e10vq

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. [X] Yes [ ] No

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). [ ] Yes [X] No

Northern States Power Co. (a Minnesota corporation), Northern States Power Co. (a Wisconsin corporation), Public Service Co. of Colorado and Southwestern Public Service Co. meet the conditions set forth in General Instruction H (1)(a) and (b) of Form 10-Q and are therefore filing this Form 10-Q with the reduced disclosure format specified in General Instruction H (2) to such Form 10-Q.

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

This combined Form 10-Q is separately filed by Northern States Power Co., a Minnesota corporation (NSP-Minnesota), Northern States Power Co., a Wisconsin corporation (NSP-Wisconsin), Public Service Co. of Colorado (PSCo) and Southwestern Public Service Co. (SPS). NSP-Minnesota, NSP-Wisconsin, PSCo and SPS are all wholly owned subsidiaries of Xcel Energy, Inc. (Xcel Energy). Xcel Energy is a registered holding company under the Public Utility Holding Company Act of 1935 (PUHCA). Additional information on Xcel Energy is available in various filings with the SEC.

Information contained in this report relating to any individual company is filed by such company on its own behalf. Each registrant makes representations only as to itself and makes no other representations whatsoever as to information relating to the other registrants.

This report should be read in its entirety. No one section of the report deals with all aspects of the subject matter.

NSP-MINNESOTA AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Thousands of Dollars)

See disclosures regarding NSP-Minnesota in the Notes to Consolidated Financial Statements

NSP-MINNESOTA AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Thousands of Dollars)

See disclosures regarding NSP-Minnesota in the Notes to Consolidated Financial Statements

NSP-MINNESOTA AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)

See disclosures regarding NSP-Minnesota in the Notes to Consolidated Financial Statements

NSP-MINNESOTA AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)

See disclosures regarding NSP-Minnesota in the Notes to Consolidated Financial Statements

NSP-WISCONSIN AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Thousands of Dollars)

See disclosures regarding NSP-Wisconsin in the Notes to Consolidated Financial Statements

NSP-WISCONSIN AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Thousands of Dollars)

See disclosures regarding NSP-Wisconsin in the Notes to Consolidated Financial Statements

NSP-WISCONSIN AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)

See disclosures regarding NSP-Wisconsin in the Notes to Consolidated Financial Statements

NSP-WISCONSIN AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)

See disclosures regarding NSP-Wisconsin in the Notes to Consolidated Financial Statements

PUBLIC SERVICE CO. OF COLORADO AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Thousands of Dollars)

See disclosures regarding PSCo in the Notes to Consolidated Financial Statements

PUBLIC SERVICE CO. OF COLORADO AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Thousands of Dollars)

See disclosures regarding PSCo in the Notes to Consolidated Financial Statements

PUBLIC SERVICE CO. OF COLORADO AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)

See disclosures regarding PSCo in the Notes to Consolidated Financial Statements

PUBLIC SERVICE CO. OF COLORADO AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)

See disclosures regarding PSCo in the Notes to Consolidated Financial Statements

SOUTHWESTERN PUBLIC SERVICE CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Thousands of Dollars)

SOUTHWESTERN PUBLIC SERVICE CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Thousands of Dollars)

SOUTHWESTERN PUBLIC SERVICE CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the financial position of NSP-Minnesota, NSP-Wisconsin, PSCo and SPS (collectively referred to as the Utility Subsidiaries of Xcel Energy) as of June 30, 2003, and Dec. 31, 2002; the results of their operations for the three and six months ended June 30, 2003 and 2002; and their cash flows for the six months ended June 30, 2003 and 2002. Due to the seasonality of electric and natural gas sales of Xcel Energy’s Utility Subsidiaries, interim results are not necessarily an appropriate base from which to project annual results.

The accounting policies of NSP-Minnesota, NSP-Wisconsin, PSCo and SPS are set forth in Note 1 to their financial statements in their respective Annual Reports on Form 10-K for the year ended Dec. 31, 2002. The following notes should be read in conjunction with such policies and other disclosures in the Form 10-Ks.

Certain items in the 2002 income statements have been reclassified to conform to the presentation disclosed in the 2002 Annual Report on Form 10-K. These reclassifications had no effect on stockholder’s equity or net income as previously reported. The reclassifications were primarily to conform the presentation of all consolidated Xcel Energy subsidiaries to a standard corporate presentation.

1. Accounting Changes — Asset Retirement Obligations (NSP-Minnesota, NSP-Wisconsin, PSCo and SPS)

The Utility Subsidiaries of Xcel Energy adopted Statement of Financial Accounting Standard (SFAS) No. 143 — “Accounting for Asset Retirement Obligations” (SFAS No. 143) effective Jan. 1, 2003. As required by SFAS No. 143, future plant decommissioning obligations were recorded as a liability at fair value as of Jan. 1, 2003, with a corresponding increase to the carrying values of the related long-lived assets. This liability will be increased over time by applying the interest method of accretion to the liability, and the capitalized costs will be depreciated over the useful life of the related long-lived assets. The adoption of the statement had no income statement impact, as the cumulative effect adjustments required under SFAS No. 143 have been deferred through the establishment of a regulatory asset pursuant to SFAS No. 71 — “Accounting for the Effects of Certain Types of Regulation.”

Asset retirement obligations were recorded for the decommissioning of two NSP-Minnesota nuclear generating plants, the Monticello plant and the Prairie Island plant. A liability was also recorded for the decommissioning of an NSP-Minnesota steam production plant, the Pathfinder plant. Monticello began operation in 1971 and is licensed to operate until 2010. Prairie Island units 1 and 2 began operation in 1973 and 1974, respectively, and are licensed to operate until 2013 and 2014, respectively. Pathfinder operated as a steam production peaking facility from 1969 through June of 2000.

A summary of the accounting for the initial adoption of SFAS No. 143 by NSP-Minnesota on Jan. 1, 2003 is as follows:

A reconciliation of the beginning and ending aggregate carrying amount of NSP-Minnesota’s asset retirement obligations recorded under SFAS No. 143 is shown in the table below for the six months ending June 30, 2003.

The adoption of SFAS No. 143 resulted in the recording of a capitalized plant asset of $131 million for the discounted cost of asset retirement as of the date the liability was incurred. Accumulated depreciation on this additional capitalized cost through the date of adoption of SFAS No. 143 was $111 million. A regulatory asset of $842 million was recognized for the accumulated SFAS No. 143 costs recognized for accretion of the initial liability and depreciation of the additional capitalized cost through adoption date. This regulatory asset was partially offset by $662 million for the reversal of the decommissioning costs previously accrued in accumulated depreciation for these plants prior to the implementation of SFAS No. 143. The net regulatory asset of $180 million at Jan. 1, 2003 reflects the excess of costs that would have been recorded in expense under SFAS No. 143 over the amount of costs recorded consistent with ratemaking cost recovery for NSP-Minnesota. We expect this regulatory asset to reverse over time since the costs to be accrued under SFAS No. 143 are the same as the costs to be recovered through current NSP-Minnesota ratemaking. Consequently, no cumulative effect adjustment to earnings or shareholders’ equity has been recorded for the adoption of SFAS No. 143 in 2003 as all such effects have been deferred as a regulatory asset.

The pro-forma liability to reflect amounts as if SFAS No. 143 had been applied as of Dec. 31, 2002, was $862 million, the same as the Jan. 1, 2003 amounts discussed previously. The pro-forma liability to reflect adoption of SFAS No. 143 as of Jan. 1, 2002, the beginning of the earliest period presented, was $810 million.

Pro-forma net income and earnings per share have not been presented for the years ended Dec. 31, 2002 because the pro-forma application of SFAS No. 143 to prior periods would not have changed net income due to the regulatory deferral of any differences of past cost recognition and SFAS No. 143 methodology, as discussed previously.

The fair value of the assets legally restricted for purposes of settling the nuclear asset retirement obligations is $835 million as of June 30, 2003.

The adoption of SFAS No. 143 in 2003 will also affect accrued plant removal costs for other generation, transmission and distribution facilities for the Utility Subsidiaries. Although SFAS No. 143 does not recognize the future accrual of removal costs as a Generally Accepted Accounting Principles liability, long-standing ratemaking practices approved by applicable state and federal regulatory commissions have allowed provisions for such costs in historical depreciation rates. These removal costs have accumulated over a number of years based on varying rates as authorized by the appropriate regulatory entities. Given the long periods over which the amounts were accrued and the changing of rates through time, the Utility Subsidiaries have estimated the amount of removal costs accumulated through historic depreciation expense based on current factors used in the existing depreciation rates. Accordingly, the estimated amounts of future removal costs, which are considered regulatory liabilities under SFAS No. 143 that are accrued in accumulated depreciation, are as follows at Jan. 1, 2003:

Regulatory Recovery Adjustment (2002) — During the first quarter of 2002, SPS wrote off approximately $5 million, or 1 cent per share, of restructuring costs relating to costs incurred to comply with legislation requiring a transition to retail competition in Texas, which was subsequently amended to delay the required transition.

Utility Restaffing (2002) — During the fourth quarter of 2001, Xcel Energy recorded an estimated liability for expected staff consolidation costs for an estimated 500 employees in several utility operating and corporate support areas of Xcel Energy. In the first quarter of 2002, the identification of affected employees was completed and additional pretax special charges of $9 million were expensed for the final costs of the utility-related staff consolidations. Approximately, $6 million of these restaffing costs were allocated to the Utility Subsidiaries. All 564 of accrued staff terminations have occurred.

The following table summarizes the activity related to accrued restaffing special charges for the first six months of 2003:

NSP-Minnesota Service Quality Investigation — As previously reported, the Minnesota Public Utilities Commission (MPUC) directed the Office of the Attorney General and the Department of Commerce (state agencies) to investigate the accuracy of NSP-Minnesota’s reliability records. On Aug. 4, 2003, the state agencies jointly filed with the MPUC a report issued by Fraudwise, an investigation firm. Fraudwise had previously been engaged by the state agencies to investigate the validity of allegations involving the integrity of NSP-Minnesota’s service quality reporting. The findings of the Aug. 4, 2003 report are generally consistent with the previously disclosed findings in Fraudwise’s preliminary report that our record keeping contains inconsistencies and misstatements and that it would be nearly impossible to establish the magnitude of misstatements in the record keeping system. The report also states that NSP-Minnesota’s records were unreliable and appear to have been manipulated by a small number of employees to ensure compliance with state-imposed standards. NSP-Minnesota is continuing its internal review of these matters and has taken certain remedial actions to address the record keeping deficiencies. The MPUC has indicated that it is reviewing the report and expects to have a hearing on the matters addressed in the report within two to four months.

The South Dakota Public Utilities Commission (SDPUC) recently indicated an intention to open an investigation into service quality issues. In particular, the investigation would focus on NSP-Minnesota operations in the Sioux Falls area, which has experienced a number of recent power outages. NSP-Minnesota is working with the SDPUC to provide information and to answer inquiries regarding service quality. No docket has been opened.

Midwest Independent Transmission System Operator, Inc. (MISO) Electric Market Initiative (NSP-Minnesota and NSP-Wisconsin) - On July 25, 2003, MISO filed proposed changes to its regional open access transmission tariff to implement a new transmission and energy markets tariff that would establish certain wholesale energy and transmission service markets based on locational marginal cost pricing (LMP) effective in 2004. NSP-Minnesota and NSP-Wisconsin presently receive transmission services from MISO for service to their retail loads and would be subject to the new tariff, if approved by the Federal Energy Regulatory Commission (FERC). Xcel Energy continues to review the filing, but believes the new tariff, if approved by the FERC, could have a material effect on wholesale power supply or transmission service costs to NSP-Minnesota and NSP-Wisconsin beginning in 2004.

NSP-Wisconsin General Rate Case — On June 1, 2003, NSP-Wisconsin filed its required biennial rate application with the Public Service Commission of Wisconsin (PSCW) requesting no change in Wisconsin retail electric and natural gas base rates. NSP-Wisconsin requested the PSCW approve its application without hearing, pending completion of the Staff’s audit. An order is expected by the end of the year.

FERC Investigation Against All Wholesale Electric Sellers/California Refund Proceedings (PSCo) On June 25, 2003, the FERC issued a series of orders addressing the California electricity markets. Two of these were show cause orders. In the first show cause order, the FERC found that 24 entities may have worked in concert through partnerships, alliances or other arrangements to engage in activities that constitute gaming and/or anomalous market behavior. The FERC initiated the proceedings against these 24 entities requiring that they show cause why their behavior did not constitute gaming and/or anomalous market behavior. PSCo was not named in this order. In a second show cause order, the FERC indicated that various California parties, including the California Independent System Operator (CAISO), have alleged that 43 entities individually engaged in one or more of seven specific types of practices that the FERC has identified as constituting gaming or anomalous market behavior within the meaning of the CAISO and California Power Exchange tariffs. PSCo was listed in an attachment to that show cause order as having been alleged to have engaged in one of the seven identified practices, namely circular scheduling. In the second show cause order, FERC required the CAISO to provide the named entities with “all of the specific

transaction data” for each of the seven practices. The CAISO provided that information on July 16, 2003. This data does not list PSCo as among the entities that allegedly engaged in circular scheduling. PSCo may have been named in the show cause order because of a trader telephone conversation transcript that PSCo had previously submitted to the FERC. This transcript was cited in witnesses testimony filed with FERC. The circular scheduling reference in the transcript was by a trader from another company discussing a transaction that did not involve PSCo. PSCo is preparing a motion to dismiss.

Pacific Northwest FERC Refund Proceeding (PSCo) On June 25, 2003, the FERC terminated the proceeding without refunds or ordering further proceedings.

PSCo General Rate Case - In May 2002, PSCo filed a combined general retail electric, natural gas and thermal energy base rate case with the Colorado Public Utilities Commission (CPUC) as required in the merger approval agreement with the CPUC to form Xcel Energy. On April 4, 2003, a comprehensive settlement agreement between PSCo and all but one of the intervenors was executed and filed with the CPUC, which addressed all significant issues in the rate case. In summary, the settlement agreement, among other things, provides for:

	•		annual base rate decreases of approximately $33 million for natural gas and $230,000 for electricity, including an annual reduction to electric depreciation expense of approximately $20 million, effective July 1, 2003;

	•		an interim adjustment clause (IAC) that recovers 100 percent of prudently incurred 2003 electric fuel and purchased energy expense above the expense recovered through electric base rates during 2003. This clause is projected to recover energy costs totaling approximately $216 million in 2003;

	•		a new electric commodity adjustment clause (ECA) for 2004-2006, with an $11.25-million cap on any cost sharing over or under an allowed ECA formula rate; and

	•		an authorized return on equity of 10.75 percent for electric operations and 11.0 percent for natural gas and thermal energy operations.

In June 2003, the CPUC issued its initial written order approving the settlement agreement. The new rates were effective July 1, 2003. PSCo will now move to the phase II, rate design, portion of the case.

PSCo Fuel Adjustment Clause Proceedings - Certain wholesale electric sales customers of PSCo have filed complaints with the FERC alleging PSCo has been improperly collecting certain fuel and purchased energy costs through the wholesale fuel cost adjustment clause included in their rates. The FERC consolidated these complaints and set them for hearing and settlement judge procedures. In November 2002, the Chief Judge terminated settlement procedures after settlement was not reached. The complainants filed initial testimony in late April 2003 claiming the improper inclusion of fuel and purchased energy costs in the range of $40 million to $50 million related to the periods 1996 through 2002. PSCo submitted answer testimony in June 2003. The complainants filed rebuttal testimony on August 1, 2003, and current claims have been reduced, now estimated at approximately $30 million. PSCo believes its wholesale customers have not been improperly charged for these costs. The hearings at the FERC are scheduled to begin Aug. 14, 2003.

PSCo had a retail incentive cost adjustment (ICA) cost recovery mechanism in place for periods prior to calendar 2003, as disclosed in the 2002 Annual Report on Form 10-K. The CPUC conducted a proceeding to review and approve the incurred and recoverable 2001 costs under the ICA. In April 2003, the CPUC Staff and an intervenor filed testimony recommending disallowance of certain fuel and purchased energy costs, which, if granted, would result in a $30 million reduction in recoverable 2001 ICA costs. On July 10, 2003, a stipulation and settlement agreement was filed with the CPUC, which resolved all issues. Under the stipulation and settlement agreement, the recoverable costs for 2001 will be reduced by $1.6 million. The resulting impact on the reset of the allowed cost recovery and cost sharing under the ICA for 2002 was not significant. In addition, the stipulation and settlement agreement provides for a prospective rate design adjustment related to the maximum allowable natural gas hedging costs that will be a part of the electric commodity adjustment for 2004. Approval of the 2002 recoverable ICA costs will be conducted in a future proceeding.

At June 30, 2003, PSCo has recorded its deferred fuel and purchased energy costs based on the expected rate recovery of its costs as filed in the above rate proceedings, without the adjustments proposed by various parties. Pending the outcome of these regulatory proceedings, we cannot at this time determine whether any customer refunds or disallowances of PSCo’s deferred costs will be required other than as discussed above.

PSCo Electric Department Earnings Test Proceedings — PSCo has filed its annual electric department earnings test reports for calendar 2001 and 2002. In both years, PSCo did not earn above its allowed authorized return on equity and, accordingly, has not recorded any refund obligations. In the 2001 proceeding, the Office of Consumer Counsel has proposed that the $10.9

million gain on the sale of the Boulder Hydroelectric Project be excluded from 2001 earnings and that possible refund of the gain be addressed in a separate proceeding. A final decision on both proceedings is pending.

PSCo Gas Cost Prudence Review As previously reported, in May 2002, the staff of the CPUC filed testimony in PSCo’s gas cost prudence review case, recommending $6.1 million in disallowances of gas costs for the July 2000 through June 2001 gas purchase year. Hearings were held before an administrative law judge in July 2002. On February 10, 2003, the judge issued a recommended decision rejecting the proposed disallowances and approving PSCo’s gas costs for the subject gas purchase year as prudently incurred. On June 6, 2003, the CPUC issued its order denying exceptions to the administrative law judge’s recommended decision. The CPUC upheld the finding that PSCo was prudent and reasonable in its handling of the Western Natural Gas default in January 2001.

PSCo Wholesale General Rate Case — On June 19, 2003, PSCo filed a wholesale electric rate case with the FERC, proposing to increase the annual electric sales rates charged to wholesale customers, other than Cheyenne Light Fuel & Power Co., a wholly owned subsidiary of Xcel Energy, by approximately $9 million. Several wholesale customers intervened protesting the proposed increase. On Aug. 1, 2003, PSCo submitted a revised filing correcting an error in the calculation of income tax costs. The revised filing requests an approximately $2 million annual increase with new rates effective in January 2004, subject to refund.

Home Builders Association of Metropolitan Denver (PSCo) — In February 2001, Home Builders Association of Metropolitan Denver (HBA) sought an award in the amount of $13.6 million for PSCo’s failure to update its extension policy construction allowances from 1996 to 2002 under its tariff. An administrative law judge had ruled in January 2002 that HBA’s claims were barred. The CPUC reversed that decision and remanded the case. On May 15, 2003, an administrative law judge issued a recommended decision. On the remanded issues, the judge determined the HBA is able to seek an award of reparations on behalf of its member homebuilders. However, the judge further determined the construction allowance applied by PSCo from 1996 through 2002 was neither excessive nor discriminatory, and that HBA failed to meet its burden to show that its method of calculating reparations for the period 1996 through 2002 is proper.

SPS Texas Fuel Reconciliation, Fuel Factor and Fuel Surcharge Applications - In June 2002, SPS filed an application for the Public Utility Commission of Texas (PUCT) to retrospectively review the operations of the utility’s electric generation and fuel management activities. In this application, SPS filed its reconciliation for electric generation and fuel management activities, totaling approximately $608 million, from January 2000 through December 2001. In May 2003, a stipulation was approved by the PUCT. The stipulation resolves all issues regarding SPS’ fuel costs and wholesale trading activities through December 2001. SPS will withdraw, without prejudice, its request to share in 10 percent of margins from certain wholesale non-firm sales. SPS will recover $1.1 million from Texas customers for the proposed sharing of wholesale non-firm sales margins. The parties agreed that SPS would reduce its December 2001 fuel under-recovery balances by $5.8 million. Including the withdrawal of proposed margin sharing of wholesale non-firm sales, the net impact to SPS’ deferred fuel expense, before tax, is a reduction of $4.7 million.

In May 2003, SPS proposed to increase its voltage-level fuel factors to reflect increased fuel costs since the time SPS’ current fuel factors were approved in March 2002. The proposed fuel factors are expected to increase Texas annual retail revenues by approximately $60.2 million.

SPS also reported to the PUCT that it has under-collected its fuel costs under the current Texas retail fixed fuel factors. In the same May 2003 application, SPS proposed to surcharge $13.2 million and related interest for fuel cost under-recoveries incurred through March 2003. In June 2003, the Administrative Law Judge approved the increased fuel factors on an interim basis subject to hearings and completion of the case. The increased fuel factors became effective in July 2003. In July 2003, a unanimous settlement was reached adopting the surcharge and providing for the implementation of an expedited procedure for revising the fixed fuel factors on a semi-annual basis. The surcharge will be collected from customers over an eight-month period. In August 2003, the PUCT approved the settlement and the new proposed fuel cost recovery process and the surcharge will become effective in September 2003.

In July 2003, SPS filed a second fuel cost surcharge factor application in Texas to recover an additional $26 million of fuel cost under-recoveries accrued during April through June 2003. SPS proposed to surcharge its retail customers in Texas over a 12-month period. This new surcharge case is pending before the Texas State Office of Administrative Hearings.

SPS New Mexico Fuel Reconciliation and Fuel Factor Applications — On May 27, 2003 a hearing examiner issued a recommended decision on SPS’s fuel proceeding approving SPS utilizing a monthly fuel factor. SPS had been utilizing an annual fuel factor, which had allowed significant under-collections. The decision denied the intervernors’ request that all margins from off-system sales be credited to ratepayers. SPS will be obligated to file its next New Mexico fuel case two years after the recommended decision is approved. The recommended decision is subject to approval by the New Mexico Public Regulatory Commission.

TRANSLink Transmission Co., LLC (TRANSLink) — In June 2003, the MPUC held a joint hearing on the TRANSLink application, filed in December 2002. At the hearing, the MPUC deferred any decision. Instead, the MPUC indicated NSP-

Minnesota could submit a supplemental or revised application to explain certain recent changes to the proposal and to respond to a number of issues and questions posed by the MPUC advisory staff. No MPUC order will be issued, and no decision has been made regarding when the revised NSP-Minnesota filing will be submitted to the MPUC.

In 2002, SPS filed for PUCT and New Mexico Public Regulatory Commission approval to transfer functional control of its electric transmission system to TRANSLink, of which SPS would be a participant. In March 2003, the Southwest Power Pool and the MISO cancelled their planned merger to form a large mid-continent regional transmission organization (RTO). This development materially impacted SPS’ applications in Texas and New Mexico. SPS has withdrawn its applications in those two states while it evaluates new RTO arrangements.

Xcel Energy is considering these developments, as well as the proceedings in process in other jurisdictions, to evaluate the possible role of TRANSLink in providing transmission service in the Xcel Energy system.

4. Commitments and Contingent Liabilities (NSP-Minnesota, NSP-Wisconsin, PSCo and SPS)

Lawsuits and claims arise in the normal course of business. Management, after consultation with legal counsel, has recorded an estimate of the probable cost of settlement or other disposition of them.

NSP-Minnesota Notice of Violation- On Dec. 10, 2001, the Minnesota Pollution Control Agency (MPCA) issued a notice of violation to NSP-Minnesota alleging air quality violations related to the replacement of a coal conveyor and violations of an opacity limitation at the A.S. King generating plant. The MPCA based its notice of violation in part on an environmental protection agency (EPA) determination that the replacement constituted reconstruction of an affected facility under the Clean Air Act’s New Source Review requirements. On June 27, 2003, the EPA rejected NSP-Minnesota’s request for reconsideration of that determination. The New Source Performance Standard for coal handling systems is unlikely to require the installation of any emission controls not currently in place on the plant. It may impose additional monitoring requirements that would not have material impact on NSP-Minnesota or its operations. In addition, the MPCA or EPA may impose civil penalties for violations of up to $27,500 per day per violation. NSP-Minnesota is working with the MPCA to resolve the notice of violation.

French Island (NSP-Wisconsin) — In June 2003, the Department of Justice lodged a consent decree settling the EPA’s claims against NSP-Wisconsin related to the French Island generating plant. The consent decree will become enforceable and, unless changed in response to comments received, NSP-Wisconsin will pay a penalty of $500,000. On Aug. 2, 2003, the comment period for the consent decree expired.

Other Environmental Contingencies - Xcel Energy’s Utility Subsidiaries have been or are currently involved with the cleanup of contamination from certain hazardous substances at several sites. In many situations, Xcel Energy’s Utility Subsidiaries are pursuing, or intend to pursue, insurance claims and believe they will recover some portion of these costs through such claims. Additionally, where applicable, Xcel Energy’s Utility Subsidiaries are pursuing, or intend to pursue, recovery from other potentially responsible parties and through the rate regulatory process. To the extent any costs are not recovered through the options listed above, Xcel Energy’s Utility Subsidiaries would be required to recognize an expense for such unrecoverable amounts in its consolidated financial statements.

St Cloud Gas Explosion (NSP-Minnesota) — As discussed previously in the Form 10-K for the period ending Dec. 31, 2002, 25 lawsuits have been filed as a result of a Dec. 11, 1998 gas explosion that killed four persons (including two employees of NSP-Minnesota), injured several others and damaged numerous buildings. Most of the lawsuits name as defendants, NSP-Minnesota, Seren, Cable Constructors, Inc. (CCI) (the contractor that struck the marked gas line) and Sirti, an architectural/engineering firm hired by Seren for its St. Cloud cable installation project. Recently, the court granted the plaintiffs’ request to amend the complaint to seek punitive damages against Seren and CCI. Presently, plaintiffs are bringing a similar motion against NSP-Minnesota. NSP-Minnesota maintains that this motion is without merit. Oral arguments are tentatively scheduled to be presented to the court on Sept. 12, 2003

Commodity Futures Trading Commission Investigation (PSCo) — On June 17, 2002, the Commodity Futures Trading Commission (CFTC) issued broad subpoenas to Xcel Energy on behalf of its affiliates, including PSCo, calling for production, among other things, of “all documents related to natural gas and electricity trading” (June 2002 subpoenas). Since that time, Xcel Energy has produced documents and other materials in response to numerous, more specific requests under the June 2002 subpoenas. Certain of these requests and Xcel Energy’s responses have concerned so-called “round-trip trades.” By a subpoena dated Jan. 29, 2003 and related letter requests (January 2003 subpoena), the CFTC has requested that Xcel Energy produce all documents related to all data submittals and documents provided to energy industry publications. Xcel Energy has produced documents and other materials in response to the January 2003 subpoena. Xcel Energy is cooperating in the CFTC investigation, but cannot predict the outcome of any investigation.

Golden Spread Electric Cooperative, Inc. (SPS) - In October 2001, Golden Spread Electric Cooperative, Inc. (Golden Spread) filed a complaint and request for investigation against SPS before the FERC. Golden Spread alleged SPS has violated provisions of a commitment and dispatch service agreement pursuant to which SPS conducts joint dispatch of SPS and Golden Spread resources. SPS filed a complaint against Golden Spread in which it has alleged that Golden Spread has failed to adhere to certain requirements of the commitment and dispatch service agreement. Both complaints were set for hearing and the FERC ordered settlement judge procedures. In May 2003, SPS and Golden Spread reached a settlement that was approved by the FERC in July 2003. The $5-million accrued costs for payments under the settlement have been deferred by SPS as they are for economic purchased energy and are recoverable from SPS customers through the respective jurisdictional fuel and purchased power cost recovery mechanisms.

Other - The circumstances set forth in Notes 13 and 14 to the financial statements in NSP-Minnesota’s, NSP-Wisconsin’s, PSCo’s and SPS’ Annual Reports on Form 10-K for the year ended Dec. 31, 2002, appropriately represent, in all material respects, the current status of commitments and contingent liabilities, including those regarding public liability for claims resulting from any nuclear incident and are incorporated herein by reference. Following are unresolved contingencies, which are material to the financial position of Xcel Energy’s Utility Subsidiaries:

•

Tax Matters — Internal Revenue Service issue of Notice of Proposed Adjustment regarding the tax deductibility of corporate owned life insurance loan interest deductions taken by PSCo in tax years beginning in 1993.

5. Short-Term Borrowings and Financing Activities (NSP-Minnesota, NSP-Wisconsin, PSCo and SPS)

Financing Activity - At June 30, 2003, NSP-Minnesota had approximately $115 million of short-term debt outstanding at a weighted average interest rate of 2.51 percent.

In April 2003, NSP-Minnesota amended an existing shelf registration statement with $415 million of available debt to allow for the issuance of secured debt, in addition to unsecured debt.

On July 31, 2003, NSP-Minnesota redeemed $200 million of 7.875 percent Trust Originated Preferred Securities of NSP Financing I, its wholly owned subsidiary. The redemption price for each security was its $25 principal amount plus a $0.1695 unpaid distribution. NSP-Minnesota initially funded this redemption with cash on hand, availability under its credit facility and a short-term loan from the Xcel Energy holding company.

On Aug. 8, 2003, NSP-Minnesota issued $200 million of 2.875 percent first mortgage bonds due 2006 and $175 million of 4.75 percent first mortgage bonds due 2010. These issuances replaced first mortgage bonds, which matured in March and April of 2003, and helped fund the redemption of $200 million of Trust Originated Preferred Securities on July 31, 2003, which was initially funded as described above.

Dividend Restrictions — NSP-Minnesota has dividend restrictions imposed by state regulatory commissions, debt agreements and the SEC under the PUHCA limiting the amount of dividends NSP-Minnesota can pay to Xcel Energy. These restrictions include, but may not be limited to, the following:

	•		maintenance of an equity ratio of 43.74 percent to 53.46 percent;

	•		payment of dividends only from retained earnings; and

	•		debt covenant restrictions under the credit agreement for debt and interest coverage ratios.

Dividend Restrictions — NSP-Wisconsin has dividend restrictions imposed by state regulatory commissions, debt agreements and the SEC under the PUHCA limiting the amount of dividends NSP-Wisconsin can pay to Xcel Energy. These restrictions include, but may not be limited to:

	•		maintenance of an equity ratio of 52 percent to 57 percent; and

	•		payment of dividends only from retained earnings.

Financing Activity — In March 2003, PSCo issued $250 million of 4.875 percent first collateral trust bonds due 2013. The bonds were sold to qualified institutional buyers.

In April 2003, PSCo registered $500 million of additional debt securities to supplement the existing $300 million of already registered debt securities.

On June 30, 2003, PSCo redeemed its $145 million of 8.75 percent first mortgage bonds due March 1, 2022. The redemption price was 100 percent of the principal amount plus a 3.76 percent call premium and accrued interest.

On June 30, 2003, PSCo’s trust subsidiary PSCo Capital Trust I redeemed its $194 million of 7.60 percent Trust Originated Preferred Securities. The redemption price for each security was its $25 principal amount plus a $0.475 unpaid distribution.

The redemptions were temporarily funded from the $300 million short-term credit facility, the $350 million revolving credit facility, and cash on hand. PSCo expects to issue permanent financing of about $575 million during the third quarter of 2003.

On June 30, 2003, PSCo had $500 million of short-term debt outstanding. $200 million was outstanding under its Revolving Credit Facility at 2.01 percent and $300 million was outstanding under its Bridge Credit Facility at 2.64 percent.

Dividend Restrictions — PSCo has dividend restrictions imposed by state regulatory commissions, debt agreements and the SEC under the PUHCA limiting the amount of dividends PSCo can pay to Xcel Energy. These restrictions include, but may not be limited to, the following:

	•		maintenance of a minimum equity ratio of 30 percent;

	•		payment of dividends only from retained earnings; and

	•		debt covenant restrictions under the credit agreement for debt and interest coverage ratios.

Dividend Restrictions — SPS has dividend restrictions imposed by state regulatory commissions, debt agreements and the SEC under the PUHCA limiting the amount of dividends SPS can pay to Xcel Energy. These restrictions include, but may not be limited to, the following:

	•		maintenance of a minimum equity ratio of 30 percent;

	•		payment of dividends only from retained earnings; and

	•		debt covenant restrictions under the credit agreement for debt and interest coverage ratios.

SFAS No. 150 — In May 2003, the FASB issued SFAS No. 150 — “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity” (SFAS No. 150). SFAS No. 150 establishes standards for classifying and measuring as liabilities certain financial instruments that embody obligations of the issuer and have characteristics of both liabilities and equity, including:

	•		instruments that represent, or are indexed to, an obligation to buy back the issuer’s shares, regardless whether the instrument is settled on a net-cash or gross physical basis;

	•		mandatorily redeemable equity instruments;

	•		written options that give the counterparty the right to require the issuer to buy back shares; and

	•		forward contracts that require the issuer to purchase shares.

SFAS No. 150 must be applied immediately to instruments entered into or modified after May 31, 2003, and to all other instruments that exist beginning July 1, 2003. SPS has a special purpose subsidiary trust with outstanding mandatorily redeemable preferred securities of $100 million consolidated in SPS’ Consolidated Balance Sheets, which will be required to be classified as long-term debt as of July 1, 2003.

6. Derivative Valuation and Financial Impacts (NSP-Minnesota, NSP-Wisconsin, PSCo and SPS)

Xcel Energy’s Utility Subsidiaries analyze derivative financial instruments in accordance with SFAS No. 133 — “Accounting for Derivative Instruments and Hedging Activities” (SFAS No. 133). This statement requires that all derivative instruments as defined by SFAS No. 133 be recorded on the balance sheet at fair value unless exempted. Changes in a derivative instrument’s fair value must be recognized currently in earnings unless the derivative has been designated in a qualifying hedging relationship. The application of hedge accounting allows a derivative instrument’s gains and losses to offset related results of the hedged item in the statement of operations, to the extent effective. SFAS No. 133 requires that the hedging relationship be highly effective and that a company formally designate a hedging relationship to apply hedge accounting.

The impact of the components of SFAS No. 133 on Other Comprehensive Income, included in Stockholder’s Equity, are detailed in the following tables:

Xcel Energy’s Utility Subsidiaries enter into derivative instruments to manage their exposure to changes in commodity prices. These derivative instruments take the form of fixed-price, floating-price or index sales, or purchases and options, such as puts, calls and swaps. These derivative instruments are designated as cash flow hedges for accounting purposes, and the changes in the fair value of these instruments are recorded as a component of Other Comprehensive Income. At June 30, 2003, NSP-Minnesota, NSP-Wisconsin, PSCo and SPS had various commodity-related contracts deemed as cash flow hedges extending through 2009. Amounts deferred in Other Comprehensive Income are recorded as the hedged purchase or sales transaction is completed. This could include the physical purchases or sales of electric energy or the use of natural gas to generate electric energy. As of June 30, 2003, NSP-Minnesota, NSP-Wisconsin, PSCo and SPS had no gains or losses accumulated in Other Comprehensive Income that are expected to be recognized in earnings during the next 12 months as the hedged transaction occurs. However, due to the volatility of commodities markets, the value in Other Comprehensive Income will likely change prior to its recognition in earnings.

As required by SFAS No. 133, PSCo recorded gains of $0 and $0.9 million related to ineffectiveness on commodity cash flow hedges during the three months ended June 30, 2003 and 2002, respectively. PSCo recorded gains of $0 and $1.0 million related to ineffectiveness on commodity cash flow hedges during the six months ended June 30, 2003 and 2002, respectively.

SPS enters into interest rate swap instruments that effectively fix the interest payments on certain floating rate debt obligations. These derivative instruments are designated as cash flow hedges for accounting purposes, and the change in the fair value of these instruments is recorded as a component of Other Comprehensive Income. SPS expects to reclassify into earnings through June 2004 net losses from Other Comprehensive Income of approximately $0.9 million.

Hedge effectiveness is recorded based on the nature of the item being hedged. Hedging transactions for the sales of electric energy are recorded as a component of revenue, hedging transactions for fuel used in energy generation are recorded as a component of fuel costs, and hedging transactions for interest rate swaps are recorded as a component of interest expense.

NSP-Minnesota and PSCo have trading operations that enter into derivative instruments. These derivative instruments are accounted for on a mark-to-market basis in their respective Consolidated Statements of Operations. All derivative instruments are recorded at the amount of the gain or loss from the transaction within Operating Revenues on the Consolidated Statements of Operations.

Xcel Energy’s Utility Subsidiaries enter into fixed-price contracts for the purchase and sale of various commodities for use in their business operations. SFAS No. 133 requires a company to evaluate these contracts to determine whether the contracts are derivatives. Certain contracts that literally meet the definition of a derivative may be exempted from SFAS No. 133 as normal purchases or normal sales. Normal purchases and normal sales are contracts that provide for the purchase or sale of something other than a financial instrument or derivative instrument that will be delivered in quantities expected to be used or sold over a reasonable period in the normal course of business. Contracts that meet the requirements of normal are documented as normal and exempted from the accounting and reporting requirements of SFAS No. 133.

Xcel Energy’s Utility Subsidiaries evaluate all of their contracts when such contracts are entered to determine if they are derivatives and if so, if they qualify and meet the normal designation requirements under SFAS No. 133. None of the contracts entered into within the trading operations qualify for a normal designation.

Normal purchases and normal sales contracts are accounted for as executory contracts as required under other generally accepted accounting principles.

In April 2003, the Financial Accounting Standards Board (FASB) issued SFAS No. 149 — “Amendment of Statement 133 on Derivative Instruments and Hedging Activities” (SFAS No. 149). SFAS No. 149, which amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under SFAS No. 133. SFAS No. 149 clarifies the discussion around initial net investment, clarifies when a derivative contains a financing component and amends the definition of an underlying to conform it to language used in FASB Interpretation No. 45. In addition, SFAS No. 149 also incorporates certain implementation issues of a derivative implementation group. The provisions of SFAS No. 149 are effective for contracts entered into or modified after June 30, 2003, and for hedging relationships designated after June 30, 2003. The guidance will be applied to hedging relationships on a prospective basis. The Utility Subsidiaries are currently assessing SFAS No. 149, but do not anticipate that it will have a material impact on consolidated results of operations, cash flows or financial position.

In June 2003, for purposes of determining the applicability of the normal purchases and normal sales scope exception, the FASB issued SFAS No. 133 Implementation Issue No. C20 as supplemental guidance to SFAS No. 133 Implementation Issue No. C11. The effective date of the Implementation guidance of Issue No. C20 is the first day for the first fiscal quarter beginning after July 10, 2003, which for Xcel Energy’s Utility Subsidiaries is the fourth quarter. The Utility Subsidiaries are currently in the process of reviewing and interpreting this guidance and do not currently anticipate any material adverse financial impact due to the implementation of Issue No. C20 guidance.

Xcel Energy’s Utility Subsidiaries each have two reportable segments, Electric Utility and Natural Gas Utility, with the exception of SPS, which has only an Electric Utility reportable segment. Trading operations are not a reportable segment; electric trading results are included in the Electric Utility segment. All Other represents activity of unregulated subsidiaries and other operations of the Utility Subsidiaries.

In 2003, the process to allocate common costs of the Electric and Natural Gas Utility segments was revised. Segment results for 2002 have been restated to reflect the revised cost allocation process.

SPS operates in the regulated electric utility industry, providing wholesale and retail electric service in the states of Texas, New Mexico, Kansas and Oklahoma. Revenues from external customers were $284.3 million and $266.9 million for the three months ended June 30, 2003 and 2002, respectively. Revenues from external customers were $528.9 million and $478.6 million for the six months ended June 30, 2003 and 2002, respectively.

The accumulated comprehensive income in stockholder’s equity at June 30, 2003 and 2002, relates to valuation adjustments on NSP-Minnesota’s derivative financial instruments and hedging activities, the related regulatory deferral and the mark-to-market components of NSP-Minnesota’s marketable securities.

The accumulated comprehensive income in stockholder’s equity at June 30, 2003 and 2002, relates to valuation adjustments on NSP-Wisconsin’s derivative financial instruments and hedging activities, the related regulatory deferral and the mark-to-market components of NSP-Wisconsin’s marketable securities.

The accumulated comprehensive income in stockholder’s equity at June 30, 2003 and 2002, relates to valuation adjustments on PSCo’s derivative financial instruments and hedging activities, the related regulatory deferral, the mark-to-market component of PSCo’s marketable securities and unrealized losses related to its minimum pension liability.

The accumulated comprehensive income in stockholder’s equity at June 30, 2003 and 2002, relates to valuation adjustments on SPS’ derivative financial instruments and hedging activities and unrealized losses related to its minimum pension liability.

On May 29, 2003, the Minnesota Legislature enacted legislation, which will enable NSP-Minnesota to store at least 12 more casks of spent fuel outside the Prairie Island nuclear generating plant, allowing NSP-Minnesota to continue to operate the facility and store spent-fuel there until the licenses with the Nuclear Regulatory Commission (NRC) expire in 2013 and 2014. The legislation transfers from the state Legislature to the MPUC the primary authority concerning future spent-fuel storage issues and allows for additional storage of spent nuclear fuel in the event the NRC extends the licenses of Prairie Island and the Monticello Nuclear generating plant and the MPUC grants a certificate of need for such additional storage without an affirmative vote from the state Legislature. The legislation requires Xcel Energy to add at least 300 megawatts of additional wind power by 2010 with an option to own 100 megawatts of this power.

The legislation also requires specified levels of payments to various third parties during the remaining operating life of the Prairie Island plant. These payments include: $2.25 million per year to the Prairie Island Tribal Community beginning in 2004; 5 percent of NSP-Minnesota’s conservation program expenditures (estimated at $2 million per year) to the University of Minnesota for renewable energy research; and an increase in funding commitments to the previously-established Renewable Development Fund from $500,000 per installed cask per year to a total of $16 million per year beginning in 2003. The legislation also designated $10 million in one-time grants to the University of Minnesota for additional renewable energy research, which is to be funded from commitments already made to the Renewable Development Fund. Nearly all of the cost increases to NSP-Minnesota from these required payments and funding commitments are expected to be recoverable in customer rates, mainly through existing cost recovery mechanisms. Funding commitments to the Renewable Development Fund would terminate after the Prairie Island plant discontinues operation unless the MPUC determines that Xcel Energy failed to make a good faith effort to move the waste, in which case NSP-Minnesota would have to make payments in the amount of $7.5 million per year.

In April 2003, Xcel Energy amended certain of its retirement plans to provide the same level of benefits to all non-bargaining employees of its utility and service company operations. While this change did not have a material impact on 2003 costs for the affected pension and retiree health plans, the increased obligations resulting from the plan amendment did create a minimum pension liability which was recorded in the second quarter of 2003. The additional pension obligation recorded by SPS increased noncurrent liabilities by approximately $21 million and reduced Accumulated Other Comprehensive Income, a component of shareholder’s equity, by approximately $25 million (net of related deferred tax effects of $14 million) during the

quarter. The minimum pension liability adjustment also increased SPS’ noncurrent intangible assets by approximately $40 million due to the recording of unamortized prior service costs, and reduced its previously recorded prepaid pension assets accordingly.

Discussion of financial condition and liquidity for the Utility Subsidiaries of Xcel Energy are omitted per conditions set forth in general instructions H (1) (a) and (b) of Form 10-Q for wholly owned subsidiaries. It is replaced with management’s narrative analysis and the results of operations set forth in general instructions H (2) (a) of Form 10-Q for wholly owned subsidiaries (reduced disclosure format).

The following discussion and analysis by management focuses on those factors that had a material effect on the financial condition and results of operations of Xcel Energy’s Utility Subsidiaries during the periods presented, or are expected to have a material impact in the future. It should be read in conjunction with the accompanying unaudited Financial Statements and Notes.

Except for the historical statements contained in this report, the matters discussed in the following discussion and analysis are forward-looking statements that are subject to certain risks, uncertainties and assumptions. Such forward-looking statements are intended to be identified in this document by the words “anticipate,” “estimate,” “expect,” “objective,” “outlook,” “possible,” “potential” and similar expressions. Actual results may vary materially. Factors that could cause actual results to differ materially include, but are not limited to:

	•		general economic conditions, including their impact on capital expenditures and the ability of Xcel Energy’s Utility Subsidiaries to obtain financing on favorable terms;

	•		business conditions in the energy industry;

	•		competitive factors, including the extent and timing of the entry of additional competition in the markets served by the Utility Subsidiaries of Xcel Energy;

	•		unusual weather;

	•		state, federal and foreign legislative and regulatory initiatives that affect cost and investment recovery, have an impact on rate structures and affect the speed and degree to which competition enters the electric and natural gas markets;

	•		risks associated with the California and other western power markets; and

	•		the other risk factors listed from time to time by the Utility Subsidiaries of Xcel Energy in reports filed with the Securities and Exchange Commission (SEC), including Exhibit 99.01 to this Report on Form 10-Q for the quarter ended June 30, 2003.

The Utility Subsidiaries of Xcel Energy are exposed to market risks, including changes in commodity prices and interest rates as disclosed in Management’s Discussion and Analysis in their annual reports on Form 10-K for the year ended Dec. 31, 2002. Commodity price and interest rate risks for the Utility Subsidiaries of Xcel Energy are mitigated in most jurisdictions due to cost-based rate regulation. At June 30, 2003, there were no material changes in the financial market risks that affect the quantitative and qualitative disclosures presented as of Dec. 31, 2002, in Item 7A of their annual reports on Form 10-K.

NSP-Minnesota maintains trust funds, as required by the Nuclear Regulatory Commission, to fund certain costs of nuclear decommissioning. Those investments are exposed to price fluctuations in equity markets and changes in interest rates. However, because the costs of nuclear decommissioning are recovered through NSP-Minnesota rates, fluctuations in investment fair value do not affect NSP-Minnesota’s consolidated results of operations.

Xcel Energy’s Utility Subsidiaries use a value-at-risk (VaR) model to assess the market risk of their fixed price purchase and sales commitments, physical forward contracts and commodity derivative instruments. VaR for hedges associated with generating assets and commodity contracts, assuming a five-day holding period for electricity and a two-day holding period for natural gas, for the three months ended June 30, 2003, is as follows:

Xcel Energy’s Utility Subsidiaries engage in energy trading activities that are accounted for in accordance with SFAS No. 133, as amended. The Utility Subsidiaries make wholesale purchases and sales of electricity, natural gas and related energy trading products, and also engage in a limited number of wholesale commodity transactions. The Utility Subsidiaries utilize forward contracts for the purchase and sale of electricity and capacity, over-the-counter swap contracts, exchange-traded natural gas futures and options, transmission contracts, natural gas transportation contracts and other physical and financial contracts.

For the period ended June 30, 2003, these contracts, with the exception of transmission and natural gas transportation contracts, were marked to market in accordance with Emerging Issues Task Force (EITF) 02-3 and SFAS No. 133. Changes in fair value of energy trading contracts that do not qualify for hedge accounting treatment are recorded in income in the reporting period in which they occur.

As of June 30, 2003, the sources of fair value of the energy trading and hedging net assets are as follows:

2 — Prices based on models and other valuation methods. These represent the fair value of positions calculated using internal models when directly and indirectly quoted external prices or prices derived from external sources are not available. Internal models incorporate the use of options pricing and estimates of the present value of cash flows based upon underlying contractual terms. The models reflect management’s estimates, taking into account observable market prices, estimated market prices in the absence of quoted market prices, the risk-free market discount rate, volatility factors, estimated correlations of energy commodity prices and contractual volumes. Market price uncertainty and other risks also are factored into the model.

In the above tables, only “hedge” transactions are included for NSP-Minnesota, NSP-Wisconsin and PSCo. “Normal purchases and sales” transactions have been excluded.

NSP-Minnesota’s net income was approximately $64.1 million for the first six months of 2003, compared with approximately $75.5 million for the first six months of 2002.

Electric fuel and purchased power expense tend to vary with changing retail and wholesale sales requirements and unit cost changes in fuel and purchased power. Due to fuel cost recovery mechanisms for retail customers, most fluctuations in energy costs do not significantly affect electric utility margin.

NSP-Minnesota has two distinct forms of wholesale sales: short-term wholesale and electric commodity trading. Short-term wholesale refers to electric sales for resale (excluding sales to retail and municipal customers), which are associated with energy produced from NSP-Minnesota’s generation assets or energy and capacity purchased to serve native load. Electric commodity trading refers to the sales for resale activity of purchasing and reselling electric energy to the wholesale market. Margins from electric commodity trading activity, conducted at NSP-Minnesota, is partially redistributed to PSCo and SPS pursuant to the Joint Operating Agreement (JOA) approved by the FERC. Trading margins are reported net of related costs in the Consolidated Statements of Income.

The following table details electric utility, short-term wholesale and electric commodity trading revenue and margin:

Base electric utility revenues increased by $41 million, or 3.9 percent, in the first six months of 2003, compared with the same period in 2002. Base electric utility margins increased by $4 million, or 0.6 percent in the first six months of 2003 when

compared with the same period in 2002. The increase in revenues and margins reflects sales growth and the recovery in 2003 of increased electric fuel costs and of the 2003 $10-million renewable development fund payments (for which a corresponding charge to depreciation expense was recorded), through the fuel clause mechanism and interchange agreement with NSP-Wisconsin. These increases were offset by the impact of an electric rate reduction attributable to a Minnesota state property tax reduction and unfavorable weather.

Short-term wholesale margins increased in the first six months of 2003, compared with the first six months of 2002, primarily due to more favorable prices on electric sales to other utilities.

The following table details the change in natural gas revenue and margin. The cost of natural gas tends to vary with changing sales requirements and unit cost of natural gas purchases. However, due to purchased natural gas cost recovery mechanisms for sales to retail customers, fluctuations in the cost of natural gas have little effect on natural gas margin.

Natural gas revenue increased by approximately $145 million, or 52.3 percent, in the first six months of 2003, primarily due to increases in the cost of natural gas, which are largely passed on to customers through various rate adjustment clauses. Natural gas margin for the first six months of 2003 increased by $2 million, or 2.2 percent, compared with the first six months of 2002, primarily due to sales growth and favorable weather in 2003, partially offset by lower margins from transportation services.

Other Operating and Maintenance Expense increased by approximately $13.5 million, or 3.3 percent, for the first six months of 2003, compared with the first six months of 2002, primarily due to higher incentive and other employee benefit costs and a planned refueling outage at the Monticello nuclear plant.

Depreciation and Amortization Expense increased by approximately $17.7 million, or 10.2 percent, for the first six months of 2003, compared with the first six months of 2002, primarily due to $10 million of renewable development fund costs, which are largely recovered through NSP-Minnesota’s fuel clause mechanism and the interchange agreement with NSP-Wisconsin. Also, depreciation increased due to plant additions, including computer software.

As discussed in Note 2 to the Financial Statements, in the first quarter of 2002, pretax special charges of $4.3 million were expensed for the costs of staff consolidations. The charges related to severance costs for utility operations resulting from restaffing plans of several operating and corporate support areas of Xcel Energy.

Other Income (Expense) — net decreased by $6.2 million, due primarily to a gain on the sale of property by a subsidiary of NSP-Minnesota, First Midwest Auto Park, in March 2002 and interest income of $4.2 million from a federal income tax settlement recorded in June 2002. These decreases from 2002 were partially offset by higher allowances for funds used during construction in 2003.

Interest charges and financing costs increased by approximately $27.3 million, or 78.8 percent, for the first six months of 2003, compared with the first six months of 2002. The increase is due to the issuance of long-term debt in July and August of 2002, as part of a financing plan to reduce the dependence on short-term debt.

Income tax expense decreased by approximately $27.4 million for the first six months of 2003, compared with the first six months of 2002. The effective tax rate for NSP-Minnesota was 26.3 percent in the first six months of 2003 and 40.0 percent in the same period of 2002. The change in the effective tax rate between years primarily reflects adjustments to 2002 and year-to-date 2003 state tax accruals recorded in 2003 related to updated income apportionment by state, a higher ratio of tax credits to lower income levels and NSP-Minnesota adjustments due to favorable income tax audit settlements in 2003.

NSP-Wisconsin’s net income was $24.7 million for the first six months of 2003, compared with $30.4 million for the first six months of 2002.

The following table details the change in electric revenue and margin. Electric production expenses tend to vary with the quantity of electricity required and changes in the unit costs of fuel and purchased power. The fuel and purchased power cost recovery mechanism of the Wisconsin jurisdiction does not allow for complete recovery of all such cost increases and, therefore, dramatic changes in costs or periods of extreme temperatures can adversely affect earnings.

Electric utility margin decreased by approximately $5 million, or 4.1 percent, in the first six months of 2003, compared with the first six months of 2002, primarily due to lower fuel cost recovery through rates and higher unit costs of fuel and purchased power in 2003. Sales growth, favorable weather in 2003, and higher billings to NSP-Minnesota for energy delivered and cost allocations partially offset the margin decreases.

The following table details the change in natural gas revenue and margin. The cost of natural gas tends to vary with changing sales requirements and unit cost of natural gas purchases. However, due to purchase natural gas cost recovery mechanisms for retail customers, fluctuations in the cost of natural gas have little effect on natural gas margin.

Natural gas revenue for the first six months of 2003 increased by approximately $22 million, or 37.3 percent, compared with the first six months of 2002, primarily due to significant increases in the cost of natural gas, which is largely recovered through various purchased natural gas cost recovery mechanisms. Natural gas margin increased by approximately $3 million, or 18.8 percent, in the first six months of 2003 due to sales growth and more favorable weather conditions in 2003.

Other Operating and Maintenance Expense for the first six months of 2003 increased by approximately $3.2 million, or 6.5 percent, compared with the first six months of 2002, primarily due to higher incentive and other benefit costs partially offset by lower transmission interchange charges from NSP-Minnesota.

Depreciation and Amortization Expense increased by approximately $1.3 million, or 5.9 percent, in the first six months of 2003, compared with the first six months of 2002, primarily due to capital additions to utility plant.

As discussed in Note 2 to the Financial Statements, in the first quarter of 2002, pretax special charges of $0.5 million were expensed for the costs of staff consolidations. The charges related to severance costs for utility operations resulting from restaffing plans of several operating and corporate support areas of Xcel Energy.

PSCo’s net income was $103.7 million for the first six months of 2003, compared with $129.1 million for the first six months of 2002.

Electric production expenses tend to vary with changing retail and wholesale sales requirements and unit cost changes in fuel and purchased power. Due to fuel clause cost recovery mechanisms for retail customers in Colorado, most fluctuations in energy costs do not materially affect electric margin In addition energy cost recovery mechanisms, PSCo has other adjustment clauses that allow certain costs to be passed through to retail customers.

Some electric commodity trading activity, initially recorded at PSCo, is partially redistributed to NSP-Minnesota and SPS pursuant to the JOA approved by the FERC. Trading revenue and costs do not include the revenue and production costs associated with energy produced from PSCo’s generation assets or energy and capacity purchased to serve native load. Margins from these generating assets for utility operations are included in short-term wholesale amounts. Trading margins reflect the impact of sharing certain trading margins with Colorado retail customers.

The following table details electric utility, short-term wholesale and electric trading revenue and margin.

Base electric utility revenues increased approximately $95 million, or 11.0 percent, in the first six months of 2003 compared with the first six months of 2002 due mainly to higher cost recovery levels under the IAC in 2003.

Base electric utility margin decreased by approximately $27 million, or 5.6 percent, in the first six months of 2003, compared with the first six months of 2002. The lower base electric margins reflect higher demand costs, which are not recoverable under the IAC, the positive impact of incentive cost adjustment mechanisms in 2002 and unfavorable weather in 2003. Sales growth and the implementation of an air-quality improvement rider for the recovery of investments and related costs to improve air quality in Colorado partially offset the margin decrease in 2003.

The following table details the change in natural gas revenue and margin. The cost of natural gas tends to vary with changing sales requirements and unit cost of natural gas purchases. PSCo has a Gas Cost Adjustment (GCA) mechanism for natural gas sales, which recognizes the majority of the effects of changes in the cost of natural gas purchased for resale and adjusts revenues to reflect such changes in costs upon request by PSCo. Therefore, fluctuations in the cost of natural gas have little effect on natural gas margin.

Natural gas revenue for the first six months of 2003 decreased by approximately $14 million, or 3.3 percent, compared with the first six months of 2002, largely due to lower revenues recognized for cost recovery levels approved under the GCA. Natural gas margin for the first six months of 2003 decreased by approximately $4 million, or 2.4 percent, compared with the first six months of 2002, primarily due to warmer winter weather, which is less favorable for natural gas sales. GCA recovery was lower in 2003 despite higher natural gas costs in 2003 compared to 2002. Costs not recovered currently are deferred to future periods when GCA recovery is provided.

Other Operation and Maintenance for the six months ended June 30, 2003 increased by approximately $8.0 million, or 3.6 percent, compared to 2002 due to higher incentive and other employee benefit costs, partly offset by lower outage related costs and timing of expenses.

Depreciation and Amortization Expense decreased by approximately $8.0 million, or 6.2 percent, for the first six months of 2003 compared with the first six months of 2002, primarily due to decreased amortization of capitalized software and to depreciation of Arapahoe plant units 1and 2 ending at Dec. 31, 2002.

Interest expense increased by approximately $16.5 million, or 27.4 percent, for the first six months of 2003 compared with the first six months of 2002. Increased interest costs reflect higher debt levels in 2003 and higher interest rates on recent debt issues.

Income tax expensed decreased by $24.3 million for the first six months of 2003 compared with the same period in 2002. The effective tax rate for PSCo was 30.7 percent in the first six months of 2003 compared with 35.2 percent for the same period in 2002. The change in the effective tax rate between years is due primarily to a higher ratio of tax credits to lower income levels.

SPS’ net income was approximately $29.0 million for the first six months of 2003, compared with approximately $28.2 million for the first six months of 2002.

The following table details the change in electric revenue and margin. Electric production expenses tend to vary with changing retail and wholesale sales requirements and unit cost changes in fuel and purchased power. Due to fuel clause cost recovery mechanisms for retail customers, most fluctuations in energy costs do not affect electric margin.

Base electric utility revenue increased by approximately $49 million, or 10.3 percent, for the first six months of 2003, compared with the first six months of 2002. Base electric utility margin decreased by approximately $6 million, or 2.7 percent, for the first six months of 2003, compared with the first six months of 2002. Base electric revenues increased primarily due to higher fuel and purchased power costs recovered through electric rates, partially offset by the unfavorable effects of lower average temperatures, and lower sharing of commodity trading margins with PSCo and NSP-Minnesota through the JOA. The decrease in base electric margin was primarily due to the effects of lower capacity sales, the settlement of the Texas fuel proceeding, the unfavorable effects of lower average temperatures and lower revenues shared through the JOA.

Other Operating and Maintenance Expense increased by approximately $3.1 million, or 4.0 percent, for the first six months of 2003, compared with the first six months of 2002. The increase is primarily due to higher incentive and other employee benefit costs partially offset by lower outage costs.

Taxes (other than income taxes) decreased by approximately $2.7 million, or 10.4 percent, for the first six months of 2003, compared with the first six months of 2002. The decrease is the result of a lower franchise tax rate assessed in Texas for 2003.

As discussed in Note 2 to the Financial Statements, in late 2001 SPS filed an application requesting a rate rider to recover costs incurred to comply with transition to retail competition legislation in Texas and New Mexico. During the first quarter of 2002, SPS entered into a settlement agreement with intervenors regarding the recovery of restructuring costs in Texas, subject to approval by the state regulatory commission. Based on the settlement agreement, SPS wrote off pretax restructuring costs of approximately $5 million in 2002, which are reported as special charges.

Xcel Energy’s Utility Subsidiaries maintain a set of disclosure controls and procedures designed to ensure that information required to be disclosed in reports that are filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. As of the end of the period covered by this report, based on an evaluation carried out under the supervision and with the participation of the Utility Subsidiaries’ management, including the Chief Executive Officers (CEO) and Chief Financial Officers (CFO) of such Utility Subsidiaries, of the effectiveness of our disclosure controls and procedures, the CEO and CFO of each Utility Subsidiary have concluded that such Utility Subsidiaries’ disclosure controls and procedures are effective.

No change in the Utility Subsidiaries’ internal control over financial reporting has occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Utility Subsidiaries’ internal controls over financial reporting.

Subsequent to the date of the evaluation, there have been no significant changes in the Utility Subsidiaries’ internal controls or in other factors that could significantly affect these controls.

Item 1. Legal Proceedings
In the normal course of business, various lawsuits and claims have arisen against the Utility Subsidiaries of Xcel Energy. Management, after consultation with legal counsel, has recorded an estimate of the probable cost of settlement or other disposition for such matters. See Notes 3 and 4 of the Financial Statements in this Form 10-Q for further discussion of legal proceedings, including Regulatory Matters and Commitments and Contingent Liabilities, which are hereby incorporated by reference. Reference also is made to Item 3 of NSP-Minnesota’s, NSP-Wisconsin’s, PSCo’s and SPS’ 2002 Form 10-K for a description of certain legal proceedings presently pending. There are no new significant cases to report against the Utility Subsidiaries of Xcel Energy and there have been no notable changes in the previously reported proceedings, except as set forth below.

Under a 1996 data services agreement, SchlumbergerSema, Inc. (SLB) provides automated meter reading, distribution automation, and other data services to NSP-Minnesota. In September 2002, NSP-Minnesota issued written notice that SLB committed events of default under the agreement, including SLB’s nonpayment of approximately $7.4 million for distribution automation assets. In November 2002, SLB demanded arbitration and asserted various claims against NSP-Minnesota totaling $24 million for alleged breach of an expansion contract and a meter purchasing contract. On April 9, 2003, the parties attempted to mediate their dispute. The mediation was unsuccessful. On April 16, 2003, SLB filed a motion in the U.S. Bankruptcy Court in Delaware for an order that “any claim against SchlumberSema, Inc. arising from the alleged failure to sign the DA Transfer Agreement was cured, released, waived, and/or barred by this court’s order of May 4, 2000 approving the sale of CellNet Data System, Inc.’s assets to SLB.” On June 3, 2003, the Court denied SLB’s motion. On June 20, 2003, SLB filed a second motion before the U.S. Bankruptcy Court in Delaware requesting an order similar to that previously requested. On July 23, 2003, the Court denied SLB’s second motion. The parties are preparing for arbitration.

On Sept. 25, 2000, NSP-Wisconsin was served with a complaint in Eau Claire County Circuit Court, Wisconsin, on behalf of Claron and Janice Stubrud. The complaint alleged that stray voltage from NSP-Wisconsin’s system harmed their dairy herd resulting in lost milk production, lost profits and income, property damage, and injury to their dairy herd. The complaint also alleged that NSP-Wisconsin acted willfully and wantonly, entitling plaintiffs to treble damages. The plaintiffs alleged farm damages of approximately $3.8 million, $2.7 million of which represents prejudgment interest. On March 28, 2003, the trial court granted partial summary judgment to NSP-Wisconsin and dismissed plaintiffs’ claims for strict products liability, trespass, treble damages, and prejudgment interest. Plaintiffs’ negligence and nuisance claims are expected to proceed to trial in Eau Claire County in November 2003.

On July 28, 2003, James and Elaine Nigon, defendants in a real estate misrepresentation suit commenced in Clark County Circuit Court by Dennis and Kathy Weber, served NSP-Wisconsin with a third-party summons and complaint. The Webers purchased a dairy farm from the Nigons in June 2000, and allege that the Nigons misrepresented the existence of stray voltage problems at the farm. The Nigons have joined NSP-Wisconsin as a third-party defendant, alleging that if they are liable to plaintiffs, it is as a result of their reliance on NSP-Wisconsin’s representations regarding stray voltage levels at the farm. NSP-Wisconsin is not aware of the amount of damages being claimed by the Webers.

On July 24, 1995, Lamb County Electric Cooperative, Inc. (LCEC) petitioned the PUCT for a cease and desist order against SPS. LCEC alleged that SPS had been unlawfully providing service to oil field customers and their facilities in LCEC’s singly certificated area. Lamb County has also sued SPS in Texas state court. In April 2003, the PUCT approved a recommended proposal for decision. SPS defended its service by demonstrating that in 1976 the cooperatives, SPS and the PUCT intended that SPS was to serve the expanding oil field operations. SPS demonstrated through extensive research that it was serving each of the oil field units and leases back in 1975, and it was not serving new customers. The PUCT decided that SPS was authorized to serve the oil field operations and denied LCEC’s request for a cease and desist order.

The following reports on Form 8-K were filed either during the three months ended June 30, 2003, or between June 30, 2003, and the date of this report:

Aug. 4, 2003 (filed Aug. 6, 2003) Items 5 and 7 Other Events and Financial Statements and Exhibits — Re: Prospectus supplement relating to $200 million of 2.875 percent First Mortgage Bonds due Aug. 1, 2006 and $175 million of 4.750 percent First Mortgage Bonds due Aug. 1, 2010.

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 on Aug. 14, 2003.

WELLS FARGO BANK, NATIONAL ASSOCIATION
and
BANC ONE CAPITAL MARKETS, INC.,
Co-Lead Arrangers

Northern States Power Company, a Minnesota corporation; the Banks, as defined below; and Wells Fargo Bank, National Association, a national banking association, as administrative agent for the Banks; agree as follows:

For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires, the terms defined in this Article have the meanings assigned to them in this Article, and include the plural as well as the singular.


	“Accounting Practices Change” means any change in the Borrower’s accounting practices that is permitted or required under the standards of the Financial Accounting Standards Board.


	“Acquisition Target” means any Person becoming a Subsidiary of the Borrower after the date hereof; any Person that is merged into or consolidated with the Borrower or any Subsidiary of the Borrower after the date hereof; or any Person with respect to whom all or a substantial part of that Person’s assets are acquired by the Borrower or any Subsidiary of the Borrower after the date hereof.


	“Act” means the Securities Act of 1933, as amended.

	“Additional Bank” means a financial institution that becomes a Bank pursuant to the procedures set forth in Section 8.10.

	“Advance” means an advance by the Banks to the Borrower pursuant to Article II.

	“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with such Person. A Person shall be deemed to control another Person if the controlling Person owns 25% or more of the voting securities (or other ownership interests) of the controlled Person or possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of stock, by contract or otherwise.

	“Agent” means Wells Fargo acting in its capacity as administrative agent for itself and the other Banks hereunder.


	“Agreement” means this Credit Agreement, as it may be amended, modified or restated from time to time in accordance with Section 9.2.

	“Assignment Certificate” has the meaning set forth in Section 8.10.

	“Authorizing Order” means any order of the MPUC or any other regulatory body having jurisdiction over the Borrower or the Parent authorizing and/or restricting the indebtedness that may be created from time to time hereunder (whether on account of Advances, Letters of Credit or otherwise) or under the Bonds.

	“Banks” means Wells Fargo, acting on its own behalf and not as Agent, each of the undersigned banks and any financial institution that becomes a Bank pursuant to the procedures set forth in Section 8.10, collectively.

	“Base Rate” means, at any time, the greater of:

	(a)		the Prime Rate,

	or

	(b)		the Federal Funds Rate, plus 50 basis points (0.50%).


	“Bonds” means the First Mortgage Bonds, Series due 2004, extendible through 2006, issued under the First Mortgage Indenture.

	“Borrower” means Northern States Power Company, a Minnesota corporation and a party to this Agreement.

	“Borrowing” means a borrowing under Article II consisting of Advances made to the Borrower at the same time by each of the Banks severally.

	“Business Day” means (i) with respect to any borrowing, payment or rate selection of Eurodollar Rate Fundings, a day (other than a Saturday or Sunday) on which banks generally are open in Minnesota and New York for the conduct of substantially all of their commercial lending activities, interbank wire transfers can be made on the Fedwire system and dealings in United States dollars are carried on in the London interbank market and (ii) for all other purposes, a day (other than a Saturday or Sunday) on which banks generally are open in Minnesota and New York for the conduct of substantially all of their commercial lending activities and interbank wire transfers can be made on the Fedwire system.

	“Capitalized Lease” means any lease that in accordance with GAAP should be capitalized on the balance sheet of the lessee thereunder.

	“Cash Collateral Account” means an interest-bearing account maintained with the Agent in which funds are deposited pursuant to Section 2.7(g) or Section 7.2(c).


	“Change of Control” means, with respect to any corporation, either (i) the acquisition by any “person” or “group” (as those terms are used in Sections 13(d) and 14(d) of the Exchange Act) of beneficial ownership (as defined in Rules 13d-3 and 13d-5 of the SEC, except that a Person shall be deemed to have beneficial ownership of all securities that such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of 25% or more of the then-outstanding voting capital stock of such corporation; or (ii) a change in the composition of the board of directors of such corporation or any corporate parent of such corporation such that continuing directors cease to constitute more than 50% of such board of directors. As used in this definition, “continuing directors” means, as of any date, (i) those members of the board of directors of the applicable corporation who assumed office prior to such date, and (ii) those members of the board of directors of the applicable corporation who assumed office after such date and whose appointment or nomination for election by that corporation’s shareholders was approved by a vote of at least 50% of the directors of such corporation in office immediately prior to such appointment or nomination.

	“Commitment” means, with respect to each Bank, that Bank’s commitment to make Advances and participate in Letters of Credit pursuant to Article II.

	“Commitment Amount” means, with respect to each Bank, the amount set forth opposite that Bank’s name in Exhibit A or on any Assignment Certificate, unless said amount is reduced pursuant to Section 2.10 or 2.19, in which event it means the amount to which said amount is reduced.

	“Commitment Termination Date” means May 14, 2004, or such later date as may be established pursuant to Section 2.19, or the earlier date of termination in whole of the Commitments pursuant to Section 2.10 or 7.2; provided, however, that the Commitment Termination Date of any declining Bank under Section 2.19 shall be the Commitment Terminate Date in effect at the time of any extension request pursuant to such section.

	“Compliance Certificate” means a certificate in substantially the form of Exhibit C, or such other form as the Borrower and the Banks may from time to time agree upon in writing, executed by the chief financial officer or treasurer of the Borrower, (i) setting forth relevant facts in reasonable detail the computations as to whether or not the Borrower is in compliance with the requirements set forth in Sections 6.8 and 6.9, (ii) stating that the financial statements delivered therewith have been prepared in accordance with GAAP, subject, in the case of interim financial statements, to year-end audit adjustments, and (iii) stating whether or not such officer has knowledge of the occurrence of any Default or Event of Default hereunder not theretofore reported or remedied and, if so, stating in reasonable detail the facts with respect thereto.


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

	“EBIT” means, with respect to any period:


	“Effective Date” means the first date on or after the date hereof on which all conditions set forth in Section 3.1 have been satisfied.

	“Eligible Lender” means (a) a financial institution organized under the laws of the United States, or any state thereof, and having a combined capital and surplus of at least $250,000,000; (b) a commercial bank organized under the laws of any other country which is a member of the Organization for Economic Cooperation and Development, or a political subdivision of any such country, and having a combined capital and surplus of at least $250,000,000, provided that such bank is acting through a branch or agency located in the United States; or (c) a person controlled by, controlling, or under common control with any entity identified in clause (a) or (b) above.

	“Environmental Law” means the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq., the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq., the Hazardous Materials Transportation Act, 49 U.S.C. § 1802 et seq., the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq., the Federal Water Pollution Control Act, 33 U.S.C. § 1252 et seq., the Clean Water Act, 33 U.S.C. § 1321 et seq., the Clean Air Act, 42 U.S.C. § 7401 et seq., and any other federal, state, county, municipal, local or other statute, law, ordinance or regulation which may relate to or deal with human health or the environment, all as may be from time to time amended.


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

	“ERISA Affiliate” means any trade or business (whether or not incorporated) that is, along with the Borrower, a member of a controlled group of corporations or a controlled group of trades or businesses, as described in sections 414(b) and 414(c), respectively, of the Internal Revenue Code of 1986, as amended.

	“Eurodollar Base Rate” means, with respect to any Interest Period, the rate per annum which appears on Reuters Screen FRBD as of approximately 11:00 a.m. London time on the date two Business Days before the commencement of such Interest Period as the rate at which dollar deposits in immediately available funds are offered on the London interbank dollar market; provided, however, that if such page is no longer available, the Eurodollar Base Rate shall be determined by the Agent on the basis of a substantially comparable source selected by the Agent and acceptable to the Required Banks.

	“Eurodollar Rate” means the annual rate equal to the sum of (i) the rate obtained by dividing (a) the applicable Eurodollar Base Rate (rounded up to the nearest 1/8 of 1%) for funds to be made available on the first day of any Interest Period in an amount approximately equal to the amount for which a Eurodollar Rate has been requested and maturing at the end of such Interest Period, by (b) a percentage equal to 100% minus the Federal Reserve System reserve requirement (expressed as a percentage) imposed under Regulation D on Eurocurrency liabilities, and (ii) the Eurodollar Rate Margin.

	“Eurodollar Rate Funding” means any Borrowing, or any portion of the principal balance of the Notes, bearing interest at a Eurodollar Rate.

	“Eurodollar Rate Margin” means a percentage, determined as set forth in Section 2.6.

	“Event of Default” has the meaning specified in Section 7.1.

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

	“Facility Fee Rate” means a percentage, determined as set forth in Section 2.6.

	“Federal Funds Rate” means at any time an interest rate per annum equal to the weighted average of the rates for overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published for such day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day for such transactions received by the Agent from three federal funds brokers of recognized standing selected by it, it being understood that the Federal


	Funds Rate for any day which is not a Business Day shall be the Federal Funds Rate for the next preceding Business Day.

	“Fee Letters” means one or more separate agreements between the Borrower and the Agent, setting forth the terms of certain fees to be paid by the Borrower to the Agent for the Agent’s own behalf or for the benefit of the Banks, as more fully set forth therein.

	“First Mortgage Bonds” means any bonds issued pursuant to the First Mortgage Indenture.

	“First Mortgage Indenture” or “Indenture” means the First Mortgage Bond Indenture dated as of February 1, 1937 between the Borrower (by assignment from the Parent) and the Trustee, as previously amended and supplemented (including by the Restated Indenture and by the Supplemental Trust Indenture dated as of May 1, 2003) and as it may be amended and/or supplemented from time to time.

	“Floating Rate” means an annual rate equal to the Base Rate, plus the Floating Rate Margin, which rate shall change when and as the Base Rate or any component of the Floating Rate Margin changes.

	“Floating Rate Funding” means any Borrowing, or any portion of the principal balance of the Notes, bearing interest at the Floating Rate.

	“Floating Rate Margin” means a percentage, determined as set forth in Section 2.6.

	“Funded Debt” of any Person means (without duplication) (i) all indebtedness of such Person for borrowed money; (ii) the deferred and unpaid balance of the purchase price owing by such Person on account of any assets or services purchased (other than trade payables and other accrued liabilities incurred in the ordinary course of business that are not overdue by more than 180 days unless being contested in good faith) if such purchase price is (A) due more than nine months from the date of incurrence of the obligation in respect thereof or (B) evidenced by a note or a similar written instrument; (iii) all Capitalized Lease obligations; (iv) all indebtedness secured by a Lien on any property owned by such Person, whether or not such indebtedness has been assumed by such Person or is nonrecourse to such Person; (v) notes payable and drafts accepted representing extensions of credit whether or not representing obligations for borrowed money (other than such notes or drafts for the deferred purchase price of assets or services to the extent such purchase price is excluded from clause (ii) above); (vi) indebtedness evidenced by bonds, notes or similar written instrument; (vii) the face amount of all letters of credit and bankers’ acceptances issued for the account of such Person, and without duplication, all drafts drawn thereunder (other than such letters of credit, bankers’ acceptances and drafts for the deferred purchase price of assets or services to the extent such purchase price is excluded from clause (ii) above); (viii) net obligations of such Person under Swap


	Contracts which constitute interest rate agreements or currency agreements; (ix) guaranty obligations of such Person with respect to indebtedness for borrowed money of another Person (including Affiliates); (x) Off-Balance Sheet Liabilities; and (xi) in the case of the Borrower, any amounts due under the TOPrS; provided, however, that in no event shall any calculation of Funded Debt of the Borrower include (y) deferred taxes, or (z) so long as the Bonds are held as security under the Pledge Agreement and have not been sold or otherwise disposed of by foreclosure, any obligation of the Borrower under the Bonds.

	“GAAP” means generally accepted accounting principles as in effect from time to time applied on a basis consistent with the accounting practices applied in the financial statements of the Borrower referred to in Section 4.5, except for changes concurred in by Borrower’s independent public accountants and disclosed in Borrower’s financial statements or the notes thereto.

	“Hazardous Substance” means any asbestos, urea-formaldehyde, polychlorinated biphenyls (“PCBs”), nuclear fuel or material, chemical waste, radioactive material, explosives, known carcinogens, petroleum products and by-products and other dangerous, toxic or hazardous pollutants, contaminants, chemicals, materials or substances listed or identified in, or regulated by, any Environmental Law.

	“Interest Coverage Ratio” means, as of the end of any fiscal quarter of the Borrower, the ratio of (i) EBIT during the 4-quarter period ending on that quarter-end, to (ii) Interest Expense during such period.

	“Interest Expense” means, with respect to any period, the aggregate interest expense (including capitalized interest) of the Borrower and its Subsidiaries (determined on a consolidated basis) for such period, including but not limited to the interest portion of any Capitalized Lease and interest expenses associated with the TOPrS; provided, however, that the foregoing shall be adjusted to reflect only the net effect of any interest rate swap, interest hedging transaction or other similar arrangement entered into by the Borrower or any Subsidiary to reduce or eliminate variations in its interest expenses.

	“Interest Period” means, with respect to any Advance bearing interest at a Eurodollar Rate, a period of one, two, three or six months beginning on a Business Day, as elected by the Borrower.

	“Investment Company Act” means the Investment Company Act of 1940, as amended.

	“Issuing Bank” means Wells Fargo, acting as the Bank issuing Letters of Credit.


	“L/C Amount” means the sum of (i) the aggregate face amount of any issued and outstanding Letters of Credit, plus (ii) amounts drawn under Letters of Credit for which the Banks have neither been reimbursed nor made any Advance.

	“L/C Sublimit” means $50,000,000.

	“Letter of Credit” has the meaning set forth in Section 2.7.

	“Level Status” means Level I, Level II, Level III, Level IV or Level V, each as determined pursuant to Section 2.6(a).

	“Lien” means any mortgage, deed of trust, lien, pledge, security interest or other charge or encumbrance, of any kind whatsoever, including but not limited to the interest of the lessor or titleholder under any Capitalized Lease, title retention contract or similar agreement.

	“Loan Documents” means this Agreement, the Notes, the Fee Letters and the Pledge Agreement.

	“Material Adverse Change” means a material adverse change in the business, condition (financial or otherwise), or operations of the Borrower and its Subsidiaries taken as a whole.

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

	“MPUC” means the Minnesota Public Utilities Commission.

	“Multiemployer Plan” means a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA.

	“Note” has the meaning set forth in Section 2.1.

	“Obligations” means each and every debt, liability and obligation of every type and description arising under any of the Loan Documents which the Borrower may now or at any time hereafter owe to any Bank or the Agent, whether such debt, liability or obligation now exists or is hereafter created or incurred, whether it is direct or indirect, due or to become due, absolute or contingent, primary or secondary, liquidated or unliquidated, or sole, joint, several or joint and several, including but not limited to principal of and interest on the Notes and all fees due under this Agreement, any Fee Letter or any other Loan Document.

	“Off-Balance Sheet Liability” of a Person means (i) any repurchase obligation or liability of such Person with respect to accounts or notes receivable sold by such Person, (ii) any liability under any Sale and Leaseback Transaction which is not a Capitalized Lease, and (iii) all Synthetic Lease Obligations of such Person.


	“Operating Lease” of a Person means any lease of Property (other than a Capitalized Lease) by such Person as lessee.

	“Organizational Documents” means, (i) with respect to any corporation, the articles of incorporation and bylaws of such corporation, (ii) with respect to any partnership, the partnership agreement of such partnership, (iii) with respect to any limited liability company, the articles of organization and operating agreement of such company, and (iv) with respect to any entity, any and all other shareholder, partner or member control agreements and similar organizational documents relating to such entity.

	“Outstandings” means, at any time, an amount equal to the sum of (i) the aggregate principal balance of the Notes then outstanding, and (ii) the L/C Amount then outstanding.

	“Outstandings Percentage” means, at any time, the ratio (expressed as a percentage) of the aggregate Outstandings to the aggregate Commitment Amounts.

	“Parent” means Xcel Energy Inc., a Minnesota corporation.

	“Participating Affiliate” means, (a) with respect to any Bank, (i) an Affiliate of such Bank or (ii) any entity (whether a corporation, partnership, trust or otherwise) that is engaged in making, purchasing, holding or otherwise investing in bank loans and similar extensions of credit in the ordinary course of its business and is administered or managed by a Bank or an Affiliate of such Bank and (b) with respect to any Bank that is a fund which invests in bank loans and similar extensions of credit, any other fund that invests in bank loans and similar extensions of credit and is managed by the same investment advisor as such Bank or by an Affiliate of such investment advisor.

	“Percentage” means, with respect to each Bank, the ratio of (i) that Bank’s Commitment Amount, to (ii) the aggregate Commitment Amounts of all of the Banks. For purposes of this definition only, following the Commitment Termination Date, each Bank’s Commitment Amount shall be deemed to be the principal balance outstanding of that Bank’s Note.

	“Permitted Swap Obligations” means all obligations (contingent or otherwise) of the Borrower or any Subsidiary thereof existing or arising under Swap Contracts, provided that each of the following criteria is satisfied: (a) such obligations are (or were) entered into by such Person or its Subsidiaries in the ordinary course of business for the purpose of directly mitigating risks associated with liabilities, commitments or assets held or to be held by such Person, changes in the value of securities issued by such Person or its Subsidiaries in conjunction with a securities repurchase program not otherwise prohibited hereunder, and not for purposes of speculation or taking a “market view;” and (b) such Swap Contracts do not contain


	any provision (“walk-away” provision) exonerating the non-defaulting party from its obligations to make payments on outstanding transactions to the defaulting party.

	“Person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.

	“Plan” means an employee benefit plan or other plan established or maintained by the Borrower or any Subsidiary or ERISA Affiliate and covered by Title IV of ERISA.

	“Pledge Agreement” means the Borrower’s Security Agreement of even date herewith, granting the Agent a security interest in the Bonds and all proceeds thereof to secure the payment of the Notes and all other present and future obligations of the Borrower to the Agent and the Banks arising under or pursuant to this Agreement, together with all amendments, modifications and restatements of such Security Agreement.

	“Prime Rate” means, at any time, the rate of interest most recently announced within the Agent at its principal office as its “prime rate” or, if the Agent ceases to announce a rate so designated, any similar successor rate designated by the Agent. Such rate is one of the Agent’s base rates and serves as the basis upon which effective rates of interest are calculated for those loans making reference thereto, and is evidenced by the recording thereof in such internal publication or publications as the Agent may designate.

	“Prior Credit Agreement” means the Credit Agreement dated August 15, 2002 among the Borrower; the Agent; Bank of Montreal, The Bank of New York and U.S. Bank National Association, as Co-Agents thereunder; and the other “Banks” named therein, together with all amendments, modifications and restatements thereof.

	“Reportable Event” means (i) a “reportable event,” described in Section 4043 of ERISA and the regulations issued thereunder, in respect of any Plan, (ii) a withdrawal from any Plan, as described in Section 4063 of ERISA, (iii) an action to terminate a Plan for which a notice is required to be filed under Section 4041 of ERISA, (iv) any other event or condition that could reasonably be expected to constitute grounds for termination by the Pension Benefit Guaranty Corporation of, or the appointment by the appropriate United States District Court of a trustee to administer, any Plan, or (v) a complete or partial withdrawal from a Multiemployer Plan as described in Sections 4203 and 4205 of ERISA.

	“Required Banks” means one or more Banks (including, where relevant, Additional Banks) having an aggregate Percentage greater than 50%.

	“Restated Indenture” means the Supplemental and Restated Trust Indenture between the Borrower and the Trustee dated May 1, 1988.


	“Restricted Subsidiary” means a Subsidiary any of whose debts, liabilities or obligations (i) have been guarantied by the Borrower, (ii) with respect to which the Borrower is in any other manner obligated for the payment of money or otherwise to provide financial support, or (iii) are secured in whole or in part by any property of the Borrower.

	“S&P” means Standard & Poors Ratings Group, a division of McGraw-Hill Corporation.

	“SEC” means the Securities and Exchange Commission.

	“Sale and Leaseback Transaction” means any arrangement, directly or indirectly, with any Person whereby a seller or transferor shall sell or otherwise transfer any real or personal property and concurrently therewith lease, or repurchase under an extended purchase contract, conditional sales or other title retention agreement, the same or substantially similar property.

	“Solvent” means, with respect to any Person, that as of the date of determination (i) the fair market value of the property of such Person is (A) greater than the total liabilities (including contingent liabilities) of such Person, and (B) not less than the amount that will be required to pay the probable liabilities on such Person’s debts as they come due, considering all financing alternatives and potential asset sales reasonably available to such Person; (ii) such Person’s capital is not unreasonably small in relation to its business or any contemplated or undertaken transaction; (iii) such Person does not intend to incur, or believe (nor should it reasonably believe) that it will incur, debts beyond its ability to pay such debts as they become due; and (iv) such Person is “solvent” within the meaning given that term and similar terms under applicable laws relating to fraudulent transfers and conveyances. For purposes of this definition, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that would reasonably be expected to become an actual or matured liability.

	“Subsidiary” means (i) any corporation of which more than 50% of the outstanding shares of capital stock having general voting power under ordinary circumstances to elect a majority of the board of directors of such corporation, irrespective of whether or not at the time stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency, is at the time directly or indirectly owned by the Borrower, by the Borrower and one or more other Subsidiaries, or by one or more other Subsidiaries, (ii) any partnership of which more than 50% of the partnership interest therein are directly or indirectly owned by the Borrower, by the Borrower and one or more other Subsidiaries, or by one or more other Subsidiaries, and (iii) any limited liability company or other form of business organization the effective control of which is held by the Borrower, the Borrower and one or more other Subsidiaries, or by one or more other Subsidiaries.


	“Swap Contracts” means any agreement, whether or not in writing, relating to any transaction that is a rate swap, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap or option, bond, note or bill option, interest rate option, forward foreign exchange transaction, cap, collar or floor transaction, currency swap, cross-currency rate swap, swaption, currency option or any other similar transaction (including any option to enter into any of the foregoing) or any combination of the foregoing, and, unless the context otherwise clearly requires, any master agreement relating to or governing any or all of the foregoing.

	“Synthetic Lease Obligation” means the monetary obligation of a Person under (i) a so-called synthetic or off-balance sheet or tax retention lease or (ii) 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 indebtedness of such Person (without regard to accounting treatment). The amount of Synthetic Lease Obligations of any Person under any such lease or agreement shall be the amount which would be shown as a liability on a balance sheet of such Person prepared in accordance with GAAP if such lease or agreement were accounted for as a Capitalized Lease.

	“Tangible Net Worth” means shareholders’ equity (including preferred stock), less intangible assets included in calculating such shareholders’ equity, all determined in accordance with GAAP. For purposes of the foregoing calculation, intangible assets shall include but not be limited to the value of patents, trademarks, trade names, copyrights, licenses, premiums paid on indebtedness, good will, prepaid expenses, deferred charges and treasury stock. Tangible Net Worth with respect to the Borrower shall at all times be determined with respect to the Borrower and its Subsidiaries on a consolidated basis.

	“TOPrS” means 8,000,000 shares of 7.875 percent Trust Originated Preferred Securities issued and sold on January 31, 1997 through NSP Financing I, a statutory business trust formed under Delaware law the equity securities of which are wholly owned by the Borrower.

	“Total Capital” means the sum of (A) stockholders’ equity, which is the sum of common stock, premium on common stock and retained earnings and which excludes the TOPrS to the extent included in Funded Debt, and (B) Funded Debt, all determined with respect to the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP.

	“Trustee” means BNY Midwest Trust Company, as successor trustee under the Indenture, or any successor trustee thereunder.

	“Trust Indenture Act” means the Trust Indenture Act of 1939, as amended.

	“Welfare Plan” means a “welfare plan” as defined in Section 3(1) of ERISA.


	“Wells Fargo” means Wells Fargo Bank, National Association, a national banking association and a party to this Agreement.

	“Utilization Fee Rate” means a percentage, determined as set forth in Section 2.8.

All references to times of day in this Agreement shall be references to Minneapolis, Minnesota time unless otherwise specifically provided.

Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared in accordance with GAAP; provided that in the event of any Accounting Practices Change, then the Borrower’s compliance with the covenants set forth in Sections 6.8 and 6.9 shall be determined on the basis of generally accepted accounting principles in effect immediately before giving effect to the Accounting Practices Change, until such covenants are amended in a manner satisfactory to the Borrower and the Required Banks in accordance with Section 9.14 hereof.

Each Bank agrees, severally but not jointly, on the terms and subject to the conditions hereinafter set forth, to make Advances to the Borrower from time to time during the period from the date hereof to and including the Commitment Termination Date in an aggregate amount not to exceed at any time outstanding that Bank’s Commitment Amount, less that Bank’s Percentage of the sum of the then-outstanding L/C Amount. Within the limits of each Bank’s Commitment Amount, the Borrower may borrow, prepay pursuant to Section 2.11 and reborrow under this Section 2.1. The Advances made by each Bank under this Section 2.1 shall be evidenced by and repayable with interest in accordance with a single promissory note of the Borrower (each, a “Note”) payable to the order of that Bank, substantially in the form of Exhibit B hereto, dated the date hereof. The Notes shall bear interest on the unpaid principal amount thereof from the date thereof until paid as set forth in Section 2.3.

respect thereto. Such notice or request must be received by the Agent not later than 10:00 a.m. on the day on which such Borrowing is to occur or, if all or any portion of the Borrowing will bear interest at a Eurodollar Rate, not later than three Business Days prior to the date on which such Borrowing is to occur. Concurrent with any such notice or request, the Borrower shall deliver to the Agent in writing (which may be by facsimile transmission) the certificate required by Section 3.3(b). Upon receiving a request for a Borrowing under Section 2.1, and in any event not later than 1:30 p.m. on the date that the requested Borrowing is to occur, or, if the requested Borrowing is to bear interest at a Eurodollar Rate, the close of business on the day that the request is received, the Agent will notify the Banks of the amount of the requested Borrowing, the amount of each Bank’s Advance with respect thereto, and, if applicable, the fact that the Borrower has elected a Eurodollar Rate and the Interest Period selected by the Borrower. Upon fulfillment of the applicable conditions set forth in Article III, each Bank shall remit its Percentage of the requested Borrowing to the Agent in immediately available funds. So long as a Bank receives notice of the requested Borrowing prior to 1:30 p.m. on the date that the requested Borrowing is to occur, or, if the requested Borrowing is to bear interest at a Eurodollar Rate, the close of business on the day that the request is received, that Bank will make its Advance with respect to that Borrowing available to the Agent by wire transfer of immediately available funds to the Agent not later than 4:00 p.m. on the date called for in such notice. Prior to the close of business on the day of the requested Borrowing, the Agent shall disburse such funds by crediting the same to the Borrower’s demand deposit account maintained with the Agent or in such other manner as the Agent and the Borrower may from time to time agree. The Agent shall have no obligation to disburse the requested Borrowing if any condition set forth in Article III has not been satisfied on the day of the requested Borrowing. Each Borrowing shall be in the amount of $1,000,000 or an integral multiple thereof; provided, however, that any portion of such Borrowing bearing interest at a Eurodollar Rate must be in the amount of $5,000,000 or an integral multiple of $1,000,000 greater than $5,000,000. The Borrower shall promptly confirm each telephonic request for an Advance by executing and delivering an appropriate confirmation certificate to the Agent. However, the Borrower shall be obligated to repay all Advances for which it actually received the moneys (including but not limited to all Advances the proceeds of which were deposited in any account of the Borrower) or in respect of which the Agent reasonably believed the person requesting the same to be authorized to do so, notwithstanding the fact that the person requesting the same was not in fact authorized so to do. Any request for an Advance shall be deemed to be a representation that the statements set forth in Section 3.3 are correct.


	(a) The Notes shall bear interest on the unpaid principal amount thereof from the date thereof until paid as set forth in this Section 2.3.

	(b) Unless the Borrower elects a Eurodollar Rate pursuant to this Section, the principal balance of each Note shall bear interest at the Floating Rate.

(c) At the election of the Borrower, which may be exercised from time to time, the Borrower may request in writing or by telephone that a Eurodollar Rate be applicable for the portion of the outstanding principal balance of the Notes (including any Advance requested or to be requested) and for the Interest Period indicated by the Borrower in its request. The portion of the outstanding balance of the Notes for which a Eurodollar Rate is requested (i) must be in the amount (as to all Notes combined) of $5,000,000 or an integral multiple of $1,000,000 greater than $5,000,000, and (ii) if such request relates to Advances already outstanding, must, on the first day of the applicable Interest Period, either (1) bear interest at the Floating Rate, or (2) bear interest at a Eurodollar Rate with respect to which the Interest Period expires on such first day. In no event may the Borrower select an Interest Period extending beyond the Commitment Termination Date. A request for a Eurodollar Rate (i) must be received by the Agent before 10:00 a.m. on the day three Business Days before the first day of the proposed Interest Period (and the Agent shall give the Banks prompt notice thereof), and (ii) may not be rescinded by the Borrower after such request has been made. Subject to the terms and conditions set forth herein, the applicable Eurodollar Rate shall (subject to fluctuations in the applicable Eurodollar Rate Margin) be the interest rate applicable for the proposed Interest Period to the portion of the outstanding principal balance of the Note to which the Eurodollar Rate request related (and the remaining part of the principal balance of the Note, if any, shall continue to bear interest at the rate or rates previously applicable to such amounts). At the termination of such Interest Period, the interest rate applicable to the portion of the principal balance of the Note to which the Eurodollar Rate request was applicable shall revert to the Floating Rate unless a new Eurodollar Rate request is made by the Borrower in accordance with this Agreement. Notwithstanding anything to the contrary in this Section, (i) the Agent shall have no obligation to permit the application of a Eurodollar Rate for any Interest Period if any Bank, in its sole discretion, determines that deposits in amounts equal to the requested amount and maturing at the end of the proposed Interest Period are not readily available to such Bank from major banks in the London interbank market and (ii) without the consent of the Required Banks, the Agent will not permit the application of a Eurodollar Rate for any interest period if a Default or Event of Default has occurred and is continuing when the request for the Eurodollar Rate is made. Absent manifest error, the records of the Agent shall be conclusive evidence as to the amount of the Note bearing interest at a Eurodollar Rate, the applicable Eurodollar Rate and the date on which the Interest Period applicable to such Eurodollar Rate expires.

In no event shall the aggregate Outstandings at any time exceed the aggregate amount of the Commitments.

(a) Interest. Interest accruing on the principal balance of the Notes shall be due and payable on the last day of each March, June, September and December and on the Commitment Termination Date. Interest accruing at a Eurodollar Rate shall be due and payable on the last day of the applicable Interest Period or, if an Interest Period is in excess of three months, on the date that is three months after the beginning of the Interest Period and after each such interest payment date thereafter, and on the last day of the Interest Period and on the Commitment Termination Date.


	(b) Principal. The principal balance of the Notes shall be due and payable in full on the Commitment Termination Date.


	(a) The Borrower’s Level Status shall be determined on the basis of the rating accorded the Borrower’s First Mortgage Bonds by S&P and Moody’s, in accordance with the following table:

If the ratings applied by S&P and Moody’s differ such that they do not fall within a single column in the table set forth above, (i) if the applicable columns are adjacent to each other, the Level Status in effect shall be based on the rightmost of the applicable columns, (ii) if the applicable columns are separated by a single column, the Level Status in effect shall be based on the column between those two columns, and (iii) if the applicable columns are separated by two or more columns, the Level Status in effect shall be based on the column to the immediate left of the rightmost applicable column.

	(b)		In making the determinations under paragraph (a):

	(i)		If either S&P or Moody’s changes the meaning or designation for its ratings referenced in paragraph (a), the criteria for Level Status in the table in paragraph (a) shall be adjusted in such manner as the Required Banks may reasonably determine to correspond with the applicable

			rating designations used by S&P or Moody’s, as the case may be, in effect on the date hereof.

	(ii)		If either S&P or Moody’s, but not both of them, ceases to rate the Borrower’s First Mortgage Bonds, the determination in paragraph (a) shall be made on the basis of the rating accorded by whichever one continues to rate such debt.

	(iii)		If neither S&P nor Moody’s rates the Borrower’s First Mortgage Bonds, the Borrower shall be deemed to be at Level Status V.


	(c) The Floating Rate Margin, Eurodollar Rate Margin and Facility Fee Rate at any time shall be determined from time to time on the basis of the Borrower’s Level Status, in accordance with the following table:

(a) The Borrower may from time to time request that the Issuing Bank issue one or more irrevocable standby letters of credit (each, a “Letter of Credit”) for the account of the Borrower. No Letter of Credit shall be issued if (i) the face amount of that Letter of Credit, together with the sum of the then-applicable L/C Amount and the aggregate principal balance of the Notes then outstanding, would exceed the aggregate Commitment Amounts, or (ii) the face amount of that Letter of Credit, together with the then-applicable L/C Amount, would exceed the L/C Sublimit.


	(b) At least three days prior to the issuance of each Letter of Credit, the Borrower shall execute a letter of credit application and reimbursement agreement in the Issuing Bank’s standard form, as required by the Issuing Bank.


	(c) Each Letter of Credit shall be issued in a form acceptable to the Issuing Bank. Unless otherwise approved by all of the Banks, no Letter of Credit shall have an initial or any renewal term ending more than one year after the date of issuance.

	(d) A fee shall be due and payable to the Agent for the benefit of the Banks upon issuance of each Letter of Credit, computed at an annual rate equal to the Eurodollar Rate Margin applied to the face amount of that Letter of Credit outstanding from time to time, from and including the date of issuance of that Letter of Credit until the expiration thereof, payable in arrears on the last day of each calendar quarter and on the Commitment Termination Date and, if later, the expiration date of such Letter of Credit. In addition, the Borrower shall pay or reimburse the Issuing Bank for such additional fees as are specified in the Fee Letters and for such normal and customary costs and expenses as are incurred or charged by the Issuing Bank in issuing, effecting payment under, amending or otherwise administering any Letter of Credit.

	(e) The Borrower shall pay the amount of each draft drawn under any Letter of Credit to the Issuing Bank on demand (or, if demand is not earlier made, on the Commitment Termination Date), together with interest at the Floating Rate from the date that such draft is paid by the Issuing Bank until payment of such amount in full. The Issuing Bank shall provide notice to the Borrower of payment of the draft within one Business Day of such payment. The Issuing Bank may (at its option) charge any deposit account maintained by the Borrower with the Issuing Bank for the amount of any draft drawn under a Letter of Credit.

	(f) Each Bank shall be deemed to hold a participation interest in each Letter of Credit equal to that Bank’s Percentage of the face amount of that Letter of Credit. If the Issuing Bank makes any payment pursuant to the terms of any Letter of Credit and is not promptly reimbursed, the Issuing Bank may request that each other Bank pay such Bank’s Percentage of the unreimbursed amount. Upon receipt of any such request prior to 1:30 p.m. on a Business Day, the recipient shall be unconditionally and irrevocably obligated to pay its Percentage of the unreimbursed amount to the Issuing Bank in immediately available funds prior to 3:00 p.m. on such date. Notices received after 1:30 p.m. shall be deemed to have been received on the following Business Day. If payment is not made by a Bank when due hereunder, interest on the unpaid amount shall accrue from and including the date of the Issuing Bank’s request to the date of payment at the Federal Funds Rate. After making any payment to the Issuing Bank under this subsection in connection with a particular Letter of Credit, a Bank shall be entitled to participate to the extent of its Percentage in the related reimbursements received by the Issuing Bank from the Borrower or otherwise. Upon receiving any such reimbursement, the Issuing Bank will distribute


	to each Bank its Percentage of such reimbursement. At the option of the Agent, payment by the Banks hereunder may be deemed an Advance in accordance with Section 2.1 and payable under the Notes.

	(g) Unless otherwise agreed by each Bank in writing, the Borrower shall deposit in the Cash Collateral Account, on the fifth Business Day preceding the Commitment Termination Date, an amount equal to the then-applicable L/C Amount, less the balance (if any) then outstanding in the Cash Collateral Account.


	(a) The Borrower shall pay to the Agent, for the benefit of the Banks, a facility fee at an annual rate equal to the then-applicable Facility Fee Rate applied to the aggregate amount of the Commitments outstanding hereunder from the Effective Date through the Commitment Termination Date.

	(b) The Borrower shall pay to the Agent, for the benefit of the Banks, a utilization fee at an annual rate equal to the then-applicable Utilization Fee Rate applied to the average daily Outstandings. The Utilization Fee Rate in effect on any day shall be an annual rate determined on the basis of the Outstandings Percentage and Level Status on that day, in accordance with the following table:


	(c) The facility fee and utilization fee set forth in this Section shall be due and payable quarterly in arrears on the last day of each March, June, September and December during the term of the Commitments. Any facility and utilization fees remaining unpaid on the Commitment Termination Date shall be due and payable on that date.

The Borrower shall pay to the Agent (i) for the benefit of the Banks, the upfront fee set forth in one of the Fee Letters, and (ii) for the Agent’s own account and not for the benefit of the Banks, certain additional fees in the amounts set forth in the Fee Letters.

The Borrower shall have the right at any time and from time to time upon three Business Days’ prior notice to the Agent (which shall promptly notify the Banks) permanently to terminate the Commitments in whole or permanently to reduce the Commitment Amounts in part, without penalty or premium, provided that (i) the Commitments may not be terminated while any Advance or L/C Amount remains outstanding, (ii) each partial reduction shall be in the aggregate amount of $5,000,000 or a multiple thereof, (iii) any partial reduction of the Commitment Amounts shall be pro rata as to each Bank in accordance with that Bank’s Percentage, and (iv) no reduction shall reduce the Commitment Amounts to an amount less than the sum of the aggregate Advances and the L/C Amount outstanding (after giving effect to any prepayments of Advances to be made on or prior to the effective date of such reduction) at the time.

The Borrower may prepay the Notes in whole or in part, without penalty or premium, at any time and from time to time; provided that (i) any prepayment by the Borrower hereunder shall be applied pro rata to the prepayment of each Bank’s Note, (ii) any prepayment of the full amount of Notes shall include accrued interest thereon, (iii) any prepayment of any portion of the principal balance of the Notes which, at the time of such prepayment, bears interest at a Eurodollar Rate shall be accompanied by compensation as specified in Section 2.16(b), and (iv) each prepayment of the Notes (other than prepayment of the Notes in full) shall be in the principal amount of $1,000,000 or more, except that no prepayment of any portion of the Notes bearing interest at a Eurodollar Rate may be made in a principal amount less than $5,000,000. Each partial prepayment of principal on the Notes shall be applied, first, to that portion of such Notes bearing interest at the Floating Rate, and, second, to that portion of such Notes bearing interest at a Eurodollar Rate.

All interest on Floating Rate Fundings accruing based on the Prime Rate will be calculated based on the actual days elapsed in a year of 365 or 366 days, as the case may be. All other interest and all fees hereunder shall be computed on the basis of actual number of days elapsed in a year of 360 days.

All payments of principal and interest under the Notes and L/C Amounts and of the fees hereunder shall be made to the Agent in immediately available funds, without setoff or

counterclaim. Payments received after noon on any day shall be deemed received on the next succeeding Business Day. The Borrower agrees that the amount shown on the books and records of each Bank as being the principal balance of that Bank’s Note, if any, shall be prima facie evidence of such principal balance. The Borrower hereby authorizes the Agent to charge against the Borrower’s account with the Agent an amount equal to the accrued interest and fees from time to time due and payable to the Agent and the Banks under the Notes or hereunder, or (at the Banks’ option) to effect a Borrowing in such amount, all without receipt of any request for such charge or Borrowing.

Whenever any payment to be made hereunder or under the Notes shall be stated to be due on a day other than a Business Day, such payment may be made on the next succeeding Business Day, and such extension of time shall in each case be included in the computation of payment of interest on such Note or the fees hereunder, as the case may be.

The proceeds of each Borrowing, and each Letter of Credit, shall be used by the Borrower for its general corporate purposes (including commercial paper backup). Notwithstanding the foregoing, in no event shall the proceeds of any Borrowing or any Letter of Credit be used by the Borrower to finance the acquisition of 5% or more of any class of the capital stock of any corporation unless, prior to making such acquisition, the Borrower has obtained written approval for such acquisition from the board of directors of such corporation. The limitation set forth in the preceding sentence is in addition to, and not in lieu of, the restriction set forth in Section 4.9.

In addition to any interest payable on Advances made hereunder and any fees or other amounts payable hereunder, the Borrower agrees:


	(a) If at any time after the date hereof any adoption of or change in any applicable law, rule or regulation or the interpretation or administration thereof by any governmental authority (including, without limitation, Regulation D of the Federal Reserve Board):

	(i)		shall subject any Bank to any tax, duty or other charges with respect to this Agreement, or shall materially change the basis of taxation of payments to any Bank of the principal of or interest on any portion of the principal balance of that Bank’s Note bearing interest at a Eurodollar Rate (except for the imposition of or changes in the rate of Excluded Taxes (as defined in Section 2.17 of this Agreement)); or

	(ii)		shall impose or deem applicable or increase any reserve, special deposit or similar requirement against assets of, deposits with or for the

			account of, or credit extended by any Bank (other than reserves and assessments described in clause (i)(b) of the definition of “Eurodollar Rate” and taken into account in determining the applicable Eurodollar Rate) because of any portion of the principal balance of that Bank’s Note bearing interest at a Eurodollar Rate and the result of any of the foregoing would be to increase the cost to that Bank of making or maintaining any such portion or to reduce any sum received or receivable by that Bank with respect to such portion;

then, within 30 days after demand by any Bank the Borrower shall pay that Bank such additional amount or amounts as will compensate that Bank for such increased cost or reduction. A Bank shall not make demand hereunder unless that Bank is generally imposing such increased costs on its similarly situated customers. No Bank may demand such compensation more than 90 days following the end of the Interest Period with respect to which such demand is made; provided, however, that the foregoing shall in no way limit the right of any Bank to demand compensation to the extent that such compensation relates to the retroactive application of any law, rule or regulation if such demand is made within 90 days after the adoption of or change in such law, rule or regulation. A certificate in reasonable detail of that Bank setting forth the basis for the determination of such additional amount or amounts shall be promptly submitted by that Bank to the Borrower and shall, in the absence of manifest error, be conclusive and binding as to such amount or amounts.

(b) The Borrower shall also compensate any Bank, upon written request by that Bank (which request shall set forth the basis for requesting such amounts), for all losses and expenses in respect of any interest or other consideration paid by that Bank to lenders of funds borrowed by it or deposited with it to maintain any portion of the principal balance of the Note at a Eurodollar Rate which that Bank may sustain to the extent not otherwise compensated for hereunder and not mitigated by the reemployment of such funds if any prepayment of any such portion occurs on a date that is not the expiration date of the relevant Interest Period or if a Borrowing or prepayment in whole or in part of an Advance bearing interest at a Eurodollar Rate fails to occur. A certificate as to any such loss or expense (including calculations, in reasonable detail, showing how that Bank computed such loss or expense) shall be promptly submitted by that Bank to the Borrower and shall, in the absence of manifest error, be conclusive and binding as to the amount thereof. Such loss or expense may be computed as though that Bank acquired deposits in the London interbank market to fund that portion of the principal balance whether or not that Bank actually did so.


	(a) All payments made by the Borrower to the Agent or any Bank (herein any “Payee”) under or in connection with this Agreement or the Notes shall be made without any setoff or other counterclaim, and free and clear of and without deduction

for or on account of any present or future taxes now or hereafter imposed by any governmental or other authority, except to the extent that such deduction or withholding is compelled by law. As used herein, the term “Taxes” shall include all income, excise and other taxes of whatever nature (other than taxes based on or measured by the net income of the Payee (or franchise taxes in lieu thereof) and imposed by the government or other authority of the country, state or political subdivision in which such Payee is incorporated or in which its principal executive office or the office through which the Payee is acting is located (“Excluded Taxes”)) as well as all levies, imposts, duties, charges, or fees of whatever nature. If the Borrower is compelled by law to make any such deductions or withholdings it will:

	(i)		pay to the relevant authorities the full amount required to be so withheld or deducted;

	(ii)		except to the extent that such deduction or withholding results from a breach by any Payee of the representations and covenants contained in Section 2.17(b) or the relevant Assignment Certificate, pay such additional amounts (including, without limitation, any penalties, interest or expenses) as may be necessary in order that the net amount received by each Payee after such deductions or withholdings (including any required deduction or withholding on such additional amounts) shall equal the amount such Payee would have received had no such deductions or withholdings been made; and

	(iii)		promptly forward to the Agent (for delivery to such Payee) an official receipt or other documentation reasonably satisfactory to the Agent evidencing such payment to such authorities.

(b) If any Taxes otherwise payable by the Borrower pursuant to Section 2.17(a) are directly asserted against any Payee, such Payee may pay such Taxes and the Borrower promptly shall reimburse such Payee to the full extent otherwise required by such paragraph. The obligations of the Borrower under this Section 2.17 shall survive any termination of this Agreement. Each Bank by its execution of this Agreement represents (and each additional Bank by its execution of any Assignment Certificate pursuant to Section 8.10 shall be deemed to represent) to each other Bank, the Agent and the Borrower that if such Bank or additional Bank is organized under the laws of any jurisdiction other than the United States or any state thereof, such Bank or additional Bank has furnished to the Agent and the Borrower either U.S. Internal Revenue Service Form W-8BEN, or U.S. Internal Revenue Service Form W-8ECI, as applicable (wherein such Bank claims entitlement to complete exemption from U.S. Federal withholding tax on all interest payments hereunder).


	(c) The amount that the Borrower shall be required to pay to any Bank pursuant to Section 2.17(a) or 2.17(b) shall be reduced by the amount of any offsetting tax benefit which such Bank receives as a result of the Borrower’s payment

to the relevant authorities as reasonably determined by such Bank; provided, however, that (i) such Bank shall be the sole judge of the amount of such tax benefit and the date on which it is received, (ii) no Bank shall be obliged to disclose information regarding its tax affairs or tax computations, (iii) nothing herein shall interfere with a Bank’s right to manage its tax affairs in whatever manner it sees fit, and (iv) if such Bank shall subsequently determine that it has lost the benefit of all or a portion of such tax benefit, the Borrower shall promptly remit to such Bank the amount certified by such Bank to be the amount necessary to restore such Bank to the position it would have been in if no payment had been made pursuant to this Section 2.17(c).

(d) If the U.S. Internal Revenue Service or any other governmental authority of the United States or any other country or any political subdivision thereof asserts a claim that the Agent or the Borrower did not properly withhold tax from amounts paid to or for the account of any Bank (because the appropriate form was not delivered or properly completed, because such Bank failed to notify the Agent or the Borrower of a change in circumstances which rendered its exemption from withholding ineffective, or for any other reason), such Bank shall indemnify the Agent or the Borrower, as applicable, fully for all amounts paid, directly or indirectly, by the Agent or the Borrower, as applicable, as tax, withholding therefor, or otherwise, including penalties and interest, and including taxes imposed by any jurisdiction on amounts payable to the Agent or the Borrower, as applicable, under this subsection, together with all costs and expenses related thereto (including attorneys fees and time charges of attorneys for the Agent or the Borrower, as applicable, which attorneys may be employees of the Agent or the Borrower, as applicable). The obligations of the Bank under this Section 2.17(d) shall survive the payment of the Obligations and termination of this Agreement.

If any Bank determines at any time that its Return has been reduced as a result of any Capital Adequacy Rule Change, that Bank may require the Borrower to pay it the amount necessary to restore its Return to what it would have been had there been no Capital Adequacy Rule Change. For purposes of this Section:

(a) “Return”, for any period, means the percentage determined by dividing (i) the sum of interest and ongoing fees earned by a Bank under this Agreement during such period, by (ii) the average capital that Bank is required to maintain during such period as a result of its being a party to this Agreement, as determined by that Bank based upon its total capital requirements and a reasonable attribution formula that takes account of the Capital Adequacy Rules then in effect. Return may be calculated for each calendar quarter and for the shorter period between the end of a calendar quarter and the date of termination in whole of this Agreement.


	(b) “Capital Adequacy Rule” means any law, rule, regulation or guideline regarding capital adequacy that applies to any Bank, or the interpretation thereof by any governmental or regulatory authority. Capital Adequacy Rules include rules requiring financial institutions to maintain total capital in amounts based upon percentages of outstanding loans, binding loan commitments and letters of credit.

	(c) “Capital Adequacy Rule Change” means any change in any Capital Adequacy Rule occurring after the date of this Agreement, but the term does not include any changes in applicable requirements that at the date hereof are scheduled to take place under the existing Capital Adequacy Rules or any increases in the capital that any Bank is required to maintain to the extent that the increases are required due to a regulatory authority’s assessment of the financial condition of that Bank.

	(d) “Bank” includes (but is not limited to) the Banks, as defined elsewhere in this Agreement; any participant in the loans made hereunder (to the extent provided in Section 8.11 only); and any bank holding company with respect to any of the foregoing.

The initial notice sent by a Bank shall be sent as promptly as practicable after that Bank learns that its Return has been reduced, shall include a demand for payment of the amount necessary to restore that Bank’s Return for the quarter in which the notice is sent and, if applicable, the preceding quarter, and shall state in reasonable detail the cause for the reduction in its Return and its calculation of the amount of such reduction. Thereafter, that Bank may send a new notice with respect to each calendar quarter setting forth the calculation of the reduced Return for that quarter and including a demand for payment of the amount necessary to restore its Return for that quarter. In such event, the Borrower shall pay the Bank such amount within 30 days after demand by such Bank. A Bank’s calculation in any such notice shall be conclusive and binding absent demonstrable error. A Bank shall not make demand hereunder unless that Bank is generally imposing such increased costs on its similarly situated customers. No Bank may demand any compensation hereunder more than 45 days following the end of the quarter for which compensation is sought.

At least 60 but not more than 90 days prior to the then current Commitment Termination Date, the Borrower may request that the Banks, by written notice to the Agent, consent to a 364-day extension of the Commitment Termination Date. The Agent shall transmit such request to the Banks within one Business Day. Each Bank shall, in its sole discretion, determine whether to consent to such request and shall notify the Agent of its determination within 30 days of the Borrower’s request. Any Bank not responding within 30 days shall be deemed to have declined the request. At the option of the Borrower, any declining Bank’s Commitment may be assumed, in whole or in part, by one or more existing Banks or other lenders acceptable to the Borrower and the Agent, upon compliance with Section 8.10. If any such Commitment is not so replaced within 30 days of the declining Bank’s response, the extension contemplated by this Section may nonetheless occur with respect to the consenting

Banks, provided that any such extension shall be conditioned upon an agreement to such extension by Banks with at least 66 2/3% of the aggregate Commitment Amounts. If Banks with at least 66 2/3% of the aggregate Commitment Amounts do not so agree, then the Commitments shall terminate on the then current Commitment Termination Date. If such request shall have been consented to by the Agent and Banks with at least 66 2/3% of the aggregate Commitment Amounts, or any declining Bank shall have been replaced, the extension shall become effective upon the delivery by the Borrower to the Agent, on or prior to the then current Commitment Termination Date, of (i) a certificate of a duly authorized officer of the Borrower, dated such date, as to the accuracy, both before and after giving effect to such proposed extension, of the representations and warranties set forth in Article IV and as to the absence, both before and after giving effect to such proposed extension, of any Default or Event of Default, (ii) certified copies of all corporate and governmental approvals, if any, required to be obtained by the Borrower in connection with such extension and (iii) an opinion or opinions of counsel to the Borrower as to the matters set forth in Exhibit D after giving effect to such extension. Upon extension of the Commitment Termination Date pursuant to this Section, the participation of any declining Bank in any Letters of Credit outstanding hereunder shall, to the extent that such declining Bank’s interest has not been assigned and assumed pursuant to Section 8.10, be automatically deemed assumed by the remaining Banks ratably in accordance with their respective Percentages after giving effect to such extension.

If any Bank delivers to the Borrower a demand for compensation pursuant to Section 2.16(a), a demand for payment pursuant to Section 2.17 or 2.18 or does not consent to an extension request pursuant to Section 2.19, the Borrower may (so long as no Default or Event of Default has occurred and is continuing) at its expense require such Bank to assign, in whole and in accordance with Section 8.10 (including the execution of an Assignment Certificate and all other applicable documents, and the payment of any fees required under Section 8.10), all of its rights and obligations hereunder and under such Bank’s Note, including but not limited to such Bank’s Commitment, to an Eligible Lender identified by the Borrower and willing to become a Bank hereunder. Such Bank may be an existing Bank hereunder. Notwithstanding the foregoing, the Borrower may not compel the resignation of any Bank as the Agent except as provided in Section 8.9.

Sections 2.1 and 2.7 of this Agreement shall become effective only upon delivery to the Agent, on or before May 22, 2003, of each of the following, each in form and substance satisfactory to each Bank:


	(a) This Agreement, duly executed by the Borrower, the Agent and each of the Banks.


	(b) The Notes, dated the date hereof, properly executed on behalf of the Borrower.


	(c) Evidence that concurrently with the making of the initial Advance, all amounts payable under the Prior Credit Agreement will be paid and the Commitments thereunder will be terminated.

The obligation of the Banks to make any Advance or issue any Letter of Credit is subject to the further condition precedent that the Agent shall have received on or before the day of the first Advance or Letter of Credit (and, in any event, not later than May 22, 2003) all of the following, in form and substance satisfactory to each Bank:


	(a) This Agreement, duly executed by the Borrower, the Agent and each of the Banks.


	(b) The Notes, dated the date hereof, properly executed on behalf of the Borrower.

(f) A certificate of the secretary or an assistant secretary of the Borrower (i) certifying that the execution, delivery and performance of the Loan Documents and other documents contemplated hereunder have been duly approved by all necessary action of the Board of Directors of the Borrower, and attaching true and correct copies of the applicable resolutions granting such approval, (ii) certifying that attached to such certificate are true and correct copies of the Organizational Documents of the Borrower, together with such copies, and (iii) certifying the names of the officers of the Borrower that are authorized to sign the Loan Documents and other documents contemplated hereunder, together with the true signatures of such officers.


	(g) A certificate of good standing of the Borrower, dated not more than ten days before such date.


	(h) A signed copy of an opinion of counsel for the Borrower, addressed to the Banks in substantially the form of Exhibit D hereto.

	(i) All fees required to be paid as of the date hereof under this Agreement or any Fee Letter.


	(j) Such other documents as the Agent or the Required Banks may deem necessary or advisable in connection with the issuance of the Bonds.

The obligation of the Banks to make any Advance (including the initial Advance) or to issue any Letter of Credit shall be subject to the further conditions precedent that on the date of such Advance or Letter of Credit:


	(a) The representations and warranties contained in Article IV are correct on and as of the date of such Advance or Letter of Credit as though made on and as of such date, except to the extent that such representations and warranties relate solely to an earlier date.


	(b) The Borrower has delivered to the Agent a certificate in the form of Exhibit F hereto, duly executed by the chief financial officer, treasurer, secretary, assistant secretary, general counsel or deputy general counsel of the Borrower, specifically confirming the Borrower’s legal authority to obtain such Advance or Letter of Credit.


	(c) No event has occurred and is continuing, or would result from such Advance or Letter of Credit, which constitutes a Default or an Event of Default.

The Borrower and its Subsidiaries are each corporations duly incorporated, validly existing and in good standing under the laws of their respective jurisdictions of incorporation, and are each duly licensed or qualified to transact business in all jurisdictions where the character of the property owned or leased or the nature of the business transacted by them makes such licensing or qualification necessary, except where the failure to be so licensed or qualified (i) will not permanently preclude the Borrower or any Subsidiary from maintaining any material action in any such jurisdiction even though such action arose in whole or in part during the period of such failure, and (ii) will not result in any other Material Adverse Change. The Borrower has all requisite power and authority, corporate or otherwise, to conduct its business, to own its properties and to execute and deliver, and to perform all of its obligations under, the Loan Documents, the Bonds and the First Mortgage Indenture.

Section 4.2 Authorization of Borrowing; No Conflict as to Law or Agreements.


	(a) The execution, delivery and performance by the Borrower of the Loan Documents, the First Mortgage Indenture and the Bonds, the borrowings from time to

time hereunder, the issuance of the Bonds, and the consummation of the transactions herein and therein contemplated, have been duly authorized by all necessary corporate action and do not and will not (i) require any consent or approval of the stockholders of the Borrower, or any authorization, consent, approval, order, filing, registration or qualification by or with any governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, other than those consents described in Schedule 4.2, each of which has been obtained and is in full force and effect, (ii) violate any provision of any law, rule or regulation (including, without limitation, Regulation X of the Board of Governors of the Federal Reserve System and Section 7 of the Exchange Act or any regulation promulgated thereunder) or of any order, writ, injunction or decree presently in effect having applicability to the Borrower or of the Organizational Documents of the Borrower, (iii) result in a breach of or constitute a default under any indenture or loan or credit agreement or any other material agreement, lease or instrument to which the Borrower or any Subsidiary is a party or by which it or its properties may be bound or affected, or (iv) result in, or require, the creation or imposition of any Lien or other charge or encumbrance of any nature (other than the Liens created under the Pledge Agreement and the Indenture) upon or with respect to any of the properties now owned or hereafter acquired by the Borrower or any Subsidiary.

(b) The MPUC has issued its Authorizing Order authorizing the issuance of the Bonds and the incurrence by the Borrower of short-term debt so long as the aggregate principal amount of short-term debt outstanding does not exceed 15% of Borrower’s total capitalization (including but not limited to common equity, TOPrS, long-term debt and short-term debt). All Obligations incurred hereunder will constitute short-term debt for purposes of such Authorizing Order. As of the date hereof, the aggregate principal amount of Borrower’s short-term debt outstanding (excluding indebtedness under the Prior Credit Agreement but including assumed Advances hereunder in an aggregate amount equal to the aggregate Commitment Amounts) does not exceed 15% of Borrower’s total capitalization.

This Agreement, the other Loan Documents, the Bonds and the Indenture constitute the legal, valid and binding obligations of the Borrower enforceable against the Borrower in accordance with their respective terms, except to the extent that such enforcement may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally or by general equitable principles. Without limiting the generality of the foregoing, the Bonds have been duly executed, issued and delivered by the Borrower and duly authenticated by the Trustee, and the Bonds will be entitled to the benefits provided by the Indenture.

Schedule 4.4 hereto is a complete and correct list of all Subsidiaries as of the date of this Agreement and of the percentage of the ownership of the Borrower or any other Subsidiary in each as of the date of this Agreement. The Borrower has no Restricted Subsidiaries as of the date hereof except as designated on Schedule 4.4. Except as otherwise indicated in that Schedule, all shares of each Subsidiary owned by the Borrower or by any such other Subsidiary are validly issued and fully paid and nonassessable.

The Borrower has heretofore furnished to the Banks the audited consolidated financial statements of the Borrower and its Subsidiaries for the year ended and as of December 31, 2002. Those financial statements fairly present in all material respects the financial condition of the Borrower on the date thereof and the results of its operations and cash flows for the period then ended, and was prepared in accordance with GAAP. The information, exhibits and reports furnished by the Borrower to the Agent and the Banks, taken as a whole, in connection with the negotiation of or compliance with the Loan Documents did not contain any material misstatement of fact or omit to state a material fact or any fact necessary to make the statements contained therein not misleading.

Except as set forth in Schedule 4.7, there are no actions, suits or proceedings pending or, to the knowledge of the Borrower, threatened against or affecting the Borrower or any Subsidiary or the properties of the Borrower or any Subsidiary before any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, which could reasonably be expected to effect a Material Adverse Change. Other than any liability incident to any litigation, arbitration or proceeding which could not reasonably be expected to have a Material Adverse Effect, the Borrower has no material contingent obligations not provided for or disclosed in the financial statements referred to in Section 4.5.

Except as set forth in Schedule 4.8, to the best of the Borrower’s knowledge after reasonable inquiry, (i) neither the Borrower nor any Subsidiary or other Person has ever caused or permitted any Hazardous Substance to be disposed of on, under or at any real property which is operated by the Borrower or any Subsidiary or in which the Borrower or any Subsidiary has any interest, except to the extent that such disposal can not reasonably be expected to result in a Material Adverse Change; and (ii) no such real property has ever been used (either by the Borrower or by any Subsidiary or other Person) as a dump site or permanent or

temporary storage site for any Hazardous Substance in a manner that could reasonably be expected to result in a Material Adverse Change.

Neither the Borrower nor any Subsidiary is engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System), and no part of the proceeds of any Advance will be used to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock.

The Borrower and its Subsidiaries have each paid or caused to be paid to the proper authorities when due all federal, state and local taxes required to be withheld and paid by them. The Borrower and its Subsidiaries have each filed all federal, state and local tax returns which to the knowledge of the officers of the Borrower or any Subsidiary are required to be filed, and the Borrower and its Subsidiaries have each paid or caused to be paid to the respective taxing authorities all taxes as shown on said returns or on any assessment received by it to the extent such taxes have become due, other than taxes whose amount, applicability or validity is being contested in good faith by appropriate proceedings and for which the Borrower or applicable Subsidiary has provided adequate reserves in accordance with GAAP.

Neither the Borrower nor any Subsidiary is a party to or bound by any agreement, or subject to any restriction in any Organizational Document, or any requirement of law, which would reasonably be expected to effect a Material Adverse Change.

The Borrower or one of its Subsidiaries has good title to each of the properties and assets material to the operations of the Borrower and its Subsidiaries, taken as a whole, which it purports to own or which are reflected as owned on its books and records, and the Borrower has good and valid title to all real and fixed property and leasehold rights described or enumerated in the Indenture (except such properties as have been released from the Lien thereof in accordance with the terms thereof), in each case free and clear of all Liens and encumbrances, except for Liens and encumbrances permitted by Section 6.1 and covenants, restrictions, rights, easements and minor irregularities in title which do not materially interfere with the business or operations of the Borrower and its Subsidiaries taken as a whole.

No Plan will have an accumulated funding deficiency (as such term is defined in Section 302 of ERISA) in excess of $50,000,000 as of the last day of the most recent fiscal year of such Plan ended prior to the date hereof, and no liability to the Pension Benefit Guaranty Corporation or the Internal Revenue Service in excess of such amount has been, or is expected by the Borrower or any Subsidiary or ERISA Affiliate to be, incurred with respect to any Plan that could become a liability of the Borrower or any Subsidiary. Except as disclosed in Borrower’s financial statements, neither the Borrower nor any Subsidiary has any contingent liability with respect to any post-retirement benefit under a Welfare Plan in excess of $50,000,000, other than liability for continuation coverage described in Part 6 of Subtitle B of Title I of ERISA.


	(a) When the Bonds are issued and delivered pursuant to this Agreement and the Indenture, the Bonds will not be of the same class (within the meaning of Rule 144A under the Act) as securities which are listed on a national securities exchange registered under Section 6 of the Exchange Act or quoted in a U.S. automated inter-dealer quotation system.


	(c) Neither the Borrower, nor any person acting on its behalf, has offered or sold (nor will offer or sell prior to the delivery of the Bonds to the Agent) the Bonds by means of any general solicitation or general advertising within the meaning of Rule 502(c) under the Act.

(d) Within the six months preceding the date hereof, neither the Borrower nor any other person acting on behalf of the Borrower has offered or sold to any person any Bonds, or any securities of the same or a similar class as the Bonds, other than Bonds delivered to the Agent hereunder. The Borrower will take reasonable precautions designed to insure that any offer or sale, direct or indirect, in the United States or to any U.S. person (as defined in Rule 902 under the Act) of any Bonds or any substantially similar security issued by the Borrower, within six months subsequent to the delivery of the Bonds to the Agent, is made under restrictions and other circumstances reasonably designed not to affect the status of the offer and sale of the Bonds contemplated by this Agreement as a transaction exempt from the registration provisions of the Act.


	(e) No registration of the Bonds under the Act is required for the offer and sale of the Bonds to the Agent in the manner contemplated by this Agreement.

The Borrower is not, and after giving effect to the offer and sale of the Bonds, will not be an “investment company,” as such term is defined in the Investment Company Act.

The Borrower is subject to the Public Utility Holding Company Act of 1935, as amended (“PUHCA”), as a “subsidiary” of a registered “holding company” within the meaning of PUHCA. However, the transactions contemplated by this Agreement are exempt from any requirement for SEC approval under PUHCA.

(a) All conditions precedent set forth in the Indenture with respect to the Assignment and Assumption Agreement dated as of August 18, 2000 between the Parent and Borrower (the “Assignment”) have been satisfied, and the Lien of the Indenture has similar force, effect and standing as the Lien of the Indenture would have had if the Indenture had not been assigned to the Borrower. Substantially all of the assets of the Parent (other than stock of the Parent’s Subsidiaries) were conveyed to the Borrower pursuant to the Assignment.


	(b) The aggregate principal amount of bonds outstanding under the Indenture (excluding the Bonds) is $1,153,835,000.


	(c) There has been no discharge of the Indenture with respect to the Parent or, following the Assignment, with respect to the Borrower.


	(d) Substantially all of the property, whether real, personal or mixed, of the Borrower is subject to the Lien of the Indenture.


	(e) True and complete copies of all amendments and supplements to and restatements of the Indenture have been delivered to counsel for the Agent.


	(f) In connection with the issuance and delivery of the Bonds to the Agent as contemplated by this Agreement and the Pledge Agreement, the Indenture is not required to be qualified under the Trust Indenture Act.


	(g) The Effective Date (as defined in the Restated Indenture) has not yet occurred.


	(h) The rights, powers, duties and obligations of the trustee under the Indenture were transferred from Harris Trust and Savings Bank to BNY Midwest Trust Company in accordance with the terms of the Indenture.

All covenants and conditions precedent to the authentication and delivery of the Bonds have been complied with, and there has been no change in the facts and circumstances set forth in the application to the Trustee for authentication of the Bonds (and the documents submitted therewith) from the date of such application to the date hereof.

The Borrower is and, upon the making of any Advance and the issuance of any Letter of Credit, will be, Solvent.

Neither the Borrower nor any of its Subsidiaries has incurred any outstanding obligations under any Swap Contracts, other than Permitted Swap Obligations.

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, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the Borrower and such Subsidiaries operate.

Except as disclosed in Schedule 4.22, The Borrower and its Subsidiaries have complied in all material respects with all applicable statutes, rules, regulations, orders and restrictions of any domestic or foreign government or any instrumentality or agency thereof having jurisdiction over the conduct of their respective businesses or the ownership of their respective properties, assets and rights.

Affirmative Covenants of the Borrower

So long as any Note shall remain unpaid or any Commitment or L/C Amount shall be outstanding, the Borrower will comply with the following requirements, unless the Required Banks shall otherwise consent in writing:


	(a) As soon as available, and in any event within 100 days after the end of each fiscal year of the Borrower, a copy of the annual audit report of the Borrower and its Subsidiaries prepared by nationally recognized independent certified public


	accountants, which annual report shall include the balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal year and the related statements of income, shareholders’ equity and cash flows of the Borrower and its Subsidiaries for the fiscal year then ended, all presented on a consolidated basis in reasonable detail and all prepared in accordance with GAAP.

(b) As soon as available and in any event within 55 days after the end of each of the first three quarters of each fiscal year of the Borrower, balance sheet of the Borrower and its Subsidiaries as at the end of such quarter and related statements of earnings and cash flows of the Borrower and its Subsidiaries for such quarter and for the year to date, in reasonable detail and prepared on a consolidated basis in accordance with GAAP, subject to year-end adjustments.


	(c) Concurrent with the delivery of any financial statements under paragraph (a) or (b), a Compliance Certificate, duly executed by the chief financial officer or treasurer of the Borrower.

(d) Promptly following the issuance of any Authorizing Order, a favorable opinion of counsel to the Borrower, in form and substance reasonably acceptable to the Agent, addressed to the Agent and the Banks, advising the Agent and the Banks of such issuance, stating the restrictions, if any, that such Authorizing Order imposes on the Borrower’s ability to obtain Borrowings or Letters of Credit hereunder, and attaching a copy of such Authorizing Order.


	(e) Promptly after the sending or filing thereof, copies of all regular and periodic financial reports which the Borrower or any Subsidiary shall file with the SEC or any national securities exchange.


	(f) Immediately after the commencement thereof, notice in writing of all litigation and of all proceedings before any governmental or regulatory agency affecting the Borrower or any Restricted Subsidiary of the type described in Section 4.7 or which seek a monetary recovery against the Borrower or any Restricted Subsidiary combined in excess of $50,000,000.


	(g) As promptly as practicable (but in any event not later than five Business Days) after an officer of the Borrower obtains knowledge of the occurrence of any Default or Event of Default, notice of such occurrence, together with a detailed statement by a responsible officer of the Borrower of the steps being taken by the Borrower to cure the effect of such event.

(h) Promptly upon becoming aware of any Reportable Event or the occurrence of a prohibited transaction (as defined in Section 4975 of the Internal Revenue Code or Section 406 of ERISA) in connection with any Plan or any trust created thereunder, which could reasonably be expected to result in a liability to Borrower or any Subsidiary in excess of $50,000,000, a written notice specifying the nature thereof, what action the Borrower has taken, is taking or proposes to take with


	respect thereto, and, when known, any action taken or threatened by the Internal Revenue Service, the Pension Benefit Guaranty Corporation or the Department of Labor with respect thereto.

(i) Promptly upon their receipt, copies of (a) all notices received by the Borrower, any Restricted Subsidiary or ERISA Affiliate of the Pension Benefit Guaranty Corporation’s intent to terminate any Plan or to have a trustee appointed to administer any Plan, and (b) all notices received by the Borrower, any Restricted Subsidiary or any ERISA Affiliate from a Multiemployer Plan concerning the imposition or amount of withdrawal liability imposed pursuant to Section 4202 of ERISA, which withdrawal liability individually or in the aggregate exceeds $50,000,000.

(k) Promptly after it obtains knowledge of any such change, notice (by telephone, followed by written notice sent promptly thereafter in accordance with Section 9.3) of any change in the rating by S&P or Moody’s of the Borrower’s First Mortgage Bonds, together with the details thereof, and of any announcement by S&P or Moody’s that its rating is “under review” or that any such rating has been placed on a “CreditWatch List”® or “watch list” or that any similar action has been taken by such rating agency.


	(l) Such other information respecting the financial condition and results of operations of the Borrower or any Subsidiary as any Bank may from time to time reasonably request.

The Borrower will keep, and will cause each Subsidiary to keep, accurate books of record and account for itself in which true and complete entries will be made in accordance with GAAP. Upon request of any Applicable Party, as defined below, the Borrower will, and will cause each Subsidiary to, give any representative of such Applicable Party access to, and permit such representative to examine, copy or make extracts from, any and all books, records and documents in its possession (except to the extent that such access is restricted by law or by a bona fide non-disclosure agreement not entered into primarily for the purpose of evading the requirements of this Section), to inspect any of its properties (subject to such physical security requirements as the Borrower or the applicable Subsidiary may require) and to discuss its affairs, finances and accounts with any of its principal officers, all at such times during normal business hours, upon reasonable notice, and as often as such Applicable Party may reasonably request. As used in this Section 5.2, “Applicable Party” means (i) so long as any Event of Default has occurred and is continuing, the Agent or any Bank, and (ii) at all other times, the Agent. The provisions of this Section 5.2 shall in no way preclude any Bank from discussing the general affairs, finances and accounts of the Borrower with any of its principal officers at such times during normal business hours and as often as may be agreed to between the Borrower and such Bank.

The Borrower will, and will cause each Subsidiary to, comply with the requirements of applicable laws and regulations, the noncompliance with which would effect a Material Adverse Change.

The Borrower will, and will cause each Subsidiary to, pay or discharge, when due, (a) all taxes, assessments and governmental charges levied or imposed upon it or upon its income or profits, or upon any properties belonging to it, prior to the date on which penalties attach thereto, (b) all federal, state and local taxes required to be withheld by it, and (c) all lawful claims for labor, materials and supplies which, if unpaid, might by law become a lien or charge upon any properties of the Borrower or any Subsidiary; provided, that neither the Borrower nor any Subsidiary shall be required to pay any such tax, assessment, charge or claim (i) whose amount, applicability or validity is being contested in good faith by appropriate proceedings and for which the Borrower or such Subsidiary has provided adequate reserves in accordance with GAAP or (ii) where failure to pay such tax, assessment, charge or claim could not reasonably be expected to result in a liability in excess of $10,000,000.

The Borrower will keep and maintain, and will cause each Subsidiary to keep and maintain, all of its properties necessary or useful in its business in good condition, repair and working order; provided, however, that nothing in this Section shall prevent the Borrower or any Subsidiary from discontinuing the operation and maintenance of, or disposing of, any of its properties if (i) (A) such discontinuance or disposition is, in the reasonable judgment of the Borrower or that Subsidiary, desirable in the conduct of its business, and (B) no Default or Event of Default exists at the time of, or will be caused by, such discontinuance or disposition or (ii) such discontinuance or disposition relates to obsolete or worn-out property.

The Borrower will, and will cause each Restricted Subsidiary to, obtain and maintain insurance with insurers reasonably believed by the Borrower or such Restricted Subsidiary to be responsible and reputable, in such amounts and against such risks as is usually carried by companies in similar circumstances engaged in similar business and owning similar properties in the same general areas in which the Borrower or that Restricted Subsidiary operates.

rights, privileges and franchises or to maintain its corporate existence if (i) its Board of Directors shall reasonably determine that the preservation or maintenance thereof is no longer desirable in the conduct of the business of the Borrower or that Restricted Subsidiary, and (ii) no Default or Event of Default exists upon, or will be caused by, the termination of such right, privilege, franchise or existence; provided, further, that in no event shall the foregoing be construed to permit the Borrower to terminate its corporate existence.

At any time when the Borrower is not subject to Section 13 or 15(d) of the Exchange Act, for the benefit of holders from time to time of Bonds, the Borrower agrees to furnish at its expense, upon request, to holders of Bonds and prospective purchasers of securities information satisfying the requirements of subsection (d)(4)(i) of Rule 144A under the Act.

The Borrower will, and will cause each Subsidiary to, use the proceeds of the Advances and L/C Amounts for general corporate purposes (including, without limitation, support of commercial paper) and to repay outstanding Advances and L/C Amounts. The Borrower will not, nor will it permit any Subsidiary to, use any of the proceeds of the Advances and L/C Amounts to purchase or carry any “margin stock” (as defined in Regulation U) or to make any acquisition of any corporation, limited liability company or other business entity unless, prior to making such acquisition, the Borrower or such Subsidiary shall have obtained written approval from the board of directors or other governing body of such entity.

So long as any Note shall remain unpaid or any Commitment or L/C Amount shall be outstanding, the Borrower agrees that, without the prior written consent of the Required Banks:

The Borrower will not create, incur, assume or suffer to exist any Lien on any of its assets, now owned or hereafter acquired, and will not permit any Subsidiary to create, incur, assume or suffer to exist any Lien on any of such Subsidiary’s assets, now owned or hereafter acquired, relating to any indebtedness of such Subsidiary with respect to which the Borrower has any obligation for the payment of money; excluding, however, from the operation of the foregoing:


	(a) Liens for taxes or assessments or other governmental charges to the extent not required to be paid by Section 5.4.


	(b) Materialmen’s, merchants’, carriers’ worker’s, repairer’s, or other like liens arising in the ordinary course of business to the extent not required to be paid by Section 5.4.

(c) Pledges or deposits to secure obligations under worker’s compensation laws, unemployment insurance, social security and other similar laws, or to secure the performance of bids, tenders, contracts (other than for the repayment of borrowed money) or leases or to secure statutory obligations or surety or appeal bonds, or to secure indemnity, performance or other similar bonds in the ordinary course of business.


	(d) Zoning restrictions, easements, licenses, restrictions on the use of real property or minor irregularities in title thereto, which do not materially impair the use of such property in the operation of the business of the Borrower and its Subsidiaries taken as a whole or the value of such property for the purpose of such business.

(e) Purchase money Liens upon or in property acquired after the date hereof, provided that (i) such Lien is created not later than the 90th day following the acquisition or completion of construction of such property by the Borrower or its applicable Subsidiary, and (ii) no such Lien extends or shall extend to or cover any property of the Borrower or its Subsidiaries other than the property then being acquired, fixed improvements then or thereafter erected thereon and improvements and modifications thereto necessary to maintain such properties in working order.

(f) Liens granted by any Acquisition Target prior to the acquisition by the Borrower or any Subsidiary of any interest in such Acquisition Target or its assets, so long as (i) such Lien was granted by the Acquisition Target prior to such acquisition and not in contemplation thereof, and (ii) no such Lien extends to any assets of the Borrower or any Subsidiary other than the assets of the Acquisition Target and improvements and modifications thereto necessary to maintain such properties in working order or, in the case of an asset transfer, the assets so acquired by the Borrower or the applicable Subsidiary and improvements and modifications thereto.


	(g) Liens (other than those described in subsection (e)) securing any indebtedness for borrowed money in existence on the date hereof and listed in Schedule 6.1 hereto.


	(i) Liens permitted under the First Mortgage Indenture as such First Mortgage Indenture exists on the date hereof, without regard to any waiver, amendment, modification or restatement thereof.


	(j) Liens securing any refinancing of indebtedness secured by the Liens described in paragraphs (e), (f), and (g) , so long as the amount of such indebtedness secured by any such Lien does not exceed the amount of such refinanced


	indebtedness immediately prior to the refinancing. Liens do not extend to assets other than those encumbered prior to such refinancing and improvements and modifications thereto.


	(k) Liens granted by any Subsidiary of the Borrower in favor of the Borrower or any wholly-owned Subsidiary of the Borrower.


	(l) Liens not otherwise described in this Section 6.1, so long as the aggregate amount of indebtedness secured by all such Liens does not at any time exceed 10% of the Tangible Net Worth of the Borrower and its Subsidiaries.

The Borrower will not declare or pay any dividend (other than dividends payable solely in stock of the Borrower) on any class of its stock or make any payment on account of the purchase, redemption or other retirement of any shares of such stock or make any distribution in respect thereof, either directly or indirectly, at any time following and during the continuance of any Default or Event of Default arising under paragraph (a), (b), (i) or (j) of Section 7.1.

The Borrower will not, and will not permit any Subsidiary to, sell, lease, assign, transfer or otherwise dispose of all or a Material Part of the Assets of the Borrower and its Subsidiaries (whether in one transaction or in a series of transactions) to any other Person other than (i) in the ordinary course of business, (ii) dispositions of property no longer used or useful in the business of the Borrower or any Subsidiary and (iii) dispositions of assets the net proceeds of which are invested or re-invested, or held in cash or cash-equivalents for reinvestment, in other energy-related assets; provided, however, that a wholly-owned Subsidiary of the Borrower may sell, lease, or transfer all or a substantial part of its assets to the Borrower or another wholly-owned Subsidiary of the Borrower, and the Borrower or such other wholly-owned Subsidiary, as the case may be, may acquire all or substantially all of the assets of the Subsidiary so to be sold, leased or transferred to it, and any such sale, lease or transfer shall not be included in determining if the Borrower and/or its Subsidiaries disposed of a Material Part of its Assets. For purposes hereof, “Material Part of the Assets” means assets with a net book value in excess of 10% of the total assets of the Borrower and its Subsidiaries on a consolidated basis as determined in accordance with GAAP, as shown on the most recent balance sheet of the Borrower and its Subsidiaries available as of the date of determination. Notwithstanding the foregoing, the operating agreement between TRANSLink Transmission Co., LLC and the Borrower shall not be treated as a disposition for the purposes of this Section 6.3.

The Borrower will not consolidate with or merge into any Person, or permit any other Person to merge into it, or acquire (in a transaction analogous in purpose or effect to a consolidation

or merger) all or substantially all of the assets of any other Person; provided, however, that the restrictions contained in this Section shall not apply to or prevent the consolidation or merger of any Person with, or a conveyance or transfer of its assets to, the Borrower so long as (i) no Default or Event of Default exists at the time of, or will be caused by, such consolidation, merger, conveyance or transfer, and (ii) the Borrower shall be the continuing or surviving corporation.

The Borrower will not, and will not permit any Subsidiary to, cause or permit any Hazardous Substance to be disposed of in any manner, or on, under or at any real property which is operated by the Borrower or any Subsidiary or in which the Borrower or any Subsidiary has any interest, if such disposition could reasonably be expected to result in a Material Adverse Change.

The Borrower will not engage in any line of business materially different from that presently engaged in by the Borrower.

The Borrower will not make any loan or capital contribution to, or any other investment in, any Affiliate, or pay any dividend to any Affiliate of the Borrower, or make any other cash transfer to any Affiliate of the Borrower; provided, however, that the foregoing shall not prohibit any of the following:


	(a) Transactions made upon fair and reasonable terms no less favorable to the Borrower than would obtain, taking into account all facts and circumstances, in a comparable arm’s-length transaction with a Person not an Affiliate of the Borrower.


	(c) Loans to Northern States Power Company (a Wisconsin corporation) to provide working capital so long as the aggregate principal amount outstanding at any time shall not exceed $50 million.


	(d) Transactions with Affiliates which are subject to the jurisdiction of the Federal Energy Regulatory Commission (“FERC”), the SEC or the Minnesota Public Utilities Commission.


	(e) Allocation of taxes, tax benefits and tax credits in accordance with the restrictions and requirements of PUHCA.


	(f) Contributions of capital to subsidiaries, so long as such transaction does not violate Section 6.3 of this Agreement.


	(g) Any investment in TRANSLink Transmission Co., LLC (“TRANSLink”) or any operating agreement between TRANSLink and the Borrower and/or its Subsidiaries, complying with the requirements of FERC Order No. 2000.

The Borrower will not at any time permit its ratio of total Funded Debt to Total Capital, determined on a consolidated basis with respect to the Borrower and its Subsidiaries as at the end of each fiscal quarter of the Borrower, to be greater than 0.60 to 1.

The Borrower will not at any time permit its Interest Coverage Ratio, determined as of the end of each fiscal quarter of the Borrower, to be less than 2.75 to 1.


	(a) Not to be or become, at any time prior to the expiration of three years after the delivery of the Bonds, an open-end investment company, unit investment trust, closed-end investment company or face-amount certificate company that is or is required to be registered under Section 8 of the Investment Company Act;


	(b) During the period of two years after the delivery of the Bonds, the Borrower will not, and will not permit any of its “affiliates” (as defined in Rule 144 under the Act) to, resell any of the Bonds which constitute “restricted securities” under Rule 144 that have been reacquired by any of them; and

(c) Until at least six months after the offer of the Bonds hereunder has been terminated, neither the Borrower nor any person will on the Borrower’s behalf offer the Bonds, or any substantially similar security of the Borrower for sale to, or solicit offers to buy any such security from, any person, it being understood that such agreement is made with a view to bringing the offer and sale of the Bonds hereunder within the exception provided by Section 4(2) of the Act and Rule 506 thereunder.

Events of Default, Rights and Remedies

“Event of Default”, wherever used herein, means any one of the following events:


	(a) Default in the payment of any principal of any Note or L/C Amount when it becomes due and payable.


	(b) Default in the payment of any interest on any Note or any fees required under Section 2.8 or under Section 2.9 when the same become due and payable and the continuance of such default for five Business Days.


	(c) Default in the performance, or breach, of any covenant or agreement on the part of the Borrower contained in Article VI hereof (other than Section 6.5).

(d) Default in the performance, or breach, of any covenant or agreement of the Borrower in this Agreement or any other Loan Document (including but not limited to Section 6.5, but excluding any other covenant or agreement a default in whose performance or whose breach is elsewhere in this Section specifically dealt with), and the continuance of such default or breach for a period of 30 days after the Agent, at the request of any Bank, has given notice to the Borrower specifying such default or breach and requiring it to be remedied.


	(e) Any representation or warranty made by the Borrower in this Agreement or any other Loan Document or by the Borrower (or any of its officers) in any certificate, instrument, or statement contemplated by or made or delivered pursuant to or in connection with this Agreement, shall prove to have been incorrect in any material respect when made.


	(f) The Borrower or the Parent shall assert that any Loan Documents or any Bonds are unenforceable in accordance with their terms; or the principal amount outstanding under the Bonds shall at any time be less than the greater of the Outstandings or the Commitment Amounts.


	(g) A default in the payment when due (after giving effect to any applicable grace periods) of principal or interest with respect to any indebtedness or any Swap Contract of the Borrower or any Subsidiary (other than indebtedness arising hereunder) if the aggregate amount of all such indebtedness as to which such payment defaults exist is not less than $50,000,000.

(h) A default (other than a default described in paragraph (g)) under any bond, debenture, note or other evidence of indebtedness or any Swap Contract of the Borrower or any Subsidiary (other than to the Banks) or under any indenture or other instrument under which any such evidence of indebtedness has been issued or by which it is governed and the expiration of the applicable period of grace, if any, specified in such evidence of indebtedness, indenture or other instrument if the effect of such default is to cause or to permit the holder of such indebtedness (or trustee or agent on behalf of such holder) to cause such indebtedness to come due prior to its stated maturity or is to cause or to permit the counterparty in respect of such Swap Contract to elect an early termination date in respect of such Swap Contract; provided, however, that no Event of Default shall be deemed to have occurred under this paragraph if the aggregate amount owing as to all such indebtedness and Swap Contracts as to which such defaults have occurred and are continuing is less than $50,000,000; provided further that if such default shall be cured by the Borrower or

such Subsidiary, or waived by the holders of such indebtedness or counterparties in respect of such Swap Contracts, in each case prior to the commencement of any action under Section 7.2 and as may be permitted by such evidence of indebtedness, indenture, other instrument, or Swap Contract, then the Event of Default hereunder by reason of such default shall be deemed likewise to have been thereupon cured or waived.

(i) The Borrower or any Restricted Subsidiary shall be adjudicated a bankrupt or insolvent, or admit in writing its inability to pay its debts as they mature, or make an assignment for the benefit of creditors; or the Borrower or any Restricted Subsidiary shall apply for or consent to the appointment of any receiver, trustee, or similar officer for it or for all or any substantial part of its property; or such receiver, trustee or similar officer shall be appointed without the application or consent of the Borrower or such Restricted Subsidiary, and such appointment shall continue undischarged for a period of 60 days; or the Borrower or any Restricted Subsidiary shall institute (by petition, application, answer, consent or otherwise) any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceeding relating to it under the laws of any jurisdiction; or any such proceeding shall be instituted (by petition, application or otherwise) against the Borrower or any Restricted Subsidiary and shall continue undischarged for 60 days; or any judgment, writ, warrant of attachment or execution or similar process shall be issued or levied against a substantial part of the property of the Borrower or any Restricted Subsidiary and such judgment, writ, or similar process shall not be released, vacated, stayed or fully bonded within 60 days after its issue or levy.

(j) A petition shall be filed by the Borrower or any Restricted Subsidiary under the United States Bankruptcy Code naming the Borrower or that Restricted Subsidiary as debtor; or an involuntary petition shall be filed against the Borrower or any Restricted Subsidiary under the United States Bankruptcy Code, and such petition shall not have been dismissed within 60 days after such filing; or an order for relief shall be entered in any case under the United States Bankruptcy Code naming the Borrower or any Restricted Subsidiary as debtor.


	(k) The Parent shall cease to own 100% of all classes of capital stock of the Borrower; or a Change of Control shall occur with respect to the Parent.

(l) The rendering against the Borrower or any Subsidiary of a final judgment, decree or order for the payment of money if the amount of such judgment, decree or order, together with the amount of all other such judgments, decrees and orders then outstanding, less (in each case) the portion thereof covered by insurance proceeds, is greater than $50,000,000 and if such judgment, decree or order remains unsatisfied and in effect for any period of 30 consecutive days without a stay of execution.

(m) Any Plan shall have been terminated as a result of which the Borrower or any Subsidiary or ERISA Affiliate has incurred an unfunded liability in excess of $50,000,000; or a trustee shall have been appointed by an appropriate United States District Court to administer any Plan or the Pension Benefit Guaranty Corporation shall have instituted proceedings to terminate any Plan or to appoint a trustee to administer any Plan and in either case such action could reasonably be expected to result in liability to the Borrower or any Subsidiary in excess of $50,000,000, or withdrawal liability in excess of $50,000,000 shall have been asserted against the Borrower or any Subsidiary or ERISA Affiliate by a Multiemployer Plan; or the Borrower or any Subsidiary or ERISA Affiliate shall have incurred any joint and several liability to the Pension Benefit Guaranty Corporation, the Internal Revenue Service or the Department of Labor, or the Borrower or any Subsidiary shall have incurred any other liability to the Pension Benefit Guaranty Corporation, the Internal Revenue Service or the Department of Labor, in excess of $50,000,000 with respect to any Plan; or any Reportable Event that the Required Banks may determine in good faith could reasonably be expected to constitute grounds for the termination of any Plan by the Pension Benefit Guaranty Corporation, for the appointment by the appropriate United States District Court of a trustee to administer any Plan or for the imposition of withdrawal liability with respect to a Multiemployer Plan, and which, in any such case, could reasonably be expected to result in liability to Borrower or any Subsidiary or ERISA Affiliate in excess of $50,000,000, shall have occurred and be continuing 30 days after written notice to such effect shall have been given to the Borrower by the Banks.


	(n) Any Authorizing Order or other governmental license or other permission necessary for the maintenance of Obligations outstanding or the conduct of the Borrower’s business substantially as presently conducted shall be suspended or revoked or shall fail to be renewed upon expiration.


	(o) Any court, government or governmental agency shall condemn, seize or otherwise appropriate, or take custody or control of, all or any Material Part of the Assets of the Borrower and its Subsidiaries.


	(p) Failure of the Borrower to maintain or deposit in the Cash Collateral Account on or after the fifth Business Day preceding the Commitment Termination Date (or earlier, if required by Section 7.2(c)) an amount equal to the face amount of all outstanding Letters of Credit.

Upon the occurrence of an Event of Default or at any time thereafter until such Event of Default is waived by the Required Banks or cured, the Agent may, with the consent of the Required Banks, and shall, upon the request of the Required Banks, exercise any or all of the following rights and remedies:


	(a) The Agent may, by notice to the Borrower, declare the Commitments to be terminated, whereupon the same shall forthwith terminate.

(b) The Agent may, by notice to the Borrower, declare the entire unpaid principal amount of the Notes then outstanding, all interest accrued and unpaid thereon, and all other amounts payable under this Agreement to be forthwith due and payable, whereupon the Notes, all such accrued interest and all such amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower.


	(c) If any Letter of Credit remains outstanding, the Agent may, by notice to the Borrower, require the Borrower to deposit in the Cash Collateral Account immediately available funds equal to the aggregate face amount of all such outstanding Letters of Credit (less any amounts then on deposit in the Cash Collateral Account).

(d) The Banks may, without notice to the Borrower and without further action, apply any and all money owing by any Bank to the Borrower to the payment of the Notes then outstanding, including interest accrued thereon, and of all other sums then owing by the Borrower hereunder. For purposes of this paragraph (d), “Bank” means the Banks, as defined elsewhere in this Agreement, and any participant in the loans made hereunder; provided, however, that each such participant, by exercising its rights under this paragraph (d), agrees that it shall be obligated under Section 8.4 with respect to such payment as if it were a Bank for purposes of that Section.


	(e) The Agent may exercise and enforce all rights and remedies available to it under the Pledge Agreement and in respect of the Cash Collateral Account.


	(f) The Agent and the Banks may exercise any other rights and remedies available to them by law or agreement.

Notwithstanding the foregoing, upon the occurrence of an Event of Default described in Section 7.1(j) hereof (whether or not such Event of Default also arises under Section 7.1(i) hereof), the Commitments shall terminate and the entire unpaid principal amount of the Notes then outstanding, all interest accrued and unpaid thereon, and all other amounts payable under this Agreement shall be immediately due and payable without presentment, demand, protest or notice of any kind.

renewals, extensions and modifications thereof and any notes issued in substitution therefor, and specifically including the Borrower’s obligation to reimburse the Issuing Bank for any amount drawn under any Letter of Credit, whether such reimbursement obligation arises directly under this Agreement or under a separate reimbursement agreement. Upon request of the Borrower, the Agent shall permit the Borrower to withdraw from the Cash Collateral Account, so long as no Default or Event of Default then exists, the lesser of (i) the Excess Balance (as defined below), or (ii) the balance of the Cash Collateral Account. If a Default or Event of Default then exists, the Agent shall, upon the request of the Borrower, apply the Excess Balance to the payment of the Obligations. As used herein, “Excess Balance” means (A) after the fifth Business Day preceding the Commitment Termination Date, the amount by which the balance of the Cash Collateral Account exceeds the L/C Amount, and (B) prior to the fifth Business Day preceding the Commitment Termination Date, the balance of the Cash Collateral Account. The Agent shall have full control of the Cash Collateral Account, and, except as set forth above, the Borrower shall have no right to withdraw the funds maintained in the Cash Collateral Account.

Each Bank and the holder of each Note irrevocably appoints and authorizes the Agent to act on behalf of such Bank or holder to the extent provided herein or in any document or instrument delivered hereunder or in connection herewith, and to take such other action as may be reasonably incidental thereto.

(a) After deduction of any costs of collection as hereinafter provided, the Agent shall remit to each Bank that Bank’s Percentage of all payments of principal, interest, Letter of Credit fees payable under Section 2.7(d) and facility and utilization fees payable under Section 2.8 that are received by the Agent under the Loan Documents. Each Bank’s interest in the Loan Documents shall be payable solely from payments, collections and proceeds actually received by the Agent under the Loan Documents; and the Agent’s only liability to the Banks hereunder shall be to account for each Bank’s Percentage of such payments, collections and proceeds in accordance with this Agreement. If the Agent is ever required for any reason to refund any such payments, collections or proceeds, each Bank will refund to the Agent, upon demand, its Percentage of such payments, collections or proceeds, together with its Percentage of interest or penalties, if any, payable by the Agent in connection with such refund. The Agent may, in its sole discretion, make payment to the Banks in anticipation of receipt of payment from the Borrower. If the Agent fails to receive any such anticipated payment from the Borrower, each Bank shall promptly refund to the Agent, upon demand, any such payment made to it in anticipation of payment from


	the Borrower, together with interest for each day on such amount until so refunded at a rate equal to the Federal Funds Rate for each such date.

(b) Notwithstanding the foregoing, if any Bank has wrongfully refused to fund its Percentage of any Borrowing or other Advance as required hereunder, or if the principal balance of any Bank’s Note is for any other reason less than its Percentage of the aggregate principal balances of the Notes then outstanding, the Agent may remit all payments received by it to the other Banks until such payments have reduced the aggregate amounts owed by the Borrower to the extent that the aggregate amount owing to such Bank hereunder is equal to its Percentage of the aggregate amount owing to all of the Banks hereunder. The provisions of this paragraph are intended only to set forth certain rules for the application of payments, proceeds and collections in the event that a Bank has breached its obligations hereunder and shall not be deemed to excuse any Bank from such obligations.

All payments, collections and proceeds received or effected by the Agent may be applied, first, to pay or reimburse the Agent for all costs, expenses, damages and liabilities at any time incurred by or imposed upon the Agent in connection with this Agreement or any other Loan Document (including but not limited to all reasonable attorney’s fees, foreclosure expenses and advances made to protect the security of collateral, if any, but excluding any costs, expenses, damages or liabilities arising from the gross negligence or willful misconduct of the Agent). If the Agent does not receive payments, collections or proceeds from the Borrower or its properties sufficient to cover any such costs, expenses, damages or liabilities within 30 days after their incurrence or imposition, each Bank shall, upon demand, remit to the Agent its Percentage of the difference between (i) such costs, expenses, damages and liabilities, and (ii) such payments, collections and proceeds.

If any Bank or other holder of a Note shall obtain any payment or other recovery (whether voluntary, involuntary, by application of offset or otherwise) on account of principal of or interest on any Note other than through distributions made in accordance with Section 8.2, such Bank or holder shall promptly give notice of such fact to the Agent and shall purchase from the other Banks or holders such participations in the Notes held by them as shall be necessary to cause the purchasing Bank or holder to share the excess payment or other recovery ratably with each of them; provided, however, that if all or any portion of the excess payment or other recovery is thereafter recovered from such purchasing Bank or holder, the purchase shall be rescinded and the purchasing Bank restored to the extent of such recovery (but without interest thereon).

The Agent shall not be required to do any act hereunder or under any other document or instrument delivered hereunder or in connection herewith, or to prosecute or defend any suit

in respect of this Agreement or the Notes or any documents or instrument delivered hereunder or in connection herewith unless indemnified to its satisfaction by the holders of the Notes against loss, cost, liability and expense (other than any such loss, cost, liability or expense attributable to the Agent’s own gross negligence or willful misconduct). If any indemnity furnished to the Agent for any purpose shall, in the opinion of the Agent, be insufficient or become impaired, the Agent may call for additional indemnity and not commence or cease to do the acts indemnified against until such additional indemnity is furnished.

(a) The Agent shall be entitled to rely upon advice of counsel concerning legal matters, and upon this Agreement, any Loan Document and any schedule, certificate, statement, report, notice or other writing which it in good faith believes to be genuine or to have been presented by a proper person. Neither the Agent nor any of its directors, officers, employees or agents shall (a) be responsible for any recitals, representations or warranties contained in, or for the execution, validity, genuineness, effectiveness or enforceability of this Agreement, any Loan Document, or any other instrument or document delivered hereunder or in connection herewith, (b) be responsible for the validity, genuineness, perfection, effectiveness, enforceability, existence, value or enforcement of any collateral security, (c) be under any duty to inquire into or pass upon any of the foregoing matters, or to make any inquiry concerning the performance by the Borrower or any other obligor of its obligations, or (d) in any event, be liable as such for any action taken or omitted by it or them, except for its or their own gross negligence or willful misconduct. The appointment of Wells Fargo as Agent hereunder shall in no way impair or affect any of the rights and powers of, or impose any duties or obligations upon, Wells Fargo in its individual capacity.

(b) The term, “agent”, is used herein in reference to the Agent merely as a matter of custom. It is intended to reflect only an administrative relationship between the Agent and the Banks, in each case as independent contracting parties. However, the obligations of the Agent shall be limited to those expressly set forth herein. In no event shall the use of such term create or imply any fiduciary relationship or any other obligation arising under the general law of agency, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Agent.

The Agent shall have the same rights and powers hereunder in its individual capacity as any other Bank, and may exercise or refrain from exercising the same as though it were not the Agent, and the Agent and its Affiliates may accept deposits from and generally engage in any kind of business with the Borrower as fully as if the Agent were not the Agent hereunder.

Each Bank acknowledges that it has made its own independent credit decision and investigation and taken such care on its own behalf as would have been the case had its Commitment been granted and the Advances made directly by such Bank to the Borrower without the intervention of the Agent or any other Bank. Each Bank agrees and acknowledges that the Agent makes no representations or warranties about the creditworthiness of the Borrower or any other party to this Agreement or with respect to the legality, validity, sufficiency or enforceability of this Agreement, any Loan Document, or any other instrument or document delivered hereunder or in connection herewith.

The Agent may resign as such at any time upon at least 30 days’ prior notice to the Borrower and the Banks. In the event of any resignation of the Agent, the Required Banks shall as promptly as practicable appoint a Bank as a successor Agent; provided, however, that so long as no Default or Event of Default has occurred and is continuing at such time, no such successor Agent may be appointed without the prior written consent of the Borrower. If no such successor Agent shall have been so appointed by the Required Banks and shall have accepted such appointment within 30 days after the resigning Agent’s giving of notice of resignation, then the resigning Agent may, on behalf of the Banks, appoint a Bank as a successor Agent, which shall be a commercial bank organized under the laws of the United States of America or of any State thereof. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon be entitled to receive from the prior Agent such documents of transfer and assignment as such successor Agent may reasonably request and the resigning Agent shall be discharged from its duties and obligations under this Agreement. After any resignation pursuant to this Section, the provisions of this Section shall inure to the benefit of the retiring Agent as to any actions taken or omitted to be taken by it while it was an Agent hereunder.

(a) Any Bank may, at any time, assign a portion of its Notes and Commitment to an Eligible Lender (an “Applicant”) on any date (the “Adjustment Date”) selected by such Bank, subject to the terms and provisions of this Section 8.10. The aggregate principal amount of the Note and Commitment so assigned in any assignment shall be not less than $5,000,000, and the assigning Bank shall retain at least $5,000,000 of such Note and Commitment for its own account; provided, however, that the foregoing restriction shall not apply to a Bank assigning its entire Note and Commitment to the Applicant. Any Bank proposing an assignment hereunder shall give notice of such assignment to the Agent and the Borrower at least ten Business Days prior to such assignment (unless the Agent consents to a shorter period of time). Such notice shall specify the identity of such Applicant and the Percentage which it proposes that such Applicant acquire (which Percentage shall be the same for the Commitment and the Note held by the assigning Bank). Any


	assignment hereunder may be made only with the prior written consent of the Agent and the Borrower; provided, however, that (i) in no event shall such consent be unreasonably withheld, and (ii) the consent of the Borrower shall not be required if a Default or Event of Default has occurred and is continuing at the time of such assignment.


	(b) Subject to the prior written consent of the Agent and the Borrower (if applicable), to confirm the status of an Applicant as a party to this Agreement and to evidence the assignment of the applicable portion of the assigning Bank’s Commitment and Notes in accordance herewith:

	(i)		the Borrower, such Bank, such Applicant, and the Agent shall, on or before the Adjustment Date, execute and deliver to the Agent an Assignment Certificate (provided that, if a Default or Event of Default has occurred and is continuing on the applicable Adjustment Date, the assignment will be effective whether the Borrower signs it or not), in substantially the form of Exhibit E (an “Assignment Certificate”); and

	(ii)		the Borrower will, at its own expense and in exchange for the assigning Bank’s Note, execute and deliver to the assigning Bank a new Note, payable to the order of the Applicant in an amount corresponding to the applicable interest in the assigning Bank’s rights and obligations acquired by such Applicant pursuant to such assignment, and, if the assigning Bank has retained interests in such rights and obligations, a new Note, payable to the order of that Bank in an amount corresponding to such retained interests. Such new Notes shall be in an aggregate principal amount equal to the principal amount of the Note to be replaced by such new Notes (or, if less, the Commitment Amount of the assigning Bank prior to giving effect to such assignment, unless such assignment is made after the Commitment Termination Date, in which case the aggregate principal amount of the new Notes shall equal the outstanding principal balance of the Note to be replaced by such new Notes), shall be dated the effective date of such assignment and shall otherwise be in the form of the Note to be replaced thereby. Such new Notes shall be issued in substitution for, but not in satisfaction or payment of, the Note being replaced thereby; and

Upon the execution and delivery of such Assignment Certificate and such Notes, (a) this Agreement shall deemed to be amended to the extent, and only to the extent, necessary to reflect the addition of such Additional Bank and the resulting adjustment of Percentages arising therefrom, (b) the assigning Bank shall be relieved of all obligations hereunder to the extent of the reduction of all obligations hereunder and to the extent of the reduction of such Bank’s Percentage, and (c) the Additional Bank shall become a party hereto and shall be entitled to all rights, benefits and privileges accorded to a Bank herein and in each other document or instrument executed

pursuant hereto and subject to all obligations of a Bank hereunder, including the right to approve or disapprove actions which, in accordance with the terms hereof, require the approval of the Required Banks or all Banks, and the obligations to make Advances hereunder.

(c) In order to facilitate the addition of Additional Banks hereto, the Borrower shall (subject to the written agreement of any prospective Additional Bank to be subject to the confidentiality provisions of Section 8.13) provide all reasonable assistance requested by each Bank and the Agent relating thereto, which shall not require undue effort or expense on the part of the Borrower, including, without limitation, the furnishing of such written materials and financial information regarding the Borrower as any Bank or the Agent may reasonably request, and the participation by officers of the Borrower in a meeting or teleconference call with any Applicant upon the reasonable request upon reasonable notice of any Bank or the Agent.

	(i)		each Bank shall have the right at any time upon written notice to the Borrower and the Agent (but without requiring the consent of the Borrower or the Agent) to sell, assign, transfer, or negotiate all or any part of its Commitment, Advances, Notes, and other rights and obligations under this Agreement and the Loan Documents to one or more Affiliates of such Bank, provided that, unless consented to by the Borrower and the Agent (which consent shall not be unreasonably withheld), no such sale, assignment, transfer or negotiation of Commitment shall relieve the transferring Bank from its obligations (to the extent such Affiliate does not fulfill its obligations) hereunder; and

	(ii)		each Bank shall have the right at any time upon written notice to the Borrower and the Agent (but without requiring the consent of the Borrower or the Agent) to sell, assign, transfer, or negotiate all or any part of its Commitment, Advances, Notes, and other rights and obligations under this Agreement and the Loan Documents to one or more Banks, and any such sale, assignment, transfer or negotiation shall relieve the transferring Bank from its obligations hereunder to the extent of the obligations so transferred (except, in any event, to the extent that the Borrower, any other Bank or the Agent has rights against such transferring Bank as a result of any default by such transferring Bank under this Agreement);

provided, however, that any partial sale, assignment, transfer or negotiation pursuant to this Section shall be pro rata as to all of the Commitment, Note and Advances transferred.


	(e) Simultaneous with any assignment under this Section, the Bank making such assignment shall pay the Agent a transfer fee in the amount of $3,500.

(f) Notwithstanding anything to the contrary contained herein, any Bank (a “Granting Bank”) may grant to a special purpose funding vehicle (an “SPC”) of such Granting Bank, identified as such in writing from time to time by the Granting Bank to the Agent and the Borrower, the option to provide to the Borrower all or any part of any Advance that such Granting Bank would otherwise be obligated to make to the applicable Borrower pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPC to make any Advance, (ii) if an SPC elects not to exercise such option or otherwise fails to provide all or any part of such Advance, the Granting Bank shall be obligated to make such Advance pursuant to the terms hereof, (iii) such Granting Bank’s other obligations under this Agreement shall remain unchanged, (iv) such Granting Bank shall remain solely responsible to the other parties hereto for the performance of such obligations, and (v) the Borrower, the Agent and the other Banks shall continue to deal solely and directly with such Granting Bank in connection with such Granting Bank’s rights and obligations under this Agreement (including any rights and obligations assigned to such SPC). The making of an Advance by an SPC hereunder shall be deemed to utilize the Commitment of the applicable Granting Bank to the same extent, and as if, such Advance were made by such Granting Bank. Each party hereto hereby agrees that no SPC shall be liable for any indemnity or similar payment obligation under this Agreement (all liability for which shall remain with the applicable Granting Bank). All notices hereunder to any Granting Bank or the related SPC, and all payments in respect of the Obligations due to such Granting Bank or the related SPC, shall be made to such Granting Bank. In addition, each Granting Bank shall vote as a Bank hereunder without giving effect to any assignment under this paragraph (f), and no SPC shall have any vote as a Bank under this Agreement for any purpose. In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding senior indebtedness of any SPC, it will not institute against, or join any other person in instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under the laws of the United States or any State thereof. In addition, notwithstanding anything to the contrary contained in this Section 8.10, any SPC may (i) with notice to, but without the prior written consent of, the Borrower or the Agent and without paying any transfer fee therefor, assign all or a portion of its interests in its right to repayment of any Advances to its Granting Bank or to any financial institutions providing liquidity and/or credit support to or for the account of such SPC to fund the Advances made by such SPC or to support the securities (if any) issued by such SPC to fund such Advances and (ii) disclose on a confidential basis, to the extent such disclosure would be permitted under Section 8.13 as if such SPC were a Bank, any non-public information relating to its Advances to any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancement to


	such SPC. No amendment to this paragraph (f) that affects the rights of an SPC that has made an advance hereunder shall be effective without the consent of such SPC.


	(g) Notwithstanding any other provision of this Agreement, any Bank may at any time create a security interest in all or any portion of its rights under this Agreement and that Bank’s Note in favor of any Federal Reserve Bank in accordance with Regulation A of the Board of Governors of the Federal Reserve System.

Each Bank may grant participations in a portion of its Notes, Letter of Credit participations and Commitments to any Eligible Lender, upon prior written notice to the Agent but without the consent of the Agent or the Borrower, but only so long as the principal amount of the participation so granted is no less than $5,000,000 (or, if the participant is a Participating Affiliate, no less than $1,000,000). No holder of any such participation, other than an Affiliate of such Bank, shall be entitled to require such Bank to take or omit to take any action hereunder, except that such Bank may agree with such participant that such Bank will not, without such participant’s consent, agree to any action described in paragraph (a) of Section 9.2. No Bank shall, as between the Borrower and such Bank, be relieved of any of its obligations hereunder as a result of any such granting of a participation. The Borrower hereby acknowledges and agrees that any participant described in this Section will, for purposes of Sections 2.16, 2.17 and 2.18 only, be considered to be a Bank hereunder (provided that such participant shall not be entitled to receive any more than the Bank selling such participation would have received had such sale not taken place).

Except as set forth in Sections 8.10 and 8.11, no Bank may assign any of its rights or obligations under, or grant any participation in, any Loan Document or Commitment.

confidential basis prior to its disclosure to the Agent or such Bank by the Borrower or a Subsidiary; (vii) to the extent the Borrower or such Subsidiary shall have consented to such disclosure in writing; (viii) to the extent reasonably deemed necessary by the Agent or any Bank in the enforcement of the remedies of the Agent and the Banks provided under the Loan Documents; or (ix) in connection with any potential assignment or participation in the interest granted hereunder, provided that any such potential assignee or participant shall have executed a confidentiality agreement imposing on such potential assignee or participant substantially the same obligations as are imposed on the Agent and the Banks under this Section 8.13.

Notwithstanding anything herein to the contrary, information subject to this Section 8.13 shall not include, and the Agent and each Bank may disclose without limitation of any kind, any information with respect to the “tax treatment” and “tax structure” (in each case, within the meaning of Treasury Regulation Section 1.6011-4) of the transactions contemplated hereby and all materials of any kind (including opinions or other tax analyses) that are provided to the Agent or such Bank relating to such tax treatment and tax structure; provided that with respect to any document or similar item that in either case contains information concerning the tax treatment or tax structure of the transaction as well as other information, this sentence shall only apply to such portions of the document or similar item that relate to the tax treatment or tax structure of the Notes, Letters of Credit and transactions contemplated hereby. The Borrower and its Subsidiaries may also disclose without limitation the “tax treatment” and “tax structure” of the transactions contemplated hereby.

The Persons identified on the title page as “Syndication Agent” and “Co-Lead Arrangers” shall have no right, power, obligation or liability under this Agreement or any other Loan Document on account of such identification other than those applicable to such Persons in their capacity (if any) as Banks. Each Bank acknowledges that it has not relied, and will not rely, on any Person so identified in deciding to enter into this Agreement or in taking or omitting any action hereunder.

Each Bank acknowledges that neither the Agent’s taking possession of the Bonds, nor its exercise of remedies with respect to the Bonds and subsequent distribution of proceeds thereunder, constitutes or will constitute an offer of any security, a solicitation of an offer to buy any security, or a placement of any security.

No failure or delay on the part of the Banks in exercising any right, power or remedy under the Loan Documents shall operate as a waiver thereof; nor shall any Bank’s acceptance of

payments while any Default or Event of Default is outstanding operate as a waiver of such Default or Event of Default, or any right, power or remedy under the Loan Documents; nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy under the Loan Documents. The remedies provided in the Loan Documents are cumulative and not exclusive of any remedies provided by law.

No amendment or waiver of any provision of any Loan Document or consent to any departure by the Borrower therefrom shall be effective unless the same shall be in writing and signed by the Required Banks (or by the Agent with the consent or at the request of the Required Banks), and any such waiver shall be effective only in the specific instance and for the specific purpose for which given. Notwithstanding the foregoing:


	(a) No such amendment or waiver shall be effective to do any of the following unless signed by each of the Banks (or by the Agent with the consent or at the request of each of the Banks):

	(i)		Increase the Commitment Amount of any Bank or extend the Commitment Termination Date.

	(ii)		Permit the Borrower to assign its rights under this Agreement.

	(iii)		Amend this Section, the definition of “Required Banks” in Section 1.1, or any provision herein providing for consent or other action by all Banks.

	(iv)		Forgive any indebtedness of the Borrower arising under this Agreement or the Notes, or reduce the rate of interest or any fees charged under this Agreement or the Notes.

	(v)		Postpone or delay any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, facility fees or other material amounts due to the Banks (or any of them) hereunder or under any other Loan Document.

	(vi)		Release the Agent’s security interest in any Bonds or other collateral granted under the Pledge Agreement or amend any terms of any Bonds or, except pursuant to the terms hereof, release any collateral in the Cash Collateral Account.


	(b) No amendment, waiver or consent shall affect the rights or duties of the Agent under this Agreement or any other Loan Document unless in writing and signed by the Agent.


	(c) No amendment, modification or (except as provided elsewhere herein) termination of this Agreement or waiver of any rights of the Borrower or obligations of any Bank or the Agent hereunder shall be effective unless the Borrower shall have consented thereto in writing.

No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances.

Except as otherwise expressly provided herein, all notices and other communications hereunder shall be in writing and shall be (i) personally delivered, (ii) transmitted by registered mail, postage prepaid, (iii) sent by Federal Express or similar expedited delivery service, or (iv) transmitted by telecopy, in each case addressed or transmitted by telecopy to the party to whom notice is being given at its address or telecopier number (as the case may be) as set forth in Exhibit A or in any applicable Assignment Certificate; or, as to each party, at such other address or telecopier number as may hereafter be designated in a notice by that party to the other party complying with the terms of this Section. All such notices or other communications shall be deemed to have been given on (i) the date received if delivered personally, (ii) five business days after the date of posting, if delivered by mail, (iii) the date of receipt, if delivered by Federal Express or similar expedited delivery service, or (iv) the date of transmission if delivered by telecopy, except that notices or requests to the Banks pursuant to any of the provisions of Article II shall not be effective as to any Bank until received by that Bank.

The Borrower agrees to pay on demand (i) all costs and expenses incurred by the Agent in connection with the negotiation, preparation, execution, administration or amendment of the Loan Documents and the other instruments and documents to be delivered hereunder and thereunder, and (ii) all costs and expenses incurred by the Agent or any Bank in connection with the workout or enforcement of the Loan Documents and the other instruments and documents to be delivered hereunder and thereunder; including, in each case, reasonable fees and out-of-pocket expenses of counsel with respect thereto, whether paid to outside counsel or allocated to the Agent or such Bank by in-house counsel. The Borrower also agrees to pay and reimburse the Agent for all of its out-of-pocket and allocated costs incurred in connection with each audit or examination conducted by the Agent, its employees or agents, which audits and examinations shall be for the sole benefit of the Agent and the Banks.

connection with or arising out of the execution or delivery of this Agreement or any agreement or instrument contemplated hereby, the performance by the parties hereto of their respective obligations hereunder or the use of the proceeds of any Advance or Letter of Credit hereunder (including but not limited to any such loss, claim, damage, expense or liability arising out of any claim that any Environmental Law has been breached with respect to any activity or property of the Borrower), except for any portion of such losses, claims, damages, expenses or liabilities incurred solely as a result of the gross negligence or willful misconduct of the applicable Indemnitee. If and to the extent that the foregoing indemnity may be unenforceable for any reason, the Borrower hereby agrees to make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. All obligations provided for in this Section shall survive any termination of this Agreement. Notwithstanding the foregoing, the Borrower shall not be obligated to indemnify any Indemnitee in respect of any Indemnified Liabilities arising as a result of the Issuing Bank’s failure to pay any Letter of Credit after the presentation to it of a request strictly complying with the terms and conditions of such Letter of Credit.

This Agreement and the other Loan Documents may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which counterparts of this Agreement or such other Loan Document, as the case may be, taken together, shall constitute but one and the same instrument.

The Loan Documents shall be binding upon and inure to the benefit of the Borrower and the Banks and their respective successors and assigns, except that the Borrower shall not have the right to assign its rights thereunder or any interest therein without the prior written consent of each of the Banks.

The Loan Documents shall be governed by, and construed in accordance with, the laws of the State of Minnesota.

Any provision of this Agreement which is prohibited or unenforceable shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof.

Each party irrevocably (i) agrees that any suit, action or other legal proceeding arising out of or relating to this Agreement or any other Loan Document may be brought in a court of record in Hennepin County in the State of Minnesota or in the courts of the United States

located in such State, (ii) consents to the jurisdiction of each such court in any suit, action or proceeding, (iii) waives any objection which it may have to the laying of venue of any such suit, action or proceeding in any such courts and any claim that any such suit, action or proceeding has been brought in an inconvenient forum, and (iv) agrees that a final judgment in any such suit, 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.

THE BORROWER, THE AGENT AND THE BANKS HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT AND THE NOTES OR THE RELATIONSHIPS ESTABLISHED HEREUNDER.

This Agreement and the other Loan Documents and related documents described herein restate and supersede in their entirety any and all prior agreements and understandings, oral or written, between the Banks and the Borrower relating to the subject matter hereof.

The Borrower hereby absolutely and unconditionally releases and forever discharges each Indemnitee (as defined in Section 9.5) from any and all claims, demands or causes of action (arising from the beginning of time to and including the date of this Agreement) of any kind, nature or description, whether arising in law or equity or upon contract or tort or under any state or federal law or otherwise, whether such claims, demands and causes of action are matured or unmatured or known or unknown, which the Borrower has had, now has or has made claim to have against any Indemnitee for or by reason of any act, omission, matter, cause or thing arising out of or in any way related to the Prior Credit Agreement or any document executed in connection therewith.

Section 9.14 Recalculation of Covenants Following Accounting Practices Change.

The Borrower shall notify the Agent of any Accounting Practices Change promptly upon becoming aware of the same. Promptly following such notice, the Borrower and the Banks shall negotiate in good faith in order to effect any adjustments to Sections 6.8 and 6.9 necessary to reflect the effects of such Accounting Practices Change.

Article and Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.

The relationship between the Borrower on the one hand and the Banks, the Issuing Bank and the Agent on the other hand shall be solely that of borrower and lender. Neither the Agent, either Co-Lead Arranger, any Bank nor the Issuing Bank shall have any fiduciary responsibilities to the Borrower. Neither the Agent, either Co-Lead Arranger, any Bank nor the Issuing Bank undertakes any responsibility to the Borrower to review or inform the Borrower of any matter in connection with any phase of the Borrower’s business or operations. The Borrower agrees that neither the Agent, either Co-Lead Arranger, any Bank nor the Issuing Bank shall have liability to the Borrower (whether sounding in tort, contract or otherwise) for losses suffered by the Borrower in connection with, arising out of, or in any way related to, the transactions contemplated and the relationship established by the Loan Documents, or any act, omission or event occurring in connection therewith, unless it is determined in a final non-appealable judgment by a court of competent jurisdiction that such losses resulted from (i) the gross negligence or willful misconduct of the party from which recovery is sought or (ii) the Issuing Bank’s failure to pay any Letter of Credit after the presentation to it of a request strictly complying with the terms and conditions of such Letter of Credit. Neither the Agent, either Co-Lead Arranger, any Bank nor the Issuing Bank shall have any liability with respect to, and the Borrower hereby waives, releases and agrees not to sue for, any special, indirect or consequential damages suffered by the Borrower in connection with, arising out of, or in any way related to the Loan Documents or the transactions contemplated thereby.

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

For value received, Northern States Power Company, a Minnesota corporation (the “Borrower”), promises to pay to the order of (the “Bank”), at such place as the Agent under the Credit Agreement defined below may from time to time designate in writing, the principal sum of Dollars ($ ), or, if less, the aggregate unpaid principal amount of all advances made by the Bank to the Borrower pursuant to Section 2.1 of the Credit Agreement dated May 16, 2003 among the Borrower, Wells Fargo Bank, National Association, as Agent (in such capacity, the “Agent”), and various Banks, including the Bank (together with all amendments, modifications and restatements thereof, the “Credit Agreement”), and to pay interest on the principal balance of this Note outstanding from time to time at the rate or rates determined pursuant to the Credit Agreement.

This Note is issued pursuant to, and is subject to, the Credit Agreement, which provides (among other things) for the amount and date of payments of principal and interest required hereunder, for the acceleration of this Note upon an Event of Default and for the mandatory and voluntary prepayment of this Note.

The Borrower shall pay all costs of collection, including reasonable attorneys’ fees and legal expenses, if this Note is not paid when due, whether or not legal proceedings are commenced.

Presentment or other demand for payment, notice of dishonor and protest are expressly waived.

Wells Fargo Bank, National Association,
for itself and as Agent under
the Credit Agreement described below

Reference is made to the Credit Agreement dated as of May 16, 2003, as it may be amended from time to time (the “Credit Agreement”) among Northern States Power Company (the “Borrower”), Wells Fargo Bank, National Association, as Agent, and the Banks, as defined therein. All terms defined in the Credit Agreement and not otherwise defined herein shall have the meanings given them in the Credit Agreement.

This is a Compliance Certificate submitted in connection with the Borrower’s financial statements (the “Statements”) as of , (the “Effective Date”).


	(a) I am the [**chief financial officer/treasurer] of the Borrower, and I am familiar with the financial statements and financial affairs of the Borrower.

	(b) The Statements have been prepared in accordance with GAAP, **[subject to year-end audit adjustments].

	(c) The computations on the Annexes hereto set forth the Borrower’s compliance or non-compliance with the requirements set forth in Sections 6.8 and 6.9 as of the Effective Date:

I have no knowledge of the occurrence of any Default or Event of Default, except as set forth in the attachments, if any, hereto.

I am the General Counsel of Northern States Power Company (the “Borrower”) and have represented the Borrower in connection with the execution and delivery by the Borrower of the Credit Agreement dated as of May 16, 2003 (the “Credit Agreement”) by and between the Borrower, Wells Fargo Bank, National Association, as administrative agent (in such capacity, the “Agent”) and the financial institutions which are party thereto (the “Banks”). This opinion is delivered to you pursuant to Section 3.1(h) of the Credit Agreement. Capitalized terms used herein and not otherwise defined herein have the meanings assigned to such terms in the Credit Agreement.

In rendering this opinion, I have examined the articles of incorporation and bylaws of the Borrower and its Subsidiaries, the Loan Documents, and have made such further investigation and examined such further documents as I deemed necessary to render an informed opinion on the matters hereinafter set forth. I have assumed: (a) the genuineness of the signatures on all documents and instruments (other than the signatures of the officers of Borrower), the authenticity of all documents submitted as originals, the conformity to originals of all documents submitted as photostatic or certified copies, and the accuracy and completeness of all corporate records made available to me by the Borrower; (b) that each of the parties (other than the Borrower) to the Loan Documents has the legal capacity, power and authority required for it to enter into the Loan Documents to which it is a party, and to perform its respective obligations thereunder; (c) that all such parties (except with respect to the Borrower) have received any corporate or other authorization required by any applicable charter, by-law, law or regulation; (d) the due execution and delivery of the Loan Documents by each of the parties thereto (other than the Borrower); and (e) that the Loan Documents constitute the legal, valid and binding obligations of the respective parties thereto, other than the Borrower.

I am qualified to practice law in the State of Minnesota and do not purport to be expert on and express no opinion with respect to any laws other than the laws of the State of Minnesota.

	1.		Each of the Borrower and its Subsidiaries is a corporation duly incorporated, validly existing and in good standing under the laws of the state of its incorporation, and is duly licensed or qualified to transact business in all jurisdictions where the character of the property owned or leased or the nature of the business transacted by it makes such licensing or qualification necessary, except where the failure to be so licensed or qualified (i) will not permanently preclude the Borrower or such Subsidiary from maintaining any material action in any such domestic jurisdiction even though such action arose in whole or in part during the period of such failure, and (ii) will not result in any other Material Adverse Change.

	2.		Each of the Borrower and its Subsidiaries has all requisite corporate power and authority to conduct its business as described in the Borrower’s Annual Report on Form 10-K for the year ended December 31, 2002 filed with the SEC and to own its properties. The Borrower has all requisite corporate power and authority to execute, deliver, and perform its obligations under the Loan Documents.

	3.		The Loan Documents have been duly and validly executed and delivered by the Borrower and constitute the Borrower’s legal, valid and binding obligations, enforceable in accordance with their respective terms (including in the case of the Notes and the Bonds against claims of usury), except (i) to the extent that such enforcement may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally or by general equitable principles, (ii) to the extent that the indemnification provisions of the Loan Documents may be held to be unenforceable by applicable provisions of securities laws or public policy, (iii) that I express no opinion as to whether the Borrower has any interest in the Bonds and (iv) that I express no opinion as to the perfection or priority of any security interest purported to be created under the Loan Documents.

	4.		The Bonds and the Indenture have been duly executed, issued and delivered by the Borrower and, assuming due authentication thereof by the Trustee, will constitute valid and legally binding obligations of the Borrower enforceable against the Borrower (subject to the qualifications expressed in paragraph 3 above with respect to the validity and enforceability of the Loan Documents) against the Borrower in accordance with their terms and entitled to the benefits of the Indenture.

	5.		The execution, delivery and performance by the Borrower of the Loan Documents, the Bonds and the Indenture, the borrowings from time to time thereunder and the consummation of the transactions therein contemplated, have been duly authorized by all necessary corporate action and do not and will not (i) require any consent or approval of the stockholders of the Borrower, or any authorization, consent, approval, order, filing, registration or qualification by any governmental department, commission, board, bureau, agency or instrumentality,

			domestic or foreign, other than (A) those consents described in Schedule 4.2 to the Credit Agreement, all of which consents have been obtained and remain in full force and effect, (B) those filings required to perfect the security interests created under the Loan Documents and (C) any filings or approvals that may be required under state securities laws, (ii) violate any provision of any law, rule or regulation or of any order, writ, injunction or decree presently in effect having applicability to the Borrower or of the Articles of Incorporation or Bylaws of the Borrower, (iii) result in a breach of or constitute a default under any indenture or loan or credit agreement or any other material agreement, lease or instrument to which the Borrower is a party or by which it or its properties may be bound, or (iv) result in, or require, the creation or imposition of any Lien or other charge or encumbrance of any nature (other than the Liens created under the Loan Documents and the Indenture) upon or with respect to any of the properties now owned or hereafter acquired by the Borrower, except, in the case of clause (ii) or (iii), any such breach, violation or default which would not, individually or in the aggregate, result in a Material Adverse Change.

	6.		To the best of my knowledge, except as set forth in Schedule 4.7 to the Credit Agreement, there are no actions, suits or proceedings pending or overtly threatened against the Borrower or the properties of the Borrower before any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, which could reasonably be expected to effect a Material Adverse Change.

	7.		The Indenture is in proper form, conforming to the laws of the States of Minnesota, North Dakota, and South Dakota, to give and create the Lien which it purports to create and has been and now is duly and properly recorded or filed in all places necessary to effectuate the Lien of the Indenture.

	8.		The Borrower has good and valid title to all real and fixed property and leasehold rights described or enumerated in the Indenture (except such properties as have been released from the Lien thereof in accordance with the terms thereof), subject only to: (a) taxes and assessments not yet delinquent; (b) the Lien of the Indenture; (c) as to parts of the Borrower’s property, certain easements, conditions, restrictions, leases, and similar encumbrances which do not affect the Borrower’s use of such property in the usual course of its business, certain minor defects in title which are not material, defects in title to certain properties which are not essential to the Borrower’s business; and mechanics’ lien claims being contested or not of record or for the satisfaction or discharge of which adequate provision has been made by the Borrower pursuant to the Indenture.

	9.		The Bonds are secured by and entitled to the benefits of the Indenture equally and ratably, except as to sinking fund provisions, with all other bonds duly issued and outstanding under the Indenture by a valid and direct first mortgage Lien of the Indenture on all of the real and fixed properties, leasehold rights, franchises, and

			permits now owned by the Borrower, subject only to the items set forth in the preceding paragraph 8 of this opinion.

	10.		The Bonds also are secured equally and ratably, except as to sinking fund provisions, with all other bonds duly issued and outstanding under the Indenture by a valid and direct first mortgage lien (subject to permitted liens as defined in the Indenture) on all real and fixed property hereafter acquired by the Borrower in conformity with the terms of the Indenture, except as the United States Bankruptcy Code may affect the validity of the Lien of such Indenture on property acquired after the commencement of a case under such Act, except as to the prior Lien of the Trustee under the Indenture in certain events specified therein, and except as otherwise provided in the Indenture in the case of consolidation, merger, or transfer of all the mortgaged and pledged property as an entirety.

	11.		All conditions precedent set forth in the Indenture with respect to the Assignment and Assumption Agreement dated as of August 18, 2000 between the Parent and Borrower have been satisfied.

	12.		All covenants and conditions precedent to the authentication and delivery of the Bonds have been complied with.

	13.		The Minnesota Public Utilities Commission has issued its order (the “MPUC Order”) authorizing the incurrence by the Borrower of short-term debt so long as the aggregate principal amount of short-term debt outstanding does not exceed 15% of the Borrower’s total capitalization. All obligations in respect of the Notes and the Bonds will constitute short-term indebtedness for purposes of the MPUC Order. The MPUC Order is in full force and effect on the date hereof.

This opinion is rendered only with respect to the laws and the regulations which are in effect as of the date hereof. I assume no responsibility for updating this opinion to take into account any event, action, interpretation or change of law occurring subsequent to the date hereof that may affect the validity of any of the opinions expressed herein.

The foregoing opinion is furnished solely for the benefit of the addressees hereof and their successors and assigns, in connection with the Loan Documents and the transactions contemplated thereby, and may not be relied upon by, and copies may not be delivered to, any other person or be used for any other purpose without our prior written consent. I hereby consent to reliance hereon by any future participant or assignee of the Bank’s interests under the Credit Agreement as expressly permitted by Section 8.10 of the Credit Agreement; provided that such Bank has notified such participant or assignee that this opinion speaks only as of the date hereof and to its addressees and that I have no responsibility or obligation to update this opinion, to consider its applicability or correctness to other than its addressees, or to take into account changes in law, facts or any other development of which I may later become aware.

We have acted as special counsel for Northern States Power Company, a Minnesota corporation (the “Borrower”), in connection with the Credit Agreement dated as of May 16, 2003 (the “Credit Agreement”) by and between the Borrower, Wells Fargo Bank, National Association, as administrative agent (in such capacity, the “Agent”) and the financial institutions which are party thereto (the “Banks”). This opinion is delivered to you pursuant to Section 3.1(h) of the Credit Agreement. Capitalized terms used herein and not otherwise defined herein have the meanings assigned to such terms in the Credit Agreement. With your permission, all assumptions and statements of reliance herein have been made without any independent investigation or verification on our part except to the extent, if any, otherwise expressly stated, and we express no opinion with respect to the subject matter or accuracy of the assumptions or items upon which we have relied

In connection with the opinions expressed herein, we have examined such documents, records and matters of law as we have deemed necessary for the purposes of this opinion. We have examined, among other documents, (i) a copy of the Credit Agreement, (ii) the form of Note attached as Exhibit B to the Credit Agreement (the “Note”), (iii) the Supplemental Indenture dated as of May 1, 2003 (the “Supplemental Indenture”), supplementing the First Mortgage Bond Indenture and (iv) the form of Bond set forth in said Supplemental Indenture. The Credit Agreement, the Notes issued thereunder, the Supplemental Indenture and the Bonds are referred to herein collectively as the “Documents”. In all such examinations, we have assumed the legal capacity of all natural persons executing documents, the genuineness of all signatures, the authenticity of original and certified documents and the conformity to original or certified copies of all copies submitted to us as conformed or reproduction copies. As to various questions of fact relevant to the opinions expressed herein, we have relied upon, and assume the accuracy of, representations and warranties contained in the Documents and certificates and oral or written statements and other information of or from representatives of the Borrower and others and assume compliance on the part of the Borrower and each other party to the Documents with their covenants and agreements contained therein. With respect to the

opinion expressed in paragraphs (a) and (b) below, our opinions are limited (x) to our actual knowledge of the specially regulated business activities and properties of the Borrower, based upon review of the Annual Report on Form 10-K for the fiscal year ended December 31, 2001 filed by the Borrower with the Securities and Exchange Commission, but without any additional investigation or verification on our part and (y) to our review of only those laws and regulations that, in our experience, are normally applicable to transactions of the type contemplated by the Credit Agreement.

Based upon the foregoing, and subject to the limitations, qualifications and assumptions set forth herein, we are of the opinion that:

	(a)		Assuming that the issuance and sale of the Bonds have been duly authorized and approved by an order of the Minnesota Public Utilities Commission and such order is in full force and effect on the date hereof, no approval, authorization, consent or order of any public board or body under the laws of the United States of America is legally required in connection with the execution, delivery and performance by the Borrower of the Documents.

	(b)		Based upon the assumption set forth in paragraph (a) above, the execution and delivery of the Documents by the Borrower and the performance by the Borrower of its obligations thereunder do not violate any present law, or present regulation of any governmental agency or authority, of the United States of America applicable to the Borrower or its property, including without limitation the Public Utility Holding Company Act of 1935, as amended (the “Holding Company Act”).

	(c)		The Borrower is not an “investment company” or a company “controlled” by an “investment company” as such terms are defined in the Investment Company Act of 1940, as amended.

	(d)		The Borrower is a “public utility” and a “subsidiary company” of a “holding company”, as such terms are defined in the Holding Company Act.

	(e)		No registration of the Bonds under the Act, and no qualification of an indenture under the Trust Indenture Act with respect thereto, is required for the offer and sale of the Bonds to the Agent in the manner contemplated by the Credit Agreement.

To the extent it may be relevant to the opinions expressed herein, we have assumed that the parties to the Documents (other than the Borrower) have the power to enter into and perform such documents and to consummate the transactions contemplated thereby and that such documents have been duly authorized, executed and delivered by, and constitute legal, valid and binding obligations of, such parties.

	2.		For purposes of our opinions above, we have assumed that (i) the Borrower is a corporation validly existing and in good standing in its jurisdiction of organization, (ii) the Borrower has all requisite power and authority, and has obtained all requisite corporate, shareholder, board, and third party authorizations, consents and approvals, (iii) except to the extent of our opinion in paragraph (a) above, the Borrower has obtained all requisite governmental authorizations, consents and approvals, and made all requisite filings and registrations, necessary to execute, deliver and perform the Documents, (iv) except to the extent of our opinion in paragraph (b) above, the execution, delivery and performance of the Documents by the Borrower will not violate or conflict with any law, rule, regulation, order, decree, judgment, instrument or agreement binding upon or applicable to the Borrower or its properties, and (v) the Documents to which the Borrower is a party have been duly executed and delivered by it.

	3.		We express no opinion herein with respect to any law, rule or regulation as to tax or, except to the extent of our opinion in paragraph (e) above, securities matters or as to any matters relating to ERISA.

The opinions expressed herein are limited to the federal laws of the United States.

We express no opinion as to the compliance or noncompliance, or the effect of the compliance or noncompliance, of each of the addressees or any other person or entity with any state or federal laws or regulations applicable to each of them by reason of their status as or affiliation with a federally insured depository institution. Our opinions are limited to those expressly set forth herein, and we express no opinions by implication.

The opinions expressed herein are solely for the benefit of the addressees hereof in connection with the transaction referred to herein and may not be relied on by such addressees for any other purpose or in any manner or for any purpose by any other person or entity; provided, however, that this opinion may be relied upon by any Additional Bank that becomes a Bank pursuant to the terms of the Credit Agreement to the extent that the addressees hereto may rely on it. This opinion speaks only as of the date hereof and to its addressees and that we have no responsibility or obligation to update this opinion, to consider its applicability or correctness to other than its addressees, or to take into account changes in law, facts or any other development of which we may later become aware.

This Certificate (the “Certificate”) is delivered pursuant to Section 8.10 of the Credit Agreement dated as of May 16, 2003 (together with all amendments, supplements, restatements and other modifications, if any, from time to time made thereto, the “Credit Agreement”), among Northern States Power Company, a Minnesota corporation (the “Borrower”), Wells Fargo Bank, National Association, as lead arranger and administrative agent (the “Agent”), and the various banks now or hereafter parties thereto.

The Assigning Bank named above wishes to assign a portion of its interest arising under the Credit Agreement to the Applicant named above pursuant to Section 8.10 of the Credit Agreement, and the Applicant wishes to become an Additional Bank pursuant thereto. This Certificate is an Assignment Certificate, as defined in the Credit Agreement, and is executed for purposes of informing the Agent and the Borrower of the transactions contemplate hereby and obtaining the consent of the Agent and the Borrower to the extent required under the Credit Agreement.

1. Definitions. Unless otherwise defined herein, terms used herein have the meanings provided in the Credit Agreement.

2. Allocation of Payments. Any interest, fees and other payments accrued to the Effective Date with respect to the Assigning Bank’s interest under the Loan Documents shall be for the account of the Assigning Bank. Any interest, fees and other payments accruing on and after the Effective Date with respect to the interests assigned hereunder shall be for the account of the Applicant. Each of the Assigning Bank and the Applicant agrees that it will hold in trust for the other party any interest, fees and other amounts which it may receive to which the other party is entitled pursuant to the preceding sentence and pay to the other party any such amounts which it may receive promptly upon receipt.

3. Effective Date; Conditions. The date on which the Applicant shall become an Additional Bank (the “Effective Date”) is , 200 ; provided, however, that the assignment and assumption described in this Certificate shall not be effective unless, on or before the Effective Date, (i) the Agent has received counterparts of this Certificate duly executed and delivered by the Borrower (unless the Borrower’s consent to the assignment hereunder is not required under Section 8.10 of the Credit Agreement), the Assigning Bank, the Agent and the Applicant, (ii) the Agent has received the transfer fee for

the account of the Agent in the amount of $3,500 (or, if the Applicant is an Affiliate of the Assigning Bank, $1,250), and (iii) all other terms and conditions of this Certificate and the Credit Agreement relating to the assignment hereunder have been satisfied.

4. Applicant’s Interest. Effective as of the Effective Date, (i) the Applicant’s Commitment Amount shall be the amount designated as the “Assigned Commitment Amount” opposite the Applicant’s signature below (and the Applicant shall be deemed to have assumed the Assigning Bank’s Commitment in the amount of such Assigned Commitment Amount), (ii) the principal amount of Advances under Section 2.1 owing to the Applicant shall be the amount designated as the “Assigned Committed Advances” opposite the Applicant’s signature below, and (iii) the Applicant’s Percentage shall be the percentage designated as the “Assigned Percentage” opposite the Applicant’s signature below.

5. Retained Interest. Effective as of the Effective Date, (i) the Assigning Bank’s Commitment Amount shall be the amount designated as the “Retained Commitment Amount” opposite the Assigning Bank’s signature below (and the Assigning Bank shall be relieved of all of its obligations under the Credit Agreement to the extent of the reduction in its Commitment Amount in accordance herewith), (ii) the principal amount of Advances under Section 2.1 owing to the Assigning Bank shall be the amount designated as the “Retained Committed Advances” opposite the Assigning Bank’s signature below, and (iii) the Assigning Bank’s Percentage shall be the percentage designated as the “Retained Percentage” opposite the Assigning Bank’s signature below.

6. New Notes. On the Effective Date, the Borrower shall issue and deliver to the Agent in exchange for the Assigning Bank’s Note (i) a Note payable to the order of the Applicant in a face principal amount equal to the Applicant’s “Assigned Commitment Amount” (or, if the Effective Date is after the Commitment Termination Date, the Applicant’s “Assigned Committed Advances”), in substantially the form of Exhibit A to the Credit Agreement, and (ii) a Note payable to the order of the Assigning Bank in the amount of the “Retained Commitment Amount” (or, if the Effective Date is after the Commitment Termination Date, the Assigning Bank’s “Retained Committed Advances”), in substantially the form of Exhibit A to the Credit Agreement. The Agent shall deliver the foregoing Notes to the Applicant and the Assigning Bank promptly after the Effective Date, or (if later) the receipt by the Agent thereof.

7. Notice Address. The address shown below the Applicant’s signature hereto shall be its notice address for purposes of Section 9.3 of the Credit Agreement, unless and until it shall designate, in accordance with such Section 9.3, another address for such purposes.

8. Assumption. Upon the Effective Date, the Applicant shall become a party to the Credit Agreement and a Bank thereunder and (i) shall be entitled to all rights, benefits and privileges accorded to a Bank in the Credit Agreement, (ii) shall be subject to all obligations of a Bank thereunder, and (iii) shall be deemed to have specifically ratified and

confirmed (and by executing this Certificate the Applicant hereby specifically ratifies and confirms) all of the provisions of the Credit Agreement and the Loan Documents.

9. Independent Credit Decision. The Applicant (a) acknowledges that it has received a copy of the Credit Agreement and the Schedules and Exhibits thereto, together with copies of the most recent financial statements referred to in Section 4.5 or 5.1 of the Credit Agreement, and such other documents and information as it has deemed appropriate to make its own credit and legal analysis and decision to enter into this Assignment Certificate; (b) acknowledges and agrees that in becoming an Additional Bank and in making any Advance under the Credit Agreement, such actions have been and will be made without recourse to, or representation or warranty by, the Assigning Bank or the Agent; and (c) agrees that it will, independently and without reliance upon the Assigning Bank, the Agent or any other Bank and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit and legal decisions in taking or not taking action under the Credit Agreement.

10. Withholding Tax. The Applicant (a) represents and warrants to the Agent and the Borrower that under applicable law and treaties no tax will be required to be withheld by the Agent or the Borrower with respect to any payments to be made to the Applicant hereunder, (b) agrees to furnish (if it is organized under the laws of any jurisdiction other than the United States or any State thereof) to the Agent and the Borrower prior to the time that the Agent or Borrower is required to make any payment of principal, interest or fees hereunder, duplicate executed originals of U.S. Internal Revenue Service Form W-8ECI or W-8BEN (or appropriate replacement forms) and agrees to provide new Forms W-8ECI or W-8BEN (or appropriate replacement forms) upon the expiration of any previously delivered form or comparable statements in accordance with applicable U.S. law and regulations and amendments thereto, duly executed and completed by the Applicant, and (c) agrees to comply with all applicable U.S. laws and regulations with regard to such withholding tax exemption.

11. Further Assurances. The Borrower, the Assigning Bank and the Applicant shall, at any time and from time to time upon the written request of the Agent, execute and deliver such further documents and do such further acts and things as the Agent may reasonably request in order to effect the purpose of this Certificate.

12. Miscellaneous. This Certificate may be executed in any number of counterparts by the parties hereto, each of which counterparts shall be deemed to be an original and all of which shall together constitute one and the same certificate. Matters relating to this Certificate shall be governed by, and construed in accordance with, the internal laws of the State of Minnesota.

IN WITNESS WHEREOF, the undersigned have executed this Certificate as of the Effective Date set forth above.

Wells Fargo Bank, National Association,
for itself and as Agent under the Credit
Agreement described below
MAC N9305-031
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479

The Banks, as defined under the Credit
Agreement described below

Re: $275,000,000 Northern States Power Company Credit Facility

Reference is made to the Credit Agreement dated May 16, 2003 (together with all amendments, modifications and restatements thereof, the “Credit Agreement”) among Northern States Power Company (the “Borrower”), Wells Fargo Bank, National Association, as Agent, and Banks that are parties thereto. As used herein, terms defined in the Credit Agreement and not otherwise defined herein have the meanings given them in the Credit Agreement.

The Borrower has requested [a Borrowing to be made under Section 2.1 of the Credit Agreement ] [a Letter of Credit to be issued under Section 2.7 of the Credit Agreement], as more specifically described on Attachment 1.

I hereby certify to you that the [Borrowing/Letter of Credit (including the Borrower’s obligation to reimburse the Banks on account of any draw under such Letter of Credit)] requested by the Borrower (i) has been duly authorized by the Borrower’s board of directors pursuant to its resolution dated , (ii) has been duly authorized by the Minnesota Public Utilities Commission pursuant to its order dated [** alternate for clause (ii): does not and will not require any authorization, consent or approval of the Minnesota Public Utilities Commission], and (iii) does not and will not require any other authorization, consent or approval by any governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, other than those that have been obtained, copies of which have been delivered to the Agent pursuant to Section 5.1(d).

I further certify to you that the [Borrowing/Letter of Credit (including the Borrower’s obligation to reimburse the Banks on account of any draw under such Letter of Credit)] requested by the Borrower complies with all applicable requirements of each board resolution and authorization of the Minnesota Public Utilities Commission described above, including but not limited to any applicable limitation on the aggregate amount of debt that the Borrower may have outstanding at any one time.

	1.		The Business Day of the proposed Borrowing is .

	2.		The aggregate amount of the proposed Borrowing is $ .

	3.		The proposed Borrowing is to be comprised of $ of Advances to bear interest at the Base Rate and $ of Advances to bear interest at the Eurodollar Rate.

	4.		The duration of the Interest Period for Advances that bear interest at the Eurodollar Rate shall be months.

	1.		The proposed date of issuance is .

	2.		The stated amount of the Letter of Credit is $ .

	3.		The Letter of Credit is to be issued to .

	4.		The expiration date of the Letter of Credit is .

The approvals or authorizations of the following regulatory bodies, depending upon the characterization of the Borrowings under the Agreement, may be required and have each been obtained and are in full force and effect:

1. See disclosure regarding legal proceedings of the Borrower under the heading NSP-Minnesota in Item 3 of the Borrower’s Annual Report on Form 10-K for the year ended December 31, 2002 filed with the SEC (the “2002 Form 10-K”) and in Note 13 to the Consolidated Financial Statements contained in the 2002 Form 10-K.

2. SchlumberSema, Inc. v. Xcel Energy Inc – Under a 1996 Data Services Agreement (DSA), SchlumberSema, Inc. (SLB) provides automated meter reading, distribution automation, and other data services to NSP-Minnesota. In September 2002, NSP-Minnesota issued written notice that SLB had committed events of default under the DSA, including SLB’s nonpayment of approximately $7.4 million for distribution automation assets. In November 2002, SLB demanded arbitration before the American Arbitration Association and asserted various claims against NSP-Minnesota totaling $24 million for NSP’s alleged breach of an expansion contract and a meter purchasing contract. On April 9, 2003, the parties attempted to mediate their dispute. The mediation was unsuccessful. On April 16, 2003 SchlumberSema, Inc. filed a motion in the U.S. Bankruptcy Court in Delaware for an Order that “any claim against SchlumberSema, Inc., arising from the alleged failure to sign the DA Transfer Agreement was cured, released, waived and/or barred by this court’s Order of May 4, 2000 approving the sale of CellNet Data Systems, Inc.’s assets to SLB”. NSP-Minnesota will vigorously oppose this motion.

See disclosure regarding environmental contingencies of the Borrower in Note 13 to the Consolidated Financial Statements contained in the 2002 Form 10-K.

See disclosure regarding legal proceedings of the Borrower under the heading NSP-Minnesota in Item 3 of the Borrower’s Annual Report on Form 10-K for the year ended December 31, 2002 filed with the SEC (the “2002 Form 10-K”) and in Note 13 to the Consolidated Financial Statements contained in the 2002 Form 10-K.

WELLS FARGO BANK, NATIONAL ASSOCIATION,

Public Service Company of Colorado, a Colorado corporation; the Banks, as defined below; and Bank One, NA, a national banking association having its principal office in Chicago, Illinois, as administrative agent for the Banks; agree as follows:

“Accounting Practices Change” means any change in the Borrower’s accounting practices that is permitted or required under the standards of the Financial Accounting Standards Board.

“Acquisition Target” means any Person becoming a Subsidiary of the Borrower after the date hereof; any Person that is merged into or consolidated with the Borrower or any Subsidiary of the Borrower after the date hereof; or any Person with respect to whom all or a substantial part of that Person’s assets are acquired by the Borrower or any Subsidiary of the Borrower after the date hereof.

“Additional Bank” means a financial institution that becomes a Bank pursuant to the procedures set forth in Section 9.1.

“Advance” means an advance by the Banks to the Borrower pursuant to Article II.

“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with such Person. A Person shall be deemed to control another Person if the controlling Person owns 25% or more of the voting securities (or other ownership interests) of the controlled Person or possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of stock, by contract or otherwise.

“Agent” means Bank One acting in its capacity as administrative agent for itself and the other Banks hereunder.

“Agreement” means this Credit Agreement, as it may be amended, modified or restated from time to time in accordance with Section 9.2.

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

“Authorizing Order” means any order of the Public Utilities Commission of the State of Colorado or any other regulatory body having jurisdiction over the Borrower or the Parent authorizing and/or restricting the indebtedness that may be created from time to time hereunder (whether on account of Advances, Letters of Credit or otherwise) or under the Pledged Securities.

“Bank One” means Bank One, NA, a national banking association having its principal office in Chicago, Illinois, in its individual capacity, and its successors.

“Banks” means Bank One, acting on its own behalf and not as Agent, each of the undersigned banks and any financial institution that becomes a Bank pursuant to the procedures set forth in Section 9.1, collectively.

“Borrower” means Public Service Company of Colorado, a Colorado corporation and a party to this Agreement.

“Borrowing” means a borrowing under Article II consisting of Advances made to the Borrower at the same time by each of the Banks severally.

“Business Day” means (i) with respect to any borrowing, payment or rate selection of Eurodollar Rate Fundings, a day (other than a Saturday or Sunday) on which banks generally are open in Chicago and New York for the conduct of substantially all of their commercial lending activities, interbank wire transfers can be made on the Fedwire system and dealings in United States dollars are carried on in the London interbank market and (ii) for all other purposes, a day (other than a Saturday or Sunday) on which banks generally are open in Chicago for the conduct of substantially all of their commercial lending activities and interbank wire transfers can be made on the Fedwire system.

“Capitalized Lease” means any lease that in accordance with GAAP should be capitalized on the balance sheet of the lessee thereunder.

“Cash Collateral Account” means an interest-bearing account maintained with the Agent in which funds are deposited pursuant to Section 2.7(g) or Section 7.2(c).

“Change of Control” means, with respect to any corporation, either (i) the acquisition by any “person” or “group” (as those terms are used in Sections 13(d) and 14(d) of the Exchange Act) of beneficial ownership (as defined in Rules 13d-3 and 13d-5 of the SEC, except that a Person shall be deemed to have beneficial ownership of all securities that such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of 25% or more of the then-outstanding voting capital stock of such corporation; or (ii) a change in the composition of the board of directors of such corporation or any corporate parent of such corporation such that continuing directors cease to constitute more

than 50% of such board of directors. As used in this definition, “continuing directors” means, as of any date, (i) those members of the board of directors of the applicable corporation who assumed office prior to such date, and (ii) those members of the board of directors of the applicable corporation who assumed office after such date and whose appointment or nomination for election by that corporation’s shareholders was approved by a vote of at least 50% of the directors of such corporation in office immediately prior to such appointment or nomination.

“Commitment” means, with respect to each Bank, that Bank’s commitment to make Advances and participate in Letters of Credit pursuant to Article II.

“Commitment Amount” means, with respect to each Bank, the amount set forth opposite that Bank’s name in Exhibit A or on any Assignment Agreement, unless said amount is reduced pursuant to Section 2.10, in which event it means the amount to which said amount is reduced.

“Commitment Termination Date” means May 14, 2004, or the earlier date of termination in whole of the Commitments pursuant to Section 2.10 or 7.2.

“Compliance Certificate” means a certificate in substantially the form of Exhibit C, or such other form as the Borrower and the Banks may from time to time agree upon in writing, executed by the chief financial officer or treasurer of the Borrower, (i) setting forth relevant facts in reasonable detail the computations as to whether or not the Borrower is in compliance with the requirements set forth in Sections 6.8 and 6.9 (ii) stating that the financial statements delivered therewith have been prepared in accordance with GAAP, subject, in the case of interim financial statements, to year-end audit adjustments, and (iii) stating whether or not such officer has knowledge of the occurrence of any Default or Event of Default hereunder not theretofore reported or remedied and, if so, stating in reasonable detail the facts with respect thereto.

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

(i)

(A) the after-tax net income of the Borrower and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP, excluding (B) non-operating gains and losses (including extraordinary or unusual gains and losses, gains and losses from discontinuance of operations, gains and losses arising from the sale of assets other than inventory, and other non-recurring gains and losses)

(ii)

the sum of the following to the extent deducted in arriving at the after-tax net income determined in clause (i)(A) of this definition (but without duplication for any item):


	(A)		Interest Expense, and

	(B)		income tax expense of the Borrower and its Subsidiaries.

“Effective Date” means the first date on or after the date hereof on which all conditions set forth in Section 3.1 have been satisfied.

“Eligible Lender” means (a) a financial institution organized under the laws of the United States, or any state thereof, and having a combined capital and surplus of at least $250,000,000; (b) a commercial bank organized under the laws of any other country which is a member of the Organization for Economic Cooperation and Development, or a political subdivision of any such country, and having a combined capital and surplus of at least $250,000,000, provided that such bank is acting through a branch or agency located in the United States; or (c) a person controlled by, controlling, or under common control with any entity identified in clause (a) or (b) above.

“Environmental Law” means the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq., the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq., the Hazardous Materials Transportation Act, 49 U.S.C. § 1802 et seq., the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq., the Federal Water Pollution Control Act, 33 U.S.C. § 1252 et seq., the Clean Water Act, 33 U.S.C. § 1321 et seq., the Clean Air Act, 42 U.S.C. § 7401 et seq., and any other federal, state, county, municipal, local or other statute, law, ordinance or regulation which may relate to or deal with human health or the environment, all as may be from time to time amended.

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

“ERISA Affiliate” means any trade or business (whether or not incorporated) that is, along with the Borrower, a member of a controlled group of corporations or a controlled group of trades or businesses, as described in sections 414(b) and 414(c), respectively, of the Internal Revenue Code of 1986, as amended.

“Eurodollar Base Rate” means, with respect to a Eurodollar Rate Funding for the relevant Interest Period, the applicable British Bankers’ Association Interest Settlement Rate for deposits in U.S. dollars appearing on Reuters Screen FRBD as of 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, and having a maturity equal to such Interest Period, provided that (i) if Reuters Screen FRBD is not available to the Agent for any reason, the applicable Eurodollar Base Rate for the relevant Interest Period shall instead be the applicable British Bankers’ Association Interest Settlement Rate for deposits in U.S. dollars as reported by any other generally recognized financial information service as of 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, and having a maturity equal to such Interest Period, and (ii) if no such British Bankers’ Association Interest Settlement Rate is available to the Agent, the applicable Eurodollar Base Rate for the relevant Interest Period shall instead be the rate determined by the Agent to be the rate at which Bank One or one of its Affiliate banks offers to place deposits in U.S. dollars with first-class banks in the London interbank market at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, in the approximate amount of Bank One’s relevant Eurodollar Rate Funding and having a maturity equal to such Interest Period.

“Eurodollar Rate” means, with respect to a Eurodollar Rate Funding for the relevant Interest Period, the sum of (i) the quotient of (a) the Eurodollar Base Rate applicable to such

Interest Period, divided by (b) one minus the Reserve Requirement (expressed as a decimal) applicable to such Interest Period, plus (ii) the Eurodollar Rate Margin.

“Eurodollar Rate Funding” means any Borrowing, or any portion of the principal balance of the Advances, bearing interest at a Eurodollar Rate.

“Eurodollar Rate Margin” means a percentage, determined as set forth in Section 2.6.

“Facility Fee Rate” means a percentage, determined as set forth in Section 2.6.

“Federal Funds Effective Rate” means, for any day, an interest 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 for such day (or, if such day is not a Business Day, for the immediately preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations at approximately 10:00 a.m. on such day on such transactions received by the Agent from three Federal funds brokers of recognized standing selected by the Agent in its sole discretion.

“Fee Letters” means one or more separate agreements between the Borrower and the Agent, setting forth the terms of certain fees to be paid by the Borrower to the Agent for the Agent’s own behalf or for the benefit of the Banks, as more fully set forth therein.

“First Collateral Trust Securities” means securities issued pursuant to the terms of the First Collateral Trust Securities Indenture.

“First Collateral Trust Securities Indenture” means the Indenture dated as of October 1, 1993 as amended from time to time, from the Borrower to U.S. Bank Trust National Association (formerly, First Trust of New York, National Association), as successor trustee to Morgan Guaranty Trust Company of New York.

“First Mortgage Bond Indenture” means the Indenture dated as of December 1, 1939 from the Borrower to U.S. Bank Trust National Association, as successor trustee thereunder, as amended from time to time.

“First Mortgage Bonds” means bonds issued pursuant to the terms of the First Mortgage Bond Indenture.

“Floating Rate” means, for any day, a rate per annum equal to (i) the Alternate Base Rate for such day plus (ii) the Floating Rate Margin, in each case changing when and as the Alternate Base Rate changes.

“Floating Rate Funding” means any Borrowing, or any portion of the principal balance of the Advances, bearing interest at the Floating Rate.

“Floating Rate Margin” means a percentage, determined as set forth in Section 2.6.

“Funded Debt” of any Person means (without duplication) (i) all indebtedness of such Person for borrowed money; (ii) the deferred and unpaid balance of the purchase price owing by such Person on account of any assets or services purchased (other than trade payables and other accrued liabilities incurred in the ordinary course of business that are not overdue by more than 180 days unless being contested in good faith) if such purchase price is (A) due more than nine months from the date of incurrence of the obligation in respect thereof or (B) evidenced by a note or a similar written instrument; (iii) all Capitalized Lease obligations; (iv) all indebtedness secured by a Lien on any property owned by such Person, whether or not such indebtedness has been assumed by such Person or is nonrecourse to such Person; (v) notes payable and drafts accepted representing extensions of credit whether or not representing obligations for borrowed money (other than such notes or drafts for the deferred purchase price of assets or services to the extent such purchase price is excluded from clause (ii) above); (vi) indebtedness evidenced by bonds, notes or similar written instrument; (vii) the face amount of all letters of credit and bankers’ acceptances issued for the account of such Person, and without duplication, all drafts drawn thereunder (other than such letters of credit, bankers’ acceptances and drafts for the deferred purchase price of assets or services to the extent such purchase price is excluded from clause (ii) above); (viii) net obligations of such Person under Swap Contracts which constitute interest rate agreements or currency agreements; (ix) guaranty obligations of such Person with respect to indebtedness for borrowed money of another Person (including Affiliates); (x) all Off-Balance Sheet Liabilities of such Person; and (xi) in the case of the Borrower, any amounts due under the Trust Preferred Securities; provided, however, that in no event shall any calculation of Funded Debt of the Borrower include (y) deferred taxes, or (z) so long as the Pledged Securities are held by the Agent pursuant to this Agreement and have not been sold or otherwise disposed of by foreclosure, any obligation of the Borrower under the Pledged Securities.

“GAAP” means generally accepted accounting principles as in effect from time to time applied on a basis consistent with the accounting practices applied in the financial statements of the Borrower referred to in Section 4.5, except for changes concurred in by Borrower’s independent public accountants and disclosed in Borrower’s financial statements or notes thereto.

“Hazardous Substance” means any asbestos, urea-formaldehyde, polychlorinated biphenyls (“PCBs”), nuclear fuel or material, chemical waste, radioactive material, explosives, known carcinogens, petroleum products and by-products and other dangerous, toxic or hazardous pollutants, contaminants, chemicals, materials or substances listed or identified in, or regulated by, any Environmental Law.

“Indentures” means the First Collateral Trust Securities Indenture and the First Mortgage Bond Indenture.

“Interest Coverage Ratio” means, as of the end of any fiscal quarter of the Borrower, the ratio of (i) EBIT during the 4-quarter period ending on that quarter-end, to (ii) Interest Expense during such period.

“Interest Expense” means, with respect to any period, the aggregate interest expense (including capitalized interest) of the Borrower and its Subsidiaries (determined on a consolidated basis) for such period, including but not limited to the interest portion of any Capitalized Lease and interest expenses associated with Trust Preferred Securities; provided, however, that the foregoing shall be adjusted to reflect only the net effect of any interest rate swap, interest hedging transaction or other similar arrangement entered into by the Borrower or any Subsidiary to reduce or eliminate variations in its interest expenses.

“Interest Period” means, with respect to any Advance bearing interest at a Eurodollar Rate, a period of one, two, three or six months beginning on a Business Day, as elected by the Borrower.

“Investment Company Act” means the Investment Company Act of 1940, as amended.

“Issuing Bank” means Bank One, acting as the Bank issuing Letters of Credit.

“L/C Amount” means the sum of (i) the aggregate face amount of any issued and outstanding Letters of Credit, plus (ii) amounts drawn under Letters of Credit for which the Banks have neither been reimbursed nor made any Advance.

“Level Status” means Level I, Level II, Level III, Level IV or Level V, each as determined pursuant to Section 2.6.

“Lien” means any mortgage, deed of trust, lien, pledge, security interest or other charge or encumbrance, of any kind whatsoever, including but not limited to the interest of the lessor or titleholder under any Capitalized Lease, title retention contract or similar agreement.

“Loan Documents” means this Agreement, the Notes, the L/C Applications, the Fee Letters and the Pledged Securities.

“Material Adverse Change” means a material adverse change in the business, condition (financial or otherwise), or operations of the Borrower and its Subsidiaries taken as a whole.

“Material Part of the Assets” means assets with a net book value in excess of 10% of the total assets of the Borrower and its Subsidiaries on a consolidated basis as determined in accordance with GAAP, as shown on the most recent balance sheet of the Borrower and its Subsidiaries available as of the date of the determination.

“Multiemployer Plan” means a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA.

“Obligations” means each and every debt, liability and obligation of every type and description arising under any of the Loan Documents which the Borrower may now or at any time hereafter owe to any Bank or the Agent, whether such debt, liability or obligation now exists or is hereafter created or incurred, whether it is direct or indirect, due or to become due, absolute or contingent, primary or secondary, liquidated or unliquidated, or sole, joint, several or joint and several, including but not limited to principal of and interest on the Notes and all fees due under this Agreement, any Fee Letter or any other Loan Documents and the obligation to fully fund the Cash Collateral Account pursuant to Section 2.7(g) or 7.2(c).

“Off-Balance Sheet Liability” of a Person means (i) any repurchase obligation or liability of such Person with respect to accounts or notes receivable sold by such Person, (ii) any liability under any Sale and Leaseback Transaction which is not a Capitalized Lease and (iii) all Synthetic Lease Obligations of such Person.

“Operating Lease” of a Person means any lease of Property (other than a Capitalized Lease) by such Person as lessee.

“Organizational Documents” means, (i) with respect to any corporation, the articles of incorporation and bylaws of such corporation, (ii) with respect to any partnership, the partnership agreement of such partnership, (iii) with respect to any limited liability company, the articles of organization and operating agreement of such company, and (iv) with respect to any entity, any and all other shareholder, partner or member control agreements and similar organizational documents relating to such entity.

“Outstandings” means, at any time, an amount equal to the sum of (i) the aggregate principal balance of the Advances then outstanding, and (ii) the L/C Amount then outstanding.

“Outstandings Percentage” means, at any time, the ratio (expressed as a percentage) of the aggregate Outstandings to the aggregate Commitment Amounts.

“Participating Affiliate” means, (a) with respect to any Bank, (i) an Affiliate of such Bank or (ii) any entity (whether a corporation, partnership, trust or otherwise) that is engaged in making, purchasing, holding or otherwise investing in bank loans and similar extensions of credit in the ordinary course of its business and is administered or managed by a Bank or an Affiliate of such Bank and (b) with respect to any Bank that is a fund which invests in bank loans and similar extensions of credit, any other fund that invests in bank loans and similar extensions of credit and is managed by the same investment advisor as such Bank or by an Affiliate of such investment advisor.

“Payment Demand” means a written notice given by the Agent to the Trustee stating that the principal of the Pledged Securities has become due and payable and specifying the amount of funds required to make such payment.

“Percentage” means, with respect to each Bank, the ratio of (i) that Bank’s Commitment Amount, to (ii) the aggregate Commitment Amounts of all of the Banks. For purposes of this definition only, following the Commitment Termination Date, each Bank’s Commitment Amount shall be deemed to be the principal balance outstanding of that Bank’s Note.

“Permitted Swap Obligations” means all obligations (contingent or otherwise) of the Borrower or any Subsidiary thereof existing or arising under Swap Contracts, provided that each of the following criteria is satisfied: (a) such obligations are (or were) entered into by such Person in the ordinary course of business for the purpose of directly mitigating risks associated with liabilities, commitments or assets held or to be held by such Person or its Subsidiaries, changes in the value of securities issued by such Person or its Subsidiaries in conjunction with a securities repurchase program not otherwise prohibited hereunder, and not for purposes of speculation or taking a “market view;” and (b) such Swap Contracts do not contain any provision (“walk-away” provision) exonerating the non-defaulting party from its obligations to make payments on outstanding transactions to the defaulting party.

“Person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.

“Plan” means an employee benefit plan established or maintained by the Borrower or any Subsidiary or ERISA Affiliate and covered by Title IV of ERISA.

“Pledged Securities” means the First Collateral Trust Bonds, Series No. 13 due 2004, issued under the First Collateral Trust Securities Indenture.

“Prime Rate” means a rate per annum equal to the prime rate of interest announced by Bank One or by its parent, BANK ONE CORPORATION (which is not necessarily the lowest rate charged to any customer), from time to time, changing when and as said prime rate changes.

“Prior Credit Agreement” means the Second Amended and Restated Credit Agreement dated June 28, 2002 among the Borrower; Bank of America, N.A., as agent, and the other “Lenders” named therein, together with all amendments, modifications and restatements thereof.

“Related First Mortgage Bonds” means the First Mortgage Bonds on the basis of which the Pledged Securities are issued.

“Reportable Event” means (i) a “reportable event”, described in Section 4043 of ERISA and the regulations issued thereunder, in respect of any Plan, (ii) a withdrawal from any Plan, as described in Section 4063 of ERISA, (iii) an action to terminate a Plan for which a notice is required to be filed under Section 4041 of ERISA, (iv) any other event or condition that could reasonably be expected to constitute grounds for termination by the Pension Benefit Guaranty

Corporation of, or the appointment by the appropriate United States District Court of a trustee to administer, any Plan, or (v) a complete or partial withdrawal from a Multiemployer Plan as described in Sections 4203 and 4205 of ERISA.

“Required Banks” means one or more Banks (including, where relevant, Additional Banks) having an aggregate Percentage greater than 50%.

“Reserve Requirement” means, with respect to an Interest Period, the maximum aggregate reserve requirement (including all basic, supplemental, marginal and other reserves) which is imposed under Regulation D on Eurocurrency liabilities.

“Restricted Subsidiary” means a Subsidiary any of whose debts, liabilities or obligations (i) have been guarantied by the Borrower, (ii) with respect to which the Borrower is in any other manner obligated for the payment of money or otherwise to provide financial support, or (iii) are secured in whole or in part by any property of the Borrower.

“S&P” means Standard & Poors Ratings Group, a division of McGraw-Hill Corporation.

“Sale and Leaseback Transaction” means any arrangement, directly or indirectly, with any Person whereby a seller or transferor shall sell or otherwise transfer any real or personal property and concurrently therewith lease, or repurchase under an extended purchase contract, conditional sales or other title retention agreement, the same or substantially similar property.

“Solvent” means, with respect to any Person, that as of the date of determination (i) the fair market value of the property of such Person is (A) greater than the total liabilities (including contingent liabilities) of such Person, and (B) not less than the amount that will be required to pay the probable liabilities on such Person’s debts as they come due, considering all financing alternatives and potential asset sales reasonably available to such Person; (ii) such Person’s capital is not unreasonably small in relation to its business or any contemplated or undertaken transaction; (iii) such Person does not intend to incur, or believe (nor should it reasonably believe) that it will incur, debts beyond its ability to pay such debts as they become due; and (iv) such Person is “solvent” within the meaning given that term and similar terms under applicable laws relating to fraudulent transfers and conveyances. For purposes of this definition, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that would reasonably be expected to become an actual or matured liability.

“Subsidiary” means (i) any corporation of which more than 50% of the outstanding shares of capital stock having general voting power under ordinary circumstances to elect a majority of the board of directors of such corporation, irrespective of whether or not at the time stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency, is at the time directly or indirectly owned by the Borrower, by the Borrower and one or more other Subsidiaries, or by one or more other Subsidiaries, (ii) any partnership of which more than 50% of the partnership interest therein are directly or indirectly owned by the Borrower, by the Borrower and one or more other Subsidiaries, or by one or more other Subsidiaries, and (iii) any limited liability company or other form of business organization

the effective control of which is held by the Borrower, the Borrower and one or more other Subsidiaries, or by one or more other Subsidiaries.

“Swap Contracts” means any agreement, whether or not in writing, relating to any transaction that is a rate swap, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap or option, bond, note or bill option, interest rate option, forward foreign exchange transaction, cap, collar or floor transaction, currency swap, cross-currency rate swap, swaption, currency option or any other similar transaction (including any option to enter into any of the foregoing) or any combination of the foregoing, and, unless the context otherwise clearly requires, any master agreement relating to or governing any or all of the foregoing.

“Synthetic Lease Obligation” means the monetary obligation of a Person under (i) a so-called synthetic or off-balance sheet or tax retention lease or (ii) 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 indebtedness of such Person (without regard to accounting treatment). The amount of Synthetic Lease Obligations of any Person under any such lease or agreement shall be the amount which would be shown as a liability on a balance sheet of such Person prepared in accordance with GAAP if such lease or agreement were accounted for as a Capitalized Lease.

“Tangible Net Worth” means shareholders’ equity (including preferred stock), less intangible assets included in calculating such shareholders’ equity, all determined in accordance with GAAP. For purposes of the foregoing calculation, intangible assets shall include but not be limited to the value of patents, trademarks, trade names, copyrights, licenses, premiums paid on indebtedness, good will, prepaid expenses, deferred charges and treasury stock. Tangible Net Worth with respect to the Borrower shall at all times be determined with respect to the Borrower and its Subsidiaries on a consolidated basis.

“Total Capital” means the sum of (A) stockholders’ equity (which is the sum of common stock, premium on common stock and retained earnings and which excludes the Trust Preferred Securities to the extent included in Funded Debt), and (B) Funded Debt, all determined with respect to the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP.

“Trust Preferred Securities” means any preferred securities issued by a Trust Preferred Securities Subsidiary, where such preferred securities have the following characteristics:


	(i) such Trust Preferred Securities Subsidiary lends substantially all of the proceeds from the issuance of such preferred securities to the Borrower or a wholly-owned direct or indirect Subsidiary of the Borrower in exchange for subordinated debt issued by the Borrower or such wholly-owned direct or indirect Subsidiary, respectively;


	(ii) such preferred securities contain terms providing for the deferral of interest payments corresponding to provisions providing for the deferral of interest payments on the subordinated debt; and


	(iii) the Borrower or a wholly-owned direct or indirect Subsidiary of the Borrower (as the case may be) makes periodic interest payments on the subordinated debt, which interest payments are in turn used by the Trust Preferred Securities Subsidiary to make corresponding payments to the holders of such preferred securities.

“Trust Preferred Securities Subsidiary” means any Delaware business trust (or similar entity) (i) all of the common equity interest of which is owned (either directly or indirectly through one or more wholly-owned Subsidiaries of the Borrower) at all times by the Borrower, (ii) that has been formed for the purpose of issuing Trust Preferred Securities and (iii) substantially all of the assets of which consist at all times solely of subordinated debt issued by the Borrower or a wholly-owned direct or indirect Subsidiary of the Borrower (as the case may be) and payments made from time to time on such subordinated debt.

“Trustee” means U.S. Bank Trust National Association, as successor trustee under the First Collateral Trust Securities Indenture, or any successor trustee thereunder.

“Utilization Fee Rate” means a percentage, determined as set forth in Section 2.8.

“Welfare Plan” means a “welfare plan” as defined in Section 3(1) of ERISA.

All references to times of day in this Agreement shall be references to Chicago, Illinois time unless otherwise specifically provided.

Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared in accordance with GAAP; provided that in the event of any Accounting Practices Change, then the Borrower’s compliance with the covenants set forth in Section 6.7 and 6.8 shall be determined on the basis of generally accepted accounting principles in effect immediately before giving effect to the Accounting Practices Change, until such covenants are amended in a manner satisfactory to the Borrower and the Required Banks in accordance with Section 10.13 hereof.

Amount, the Borrower may borrow, prepay pursuant to Section 2.11 and reborrow under this Section 2.1. The Advances made by each Bank under this Section 2.1 shall be evidenced by and repayable with interest in accordance with a single promissory note of the Borrower (each, a “Note”) payable to the order of that Bank, substantially in the form of Exhibit B hereto, dated the date hereof. Each Advance shall bear interest on the unpaid principal amount thereof from the date thereof until paid as set forth in Section 2.3.

Each Borrowing under Section 2.1 shall occur following written notice from the Borrower to the Agent or telephonic request from any person purporting to be authorized to request Advances on behalf of the Borrower. Each such notice or request shall specify (i) the date of the requested Borrowing, (ii) the amount thereof, and (iii) if any portion of such Borrowing will bear interest at a Eurodollar Rate, the Interest Period selected by the Borrower with respect thereto. Such notice or request must be received by the Agent not later than 10:00 a.m. on the day on which such Borrowing is to occur or, if all or any portion of the Borrowing will bear interest at a Eurodollar Rate, not later than three Business Days prior to the date on which such Borrowing is to occur. Concurrent with any such notice or request, the Borrower shall deliver to the Agent in writing (which may be by facsimile transmission) the certificate required by Section 3.3(b). Upon receiving a request for a Borrowing under Section 2.1, and in any event not later than 1:30 p.m. on the date that the requested Borrowing is to occur, or, if the requested Borrowing is to bear interest at a Eurodollar Rate, the close of business on the day that the request is received, the Agent will notify the Banks of the amount of the requested Borrowing, the amount of each Bank’s Advance with respect thereto, and, if applicable, the fact that the Borrower has elected a Eurodollar Rate and the Interest Period selected by the Borrower. Upon fulfillment of the applicable conditions set forth in Article III, each Bank shall remit its Percentage of the requested Borrowing to the Agent in immediately available funds. So long as a Bank receives notice of the requested Borrowing prior to 1:30 p.m. on the date that the requested Borrowing is to occur, or, if the requested Borrowing is to bear interest at a Eurodollar Rate, the close of business on the day that the request is received, that Bank will make its Advance with respect to that Borrowing available to the Agent by wire transfer of immediately available funds to the Agent not later than 4:00 p.m. on the date called for in such notice. Prior to the close of business on the day of the requested Borrowing, the Agent shall disburse such funds by crediting the same to the Borrower’s demand deposit account maintained with the Agent or in such other manner as the Agent and the Borrower may from time to time agree. The Agent shall have no obligation to disburse the requested Borrowing if any condition set forth in Article III has not been satisfied on the day of the requested Borrowing. Each Borrowing shall be in the amount of $1,000,000 or an integral multiple thereof; provided, however, that any portion of such Borrowing bearing interest at a Eurodollar Rate must be in the amount of $5,000,000 or an integral multiple of $1,000,000 greater than $5,000,000. The Borrower shall promptly confirm each telephonic request for an Advance by executing and delivering an appropriate confirmation certificate to the Agent. However, the Borrower shall be obligated to repay all Advances for which it actually received the moneys (including but not limited to all Advances the proceeds of which were deposited in any account of the Borrower) or in respect of which the Agent reasonably believed the person requesting the same to be authorized to do so, notwithstanding the fact that the person requesting the same was not in fact authorized so to do. Any request for an Advance shall be deemed to be a representation that the statements set forth in Section 3.3 are correct.


	(a) Each Advance shall bear interest on the unpaid principal amount thereof from the date thereof until paid as set forth in this Section 2.3.


	(b) Unless the Borrower elects a Eurodollar Rate pursuant to this Section, the principal balance of each Advance shall bear interest at the Floating Rate.

(c) At the election of the Borrower, which may be exercised from time to time, the Borrower may request in writing or by telephone that a Eurodollar Rate be applicable for the portion of the outstanding principal balance of the Advances (including any Advance requested or to be requested) and for the Interest Period indicated by the Borrower in its request. The portion of the outstanding balance of the Advances for which a Eurodollar Rate is requested (i) must be in the amount (as to all Advances combined) of $5,000,000 or an integral multiple of $1,000,000 greater than $5,000,000, and (ii) if such request relates to Advances already outstanding, must, on the first day of the applicable Interest Period, either (1) bear interest at the Floating Rate, or (2) bear interest at a Eurodollar Rate with respect to which the Interest Period expires on such first day. In no event may the Borrower select an Interest Period extending beyond the Commitment Termination Date. A request for a Eurodollar Rate (i) must be received by the Agent before 10:00 a.m. on the day three Business Days before the first day of the proposed Interest Period (and the Agent shall give the Banks prompt notice thereof), and (ii) may not be rescinded by the Borrower after such request has been made. Subject to the terms and conditions set forth herein, the applicable Eurodollar Rate shall (subject to fluctuations in the applicable Eurodollar Rate Margin) be the interest rate applicable for the proposed Interest Period to the portion of the outstanding principal balance of the Advances to which the Eurodollar Rate request related. At the termination of such Interest Period, the interest rate applicable to the portion of the principal balance of the Advances to which the Eurodollar Rate request was applicable shall revert to the Floating Rate unless a new Eurodollar Rate request is made by the Borrower in accordance with this Agreement. Notwithstanding anything to the contrary in this Section, (i) the Agent shall have no obligation to permit the application of a Eurodollar Rate for any Interest Period if any Bank, in its sole discretion, determines that deposits in amounts equal to the requested amount and maturing at the end of the proposed Interest Period are not readily available to such Bank from major banks in the London interbank market, and (ii) without the consent of the Required Banks, the Agent will not permit the application of a Eurodollar Rate for any Interest Period if a Default or Event of Default has occurred and is continuing when the request for the Eurodollar Rate is made. Absent manifest error, the records of the Agent shall be conclusive evidence as to the amount of the Advances bearing interest at a Eurodollar Rate, the applicable Eurodollar Rate and the date on which the Interest Period applicable to such Eurodollar Rate expires.

In no event shall the aggregate Outstandings at any time exceed the aggregate amount of the Commitments.


	(a) Interest. Interest accruing on the principal balance of the Floating Rate Advances shall be due and payable on the last day of each March, June, September and December and on the Commitment Termination Date. Interest accruing at a Eurodollar Rate shall be due and payable on the last day of the applicable Interest Period or, if an Interest Period is in excess of three months, on the date that is three months after the beginning of the Interest Period and after each such interest payment date thereafter, and on the last day of the Interest Period and on the Commitment Termination Date.

	(b) Principal. The principal balance of the Advances shall be due and payable in full on the Commitment Termination Date.


	(a) The Borrower’s Level Status shall be determined on the basis of the rating accorded the Borrower’s First Collateral Trust Securities by S&P and Moody’s, in accordance with the following table:

(i)

If either S&P or Moody’s changes the meaning or designation for its ratings referenced in paragraph (a), the criteria for Level Status in the table in paragraph (a) shall be adjusted in such manner as the Required Banks may reasonably determine to correspond with the applicable rating

			designations used by S&P or Moody’s, as the case may be, in effect on the date hereof.

	(ii)		If either S&P or Moody’s, but not both of them, ceases to rate the Borrower’s First Collateral Trust Securities, the determination in paragraph (a) shall be made on the basis of the rating accorded by whichever one continues to rate such debt.

	(iii)		If neither S&P nor Moody’s rates the Borrower’s First Collateral Trust Securities, the Borrower shall be deemed to be at Level Status V.


	(c) The Floating Rate Margin, Eurodollar Rate Margin and Facility Fee Rate at any time shall be determined from time to time on the basis of the Borrower’s Level Status, in accordance with the following table:

(a) The Borrower may from time to time request that the Issuing Bank issue one or more irrevocable standby letters of credit (each, a “Letter of Credit”) for the account of the Borrower. No Letter of Credit shall be issued if (i) the face amount of that Letter of Credit, together with the sum of the then-applicable L/C Amount and the aggregate principal balance of the Advances then outstanding, would exceed the aggregate Commitment Amounts, or (ii) the face amount of that Letter of Credit, together with the then-applicable L/C Amount, would exceed the L/C Sublimit.


	(b) At least three days prior to the issuance of each Letter of Credit, the Borrower shall execute a letter of credit application and reimbursement agreement (an “L/C Application”) in the Issuing Bank’s standard form, as required by the Issuing Bank.


	(c) Each Letter of Credit shall be issued in a form acceptable to the Issuing Bank. Unless otherwise approved by all of the Banks, no Letter of Credit shall have an initial or any renewal term ending more than one year after the date of issuance.

	(d) A fee shall be due and payable to the Agent for the benefit of the Banks upon issuance of each Letter of Credit, computed at an annual rate equal to the Eurodollar Rate Margin applied to the face amount of that Letter of Credit outstanding from time to time, from and including the date of issuance of that Letter of Credit until the expiration thereof, payable in arrears on the last day of each calendar quarter and on the Commitment Termination Date and, if later, the expiry date of such Letter of Credit. The Borrower shall also pay to the Issuing Bank for its own account a fronting fee at a rate per annum of [.125]% on each other Bank’s Percentage of the face amount of each Letter of Credit, payable in arrears on the last day of each calendar quarter and on the Commitment Termination Date and, if later, the expiry date of such Letter of Credit. In addition, the Borrower shall pay or reimburse the Issuing Bank for such additional fees as are specified in the Fee Letters and for such normal and customary costs and expenses as are incurred or charged by the Issuing Bank in issuing, effecting payment under, amending or otherwise administering any Letter of Credit.

	(e) The Borrower shall be irrevocably and unconditionally obligated to reimburse the Issuing Bank on demand (or, if demand is not earlier made, on the Commitment Termination Date) for any amount to be paid by the Issuing Bank upon any drawing under any Letter of Credit issued by the Issuing Bank, without presentment, protest or other formalities of any kind; provided that the Borrower shall not hereby be precluded from asserting any claim for direct (but not consequential) damages suffered by the Borrower to the extent, but only to the extent, caused by (i) the willful misconduct or gross negligence of the Issuing Bank in determining whether a request presented under any Letter of Credit issued by it complied with the terms of such Letter of Credit or (ii) the Issuing Bank’s failure to pay under any Letter of Credit issued by it after the presentation to it of a request strictly complying with the terms and conditions of such Letter of Credit. All such amounts paid by the Issuing Bank and remaining unpaid by the Borrower after demand for payment thereof shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the sum of 2% plus the rate applicable to Floating Rate Advances. The Issuing Bank shall provide notice to the Borrower of payment made by the Issuing Bank on any drawing under any Letter of Credit within one Business Day of such payment.

	(f) Each Bank shall be deemed to hold a participation interest in each Letter of Credit equal to that Bank’s Percentage of the face amount of that Letter of Credit. If the Issuing Bank makes any payment pursuant to the terms of any Letter of Credit and is not promptly reimbursed, the Issuing Bank may request that each other Bank pay such Bank’s Percentage of the unreimbursed amount. Upon receipt of any such request prior to 1:30 p.m. on a Business Day, the recipient shall be unconditionally and irrevocably obligated to pay its Percentage of the unreimbursed amount to the Issuing Bank in immediately available funds prior to 3:00 p.m. on such date. Notices received after 1:30 p.m. shall be deemed to have been received on the following Business Day. If payment is not made by a Bank when due hereunder, interest on the unpaid amount shall accrue


	from and including the date of the Issuing Bank’s request to the date of payment at the Federal Funds Effective Rate. After making any payment to the Issuing Bank under this subsection in connection with a particular Letter of Credit, a Bank shall be entitled to participate to the extent of its Percentage in the related reimbursements received by the Issuing Bank from the Borrower or otherwise. Upon receiving any such reimbursement, the Issuing Bank will distribute to each Bank its Percentage of such reimbursement. At the option of the Agent, any payment by a Bank hereunder may be deemed an Advance in accordance with Section 2.1 and payable under the Notes.

	(g) Unless otherwise agreed by each Bank in writing, the Borrower shall deposit in the Cash Collateral Account, on the fifth Business Day preceding the Commitment Termination Date, an amount equal to the then-applicable L/C Amount, less the balance (if any) then outstanding in the Cash Collateral Account.

	(h) The Borrower’s obligations under this Section 2.7 shall be absolute and unconditional under any and all circumstances and irrespective of any setoff, counterclaim or defense to payment which the Borrower may have or have had against the Issuing Bank, any Bank or any beneficiary of a Letter of Credit. The Borrower further agrees with the Issuing Bank and the Banks that neither the Issuing Bank nor any Bank shall be responsible for, and the Borrower’s reimbursement obligation in respect of any Letter of Credit shall not be affected by, among other things, the validity or genuineness of documents or of any endorsements thereon, even if such documents should in fact prove to be in any or all respects invalid, fraudulent or forged, or any dispute between or among the Borrower, any of its Affiliates, the beneficiary of any Letter of Credit or any financing institution or other party to whom any Letter of Credit may be transferred or any claims or defenses whatsoever of the Borrower or of any of its Affiliates against the beneficiary of any Letter of Credit or any such transferee. The Issuing Bank shall not be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Letter of Credit. The Borrower agrees that any action taken or omitted by the Issuing Bank or any Bank under or in connection with any Letter of Credit and the related drafts and documents, if done without gross negligence or willful misconduct, shall be binding upon the Borrower and shall not put the Issuing Bank or any Bank under any liability to the Borrower. Nothing in this Section 2.7(h) or Section 2.7(i) is intended to limit the right of the Borrower to make a claim against the Issuing Bank for damages as contemplated by the proviso to the first sentence of Section 2.7(e).

	(i) The Issuing Bank shall be entitled to rely, and shall be fully protected in relying, upon any Letter of Credit, draft, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, facsimile, telex or teletype message, statement, order or other document believed in good faith by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon advice and statements of legal counsel, independent accountants and other experts selected by the Issuing Bank. The Issuing Bank shall be fully justified in failing or refusing to take any action under this Agreement unless it shall first have received such advice or concurrence of the Required Banks as it reasonably deems appropriate or it shall first be indemnified to its reasonable satisfaction by the Banks against any and all liability and expense which


	may be incurred by it by reason of taking or continuing to take any such action. Notwithstanding any other provision of this Section 2.7, the Issuing Bank shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement in accordance with a request of the Required Banks, and such request and any action taken or failure to act pursuant thereto shall be binding upon the Banks and any future holders of a participation in any Letter of Credit.

	(j) The Borrower hereby agrees to indemnify and hold harmless each Bank, the Issuing Bank and the Agent, and their respective directors, officers, agents and employees, from and against any and all claims and damages, losses, liabilities, costs or expenses which such Bank, the Issuing Bank or the Agent may incur (or which may be claimed against such Bank, the Issuing Bank or the Agent by any Person whatsoever) by reason of or in connection with the issuance, execution and delivery or transfer of or payment or failure to pay under any Letter of Credit or any actual or proposed use of any Letter of Credit, including, without limitation, any claims, damages, losses, liabilities, costs or expenses which the Issuing Bank may incur by reason of or in connection with (i) the failure of any other Bank to fulfill or comply with its obligations to the Issuing Bank hereunder (but nothing herein contained shall affect any rights the Borrower may have against any defaulting Bank) or (ii) by reason of or on account of the Issuing Bank issuing any Letter of Credit which specifies that the term “Beneficiary” included therein includes any successor by operation of law of the named Beneficiary, but which Letter of Credit does not require that any drawing by any such successor Beneficiary be accompanied by a copy of a legal document, satisfactory to the Issuing Bank, evidencing the appointment of such successor Beneficiary; provided that the Borrower shall not be required to indemnify any Bank, the Issuing Bank or the Agent for any claims, damages, losses, liabilities, costs or expenses to the extent, but only to the extent, caused by (x) the willful misconduct or gross negligence of the Issuing Bank in determining whether a request presented under any Letter of Credit issued by the Issuing Bank complied with the terms of such Letter of Credit or (y) the Issuing Bank’s failure to pay under any Letter of Credit after the presentation to it of a request strictly complying with the terms and conditions of such Letter of Credit. Nothing in this Section 2.7(j) is intended to limit the obligations of the Borrower under any other provision of this Agreement.

	(k) Each Bank shall, ratably in accordance with its Percentage, indemnify the Issuing Bank, its affiliates and its directors, officers, agents and employees (to the extent not reimbursed by the Borrower) against any cost, expense (including reasonable counsel fees and disbursements), claim, demand, action, loss or liability (except such as result from such indemnitees’ gross negligence or willful misconduct or the Issuing Bank’s failure to pay under any Letter of Credit after the presentation to it of a request strictly complying with the terms and conditions of the Letter of Credit) that such indemnitees may suffer or incur in connection with this Section 2.7 or any action taken or omitted by such indemnitees hereunder.


	(a) The Borrower shall pay to the Agent, for the benefit of the Banks, a facility fee at an annual rate equal to the then-applicable Facility Fee Rate applied to the


	aggregate amount of the Commitments outstanding hereunder from the Effective Date through the Commitment Termination Date.

	(b) The Borrower shall pay to the Agent, for the benefit of the Banks, a utilization fee at an annual rate equal to the then-applicable Utilization Fee Rate applied to the average daily Outstandings. The Utilization Fee Rate in effect on any day shall be an annual rate determined on the basis of the Outstandings Percentage and Level Status on that day, in accordance with the following table:


	(c) The facility fee and utilization fee set forth in this Section shall be due and payable quarterly in arrears on the last day of each March, June, September and December during the term of the Commitments. Any facility and utilization fees remaining unpaid on the Commitment Termination Date shall be due and payable on that date.

aggregate Advances and the L/C Amount outstanding (after giving effect to any prepayments of Advances to be made on or prior to the effective date of such reduction) at the time.

The Borrower may prepay the Advances in whole or in part, without penalty or premium, at any time and from time to time; provided that (i) any prepayment by the Borrower hereunder shall be applied pro rata to the prepayment of each Bank’s Advances, (ii) any prepayment of the full amount of the Advances shall include accrued interest thereon, (iii) any prepayment of any portion of the principal balance of any Advances which, at the time of such prepayment, bears interest at a Eurodollar Rate shall be accompanied by compensation as specified in Section 2.16(b), and (iv) each prepayment of the Advances (other than prepayment of the Advances in full) shall be in the principal amount of $1,000,000 or higher integral multiples of $1,000,000, provided that any prepayment of any portion of the Advances bearing interest at a Eurodollar Rate shall be made in a principal amount of $5,000,000 or higher integral multiple of $1,000,000. Each partial prepayment of principal on the Advances shall be applied, first, to that portion of such Advances bearing interest at the Floating Rate, and, second, to that portion of such Advances bearing interest at a Eurodollar Rate.

All payments of principal and interest under the Advances and L/C Amounts and of the fees hereunder shall be made to the Agent in immediately available funds, without setoff or counterclaim. Payments received after noon on any day shall be deemed received on the next succeeding Business Day. The Borrower agrees that the amount shown on the books and records of each Bank as being the principal balance of that Bank’s Obligations, if any, shall be prima facie evidence of such principal balance. The Borrower hereby authorizes the Agent to charge against the Borrower’s account with the Agent an amount equal to the accrued interest and fees from time to time due and payable to the Agent and the Banks under this Agreement, or (at the Banks’ option) to effect a Borrowing in such amount, all without receipt of any request for such charge or Borrowing.

Whenever any payment to be made under this Agreement shall be stated to be due on a day other than a Business Day, such payment may be made on the next succeeding Business Day, and such extension of time shall in each case be included in the computation of payment of interest on such Obligations or the fees hereunder, as the case may be.

In addition to any interest payable on Advances made hereunder and any fees or other amounts payable hereunder, the Borrower agrees:


	(a) If at any time after the date hereof any adoption of or change in any applicable law, rule or regulation or the interpretation or administration thereof by any governmental authority (including, without limitation, Regulation D of the Federal Reserve Board):

	(i)		shall subject any Bank to any tax, duty or other charges with respect to this Agreement, or shall materially change the basis of taxation of payments to any Bank of the principal of or interest on any portion of the principal balance of that Bank’s Advances bearing interest at a Eurodollar Rate (except for the imposition of or changes in the rate of Excluded Taxes); or

	(ii)		shall impose or deem applicable or increase any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by any Bank (other than reserves and assessments described in the definition of “Reserve Requirement” and taken into account in determining the applicable Eurodollar Rate) because of any portion of the principal balance of that Bank’s Advances bearing interest at a Eurodollar Rate and the result of any of the foregoing would be to increase the cost to that Bank of making or maintaining any such portion or to reduce any sum received or receivable by that Bank with respect to such portion;


	regulation. A certificate in reasonable detail of that Bank setting forth the basis for the determination of such additional amount or amounts shall be promptly submitted by that Bank to the Borrower and shall, in the absence of manifest error, be conclusive and binding as to such amount or amounts.

(b) The Borrower shall also compensate any Bank, upon written request by that Bank (which request shall set forth the basis for requesting such amounts), for all losses and expenses in respect of any interest or other consideration paid by that Bank to lenders of funds borrowed by it or deposited with it to maintain any portion of the principal balance of the Advances at a Eurodollar Rate which that Bank may sustain to the extent not otherwise compensated for hereunder and not mitigated by the reemployment of such funds if any prepayment of any such portion occurs on a date that is not the expiration date of the relevant Interest Period or if a Borrowing or prepayment in whole or in part of an Advance bearing interest at a Eurodollar Rate fails to occur. A certificate as to any such loss or expense (including calculations, in reasonable detail, showing how that Bank computed such loss or expense) shall be promptly submitted by that Bank to the Borrower and shall, in the absence of manifest error, be conclusive and binding as to the amount thereof. Such loss or expense may be computed as though that Bank acquired deposits in the London interbank market to fund that portion of the principal balance whether or not that Bank actually did so.

(a) All payments made by the Borrower to the Agent or any Bank (herein any “Payee”) under or in connection with this Agreement or the Notes shall be made without any setoff or other counterclaim, and free and clear of and without deduction for or on account of any present or future taxes now or hereafter imposed by any governmental or other authority, except to the extent that such deduction or withholding is compelled by law. As used herein, the term “Taxes” shall include all income, excise and other taxes of whatever nature (other than taxes based on or measured by the net income of the Payee (or franchise taxes in lieu thereof) and imposed by the government or other authority of the country, state or political subdivision in which such Payee is incorporated or in which its principal executive office or the office through which the Payee is acting is located (“Excluded Taxes”)) as well as all levies, imposts, duties, charges, or fees of whatever nature. If the Borrower is compelled by law to make any such deductions or withholdings it will:

	(i)		pay to the relevant authorities the full amount required to be so withheld or deducted;

	(ii)		except to the extent that such deduction or withholding results from a breach by any Payee of the representations and covenants contained in Section 2.17(b) or the relevant Assignment Agreement pay such additional amounts (including, without limitation, any penalties, interest or expenses) as may be necessary in order that the net amount received by each Payee after such deductions or withholdings (including any required deduction or withholding on such additional amounts) shall equal the amount such

			Payee would have received had no such deductions or withholdings been made; and

	(iii)		promptly forward to the Agent (for delivery to such Payee) an official receipt or other documentation reasonably satisfactory to the Agent evidencing such payment to such authorities.

(b) If any Taxes otherwise payable by the Borrower pursuant to Section 2.17(a) are directly asserted against any Payee, such Payee may pay such Taxes and the Borrower promptly shall reimburse such Payee to the full extent otherwise required by such paragraph. The obligations of the Borrower under this Section 2.17 shall survive any termination of this Agreement. Each Bank by its execution of this Agreement represents (and each additional Bank by its execution of any Assignment Agreement pursuant to Section 9.1 shall be deemed to represent) to each other Bank, the Agent and the Borrower that if such Bank is organized under the laws of any jurisdiction other than the United States or any state thereof, such Bank has furnished to the Agent and the Borrower either U.S. Internal Revenue Service Form W-8BEN, or U.S. Internal Revenue Service Form W-8ECI, as applicable (wherein such Bank claims entitlement to complete exemption from U.S. Federal withholding tax on all interest payments hereunder).

(c) The amount that the Borrower shall be required to pay to any Bank pursuant to Sections 2.17(a) or 2.17(b) shall be reduced by the amount of any offsetting tax benefit which such Bank receives as a result of the Borrower’s payment to the relevant authorities as reasonably determined by such Bank; provided, however, that (i) such Bank shall be the sole judge of the amount of such tax benefit and the date on which it is received, (ii) no Bank shall be obliged to disclose information regarding its tax affairs or tax computations, (iii) nothing herein shall interfere with a Bank’s right to manage its tax affairs in whatever manner it sees fit, and (iv) if such Bank shall subsequently determine that it has lost the benefit of all or a portion of such tax benefit, the Borrower shall promptly remit to such Bank the amount certified by such Bank to be the amount necessary to restore such Bank to the position it would have been in if no payment had been made pursuant to this Section 2.17(c).


	the Borrower, as applicable). The obligations of the Bank under this Section 2.17(d) shall survive the payment of the Obligations and termination of this Agreement.


	(a) “Return”, for any period, means the percentage determined by dividing (i) the sum of interest and ongoing fees earned by a Bank under this Agreement during such period, by (ii) the average capital that Bank is required to maintain during such period as a result of its being a party to this Agreement, as determined by that Bank based upon its total capital requirements and a reasonable attribution formula that takes account of the Capital Adequacy Rules then in effect. Return may be calculated for each calendar quarter and for the shorter period between the end of a calendar quarter and the date of termination in whole of this Agreement.

	(b) “Capital Adequacy Rule” means any law, rule, regulation or guideline regarding capital adequacy that applies to any Bank, or the interpretation thereof by any governmental or regulatory authority. Capital Adequacy Rules include rules requiring financial institutions to maintain total capital in amounts based upon percentages of outstanding loans, binding loan commitments and letters of credit.

	(c) “Capital Adequacy Rule Change” means any change in any Capital Adequacy Rule occurring after the date of this Agreement, but the term does not include any changes in applicable requirements that at the date hereof are scheduled to take place under the existing Capital Adequacy Rules or any increases in the capital that any Bank is required to maintain to the extent that the increases are required due to a regulatory authority’s assessment of the financial condition of that Bank.

	(d) “Bank” includes (but is not limited to) the Banks, as defined elsewhere in this Agreement; any Bank hereunder; any participant in the loans made hereunder (to the extent provided in Section 9.2 only); and any bank holding company with respect to any of the foregoing.

generally imposing such increased costs on its similarly situated customers. No Bank may demand any compensation hereunder more than 45 days following the end of the quarter for which compensation is sought.

If any Bank delivers to the Borrower a demand for compensation pursuant to Section 2.16(a) or a demand for payment pursuant to Section 2.17 or 2.18 or if at any time the long-term unenhanced credit rating of any Bank falls below Baa2 from Moody’s or below BBB from S&P or if such Bank is no longer rated by S&P or Moody’s, the Borrower may (so long as no Default or Event of Default has occurred and is continuing) at its expense require such Bank to assign, in whole and in accordance with Section 9.1 (including the execution of an Assignment Agreement and all other applicable documents, and the payment of any fees required under Section 9.1), all of its rights and obligations hereunder and under such Bank’s Note, including but not limited to such Bank’s Commitment, to an Eligible Bank identified by the Borrower and willing to become a Bank hereunder. Such Bank may be an existing Bank hereunder. Notwithstanding the foregoing, the Borrower may not compel the resignation of any Bank as the Agent except as provided in Section 8.12.


	(a) This Agreement, duly executed by the Borrower, the Agent and each of the Banks.

	(b) The Notes, dated the date hereof, properly executed on behalf of the Borrower.

	(c) Evidence that concurrently with the making of the initial Advance, all amounts payable under the Prior Credit Agreement will be paid and the commitments thereunder will be terminated.

The obligation of the Banks to make any Advance or issue any Letter of Credit is subject to the further condition precedent that the Agent shall have received on or before the day of the first Advance or Letter of Credit (and, in any event, not later than May 23, 2003) all of the following, in form and substance satisfactory to each Bank:


	(a) This Agreement, duly executed by the Borrower, the Agent and each of the Banks.


	(b) The Notes, dated the date hereof, properly executed on behalf of the Borrower.


	(c) The Pledged Securities, properly issued by the Borrower pursuant to the First Collateral Trust Securities Indenture, in the principal amount of $350,000,000, copies of the First Mortgage Bonds, properly issued by the Borrower to the Trustee pursuant to the First Mortgage Bond Indenture, in the principal amount of $350,000,000, as the basis for issuance of the Pledged Securities, and the related supplemental indentures to the First Collateral Trust Securities Indenture and the First Mortgage Bond Indenture, company orders and bond applications.

	(d) The Fee Letters, properly executed on behalf of the Borrower.

	(e) A certificate of the secretary or an assistant secretary of the Borrower (i) certifying that the execution, delivery and performance of the Loan Documents and other documents contemplated hereunder have been duly approved by all necessary action of the Board of Directors of the Borrower, and attaching true and correct copies of the applicable resolutions granting such approval, (ii) certifying that attached to such certificate are true and correct copies of the Organizational Documents of the Borrower, together with such copies, and (iii) certifying the names of the officers of the Borrower that are authorized to sign the Loan Documents and other documents contemplated hereunder, together with the true signatures of such officers.

	(f) A certificate of good standing of the Borrower, dated not more than twenty days before such date.

	(g) Copies of order(s) of the Public Utilities Commission of the State of Colorado approving the execution, delivery and performance by the Borrower of this Agreement and the other Loan Documents to which it is a party and the transactions contemplated hereby and thereby.

	(h) Signed copies of opinions of counsel for the Borrower, addressed to the Banks in substantially the forms of Exhibit D hereto.

	(i) All fees required to be paid as of the date hereof under this Agreement or any Fee Letter.

	(j) Such other documents as the Agent or the Required Banks may deem necessary or advisable in connection with the issuance of the Pledged Securities.


	(a) The representations and warranties contained in Article IV are correct on and as of the date of such Advance or Letter of Credit as though made on and as of such


	date, except to the extent that such representations and warranties relate solely to an earlier date.


	(b) The Borrower has delivered to the Agent a certificate in the form of Exhibit F hereto, duly executed by the chief financial officer, treasurer, secretary, assistant secretary, general counsel or deputy general counsel of the Borrower, specifically confirming the Borrower’s legal authority to obtain such Advance or Letter of Credit.

	(c) No event has occurred and is continuing, or would result from such Advance or Letter of Credit, which constitutes a Default or an Event of Default.

The Borrower and its Subsidiaries are each corporations duly incorporated, validly existing and in good standing under the laws of their respective jurisdictions of incorporation, and are each duly licensed or qualified to transact business in all jurisdictions where the character of the property owned or leased or the nature of the business transacted by them makes such licensing or qualification necessary, except where the failure to be so licensed or qualified (i) will not permanently preclude the Borrower or any Subsidiary from maintaining any material action in any such jurisdiction even though such action arose in whole or in part during the period of such failure, and (ii) will not result in any other Material Adverse Change. The Borrower has all requisite power and authority, corporate or otherwise, to conduct its business, to own its properties and to execute, deliver, and perform all of its obligations under, the Loan Documents, the Pledged Securities, the Related First Mortgage Bonds and the Indentures.

Section 4.2 Authorization of Borrowing; No Conflict as to Law or Agreements.

(a) The execution, delivery and performance by the Borrower of the Loan Documents, the Indentures and the Pledged Securities, the borrowings from time to time hereunder, the issuance of the Pledged Securities, the issuance of the Related First Mortgage Bonds and the consummation of the transactions herein and therein contemplated, have been duly authorized by all necessary corporate action and do not and will not (i) require any consent or approval of the stockholders of the Borrower, or any authorization, consent, approval, order, filing, registration or qualification by or with any governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, other than those consents described in Schedule 4.2, each of which has been obtained and is in full force and effect, (ii) violate any provision of any law, rule or regulation (including, without limitation, Regulation X of the Board of Governors of the Federal Reserve System and Section 7 of the Exchange Act or any regulation promulgated thereunder) or of any order, writ, injunction or decree presently in effect having applicability to the Borrower or of the Organizational Documents of the Borrower, (iii) result in a breach of or constitute a default under any indenture or loan or

credit agreement or any other material agreement, lease or instrument to which the Borrower or any Subsidiary is a party or by which it or its properties may be bound or affected, or (iv) result in, or require, the creation or imposition of any Lien or other charge or encumbrance of any nature (other than the Liens created under this Agreement, the First Collateral Trust Securities Indenture and the First Mortgage Bond Indenture) upon or with respect to any of the properties now owned or hereafter acquired by the Borrower or any Subsidiary.


	(b) The Public Utilities Commission of the State of Colorado has issued its Authorizing Orders authorizing the issuance of the Pledged Securities, the Related First Mortgage Bonds and the incurrence by the Borrower of the Obligations under this Agreement.

This Agreement, the other Loan Documents, the Pledged Securities, the Related first Mortgage Bonds and the Indentures constitute the legal, valid and binding obligations of the Borrower enforceable against the Borrower in accordance with their respective terms, except to the extent that such enforcement may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally or by general equitable principles. Without limiting the generality of the foregoing, the Pledged Securities have been duly executed, issued and delivered by the Borrower and duly authenticated by the Trustee, and the Pledged Securities will be entitled to the benefits provided by the First Collateral Trust Securities Indenture and the Related First Mortgage Bonds have been duly executed, issued and delivered by the Borrower and duly authenticated by the trustee under the First Mortgage Bond Indenture, and the Related First Mortgage Bonds will be entitled to the benefits provided by the First Mortgage Bond Indenture.

The Borrower has heretofore furnished to the Banks the audited consolidated financial statements of the Borrower and its Subsidiaries for the year ended and as of December 31, 2002 and the unaudited consolidated financial statements of the Borrower and its Subsidiaries for the quarter ended and as of March 31, 2003. Those financial statements fairly present in all material respects the financial condition of the Borrower on the dates thereof and the results of its operations and cash flows for the periods then ended, and were prepared in accordance with GAAP as then in effect. The information, exhibits and reports furnished by the Borrower to the Agent and the Banks, taken as a whole, in connection with the negotiation of or compliance with

the Loan Documents did not contain any material misstatement of fact or omit to state a material fact or any fact necessary to make the statements contained therein not misleading.

contested in good faith by appropriate proceedings and for which the Borrower or applicable Subsidiary has provided adequate reserves in accordance with GAAP.

The Borrower or one of its Subsidiaries has good title to each of the properties and assets material to the operations of the Borrower and its Subsidiaries, taken as a whole, which it purports to own or which are reflected as owned on its books and records, and the Borrower has good and valid title to all real and fixed property and leasehold rights described or enumerated in the First Collateral Trust Securities Indenture and in the First Mortgage Bond Indenture (except, in each case, such properties as have been released from the Lien thereof in accordance with the terms thereof), in each case free and clear of all Liens and encumbrances, except for Liens and encumbrances permitted by Section 6.1 and covenants, restrictions, rights, easements and minor irregularities in title which do not materially interfere with the business or operations of the Borrower and its Subsidiaries taken as a whole.


	(a) When the Pledged Securities are issued and delivered pursuant to this Agreement and the First Collateral Trust Securities Indenture, the Pledged Securities will not be of the same class (within the meaning of Rule 144A under the Act) as securities which are listed on a national securities exchange registered under Section 6 of the Exchange Act or quoted in a U.S. automated inter-dealer quotation system.

	(b) The Borrower is subject to Section 13 or 15(d) of the Exchange Act.

	(c) Neither the Borrower, nor any person acting on its behalf, has offered or sold (nor will offer or sell prior to the delivery of the Pledged Securities to the Agent) the Pledged Securities by means of any general solicitation or general advertising within the meaning of Rule 502(c) under the Act.

	(d) Within the six months preceding the date hereof, neither the Borrower nor any other person acting on behalf of the Borrower has offered or sold to any person any

Pledged Securities, or any securities of the same or a similar class as the Pledged Securities, other than the Pledged Securities delivered to the Agent hereunder. The Borrower will take reasonable precautions designed to insure that any offer or sale, direct or indirect, in the United States or to any U.S. person (as defined in Rule 902 under the Act) of any Pledged Securities or any substantially similar security issued by the Borrower, within six months subsequent to the delivery of the Pledged Securities to the Agent, is made under restrictions and other circumstances reasonably designed not to affect the status of the offer and sale of the Pledged Securities contemplated by this Agreement as a transaction exempt from the registration provisions of the Act.


	(e) No registration of the Pledged Securities under the Act is required for the offer and sale of the Pledged Securities to the Agent in the manner contemplated by this Agreement.

The Borrower is not, and after giving effect to the offer and sale of the Pledged Securities, will not be an “investment company,” as such term is defined in the Investment Company Act.


	(a) On the date hereof, the aggregate principal amount of securities outstanding under the First Collateral Trust Securities Indenture (excluding the Pledged Securities) is $1,973,250,000; and the aggregate principal amount of the First Mortgage Bonds outstanding under the First Mortgage Bond Indenture (excluding bonds issued to secure securities under the First Collateral Trust Securities Indenture) is $374,340,000.

	(b) There has been no discharge of the First Collateral Trust Securities Indenture or of the First Mortgage Bond Indenture with respect to the Borrower.

	(c) Substantially all of the property, whether real, personal or mixed, of the electric utility business of the Borrower is subject to the Liens of the First Collateral Trust Securities Indenture. Substantially all of the property, whether real, personal or mixed, of the Borrower is subject to the Lien of the First Mortgage Bond Indenture.

	(d) True and complete copies of all amendments and supplements to and restatements of the First Collateral Trust Securities Indenture and First Mortgage Bond Indenture have been delivered to counsel for the Agent.

	(e) The supplemental indentures to the First Collateral Trust Securities Indenture and the First Mortgage Bond Indenture entered into in connection with the


	Pledged Securities and the Related First Mortgage Bonds are not required to be qualified under the Trust Indenture Act and, in connection with the issuance and delivery of the Pledged Securities to the Agent as contemplated by this Agreement, the First Collateral Trust Securities Indenture and the First Mortgage Bond Indenture are not required to be qualified under the Trust Indenture Act.

Section 4.18 Authentication of Pledged Securities and Related First Mortgage Bonds.

All covenants and conditions precedent to the authentication and delivery of the Pledged Securities have been complied with, and there has been no change in the facts and circumstances set forth in the application to the Trustee for authentication of the Pledged Securities (and the documents submitted therewith) from the date of such application to the date hereof. All covenants and conditions precedent to the authentication and delivery of the Related First Mortgage Bonds have been complied with, and there has been no change in the facts and circumstances set forth in the application to the trustee under the First Mortgage Bond Indenture for authentication of the Related First Mortgage Bonds (and the documents submitted therewith) from the date of such application to the date hereof.

The Borrower is and, upon the making of any Advance and the issuance of any Letter of Credit will be, Solvent.

Neither the Borrower nor any of its Subsidiaries has incurred any outstanding obligations under any Swap Contracts, other than Permitted Swap Obligations.

Except as disclosed in Schedule 4.22, the Borrower and its Subsidiaries have complied in all material respects with all applicable statutes, rules, regulations, orders and restrictions of any domestic or foreign government or any instrumentality or agency thereof having jurisdiction over the conduct of their respective businesses or the ownership of their respective properties, assets and rights.


	(a) As soon as available, and in any event within 100 days after the end of each fiscal year of the Borrower, a copy of the annual audit report of the Borrower and its Subsidiaries prepared by nationally recognized independent certified public accountants, which annual report shall include the balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal year and the related statements of income, shareholders’ equity and cash flows of the Borrower and its Subsidiaries for the fiscal year then ended, all presented on a consolidated basis in reasonable detail and all prepared in accordance with GAAP.

	(b) As soon as available and in any event within 55 days after the end of each of the first three quarters of each fiscal year of the Borrower, a balance sheet of the Borrower and its Subsidiaries as at the end of such quarter and related statements of earnings and cash flows of the Borrower and its Subsidiaries for such quarter and for the year to date, in reasonable detail and prepared on a consolidated basis in accordance with GAAP, subject to year-end adjustments.

	(c) Concurrent with the delivery of any financial statements under paragraph (a) or (b), a Compliance Certificate, duly executed by the chief financial officer or treasurer of the Borrower.

	(d) Promptly following the issuance of any Authorizing Order, a favorable opinion of counsel to the Borrower, in form and substance reasonably acceptable to the Agent, addressed to the Agent and the Banks, advising the Agent and the Banks of such issuance, stating the restrictions, if any, that such Authorizing Order imposes on the Borrower’s ability to obtain Borrowings or Letters of Credit hereunder, and attaching a copy of such Authorizing Order.

	(e) Promptly after the sending or filing thereof, copies of all regular and periodic financial reports which the Borrower or any Subsidiary shall file with the SEC or any national securities exchange.

	(f) Immediately after the commencement thereof, notice in writing of all litigation and of all proceedings before any governmental or regulatory agency affecting the Borrower or any Restricted Subsidiary of the type described in Section 4.7 or which seek a monetary recovery against the Borrower or any Restricted Subsidiary combined in excess of $50,000,000.


	(g) As promptly as practicable (but in any event not later than five Business Days) after an officer of the Borrower obtains knowledge of the occurrence of any Default or Event of Default, notice of such occurrence, together with a detailed statement by a responsible officer of the Borrower of the steps being taken by the Borrower to cure the effect of such event.

	(h) Promptly upon becoming aware of any Reportable Event or the occurrence of any prohibited transaction (as defined in Section 4975 of the Internal Revenue Code or Section 406 of ERISA) in connection with any Plan or any trust created thereunder which could reasonably be expected to result in a liability to the Borrower or any Subsidiary in excess of $50,000,000, a written notice specifying the nature thereof, what action the Borrower has taken, is taking or proposes to take with respect thereto, and, when known, any action taken or threatened by the Internal Revenue Service, the Pension Benefit Guaranty Corporation or the Department of Labor with respect thereto.

	(i) Promptly upon their receipt, copies of (a) all notices received by the Borrower, any Restricted Subsidiary or ERISA Affiliate of the Pension Benefit Guaranty Corporation’s intent to terminate any Plan or to have a trustee appointed to administer any Plan, and (b) all notices received by the Borrower, any Restricted Subsidiary or any ERISA Affiliate from a Multiemployer Plan concerning the imposition or amount of withdrawal liability imposed pursuant to Section 4202 of ERISA, which withdrawal liability individually or in the aggregate exceeds $50,000,000.

	(j) All notices required to be delivered under Section 10.13.

	(k) Promptly after it obtains knowledge of any such change, notice (by telephone, followed by written notice transmitted promptly thereafter in accordance with Section 10.4) of any change in the rating by S&P or Moody’s of the First Collateral Trust Securities, together with the details thereof, and of any announcement by S&P or Moody’s that its rating is “under review” or that any such rating has been placed on a “CreditWatch List”® or “watch list” or that any similar action has been taken by such rating agency.

	(l) Such other information respecting the financial condition and results of operations of the Borrower or any Subsidiary as any Bank may from time to time reasonably request.

requirements as the Borrower or the applicable Subsidiary may require) and to discuss its affairs, finances and accounts with any of its principal officers, all at such times during normal business hours, upon reasonable notice, and as often as such Applicable Party may reasonably request. As used in this Section 5.2, “Applicable Party” means (i) so long as any Event of Default has occurred and is continuing, the Agent or any Bank, and (ii) at all other times, the Agent. The provisions of this Section 5.2 shall in no way preclude any Bank from discussing the general affairs, finances and accounts of the Borrower with any of its principal officers at such times during normal business hours and as often as may be agreed to between the Borrower and such Bank.

The Borrower will, and will cause each Subsidiary to, comply with the requirements of applicable laws and regulations, the noncompliance with which would effect a Material Adverse Change.

The Borrower will keep and maintain, and will cause each Subsidiary to keep and maintain, all of its properties necessary or useful in its business in good condition, repair and working order; provided, however, that nothing in this Section shall prevent the Borrower or any Subsidiary from discontinuing the operation and maintenance of, or disposing of, any of its properties if (i) (A) such discontinuance or disposition is, in the reasonable judgment of the Borrower or that Subsidiary, desirable in the conduct of its business, and (B) no Default or Event of Default exists at the time of, or will be caused by, such discontinuance or disposition, or (ii) such discontinuance or disposition relates to obsolete or worn-out property.

The Borrower will, and will cause each Restricted Subsidiary to, preserve and maintain its corporate existence and all of its rights, privileges and franchises; provided, however, that neither the Borrower nor any Restricted Subsidiary shall be required to preserve any of its rights, privileges and franchises or to maintain its corporate existence if (i) its Board of Directors shall reasonably determine that the preservation or maintenance thereof is no longer desirable in the conduct of the business of the Borrower or that Restricted Subsidiary, and (ii) no Default or Event of Default exists upon, or will be caused by, the termination of such right, privilege, franchise or existence; provided, further, that in no event shall the foregoing be construed to permit the Borrower to terminate its corporate existence.

At any time when the Borrower is not subject to Section 13 or 15(d) of the Exchange Act, for the benefit of holders from time to time of Pledged Securities, the Borrower agrees to furnish at its expense, upon request, to holders of Pledged Securities and prospective purchasers of securities information satisfying the requirements of subsection (d)(4)(i) of Rule 144A under the Act.

The Borrower will, and will cause each Subsidiary to, use the proceeds of the Advances and L/C Amounts for general corporate purposes (including, without limitation, support of commercial paper) and to repay outstanding Advances and L/C Amounts. The Borrower will not, nor will it permit any Subsidiary to, use any of the proceeds of the Advances and L/C Amounts to purchase or carry any “margin stock” (as defined in Regulation U) or to make any acquisition of any corporation, partnership, limited liability company or other business entity unless, prior to making such acquisition, the Borrower or such Subsidiary shall have obtained written approval from the board of directors or other governing body of such entity.

So long as any Note shall remain unpaid or any Commitment or L/C Amount shall be outstanding, the Borrower agrees that, without the prior written consent of the Required Banks:


	(a) Liens for taxes or assessments or other governmental charges to the extent not required to be paid by Section 5.4.


	(b) Materialmen’s, merchants’, carriers’ worker’s, repairer’s, or other like liens arising in the ordinary course of business to the extent not required to be paid by Section 5.4.


	(c) Pledges or deposits to secure obligations under worker’s compensation laws, unemployment insurance, social security and other similar laws, or to secure the performance of bids, tenders, contracts (other than for the repayment of borrowed money) or leases or to secure statutory obligations or surety or appeal bonds, or to secure indemnity, performance or other similar bonds in the ordinary course of business.

	(d) Zoning restrictions, easements, licenses, restrictions on the use of real property or minor irregularities in title thereto, which do not materially impair the use of such property in the operation of the business of the Borrower and its Subsidiaries taken as a whole or the value of such property for the purpose of such business.

	(e) Purchase money Liens upon or in property acquired after the date hereof, provided that (i) such Lien is created not later than the 90th day following the acquisition or completion of construction of such property by the Borrower or its applicable Subsidiary, and (ii) no such Lien extends or shall extend to or cover any property of the Borrower or its Subsidiaries other than the property then being acquired, fixed improvements then or thereafter erected thereon and improvements and modifications thereto necessary to maintain such properties in working order.

	(f) Liens granted by any Acquisition Target prior to the acquisition by the Borrower or any Subsidiary of any interest in such Acquisition Target or its assets, so long as (i) such Lien was granted by the Acquisition Target prior to such acquisition and not in contemplation thereof, and (ii) no such Lien extends to any assets of the Borrower or any Subsidiary other than the assets of the Acquisition Target and improvements and modifications thereto necessary to maintain such properties in working order or, in the case of an asset transfer, the assets so acquired by the Borrower or the applicable Subsidiary and improvements and modifications thereto.

	(g) Liens (other than those described in subsection (e)) securing any indebtedness for borrowed money in existence on the date hereof and listed in Schedule 6.1 hereto.

	(h) Liens created under or in connection with this Agreement, the First Collateral Trust Securities Indenture and the First Mortgage Bond Indenture.

	(i) Liens permitted under the First Collateral Trust Securities Indenture and the First Mortgage Bond Indenture as such indentures exist on the date hereof, without regard to any waiver, amendment, modification or restatement thereof.

	(j) Liens securing any refinancing of indebtedness secured by the Liens described in paragraphs (e), (f) and (g), so long as the amount of such indebtedness secured by any such Lien does not exceed the amount of such refinanced indebtedness immediately prior to the refinancing and Liens do not extend to assets other than those encumbered prior to such refinancing and improvements and modifications thereto.


	(k) Liens granted by any Subsidiary of the Borrower in favor of the Borrower or any wholly-owned Subsidiary of the Borrower.

	(l) Liens not otherwise described in this Section 6.1, so long as the aggregate amount of indebtedness secured by all such Liens does not at any time exceed 10% of the Tangible Net Worth of the Borrower and its Subsidiaries.

The Borrower will not, and will not permit any Subsidiary to, sell, lease, assign, transfer or otherwise dispose of all or a Material Part of the Assets of the Borrower and its Subsidiaries (whether in one transaction or in a series of transactions) to any other Person other than (i) in the ordinary course of business, (ii) dispositions of property no longer used or useful in the business of the Borrower or any Subsidiary and (iii) dispositions of assets the net proceeds of which are invested or re-invested, or held in cash or cash-equivalents for reinvestment, in other energy-related assets; provided, however, that a wholly-owned Subsidiary of the Borrower may sell, lease, or transfer all or a substantial part of its assets to the Borrower or another wholly-owned Subsidiary of the Borrower, and the Borrower or such other wholly-owned Subsidiary, as the case may be, may acquire all or substantially all of the assets of the Subsidiary so to be sold, leased or transferred to it and any such sale, lease or transfer shall not be included in determining if the Borrower and/or its Subsidiaries disposed of a Material Part of its Assets. Notwithstanding the foregoing, the operating agreement between TRANSLink Transmission Co., LLC and the Borrower shall not be treated as a disposition for the purposes of this Section 6.2.

The Borrower will not consolidate with or merge into any Person, or permit any other Person to merge into it, or acquire (in a transaction analogous in purpose or effect to a consolidation or merger) all or substantially all of the assets of any other Person; provided, however, that the restrictions contained in this Section shall not apply to or prevent the consolidation or merger of any Person with, or a conveyance or transfer of its assets to, the Borrower so long as (i) no Default or Event of Default exists at the time of, or will be caused by, such consolidation, merger, conveyance or transfer, and (ii) the Borrower shall be the continuing or surviving corporation.

The Borrower will not engage in any line of business materially different from that presently engaged in by the Borrower.

The Borrower will not (i) make any loan or capital contribution to, or any other investment in, any Affiliate or make any other cash transfer to any Affiliate of the Borrower or (ii) enter into any transaction or series of transactions, whether or not in the ordinary course of business, with any officer, director, shareholder, Affiliate (other than a Subsidiary) of the Borrower; provided, however, that the foregoing shall not prohibit any of the following:


	(a) Transactions made upon fair and reasonable terms no less favorable to the Borrower than would obtain, taking into account all facts and circumstances, in a comparable arm’s-length transaction with a Person not an officer, director, shareholder or Affiliate of the Borrower.

	(b) Dividends to the Parent.

	(c) Transactions with Affiliates which transactions are subject to the jurisdiction of the Federal Energy Regulatory Commission (“FERC”), the SEC or the Public Utilities Commission of the State of Colorado.

	(d) Allocation of taxes, tax benefits and tax credits in accordance with the restrictions and requirements of PUHCA.

	(e) Contributions of capital to Subsidiaries.

	(f) Any investment in TRANSLink Transmission Co., LLC (“TRANSLink”) or any operating agreement between TRANSLink and the Borrower and/or its Subsidiaries, complying with the requirements of FERC Order No. 2000.

The Borrower will not at any time permit its Interest Coverage Ratio, determined as of the end of each fiscal quarter of the Borrower, to be less than 2.75 to 1.

“Event of Default”, wherever used herein, means any one of the following events:


	(a) Default in the payment of any principal of any Advance or L/C Amount when it becomes due and payable.


	(b) Default in the payment of any interest on any Obligations or any fees required under Section 2.8 or under Section 2.9 when the same become due and payable and the continuance of such default for five Business Days.

	(c) Default in the performance, or breach, of any covenant or agreement on the part of the Borrower contained in Article VI hereof (other than Section 6.4).

	(d) Default in the performance, or breach, of any covenant or agreement of the Borrower in this Agreement or any other Loan Document (including but not limited to Section 6.4, but excluding any other covenant or agreement a default in whose performance or whose breach is elsewhere in this Section specifically dealt with), and the continuance of such default or breach for a period of 30 days after the Agent, at the request of any Bank, has given notice to the Borrower specifying such default or breach and requiring it to be remedied.

	(e) Any representation or warranty made by the Borrower in this Agreement or any other Loan Document or by the Borrower (or any of its officers) in any certificate, instrument, or statement contemplated by or made or delivered pursuant to or in connection with this Agreement, shall prove to have been incorrect in any material respect when made.

	(f) The Borrower or the Parent shall assert that any Loan Documents or any Pledged Securities are unenforceable in accordance with their terms; or the principal amount outstanding under the Pledged Securities shall at any time be less than the greater of the Outstandings or the Commitment Amounts.

	(g) A default in the payment when due (after giving effect to any applicable grace period) of principal or interest with respect to any indebtedness or any Swap Contract of the Borrower or any Subsidiary (other than the Obligations) if the aggregate amount of all such indebtedness as to which such payment defaults exist is not less than $50,000,000.

	(h) A default (other than a default described in paragraph (g)) under any bond, debenture, note or other evidence of indebtedness or any Swap Contract of the Borrower or any Subsidiary (other than the Obligations) or under any indenture or other instrument under which any such evidence of indebtedness has been issued or by which it is governed and the expiration of the applicable period of grace, if any, specified in such evidence of indebtedness, indenture or other instrument if the effect of such default is to cause or to permit the holder of such indebtedness (or trustee or agent on behalf of such holder) to cause such indebtedness to come due prior to its stated maturity or is to cause or to permit the counterparty in respect of such Swap Contract to elect an early termination date in respect of such Swap Contract; provided, however, that no Event of Default shall be deemed to have occurred under this paragraph if the aggregate amount owing as to all such indebtedness and Swap Contracts as to which such defaults have occurred and are continuing is less than $50,000,000; provided further that if such default shall be cured by the Borrower or such Subsidiary, or waived by the holders of such indebtedness or counterparties in respect of such Swap Contracts, in each case prior to


	the commencement of any action under Section 7.2 and as may be permitted by such evidence of indebtedness, indenture, other instrument or Swap Contract, then the Event of Default hereunder by reason of such default shall be deemed likewise to have been thereupon cured or waived.


	(i) The Borrower or any Restricted Subsidiary shall be adjudicated a bankrupt or insolvent, or admit in writing its inability to pay its debts as they mature, or make an assignment for the benefit of creditors; or the Borrower or any Restricted Subsidiary shall apply for or consent to the appointment of any receiver, trustee, or similar officer for it or for all or any substantial part of its property; or such receiver, trustee or similar officer shall be appointed without the application or consent of the Borrower or such Restricted Subsidiary, and such appointment shall continue undischarged for a period of 60 days; or the Borrower or any Restricted Subsidiary shall institute (by petition, application, answer, consent or otherwise) any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceeding relating to it under the laws of any jurisdiction; or any such proceeding shall be instituted (by petition, application or otherwise) against the Borrower or any Restricted Subsidiary and shall continue undischarged for 60 days; or any judgment, writ, warrant of attachment or execution or similar process shall be issued or levied against a substantial part of the property of the Borrower or any Restricted Subsidiary and such judgment, writ, or similar process shall not be released, vacated, stayed or fully bonded within 60 days after its issue or levy.

	(j) A petition shall be filed by the Borrower or any Restricted Subsidiary under the United States Bankruptcy Code naming the Borrower or that Restricted Subsidiary as debtor; or an involuntary petition shall be filed against the Borrower or any Restricted Subsidiary under the United States Bankruptcy Code, and such petition shall not have been dismissed within 60 days after such filing; or an order for relief shall be entered in any case under the United States Bankruptcy Code naming the Borrower or any Restricted Subsidiary as debtor.

	(k) The Parent shall cease to own 100% of all classes of capital stock of the Borrower; or a Change of Control shall occur with respect to the Parent.

	(l) The rendering against the Borrower or any Subsidiary of a final judgment, decree or order for the payment of money if the amount of such judgment, decree or order, together with the amount of all other such judgments, decrees and orders then outstanding, less (in each case) the portion thereof covered by insurance proceeds, is greater than $50,000,000 and if such judgment, decree or order remains unsatisfied and in effect for any period of 30 consecutive days without a stay of execution.

	(m) Any Plan shall have been terminated as a result of which the Borrower or any Subsidiary or ERISA Affiliate has incurred an unfunded liability in excess of $50,000,000; or a trustee shall have been appointed by an appropriate United States District Court to administer any Plan, or the Pension Benefit Guaranty Corporation shall have instituted proceedings to terminate any Plan or to appoint a trustee to administer any Plan and in either case such action could reasonably be expected to result in liability to

the Borrower or any Subsidiary in excess of $50,000,000, or withdrawal liability in excess of $50,000,000 shall have been asserted against the Borrower or any Subsidiary or ERISA Affiliate by a Multiemployer Plan; or the Borrower or any Subsidiary or ERISA Affiliate shall have incurred any joint and several liability to the Pension Benefit Guaranty Corporation, the Internal Revenue Service or the Department of Labor, or the Borrower or any Subsidiary shall have incurred any other liability to the Pension Benefit Guaranty Corporation, the Internal Revenue Service or the Department of Labor in excess of $50,000,000 with respect to any Plan; or any Reportable Event that the Required Banks may determine in good faith could reasonably be expected to constitute grounds for the termination of any Plan by the Pension Benefit Guaranty Corporation, for the appointment by the appropriate United States District Court of a trustee to administer any Plan or for the imposition of withdrawal liability with respect to a Multiemployer Plan, and which, in any such case, could reasonably be expected to result in liability to the Borrower or any Subsidiary or any ERISA Affiliate in excess of $50,000,000 shall have occurred and be continuing 30 days after written notice to such effect shall have been given to the Borrower by the Banks.


	(n) Any Authorizing Order or other governmental license or other permission necessary for the maintenance of Obligations outstanding or the conduct of the Borrower’s business substantially as presently conducted shall be suspended or revoked or shall fail to be renewed upon expiration.

	(o) Any court, government or governmental agency shall condemn, seize or otherwise appropriate, or take custody or control of, all or any Material Part of the Assets of the Borrower and its Subsidiaries.

	(p) Failure of the Borrower to maintain on deposit in the Cash Collateral Account on and after the fifth Business Day preceding the Commitment Termination Date (or earlier, if required pursuant to Section 7.2(c)) an amount equal to the aggregate face amount of all outstanding Letters of Credit.


	(a) The Agent may, by notice to the Borrower, declare the Commitments to be terminated, whereupon the same shall forthwith terminate.

	(b) The Agent may, by notice to the Borrower, declare the entire unpaid principal amount of the Obligations then outstanding, all interest accrued and unpaid thereon, and all other Obligations payable under this Agreement to be forthwith due and payable, whereupon the Obligations, all such accrued interest and all such amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower.


	(c) If any Letter of Credit remains outstanding, the Agent may, by notice to the Borrower, require the Borrower to deposit in the Cash Collateral Account an amount in immediately available funds that, together with any other amounts then in the Cash Collateral Account, equals the aggregate face amount of all such outstanding Letters of Credit.

	(d) The Banks may, without notice to the Borrower and without further action, apply any and all money owing by any Bank to the Borrower to the payment of the Obligations then outstanding, including accrued interest. For purposes of this paragraph (d), “Bank” means the Banks, as defined elsewhere in this Agreement, and any participant in the loans made hereunder; provided, however, that each such participant, by exercising its rights under this paragraph (d), agrees that it shall be obligated under Section 8.17 with respect to such payment as if it were a Bank for purposes of that Section.

	(e) The Agent may exercise and enforce all rights and remedies available to it in respect of the Pledged Securities and the Cash Collateral Account.

	(f) The Agent and the Banks may exercise any other rights and remedies available to them by law or agreement.

The Borrower hereby pledges, and grants the Agent, as agent for the Banks, including the Issuing Bank, a security interest in, all sums held in the Cash Collateral Account from time to time and all proceeds thereof as security for the payment of all amounts due and to become due from the Borrower to the Issuing Bank, the Agent and/or the Banks pursuant to this Agreement, including but not limited to both principal of and interest on the Notes and all renewals, extensions and modifications thereof and any notes issued in substitution therefor, and specifically including the Borrower’s obligation to reimburse the Issuing Bank for any amount drawn under any Letter of Credit, whether such reimbursement obligation arises directly under this Agreement or under a separate reimbursement agreement. Upon request of the Borrower, the Agent shall permit the Borrower to withdraw from the Cash Collateral Account, so long as no Default or Event of Default then exists, the lesser of (i) the Excess Balance (as defined below), or (ii) the balance of the Cash Collateral Account. If a Default or Event of Default then exists, the Agent shall, upon the request of the Borrower apply the Excess Balance to the payment of the Obligations. As used herein, “Excess Balance” means (A) after the fifth Business Day preceding the Commitment Termination Date, the amount by which the balance of the Cash Collateral Account exceeds the L/C Amount, and (B) prior to the fifth Business Day preceding the Commitment Termination Date, the balance of the Cash Collateral Account. The Agent shall have full control

of the Cash Collateral Account, and, except as set forth above, the Borrower shall have no right to withdraw the funds maintained in the Cash Collateral Account.

(a) Pledged Securities. The Borrower covenants and agrees that, for the purpose of providing security for the payment of the principal of the Advances and L/C Amounts (including the obligation to fund the Cash Collateral Account), it will execute and deliver on May 16, 2003, the non-interest bearing Pledged Securities to the Agent in an aggregate principal amount equal to the aggregate Commitment Amounts. The Pledged Securities shall mature on May 14, 2004, unless payable prior thereto upon an Event of Default under Section 7.1(a), (b), or (p) or upon another Event of Default that results in an acceleration of the Obligations.

Notwithstanding the foregoing, (x) without the prior written consent of the Agent, the Borrower shall make no payment with respect to the Pledged Securities at any time while any Commitment or Letter of Credit remains outstanding, and (y) the Agent shall not demand payment of the Pledged Securities from any obligor thereunder prior to the occurrence of an Event of Default.

On the date which is thirty (30) days after the maturity of the Pledged Securities, the Trustee may conclusively presume that the obligation of the Borrower to pay principal on the Pledged Securities as the same shall have come due and payable shall have been fully satisfied and discharged unless and until the Trustee shall have received a Payment Demand from the Agent stating that the principal of Pledged Securities has become due and payable and specifying the amount of funds required to make such payment. Notwithstanding anything to the contrary contained herein, the aggregate amount actually due on the Pledged Securities shall not exceed the aggregate principal amount of the Advances and L/C Amounts including the obligation to fund the Cash Collateral Account.

The Agent shall hold on deposit in the Cash Collateral Account and apply in accordance with Section 7.3 any proceeds of Pledged Securities paid in respect of the Borrower’s obligation to fund the Cash Collateral Account.

(b) Effect of Reduction on Termination of Commitment. Upon any reduction or termination of the Commitments, the Pledged Securities shall be deemed satisfied and discharged as to the reduced or terminated unutilized portion of the Commitments, as and to the extent provided in the Pledged Securities.

(c) Voting Restrictions. The Agent’s rights to vote or consent under the First Collateral Trust Securities Indenture in respect of the Pledged Securities shall be restricted as and to the extent provided in the Pledged Securities.

(d) Restrictions on Transfer of Bonds. The Pledged Securities are not transferable except to a successor to the Agent under this Agreement.

(e) Securities Act Representation. Each of the Agent and the Banks represents to the Borrower that it is an “accredited investor” within the meanings of Rule 501(a) of Regulation D

and is acquiring its interest in the Pledged Securities hereunder as security for the Obligations and not with a view to any sale or distribution thereof within the meaning of the Act.

Bank One is hereby appointed by each of the Banks as its contractual representative (herein referred to as the “Agent”) hereunder and under each other Loan Document, and each of the Banks irrevocably authorizes the Agent to act as the contractual representative of such Bank with the rights and duties expressly set forth herein and in the other Loan Documents. The Agent agrees to act as such contractual representative upon the express conditions contained in this Article VIII. Notwithstanding the use of the defined term “Agent,” it is expressly understood and agreed that the Agent shall not have any fiduciary responsibilities to any Bank by reason of this Agreement or any other Loan Document and that the Agent is merely acting as the contractual representative of the Banks with only those duties as are expressly set forth in this Agreement and the other Loan Documents. In its capacity as the Banks’ contractual representative, the Agent (i) does not hereby assume any fiduciary duties to any of the Banks, (ii) is a “representative” of the Banks within the meaning of Section 9-105 of the Uniform Commercial Code and (iii) is acting as an independent contractor, the rights and duties of which are limited to those expressly set forth in this Agreement and the other Loan Documents. Each of the Banks hereby agrees to assert no claim against the Agent on any agency theory or any other theory of liability for breach of fiduciary duty, all of which claims each Bank hereby waives.

The Agent shall have and may exercise such powers under the Loan Documents as are specifically delegated to the Agent by the terms of each thereof, together with such powers as are reasonably incidental thereto. The Agent shall have no implied duties to the Banks, or any obligation to the Banks to take any action thereunder except any action specifically provided by the Loan Documents to be taken by the Agent.

Neither the Agent nor any of its directors, officers, agents or employees shall be liable to the Borrower, the Banks or any Bank for any action taken or omitted to be taken by it or them hereunder or under any other Loan Document or in connection herewith or therewith except to the extent such action or inaction is determined in a final non-appealable judgment by a court of competent jurisdiction to have arisen from the gross negligence or willful misconduct of such Person.

Neither the Agent nor any of its directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into, or verify (a) any statement, warranty or representation made in connection with any Loan Document or any borrowing hereunder; (b) the performance

or observance of any of the covenants or agreements of any obligor under any Loan Document, including, without limitation, any agreement by an obligor to furnish information directly to each Bank; (c) the satisfaction of any condition specified in Article III, except receipt of items required to be delivered solely to the Agent; (d) the existence or possible existence of any Default or Event of Default; (e) the validity, enforceability, effectiveness, sufficiency or genuineness of any Loan Document or any other instrument or writing furnished in connection therewith, or (f) the financial condition of the Borrower or of any of the Borrower’s Subsidiaries. The Agent shall have no duty to disclose to the Banks information that is not required to be furnished by the Borrower to the Agent at such time, but is voluntarily furnished by the Borrower to the Agent (either in its capacity as Agent or in its individual capacity).

The Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder and under any other Loan Document in accordance with written instructions signed by the Required Banks (or, when expressly required hereunder, all of the Banks), and such instructions and any action taken or failure to act pursuant thereto shall be binding on all of the Banks. The Banks hereby acknowledge that the Agent shall be under no duty to take any discretionary action permitted to be taken by it pursuant to the provisions of this Agreement or any other Loan Document unless it shall be requested in writing to do so by the Required Banks. The Agent shall be fully justified in failing or refusing to take any action hereunder and under any other Loan Document unless it shall first be indemnified to its satisfaction by the Banks pro rata against any and all liability, cost and expense that it may incur by reason of taking or continuing to take any such action.

The Agent may execute any of its duties as Agent hereunder and under any other Loan Document by or through employees, agents, and attorneys-in-fact and shall not be answerable to the Banks, except as to money or securities received by it or its authorized agents, for the default or misconduct of any such agents or attorneys-in-fact selected by it with reasonable care. The Agent shall be entitled to advice of counsel concerning the contractual arrangement between the Agent and the Banks and all matters pertaining to the Agent’s duties hereunder and under any other Loan Document.

The Agent shall be entitled to rely upon any Note, notice, consent, certificate, affidavit, letter, telegram, statement, paper or document believed by it to be genuine and correct and to have been signed or sent by the proper person or persons, and, in respect to legal matters, upon the opinion of counsel selected by the Agent, which counsel may be employees of the Agent.

The Banks agree to reimburse and indemnify the Agent ratably in proportion to their respective Commitments (or, if the Commitments have been terminated, in proportion to their Commitments immediately prior to such termination) (i) for any amounts not reimbursed by the Borrower for which the Agent is entitled to reimbursement by the Borrower under the Loan

Documents, (ii) for any other expenses incurred by the Agent on behalf of the Banks, in connection with the preparation, execution, delivery, administration and enforcement of the Loan Documents (including, without limitation, for any expenses incurred by the Agent in connection with any dispute between the Agent and any Bank or between two or more of the Banks) and (iii) for any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever which may be imposed on, incurred by or asserted against the Agent in any way relating to or arising out of the Loan Documents or any other document delivered in connection therewith or the transactions contemplated thereby (including, without limitation, for any such amounts incurred by or asserted against the Agent in connection with any dispute between the Agent and any Bank or between two or more of the Banks), or the enforcement of any of the terms of the Loan Documents or of any such other documents, provided that (i) no Bank shall be liable for any of the foregoing to the extent any of the foregoing is found in a final non-appealable judgment by a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the Agent and (ii) any indemnification required pursuant to Section 2.17(d) shall, notwithstanding the provisions of this Section 8.8, be paid by the relevant Bank in accordance with the provisions thereof. The obligations of the Banks under this Section 8.8 shall survive payment of the Obligations and termination of this Agreement.

The Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless the Agent has received written notice from a Bank or the Borrower referring to this Agreement describing such Default or Event of Default and stating that such notice is a “notice of default”. In the event that the Agent receives such a notice, the Agent shall give prompt notice thereof to the Banks.

In the event the Agent is a Bank, the Agent shall have the same rights and powers hereunder and under any other Loan Document with respect to its Commitment and its Advances as any Bank and may exercise the same as though it were not the Agent, and the term “Bank” or “Banks” shall, at any time when the Agent is a Bank, unless the context otherwise indicates, include the Agent in its individual capacity. The Agent and its Affiliates may accept deposits from, lend money to, and generally engage in any kind of trust, debt, equity or other transaction, in addition to those contemplated by this Agreement or any other Loan Document, with the Borrower or any of its Subsidiaries in which the Borrower or such Subsidiary is not restricted hereby from engaging with any other Person. The Agent, in its individual capacity, is not obligated to remain a Bank.

Each Bank acknowledges that it has, independently and without reliance upon the Agent, the Arranger or any other Bank and based on the financial statements prepared by the Borrower and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and the other Loan Documents. Each Bank also acknowledges that it will, independently and without reliance upon the Agent, the Arranger or

any other Bank and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement and the other Loan Documents.

The Agent may resign at any time by giving written notice thereof to the Banks and the Borrower, such resignation to be effective upon the appointment of a successor Agent or, if no successor Agent has been appointed, forty-five days after the retiring Agent gives notice of its intention to resign. The Agent may be removed at any time with or without cause by written notice received by the Agent from the Required Banks, such removal to be effective on the date specified by the Required Banks; provided that the Agent may not be removed unless the Agent (in its individual capacity) and any affiliate thereof acting as Issuing Bank is relieved of all of its duties as Issuing Bank pursuant to documentation reasonably satisfactory to such Person on or prior to the date of such removal. Upon any such resignation or removal, the Required Banks shall have the right to appoint, on behalf of the Borrower and the Banks, a Bank as a successor Agent. If no successor Agent shall have been so appointed by the Required Banks within thirty days after the resigning Agent’s giving notice of its intention to resign, then the resigning Agent may appoint, on behalf of the Borrower and the Banks, a successor Agent. Notwithstanding the foregoing, (i) the Agent may at any time without the consent of any Bank and with the consent of the Borrower, not to be unreasonably withheld or delayed, appoint any of its Affiliates which is a commercial bank as a successor Agent hereunder and (ii) so long as no Event of Default exists, no successor Agent may be appointed without the prior written consent of the Borrower, not to be unreasonably withheld or delayed. If the Agent has resigned or been removed and no successor Agent has been appointed, the Banks may perform all the duties of the Agent hereunder and the Borrower shall make all payments in respect of the Obligations to the applicable Bank and for all other purposes shall deal directly with the Banks. No successor Agent shall be deemed to be appointed hereunder until such successor Agent has accepted the appointment. Any such successor Agent shall be a commercial bank having capital and retained earnings of at least $100,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the resigning or removed Agent. Upon the effectiveness of the resignation or removal of the Agent, the resigning or removed Agent shall be discharged from its duties and obligations hereunder and under the Loan Documents. After the effectiveness of the resignation or removal of an Agent, the provisions of this Article VIII shall continue in effect for the benefit of such Agent in respect of any actions taken or omitted to be taken by it while it was acting as the Agent hereunder and under the other Loan Documents. In the event that there is a successor to the Agent by merger, or the Agent assigns its duties and obligations to an Affiliate pursuant to this Section 8.12, then the term “Prime Rate” as used in this Agreement shall mean the prime rate, base rate or other analogous rate of the new Agent.

The Borrower and the Banks agree that the Agent may delegate any of its duties under this Agreement to any of its Affiliates. Any such Affiliate (and such Affiliate’s directors, officers, agents and employees) which performs duties in connection with this Agreement shall be entitled

to the same benefits of the indemnification, waiver and other protective provisions to which the Agent is entitled under Articles VIII and X.

The Persons identified on the cover page, the signature pages or otherwise in this Agreement, or in any document related hereto, as being the “Syndication Agent” or “Co-Lead Arrangers” shall have no right, power, obligation, liability, responsibility or duty under this Agreement or any other Loan Document on account of such identification other than those applicable in their capacity (if any) as Banks. Each Bank acknowledges that it has not relied, and will not rely, on any Person so identified in deciding to enter into this Agreement or in taking or refraining from taking any action hereunder or pursuant hereto.


	(a) After deduction of any costs of collection as hereinafter provided, the Agent shall remit to each Bank that Bank’s Percentage of all payments of principal, interest, Letter of Credit fees payable under Section 2.7(d) and facility and utilization fees payable under Section 2.8 that are received by the Agent under the Loan Documents. Each Bank’s interest in the Loan Documents shall be payable solely from payments, collections and proceeds actually received by the Agent under the Loan Documents; and the Agent’s only liability to the Banks hereunder shall be to account for each Bank’s Percentage of such payments, collections and proceeds in accordance with this Agreement. If the Agent is ever required for any reason to refund any such payments, collections or proceeds, each Bank will refund to the Agent, upon demand, its Percentage of such payments, collections or proceeds, together with its Percentage of interest or penalties, if any, payable by the Agent in connection with such refund. The Agent may, in its sole discretion, make payment to the Banks in anticipation of receipt of payment from the Borrower. If the Agent fails to receive any such anticipated payment from the Borrower, each Bank shall promptly refund to the Agent, upon demand, any such payment made to it in anticipation of payment from the Borrower, together with interest for each day on such amount until so refunded at a rate equal to the Federal Funds Effective Rate for each such day.

	(b) Notwithstanding the foregoing, if any Bank has wrongfully refused to fund its Percentage of any Borrowing or other Advance as required hereunder, or if the principal balance of any Bank’s Note is for any other reason less than its Percentage of the aggregate principal balances of the Notes then outstanding, the Agent may remit all payments received by it to the other Banks until such payments have reduced the aggregate amounts owed by the Borrower to the extent that the aggregate amount owing to such Bank hereunder is equal to its Percentage of the aggregate amount owing to all of the Banks hereunder. The provisions of this paragraph are intended only to set forth certain rules for the application of payments, proceeds and collections in the event that a Bank has breached its obligations hereunder and shall not be deemed to excuse any Bank from such obligations.

Each Bank acknowledges that neither the Agent’s taking possession of the Pledged Securities, nor its exercise of remedies with respect to the Pledged Securities and subsequent distribution of proceeds thereunder, constitutes or will constitute an offer of any security, a solicitation of an offer to buy any security, or a placement of any security.

(a) Any Bank may, at any time, assign a portion of its Obligations and Commitment to an Eligible Lender (an “Applicant”) on any date (the “Adjustment Date”) selected by such Bank subject to the terms and provisions of this Section 9.1. The aggregate principal amount of the Obligations and Commitment so assigned in any assignment shall be not less than $5,000,000, and the assigning Bank shall retain at least $5,000,000 of such Obligations and Commitment for its own account; provided, however, that the foregoing restriction shall not apply to a Bank assigning its entire Obligations and Commitment to the Applicant. Any Bank proposing an assignment hereunder shall give notice of such assignment to the Agent and the Borrower at least ten

Business Days prior to such assignment (unless the Agent consents to a shorter period of time). Such notice shall specify the identity of such Applicant and the Percentage which it proposes that such Applicant acquire (which Percentage shall be the same for the Commitment and the Note held by the assigning Bank). Any assignment hereunder may be made only with the prior written consent of the Agent, the Issuing Bank and the Borrower; provided, however, that (i) in no event shall such consent be unreasonably withheld, and (ii) the consent of the Borrower shall not be required if a Default or Event of Default has occurred and is continuing at the time of such assignment.


	(b) Subject to the prior written consent of the Agent and the Borrower (if applicable), to confirm the status of each Applicant as a party to this Agreement and to evidence the assignment of the applicable portion of the assigning Bank’s Commitment, Letter of Credit participations and Advances in accordance herewith:

	(i)		the Borrower, such Bank, such Applicant, the Issuing Bank and the Agent shall, on or before the Adjustment Date, execute and deliver to the Agent an Assignment Agreement (provided that, if a Default or Event of Default has occurred and is continuing on the applicable Adjustment Date, the assignment will be effective whether the Borrower signs it or not), in substantially the form of Exhibit E (an “Assignment Agreement”); and

	(ii)		the Borrower will, at its own expense and in exchange for the assigning Bank’s Note, execute and deliver to the assigning Bank a new Note, payable to the order of the Applicant in an amount corresponding to the applicable interest in the assigning Bank’s rights and obligations acquired by such Applicant pursuant to such assignment, and, if the assigning Bank has retained interests in such rights and obligations, a new Note, payable to the order of that Bank in an amount corresponding to such retained interests. Such new Notes shall be in an aggregate principal amount equal to the principal amount of the Note to be replaced by such new Notes (or, if less, the Commitment Amount of the assigning Bank prior to giving effect to such assignment, unless such assignment is made after the Commitment Termination Date, in which case the aggregate principal amount of the new Notes shall equal the outstanding principal balance of the Note to be replaced by such new Notes), shall be dated the effective date of such assignment and shall otherwise be in the form of the Note to be replaced thereby. Such new Notes shall be issued in substitution for, but not in satisfaction or payment of, the Note being replaced thereby; and

Upon the execution and delivery of such Assignment Agreement and such Notes, (a) this Agreement shall deemed to be amended to the extent, and only to the extent, necessary to reflect the addition of such Additional Bank and the resulting adjustment of Percentages arising therefrom, (b) the assigning Bank shall be relieved of all obligations hereunder to the extent of the reduction of all obligations hereunder and to the extent of the reduction of such Bank’s Percentage, and (c) the Additional Bank shall become a party hereto and shall be entitled to all rights, benefits and privileges accorded to a Bank herein and in each other document or instrument executed pursuant hereto and subject to all obligations of a Bank hereunder, including

the right to approve or disapprove actions which, in accordance with the terms hereof, require the approval of the Required Banks or all Banks, and the obligations to make Advances hereunder.


	(c) In order to facilitate the addition of Additional Banks hereto, the Borrower shall (subject to the written agreement of any prospective Additional Bank to be subject to the confidentiality provisions of Section 10.1) provide all reasonable assistance requested by each Bank and the Agent relating thereto which shall not require undue effort or expense on the part of the Borrower, including, without limitation, the furnishing of such written materials and financial information regarding the Borrower as any Bank or the Agent may reasonably request and the participation by officers of the Borrower in a meeting or teleconference call with any Applicant upon the reasonable request upon reasonable notice of any Bank or the Agent.

	(d) Without limiting any other provision hereof:

	(i)		each Bank shall have the right at any time upon written notice to the Borrower and the Agent (but without requiring the consent of the Borrower or the Agent) to sell, assign, transfer, or negotiate all or any part of its Commitment, Advances, Notes, and other rights and obligations under this Agreement and the Loan Documents to one or more Affiliates of such Bank, provided that, unless consented to by the Borrower and the Agent (which consent shall not be unreasonably withheld), no such sale, assignment, transfer or negotiation of Commitment shall relieve the transferring Bank from its obligations (to the extent such Affiliate does not fulfill its obligations) hereunder; and

	(ii)		each Bank shall have the right at any time upon written notice to the Borrower and the Agent (but without requiring the consent of the Borrower or the Agent) to sell, assign, transfer, or negotiate all or any part of its Commitment, Advances, Notes, and other rights and obligations under this Agreement and the Loan Documents to one or more Banks, and any such sale, assignment, transfer or negotiation shall relieve the transferring Bank from its obligations hereunder to the extent of the obligations so transferred (except, in any event, to the extent that the Borrower, any other Bank or the Agent has rights against such transferring Bank as a result of any default by such transferring Bank under this Agreement);

provided, however, that any partial sale, assignment, transfer or negotiation pursuant to this Section shall be pro rata as to all of the Commitment, Obligations and Advances transferred.


	(e) Simultaneous with any assignment under this Section, the Bank making such assignment shall pay the Agent a transfer fee in the amount of $3,500.

	(f) Notwithstanding anything to the contrary contained herein, any Bank (a “Granting Bank”) may grant to a special purpose funding vehicle (an “SPC”) of such Granting Bank, identified as such in writing from time to time by the Granting Bank to

the Agent and the Borrower, the option to provide to the Borrower all or any part of any Advance that such Granting Bank would otherwise be obligated to make to the applicable Borrower pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPC to make any Advance, (ii) if an SPC elects not to exercise such option or otherwise fails to provide all or any part of such Advance, the Granting Bank shall be obligated to make such Advance pursuant to the terms hereof, (iii) such Granting Bank’s other obligations under this Agreement shall remain unchanged, (iv) such Granting Bank shall remain solely responsible to the other parties hereto for the performance of such obligations, and (v) the Borrower, the Agent and the other Banks shall continue to deal solely and directly with such Granting Bank in connection with such Granting Bank’s rights and obligations under this Agreement (including any rights and obligations assigned to such SPC). The making of an Advance by an SPC hereunder shall be deemed to utilize the Commitment of the applicable Granting Bank to the same extent, and as if, such Advance were made by such Granting Bank. Each party hereto hereby agrees that no SPC shall be liable for any indemnity or similar payment obligation under this Agreement (all liability for which shall remain with the applicable Granting Bank). All notices hereunder to any Granting Bank or the related SPC, and all payments in respect of the Obligations due to such Granting Bank or the related SPC, shall be made to such Granting Bank. In addition, each Granting Bank shall vote as a Bank hereunder without giving effect to any assignment under this paragraph (f), and no SPC shall have any vote as a Bank under this Agreement for any purpose. In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding senior indebtedness of any SPC, it will not institute against, or join any other person in instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under the laws of the United States or any State thereof. In addition, notwithstanding anything to the contrary contained in this Section 9.1, any SPC may (i) with notice to, but without the prior written consent of, the Borrower or the Agent and without paying any transfer fee therefor, assign all or a portion of its interests in its right to repayment of any Advances to its Granting Bank or to any financial institutions providing liquidity and/or credit support to or for the account of such SPC to fund the Advances made by such SPC or to support the securities (if any) issued by such SPC to fund such Advances and (ii) disclose on a confidential basis, to the extent such disclosure would be permitted under Section 10.1 as if such SPC were a Bank, any non-public information relating to its Advances to any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancement to such SPC. No amendment to this paragraph (f) that affects the rights of an S PC that has made an advance hereunder shall be effective without the consent of such SPC.


	(g) Notwithstanding any other provision of this Agreement, any Bank may at any time create a security interest in all or any portion of its rights under this Agreement and that Bank’s Note in favor of any Federal Reserve Bank in accordance with Regulation A of the Board of Governors of the Federal Reserve System.

Each Bank may grant participations in a portion of its Advances, Letter of Credit participations and Commitments to any Eligible Lender, upon prior written notice to the Agent but without the consent of the Agent or the Borrower, but only so long as the principal amount of the participation so granted is no less than $5,000,000 (or, if the participant is a Participating Affiliate, no less than $1,000,000). No holder of any such participation, other than an Affiliate of such Bank, shall be entitled to require such Bank to take or omit to take any action hereunder, except that such Bank may agree with such participant that such Bank will not, without such participant’s consent, agree to any action described in paragraph (a) of Section 10.3. No Bank shall, as between the Borrower and such Bank, be relieved of any of its obligations hereunder as a result of any such granting of a participation. The Borrower hereby acknowledges and agrees that any participant described in this Section will, for purposes of Sections 2.16, 2.17 and 2.18 only, be considered to be a Bank hereunder (provided that such participant shall not be entitled to receive any more than the Bank selling such participation would have received had such sale not taken place).

Except as set forth in Sections 9.1 and 9.2, no Bank may assign any of its rights or obligations under, or grant any participation in, any Loan Document or Commitment.

The Agent and the Banks shall keep confidential (and cause their respective officers, directors, employees, agents and representatives to keep confidential) all information, materials and documents furnished by the Borrower and its Subsidiaries to the Agent or the Banks (the “Disclosed Information”). Notwithstanding the foregoing, the Agent and each Bank may disclose Disclosed Information (i) to the Agent or any other Bank; (ii) to any Affiliate of any Bank in connection with the transactions contemplated hereby, provided that such Affiliate has been informed of the confidential nature of such information; (iii) to legal counsel, accountants and other professional advisors to the Agent or such Bank; (iv) to any regulatory body having jurisdiction over any Bank or the Agent; (v) to the extent required by applicable laws and regulations or by any subpoena or similar legal process, or requested by any governmental agency or authority; (vi) to the extent such Disclosed Information (A) becomes publicly available other than as a result of a breach of this Agreement, (B) becomes available to the Agent or such Bank on a non-confidential basis from a source other than the Borrower or a Subsidiary, or (C) was available to the Agent or such Bank on a non-confidential basis prior to its disclosure to the Agent or such Bank by the Borrower or a Subsidiary; (vii) to the extent the Borrower or such Subsidiary shall have consented to such disclosure in writing; (viii) to the extent reasonably deemed necessary by the Agent or any Bank in the enforcement of the remedies of the Agent and the Banks provided under the Loan Documents; or (ix) in connection with any potential assignment or participation in the interest granted hereunder, provided that any such potential assignee or participant shall have executed a confidentiality agreement imposing on such

potential assignee or participant substantially the same obligations as are imposed on the Agent and the Banks under this Section 10.1.

Notwithstanding anything herein to the contrary, information subject to this Section 10.1 shall not include, and the Agent and each Bank may disclose without limitation of any kind, any information with respect to the “tax treatment” and “tax structure” (in each case, within the meaning of Treasury Regulation Section 1.6011-4) of the transactions contemplated hereby and all materials of any kind (including opinions or other tax analyses) that are provided to the Agent or such Bank relating to such tax treatment and tax structure; provided that with respect to any document or similar item that in either case contains information concerning the tax treatment or tax structure of the transaction as well as other information, this sentence shall only apply to such portions of the document or similar item that relate to the tax treatment or tax structure of the Advances, Letters of Credit and transactions contemplated hereby. The Borrower and its Subsidiaries may also disclose without limitation the “tax treatment” and “tax structure” of the transactions contemplated hereby.

No failure or delay on the part of the Banks in exercising any right, power or remedy under the Loan Documents shall operate as a waiver thereof; nor shall any Bank’s acceptance of payments while any Default or Event of Default is outstanding operate as a waiver of such Default or Event of Default, or any right, power or remedy under the Loan Documents; nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy under the Loan Documents. The remedies provided in the Loan Documents are cumulative and not exclusive of any remedies provided by law.


	(a) No such amendment or waiver shall be effective to do any of the following unless signed by each of the Banks (or by the Agent with the consent or at the request of each of the Banks):

	(i)		Increase the Commitment Amount of any Bank or extend the Commitment Termination Date.

	(ii)		Permit the Borrower to assign its rights under this Agreement.

	(iii)		Amend this Section, the definition of “Required Banks” in Section 1.1, or any provision herein providing for consent or other action by all Banks.

	(iv)		Forgive any indebtedness of the Borrower arising under this Agreement or the Notes, or reduce the rate of interest or any fees charged under this Agreement or the Notes.

	(v)		Postpone or delay any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, facility fees or other material amounts due to the Banks (or any of them) hereunder or under any other Loan Document.

	(vi)		Release the Agent’s interest in any Pledged Securities, the Cash Collateral Account or amend any terms of any Pledged Securities or, except pursuant to the terms hereof, release any collateral in the Cash Collateral Account.


	(b) No amendment, waiver or consent shall affect the rights or duties of the Agent under this Agreement or any other Loan Document unless in writing and signed by the Agent.

	(c) No amendment, modification or (except as provided elsewhere herein) termination of this Agreement or waiver of any rights of the Borrower or obligations of any Bank or the Agent hereunder shall be effective unless the Borrower shall have consented thereto in writing.

No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances.

Except as otherwise expressly provided herein, all notices and other communications hereunder shall be in writing and shall be (i) personally delivered, (ii) transmitted by registered mail, postage prepaid, (iii) sent by Federal Express or similar expedited delivery service, or (iv) transmitted by telecopy, in each case addressed or transmitted by telecopy to the party to whom notice is being given at its address or telecopier number (as the case may be) as set forth in Exhibit A or in any applicable Assignment Agreement; or, as to each party, at such other address or telecopier number as may hereafter be designated in a notice by that party to the other party complying with the terms of this Section. All such notices or other communications shall be deemed to have been given on (i) the date received if delivered personally, (ii) five business days after the date of posting, if delivered by mail, (iii) the date of receipt, if delivered by Federal Express or similar expedited delivery service, or (iv) the date of transmission if delivered by telecopy, except that notices or requests to the Banks pursuant to any of the provisions of Article II shall not be effective as to any Bank until received by that Bank.

be delivered hereunder and thereunder; including, in each case, reasonable fees and out-of-pocket expenses of counsel with respect thereto, whether paid to outside counsel or allocated to the Agent or such Bank by in-house counsel. The Borrower also agrees to pay and reimburse the Agent for all of its out-of-pocket and allocated costs incurred in connection with each audit or examination conducted by the Agent, its employees or agents, which audits and examinations shall be for the sole benefit of the Agent and the Banks.

The Borrower hereby agrees to indemnify the Agent and the Banks and each officer, director, employee and agent thereof (herein individually each called an “Indemnitee” and collectively called the “Indemnitees”) from and against any and all losses, claims, damages, reasonable expenses (including, without limitation, reasonable attorneys’ fees) and liabilities (all of the foregoing being herein called the “Indemnified Liabilities”) incurred by an Indemnitee in connection with or arising out of the execution or delivery of this Agreement or any agreement or instrument contemplated hereby, the performance by the parties hereto of their respective obligations hereunder or the use of the proceeds of any Advance or Letter of Credit hereunder (including but not limited to any such loss, claim, damage, expense or liability arising out of any claim that any Environmental Law has been breached with respect to any activity or property of the Borrower), except for any portion of such losses, claims, damages, expenses or liabilities incurred solely as a result of the gross negligence or willful misconduct of the applicable Indemnitee. If and to the extent that the foregoing indemnity may be unenforceable for any reason, the Borrower hereby agrees to make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. All obligations provided for in this Section shall survive any termination of this Agreement. Notwithstanding the foregoing, the Borrower shall not be obligated to indemnify any Indemnitee in respect of any Indemnified Liabilities arising as a result of the Issuing Bank’s failure to pay under any Letter of Credit after the presentation to it of a request strictly complying with the terms and conditions of such Letter of Credit.

THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE

WITH THE INTERNAL LAWS (INCLUDING, WITHOUT LIMITATION, 735 ILCS SECTION 105/5-1 ET SEQ, BUT OTHERWISE WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS) OF THE STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.

Any provision of this Agreement which is prohibited or unenforceable shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof.

EACH PARTY HERETO HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE COURT SITTING IN CHICAGO, ILLINOIS IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND EACH PARTY HERETO HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT, ANY BANK OR THE ISSUING BANK TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY THE BORROWER AGAINST THE AGENT OR ANY BANK OR ANY AFFILIATE OF THE AGENT OR ANY BANK INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS.

Section 10.13 Recalculation of Covenants Following Accounting Practices Change.

The Borrower shall notify the Agent of any Accounting Practices Change promptly upon becoming aware of the same. Promptly following such notice, the Borrower and the Banks shall negotiate in good faith in order to effect any adjustments to Sections 6.9 and 6.10 necessary to reflect the effects of such Accounting Practices Change.

Article and Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.

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

For value received, Public Service Company of Colorado, a Colorado corporation (the “Borrower”), promises to pay to the order of (the “Bank”), at such place as the Agent under the Credit Agreement defined below may from time to time designate in writing, the principal sum of Dollars ($ ), or, if less, the aggregate unpaid principal amount of all advances made by the Bank to the Borrower pursuant to Section 2.1 of the Credit Agreement dated May 16, 2003 among the Borrower, Bank One, NA, as Agent (in such capacity, the “Agent”), and various Banks, including the Bank (together with all amendments, modifications and restatements thereof, the “Credit Agreement”), and to pay interest on the principal balance of this Note outstanding from time to time at the rate or rates determined pursuant to the Credit Agreement.

The Borrower shall pay all costs of collection, including reasonable attorneys’ fees and legal expenses, if this Note is not paid when due, whether or not legal proceedings are commenced.

Presentment or other demand for payment, notice of dishonor and protest are expressly waived.

for itself and as Agent under the Credit
Agreement described below

Reference is made to the Credit Agreement dated May , 2003 among Public Service Company of Colorado (the “Borrower”), Bank One, NA, as Agent, and the Banks, as defined therein (the “Credit Agreement”).

All terms defined in the Credit Agreement and not otherwise defined herein shall have the meanings given them in the Credit Agreement.

This is a Compliance Certificate submitted in connection with the Borrower’s financial statements (the “Statements”) as of , (the “Effective Date”).


	(a) I am the [**chief financial officer/treasurer] of the Borrower, and I am familiar with the financial statements and financial affairs of the Borrower.


	(b) The Statements have been prepared in accordance with GAAP, **[subject to year-end audit adjustments].


	(c) The computations on the Annexes hereto set forth the Borrower’s compliance or non-compliance with the requirements set forth in Section 6.7 and 6.8 as of the Effective Date.

I have no knowledge of the occurrence of any Default or Event of Default, except as set forth in the attachments, if any, hereto.

3.		Funded Debt to Total Capital (Ratio of Item 1(j) to
		Item 2(f))

(not to be greater than 0.60 to 1.0)

_______________ to 1.

Interest Coverage Ratio (Ratio of Item 1(e) to

Item 2)
(not to be greater than 2.75 to 1.0)

______________to 1.0

This Assignment Agreement (this “Assignment Agreement”) between (the “Assignor”) and (the “Assignee”) is dated as of , 20 . The parties hereto agree as follows:

1. PRELIMINARY STATEMENT. The Assignor is a party to a Credit Agreement (which, as it may be amended, modified, renewed or extended from time to time is herein called the “Credit Agreement”) described in Item 1 of Schedule 1 attached hereto (“Schedule 1”). Capitalized terms used herein and not otherwise defined herein shall have the meanings attributed to them in the Credit Agreement.

2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, an interest in and to the Assignor’s rights and obligations under the Credit Agreement and the other Loan Documents, such that after giving effect to such assignment the Assignee shall have purchased pursuant to this Assignment Agreement the percentage interest specified in Item 3 of Schedule 1 of all outstanding rights and obligations under the Credit Agreement and the other Loan Documents relating to the facilities listed in Item 3 of Schedule 1. The aggregate Commitment (or Loans, if the applicable Commitment has been terminated) purchased by the Assignee hereunder is set forth in Item 4 of Schedule 1.

3. EFFECTIVE DATE. The effective date of this Assignment Agreement (the “Effective Date”) shall be the later of the date specified in Item 5 of Schedule 1 or two Business Days (or such shorter period agreed to by the Agent) after this Assignment Agreement, together with any consents required under the Credit Agreement, are delivered to the Agent. In no event will the Effective Date occur if the payments required to be made by the Assignee to the Assignor on the Effective Date are not made on the proposed Effective Date.

4. PAYMENT OBLIGATIONS. In consideration for the sale and assignment of Loans hereunder, the Assignee shall pay the Assignor, on the Effective Date, the amount agreed to by the Assignor and the Assignee. On and after the Effective Date, the Assignee shall be entitled to receive from the Agent all payments of principal, interest and fees with respect to the interest assigned hereby. The Assignee will promptly remit to the Assignor any interest on Loans and fees received from the Agent which relate to the portion of the Commitment or Loans assigned to the Assignee hereunder for periods prior to the Effective Date and not previously paid by the Assignee to the Assignor. In the event that either party hereto receives any payment to which the other party hereto is entitled under this Assignment Agreement, then the party receiving such amount shall promptly remit it to the other party hereto.

5. RECORDATION FEE. The Assignor and Assignee each agree to pay one-half of the recordation fee required to be paid to the Agent in connection with this Assignment Agreement unless otherwise specified in Item 6 of Schedule 1.

6. REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE ASSIGNOR’S LIABILITY. The Assignor represents and warrants that (i) it is the legal and

beneficial owner of the interest being assigned by it hereunder, (ii) such interest is free and clear of any adverse claim created by the Assignor and (iii) the execution and delivery of this Assignment Agreement by the Assignor is duly authorized. It is understood and agreed that the assignment and assumption hereunder are made without recourse to the Assignor and that the Assignor makes no other representation or warranty of any kind to the Assignee. Neither the Assignor nor any of its officers, directors, employees, agents or attorneys shall be responsible for (i) the due execution, legality, validity, enforceability, genuineness, sufficiency or collectability of any Loan Document, including without limitation, documents granting the Assignor and the other Banks a security interest in assets of the Borrower or any guarantor, (ii) any representation, warranty or statement made in or in connection with any of the Loan Documents, (iii) the financial condition or creditworthiness of the Borrower or any guarantor, (iv) the performance of or compliance with any of the terms or provisions of any of the Loan Documents, (v) inspecting any of the property, books or records of the Borrower, (vi) the validity, enforceability, perfection, priority, condition, value or sufficiency of any collateral securing or purporting to secure the Loans or (vii) any mistake, error of judgment, or action taken or omitted to be taken in connection with the Loans or the Loan Documents.

7. REPRESENTATIONS AND UNDERTAKINGS OF THE ASSIGNEE. The Assignee (i) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements requested by the Assignee and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment Agreement, (ii) agrees that it will, independently and without reliance upon the Agent, the Assignor or any other Bank and based on such documents and information at it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, (iii) appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under the Loan Documents as are delegated to the Agent by the terms thereof, together with such powers as are reasonably incidental thereto, (iv) confirms that the execution and delivery of this Assignment Agreement by the Assignee is duly authorized, (v) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Bank, (vi) agrees that its payment instructions and notice instructions are as set forth in the attachment to Schedule 1, (vii) confirms that none of the funds, monies, assets or other consideration being used to make the purchase and assumption hereunder are “plan assets” as defined under ERISA and that its rights, benefits and interests in and under the Loan Documents will not be “plan assets” under ERISA, and (viii) agrees to indemnify and hold the Assignor harmless against all losses, costs and expenses (including, without limitation, reasonable attorneys’ fees) and liabilities incurred by the Assignor in connection with or arising in any manner from the Assignee’s nonperformance of the obligations assumed under this Assignment Agreement. The Assignee (a) represents and warrants to the Agent and the Borrower that under applicable law and treaties no tax will be required to be withheld by the Agent or the Borrower with respect to any payments to be made to the Assignee hereunder, (b) agrees to furnish (if it is organized under the laws of any jurisdiction other than the United States or any State thereof) to the Agent and the Borrower prior to the time that the Agent or Borrower is required to make any payment of principal, interest or fees hereunder, duplicate executed originals of U.S. Internal Revenue Service Form W-8ECI or W-8BEN (or appropriate replacement forms) and agrees to provide new Forms W-8ECI or W-BEN (or appropriate replacement forms) upon the expiration of any previously delivered form or comparable statements in accordance with applicable U.S.

law and regulations and amendments thereto, duly executed and completed by the Assignee and (c) agrees to comply with all applicable U.S. laws and regulations with regard to such withholding tax exemption.

8. GOVERNING LAW. This Assignment Agreement shall be governed by the internal law, and not the law of conflicts, of the State of Illinois.

9. NOTICES. Notices shall be given under this Assignment Agreement in the manner set forth in the Credit Agreement. For the purpose hereof, the addresses of the parties hereto (until notice of a change is delivered) shall be the address set forth in the attachment to Schedule 1.

10. COUNTERPARTS; DELIVERY BY FACSIMILE. This Assignment Agreement may be executed in counterparts. Transmission by facsimile of an executed counterpart of this Assignment Agreement shall be deemed to constitute due and sufficient delivery of such counterpart and such facsimile shall be deemed to be an original counterpart of this Assignment Agreement.

IN WITNESS WHEREOF, the duly authorized officers of the parties hereto have executed this Assignment Agreement by executing Schedule 1 hereto as of the date first above written.

1.		Description and Date of Credit Agreement:

	Credit	Agreement dated as of May , 2003 among Public Service Company of Colorado, the lenders named therein including the Assignor, and Bank One, NA individually and as Agent for such lenders, as it may be amended from time to time.

2.		Date of Assignment Agreement: , 20

3.		Amounts (As of Date of Item 2 above):

N/A***
[Assignor/Assignee
to pay 100% of fee]
[Fee waived by Agent]

** Percentage taken to 10 decimal places

*** If fee is split 50-50, pick N/A as option

**** Delete if not required by Credit Agreement

Attach Assignor’s Administrative Information Sheet, which must
include notice addresses for the Assignor and the Assignee
(Sample form shown below)

for itself and as Agent under the Credit Agreement described below

Reference is made to the Credit Agreement dated May , 2003 (together with all amendments, modifications and restatements thereof, the “Credit Agreement”) among Public Service Company of Colorado (the “Borrower”), Bank One, NA, as Agent, and Banks that are parties thereto. As used herein, terms defined in the Credit Agreement and not otherwise defined herein have the meanings given them in the Credit Agreement.

The Borrower has requested [a Borrowing to be made under Section 2.1 of the Credit Agreement] [a Letter of Credit to be issued under Section 2.7 of the Credit Agreement] as more specifically described on Attachment 1.

I hereby certify to you that the [Borrowing/Letter of Credit (including the Borrower’s obligation to reimburse the Banks on account of any draw under such Letter of Credit)] requested by the Borrower (i) has been duly authorized by the Borrower’s board of directors pursuant to its resolution dated , (ii) has been duly authorized by the Public Utilities Commission of the State of Colorado pursuant to its order dated [** alternate for clause (ii): does not and will not require any authorization, consent or approval of the Public Utilities Commission of the State of Colorado], and (iii) does not and will not require any other authorization, consent or approval by any governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, other than those that have been obtained, copies of which have been delivered to the Agent pursuant to Section 5.1(d).

I further certify to you that the [Borrowing/Letter of Credit (including the Borrower’s obligation to reimburse the Banks on account of any draw under such Letter of Credit)] requested by the Borrower complies with all applicable requirements of each board resolution and the authorization of the Public Utilities Commission of the State of Colorado described above, including but not limited to any applicable limitation on the aggregate amount of debt that the Borrower may have outstanding at any one time.

PSCO Capital Trust 1 (100%)*
1480 Welton, Inc. (100%)
Green and Clear Lakes Company (100%)
P.S.R. Investments, Inc. (100%)
Various ditch and water companies

*Denotes Restricted Subsidiary

1. See disclosure regarding legal proceedings of the Borrower in Note 13 to the Consolidated Financial Statements contained in the Borrower’s Annual Report on Form 10-K for the year ended December 31, 2002 filed with the SEC (the “2002 Form 10-K”).

2. PSCo Fuel Adjustment Clause Proceedings - Certain wholesale power customers of PSCo have filed complaints with the FERC alleging PSCo has been improperly collecting certain fuel and purchased energy costs through the wholesale fuel cost adjustment clause included in their rates. The FERC consolidated these complaints and set them for hearing and settlement judge procedures. In November 2002, the Chief Judge terminated settlement procedures after settlement was not reached. The Complainants’ filed initial testimony in late April 2003 claiming the improper inclusion of fuel and purchased energy costs in the range of $40-50 million related to the 1996 to 2002 period. The Company is currently analyzing the testimony and will file rebuttal testimony in June 2003. The hearings are scheduled for August 2003.

PSCo had an Incentive Cost Adjustment (ICA) for periods prior to calendar 2003, as disclosed in the 2002 Form 10-K. The CPUC is conducting a proceeding to review and approve the incurred and recoverable 2001 costs under the ICA. In April 2003, the CPUC Staff and an intervenor filed testimony recommending disallowance of fuel and purchased energy costs which, if granted, would result in a $30 million reduction in recoverable 2001 ICA costs. The Company is currently analyzing the testimony of the CPUC Staff and the intervenor and will file rebuttal testimony in June 2003. The hearings on this matter are scheduled to commence in July 2003. If CPUC Staff and the intervenor are successful, recommended disallowances would also result in a reduction of the recoverable 2002 ICA costs. A review of the 2002 recoverable ICA costs will be conducted in a future proceeding.

PSCo has recorded its deferred fuel and purchased energy costs based on the expected rate recovery of its costs as filed in the above rate proceedings, without the adjustments proposed by various parties. Pending the outcome of these regulatory proceedings, we cannot at this time determine whether any customer refunds or disallowances of PSCo’s deferred costs will be required.

See disclosure regarding environmental contingencies of the Borrower in Note 13 to the Consolidated Financial Statements contained in the 2002 Form 10-K.


Exhibit A		Commitment Amounts and Addresses
Exhibit B		Note
Exhibit C		Compliance Certificate
Exhibit D		Opinion of Borrower’s Counsel
Exhibit E		Assignment Certificate
Exhibit F		Borrowing Certificate


Schedule 4.2		Consents
Schedule 4.4		Subsidiaries
Schedule 4.7		Litigation
Schedule 4.8		Environmental Matters
Schedule 4.22		Compliance with Laws
Schedule 6.1		Liens

-iv- EX-4.03 5 c79003exv4w03.txt EX-4.03 CREDIT AGREEMENT EXHIBIT 4.03 EXECUTION COPY ================================================================================ CREDIT AGREEMENT DATED AS OF FEBRUARY 18, 2003 AMONG SOUTHWESTERN PUBLIC SERVICE COMPANY THE LENDERS, BANK ONE, NA, AS AGENT, THE BANK OF NEW YORK, AS SYNDICATION AGENT AND BANC ONE CAPITAL MARKETS, INC., AS LEAD ARRANGER AND SOLE BOOK RUNNER ================================================================================ CREDIT AGREEMENT This Agreement, dated as of February 18, 2003, is among Southwestern Public Service Company, the Lenders and Bank One, NA, a national banking association having its principal office in Chicago, Illinois, as Agent. The parties hereto agree as follows: ARTICLE I. DEFINITIONS As used in this Agreement: "Acquisition" means any transaction, or any series of related transactions, consummated on or after the date of this Agreement, by which the Borrower or any of its Subsidiaries (i) acquires any going business or all or substantially all of the assets of any firm, corporation or limited liability company, or division thereof, whether through purchase of assets, merger or otherwise or (ii) directly or indirectly acquires (in one transaction or as the most recent transaction in a series of transactions) at least a majority (in number of votes) of the securities of a corporation which have ordinary voting power for the election of directors (other than securities having such power only by reason of the happening of a contingency) or a majority (by percentage or voting power) of the outstanding ownership interests of a partnership or limited liability company. "Advance" means a borrowing hereunder, (i) made by the Lenders on the same Borrowing Date, or (ii) converted or continued by the Lenders on the same date of conversion or continuation, consisting, in either case, of the aggregate amount of the several Loans of the same Type and, in the case of Eurodollar Loans, for the same Interest Period. "Affected Lender" is defined in Section 2.19. "Affiliate" of any Person means any other Person directly or indirectly controlling, controlled by or under common control with such Person. A Person shall be deemed to control another Person if the controlling Person owns 10% or more of any class of voting securities (or other ownership interests) of the controlled Person or possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of stock, by contract or otherwise. "Agent" means Bank One in its capacity as contractual representative of the Lenders pursuant to Article X, and not in its individual capacity as a Lender, and any successor Agent appointed pursuant to Article X. "Aggregate Commitment" means the aggregate of the Commitments of all the Lenders, as reduced from time to time pursuant to the terms hereof. "Aggregate Outstanding Credit Exposure" means, at any time, the aggregate of the Outstanding Credit Exposure of all Lenders. "Agreement" means this credit agreement, as it may be amended or modified and in effect from time to time. "Agreement Accounting Principles" means generally accepted accounting principles as in effect from time to time, applied in a manner consistent with that used in preparing the financial statements referred to in Section 5.4. "Alternate Base Rate" means, for any day, a rate of interest per annum equal to the higher of (i) the Prime Rate for such day and (ii) the sum of the Federal Funds Effective Rate for such day plus 1/2% per annum. "Applicable Margin" means, with respect to Advances of any Type at any time, the percentage rate per annum which is applicable at such time with respect to Advances of such Type as set forth in the Pricing Schedule. "Arranger" means Banc One Capital Markets, Inc., a Delaware corporation, and its successors, in its capacity as Lead Arranger and Sole Book Runner. "Article" means an article of this Agreement unless another document is specifically referenced. "Authorized Officer" means any of the following officers of the Borrower, acting singly: the Chairman of the Board, the Chief Executive Officer, the Vice Chairman of the Board, the Chief Operating Officer, the President, the Chief Financial Officer or any Executive Vice President, Senior Vice President, Vice President, Assistant Vice President, Treasurer or Assistant Treasurer. "Bank One" means Bank One, NA, a national banking association having its principal office in Chicago, Illinois, in its individual capacity, and its successors. "Borrower" means Southwestern Public Service Company, a New Mexico corporation, and its successors and assigns. "Borrowing Date" means a date on which an Advance is made hereunder. "Borrowing Notice" is defined in Section 2.8. "Business Day" means (i) with respect to any borrowing, payment or rate selection of Eurodollar Advances, a day (other than a Saturday or Sunday) on which banks generally are open in Chicago and New York for the conduct of substantially all of their commercial lending activities, interbank wire transfers can be made on the Fedwire system and dealings in United States dollars are carried on in the London interbank market and (ii) for all other purposes, a day (other than a Saturday or Sunday) on which banks generally are open in Chicago for the conduct of substantially all of their commercial lending activities and interbank wire transfers can be made on the Fedwire system. 2 "Capitalized Lease" of a Person means any lease of Property by such Person as lessee which would be capitalized on a balance sheet of such Person prepared in accordance with Agreement Accounting Principles. "Capitalized Lease Obligations" of a Person means the amount of the obligations of such Person under Capitalized Leases which would be shown as a liability on a balance sheet of such Person prepared in accordance with Agreement Accounting Principles. "Code" means the Internal Revenue Code of 1986, as amended, reformed or otherwise modified from time to time. "Commitment" means, for each Lender, the obligation of such Lender to make Loans and to participate in Letters of Credit, in an aggregate amount not exceeding the amount set forth opposite its signature below or as set forth in any assignment that has become effective pursuant to Section 12.3.2, as such amount may be modified from time to time pursuant to the terms hereof. "Commitment Fee Rate" means, at any time, the percentage rate per annum at which Commitment Fees are accruing on the unused portion of the Aggregate Commitment at such time as set forth in the Pricing Schedule. "Consolidated EBITDA" means, for any period, (a) the consolidated net income of the Company and its Subsidiaries for such period, excluding all non-operating gains and losses (including extraordinary or unusual gains and losses, gains and losses from discontinuance of operations, gains and losses arising from the sale of assets (other than inventory or in connection with a Qualified Receivables Transaction) and other non-recurring gains and losses), plus (b) to the extent deducted in determining the amount in clause (a) (but without duplication), (i) Consolidated Interest Expense, (ii) income taxes, (iii) depreciation and amortization and (iv) "other income (deductions) - net" as shown on the Borrower's consolidated statements of income. "Consolidated Interest Expense" means, for any period, the consolidated interest expense of the Company and its Subsidiaries for such period (including imputed interest on Capitalized Leases and, to the extent not otherwise included in consolidated interest expense, distributions on Trust Preferred Securities, but excluding "other financing costs" as shown on the Borrower's consolidated statements of income). "Contingent Obligation" of a Person means any agreement, undertaking or arrangement by which such Person assumes, guarantees, endorses, contingently agrees to purchase or provide funds for the payment of, or otherwise becomes or is contingently liable upon, the obligation or liability of any other Person, or agrees to maintain the net worth or working capital or other financial condition of any other Person, or otherwise assures any creditor of such other Person against loss, including, without limitation, any comfort letter, operating agreement, take or pay contract, application for a letter of credit or the obligations of any such Person as general partner of a partnership with respect to the liabilities of the partnership. "Conversion/Continuation Notice" is defined in Section 2.9. 3 "Controlled Group" means all members of a controlled group of corporations or other business entities and all trades or businesses (whether or not incorporated) under common control which, together with the Borrower or any of its Subsidiaries, are treated as a single employer under Section 414 of the Code. "Credit Extension" means the making of an Advance or the issuance of a Letter of Credit. "Debt to Capitalization Ratio" means the ratio of (a) Total Debt to (b) the sum of Total Debt plus the Borrower's consolidated stockholders' equity plus, to the extent not included in stockholders' equity, Mandatorily Redeemable Stock, as determined in accordance with Agreement Accounting Principles. "Default" means an event described in Article VII. "Environmental Laws" means any and all federal, state, local and foreign statutes, laws, judicial decisions, regulations, ordinances, rules, judgments, orders, decrees, plans, injunctions, permits, concessions, grants, franchises, licenses, agreements and other governmental restrictions relating to (i) the protection of the environment, (ii) the effect of the environment on human health, (iii) emissions, discharges or releases of pollutants, contaminants, hazardous substances or wastes into surface water, ground water or land, or (iv) the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, hazardous substances or wastes or the clean-up or other remediation thereof. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any rule or regulation issued thereunder. "Eurodollar Advance" means an Advance which, except as otherwise provided in Section 2.11, bears interest at the applicable Eurodollar Rate. "Eurodollar Base Rate" means, with respect to a Eurodollar Advance for the relevant Interest Period, the applicable British Bankers' Association Interest Settlement Rate for deposits in U.S. dollars appearing on Reuters Screen FRBD as of 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, and having a maturity equal to such Interest Period, provided that (i) if Reuters Screen FRBD is not available to the Agent for any reason, the applicable Eurodollar Base Rate for the relevant Interest Period shall instead be the applicable British Bankers' Association Interest Settlement Rate for deposits in U.S. dollars as reported by any other generally recognized financial information service as of 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, and having a maturity equal to such Interest Period, and (ii) if no such British Bankers' Association Interest Settlement Rate is available to the Agent, the applicable Eurodollar Base Rate for the relevant Interest Period shall instead be the rate determined by the Agent to be the rate at which Bank One or one of its Affiliate banks offers to place deposits in U.S. dollars with first-class banks in the London interbank market at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, in the approximate amount of Bank One's relevant Eurodollar Loan and having a maturity equal to such Interest Period. "Eurodollar Loan" means a Loan which, except as otherwise provided in Section 2.11, bears interest at the applicable Eurodollar Rate. 4 "Eurodollar Rate" means, with respect to a Eurodollar Advance for the relevant Interest Period, the sum of (i) the quotient of (a) the Eurodollar Base Rate applicable to such Interest Period, divided by (b) one minus the Reserve Requirement (expressed as a decimal) applicable to such Interest Period, plus (ii) the Applicable Margin. "Excluded Taxes" means, in the case of each Lender or applicable Lending Installation and the Agent, taxes imposed on its overall net income, and franchise taxes imposed on it, by (i) the jurisdiction under the laws of which such Lender or the Agent is incorporated or organized or (ii) the jurisdiction in which the Agent's or such Lender's principal executive office or such Lender's applicable Lending Installation is located. "Exhibit" refers to an exhibit to this Agreement, unless another document is specifically referenced. "Existing Agreement" means the Credit Agreement dated as of February 19, 2002, as amended to the date of this Agreement, among the Borrower, the lenders party thereto, and Bank One, NA, as agent for said lenders. "Existing LC" means letter of credit number SLT750771 issued by Issuer for the account of the Borrower in favor of Southwest Power Pool. "Facility Termination Date" means February 17, 2004 or any earlier date on which the Aggregate Commitment is reduced to zero or otherwise terminated pursuant to the terms hereof. "Federal Funds Effective Rate" means, for any day, an interest 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 for such day (or, if such day is not a Business Day, for the immediately preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations at approximately 10:00 a.m. (Chicago time) on such day on such transactions received by the Agent from three Federal funds brokers of recognized standing selected by the Agent in its sole discretion. "Final Maturity Date" means February 17, 2004. "Floating Rate" means, for any day, a rate per annum equal to (i) the Alternate Base Rate for such day plus (ii) the Applicable Margin, in each case changing when and as the Alternate Base Rate changes. "Floating Rate Advance" means an Advance which, except as otherwise provided in Section 2.11, bears interest at the Floating Rate. "Floating Rate Loan" means a Loan which, except as otherwise provided in Section 2.11, bears interest at the Floating Rate. "Indebtedness" means, with respect to any Person, all (but without duplication) of such Person's (i) obligations for borrowed money, (ii) obligations representing the deferred purchase price of Property or services (other than accounts payable arising in the ordinary course of such 5 Person's business payable on terms customary in the trade), (iii) direct or contingent obligations arising under letters of credit, banker's acceptances, bank guaranties, surety bonds and similar instruments, (iv) obligations, whether or not assumed, secured by Liens or payable out of the proceeds or production from Property now or hereafter owned or acquired by such Person, (v) obligations which are evidenced by notes or other instruments, (vi) obligations of such Person to purchase accounts, securities or other Property arising out of or in connection with the sale of the same or substantially similar accounts, securities or Property, (vii) Capitalized Lease Obligations, (viii) net liabilities under interest rate swap, exchange or cap agreements, (ix) Synthetic Lease Obligations, (x) obligations under other transactions which are the functional equivalent, or take the place, of borrowing but which do not constitute a liability on the consolidated balance sheet of such Person and (xi) Contingent Obligations in respect of any of the foregoing; provided that Indebtedness shall not include obligations arising under Qualified Receivables Transactions. "Interest Coverage Ratio" means, as of the last day of any fiscal quarter of the Borrower, the ratio of (i) Consolidated EBITDA for the four-quarter period ending on such day to (ii) Consolidated Interest Expense for such period. "Interest Period" means, with respect to a Eurodollar Advance, a period of one, two or three months commencing on a Business Day selected by the Borrower pursuant to this Agreement. Such Interest Period shall end on the day which corresponds numerically to such date one, two or three months thereafter, provided that if there is no such numerically corresponding day in such next, second or third succeeding month, such Interest Period shall end on the last Business Day of such next, second or third succeeding month. If an Interest Period would otherwise end on a day which is not a Business Day, such Interest Period shall end on the next succeeding Business Day, provided that if said next succeeding Business Day falls in a new calendar month, such Interest Period shall end on the immediately preceding Business Day. "Investment" of a Person means any loan, advance (other than commission, travel and similar advances to officers and employees made in the ordinary course of business), extension of credit (other than accounts receivable arising in the ordinary course of business on terms customary in the trade) or contribution of capital by such Person; stocks, bonds, mutual funds, partnership interests, notes, debentures or other securities owned by such Person; any deposit accounts and certificate of deposit owned by such Person; and structured notes, derivative financial instruments and other similar instruments or contracts owned by such Person. "Issuer" means Bank One in its capacity as issuer of Letters of Credit hereunder. "Lenders" means the lending institutions listed on the signature pages of this Agreement and their respective successors and assigns. "Lending Installation" means, with respect to a Lender or the Agent, the office, branch, subsidiary or affiliate of such Lender or the Agent listed on its administrative questionnaire or on the signature pages hereof or otherwise selected by such Lender or the Agent pursuant to Section 2.17. 6 "Letter of Credit" means the Existing LC or a letter of credit issued pursuant to Section 2.20(i). "Letter of Credit Application" is defined in Section 2.20(iii). "Letter of Credit Collateral Account" is defined in Section 2.20(xi). "Letter of Credit Fee" is defined in Section 2.20(iv). "Letter of Credit Fee Rate" means, at any time, the percentage rate per annum applicable to Letter of Credit Fees at such time as set forth in the Pricing Schedule. "Letter of Credit Obligations means, at any time, the sum, without duplication, of (i) the aggregate undrawn stated amount of all Letters of Credit at such time plus (ii) the aggregate unpaid amount of all Reimbursement Obligations at such time. "Letter of Credit Payment Date" is defined in Section 2.20(v). "Lien" means any lien (statutory or other), mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, the interest of a vendor or lessor under any conditional sale, Capitalized Lease or other title retention agreement). "Loan" means, with respect to a Lender, such Lender's loan made pursuant to Article II (or any conversion or continuation thereof). "Loan Documents" means this Agreement, any Notes issued pursuant to Section 2.13, any Letter of Credit and any Letter of Credit Application. "Mandatorily Redeemable Stock" means, with respect to any Person, any share of such Person's capital stock to the extent that it is (a) redeemable, payable or required to be purchased or otherwise retired or extinguished, or convertible into any Indebtedness or other liability of such Person, (i) at a fixed or determinable date, whether by operation of a sinking fund or otherwise, (ii) at the option of any Person other than such Person or (iii) upon the occurrence of a condition not solely within the control of such Person, such as a redemption required to be made out of future earnings or (b) convertible into Mandatorily Redeemable Stock. "Material Adverse Effect" means a material adverse effect on (i) the business, Property, condition (financial or otherwise), results of operations, or prospects of the Borrower and its Subsidiaries taken as a whole, (ii) the ability of the Borrower to perform its obligations under the Loan Documents, or (iii) the validity or enforceability of any of the Loan Documents or the rights or remedies of the Agent, the Lenders or the Issuer thereunder. "Material Indebtedness" is defined in Section 7.5. "Modify" and "Modification" are defined in Section 2.20(i) 7 "Moody's" means Moody's Investors Service, Inc. "Multiemployer Plan" means a Plan maintained pursuant to a collective bargaining agreement or any other arrangement to which the Borrower or any member of the Controlled Group is a party to which more than one employer is obligated to make contributions. "Non-U.S. Lender" is defined in Section 3.5(iv). "Note" means any promissory note issued at the request of a Lender pursuant to Section 2.13 in the form of Exhibit D. "Obligations" means all unpaid principal of and accrued and unpaid interest on the Loans, all Reimbursement Obligations, all accrued and unpaid fees and all expenses, reimbursements, indemnities and other obligations of the Borrower to the Lenders or to any Lender, the Agent, the Issuer or any indemnified party arising under the Loan Documents. "Off-Balance Sheet Liability" of a Person means (i) any repurchase obligation or liability of such Person with respect to accounts or notes receivable sold by such Person, (ii) any liability under any sale and leaseback transaction which is not a Capitalized Lease, (iii) all Synthetic Lease Obligations of such Person and (iv) any obligation arising with respect to any other transaction which is the functional equivalent of or takes the place of borrowing but which does not constitute a liability on the balance sheet of such Person, but excluding from this clause (iv) any Operating Lease which does not give rise to Synthetic Lease Obligations. "Operating Lease" of a Person means any lease of Property (other than a Capitalized Lease) by such Person as lessee. "Outstanding Credit Exposure" means, as to any Lender at any time, the sum of (i) the aggregate principal amount of its Loans outstanding at such time, plus (ii) an amount equal to its pro rata share of the Letter of Credit Obligations at such time. "Other Taxes" is defined in Section 3.5(ii). "Participants" is defined in Section 12.2.1. "Payment Date" means the last day of each March, June, September and December. "PBGC" means the Pension Benefit Guaranty Corporation, or any successor thereto. "Person" means any natural person, corporation, firm, joint venture, partnership, limited liability company, association, enterprise, trust or other entity or organization, or any government or political subdivision or any agency, department or instrumentality thereof. "Plan" means an employee pension benefit plan which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code as to which the Borrower or any member of the Controlled Group may have any liability. "Pricing Schedule" means the Schedule attached hereto identified as such. 8 "Prime Rate" means a rate per annum equal to the prime rate of interest announced by Bank One or by its parent, BANK ONE CORPORATION, from time to time, changing when and as said prime rate changes. "Property" of a Person means any and all property, whether real, personal, tangible, intangible, or mixed, of such Person, or other assets owned, leased or operated by such Person. "Purchasers" is defined in Section 12.3.1. "Qualified Receivables Transaction" means any transaction or series of transactions pursuant to which the Borrower or any Subsidiary sells, conveys, pledges or otherwise transfers to a newly-formed Subsidiary or other special purpose entity, or any other Person, any accounts receivable (including chattel paper, instruments and general intangibles) or notes receivable and the rights and certain other property related thereto, provided that all of the terms and conditions of such transaction or series of transactions, including the amount and type of any recourse to the Borrower or any Subsidiary with respect to the assets transferred, are reasonably acceptable to the Agent. "Receivables Transaction Attributed Obligations" means, at any time with respect to any Qualified Receivables Transaction, the unrecovered purchase price on such date of all assets sold, conveyed, pledged or otherwise transferred by the Borrower or any Subsidiary to the third-party conduit entity or other receivables credit provider under such Qualified Receivables Transaction. "Regulation D" means Regulation D of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor thereto or other regulation or official interpretation of said Board of Governors relating to reserve requirements applicable to member banks of the Federal Reserve System. "Regulation U" means Regulation U of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor or other regulation or official interpretation of said Board of Governors relating to the extension of credit by banks for the purpose of purchasing or carrying margin stocks applicable to member banks of the Federal Reserve System. "Reimbursement Obligations" means, at any time, the aggregate of all obligations of the Borrower then outstanding under Section 2.20 to reimburse the Issuer for amounts paid by the Issuer in respect of any one or more drawings under Letters of Credit. "Reportable Event" means a reportable event as defined in Section 4043 of ERISA and the regulations issued under such section, with respect to a Plan, excluding, however, such events as to which the PBGC has by regulation waived the requirement of Section 4043(a) of ERISA that it be notified within 30 days of the occurrence of such event, provided, however, that a failure to meet the minimum funding standard of Section 412 of the Code and of Section 302 of ERISA shall be a Reportable Event regardless of the issuance of any such waiver of the notice requirement in accordance with either Section 4043(a) of ERISA or Section 412(d) of the Code; and provided, further, that the events described on Schedule 5.9 shall not constitute a Reportable 9 Event unless the Required Lenders determine that such events have had or are reasonably expected to have a Material Adverse Effect. "Required Lenders" means Lenders in the aggregate having more than 50% of the Aggregate Commitment or, if the Aggregate Commitment has been terminated, Lenders in the aggregate holding more than 50% of the aggregate unpaid principal amount of the Aggregate Outstanding Credit Exposure. "Reserve Requirement" means, with respect to an Interest Period, the maximum aggregate reserve requirement (including all basic, supplemental, marginal and other reserves) which is imposed under Regulation D on Eurocurrency liabilities. "S&P" means Standard and Poor's Ratings Services, a division of The McGraw Hill Companies, Inc. "Sale and Leaseback Transaction" means any sale or other transfer of Property by any Person with the intent to lease such Property as lessee. "Schedule" refers to a specific schedule to this Agreement, unless another document is specifically referenced. "SEC" means the Securities and Exchange Commission. "Section" means a numbered section of this Agreement, unless another document is specifically referenced. "Significant Subsidiary" means, as of any date of determination, each Subsidiary of the Borrower that meets any of the following criteria: (i) the Borrower's and its other Subsidiaries' Investments in and to such Subsidiary (and its respective Subsidiaries), as shown in the consolidated financial statements of the Borrower and its Subsidiaries prepared as of the end of the fiscal quarter ended most recently prior to such date of determination, exceed 10% of the total consolidated assets of the Borrower and its Subsidiaries; or (ii) the assets of such Subsidiary (and its respective Subsidiaries) represent more than 10% of the consolidated assets of the Borrower and its Subsidiaries as would be shown in the consolidated financial statements referred to in clause (i) above; or (iii) such Subsidiary (and its respective Subsidiaries) is responsible for more than 10% of the consolidated net sales or of the consolidated net income of the Borrower and its Subsidiaries as reflected in the financial statements referred to in clause (i) above. "Single Employer Plan" means a Plan maintained by the Borrower or any member of the Controlled Group for employees of the Borrower or any member of the Controlled Group. "Subsidiary" of a Person means (i) any corporation more than 50% of the outstanding securities having ordinary voting power of which shall at the time be owned or controlled, 10 directly or indirectly, by such Person or by one or more of its Subsidiaries or by such Person and one or more of its Subsidiaries, or (ii) any partnership, limited liability company, association, joint venture or similar business organization more than 50% of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled. Unless otherwise expressly provided, all references herein to a "Subsidiary" shall mean a Subsidiary of the Borrower. "Substantial Portion" means, with respect to the Property of the Borrower and its Subsidiaries, Property which (i) represents more than 10% of the consolidated assets of the Borrower and its Subsidiaries as would be shown in the consolidated financial statements of the Borrower and its Subsidiaries as at the beginning of the twelve-month period ending with the month in which such determination is made, or (ii) is responsible for more than 10% of the consolidated net sales or of the consolidated net income of the Borrower and its Subsidiaries as reflected in the financial statements referred to in clause (i) above. "Synthetic Lease Obligation" means the monetary obligation of a Person under (i) a so-called synthetic or off-balance sheet or tax retention lease or (ii) 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 indebtedness of such Person (without regard to accounting treatment). The amount of Synthetic Lease Obligations of any Person under any such lease or agreement shall be the amount which would be shown as a liability on a balance sheet of such Person prepared in accordance with Agreement Accounting Principles if such lease or agreement were accounted for as a Capitalized Lease. "Taxes" means any and all present or future taxes, duties, levies, imposts, deductions, charges or withholdings, and any and all liabilities with respect to the foregoing, but excluding Excluded Taxes and Other Taxes. "Total Debt" means all Indebtedness of the Borrower and its Subsidiaries (including Trust Preferred Securities, but excluding Mandatorily Redeemable Stock), determined on a consolidated basis in accordance with Agreement Accounting Principles. For purposes of calculating Total Debt, obligations under interest rate swaps and similar arrangements shall be marked to market in accordance with Financial Accounting Standard 133. "Transferee" is defined in Section 12.4. "Trust Preferred Securities" means preferred stock issued by a trust, the common equities of which are owned by the Borrower. "Type" means, with respect to any Advance, its nature as a Floating Rate Advance or a Eurodollar Advance. "Unfunded Liabilities" means the amount (if any) by which the present value of all vested and unvested accrued benefits under all Single Employer Plans exceeds the fair market value of all such Plan assets allocable to such benefits, all determined as of the then most recent valuation date for such Plans using PBGC actuarial assumptions for single employer plan terminations. 11 "Unmatured Default" means an event which but for the lapse of time or the giving of notice, or both, would constitute a Default. "Wholly-Owned Subsidiary" of a Person means (i) any Subsidiary all of the outstanding voting securities of which shall at the time be owned or controlled, directly or indirectly, by such Person or one or more Wholly-Owned Subsidiaries of such Person, or by such Person and one or more Wholly-Owned Subsidiaries of such Person, or (ii) any partnership, limited liability company, association, joint venture or similar business organization 100% of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled. The foregoing definitions shall be equally applicable to both the singular and plural forms of the defined terms. ARTICLE II. THE CREDITS 2.1 Commitment. From and including the date of this Agreement and prior to the Facility Termination Date, subject to the terms and conditions set forth in this Agreement, (a) each Lender severally agrees to make Loans to the Borrower from time to time in amounts not to exceed in the aggregate at any one time outstanding the amount of its Commitment and (b) the Issuer agrees to issue Letters of Credit for the account of the Borrower in an aggregate amount not to exceed $10,000,000 (and each Lender severally agrees to participate in each such Letter of Credit as more fully set forth in Section 2.20). Subject to the terms of this Agreement, the Borrower may borrow, repay and reborrow at any time prior to the Facility Termination Date. The Commitments hereunder shall expire on the Facility Termination Date. Any repayments of Loans after the Facility Termination Date may not be reborrowed. 2.2 Required Payments; Maturity. The Aggregate Outstanding Credit Exposure and all other unpaid Obligations shall be paid in full (or, the case of any Letter of Credit, a Letter of Credit Collateral Account shall be established in accordance with Section 2.20(xi)) by the Borrower on the Final Maturity Date. 2.3 Ratable Loans. Each Advance hereunder shall consist of Loans made from the several Lenders ratably in proportion to the ratio that their respective Commitments bear to the Aggregate Commitment. 2.4 Types of Advances. The Advances may be Floating Rate Advances or Eurodollar Advances, or a combination thereof, selected by the Borrower in accordance with Sections 2.8 and 2.9. 2.5 Commitment Fee; Changes in Aggregate Commitment; Up-Front Fees. (i) The Borrower agrees to pay to the Agent for the account of each Lender a commitment fee at a per annum rate equal to the Commitment Fee Rate on the daily unused portion of such Lender's Commitment from the date hereof to and including the Facility Termination Date, payable on each Payment Date hereafter and on the Facility Termination Date. 12 (ii) The Borrower may permanently reduce the Aggregate Commitment in whole, or in part ratably among the Lenders in integral multiples of $1,000,000, upon at least ten (10) Business Days' written notice to the Agent, which notice shall specify the amount of any such reduction, provided that the amount of the Aggregate Commitment may not be reduced below the Aggregate Outstanding Credit Exposure. All accrued commitment fees shall be payable on the effective date of any termination of the obligations of the Lenders to make Loans hereunder. (iii) The Borrower may, from time to time, by means of a letter delivered to the Agent substantially in the form of Exhibit E, request that the Aggregate Commitment be increased to up to $125,000,000 (less the amount of any previous reductions of the Aggregate Commitment pursuant to clause (ii) above) by (a) increasing the Commitment of one or more Lenders which have agreed to such increase and/or (b) adding one or more commercial banks or other Persons as a party hereto (each an "Additional Lender") with a Commitment in an amount agreed to by any such Additional Lender; provided that no Additional Lender shall be added as a party hereto without the written consent of the Agent (which shall not be unreasonably withheld) or if a Default or an Unmatured Default exists. Any increase in the Aggregate Commitment pursuant to this clause (iii) shall be effective three Business Days after the date on which the Agent has received (and, to the extent applicable, consented to) the applicable increase letter in the form of Annex 1 to Exhibit E (in the case of an increase in the Commitment of an existing Lender) or assumption letter in the form of Annex 2 to Exhibit E (in the case of an Additional Lender). The Agent shall promptly notify the Borrower and the Lenders of any increase in the amount of the Aggregate Commitment pursuant to this clause (iii) and of each Lender's pro rata share of the Aggregate Commitment of each Lender after giving effect thereto. The Borrower acknowledges that, in order to maintain ratable Advances in accordance with each Lender's pro rata share of the Aggregate Commitment, prepayment of all or portions of certain ratable Advances may be required on the date of any increase in the Aggregate Commitment pursuant to this clause (iii) (and any such prepayment shall be subject to the provisions of Section 3.4). (iv) The Borrower agrees to pay to the Agent on behalf of each Lender on the date the Borrower signs this Agreement an up-front fee in the amount previously agreed upon among the Company, the Agent and such Lender. 2.6 Minimum Amount of Each Advance. Each Eurodollar Advance shall be in the minimum amount of $1,000,000 (and in multiples of $100,000 if in excess thereof), and each Floating Rate Advance shall be in the minimum amount of $1,000,000 (and in multiples of $100,000 if in excess thereof), provided that any Floating Rate Advance may be in the amount of the unused Aggregate Commitment. 2.7 Optional Principal Payments. The Borrower may from time to time pay, without penalty or premium, all outstanding Floating Rate Advances, or, in a minimum aggregate amount of $1,000,000 or any integral multiple of $100,000 in excess thereof, any portion of the outstanding Floating Rate Advances upon two Business Days' prior notice to the Agent. The Borrower may from time to time pay, subject to the payment of any funding indemnification amounts required by Section 3.4 but without penalty or premium, all outstanding Eurodollar Advances, or, in a minimum aggregate amount of $1,000,000 or any integral multiple of $100,000 in excess thereof, any portion of the outstanding Eurodollar Advances upon three Business Days' prior notice to the Agent. 13 2.8 Method of Selecting Types and Interest Periods for New Advances. The Borrower shall select the Type of Advance and, in the case of each Eurodollar Advance, the Interest Period applicable thereto from time to time. The Borrower shall give the Agent irrevocable notice (a "Borrowing Notice") not later than 10:00 a.m. (Chicago time) at least one Business Day before the Borrowing Date of each Floating Rate Advance and three Business Days before the Borrowing Date for each Eurodollar Advance, specifying: (i) the Borrowing Date, which shall be a Business Day, of such Advance, (ii) the aggregate amount of such Advance, (iii) the Type of Advance selected, and (iv) in the case of each Eurodollar Advance, the Interest Period applicable thereto. Not later than noon (Chicago time) on each Borrowing Date, each Lender shall make available its Loan or Loans in funds immediately available in Chicago to the Agent at its address specified pursuant to Article XIII. The Agent will make the funds so received from the Lenders available to the Borrower at the Agent's aforesaid address. 2.9 Conversion and Continuation of Outstanding Advances. Floating Rate Advances shall continue as Floating Rate Advances unless and until such Floating Rate Advances are converted into Eurodollar Advances pursuant to this Section 2.9 or are repaid in accordance with Section 2.7. Each Eurodollar Advance shall continue as a Eurodollar Advance until the end of the then applicable Interest Period therefor, at which time such Eurodollar Advance shall be automatically converted into a Floating Rate Advance unless (x) such Eurodollar Advance is or was repaid in accordance with Section 2.7 or (y) the Borrower shall have given the Agent a Conversion/Continuation Notice (as defined below) requesting that, at the end of such Interest Period, such Eurodollar Advance continue as a Eurodollar Advance for the same or another Interest Period. Subject to the terms of Section 2.6, the Borrower may elect from time to time to convert all or any part of a Floating Rate Advance into a Eurodollar Advance. The Borrower shall give the Agent irrevocable notice (a "Conversion/Continuation Notice") of each conversion of a Floating Rate Advance into a Eurodollar Advance or continuation of a Eurodollar Advance not later than 10:00 a.m. (Chicago time) at least three Business Days prior to the date of the requested conversion or continuation, specifying: (i) the requested date, which shall be a Business Day, of such conversion or continuation, (ii) the aggregate amount and Type of the Advance which is to be converted or continued, and (iii) the amount of such Advance which is to be converted into or continued as a Eurodollar Advance and the duration of the Interest Period applicable thereto. 2.10 Changes in Interest Rate, etc. Each Floating Rate Advance shall bear interest on the outstanding principal amount thereof, for each day from and including the date such Advance is made or is automatically converted from a Eurodollar Advance into a Floating Rate Advance 14 pursuant to Section 2.9, to but excluding the date it is paid or is converted into a Eurodollar Advance pursuant to Section 2.9 hereof, at a rate per annum equal to the Floating Rate for such day. Changes in the rate of interest on that portion of any Advance maintained as a Floating Rate Advance will take effect simultaneously with each change in the Alternate Base Rate. Each Eurodollar Advance shall bear interest on the outstanding principal amount thereof from and including the first day of the Interest Period applicable thereto to (but not including) the last day of such Interest Period at the interest rate determined by the Agent as applicable to such Eurodollar Advance based upon the Borrower's selections under Sections 2.8 and 2.9 and otherwise in accordance with the terms hereof. No Interest Period may end after the Final Maturity Date. 2.11 Rates Applicable After Default. Notwithstanding anything to the contrary contained in Section 2.8 or 2.9, during the continuance of a Default or Unmatured Default the Required Lenders may, at their option, by notice to the Borrower (which notice may be revoked at the option of the Required Lenders notwithstanding any provision of Section 8.2 requiring unanimous consent of the Lenders to changes in interest rates), declare that no Advance may be made as, converted into or continued as a Eurodollar Advance. During the continuance of a Default the Required Lenders may, at their option, by notice to the Borrower (which notice may be revoked at the option of the Required Lenders notwithstanding any provision of Section 8.2 requiring unanimous consent of the Lenders to changes in interest rates), declare that (i) each Eurodollar Advance shall bear interest for the remainder of the applicable Interest Period at the rate otherwise applicable to such Interest Period plus 2% per annum, (ii) each Floating Rate Advance shall bear interest at a rate per annum equal to the Floating Rate in effect from time to time plus 2% per annum and (iii) the Letter of Credit Fee Rate shall be increased by 2% per annum, provided that, during the continuance of a Default under Section 7.6 or 7.7, the interest rates set forth in clauses (i) and (ii) above and the increase in the Letter of Credit Fee Rate set forth in clause (iii) above shall be applicable to all applicable Credit Extensions without any election or action on the part of the Agent or any Lender. 2.12 Method of Payment. All payments of the Obligations hereunder shall be made, without setoff, deduction, or counterclaim, in immediately available funds to the Agent at the Agent's address specified pursuant to Article XIII, or at any other Lending Installation of the Agent specified in writing by the Agent to the Borrower, by noon (local time) on the date when due and shall be applied ratably by the Agent among the Lenders. Each payment delivered to the Agent for the account of any Lender shall be delivered promptly by the Agent to such Lender in the same type of funds that the Agent received at its address specified pursuant to Article XIII or at any Lending Installation specified in a notice received by the Agent from such Lender. The Agent is hereby authorized to charge the account of the Borrower maintained with Bank One for each payment of principal, interest, Reimbursement Obligations and fees as it becomes due hereunder. 2.13 Noteless Agreement; Evidence of Indebtedness. (i) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder. 15 (ii) The Agent shall also maintain accounts in which it will record (a) the amount of each Loan made hereunder, the Type thereof and the Interest Period with respect thereto, (b) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder, (c) the original stated amount of each Letter of Credit and the amount of Letter of Credit Obligations outstanding at any time and (d) the amount of any sum received by the Agent hereunder from the Borrower and each Lender's share thereof. (iii) The entries maintained in the accounts maintained pursuant to paragraphs (i) and (ii) above shall be prima facie evidence of the existence and amounts of the Obligations therein recorded; provided that the failure of the Agent or any Lender to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Obligations in accordance with their terms. (iv) Any Lender may request that its Loans be evidenced by a Note. In such event, the Borrower shall prepare, execute and deliver to such Lender a Note payable to the order of such Lender. Thereafter, the Loans evidenced by such Note and interest thereon shall at all times (including after any assignment pursuant to Section 12.3) be represented by one or more Notes payable to the order of the payee named therein or any assignee pursuant to Section 12.3, except to the extent that any such Lender or assignee subsequently returns any such Note for cancellation and requests that such Loans once again be evidenced as described in paragraphs (i) and (ii) above. 2.14 Telephonic Notices. The Borrower hereby authorizes the Lenders and the Agent to extend, convert or continue Advances, effect selections of Types of Advances and to transfer funds based on telephonic notices made by any person or persons the Agent or any Lender in good faith believes to be acting on behalf of the Borrower, it being understood that the foregoing authorization is specifically intended to allow Borrowing Notices and Conversion/Continuation Notices to be given telephonically. The Borrower agrees to deliver promptly to the Agent a written confirmation, if such confirmation is requested by the Agent or any Lender, of each telephonic notice signed by an Authorized Officer. If the written confirmation differs in any material respect from the action taken by the Agent and the Lenders, the records of the Agent and the Lenders shall govern absent manifest error. 2.15 Interest Payment Dates; Interest and Fee Basis. Interest accrued on each Floating Rate Advance shall be payable on each Payment Date, commencing with the first such date to occur after the date hereof, on any date on which the Floating Rate Advance is prepaid, whether due to acceleration or otherwise, and at maturity. Interest accrued on that portion of the outstanding principal amount of any Floating Rate Advance converted into a Eurodollar Advance on a day other than a Payment Date shall be payable on the date of conversion. Interest accrued on each Eurodollar Advance shall be payable on the last day of its applicable Interest Period, on any date on which the Eurodollar Advance is prepaid, whether by acceleration or otherwise, and at maturity. Interest accrued on each Eurodollar Advance having an Interest Period longer than three months shall also be payable on the last day of each three-month interval during such Interest Period. Interest and commitment fees shall be calculated for actual days elapsed on the basis of a 360-day year, except that interest accruing at the Prime Rate shall be calculated for actual days elapsed on the basis of a 365, or when appropriate 366, day year. Interest shall be payable for the day an Advance is made but not for the day of any payment on the amount paid if 16 payment is received prior to noon (local time) at the place of payment. If any payment of principal of or interest on an Advance shall become due on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day and, in the case of a principal payment, such extension of time shall be included in computing interest in connection with such payment. 2.16 Notification of Advances, Interest Rates, Prepayments and Commitment Reductions. Promptly after receipt thereof, the Agent will notify each Lender of the contents of each Aggregate Commitment reduction notice, Borrowing Notice, Conversion/Continuation Notice, and repayment notice received by it hereunder. The Agent will notify each Lender of the interest rate applicable to each Eurodollar Advance promptly upon determination of such interest rate and will give each Lender prompt notice of each change in the Alternate Base Rate. 2.17 Lending Installations. Each Lender may book its Loans at any Lending Installation selected by such Lender and may change its Lending Installation from time to time. All terms of this Agreement shall apply to any such Lending Installation and the Loans and any Notes issued hereunder shall be deemed held by each Lender for the benefit of any such Lending Installation. Each Lender may, by written notice to the Agent and the Borrower in accordance with Article XIII, designate replacement or additional Lending Installations through which Loans will be made by it and for whose account Loan payments are to be made. 2.18 Non-Receipt of Funds by the Agent. Unless the Borrower or a Lender, as the case may be, notifies the Agent prior to the date on which it is scheduled to make payment to the Agent of (i) in the case of a Lender, the proceeds of a Loan or (ii) in the case of the Borrower, a payment of principal, interest or fees to the Agent for the account of the Lenders, that it does not intend to make such payment, the Agent may assume that such payment has been made. The Agent may, but shall not be obligated to, make the amount of such payment available to the intended recipient in reliance upon such assumption. If such Lender or the Borrower, as the case may be, has not in fact made such payment to the Agent, the recipient of such payment shall, on demand by the Agent, repay to the Agent the amount so made available together with interest thereon in respect of each day during the period commencing on the date such amount was so made available by the Agent until the date the Agent recovers such amount at a rate per annum equal to (x) in the case of payment by a Lender, the Federal Funds Effective Rate for such day for the first three days and, thereafter, the interest rate applicable to the relevant Loan or (y) in the case of payment by the Borrower, the interest rate applicable to the relevant Loan. 2.19 Replacement of Lender. If the Borrower is required pursuant to Section 3.1, 3.2 or 3.5 to make any additional payment to any Lender or if any Lender's obligation to make or continue, or to convert Floating Rate Advances into, Eurodollar Advances shall be suspended pursuant to Section 3.3 (any Lender so affected an "Affected Lender"), the Borrower may elect, if such amounts continue to be charged or such suspension is still effective, to replace such Affected Lender as a Lender party to this Agreement, provided that no Default or Unmatured Default shall have occurred and be continuing at the time of such replacement, and provided, further, that, concurrently with such replacement, (i) another bank or other entity which is reasonably satisfactory to the Borrower and the Agent shall agree, as of such date, to purchase for cash the Advances and other Obligations due to the Affected Lender pursuant to an assignment substantially in the form of Exhibit B and to become a Lender for all purposes under 17 this Agreement and to assume all obligations of the Affected Lender to be terminated as of such date and to comply with the requirements of Section 12.3 applicable to assignments, and (ii) the Borrower shall pay to such Affected Lender in same day funds on the day of such replacement (A) all interest, fees and other amounts then accrued but unpaid to such Affected Lender by the Borrower hereunder to and including the date of termination, including without limitation payments due to such Affected Lender under Sections 3.1, 3.2 and 3.5, and (B) an amount, if any, equal to the payment which would have been due to such Lender on the day of such replacement under Section 3.4 had the Loans of such Affected Lender been prepaid on such date rather than sold to the replacement Lender. 2.20 Letters of Credit. (i) Issuance. The Issuer hereby agrees, on the terms and conditions set forth in this Agreement, to issue standby letters of credit and to renew, extend, increase, decrease or otherwise modify Letters of Credit ("Modify," and each such action a "Modification") from time to time from and including the date of this Agreement and prior to the Facility Termination Date upon the request of the Borrower; provided that immediately after each such Letter of Credit is issued or Modified, (i) the aggregate amount of the outstanding LC Obligations shall not exceed $10,000,000 and (ii) the Aggregate Outstanding Credit Exposure shall not exceed the Aggregate Commitment. No Letter of Credit shall have an expiry date later than the scheduled Facility Termination Date. By their execution of this Agreement, the Borrower, each Lender, the Issuer and the Agent agree that, effective as of the date of this Agreement, the Existing LC shall be a Letter of Credit under this Agreement and subject to the terms hereof. (ii) Participations. On the date of this Agreement, with respect to the Existing LC, and upon the issuance of each other Letter of Credit or the Modification of any Letter of Credit in accordance with this Section 2.20, the Issuer shall be deemed, without further action by any party hereto, to have unconditionally and irrevocably sold to each Lender, and each Lender shall be deemed, without further action by any party hereto, to have unconditionally and irrevocably purchased from the Issuer, a participation in such Letter of Credit (and each Modification thereof) and the related LC Obligations in proportion to its pro rata share of the Aggregate Commitment. (iii) Notice. Subject to Section 2.20(i), the Borrower shall give the Issuer notice prior to 10:00 a.m. (Chicago time) at least three Business Days prior to the proposed date of issuance or Modification of each Letter of Credit, specifying the beneficiary, the proposed date of issuance (or Modification) and the expiry date of such Letter of Credit, and describing the proposed terms of such Letter of Credit and the nature of the transactions proposed to be supported thereby. Upon receipt of such notice, the Issuer shall promptly notify the Agent, and the Agent shall promptly notify each Lender, of the contents thereof and of the amount of such Lender's participation in such proposed Letter of Credit. The issuance or Modification by the Issuer of any Letter of Credit shall, in addition to the conditions precedent set forth in Article IV (the satisfaction of which the Issuer shall have no duty to ascertain), be subject to the conditions precedent that such Letter of Credit shall be satisfactory to the Issuer and that the Borrower shall have executed and delivered such application agreement and/or such other instruments and agreements relating to such Letter of Credit as the Issuer shall have reasonably requested (each a 18 "Letter of Credit Application"). In the event of any conflict between the terms of this Agreement and the terms of any Letter of Credit Application, the terms of this Agreement shall control. (iv) Letter of Credit Fees. The Borrower shall pay to the Agent, for the account of the Lenders ratably in accordance with their respective pro rata shares of the Aggregate Commitment, with respect to each Letter of Credit, a letter of credit fee (the "Letter of Credit Fee") at a per annum rate equal to the Letter of Credit Fee Rate in effect from time to time on the undrawn stated amount available under such Letter of Credit, such fee to be payable in arrears on each Payment Date. The Borrower shall also pay to the Issuer for its own account (x) a fronting fee in the amount agreed to by the Issuer and the Borrower from time to time, with such fee to be payable in arrears on each Payment Date, and (y) documentary and processing charges in connection with the issuance or Modification of and draws under Letters of Credit in accordance with the Issuer's standard schedule for such charges as in effect from time to time. (v) Administration; Reimbursement by Lenders. Upon receipt from the beneficiary of any Letter of Credit of any demand for payment under such Letter of Credit, the Issuer shall notify the Agent and the Agent shall promptly notify the Borrower and each other Lender as to the amount to be paid by the Issuer as a result of such demand and the proposed payment date (the "Letter of Credit Payment Date"). The responsibility of the Issuer to the Borrower and each Lender shall be only to determine that the documents (including each demand for payment) delivered under each Letter of Credit in connection with such presentment shall be in conformity in all material respects with such Letter of Credit. The Issuer shall endeavor to exercise the same care in its issuance and administration of Letters of Credit as it does with respect to letters of credit in which no participations are granted, it being understood that in the absence of any gross negligence or willful misconduct by the Issuer, each Lender shall be unconditionally and irrevocably obligated, without regard to the occurrence of any Default or any condition precedent whatsoever, to reimburse the Issuer on demand for (i) such Lender's pro rata share (determined by such Lender's pro rata share of the Aggregate Commitment) of the amount of each payment made by the Issuer under each applicable Letter of Credit to the extent such amount is not reimbursed by the Borrower pursuant to Section 2.20(vi) below, plus (ii) interest on the foregoing amount for each day from the date of the applicable payment by the Issuer to the date on which such Lender pays the amount to be reimbursed by it, at a rate of interest per annum equal to the Federal Funds Effective Rate or, beginning on third Business Day after demand for such amount by the Issuer, the rate applicable to Floating Rate Advances. (vi) Reimbursement by Borrower. The Borrower shall be irrevocably and unconditionally obligated to reimburse the Issuer on or before the applicable Letter of Credit Payment Date for any amount to be paid by the Issuer upon any drawing under any Letter of Credit issued by the Issuer, without presentment, demand, protest or other formalities of any kind; provided that the Borrower shall not hereby be precluded from asserting any claim for direct (but not consequential) damages suffered by the Borrower to the extent, but only to the extent, caused by (i) the willful misconduct or gross negligence of the Issuer in determining whether a request presented under any Letter of Credit issued by it complied with the terms of such Letter of Credit or (ii) the Issuer's failure to pay under any Letter of Credit issued by it after the presentation to it of a request strictly complying with the terms and conditions of such Letter of Credit. All such amounts paid by the Issuer and remaining unpaid by the Borrower shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the sum of 2% 19 plus the rate applicable to Floating Rate Advances. The Issuer will pay to each Lender ratably in accordance with its pro rata share of the Aggregate Commitment all amounts received by it from the Borrower for application in payment, in whole or in part, of the Reimbursement Obligation in respect of any Letter of Credit issued by the Issuer, but only to the extent such Lender has made payment to the Issuer in respect of such Letter of Credit pursuant to Section 2.20(v). (vii) Obligations Absolute. The Borrower's obligations under this Section 2.20 shall be absolute and unconditional under any and all circumstances and irrespective of any setoff, counterclaim or defense to payment which the Borrower may have or have had against the Issuer, any Lender or any beneficiary of a Letter of Credit. The Borrower further agrees with the Issuer and the Lenders that neither the Issuer nor any Lender shall be responsible for, and the Borrower's Reimbursement Obligation in respect of any Letter of Credit shall not be affected by, among other things, the validity or genuineness of documents or of any endorsements thereon, even if such documents should in fact prove to be in any or all respects invalid, fraudulent or forged, or any dispute between or among the Borrower, any of its Affiliates, the beneficiary of any Letter of Credit or any financing institution or other party to whom any Letter of Credit may be transferred or any claims or defenses whatsoever of the Borrower or of any of its Affiliates against the beneficiary of any Letter of Credit or any such transferee. The Issuer shall not be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Letter of Credit. The Borrower agrees that any action taken or omitted by the Issuer or any Lender under or in connection with any Letter of Credit and the related drafts and documents, if done without gross negligence or willful misconduct, shall be binding upon the Borrower and shall not put the Issuer or any Lender under any liability to the Borrower. Nothing in this Section 2.20(vii) is intended to limit the right of the Borrower to make a claim against the Issuer for damages as contemplated by the proviso to the first sentence of Section 2.20(vi). (viii) Actions of Issuer. The Issuer shall be entitled to rely, and shall be fully protected in relying, upon any Letter of Credit, draft, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, facsimile, telex or teletype message, statement, order or other document believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon advice and statements of legal counsel, independent accountants and other experts selected by the Issuer. The Issuer shall be fully justified in failing or refusing to take any action under this Agreement unless it shall first have received such advice or concurrence of the Required Lenders as it reasonably deems appropriate or it shall first be indemnified to its reasonable satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. Notwithstanding any other provision of this Section 2.20, the Issuer shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement in accordance with a request of the Required Lenders, and such request and any action taken or failure to act pursuant thereto shall be binding upon the Lenders and any future holders of a participation in any Letter of Credit. (ix) Indemnification. The Borrower hereby agrees to indemnify and hold harmless each Lender, the Issuer and the Agent, and their respective directors, officers, agents and employees, from and against any and all claims and damages, losses, liabilities, costs or expenses which such Lender, the Issuer or the Agent may incur (or which may be claimed against such 20 Lender, the Issuer or the Agent by any Person whatsoever) by reason of or in connection with the issuance, execution and delivery or transfer of or payment or failure to pay under any Letter of Credit or any actual or proposed use of any Letter of Credit, including, without limitation, any claims, damages, losses, liabilities, costs or expenses which the Issuer may incur by reason of or in connection with (i) the failure of any other Lender to fulfill or comply with its obligations to the Issuer hereunder (but nothing herein contained shall affect any rights the Borrower may have against any defaulting Lender) or (ii) by reason of or on account of the Issuer issuing any Letter of Credit which specifies that the term "Beneficiary" included therein includes any successor by operation of law of the named Beneficiary, but which Letter of Credit does not require that any drawing by any such successor Beneficiary be accompanied by a copy of a legal document, satisfactory to the Issuer, evidencing the appointment of such successor Beneficiary; provided that the Borrower shall not be required to indemnify any Lender, the Issuer or the Agent for any claims, damages, losses, liabilities, costs or expenses to the extent, but only to the extent, caused by (x) the willful misconduct or gross negligence of the Issuer in determining whether a request presented under any Letter of Credit issued by the Issuer complied with the terms of such Letter of Credit or (y) the Issuer's failure to pay under any Letter of Credit after the presentation to it of a request strictly complying with the terms and conditions of such Letter of Credit. Nothing in this Section 2.20(ix) is intended to limit the obligations of the Borrower under any other provision of this Agreement. (X) Lenders' Indemnification. Each Lender shall, ratably in accordance with its pro rata share of the Aggregate Commitment, indemnify the Issuer, its affiliates and its directors, officers, agents and employees (to the extent not reimbursed by the Borrower) against any cost, expense (including reasonable counsel fees and disbursements), claim, demand, action, loss or liability (except such as result from such indemnitees' gross negligence or willful misconduct or the Issuer's failure to pay under any Letter of Credit after the presentation to it of a request strictly complying with the terms and conditions of the Letter of Credit) that such indemnitees may suffer or incur in connection with this Section 2.20 or any action taken or omitted by such indemnitees hereunder. (xi) Letter of Credit Collateral Account. The Borrower agrees that it will, upon the request of the Agent or the Required Lenders and until the final expiration date of any Letter of Credit and thereafter as long as any amount is payable to the Issuer or the Lenders in respect of any Letter of Credit, maintain a special collateral account pursuant to arrangements satisfactory to the Agent (the "Letter of Credit Collateral Account") at the Agent's office at the address specified pursuant to Article XIII, in the name of such Borrower but under the sole dominion and control of the Agent, for the benefit of the Lenders and in which the Borrower shall have no interest other than as set forth in Section 8.1. The Borrower hereby pledges, assigns and grants to the Agent, on behalf of and for the ratable benefit of the Lenders and the Issuer, a security interest in all of the Borrower's right, title and interest in and to all funds which may from time to time be on deposit in the Letter of Credit Collateral Account to secure the prompt and complete payment and performance of the Obligations. The Agent will invest any funds on deposit from time to time in the Letter of Credit Collateral Account in certificates of deposit of Bank One having a maturity not exceeding 30 days. Nothing in this Section 2.20(xi) shall either obligate the Agent to require the Borrower to deposit any funds in the Letter of Credit Collateral Account or limit the right of the Agent to release any funds held in the Letter of Credit Collateral Account in each case other than as required by Section 8.1; provided that if one or more Letters 21 of Credit are outstanding on the Facility Termination Date, the Borrower shall deposit funds in the Letter of Credit Collateral Account in an amount equal to the stated amount of all such Letters of Credit, and such account shall at all times thereafter have a balance in excess of the full amount available to be drawn under such Letters of Credit. (xii) Rights as a Lender. In its capacity as a Lender, the Issuer shall have the same rights and obligations as any other Lender. ARTICLE III. YIELD PROTECTION; TAXES 3.1 Yield Protection. If, on or after the date of this Agreement, the adoption of or any change in any law or any governmental or quasi-governmental rule, regulation, policy, guideline or directive (whether or not having the force of law), or any change in the interpretation or administration thereof by any governmental or quasi-governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender, any applicable Lending Installation or the Issuer with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency: (i) subjects any Lender, any applicable Lending Installation or the Issuer to any Taxes, or changes the basis of taxation of payments (other than with respect to Excluded Taxes) to any Lender or the Issuer in respect of its Eurodollar Loans, Letters of Credit or participations therein, or (ii) imposes or increases or deems applicable any reserve, assessment, insurance charge, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender, any applicable Lending Installation or the Issuer (other than reserves and assessments taken into account in determining the interest rate applicable to Eurodollar Advances), or (iii) imposes any other condition the result of which is to increase the cost to any Lender, any applicable Lending Installation or the Issuer of making, funding or maintaining its Eurodollar Loans or of issuing or participating in Letters of Credit or reduces any amount receivable by any Lender, any applicable Lending Installation or the Issuer in connection with its Eurodollar Loans or Letters of Credit, or requires any Lender, any applicable Lending Installation or the Issuer to make any payment calculated by reference to the amount of Eurodollar Loans or Letters of Credit held or interest received by it, by an amount deemed material by such Lender or the Issuer, as the case may be, and the result of any of the foregoing is to increase the cost to such Lender, the applicable Lending Installation or the Issuer of making or maintaining its Eurodollar Loans, Letters of Credit or Commitment or to reduce the return received by such Lender, the applicable Lending Installation or the Issuer in connection with such Eurodollar Loans, Letters of Credit or Commitment, then, within 15 days of demand by such Lender or the Issuer, the Borrower shall 22 pay such Lender or the Issuer such additional amount or amounts as will compensate such Lender or the Issuer for such increased cost or reduction in amount received. 3.2 Changes in Capital Adequacy Regulations. If a Lender or the Issuer determines the amount of capital required or expected to be maintained by such Lender, the Issuer, any Lending Installation of such Lender or any corporation controlling such Lender or the Issuer is increased as a result of a Change, then, within 15 days of demand by such Lender or the Issuer, the Borrower shall pay such Lender or the Issuer the amount necessary to compensate for any shortfall in the rate of return on the portion of such increased capital which such Lender or the Issuer determines is attributable to this Agreement, its Outstanding Credit Exposure or its Commitment to make Loans and issue or participate in Letters of Credit, as the case may be, hereunder (after taking into account such Lender's or the Issuer's policies as to capital adequacy). "Change" means (i) any change after the date of this Agreement in the Risk-Based Capital Guidelines or (ii) any adoption of or change in any other law, governmental or quasi-governmental rule, regulation, policy, guideline, interpretation, or directive (whether or not having the force of law) after the date of this Agreement which affects the amount of capital required or expected to be maintained by any Lender, any Lending Installation or the Issuer or any corporation controlling any Lender or the Issuer. "Risk-Based Capital Guidelines" means (i) the risk-based capital guidelines in effect in the United States on the date of this Agreement, including transition rules, and (ii) the corresponding capital regulations promulgated by regulatory authorities outside the United States implementing the July 1988 report of the Basle Committee on Banking Regulation and Supervisory Practices Entitled "International Convergence of Capital Measurements and Capital Standards," including transition rules, and any amendments to such regulations adopted prior to the date of this Agreement. 3.3 Availability of Types of Advances. If any Lender determines that maintenance of its Eurodollar Loans at a suitable Lending Installation would violate any applicable law, rule, regulation, or directive, whether or not having the force of law, or if the Required Lenders determine that (i) deposits of a type and maturity appropriate to match fund Eurodollar Advances are not available or (ii) the interest rate applicable to Eurodollar Advances does not accurately reflect the cost of making or maintaining Eurodollar Advances, then the Agent shall suspend the availability of Eurodollar Advances and require any affected Eurodollar Advances to be repaid or converted to Floating Rate Advances (on or before the date required by such law, rule, regulation or directive), subject to the payment of any funding indemnification amounts required by Section 3.4. 3.4 Funding Indemnification. If any payment of a Eurodollar Advance occurs on a date which is not the last day of the applicable Interest Period, whether because of acceleration, prepayment or otherwise, or a Eurodollar Advance is not made on the date specified by the Borrower for any reason other than default by the Lenders, the Borrower will indemnify each Lender for any loss or cost incurred by it resulting therefrom, including, without limitation, any loss or cost in liquidating or employing deposits acquired to fund or maintain such Eurodollar Advance. 3.5 Taxes. (i) All payments by the Borrower to or for the account of any Lender, the Issuer or the Agent hereunder or under any Note shall be made free and clear of and without deduction for any and all Taxes. If the Borrower shall be required by law to deduct any Taxes 23 from or in respect of any sum payable hereunder to any Lender, the Issuer or the Agent, (a) 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 3.5) such Lender, the Issuer or the Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (b) the Borrower shall make such deductions, (c) the Borrower shall pay the full amount deducted to the relevant authority in accordance with applicable law and (d) the Borrower shall furnish to the Agent the original copy of a receipt evidencing payment thereof within 30 days after such payment is made. (ii) In addition, the Borrower hereby agrees to pay any present or future stamp or documentary taxes and any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or under any Note or Letter of Credit Application or from the execution or delivery of, or otherwise with respect to, this Agreement, any Note or any Letter of Credit Application ("Other Taxes"). (iii) The Borrower hereby agrees to indemnify the Agent, each Lender and the Issuer for the full amount of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed on amounts payable under this Section 3.5) paid by the Agent, such Lender or the Issuer and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto. Payments due under this indemnification shall be made within 30 days of the date the Agent, such Lender or the Issuer makes demand therefor pursuant to Section 3.6. (iv) Each Lender that is not incorporated under the laws of the United States of America or a state thereof (each a "Non-U.S. Lender") agrees that it will, not less than ten Business Days after the date of this Agreement, (i) deliver to each of the Borrower and the Agent two duly completed copies of United States Internal Revenue Service Form 1001 or 4224, certifying in either case that such Lender is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes, and (ii) deliver to each of the Borrower and the Agent a United States Internal Revenue Form W-8 or W-9, as the case may be, and certify that it is entitled to an exemption from United States backup withholding tax. Each Non-U.S. Lender further undertakes to deliver to each of the Borrower and the Agent (x) renewals or additional copies of such form (or any successor form) on or before the date that such form expires or becomes obsolete, and (y) after the occurrence of any event requiring a change in the most recent forms so delivered by it, such additional forms or amendments thereto as may be reasonably requested by the Borrower or the Agent. All forms or amendments described in the preceding sentence shall certify that such Lender is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes, unless an event (including without limitation any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders all such forms inapplicable or which would prevent such Lender from duly completing and delivering any such form or amendment with respect to it and such Lender advises the Borrower and the Agent that it is not capable of receiving payments without any deduction or withholding of United States federal income tax. (v) For any period during which a Non-U.S. Lender has failed to provide the Borrower with an appropriate form pursuant to clause (iv), above (unless such failure is due to a change in treaty, law or regulation, or any change in the interpretation or administration thereof by any 24 governmental authority, occurring subsequent to the date on which a form originally was required to be provided), such Non-U.S. Lender shall not be entitled to indemnification under this Section 3.5 with respect to Taxes imposed by the United States; provided that, should a Non-U.S. Lender which is otherwise exempt from or subject to a reduced rate of withholding tax become subject to Taxes because of its failure to deliver a form required under clause (iv), above, the Borrower shall take such steps as such Non-U.S. Lender shall reasonably request to assist such Non-U.S. Lender to recover such Taxes. (vi) Any Lender that is entitled to an exemption from or reduction of withholding tax with respect to payments under this Agreement or any Note pursuant to the law of any relevant jurisdiction or any treaty shall deliver to the Borrower (with a copy to the Agent), at the time or times prescribed by applicable law, 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. (vii) If the U.S. Internal Revenue Service or any other governmental authority of the United States or any other country or any political subdivision thereof asserts a claim that the Agent did not properly withhold tax from amounts paid to or for the account of any Lender (because the appropriate form was not delivered or properly completed, because such Lender failed to notify the Agent of a change in circumstances which rendered its exemption from withholding ineffective, or for any other reason), such Lender shall indemnify the Agent fully for all amounts paid, directly or indirectly, by the Agent as tax, withholding therefor, or otherwise, including penalties and interest, and including taxes imposed by any jurisdiction on amounts payable to the Agent under this subsection, together with all costs and expenses related thereto (including attorneys fees and time charges of attorneys for the Agent, which attorneys may be employees of the Agent). The obligations of the Lenders under this Section 3.5(vii) shall survive the payment of the Obligations and termination of this Agreement. 3.6 Lender Statements; Survival of Indemnity. To the extent reasonably possible, each Lender shall designate an alternate Lending Installation with respect to its Eurodollar Loans to reduce any liability of the Borrower to such Lender under Sections 3.1, 3.2 and 3.5 or to avoid the unavailability of Eurodollar Advances under Section 3.3, so long as such designation is not, in the judgment of such Lender, disadvantageous to such Lender. Each Lender shall deliver a written statement of such Lender to the Borrower (with a copy to the Agent) as to the amount due, if any, under Section 3.1, 3.2, 3.4 or 3.5. Such written statement shall set forth in reasonable detail the calculations upon which such Lender determined such amount and shall be final, conclusive and binding on the Borrower in the absence of manifest error. Determination of amounts payable under such Sections in connection with a Eurodollar Loan shall be calculated as though each Lender funded its Eurodollar Loan through the purchase of a deposit of the type and maturity corresponding to the deposit used as a reference in determining the Eurodollar Rate applicable to such Loan, whether in fact that is the case or not. Unless otherwise provided herein, the amount specified in the written statement of any Lender shall be payable on demand after receipt by the Borrower of such written statement. The obligations of the Borrower under Sections 3.1, 3.2, 3.4 and 3.5 shall survive payment of the Obligations and termination of this Agreement. 25 ARTICLE IV. CONDITIONS PRECEDENT 4.1 Initial Credit Extension. The Lenders and the Issuer shall not be required to make the initial Credit Extension hereunder unless the Borrower has furnished to the Agent with sufficient copies for the Lenders: (i) Copies of the articles or certificate of incorporation of the Borrower, together with all amendments, and a certificate of good standing, each certified by the appropriate governmental officer in its jurisdiction of incorporation. (ii) Copies certified by the Secretary or Assistant Secretary of the Borrower, of its by-laws and of its Board of Directors' resolutions and of resolutions or actions of any other body authorizing the execution of the Loan Documents to which the Borrower is a party. (iii) An incumbency certificate, executed by the Secretary or Assistant Secretary of the Borrower, which shall identify by name and title and bear the signatures of the officers of the Borrower authorized to sign the Loan Documents to which the Borrower is a party, upon which certificate the Agent and the Lenders shall be entitled to rely until informed of any change in writing by the Borrower. (iv) Evidence,in form and substance satisfactory to the Agent, that the Borrower has obtained all governmental approvals necessary for it to enter into the Loan Documents. (v) A certificate, signed by an Authorized Officer of the Borrower, stating that on the initial Borrowing Date no Default or Unmatured Default has occurred and is continuing. (vi) A written opinion of the Borrower's counsel, addressed to the Lenders in substantially the form of Exhibit A. (vii) Any Notes requested by a Lender pursuant to Section 2.13 payable to the order of each such requesting Lender. (viii) Written money transfer instructions, in substantially the form of Exhibit C, addressed to the Agent and signed by an Authorized Officer, together with such other related money transfer authorizations as the Agent may have reasonably requested. (ix) Evidence,in form and substance satisfactory to the Agent, of the termination of the Existing Agreement and the repayment in full of all outstanding obligations of the Borrower thereunder (it being understood that the Existing LC shall become a Letter of Credit hereunder on the date of this Agreement). 26 (x) If the initial Credit Extension will be the issuance of a Letter of Credit, a properly completed Letter of Credit Application. (xi) Such other documents as any Lender or its counsel may have reasonably requested. 4.2 Each Credit Extension. The Lenders shall not be required to make any Credit Extension unless on the applicable Borrowing Date: (i) There exists no Default or Unmatured Default. (ii) The representations and warranties contained in Article V are true and correct as of such Borrowing Date except to the extent any such representation or warranty is stated to relate solely to an earlier date, in which case such representation or warranty shall have been true and correct on and as of such earlier date. (iii) All legal matters incident to the making of such Credit Extension shall be satisfactory to the Lenders and their counsel. Each Borrowing Notice and each request for the issuance of a Letter of Credit shall constitute a representation and warranty by the Borrower that the conditions contained in Sections 4.2(i) and (ii) have been satisfied. ARTICLE V. REPRESENTATIONS AND WARRANTIES The Borrower represents and warrants to the Lenders that: 5.1 Existence and Standing. Each of the Borrower and its Subsidiaries is a corporation, partnership or limited liability company duly and properly incorporated or organized, as the case may be, validly existing and (to the extent such concept applies to such entity) in good standing under the laws of its jurisdiction of incorporation or organization and has all requisite authority to conduct its business in each jurisdiction in which its business is conducted. 5.2 Authorization and Validity. The Borrower has the corporate power and authority and legal right to execute and deliver the Loan Documents and to perform its obligations thereunder. The execution and delivery by the Borrower of the Loan Documents and the performance of its obligations thereunder have been duly authorized by proper corporate proceedings. After giving effect to each Credit Extension hereunder, the aggregate amount of all Indebtedness and borrowings of the Borrower will not exceed the maximum amount of Indebtedness and borrowings authorized by the Borrower's Board of Directors. The Loan Documents constitute legal, valid and binding obligations of the Borrower enforceable against the Borrower in accordance with their terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally. 27 5.3 No Conflict; Government Consent. Neither the execution and delivery by the Borrower of the Loan Documents, nor the consummation of the transactions therein contemplated, nor compliance with the provisions thereof will violate (i) any law, rule, regulation, order, writ, judgment, injunction, decree or award binding on the Borrower or any of its Subsidiaries, or (ii) the Borrower's or any Subsidiary's articles or certificate of incorporation, partnership agreement, certificate of partnership, articles or certificate of organization, bylaws, or operating or other management agreement, as the case may be, or (iii) the provisions of any indenture, instrument or agreement to which the Borrower or any of its Subsidiaries is a party or is subject, or by which it, or its Property, is bound, or conflict with or constitute a default thereunder, or result in, or require, the creation or imposition of any Lien in, of or on the Property of the Borrower or a Subsidiary pursuant to the terms of any such indenture, instrument or agreement. No order, consent, adjudication, approval, license, authorization, or validation of, or filing, recording or registration with, or exemption by, or other action in respect of any governmental or public body or authority, or any subdivision thereof, which has not been obtained by the Borrower or any of its Subsidiaries and is in full force and effect, is required to be obtained by the Borrower or any of its Subsidiaries in connection with the execution and delivery of the Loan Documents, the borrowings under this Agreement, the payment and performance by the Borrower of the Obligations or the legality, validity, binding effect or enforceability of any of the Loan Documents, except that the Borrower is required to make a notice filing with the SEC pursuant to the SEC's Rule 52 adopted pursuant to the Public Utility Holding Company Act of 1935, as amended. The Borrower covenants that it will make the notice filing referred to in the preceding sentence within the time limited prescribed therefor and further represents that no further consent, approval, license, authorization or validation of the SEC is required in connection therewith. 5.4 Financial Statements. The September 30, 2002 consolidated financial statements of the Borrower and its Subsidiaries heretofore delivered to the Lenders were prepared in accordance with generally accepted accounting principles in effect on the date such statements were prepared and fairly present the consolidated financial condition and operations of the Borrower and its Subsidiaries at such date and the consolidated results of their operations for the period then ended. 5.5 Material Adverse Change. Since September 30, 2002 no event has occurred which could reasonably be expected to have a Material Adverse Effect. 5.6 Taxes. The Borrower and its Subsidiaries have filed all United States federal tax returns and all other tax returns which are required to be filed and have paid all taxes due pursuant to said returns or pursuant to any assessment received by the Borrower or any of its Subsidiaries, except such taxes, if any, as are being contested in good faith and as to which adequate reserves have been provided in accordance with Agreement Accounting Principles and as to which no Lien exists. The United States income tax returns of the Borrower and its Subsidiaries have been audited by the Internal Revenue Service through the fiscal year ended July 31, 1997. No tax liens have been filed against the Borrower or any Subsidiary. The charges, accruals and reserves on the books of the Borrower and its Subsidiaries in respect of any taxes or other governmental charges are adequate. 28 5.7 Litigation and Contingent Obligations. Except as described on Schedule 5.7 or in the Borrower's annual report on Form 10K for the year ended December 31, 2001 and the Borrower's quarterly reports on Form 10Q for the periods ended March 31, 2002, June 30, 2002 and September 30, 2002, there is no litigation, arbitration, governmental investigation, proceeding or inquiry pending or, to the knowledge of any of their officers, threatened against or affecting the Borrower or any of its Subsidiaries which could reasonably be expected to have a Material Adverse Effect or which seeks to prevent, enjoin or delay the making of any Loans. Other than any liability incident to any litigation, arbitration or proceeding which could not reasonably be expected to have a Material Adverse Effect, the Borrower has no material contingent obligations not provided for or disclosed in the financial statements referred to in Section 5.4. 5.8 Subsidiaries. As of the date of this Agreement, the Borrower has no Subsidiaries other than Southwestern Public Service Capital I. 5.9 ERISA. The Unfunded Liabilities of all Single Employer Plans do not in the aggregate exceed $25,000,000. Each Plan complies in all material respects with all applicable requirements of law and regulations, no Reportable Event has occurred with respect to any Plan, neither the Borrower nor any other member of the Controlled Group (while it was a member of the Controlled Group) has withdrawn from any Plan or initiated steps to do so, and no steps have been taken to reorganize or terminate any Plan. Neither the Borrower nor any other member of the Controlled Group is party to any Multiemployer Plan. 5.10 Accuracy of Information. No information, exhibit or report furnished by the Borrower or any of its Subsidiaries to the Agent or to any Lender in connection with the negotiation of, or compliance with, the Loan Documents contained any material misstatement of fact or omitted to state a material fact or any fact necessary to make the statements contained therein not misleading. 5.11 Regulation U. Margin stock (as defined in Regulation U) constitutes less than 25% of the value of those assets of the Borrower and its Subsidiaries which are subject to any limitation on sale, pledge, or other restriction hereunder. 5.12 Material Agreements. Neither the Borrower nor any Subsidiary is a party to any agreement or instrument or subject to any charter or other corporate restriction which could reasonably be expected to have a Material Adverse Effect. Neither the Borrower nor any Subsidiary is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in (i) any agreement to which it is a party, which default could reasonably be expected to have a Material Adverse Effect or (ii) any agreement or instrument evidencing or governing Indebtedness. 5.13 Compliance With Laws. The Borrower and its Subsidiaries have complied in all material respects with all applicable statutes, rules, regulations, orders and restrictions of any domestic or foreign government or any instrumentality or agency thereof having jurisdiction over the conduct of their respective businesses or the ownership of their respective Property. 29 5.14 Plan Assets; Prohibited Transactions. The Borrower is not an entity deemed to hold "plan assets" within the meaning of 29 C.F.R. Section 2510.3-101 of an employee benefit plan (as defined in Section 3(3) of ERISA) which is subject to Title I of ERISA or any plan (within the meaning of Section 4975 of the Code), and neither the execution of this Agreement nor the making of Loans hereunder gives rise to a prohibited transaction within the meaning of Section 406 of ERISA or Section 4975 of the Code. 5.15 Environmental Matters. In the ordinary course of its business, the officers of the Borrower consider the effect of Environmental Laws on the business of the Borrower and its Subsidiaries, in the course of which they identify and evaluate potential risks and liabilities accruing to the Borrower due to Environmental Laws. On the basis of this consideration, the Borrower has concluded that Environmental Laws cannot reasonably be expected to have a Material Adverse Effect. Neither the Borrower nor any Subsidiary has received any notice to the effect that its operations are not in material compliance with any of the requirements of applicable Environmental Laws or are the subject of any federal or state investigation evaluating whether any remedial action is needed to respond to a release of any toxic or hazardous waste or substance into the environment, which noncompliance or remedial action could reasonably be expected to have a Material Adverse Effect. 5.16 Investment Company Act. Neither the Borrower nor any Subsidiary is an "investment company" or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended. 5.17 Public Utility Holding Company Act. The Borrower is a subsidiary of Xcel Energy Inc., which is a regulated "holding company" within the meaning of the Public Utility Holding Company Act of 1935, as amended. 5.18 Insurance. The Borrower and its Subsidiaries maintain a self-insurance program and maintain with financially sound and reputable insurance companies insurance on all their Property of a character usually insured by entities in the same or similar businesses similarly situated against loss or damage of the kinds and in the amounts, customarily insured against by such entities, and maintain such other insurance as is usually carried by such entities. ARTICLE VI. COVENANTS During the term of this Agreement, unless the Required Lenders shall otherwise consent in writing: 6.1 Financial Reporting. The Borrower will maintain, for itself and each Subsidiary, a system of accounting established and administered in accordance with Agreement Accounting Principles, and furnish to the Lenders: (i) Within 90 days after the close of each of its fiscal years, an unqualified (except for qualifications relating to changes in accounting principles or practices reflecting changes in generally accepted accounting principles and required or approved by the Borrower's independent certified public accountants) audit report 30 certified by nationally recognized independent certified public accountants, prepared in accordance with Agreement Accounting Principles on a consolidated basis for itself and its Subsidiaries, including balance sheets as of the end of such period, related profit and loss and reconciliation of surplus statements, and a statement of cash flows, accompanied by any management letter prepared by said accountants. (ii) Within 45 days after the close of the first three quarterly periods of each of its fiscal years, for itself and its Subsidiaries, consolidated unaudited balance sheets as at the close of each such period and consolidated profit and loss and reconciliation of surplus statements and a statement of cash flows for the period from the beginning of such fiscal year to the end of such quarter, all certified by an Authorized Officer. (iii) As soon as possible and in any event within 10 days after the Borrower knows that any Reportable Event has occurred with respect to any Plan, a statement, signed by an Authorized Officer, describing said Reportable Event and the action which the Borrower proposes to take with respect thereto. (iv) As soon as possible and in any event within 10 days after receipt by the Borrower, a copy of (a) any notice or claim to the effect that the Borrower or any of its Subsidiaries is or may be liable to any Person as a result of the release by the Borrower, any of its Subsidiaries, or any other Person of any toxic or hazardous waste or substance into the environment, and (b) any notice alleging any violation of any federal, state or local environmental, health or safety law or regulation by the Borrower or any of its Subsidiaries, which, in either case, could reasonably be expected to have a Material Adverse Effect. (v) Promptly upon the furnishing thereof to the shareholders of the Borrower, copies of all financial statements, reports and proxy statements so furnished. (vi) Promptly upon the filing thereof, copies of all registration statements and annual, quarterly, monthly or other regular reports which the Borrower or any of its Subsidiaries files with the SEC. (vii) Together with the annual and quarterly reports referred to in clauses (i) and (ii) above, a certificate in the form of Exhibit F, certified by an Authorized Officer. (viii) Such other information (including non-financial information) as the Agent or any Lender may from time to time reasonably request. 6.2 Use of Proceeds. The Borrower will, and will cause each Subsidiary to, use the proceeds of the Credit Extensions for general corporate purposes and to repay outstanding Credit Extensions. The Borrower will not, nor will it permit any Subsidiary to, use any of the proceeds of the Credit Extensions to purchase or carry any "margin stock" (as defined in Regulation U) or to make any hostile Acquisition. 31 6.3 Notice of Default. The Borrower will, and will cause each Subsidiary to, give prompt notice in writing to the Lenders within five (5) days of the occurrence of any Default or Unmatured Default and of any other development, financial or otherwise, which could reasonably be expected to have a Material Adverse Effect (it being understood and agreed that the Borrower and its Subsidiaries shall not be required to make separate disclosure under this Section 6.3 of occurrences or developments which have previously been disclosed to the Lenders in any financial statements or other information delivered to the Lenders pursuant to Section 6.1). 6.4 Conduct of Business. The Borrower will, and will cause each Subsidiary to, carry on and conduct its business in substantially the same manner and in substantially the same fields of enterprise as it is presently conducted and do all things necessary to remain duly incorporated or organized, validly existing and (to the extent such concept applies to such entity) in good standing as a domestic corporation, partnership or limited liability company in its jurisdiction of incorporation or organization, as the case may be, and maintain all requisite authority to conduct its business in each jurisdiction in which its business is conducted. 6.5 Taxes. The Borrower will, and will cause each Subsidiary to, timely file complete and correct United States federal and applicable foreign, state and local tax returns required by law and pay when due all taxes, assessments and governmental charges and levies upon it or its income, profits or Property, except those which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves have been set aside in accordance with Agreement Accounting Principles. 6.6 Insurance. The Borrower will, and will cause each Subsidiary to, maintain a self-insurance program, and maintain with financially sound and reputable insurance companies insurance on all their Property in such amounts and covering such risks as is consistent with sound business practice, and the Borrower will furnish to any Lender upon request full information as to the insurance carried. 6.7 Compliance with Laws. The Borrower will, and will cause each Subsidiary to, comply with all laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject including, without limitation, all Environmental Laws, where failure to do so could reasonably be expected to have a Material Adverse Effect. 6.8 Maintenance of Properties. The Borrower will, and will cause each Subsidiary to, do all things necessary to maintain, preserve, protect and keep its Property in good repair, working order and condition, and make all necessary and proper repairs, renewals and replacements so that its business carried on in connection therewith may be properly conducted at all times. 6.9 Inspection. The Borrower will, and will cause each Subsidiary to, permit the Agent and the Lenders, by their respective representatives and agents, to inspect any of the Property, books and financial records of the Borrower and each Subsidiary, to examine and make copies of the books of accounts and other financial records of the Borrower and each Subsidiary, and to discuss the affairs, finances and accounts of the Borrower and each Subsidiary with, and 32 to be advised as to the same by, their respective officers at such reasonable times and intervals as the Agent or any Lender may designate. 6.10 Merger. The Borrower will not, nor will it permit any Subsidiary to, merge or consolidate with or into any other Person, except that, so long as both immediately prior to and after giving effect to such merger or consolidation, no Default or Unmatured Default shall have occurred and be continuing, then (i) any Subsidiary may merge with the Borrower or a Wholly-Owned Subsidiary and (ii) the Borrower may merge or consolidate with any other Person so long as the Borrower is the surviving entity. 6.11 Sale of Assets. The Borrower will not, nor will it permit any Subsidiary to, lease, sell or otherwise dispose of its Property to any other Person, except: (i) Sales of inventory in the ordinary course of business. (ii) Leases, sales or other dispositions of its Property that, together with all other Property of the Borrower and its Subsidiaries previously leased, sold or disposed of (other than inventory in the ordinary course of business) as permitted by this Section during the twelve-month period ending with the month in which any such lease, sale or other disposition occurs, do not constitute a Substantial Portion of the Property of the Borrower and its Subsidiaries. (iii) Any disposition of accounts receivable, notes receivable or unbilled revenue, the rights related to any of the foregoing and property related to any of the foregoing in connection with Qualified Receivables Transactions. 6.12 Debt to Capitalization Ratio. The Borrower will not at any time permit the Debt to Capitalization Ratio to be greater than 0.55 to 1.00. 6.13 Interest Coverage Ratio. The Borrower will not permit the Interest Coverage Ratio as of the last day of any fiscal quarter to be less than 2.75 to 1.0. 6.14 Liens. The Borrower will not, nor will it permit any Subsidiary to, create, incur, or suffer to exist any Lien in, of or on the Property of the Borrower or any of its Subsidiaries, except: (a) Liens for taxes, assessments or governmental charges or levies on its Property if the same shall not at the time be delinquent or thereafter can be paid without penalty, or are being contested in good faith and by appropriate proceedings and for which adequate reserves in accordance with Agreement Accounting Principles shall have been set aside on its books. (b) Liens imposed by law, such as carriers', warehousemen's and mechanics' liens and other similar liens arising in the ordinary course of business which secure payment of obligations not more than 60 days past due or which are being contested in good faith by appropriate proceedings and for which adequate reserves shall have been set aside on its books. 33 (c) Liens arising out of pledges or deposits under worker's compensation laws, unemployment insurance, old age pensions, or other social security or retirement benefits, or similar legislation. (d) Utility easements, building restrictions and such other encumbrances or charges against real property as are of a nature generally existing with respect to properties of a similar character and which do not in any material way affect the marketability of the same or interfere with the use thereof in the business of the Borrower or its Subsidiaries. (e) Liens existing on the date hereof and described in Schedule 6.14. (f) Liens incurred in connection with Qualified Receivables Transactions. (g) Purchase money Liens arising in the ordinary course of business; provided that the aggregate amount of Indebtedness secured by all such Liens shall not at any time exceed $5,000,000. 6.15 Intercompany Transactions. The Borrower will not, and will not permit any Subsidiary to, (a) make any loan or advance to, or any investment in, Xcel Energy Inc. or any Affiliate thereof (other than the Borrower or any Subsidiary thereof); or (b) enter into any other transaction with Xcel Energy Inc. or any Affiliate thereof (other than the Borrower or any Subsidiary thereof) except in the ordinary course of business and pursuant to the reasonable requirements of the Borrower's or such Subsidiary's business and upon fair and reasonable terms no less favorable to the Borrower or such Subsidiary than the Borrower or such Subsidiary would obtain in a comparable arms' length transaction with unrelated third parties. Nothing in this Section 6.15 shall restrict the ability of the Borrower to pay dividends to Xcel Energy Inc. so long as no Default or Unmatured Default exists or would result therefrom. 6.16 Off-Balance Sheet Liabilities. The Borrower will not at any time permit the aggregate amount of all Off-Balance Sheet Liabilities (excluding (i) Receivables Transaction Attributed Obligations and (ii) the existing Off-Balance Sheet Liabilities listed on Schedule 6.16) of the Borrower and its Subsidiaries to exceed $100,000,000. 6.17 Receivables Transaction Attributed Obligations. The Borrower will not at any time permit the aggregate amount of all Receivables Transaction Attributed Obligations to exceed $75,000,000. ARTICLE VII. DEFAULTS The occurrence of any one or more of the following events shall constitute a Default: 7.1 Any representation or warranty made or deemed made by or on behalf of the Borrower or any of its Subsidiaries to the Lenders or the Agent under or in connection with this Agreement, any Loan, or any certificate or information delivered in connection with this Agreement or any other Loan Document shall be materially false on the date as of which made. 34 7.2 Nonpayment of principal of any Loan when due, nonpayment of any Reimbursement Obligation within one Business Day after the same becomes due, or nonpayment of interest upon any Loan or of any commitment fee, Letter of Credit Fee or other obligations under any of the Loan Documents within five days after the same becomes due. 7.3 The breach by the Borrower of any of the terms or provisions of Section 6.2, 6.3, 6.10, 6.12 or 6.13. 7.4 The breach by the Borrower (other than a breach which constitutes a Default under another Section of this Article VII) of any of the terms or provisions of this Agreement which is not remedied within five days after written notice from the Agent or any Lender. 7.5 Failure of the Borrower and/or any of its Significant Subsidiaries to pay when due any Indebtedness aggregating in excess of $25,000,000 ("Material Indebtedness"); or the default by the Borrower and/or any of its Significant Subsidiaries in the performance of any term, provision or condition contained in any agreement under which any such Material Indebtedness was created or is governed, or any other event shall occur or condition exist, the effect of which default or event is to cause, or to permit the holder or holders of such Material Indebtedness to cause, such Indebtedness to become due prior to its stated maturity; or any Material Indebtedness of the Borrower and/or any of its Significant Subsidiaries shall be declared to be due and payable or required to be prepaid or repurchased (other than by a regularly scheduled payment) prior to the stated maturity thereof; or the Borrower or any of its Significant Subsidiaries shall not pay, or admit in writing its inability to pay, its debts generally as they become due. 7.6 The Borrower or any of its Significant Subsidiaries shall (i) have an order for relief entered with respect to it under the Federal bankruptcy laws as now or hereafter in effect, (ii) make an assignment for the benefit of creditors, (iii) apply for, seek, consent to, or acquiesce in, the appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for it or any Substantial Portion of its Property, (iv) institute any proceeding seeking an order for relief under the Federal bankruptcy laws as now or hereafter in effect or seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors or fail to file an answer or other pleading denying the material allegations of any such proceeding filed against it, (v) take any corporate or partnership action to authorize or effect any of the foregoing actions set forth in this Section 7.6 or (vi) fail to contest in good faith any appointment or proceeding described in Section 7.7. 7.7 Without the application, approval or consent of the Borrower or any of its Significant Subsidiaries, a receiver, trustee, examiner, liquidator or similar official shall be appointed for the Borrower or any of its Significant Subsidiaries or any Substantial Portion of its Property, or a proceeding described in Section 7.6(iv) shall be instituted against the Borrower or any of its Significant Subsidiaries and such appointment continues undischarged or such proceeding continues undismissed or unstayed for a period of 30 consecutive days. 7.8 Any court, government or governmental agency shall condemn, seize or otherwise appropriate, or take custody or control of, all or any portion of the Property of the Borrower and its Subsidiaries which, when taken together with all other Property of the Borrower and its 35 Subsidiaries so condemned, seized, appropriated, or taken custody or control of, during the twelve-month period ending with the month in which any such action occurs, constitutes a Substantial Portion. 7.9 The Borrower or any of its Significant Subsidiaries shall fail within 30 days to pay, bond or otherwise discharge one or more (i) judgments or orders for the payment of money in excess of $25,000,000 (or the equivalent thereof in currencies other than U.S. Dollars) in the aggregate, or (ii) nonmonetary judgments or orders which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, which judgment(s), in any such case, is/are not stayed on appeal or otherwise being appropriately contested in good faith. 7.10 The Unfunded Liabilities of all Single Employer Plans shall exceed in the aggregate $25,000,000; any Reportable Event shall occur in connection with any Plan which has resulted or could reasonably be expected to result in liability of the Borrower under Title IV of ERISA in excess of $5,000,000; a contribution failure occurs with respect to any Plan sufficient to give rise to a Lien under section 302(f) of ERISA; or the Borrower or any other member of the Controlled Group shall become party to any Multiemployer Plan. 7.11 The Borrower or any of its Significant Subsidiaries shall (i) be the subject of any proceeding or investigation pertaining to the release by the Borrower, any of its Significant Subsidiaries or any other Person of any toxic or hazardous waste or substance into the environment, or (ii) violate any Environmental Law, which, in the case of an event described in clause (i) or clause (ii), could reasonably be expected to have a Material Adverse Effect. 7.12 The representations and warranties set forth in Section 5.14 ("Plan Assets; Prohibited Transactions") shall at any time not be true and correct. 7.13 Xcel Energy Inc. or any successor thereto shall cease to own, free and clear of all Liens or other encumbrances, 100% of the outstanding shares of voting stock of the Borrower on a fully diluted basis. ARTICLE VIII. ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES 8.1 Acceleration; Letter of Credit Collection Account. (i) If any Default described in Section 7.6 or 7.7 occurs with respect to the Borrower, the obligations of the Lenders to make Loans hereunder and the obligation and power of the Issuer to issue Letters of Credit shall automatically terminate and the Obligations shall immediately become due and payable without any election or action on the part of the Agent, any Lender or the Issuer and the Borrower will be and become thereby unconditionally obligated, without any further notice, act or demand, to pay to the Agent an amount in immediately available funds, which funds shall be held in the Letter of Credit Collateral Account, equal to the excess of (x) the amount of LC Obligations at such time over (y) the amount on deposit in the Letter of Credit Collateral Account at such time which is free and clear of all rights and claims of third parties and has not been applied against the Obligations (such difference, the "Collateral Shortfall Amount"). If any other Default occurs and is continuing, the Required Lenders (or the Agent 36 with the consent of the Required Lenders) may (a) terminate or suspend the obligations of the Lenders to make Loans hereunder and the obligation and power of the Issuer to issue Letters of Credit, or declare the Obligations to be due and payable, or both, whereupon the Obligations shall become immediately due and payable, without presentment, demand, protest or notice of any kind, all of which the Borrower hereby expressly waives, and/or (b) upon notice to the Borrower and in addition to the continuing right to demand payment of all amounts payable under this Agreement, make demand on the Borrower to pay, and the Borrower will, forthwith upon such demand and without any further notice or act, pay to the Agent in immediately available funds the Collateral Shortfall Amount, which funds shall be deposited in the Letter of Credit Collateral Account. (ii) If at any time while any Default exists, the Agent determines that the Collateral Shortfall Amount at such time is greater than zero, the Agent may make demand on the Borrower to pay, and the Borrower will, forthwith upon such demand and without any further notice or act, pay to the Agent in immediately available funds the Collateral Shortfall Amount, which funds shall be deposited in the Letter of Credit Collateral Account. (iii) The Agent may at any time or from time to time, after funds are deposited in the Letter of Credit Collateral Account, apply such funds to the payment of the Obligations and any other amounts as shall from time to time have become due and payable by the Borrower to the Lenders or the Issuer under the Loan Documents. (iv) At any time while any Default is continuing, neither the Borrower nor any Person claiming on behalf of or through the Borrower shall have any right to withdraw any of the funds held in the Letter of Credit Collateral Account. After all of the Obligations have been indefeasibly paid in full and the Aggregate Commitment has been terminated, any funds remaining in the Letter of Credit Collateral Account shall be returned by the Agent to the Borrower or paid to whomever may be legally entitled thereto at such time. If, within 30 days after acceleration of the maturity of the Obligations or termination of the obligations of the Lenders to make Loans hereunder as a result of any Default (other than any Default as described in Section 7.6 or 7.7 with respect to the Borrower) and before any judgment or decree for the payment of the Obligations due shall have been obtained or entered, the Required Lenders (in their sole discretion) shall so direct, the Agent shall, by notice to the Borrower, rescind and annul such acceleration and/or termination. 8.2 Amendments. Subject to the provisions of this Article VIII, the Required Lenders (or the Agent with the consent in writing of the Required Lenders) and the Borrower may enter into agreements supplemental hereto for the purpose of adding or modifying any provisions to the Loan Documents or changing in any manner the rights of the Lenders or the Borrower hereunder or waiving any Default hereunder; provided, however, that no such supplemental agreement shall, without the consent of all of the Lenders: (i) Extend the final maturity of any Loan or the Final Maturity Date, or extend the expiry date of any Letter of Credit to a date after the Facility Termination Date, forgive all or any portion of the principal amount thereof, or reduce the rate or 37 extend the time of payment of interest or fees thereon or any Reimbursement Obligation related thereto. (ii) Reduce the percentage specified in the definition of Required Lenders. (iii) Extend the Facility Termination Date, or reduce the amount or extend the payment date for, the mandatory payments required under Section 2.2, or increase the amount of the Aggregate Commitment or of the Commitment of any Lender hereunder, or permit the Borrower to assign its rights under this Agreement. (iv) Amend this Section 8.2. No amendment of any provision of this Agreement relating to the Agent shall be effective without the written consent of the Agent, and no amendment of any provision to this Agreement relating to the Issuer shall be effective without the written consent of the Issuer. The Agent may waive payment of the fee required under Section 12.3.2 without obtaining the consent of any other party to this Agreement. 8.3 Preservation of Rights. No delay or omission of the Lenders, the Issuer or the Agent to exercise any right under the Loan Documents shall impair such right or be construed to be a waiver of any Default or an acquiescence therein, and the making of a Credit Extension notwithstanding the existence of a Default or the inability of the Borrower to satisfy the conditions precedent to such Credit Extension shall not constitute any waiver or acquiescence. Any single or partial exercise of any such right shall not preclude other or further exercise thereof or the exercise of any other right, and no waiver, amendment or other variation of the terms, conditions or provisions of the Loan Documents whatsoever shall be valid unless in writing signed by the Lenders required pursuant to Section 8.2, and then only to the extent in such writing specifically set forth. All remedies contained in the Loan Documents or by law afforded shall be cumulative and all shall be available to the Agent, the Lenders and the Issuer until the Obligations have been paid in full. ARTICLE IX. GENERAL PROVISIONS 9.1 Survival of Representations. All representations and warranties of the Borrower contained in this Agreement shall survive the making of the Credit Extensions herein contemplated. 9.2 Governmental Regulation. Anything contained in this Agreement to the contrary notwithstanding, no Issuer or Lender shall be obligated to extend credit to the Borrower in violation of any limitation or prohibition provided by any applicable statute or regulation. 9.3 Headings. Section headings in the Loan Documents are for convenience of reference only, and shall not govern the interpretation of any of the provisions of the Loan Documents. 38 9.4 Entire Agreement. The Loan Documents embody the entire agreement and understanding among the Borrower, the Agent, the Lenders and the Issuer and supersede all prior agreements and understandings among the Borrower, the Agent, the Lenders and the Issuer relating to the subject matter thereof other than the fee letter described in Section 10.13. 9.5 Several Obligations; Benefits of this Agreement. The respective obligations of the Lenders hereunder are several and not joint and no Lender shall be the partner or agent of any other (except to the extent to which the Agent is authorized to act as such). The failure of any Lender to perform any of its obligations hereunder shall not relieve any other Lender from any of its obligations hereunder. This Agreement shall not be construed so as to confer any right or benefit upon any Person other than the parties to this Agreement and their respective successors and assigns, provided that the parties hereto expressly agree that the Arranger shall enjoy the benefits of the provisions of Sections 9.6, 9.10 and 10.11 to the extent specifically set forth therein and shall have the right to enforce such provisions on its own behalf and in its own name to the same extent as if it were a party to this Agreement. 9.6 Expenses; Indemnification. (i) The Borrower shall reimburse the Agent and the Arranger for all reasonable costs, internal charges and out-of-pocket expenses (including reasonable attorneys' fees and reasonable time charges of attorneys for the Agent, which attorneys may be employees of the Agent) paid or incurred by the Agent or the Arranger in connection with the preparation, negotiation, execution, delivery, syndication, review, amendment, modification, and administration of the Loan Documents. The Borrower also agrees to reimburse the Agent, the Arranger, the Lenders and the Issuer for all reasonable costs, internal charges and out-of-pocket expenses (including reasonable attorneys' fees and reasonable time charges of attorneys for the Agent, the Arranger, the Lenders and the Issuer, which attorneys may be employees of the Agent, the Arranger, the Lenders or the Issuer) paid or incurred by the Agent, the Arranger, any Lender or the Issuer in connection with the collection and enforcement of the Loan Documents. (ii) The Borrower hereby further agrees to indemnify the Agent, the Arranger, each Lender, the Issuer, their respective affiliates, and each of their directors, officers and employees against all losses, claims, damages, penalties, judgments, liabilities and reasonable expenses (including, without limitation, all reasonable expenses of litigation or preparation therefor whether or not the Agent, the Arranger, any Lender, the Issuer or any affiliate is a party thereto) which any of them may pay or incur arising out of or relating to this Agreement, the other Loan Documents, the transactions contemplated hereby or the direct or indirect application or proposed application of the proceeds of any Credit Extension hereunder except to the extent that they are determined in a final non-appealable judgment by a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the party seeking indemnification. The obligations of the Borrower under this Section 9.6 shall survive the termination of this Agreement. 9.7 Numbers of Documents. All statements, notices, closing documents, and requests hereunder shall be furnished to the Agent with sufficient counterparts so that the Agent may furnish one to each of the Lenders. 39 9.8 Accounting. Except as provided to the contrary herein, all accounting terms used herein shall be interpreted and all accounting determinations hereunder shall be made in accordance with Agreement Accounting Principles. 9.9 Severability of Provisions. Any provision in any Loan Document that is held to be inoperative, unenforceable, or invalid in any jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or invalid without affecting the remaining provisions in that jurisdiction or the operation, enforceability, or validity of that provision in any other jurisdiction, and to this end the provisions of all Loan Documents are declared to be severable. 9.10 Nonliability of Lenders. The relationship between the Borrower on the one hand and the Lenders, the Issuer and the Agent on the other hand shall be solely that of borrower and lender. Neither the Agent, the Arranger, any Lender nor the Issuer shall have any fiduciary responsibilities to the Borrower. Neither the Agent, the Arranger, any Lender nor the Issuer undertakes any responsibility to the Borrower to review or inform the Borrower of any matter in connection with any phase of the Borrower's business or operations. The Borrower agrees that neither the Agent, the Arranger, any Lender nor the Issuer shall have liability to the Borrower (whether sounding in tort, contract or otherwise) for losses suffered by the Borrower in connection with, arising out of, or in any way related to, the transactions contemplated and the relationship established by the Loan Documents, or any act, omission or event occurring in connection therewith, unless it is determined in a final non-appealable judgment by a court of competent jurisdiction that such losses resulted from the gross negligence or willful misconduct of the party from which recovery is sought. Neither the Agent, the Arranger, any Lender nor the Issuer shall have any liability with respect to, and the Borrower hereby waives, releases and agrees not to sue for, any special, indirect or consequential damages suffered by the Borrower in connection with, arising out of, or in any way related to the Loan Documents or the transactions contemplated thereby. 9.11 Limited Disclosure. (a) Notwithstanding anything to the contrary herein, the Borrower, each Lender and the Agent hereby agree that, from the commencement of discussions with respect to the facility established by this Agreement (the "Facility"), the Borrower, each Lender and the Agent (and each of their respective, and their respective Affiliates', employees, officers, directors, representatives, advisors and agents) are permitted to disclose to any and all Persons, without limitation of any kind, the structure and tax aspects (as such terms are used in sections 6011 and 6111 of the Code) of the Facility, and all materials or any kind (including opinions or other tax analyses) that are provided to the Borrower, any Lender or the Agent related to such structure and tax aspects. In this regard, each of the Borrower, each Lender and the Agent acknowledges and agrees that the disclosure of the structure or tax aspects of the Facility is not limited in any way by an express or implied understanding or agreement, oral or written (whether or not such understanding or agreement is legally binding). Furthermore, each of the Borrower, each Lender and the Agent acknowledges and agrees that it does not know or have reason to know that its use or disclosure of information relating to the structure or tax aspects of the Facility is limited in any other manner (such as where the Facility is claimed to be proprietary or exclusive) for the benefit of any other Person. (b) Neither the Agent nor any Lender may disclose to any Person any Specified Information (as defined below) except to its, and its Affiliates', officers, employees, agents, 40 accountants, legal counsel, advisors and other representatives who have a need to know such Specified Information. "Specified Information" means information that the Borrower furnishes to the Agent or any Lender in a writing designated as confidential, but does not include any such information that (i) relates to the "structure" or "tax aspects" of the transactions contemplated by this Agreement, as such terms are used in Sections 6011, 6111 and 6112 of the Code and the regulations promulgated thereunder or (ii) is or becomes generally available to the public or that is or becomes available to the Agent or such Lender from a source other than the Borrower. (c) The provisions of subsection (b) above shall not apply to Specified Information (i) that is a matter of general public knowledge or has heretofore been or is hereafter published in any source generally available to the public, (ii) that is required to be disclosed by law, regulation or judicial order, including pursuant to the tax shelter regulations under Sections 6011, 6111 and 6112 of the Code, (iii) that is requested by any regulatory body with jurisdiction over the Agent or any Lender, or (iv) that is disclosed to legal counsel, accountants and other professional advisors to such Lender, in connection with the exercise of any right or remedy hereunder or under any Note or any suit or other litigation or proceeding relating to this Agreement or any Note, to a rating agency if required by such agency in connection with a rating relating to Credit Extensions hereunder or to assignees or participants or potential assignees or participants who agree to be bound by the provisions of this Section 9.11. (d) The provisions of this Section 9.11 supersede any confidentiality obligations of any Lender or the Agent relating to the Facility under any agreement between the Borrower and any such party. The parties hereto agree that any such confidentiality obligations of any Lender or the Agent shall be deemed void ab initio to the extent the same relate to the Facility. 9.12 Nonreliance. Each Lender hereby represents that it is not relying on or looking to any margin stock (as defined in Regulation U of the Board of Governors of the Federal Reserve System) for the repayment of the Credit Extensions provided for herein. 9.13 Disclosure. The Borrower, each Lender and the Issuer hereby (i) acknowledge and agree that Bank One and/or its Affiliates from time to time may hold investments in, make other loans to or have other relationships with the Borrower and its Affiliates, and (ii) waive any liability of Bank One or such Affiliate of Bank One to the Borrower or any Lender, respectively, arising out of or resulting from such investments, loans or relationships other than liabilities arising out of the gross negligence or willful misconduct of Bank One or its Affiliates. ARTICLE X. THE AGENT 10.1 Appointment; Nature of Relationship. Bank One, is hereby appointed by each of the Lenders as its contractual representative (herein referred to as the "Agent") hereunder and under each other Loan Document, and each of the Lenders irrevocably authorizes the Agent to act as the contractual representative of such Lender with the rights and duties expressly set forth herein and in the other Loan Documents. The Agent agrees to act as such contractual representative upon the express conditions contained in this Article X. Notwithstanding the use of the defined term "Agent," it is expressly understood and agreed that the Agent shall not have 41 any fiduciary responsibilities to any Lender by reason of this Agreement or any other Loan Document and that the Agent is merely acting as the contractual representative of the Lenders with only those duties as are expressly set forth in this Agreement and the other Loan Documents. In its capacity as the Lenders' contractual representative, the Agent (i) does not hereby assume any fiduciary duties to any of the Lenders, (ii) is a "representative" of the Lenders within the meaning of Section 9-105 of the Uniform Commercial Code and (iii) is acting as an independent contractor, the rights and duties of which are limited to those expressly set forth in this Agreement and the other Loan Documents. Each of the Lenders hereby agrees to assert no claim against the Agent on any agency theory or any other theory of liability for breach of fiduciary duty, all of which claims each Lender hereby waives. 10.2 Powers. The Agent shall have and may exercise such powers under the Loan Documents as are specifically delegated to the Agent by the terms of each thereof, together with such powers as are reasonably incidental thereto. The Agent shall have no implied duties to the Lenders, or any obligation to the Lenders to take any action thereunder except any action specifically provided by the Loan Documents to be taken by the Agent. 10.3 General Immunity. Neither the Agent nor any of its directors, officers, agents or employees shall be liable to the Borrower, the Lenders or any Lender for any action taken or omitted to be taken by it or them hereunder or under any other Loan Document or in connection herewith or therewith except to the extent such action or inaction is determined in a final non-appealable judgment by a court of competent jurisdiction to have arisen from the gross negligence or willful misconduct of such Person. 10.4 No Responsibility for Loans, Recitals, etc. Neither the Agent nor any of its directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into, or verify (a) any statement, warranty or representation made in connection with any Loan Document or any borrowing hereunder; (b) the performance or observance of any of the covenants or agreements of any obligor under any Loan Document, including, without limitation, any agreement by an obligor to furnish information directly to each Lender; (c) the satisfaction of any condition specified in Article IV, except receipt of items required to be delivered solely to the Agent; (d) the existence or possible existence of any Default or Unmatured Default; (e) the validity, enforceability, effectiveness, sufficiency or genuineness of any Loan Document or any other instrument or writing furnished in connection therewith, or (f) the financial condition of the Borrower or of any of the Borrower's Subsidiaries. The Agent shall have no duty to disclose to the Lenders information that is not required to be furnished by the Borrower to the Agent at such time, but is voluntarily furnished by the Borrower to the Agent (either in its capacity as Agent or in its individual capacity). 10.5 Action on Instructions of Lenders. The Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder and under any other Loan Document in accordance with written instructions signed by the Required Lenders (or, when expressly required hereunder, all of the Lenders), and such instructions and any action taken or failure to act pursuant thereto shall be binding on all of the Lenders. The Lenders hereby acknowledge that the Agent shall be under no duty to take any discretionary action permitted to be taken by it pursuant to the provisions of this Agreement or any other Loan Document unless it shall be requested in writing to do so by the Required Lenders. The Agent shall be fully justified in 42 failing or refusing to take any action hereunder and under any other Loan Document unless it shall first be indemnified to its satisfaction by the Lenders pro rata against any and all liability, cost and expense that it may incur by reason of taking or continuing to take any such action. 10.6 Employment of Agents and Counsel. The Agent may execute any of its duties as Agent hereunder and under any other Loan Document by or through employees, agents, and attorneys-in-fact and shall not be answerable to the Lenders, except as to money or securities received by it or its authorized agents, for the default or misconduct of any such agents or attorneys-in-fact selected by it with reasonable care. The Agent shall be entitled to advice of counsel concerning the contractual arrangement between the Agent and the Lenders and all matters pertaining to the Agent's duties hereunder and under any other Loan Document. 10.7 Reliance on Documents; Counsel. The Agent shall be entitled to rely upon any Note, notice, consent, certificate, affidavit, letter, telegram, statement, paper or document believed by it to be genuine and correct and to have been signed or sent by the proper person or persons, and, in respect to legal matters, upon the opinion of counsel selected by the Agent, which counsel may be employees of the Agent. 10.8 Agent's Reimbursement and Indemnification. The Lenders agree to reimburse and indemnify the Agent ratably in proportion to their respective Commitments (or, if the Commitments have been terminated, in proportion to their Commitments immediately prior to such termination) (i) for any amounts not reimbursed by the Borrower for which the Agent is entitled to reimbursement by the Borrower under the Loan Documents, (ii) for any other expenses incurred by the Agent on behalf of the Lenders, in connection with the preparation, execution, delivery, administration and enforcement of the Loan Documents (including, without limitation, for any expenses incurred by the Agent in connection with any dispute between the Agent and any Lender or between two or more of the Lenders) and (iii) for any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever which may be imposed on, incurred by or asserted against the Agent in any way relating to or arising out of the Loan Documents or any other document delivered in connection therewith or the transactions contemplated thereby (including, without limitation, for any such amounts incurred by or asserted against the Agent in connection with any dispute between the Agent and any Lender or between two or more of the Lenders), or the enforcement of any of the terms of the Loan Documents or of any such other documents, provided that (i) no Lender shall be liable for any of the foregoing to the extent any of the foregoing is found in a final non-appealable judgment by a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the Agent and (ii) any indemnification required pursuant to Section 3.5(vii) shall, notwithstanding the provisions of this Section 10.8, be paid by the relevant Lender in accordance with the provisions thereof. The obligations of the Lenders under this Section 10.8 shall survive payment of the Obligations and termination of this Agreement. 10.9 Notice of Default. The Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Unmatured Default hereunder unless the Agent has received written notice from a Lender or the Borrower referring to this Agreement describing such Default or Unmatured Default and stating that such notice is a "notice of default". In the event that the Agent receives such a notice, the Agent shall give prompt notice thereof to the Lenders. 43 10.10 Rights as a Lender. In the event the Agent is a Lender, the Agent shall have the same rights and powers hereunder and under any other Loan Document with respect to its Commitment and its Loans as any Lender and may exercise the same as though it were not the Agent, and the term "Lender" or "Lenders" shall, at any time when the Agent is a Lender, unless the context otherwise indicates, include the Agent in its individual capacity. The Agent and its Affiliates may accept deposits from, lend money to, and generally engage in any kind of trust, debt, equity or other transaction, in addition to those contemplated by this Agreement or any other Loan Document, with the Borrower or any of its Subsidiaries in which the Borrower or such Subsidiary is not restricted hereby from engaging with any other Person. The Agent, in its individual capacity, is not obligated to remain a Lender. 10.11 Lender Credit Decision. Each Lender acknowledges that it has, independently and without reliance upon the Agent, the Arranger or any other Lender and based on the financial statements prepared by the Borrower and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and the other Loan Documents. Each Lender also acknowledges that it will, independently and without reliance upon the Agent, the Arranger or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement and the other Loan Documents. 10.12 Successor Agent. The Agent may resign at any time by giving written notice thereof to the Lenders and the Borrower, such resignation to be effective upon the appointment of a successor Agent or, if no successor Agent has been appointed, forty-five days after the retiring Agent gives notice of its intention to resign. The Agent may be removed at any time with or without cause by written notice received by the Agent from the Required Lenders, such removal to be effective on the date specified by the Required Lenders; provided that the Agent may not be removed unless the Agent (in its individual capacity) and any affiliate thereof acting as Issuer is relieved of all of its duties as Issuer pursuant to documentation reasonably satisfactory to such Person on or prior to the date of such removal. Upon any such resignation or removal, the Required Lenders shall have the right to appoint, on behalf of the Borrower and the Lenders, a successor Agent. If no successor Agent shall have been so appointed by the Required Lenders within thirty days after the resigning Agent's giving notice of its intention to resign, then the resigning Agent may appoint, on behalf of the Borrower and the Lenders, a successor Agent. Notwithstanding the previous sentence, the Agent may at any time without the consent of any Lender and with the consent of the Borrower, not to be unreasonably withheld or delayed, appoint any of its Affiliates which is a commercial bank as a successor Agent hereunder. If the Agent has resigned or been removed and no successor Agent has been appointed, the Lenders may perform all the duties of the Agent hereunder and the Borrower shall make all payments in respect of the Obligations to the applicable Lender and for all other purposes shall deal directly with the Lenders. No successor Agent shall be deemed to be appointed hereunder until such successor Agent has accepted the appointment. Any such successor Agent shall be a commercial bank having capital and retained earnings of at least $100,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the resigning or removed Agent. Upon the effectiveness of the resignation or removal of the Agent, the resigning or removed Agent shall be discharged from its duties and obligations hereunder and under the Loan Documents. After the effectiveness of the resignation or removal of an Agent, 44 the provisions of this Article X shall continue in effect for the benefit of such Agent in respect of any actions taken or omitted to be taken by it while it was acting as the Agent hereunder and under the other Loan Documents. In the event that there is a successor to the Agent by merger, or the Agent assigns its duties and obligations to an Affiliate pursuant to this Section 10.12, then the term "Prime Rate" as used in this Agreement shall mean the prime rate, base rate or other analogous rate of the new Agent. 10.13 Agent's Fee. The Borrower agrees to pay to the Agent, for its own account, the fees agreed to by the Borrower and the Agent pursuant to that certain letter agreement dated January 23, 2003, or as otherwise agreed from time to time. 10.14 Delegation to Affiliates. The Borrower and the Lenders agree that the Agent may delegate any of its duties under this Agreement to any of its Affiliates. Any such Affiliate (and such Affiliate's directors, officers, agents and employees) which performs duties in connection with this Agreement shall be entitled to the same benefits of the indemnification, waiver and other protective provisions to which the Agent is entitled under Articles IX and X. 10.15 Syndication Agent. No Lender identified on the cover page, the signature pages or otherwise in this Agreement, or in any document related hereto, as being the "Syndication Agent" shall have any right, power, obligation, liability, responsibility or duty under this Agreement in such capacity other than those applicable to all Lenders. Each Lender acknowledges that it has not relied, and will not rely, on the Syndication Agent in deciding to enter into this Agreement or in taking or refraining from taking any action hereunder or pursuant hereto. ARTICLE XI. SETOFF; RATABLE PAYMENTS 11.1 Setoff. In addition to, and without limitation of, any rights of the Lenders under applicable law, if the Borrower becomes insolvent, however evidenced, or any Default occurs, any and all deposits (including all account balances, whether provisional or final and whether or not collected or available) and any other Indebtedness at any time held or owing by any Lender or any Affiliate of any Lender to or for the credit or account of the Borrower may be offset and applied toward the payment of the Obligations owing to such Lender, whether or not the Obligations, or any part thereof, shall then be due. 11.2 Ratable Payments. If any Lender, whether by setoff or otherwise, has payment made to it upon its Outstanding Credit Exposure (other than payments received pursuant to Section 3.1, 3.2, 3.4 or 3.5 and payments made to the Issuer in respect of Reimbursement Obligations so long as the Lenders have not funded their participations therein) in a greater proportion than that received by any other Lender, such Lender agrees, promptly upon demand, to purchase a portion of the Aggregate Outstanding Credit Exposure held by the other Lenders so that after such purchase each Lender will hold its ratable proportion of the Aggregate Outstanding Credit Exposure. If any Lender, whether in connection with setoff or amounts which might be subject to setoff or otherwise, receives collateral or other protection for its Obligations or such amounts which may be subject to setoff, such Lender agrees, promptly upon 45 demand, to take such action necessary such that all Lenders share in the benefits of such collateral ratably in proportion to their Aggregate Outstanding Credit Exposure. In case any such payment is disturbed by legal process, or otherwise, appropriate further adjustments shall be made. ARTICLE XII. BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS 12.1 Successors and Assigns. The terms and provisions of the Loan Documents shall be binding upon and inure to the benefit of the Borrower and the Lenders and their respective successors and assigns, except that (i) the Borrower shall not have the right to assign its rights or obligations under the Loan Documents and (ii) any assignment by any Lender must be made in compliance with Section 12.3. The parties to this Agreement acknowledge that clause (ii) of this Section 12.1 relates only to absolute assignments and does not prohibit assignments creating security interests, including, without limitation, any pledge or assignment by any Lender of all or any portion of its rights under this Agreement and any Note to a Federal Reserve Bank; provided that no such pledge or assignment creating a security interest shall release the transferor Lender from its obligations hereunder unless and until the parties thereto have complied with the provisions of Section 12.3. The Agent may treat the Person which made any Loan or which holds any Note as the owner thereof for all purposes hereof unless and until such Person complies with Section 12.3; provided that the Agent may in its discretion (but shall not be required to) follow instructions from the Person which made any Loan or which holds any Note to direct payments relating to such Loan or Note to another Person. Any assignee of the rights to any Loan or any Note agrees by acceptance of such assignment to be bound by all the terms and provisions of the Loan Documents. Any request, authority or consent of any Person, who at the time of making such request or giving such authority or consent is the owner of the rights to any Loan (whether or not a Note has been issued in evidence thereof), shall be conclusive and binding on any subsequent holder or assignee of the rights to such Loan. 12.2 Participations. 12.2.1 Permitted Participants; Effect. Any Lender may, in the ordinary course of its business and in accordance with applicable law, at any time sell to one or more banks or other entities ("Participants") participating interests in any Outstanding Credit Exposure owing to such Lender, any Note held by such Lender, any Commitment of such Lender or any other interest of such Lender under the Loan Documents. In the event of any such sale by a Lender of participating interests to a Participant, such Lender's obligations under the Loan Documents shall remain unchanged, such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, such Lender shall remain the owner of its Outstanding Credit Exposure and the holder of any Note issued to it in evidence thereof for all purposes under the Loan Documents, all amounts payable by the Borrower under this Agreement shall be determined as if such Lender had not sold such participating interests, and the Borrower and the Agent shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under the Loan Documents. 46 12.2.2 Voting Rights. Each Lender shall retain the sole right to approve, without the consent of any Participant, any amendment, modification or waiver of any provision of the Loan Documents other than any amendment, modification or waiver with respect to any Credit Extension or Commitment in which such Participant has an interest which forgives principal, interest, fees or Reimbursement Obligations or reduces the interest rate or fees payable with respect to any such Credit Extension or Commitment, extends the Facility Termination Date or the Final Maturity Date, or postpones any date fixed for any regularly scheduled payment of principal of, or interest or fees on, any such Credit Extension or Commitment. 12.2.3 Benefit of Setoff. The Borrower agrees that each Participant shall be deemed to have the right of setoff provided in Section 11.1 in respect of its participating interest in amounts owing under the Loan Documents to the same extent as if the amount of its participating interest were owing directly to it as a Lender under the Loan Documents, provided that each Lender shall retain the right of setoff provided in Section 11.1 with respect to the amount of participating interests sold to each Participant. The Lenders agree to share with each Participant, and each Participant, by exercising the right of setoff provided in Section 11.1, agrees to share with each Lender, any amount received pursuant to the exercise of its right of setoff, such amounts to be shared in accordance with Section 11.2 as if each Participant were a Lender. 12.3 Assignments. 12.3.1 Permitted Assignments. Any Lender may, in the ordinary course of its business and in accordance with applicable law, at any time assign to one or more banks or other entities ("Purchasers") all or any part of its rights and obligations under the Loan Documents. Such assignment shall be substantially in the form of Exhibit C or in such other form as may be agreed to by the parties thereto. The consent of the Borrower and the Agent shall be required prior to an assignment becoming effective with respect to a Purchaser which is not a Lender or an Affiliate thereof; provided that if a Default has occurred and is continuing, the consent of the Borrower shall not be required. Such consent shall not be unreasonably withheld or delayed. Each such assignment with respect to a Purchaser which is not a Lender or an Affiliate thereof shall (unless each of the Borrower and the Agent otherwise consents) be in an amount not less than the lesser of (i) $10,000,000 or (ii) the remaining amount of the assigning Lender's Commitment (calculated as at the date of such assignment) or outstanding Loans (if the applicable Commitment has been terminated). 12.3.2 Effect; Effective Date. Upon (i) delivery to the Agent of an assignment, together with any consents required by Section 12.3.1, and (ii) payment of a $3,500 fee to the Agent for processing such assignment (unless such fee is waived by the Agent), such assignment shall become effective on the effective date specified in such assignment. The assignment shall contain a representation by the Purchaser to the effect that none of the consideration used to make the purchase of the Commitment and Outstanding Credit Exposure under the applicable assignment agreement constitutes "plan assets" as defined under ERISA and that the rights and interests of the Purchaser in and under the Loan Documents will not be "plan assets" under ERISA. On and after the effective date of 47 such assignment, such Purchaser shall for all purposes be a Lender party to this Agreement and any other Loan Document executed by or on behalf of the Lenders and shall have all the rights and obligations of a Lender under the Loan Documents, to the same extent as if it were an original party hereto, and no further consent or action by the Borrower, the Lenders or the Agent shall be required to release the transferor Lender with respect to the percentage of the Aggregate Commitment and the Aggregate Outstanding Credit Exposure assigned to such Purchaser. Upon the consummation of any assignment to a Purchaser pursuant to this Section 12.3.2, the transferor Lender, the Agent and the Borrower shall, if the transferor Lender or the Purchaser desires that its Loans be evidenced by Notes, make appropriate arrangements so that new Notes or, as appropriate, replacement Notes are issued to such transferor Lender and new Notes or, as appropriate, replacement Notes, are issued to such Purchaser, in each case in principal amounts reflecting their respective Commitments, as adjusted pursuant to such assignment. 12.4 Dissemination of Information. The Borrower authorizes each Lender to disclose to any Participant or Purchaser or any other Person acquiring an interest in the Loan Documents by operation of law (each a "Transferee") and any prospective Transferee any and all information in such Lender's possession concerning the creditworthiness of the Borrower and its Subsidiaries, including without limitation any information contained in any Reports; provided that each Transferee and prospective Transferee agrees to be bound by Section 9.11 of this Agreement. 12.5 Tax Treatment. If any interest in any Loan Document is transferred to any Transferee which is organized under the laws of any jurisdiction other than the United States or any State thereof, the transferor Lender shall cause such Transferee, concurrently with the effectiveness of such transfer, to comply with the provisions of Section 3.5(iv). ARTICLE XIII. NOTICES 13.1 Notices. Except as otherwise permitted by Section 2.14 with respect to borrowing notices, all notices, requests and other communications to any party hereunder shall be in writing (including electronic transmission, facsimile transmission or similar writing) and shall be given to such party: (x) in the case of the Borrower or the Agent, at its address or facsimile number set forth on the signature pages hereof, (y) in the case of any Lender, at its address or facsimile number set forth in its administrative questionnaire or (z) in the case of any party, at such other address or facsimile number as such party may hereafter specify for the purpose by notice to the Agent and the Borrower in accordance with the provisions of this Section 13.1. Each such notice, request or other communication shall be effective (i) if given by facsimile transmission, when transmitted to the facsimile number specified in this Section and confirmation of receipt is received, or (ii) if given by any other means, when delivered (or, in the case of electronic transmission, received) at the address specified in this Section; provided that notices to the Agent under Article II shall not be effective until received. 13.2 Change of Address. The Borrower, the Agent and any Lender may each change the address for service of notice upon it by a notice in writing to the other parties hereto. 48 ARTICLE XIV. COUNTERPARTS This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one agreement, and any of the parties hereto may execute this Agreement by signing any such counterpart. This Agreement shall be effective when it has been executed by the Borrower, the Agent and the Lenders and each party has notified the Agent by facsimile transmission or telephone that it has taken such action. ARTICLE XV. CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL; MAXIMUM INTEREST RATE 15.1 CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (INCLUDING, WITHOUT LIMITATION, 735 ILCS SECTION 105/5-1 ET SEQ, BUT OTHERWISE WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS) OF THE STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. 15.2 CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE COURT SITTING IN CHICAGO, ILLINOIS IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT, ANY LENDER OR THE ISSUER TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY THE BORROWER AGAINST THE AGENT OR ANY LENDER OR ANY AFFILIATE OF THE AGENT OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS. 15.3 WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT, THE ISSUER AND EACH LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY 49 ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER. 15.4 Maximum Interest Rate. No provision of the Loan Documents shall require the payment or permit the collection of interest in excess of the maximum permitted by applicable law ("Maximum Rate"). If any interest in excess of the Maximum Rate is provided for or shall be adjudicated to be provided for in the Notes or otherwise in connection with this Agreement, the provisions of this Section 15.4 shall govern and prevail and neither the Borrower nor the sureties, guarantors, successors or assigns of the Borrower shall be obligated to pay the excess amount of the interest or any other excess sum paid for the use, forbearance, or detention of sums loaned. In the event the Agent or any Lender ever receives, collects or applies as interest any amount in excess of the Maximum Rate, the amount by which such amount exceeds the Maximum Rate shall be applied as a payment and reduction of the principal of indebtedness evidenced by the Loans, and, if the principal amount of the Loans has been paid in full, any remaining excess shall forthwith be paid to the Borrower. 50 IN WITNESS WHEREOF, the Borrower, the Lenders and the Agent have executed this Agreement as of the date first above written. SOUTHWESTERN PUBLIC SERVICE COMPANY By: /s/ Benjamin G.S. Fowke III ---------------------------------------- Title: Vice President and Treasurer By: /s/ Judith A. Delaney --------------------------------------- Title: Assistant Treasurer 800 Nicollet Mall, Suite 2900 Minneapolis, MN 55402 Attention: Mary Schell Telephone: (612) 215-5362 Fax: (612) 215-5370 Credit Agreement Commitments $34,000,000 BANK ONE, NA, Individually and as Agent By: /s/ Jane A. Bek --------------------------------------- Title: Director -------------------------------- 1 Bank One Plaza Chicago, Illinois 60670 Attention: Jane Bek Telephone: (312) 732-3422 Fax: (312) 732-5435 Credit Agreement $26,000,000 THE BANK OF NEW YORK, as Syndication Agent and as a Lender By: /s/ ---------------------------------------- Title: Managing Director --------------------------------- Credit Agreement $15,000,000 THE BANK OF TOKYO-MITSUBISHI, LTD. By: /s/ D Barnell --------------------------------------- Title: Vice President -------------------------------- By: /s/ John M. Mearns --------------------------------------- Title: VP & Manager -------------------------------- Credit Agreement $15,000,000 UBS AG, CAYMAN ISLANDS BRANCH By: /s/ Barbara Ezell-McMichael ---------------------------------------- Title: Associate Director -------------------------------- By: /s/ --------------------------------------- Title: Director -------------------------------- Credit Agreement $10,000,000 AMARILLO NATIONAL BANK By: /s/ --------------------------------------- Title: Executive Vice President --------------------------------- Credit Agreement PRICING SCHEDULE

For the purposes of this Schedule, the following terms have the following meanings, subject to the final paragraph of this Schedule: "Level I Status" exists at any date if, on such date, the Borrower's Moody's Rating is A3 or better and the Borrower's S&P Rating is A- or better. "Level II Status" exists at any date if, on such date, (i) the Borrower has not qualified for Level I Status and (ii) the Borrower's Moody's Rating is Baa1 or better and the Borrower's S&P Rating is BBB+ or better. "Level III Status" exists at any date if, on such date, (i) the Borrower has not qualified for Level I Status or Level II Status; and (ii) the Borrower's Moody's Rating is Baa2 or better and the Borrower's S&P Rating is BBB or better. "Level IV Status" exists at any date if, on such date, (i) the Borrower has not qualified for Level I Status, Level II Status or Level III Status; and (ii) the Borrower's Moody's Rating is Baa3 or better and the Borrower's S&P Rating is BBB- or better. "Level V Status" exists at any date if, on such date, the Borrower has not qualified for Level I Status, Level II Status, Level III Status or Level IV Status. "Moody's Rating" means, at any time, the rating issued by Moody's and then in effect with respect to the Borrower's senior unsecured long-term debt securities without third-party credit enhancement. "S&P Rating" means, at any time, the rating issued by S&P and then in effect with respect to the Borrower's senior unsecured long-term debt securities without third-party credit enhancement. "Status" means Level I Status, Level II Status, Level III Status, Level IV Status or Level V Status. The Applicable Margin, the Commitment Fee Rate and the Letter of Credit Fee Rate shall be determined in accordance with the foregoing table based on the Borrower's Status as determined from its then-current Moody's and S&P Ratings. The credit rating in effect on any date for the purposes of this Schedule is that in effect at the close of business on such date. If at any time the Borrower has no Moody's Rating or no S&P Rating, Level V Status shall exist. SCHEDULE 5.7 LITIGATION; CONTINGENT LIABILITIES On July 24, 1995, Lamb County Electric Cooperative, Inc. (LCEC) petitioned the Public Utility Commission of Texas (PUCT) for a cease and desist order against the Borrower. LCEC alleged that the Borrower had been unlawfully providing service to oil-field customers and their facilities in LCEC's singly certificated area. The Borrower responded that it was lawfully entitled to serve oil field customers under "grandfather rights" granted to it in the same order that granted LCEC its certificated area. Ultimately, the Commission issued an order granting the Borrower's motion for summary disposition, thus denying LCEC's petition. LCEC appealed the Commission's order to district court, which upheld the order. LCEC then appealed to the Third Court of Appeals, which reversed the district court judgment and remanded the case to the Commission for an evidentiary hearing. The LCEC complaint was transferred to the State Office of Administrative Hearings (SOAH) for processing. A hearing on the merits was held October 7-10, 2002, and we are currently waiting for a Proposal For Decision from the SOAH Administrative Law Judge. In related litigation, on October 18, 1996, LCEC filed an action for damages based on its claim that the Borrower has been unlawfully providing service to oil field customers in its certificated area. This case has remained dormant pending a final determination by the PUCT of the lawfulness of the service. Damages resulting from a decision adverse to the Borrower could be material. Schedule 5.7-1 SCHEDULE 5.9 EXCLUDED REPORTABLE EVENTS Pursuant to 29 CFR Part 4043, Subparts A and B, a Reportable Event occurred on November 22, 2002, when five former officers of NRG Energy, Inc. a wholly owned subsidiary of Xcel Energy Inc., filed an involuntary petition in the United States Bankruptcy Court, District of Minnesota, alleging non-payment of certain obligations arising out of their employment with NRG Energy, Inc. Xcel Energy Inc., as plan sponsor of the Xcel Energy Pension Plan, of which NRG Energy, Inc. is a participating employer, has complied with the Pension Benefit Guaranty Corporation's Reporting and Notification requirements, and takes the position that the Involuntary Petition has no impact on the funded status of the Xcel Energy Pension Plan. Schedule 5.9-1 SCHEDULE 6.14 EXISTING LIENS 1. Liens in connection with the $25,000,000 aggregate principal amount of Red River Authority of Texas Adjustable Rate Tender Securities (Pollution Control Revenue Refunding Bonds, Southwestern Public Service Company Project), Series 1996 2. Liens in connection with the $57,300,000 aggregate principal amount of Potter County Development Corporation Pollution Control Revenue Refunding Bonds (Southwestern Public Service Company Project), Series 1996 3. Liens in connection with the $44,500,000 aggregate principal amount of Red River Authority of Texas Adjustable Rate Tender Securities (Pollution Control Revenue Refunding Bonds, Southwestern Public Service Company Project), Series 1991 4. Liens in connection with financing in the amount of approximately $17,700,000 relating to construction of electric bulk power transmission system, including approximately 284 miles of transmission lines and rights under related construction contracts, transmission agreement and power sales agreement 5. Leases with respect to assets or Property of the Southwestern Public Service Company entered into in the ordinary course of business 6. Liens in connection with any attachment, decree or judgment not constituting a Default under Section 7.9 Schedule 6.14-1 SCHEDULE 6.16 OFF-BALANCE SHEET LIABILITIES Existing letters of credit issued in favor of Southwest Power Pool in the aggregate amount of $6,206,763. Existing Synthetic Lease with an unamortized balance of $13,679,274.13. Schedule 6.16-1 EXHIBIT A FORM OF OPINION February 18, 2003 To: The Agent and the Lenders who are parties to the Credit Agreement described below. Re: Southwestern Public Service Company Ladies and Gentlemen: We have acted as counsel for Southwestern Public Service Company (the "Borrower") and have represented the Borrower in connection with its execution and delivery of a Credit Agreement dated as of February 18, 2003 (the "Agreement"), among the Borrower, the Lenders named therein, Bank One, NA, as Agent, The Bank of New York, as Syndication Agent, and Bank One Capital Markets, Inc., as Lead Arranger and Sole Book Runner, providing for Credit Extensions in an aggregate principal amount not exceeding $125,000,000 at any one time outstanding. All capitalized terms used in this opinion and not otherwise defined herein shall have the meanings attributed to them in the Agreement. We are not general counsel to the Borrower, and our representation consists of advising the Borrower on corporate matters as to which we have been specifically consulted. In connection with this opinion, we have examined the originals or photocopies of the Agreement, the Notes executed and to be executed by the Borrower, and such corporate records, agreements and instruments of the Borrower, certificates of public officials and of officers of the Borrower, such other documents and records, and such matters of law, as we have deemed necessary or appropriate for purposes of the opinions rendered below. In such examination, we have assumed the genuineness of all signatures (other than those of the Borrower), the authenticity of all documents submitted to us as copies and the authenticity of the originals of such latter documents. In addition, where relevant facts were not independently established, we have relied as to matters of fact (but not conclusions of law) upon the aforesaid agreements, corporate records, instruments, documents and certificates, discussions with officers and representatives of the Borrower, the representations and warranties of the Borrower contained in the Agreement and the certificates of officers of the Borrower being delivered to you in connection with the Agreement. In rendering this opinion, we have also assumed that the Agreement has been duly authorized, executed and delivered by, and is the legal, valid and binding agreement of, and is enforceable against, the Lenders. Based on the foregoing examination, and subject to the limitations and qualifications set forth in this letter, we are of the opinion that: 1. The Borrower is a corporation, duly and properly incorporated, validly existing, and in good standing under the laws of New Mexico and has all requisite authority to conduct its business in each jurisdiction in which qualification is required, except where the failure to Exhibit A-1 so qualify would not have a Material Adverse Effect. 2. The execution and delivery by the Borrower of the Loan Documents and the performance by the Borrower of its obligations thereunder have been duly authorized by proper corporate proceedings on the part of the Borrower and will not: (a) require any consent of the Borrower's shareholders; (b) violate (i) any law, rule, regulation, order, writ, judgment, injunction, decree or award binding on the Borrower or (ii) the Borrower's restated articles of incorporation, or bylaws, or (iii) the provisions of any indenture, instrument or agreement to which the Borrower is a party or is subject, or by which it, or its Property, is bound, or conflict with or constitute a default thereunder; or (c) result in, or require, the creation or imposition of any Lien in, of, or on the Property of the Borrower pursuant to the terms of any indenture, instrument or agreement binding upon the Borrower. 3. The Loan Documents have been duly executed and delivered by the Borrower and constitute the legal, valid and binding obligations of the Borrower enforceable against the Borrower in accordance with their terms except to the extent the enforcement thereof may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally and subject also to the availability of equitable remedies if equitable remedies are sought. 4. Except as set forth in the Borrower's Annual Report on Form 10-K for the fiscal year ended December 31, 2001, the Borrower's Quarterly reports on Form 10-Q for the quarters ended March 31, 2002, June 30, 2002, and September 30, 2002, and in Schedule 5.7 to the Agreement, there is no litigation, arbitration, governmental investigation, proceeding or inquiry pending or, to the best of our knowledge after due inquiry, threatened against the Borrower which, if adversely determined, could reasonably be expected to have a Material Adverse Effect. 5. No order, consent, adjudication, approval, license, authorization, or validation of, or filing, recording or registration with, or exemption by, or other action in respect of any governmental or public body or authority, or any subdivision thereof which has not been obtained by the Borrower is required to be obtained by the Borrower in connection with the execution and delivery of the Loan Documents, the borrowings under the Agreement, the payment and performance by the Borrower of the Obligations, or the legality, validity, binding effect or enforceability of any of the Loan Documents. This opinion is subject to and qualified in all respects by the following: 1. This opinion is limited to federal law and the laws of New Mexico as in effect on the date hereof, and we disclaim any responsibility to inform you of any changes after the date Exhibit A-2 hereof. We express no opinion as to (a) any matter that may be governed by the laws of any other jurisdiction; (b) state and federal securities, tax, and ERISA laws, rules, and regulations; or (c) potential liability imposed by any of the foregoing laws with respect to the transactions contemplated by the Agreement. 2. We express no opinion not expressly stated herein, and no further or other opinion shall be implied. This opinion is being delivered solely in connection with the closing under the Agreement that is being consummated on the date hereof. The opinions expressed herein are based upon the laws mentioned above in effect on the date hereof, and we assume no obligation to revise or supplement this letter to take into account any event, action, interpretation, change of circumstance, change of law or other matters coming to our attention after the date hereof. This opinion may be relied upon by the Agent, the Lenders, and their participants, assignees and other transferees. Very truly yours, Exhibit A-3 EXHIBIT B FORM OF ASSIGNMENT AGREEMENT This Assignment Agreement (this "Assignment Agreement") between _______________________________ (the "Assignor") and _________________________ (the "Assignee") is dated as of ___________________, 20___. The parties hereto agree as follows: 1. PRELIMINARY STATEMENT. The Assignor is a party to a Credit Agreement (which, as it may be amended, modified, renewed or extended from time to time is herein called the "Credit Agreement") described in Item 1 of Schedule 1 attached hereto ("Schedule 1"). Capitalized terms used herein and not otherwise defined herein shall have the meanings attributed to them in the Credit Agreement. 2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, an interest in and to the Assignor's rights and obligations under the Credit Agreement and the other Loan Documents, such that after giving effect to such assignment the Assignee shall have purchased pursuant to this Assignment Agreement the percentage interest specified in Item 3 of Schedule 1 of all outstanding rights and obligations under the Credit Agreement and the other Loan Documents relating to the facilities listed in Item 3 of Schedule 1. The aggregate Commitment (or Loans, if the applicable Commitment has been terminated) purchased by the Assignee hereunder is set forth in Item 4 of Schedule 1. 3. EFFECTIVE DATE. The effective date of this Assignment Agreement (the "Effective Date") shall be the later of the date specified in Item 5 of Schedule 1 or two Business Days (or such shorter period agreed to by the Agent) after this Assignment Agreement, together with any consents required under the Credit Agreement, are delivered to the Agent. In no event will the Effective Date occur if the payments required to be made by the Assignee to the Assignor on the Effective Date are not made on the proposed Effective Date. 4. PAYMENT OBLIGATIONS. In consideration for the sale and assignment of Loans hereunder, the Assignee shall pay the Assignor, on the Effective Date, the amount agreed to by the Assignor and the Assignee. On and after the Effective Date, the Assignee shall be entitled to receive from the Agent all payments of principal, interest and fees with respect to the interest assigned hereby. The Assignee will promptly remit to the Assignor any interest on Loans and fees received from the Agent which relate to the portion of the Commitment or Loans assigned to the Assignee hereunder for periods prior to the Effective Date and not previously paid by the Assignee to the Assignor. In the event that either party hereto receives any payment to which the other party hereto is entitled under this Assignment Agreement, then the party receiving such amount shall promptly remit it to the other party hereto. 5. RECORDATION FEE. The Assignor and Assignee each agree to pay one-half of the recordation fee required to be paid to the Agent in connection with this Assignment Agreement unless otherwise specified in Item 6 of Schedule 1. 6. REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE ASSIGNOR'S LIABILITY. The Assignor represents and warrants that (i) it is the legal and Exhibit B-1 beneficial owner of the interest being assigned by it hereunder, (ii) such interest is free and clear of any adverse claim created by the Assignor and (iii) the execution and delivery of this Assignment Agreement by the Assignor is duly authorized. It is understood and agreed that the assignment and assumption hereunder are made without recourse to the Assignor and that the Assignor makes no other representation or warranty of any kind to the Assignee. Neither the Assignor nor any of its officers, directors, employees, agents or attorneys shall be responsible for (i) the due execution, legality, validity, enforceability, genuineness, sufficiency or collectability of any Loan Document, including without limitation, documents granting the Assignor and the other Lenders a security interest in assets of the Borrower or any guarantor, (ii) any representation, warranty or statement made in or in connection with any of the Loan Documents, (iii) the financial condition or creditworthiness of the Borrower or any guarantor, (iv) the performance of or compliance with any of the terms or provisions of any of the Loan Documents, (v) inspecting any of the property, books or records of the Borrower, (vi) the validity, enforceability, perfection, priority, condition, value or sufficiency of any collateral securing or purporting to secure the Loans or (vii) any mistake, error of judgment, or action taken or omitted to be taken in connection with the Loans or the Loan Documents. 7. REPRESENTATIONS AND UNDERTAKINGS OF THE ASSIGNEE. The Assignee (i) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements requested by the Assignee and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment Agreement, (ii) agrees that it will, independently and without reliance upon the Agent, the Assignor or any other Lender and based on such documents and information at it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, (iii) appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under the Loan Documents as are delegated to the Agent by the terms thereof, together with such powers as are reasonably incidental thereto, (iv) confirms that the execution and delivery of this Assignment Agreement by the Assignee is duly authorized, (v) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender, (vi) agrees that its payment instructions and notice instructions are as set forth in the attachment to Schedule 1, (vii) confirms that none of the funds, monies, assets or other consideration being used to make the purchase and assumption hereunder are "plan assets" as defined under ERISA and that its rights, benefits and interests in and under the Loan Documents will not be "plan assets" under ERISA, (viii) agrees to indemnify and hold the Assignor harmless against all losses, costs and expenses (including, without limitation, reasonable attorneys' fees) and liabilities incurred by the Assignor in connection with or arising in any manner from the Assignee's nonperformance of the obligations assumed under this Assignment Agreement, and (ix) if applicable, attaches the forms prescribed by the Internal Revenue Service of the United States certifying that the Assignee is entitled to receive payments under the Loan Documents without deduction or withholding of any United States federal income taxes. 8. GOVERNING LAW. This Assignment Agreement shall be governed by the internal law, and not the law of conflicts, of the State of Illinois. 9. NOTICES. Notices shall be given under this Assignment Agreement in the manner set forth in the Credit Agreement. For the purpose hereof, the addresses of the parties Exhibit B-2 hereto (until notice of a change is delivered) shall be the address set forth in the attachment to Schedule 1. 10. COUNTERPARTS; DELIVERY BY FACSIMILE. This Assignment Agreement may be executed in counterparts. Transmission by facsimile of an executed counterpart of this Assignment Agreement shall be deemed to constitute due and sufficient delivery of such counterpart and such facsimile shall be deemed to be an original counterpart of this Assignment Agreement. IN WITNESS WHEREOF, the duly authorized officers of the parties hereto have executed this Assignment Agreement by executing Schedule 1 hereto as of the date first above written. Exhibit B-3 SCHEDULE 1 to Assignment Agreement 1. Description and Date of Credit Agreement: Credit Agreement dated as of February 18, 2003 among Southwestern Public Service Company, the lenders named therein including the Assignor, and Bank One, NA individually and as Agent for such lenders, as it may be amended from time to time. 2. Date of Assignment Agreement:_______________, 20 3. Amounts (As of Date of Item 2 above): a. Assignee's percentage of Aggregate Commitment (Advances) purchased under the Assignment Agreement** ____% b. Amount of Assignor's Commitment purchased under the Assignment Agreement** $____ 4. Assignee's Commitment (or Loans with respect to terminated Commitments) purchased hereunder: $__________________ 5. Proposed Effective Date: ____________________ 6. Non-standard Recordation Fee Arrangement N/A*** [Assignor/Assignee to pay 100% of fee] [Fee waived by Agent] Exhibit B-4 Accepted and Agreed: [NAME OF ASSIGNOR] [NAME OF ASSIGNEE] By:______________________________ By:___________________________________ Title ___________________________ Title:________________________________ Exhibit B-5 ACCEPTED AND CONSENTED TO****BY ACCEPTED AND CONSENTED TO BY SOUTHWESTERN PUBLIC BANK ONE, NA, as Agent SERVICE COMPANY By:______________________________ By:___________________________________ Title ___________________________ Title:________________________________ ** Percentage taken to 10 decimal places *** If fee is split 50-50, pick N/A as option **** Delete if not required by Credit Agreement Exhibit B-6 Attachment to SCHEDULE 1 to ASSIGNMENT AGREEMENT ADMINISTRATIVE INFORMATION SHEET Attach Assignor's Administrative Information Sheet, which must include notice addresses for the Assignor and the Assignee (Sample form shown below) ASSIGNOR INFORMATION CONTACT: Name:____________________________ Telephone No.:________________________ Fax No.:_________________________ Telex No.:____________________________ Answerback:___________________________ PAYMENT INFORMATION: Name & ABA # of Destination Bank: _______________________________________ Account Name & Number for Wire Transfer: _______________________________________ _______________________________________ Other Instructions:_____________________________________________________________ ADDRESS FOR NOTICES FOR ASSIGNOR:__________________ ASSIGNEE INFORMATION CREDIT CONTACT: Name:____________________________ Telephone No.:________________________ Fax No.:_________________________ Telex No.:____________________________ Answerback:___________________________ Exhibit B-7 KEY OPERATIONS CONTACTS: Booking Installation: Booking Installation: Name: Name: Telephone No.: Telephone No.: Fax No.: Fax No.: Telex No.: Telex No.: Answerback: Answerback: PAYMENT INFORMATION: Name & ABA # of Destination Bank: Account Name & Number for Wire Transfer: Other Instructions: ADDRESS FOR NOTICES FOR ASSIGNEE: Exhibit B-8 BANK ONE INFORMATION Assignee will be called promptly upon receipt of the signed agreement. INITIAL FUNDING CONTACT: SUBSEQUENT OPERATIONS CONTACT: Name: Name: Telephone No.: (312) Telephone No.: (312) Fax No.: (312) Fax No.: (312) Bank One Telex No.: 190201 (Answerback: FNBC UT) INITIAL FUNDING STANDARDS: Libor Fund 2 days after rates are set. BANK ONE WIRE INSTRUCTIONS: Bank One, NA, ABA # 071000013 LS2 Incoming Account # 481152860000 Ref:________________ ADDRESS FOR NOTICES FOR BANK ONE: 1 Bank One Plaza, Chicago, IL 60670 Attn: Agency Compliance Division, Suite IL1-0353 Fax No. (312) 732-2038 or (312) 732-4339 Exhibit B-9 EXHIBIT C FORM OF LOAN/CREDIT RELATED MONEY TRANSFER INSTRUCTION To Bank One, NA, as Agent (the "Agent") under the Credit Agreement Described Below. Re: Credit Agreement, dated as of February 18, 2003 (as the same may be amended or modified, the "Credit Agreement"), among Southwestern Public Service Company (the "Borrower"), the Lenders named therein and the Agent. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned thereto in the Credit Agreement. The Agent is specifically authorized and directed to act upon the following standing money transfer instructions with respect to the proceeds of Credit Extensions or other extensions of credit from time to time until receipt by the Agent of a specific written revocation of such instructions by the Borrower, provided that the Agent may otherwise transfer funds as hereafter directed in writing by the Borrower in accordance with Section 13.1 of the Credit Agreement or based on any telephonic notice made in accordance with Section 2.14 of the Credit Agreement. Facility Identification Number(s)______________________________________ Customer/Account Name: Southwestern Public Service Company Transfer Funds To _____________________________________________________ For Account No. _______________________________________________________ Reference/Attention To ________________________________________________ Authorized Officer (Customer Representative) Date________________ ___________________________________________ ___________________ (Please Print) Signature Bank Officer Name Date_____________________ ___________________________________________ _________________________ (Please Print) Signature (Deliver Completed Form to Credit Support Staff For Immediate Processing) Exhibit C-1 EXHIBIT D FORM OF NOTE [Date] Southwestern Public Service Company, a New Mexico corporation (the "Borrower"), promises to pay to the order of _____________________________ (the "Lender") the aggregate unpaid principal amount of all Loans made by the Lender to the Borrower pursuant to Article II of the Agreement (as hereinafter defined), in immediately available funds at the main office of Bank One, NA in Chicago, Illinois, as Agent, together with interest on the unpaid principal amount hereof at the rates and on the dates set forth in the Agreement. The Borrower shall pay the principal of and accrued and unpaid interest on the Loans in full on the Final Maturity Date. The Lender shall, and is hereby authorized to, record on the schedule attached hereto, or to otherwise record in accordance with its usual practice, the date and amount of each Loan and the date and amount of each principal payment hereunder. This Note is one of the Notes issued pursuant to, and is entitled to the benefits of, the Credit Agreement dated as of February 18, 2003 (which, as it may be amended or modified and in effect from time to time, is herein called the "Agreement"), among the Borrower, the lenders party thereto, including the Lender, and Bank One, NA, as Agent, to which Agreement reference is hereby made for a statement of the terms and conditions governing this Note, including the terms and conditions under which this Note may be prepaid or its maturity date accelerated. Capitalized terms used herein and not otherwise defined herein are used with the meanings attributed to them in the Agreement. Notwithstanding anything to the contrary in this Note, no provision of this Note shall require the payment or permit the collection of interest in excess of the maximum permitted by applicable law ("Maximum Rate"). If any interest in excess of the Maximum Rate is provided for or shall be adjudicated to be so provided, in this Note or otherwise in connection with the loan transaction, the provisions of this paragraph shall govern and prevail, and neither the Borrower nor the sureties, guarantors, successors or assigns of the Borrower shall be obligated to pay the excess of the interest or any other excess sum paid for the use, forbearance, or detention of sums loaned. If for any reason interest in excess of the Maximum Rate shall be deemed charged, required or permitted by any court of competent jurisdiction, the excess shall be applied a payment and reduction of the principal of indebtedness evidenced by this Note, and, if the principal amount has been paid in full, any remaining excess shall forthwith be paid to the Borrower. Exhibit D-1 This Note shall be construed in accordance with the internal laws (and not the law of conflicts) of the State of Illinois, but giving effect to Federal laws applicable to national banks. SOUTHWESTERN PUBLIC SERVICE COMPANY By: __________________________________ Print Name:___________________________ Title:________________________________ By: __________________________________ Print Name:___________________________ Title:________________________________ Exhibit D-2 SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL TO NOTE OF SOUTHWESTERN PUBLIC SERVICE COMPANY DATED____________,

Exhibit D-3 EXHIBIT E FORM OF INCREASE REQUEST _________________________, 20___ Bank One, NA, as Agent under the Credit Agreement referred to below Ladies/Gentlemen: Please refer to the Credit Agreement dated as of February 18, 2003 among Southwestern Public Service Company (the "Borrower"), various financial institutions and Bank One, NA, as Agent (as amended, modified, extended or restated from time to time, the "Credit Agreement"). Capitalized terms used but not defined herein have the respective meanings set forth in the Credit Agreement. In accordance with Section 2.5(iii) of the Credit Agreement, the Borrower requests an increase in the Aggregate Commitment from $__________ to $__________. Such increase shall be made by [increasing the Commitment of ____________ from $________ to $________] [adding _____________ as a Lender under the Credit Agreement with a Commitment of $____________] as set forth in the letter attached hereto. Such increase shall be effective three Business Days after the date that the Agent accepts the letter attached hereto or such other date as is agreed among the Borrower, the Agent and the [increasing] [new] Lender. Very truly yours, SOUTHWESTERN PUBLIC SERVICE COMPANY By: __________________________________ Name: ________________________________ Title: _______________________________ Exhibit E-1 ANNEX I TO EXHIBIT E [Date] Bank One, NA, as Agent under the Credit Agreement referred to below Ladies/Gentlemen: Please refer to the letter dated __________, 20__ from Southwestern Public Service Company (the "Borrower") requesting an increase in the Aggregate Commitment from $__________ to $__________ pursuant to Section 2.5(iii) of the Credit Agreement dated as of February 18, 2003 among the Borrower, various financial institutions and Bank One, NA, as Agent (as amended, modified, extended or restated from time to time, the "Credit Agreement"). Capitalized terms used but not defined herein have the respective meanings set forth in the Credit Agreement. The undersigned hereby confirms that it has agreed to increase its Commitment under the Credit Agreement from $__________ to $__________ effective on the date which is three Business Days after the acceptance hereof by the Agent or on such other date as may be agreed among the Borrower, the Agent and the undersigned. Very truly yours, [NAME OF INCREASING BANK] By:_________________________ Title:______________________ Accepted as of _________, ____ BANK ONE, NA, as Agent By: __________________________________ Name: ________________________________ Title: _______________________________ Exhibit E-2 ANNEX II TO EXHIBIT E [Date] Bank One, NA, as Agent under the Credit Agreement referred to below Ladies/Gentlemen: Please refer to the letter dated __________, 20___ from Southwestern Public Service Company (the "Borrower") requesting an increase in the Aggregate Commitment from $__________ to $__________ pursuant to Section 2.5(iii) of the Credit Agreement dated as of February 18, 2003 among the Borrower, various financial institutions and Bank One, NA, as Agent (as amended, modified, extended or restated from time to time, the "Credit Agreement"). Capitalized terms used but not defined herein have the respective meanings set forth in the Credit Agreement. The undersigned hereby confirms that it has agreed to become a Lender under the Credit Agreement with a Commitment of $__________ effective on the date which is three Business Days after the acceptance hereof, and consent hereto, by the Agent or on such other date as may be agreed among the Borrower, the Agent and the undersigned. The undersigned (a) acknowledges that it has received a copy of the Credit Agreement and the Schedules and Exhibits thereto, together with copies of the most recent financial statements delivered by the Borrower pursuant to the Credit Agreement, and such other documents and information as it has deemed appropriate to make its own credit and legal analysis and decision to become a Lender under the Credit Agreement; and (b) agrees that it will, independently and without reliance upon the Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit and legal decisions in taking or not taking action under the Credit Agreement. The undersigned represents and warrants that (i) it is duly organized and existing and it has full power and authority to take, and has taken, all action necessary to execute and deliver this letter and to become a Lender under the Credit Agreement; and (ii) no notices to, or consents, authorizations or approvals of, any Person are required (other than any already given or obtained) for its due execution and delivery of this letter and the performance of its obligations as a Lender under the Credit Agreement. The undersigned agrees to execute and deliver such other instruments, and take such other actions, as the Agent may reasonably request in connection with the transactions contemplated by this letter. Exhibit E-3 The following administrative details apply to the undersigned: (A) Notice Address: Legal name: _____________________________ Address: ________________________________ _______________________________ _______________________________ Attention: _____________________________ Telephone: (___) ________________________ Facsimile: (___) ________________________ (B) Payment Instructions: Account No.: ___________________________ At: ___________________________ _______________________________ _______________________________ Reference: ___________________________ Attention: ___________________________ The undersigned acknowledges and agrees that, on the date on which the undersigned becomes a Lender under the Credit Agreement as set forth in the second paragraph hereof, the undersigned will be bound by the terms of the Credit Agreement as fully and to the same extent as if the undersigned were an original Lender under the Credit Agreement. Very truly yours, [NAME OF NEW LENDER] By:_________________________ Title:______________________ Accepted and consented to as of ______________, 20___ BANK ONE, NA, as Agent By: _____________________________ Name: ___________________________ Title: ____________________________ Exhibit E-4 EXHIBIT F FORM OF COMPLIANCE CERTIFICATE _________________________, 20___ Bank One, NA, as Agent under the Credit Agreement referred to below Ladies/Gentlemen: Please refer to the Credit Agreement dated as of February 18, 2003 among Southwestern Public Service Company (the "Borrower"), various financial institutions and Bank One, NA, as Agent (as amended, modified, extended or restated from time to time, the "Credit Agreement"). Capitalized terms used but not defined herein have the respective meanings set forth in the Credit Agreement. The Borrower certifies to you that (a) set forth on the Annexes hereto are correct calculations of the financial covenants set forth in Sections 6.12 and 6.13 of the Credit Agreement as of _______________; and (b) no Default or Unmatured Default exists as of the date of this Certificate[, except as specified in reasonable detail below:] Very truly yours, SOUTHWESTERN PUBLIC SERVICE COMPANY By: __________________________________ Name: ________________________________ Title: _______________________________ Exhibit F-1 ANNEX 1 TO COMPLIANCE CERTIFICATE Debt to Capitalization Ratio (Section 6.12) 1. Indebtedness (a) Long-term debt (including current maturities) $_____________ (b) Commercial paper & other short term debt $_____________ (c) Letters of credit $_____________ (d) Net liabilities under swaps, etc. $_____________ (e) Capitalized Lease Obligations $_____________ (f) Synthetic Lease Obligations $_____________ (g) Trust Preferred Securities $_____________ (h) Total Debt (sum of (a) through (g)) $___________ 2. Capitalization (a) Total Common Stock $_____________ (b) Total Retained Earnings $_____________ (c) Total Debt (from 1(h) above) $_____________ (d) Capitalization (sum of (a) through (c)) $___________ 3. Debt to Capitalization Ratio (1(h) to 2(d)) ____ to 1. (not to be greater than 0.55 to 1.0) Exhibit F-2 ANNEX 2 TO COMPLIANCE CERTIFICATE Interest Coverage Ratio (Section 6.13) 1. EBITDA (a) Consolidated Net Income $_____________ (b) Consolidated Interest Expense $_____________ (c) Income Taxes $_____________ (d) Depreciation and Amortization $_____________ (e) Other Income/Deductions (Net) $_____________ (f) Extraordinary Items (net of income tax)(Net) $_____________ (g) EBITDA (total of (a)+(b)+(c)+(d)+/-(e)+/-(f)) $_____________ 2. Consolidated Interest Expense $__________ 3. Interest Coverage Ratio (1(g) to 2) ____ to 1.0 (not to be less than 2.75 to 1.0) Exhibit F-3 TABLE OF CONTENTS

-i- TABLE OF CONTENTS (continued)

-ii- TABLE OF CONTENTS (continued)

-iii- TABLE OF CONTENTS (continued)

-iv- TABLE OF CONTENTS (continued)

SCHEDULES Pricing Schedule 5.7 - Litigation and Contingent Liabilities 5.9 - Excluded Reportable Events 6.14 - Existing Liens 6.16 - Off-Balance Sheet Liabilities EXHIBITS A Form of Opinion of Counsel to the Borrower B Form of Assignment Agreement C Form of Money Transfer Instructions D Form of Note E Form of Increase Request F Form of Compliance Certificate -v- EX-4.04 6 c79003exv4w04.txt EX-4.04 CREDIT AGREEMENT Exhibit 4.04 ================================================================================ CREDIT AGREEMENT AMONG PUBLIC SERVICE COMPANY OF COLORADO; KEYBANK NATIONAL ASSOCIATION, AS ADMINISTRATIVE AGENT, BOOK MANAGER AND LEAD ARRANGER; AND THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO CLOSING DATE: JUNE 24, 2003 ================================================================================ $300,000,000 CREDIT FACILITY ================================================================================ CREDIT AGREEMENT Dated as of June 24, 2003 Public Service Company of Colorado, a Colorado corporation; the Banks, as defined below and KeyBank National Association, a national banking association having its principal office in Cleveland, Ohio, as administrative agent, book manager and lead arranger for the Banks agree as follows: ARTICLE I DEFINITIONS SECTION 1.1 DEFINITIONS. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires, the terms defined in this Article have the meanings assigned to them in this Article, and include the plural as well as the singular. "Accounting Practices Change" means any change in the Borrower's accounting practices that is permitted or required under the standards of the Financial Accounting Standards Board. "Acquisition Target" means any Person becoming a Subsidiary of the Borrower after the date hereof; any Person that is merged into or consolidated with the Borrower or any Subsidiary of the Borrower after the date hereof; or any Person with respect to whom all or a substantial part of that Person's assets are acquired by the Borrower or any Subsidiary of the Borrower after the date hereof. "Act" means the Securities Act of 1933, as amended. "Additional Bank" means a financial institution that becomes a Bank pursuant to the procedures set forth in Section 9.1. "Agent-Related Persons" means the Agent (including any successor agent), together with its Affiliates, and the officers, directors, employees, agents and attorneys-in-fact of such Persons and Affiliates. "Advance" means an advance by the Banks to the Borrower pursuant to Article II. "Affiliate" means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with such Person. A Person shall be deemed to control another Person if the controlling Person owns 25% or more of the voting securities (or other ownership interests) of the controlled Person or possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of stock, by contract or otherwise. "Agent" means KeyBank acting in its capacity as administrative agent for itself and the other Banks hereunder. "Agreement" means this Credit Agreement, as it may be amended, modified or restated from time to time in accordance with Section 9.2. "Alternate Base Rate" means, for any day, a rate of interest per annum equal to the higher of (i) the Prime Rate for such day and (ii) the sum of the Federal Funds Effective Rate for such day plus 1/2% per annum. "Arranger" means KeyBank, in its capacity as lead arranger and sole book manager. "Assignment Agreement" has the meaning set forth in Section 9.1. "Authorizing Order" means any order of the PUC or any other regulatory body having jurisdiction over the Borrower or the Parent authorizing and/or restricting the indebtedness that may be created from time to time hereunder (whether on account of Advances or otherwise) or under the Pledged Securities. "Banks" means KeyBank, acting on its own behalf and not as the Agent, each of the undersigned banks and any financial institution that becomes a Bank pursuant to the procedures set forth in Section 9.1, collectively. "Borrower" means Public Service Company of Colorado, a Colorado corporation and a party to this Agreement. "Borrowing" means a borrowing under Article II consisting of Advances made to the Borrower at the same time by each of the Banks severally. "Business Day" means (i) with respect to any borrowing, payment or rate selection of Eurodollar Rate Fundings, a day (other than a Saturday or Sunday) on which banks generally are open in New York for the conduct of substantially all of their commercial lending activities, interbank wire transfers can be made on the Fedwire system and dealings in United States dollars are carried on in the London interbank market and (ii) for all other purposes, a day (other than a Saturday or Sunday) on which banks generally are open in New York for the conduct of substantially all of their commercial lending activities and interbank wire transfers can be made on the Fedwire system. "Capitalized Lease" means any lease that in accordance with GAAP should be capitalized on the balance sheet of the lessee thereunder. "Change of Control" means, with respect to any corporation, either (i) the acquisition by any "person" or "group" (as those terms are used in Sections 13(d) and 14(d) of the Exchange Act) of beneficial ownership (as defined in Rules 13d-3 and 13d-5 of the SEC, except that a Person shall be deemed to have beneficial ownership of all securities that such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of 25% or more of the then-outstanding voting capital stock of such corporation; or (ii) a change in the composition of the board of directors of such corporation or any corporate parent of such corporation such that continuing directors cease to constitute more than 50% of such board of directors. As used in this definition, "continuing directors" means, as of any date, (i) those members of the board of directors of the applicable corporation who 2 assumed office prior to such date, and (ii) those members of the board of directors of the applicable corporation who assumed office after such date and whose appointment or nomination for election by that corporation's shareholders was approved by a vote of at least 50% of the directors of such corporation in office immediately prior to such appointment or nomination. "Code" means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto. "Commitment" means, with respect to each Bank, that Bank's commitment to make Advances pursuant to Article II. "Commitment Amount" means, with respect to each Bank, the amount set forth opposite that Bank's name in Exhibit A or on any Assignment Agreement. "Commitment Termination Date" means 30 days after the Effective Date, or any earlier date of termination in whole of the Commitments pursuant to Section 7.2. "Compliance Certificate" means a certificate in substantially the form of Exhibit C, or such other form as the Borrower and the Banks may from time to time agree upon in writing, executed by the chief financial officer or treasurer of the Borrower, (i) setting forth relevant facts in reasonable detail the computations as to whether or not the Borrower is in compliance with the requirements set forth in Sections 6.7 and 6.8 (ii) stating that the financial statements delivered therewith have been prepared in accordance with GAAP, subject, in the case of interim financial statements, to year-end audit adjustments, and (iii) stating whether or not such officer has knowledge of the occurrence of any Default or Event of Default hereunder not theretofore reported or remedied and, if so, stating in reasonable detail the facts with respect thereto. "Debtor Relief Laws" means the Bankruptcy Code of the United States of America, 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 of America or other applicable jurisdictions from time to time in effect affecting the rights of creditors generally. "Debt Securities" means any debt issued by any Person consisting of bonds, debentures, senior or subordinated notes or other debt securities, in exchange for cash. "Default" means an event that, with the giving of notice, the passage of time or both, would constitute an Event of Default. "EBIT" means, with respect to any period: (i) (A) the after-tax net income of the Borrower and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP, excluding (B) non-operating gains and losses (including extraordinary or unusual gains and losses, gains and losses from discontinuance of operations, gains and losses arising from the sale of assets other than inventory, and other non-recurring gains and losses) 3 plus (ii) the sum of the following to the extent deducted in arriving at the after-tax net income determined in clause (i)(A) of this definition (but without duplication for any item): (A) Interest Expense, and (B) income tax expense of the Borrower and its Subsidiaries. "Effective Date" means the first date on or after the date hereof on which all conditions set forth in Section 3.1 have been satisfied. "Eligible Lender" means (a) a financial institution organized under the laws of the United States, or any state thereof, and having a combined capital and surplus of at least $250,000,000; (b) a commercial bank organized under the laws of any other country which is a member of the Organization for Economic Cooperation and Development, or a political subdivision of any such country, and having a combined capital and surplus of at least $250,000,000, provided that such bank is acting through a branch or agency located in the United States; or (c) a person controlled by, controlling, or under common control with any entity identified in clause (a) or (b) above. "Environmental Law" means the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601 et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq., the Hazardous Materials Transportation Act, 49 U.S.C. Section 1802 et seq., the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq., the Federal Water Pollution Control Act, 33 U.S.C. Section 1252 et seq., the Clean Water Act, 33 U.S.C. Section 1321 et seq., the Clean Air Act, 42 U.S.C. Section 7401 et seq., and any other federal, state, county, municipal, local or other statute, law, ordinance or regulation which may relate to or deal with human health or the environment, all as may be from time to time amended. "Equity Securities" of any Person means (a) all common stock, preferred stock, participations, shares, partnership interests or other equity interests in such Person (regardless of how designated and whether or not voting or non-voting) and (b) all warrants, options and other rights to acquire any of the foregoing, other than convertible debt securities which have not been converted into common stock, preferred stock, participations, shares, partnership interests or other equity interests in any such Person. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. "ERISA Affiliate" means any trade or business (whether or not incorporated) that is, along with the Borrower, a member of a controlled group of corporations or a controlled group of trades or businesses, as described in sections 414(b) and 414(c), respectively, of the Code. "Eurodollar Base Rate" means, with respect to a Eurodollar Rate Funding for the relevant Interest Period, the applicable British Bankers' Association Interest Settlement Rate for deposits in U.S. dollars appearing on Reuters Screen FRBD as of 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, and having a maturity equal to such Interest Period, provided that (i) if Reuters Screen FRBD is not available to the Agent for any reason, the 4 applicable Eurodollar Base Rate for the relevant Interest Period shall instead be the applicable British Bankers' Association Interest Settlement Rate for deposits in U.S. dollars as reported by any other generally recognized financial information service as of 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, and having a maturity equal to such Interest Period, and (ii) if no such British Bankers' Association Interest Settlement Rate is available to the Agent, the applicable Eurodollar Base Rate for the relevant Interest Period shall instead be the rate determined by the Agent to be the rate at which KeyBank or one of its Affiliate banks offers to place deposits in U.S. dollars with first-class banks in the London interbank market at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, in the approximate amount of KeyBank's relevant Eurodollar Rate Funding and having a maturity equal to such Interest Period. "Eurodollar Rate" means, with respect to a Eurodollar Rate Funding for the relevant Interest Period, the sum of (i) the quotient of (a) the Eurodollar Base Rate applicable to such Interest Period, divided by (b) one minus the Reserve Requirement (expressed as a decimal) applicable to such Interest Period, plus (ii) the Eurodollar Rate Margin. "Eurodollar Rate Funding" means any Borrowing, or any portion of the principal balance of the Advances, bearing interest at a Eurodollar Rate. "Eurodollar Rate Margin" means a percentage, determined as set forth in Section 2.6. "Event of Default" has the meaning specified in Section 7.1. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Existing Credit Facility" means that certain Credit Agreement, in the amount of $350,000,000, dated as of May 16, 2003, by and among the Borrower, Bank One, N.A., as Administrative Agent, Wells Fargo Bank, National Association, as Syndication Agent, and the other financial institutions party thereto. "Excluded Taxes" has the meaning specified in Section 2.17. "Facility Termination Date" means June 23, 2004. "Federal Funds Effective Rate" means, for any day, an interest 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 for such day (or, if such day is not a Business Day, for the immediately preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations at approximately 10:00 a.m. on such day on such transactions received by the Agent from three Federal funds brokers of recognized standing selected by the Agent in its sole discretion. "Fee Letter" means the separate agreement dated as of the Effective Date between the Borrower and the Agent, setting forth the terms of certain fees to be paid by the Borrower to the Agent for the Agent's own behalf. 5 "First Collateral Trust Securities" means securities issued pursuant to the terms of the First Collateral Trust Securities Indenture. "First Collateral Trust Securities Indenture" means the Indenture dated as of October 1, 1993 as amended or supplemented from time to time, from the Borrower to U.S. Bank Trust National Association (formerly, First Trust of New York, National Association), as successor trustee to Morgan Guaranty Trust Company of New York. "First Mortgage Bond Indenture" means the Indenture dated as of December 1, 1939 from the Borrower to U.S. Bank Trust National Association, as successor trustee thereunder, as amended or supplemented from time to time. "First Mortgage Bonds" means bonds issued pursuant to the terms of the First Mortgage Bond Indenture. "Floating Rate" means, for any day, a rate per annum equal to (i) the Alternate Base Rate for such day plus (ii) the Floating Rate Margin, in each case changing when and as the Alternate Base Rate changes. "Floating Rate Funding" means any Borrowing, or any portion of the principal balance of the Advances, bearing interest at the Floating Rate. "Floating Rate Margin" means a percentage, determined as set forth in Section 2.6. "Funded Debt" of any Person means (without duplication) (i) all indebtedness of such Person for borrowed money; (ii) the deferred and unpaid balance of the purchase price owing by such Person on account of any assets or services purchased (other than trade payables and other accrued liabilities incurred in the ordinary course of business that are not overdue by more than 180 days unless being contested in good faith) if such purchase price is (A) due more than nine months from the date of incurrence of the obligation in respect thereof or (B) evidenced by a note or a similar written instrument; (iii) all Capitalized Lease obligations; (iv) all indebtedness secured by a Lien on any property owned by such Person, whether or not such indebtedness has been assumed by such Person or is nonrecourse to such Person; (v) notes payable and drafts accepted representing extensions of credit whether or not representing obligations for borrowed money (other than such notes or drafts for the deferred purchase price of assets or services to the extent such purchase price is excluded from clause (ii) above); (vi) indebtedness evidenced by bonds, notes or similar written instrument; (vii) the face amount of all letters of credit and bankers' acceptances issued for the account of such Person, and without duplication, all drafts drawn thereunder (other than such letters of credit, bankers' acceptances and drafts for the deferred purchase price of assets or services to the extent such purchase price is excluded from clause (ii) above); (viii) net obligations of such Person under Swap Contracts which constitute interest rate agreements or currency agreements; (ix) guaranty obligations of such Person with respect to indebtedness for borrowed money of another Person (including Affiliates); (x) all Off-Balance Sheet Liabilities of such Person; and (xi) in the case of the Borrower, any amounts due under the Trust Preferred Securities; provided, however, that in no event shall any calculation of Funded Debt of the Borrower include (y) deferred taxes, or (z) so long as the Pledged Securities 6 are held by the Agent pursuant to this Agreement and have not been sold or otherwise disposed of by foreclosure, any obligation of the Borrower under the Pledged Securities. "GAAP" means generally accepted accounting principles as in effect from time to time applied on a basis consistent with the accounting practices applied in the financial statements of the Borrower referred to in Section 4.5, except for changes concurred in by the Borrower's independent public accountants and disclosed in the Borrower's financial statements or notes thereto. "Governmental Authority" means (a) any international, foreign, federal, state, county or municipal government, or political subdivision thereof, (b) any governmental or quasi-governmental agency, authority, board, bureau, commission, department, instrumentality, central bank or public body, or (c) any court, administrative tribunal or public utility commission. "Hazardous Substance" means any asbestos, urea-formaldehyde, polychlorinated biphenyls ("PCBs"), nuclear fuel or material, chemical waste, radioactive material, explosives, known carcinogens, petroleum products and by-products and other dangerous, toxic or hazardous pollutants, contaminants, chemicals, materials or substances listed or identified in, or regulated by, any Environmental Law. "Indentures" means the First Collateral Trust Securities Indenture and the First Mortgage Bond Indenture. "Interest Coverage Ratio" means, as of the end of any fiscal quarter of the Borrower, the ratio of (i) EBIT during the 4-quarter period ending on that quarter-end, to (ii) Interest Expense during such period. "Interest Expense" means, with respect to any period, the aggregate interest expense (including capitalized interest) of the Borrower and its Subsidiaries (determined on a consolidated basis) for such period, including but not limited to the interest portion of any Capitalized Lease and interest expenses associated with Trust Preferred Securities; provided, however, that the foregoing shall be adjusted to reflect only the net effect of any interest rate swap, interest hedging transaction or other similar arrangement entered into by the Borrower or any Subsidiary to reduce or eliminate variations in its interest expenses. "Interest Period" means, with respect to any Advance bearing interest at a Eurodollar Rate, a period of one, two or three months beginning on a Business Day, as elected by the Borrower. "Investment Company Act" means the Investment Company Act of 1940, as amended. "KeyBank" means KeyBank National Association, a national banking association having its principal office in Cleveland, Ohio, in its individual capacity, and its successors. "Laws" or "Law" means 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, 7 and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law. "Level Status" means Level I, Level II, Level III, Level IV or Level V, each as determined pursuant to Section 2.6. "Lien" means any mortgage, deed of trust, lien, pledge, security interest or other charge or encumbrance, of any kind whatsoever, including but not limited to the interest of the lessor or titleholder under any Capitalized Lease, title retention contract or similar agreement. "Loan Documents" means this Agreement, the Notes and the Pledged Securities, if issued pursuant to Section 7.3. "Material Adverse Change" means a material adverse change in the business, condition (financial or otherwise), or operations of the Borrower and its Subsidiaries taken as a whole. "Material Part of the Assets" means assets with a net book value in excess of 10% of the total assets of the Borrower and its Subsidiaries on a consolidated basis as determined in accordance with GAAP, as shown on the most recent balance sheet of the Borrower and its Subsidiaries available as of the date of the determination. "Moody's" means Moody's Investors Service, Inc. "Moody's Rating" shall mean the rating assigned by Moody's to the Borrower's senior unsecured long-term debt. "Multiemployer Plan" means a "multiemployer plan" as defined in Section 4001(a)(3) of ERISA. "Note" has the meaning set forth in Section 2.1. "Obligations" means each and every debt, liability and obligation of every type and description arising under any of the Loan Documents which the Borrower may now or at any time hereafter owe to any Bank or the Agent, whether such debt, liability or obligation now exists or is hereafter created or incurred, whether it is direct or indirect, due or to become due, absolute or contingent, primary or secondary, liquidated or unliquidated, or sole, joint, several or joint and several, including but not limited to principal of and interest on the Notes and all fees due under this Agreement, the Fee Letter or any Loan Documents and the obligation to issue, execute and deliver the Pledged Securities pursuant to Section 7.3. "Off-Balance Sheet Liability" of a Person means (i) any repurchase obligation or liability of such Person with respect to accounts or notes receivable sold by such Person, (ii) any liability under any Sale and Leaseback Transaction which is not a Capitalized Lease and (iii) all Synthetic Lease Obligations of such Person. "Operating Lease" of a Person means any lease of Property (other than a Capitalized Lease) by such Person as lessee. 8 "Organizational Documents" means, (i) with respect to any corporation, the articles of incorporation and bylaws of such corporation, (ii) with respect to any partnership, the partnership agreement of such partnership, (iii) with respect to any limited liability company, the articles of organization and operating agreement of such company, and (iv) with respect to any entity, any and all other shareholder, partner or member control agreements and similar organizational documents relating to such entity. "Outstandings" means, at any time, an amount equal to the aggregate principal balance of the Advances then outstanding. "Outstandings Percentage" means, at any time, the ratio (expressed as a percentage) of the aggregate Outstandings to the aggregate Commitment Amounts. "Parent" means Xcel Energy Inc., a Minnesota corporation. "Participating Affiliate" means, (a) with respect to any Bank, (i) an Affiliate of such Bank or (ii) any entity (whether a corporation, partnership, trust or otherwise) that is engaged in making, purchasing, holding or otherwise investing in bank loans and similar extensions of credit in the ordinary course of its business and is administered or managed by a Bank or an Affiliate of such Bank and (b) with respect to any Bank that is a fund which invests in bank loans and similar extensions of credit, any other fund that invests in bank loans and similar extensions of credit and is managed by the same investment advisor as such Bank or by an Affiliate of such investment advisor. "Payment Demand" means a written notice given by the Agent to the Trustee stating that the principal of the Pledged Securities has become due and payable and specifying the amount of funds required to make such payment. "Percentage" means, with respect to each Bank, the ratio of (i) that Bank's Commitment Amount, to (ii) the aggregate Commitment Amounts of all of the Banks. For purposes of this definition only, following the Commitment Termination Date, each Bank's Commitment Amount shall be deemed to be the principal balance outstanding of that Bank's Note. "Permitted Swap Obligations" means all obligations (contingent or otherwise) of the Borrower or any Subsidiary thereof existing or arising under Swap Contracts, provided that each of the following criteria is satisfied: (a) such obligations are (or were) entered into by such Person in the ordinary course of business for the purpose of directly mitigating risks associated with liabilities, commitments or assets held or to be held by such Person or its Subsidiaries, changes in the value of securities issued by such Person or its Subsidiaries in conjunction with a securities repurchase program not otherwise prohibited hereunder, and not for purposes of speculation or taking a "market view;" and (b) such Swap Contracts do not contain any provision ("walk-away" provision) exonerating the non-defaulting party from its obligations to make payments on outstanding transactions to the defaulting party. "Person" means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. 9 "Plan" means an employee benefit plan established or maintained by the Borrower or any Subsidiary or ERISA Affiliate and covered by Title IV of ERISA. "Pledged Securities" means those certain Securities (as defined in the First Collateral Trust Securities Indenture) to be issued in favor of the Agent for the benefit of Banks under the First Collateral Trust Securities Indenture in accordance with the terms of Section 7.3 hereof. "Pledged Securities Deliverables" means the following, each of which is to be delivered to the Agent concurrently with, and as a condition precedent to, issuance and delivery of the Pledged Securities pursuant to Section 7.3: (i) all required certificates, covenants, consents, and approvals from all requisite Governmental Authorities required to authenticate and deliver the Pledged Securities; (ii) a Pledged Securities Compliance Certificate executed by the Chief Financial Officer or Treasurer or Chief Executive Officer of the Borrower in the form of Exhibit G attached hereto; and (iii) a legal opinion of counsel to the Borrower, reasonably satisfactory to the Agent, that the Pledged Securities are duly authorized and valid and enforceable in accordance with their terms. "Pledged Securities Order" means that certain Order of the Commission Granting Application In Part, adopted by the PUC on March 26, 2003, as Decision No. C03-0306, relating to the Borrower's issuance of Collateral Securities (as defined in the Pledged Securities Order), Short-Term Debt Securities (as defined in the Pledged Securities Order) and Non-collateral Securities (as defined in the Pledged Securities Order). "Pledged Securities Shortfall" means the aggregate principal amount of the Outstandings less the aggregate amount of the Pledged Securities. "Prepayment Proceeds" means cash proceeds from any issuance of Equity Securities or Debt Securities of the Borrower, net of reasonable out-of-pocket transaction fees and expenses, including without limitation legal and accounting fees and expenses, other professional fees and expenses, recording tax expenses and commissions (including investment banking fees). "Prime Rate" means a rate per annum equal to the prime rate of interest announced by KeyBank (which is not necessarily the lowest rate charged to any customer), from time to time, changing when and as said prime rate changes. Such prime rate is a rate set by KeyBank based upon various factors including KeyBank'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 prime rate announced by KeyBank shall take effect at the opening of business on the day specified in the public announcement of such change If KeyBank ceases to establish or publish a prime rate, the applicable Alternate Base Rate thereafter shall be instead the prime rate reported in The Wall Street Journal (or the average prime rate if a high and a low prime rate are therein reported). "PSCo 8-3/4% First Mortgage Bonds" means the Borrower's 8-3/4% First Mortgage Bonds, in an outstanding principal amount of $144,840,000, issued pursuant to the First Mortgage Bond Indenture bearing interest at 8-3/4%, with a maturity date of March 1, 2022. "PSCo Capital Trust I Securities" means the 7.60% Trust Originated Preferred Securities issued by PSCo Capital Trust I. 10 "PUC" means the Public Utilities Commission of the State of Colorado. "PUHCA" has the meaning set forth in Section 4.16. "Related First Mortgage Bonds" means the First Mortgage Bonds on the basis of which the Pledged Securities are issued and which, upon issuance of the Pledged Securities, will be held by the trustee under the First Collateral Trust Securities Indenture. "Reportable Event" means (i) a "reportable event", described in Section 4043 of ERISA and the regulations issued thereunder, in respect of any Plan, (ii) a withdrawal from any Plan, as described in Section 4063 of ERISA, (iii) an action to terminate a Plan for which a notice is required to be filed under Section 4041 of ERISA, (iv) any other event or condition that could reasonably be expected to constitute grounds for termination by the Pension Benefit Guaranty Corporation of, or the appointment by the appropriate United States District Court of a trustee to administer, any Plan, or (v) a complete or partial withdrawal from a Multiemployer Plan as described in Sections 4203 and 4205 of ERISA. "Required Banks" means (i) in the case where there are two (2) or fewer Banks, an aggregate Percentage of 100%; or (ii) in the case where there are more than two (2) Banks, an aggregate Percentage of at least 66.67% (including, in both cases, where relevant, Additional Banks). "Reserve Requirement" means, with respect to an Interest Period, the maximum aggregate reserve requirement (including all basic, supplemental, marginal and other reserves) which is imposed under Regulation D on Eurocurrency liabilities. "Restricted Subsidiary" means a Subsidiary any of whose debts, liabilities or obligations (i) have been guarantied by the Borrower, (ii) with respect to which the Borrower is in any other manner obligated for the payment of money or otherwise to provide financial support, or (iii) are secured in whole or in part by any property of the Borrower. "S&P" means Standard & Poors Ratings Group, a division of McGraw-Hill Corporation. "S&P Rating" shall mean the rating assigned by S&P to the Borrower's senior unsecured long-term debt. "SEC" means the Securities and Exchange Commission. "Sale and Leaseback Transaction" means any arrangement, directly or indirectly, with any Person whereby a seller or transferor shall sell or otherwise transfer any real or personal property and concurrently therewith lease, or repurchase under an extended purchase contract, conditional sales or other title retention agreement, the same or substantially similar property. "Solvent" means, with respect to any Person, that as of the date of determination (i) the fair market value of the property of such Person is (A) greater than the total liabilities (including contingent liabilities) of such Person, and (B) not less than the amount that will be required to pay the probable liabilities on such Person's debts as they come due, considering all financing alternatives and potential asset sales reasonably available to such Person; (ii) such Person's 11 capital is not unreasonably small in relation to its business or any contemplated or undertaken transaction; (iii) such Person does not intend to incur, or believe (nor should it reasonably believe) that it will incur, debts beyond its ability to pay such debts as they become due; and (iv) such Person is "solvent" within the meaning given that term and similar terms under applicable laws relating to fraudulent transfers and conveyances. For purposes of this definition, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that would reasonably be expected to become an actual or matured liability. "Subsidiary" means (i) any corporation of which more than 50% of the outstanding shares of capital stock having general voting power under ordinary circumstances to elect a majority of the board of directors of such corporation, irrespective of whether or not at the time stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency, is at the time directly or indirectly owned by the Borrower, by the Borrower and one or more other Subsidiaries, or by one or more other Subsidiaries, (ii) any partnership of which more than 50% of the partnership interest therein are directly or indirectly owned by the Borrower, by the Borrower and one or more other Subsidiaries, or by one or more other Subsidiaries, and (iii) any limited liability company or other form of business organization the effective control of which is held by the Borrower, the Borrower and one or more other Subsidiaries, or by one or more other Subsidiaries. "Swap Contracts" means any agreement, whether or not in writing, relating to any transaction that is a rate swap, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap or option, bond, note or bill option, interest rate option, forward foreign exchange transaction, cap, collar or floor transaction, currency swap, cross-currency rate swap, swaption, currency option or any other similar transaction (including any option to enter into any of the foregoing) or any combination of the foregoing, and, unless the context otherwise clearly requires, any master agreement relating to or governing any or all of the foregoing. "Synthetic Lease Obligation" means the monetary obligation of a Person under (i) a so-called synthetic or off-balance sheet or tax retention lease or (ii) 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 indebtedness of such Person (without regard to accounting treatment). The amount of Synthetic Lease Obligations of any Person under any such lease or agreement shall be the amount which would be shown as a liability on a balance sheet of such Person prepared in accordance with GAAP if such lease or agreement were accounted for as a Capitalized Lease. "Tangible Net Worth" means shareholders' equity (including preferred stock), less intangible assets included in calculating such shareholders' equity, all determined in accordance with GAAP. For purposes of the foregoing calculation, intangible assets shall include but not be limited to the value of patents, trademarks, trade names, copyrights, licenses, premiums paid on indebtedness, good will, prepaid expenses, deferred charges and treasury stock. Tangible Net Worth with respect to the Borrower shall at all times be determined with respect to the Borrower and its Subsidiaries on a consolidated basis. 12 "Total Capital" means the sum of (A) stockholders' equity (which is the sum of common stock, premium on common stock and retained earnings and which excludes the Trust Preferred Securities to the extent included in Funded Debt), and (B) Funded Debt, all determined with respect to the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP. "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended. "Trust Preferred Securities" means any preferred securities issued by a Trust Preferred Securities Subsidiary, where such preferred securities have the following characteristics: (i) such Trust Preferred Securities Subsidiary lends substantially all of the proceeds from the issuance of such preferred securities to the Borrower or a wholly-owned direct or indirect Subsidiary of the Borrower in exchange for subordinated debt issued by the Borrower or such wholly-owned direct or indirect Subsidiary, respectively; (ii) such preferred securities contain terms providing for the deferral of interest payments corresponding to provisions providing for the deferral of interest payments on the subordinated debt; and (iii) the Borrower or a wholly-owned direct or indirect Subsidiary of the Borrower (as the case may be) makes periodic interest payments on the subordinated debt, which interest payments are in turn used by the Trust Preferred Securities Subsidiary to make corresponding payments to the holders of such preferred securities. "Trust Preferred Securities Subsidiary" means any Delaware business trust (or similar entity) (i) all of the common equity interest of which is owned (either directly or indirectly through one or more wholly-owned Subsidiaries of the Borrower) at all times by the Borrower, (ii) that has been formed for the purpose of issuing Trust Preferred Securities and (iii) substantially all of the assets of which consist at all times solely of subordinated debt issued by the Borrower or a wholly-owned direct or indirect Subsidiary of the Borrower (as the case may be) and payments made from time to time on such subordinated debt. "Trustee" means U.S. Bank Trust National Association, as successor trustee under the First Collateral Trust Securities Indenture, or any successor trustee thereunder. "Welfare Plan" means a "welfare plan" as defined in Section 3(1) of ERISA. SECTION 1.2 TIMES. All references to times of day in this Agreement shall be references to New York, New York time unless otherwise specifically provided. SECTION 1.3 ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared in accordance with GAAP; provided that in the event of any Accounting Practices Change, then the Borrower's compliance with the covenants set forth 13 in Section 6.7 and 6.8 shall be determined on the basis of generally accepted accounting principles in effect immediately before giving effect to the Accounting Practices Change, until such covenants are amended in a manner satisfactory to the Borrower and the Required Banks in accordance with Section 10.13 hereof. ARTICLE II AMOUNT AND TERMS OF THE LOANS SECTION 2.1 COMMITTED ADVANCES. Each Bank agrees, severally but not jointly, on the terms and subject to the conditions hereinafter set forth, to make Advances to the Borrower from time to time during the thirty (30) day period beginning on the Effective Date and ending on the Commitment Termination Date in an aggregate amount not to exceed at any time outstanding that Bank's Commitment Amount. Within the limits of each Bank's Commitment Amount and the thirty (30) day draw period, the Borrower may borrow (solely for the purposes set forth in Section 5.10) and prepay pursuant to Sections 2.10 and 2.11. The Advances made by each Bank under this Section 2.1 shall be evidenced by and repayable with interest in accordance with a single promissory note of the Borrower (each, a "Note") payable to the order of that Bank, substantially in the form of Exhibit B hereto, dated the date hereof. Each Advance shall bear interest on the unpaid principal amount thereof from the date thereof until paid as set forth in Section 2.3. SECTION 2.2 PROCEDURE FOR MAKING ADVANCES. Each Borrowing under Section 2.1 shall occur following written notice from the Borrower to the Agent or telephonic request from any person purporting to be authorized to request Advances on behalf of the Borrower. Each such notice or request shall specify (i) the date of the requested Borrowing, (ii) the amount thereof, and (iii) if any portion of such Borrowing will bear interest at a Eurodollar Rate, the Interest Period selected by the Borrower with respect thereto. Such notice or request must be received by the Agent not later than 10:00 a.m. on the day on which such Borrowing is to occur or, if all or any portion of the Borrowing will bear interest at a Eurodollar Rate, not later than three Business Days prior to the date on which such Borrowing is to occur. Concurrent with any such notice or request, the Borrower shall deliver to the Agent in writing (which may be by facsimile transmission) the certificate required by Section 3.2(b). Upon receiving a request for a Borrowing under Section 2.1, and in any event not later than 1:30 p.m. on the date that the requested Borrowing is to occur, or, if the requested Borrowing is to bear interest at a Eurodollar Rate, the close of business on the day that the request is received, the Agent will notify the Banks of the amount of the requested Borrowing, the amount of each Bank's Advance with respect thereto, and, if applicable, the fact that the Borrower has elected a Eurodollar Rate and the Interest Period selected by the Borrower. Upon fulfillment of the applicable conditions set forth in Article III, each Bank shall remit its Percentage of the requested Borrowing to the Agent in immediately available funds. So long as a Bank receives notice of the requested Borrowing prior to 1:30 p.m. on the date that the requested Borrowing is to occur, or, if the requested Borrowing is to bear interest at a Eurodollar Rate, the close of business on the day that the request is received, that Bank will make its Advance with respect to 14 that Borrowing available to the Agent by wire transfer of immediately available funds to the Agent not later than 4:00 p.m. on the date called for in such notice. Prior to the close of business on the day of the requested Borrowing, the Agent shall disburse such funds by crediting the same to the Borrower's demand deposit account maintained with the Agent or in such other manner as the Agent and the Borrower may from time to time agree. The Agent shall have no obligation to disburse the requested Borrowing if any condition set forth in Article III has not been satisfied on the day of the requested Borrowing. The initial Borrowing shall be in the amount of $50,000,000 or an integral multiple of $1,000,000 greater than $50,000,000. Each subsequent Borrowing shall be in the amount of $10,000,000 or an integral multiple of $1,000,000 greater than $10,000,000. The Borrower shall promptly confirm each telephonic request for an Advance by executing and delivering an appropriate confirmation certificate to the Agent. However, the Borrower shall be obligated to repay all Advances for which it actually received the moneys (including but not limited to all Advances the proceeds of which were deposited in any account of the Borrower) or in respect of which the Agent reasonably believed the person requesting the same to be authorized to do so, notwithstanding the fact that the person requesting the same was not in fact authorized so to do. Any request for an Advance shall be deemed to be a representation that (i) the representations and warranties in Article IV are true and correct on and as of the date of such Advance (except to the extent such representation or warranty specifically relates to an earlier date); and (ii) no event has occurred and is continuing, or would result from such Advance, which constitutes a Default or an Event of Default. SECTION 2.3 INTEREST. (a) Each Advance shall bear interest on the unpaid principal amount thereof from the date thereof until paid as set forth in this Section 2.3. (b) Unless the Borrower elects a Eurodollar Rate pursuant to this Section, the principal balance of each Advance shall bear interest at the Floating Rate. (c) At the election of the Borrower, which may be exercised from time to time, the Borrower may request in writing or by telephone that a Eurodollar Rate be applicable for the portion of the outstanding principal balance of the Advances (including any Advance requested or to be requested) and for the Interest Period indicated by the Borrower in its request. The portion of the outstanding balance of the Advances for which a Eurodollar Rate is requested (i) must be in the amount (as to all Advances combined) of $5,000,000 or an integral multiple of $1,000,000 greater than $5,000,000, and (ii) if such request relates to Advances already outstanding, must, on the first day of the applicable Interest Period, either (1) bear interest at the Floating Rate, or (2) bear interest at a Eurodollar Rate with respect to which the Interest Period expires on such first day. In no event may the Borrower select an Interest Period extending beyond the Facility Termination Date. A request for a Eurodollar Rate (i) must be received by the Agent before 10:00 a.m. on the day three Business Days before the first day of the proposed Interest Period (and the Agent shall give the Banks prompt notice thereof), and (ii) may not be rescinded by the Borrower after such request has been made. Subject to the terms and conditions set forth herein, the applicable Eurodollar Rate shall (subject to fluctuations in the applicable Eurodollar Rate Margin) be the interest rate applicable for the proposed Interest Period to the portion of the outstanding principal balance of the 15 Advances to which the Eurodollar Rate request related. At the termination of such Interest Period, the interest rate applicable to the portion of the principal balance of the Advances to which the Eurodollar Rate request was applicable shall revert to the Floating Rate unless a new Eurodollar Rate request is made by the Borrower in accordance with this Agreement. Notwithstanding anything to the contrary in this Section, (i) the Agent shall have no obligation to permit the application of a Eurodollar Rate for any Interest Period if any Bank, in its sole discretion, determines that deposits in amounts equal to the requested amount and maturing at the end of the proposed Interest Period are not readily available to such Bank from major banks in the London interbank market, and (ii) without the consent of the Required Banks, the Agent will not permit the application of a Eurodollar Rate for any Interest Period if a Default or Event of Default has occurred and is continuing when the request for the Eurodollar Rate is made. Absent manifest error, the records of the Agent shall be conclusive evidence as to the amount of the Advances bearing interest at a Eurodollar Rate, the applicable Eurodollar Rate and the date on which the Interest Period applicable to such Eurodollar Rate expires. SECTION 2.4 LIMITATION OF OUTSTANDINGS. In no event shall the aggregate Outstandings at any time exceed the aggregate amount of the Commitment Amounts. SECTION 2.5 PRINCIPAL AND INTEREST PAYMENT DATES. (a) Interest. Interest accruing on the principal balance of the Floating Rate Advances shall be due and payable on the last day of each month beginning with the month in which the first Advance is made and on the Facility Termination Date. Interest accruing at a Eurodollar Rate shall be due and payable on the last day of the applicable Interest Period and on the Facility Termination Date. (b) Principal. The principal balance of the Advances shall be due and payable in full on the Facility Termination Date. SECTION 2.6 LEVEL STATUS AND MARGINS. (a) The Borrower's Level Status shall be determined on the basis of the S&P Rating and Moody's Rating on the close of business on such date, in accordance with the following table: 16

If the S&P Rating and Moody's Rating differ such that they do not fall within a single column in the table set forth above, (i) if the applicable columns are adjacent to each other, the Level Status in effect shall be based on the rightmost of the applicable columns, (ii) if the applicable columns are separated by a single column, the Level Status in effect shall be based on the column between those two columns, and (iii) if the applicable columns are separated by two or more columns, the Level Status in effect shall be based on the column to the immediate left of the rightmost applicable column. (b) In making the determinations under paragraph (a): (i) If either S&P or Moody's changes the meaning or designation for its ratings referenced in paragraph (a), the criteria for Level Status in the table in paragraph (a) shall be adjusted in such manner as the Required Banks may reasonably determine to correspond with the applicable rating designations used by S&P or Moody's, as the case may be, in effect on the date hereof. (ii) If either S&P or Moody's, but not both of them, ceases to rate the Borrower's senior unsecured debt, the determination in paragraph (a) shall be made on the basis of the rating accorded by whichever one continues to rate such debt. (iii) If neither S&P nor Moody's rates the Borrower's senior unsecured debt, the Borrower shall be deemed to be at Level Status V. (c) The Floating Rate Margin and Eurodollar Rate Margin at any time shall be determined from time to time on the basis of the Borrower's Level Status, in accordance with the following table: 17

(d) Upon the occurrence of any Event of Default, and so long as such Event of Default continues without written waiver thereof by the Banks, a default increment equal to 200 basis points (2.00%) shall be added to the Floating Rate Margin and Eurodollar Rate Margin (the "Default Rate"). Inclusion of such default increment in calculating the Floating Rate Margin and Eurodollar Rate Margin shall not be deemed a waiver or excuse of any such Event of Default. SECTION 2.7 FACILITY FEES. (a) The Borrower shall pay to the Agent, for the benefit of the Banks (for the account of each Bank in accordance with its Percentage), a facility fee as follows: (i) On the Effective Date, the sum of $300,000. (ii) So long as any Advances remain outstanding on the date that is ninety (90) days from the Effective Date, the sum of $600,000. (iii) So long as any Advances remain outstanding, on the date that is one hundred eighty (180) days from the Effective Date, the sum of $375,000. (iv) So long as any Advances remain outstanding, on the date that is two hundred seventy (270) days from the Effective Date, the sum of $750,000. (b) So long as any Advances remain outstanding on a date specified in Section 2.7 (a)(ii) through 2.7 (a)(iv), respectively (each a "Facility Fee Accrual Date"), the specified fee in respect of such Facility Fee Accrual Date set forth in this Section shall be due and payable one (1) Business Day after each such Facility Fee Accrual Date, regardless of the amount of the outstanding Advances. Each portion of the facility fee specified in Section 2.7(a) shall be fully earned on its respective Facility Fee Accrual Date and shall be non-refundable. SECTION 2.8 OTHER FEES. The Borrower shall pay to the Agent for the Agent's own account and not for the benefit of the Banks, certain additional fees in the amounts set forth in the Fee Letter. 18 SECTION 2.9 TERMINATION OF THE COMMITMENT. The Commitments shall terminate on the Commitment Termination Date and the Banks shall have no further obligation to make additional Advances. SECTION 2.10 VOLUNTARY PREPAYMENTS. The Borrower may prepay the Advances in whole or in part, without penalty or premium, at any time and from time to time; provided that (i) any prepayment by the Borrower hereunder shall be applied pro rata to the prepayment of each Bank's Advances, (ii) any prepayment of the full amount of the Advances shall include accrued interest thereon, (iii) any prepayment of any portion of the principal balance of any Advances which, at the time of such prepayment, bears interest at a Eurodollar Rate shall be accompanied by compensation as specified in Section 2.16(b), and (iv) each prepayment of the Advances (other than prepayment of the Advances in full) shall be in the principal amount of $10,000,000 or integral multiples of $1,000,000 in excess thereof. Each partial prepayment of principal on the Advances shall be applied, first, to that portion of such Advances bearing interest at the Floating Rate, and, second, to that portion of such Advances bearing interest at a Eurodollar Rate. SECTION 2.11 MANDATORY PREPAYMENTS. In the event the Borrower issues any Equity Securities or any Debt Securities after the Effective Date (excluding loans made under the Existing Credit Facility or any intercompany loans, advances or capital contributions by an Affiliate of the Borrower), the Borrower shall use the Prepayment Proceeds to prepay, to the extent of such Prepayment Proceeds, the Advances. Such payment shall be made within one (1) Business Day of the closing of such Equity Securities or Debt Securities issuance. Any prepayment of any portion of the principal balance of any Advances pursuant to this Section 2.11, which, at the time of such prepayment, bears interest at a Eurodollar Rate shall be accompanied by compensation as specified in Section 2.16(b). SECTION 2.12 COMPUTATION OF INTEREST AND FEES. All interest on Floating Rate Fundings accruing based on the Prime Rate will be calculated based on the actual days elapsed in a year of 365 or 366 days, as the case may be. All other interest and all fees hereunder shall be computed on the basis of actual number of days elapsed in a year of 360 days. SECTION 2.13 PAYMENTS. (a) Except as otherwise provided herein, all payments by the Borrower or any Bank hereunder shall be made to the Agent at the location designated by the Agent not later than the due date for such payment. All payments shall be made in immediately available funds in lawful money of the United States of America. All payments by the Borrower shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff. (b) Upon satisfaction of any applicable terms and conditions set forth herein, the Agent shall promptly make any amounts received by the Agent due to any Bank in 19 accordance with the prior subsection, available in like funds as received, by wire transfer as specified by such Bank. (c) Unless the Borrower or any Bank has notified the Agent prior to the date any payment to be made by it is due that it does not intend to remit such payment, the Agent may, in its sole and absolute discretion, assume that the Borrower or Bank, as the case may be, has timely remitted such payment and may, in its sole and absolute discretion and in reliance thereon, make available such payment to the Person entitled thereto. If such payment was not in fact remitted to the Agent in immediately available funds, then: (i) if the Borrower failed to make such payment, each Bank shall forthwith on demand repay to the Agent the amount of such assumed payment made available to such Bank, together with interest thereon in respect of each day from and including the date such amount was made available by the Agent to such Bank to the date such amount is repaid to the Agent at the Federal Funds Effective Rate; and (ii) if any Bank failed to make such payment, the Agent shall be entitled to recover such corresponding amount on demand from such Bank. If such Bank does not pay such corresponding amount forthwith upon the Agent's demand therefor, the Agent promptly shall notify the Borrower, and the Borrower shall pay such corresponding amount to the Agent. The Agent also shall be entitled to recover interest on such corresponding amount in respect of each day from the date such corresponding amount was made available by the Agent to the Borrower to the date such corresponding amount is recovered by the Agent, (A) from such Bank at a rate per annum equal to the daily Federal Funds Effective Rate, and (B) from the Borrower, at a rate per annum equal to the interest rate applicable to such Borrowing. Nothing herein shall be deemed to relieve any Bank from its obligation to fulfill its Commitment or to prejudice any rights which the Agent or the Borrower may have against any Bank as a result of any default by such Bank hereunder. (d) If the Agent or any Bank is required at any time to return to the Borrower, or to a trustee, receiver, liquidator, custodian, or any official under any proceeding under Debtor Relief Laws, any portion of a payments made by the Borrower, each Bank shall, on demand of the Agent, return its share of the amount to be returned, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the daily Federal Funds Effective Rate. (e) The Borrower agrees that the amount shown on the books and records of each Bank as being the principal balance of that Bank's Obligations, if any, shall be prima facie evidence of such principal balance. (f) The Borrower hereby authorizes the Agent to charge against the Borrower's account with the Agent an amount equal to the accrued interest and fees from 20 time to time due and payable to the Agent and the Banks under this Agreement, or (at the Banks' option) to effect a Borrowing in such amount, all without receipt of any request for such charge or Borrowing. SECTION 2.4 PAYMENT ON NONBUSINESS DAYS. Whenever any payment to be made under this Agreement shall be stated to be due on a day other than a Business Day, such payment may be made on the next succeeding Business Day, and such extension of time shall in each case be included in the computation of payment of interest on such Obligations or the fees hereunder, as the case may be. SECTION 2.15 USE OF ADVANCES. The proceeds of each Borrowing shall be used by the Borrower solely to pay the Borrower's existing obligations under the PSCo 8-3/4% First Mortgage Bonds and the PSCo Capital Trust I Securities. SECTION 2.16 INCREASED COSTS OR REDUCTION OF YIELD. In addition to any interest payable on Advances made hereunder and any fees or other amounts payable hereunder, the Borrower agrees: (a) If at any time after the date hereof any adoption of or change in any applicable law, rule or regulation or the interpretation or administration thereof by any Governmental Authority (including, without limitation, Regulation D of the Federal Reserve Board): (i) shall subject any Bank to any tax, duty or other charges with respect to this Agreement, or shall materially change the basis of taxation of payments to any Bank of the principal of or interest on any portion of the principal balance of that Bank's Advances bearing interest at a Eurodollar Rate (except for the imposition of or changes in the rate of Excluded Taxes); or (ii) shall impose or deem applicable or increase any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by any Bank (other than reserves and assessments described in the definition of "Reserve Requirement" and taken into account in determining the applicable Eurodollar Rate) because of any portion of the principal balance of that Bank's Advances bearing interest at a Eurodollar Rate and the result of any of the foregoing would be to increase the cost to that Bank of making or maintaining any such portion or to reduce any sum received or receivable by that Bank with respect to such portion; then, within 30 days after demand by any Bank the Borrower shall pay that Bank such additional amount or amounts as will compensate that Bank for such increased cost or reduction. A Bank shall not make demand hereunder unless that Bank is generally 21 imposing such increased costs on its similarly situated customers. No Bank may demand such compensation more than 90 days following the end of the Interest Period with respect to which such demand is made; provided, however, that the foregoing shall in no way limit the right of any Bank to demand compensation to the extent that such compensation relates to the retroactive application of any law, rule or regulation if such demand is made within 90 days after the adoption of or change in such law, rule or regulation. A certificate in reasonable detail of that Bank setting forth the basis for the determination of such additional amount or amounts shall be promptly submitted by that Bank to the Borrower and shall, in the absence of manifest error, be conclusive and binding as to such amount or amounts. (b) The Borrower shall also compensate any Bank, upon written request by that Bank (which request shall set forth the basis for requesting such amounts), for all losses and expenses in respect of any interest or other consideration paid by that Bank to lenders of funds borrowed by it or deposited with it to maintain any portion of the principal balance of the Advances at a Eurodollar Rate which that Bank may sustain to the extent not otherwise compensated for hereunder and not mitigated by the reemployment of such funds if any prepayment of any such portion occurs on a date that is not the expiration date of the relevant Interest Period or if a Borrowing or prepayment in whole or in part of an Advance bearing interest at a Eurodollar Rate fails to occur. A certificate as to any such loss or expense (including calculations, in reasonable detail, showing how that Bank computed such loss or expense) shall be promptly submitted by that Bank to the Borrower and shall, in the absence of manifest error, be conclusive and binding as to the amount thereof. Such loss or expense may be computed as though that Bank acquired deposits in the London interbank market to fund that portion of the principal balance whether or not that Bank actually did so. SECTION 2.17 ILLEGALITY. If any Bank determines that any Laws have made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Bank to make, maintain or fund Eurodollar Rate Loans, or materially restricts the authority of such Bank to purchase or sell, or to take deposits of, United States Dollars in the applicable offshore United States dollar market, or to determine or charge interest rates based upon the Eurodollar Rate, then, on notice thereof by Bank to the Borrower through the Agent, any obligation of such Bank to make Eurodollar Rate Loans shall be suspended until Bank notifies the 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 Bank (with a copy to the Agent), either prepay or convert, at the Borrower's option, all Eurodollar Rate Loans of such Bank, either on the last day of the Interest Period thereof, if Bank may lawfully continue to maintain such Eurodollar Rate Loans to such day, or immediately, if Bank may not lawfully continue to maintain such Eurodollar Rate Loans. SECTION 2.18 TAXES. (a) All payments made by the Borrower to the Agent or any Bank (herein any "Payee") under or in connection with this Agreement or the Notes shall be made without any setoff or other counterclaim, and free and clear of and without deduction for or on 22 account of any present or future taxes now or hereafter imposed by any governmental or other authority, except to the extent that such deduction or withholding is compelled by law. As used herein, the term "Taxes" shall include all income, excise and other taxes of whatever nature (other than taxes based on or measured by the net income of the Payee (or franchise taxes in lieu thereof) and imposed by the government or other authority of the country, state or political subdivision in which such Payee is incorporated or in which its principal executive office or the office through which the Payee is acting is located ("Excluded Taxes") as well as all levies, imposts, duties, charges, or fees of whatever nature. If the Borrower is compelled by law to make any such deductions or withholdings it will: (i) pay to the relevant authorities the full amount required to be so withheld or deducted; (ii) except to the extent that such deduction or withholding results from a breach by any Payee of the representations and covenants contained in Section 2.17(b) or the relevant Assignment Agreement pay such additional amounts (including, without limitation, any penalties, interest or expenses) as may be necessary in order that the net amount received by each Payee after such deductions or withholdings (including any required deduction or withholding on such additional amounts) shall equal the amount such Payee would have received had no such deductions or withholdings been made; and (iii) promptly forward to the Agent (for delivery to such Payee) an official receipt or other documentation reasonably satisfactory to the Agent evidencing such payment to such authorities. (b) If any Taxes otherwise payable by the Borrower pursuant to Section 2.17(a) are directly asserted against any Payee, such Payee may pay such Taxes and the Borrower promptly shall reimburse such Payee to the full extent otherwise required by such paragraph. The obligations of the Borrower under this Section 2.17 shall survive any termination of this Agreement. Each Bank by its execution of this Agreement represents (and each additional Bank by its execution of any Assignment Agreement pursuant to Section 9.1 shall be deemed to represent) to each other Bank, the Agent and the Borrower that if such Bank is organized under the laws of any jurisdiction other than the United States or any state thereof, such Bank has furnished to the Agent and the Borrower either U.S. Internal Revenue Service Form W-8BEN, or U.S. Internal Revenue Service Form W-8ECI, as applicable (wherein such Bank claims entitlement to complete exemption from U.S. Federal withholding tax on all interest payments hereunder). (c) The amount that the Borrower shall be required to pay to any Bank pursuant to Sections 2.17(a) or 2.17(b) shall be reduced by the amount of any offsetting tax benefit which such Bank receives as a result of the Borrower's payment to the relevant authorities as reasonably determined by such Bank; provided, however, that (i) such Bank shall be the sole judge of the amount of such tax benefit and the date on which it is received, (ii) no Bank shall be obliged to disclose information regarding its tax 23 affairs or tax computations, (iii) nothing herein shall interfere with a Bank's right to manage its tax affairs in whatever manner it sees fit, and (iv) if such Bank shall subsequently determine that it has lost the benefit of all or a portion of such tax benefit, the Borrower shall promptly remit to such Bank the amount certified by such Bank to be the amount necessary to restore such Bank to the position it would have been in if no payment had been made pursuant to this Section 2.17(c). (d) If the U.S. Internal Revenue Service or any other Governmental Authority of the United States or any other country or any political subdivision thereof asserts a claim that the Agent or the Borrower did not properly withhold tax from amounts paid to or for the account of any Bank (because the appropriate form was not delivered or properly completed, because such Bank failed to notify the Agent or the Borrower of a change in circumstances which rendered its exemption from withholding ineffective, or for any other reason), such Bank shall indemnify the Agent or the Borrower, as applicable, fully for all amounts paid, directly or indirectly, by the Agent or the Borrower, as applicable, as tax, withholding therefor, or otherwise, including penalties and interest, and including taxes imposed by any jurisdiction on amounts payable to the Agent or the Borrower, as applicable, under this subsection, together with all costs and expenses related thereto (including attorneys fees and time charges of attorneys for the Agent or the Borrower, as applicable, which attorneys may be employees of the Agent or the Borrower, as applicable). The obligations of the Bank under this Section 2.17(d) shall survive the payment of the Obligations and termination of this Agreement. SECTION 2.19 CAPITAL ADEQUACY. If any Bank determines at any time that its Return has been reduced as a result of any Capital Adequacy Rule Change, that Bank may require the Borrower to pay it the amount necessary to restore its Return to what it would have been had there been no Capital Adequacy Rule Change. For purposes of this Section: (a) "Return", for any period, means the percentage determined by dividing (i) the sum of interest and ongoing fees earned by a Bank under this Agreement during such period, by (ii) the average capital that Bank is required to maintain during such period as a result of its being a party to this Agreement, as determined by that Bank based upon its total capital requirements and a reasonable attribution formula that takes account of the Capital Adequacy Rules then in effect. Return may be calculated for each calendar quarter and for the shorter period between the end of a calendar quarter and the date of termination in whole of this Agreement. (b) "Capital Adequacy Rule" means any law, rule, regulation or guideline regarding capital adequacy that applies to any Bank, or the interpretation thereof by any governmental or regulatory authority. Capital Adequacy Rules include rules requiring financial institutions to maintain total capital in amounts based upon percentages of outstanding loans, binding loan commitments and letters of credit. (c) "Capital Adequacy Rule Change" means any change in any Capital Adequacy Rule occurring after the date of this Agreement, but the term does not include 24 any changes in applicable requirements that at the date hereof are scheduled to take place under the existing Capital Adequacy Rules or any increases in the capital that any Bank is required to maintain to the extent that the increases are required due to a regulatory authority's assessment of the financial condition of that Bank. (d) "Bank" includes (but is not limited to) the Banks, as defined elsewhere in this Agreement; any Bank hereunder; any participant in the loans made hereunder (to the extent provided in Section 9.2 only); and any bank holding company with respect to any of the foregoing. The initial notice sent by a Bank shall be sent as promptly as practicable after that Bank learns that its Return has been reduced, shall include a demand for payment of the amount necessary to restore that Bank's Return for the quarter in which the notice is sent and, if applicable, the preceding quarter, and shall state in reasonable detail the cause for the reduction in its Return and its calculation of the amount of such reduction. Thereafter, that Bank may send a new notice with respect to each calendar quarter setting forth the calculation of the reduced Return for that quarter and including a demand for payment of the amount necessary to restore its Return for that quarter. In such event, the Borrower shall pay the Bank such amount within 30 days after demand by such Bank. A Bank's calculation in any such notice shall be conclusive and binding absent demonstrable error. A Bank shall not make demand hereunder unless that Bank is generally imposing such increased costs on its similarly situated customers. No Bank may demand any compensation hereunder more than 45 days following the end of the quarter for which compensation is sought. SECTION 2.20 MANDATORY ASSIGNMENT OF BANK'S INTEREST. If any Bank delivers to the Borrower a demand for compensation pursuant to Section 2.16(a) or a demand for payment pursuant to Section 2.17 or 2.18 or if at any time the long-term unenhanced credit rating of any Bank falls below Baa2 from Moody's or below BBB from S&P or if such Bank is no longer rated by S&P or Moody's, the Borrower may (so long as no Default or Event of Default has occurred and is continuing) at its expense require such Bank to assign, in whole and in accordance with Section 9.1 (including the execution of an Assignment Agreement and all other applicable documents, and the payment of any fees required under Section 9.1), all of its rights and obligations hereunder and under such Bank's Note, including but not limited to such Bank's Commitment, to an Eligible Lender identified by the Borrower and willing to become a Bank hereunder. Such Bank may be an existing Bank hereunder. Notwithstanding the foregoing, the Borrower may not compel the resignation of any Bank as the Agent except as provided in Section 8.12. ARTICLE III CONDITIONS PRECEDENT SECTION 3.1 INITIAL CONDITIONS PRECEDENT. The obligation of the Banks to make any Advance is subject to the condition precedent that the Agent shall have received on or before the day of the first Advance (and, in any event, not later than June 25, 2003) all of the following, in form and substance satisfactory to each Bank: 25 (a) This Agreement, duly executed by the Borrower, the Agent and each of the Banks. (b) The Notes, dated the date hereof, properly executed on behalf of the Borrower. (c) A certificate of the secretary or an assistant secretary of the Borrower (i) certifying that the execution, delivery and performance of the Loan Documents and other documents contemplated hereunder have been duly approved by all necessary action of the Board of Directors of the Borrower, and attaching true and correct copies of the applicable resolutions granting such approval, (ii) certifying that attached to such certificate are true and correct copies of the Organizational Documents of the Borrower, together with such copies, and (iii) certifying the names of the officers of the Borrower that are authorized to sign the Loan Documents and other documents contemplated hereunder, together with the true signatures of such officers. (d) The Fee Letter, properly executed on behalf of the Borrower. (e) A certificate of good standing of the Borrower from the State of Colorado, dated not more than twenty days before such date. (f) Copies of order(s) of the PUC approving the execution, delivery and performance by the Borrower of this Agreement and the other Loan Documents to which it is a party and the transactions contemplated hereby and thereby. (g) Signed copies of opinions of counsel for the Borrower, addressed to the Banks in substantially the forms of Exhibit D hereto. (h) All fees required to be paid as of the date hereof under this Agreement or the Fee Letter or any other agreement. SECTION 3.2 CONDITIONS PRECEDENT TO ALL ADVANCES. The obligation of the Banks to make any Advance (including the initial Advance) shall be subject to the further conditions precedent that on the date of such Advance: (a) The representations and warranties contained in Article IV are correct on and as of the date of such Advance as though made on and as of such date, except to the extent that such representations and warranties relate solely to an earlier date. (b) The Borrower has delivered to the Agent a certificate in the form of Exhibit F hereto, duly executed by the chief financial officer, treasurer, secretary, assistant secretary, general counsel or deputy general counsel of the Borrower, specifically confirming the Borrower's legal authority to obtain such Advance and that the proceeds of any Advance shall be used solely to pay the PSCo 8-3/4% First Mortgage Bonds and the PSCo Capital Trust I Securities. 26 (c) No event has occurred and is continuing, or would result from such Advance, which constitutes a Default or an Event of Default. ARTICLE IV REPRESENTATIONS AND WARRANTIES The Borrower represents and warrants to the Banks as follows: SECTION 4.1 CORPORATE EXISTENCE AND POWER. The Borrower and its Subsidiaries are each corporations duly incorporated, validly existing and in good standing under the laws of their respective jurisdictions of incorporation, and are each duly licensed or qualified to transact business in all jurisdictions where the character of the property owned or leased or the nature of the business transacted by them makes such licensing or qualification necessary, except where the failure to be so licensed or qualified (i) will not permanently preclude the Borrower or any Subsidiary from maintaining any material action in any such jurisdiction even though such action arose in whole or in part during the period of such failure, and (ii) will not result in any other Material Adverse Change. The Borrower has all requisite power and authority, corporate or otherwise, to conduct its business, to own its properties and to execute, deliver, and perform all of its obligations under, the Loan Documents and the Indentures. SECTION 4.2 AUTHORIZATION OF BORROWING; NO CONFLICT AS TO LAW OR AGREEMENTS. (a) The execution, delivery and performance by the Borrower of the Loan Documents, the borrowings from time to time hereunder and the consummation of the transactions herein and therein contemplated, have been duly authorized by all necessary corporate action and do not and will not (i) require any consent or approval of the stockholders of the Borrower, or any authorization, consent, approval, order, filing, registration or qualification by or with any governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, other than those consents described in Schedule 4.2, each of which has been obtained and is in full force and effect, (ii) violate any provision of any law, rule or regulation (including, without limitation, Regulation X of the Board of Governors of the Federal Reserve System and Section 7 of the Exchange Act or any regulation promulgated thereunder) or of any order, writ, injunction or decree presently in effect having applicability to the Borrower or of the Organizational Documents of the Borrower, (iii) result in a breach of or constitute a default under any indenture or loan or credit agreement or any other material agreement, lease or instrument to which the Borrower or any Subsidiary is a party or by which it or its properties may be bound or affected, or (iv) result in, or require, the creation or imposition of any Lien or other charge or encumbrance of any nature (other than the Liens created under this Agreement, the First Collateral Trust Securities Indenture and the First Mortgage Bond Indenture) upon or with respect to any of the properties now owned or hereafter acquired by the Borrower or any Subsidiary. 27 (b) The PUC has issued its Authorizing Orders authorizing the issuance of the Pledged Securities, the Related First Mortgage Bonds and the incurrence by the Borrower of the Obligations under this Agreement. SECTION 4.3 LEGAL AGREEMENTS. This Agreement, the other Loan Documents, the Related First Mortgage Bonds, if issued, and the Indentures constitute the legal, valid and binding obligations of the Borrower enforceable against the Borrower in accordance with their respective terms, except to the extent that such enforcement may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally or by general equitable principles. Without limiting the generality of the foregoing, as of the Pledged Securities Delivery Date, the Pledged Securities will be (i) duly issued, executed and delivered by the Borrower; (ii) duly authenticated by the Trustee, and (iii) entitled to the benefits provided by the First Collateral Trust Securities Indenture. On the Pledged Securities Delivery Date, the Related First Mortgage Bonds will be (i) duly issued, executed and delivered by the Borrower; (ii) duly authenticated by the trustee under the First Mortgage Bond Indenture and (iii) entitled to the benefits provided by the First Mortgage Bond Indenture. SECTION 4.4 SUBSIDIARIES. Schedule 4.4 hereto is a complete and correct list of all Subsidiaries as of the date of this Agreement and of the percentage of the ownership of the Borrower or any other Subsidiary in each as of the date of this Agreement. The Borrower has no Restricted Subsidiaries as of the date hereof except as designated on Schedule 4.4. Except as otherwise indicated in that Schedule, all shares of each Subsidiary owned by the Borrower or by any such other Subsidiary are validly issued and fully paid and nonassessable. SECTION 4.5 FINANCIAL CONDITION; OTHER INFORMATION. The Borrower has heretofore furnished to the Banks the audited consolidated financial statements of the Borrower and its Subsidiaries for the year ended and as of December 31, 2002 and the unaudited consolidated financial statements of the Borrower and its Subsidiaries for the quarter ended and as of March 31, 2003. Those financial statements fairly present in all material respects the financial condition of the Borrower on the dates thereof and the results of its operations and cash flows for the periods then ended, and were prepared in accordance with GAAP as then in effect. The information, exhibits and reports furnished by the Borrower to the Agent and the Banks, taken as a whole, in connection with the negotiation of or compliance with the Loan Documents did not contain any material misstatement of fact or omit to state a material fact or any fact necessary to make the statements contained therein not misleading. SECTION 4.6 ADVERSE CHANGE. There has been no Material Adverse Change since March 31, 2003. 28 SECTION 4.7 LITIGATION. Except as set forth in Schedule 4.7, there are no actions, suits or proceedings pending or, to the knowledge of the Borrower, threatened against or affecting the Borrower or any Subsidiary or the properties of the Borrower or any Subsidiary before any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, which could reasonably be expected to effect a Material Adverse Change. Other than any liability incident to any litigation, arbitration or proceeding which could not reasonably be expected to have a Material Adverse Effect, the Borrower has no material contingent obligations not provided for or disclosed in the financial statements referred to in Section 4.5. SECTION 4.8 HAZARDOUS SUBSTANCES. Except as set forth in Schedule 4.8, to the best of the Borrower's knowledge after reasonable inquiry, (i) neither the Borrower nor any Subsidiary or other Person has ever caused or permitted any Hazardous Substance to be disposed of on, under or at any real property which is operated by the Borrower or any Subsidiary or in which the Borrower or any Subsidiary has any interest, except to the extent that such disposal can not reasonably be expected to result in a Material Adverse Change; and (ii) no such real property has ever been used (either by the Borrower or by any Subsidiary or other Person) as a dump site or permanent or temporary storage site for any Hazardous Substance in a manner that could reasonably be expected to result in a Material Adverse Change. SECTION 4.9 REGULATION U. Neither the Borrower nor any Subsidiary is engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System), and no part of the proceeds of any Advance will be used to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock. SECTION 4.10 TAXES. The Borrower and its Subsidiaries have each paid or caused to be paid to the proper authorities when due all federal, state and local taxes required to be withheld and paid by them. The Borrower and its Subsidiaries have each filed all federal, state and local tax returns which to the knowledge of the officers of the Borrower or any Subsidiary are required to be filed, and the Borrower and its Subsidiaries have each paid or caused to be paid to the respective taxing authorities all taxes as shown on said returns or on any assessment received by it to the extent such taxes have become due, other than taxes whose amount, applicability or validity is being contested in good faith by appropriate proceedings and for which the Borrower or applicable Subsidiary has provided adequate reserves in accordance with GAAP. SECTION 4.11 BURDENSOME RESTRICTIONS. Neither the Borrower nor any Subsidiary is a party to or bound by any agreement, or subject to any restriction in any Organizational Document, or any requirement of law, which would reasonably be expected to effect a Material Adverse Change. 29 SECTION 4.12 TITLES AND LIENS. The Borrower or one of its Subsidiaries has good title to each of the properties and assets material to the operations of the Borrower and its Subsidiaries, taken as a whole, which it purports to own or which are reflected as owned on its books and records, and the Borrower has good and valid title to all real and fixed property and leasehold rights described or enumerated in the First Collateral Trust Securities Indenture and in the First Mortgage Bond Indenture (except, in each case, such properties as have been released from the Lien thereof in accordance with the terms thereof), in each case free and clear of all Liens and encumbrances, except for Liens and encumbrances permitted by Section 6.1 and covenants, restrictions, rights, easements and minor irregularities in title which do not materially interfere with the business or operations of the Borrower and its Subsidiaries taken as a whole. SECTION 4.13 ERISA. No Plan will have an accumulated funding deficiency (as such term is defined in Section 302 of ERISA) in excess of $50,000,000 as of the last day of the most recent fiscal year of such Plan ended prior to the date hereof, and no liability to the Pension Benefit Guaranty Corporation or the Internal Revenue Service in excess of such amount has been, or is expected by the Borrower or any Subsidiary or ERISA Affiliate to be, incurred with respect to any Plan that could become a liability of the Borrower or any Subsidiary. SECTION 4.14 SECURITIES LAW MATTERS. (a) If the Pledged Securities are issued and delivered pursuant to this Agreement and the First Collateral Trust Securities Indenture, the Pledged Securities will not be of the same class (within the meaning of Rule 144A under the Act) as securities which are listed on a national securities exchange registered under Section 6 of the Exchange Act or quoted in a U.S. automated inter-dealer quotation system. (b) The Borrower is subject to Section 13 or 15(d) of the Exchange Act. (c) Neither the Borrower, nor any person acting on its behalf, has offered or sold (nor will offer or sell prior to any delivery of the Pledged Securities to the Agent) the Pledged Securities by means of any general solicitation or general advertising within the meaning of Rule 502(c) under the Act. (d) The offer, issuance and delivery of the Securities (as defined in the First Collateral Trust Securities Indenture) delivered in connection with the execution and delivery of the Existing Credit Agreement was made under restrictions and other circumstances reasonably designed not to affect the status of the offer, issuance and delivery of the Pledged Securities contemplated by this Agreement as a transaction exempt from the registration provisions of the Act. (e) The issuance and delivery of the Pledged Securities as contemplated by this Agreement will be exempt from the registration requirements of the Act, and neither the Borrower nor any authorized agent acting on its behalf will take any action hereafter that would cause the loss of such exemption. 30 (f) Except in respect of Securities (as defined in the First Collateral Trust Securities Indenture) delivered in connection with the execution and delivery of the Existing Credit Agreement, within the six months preceding the date of any delivery of the Pledged Securities to the Agent, neither the Borrower nor any other person acting on behalf of the Borrower will have offered or sold to any person any Pledged Securities, or any securities of the same or a similar class as the Pledged Securities, other than the Pledged Securities delivered to the Agent hereunder. The Borrower will take reasonable precautions designed to insure that any offer or sale, direct or indirect, in the United States or to any U.S. person (as defined in Rule 902 under the Act) of any Pledged Securities or any substantially similar security issued by the Borrower, within six months subsequent to any delivery of the Pledged Securities to the Agent, is made under restrictions and other circumstances reasonably designed not to affect the status of the offer and sale of the Pledged Securities contemplated by this Agreement as a transaction exempt from the registration provisions of the Act. (g) No registration of the Pledged Securities under the Act is required for the offer and sale of the Pledged Securities to the Agent, if so offered and sold, in the manner contemplated by this Agreement. SECTION 4.15 INVESTMENT COMPANY ACT. The Borrower is not, and after giving effect to the offer and sale of the Pledged Securities, will not be an "investment company," as such term is defined in the Investment Company Act. SECTION 4.16 PUBLIC UTILITY HOLDING COMPANY ACT. The Borrower is subject to the Public Utility Holding Company Act of 1935, as amended ("PUHCA"), as a "subsidiary" of a registered "holding company" within the meaning of PUHCA. However, the transactions contemplated by this Agreement are exempt from any requirement for SEC approval under PUHCA. SECTION 4.17 INDENTURE. (a) On the date hereof, the aggregate principal amount of Securities (as defined in the First Collateral Trust Securities Indenture) outstanding under the First Collateral Trust Securities Indenture (excluding the Pledged Securities) is $1,793,250,000; and the aggregate principal amount of the First Mortgage Bonds outstanding under the First Mortgage Bond Indenture (excluding bonds issued to secure securities under the First Collateral Trust Securities Indenture) is $374,340,000. (b) There has been no discharge of the First Collateral Trust Securities Indenture or of the First Mortgage Bond Indenture with respect to the Borrower. (c) Substantially all of the property, whether real, personal or mixed, of the electric utility business of the Borrower is subject to the Liens of the First Collateral Trust Securities Indenture. Substantially all of the property, whether real, personal or mixed, of the Borrower is subject to the Lien of the First Mortgage Bond Indenture. 31 (d) True and complete copies of all amendments and supplements to and restatements of the First Collateral Trust Securities Indenture and First Mortgage Bond Indenture have been delivered to counsel for the Agent. (e) The supplemental indentures to the First Collateral Trust Securities Indenture and the First Mortgage Bond Indenture to be entered into in connection with the delivery of the Pledged Securities and the Related First Mortgage Bonds will not be required to be qualified under the Trust Indenture Act and, in connection with the issuance and delivery of the Pledged Securities to the Agent as contemplated by this Agreement, the First Collateral Trust Securities Indenture and the First Mortgage Bond Indenture will not be required to be qualified under the Trust Indenture Act. SECTION 4.18 SOLVENCY. The Borrower is and, upon the drawing of any Advance will be, Solvent. SECTION 4.19 SWAP OBLIGATIONS. Neither the Borrower nor any of its Subsidiaries has incurred any outstanding obligations under any Swap Contracts, other than Permitted Swap Obligations. SECTION 4.20 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, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the Borrower and such Subsidiaries operate. SECTION 4.21 COMPLIANCE WITH LAWS. Except as disclosed in Schedule 4.22, the Borrower and its Subsidiaries have complied in all material respects with all applicable statutes, rules, regulations, orders and restrictions of any domestic or foreign government or any instrumentality or agency thereof having jurisdiction over the conduct of their respective businesses or the ownership of their respective properties, assets and rights. ARTICLE V AFFIRMATIVE COVENANTS OF THE BORROWER So long as any Note shall remain unpaid or any Obligations shall be outstanding, the Borrower will comply with the following requirements, unless the Required Banks shall otherwise consent in writing: SECTION 5.1 FINANCIAL STATEMENTS; OTHER NOTICES. The Borrower will deliver to the Agent and each Bank: 32 (a) As soon as available, and in any event within 100 days after the end of each fiscal year of the Borrower, a copy of the annual audit report of the Borrower and its Subsidiaries prepared by nationally recognized independent certified public accountants, which annual report shall include the balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal year and the related statements of income, shareholders' equity and cash flows of the Borrower and its Subsidiaries for the fiscal year then ended, all presented on a consolidated basis in reasonable detail and all prepared in accordance with GAAP. (b) As soon as available and in any event within 55 days after the end of each of the first three quarters of each fiscal year of the Borrower, a balance sheet of the Borrower and its Subsidiaries as at the end of such quarter and related statements of earnings and cash flows of the Borrower and its Subsidiaries for such quarter and for the year to date, in reasonable detail and prepared on a consolidated basis in accordance with GAAP, subject to year-end adjustments. (c) Concurrent with the delivery of any financial statements under paragraph (a) or (b), a Compliance Certificate, duly executed by the chief financial officer or treasurer of the Borrower. (d) Promptly following the issuance of any Authorizing Order, a favorable opinion of counsel to the Borrower, in form and substance reasonably acceptable to the Agent, addressed to the Agent and the Banks, advising the Agent and the Banks of such issuance, stating the restrictions, if any, that such Authorizing Order imposes on the Borrower's ability to obtain Borrowings hereunder, and attaching a copy of such Authorizing Order. (e) Promptly after the sending or filing thereof, copies of all regular and periodic financial reports which the Borrower or any Subsidiary shall file with the SEC or any national securities exchange. (f) Immediately after the commencement thereof, notice in writing of all litigation and of all proceedings before any governmental or regulatory agency affecting the Borrower or any Restricted Subsidiary of the type described in Section 4.7 or which seek a monetary recovery against the Borrower or any Restricted Subsidiary combined in excess of $50,000,000. (g) As promptly as practicable (but in any event not later than five Business Days) after an officer of the Borrower obtains knowledge of the occurrence of any Default or Event of Default, notice of such occurrence, together with a detailed statement by a responsible officer of the Borrower of the steps being taken by the Borrower to cure the effect of such event. (h) Promptly upon becoming aware of any Reportable Event or the occurrence of any prohibited transaction (as defined in Section 4975 of the Code or Section 406 of ERISA) in connection with any Plan or any trust created thereunder which could reasonably be expected to result in a liability to the Borrower or any Subsidiary in excess 33 of $50,000,000, a written notice specifying the nature thereof, what action the Borrower has taken, is taking or proposes to take with respect thereto, and, when known, any action taken or threatened by the Internal Revenue Service, the Pension Benefit Guaranty Corporation or the Department of Labor with respect thereto. (i) Promptly upon their receipt, copies of (a) all notices received by the Borrower, any Restricted Subsidiary or ERISA Affiliate of the Pension Benefit Guaranty Corporation's intent to terminate any Plan or to have a trustee appointed to administer any Plan, and (b) all notices received by the Borrower, any Restricted Subsidiary or any ERISA Affiliate from a Multiemployer Plan concerning the imposition or amount of withdrawal liability imposed pursuant to Section 4202 of ERISA, which withdrawal liability individually or in the aggregate exceeds $50,000,000. (j) All notices required to be delivered under Section 10.23. (k) Promptly after it obtains knowledge of any such change, notice (by telephone, followed by written notice transmitted promptly thereafter in accordance with Section 10.4) of any change in the Moody's Rating or the S&P Rating, together with the details thereof, and of any announcement by S&P or Moody's that its rating is "under review" or that any such rating has been placed on a "CreditWatch List"(R) or "watch list" or that any similar action has been taken by such rating agency. (l) Such other information respecting the financial condition and results of operations of the Borrower or any Subsidiary as any Bank may from time to time reasonably request. SECTION 5.2 BOOKS AND RECORDS; INSPECTION AND EXAMINATION. The Borrower will keep, and will cause each Subsidiary to keep, accurate books of record and account for itself in which true and complete entries will be made in accordance with GAAP. Upon request of any Applicable Party, as defined below, the Borrower will, and will cause each Subsidiary to, give any representative of such Applicable Party access to, and permit such representative to examine, copy or make extracts from, any and all books, records and documents in its possession (except to the extent that such access is restricted by law or by a bona fide non-disclosure agreement not entered into primarily for the purpose of evading the requirements of this Section), to inspect any of its properties (subject to such physical security requirements as the Borrower or the applicable Subsidiary may require) and to discuss its affairs, finances and accounts with any of its principal officers, all at such times during normal business hours, upon reasonable notice, and as often as such Applicable Party may reasonably request. As used in this Section 5.2, "Applicable Party" means (i) so long as any Event of Default has occurred and is continuing, the Agent or any Bank, and (ii) at all other times, the Agent. The provisions of this Section 5.2 shall in no way preclude any Bank from discussing the general affairs, finances and accounts of the Borrower with any of its principal officers at such times during normal business hours and as often as may be agreed to between the Borrower and such Bank. 34 SECTION 5.3 COMPLIANCE WITH LAWS. The Borrower will, and will cause each Subsidiary to, comply with the requirements of applicable laws and regulations, the noncompliance with which would effect a Material Adverse Change and to conduct its and cause each Subsidiary to conduct its operations and keep and maintain its property in material compliance with all Environmental Laws. SECTION 5.4 PAYMENT OF TAXES AND OTHER CLAIMS. The Borrower will, and will cause each Subsidiary to, pay or discharge, when due, (a) all taxes, assessments and governmental charges levied or imposed upon it or upon its income or profits, or upon any properties belonging to it, prior to the date on which penalties attach thereto, (b) all federal, state and local taxes required to be withheld by it, and (c) all lawful claims for labor, materials and supplies which, if unpaid, might by law become a lien or charge upon any properties of the Borrower or any Subsidiary; provided, that neither the Borrower nor any Subsidiary shall be required to pay any such tax, assessment, charge or claim (i) whose amount, applicability or validity is being contested in good faith by appropriate proceedings and for which the Borrower or such Subsidiary has provided adequate reserves in accordance with GAAP or (ii) where failure to pay such tax, assessment, charge or claim could not reasonably be expected to result in a liability in excess of $10,000,000. SECTION 5.5 MAINTENANCE OF PROPERTIES. The Borrower will keep and maintain, and will cause each Subsidiary to keep and maintain, all of its properties necessary or useful in its business in good condition, repair and working order; provided, however, that nothing in this Section shall prevent the Borrower or any Subsidiary from discontinuing the operation and maintenance of, or disposing of, any of its properties if (i) (A) such discontinuance or disposition is, in the reasonable judgment of the Borrower or that Subsidiary, desirable in the conduct of its business, and (B) no Default or Event of Default exists at the time of, or will be caused by, such discontinuance or disposition, or (ii) such discontinuance or disposition relates to obsolete or worn-out property. SECTION 5.6 INSURANCE. The Borrower will, and will cause each Restricted Subsidiary to, obtain and maintain insurance with insurers reasonably believed by the Borrower or such Restricted Subsidiary to be responsible and reputable, in such amounts and against such risks as is usually carried by companies in similar circumstances engaged in similar business and owning similar properties in the same general areas in which the Borrower or that Restricted Subsidiary operates. SECTION 5.7 PRESERVATION OF CORPORATE EXISTENCE. The Borrower will, and will cause each Restricted Subsidiary to, preserve and maintain its corporate existence and all of its rights, privileges and franchises; provided, however, that neither the Borrower nor any Restricted Subsidiary shall be required to preserve any of its rights, privileges and franchises or to maintain its corporate existence if (i) its Board of Directors shall reasonably determine that the preservation or maintenance thereof is no longer desirable in the conduct of the business of the Borrower or that Restricted Subsidiary, and (ii) no Default or 35 Event of Default exists upon, or will be caused by, the termination of such right, privilege, franchise or existence; provided, further, that in no event shall the foregoing be construed to permit the Borrower to terminate its corporate existence. SECTION 5.8 DELIVERY OF INFORMATION. At any time when the Borrower is not subject to Section 13 or 15(d) of the Exchange Act, for the benefit of holders from time to time of Pledged Securities, the Borrower agrees to furnish at its expense, upon request, to holders of Pledged Securities and prospective purchasers of securities information satisfying the requirements of subsection (d)(4)(i) of Rule 144A under the Act. SECTION 5.9 PLEDGED SECURITIES CAPACITY. The Borrower shall at all times between the Effective Date through and including the Pledged Securities Delivery Date (as defined in Section 7.3) maintain authority under the Pledged Securities Order and any other order of the PUC or any Governmental Authority to issue (i) Collateral Securities (as defined in the Pledged Securities Order) in the form of First Collateral Trust Bonds secured by related First Mortgage Bonds in an amount at least equal to the lesser of $180,000,000 and the amount of the Outstandings and (ii) an aggregate amount of Short-Term Debt Securities (as defined in the Pledged Securities Order) and Non-collateral Securities (as defined in the Pledged Securities Order) in the form of First Collateral Trust Bonds secured by related First Mortgage Bonds in an amount equal to the amount by which the Outstandings (after giving effect to any prepayment pursuant to Section 2.11 from the Prepayment Proceeds of such Debt Securities offering) exceed $180,000,000. SECTION 5.10 USE OF PROCEEDS. The Borrower will use the proceeds of the Advances solely to pay Borrower's obligations under the PSCo 8-3/4% First Mortgage Bonds and the PSCo Capital Trust I Securities. The Borrower will not, nor will it permit any Subsidiary to, use any of the proceeds for any other purpose. ARTICLE VI NEGATIVE COVENANTS So long as any Note shall remain unpaid or any Obligations shall be outstanding, the Borrower agrees that, without the prior written consent of the Required Banks: SECTION 6.1 LIENS. The Borrower will not create, incur, assume or suffer to exist any Lien on any of its assets, now owned or hereafter acquired, and will not permit any Subsidiary to create, incur, assume or suffer to exist any Lien on any of such Subsidiary's assets, now owned or hereafter acquired, relating to any indebtedness of such Subsidiary with respect to which the Borrower has any obligation for the payment of money; excluding, however, from the operation of the foregoing: (a) Liens for taxes or assessments or other governmental charges to the extent not required to be paid by Section 5.4. 36 (b) Materialmen's, merchants', carriers' worker's, repairer's, or other like liens arising in the ordinary course of business to the extent not required to be paid by Section 5.4. (c) Pledges or deposits to secure obligations under worker's compensation laws, unemployment insurance, social security and other similar laws, or to secure the performance of bids, tenders, contracts (other than for the repayment of borrowed money) or leases or to secure statutory obligations or surety or appeal bonds, or to secure indemnity, performance or other similar bonds in the ordinary course of business. (d) Zoning restrictions, easements, licenses, restrictions on the use of real property or minor irregularities in title thereto, which do not materially impair the use of such property in the operation of the business of the Borrower and its Subsidiaries taken as a whole or the value of such property for the purpose of such business. (e) Purchase money Liens upon or in property acquired after the date hereof, provided that (i) such Lien is created not later than the 90th day following the acquisition or completion of construction of such property by the Borrower or its applicable Subsidiary, and (ii) no such Lien extends or shall extend to or cover any property of the Borrower or its Subsidiaries other than the property then being acquired, fixed improvements then or thereafter erected thereon and improvements and modifications thereto necessary to maintain such properties in working order. (f) Liens granted by any Acquisition Target prior to the acquisition by the Borrower or any Subsidiary of any interest in such Acquisition Target or its assets, so long as (i) such Lien was granted by the Acquisition Target prior to such acquisition and not in contemplation thereof, and (ii) no such Lien extends to any assets of the Borrower or any Subsidiary other than the assets of the Acquisition Target and improvements and modifications thereto necessary to maintain such properties in working order or, in the case of an asset transfer, the assets so acquired by the Borrower or the applicable Subsidiary and improvements and modifications thereto. (g) Liens (other than those described in subsection (e)) securing any indebtedness for borrowed money in existence on the date hereof and listed in Schedule 6.1 hereto. (h) Liens created under or in connection with this Agreement, the First Collateral Trust Securities Indenture and the First Mortgage Bond Indenture. (i) Liens permitted under the First Collateral Trust Securities Indenture and the First Mortgage Bond Indenture as such indentures exist on the date hereof, without regard to any waiver, amendment, modification or restatement thereof. (j) Liens securing any refinancing of indebtedness secured by the Liens described in paragraphs (e), (f) and (g), so long as the amount of such indebtedness secured by any such Lien does not exceed the amount of such refinanced indebtedness immediately prior to the refinancing and Liens do not extend to assets other than those encumbered prior to such refinancing and improvements and modifications thereto. 37 (k) Liens granted by any Subsidiary of the Borrower in favor of the Borrower or any wholly-owned Subsidiary of the Borrower. (l) Liens not otherwise described in this Section 6.1, so long as the aggregate amount of indebtedness secured by all such Liens does not at any time exceed 10% of the Tangible Net Worth of the Borrower and its Subsidiaries. SECTION 6.2 SALE OF ASSETS. The Borrower will not, and will not permit any Subsidiary to, sell, lease, assign, transfer or otherwise dispose of all or a Material Part of the Assets of the Borrower and its Subsidiaries (whether in one transaction or in a series of transactions) to any other Person other than (i) in the ordinary course of business, (ii) dispositions of property no longer used or useful in the business of the Borrower or any Subsidiary and (iii) dispositions of assets the net proceeds of which are invested or re-invested, or held in cash or cash-equivalents for reinvestment, in other energy-related assets; provided, however, that a wholly-owned Subsidiary of the Borrower may sell, lease, or transfer all or a substantial part of its assets to the Borrower or another wholly-owned Subsidiary of the Borrower, and the Borrower or such other wholly-owned Subsidiary, as the case may be, may acquire all or substantially all of the assets of the Subsidiary so to be sold, leased or transferred to it and any such sale, lease or transfer shall not be included in determining if the Borrower and/or its Subsidiaries disposed of a Material Part of its Assets. Notwithstanding the foregoing, the operating agreement between TRANSLink Transmission Co., LLC and the Borrower shall not be treated as a disposition for the purposes of this Section 6.2. SECTION 6.3 CONSOLIDATION AND MERGER. The Borrower will not consolidate with or merge into any Person, or permit any other Person to merge into it, or acquire (in a transaction analogous in purpose or effect to a consolidation or merger) all or substantially all of the assets of any other Person; provided, however, that the restrictions contained in this Section shall not apply to or prevent the consolidation or merger of any Person with, or a conveyance or transfer of its assets to, the Borrower so long as (i) no Default or Event of Default exists at the time of, or will be caused by, such consolidation, merger, conveyance or transfer, and (ii) the Borrower shall be the continuing or surviving corporation. SECTION 6.4 HAZARDOUS SUBSTANCES. The Borrower will not, and will not permit any Subsidiary to, cause or permit any Hazardous Substance to be disposed of in any manner, or on, under or at any real property which is operated by the Borrower or any Subsidiary or in which the Borrower or any Subsidiary has any interest, if such disposition could reasonably be expected to result in a Material Adverse Change. SECTION 6.5 RESTRICTIONS ON NATURE OF BUSINESS. The Borrower will not engage in any line of business materially different from that presently engaged in by the Borrower. 38 SECTION 6.6 TRANSACTIONS WITH AFFILIATES. The Borrower will not (i) make any loan or capital contribution to, or any other investment in, any Affiliate or make any other cash transfer to any Affiliate of the Borrower or (ii) enter into any transaction or series of transactions, whether or not in the ordinary course of business, with any officer, director, shareholder, Affiliate (other than a Subsidiary) of the Borrower; provided, however, that the foregoing shall not prohibit any of the following: (a) Transactions made upon fair and reasonable terms no less favorable to the Borrower than would obtain, taking into account all facts and circumstances, in a comparable arm's-length transaction with a Person not an officer, director, shareholder or Affiliate of the Borrower. (b) Dividends to the Parent. (c) Transactions with Affiliates which transactions are subject to the jurisdiction of the Federal Energy Regulatory Commission ("FERC"), the SEC or the PUC. (d) Allocation of taxes, tax benefits and tax credits in accordance with the restrictions and requirements of PUHCA. (e) Contributions of capital to Subsidiaries. (f) Any investment in TRANSLink Transmission Co., LLC ("TRANSLink") or any operating agreement between TRANSLink and the Borrower and/or its Subsidiaries, complying with the requirements of FERC Order No. 2000. SECTION 6.7 RATIO OF FUNDED DEBT TO TOTAL CAPITAL. The Borrower will not at any time permit its ratio of total Funded Debt to Total Capital, determined on a consolidated basis with respect to the Borrower and its Subsidiaries as at the end of each fiscal quarter of the Borrower, to be greater than 0.60 to 1. SECTION 6.8 INTEREST COVERAGE RATIO. The Borrower will not at any time permit its Interest Coverage Ratio, determined as of the end of each fiscal quarter of the Borrower, to be less than 2.75 to 1. ARTICLE VII EVENTS OF DEFAULT, RIGHTS AND REMEDIES SECTION 7.1 EVENTS OF DEFAULT. "Event of Default", wherever used herein, means any one of the following events: (a) Default in the payment of any principal of any Advance when it becomes due and payable. 39 (b) Default in the payment of any interest on any Obligations or any fees required under Section 2.7 when the same become due and payable and the continuance of such default for five (5) Business Days. (c) Failure to (i) deliver the Pledged Securities and the Pledged Securities Deliverables or (ii) make any prepayment on the Advances when and as required under Section 7.3. (d) Default in the performance, or breach, of any covenant or agreement on the part of the Borrower contained in Article VI hereof (other than Section 6.4). (e) Default in the performance, or breach, of any covenant or agreement of the Borrower in this Agreement or any other Loan Document (including but not limited to Section 6.4, but excluding any other covenant or agreement a default in whose performance or whose breach is elsewhere in this Section specifically dealt with), and the continuance of such default or breach for a period of 30 days after the Agent, at the request of any Bank, has given notice to the Borrower specifying such default or breach and requiring it to be remedied. (f) Any representation or warranty made by the Borrower in this Agreement or any other Loan Document or by the Borrower (or any of its officers) in any certificate, instrument, or statement contemplated by or made or delivered pursuant to or in connection with this Agreement, shall prove to have been incorrect in any material respect when made. (g) The Borrower or the Parent shall assert that any Loan Documents or any Pledged Securities (if any) are unenforceable in accordance with their terms; or the principal amount outstanding under the Pledged Securities, if pledged, shall at any time be less than the Outstandings. (h) A default in the payment when due (after giving effect to any applicable grace period) of principal or interest with respect to any indebtedness or any Swap Contract of the Borrower or any Subsidiary (other than the Obligations) if the aggregate amount of all such indebtedness as to which such payment defaults exist is not less than $50,000,000. (i) A default (other than a default described in paragraph (g)) under any bond, debenture, note or other evidence of indebtedness or any Swap Contract of the Borrower or any Subsidiary (other than the Obligations) or under any indenture or other instrument under which any such evidence of indebtedness has been issued or by which it is governed and the expiration of the applicable period of grace, if any, specified in such evidence of indebtedness, indenture or other instrument if the effect of such default is to cause or to permit the holder of such indebtedness (or trustee or agent on behalf of such holder) to cause such indebtedness to come due prior to its stated maturity or is to cause or to permit the counterparty in respect of such Swap Contract to elect an early termination date in respect of such Swap Contract; provided, however, that no Event of Default shall be deemed to have occurred under this paragraph if the aggregate amount 40 owing as to all such indebtedness and Swap Contracts as to which such defaults have occurred and are continuing is less than $50,000,000; provided further that if such default shall be cured by the Borrower or such Subsidiary, or waived by the holders of such indebtedness or counterparties in respect of such Swap Contracts, in each case prior to the commencement of any action under Section 7.2 and as may be permitted by such evidence of indebtedness, indenture, other instrument or Swap Contract, then the Event of Default hereunder by reason of such default shall be deemed likewise to have been thereupon cured or waived. (j) The Borrower or any Restricted Subsidiary shall be adjudicated a bankrupt or insolvent, or admit in writing its inability to pay its debts as they mature, or make an assignment for the benefit of creditors; or the Borrower or any Restricted Subsidiary shall apply for or consent to the appointment of any receiver, trustee, or similar officer for it or for all or any substantial part of its property; or such receiver, trustee or similar officer shall be appointed without the application or consent of the Borrower or such Restricted Subsidiary, and such appointment shall continue undischarged for a period of 60 days; or the Borrower or any Restricted Subsidiary shall institute (by petition, application, answer, consent or otherwise) any proceeding relating to it under the Debtor Relief Laws or any such proceeding shall be instituted (by petition, application or otherwise) against the Borrower or any Restricted Subsidiary and shall continue undischarged for 60 days; or any judgment, writ, warrant of attachment or execution or similar process shall be issued or levied against a substantial part of the property of the Borrower or any Restricted Subsidiary and such judgment, writ, or similar process shall not be released, vacated, stayed or fully bonded within 60 days after its issue or levy. (k) A petition shall be filed by the Borrower or any Restricted Subsidiary under the Debtor Relief Laws naming the Borrower or that Restricted Subsidiary as debtor; or an involuntary petition shall be filed against the Borrower or any Restricted Subsidiary under the Debtor Relief Laws, and such petition shall not have been dismissed within 60 days after such filing; or an order for relief shall be entered in any case under the Debtor Relief Laws naming the Borrower or any Restricted Subsidiary as debtor. (l) The Parent shall cease to own 100% of all classes of capital stock of the Borrower; or a Change of Control shall occur with respect to the Parent. (m) The rendering against the Borrower or any Subsidiary of a final judgment, decree or order for the payment of money if the amount of such judgment, decree or order, together with the amount of all other such judgments, decrees and orders then outstanding, less (in each case) the portion thereof covered by insurance proceeds, is greater than $50,000,000 and if such judgment, decree or order remains unsatisfied and in effect for any period of 30 consecutive days without a stay of execution. (n) Any Plan shall have been terminated as a result of which the Borrower or any Subsidiary or ERISA Affiliate has incurred an unfunded liability in excess of $50,000,000; or a trustee shall have been appointed by an appropriate United States District Court to administer any Plan, or the Pension Benefit Guaranty Corporation shall have instituted proceedings to terminate any Plan or to appoint a trustee to administer any 41 Plan and in either case such action could reasonably be expected to result in liability to the Borrower or any Subsidiary in excess of $50,000,000, or withdrawal liability in excess of $50,000,000 shall have been asserted against the Borrower or any Subsidiary or ERISA Affiliate by a Multiemployer Plan; or the Borrower or any Subsidiary or ERISA Affiliate shall have incurred any joint and several liability to the Pension Benefit Guaranty Corporation, the Internal Revenue Service or the Department of Labor, or the Borrower or any Subsidiary shall have incurred any other liability to the Pension Benefit Guaranty Corporation, the Internal Revenue Service or the Department of Labor in excess of $50,000,000 with respect to any Plan; or any Reportable Event that the Required Banks may determine in good faith could reasonably be expected to constitute grounds for the termination of any Plan by the Pension Benefit Guaranty Corporation, for the appointment by the appropriate United States District Court of a trustee to administer any Plan or for the imposition of withdrawal liability with respect to a Multiemployer Plan, and which, in any such case, could reasonably be expected to result in liability to the Borrower or any Subsidiary or any ERISA Affiliate in excess of $50,000,000 shall have occurred and be continuing 30 days after written notice to such effect shall have been given to the Borrower by the Banks. (o) Any Authorizing Order or other governmental license or other permission necessary for the maintenance of Obligations outstanding or the conduct of the Borrower's business substantially as presently conducted shall be suspended or revoked or shall fail to be renewed upon expiration. (p) Any court, government or governmental agency shall condemn, seize or otherwise appropriate, or take custody or control of, all or any Material Part of the Assets of the Borrower and its Subsidiaries. SECTION 7.2 RIGHTS AND REMEDIES. Upon the occurrence of an Event of Default or at any time thereafter until such Event of Default is waived by the Required Banks or cured, the Agent may, with the consent of the Required Banks, and shall, upon the request of the Required Banks, exercise any or all of the following rights and remedies: (a) The Agent may, by notice to the Borrower, declare the Commitments to be terminated, whereupon the same shall forthwith terminate. (b) The Agent may, by notice to the Borrower, declare the entire unpaid principal amount of the Obligations then outstanding, all interest accrued and unpaid thereon, and all other Obligations payable under this Agreement to be forthwith due and payable, whereupon the Obligations, all such accrued interest and all such amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower. (c) The Banks may, without notice to the Borrower and without further action, apply any and all money owing by any Bank to the Borrower to the payment of the Obligations then outstanding, including accrued interest. For purposes of this 42 paragraph (d), "Bank" means the Banks, as defined elsewhere in this Agreement, and any participant in the loans made hereunder; provided, however, that each such participant, by exercising its rights under this paragraph (d), agrees that it shall be obligated under Section 8.17 with respect to such payment as if it were a Bank for purposes of that Section. (d) The Agent may exercise and enforce all rights and remedies available to it in respect of the Pledged Securities. (e) The Agent and the Banks may exercise any other rights and remedies available to them by law or agreement. Notwithstanding the foregoing, upon the occurrence of an Event of Default described in Section 7.1(j) hereof (whether or not such Event of Default also arises under Section 7.1(i) hereof), the Commitments shall terminate and the entire unpaid principal amount of the Notes then outstanding, all interest accrued and unpaid thereon, and all other amounts payable under this Agreement shall be immediately due and payable without presentment, demand, protest or notice of any kind. SECTION 7.3 PROVISIONS REGARDING PLEDGED SECURITIES. (a) Pledged Securities. In the event that all outstanding Obligations are not paid in full on or before the date that is one hundred twenty (120) days after the Effective Date (the "Pledged Securities Delivery Date"), the Borrower covenants and agrees that, for the purpose of providing security for the payment of the principal of the Advances, it will issue, execute and deliver to the Agent on the Pledged Securities Delivery Date (i) Pledged Securities in an aggregate principal amount equal to the aggregate Outstandings; and (ii) the Pledged Securities Deliverables. Notwithstanding the foregoing, in the event that the Borrower does not have lawful authority to issue, execute and deliver Pledged Securities to the Agent in an amount equal to the aggregate amount of the Outstandings, then, on the Pledged Securities Delivery Date, the Borrower shall prepay the Advances to the extent of any Pledged Securities Shortfall (subject to any compensation due the Agent and/or Banks as specified in Section 2.16(b)) and deliver to the Agent (x) Pledged Securities in an aggregate principal amount equal to the aggregate Outstandings after giving effect to such prepayment; and (y) the Pledged Securities Deliverables. The Pledged Securities shall mature on the Facility Termination Date, except that upon the occurrence of an Event of Default pursuant to Section 7.1(a) or (b) or any other Event of Default that results in an acceleration of the outstanding principal amount of any Notes, the Pledged Securities shall be redeemable in whole or in part upon receipt by the Trustee and the Borrower of a written demand (a "Redemption Demand") from the Agent specifying a date (the "Demand Redemption Date") (which may be the date of receipt by Borrower of the Redemption Demand) stating that there has been such an Event of Default and demanding redemption of the Pledged Securities to the extent of the amount of the accelerated principal amount of the Notes. The Pledged Securities shall otherwise contain terms substantially similar to the terms of those Securities (as defined in the First Collateral Trust Securities Indenture) issued and delivered in connection with the execution and delivery by Borrower of the Existing Credit Agreement. 43 Notwithstanding the foregoing, (x) without the prior written consent of the Agent, the Borrower shall make no payment with respect to the Pledged Securities at any time while any Advance remains outstanding, and (y) the Agent shall not demand payment of the Pledged Securities from any obligor thereunder prior to the occurrence of an Event of Default. On the date which is thirty (30) days after the maturity of the Pledged Securities, the Trustee may conclusively presume that the obligation of the Borrower to pay principal on the Pledged Securities as the same shall have come due and payable shall have been fully satisfied and discharged unless and until the Trustee shall have received a Payment Demand from the Agent stating that the principal of Pledged Securities has become due and payable and specifying the amount of funds required to make such payment. Notwithstanding anything to the contrary contained herein, the aggregate amount actually due on the Pledged Securities shall not exceed the aggregate principal amount of the Advances. (b) Effect of Termination or Reduction of Outstandings. Upon any reduction or termination of the Outstandings, the Pledged Securities shall be deemed satisfied and discharged as to the reduced or terminated portion of the Outstandings, as and to the extent provided in the Pledged Securities. (c) Voting Restrictions. The Agent's rights to vote or consent under the First Collateral Trust Securities Indenture in respect of the Pledged Securities shall be restricted as and to the extent provided in the Pledged Securities. (d) Restrictions on Transfer of Bonds. The Pledged Securities are not transferable except to a successor to the Agent under this Agreement. (e) Securities Act Representation. Each of the Agent and the Banks represents to the Borrower that it is an "accredited investor" within the meanings of Rule 501(a) of Regulation D and is acquiring its interest in the Pledged Securities hereunder as security for the Obligations and not with a view to any sale or distribution thereof within the meaning of the Act. ARTICLE VIII THE AGENT SECTION 8.1 APPOINTMENT; NATURE OF RELATIONSHIP. KeyBank is hereby appointed by each of the Banks as its contractual representative (herein referred to as the "Agent") hereunder and under each other Loan Document, and each of the Banks irrevocably authorizes the Agent to act as the contractual representative of such Bank with the rights and duties expressly set forth herein and in the other Loan Documents. The Agent agrees to act as such contractual representative upon the express conditions contained in this Article VIII. Notwithstanding the use of the defined term "Agent," it is expressly understood and agreed that the Agent shall not have any fiduciary responsibilities to any Bank by reason of this Agreement or any other Loan Document and that the Agent is merely acting as the contractual representative of the Banks with only those duties as are expressly set forth in this Agreement and the other Loan Documents. In its capacity as the Banks' contractual representative, the Agent (i) does not hereby assume any fiduciary duties to any of the Banks, (ii) is a "representative" of the Banks within the meaning of Section 9-105 of the Uniform 44 Commercial Code and (iii) is acting as an independent contractor, the rights and duties of which are limited to those expressly set forth in this Agreement and the other Loan Documents. Each of the Banks hereby agrees to assert no claim against the Agent on any agency theory or any other theory of liability for breach of fiduciary duty, all of which claims each Bank hereby waives. SECTION 8.2 POWERS. The Agent shall have and may exercise such powers under the Loan Documents as are specifically delegated to the Agent by the terms of each thereof, together with such powers as are reasonably incidental thereto. The Agent shall have no implied duties to the Banks, or any obligation to the Banks to take any action thereunder except any action specifically provided by the Loan Documents to be taken by the Agent. The Agent shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects with reasonable care. SECTION 8.3 GENERAL IMMUNITY. Neither the Agent nor any of its directors, officers, agents or employees shall be liable to the Borrower, the Banks or any Bank for any action taken or omitted to be taken by it or them hereunder or under any other Loan Document or in connection herewith or therewith except to the extent such action or inaction is determined in a final non-appealable judgment by a court of competent jurisdiction to have arisen from the gross negligence or willful misconduct of such Person. SECTION 8.4 NO RESPONSIBILITY FOR LOANS, RECITALS, ETC. Neither the Agent nor any of its directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into, or verify (a) any statement, warranty or representation made in connection with any Loan Document or any borrowing hereunder; (b) the performance or observance of any of the covenants or agreements of any obligor under any Loan Document, including, without limitation, any agreement by an obligor to furnish information directly to each Bank; (c) the satisfaction of any condition specified in Article III, except receipt of items required to be delivered solely to the Agent; (d) the existence or possible existence of any Default or Event of Default; (e) the validity, enforceability, effectiveness, sufficiency or genuineness of any Loan Document or any other instrument or writing furnished in connection therewith, or (f) the financial condition of the Borrower or of any of the Borrower's Subsidiaries. The Agent shall have no duty to disclose to the Banks information that is not required to be furnished by the Borrower to the Agent at such time, but is voluntarily furnished by the Borrower to the Agent (either in its capacity as the Agent or in its individual capacity). No Agent-Related Person shall be under any obligation to any Bank to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of the Borrower or any of the Borrower's Subsidiaries or Affiliates. SECTION 8.5 ACTION ON INSTRUCTIONS OF BANKS. The Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder and under any other Loan Document in accordance with written instructions signed by the 45 Required Banks (or, when expressly required hereunder, all of the Banks), and such instructions and any action taken or failure to act pursuant thereto shall be binding on all of the Banks. The Banks hereby acknowledge that the Agent shall be under no duty to take any discretionary action permitted to be taken by it pursuant to the provisions of this Agreement or any other Loan Document unless it shall be requested in writing to do so by the Required Banks. The Agent shall be fully justified in failing or refusing to take any action hereunder and under any other Loan Document unless it shall first be indemnified to its satisfaction by the Banks pro rata against any and all liability, cost and expense that it may incur by reason of taking or continuing to take any such action. SECTION 8.6 EMPLOYMENT OF AGENTS AND COUNSEL. The Agent may execute any of its duties as the Agent hereunder and under any other Loan Document by or through employees, agents, and attorneys-in-fact and shall not be answerable to the Banks, except as to money or securities received by it or its authorized agents, for the default or misconduct of any such agents or attorneys-in-fact selected by it with reasonable care. The Agent shall be entitled to advice of counsel concerning the contractual arrangement between the Agent and the Banks and all matters pertaining to the Agent's duties hereunder and under any other Loan Document. SECTION 8.7 RELIANCE ON DOCUMENTS; COUNSEL. The Agent shall be entitled to rely upon any Note, notice, consent, certificate, affidavit, letter, telegram, statement, paper or document believed by it to be genuine and correct and to have been signed or sent by the proper person or persons, and, in respect to legal matters, upon the opinion of counsel selected by the Agent, which counsel may be employees of the Agent. SECTION 8.8 AGENT'S REIMBURSEMENT AND INDEMNIFICATION. The Banks agree to reimburse and indemnify the Agent ratably in proportion to their respective Commitments (or, if the Commitments have been terminated, in proportion to their Commitments immediately prior to such termination) (i) for any amounts not reimbursed by the Borrower for which the Agent is entitled to reimbursement by the Borrower under the Loan Documents, (ii) for any other expenses incurred by the Agent on behalf of the Banks, in connection with the preparation, execution, delivery, administration and enforcement of the Loan Documents (including, without limitation, for any expenses incurred by the Agent in connection with any dispute between the Agent and any Bank or between two or more of the Banks) and (iii) for any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever which may be imposed on, incurred by or asserted against the Agent in any way relating to or arising out of the Loan Documents or any other document delivered in connection therewith or the transactions contemplated thereby (including, without limitation, for any such amounts incurred by or asserted against the Agent in connection with any dispute between the Agent and any Bank or between two or more of the Banks), or the enforcement of any of the terms of the Loan Documents or of any such other documents, provided that (i) no Bank shall be liable for any of the foregoing to the extent any of the foregoing is found in a final non-appealable judgment by a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct 46 of the Agent and (ii) any indemnification required pursuant to Section 2.17(d) shall, notwithstanding the provisions of this Section 8.8, be paid by the relevant Bank in accordance with the provisions thereof. The obligations of the Banks under this Section 8.8 shall survive payment of the Obligations and termination of this Agreement. SECTION 8.9 NOTICE OF DEFAULT. The Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default, except with respect to defaults in the payment of principal, interest and fees required to be paid to the Agent for the account of Banks, unless the Agent shall have received written notice from a Bank or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default". The Agent will notify Banks of its receipt of any such notice. The Agent shall take such action with respect to such Default or Event of Default as may be directed by Required Banks in accordance with Article VII; provided, however, that unless and until the Agent has received any such direction, the Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable or in the best interest of Banks. SECTION 8.10 RIGHTS AS A BANK. In the event the Agent is a Bank, the Agent shall have the same rights and powers hereunder and under any other Loan Document with respect to its Commitment and its Advances as any Bank and may exercise the same as though it were not the Agent, and the term "Bank" or "Banks" shall, at any time when the Agent is a Bank, unless the context otherwise indicates, include the Agent in its individual capacity. The Agent and its Affiliates may accept deposits from, lend money to, and generally engage in any kind of trust , debt, equity or other transaction, in addition to those contemplated by this Agreement or any other Loan Document, with the Borrower or any of its Subsidiaries in which the Borrower or such Subsidiary is not restricted hereby from engaging with any other Person. The Agent, in its individual capacity, is not obligated to remain a Bank. SECTION 8.11 BANK CREDIT DECISION; DISCLOSURE OF INFORMATION BY AGENT. Each Bank acknowledges that no Agent-Related Person has made any representation or warranty to it, and that no act by the Agent hereinafter taken, including any consent to and acceptance of any assignment or review of the affairs of the Borrower and its Subsidiaries, shall be deemed to constitute any representation or warranty by any Agent-Related Person to any Bank as to any matter, including whether Agent-Related Persons have disclosed material information in their possession. Each Bank, including any Bank by assignment, represents to the Agent that it has, independently and without reliance upon any Agent-Related Person and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of the Borrower and its Subsidiaries, and all applicable bank regulatory laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to the Borrower hereunder. Each Bank also represents that it will, independently and without reliance upon any Agent-Related Person and based on such 47 documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of the Borrower. Except for notices, reports and other documents expressly required to be furnished to Banks by the Agent herein, the Agent shall not have any duty or responsibility to provide any Bank with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of the Borrower or any of its Subsidiaries which may come into the possession of any Agent-Related Person. SECTION 8.12 SUCCESSOR AGENT. The Agent may resign at any time by giving written notice thereof to the Banks and the Borrower, such resignation to be effective upon the appointment of a successor Agent or, if no successor Agent has been appointed, forty-five days after the retiring Agent gives notice of its intention to resign. The Agent may be removed at any time with or without cause by written notice received by the Agent from the Required Banks, such removal to be effective on the date specified by the Required Banks. Upon any such resignation or removal, the Required Banks shall have the right to appoint, on behalf of the Borrower and the Banks, a Bank as a successor Agent. If no successor Agent shall have been so appointed by the Required Banks within thirty days after the resigning Agent's giving notice of its intention to resign, then the resigning Agent may appoint, on behalf of the Borrower and the Banks, a successor Agent. Notwithstanding the foregoing, (i) the Agent may at any time without the consent of any Bank and with the consent of the Borrower, not to be unreasonably withheld or delayed, appoint any of its Affiliates which is a commercial bank as a successor Agent hereunder and (ii) so long as no Event of Default exists, no successor Agent may be appointed without the prior written consent of the Borrower, not to be unreasonably withheld or delayed. If the Agent has resigned or been removed and no successor Agent has been appointed, the Banks may perform all the duties of the Agent hereunder and the Borrower shall make all payments in respect of the Obligations to the applicable Bank and for all other purposes shall deal directly with the Banks. No successor Agent shall be deemed to be appointed hereunder until such successor Agent has accepted the appointment. Any such successor Agent shall be a commercial bank having capital and retained earnings of at least $100,000,000. Upon the acceptance of any appointment as the Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the resigning or removed Agent. Upon the effectiveness of the resignation or removal of the Agent, the resigning or removed Agent shall be discharged from its duties and obligations hereunder and under the Loan Documents. After the effectiveness of the resignation or removal of an Agent, the provisions of this Article VIII shall continue in effect for the benefit of such Agent in respect of any actions taken or omitted to be taken by it while it was acting as the Agent hereunder and under the other Loan Documents. In the event that there is a successor to the Agent by merger, or the Agent assigns its duties and obligations to an Affiliate pursuant to this Section 8.12, then the term "Prime Rate" as used in this Agreement shall mean the prime rate, base rate or other analogous rate of the new Agent. 48 SECTION 8.13 DELEGATION TO AFFILIATES. The Borrower and the Banks agree that the Agent may delegate any of its duties under this Agreement to any of its Affiliates. Any such Affiliate (and such Affiliate's directors, officers, agents and employees) which performs duties in connection with this Agreement shall be entitled to the same benefits of the indemnification, waiver and other protective provisions to which the Agent is entitled under Articles VIII and X. SECTION 8.14 DISTRIBUTION OF PAYMENTS AND PROCEEDS. (a) After deduction of any costs of collection as hereinafter provided, the Agent shall remit to each Bank that Bank's Percentage of all payments of principal, interest and facility fees payable under Section 2.7 that are received by the Agent under the Loan Documents. Each Bank's interest in the Loan Documents shall be payable solely from payments, collections and proceeds actually received by the Agent under the Loan Documents; and the Agent's only liability to the Banks hereunder shall be to account for each Bank's Percentage of such payments, collections and proceeds in accordance with this Agreement. If the Agent is ever required for any reason to refund any such payments, collections or proceeds, each Bank will refund to the Agent, upon demand, its Percentage of such payments, collections or proceeds, together with its Percentage of interest or penalties, if any, payable by the Agent in connection with such refund. The Agent may, in its sole discretion, make payment to the Banks in anticipation of receipt of payment from the Borrower. If the Agent fails to receive any such anticipated payment from the Borrower, each Bank shall promptly refund to the Agent, upon demand, any such payment made to it in anticipation of payment from the Borrower, together with interest for each day on such amount until so refunded at a rate equal to the Federal Funds Effective Rate for each such day. (b) Notwithstanding the foregoing, if any Bank has wrongfully refused to fund its Percentage of any Borrowing or other Advance as required hereunder, or if the principal balance of any Bank's Note is for any other reason less than its Percentage of the aggregate principal balances of the Notes then outstanding, the Agent may remit all payments received by it to the other Banks until such payments have reduced the aggregate amounts owed by the Borrower to the extent that the aggregate amount owing to such Bank hereunder is equal to its Percentage of the aggregate amount owing to all of the Banks hereunder. The provisions of this paragraph are intended only to set forth certain rules for the application of payments, proceeds and collections in the event that a Bank has breached its obligations hereunder and shall not be deemed to excuse any Bank from such obligations. SECTION 8.15 EXPENSES. All payments, collections and proceeds received or effected by the Agent may be applied, first, to pay or reimburse the Agent for all costs, expenses, damages and liabilities at any time incurred by or imposed upon the Agent in connection with this Agreement or any other Loan Document (including but not limited to all reasonable attorney's fees, foreclosure expenses and advances made to protect the security of collateral, if any, but excluding any costs, expenses, damages or 49 liabilities arising from the gross negligence or willful misconduct of the Agent). If the Agent does not receive payments, collections or proceeds from the Borrower or its properties sufficient to cover any such costs, expenses, damages or liabilities within 30 days after their incurrence or imposition, each Bank shall, upon demand, remit to the Agent its Percentage of the difference between (i) such costs, expenses, damages and liabilities, and (ii) such payments, collections and proceeds. SECTION 8.16 PAYMENTS RECEIVED DIRECTLY BY BANKS. If any Bank or other holder of a Note shall obtain any payment or other recovery (whether voluntary, involuntary, by application of offset or otherwise) on account of principal of or interest on any Note other than through distributions made in accordance with Section 8.2, such Bank or holder shall promptly give notice of such fact to the Agent and shall purchase from the other Banks or holders such participations in the Notes held by them as shall be necessary to cause the purchasing Bank or holder to share the excess payment or other recovery ratably with each of them; provided, however, that if all or any portion of the excess payment or other recovery is thereafter recovered from such purchasing Bank or holder, the purchase shall be rescinded and the purchasing Bank restored to the extent of such recovery (but without interest thereon). SECTION 8.17 AGENT NOT OFFERING BONDS. Each Bank acknowledges that neither the Agent's taking possession of the Pledged Securities, nor its exercise of remedies with respect to the Pledged Securities and subsequent distribution of proceeds thereunder, constitutes or will constitute an offer of any security, a solicitation of an offer to buy any security, or a placement of any security. ARTICLE IX ASSIGNMENTS AND PARTICIPATIONS SECTION 9.1 ASSIGNMENTS. (a) Any Bank may, at any time, assign a portion of its Obligations and Commitment to an Eligible Lender (an "Applicant") on any date (the "Adjustment Date") selected by such Bank subject to the terms and provisions of this Section 9.1. The aggregate principal amount of the Obligations and Commitment so assigned in any assignment shall be $5,000,000 or an integral multiple of $1,000,000 in excess of $5,000,000, and the assigning Bank shall retain at least $5,000,000 of such Obligations and Commitment for its own account; provided, however, that the foregoing restriction shall not apply to a Bank assigning its entire Obligations and Commitment to the Applicant. Any Bank proposing an assignment hereunder shall give notice of such assignment to the Agent and the Borrower at least ten Business Days prior to such assignment (unless the Agent consents to a shorter period of time). Such notice shall specify the identity of such Applicant and the Percentage which it proposes that such Applicant acquire (which Percentage shall be the same for the Commitment and the Note held by the assigning Bank). Any assignment hereunder may be made only with the prior written consent of the Agent and the Borrower; provided, however, that (i) in no event 50 shall such consent be unreasonably withheld, and (ii) the consent of the Borrower shall not be required if a Default or Event of Default has occurred and is continuing at the time of such assignment. (b) Subject to the prior written consent of the Agent and the Borrower (if applicable), to confirm the status of each Applicant as a party to this Agreement and to evidence the assignment of the applicable portion of the assigning Bank's Commitment, and Advances in accordance herewith: (i) the Borrower, such Bank, such Applicant and the Agent shall, on or before the Adjustment Date, execute and deliver to the Agent an Assignment Agreement (provided that, if a Default or Event of Default has occurred and is continuing on the applicable Adjustment Date, the assignment will be effective whether the Borrower signs it or not), in substantially the form of Exhibit E (an "Assignment Agreement"); and (ii) the Borrower will, at its own expense and in exchange for the assigning Bank's Note, execute and deliver to the assigning Bank a new Note, payable to the order of the Applicant in an amount corresponding to the applicable interest in the assigning Bank's rights and obligations acquired by such Applicant pursuant to such assignment, and, if the assigning Bank has retained interests in such rights and obligations, a new Note, payable to the order of that Bank in an amount corresponding to such retained interests. Such new Notes shall be in an aggregate principal amount equal to the principal amount of the Note to be replaced by such new Notes (or, if less, the Commitment Amount of the assigning Bank prior to giving effect to such assignment, unless such assignment is made after the Commitment Termination Date, in which case the aggregate principal amount of the new Notes shall equal the outstanding principal balance of the Note to be replaced by such new Notes), shall be dated the effective date of such assignment and shall otherwise be in the form of the Note to be replaced thereby. Such new Notes shall be issued in substitution for, but not in satisfaction or payment of, the Note being replaced thereby; and Upon the execution and delivery of such Assignment Agreement and such Notes, (a) this Agreement shall deemed to be amended to the extent, and only to the extent, necessary to reflect the addition of such Additional Bank and the resulting adjustment of Percentages arising therefrom, (b) the assigning Bank shall be relieved of all obligations hereunder to the extent of the reduction of all obligations hereunder and to the extent of the reduction of such Bank's Percentage, and (c) the Additional Bank shall become a party hereto and shall be entitled to all rights, benefits and privileges accorded to a Bank herein and in each other document or instrument executed pursuant hereto and subject to all obligations of a Bank hereunder, including the right to approve or disapprove actions which, in accordance with the terms hereof, require the approval of the Required Banks or all Banks, and the obligations to make Advances hereunder. (c) In order to facilitate the addition of Additional Banks hereto, the Borrower shall (subject to the written agreement of any prospective Additional Bank to be subject 51 to the confidentiality provisions of Section 10.1) provide all reasonable assistance requested by each Bank and the Agent relating thereto which shall not require undue effort or expense on the part of the Borrower, including, without limitation, the furnishing of such written materials and financial information regarding the Borrower as any Bank or the Agent may reasonably request and the participation by officers of the Borrower in a meeting or teleconference call with any Applicant upon the reasonable request upon reasonable notice of any Bank or the Agent. (d) Without limiting any other provision hereof: (i) each Bank shall have the right at any time upon written notice to the Borrower and the Agent (but without requiring the consent of the Borrower or the Agent) to sell, assign, transfer, or negotiate all or any part of its Commitment, Advances, Notes, and other rights and obligations under this Agreement and the Loan Documents to one or more Affiliates of such Bank, provided that, unless consented to by the Borrower and the Agent (which consent shall not be unreasonably withheld), no such sale, assignment, transfer or negotiation of Commitment shall relieve the transferring Bank from its obligations (to the extent such Affiliate does not fulfill its obligations) hereunder; and (ii) each Bank shall have the right at any time upon written notice to the Borrower and the Agent (but without requiring the consent of the Borrower or the Agent) to sell, assign, transfer, or negotiate all or any part of its Commitment, Advances, Notes, and other rights and obligations under this Agreement and the Loan Documents to one or more Banks, and any such sale, assignment, transfer or negotiation shall relieve the transferring Bank from its obligations hereunder to the extent of the obligations so transferred (except, in any event, to the extent that the Borrower, any other Bank or the Agent has rights against such transferring Bank as a result of any default by such transferring Bank under this Agreement); provided, however, that any partial sale, assignment, transfer or negotiation pursuant to this Section shall be pro rata as to all of the Commitment, Obligations and Advances transferred. (e) Simultaneous with any assignment under this Section, the Bank making such assignment shall pay the Agent a transfer fee in the amount of $3,500. (f) Notwithstanding anything to the contrary contained herein, any Bank (a "Granting Bank") may grant to a special purpose funding vehicle (an "SPC") of such Granting Bank, identified as such in writing from time to time by the Granting Bank to the Agent and the Borrower, the option to provide to the Borrower all or any part of any Advance that such Granting Bank would otherwise be obligated to make to the applicable Borrower pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPC to make any Advance, (ii) if an SPC elects not to exercise such option or otherwise fails to provide all or any part of such Advance, the Granting Bank 52 shall be obligated to make such Advance pursuant to the terms hereof, (iii) such Granting Bank's other obligations under this Agreement shall remain unchanged, (iv) such Granting Bank shall remain solely responsible to the other parties hereto for the performance of such obligations, and (v) the Borrower, the Agent and the other Banks shall continue to deal solely and directly with such Granting Bank in connection with such Granting Bank's rights and obligations under this Agreement (including any rights and obligations assigned to such SPC). The making of an Advance by an SPC hereunder shall be deemed to utilize the Commitment of the applicable Granting Bank to the same extent, and as if, such Advance were made by such Granting Bank. Each party hereto hereby agrees that no SPC shall be liable for any indemnity or similar payment obligation under this Agreement (all liability for which shall remain with the applicable Granting Bank). All notices hereunder to any Granting Bank or the related SPC, and all payments in respect of the Obligations due to such Granting Bank or the related SPC, shall be made to such Granting Bank. In addition, each Granting Bank shall vote as a Bank hereunder without giving effect to any assignment under this paragraph (f), and no SPC shall have any vote as a Bank under this Agreement for any purpose. In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding senior indebtedness of any SPC, it will not institute against, or join any other person in instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under the laws of the United States or any State thereof. In addition, notwithstanding anything to the contrary contained in this Section 9.1, any SPC may (i) with notice to, but without the prior written consent of, the Borrower or the Agent and without paying any transfer fee therefor, assign all or a portion of its interests in its right to repayment of any Advances to its Granting Bank or to any financial institutions providing liquidity and/or credit support to or for the account of such SPC to fund the Advances made by such SPC or to support the securities (if any) issued by such SPC to fund such Advances and (ii) disclose on a confidential basis, to the extent such disclosure would be permitted under Section 10.1 as if such SPC were a Bank, any non-public information relating to its Advances to any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancement to such SPC. No amendment to this paragraph (f) that affects the rights of an SPC that has made an advance hereunder shall be effective without the consent of such SPC. (g) Notwithstanding any other provision of this Agreement, any Bank may at any time create a security interest in all or any portion of its rights under this Agreement and that Bank's Note in favor of any Federal Reserve Bank in accordance with Regulation A of the Board of Governors of the Federal Reserve System. SECTION 9.2 PARTICIPATIONS. Each Bank may grant participations in a portion of its Advances and Commitments to any Eligible Lender, upon prior written notice to the Agent but without the consent of the Agent or the Borrower, but only so long as the principal amount of the participation so granted is no less than $5,000,000 (or, if the participant is a Participating Affiliate, no less than $1,000,000). No holder of any such participation, other than an Affiliate of such Bank, shall be entitled to require 53 such Bank to take or omit to take any action hereunder, except that such Bank may agree with such participant that such Bank will not, without such participant's consent, agree to any action described in paragraph (a) of Section 10.3. No Bank shall, as between the Borrower and such Bank, be relieved of any of its obligations hereunder as a result of any such granting of a participation. The Borrower hereby acknowledges and agrees that any participant described in this Section will, for purposes of Sections 2.16, 2.17 and 2.18 only, be considered to be a Bank hereunder (provided that such participant shall not be entitled to receive any more than the Bank selling such participation would have received had such sale not taken place). SECTION 9.3 LIMITATION ON ASSIGNMENTS AND PARTICIPATIONS. Except as set forth in Sections 9.1 and 9.2, no Bank may assign any of its rights or obligations under, or grant any participation in, any Loan Document or Commitment. ARTICLE X MISCELLANEOUS SECTION 10.1 DISCLOSURE OF INFORMATION. The Agent and the Banks shall keep confidential (and cause their respective officers, directors, employees, agents and representatives to keep confidential) all information, materials and documents furnished by the Borrower and its Subsidiaries to the Agent or the Banks (the "Disclosed Information"). Notwithstanding the foregoing, the Agent and each Bank may disclose Disclosed Information (i) to the Agent or any other Bank; (ii) to any Affiliate of any Bank in connection with the transactions contemplated hereby, provided that such Affiliate has been informed of the confidential nature of such information; (iii) to legal counsel, accountants and other professional advisors to the Agent or such Bank; (iv) to any regulatory body having jurisdiction over any Bank or the Agent; (v) to the extent required by applicable laws and regulations or by any subpoena or similar legal process, or requested by any governmental agency or authority; (vi) to the extent such Disclosed Information (A) becomes publicly available other than as a result of a breach of this Agreement, (B) becomes available to the Agent or such Bank on a non-confidential basis from a source other than the Borrower or a Subsidiary, or (C) was available to the Agent or such Bank on a non-confidential basis prior to its disclosure to the Agent or such Bank by the Borrower or a Subsidiary; (vii) to the extent the Borrower or such Subsidiary shall have consented to such disclosure in writing; (viii) to the extent reasonably deemed necessary by the Agent or any Bank in the enforcement of the remedies of the Agent and the Banks provided under the Loan Documents; or (ix) in connection with any potential assignment or participation in the interest granted hereunder, provided that any such potential assignee or participant shall have executed a confidentiality agreement imposing on such potential assignee or participant substantially the same obligations as are imposed on the Agent and the Banks under this Section 10.1. Furthermore, the Borrower acknowledges and agrees that KeyBank may, after the successful syndication of the Facility, share certain information relating to transactions contemplated hereby with standard industry database companies (including Loan Pricing Corporation and Standard & Poor's Leveraged Commentary & Data) in accordance with customary industry practice. 54 Notwithstanding anything herein to the contrary, information subject to this Section 10.1 shall not include, and the Agent and each Bank may disclose without limitation of any kind, any information with respect to the "tax treatment" and "tax structure" (in each case, within the meaning of Treasury Regulation Section 1.6011-4) of the transactions contemplated hereby and all materials of any kind (including opinions or other tax analyses) that are provided to the Agent or such Bank relating to such tax treatment and tax structure; provided that with respect to any document or similar item that in either case contains information concerning the tax treatment or tax structure of the transaction as well as other information, this sentence shall only apply to such portions of the document or similar item that relate to the tax treatment or tax structure of the Advances and transactions contemplated hereby. The Borrower and its Subsidiaries may also disclose without limitation the "tax treatment" and "tax structure" of the transactions contemplated hereby. SECTION 10.2 NO WAIVER; CUMULATIVE REMEDIES. No failure or delay on the part of the Banks in exercising any right, power or remedy under the Loan Documents shall operate as a waiver thereof; nor shall any Bank's acceptance of payments while any Default or Event of Default is outstanding operate as a waiver of such Default or Event of Default, or any right, power or remedy under the Loan Documents; nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy under the Loan Documents. The rights, remedies, powers and privileges herein or therein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. Any decision by Agent or any Bank not to require payment of any interest (including interest due under Section 2.6(d)), fee, cost or other amount payable under any Loan Document or to calculate any amount payable by a particular method on any occasion shall in no way limit or be deemed a waiver of the Agent's or such Bank's right to require full payment thereof, or to calculate an amount payable by another method that is not inconsistent with this Agreement, on any other or subsequent occasion. SECTION 10.3 AMENDMENTS, ETC. No amendment or waiver of any provision of any Loan Document or consent to any departure by the Borrower therefrom shall be effective unless the same shall be in writing and signed by the Required Banks (or by the Agent with the consent or at the request of the Required Banks), and any such waiver shall be effective only in the specific instance and for the specific purpose for which given. Notwithstanding the foregoing: (a) No such amendment or waiver shall be effective to do any of the following unless signed by each of the Banks (or by the Agent with the consent or at the request of each of the Banks): (i) Increase the Commitment Amount of any Bank or extend the Commitment Termination Date or the Facility Termination Date. (ii) Permit the Borrower to assign its rights under this Agreement. 55 (iii) Amend this Section, the definition of "Required Banks" in Section 1.1, or any provision herein providing for consent or other action by all Banks. (iv) Forgive any indebtedness of the Borrower arising under this Agreement or the Notes, or reduce the rate of interest or any fees charged under this Agreement or the Notes. (v) Postpone or delay any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, facility fees or other material amounts due to the Banks (or any of them) hereunder or under any other Loan Document. (vi) Modify the Borrower's obligation to deliver the Pledged Securities or prepay the Advances to the extent of any Pledged Securities Shortfall as and when required under Section 7.3. (vii) Release the Agent's interest in any Pledged Securities or amend any terms of any Pledged Securities. (b) No amendment, waiver or consent shall affect the rights or duties of the Agent under this Agreement or any other Loan Document unless in writing and signed by the Agent. (c) No amendment, modification or (except as provided elsewhere herein) termination of this Agreement or waiver of any rights of the Borrower or obligations of any Bank or the Agent hereunder shall be effective unless the Borrower shall have consented thereto in writing. No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances. SECTION 10.4 TRANSMISSION, NOTICE AND EFFECTIVENESS OF COMMUNICATIONS AND SIGNATURES. (a) MODES OF DELIVERY. Except as otherwise expressly provided herein, all notices and other communications hereunder shall be in writing and shall be (i) personally delivered, (ii) transmitted by registered mail, postage prepaid, (iii) sent by Federal Express or similar expedited delivery service, or (iv) transmitted by telecopy, in each case addressed or transmitted by telecopy to the party to whom notice is being given at its address or telecopier number (as the case may be) as set forth in Exhibit A or in any applicable Assignment Agreement; or, as to each party, at such other address or telecopier number as may hereafter be designated in a notice by that party to the other party complying with the terms of this Section. All such notices or other communications shall be deemed to have been given on (i) the date received if delivered personally, (ii) five business days after the date of posting, if delivered by mail, (iii) the date of receipt, if delivered by Federal Express or similar expedited delivery service, or (iv) the date of transmission if delivered by telecopy, except that notices or requests to the Banks pursuant to any of the provisions of Article II shall not be effective as to any Bank until received by that Bank. 56 (b) RELIANCE BY AGENT AND BANKS. The Agent and each Bank shall be entitled to rely and act on any communication believed by it in good faith to be given by or on behalf of the Borrower even if (i) such communications (A) were not made in a manner specified herein, (B) were incomplete or (C) were not preceded or followed by any other notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any subsequent related communications provided for herein. The Borrower shall indemnify the Agent and the Banks from any loss, cost, expense or liability as a result of relying on any communications permitted herein. (c) EFFECTIVENESS OF FACSIMIlE DOCUMENTS AND SIGNATURES. Documents and agreements delivered from time to time in connection with the Loan Documents may be transmitted and/or signed by facsimile. The effectiveness of any such documents and signatures shall, subject to applicable Law, have the same force and effect as hardcopies with manual signatures and shall be binding on the Borrower and the Agent and the Banks. The Agent may also request that any such documents and signature be confirmed by a manually-signed hardcopy thereof; provided, however, that the failure to request or deliver any such manually-signed hardcopy shall not affect the effectiveness of any facsimile documents or signatures. SECTION 10.5 COSTS AND EXPENSES. The Borrower agrees (a) to pay or reimburse the Agent for all reasonable costs and expenses incurred in connection with the development, preparation, negotiation and execution of the Loan Documents, and the development, preparation, negotiation and execution of any amendment, waiver, consent, supplement or modification to, any Loan Documents, and any other documents prepared in connection herewith or therewith, including the Commitment Letter, dated May 27, 2003, by and between KeyBank and the Borrower (including the attached Summary of Terms and Conditions dated May 27, 2003) and the consummation and administration of the transactions contemplated hereby and thereby, including all reasonable attorney fees and costs, and (b) to pay or reimburse the Agent and each Bank for all costs and expenses incurred in connection with any refinancing, restructuring, reorganization (including a bankruptcy reorganization), collection and enforcement or attempted enforcement, or preservation of any rights under any Loan Documents, and any other documents prepared in connection herewith or therewith, or in connection with any refinancing, or restructuring of any such documents in the nature of a "workout" or of any insolvency or bankruptcy proceeding, including attorney fees and costs. The foregoing costs and expenses shall include all reasonable out-of-pocket expenses incurred by the Agent and the cost of independent public accountants and other outside experts retained by the Agent or any Bank. Such costs and expenses shall also include administrative costs of the Agent reasonably attributable to the administration of the Loan Documents. Any amount payable by the Borrower under this Section shall bear interest from the second Business Day following the date of demand for payment at the Default Rate, unless waived by the Agent. The agreements in this Section shall survive repayment of all Obligations. SECTION 10.6 INDEMNIFICATION BY BORROWER. The Borrower hereby agrees to indemnify the Agent and the Banks and each officer, director, employee and agent thereof (herein individually each called an "Indemnitee" and collectively called the "Indemnitees") from and against any and all losses, claims, damages, reasonable 57 expenses (including, without limitation, reasonable attorneys' fees) and liabilities (all of the foregoing being herein called the "Indemnified Liabilities") incurred by an Indemnitee in connection with or arising out of the execution or delivery of this Agreement or any agreement or instrument contemplated hereby, the performance by the parties hereto of their respective obligations hereunder or the use of the proceeds of any Advance hereunder (including but not limited to any such loss, claim, damage, expense or liability arising out of any claim that any Environmental Law has been breached with respect to any activity or property of the Borrower), except for any portion of such losses, claims, damages, expenses or liabilities incurred solely as a result of the gross negligence or willful misconduct of the applicable Indemnitee. If and to the extent that the foregoing indemnity may be unenforceable for any reason, the Borrower hereby agrees to make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. All obligations provided for in this Section shall survive any termination of this Agreement. SECTION 10.7 SET-OFF. In addition to any rights and remedies of the Agent and the Banks or any assignee or participant of any Bank or any Affiliate thereof (each, a "Proceeding Party") provided by law, upon the occurrence and during the continuance of any Event of Default, each Proceeding Party is authorized at any time and from time to time, without prior notice to the Borrower, any such notice being waived by the Borrower to the fullest extent permitted by law, to proceed directly, by right of set-off, banker's lien, or otherwise, against any assets of the Borrower which may be in the hands of such Proceeding Party (including all general or special, time or demand, provisional or other deposits and other indebtedness owing by such Proceeding Party to or for the credit or the account of the Borrower) and apply such assets against the Obligations, irrespective of whether such Proceeding Party shall have made any demand therefor and although such Obligations may be unmatured. Each Bank agrees promptly to notify the Borrower and the Agent after any such set-off and application made by such Bank; provided, however, that the failure to give such notice shall not affect the validity of such set-off and application. SECTION 10.8 SHARING OF SET-OFF. The Agent and each Bank severally agrees that if it (or any Proceeding Party claiming through it), through the exercise of any right of setoff, banker's lien or counterclaim against the Borrower or otherwise, receives payment on account of the Outstandings held by it that is ratably more than any other Bank receives in payment on account of the Outstandings held by such other Bank, then, subject to applicable Laws: (a) the Bank, which acting on its behalf or through any Proceeding Party, exercises the right of setoff, banker's lien or counterclaim or otherwise receives such payment shall purchase, and shall be deemed to have simultaneously purchased, from the other Bank a participation in the Outstandings held by the other Bank and shall pay to the other Bank a purchase price in an amount so that the share of the Outstandings held by each Bank after the exercise of the right of setoff, banker's lien or counterclaim or receipt of payment shall be in the same proportion that existed prior to the exercise of the right of setoff, banker's lien or counterclaim or receipt of payment; and (b) such other adjustments and purchases of participations shall be made from time to time as shall be equitable to ensure that all Banks share any payment obtained in respect of the Outstandings ratably in accordance with each Bank's 58 share of the Outstandings immediately prior to, and without taking into account, the payment; provided that, if all or any portion of a disproportionate payment obtained as a result of the exercise of the right of setoff, banker's lien, counterclaim or otherwise is thereafter recovered from the purchasing Bank by the Borrower or any Person claiming through or succeeding to the rights of the Borrower, the purchase of a participation shall be rescinded and the purchase price thereof shall be restored to the extent of the recovery, but without interest. Each Bank that purchases a participation in the Outstandings pursuant to this Section shall from and after the purchase have the right to give all notices, requests, demands, directions and other communications under this Agreement with respect to the portion of the Outstandings purchased to the same extent as though the purchasing Bank were the original owner of the Outstandings purchased. The Borrower expressly consents to the foregoing arrangements and agrees that any lender holding a participation in an Obligation so purchased may exercise any and all rights of setoff, banker's lien or counterclaim with respect to the participation as fully as if lender were the original owner of the Obligation purchased; provided that such lender agrees to be bound by the terms of this Section 10.8. SECTION 10.9 USURY. Notwithstanding anything to the contrary contained in any Loan Document, the interest and fees 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 Agent or any Bank shall receive interest or a fee in an amount that exceeds the Maximum Rate, the excessive interest or fee shall be applied to the principal of the Outstandings or, if it exceeds the unpaid principal, refunded to the Borrower. In determining whether the interest or a fee contracted for, charged, or received by the Agent or a Bank 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. SECTION 10.10 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and warranties made hereunder and in any Loan Document, certificate or statement delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery thereof but shall terminate the later of (a) when the Commitments are terminated and (b) when no Obligations remain outstanding under any Loan Document. Such representations and warranties have been or will be relied upon by the Agent and each Bank, notwithstanding any investigation made by the Agent or any Bank on their behalf. SECTION 10.11 INTEGRATION. This Agreement, together with the other Loan Documents and any letter agreements referred to herein, comprises the complete and integrated agreement of the parties on the subject matter hereof and supersedes all prior agreements, written or oral, including without limitation, the Commitment Letter, dated May 27, 2003 by and between KeyBank and the Borrower (the "Commitment Letter") and the Term Sheet dated May 27, 2003 relating to the Commitment 59 Letter, on the subject matter hereof. In the event of any conflict between the provisions of this Agreement and those of any other Loan Document, the provisions of this Agreement shall control and govern; provided that the inclusion of supplemental rights or remedies in favor of the Agent or the Banks in any other Loan Document shall not be deemed a conflict with this Agreement. Each Loan Document was drafted with the joint participation of the respective parties thereto and shall be construed neither against nor in favor of any party, but rather in accordance with the fair meaning thereof. SECTION 10.12 FURTHER ASSURANCES. The Borrower shall, at its expense and without expense to the Banks or the Agent, do, execute and deliver such further acts and documents as any Bank or the Agent from time to time reasonably requires for the assuring and confirming unto the Banks or the Agent of the rights hereby created. SECTION 10.13 HEADINGS. Section headings in this Agreement and the other Loan Documents are included for convenience of reference only and are not part of this Agreement or the other Loan Documents for any other purpose. SECTION 10.14 TIME OF THE ESSENCE. Time is of the essence of the Loan Documents. SECTION 10.15 FOREIGN BANKS. Each Bank that is a "foreign corporation, partnership or trust" within the meaning of the Code, or any successor statute thereto (a "Foreign Bank") shall deliver to the Agent, prior to receipt of any payment subject to withholding under the Code (or after accepting an assignment of an interest herein), two duly signed completed copies of either Form W-8BEN or any successor thereto (relating to such Person and entitling it to a complete exemption from withholding on all payments to be made to such Person by the Borrower pursuant to this Agreement) or Form W-8ECI or any successor thereto (relating to all payments to be made to such Person by the Borrower pursuant to this Agreement) of the United States Internal Revenue Service or such other evidence satisfactory to the Borrower and the Agent that no withholding under the federal income tax laws is required with respect to such Person. Thereafter and from time to time, each such Person shall (a) promptly submit to the Agent such additional duly completed and signed copies of one of such forms (or such successor forms as shall be adopted from time to time by the relevant United States taxing authorities) as may then be available under then current United States laws and regulations to avoid, or such evidence as is satisfactory to the Borrower and the Agent of any available exemption from, United States withholding taxes in respect of all payments to be made to such Person by the Borrower pursuant to this Agreement, and (b) take such steps as shall not be materially disadvantageous to it, in the reasonable judgment of such Bank, and as may be reasonably necessary (including the re-designation of its Lending Office) to avoid any requirement of applicable laws that the Borrower make any deduction or withholding for taxes from amounts payable to such Person. If such Persons fails to deliver the above forms or other documentation, then the Agent may withhold from any interest payment to such Person 60 an amount equivalent to the applicable withholding tax imposed by Sections 1441 and 1442 of the Code, without reduction. If any Governmental Authority asserts that the Agent did not properly withhold any tax or other amount from payments made in respect of such Person, such Person shall indemnify the Agent therefor, including all penalties and interest and costs and expenses (including reasonable attorney fees and costs) of the Agent. The obligation of Banks under this Section shall survive the payment of all Obligations and the resignation or replacement of the Agent. SECTION 10.16 NATURE OF BANK'S OBLIGATIONS. Nothing contained in this Agreement or any other Loan Document and no action taken by the Agent or Banks or any of them pursuant hereto or thereto may, or may be deemed to, make Banks a partnership, an association, a joint venture or other entity, either among themselves or with the Borrower or any Affiliate of the Borrower. Each Bank's obligation to make any Advance pursuant hereto is several and not joint or joint and several, and in the case of the initial Advance only is conditioned upon the performance by all other Banks of their obligations to make the initial Advance. A default by any Bank will not increase the pro rata share attributable to any other Bank. SECTION 10.17 EXECUTION IN COUNTERPARTS. This Agreement and the other Loan Documents may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which counterparts of this Agreement or such other Loan Document, as the case may be, taken together, shall constitute but one and the same instrument. SECTION 10.18 BINDING EFFECT, ASSIGNMENT. The Loan Documents shall be binding upon and inure to the benefit of the the Borrower and the Banks and their respective successors and assigns, except that the Borrower shall not have the right to assign its rights thereunder or any interest therein without the prior written consent of each of the Banks. SECTION 10.19 GOVERNING LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS) OF THE STATE OF NEW YORK, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. SECTION 10.20 SEVERABILITY OF PROVISIONS. Any provision of this Agreement which is prohibited or unenforceable shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof. 61 SECTION 10.21 CONSENT TO JURISDICTION. EACH PARTY HERETO HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK, NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND EACH PARTY HERETO HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT, ANY BANK TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY THE BORROWER AGAINST THE AGENT OR ANY BANK OR ANY AFFILIATE OF THE AGENT OR ANY BANK INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN NEW YORK, NEW YORK. SECTION 10.22 WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT AND THE BANKS HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT AND THE NOTES OR THE RELATIONSHIPS ESTABLISHED HEREUNDER. SECTION 10.23 RECALCULATION OF COVENANTS FOLLOWING ACCOUNTING PRACTICES CHANGE. The Borrower shall notify the Agent of any Accounting Practices Change promptly upon becoming aware of the same. Promptly following such notice, the Borrower and the Banks shall negotiate in good faith in order to effect any adjustments to Sections 6.7 and 6.8 necessary to reflect the effects of such Accounting Practices Change. SECTION 10.24 HEADINGS. Article and Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose. SECTION 10.25 NONLIABILITY OF BANKS. The relationship between the Borrower on the one hand and the Banks and the Agent on the other hand shall be solely that of borrower and lender. Neither the Agent nor any Bank shall have any fiduciary responsibilities to the Borrower. Neither the Agent nor any Bank undertakes any responsibility to the Borrower to review or inform the Borrower of any matter in connection with any phase of the Borrower's business or operations. The Borrower agrees that neither the 62 Agent nor any Bank shall have liability to the Borrower (whether sounding in tort, contract or otherwise) for losses suffered by the Borrower in connection with, arising out of, or in any way related to, the transactions contemplated and the relationship established by the Loan Documents, or any act, omission or event occurring in connection therewith, unless it is determined in a final non-appealable judgment by a court of competent jurisdiction that such losses resulted from the gross negligence or willful misconduct of the party from which recovery is sought. Neither the Agent nor any Bank shall have any liability with respect to, and the Borrower hereby waives, releases and agrees not to sue for, any special, indirect or consequential damages suffered by the Borrower in connection with, arising out of, or in any way related to the Loan Documents or the transactions contemplated thereby. [Signature Pages Follow] 63 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the date first above written. PUBLIC SERVICE COMPANY OF COLORADO, A COLORADO CORPORATION By /s/ Benjamin G.S. Fowke III --------------------------------------- Its Vice President & Treasurer ----------------------------------- [Signature Page to Public Service Company of Colorado Credit Agreement] S-1 KEYBANK NATIONAL ASSOCIATION, AS ADMINISTRATIVE AGENT, LEAD ARRANGER, BOOK MANAGER AND AS A BANK By /s/ Keven D. Smith --------------------------------------- Its Vice President ----------------------------------- [Signature Page to Public Service Company of Colorado Credit Agreement] S-2 UBS AG, CAYMAN ISLANDS BRANCH, AS A BANK By /s/ --------------------------------------- Its Director ----------------------------------- UBS AG, CAYMAN ISLANDS BRANCH, AS A BANK By /s/ --------------------------------------- Its Associate Director ----------------------------------- [Signature Page to Public Service Company of Colorado Credit Agreement] S-3 CREDIT SUISSE FIRST BOSTON, CAYMAN ISLANDS BRANCH, AS A BANK By /s/ Sarah Wu --------------------------------------- Its Vice President ----------------------------------- By /s/ Jay Chall --------------------------------------- Its Director ----------------------------------- [Signature Page to Public Service Company of Colorado Credit Agreement] S-4 EXHIBIT A COMMITMENT AMOUNTS AND ADDRESSES

Exhibit A-1 EXHIBIT B FORM OF NOTE _______________________ ___________, 200_ FOR VALUE RECEIVED, the undersigned (the "Borrower"), hereby promises to pay to the order of ________________ (the "Bank") on the Facility Termination Date (as defined in the Credit Agreement referred to below) the principal amount of ___________________ ($____________), or such lesser principal amount of Advances (as defined in the Credit Agreement referred to below) payable by Borrower to Bank on such Facility Termination Date under that certain Credit Agreement, dated as of June __, 2003 among Borrower, Banks from time to time party thereto, and KeyBank National Association, as Agent, Lead Arranger and Book Manager (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the "Agreement;" the terms defined therein being used herein as therein defined). Borrower promises to pay interest on the unpaid principal amount of each Advance from the date of such Advance until such principal amount is paid in full, at such interest rates, and payable at such times as are specified in the Credit Agreement. All payments of principal and interest shall be made to the Agent for the account of Bank in United States dollars in immediately available funds at the Agent's designated payment office. If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until the date of actual payment (and before as well as after judgment) computed at the per annum rate set forth in the Credit Agreement. This Note is one of the "Notes" referred to in the Credit Agreement. Reference is hereby made to the Credit Agreement for rights and obligations of payment and prepayment, events of default and the right of Bank to accelerate the maturity hereof upon the occurrence of such events. Advances made by Bank shall be evidenced by one or more loan accounts or records maintained by Bank in the ordinary course of business. Bank may also attach schedules to this Note and endorse thereon the date, amount and maturity of its Advances and payments with respect thereto. Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor and non-payment of this Note. Borrower agrees to pay all collection expenses, court costs and attorney fees and costs (whether or not litigation is commenced) which may be incurred by Bank in connection with the collection or enforcement of this Note. Exhibit B-1 THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. PUBLIC SERVICE COMPANY OF COLORADO, A COLORADO CORPORATION By __________________________________ Its ________________________________ Exhibit B-2 EXHIBIT C COMPLIANCE CERTIFICATE __________________________, ______ KeyBank National Association, for itself and as Agent under the Credit Agreement described below The Banks, as defined under the Credit Agreement described below COMPLIANCE CERTIFICATE Ladies and Gentlemen: Reference is made to the Credit Agreement dated June __, 2003 among Public Service Company of Colorado (the "Borrower"), KeyBank National Association, as Agent, and the Banks, as defined therein (the "Credit Agreement"). All terms defined in the Credit Agreement and not otherwise defined herein shall have the meanings given them in the Credit Agreement. This is a Compliance Certificate submitted in connection with the Borrower's financial statements (the "Statements") as of _____________________, _______ (the "Effective Date"). I hereby certify to you as follows: (a) I am the _________________________ [**chief financial officer/treasurer] of the Borrower, and I am familiar with the financial statements and financial affairs of the Borrower. (b) The Statements have been prepared in accordance with GAAP, **[subject to year-end audit adjustments]. (c) The computations on the Annexes hereto set forth the Borrower's compliance or non-compliance with the requirements set forth in Section 6.7 and 6.8 as of the Effective Date. I have no knowledge of the occurrence of any Default or Event of Default, except as set forth in the attachments, if any, hereto. Exhibit C-1 Very truly yours, PUBLIC SERVICE COMPANY OF COLORADO, a Colorado corporation By ___________________________________ Its _______________________________ Exhibit C-2 ANNEX 1 TO COMPLIANCE CERTIFICATE Funded Debt to Total Capital (Section 6.7) 1. Funded Debt (a) Long-Term debt (including current maturities) $_____________ (b) Commercial paper and other short term debt $_____________ (c) Letters of Credit $_____________ (d) Net liabilities under Swap Contracts $_____________ (e) Capitalized Lease Obligations $_____________ (f) Off-Balance Sheet Liabilities (including Sale and Leaseback Transactions and Synthetic Lease Obligations) $_____________ (g) Trust Preferred Securities of the Borrower $_____________ (h) Guaranties of indebtedness of others $_____________ (i) Other Funded Debt $_____________ (j) Total Funded Debt (sum of Items 1(a) through 1(i)) $______________ 2. Total Capital (a) Common Stock $_____________ (b) Premium on Common Stock $_____________ (c) Retained Earnings $_____________ (d) Stockholder's Equity (sum of Items 2(a), 2(b) and 2(c) $_____________ (e) Funded Debt (from Item 1(j) above) $_____________ (f) Total Capital (sum of Items 2(d) and 2(e)) $______________ 3. Funded Debt to Total Capital (Ratio of Item 1(j) to Item 2(f)) (not to be greater than 0.60 to 1.0) ______to 1.

Exhibit C-3 ANNEX 2 TO COMPLIANCE CERTIFICATE Interest Coverage Ratio (Section 6.8) 1. EBIT (a) Consolidated Net Income $____________ (b) Interest Expense (including Trust Preferred Securities) $____________ (c) Income Tax Expense $____________ (D) Excluding Non-operating Gains and Losses (net of income tax) $____________ (e) EBIT (total of (a)+(b)+(c)+or-(d)) $_____________ 2. Interest Expense (including Trust Preferred Securities) $_____________ 3. Interest Coverage Ratio (Ratio of Item 1(e) to Item 2) _______to 1.0 (not to be greater than 2.75 to 1.0)

Exhibit C-4 EXHIBIT D OPINION LETTERS Exhibit D-1 EXHIBIT E ASSIGNMENT AGREEMENT This Assignment Agreement (this "Assignment Agreement") between _______________________________ (the "Assignor") and _________________________ (the "Assignee") is dated as of ___________________, 20___. The parties hereto agree as follows: 1. PRELIMINARY STATEMENT. The Assignor is a party to a Credit Agreement (which, as it may be amended, modified, renewed or extended from time to time is herein called the "Credit Agreement") described in Item 1 of Schedule 1 attached hereto ("Schedule 1"). Capitalized terms used herein and not otherwise defined herein shall have the meanings attributed to them in the Credit Agreement. 2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, an interest in and to the Assignor's rights and obligations under the Credit Agreement and the other Loan Documents, such that after giving effect to such assignment the Assignee shall have purchased pursuant to this Assignment Agreement the percentage interest specified in Item 3 of Schedule 1 of all outstanding rights and obligations under the Credit Agreement and the other Loan Documents relating to the facilities listed in Item 3 of Schedule 1. The aggregate Commitment (or Advances, if the applicable Commitment has been terminated) purchased by the Assignee hereunder is set forth in Item 4 of Schedule 1. 3. EFFECTIVE DATE. The effective date of this Assignment Agreement (the "Effective Date") shall be the later of the date specified in Item 5 of Schedule 1 or two Business Days (or such shorter period agreed to by the Agent) after this Assignment Agreement, together with any consents required under the Credit Agreement, are delivered to the Agent. In no event will the Effective Date occur if the payments required to be made by the Assignee to the Assignor on the Effective Date are not made on the proposed Effective Date. 4. PAYMENT OBLIGATIONS. In consideration for the sale and assignment of Advances hereunder, the Assignee shall pay the Assignor, on the Effective Date, the amount agreed to by the Assignor and the Assignee. On and after the Effective Date, the Assignee shall be entitled to receive from the Agent all payments of principal, interest and fees with respect to the interest assigned hereby. The Assignee will promptly remit to the Assignor any interest on Advances and fees received from the Agent which relate to the portion of the Commitment or Advances assigned to the Assignee hereunder for periods prior to the Effective Date and not previously paid by the Assignee to the Assignor. In the event that either party hereto receives any payment to which the other party hereto is entitled under this Assignment Agreement, then the party receiving such amount shall promptly remit it to the other party hereto. 5. RECORDATION FEE. The Assignor and Assignee each agree to pay one-half of the recordation fee required to be paid to the Agent in connection with this Assignment Agreement unless otherwise specified in Item 6 of Schedule 1. 6. REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE ASSIGNOR'S LIABILITY. The Assignor represents and warrants that (i) it is the legal and Exhibit E-1 beneficial owner of the interest being assigned by it hereunder, (ii) such interest is free and clear of any adverse claim created by the Assignor and (iii) the execution and delivery of this Assignment Agreement by the Assignor is duly authorized. It is understood and agreed that the assignment and assumption hereunder are made without recourse to the Assignor and that the Assignor makes no other representation or warranty of any kind to the Assignee. Neither the Assignor nor any of its officers, directors, employees, agents or attorneys shall be responsible for (i) the due execution, legality, validity, enforceability, genuineness, sufficiency or collectability of any Loan Document, including without limitation, documents granting the Assignor and the other Banks a security interest in assets of the Borrower or any guarantor, (ii) any representation, warranty or statement made in or in connection with any of the Loan Documents, (iii) the financial condition or creditworthiness of the Borrower or any guarantor, (iv) the performance of or compliance with any of the terms or provisions of any of the Loan Documents, (v) inspecting any of the property, books or records of the Borrower, (vi) the validity, enforceability, perfection, priority, condition, value or sufficiency of any collateral securing or purporting to secure the Advances or (vii) any mistake, error of judgment, or action taken or omitted to be taken in connection with the Advances or the Loan Documents. 7. REPRESENTATIONS AND UNDERTAKINGS OF THE ASSIGNEE. The Assignee (i) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements requested by the Assignee and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment Agreement, (ii) agrees that it will, independently and without reliance upon the Agent, the Assignor or any other Bank and based on such documents and information at it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, (iii) appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under the Loan Documents as are delegated to the Agent by the terms thereof, together with such powers as are reasonably incidental thereto, (iv) confirms that the execution and delivery of this Assignment Agreement by the Assignee is duly authorized, (v) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Bank, (vi) agrees that its payment instructions and notice instructions are as set forth in the attachment to Schedule 1, (vii) confirms that none of the funds, monies, assets or other consideration being used to make the purchase and assumption hereunder are "plan assets" as defined under ERISA and that its rights, benefits and interests in and under the Loan Documents will not be "plan assets" under ERISA, and (viii) agrees to indemnify and hold the Assignor harmless against all losses, costs and expenses (including, without limitation, reasonable attorneys' fees) and liabilities incurred by the Assignor in connection with or arising in any manner from the Assignee's nonperformance of the obligations assumed under this Assignment Agreement. The Assignee (a) represents and warrants to the Agent and the Borrower that under applicable law and treaties no tax will be required to be withheld by the Agent or the Borrower with respect to any payments to be made to the Assignee hereunder, (b) agrees to furnish (if it is organized under the laws of any jurisdiction other than the United States or any State thereof) to the Agent and the Borrower prior to the time that the Agent or Borrower is required to make any payment of principal, interest or fees hereunder, duplicate executed originals of U.S. Internal Revenue Service Form W-8ECI or W-8BEN (or appropriate replacement forms) and agrees to provide new Forms W-8ECI or W-BEN (or appropriate replacement forms) upon the expiration of any previously delivered form or comparable statements in accordance with applicable U.S. Exhibit E-2 law and regulations and amendments thereto, duly executed and completed by the Assignee and (c) agrees to comply with all applicable U.S. laws and regulations with regard to such withholding tax exemption. 8. GOVERNING LAW. This Assignment Agreement shall be governed by the internal law, and not the law of conflicts, of the State of New York. 9. NOTICES. Notices shall be given under this Assignment Agreement in the manner set forth in the Credit Agreement. For the purpose hereof, the addresses of the parties hereto (until notice of a change is delivered) shall be the address set forth in the attachment to Schedule 1. 10. COUNTERPARTS; DELIVERY BY FACSIMILE. This Assignment Agreement may be executed in counterparts. Transmission by facsimile of an executed counterpart of this Assignment Agreement shall be deemed to constitute due and sufficient delivery of such counterpart and such facsimile shall be deemed to be an original counterpart of this Assignment Agreement. IN WITNESS WHEREOF, the duly authorized officers of the parties hereto have executed this Assignment Agreement by executing Schedule 1 hereto as of the date first above written. Exhibit E-3 SCHEDULE 1 TO ASSIGNMENT AGREEMENT 1. Description and Date of Credit Agreement: Credit Agreement dated as of June __, 2003 among Public Service Company of Colorado, the Banks named therein including the Assignor, and KEYBANK NATIONAL ASSOCIATION individually and as Agent for such lenders, as it may be amended from time to time. 2. Date of Assignment Agreement: , 20___ 3. Amounts (As of Date of Item 2 above): a. Assignee's percentage of Aggregate Commitment (Advances) purchased under the Assignment Agreement** ____% b. Amount of Assignor's Commitment purchased under the Assignment Agreement** $_____ 4. Assignee's Commitment (or Loans with respect to terminated Commitments) purchased hereunder: $__________________ 5. Proposed Effective Date: ___________________ 6. Non-standard Recordation Fee Arrangement N/A*** [Assignor/Assignee to pay 100% of fee] [Fee waived by Agent] Exhibit E-4 Accepted and Agreed: [NAME OF ASSIGNOR] [NAME OF ASSIGNEE] By:_______________________________ By:___________________________ Title_____________________________ Title_________________________ Exhibit E-5 ACCEPTED AND CONSENTED TO****BY ACCEPTED AND CONSENTED TO BY PUBLIC SERVICE KEYBANK NATIONAL COMPANY OF COLORADO ASSOCIATION, as Agent By:_______________________________ By:___________________________ Title_____________________________ Title_________________________ ** Percentage taken to 10 decimal places *** If fee is split 50-50, pick N/A as option **** Delete if not required by Credit Agreement Exhibit E-6 Attachment to SCHEDULE 1 to ASSIGNMENT AGREEMENT ADMINISTRATIVE INFORMATION SHEET Attach Assignor's Administrative Information Sheet, which must include notice addresses for the Assignor and the Assignee (Sample form shown below) ASSIGNOR INFORMATION CONTACT: Name:___________________________ Telephone No.:____________________ Fax No.:________________________ Telex No.:________________________ Answerback:_______________________ PAYMENT INFORMATION: Name & ABA # of Destination Bank: __________________________________ Account Name & Number for Wire Transfer: __________________________________ __________________________________ Other Instructions:_____________________________________________________________ ADDRESS FOR NOTICES FOR ASSIGNOR: ____________________________ ASSIGNEE INFORMATION CREDIT CONTACT: Name:___________________________ Telephone No.:____________________ Fax No.:________________________ Telex No.:________________________ Answerback:_______________________ Exhibit E-7 KEY OPERATIONS CONTACTS: Booking Installation: Booking Installation: Name: Name: Telephone No.: Telephone No.: Fax No.: Fax No.: Telex No.: Telex No.: Answerback: Answerback: PAYMENT INFORMATION: Name & ABA # of Destination Bank: Account Name & Number for Wire Transfer: Other Instructions: ADDRESS FOR NOTICES FOR ASSIGNEE: Exhibit E-8 KEYBANK INFORMATION Assignee will be called promptly upon receipt of the signed agreement. INITIAL FUNDING CONTACT: SUBSEQUENT OPERATIONS CONTACT: Name: Kathy Koenig Name: Telephone No.: (216) 689-4228 Telephone No.: (___) Fax No.: (216) 689-4981 Fax No.: (___) INITIAL FUNDING STANDARDS: Libor Fund 2 days after rates are set. KEYBANK WIRE INSTRUCTIONS: KeyBank National Association, Cleveland, Ohio ABA # 041-001-039 Credit: Specialty Loan Services Credit Account Number: 3057 Ref: Public Service CO. of Colorado ADDRESS FOR NOTICES FOR KEYBANK: For Administrative Matters: Attention: Kathy Koenig 127 Public Square, Cleveland, Ohio 44114 (216) 689-4228 (phone) (216) 689-4981 (fax) For Credit Matters: Attention: Keven Smith 601 108th Avenue NE Bellevue, WA 98004 (425) 709-4579 (phone) (425) 709-4587 (fax) Exhibit E-9 EXHIBIT F BORROWING CERTIFICATE ________________________, 200__ KeyBank National Association for itself and as Agent under the Credit Agreement described below [street] [city, state, zip] The Banks, as defined under the Credit Agreement described below RE: $300,000,000 PUBLIC SERVICE COMPANY OF COLORADO CREDIT FACILITY Ladies and Gentlemen: Reference is made to the Credit Agreement dated June __, 2003 (together with all amendments, modifications and restatements thereof, the "Credit Agreement") among Public Service Company of Colorado (the "Borrower"), KeyBank National Association, as Agent, and Banks that are parties thereto. As used herein, terms defined in the Credit Agreement and not otherwise defined herein have the meanings given them in the Credit Agreement. The Borrower has requested a Borrowing to be made under Section 2.1 of the Credit Agreement as more specifically described on Attachment 1. I hereby certify to you that I am the [Chief Financial Officer] [Treasurer] [Chief Executive Officer] [general legal counsel] of the Borrower and I am authorized to execute and deliver this Certificate to the Agent on the behalf of Borrower. I hereby further certify that the Borrowing requested by the Borrower (i) has been duly authorized by the Borrower's board of directors pursuant to its resolution dated ________________, (ii) has been duly authorized by the Public Utilities Commission of the State of Colorado pursuant to its order dated _______________________ [** alternate for clause (ii): does not and will not require any authorization, consent or approval of the Public Utilities Commission of the State of Colorado], (iii) does not and will not require any other authorization, consent or approval by any governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, other than those that have been obtained, copies of which have been delivered to the Agent pursuant to Section 5.1(d) and (iv) will be used solely for the purpose of payment toward the PSCo 8-3/4% First Mortgage Bonds and the PSCo Capital Trust I Securities. Exhibit F-1 I further certify to you that the Borrowing requested by the Borrower complies with all applicable requirements of each board resolution and the authorization of the Public Utilities Commission of the State of Colorado described above, including but not limited to any applicable limitation on the aggregate amount of debt that the Borrower may have outstanding at any one time. PUBLIC SERVICE COMPANY OF COLORADO, A COLORADO CORPORATION By____________________________________ Its_________________________________ Exhibit F-2 Attachment 1 to Borrowing Certificate Terms of Borrowing: 1. The Business Day of the proposed Borrowing is ____________. 2. The aggregate amount of the proposed Borrowing is $ ____________. 3. The proposed Borrowing is to be comprised of $_________ of Advances to bear interest at the Base Rate and $_____ of Advances to bear interest at the Eurodollar Rate. 4. The duration of the Interest Period for Advances that bear interest at the Eurodollar Rate shall be ____ months. Exhibit F-3 EXHIBIT G PLEDGED SECURITIES COMPLIANCE CERTIFICATE __________________________,_______ KeyBank National Association, for itself and as Agent under the Credit Agreement described below The Banks, as defined under the Credit Agreement described below COMPLIANCE CERTIFICATE Ladies and Gentlemen: Reference is made to the Credit Agreement dated June __, 2003 among Public Service Company of Colorado (the "Borrower"), KeyBank National Association, as Agent, and the Banks, as defined therein (the "Credit Agreement"). All terms defined in the Credit Agreement and not otherwise defined herein shall have the meanings given them in the Credit Agreement. This is a Compliance Certificate submitted in connection with the Pledged Securities being delivered by Borrower to the Agent in accordance with Section 7.3 of the Credit Agreement. I hereby certify to you as follows: (a) I am the [Chief Financial Officer] [Treasurer] [Chief Executive Officer] of the Borrower. I am familiar with the regulatory affairs of the Borrower as they relate to issuance of securities pledged under the Indentures. I am authorized to execute and deliver this Certificate to the Agent on the behalf of Borrower. (b) All covenants and conditions precedent to the authentication and delivery of the Pledged Securities have been complied with, and there has been no change in the facts and circumstances set forth in the application to the Trustee for authentication of the Pledged Securities (and the documents submitted therewith) from the date of such application to the date hereof. All covenants and conditions precedent to the authentication and delivery of the Related First Mortgage Bonds have been complied with, and there has been no change in the facts and circumstances set forth in the application to the trustee under the First Mortgage Bond Indenture for authentication of the Related First Mortgage Bonds (and the documents submitted therewith) from the date of such application to the date hereof. Exhibit G-1 (c) The issuance, execution, delivery and performance by the Borrower of the Indentures, the Pledged Securities and the Related First Mortgage Bonds, have been duly authorized by all necessary corporate action and do not and will not (i) require any consent or approval of the stockholders of the Borrower, or any authorization, consent, approval, order, filing, registration or qualification by or with any governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, other than those consents described in Schedule 4.2 to the Credit Agreement, each of which has been obtained and is in full force and effect, (ii) violate any provision of any law, rule or regulation (including, without limitation, Regulation X of the Board of Governors of the Federal Reserve System and Section 7 of the Exchange Act or any regulation promulgated thereunder) or of any order, writ, injunction or decree presently in effect having applicability to the Borrower or of the Organizational Documents of the Borrower, (iii) result in a breach of or constitute a default under any indenture or loan or credit agreement or any other material agreement, lease or instrument to which the Borrower or any Subsidiary is a party or by which it or its properties may be bound or affected, or (iv) result in, or require, the creation or imposition of any Lien or other charge or encumbrance of any nature (other than the Liens created under the Credit Agreement, the First Collateral Trust Securities Indenture and the First Mortgage Bond Indenture) upon or with respect to any of the properties now owned or hereafter acquired by the Borrower or any Subsidiary. (d) The representations set forth in Sections 4.3, 4.14 and 4.15 are true and correct as of the date hereof. (e) With the exception of the attached exceptions to Section 4.17(a), the representations set forth in Section 4.17 are true and correct as of the date hereof. I have no knowledge of the occurrence of any Default or Event of Default, except as set forth in the attachments, if any, hereto. Very truly yours, PUBLIC SERVICE COMPANY OF COLORADO, a Colorado corporation By____________________________________ Its________________________________ Exhibit G-2 SCHEDULE 4.2 CONSENTS The approvals or authorizations of the following regulatory bodies, depending upon the characterization of the Borrowings under the Agreement, may be required and have each been obtained and are in full force and effect: Public Utilities Commission of the State of Colorado SCHEDULE 4.4 SUBSIDIARIES PSCO Capital Trust 1 (100%)* 1480 Welton, Inc. (100%) Green and Clear Lakes Company (100%) P.S.R. Investments, Inc. (100%) Various ditch and water companies *Denotes Restricted Subsidiary SCHEDULE 4.7 LITIGATION 1. See disclosure regarding legal proceedings of the Borrower in (i) Note 13 to the Consolidated Financial Statements contained in the Borrower's Annual Report on Form 10-K for the year ended December 31, 2002 filed with the SEC (the "2002 Form 10-K") and (ii) the Borrower's Quarterly Report on Form 10-Q for the quarter ended March 31, 2003 filed with the SEC (the "3/31/03 Form 10-Q"). 2. The disclosure in the first paragraph under the heading Utility Regulation - Fuel, Purchased Gas and Resource Adjustment Clauses - PSCo in Item 1 of the 2002 Form 10-K is revised to read as follows: The Borrower currently has six adjustment clauses that recover fuel, purchased energy and resource costs: the incentive cost adjustment (the "ICA"), the interim adjustment clause (the "IAC"), the air quality improvement rider, the demand side management cost adjustment, the gas cost adjustment and the steam cost adjustment. These adjustment clauses allow certain costs to be recovered from our retail customers. For certain adjustment mechanisms, the Borrower is required to file applications with the CPUC for approval in advance of the prospective effective dates. 3. A new paragraph is added to the disclosure under the heading PSCo General Rate Case in footnote 3 to the financial statements in the 3/31/03 Form 10-Q, which reads as follows: On May 29, 2003, the CPUC engaged in deliberations on the settlement agreement and entered an oral decision approving the settlement agreement with only minor modifications. We expect the CPUC to issue its written order reflecting the results of the May 29, 2003 deliberations in late June 2003. We are now moving to the phase II, rate design, portion of the case. 4. The second to last sentence of the first paragraph under the heading PSCo Fuel Adjustment Clause Proceedings is revised to read as follows: PSCo is currently analyzing the testimony and will file responsive testimony in June 2003. 5. Pacific Northwest Refund Proceeding. In July 2001, the FERC ordered a preliminary hearing to determine whether there may have been unjust and unreasonable charges for spot market bilateral sales in the Pacific Northwest for the period December 25, 2000 through June 20, 2001. We supplied energy to the Pacific Northwest markets during this period and have been an active participant in the hearings. In September 2001, the presiding administrative law judge concluded that prices in the Pacific Northwest during the referenced period were the result of a number of factors, including the shortage of supply, excess demand, drought and increased natural gas prices. Under these circumstances the administrative law judge concluded that the prices in the Pacific Northwest markets were not unreasonable or unjust and no refunds should be ordered. Subsequent to the ruling the FERC has allowed the parties to request additional evidence regarding the use of certain strategies and how they may have impacted the markets in the Pacific Northwest markets. For the referenced period parties have claimed the total amount of transactions with us subject to refund are $34 million. On March 26, 2003, the FERC at its open meeting discussed this proceeding. While the action that the FERC plans to take cannot be definitively ascertained from that discussion, it appears that the FERC may conduct further proceedings to determine whether spot-market bilateral sales in the Pacific Northwest should be subject to refund. If the proceedings before the FERC or the CPUC are not resolved in our favor, or if the CPUC, for any reason, does not grant us, in a timely manner, the increases we have requested or does not approve the settlement agreement or issue a final rate order with new rates that are consistent with those provided for in the settlement agreement, this could have a negative impact on our financial condition and results of operations. SCHEDULE 4.8 ENVIRONMENTAL MATTERS See disclosure regarding environmental contingencies of the Borrower in (i) Note 13 to the Consolidated Financial Statements contained in the 2002 Form 10-K and (ii) the 3/31/03 Form 10-Q. SCHEDULE 4.22 COMPLIANCE WITH LAWS 1. See disclosure regarding legal proceedings of the Borrower in (i) Note 13 to the Consolidated Financial Statements contained in the 2002 Form 10-K and (ii) the 3/31/03 Form 10-Q. 2. The disclosure in the first paragraph under the heading Utility Regulation - Fuel, Purchased Gas and Resource Adjustment Clauses - PSCo in Item 1 of the 2002 Form 10-K is revised to read as follows: The Borrower currently has six adjustment clauses that recover fuel, purchased energy and resource costs: the incentive cost adjustment (the "ICA"), the interim adjustment clause (the "IAC"), the air quality improvement rider, the demand side management cost adjustment, the gas cost adjustment and the steam cost adjustment. These adjustment clauses allow certain costs to be recovered from our retail customers. For certain adjustment mechanisms, the Borrower is required to file applications with the CPUC for approval in advance of the prospective effective dates. 3. A new paragraph is added to the disclosure under the heading PSCo General Rate Case in footnote 3 to the financial statements in the 3/31/03 Form 10-Q, which reads as follows: On May 29, 2003, the CPUC engaged in deliberations on the settlement agreement and entered an oral decision approving the settlement agreement with only minor modifications. We expect the CPUC to issue its written order reflecting the results of the May 29, 2003 deliberations in late June 2003. We are now moving to the phase II, rate design, portion of the case. 4. The second to last sentence of the first paragraph under the heading PSCo Fuel Adjustment Clause Proceedings is revised to read as follows: PSCo is currently analyzing the testimony and will file responsive testimony in June 2003. 5. Pacific Northwest Refund Proceeding. In July 2001, the FERC ordered a preliminary hearing to determine whether there may have been unjust and unreasonable charges for spot market bilateral sales in the Pacific Northwest for the period December 25, 2000 through June 20, 2001. We supplied energy to the Pacific Northwest markets during this period and have been an active participant in the hearings. In September 2001, the presiding administrative law judge concluded that prices in the Pacific Northwest during the referenced period were the result of a number of factors, including the shortage of supply, excess demand, drought and increased natural gas prices. Under these circumstances the administrative law judge concluded that the prices in the Pacific Northwest markets were not unreasonable or unjust and no refunds should be ordered. Subsequent to the ruling the FERC has allowed the parties to request additional evidence regarding the use of certain strategies and how they may have impacted the markets in the Pacific Northwest markets. For the referenced period parties have claimed the total amount of transactions with us subject to refund are $34 million. On March 26, 2003, the FERC at its open meeting discussed this proceeding. While the action that the FERC plans to take cannot be definitively ascertained from that discussion, it appears that the FERC may conduct further proceedings to determine whether spot-market bilateral sales in the Pacific Northwest should be subject to refund. If the proceedings before the FERC or the CPUC are not resolved in our favor, or if the CPUC, for any reason, does not grant us, in a timely manner, the increases we have requested or does not approve the settlement agreement or issue a final rate order with new rates that are consistent with those provided for in the settlement agreement, this could have a negative impact on our financial condition and results of operations. SCHEDULE 6.1 LIENS NONE. TABLE OF CONTENTS
PAGE ARTICLE I DEFINITIONS............................................................................... 1 Section 1.1 Definitions...................................................................... 1 Section 1.2 Times............................................................................ 13 Section 1.3 Accounting Terms and Determinations.............................................. 13 ARTICLE II AMOUNT AND TERMS OF THE LOANS............................................................. 14 Section 2.1 Committed Advances............................................................... 14 Section 2.2 Procedure for Making Advances.................................................... 14 Section 2.3 Interest......................................................................... 15 Section 2.4 Limitation of Outstandings....................................................... 16 Section 2.5 Principal and Interest Payment Dates............................................. 16 Section 2.6 Level Status and Margins......................................................... 16 Section 2.7 Facility Fees.................................................................... 18 Section 2.8 Other Fees....................................................................... 18 Section 2.9 Termination of the Commitment.................................................... 19 Section 2.10 Voluntary Prepayments............................................................ 19 Section 2.11 Mandatory Prepayments............................................................ 19 Section 2.12 Computation of Interest and Fees................................................. 19 Section 2.13 Payments......................................................................... 19 Section 2.14 Payment on Nonbusiness Days...................................................... 21 Section 2.15 Use of Advances.................................................................. 21 Section 2.16 Increased Costs or Reduction of Yield............................................ 21 Section 2.17 Illegality....................................................................... 22 Section 2.18 Taxes............................................................................ 22 Section 2.19 Capital Adequacy................................................................. 24 Section 2.20 Mandatory Assignment of Bank's Interest.......................................... 25 ARTICLE III CONDITIONS PRECEDENT...................................................................... 25 Section 3.1 Initial Conditions Precedent..................................................... 25 Section 3.2 Conditions Precedent to All Advances............................................. 26 ARTICLE IV REPRESENTATIONS AND WARRANTIES............................................................ 27 Section 4.1 Corporate Existence and Power.................................................... 27 Section 4.2 Authorization of Borrowing; No Conflict as to Law or Agreements.................. 27 Section 4.3 Legal Agreements................................................................. 28 Section 4.4 Subsidiaries..................................................................... 28 Section 4.5 Financial Condition; Other Information........................................... 28 Section 4.6 Adverse Change................................................................... 28 Section 4.7 Litigation....................................................................... 29 Section 4.8 Hazardous Substances............................................................. 29 Section 4.9 Regulation U..................................................................... 29
-i- TABLE OF CONTENTS (continued)
PAGE Section 4.10 Taxes............................................................................ 29 Section 4.11 Burdensome Restrictions.......................................................... 29 Section 4.12 Titles and Liens................................................................. 30 Section 4.13 ERISA............................................................................ 30 Section 4.14 Securities Law Matters........................................................... 30 Section 4.15 Investment Company Act........................................................... 31 Section 4.16 Public Utility Holding Company Act............................................... 31 Section 4.17 Indenture........................................................................ 31 Section 4.18 Solvency......................................................................... 32 Section 4.19 Swap Obligations................................................................. 32 Section 4.20 Insurance........................................................................ 32 Section 4.21 Compliance With Laws............................................................. 32 ARTICLE V AFFIRMATIVE COVENANTS OF THE BORROWER..................................................... 32 Section 5.1 Financial Statements; Other Notices.............................................. 32 Section 5.2 Books and Records; Inspection and Examination.................................... 34 Section 5.3 Compliance with Laws............................................................. 35 Section 5.4 Payment of Taxes and Other Claims................................................ 35 Section 5.5 Maintenance of Properties........................................................ 35 Section 5.6 Insurance........................................................................ 35 Section 5.7 Preservation of Corporate Existence.............................................. 35 Section 5.8 Delivery of Information.......................................................... 36 Section 5.9 Pledged Securities Capacity...................................................... 36 Section 5.10 Use of Proceeds.................................................................. 36 ARTICLE VI NEGATIVE COVENANTS........................................................................ 36 Section 6.1 Liens............................................................................ 36 Section 6.2 Sale of Assets................................................................... 38 Section 6.3 Consolidation and Merger......................................................... 38 Section 6.4 Hazardous Substances............................................................. 38 Section 6.5 Restrictions on Nature of Business............................................... 38 Section 6.6 Transactions with Affiliates..................................................... 39 Section 6.7 Ratio of Funded Debt to Total Capital............................................ 39 Section 6.8 Interest Coverage Ratio.......................................................... 39 ARTICLE VII EVENTS OF DEFAULT, RIGHTS AND REMEDIES.................................................... 39 Section 7.1 Events of Default................................................................ 39 Section 7.2 Rights and Remedies.............................................................. 42 Section 7.3 Provisions Regarding Pledged Securities.......................................... 43
-ii- TABLE OF CONTENTS (continued)
PAGE ARTICLE VIII THE AGENT................................................................................. 44 Section 8.1 Appointment; Nature of Relationship.............................................. 44 Section 8.2 Powers........................................................................... 45 Section 8.3 General Immunity................................................................. 45 Section 8.4 No Responsibility for Loans, Recitals, etc....................................... 45 Section 8.5 Action on Instructions of Banks.................................................. 45 Section 8.6 Employment of Agents and Counsel................................................. 46 Section 8.7 Reliance on Documents; Counsel................................................... 46 Section 8.8 Agent's Reimbursement and Indemnification........................................ 46 Section 8.9 Notice of Default................................................................ 47 Section 8.10 Rights as a Bank................................................................. 47 Section 8.11 Bank Credit Decision; Disclosure of Information by Agent......................... 47 Section 8.12 Successor Agent.................................................................. 48 Section 8.13 Delegation to Affiliates......................................................... 49 Section 8.14 Distribution of Payments and Proceeds............................................ 49 Section 8.15 Expenses......................................................................... 49 Section 8.16 Payments Received Directly by Banks.............................................. 50 Section 8.17 Agent not Offering Bonds......................................................... 50 ARTICLE IX ASSIGNMENTS AND PARTICIPATIONS............................................................ 50 Section 9.1 Assignments...................................................................... 50 Section 9.2 Participations................................................................... 53 Section 9.3 Limitation on Assignments and Participations..................................... 54 ARTICLE X MISCELLANEOUS............................................................................. 54 Section 10.1 Disclosure of Information........................................................ 54 Section 10.2 No Waiver; Cumulative Remedies................................................... 55 Section 10.3 Amendments, Etc.................................................................. 55 Section 10.4 Transmission, Notice and Effectiveness of Communications and Signatures.......... 56 Section 10.5 Costs and Expenses............................................................... 57 Section 10.6 Indemnification by Borrower...................................................... 57 Section 10.7 Setoff........................................................................... 58 Section 10.8 Sharing of Setoff................................................................ 58 Section 10.9 Usury............................................................................ 59 Section 10.10 Survival of Representations and Warranties....................................... 59 Section 10.11 Integration...................................................................... 59 Section 10.12 Further Assurances............................................................... 60 Section 10.13 Headings......................................................................... 60 Section 10.14 Time of the Essence.............................................................. 60 Section 10.15 Foreign Banks.................................................................... 60 Section 10.16 Nature of Banks Obligations...................................................... 61 Section 10.17 Execution in Counterparts........................................................ 61
-iii- TABLE OF CONTENTS (continued)
PAGE Section 10.18 Binding Effect, Assignment....................................................... 61 Section 10.19 Governing Law.................................................................... 61 Section 10.20 Severability of Provisions....................................................... 61 Section 10.21 Consent to Jurisdiction.......................................................... 62 Section 10.22 Waiver of Jury Trial............................................................. 62 Section 10.23 Recalculation of Covenants Following Accounting Practices Change................. 62 Section 10.24 Headings......................................................................... 62 Section 10.25 Nonliability of Banks............................................................ 62
-iv- TABLE OF CONTENTS EXHIBITS AND SCHEDULES Exhibit A Commitment Amounts and Addresses Exhibit B Note Exhibit C Compliance Certificate Exhibit D Opinion of Borrower's Counsel Exhibit E Assignment Certificate Exhibit F Borrowing Certificate Exhibit G Pledged Securities Compliance Certificate Schedule 4.2 Consents Schedule 4.4 Subsidiaries Schedule 4.7 Litigation Schedule 4.8 Environmental Matters Schedule 4.22 Compliance with Laws Schedule 6.1 Liens -v- ~~EX-31.01 7 c79003exv31w01.htm EX-31.01 CERTIFICATION TO SEC. 302 - NSP-MINNESOTA exv31w01~~

1) I have reviewed this quarterly report on Form 10-Q of NSP-Minnesota;

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)) or 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) 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

c) 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

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 registrant’s board of directors (or persons performing the equivalent function):

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.


	Exact name of registrant as specified in its charter, State or
	other jurisdiction of incorporation or organization, Address of
Commission	principal executive offices and Registrant's Telephone Number,	IRS Employer
File Number	including area code	Identification No.

001-31387	NORTHERN STATES POWER COMPANY (a Minnesota Corporation) 414 Nicollet Mall, Minneapolis, Minn. 55401 Telephone (612) 330-5500	41-1967505

001-3140	NORTHERN STATES POWER COMPANY (a Wisconsin Corporation) 1414 W. Hamilton Ave., Eau Claire, Wis. 54701 Telephone (715) 839-2625	39-0508315

001-3280	PUBLIC SERVICE COMPANY OF COLORADO (a Colorado Corporation) 1225 17th Street, Denver, Colo. 80202 Telephone (303) 571-7511	84-0296600

001-3789	SOUTHWESTERN PUBLIC SERVICE COMPANY (a New Mexico Corporation) Tyler at Sixth, Amarillo, Texas 79101 Telephone (303) 571-7511	75-0575400


Northern States Power Co. (a Minnesota Corporation)		Common Stock, $0.01 par value1,000,000 Shares

Northern States Power Co. (a Wisconsin Corporation)		Common Stock, $100 par value933,000 Shares

Public Service Co. of Colorado		Common Stock, $0.01 par value100 Shares

Southwestern Public Service Co.		Common Stock, $1 par value100 Shares


PART I — FINANCIAL INFORMATION
	Item 1. Financial Statements
	Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
	Item 4. CONTROLS AND PROCEDURES
Part II. OTHER INFORMATION
	Item 1. Legal Proceedings
	Item 6. Exhibits and Reports on Form 8-K
EX-4.01 Credit Agreement
EX-4.02 Credit Agreement
EX-4.03 Credit Agreement
EX-4.04 Credit Agreement
EX-31.01 Certification to Sec. 302 - NSP-Minnesota
EX-31.02 Certification to Sec. 302 - NSP-Wisconsin
EX-31.03 Certification to Sec. 302 - PSCo
EX-31.04 Certification to Sec. 302 - SPS
EX-32.01 Certification to Sec. 906 - NSP-Minnesota
EX-32.02 Certification to Sec. 906 - NSP-Wisconsin
EX-32.03 Certification to Sec. 906 - PSCo
EX-32.04 Certification to Sec. 906 - SPS
EX-99.01 Statement-Securities Litigation Reform


PART I — FINANCIAL INFORMATION

Item 1. Item 2. Item 4.		Financial Statements Management’s Discussion and Analysis Controls and Procedures

PART II — OTHER INFORMATION

Item 1. Item 6.		Legal Proceedings Exhibits and Reports on Form 8-K


			Three Months Ended June 30,						Six Months Ended June 30,

			2003			2002			2003			2002

Operating revenues:
	Electric utility		$	571,638		$	563,918		$	1,158,549		$	1,101,800
	Natural gas utility			88,878			89,782			422,128			277,318
	Electric trading margin			2,001			(1,958	)		3,401			1,142
	Other			4,744			5,231			10,938			11,964

		Total operating revenues		667,261			656,973			1,595,016			1,392,224
Operating expenses:
	Electric fuel and purchased power			204,744			192,908			413,734			377,353
	Cost of natural gas sold and transported			62,770			59,390			331,462			187,878
	Other operating and maintenance expenses			211,979			188,228			423,589			410,102
	Depreciation and amortization			99,469			87,556			190,671			172,989
	Taxes (other than income taxes)			42,830			42,612			87,176			85,929
	Special charges (see Note 2)			—			—			—			4,324

		Total operating expenses		621,792			570,694			1,446,632			1,238,575

Operating income				45,469			86,279			148,384			153,649
Other income (expense):
	Interest income			1,493			5,451			3,393			6,920
	Other nonoperating income			5,554			2,170			8,154			10,457
	Nonoperating expense			(1,689	)		(1,725	)		(3,169	)		(2,817	)

		Total other income (expense)		5,358			5,896			8,378			14,560
Interest charges and financing costs:
	Interest charges — net of amounts capitalized (including financing costs of $2,246, $1,030, $3,980 and $2,189, respectively)			29,921			17,041			61,895			34,617
	Distributions on redeemable preferred securities of subsidiary trusts			3,937			3,938			7,875			7,875

		Total interest charges and financing costs		33,858			20,979			69,770			42,492
Income before income taxes				16,969			71,196			86,992			125,717
Income taxes (benefit)				(2,672	)		28,772			22,900			50,260

Net income			$	19,641		$	42,424		$	64,092		$	75,457


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


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

		For the transition period from _______to________


			June 30, 2003			December 31,
			(Unaudited)			2002

ASSETS
Current assets:
	Cash and cash equivalents		$	41,975		$	310,338
	Restricted cash			7,500			23,000
	Accounts receivable — net of allowance for bad debts of $7,261 and $5,812, respectively			231,603			231,996
	Accounts receivable from affiliates			25,257			24,773
	Accrued unbilled revenues			89,832			109,435
	Materials and supplies inventories — at average cost			106,503			106,037
	Fuel inventory — at average cost			36,689			34,875
	Natural gas inventory — at average cost			16,223			24,385
	Prepayments and other			36,892			38,065

		Total current assets		592,474			902,904

Property, plant and equipment, at cost:
	Electric utility plant			7,054,806			6,855,807
	Natural gas utility plant			725,441			716,844
	Construction work in progress			357,889			313,931
	Other			399,048			384,214

		Total property, plant and equipment		8,537,184			8,270,796
Less accumulated depreciation				(4,241,098	)		(4,624,988	)
Nuclear fuel — net of accumulated amortization: $1,080,401 and $1,058,531, respectively				97,298			74,139

		Net property, plant and equipment		4,393,384			3,719,947

Other assets:
	Nuclear decommissioning fund			688,522			617,048
	Other investments			24,339			22,730
	Regulatory assets			393,986			212,539
	Prepaid pension asset			290,714			263,713
	Other			63,837			72,144

		Total other assets		1,461,398			1,188,174

		Total assets	$	6,447,256		$	5,811,025


	Increase (decrease) in:

	Plant			Regulatory			Long-Term
(Thousands of Dollars)	Assets			Assets			Liabilities

Reflect retirement obligation when liability incurred	$	130,659		$	—		$	130,659
Record accretion of liability to adoption date		—			731,709			731,709
Record depreciation of plant to adoption date		(110,573	)		110,573			—
Reclassify pre-adoption accumulated depreciation		662,411			(662,411	)		—

Net impact of SFAS No. 143 on balance sheet	$	682,497		$	179,871		$	862,368


		Beginning						Accretion in		Revisions		Ending
		Balance		Liabilities		Liabilities		Depreciation		To Prior		Balance
(Thousands of Dollars)		Jan. 1, 2003		Incurred		Settled		Expense		Estimates		June 30, 2003

Steam plant retirement		$	2,725	$	—	$	—	$	66	$	—	$	2,791
Nuclear plant decommissioning			859,643		—		—		27,286		—		886,929

	Total liability	$	862,368	$	—	$	—	$	27,352	$	—	$	889,720


(Millions of Dollars)
NSP-Minnesota	$	304
NSP-Wisconsin	$	70
PSCo.	$	329
SPS	$	97


			Dec. 31, 2002		Accrued					June 30, 2003
(Thousands of Dollars)			Liability*		Special Charges		Payments			Liability*

Employee severance and related costs for Utility Subsidiaries:
	NSP-Minnesota		$	1,567	$	—	$	(1,263	)	$	304
	NSP-Wisconsin			171		—		(132	)		39
	PSCo			267		—		(248	)		19
	SPS			250		—		(227	)		23

		Total accrued special charges	$	2,255	$	—	$	(1,870	)	$	385


	Six Months Ended June 30, 2003

	NSP-			NSP-
(Millions of Dollars)	Minnesota			Wisconsin			PSCo			SPS

Balance at Jan. 1, 2003	$	0.0		$	0.0		$	1.0		$	(4.6	)
After-tax net unrealized losses related to derivatives accounted for as hedges		(1.2	)		(0.2	)		(3.7	)		(2.7	)
After-tax net realized (gains) losses on derivative transactions reclassified into earnings		0.0			0.0			(0.2	)		0.1

Accumulated other comprehensive loss before regulatory deferrals		(1.2	)		(0.2	)		(2.9	)		(7.2	)
Regulatory deferral of costs to be recovered*		1.2			0.2			2.9			0.0

Accumulated other comprehensive income (loss) related to SFAS No. 133 — June 30, 2003	$	0.0		$	0.0		$	0.0		$	(7.2	)


	Six Months Ended June 30, 2002

(Millions of Dollars)	NSP-Minnesota			PSCo			SPS

Balance at Jan. 1, 2002	$	0.1		$	(4.3	)	$	(4.4	)
After-tax net unrealized gains related to derivatives accounted for as hedges		0.6			9.0			0.9
After-tax net realized (gains) losses on derivative transactions reclassified into earnings		(0.3	)		(5.0	)		0.1

Accumulated other comprehensive income (loss) related to SFAS No. 133 — June 30, 2002	$	0.4		$	(0.3	)	$	(3.4	)


			Electric		Natural Gas			All			Consolidated
(Thousands of Dollars)			Utility		Utility			Other			Total

Three months ended June 30, 2003
Revenues from:
	External customers		$	573,481	$	87,205		$	4,744		$	665,430
	Internal customers			158		1,673			—			1,831

		Total revenue		573,639		88,878			4,744			667,261
Segment net income			$	23,704	$	(4,829	)	$	766		$	19,641
Three months ended June 30, 2002
Revenues from:
	External customers		$	561,828	$	90,076		$	5,231		$	657,135
	Internal customers			132		(294	)		—			(162	)

		Total revenue		561,960		89,782			5,231			656,973
Segment net income			$	41,247	$	2,076		$	(899	)	$	42,424
Six months ended June 30, 2003
Revenues from:
	External customers		$	1,161,603	$	419,648		$	10,938		$	1,592,189
	Internal customers			347		2,480			—			2,827

		Total revenue		1,161,950		422,128			10,938			1,595,016
Segment net income			$	48,543	$	12,988		$	2,561		$	64,092
Six months ended June 30, 2002
Revenues from:
	External customers		$	1,102,647	$	277,289		$	11,964		$	1,391,900
	Internal customers			295		29			—			324

		Total revenue		1,102,942		277,318			11,964			1,392,224
Segment net income			$	61,964	$	12,701		$	792		$	75,457


	Period Ended		Change from
(Millions of Dollars)	June 30, 2003		March 31, 2003		VaR Limit		Average		High		Low

Electric Commodity Trading (1)	$	0.90	$	0.29	$	6.0	$	0.69	$	1.00	$	0.41


	Futures/Forwards

	Source of		Maturity Less			Maturity		Maturity		Maturity Greater		Total Futures/
(Thousands of Dollars)	Fair Value		Than 1 Year			1 to 3 Years		4 to 5 Years		Than 5 Years		Forwards Fair Value

NSP-Minnesota		1	$	(472	)	$	—	$	—	$	—	$	(472	)
		2		2,283			—		—		—		2,283
PSCo		1		(1,331	)		—		—		—		(1,331	)
		2		1,701			—		—		—		1,701

Total Futures/Forwards Fair Value			$	2,181		$	—	$	—	$	—	$	2,181


	Options

	Source of		Maturity Less			Maturity		Maturity		Maturity Greater		Total Futures/
(Thousands of Dollars)	Fair Value		Than 1 Year			1 to 3 Years		4 to 5 Years		Than 5 Years		Forwards Fair Value

NSP-Minnesota		2	$	(200	)	$	—	$	—	$	—	$	(200	)
PSCo		2		(311	)		1,980						1,669

Total Futures/Forwards Fair Value			$	(511	)	$	1,980	$	—	$	—	$	1,469


	Base						Electric
	Electric			Short-Term			Commodity			Consolidated
(Millions of Dollars)	Utility			Wholesale			Trading			Total

Six months ended June 30, 2003
Electric utility revenue	$	1,094		$	65		$	—		$	1,159
Electric fuel and purchased power		(380	)		(34	)		—			(414	)
Electric trading revenue		—			—			28			28
Electric trading costs		—			—			(25	)		(25	)

Gross margin before operating expenses	$	714		$	31		$	3		$	748

Margin as a percentage of revenue		65.3	%		47.7	%		10.7	%		63.0	%
Six months ended June 30, 2002
Electric utility revenue	$	1,053		$	49		$	—		$	1,102
Electric fuel and purchased power		(343	)		(34	)		—			(377	)
Electric trading revenue		—			—			18			18
Electric trading costs		—			—			(17	)		(17	)

Gross margin before operating expenses	$	710		$	15		$	1		$	726

Margin as a percentage of revenue		67.4	%		30.6	%		5.6	%		64.8	%


4.01		Credit Agreement dated May 16, 2003, among NSP-Minnesota, Wells Fargo Bank N.A., Bank One N.A. and other financial institutions.


4.02		Credit Agreement dated May 16, 2003 among PSCo, Wells Fargo N.A., Bank One N.A. and other financial institutions.

4.03		Credit Agreement dated Feb. 18, 2003 among SPS, BankOne, N.A. and other financial institutions.

4.04		Credit Agreement dated June 24, 2003 among PSCo, Key Bank N.A. and other financial institutions.

31.01		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 — NSP-Minnesota.

31.02		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 — NSP-Wisconsin.

31.03		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 — PSCo.

31.04		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 — SPS.

32.01		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 — NSP-Minnesota.

32.02		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 — NSP-Wisconsin.

32.03		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 — PSCo.

32.04		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 — SPS.

99.01		Statement pursuant to Private Securities Litigation Reform Act.


		Northern States Power Co. (a Minnesota corporation)

		(Registrant)

		/s/ DAVID E. RIPKA

		David E. Ripka Vice President and Controller

		/s/ RICHARD C. KELLY

		Richard C. Kelly Vice President and Chief Financial Officer


ARTICLE I Definitions
	Section 1.1 Definitions
	Section 1.2 Times
ARTICLE II Amount and Terms of the Loans and Letters of Credit
	Section 2.1 Committed Advances
	Section 2.2 Procedure for Making Advances
	Section 2.3 Interest
	Section 2.4 Limitation of Outstandings
	Section 2.5 Principal and Interest Payment Dates
	Section 2.6 Level Status and Margins
	Section 2.7 Letters of Credit
	Section 2.8 Facility and Utilization Fees
	Section 2.9 Other Fees
	Section 2.10 Termination or Reduction of the Commitment
	Section 2.11 Voluntary Prepayments
	Section 2.12 Computation of Interest and Fees
	Section 2.13 Payments
	Section 2.14 Payment on Nonbusiness Days
	Section 2.15 Use of Advances and Letters of Credit
	Section 2.16 Yield Protection; Funding Indemnification
	Section 2.17 Taxes
	Section 2.18 Capital Adequacy
	Section 2.19 Extension of Termination Date
	Section 2.20 Mandatory Assignment of Bank’s Interest
ARTICLE III Conditions Precedent
	Section 3.1 Conditions to Effectiveness
	Section 3.2 Initial Conditions Precedent
ARTICLE IV Representations and Warranties
	Section 4.1 Corporate Existence and Power
	Section 4.2 Authorization of Borrowing; No Conflict as to Law or Agreements
	Section 4.3 Legal Agreements
	Section 4.4 Subsidiaries
	Section 4.5 Financial Condition
	Section 4.6 Adverse Change
	Section 4.7 Litigation
	Section 4.8 Hazardous Substances
	Section 4.9 Regulation U
	Section 4.10 Taxes
	Section 4.11 Burdensome Restrictions
	Section 4.12 Titles and Liens
	Section 4.13 ERISA
	Section 4.14 Securities Law Matters
	Section 4.15 Investment Company Act
	Section 4.16 Public Utility Holding Company Act
	Section 4.17 Indenture
	Section 4.18 Authentication of Bonds
	Section 4.19 Solvency
	Section 4.20 Swap Obligations
	Section 4.21 Insurance
	Section 4.22 Compliance With Laws
ARTICLE V Affirmative Covenants of the Borrower
	Section 5.1 Financial Statements
	Section 5.2 Books and Records; Inspection and Examination
	Section 5.3 Compliance with Laws
	Section 5.4 Payment of Taxes and Other Claims
	Section 5.5 Maintenance of Properties
	Section 5.6 Insurance
	Section 5.7 Preservation of Corporate Existence
	Section 5.8 Delivery of Information
	Section 5.9 Use of Proceeds
ARTICLE VI Negative Covenants
	Section 6.1 Liens
	Section 6.2 Dividends
	Section 6.3 Sale of Assets
	Section 6.4 Consolidation and Merger
	Section 6.5 Hazardous Substances
	Section 6.6 Restrictions on Nature of Business
	Section 6.7 Transactions with Affiliates
	Section 6.8 Ratio of Funded Debt to Total Capital
	Section 6.9 Interest Coverage Ratio
	Section 6.10 Securities Laws
ARTICLE VII Events of Default, Rights and Remedies
	Section 7.1 Events of Default
	Section 7.2 Rights and Remedies
	Section 7.3 Pledge of Cash Collateral Account
ARTICLE VIII The Agent
	Section 8.1 Authorization
	Section 8.2 Distribution of Payments and Proceeds
	Section 8.3 Expenses
	Section 8.4 Payments Received Directly by Banks
	Section 8.5 Indemnification
	Section 8.6 Exculpation
	Section 8.7 Agent and Affiliates
	Section 8.8 Credit Investigation
	Section 8.9 Resignation
	Section 8.10 Assignments
	Section 8.11 Participations
	Section 8.12 Limitation on Assignments and Participations
	Section 8.13 Disclosure of Information
	Section 8.14 Titles
	Section 8.15 Agent not Offering Bonds
ARTICLE IX Miscellaneous
	Section 9.1 No Waiver; Cumulative Remedies
	Section 9.2 Amendments, Etc
	Section 9.3 Notice
	Section 9.4 Costs and Expenses
	Section 9.5 Indemnification by Borrower
	Section 9.6 Execution in Counterparts
	Section 9.7 Binding Effect, Assignment
	Section 9.8 Governing Law
	Section 9.9 Severability of Provisions
	Section 9.10 Consent to Jurisdiction
	Section 9.11 Waiver of Jury Trial
	Section 9.12 Prior Agreements
	Section 9.13 General Release
	Section 9.14 Recalculation of Covenants Following Accounting Practices Change
	Section 9.15 Headings
	Section 9.16 Nonliability of Banks
EX-4.01 Credit Agreement
EX-4.02 Credit Agreement
EX-4.03 Credit Agreement
EX-4.04 Credit Agreement
EX-31.01 Certification to Sec. 302 - NSP-Minnesota
EX-31.02 Certification to Sec. 302 - NSP-Wisconsin
EX-31.03 Certification to Sec. 302 - PSCo
EX-31.04 Certification to Sec. 302 - SPS
EX-32.01 Certification to Sec. 906 - NSP-Minnesota
EX-32.02 Certification to Sec. 906 - NSP-Wisconsin
EX-32.03 Certification to Sec. 906 - PSCo
EX-32.04 Certification to Sec. 906 - SPS
EX-99.01 Statement-Securities Litigation Reform


ARTICLE I DEFINITIONS		1
	Section 1.1 Definitions	1
	Section 1.2 Times	13
ARTICLE II AMOUNT AND TERMS OF THE LOANS AND LETTERS OF CREDIT		13
	Section 2.1 Committed Advances	13
	Section 2.2 Procedure for Making Advances	13
	Section 2.3 Interest	14
	Section 2.4 Limitation of Outstandings	15
	Section 2.5 Principal and Interest Payment Dates	16
	Section 2.6 Level Status and Margins	16
	Section 2.7 Letters of Credit	17
	Section 2.8 Facility and Utilization Fees	19
	Section 2.9 Other Fees	20
	Section 2.10 Termination or Reduction of the Commitment	20
	Section 2.11 Voluntary Prepayments	20
	Section 2.12 Computation of Interest and Fees	20
	Section 2.13 Payments	20
	Section 2.14 Payment on Nonbusiness Days	21
	Section 2.15 Use of Advances and Letters of Credit	21
	Section 2.16 Yield Protection; Funding Indemnification	21
	Section 2.17 Taxes.	22
	Section 2.18 Capital Adequacy	24
	Section 2.19 Extension of Termination Date	25
	Section 2.20 Mandatory Assignment of Bank’s Interest	26
ARTICLE III CONDITIONS PRECEDENT		26
	Section 3.1 Initial Conditions Precedent	27
	Section 3.2 Conditions Precedent to All Advances and Letters of Credit	28
ARTICLE IV REPRESENTATIONS AND WARRANTIES		28
	Section 4.1 Corporate Existence and Power	28
	Section 4.2 Authorization of Borrowing; No Conflict as to Law or Agreements	28
	Section 4.3 Legal Agreements	29
	Section 4.4 Subsidiaries	30
	Section 4.5 Financial Condition	30
	Section 4.6 Adverse Change	30
	Section 4.7 Litigation	30
	Section 4.8 Hazardous Substances	30
	Section 4.9 Regulation U	31
	Section 4.10 Taxes	31
	Section 4.11 Burdensome Restrictions	31
	Section 4.12 Titles and Liens	31
	Section 4.13 ERISA	32


	(i)			(A) the after-tax net income of the Borrower and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP, excluding (B) non-operating gains and losses (including extraordinary or unusual gains and losses, gains and losses from discontinuance of operations, gains and losses arising from the sale of assets other than inventory, and other non-recurring gains and losses)

	plus

	(ii)			the sum of the following to the extent deducted in arriving at the after-tax net income determined in clause (i)(A) of this definition (but without duplication for any item):


	Level I	Level II	Level III	Level IV	Level V

S&P	A- or better	BBB+ or better, but less than A-	BBB or better, but less than BBB+	BBB- or better, but less than BBB	Less than BBB-
Moody’s	A3 or better	Baa1 or better, but less than A3	Baa2 or better, but less than Baa1	Baa3 or better, but less than Baa2	Less than Baa3


Outstandings
Percentage/ Level
Status	33% or less			More than 33%

Level I		0	%		0.125	%
Level II		0	%		0.125	%
Level III		0	%		0.125	%
Level IV		0	%		0.250	%
Level V		0	%		0.500	%


	(c) The Pledge Agreement, properly executed on behalf of the Borrower.


	(e) The Fee Letters, properly executed on behalf of the Borrower.


	(b) Distributions to the extent not prohibited by Section 6.2.


NORTHERN STATES POWER COMPANY

By	/s/ Ben G.S. Fowke III

	Its	Vice President and Treasurer


WELLS FARGO BANK, NATIONAL ASSOCIATION, as Agent and as a Bank

By	/s/ Scott D. Bjelde

	Its	Vice President and Senior Banker


By	Christopher A. Cudak

	Its	Senior Vice President


BANK ONE, NA (Main Branch, Chicago)

By	/s/ Jane A. Bek

	Its	Director


UBS AG, Cayman Islands Branch

By	/s/

	Its	Director


By	/s/

	Its	Associate Director


THE BANK OF TOKYO-MITSUBISHI, LTD., Chicago Branch

By	/s/ Patrick McCue

	Its	Vice President & Manager