-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FBWj88h4abrZXLzoJAQvmCx3svLrkq2cjBZvEDeOm1UbJuM6SWTM3mUzfEI9ExBW +NX9yx0ThtgEvMZxyVO9JA== 0001160661-05-000004.txt : 20050630 0001160661-05-000004.hdr.sgml : 20050630 20050630135101 ACCESSION NUMBER: 0001160661-05-000004 CONFORMED SUBMISSION TYPE: U-1/A PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20050630 DATE AS OF CHANGE: 20050630 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOUTHERN POWER CO CENTRAL INDEX KEY: 0001160661 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 582598670 FILING VALUES: FORM TYPE: U-1/A SEC ACT: 1935 Act SEC FILE NUMBER: 070-10293 FILM NUMBER: 05927850 BUSINESS ADDRESS: STREET 1: 600 N 18TH ST. CITY: BIRMINGHAM STATE: AL ZIP: 35291 BUSINESS PHONE: 4045067146 MAIL ADDRESS: STREET 1: 241 RALPH MCGILL BLVD STREET 2: NE BIN 10116 CITY: ATLANTA STATE: GA ZIP: 30308 U-1/A 1 am2.txt File No. 70-10293 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 AMENDMENT NO. 2 TO APPLICATION OR DECLARATION under The Public Utility Holding Company Act of 1935 THE SOUTHERN COMPANY 270 Peachtree Street, N.W. Atlanta, Georgia 30303 SOUTHERN POWER COMPANY 270 Peachtree Street, N.W. Atlanta, Georgia 30303 (Name of company or companies filing this statement and addresses of principal executive offices) THE SOUTHERN COMPANY (Name of top registered holding company parent of each applicant or declarant) Patricia L. Roberts Assistant Secretary The Southern Company 270 Peachtree Street, N.W. Atlanta, Georgia 30303 Michael W. Southern Senior Vice President and Chief Financial Officer Southern Power Company 270 Peachtree Street, N.W. Atlanta, Georgia 30303 (Names and address of agents for service) This Commission is requested to mail signed copies of all orders, notices and communications to:

INFORMATION REQUIRED The statement on form U-1 as initially filed in this proceeding is hereby amended and restated in its entirety as follows: Item 1. Description of Proposed Transactions. ------------------------------------ 1.1 Introduction ------------ Southern Power Company ("Southern Power") is a wholly-owned subsidiary of The Southern Company ("Southern"), a registered holding company under the Public Utility Holding Company Act of 1935, as amended (the "Act"). Southern Power is an electric wholesale generation subsidiary which constructs, owns and manages generating facilities and sells the output under long-term, fixed-price capacity contracts both to unaffiliated wholesale purchasers as well as to its retail operating company affiliates. Southern Power's business activities are not subject to regulation by any state commission, but are subject to regulation by the Federal Energy Regulatory Commission (the "FERC"). This Application seeks a renewal and extension of certain existing authorizations with respect to Southern's funding of Southern Power, Southern Power's independent financing activities and Southern Power's investment in EWGs and energy-related companies, as the terms are defined in the Act ("Exempt Subsidiaries"). 1.2 Existing Financing Authority. ----------------------------- Southern Power was authorized to be formed pursuant to an order dated December 27, 2000 in File No. 70-9701 (HCAR No. 35-27322) (the "December 2000 Order"). In addition to authorization of the formation of Southern Power, the December 2000 Order authorized Southern to fund Southern Power in an aggregate amount not to exceed $1.7 million, authorized Southern Power to obtain an aggregate amount not to exceed $2.5 billion in independent financing and authorized Southern Power to make direct or indirect investments in EWGs. 1.3 Requested Approvals. ------------------- The applicants request authority to engage in the transactions described below from time to time, as applicable, for the period commencing with the effective date of the Securities and Exchange Commission's (the "Commission") order in this proceeding and ending on June 30, 2007 (the "Authorization Period"). Upon the effective date of the Commission's order in this proceeding, the applicants will relinquish their authority authorized in the December 2000 Order relating to the authorization requested herein. A. Equity Funding, Guarantee and Parent Support -------------------------------------------- Southern requests authority to fund the growth of Southern Power in an aggregate amount not to exceed $1.2 billion. Southern proposes that such funding take the form of any combination of: (1) purchases of common stock and debt securities from Southern Power; (2) purchases of or contributions in respect of limited liability company interests or other forms of equity interests from Southern Power; and (3) guarantees issued in support of securities and other obligations of Southern Power. The proceeds of such financings will be used to finance the operations of Southern Power, including the acquisition, construction and operation of power generation facilities, fuel and power generation equipment procurement and storage, and energy-related activities, including those authorized pursuant to 17 C.F.R. ss.250.58, pertaining thereto. The terms of the debt securities proposed to be acquired by Southern are described in 1.3(B) below. Southern proposes to issue guarantees or provide other forms of credit support or enhancements (collectively, "Guarantees") to, or for the benefit of, Southern Power. Guarantees may take the form of Southern agreeing to guarantee, to undertake reimbursement obligations, to assume liabilities or to assume other obligations with respect to, or to act as surety on, bonds, letters of credit, evidences of indebtedness, equity commitments, performance and other obligations undertaken by Southern Power. The terms and conditions of the Guarantees will be established through arms-length negotiations based upon current market conditions. Any Guarantee issued will be without recourse to any of the other subsidiaries of Southern. The effective cost of capital on any Guarantee by Southern of debt of Southern Power will not exceed 500 basis points over a U.S. Treasury security having a term and an amount equal to the guaranteed amount; provided that in no event will the cost of capital exceed the cost of obtaining from a third party the liquidity necessary to perform the Guarantee for the period of time the Guarantee remains outstanding. Southern also seeks authority to issue loans with a term not to exceed seven years to Southern Power in order to provide liquidity to Southern Power to facilitate cash management. Southern Power needs the flexibility to be able to obtain parent company loans if the need arises in its business operations. Such loans will be at interest rates and maturities designed to provide a return to Southern at its effective cost of capital. B. Southern Power Financing Authority. --------------------------------- As discussed below, Southern Power requests authority to obtain financing in the form of Common Stock, Preferred Stock, Preferred Securities (including without limitation trust preferred securities), Long-term Debt, Short-term and Term Loan Notes, Commercial Paper (each as defined herein) and guarantees. In connection with project financing of Southern Power's assets, Southern Power may acquire securities or other interests in project subsidiaries. In addition, Southern Power proposes to incur obligations in connection with the issuance and sale by public instrumentalities of one or more series of Revenue Bonds (as defined herein). Southern Power requests that the Commission authorize it to obtain financing in an aggregate amount not to exceed $1.2 billion. 1. Use of Intermediate Companies. ----------------------------- Southern Power intends to acquire securities or interests in the business of one or more Exempt Subsidiaries. In connection therewith, Southern Power proposes that it may acquire intermediate companies ("Intermediate Companies"). Intermediate Companies would be special purpose subsidiaries formed to exclusively engage in activities to facilitate the consummation of investments in Exempt Subsidiaries. They may also engage in development activities.1 Intermediate Companies may acquire interests in, finance the acquisition of and hold the securities of Exempt Subsidiaries. Intermediate Companies would enhance the ability of Southern Power to respond quickly to investment opportunities. An Intermediate Company may be organized at the time of the making of bids or proposals to acquire an interest in any Exempt Subsidiary or at any time thereafter in order to facilitate the bidding and subsequent consummation of an acquisition of an interest in an Exempt Subsidiary. Southern Power also proposes that an Intermediate Company may issue equity securities to Southern Power and debt securities to non-affiliated persons (and with respect to which there will be no recourse to Southern Power), including banks, insurance companies and other financial institutions, exclusively for the purpose of financing (including any refinancing) investments in Exempt Subsidiaries. These debt securities would have the same terms as Long-term Debt, Short-term and Term Loan Notes and Commercial Paper (as defined below) proposed to be issued by Southern Power. ___________________________ 1 Development activities will include project due diligence and design review; market studies; site inspection; preparation of bid proposals, including, in connection therewith, posting of bid bonds, cash deposits or the like; application for requirement permits and/or regulatory approvals; acquisitions of site options and options on other necessary rights; negotiation and execution of contractual commitments with owners of existing facilities, equipment vendors, construction firms, power purchasers, thermal "host" users, fuels suppliers and other project contractors; negotiation of financing commitments with lenders and equity co-investors; and such other preliminary development activities as may be required in preparation for the a cquisition or financing of a project. 2. Investment in Intermediate Companies and Exempt Subsidiaries. The Intermediate Companies may issue securities to Southern Power, and Southern Power may acquire the securities. The investment by Southern Power in the Exempt Subsidiaries may take the form of capital stock or shares, debt securities, trust certificates, capital contributions, open account advances without interest and partnership interests or other equity or participation interests, bid bonds or other credit support to secure obligations incurred by Southern Power and/or Intermediate Companies in connection with Exempt Subsidiary investments or of Southern Power's undertaking to contribute equity to an Intermediate Company. Southern Power and the Intermediate Companies propose, from time to time through June 30, 2007, to (1) guarantee the indebtedness or other obligations of one or more Exempt Subsidiaries; (2) assume the liabilities or one or more Exempt Subsidiaries; and or (3) enter into guarantees and letters of credit reimbursement agreements in support of equity contribution obligations or otherwise in connection with project development activities for one or more Exempt Subsidiaries. Investments may be made from Southern Power and/or Intermediate Companies directly or indirectly. Any open account advance made by Southern Power will have a maturity of not more than one year. Southern Power requests approval to enter into reimbursement agreements with banks to support letters of credit delivered as security for Southern Power's equity contribution obligation to an Intermediate Company or otherwise in connection with an Intermediate Company's or Exempt Subsidiary's project development activities. The investments in Intermediate Companies and Exempt Subsidiaries are included in the $1.2 billion authority requested in Item 1.3 herein. Southern Power proposes that its guarantees of obligations of Intermediate Companies and Exempt Subsidiaries, and those of Intermediate Companies on behave of Exempt Subsidiaries, not exceed $500 million in the aggregate, which is in addition to the $1.2 billion financing authority sought herein. 3. Rule 53 and Rule 58 Compliance. ------------------------------ Southern will report all "aggregate investment" as defined under Rule 53 of the Act on a consolidated basis. In addition, to the extent that Southern provides funds to Southern Power that are used in an energy-related company (within the meaning of Rule 58 under the Act), the amount of the investment will be included in the calculation of "aggregate investment" required under Rule 58, and such aggregate investments shall not exceed the amounts permitted by Rules 53 and 58. 1.4 Parameters Applicable to Southern Power Financing Transactions. -------------------------------------------------------------- The following general terms will be applicable where appropriate to the proposed Southern and Southern Power financing activities requested to be authorized hereby: Effective Cost of Money. The effective cost of capital on Long-term Debt, Preferred Stock, Preferred Securities, Short-term and Term Loan Notes and Commercial Paper will not exceed competitive market rates available at the time of issuance for securities having the same or reasonably similar terms and conditions issued by similar companies of reasonably comparable credit quality; provided that in no event will the effective cost of capital (i) on any series of Long-term Debt and any Term Loan Note with a maturity of greater than one year exceed 500 basis points over a U.S. treasury security having a remaining term equal to the term of such security, (ii) on any series of Short-term Debt or Term Loan Note with maturity of one year or less or Commercial Paper exceed 300 basis points over the London Interbank Offered Rate for maturities of less than one year and (iii) on any series of Preferred Stock or Preferred Securities exceed 500 basis points over a U.S. Treasury security having a remaining term equal to the term of such series. Maturity. The maturity of Long-term Debt and Preferred Securities will be between one and 50 years after the issuance thereof. Preferred Stock will be redeemed no later than 50 years, unless it is perpetual in duration. Issuance Expenses. The underwriting fees, commissions or other similar remuneration paid in connection with the non-competitive issue, sale or distribution of Long-term Debt, Short-term and Term Loan Notes, Preferred Stock or Preferred Securities will not exceed the greater of (i) 6% of the principal or total amount of the securities being issued or (ii) issuance expenses that are paid at the time in respect of the issuance of securities having the same or reasonably similar terms and conditions issued by similar companies of reasonably comparable credit quality. No commission or fee will be payable in connection with the issuance and sale of Commercial Paper, except for a commission, payable to the dealer, not to exceed one-eighth of one percent per annum in respect of Commercial Paper sold through the dealer as principal. Common Equity Ratio. At all times during the Authorization Period, Southern and Southern Power represent that each will maintain a common equity ratio of at least thirty percent of consolidated capitalization2 as reflected in the most recent Form 10-K or Form 10-Q filed with the Commission adjusted to reflect changes in capitalization since the balance sheet date, unless otherwise authorized. _________________________ 2 Consolidated capitalization is defined to include, where applicable, all common stock equity (comprised of common stock, additional paid-in-capital, retained earnings, treasury stock and/or other comprehensive income or loss), preferred stock, preference securities, equity linked securities, long-term debt, short-term debt, current maturities and/or minority interests. Investment Grade Ratings. (i) Within four business days after the occurrence of a Ratings Event, applicants will notify the Commission of its occurrence (by means of a letter, via fax or overnight mail to the office of Public Utility Regulation) and (ii) within 30 days after the occurrence of a Ratings Event, applicants will submit a post-effective amendment to this Application explaining the material facts and circumstances relating to that Ratings Event (including the basis on which, taking into account the interests of investors, consumers and the public as well as other applicable criteria under the Act, it remains appropriate for applicants to issue the securities for which authorization is sought in this Application, so long as applicants continue to comply with the other applicable terms and conditions specified in the Commission's order authorizing the transactions requested in this Application). Furthermore, no securities authorized as a result of this Application will be issued following the 60th day after a Ratings Event (other than Common Stock, Commercial Paper and Short-term Notes) by Southern or Southern Power if any such downgraded rating has not been upgraded to investment grade. Applicants also request that the Commission reserve jurisdiction through the remainder of the Authorization Period over the issuance of any securities (other than Common Stock, Commercial Paper and Short-term Notes) that the applicants are prohibited from issuing as a result of the occurrence of a Ratings Event if no revised rating reflecting an investment grade rating has been issued. A "Ratings Event" will be deemed to have occurred if during the Authorization Period, (a) any security issued by Southern or Southern Power upon original issuance, if rated, is rated below investment grade; (b) any outstanding security of Southern Power that is rated is downgraded below investment grade; and (c) any outstanding security of Southern that is rated is downgraded below investment grade. For purposes of this provision, a security will be deemed to be rated "investment grade" if it is rated investment grade by at least one nationally recognized statistical rating organization, as that term is used in paragraphs (c)(2)(vi)(E), (F) and (H) of Rule 15c3-1 under the 1934 Act. Authorization Period. No security will be issued pursuant to the authorization sought herein after the last day of the Authorization Period (June 30, 2007). Security Ratings. The ratings of the securities issued by Southern Power are as follows:

1.5 Use of Proceeds --------------- The proceeds from the sale of securities authorized hereunder, including the Long-term Debt, the Short-term and Term Loan Notes, the Commercial Paper, the Common Stock, the Preferred Stock, the Preferred Securities and the Revenue Bonds will be used by Southern Power to construct and acquire generating facilities and for other general corporate purposes, as permitted by rule, regulation or order under the Act, to acquire interests in other businesses, as permitted under the Act, including interests in Exempt Subsidiaries, in transactions permitted under Act, and for other lawful purposes. However, no proceeds will be used to acquire interests in other businesses or the securities of associate companies unless the financing is consummated in accordance with Commission order or is exempt from the Act. 1.6 Description of Specific Southern Power Independent Financing Proposals ---------------------------------------------------------------------- 1. Common Stock. Southern Power requests authority to issue and sell from time to time shares of its $0.01 par value capital stock ("Common Stock"). Shares of the Common Stock will be issued to Southern for such consideration having a value not less than the par value as determined by Southern Power's board of directors. 2. Preferred Stock, Preferred Securities and Long-term Debt. Southern Power requests authority to issue and sell from time to time, directly, Preferred Stock and Long-term Debt and, indirectly through one or more financing subsidiaries, Preferred Securities (including, without limitation, trust preferred securities) to non-affiliates. Southern Power wishes to have the flexibility to issue through one or more statutory or business trusts or any other financing subsidiary, preferred securities (including, without limitation, trust preferred securities) (the "Preferred Securities"). Preferred Securities would be issued in one or more series with such rights, preferences and priorities as may be designated in the instrument creating each such series, as determined by the board of directors of Southern Power. Dividends or distributions on such securities will be made periodically and to the extent funds are legally available for such purpose, but may be made subject to the terms which allow the issuer to defer dividend payments for specified periods. Southern Power would guarantee certain payments made by any trust or other finance subsidiary and associated with the Preferred Securities. Southern Power expects that the Preferred Securities would be issued using up to two different types of special purpose subsidiaries. One or more subsidiaries (each a "Financing Subsidiary") would issue the Preferred Securities. These subsidiaries would be established by Southern Power.3 A Financing Subsidiary would lend, dividend or otherwise transfer to Southern Power, the proceeds of the Preferred Securities it issues, together with the equity contributed to the Financing Subsidiary. Southern Power proposes to issue guarantees related to: (a) payment of dividends or distributions on the __________________________________ 3 In the event that a Financing Subsidiary is organized as a limited liability company, Southern Power may also organize a second special purpose subsidiary under Delaware or other state law ("Investment Subsidiary") to acquire and hold Financing Subsidiary membership interests, so as to comply with any requirement under any applicable law that a limited liability company have at least two members. Similarly, in the event that any Financing Subsidiary is organized as a limited partnership, an Investment Subsidiary may be organized to act as the general partner of the Financing Subsidiary. If a Financing Subsidiary is organized as a limited partnership, Southern Power may acquire, directly or indirectly through the Investment Subsidiary, a limited partnership interest in the Financing Subsidiary, in order to ensure that the Financing Subsidiary will have a limited partner to the extent required by applicable law. Preferred Securities of any Financing Subsidiary, if, and to the extent that, the Financing Subsidiary has funds legally available for this purpose; (b) payments to holders of the Preferred Securities of amounts due upon liquidation of the Financing Subsidiary or redemption of its Preferred Securities; and (c) certain additional amounts that may be payable in respect of the Preferred Securities (e.g. trustee's fees and expenses). In connection with the issuance of Preferred Securities, Southern Power proposes to organize one or more separate subsidiaries as a statutory trust or trusts of the State of Delaware or other comparable trust in any jurisdiction considered advantageous by Southern Power or any other entity or structure that is considered advantageous by Southern Power. Southern Power proposes that, in addition to, or as an alternative to, any Preferred Securities financing as described hereinabove, Southern Power may issue and sell notes directly to investors, including Southern. It is proposed that any notes so issued will be secured or unsecured, may be either senior or subordinated obligations of Southern Power, as the case may be, may be convertible or exchangeable into Preferred Stock, may have the benefit of a sinking fund and may be insured by a policy of insurance guaranteeing the payment when due of the principal of and interest on such notes (the "Long-term Debt"). Southern Power will not issue Long-term Debt unless it has evaluated all relevant financial considerations (including, without limitation, the cost of equity capital) and has determined that to do so is preferable to issuing short-term debt. It is proposed that Southern Power may issue and sell from time to time shares of its preferred or preference stock (the "Preferred Stock") to non-affiliates. Any such issue of Preferred Stock will have a specified par or stated value per share and, in accordance with applicable state law, will have such voting powers (if any), designations, preferences, rights and qualifications, limitations or restrictions as shall be stated and expressed in the resolution or resolutions providing for such issue adopted by the board of directors of Southern Power pursuant to authority vested in it by the provisions of its certificate of incorporation. 3. Short-term and Term Loan Notes and Commercial Paper. Southern Power proposes to issue and sell from time to time unsecured short-term and term loan notes ("Short-term and Term Loan Notes"4) and commercial paper ("Commercial Paper"). Short-term and Term Loan Notes and Commercial Paper may include commercial paper notes, bank notes and other forms of short-term indebtedness. Southern Power proposes to effect Short-term and Term Loan Notes borrowings from one or more commercial lending institutions or from Southern. These borrowings will be evidenced by short-term and/or term loan notes, dated as of the date of the borrowings, and maturing not more than seven years after the date of issue, or "grid" short-term and/or long term notes, evidencing all outstanding borrowings from each lender, dated as of the date of the initial borrowings, and maturing not more than seven years after the date of issue. Southern Power proposes to issue Commercial Paper in the form of promissory notes with varying maturities not to exceed one year. These maturities may be subject to extension to a final maturity not to exceed 390 days. Actual maturities will be determined by market conditions, the effective interest cost and Southern Power's anticipated cash flow, including the proceeds of other borrowings, at the time of issuance. 4. Revenue Bonds. Each issue of the proposed revenue bonds ("Revenue Bonds") will be issued for the benefit of Southern Power to finance or refinance the costs of certain sewage and solid waste disposal facilities at Southern Power's generating facilities located in various counties. It is proposed that each such county or the otherwise appropriate public body or instrumentality (the "County") will issue its Revenue Bonds to finance or refinance the costs of the acquisition, construction, installation and equipping of said facilities at the plant or other facility located in its jurisdiction (the "Project"). Each County is authorized by relevant state law to issue its Revenue Bonds for such purposes. _________________________ 4 A "Short Term Note" is a promissory note with a term of one year or less; a "Term Loan Note" is a promissory note with a term of more than one year. While the actual amount of Revenue Bonds to be issued by each County has not yet been determined, such amount will be based upon the cost of refunding outstanding bonds or the cost of the Project located in its jurisdiction. Southern Power proposes to enter into a Loan Agreement with the County substantially in the form of Exhibit B-2 hereto (the "Loan Agreement"), relating to each issue of the Revenue Bonds or an Installment Sale Agreement substantially in the form of Exhibit B-3 hereto (the "Installment Sale Agreement"). Under the Loan Agreement, the County will loan to Southern Power the proceeds of the sale of the County's Revenue Bonds, and Southern Power may issue a non-negotiable promissory note therefore (the "Note"), or under the Installment Sale Agreement, the County will undertake to purchase and sell the related Project to Southern Power. The installment sale structure may be used because it is required by applicable state law or to the extent it affords transactional advantages to Southern Power. Under either structure, the proceeds of the loan or purchase will be deposited with the Trustee (the "Trustee") under an indenture to be entered into between the County and such Trustee (the "Trust Indenture"), pursuant to which such Revenue Bonds are to be issued and secured, and will be applied by Southern Power to payment of the cost of construction of the Project or to refund outstanding pollution control revenue obligations. The Note, the Loan Agreement or the Installment Sale Agreement, as the case may be, will provide for payments to be made by Southern Power at times and in amounts which shall correspond to the payments with respect to the principal of, premium, if any, and interest on the related Revenue Bonds whenever and in whatever manner the same shall become due, whether at stated maturity, upon redemption or declaration or otherwise. The Loan Agreement or the Installment Sale Agreement will provide for the assignment to the Trustee of the County's interest in, and of the monies receivable by the County under, such Agreement or the Note. The Loan Agreement or the Installment Sale Agreement will also obligate Southern Power to pay the fees and charges of the Trustee and may provide that Southern Power may at any time, so long as it is not in default thereunder, prepay the amount due under the Loan Agreement or the Note, or the Installment Sale Agreement, in whole or in part, such payment to be sufficient to redeem or purchase outstanding Revenue Bonds in the manner and to the extent provided in the Trust Indenture. The Trust Indenture will provide that the Revenue Bonds issued thereunder (i) may be redeemable at any time on or after a specified date from the date of issuance, in whole or in part, at the option of Southern Power, and may require the payment of a premium at a specified percentage of the principal amount which may decline annually thereafter, and (ii) will be redeemed in whole, at the option of Southern Power, in certain other cases of undue burdens or excessive liabilities imposed with respect to the related Project, its destruction or damage beyond practicable or desirable repairability or condemnation or taking by eminent domain, or if operation of the related facility is enjoined and Southern Power determines to discontinue operation thereof, such redemption of all such outstanding Revenue Bonds to be at the principal amount thereof plus accrued interest, but without premium. It is proposed that the Revenue Bonds will mature not more than 40 years from the first day of the month in which they are initially issued and may, if it is deemed advisable for purposes of the marketability of the Revenue Bonds, be entitled to the benefit of a mandatory redemption sinking fund calculated to retire a portion of the aggregate principal amount of the Revenue Bonds prior to maturity. The Trust Indenture may give the holders of the Revenue Bonds the right, during such time as the Revenue Bonds bear interest at a fluctuating rate or otherwise, to require that the Revenue Bonds be repurchased from time to time, and arrangements may be made for the remarketing of any such Revenue Bonds through a remarketing agent. Southern Power also may be required to purchase the Revenue Bonds5, or the Revenue Bonds may be subject to mandatory redemption, at any time if the interest thereon is determined to be subject to federal income tax. Also in the event of taxability, interest on the Revenue Bonds may be effectively converted to a higher variable or fixed rate, and Southern Power also may be required to indemnify the bondholders against any other additions to interest, penalties and additions to tax; such terms are not considered to constitute the issuance of a separate security under Sections 6(a) and 7 of the Act, but rather possible additional terms of the Revenue Bonds and Southern Power's obligations with respect thereto. Southern Power may cause an irrevocable letter of credit or other credit facility (the "Letter of Credit") of a bank or other financial institution (the "Bank") to be delivered to the Trustee. The Letter of Credit would be an irrevocable obligation of the Bank to pay to the Trustee, upon request, up to an amount necessary in order to pay principal of and accrued interest on the Revenue Bonds when due. Pursuant to a separate agreement with the Bank, Southern Power would agree to pay to the Bank, on demand or pursuant to a borrowing under such agreement, all amounts that are drawn under the Letter ______________________ 5 This purchase is exempt from Section 9(a) of the Act under Rule 42. of Credit, as well as certain fees and expenses. Such delivery of the Letter of Credit to the Trustee would obtain for the Revenue Bonds the benefit of a rating equivalent to the credit rating of the Bank. In the event that the Letter of Credit is delivered to the Trustee, Southern Power may also convey to the County a subordinated security interest in the Project or other property of Southern Power as further security for Southern Power's obligations under the Loan Agreement and the Note or Installment Sale Agreement. Such subordinated security interest would be assigned by the County to the Trustee. As an alternative to, or in conjunction with, securing its obligations under the Loan Agreement and Note or Installment Sale Agreement as above described, and in order to obtain a "AAA" rating for the Revenue Bonds by one or more nationally recognized securities rating services, Southern Power may cause an insurance company to issue a policy of insurance guaranteeing the payment when due of the principal of and interest on such series of the Revenue Bonds. Such insurance policy would extend for the term of the relating Revenue Bonds and would be non-cancelable by the insurance company for any reason. Southern Power's payment of the premium with respect to said insurance policy could be in various forms, including a non-refundable, one-time insurance premium paid at the time the policies are issued, and/or an additional interest percentage to be paid to said insurer in correlation with regular interest payments. In addition, Southern Power may be obligated to make payments of certain specified amounts into separate escrow funds and to increase the amounts on deposit in such funds under certain circumstances. The amount of each escrow fund would be payable to the insurance company as indemnity for any amounts paid pursuant to the related insurance policy in respect of principal of or interest on the related Revenue Bonds. It is contemplated that the Revenue Bonds will be sold by the County pursuant to arrangements with one or more purchasers, placement agents or underwriters. In accordance with applicable state laws, the interest rate to be borne by the Revenue Bonds will be approved by the County and will be either a fixed rate, which fixed rate may be convertible to a rate which will fluctuate in accordance with a specified prime or base rate or rates or may be determined pursuant to certain remarketing or auction procedures, or a fluctuating rate, which fluctuating rate may be convertible to a fixed rate. While Southern Power may not be party to the purchase, placement or underwriting arrangements for the Revenue Bonds, such arrangements will provide that the terms of the Revenue Bonds and their sale by the County shall be satisfactory to Southern Power. Bond counsel will issue an opinion that, based upon existing law, interest on the Revenue Bonds will generally be excludable from gross income for federal income tax purposes. Southern Power has been advised that the interest rates on obligations, the interest on which is tax exempt, recently have been and can be expected at the time of issue of the Revenue Bonds to be lower than the rates on obligations of like tenor and comparable quality, interest on which is fully subject to federal income taxation. The effective cost of capital to Southern Power on any series of the Revenue Bonds will not exceed competitive market rates available at the time of issuance of securities having the same or reasonably similar terms and conditions issued by companies of reasonably comparable credit quality; provided that in no event will the effective cost of capital exceed 200 basis points over U.S. Treasury securities having comparable maturities. The premium (if any) payable upon the redemption of any Revenue Bonds at the option of Southern Power will not exceed the greater of (i) 5% of the principal amount of the Revenue Bonds so to be redeemed, or (ii) a percentage of such principal amount equal to the rate of interest per annum borne by such Revenue Bonds. The purchase price payable by or on behalf of Southern Power in respect of Revenue Bonds tendered for purchase at the option of the holders thereof will not exceed 100% of the principal amount thereof, plus accrued interest to the purchase date. Any Letter of Credit issued as security for the payment of Revenue Bonds will be issued pursuant to a reimbursement agreement between Southern Power and the financial institution issuing such Letter of Credit (the "Reimbursement Agreement"). Pursuant to the Reimbursement Agreement, Southern Power will agree to pay or cause to be paid to the financial institution, on each date that any amount is drawn under such institution's Letter of Credit, an amount equal to the amount of such drawing, whether by cash or by means of a borrowing from such institution pursuant to the Reimbursement Agreement. Any such borrowing may have a term of up to 10 years and will bear interest at the financial institution's prevailing rate offered to corporate borrowers of similar quality which will not exceed (i) the London Interbank Offered Rate plus up to 3%, (ii) the financial institution's certificate of deposit rate plus up to 2 - 3/4%, or (iii) a rate not to exceed the prime rate plus 1%, to be established by agreement with the financial institution prior to the borrowing. 5. Certificate of Notification. With respect to transactions pursuant to the authority sought in this Application, the applicants will file certificates in accordance with Rule 24 under the Act, on a quarterly basis (within 90 days following the close of the fourth calendar quarter and 60 days following the close of each other calendar quarter), to report transactions pursuant to authority sought in this Application, containing the following information: (1) a copy of the balance sheets and income statements as of and for the period ending on the last day of the quarter for direct subsidiaries of Southern that hold the securities of Exempt Subsidiaries, including Southern Power; (2) narrative descriptions of the activities of Southern Power, the Intermediate Companies and Exempt Subsidiaries during the quarter just ended, organized by business category (project development, project related services and other) and within each category, a description of new developments by project type (e.g., EWGs, energy related activities, etc.); (3) amounts and forms of: (a) all guarantees issued or provided in reliance upon the authority sought in this Application; (b) all indemnifications of and with respect to persons acting as sureties on bonds or other obligations on behalf of Southern Power or any of its subsidiaries that Southern has agreed to grant in the event a bid by any of the foregoing is accepted; (4) a description of all services and goods that Southern Power or its subsidiaries have obtained from or provided to affiliates, specifying in each case the type of good or service provided, the provider and recipient of the good or service, the number of personnel used to provide the service during the quarter, the total dollar value of the goods or services, whether the charge was computed at cost, market or by using another method (any other method to be specified); (5) a chart identifying, as of the end of each quarterly period: (a) all associate companies of Southern that are Intermediate Companies, Financing Subsidiaries and Exempt Subsidiaries; (b) Southern's direct or indirect investment in each entity; (c) the aggregate direct and indirect investment by Southern in all the entities; and (d) Southern's percentage of equity ownership in each entity, together with a statement indicating by category the type of entity or person (i.e., domestic corporation, foreign corporation, foreign government or natural persons) owning the equity interests in each entity that are not held directly or indirectly by Southern; and (6) with respect to the securities issuance authority sought in this Application: (a) summary information concerning all securities issued during the preceding quarter under authority sought in this Application, including applicants' relative position as of the end of the quarter under the Southern Power aggregate financing limit and the Southern guarantee limit, together with a representation confirming that the securities were issued according to the applicable terms and conditions set forth above; and (b) a statement describing the uses of the proceeds of the securities issued. Item 2. Fees, Commissions and Expenses. ------------------------------ The fees, commissions and expenses (excluding underwriter's discounts and commissions) paid or incurred or to be paid or incurred in connection with the proposed transactions are estimated not to exceed $500,000. Item 3. Applicable Statutory Provisions. ------------------------------- Applicants consider that Sections 6, 7, 9, 10 and 12 of the Act and Rules 43, 45, 53 and 54 under the Act are applicable to the proposed transactions. To the extent that other sections of the Act or the Commission rules thereunder are deemed to be applicable to the transactions described herein, such sections and rules should be considered to be set forth in this Item 3. Applicants believe that this Application satisfies the standards of Section 7(a) of the Act and that the authority to issue securities sought in this Application satisfies the prerequisites set forth in Section 7(c)(2) in that such securities are to be issued or sold for the purposes set forth therein. Further, applicants believe that the securities sought to be issued pursuant to this Application do not satisfy any of the standards set forth in Section 7(d) which would preclude the Commission from issuing an order authorizing the issuance of the securities sought in this Application. Section 9(a)(1) provides that unless the acquisition has been approved by the Commission under Section 10, it shall be unlawful for any registered holding company or any subsidiary company thereof "to acquire, directly or indirectly, any securities or utility assets or any other interest in any business." Applicants believe that the proposed transactions described herein which are subject to Section 9(a) of the Act satisfy the standards of Section 10 of the Act. Applicants also believe that the consideration to be paid in connection with the transactions described herein is fair and reasonable. Rule 53 and Rule 54 Analysis: The proposed transactions are also subject to Rule 53 and Rule 54, which provide that, in determining whether to approve an application involving the issue or sale of a security for purposes of financing the acquisition of an EWG or FUCO, as those terms are defined in Sections 32 and 33, respectively, of the Act, the Commission shall not make certain adverse findings if the conditions set forth in Rule 53(a)(1) through (a)(4) are met, and not otherwise made inapplicable by reason of the existence of any of the circumstances described in Rule 53(b). Southern currently meets all of the conditions of Rule 53(a). At March 31, 2005, Southern's "aggregate investment," as defined in Rule 53(a)(1), in EWGs and FUCOs was approximately $265 million, or about 4.58% of Southern's "consolidated retained earnings," also as defined in Rule 53(a)(1), for the four quarters ended March 31, 2005 ($5.784 billion)6. With respect to Rule 53(a)(1), ______________________________ 6 Although Southern owns all of the equity in four indirect subsidiaries (EPZ Lease, Inc., Dutch Gas Lease, Inc., GAMOG Lease, Inc. and NUON Lease, Inc.), Southern has no direct or indirect investment or any aggregate investment within the meaning of Rule 53 in these FUCOs, including any direct or indirect guarantees or credit positions related to any capital or financing leases. (See Southern's application on Form U-1, File No., 70-9727, for further information). Southern has executed limited keep-well commitments whereby Southern would be required to make capital contributions to SE Finance Capital Corp. II, SE Finance Capital Corp. or SE Finance Company, Inc. in the event of a shortfall in the scheduled debt service resulting from certain changes in the payments due from Southern under the Southern Company Income Tax Allocation Agreement. The maximum potential capital contribution required under these commitments is the unamortized balance of the related loans, which totaled approximately $403 million as of March 31, 2005. however, the Commission has determined that Southern's financing of investments in EWGs and FUCOs in an amount greater than the amount that would otherwise be allowed by Rule 53(a)(1) would not have either of the adverse effects set forth in Rule 53(c). See The Southern Company, Holding Company Act Release No. 26501, dated April 1, 1996 (the "Rule 53(c) Order"); and Holding Company Act Release No. 26646, dated January 15, 1997 (order denying request for reconsideration and motion to stay). In addition, Southern has complied and will continue to comply with the record-keeping requirements of Rule 53(a)(2), the limitation under Rule 53(a)(3) on the use of operating company personnel to render services to EWGs and FUCOs, and the requirements of Rule 53(a)(4) concerning the submission of copies of certain filings under the Act to retail rate regulatory commissions. Further, none of the circumstances described in Rule 53(b) has occurred. Finally, Rule 53(c) is, by its terms, inapplicable since the requirements of paragraphs 53(a) and 53(b) are satisfied. Item 4. Regulatory Approval. ------------------- No state commission and no federal commission (other than the Commission) has jurisdiction over the proposed transaction. Item 5. Procedure. --------- Applicant hereby requests that the Commission's order be issued as soon as the rules allow. Applicant hereby waives a recommended decision by a hearing officer or other responsible officer of the Commission, consents that the Division of Investment Management may assist in the preparation of the Commission's decision and/or order in this matter, unless such Division opposes the transactions proposed herein, and requests that there be no 30-day waiting period between the issuance of the Commission's order and the date on which it is to become effective. Item 6. Exhibits and Financial Statements. --------------------------------- (a) Exhibits -------- A-1 - Composite Certificate of Incorporation of Southern reflecting all amendments thereto through January 5, 1994. (Designated in Registration No. 33-3546 as Exhibit 4(a), in Certificate of Notification, File No. 70-7341, as Exhibit A, and in Certificate of Notification, File No. 70-8181, as Exhibit A.) A-2 - By-Laws of Southern as amended effective February 17, 2003 and presently in effect. (Designated in Form 10-Q for the quarter ended June 30, 2003, File No. 1-3526, as Exhibit 3(a)1.) A-3 - Certificate of Incorporation of Southern Power dated January 8, 2001. (Designated in Registration No. 333-98553 as Exhibit 3.1.) A-4 - Bylaws of Southern Power effective January 8, 2001 and presently in effect. (Designated in Registration No. 333-98533 as Exhibit 3.2.) A-5 - Indenture dated as of June 1, 2002 between Southern Power and The Bank of New York, as Trustee, and indentures supplemental thereto through July 8, 2003. (Designated in Registration No. 333-98553 as Exhibits 4.1 and 4.2 and in Southern Power's Form 10-Q for the quarter ended June 30, 2003, File No. 333-98553, as Exhibit 4(g)(1).) B-1 - Multi-Year Credit Agreement among Southern Power, Citibank N.A., as the administrative agent, and the lenders listed therein dated as of June 10, 2005. B-2 - Form of Loan Agreement. B-3 - Form of Installment Sale Agreement. F-1 - Opinion of Balch & Bingham LLP. F-2 - Opinion of Troutman Sanders LLP. H. -Projected cash flow summary of Southern Power for the third quarter of 2005 through the second quarter of 2007 (filed confidentially pursuant to Rule 104). Exhibits heretofore filed with the Commission and designated as set forth above are hereby incorporated herein by reference and made a part hereof with the same effect as if filed herewith. (b) Financial Statements --------------------- Consolidated balance sheet of The Southern Company and its subsidiaries at March 31, 2005. (Designated in The Southern Company's Form 10-Q for the quarter ended March 31, 2005, File No. 1-3526.) Consolidated statements of income and cash flows for The Southern Company and its subsidiaries for the nine months ended March 31, 2005. (Designated in The Southern Company's Form 10-Q for the quarter ended March 31, 2005, File No. 1-3526.) Balance Sheet for Southern Power Company at March 31, 2005. (Designated in Southern Power Company's Form 10-Q for the quarter ended March 31, 2005, File No. 333-98553.) Statement of Income for Southern Power Company for the quarter ended March 31, 2005. (Designated in Southern Power Company's Form 10-Q for the quarter ended March 31, 2005, File No. 333-98553.) Item 7. Information as to Environmental Effects. --------------------------------------- (a) The issuance of an order by the Commission with respect to the proposed transactions will not constitute a major federal action significantly affecting the quality of the human environment. (b) No other federal agency has prepared or is preparing an environmental impact statement with regard to the proposed transactions. SIGNATURES Pursuant to the requirements of the Public Utility Holding Company Act of 1935, the undersigned company has duly caused this amendment to be signed on its behalf by the undersigned thereunto duly authorized. Date: June 30, 2005 THE SOUTHERN COMPANY By : /s/ Patricia L. Roberts Patricia L. Roberts Assistant Secretary SOUTHERN POWER COMPANY By: /s/ Wayne Boston Wayne Boston Assistant Secretary EX-1 2 xb1.txt Exhibit B-1 EXECUTION VERSION MULTI-YEAR CREDIT AGREEMENT dated as of June 10, 2005 among SOUTHERN POWER COMPANY, as Borrower, THE LENDERS IDENTIFIED HEREIN, CITIBANK, N.A., as Administrative Agent, and THE BANK OF TOKYO-MITSUBISHI, LTD., NEW YORK BRANCH, as Issuing Bank - ------------------------------------------------------------------------------- THE BANK OF TOKYO-MITSUBISHI, LTD., NEW YORK BRANCH, as Syndication Agent, BAYERISCHE LANDESBANK, ING CAPITAL LLC, KBC BANK, N.V., as Documentation Agents, BARCLAYS BANK PLC, HSBC BANK USA, NATIONAL ASSOCIATION, JPMORGAN CHASE BANK, N.A., MIZUHO CORPORATE BANK, LTD., THE BANK OF NOVA SCOTIA, SCOTIABANC INC., WACHOVIA BANK, N.A., as Senior Managing Agents, and CITIGROUP GLOBAL MARKETS INC. and THE BANK OF TOKYO-MITSUBISHI, LTD., NEW YORK BRANCH, as Joint Lead Arrangers and Joint Book Managers The Syndication Agent, the Documentation Agents, the Managing Agents, the Joint Lead Arrangers and the Joint Book Managers are for information purposes only and have no liability in such capacities in this Credit Agreement. Table of Contents Page Section 1 DEFINITIONS AND ACCOUNTING TERMS 1.1 Definitions.....................................................1 1.2 Computation of Time Periods and Other Definitional Provisions..15 1.3 Accounting Terms...............................................15 Section 2 LOANS AND LETTERS OF CREDIT 2.1 Commitment of the Lenders......................................16 2.2 Extension of Maturity Date.....................................18 2.3 Method of Borrowing for Revolving Loans........................19 2.4 Funding of Revolving Loans.....................................19 2.5 Continuations and Conversions..................................20 2.6 Minimum Amounts................................................21 2.7 Reductions of Revolving Loan Commitment........................21 2.8 Notes..........................................................21 2.9 Increases in Revolving Loan Commitment.........................22 2.10 Letters of Credit.............................................22 Section 3 PAYMENTS 3.1 Interest.......................................................25 3.2 Prepayments....................................................26 3.3 Payment in Full at Maturity....................................26 3.4 Fees...........................................................27 3.5 Place and Manner of Payments...................................28 3.6 Pro Rata Treatment.............................................28 3.7 Computations of Interest and Fees..............................28 3.8 Sharing of Payments............................................29 Section 4 ADDITIONAL PROVISIONS REGARDING LOANS 4.1 Eurodollar Loans...............................................30 4.2 Capital Adequacy...............................................31 4.3 Compensation...................................................32 4.4 Taxes..........................................................32 4.5 Mitigation; Mandatory Assignment...............................34 Section 5 CONDITIONS PRECEDENT 5.1 Closing Conditions.............................................35 5.2 Conditions to Extensions of Credit.............................37 Section 6 REPRESENTATIONS AND WARRANTIES 6.1 Organization and Good Standing.................................37 6.2 Due Authorization..............................................38 6.3 No Conflicts...................................................38 6.4 Consents.......................................................38 6.5 Enforceable Obligations........................................38 6.6 Financial Condition............................................38 6.7 No Default.....................................................39 6.8 Indebtedness and Off-Balance Sheet Indebtedness................39 6.9 Litigation.....................................................39 6.10 Material Agreements...........................................39 6.11 Taxes.........................................................39 6.12 ERISA.........................................................39 6.13 Compliance with Law...........................................40 6.14 Use of Proceeds; Margin Stock.................................40 6.15 Government Regulation.........................................40 6.16 Solvency......................................................40 Section 7 AFFIRMATIVE COVENANTS 7.1 Information Covenants..........................................40 7.2 Preservation of Existence and Franchises.......................42 7.3 Books and Records..............................................42 7.4 Compliance with Law............................................42 7.5 Payment of Taxes...............................................42 7.6 Insurance......................................................42 7.7 Performance of Obligations.....................................43 7.8 ERISA..........................................................43 7.9 Use of Proceeds................................................43 7.10 Audits/Inspections............................................43 7.11 Indebtedness to Capitalization................................44 Section 8 NEGATIVE COVENANTS 8.1 Nature of Business.............................................44 8.2 Consolidation and Merger.......................................44 8.3 Sale or Lease of Assets........................................45 8.4 Transactions with Affiliates...................................45 8.5 Fiscal Year....................................................45 8.6 Liens..........................................................45 8.7 Minimum Contract Maintenance Covenant..........................46 Section 9 EVENTS OF DEFAULT 9.1 Events of Default..............................................47 9.2 Acceleration; Remedies.........................................49 9.3 Allocation of Payments after Event of Default..................50 Section 10 AGENCY PROVISIONS 10.1 Appointment...................................................51 10.2 Delegation of Duties..........................................51 10.3 Exculpatory Provisions........................................52 10.4 Reliance on Communications....................................52 10.5 Notice of Default.............................................53 10.6 Non-Reliance on Agents and Other Lenders......................53 10.7 Indemnification...............................................53 10.8 Each Agent in Its Individual Capacity.........................54 10.9 Successor Administrative Agent................................54 10.10 Administrative Agent May File Proof of Claims................55 Section 11 MISCELLANEOUS 11.1 Notices and Other Communications; Facsimile Copies....................................................55 11.2 Right of Setoff...............................................56 11.3 Benefit of Agreement..........................................57 11.4 No Waiver; Remedies Cumulative................................60 11.5 Payment of Expenses, Etc......................................60 11.6 Amendments, Waivers and Consents..............................61 11.7 Counterparts..................................................61 11.8 Headings......................................................62 11.9 Defaulting Lender.............................................62 11.10 Survival of Indemnification and Representations and Warranties............................................62 11.11 Governing Law................................................62 11.12 Waiver of Jury Trial; Waiver of Consequential Damages........62 11.13 Time.........................................................63 11.14 Severability.................................................63 11.15 Entirety.....................................................63 11.16 Confidentiality..............................................63 11.17 Binding Effect...............................................64 11.18 USA Patriot Act Notice.......................................64 11.19 Jurisdiction, Etc............................................64 SCHEDULES Schedule 1.1(a) Account Designation Letter Schedule 1.1(b) Commitment Percentages Schedule 11.1 Notices EXHIBITS Exhibit 1.1 Terms of Subordination Exhibit 2.1(b) Form of Competitive Bid Request Exhibit 2.3 Form of Notice of Borrowing Exhibit 2.5 Form of Notice of Continuation/Conversion Exhibit 2.8(a) Form of Revolving Loan Note Exhibit 2.8(b) Form of Competitive Bid Loan Note Exhibit 2.10 Form of Letter of Credit Request Exhibit 7.1(c) Form of Compliance Certificate Exhibit 11.3(b) Form of Assignment and Assumption MULTI-YEAR CREDIT AGREEMENT THIS MULTI-YEAR CREDIT AGREEMENT (this "Credit Agreement"), dated as of June 10, 2005, is entered into among SOUTHERN POWER COMPANY, a Delaware corporation (together with any other Person (as defined herein) as may be substituted therefor pursuant to Section 8.2(b)(ii), the "Borrower"), the Lenders (as defined herein), CITIBANK, N.A. ("Citibank"), as administrative agent (together with any successor administrative agent appointed pursuant to Section 10, the "Administrative Agent"), and The Bank of Tokyo-Mitsubishi, Ltd., New York Branch ("BTM"), as Issuing Bank (as defined herein). RECITALS WHEREAS, the Borrower has requested that the Lenders provide a revolving credit facility, and the Lenders are willing to do so on the terms and conditions set forth herein. NOW, THEREFORE, IN CONSIDERATION of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto 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 Eurodollar Rate" means, at any time, the Eurodollar Rate plus the Applicable Percentage for Eurodollar Loans, in each case as then in effect. "Administrative Agent" has the meaning in the recital of parties to this Credit Agreement. "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 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 of such corporation or (ii) to direct or cause direction of the management and policies of such corporation, whether through the ownership of voting securities, by contract or otherwise. "Affiliate Subordinated Indebtedness" means any borrowings by the Borrower from The Southern Company or an Affiliate of The Southern Company; provided that such borrowings are subordinated on terms substantially similar to the terms of subordination set forth in Exhibit 1.1 hereto. "Agent-Related Persons" means each of the Agents (including any successor agents), together with its Affiliates (including any Affiliate of such Agent acting as a Joint Lead Arranger) and the officers, directors, employees, representatives, agents, counsel and attorneys-in-fact of such Persons and Affiliates. "Agents" means, collectively, the Issuing Bank, the Administrative Agent, the Syndication Agent, the Documentation Agents and the Managing Agents. "Agent's Account" means the account of the Administrative Agent maintained by the Administrative Agent at Citibank, N.A., with its office at 388 Greenwich Street, New York, New York 10013, Account No. 36852248, Attention: Bank Loan Syndications. "Anniversary Date" has the meaning specified in Section 2.2(a). "Applicable Percentage" means, at any time, and with respect to all Eurodollar Loans then outstanding, Unused Fees and/or Utilization Fees, the applicable percentage corresponding to the Senior Debt Rating in effect from time to time as described below: Applicable Applicable Applicable Senior Percentage Percentage Percentage Debt Rating for Eurodollar for Unused for Loans Fees Utilization Fees I. => A+ from S&P .20% .070% .10% or => A1 from Moody's II. => A but A+ from S&P .25% .090% .10% or => A2 but A1 from Moody's III. => A- but A from S&P .30% .110% .10% or => A3 but A2 from Moody's IV. = BBB+ but<- from S&P .45% .125% .10% or = Baa1 but A3 from Moody's V. = BBB but BBB+ from S&P .55% .150% .15% or = Baa2 but Baa1 from Moody's VI. = BBB- but BBB from S&P .70% .200% .15% or = Baa3 but Baa2 from Moody's VII. BBB- from S&P 1.00% .250% .25% and Baa3 from Moody's or unrated by S&P and Moody's Notwithstanding the above, if at any time there is a split in Senior Debt Ratings between S&P and Moody's, (a) in the event of a single level split, the higher Senior Debt Rating (i.e., the lower pricing) will apply and (b) in the event of a multiple level split, one level below the higher Senior Debt Rating will apply. The Applicable Percentages for Eurodollar Loans, Unused Fees and Utilization Fees shall be determined and adjusted on the date (each, a "Calculation Date") on which there is any change in the Senior Debt Rating of the Borrower. Each Applicable Percentage shall be effective from one Calculation Date until the next Calculation Date. Any adjustment in the Applicable Percentage shall be applicable to all existing Eurodollar Loans as well as any new Eurodollar Loans made. The Borrower shall notify the Administrative Agent in writing immediately upon any change in its Senior Debt Rating. "Approved Fund" means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender. "Arranger" means each of Citigroup Global Markets Inc. and BTM in its capacity as joint lead arranger. "Assignment and Assumption" means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 11.3(b), and accepted by the Administrative Agent, in substantially the form of Exhibit 11.3(b) or any other form approved by the Administrative Agent). "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 1/2% plus the Federal Funds Rate for such day. "Base Rate Loan" means a Revolving Loan which bears interest based on the Base Rate. "Borrower" has the meaning specified in the recital of parties to this Credit Agreement. "Borrower Obligations" means, without duplication, all of the obligations of the Borrower to the Lenders and the Agents, whenever arising, under this Credit Agreement, the Notes or any of the other Credit Documents. "BTM" has the meaning specified in the recital of parties to this Credit Agreement. "Business Day" means any day other than a Saturday, a Sunday, a legal holiday or a day on which any Lender specifically or banking institutions generally are authorized or required by law or other governmental action to close in Atlanta, Georgia or New York, New York; provided that in the case of Eurodollar Loans, such day is also a day on which dealings between banks are carried on in Dollar deposits in the London interbank market. "Calculation Date" has the meaning set forth in the definition of Applicable Percentage. "Capitalization" means, with respect to the Borrower at any time, without duplication, the sum of (a) the aggregate of (i) the capital stock (but excluding treasury stock and capital stock subscribed and unissued), other equity accounts (including retained earnings, paid-in capital and accumulated other comprehensive income and loss) of the Borrower as the same appears on its balance sheet prepared in accordance with GAAP as of the date of determination, (ii) Affiliate Subordinated Indebtedness and (iii) the principal amount of Trust Preferred Obligations and Junior Subordinated Deferred Interest Debt Obligations; provided that the maturity date of such Trust Preferred Obligations and Junior Subordinated Deferred Interest Debt Obligations is subsequent to the latest Maturity Date applicable to any of the Commitments and Loans outstanding at such time and (b) the amount of all Indebtedness of the Borrower as of the same date; provided, that "Capitalization" shall not include any capital stock or other equity (including paid in capital and retained earnings, other than retained earnings which are permitted to be distributed by an Unrestricted Subsidiary to the Borrower) attributable, directly or indirectly, to an Unrestricted Subsidiary. "Cash Collateralize" means to pledge and deposit with or deliver to the Administrative Agent, for the benefit of the Issuing Bank and the Lenders, as collateral for the Letters of Credit Outstanding, cash or deposit account balances pursuant to documentation in form and substance satisfactory to the Administrative Agent and the Issuing Bank (which documents are hereby consented to by the Lenders). Derivatives of such term have corresponding meanings. "Change of Control" means the failure of The Southern Company, a Delaware corporation, to own more than 51% of the outstanding shares of the capital stock of the Borrower entitled to vote generally for the election of directors of the Borrower. "Citibank" has the meaning specified in the recital of parties to this Credit Agreement. "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, the obligation of such Lender to make Loans to the Borrower in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Lender's name on Schedule 1.1(b) or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Credit Agreement, and "Commitments" means, collectively, the sum of all Lenders' Commitments, which shall be equal to $400,000,000 as such amount may be otherwise reduced in accordance with Section 2.7 or increased in accordance with Section 2.9. "Commitment Percentage" means, for each Lender, the percentage identified as its Commitment Percentage opposite such Lender's name on Schedule 1.1(b) attached hereto, as such percentage may be modified by assignment in accordance with Section 11.3 or by increases in the Commitments pursuant to Section 2.9. "Competitive Bid" means an offer by a Lender to make a Competitive Bid Loan pursuant to the terms of Section 2.1(b). "Competitive Bid Fee" means a fee of $1,000 payable by the Borrower to the Administrative Agent in connection with a Competitive Bid Request pursuant to Section 2.1(b). "Competitive Bid Loan" means a loan made by a Lender in its discretion pursuant to the provisions of Section 2.1(b). "Competitive Bid Maturity Date" means, with respect to any Competitive Bid Loan, the maturity date specified for such Competitive Bid Loan pursuant to Section 2.1(b)(ii). "Competitive Bid Loan Notes" means the promissory notes of the Borrower in favor of each Lender evidencing the Competitive Bid Loans and substantially in the form of Exhibit 2.8(b), as such promissory notes may be amended, modified, supplemented or replaced from time to time. "Competitive Bid Rate" means, as to any Competitive Bid made by a Lender in accordance with the provisions of Section 2.1(b), the rate of interest offered by the Lender making the Competitive Bid. "Competitive Bid Request" means a request by the Borrower for Competitive Bids in the form of Exhibit 2.1(b). "Contracted Operating Cash Flows" means the projection done at the end of each fiscal quarter of the next four fiscal quarters of the Borrower's and its Subsidiaries' (other than Unrestricted Subsidiaries) total cash flow available for debt service from fixed-price capacity power contracts, each contract having a term from initial commencement to expiry of at least five years; provided, however, that up to 12.5% of the Contracted Operating Cash Flows may be derived from fixed-price capacity power contracts that have contract terms of at least two years but less than five years from initial commencement to expiry. The projection shall be consistent with financial reporting procedures of the Borrower. The term fixed-price capacity power contracts includes any power contract that states the base capacity price on a per unit basis (for example, in Dollars per megawatt) and which may allow for adjustments to that base price that are generally encompassed within the Borrower's or the electric generation industry's commercial expectations for a power contract of a similar duration (including but not limited to adjustments to accommodate changed capacity purchase levels, variations in expected or actual construction costs or demonstrated capability levels, changes in equipment or law and force majeure); provided, however, that a power contract will not be considered to be a fixed-price capacity power contract if a material portion of the capacity price varies based upon a market index for electric capacity or energy, fuel, weather or other factor that is external to the generating facility and the transaction between the Borrower and its customer. The method of calculating the energy price shall not be considered in assessing whether a power contract is a fixed-priced capacity power contract. "Controlled Group" means (a) the controlled group of corporations as defined in Section 414(b) of the Code and the applicable regulations thereunder or (b) 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, and all other related agreements and documents issued or delivered hereunder or thereunder or pursuant hereto or thereto. "Credit Extensions" means as of any day, the sum of (a) the principle balance of all Loans then outstanding plus (b) the amount of Letters of Credit Outstanding as of such day. "Debt Rating" means any credit rating of the Borrower by S&P or Moody's. "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. "Documentation Agents" means each of Bayerische Landesbank, ING Capital LLC and KBC Bank, N.V. in its capacity as Documentation Agent. "Dollars" and "$" means dollars in lawful currency of the United States of America. "Eligible Assignee" means (a) a Lender; (b) an Affiliate of a Lender; (c) an Approved Fund; or (d) any other Person (other than a natural Person) that (i) has a combined capital and surplus of at least $500,000,000 and (ii) is approved by (A) the Administrative Agent and (B) unless a Default or Event of Default has occurred and is continuing, the Borrower (each such approval not to be unreasonably withheld or delayed); provided that notwithstanding the foregoing, "Eligible Assignee" shall not include the Borrower or any of the Borrower's Affiliates or Subsidiaries. "Engagement Letter" means that certain letter agreement, dated as of May 3, 2005, among the Borrower and each of the Arrangers. "Environmental Law" means any federal, state, local or foreign statute, law, ordinance, rule, regulation, code, order, judgment, decree or judicial or agency interpretation, policy or guidance relating to pollution or protection of the environment, health, safety or natural resources, including, without limitation, those relating to the use, handling, transportation, treatment, storage, disposal, release or discharge of hazardous materials. "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 Loan" means a Revolving Loan bearing interest based on the Adjusted Eurodollar Rate. "Eurodollar Rate" means, with respect to any Eurodollar Loan, for the Interest Period applicable thereto, a rate per annum determined pursuant to the following formula: "Eurodollar Rate" = Interbank Offered Rate --------------- ---------------------- 1 - Eurodollar Reserve Percentage "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 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 Loans is determined), whether or not any Lender has any Eurodollar liabilities subject to such reserve requirement at that time. Eurodollar Loans shall be deemed to constitute Eurodollar 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. "Event of Default" has the meaning specified in Section 9.1. "Existing Credit Agreement" means that certain Amended and Restated Credit Agreement, dated as of April 17, 2003, among the Borrower, Citibank, as administrative agent, and certain lenders party thereto. "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 next preceding Business Day as so published on the next succeeding 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. "Fund" means any Person (other than a natural Person) that is, or will be, engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business. "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. "Guaranty Obligations" means, in respect of any Person, any legally enforceable obligation, contingent or otherwise, of such Person directly or indirectly guaranteeing any Indebtedness of another Person. "Indebtedness" means, as to any Person, without duplication: (i) all obligations of such Person for borrowed money or evidenced by bonds, debentures, notes or similar instruments; (ii) 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); (iii) all capital lease obligations of such Person; (iv) 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 such Person in entities other than the Borrower or any of its Subsidiaries) to the extent of the lesser of the value of the property subject to such Lien or the amount of such Indebtedness; (v) all Guaranty Obligations; and (vi) all non-contingent obligations of such Person under any letters of credit or bankers' acceptances. It is understood and agreed that Indebtedness (including Guaranty Obligations) shall not include (A) any Off Balance Sheet Indebtedness in existence as of the Closing Date and additional Off Balance Sheet Indebtedness in an amount not to exceed $150,000,000 in the aggregate at any time, other than obligations of any partnership or joint venture that are recourse to the Borrower or any of its Subsidiaries, (B) any refinancing of Off Balance Sheet Indebtedness described in subsection (A) above in a principal amount not in excess of that outstanding as of the date of refinancing, (C) any project Indebtedness incurred by Subsidiaries of the Borrower to the extent such Indebtedness is non-recourse to the Borrower or (D) any Indebtedness with respect to Trust Preferred Obligations and any Junior Subordinated Deferred Interest Debt Obligations, as long as the maturity date of such Trust Preferred Obligations and Junior Subordinated Deferred Interest Debt Obligations is subsequent to the latest Maturity Date of any of the Commitments and Loans as of any date of determination; provided that the amount of any mandatory principal amortization or defeasance of Trust Preferred Obligations or Junior Subordinated Deferred Interest Debt Obligations prior to the Maturity Date shall be included in this definition of Indebtedness. "Interbank Offered Rate" means, with respect to any Eurodollar Loan for the Interest Period applicable thereto: (a) the rate per annum equal to the rate determined by the Administrative Agent to be the offered rate that appears on the page of the Telerate screen (or any successor thereto) that displays an average British Bankers Association Interest Settlement Rate for deposits in Dollars (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, determined as of approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, or (b) if the rate referenced in the preceding clause (a) does not appear on such page or service or such page or service shall not be available, the rate per annum equal to the rate determined by the Administrative Agent to be the offered rate on such other page or other service that displays an average British Bankers Association Interest Settlement Rate for deposits in Dollars (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, determined as of approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, or (c) if the rates referenced in the preceding clauses (a) and (b) are not available, the rate per annum determined by the Administrative Agent as the rate of interest at which deposits in Dollars for delivery on the first day of such Interest Period in same day funds in the approximate amount of the Eurodollar Loan being made, continued or converted by the Administrative Agent and with a term equivalent to such Interest Period would be offered to leading banks in the London interbank eurodollar market at their request at approximately 4:00 p.m. (London time) two Business Days prior to the first day of such Interest Period. "Interest Payment Date" means (a) as to any Base Rate Loan, the last day of each fiscal quarter of the Borrower and the Maturity Date applicable to such Base Rate Loan, (b) as to any Eurodollar Loan, the last day of each applicable Interest Period and the Maturity Date applicable to such Eurodollar Loan and (c) as to any Competitive Bid Loan, the last day of the Interest Period for such Competitive Bid Loan and the Competitive Bid Maturity Date applicable to such Competitive Bid Loan. In addition, where the applicable Interest Period for a Eurodollar Loan is greater than three months or the applicable Interest Period for a Competitive Bid Loan is greater than 90 days, then an Interest Payment Date shall also occur on the last day of each three-month period during such Interest Period. 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 Loans where the next succeeding Business Day falls in the next succeeding calendar month, then on the next preceding Business Day. "Interest Period" means (a) as to each Eurodollar Loan, a period of one, two, three, six, nine or 12 months' duration, as the Borrower may elect and as may be available, with respect to durations of six months or less, and as consented to by all Lenders, with respect to durations of nine or 12 months, commencing, in each case, on the date of the borrowing (including continuations and conversions of Eurodollar Loans) and (b) with respect to each Competitive Bid Loan, each of the Interest Periods specified for such Competitive Bid Loan pursuant to Section 2.2(b)(ii), each of which Interest Periods shall not in any event be less than seven days' duration; 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 on the next preceding Business Day), (ii) no Interest Period shall extend beyond the Competitive Bid Maturity Date or Maturity Date applicable to the relevant Loan and (iii) with respect to Eurodollar 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. "Issuing Bank" means BTM in its capacity as the issuer of Letters of Credit hereunder, and any successor to BTM in such capacity (which may only be a Lender, as selected by the Borrower and agreed by such Lender, with the Administrative Agent's consent, provided that such consent may not be unreasonably withheld). The Issuing Bank may, in its reasonable discretion, arrange for one or more Letters of Credit to be issued by Affiliates of the Issuing Bank, in which case the term "Issuing Bank" shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate. Each Issuing Bank shall act commercially reasonably. "Junior Subordinated Deferred Interest Debt Obligations" means deferrable interest debt obligations of the Borrower or one of its Subsidiaries that are subordinated with respect to right of payment on terms and conditions substantially similar to the Series F 7.125% Junior Subordinated Notes due June 30, 2042 issued by Southern Company Capital Funding, Inc. "L/C Cash Deposit Account" has the meaning specified in Section 2.10(i). "L/C Disbursement" means a payment made by the Issuing Bank pursuant to a Letter of Credit. "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 11.3. "Letter of Credit" means a letter of credit that is (a) issued by the Issuing Bank for the account of the Borrower and (b) in form and substance reasonably satisfactory to the Issuing Bank. "Letter of Credit Fees" means the fees payable in respect of Letters of Credit pursuant to Section 3.4(c). "Letter of Credit Request" means a request by the Borrower for the issuance of a Letter of Credit in the form of Exhibit 2.10. "Letters of Credit Outstanding" means, at any time, the sum of (a) with respect to Letters of Credit outstanding at such time, the aggregate maximum amount that then is or at any time thereafter may become available for drawing or payment thereunder plus (b) all amounts theretofore drawn or paid under Letters of Credit for which the Issuing Bank has not then been reimbursed. "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). "Loans" means the Revolving Loans and the Competitive Bid Loans. "Managing Agents" means each of Barclays Bank PLC, HSBC Bank USA, National Association, JPMorgan Chase Bank, N.A., Mizuho Corporate Bank, Ltd., The Bank of Nova Scotia, Scotiabanc Inc. and Wachovia Bank, N.A. in its capacity as Senior Managing Agent. "Material Adverse Effect" means a material adverse effect on (a) the operations, assets, financial condition or business of the Borrower, (b) the ability of the Borrower to perform its obligations under this Credit Agreement and the other Credit Documents or (c) the validity or enforceability of this Credit Agreement, any of the other Credit Documents, or the rights and remedies of the Lenders hereunder or thereunder; provided that neither a downgrade in any Debt Rating(s) nor the inability of the Borrower to place commercial paper shall, standing alone, constitute a Material Adverse Effect. "Maturity Date" means the earlier of (a) June 10, 2010, subject to the extension thereof pursuant to Section 2.2, and (b) the date of termination in whole of the aggregate Commitments pursuant to Section 2.7 or 9.2; provided, however, that the Maturity Date of any Lender that is a Refusing Lender to any requested extension pursuant to Section 2.2 shall be the Maturity Date in effect immediately prior to the applicable Anniversary Date for all purposes of this Credit Agreement; provided further that if any Maturity Date as determined hereunder falls on a day that is not a Business Day, such Maturity Date shall be deemed to fall on the next preceding Business Day. "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 Tangible Assets" means, as of any date, the total assets shown on the balance sheet of the Borrower and its Subsidiaries, determined on a consolidated basis in accordance with GAAP less (a) all current liabilities and minority interests and (b) goodwill and other identifiable intangibles. "Notes" means the Revolving Loan Notes and the Competitive Bid Loan Notes. "Notice of Borrowing" means a request by the Borrower for a Revolving Loan (or any continuation or conversion thereof) in the form of Exhibit 2.3. "Notice of Continuation/Conversion" means a request by the Borrower for the continuation or conversion of a Revolving Loan in the form of Exhibit 2.5. "Off-Balance Sheet Indebtedness" means any obligation of a Person that would be considered indebtedness for tax purposes but is not set forth on the balance sheet of such Person, including, but not limited to, (a) any synthetic lease, tax retention operating lease, off-balance sheet loan or similar off-balance sheet financing product of such Person, (b) the aggregate amount of uncollected accounts receivables of such Person subject at such time to a sale of receivables (or similar transaction) and (c) obligations of any partnership or joint venture that is recourse to such Person. "Other Taxes" has the meaning set forth in Section 4.4(b). "Participation Purchaser" has the meaning assigned to such term in Section 11.3(d). "PBGC" means the Pension Benefit Guaranty Corporation established under ERISA, and any successor thereto. "Pension Plan" means any "pension plan" as defined in Section 3(2) of ERISA which is maintained for the employees of the Borrower or any Subsidiary of the Borrower. "Person" means any individual, partnership (general or limited), limited liability company, joint venture, firm, corporation, 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 and to which ERISA applies, 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 an ERISA Affiliate. "Prime Rate" means the per annum rate of interest established from time to time by the Administrative Agent at its principal office in New York, New York as its "prime rate". Such rate is a rate set by the Administrative Agent based upon various factors including the Administrative Agent's costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above or below such announced rate. Any change in the interest rate resulting from a change in the Prime Rate shall become effective as of the opening of business on the day on which such change in the Prime Rate is announced by the Administrative Agent. "PUHCA" means the Public Utility Holding Company Act of 1935, as amended. "Refund" has the meaning specified in Section 4.4(c). "Refusing Lenders" has the meaning specified in Section 2.2. "Regulation D, U or X" means Regulation D, 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, at any time, 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 means (a) at any time prior to the termination of the Commitments, an amount equal to the Commitment of such Lender and (b) at any time after the termination of the Commitments, the outstanding amount of Revolving Loans owed to such Lender. "Revolving Loan Notes" means the promissory notes of the Borrower in favor of each Lender evidencing the Revolving Loans and substantially in the form of Exhibit 2.8(a), as such promissory notes may be amended, modified, supplemented or replaced from time to time. "Revolving Loans" means the revolving Loans made by the Lenders to the Borrower pursuant to Section 2.1(a). "S&P" means Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc., or any successor or assignee of the business of such division in the business of rating securities. "Senior Debt Rating" means the long-term senior unsecured, non-credit enhanced debt rating of the Borrower by each of S&P and Moody's. "Significant Subsidiary" means a Subsidiary of the Borrower which represents more than 10% of the Borrower's assets on a consolidated basis. "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, limited liability company, association, joint venture or other entity in which such Person directly or indirectly through Subsidiaries has more than 50% equity interest at any time. "Syndication Agent" has the meaning specified in the recital of parties to this Credit Agreement. "Taxes" has the meaning set forth in Section 4.4(a). "Total Operating Cash Flows" means the projection done at the end of each fiscal quarter of the next four fiscal quarters of the Borrower's and its Subsidiaries' (other than Unrestricted Subsidiaries) total cash flow available for debt service, as projected consistent with the Borrower's financial reporting procedures. "Trust Preferred Obligations" means any securities issued by a trust or other special purpose entity in connection with the issuance of Junior Subordinated Deferred Interest Debt Obligations that are substantially similar to the 7.125% Trust Preferred Securities issued by Southern Company Capital Trust VI. "Unrestricted Subsidiary" means any Subsidiary of the Borrower all the Indebtedness of which (a) is nonrecourse to the Borrower or any of its Subsidiaries (other than any other Unrestricted Subsidiary), other than with respect to stock or other ownership interest of the Borrower or any of its Subsidiaries in such Subsidiary, and (b) is not secured by any property of the Borrower or any of its Subsidiaries (other than the property of, or stock or other ownership interest in, an Unrestricted Subsidiary). "Unused Fees" has the meaning set forth in Section 3.4(a). "Unused Revolving Loan Commitment" means, for any period from the Closing Date to the final Maturity Date, the amount by which (a) the average aggregate amount of the Commitments for such period exceeds (b) the daily average sum for such period of the aggregate principal amount of all Revolving Loans outstanding. "Utilization Fees" has the meaning set forth in Section 3.4(b). "Utilized Revolving Loan Commitment" means, for any period from the Closing Date to the final Maturity Date, the amount equal to the daily average sum for such period of the aggregate principal amount of all Loans outstanding. 1.2 Computation of Time Periods and 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 "Articles", "Sections", "Schedules" or "Exhibits" shall be to Articles, Sections, Schedules or Exhibits of or to this Credit Agreement unless otherwise specifically provided. 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 7.1 (or, prior to the delivery of the first financial statements pursuant to Section 7.1, consistent with the financial statements described in Section 5.1(e)); 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. Section 2 LOANS AND LETTERS OF CREDIT 2.1 Commitment of the Lenders. (a) Extensions of Credit. Subject to the terms and conditions set forth herein, each Lender severally agrees to extend credit to the Borrower, on a revolving basis, in the form of revolving loans to the Borrower (each, a "Revolving Loan" and collectively, the "Revolving Loans") and Letters of Credit, each in Dollars, at any time and from time to time, during the period from the Closing Date until the Maturity Date applicable to the Commitment and Loans of such Lender; provided, however, that (i) the aggregate amount of the Credit Extensions (after giving effect to such extension of credit) outstanding shall not exceed the aggregate amount of the Commitments of the Lenders then in effect; (ii) Letters of Credit shall be available from the Issuing Bank, subject to the ratable participation of all Lenders, as set forth in Section 2.10; (iii) the aggregate amount of Letters of Credit Outstanding shall not at any time exceed the lesser of (A) $100,000,000 and (B) the aggregate amount of the Commitments of the Lenders then in effect; and (iv) with respect to each individual Lender, the Lender's pro rata share of outstanding Credit Extensions shall not exceed such Lender's Commitment Percentage of the aggregate amount of Commitments then in effect. Within the limits of each Lender's Commitment, the Borrower may borrow, repay and reborrow pursuant to the terms of this Credit Agreement. (b) Competitive Bid Loans Subfacility. (i) Competitive Bid Loans. Subject to the terms and conditions set forth herein, the Borrower may, from time to time, during the period from the Closing Date to the relevant Maturity Date, request, in Dollars, and each Lender may, in its sole discretion, agree to make Competitive Bid Loans to the Borrower; provided, however, that (A) the sum of the aggregate amount of Credit Extensions outstanding shall not exceed the aggregate amount of the Commitments then in effect and (B) if a Lender does make a Competitive Bid Loan it shall not reduce such Lender's obligation to make its pro rata share of any Revolving Loan or fund participations in L/C Disbursements. (ii) Competitive Bid Requests. The Borrower may solicit Competitive Bids by delivery of a Competitive Bid Request to the Administrative Agent by 10:00 a.m. on a Business Day not less than one nor more than five Business Days prior to the date of the requested Competitive Bid Loan. A Competitive Bid Request must be substantially in the form of Exhibit 2.1(b) and shall specify (A) the date of the requested Competitive Bid Loan (which shall be a Business Day), (B) the aggregate amount of the requested Competitive Bid Loan, (C) the applicable Interest Period or Interest Periods requested, (D) the maturity date for repayment of the requested Competitive Bid Loan (which Maturity Date may not be earlier than the date occurring seven days after the date on which such requested Competitive Bid Loan is to be made and no later than the Maturity Date) and (E) other terms (if any) and must be accompanied by the Competitive Bid Fee. The Administrative Agent shall notify the Lenders of its receipt of a Competitive Bid Request and the contents thereof and invite the Lenders to submit Competitive Bids in response thereto. The Borrower may not request a Competitive Bid for more than three different Interest Periods per Competitive Bid Request and Competitive Bid Requests may be made no more frequently than four times every calendar month. (iii) Competitive Bid Procedure. Each Lender may, in its sole discretion, make one or more Competitive Bids to the Borrower in response to a Competitive Bid Request. Each Competitive Bid must be received by the Administrative Agent not later than 10:00 a.m. on the proposed date of the requested Competitive Bid Loan; provided, however, that should the Administrative -------- ------- Agent, in its capacity as a Lender, desire to submit a Competitive Bid it shall notify the Borrower of its Competitive Bid and the terms thereof not later than 15 minutes prior to the time the other Lenders are required to submit their Competitive Bid. A Lender may offer to make all or part of the requested Competitive Bid Loan and may submit multiple Competitive Bids in response to a Competitive Bid Request. Any Competitive Bid must specify (A) the particular Competitive Bid Request as to which the Competitive Bid is submitted, (B) the minimum (which shall be not less than $5,000,000 and integral multiples of $1,000,000 in excess thereof) and maximum principal amounts of the requested Competitive Bid Loan or Loans that the Lender is willing to make and (C) the applicable interest rate or rates and Interest Period or Interest Periods therefor. A Competitive Bid submitted by a Lender in accordance with the provisions hereof shall be irrevocable. The Administrative Agent shall promptly notify the Borrower of all Competitive Bids made and the terms thereof. The Administrative Agent shall send a copy of each of the Competitive Bids to the Borrower and each of the Lenders for its records as soon as practicable. (iv) Acceptance of Competitive Bids. The Borrower may, in its sole discretion, subject only to the provisions of this subsection (iv), accept or refuse any Competitive Bid offered to it. To accept a Competitive Bid, the Borrower shall give oral notification of its acceptance of any or all such Competitive Bids (which shall be promptly confirmed in writing) to the Administrative Agent by 11:00 a.m. on the proposed date of the Competitive Bid Loan; provided, however, (A) the failure by the Borrower to give timely notice of its acceptance of a Competitive Bid shall be deemed to be a refusal thereof, (B) to the extent Competitive Bids are for comparable Interest Periods, the Borrower may accept Competitive Bids only in ascending order of rates, (C) the aggregate amount of Competitive Bids accepted by the Borrower shall not exceed the principal amount specified in the Competitive Bid Request, (D) if the Borrower shall accept a bid or bids made at a particular Competitive Bid Rate, but the amount of such bid or bids shall cause the total amount of bids to be accepted by the Borrower to be in excess of the amount specified in the Competitive Bid Request, then the Borrower shall accept a portion of such bid or bids in an amount equal to the amount specified in the Competitive Bid Request less the amount of all other Competitive Bids accepted with respect to such Competitive Bid Request, which acceptance in the case of multiple bids at such Competitive Bid Rate, shall be made pro rata in accordance with the amount of each such bid at such Competitive Bid Rate and (E) no bid shall be accepted for a Competitive Bid Loan unless such Competitive Bid Loan is in a minimum principal amount of $5,000,000 and integral multiples of $1,000,000 in excess thereof, except that where a portion of a Competitive Bid is accepted in accordance with the provisions of clause (D) of this subsection (iv), then in a minimum principal amount of $500,000 and integral multiples of $100,000 in excess thereof (but not in any event less than the minimum amount specified in the Competitive Bid), and in calculating the pro rata allocation of acceptances of portions of multiple bids at a particular Competitive Bid Rate pursuant to clause (D) of this subsection (iv), the amounts shall be rounded to integral multiples of $100,000 in a manner which shall be in the discretion of the Borrower. A notice of acceptance of a Competitive Bid given by the Borrower in accordance with the provisions hereof shall be irrevocable. The Administrative Agent shall, not later than noon on the proposed date of such Competitive Bid Loan, notify each bidding Lender whether or not its Competitive Bid has been accepted (and, if so, in what amount and at what Competitive Bid Rate), and each successful bidder will thereupon become bound, subject to the other applicable conditions hereof, to make the Competitive Bid Loan in respect of which its bid has been accepted. (v) Funding of Competitive Bid Loans. Each Lender which is to make a Competitive Bid Loan shall make its Competitive Bid Loan available to the Administrative Agent by 2:00 p.m. on the date specified in the Competitive Bid Request by deposit of immediately available funds to the Administrative Agent at the Agent's Account. The Administrative Agent will, upon receipt, make the proceeds of such Competitive Bid Loans available to the Borrower. (vi) Maturity of Competitive Bid Loans. Each Competitive Bid Loan shall mature and be due and payable in full on the Competitive Bid Maturity Date applicable thereto. Unless the Borrower shall give notice to the Administrative Agent otherwise (or repays such Competitive Bid Loan), or a Default or Event of Default exists and is continuing, the Borrower shall be deemed to have requested Revolving Loans from all of the Lenders (in the amount of the maturing Competitive Bid Loan and accruing interest at the Base Rate), the proceeds of which will be used to repay such Competitive Bid Loan. 2.2 Extension of Maturity Date. (a) Not more than 60 days and not less than 30 days prior to each anniversary of the Closing Date (the "Anniversary Date"), the Borrower may request in writing that the Lenders extend each Maturity Date for an additional year (and the Administrative Agent shall promptly give the Lenders notice of any such request); provided, however, that in no event shall any Maturity Date be extended to a date later than the eighth anniversary of the Closing Date. Each Lender shall provide the Administrative Agent, not less than 15 days prior to the then current Anniversary Date, with written notice regarding whether it agrees to extend the Maturity Date of its Commitment. Each decision by a Lender shall be in its sole discretion and failure by a Lender to give timely written notice hereunder shall be deemed a decision by such Lender not to extend the Maturity Date of its Commitment and Loans. If each of the Lenders timely agrees in writing to extend the Maturity Date, then the Maturity Date shall be extended for an additional year pursuant to a duly written amendment of this Credit Agreement executed by the Administrative Agent, on behalf of the Lenders, and the Borrower. (b) If Lenders holding more than 50% of the Commitments but less than all of the Commitments timely agree in writing to extend the Maturity Date of their respective Commitments, then the Borrower may either: (i) notify the Administrative Agent in writing that it wishes to (and all Lenders that are not Refusing Lenders (as defined below) shall agree to) extend the Maturity Date applicable to the Commitments and Loans of those Lenders that are not Refusing Lenders; provided that the Maturity Date shall not be extended as to any Refusing Lender; or (ii) acknowledge in writing that the Maturity Date will not be extended. (c) In the event that the Borrower elects to extend the Maturity Date pursuant to Section 2.2(b)(i), then the Borrower may, on or before the then current Anniversary Date, request, at its own discretion and its own expense, that any of the Lenders that fail to agree to extend the Maturity Dates of their respective Commitments (each, a "Refusing Lender") (and each Refusing Lender shall be required to transfer and assign upon such request) transfer and assign in whole (but not in part), without recourse (in accordance with and subject to the terms of Section 11.3(b)), all of its interests, rights and obligations under this Credit Agreement to an Eligible Assignee or Eligible Assignees (which may be one or more existing Lenders if any existing Lender accepts such assignment); provided that (A) such assignment or assignments shall not conflict with any law, rule, regulation or order of any court or other Governmental Authority, (B) the Borrower or such Eligible Assignee or Eligible Assignees shall pay to the Refusing Lenders in immediately available funds the principal of and interest accrued to the date of such payment on the portion of the Loans hereunder held by such Refusing Lenders and all other amounts owed to such Refusing Lenders hereunder, as well as any transfer fee owing to the Administrative Agent under Section 11.3(b) and (C) such transfer and assignment must occur on or prior to the then current Anniversary Date. (d) If the Maturity Date is extended in accordance with clause (a) or (b)(i) of this Section 2.2, then the Borrower shall pay to the Administrative Agent, for the pro rata benefit of the Lenders (other than the Refusing Lenders), a Maturity Date extension fee. 2.3 Method of Borrowing for Revolving Loans. By no later than 11:00 a.m. (a) on the date of the requested borrowing of Revolving Loans that will be Base Rate Loans or (b) three Business Days prior to the date of the requested borrowing of Revolving Loans that will be Eurodollar Loans, the Borrower shall submit a written Notice of Borrowing in the form of Exhibit 2.3 to the Administrative Agent setting forth (i) the amount requested, (ii) whether such Revolving Loans shall accrue interest at the Base Rate or the Adjusted Eurodollar Rate, (iii) with respect to Revolving Loans that will be Eurodollar Loans, the Interest Period applicable thereto and (iv) certification that the Borrower has complied in all respects with Section 5.2. 2.4 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 such Lender shall make its Commitment Percentage of the requested 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 to the Administrative Agent at the Agent's Account. The amount of the requested Revolving Loans will then be made available to the Borrower by the Administrative Agent by crediting the account of the Borrower on the books of such office of the Administrative Agent, to the extent the amount of such Revolving Loans are made available to the Administrative Agent. No Lender shall be responsible for the failure or delay by any other Lender in its obligation to make Revolving 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 date of any such Revolving Loan that such Lender does not intend to make available to the Administrative Agent its portion of the Revolving 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 Revolving Loans, and the Administrative Agent in reliance upon such assumption, may (in its sole discretion but 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 (i) from the Borrower at the applicable rate for such Revolving Loan pursuant to the Notice of Borrowing and (ii) from a Lender at the Federal Funds Rate. 2.5 Continuations and Conversions. The Borrower shall have the option, on any Business Day, to continue existing Eurodollar Loans for a subsequent Interest Period, to convert Base Rate Loans into Eurodollar Loans or to convert Eurodollar Loans in Dollars into Base Rate Loans; provided, however, that (a) each such continuation or conversion must be requested by the Borrower pursuant to a written Notice of Continuation/Conversion, in the form of Exhibit 2.5, in compliance with the terms set forth below, (b) except as provided in Section 4.1, Eurodollar Loans may only be continued or converted into Base Rate Loans on the last day of the Interest Period applicable hereto, (c) upon the occurrence of an Event of Default, any Eurodollar Loan then outstanding shall automatically be converted into a Base Rate Loan at the end of the Interest Period then in effect for such Eurodollar Loan, (d) Base Rate Loans may not be converted into Eurodollar Loans during the existence and continuation of a Default or Event of Default and (e) any request to extend a Eurodollar Loan that fails to comply with the terms hereof or any failure to request an extension of a Eurodollar Loan at the end of an Interest Period shall constitute a conversion, in each case, to a Base Rate Loan on the last day of the applicable Interest Period. Each continuation or conversion must be requested by the Borrower no later than 11:00 a.m. (i) on the date for a requested conversion of a Eurodollar Loan to a Base Rate Loan or (ii) three Business Days prior to the date for a requested continuation of a Eurodollar Loan or conversion of a Base Rate Loan to a Eurodollar Loan, in each case pursuant to a written Notice of Continuation/Conversion submitted to the Administrative Agent which shall set forth (A) whether the Borrower wishes to continue or convert such Loans and (B) if the request is to continue a Eurodollar Loan or convert a Base Rate Loan to a Eurodollar Loan, the Interest Period applicable thereto. 2.6 Minimum Amounts. Each request for a Revolving Loan or a conversion or continuation hereunder shall be subject to the following requirements: (a) each Revolving Loan shall be in a minimum of $5,000,000, and (b) no more than ten Eurodollar Loans shall be outstanding hereunder at any one time. For the purposes of this Section 2.6, all Eurodollar Loans with the same Interest Periods shall be considered as one Eurodollar Loan, but Eurodollar Loans with different Interest Periods, even if they begin on the same date, shall be considered separate Eurodollar Loans. Any Revolving Loan requested shall be in an integral multiple of $1,000,000, unless the request is for all of the remaining amount of the Commitments available to be borrowed. 2.7 Reductions of Revolving Loan Commitment. Upon at least three Business Days' prior written notice to the Administrative Agent (which notice shall be promptly transmitted by the Administrative Agent to each Lender), the Borrower shall have the right to permanently terminate or reduce the aggregate unused amount of the Commitments, 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 aggregate amount of the Commitments to an amount less than the then outstanding Credit Extensions. Any reduction in (or termination of) the Commitments shall be permanent and may not be reinstated except as permitted by Section 2.9. 2.8 Notes. (a) Revolving Loan Notes. The Revolving Loans made by the Lenders shall be evidenced by a promissory note of the Borrower payable to each Lender in substantially the form of Exhibit 2.8(a) (the "Revolving Loan Notes") and shall be delivered by the Borrower on the Closing Date and when a new Lender becomes a party hereto in accordance with Section 11.3(b). (b) Competitive Bid Loan Notes. The Competitive Bid Loans, if and when made by a Lender, shall be evidenced by a promissory note of the Borrower payable to such Lender in substantially the form of Exhibit 2.8(b) (the "Competitive Bid Loan Notes") and shall be delivered by the Borrower to such Lender on or before the date a Competitive Bid Loan is made. 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. 2.9 Increases in Revolving Loan Commitment. Prior to the latest applicable Maturity Date and upon at least 45 days' prior written notice to the Administrative Agent (which notice shall be promptly transmitted by the Administrative Agent to each Lender), the Borrower shall have the right, once during the term of this Credit Agreement and subject to the terms and conditions set forth below, to increase the aggregate amount of the Commitments; provided that (a) no Default or Event of Default shall exist at the time of the request or the proposed increase in the Commitments, (b) such increase must be in a minimum amount of $10,000,000 and in integral multiples of $1,000,000 above such amount, (c) the Commitments shall not be increased by an amount greater than $100,000,000 without the prior written consent of the Required Lenders, (d) no individual Lender's Commitment may be increased without such Lender's written consent, (e) the Borrower shall execute and deliver such Revolving Loan Note(s) as are necessary to reflect the increase in the Commitments, (f) Schedule 1.1(b) shall be amended to reflect the revised Commitments and revised Commitment Percentages of the Lenders and (g) if any Revolving Loans are outstanding at the time of an increase in the Commitments, the Borrower will prepay (provided that any such prepayment shall be subject to Section 4.3) one or more existing Revolving Loans in an amount necessary such that after giving effect to the increase in the Commitments each Lender will hold its pro rata share (based on its share of the revised Commitments) of outstanding Revolving Loans. Any such increase in the aggregate amount of the Commitments shall apply to (x) the Commitment of one or more existing Lenders requested by the Borrower to participate in such increase that accepts such request in the Lender's sole discretion; provided that if more than one Lender wishes to participate, then such increase shall be allocated pro rata among such Lenders and any Eligible Assignee referred to in (y) below (based on the amount that each such Lender was willing to increase its Commitment) and/or (y) the creation of a new Commitment by one or more institutions that is not an existing Lender; provided that any such institution (A) must be an Eligible Assignee, (B) must be acceptable to the Administrative Agent, (C) must have a Commitment of at least $10,000,000 and (D) must become a Lender under this Credit Agreement by execution and delivery of an appropriate joinder agreement or of counterparts to this Credit Agreement in a manner acceptable to the Borrower and the Administrative Agent. 2.10 Letters of Credit. (a) Upon the terms and subject to the conditions herein set forth, the Borrower may request, in the form of a Letter of Credit Request, the Issuing Bank, at any time and from time to time after the date hereof, to issue, and the Issuing Bank shall issue, for the account of the Borrower one or more Letters of Credit; provided that no Letter of Credit shall be issued if after giving effect to such issuance (i) the aggregate Letters of Credit Outstanding shall exceed the lesser of (A) $100,000,000 and (B) the aggregate amount of the Commitments of the Lenders then in effect or (ii) the aggregate Credit Extensions (after giving effect to the issuance of such Letter of Credit) would exceed the aggregate amount of Commitments then in effect; and provided further that no Letter of Credit shall be issued if the Issuing Bank shall have received notice from the Administrative Agent or the Required Lenders that the conditions to such issuance have not been met. (b) Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i) the date one year after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, one year after such renewal or extension) and (ii) the date that is five Business Days prior to the latest applicable Maturity Date. (c) The Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. The Issuing Bank shall promptly notify the Administrative Agent and the Borrower by telephone (confirmed by telecopy) of such demand for payment and whether the Issuing Bank will make payment thereunder (which payment shall not be made until at least two Business Days after such notice from the Issuing Bank to the Borrower); provided that any failure to give or delay in giving such notice shall not relieve the Borrower of its obligation to reimburse the Issuing Bank and the Lenders with respect to any such payment. (d) Any L/C Disbursement shall be reimbursed by the Borrower in Dollars on the next Business Day of any such payment thereof by the Issuing Bank by paying to the Administrative Agent an amount equal to such drawing not later than 3:00 p.m., New York time, on such date; provided that the Borrower may, subject to the conditions to borrowing set forth herein, request in accordance with Section 2.3 that such payment be financed with a Revolving Loan in an equivalent amount and, to the extent so financed, the Borrower's obligation to make such payment shall be discharged and replaced by the resulting Revolving Loan; provided that if the Borrower fails to reimburse such Issuing Bank when due pursuant to this paragraph (d), then (i) Section 2.10(f) shall apply and (ii) interest shall accrue on the unpaid amount of the L/C Disbursement, from the date of such disbursement to but excluding the date the Borrower reimburses the Issuing Bank, at the rate per annum then applicable to Base Rate Loans, and such interest accrued shall be for the account of the Issuing Bank; provided further that interest accrued on and after the date of payment by any Lender pursuant to paragraph (g) of this Section to reimburse the Issuing Bank shall be for the account of such Lender to the extent of such payment. (e) Immediately upon the issuance of any Letter of Credit by the Issuing Bank (or the amendment of a Letter of Credit increasing the amount thereof), and without any further action on the part of the Issuing Bank, the Issuing Bank shall be deemed to have sold to each Lender, and each such Lender shall be deemed unconditionally and irrevocably to have purchased from the Issuing Bank, without recourse or warranty, an undivided interest and participation, to the extent of such Lender's Commitment Percentage, in such Letter of Credit, each drawing thereunder and the obligations of the Borrower under this Credit Agreement and the other Credit Documents with respect thereto. Upon any change in the Commitments pursuant to Sections 2.2, 2.7, 2.9 or 11.3 or any termination of the Commitment of any Refusing Lender on any Maturity Date occurring prior to the latest Maturity Date applicable to the Loans pursuant to Section 2.2, it is hereby agreed that with respect to all Letters of Credit Outstanding, there shall be an automatic adjustment to the participations hereby created to reflect the new Commitment of the assigning and assignee Lenders or the termination of the Commitment of any Refusing Lender on the Maturity Date applicable to such Refusing Lender. Any action taken or omitted by the Issuing Bank under or in connection with a Letter of Credit, if taken or omitted in the absence of gross negligence or willful misconduct, shall not create for the Issuing Bank any resulting liability to any Lender. (f) In the event that the Issuing Bank makes any L/C Disbursement and the Borrower shall not have reimbursed such amount in full to the Issuing Bank pursuant to Section 2.10(d), the Issuing Bank shall promptly notify the Administrative Agent, which shall promptly notify each Lender of such failure, and each Lender shall promptly and unconditionally pay to the Administrative Agent for the account of the Issuing Bank the amount of such Lender's Commitment Percentage of such unreimbursed payment in Dollars and in same day funds. If the Issuing Bank so notifies the Administrative Agent, and the Administrative Agent so notifies the Lenders prior to 11:00 a.m., New York time, on any Business Day, each such Lender shall make available to the Issuing Bank such Lender's Commitment Percentage of the amount of such payment on such Business Day in same day funds. If and to the extent such Lender shall not have so made its Commitment Percentage of the amount of such payment available to the Issuing Bank, such Lender agrees to pay to the Issuing Bank, forthwith on demand such amount, together with interest thereon, for each day from such date until the date such amount is paid to the Administrative Agent for the account of the Issuing Bank at the Federal Funds Rate. Each Lender agrees to fund its Commitment Percentage of such unreimbursed payment notwithstanding a failure to satisfy any applicable lending conditions or the provisions of Section 2.1 or Section 2.6, or the occurrence of the applicable Maturity Date. The failure of any Lender to make available to the Issuing Bank its Commitment Percentage of any payment under any Letter of Credit shall neither relieve any Lender of its obligation hereunder to make available to the Issuing Bank its Commitment Percentage of any payment under any Letter of Credit on the date required, as specified above, nor increase the obligation of such other Lender. Whenever any Lender has made payments to the Issuing Bank in respect of any reimbursement obligation for any Letter of Credit, such Lender shall be entitled to share ratably, based on its Commitment Percentage, in all payments and collections thereafter received on account of such reimbursement obligation. (g) Whenever the Borrower desires that the Issuing Bank issue a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of Credit), the Borrower shall give to the Issuing Bank and the Administrative Agent at least two Business Days' prior written (including telegraphic, telex, facsimile or cable communication) notice (or such shorter period as may be agreed upon in writing by the Issuing Bank and the Borrower) specifying the date on which the proposed Letter of Credit is to be issued, amended, renewed or extended (which shall be a Business Day), the stated amount of the Letter of Credit so requested, the expiration date of such Letter of Credit, the name and address of the beneficiary thereof, and the provisions thereof. (h) The obligations of the Borrower to reimburse the Issuing Bank for any L/C Disbursement shall be unconditional and irrevocable and shall be paid strictly in accordance with the terms of this Credit Agreement under all circumstances, including, without limitation: (i) any lack of validity or enforceability of any Letter of Credit; (ii) the existence of any claim, setoff, defense or other right which the Borrower may have at any time against a beneficiary of any Letter of Credit or against any of the Lenders, whether in connection with this Credit Agreement, the transactions contemplated herein or any unrelated transaction; (iii) any draft, demand, certificate or other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (iv) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of, or provide a right of setoff against, the Borrower's obligations hereunder; or (v) the fact that any Event of Default shall have occurred and be continuing. (i) If any Letters of Credit shall remain outstanding and partially or wholly undrawn on any Maturity Date applicable to the Commitments and Loans of any Refusing Lender, the Borrower shall immediately Cash Collateralize an amount equal to such Refusing Lender's Commitment Percentage of the amount of Letters of Credit Outstanding on such Maturity Date. The Borrower hereby grants to the Administrative Agent, for the benefit of the Issuing Bank and the Lenders, a security interest in all cash, deposit accounts and all balances therein and all proceeds of the foregoing which form part of the Cash Collateral. Cash Collateral shall be maintained in a blocked, non-interest bearing deposit account of the Administrative Agent (the "L/C Cash Deposit Account"). Amounts deposited into the L/C Cash Deposit Account pursuant to this Section 2.10(i) shall be made available to the Issuing Bank to the extent such Refusing Lender would have been required to make such amount available to the Issuing Bank in accordance with Section 2.10(f) if the Commitments of such Refusing Lender had not terminated on the relevant Maturity Date. After all relevant Letters of Credit shall have expired or been fully drawn upon and all other obligations of the Borrower thereunder shall have been paid in full, the balance, if any, in such L/C Cash Deposit Account shall be promptly returned to the Borrower. Section 3 PAYMENTS 3.1 Interest. (a) Interest Rate. (i) Each Base Rate Loan shall accrue interest at the Base Rate applicable to such Base Rate Loan. (ii) Each Eurodollar Loan shall accrue interest at the Adjusted Eurodollar Rate applicable to such Eurodollar Loan. (iii) Each Competitive Bid Loan shall accrue interest at the applicable Competitive Bid Rate with respect to such Competitive Bid 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 and any other amounts owing 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 a rate per annum equal to the rate for Revolving Loans that are Base Rate Loans plus 2% per annum). (c) Interest Payments. Interest on Loans shall be due and payable in arrears on each applicable 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 Loans may only be prepaid on two Business Days' prior written notice to the Administrative Agent and any prepayment of Eurodollar Loans will be subject to Section 4.3; (ii) each such partial prepayment of Loans shall be in the minimum principal amount of $5,000,000 and integral multiples of $1,000,000 in excess thereof; and (iii) Competitive Bid Loans may not be prepaid unless a breakage fee equal to the actual amount of damages suffered by the Lender whose Competitive Bid Loan is prepaid is paid to such Lender. 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 first to Base Rate Loans, then to Eurodollar Loans in direct order of Interest Period maturities, and then to Competitive Bid Loans pro rata among all Lenders holding same. (b) Mandatory Prepayments. (i) If at any time the amount of Revolving Loans outstanding plus the aggregate amount of Competitive Bid Loans outstanding plus the aggregate amount of Letters of Credit Outstanding exceeds the aggregate amount of the Commitments of the Lenders then in effect, the Borrower shall immediately make a principal payment to the Administrative Agent in the manner and in an amount such that the sum of the aggregate amount of Revolving Loans outstanding plus Competitive Bid Loans outstanding plus the aggregate amount of Letters of Credit Outstanding is less than or equal to the aggregate amount of the Commitments of the Lenders then in effect. (ii) Any prepayments made under this Section 3.2(b) shall be subject to Section 4.3 and shall be applied first to Base Rate Loans, then to Eurodollar Loans in direct order of Interest Period maturities, and then to Competitive Bid Loans pro rata among all Lenders holding same. 3.3 Payment in Full at Maturity. On each Maturity Date, the entire outstanding principal amount owing under the Credit Documents, together with accrued but unpaid interest and all other sums owing under the Credit Documents, shall be due and payable in full to the relevant Lenders, unless accelerated sooner pursuant to Section 9.2. 3.4 Fees. (a) Unused Fees. (i) In consideration of the Commitment being made available by each Lender 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 Applicable Percentage for Unused Fees multiplied by the Unused Revolving Loan Commitment (the "Unused Fees"). (ii) The accrued Unused Fees shall be due and payable in arrears fifteen days after the end of each fiscal quarter of the Borrower for the immediately preceding fiscal quarter (or portion thereof), beginning with the first of such dates to occur after the Closing Date, as well as on each Maturity Date. (b) Utilization Fees. (i) If on any day the aggregate outstanding principal amount of all Revolving Loans and Competitive Bid Loans exceeds the product of (A) 50% times (B) the aggregate amount of Commitments then in effect, the Borrower agrees to pay to the Administrative Agent, for the pro rata benefit of each Lender, a per annum fee equal to the Applicable Percentage for Utilization Fees multiplied by the Utilized Revolving Loan Commitment (the "Utilization Fees"). (ii) The accrued Utilization Fees shall be due and payable in arrears 15 days after the end of each fiscal quarter of the Borrower for the immediately preceding fiscal quarter (or portion thereof), beginning with the first of such dates to occur after the Closing Date, as well as on each Maturity Date. (c) Letter of Credit Fees. (i) The Borrower shall pay to the Administrative Agent, for the pro rata benefit of each Lender, in arrears 15 days after the end of each fiscal quarter and on each Maturity Date, a fee (each, a "Letter of Credit Fee") equal to the average face amount of the Letters of Credit Outstanding during such quarter times the then Applicable Percentage for Eurodollar Loans on or before each Maturity Date. Upon the occurrence and during the continuance of an Event of Default, the amount of any Letter of Credit Fees payable by the Borrower pursuant to this Section 3.4(c)(i) shall be increased by 2% per annum. (ii) The Borrower shall pay to the Issuing Bank, for its own account, and in addition to all Letter of Credit Fees otherwise provided for hereunder, (A) a fee in an amount equal to 0.125% per annum of the average face amount of any Letters of Credit Outstanding during each fiscal quarter, which shall be due and payable in arrears 15 days after the end of such quarter and on each Maturity Date, and (B) such fees and charges in connection with the issuance, negotiation, settlement, amendment and processing of each Letter of Credit issued by the Issuing Bank as are agreed upon between the Borrower and the Issuing Bank. (d) Administrative Fees. The Borrower agrees to pay to the Administrative Agent, for its own account, the administrative fee as agreed to between the Borrower and the Administrative Agent in the Engagement Letter. 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 made unconditionally and without deduction for any counterclaim, defense, recoupment or setoff. All such payments shall be received not later than 2:00 p.m. on the date when due in Dollars and in immediately available funds by the Administrative Agent at its offices in New York, New York. The Administrative Agent will distribute such payments made to the Lenders on the date of receipt if such payment is received prior to 2:00 p.m.; otherwise, the Administrative Agent will distribute such payments to the Lenders, and such payment will be credited to the Borrower, on the next succeeding Business Day. 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). Whenever any payment hereunder shall be stated to be due on a day which is not a Business Day, the due date thereof shall be extended to the next succeeding Business Day (subject to accrual of interest and fees for the period of such extension), except that, in the case of Eurodollar Loans (or interest payable with respect thereto), if the extension would cause the payment to be made in the next following calendar month, then such payment shall instead be made on the next preceding Business Day. 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 with respect to a Letter of Credit, each payment of Unused Fees, each payment of Utilization Fees, each payment of Letters of Credit Fees, each reduction of the Commitments, and each conversion or continuation of any Revolving Loans, shall be allocated pro rata among the Lenders in accordance with the respective Commitment Percentages; provided that if any Lender shall have failed to pay its applicable pro rata share of any Revolving Loan or L/C Disbursement and such amount was made available to the Borrower pursuant to Section 2.4 or 2.10, as applicable, then any amount to which such Lender would otherwise be entitled pursuant to this Section 3.6 shall instead be payable to the Administrative Agent until the share of such Revolving Loan not funded by such Lender has been repaid; provided further that, in the event that any amount paid to any Lender pursuant to this Section 3.6 is rescinded or must otherwise be returned by the Administrative Agent, each Lender shall, upon the request of the Administrative Agent, repay to the Administrative Agent the amount so paid to such Lender, with interest for the period commencing on the date such payment is returned by the Administrative Agent until the date the Administrative Agent receives such payment at a rate per annum equal to the Federal Funds Rate. 3.7 Computations of Interest and Fees. (a) Except for Base Rate Loans, 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 nonusurious 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 nonusurious amount, any such construction shall be subject to the provisions of this paragraph and such documents shall be automatically reduced to the maximum nonusurious 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 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 nonusurious 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 Loan or L/C Disbursement owing to such Lender under this Credit Agreement through the exercise of a right of setoff, 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 Lender shall promptly purchase from the other Lenders a participation in such Loans or L/C Disbursements, 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 setoff, 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, together with its pro rata share of any interest required to be paid by the Lender whose payment shall have been rescinded or otherwise restored. The Borrower agrees that any Lender so purchasing such a participation may, to the fullest extent permitted by law, exercise all rights of payment, including setoff, 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. Section 4 ADDITIONAL PROVISIONS REGARDING LOANS 4.1 Eurodollar Loans. (a) Unavailability. In the event that the Administrative Agent shall have determined in good faith (i) that Dollar deposits in the principal amounts requested with respect to a Eurodollar 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 written 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 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 Loans shall be deemed to be a request for conversion into or continuation of Base Rate Loans. (b) Change in Legality. 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 Borrower and to the Administrative Agent, such Lender may: (A) declare that Eurodollar Loans, and conversions to or continuations of Eurodollar Loans, will not thereafter be made by such Lender hereunder, whereupon any request by the Borrower for, or for conversion into or continuation of, Eurodollar 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 Loans made by it be converted to Base Rate Loans in which event all such Eurodollar 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 Loans that would have been made by such Lender or the converted Eurodollar Loans of such Lender shall instead be applied to repay the Base Rate Loans made by such Lender in lieu of, or resulting from the conversion of, such Eurodollar 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 Loan because of 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, 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), then the Borrower shall pay to such Lender within 15 days after demand, which demand shall contain the basis and calculations supporting such demand, 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 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 hereunder to a level below that which such Lender, or its parent corporation, could have achieved but for such adoption, effectiveness, change or compliance (taking into consideration such Lender's (or parent corporation's) policies with respect to capital adequacy), then the Borrower shall pay to such Lender within 15 days after demand, which demand shall contain the basis and calculations supporting such demand, such additional amount or amounts as will compensate such Lender for such reduction. Each determination by any such Lender of amounts owing under this Section 4.2 shall, absent manifest error, be conclusive and binding on the parties hereto. 4.3 Compensation. The Borrower shall compensate each Lender, within 15 days after demand, which demand shall contain the basis and calculations supporting such demand, for all reasonable losses, expenses and liabilities (including, without limitation, any loss, expense or liability incurred by reason of the liquidation or reemployment of deposits or other funds required by the Lender to fund its Eurodollar Loans) which such Lender may sustain: (a) if for any reason (other than a default by such Lender or the Administrative Agent) a borrowing, continuation or conversion of any Eurodollar Loan or Competitive Bid Loan does not occur on a date specified therefor in a Notice of Borrowing, Competitive Bid Request or Notice of Continuation/Conversion, as the case may be; (b) if any prepayment, repayment, continuation or conversion of any Eurodollar Loan or Competitive Bid Loan occurs on a date which is not the last day of an Interest Period applicable thereto, including, without limitation, in connection with any demand, acceleration, mandatory prepayment or otherwise (including any demand under this Section 4); (c) if the Borrower fails to repay any Eurodollar Loan or Competitive Bid Loans when required by the terms of this Credit Agreement; or (d) if the Borrower elects to cause a mandatory assignment of such Lender's Commitment pursuant to Section 4.5. Calculation of all amounts payable to a Lender under this Section 4.3 shall be made as though the Lender has actually funded its relevant Eurodollar Loan through the purchase of a Eurodollar deposit bearing interest at the Adjusted Eurodollar Rate (or at the margin set forth in the applicable Competitive Bid) in an amount equal to the amount of that Loan, having a maturity comparable to the relevant Interest Period and through the transfer of such Eurodollar deposit from an offshore office of that Lender to a domestic office of that Lender in the United States of America; provided, however, that each Lender may fund each of its Eurodollar Loans in any manner it sees fit and the foregoing assumption shall be utilized only for the calculation of amounts payable under this Section 4.3. Each determination and calculation hereunder shall be in good faith and shall be conclusive absent manifest error. 4.4 Taxes. (a) Tax Liabilities Imposed on a Lender. Any and all payments by the Borrower hereunder or under any of the Credit Documents shall be made, in accordance with the terms hereof and thereof, free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding taxes measured by net income and franchise taxes imposed on any Lender by the jurisdiction under the laws of which such Lender is organized or transacting business or any political subdivision thereof (all such non-excluded taxes, being hereinafter referred to as "Taxes"). If the Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder to any Lender, (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 4.4) such Lender receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions, (iii) the Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law, and (iv) the Borrower shall deliver to such Lender evidence of such payment to the relevant Governmental Authority. (b) Other Taxes. In addition, the Borrower agrees to pay, upon written notice from a Lender and prior to the date when penalties attach thereto, all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies of the United States or any state or political subdivision thereof or any applicable foreign jurisdiction that arise from any payment made hereunder or from the execution, delivery or registration of, or otherwise with respect to, this Credit Agreement (collectively, the "Other Taxes"). (c) Refunds. If a Lender or the Administrative Agent (as the case may be) shall become aware that it is entitled to claim a refund (or a refund in the form of a credit) (each, a "Refund") from a Governmental Authority (as a result of any error in the amount of Taxes or Other Taxes paid to such Governmental Authority or otherwise) of Taxes or Other Taxes which the Borrower has paid, or with respect to which the Borrower has paid additional amounts, pursuant to this Section 4.4, it shall promptly notify the Borrower in writing of the availability of such Refund and shall, within 30 days after receipt of written notice by the Borrower make a claim to such Governmental Authority for such Refund at the Borrower's expense if, in the judgment of such Lender or the Administrative Agent (as the case may be), the making of such claim will not be otherwise disadvantageous to it; provided that nothing in this subsection (c) shall be construed to require any Lender or the Administrative Agent to institute any administrative proceeding (other than the filing of a claim for any such Refund) or judicial proceeding to obtain such Refund. If a Lender or the Administrative Agent (as the case may be) receives a Refund from a Governmental Authority (as a result of any error in the amount of Taxes or Other Taxes paid to such Governmental Authority or otherwise) of any Taxes or Other Taxes which have been paid by the Borrower, or with respect to which the Borrower has paid additional amounts pursuant to this Section 4.4, it shall promptly pay to the Borrower the amount so received (but only to the extent of payments made, or additional amounts paid, by the Borrower under this Section 4.4 with respect to Taxes or Other Taxes giving rise to such Refund), net of all reasonable out-of-pocket expenses (including the net amount of taxes, if any, imposed on such Lender or the Administrative Agent with respect to such Refund) of such Lender or Administrative Agent, and without interest (other than interest paid by the relevant Governmental Authority with respect to such Refund); provided, however, that the Borrower, upon the request of such Lender or the Administrative Agent, agrees to repay the amount paid over to the Borrower (plus penalties, interest or other charges) to such Lender or the Administrative Agent in the event such Lender or the Administrative Agent is required to repay such Refund to such Governmental Authority. Nothing contained in this Section 4.4(c) shall require any Lender or the Administrative Agent to make available any of its tax returns (or any other information that it deems to be confidential or proprietary) or to alter its tax accounting practices. (d) Foreign Lender. Each Lender (which, for purposes of this Section 4.4, shall include any Affiliate of a Lender that makes any Eurodollar Loan pursuant to the terms of this Credit Agreement) that is not a "United States person" (as such term is defined in Section 7701(a)(30) of the Code) shall submit to the Borrower and the Administrative Agent on or before the Closing Date (or, in the case of a Person that becomes a Lender after the Closing Date by assignment, promptly upon such assignment), two duly completed and signed copies of (A) either (1) Form W-8BEN of the United States Internal Revenue Service, or a successor applicable form, entitling such Lender to a complete exemption from withholding on all amounts to be received by such Lender pursuant to this Credit Agreement and/or the Notes or (2) Form W-8ECI of the United States Internal Revenue Service, or an applicable successor form, relating to all amounts to be received by such Lender pursuant to this Credit Agreement and/or the Notes and, if applicable, (B) an Internal Revenue Service Form W-8 or W-9 entitling such Lender to receive a complete exemption from United States backup withholding tax. Each such Lender shall, from time to time after submitting either such form, submit to the Borrower and the Administrative Agent such additional duly completed and signed copies of such forms (or such successor forms or other documents as shall be adopted from time to time by the relevant United States taxing authorities) as may be (1) reasonably requested in writing by the Borrower or the Administrative Agent and (2) appropriate under then current United States laws or regulations. Upon the reasonable request of the Borrower or the Administrative Agent, each Lender that has not provided the forms or other documents as provided above, on the basis of being a United States person, shall submit to the Borrower and the Administrative Agent a certificate to the effect that it is such a "United States person." If and for any period during which the provisions of this Section 4.4(d) are not satisfied by or with respect to any such Lender, no provision of this Credit Agreement shall require the Borrower to indemnify with respect to any resulting withholding of United States taxes imposed on or with respect to such Lender as a result of such noncompliance for the periods to which such noncompliance relates, unless such noncompliance is directly attributable to a change in a law, rule or regulation issued by a Governmental Authority which results in the inability of such Lender to provide such form. Each such Lender shall indemnify and hold harmless (on an after-tax basis) the Borrower against any claim for United States withholding taxes which the Borrower fails to withhold on payments to such Lender as a direct result of the invalidity of any form provided to the Borrower by such Lender pursuant to this Section 4.4(d). 4.5 Mitigation; Mandatory Assignment. The Administrative Agent and each Lender shall use reasonable efforts to avoid or mitigate any increased cost or suspension of the availability of an interest rate under Sections 4.1 through 4.4 above to the greatest extent practicable (including transferring the Loans to another lending office or Affiliate of a Lender) unless, in the opinion of the Administrative Agent or such Lender, such efforts would be likely to have an adverse effect upon it. In the event that (a) a Lender makes a request to the Borrower for additional payments in accordance with Section 4.1, 4.2 or 4.4 or (b) a Lender is a Defaulting Lender, then, provided that no Default or Event of Default has occurred and is continuing at such time, the Borrower may, at its own expense (such expense to include any transfer fee payable to the Administrative Agent under Section 11.3(b) and any expense pursuant to this Section 4.5) and in its sole discretion, require such Lender to transfer and assign in whole (but not in part), without recourse (in accordance with and subject to the terms and conditions of Section 11.3(b)), all of its interests, rights and obligations under this Credit Agreement to an Eligible Assignee which shall assume such assigned obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (a) such assignment shall not conflict with any law, rule or regulation or order of any court or other Governmental Authority and (b) the Borrower or such assignee shall have paid to the assigning Lender in immediately available funds the principal of and interest accrued to the date of such payment on the portion of the Loans hereunder held by such assigning Lender and all other amounts owed to such assigning Lender hereunder, including amounts owed pursuant to Sections 4.1 through 4.4. In the event that, after ten Business Days of receiving written notice from the Borrower requiring any Lender to make such an assignment pursuant to this Section 4.5, such Lender fails to execute the agreements required under Section 11.3(b) in connection with such an assignment, then upon one Business Day's prior written notice from the Borrower to such Lender (with a copy furnished to the Administrative Agent), such agreements shall be deemed to have been executed by such Lender. Section 5 CONDITIONS PRECEDENT 5.1 Closing Conditions. The obligation of each Lender to enter into this Credit Agreement is subject to satisfaction of the following conditions on or prior to the Closing Date (in form and substance acceptable to the Lenders): (a) Executed Credit Documents. Receipt by the Administrative Agent of duly executed copies of (i) this Credit Agreement and (ii) the Revolving Loan Notes. (b) Officer's Certificate. Receipt by the Administrative Agent of a certificate of an officer of the Borrower stating that, as of the Closing Date, (i) there exists no Default or Event of Default, (ii) all representations and warranties contained herein and in the other Credit Documents are true and correct in all material respects and (iii) the Borrower is in compliance with the financial covenant set forth in Section 7.11, as demonstrated by the covenant calculations on a schedule attached thereto. (c) Opinions of Counsel. Receipt by the Administrative Agent of the following: (i) an opinion, or opinions, satisfactory to the Administrative Agent, addressed to the Administrative Agent and each of the Lenders from legal counsel to the Borrower; and (ii) an opinion of Shearman & Sterling LLP, counsel to the Administrative Agent, in form and substance satisfactory to the Administrative Agent. (d) Corporate Documents. Receipt by the Administrative Agent of the following: (i) Charter Documents. A certificate of an officer of the Borrower that there have been no amendments or documents granted by the office of the Secretary of State of the State of Delaware affecting the Certificate of Incorporation of the Borrower issued by the Secretary of State of the State of Delaware on January 8, 2001. (ii) Bylaws. A copy of the bylaws of the Borrower certified by a secretary or assistant secretary of the Borrower to be true and correct as of the Closing Date. (iii) Resolutions. Copies of resolutions of the Board of Directors of the Borrower approving and adopting the Credit Documents to which it is a party and the transactions contemplated therein and authorizing execution and delivery thereof, certified by a secretary or assistant secretary of the Borrower to be true and correct and in force and effect as of the Closing Date. (iv) Good Standing. Copies of (A) certificates of good standing, existence or its equivalent with respect to the Borrower certified as of a recent date by the appropriate Governmental Authorities of the state or other jurisdiction of incorporation and each other jurisdiction in which the failure to so qualify and be in good standing would have a Material Adverse Effect and (B) to the extent available, a certificate indicating payment of all corporate franchise taxes certified as of a recent date by the appropriate Governmental Authorities of the state or other jurisdiction of its incorporation and each other jurisdiction in which the failure to pay such franchise taxes would have a Material Adverse Effect. (v) Incumbency. An incumbency certificate of the Borrower, certified by a secretary or assistant secretary of the Borrower to be true and correct as of the Closing Date. (e) Financial Statements. Receipt by the Lenders of the consolidated audited financial statements of the Borrower dated as of December 31, 2004, including balance sheets and income and cash flow statements, in each case audited by independent public accountants of recognized standing and prepared in accordance with GAAP. (f) Fees and Expenses. Payment by the Borrower of all fees and expenses owed by it to the Lenders, the Arrangers and the Administrative Agent, including, without limitation, payment to the Administrative Agent of the fees agreed to between the Borrower and the Administrative Agent set forth in the Engagement Letter and payment to each of the Arrangers of the fees agreed to between the Borrower and each Arranger set forth in the respective fee letter between such Arranger and the Borrower. (g) Material Adverse Effect. No event or condition shall have occurred since the date of the financial statements delivered pursuant to Section 5.1(e) above that has had or would be likely to have a Material Adverse Effect. (h) Existing Credit Agreement. Receipt by the Administrative Agent of evidence that all obligations under the Existing Credit Agreement have been paid in full and all commitments thereunder terminated. (i) Account Designation Letter. The Administrative Agent shall have received the executed Account Designation Letter in the form of Schedule 1.1(a). (j) Other. Receipt by the Lenders of such other documents, instruments, agreements or information as reasonably requested by any Lender. 5.2 Conditions to Extensions of Credit. In addition to the conditions precedent stated elsewhere herein, the Lenders shall not be obligated to make any Loans, issue any Letters of Credit or extend any Maturity Date hereunder unless: (a) Request. The Borrower shall have timely delivered a duly executed and completed Notice of Borrowing, Letter of Credit Request, Competitive Bid Request or written request to extend any Maturity Date, as applicable, in conformance with all the terms and conditions of this Credit Agreement; (b) Representations and Warranties. The representations and warranties made by the Borrower in the Credit Documents are true and correct in all material respects at and as if made as of the date of the funding of each Loan, issuance of each Letter of Credit or each extension of any Maturity Date, and after giving effect to such Loan, Letter of Credit or extension, as applicable, and, with respect to each Loan, to the application of the proceeds therefrom; provided that the representations made pursuant to Sections 6.6, 6.8 and 6.9 shall only be made on the Closing Date and on the date of any extension of any Maturity Date; and (c) No Default. On the date of the funding of each Loan, issuance of each Letter of Credit or each extension of any Maturity Date, as applicable, no Default or Event of Default has occurred and is continuing or would be caused by making the requested Loans, including, without limitation, with respect to each Loan, the restrictions on (i) the amount of Credit Extensions that may be outstanding as set forth in Sections 2.1(a) and 2.1(b) and (ii) the use of proceeds set forth in Section 7.9. The delivery of each Notice of Borrowing, Letter of Credit Request or Competitive Bid Request, as applicable, shall constitute a representation and warranty by the Borrower of the correctness of the matters specified in subsections (b) and (c) above. Section 6 REPRESENTATIONS AND WARRANTIES The Borrower hereby represents and warrants to each Lender that: 6.1 Organization and Good Standing. Each of the Borrower and each Significant Subsidiary (a) is a corporation duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation, (b) is duly qualified and in good standing as a foreign corporation authorized to do business in every jurisdiction where the failure to so qualify would have a Material Adverse Effect and (c) has the requisite corporate power and authority to own its properties and to carry on its business as now conducted and as proposed to be conducted. 6.2 Due Authorization. The Borrower (a) has the requisite corporate power and authority to execute, deliver and perform this Credit Agreement and the other Credit Documents and to incur the obligations herein and therein provided for and (b) is duly authorized to, and has been authorized by all necessary corporate action to, execute, deliver and perform this Credit Agreement and the other Credit Documents. 6.3 No Conflicts. Neither the execution and delivery of the Credit Documents, nor the consummation of the transactions contemplated therein, nor performance of and compliance with the terms and provisions thereof by the Borrower will (a) violate or conflict with any provision of its certificate or articles of incorporation or bylaws, (b) violate, contravene or materially conflict with any law (including without limitation, PUHCA), regulation (including without limitation, Regulation D, U or X), order, writ, judgment, injunction, decree or permit applicable to it, (c) violate, contravene or materially conflict with contractual provisions of, or cause an event of default under, any indenture, loan agreement, mortgage, deed of trust, contract or other agreement or instrument to which it is a party or by which it may be bound, the violation of which could have a Material Adverse Effect or (d) result in or require the creation of any Lien upon or with respect to its properties. 6.4 Consents. No consent, approval, authorization or order of, or filing, registration or qualification with, any court or Governmental Authority or third party is required in connection with the execution, delivery or performance of this Credit Agreement or any of the other Credit Documents that has not been obtained. 6.5 Enforceable Obligations. This Credit Agreement and the other Credit Documents have been duly executed and delivered by the Borrower and constitute legal, valid and binding obligations of the Borrower enforceable against the Borrower in accordance with their respective terms, except as may be limited by bankruptcy or insolvency laws or similar laws affecting creditors' rights generally or by general equitable principles. 6.6 Financial Condition. The financial statements provided to the Lenders as described in Section 5.1(e): (a) fairly present the financial condition and operations of the Borrower as of the date thereof and (b) were prepared in accordance with GAAP. Since the date of such financial statements, there has been no change that has, or would be reasonably likely to have, a Material Adverse Effect. 6.7 No Default. No Default or Event of Default presently exists. 6.8 Indebtedness and Off-Balance Sheet Indebtedness. As of the Closing Date, the Borrower and its Subsidiaries have no Indebtedness except as disclosed in the financial statements referenced in Section 5.1(e) and as otherwise incurred in the ordinary course. Set forth on the Borrower's Annual Report on Form 10-K for the year ended December 31, 2004 and the Borrower's Quarterly Report on Form 10-Q for the quarter ended March 31, 2005 is a specific description of all material Off-Balance Sheet Indebtedness of the Borrower and its Subsidiaries as of the periods covered thereby. 6.9 Litigation. Except as disclosed in the Borrower's Annual Report on Form 10-K for the year ended December 31, 2004, in the Borrower's Quarterly Report on Form 10-Q for the quarter ended March 31, 2005 and in any Current Report on Form 8-K filed by the Borrower between December 31, 2004 and the Closing Date, there are no actions, suits or legal, equitable, arbitration or administrative proceedings, pending or, to the knowledge of the Borrower, threatened against the Borrower or a Significant Subsidiary, in which there is a reasonable possibility of an adverse decision which has had or would be reasonably expected to have a Material Adverse Effect. 6.10 Material Agreements. The Borrower is not in default in any respect under any contract, lease, loan agreement, indenture, mortgage, security agreement or other agreement or obligation to which it is a party or by which any of its properties is bound, which default has had or would be reasonably expected to have a Material Adverse Effect. 6.11 Taxes. The Borrower has filed, or caused to be filed, all material tax returns (federal, state, local and foreign) required to be filed and paid all amounts of taxes shown thereon to be due (including interest and penalties) and has paid all other taxes, fees, assessments and other governmental charges (including mortgage recording taxes, documentary stamp taxes and intangibles taxes) owing by it, except for such taxes (a) which are not yet delinquent or (b) that are being contested in good faith and by proper proceedings, and against which adequate reserves are being maintained in accordance with GAAP. The Borrower is not aware of any proposed material tax assessments against it. 6.12 ERISA. (a) No Reportable Event has occurred and is continuing with respect to any Plan; (b) no Plan has an accumulated funding deficiency determined under Section 412 of the Code; (c) no proceedings have been instituted, or, to the knowledge of the Borrower, planned to terminate any Plan; (d) neither the Borrower, nor any member of a Controlled Group, nor any duly appointed administrator of a Plan has instituted or intends to institute proceedings to withdraw from any Multiemployer Pension Plan (as defined in Section 3(37) of ERISA); and (e) each Plan has been maintained and funded in all material respects with its terms and with the provisions of ERISA applicable thereto. 6.13 Compliance with Law. The Borrower is in compliance with all laws, rules, regulations, orders and decrees applicable to it, or to its properties, unless such failure to comply would not have a Material Adverse Effect. 6.14 Use of Proceeds; Margin Stock. The proceeds of the Loans hereunder (a) will be used solely for the purposes specified in Section 7.9 and (b) will not be used in a manner that would cause a violation of Regulation U or Regulation X. 6.15 Government Regulation. The Borrower is a Subsidiary of a registered "holding company" within the meaning of that term under PUHCA. Any issuance of the Notes by the Borrower hereunder, the incurrence of the indebtedness contemplated by this Credit Agreement and the borrowing, repayment and reborrowing of Loans hereunder is permitted by PUHCA and requires no authorization or approval of any Governmental Authority other than such authorizations and approvals that already have been obtained. The Borrower is not an "investment company" registered or required to be registered under the Investment Company Act of 1940, as amended, or controlled by such a company. 6.16 Solvency. The Borrower is solvent. For purposes of the preceding sentence, "solvent" means (a) the fair saleable value (on a going concern basis) of the Borrower's assets exceed its liabilities, contingent or otherwise, fairly valued, (b) the Borrower will be able to pay its debts as they become due and (c) upon paying its debts as they become due, the Borrower will be left with reasonably sufficient capital to satisfy all of its current and reasonably anticipated obligations. Section 7 AFFIRMATIVE COVENANTS The Borrower hereby covenants and agrees that so long as this Credit Agreement is in effect and until the Loans and L/C Disbursements, together with interest, fees and other obligations hereunder, have been paid in full and the Commitments hereunder shall have terminated: 7.1 Information Covenants. The Borrower will furnish, or cause to be furnished, to the Administrative Agent: (a) Annual Financial Statements. As soon as available, and in any event within 120 days after the close of each fiscal year of the Borrower, a consolidated balance sheet and income statement of the Borrower and its Subsidiaries as of the end of such fiscal year, together with related statements of operations and retained earnings and of cash flows for such fiscal year, setting forth in comparative form figures for the preceding fiscal year, all such financial information described above to be in reasonable form and detail and audited by independent certified public accountants of recognized national standing reasonably acceptable to the Administrative Agent and whose opinion shall be to the effect that such financial statements have been prepared in accordance with GAAP (except for changes with which such accountants concur) and shall not be limited as to the scope of the audit or qualified as to going concern. (b) Quarterly Financial Statements. As soon as available, and in any event within 55 days after the close of each fiscal quarter of the Borrower (other than the fourth fiscal quarter), a consolidated balance sheet and income statement of the Borrower and its Subsidiaries as of the end of such fiscal quarter, together with related statements of operations and retained earnings and of cash flows for such fiscal quarter in each case setting forth in comparative form figures for the corresponding period of the preceding fiscal year, all such financial information described above to be in reasonable form and detail and reasonably acceptable to the Administrative Agent, and accompanied by a certificate of the chief financial officer of the Borrower to the effect that such quarterly financial statements fairly present in all material respects the financial condition of the Borrower and its Subsidiaries and have been prepared in accordance with GAAP, subject to changes resulting from audit and normal year-end audit adjustments. (c) Officer's Certificate. At the time of delivery of the financial statements provided for in Sections 7.1(a) and 7.1(b) above, a certificate of the chief financial officer of the Borrower, substantially in the form of Exhibit 7.1(c), (i) demonstrating compliance with the financial covenant contained in Section 7.11 by calculation thereof as of the end of each such fiscal period, (ii) providing Contracted Operating Cash Flows and Total Operating Cash Flows, each as of the end of such fiscal quarter, and (iii) stating that no Default or Event of Default exists, or if any Default or Event of Default does exist, specifying the nature and extent thereof and what action the Borrower proposes to take with respect thereto. (d) Reports. Promptly upon transmission or receipt thereof, copies of any filings and registrations with, and reports to or from, the Securities and Exchange Commission, or any successor agency, and copies of all financial statements, proxy statements, notices and reports as the Borrower shall send to its shareholders; provided that the Borrower shall not be required to send copies of its filings pursuant to PUHCA so long as the Borrower provides the Administrative Agent with a list of such filings on a quarterly basis. (e) Notices. Upon the Borrower obtaining knowledge thereof, the Borrower will give written notice to the Administrative Agent immediately of (i) the occurrence of an event or condition consisting of a Default or Event of Default, specifying the nature and existence thereof and what action the Borrower proposes to take with respect thereto, and (ii) the occurrence of any of the following with respect to the Borrower: (A) the pendency or commencement of any litigation, arbitral or governmental proceeding against the Borrower which, if adversely determined, is likely to have a Material Adverse Effect, (B) the institution of any proceedings against the Borrower with respect to, or the receipt of notice by the Borrower of potential liability or responsibility for, violation or alleged violation of any federal, state or local law, rule or regulation, the violation of which would likely have a Material Adverse Effect, or (C) any notice or determination concerning the imposition of any withdrawal liability by a Multiemployer Plan against the Borrower or any of its ERISA Affiliates, the determination that a Multiemployer Plan is, or is expected to be, in reorganization within the meaning of Title IV of ERISA or the termination of any Plan. (f) Other Information. With reasonable promptness upon any such request, such other information regarding the business, properties or financial condition of the Borrower as the Administrative Agent or any Lender may reasonably request. 7.2 Preservation of Existence and Franchises. The Borrower will, except as permitted by Section 8.2, do all things necessary to preserve and keep in full force and effect its existence, rights, franchises and authority. 7.3 Books and Records. The Borrower will keep complete and accurate books and records of its transactions in accordance with good accounting practices on the basis of GAAP (including the establishment and maintenance of appropriate reserves). 7.4 Compliance with Law. The Borrower will comply with all laws, rules, regulations and orders, and all restrictions imposed by all Governmental Authorities, applicable to it and its property if noncompliance with any such law, rule, regulation, order or restriction would be reasonably expected to have a Material Adverse Effect, such compliance to include, without limitation, ERISA and Environmental Laws. 7.5 Payment of Taxes. The Borrower will pay and discharge all taxes, assessments and governmental charges or levies imposed upon it, or upon its income or profits, or upon any of its properties, before they shall become delinquent; provided, however, that the Borrower shall not be required to pay any such tax, assessment, charge, levy, or claim which is being contested in good faith by appropriate proceedings and as to which adequate reserves therefor have been established in accordance with GAAP. 7.6 Insurance. The Borrower will at all times maintain in full force and effect insurance (including worker's compensation insurance, liability insurance, casualty insurance and business interruption insurance) in such amounts, covering such risks and liabilities and with such deductibles or self-insurance retentions as are in accordance with normal industry practice. 7.7 Performance of Obligations. The Borrower will perform in all material respects all of its obligations under the terms of all material agreements, indentures, mortgages, security agreements or other material debt instruments to which it is a party or by which it is bound. 7.8 ERISA. The Borrower and each ERISA Affiliate will (a) at all times make prompt payment of all contributions (i) required under all Pension Plans and (ii) required to meet the minimum funding standard set forth in ERISA with respect to each Plan; (b) promptly upon request, furnish the Administrative Agent and the Lenders copies of each annual report/return (Form 5500 Series), as well as all schedules and attachments required to be filed with the Department of Labor and/or the Internal Revenue Service pursuant to ERISA, and the regulations promulgated thereunder, in connection with each of its Pension Plans for each Plan Year (as defined in ERISA); (c) notify the Administrative Agent immediately of any fact, including, but not limited to, any Reportable Event arising in connection with any of its Plans, which might constitute grounds for termination thereof by the PBGC or for the appointment by the appropriate United States District Court of a trustee to administer such Plan, together with a statement, if requested by the Administrative Agent, as to the reason therefor and the action, if any, proposed to be taken in respect thereof; and (d) furnish to the Administrative Agent, upon its request, such additional information concerning any of its Plans as may be reasonably requested. The Borrower will not nor will it permit any ERISA Affiliate to (A) terminate a Plan if any such termination would have a Material Adverse Effect or (B) cause or permit to exist any Reportable Event under ERISA or other event or condition which presents a material risk of termination at the request of the PBGC if such termination would have a Material Adverse Effect. 7.9 Use of Proceeds. The proceeds of the Loans may be used solely (a) to provide credit support for the Borrower's commercial paper program or tax-exempt financings, (b) for working capital for the Borrower and (c) for other general corporate purposes, including, without limitation, acquisitions. 7.10 Audits/Inspections. Upon reasonable notice and during normal business hours, the Borrower will permit representatives appointed by the Administrative Agent, including, without limitation, independent accountants, agents, attorneys, and appraisers, to visit and inspect the Borrower's property, including its books and records, its accounts receivable and inventory, the Borrower's facilities and its other business assets, and to make photocopies or photographs thereof and to write down and record any information such representatives obtain and shall permit the Administrative Agent or its representatives to investigate and verify the accuracy of information provided to the Lenders and to discuss all such matters with the officers, employees and representatives of the Borrower. 7.11 Indebtedness to Capitalization. The ratio of (a) Indebtedness of the Borrower to (b) Capitalization shall at all times be less than or equal to ..65 to 1.0. Section 8 NEGATIVE COVENANTS The Borrower hereby covenants and agrees that so long as this Credit Agreement is in effect and until the Loans and L/C Disbursements, together with interest, fees and other obligations hereunder, have been paid in full and the Commitments hereunder shall have terminated: 8.1 Nature of Business. The Borrower will not alter the character of its business from that conducted as of the Closing Date. 8.2 Consolidation and Merger. The Borrower will not enter into any transaction of merger or consolidation or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution); provided that notwithstanding the foregoing provisions of this Section 8.2, the following actions may be taken if after giving effect thereto no Default or Event of Default exists: (a) a Subsidiary of the Borrower may be merged or consolidated with or into the Borrower; provided that the Borrower shall be the continuing or surviving corporation; and (b) the Borrower may merge or consolidate with any other Person (other than one of its Subsidiaries) if either (i) the Borrower shall be the continuing or surviving corporation or (ii) the Borrower shall not be the continuing or surviving corporation and the corporation so continuing or surviving (A) is a corporation organized and duly existing under the law of any state of the United States, (B) has (1) a long-term, senior, unsecured, non-credit enhanced debt rating of BBB- or better from S&P and Baa3 or better from Moody's or (2) a commercial paper rating of A-2 or better from S&P and P-2 or better from Moody's and (C) executes and delivers to the Administrative Agent and the Lenders an instrument in form satisfactory to the Required Lenders pursuant to which it expressly assumes the Loans and all of the other obligations of the Borrower under the Credit Documents and procures for the Administrative Agent and each Lender an opinion in form satisfactory to the Required Lenders and from counsel satisfactory to the Required Lenders in respect of the due authorization, execution, delivery and enforceability of such instrument and covering such other matters as the Required Lenders may reasonably request; provided that prior to any such merger or consolidation, the Borrower shall have delivered to the Administrative Agent a certificate demonstrating that, upon giving effect to such merger or consolidation on a pro forma basis, the Borrower will be in compliance with Section 7.11. 8.3 Sale or Lease of Assets. The Borrower will not convey, sell, lease, transfer or otherwise dispose of in one transaction or a series of transactions, all or substantially all of its business or assets whether now owned or hereafter acquired, except as permitted pursuant to Section 8.2. 8.4 Transactions with Affiliates. Except as otherwise required by law, the Borrower will not enter into any transaction or series of transactions, whether or not in the ordinary course of business, with any of its Affiliates other than on terms and conditions substantially as favorable as would be obtainable in a comparable arm's-length transaction with a Person other than an Affiliate. 8.5 Fiscal Year. The Borrower will not change its fiscal year (a) without prior written notification to the Lenders and (b) if such change would materially affect the Lenders' ability to read and interpret the financial statements delivered pursuant to Section 7.1 or calculate the financial covenant in Section 7.11. 8.6 Liens. The Borrower will not contract, create, incur, assume or permit to exist any Lien with respect to any of its property or assets of any kind (whether real or personal, tangible or intangible), whether now owned or hereafter acquired, securing any Indebtedness unless the Loans hereunder are equally and ratably secured with such other Indebtedness other than the following: (a) Liens securing Borrower Obligations, (b) Liens for taxes not yet due or Liens for taxes being contested in good faith by appropriate proceedings for which adequate reserves determined in accordance with GAAP have been established (and as to which the property subject to any such Lien is not yet subject to foreclosure, sale or loss on account thereof), (c) Liens in respect of property imposed by law arising in the ordinary course of business such as materialmen's, mechanics', warehousemen's, carrier's, landlords' and other nonconsensual statutory Liens which are not yet due and payable, which have been in existence less than 90 days or which are being contested in good faith by appropriate proceedings for which adequate reserves determined in accordance with GAAP have been established (and as to which the property subject to any such Lien is not yet subject to foreclosure, sale or loss on account thereof), (d) pledges or deposits made in the ordinary course of business to secure payment of worker's compensation insurance, unemployment insurance, pensions or social security programs, (e) Liens arising from good faith deposits in connection with or to secure performance of tenders, bids, leases, government contracts, performance and return-of-money bonds and other similar obligations incurred in the ordinary course of business (other than obligations in respect of the payment of borrowed money), (f) Liens arising from good faith deposits in connection with or to secure performance of statutory obligations and surety and appeal bonds (unless such Lien is in connection with a judgment that has caused an Event of Default pursuant to Section 9.1(g)), (g) easements, rights-of-way, restrictions (including zoning restrictions), minor defects or irregularities in title and other similar charges or encumbrances not, in any material respect, impairing the use of the encumbered property for its intended purposes, (h) judgment Liens that would not constitute an Event of Default, (i) Liens arising by virtue of any statutory or common law provision relating to banker's liens, rights of setoff or similar rights as to deposit accounts or other funds maintained with a creditor depository institution, (j) any Lien created or arising over any property which is acquired, constructed or created by the Borrower, but only if (i) such Lien secures only principal amounts (not exceeding the cost of such acquisition, construction or creation) raised for the purposes of such acquisition, construction or creation, together with any costs, expenses, interest and fees incurred in relation thereto or a guarantee given in respect thereof, (ii) such Lien is created or arises on or before 180 days after the completion of such acquisition, construction or creation and (iii) such Lien is confined solely to the property so acquired, constructed or created and any improvements thereto, (k) any Lien on any property or assets acquired from a corporation or other entity which is merged with or into the Borrower in accordance with Section 8.2, and is not created in anticipation of any such transaction (unless such Lien is created to secure or provide for the payment of any part of the purchase price of such corporation or other entity), (l) any Lien on any property or assets existing at the time of acquisition of such property or assets by the Borrower and which is not created in anticipation of such acquisition (unless such Lien was created to secure or provide for the payment of any part of the purchase price of such property or assets), (m) any extension, renewal or replacement (or successive extensions, renewals or replacements), as a whole or in part, of any Liens referred to in the foregoing clauses (a) through (l), for amounts not exceeding the principal amount of the Indebtedness secured by the Lien so extended, renewed or replaced, provided that such extension, renewal or replacement Lien is limited to all or a part of the same property or assets that were covered by the Lien extended, renewed or replaced (plus improvements on such property or assets) and (n) Liens on property, in addition to those otherwise permitted by clauses (a) through (m) above, securing, directly or indirectly, Indebtedness which does not exceed, in the aggregate at any one time outstanding, ten percent (10%) of Net Tangible Assets. 8.7 Minimum Contract Maintenance Covenant. The Borrower will not declare or pay any dividends or make any other distributions (except dividends payable or distributions made in shares of its common stock and dividends payable in cash in cases where, concurrently with the payment of the dividend, an amount in cash equal to the dividend is received by the Borrower as a capital contribution or as the proceeds of the issue and sale of shares of its common stock) on its common stock, or purchase or permit any of its Subsidiaries to purchase any shares of its common stock or make any payment on Affiliate Subordinated Indebtedness, unless (i) the percentage derived from dividing Contracted Operating Cash Flows by Total Operating Cash Flows is at least 80%, or (ii) the ratio of Indebtedness of the Borrower and its Subsidiaries (other than Unrestricted Subsidiaries) to Capitalization of the Borrower and its Subsidiaries (other than Unrestricted Subsidiaries) is .60 to 1.0. Section 9 EVENTS OF DEFAULT 9.1 Events of Default. An Event of Default shall exist upon the occurrence of any of the following specified events (each, an "Event of Default"): (a) Payment. The Borrower shall: (i) default in the payment when due of any principal of any of the Loans; or (ii) default, and such default shall continue for five or more Business Days, in the payment when due of any interest on the Loans or of any fees or other amounts owing hereunder, under any of the other Credit Documents or in connection herewith. (b) Representations. Any representation, warranty or statement made or deemed to be made by the Borrower herein, in any of the other Credit Documents, or in any statement or certificate delivered or required to be delivered pursuant hereto or thereto shall prove untrue in any material respect on the date as of which it was made or deemed to have been made. (c) Covenants. The Borrower shall: (i) default in the due performance or observance of any term, covenant or agreement contained in Sections 7.2, 7.3, 7.4, 7.9, 7.11 or 8.1 through 8.7, inclusive; or (ii) default in the due performance or observance by it of any term, covenant or agreement contained in Section 7.1(a), (b), (c) or (e) and such default shall continue unremedied for a period of ten Business Days after the earlier of an officer of the Borrower becoming aware of such default or written notice thereof given by the Administrative Agent; or (iii) default in the due performance or observance by it of any term, covenant or agreement (other than those referred to in subsections (a), (b), (c)(i) or (c)(ii) of this Section 9.1) contained in this Credit Agreement or any other Credit Document and such default shall continue unremedied for a period of at least 30 days after the earlier of an officer of the Borrower becoming aware of such default and written notice thereof given by the Administrative Agent. (d) Credit Documents. Any Credit Document shall fail to be in full force and effect or to give the Administrative Agent and/or the Lenders the rights, powers and privileges purported to be created thereby. (e) Bankruptcy, Etc. The occurrence of any of the following with respect to the Borrower or a Significant Subsidiary: (i) a court or governmental agency having jurisdiction in the premises shall enter a decree or order for relief in respect of the Borrower or a Significant Subsidiary in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or appoint a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Borrower or a Significant Subsidiary or for any substantial part of its property or ordering the winding up or liquidation of its affairs; or (ii) an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect is commenced against the Borrower or a Significant Subsidiary and such petition remains unstayed and in effect for a period of 60 consecutive days; or (iii) the Borrower or a Significant Subsidiary shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consent to the entry of an order for relief in an involuntary case under any such law, or consent to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of such Person or any substantial part of its property or make any general assignment for the benefit of creditors; or (iv) the Borrower or a Significant Subsidiary shall admit in writing its inability to pay its debts generally as they become due or any action shall be taken by such Person in furtherance of any of the aforesaid purposes. (f) Defaults under Other Agreements. With respect to any Indebtedness (other than the Indebtedness under this Credit Agreement) of the Borrower or a Significant Subsidiary in an aggregate principal amount in excess of $100,000,000, (i) the Borrower or such Significant Subsidiary shall (A) default in any payment (interest or principal) (beyond the applicable grace period with respect thereto, if any) with respect to any such Indebtedness, or (B) default (after giving effect to any applicable grace period) in the observance or performance of any covenant or agreement relating to such Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event or condition shall occur or condition exist, the effect of which default or other event or condition is to cause, or permit, the holder or holders of such Indebtedness (or trustee or agent on behalf of such holders) to cause any such Indebtedness to become due prior to its stated maturity; or (ii) any such Indebtedness shall be declared due and payable, or required to be prepaid other than by a regularly scheduled required prepayment, prior to the stated maturity thereof; or (iii) any such Indebtedness matures and remains unpaid. (g) Judgments. One or more judgments, orders, or decrees shall be entered against the Borrower or a Significant Subsidiary involving any liabilities of $100,000,000 or more, in the aggregate (to the extent not paid or covered by insurance provided by a carrier that has acknowledged coverage), and such judgments, orders or decrees shall continue unsatisfied, undischarged and unstayed for a period ending on the first to occur of (i) the last day on which such judgment, order or decree becomes final and unappealable and, where applicable, with the status of a judicial lien or (ii) 30 days. (h) ERISA. (i) The Borrower, or any member of the Controlled Group, shall fail to pay when due an amount or amounts aggregating in excess of $100,000,000 which it shall have become liable to pay under Title IV of ERISA; or (ii) notice of intent to terminate a Plan or Plans which in the aggregate have unfunded liabilities in excess of $100,000,000 (individually and collectively, a "Material Plan") shall be filed under Title IV of ERISA by the Borrower or any member of the Controlled Group, any plan administrator or any combination of the foregoing; or (iii) the PBGC shall institute proceedings under Title IV of ERISA to terminate, to impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or to cause a trustee to be appointed to administer any Material Plan; or (iv) a condition shall exist by reason of which the PBGC would be entitled to obtain a decree adjudicating that any Material Plan must be terminated; or (v) there shall occur a complete or partial withdrawal from, or a default, within the meaning of Section 4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans which could cause one or more members of the Controlled Group to incur a current payment obligation in excess of $100,000,000. (i) Change of Control. The occurrence of any Change of Control. 9.2 Acceleration; Remedies. Upon the occurrence of an Event of Default, and at any time thereafter unless and until such Event of Default has been waived by the Required Lenders (or the Lenders, if required by Section 11.6) or cured to the satisfaction of the Required Lenders (or the Lenders, if required by Section 11.6), the Administrative Agent may, with the consent of the Required Lenders or, in the case of clause (ii) or (iv), the Required Lenders or the Issuing Bank, and shall, upon the request and direction of the Required Lenders or, in the case of clause (ii) or (iv), the Required Lenders or the Issuing Bank, by written notice to the Borrower take any of the following actions without prejudice to the rights of the Administrative Agent or any Lender to enforce its claims against the Borrower, except as otherwise specifically provided for herein: (i) Termination of Commitments. Declare the Commitments terminated whereupon the Commitments shall be immediately terminated. (ii) Letters of Credit. Declare the obligation of the Issuing Bank to issue Letters of Credit to be terminated, whereupon the same shall forthwith terminate. (iii) Acceleration of Loans. Declare the unpaid principal of and any accrued interest in respect of all Loans and any and all other indebtedness or obligations of any and every kind owing by the Borrower to any of the Lenders or the Administrative Agent hereunder to be due whereupon the same shall be immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower. (iv) Cash Collateral. Require that the Borrower Cash Collateralize the Letters of Credit in an amount equal to the Letters of Credit Outstanding. (v) Enforcement of Rights. Enforce any and all rights and interests created and existing under the Credit Documents, including, without limitation, all rights of setoff. Notwithstanding the foregoing, if an Event of Default specified in Section 9.1(e) shall occur, then the Commitments and the obligation of the Issuing Bank to issue Letters of Credit shall automatically terminate, and all Loans, all accrued interest in respect thereof, all accrued and unpaid fees and other indebtedness or obligations owing to the Lenders and the Administrative Agent hereunder shall immediately become due and payable, in each case, without the giving of any notice or other action by the Administrative Agent, the Issuing Bank or the Lenders, and the obligation of the Borrower to Cash Collateralize the Letters of Credit pursuant to Section 9.2(iv) shall automatically become effective. Notwithstanding the fact that enforcement powers reside primarily with the Administrative Agent, the Issuing Bank and each Lender have, to the extent permitted by law, a separate right of payment and shall be considered a separate "creditor" holding a separate "claim" within the meaning of Section 101(5) of the Bankruptcy Code or any other insolvency statute. 9.3 Allocation of Payments after Event of Default. Notwithstanding any other provisions of this Credit Agreement, after the exercise of any remedies by the Administrative Agent or the Lenders pursuant to Section 9.2 (or after the Commitments shall automatically terminate, the Loans (with accrued interest thereon) and all other amounts under the Credit Documents shall automatically become due and payable in accordance with the terms of such Section and the Letters of Credit Outstanding shall automatically be required to be Cash Collateralized as set forth in Section 9.2), all amounts collected or received by the Administrative Agent, the Issuing Bank or any Lender on account of amounts outstanding under any of the Credit Documents shall be paid over or delivered as follows: FIRST, to the payment of all reasonable out-of-pocket costs and expenses (including without limitation reasonable attorneys' fees) of the Administrative Agent, the Issuing Bank or any of the Lenders in connection with enforcing the rights of the Administrative Agent, the Issuing Bank and the Lenders under the Credit Documents and any protective advances made by the Administrative Agent, the Issuing Bank or any of the Lenders, pro rata as set forth below; SECOND, to payment of any fees owed to the Administrative Agent, the Issuing Bank or any Lender, pro rata as set forth below; THIRD, to the payment of all accrued interest payable to the Lenders hereunder, pro rata as set forth below; FOURTH, to the payment of the outstanding principal amount of the Loans and all other obligations which shall have become due and payable under the Credit Documents; FIFTH, to the Administrative Agent for the account of the Issuing Bank, to Cash Collateralize the Letters of Credit Outstanding comprised of the aggregate undrawn amount of all outstanding Letters of Credit; and SIXTH, the payment of the surplus, if any, after all of the Borrower Obligations have been indefeasibly paid in full to whomever may be lawfully entitled to receive such surplus. Subject to Section 2.10(i), amounts used to Cash Collateralize the aggregate undrawn amount of Letters of Credit pursuant to clause Fifth above shall be applied to satisfy drawings under such Letters of Credit as they occur. If any amount remains on deposit as Cash Collateral after all Letters of Credit have either been fully drawn or expired, such remaining amount shall be applied in accordance with clause Sixth above. In carrying out the foregoing, (a) amounts received shall be applied in the numerical order provided until exhausted prior to application to the next succeeding category and (b) each of the Lenders shall receive an amount equal to its pro rata share (based on the proportion that the then outstanding Loans held by such Lender bears to the aggregate then outstanding Loans) of amounts available to be applied. Section 10 AGENCY PROVISIONS 10.1 Appointment. Each Lender hereby designates and appoints Citibank as Administrative Agent and BTM as Issuing Bank to act as specified herein and in the other Credit Documents, and each such Lender hereby authorizes the Agents, as an agent for such Lender, to take such action on its behalf under the provisions of this Credit Agreement and the other Credit Documents and to exercise such powers and perform such duties as are expressly delegated by the terms hereof and of the other Credit Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere herein and in the other Credit Documents, the Agents shall not have any duties or responsibilities, except those expressly set forth herein and therein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Credit Agreement or any of the other Credit Documents, or shall otherwise exist against the Agents. The provisions of this Section 10.1 are solely for the benefit of the Agents and the Lenders, and the Borrower shall not have any rights as a third-party beneficiary of the provisions hereof. In performing its functions and duties under this Credit Agreement and the other Credit Documents, each Agent shall act solely as an agent of the Lenders and does not assume and shall not be deemed to have assumed any obligation or relationship of agency or trust with or for the Borrower. Notwithstanding anything herein or in any of the Credit Documents to the contrary, no Lender that is listed as a "Co-Documentation Agent", a "Co-Managing Agent" or a "Co-Agent" (if any) herein shall have any functions, duties, obligations, responsibilities or liabilities, or serve in any capacity, hereunder or under any of the Credit Documents except as a Lender in accordance with the terms of the Credit Documents. The Administrative Agent shall, upon receipt thereof from the Borrower, promptly deliver to the Lenders copies of the financial statements received pursuant to Section 7.1. 10.2 Delegation of Duties. An Agent may execute any of its duties hereunder or under the other Credit Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. An Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care. 10.3 Exculpatory Provisions. No Agent-Related Person shall be (a) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection herewith or in connection with any of the other Credit Documents (except for its or such Person's own gross negligence or willful misconduct) or (b) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by the Borrower contained herein or in any of the other Credit Documents or in any certificate, report, statement or other document referred to or provided for in, or received by an Agent-Related Person under or in connection herewith, or in connection with, the other Credit Documents, or enforceability or sufficiency therefor of any of the other Credit Documents, or for any failure of the Borrower to perform its obligations hereunder or thereunder. No Agent-Related Person shall be responsible to any Lender for the effectiveness, genuineness, validity, enforceability, collectibility or sufficiency of this Credit Agreement or any of the other Credit Documents or for any representations, warranties, recitals or statements made herein or therein or made by the Borrower in any written or oral statement or in any financial or other statements, instruments, reports, certificates or any other documents in connection herewith or therewith furnished or made by an Agent-Related Person to the Lenders or by or on behalf of the Borrower to an Agent-Related Person or any Lender or be required to ascertain or inquire as to the performance or observance of any of the terms, conditions, provisions, covenants or agreements contained herein or therein or as to the use of the proceeds of the Loans or of the existence or possible existence of any Default or Event of Default or to inspect the properties, books or records of the Borrower. The Agents are not trustees for the Lenders and owe no fiduciary duty to the Lenders. 10.4 Reliance on Communications. An Agent shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to the Borrower, independent accountants and other experts selected by such Agent with reasonable care). An Agent may deem and treat the Lenders as the owner of its interests hereunder for all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with the Administrative Agent in accordance with Section 11.3(b). The Agents shall be fully justified in failing or refusing to take any action under this Credit Agreement or under any of the other Credit Documents unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Agents shall in all cases be fully protected in acting, or in refraining from acting, hereunder or under any of the other Credit Documents, in accordance with a request of the Required Lenders (or, to the extent specifically provided in Section 11.6, all the Lenders) and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders (including their successors and assigns). 10.5 Notice of Default. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless it has received notice from a Lender or the Borrower referring to the Credit Document, describing such Default or Event of Default and stating that such notice is a "notice of default." In the event that the Administrative Agent receives such a notice, the Administrative Agent shall give prompt notice thereof to the Lenders. The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be directed by the Required Lenders. 10.6 Non-Reliance on Agents and Other Lenders. Each Lender expressly acknowledges that no Agent-Related Person has made any representations or warranties to it and that no act by any Agent-Related Person hereinafter taken, including any review of the affairs of the Borrower, shall be deemed to constitute any representation or warranty by any Agent-Related Person to any Lender. Each Lender represents to the Agents that it has, independently and without reliance upon the Agents, any other Agent-Related Person or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, assets, operations, property, financial and other conditions, prospects and creditworthiness of the Borrower and made its own decision to make its Loans hereunder and enter into this Credit Agreement. Each Lender also represents that it will, independently and without reliance upon the Agents, any other Agent-Related Person or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Credit Agreement, and to make such investigation as it deems necessary to inform itself as to the business, assets, operations, property, financial and other conditions, prospects and creditworthiness of the Borrower. Except for (i) delivery of the Credit Documents, (ii) delivery of all financial statements received by the Administrative Agent pursuant to Section 7.1(a) and 7.1(b), (iii) delivery of all notices received by the Administrative Agent pursuant to Sections 7.1(e) and 7.8 and (iv) delivery of notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder, no Agent-Related Person shall have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, assets, property, financial or other conditions, prospects or creditworthiness of the Borrower which may come into the possession of an Agent-Related Person. 10.7 Indemnification. Each Lender agrees to indemnify each Agent-Related Person (to the extent not reimbursed by the Borrower and without limiting the obligation of the Borrower to do so), ratably according to such Lender's Commitment in effect on the date on which indemnification is sought under this section (or if indemnification is sought after the date on which the Commitments shall have terminated and the Loans shall have been paid in full, according to such Lender's Commitment in effect immediately prior to such date), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever which may at any time (including without limitation at any time following the payment of the Borrower Obligations) be imposed on, incurred by or asserted against such Agent-Related Person in any way relating to or arising out of this Credit Agreement or the other Credit Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by such Agent-Related Person under or in connection with any of the foregoing; provided that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the gross negligence or willful misconduct of such Agent-Related Person. If any indemnity furnished to an Agent-Related Person for any purpose shall, in the opinion of such Agent-Related Person, be insufficient or become impaired, such Agent-Related Person may call for additional indemnity and cease, or not commence, to do the acts indemnified against until such additional indemnity is furnished. The agreements in this Section 10.7 shall survive the payment of the Borrower Obligations and all other amounts payable hereunder and under the other Credit Documents. 10.8 Each Agent in Its Individual Capacity. Each Agent and its Affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Borrower as though such Agent were not an Agent hereunder. With respect to the Loans made and all Borrower Obligations owing to it, each Agent shall have the same rights and powers under this Credit Agreement as any Lender and may exercise the same as though it were not an Agent, and the terms "Lender" and "Lenders" shall include each Agent in its individual capacity. No Agent shall have any duty to disclose any information obtained or received by it or any of its Affiliates relating to the Borrower or any of its Affiliates to the extent such information was obtained or received in any capacity other than as such Agent. 10.9 Successor Administrative Agent. The Administrative Agent may, at any time, resign upon 30 days' written notice to the Borrower and the Lenders. Upon any such resignation, the Required Lenders, with the written consent of the Borrower, shall have the right to appoint a successor to the resigning Administrative Agent. If no successor Administrative Agent shall have been so duly appointed, and/or such successor agent shall not have accepted such appointment, within 30 days after the notice of resignation, then the retiring Administrative Agent shall select a successor Administrative Agent, with the written consent of the Borrower, provided such successor is a Lender hereunder or a commercial bank organized or licensed under the laws of the United States of America or of any State thereof and has a combined capital and surplus of at least $500,000,000. If no successor Administrative Agent shall have been appointed within the time frame set forth above, then the Lenders shall perform all the obligations of the resigning Administrative Agent until the time a successor has been appointed by the Required Lenders, with the written consent of the Borrower, as set forth above and has accepted such appointment. Upon the acceptance of the appointment as Administrative Agent hereunder by a successor, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations as Administrative Agent under this Credit Agreement and the other Credit Documents, and the provisions of this Section 10 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was the Administrative Agent under this Credit Agreement. 10.10 Administrative Agent May File Proof of Claims. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Borrower, the Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise: (a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other Borrower Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders and the Administrative Agent under Sections 3.4 and 11.5 allowed in such judicial proceeding); and (b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 3.4 and 11.5. Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the Borrower Obligations or the rights of any Lender or to authorize the Administrative Agent to vote in respect of the claim of any Lender in any such proceeding. Section 11 MISCELLANEOUS 11.1 Notices and Other Communications; Facsimile Copies. (a) General. Unless otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing (including by facsimile transmission). All written notices and all other communications expressly permitted hereunder to be given by telephone shall be made to the applicable address, facsimile number, electronic mail address or telephone number specified for such Person on Schedule 11.1 or to such other address, facsimile number, electronic mail address or telephone number as shall be designated by such party in a notice to the other parties. All such notices and other communications shall be deemed to be given or made upon the earlier to occur of (i) actual receipt by the relevant party hereto and (ii) (A) if delivered by hand or by courier, when signed for by or on behalf of the relevant party hereto; (B) if delivered by mail, four Business Days after deposit in the mails, postage prepaid; (C) if delivered by facsimile, when sent and receipt has been confirmed by telephone; and (D) if delivered by electronic mail (which form of delivery is subject to the provisions of subsection (c) below), when delivered; provided, however, that notices and other communications to the Administrative Agent or the Lenders pursuant to Section 2 shall not be effective until actually received by the Administrative Agent or the Lenders, as the case may be. In no event shall a voicemail message be effective as a notice, communication or confirmation hereunder. (b) Effectiveness of Facsimile Documents and Signatures. Credit Documents may be transmitted and/or signed by facsimile. The effectiveness of any such documents and signatures shall have the same force and effect as manually signed originals and shall be binding on the Borrower, the Administrative Agent and the Lenders. The Administrative Agent may also require that any such documents and signatures be confirmed by a manually signed original thereof; provided, however, that the failure to request or deliver the same shall not limit the effectiveness of any facsimile document or signature. (c) Limited Use of Electronic Mail. Electronic mail and Internet and intranet websites may be used only to distribute routine communications, such as financial statements and other information as provided in Section 7.1, and to distribute Credit Documents for execution by the parties thereto, and may not be used for any other purpose except as deemed reasonable and appropriate by the Administrative Agent. (d) Reliance by Administrative Agent and Lenders. The Administrative Agent and the Lenders shall be entitled to rely and act upon any notices given by the Borrower even if such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein. All telephonic notices to and other communications with the Administrative Agent may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording. 11.2 Right of Setoff. In addition to any rights now or hereafter granted under applicable law or otherwise, and not by way of limitation of any such rights, upon the occurrence of an Event of Default and the commencement of remedies described in Section 9.2, each Lender is authorized at any time and from time to time, without presentment, demand, protest or other notice of any kind (all of which rights being hereby expressly waived), to set off and to appropriate and apply any and all deposits (general or special) and any other indebtedness at any time held or owing by such Lender (including, without limitation branches, agencies or Affiliates of such Lender wherever located) to or for the credit or the account of the Borrower against obligations and liabilities of the Borrower to the Lenders hereunder, under the Notes, the other Credit Documents or otherwise, irrespective of whether the Administrative Agent or the Lenders shall have made any demand hereunder and although such obligations, liabilities or claims, or any of them, may be contingent or unmatured, and any such setoff shall be deemed to have been made immediately upon the occurrence of an Event of Default even though such charge is made or entered on the books of such Lender subsequent thereto. The Borrower hereby agrees that any Participation Purchaser may exercise all rights of setoff with respect to its participation interest as fully as if such Person were a Lender hereunder. 11.3 Benefit of Agreement. (a) The provisions of this Credit Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an Eligible Assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section, or (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (f) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Credit Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby and Participation Purchasers to the extent provided in subsection (d) of this Section) any legal or equitable right, remedy or claim under or by reason of this Credit Agreement. (b) Any Lender may at any time assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Credit Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided that (i) except in the case of an assignment of the entire remaining amount of the assigning Lender's Commitment and the Loans at the time owing to it or, in the case of an assignment to a Lender or an Affiliate of a Lender or an Approved Fund with respect to a Lender, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) subject to each such assignment, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if "Trade Date" is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $5,000,000 and in integral multiples of $1,000,000 in excess thereof, unless each of the Administrative Agent and, so long as no Default or Event of Default has occurred and is continuing, the Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed); (ii) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender's rights and obligations under this Credit Agreement with respect to the Loans or the Commitment assigned; (iii) any assignment of a Commitment must be approved by the Administrative Agent (which approval shall not be unreasonably withheld) unless the Person that is the proposed assignee is itself a Lender or an Affiliate of a Lender (whether or not the proposed assignee would otherwise qualify as an Eligible Assignee); (iv) any assignment of a Commitment must be approved by each Issuing Bank (which approval shall not be unreasonably withheld); and (v) except as provided in Section 4.5 solely with respect to an assigning Lender, the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500. Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the Eligible Assignee thereunder shall be a party to this Credit Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Credit Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Credit Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender's rights and obligations under this Credit Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 4.1 through 4.4 and 11.5 with respect to facts and circumstances occurring prior to the effective date of such assignment). Upon request, the Borrower (at its expense) shall execute and deliver a Revolving Loan Note to the assignee Lender. Any assignment or transfer by a Lender of rights or obligations under this Credit Agreement that does not comply with this subsection shall be treated for purposes of this Credit Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section. (c) The Administrative Agent, acting solely for this purpose as an agent of the Borrower, shall maintain at one of its offices in the United States a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the "Register"). The entries in the Register shall be conclusive, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Credit Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice. (d) Any Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to any Person (other than a natural person or the Borrower or any of the Borrower's Affiliates or Subsidiaries) (each, a "Participation Purchaser") in all or a portion of such Lender's rights and/or obligations under this Credit Agreement (including all or a portion of its Commitment and/or the Loans owing to it); provided that (i) such Lender's obligations under this Credit Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Credit Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Credit Agreement and to approve any amendment, modification or waiver of any provision of this Credit Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participation Purchaser, agree to any amendment, waiver or other modification described in clauses (a) through (g) of Section 11.6 that directly affects such Participation Purchaser. Subject to subsection (e) of this Section, the Borrower agrees that each Participation Purchaser shall be entitled to the benefits of Sections 4.1 through 4.4 and 11.5 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section. To the extent permitted by law, each Participation Purchaser also shall be entitled to the benefits of Section 11.2 as though it were a Lender, provided such Participation Purchaser agrees to be subject to Section 3.8 as though it were a Lender. (e) A Participation Purchaser shall not be entitled to receive any greater payment under Section 4.2 or 4.4 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participation Purchaser, unless the sale of the participation to such Participation Purchaser is made with the Borrower's prior written consent. A Participation Purchaser that would be a "foreign corporation, partnership or trust" within the meaning of the Code if it were a Lender shall not be entitled to the benefits of Section 4.4 unless the Borrower is notified of the participation sold to such Participation Purchaser and such Participation Purchaser agrees, for the benefit of the Borrower, to comply with Section 4.4(d) as though it were a Lender. (f) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Credit Agreement (including under its Notes, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto. (g) Notwithstanding anything to the contrary contained herein, any Lender (a "Granting Lender") may grant to a special purpose-funding vehicle managed or sponsored by the Granting Lender or an Affiliate thereof (an "SPC") the option to fund all or any part of any Loan that such Granting Lender would otherwise be obligated to fund pursuant to this Credit Agreement; provided that (i) nothing herein shall constitute a commitment by any SPC to fund any Loan, (ii) if an SPC elects not to exercise such option or otherwise fails to fund all or any part of such Loan, the Granting Lender shall be obligated to fund such Loan pursuant to the terms hereof, (iii) no SPC shall have any voting rights pursuant to Section 11.6, (iv) with respect to notices, payments and other matters hereunder, the Borrower, the Administrative Agent and the Lenders shall not be obligated to deal with an SPC, but may limit their communications and other dealings relevant to such SPC to the applicable Granting Lender and (v) each Granting Lender's obligations under this Credit Agreement shall remain unchanged. Each party hereto agrees that no SPC will be entitled to any rights or benefits except as expressly set forth in this subsection (g). The funding of a Loan by an SPC hereunder shall utilize the Commitment of the Granting Lender to the same extent that, and as if, such Loan were funded by such Granting Lender. Each party hereto hereby agrees that no SPC shall be liable for any indemnity or payment under this Credit Agreement for which a Lender would otherwise be liable for so long as, and to the extent, the Granting Lender provides such indemnity or makes such payment. Notwithstanding anything to the contrary contained in this Credit Agreement, any SPC may disclose on a confidential basis any non-public information relating to its funding of Loans to any rating agency, commercial paper dealer or provider of any surety or guarantee to such SPC. This subsection (g) may not be amended without the prior written consent of each Granting Lender, all or any part of whose Loan is being funded by an SPC at the time of such amendment. (h) Notwithstanding anything to the contrary contained herein, any Lender that is a Fund may create a security interest in all or any portion of the Loans owing to it and the Notes, if any, held by it to the trustee for holders of obligations owed, or securities issued, by such Fund as security for such obligations or securities, provided that, unless and until such trustee actually becomes a Lender in compliance with the other provisions of this Section 11.3, (i) no such pledge shall release the pledging Lender from any of its obligations under the Credit Documents and (ii) such trustee shall not be entitled to exercise any of the rights of a Lender under the Credit Documents even though such trustee may have acquired ownership rights with respect to the pledged interest through foreclosure or otherwise. 11.4 No Waiver; Remedies Cumulative. No failure or delay on the part of an Agent or any Lender in exercising any right, power or privilege hereunder or under any other Credit Document and no course of dealing between the Borrower and an Agent or any Lender shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or under any other Credit Document preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder or thereunder. The rights and remedies provided herein are cumulative and not exclusive of any rights or remedies which an Agent or any Lender would otherwise have. No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the Administrative Agent or the Lenders to any other or further action in any circumstances without notice or demand. 11.5 Payment of Expenses, Etc. The Borrower agrees to: (i) pay all reasonable out-of-pocket costs and expenses of (A) each Agent-Related Person in connection with the administration of this Credit Agreement and the other Credit Documents and the documents and instruments referred to therein (including, without limitation, the reasonable fees and expenses of Shearman & Sterling LLP, special counsel to the Administrative Agent) and any amendment, waiver, consent or assignment relating hereto and thereto including, but not limited to, any such amendments, waivers or consents resulting from or related to any work-out, renegotiation or restructure relating to the performance by the Borrower under this Credit Agreement and (B) the Administrative Agent and the Lenders in connection with enforcement of the Credit Documents and the documents and instruments referred to therein (including, without limitation, in connection with any such enforcement, the reasonable fees and disbursements of counsel for the Administrative Agent and each of the Lenders); and (ii) indemnify each Agent-Related Person, each Lender and their respective Affiliates, directors, officers, employees, counsel, agents, representatives and attorneys-in-fact from and hold each of them harmless against any and all losses, liabilities, claims, damages or expenses incurred by any of them as a result of, or arising out of, or in any way related to, or by reason of, any investigation, litigation or other proceeding (whether or not any Lender is a party thereto) related to the entering into and/or performance of any Credit Document or the use of proceeds of any Loans (including other extensions of credit) hereunder or the consummation of any other transactions contemplated in any Credit Document, including, without limitation, the reasonable fees and disbursements of counsel incurred in connection with any such investigation, litigation or other proceeding; provided that the Borrower shall not be responsible for any such losses, liabilities, claims, damages or expenses to the extent incurred by reason of gross negligence or willful misconduct on the part of the Person to be indemnified; and provided further that in no event shall the Borrower have any liability with respect to the settlement or compromise of any claim or proceeding effected without its prior written consent. The agreements in this Section 11.5 shall survive the repayment of the Borrower Obligations and the termination of the Commitments. 11.6 Amendments, Waivers and Consents. Neither this Credit Agreement nor any other Credit Document nor any of the terms hereof or thereof may be amended, changed, waived, discharged or terminated unless such amendment, change, waiver, discharge or termination is in writing and signed by the Required Lenders and the Borrower; provided that no such amendment, change, waiver, discharge or termination shall without the consent of each Lender affected thereby, (a) extend any Maturity Date; (b) reduce the rate or extend the time of payment of interest (other than as a result of waiving the applicability of any post-default increase in interest rates) on any Loan or reduce the amount or extend the time of payment of fees owing hereunder; (c) reduce or waive or extend the time of payment of the principal amount of any Loan; (d) increase the Commitment of a Lender over the amount thereof in effect (it being understood and agreed that a waiver of any Default or Event of Default or a mandatory reduction in the Commitments shall not constitute a change in the terms of any Commitment of any Lender); (e) release the Borrower from its obligations under the Credit Documents or consent to the transfer or assignment of such obligations; (f) amend, modify or waive any provision of this Section 11.6 or Section 3.6, 3.8, 5.2, 9.1(a), 11.2, 11.3 or 11.5; or (g) reduce any percentage specified in, or otherwise modify, the definition of Required Lenders. Notwithstanding the above, no provision of Section 10 may be amended or modified without the written consent of the Administrative Agent. Notwithstanding the fact that the consent of all the Lenders is required in certain circumstances as set forth above, each Lender is entitled to vote as such Lender sees fit on any reorganization plan that affects the Loans and each Lender acknowledges that the provisions of Section 1126(c) of the Bankruptcy Code supersede the unanimous consent provisions set forth herein. 11.7 Counterparts. This Credit Agreement may be executed in any number of counterparts, each of which where so executed and delivered shall be an original, but all of which shall constitute one and the same instrument. It shall not be necessary in making proof of this Credit Agreement to produce or account for more than one such counterpart. 11.8 Headings. The headings of the sections and subsections hereof are provided for convenience only and shall not in any way affect the meaning or construction of any provision of this Credit Agreement. 11.9 Defaulting Lender. Each Lender understands and agrees that if such Lender is a Defaulting Lender then it shall not be entitled to vote on any matter requiring the consent of the Required Lenders or to object to any matter requiring the consent of all the Lenders; provided, however, that (a) any Defaulting Lender shall be entitled to vote on any matters set forth in clause (d) of Section 11.6 (or the amendment of such clause) or any amendment or modification to this Section 11.9 and (b) all other benefits and obligations under the Credit Documents shall apply to such Defaulting Lender. 11.10 Survival of Indemnification and Representations and Warranties. All indemnities set forth herein and all representations and warranties made herein shall survive the execution and delivery of this Credit Agreement, the making of the Loans, and the repayment of the Loans and other obligations and the termination of the Commitments hereunder. 11.11 Governing Law. THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE PARTIES HERETO CONSENT TO SUCH GOVERNANCE, CONSTRUCTION AND INTERPRETATION UNDER THE LAWS OF THE STATE OF NEW YORK. 11.12 Waiver of Jury Trial; Waiver of Consequential Damages. (a) EACH OF THE PARTIES TO THIS CREDIT AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS CREDIT AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY. (b) The Borrower agrees that the Administrative Agent, any Lender, any of their Affiliates and their respective officers, directors, employees, representatives, agents and attorneys-in-fact (each, an "Indemnified Party") shall not have any liability for any indirect or consequential damages arising out of, related to or in connection with the Credit Documents except to the extent such damages were caused by reason of gross negligence or willful misconduct on the part of such Indemnified Party. 11.13 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. 11.14 Severability. If any provision of any of the Credit Documents is determined to be illegal, invalid or unenforceable, such provision shall be fully severable and the remaining provisions shall remain in full force and effect and shall be construed without giving effect to the illegal, invalid or unenforceable provisions. 11.15 Entirety. This Credit Agreement together with the other Credit Documents represent the entire agreement of the parties hereto and thereto, and supersede all prior agreements and understandings, oral or written, if any, including any commitment letters or correspondence relating to the Credit Documents or the transactions contemplated herein and therein. 11.16 Confidentiality. Each Lender agrees that it will use its reasonable best efforts to keep confidential and to cause any representative designated under Section 7.10 to keep confidential any non-public information from time to time supplied to it under or in connection with any Credit Document including, without limitation, any such information furnished to a Lender prior to or in connection with its entry into any Credit Document (the "Information"); provided, however, that nothing herein shall affect the disclosure of any such Information to (a) the extent such Lender in good faith believes such disclosure is required by statute, rule, regulation or judicial process, (b) the extent requested by any regulatory authority having jurisdiction over such Lender (including any self-regulatory authority, such as the National Association of Insurance Commissioners) which has been notified of the confidential nature of such Information, (c) counsel for such Lender or to its accountants, (d) bank examiners or auditors or comparable Persons, (e) any Affiliate of such Lender, (f) (i) any other Lender, (ii) any assignee, transferee or participant or (iii) any potential assignee, transferee or participant of all or any portion of any Lender's rights under this Credit Agreement, in each case, who is notified of the confidential nature of the Information and agrees to be bound by this provision or provisions reasonably comparable hereto or (g) any other Person in connection with any litigation to which any one or more of the Lenders is a party; and provided further that no Lender shall have any obligation under this Section 11.16 to the extent any such Information becomes available on a non-confidential basis from a source other than the Borrower or its Subsidiaries or that any Information becomes publicly available other than by a breach of this Section 11.16. Each Lender agrees it will use all confidential Information exclusively for the purpose of evaluating, monitoring, selling, protecting or enforcing its Loans and other rights under the Credit Documents. 11.17 Binding Effect. (a) This Credit Agreement shall become effective when it shall have been executed by the Borrower, each Lender and the Agents, and thereafter this Credit Agreement shall be binding upon and inure to the benefit of the Borrower, each Lender and the Agents, together with their respective successors and assigns. Nothing in this Credit Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their successors and assigns permitted hereby and, to the extent expressly contemplated hereby, the indemnified parties hereunder) any legal or equitable right, remedy or claim under or by reason of this Credit Agreement. (b) This Credit Agreement shall be a continuing agreement and shall remain in full force and effect until all Loans, interest, fees and other Borrower Obligations have been paid in full and all Commitments have been terminated. Upon termination, the Borrower shall have no further obligations (other than the indemnification provisions that survive) under the Credit Documents; provided that, should any payment, in whole or in part, of the Borrower Obligations be rescinded or otherwise required to be restored or returned by the Administrative Agent or any Lender, whether as a result of any proceedings in bankruptcy or pursuant to court order, then the Credit Documents shall automatically be reinstated and all amounts required to be restored or returned, and all costs and expenses incurred by the Administrative Agent or any Lender in connection therewith shall be deemed included as part of the Borrower Obligations. 11.18 USA Patriot Act Notice. Each Lender that is subject to the Act (as hereinafter defined) and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower that, pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the "Act"), it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender or the Administrative Agent, as applicable, to identify the Borrower in accordance with the Act. 11.19 Jurisdiction, Etc. (a) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Credit Agreement or any of the other Credit Documents to which it is a party, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in any such New York State court or, to the fullest extent permitted by law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Credit Agreement shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Credit Agreement or any of the other Credit Documents in the courts of any jurisdiction. (b) Each of the parties hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Credit Agreement or any of the other Credit Documents to which it is a party in any New York State or federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. [Signature pages follow.] Each of the parties hereto has caused a counterpart of this Credit Agreement to be duly executed and delivered as of the date first above written. SOUTHERN POWER COMPANY, as Borrower By: /s/ Michael W. Southern ------------------------------------ Name: Michael W. Southern Title: Senior Vice President and Chief Financial Officer CITIBANK, N.A., as Administrative Agent By: /s/ Judith Green ---------------------------------------- Name: Judith Green Title: Vice President THE BANK OF TOKYO-MITSUBISHI, LTD., NEW YORK BRANCH, as Issuing Bank By: /s/ Linda Tam Name: Linda Tam Title: Authorized Signatory CITIBANK, N.A., as Lender By: /s/ Judith Green ---------------------------------------- Name: Judith Green Title: Vice President THE BANK OF TOKYO-MITSUBISHI, LTD., NEW YORK BRANCH, as Lender By: /s/ Linda Tam Name: Linda Tam Title: Authorized Signatory BAYERISCHE LANDESBANK, as Lender By: /s/ Dietmar Rieg ---------------------------------------- Name: Dietmar Rieg Title: Senior Vice President By: /s/ Norman McClave --------------------------------------------- Name: Norman McClave Title: First Vice President ING CAPITAL LLC, as Lender By: /s/ Ann E. Sutton ---------------------------------------- Name: Ann E. Sutton Title: Associate By: /s/ Erwin Thomet ---------------------------------------- Name: Erwin Thomet Title: Managing Director KBC BANK, N.V., as Lender By: /s/ Dennis A. Graham ------------------------------------------------- Name: Dennis A. Graham Title: First Vice President BARCLAYS BANK PLC, as Lender By: /s/ Gary B. Wenslow ------------------------------------------------- Name: Gary B. Wenslow Title: Associate Director HSBC BANK USA, NATIONAL ASSOCIATION, as Lender By: /s/ Jose Aldeanueva ------------------------------------------- Name: Jose Aldeanueva Title: Vice President JPMORGAN CHASE BANK, N.A., as Lender By: /s/ Peter M. Ling ---------------------------------------- Name: Peter M. Ling Title: Managing Director MIZUHO CORPORATE BANK, LTD., as Lender By: /s/ Mark Gronich -------------------------------------- Name: Mark Gronich Title: Senior Vice President THE BANK OF NOVA SCOTIA, as Lender By: /s/ Thane Rattew ---------------------------------------- Name: Thane Rattew Title: Managing Director SCOTIABANC INC., as Lender By: /s/ William E. Zarrett ---------------------------------------- Name: William E. Zarrett Title: Managing Director WACHOVIA BANK, N.A., as Lender By: /s/ Lawrence P. Sullivan -------------------------------------- Name: Lawrence P. Sullivan Title: Director BANK OF AMERICA, N.A., as Lender By: /s/ Daryl Patterson ------------------------------------------ Name: Daryl Patterson Title: Senior Vice President SANPAOLO IMI, S.P.A., as Lender By: /s/ Renato Carducci ----------------------------------------- Name: Renato Carducci Title: General Manager By: /s/ Glen Binder --------------------------------------- Name: Glen Binder Title: Vice President EX-2 3 xb2.txt Exhibit B-2 ------------------ and SOUTHERN POWER COMPANY LOAN AGREEMENT Dated as of Relating to $______________ _________________________ Revenue Bonds (Southern Power Company Project) LOAN AGREEMENT TABLE OF CONTENTS (This Table of Contents is for convenience of reference only and is not a part of this Loan Agreement)

LOAN AGREEMENT dated as of __________, between (the "Issuer"), a ___________ as defined in _________________________________ (the "Act"), and a political subdivision of the State of ________, and SOUTHERN POWER COMPANY, a corporation organized and existing under the laws of the State of Delaware and qualified and doing business as an electric utility in the State of ________ (the "Company"), evidencing the agreement of the parties hereto. In consideration of the respective representations and agreements hereinafter contained, the parties hereto agree as follows (provided that in the performance of the agreements of the Issuer herein contained, any obligation it may thereby incur for the payment of money shall not be a general debt, liability or obligation of the Issuer, or of the State of or any political subdivision thereof but shall be payable solely out of the revenues and proceeds derived from this Agreement and the Note (as hereinafter defined) and the sale of the Bonds referred to herein): ARTICLE I DEFINITIONS "Bondholder", "Bonds", "Business Day", "Government Obligations", "Prior Bonds Trustee", "Remarketing Agent" and "Trustee" have the same meanings given and assigned to such words in Article I of the Indenture (as hereinafter defined). "Agreement" means this Loan Agreement and any amendments and supplements hereto. "Completion Date" means the date of completion of the acquisition, construction, installation and equipping of the Project (hereinafter defined) as such date shall be certified as provided in Section 2.3 hereof. "corporation" includes corporations, partnerships, limited partnerships, limited liability partnerships, limited liability companies, associations, companies, statutory trusts and business trusts. "Cost of Construction" with respect to the Project means the following: (a) obligations of the Company incurred for labor and materials (including reimbursements payable to the Company and payments on contracts in the name of the Company) in connection with the acquisition, construction, installation and equipping of the Project; (b) the cost of contract bonds and of insurance of all kinds that may be required or necessary during the course of construction of the Project; (c) all costs of engineering services, including the costs for test borings, surveys, estimates, plans and specifications and preliminary investigation therefor, and for supervising construction, as well as for the performance of all other duties required by or consequent upon the proper construction of the Project; (d) overheads of the Company, to the extent not included in subparagraph (c) above, allocable to the Project by the Company in accordance with the Uniform System of Accounts prescribed for Public Utilities and Licensees by the Federal Energy Regulatory Commission; (e) interest to accrue in respect of the Bonds to the Completion Date, amounts paid to the United States Treasury pursuant to Section 1.103-15AT(d) and (e) of the Temporary Regulations promulgated pursuant to Section 148(f) of the Internal Revenue Code of 1986, as amended, or any successor regulations, and all expenses incurred in connection with the issuance of the Bonds, including without limitation initial compensation and expenses of the Trustee, legal expenses and fees, costs of printing and engraving, recording and filing fees, compensation of the underwriters, if any, and rating agency fees; (f) all other costs which the Company may properly pay or accrue for the acquisition, construction, installation or equipping of the Project; (g) all costs incurred by the Company in the performance of its obligation under Section 3.4 hereof; and (h) any sums required to reimburse the Company for advances made for any of the above items or for any other costs incurred or for work done which are properly chargeable to the Project. "Event of Default" means any of the occurrences enumerated in Section 5.1 of this Agreement. "Indenture" means the Trust Indenture dated as of____________, relating to ____________________ Revenue Bonds (Southern Power Company Project) , between the Issuer and ________________ , as Trustee, pursuant to which the Bonds are authorized to be issued, and including any indenture supplemental thereto. "Loan" means the loan to be made by the Issuer to the Company of the proceeds (which shall be deemed to include the underwriting discounts, if any, and original issue discount, if any) of the sale of the Bonds, exclusive of any accrued interest paid by the initial purchasers of the Bonds upon the delivery thereof. "Note" means the non-negotiable promissory note of the Company issued pursuant to Section 3.2 hereof, in the form set forth in Exhibit A hereto. "Plans" means the plans and specifications prepared by or on behalf of the Company for the Project, as the same may be revised from time to time by the Company. "Project" means the _______________________described in the Plans. ARTICLE II ACQUISITION AND COMPLETION OF THE PROJECT; ISSUANCE OF THE BONDS SECTION 2.1. Acquisition and Completion of the Project. The Company agrees to use its best efforts to cause the acquisition, construction, installation and equipping of the Project to be completed substantially in accordance with the Plans as soon as practicable, delays incident to "force majeure" (as defined in Section 5.1 hereof) only excepted. The Project shall belong to and be the property of the Company. The Issuer and the Company agree that the Company may from time to time supplement or amend the Plans (including additions thereto or omissions therefrom), provided that such supplements or amendments shall not result in the interest on the Bonds or any portion thereof becoming includable in gross income for federal income tax purposes under the laws then in effect. SECTION 2.2. Issuance of the Bonds. In order to provide funds for payment of a portion of the Cost of Construction, the Issuer agrees that it will issue and deliver the Bonds to the purchasers thereof at a price to be approved in advance by the Company and apply and deposit the proceeds thereof in accordance with the terms of the Indenture. The Indenture shall be satisfactory in form and substance to the Company and shall provide the manner in which, and the purposes for which, proceeds of Bonds may be used and invested. The Issuer has authorized and directed the Trustee to disburse moneys from the Construction Fund in respect of the Cost of Construction in accordance with Section 6.08 of the Indenture. SECTION 2.3. Establishment of Completion Date. The Completion Date shall be evidenced to the Trustee by a certificate of the Company: (i) stating that the Project has been completed substantially in accordance with the Plans, and (ii) stating that, except for amounts retained by the Trustee at the Company's direction for any Cost of Construction not then due and payable or which is in dispute, the entire Cost of Construction has been paid. Notwithstanding the foregoing, such certificate shall state that it is given without prejudice to any rights against third parties which exist at the date of such certificate or which my subsequently come into being. SECTION 2.4. Insufficiency of Construction Fund. The Issuer does not make any warranty, either express or implied, that the amounts in the Construction Fund and available for payment of the Cost of Construction will be sufficient to pay all of the Cost of Construction. The Company agrees that, if after exhaustion of the amounts in the Construction Fund, it should pay any portion of the Cost of Construction, it shall not be entitled to any diminution of the amounts payable under the Note and as provided in Section 3.2 hereof. ARTICLE III LOAN BY ISSUER; PROVISIONS FOR PAYMENT SECTION 3.1. Loan by Issuer. The Issuer hereby agrees to make the Loan to the Company in order to finance the acquisition, construction, installation and equipping of the Project. SECTION 3.2. Delivery of Note by Company; Other Amounts Payable. In order to evidence the Loan and the obligation of the Company to repay the same, the Company shall execute and deliver the Note in a principal amount equal to the aggregate principal amount of the Bonds and providing for payments which correspond in time and amount with payments due with respect to the principal or purchase price of, interest and premium, if any, on the Bonds, whether at maturity, prior optional or mandatory redemption, or upon tender for purchase or otherwise. The Note shall be dated the date of the initial authentication of, and mature on the same maturity date as, the Bonds. If (i) on the date any payments on the Bonds are due there are any available moneys on deposit with the Trustee which are not being held for the payment of Bonds due and payable but which have not been presented for payment, or (ii) on any date on which Bonds are required to be purchased pursuant to the Bonds or Article III of the Indenture, there are available moneys on deposit with the Trustee held for the payment of the purchase price which are not being held for the payment of Bonds which have not been presented for payment, then, in each case, such moneys shall be credited against the payment then due under the Note, first in respect of interest and then, to the extent of remaining moneys, in respect of principal. The Company shall pay all reasonable costs and expenses incurred in connection with the issuance of the Bonds and the execution, delivery and performance of the Agreement, the Indenture and any other documents or instruments related thereto or to the Bonds, to which the Issuer is a party or by which it is bound, including, without limitation, the reasonable fees of the Issuer's financial advisor and bond counsel. The Company will also pay: (i) the fees, charges and reasonable expenses of the Trustee and any paying agents under the Indenture, such fees, charges and reasonable expenses to be paid directly to the Trustee or paying agents for their respective accounts as and when such fees, charges and reasonable expenses become due and payable, (ii) any expenses in connection with any redemption of the Bonds and (iii) all other amounts due under the terms hereof to the Issuer. SECTION 3.3. Obligation of the Company Unconditional. The obligation of the Company to make payments as provided in the Note and to perform and observe the other agreements on its part contained herein shall be absolute and unconditional notwithstanding any change in the tax or other laws of the United States of America or of the State of ________ or any political subdivision of either thereof or any failure of the Issuer to perform and observe any agreement, whether express or implied, or any duty, liability or obligation arising out of or connected with this Agreement. Subject in all cases to Section 4.2 hereof, nothing contained in this Section 3.3 shall be construed to release the Issuer from the performance of any of the agreements on its part herein contained; and, in the event the Issuer should fail to perform any such agreement on its part, the Company may institute such action against the Issuer as the Company may deem necessary to compel performance so long as such action shall not violate the agreements on the part of the Company contained in the preceding sentence, but in no event shall the Company be entitled to any diminution of the amounts payable under the Note and as provided in Section 3.2 hereof. SECTION 3.4. Assignment and Pledge of Payments and Rights Under the Note and the Agreement. The Issuer shall assign to the Trustee as security under the Indenture all rights, title and interests of the Issuer in and to (i) the Note and all payments thereunder and (ii) this Agreement and all moneys receivable hereunder (except for payments under Sections 4.2 and 5.3 hereof). The Company assents to such assignment and hereby agrees that, as to the Trustee, its obligations to make such payments shall be absolute and shall not be subject to any defense or any right of set-off, counterclaim or recoupment arising out of any breach by the Issuer or the Trustee of any obligation to the Company, whether hereunder or otherwise, or out of any indebtedness or liability at any time owing to the Company by the Issuer or the Trustee. ARTICLE IV SPECIAL COVENANTS SECTION 4.1. Use of Project. The Issuer hereby acknowledges that it shall have no rights to the use or possession of the Project. The Issuer hereby further acknowledges that the Project will not constitute any part of the security for the Bonds. SECTION 4.2. Indemnity Against Claims. ------------------------ (a) Notwithstanding anything to the contrary contained herein or in any of the Bonds, the Indenture or in any other instrument or document executed by or on behalf of the Issuer in connection herewith, (i) the Issuer shall have no obligation to take action under this Agreement, the Indenture, the Bonds or such other instruments or documents unless the Issuer is reasonably requested in writing by an appropriate person to take such action and is provided with indemnity and assurances reasonably satisfactory to it of payment of or reimbursement for any expenses (including attorneys' fees) in such action, and (ii) any judgment rendered against the Issuer for breach of its obligations under this Agreement, the Indenture, the Bonds or such other instruments or documents shall be payable solely from the revenues derived from the Project by the Issuer under this Agreement, the Note and the Indenture, and no personal liability or charge payable directly or indirectly from the general funds of the Issuer shall arise therefrom. The provisions of this Section shall survive the termination of this Agreement. (b) In acting under this Agreement, the Indenture, the Bonds or such other instruments or documents, or in refraining from taking such action, the Issuer may conclusively rely on the advice of its counsel. (c) The Company will pay and discharge and will indemnify and hold harmless the Issuer from (i) any lien or charge upon payments by the Company to the Issuer under the Note or hereunder, (ii) any taxes, assessments, impositions and other charges upon payments by the Company to the Issuer under the Note or hereunder and (iii) any and all liability, damages, costs and expenses arising out of or resulting from the transactions contemplated by this Agreement and the Indenture, including the reasonable fees and expenses of counsel. If any such lien or charge is sought to be imposed upon payments, or any such taxes, assessments, impositions or other charges are sought to be imposed, or any such liability, damages, costs and expenses are sought to be imposed, the Issuer will give prompt notice to the Company, and the Company shall have the sole right and duty to assume, and will assume, the defense thereof, with full power to litigate, compromise or settle the same in its sole discretion. SECTION 4.3. The Company to Maintain Its Corporate Existence; Conditions Under Which Exceptions Permitted. The Company agrees that during the term of this Agreement it will maintain its corporate existence and qualification to do business in ________, will not dissolve or otherwise dispose of all or substantially all of its assets and will not consolidate with or merge into another corporation or permit one or more other corporations to consolidate with or merge into it; provided, that the Company may, without violating the agreements contained in this Section 4.3, consolidate with or merge into another domestic corporation (i.e., a corporation incorporated and existing under the laws of one of the states of the United States of America or under the laws of the United States of America) or permit one or more other corporations to consolidate with or merge into it, or sell or otherwise transfer to another domestic corporation all or substantially all of its assets as an entirety and thereafter dissolve, provided that, in the event the Company is not the surviving, resulting or transferee corporation, as the case may be, the surviving, resulting or transferee corporation assumes, accepts and agrees in writing to pay and perform all of the obligations of the Company herein and under the Note and is a ________ corporation or is qualified to do business in ________ as a foreign corporation and that such consolidation or merger does not result in the loss of the exclusion from gross income for federal income tax purposes of interest on the outstanding Bonds. SECTION 4.4. Annual Statement. The Company agrees to have an annual audit made by its regular independent public accountants and within 180 days after the close of each fiscal year to furnish the Trustee and any Bondholder who may so request a balance sheet and statement of income and surplus showing the financial condition of the Company and its consolidated subsidiaries, if any, at the close of such fiscal year and the results of operations of the Company and its consolidated subsidiaries, if any, for such fiscal year, accompanied by a certificate or opinion of said accountants. The requirements of this Section 4.4 may be satisfied by the submission to the Trustee and each Bondholder who may request such information of the Company's annual report to its shareholders. SECTION 4.5. Further Assurances and Corrective Instruments. The Issuer and the Company agree that they will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such further instruments as may reasonably be required for correcting any inadequate or incorrect description of the Project and for carrying out the intention or facilitating the performance of this Agreement. SECTION 4.6. Maintenance of Project by Company. The Company agrees that during the term of this Agreement it will pay all costs of operating, maintaining and repairing the Project; provided, however, that the Company shall not be under any obligation to renew, repair or replace any inadequate, obsolete, worn-out, unsuitable, undesirable or unnecessary portion of the Project. SECTION 4.7. Redemption or Purchase of Bonds. The Issuer shall take all steps then necessary under the applicable provisions of the Indenture for the redemption or purchase (other than a purchase pursuant to tenders as provided in the form of Bonds or in lieu of redemption as provided in Section 3.07 of the Indenture) of Bonds upon receipt, not less than ten days prior to the day on which the Trustee is required to give notice (if any) thereof pursuant to the Indenture, by the Issuer and the Trustee from the Company of a written notice specifying: (a) the principal amount of Bonds to be redeemed or purchased; (b) the date of such redemption or purchase; and (c) in the case of a redemption of Bonds, directions to mail a notice of redemption. In the case of a purchase of Bonds, the written notice to the Trustee shall, if available moneys on deposit with the Trustee are insufficient to purchase the principal amount of Bonds specified in (a) above, be accompanied by a deposit with the Trustee of cash or Government Obligations sufficient, together with other available moneys on deposit with the Trustee, to make the directed purchase of Bonds. SECTION 4.8. Non-Arbitrage Covenant. The Company covenants that it shall take no action, nor shall the Company direct the taking of any action or the making of any investment or use of the proceeds of the Bonds or any other moneys, which would cause the Bonds to be treated as "arbitrage bonds" within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended, and the proposed, temporary or final regulations thereunder as such may be applicable or proposed to be applicable to the Bonds at the time of such action, investment or use. The Issuer covenants that it shall not knowingly take any action which would cause the Bonds to be treated as "arbitrage bonds" within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended, and the proposed, temporary or final regulations thereunder as such may be applicable to the Bonds or the proceeds derived from the sale of the Bonds or any other moneys; provided, however, that no action taken by the Issuer pursuant to and in accordance with the terms of this Agreement or the Indenture shall give rise in any manner whatsoever to any claim against or liability of the Issuer under this Agreement; and provided further, that any such claims or liabilities shall in all events be subject to the indemnification provisions of Section 4.2. Without limiting the generality of the foregoing, the Company covenants and agrees to comply with the requirements of Section 148(f) of the Internal Revenue Code of 1986, as amended, and any proposed, temporary or final regulations thereunder as may be applicable to the Bonds or the proceeds derived from the sale of the Bonds or any other moneys. SECTION 4.9. No Issuer Liability. Notwithstanding the fact that it is the intention of the parties hereto that the Issuer shall not incur any loss, expense or pecuniary liability by reason of the terms of this Agreement or the undertakings required of the Issuer hereunder, by reason of the issuance of the performance of any act requested of the Issuer by the Company, including all claims, liabilities or losses arising in connection with the violation of any statutes or regulation pertaining to the foregoing, if the Issuer should incur any such loss, expense or pecuniary liability, then in such event the Company shall indemnify and hold the Issuer harmless against all claims, demands or causes of action whatsoever, by or on behalf of any person, firm or corporation or other legal entity arising out of the same or out of any offering statement or lack of offering statement or disclosure in connection with the offering, sale or remarketing of the Bonds or out of any determination of taxability of the Bonds or interest thereon and all costs and expenses incurred in connection with any such claim or in connection with any action or proceeding brought thereon, and upon notice from the Issuer, the Company shall defend the Issuer in any such action or proceeding. All references to the Issuer in this Section shall be deemed to include its Board of County Commissioners, Commission Members, officers, employees and agents. Notwithstanding anything to the contrary contained herein or in any of the Bonds, or the Indenture or in any other instrument or document executed by or on behalf of the Issuer in connection herewith, no stipulation, covenant, agreement or obligation contained herein or therein shall be deemed or construed to be a stipulation, covenant, agreement or obligation of any present or future member, officer, employee or agent of the Issuer, or of any incorporator, member, director, trustee, officer, employee or agent of any successor to the Issuer, in any such person's individual capacity, and no such person, in his individual capacity, shall be liable personally for any breach or non-observance of or for any failure to perform, fulfill or comply with any such stipulations, covenants, agreements or obligations, nor shall any recourse be had for the payment of the principal of, premium, if any, or interest on any of the Bonds or for any claim based thereon or on any such stipulation, covenant, agreement or obligation, against any such person, in his individual capacity, either directly or through the Issuer or any successor to the Issuer, under any rule of law or equity, statute or constitution or by the enforcement of any assessment or penalty or otherwise, and all such liability of any such person, in his individual capacity, is hereby expressly waived and released. The provisions of this Section shall survive the termination of this Agreement. SECTION 4.10 Post Issuance Audits. The Company agrees to provide such records regarding the Project and the use, investment and application of proceeds of the Bonds as may reasonably be requested by the County to enable the County to determine that the Company has complied with the requirements of this Agreement and the Indenture subsequent to the issuance of the Bonds. Such compliance shall include, but not be limited to, the proper use of the Bonds proceeds for the intended purposes of the Indenture and this Agreement and compliance with any federal arbitrage rebate requirements. The Company agrees to advance all funds necessary to enable the County to engage and pay for such auditors, accountants, financial advisors, counsel or other professionals for purposes of reasonably determining such compliance. ARTICLE V EVENTS OF DEFAULT AND REMEDIES SECTION 5.1. Events of Default. Each of the following shall be an "Event of Default" under this Agreement: (a) Failure by the Company to pay when due the amounts required to be paid pursuant to the Note which failure, in the case of such amounts in respect of interest on any Bond, continues for five days, or the failure by the Company to pay within 30 days of the date due any other amounts required to be paid pursuant to this Agreement. (b) Failure by the Company to observe and perform any covenant, condition or agreement on its part to be observed or performed hereunder, other than as referred to in subsection (a) of this Section 5.1, for a period of 90 days after written notice, specifying such failure and requesting that it be remedied, is given to the Company by the Issuer or the Trustee, unless the Issuer and the Trustee shall agree in writing to an extension of such period prior to its expiration; provided, however, if the failure stated in the notice cannot be corrected within the applicable period, the Issuer and the Trustee will not unreasonably withhold their consent to an extension of such period if corrective action is instituted by the Company within the applicable period and diligently pursued until the default is corrected. (c) The dissolution or liquidation of the Company, except as permitted by Section 4.3 hereof, or the commencement by the Company of any case or proceeding seeking to have an order for relief entered on its behalf as a debtor or to adjudicate it as bankrupt or insolvent or seeking reorganization, liquidation, dissolution, winding-up, arrangement, composition, readjustment of its debts or any other relief under any bankruptcy, insolvency, reorganization or other similar law of the United States or any state, or adjudication of the Company as bankrupt, or an assignment by the Company for the benefit of its creditors, or the entry by the Company into an agreement of composition with its creditors, or the approval by a court of competent jurisdiction of a petition applicable to the Company in any proceeding for its reorganization instituted under the provisions of Title 11 of the United States Code, as amended, or under any similar statutory provision which may hereafter be enacted. The foregoing provisions of Section 5.1(b) are subject to the limitation that, if by reason of force majeure the Company is unable in whole or in part to carry out its agreements herein contained other than those set forth in Sections 3.2, 4.3 and 4.8 hereof, an Event of Default shall not be deemed to have occurred during the continuance of such inability. The term "force majeure" as used herein shall mean the following: acts of God; strikes; lockouts or other industrial disturbances; acts of public enemies; orders of any kind of the government of the United States or of the State of ________ or any of their departments, agencies or officials or of any civil or military authority; insurrections; riots; epidemics; landslides; lightning; earthquakes; fire; hurricanes; tornadoes; storms; floods; washouts; droughts; arrests; restraints of government and people; civil disturbances; explosions; breakage or accident to machinery, transmission lines, pipes or canals; partial or entire failure of utilities; or any other cause or event not reasonably within the control of the Company. The Company agrees, however, to remedy to the extent practicable with all reasonable dispatch the effects of any force majeure preventing the Company from carrying out its agreements; provided that the settlement of strikes, lockouts and other industrial disturbances shall be entirely within the discretion of the Company, and the Company shall not be required to make settlement of strikes, lockouts and other industrial disturbances by acceding to the demands of the opposing party or parties when such course is in the judgment of the Company unfavorable to the Company. SECTION 5.2. Remedies on Default. Whenever any Event of Default shall have occurred and be continuing, the Issuer may, in addition to any other remedy now or hereafter existing at law, in equity or by statute, take either or both of the following remedial steps: (a) By written notice to the Company, the Issuer may accelerate and declare all amounts payable pursuant to the Note to be immediately due and payable, whereupon the same shall become immediately due and payable; and (b) The Issuer may take whatever action at law or in equity may appear necessary or desirable to collect the amounts referred to in (a) above then due and thereafter to become due, or to enforce performance and observance of any obligation, agreement or covenant of the Company under this Agreement. Any amounts collected pursuant to action taken under this Section 5.2 shall be deposited with the Trustee and applied in accordance with the provisions of the Indenture or, if the Bonds have been fully paid (or provision for payment thereof has been made in accordance with the provisions of the Indenture) and the fees and expenses of the Trustee and the paying agents and all other amounts required to be paid under the Indenture shall have been paid, returned to the Company. SECTION 5.3. Agreement to Pay Attorneys' Fees and Expenses. In the event the Company should breach any of the provisions of the Note or this Agreement and the Issuer or the Trustee should employ attorneys or incur other expenses for the collection of amounts payable hereunder or the enforcement of performance or observance of any obligation or agreement on the part of the Company herein contained, the Company agrees that it will on demand therefor pay to the Issuer the reasonable fees of such attorneys and such other reasonable expenses so incurred by the Issuer or the Trustee. SECTION 5.4. No Additional Waiver Implied by One Waiver. In the event any agreement contained in the Note or in this Agreement should be breached by either party and thereafter waived by the other party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other breach hereunder. ARTICLE VI MISCELLANEOUS SECTION 6.1. Term of This Agreement. Except as otherwise expressly provided herein, this Agreement shall remain in full force and effect from the date hereof until such time as all of the outstanding Bonds shall have been fully paid or provision made therefor in accordance with the provisions of the Indenture, whichever shall first occur, and the fees and expenses of the Trustee and any paying agents and all other amounts payable by the Company under this Agreement and the Note shall have been paid. SECTION 6.2. Notices. All notices, certificates or other communications hereunder shall be sufficiently given and shall be deemed given when delivered or mailed by registered or certified mail, postage prepaid, addressed as follows: if to the Issuer, to, ; if to the Company and via United States mail at , Attention: , with copies to Southern Company Services, Inc., , Attention: Corporate Finance Department; if to the Company and via hand delivery at , Attention: , with copies to Southern Company Services, Inc., , Attention: Corporate Finance Department; and if to the Trustee, at , Attention: . A duplicate copy of each notice, certificate or other communication given hereunder by either the Issuer or the Company to the other shall also be given to the Trustee. The Issuer, the Company and the Trustee may, by notice given hereunder, designate any further or different addresses to which subsequent notices, certificates or other communications shall be sent. SECTION 6.3. Binding Effect. This Agreement shall inure to the benefit of and shall be binding upon the Issuer, the Company and their respective successors and assigns, subject, however, to the limitations contained in Section 4.3 hereof. SECTION 6.4. Severability. In the event any provision of this Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. SECTION 6.5. Amendments. This Agreement may not be effectively terminated except in accordance with the provisions hereof and may not be effectively amended except by a written agreement in accordance with Article XI of the Indenture and signed by the parties hereto. SECTION 6.6. Execution in Counterparts. This Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. SECTION 6.7. Applicable Law. This Agreement and the Note shall be governed by and construed in accordance with the laws of the State of ________. SECTION 6.8. Captions. The captions or headings in this Agreement are for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this Agreement. SECTION 6.9. Other Financing. Notwithstanding anything in this Agreement to the contrary, the Issuer and the Company may hereafter enter into agreements to provide for the financing or refinancing of costs of the Project or any portion thereof. IN WITNESS WHEREOF, the Issuer and the Company have caused this Agreement to be executed in their respective corporate names and their respective corporate seals to be hereunto affixed and attested by their duly authorized officers, all as of the date first above written. [SEAL] By: ATTEST: SOUTHERN POWER COMPANY [SEAL] By: Title: ATTEST: Title: EXHIBIT A SOUTHERN POWER COMPANY PROMISSORY NOTE SOUTHERN POWER COMPANY ("Southern Power"), a corporation organized and existing under the laws of the State of Delaware, acknowledges itself indebted and for value received hereby promises to pay to the order of (the "County"), and its successors and assigns, the principal sum of _____________DOLLARS ($ ) together with interest on the unpaid principal balance thereof from the date ______________hereof until Southern Power's obligations with respect to the payment of such sum shall be discharged at the rate or rates borne by the Bonds referred to below. As additional interest hereon there shall be payable, and Southern Power promises to pay when due, amounts which shall equal the premium, if any, due on such Bonds in connection with the redemption thereof. Southern Power further promises to pay the purchase price of such Bonds as hereinbelow provided. This Note is issued to evidence the Loan (as defined in the Agreement hereinafter referred to) of the County to Southern Power and the obligation of Southern Power to repay the same and shall be governed by and be payable in accordance with the terms and conditions of a loan agreement (the "Agreement") between the County and Southern Power dated as of , 20 , pursuant to which the County has loaned to Southern Power the proceeds of the sale of the County's $ of Revenue Bonds (Southern Power Company Project ), (the "Bonds"). This Note (together with the Agreement) has been assigned to (the "Trustee"), acting pursuant to a trust indenture dated as of , 20 (the "Indenture") between the County and the Trustee, and may not be assigned by the Trustee except to a successor Trustee pursuant to the terms of the Indenture. Such assignment is made as security for the Bonds. The Bonds are dated and bear interest in accordance with the provisions of the Indenture, and mature on , 20 . The Bonds are subject to redemption or prior purchase prior to maturity as provided therein. Subject to the provisions of the Agreement, payments hereon are to be made by paying to the Trustee, as assignee of the County, in funds which will be immediately available on the day payment is due, amounts which, and at or before times which, shall correspond to the payments with respect to the principal of and premium, if any, and interest on the Bonds whenever and in whatever manner the same shall become due, whether at stated maturity, upon redemption or declaration or otherwise, and the purchase price of Bonds required to be purchased under the Indenture. If (i) on the date any payments on the Bonds are due there are any available moneys on deposit with the Trustee which are not being held for the payment of Bonds due and payable but which have not been presented for payment, or (ii) on any date on which Bonds are required to be purchased pursuant to the Bonds or Article III of the Indenture, there are available moneys on deposit with the Trustee held for the payment of the purchase price which are not being held for the payment of Bonds which have not been presented for payment, then, in each case, such moneys shall be credited against the payment then due hereunder, first in respect of interest and then, to the extent of remaining moneys, in respect of principal. Upon the occurrence of an Event of Default, as defined in the Agreement, the principal of and interest on this Note may be declared immediately due and payable as provided in the Agreement. Neither the officers of Southern Power nor any persons executing this Note shall be liable personally or shall be subject to any personal liability or accountability by reason of the issuance hereof. IN WITNESS WHEREOF, Southern Power Company has caused this Note to be executed in its corporate name and on its behalf by its President, its Treasurer or a Vice President by his manual signature, and its corporate seal to be impressed hereon and attested by the manual signature of its Secretary or an Assistant Secretary, all as of the date first above written. SOUTHERN POWER COMPANY By: ----------------- Attest: ----------------- ASSIGNMENT Pay, without recourse, to the order of ____________ , as assignee of under the Trust Indenture, dated as of , 20 , between________ and ____________________________ , as Trustee, securing the payment of Revenue Bonds (Southern Power Company Project), in the original principal amount of $ ___________________. By: ----------------------- EX-3 4 xb3.txt Exhibit B-3 --------------------------------------- and SOUTHERN POWER COMPANY INSTALLMENT SALE AGREEMENT Dated as of ______________ Relating to $ ___________ _________________________ Revenue Bonds (Southern Power Company Plant )

INSTALLMENT SALE AGREEMENT THIS INSTALLMENT SALE AGREEMENT dated as of______________. between _______________________________________ (the "Board"), and SOUTHERN POWER COMPANY, a corporation organized and existing under the laws of the State of Delaware (the "Company"); WITNESSETH: ..........NOW, THEREFORE, for and in consideration of the premises and the mutual covenants hereafter contained and the sum of $ paid to the Board by the Company, the receipt and sufficiency of which is hereby acknowledged, the parties hereto formally covenant, agree and bind themselves as follows: ARTICLE I DEFINITIONS For purposes of this Agreement, the following terms shall have the meanings indicated. Capitalized terms used without definition herein shall have the meaning ascribed such terms in the Indenture. "Act" means the _______________________________________ "Agreement" means this Installment Sale Agreement and any amendments and supplements hereto. "Board" means , and its successors and assigns and any body resulting from or surviving any consolidation or merger to which it or its successors may be a party. "Board Representative" means the person at the time designated to act on behalf of the Board by written certificate furnished to the Company and the Trustee containing the specimen signature of such person and signed on behalf of the Board by the President or the Vice President of its Board of Directors or by the Secretary of the Board. Such certificate may designate an alternate or alternates. The Board Representative may be an employee of the Board. "Bond Fund" means the fund created in Section 5.01 of the Indenture. "Bonds" means the Board's Revenue Bonds (Southern Power Company Plant ). "Code" means the Internal Revenue Code of 1986, as amended, and any regulations thereunder. "Company" means Southern Power Company, a Delaware corporation, and its successors and assigns and any surviving, resulting or transferee corporation as provided in Section 6.3 hereof. "Company Representative" means the person at the time designated to act on behalf of the Company by written certificate furnished to the Board and the Trustee containing the specimen signature of such person and signed on behalf of the Company by the President or any Vice President of the Company. Such certificate may designate an alternate or alternates. The Company Representative may be an employee of the Company. "Completion Date" means the date of completion of the acquisition, construction, installation and equipping of the Project as that date shall be certified as provided in Section 3.5 hereof. "Construction Fund" means the fund created in Section 5.03 of the Indenture. "Government Obligations" means (i) noncallable direct obligations of the United States for which its full faith and credit are pledged, (ii) noncallable obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States, the timely payment of which is unconditionally guaranteed as a full faith and credit obligation of the United States, or (iii) securities or receipts evidencing ownership interests in obligations or specified portions (such as principal or interest) of obligations described in (i) or (ii). "Improvements" means any facilities and, if then authorized by the Act, as now or hereafter amended, any other facilities and improvements authorized to be financed with the proceeds of bonds of the Board in or on any properties of the Company and further includes any additions, extensions, improvements, relocations, alterations, enlargements, modifications, repairs, replacements or changes with respect to any of the foregoing. "Indenture" means the Trust Indenture dated as of , between the Board and , as Trustee, pursuant to which the Bonds are authorized to be issued, and including any trust indenture supplemental thereto. "Plans and Specifications" means the plans and specifications prepared by or on behalf of the Company for the Project, as the same may be revised from time to time by the Company in accordance with the last paragraph of Section 3.1 hereof. "Plant" means the Company's . "Project" means the described in the Plans and Specifications; such Project as designed on the date hereof is generally described in Exhibit A. "Project Costs" with respect to the Project shall be deemed to include the following: (a) obligations of the Board or the Company incurred for labor and material (including reimbursements payable to the Board or the Company and payments on contracts in the name of the Board or the Company) in connection with the acquisition, construction, installation and equipping of the Project; (b) the cost of contract bonds and of insurance of all kinds that may be required or necessary during the course of construction of the Project; (c) all costs of engineering services, including the costs of the Board or the Company for test borings, surveys, estimates, plans and specifications and preliminary investigation therefor, and for supervising construction, as well as for the performance of all other duties required by or consequent upon the proper construction of the Project; (d) overheads of the Board and the Company, to the extent not included in subparagraph (c) above, allocable to the Project by the Board or the Company, in accordance with the Uniform System of Accounts prescribed for Public Utilities and Licensees by the Federal Power Commission; (e) all expenses incurred in connection with the issuance of the Bonds, including without limitation compensation and expenses of the Trustee, legal expenses and fees, fees related to the remarketing of the Bonds, costs of printing and engraving, recording and filing fees, compensation of the underwriters, rating agency fees and interest to accrue on the Bonds to the Completion Date; (f) allowance for funds used during construction of the Company with respect to the Project to and including the last day of the calendar month preceding the date that Bonds are first issued under Section 2.01 of the Indenture, determined in conformity with Account 419.1 of the Uniform System of Accounts prescribed for Public Utilities and Licensees by the Federal Power Commission; (g) all other costs and allowances which the Board or the Company may properly pay or accrue for the acquisition, construction, installation or equipping of the Project or the sale thereof to the Company; and (h) any sums required to reimburse the Board or the Company for advances made by either of them for any of the above items or for any other costs incurred and for work done by either of them which are properly chargeable to the Project. "Security Interest" means the security interest created by Section 7.4 hereof. "Trustee" means the trustee at the time serving as such under the Indenture. ARTICLE II REPRESENTATIONS Section 2.1. Representations by the Board. The Board represents and warrants that: (a) The Board is a , created pursuant to the Act. Under the provisions of the Act, the Board has the power to enter into the transactions contemplated by this Agreement and to carry out its obligations hereunder. The Board is not in default under any of the laws of the State of and is duly authorized to execute and deliver this Agreement. Subject to Section 7.2 hereof, the Board agrees that it will do or cause to be done all things necessary to preserve and keep in full force and effect its existence. (b) The Board proposes to provide funds for the acquiring, constructing, installing and equipping of the Project, as may be necessary, and has agreed to sell the Project to the Company, all as hereinafter provided. (c) The Board will, with the approval of its counsel and upon the request and at the expense of the Company, cause the execution and delivery from time to time to the Company of such further instruments of conveyance as the Company deems to be necessary to effect or evidence the conveyance to the Company of good and marketable title to the Project, or any portion thereof. (d) The Board will issue $ aggregate principal amount of its Bonds following the execution of this Agreement, on the terms set forth in the Indenture, for the purpose of paying a portion of the Project Costs. Section 2.2. Representations by the Company. The Company represents and warrants that: (a) The Company is a corporation duly incorporated and in good standing under the laws of the State of Delaware, has all necessary authorization power to enter into, and to perform and observe the agreements and covenants on its part contained in, this Agreement, and by proper corporate action has duly authorized the execution and delivery of this Agreement. (b) Neither the execution and delivery of this Agreement, the consummation of the transactions contemplated hereby, nor the fulfillment of or compliance with the terms and conditions of this Agreement will conflict with or constitute a breach of or default under the Company's corporate charter or by-laws or any agreement or instrument to which the Company is a party or by which it is bound. (c) The Project does not include facilities designed, and is not designed, nor will the Project be used, for the sale or distribution of electricity to the public. (d) Substantially all of the proceeds of the Bonds will be used to pay Project Costs which constitute proper costs of solid waste disposal facilities within the meaning of Section 142 of the Code, and which constitute proper costs of a Project within the meaning of the Act. ARTICLE III COMMENCEMENT AND COMPLETION OF THE PROJECT; ISSUANCE OF THE BONDS Section 3.1. Agreement to Construct and Equip the Project. The Board agrees that: (a) It will cause the Project to be acquired, constructed, installed and equipped as herein provided at the Plant substantially in accordance with the Plans and Specifications. (b) It will make, execute, acknowledge and deliver any contracts, orders, receipts, writings and instructions with any other persons, firms or corporations and in general do all things which may be requisite or proper, all for constructing and completing the Project in accordance with the Plans and Specifications. (c) It will ask, demand, sue for, levy, recover and receive such sums of money, debts or other rights whatsoever to which it may be entitled under any contract, order, receipt, guaranty, warranty, writing or instruction in connection with any of the foregoing, and it will enforce the provisions of any such contract, agreement, obligation, bond or other security. Any amounts received in connection with the foregoing, after deduction of expenses incurred in such recovery, if received prior to the Completion Date, shall be paid into the Construction Fund and, if received on or after the Completion Date, shall be paid into the Bond Fund. The Company hereby transfers to the Board that portion of the Project which has been heretofore acquired, constructed, installed or put in place and not previously acquired by the Board, subject to no liens. The Board hereby makes, constitutes and appoints the Company as its true, lawful and exclusive agent for the acquisition, construction, installation and equipping of the Project, and the Company hereby accepts such agency to act and do all things on behalf of the Board, to perform all acts and agreements of the Board hereinbefore provided in this Section 3.1, and to bring any actions or proceedings against any person which the Board might bring with respect thereto as the Company shall deem proper. The Board hereby ratifies and confirms all lawful and proper actions of, and assumes and adopts all such contracts entered into by, the Company with respect to the Project prior to the effective date hereof. This appointment of the Company to act as agent and all authority hereby conferred are granted and conferred to the Completion Date and thereafter until all activities in connection with the construction, acquisition, installation and equipping of the Project shall have been completed, and shall not be terminated prior thereto by act of the Board or of the Company. Upon the Completion Date or at any time prior thereto upon the request of the Company, so long as it is not in default hereunder, the Board will assign to the Company all warranties and guaranties of all contractors, subcontractors, suppliers, architects and engineers for the furnishing of labor, materials or equipment or supervision or design in connection with the Project and any rights or causes of action arising from or against any of the foregoing. It is expressly provided, however, that the Board shall retain primary legal responsibility for the expenditure of the proceeds of the Bonds and nothing herein contained shall be construed as relieving or derogating the Board's responsibility therefor and the Board shall take such action, institute such procedures and adopt such regulations consistent with the Indenture as are necessary to insure that the Company at all times is in full compliance herewith. The Board and the Company agree to acquire, construct, install and equip the Project with all reasonable dispatch, delays incident to strikes, riots, acts of God or public enemy or any delay beyond the reasonable control of the Board or the Company only excepted; but, if such acquisition, construction, installation and equipping is delayed for any reason, there shall be no resulting liability on the part of the Board and no diminution in or postponement of the amounts payable by the Company pursuant to this Agreement. The Board and the Company agree that the Company may supplement, amend and add to the Plans and Specifications, and that the Company shall be authorized to omit or make substitutions for components of the Project provided that no such change shall be in contravention of Section 2.2(c) hereof or shall result in any part of the Project not being a qualifying "project" within the meaning of the Act. Section 3.2. Agreement to Issue Bonds; Application of Bond Proceeds; Additional Bonds. (a) In order to provide funds for payment of a portion of the Project Costs, the Board agrees that it will sell, issue and deliver the Bonds to the initial purchaser thereof and deposit the proceeds thereof with the Trustee as follows: (i) in the Bond Fund a sum equal to the accrued interest, if any, to be paid by the purchaser of the Bonds, and (ii) in the Construction Fund the balance of the proceeds to be received from said sale. (b) The Board agrees to authorize the issuance of additional bonds upon the terms and conditions provided herein. Additional bonds may be authorized for the purpose of financing (i) the Project Costs to the extent that such costs exceed the amount in the Construction Fund, or (ii) additional Project Costs as the Company may deem necessary or desirable. If the Company is not in default hereunder, the Board agrees, on request of the Company, from time to time, to use its best efforts to issue the amount of additional bonds specified by the Company, provided, that the Company and the Board shall have entered into an amendment to this Agreement to provide for the sale of any Improvements to the Company and to include a description of such Improvements and a statement that such Improvements will be located at the Plant. Such amendment will provide that any such Improvements shall be included under this Agreement upon terms equivalent to those pertaining to the Project. The Board will deposit the proceeds from the sale of additional bonds with the Trustee in the manner as provided at the time of issuance of such additional bonds. Section 3.3. Disbursements from the Construction Fund. In the Indenture, the Board has authorized and directed the Trustee to make payments from the Construction Fund to pay Project Costs or to reimburse the Board or the Company for any Project Costs paid or incurred by the Board or the Company before or after execution of this Agreement and delivery of the Bonds. Such payments shall be made by the Trustee upon receipt of a requisition signed by the Company Representative stating with respect to each payment to be made: (i) the requisition number, if any, (ii) the name and address of the person, firm or corporation to whom payment is due, (iii) the amount to be paid and (iv) that each obligation or portion thereof which is to be paid has been properly incurred, is a proper charge against the Construction Fund, is unpaid and has not been the basis of any previous withdrawal. In the Indenture, the Board has authorized and directed that upon completion of the Project, any balance remaining in the Construction Fund shall be disbursed as provided for in Section 3.5 hereof. Section 3.4. Furnishing Documents to Trustee. The Board and the Company agree to cause such requisitions to be directed by the Board and the Company to the Trustee as may be necessary to effect payments out of the Construction Fund in accordance with Section 3.3 hereof. Section 3.5. Establishment of Completion Date. The Completion Date shall be evidenced to the Trustee by a certificate signed by the Company Representative stating that, except for amounts retained by the Trustee at the Company's direction for any Project Costs not then due and payable, the acquisition, construction, installation and equipping of the Project has been completed substantially in accordance with the Plans and Specifications and all labor, services, materials and supplies used in such construction have been paid for, and all costs and expenses incurred in connection therewith have been paid. Notwithstanding the foregoing, such certificate shall state that it is given without prejudice to any rights against third parties which exist at the date of such certificate or which may subsequently exist at the date of such certificate or which may subsequently come into being. The Board and the Company agree to cooperate in causing such certificate to be furnished to the Trustee. As soon as practicable and in any event within sixty days from the receipt of such certificate, the Trustee shall transfer all amounts then in the Construction Fund, including any unliquidated investments made with moneys theretofore deposited in the Construction Fund, to the Bond Fund to be applied in accordance with the Indenture. Section 3.6. Company Required to Pay in Event Construction Fund Insufficient. In the event the moneys in the Construction Fund available for payment of the Project Costs (including the proceeds of any additional bonds issued for the purpose of paying the cost of completing the Project) should not be sufficient to pay the Project Costs in full, the Company agrees to complete the Project and to pay that portion of the Project Costs in excess of the moneys available therefor in the Construction Fund. The Board does not make any warranty, either express or implied, that the moneys paid into the Construction Fund and available for payment of the Project Costs will be sufficient to pay all of the Project Costs. The Company agrees that if after exhaustion of the moneys in the Construction Fund the Company should pay any portion of the Project Costs pursuant to the provisions of this Section, it shall not be entitled to any reimbursement therefor (except from the proceeds of additional bonds, if any) from the Board or from the Trustee or from the holders of any of the Bonds, nor shall it be entitled to any diminution of the amounts payable under Section 4.3 hereof. Section 3.7. Investment of Construction Fund and Bond Fund Moneys. Provided this Agreement has not been terminated pursuant to Section 9.1 hereof and no event of default hereunder shall have occurred and be continuing, any moneys held in the Construction Fund and the Bond Fund shall be invested or reinvested by the Trustee, at the request of, and as directed by, the Company, in any obligations or securities to the extent that moneys in the Construction Fund or the Bond Fund are permitted to be invested therein under applicable law, which obligations or securities are accorded one of the three highest ratings by a national rating agency. ARTICLE IV SALE OF THE PROJECT; PROVISIONS FOR PAYMENT Section 4.1. Sale of the Project. In further consideration of the Company's agreement to purchase the Project, payable in installments as set forth in this Agreement, immediately after the sale and delivery of the Bonds, the Board shall execute and deliver to the Company instruments conveying and vesting in the Company all of the right, title and interest of the Board in the portion of the Project which has been theretofore acquired, constructed, installed or put in place, and conveying all of the right, title and interest of the Board thereafter acquired for the Project subject, in each case, to no liens. Title to such equipment, component or other personal property shall vest in the Company immediately upon the construction, installation or placement of such equipment, component or other personal property. Section 4.2. Use of Project. The Board hereby covenants and agrees that it will not take any action, other than pursuant to the exercise of its rights under Section 8.2 of this Agreement, to prevent the Company from having possession and enjoyment of the Project during the term of this Agreement and will, at the request of the Company, and at the Company's cost, cooperate with the Company in order that the Company may have possession and enjoyment of the Project. Section 4.3. Amounts Payable. The Company agrees to pay to the Trustee, as assignee of the Board, in funds which will be immediately available on the day payment is due, from time to time as the amount owed hereunder, including interest thereon (which interest obligation shall equal the interest and premium, if any, on the Bonds), amounts which, and at or before times which, shall correspond (i) to the payments in respect of the principal of and premium, if any, and interest on the Bonds whenever and in whatever manner the same shall become due whether at stated maturity, upon redemption or acceleration or otherwise, and (ii) the purchase price of the Bonds required or permitted to be purchased under the Indenture. If (i) at the date any payment on the Bonds is due, available moneys are held by the Trustee under the Indenture which are not being held for the payment of Bonds due and payable but which have not been presented for payment, or (ii) on any date on which Bonds are to be purchased pursuant to Section 4.02 of the Indenture, there are any available moneys held for the payment of the purchase price which are not being held for the purchase of Bonds which have not been presented for purchase pursuant to Section 6 of the form of Bonds, then, in each case, such moneys shall be credited against the payment then due hereunder, first in respect of interest on the amount then due and owing hereunder and then, to the extent of remaining moneys, in respect of principal on the amount then due and owing hereunder. The Company will also pay: (i) the fees, charges and reasonable expenses of the Trustee, the paying agent and the Remarketing Agent under the Indenture, such fees, charges, and reasonable expenses to be paid directly to the Trustee, the paying agent and the Remarketing Agent for their respective accounts as and when such fees, charges and reasonable expenses become due and payable, (ii) any expenses and costs incurred or to be incurred by virtue of the issuance of the Bonds, and (iii) any expenses in connection with any redemption of the Bonds. The Company may direct the Trustee to use moneys in the Bond Fund to redeem Bonds prior to maturity pursuant to Section 3.01 of the Indenture or to purchase Bonds at any time for cancellation in the manner provided in Section 4.05 of the Indenture. Notwithstanding any other provision hereof, the Company shall have, and is hereby granted the option, exercisable at its sole discretion, to prepay all amounts due and owing by it hereunder and under the Indenture by depositing sufficient moneys with the Trustee in accordance with the terms of the Indenture. Section 4.4. Indemnity Against Claims. The Company will indemnify the Trustee, the Board and each director, officer, employee, attorney and agent thereof (herein "Indemnitees") and will hold the Indemnitees harmless against, any and all claims and liabilities of any character or nature whatsoever, regardless of by whom asserted or imposed, and by or on behalf of any person, firm, corporation, or governmental authority, arising out of, resulting from, or in any manner connected with the Project and the issuance of the Bonds, including, without limiting the generality of the foregoing: (a) liability resulting from any destruction of or damage to property or injury or death of any person or persons occurring in connection with the acquisition, construction, use, non-use, condition or operation of the Project; (b) any liability with respect to any contract or purchase order for the acquisition and construction of the Project; (c) any actions relating to the acquisition and construction of the Project or any part thereof; or (d) any claim or liability arising out of any action taken by Indemnitees at the request of the Company (or any person authorized to act on behalf of the Company) in any manner related to this Agreement. The Company will pay or reimburse all legal or other expenses reasonably incurred by Indemnitees, as the case may be, in connection with the investigation or defense of any action or proceeding whether or not resulting in liability, with respect to any claim, liability or loss in respect of which indemnity may be sought by Indemnitees against the Company under the provisions of this Section. The Company shall have the sole right and duty to assume, and will assume, the defense thereof, with full power to litigate, compromise or settle the same in its sole discretion. Nothing contained in this section shall be construed to indemnify Indemnitees against or to release any of such parties from liability for any claim, liability or loss that may result from gross negligence, bad faith or willful misconduct by Indemnitees. Anything to the contrary herein contained notwithstanding, the covenants of the Company contained in this Section shall, with respect to any claim, liability or loss for which the Company is obligated to provide indemnity, remain in full force and effect after the termination of this Agreement until: (i) any cause of action brought in respect of such claim, liability or loss shall be barred by the applicable statute of limitations as determined by a court of competent jurisdiction; or (ii) the payment in full or the satisfaction of such claim, liability or loss, including all reasonable expenses incurred by Indemnitees in defending against any such claim, liability or loss. The obligations of the Company to indemnify or defend Indemnitees shall attach and become effective with regard to any claim only upon condition that Indemnitees reasonably promptly notify the Company in writing upon Indemnitees' discovery of such claim and tender the defense of such claim to the Company. Indemnitees shall have no right to further reimbursement for legal or other expenses incurred in investigation or defense of such claim after the Company accepts such tender. Section 4.5. Obligation of the Company Unconditional. The obligation of the Company to make the payments pursuant to this Agreement and to perform and observe the other agreements on its part contained herein and in the Indenture shall be absolute and unconditional, shall not be subject to any defense or any right of set-off, counterclaim or recoupment arising out of any breach by the Board or the Trustee of any obligation to the Company, whether hereunder or otherwise, or out of any indebtedness or liability at any time owing to the Company by the Board or the Trustee. Until such time as the principal of, premium, if any, and interest on the Bonds shall have been fully paid or provision for the payment thereof shall have been made in accordance with the Indenture, the Company (i) will not suspend or discontinue any payments pursuant to this Agreement, (ii) will perform and observe all its other agreements contained in this Agreement and (iii) except as provided herein, will not terminate this Agreement for any cause including, without limiting the generality of the foregoing, failure of the Board to complete the Project, failure of the Board's title to the Project or any part thereof, loss title to (or the temporary use of) the Project by virtue of the exercise by others of the power of eminent domain, any acts or circumstances that may constitute failure or consideration, destruction of or damage to the Project, commercial frustration of purpose, any change in the tax or other laws or the United States of America or of the State of or any political subdivision of either thereof or any failure of the Board to perform and observe any agreement, whether express or implied, or any duty, liability or obligation arising out of or connected with this Agreement. Nothing contained in this Section 4.5 shall be construed to release the Board from the performance of any of the agreements on its part herein contained; and, in the event the Board shall fail to perform any such agreement on its part, the Company may institute such action against the Board as the Company may deem necessary to compel performance or may pursue such other remedies for non-performance as may be available to it so long as such action shall not violate the agreements on the part of the Company contained in the preceding sentence, and in no event shall the Company be entitled to any diminution of the amounts payable under Section 4.3 hereof. The Company may, however, at its own cost and expense and in its own name or in the name of the Board, prosecute or defend any action or proceeding or take any other action involving third persons which the company deems reasonably necessary in order to insure the acquisition, construction, installation, equipping and completion of the Project or to secure or protect its right or possession, occupancy and use hereunder, and in such event the Board hereby agrees to cooperate fully with the Company and to take all action necessary to effect the substitution of the Company for the Board in any such action or proceeding if the Company shall so request. ARTICLE V MAINTENANCE AND INSURANCE Section 5.1. Maintenance of Project by the Company. The Company agrees that it will pay all costs of operating and maintaining the Project. Section 5.2. Removal of Portions of the Project. The Company shall not be under any obligation to renew, repair or replace any inadequate, obsolete, worn-out, unsuitable, undesirable or unnecessary portion of the Project. In any instance where the Company determines that any portion of the Project has become inadequate, obsolete, worn-out, unsuitable, undesirable or unnecessary, the Company may remove such portion of the Project and sell, trade-in, exchange or otherwise dispose of such removed portion of the Project free of any security interest in favor of the Board or the Trustee; provided, however, the Company shall utilize any unfounded net property additions which are available to it to withdraw any net proceeds of the disposition of such removed portion of the Project under any indenture securing indebtedness of the Company and promptly apply the funds so withdrawn to the replacement of or substitution for the properties so disposed of or shall pay such funds to the Trustee for deposit in the Bond Fund, and any properties having a similar function acquired for the replacement of or in substitution for the properties so disposed, if acquired in whole or in part with such proceeds, shall become a part of the Project subject to the Security Interest. The Company will promptly notify the Board and the Trustee of the disposition of any portion of the Project, as permitted by this Section, if, but only if, such removed portion at the time such is disposed of is replaced by property having a similar function, which costs $ or more or is sold by the Company for a sale price of $ or more. The removal of any portion of the Project pursuant to the provisions of this Section shall not entitle the Company to any abatement or diminution of the purchase price for the Project. Section 5.3. Taxes and Other Governmental Charges. The Company will pay, as the same respectively becomes due, all taxes and governmental charges of any kind whatsoever that may be lawfully assessed against the Company or the Board with respect to the Project or any portion thereof or with respect to the income of the Board from the Project or under this Agreement. The Company may in good faith contest any such tax or charge and permit the same to remain unsatisfied during the period of such contest and any appeal therefrom unless in the opinion of counsel satisfactory to the Trustee by such action the Security Interest shall be materially endangered or the Project or any material part thereof shall become subject to imminent loss or forfeiture, in which event such tax or charge shall be paid prior to any such loss or forfeiture. Section 5.4. Property Insurance. Until the Company shall have satisfied its obligations under Section 4.3 hereof, the Company will insure the Project against such property risks as is consistent with its insurance practices in effect from time to time, including self-insurance. In the event that the Project is damaged or destroyed in whole or in part by any casualty, the Company shall, to the extent it determines that rebuilding, repairing or restoring of the Project is not practicable, utilize any unfunded net property additions which are available to it to withdraw any proceeds of insurance covering the Project against such damage or loss under any indenture securing indebtedness of the Company and promptly, upon withdrawal of such proceeds, pay the funds so withdrawn to the Trustee for deposit in the Bond Fund; provided, however, that in no event shall the amount required to be so paid to the Trustee exceed the purchase price for the Project than payable under Section 4.3 hereof. Section 5.5 Eminent Domain. In the event that title to or the temporary use of the Project, or any part thereof, shall be taken in condemnation or by the exercise of the power of eminent domain by any governmental body or by any person, firm or corporation acting under governmental authority, there shall be no abatement or reduction in the payments required by Section 4.3 hereof for the purchase price for the Project. If and to the extent that the Company shall determine that rebuilding or restoring the Project, or such part thereof as has been taken, is not practicable, the Company shall utilize any unfunded net property additions which are available to the Company to withdraw any proceeds of any award or awards in respect of the Project or any part thereof under any indenture securing indebtedness of the Company and promptly, upon the withdrawal of such proceeds, pay the funds so withdrawn to the Trustee for deposit in the Bond Fund; provided, however, that in no event shall the amount required to be so paid to the Trustee exceed the purchase price for the Project then payable under Section 4.3 hereof. ARTICLE VI SPECIAL COVENANTS Section 6.1. No Warranty of Conditions or Suitability by the Board. The Board makes no warranty, either express or implied, as to the Project or its suitability for the Company's purposes or needs. Section 6.2. Inspection of the Project. The Company agrees that the Board, the Trustee and their or either of their duly authorized agents shall have the right at all reasonable times to enter at their own risk upon the site of the Plant and to examine and inspect the Project. The Company further agrees that the Board and its duly authorized agents shall have such rights or access to the Project as may be reasonably necessary to cause to be completed the acquisition, construction, equipping and installation provided for in Section 3.1 hereof. The Board and the Trustee shall also be permitted, at all reasonable times, to examine the books and records of the Company with respect to the Project. Section 6.3. Company to Maintain its Corporate Existence; Conditions Under Which Exceptions Permitted. The Company agrees that during the term of this Agreement it will maintain its corporate existence and qualification to do business in the State of Delaware , will not dissolve or otherwise dispose of all or substantially all of its assets and will not consolidate with or merge into another corporation or permit one or more other corporations to consolidate with or merge into it; provided, that the Company may, without violating the agreements contained in this Section 6.3, consolidate with or merge into another domestic corporation (i.e., a corporation incorporated and existing under the laws of one of the states of the United States of America) or permit one or more other corporation to consolidate with or merge into it, or sell or otherwise transfer to another domestic corporation all or substantially all of its assets as an entirety and thereafter dissolve; provided, in the event the Company is not the surviving, resulting or transferee corporation, as the case may be, that the surviving, resulting or transferee corporation assumes, accepts and agrees in writing to pay and perform all of the obligations of the Company herein and is a corporation or is qualified to do business in the State of as a foreign corporation. Section 6.4. Annual Statement. The Company agrees to have an annual audit made by its regular independent certified public accountants and within 120 days after the close of each fiscal year to furnish the Trustee and any holder of the Bonds who may so request a balance sheet and statement of income and surplus showing the financial condition of the Company and its consolidated subsidiaries, if any, at the close of such fiscal year and the result of operations of the Company and its consolidated subsidiaries, if any, for such fiscal year, accompanied by a certificate or opinion of said accountants. The requirements of this Section 6.4 shall be satisfied by the submission to the Trustee or to any holder of the Bonds who may request such information of the Company's annual report to its shareholders. Section 6.5. Further Assurances and Corrective Instruments. The Board and the Company agree that they will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such further instruments as may reasonably be required for correcting any inadequate or incorrect description of the Project and for carrying out the intention or facilitating the performance of this Agreement. Section 6.6. Board Representative. Whenever under the provisions of this Agreement the approval of the Board is required or the Board is required to take some action at the request of the Company, such approval shall be made or such action shall be taken by the Board Representative; and the Company or the Trustee shall be authorized to act on any such approval or action and the Board shall have no complaint against the Company or the Trustee as a result of any such action taken. Section 6.7. Company Representative. Whenever under the provisions of this Agreement the approval of the Company is required or the Company is required to take some action at the request of the Board, such approval shall be made or such action be taken by the Company Representative; and the Board or the Trustee shall be authorized to act on any such approval or action and the Company shall have no complaint against the Board or the Trustee as a result of any such action taken. Section 6.8. Non-Arbitrage Covenant. The Company and the Board covenant and agree that they will not use or permit the use by any person of any of the funds provided by the Board hereunder or any other of its funds, directly or indirectly, or direct the Trustee to invest any funds held by it under the Indenture or this Agreement, in such manner as would, or enter into, or allow any "related person" to enter into, any arrangement, formal or informal, that would, or take or omit to take any other action that would, cause any Bond to be an "arbitrage bond" within the meaning of Section 148(a) of the Code or result in the loss of the exclusion from gross income for federal income tax purposes of the interest paid on the Bonds. Without limiting the generality of the foregoing, the Company covenants and agrees to comply with the requirements of Sections 148(d) and 148(f) of the Code and any proposed, temporary, or final regulations thereunder as may be applicable to the Bonds or the proceeds derived from the sale of the Bonds or any other moneys. The Company acknowledges Section 6.03 of the Indenture and agrees to perform all duties imposed upon it by such Section. Insofar as said Section imposes duties and responsibilities on the Company, it is specifically incorporated herein by reference. Section 6.9 Use of Project. The Board hereby covenants and agrees that it will not take any action, other than pursuant to the exercise of its rights under Section 8.2 of this Agreement, to prevent the Company from having possession and enjoyment of the Project during the term of this Agreement and will, at the request of the Company and at the Company's cost, cooperate with the Company in order that the Company may have possession and enjoyment of the Project. ARTICLE VII ASSIGNMENT, LEASING AND SELLING; REDEMPTION Section 7.1. Assignment and Lease. This Agreement may be assigned, and the Project may be leased as a whole or in part, by the Company without the necessity of obtaining the consent of either the Board or the Trustee, subject, however, to the condition that no assignment or leasing (other than pursuant to Section 6.3 hereof) shall relieve the Company from primary liability for any of its obligations hereunder, and in the event of any such assignment or leasing, the Company shall continue to remain primarily liable for payments of the amounts specified in Section 4.3 hereof and for performance and observance of the other agreements on its part herein provided to be performed and observed by it to the same extent as through no assignment or lease had been made. Furthermore, any assignee of the Company's interest in this Agreement shall assume the obligations of the Company hereunder to the extent of the interest assigned, and the Company shall, promptly upon the making of any assignment, furnish or cause to be furnished to the Board and to the Trustee a true and complete copy of each such assignment and assumption of obligations. Section 7.2. Restrictions on Transfer of Board's Rights. The Board agrees that, except for the assignment of this Agreement pursuant to the Indenture, it will not sell, assign, transfer or convey its interest in the Project or in this Agreement during the term of this Agreement, except as herein provided. If the laws of the State of at the time shall permit such action to be taken, nothing contained in this Section 7.2 shall prevent the reincorporation of Board, the consolidation of the Board with, or merger of the Board into, or transfer of its remaining interest in the Project or in this Agreement as an entirety to, any public corporation whose property and income are not subject to taxation and which has corporate authority to exercise the Board's rights granted hereunder; provided (i) that no such action shall be taken without the prior written consent of the Company, unless such action shall be required by law, (ii) that any such action shall be approved by the governing body of the City of , and (iii) that upon any such consolidation, merger or transfer, the due and punctual payment of the principal of, interest and premium, if any, on the Bonds according to their tenor, and the due and actual performance and observance of all the agreements and conditions of this Agreement to be kept and performed by the Board, shall be expressly assumed in writing by the corporation resulting from such consolidation or surviving such merger or to which the Project shall be transferred as an entirety. Section 7.3. Redemption of Bonds. If the Company shall have deposited moneys or Government Obligations in the Bond Fund in an amount sufficient, or which together with other moneys available therefore under any terms of the Indenture are sufficient, to redeem all or part of the principal amount of the Bonds, the Board, at the request of the Company, shall forthwith take all steps necessary under the applicable redemption provisions of the Indenture to effect redemption of not less than such principal amount of the Bonds requested by the Company (if such Bonds are subject to redemption prior to maturity), and for which sufficient moneys or Government Obligations shall have been so deposited or made available, on a redemption date selected by the Company, provided that such request is received in sufficient time prior to the redemption date selected by the Company to effect such redemption under the provisions of the Indenture. Section 7.4. Creation of Security Interest. As security for the performance of the Company of its obligations under Section 4.3 hereof, the Company hereby grants to the Board a security interest in the Project and in each component thereof which has been or will be acquired hereunder by the Company from the Board. Such security interest shall remain in effect until the Company shall have satisfied its obligations under Section 4.3 hereof at which time the Board shall cause the execution and delivery to the Company of such documents as shall be necessary to effect or evidence the termination of such security interest. Section 7.5. Assignment of Rights Under this Agreement. Concurrently with issuance of the Bonds pursuant to Section 2.01 of the Indenture, the Board shall assign to the Trustee all of its rights and interest in and to this Agreement, including the Security Interest and all funds due and to become due hereunder (except for payments for indemnification and expenses under Section 4.4 and 8.4 hereof) as security for payment of the principal of, premium, if any, and interest on, and purchase price of, the Bonds. The Company hereby consents to such assignment. ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES Section 8.1. Events of Default Defined. The following shall be "events of default" under this Agreement and the terms "event of default" or "default" shall mean, whenever they are used in this Agreement, any one or more of the following events: (a) Failure by the Company to pay or cause to be paid that portion of the amounts payable hereunder which is attributable to the interest due or becoming due on any of the Bonds for a period of five days after the same shall become due and payable. (b) Failure by the Company to pay or cause to be paid that portion of the amounts payable hereunder which is attributable to the principal of, or premium, if any, on any of the Bonds when the same shall become due and payable. (c) Failure by the Company to pay or cause to be paid that portion of the amounts payable hereunder which is attributable to the purchase price of any of the Bonds after the same shall become due and payable. (d) Failure by the Company to observe and perform any covenant, condition, or agreement in this Agreement on its part to be observed or performed, other than as referred to in subsections (a), (b), and (c) of this Section, for a period of 90 days after written notice, specifying such failure and requesting that it be remedied, is given to the Company by the Board or the Trustee, unless extended prior to the expiration of such period as described below. (e) The dissolution or liquidation of the Company, except as permitted by Section 4.4 hereof, or the commencement by the Company of any case or proceeding seeking to have an order for relief entered on its behalf as a debtor or to adjudicate it as bankrupt or insolvent or seeking reorganization, liquidation, dissolution, winding-up, arrangement, composition, readjustment of its debts or any other relief under any bankruptcy, insolvency, reorganization or other similar law of the United States or any state, or adjudication of the Company as bankrupt, or an assignment by the Company for the benefit of its creditors, or the entry by the Company into an agreement of composition with its creditors, or the approval by a court of competent jurisdiction of a petition applicable to the Company in any proceeding for its reorganization instituted under the provisions of Title 11 of the United States Code, as amended, or under any similar statutory provision which may hereafter be enacted. (f) An "event of default" as defined in Section 8.01 of the Indenture shall have occurred and be continuing. A default under clause (d) of this Section is not an Event of Default until the Trustee or the holders of at least 25% in principal amount of the Bonds then outstanding give the Board and the Company a notice specifying the default, requesting that it be remedied and stating that the notice is a "Notice of Default" and the Company does not cure the default within 90 days after receipt of the notice, or within such longer period as the Trustee shall agree to. The Trustee shall not unreasonably refuse to agree to a longer period if the default cannot reasonably be cured within 90 days after receipt of the notice and the Company has begun within 90 days and continued diligent efforts to correct the default. The foregoing provisions of clause (d) of this Section are subject to the further qualification that if by reason of force majeure the Company is unable in whole or in part to carry out its agreements herein contained, other than the obligations on the part of the Company contained in Article V and in Sections 6.2, 6.3, 6.4, 6.8 and 7.1 hereof, the Company shall not be deemed in default during the continuance of such inability. The term "force majeure" as used herein shall mean, without limitation, the following: acts of God; strikes, lockouts or other industrial disturbances; acts of public enemies; orders of any kind of the government of the United States or of the State or of any of their departments, agencies or officials, or of any civil or military authority; insurrections; riots; epidemics; landslides; lightning; earthquake; fire; hurricanes; storms; floods; washouts; droughts; arrests; restraint of government and people; civil disturbances; explosions; breakage or accident to machinery, transmission lines, pipes or canals; partial or entire failure of utilities; or any other cause or event not reasonably within the control of the Company. The Company agrees, however, to remedy with all reasonable dispatch the cause or causes preventing the Company from carrying out its agreements; provided that the settlement of strikes, lockouts, and other industrial disturbances shall be entirely within the discretion of the Company, and the Company shall not be required to make settlement of strikes, lockouts, and other industrial disturbances by acceding to the demands of the opposing party or parties when such course is in the judgment of the Company unfavorable to the Company. Section 8.2. Remedies on Default. Subject to Section 8.6 hereof, whenever any event of default referred to in Section 8.1 hereof shall have happened and be continuing, the Board may take any one or more of the following remedial steps: (a) By written notice to the Company, the Board may declare all amounts payable under Section 4.3 hereof, including interest accrued thereon to the date of such declaration, to be immediately due and payable, whereupon the same shall become immediately due and payable. (b) The Board may take whatever action at law or in equity may appear necessary or desirable to collect the amounts referred to in (a) above, then due and thereafter become due, or to enforce performance and observances of any obligation, agreement or covenant of the Company under this Agreement or under the Indenture. Any amounts collected pursuant to action under this Section 8.2 shall be paid into the Bond Fund and applied in accordance with the provisions of the Indenture or, if the Bonds have been fully paid (or provision for payment thereof has been made in accordance with the provisions of the Indenture), to the Company. Section 8.3. No Remedy Exclusive. Subject to Section 8.6 hereof, no remedy herein conferred upon or reserved to the Board is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. Section 8.4 Agreement to Pay Attorneys' Fees and Expenses. In the event the Company should default under any of the provisions of this Agreement and the Board or the Trustee should employ attorneys or incur other expenses for the collection of amounts payable hereunder or the enforcement or performance or observance of any obligation or agreement on the part of the Company herein contained, the Company agrees that it will on demand therefore pay to the Board or the Trustee the reasonable fee of such attorneys and such other expenses so incurred by the Board or the Trustee. Section 8.5. No Additional Waiver Implied by One Waiver. In the event any agreement contained in this Agreement should be breached by either party and thereafter waived by the other party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other breach hereunder. Section 8.6. Remedial Rights Assigned to Trustee. All rights and remedies conferred upon or reserved to the Board in this Article VIII shall upon the execution and delivery of the Indenture be deemed to have been assigned to the Trustee and the Trustee shall have the exclusive right to exercise such rights and remedies in the same manner and under the limitations and conditions that the Trustee is entitled to exercise rights and remedies upon the occurrence of an event of default pursuant to Article VIII of the Indenture. ARTICLE IX MISCELLANEOUS Section 9.1. Term of this Agreement. This Agreement shall remain in full force and effect from the date hereof until all of the outstanding Bonds shall have been fully paid or provision made for such payment in accordance with the terms of the Indenture and until all fees and expenses of the Trustee and Remarketing Agent and all other amounts payable by the Company under this Agreement shall have been duly paid. Section 9.2. Notices. All notices, certificates or other communications hereunder shall be sufficiently given and shall be deemed given when delivered or mailed by registered or certified mail, postage prepaid, addressed as follows: if to the Board, at , Attention: ; if to the Company, at , Attention: ; and if to the Trustee, at , Attention:. A duplicate copy of each notice, certificate or other communication given hereunder by either the Board or the Company to the other shall also be given to the Trustee. The Board, the Company and the Trustee may, by notice given hereunder, designate any further or different addresses to which subsequent notices, certificates or other communications shall be sent. Section 9.3. Binding Effect. This Agreement shall insure to the benefit of and shall be binding upon the Board, the Company and their respective successors and assigns, subject, however, to the limitations contained in Sections 6.3, 7.1, 7.2 and 7.5 hereof. Section 9.4. Severability. In the event any provision of this Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. Section 9.5. Amounts Remaining in the Bond Fund. Any amounts remaining in the Bond Fund upon expiration or sooner termination of the terms of this Agreement, after payment in full of the Bonds (or provision for payment thereof having been made in accordance with the provisions of the Indenture) and the fees and expenses of the Trustee and any paying agent in accordance with the Indenture, shall belong to and be paid to the Company by the Trustee. Section 9.6. Amendments, Changes and Modifications. Subsequent to the issuance of the Bonds and prior to payment in full of all Bonds (or provision for the payment thereof having been made in accordance with the provisions of the Indenture), this Agreement may not be effectively amended, changed, modified, altered or terminated except in accordance with the Indenture. Section 9.7. Execution in Counterparts. This Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 9.8. Recording and Filing. The Company will take all actions that at the time and from time to time may be necessary (or, in the opinion of the Trustee, may be necessary) to perfect, preserve, protect and secure the interests of the Board and the Trustee, or either, in and to the Project, including, without limitation, the filing of all financing and continuation statements that may be required under the Uniform Commercial Code. Section 9.9. Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of. Section 9.10. No Charge Against Board's Credit. This Agreement shall inure to the benefit of and shall be binding upon the Board, the Company and their respective successors and assigns. The Bonds are limited obligations of the Board, payable solely from the revenues and receipts derived hereunder, except to the extent paid out of moneys attributable to the proceeds of the Bonds. The Bonds do not constitute an indebtedness or other liability of the State of , the City of or of any other political subdivision of the State of . Neither the faith nor credit of the State, the City of , nor any other political subdivision of the State is pledged to the payment of the Bonds or the interest thereon, and the issuance of the Bonds does not directly, indirectly or contingently obligate the State, the City of or any other political subdivision of the State to apply money for, or to levy or pledge, any form of taxation whatever to the payment of, the principal of, premium, if any, or the interest on, or purchase price of, the Bonds, as the case may be. The Board has no taxing power. Section 9.11. Captions. The captions or headings in this Agreement are for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this Agreement. Section 9.12. Other Financing. Notwithstanding anything in this Agreement to the contrary, the Board and the Company may hereafter enter into agreements to provide for the financing or refinancing of Project Costs, or any portion thereof, in lieu of or in addition to the provisions herein. IN WITNESS WHEREOF, the Board and the Company have caused this Agreement to be executed in their respective corporate names and their respective corporate seals to be hereunto affixed and attested by their duly authorized officers, all as of the date first above written. ................. ................. By:______________ ................. [SEAL] Attest: By:____________________________ ................. SOUTHERN POWER COMPANY ................. By:______________________ ................. [SEAL] Attest: By:____________________________ TATE OF ) .........: ss.: COUNTY OF ) I, ____________________________, a Notary Public in and for said county in said state, hereby certify that _____________________, whose name as , is signed to the foregoing instrument and who is known to me, acknowledged before me on this day that, being informed of the contents of the within instrument, he, as such officer and with full authority, executed the same voluntarily for and as the act of said public corporation. Given under my hand and official seal of office this ___ day of ____. ------------------------------------------ Notary Public My Commission Expires: ____________________ STATE OF ____________________) _________: ss.: COUNTY OF ___________) I, ____________________________, a Notary Public in and for said county in said state, hereby certify that ______________, whose name as of SOUTHERN POWER COMPANY, a corporation organized under the laws of the State of Delaware, is signed to the foregoing instrument and who is known to me, acknowledged before me on this day that, being informed of the contents of the within instrument, he, as such officer and with full authority, executed the same voluntarily for and as the act of said corporation. Given under my hand and official seal of office this ___ day of ___ ,___ . ------------------------------------------ Notary Public My Commission Expires: ____________________ EXHIBIT A DESCRIPTION OF PROJECT EX-1 5 xf1.txt June 30, 2005 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Re: Statement on Form U-1 of The Southern Company and Southern Power Company (File No. 70-10293) Ladies and Gentlemen: We are familiar with the statement on Form U-1, as amended, filed by The Southern Company ("Southern") and Southern Power Company ("Southern Power") (the "Application"). In the Application, Southern Power requests authority under the Public Utility Holding Company Act of 1935, as amended (the "Act"), to engage in various financing and related transactions (the "Proposed Transactions") through June 30, 2007. We are of the opinion that Southern Power is a validly organized and duly existing corporation under the laws of the State of Delaware, and that, upon the adoption of appropriate resolutions by the board of directors of Southern Power (or a duly authorized committee thereof), upon the issuance of your order or orders in this matter permitting the Application to become effective with respect to the consummation of the Proposed Transactions, upon compliance with the Securities Act of 1933, as amended and any relevant state securities laws and in the event that the Proposed Transactions are consummated in accordance with the terms of the Application and your order or orders: (a) all state laws applicable to the Proposed Transactions as described in the Application have been complied with; (b) any debt securities and any guarantees issued by Southern Power as contemplated in the Application will be valid and binding obligations of Southern Power in accordance with their terms; (c) any shares of common stock or preferred stock issued or sold by Southern Power as contemplated in the Application will be validly issued, fully paid, and non-assessable and the holders thereof will be entitled to the rights and privileges appertaining thereto; and (d) the consummation by Southern Power of the Proposed Transactions will not violate the legal rights of the holders of any securities issued by Southern Power or any "associate" company, as such term is defined in the Act, of Southern Power. We are members of the State Bar of Alabama and we express no opinion as to the laws of any jurisdiction other than the internal laws of the State of Alabama, the Delaware General Corporation Law (without reference to interpretive case law) and United States Federal law. We hereby consent to the use of this opinion as an exhibit to the above-mentioned statement on Form U-1. Very truly yours, /s/Balch & Bingham LLP EX-1 6 exf2.txt Exhibit F-2 TROUTMAN SANDERS LLP ATTORNEY AT LAW 600 PEACHTREE STREET., NE, SUITE 5200 ATLANTA, GEOEGIA 30308-2216 404-885-3000 June 30, 2005 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Re: Statement on Form U-1 of The Southern Company and Southern Power Company (File No. 70-10293) Ladies and Gentlemen: We are familiar with the statement on Form U-1, as amended, referred to above relating to the proposal by The Southern Company ("Southern") to, among other things, make purchases of the common stock and debt securities of Southern Power Company ("Southern Power and issue guarantees in support of securities and other obligations of Southern Power. We are of the opinion that Southern is validly organized and duly existing as a corporation under the laws of the State of Delaware and that, upon the issuance of your order herein and in the event that the proposed transactions are consummated in accordance with such statement on Form U-1, as amended, and such order: (a) all state laws applicable to the proposed transactions by Southern will have been complied with; (b) any guarantees of Southern Power's indebtedness by Southern will be valid and binding obligations of Southern in accordance with their terms; and (c) the consummation of the proposed transactions will not violate the legal rights of the holders of any securities issued by Southern or any associate company thereof. We hereby consent to the use of this opinion in connection with the above-referenced statement on Form U-1, as amended. /s/ TROUTMAN SANDERS LLP TROUTMAN SANDERS LLP -----END PRIVACY-ENHANCED MESSAGE-----