REVOLVING CREDIT AGREEMENT

Exhibit 10.1

 

[EXECUTION VERSION]

 

 

TXU ENERGY COMPANY LLC

TXU ELECTRIC DELIVERY COMPANY,

as Borrowers

 

 

REVOLVING CREDIT AGREEMENT

 

Dated as of August 12, 2005

 

 

CITIBANK, N.A.,

as Administrative Agent

 

CITIBANK, N.A.,

JPMORGAN CHASE BANK, N.A.,

CALYON NEW YORK BRANCH,

DEUTSCHE BANK AG NEW YORK BRANCH,

and WACHOVIA BANK, NATIONAL ASSOCIATION,

as Fronting Banks

 

 

CITIGROUP GLOBAL MARKETS INC.

Lead Arranger and Sole Bookrunner

 

JPMORGAN CHASE BANK, N.A.

CALYON NEW YORK BRANCH

DEUTSCHE BANK AG NEW YORK BRANCH

and WACHOVIA BANK, NATIONAL ASSOCIATION

Syndication Agents

TABLE OF CONTENTS

 

 

i

 

ii

EXHIBITS AND SCHEDULES

 

 

iii

REVOLVING CREDIT AGREEMENT (this “ Agreement ”), dated as of August 12, 2005, among TXU Energy Company LLC, a Delaware limited liability company (“ Energy ”), TXU Electric Delivery Company, a Texas corporation (“ Delivery ” and, together with Energy, the “ Borrowers ”, and each individually, a “ Borrower ”), the lenders listed in Schedule 2.01 (together with their successors and assigns, the “ Lenders ”), Citibank, N.A. (“ Citibank ”), as administrative agent for the Lenders (in such capacity, the “ Agent ”) and as a fronting bank for letters of credit issued hereunder, and JPMorgan Chase Bank, N.A., Calyon New York Branch, Deutsche Bank AG New York Branch and Wachovia Bank, National Association, as fronting banks for letters of credit issued hereunder.

 

WITTNESETH:

 

WHEREAS, the Borrowers have requested that the Lenders and the Fronting Banks provide the revolving credit and letter of credit facilities hereinafter described in the amounts and on the terms and conditions set forth herein; and

 

WHEREAS, the Lenders and the Fronting Banks have agreed to provide such facilities on the terms and conditions set forth herein, and Citibank has agreed to act as Agent on behalf of the Lenders and the Fronting Banks on such terms and conditions.

 

NOW, THEREFORE, the parties hereto agree as follows:

 

ARTICLE I

DEFINITIONS; CONSTRUCTION

 

SECTION 1.01. Defined Terms.

 

As used in this Agreement, the following terms shall have the meanings specified below:

 

“ ABR Borrowing ” shall mean a Borrowing comprised of ABR Loans.

 

“ ABR Loan ” shall mean any Loan bearing interest at a rate determined by reference to the Alternate Base Rate in accordance with the provisions of Article II or any Eurodollar Loan converted (pursuant to Section 2.03, 2.07 or 2.11(a)(ii)) to a loan bearing interest at a rate determined by reference to the Alternate Base Rate.

 

“ Acquisition Date ” shall mean the date as of which a person or group of related persons first acquires more than 30% of any outstanding class of Voting Shares of TXU (within the meaning of Section 13(d) or 14(d) of the Exchange Act, and the applicable rules and regulations thereunder).

 

“ Administrative Fees ” shall have the meaning assigned to such term in Section 2.04(c).

“ Affiliate ” shall mean, when used with respect to a specified person, another person that directly or indirectly controls or is controlled by or is under common control with the person specified.

 

“ Agent ” shall have the meaning given such term in the preamble hereto.

 

“ Agreement ” shall have the meaning given such term in the preamble hereto.

 

“ Alternate Base Rate ” shall mean, for any day, a rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greater of (i) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1% and (ii) the Prime Rate in effect on such day. For purposes hereof, “ Prime Rate ” shall mean the rate of interest per annum publicly announced from time to time by Citibank as its prime rate in effect at its principal office in New York City; each change in the Prime Rate shall be effective on the date such change is publicly announced as effective; and “ Federal Funds Effective Rate ” shall mean, for any day, the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as released on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so released for any day which is a Business Day, the arithmetic average (rounded upwards to the next 1/100th of 1%), as determined by Citibank, of the quotations for the day of such transactions received by Citibank from three Federal funds brokers of recognized standing selected by it. If for any reason Citibank shall have determined (which determination shall be conclusive absent manifest error; provided that Citibank shall, upon request, provide to the applicable Borrower a certificate setting forth in reasonable detail the basis for such determination) that it is unable to ascertain the Federal Funds Effective Rate for any reason, including the inability of Citibank to obtain sufficient quotations in accordance with the terms thereof, the Alternate Base Rate shall be determined without regard to clause (i) of the first sentence of this definition until the circumstances giving rise to such inability no longer exist. Any change in the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective on the effective date of such change in the Prime Rate or the Federal Funds Effective Rate, respectively.

 

“ Applicable Margin ” shall mean, for any Type of Loan made to any Borrower at any time, the percentage per annum set forth below corresponding to such Type of Loan in the column under the Applicable Rating Level of such Borrower at such time. The Applicable Margins set forth below with respect to each Applicable Rating Level shall be increased by the percentage set forth below in the row designated “Utilization Fee” during any period (and for only such period) in which Outstanding Credits are at least 50% of the aggregate amount of the Commitments available. At any time an Event of Default has occurred and is continuing with respect to any Borrower, the Applicable Margins set forth below for such Borrower shall be increased for each Applicable Rating Level by 2.00%.

 

 

2

“ Applicable Rating Level ” shall mean, for any Borrower at any time, the level set forth below in the row next to the then applicable Debt Ratings of such Borrower. If there is a difference of one level in the Debt Ratings of such Borrower, then the higher Debt Rating shall be used for purposes of determining the Applicable Rating Level for such Borrower, and if there is a difference of more than one level in the Debt Ratings for such Borrower, then the Debt Rating one level higher than the lower Debt Rating will be used for purposes of determining the Applicable Rating Level of such Borrower. Any change in the Applicable Rating Level of any Borrower shall be effective on the date on which the applicable rating agency announces any change in the applicable Debt Rating of such Borrower.

 

*	or unrated

 

“ Assignment and Acceptance ” shall mean an assignment and acceptance entered into by a Lender and an assignee in the form of Exhibit A.

 

“ Available Commitment ” shall mean, for each Lender, the excess of such Lender’s Commitment over such Lender’s Outstanding Credits. “ Available Commitments ” shall refer to the aggregate of the Lenders’ Available Commitments.

 

“ Board ” shall mean the Board of Governors of the Federal Reserve System of the United States.

 

“ Borrower ” and “ Borrowers ” each shall have the meaning given such term in the preamble hereto.

 

3

“ Borrower Information ” shall have the meaning given to such term in Section 3.05(b).

 

“ Borrowing ” shall mean a group of Loans of a single Type made by the Lenders on a single date and as to which a single Interest Period is in effect.

 

“ Borrowing Request ” shall mean a request made pursuant to Section 2.03 in the form of Exhibit B.

 

“ Business Day ” shall mean any day (other than a day that is a Saturday, Sunday or legal holiday in the State of New York) on which banks are open for business in New York City; provided, however , that, when used in connection with a Eurodollar Loan, the term “Business Day” shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market.

 

“ Cash Collateral Account ” shall have the meaning assigned to such term in Article VI.

 

a “ Change in Control ” shall be deemed to have occurred if (i) any person or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act, as amended) shall acquire beneficial ownership of more than 30% of any outstanding class of Voting Shares of TXU unless such acquisition shall have been approved prior to the applicable Acquisition Date by a majority of Disinterested Directors of TXU or (ii) during any period of 12 consecutive months, a majority of the members of the board of directors of TXU cease to be composed of individuals (A) who were members of board of directors of TXU on the first day of such period, (B) whose election or nomination to the board of directors of TXU was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of the board of directors of TXU or (C) whose election or nomination to the board of directors of TXU was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of the board of directors of TXU.

 

“ Citibank ” shall have the meaning given such term in the preamble hereto.

 

“ Code ” shall mean the Internal Revenue Code of 1986, as the same may be amended from time to time.

 

“ Commission ” shall mean the Public Utility Commission of the State of Texas.

 

“ Commitment ” shall mean, with respect to any Lender, the commitment of such Lender set forth in Schedule 2.01 hereto to make Loans and to purchase participations in Letters of Credit, as such Commitment may be permanently terminated or reduced from time to time pursuant to Section 2.08 or modified from time to time pursuant to Section 8.04. The Commitment of each Lender shall automatically and permanently terminate on the Commitment Termination Date if not terminated earlier pursuant to the terms hereof. “ Commitments ” shall mean the aggregate of the Lenders’ Commitments.

 

“ Commitment Termination Date ” shall mean August 12, 2008.

 

4

“ Consolidated Earnings Available for Fixed Charges ” shall mean, for any Borrower for any twelve-month period, (i) consolidated net income, calculated after deducting preferred stock dividends and preferred securities distributions of Subsidiaries of such Borrower, but before any extraordinary items and before the effect in such twelve-month period of any change in GAAP becoming effective after December 31, 2004 less (ii) allowances for equity funds used during construction to the extent that such allowances, taken as a whole, increased such consolidated net income, plus (iii) provisions for Federal income taxes, to the extent that such provisions, taken as a whole, decreased such consolidated net income, plus (iv) Consolidated Fixed Charges, less (v) revenues arising from competitive transition charges, plus (vi) depreciation and amortization, all determined for such twelve-month period with respect to such Borrower and its Consolidated Subsidiaries on a consolidated basis; provided, however , that in computing Consolidated Earnings Available for Fixed Charges for any twelve-month period, the following shall be added to the extent that the following decreased consolidated net income: (A) any non-cash book losses or charges, (B) any cash charges, in an amount of up to $500,000,000 (calculated on an aggregate basis throughout the term of this Agreement), as a result of (1) rulings by federal or state regulatory bodies having jurisdiction over such Borrower or its Consolidated Subsidiaries, (2) the early retirement, repurchase or termination of debt or other securities or financing arrangements, including premiums, relating to liability management activities and (3) initiatives implemented pursuant to the performance improvement programs of TXU and its Subsidiaries as described by TXU in the Spring of 2004, including, but not limited to, severance costs, plant or mine closings, asset dispositions, restructuring charges and transaction costs and (C) any losses incurred in connection with Preferred Membership Interest Repurchases.

 

“ Consolidated Fixed Charges ” shall mean, for any Borrower for any twelve-month period, the sum (without duplication) of (i) interest expense (excluding any such expense (A) in respect of the amortization of debt discount relating to the Preferred Membership Interests, (B) incurred in connection with Preferred Membership Interest Repurchases, (C) in respect of Qualified Transition Bonds (including interest rate swaps entered into by any Qualified Transition Bond Issuer in connection with Qualified Transition Bonds issued by such Qualified Transition Bond Issuer), (D) in the case of Delivery, in respect of generation-related regulatory assets to the extent reimbursed by Energy and (E) incurred in connection with any charges, write-offs or premiums resulting from the early retirement of debt relating to liability management activities, in each case to the extent included in the calculation of interest expense) and (ii) preferred stock dividends and preferred securities distributions (excluding any such dividends or distributions incurred in connection with Preferred Membership Interest Repurchases), all determined for such twelve-month period with respect to such Borrower and its Consolidated Subsidiaries on a consolidated basis.

 

“ Consolidated Senior Debt ” shall mean, for any Borrower, the Senior Debt of such Borrower and its Consolidated Subsidiaries determined on a consolidated basis, excluding, however, in the case of Energy, up to $400,000,000 in the aggregate at any time of determination of such Senior Debt described in clause (iii) of the definition of “Senior Debt”.

 

5

“ Consolidated Shareholders’ Equity ” shall mean, for each Borrower, the sum (without duplication) of (i) total common stock or common members’ interest plus (ii) preferred and preference stock or preferred members’ interest not subject to mandatory redemption, each (in the case of clauses (i) and (ii)) determined with respect to such Borrower and its Consolidated Subsidiaries on a consolidated basis, plus (iii) Equity-Credit Preferred Securities in an aggregate liquidation preference amount not in excess of (A) $1,000,000,000, in the case of Energy, and (B) $850,000,000, in the case of Delivery, plus (iv) Preferred Membership Interests; provided, however , that in computing Consolidated Shareholders’ Equity at any time, the following shall be added to the extent that the following decreased total common stock or common members’ interest: (1) any cash and non-cash charges, in an amount of up to $750,000,000 (calculated on an aggregate basis throughout the term of this Agreement), as a result of (x) rulings by federal or state regulatory bodies having jurisdiction over such Borrower or its Consolidated Subsidiaries, (y) the early retirement, repurchase or termination of debt or other securities or financing arrangements, including premiums, relating to liability management activities and (z) initiatives implemented pursuant to the performance improvement programs of TXU and its Subsidiaries as described by TXU in Spring 2004, including, but not limited to, severance costs, plant or mine closings, asset dispositions, restructuring charges and transaction costs and (2) any losses incurred in connection with Preferred Membership Interest Repurchases.

 

“ Consolidated Subsidiary ” of any person shall mean at any date any Subsidiary or other entity the accounts of which would be consolidated with those of such person in such person’s consolidated financial statements as of such date.

 

“ Consolidated Total Capitalization ” of any Borrower shall mean the sum of (i) Consolidated Shareholders’ Equity of such Borrower and (ii) Consolidated Senior Debt of such Borrower.

 

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

 

“ Debt Ratings ” shall mean, with respect to any Borrower, the ratings (whether explicit or implied) assigned by S&P and Moody’s to the senior unsecured non-credit enhanced long term debt of such Borrower.

 

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

 

“ Delivery ” shall have the meaning set forth in the preamble hereto.

 

“ Delivery Mortgage ” shall mean the Mortgage and Deed of Trust, dated as of December 1, 1983, from TXU Electric Company to Irving Trust Company (now The Bank of New York), Trustee, as amended and supplemented from time to time and as assumed by Delivery.

 

6

“ Disinterested Director ” shall mean any member of the board of directors of TXU who is not affiliated, directly or indirectly, with, or appointed by, a person or group of related persons (other than TXU, any Subsidiary of TXU, or any pension, savings or other employee benefit plan for the benefit of employees of TXU and/or any Subsidiary of TXU) acquiring the beneficial ownership of more than 30% of the outstanding Voting Shares of TXU (within the meaning of Section 13(d) or 14(d) of the Exchange Act, and the applicable rules and regulations thereunder) and who either was a member of the board of directors of TXU prior to the Acquisition Date or was recommended for election by a majority of the Disinterested Directors in office prior to the Acquisition Date.

 

“ dollars ” or “ $ ” shall mean lawful money of the United States of America.

 

“ Energy ” shall have the meaning set forth in the preamble hereto.

 

“ Equity-Credit Preferred Securities ” shall mean securities, however denominated, (i) issued by any Borrower or a Consolidated Subsidiary of any Borrower, (ii) that are not subject to mandatory redemption or the underlying securities, if any, of which are not subject to mandatory redemption, (iii) that are perpetual or mature no less than 30 years from the date of issuance, (iv) the indebtedness issued in connection with which, including any guaranty, is subordinate 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 the payment of interest or distributions thereon to a date occurring after the Commitment Termination Date.

 

“ ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as the same may be amended from time to time.

 

“ ERISA Affiliate ” shall mean any trade or business (whether or not incorporated) that is a member of a group of (i) organizations described in Section 414(b) or (c) of the Code and (ii) solely for purposes of the Lien created under Section 412(n) of the Code, organizations described in Section 414(m) or (o) of the Code of which the applicable Borrower is a member.

 

“ ERISA Event ” shall mean (i) any Reportable Event; (ii) the adoption of any amendment to a Plan that would require the provision of security pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA; (iii) the incurrence of any liability under Title IV of ERISA with respect to the termination of any Plan or the withdrawal or partial withdrawal of any Borrower or any of its ERISA Affiliates from any Plan or Multiemployer Plan; (iv) the receipt by any Borrower or any ERISA Affiliate from the PBGC of any notice relating to the intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (v) the receipt by any Borrower or any ERISA Affiliate of any notice concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA; (vi) the occurrence of a nonexempt “prohibited transaction” as defined in Section 4975(c) of the Code or Section 406 of ERISA with respect to which any Borrower or any of its Subsidiaries is liable; and (vii) any other similar event or condition with respect to a Plan or Multiemployer Plan that could result in liability of any Borrower other than a liability to pay premiums or benefits when due.

 

7

“ Eurodollar Borrowing ” shall mean a Borrowing comprised of Eurodollar Loans.

 

“ Eurodollar Loan ” shall mean any Loan bearing interest at a rate determined by reference to the LIBO Rate in accordance with the provisions of Article II.

 

“ Event of Default ” shall have the meaning assigned to such term in Article VI.

 

“ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended.

 

“ Extension of Credit ” shall mean (i) the making of a Loan or (ii) the issuance of a Letter of Credit or the amendment of any Letter of Credit having the effect of extending the stated termination date thereof or increasing the maximum amount available to be drawn thereunder.

 

“ Facility Fee ” shall have the meaning assigned to such term in Section 2.04(a).

 

“ Facility Fee Percentage ” shall mean, at any time, the percentage per annum set forth below in the column under the Applicable Rating Level of the Borrower with the lower Applicable Rating Level at such time.

 

 

“ Federal Funds Effective Rate ” shall have the meaning set forth in the definition of “Alternate Base Rate”.

 

“ Fees ” shall mean the Facility Fee, the Administrative Fees, the Fronting Fee, the LC Fee and any other fees provided for in the Letter Agreements.

 

“ Financial Officer ” of any corporation or limited liability company shall mean the chief financial officer, principal accounting officer, treasurer, associate or assistant treasurer, or any responsible officer designated by one of the foregoing persons, of such corporation or limited liability company.

 

“ First Mortgage ” shall mean (i) the Delivery Mortgage, (ii) any mortgage and deed of trust entered into by Delivery in order to refund or replace, or in substitution for, the Delivery Mortgage, and (iii) if and for so long as any first mortgage bonds are issued and outstanding under the Delivery Mortgage, any other indenture or instrument of Delivery pursuant to which Delivery issues debt securities secured directly or indirectly by (A) the Lien created by the Delivery Mortgage and/or (B) any property of Delivery.

 

8

“ Fronting Banks ” shall mean (i) Citibank, JPMorgan Chase Bank, N.A., Calyon New York Branch, Deutsche Bank AG New York Branch and Wachovia Bank, National Association and (ii) any Affiliate of any person listed in clause (i) and (iii) any other Lender or Affiliate of any Lender, in each case, having a long-term credit rating acceptable to the Borrowers (and, in the case of any such Affiliate, being otherwise reasonably acceptable to the Borrowers) that delivers an instrument in form and substance satisfactory to the Borrowers and the Agent whereby such other Lender or Affiliate agrees to act as a “Fronting Bank” hereunder and states the amount of its LC Fronting Bank Commitment.

 

“ Fronting Fee ” shall have the meaning assigned to such term in Section 2.04(d).

 

“ GAAP ” shall mean generally accepted accounting principles, applied on a consistent basis.

 

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

 

“ Holdings ” shall mean TXU US Holdings Company, a Texas corporation, and its successors.

 

“ Indebtedness ” of any person shall mean (without duplication) all liabilities, obligations and indebtedness (whether contingent or otherwise) of such person (i) for borrowed money or evidenced by bonds, indentures, notes or other similar instruments, (ii) to pay the deferred purchase price of property or services, (iii) as lessee under leases that are recorded as capital leases, (iv) under reimbursement agreements or similar agreements with respect to the issuance of letters of credit (other than obligations in respect of letters of credit opened to provide for the payment of goods or services purchased in the ordinary course of business), (v) in respect of Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) a mortgage, lien, pledge, charge or other encumbrance on any asset of such person (with the Indebtedness of such person described in this clause (v) to be valued at the book value, net of accumulated depreciation, of such asset of such person securing such Indebtedness of others), (vi) all net payment obligations of such person in respect of interest rate swap agreements, currency swap agreements and other similar agreements designed to hedge against fluctuations in interest rates or foreign exchange rates and (vii) under direct or indirect guaranties in respect of, and to purchase or otherwise acquire, or otherwise to assure a creditor against loss in respect of, liabilities, obligations or indebtedness of others of the kinds referred to in clauses (i) through (vi) above; provided, however , that for all purposes, the following shall be excluded from the definition of “Indebtedness”: (A) Qualified Transition Bonds (including, with respect to any Borrower, interest rate swaps entered into by any Qualified Transition Bond Issuer of such Borrower in connection with Qualified Transition Bonds issued by such Qualified Transition Bond Issuer), (B) amounts payable from one Borrower to the other in connection with nuclear decommissioning costs, retail clawback or other regulatory transition issues and (C) any Indebtedness defeased by such person or by any Subsidiary of such person.

 

9

“ Interest Payment Date ” shall mean, with respect to any Loan, the last day of the Interest Period applicable thereto and, in the case of a Eurodollar Loan with an Interest Period of more than three months’ duration, each day that would have been an Interest Payment Date for such Loan had successive Interest Periods of three months’ duration or 90 days’ duration, as the case may be, been applicable to such Loan and, in addition, the date of any prepayment of such Loan or conversion of such Loan to a Loan of a different Type.

 

“ Interest Period ” shall mean (i) as to any Eurodollar Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day (or, if there is no numerically corresponding day, on the last day) in the calendar month that is 1, 2, 3 or 6 months thereafter; provided that, in the case of any Eurodollar Borrowing made during the 30-day period ending on the Commitment Termination Date, such period may end on the seventh or fourteenth day thereafter, as the relevant Borrower may elect and (ii) as to any ABR Borrowing, the period commencing on the date of such Borrowing and ending on the earliest of (A) the next succeeding March 31, June 30, September 30 or December 31, (B) the Commitment Termination Date, and (C) the date such Borrowing is repaid or prepaid in accordance with Section 2.05, Section 2.08(d) or Section 2.09; provided, however , that if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless, in the case of Eurodollar Loans only, such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day. Interest shall accrue from and including the first day of an Interest Period to but excluding the last day of such Interest Period.

 

“ LC Fee ” shall have the meaning assigned to such term in Section 2.04(d).

 

“ LC Fronting Bank Commitment ” shall mean, with respect to any Fronting Bank, the aggregate stated amount of all Letters of Credit that such Fronting Bank agrees to issue, as modified from time to time pursuant to agreement among such Fronting Bank, the Borrowers and the Agent. With respect to each person that is a Fronting Bank on the date hereof, such Fronting Bank’s LC Fronting Bank Commitment shall equal such Fronting Bank’s “LC Fronting Bank Commitment” listed on Schedule 2.17(i) and, with respect to any person that becomes a Fronting Bank after the date hereof, such person’s LC Fronting Bank Commitment shall equal the amount agreed upon between the Borrower and such person at the time such person becomes a Fronting Bank.

 

“ LC Outstandings ” shall mean, on any date of determination, the sum of (i) the undrawn stated amounts of all Letters of Credit that are outstanding on such date and (ii) the aggregate principal amount of all unpaid reimbursement obligations of the Borrowers on such date with respect to payments made by the Fronting Banks under Letters of Credit (excluding reimbursement obligations that have been repaid with the proceeds of any Loan). A Lender’s “LC Outstandings” shall mean such Lender’s participation interest in undrawn Letters of Credit and its Percentage of all unpaid reimbursement obligations in respect of the Letters of Credit.

 

10

“ LC Payment Notice ” shall have the meaning assigned to such term in Section 2.17(d).

 

“ Lenders ” shall have the meaning given such term in the preamble hereto.

 

“ Letter Agreements ” shall mean (i) the Commitment Letter, dated June 15, 2005, among Energy, Citigroup Global Markets Inc. and Citibank and (ii) the Fee Letter, dated June 15, 2005, among Energy, Citigroup Global Markets Inc. and Citibank, each as amended, modified or supplemented from time to time.

 

“ Letter of Credit ” shall mean a letter of credit that is issued by a Fronting Bank pursuant to a Request for Issuance, as such letter of credit may from time to time be amended, modified or extended in accordance with the terms of this Agreement.

 

“ LIBO Rate ” shall mean, with respect to any Eurodollar Borrowing for any Interest Period, the rate appearing on Page 3750 of the Telerate Service (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 such service, as determined by Citibank from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market) at approximately 11:00 a.m., London time, two 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 available at such time for any reason, then the “ LIBO Rate ” with respect to such Eurodollar Borrowing for such Interest Period shall be the rate at which dollar deposits of $5,000,000 and for a maturity comparable to such Interest Period are offered by the principal London office of Citibank in immediately available funds in the London interbank market at approximately 11:00 a.m. London time, two Business Days prior to the commencement of such Interest Period.

 

“ Lien ” shall mean, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset. For the purposes of this Agreement, any person 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 ” shall mean a revolving loan made pursuant to Section 2.02, whether made as a Eurodollar Loan or as an ABR Loan.

 

“ Margin Regulations ” shall mean Regulations T, U and X of the Board as from time to time in effect, and all official rulings and interpretations thereunder or thereof.

 

“ Margin Stock ” shall have the meaning given such term under Regulation U of the Board.

 

“ Material Adverse Change ” shall mean, with respect to any Borrower, a materially adverse change in the business, assets, operations or financial condition of such Borrower and its Subsidiaries taken as a whole that makes such Borrower unable to perform any of its obligations under this Agreement or that impairs the rights of, or benefits available to, the Lenders or any Fronting Bank under this Agreement.

 

11

“ Moody’s ” shall mean Moody’s Investors Service, Inc.

 

“ Multiemployer Plan ” shall mean a multiemployer plan as defined in Section 4001(a)(3) of ERISA to which any Borrower or any ERISA Affiliate is making, or accruing an obligation to make, contributions, or has within any of the preceding five plan years made, or accrued an obligation to make, contributions.

 

“ Operating Agreements ” shall mean (i) the Operating Agreement, dated April 28, 1978, as amended by the Modification of Operating Agreement, dated April 20, 1979, among TXU Mining and Holdings (formerly TXU Electric Company, successor to Dallas Power & Light Company, Texas Electric Service Company and Texas Power & Light Company) and Energy, TXU Energy Retail Company LP and TXU Generation Company LP (pursuant to the Assumption Agreement, dated December 31, 2001, by and among Holdings, Energy, TXU Energy Retail Company LP and TXU Generation Company LP) (“TXU Mining Operating Agreement”), and as it may be amended from time to time, or (ii) the Operating Agreement, dated December 15, 1976, between TXU Fuel and Dallas Power & Light Company, Texas Electric Service Company and Texas Power & Light Company (“TXU Fuel Operating Agreement”), as it may be amended from time to time; provided that no amendment of the TXU Mining Operating Agreement or the TXU Fuel Operating Agreement shall increase the scope of any Lien permitted under Section 5.10(j).

 

“ Outstanding Credits ” of any Lender shall mean, on any date of determination, an amount equal to (i) the aggregate principal amount of all outstanding Loans made by such Lender plus (ii) such Lender’s LC Outstandings on such date.

 

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

 

“ Percentage ” shall mean, for any Lender on any date of determination, the percentage obtained by dividing such Lender’s Commitment on such date by the Total Commitment on such date.

 

“ Permitted Encumbrances ” shall mean, as to any person at any date, any of the following:

 

(a) (i) Liens for taxes, assessments or governmental charges not then delinquent and Liens for workers’ compensation awards and similar obligations not then delinquent and undetermined Liens or charges incidental to construction, Liens for taxes, assessments or governmental charges then delinquent but the validity of which is being contested at the time by such person in good faith against which an adequate reserve has been established, with respect to which levy and execution thereon have been stayed and continue to be stayed and that do not impair the use of the property or the operation of such person’s business, (ii) Liens incurred or created in connection with or to secure the performance of bids, tenders, contracts (other than for the payment of money), leases,

 

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statutory obligations, surety bonds or appeal bonds, and mechanics’ or materialmen’s Liens, assessments or similar encumbrances, the existence of which does not impair the use of the property subject thereto for the purposes for which it was acquired, and other Liens of like nature incurred or created in the ordinary course of business;

 

(b) Liens securing indebtedness, neither assumed nor guaranteed by such person nor on which it customarily pays interest, existing upon real estate or rights in or relating to real estate acquired by such person for any substation, transmission line, transportation line, distribution line, right of way or similar purpose;

 

(c) rights reserved to or vested in any municipality or public authority by the terms of any right, power, franchise, grant, license or permit, or by any provision of law, to terminate such right, power, franchise, grant, license or permit or to purchase or recapture or to designate a purchaser of any of the property of such person;

 

(d) rights reserved to or vested in others to take or receive any part of the power, gas, oil, coal, lignite or other minerals or timber generated, developed, manufactured or produced by, or grown on, or acquired with, any property of such person and Liens upon the production from property of power, gas, oil, coal, lignite or other minerals or timber, and the by-products and proceeds thereof, to secure the obligations to pay all or a part of the expenses of exploration, drilling, mining or development of such property only out of such production or proceeds;

 

(e) easements, restrictions, exceptions or reservations in any property and/or rights of way of such person for the purpose of roads, pipe lines, substations, transmission lines, transportation lines, distribution lines, removal of oil, gas, lignite, coal or other minerals or timber, and other like purposes, or for the joint or common use of real property, rights of way, facilities and/or equipment, and defects, irregularities and deficiencies in titles of any property and/or rights of way, which do not materially impair the use of such property and/or rights of way for the purposes for which such property and/or rights of way are held by such person;

 

(f) rights reserved to or vested in any municipality or public authority to use, control or regulate any property of such person;

 

(g) any obligations or duties, affecting the property of such person, to any municipality or public authority with respect to any franchise, grant, license or permit;

 

(h) as of any particular time any controls, Liens, restrictions, regulations, easements, exceptions or reservations of any municipality or public authority applying particularly to space satellites or nuclear fuel;

 

(i) any judgment Lien against such person securing a judgment for an amount not exceeding 25% of Consolidated Shareholders’ Equity of such person, so long as the finality of such judgment is being contested by appropriate proceedings conducted in good faith and execution thereon is stayed;

 

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(j) any Lien arising by reason of deposits with or giving of any form of security to any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, for any purpose at any time as required by law or governmental regulation as a condition to the transaction of any business or the exercise of any privilege or license, or to enable such person to maintain self-insurance or to participate in any fund for liability on any insurance risks or in connection with workers’ compensation, unemployment insurance, old age pensions or other social security or to share in the privileges or benefits required for companies participating in such arrangements; or

 

(k) any landlords’ Lien on fixtures or movable property located on premises leased by such person in the ordinary course of business so long as the rent secured thereby is not in default.

 

“ person ” shall mean any natural person, corporation, business trust, joint venture, association, company, limited liability company, partnership or government, or any agency or political subdivision thereof.

 

“ Plan ” shall mean any employee pension benefit plan described under Section 3(2) of ERISA (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA that is maintained by any Borrower or any ERISA Affiliate.

 

“ Preferred Membership Interest Repurchases ” shall mean the repurchase by TXU of Preferred Membership Interests and any subsequent purchase or purchases of Preferred Membership Interests by any affiliate of TXU.

 

“ Preferred Membership Interests ” shall mean the $750,000,000 aggregate liquidation preference amount of exchangeable preferred membership interests in Energy.

 

“ Prepayment Notice ” shall have the meaning given such term in Section 2.09(a).

 

“ Qualified Transition Bond Issuer ” shall mean, with respect to any Borrower, (i) TXU Electric Delivery Transition Bond Company LLC (formerly known as Oncor Electric Delivery Transition Bond Company LLC), (ii) such Borrower, (iii) a Subsidiary of such Borrower formed and operating solely for the purpose of (A) purchasing and owning transition property created under a “financing order” (as such term is defined in the Texas Utilities Code) issued by the Commission, (B) issuing such securities pursuant to such order, (C) pledging its interests in such transition property to secure such securities and (D) engaging in activities ancillary to those described in (A), (B) and (C) or (iv) any directly or indirectly held Subsidiary of such Borrower formed and operating for purposes that include owning TXU Electric Delivery Transition Bond Company LLC.

 

“ Qualified Transition Bonds ” of any Borrower shall mean securities, however denominated, that are (i) issued by a Qualified Transition Bond Issuer of such Borrower, (ii) secured by or otherwise payable from transition charges authorized pursuant to the financing order referred to in clause (iii)(A) of the definition of “Qualified Transition Bond Issuer”, and (iii) non-recourse to such Borrower or any of its Consolidated Subsidiaries (other than the issuer of such securities).

 

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“ Register ” shall have the meaning given such term in Section 8.04(d).

 

“ Reportable Event ” shall mean any reportable event as defined in Sections 4043(c)(1)-(8) of ERISA or the regulations issued thereunder (other than a reportable event for which the 30 day notice requirement has been waived) with respect to a Plan (other than a Plan maintained by an ERISA Affiliate that is considered an ERISA Affiliate only pursuant to subsection (m) or (o) of Code Section 414).

 

“ Request for Issuance ” shall mean a request for issuance of a Letter of Credit pursuant to Section 2.17(a), in a form substantially similar to Exhibit C, if Citibank is the applicable Fronting Bank, and, in the case of any other Fronting Bank, the form that is customary for such Fronting Bank.

 

“ Required Lenders ” shall mean, at any time, Lenders having Commitments representing in excess of 50% of the Total Commitment or, (i) for purposes of acceleration pursuant to clause (ii) of the first paragraph of Article VI, or (ii) if the Total Commitment has been terminated, Lenders with Outstanding Credits in excess of 50% of the aggregate amount of Outstanding Credits.

 

“ Responsible Officer ” of any corporation shall mean any executive officer or Financial Officer of such corporation and any other officer or similar official thereof responsible for the administration of the obligations of such corporation in respect of this Agreement.

 

“ S&P ” shall mean Standard & Poor’s Ratings Services (a division of The McGraw-Hill Companies, Inc.).

 

“ SEC ” shall mean the Securities and Exchange Commission.

 

“ Senior Debt ” of any person shall mean (without duplication) (i) all Indebtedness of such person described in clauses (i) through (iii) of the definition of “Indebtedness”, (ii) all Indebtedness of such person described in clause (iv) of the definition of “Indebtedness” in respect of unreimbursed drawings under letters of credit described in such clause (iv), and (iii) all direct or indirect guaranties of such person in respect of, and to purchase or otherwise acquire, or otherwise to assure a creditor against loss in respect of, liabilities, obligations or indebtedness of others of the kinds referred to in clauses (i) and (ii) above; provided, however , that in calculating “Senior Debt” of any Borrower, (A) the aggregate amount of Preferred Membership Interests outstanding shall be excluded and (B) any amount of Equity Credit-Preferred Securities not included in the definition of “Consolidated Shareholders Equity” shall be included.

 

“ Significant Disposition ” shall mean a sale, lease, disposition or other transfer by a person, or any Subsidiary of such person, during any 12-month period commencing on or after the date hereof, of assets constituting, either individually or in the aggregate with all other assets sold, leased, disposed or otherwise transferred by such person or any Subsidiary thereof during such period, 10% or more of the assets of such person and its Subsidiaries taken as a whole, excluding any such sale, lease, disposition or other transfer to a Wholly Owned Subsidiary of such person.

 

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“ Significant Subsidiary ” shall mean, with respect to any Borrower at any time, any Subsidiary of such Borrower that as of such time has total assets in excess of 10% of the total assets of such Borrower and its Consolidated Subsidiaries.

 

“ Solvent ” shall mean, with respect to any person as of a particular date, that on such date such person is able to pay its debts and other liabilities, contingent obligations and other commitments as they mature in the normal course of business. In computing the amount of contingent liabilities at any time, it is intended that such liabilities will be computed as the amount which, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

 

“ Stated Amount ” shall mean the maximum amount available to be drawn by a beneficiary under a Letter of Credit.

 

“ Subsidiary ” shall mean, with respect to any person (the “ parent ”), 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 parent; provided, however , that Qualified Transition Bond Issuers and Subsidiaries of Qualified Transition Bond Issuers shall not be deemed to be Subsidiaries of any Borrower.

 

“ Substantial ” shall mean, for any Borrower, an amount in excess of 10% of the consolidated assets of such Borrower and its Consolidated Subsidiaries taken as a whole.

 

“ Total Commitment ” shall mean, at any time, the aggregate amount of Commitments of all the Lenders, as in effect at such time. The initial amount of the Total Commitment is $1,000,000,000.

 

“ TXU ” shall mean TXU Corp., a Texas corporation, and its successors.

 

“ TXU Fuel ” shall mean TXU Fuel Company, a Texas corporation, and its successors.

 

“ TXU Mining ” shall mean TXU Mining Company LP, a Texas limited partnership, and its successors.

 

“ Type ”, when used in respect of any Loan or Borrowing, shall refer to the Rate by reference to which interest on such Loan or on the Loans comprising such Borrowing is determined. For purposes hereof, “ Rate ” shall include the LIBO Rate and the Alternate Base Rate.

 

“ Voting Shares ” shall mean, as to shares or other equity interests of a particular corporation or other type of person, outstanding shares of stock or other equity interests of any class of such corporation or other person entitled to vote in the election of directors or other comparable managers of such person, excluding shares or other interests entitled so to vote only upon the happening of some contingency.

 

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“ Wholly Owned Subsidiary ” of any person shall mean any Consolidated Subsidiary of such person all the shares of common stock and other voting capital stock or other voting ownership interests having ordinary voting power to vote in the election of the board of directors or other governing body performing similar functions (except directors’ qualifying shares) of which are at the time directly or indirectly owned by such person.

 

“ Withdrawal Liability ” shall mean liability of a Borrower established under Section 4201 of ERISA as a result of a complete or partial withdrawal from a Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

 

SECTION 1.02. Terms Generally.

 

The definitions in Section 1.01 shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” All references herein to Articles, Sections, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Exhibits and Schedules to, this Agreement unless the context shall otherwise require. Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided, however , that for purposes of determining compliance with any covenant set forth in Article V, such terms shall be construed in accordance with GAAP as in effect on the date hereof applied on a basis consistent with the application used in preparing any Borrower’s audited financial statements referred to in Section 3.05.

 

ARTICLE II

THE CREDITS

 

SECTION 2.01. Commitments.

 

(a) Subject to the terms and conditions and relying upon the representations and warranties herein set forth, each Lender and each Fronting Bank (as applicable) agrees, severally and not jointly, as follows: (i) each Lender agrees to make Loans to any Borrower at any time and from time to time until the Commitment Termination Date up to the amount of such Lender’s Available Commitment, (ii) each Fronting Bank agrees to issue Letters of Credit for the account of any Borrower at any time and from time to time until the fifth Business Day preceding the Commitment Termination Date in an aggregate stated amount at any time outstanding not to exceed such Fronting Bank’s LC Fronting Bank Commitment, and (iii) each Lender agrees to purchase participations in such Letters of Credit as more fully set forth in Section 2.17. Notwithstanding the foregoing, at no time shall (A) the aggregate amount of Outstanding Credits exceed the aggregate amount of the Lenders’ Commitments, (B) any Lender’s Outstanding Credits exceed the amount of such Lender’s Commitment, (C) any Fronting Bank make any Extension of Credit relating to a Letter of Credit if such Extension of Credit would cause (x) the aggregate amount of Outstanding Credits to exceed the aggregate amount of the Lenders’ Commitments or (y) the aggregate LC Outstandings relating to such

 

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Fronting Bank to exceed such Fronting Bank’s LC Fronting Bank Commitment and (D) any Extension of Credit be made to Delivery if such Extension of Credit would cause the amount of Outstanding Credits to Delivery to exceed $800,000,000.

 

(b) Within the foregoing limits, the Borrowers may borrow, pay or prepay Loans and request new Extensions of Credit on and after the date hereof and prior to the Commitment Termination Date subject to the terms, conditions and limitations set forth herein.

 

SECTION 2.02. Loans.

 

(a) Each Loan shall be made as part of a Borrowing consisting of Loans made by the Lenders ratably in accordance with their respective Commitments; provided, however , that the failure of any Lender to make any Loan shall not in itself relieve any other Lender of its obligation to lend hereunder (it being understood, however, that no Lender shall be responsible for the failure of any other Lender to make any Loan required to be made by such other Lender). The Loans comprising any Borrowing shall be in an aggregate principal amount that is an integral multiple of $5,000,000 and not less than $25,000,000 (or an aggregate principal amount equal to the remaining balance of the Available Commitments).

 

(b) Each Borrowing shall be comprised entirely of Eurodollar Loans or ABR Loans, as the applicable Borrower may request pursuant to Section 2.03. Each Lender may at its option make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of any Borrower to repay such Loan in accordance with the terms of this Agreement. Borrowings of more than one Type may be outstanding at the same time.

 

(c) Subject to subsection (d) below, each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds to the Agent in New York, New York, not later than noon, New York City time, and the Agent shall by 2:00 p.m., New York City time, credit the amounts so received to the account or accounts specified from time to time in one or more notices delivered by the applicable Borrower to the Agent or, if a Borrowing shall not occur on such date because any condition precedent herein specified shall not have been met, return the amounts so received to the respective Lenders. Loans shall be made by the Lenders pro rata in accordance with Section 2.12. Unless the Agent shall have received notice from a Lender prior to the date of any Borrowing that such Lender will not make available to the Agent such Lender’s portion of such Borrowing, the Agent may assume that such Lender has made such portion available to the Agent on the date of such Borrowing in accordance with this subsection (c) and the Agent may, in reliance upon such assumption, make available to the applicable Borrower on such date a corresponding amount. If and to the extent that such Lender shall not have made such portion available to the Agent, such Lender and the applicable Borrower (without waiving any claim against such Lender for such Lender’s failure to make such portion available) severally agree to repay to the Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to such Borrower until the date such amount is repaid to the Agent, at (i) in the case of such Borrower, the interest rate applicable at the time to the Loans comprising such Borrowing and (ii) in the case of such Lender, the Federal Funds Effective Rate. If such Lender shall repay to the Agent such corresponding amount, such amount shall constitute such Lender’s Loan as part of such Borrowing for purposes of this Agreement.

 

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(d) A Borrower may refinance all or any part of any Borrowing with a Borrowing of the same or a different Type, subject to the conditions and limitations set forth in this Agreement. Any Borrowing or part thereof so refinanced shall be deemed to be repaid or prepaid in accordance with Section 2.05 or 2.09, as applicable, with the proceeds of a new Borrowing, and the proceeds of the new Borrowing, to the extent they do not exceed the principal amount of the Borrowing being refinanced, shall not be paid by the Lenders to the Agent or by the Agent to such Borrower pursuant to subsection (c) above.

 

SECTION 2.03. Borrowing Procedure.

 

In order to request a Borrowing, a Borrower shall hand deliver or send via facsimile to the Agent a duly completed Borrowing Request (i) in the case of a Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three Business Days before such Borrowing, and (ii) in the case of an ABR Borrowing, not later than 11:00 a.m., New York City time, one Business Day before such Borrowing. Such notice shall be irrevocable and shall in each case specify (A) whether the Borrowing then being requested is to be a Eurodollar Borrowing or an ABR Borrowing, (B) the date of such Borrowing (which shall be a Business Day) and the amount thereof, and (C) if such Borrowing is to be a Eurodollar Borrowing, the Interest Period with respect thereto, which shall not end after the Commitment Termination Date. If no election as to the Type of Borrowing is specified in any such notice, then the requested Borrowing shall be deemed an ABR Borrowing. If no Interest Period with respect to any Eurodollar Borrowing is specified in any such notice, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration (subject to the limitations set forth in the definition of “Interest Period”). If a Borrower shall not have given notice in accordance with this Section of its election to refinance a Borrowing prior to the end of the Interest Period in effect for such Borrowing, then such Borrower shall (unless such Borrowing is repaid at the end of such Interest Period) be deemed to have given notice of an election to refinance such Borrowing with an ABR Borrowing. Notwithstanding any other provision of this Agreement to the contrary, no Borrowing shall be requested if the Interest Period with respect thereto would end after the Commitment Termination Date. The Agent shall promptly advise the Lenders of any notice given pursuant to this Section and of each Lender’s portion of the requested Borrowing.

 

SECTION 2.04. Fees.

 

(a) Energy agrees to pay to each Lender, through the Agent, on each March 31, June 30, September 30 and December 31 (with the first payment being due on September 30, 2005) and on each date on which the Commitment of such Lender shall be terminated or reduced as provided herein, a facility fee (a “ Facility Fee ”), at a rate per annum equal to the Facility Fee Percentage from time to time in effect on the Commitment of such Lender (without regard to usage) during the preceding quarter (or other period commencing on the date of this Agreement or ending on the Commitment Termination Date or any date on which the Commitment of such Lender shall be terminated).

 

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(b) All Facility Fees shall be computed on the basis of the actual number of days elapsed in a year of 360 days. The Facility Fees due to each Lender shall commence to accrue on the date of this Agreement, and shall cease to accrue on the date of termination of such Lender’s Commitment, as provided herein.

 

(c) Energy agrees to pay the Agent the fees from time to time payable to it in its capacity as Agent pursuant to the Letter Agreements (the “ Administrative Fees ”).

 

(d) Each Borrower for the account of which a Letter of Credit is issued agrees to pay the Agent, for the account of the Fronting Bank that issued such Letter of Credit, a fronting fee equal to 0.125% of the stated amount of such Letter of Credit (a “ Fronting Fee ”) and such other charges with respect to such Letter of Credit as are agreed upon with such Fronting Bank and as are customary. Each Borrower for the account of which a Letter of Credit is issued agrees to pay to the Agent for the account of the Lenders a fee (the “ LC Fee ”) on the face amount of each Letter of Credit issued by any Fronting Bank for the account of such Borrower, calculated at a rate per annum equal to the Applicable Margin for Eurodollar Loans (regardless of whether any such Loans are then outstanding). All Fronting Fees and LC Fees shall be computed on the basis of the actual number of days that each such Letter of Credit is outstanding, assuming a year of 360 days, payable in arrears on each March 31, June 30, September 30 and December 31, and on the date that such Letter of Credit expires or is drawn in full.

 

(e) All Fees shall be paid on the dates due, in immediately available funds, to the Agent for distribution, if and as appropriate, among the Lenders. Once paid, none of the Fees shall be refundable under any circumstances.

 

SECTION 2.05. Repayment of Loans; Evidence of Indebtedness.

 

(a) The outstanding principal balance of each (i) Eurodollar Loan shall be due and payable on the last day of the Interest Period applicable thereto and on the Commitment Termination Date and (ii) ABR Loan shall be due and payable on the Commitment Termination Date.

 

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

 

(c) The Agent shall maintain accounts in which it will record (i) the amount of each Extension of Credit made hereunder, the Type of each Loan made and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from each Borrower to each Lender hereunder and (iii) the amount of any sum received by the Agent hereunder from each Borrower and each Lender’s share thereof.

 

(d) The entries made in the accounts maintained pursuant to subsections (b) and (c) above shall, to the extent permitted by applicable law, be prima facie evidence of the existence and amounts of the obligations therein recorded; provided, however , that the failure of any Lender or the Agent to maintain such accounts or any error therein shall not in any manner affect the obligations of the Borrowers to repay the Outstanding Credits in accordance with their terms.

 

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SECTION 2.06. Interest on Loans.

 

(a) The Loans comprising each Eurodollar Borrowing shall bear interest (computed on the basis of the actual number of days elapsed over a year of 360 days) at a rate per annum equal to the LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Margin from time to time in effect for Eurodollar Borrowings.

 

(b) The Loans comprising each ABR Borrowing shall bear interest (computed on the basis of the actual number of days elapsed over a year of (i) 365 or 366 days, as the case may be, for periods during which the Alternate Base Rate is determined by reference to the Prime Rate and (ii) 360 days for other periods) at a rate per annum equal to the Alternate Base Rate plus the Applicable Margin from time to time in effect for ABR Borrowings.

 

(c) Interest on each Loan shall be payable on each Interest Payment Date applicable to such Loan except as otherwise provided in this Agreement. The applicable LIBO Rate or Alternate Base Rate for each Interest Period or day within an Interest Period, as the case may be, shall be determined by Citibank, and such determination shall be conclusive absent manifest error; provided that Citibank shall, upon request, provide to the applicable Borrower a certificate setting forth in reasonable detail the basis for such determination.

 

SECTION 2.07. Alternate Rate of Interest.

 

In the event, and on each occasion, that on the day two Business Days prior to the commencement of any Interest Period for a Eurodollar Borrowing the Agent shall have determined (i) that dollar deposits in the principal amounts of the Eurodollar Loans comprising such Borrowing are not generally available in the London interbank market or (ii) that reasonable means do not exist for ascertaining the LIBO Rate, the Agent shall, as soon as practicable thereafter, give facsimile notice of such determination to the Borrowers and the Lenders. In the event of any such determination under clause (i) or (ii) above, until the Agent shall have advised the Borrowers and the Lenders that the circumstances giving rise to such notice no longer exist, any request by a Borrower for a Eurodollar Borrowing pursuant to Section 2.03 shall be deemed to be a request for an ABR Borrowing. In the event the Required Lenders notify the Agent that the rates at which dollar deposits are being offered will not adequately and fairly reflect the cost to such Lenders of making or maintaining Eurodollar Loans during such Interest Period, the Agent shall notify the applicable Borrower of such notice and until the Required Lenders shall have advised the Agent that the circumstances giving rise to such notice no longer exist, any request by such Borrower for a Eurodollar Borrowing shall be deemed a request for an ABR Borrowing. Each determination by the Agent hereunder shall be made in good faith and shall be conclusive absent manifest error; provided that the Agent, shall, upon request, provide to the applicable Borrower a certificate setting forth in reasonable detail the basis for such determination.

 

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SECTION 2.08. Termination and Reduction of Commitments.

 

(a) The Commitments shall terminate automatically on the Commitment Termination Date.

 

(b) Upon at least two Business Days’ prior irrevocable written notice to the Agent, the Borrowers, acting jointly, may, without premium or penalty, at any time in whole permanently terminate, or from time to time in part permanently reduce, the Commitments; provided, however, that (i) each partial reduction of the Commitments shall be in an integral multiple of $10,000,000 and in a minimum principal amount of $10,000,000 and (ii) no such termination or reduction shall be made that would reduce the Commitments to an amount less than (1) the aggregate amount of Outstanding Credits on the date of such termination or reduction (after giving effect to any prepayment made pursuant to Section 2.09) or (2) $50,000,000, unless the result of such termination or reduction referred to in this clause (2) is to reduce the Commitments to $0. The Agent shall advise the Lenders of any notice given pursuant to this subsection (b) and of each Lender’s portion of any such termination or reduction of the Commitments.

 

(c) Each reduction in the Commitments shall be made ratably among the Lenders in accordance with their respective Commitments. Energy shall pay to the Agent for the account of the Lenders, on the date of each termination or reduction of the Commitments, the Facility Fee on the amount of the Commitments so terminated or reduced, in each case accrued through the date of such termination or reduction.

 

(d) Upon at least one Business Day’s prior written notice to the Agent, any Borrower may at any time terminate the Commitment available to it, without premium or penalty (other than as described in Section 8.05(b)(ii)), on the date of such termination, provided that (i) all Advances made to such Borrower shall have been repaid or prepaid in full, all Letters of Credit issued for the account of such Borrower shall have been cancelled and terminated and all amounts due and owing by such Borrower hereunder shall have been paid in full and (ii) any and all obligations of such Borrower that survive such termination shall be assumed by the remaining Borrower. On and as of the date of termination of the Commitment available to any Borrower pursuant to this subsection (d), such Borrower shall be deemed no longer to be a party to this Agreement and shall have no continuing rights or obligations hereunder and all references herein to the Borrowers or any Borrower shall be deemed to be a reference to the remaining Borrower.

 

SECTION 2.09. Prepayment.

 

(a) Each Borrower shall have the right at any time and from time to time to prepay any Borrowing, in whole or in part, upon giving a written notice substantially in the form of Exhibit D (a “ Prepayment Notice ”) via facsimile (or telephone notice promptly confirmed by facsimile) to the Agent: (i) before 11:00 a.m., New York City time, three Business Days prior to prepayment, in the case of Eurodollar Loans, and (ii) before 11:00 a.m., New York City time, one Business Day prior to prepayment, in the case of ABR Loans; provided, however , that each partial prepayment shall be in an amount which is an integral multiple of $10,000,000 and not less than $10,000,000.

 

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(b) Each Prepayment Notice shall specify the prepayment date and the principal amount of each Borrowing (or portion thereof) to be prepaid, shall be irrevocable and shall commit the Borrower to prepay such Borrowing (or portion thereof) by the amount stated therein on the date stated therein. All prepayments under this Section shall be subject to Section 8.05 but otherwise without premium or penalty. All prepayments under this Section shall be accompanied by accrued interest on the principal amount being prepaid to the date of payment.

 

SECTION 2.10. Reserve Requirements; Change in Circumstances.

 

(a) Notwithstanding any other provision herein, if after the date of this Agreement any change in applicable law or regulation or in the interpretation or administration thereof by any Governmental Authority charged with the interpretation or administration thereof (whether or not having the force of law) shall change the basis of taxation of payments to any Lender or any Fronting Bank hereunder (except for changes in respect of taxes on the overall net income of such Lender or such Fronting Bank (as the case may be) or its lending office imposed by the jurisdiction in which such Lender’s or such Fronting Bank’s (as the case may be) principal executive office or lending office is located), or shall result in the imposition, modification or applicability of any reserve, special deposit or similar requirement against assets of, deposits with or for the account of or credit extended by any Lender or such Fronting Bank (as the case may be) or shall result in the imposition on any Lender, any Fronting Bank or the London interbank market of any other condition affecting this Agreement, such Lender’s Commitment or any Extension of Credit (other than an ABR Loan) made by such Lender or such Fronting Bank, and the result of any of the foregoing shall be to increase the cost to such Lender or such Fronting Bank (as the case may be) of making or maintaining any Outstanding Credit (other than an ABR Loan) or to reduce the amount of any sum received or receivable by such Lender or such Fronting Bank (as the case may be) hereunder (whether of principal, interest or otherwise) by an amount deemed by such Lender or such Fronting Bank (as the case may be) to be material, then the applicable Borrower or, if the foregoing circumstances do not relate to a particular Borrowing, Energy shall, upon receipt of the notice and certificate provided for in subsection (c) below promptly pay to such Lender or such Fronting Bank (as the case may be) such additional amount or amounts as will compensate such Lender or such Fronting Bank (as the case may be) for such additional costs incurred or reduction suffered.

 

(b) If any Lender or Fronting Bank shall have determined that the adoption of any law, rule, regulation or guideline arising out of the July 1988 report of the Basle Committee on Banking Regulations and Supervisory Practices entitled “International Convergence of Capital Measurement and Capital Standards,” or the adoption after the date hereof of any other law, rule, regulation or guideline regarding capital adequacy, or any change in any of the foregoing or in the interpretation or administration of any of the foregoing by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender or Fronting Bank (or any lending office of such Lender or such Fronting Bank) or any Lender’s or any Fronting Bank’s holding company 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 such Fronting Bank’s (as the case may be) capital or on the capital of such Lender’s or such Fronting Bank’s (as the case may be) holding company, if any, as a consequence of this Agreement, such Lender’s Commitment or the Extensions of Credit made by

 

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such Lender or such Fronting Bank (as the case may be) pursuant hereto to a level below that which such Lender or such Fronting Bank (as the case may be) or such Lender’s or such Fronting Bank’s (as the case may be) holding company could have achieved but for such adoption, change or compliance (taking into consideration such Lender’s or such Fronting Bank’s (as the case may be) policies and the policies of such Lender’s or such Fronting Bank’s (as the case may be) holding company with respect to capital adequacy) by an amount deemed by such Lender or such Fronting Bank (as the case may be) to be material, then from time to time such additional amount or amounts as will compensate such Lender or such Fronting Bank (as the case may be) for any such reduction suffered will be paid to such Lender or such Fronting Bank (as the case may be) by the applicable Borrower or, if the foregoing circumstances do not relate to a particular Borrower, by Energy. It is acknowledged that this Agreement is being entered into by the Lenders and the Fronting Banks on the understanding that neither the Lenders nor the Fronting Banks will be required to maintain capital against their Commitments or agreements to issue Letters of Credit, as the case may be, under currently applicable laws, regulations and regulatory guidelines. In the event the Lenders or any Fronting Bank shall otherwise determine that such understanding is incorrect, it is agreed that the Lenders or the Fronting Banks, as the case may be, will be entitled to make claims under this subsection (b) based upon market requirements prevailing on the date hereof for commitments under comparable credit facilities against which capital is required to be maintained.

 

(c) A certificate of each Lender or the applicable Fronting Bank setting forth such amount or amounts as shall be necessary to compensate such Lender or such Fronting Bank (as the case may be) or its holding company as specified in subsection (a) or (b) above, as the case may be, and containing an explanation in reasonable detail of the manner in which such amount or amounts shall have been determined, shall be delivered to the applicable Borrower or the Borrowers, as the case may be, and shall be conclusive absent manifest error. The applicable Borrower shall pay each Lender or Fronting Bank (as the case may be) the amount shown as due on any such certificate delivered by it within 10 days after its receipt of the same. Each Lender and each Fronting Bank shall give prompt notice to the applicable Borrower of any event of which it has knowledge, occurring after the date hereof, that it has determined will require compensation by such Borrower pursuant to this Section; provided , however , that failure by such Lender or such Fronting Bank to give such notice shall not constitute a waiver of such Lender’s or such Fronting Bank’s (as the case may be) right to demand compensation hereunder.

 

(d) Failure on the part of any Lender or Fronting Bank to demand compensation for any increased costs or reduction in amounts received or receivable or reduction in return on capital with respect to any period shall not constitute a waiver of such Lender’s or such Fronting Bank’s (as the case may be) right to demand compensation with respect to such period or any other period; provided, however , that no Lender or Fronting Bank shall be entitled to compensation under this Section for any costs incurred or reductions suffered with respect to any date unless it shall have notified the applicable Borrower that it will demand compensation for such costs or reductions under subsection (c) above not more than 90 days after the later of (i) such date and (ii) the date on which it shall have become aware of such costs or reductions. The protection of this Section shall be available to each Lender and each Fronting Bank regardless of any possible contention of the invalidity or inapplicability of the law, rule, regulation, guideline or other change or condition which shall have occurred or been imposed.

 

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(e) Each Lender and each Fronting Bank agrees that it will designate a different lending office if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the reasonable judgment of such Lender or such Fronting Bank (as the case may be), be disadvantageous to such Lender or such Fronting Bank (as the case may be).

 

SECTION 2.11. Change in Legality.

 

(a) 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 Loan or to give effect to its obligations as contemplated hereby with respect to any Eurodollar Loan, then, by written notice to the Borrowers and to the Agent, such Lender may:

 

(i) declare that Eurodollar Loans will not thereafter be made by such Lender hereunder, whereupon any request for a Eurodollar Borrowing shall, as to such Lender only, be deemed a request for an ABR Loan unless such declaration shall be subsequently withdrawn (any Lender delivering such a declaration hereby agreeing to withdraw such declaration promptly upon determining that such event of illegality no longer exists); and

 

(ii) require that all outstanding Eurodollar Loans made by it be converted to ABR Loans, in which event all such Eurodollar Loans shall be automatically converted to ABR Loans as of the effective date of such notice as provided in subsection (b) below.

 

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

 

(b) For purposes of this Section, a notice by any Lender shall be effective as to each Eurodollar Loan, if lawful, on the last day of the Interest Period currently applicable to such Eurodollar Loan; in all other cases such notice shall be effective on the date of receipt.

 

SECTION 2.12. Pro Rata Treatment.

 

Except as required under Sections 2.10 and 2.15, each Extension of Credit, each payment or prepayment of principal of any Borrowing, each payment of interest on the Loans, each payment of a reimbursement obligation in respect of a drawn Letter of Credit, each payment of the Facility Fees, each reduction of the Total Commitment and each refinancing or conversion of any Borrowing with a Borrowing of any Type, shall be allocated pro rata among the Lenders in accordance with their respective Commitments (or, if such Commitments shall have expired or been terminated, in accordance with the respective principal amounts of their Outstanding Credits). For purposes of determining the Available Commitments of the Lenders at any time, the LC Outstandings shall be deemed to have utilized the Commitments of the Lenders pro rata in accordance with their respective Commitments at such time. Each Lender agrees that in computing such Lender’s portion of any Extension of Credit to be made hereunder, the Agent may, in its discretion, round each Lender’s percentage of such Extension of Credit to the next higher or lower whole dollar amount.

 

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SECTION 2.13. Sharing of Setoffs.

 

Each Lender agrees that if it shall, through the exercise of a right of banker’s lien, setoff or counterclaim, or pursuant to a secured claim under Section 506 of Title 11 of the United States Bankruptcy Code or other security or interest arising from, or in lieu of, such secured claim, received by such Lender under any applicable bankruptcy, insolvency or other similar law or otherwise, or by any other means, obtain payment (voluntary or involuntary) in respect of any Loans or LC Outstandings as a result of which the unpaid principal portion of its Loans and LC Outstandings shall be proportionately less than the unpaid principal portion of the Loans and LC Outstandings of any other Lender, it shall be deemed simultaneously to have purchased from such other Lender at face value, and shall promptly pay to such other Lender the purchase price for, a participation in the Loans or LC Outstandings of such other Lender, so that the aggregate unpaid principal amount of the Loans and LC Outstandings and participations in the Loans and LC Outstandings held by each Lender shall be in the same proportion to the aggregate unpaid principal amount of all Loans and LC Outstandings then outstanding as the principal amount of its Loans and LC Outstandings prior to such exercise of banker’s lien, setoff or counterclaim or other event was to the principal amount of all Loans and LC Outstandings outstanding prior to such exercise of banker’s lien, setoff or counterclaim or other event; provided, however , that, if any such purchase or purchases or adjustments shall be made pursuant to this Section and the payment giving rise thereto shall thereafter be recovered, such purchase or purchases or adjustments shall be rescinded to the extent of such recovery and the purchase price or prices or adjustment restored without interest. Each Borrower expressly consents to the foregoing arrangements and agrees that any Lender holding a participation in a Loan or any LC Outstandings deemed to have been so purchased may exercise any and all rights of banker’s lien, setoff or counterclaim with respect to any and all moneys owing by such Borrower to such Lender by reason thereof as fully as if such Lender had made an Extension of Credit in the amount of such participation.

 

SECTION 2.14. Payments.

 

(a) Each Borrower shall make each payment (including principal of or interest on any Outstanding Credit or any Fees or other amounts) hereunder from an account in the United States not later than 12:00 noon, New York City time, on the date when due in dollars to the Agent at its offices at Two Penns Way, Suite 200, New Castle, DE 19720, Attention: Bank Loan Syndications, in immediately available funds. Each such payment shall be made without off-set, deduction or counterclaim, provided , that the foregoing shall not constitute a relinquishment or waiver of such Borrower’s rights to any independent claim that such Borrower may have against the Agent, any Fronting Bank or any Lender.

 

(b) Whenever any payment (including principal of or interest on any Outstanding Credit or any Fees or other amounts) hereunder shall become due, or otherwise would occur, on a day that is not a Business Day, such payment may be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of interest or Fees, if applicable.

 

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SECTION 2.15. Taxes.

 

(a) Any and all payments of principal and interest on any of the Outstanding Credits or of any Fees or indemnity or expense reimbursements by a Borrower hereunder (“ Borrower Payments ”) shall be made, in accordance with Section 2.14, free and clear of and without deduction for any and all current or future United States Federal, state and local taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect to such Borrower Payments, but only to the extent reasonably attributable to such Borrower Payments, excluding (i) income taxes imposed on the net income of the Agent, any Fronting Bank or any Lender (or any transferee or assignee thereof, including a participat