10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended January 31, 2009

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number 1-6196

Piedmont Natural Gas Company, Inc.

(Exact name of registrant as specified in its charter)

North Carolina	56-0556998
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

4720 Piedmont Row Drive, Charlotte, North Carolina	28210
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (704) 364-3120

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ    No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ  Accelerated filer o  Non-accelerated filer   o
(Do not check if a smaller reporting company) Smaller reporting company o 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o    No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding at March 2, 2009
Common Stock, no par value	73,484,181

Piedmont Natural Gas Company, Inc.

Form 10-Q

for

January 31, 2009

TABLE OF CONTENTS

	Page
Part I. Financial Information
Item 1. Financial Statements		1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		23
Item 3. Quantitative and Qualitative Disclosures about Market Risk		37
Item 4. Controls and Procedures		39
Part II. Other Information
Item 1. Legal Proceedings		40
Item 1A. Risk Factors		40
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		40
Item 6. Exhibits		42
Signatures		43
EX-10.1
EX-10.2
EX-10.3
EX-10.4
EX-10.5
EX-31.1
EX-31.2
EX-32.1
EX-32.2

Part I. Financial Information

Item 1. Financial Statements

Piedmont Natural Gas Company, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands)

	January 31,		October 31,
	2009		2008
ASSETS
Utility Plant, at original cost	$	3,080,932	$	3,054,656
Less accumulated depreciation		830,962		813,822
Utility plant, net		2,249,970		2,240,834
Other Physical Property, at cost (net of accumulated depreciation of $2,388 in 2009 and $2,351 in 2008)		828		864
Current Assets:
Cash and cash equivalents		22,887		6,991
Restricted cash		1		—
Trade accounts receivable (less allowance for doubtful accounts of $2,894 in 2009 and $1,066 in 2008)		236,487		82,346
Income taxes receivable		—		731
Other receivables		358		393
Unbilled utility revenues		149,589		51,819
Gas in storage		192,284		190,275
Gas purchase options, at fair value		9,002		22,645
Amounts due from customers		206,128		181,745
Prepayments		4,607		79,831
Other		7,169		6,620
Total current assets		828,512		623,396
Investments, Deferred Charges and Other Assets:
Equity method investments in non-utility activities		102,236		99,214
Goodwill		48,852		48,852
Marketable securities, at fair value		358		—
Overfunded postretirement asset		6,697		6,797
Regulatory asset for postretirement benefits		29,115		28,732
Gas purchase options, at fair value		9,298		32,434
Unamortized debt expense		9,750		9,915
Regulatory cost of removal asset		6,584		6,398
Other		38,928		40,965
Total investments, deferred charges and other assets		251,818		273,307
Total	$	3,331,128	$	3,138,401

See notes to condensed consolidated financial statements.

1

	January 31,			October 31,
(In thousands)	2009			2008
CAPITALIZATION AND LIABILITIES
Capitalization:
Stockholders’ equity:
Cumulative preferred stock — no par value - 175 shares authorized	$	—		$	—
Common stock — no par value — shares authorized: 200,000; shares outstanding: 73,472 in 2009 and 73,246 in 2008		477,908			471,565
Paid-in capital		855			763
Retained earnings		476,065			414,246
Accumulated other comprehensive income (loss)		(2,553	)		670
Total stockholders’ equity		952,275			887,244
Long-term debt		793,867			794,261
Total capitalization		1,746,142			1,681,505
Current Liabilities:
Current maturities of long-term debt		30,000			30,000
Notes payable		448,000			406,500
Trade accounts payable		125,311			91,142
Other accounts payable		29,050			45,148
Income taxes accrued		23,368			4,414
Accrued interest		11,934			22,777
Customers’ deposits		26,783			23,881
Deferred income taxes		34,822			6,878
General taxes accrued		8,028			18,932
Gas purchase options, at fair value		75,987			42,205
Amounts due to customers		2,372			—
Other		20,970			12,300
Total current liabilities		836,625			704,177
Deferred Credits and Other Liabilities:
Deferred income taxes		300,135			305,362
Unamortized federal investment tax credits		2,543			2,626
Accumulated provision for postretirement benefits		16,506			16,257
Cost of removal obligations		374,072			367,450
Gas purchase options, at fair value		19,687			22,177
Other		35,418			38,847
Total deferred credits and other liabilities		748,361			752,719
Commitments and Contingencies (Note 11)
Total	$	3,331,128		$	3,138,401

See notes to condensed consolidated financial statements.

2

Piedmont Natural Gas Company, Inc. and Subsidiaries
Condensed Consolidated Statements of Income (Unaudited)
(In thousands except per share amounts)

	Three Months Ended
	January 31
	2009			2008
Operating Revenues	$	779,644		$	788,470
Cost of Gas		558,961			561,444
Margin		220,683			227,026
Operating Expenses:
Operations and maintenance		50,725			52,578
Depreciation		24,142			22,706
General taxes		8,737			8,745
Income taxes		48,948			51,061
Total operating expenses		132,552			135,090
Operating Income		88,131			91,936
Other Income (Expense):
Income from equity method investments		9,790			8,718
Non-operating income		34			544
Non-operating expense		(350	)		(265	)
Income taxes		(3,716	)		(3,526	)
Total other income (expense)		5,758			5,471
Utility Interest Charges		13,013			15,139
Net Income	$	80,876		$	82,268
Average Shares of Common Stock:
Basic		73,319			73,280
Diluted		73,646			73,563
Earnings Per Share of Common Stock:
Basic	$	1.10		$	1.12
Diluted	$	1.10		$	1.12
Cash Dividends Per Share of Common Stock	$	0.26		$	0.25

See notes to condensed consolidated financial statements.

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Piedmont Natural Gas Company, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)

	Three Months Ended
	January 31
	2009			2008
Cash Flows from Operating Activities:
Net income	$	80,876		$	82,268
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		25,448			23,813
Amortization of investment tax credits		(83	)		(92	)
Allowance for doubtful accounts		1,828			2,141
Deferred gain on sale of land		(77	)		—
Earnings from equity method investments		(9,790	)		(8,718	)
Distributions of earnings from equity method investments		1,251			1,164
Deferred income taxes		24,795			26,185
Stock-based compensation expense		84			84
Change in assets and liabilities of gas purchase options, at fair value		68,071			8,126
Change in assets and liabilities		(171,641	)		(134,660	)
Net cash provided by operating activities		20,762			311
Cash Flows from Investing Activities:
Utility construction expenditures		(29,882	)		(34,609	)
Allowance for funds used during construction		(694	)		(938	)
Contributions to equity method investments		—			(10,022	)
Distributions of capital from equity method investments		216			16
(Increase) decrease in restricted cash		(1	)		2,196
Increase in marketable securities		(358	)		—
Other		281			687
Net cash used in investing activities		(30,438	)		(42,670	)
Cash Flows from Financing Activities:
Increase in notes payable		41,500			93,500
Retirement of long-term debt		(394	)		(114	)
Expenses related to expansion of the short-term facility		—			(88	)
Issuance of common stock through dividend reinvestment and employee stock plans		3,588			3,722
Repurchases of common stock		—			(26,138	)
Dividends paid		(19,072	)		(18,319	)
Other		(50	)		—
Net cash provided by financing activities		25,572			52,563
Net Increase in Cash and Cash Equivalents		15,896			10,204
Cash and Cash Equivalents at Beginning of Period		6,991			7,515
Cash and Cash Equivalents at End of Period	$	22,887		$	17,719
Noncash Investing and Financing Activities:
Accrued construction expenditures	$	3,390		$	987
Guaranty		—			101

See notes to condensed consolidated financial statements.

4

Piedmont Natural Gas Company, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
(In thousands)

	Three Months Ended
	January 31
	2009			2008
Net Income	$	80,876		$	82,268
Other Comprehensive Income:
Unrealized (loss) gain from hedging activities of equity method investments, net of tax of ($1,511) in 2009 and $164 in 2008		(2,343	)		258
Reclassification adjustment from hedging activities of equity method investments included in net income, net of tax of ($566) in 2009 and ($147) in 2008		(880	)		(230	)
Total Comprehensive Income	$	77,653		$	82,296

See notes to condensed consolidated financial statements.

5

Piedmont Natural Gas Company, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

1. Accounting Matters

     Unaudited Interim Financial Information

The condensed consolidated financial statements have not been audited. We have prepared the unaudited condensed consolidated financial statements under the rules of the Securities and Exchange Commission (SEC). Therefore, certain financial information and note disclosures normally included in annual financial statements prepared in conformity with generally accepted accounting principles in the United States of America (GAAP) are omitted in this interim report under these SEC rules and regulations. These financial statements should be read in conjunction with the Consolidated Financial Statements and Notes included in our Form 10-K for the year ended October 31, 2008.

     Seasonality and Use of Estimates

In our opinion, the unaudited condensed consolidated financial statements include all normal recurring adjustments necessary for a fair statement of financial position at January 31, 2009 and October 31, 2008, the results of operations for the three months ended January 31, 2009 and 2008, and cash flows for the three months ended January 31, 2009 and 2008. Our business is seasonal in nature. The results of operations for the three months ended January 31, 2009 do not necessarily reflect the results to be expected for the full year.

We make estimates and assumptions when preparing the condensed consolidated financial statements. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from estimates.

     Significant Accounting Policies

Our accounting policies are described in Note 1 to the consolidated financial statements in our Form 10-K for the year ended October 31, 2008. There were no significant changes to those accounting policies during the three months ended January 31, 2009 other than disclosed in Note 12 to the condensed consolidated financial statements in this Form 10-Q.

     Rate-Regulated Basis of Accounting

We follow Statement of Financial Accounting Standards (SFAS) No. 71, “Accounting for the Effects of Certain Types of Regulation” (Statement 71). Statement 71 provides that rate-regulated public utilities account for and report assets and liabilities consistent with the economic effect of the manner in which independent third-party regulators establish rates. In applying Statement 71, we capitalize certain costs and benefits as regulatory assets and liabilities, respectively, in order to provide for recovery from or refund to utility customers in future periods. The amounts recorded as regulatory assets and regulatory liabilities in the condensed consolidated balance sheets as of January 31, 2009 and October 31, 2008 are as follows.

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	January 31,		October 31,
In thousands	2009		2008
Regulatory Assets	$	286,884	$	263,205
Regulatory Liabilities		401,035		383,684

Inter-company transactions have been eliminated in consolidation where appropriate; however, we have not eliminated inter-company profit on sales to affiliates and costs from affiliates in accordance with Statement 71. For information on related party transactions, see Note 6 to the condensed consolidated financial statements in this Form 10-Q.

     Accounting Pronouncements

In March 2008, the Financial Accounting Standards Board (FASB) issued SFAS No. 161, “Disclosures About Derivative Instruments and Hedging Activities” (Statement 161). Statement 161 amends SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” (Statement 133), by requiring expanded qualitative, quantitative and credit-risk disclosures about derivative instruments and hedging activities, but does not change the scope or accounting under Statement 133 and its related interpretations. Statement 161 requires specific disclosures regarding how and why an entity uses derivative instruments; how derivative instruments and related hedged items are accounted for; and how derivative instruments and related hedged items affect an entity’s financial position, results of operations and cash flows. Statement 161 also amended SFAS No. 107, “Disclosures about Fair Value of Financial Instruments” (Statement 107), to clarify that derivative instruments are subject to Statement 107’s concentration-of-credit-risk disclosures. Statement 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early adoption permitted. Since Statement 161 only requires additional disclosures concerning derivatives and hedging activities, this standard did not have a material impact on our financial position, results of operations or cash flows. We adopted Statement 161 on February 1, 2009.

In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles” (Statement 162). Statement 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements that are presented in conformity with GAAP for nongovernmental entities. Statement 162 became effective November 15, 2008. We adopted Statement 162 on the effective date, and it had no impact on our financial position, results of operations or cash flows.

In December 2008, FASB issued a staff position, FSP FAS 132(R)-1, that amended SFAS No. 132(R), “Employers’ Disclosures about Pension and Other Postretirement Benefits,” that requires additional disclosures about plan assets of defined benefit pension and other postretirement plans. This staff position requires that employers provide more transparency about the assets held by retirement plans or other postretirement employee benefit plans, the concentration of risk in those plans and information about the fair value measurements of plan assets similar to the disclosures required by SFAS No. 157, “Fair Value Measurements.” FSP FAS 132(R)-1 is effective for fiscal years ending after December 15, 2009, with earlier application permitted. Since this staff position only requires additional disclosures about plan assets of defined benefit pension and other postretirement plans, it is not expected to have a material impact on our financial position, results of operations or cash flows. We will adopt FSP FAS 132(R)-1 during our fiscal year ending October 31, 2010.

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2. Regulatory Matters

In August 2008, we filed testimony with the North Carolina Utilities Commission (NCUC) in support of our gas cost purchasing and accounting practices for the period ended May 31, 2008. A hearing was held in December 2008. On February 20, 2009, the NCUC issued an order approving our accounting of gas costs for the twelve months ended May 31, 2008 and found our gas purchasing polices and practices prudent during the review period.

In December 2008, we filed an annual report for the twelve months ended December 31, 2007 with the Tennessee Regulatory Authority (TRA) that reflects the transactions in the deferred gas cost account for the Actual Cost Adjustment mechanism. We are unable to determine the outcome of the proceeding at this time.

3. Earnings per Share

We compute basic earnings per share using the weighted average number of shares of common stock outstanding during each period. A reconciliation of basic and diluted earnings per share for the three months ended January 31, 2009 and 2008 is presented below.

	Three Months
In thousands except per share amounts	2009		2008
Net Income	$	80,876	$	82,268
Average shares of common stock outstanding for basic earnings per share		73,319		73,280
Contingently issuable shares under incentive compensation plans		327		283
Average shares of dilutive stock		73,646		73,563
Earnings Per Share of Common Stock:
Basic	$	1.10	$	1.12
Diluted	$	1.10	$	1.12

4. Employee Benefit Plans

Effective January 1, 2008, we amended our noncontributory defined benefit pension plan, other postretirement employee benefits (OPEB) plan and our 401(k) plans. These amendments applied to nonunion employees and employees covered by the Carolinas bargaining unit contract. Effective January 1, 2009, these same amendments apply to all employees, including those covered by the Nashville, Tennessee bargaining unit contract. The details of the changes to these plans are described in Note 7 to the consolidated financial statements in our Form 10-K for the year ended October 31, 2008.

Components of the net periodic benefit cost for our defined benefit pension plans and our OPEB plan for the three months ended January 31, 2009 and 2008 are presented below.

8

	Qualified Pension						Nonqualified Pension					Other Benefits
In thousands	2009			2008			2009			2008		2009			2008
Service cost	$	1,487		$	2,163		$	6		$	7	$	360		$	317
Interest cost		2,750			2,835			83			69		579			509
Expected return on plan assets		(4,138	)		(4,145	)		—			—		(426	)		(370	)
Amortization of transition obligation		—			—			—			—		167			169
Amortization of prior service (credit) cost		(549	)		(478	)		5			—		—			—
Amortization of actuarial gain		—			—			(10	)		—		—			—
Total	$	(450	)	$	375		$	84		$	76	$	680		$	625

We contributed $87,000 to the money purchase pension plan in February 2009. We anticipate that we will contribute the following amounts to our plans in 2009.

	In thousands
Qualified pension plan	$	11,000
Nonqualified pension plans		528
OPEB plan		3,400

We have maintained two 401(k) plans that are profit-sharing plans under Section 401(a) of the Internal Revenue Code of 1986, as amended (the Tax Code), which include qualified cash or deferred arrangements under Tax Code Section 401(k). Effective November 30, 2008, we merged the two plans into one plan.

We previously had a supplemental executive retirement plan (SERP) covering all officers at the vice president level and above. It provided supplemental retirement income as well as a life insurance benefit for officers to indirectly address the tax code limitations on qualified retirement plans. The level of insurance benefit and target retirement income benefits intended to be provided under the SERP depended upon the position of the officer. The SERP was funded by life insurance policies covering each officer, and the policy was owned exclusively by each officer.

On September 4, 2008, our Compensation Committee of the Board of Directors terminated the former SERP effective October 31, 2008 and replaced the supplemental retirement benefit with a non-qualified defined contribution restoration plan (DCR plan), effective January 1, 2009. The new plan is funded through a rabbi trust with a bank as the trustee. We will contribute 13% of total cash compensation (base salary, short-term incentive and MVP incentive) for each executive above the Internal Revenue Service compensation limit ($245,000 for 2009) to the DCR plan. An additional one-time contribution was made for all eligible officers in January 2009 equal to the greater of:

• 13% of base salary paid in November 2008 and December 2008 (to the extent that calendar year-to-date base salary exceeded the 2008 annual limit), or

• Two monthly premiums (without adjustment for taxes) under the former SERP.

9

In addition, an opening balance that totaled $.3 million was established for four Vice Presidents to compensate them for the loss of benefits under the new plan. Participant contributions are not allowed. Vesting under the DCR plan is five-year cliff vesting, including service prior to adoption, of annual company contributions, and prospective five-year cliff vesting for the opening balances of the four Vice Presidents. If the officer severs employment before the expiration of the relevant five-year period, he or she receives nothing from that portion of the DCR plan. Participant-directed investment options are available to the officers. Distribution will occur upon separation of service or death. The insurance portion of the SERP benefit has been maintained in the form of new term life insurance.

Also on September 4, 2008, our Compensation Committee of the Board of Directors approved a voluntary deferred compensation plan, effective January 1, 2009, for the benefit of all officers, director-level employees and regional executives. This plan, known as the Voluntary Deferral Plan, is funded through a rabbi trust with a bank as the trustee.

There are no company contributions to the Voluntary Deferral Plan. Participants may contribute up to 50% of base salary with elections made by December 31 prior to the upcoming calendar year, and up to 95% of annual incentive pay with elections made by April 30. Vesting is immediate through a rabbi trust with participant-directed investment options. Distributions can be made from the Voluntary Deferral Plan on a specified date that is at least two years from the date of deferral, on separation of service or upon death.

5. Business Segments

We have two reportable business segments, regulated utility and non-utility activities. These segments were identified based on products and services, regulatory environments and our current corporate organization and business decision-making activities. Operations of our regulated utility segment are conducted by the parent company. Operations of our non-utility activities segment are comprised of our equity method investments in joint ventures.

Operations of the regulated utility segment are reflected in operating income in the condensed consolidated statements of income. Operations of the non-utility activities segment are included in the condensed consolidated statements of income in “Income from equity method investments” and “Non-operating income.”

We evaluate the performance of the regulated utility segment based on margin, operations and maintenance expenses and operating income. We evaluate the performance of the non-utility activities segment based on earnings from the ventures. The basis of segmentation and the basis of the measurement of segment profit or loss are the same as reported in the consolidated financial statements in our Form 10-K for the year ended October 31, 2008.

Operations by segment for the three months ended January 31, 2009 and 2008 are presented below.

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	Regulated		Non-utility
In thousands	Utility		Activities			Total
2009
Revenues from external customers	$	779,644	$	—		$	779,644
Margin		220,683		—			220,683
Operations and maintenance expenses		50,725		39			50,764
Income from equity method investments		—		9,790			9,790
Operating income (loss) before income taxes		137,079		(132	)		136,947
Income before income taxes		123,892		9,648			133,540
2008
Revenues from external customers	$	788,470	$	—		$	788,470
Margin		227,026		—			227,026
Operations and maintenance expenses		52,578		21			52,599
Income from equity method investments		—		8,718			8,718
Operating income (loss) before income taxes		142,997		(149	)		142,848
Income before income taxes		128,379		8,476			136,855

Reconciliations to the condensed consolidated statements of income for the three months ended January 31, 2009 and 2008 are presented below.

In thousands	2009			2008
Operating Income:
Segment operating income before income taxes	$	136,947		$	142,848
Utility income taxes		(48,948	)		(51,061	)
Non-utility activities before income taxes		132			149
Operating income	$	88,131		$	91,936
Net Income:
Income before income taxes for reportable segments	$	133,540		$	136,855
Income taxes		(52,664	)		(54,587	)
Net income	$	80,876		$	82,268

6. Equity Method Investments

The condensed consolidated financial statements include the accounts of wholly owned subsidiaries whose investments in joint venture, energy-related businesses are accounted for under the equity method. Our ownership interest in each entity is included in “Equity method investments in non-utility activities” in the condensed consolidated balance sheets. Earnings or losses from equity method investments are included in “Income from equity method investments” in the condensed consolidated statements of income.

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We own 21.49% of the membership interests in Cardinal Pipeline Company, L.L.C., a North Carolina limited liability company. Cardinal owns and operates an intrastate natural gas pipeline in North Carolina and is regulated by the NCUC. We have related party transactions as a transportation customer of Cardinal, and we record in cost of gas the transportation costs charged by Cardinal. For each period of the three months ended January 31, 2009 and 2008, these transportation costs and the amounts we owed Cardinal as of January 31, 2009 and October 31, 2008 are as follows.

	Three Months
In thousands	2009		2008
Transportation costs	$	1,035	$	1,035

	January 31,		October 31,
	2009		2008
Trade accounts payable	$	349	$	349

We own 40% of the membership interests in Pine Needle LNG Company, L.L.C., a North Carolina limited liability company. Pine Needle owns an interstate liquefied natural gas (LNG) storage facility in North Carolina and is regulated by the Federal Energy Regulatory Commission (FERC). We have related party transactions as a customer of Pine Needle, and we record in cost of gas the storage costs charged by Pine Needle. For each period of the three months ended January 31, 2009 and 2008, these gas storage costs and the amounts we owed Pine Needle as of January 31, 2009 and October 31, 2008 are as follows.

	Three Months
In thousands	2009		2008
Gas storage costs	$	3,024	$	2,767

	January 31,		October 31,
	2009		2008
Trade accounts payable	$	1,019	$	1,019

We own 30% of the membership interests in SouthStar Energy Services LLC, a Delaware limited liability company. Under the terms of the Amended and Restated Limited Liability Company Agreement (Restated Agreement), earnings and losses are allocated 25% to us and 75% to the other member, Georgia Natural Gas Company (GNGC), a subsidiary of AGL Resources, Inc., with the exception of earnings and losses in the Ohio and Florida markets, which are allocated to us at our ownership percentage of 30%. SouthStar primarily sells natural gas to residential, commercial and industrial customers in the southeastern United States with most of its business being conducted in the unregulated retail gas market in Georgia.

The SouthStar Restated Agreement includes a provision granting GNGC the option to purchase our ownership interest in SouthStar. Under the provision, GNGC has the option to purchase our entire 30% interest effective on January 1, 2010 provided they give us notice of their intent to exercise the option by November 1, 2009. If GNGC exercises its option, the purchase price would be based on the market value of SouthStar as defined in the Restated Agreement.

12

We have related party transactions as we sell wholesale gas supplies to SouthStar, and we record in operating revenues the amounts billed to SouthStar. For each period of the three months ended January 31, 2009 and 2008, our operating revenues from these sales and the amounts SouthStar owed us as of January 31, 2009 and October 31, 2008 are as follows.

	Three Months
In thousands	2009		2008
Operating revenues	$	2,998	$	3,011

	January 31,		October 31,
	2009		2008
Trade accounts receivable	$	983	$	1,202

Piedmont Hardy Storage Company, LLC (Piedmont Hardy), a wholly owned subsidiary of Piedmont, owns 50% of the membership interests in Hardy Storage Company LLC (Hardy Storage), a West Virginia limited liability company. The other owner is a subsidiary of Columbia Gas Transmission Corporation, a subsidiary of NiSource Inc. Hardy Storage owns and operates an underground interstate natural gas storage facility located in Hardy and Hampshire Counties, West Virginia that is regulated by the FERC. Initial service to customers began April 1, 2007 when customers began injecting gas into storage for subsequent winter withdrawals, and final service levels are planned to commence on April 1, 2009.

On June 29, 2006, Hardy Storage signed a note purchase agreement for interim notes and a revolving equity bridge facility for up to a total of $173.1 million for funding during the construction period.

The members of Hardy Storage have each agreed to guarantee 50% of the construction financing. Our guaranty was executed by Piedmont Energy Partners, Inc. (PEP), a wholly owned subsidiary of Piedmont and a sister company of Piedmont Hardy. Our share of the guaranty is capped at $111.5 million. Depending upon the facility’s performance over the first three years after the in-service date, there could be additional construction expenditures of up to $10 million for contingency wells, of which PEP will guarantee 50%.

Securing PEP’s guaranty is a pledge of intercompany notes issued by Piedmont held by non-utility subsidiaries of PEP. Should Hardy Storage be unable to perform its payment obligation under the construction financing, PEP will call on Piedmont for the payment of the notes, plus accrued interest, for the amount of the guaranty. Also pledged is our membership interest in Hardy Storage.

For the three months ended January 31, 2009, we have made no equity contributions to fund construction expenditures. Upon completion of project construction, including any contingency wells if needed, the members intend to target a capitalization structure of 70% debt and 30% equity. After the satisfaction of certain conditions in the note purchase agreement, amounts outstanding under the interim notes will convert to a fifteen-year mortgage-style debt instrument without recourse to the members. We expect the conversion to occur in May 2010. To the extent that more funding is needed, the members will evaluate funding options at that time.

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We record a liability at fair value for this guaranty based on the present value of 50% of the construction financing outstanding at the end of each quarter, with a corresponding increase to our investment account in the venture. As our risk in the project changes, the fair value of the guaranty is adjusted accordingly through a quarterly evaluation. The details of the guaranty at January 31, 2009 and October 31, 2008 are as follows.

	January 31,		October 31,
In thousands	2009		2008
Guaranty liability	$	1,234	$	1,234
Amount outstanding under the construction financing		123,410		123,410

We have related party transactions as a customer of Hardy Storage and record in cost of gas the storage costs charged by Hardy Storage. For each period of the three months ended January 31, 2009 and 2008, our gas storage costs and the amounts we owed Hardy Storage as of January 31, 2009 and October 31, 2008 are as follows.

	Three Months
In thousands	2009		2008
Gas storage costs	$	2,321	$	7,647

	January 31,		October 31,
	2009		2008
Trade accounts payable	$	774	$	774

7. Financial Instruments and Risk Management

     Derivative Assets and Liabilities under Master Netting Arrangements

We maintain brokerage accounts to facilitate transactions that support our gas cost hedging plans. Based on the value of our positions in these brokerage accounts and the associated margin requirements, we may be required to deposit cash into these brokerage accounts.

In April 2007, the FASB issued a staff position, FSP FIN 39-1, to amend paragraph 3 of FIN 39, “Offsetting of Amounts Related to Certain Contracts,” to replace the terms conditional contracts and exchange contracts with the term derivative instruments as defined in Statement 133. The FSP amends paragraph 10 of FIN 39 to permit a reporting entity to offset fair value amounts recognized for the right to reclaim cash collateral or the obligation to return cash collateral against fair value amounts recognized for derivative instruments executed with the same counterparty under a master netting arrangement. Accordingly, we have evaluated the impacts of the right to offset fair value amounts pursuant to amended paragraph 10 of FIN 39 for our fiscal year beginning November 1, 2008. Prior to the adoption of FSP FIN 39-1, our policy was to present our positions, exclusive of

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any receivable or payable, with the same counterparty on a net basis. On November 1, 2008, we elected “not to net” fair value amounts for our derivative instruments or the fair value of the right to reclaim cash collateral under FSP FIN 39-1 and moved to a gross presentation.

We include amounts recognized for the right to reclaim cash collateral in our current assets and current liabilities. We had the right to reclaim cash collateral of $64.1 million and $67.3 million as of January 31, 2009 and October 31, 2008, respectively.

     Fair Value Measurements

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (Statement 157). Statement 157 provides enhanced guidance for using fair value to measure assets and liabilities and applies whenever other standards require (or permit) the measurement of assets or liabilities at fair value, but does not expand the use of fair value measurement to any new circumstances. Under Statement 157, fair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the entity transacts. Statement 157 clarifies that fair value should be based on the assumptions market participants would use when pricing the asset or liability. Statement 157 establishes a fair value hierarchy for valuation inputs that prioritizes the information used to develop those assumptions into three levels.

In November 2007, the FASB delayed the implementation of Statement 157 for one year only for other nonfinancial assets and liabilities. Statement 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years.

We adopted Statement 157 on November 1, 2008 for our financial assets and liabilities, which consist primarily of derivatives that we record on the consolidated balance sheets in accordance with Statement 133. The adoption of Statement 157 had no impact on our financial position, results of operations or cash flows. There was no cumulative effect adjustment to retained earnings as a result of the adoption. We will adopt Statement 157 for our nonfinancial assets and liabilities that are not recognized or disclosed on a recurring basis on November 1, 2009 and are currently evaluating the impact on our financial position, results of operations and cash flows.

The carrying amounts of cash and cash equivalents, receivables, notes payable, accounts payable and accrued interest approximate fair value. In developing the fair value of our long-term debt, we use a discounted cash flow technique that incorporates a developed discount rate using long-term debt similarly rated by credit rating agencies combined with the U.S. Treasury bench mark with consideration given to maturities, redemption terms and credit ratings similar to our debt issuances. The carrying amounts and fair value of our long-term debt, including the current portion, are shown below.

	Carrying
In thousands	Amounts		Fair Value
As of January 31, 2009	$	823,867	$	877,009
As of October 31, 2008		824,261		798,057

We utilize market data or assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable. We primarily apply the market approach for recurring fair value measurements and

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endeavor to utilize the best available information. Accordingly, we use valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. We are able to classify fair value balances based on the observance of those inputs into the following fair value hierarchy levels as set forth in Statement 157.

Level 1

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity has the ability to access as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Our Level 1 items consist of financial instruments of exchange-traded derivatives and investments in marketable securities.

Level 2

Level 2 inputs are inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly corroborated or observable as of the reporting date. Level 2 includes those financial and commodity instruments that are valued using valuation methodologies. We obtain market price data from multiple sources in order to value our Level 2 transactions, and this data is representative of transactions that occurred in the market place. As we aggregate our disclosures by counterparty, the underlying transactions for a given counterparty may be a combination of exchange-traded derivatives and values based on other sources. Instruments in this category include non-exchange-traded derivative instruments such as over-the-counter (OTC) options and long-term debt.

Level 3

Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. Level 3 instruments include those that may be more structured or otherwise tailored to customer’s needs. We do not have any material financial assets or liabilities classified as Level 3.

The following table sets forth, by level of the fair value hierarchy, our financial assets and liabilities that were accounted for at fair value on a recurring basis as of January 31, 2009. As required by Statement 157, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and liabilities and their consideration with the fair value hierarchy levels.

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Recurring Fair Value Measurements under Statement 157 as of January 31, 2009

			Significant
	Quoted Prices		Other		Significant
	in Active		Observable		Unobservable		Total
	Markets		Inputs		Inputs		Carrying
In thousands	(Level 1)		(Level 2)		(Level 3)		Value
Assets:
Derivatives held for distribution operations	$	18,300	$	—	$	—	$	18,300
Debt and equity securities held as trading securities		358		—		—		358
Total assets	$	18,658	$	—	$	—	$	18,658
Liabilities:
Derivatives held for distribution operations	$	65,289	$	30,385	$	—	$	95,674

The determination of the fair values incorporates various factors required under Statement 157. These factors include the credit standing of the counterparties involved, the impact of credit enhancements (such as cash deposits, letters of credit and priority interests), and the impact of our nonperformance risk on our liabilities.

Our utility segment derivative instruments are utilized in accordance with programs approved or filed with the NCUC, the Public Service Commission of South Carolina (PSCSC) and the TRA to hedge the impact of market fluctuations in natural gas prices. These derivative instruments are accounted for at fair value each reporting period. In accordance with regulatory requirements, the net costs and the gains and losses related to these derivatives are reflected in purchased gas costs and ultimately passed through to customers through our purchased gas adjustment (PGA) procedures. In accordance with Statement 71, the unrecovered amounts related to these instruments are reflected as a regulatory asset or liability, as appropriate, in “Amounts due to customers” or “Amounts due from customers” in our condensed consolidated balance sheets. These derivative instruments include exchange-traded and OTC derivative contracts. Exchange-traded contracts are generally based on unadjusted quoted prices in active markets and are classified within Level 1. OTC derivative contracts are valued using broker or dealer quotation services or market transactions in either the listed or OTC markets and are classified within Level 2.

Through January 31, 2009, we purchased and sold financial options for natural gas for our Tennessee gas supply portfolio. As of January 31, 2009, we had forward positions for March 2009 through November 2010. The costs of these options and all other costs related to hedging activities up to 1% of total annual gas costs are approved for recovery under the terms and conditions of our Tennessee Incentive Plan (TIP) approved by the TRA.

Through January 31, 2009, we purchased and sold financial options for natural gas for our South Carolina gas supply portfolio. As of January 31, 2009, we had forward positions for March 2009 through November 2010. The costs of these options are pre-approved by the PSCSC for recovery from customers subject to the terms and conditions of our gas hedging plan approved by the PSCSC.

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Through January 31, 2009, we purchased and sold financial options for natural gas for our North Carolina gas supply portfolio. As of January 31, 2009, we had forward positions for March 2009 through November 2010. Costs associated with our North Carolina hedging program are not pre-approved by the NCUC but are treated as gas costs subject to an annual cost review proceeding by the NCUC.

We purchase natural gas for our regulated operations for resale under tariffs approved by state regulatory commissions. We recover the cost of gas purchased for regulated operations through PGA procedures. Our risk management policies allow us to use financial instruments to hedge commodity price risks, but not for speculative trading. The strategy and objective of our hedging programs is to use these financial instruments to provide increased price stability for our customers. Accordingly, there is no earnings impact of the hedging programs on the regulated utility segment as a result of the use of these financial derivatives.

Trading securities include assets in a trust established for our deferred compensation plans and are included in “Marketable securities, at fair value” in the condensed consolidated balance sheets. Securities classified within Level 1 include funds held in money market and mutual funds which are highly liquid and are actively traded on the exchanges.

     Risk Management

We seek to identify, assess, monitor and manage risk in accordance with defined policies and procedures under an Enterprise Risk Management Policy. In addition, we have an Energy Risk Management Committee that monitors compliance with our hedging programs, policies and procedures.

8. Debt Instruments

During the three months ended January 31, 2009, we paid $.4 million to noteholders of the 6.25% insured quarterly notes. These notes have a redemption right upon the death of the owner of the notes, within specified limitations.

We have a syndicated five-year revolving credit facility with aggregate commitments totaling $450 million to meet working capital needs. This facility may be increased up to $600 million and includes annual renewal options and letters of credit. We pay an annual fee of $35,000 plus six basis points for any unused amount up to $450 million. The facility provides a line of credit for letters of credit of $5 million, of which $2.4 million and $1.9 million were issued and outstanding at January 31, 2009 and October 31, 2008, respectively. These letters of credit are used to guarantee claims from self-insurance under our general liability policies. The credit facility bears interest based on the 30-day LIBOR rate plus from .15% to .35%, based on our credit ratings.

On October 27 and 29, 2008, we entered into two short-term credit facilities with banks for unsecured commitments totaling $75 million expiring on December 1, 2008. On December 1, 2008, these commitments were extended to December 3, 2008. Advances under each short-term facility bore interest at a rate based on the 30-day LIBOR rate plus from .75% to 1.75%, based on our credit ratings. We entered into these short-term facilities to provide lines of credit above the senior revolving credit facility discussed above in order to have additional resources to meet seasonal cash flow requirements, including support for our gas supply procurement program as well as general corporate needs.

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Effective December 3, 2008, we entered into a syndicated seasonal credit facility with aggregate commitments totaling $150 million. Advances under this seasonal facility bear interest at a rate based on the 30-day LIBOR rate plus from .75% to 1.75%, based on our credit ratings. Any borrowings under this agreement are due by March 31, 2009. We entered into this facility to provide lines of credit in addition to the senior revolving credit facility discussed above in order to have additional resources to meet seasonal cash flow requirements and general corporate needs. This seasonal credit facility replaced the two short-term credit facilities with banks for unsecured commitments totaling $75 million that expired on December 3, 2008 as discussed above.

As of January 31, 2009 and October 31, 2008, outstanding short-term borrowings under our syndicated credit facility as included in “Notes payable” in the condensed consolidated balance sheets were $445 million and $406.5 million, respectively. As of January 31, 2009, outstanding short-term borrowings under our seasonal credit facility as included in “Notes payable” in the condensed consolidated balance sheets were $3 million. During the three months ended January 31, 2009, short-term borrowings ranged from $362 million to $556.5 million, and interest rates ranged from .58% to 2.84% (weighted average of 1.26%). Our credit facility’s financial covenants require us to maintain a ratio of total debt to total capitalization of no greater than 70%, and our actual ratio was 57% at January 31, 2009.

9. Restructuring and Other Termination Benefits

In 2007, we implemented organizational changes under our business process improvement program to streamline business processes, capture operational and organizational efficiencies and improve customer service. As a part of this effort, we began initiating changes in our customer payment and collection processes, including no longer accepting customer payments in our business offices and streamlining our district operations. We also further consolidated our call centers. Collections of delinquent accounts have been consolidated in our central business office.

We accrued costs in connection with these initiatives in the form of severance benefits to employees who were either voluntarily or involuntarily severed. These benefits are under existing arrangements and are accounted for in accordance with SFAS No. 112, “Employers’ Accounting for Postemployment Benefits.” All costs are included in the regulated utility segment in “Operations and maintenance” expenses in the condensed consolidated statements of income.

A reconciliation of activity to the liability as of January 31, 2009 is as follows.

In thousands
Beginning liability, October 31, 2008	$	22
Adjustment to accruals		(22	)
Ending liability, January 31, 2009	$	—

10. Employee Share-Based Plans

Under Board of Directors approved incentive compensation plans, eligible officers and other participants are awarded units depending upon the level of performance achieved by Piedmont during multi-year performance periods. Distribution of those awards may be made in the form of shares of common stock and cash withheld for payment of applicable taxes on the compensation. These plans require that a minimum threshold performance level be achieved in order for any award to be distributed.

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The compensation expense related to the incentive compensation plans for the three months ended January 31, 2009 and 2008, and the amounts recorded as liabilities as of January 31, 2009 and October 31, 2008 are presented below.

	Three Months
In thousands	2009			2008
Compensation expense	$	(154	)	$	1,327

	January 31,		October 31,
	2009		2008
Liability	$	5,157	$	10,749

The accrual of compensation expense is based on the fair market value of our stock at the end of each quarter. The liability is re-measured to market value at the settlement date.

Also under our incentive compensation plan, 65,000 restricted shares of our common stock with a value at the date of grant of $1.7 million were granted to our President and Chief Executive Officer on September 1, 2006. During the vesting period, any dividends paid on these shares are accrued and converted into additional shares at the closing price on the date of the dividend payment. The restricted shares and any additional shares accrued through dividends will vest over a five-year period only if he is an employee on each vesting date. We recorded compensation expense under this grant of $84,100 for the three months ended January 31, 2009 and 2008. We are recording compensation on the straight-line method.

Shares of common stock to be issued under the incentive compensation plans are contingently issuable shares and are included in our calculation of fully diluted earnings per share.

11. Commitments and Contingent Liabilities

Long-term contracts

We routinely enter into long-term gas supply commodity and capacity commitments and other agreements that commit future cash flows to acquire services we need in our business. These commitments include pipeline and storage capacity contracts and gas supply contracts to provide service to our customers and telecommunication and information technology contracts and other purchase obligations. The time periods for pipeline and storage capacity contracts range from one to fifteen years. The time periods for gas supply contracts range from one to four years. The time periods for the telecommunications and technology outsourcing contracts, maintenance fees for hardware and software applications, usage fees, local and long-distance costs and wireless service range from one to three years. Other purchase obligations consist primarily of commitments for pipeline products, vehicles and contractors.

Certain storage and pipeline capacity contracts require the payment of demand charges that are based on rates approved by the FERC in order to maintain our right to access the natural gas

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storage or the pipeline capacity on a firm basis during the contract term. The demand charges that are incurred in each period are recognized in the condensed consolidated statements of income as part of gas purchases and included in cost of gas.

Leases

We lease certain buildings, land and equipment for use in our operations under noncancelable operating leases.

Legal

We have only routine immaterial litigation in the normal course of business.

Letters of Credit

We use letters of credit to guarantee claims from self-insurance under our general liability policies. We had $2.4 million in letters of credit that were issued and outstanding at January 31, 2009. Additional information concerning letters of credit is included in Note 7 to the condensed consolidated financial statements in this Form 10-Q.

Environmental Matters

Our three regulatory commissions have authorized us to utilize deferral accounting in connection with environmental costs. Accordingly, we have established regulatory assets for actual environmental costs incurred and for estimated environmental liabilities recorded.

In October 1997, we entered into a settlement with a third party with respect to nine manufactured gas plant (MGP) sites that we have owned, leased or operated and paid $5.3 million, charged to the estimated environmental liability, that released us from any investigation and remediation liability. Although no such claims are pending or, to our knowledge, threatened, the settlement did not cover any third-party claims for personal injury, death, property damage and diminution of property value or natural resources. On one of these nine properties, we performed additional clean-up activities, including the removal of an underground storage tank, in anticipation of an impending sale.

There are three other MGP sites located in Hickory, North Carolina, Nashville, Tennessee and Anderson, South Carolina that we have owned, leased or operated. In addition to these sites, we acquired the liability for an MGP site located in Reidsville, North Carolina, in connection with the acquisition in 2002 of certain assets and liabilities of North Carolina Services, a division of NUI Utilities, Inc.

In connection with the 2003 North Carolina Natural Gas Corporation (NCNG) acquisition, several MGP sites owned by NCNG were transferred to a wholly owned subsidiary of Progress Energy, Inc. (Progress) prior to closing. Progress has complete responsibility for performing all of NCNG’s remediation obligations to conduct testing and clean-up at these sites, including both the costs of such testing and clean-up and the implementation of any affirmative remediation obligations that NCNG has related to the sites. Progress’ responsibility does not include any third-party claims for personal injury, death, property damage, and diminution of property value or natural resources. We know of no such pending or threatened claims.

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Further evaluation of the MGP sites and the underground storage tank sites could significantly affect recorded amounts; however, we believe that the ultimate resolution of these matters will not have a material adverse effect on our financial position, cash flows or results of operations.

During 2008, through the normal course of an on-going business review, one of our operating districts was found to have coatings on their pipelines containing asbestos. We have taken action to educate employees on the hazards of asbestos and to implement procedures for removing these coatings from our pipelines when we must excavate and expose small portions of the pipeline. We continue to determine the impacts and related costs to us, if any, and the impact to employees and contractors, if any.

Additional information concerning commitments and contingencies is set forth in Note 6 to the consolidated financial statements of our Form 10-K for the year ended October 31, 2008.

Other

We have been in discussions with FERC’s Office of Enforcement (OE) regarding certain instances of possible non-compliance with FERC’s capacity release regulations regarding posting and bidding requirements for short-term releases. We have provided relevant information to FERC OE Staff and are cooperating with FERC in its investigation. We are continuing to meet with FERC’s OE staff to resolve this matter. We are unable to predict the outcome of the investigation at this time; however, we do not believe this matter will have a material effect on our results of operations.

12. Adjustment of Statement of Cash Flows and Balance Sheet for the Adoption of FSP FIN 39-1

In April 2007, the FASB issued FSP FIN 39-1 to amend FIN 39, “Offsetting of Amounts Related to Certain Contracts.” Prior to the adoption of FSP FIN 39-1, our policy has been to present our positions, exclusive of any receivable or payable, with the same counterparty on a net basis. On November 1, 2008, we elected “not to net” fair value amounts for our derivative instruments or the fair value of the right to reclaim cash collateral under FSP FIN 39-1 and moved to a gross presentation.

The following table reflects the adjustments on our condensed consolidated balance sheet and condensed consolidated statement of cash flows as a result of the change from the net to the gross method.

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	As
	Previously
In thousands	Reported			As Adjusted
As of October 31, 2008
Total current assets	$	600,752		$	623,396
Total investments, deferred charges and other assets		251,130			273,307
Total current liabilities		681,533			704,177
Total deferred credits and other liabilities		730,542			752,719
	As
	Previously
In thousands	Reported			As Adjusted
For the Three Months Ended January 31, 2008
Cash Flows from Operating Activities:
Change in asset and liabilities of gas purchase options, at fair value	$	—		$	8,126
Change in asset and liabilities		(126,534	)		(134,660	)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This report as well as other documents we file with the SEC may contain forward-looking statements. In addition, our senior management and other authorized spokespersons may make forward-looking statements in print or orally to analysts, investors, the media and others. These statements are based on management’s current expectations and information currently available and are believed to be reasonable and are made in good faith. However, the forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in the statements. Factors that may make the actual results differ from anticipated results include, but are not limited to:

• Regulatory issues affecting us and those from whom we purchase natural gas transportation and storage service, including those that affect allowed rates of return, terms and conditions of service, rate structures and financings. We monitor our ability to earn appropriate rates of return and initiate general rate proceedings as needed.

• Residential, commercial, industrial and power generation growth and energy consumption in our service areas. The ability to grow our customer base, the pace of that growth and the levels of energy consumption are impacted by general business and economic conditions, such as interest rates, inflation, fluctuations in the capital markets and the overall strength of the economy in our service areas and the country, and fluctuations in the wholesale prices of natural gas and competitive energy sources.

• Deregulation, regulatory restructuring and competition in the energy industry. We face competition from electric companies and energy marketing and trading companies, and

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	we expect this competitive environment to continue. We must be able to adapt to the changing environments and the competition.
•	The potential loss of large-volume industrial customers to alternate fuels or to bypass, or the shift by such customers to special competitive contracts or to tariff rates that are at lower per-unit margins than that customer’s existing rate.
•	Regulatory issues, customer growth, deregulation, economic and capital market conditions, the cost and availability of natural gas and weather conditions can impact our ability to meet internal performance goals.
•	The capital-intensive nature of our business. In order to maintain growth, we must add to our natural gas distribution system each year. The cost of this construction may be affected by the cost of obtaining governmental approvals, compliance with federal and state pipeline safety and integrity regulations, development project delays and changes in project costs. Weather, general economic conditions and the cost of funds to finance our capital projects can materially alter the cost and timing of a project.
•	Access to capital markets. Our internally generated cash flows are not adequate to finance the full cost of capital expenditures. As a result, we rely on access to both short-term and long-term capital markets as a significant source of liquidity for capital requirements not satisfied by cash flows from operations. Changes in the capital markets or our financial condition could affect access to and cost of capital.
•	Changes in the availability and cost of natural gas. To meet firm customer requirements, we must acquire sufficient gas supplies and pipeline capacity to ensure delivery to our distribution system while also ensuring that our supply and capacity contracts allow us to remain competitive. Natural gas is an unregulated commodity market subject to supply and demand and price volatility. Producers, marketers and pipelines are subject to operating and financial risks associated with exploring, drilling, producing, gathering, marketing and transporting natural gas and have risks that increase our exposure to supply and price fluctuations.
•	Changes in weather conditions. Weather conditions and other natural phenomena can have a material impact on our earnings. Severe weather conditions, including destructive weather patterns such as hurricanes, can impact our suppliers and the pipelines that deliver gas to our distribution system. Weather conditions directly influence the supply of, demand for and the cost of natural gas.
•	Changes in environmental, safety and system integrity regulations and the cost of compliance. We are subject to extensive federal, state and local regulations. Compliance with such regulations may result in increased capital or operating costs.
•	Ability to retain and attract professional and technical employees. To provide quality service to our customers and meet regulatory requirements, we are dependent on our ability to recruit, train, motivate and retain qualified employees.
•	Changes in accounting regulations and practices. We are subject to accounting regulations and practices issued periodically by accounting standard-setting bodies. New accounting standards may be issued that could change the way we record revenues, expenses, assets and liabilities, and could affect our reported earnings or increase our liabilities.
•	Changes in tax law and regulations. New tax law and regulations may be passed that could affect our reported earnings or increase our liabilities. Producers, marketers and pipelines are subject to changes in tax laws and regulations that increase our exposure to supply and price fluctuations.

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• Earnings from our equity method investments. We invest in companies that have risks that are inherent in their businesses, and these risks may negatively affect our earnings from those companies.

Other factors may be described elsewhere in this report. All of these factors are difficult to predict and many of them are beyond our control. For these reasons, you should not rely on these forward-looking statements when making investment decisions. When used in our documents or oral presentations, the words “expect,” “believe,” “project,” “anticipate,” “intend,” “should,” “could,” “will,” “assume,” “can,” “estimate,” “forecast,” “future,” “indicate,” “outlook,” “plan,” “predict,” “seek,” “target,” “would” and variations of such words and similar expressions are intended to identify forward-looking statements.

Forward-looking statements are only as of the date they are made, and we do not undertake any obligation to update publicly any forward-looking statement either as a result of new information, future events or otherwise except as required by applicable laws and regulations. Please reference our website at www.piedmontng.com for current information. Our reports on Form 10-K, Form 10-Q and Form 8-K and amendments to these reports are available at no cost on our website as soon as reasonably practicable after the report is filed with or furnished to the SEC.

Executive Overview

Piedmont Natural Gas Company, Inc., which began operations in 1951, is an energy services company whose principal business is the distribution of natural gas to over one million residential, commercial, industrial and power generation customers in portions of North Carolina, South Carolina and Tennessee, including 62,000 customers served by municipalities who are our wholesale customers. We are invested in joint venture, energy-related businesses, including unregulated retail natural gas marketing, interstate natural gas storage and intrastate natural gas transportation.

In 1994, our predecessor, which was incorporated in 1950 under the same name, was merged into a newly formed North Carolina corporation for the purpose of changing our state of incorporation to North Carolina.

In the Carolinas, our service area is comprised of numerous cities, towns and communities. We provide service to Anderson, Gaffney, Greenville and Spartanburg in South Carolina and Charlotte, Salisbury, Greensboro, Winston-Salem, High Point, Burlington, Hickory, Indian Trail, Spruce Pine, Reidsville, Fayetteville, New Bern, Wilmington, Tarboro, Elizabeth City, Rockingham and Goldsboro in North Carolina. In North Carolina, we also provide wholesale natural gas service to Greenville, Monroe, Rocky Mount and Wilson. In Tennessee, our service area is the metropolitan area of Nashville, including wholesale natural gas service to Gallatin and Smyrna.

We have two reportable business segments, regulated utility and non-utility activities. The regulated utility segment is the largest segment of our business with approximately 97% of our consolidated assets. Factors critical to the success of the regulated segment include a safe, reliable natural gas distribution system and the ability to recover the costs and expenses of the business in the rates charged to customers. For the three months ended January 31, 2009, 93% of our earnings before taxes came from our regulated utility segment. The non-utility activities segment consists of our equity method investments in joint venture, energy-related businesses that are involved in unregulated retail natural gas marketing, interstate natural gas storage and intrastate natural gas transportation. For further information on business segments, see Note 5 to the condensed

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consolidated financial statements in this Form 10-Q. For information about our equity method investments, see Note 6 to the condensed consolidated financial statements in this Form 10-Q.

Our utility operations are regulated by the NCUC, the PSCSC and the TRA as to rates, service area, adequacy of service, safety standards, extensions and abandonment of facilities, accounting and depreciation. We are also regulated by the NCUC as to the issuance of securities. We are also subject to or affected by various federal regulations. These federal regulations include regulations that are particular to the natural gas industry, such as regulations of the FERC that affect the purchase and sale of and the prices paid for the interstate transportation and storage of natural gas, regulations of the Department of Transportation that affect the construction, operation, maintenance, integrity, safety and security of natural gas distribution and transmission systems, and regulations of the Environmental Protection Agency relating to the use and release into the environment of hazardous wastes. In addition, we are subject to numerous regulations, such as those relating to employment practices, which are generally applicable to companies doing business in the United States of America.

Our regulatory commissions approve rates and tariffs that are designed to give us the opportunity to generate revenues to cover our gas and non-gas costs and to earn a fair rate of return for our shareholders. In North Carolina, a margin decoupling mechanism provides for the recovery of our approved margin from residential and commercial customers independent of consumption patterns. The margin decoupling mechanism results in semi-annual rate adjustments to refund any over-collection of margin or recover any under-collection of margin. We have weather normalization adjustment (WNA) mechanisms in South Carolina and Tennessee that partially offset the impact of colder- or warmer-than-normal weather on bills rendered during the months of November through March for residential and commercial customers. The WNA formula calculates the actual weather variance from normal, using 30 years of history, which results in an increase in revenues when weather is warmer than normal and a decrease in revenues when weather is colder than normal. The gas cost portion of our costs is recoverable through PGA procedures and is not affected by the margin decoupling mechanism or the WNA.

We continually assess the nature of our business and explore alternatives in our core business of traditional regulated utility service. Non-traditional ratemaking initiatives and market-based pricing of products and services provide additional opportunities and challenges for us. We also regularly evaluate opportunities for obtaining natural gas from different supply regions to diversify our natural gas portfolio.

We are seeing the impacts of the economic recession in our market area with a decline in customer growth in our new construction market and continued customer conservation practices. We are also experiencing a decline in margin in our commercial and industrial markets from lower energy consumption related to company closings and reduced production and business activities. We continue to pursue customer growth opportunities, including residential customer conversions, in our service areas. A further weakening of the economy in our service areas could result in a greater decline in customer additions and energy consumption which could adversely affect our revenues or restrict our future growth.

We have deferred the development and construction of our previously announced LNG peak storage facility in Robeson County, North Carolina based on our current growth projections. Our current growth projections indicate that we may need to resume development of the project in 2011 to prepare for construction in 2012 in order to provide service in 2015. With the uncertain economic outlook, we will monitor customer growth trends in our markets and plan for the development of the project when needed to meet future customer requirements.

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Our current customer growth projections for fiscal 2009 are gross customer additions in the range of 1-1.5% and an increase of .5-1% in the number of net customers billed. This compares to fiscal year 2008 gross and net customer increases of approximately 2%

Under current economic conditions, it may become more difficult for customers to pay their gas bills, leading to slower collections and higher-than-normal levels of accounts receivable and ultimately increasing the non-gas bad debt expense. With a slower turnover of accounts receivable, our level of borrowings could increase in order to meet our working capital needs.

Our strategic focus is on our core business of providing safe, reliable and quality natural gas distribution service to our customers in the growing Southeast market area. Part of our strategic plan is to manage our gas distribution business through control of our operating costs, implementation of new technologies and sound rate and regulatory initiatives. We are working to enhance the value and growth of our utility assets by good management of capital spending, including improvements for current customers and the pursuit of profitable customer growth opportunities in our service areas. We strive for quality customer service by investing in technology, processes and people. We work with our state regulators to maintain fair rates of return and balance the interests of our customers and shareholders.

We seek to maintain a long-term debt-to-capitalization ratio within a range of 45% to 50%. We also seek to maintain a strong balance sheet and investment-grade credit ratings to support our operating and investment needs.

We will continue our efforts to promote natural gas and to inform consumers about the environmental benefits of using natural gas directly in their homes and business for the most efficient use of natural gas. This positions us, now and into the future, as the source of an environmentally responsible energy choice for our customers.

We remain focused on implementing and improving our underlying business processes while at the same time monitoring economic and other ongoing developments in order to ensure that our operations and business plan stay in step with these developments.

We invest in joint ventures to complement or supplement income from our regulated utility operations if an opportunity aligns with our overall business strategies and allows us to leverage our core competencies. We analyze and evaluate potential projects with a major factor being a projected rate of return greater than the returns allowed in our utility operations due to the higher risk of such projects. We participate in the governance of our ventures by having management representatives on the governing boards. We monitor actual performance against expectations, and any decision to exit an existing joint venture would be based on many factors, including performance results and continued alignment with our business strategies. For further information, see Note 6 to the condensed consolidated financial statements in this Form 10-Q.

Results of Operations

We reported net income of $80.9 million for the three months ended January 31, 2009 as compared to $82.3 million for the same period in 2008. The following table sets forth a comparison of the components of our condensed consolidated statements of income for the three months ended January 31, 2009 as compared with the three months ended January 31, 2008.

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Income Statement Components

	Three Months Ended January 31							Percent
In thousands, except per share amounts	2009		2008		Variance			Change
Operating Revenues	$	779,644	$	788,470	$	(8,826	)		(1.1	)%
Cost of Gas		558,961		561,444		(2,483	)		(0.4	)%
Margin		220,683		227,026		(6,343	)		(2.8	)%
Operations and Maintenance		50,725		52,578		(1,853	)		(3.5	)%
Depreciation		24,142		22,706		1,436			6.3	%
General Taxes		8,737		8,745		(8	)		(0.1	)%
Income Taxes		48,948		51,061		(2,113	)		(4.1	)%
Total Operating Expenses		132,552		135,090		(2,538	)		(1.9	)%
Operating Income		88,131		91,936		(3,805	)		(4.1	)%
Other Income (Expense), net of tax		5,758		5,471		287			5.2	%
Utility Interest Charges		13,013		15,139		(2,126	)		(14.0	)%
Net Income	$	80,876	$	82,268	$	(1,392	)		(1.7	)%
Average Shares of Common Stock:
Basic		73,319		73,280		39			0.1	%
Diluted		73,646		73,563		83			0.1	%
Earnings Per Share of Common Stock:
Basic	$	1.10	$	1.12	$	(0.02	)		(1.8	)%
Diluted	$	1.10	$	1.12	$	(0.02	)		(1.8	)%

Key statistics are shown in the table below for the three months ended January 31, 2009 and 2008.

Gas Deliveries, Customers, Weather Statistics and Number of Employees

	Three Months Ended
	January 31									Percent
	2009			2008			Variance			Change
Deliveries in Dekatherms (in thousands):
Sales Volumes		52,376			49,195			3,181			6.5	%
Transportation Volumes		24,155			23,359			796			3.4	%
Throughput		76,531			72,554			3,977			5.5	%
Secondary Market Volumes		13,392			16,085			(2,693	)		(16.7	)%
Customers Billed (at period end)		965,402			958,871			6,531			0.7	%
Gross Customer Additions		3,913			7,163			(3,250	)		(45.4	)%
Degree Days
Actual		1,944			1,755			189			10.8	%
Normal		1,856			1,869			(13	)		(0.7	)%
Percent colder (warmer) than normal		4.7	%		(6.1	)%		n/a			n/a
Number of Employees (at period end)		1,823			1,870			(47	)		(2.5	)%

Operating Revenues

Operating revenues decreased $8.8 million for the three months ended January 31, 2009 compared with the same period in 2008 primarily due to the following decreases:

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• $37.1 million from revenues in secondary market transactions due to decreased activity and gas costs. Secondary market transactions consist of off-system sales and capacity release arrangements and are a part of our regulatory gas supply management program with regulatory-approved sharing mechanisms between our utility customers and our shareholders.

• $21.1 million from decreased revenues under the margin decoupling mechanism. As discussed in “Financial Condition and Liquidity,” the margin decoupling mechanism in North Carolina adjusts for variations in residential and commercial use per customer including those due to conservation and weather.

• $6.8 million from decreased revenues under the WNA in South Carolina and Tennessee.

• $1.4 million from a decrease in volumes delivered to transportation customers other than power generation.

These decreases were partially offset by the following increases:

• $33.6 million primarily from increased commodity and demand costs passed through to sales customers.

• $25.4 million of commodity gas costs from higher volume deliveries to sales customers.

Cost of Gas

Cost of gas decreased $2.5 million for the three months ended January 31, 2009 compared with the same period in 2008 primarily due to the following decrease:

• $38.2 million from commodity gas costs in secondary market transactions due to decreased activity and gas costs.

This decrease was partially offset by the following increases:

• $25.4 million of commodity gas costs from higher volume deliveries to sales customers.

• $9 million from increased commodity and demand costs passed through to sales customers.

Under PGA procedures in all three states, we revise rates periodically without formal rate proceedings to reflect changes in the wholesale cost of gas. Charges to cost of gas are based on the amount recoverable under approved rate schedules. The net of any over- or under-recoveries of gas costs are added to or deducted from cost of gas and included in “Amounts due from customers” or “Amounts due to customers” in the condensed consolidated balance sheets.

Margin

Margin decreased $6.3 million for the three months ended January 31, 2009 compared with the same period in 2008 primarily due to the following decreases:

• $5.8 million from net adjustments to gas costs, inventory, supplier refunds and lost and unaccounted for gas due to regulatory gas cost accounting reviews in the prior year.

• $2.5 million from commercial customers from conservation practices and the impact of the economic downturn.

• $2.4 million from decreased volumes delivered to industrial customers due to the impact of the economic downturn.

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These decreases were partially offset by the following increases:

• $3.4 million from growth in our residential customer base.

• $1.2 million from the timing of asset management payments, partially offset by reduced margins from monthly capacity release and off-system sales transactions.

• $.8 million from conservation programs in the prior year.

Our utility margin is defined as natural gas revenues less natural gas commodity purchases and fixed gas costs for transportation and storage capacity. Margin, rather than revenues, is used by management to evaluate utility operations due to the impact of volatile wholesale commodity prices and resulting gas costs which are currently 58% of revenues and transportation and storage costs which are currently 4% of revenues.

Our utility margin is impacted also by certain regulatory mechanisms as defined elsewhere in this document and in our Form 10-K for the year ended October 31, 2008. These include WNA in Tennessee and South Carolina, the Natural Gas Rate Stabilization in South Carolina, secondary market activity in North Carolina and South Carolina, TIP in Tennessee, margin decoupling mechanism in North Carolina and negotiated loss treatment and the collection of uncollectible gas costs in all three jurisdictions. We retain 25% of secondary market margins generated through off-system sales and capacity release activity in all jurisdictions, with 75% credited to customers through the incentive plans.

Operations and Maintenance Expenses

Operations and maintenance expenses decreased $1.9 million for the three months ended January 31, 2009 compared with the same period in 2008 primarily due to decreases in payroll due to lower short-term and long-term incentive plan accruals and fewer employees.

Depreciation

Depreciation expense increased $1.4 million for the three months ended January 31, 2009 compared with the same period in 2008 primarily due to increases in plant in service.

General Taxes

General taxes were comparable for the three months ended January 31, 2009 as compared with the same period in 2008.

Other Income (Expense)

Other Income (Expense) is comprised of income from equity method investments, non-operating income, charitable contributions, non-operating expense and income taxes related to these items. Non-operating income includes non-regulated merchandising and service work, subsidiary operations, interest income and other miscellaneous income. Non-operating expense is comprised of other miscellaneous expenses.

The primary changes to Other Income (Expense) were in income from equity method investments and non-operating income discussed below. All other changes were insignificant.

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Income from equity method investments increased $1.1 million for the three months ended January 31, 2009 as compared with the same period in 2008 primarily due to the following:

• $1.6 million increase in earnings from SouthStar primarily due to higher retail margins and lower operating costs, partially offset by lower of cost or market inventory adjustments.

• $.5 million decrease in earnings from Hardy Storage primarily due to higher operations and maintenance expenses, property taxes and amortization of deferred interest on financing fees.

Non-operating income decreased $.5 million for the three months ended January 31, 2009 as compared with the same period in 2008 primarily due to a $.3 million write off of a community economic development loan.

Utility Interest Charges

Utility interest charges decreased $2.1 million for the three months ended January 31, 2009 compared with the same period in 2008 primarily due to the following decreases:

• $1.7 million in interest on short-term debt primarily due to the average interest rate of the current period being 350 basis points lower than the prior year period even though borrowings were higher in the current period.

• $.8 million in net interest expense on amounts due to/from customers due to higher net receivables in the current period.

Financial Condition and Liquidity

To meet our capital and liquidity requirements, we rely on certain resources, including cash flows from operating activities, access to capital markets, cash generated from our investments in joint ventures and short-term bank borrowings. We access our short-term credit facilities to finance our working capital needs and growth. Although the credit markets tightened in the latter half of 2008, we believe that these sources, including amounts available to us under our existing and seasonal facilities, will continue to allow us to meet our needs for working capital, construction expenditures, investments in joint ventures, anticipated debt redemptions and dividend payments.

Cash Flows from Operating Activities. The natural gas business is seasonal in nature. Operating cash flows may fluctuate significantly during the year and from year to year due to working capital changes within our utility and non-utility operations resulting from such factors as weather, natural gas purchases and prices, natural gas storage activity, collections from customers and deferred gas cost recoveries. We rely on operating cash flows and short-term bank borrowings to meet seasonal working capital needs. During our first and second quarters, we generally experience overall positive cash flows from the sale of flowing gas and gas in storage and the collection of amounts billed to customers during the winter heating season (November through March). Cash requirements generally increase during the third and fourth quarters due to increases in natural gas purchases for storage, seasonal construction activity and decreases in receipts from customers.

During the winter heating season, our accounts payable increase to reflect amounts due to our natural gas suppliers for commodity and pipeline capacity. The cost of the natural gas can vary

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significantly from period to period due to volatility in the price of natural gas, which is a function of market fluctuations in the price of natural gas, along with our changing requirements for storage volumes. Differences between natural gas costs that we have paid to suppliers and amounts that we have collected from customers are included in regulatory deferred accounts and in amounts due to/from customers. These natural gas costs can cause cash flows to vary significantly from period to period along with variations in the timing of collections from customers under our gas cost recovery mechanisms.

Cash flows from operations are impacted by weather, which affects gas purchases and sales. Warmer weather can lead to lower revenues from fewer volumes of natural gas sold or transported. Colder weather can increase volumes sold to weather-sensitive customers, but may lead to conservation by customers in order to reduce their heating bills. Warmer-than-normal weather can lead to reduced operating cash flows, thereby increasing the need for short-term borrowings to meet current cash requirements.

Because of the economic recession, we may incur additional bad debt expense during the winter heating season, as well as experience increased customer conservation. We may incur more short-term debt to pay for gas supplies and other operating costs, since collections from customers could be slower and some customers may not be able to pay their bills. Regulatory margin stabilizing and cost recovery mechanisms, such as those that allow us to recover the gas cost portion of bad debt expense, will significantly mitigate the impact these factors may have on our results of operations.

Net cash provided by operating activities was $20.8 million and $.3 million for the three months ended January 31, 2009 and 2008, respectively. Net cash provided by operating activities reflects a $1.4 million decrease in net income for 2009 compared with 2008. The effect of changes in working capital on net cash provided by operating activities is described below:

• Trade accounts receivable and unbilled utility revenues increased $253.7 million in the current period primarily due to increased amounts billed to customers in 2009 as compared with 2008 due to higher volumes delivered. Volumes sold to residential and commercial customers increased 4.5 million dekatherms as compared with the same prior period primarily due to weather that was 11% colder. Total throughput increased 4 million dekatherms as compared with the same prior period.

• Net amounts due from customers increased $22 million primarily resulting from realized and unrealized market impacts on hedging activities, partially offset by decreases for gas cost differences deferred and the impact of the decrease in amounts recorded under the margin decoupling mechanism.

• Gas in storage increased $2 million in the current period primarily due to prepaid inventories becoming available for use which increased the levels of gas in storage. The volumes of gas in storage are at a higher average cost than the prior year.

• Prepaid gas costs decreased $77.4 million in the current period primarily due to gas becoming available for sale as noted above. Under some gas supply contracts, prepaid gas costs incurred during the summer months represent purchases of gas that are not available for sale, and therefore not recorded in inventory, until the winter heating season.

• Trade accounts payable increased $37.6 million in the current period primarily due to gas purchases to meet customer demand during the winter months.

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Our three state regulatory commissions approve rates that are designed to give us the opportunity to generate revenues to cover our gas costs and fixed and variable non-gas costs and to earn a fair return for our shareholders. We have a WNA mechanism in South Carolina and Tennessee that partially offsets the impact of colder- or warmer-than-normal weather on bills rendered in November through March for residential and commercial customers. The WNA in South Carolina and Tennessee generated credits to customers of $1.7 million and charges of $5.1 million in the three months ended January 31, 2009 and 2008, respectively. In Tennessee, adjustments are made directly to individual customer bills. In South Carolina, the adjustments are calculated at the individual customer level but are recorded in a deferred account for subsequent collection from or refund to all customers in the class. The margin decoupling mechanism in North Carolina provides for the collection of our approved margin from residential and commercial customers independent of consumption patterns. The margin decoupling mechanism reduced margin by $6.9 million and increased margin by $14.2 million in the three months ended January 31, 2009 and 2008, respectively. Our gas costs are recoverable through PGA procedures and are not affected by the WNA or the margin decoupling mechanism.

The financial condition of the natural gas marketers and pipelines that supply and deliver natural gas to our distribution system can increase our exposure to supply and price fluctuations. We believe our risk exposure to the financial condition of the marketers and pipelines is not significant based on our receipt of the products and services prior to payment and the availability of other marketers of natural gas to meet our firm supply needs if necessary. We have regulatory commission approval in North Carolina, South Carolina and Tennessee that places tighter credit requirements on the retail natural gas marketers that schedule gas for transportation service on our system.

The regulated utility competes with other energy products, such as electricity and propane, in the residential and commercial customer markets. The most significant product competition is with electricity for space heating, water heating and cooking. Numerous factors can influence customer demand for natural gas, including price, value, availability, environmental attributes, reliability and energy efficiency. Increases in the price of natural gas can negatively impact our competitive position by decreasing the price benefits of natural gas to the consumer. This can impact our cash needs if customer growth slows, resulting in reduced capital expenditures, or if customers conserve, resulting in reduced gas purchases and customer billings.

In the industrial market, many of our customers are capable of burning a fuel other than natural gas, with fuel oil being the most significant competing energy alternative. Our ability to maintain industrial market share is largely dependent on price. The relationship between supply and demand has the greatest impact on the price of natural gas. The price of oil depends upon a number of factors beyond our control, including the relationship between worldwide supply and demand and the policies of foreign and domestic governments and organizations. Our liquidity could be impacted, either positively or negatively, as a result of alternate fuel decisions made by industrial customers.

In an effort to keep customer rates competitive and to maximize earnings, we continue to implement business process improvement and operations and maintenance cost management programs to capture operational efficiencies while improving customer service.

Cash Flows from Investing Activities. Net cash used in investing activities was $30.4 million and $42.7 million for the three months ended January 31, 2009 and 2008, respectively. Net cash used in investing activities was primarily for utility construction expenditures. Gross utility construction expenditures for the three months ended January 31, 2009 were $29.9 million as compared to $34.6 million in the same prior period primarily due to lower system infrastructure investments related to system strengthening and customer growth.

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We have a substantial capital expansion program for construction of distribution facilities, purchase of equipment and other general improvements. This program primarily supports our system infrastructure and the growth in our customer base. Gross utility construction expenditures totaling $176 million are forecasted for 2009, a reduction of $70 million, including $54 million for the deferral of the Robeson LNG storage project and $16 million for the deferral of pipeline infrastructure to serve new gas fired power generation markets in North Carolina. Our original 2009 budget was $246 million. We are not contractually obligated to expend capital until the work is completed.

Cash Flows from Financing Activities. Net cash provided by financing activities was $25.6 million and $52.6 million for the three months ended January 31, 2009 and 2008, respectively. Funds are primarily provided from bank borrowings and the issuance of common stock through dividend reinvestment and employee stock plans, net of purchases under the common stock repurchase program. We may sell common stock and long-term debt when market and other conditions favor such long-term financing. Funds are primarily used to pay down outstanding short-term borrowings, to repurchase common stock under the common stock repurchase program and to pay quarterly dividends on our common stock. As of January 31, 2009, our current assets were $828.5 million and our current liabilities were $836.6 million primarily due to seasonal requirements as discussed above.

As of January 31, 2009, we had committed lines of credit under our syndicated credit facility of $450 million with the ability to expand up to $600 million, for which we pay an annual fee of $35,000 plus six basis points for any unused amount up to $450 million. We had a syndicated seasonal credit facility with aggregate commitments totaling $150 million. Outstanding short-term borrowings increased from $406.5 million as of October 31, 2008 to $448 million as of January 31, 2009 primarily due to our gas procurement programs. During the three months ended January 31, 2009, short-term borrowings ranged from $362 million to $556.5 million, and interest rates ranged from .58% to 2.84% (weighted average of 1.26%).

As of January 31, 2009, under our syndicated credit facility, we had available letters of credit of $5 million of which $2.4 million was issued and outstanding. The letters of credit are used to guarantee claims from self-insurance under our general liability policies. As of January 31, 2009, unused lines of credit available under our syndicated credit facility and the seasonal credit facility, including the issuance of the letters of credit, totaled $149.6 million.

The level of short-term borrowings can vary significantly due to changes in the wholesale prices of natural gas and to the level of purchases of natural gas supplies and hedging transactions to serve customer demand and for storage. Short-term debt may increase when wholesale prices for natural gas increase because we must pay suppliers for the gas before we collect our costs from customers through their monthly bills. Gas prices could continue to fluctuate.

Due to the economic downturn and lower customer growth projections, we have delayed the Robeson County LNG project, as well as other capital expenditures as mentioned above. At this time, we do not anticipate issuing long-term debt in 2009. However, we will continue to monitor customer growth trends in our markets and the timing of any infrastructure investments that would require the need for additional long-term debt.

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During the three months ended January 31, 2009, we issued $3.6 million of common stock through dividend reinvestment and stock purchase plans. From time to time, we have repurchased shares of common stock under our Common Stock Open Market Purchase Program as described in Part II, Item 2 of this Form 10-Q. We also have an accelerated share repurchase (ASR) program for purchasing shares of common stock that are in addition to shares that are repurchased on a normal basis through the open market program. Through the ASR program, we have repurchased 3,850,000 shares of the four million shares of common stock authorized under the ASR program and have 150,000 shares remaining. On March 6, 2009, the Board of Directors authorized the repurchase of up to an additional 4 million shares under the Common Stock Open Market Purchase Program and the ASR program, which were consolidated. The total number of shares available for repurchase under the combined plans is 7,010,074. In our second or third quarter of 2009, we intend to repurchase shares of common stock through the use of a broker under an ASR agreement. Such shares will be cancelled and become authorized but unissued shares available for issuance under our dividend reinvestment, employee stock purchase and incentive compensation plans.

We have paid quarterly dividends on our common stock since 1956. Provisions contained in certain note agreements under which long-term debt was issued restrict the amount of cash dividends that may be paid. As of January 31, 2009, our retained earnings were not restricted. On March 6, 2009, the Board of Directors declared a quarterly dividend on common stock of $.27 per share, payable April 15, 2009 to shareholders of record at the close of business on March 25, 2009.

Our long-term targeted capitalization ratio is 45-50% in long-term debt and 50-55% in common equity. Accomplishing this capital structure objective and maintaining sufficient cash flow are necessary to maintain attractive credit ratings. As of January 31, 2009, our capitalization, including current maturities of long-term debt, consisted of 46% in long-term debt and 54% in common equity.

The components of our total debt outstanding (short-term debt and long-term debt) to our total capitalization as of January 31, 2009 and 2008, and October 31, 2008, are summarized in the table below.

	January 31					October 31					January 31
In thousands	2009		Percentage			2008		Percentage			2008		Percentage
Short-term debt	$	448,000		20	%	$	406,500		19	%	$	289,000		14	%
Current portion of long-term debt		30,000		1	%		30,000		1	%		—		—	%
Long-term debt		793,867		36	%		794,261		38	%		824,773		41	%
Total debt		1,271,867		57	%		1,230,761		58	%		1,113,773		55	%
Common stockholders’ equity		952,275		43	%		887,244		42	%		921,125		45	%
Total capitalization (including short-term debt)	$	2,224,142		100	%	$	2,118,005		100	%	$	2,034,898		100	%

Credit ratings impact our ability to obtain short-term and long-term financing and the cost of such financings. In determining our credit ratings, the rating agencies consider a number of quantitative factors, including debt to total capitalization, operating cash flows relative to outstanding debt, capital expenditures, operating cash flow coverage of interest and pension liabilities and funding status. Rating agencies also consider qualitative factors, such as the consistency of our earnings over time, the quality of management, corporate governance and business strategy, the risks associated with our utility and non-utility businesses and the regulatory commissions that establish rates in the states where we operate.

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As of January 31, 2009, all of our long-term debt was unsecured. Our long-term debt is rated “A” by Standard & Poor’s Ratings Services and “A3” by Moody’s Investors Service. Currently, with respect to our long-term debt, the credit agencies maintain their stable outlook. There is no guarantee that a rating will remain in effect for any given period of time or that a rating will not be lowered or withdrawn by a rating agency if, in its judgment, circumstances warrant a change.

We are subject to default provisions related to our long-term debt and short-term borrowings. Failure to satisfy any of the default provisions may result in total outstanding issues of debt becoming due. There are cross-default provisions in all our debt agreements. As of January 31, 2009, there has been no event of default giving rise to acceleration of our debt.

Estimated Future Contractual Obligations

During the three months ended January 31, 2009, there were no material changes to our estimated future contractual obligations that were disclosed in our Form 10-K for the year ended October 31, 2008, in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Off-balance Sheet Arrangements

We have no off-balance sheet arrangements other than operating leases and letters of credit that were discussed in Note 6 to the consolidated financial statements in our Form 10-K for the year ended October 31, 2008 and the credit extended by our counterparty in OTC derivative contracts as discussed in Note 7 to the condensed consolidated financial statements in this Form 10-Q.

Piedmont Energy Partners, Inc., a wholly owned subsidiary of Piedmont, has entered into a guaranty in the normal course of business. The guaranty involves some levels of performance and credit risk that are not included on our condensed consolidated balance sheets. We have recorded an estimated liability of $1.2 million as of January 31, 2009 and October 31, 2008, respectively. The possibility of having to perform on the guaranty is largely dependent upon the future operations of Hardy Storage, third parties or the occurrence of certain future events. For further information on this guaranty, see Note 6 to the condensed consolidated financial statements in this Form 10-Q.

Critical Accounting Policies and Estimates

We prepare the condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America. We make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods reported. Actual results may differ significantly from these estimates and assumptions. We base our estimates on historical experience, where applicable, and other relevant factors that we believe are reasonable under the circumstances. On an ongoing basis, we evaluate estimates and assumptions and make adjustments in subsequent periods to reflect more current information if we determine that modifications in assumptions and estimates are warranted.

Management considers an accounting estimate to be critical if it requires assumptions to be made that were uncertain at the time the estimate was made and changes in the estimate or a different estimate that could have been used would have had a material impact on our financial condition or results of operations. We consider regulatory accounting, revenue recognition, and pension and postretirement benefits to be our critical accounting estimates. Management is responsible for the

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selection of the critical accounting estimates presented in our Form 10-K for the year ended October 31, 2008, in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Management has discussed these critical accounting estimates with the Audit Committee of the Board of Directors. There have been no changes in our critical accounting policies and estimates since October 31, 2008.

Recent Accounting Pronouncements

In March 2008, the Financial Accounting Standards Board (FASB) issued SFAS No. 161, “Disclosures About Derivative Instruments and Hedging Activities” (Statement 161). Statement 161 amends SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” (Statement 133), by requiring expanded qualitative, quantitative and credit-risk disclosures about derivative instruments and hedging activities, but does not change the scope or accounting under Statement 133 and its related interpretations. Statement 161 requires specific disclosures regarding how and why an entity uses derivative instruments; how derivative instruments and related hedged items are accounted for; and how derivative instruments and related hedged items affect an entity’s financial position, results of operations and cash flows. Statement 161 also amended SFAS No. 107, “Disclosures about Fair Value of Financial Instruments” (Statement 107), to clarify that derivative instruments are subject to Statement 107’s concentration-of-credit-risk disclosures. Statement 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early adoption permitted. Since Statement 161 only requires additional disclosures concerning derivatives and hedging activities, this standard did not have a material impact on our financial position, results of operations or cash flows. We adopted Statement 161 on February 1, 2009.

In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles” (Statement 162). Statement 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements that are presented in conformity with GAAP for nongovernmental entities. Statement 162 became effective November 15, 2008. We adopted Statement 162 on the effective date, and it had no impact on our financial position, results of operations or cash flows.

In December 2008, FASB issued a staff position, FSP FAS 132(R)-1, that amended SFAS No. 132(R), “Employers’ Disclosures about Pension and Other Postretirement Benefits,” that requires additional disclosures about plan assets of defined benefit pension and other postretirement plans. This staff position requires that employers provide more transparency about the assets held by retirement plans or other postretirement employee benefit plans, the concentration of risk in those plans and information about the fair value measurements of plan assets similar to the disclosures required by SFAS No. 157, “Fair Value Measurements.” FSP FAS 132(R)-1 is effective for fiscal years ending after December 15, 2009, with earlier application permitted. Since this staff position only requires additional disclosures about plan assets of defined benefit pension and other postretirement plans, it is not expected to have a material impact on our financial position, results of operations or cash flows. We will adopt FSP FAS 132(R)-1 during our fiscal year ending October 31, 2010.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to various forms of market risk, including the credit risk of our suppliers and our customers, interest rate risk, commodity price risk and weather risk. We seek to identify, assess, monitor and manage market risk and credit risk in accordance with defined policies and procedures

37

under an Enterprise Risk Management Policy and with the direction of the Risk Management Advisory Committee. Risk management is guided by senior management with Board of Directors’ oversight, and senior management takes an active role in the development of policies and procedures.

We hold all financial instruments discussed below for purposes other than trading.

Credit Risk

We enter into contracts with third parties to buy and sell natural gas. Our policy requires counterparties to have an investment-grade credit rating at the time of the contract. The policy specifies limits on the contract amount and duration based on the counterparty’s credit rating. The policy is also designed to mitigate credit risks through a requirement for credit enhancements that include letters of credit or parent guaranties. In order to minimize our exposure, we continually re-evaluate third-party creditworthiness and market conditions and modify our requirements accordingly.

We also enter into contracts with third parties to manage some of our supply and capacity assets for the purpose of maximizing their value. These arrangements include a counterparty credit evaluation according to our policy described above prior to contract execution and typically have durations of one year or less. In the event that a party is unable to perform under these arrangements, we have exposure to satisfy any supply or demand contractual obligations that were incurred while under the management of this third party.

We have mitigated exposure to the risk of non-payment of utility bills by customers. In North Carolina and South Carolina, gas costs related to uncollectible accounts are recovered through PGA procedures. In Tennessee, the gas cost portion of net write-offs for a fiscal year that exceed the gas cost portion included in base rates is recovered through PGA procedures. To manage the non-gas cost customer credit risk, we evaluate credit quality and payment history and may require cash deposits from those customers that do not satisfy our predetermined credit standards. Significant increases in the price of natural gas can also slow our collection efforts as customers experience increased difficulty in paying their gas bills, leading to higher than normal accounts receivable.

Interest Rate Risk

We are exposed to interest rate risk as a result of changes in interest rates on short-term debt. As of January 31, 2009, all of our long-term debt was issued at fixed rates, and therefore not subject to interest rate risk.

We have short-term borrowing arrangements to provide working capital and general corporate liquidity. The level of borrowings under such arrangements varies from period to period depending upon many factors, including the cost of wholesale natural gas and our gas supply hedging programs, our investments in capital projects, the level and expense of our storage inventory and the collection of receivables. Future short-term interest expense and payments will be impacted by both short-term interest rates and borrowing levels.

As of January 31, 2009, we had $448 million of short-term debt outstanding under our syndicated credit facility and seasonal credit facility at a weighted average interest rate of 1.26%. The carrying amount of our short-term debt approximates fair value. A change of 100 basis points in

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the underlying average interest rate for our short-term debt would have caused a change in interest expense of approximately $1.1 million during the three months ended January 31, 2009.

Commodity Price Risk

We have mitigated the cash flow risk resulting from commodity purchase contracts under our regulatory gas cost recovery mechanisms that permit the recovery of these costs in a timely manner. As such, we face regulatory recovery risk associated with these costs. With regulatory commission approval, we revise rates periodically without formal rate proceedings to reflect changes in the wholesale cost of gas, including costs associated with our hedging programs under the recovery mechanism allowed by each of our state regulators. Under our PGA procedures, differences between gas costs incurred and gas costs billed to customers are deferred and any under-recoveries are included in “Amounts due from customers” or any over-recoveries are included in “Amounts due to customers” in our consolidated balance sheets for collection or refund over subsequent periods. When we have “Amounts due from customers,” we earn a carrying charge that mitigates any incremental short-term borrowing costs. When we have “Amounts due to customers,” we incur a carrying charge that we must refund to our customers.

We manage our gas supply costs through a portfolio of short- and long-term procurement and storage contracts with various suppliers. We actively manage our supply portfolio to balance sales and delivery obligations. We inject natural gas into storage during the summer months and withdraw the gas during the winter heating season. In the normal course of business, we utilize over-the-counter and New York Mercantile Exchange (NYMEX) exchange-traded instruments of various durations for the forward purchase of a portion of our natural gas requirements, subject to regulatory review and approval.

Our gas purchasing practices are subject to regulatory reviews in all three states in which we operate. Costs have never been disallowed in any jurisdiction.

Weather Risk

We are exposed to weather risk in our regulated utility segment in South Carolina and Tennessee where revenues are collected from volumetric rates without a margin decoupling mechanism. Our rates are designed based on an assumption of normal weather. In these states, this risk is mitigated by WNA mechanisms that are designed to offset the impact of colder-than-normal or warmer-than-normal weather in our residential and commercial markets. In North Carolina, we manage our weather risk through a margin decoupling mechanism that allows us to recover our approved margin from residential and commercial customers independent of volumes sold.

Additional information concerning market risk is set forth in “Financial Condition and Liquidity” in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 2 of this Form 10-Q.

Item 4. Controls and Procedures

Our management, including the President and Chief Executive Officer and the Senior Vice President and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this Form 10-Q. Based on such evaluation, the President and Chief Executive Officer and the Senior Vice President and Chief Financial Officer concluded that, as of

39

the end of the period covered by this Form 10-Q, our disclosure controls and procedures were effective in that they provide reasonable assurances that the information we are required to disclose in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods required by the United States Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

We routinely review our internal control over financial reporting and from time to time make changes intended to enhance the effectiveness of our internal control over financial reporting. There were no changes to our internal control over financial reporting as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act during the first quarter of fiscal 2009 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II. Other Information

Item 1. Legal Proceedings

We have only routine litigation in the normal course of business.

Item 1A. Risk Factors

During the three months ended January 31, 2009, there were no material changes to our risk factors that were disclosed in our Form 10-K for the year ended October 31, 2008.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

     c) Issuer Purchases of Equity Securities.

          The following table provides information with respect to purchases of common stock under the Common Stock Open Market Purchase Program, including the accelerated stock repurchase program, during the three months ended January 31, 2009.

					Total Number of		Maximum Number
	Total Number				Shares Purchased		of Shares that May
	of Shares		Average Price		as Part of Publicly		Yet be Purchased
Period	Purchased		Paid Per Share		Announced Program		Under the Program *
Beginning of the period								3,010,074
11/1/08 - 11/30/08		—	$	—		—		3,010,074
12/1/08 - 12/31/08		—	$	—		—		3,010,074
1/1/09 - 1/31/09		—	$	—		—		3,010,074
Total		—	$	—		—

* The Common Stock Open Market Purchase Program was approved by the Board of Directors and announced on June 4, 2004 to purchase up to three million shares of common stock for reissuance under our dividend reinvestment, stock purchase and incentive compensation plans. On December 16, 2005, the Board of Directors approved an increase in the number of shares in this program from three million to six million to reflect the two-for-one stock split in 2004.

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The Board also approved on that date an amendment of the Common Stock Open Market Purchase Program to provide for the purchase of up to four million additional shares of common stock to maintain our debt-to-equity capitalization ratios at target levels. These combined actions increased the total authorized share repurchases from three million to ten million shares. The additional four million shares are referred to as our accelerated share repurchase program.

The amount of cash dividends that may be paid on common stock is restricted by provisions contained in certain note agreements under which long-term debt was issued, with those for the senior notes being the most restrictive. We cannot pay or declare any dividends or make any other distribution on any class of stock or make any investments in subsidiaries or permit any subsidiary to do any of the above (all of the foregoing being “restricted payments”) except out of net earnings available for restricted payments. As of January 31, 2009, net earnings available for restricted payments were greater than retained earnings; therefore, our retained earnings were not restricted.

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Item 6. Exhibits

	Compensatory Contracts:
10.1	Piedmont Natural Gas Company, Inc. Voluntary Deferral Plan, dated as of December 8, 2008, effective November 1, 2008.
10.2	Piedmont Natural Gas Company, Inc. Defined Contribution Restoration Plan, dated as of December 8, 2008, effective January 1, 2009.
	Other Contracts:
10.3	Credit Agreement dated as of December 3, 2008 among Piedmont Natural Gas Company, Inc., Bank of America, N.A., as Administrative Agent, and the Other Lenders Party Thereto.
10.4	Amended and Restated Revolving Credit Facility dated December 1, 2008 between Piedmont Natural Gas Company, Inc. and Bank of America, N.A.
10.5	Amended and Restated Revolving Credit Facility dated December 1, 2008 between Piedmont Natural Gas Company, Inc. and Branch Banking and Trust Company.
31.1	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of the Chief Executive Officer.
31.2	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of the Chief Financial Officer.
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of the Chief Executive Officer.
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of the Chief Financial Officer.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Piedmont Natural Gas Company, Inc. (Registrant)

Date March 9, 2009	/s/ David J. Dzuricky
	David J. Dzuricky
	Senior Vice President and Chief Financial Officer (Principal Financial Officer)

Date March 9, 2009	/s/ Jose M. Simon
	Jose M. Simon
	Vice President and Controller (Principal Accounting Officer)

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Piedmont Natural Gas Company, Inc.
Form 10-Q
For the Quarter Ended January 31, 2009

Exhibits

10.1	Piedmont Natural Gas Company, Inc. Voluntary Deferral Plan, dated as of December 8, 2008, effective November 1, 2008
10.2	Piedmont Natural Gas Company, Inc. Defined Contribution Restoration Plan, dated as of December 8, 2008, effective January 1, 2009
10.3	Credit Agreement dated as of December 3, 2008 among Piedmont Natural Gas Company, Inc., Bank of America, N.A., as Administrative Agent, and the Other Lenders Party Thereto
10.4	Amended and Restated Revolving Credit Facility dated December 1, 2008 between Piedmont Natural Gas Company, Inc. and Bank of America, N.A.
10.5	Amended and Restated Revolving Credit Facility dated December 1, 2008 between Piedmont Natural Gas Company, Inc. and Branch Banking and Trust Company
31.1	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of the Chief Executive Officer
31.2	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of the Chief Financial Officer
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of the Chief Executive Officer
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of the Chief Financial Officer

EX-10.1

Exhibit 10.1

PIEDMONT NATURAL GAS COMPANY, INC.
VOLUNTARY DEFERRAL PLAN

Effective November 1, 2008

TABLE OF CONTENTS

ARTICLE I NAME AND PURPOSE	1
Section 1.1 Name	1
Section 1.2 Purpose	1
ARTICLE II CONSTRUCTION, DEFINITIONS AND APPLICABLE LAW	1
Section 2.1 Construction and Definitions	1
Section 2.2 Applicable Law	4
ARTICLE III PARTICIPATION	4
Section 3.1 General	4
Section 3.2 Eligibility	4
ARTICLE IV DEFERRALS	4
Section 4.1 Employee Deferrals	4
Section 4.2 Form of Deferral Election	5
Section 4.3 Timing of Deferral Elections	5
Section 4.4 Suspension of Deferrals	6
Section 4.5 Deferral Account Adjustments	6
Section 4.6 Vesting	6
ARTICLE V DISTRIBUTION OF DEFERRAL ACCOUNTS	6
Section 5.1 Payment on Date Certain	6
Section 5.2 Payment of Deferral Accounts Following Separation From Service	7
Section 5.3 Payment to Beneficiary	8
Section 5.4 Form of Distribution	9
ARTICLE VI AMENDMENT AND TERMINATION	9
Section 6.1 Amendment of Plan	9
Section 6.2 Termination of Plan	9
Section 6.3 Effect of Amendment or Termination on Certain Benefits	9
ARTICLE VII MISCELLANEOUS	10
Section 7.1 Spendthrift Clause	10
Section 7.2 Benefits Payable From General Assets of the Company	10
Section 7.3 Tax Withholding	10
Section 7.4 Compliance with Code Section 409A	10
Section 7.5 Benefits Limited to the Plan	11

ARTICLE VIII CLAIMS PROCEDURE	11
Section 8.1 Claims Procedure	11
Section 8.2 Agent for Service of Process	13

ii 

PIEDMONT NATURAL GAS COMPANY, INC.
VOLUNTARY DEFERRAL PLAN

Effective November 1, 2008

     WHEREAS, Piedmont Natural Gas Company, Inc. (the “Company”) desires to establish, effective as of November 1, 2008, the Piedmont Natural Gas Company, Inc. Voluntary Deferral Plan (the “Plan”), to permit eligible employees to voluntarily defer a portion of their base salary and annual cash bonus on a tax-deferred basis, and to have such deferred amounts credited with earnings;

     NOW, THEREFORE, the Company does hereby establish, effective as of November 1, 2008, the Plan to consist of the terms and provisions set forth in Article I through Article VIII, inclusive, as follows:

ARTICLE I

NAME AND PURPOSE

     Section 1.1 Name. The Plan shall be known as the Piedmont Natural Gas Company, Inc. Voluntary Deferral Plan.

     Section 1.2 Purpose. The purpose of the Plan is to provide a “select group of management or highly compensated employees” (within the meaning of Department of Labor Regulation § 2520.104-23) to voluntarily defer a portion of their base salary and annual cash bonus on a tax-deferred basis, and to have such deferred amounts credited with earnings.

ARTICLE II

CONSTRUCTION, DEFINITIONS AND APPLICABLE LAW

     Section 2.1 Construction and Definitions.

     (a) Construction. Article, section and paragraph headings have been inserted for convenience of reference only and are to be ignored in any construction of the provisions hereof. If any provision of the Plan shall for any reason be invalid or unenforceable, the remaining provisions shall nevertheless be valid, enforceable and fully effective.

     (b) Definitions. Whenever used in the Plan, unless the context clearly indicates otherwise, the following terms shall have the following meanings:

     (1) 401(k) Plan means the Piedmont Natural Gas Company, Inc. 401(k) Plan.

     (2) Base Pay of a Participant means the base salary payable to the Participant for employment with the Company, prior to any reduction in said base salary under Section

125, 132(f)(4) or 401(k) of the Code or under any non-qualified plan of deferred compensation sponsored by the Company. Base Pay shall not include any other form of compensation, whether taxable or non-taxable, including, but not limited to, annual or long-term incentive compensation, commissions, gains from the exercise or vesting of stock options, restricted stock or other equity-based awards or any other forms of additional compensation, expense allowances or reimbursements, any car allowances or any benefit payments from any non-qualified plan of deferred compensation sponsored by the Company.

     (3) Base Pay Deferral Year means the calendar year beginning January 1, 2009 and each subsequent calendar year.

     (4) Beneficiary means the person(s) or entity(ies) designated by a Participant or the provisions of the Plan to receive such benefits as may become payable to such person(s) or entity(ies) in accordance with the provisions of the Plan.

     (5) Board of Directors means the Board of Directors of the Company or any committee of such Board of Directors to which, and to the extent, the Board of Directors of Piedmont Natural Gas Company, Inc. has delegated some or all of its power, authority, duties or responsibilities with respect to the Plan.

     (6) Bonus means the annual short-term incentive cash bonus, if any, payable to a Participant under (i) the Company’s Mission, Values and Performance cash incentive plan or (ii) the Company’s 2006 Incentive Compensation Plan, or any similar successor short-term incentive compensation plans.

     (7) Bonus Deferral Year means the Company’s fiscal year beginning November 1, 2008 and each subsequent fiscal year of the Company.

     (8) Change in Control Acceleration Event means a change in the ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company under Section 409A(2)(A)(v) of the Code.

     (9) Code means the Internal Revenue Code of 1986, as amended from time to time, and references thereto shall include the valid Treasury regulations issued thereunder.

     (10) Committee means the Piedmont Natural Gas Company, Inc. Benefit Plan Committee.

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     (11) Company means Piedmont Natural Gas Company, Inc., a North Carolina corporation, any successor or assign, and all of the legal entities that are a part of a controlled group or affiliated service group with Piedmont Natural Gas Company, Inc. pursuant to the provisions of Code Sections 414(b), (c), (m) and (o).

     (12) Deferral Account means the account established and maintained under the Plan to reflect the interest of a Participant in the Plan. Each Deferral Account shall reflect Employee Deferrals by the Participants, as well as additions, withdrawals and adjustments to the Deferral Account. The Deferral Account shall be a bookkeeping entry only and shall be utilized solely as a device for the measurement and determination of the amounts to be paid to a Participant or Beneficiary under the Plan.

     (13) Deferral Election means a Participant’s irrevocable election under the Plan to defer Base Pay or Bonus.

     (14) Effective Date means November 1, 2008.
(15) Employee means a common law employee of the Company.

     (16) Employee Deferrals means the pre-tax deferral of Base Pay or Bonus under the Plan by a Participant pursuant to the Participant’s Deferral Election.

     (17) Participant means an Employee who has been designated as a Participant in the Plan as provided in Section 3.2.

     (18) Plan means the Piedmont Natural Gas Company, Inc. Voluntary Deferral Plan as set forth herein and as amended from time to time.

     (19) Plan Year means the calendar year.

     (20) Separation from Service means the termination of a Participant’s employment with the Company, provided such termination also constitutes a separation from service under Section 409A of the Code.

     (21) Specified Employee means an Employee who, as of the date of the Employee’s Separation from Service, is a “key employee” of the Employer. An Employee shall be a “key employee” for this purpose during the twelve (12) month period beginning April 1 each year if the Employee met the requirements of Section 416(i)(1)(A)(i), (ii) or (iii) of the Code (applied in accordance with the regulations thereunder and disregarding Section 416(i)(5) of the Code) at any time during the twelve (12) month period ending on the immediately preceding December 31.

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     Section 2.2 Applicable Law. The Plan shall be construed, administered, regulated and governed in all respects under and by the laws of the United States to the extent applicable, and to the extent such laws are not applicable, by the laws of the State of North Carolina.

ARTICLE III

PARTICIPATION

     Section 3.1 General. No person shall become a Participant unless or until such person is or becomes an Employee. In addition, in no event shall any Employee be eligible to participate in the Plan prior to the Effective Date.

     Section 3.2 Eligibility. The Committee, in its sole and exclusive discretion, shall determine which Employees shall become Participants. Designation of Employees as Participants shall be made in such manner as the Committee shall determine from time to time. The Committee may in its discretion determine that an Employee designated as a Participant shall no longer be eligible to participate in the Plan as of the end of the Plan Year in which the Committee makes such determination or an Employee may terminate his or her employment with the Company and in either such event, such Participant shall cease active participation in the Plan. No further deferrals shall be made to a Participant’s Deferral Account from and after the date the Participant ceases active participation in the Plan. However, such Participant’s Deferral Account shall continue to be adjusted in accordance with Section 4.4(b) until the Participant’s Deferral Account is distributed in accordance with the provisions of the Plan.

ARTICLE IV

DEFERRALS

     Section 4.1 Employee Deferrals.

     (a) Base Pay Deferrals. A Participant may elect to defer payment of up to fifty percent (50%) of the Participant’s Base Pay for a Base Pay Deferral Year. Such election may be expressed as a percentage of Base Pay, a set dollar amount or in any other manner permitted by the Committee from time to time. If a Participant makes a Base Pay deferral election for a Base Pay Deferral Year, the amount the Participant elected to defer shall be deducted from the Participant’s Base Pay each payroll period during such Deferral Year and credited to the Participant’s Deferral Account.

     (b) Bonus Deferrals. Each Participant may elect to defer payment of up to ninety-five percent (95%) of the Participant’s Bonus for the Bonus Deferral Year. Such

4

election may be expressed as a percentage of the Bonus, a set dollar amount, an amount in excess of a set dollar amount or in any other manner permitted by the Committee from time to time. If a Participant makes a Bonus deferral election for a Bonus Deferral Year, the amount the Participant elected to defer shall be deducted from the Participant’s Bonus for the Bonus Deferral Year and credited to the Participant’s Deferral Account.

     Section 4.2 Form of Deferral Election. A Deferral Election shall be made in the manner prescribed by the Committee from time to time

     Section 4.3 Timing of Deferral Elections.

     (a) Base Pay Deferrals. A Participant’s Deferral Election for the deferral of the Participant’s Base Pay for a Base Pay Deferral Year shall be made no later than the last business day immediately preceding the beginning of such Base Pay Deferral Year. A Participant may not revoke a Deferral Election for the deferral of Base Pay for a Base Pay Deferral Year after the Base Pay Deferral Year begins. Notwithstanding the foregoing, in the event an Employee is newly-eligible (which shall include an Employee deemed to be “initially eligible” as provided under Code Section 409A) during a Base Pay Deferral Year, the Participant may make a Base Pay Deferral Election within thirty (30) days after the date the Participant becomes eligible to participate in the Plan with respect to Base Pay for services to be performed after the date of the Participant’s Deferral Election.

     (b) Bonus Deferrals. A Participant’s Deferral Election for the deferral of the Participant’s Bonus for a Bonus Deferral Year shall be made no later than the April 30 of the Bonus Deferral Year (or if April 30 is not a business day, the immediately preceding business day). An Employee who is first designated as a Participant during a Bonus Deferral Year shall not be eligible to make a Deferral Election for the deferral of the Participant’s Bonus for the Bonus Deferral Year in which the Participant becomes eligible to participate in the Plan.

     (c) Other Rules. Any revocation of a Deferral Election shall be made in a form prescribed by the Committee not later than the deadline for making the Deferral Election (e.g., the revocation of a Deferral Election for Base Pay must be made no later than December 31 preceding the Base Pay Deferral Year in which the Base Pay would be

5

earned). No Deferral Election shall carry forward to future years; a new Deferral Election form must be completed for each Base Pay and Bonus Deferral Year.

     Section 4.4 Suspension of Deferrals. Notwithstanding any contrary provision of the Plan, in the event a Participant receives an in-service financial hardship withdrawal from the 401(k) Plan, the Participant’s Employee Deferrals under this Plan shall be suspended for a period of six (6) months from the date of the hardship withdrawal.

     Section 4.5 Deferral Account Adjustments.

     (a) Employee Deferrals. A Participant’s Employee Deferrals shall be credited to the Participant’s Deferral Account as of the date the Base Pay or Bonus, respectively, would have been paid to the Participant, but for the deferral of such amounts under in the Plan.

     (b) Investment Fund Options. Each Participant’s Deferral Account shall be deemed to be invested in one or more of the investment options permitted from time to time under the 401(k) Plan (other than the Company common stock fund investment option). A Participant may elect to have the Participant’s Deferral Account deemed to be invested in one or more of such investment options in accordance with procedures established by the Committee for such purpose.

     Section 4.6 Vesting. The amount to the credit of a Participant from time to time in the Participant’s Deferral Account shall be 100% vested at all times.

ARTICLE V

DISTRIBUTION OF DEFERRAL ACCOUNTS

     Section 5.1 Payment on Date Certain.

     (a) General. In accordance with procedures established by the Committee, a Participant may elect to have the Base Pay deferred for a Base Pay Deferral Year or the Bonus deferred for a Bonus Deferral Year segregated into a separate sub-account and to have such separate sub-account (as adjusted pursuant to Section 4.5) paid to the Participant as of a date certain, prior to the Participant’s Separation from Service, in a single lump sum payment. The date certain elected by the Participant may be not earlier than two (2) years from beginning of the Base Pay Deferral Year or Bonus Deferral Year (as the case may be). A Participant’s election of a date certain payment under this

6

Section 5.1 for Base Pay or Bonus deferrals shall be made at the same time as the Deferral Election for the Base Pay or Bonus deferrals.

     (b) Changes in Date Certain. A Participant may change the date the Participant elected for payment of a sub-account established under Section 5.1(a) upon written notice in a form acceptable to the Committee so long as (i) the change is made at least twelve (12) months before the date payment would otherwise be made, (ii) the change does not become effective for at least twelve (12) months after the change is made, and (iii) the newly elected payment date is at least five (5) years after the date payment would otherwise be made.

     Section 5.2 Payment of Deferral Accounts Following Separation From Service.

     (a) Time and Method of Payment. Except to the extent otherwise provided in Section 5.2(c) and 5.2(d), within ninety (90) days following a Participant’s Separation from Service, the Participant shall receive (or begin to receive) payment of the balance to the credit of the Participant’s Deferral Account (including any amounts credited to sub-accounts under Section 5.1), as adjusted under Section 4.4(b) through the date of distribution, in accordance with one of the following two methods of payment:

     (i) Single lump sum payment, or

     (ii) Annual installments over a period of up to ten (10) years, provided, however, a lump sum distribution shall be paid in lieu of installments if as of the date the installment payments would otherwise commence, the Deferral Account balance does not exceed $25,000.

     (b) Election Procedures. A Participant shall specify the method of payment of the Participant’s Deferral Account concurrently with the Participant’s annual Deferral Election. If a Participant fails to specify a method of payment, the Participant’s Deferral Account shall be distributed in a lump sum. A Participant shall not be permitted to amend the Participant’s method of payment election.

     (c) Distributions to Specified Employees. Notwithstanding Section 5.2(a), in no event will distribution be made (or commence) to a Participant who is a Specified Employee prior to the date which is six (6) months after such Participant’s Separation from Service.

     (d) Change in Control Acceleration Event. Notwithstanding any other provision of the Plan, the entire balance to the credit of the Participant’s Deferral

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Account (including any amounts credited to sub-accounts under Section 5.1), as adjusted under Section 4.5 through the date of distribution, shall be distributed to the Participant in a single lump sum payment within ninety (90) days after a Change in Control Acceleration Event.

Section 5.3 Payment to Beneficiary.

     (a) Death Benefit. In the event a Participant dies before the Participant’s Deferral Account has been fully paid to the Participant, the remaining Deferral Account balance will be paid to the Participant’s Beneficiary in a single lump sum within ninety (90) days after the Participant’s death.

     (b) Designation or Change of Beneficiary by a Participant. Each Participant may from time to time designate the person(s) or entity(ies) to whom any death benefits are to be paid under the Plan. A Participant may from time to time change such designation and upon any such change, any previously designated Beneficiary’s right to receive any benefits under the Plan shall terminate. In order to be effective, any designation or change of designation of a Beneficiary must be made on a form furnished by the Company and signed by the Participant and received by the Company while the Participant is alive. If a Beneficiary of a deceased Participant shall survive the deceased Participant but die prior to the receipt of all benefits payable to said Beneficiary under the Plan, then such benefits as would have been payable to said deceased Beneficiary shall be paid to such Beneficiary’s estate at the same time and in the same manner as such benefits would have been payable to said deceased Beneficiary.

     (c) Beneficiary Designated by the Plan. In the event a Participant shall die without having designated a Beneficiary, or in the event that a Participant shall die having revoked an earlier Beneficiary designation without having effectively designated another Beneficiary, or in the event that a Participant shall die but the Beneficiary designated by such Participant shall fail to survive such Participant, then the deceased Participant’s Deferral Account shall be paid to the deceased Participant’s spouse, or, if there is no surviving spouse, to the beneficiary designated by the Participant pursuant to the Company’s Group Life Insurance Plan, or, if there is no such designation, the Participant’s descendants per stirpes (including adopted children), or, if no descendants, to the deceased Participant’s estate.

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     Section 5.4 Form of Distribution. Distribution of the Participant’s Deferral Account shall be made in cash.

ARTICLE VI

AMENDMENT AND TERMINATION

     Section 6.1 Amendment of Plan. Subject to the provisions of Section 6.3, the Company expressly reserves the right, at any time and from time to time, to amend the Plan in whole or in part by action of the Board of Directors. In addition, the Committee shall have the discretionary power and authority to adopt any non-substantive amendment necessary for the administration, management or interpretation of the Plan, provided such amendment does not materially increase or decrease the cost of the Plan or the level of benefits provided to Participants. Subject to the provisions of Section 6.3, any amendment to the Plan or termination of the Plan may be retroactive to the extent permitted by applicable law.

     Section 6.2 Termination of Plan. Subject to the provisions of Section 6.3, the Company expressly reserves the right, at any time and for whatever reason it may deem appropriate, to terminate the Plan by action of the Board of Directors. The Company intends to have the maximum discretionary authority to terminate the Plan and make distributions following any such termination as is permissible under Code Section 409A.

     Section 6.3 Effect of Amendment or Termination on Certain Benefits. No amendment or termination of the Plan may reduce or eliminate the benefits (if any) payable under the Plan (without regard to such amendment or termination) to:

     (a) any Participant who commenced receiving benefits under the Plan prior to the amendment or termination date and is alive on the amendment or termination date and the Beneficiary of such Participant; or

     (b) any Beneficiary who commenced receiving benefits under the Plan prior to the amendment and termination date.

In addition, no amendment or termination of the Plan shall reduce the amount of any Participant’s benefits under the Plan below the amount of such benefits determined immediately prior to such amendment or termination as if the Participant had then separated from service and was to receive such benefits in a single payment of the entire amount of such benefits.

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ARTICLE VII

MISCELLANEOUS

     Section 7.1 Spendthrift Clause. To the extent permitted by law, no benefits payable under the Plan shall be subject to the claim of any creditor of any Participant or to any legal process by any creditor of any Participant and no Participant entitled to benefits hereunder shall have any right whatsoever to alienate, commute, anticipate or assign any benefits under the Plan.

     Section 7.2 Benefits Payable From General Assets of the Company. All benefits payable hereunder shall be paid from the general assets of the Company. No assets of the Company shall be segregated or placed in trust pursuant to the Plan in a manner which would put such asset beyond the reach of the general creditors of the Company, and the rights of any Participant (or Beneficiary) to receive any benefits hereunder shall be no greater than the right of any general, unsecured creditor of the Company. Nothing contained in the Plan shall create or be construed as creating a trust of any kind or any other fiduciary relationship between the Company and a Participant. The Company may establish a trust for the purpose of accumulating assets which may be used by the Company to satisfy some or all of its obligations to provide benefits to Participants under this Plan; provided that the assets of such trust shall remain the exclusive property of the Company and shall be available to pay creditor claims of the Company in the event of bankruptcy. Any such trust shall be administered in accordance with the terms of a separate trust agreement between the Company and a trustee.

     Section 7.3 Tax Withholding. The Company shall withhold from any payment of Plan benefits to a Participant (or Beneficiary, if applicable) any federal, state or local income taxes required by law to be withheld from such payment and shall remit such taxes to the proper taxing authority(ies).

     Section 7.4 Compliance with Code Section 409A. Nothing in this Plan shall operate or be construed to cause the Plan to fail to comply with the requirements of Code Section 409A and, to the extent applicable, it is intended that the Plan comply with the provisions of Code Section 409A and shall be administered in a manner consistent with that intent. Any provision of this Plan that would cause the Plan or any payment made hereunder to fail to satisfy Code Section 409A shall have no force and effect until amended by the Company to comply with Code Section 409A (which amendment may be retroactive to the extent permitted by Code Section 409(A)) and may be made by the Company without the consent of any Participant.

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     Section 7.5 Benefits Limited to the Plan. Participation in the Plan shall not give a Participant any right to be retained in the employ of the Company nor, upon dismissal, any right or interest in the Plan except as expressly provided herein.

ARTICLE VIII

CLAIMS PROCEDURE

     Section 8.1 Claims Procedure.

          (a) General. In the event that any person (a “Claimant”) makes a claim for benefits under the Plan (a “Claim”), such Claim shall be made by the Claimant’s filing a notice thereof with the Committee, within ninety (90) days after such Claimant first has knowledge of such Claim. Each Claimant who has submitted a Claim to the Committee shall be afforded a reasonable opportunity to state such Claimant’s position and to present evidence and other material relevant to the Claim to the Committee for its consideration in rendering its decision with respect thereto. The Committee shall render its decision in writing within sixty (60) days after the Claim is referred to it, and a copy of such written decision shall be furnished to the Claimant.

     (b) Notice of Decision of Committee. Each Claimant whose Claim has been denied by the Committee shall be provided written notice thereof, which notice shall set forth:

     (1) the specific reason(s) for the denial;

     (2) specific reference to pertinent provision(s) of the Plan upon which such denial is based;

     (3) a description of any additional material or information necessary for the Claimant to perfect such Claim and an explanation of why such material or information is necessary; and

     (4) an explanation of the procedure hereunder for review of such Claim;

all in a manner calculated to be understood by such Claimant.

     (c) Review of Decision of Committee. Each such Claimant shall be afforded a reasonable opportunity for a full and fair review of the decision of the Committee denying the Claim. Such review shall be by the Committee. Such appeal shall be made within ninety (90) days after the Claimant received the written decision of the Committee and shall

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be made by the written request of the Claimant or such Claimant’s duly authorized representative to the Committee. In the event of appeal, the Claimant or such Claimant’s duly authorized representative may review pertinent documents and submit issues and comments in writing to the Committee. The Committee shall review the following:

     (1) the initial proceedings of the Committee with respect to such Claim;

     (2) such issues and comments as were submitted in writing by the Claimant or the Claimant’s duly authorized representative; and

     (3) such other material and information as the Committee, in its sole discretion, deems advisable for a full and fair review of the decision of the Committee.

The Committee may approve, disapprove or modify the decision of the Committee, in whole or in part, or may take such other action with respect to such appeal as it deems appropriate. The decision of the Committee with respect to such appeal shall be made promptly, and in no event later than sixty (60) days after receipt of such appeal, unless special circumstances require an extension of such time within which to render such decision, in which event such decision shall be rendered as soon as possible and in no event later than one hundred twenty (120) days following receipt of such appeal. The decision of the Committee shall be in writing and in a manner calculated to be understood by the Claimant and shall include specific reasons for such decision and set forth specific references to the pertinent provisions of the Plan upon which such decision is based. The Claimant shall be furnished a copy of the written decision of the Committee. Such decision shall be final and conclusive upon all

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persons interested therein, except to the extent otherwise provided by applicable law. Not in limitation of the foregoing, the Committee shall have the discretion to decide any factual or interpretative issues in its determination of Claims, and the Committee’s exercise of such discretion shall be conclusive and binding as long as it is not arbitrary or capricious.

     Section 8.2 Agent for Service of Process. The Company shall be the agent for service of legal process upon this Plan, and its address for such purpose shall be the address of its principal place of business in Charlotte, North Carolina.

     IN WITNESS WHEREOF, the undersigned authorized officer of the Company has executed this instrument as of the 8^th day of December, 2008.

PIEDMONT NATURAL GAS COMPANY, INC.
By:	/s/ Kevin M. O’Hara
	Kevin M. O’Hara
	Senior Vice President—Corporate and Community Affairs

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EX-10.2

Exhibit 10.2

PIEDMONT NATURAL GAS COMPANY, INC.
DEFINED CONTRIBUTION RESTORATION PLAN

Effective January 1, 2009

TABLE OF CONTENTS

ARTICLE I NAME AND PURPOSE		1
	Section 1.1. Name	1
	Section 1.2. Purpose	1
ARTICLE II CONSTRUCTION, DEFINITIONS AND APPLICABLE LAW		1
	Section 2.1. Construction and Definitions	1
	Section 2.2. Applicable Law	6
ARTICLE III PARTICIPATION		7
	Section 3.1. General	7
	Section 3.2. Eligibility	7
ARTICLE IV RESTORATION ACCOUNTS; CONTRIBUTIONS AND INVESTMENT CREDITS		7
	Section 4.1. Restoration Accounts	7
	Section 4.2. Restoration Account Contributions	7
	Section 4.3. Deemed Investment of Restoration Accounts	8
	Section 4.4. Vesting of Restoration Accounts	9
ARTICLE V DISTRIBUTION OF RESTORATION ACCOUNTS		10
	Section 5.1. Separation from Service	10
	Section 5.2. Death	10
	Section 5.3 Form of Distribution	11
ARTICLE VI AMENDMENT AND TERMINATION		11
	Section 6.1. Amendment of Plan	11
	Section 6.2. Termination of Plan	12
	Section 6.3. Effect of Amendment or Termination on Certain Benefits	12
ARTICLE VII MISCELLANEOUS		12
	Section 7.1. Spendthrift Clause	12
	Section 7.2. Benefits Payable From General Assets of the Participating Employers	12
	Section 7.3. Tax Withholding	13
	Section 7.4. Compliance with Code Section 409A	13
	Section 7.5. Benefits Limited to the Plan	13

ARTICLE VIII CLAIMS PROCEDURE		13
	Section 8.1. Claims Procedure	13
	Section 8.2. Agent for Service of Process	15

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PIEDMONT NATURAL GAS COMPANY, INC.
DEFINED CONTRIBUTION RESTORATION PLAN

Effective January 1, 2009

     WHEREAS, Piedmont Natural Gas Company, Inc. (the “Company”) desires to establish, effective as of January 1, 2009, the Piedmont Natural Gas Company, Inc. Defined Contribution Restoration Plan (the “Plan”), an unfunded supplemental retirement plan for senior officers of the Company;

     NOW, THEREFORE, the Company does hereby establish, effective as of January 1, 2009, the Plan to consist of the terms and provisions set forth in Article I through Article VIII, inclusive, as follows:

ARTICLE I
NAME AND PURPOSE

     Section 1.1. Name. The Plan shall be known as the Piedmont Natural Gas Company, Inc. Defined Contribution Restoration Plan.

     Section 1.2. Purpose. The purpose of the Plan is to provide supplemental retirement benefits, in accordance with the provisions of the Plan, to a “select group of management or highly compensated employees” (within the meaning of Department of Labor Regulation § 2520.104-23).

ARTICLE II
CONSTRUCTION, DEFINITIONS AND APPLICABLE LAW

     Section 2.1. Construction and Definitions.

     (a) Construction. Article, section and paragraph headings have been inserted for convenience of reference only and are to be ignored in any construction of the provisions hereof. If any provision of the Plan shall for any reason be invalid or unenforceable, the remaining provisions shall nevertheless be valid, enforceable and fully effective.

     (b) Definitions. Whenever used in the Plan, unless the context clearly indicates otherwise, the following terms shall have the following meanings:

     (1) 401(k) Plan means the Piedmont Natural Gas Company, Inc. 401(k) Plan.

     (2) Beneficiary means the person(s) or entity(ies) designated by a Participant or the provisions of the Plan to receive such benefits as may become payable to such person(s) or entity(ies) in accordance with the provisions of the Plan.

     (3) Board of Directors means the Board of Directors of the Company or any committee of such Board of Directors to which, and to the extent, the Board of Directors of Piedmont Natural Gas Company, Inc. has delegated some or all of its power, authority, duties or responsibilities with respect to the Plan.

     (4) Cause means, with respect to a Participant, (a) any circumstance, or any act or failure to act that would authorize the Company to terminate the Participant’s employment “for cause” under any written employment agreement between the Company and the Participant; (b) after a written notice is delivered to the Participant by a supervising officer of the Company advising the Participant that the Participant has not adequately or properly performed the Participant’s duties with the Company or has failed to comply with rules, standards, and policies established by the Company, the Participant fails to perform the Participant’s duties with the Company (other than any such failure resulting from the Participant’s incapacity due to physical or mental illness), or to comply with rules, standards, and policies established by the Company; (c) the Participant willfully engages in conduct which is demonstrably injurious to the Company, monetarily or otherwise, including (without limitation) damage to the good business reputation of the Company; or (d) the Participant commits a felony or other crime punishable by imprisonment for more than one year, or enters a plea of nolo contendere thereto, or commits a crime of moral turpitude.

     (5) Change in Control means:

     (i) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty percent (20%) or more of either (A) the then outstanding shares of Common Stock of the Company (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that the following acquisitions shall not constitute an acquisition of control: any acquisition directly from the Company (excluding an acquisition by virtue of the exercise of a conversion privilege), any acquisition by the Company, any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or any acquisition by any corporation pursuant to a reorganization, merger or consolidation, if, following such reorganization, merger or consolidation, the

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conditions described in clauses (A), (B) and (C) of subsection (iii) of this section are satisfied;

     (ii) Individuals who, as of the Effective Date, constitute the Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board of Directors; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board;

     (iii) Consummation of a reorganization, merger or consolidation, in each case, unless, following such reorganization, merger or consolidation, (A) more than sixty percent (60%) of, respectively, the then outstanding shares of common stock of the corporation resulting from such reorganization, merger or consolidation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such reorganization, merger or consolidation in substantially the same proportions as their ownership, immediately prior to such reorganization, merger or consolidation, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding the Company, any employee benefit plan or related trust of the Company, or such corporation resulting from such reorganization, merger or consolidation and any Person beneficially owning, immediately prior to such reorganization, merger or consolidation, directly or indirectly, twenty percent (20%) or more of the Outstanding Company Common Stock or Outstanding Company Voting Securities, as the case may be) beneficially owns, directly or indirectly, twenty percent (20%) or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such reorganization, merger or consolidation or the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors and (C) at least a majority of the members of the board of directors of the corporation resulting from such reorganization, merger or consolidation were members of the Incumbent Board at the time of the execution of the initial agreement providing for such reorganization, merger or consolidation;

     (iv) Approval by the shareholders of the Company of (A) a complete liquidation or dissolution of the Company or (B) the sale or other disposition of all or substantially all of the assets of the Company, other than to a corporation, with respect to which following such sale or other disposition (1) more than sixty

3

percent (60%) of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (2) no Person (excluding the Company and any employee benefit plan or related trust of the Company, or such corporation and any Person beneficially owning, immediately prior to such sale or other disposition, directly or indirectly, twenty percent (20%) or more of the Outstanding Company Common Stock or Outstanding Company Voting Securities, as the case may be) beneficially owns, directly or indirectly, twenty percent (20%) or more of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors and (3) at least a majority of the members of the board of directors of such corporation were members of the Incumbent Board at the time of the execution of the initial agreement or action of the Board providing for such sale or other disposition of assets of the Company; or

     (v) The closing, as defined in the documents relating to, or as evidenced by a certificate of any state or federal governmental authority in connection with, a transaction approval of which by the shareholders of the Company would constitute a “Change in Control” under subsection (iii) or (iv) of this Section.

     (e) Notwithstanding (a) above, if the Participant’s employment is terminated before a Change in Control as defined in this Section and the Participant reasonably demonstrates that such termination (i) was at the request of a third party who has indicated an intention or taken steps reasonably calculated to effect a “Change in Control” and who effectuates a “Change in Control” or (ii) otherwise occurred in connection with, or in anticipation of, a “Change in Control” which actually occurs, then for all purposes of this Plan, the date of a “Change in Control” with respect to the Participant shall mean the date immediately prior to the date of such termination of the Participant’s employment.

     (6) Change in Control Acceleration Event means a Change in Control that also constitutes a change in the ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company under Section 409A(2)(A)(v) of the Code.

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     (7) Code means the Internal Revenue Code of 1986, as amended from time to time, and references thereto shall include the valid Treasury regulations issued thereunder.

     (8) Committee means the Piedmont Natural Gas Company, Inc. Benefit Plan Committee.

     (9) Company means Piedmont Natural Gas Company, Inc., a North Carolina corporation, any successor or assign, and all of the legal entities that are a part of a controlled group or affiliated service group with Piedmont Natural Gas Company, Inc. pursuant to the provisions of Code Sections 414(b), (c), (m) and (o).

     (10) Compensation of a Participant means (a) the annual cash base salary and (b) annual cash bonuses payable to the Participant for employment with the Company, prior to any reduction in said cash remuneration under Section 125, 132(f)(4) or 401(k) of the Code or under any non-qualified plan of deferred compensation sponsored by the Company. Compensation shall not include long-term incentive compensation, commissions, gains from the exercise or vesting of stock options, restricted stock or other equity-based awards or any other forms of additional compensation, expense allowances or reimbursements, any car allowances or any benefit payments from any non-qualified plan of deferred compensation sponsored by the Company.

     (11) Compensation Limit means the compensation limit in effect under Code Section 401(a)(17), as adjusted from time to time. The Compensation Limit is $230,000 for 2008 and $245,000 for 2009.

     (12) Disability means a Participant is deemed to be “disabled” under the terms of the long term disability plan sponsored by the Company or is determined to be disabled by the Social Security Administration.

     (13) Effective Date means January 1, 2009.

     (14) Employee means a common law employee of the Company.

     (15) Involuntary Separation means a Participant’s Separation from Service due to termination by the Company without Cause.

     (16) Participant means an Employee who has been designated as a Participant in the Plan as provided in Section 3.2.

     (17) Plan means the Piedmont Natural Gas Company, Inc. Defined Contribution Restoration Plan as set forth herein and as amended from time to time.

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     (18) Plan Year means the calendar year.

     (19) Retirement means a Participant’s Separation from Service after attaining age sixty-five (65).

     (20) Restoration Account means the bookkeeping account established and maintained on the books and records of the Plan to record that portion of a Participant’s benefit accrued under the Plan.

     (21) Restoration Contribution means the amount credited to a Participant’s Restoration Account as of the end of each Plan Year pursuant to Section 4.2(c).

     (22) SEBP means the Piedmont Natural Gas Company, Inc. Supplemental Executive Benefit Plan as in effect immediately prior to its termination effective October 31, 2008.

     (23) SEBP Make-Up Contribution means the amount credited to a Participant’s Restoration Account pursuant to Section 4.2(b).

     (24) SEBP Transition Contribution means the amount credited to a Participant’s Restoration Account pursuant to Section 4.2(a).

     (25) Separation from Service means the termination of a Participant’s employment with the Company, provided such termination also constitutes a separation from service under Section 409A of the Code.

     (26) Specified Employee means an Employee who, as of the date of the Employee’s Separation from Service, is a “key employee” of the Employer. An Employee shall be a “key employee” for this purpose during the twelve (12) month period beginning April 1 each year if the Employee met the requirements of Section 416(i)(1)(A)(i), (ii) or (iii) of the Code (applied in accordance with the regulations thereunder and disregarding Section 416(i)(5) of the Code) at any time during the twelve (12) month period ending on the immediately preceding December 31.

     Section 2.2. Applicable Law. The Plan shall be construed, administered, regulated and governed in all respects under and by the laws of the United States to the extent applicable, and to the extent such laws are not applicable, by the laws of the State of North Carolina.

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ARTICLE III

PARTICIPATION

     Section 3.1. General. No person shall become a Participant unless or until such person is or becomes an Employee. In addition, in no event shall any Employee be eligible to participate in the Plan prior to the Effective Date.

     Section 3.2. Eligibility. The Committee, in its sole and exclusive discretion, shall determine which Employees shall become Participants. The Committee may in its discretion determine that an Employee designated as a Participant is no longer a Participant or such Employee may terminate his or her employment with the Company, and in either such event, such Participant shall cease active participation in the Plan. No further Restoration Contributions shall be credited to a Participant’s Restoration Account from and after the date the Participant ceases active participation in the Plan. However, such Participant’s Restoration Account shall continue to be adjusted in accordance with Section 4.3 until the Participant’s Restoration Account is distributed or forfeited in accordance with the provisions of the Plan.

ARTICLE IV

RESTORATION ACCOUNTS; CONTRIBUTIONS AND INVESTMENT CREDITS

     Section 4.1. Restoration Accounts. A Restoration Account shall be established and maintained on the books and records of the Plan in the name of each Participant in accordance with the provisions of this Article IV.

     Section 4.2. Restoration Account Contributions.

     (a) SEBP Transition Contributions. In January 2009, the Restoration Account of each Participant who is designated as a Participant on the Effective Date shall be credited with an amount equal to the greater of:

     (i) thirteen percent (13%) times the lesser of (A) the Participant’s annual cash base salary for the 2008 calendar year minus the Compensation Limit for the 2008 calendar year or (B) the Participant’s annual cash base salary for the period from November 1, 2008 through December 31, 2008; or

     (ii) two (2) times the monthly premium amount paid for the “Policy” (as defined in the SEBP) insuring the life of the Participant under the SEBP for the month of October 2008 (without adjustment for taxes).

     (b) SEBP Make-Up Contributions. In January 2009, the Restoration Account of each Participant who is designated as Participant on the Effective Date and who is not a member of the Company’s Executive Management Team shall receive a one-time credit

7

equal to the amount that is projected (based on reasonable assumptions adopted by the Committee) to cause the sum of the Participant’s benefit under this Plan and the SEBP to be equal to the benefit the Participant would have earned under the SEBP if the SEBP had not been terminated and the Participant had continued participating in the SEBP until the Participant attained age sixty (60).

     (c) Restoration Contributions. As of the end of each Plan Year commencing December 31, 2009, the Restoration Account of each Participant who is employed on the last day of the Plan Year or who had a Separation from Service during the Plan Year due to the Participant’s Retirement, death or Disability shall be credited with an amount equal to thirteen percent (13%) times the amount, if any, by which the Participant’s Compensation for the Plan Year exceeds the Compensation Limit for the Plan Year.

     Section 4.3. Deemed Investment of Restoration Accounts. Each Participant’s Restoration Account shall be deemed to be invested in one or more of the investment options permitted from time to time under the 401(k) Plan (other than the Company common stock fund investment option). A Participant may elect to have the Participant’s Restoration Account deemed to be invested in one or more of such investment options in accordance with procedures established by the Committee for such purpose.

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Section 4.4. Vesting of Restoration Accounts.

     (a) Vesting Schedule Not Applicable. Upon the first to occur of a Change in Control or a Participant’s Retirement, Involuntary Separation or Disability or death while in service, the entire amount credited to the Participant’s Restoration Account shall become fully vested.

     (b) Vesting Schedule Applicable. If a Participant has a Separation from Service prior to a Change in Control other than by reason of the Participant’s Retirement, Involuntary Separation, Disability or death, only the vested portion of the amount to the credit of the Participant in the Participant’s Restoration Account determined by application of the Vesting Schedule in Section 4.4(c) will be available for Distribution to the Participant or the Participant’s Beneficiary (when and as provided in Article V). The amount to the credit of the Participant in the Participant’s Restoration Account which is not vested upon a Participant’s Separation from Service shall be immediately forfeited without further action by the Company or the Participant, and neither the Participant, the Participant’s Beneficiary or any person claiming by or through the Participant shall have right or claim to the amount forfeited.

     (c) Vesting Schedule. If not vested earlier in accordance with Section 4.4(a), a Participant’s Restoration Account shall become fully (100%) vested upon the Participant’s completion of five (5) Years of Vesting Service with the Company. “Years of Vesting Service” for purposes of applying the immediately preceding sentence to a Participant’s Restoration Account other than the portion, if any, of such account attributable to SEBP Make-Up Contributions will be equal to the number of complete twelve (12) month periods of employment with the Company the Participant has completed as of the Participant’s Separation from Service (including periods prior to the Effective Date). “Years of Vesting Service” for purposes of applying the first sentence of this Section 4.4(c) to the portion, if any, of a Participant’s Restoration Account attributable to SEBP Make-Up Contributions will be equal to the number of complete twelve (12) month periods of employment with the Company the Participant has completed as of the Participant’s Separation from Service (excluding periods of employment prior to the Effective Date). The Committee shall keep such separate records of the SEBP Make-Up Contributions and all other contributions

9

credited to a Participant’s Restoration Account (and the adjustments thereto pursuant to Section 4.3) as are necessary for the proper application of the Vesting Schedule.

ARTICLE V

DISTRIBUTION OF RESTORATION ACCOUNTS

Section 5.1. Separation from Service.

     (a) Except to the extent otherwise provided in Sections 5.1(b) and 5.1(c), following a Participant’s Separation from Service, the Participant shall receive payment of the vested balance to the credit of the Participant’s Restoration Account (as adjusted under Section 4.3 through the date of distribution) in five (5) installments. The first installment shall be paid to the Participant within ninety (90) days after the Participant’s Separation from Service. Subsequent installments shall be paid to the Participant in each succeeding January. Notwithstanding the foregoing, if the Participant’s vested Restoration Account balance does not exceed Twenty-Five Thousand Dollars ($25,000) as of the date the installment payments would otherwise commence, then the entire amount of the Participant’s vested Restoration Account balance shall be paid to the Participant in a single lump sum payment. The dollar amount in the immediately preceding sentence shall be increased (or decreased) as of January 1, 2010 and each January 1 thereafter by the increase (or decrease) in the U.S. Consumer Price Index for All Urban Consumers (CPI-U) since the immediately preceding January 1.

     (b) Notwithstanding Section 5.2(a), in no event will distribution be made (or commence) to a Participant who is a Specified Employee prior to the date which is six (6) months after such Participant’s Separation from Service.

     (c) Notwithstanding Section 5.2(a), in the event of a Participant’s Separation from Service within twenty-four (24) months after a Change in Control Acceleration Event, the Participant’s vested Restoration Account shall be distributed in a lump-sum payment.

Section 5.2. Death.

     (a) Death Benefit. In the event a Participant dies before the Participant’s vested Restoration Account has been fully paid to the Participant, the remaining vested Restoration Account balance shall be paid to the Participant’s Beneficiary in a single lump sum within ninety (90) days after the Participant’s death.

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     (b) Designation or Change of Beneficiary by a Participant. Each Participant may from time to time designate the person(s) or entity(ies) to whom any death benefits are to be paid under the Plan. A Participant may from time to time change such designation and upon any such change, any previously designated Beneficiary’s right to receive any benefits under the Plan shall terminate. In order to be effective, any designation or change of designation of a Beneficiary must be made on a form furnished by the Company and signed by the Participant and received by the Company while the Participant is alive. If a Beneficiary of a deceased Participant shall survive the deceased Participant but die prior to the receipt of all benefits payable to said Beneficiary under the Plan, then such benefits as would have been payable to said deceased Beneficiary shall be paid to such Beneficiary’s estate at the same time and in the same manner as such benefits would have been payable to said deceased Beneficiary.

     (c) Beneficiary Designated by the Plan. In the event that a Participant shall die without having designated a Beneficiary, or in the event that a Participant shall die having revoked an earlier Beneficiary designation without having effectively designated another Beneficiary, or in the event that a Participant shall die but the Beneficiary designated by such Participant shall fail to survive such Participant, then the deceased Participant’s vested Restoration Account balance shall be paid to the deceased Participant’s spouse, or, if there is no surviving spouse, to the beneficiary designated by the Participant pursuant to the Company’s Group Life Insurance Plan, or, if there is no such designation, the Participant’s descendants per stirpes (including adopted children), or, if no descendants, to the deceased Participant’s estate.

     Section 5.3 Form of Distribution. Distribution of the vested portion of the Participant’s Restoration Account shall be made in cash.

ARTICLE VI

AMENDMENT AND TERMINATION

     Section 6.1. Amendment of Plan. Subject to the provisions of Section 6.3, the Company expressly reserves the right, at any time and from time to time, to amend the Plan in whole or in part by action of the Board of Directors. In addition, the Committee shall have the discretionary power and authority to adopt any non-substantive amendment necessary for the administration, management or interpretation of the Plan, provided such amendment does not

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materially increase or decrease the cost of the Plan or the level of benefits provided to Participants. Subject to the provisions of Section 6.3, any amendment to the Plan or termination of the Plan may be retroactive to the extent permitted by applicable law.

     Section 6.2. Termination of Plan. Subject to the provisions of Section 6.3, the Company expressly reserves the right, at any time and for whatever reason it may deem appropriate, to terminate the Plan by action of the Board of Directors. The Company intends to have the maximum discretionary authority to terminate the Plan and make distributions following such termination as is permissible under Code Section 409A.

     Section 6.3. Effect of Amendment or Termination on Certain Benefits. No amendment or termination of the Plan may reduce or eliminate the benefits (if any) payable under the Plan (without regard to such amendment or termination) to:

     (a) any Participant who commenced receiving benefits under the Plan prior to the amendment or termination date and is alive on the amendment or termination date and the Beneficiary of such Participant; or

     (b) any Beneficiary who commenced receiving benefits under the Plan prior to the amendment and termination date.

In addition, no amendment or termination of the Plan shall reduce the amount of any Participant’s benefits under the Plan below the amount of such benefits determined immediately prior to such amendment or termination as if the Participant had then separated from service and was to receive such benefits in a single cash payment of the entire amount of such benefits.

ARTICLE VII

MISCELLANEOUS

     Section 7.1. Spendthrift Clause. To the extent permitted by law, no benefits payable under the Plan shall be subject to the claim of any creditor of any Participant or to any legal process by any creditor of any Participant and no Participant entitled to benefits hereunder shall have any right whatsoever to alienate, commute, anticipate or assign any benefits under the Plan.

     Section 7.2. Benefits Payable From General Assets of the Participating Employers. All benefits payable hereunder shall be paid from the general assets of the Company. No assets of the Company shall be segregated or placed in trust pursuant to the Plan in a manner which would put such assets beyond the reach of the general creditors of the Company, and the rights of any Participant (or Beneficiary) to receive any benefits hereunder shall be no greater than the right of

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any general, unsecured creditor of the Company. Nothing contained in the Plan shall create or be construed as creating a trust of any kind or any other fiduciary relationship between the Company and a Participant. The Company may establish a trust for the purpose of accumulating assets which may be used by the Company to satisfy some or all of its obligations to provide benefits to Participants under this Plan; provided that the assets of such trust shall remain the exclusive property of the Company and shall be available to pay creditor claims of the Company in the event of bankruptcy. Any such trust shall be administered in accordance with the terms of a separate trust agreement between the Company and a trustee.

     Section 7.3. Tax Withholding. The Company shall withhold from any payment of Plan benefits to a Participant (or Beneficiary, if applicable) any federal, state or local income taxes required by law to be withheld from such payment and shall remit such taxes to the proper taxing authority(ies).

     Section 7.4. Compliance with Code Section 409A. Nothing in this Plan shall operate or be construed to cause the Plan to fail to comply with the requirements of Code Section 409A and, to the extent applicable, it is intended that the Plan comply with the provisions of Code Section 409A and shall be administered in a manner consistent with that intent. Any provision of this Plan that would cause the Plan or any payment made hereunder to fail to satisfy Code Section 409A shall have no force and effect until amended by the Company to comply with Code Section 409A (which amendment may be retroactive to the extent permitted by Code Section 409(A)) and may be made by the Company without the consent of any Participant.

     Section 7.5. Benefits Limited to the Plan. Participation in the Plan shall not give a Participant any right to be retained in the employ of the Company nor, upon dismissal, any right or interest in the Plan except as expressly provided herein.

ARTICLE VIII

CLAIMS PROCEDURE

     Section 8.1. Claims Procedure.

     (a) General. In the event that any person (a “Claimant”) makes a claim for benefits under the Plan (a “Claim”), such Claim shall be made by the Claimant’s filing a notice thereof with the Committee, within ninety (90) days after such Claimant first has knowledge of such Claim. Each Claimant who has submitted a Claim to the Committee shall be afforded a reasonable opportunity to state such Claimant’s position and to present evidence and other material relevant to

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the Claim to the Committee for its consideration in rendering its decision with respect thereto. The Committee shall render its decision in writing within sixty (60) days after the Claim is referred to it, and a copy of such written decision shall be furnished to the Claimant.

     (b) Notice of Decision of Committee. Each Claimant whose Claim has been denied by the Committee shall be provided written notice thereof, which notice shall set forth:

     (1) the specific reason(s) for the denial;

     (2) specific reference to pertinent provision(s) of the Plan upon which such denial is based;

     (3) a description of any additional material or information necessary for the Claimant to perfect such Claim and an explanation of why such material or information is necessary; and

     (4) an explanation of the procedure hereunder for review of such Claim;

all in a manner calculated to be understood by such Claimant.

     (c) Review of Decision of Committee. Each such Claimant shall be afforded a reasonable opportunity for a full and fair review of the decision of the Committee denying the Claim. Such review shall be by the Committee. Such appeal shall be made within ninety (90) days after the Claimant received the written decision of the Committee and shall be made by the written request of the Claimant or such Claimant’s duly authorized representative to the Committee. In the event of appeal, the Claimant or such Claimant’s duly authorized representative may review pertinent documents and submit issues and comments in writing to the Committee. The Committee shall review the following:

     (1) the initial proceedings of the Committee with respect to such Claim;

     (2) such issues and comments as were submitted in writing by the Claimant or the Claimant’s duly authorized representative; and

     (3) such other material and information as the Committee, in its sole discretion, deems advisable for a full and fair review of the decision of the Committee.

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The Committee may approve, disapprove or modify the decision of the Committee, in whole or in part, or may take such other action with respect to such appeal as it deems appropriate. The decision of the Committee with respect to such appeal shall be made promptly, and in no event later than sixty (60) days after receipt of such appeal, unless special circumstances require an extension of such time within which to render such decision, in which event such decision shall be rendered as soon as possible and in no event later than one hundred twenty (120) days following receipt of such appeal. The decision of the Committee shall be in writing and in a manner calculated to be understood by the Claimant and shall include specific reasons for such decision and set forth specific references to the pertinent provisions of the Plan upon which such decision is based. The Claimant shall be furnished a copy of the written decision of the Committee. Such decision shall be final and conclusive upon all persons interested therein, except to the extent otherwise provided by applicable law. Not in limitation of the foregoing, the Committee shall have the discretion to decide any factual or interpretative issues in its determination of Claims, and the Committee’s exercise of such discretion shall be conclusive and binding as long as it is not arbitrary or capricious.

     Section 8.2. Agent for Service of Process. The Company shall be the agent for service of legal process upon this Plan, and its address for such purpose shall be the address of its principal place of business in Charlotte, North Carolina.

     IN WITNESS WHEREOF, the undersigned authorized officer of the Company has executed this instrument as of the 8th day of December, 2008.

PIEDMONT NATURAL GAS COMPANY, INC.
By:	/s/ Kevin M. O’Hara
	Kevin M. O’Hara
	Senior Vice President—Corporate and Community Affairs

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EX-10.3

Exhibit 10.3

Published Deal CUSIP Number:                     

CREDIT AGREEMENT

Dated as of December 3, 2008

among

PIEDMONT NATURAL GAS COMPANY, INC.
as the Borrower,

BANK OF AMERICA, N.A.,
as Administrative Agent,

and

The Other Lenders Party Hereto

BANC OF AMERICA SECURITIES LLC,
as
Sole Lead Arranger and Sole Book Manager

Table of Contents

	Section	Page
	ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS
1.01	Defined Terms		1
1.02	Other Interpretive Provisions		20
1.03	Accounting Terms		20
1.04	Rounding		21
1.05	Times of Day		21
	ARTICLE II. THE COMMITMENTS AND CREDIT EXTENSIONS
2.01	Loans		21
2.02	Borrowings and Conversions of Loans		22
2.03	[Reserved]		23
2.04	[Reserved]		32
2.05	Prepayments		34
2.06	Termination or Reduction of Commitments		35
2.07	Repayment of Loans		36
2.08	Interest		36
2.09	Fees		37
2.10	Computation of Interest and Fees		37
2.11	Evidence of Debt		37
2.12	Payments Generally; Administrative Agent’s Clawback		38
2.13	Sharing of Payments by Lenders		40
	ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY
3.01	Taxes		43
3.02	Illegality		45
3.03	Inability to Determine Rates		45
3.04	Increased Costs		46
3.05	[Reserved]		47
3.06	Mitigation Obligations; Replacement of Lenders		48
3.07	Survival		48
	ARTICLE IV. CONDITIONS PRECEDENT TO CREDIT EXTENSIONS
4.01	Conditions of Initial Credit Extension		48
4.02	Conditions to all Credit Extensions		50
	ARTICLE V. REPRESENTATIONS AND WARRANTIES

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5.01	Existence, Qualification and Power	51
5.02	Authorization; No Contravention	51
5.03	Governmental Authorization; Other Consents	51
5.04	Binding Effect	51
5.05	Financial Statements; No Material Adverse Effect; No Internal Control Event	51
5.06	Litigation	52
5.07	No Default	52
5.08	Ownership of Property; Liens	52
5.09	Environmental Compliance	52
5.10	Insurance	53
5.11	Taxes	53
5.12	ERISA Compliance	53
5.13	Subsidiaries; Equity Interests	54
5.14	Margin Regulations; Investment Company Act	54
5.15	Disclosure	54
5.16	Compliance with Laws	54
5.17	Taxpayer Identification Number	55
	ARTICLE VI. AFFIRMATIVE COVENANTS
6.01	Financial Statements	55
6.02	Certificates; Other Information	56
6.03	Notices	57
6.04	Payment of Obligations	58
6.05	Preservation of Existence, Etc	58
6.06	Maintenance of Properties	58
6.07	Maintenance of Insurance	58
6.08	Compliance with Laws	58
6.09	Books and Records	59
6.10	Inspection Rights	59
6.11	Use of Proceeds	59
6.12	Guarantors	59
	ARTICLE VII. NEGATIVE COVENANTS
7.01	[Reserved]	60
7.02	Fundamental Changes	61
7.03	Change in Nature of Business	62
7.04	Transactions with Affiliates	62
7.05	Burdensome Agreements	62
7.06	Ratio of Consolidated Funded Indebtedness to Total Capitalization	63
7.07	Amendments to Note Agreements	63

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	ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES
8.01	Events of Default	63
8.02	Remedies Upon Event of Default	65
8.03	Application of Funds	65
	ARTICLE IX. ADMINISTRATIVE AGENT
9.01	Appointment and Authority	66
9.02	Rights as a Lender	67
9.03	Exculpatory Provisions	67
9.04	Reliance by Administrative Agent	68
9.05	Delegation of Duties	68
9.06	Resignation of Administrative Agent	68
9.07	Non-Reliance on Administrative Agent and Other Lenders	69
9.08	No Other Duties, Etc	70
9.09	Administrative Agent May File Proofs of Claim	70
9.10	Guaranty Matters	70
	ARTICLE X. MISCELLANEOUS
10.01	Amendments, Etc	71
10.02	Notices; Effectiveness; Electronic Communication	72
10.03	No Waiver; Cumulative Remedies	74
10.04	Expenses; Indemnity; Damage Waiver	74
10.05	Payments Set Aside	76
10.06	Successors and Assigns	76
10.07	Treatment of Certain Information; Confidentiality	80
10.08	Right of Setoff	81
10.09	Interest Rate Limitation	81
10.10	Counterparts; Integration; Effectiveness	81
10.11	Survival of Representations and Warranties	82
10.12	Severability	82
10.13	Replacement of Lenders	82
10.14	Governing Law; Jurisdiction; Etc	83
10.15	Waiver of Jury Trial	84
10.16	No Advisory or Fiduciary Responsibility	84
10.17	USA PATRIOT Act Notice	85

SIGNATURES S-1

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SCHEDULES

2.01	Commitments and Applicable Percentages
5.13	Subsidiaries; Other Equity Investments
10.02	Administrative Agent’s Office; Certain Addresses for Notices
10.06	Processing and Recordation Fees

EXHIBITS

	Form of
A	Loan Notice
B	Note
C	Compliance Certificate
D	Assignment and Assumption
E	Guaranty
F	Opinion Matters

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CREDIT AGREEMENT

     This CREDIT AGREEMENT (“Agreement”) is entered into as of December 3, 2008, among PIEDMONT NATURAL GAS COMPANY, INC., a North Carolina corporation (the “Borrower”), each lender from time to time party hereto (collectively, the “Lenders” and individually, a “Lender”), and BANK OF AMERICA, N.A., as Administrative Agent.

     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.

     In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:

ARTICLE I.
DEFINITIONS AND ACCOUNTING TERMS

   1.01 Defined Terms. As used in this Agreement, the following terms shall have the meanings set forth below:

     “Administrative Agent” means Bank of America in its capacity as administrative agent under any of the Loan Documents, or any successor administrative agent.

     “Administrative Agent’s Office” means the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 10.02, or such other address or account as the Administrative Agent may from time to time notify to the Borrower and the Lenders.

     “Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Administrative Agent.

     “Affiliate” means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

     “Aggregate Commitments” means the Commitments of all the Lenders, which, as of the Closing Date, are $150,000,000.

     “Agreement” means this Credit Agreement.

     “Alternative Base Rate” means, for all Loans, on any day any such Loan is outstanding, the fluctuating rate of interest (rounded upwards, as necessary, to the nearest 1/100 of 1%) equal to the British Bankers Association LIBOR Rate (“BBA LIBOR”), as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as designated by the Administrative Agent from time to time) at approximately 11:00 a.m., London time, on each day any such Loan is outstanding, for Dollar deposits with a term of one month, as adjusted from time to time in the Administrative Agent’s sole discretion for changes in deposit insurance requirements and other regulatory costs. If such rate is not available at such time for any reason, then the “Alternative Base Rate” shall be the rate per annum determined by the Administrative

1

Agent to be the rate at which deposits in Dollars for delivery in immediately available funds in the approximate amount of the Dollar denominated Loans outstanding with a term equivalent to one month would be offered by the Administrative Agent’s London Branch to major banks in the London interbank eurodollar market at their request at approximately 11:00 a.m. (London time), on each day any such Loan is outstanding.

     “Applicable Percentage” means with respect to any Lender at any time, the percentage (carried out to the ninth decimal place) of the Aggregate Commitments represented by such Lender’s Commitment at such time. If the commitment of each Lender to make Loans has been terminated pursuant to Section 8.02 or if the Aggregate Commitments have expired, then the Applicable Percentage of each Lender shall be determined based on the Applicable Percentage of such Lender most recently in effect, giving effect to any subsequent assignments. The initial Applicable Percentage of each Lender is set forth opposite the name of such Lender on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable.

     “Applicable Rate” means, from time to time, the following percentages per annum, based upon the Debt Rating as set forth below:

	Applicable Rate
						Applicable Rate for LIBOR
Pricing	Debt Ratings		Applicable Rate for			Floating Rate Loans and
Level	S&P/Moody’s		Commitment Fee			Base RateLoans
1	≥ AA-/Aa3			0.20	%		0.75	%
2		A+/A1		0.20	%		1.00	%
3		A/A2		0.25	%		1.25	%
4		A-/A3		0.30	%		1.50	%
5	≤ BBB+/Baa1			0.40	%		1.75	%

     “Debt Rating” means, as of any date of determination, the rating as determined by either S&P or Moody’s (collectively, the “Debt Ratings”) of the Borrower’s non-credit-enhanced, senior unsecured long-term debt; provided that (a) if the respective Debt Ratings issued by the foregoing rating agencies differ by one level, then the Pricing Level for the higher of such Debt Ratings shall apply (with the Debt Rating for Pricing Level 1 being the highest and the Debt Rating for Pricing Level 5 being the lowest); (b) if there is a split in Debt Ratings of more than one level, then the Pricing Level that is one level lower than the Pricing Level of the higher Debt Rating shall apply; (c) if the Borrower has only one Debt Rating, the Pricing Level of such Debt Rating shall apply; and (d) if the Borrower does not have any Debt Rating, Pricing Level 5 shall apply.

Initially, the Applicable Rate shall be determined based upon the Debt Rating specified in the certificate delivered pursuant to Section 4.01(a)(vii). Thereafter, each change in the Applicable Rate resulting from a publicly announced change in the Debt Rating shall be effective during the period commencing on the date of the public announcement thereof and ending on the date immediately preceding the effective date of the next such change.

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     “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 Banc of America Securities LLC, in its capacity as sole lead arranger and sole book manager.

     “Assignee Group” means two or more Eligible Assignees that are Affiliates of one another or two or more Approved Funds managed by the same investment advisor.

     “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 10.06(b)), and accepted by the Administrative Agent, in substantially the form of Exhibit D or any other form approved by the Administrative Agent.

     “Attributable Indebtedness” means, on any date, (a) in respect of any capital lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic Lease Obligation of any Person, the capitalized amount of the remaining lease payments under the relevant lease that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease were accounted for as a capital lease.

     “Audited Financial Statements” means the audited consolidated balance sheet of the Borrower and its Subsidiaries for the fiscal year ended October 31, 2007, and the related consolidated statements of income from operations, shareholders’ equity and cash flows of the Borrower and its Subsidiaries for such fiscal year, including the notes thereto.

     “Availability Period” means the period from and including the Closing Date to the earliest of (a) the Maturity Date, (b) the date of termination of the Aggregate Commitments pursuant to Section 2.06, and (c) the date of termination of the commitment of each Lender to make Loans pursuant to Section 8.02.

     “Bank of America” means Bank of America, N.A. and its successors.

     “Base Rate” means for any day a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate plus 1/2 of 1%, (b) the Alternative Base Rate plus 1.00%, and (c) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate.” The “prime rate” is a rate set by Bank of America based upon various factors including Bank of America’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 such rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change.

     “Base Rate Loan” means a Loan that bears interest based on the Base Rate.

     “BBA LIBOR” means the British Bankers Association LIBOR Rate.

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     “Borrower” has the meaning specified in the introductory paragraph hereto.

     “Borrower Materials” has the meaning specified in Section 6.02.

     “Borrowing” means a borrowing consisting of simultaneous Loans of the same Type made by each of the Lenders pursuant to Section 2.01.

     “Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where the Administrative Agent’s Office is located.

     “Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) by any Governmental Authority.

     “Change of Control” means an event or series of events by which:

     (a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have “beneficial ownership” of all securities that such person or group has the right to acquire whether such right is exercisable immediately or only after the passage of time (such right, an “option right”)), directly or indirectly, of 35% or more of the equity securities of the Borrower entitled to vote for members of the board of directors or equivalent governing body of the Borrower on a fully-diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant to any option right); or

     (b) during any period of 24 consecutive months, a majority of the members of the board of directors or other equivalent governing body of the Borrower cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body (excluding, in the case of both clause (ii) and clause (iii), any individual whose initial nomination for, or assumption of office as, a member of that board or equivalent governing body occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors by any person or group other than a solicitation for the election of one or more directors by or on behalf of the board of directors).

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     “Closing Date” means the first date all the conditions precedent in Section 4.01 are satisfied or waived in accordance with Section 10.01.

     “Code” means the Internal Revenue Code of 1986.

     “Commitment” means, as to each Lender, its obligation to make Loans to the Borrower pursuant to Section 2.01, in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Lender’s name on Schedule 2.01 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 Agreement.

     “Compliance Certificate” means a certificate substantially in the form of Exhibit C.

     “Consolidated Funded Indebtedness” means, as of any date of determination, for the Borrower and its Subsidiaries on a consolidated basis, the sum of (a) the outstanding principal amount of all obligations, whether current or long-term, for borrowed money (including Obligations hereunder) and all obligations evidenced by bonds, debentures, notes, loan agreements or other similar instruments, (b) all purchase money Indebtedness, (c) all direct obligations arising under standby letters of credit, bankers’ acceptances, bank guaranties, surety bonds and similar instruments, (d) all obligations in respect of the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business), (e) Attributable Indebtedness in respect of capital leases and Synthetic Lease Obligations, (f) without duplication, all Guarantees with respect to outstanding Indebtedness of the types specified in clauses (a) through (e) above of Persons other than the Borrower or any Subsidiary, and (g) all Indebtedness of the types referred to in clauses (a) through (f) above of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which the Borrower or a Subsidiary is a general partner or joint venturer, except to the extent such Indebtedness is expressly made non-recourse to the Borrower or such Subsidiary.

     “Consolidated Total Assets” means, as of any date of determination, for the Borrower and its Subsidiaries on a consolidated basis, the total assets of the Borrower and its Subsidiaries as set forth or reflected on the most recent consolidated balance sheet of the Borrower and its Subsidiaries, prepared in accordance with GAAP.

     “Contractual Obligation” means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.

     “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.

     “COSO” means the Committee of Sponsoring Organizations of the Treadway Commission.

     “Credit Extension” means each Borrowing.

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     “Debt Rating” has the meaning specified in the definition of “Applicable Rate.”

     “Debtor Relief Laws” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

     “Default” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.

     “Default Rate” means an interest rate equal to (i) the Base Rate plus (ii) 2% per annum.

     “Defaulting Lender” means any Lender that (a) has failed to fund any portion of the Loans required to be funded by it hereunder within one Business Day of the date required to be funded by it hereunder unless such failure has been cured, (b) has otherwise failed to pay over to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder within one Business Day of the date when due, unless the subject of a good faith dispute or unless such failure has been cured, or (c) has been deemed insolvent or become the subject of a bankruptcy or insolvency proceeding.

     “Disposition” or “Dispose” means the sale, transfer, license, lease or other disposition (including any sale and leaseback transaction) of any property by any Person, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.

     “Dollar” and “$” mean lawful money of the United States.

     “Domestic Subsidiary” means any Subsidiary that is organized under the laws of any political subdivision of the United States.

     “Eligible Assignee” means any Person that meets the requirements to be an assignee under Section 10.06(b)(iii), (v) and (vi) (subject to such consents, if any, as may be required under Section 10.06(b)(iii)).

     “Environmental Laws” means any and all Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including those related to hazardous substances or wastes, air emissions and discharges to waste or public systems.

     “Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower, any other Loan Party or any of their respective Subsidiaries directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into

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the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

     “Equity Interests” means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.

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

     “ERISA Affiliate” means any trade or business (whether or not incorporated) under common control with the Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).

     “ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate.

     “Eurodollar Reserve Percentage” means, for any day, the reserve percentage (expressed as a decimal, carried out to five decimal places) in effect on such day, whether or not applicable to any Lender, under regulations issued from time to time by the FRB for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to Eurocurrency funding (currently referred to as “Eurocurrency liabilities”). The LIBOR Daily Floating Rate for each outstanding LIBOR Floating Rate Loan shall be adjusted automatically as of the effective date of any change in the Eurodollar Reserve Percentage.

     “Event of Default” has the meaning specified in Section 8.01.

     “Excluded Taxes” means, with respect to the Administrative Agent, any Lender or any other recipient of any payment to be made by or on account of any obligation of the Borrower

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hereunder, (a) taxes imposed on or measured by its overall net income (however denominated), and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable Lending Office is located, (b) any branch profits taxes imposed by the United States or any similar tax imposed by any other jurisdiction in which the Borrower is located and (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower under Section 10.13), any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party hereto (or designates a new Lending Office) or is attributable to such Foreign Lender’s failure or inability (other than as a result of a Change in Law) to comply with Section 3.01(e), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new Lending Office (or assignment), to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 3.01(a).

     “Existing Credit Agreement” means that certain Credit Agreement dated as of April 25, 2006, among the Borrower, Bank of America, N.A., as administrative agent, swing line lender and L/C issuer, and the lenders party thereto.

     “Federal Funds Rate” means, for any day, the rate per annum 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 (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on such day on such transactions as determined by the Administrative Agent.

     “Fee Letter” means the letter agreement, dated October 9, 2008, among the Borrower, the Administrative Agent and the Arranger.

     “Foreign Lender” means any Lender that is organized under the laws of a jurisdiction other than that in which the Borrower is resident for tax purposes. For purposes of this definition, the United States, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

     “FRB” means the Board of Governors of the Federal Reserve System of the United States.

     “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 set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting

8

Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.

     “Governmental Authority” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

     “Guarantee” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien); provided that, the term “Guarantee” shall not include endorsements for collection or deposit in the ordinary course of business. The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. The term “Guarantee” as a verb has a corresponding meaning.

     “Guarantors” means, collectively, each Subsidiary of the Borrower that is a Regulated Entity.

     “Guaranty” means that certain Guaranty Agreement executed by a Guarantor in favor of the Administrative Agent and the Lenders, substantially in the form of Exhibit E, as supplemented from time to time by execution and delivery of Guaranty Joinder Agreements pursuant to Section 6.12 or otherwise.

     “Guaranty Joinder Agreement” means each Guaranty Joinder Agreement, substantially in the form thereof attached to the Guaranty, executed and delivered by a Regulated Entity to the Administrative Agent pursuant to Section 6.12.

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     “Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.

     “Indebtedness” means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:

     (a) all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments;

     (b) all direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and similar instruments;

     (c) net obligations of such Person under any Swap Contract;

     (d) all obligations of such Person to pay the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business);

     (e) indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse;

     (f) capital leases and Synthetic Lease Obligations;

     (g) all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Equity Interest in such Person or any other Person, valued, in the case of a redeemable preferred interest, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends; and

     (h) all Guarantees of such Person in respect of any of the foregoing.

     For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, except to the extent such Indebtedness is expressly made non-recourse to such Person. The amount of any net obligation under any Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of such date. The amount of any capital lease or Synthetic Lease Obligation as of any date shall be deemed to be the amount of Attributable Indebtedness in respect thereof as of such date.

     “Indemnified Taxes” means Taxes other than Excluded Taxes.

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     “Indemnitees” has the meaning specified in Section 10.04(b).

     “Information” has the meaning specified in Section 10.07.

     “Interest Payment Date” means, as to any Loan, the first Business Day following the end of each month and the Maturity Date.

     “Internal Control Event” means a material weakness in, or fraud that involves management or other employees who have a significant role in, the Borrower’s internal controls over financial reporting, in each case as described in the Securities Laws.

     “IRS” means the United States Internal Revenue Service.

     “Laws” means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case having the force of law.

     “Lender” has the meaning specified in the introductory paragraph hereto.

     “Lending Office” means, as to any Lender, the office or offices of such Lender described as such in such Lender’s Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify the Borrower and the Administrative Agent.

     “LIBOR Daily Floating Rate” means a rate per annum determined by the Administrative Agent pursuant to the following formula:

		LIBOR Daily Floating Base Rate
LIBOR Daily Floating Rate	=
		1.00 – Eurodollar Reserve Percentage

     Where,

     “LIBOR Daily Floating Base Rate” means, for all LIBOR Floating Rate Loans, on each day any such Loan is outstanding, the fluctuating rate of interest (rounded upwards, as necessary, to the nearest 1/100 of 1%) equal to the BBA LIBOR, as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as designated by the Administrative Agent from time to time) at approximately 11:00 a.m., London time, on each day any such Loan is outstanding, for Dollar deposits with a term equivalent to a one month interest period. If such rate is not available at such time for any reason, then the “LIBOR Daily Floating Base Rate” shall be the rate per annum determined by the Administrative Agent to be the rate at which deposits in Dollars for delivery in same day funds in the approximate amount of the LIBOR Floating Rate Loan being made or converted and with a term equivalent to a one-month interest period would be offered by Bank of America’s London Branch to major

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banks in the London interbank eurodollar market at their request at approximately 11:00 a.m. (London time), on each day any such Loan is outstanding.

     “LIBOR Floating Rate Loan” means a Loan that bears interest at a rate based on the LIBOR Daily Floating Rate.

     “Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing).

     “Loan” has the meaning specified in Section 2.01.

     “Loan Documents” means this Agreement, each Note, the Fee Letter and the Guaranty.

     “Loan Notice” means a notice of (a) a Borrowing or (b) a conversion of Loans from one Type to the other, pursuant to Section 2.02(a), which, if in writing, shall be substantially in the form of Exhibit A.

     “Loan Parties” means, collectively, the Borrower and each Guarantor.

     “Margin Stock” means “margin stock” as such term is defined in Regulation T, U or X of the FRB.

     “Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties, condition (financial or otherwise) of the Borrower and its Subsidiaries taken as a whole; (b) a material impairment of the ability of any Loan Party to perform its obligations under any Loan Document to which it is a party; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against any Loan Party of any Loan Document to which it is a party.

     “Maturity Date” means March 31, 2009, or such earlier date on which the Commitment may terminate in accordance with the terms hereof.

     “Medium Term Note Indebtedness” means all indebtedness outstanding under the Medium Term Notes Indenture.

     “Medium Term Notes Indenture” means that certain Indenture dated as of April 1, 1993 between the Borrower and Citibank, N.A., as Trustee.

     “Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.

     “Multiemployer Plan” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.

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     “Note” means a promissory note made by the Borrower in favor of a Lender evidencing Loans made by such Lender, substantially in the form of Exhibit B.

     “Obligations” means all advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party arising under any Loan Document or otherwise with respect to any Loan or Related Credit Arrangement, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Loan Party or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.

     “Organization Documents” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.

     “Other Taxes” means all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or under any other Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document.

     “Outstanding Amount” means with respect to Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of Loans, as the case may be, occurring on such date.

     “Participant” has the meaning specified in Section 10.06(d).

     “PBGC” means the Pension Benefit Guaranty Corporation.

     “PCAOB” means the Public Company Accounting Oversight Board.

     “Pension Plan” means any “employee pension benefit plan” (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by the Borrower or any ERISA Affiliate or to which the Borrower or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding five plan years.

     “Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

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     “Plan” means any “employee benefit plan” (as such term is defined in Section 3(3) of ERISA) established by the Borrower or, with respect to any such plan that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA Affiliate.

     “Platform” has the meaning specified in Section 6.02.

     “Register” has the meaning specified in Section 10.06(c).

     “Registered Public Accounting Firm” has the meaning specified in the Securities Laws and shall be independent of the Borrower as prescribed in the Securities Laws.

     “Regulated Entity” means any direct or indirect, wholly-owned Subsidiary of the Borrower that is regulated by any state public utility commission.

     “Related Credit Arrangements” means, collectively, Related Swap Contracts and Related Treasury Management Arrangements.

     “Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents and advisors of such Person and of such Person’s Affiliates.

     “Related Swap Contract” means a Swap Contract which is entered into or maintained by any Loan Party with a Lender or an Affiliate of a Lender.

     “Related Treasury Management Arrangement” means an arrangement for the delivery of treasury management services to or for the benefit of any Loan Party which is entered into or maintained with a Lender or Affiliate of a Lender and which is not prohibited by the express terms of the Loan Documents.

     “Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30 day notice period has been waived.

     “Request for Credit Extension” means with respect to a Borrowing or conversion of Loans, a Loan Notice.

     “Required Lenders” means, as of any date of determination, Lenders having more than 50% of the Aggregate Commitments or, if the commitment of each Lender to make Loans has been terminated pursuant to Section 8.02, Lenders holding in the aggregate more than 50% of the Total Outstandings; provided that the Commitment of, and the portion of the Total Outstandings held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders.

     “Responsible Officer” means the president, senior vice president, chief financial officer, treasurer, or vice president-chief risk officer of a Loan Party and, solely for purposes of notices given pursuant to Article II, any other officer or employee of the applicable Loan Party so designated by any of the foregoing officers in a notice to the Administrative Agent. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or

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other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.

     “Restricted Payment” means, with respect to any Person, any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interest of such Person, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such Equity Interest, or on account of any return of capital to such Person’s stockholders, partners or members (or the equivalent Person thereof).

     “S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. and any successor thereto.

     “Sarbanes-Oxley” means the Sarbanes-Oxley Act of 2002.

     “SEC” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.

     “Securities Laws” means the Securities Act of 1933, the Securities Exchange Act of 1934, Sarbanes-Oxley and the applicable accounting and auditing principles, rules, standards and practices promulgated, approved or incorporated by the SEC or the PCAOB.

     “Senior Note Agreements” means, collectively, (i) the Note Agreement dated as of July 30, 1991, and (ii) the Note Agreement dated as of September 21, 1992, for the issuance of $35,000,000 8.51% Senior Notes due September 30, 2017.

     “Senior Note Indebtedness” means all indebtedness outstanding under the Senior Note Agreements.

     “Shareholders’ Equity” means, as of any date of determination, consolidated shareholders’ equity of the Borrower and its Subsidiaries as of that date determined in accordance with GAAP.

     “Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Borrower.

     “Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap

15

transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.

     “Swap Termination Value” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender).

     “Synthetic Lease Obligation” means, with respect to any Person, the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).

     “Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

     “Threshold Amount” means $35,000,000.

     “Total Capitalization” means, as of any date of determination, the sum of (i) Shareholders’ Equity on such date plus (ii) Consolidated Funded Indebtedness on such date.

     “Total Outstandings” means the aggregate Outstanding Amount of all Loans.

     “Type” means, with respect to a Loan, its character as a Base Rate Loan or a LIBOR Floating Rate Loan.

     “Unfunded Pension Liability” means the excess of a Pension Plan’s benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Pension Plan’s assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year.

     “United States” and “U.S.” mean the United States of America.

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   1.02 Other Interpretive Provisions. With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:

     (a) The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document (including any Organization Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Loan Document), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “herein,” “hereof” and “hereunder,” and words of similar import when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to any particular provision thereof, (iv) all references in a Loan Document to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan Document in which such references appear, (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, and (vi) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

     (b) In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including;” the words “to” and “until” each mean “to but excluding;” and the word “through” means “to and including.”

     (c) Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.

   1.03 Accounting Terms. (a) Generally. All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Audited Financial Statements (except for changes concurred in by the Borrower’s independent public accountants or otherwise required by a change in GAAP).

     (b) Changes in GAAP. If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document then such computation shall be made in accordance with GAAP as so changed unless (i) the Borrower shall have objected to determining compliance on such basis at or prior to the time of delivery of such financial statements, or (ii) the Required Lenders shall so object in writing within 30

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days after delivery of such financial statements, in either of which events such calculations shall be made on a basis consistent with those used in the preparation of the latest financial statements as to which no such objection shall have been made.

   1.04 Rounding. Any financial ratios required to be maintained by the Borrower pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).

   1.05 Times of Day. Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).

ARTICLE II.
THE COMMITMENTS AND CREDIT EXTENSIONS

   2.01 Loans. Subject to the terms and conditions set forth herein, each Lender severally agrees to make loans (each such loan, a “Loan”) to the Borrower from time to time, on any Business Day during the Availability Period, in an aggregate amount not to exceed at any time outstanding the amount of such Lender’s Commitment; provided, however, that after giving effect to any Borrowing, (i) the Total Outstandings shall not exceed the Aggregate Commitments, and (ii) the aggregate Outstanding Amount of the Loans of any Lender shall not exceed such Lender’s Commitment. Within the limits of each Lender’s Commitment, and subject to the other terms and conditions hereof, the Borrower may borrow under this Section 2.01, prepay under Section 2.05, and reborrow under this Section 2.01. Loans may be Base Rate Loans or LIBOR Floating Rate Loans, as further provided herein.

   2.02 Borrowings and Conversions of Loans.

     (a) Each Borrowing and each conversion of Loans from one Type to the other shall be made upon the Borrower’s irrevocable notice to the Administrative Agent, which may be given by telephone. Each such notice must be received by the Administrative Agent not later than 11:00 a.m., (i) on the requested date of any Borrowing of LIBOR Floating Rate Loans or Base Rate Loans or (ii) on the requested date of any conversion of (A) LIBOR Floating Rate Loans to Base Rate Loans or (B) Base Rate Loans to LIBOR Floating Rate Loans. Each telephonic notice by the Borrower pursuant to this Section 2.02(a) must be confirmed promptly by delivery to the Administrative Agent of a written Loan Notice, appropriately completed and signed by a Responsible Officer of the Borrower. Each Borrowing of or conversion to LIBOR Floating Rate Loans or Base Rate Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof. Each Loan Notice (whether telephonic or written) shall specify (i) whether the Borrower is requesting a Borrowing or a conversion of Loans from one Type to the other, (ii) the requested date of the Borrowing or conversion, as the case may be (which shall be a Business Day), (iii) the principal amount of Loans to be borrowed or converted, and (iv) the Type of Loans to be borrowed or to which existing Loans are to be converted. If the Borrower fails to specify a Type of Loan in a Loan Notice, then the applicable Loans shall be made as LIBOR Floating Rate Loans; provided that, if the LIBOR Daily

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Floating Rate is unavailable, then the applicable Loans shall be made as, or converted to, Base Rate Loans.

     (b) Following receipt of a Loan Notice, the Administrative Agent shall promptly notify each Lender of the amount of its Applicable Percentage of the applicable Loans. In the case of a Borrowing, each Lender shall make the amount of its Loan available to the Administrative Agent in immediately available funds at the Administrative Agent’s Office not later than 1:00 p.m. on the Business Day specified in the applicable Loan Notice. Upon satisfaction of the applicable conditions set forth in Section 4.02 (and, if such Borrowing is the initial Credit Extension, Section 4.01), the Administrative Agent shall make all funds so received available to the Borrower in like funds as received by the Administrative Agent either by (i) crediting the account of the Borrower on the books of Bank of America with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) the Administrative Agent by the Borrower.

     (c) At any time that Base Rate Loans are outstanding, the Administrative Agent shall notify the Borrower and the Lenders of any change in Bank of America’s “prime rate” used in determining the Base Rate promptly following the public announcement of such change. The Administrative Agent shall notify the Borrower and the Lenders of any change in the LIBOR Daily Floating Rate on the date such change occurs.

   2.03 [Reserved].

   2.04 [Reserved].

   2.05 Prepayments.

     (a) The Borrower may, upon notice to the Administrative Agent, at any time or from time to time voluntarily prepay Loans in whole or in part without premium or penalty; provided that (i) such notice must be received by the Administrative Agent not later than 11:00 a.m. on the date of prepayment of any Loan; and (ii) any prepayment of Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof or, if less, the entire principal amount thereof then outstanding. Each such notice shall specify the date and amount of such prepayment and the Type(s) of Loans to be prepaid. The Administrative Agent will promptly notify each Lender of its receipt of each such notice, and of the amount of such Lender’s Applicable Percentage of such prepayment. If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. Each such prepayment shall be applied to the Loans of the Lenders in accordance with their respective Applicable Percentages.

     (b) If for any reason the Total Outstandings at any time exceed the Aggregate Commitments then in effect, the Borrower shall immediately prepay Loans in an aggregate amount equal to such excess.

   2.06 Termination or Reduction of Commitments. The Borrower may, upon notice to the Administrative Agent, terminate the Aggregate Commitments, or from time to time permanently reduce the Aggregate Commitments; provided that (i) any such notice shall be received by the Administrative Agent not later than 11:00 a.m. five Business Days prior to the

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date of termination or reduction, (ii) any such partial reduction shall be in an aggregate amount of $10,000,000 or any whole multiple of $1,000,000 in excess thereof, and (iii) the Borrower shall not terminate or reduce the Aggregate Commitments if, after giving effect thereto and to any concurrent prepayments hereunder, the Total Outstandings would exceed the Aggregate Commitments. The Administrative Agent will promptly notify the Lenders of any such notice of termination or reduction of the Aggregate Commitments. Any reduction of the Aggregate Commitments shall be applied to the Commitment of each Lender according to its Applicable Percentage. All fees accrued until the effective date of any termination of the Aggregate Commitments shall be paid on the effective date of such termination.

   2.07 Repayment of Loans. The Borrower shall repay to the Lenders on the Maturity Date the aggregate principal amount of Loans outstanding on such date.

   2.08 Interest.

     (a) Subject to the provisions of subsection (b) below, (i) each LIBOR Floating Rate Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the LIBOR Daily Floating Rate plus the Applicable Rate; and (ii) each Base Rate Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate.

(b) (i) If any amount of principal of any Loan is not paid when due (after giving effect to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

     (ii) If any amount (other than principal of any Loan) payable by the Borrower under any Loan Document is not paid when due (after giving effect to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, then upon the request of the Required Lenders, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

     (iii) Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand.

     (c) Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.

   2.09 Fees.

     (a) Commitment Fee. The Borrower shall pay to the Administrative Agent for the account of each Lender in accordance with its Applicable Percentage, a commitment fee equal

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to the Applicable Rate times the actual daily amount by which the Aggregate Commitments exceed the sum of the Outstanding Amount of Loans. The commitment fee shall accrue at all times during the Availability Period, including at any time during which one or more of the conditions in Article IV is not met, and shall be due and payable on the last Business Day of each month, commencing with the first such date to occur after the Closing Date, and on the last day of the Availability Period. The commitment fee shall be calculated monthly in arrears, and if there is any change in the Applicable Rate during any month, the actual daily amount shall be computed and multiplied by the Applicable Rate separately for each period during such month that such Applicable Rate was in effect.

(b) Other Fees. (i) The Borrower shall pay to the Arranger and the Administrative Agent for their own respective accounts fees in the amounts and at the times specified in the Fee Letter. Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.

     (ii) The Borrower shall pay to the Lenders such fees as shall have been separately agreed upon in writing in the amounts and at the times so specified. Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.

   2.10 Computation of Interest and Fees. All computations of interest for Base Rate Loans when the Base Rate is determined by Bank of America’s “prime rate” shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year). Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid, provided that any Loan that is repaid on the same day on which it is made shall, subject to Section 2.12(a), bear interest for one day. Each determination by the Administrative Agent of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error.

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   2.11 Evidence of Debt. The Credit Extensions made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary course of business. The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Credit Extensions made by the Lenders to the Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error. Upon the request of any Lender made through the Administrative Agent, the Borrower shall execute and deliver to such Lender (through the Administrative Agent) a Note, which shall evidence such Lender’s Loans in addition to such accounts or records. Each Lender may attach schedules to its Note and endorse thereon the date, Type (if applicable), amount and maturity of its Loans and payments with respect thereto.

   2.12 Payments Generally; Administrative Agent’s Clawback.

     (a) General. All payments to be made by the Borrower shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein, all payments by the Borrower hereunder shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the Administrative Agent’s Office in Dollars and in immediately available funds not later than 2:00 p.m. on the date specified herein. The Administrative Agent will promptly distribute to each Lender its Applicable Percentage (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender’s Lending Office. All payments received by the Administrative Agent after 2:00 p.m. shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue. If any payment to be made by the Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be.

(b) (i) Funding by Lenders; Presumption by Administrative Agent. Unless the Administrative Agent shall have received notice from a Lender prior to 12:00 noon on the date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with and at the time required by Section 2.02 and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount in immediately available funds with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (A) in the case of a payment to be made by such Lender, the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation, plus any administrative

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processing or similar fees customarily charged by the Administrative Agent in connection with the foregoing, and (B) in the case of a payment to be made by the Borrower, the interest rate applicable to Base Rate Loans. If the Borrower and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to the Borrower the amount of such interest paid by the Borrower for such period. If such Lender pays its share of the applicable Borrowing to the Administrative Agent, then the amount so paid shall constitute such Lender’s Loan included in such Borrowing. Any payment by the Borrower shall be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.

     (ii) Payments by Borrower; Presumptions by Administrative Agent. Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender, in immediately available funds with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

     A notice of the Administrative Agent to any Lender or the Borrower with respect to any amount owing under this subsection (b) shall be conclusive, absent manifest error.

     (c) Failure to Satisfy Conditions Precedent. If any Lender makes available to the Administrative Agent funds for any Loan to be made by such Lender as provided in the foregoing provisions of this Article II, and such funds are not made available to the Borrower by the Administrative Agent because the conditions to the applicable Credit Extension set forth in Article IV are not satisfied or waived in accordance with the terms hereof, the Administrative Agent shall return such funds (in like funds as received from such Lender) to such Lender, without interest.

     (d) Obligations of Lenders Several. The obligations of the Lenders hereunder to make Loans and to make payments pursuant to Section 10.04(c) are several and not joint. The failure of any Lender to make any Loan or to make any payment under Section 10.04(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loan or to make its payment under Section 10.04(c).

     (e) Funding Source. Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.

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   2.13 Sharing of Payments by Lenders. If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of the Loans made by it resulting in such Lender’s receiving payment of a proportion of the aggregate amount of such Loans and accrued interest thereon greater than its pro rata share thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Loans of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and other amounts owing them, provided that:

     (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and

     (ii) the provisions of this Section shall not be construed to apply to (x) any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or (y) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans to any assignee or participant, other than to the Borrower or any Subsidiary thereof (as to which the provisions of this Section shall apply).

     The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.

ARTICLE III.
TAXES, YIELD PROTECTION AND ILLEGALITY

   3.01 Taxes.

     (a) Payments Free of Taxes. Any and all payments by or on account of any obligation of the Borrower hereunder or under any other Loan Document shall be made free and clear of and without reduction or withholding for any Indemnified Taxes or Other Taxes, provided that if the Borrower shall be required by applicable law to deduct any Indemnified Taxes (including any Other Taxes) from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Administrative Agent or Lender, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall timely pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.

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     (b) Payment of Other Taxes by the Borrower. Without limiting the provisions of subsection (a) above, the Borrower shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

     (c) Indemnification by the Borrower. The Borrower shall indemnify the Administrative Agent and each Lender, within 10 days after demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) paid by the Administrative Agent or such Lender, as the case may be, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.

     (d) Evidence of Payments. As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

     (e) Status of Lenders. Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the Borrower is resident for tax purposes, or any treaty to which such jurisdiction is a party, with respect to payments hereunder or under any other Loan Document shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements.

     Without limiting the generality of the foregoing, in the event that the Borrower is resident for tax purposes in the United States, any Foreign Lender shall deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the request of the Borrower or the Administrative Agent, but only if such Foreign Lender is legally entitled to do so), whichever of the following is applicable:

     (i) duly completed copies of Internal Revenue Service Form W-8BEN claiming eligibility for benefits of an income tax treaty to which the United States is a party,

     (ii) duly completed copies of Internal Revenue Service Form W-8ECI,

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     (iii) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under section 881(c) of the Code, (x) a certificate to the effect that such Foreign Lender is not (A) a “bank” within the meaning of section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the Borrower within the meaning of section 881(c)(3)(B) of the Code, or (C) a “controlled foreign corporation” described in section 881(c)(3)(C) of the Code and (y) duly completed copies of Internal Revenue Service Form W-8BEN, or

     (iv) any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in United States Federal withholding tax duly completed together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower to determine the withholding or deduction required to be made.

     (f) Treatment of Certain Refunds. If the Administrative Agent or any Lender determines, in its sole discretion, that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section, it shall pay to the Borrower an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Administrative Agent or such Lender, as the case may be, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund), provided that the Borrower, upon the request of the Administrative Agent or such Lender, agrees to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent or such Lender in the event the Administrative Agent or such Lender is required to repay such refund to such Governmental Authority. This subsection shall not be construed to require the Administrative Agent or any Lender to make available its tax returns (or any other information relating to its taxes that it deems confidential) to the Borrower or any other Person.

   3.02 Illegality. If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to determine or charge interest rates based upon the LIBOR Daily Floating Rate, or any Governmental Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take deposits of, Dollars in the London interbank market, then, on notice thereof by such Lender to the Borrower through the Administrative Agent, any obligation of such Lender to make LIBOR Floating Rate Loans or to convert Base Rate Loans to LIBOR Floating Rate Loans shall be suspended until such Lender notifies the Administrative Agent and the Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, the Borrower shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay or, if applicable, convert all applicable LIBOR Floating Rate Loans of such Lender to Base Rate Loans immediately, if such Lender may not lawfully continue to maintain such LIBOR Floating Rate Loans. Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted.

   3.03 Inability to Determine Rates. If the Required Lenders determine that for any reason in connection with any request for a LIBOR Floating Rate Loans or a conversion thereto

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that (a) Dollar deposits are not being offered to banks in the London interbank eurodollar market for the applicable amount, (b) adequate and reasonable means do not exist for determining the LIBOR Daily Floating Base Rate with respect to a proposed LIBOR Floating Rate Loan, or (c) the LIBOR Daily Floating Base Rate with respect to a proposed LIBOR Floating Rate Loan does not adequately and fairly reflect the cost to such Lenders of funding such Loan, the Administrative Agent will promptly so notify the Borrower and each Lender. Thereafter, the obligation of Lenders to make or maintain LIBOR Floating Rate Loans shall be suspended until the Administrative Agent (upon the instruction of the Required Lenders) revokes such notice. Upon receipt of such notice, the Borrower may revoke any pending request for a Borrowing of or conversion to LIBOR Floating Rate Loans or, failing that, will be deemed to have converted such request into a request for a Borrowing of Base Rate Loans in the amount specified therein.

   3.04 Increased Costs.

     (a) Increased Costs Generally. If any Change in Law shall:

     (i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement reflected in the LIBOR Daily Floating Rate);

     (ii) subject any Lender to any tax of any kind whatsoever with respect to this Agreement or any LIBOR Floating Rate Loan made by it, or change the basis of taxation of payments to such Lender in respect thereof (except for Indemnified Taxes or Other Taxes covered by Section 3.01 and the imposition of, or any change in the rate of, any Excluded Tax payable by such Lender); or

     (iii) impose on any Lender or the London interbank market any other condition, cost or expense affecting this Agreement or LIBOR Floating Rate Loans made by such Lender;

and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any LIBOR Floating Rate Loan (or of maintaining its obligation to make any such Loan), or to reduce the amount of any sum received or receivable by such Lender hereunder (whether of principal, interest or any other amount) then, upon request of such Lender, the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender for such additional costs incurred or reduction suffered.

     (b) Capital Requirements. If any Lender determines that any Change in Law affecting such Lender or any Lending Office of such Lender or such Lender’s holding company, if any, regarding capital requirements has or would have the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by such Lender to a level below that which such Lender or such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender such additional amount or

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amounts as will compensate such Lender or such Lender’s holding company for any such reduction suffered.

     (c) Certificates for Reimbursement. A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company, as the case may be, as specified in subsection (a) or (b) of this Section and delivered to the Borrower shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof.

     (d) Delay in Requests. Failure or delay on the part of any Lender to demand compensation pursuant to the foregoing provisions of this Section shall not constitute a waiver of such Lender’s right to demand such compensation, provided that the Borrower shall not be required to compensate a Lender pursuant to the foregoing provisions of this Section for any increased costs incurred or reductions suffered more than nine months prior to the date that such Lender notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine-month period referred to above shall be extended to include the period of retroactive effect thereof).

     Any Lender requesting compensation under Sections 3.01 and 3.04 hereof shall do so within 90 days of the event giving rise to such request or otherwise lose the right to request such compensation.

   3.05 [Reserved].

   3.06 Mitigation Obligations; Replacement of Lenders.

     (a) Designation of a Different Lending Office. If any Lender requests compensation under Section 3.04, or the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01, or if any Lender gives a notice pursuant to Section 3.02, then such Lender shall use reasonable efforts to designate a different Lending Office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 3.01 or 3.04, as the case may be, in the future, or eliminate the need for the notice pursuant to Section 3.02, as applicable, and (ii) in each case, would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

     (b) Replacement of Lenders. If any Lender requests compensation under Section 3.04, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01, the Borrower may replace such Lender in accordance with Section 10.13.

   3.07 Survival. All of the Borrower’s obligations under this Article III shall survive termination of the Aggregate Commitments and repayment of all other Obligations hereunder.

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ARTICLE IV.
CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

   4.01 Conditions of Initial Credit Extension. The obligation of each Lender to make its initial Credit Extension hereunder is subject to satisfaction of the following conditions precedent:

     (a) The Administrative Agent’s receipt of the following, each of which shall be originals or telecopies (followed promptly by originals) unless otherwise specified, each properly executed by a Responsible Officer of the signing Loan Party, each dated the Closing Date (or, in the case of certificates of governmental officials, a recent date before the Closing Date) and each in form and substance satisfactory to the Administrative Agent and each of the Lenders:

     (i) executed counterparts of this Agreement and the Guaranty, sufficient in number for distribution to the Administrative Agent, each Lender and the Borrower;

     (ii) a Note executed by the Borrower in favor of each Lender requesting a Note;

     (iii) such certificates of resolutions or other action, incumbency certificates and/or other certificates of Responsible Officers of each Loan Party as the Administrative Agent may require evidencing the identity, authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Agreement and the other Loan Documents to which such Loan Party is a party;

     (iv) such documents and certifications as the Administrative Agent may reasonably require to evidence that each Loan Party is duly organized or formed, and that each of the Borrower and each Guarantor is validly existing, in good standing and qualified to engage in business in each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect;

     (v) a favorable opinion of in-house counsel to the Borrower and Moore & Van Allen, PLLC, counsel to the Loan Parties, addressed to the Administrative Agent and each Lender, as to the matters set forth in Exhibit F and such other matters concerning the Loan Parties and the Loan Documents as the Required Lenders may reasonably request;

     (vi) a certificate of a Responsible Officer of each Loan Party either (A) attaching copies of all consents, licenses and approvals required in connection with the execution, delivery and performance by such Loan Party and the validity against such Loan Party of the Loan Documents to which it is a party, and such consents, licenses and approvals shall be in full force and effect, or (B) stating that no such consents, licenses or approvals are so required;

     (vii) a certificate signed by a Responsible Officer of the Borrower certifying (A) that the conditions specified in Sections 4.02(a) and (b) have been satisfied, (B) that

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there has been no event or circumstance since the date of the Audited Financial Statements that has had or could be reasonably expected to have, either individually or in the aggregate, a Material Adverse Effect; and (C) the current Debt Ratings;

     (viii) a duly completed Compliance Certificate as of the last day of the fiscal quarter of the Borrower ended on July 31, 2008, signed by a Responsible Officer of the Borrower;

     (ix) (A) the $50,000,000 Revolving Credit Facility dated October 27, 2008, between the Borrower and Bank of America, N.A. and (B) the $25,000,000 Revolving Credit Facility dated October 29, 2008, between the Borrower and Branch Banking and Trust Company have each been, or substantially simultaneously herewith will be, terminated; and

     (x) such other assurances, certificates, documents, consents or opinions as the Administrative Agent or the Required Lenders reasonably may require.

     (b) Any fees required to be paid by the Borrower pursuant to the Loan Documents on or before the Closing Date shall have been paid.

     (c) Unless waived by the Administrative Agent, the Borrower shall have paid all fees, charges and disbursements of counsel to the Administrative Agent (directly to such counsel if requested by the Administrative Agent) to the extent invoiced prior to or on the Closing Date, plus such additional amounts of such fees, charges and disbursements as shall constitute its reasonable estimate of such fees, charges and disbursements incurred or to be incurred by it through the closing proceedings (provided that such estimate shall not thereafter preclude a final settling of accounts between the Borrower and the Administrative Agent).

     Without limiting the generality of the provisions of Section 9.04, for purposes of determining compliance with the conditions specified in this Section 4.01, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto.

   4.02 Conditions to all Credit Extensions. The obligation of each Lender to honor any Request for Credit Extension (other than a Loan Notice requesting only a conversion of Loans to the other Type) is subject to the following conditions precedent:

     (a) The representations and warranties of the Borrower and each other Loan Party contained in Article V (except for Section 5.05(c)) or any other Loan Document, or which are contained in any document furnished at any time under or in connection herewith or therewith, shall be true and correct on and as of the date of such Credit Extension, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct as of such earlier date, and except that for purposes of this Section 4.02, the representations and warranties contained in subsections (a) and (b) of Section 5.05 shall be deemed to refer to the most recent statements furnished pursuant to clauses (a) and (b), respectively, of Section 6.01.

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     (b) No Default shall exist, or would result from such proposed Credit Extension or from the application of the proceeds thereof.

     (c) The Administrative Agent shall have received a Request for Credit Extension in accordance with the requirements hereof.

     Each Request for Credit Extension (other than a Loan Notice requesting only a conversion of Loans to the other Type) submitted by the Borrower shall be deemed to be a representation and warranty that the conditions specified in Sections 4.02(a) and (b) have been satisfied on and as of the date of the applicable Credit Extension.

ARTICLE V.
REPRESENTATIONS AND WARRANTIES

     The Borrower represents and warrants to the Administrative Agent and the Lenders that:

     5.01 Existence, Qualification and Power. Each Loan Party (a) is (i) duly organized or formed, validly existing and (ii), as applicable, in good standing under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite corporate power and authority and all requisite governmental licenses, authorizations, consents and approvals to (i) own or lease its assets and carry on its business and (ii) execute, deliver and perform its obligations under the Loan Documents to which it is a party, and (c) is duly qualified and is licensed and, as applicable, in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license; except in each case referred to in clauses (a)(ii), (b)(i) or (c), to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.

     5.02 Authorization; No Contravention. The execution, delivery and performance by each Loan Party of each Loan Document to which such Person is party, have been duly authorized by all necessary corporate or other organizational action, and do not and will not (a) contravene the terms of any of such Person’s Organization Documents; (b) conflict with or result in any breach or contravention of, or the creation of any Lien under, or require any payment to be made under (i) any Contractual Obligation to which such Person is a party or affecting such Person or the properties of such Person or any of its Subsidiaries or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject; or (c) violate any Law, except in each case referred to in clauses (b) or (c) to the extent that such conflict, breach or violation could not reasonably be expected to have a Material Adverse Effect.

   5.03 Governmental Authorization; Other Consents. No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement or any other Loan Document.

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   5.04 Binding Effect. This Agreement has been, and each other Loan Document, when delivered hereunder, will have been, duly executed and delivered by each Loan Party that is party thereto. This Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is party thereto in accordance with its terms.

   5.05 Financial Statements; No Material Adverse Effect; No Internal Control Event.

     (a) The Audited Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present in all material respects the financial condition of the Borrower and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; and (iii) show all material indebtedness and other liabilities, direct or contingent, of the Borrower and its Subsidiaries as of the date thereof, including liabilities for taxes, material commitments and Indebtedness.

     (b) The unaudited consolidated balance sheets of the Borrower and its Subsidiaries dated July 31, 2008, and the related consolidated statements of income from operations, and cash flows for the portion of the Borrower’s fiscal year then ended on that date (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, and (ii) fairly present in all material respects the financial condition of the Borrower and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby, subject, in the case of clauses (i) and (ii), to the absence of footnotes and to normal year-end audit adjustments.

     (c) Since the date of the Audited Financial Statements, there has been no event or circumstance, either individually or in the aggregate, that has had or could reasonably be expected to have a Material Adverse Effect.

     (d) To the best knowledge of the Borrower, no Internal Control Event exists or has occurred since the date of the Audited Financial Statements that has resulted in or could reasonably be expected to result in a misstatement in any material respect, in any financial information delivered or to be delivered to the Administrative Agent or the Lenders, of (i) covenant compliance calculations provided hereunder or (ii) the assets, liabilities, financial condition or results of operations of the Borrower and its Subsidiaries on a consolidated basis.

   5.06 Litigation. There are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of the Borrower after due and diligent investigation, threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, by or against the Borrower or any of its Subsidiaries or against any of their properties or revenues that (a) purport to affect or pertain to this Agreement or any other Loan Document, or any of the transactions contemplated hereby, or (b) except as specifically disclosed in the Audited Financial Statements, either individually or in the aggregate could reasonably be expected to have a Material Adverse Effect.

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   5.07 No Default. No Default has occurred and is continuing or would result from the consummation of the transactions contemplated by this Agreement or any other Loan Document.

   5.08 Ownership of Property; Liens. Each of the Borrower and each Subsidiary has good record and marketable title in fee simple to, or valid leasehold interests in, all real property necessary or used in the ordinary conduct of its business, except for such defects in title as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The property of the Borrower and its Subsidiaries is subject to no Liens, other than Liens permitted by the Existing Credit Agreement.

   5.09 Environmental Compliance. The Borrower and its Subsidiaries conduct in the ordinary course of business a review of the effect of existing Environmental Laws and claims alleging potential liability or responsibility for violation of any Environmental Law on their respective businesses, operations and properties, and as a result thereof the Borrower has reasonably concluded that except as specifically disclosed in the Audited Financial Statements, such Environmental Laws and claims could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

   5.10 Insurance. The properties of the Borrower and its Subsidiaries are insured with financially sound and reputable insurance companies not Affiliates of the Borrower, in such amounts (after giving effect to any self-insurance), with such deductibles and covering such assets and risks of the Borrower and its Subsidiaries in accordance with customary business practices in the industry of the Borrower, as necessary and appropriate in the good faith business judgment of the Borrower.

   5.11 Taxes. The Borrower and its Subsidiaries have filed all Federal, state and other material tax returns and reports required to be filed, and have paid all Federal, state and other material taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except those which are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been provided in accordance with GAAP. There is no proposed tax assessment against the Borrower or any Subsidiary that would, if made, have a Material Adverse Effect.

   5.12 ERISA Compliance.

     (a) Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal or state Laws. Each Plan that is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the IRS or the remedial amendment cycle under Revenue Procedure 2007-44 (2007-28 IRB 54) for applying for such a letter from the IRS has not expired and, to the best knowledge of the Borrower, nothing has occurred which would prevent, or cause the loss of, such qualification. The Borrower and each ERISA Affiliate have made all required contributions to each Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan.

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     (b) There are no pending or, to the best knowledge of the Borrower, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that could reasonably be expected to have a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or could reasonably be expected to result in a Material Adverse Effect.

     (c) (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither the Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither the Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v) neither the Borrower nor any ERISA Affiliate has engaged in a transaction that could be subject to Section 4069 or 4212(c) of ERISA.

   5.13 Subsidiaries; Equity Interests. As of the Closing Date, the Borrower has no Subsidiaries other than those specifically disclosed in Part (a) of Schedule 5.13, and all of the outstanding Equity Interests in such Subsidiaries have been validly issued, are fully paid and nonassessable and are owned by the Borrower or a Subsidiary in the amounts specified on Part (a) of Schedule 5.13. The Borrower has no equity investments in any other corporation or entity other than those specifically disclosed in Part(b) of Schedule 5.13. All of the outstanding Equity Interests in the Borrower have been validly issued and are fully paid and nonassessable.

   5.14 Margin Regulations; Investment Company Act.

     (a) The Borrower is not engaged and will not engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U issued by the FRB), or extending credit for the purpose of purchasing or carrying margin stock. Following the application of the proceeds of each Borrowing, not more than 25% of the value of the assets (either of the Borrower only or of the Borrower and its Subsidiaries on a consolidated basis) subject to the provisions of Section 7.03 or subject to any restriction contained in any agreement or instrument between the Borrower and any Lender or any Affiliate of any Lender relating to Indebtedness and within the scope of Section 8.01(e) will be Margin Stock.

     (b) None of the Borrower, any Person Controlling (as defined under the ICA, defined below) the Borrower, or any Subsidiary is or is required to be registered as an “investment company” under the Investment Company Act of 1940 (the “ICA”).

   5.15 Disclosure. The Borrower has disclosed to the Administrative Agent and the Lenders all agreements, instruments and corporate or other restrictions to which it or any of its Subsidiaries is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. No report, financial statement, certificate or other information furnished (whether in writing or orally) by or on behalf of any Loan Party to the Administrative Agent or any Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder

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or under any other Loan Document (in each case, as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, with respect to projected financial information, the Borrower represents only that such information was prepared in good faith based upon assumptions believed by the Borrower to be reasonable at the time.

   5.16 Compliance with Laws. Each Loan Party and each Subsidiary thereof is in compliance in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted or (b) the failure to comply therewith, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

   5.17 Taxpayer Identification Number. The Borrower’s true and correct U.S. taxpayer identification number is set forth on Schedule 10.02.

ARTICLE VI.
AFFIRMATIVE COVENANTS

   So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation hereunder shall remain unpaid or unsatisfied, the Borrower shall, and shall (except in the case of the covenants set forth in Sections 6.01, 6.02, and 6.03) cause each Guarantor to:

   6.01 Financial Statements. Deliver to the Administrative Agent with sufficient copies for distribution to each Lender, and the Administrative Agent shall deliver such copies promptly to each Lender after the Administrative Agent’s receipt:

     (a) as soon as available, but in any event by the date on which consolidated financial statements for such period are required to be delivered to the SEC under the Securities Laws (without regard to any extensions of such date permitted by the Securities Laws for which any special application is required) (and if the Borrower does not have to deliver such consolidated financial statements to the SEC under the Securities Laws, then as soon as available, but in any event within 90 days after the end of the fiscal year of the Borrower), a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of each fiscal year, and the related consolidated statements of income from operations, shareholders’ equity and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP, such consolidated statements to be audited and accompanied by (i) a report and opinion of a Registered Public Accounting Firm of nationally recognized standing reasonably acceptable to the Required Lenders (which shall include but not be limited to Deloitte & Touche, LLP), which report and opinion shall be prepared in accordance with generally accepted auditing standards and applicable Securities Laws and shall not be subject to any “going concern” or like qualification or exception or any qualification or exception as to the scope of such audit or with respect to the absence of any material misstatement and (ii) an attestation report of such

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Registered Public Accounting Firm as to the Borrower’s internal controls over financial reporting pursuant to Section 404 of Sarbanes-Oxley expressing a conclusion that the Borrower has maintained effective internal controls over financial reporting based on the COSO criteria; and

     (b) as soon as available, but in any event by the date on which consolidated financial statements for such period are required to be delivered to the SEC under the Securities Laws (without regard to any extensions of such date permitted by the Securities Laws for which any special application is required) (and if the Borrower does not have to deliver such consolidated financial statements to the SEC under the Securities Laws, then as soon as available, but in any event within 45 days after the end of the first three fiscal quarters of each fiscal year of the Borrower), a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of each fiscal quarter, and the related consolidated statements of income from operations, and cash flows for such portion of the Borrower’s fiscal year then ended and for the portion of the Borrower’s fiscal year then ended, setting forth in each case in comparative form the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail, such consolidated statements to be certified by the chief executive officer, chief financial officer, treasurer or controller of the Borrower as fairly presenting the financial condition, results of operations, shareholders’ equity and cash flows of the Borrower and its Subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes.

   As to any information contained in materials furnished pursuant to Section 6.02(c), the Borrower shall not be separately required to furnish such information under clause (a) or (b) above, and to the extent that the Borrower has filed a Form 10K or Form 10Q for the respective financial period with the SEC, it shall be deemed to have satisfied clauses (a) and (b) above.

   6.02 Certificates; Other Information. Deliver to the Administrative Agent and each Lender, in form and detail satisfactory to the Administrative Agent and the Required Lenders:

     (a) concurrently with the delivery of the financial statements referred to in Sections 6.01(a) and (b) (commencing with the delivery of the financial statements for the fiscal quarter ended October 31, 2008), a duly completed Compliance Certificate signed by the chief executive officer, chief financial officer, treasurer or controller of the Borrower;

     (b) promptly after any request by the Administrative Agent or any Lender, copies of any detailed audit reports, management letters or recommendations submitted to the board of directors (or the audit committee of the board of directors) of the Borrower by independent accountants in connection with the accounts or books of the Borrower or any Subsidiary, or any audit of any of them;

     (c) promptly after the same are available, copies of each annual report, proxy or financial statement or other report or communication sent to the stockholders of the Borrower, and copies of all annual, regular, periodic and special reports and registration statements which the Borrower may file or be required to file with the SEC under Section 13 or 15(d) of the Securities Exchange Act of 1934, and not otherwise required to be delivered to the Administrative Agent pursuant hereto;

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          (d) promptly after the furnishing thereof, copies of any statement or report furnished to any holder of debt securities of the Borrower or any Subsidiary thereof pursuant to the terms of any indenture, loan or credit or similar agreement and not otherwise required to be furnished to the Lenders pursuant to Section 6.01 or any other clause of this Section 6.02;

          (e) promptly, and in any event within five Business Days after receipt thereof by any Loan Party or any Subsidiary thereof, copies of each notice or other correspondence received from the SEC (or comparable agency in any applicable non-U.S. jurisdiction) concerning any investigation or possible investigation or other inquiry by such agency regarding financial or other operational results of any Loan Party or any Subsidiary thereof; and

          (f) promptly, such additional information regarding the business, financial or corporate affairs of the Borrower or any Subsidiary, or compliance with the terms of the Loan Documents, as the Administrative Agent or any Lender may from time to time reasonably request.

          Documents required to be delivered pursuant to Section 6.01(a) or (b) or Section 6.02(c) or (d) (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Borrower posts such documents, or provides a link thereto on the Borrower’s website on the Internet at the website address listed on Schedule 10.02; or (ii) on which such documents are posted on the Borrower’s behalf on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided that: upon the request of the Administrative Agent, (i) the Borrower shall deliver paper copies of such documents to the Administrative Agent or any Lender that requests the Borrower to deliver such paper copies until a written request to cease delivering paper copies is given by the Administrative Agent or such Lender and (ii) the Borrower shall notify the Administrative Agent and each Lender (by telecopier or electronic mail) of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents. Except for such Compliance Certificates, the Administrative Agent shall have no obligation to request the delivery or to maintain copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Borrower with any such request for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents.

          The Borrower hereby acknowledges that (a) the Administrative Agent and/or the Arranger will make available to the Lenders materials and/or information provided by or on behalf of the Borrower hereunder (collectively, “Borrower Materials”) by posting the Borrower Materials on IntraLinks or another similar electronic system (the “Platform”) and (b) certain of the Lenders may be “public-side” Lenders (i.e., Lenders that do not wish to receive material non-public information with respect to the Borrower or its securities) (each, a “Public Lender”). The Borrower hereby agrees that (w) all Borrower Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC”, the Borrower shall be deemed to have authorized the Administrative Agent, the Arranger and the Lenders to treat such Borrower Materials as not

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containing any material non-public information with respect to the Borrower or its securities for purposes of United States Federal and state securities laws (provided, however, that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 10.07); (y) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Investor”; and (z) the Administrative Agent and the Arranger shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Investor”. Notwithstanding the foregoing, the Borrower shall be under no obligation to mark any Borrower Materials “PUBLIC”.

          6.03 Notices. Promptly, but in any event, within five (5) days of the Borrower becoming aware thereof, notify the Administrative Agent and each Lender:

          (a) of the occurrence of any Default;

          (b) of any matter that has resulted or could reasonably be expected to result in a Material Adverse Effect, including (i) any dispute, litigation, investigation, proceeding or suspension between the Borrower or any Subsidiary and any Governmental Authority; or (ii) the commencement of, or any material development in, any litigation or proceeding affecting the Borrower or any Subsidiary, including pursuant to any applicable Environmental Laws;

          (c) of the occurrence of any ERISA Event;

          (d) of any material change in accounting policies or financial reporting practices by the Borrower or any Subsidiary;

          (e) of the determination by the Registered Public Accounting Firm providing the opinion required under Section 6.01(a)(ii) (in connection with its preparation of such opinion) or the Borrower’s determination at any time of the occurrence or existence occurrence of any Internal Control Event; and

          (f) of any announcement by Moody’s or S&P of any change or possible change in a Debt Rating.

          Each notice pursuant to this Section 6.03 (other than Section 6.03(f)) shall be accompanied by a statement of a Responsible Officer of the Borrower setting forth details of the occurrence referred to therein and stating what action the Borrower has taken and proposes to take with respect thereto. Each notice pursuant to Section 6.03(a) shall describe with particularity any and all provisions of this Agreement and any other Loan Document that have been breached.

          6.04 Payment of Obligations. Pay and discharge as the same shall become due and payable, all its obligations and liabilities, including all federal, state and other material tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by the Borrower or such Subsidiary.

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          6.05 Preservation of Existence, Etc. (a) Preserve, renew and maintain in full force and effect its legal existence under the Laws of the jurisdiction of its organization except in a transaction permitted by Section 7.02 or 7.03; (b) preserve, renew and maintain in full force and effect its good standing under the Laws of the jurisdiction of its origination, except where the failure to do so could not reasonably be expected to result in a Material Adverse Effect; (c) take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of its business, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; and (d) preserve or renew all of its registered patents, trademarks, trade names and service marks, the non-preservation of which could reasonably be expected to have a Material Adverse Effect.

          6.06 Maintenance of Properties. Maintain, preserve and protect all of its material properties and equipment necessary in the operation of its business in good working order and condition, ordinary wear and tear excepted; and (b) make all necessary repairs thereto and renewals and replacements thereof, except in the case of both (a) and (b) above, where the failure to do so could not reasonably be expected to have a Material Adverse Effect.

          6.07 Maintenance of Insurance. Maintain insurance (including self-insurance) with respect to its properties and business as necessary and appropriate in the customary business practice in the industry of the Borrower.

          6.08 Compliance with Laws. Comply in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its business or property, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted; or (b) the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect.

          6.09 Books and Records. Maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made of all financial transactions and matters involving the assets and business of the Borrower or such Subsidiary, as the case may be.

          6.10 Inspection Rights. Permit representatives and independent contractors of the Administrative Agent and each Lender to visit and inspect any of its properties, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its directors, officers, and independent public accountants, all at the expense of the Administrative Agent or such Lender, as applicable, and at such reasonable times during normal business hours and upon reasonable advance notice to the Borrower, but not more frequently than once per every twelve (12) month period; provided, however, that when an Event of Default exists the Administrative Agent or any Lender (or any of their respective representatives or independent contractors) may do any of the foregoing at the expense of the Borrower at any time during normal business hours and without advance notice as often as may be reasonably requested.

          6.11 Use of Proceeds. Use the proceeds of the Credit Extensions for (a) general working capital needs, capital expenditures and permitted acquisitions, (b) subject to the proviso

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below, the purchase or other acquisition by the Borrower of shares of its capital stock and related preferred stock purchase rights, and (c) other lawful corporate purposes, other than, directly or indirectly, (i) for a purpose in contravention of any Law or of any Loan Document, (ii) to purchase or carry Margin Stock, (iii) to repay or otherwise refinance indebtedness of the Borrower or others incurred to purchase or carry Margin Stock, (iv) to extend credit for the purpose of purchasing or carrying any Margin Stock, or (v) to acquire any security in any transaction that is subject to Section 13 or 14 of the Exchange Act; provided, however, that notwithstanding clauses (ii) through (v) above, the Borrower may use proceeds of Loans as described in clause (b) above so long as either (x) the Margin Stock so acquired is promptly retired following the purchase or other acquisition thereof or (y) at all times and after giving effect to each such purchase or acquisition, not more than twenty-five percent (25%) of the total assets of the Borrower and its Subsidiaries on a consolidated basis are represented by Margin Stock owned by the Borrower and its Subsidiaries on a consolidated basis.

          6.12 Guarantors. Notify the Administrative Agent at the time that any Person becomes a Regulated Entity, and promptly thereafter (and in any event within 30 days), cause such Person to

          (a) in the case of the first Regulated Entity becoming a Guarantor, a Guaranty and thereafter for each additional Regulated Entity, a Guaranty Joinder Agreement duly executed by such Regulated Entity;

          (b) an opinion of counsel to each Person executing the Guaranty or Guaranty Joinder Agreement pursuant to this Section 6.12 dated as of the date of delivery of such applicable agreements and other Loan Documents provided for in this Section 6.12 and addressed to the Administrative Agent and the Lenders, in form and substance reasonably acceptable to the Administrative Agent, each of which opinions may be in form and substance, including assumptions and qualifications contained therein, substantially similar to those opinions of counsel delivered pursuant to Section 4.01(a); and

          (c) with respect to each Person executing any Guaranty or Guaranty Joinder Agreement pursuant to this Section 6.12, current copies of the Organization Documents of each such Person, minutes of duly called and conducted meetings (or duly effected consent actions) of the board of directors, partners, or appropriate committees thereof (and, if required by such Organization Documents or applicable law, of the shareholders, members or partners) of such Person authorizing the actions and the execution and delivery of documents described in this Section 6.12, all certified by the applicable Governmental Authority or appropriate officer as the Administrative Agent may elect.

     ARTICLE VII.
NEGATIVE COVENANTS

          So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation hereunder shall remain unpaid or unsatisfied, the Borrower shall not, nor shall it permit any Guarantor to, directly or indirectly:

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          7.01 [Reserved].

          7.02 Fundamental Changes. Merge, dissolve, liquidate, consolidate with or into another Person, or discontinue or eliminate, a line of business; provided, that so long as no Default exists or would result therefrom:

          (a) the Borrower may merge with another Person if (i) such Person is organized under the laws of the United States of America or one of its states, and (ii) the Borrower is the surviving corporation; and

          (b) any Guarantor may merge with (i) the Borrower, provided that the Borrower shall be the continuing or surviving Person, or (ii) any one or more other Guarantors.

          7.03 Change in Nature of Business. Engage in any material line of business substantially different from those lines of business conducted by the Borrower and its Subsidiaries on the date hereof or any business substantially related or incidental thereto.

          7.04 Transactions with Affiliates. Enter into any transaction of any kind (other than this Agreement and any other Loan Document) with any Affiliate of the Borrower, whether or not in the ordinary course of business, other than on fair and reasonable terms substantially as favorable to the Borrower or such Guarantor as would be obtainable by the Borrower or such Guarantor at the time in a comparable arm’s length transaction with a Person other than an Affiliate, provided that the foregoing restriction shall not apply to transactions between or among the Borrower and any Guarantor or between and among any Guarantors.

          7.05 Burdensome Agreements. Enter into any Contractual Obligation (other than this Agreement, any other Loan Document or the Existing Credit Agreement) that (a) limits the ability (i) of any Subsidiary to make Restricted Payments to the Borrower or any Guarantor or to otherwise transfer property to the Borrower or any Guarantor, (ii) of any Regulated Entity to Guarantee the Indebtedness of the Borrower or (iii) of the Borrower or any Subsidiary to create, incur, assume or suffer to exist Liens on property of such Person except, with respect to clause (iii) above, for (1) any document or instrument governing purchase money Indebtedness, provided that any such restriction contained therein relates only to the asset or assets constructed or acquired in connection therewith, (2) Medium Term Notes Indenture and the Senior Note Agreements, (3) any Lien permitted by the Existing Credit Agreement or any document or instrument governing any such Lien, provided that any such restriction contained therein relates only to the asset or assets subject to such Lien, and (4) customary restrictions and conditions contained in any agreement relating to the sale of any property permitted under Section 7.03 pending the consummation of such sale; or (b) (except for the Medium Term Notes Indenture, the Senior Note Agreements and any other agreement or indenture providing for the issuance of senior indebtedness on parity with the Obligations) requires the grant of a Lien to secure an obligation of such Person if a Lien is granted to secure another obligation of such Person.

          7.06 Ratio of Consolidated Funded Indebtedness to Total Capitalization. Permit the ratio of Consolidated Funded Indebtedness to Total Capitalization to exceed 0.70 to 1.00 at any time.

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          7.07 Amendments to Note Agreements. Enter into or suffer to exist any amendment or modification (a) to the amortization schedule or prepayment provisions (excluding the waiver of any prepayment premium or penalty) of the Indebtedness created under the Medium Term Notes Indenture and the Senior Note Agreements or (b) to any other terms or conditions contained in the Medium Term Notes Indenture and the Senior Note Agreements if such modification (i) would conflict with or be more restrictive than the terms or provisions of this Agreement, (ii) would provide for collateral security for such Indebtedness in excess of that provided under such agreements as of the Closing Date, (iii) would expand any negative pledge provision provided for therein, or (iv) would alter any provision of the events of default under those agreements.

ARTICLE VIII.
EVENTS OF DEFAULT AND REMEDIES

          8.01 Events of Default. Any of the following shall constitute an Event of Default:

          (a) Non-Payment. The Borrower or any other Loan Party fails to pay (i) when and as required to be paid herein, any amount of principal of any Loan, or (ii) within three days after the same becomes due, any interest on any Loan, or any fee due hereunder, or (iii) within five days after the same becomes due, any other amount payable hereunder or under any other Loan Document; or

          (b) Specific Covenants. The Borrower fails to perform or observe any term, covenant or agreement contained in any of Section 6.01, 6.02 (within five days of the date when due, in the case of Section 6.02(a)) , 6.03, 6.05(a), 6.10, 6.11 or 6.12 or Article VII, or any Guarantor fails to perform or observe any term, covenant or agreement contained in the Guaranty; or

          (c) Other Defaults. Any Loan Party fails to perform or observe any other covenant or agreement (not specified in subsection (a) or (b) above) contained in any Loan Document on its part to be performed or observed and such failure continues for 30 days after the Borrower becoming aware thereof or having received notice thereof; or

          (d) Representations and Warranties. Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of the Borrower or any other Loan Party herein, in any other Loan Document, or in any document delivered in connection herewith or therewith shall be incorrect or misleading when made or deemed made; or

          (e) Cross-Default. (i) Any Loan Party (A) fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of the Medium Term Note Indebtedness, the Senior Notes Indebtedness or any other Indebtedness or Guarantee (other than Indebtedness hereunder and Indebtedness under Swap Contracts) having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than the Threshold Amount, or (B) fails to observe or perform any other agreement or condition relating to the Medium Term Note Indebtedness, the Senior Notes

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Indebtedness or any other such Indebtedness or Guarantee or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the effect of which default or other event is to cause, or to permit the holder or holders of such Indebtedness or the beneficiary or beneficiaries of such Guarantee (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to be demanded or to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity, or such Guarantee to become payable or cash collateral in respect thereof to be demanded; or (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (A) any event of default under such Swap Contract as to which any Loan Party is the Defaulting Party (as defined in such Swap Contract) or (B) any Termination Event (as so defined) under such Swap Contract as to which the Borrower or any Subsidiary is an Affected Party (as so defined) and, in either event, the Swap Termination Value owed by the Borrower or such Subsidiary as a result thereof is greater than the Threshold Amount;

          (f) Existing Credit Agreement. The occurrence of any Event of Default under the Existing Credit Agreement (as such term is defined therein), regardless of whether the lenders party to the Existing Credit Agreement waive such Event of Default thereunder; or

          (g) Insolvency Proceedings, Etc. Any Loan Party institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of such Person and the appointment continues undischarged or unstayed for 60 calendar days; or any proceeding under any Debtor Relief Law relating to any such Person or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or unstayed for 60 calendar days, or an order for relief is entered in any such proceeding; or

          (h) Inability to Pay Debts; Attachment. (i) Any Loan Party becomes unable or admits in writing its inability or fails generally to pay its debts as they become due, or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the property of any such Person and is not released, vacated or fully bonded within 30 days after its issue or levy; or

          (i) Judgments. There is entered against any Loan Party (i) one or more final judgments or orders for the payment of money in an aggregate amount (as to all such judgments or orders) exceeding the Threshold Amount (to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage), or (ii) any one or more non-monetary final judgments that have, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and, in either case, (A) enforcement proceedings are commenced by any creditor upon such judgment or order, or (B) there is a period of 10 consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect; or

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          (j) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of the Borrower under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of the Threshold Amount, or (ii) the Borrower or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of the Threshold Amount; or

          (k) Invalidity of Loan Documents. Any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect; or any Loan Party contests in any manner the validity or enforceability of any Loan Document; or any Loan Party denies that it has any or further liability or obligation under any Loan Document, or purports to revoke, terminate or rescind any Loan Document; or

          (l) Change of Control. There occurs any Change of Control.

          8.02 Remedies Upon Event of Default. If any Event of Default occurs and is continuing, the Administrative Agent shall, at the request of, or may, with the consent of, the Required Lenders, take any or all of the following actions:

          (a) declare the commitment of each Lender to make Loans to be terminated, whereupon such commitments and obligation shall be terminated;

          (b) declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrower; and

          (c) exercise on behalf of itself and the Lenders all rights and remedies available to it and the Lenders under the Loan Documents;

provided, however, that upon the occurrence of an actual or deemed entry of an order for relief with respect to the Borrower under the Bankruptcy Code of the United States, the obligation of each Lender to make Loans shall automatically terminate, and the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable, in each case without further act of the Administrative Agent or any Lender.

          8.03 Application of Funds. After the exercise of remedies provided for in Section 8.02 (or after the Loans have automatically become immediately due and payable as set forth in the proviso to Section 8.02), any amounts received on account of the Obligations shall be applied by the Administrative Agent in the following order:

          First, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including fees, charges and disbursements of counsel to the Administrative Agent and amounts payable under Article III) payable to the Administrative Agent in its capacity as such;

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          Second, to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal and interest) payable to the Lenders (including fees, charges and disbursements of counsel to the respective Lenders (including fees and time charges for attorneys who may be employees of any Lender) and amounts payable under Article III), ratably among them in proportion to the respective amounts described in this clause Second payable to them;

          Third, to payment of that portion of the Obligations constituting accrued and unpaid interest on the Loans and other Obligations, ratably among the Lenders in proportion to the respective amounts described in this clause Third payable to them;

          Fourth, to payment of that portion of the Obligations constituting unpaid principal of the Loans, ratably among the Lenders in proportion to the respective amounts described in this clause Fourth held by them;

          Fifth, to payment of Obligations consisting of liabilities under any Related Credit Arrangement with any Lender or any Affiliate of a Lender party to a Related Credit Arrangement and as to which the Agent has received notice of the amounts owed thereunder from the applicable Lender or any Affiliate of a Lender party to a Related Credit Arrangement, such payments under this clause Fifth to be allocated on a pro rata basis according to such amounts owed as to which the Agent has received such notice; and

          Last, the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the Borrower or as otherwise required by Law.

ARTICLE IX.
ADMINISTRATIVE AGENT

          9.01 Appointment and Authority. Each of the Lenders hereby irrevocably appoints Bank of America to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this Article are solely for the benefit of the Administrative Agent and the Lenders, and the Borrower shall not have rights as a third party beneficiary of any of such provisions; provided, the foregoing provisions are not intended to limit the rights granted to the Borrower under this Article as a primary party of interest.

          9.02 Rights as a Lender. The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with

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the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.

          9.03 Exculpatory Provisions. The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents. Without limiting the generality of the foregoing, the Administrative Agent:

          (a) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;

          (b) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents), provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or applicable law; and

          (c) shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity.

          The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 10.01 and 8.02) or (ii) in the absence of its own gross negligence or willful misconduct. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given to the Administrative Agent by the Borrower or a Lender.

          The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

          9.04 Reliance by Administrative Agent. The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have

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been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan that by its terms must be fulfilled to the satisfaction of a Lender, the Administrative Agent may presume that such condition is satisfactory to such Lender unless the Administrative Agent shall have received notice to the contrary from such Lender prior to the making of such Loan. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

          9.05 Delegation of Duties. The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.

          9.06 Resignation of Administrative Agent. The Administrative Agent may at any time give notice of its resignation to the Lenders and the Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with the Borrower, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may on behalf of the Lenders, appoint a successor Administrative Agent meeting the qualifications set forth above; provided that if the Administrative Agent shall notify the Borrower and the Lenders that no qualifying Person has accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice and (1) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral security held by the Administrative Agent on behalf of the Lenders under any of the Loan Documents, the retiring Administrative Agent shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed) and (2) all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender directly, until such time as the Required Lenders appoint a successor Administrative Agent as provided for above in this Section. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or retired) Administrative Agent, and the retiring Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section). The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the retiring Administrative Agent’s resignation hereunder and under the other Loan Documents, the provisions of this Article and

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Section 10.04 shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Administrative Agent was acting as Administrative Agent.

          9.07 Non-Reliance on Administrative Agent and Other Lenders. Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.

          9.08 No Other Duties, Etc. Anything herein to the contrary notwithstanding, none of the Book Manager or the Arranger listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent or a Lender hereunder.

          9.09 Administrative Agent May File Proofs of Claim. In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party, 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 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 2.09 and 10.04) 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 2.09 and 10.04.

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          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 Obligations or the rights of any Lender to authorize the Administrative Agent to vote in respect of the claim of any Lender in any such proceeding.

          9.10 Guaranty Matters. The Lenders irrevocably authorize the Administrative Agent, at its option and in its discretion, to release any Guarantor from its obligations under the Guaranty if such Person ceases to be a Subsidiary as a result of a transaction permitted hereunder.

          Upon request by the Administrative Agent at any time, the Required Lenders will confirm in writing the Administrative Agent’s authority to release any Guarantor from its obligations under the Guaranty pursuant to this Section 9.10.

ARTICLE X.
MISCELLANEOUS

          10.01 Amendments, Etc. No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by the Borrower or any other Loan Party therefrom, shall be effective unless in writing signed by the Required Lenders and the Borrower or the applicable Loan Party, as the case may be, and acknowledged by the Administrative Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such amendment, waiver or consent shall:

          (a) waive any condition set forth in Section 4.01(a) without the written consent of each Lender;

          (b) extend or increase the Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 8.02) without the written consent of such Lender;

          (c) postpone any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, fees or other amounts due to the Lenders (or any of them) hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby;

          (d) reduce the principal of, or the rate of interest specified herein on, any Loan, or (subject to clause (iv) of the second proviso to this Section 10.01) any fees or other amounts payable hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby; provided, however, that only the consent of the Required Lenders shall be necessary (i) to amend the definition of “Default Rate” or to waive any obligation of the Borrower to pay interest at the Default Rate or (ii) to amend any financial covenant hereunder (or any defined term used therein) even if the effect of such amendment would be to reduce the rate of interest on any Loan or to reduce any fee payable hereunder;

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          (e) change Section 2.13 or Section 8.03 in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender;

          (f) change any provision of this Section or the definition of “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender; or

          (g) release all or substantially all of the value of the Guaranty without the written consent of each Lender;

and, provided further, that (i) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above, affect the rights or duties of the Administrative Agent under this Agreement or any other Loan Document; and (ii) the Fee Letter may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto. Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder, except that the Commitment of such Lender may not be increased or extended without the consent of such Lender.

          10.02 Notices; Effectiveness; Electronic Communication.

          (a) Notices Generally. Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in subsection (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier as follows, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:

          (i) if to the Borrower or the Administrative Agent, to the address, telecopier number, electronic mail address or telephone number specified for such Person on Schedule 10.02; and

          (ii) if to any other Lender, to the address, telecopier number, electronic mail address or telephone number specified in its Administrative Questionnaire.

          Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by telecopier shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient). Notices delivered through electronic communications to the extent provided in subsection (b) below, shall be effective as provided in such subsection (b).

          (b) Electronic Communications. Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender pursuant to Article II if such Lender has notified the Administrative Agent that it is incapable of receiving notices

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under such Article by electronic communication. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications.

          Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.

          (c) The Platform. THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event shall the Administrative Agent or any of its Related Parties (collectively, the “Agent Parties”) have any liability to the Borrower, any Lender or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of the Borrower’s or the Administrative Agent’s transmission of Borrower Materials through the Internet, except to the extent that such losses, claims, damages, liabilities or expenses are determined by a court of competent jurisdiction by a final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Agent Party; provided, however, that in no event shall any Agent Party have any liability to the Borrower, any Lender or any other Person for indirect, special, incidental, consequential or punitive damages (as opposed to direct or actual damages).

          (d) Change of Address, Etc. Each of the Borrower and the Administrative Agent may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the other parties hereto. Each other Lender may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the Borrower and the Administrative Agent. In addition, each Lender agrees to notify the Administrative Agent from time to time to ensure that the Administrative Agent has on record (i) an effective address, contact name, telephone number, telecopier number and electronic mail address to which notices and other communications may be sent and (ii) accurate wire instructions for such Lender.

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          (e) Reliance by Administrative Agent and Lenders. The Administrative Agent and the Lenders shall be entitled to rely and act upon any notices (including telephonic Loan Notices) purportedly given by or on behalf of the Borrower even if (i) 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, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. The Borrower shall indemnify the Administrative Agent, each Lender and the Related Parties of each of them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of the Borrower. All telephonic notices to and other telephonic communications with the Administrative Agent may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording.

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

          10.04 Expenses; Indemnity; Damage Waiver.

          (a) Costs and Expenses. The Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the Administrative Agent and its Affiliates (including the reasonable fees, charges and disbursements of external counsel for the Administrative Agent), in connection with the syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), and (ii) all reasonable out-of-pocket expenses incurred by the Administrative Agent or any Lender (including the reasonable fees, charges and disbursements of any external counsel for the Administrative Agent or any Lender) in connection with the enforcement or protection of its rights (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with the Loans made hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans.

          (b) Indemnification by the Borrower. The Borrower shall indemnify the Administrative Agent (and any sub-agent thereof) and each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the fees, charges and disbursements of any counsel for any Indemnitee), and shall indemnify and hold harmless each Indemnitee from all fees and time charges and disbursements for attorneys who may be employees of any Indemnitee, incurred by any Indemnitee or asserted against any Indemnitee by any third party or by the Borrower or any other Loan Party arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations

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hereunder or thereunder, the consummation of the transactions contemplated hereby or thereby or, in the case of the Administrative Agent (and any sub-agent thereof) and its Related Parties only, the administration of this Agreement and the other Loan Documents, (ii) any Loan or the use or proposed use of the proceeds therefrom, (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by the Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to the Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Borrower or any other Loan Party, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (y) result from a claim brought by the Borrower or any other Loan Party against an Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder or under any other Loan Document, if the Borrower or such Loan Party has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction.

          (c) Reimbursement by Lenders. To the extent that the Borrower for any reason fails to indefeasibly pay any amount required under subsection (a) or (b) of this Section to be paid by it to the Administrative Agent (or any sub-agent thereof) or any Related Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent) or such Related Party, as the case may be, such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount, provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent) in its capacity as such, or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent) in connection with such capacity. The obligations of the Lenders under this subsection (c) are subject to the provisions of Section 2.12(d).

          (d) Waiver of Consequential Damages, Etc. To the fullest extent permitted by applicable law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or the use of the proceeds thereof. No Indemnitee referred to in subsection (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by such Indemnitee through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby other than for direct or actual damages resulting from the gross negligence of willful misconduct of such Indemnitee as determined by a final and nonappealable judgment of a court of competent jurisdiction.

          (e) Payments. All amounts due under this Section shall be payable not later than ten Business Days after demand therefor.

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          (f) Survival. The agreements in this Section shall survive the resignation of the Administrative Agent, the replacement of any Lender, the termination of the Aggregate Commitments and the repayment, satisfaction or discharge of all the other Obligations.

          10.05 Payments Set Aside. To the extent that any payment by or on behalf of the Borrower is made to the Administrative Agent or any Lender, or the Administrative Agent or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (b) each Lender severally agrees to pay to the Administrative Agent upon demand its applicable share (without duplication) of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from time to time in effect. The obligations of the Lenders under clause (b) of the preceding sentence shall survive the payment in full of the Obligations and the termination of this Agreement.

          10.06 Successors and Assigns.

          (a) Successors and Assigns Generally. The provisions of this 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 the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an 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 Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

          (b) Assignments by Lenders. Any Lender may at any time assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided that any such assignment shall be subject to the following conditions:

          (i) Minimum Amounts.

          (A) 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

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case of an assignment to a Lender, an affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and

     (B) in any case not described in subsection (b)(i)(A) of this Section, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning Lender 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 unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed); provided, however, that concurrent assignments to members of an Assignee Group and concurrent assignments from members of an Assignee Group to a single assignee (or to an assignee and members of its Assignee Group) will be treated as a single assignment for purposes of determining whether such minimum amount has been met.

          (ii) Proportionate Amounts. Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Loans or the Commitment assigned.

          (iii) Required Consents. No consent shall be required for any assignment except to the extent required by subsection (b)(i)(B) of this Section and, in addition:

          (A) the consent of the Borrower (such consent not to be unreasonably withheld or delayed, it being deemed reasonable on the part of the Borrower to withhold consent to any assignment that would cause the Borrower to incur additional costs under Section 3.01(a)) shall be required unless (1) an Event of Default has occurred and is continuing at the time of such assignment or (2) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund; and

          (B) the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required if such assignment is to be a Person that is not a Lender, an Affiliate of such Lender or an Approved Fund with respect to such Lender.

     (iv) Assignment and Assumption. The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee in the amount, if any, required as set forth in Schedule 10.06; provided, however, that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment. The assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.

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          (v) No Assignment to Borrower. No such assignment shall be made to the Borrower or any of the Borrower’s Affiliates or Subsidiaries.

          (vi) No Assignment to Natural Persons. No such assignment shall be made to a natural person.

          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 assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this 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 Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 3.01, 3.04, and 10.04 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 Note to the assignee Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section.

          (c) Register. The Administrative Agent, acting solely for this purpose as an agent of the Borrower, shall maintain at the Administrative Agent’s Office 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 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) Participations. 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 “Participant”) in all or a portion of such Lender’s rights and/or obligations under this 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 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 Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this 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 Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such

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agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first proviso to Section 10.01 that affects such Participant. Subject to subsection (e) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 3.01 and 3.04 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 Participant also shall be entitled to the benefits of Section 10.08 as though it were a Lender, provided such Participant agrees to be subject to Section 2.13 as though it were a Lender.

          (e) Limitations upon Participant Rights. A Participant shall not be entitled to receive any greater payment under Section 3.01 or 3.04 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 3.01 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 3.01(e) as though it were a Lender.

          (f) Certain Pledges. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Note, 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) Electronic Execution of Assignments. The words “execution,” “signed,” “signature,” and words of like import in any Assignment and Assumption shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

          10.07 Treatment of Certain Information; Confidentiality. Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its and its Affiliates’ respective partners, directors, officers, employees, agents, advisors and representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or

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Participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations, (g) with the consent of the Borrower or (h) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to the Administrative Agent and any Lender or any of their respective Affiliates on a nonconfidential basis from a source other than the Borrower.

          For purposes of this Section, “Information” means all information received from the Borrower or any Subsidiary relating to the Borrower or any Subsidiary or any of their respective businesses, other than any such information that is available to the Administrative Agent or any Lender on a nonconfidential basis prior to disclosure by the Borrower or any Subsidiary, provided that, in the case of information received from the Borrower or any Subsidiary after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

          Each of the Administrative Agent and the Lenders acknowledges that (a) the Information may include material non-public information concerning the Borrower or a Subsidiary, as the case may be, (b) it has developed compliance procedures regarding the use of material non-public information and (c) it will handle such material non-public information in accordance with applicable Law, including Federal and state securities Laws.

          10.08 Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender and each of its respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by applicable law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender or any such Affiliate to or for the credit or the account of the Borrower against any and all of the obligations of the Borrower now or hereafter existing under this Agreement or any other Loan Document to such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement or any other Loan Document and although such obligations of the Borrower may be contingent or unmatured or are owed to a branch or office of such Lender different from the branch or office holding such deposit or obligated on such indebtedness. The rights of each Lender and its respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender or its respective Affiliates may have. Each Lender agrees to notify the Borrower and the Administrative Agent promptly after any such setoff and application, provided that the failure to give such notice shall not affect the validity of such setoff and application.

          10.09 Interest Rate Limitation. Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the “Maximum Rate”). If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrower. In determining whether the

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interest contracted for, charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.

          10.10 Counterparts; Integration; Effectiveness. This Agreement and the other Loan Documents may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and the other Loan Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement and the other Loan Documents shall become effective when they shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement and any other Loan Document by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement and the other Loan Documents.

          10.11 Survival of Representations and Warranties. All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by the Administrative Agent and each Lender, regardless of any investigation made by the Administrative Agent or any Lender or on their behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default at the time of any Credit Extension, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied.

          10.12 Severability. If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

          10.13 Replacement of Lenders. If any Lender requests compensation under Section 3.04, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01, if any Lender is a Defaulting Lender, or if any Lender is a Restricted Lender (as defined below) then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 10.06), all of its interests, rights and obligations under this Agreement and the related Loan Documents to an

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assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment), provided that:

          (a) the Borrower shall have paid to the Administrative Agent the assignment fee specified in Section 10.06(b);

          (b) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts);

          (c) in the case of any such assignment resulting from a claim for compensation under Section 3.04 or payments required to be made pursuant to Section 3.01, such assignment will result in a reduction in such compensation or payments thereafter;

          (d) in the case of any such assignment by a Restricted Lender, the assignee must have approved in writing the substance of the amendment, waiver or consent which caused the assignor to be a Restricted Lender; and

          (e) such assignment does not conflict with applicable Laws.

          A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

          For the purposes of this Section 10.13, a “Restricted Lender” means a Lender that fails to approve an amendment, waiver or consent requested by the Loan Parties pursuant to Section 10.01 that has received the written approval of not less than the Required Lenders but also requires the approval of such Lender.

          10.14 Governing Law; Jurisdiction; Etc.

          (a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NORTH CAROLINA.

          (b) SUBMISSION TO JURISDICTION. EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NORTH CAROLINA SITTING IN MECKLENBURG COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE WESTERN DISTRICT OF NORTH CAROLINA, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NORTH

60

CAROLINA STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE 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 AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT OR ANY LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

          (c) WAIVER OF VENUE. EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

          (d) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

          10.15 Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

          10.16 No Advisory or Fiduciary Responsibility. In connection with all aspects of each transaction contemplated hereby, the Borrower acknowledges and agrees that: (i) the credit facility provided for hereunder and any related arranging or other services in connection therewith (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document) are an arm’s-length commercial transaction between the Borrower

61

and its Affiliates, on the one hand, and the Administrative Agent and the Arranger, on the other hand, the Borrower is capable of evaluating and understanding and understands and accepts the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents (including any amendment, waiver or other modification thereof or thereof); (ii) in connection with the process leading to such transaction, the Administrative Agent and the Arranger each is and has been acting solely as a principal and is not the financial advisor, agent or fiduciary, for the Borrower or any of its Affiliates, stockholders, creditors or employees or any other Person; (iii) neither the Administrative Agent nor the Arranger has assumed or will assume an advisory, agency or fiduciary responsibility in favor of the Borrower with respect to any of the transactions contemplated hereby or the process leading thereto, including with respect to any amendment, waiver or other modification hereof or of any other Loan Document (irrespective of whether the Administrative Agent or the Arranger has advised or is currently advising the Borrower or any of its Affiliates on other matters) and neither the Administrative Agent nor Arranger has any obligation to the Borrower or any of its Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; (iv) the Administrative Agent and the Arranger and their respective Affiliates may be engaged in a board range of transactions that involve interests that differ from those of the Borrower and its Affiliates, and neither the Administrative Agent nor the Arranger has any obligation to disclose any of such interests by virtue of any advisory, agency or fiduciary relationship; and (v) the Administrative Agent and the Arranger have not provided and will not provide any legal, accounting, regulatory or tax advice with respect to any of the transactions contemplated hereby (including any amendment, waiver or other modification hereof or of any other Loan Document) and the Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate. The Borrower hereby waives and releases, to the fullest extent permitted by law, any claims that it may have against the Administrative Agent and the Arranger with respect to any breach or alleged breach of agency or fiduciary duty.

          10.17 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.

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          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.

PIEDMONT NATURAL GAS COMPANY, INC.
By: /s/ ROBERT O. PRITCHARD
Name:	Robert O. Pritchard
Title:	Treasurer
BANK OF AMERICA, N.A., as Administrative Agent
By: /s/ KRISTINE THENNES
Name:	Kristine Thennes
Title:	Vice President
BANK OF AMERICA, N.A., as a Lender
By: /s/ SCOTT K. MITCHELL
Name:	Scott K. Mitchell
Title:	Senior Vice President
REGIONS BANK
By: /s/ ANTHONY LETRENT
Name:	Anthony LeTrent
Title:	Senior Vice President
BRANCH BANKING AND TRUST COMPANY
By: /s/ H. WRIGHT UZZELL, JR.
Name:	H. Wright Uzzell, Jr.
Title:	Senior Vice President
U.S. BANK NATIONAL ASSOCIATION
By: /s/ FELICIA LA FORGIA
Name:	Felicia La Forgia
Title:	Senior Vice President
CAROLINA FIRST BANK
By: /s/ C. KEMP SIMMONS
Name:	C. Kemp Simmons

Piedmont Natural Gas Company, Inc.
Credit Agreement
Signature Page

Title:	Senior Vice President
FIFTH THIRD BANK, N.A.
By: /s/ DAVID C. HOUSTON
Name:	David C. Houston
Title:	Vice President

Piedmont Natural Gas Company, Inc.
Credit Agreement
Signature Page

EX-10.4

Exhibit 10.4

December 1, 2008

Piedmont Natural Gas Company, Inc.
4720 Piedmont Row Drive
Charlotte, North Carolina 28210

Attention: Robert O. Pritchard, Treasurer

          Re: Amended and Restated Revolving Credit Facility

Ladies and Gentlemen:

     This Amended and Restated Revolving Credit Facility (this “Agreement”) is entered into between BANK OF AMERICA, N.A. (the “Lender”) and PIEDMONT NATURAL GAS COMPANY, INC., a North Carolina corporation (the “Borrower”). Terms not defined herein have the meanings assigned to them in Exhibit A hereto.

     The Borrower and the Lender have entered into that certain Revolving Credit Facility dated as of October 27, 2008 (as in effect on the date hereof, the “Existing Credit Facility”).

     The Borrower and the Lender desire to amend and restate the Existing Credit Facility to, among other things, extend the maturity date of the revolving credit facility and make certain other changes as set forth herein, all subject to the terms and conditions set forth in this Agreement.

1A. Amendment and Restatement. In order to facilitate the amendment and restatement of the Existing Credit Facility and otherwise to effectuate the desires of the Borrower and the Lender:

(a)

The Borrower and the Lender hereby agree that, (i) this Agreement constitutes an amendment and restatement of the Existing Credit Facility, and (ii) on the Closing Date, the terms and provisions of the Existing Credit Facility shall be and hereby are amended and restated in their entirety by the terms, conditions and provisions of this Agreement, and the terms and provisions of the Existing Credit Facility, except as otherwise expressly provided herein, shall be superseded by this Agreement.

(b)

Notwithstanding this amendment and restatement of the Existing Credit Facility and any amendment and restatement of any related “Loan Documents” (as such term is defined in the Existing Credit Facility and referred to herein as the “Existing Loan Documents”), (i) all obligations outstanding under the Existing Credit Facility and other Existing Loan Documents (the “Existing Obligations”) shall, except to the extent repaid on the Closing Date, continue as obligations hereunder, and (ii) neither the execution and delivery of this Agreement or any other Loan Documents nor the consummation of any other transactions contemplated hereunder or thereunder is intended to constitute a novation of the Existing Credit Facility or of any of the other Existing Loan Documents or any obligations thereunder. Upon the effectiveness of this Agreement, all Loans owing by the Borrower

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December 1, 2008
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and outstanding under the Existing Credit Facility shall be repaid with an advance of Loans hereunder. Together with such repayment, the Borrower shall pay (on the Closing Date) all accrued interest and fees with respect to the Existing Obligations.

1. The Facility.

(a)

The Commitment. Subject to the terms and conditions set forth herein, the Lender agrees to make available to the Borrower until the Maturity Date a revolving credit facility providing for loans (“Loans”) in an aggregate principal amount not exceeding at any time $50,000,000 (the “Commitment”). Within the foregoing limit, the Borrower may borrow, repay and reborrow Loans until the Maturity Date.

(b)

Borrowings, Conversions, Continuations. The Borrower may request that Loans be (i) made as or converted to Base Rate Loans by irrevocable notice to be received by the Lender not later than 11:00 a.m. on the Business Day of the borrowing or conversion, or (ii) made as or converted to LIBOR Floating Rate Loans by irrevocable notice to be received by the Lender not later than 11:00 a.m. on the Business Day of the borrowing or conversion. Notices pursuant to this Paragraph 1(b) may be given by telephone if promptly confirmed in writing.

     Each Loan shall be in a minimum principal amount of $500,000 or a whole multiple of $100,000.

(c) Interest. At the option of the Borrower, Loans shall bear interest at a rate per annum equal to (i) the LIBOR Daily Floating Rate plus the Applicable Rate, or (ii) the Base Rate plus the Applicable Rate. Interest on Base Rate Loans when the Base Rate is determined by the Lender’s “prime rate” shall be calculated on the basis of a year of 365 or 366 days and actual days elapsed. All other interest hereunder shall be calculated on the basis of a year of 360 days and actual days elapsed.

The Borrower promises to pay interest for all Loans on (i) the first Business Day following the end of each month; and (ii) the Maturity Date. If the time for any payment is extended by operation of law or otherwise, interest shall continue to accrue for such extended period.

(1) After the date any principal amount of any Loan is due and payable (whether on the Maturity Date, upon acceleration or otherwise), or after any other monetary obligation hereunder shall have become due and payable (in each case without regard to any applicable grace periods), and (2) while any Event of Default exists, the Borrower shall pay, but only to the extent permitted by law, interest (after as well as before judgment) on such amounts at a rate per annum equal to the Base Rate plus 2.000%. Accrued and unpaid interest on past due amounts shall be payable on demand.

In no case shall interest hereunder exceed the amount that the Lender may charge or collect under applicable law.

(d) Evidence of Loans. The Loans and all payments thereon shall be evidenced by the Lender’s loan accounts and records; provided, however, that upon the request of the Lender, the Loans may be evidenced by a promissory note in the form of Exhibit B hereto in addition to such loan accounts and records. Such loan accounts, records and

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December 1, 2008
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promissory note shall be conclusive absent manifest error of the amount of the Loans and payments thereon. Any failure to record any Loan or payment thereon or any error in doing so shall not limit or otherwise affect the obligation of the Borrower to pay any amount owing with respect to the Loans.

(e)	Unused Fee. The Borrower promises to pay a fee equal to 0.250% times the actual daily amount by which the Commitment exceeds the amount of Loans outstanding, payable in arrears on the last Business Day of each calendar quarter and on the Maturity Date, and calculated on the basis of a year of 360 days and actual days elapsed.
(f)	Repayment. The Borrower promises to pay all Loans then outstanding on the Maturity Date.

The Borrower shall make all payments required hereunder not later than 2:00 p.m. on the date of payment in same day funds in Dollars at the office of the Lender as set forth in Schedule 10.02 to the Incorporated Agreement or such other address as the Lender may from time to time designate in writing.

All payments by the Borrower to the Lender hereunder shall be made to the Lender in full without set-off or counterclaim and free and clear of and exempt from, and without deduction or withholding for or on account of, any present or future taxes, levies, imposts, duties or charges of whatsoever nature imposed by any government or any political subdivision or taxing authority thereof. The Borrower shall reimburse the Lender for any taxes imposed on or withheld from such payments (other than taxes imposed on the Lender’s income, and franchise taxes imposed on the Lender, by the jurisdiction under the laws of which the Lender is organized or in which its principal office is located or any political subdivision thereof).

(g)

Prepayments. The Borrower may, upon same-day notice, prepay Loans on any Business Day. Prepayments of Loans must be in a principal amount of $500,000 or a whole multiple of $100,000, or, if less, the entire principal amount thereof then outstanding.

(h)

Commitment Termination or Reductions. The Borrower may, upon same-day notice, terminate the Commitment or from time to time permanently reduce the Commitment, provided, that (i) any such notice shall be received by the Lender no later than 11:00 a.m. on the date of such termination or reduction; (ii) any such partial reduction shall not be less than $10,000,000 or a whole multiple of $1,000,000 in excess thereof; and (iii) the Borrower shall not terminate or reduce the Commitment if, after giving effect thereto and any concurrent prepayments hereunder, the outstanding amount of Loans would exceed the Commitment. All fees accrued until the effective date of any termination of the Commitment shall be paid on the effective date of such termination.

2. Upfront Fee. Subject to the final sentence of this Paragraph 2, the Borrower shall pay to the Lender, for its own account, a fee (each an “Upfront Fee”) in the amounts and on the dates set forth below. Each such Upfront Fee shall be for the Lender’s Commitment under the revolving credit facility and shall be payable in full upon the date opposite such fee:

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December 1, 2008
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Payment Date of Upfront Fee	Upfront Fee
December 4, 2008	$15,000
December 16, 2008	$25,000
December 26, 2008	$35,000

To the extent this Agreement is terminated prior to any of the above referenced “Payment Date of Upfront Fee,” then the Borrower shall not owe and shall have no obligation to pay any Upfront Fee on any such date or thereafter.

3. Conditions Precedent to Loans.

(a) Conditions Precedent to Initial Loan. As a condition precedent to the effectiveness of this Agreement and the obligation of the Lender to make any Loan on the Closing Date, the Lender must receive the following from the Borrower in form satisfactory to the Lender:

(i)	the enclosed duplicate of this Agreement duly executed and delivered on behalf of the Borrower;
(ii)	a certified borrowing resolution or other evidence of the Borrower’s authority to borrow;
(iii)	a certificate of incumbency;
(iv)	if requested by the Lender, a promissory note as contemplated in Paragraph 1(d) above;
(v)	such other documents and certificates (including legal opinions) as the Lender may reasonably request; and
(vi)	any fees and expenses required to be paid on or before the Closing Date shall have been paid.

(b) Conditions to Each Borrowing. As a condition precedent to each borrowing (including the initial borrowing) of any Loan:

(i)	The Borrower must furnish the Lender with, as appropriate, a notice of borrowing;
(ii)	each representation and warranty set forth in Paragraph 4 below shall be true and correct in all material respects as if made on the date of such borrowing; and
(iii)	no Default shall have occurred and be continuing on the date of such borrowing.

Each notice of borrowing shall be deemed a representation and warranty by the Borrower that the conditions referred to in clauses (ii) and (iii) above have been met.

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4.

Representations and Warranties. The Borrower represents and warrants (which representations and warranties shall survive the Closing Date and each borrowing hereunder) that the representations and warranties contained in Article V (Representations and Warranties) of the Incorporated Agreement, including for purposes of this Paragraph 4 each Additional Incorporated Agreement Representation, are true and correct as if made on such date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct as of such earlier date. The representations and warranties of the Borrower referred to in the preceding sentence (including all exhibits, schedules and defined terms referred to therein) are hereby (or, in the case of each Additional Incorporated Agreement Representation, shall, upon its effectiveness, be) incorporated herein by reference as if set forth in full herein.

All such representations and warranties so incorporated herein by reference shall survive any termination, cancellation, discharge or replacement of the Incorporated Agreement.

5.	Covenants. So long as principal of and interest on any Loan or any other amount payable hereunder or under any other Loan Document remains unpaid or unsatisfied and the Commitment has not been terminated, the Borrower shall comply with all the covenants and agreements applicable to it contained in Article VI (Affirmative Covenants) and Sections 7.03, 7.04, 7.05, 7.06 and 7.07 (Negative Covenants) of the Incorporated Agreement, including for purposes of this Paragraph 5 each Additional Incorporated Agreement Covenant. In addition to the foregoing (but not in duplication of any other provisions of this Agreement), each of the Borrower and the Lender shall comply with the respective obligations applicable to each such party as such are set forth in Article III (Taxes, Yield Protection and Illegality) of the Incorporated Agreement. The covenants and agreements of the Borrower referred to in the preceding sentence (including all exhibits, schedules and defined terms referred to therein) are hereby (or, in the case of each Additional Incorporated Agreement Covenant, shall, upon its effectiveness, be) incorporated herein by reference as if set forth in full herein.
	All such covenants and agreements so incorporated herein by reference shall survive any termination, cancellation, discharge or replacement of the Incorporated Agreement.
	Any financial statements, certificates or other documents received by the Lender under the Incorporated Agreement shall be deemed delivered hereunder.

6. Events of Default. The following are “Events of Default:”

(a)	The Borrower fails to pay any principal of any Loan as and on the date when due; or
(b)	The Borrower fails to pay any interest on any Loan, or any unused fee due hereunder, or any portion thereof, within five days after the date when due; or the Borrower fails to pay any other fee or amount payable to the Lender under any Loan Document, or any portion thereof, within five days after the date due; or
(c)	The Borrower fails to comply with any covenant or agreement incorporated herein by reference pursuant to Paragraph 5 above, subject to any applicable grace period and/or notice requirement set forth in Section 8.01 of the Incorporated Agreement (it being understood and agreed that any such notice requirement shall be met by the Lender’s giving the applicable notice to the Borrower hereunder); or

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(d)

Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of the Borrower or any other Loan Party herein, in any other Loan Document, or in any document delivered in connection herewith or therewith shall be incorrect or misleading when made or deemed made; or

(e)

Any “Event of Default” specified in Section 8.01 of the Incorporated Agreement (including for purposes of this Paragraph 6(e) each Additional Incorporated Agreement Event of Default) occurs and is continuing, without giving effect to any waiver thereof pursuant to the Incorporated Agreement, it being agreed that each such “Event of Default” shall survive any termination, cancellation, discharge or replacement of the Incorporated Agreement.

Upon the occurrence of an Event of Default, the Lender may declare the Commitment to be terminated, whereupon the Commitment shall be terminated, and/or declare all sums outstanding hereunder and under the other Loan Documents, including all interest thereon, to be immediately due and payable, whereupon the same shall become and be immediately due and payable, without notice of default, presentment or demand for payment, protest or notice of nonpayment or dishonor, or other notices or demands of any kind or character, all of which are hereby expressly waived; provided, however, that upon the occurrence of an actual or deemed entry of an order for relief with respect to the Borrower under the Bankruptcy Code of the United States of America, the Commitment shall automatically terminate, and all sums outstanding hereunder and under each other Loan Document, including all interest thereon, shall become and be immediately due and payable, without notice of default, presentment or demand for payment, protest or notice of nonpayment or dishonor, or other notices or demands of any kind or character, all of which are hereby expressly waived.

7. Miscellaneous.

(a)	The provisions of Section 1.05 of the Incorporated Agreement are hereby incorporated by reference, and each party hereto shall fully comply therewith, as if set forth in full herein.
(b)	All references herein and in the other Loan Documents to any time of day shall mean the local (standard or daylight, as in effect) time of Eastern time.
(c)	If at any time the Lender, in its sole discretion, determines that (i) adequate and reasonable means do not exist for determining the LIBOR Daily Floating Rate, or (ii) the LIBOR Daily Floating Rate does not accurately reflect the funding cost to the Lender of making such Loans, the Lender’s obligation to make or maintain LIBOR Floating Rate Loans shall cease for the period during which such circumstance exists.
(d)	No amendment or waiver of any provision of this Agreement (including any provision of the Incorporated Agreement incorporated herein by reference) or of any other Loan Document and no consent by the Lender to any departure therefrom by the Borrower shall be effective unless such amendment, waiver or consent shall be in writing and signed by a duly authorized officer of the Lender and a duly authorized officer of the Borrower, and any such amendment, waiver or consent shall then be effective only for the period and on the conditions and for the specific instance specified in such writing. No failure or delay by the Lender in exercising any right, power or privilege hereunder

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shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other rights, power or privilege.

(e) Except as otherwise expressly provided herein, notices and other communications to each party provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed or sent by telecopy to the address provided from time to time by such party. Any such notice or other communication sent by overnight courier service, mail or telecopy shall be effective on the earlier of actual receipt and (i) if sent by overnight courier service, the scheduled delivery date, (ii) if sent by mail, the fourth Business Day after deposit in the U.S. mail first class postage prepaid, and (iii) if sent by telecopy, when transmission in legible form is complete. All notices and other communications sent by the other means listed in the first sentence of this paragraph shall be effective upon receipt. Notwithstanding anything to the contrary contained herein, all notices (by whatever means) to the Lender pursuant to Paragraph 1(b) hereof shall be effective only upon receipt. Any notice or other communication permitted to be given, made or confirmed by telephone hereunder shall be given, made or confirmed by means of a telephone call to the intended recipient at the number specified in writing by such Person for such purpose, it being understood and agreed that a voicemail message shall in no event be effective as a notice, communication or confirmation hereunder.

The Lender shall be entitled to rely and act upon any notices (including telephonic notices of borrowings, conversions and continuations) purportedly given by or on behalf of the Borrower even if (i) 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, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. The Borrower shall indemnify each Indemnitee from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of the Borrower. All telephonic notices to and other communications with the Lender may be recorded by the Lender, and the Borrower hereby consents to such recording.

(f)

This Agreement shall inure to the benefit of the parties hereto and their respective successors and assigns, except that the Borrower may not assign its rights and obligations hereunder. The Lender may at any time (i) assign all or any part of its rights and obligations hereunder to any other Person with the consent of the Borrower, such consent not to be unreasonably withheld, provided that no such consent shall be required if the assignment is to an affiliate of the Lender or if a Default exists, and (ii) grant to any other Person participating interests in all or part of its rights and obligations hereunder without notice to the Borrower. The Borrower agrees to execute any documents reasonably requested by the Lender in connection with any such assignment. All information provided by or on behalf of the Borrower to the Lender or its affiliates may be furnished by the Lender to its affiliates and to any actual or proposed assignee or participant.

(g)

The Borrower shall pay the Lender, on demand, all reasonable out-of-pocket expenses (including the fees, charges and disbursements of any counsel for the Lender) incurred by the Lender in connection with the enforcement of this Agreement or any instruments or agreements executed in connection herewith.

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(h)	The provisions of Sections 10.04(b) (Indemnification), 10.07 (Treatment of Certain Information; Confidentiality), 10.12 (Severability), 10.14 (Governing Law; Jurisdiction; Etc.), 10.15 (Waiver of Jury Trial) and 10.17 (USA PATRIOT Act) of the Incorporated Agreement are hereby incorporated by reference, and each party hereto shall fully comply therewith, as if set forth in full herein.
(i)	This Agreement may be executed in one or more counterparts, and each counterpart, when so executed, shall be deemed an original but all such counterparts shall constitute but one and the same instrument.
(j)	THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

[Remainder of page intentionally left blank.]

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     Please indicate your acceptance of the Commitment on the foregoing terms and conditions by returning an executed copy of this Agreement to the undersigned not later than December 1, 2008.

BANK OF AMERICA, N.A.
By:	/s/ Scott K. Mitchell
	Name: Scott K. Mitchell
	Title: Senior Vice President

Accepted and Agreed to as of the date first written above:

PIEDMONT NATURAL GAS COMPANY, INC.

By:	/s/ Robert O. Pritchard
	Name:	Robert O. Pritchard
	Title:	Vice President, Treasurer and Chief Risk Officer

EXHIBIT A

DEFINITIONS

Additional Incorporated
Agreement Covenant:	A covenant or agreement that is added to Article VI (Affirmative Covenants) or VII (Negative Covenants) of the Incorporated Agreement after the date hereof; provided, however, to the extent the incorporation of such additional covenant or agreement would cause a default under Section 7.05 of the Incorporated Agreement, such additional covenant or agreement shall not be incorporated hereunder.
Additional Incorporated
Agreement Event of Default:	An “Event of Default” that is added to Section 8.01 of the Incorporated Agreement after the date hereof.
Additional Incorporated
Agreement Representation:	A representation or warranty that is added to Article V (Representations of the Borrower) of the Incorporated Agreement after the date hereof.
Affiliate:	Has the meaning set forth in the Incorporated Agreement.
Agreement:	This letter agreement, as amended, restated, extended, supplemented or otherwise modified in writing from time to time.
Alternative Base Rate:	For all Loans, on any day any such Loan is outstanding, the fluctuating rate of interest (rounded upwards, as necessary, to the nearest 1/100 of 1%) equal to the British Bankers Association LIBOR Rate (“BBA LIBOR”), as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as designated by the Lender from time to time) at approximately 11:00 a.m., London time, on each day any such Loan is outstanding, for Dollar deposits with a term of one month, as adjusted from time to time in the Lender’s sole discretion for changes in deposit insurance requirements and other regulatory costs. If such rate is not available at such time for any reason, then the “Alternative Base Rate” shall be the rate per annum determined by the Lender to be the rate at which deposits in Dollars for delivery in immediately available funds in the approximate amount of the Dollar denominated Loans outstanding with a term equivalent to one month would be offered by the Lender’s London Branch to major banks in the London interbank eurodollar market at their request at approximately 11:00 a.m. (London time), on each day any such Loan is outstanding.

A-1

Applicable Rate: The following percentages per annum, based upon the Debt Rating as set forth below:

Applicable Rate

Pricing	Debt Ratings	LIBOR Floating
Level	S&P/Moody’s	Rate and Base Rate
1	³ AA-/Aa3	0.75%
2	A+/A1	1.00%
3	A/A2	1.25%
4	A-/A3	1.50%
5	£ BBB+/Baa1	1.75%

	“Debt Rating” means, as of any date of determination, the rating as determined by either S&P or Moody’s (collectively, the “Debt Ratings”) of the Borrower’s non-credit-enhanced, senior unsecured long-term debt; provided that (a) if the respective Debt Ratings issued by the foregoing rating agencies differ by one level, then the Pricing Level for the higher of such Debt Ratings shall apply (with the Debt Rating for Pricing Level 1 being the highest and the Debt Rating for Pricing Level 5 being the lowest); (b) if there is a split in Debt Ratings of more than one level, then the Pricing Level that is one level lower than the Pricing Level of the higher Debt Rating shall apply; (c) if the Borrower has only one Debt Rating, the Pricing Level of such Debt Rating shall apply; and (d) if the Borrower does not have any Debt Rating, Pricing Level 5 shall apply.
	Initially, the Applicable Rate shall be determined based upon the Debt Rating specified in the Compliance Certificate most recently delivered pursuant to Section 6.02(a) of the Incorporated Agreement. Thereafter, each change in the Applicable Rate resulting from a publicly announced change in the Debt Rating shall be effective during the period commencing on the date of the public announcement thereof and ending on the date immediately preceding the effective date of the next such change.
	For the purposes of this definition, capitalized terms not otherwise defined herein shall have the meanings as specified therefor in the Incorporated Agreement.
Base Rate:	For any day, a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate plus 1/2 of 1%, (b) the Alternative Base Rate plus 1.00%, or (c) the rate of interest in effect for such day as publicly announced from time to time by the Lender as its “prime rate.” The Lender’s “prime rate” is a rate set by the Lender based upon various factors including the Lender’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 “prime rate” announced by the Lender shall take

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	effect at the opening of business on the day specified in the public announcement of such change.
Base Rate Loan:	A Loan bearing interest based on the Base Rate.
Borrower:	Has the meaning set forth in the preamble to the Agreement.
Business Day:	Any day other than a Saturday, Sunday, or other day on which commercial banks are authorized to close under the laws of, or are in fact closed in, the State of North Carolina or the state where the Lender’s lending office is located.
Closing Date:	The first date all of the conditions precedent in Paragraph 3(a) are satisfied or waived by the Lender.
Commitment:	Has the meaning set forth in the Paragraph 1(a) of the Agreement.
Default:	Any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.
Dollar or $:	The lawful currency of the United States of America.
Eurodollar Reserve Percentage:	For any day, the reserve percentage (expressed as a decimal, carried out to five decimal places) in effect on such day applicable to the Lender under regulations issued from time to time by the Board of Governors of the Federal Reserve System for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to Eurocurrency funding (currently referred to as “Eurocurrency liabilities”).
Event of Default:	Has the meaning set forth in Paragraph 6.
Federal Funds Rate:	For any day, the rate per annum 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 (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to the Lender on such day on such transactions as determined by the Lender.
Incorporated Agreement:	The Credit Agreement, dated as of April 25, 2006, among the Borrower, Bank of America, as Administrative Agent, Swing Line Lender and L/C Issuer, and the Lenders party thereto (as from time to time amended, modified, supplemented, restated, or amended and restated in accordance with the terms thereof so long as Bank of America, N.A. as lender under

A-3

such Credit Agreement has approved such amendment, modification, supplement, restatement or amendment and restatement). A copy of the Incorporated Agreement is attached as Exhibit C. For purposes of this Agreement the Borrower specifically covenants and agrees that each term or provision of the Incorporated Agreement incorporated by reference into this Agreement is effective and binding upon the Borrower as if set forth herein. All such incorporated terms and provisions are incorporated herein with appropriate substitutions, including the following:

(i)	all references to “the Administrative Agent”, “the Arranger”, “the L/C Issuer”, “the Lenders”, “each Lender”, “any Lender”, and “the Required Lenders” shall be deemed to be references to the Lender;
(ii)	all references to “this Agreement” shall be deemed to be references to this Agreement and for purposes of Sections 7.04, 7.05 and 7.07 of the Incorporated Agreement, the Incorporated Agreement;
(iii)	all references to “Base Rate Loan” shall be deemed to be references to a Base Rate Loan;
(iv)	all references to “Borrower” shall be deemed to be references to the Borrower;
(v)	all references to “Commitment” shall be deemed references to the Commitment;
(vi)	all references to “Default” and "Event of Default” shall be deemed to be references to a Default and an Event of Default, respectively;
(vii)	all references to “any Loan Document,” “any other Loan Document” or the like shall be deemed to be references to the Loan Documents and for purposes of Sections 7.04, 7.05 and 7.07 of the Incorporated Agreement, the Loan Documents (as such term is defined in the Incorporated Agreement);
(viii)	all references to “Loans” shall be deemed to be references to the Loans;
(ix)	all references to “Maturity Date” shall be deemed to be references to the Maturity Date;
(x)	all references to “Obligations” shall be deemed to be references to obligations under this Agreement; and
(xi)	references to any schedules shall be deemed to be references to the schedules attached hereto as Exhibit D.

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LIBOR Daily Floating Rate: A rate per annum determined by the Lender pursuant to the following formula:

LIBOR Daily Floating Rate	=	LIBOR Daily Floating Base Rate
		1.00 – Eurodollar Reserve Percentage

	Where,
	“LIBOR Daily Floating Base Rate” means, for all LIBOR Floating Rate Loans, on each day any such Loan is outstanding, the fluctuating rate of interest (rounded upwards, as necessary, to the nearest 1/100 of 1%) equal to the British Bankers Association LIBOR (“BBA LIBOR”), as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as designated by the Lender from time to time) at approximately 11:00 a.m., London time, on each day any such Loan is outstanding, for Dollar deposits with a term equivalent to a one month Interest Period. If such rate is not available at such time for any reason, then the “LIBOR Daily Floating Base Rate” shall be the rate per annum determined by the Lender to be the rate at which deposits in Dollars for delivery in same day funds in the approximate amount of the LIBOR Floating Rate Loan being made, continued or converted and with a term equivalent to a one-month Interest Period would be offered by the Lender’s London Branch to major banks in the London interbank eurodollar market at their request at approximately 11:00 a.m. (London time), on each day any such Loan is outstanding.
LIBOR Floating Rate Loan:	A Loan bearing interest based on the LIBOR Daily Floating Rate.
Loan Documents:	This Agreement, and the promissory note and fee letter, if any, delivered in connection with this Agreement.
Maturity Date:	December 31, 2008, or such earlier date on which the Commitment may terminate in accordance with the terms hereof.
Person:	Has the meaning set forth in the Incorporated Agreement.
Subsidiary:	Has the meaning set forth in the Incorporated Agreement.

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EXHIBIT B

FORM OF AMENDED AND RESTATED PROMISSORY NOTE

December 1, 2008

     FOR VALUE RECEIVED, the undersigned, PIEDMONT NATURAL GAS COMPANY, INC., a North Carolina corporation (the “Borrower”), hereby promises to pay to the order of BANK OF AMERICA, N.A. (the “Lender”) the principal amount of all Loans made by the Lender to the Borrower pursuant to the amended and restated letter agreement, dated as of even date herewith (such letter agreement, as it may be amended, restated, extended, supplemented or otherwise modified from time to time, being hereinafter called the “Agreement”), between the Borrower and the Lender, on the Maturity Date. The Borrower further promises to pay interest on the unpaid principal amount of the Loans evidenced hereby from time to time at the rates, on the dates, and otherwise as provided in the Agreement.

     This promissory note constitutes an amendment and restatement in its entirety of the promissory note dated October 27, 2008, payable by the Borrower to the Lender (the “Original Note”) and is executed and delivered by the Borrower, and received by the Lender, in substitution for, the Original Note and is not intended to constitute a novation of the Original Note.

     The loan account records maintained by the Lender shall at all times be conclusive evidence, absent manifest error, as to the amount of the Loans and payments thereon; provided, however, that any failure to record any Loan or payment thereon or any error in doing so shall not limit or otherwise affect the obligation of the Borrower to pay any amount owing with respect to the Loans.

     This promissory note is the promissory note referred to in, and is entitled to the benefits of, the Agreement, which Agreement, among other things, contains provisions for acceleration of the maturity of the Loans evidenced hereby upon the happening of certain stated events and also for prepayments on account of principal of the Loans prior to the maturity thereof upon the terms and conditions therein specified.

     Unless otherwise defined herein, terms defined in the Agreement are used herein with their defined meanings therein. This promissory note shall be governed by, and construed in accordance with, the laws of the State of North Carolina.

PIEDMONT NATURAL GAS COMPANY, INC.

By

Name

Title

B-1

EX-10.5

Exhibit 10.5

December 1, 2008

Piedmont Natural Gas Company, Inc.
4720 Piedmont Row Drive
Charlotte, North Carolina 28210

Attention: Robert O. Pritchard, Treasurer

          Re:       Amended and Restated Revolving Credit Facility

Ladies and Gentlemen:

     This Amended and Restated Revolving Credit Facility (this “Agreement”) is entered into between BRANCH BANKING AND TRUST COMPANY (the “Lender”) and PIEDMONT NATURAL GAS COMPANY, INC., a North Carolina corporation (the “Borrower”). Terms not defined herein have the meanings assigned to them in Exhibit A hereto.

     The Borrower and the Lender have entered into that certain Revolving Credit Facility dated as of October 29, 2008 (as in effect on the date hereof, the “Existing Credit Facility”).

     The Borrower and the Lender desire to amend and restate the Existing Credit Facility to, among other things, extend the maturity date of the revolving credit facility and make certain other changes as set forth herein, all subject to the terms and conditions set forth in this Agreement.

1A. Amendment and Restatement. In order to facilitate the amendment and restatement of the Existing Credit Facility and otherwise to effectuate the desires of the Borrower and the Lender:

(a)

The Borrower and the Lender hereby agree that, (i) this Agreement constitutes an amendment and restatement of the Existing Credit Facility, and (ii) on the Closing Date, the terms and provisions of the Existing Credit Facility shall be and hereby are amended and restated in their entirety by the terms, conditions and provisions of this Agreement, and the terms and provisions of the Existing Credit Facility, except as otherwise expressly provided herein, shall be superseded by this Agreement.

(b)

Notwithstanding this amendment and restatement of the Existing Credit Facility and any amendment and restatement of any related “Loan Documents” (as such term is defined in the Existing Credit Facility and referred to herein as the “Existing Loan Documents”), (i) all obligations outstanding under the Existing Credit Facility and other Existing Loan Documents (the “Existing Obligations”) shall, except to the extent repaid on the Closing Date, continue as obligations hereunder, and (ii) neither the execution and delivery of this Agreement or any other Loan Documents nor the consummation of any other transactions contemplated hereunder or thereunder is intended to constitute a novation of the Existing

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Credit Facility or of any of the other Existing Loan Documents or any obligations thereunder. Upon the effectiveness of this Agreement, all Loans owing by the Borrower and outstanding under the Existing Credit Facility shall be repaid with an advance of Loans hereunder. Together with such repayment, the Borrower shall pay (on the Closing Date) all accrued interest and fees with respect to the Existing Obligations.

1. The Facility.

(a)	The Commitment. Subject to the terms and conditions set forth herein, the Lender agrees to make available to the Borrower until the Maturity Date a revolving credit facility providing for loans (“Loans”) in an aggregate principal amount not exceeding at any time $25,000,000 (the “Commitment”). Within the foregoing limit, the Borrower may borrow, repay and reborrow Loans until the Maturity Date.
(b)	Borrowings. The Borrower may request that Loans be made by irrevocable notice to be received by the Lender not later than 11:00 a.m. on the Business Day of the borrowing. Notices pursuant to this Paragraph 1(b) may be given by telephone if promptly confirmed in writing.

Each Loan shall be in a minimum principal amount of $500,000 or a whole multiple of $100,000.

(c) Interest. Loans shall bear interest at a rate per annum equal to the Adjusted LIBOR Rate. Interest hereunder shall be calculated on the basis of a year of 360 days and actual days elapsed.

The Borrower promises to pay interest for all Loans on (i) the first Business Day following the end of each month; and (ii) the Maturity Date. If the time for any payment is extended by operation of law or otherwise, interest shall continue to accrue for such extended period.

(1) After the date any principal amount of any Loan is due and payable (whether on the Maturity Date, upon acceleration or otherwise), or after any other monetary obligation hereunder shall have become due and payable (in each case without regard to any applicable grace periods), and (2) while any Event of Default exists, the Borrower shall pay, but only to the extent permitted by law, interest (after as well as before judgment) on such amounts at a rate per annum equal to the Adjusted LIBOR Rate plus 2.000%. Accrued and unpaid interest on past due amounts shall be payable on demand.

In no case shall interest hereunder exceed the amount that the Lender may charge or collect under applicable law.

(d) Evidence of Loans. The Loans and all payments thereon shall be evidenced by the Lender’s loan accounts and records; provided, however, that upon the request of the Lender, the Loans may be evidenced by a promissory note in the form of Exhibit B hereto in addition to such loan accounts and records. Such loan accounts, records and promissory note shall be conclusive absent manifest error of the amount of the Loans and payments thereon. Any failure to record any Loan or payment thereon or any error in doing so shall not limit or otherwise affect the obligation of the Borrower to pay any amount owing with respect to the Loans.

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(e)	Unused Fee. The Borrower promises to pay a fee equal to 0.25% times the actual daily amount by which the Commitment exceeds the amount of Loans outstanding, payable in arrears on the last Business Day of each calendar quarter and on the Maturity Date, and calculated on the basis of a year of 360 days and actual days elapsed.
(f)	Repayment. The Borrower promises to pay all Loans then outstanding on the Maturity Date.

The Borrower shall make all payments required hereunder not later than 2:00 p.m. on the date of payment in same day funds in Dollars at the office of the Lender as set forth in Schedule 10.02 to the Incorporated Agreement or such other address as the Lender may from time to time designate in writing.

All payments by the Borrower to the Lender hereunder shall be made to the Lender in full without set-off or counterclaim and free and clear of and exempt from, and without deduction or withholding for or on account of, any present or future taxes, levies, imposts, duties or charges of whatsoever nature imposed by any government or any political subdivision or taxing authority thereof. The Borrower shall reimburse the Lender for any taxes imposed on or withheld from such payments (other than taxes imposed on the Lender’s income, and franchise taxes imposed on the Lender, by the jurisdiction under the laws of which the Lender is organized or in which its principal office is located or any political subdivision thereof).

(g)

Prepayments. The Borrower may, upon same-day notice, prepay Loans on any Business Day. Prepayments of Loans must be in a principal amount of $500,000 or a whole multiple of $100,000, or, if less, the entire principal amount thereof then outstanding.

(h)

Commitment Termination or Reductions. The Borrower may, upon same day notice, terminate the Commitment or from time to time permanently reduce the Commitment, provided, that (i) any such notice shall be received by the Lender no later than 11:00 am on the date of such termination or reduction; (ii) any such partial reduction shall be not less than $10,000,000 or a whole multiple of $1,000,000 in excess thereof; and (iii) the Borrower shall not terminate or reduce the Commitment if, after giving effect thereto and any concurrent prepayments hereunder, the outstanding amount of Loans would exceed the Commitment. All fees accrued until the effective date of any termination of the Commitment shall be paid on the effective date of such termination.

2. Upfront Fee. Subject to the final sentence of this Paragraph 2, the Borrower shall pay to the Lender, for its own account, a fee (each an “Upfront Fee”) in the amounts and on the dates set forth below. Each such Upfront Fee shall be for the Lender’s Commitment under the revolving credit facility and shall be payable in full upon the date opposite such fee:

Payment Date of
Upfront Fee	Upfront Fee
December 4, 2008	$	7,500.00
December 16, 2008	$	12,500.00
December 26, 2008	$	17,500.00

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     To the extent this Agreement is terminated prior to any of the above referenced “Payment Date of Upfront Fee,” then the Borrower shall not owe and shall have no obligation to pay any Upfront Fee on any such date or thereafter.

3. Conditions Precedent to Loans.

(a) Conditions Precedent to Initial Loan. As a condition precedent to the effectiveness of this Agreement and the obligation of the Lender to make any Loan on the Closing Date, the Lender must receive the following from the Borrower in form satisfactory to the Lender:

(i)	the enclosed duplicate of this Agreement duly executed and delivered on behalf of the Borrower;
(ii)	a certified borrowing resolution or other evidence of the Borrower’s authority to borrow;
(iii)	a certificate of incumbency;
(iv)	if requested by the Lender, a promissory note as contemplated in Paragraph 1(d) above;
(v)	such other documents and certificates (including legal opinions) as the Lender may reasonably request; and
(vi)	any fees and expenses required to be paid on or before the Closing Date shall have been paid.

(b) Conditions to Each Borrowing. As a condition precedent to each borrowing (including the initial borrowing) of any Loan:

(i)	The Borrower must furnish the Lender with, as appropriate, a notice of borrowing;
(ii)	each representation and warranty set forth in Paragraph 4 below shall be true and correct in all material respects as if made on the date of such borrowing; and
(iii)	no Default shall have occurred and be continuing on the date of such borrowing.

Each notice of borrowing shall be deemed a representation and warranty by the Borrower that the conditions referred to in clauses (ii) and (iii) above have been met.

4. Representations and Warranties. The Borrower represents and warrants (which representations and warranties shall survive the Closing Date and each borrowing hereunder) that the representations and warranties contained in Article V (Representations and Warranties) of the Incorporated Agreement, including for purposes of this Paragraph 4 each Additional Incorporated Agreement Representation, are true and correct as if made on such date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall

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be true and correct as of such earlier date. The representations and warranties of the Borrower referred to in the preceding sentence (including all exhibits, schedules and defined terms referred to therein) are hereby (or, in the case of each Additional Incorporated Agreement Representation, shall, upon its effectiveness, be) incorporated herein by reference as if set forth in full herein.

All such representations and warranties so incorporated herein by reference shall survive any termination, cancellation, discharge or replacement of the Incorporated Agreement.

5. Covenants. So long as principal of and interest on any Loan or any other amount payable hereunder or under any other Loan Document remains unpaid or unsatisfied and the Commitment has not been terminated, the Borrower shall comply with all the covenants and agreements applicable to it contained in Article VI (Affirmative Covenants) and Sections 7.03, 7.04, 7.05, 7.06 and 7.07 (Negative Covenants) of the Incorporated Agreement, including for purposes of this Paragraph 5 each Additional Incorporated Agreement Covenant. In addition to the foregoing (but not in duplication of any other provisions of this Agreement), each of the Borrower and the Lender shall comply with the respective obligations applicable to each such party as such are set forth in Article III (Taxes, Yield Protection and Illegality) of the Incorporated Agreement. The covenants and agreements of the Borrower referred to in the preceding sentence (including all exhibits, schedules and defined terms referred to therein) are hereby (or, in the case of each Additional Incorporated Agreement Covenant, shall, upon its effectiveness, be) incorporated herein by reference as if set forth in full herein.

	All such covenants and agreements so incorporated herein by reference shall survive any termination, cancellation, discharge or replacement of the Incorporated Agreement.
	Any financial statements, certificates or other documents received by the Lender under the Incorporated Agreement shall be deemed delivered hereunder.
6.	Events of Default. The following are “Events of Default:”

(a)	The Borrower fails to pay any principal of any Loan as and on the date when due; or
(b)	The Borrower fails to pay any interest on any Loan, or any unused fee due hereunder, or any portion thereof, within five days after the date when due; or the Borrower fails to pay any other fee or amount payable to the Lender under any Loan Document, or any portion thereof, within five days after the date due; or
(c)	The Borrower fails to comply with any covenant or agreement incorporated herein by reference pursuant to Paragraph 5 above, subject to any applicable grace period and/or notice requirement set forth in Section 8.01 of the Incorporated Agreement (it being understood and agreed that any such notice requirement shall be met by the Lender’s giving the applicable notice to the Borrower hereunder); or
(d)	Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of the Borrower or any other Loan Party herein, in any other Loan Document, or in any document delivered in connection herewith or therewith shall be incorrect or misleading when made or deemed made; or

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(e) Any “Event of Default” specified in Section 8.01 of the Incorporated Agreement (including for purposes of this Paragraph 6(e) each Additional Incorporated Agreement Event of Default) occurs and is continuing, without giving effect to any waiver thereof pursuant to the Incorporated Agreement, it being agreed that each such “Event of Default” shall survive any termination, cancellation, discharge or replacement of the Incorporated Agreement.

Upon the occurrence of an Event of Default, the Lender may declare the Commitment to be terminated, whereupon the Commitment shall be terminated, and/or declare all sums outstanding hereunder and under the other Loan Documents, including all interest thereon, to be immediately due and payable, whereupon the same shall become and be immediately due and payable, without notice of default, presentment or demand for payment, protest or notice of nonpayment or dishonor, or other notices or demands of any kind or character, all of which are hereby expressly waived; provided, however, that upon the occurrence of an actual or deemed entry of an order for relief with respect to the Borrower under the Bankruptcy Code of the United States of America, the Commitment shall automatically terminate, and all sums outstanding hereunder and under each other Loan Document, including all interest thereon, shall become and be immediately due and payable, without notice of default, presentment or demand for payment, protest or notice of nonpayment or dishonor, or other notices or demands of any kind or character, all of which are hereby expressly waived.

7. Miscellaneous.

(a)	The provisions of Section 1.05 of the Incorporated Agreement are hereby incorporated by reference, and each party hereto shall fully comply therewith, as if set forth in full herein.
(b)	All references herein and in the other Loan Documents to any time of day shall mean the local (standard or daylight, as in effect) time of Eastern time.
(c)	If at any time the Lender, in its sole discretion, determines that (i) adequate and reasonable means do not exist for determining the Adjusted LIBOR Rate, or (ii) the Adjusted LIBOR Rate does not accurately reflect the funding cost to the Lender of making the Loans, the Lender’s obligation to make or maintain the Loans shall cease for the period during which such circumstance exists.
(d)	No amendment or waiver of any provision of this Agreement (including any provision of the Incorporated Agreement incorporated herein by reference) or of any other Loan Document and no consent by the Lender to any departure therefrom by the Borrower shall be effective unless such amendment, waiver or consent shall be in writing and signed by a duly authorized officer of the Lender and a duly authorized officer of the Borrower, and any such amendment, waiver or consent shall then be effective only for the period and on the conditions and for the specific instance specified in such writing. No failure or delay by the Lender in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other rights, power or privilege.

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(e) Except as otherwise expressly provided herein, notices and other communications to each party provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed or sent by telecopy to the address provided from time to time by such party. Any such notice or other communication sent by overnight courier service, mail or telecopy shall be effective on the earlier of actual receipt and (i) if sent by overnight courier service, the scheduled delivery date, (ii) if sent by mail, the fourth Business Day after deposit in the U.S. mail first class postage prepaid, and (iii) if sent by telecopy, when transmission in legible form is complete. All notices and other communications sent by the other means listed in the first sentence of this paragraph shall be effective upon receipt. Notwithstanding anything to the contrary contained herein, all notices (by whatever means) to the Lender pursuant to Paragraph 1(b) hereof shall be effective only upon receipt. Any notice or other communication permitted to be given, made or confirmed by telephone hereunder shall be given, made or confirmed by means of a telephone call to the intended recipient at the number specified in writing by such Person for such purpose, it being understood and agreed that a voicemail message shall in no event be effective as a notice, communication or confirmation hereunder.

The Lender shall be entitled to rely and act upon any notices (including telephonic notices of borrowings) purportedly given by or on behalf of the Borrower even if (i) 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, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. The Borrower shall indemnify each Indemnitee from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of the Borrower. All telephonic notices to and other communications with the Lender may be recorded by the Lender, and the Borrower hereby consents to such recording.

(f)	This Agreement shall inure to the benefit of the parties hereto and their respective successors and assigns, except that the Borrower may not assign its rights and obligations hereunder. The Lender may at any time (i) assign all or any part of its rights and obligations hereunder to any other Person with the consent of the Borrower, such consent not to be unreasonably withheld, provided that no such consent shall be required if the assignment is to an affiliate of the Lender or if a Default exists, and (ii) grant to any other Person participating interests in all or part of its rights and obligations hereunder without notice to the Borrower. The Borrower agrees to execute any documents reasonably requested by the Lender in connection with any such assignment. All information provided by or on behalf of the Borrower to the Lender or its affiliates may be furnished by the Lender to its affiliates and to any actual or proposed assignee or participant.
(g)	The Borrower shall pay the Lender, on demand, all reasonable out-of-pocket expenses (including the fees, charges and disbursements of any counsel for the Lender) incurred by the Lender in connection with the enforcement of this Agreement or any instruments or agreements executed in connection herewith.
(h)	The provisions of Sections 10.04(b) (Indemnification), 10.07 (Treatment of Certain Information; Confidentiality), 10.12 (Severability), 10.14 (Governing Law; Jurisdiction; Etc.), 10.15 (Waiver of Jury Trial) and 10.17 (USA PATRIOT Act) of the Incorporated

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	Agreement are hereby incorporated by reference, and each party hereto shall fully comply therewith, as if set forth in full herein.
(i)	This Agreement may be executed in one or more counterparts, and each counterpart, when so executed, shall be deemed an original but all such counterparts shall constitute but one and the same instrument.
(j)	THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

[Remainder of page intentionally left blank.]

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     Please indicate your acceptance of the Commitment on the foregoing terms and conditions by returning an executed copy of this Agreement to the undersigned not later than December 1, 2008.

BRANCH BANKING AND TRUST COMPANY
By:	/s/ H. Wright Uzzell, Jr.
	Name: H. Wright Uzzell, Jr.
	Title: Senior Vice President

Accepted and Agreed to as of the date first written above:

PIEDMONT NATURAL GAS COMPANY, INC.

By:	/s/ Robert O. Pritchard
	Name: Robert O. Pritchard
	Title: Vice President, Treasurer and Chief Risk Officer

EXHIBIT A

DEFINITIONS

Additional Incorporated
Agreement Covenant:	A covenant or agreement that is added to Article VI (Affirmative Covenants) or VII (Negative Covenants) of the Incorporated Agreement after the date hereof; provided, however, to the extent the incorporation of such additional covenant or agreement would cause a default under Section 7.05 of the Incorporated Agreement, such additional covenant or agreement shall not be incorporated hereunder.
Additional Incorporated
Agreement Event of Default:	An “Event of Default” that is added to Section 8.01 of the Incorporated Agreement after the date hereof.
Additional Incorporated
Agreement Representation:	A representation or warranty that is added to Article V (Representations of the Borrower) of the Incorporated Agreement after the date hereof.
Adjusted LIBOR Rate:	The rate of interest per annum equal to the sum obtained (rounded upwards, if necessary, to the next higher 1/100th of 1.0%) by adding the LIBOR Rate plus the Applicable Rate. The Adjusted LIBOR Rate shall be adjusted (i) monthly with changes in the LIBOR Rate on the first day of each month, and (ii) concurrently with any changes in the Applicable Rate as set forth below in the definition of Applicable Rate. If the first day of a month is not a Business Day, the Adjusted LIBOR Rate shall be determined as of the last preceding Business Day. The Adjusted LIBOR Rate shall be adjusted for any change in the LIBOR Reserve Percentage so that Lender shall receive the same yield.
Affiliate:	Has the meaning set forth in the Incorporated Agreement.
Agreement:	This letter agreement, as amended, restated, extended, supplemented or otherwise modified in writing from time to time.
Applicable Rate:	The following percentages per annum, based upon the Debt Rating as set forth below:

Applicable Rate

Pricing	Debt Ratings
Level	S&P/Moody's		Applicable Rate
1	> AA-/Aa3			0.75	%
2		A+/A1		1.00	%
3		A/A2		1.25	%
4		A-/A3		1.50	%
5	< BBB+/Baa1			1.75	%

A-1

	“Debt Rating” means, as of any date of determination, the rating as determined by either S&P or Moody’s (collectively, the “Debt Ratings”) of the Borrower’s non-credit-enhanced, senior unsecured long-term debt; provided that (a) if the respective Debt Ratings issued by the foregoing rating agencies differ by one level, then the Pricing Level for the higher of such Debt Ratings shall apply (with the Debt Rating for Pricing Level 1 being the highest and the Debt Rating for Pricing Level 5 being the lowest); (b) if there is a split in Debt Ratings of more than one level, then the Pricing Level that is one level lower than the Pricing Level of the higher Debt Rating shall apply; (c) if the Borrower has only one Debt Rating, the Pricing Level of such Debt Rating shall apply; and (d) if the Borrower does not have any Debt Rating, Pricing Level 5 shall apply.
	Initially, the Applicable Rate shall be determined based upon the Debt Rating specified in the Compliance Certificate most recently delivered pursuant to Section 6.02(a) of the Incorporated Agreement. Thereafter, each change in the Applicable Rate resulting from a publicly announced change in the Debt Rating shall be effective during the period commencing on the date of the public announcement thereof and ending on the date immediately preceding the effective date of the next such change.
	For the purposes of this definition, capitalized terms not otherwise defined herein shall have the meanings as specified therefor in the Incorporated Agreement.
Borrower:	Has the meaning set forth in the preamble to the Agreement.
Business Day:	Any day other than a Saturday, Sunday, or other day on which commercial banks are authorized to close under the laws of, or are in fact closed in, the State of North Carolina or the state where the Lender’s lending office is located.
Closing Date:	The first date all of the conditions precedent in Paragraph 3(a) are satisfied or waived by the Lender.
Commitment:	Has the meaning set forth in the Paragraph 1(a) of the Agreement.
Default:	Any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.
Dollar or $:	The lawful currency of the United States of America.
Event of Default:	Has the meaning set forth in Paragraph 6.
Incorporated Agreement:	The Credit Agreement, dated as of April 25, 2006, among the Borrower, Bank of America, as Administrative Agent, Swing Line Lender and L/C Issuer, and the Lenders party thereto (as from time to time amended,

A-2

modified, supplemented, restated, or amended and restated in accordance with the terms thereof so long as Branch Banking and Trust Company as lender under such Credit Agreement has approved such amendment, modification, supplement, restatement or amendment and restatement). A copy of the Incorporated Agreement is attached as Exhibit C. For purposes of this Agreement the Borrower specifically covenants and agrees that each term or provision of the Incorporated Agreement incorporated by reference into this Agreement is effective and binding upon the Borrower as if set forth herein. All such incorporated terms and provisions are incorporated herein with appropriate substitutions, including the following:
(i)	all references to “the Administrative Agent”, “the Arranger”, “the L/C Issuer”, “the Lenders”, “each Lender”, “any Lender”, and “the Required Lenders” shall be deemed to be references to the Lender;
(ii)	all references to “this Agreement” shall be deemed to be references to this Agreement and for purposes of Sections 7.04, 7.05 and 7.07 of the Incorporated Agreement, the Incorporated Agreement;
(iii)	all references to “Base Rate Loan” shall be deemed to be references to a Loan;
(iv)	all references to “Borrower” shall be deemed to be references to the Borrower;
(v)	all references to “Commitment” shall be deemed references to the Commitment;
(vi)	all references to “Default” and "Event of Default” shall be deemed to be references to a Default and an Event of Default, respectively;
(vii)	all references to “any Loan Document,” “any other Loan Document” or the like shall be deemed to be references to the Loan Documents and for purposes of Sections 7.04, 7.05 and 7.07 of the Incorporated Agreement, the Loan Documents (as such term is defined in the Incorporated Agreement);
(viii)	all references to “Loans” shall be deemed to be references to the Loans;
(ix)	all references to “Maturity Date” shall be deemed to be references to the Maturity Date;
(x)	all references to “Obligations” shall be deemed to be references to obligations under this Agreement; and

A-3

(xi) references to any schedules shall be deemed to be references to the schedules attached hereto as Exhibit D.

LIBOR Rate:	The average rate (rounded upward, if necessary, to the next higher 1/100th of one percent) quoted on Page 3750 (or such replacement page) of the Telerate Service or Bloomberg Screen BTMM on the determination date for deposits in U.S. Dollars offered in the London interbank market for one month, or if the above method for determining LIBOR shall not be available, the rate quoted in The Wall Street Journal or a rate determined by a substitute method of determination agreed on by Borrower and Lender; provided, if such agreement is not reached within a reasonable period of time (in Lender’s judgment), a rate reasonably determined by Lender in its sole discretion as a rate being paid, as of the determination date, by first class banking organizations (as determined by Lender) in the London interbank market for U.S. Dollar deposits.
LIBOR Reserve Percentage:	The maximum aggregate rate at which reserves (including, without limitation, any marginal supplemental or emergency reserves) are required to be maintained under Regulation D by member banks of the Federal Reserve System with respect to dollar funding in the London interbank market. Without limiting the effect of the foregoing, the LIBOR Reserve Percentage shall reflect any other reserves required to be maintained by such member banks by reason of any applicable regulatory change against any category of liability which includes deposits by reference to which the Adjusted LIBOR Rate is to be determined or any category of extensions of credit or other assets related to the LIBOR Rate.
Loan Documents:	This Agreement, and the promissory note and fee letter, if any, delivered in connection with this Agreement.
Maturity Date:	December 31, 2008, or such earlier date on which the Commitment may terminate in accordance with the terms hereof.
Person:	Has the meaning set forth in the Incorporated Agreement.
Subsidiary:	Has the meaning set forth in the Incorporated Agreement.

A-4

EXHIBIT B

FORM OF AMENDED AND RESTATED PROMISSORY NOTE

December 1, 2008

     FOR VALUE RECEIVED, the undersigned, PIEDMONT NATURAL GAS COMPANY, INC., a North Carolina corporation (the “Borrower”), hereby promises to pay to the order of BRANCH BANKING AND TRUST COMPANY (the “Lender”) the principal amount of all Loans made by the Lender to the Borrower pursuant to the amended and restated letter agreement, dated as of even date herewith (such letter agreement, as it may be amended, restated, extended, supplemented or otherwise modified from time to time, being hereinafter called the “Agreement”), between the Borrower and the Lender, on the Maturity Date. The Borrower further promises to pay interest on the unpaid principal amount of the Loans evidenced hereby from time to time at the rates, on the dates, and otherwise as provided in the Agreement.

     This promissory note constitutes an amendment and restatement in its entirety of the promissory note dated October 29, 2008, payable by the Borrower to the Lender (the “Original Note”) and is executed and delivered by the Borrower, and received by the Lender, in substitution for, the Original Note and is not intended to constitute a novation of the Original Note.

     The loan account records maintained by the Lender shall at all times be conclusive evidence, absent manifest error, as to the amount of the Loans and payments thereon; provided, however, that any failure to record any Loan or payment thereon or any error in doing so shall not limit or otherwise affect the obligation of the Borrower to pay any amount owing with respect to the Loans.

     This promissory note is the promissory note referred to in, and is entitled to the benefits of, the Agreement, which Agreement, among other things, contains provisions for acceleration of the maturity of the Loans evidenced hereby upon the happening of certain stated events and also for prepayments on account of principal of the Loans prior to the maturity thereof upon the terms and conditions therein specified.

     Unless otherwise defined herein, terms defined in the Agreement are used herein with their defined meanings therein. This promissory note shall be governed by, and construed in accordance with, the laws of the State of North Carolina.

PIEDMONT NATURAL GAS COMPANY, INC.

By

Name

Title

B-1

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Thomas E. Skains, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Piedmont Natural Gas Company, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 9, 2009 /s/ Thomas E. Skains
Thomas E. Skains
Chairman of the Board, President and
Chief Executive Officer
(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, David J. Dzuricky, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Piedmont Natural Gas Company, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 9, 2009 /s/ David J. Dzuricky
David J. Dzuricky
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY
ACT OF 2002

In connection with the Quarterly Report of Piedmont Natural Gas Company, Inc. (the “Company”), on Form 10-Q for the period ended January 31, 2009, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Thomas E. Skains, Chairman of the Board, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

March 9, 2009

/s/ Thomas E. Skains
Thomas E. Skains
Chairman of the Board, President and Chief Executive Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY
ACT OF 2002

In connection with the Quarterly Report of Piedmont Natural Gas Company, Inc. (the “Company”), on Form 10-Q for the period ended January 31, 2009, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David J. Dzuricky, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

March 9, 2009

/s/ David J. Dzuricky
David J. Dzuricky
Senior Vice President and Chief Financial Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.