364-DAY REVOLVING CREDIT AGREEMENT

Exhibit 10.1

EXECUTION VERSION

$500,000,000

364-DAY REVOLVING CREDIT AGREEMENT

among

DOMINION RESOURCES, INC.,

The Several Lenders from Time to Time Parties Hereto,

THE ROYAL BANK OF SCOTLAND PLC,

as Administrative Agent,

BARCLAYS BANK PLC AND MORGAN STANLEY BANK,

as Co-Syndication Agents,

CITIBANK N.A. AND THE BANK OF NOVA SCOTIA ,

as Co-Documentation Agents

 

RBS SECURITIES CORPORATION D/B/A RBS GREENWICH CAPITAL,

as Lead Arranger and Bookrunner

Dated as of July 30, 2008

Table of Contents

 

 

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SCHEDULES

 

EXHIBITS

 

 

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364-DAY REVOLVING

CREDIT AGREEMENT

364-DAY REVOLVING CREDIT AGREEMENT (this “ Credit Agreement ”), dated as of July 30, 2008 among DOMINION RESOURCES, INC., a Virginia corporation (together with its permitted successors and assigns, the “ Borrower ”), the several banks and other financial institutions from time to time parties to this Credit Agreement (each a “ Lender ” and, collectively, the “Lenders”), THE ROYAL BANK OF SCOTLAND PLC, a public limited company incorporated in the United Kingdom and registered under the laws of Scotland, as administrative agent for the Lenders hereunder (in such capacity, the “ Administrative Agent ”), BARCLAYS BANK PLC and MORGAN STANLEY BANK, as Co-Syndication Agents and, CITIBANK N.A. and THE BANK OF NOVA SCOTIA, as Co-Documentation Agents.

The parties hereto hereby agree as follows:

SECTION 1. DEFINITIONS AND ACCOUNTING TERMS

1.1  Definitions .

As used herein, the following terms shall have the meanings herein specified unless the context otherwise requires. Defined terms herein shall include in the singular number the plural and in the plural the singular:

“ Adjusted Base Rate ” means the Base Rate plus the Applicable Percentage for Base Rate Loans.

“ Adjusted Eurodollar Rate ” means the Eurodollar Rate plus the Applicable Percentage for Eurodollar Revolving Loans.

“ Administrative Agent ” means The Royal Bank of Scotland plc and any successors and assigns in such capacity.

“ Affiliate ” means, with respect to any Person, any other Person directly or indirectly controlling (including but not limited to all directors and officers of such Person), controlled by or under direct or indirect common control with such Person. A Person shall be deemed to control a corporation or other entity if such Person possesses, directly or indirectly, the power (i) to vote 20% or more of the securities having ordinary voting power for the election of directors or other managing persons of such corporation or other entity or (ii) to direct or cause direction of the management and policies of such corporation or other entity, whether through the ownership of voting securities, by contract or otherwise.

“ Applicable Percentage ” means, for (x) Eurodollar Revolving Loans, the LIBOR Market Rate Spread in effect from time to time, and (y) all other Revolving Loans made to the Borrower, 0%. Any adjustment in the Applicable Percentages shall be applicable to all existing Loans as well as any new Loans.

“ Available Revolving Loan Commitment ” means, as of any date of determination, the Revolving Loan Commitment as of such date minus the aggregate principal amount of all Loans outstanding as of such date.

“ Bankruptcy Code ” means the Bankruptcy Code in Title 11 of the United States Code, as amended, modified, succeeded or replaced from time to time.

“ Base Rate ” means, for any day, a simple rate per annum equal to the greater of (a) the Prime Rate for such day or (b) the sum of one-half of one percent (.50%) plus the Federal Funds Rate for such day.

“ Base Rate Loan ” means a Loan that bears interest at an Adjusted Base Rate.

“ Borrower ” has the meaning set forth in the preamble hereof.

“ Business Day ” means any day other than a Saturday, a Sunday, a legal holiday or a day on which banking institutions are authorized or required by law or other governmental action to close in New York, New York; provided that in the case of Eurodollar Revolving Loans, such day is also a day on which dealings between banks are carried on in Dollar deposits in the London interbank market.

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

“ Capitalization ” means the sum of (a) Total Funded Debt plus (b) Net Worth.

“ Change of Control ” means (i) the direct or indirect acquisition by any person (as such term is defined in Section 13(d) of the Securities and Exchange Act of 1934, as amended) of beneficial ownership of more than 50% of the outstanding shares of the capital stock of the Borrower entitled to vote generally for the election of directors of the Borrower or (ii) VaPower shall cease to be a Subsidiary of the Borrower; provided , however , that should VaPower cease to be a Subsidiary of the Borrower by virtue of its merger with or into the Borrower, or with or into any other Subsidiary of the Borrower, such merger will not constitute a Change of Control.

“ Closing Date ” means the date hereof.

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

“ Commitment ” means, with respect to each Lender, such Lender’s share of the Revolving Loan Commitment based upon such Lender’s Commitment Percentage.

“ Commitment Fees ” has the meaning set forth in Section 3.4(a).

“ Commitment Fee Margin ” means Commitment Fees payable by the Borrower, the appropriate applicable percentages, in each case, corresponding to the Rating of the Borrower in effect from time to time as shown below:

 

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Pricing Level		Long-Term Senior Unsecured Non-Credit Enhanced Debt Rating of Borrower		Applicable Percentage for Commitment Fees
I.		³ A from S&P or		.07	%
		³ A2 from Moody’s or   ³ A from Fitch
II.		A- from S&P or		.08	%
		A3 from Moody’s or   A- from Fitch
III.		BBB+ from S&P or		.10	%
		Baa1 from Moody’s or   BBB+ from Fitch
IV.		BBB from S&P or		.125	%
		Baa2 from Moody’s or   BBB from Fitch
V.		BBB- from S&P or		.15	%
		Baa3 from Moody’s or   BBB- from Fitch
VI.		BB+ from S&P or		.20	%
		Ba1 from Moody’s or   BB+ from Fitch
VII.		< BB+ from S&P or		.25	%
		< Ba1 from Moody’s or   < BB+ from Fitch

Notwithstanding the above, if at any time there is a split in Ratings among S&P, Moody’s and Fitch and (i) two Ratings are equal and higher than the third, the higher Rating will apply, (ii) two Ratings are equal and lower than the third, the lower Rating will apply or (iii) no Ratings are equal, the intermediate Rating will apply. In the event that the Borrower shall maintain Ratings from only two of S&P, Moody’s and Fitch and the Borrower is split-rated and (x) the Ratings differential is one level, the higher Rating will apply and (y) the Ratings differential is two levels or more, the level one level lower than the higher Rating will apply.

 

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The Commitment Fee Margin shall be determined and adjusted on the date of any applicable change in the Rating of the Borrower.

The Commitment Fee Margin payable by the Borrower shall be the appropriate applicable percentages from time to time, as shown above, calculated based on the Ratings of the Borrower at such time.

These Ratings shall be determined based upon the Rating for the Borrower in effect on such day as published by S&P, Moody’s and Fitch; it being understood that the initial Commitment Fee Margin is based on Pricing Level III (as shown above) and shall remain at Pricing Level III until a change in the Ratings of the Borrower. The Borrower shall at all times maintain a Rating from at least two of S&P, Moody’s and Fitch. If at any time the Borrower does not have a Rating from at least two of S&P, Moody’s and Fitch, the Commitment Fee Margin shall be set at Pricing Level VII.

The Borrower shall promptly deliver to the Administrative Agent, at the address set forth on Schedule 12.1 , information regarding any change in the Rating of the Borrower that would change the existing Pricing Level (as set forth in the chart above) and/or the Commitment Fees.

“ Commitment Percentage ” means, for each Lender, the percentage identified as its Commitment Percentage opposite such Lender’s name on Schedule 1.1 attached hereto, as such percentage may be modified in accordance with the terms of this Credit Agreement.

“ Commitment Period ” means the period from the Closing Date to the Maturity Date.

“ Consolidated Subsidiary ” means, as to any Person, each Subsidiary of such Person (whether now existing or hereafter created or acquired), the financial statements of which are consolidated with the financial statements of such Person in accordance with GAAP, including principles of consolidation.

“ Controlled Group ” means (i) the controlled group of corporations as defined in Section 414(b) of the Code and the applicable regulations thereunder or (ii) the group of trades or businesses under common control as defined in Section 414(c) of the Code and the applicable regulations thereunder, of which the Borrower is a part or may become a part.

“ Credit Documents ” means this Credit Agreement, the Notes (if any), and all other related agreements and documents issued or delivered hereunder or thereunder or pursuant hereto or thereto.

“ Credit Exposure ” has the meaning set forth in the definition of “Required Lenders” below.

 

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

“ Defaulting Lender ” means, at any time, any Lender that, at such time (a) has failed to make a Loan required pursuant to the terms of this Credit Agreement, (b) has failed to pay to the Administrative Agent or any Lender an amount owed by such Lender pursuant to the terms of this Credit Agreement or (c) has been deemed insolvent or has become subject to a bankruptcy or insolvency proceeding or to a receiver, trustee or similar official.

“ Dollar ”, “ dollar ” and “ $ ” means lawful currency of the United States.

“ Effective Date ” has the meaning set forth in Section 12.15 hereof.

“ Eligible Assignee ” means (a) any Lender or Affiliate or Subsidiary of a Lender and (b) any other commercial bank, financial institution or “accredited investor” (as defined in Regulation D) that is either a bank organized or licensed under the laws of the United States of America or any State thereof or that has agreed to provide the information listed in Section 4.4(d) to the extent that it may lawfully do so and that is approved by the Administrative Agent and the Borrower (such approval not to be unreasonably withheld or delayed); provided that (i) the Borrower’s consent is not required pursuant to clause (a) or, with respect to clause (b), during the existence and continuation of a Default or an Event of Default and (ii) neither the Borrower nor any Affiliate or Subsidiary of the Borrower shall qualify as an Eligible Assignee.

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and the rulings issued thereunder.

“ ERISA Affiliate ” means each person (as defined in Section 3(9) of ERISA) which together with the Borrower or any Subsidiary of the Borrower would be deemed to be a member of the same “controlled group” within the meaning of Section 414(b), (c), (m) and (o) of the Code.

“ Eurodollar Rate ” means with respect to any Eurodollar Revolving Loan, for the Interest Period applicable thereto, a rate per annum determined pursuant to the following formula:

 

“ Eurodollar Reserve Percentage ” means, for any day, that percentage (expressed as a decimal) which is in effect from time to time under Regulation D, as such regulation may be amended from time to time or any successor regulation, as the maximum reserve requirement (including, without limitation, any basic, supplemental, emergency, special, or marginal reserves) applicable with respect to Eurocurrency liabilities as that term is defined in Regulation D (or against any other category of liabilities that includes deposits by reference to which the interest rate of Eurodollar Revolving Loans is determined), whether or not any Lender has any Eurocurrency liabilities subject to such reserve requirement at that time. Eurodollar Revolving Loans shall be deemed to constitute Eurocurrency liabilities and as such shall be deemed subject to reserve requirements without benefits of credits for proration, exceptions or offsets that may be available from time to time to a Lender. The Eurodollar Rate shall be adjusted automatically on and as of the effective date of any change in the Eurodollar Reserve Percentage.

 

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“ Eurodollar Revolving Loan ” means a Revolving Loan bearing interest at a rate of interest determined by reference to the Eurodollar Rate.

“ Event of Default ” has the meaning specified in Section 10.1.

“ Exchange Act ” means the Securities and Exchange Act of 1934, as amended.

“ Existing DRI Credit Agreement ” means that certain $3,000,000,000 Five-Year Revolving Credit Agreement, dated as of February 28, 2006 among the Borrower, VaPower and Consolidated Natural Gas Company, as borrowers, the financial institutions parties thereto as lenders, and JPMorgan Chase Bank, N.A., as administrative agent, as amended from time to time.

“ Federal Funds Rate ” means for any day the rate per annum (rounded upward 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 Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the immediately preceding Business Day and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate quoted to the Administrative Agent on such day on such transactions as determined by the Administrative Agent.

“ Fee Payment Date ” shall mean (a) the first Business Day of each January, April, July and October and (b) the Maturity Date.

“ Fitch ” means Fitch Ratings Ltd., or any successor or assignee of the business of such company in the business of rating securities.

“ Funded Debt ” means, as to any Person, without duplication: (a) all Indebtedness of such Person for borrowed money or which has been incurred in connection with the acquisition of assets (excluding letters of credit, bankers’ acceptances, Non-Recourse Debt, Mandatorily Convertible Securities, Trust Preferred Securities and Hybrid Equity Securities), (b) all capital lease obligations (including Synthetic Lease Obligations) of such Person and (c) all Guaranty Obligations of Funded Debt of other Persons.

“ GAAP ” means generally accepted accounting principles in the United States applied on a consistent basis and subject to Section 1.3.

“ Governmental Authority ” means any Federal, state, local or foreign court or governmental agency, authority, instrumentality or regulatory body.

“ Granting Lender ” has the meaning set forth in Section 12.18 hereof.

 

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“ Guaranty Obligations ” means, in respect of any Person, any obligation, contingent or otherwise, of such Person directly or indirectly guaranteeing any Indebtedness of another Person, including, without limitation, any obligation (a) to purchase or pay, or advance or supply funds for the purchase or payment of, such Indebtedness or (b) entered into primarily for the purpose of assuring the owner of such Indebtedness of the payment thereof (such as, for example, but without limitation, an agreement to advance or provide funds or other support for the payment or purchase of such Indebtedness or to maintain working capital, solvency or other balance sheet conditions of such other Person, including, without limitation, maintenance agreements, comfort letters or similar agreements or arrangements, or to lease or purchase property, securities or services) if such obligation would constitute an indirect guarantee of indebtedness of others, the disclosure of which would be required in such Person’s financial statements under GAAP; provided , however , that the term Guaranty Obligations shall not include (i) endorsements for deposit or collection in the ordinary course of business, (ii) obligations under purchased power contracts or (iii) obligations of such Person otherwise constituting Guaranty Obligations under this definition to provide contingent equity support, to keep well, to purchase assets, goods, securities or services, to take or pay or to maintain financial statement conditions or otherwise in respect of any Subsidiary or Affiliate of such Person in connection with the non-utility non-recourse financing activities of such Subsidiary or Affiliate.

“ Hybrid Equity Securities ” means any securities issued by the Borrower or a financing vehicle of the Borrower that (i) are classified as possessing a minimum of at least “intermediate equity content” by S&P, at least Basket C equity credit by Moody’s, and at least 50% equity credit by Fitch and (ii) require no repayments or prepayments and no mandatory redemptions or repurchases, in each case, prior to at least 91 days after the later of the termination of the Commitments and the repayment in full of the Revolving Loans and all other amounts due under this Credit Agreement.

“ Indebtedness ” means, as to any Person, without duplication: (a) all obligations of such Person for borrowed money or evidenced by bonds, debentures, notes or similar instruments; (b) all obligations of such Person for the deferred purchase price of property or services (except trade accounts payable arising in the ordinary course of business, customer deposits, provisions for rate refunds, deferred fuel expenses and obligations in respect of pensions and other post-retirement benefits); (c) all capital lease obligations of such Person; (d) all Indebtedness of others secured by a Lien on any properties, assets or revenues of such Person (other than stock, partnership interests or other equity interests of the Borrower or any of its Subsidiaries in other entities) to the extent of the lesser of the value of the property subject to such Lien or the amount of such Indebtedness; (e) all Guaranty Obligations; and (f) all non-contingent obligations of such Person under any letters of credit or bankers’ acceptances.

“ Interbank Offered Rate ” means, for any Eurodollar Revolving Loan for any Interest Period therefor, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on any service selected by the Administrative Agent which has been nominated by the British Bankers’ Association as an authorized information vendor for the purpose of displaying the London interbank offered rate for deposits in Dollars (such as the applicable Reuters’ screen) at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period.

 

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“ Interest Payment Date ” means (a) as to Base Rate Loans, the last day of each fiscal quarter and the Maturity Date, and (b) as to Eurodollar Revolving Loans, the last day of each applicable Interest Period and the Maturity Date. If an Interest Payment Date falls on a date which is not a Business Day, such Interest Payment Date shall be deemed to be the next succeeding Business Day, except that in the case of Eurodollar Revolving Loans where the next succeeding Business Day falls in the next succeeding calendar month, then such Interest Payment Date shall be deemed to be the immediately preceding Business Day.

“ Interest Period ” means, as to Eurodollar Revolving Loans, a period of 14 days (in the case of new money borrowings) and one, two or three months’ duration, as the Borrower may elect, commencing, in each case, on the date of the borrowing (including continuations and conversions of Eurodollar Revolving Loans); provided , however , (i) if any Interest Period would end on a day which is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day (except that where the next succeeding Business Day falls in the next succeeding calendar month, then such Interest Period shall end on the next preceding Business Day), (ii) no Interest Period shall extend beyond the Maturity Date and (iii) with respect to Eurodollar Revolving Loans, where an Interest Period begins on a day for which there is no numerically corresponding day in the calendar month in which the Interest Period is to end, such Interest Period shall end on the last Business Day of such calendar month.

“ Lead Arranger ” means RBS Securities Corporation d/b/a RBS Greenwich Capital.

“ Lenders ” means those banks and other financial institutions identified as such on the signature pages hereto and such other institutions that may become Lenders pursuant to Section 12.3(b).

“ LIBOR Market Rate Spread ” means, at any time for any Eurodollar Revolving Loan for any Interest Period, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to (x) 110% multiplied by (y) the Borrower’s 1-year credit default swap mid-rate spread (as provided by Markit Group Limited or any successor thereto (the “ Quotation Agency ”)) for the one-year period beginning on the Rate Set Date (as defined below), appearing on the Quotation Agency’s website at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period (the “ Rate Set Date ”); provided , that the LIBOR Market Rate Spread shall in no event be less than 0.50% or greater than 1.00%; provided , further that in the event that the LIBOR Market Rate Spread is not available from the Quotation Agency on the Rate Set Date for any Interest Period, the LIBOR Market Rate Spread shall be 1.00% for such Interest Period.

“ Lien ” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, security interest, encumbrance, lien (statutory or otherwise), preference, priority or charge of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, any financing or similar statement or notice filed under the Uniform Commercial Code as adopted and in effect in the relevant jurisdiction or other similar recording or notice statute, and any lease in the nature thereof).

“ Loan ” means any loan made by any Lender pursuant to this Credit Agreement.

 

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“ Mandatorily Convertible Securities ” means any mandatorily convertible equity-linked securities issued by the Borrower, so long as the terms of such securities require no repayments or prepayments and no mandatory redemptions or repurchases, in each case prior to at least 91 days after the later of the termination of the Commitments and the repayment in full of the Loans and all other amounts due under this Credit Agreement.

“ Material Adverse Effect ” means a material adverse effect, after taking into account applicable insurance, if any, on (a) the operations, financial condition or business of the Borrower, (b) the ability of the Borrower to perform its obligations under this Credit Agreement or (c) the validity or enforceability of this Credit Agreement or any of the other Credit Documents against the Borrower, or the rights and remedies of the Lenders against the Borrower hereunder or thereunder; provided , however , that a transfer of assets permitted under and in compliance with Section 9.3 shall not be considered to have a Material Adverse Effect.

“ Material Subsidiary ” shall mean a Subsidiary of the Borrower whose total assets (as determined in accordance with GAAP) represent at least 20% of the total assets of the Borrower, on a consolidated basis.

“ Maturity Date ” means July 28, 2009.

“ Moody’s ” means Moody’s Investors Service, Inc., or any successor or assignee of the business of such company in the business of rating securities.

“ Multiemployer Plan ” means at any time an employee pension benefit plan within the meaning of Section 4001(a)(3) of ERISA to which any member of the Controlled Group is then making or accruing an obligation to make contributions or has within the preceding five plan years made contributions, including for these purposes any Person which ceased to be a member of the Controlled Group during such five year period but only with respect to the period during which such Person was a member of the Controlled Group.

“ Net Worth ” means as of any date, the shareholders’ equity or net worth of the Borrower and its Consolidated Subsidiaries (including, but not limited to, the face amount of any Mandatorily Convertible Securities, Trust Preferred Securities, Hybrid Equity Securities and Preferred Stock; but, excluding the accumulated other comprehensive income or loss component of shareholders’ equity), on a consolidated basis, as determined in accordance with GAAP.

“ Non-Recourse Debt ” means Indebtedness (a) as to which the Borrower (i) does not provide credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness), (ii) is not directly or indirectly liable as a guarantor or otherwise, or (iii) is not the lender; (b) no default with respect to which would permit upon notice, lapse of time or both any holder of any other Indebtedness (other than the Loans or the Notes) of the Borrower to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity; and (c) as to which the lenders will not have any recourse to the stock or assets of the Borrower (other than the specific assets pledged to secure such Indebtedness) and the relevant legal documents so provide.

 

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“ Non-Regulated Assets ” means with respect to the Borrower, the operations that are not regulated by a Governmental Authority (i.e. merchant generation, exploration and production, producer services or retail supply assets of the Borrower).

“ Notes ” means the collective reference to the Revolving Loan Notes of the Borrower.

“ Notice of Borrowing ” means a request by the Borrower for a Loan in the form of Exhibit 2.2(a) .

“ Notice of Continuation/Conversion ” means a request by the Borrower for the continuation or conversion of a Loan in the form of Exhibit 2.2(c) .

“ Other Taxes ” has the meaning set forth in Section 4.4(b) hereof.

“ PBGC ” means the Pension Benefit Guaranty Corporation established under ERISA and any successor thereto.

“ Pension Plans ” has the meaning set forth in Section 8.8 hereof.

“ Person ” means any individual, partnership, joint venture, firm, corporation, limited liability company, association, trust or other enterprise (whether or not incorporated), or any government or political subdivision or any agency, department or instrumentality thereof.

“ Plan ” means any single-employer plan as defined in Section 4001 of ERISA, which is maintained, or at any time during the five calendar years preceding the date of this Credit Agreement was maintained, for employees of the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate of the Borrower.

“ Preferred Stock ” means any Capital Stock issued by the Borrower that is entitled to preference or priority over any other Capital Stock of the Borrower in respect of the payment of dividends or distribution of assets upon liquidation, or both.

“ Prime Rate ” means the per annum rate of interest as notified to the Borrower by the Administrative Agent from time to time as its Prime Rate. Any change in the interest rate resulting from a change in the Prime Rate shall become effective as of 12:01 a.m. of the Business Day on which each change in the Prime Rate is announced by the Administrative Agent. The Prime Rate is a reference rate used by the Administrative Agent in determining interest rates on certain loans and is not intended to be the lowest rate of interest charged on any extension of credit to any debtor.

“ Rating ” means the rating assigned by S&P, Moody’s or Fitch to the Borrower based on the Borrower’s senior, unsecured, non-credit-enhanced obligations.

“ RBS ” means The Royal Bank of Scotland plc.

“ Register ” has the meaning set forth in Section 12.3(c).

 

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“ Regulation A, D, T, U or X ” means Regulation A, D, T, U or X, respectively, of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof.

“ Reportable Event ” means a “reportable event” as defined in Section 4043 of ERISA with respect to which the notice requirements to the PBGC have not been waived.

“ Required Lenders ” means Lenders whose aggregate Credit Exposure (as hereinafter defined) constitutes more than 50% of the aggregate Credit Exposure of all Lenders at such time; provided , however , that if any Lender shall be a Defaulting Lender at such time then there shall be excluded from the determination of Required Lenders the aggregate principal amount of Credit Exposure of such Lender at such time. For purposes of the preceding sentence, the term “ Credit Exposure ” as applied to each Lender shall mean (a) at any time prior to the termination of the Commitments, the Commitment Percentage of such Lender multiplied by the Revolving Loan Commitment and (b) at any time after the termination of the Commitments, the outstanding amount of Loans owed to such Lender.

“ Revolving Loan ” means a Loan made by the Lenders to the Borrower pursuant to Section 2.1(a) hereof.

“ Revolving Loan Commitment ” means Five Hundred Million Dollars ($500,000,000), as such amount may be otherwise reduced in accordance with Section 2.5.

“ Revolving Loan Notes ” means the promissory notes of the Borrower in favor of each Lender evidencing the Revolving Loans made to the Borrower and substantially in the form of Exhibit 2.7(a) , as such promissory notes may be amended, modified, supplemented or replaced from time to time.

“ S&P ” means Standard & Poor’s Ratings Group, a division of McGraw Hill, Inc., or any successor or assignee of the business of such division in the business of rating securities.

“ Solvent ” means, with respect to any Person as of a particular date, that on such date (a) the fair saleable value (on a going concern basis) of such Person’s assets exceeds its liabilities, contingent or otherwise, fairly valued, (b) such Person will be able to pay its debts as they become due, (c) such Person does not have unreasonably small capital with which to satisfy all of its current and reasonably anticipated obligations and (d) such Person does not intend to incur nor does it reasonably anticipate that it will incur debts beyond its ability to pay as such debts become due.

“ SPV ” has the meaning set forth in Section 12.18 hereof.

“ Subsidiary ” means, as to any Person, (a) any corporation more than 50% of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time, any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned by such Person directly or indirectly through Subsidiaries and (b) any partnership, association, joint venture or other entity in which such Person directly or indirectly through Subsidiaries has more than 50% equity interest at any time.

 

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“ Synthetic Lease ” means each arrangement, however described, under which the obligor accounts for its interest in the property covered thereby under GAAP as lessee of a lease which is not a capital lease under GAAP and accounts for its interest in the property covered thereby for federal income tax purposes as the owner.

“ Synthetic Lease Obligation ” means, as to any Person with respect to any Synthetic Lease at any time of determination, the amount of the liability of such Person in respect of such Synthetic Lease that would (if such lease was required to be classified and accounted for as a capital lease on a balance sheet of such Person in accordance with GAAP) be required to be capitalized on the balance sheet of such Person at such time.

“ Taxes ” has the meaning set forth in Section 4.4(a).

“ Total Funded Debt ” means all Funded Debt of the Borrower and its Consolidated Subsidiaries, on a consolidated basis, as determined in accordance with GAAP.

“ Trust Preferred Securities ” means the trust preferred securities issued by a subsidiary capital trust established by the Borrower outstanding on the date hereof and reflected as junior subordinated notes in the financial statements of the Borrower for the fiscal year ended December 31, 2007, and any additional trust preferred securities that are substantially similar thereto, along with the junior subordinated debt obligations of the Borrower, so long as (a) the terms thereof require no repayments or prepayments and no mandatory redemptions or repurchases, in each case prior to at least 91 days after the later of the termination of the Commitments and the repayment in full of the Loans and all other amounts due under this Credit Agreement, (b) such securities are subordinated and junior in right of payment to all obligations of the Borrower for or in respect of borrowed money and (c) the obligors in respect of such preferred securities and subordinated debt have the right to defer interest and dividend payments, in each case to substantially the same extent as such currently outstanding preferred securities or on similar terms customary for trust preferred securities and not materially less favorable to the interests of the Borrower or the Lenders.

“ VaPower ” means Virginia Electric and Power Company, a Virginia corporation and its successors and assigns.

“ VaPower Indenture ” means the first mortgage bond indenture, dated November 1, 1935, by and between VaPower and The Chase Manhattan Bank, as supplemented and amended.

“ Wholly Owned Subsidiary ” means, as to any Person, any other Person all of the Capital Stock of which (other than de minimis directors’ qualifying shares or local ownership shares required by law and outstanding publicly owned Preferred Stock of VaPower) is owned by such Person directly and/or through other Wholly Owned Subsidiaries.

1.2  Computation of Time Periods; Other Definitional Provisions .

For purposes of computation of periods of time hereunder, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding.” References in this Credit Agreement to “Sections”, “Schedules” and “Exhibits” shall be to Sections, Schedules or Exhibits of or to this Credit Agreement unless otherwise specified.

 

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1.3  Accounting Terms .

Except as otherwise expressly provided herein, all accounting terms used herein shall be interpreted, and all financial statements and certificates and reports as to financial matters required to be delivered to the Lenders hereunder shall be prepared, in accordance with GAAP applied on a consistent basis. All calculations made for the purposes of determining compliance with this Credit Agreement shall (except as otherwise expressly provided herein) be made by application of GAAP applied on a basis consistent with the most recent annual or quarterly financial statements delivered pursuant to Section 8.1 (or, prior to the delivery of the first financial statements pursuant to Section 8.1, consistent with the financial statements described in Section 6.1(f)); provided , however , if (a) the Borrower shall object to determining such compliance on such basis at the time of delivery of such financial statements due to any change in GAAP or the rules promulgated with respect thereto or (b) the Administrative Agent or the Required Lenders shall so object in writing within 30 days after delivery of such financial statements, then such calculations shall be made on a basis consistent with the most recent financial statements delivered by the Borrower to the Lenders as to which no such objection shall have been made.

1.4  Time .

All references to time herein shall be references to Eastern Standard Time or Eastern Daylight time, as the case may be, unless specified otherwise.

SECTION 2. LOANS

2.1  Revolving Loan Commitment .

(a) Revolving Loans . Subject to the terms and conditions set forth herein, each Lender severally agrees to make revolving loans to the Borrower in Dollars, at any time and from time to time, during the Commitment Period (each a “ Revolving Loan ” and collectively the “ Revolving Loans ”); provided that (i) the aggregate amount of Revolving Loans outstanding to the Borrower on any day shall not exceed the Revolving Loan Commitment and (ii) with respect to each individual Lender, the Lender’s pro rata share of outstanding Revolving Loans then outstanding on any day shall not exceed such Lender’s Commitment Percentage of the Revolving Loan Commitment. Subject to the terms and conditions of this Credit Agreement, the Borrower may borrow, repay and reborrow the amount of the Revolving Loan Commitment made to it.

(b) Intentionally Omitted .

2.2  Method of Borrowing for Revolving Loans .

(a) Base Rate Loans . By no later than 11:00 a.m. on the Business Day of the Borrower’s request for a Base Rate Loan (or for the conversion of Eurodollar Revolving Loans to Base Rate Loans), the Borrower shall submit a Notice of Borrowing to the Administrative Agent setting forth (i) the amount requested, (ii) the desire to have such Revolving Loans accrue interest at the Base Rate and (iii) except in the case of conversions of Eurodollar Revolving Loans to Base Rate Loans, complying in all respects with Section 6.2 hereof.

 

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(b) Eurodollar Revolving Loans . By no later than 11:00 a.m. three Business Days prior to the date of the Borrower’s request for a Eurodollar Revolving Loan (or for the conversion of Base Rate Loans to Eurodollar Revolving Loans or the continuation of existing Eurodollar Revolving Loans), the Borrower shall submit a Notice of Borrowing to the Administrative Agent setting forth (i) the amount requested, (ii) the desire to have such Revolving Loans accrue interest at the Adjusted Eurodollar Rate, (iii) the Interest Period applicable thereto, and (iv) except in the case of conversions of Base Rate Loans to Eurodollar Revolving Loans or the continuation of existing Eurodollar Revolving Loans, complying in all respects with Section 6.2 hereof.

(c) Continuation and Conversion . The Borrower shall have the option, on any Business Day, to continue existing Eurodollar Revolving Loans made to it for a subsequent Interest Period, to convert Base Rate Loans made to it into Eurodollar Revolving Loans or to convert Eurodollar Revolving Loans made to it into Base Rate Loans. By no later than 11:00 a.m. (a) on the date of the requested conversion of a Eurodollar Revolving Loan to a Base Rate Loan or (b) three Business Days prior to the date for a requested continuation of a Eurodollar Revolving Loan or conversion of a Base Rate Loan to a Eurodollar Revolving Loan, the Borrower shall provide telephonic notice to the Administrative Agent, followed promptly by a written Notice of Continuation/Conversion, setting forth (i) whether the Borrower wishes to continue or convert such Loans and (ii) if the request is to continue a Eurodollar Revolving Loan or convert a Base Rate Loan to a Eurodollar Revolving Loan, the Interest Period applicable thereto. Notwithstanding anything herein to the contrary, (i) except as provided in Section 4.1 hereof, Eurodollar Revolving Loans may be converted to Base Rate Loans only on the last day of an Interest Period applicable thereto; (ii) Eurodollar Revolving Loans may be continued and Base Rate Loans may be converted to Eurodollar Revolving Loans only if no Default or Event of Default with respect to the Borrower is in existence on the date of such extension or conversion; (iii) any continuation or conversion must comply with Sections 2.2(a) or 2.2(b) hereof, as applicable; and (iv) failure by the Borrower to properly continue Eurodollar Revolving Loans at the end of an Interest Period shall be deemed a conversion to Base Rate Loans.

2.3  Funding of Revolving Loans .

Upon receipt of a Notice of Borrowing, the Administrative Agent shall promptly inform the Lenders as to the terms thereof. Each Lender will make its pro rata share of the Revolving Loans available to the Administrative Agent by 1:00 p.m. on the date specified in the Notice of Borrowing by deposit (in Dollars) of immediately available funds at the office of the Administrative Agent, or at such other address as the Administrative Agent may designate in writing. All Revolving Loans shall be made by the Lenders pro rata on the basis of each Lender’s Commitment Percentage.

No Lender shall be responsible for the failure or delay by any other Lender in its obligation to make Loans hereunder; provided , however , that the failure of any Lender to fulfill its obligations hereunder shall not relieve any other Lender of its obligations hereunder. Unless the Administrative Agent shall have been notified by any Lender prior to the time of any such Loan

 

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that such Lender does not intend to make available to the Administrative Agent its portion of the Loans to be made on such date, the Administrative Agent may assume that such Lender has made such amount available to the Administrative Agent on the date of such Loans, and the Administrative Agent in reliance upon such assumption, may (in its sole discretion without any obligation to do so) make available to the Borrower a corresponding amount. If such corresponding amount is not in fact made available to the Administrative Agent, the Administrative Agent shall be able to recover such corresponding amount from such Lender. If such Lender does not pay such corresponding amount forthwith upon the Administrative Agent’s demand therefor, the Administrative Agent will promptly notify the Borrower and the Borrower shall immediately pay such corresponding amount to the Administrative Agent. The Administrative Agent shall also be entitled to recover from the Lender or the Borrower, as the case may be, interest on such corresponding amount in respect of each day from the date such corresponding amount was made available by the Administrative Agent to the Borrower to the date such corresponding amount is recovered by the Administrative Agent at a per annum rate equal to (a) the applicable rate for such Loan pursuant to the Notice of Borrowing, if recovered from the Borrower, and (b) the Federal Funds Rate, if recovered from a Lender.

2.4  Minimum Amounts of Revolving Loans .

Each request for Revolving Loans shall be, in the case of Eurodollar Revolving Loans, in an aggregate principal amount that is not less than the lesser of $10,000,000 or the remaining amount available to be borrowed and, in the case of Base Rate Loans, in an aggregate principal amount that is not less than the lesser of $5,000,000 or the remaining amount available to be borrowed. Any Revolving Loan requested shall be in an integral multiple of $1,000,000 unless the request is for all of the remaining amount available to be borrowed.

2.5  Reductions of Revolving Loan Commitment .

Upon at least three Business Days’ notice, the Borrower shall have the right to permanently terminate or reduce the aggregate unused amount of the Revolving Loan Commitment available to it at any time or from time to time; provided that (a) each partial reduction shall be in an aggregate amount at least equal to $10,000,000 and in integral multiples of $1,000,000 above such amount and (b) no reduction shall be made which would reduce the Revolving Loan Commitment to an amount less than the then outstanding Revolving Loans. Any reduction in (or termination of) the Revolving Loan Commitment shall be permanent and may not be reinstated.

2.6  RESERVED .

2.7  Notes .

(a) Revolving Loan Notes . The Revolving Loans made by the Lenders to the Borrower shall be evidenced, upon request by any Lender, by a promissory note of the Borrower payable to each Lender in substantially the form of Exhibit 2.7(a) hereto (the “ Revolving Loan Notes ”) and in a principal amount equal to the amount of such Lender’s Commitment Percentage of the Revolving Loan Commitment as originally in effect.

 

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(b) Intentionally Omitted .

The date, amount, type, interest rate and duration of Interest Period (if applicable) of each Loan made by each Lender to the Borrower, and each payment made on account of the principal thereof, shall be recorded by such Lender on its books; provided that the failure of such Lender to make any such recordation or endorsement shall not affect the obligations of the Borrower to make a payment when due of any amount owing hereunder or under any Note in respect of the Loans to be evidenced by such Note, and each such recordation or endorsement shall be conclusive and binding absent manifest error.

2.8  RESERVED

SECTION 3. PAYMENTS

3.1  Interest .

(a) Interest Rate .

(i) All Base Rate Loans made to the Borrower shall accrue interest at the Adjusted Base Rate.

(ii) All Eurodollar Revolving Loans made to the Borrower shall accrue interest at the Adjusted Eurodollar Rate applicable to such Eurodollar Revolving Loan.

(b) Default Rate of Interest . Upon the occurrence, and during the continuance, of an Event of Default, the principal of and, to the extent permitted by law, interest on the Loans outstanding to the Borrower and any other amounts owing by the Borrower hereunder or under the other Credit Documents shall bear interest, payable on demand, at a per annum rate equal to 2% plus the rate which would otherwise be applicable (or if no rate is applicable, then the rate for Loans outstanding to the Borrower that are Base Rate Loans plus 2% per annum).

(c) Interest Payments . Except as otherwise provided in subsection (b) above, interest on Loans shall be due and payable in arrears on each Interest Payment Date.

3.2  Prepayments .

(a) Voluntary Prepayments . The Borrower shall have the right to prepay Loans in whole or in part from time to time without premium or penalty; provided, however, that (i) Eurodollar Revolving Loans may only be prepaid on three Business Days’ prior written notice to the Administrative Agent and any prepayment of Eurodollar Revolving Loans will be subject to Section 4.3 hereof and (ii) each such partial prepayment of Loans shall be in the minimum principal amount of $10,000,000. Amounts prepaid hereunder shall be applied as the Borrower may elect; provided that if the Borrower fails to specify the application of a voluntary prepayment then such prepayment shall be applied in each case first to Base Rate Loans of the Borrower and then to Eurodollar Revolving Loans of the Borrower in direct order of Interest Period maturities.

 

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(b) Mandatory Prepayments . If at any time the amount of Revolving Loans outstanding exceeds the Revolving Loan Commitment, the Borrower shall immediately make a principal payment to the Administrative Agent in the manner and in an amount necessary to be in compliance with Section 2.1 hereof. Any payments made under this Section 3.2(b) shall be subject to Section 4.3 hereof and shall be applied first to Base Rate Loans, then to Eurodollar Revolving Loans in direct order of Interest Period maturities.

3.3  Payment in Full at Maturity .

On the Maturity Date, the entire outstanding principal balance of all Loans, together with accrued but unpaid interest and all other sums owing under this Credit Agreement, shall be due and payable in full, unless accelerated sooner pursuant to Section 10 hereof.

3.4  Fees .

(a) Commitment Fees .

(i) In consideration of the Revolving Loan Commitment being made available by the Lenders hereunder, the Borrower agrees to pay to the Administrative Agent, for the pro rata benefit of each Lender, a per annum fee equal to the Commitment Fee Margin multiplied by the daily average Available Revolving Loan Commitment (the “ Commitment Fees ”).

(ii) The accrued Commitment Fees shall be due and payable in arrears on each Fee Payment Date (as well as on any date that the Revolving Loan Commitment is reduced) for the immediately preceding fiscal quarter (or portion thereof), beginning with the first of such dates to occur after the Closing Date.

(b) Intentionally Omitted.

(c) Administrative Fees . The Borrower agrees to pay to the Administrative Agent an annual fee as agreed to between the Borrower and the Administrative Agent.

3.5  Place and Manner of Payments .

All payments of principal, interest, fees, expenses and other amounts to be made by the Borrower under this Credit Agreement shall be received not later than 2:00 p.m. on the date when due in Dollars and in immediately available funds, without setoff, deduction, counterclaim or withholding of any kind, by the Administrative Agent at its offices in Connecticut. The Borrower shall, at the time it makes any payment under this Credit Agreement, specify to the Administrative Agent, the Loans, fees or other amounts payable by the Borrower hereunder to which such payment is to be applied (and in the event that it fails to specify, or if such application would be inconsistent with the terms hereof, the Administrative Agent, shall distribute such payment to the Lenders in such manner as it reasonably determines in its sole discretion).

 

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3.6  Pro Rata Treatment .

Except to the extent otherwise provided herein, all Revolving Loans, each payment or prepayment of principal of any Revolving Loan, each payment of interest on the Revolving Loans, each payment of Commitment Fees, each reduction of the Revolving Loan Commitment, and each conversion or continuation of any Revolving Loans, shall be allocated pro rata among the Lenders in accordance with the respective Commitment Percentages.

3.7  Computations of Interest and Fees .

(a) Except for Base Rate Loans calculated using the Prime Rate, on which interest shall be computed on the basis of a 365 or 366 day year as the case may be, all computations of interest and fees hereunder shall be made on the basis of the actual number of days elapsed over a year of 360 days.

(b) It is the intent of the Lenders and the Borrower to conform to and contract in strict compliance with applicable usury law from time to time in effect. All agreements between the Lenders and the Borrower are hereby limited by the provisions of this paragraph which shall override and control all such agreements, whether now existing or hereafter arising and whether written or oral. In no way, nor in any event or contingency (including but not limited to prepayment or acceleration of the maturity of any obligation), shall the interest taken, reserved, contracted for, charged, or received under this Credit Agreement, under the Notes or otherwise, exceed the maximum non-usurious amount permissible under applicable law. If, from any possible construction of any of the Credit Documents or any other document, interest would otherwise be payable in excess of the maximum non-usurious amount, any such construction shall be subject to the provisions of this paragraph and such documents shall be automatically reduced to the maximum non-usurious amount permitted under applicable law, without the necessity of execution of any amendment or new document. If any Lender shall ever receive anything of value which is characterized as interest on the Loans under applicable law and which would, apart from this provision, be in excess of the maximum lawful amount, an amount equal to the amount which would have been excessive interest shall, without penalty, be applied to the reduction of the principal amount owing on the Loans and not to the payment of interest, or refunded to the Borrower or the other payor thereof if and to the extent such amount which would have been excessive exceeds such unpaid principal amount of the Loans. The right to demand payment of the Loans of the Borrower or any other indebtedness evidenced by any of the Credit Documents does not include the right to receive any interest which has not otherwise accrued on the date of such demand, and the Lenders do not intend to charge or receive any unearned interest in the event of such demand. All interest paid or agreed to be paid to the Lenders with respect to the Loans shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full stated term (including any renewal or extension) of the Loans so that the amount of interest on account of such indebtedness does not exceed the maximum non-usurious amount permitted by applicable law.

3.8  Sharing of Payments .

Each Lender agrees that, in the event that any Lender shall obtain payment in respect of any Revolving Loan owing to such Lender under this Credit Agreement through the exercise of a right of set-off, banker’s lien, counterclaim or otherwise (including, but not limited to, pursuant to the Bankruptcy Code) in excess of its pro rata share as provided for in this Credit Agreement, such

 

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Lender shall promptly purchase from the other Lenders a participation in such Loans, in such amounts and with such other adjustments from time to time, as shall be equitable in order that all Lenders share such payment in accordance with their respective ratable shares as provided for in this Credit Agreement. Each Lender further agrees that if a payment to a Lender (which is obtained by such Lender through the exercise of a right of set-off, banker’s lien, counterclaim or otherwise) shall be rescinded or must otherwise be restored, each Lender which shall have shared the benefit of such payment shall, by repurchase of a participation theretofore sold, return its share of that benefit to each Lender whose payment shall have been rescinded or otherwise restored. The Borrower agrees that any Lender so purchasing such a participation in Loans made to the Borrower may, to the fullest extent permitted by law, exercise all rights of payment, including set-off, banker’s lien or counterclaim, with respect to such participation as fully as if such Lender were a holder of such Loan or other obligation in the amount of such participation. Except as otherwise expressly provided in this Credit Agreement, if any Lender shall fail to remit to the Administrative Agent or any other Lender an amount payable by such Lender to the Administrative Agent or such other Lender pursuant to this Credit Agreement on the date when such amount is due, such payments shall accrue interest thereon, for each day from the date such amount is due until the day such amount is paid to the Administrative Agent or such other Lender, at a rate per annum equal to the Federal Funds Rate.

3.9  Evidence of Debt .

(a) Each Lender shall maintain an account or accounts evidencing each Loan made by such Lender to the Borrower from time to time, including the amounts of principal and interest payable and paid to such Lender by or for the account of the Borrower from time to time under this Credit Agreement. Each Lender will make reasonable efforts to maintain the accuracy of its account or accounts and to promptly update its account or accounts from time to time, as necessary.

(b) The Administrative Agent shall maintain the Register for the Borrower pursuant to Section 12.3(c), and a subaccount for each Lender, in which Registers and subaccounts (taken together) shall be recorded (i) the amount, type and Interest Period of each such Loan hereunder, (ii) the amount of any principal or interest due and payable or to become due and payable to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder from or for the account of the Borrower and each Lender’s share thereof. The Administrative Agent will make reasonable efforts to maintain the accuracy of the subaccounts referred to in the preceding sentence and to promptly update such subaccounts from time to time, as necessary.

(c) The entries made in the accounts, Registers and subaccounts maintained pursuant to subsection (b) of this Section 3.9 (and, if consistent with the entries of the Administrative Agent, subsection (a)) shall be prima facie evidence of the existence and amounts of the obligations of the Borrower therein recorded; provided , however, that the failure of any Lender or the Administrative Agent to maintain any such account, such Registers or such subaccounts, as applicable, or any error therein, shall not in any manner affect the obligation of the Borrower to repay the Loans made by such Lender to the Borrower in accordance with the terms hereof.

 

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SECTION 4. ADDITIONAL PROVISIONS REGARDING LOANS

4.1  Eurodollar Revolving Loan Provisions .

(a) Unavailability . In the event that the Administrative Agent shall have determined in good faith (i) that U.S. dollar deposits in the principal amounts requested with respect to a Eurodollar Revolving Loan are not generally available in the London interbank Eurodollar market or (ii) that reasonable means do not exist for ascertaining the Eurodollar Rate, the Administrative Agent shall, as soon as practicable thereafter, give notice of such determination to the Borrower and the Lenders. In the event of any such determination under clauses (i) or (ii) above, until the Administrative Agent shall have advised the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (A) any request by the Borrower for Eurodollar Revolving Loans shall be deemed to be a request for Base Rate Loans, and (B) any request by the Borrower for conversion into or continuation of Eurodollar Revolving Loans shall be deemed to be a request for conversion into or continuation of Base Rate Loans.

(b) Change in Legality .

(i) Notwithstanding any other provision herein, if any change in any law or regulation or in the interpretation thereof by any Governmental Authority charged with the administration or interpretation thereof shall make it unlawful for any Lender to make or maintain any Eurodollar Revolving Loan or to give effect to its obligations as contemplated hereby with respect to any Eurodollar Revolving Loan, then, by written notice to the Borrower and to the Administrative Agent, such Lender may:

(A) declare that Eurodollar Revolving Loans, and conversions to or continuations of Eurodollar Revolving Loans, will not thereafter be made by such Lender to the Borrower hereunder, whereupon any request by the Borrower for, or for conversion into or continuation of, Eurodollar Revolving Loans shall, as to such Lender only, be deemed a request for, or for conversion into or continuation of, Base Rate Loans, unless such declaration shall be subsequently withdrawn; and

(B) require that all outstanding Eurodollar Revolving Loans made by it to the Borrower be converted to Base Rate Loans in which event all such Eurodollar Revolving Loans shall be automatically converted to Base Rate Loans.

In the event any Lender shall exercise its rights under clause (A) or (B) above, all payments and prepayments of principal which would otherwise have been applied to repay the Eurodollar Revolving Loans that would have been made by such Lender to the Borrower or the converted Eurodollar Revolving Loans of such Lender to the Borrower shall instead be applied to repay the Base Rate Loans made by such Lender to the Borrower in lieu of, or resulting from the conversion of, such Eurodollar Revolving Loans.

(c) Increased Costs . If at any time a Lender shall incur increased costs or reductions in the amounts received or receivable hereunder with respect to the making, the commitment to make or the maintaining of any Eurodollar Revolving Loan because of (i) any change since the date of this Credit Agreement in any applicable law, governmental rule, regulation, guideline or order (or in the interpretation or administration thereof and including the introduction of any new law or governmental rule, regulation,

 

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guideline or such order) including, without limitation, the imposition, modification or deemed applicability of any reserves, deposits or similar requirements (such as, for example, but not limited to, a change in official reserve requirements, but, in all events, excluding reserves required under Regulation D to the extent included in the computation of the Adjusted Eurodollar Rate) or (ii) other circumstances affecting the London interbank Eurodollar market; then the Borrower shall pay to such Lender promptly upon written demand therefor, such additional amounts (in the form of an increased rate of, or a different method of calculating, interest or otherwise as such Lender may determine in its sole discretion) as may be required to compensate such Lender for such increased costs or reductions in amounts receivable hereunder.

Each determination and calculation made by a Lender under this Section 4.1 shall, absent manifest error, be binding and conclusive on the parties hereto.

4.2  Capital Adequacy .

If, after the date hereof, any Lender has determined that the adoption or effectiveness of any applicable law, rule or regulation regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by such Lender (or its parent corporation) with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on such Lender’s (or parent corporation’s) capital or assets as a consequence of its commitments or obligations hereun