  rates at the conversion of the construction loan to the term loan. The rate
  will be determined by adding 325 bps to Lender’s funding costs or a similar
  benchmark existing at the time of conversion. 

  

  Fixed rates are not eligible for rate incentives. 

  

  Operating Loan: 

  

  The operating loan facility is eligible for the variable base rate of the
  30-day LIBOR plus 325 bps.

  
	
   

  	
   

  	
   

  
	
  Fees:

  	
   

  	
  1. There will be a $200,000 underwriting and participation fee;
  $50,000 is due upon acceptance of the term sheet by the borrower and $150,000
  is due at loan closing. 

  

 

 

	
   

  	
   

  	
  2. There will be an annual servicing fee of $25,000 beginning at the
  conversion of the construction loan to the term facility and annually
  thereafter until loan maturity. The servicing fee is solely for the account
  of the lender, not the participants. 

  3. There will be an unused commitment fee of 30 bps paid quarterly during the
  term of the Operating Line of Credit.

  
	
   

  	
   

  	
   

  
	
  Costs:

  	
   

  	
  All costs associated with this construction and senior loan are the
  responsibility of the borrower. Some of these costs include but are not
  limited to: appraisal, title insurance, engineer oversight, document
  recording, legal costs, construction bonding and guarantee fees.

  
	
   

  	
   

  	
   

  
	
  Security:

  	
   

  	
  First security interest covering all real estate and personal
  property including but not limited to such things as accounts receivables,
  inventory, machinery, equipment and investments. Assignment of all material
  contracts per lender discretion. Maximum 60% term loan to facility value
  required.

  
	
   

  	
   

  	
   

  
	
  USDA Guarantee:

  	
   

  	
  Approval of the maximum USDA program available is required prior to
  closing.

  
	
   

  	
   

  	
   

  
	
  Documentation:

  	
   

  	
  The Loans will be subject to the negotiation, execution and delivery
  of a definitive Master Loan Agreement (including schedules, exhibits and
  ancillary documentation) and all such other documentation (“Loan Documents”).
  The terms, conditions and definitions in this Term Sheet are set forth in
  relative detail not for the purpose of establishing precise terminology for
  the Loan Documents, but for the purpose of establishing the basic elements of
  the offered financing package.

  
	
   

  	
   

  	
   

  
	
  Representations and Warranties, Conditions
  Precedent, Affirmative and Negative Covenants:

  	
   

  	
  Documentation will contain representations,
  warranties, conditions precedent, affirmative (including, without limitation,
  the Financial Covenants) and negative covenants, reporting requirements that
  are reasonable and customary for Loans of this type.

  
	
   

  	
   

  	
   

  
	
  Participants:

  	
   

  	
  This commitment is subject to 1st Farm
  Credit Services obtaining sufficient participants to fund the transactions as
  outlined. 

  

 

This space left intentionally blank.

 

 

CONDITIONS
PRECEDENT:

 

1.                                       Borrower
or a permitted assignee is to provide Lender with copies of all agreements with
third parties, including but not limited to the following areas: construction,
management, output marketing, input purchasing, transportation, rail access ,
water & wastewater treatment, energy sources & distribution, road
improvement, insurance and other contracts used in the normal operations of
Borrower. Lender approval of all agreements is required.

 

2.                                       Assignments
of all applicable contracts to be provided to Lender prior to loan closing.

 

3.                                       Borrower
will provide Lender with proof of insurance naming the primary lender as
lender’s loss payable and/or mortgagee as requested. Lender approval of all
insurance coverage is required.

 

4.                                       Independent
construction inspections are to occur on a scheduled basis, with unscheduled
inspections by Lender and/or Bank Group at their discretion.

 

5.                                       Borrower
will provide 1st FCS with proof of total equity prior to first
advance of loan disbursements. Cash equity requirements will be not less than
$35,000,000.

 

6.                                       All
equity will be disbursed by the designated Lender escrow agent for agreed upon
construction purposes prior to the first disbursement of loan proceeds.

 

7.                                       If
applicable, Borrower will accept the designated agent of 1st Farm
Credit Services for co-leading the senior debt of this project.

 

8.                                       Completion
of an acceptable appraisal by a third party appraiser as selected by Lender
supporting the maximum 60% term loan to value requirement.

 

9.                                       Borrower
to provide Lender copies of all necessary permits to construct and operate
proposed facilities.

 

10.                                 Approval
and compliance with all conditions required to obtain the USDA guarantee.

 

 

LOAN
COVENANTS:

 

1.                                       To
achieve and maintain minimum working capital of $7.0 million at the end of the
construction period, $8.5 million after the end of the first 12 months of
production, $10.0 million after the end of the first 24 months of production
and to be maintained continually at $10.0 million thereafter. Working Capital
to be defined as GAAP basis current assets less GAAP basis current liabilities.

 

2.                                       To achieve
and maintain a minimum Owner Equity of 50% at the end of the construction
period and thereafter. Owner Equity to be defined as GAAP basis equity divided
by GAAP basis total assets.

 

3.                                       To achieve
and maintain a minimum Net Worth of not less than $33M at the end of the
construction period and thereafter. Net Worth to be defined as GAAP basis total
assets less GAAP basis total liabilities.

 

4.                                       To achieve
and maintain a minimum Debt Service Coverage Ratio of at least 1.20 in the
first year and all subsequent year’s of operations. Debt Service Coverage Ratio
is defined as: i) net income after taxes, plus depreciation and amortization
divided by ii) current portion of long term debt. Initial measuring time is the
end of the first full year after production and will be measured annually based
on fiscal year-end audit thereafter.

 

5.                                       Maximum
distributions/dividends of 40% of previous year’s net income, including state
and federal incentive payments. Distributions/dividends may be paid out
annually or as negotiated with lender, based on a 12-month year to be
determined by Lender and Borrower, after Lender has received annual audited
financial statements and after all Lender covenants are met on a
post-distribution/dividend basis.

 

6.                                       Maximum
annual capital expenditures, other than construction of the plant per approved
plans, of not greater than $500,000.

 

7.                                       No
additional borrowings without Lender approval.

 

 

8.                                       Free
Cash Flow Sweep In addition to the Term Loan payment schedule, the Company
shall also within 120 days of each fiscal year end make a sweep payment applied
to the principal installment in inverse order of maturity of the term loan
equal to 75% of the available (if any) Free Cash Flow* of the Company. The Free
Cash Flow payment requirement will be limited to a maximum $2,500,000 annually
and will be discontinued when the aggregate total received, exceeds $7,500,000.

 

Not withstanding the paragraph above, in any
periods in which the Federal Biodiesel Tax Credit is scheduled to expire in
less than 12 months or is reduced to < $.80/gallon, the Free Cash Flow Sweep
rate will increase to 100% and the annual/aggregate limits will not apply. 

 

Cash Flow Sweeps will be suspended in any
year where owner equity is >70% but will be reinstated if the owner
equity goes below 70% owner equity. 

 

*The term “Free Cash Flow” is defined
as the Company’s annual profit, plus the respective fiscal year
depreciation and amortization expense, minus allowed capitalized
expenditures for fixed assets, allowed dividends/distributions to the
members/owners, and regular scheduled term loan payments to Lender and other
long-term creditors.

 

9.                                       Lender
must approve any changes in plant management or any decision to excuse
management.

 

10.                                 Lender
approval of all construction changes orders required.

 

11.                                 To
provide monthly interim compiled financial statements (balance sheet and income
statement), prepared in accordance with GAAP along with calculations of
financial covenants and borrowing base, within thirty (30) days of month-end.

 

12.                                 To
provide accountant prepared unqualified audit of fiscal year-end financial
statements within 120 days of fiscal year-end.

 

13.                                 To provide a
quarterly Compliance Certificate, completed by the Plant or General Manager,
certifying that Borrower is in compliance with all Lender covenants, within
thirty days of quarter-end.

 

14                                    To
provide a monthly production report in form agreed between the parties
outlining input and output levels within thirty days of month-end.

 

 

15.                                 Lender
approval of the plant’s initial Risk Management Plan and any significant
modification is required.

 

This
commitment expires if not accepted and presented to 1st Farm Credit
Services by Borrower before 11/15/06. Borrower hereby accepts this Term Sheet.

 

 

	
  Signed
  by

  	
  /s/ Ronald Mapes

  	
   

  	
  Dated:

  	
  November 27, 2006

  	
   

  
	
   

  	
   

  
	
  Signors printed name: 

  	
  Ronald Mapes

  	
   

  	
   

  
							

 

1st Farm Credit Services Authorized Representative:

 

	
  /s/ Michael Sherman

  	
   

  
	
  Michael Sherman

  
	
  VP Agribusiness Lending

  
	
  Bio-Fuels SpecialistExhibit
10.1

$350,000,000

CREDIT
AGREEMENT

as of

November
28, 2006

among

Duke Capital LLC,

The
Banks Listed Herein,

Citibank,
N.A., 

as Administrative Agent,

and

Barclays
Bank PLC,

as Syndication Agent

 

TABLE OF
CONTENTS

	
  

  	
   

  	
   

  	
   

  	
  Page

  	
   

  
	
   

  	
   

  	
  Article 1

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Definitions

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 1.01.

  	
   

  	
  Definitions

  	
   

  	
  1

  	
   

  
	
  Section 1.02.

  	
   

  	
  Accounting
  Terms and Determinations

  	
   

  	
  9

  	
   

  
	
  Section 1.03.

  	
   

  	
  Types of
  Borrowings

  	
   

  	
  10

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Article 2

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The Credits

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 2.01.

  	
   

  	
  Commitments to
  Lend.

  	
   

  	
  10

  	
   

  
	
  Section 2.02.

  	
   

  	
  Notice of
  Borrowings

  	
   

  	
  10

  	
   

  
	
  Section 2.03.

  	
   

  	
  Notice to
  Banks; Funding of Loans.

  	
   

  	
  11

  	
   

  
	
  Section 2.04.

  	
   

  	
  Registry;
  Notes

  	
   

  	
  12

  	
   

  
	
  Section 2.05.

  	
   

  	
  Maturity of
  Loans

  	
   

  	
  12

  	
   

  
	
  Section 2.06.

  	
   

  	
  Interest
  Rates.

  	
   

  	
  12

  	
   

  
	
  Section 2.07.

  	
   

  	
  Fees

  	
   

  	
  13

  	
   

  
	
  Section 2.08.

  	
   

  	
  Optional
  Termination or Reduction of Commitments

  	
   

  	
  14

  	
   

  
	
  Section 2.09.

  	
   

  	
  Method of
  Electing Interest Rates

  	
   

  	
  14

  	
   

  
	
  Section 2.10.

  	
   

  	
  Mandatory
  Termination of Commitments

  	
   

  	
  15

  	
   

  
	
  Section 2.11.

  	
   

  	
  Optional
  Prepayments

  	
   

  	
  15

  	
   

  
	
  Section 2.12.

  	
   

  	
  General
  Provisions as to Payments.

  	
   

  	
  16

  	
   

  
	
  Section 2.13.

  	
   

  	
  Funding Losses

  	
   

  	
  17

  	
   

  
	
  Section 2.14.

  	
   

  	
  Computation of
  Interest and Fees

  	
   

  	
  17

  	
   

  
	
  Section 2.15.

  	
   

  	
  Regulation D
  Compensation

  	
   

  	
  17

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Article 3

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Conditions

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 3.01.

  	
   

  	
  Effectiveness

  	
   

  	
  18

  	
   

  
	
  Section 3.02.

  	
   

  	
  Borrowings

  	
   

  	
  19

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Article 4

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Representations and Warranties

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 4.01.

  	
   

  	
  Organization
  and Power

  	
   

  	
  19

  	
   

  
	
  Section 4.02.

  	
   

  	
  Company and
  Governmental Authorization; No Contravention

  	
   

  	
  19

  	
   

  
	
  Section 4.03.

  	
   

  	
  Binding Effect

  	
   

  	
  20

  	
   

  
	
  Section 4.04.

  	
   

  	
  Financial
  Information

  	
   

  	
  20

  	
   

  
	
  Section 4.05.

  	
   

  	
  Regulation U

  	
   

  	
  20

  	
   

  
	
  Section 4.06.

  	
   

  	
  Litigation

  	
   

  	
  21

  	
   

  

 

 

 

	
  Section 4.07.

  	
   

  	
  Compliance
  with Laws

  	
   

  	
  21

  	
   

  
	
  Section 4.08.

  	
   

  	
  Taxes

  	
   

  	
  21

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Article 5

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Covenants

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 5.01.

  	
   

  	
  Information

  	
   

  	
  21

  	
   

  
	
  Section 5.02.

  	
   

  	
  Payment of
  Taxes

  	
   

  	
  23

  	
   

  
	
  Section 5.03.

  	
   

  	
  Maintenance of
  Property; Insurance.

  	
   

  	
  24

  	
   

  
	
  Section 5.04.

  	
   

  	
  Maintenance of
  Existence

  	
   

  	
  24

  	
   

  
	
  Section 5.05.

  	
   

  	
  Compliance
  with Laws

  	
   

  	
  24

  	
   

  
	
  Section 5.06.

  	
   

  	
  Books and
  Records

  	
   

  	
  24

  	
   

  
	
  Section 5.07.

  	
   

  	
  Maintenance of
  Ownership of Principal Subsidiaries

  	
   

  	
  25

  	
   

  
	
  Section 5.08.

  	
   

  	
  Negative
  Pledge

  	
   

  	
  25

  	
   

  
	
  Section 5.09.

  	
   

  	
  Consolidations,
  Mergers and Sales of Assets

  	
   

  	
  26

  	
   

  
	
  Section 5.10.

  	
   

  	
  Use of
  Proceeds

  	
   

  	
  27

  	
   

  
	
  Section 5.11.

  	
   

  	
  Transactions
  with Affiliates

  	
   

  	
  27

  	
   

  
	
  Section 5.12.

  	
   

  	
  Indebtedness/Capitalization Ratio

  	
   

  	
  28

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Article 6

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Defaults

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 6.01.

  	
   

  	
  Events of
  Default

  	
   

  	
  28

  	
   

  
	
  Section 6.02.

  	
   

  	
  Notice of
  Default

  	
   

  	
  30

  	
   

  
	
   

  	
   

  	
  Article 7

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THE ADMINISTRATIVE AGENT

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 7.01.

  	
   

  	
  Appointment
  and Authorization

  	
   

  	
  30

  	
   

  
	
  Section 7.02.

  	
   

  	
  Administrative
  Agent and Affiliates

  	
   

  	
  31

  	
   

  
	
  Section 7.03.

  	
   

  	
  Action by
  Administrative Agent

  	
   

  	
  31

  	
   

  
	
  Section 7.04.

  	
   

  	
  Consultation
  with Experts

  	
   

  	
  31

  	
   

  
	
  Section 7.05.

  	
   

  	
  Liability of
  Administrative Agent

  	
   

  	
  31

  	
   

  
	
  Section 7.06.

  	
   

  	
  Indemnification

  	
   

  	
  32

  	
   

  
	
  Section 7.07.

  	
   

  	
  Credit
  Decision

  	
   

  	
  32

  	
   

  
	
  Section 7.08.

  	
   

  	
  Successor
  Administrative Agent

  	
   

  	
  32

  	
   

  
	
  Section 7.09.

  	
   

  	
  Syndication
  Agent

  	
   

  	
  33

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Article 8

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Change in Circumstances

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 8.01.

  	
   

  	
  Basis for
  Determining Interest Rate Inadequate or Unfair

  	
   

  	
  33

  	
   

  
	
  Section 8.02.

  	
   

  	
  Illegality

  	
   

  	
  33

  	
   

  
	
  Section 8.03.

  	
   

  	
  Increased Cost
  and Reduced Return

  	
   

  	
  34

  	
   

  
	
  Section 8.04.

  	
   

  	
  Taxes

  	
   

  	
  35

  	
   

  

 

 

 

	
  Section 8.05.

  	
   

  	
  Base Rate
  Loans Substituted for Affected Euro-Dollar Loans

  	
   

  	
  37

  	
   

  
	
  Section 8.06.

  	
   

  	
  Substitution
  of Bank; Termination Option

  	
   

  	
  38

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Article 9

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Miscellaneous

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 9.01.

  	
   

  	
  Notices

  	
   

  	
  39

  	
   

  
	
  Section 9.02.

  	
   

  	
  No Waivers

  	
   

  	
  40

  	
   

  
	
  Section 9.03.

  	
   

  	
  Expenses;
  Indemnification

  	
   

  	
  40

  	
   

  
	
  Section 9.04.

  	
   

  	
  Sharing of
  Set-offs

  	
   

  	
  40

  	
   

  
	
  Section 9.05.

  	
   

  	
  Amendments and
  Waivers

  	
   

  	
  41

  	
   

  
	
  Section 9.06.

  	
   

  	
  Successors and
  Assigns

  	
   

  	
  41

  	
   

  
	
  Section 9.07.

  	
   

  	
  Collateral

  	
   

  	
  43

  	
   

  
	
  Section 9.08.

  	
   

  	
  Confidentiality

  	
   

  	
  43

  	
   

  
	
  Section 9.09.

  	
   

  	
  Governing Law;
  Submission to Jurisdiction

  	
   

  	
  43

  	
   

  
	
  Section 9.10.

  	
   

  	
  Counterparts;
  Integration

  	
   

  	
  44

  	
   

  
	
  Section 9.11.

  	
   

  	
  WAIVER OF JURY
  TRIAL

  	
   

  	
  44

  	
   

  
	
  Section 9.12.

  	
   

  	
  USA Patriot
  Act

  	
   

  	
  44

  	
   

  

 

PRICING SCHEDULE

	
  EXHIBIT A -

  	
  Note

  
	
  EXHIBIT B-1 -

  	
  Opinion of Internal Counsel of the Borrower

  
	
  EXHIBIT B-2 -

  	
  Opinion of Special Counsel for the Borrower

  
	
  EXHIBIT C -

  	
  Assignment and Assumption Agreement

  

 

 

CREDIT AGREEMENT

CREDIT AGREEMENT
as of November 28, 2006 among DUKE CAPITAL LLC, the BANKS listed on the signature
pages hereof, CITIBANK, N.A., as Administrative Agent, and BARCLAYS BANK PLC,
as Syndication Agent.

The parties hereto
agree as follows:

Article 1

Definitions

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

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

“Administrative
Agent” means Citibank, N.A., in its capacity as administrative agent
for the Banks hereunder, and its successors in such capacity.

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

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

“Agent” means either of the
Administrative Agent or the Syndication Agent.

“Agreement” means this Credit
Agreement, as it may be amended from time to time after the date hereof.

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

 

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

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

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

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

“Base Rate”
means, for any day, a rate per annum equal to the higher of (i) the Citibank
Rate for such day and (ii) the sum of 1/2 of 1% plus the Federal Funds Rate for
such day.

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

“Borrower”
means Duke Capital LLC, a Delaware limited liability company, and its
successors.

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

“Citibank Rate”
means the rate of interest per annum publicly announced from time to time by
Citibank, N.A. as its base rate in effect at its principal office in New York
City. Each change in the Citibank Rate shall be effective on the date such
change is publicly announced.

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

“Commitment
Termination Date” means, for each Bank, November 27, 2007, or, if
such day is not a Euro-Dollar Business Day, the next preceding Euro-Dollar
Business Day.

 2
 

 

“Company” means Duke Energy
Corporation, a Delaware corporation.

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

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

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

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

“Domestic Business
Day” means any day except a Saturday, Sunday or other day on which
commercial banks in New York City are authorized by law to close.

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

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

“Environmental Laws”
means any and all federal, state, local and foreign statutes, laws,
regulations, ordinances, rules, judgments, orders, decrees, permits,
concessions, grants, franchises, licenses, agreements or other governmental 

 3
 

 

restrictions relating to
the environment or to emissions, discharges, releases of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes
into the environment including, without limitation, ambient air, surface water,
ground water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes.

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

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

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

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

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

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

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

 4
 

 

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

“Euro-Dollar
Reference Bank” means the principal London offices of Citibank, N.A.

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

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

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

“Federal Funds Rate”
means, for any day, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100th of 1%) equal to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers on such day, as published by the Federal Reserve Bank
of New York on the Domestic Business Day next succeeding such day; provided that (i) if such day is not a
Domestic Business Day, the Federal Funds Rate for such day shall be such rate
on such transactions on the next preceding Domestic Business Day as so
published on the next succeeding Domestic Business Day and (ii) if no such rate
is so published on such next succeeding Domestic Business Day, the Federal
Funds Rate for such day shall be the average rate quoted to Citibank, N.A. (or
its successor as Administrative Agent) on such day on such transactions as
determined by the Administrative Agent.

“Fund”
means any Person (other than a natural Person) that is (or will be) engaged in
making, purchasing, holding or otherwise investing in commercial loans and
similar extensions of credit in the ordinary course of its business.

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

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

 5
 

 

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

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

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

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

provided  further that no Interest Period may end
after the Commitment Termination Date.

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

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

 6
 

 

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

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

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

“Material Debt”
means Indebtedness of the Borrower or any of its Material Subsidiaries in an
aggregate principal amount exceeding $150,000,000.

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

“Material Subsidiary”
means at any time any Subsidiary of the Borrower that is a “significant
subsidiary” (as such term is defined on the Effective Date in Regulation S-X of
the Securities and Exchange Commission (17 CFR 210.1-02(w)), but treating all
references therein to the “registrant” as references to the Borrower); provided, however, in no
event shall Duke Energy Field Services, LLC be deemed a Material Subsidiary.

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

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

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

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

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

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

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

 7
 

 

“Permitted Spin-Off”
means a distribution of the common equity interests in the Borrower (or in a
parent corporation of the Borrower) (whichever the case, the “Public Company”) to the shareholders of the
Company, as further described in Form 10 of Gas Spinco, Inc., initially filed
on September 7, 2006, as amended on October 23, 2006 and as such Form 10 may be
further amended, modified or supplemented from time to time; provided that immediately after giving effect thereto (i)
the Borrower retains United States assets of its natural gas transmission
segment comprising not less than 85% of the book value of all such assets at
December 31, 2005 and contributing not less than 85% of the United States
EBITDA of such segment for the year then ended and (ii) the Borrower’s senior
unsecured long-term debt is rated at least BBB- by S&P and Baa3 by Moody’s.
For purposes solely of clause (i) above, the Borrower shall be deemed to own
assets which have been contributed to a master limited partnership or similar
entity in exchange for equity interests in such entity, to the extent it
retains such equity interests.

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

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

“Pricing Schedule”
means the Pricing Schedule attached hereto.

“Principal
Subsidiary” means each of Texas Eastern Transmission, LP, Algonquin
Gas Transmission, LLC, Westcoast Energy Inc. and their respective successors.

“Public Company”
has the meaning set forth in the definition of Permitted Spin-Off.

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

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

 8
 

 

“Related  Agreement” means the Amended and Restated
Credit Agreement dated as of June 29, 2006 among the Borrower, the banks and
other financial institutions and Agents from time to time parties thereto, as
amended and in effect from time to time.

“Required Banks”
means at any time Banks (i) having at least 51% of the sum of the aggregate
amount of the Commitments or (ii) if all the Commitments shall have been
terminated, holding at least 51% of the aggregate unpaid principal amount of
the Loans.

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

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

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

“Substantial Assets”
means assets (other than Duke Energy International, Inc., Duke Energy North
America, LLC and Crescent Resources, LLC) sold or otherwise disposed of in a
single transaction or a series of related transactions representing 25% or more
of the consolidated assets of the Borrower and its Consolidated Subsidiaries,
taken as a whole.

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

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

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

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

Section 1.02. Accounting Terms and
Determinations. Unless otherwise specified herein, all accounting
terms used herein shall be interpreted, all 

 9
 

 

accounting determinations
hereunder shall be made, and all financial statements required to be delivered
hereunder shall be prepared in accordance with generally accepted accounting
principles as in effect from time to time, applied on a basis consistent
(except for changes concurred in by the Borrower’s independent public
accountants) with the most recent audited consolidated financial statements of
the Borrower and its Consolidated Subsidiaries delivered to the Banks.

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

Article 2

The Credits

Section 2.01. Commitments to Lend. During
the Revolving Credit Period, each Bank severally agrees, on the terms and
conditions set forth in this Agreement, to make loans to the Borrower pursuant
to this Section 2.01 from time to time in amounts such that the aggregate
principal amount of loans by such Bank at any one time outstanding shall not
exceed the amount of its Commitment. Each Borrowing under this Section 2.01
shall be in an aggregate principal amount of $5,000,000 or any larger multiple
of $1,000,000 (except that any such Borrowing may be in the aggregate amount
available in accordance with Section 3.02(b)) and shall be made from the several
Banks ratably in proportion to their respective Commitments in effect on the
date of Borrowing. Within the foregoing limits, the Borrower may borrow under
this Section 2.01, or to the extent permitted by Section 2.11, prepay Loans and
reborrow at any time during the Revolving Credit Period under this Section 2.01.

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

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

(b)           the
aggregate amount of such Borrowing;

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

 10
 

 

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

Section 2.03. Notice to Banks; Funding of Loans.

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

(b)           Not
later than 1:00 P.M. (New York City time) on the date of each Borrowing, each
Bank participating therein shall (except as provided in subsection (c) of this
Section) make available its share of such Borrowing, in Federal or other funds
immediately available in New York City, to the Administrative Agent at its
address specified in or pursuant to Section 9.01. Unless the Administrative
Agent determines that any applicable condition specified in Article 3 has not
been satisfied, the Administrative Agent will make the funds so received from
the Banks available to the Borrower at the Administrative Agent’s aforesaid
address.

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

(d)           The
failure of any Bank to make the Loan to be made by it as part of any Borrowing
shall not relieve any other Bank of its obligation, if any, hereunder 

 11
 

 

to make a Loan on the
date of such Borrowing, but no Bank shall be responsible for the failure of any
other Bank to make a Loan to be made by such other Bank.

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

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

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

Section 2.05. Maturity of Loans. Each
Loan made by any Bank shall mature, and the principal amount thereof shall be
due and payable together with accrued interest thereon, on the Commitment
Termination Date.

Section 2.06. Interest Rates.

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

 12

 

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

The “London Interbank Offered Rate” applicable
to any Interest Period means the rate appearing on Page 3750 of the Telerate
Service Company (or on any successor or substitute page of such service, or any
successor to or substitute for such service, providing rate quotations
comparable to those currently provided on such page of the Telerate Service, as
may be nominated by the British Bankers' Association for purposes of providing
quotations of interest rates applicable to dollar deposits in the London
interbank market) as of 11:00 A.M. (London time) two Euro-Dollar Business Days
prior to the commencement of such Interest Period, as the rate for dollar
deposits with a maturity comparable to such Interest Period. In the event that
such rate is not so available at such time for any reason, then the “London Interbank Offered Rate” for such
Interest Period shall be the rate per annum at which deposits in dollars are
offered to the Euro-Dollar Reference Bank in the London interbank market at
approximately 11:00 A.M. (London time) two Euro-Dollar Business Days before the
first day of such Interest Period in an amount approximately equal to the
principal amount of the Loan of such Euro-Dollar Reference Bank to which such
Interest Period is to apply and for a period of time comparable to such
Interest Period. If the Euro-Dollar Reference Bank does not furnish a timely
quotation, the provisions of Section 8.01 shall apply.

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

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

Section 2.07. Fees. (a) Facility Fee. The Borrower shall pay to the Administrative
Agent for the account of each Bank a facility fee at the Facility 

 13
 

 

Fee Rate (determined
daily in accordance with the Pricing Schedule). Such facility fee shall accrue (i)
from and including the Effective Date to but excluding the Commitment
Termination Date, on the daily average aggregate amount of such Bank’s
Commitment (whether used or unused) and (ii) from and including the Commitment
Termination Date to but excluding the date the Loans shall be repaid in their
entirety, on the daily average aggregate outstanding principal amount of such
Bank’s Loans.

(b)           Payments. Accrued fees under this Section
shall be payable quarterly in arrears on each Quarterly Payment Date and upon
the Commitment Termination Date and, if later, the date the Loans shall be
repaid in their entirety.

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

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

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

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

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

 14
 

 

such notice
applies, and the remaining portion to which it does not apply, are each
$10,000,000 or any larger multiple of $1,000,000.

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

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

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

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

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

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

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

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

Section 2.10. Mandatory Termination of Commitments. The Commitment of
each Bank shall terminate on the Commitment Termination Date, and any Loans then
outstanding (together with accrued interest thereon) shall be due and payable
on such date.

Section
2.11. Optional Prepayments. (a) The Borrower
may (i) upon notice to the Administrative Agent not later than 11:00 A.M. (New
York City time) on any Domestic Business Day prepay on such Domestic Business
Day any Group of Base Rate Loans and (ii) upon at least three Euro-Dollar
Business Days’ 

 15
 

 

notice to the
Administrative Agent not later than 11:00 A.M. (New York City time) prepay any
Group of Euro-Dollar Loans, in each case in whole at any time, or from
time to time in part in amounts aggregating $5,000,000 or any larger multiple
of $1,000,000, by paying the principal amount to be prepaid together with
accrued interest thereon to the date of prepayment and together with any
additional amounts payable pursuant to Section 2.13. Each such optional
prepayment shall be applied to prepay ratably the Loans of the several Banks
included in such Group or Borrowing.

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

Section 2.12. General Provisions as to
Payments.

(a)           The
Borrower shall make each payment of principal of, and interest on, the Loans
and of fees hereunder, not later than 1:00 P.M. (New York City time) on the
date when due, in Federal or other funds immediately available in New York
City, to the Administrative Agent at its address referred to in Section 9.01
and without reduction by reason of any set-off, counterclaim or deduction of
any kind. The Administrative Agent will promptly distribute to each Bank in
like funds its ratable share of each such payment received by the
Administrative Agent for the account of the Banks. Whenever any payment of
principal of, or interest on, the Base Rate Loans or fees shall be due on a day
which is not a Domestic Business Day, the date for payment thereof shall be
extended to the next succeeding Domestic Business Day. Whenever any payment of
principal of, or interest on, the Euro-Dollar Loans shall be due on a day
which is not a Euro-Dollar Business Day, the date for payment thereof
shall be extended to the next succeeding Euro-Dollar Business Day unless
such Euro-Dollar Business Day falls in another calendar month, in which
case the date for payment thereof shall be the next preceding Euro-Dollar
Business Day. If the date for any payment of principal is extended by operation
of law or otherwise, interest thereon shall be payable for such extended time.

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

 16
 

 

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

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

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

Section 2.15. Regulation D Compensation. In the event that a Bank is
required to maintain reserves of the type contemplated by the definition of “Euro-Dollar Reserve Percentage”, such
Bank may require the Borrower to pay, contemporaneously with each payment of
interest on the Euro-Dollar Loans, additional interest on the related
Euro-Dollar Loan of such Bank at a rate per annum determined by such Bank
up to but not exceeding the excess of (i) (A) the applicable London Interbank
Offered Rate divided by (B) one minus
the Euro-Dollar Reserve Percentage over (ii) the applicable London
Interbank Offered Rate. Any Bank wishing to require payment of such additional
interest (x) shall so notify the Borrower and the Administrative Agent, in
which case such additional interest on the Euro-Dollar Loans of such Bank
shall be payable to such Bank at the place indicated in such notice with
respect to each Interest Period commencing at least three Euro-Dollar
Business Days after the giving of such notice and (y) shall notify the Borrower
at least three Euro-Dollar Business Days prior to each date on which
interest is payable on the Euro-Dollar Loans of the amount then due it
under this Section. Each such notification shall be accompanied by such
information as the Borrower may reasonably request.

 17
 

 

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

Article 3

Conditions

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

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

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

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

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

provided that this Agreement shall not become
effective or be binding on any party hereto unless all of the foregoing
conditions are satisfied not later than 

 18
 

 

November 30, 2006. The Administrative Agent shall
promptly notify the Borrower and the Banks of the Effective Date, and such
notice shall be conclusive and binding on all parties hereto.

Section
3.02. Borrowings. The obligation of any Bank
to make a Loan on the occasion of any Borrowing is subject to the satisfaction of
the following conditions:

(a)           receipt
by the Administrative Agent of a Notice of Borrowing as required by Section 2.02;

(b)           the fact that, immediately after such
Borrowing, the aggregate outstanding principal amount of the Loans will not
exceed the aggregate amount of the Commitments;

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

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

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

Article 4

Representations and Warranties

The Borrower represents and warrants that:

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

Section 4.02. Company and Governmental Authorization; No Contravention. The
execution, delivery and performance by the Borrower of this Agreement and the
Notes are within the Borrower’s limited liability company powers, have been
duly authorized by all necessary limited liability company 

 19
 

 

action, require no action by or in respect of, or
filing with, any governmental body, agency or official and do not contravene,
or constitute a default under, any provision of applicable law or regulation or
of the certificate of formation or limited liability company agreement of the
Borrower or of any agreement, judgment, injunction, order, decree or other
instrument binding upon the Borrower or result in the creation or imposition of
any Lien on any asset of the Borrower or any of its Material Subsidiaries.

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

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

(b)           The
unaudited consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of September 30, 2006 and the related unaudited consolidated
statements of income and cash flows for the nine months then ended, fairly
present, in conformity with generally accepted accounting principles applied on
a basis consistent with the financial statements referred to in subsection (a)
of this Section, the consolidated financial position of the Borrower and its
Consolidated Subsidiaries as of such date and their consolidated results of
operations and changes in financial position for such nine-month period
(subject to normal year-end adjustments and the absence of footnotes).

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

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

 20
 

 

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

Section 4.06. Litigation. Except as disclosed in the Borrower’s annual
report on Form 10-K for the fiscal year ended December 31, 2005 and its
quarterly report on Form 10-Q for the period ended September 30, 2006, there is
no action, suit or proceeding pending against, or to the knowledge of the
Borrower threatened against or affecting, the Borrower or any of its
Subsidiaries before any court or arbitrator or any governmental body, agency or
official which would be likely to be decided adversely to Borrower or such
Subsidiary and, as a result, have a material adverse effect upon the business,
consolidated financial position or results of operations of the Borrower and
its Consolidated Subsidiaries, considered as a whole, or which in any manner
draws into question the validity of this Agreement or any Note.

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

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

Article 5

Covenants

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

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

 21
 

 

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

(b)           as soon as available and in any event
within 60 days after the end of each of the first three quarters of each fiscal
year of the Borrower, a consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of the end of such quarter and the related
consolidated statements of income and cash flows for such quarter and for the
portion of the Borrower’s fiscal year ended at the end of such quarter, setting
forth in each case in comparative form the figures for the corresponding
quarter and the corresponding portion of the Borrower’s previous fiscal year,
all certified (subject to normal year-end adjustments) as to fairness of
presentation, generally accepted accounting principles and consistency by an
Approved Officer of the Borrower;

(c)           simultaneously with the delivery of
each set of financial statements referred to in clauses (a) and (b) above, a
certificate of an Approved Officer of the Borrower (i) setting forth in
reasonable detail the calculations required to establish whether the Borrower
was in compliance with the requirements of Section 5.12 on the date of such
financial statements and (ii) stating whether any Default exists on the date of
such certificate and, if any Default then exists, setting forth the details
thereof and the action which the Borrower is taking or proposes to take with
respect thereto;

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

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

(f)            if
and when any member of the ERISA Group (i) gives or is required to give notice
to the PBGC of any “reportable event”
(as defined in Section 4043 of ERISA) with respect to any Material Plan which
might constitute grounds for a termination of such Plan under Title IV of
ERISA, or knows that the plan administrator of any Material Plan has given or
is required to give notice of any 

 22
 

 

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

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

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

Section 5.02. Payment of Taxes. The Borrower will pay and discharge, and
will cause each Material Subsidiary to pay and discharge, at or before
maturity, all their tax liabilities, except where (i) nonpayment would not have
a material adverse effect on the business, financial position or results of
operations of the Borrower and its Consolidated Subsidiaries, considered as a
whole, or (ii) the same may be contested in good faith by appropriate
proceedings, and will maintain, and will cause each Material Subsidiary to
maintain, in accordance with generally accepted accounting principles,
appropriate reserves for the accrual of any of the same.

 23

 

Section 5.03.  Maintenance of Property;
Insurance.

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

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

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

Section 5.05.  Compliance with Laws.  The Borrower will comply, and
cause each Material Subsidiary to comply, in all material respects with all
applicable laws, ordinances, rules, regulations, and requirements of
governmental authorities (including, without limitation, ERISA and Environmental
Laws) except where (i) noncompliance would not have a material adverse effect
on the business, financial position or results of operations of the Borrower
and its Consolidated Subsidiaries, considered as a whole, or (ii) the necessity
of compliance therewith is contested in good faith by appropriate proceedings.

Section 5.06.  Books and Records.  The Borrower will keep, and will
cause each Material Subsidiary to keep, proper books of record and account in
which full, true and correct entries shall be made of all financial
transactions in relation to its business and activities in accordance with its
customary practices; and will permit, and will cause each Material Subsidiary
to permit, representatives

 24
 

 

of any Bank at such Bank’s expense (accompanied by a
representative of the Borrower, if the Borrower so desires) to visit any of
their respective properties, to examine any of their respective books and
records and to discuss their respective affairs, finances and accounts with
their respective officers, employees and independent public accountants, all
upon such reasonable notice, at such reasonable times and as often as may
reasonably be desired.

Section 5.07.  Maintenance of Ownership of
Principal Subsidiaries.  The
Borrower will maintain ownership of all common equity interests of each
Principal Subsidiary, directly or indirectly through Subsidiaries, free and
clear of all Liens; provided that
any Principal Subsidiary may merge or consolidate with or into the Borrower or
another wholly-owned Subsidiary.

Section 5.08.  Negative Pledge.  The Borrower will not create,
assume or suffer to exist any Lien on any asset now owned or hereafter acquired
by it, except:

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

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

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

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

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

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

(g)   statutory Liens of landlords and Liens of
carriers, warehousemen, mechanics, materialmen and other Liens imposed by law,
created in the ordinary

 25
 

 

course of business and for amounts not past due for
more than 60 days or which are being contested in good faith by appropriate proceedings
which are sufficient to prevent imminent foreclosure of such Liens, are
promptly instituted and diligently conducted and with respect to which adequate
reserves or other appropriate provisions are being maintained in accordance
with generally accepted accounting principles;

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

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

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

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

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

(m)  Liens required pursuant to the terms of this
Agreement and the Related Agreement; and

(n)   Liens not otherwise permitted by the
foregoing clauses of this Section securing obligations in an aggregate
principal or face amount at any date not to exceed $500,000,000.

Section 5.09.  Consolidations, Mergers and
Sales of Assets.  The Borrower
will not (i) consolidate or merge with or into any other Person or (ii) sell,
lease or

 26
 

 

otherwise transfer, directly or indirectly,
Substantial Assets to any Person (other than a Subsidiary); provided that the Borrower may merge with
another Person if the Borrower is the entity surviving such merger and, after
giving effect thereto, no Default shall have occurred and be continuing.

Section 5.10.  Use of Proceeds.  The proceeds of the Loans made
under this Agreement will be used by the Borrower for its general company
purposes, including liquidity support for outstanding commercial paper and
acquisitions.  None of such proceeds will
be used, directly or indirectly, for the purpose, whether immediate, incidental
or ultimate, of buying or carrying any “margin
stock” within the meaning of Regulation U.

Section 5.11.  Transactions with
Affiliates.  The Borrower will
not, and will not permit any Subsidiary to, directly or indirectly, pay any
funds to or for the account of, make any investment in, lease, sell, transfer
or otherwise dispose of any assets, tangible or intangible, to, or participate
in, or effect, any transaction with, any Affiliate unless all such transactions
between the Borrower and its Subsidiaries on the one hand and any Affiliate on
the other, taken in the aggregate and not individually, shall be on an
arms-length basis on terms no less favorable to the Borrower or such
Subsidiary than could have been obtained from a third party who was not an
Affiliate; provided that the
foregoing provisions of this Section shall not prohibit the Borrower and
each Subsidiary from (i) declaring or making any lawful distribution so long
as, after giving effect thereto, no Default shall have occurred and be
continuing, (ii) issuing and maintaining letters of credit, guaranties and
sureties as contingent obligations on behalf of Affiliates,  (iii) (A) the payment of funds on behalf
of Duke Energy Carolinas, LLC (f/k/a Duke Power Company LLC) and/or Cinergy
Corp. in respect of services, operations and expenditures shared with Duke
Energy Carolinas, LLC and/or Cinergy Corp. and for which a corresponding
account payable is created on the books of Duke Energy Carolinas, LLC and/or
Cinergy Corp. for the benefit of the Borrower and (B) loans from the Borrower
to Duke Energy Carolinas, LLC and/or Cinergy Corp., provided
that the aggregate amount of all such payments and loans referred to in clauses
(iii)(A) and (B) of this Section does not exceed $500,000,000 at any time
outstanding (calculated at such time after giving effect to any repayments to
the Borrower by, or on behalf of, Duke Energy Carolinas, LLC and/or Cinergy
Corp.), or (iv) in addition to those activities permitted by the preceding clause (iii), the
payment of funds and making of capital contributions, loans and other transfers
of money to Affiliates or to other Persons on behalf of such Affiliates,
including payments made under letters of credit, guarantees and sureties issued
and maintained on behalf of Affiliates, provided
that the aggregate amount for all such payments and transfers referred to in
this clause (iv) does not exceed $500,000,000 at any time outstanding
(calculated at such time after giving effect to any repayments to the Borrower
by, or on behalf of, such Affiliates for any such payment of funds and making
of capital contributions, loans and other transfers of money).

 27
 

 

Section 5.12.  Indebtedness/Capitalization
Ratio.  The ratio of
Consolidated Indebtedness to Consolidated Capitalization will at no time exceed
65%.

ARTICLE 6

DEFAULTS

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

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

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

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

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

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

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

(g)   the Borrower or any Material Subsidiary shall
commence a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, or shall
consent to any such relief or to the appointment of or taking possession by any
such official in an involuntary case or other proceeding commenced against it,
or shall make a general assignment for the benefit of

 28
 

 

creditors, or shall admit in writing its inability to,
or shall fail generally to, pay its debts as they become due, or shall take any
corporate action to authorize any of the foregoing;

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

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

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

(k)   (i)prior to a Permitted Spin-Off: (x) any
person or group of persons (within the meaning of Section 13 or 14 of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)) other than trustees and participants in
employee benefit plans of the Company and its Subsidiaries, shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 promulgated by the
Securities and Exchange Commission under the Exchange Act) of 50% or more of
the outstanding shares of common stock of the Company; (y) during any period of
twelve consecutive calendar months commencing after the Effective Date,
individuals who were directors of

 29
 

 

the Company on the first day of such
period (together with any successors nominated or appointed by such directors
in the ordinary course) shall cease to constitute a majority of the board of
directors of the Company; or (z) the Borrower shall cease to be a Subsidiary of
the Company; except pursuant to a Permitted Spin-Off; or (ii) subsequent to a
Permitted Spin-Off: (x) any person or group of persons (within the meaning of
Section 13 or 14 of the Exchange Act) other than trustees and participants in
employee benefit plans of the Public Company and its Subsidiaries, shall have
acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated by
the Securities and Exchange Commission under the Exchange Act) of 50% or more
of the outstanding shares of common stock of the Public Company; (y) during any
period of twelve consecutive calendar months commencing on or after the date of
the Permitted Spin-Off, individuals who were directors of the Public Company on
the first day of such period (together with any successors nominated or
appointed by such directors in the ordinary course) shall cease to constitute a
majority of the board of directors of the Public Company; or, if the Borrower
is not the Public Company, the Borrower shall cease to be a Subsidiary of the
Public Company;

then, and in every such
event, the Administrative Agent shall (i) if requested by Banks having more
than 66-2/3% in aggregate amount of the Commitments, by notice to the Borrower
terminate the Commitments and they shall thereupon terminate and (ii) if
requested by Banks holding more than 66-2/3% in aggregate principal amount of
the Loans, by notice to the Borrower declare the Loans (together with accrued
interest thereon) to be, and the Loans shall thereupon become, immediately due
and payable without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower; provided that in the case of any of the Events of Default
specified in clause (g) or (h) above with respect to the Borrower, without any
notice to the Borrower or any other act by the Administrative Agent or the
Banks, the Commitments shall thereupon terminate and the Loans (together with
accrued interest thereon) shall become immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower.

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

ARTICLE 7

THE ADMINISTRATIVE AGENT

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

 30
 

 

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

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

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

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

 31
 

 

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

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

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

 32
 

 

Section 7.09.  Syndication Agent.  The Syndication Agent, in its
capacity as such, shall not have any duties or obligations of any kind under
this Agreement.

ARTICLE 8

CHANGE IN CIRCUMSTANCES

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

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

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

the
Administrative Agent shall forthwith give notice thereof to the Borrower and
the Banks, whereupon

 33
 

 

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

Section 8.02.  Illegality.  If on or after the date of this
Agreement, the adoption of any applicable law, rule or regulation, or any
change in any applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank (or its Euro-Dollar Lending Office)
with any request or directive (whether or not having the force of law) of any
such authority, central bank or comparable agency shall make it unlawful or
impossible for any Bank (or its Euro-Dollar Lending Office) to make,
maintain or fund any of its Euro-Dollar Loans and such Bank shall so
notify the Administrative Agent, the Administrative Agent shall forthwith give
notice thereof to the other Banks and the Borrower, whereupon until such Bank
notifies the Borrower and the Administrative Agent that the circumstances
giving rise to such suspension no longer exist, the obligation of such Bank to
make Euro-Dollar Loans, or to continue or convert outstanding Loans as or
into Euro-Dollar Loans, shall be suspended. Before giving any notice to the
Administrative Agent pursuant to this Section, such Bank shall designate a different
Euro-Dollar Lending Office if such designation will avoid the need for
giving such notice and will not be otherwise disadvantageous to such Bank in
the good faith exercise of its discretion. 
If such notice is given, each Euro-Dollar Loan of such Bank then
outstanding shall be converted to a Base Rate Loan either (a) on the last day
of the then current Interest Period applicable to such Euro-Dollar Loan if such
Bank may lawfully continue to maintain and fund such Loan to such day or (b)
immediately if such Bank shall determine that it may not lawfully continue to
maintain and fund such Loan to such day.

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

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

 34
 

 

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

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

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

“Taxes” means any and all
present or future taxes, duties, levies, imposts, deductions, charges or
withholdings with respect to any payment by the Borrower pursuant to this
Agreement or any Note, and all liabilities with respect thereto, excluding (i) in the case of each Bank and
the Administrative Agent, taxes imposed on its income, net worth or gross
receipts and franchise or similar taxes imposed on it by a jurisdiction under
the laws of which such Bank or the Administrative Agent (as the case may be) is
organized or in which its principal executive office is located or, in the case
of each Bank, in which its Applicable Lending Office is located and
(ii) in the case of each Bank, any United States withholding tax imposed
on such payments except to the extent that such Bank is subject to United
States withholding tax by reason of a U.S. Tax Law Change.

 35

 

 

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

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

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

(c)   The Borrower agrees to indemnify each Bank
and the Administrative Agent for the full amount of Taxes or Other Taxes
(including, without limitation, any Taxes or Other Taxes imposed or asserted by
any jurisdiction on amounts payable under this Section 8.04) paid by such Bank
or the Administrative Agent (as the case may be) and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto.
This indemnification shall be paid within 15 days after such Bank or the
Administrative Agent (as the case may be) makes demand therefor.

(d)   Each Bank organized under the laws of a
jurisdiction outside the United States, on or prior to the date of its
execution and delivery of this Agreement in the case of each Bank listed on the
signature pages hereof and on or prior to the date on which it becomes a Bank
in the case of each other Bank, and from time to time thereafter as required by
law (but only so long as such Bank remains lawfully able to do so), shall
provide the Borrower two completed and

 36
 

 

duly executed copies
of Internal Revenue Service form W-8BEN or W-8ECI, as appropriate, or any
successor form prescribed by the Internal Revenue Service, or other
documentation reasonably requested by the Borrower, certifying that such Bank
is entitled to benefits under an income tax treaty to which the United States
is a party which exempts the Bank from United States withholding tax or reduces
the rate of withholding tax on payments of interest for the account of such
Bank or certifying that the income receivable pursuant to this Agreement is
effectively connected with the conduct of a trade or business in the United
States.

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

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

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

Section 8.05.  Base Rate Loans Substituted for Affected
Euro-Dollar Loans.  If (i) the
obligation of any Bank to make or to continue or convert outstanding Loans as
or into Euro-Dollar Loans has been suspended pursuant to Section 8.02 or
(ii) any Bank has demanded compensation under Section 8.03(a) or 8.04 with
respect to its Euro-Dollar Loans and the Borrower shall, by at least five Euro-Dollar
Business Days’ prior notice to such Bank through the

 37
 

 

Administrative
Agent, have elected that the provisions of this Section shall apply to such
Bank, then, unless and until such Bank notifies the Borrower that the
circumstances giving rise to such suspension or demand for compensation no
longer apply:

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

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

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

 

Section
8.06. 
Substitution of Bank; Termination Option.  If (i) the obligation of any Bank
to make or to convert or continue outstanding Loans as or into Euro-Dollar
Loans has been suspended pursuant to Section 8.02, (ii) any Bank has demanded
compensation under Section 8.03 or 8.04, or (iii) Investment Grade Status
ceases to exist as to any Bank, then:

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

(b)   if at the
time Investment Grade Status exists as to the Borrower, the Borrower may elect
to terminate this Agreement as to such Bank; provided
that (i) the Borrower notifies such Bank through the Administrative Agent of
such election at least three Euro-Dollar Business Days before the
effective date of such

 38
 

 

termination and (ii) the Borrower repays or prepays
the principal amount of all outstanding Loans made by such Bank plus any
accrued but unpaid interest thereon and the accrued but unpaid fees in respect
of such Bank’s Commitment hereunder plus all other amounts payable by the
Borrower to such Bank hereunder, not later than the effective date of such
termination.  Upon satisfaction of the foregoing conditions, the Commitment of such Bank
shall terminate on the effective date specified in such notice.

Article
9

MISCELLANEOUS

Section
9.01. 
Notices.  (a) All
notices, requests and other communications to any party hereunder shall be in
writing (including bank wire, telex, facsimile transmission or similar writing)
and shall be given to such party:  (x) in
the case of the Borrower or the Administrative Agent, at its address or telecopy
or telex number set forth on the signature pages hereof, (y) in the case of any
Bank, at its address or telecopy or telex number set forth in its
Administrative Questionnaire or (z) in the case of any party, such other
address or telecopy or telex number as such party may hereafter specify for the
purpose by notice to the Administrative Agent and the Borrower.  Each such notice, request or other
communication shall be effective (i) if given by telecopy or telex, when such
telecopy or telex is transmitted to the telecopy or telex number specified in
this Section and the appropriate answerback or confirmation slip, as the case
may be, is received or (ii) if given by any other means, when delivered at the
address specified in this Section; provided
that notices to the Administrative Agent under Article 2 or Article 3 shall not
be effective until delivered.

(b)   Notices and
other communications to the Banks hereunder may be delivered or furnished by
electronic communication (including e-mail and Internet or intranet websites)
pursuant to procedures approved by the Administrative Agent, provided that the
foregoing shall not apply to notices to any Bank pursuant to Article 2 if such
Bank has notified the Administrative Agent that it is incapable of receiving
notices under such Article by electronic communication.  The Administrative Agent or the Borrower may,
in its discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved by it,
provided that approval of such procedures may be limited to particular notices
or communications.  Unless the
Administrative Agent otherwise prescribes, (i) notices and other communications
sent to an e-mail address shall be deemed received upon the sender’s receipt of
an acknowledgment from the intended recipient (such as by the “return receipt
requested” function, as available, return e-mail or other written
acknowledgement), provided that if such notice or other communication is not
sent during the normal business hours of the recipient, such notice or

 39
 

 

communication shall be deemed to have been sent at the
opening of business on the next business day for the recipient, and (ii)
notices or communications posted to an Internet or intranet website shall be
deemed received upon the deemed receipt by the intended recipient at its e-mail
address as described in the foregoing clause (i) of notification that such
notice or communication is available and identifying the website address
therefor.

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

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

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

Section
9.04.  Sharing of
Set-offs.  Each Bank agrees
that if it shall, by exercising any right of set-off or counterclaim or
otherwise, receive payment of a proportion of the aggregate amount then due
with respect to the Loans held by it which is greater than the proportion
received by any other Bank in respect of the aggregate amount then due with
respect to the

 40
 

 

Loans held by such other Bank, the Bank receiving such
proportionately greater payment shall purchase such participations in the Loans
held by the other Banks, and such other adjustments shall be made, as may be
required so that all such payments with respect to the Loans held by the Banks
shall be shared by the Banks pro rata; provided
that nothing in this Section shall impair the right of any Bank to exercise any
right of set-off or counterclaim it may have and to apply the amount
subject to such exercise to the payment of indebtedness of the Borrower other
than its indebtedness under this Agreement.

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

Section 9.06.  Successors and Assigns.  (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns and each Indemnitee, except that
the Borrower may not assign or otherwise transfer any of its rights under this
Agreement without the prior written consent of all Banks.

(b)   Any Bank may, with the consent (unless an
Event of Default then exists) of the Borrower (such consent not to be
unreasonably withheld or delayed), at any time grant to one or more banks or
other institutions (each a “Participant”)
participating interests in its Commitment or any or all of its Loans; provided that any Bank may, without the consent of the
Borrower, at any time grant participating interests in its Commitment or any or
all of its Loans to another Bank, an Approved Fund or an Affiliate of such
transferor Bank. In the event of any such grant by a Bank of a participating
interest to a Participant, whether or not upon notice to the Administrative
Agent, such Bank shall remain responsible for the performance of its
obligations hereunder, and the Borrower, and the Administrative Agent shall
continue to deal solely and directly with such Bank in connection with such
Bank’s rights and obligations under this Agreement. Any agreement pursuant to
which any Bank may grant such a participating interest shall provide that such
Bank shall retain the sole right and responsibility to enforce the obligations
of the Borrower hereunder including, without limitation, the right to approve
any amendment, modification or waiver of any provision of this Agreement; provided that such participation agreement
may provide that such Bank will not agree to any modification, amendment or
waiver of this Agreement described in clause (i), (ii) or (iii) of Section 9.05
without the consent of the Participant. The Borrower agrees that each
Participant shall, to the

 41
 

 

extent provided in
its participation agreement, be entitled to the benefits of Article 8
with respect to its participating interest, subject to the performance by such
Participant of the obligations of a Bank thereunder. An assignment or other
transfer which is not permitted by subsection (c) or (d) below shall be given
effect for purposes of this Agreement only to the extent of a participating
interest granted in accordance with this subsection (b).

(c)   Any Bank may at any time assign to one or
more banks or other financial institutions (each an “Assignee”) all, or a proportionate part (equivalent to an
initial Commitment of not less than $10,000,000 (unless the Borrower and the
Administrative Agent shall otherwise agree)) of all, of its rights and
obligations under this Agreement and its Note (if any), and such Assignee shall
assume such rights and obligations, pursuant to an Assignment and Assumption
Agreement in substantially the form of Exhibit C hereto executed by such
Assignee and such transferor Bank, with (and only with and subject to) the
prior written consent of the Administrative Agent (which shall not be
unreasonably withheld or delayed) and, so long as no Event of Default has
occurred and is continuing, the Borrower (which shall not be unreasonably
withheld or delayed); provided that
unless such assignment is of the entire right, title and interest of the
transferor Bank hereunder, after making any such assignment such transferor
Bank shall have a Commitment of at least $10,000,000 (unless the Borrower and
the Administrative Agent shall otherwise agree).  Upon execution and delivery of such
instrument of assumption and payment by such Assignee to such transferor Bank
of an amount equal to the purchase price agreed between such transferor Bank
and such Assignee, such Assignee shall be a Bank party to this Agreement and
shall have all the rights and obligations of a Bank with a Commitment as set
forth in such instrument of assumption, and the transferor Bank shall be
released from its obligations hereunder to a corresponding extent, and no
further consent or action by any party shall be required.  Upon the consummation of any assignment
pursuant to this subsection (c), the transferor Bank, the Administrative Agent
and the Borrower shall make appropriate arrangements so that, if required by
the Assignee, a Note is issued to the Assignee. If the Assignee is not
incorporated under the laws of the United States of America or a state thereof,
it shall, prior to the first date on which interest or fees are payable
hereunder for its account, deliver to the Borrower and the Administrative Agent
certification as to exemption from deduction or withholding of any United
States federal income taxes in accordance with Section 8.04.  All assignments (other than assignments to
Affiliates) shall be subject to a transaction fee established by, and payable
by the transferor Bank to, the Administrative Agent for its own account (which
shall not exceed $5,000).

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

 42
 

 

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

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

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

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

 43
 

 

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

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

Section 9.12.  USA Patriot Act.  Each Bank hereby notifies the
Borrower that pursuant to the requirements of the USA Patriot Act, Title III of
Pub. L. 107-56 (signed into law October 26, 2001) (the “Act”), it is required to obtain, verify and
record information that identifies the Borrower, which information includes the
name and address of the Borrower and other information that will allow such
Bank to identify the Borrower in accordance with the Act.

 44

 

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

	
  

  	
  DUKE CAPITAL LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  

  	
  Title:

  	
  Assistant Treasurer

  
	
   

  	
  Address:

  	
  526 South Church Street

  Charlotte, NC 28202-1904

  
	
   

  	
  Attention:

  	
  Stephen G. De May

  
	
   

  	
  Telecopy

  number:

  	
  

  704-382-3288

  

 

	
  

  	
  CITIBANK, N.A.,

    as Administrative Agent and Bank

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
  

  	
  

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

	
  

  	
  Address for notices:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attn: Bank Loan Syndications

  
	
   

  	
  Citibank, N.A., as Administrative Agent

  
	
   

  	
  Two Penns Way

  
	
   

  	
  New Castle, Delaware  19720

  
	
   

  	
  Facsimile:  212-994-0691

  

 

	
  

  	
  BARCLAYS BANK PLC, as Syndication

    Agent and Bank

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
  

  	
  

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

Pricing Schedule

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

(basis points per annum) 

	
   

  Ratings

  	
   

  	
  at least A

  by S&P

  or A2 by

  Moody’s

  	
   

  	
  A- by

  S&P or

  A3 by

  Moody’s

  	
   

  	
  BBB+ by

  S&P or

  Baa1 by

  Moody’s

  	
   

  	
  BBB by

  S&P or

  Baa2 by

  Moody’s

  	
   

  	
  BBB- by

  S&P or

  Baa3 by

  Moody’s

  	
   

  	
  less than

  BBB- by

  S&P and

  less than

  Baa3 by

  Moody’s

  	
   

  
	
  Facility Fee

  	
   

  	
  5.0

  	
   

  	
  6.0

  	
   

  	
  7.0

  	
   

  	
  8.0

  	
   

  	
  11.5

  	
   

  	
  15.0

  	
   

  
	
  Euro-Dollar Margin

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Utilization ≤ 50%

  	
   

  	
  20.0

  	
   

  	
  24.0

  	
   

  	
  28.0

  	
   

  	
  37.0

  	
   

  	
  48.5

  	
   

  	
  62.5

  	
   

  
	
  Utilization
  > 50%

  	
   

  	
  25.0

  	
   

  	
  29.0

  	
   

  	
  33.0

  	
   

  	
  42.0

  	
   

  	
  53.5

  	
   

  	
  67.5

  	
   

  

 

The “Utilization” applicable
to any date is the percentage equivalent of a fraction the numerator of which
is the sum of the aggregate outstanding principal amount of the Loans
determined at such time after giving effect, if one or more Loans are being
made at such time, to any substantially concurrent application of the proceeds
thereof to repay one or more other Loans and the denominator of which is the
aggregate amount of the Commitments at such date.

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

EXHIBIT A

 

NOTE

 

New York, New York

[Date]

 

For
value received, Duke Capital LLC, a Delaware limited liability company (the “Borrower”), promises to pay to the order of
                    
(the “Bank”), for the account of
its Applicable Lending Office, the unpaid principal amount of each Loan
made by the Bank to the Borrower pursuant to the Credit Agreement referred to
below on the date specified in the Credit Agreement.  The Borrower promises to pay interest on the
unpaid principal amount of each such Loan on the dates and at the rate or rates
provided for in the Credit Agreement. 
All such payments of principal and interest shall be made in lawful
money of the United States in Federal or other immediately available funds at
the office of Citibank, N.A.,                              .

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

This
note is one of the Notes referred to in the Credit Agreement dated as of
November 28, 2006 among the Borrower, the banks listed on the signature pages
thereof and Citibank N.A., as Administrative Agent, and Barclays Bank PLC, as
Syndication Agent (as the same may be amended from time to time, the “Credit Agreement”).  Terms defined in the Credit Agreement are
used herein with the same meanings. 
Reference is made to the Credit Agreement for provisions for the
prepayment hereof and the acceleration of the maturity hereof.

	
  

  	
  DUKE CAPITAL LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  

 

 

 

LOANS
AND PAYMENTS OF PRINCIPAL

 

	
  Date

  	
   

  	
  Amount of

  Loan

  	
   

  	
  Type of

  Loan

  	
   

  	
  Amount of

  Principal

  Repaid

  	
   

  	
  Maturity

  Date

  	
   

  	
  Notation

  Made By

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 2

EXHIBIT
B-1

 

 

OPINION OF INTERNAL
COUNSEL OF THE BORROWER

 

[Effective Date]

 

 

 

To the Banks and the Administrative Agent

   Referred to
Below 

c/o Citibank, N.A., 

   as
Administrative Agent

[Address]

 

Ladies and Gentlemen:

 

I am internal counsel of Duke Capital
LLC (the “Borrower”) and have
acted as its counsel in connection with the Credit Agreement (the “Credit Agreement”), dated as of November
28, 2006, among the Borrower, the banks listed on the signature pages thereof,
Citibank, N.A., as Administrative Agent, and Barclays Bank PLC, as Syndication
Agent.  Capitalized terms defined in the
Credit Agreement are used herein as therein defined.  This opinion letter is being delivered
pursuant to Section 3.01(b) of the Credit Agreement.

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

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

1.             The
Borrower is a limited liability company duly formed, validly existing and in
good standing under the laws of Delaware.

2.             The
execution, delivery and performance by the Borrower of the Credit Agreement and
any Notes are within the Borrower’s limited liability company powers, have been
duly authorized by all necessary limited liability company action, require no
action by or in respect of, or filing with, any governmental body, agency or
official and do not contravene, or constitute a default under, any provision of
applicable law or regulation or of the certificate of formation or limited
liability company agreement of the Borrower or, to my knowledge, of any
agreement, judgment, injunction, order, decree or other instrument binding upon
the Borrower or, to my knowledge, result in the creation 

 

or imposition of any
Lien on any asset of the Borrower or any of its Material Subsidiaries.

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

4.             Except
as disclosed in the Borrower’s quarterly report on Form 10-Q for the period
ended September 30, 2006, to my knowledge (but without independent
investigation), there is no action, suit or proceeding pending or threatened
against or affecting, the Borrower or any of its Subsidiaries before any court
or arbitrator or any governmental body, agency or official, which would be
likely to be decided adversely to the Borrower or such Subsidiary and, as a
result, to have a material adverse effect upon the business, consolidated
financial position or consolidated results of operations of the Borrower and
its Consolidated Subsidiaries, considered as a whole, or which in any manner
draws into question the validity of the Credit Agreement or any Notes.

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

I am a member of the Bar of the State
of North Carolina and do not express any opinion herein concerning any law
other than the law of the State of North Carolina, the Limited Liability Company
Act of the State of Delaware and the federal law of the United States of
America.

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

Very
truly yours,

 

 2

 

EXHIBIT B-2

OPINION OF

ROBINSON, BRADSHAW & HINSON, P.A.,

SPECIAL COUNSEL FOR THE BORROWER

[Effective Date]

To the Banks and the
Administrative Agent

Referred to Below

c/o Citibank, N.A.,

as Administrative Agent

[Address]

Ladies and Gentlemen:

We have acted as counsel to Duke Capital LLC, a
Delaware limited liability company, in connection with the Credit Agreement
(the “Credit Agreement”), dated as
of November 28, 2006, between the Duke Capital LLC, the banks listed on the
signature pages thereof, Citibank, N.A., as Administrative Agent, and Barclays
Bank PLC, as Syndication Agent. Capitalized terms used herein and not defined
shall have the meanings given to them in the Credit Agreement. This opinion
letter is being delivered pursuant to Section 3.01(b) of the Credit Agreement.

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

In rendering the opinions contained herein, we have
assumed, among other things, that the Credit Agreement and any Notes to be
executed (i) are within the Borrower’s limited liability company powers, (ii)
have been duly authorized by all necessary limited liability company action,
(iii) require no action by or in respect of, or filing with, any governmental
body, agency of official, (iv) have been duly executed and delivered by the Borrower,
and (v) do not contravene, or constitute a default under, any provision of
applicable law or regulation or of the Borrower’s certificate of formation or
limited liability company agreement or any agreement, judgment, injunction,
order, decree or other instrument binding upon 

 

the Borrower or result in
the creation or imposition of any Lien on any asset of the Borrower. In
addition, we have assumed that the Credit Agreement fully states the agreement
between the Borrower and the Banks with respect to the matters addressed
therein, and that the Credit Agreement constitutes a legal, valid and binding
obligation of each Bank, enforceable in accordance with its respective terms.

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

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

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

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

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

3.             We
do not express any opinion as to the enforceability of any provisions contained
in the Credit Agreement or any Note that (i) purport to excuse a party for
liability for its own acts, (ii) purport to make void any act done in
contravention thereof, (iii) purport to authorize a party to act in its sole
discretion, (iv) require waivers or amendments to be made only in writing, 

 2
 

 

(v) purport to effect
waivers of constitutional, statutory or equitable rights or the effect of
applicable laws, (vi) impose liquidated damages, penalties or forfeiture, or
(vii) purport to indemnify a party for its own negligence or willful
misconduct. Indemnification provisions in the Credit Agreement are subject to
and may be rendered unenforceable by applicable law or public policy, including
applicable securities law.

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

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

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

7.             It
is likely that North Carolina courts will enforce the provisions of the Credit
Agreement providing for interest at a higher rate resulting from a Default or
Event of Default (a ”Default Rate”)
which rate is higher than the rate otherwise stipulated in the Credit Agreement.
The law, however, disfavors penalties, and it is possible that interest at the
Default Rate may be held to be an unenforceable penalty, to the extent such
rate exceeds the rate applicable prior to a default under the Credit Agreement.
Also, since North Carolina General Statutes § 24-10.1 expressly provides for
late charges, it is possible that North Carolina courts, when faced
specifically with the issue, might rule that this statutory late charge
preempts any other charge (such as default interest) by a bank for delinquent
payments. The only North Carolina case which we have found that addresses this
issue is a 1978 Court of Appeals decision, which in our opinion is of limited
precedential value, North Carolina National
Bank v. Burnette, 38 N.C. App. 120, 247 S.E.2d 648 (1978), rev’d on other grounds, 297 N.C. 524, 256
S.E.2d 388 (1979). While the court in that case did allow interest after
default (commencing with the date requested in the complaint) at a rate six
percent in excess of pre-default interest, we are unable to determine from the
opinion that any question was raised as to this being penal in nature, nor does
the court address the possible question of the statutory late charge preempting
a default interest surcharge. Therefore, since the North Carolina Supreme Court
has not ruled in a properly presented case raising issues of its possible penal

 3
 

 

nature and those of North
Carolina General Statutes § 24-10.1, we are unwilling to express an unqualified
opinion that the Default Rate of interest prescribed in the Credit Agreement is
enforceable.

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

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

	
  

  	
  Very truly yours,

  

 

 4

 

EXHIBIT
C

ASSIGNMENT AND
ASSUMPTION AGREEMENT

AGREEMENT dated as of                   ,
20     among [ASSIGNOR] (the “Assignor”), [ASSIGNEE] (the “Assignee”),
[DUKE CAPITAL LLC,] and CITIBANK, N.A., as Administrative Agent (the “Administrative Agent”).

W I T N E S S E T H

WHEREAS, this Assignment and Assumption Agreement (the
“Agreement”) relates to the Credit
Agreement dated as of November [28], 2006
among Duke Capital LLC (the “Borrower”),
the Assignor and the other Banks party thereto, as Banks, the Administrative
Agent, and Barclays Bank PLC, as Syndication Agent (the “Credit Agreement”);

WHEREAS, as provided under the Credit Agreement, the
Assignor has a Commitment to make Loans to the Borrower in an aggregate
principal amount at any time outstanding not to exceed $                    ;

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

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

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

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

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

SECTION 2. Assignment. The Assignor hereby assigns
and sells to the Assignee all of the rights of the Assignor under the Credit
Agreement to the extent of the Assigned Amount, and the Assignee hereby accepts
such assignment from the Assignor and assumes all of the obligations of the
Assignor under the Credit Agreement to the extent of the Assigned Amount,
including the purchase from the Assignor of the corresponding portion of the
principal amount of the Loans made by the Assignor outstanding at the date
hereof. Upon the execution 

 

and delivery hereof by
the Assignor, the Assignee, [the Borrower,] and the Administrative Agent, the
payment of the amounts specified in Section 3 required to be paid on the date
hereof (i) the Assignee shall, as of the date hereof, succeed to the rights and
be obligated to perform the obligations of a Bank under the Credit Agreement
with a Commitment in an amount equal to the Assigned Amount, and (ii) the
Commitment of the Assignor shall, as of the date hereof, be reduced by a like
amount and the Assignor released from its obligations under the Credit
Agreement to the extent such obligations have been assumed by the Assignee. The
assignment provided for herein shall be without recourse to the Assignor.

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

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

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

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

 2
 

 

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

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

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

 3
 

 

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

	
  

  	
  [ASSIGNOR]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  [ASSIGNEE]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  [DUKE CAPITAL LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:]

  
	
   

  	
   

  
	
   

  	
  CITIBANK, N.A., as Administrative Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  

 

 4

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