xcel energy 10q 2q03_util

UNITED STATESSECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

For the quarterly period ended June 30, 2003

or

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 Actof 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has beensubject 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 Coloradoand Southwestern Public Service Co. meet the conditions set forth in General Instruction H (1)(a) and (b) of Form 10-Q and are therefore filingthis 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.

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OFTHE 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________

Exact name of registrant as specified in its charter, State orother jurisdiction of incorporation or organization, Address of

Commission principal executive offices and Registrant's Telephone Number, IRS EmployerFile Number including area code Identification No.

001-31387 NORTHERN STATES POWER COMPANY(a Minnesota Corporation)414 Nicollet Mall, Minneapolis, Minn. 55401Telephone (612) 330-5500

41-1967505

001-3140 NORTHERN STATES POWER COMPANY(a Wisconsin Corporation)1414 W. Hamilton Ave., Eau Claire, Wis. 54701Telephone (715) 839-2625

39-0508315

001-3280 PUBLIC SERVICE COMPANY OF COLORADO(a Colorado Corporation)1225 17th Street, Denver, Colo. 80202Telephone (303) 571-7511

84-0296600

001-3789 SOUTHWESTERN PUBLIC SERVICE COMPANY(a New Mexico Corporation)Tyler at Sixth, Amarillo, Texas 79101Telephone (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

Table of Contents

This combined Form 10-Q is separately filed by Northern States Power Co., a Minnesota corporation (NSP-Minnesota), Northern States PowerCo., 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 registeredholding company under the Public Utility Holding Company Act of 1935 (PUHCA). Additional information on Xcel Energy is available invarious 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 makesrepresentations 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.

2

PART I — FINANCIAL INFORMATION

Item 1.Item 2.Item 4.

Financial StatementsManagement’s Discussion and AnalysisControls and Procedures

PART II — OTHER INFORMATION

Item 1.Item 6.

Legal ProceedingsExhibits and Reports on Form 8-K

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

NSP-MINNESOTA AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(Thousands of Dollars)

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

3

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 $1,101,800Natural gas utility 88,878 89,782 422,128 277,318Electric trading margin 2,001 (1,958) 3,401 1,142Other 4,744 5,231 10,938 11,964

Total operating revenues 667,261 656,973 1,595,016 1,392,224Operating expenses:Electric fuel and purchased power 204,744 192,908 413,734 377,353Cost of natural gas sold and transported 62,770 59,390 331,462 187,878Other operating and maintenance expenses 211,979 188,228 423,589 410,102Depreciation and amortization 99,469 87,556 190,671 172,989Taxes (other than income taxes) 42,830 42,612 87,176 85,929Special charges (see Note 2) — — — 4,324

Total operating expenses 621,792 570,694 1,446,632 1,238,575

Operating income 45,469 86,279 148,384 153,649Other income (expense):Interest income 1,493 5,451 3,393 6,920Other nonoperating income 5,554 2,170 8,154 10,457Nonoperating expense (1,689) (1,725) (3,169) (2,817)

Total other income (expense) 5,358 5,896 8,378 14,560Interest 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 34,617Distributions 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 42,492Income before income taxes 16,969 71,196 86,992 125,717Income taxes (benefit) (2,672) 28,772 22,900 50,260

Net income $ 19,641 $ 42,424 $ 64,092 $ 75,457

NSP-MINNESOTA AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)



4

Six Months Ended June 30,

2003 2002

Operating activities:Net income $ 64,092 $ 75,457Adjustments to reconcile net income to cash provided by operating activities:

Depreciation and amortization 174,207 177,966Nuclear fuel amortization 21,870 24,586Deferred income taxes (20,192) (30,725)Amortization of investment tax credits (3,683) (4,211)Allowance for equity funds used during construction (6,466) (3,423)Gain on sale of property — (6,785)Change in accounts receivable (91) 40,284Change in inventories 5,882 3,311Change in other current assets 20,274 21,789Change in accounts payable (78,880) (33,825)Change in other current liabilities (94,746) (46,287)Change in other noncurrent assets 2,160 (30,602)Change in other noncurrent liabilities 29,842 50,879

Net cash provided by operating activities 114,269 238,414Investing activities:

Capital/construction expenditures (181,007) (201,216)Allowance for equity funds used during construction 6,466 3,423Investments in external decommissioning fund (25,769) (29,383)Proceeds from sale of property — 11,152Restricted cash 15,500 —Other investments — net (2,536) (1,619)

Net cash used in investing activities (187,346) (217,643)Financing activities:

Short-term borrowings — net 115,000 37,997Repayment of long-term debt, including reacquisition premiums (208,551) (778)Capital contributions from parent 4,114 42,431Dividends paid to parent (105,849) (92,679)

Net cash used in financing activities (195,286) (13,029)Net (decrease) increase in cash and cash equivalents (268,363) 7,742Cash and cash equivalents at beginning of period 310,338 17,169

Cash and cash equivalents at end of period $ 41,975 $ 24,911

NSP-MINNESOTA AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS



5

June 30, 2003 December 31,(Unaudited) 2002

ASSETSCurrent assets:

Cash and cash equivalents $ 41,975 $ 310,338Restricted cash 7,500 23,000Accounts receivable — net of allowance for bad debts of $7,261 and $5,812, respectively 231,603 231,996Accounts receivable from affiliates 25,257 24,773Accrued unbilled revenues 89,832 109,435Materials and supplies inventories — at average cost 106,503 106,037Fuel inventory — at average cost 36,689 34,875Natural gas inventory — at average cost 16,223 24,385Prepayments 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 6,855,807Natural gas utility plant 725,441 716,844Construction work in progress 357,889 313,931Other 399,048 384,214

Total property, plant and equipment 8,537,184 8,270,796Less 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 688,522 617,048Other investments 24,339 22,730Regulatory assets 393,986 212,539Prepaid pension asset 290,714 263,713Other 63,837 72,144

Total other assets 1,461,398 1,188,174

Total assets $ 6,447,256 $ 5,811,025

NSP-MINNESOTA AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS



6


LIABILITIES AND EQUITYCurrent liabilities:

Current portion of long-term debt $ 17,954 $ 226,462Short-term debt 115,069 69Accounts payable 152,518 198,889Accounts payable to affiliates 34,357 66,866Taxes accrued 108,736 210,041Accrued interest 43,902 44,167Dividends payable to parent 53,332 52,280Other 50,074 43,255

Total current liabilities 575,942 842,029

Deferred credits and other liabilities:Deferred income taxes 680,413 700,966Deferred investment tax credits 70,629 74,577Regulatory liabilities 558,154 486,035Benefit obligations and other 139,743 136,452Asset retirement obligations (see Note 1) 889,720 —

Total deferred credits and other liabilities 2,338,659 1,398,030

Long-term debt 1,570,317 1,569,938Mandatorily redeemable preferred securities of subsidiary trust 200,000 200,000Common stock — authorized 5,000,000 shares of $0.01 par value; outstanding 1,000,000 shares 10 10Premium on common stock 817,983 813,869Retained earnings 944,350 987,158Accumulated other comprehensive income (loss) (5) (9)

Total common stockholder’s equity 1,762,338 1,801,028

Commitments and contingencies (see Note 4)Total liabilities and equity $6,447,256 $5,811,025

NSP-WISCONSIN AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)


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

7


2003 2002 2003 2002

Operating revenues:Electric utility $108,048 $110,189 $228,574 $227,111Natural gas utility 16,287 18,845 80,720 59,239Other 51 25 138 111

Total operating revenues 124,386 129,059 309,432 286,461Operating expenses:Electric fuel and purchased power 56,719 50,115 112,182 104,646Cost of natural gas sold and transported 10,978 13,523 61,634 42,757Other operating and maintenance expenses 27,632 25,303 52,070 48,891Depreciation and amortization 11,803 11,084 23,137 21,839Taxes (other than income taxes) 4,032 4,117 8,259 8,217Special charges (see Note 2) — — — 512

Total operating expenses 111,164 104,142 257,282 226,862

Operating income 13,222 24,917 52,150 59,599Other income (expense):Interest income 136 160 297 857Other nonoperating income 346 94 608 275Nonoperating expense (104) (83) (206) (139)

Total other income (expense) 378 171 699 993Interest charges — net of amounts capitalized

(including financing costs of $224, $224, $448 and$448, respectively) 5,693 5,740 11,424 11,573

Income before income taxes 7,907 19,348 41,425 49,019Income taxes 3,060 6,930 16,724 18,650

Net income $ 4,847 $ 12,418 $ 24,701 $ 30,369

NSP-WISCONSIN AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)



8


2003 2002


Depreciation and amortization 23,650 22,383Deferred income taxes 3,313 1,309Amortization of investment tax credits (396) (403)Allowance for equity funds used during construction (548) (274)Undistributed equity in earnings of unconsolidated affiliates (43) (81)Change in accounts receivable 9,894 213Change in inventories 1,413 2,363Change in other current assets 11,817 11,233Change in accounts payable (5,433) 4,611Change in other current liabilities 1,064 9,241Change in other noncurrent assets (3,100) (6,748)Change in other noncurrent liabilities (127) 1,210


Capital/construction expenditures (22,139) (17,270)Allowance for equity funds used during construction 548 274Other investments — net 13 (275)


Short-term borrowings (repayments) — net (6,880) (34,300)Capital contributions from parent 692 2,438Dividends paid to parent (24,714) (22,425)

Net cash used in financing activities (30,902) (54,287)Net increase in cash and cash equivalents 13,725 3,868Cash and cash equivalents at beginning of period 98 30


NSP-WISCONSIN AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS



9



Cash and cash equivalents $ 13,823 $ 98Accounts receivable — net of allowance for bad debts of $1,145 and $1,373, respectively 37,790 47,890Accounts receivable from affiliates 1,666 1,460Accrued unbilled revenues 11,858 20,074Materials and supplies inventories — at average cost 6,565 5,994Fuel inventory — at average cost 4,313 6,006Natural gas inventory — at average cost 3,971 4,263Current deferred income taxes 6,097 —Prepaid taxes 13,299 13,735Prepayments and other 1,351 1,681


Property, plant and equipment, at cost:Electric utility plant 1,175,546 1,161,901Natural gas utility plant 133,969 131,969Construction work in progress 25,861 18,305Other 93,719 95,631

Total property, plant and equipment 1,429,095 1,407,806Less accumulated depreciation (614,462) (592,187)

Net property, plant and equipment 814,633 815,619

Other assets:Other investments 9,849 9,817Regulatory assets 47,259 48,112Prepaid pension asset 42,453 38,557Other 7,153 7,577

Total other assets 106,714 104,063

Total assets $1,022,080 $1,020,883

NSP-WISCONSIN AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS



10



Current portion of long-term debt $ 40,034 $ 40,034Short-term debt — notes payable to affiliate — 6,880Accounts payable 13,898 23,535Accounts payable to affiliates 11,040 6,836Dividends payable to parent 12,683 12,260Other 21,271 20,225


Deferred credits and other liabilities:Deferred income taxes 158,734 146,471Deferred investment tax credits 14,424 14,820Regulatory liabilities 11,860 11,950Benefit obligations and other 45,990 46,026

Total deferred credits and other liabilities 231,008 219,267

Long-term debt 273,151 273,108Common stock — authorized 1,000,000 shares of $100 par value; outstanding 933,000 shares 93,300 93,300Premium on common stock 63,673 62,981Retained earnings 262,022 262,457

Total common stockholder’s equity 418,995 418,738Commitments and contingencies (see Note 4)

Total liabilities and equity $1,022,080 $1,020,883

PUBLIC SERVICE CO. OF COLORADO AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)


See disclosures regarding PSCo in the Notes to Consolidated Financial Statements

11


2003 2002 2003 2002

Operating revenues:Electric utility $492,734 $451,880 $ 987,223 $ 889,529Natural gas utility 161,661 115,563 418,338 432,428Electric trading margin 2,062 1,283 11 (2,317)Steam and other 4,722 5,213 11,370 12,978

Total operating revenues 661,179 573,939 1,416,942 1,332,618Operating expenses:Electric fuel and purchased power 274,922 196,775 530,717 405,943Cost of natural gas sold and transported 97,283 50,862 252,190 261,706Cost of sales — steam and other 2,729 2,275 6,427 3,800Other operating and maintenance expenses 115,972 105,460 230,740 222,778Depreciation and amortization 62,004 64,094 120,647 128,658Taxes (other than income taxes) 22,855 20,440 43,036 42,711Special charges (see Note 2) — — — 131

Total operating expenses 575,765 439,906 1,183,757 1,065,727

Operating income 85,414 134,033 233,185 266,891Other income (expense):Interest income 1,570 274 2,011 370Other nonoperating income 4,321 2,851 5,883 4,130Nonoperating expense (4,213) (2,145) (7,417) (4,612)

Total other income (expense) 1,678 980 477 (112)Interest charges and financing costs:Interest charges — net of amounts capitalized (including financing costs of

$2,199, $869, $3,915 and $1,738, respectively) 40,679 32,459 76,596 60,114Distributions on redeemable preferred securities of subsidiary trusts 3,686 3,572 7,372 7,372

Total interest charges and financing costs 44,365 36,031 83,968 67,486Income before income taxes 42,727 98,982 149,694 199,293Income taxes 9,073 36,621 45,953 70,240

Net income $ 33,654 $ 62,361 $ 103,741 $ 129,053

PUBLIC SERVICE CO. OF COLORADO AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)



12


2003 2002


Depreciation and amortization 125,550 133,089Deferred income taxes 63,515 23,103Amortization of investment tax credits (3,666) (2,189)Allowance for equity funds used during construction (3,387) (21)Change in accounts receivable (16,068) 38,128Change in unbilled revenue 70,310 103Change in recoverable natural gas and electric costs (52,621) (75,615)Change in inventories 43,713 6,162Change in other current assets (24,643) (12,177)Change in accounts payable (49,448) (37,290)Change in other current liabilities (17,807) 90,586Change in other noncurrent assets (4,002) (16,734)Change in other noncurrent liabilities 26,015 22,035


Capital/construction expenditures (175,390) (223,915)Allowance for equity funds used during construction 3,387 21Proceeds from sale of property 4,114 13,547Other investments — net (25,565) (6,207)


Short-term borrowings (repayments) — net 410,804 (30,448)Repayment of long-term debt, including reacquisition premiums (596,819) (2,625)Proceeds from the issue of long term debt 247,252 —Capital contributions from parent 1,490 54,749Dividends paid to parent (119,396) (108,869)

Net cash used in financing activities (56,669) (87,193)Net increase (decrease) in cash and cash equivalents 11,079 (5,514)Cash and cash equivalents at beginning of period 25,924 22,666


PUBLIC SERVICE CO. OF COLORADO AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS



13



Cash and cash equivalents $ 37,003 $ 25,924Accounts receivable — net of allowance for bad debts of $14,754 and $13,685, respectively 191,757 165,743Accounts receivable from affiliates 9,462 19,407Accrued unbilled revenues 133,659 203,969Recoverable purchased natural gas and electric energy costs 101,782 23,131Materials and supplies inventories — at average cost 43,248 49,579Fuel inventory — at average cost 25,763 25,366Natural gas inventory — replacement cost in excess of LIFO: $38,658 and $20,502, respectively 47,899 85,679Prepayments and other 43,836 15,992


Property, plant and equipment, at cost:Electric utility plant 5,495,854 5,345,464Natural gas utility plant 1,526,603 1,494,017Construction work in progress 425,008 456,800Other 622,675 624,764

Total property, plant and equipment 8,070,140 7,921,045Less accumulated depreciation (2,992,974) (2,896,978)


Other assets:Other investments 28,238 12,319Regulatory assets 233,133 238,600Other 36,882 35,150


Total assets $ 6,009,828 $ 5,924,926

PUBLIC SERVICE CO. OF COLORADO AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS



14



Current portion of long-term debt $ 177,114 $ 282,097Short-term debt 500,000 88,074Note payable to affiliate 14,020 15,142Accounts payable 261,194 318,005Accounts payable to affiliates 47,741 40,449Taxes accrued 11,190 47,363Accrued interest 40,317 44,391Dividends payable to parent 59,269 60,550Current portion of deferred income tax 55,349 22,298Other 88,425 56,167

Total current liabilities 1,254,619 974,536

Deferred credits and other liabilities:Deferred income taxes 577,933 553,006Deferred investment tax credits 72,971 74,987Regulatory liabilities 44,487 45,707Minimum pension liability 104,773 104,773Benefit obligations and other 78,356 74,335Customers advances for construction 172,586 142,992

Total deferred credits and other liabilities 1,051,106 995,800

Long-term debt 1,739,538 1,782,128Mandatorily redeemable preferred securities of subsidiary trust — 194,000Common stock — authorized 100 shares of $0.01 par value; outstanding 100 shares — —Premium on common stock 1,653,774 1,652,284Retained earnings 416,623 430,997Accumulated other comprehensive income (loss) (105,832) (104,819)

Total common stockholder’s equity 1,964,565 1,978,462Commitments and contingencies (see Note 4)


SOUTHWESTERN PUBLIC SERVICE CO. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)


See disclosures regarding SPS in the Notes to Consolidated Financial Statements

15


2003 2002 2003 2002

Operating revenues $284,342 $266,917 $528,939 $478,609Operating expenses:Electric fuel and purchased power 170,416 158,399 310,604 256,375Other operating and maintenance expenses 38,186 38,370 81,030 77,886Depreciation and amortization 21,797 21,287 43,309 43,291Taxes (other than income taxes) 11,557 14,219 23,287 25,977Special charges (see Note 2) — — — 5,321

Total operating expenses 241,956 232,275 458,230 408,850

Operating income 42,386 34,642 70,709 69,759Other income (expense):Interest income (215) 76 923 791Other nonoperating income 1,118 226 1,695 1,362Nonoperating expense (36) (51) (71) (54)

Total other income (expense) 867 251 2,547 2,099Interest charges and financing costs:Interest charges — net of amounts capitalized (including financing

costs of $1,790, $1,534, $3,429 and $3,069, respectively) 10,674 11,442 22,406 22,834Distributions on redeemable preferred securities of subsidiary trust 1,962 1,962 3,925 3,925

Total interest charges and financing costs 12,636 13,404 26,331 26,759

Income before income taxes 30,617 21,489 46,925 45,099Income taxes 11,720 8,060 17,937 16,922

Net income $ 18,897 $ 13,429 $ 28,988 $ 28,177

SOUTHWESTERN PUBLIC SERVICE CO. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)



16


2003 2002


Depreciation and amortization 46,860 51,397Deferred income taxes 10,800 300Amortization of investment tax credits (125) (125)Allowance for equity funds used during construction (1,680) (496)Change in recoverable electric energy costs (25,646) —Change in accounts receivable (4,346) (47,305)Change in inventories (1,932) (1,846)Change in other current assets (3,796) 34,790Change in accounts payable 17,474 3,375Change in other current liabilities (17,364) (46,083)Change in other noncurrent assets (9,846) (23,856)Change in other noncurrent liabilities 3,683 22,527


Capital/construction expenditures (50,959) (19,023)Allowance for equity funds used during construction 1,680 496Other investments — net 250 (2,937)


Short-term borrowings — net — 15,000Capital contributions from parent 1,391 615Dividends paid to parent (49,077) (60,969)

Net cash used in financing activities (47,686) (45,354)Net decrease in cash and cash equivalents (53,645) (45,963)Cash and cash equivalents at beginning of period 60,700 65,499


SOUTHWESTERN PUBLIC SERVICE CO. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS



17



Cash and cash equivalents $ 7,055 $ 60,700Accounts receivable — net of allowance for bad debts of $1,985 and $1,559, respectively 53,505 49,460Accounts receivable from affiliates 23,088 22,787Accrued unbilled revenues 57,992 52,999Recoverable electric energy costs 42,085 16,439Materials and supplies inventories — at average cost 18,511 17,231Fuel inventory — at average cost 1,974 1,322Prepayments and other 4,862 6,059


Property, plant and equipment, at cost:Electric utility plant 3,088,259 3,076,970Construction work in progress 89,864 64,908

Total property, plant and equipment 3,178,123 3,141,878Less accumulated depreciation (1,366,054) (1,338,340)


Other assets:Other investments 14,132 14,382Intangible assets 40,063 —Regulatory assets 102,612 105,404Prepaid pension asset 55,843 105,044Other 9,194 9,979


Total assets $ 2,242,985 $ 2,265,344

SOUTHWESTERN PUBLIC SERVICE CO. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS



18



Accounts payable $ 89,429 $ 73,536Accounts payable to affiliates 11,185 9,604Taxes accrued 6,104 24,107Accrued interest 7,634 7,630Dividends payable to parent 24,242 24,427Current portion of deferred income tax 18,878 13,034Other 24,479 23,649


Deferred credits and other liabilities:Deferred income taxes 388,694 399,800Deferred investment tax credits 4,092 4,217Regulatory liabilities 2,292 2,363Derivative instrument valuation — at market 9,918 6,008Minimum pension liability 20,839 —Benefit obligations and other 26,280 22,597

Total deferred credits and other liabilities 452,115 434,985

Long-term debt 725,806 725,662Mandatorily redeemable preferred securities of subsidiary trust 100,000 100,000Common stock — authorized 200 shares of $1.00 par value; outstanding 100 shares — —Premium on common stock 412,720 411,329Retained earnings 402,073 421,976Accumulated other comprehensive income (loss) (31,680) (4,595)

Total common stockholder’s equity 783,113 828,710Commitments and contingencies (see Note 4)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to presentfairly the financial position of NSP-Minnesota, NSP-Wisconsin, PSCo and SPS (collectively referred to as the Utility Subsidiaries of XcelEnergy) 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; andtheir 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’sUtility 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 theirrespective Annual Reports on Form 10-K for the year ended Dec. 31, 2002. The following notes should be read in conjunction with suchpolicies 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 onForm 10-K. These reclassifications had no effect on stockholder’s equity or net income as previously reported. The reclassifications wereprimarily 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 AssetRetirement Obligations” (SFAS No. 143) effective Jan. 1, 2003. As required by SFAS No. 143, future plant decommissioning obligations wererecorded 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. Thisliability will be increased over time by applying the interest method of accretion to the liability, and the capitalized costs will be depreciatedover the useful life of the related long-lived assets. The adoption of the statement had no income statement impact, as the cumulative effectadjustments 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.”

NSP-Minnesota

Asset retirement obligations were recorded for the decommissioning of two NSP-Minnesota nuclear generating plants, the Monticello plant andthe Prairie Island plant. A liability was also recorded for the decommissioning of an NSP-Minnesota steam production plant, the Pathfinderplant. 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 from1969 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 SFASNo. 143 is shown in the table below for the six months ending June 30, 2003.

Increase (decrease) in:

Plant Regulatory Long-Term(Thousands of Dollars) Assets Assets Liabilities

Reflect retirement obligation when liability incurred $ 130,659 $ — $130,659Record accretion of liability to adoption date — 731,709 731,709Record 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 EndingBalance 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 $— $ 2,791Nuclear plant decommissioning 859,643 — — 27,286 — 886,929

Total liability $862,368 $— $— $27,352 $— $889,720

The adoption of SFAS No. 143 resulted in the recording of a capitalized plant asset of $131 million for the discounted cost of asset retirementas of the date the liability was incurred. Accumulated depreciation on this additional capitalized cost through the date of adoption of SFASNo. 143 was $111 million. A regulatory asset of $842 million was recognized for the accumulated SFAS No. 143 costs recognized foraccretion of the initial liability and depreciation of the additional capitalized cost through adoption date. This regulatory asset was partiallyoffset by $662 million for the reversal of the decommissioning costs previously accrued in accumulated depreciation for these plants prior tothe implementation of SFAS No. 143. The net regulatory asset of $180 million at Jan. 1, 2003 reflects the excess of costs that would have beenrecorded in expense under SFAS No. 143 over the amount of costs recorded consistent with ratemaking cost recovery for NSP-Minnesota. Weexpect 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 recoveredthrough current NSP-Minnesota ratemaking. Consequently, no cumulative effect adjustment to earnings or shareholders’ equity has beenrecorded 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 theearliest 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 ofSFAS No. 143 to prior periods would not have changed net income due to the regulatory deferral of any differences of past cost recognitionand 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.

NSP-Minnesota, NSP-Wisconsin, PSCo and SPS

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

2. Special Charges (NSP-Minnesota, NSP-Wisconsin, PSCo and SPS)

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

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

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(Millions of Dollars)NSP-Minnesota $304NSP-Wisconsin $ 70PSCo. $329SPS $ 97

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

3. Regulation (NSP-Minnesota, NSP-Wisconsin, PSCo and SPS)

NSP-Minnesota Service Quality Investigation — As previously reported, the Minnesota Public Utilities Commission (MPUC) directed theOffice of the Attorney General and the Department of Commerce (state agencies) to investigate the accuracy of NSP-Minnesota’s reliabilityrecords. On Aug. 4, 2003, the state agencies jointly filed with the MPUC a report issued by Fraudwise, an investigation firm. Fraudwise hadpreviously been engaged by the state agencies to investigate the validity of allegations involving the integrity of NSP-Minnesota’s servicequality reporting. The findings of the Aug. 4, 2003 report are generally consistent with the previously disclosed findings in Fraudwise’spreliminary report that our record keeping contains inconsistencies and misstatements and that it would be nearly impossible to establish themagnitude of misstatements in the record keeping system. The report also states that NSP-Minnesota’s records were unreliable and appear tohave been manipulated by a small number of employees to ensure compliance with state-imposed standards. NSP-Minnesota is continuing itsinternal review of these matters and has taken certain remedial actions to address the record keeping deficiencies. The MPUC has indicated thatit 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. Inparticular, the investigation would focus on NSP-Minnesota operations in the Sioux Falls area, which has experienced a number of recentpower outages. NSP-Minnesota is working with the SDPUC to provide information and to answer inquiries regarding service quality. Nodocket has been opened.

Midwest Independent Transmission System Operator, Inc. (MISO) Electric Market Initiative (NSP-Minnesota and NSP-Wisconsin) - OnJuly 25, 2003, MISO filed proposed changes to its regional open access transmission tariff to implement a new transmission and energymarkets 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 retailloads and would be subject to the new tariff, if approved by the Federal Energy Regulatory Commission (FERC). Xcel Energy continues toreview the filing, but believes the new tariff, if approved by the FERC, could have a material effect on wholesale power supply or transmissionservice 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 ServiceCommission of Wisconsin (PSCW) requesting no change in Wisconsin retail electric and natural gas base rates. NSP-Wisconsin requested thePSCW 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 aseries of orders addressing the California electricity markets. Two of these were show cause orders. In the first show cause order, the FERCfound that 24 entities may have worked in concert through partnerships, alliances or other arrangements to engage in activities that constitutegaming and/or anomalous market behavior. The FERC initiated the proceedings against these 24 entities requiring that they show cause whytheir 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 43entities individually engaged in one or more of seven specific types of practices that the FERC has identified as constituting gaming oranomalous market behavior within the meaning of the CAISO and California Power Exchange tariffs. PSCo was listed in an attachment to thatshow cause order as having been alleged to have engaged in one of the seven identified practices, namely circular scheduling. In the secondshow cause order, FERC required the CAISO to provide the named entities with “all of the specific

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Dec. 31, 2002 Accrued June 30, 2003(Thousands of Dollars) Liability* Special Charges Payments Liability*

Employee severance and related costs for UtilitySubsidiaries:NSP-Minnesota $1,567 $ — $(1,263) $304NSP-Wisconsin 171 — (132) 39PSCo 267 — (248) 19SPS 250 — (227) 23

Total accrued special charges $2,255 $ — $(1,870) $385

* Reported on the balance sheets in other current liabilities.

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

PSCo General Rate Case - In May 2002, PSCo filed a combined general retail electric, natural gas and thermal energy base rate case with theColorado 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, whichaddressed all significant issues in the rate case. In summary, the settlement agreement, among other things, provides for:

In June 2003, the CPUC issued its initial written order approving the settlement agreement. The new rates were effective July 1, 2003. PSCowill 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 FERCalleging PSCo has been improperly collecting certain fuel and purchased energy costs through the wholesale fuel cost adjustment clauseincluded 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 2003claiming the improper inclusion of fuel and purchased energy costs in the range of $40 million to $50 million related to the periods 1996through 2002. PSCo submitted answer testimony in June 2003. The complainants filed rebuttal testimony on August 1, 2003, and currentclaims have been reduced, now estimated at approximately $30 million. PSCo believes its wholesale customers have not been improperlycharged 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 the2002 Annual Report on Form 10-K. The CPUC conducted a proceeding to review and approve the incurred and recoverable 2001 costs underthe ICA. In April 2003, the CPUC Staff and an intervenor filed testimony recommending disallowance of certain fuel and purchased energycosts, which, if granted, would result in a $30 million reduction in recoverable 2001 ICA costs. On July 10, 2003, a stipulation and settlementagreement was filed with the CPUC, which resolved all issues. Under the stipulation and settlement agreement, the recoverable costs for 2001will 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 notsignificant. In addition, the stipulation and settlement agreement provides for a prospective rate design adjustment related to the maximumallowable natural gas hedging costs that will be a part of the electric commodity adjustment for 2004. Approval of the 2002 recoverable ICAcosts 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 theabove rate proceedings, without the adjustments proposed by various parties. Pending the outcome of these regulatory proceedings, we cannotat 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 2001and 2002. In both years, PSCo did not earn above its allowed authorized return on equity and, accordingly, has not recorded any refundobligations. In the 2001 proceeding, the Office of Consumer Counsel has proposed that the $10.9

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• annual base rate decreases of approximately $33 million for natural gas and $230,000 for electricity, including an annual reduction toelectric 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 expenseabove the expense recovered through electric base rates during 2003. This clause is projected to recover energy costs totalingapproximately $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 anallowed 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.

million gain on the sale of the Boulder Hydroelectric Project be excluded from 2001 earnings and that possible refund of the gain be addressedin 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 prudencereview case, recommending $6.1 million in disallowances of gas costs for the July 2000 through June 2001 gas purchase year. Hearings wereheld before an administrative law judge in July 2002. On February 10, 2003, the judge issued a recommended decision rejecting the proposeddisallowances and approving PSCo’s gas costs for the subject gas purchase year as prudently incurred. On June 6, 2003, the CPUC issued itsorder denying exceptions to the administrative law judge’s recommended decision. The CPUC upheld the finding that PSCo was prudent andreasonable 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 theannual electric sales rates charged to wholesale customers, other than Cheyenne Light Fuel & Power Co., a wholly owned subsidiary of XcelEnergy, by approximately $9 million. Several wholesale customers intervened protesting the proposed increase. On Aug. 1, 2003, PSCosubmitted a revised filing correcting an error in the calculation of income tax costs. The revised filing requests an approximately $2 millionannual 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 to2002 under its tariff. An administrative law judge had ruled in January 2002 that HBA’s claims were barred. The CPUC reversed that decisionand remanded the case. On May 15, 2003, an administrative law judge issued a recommended decision. On the remanded issues, the judgedetermined the HBA is able to seek an award of reparations on behalf of its member homebuilders. However, the judge further determined theconstruction allowance applied by PSCo from 1996 through 2002 was neither excessive nor discriminatory, and that HBA failed to meet itsburden 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 UtilityCommission of Texas (PUCT) to retrospectively review the operations of the utility’s electric generation and fuel management activities. Inthis application, SPS filed its reconciliation for electric generation and fuel management activities, totaling approximately $608 million, fromJanuary 2000 through December 2001. In May 2003, a stipulation was approved by the PUCT. The stipulation resolves all issues regardingSPS’ fuel costs and wholesale trading activities through December 2001. SPS will withdraw, without prejudice, its request to share in 10percent of margins from certain wholesale non-firm sales. SPS will recover $1.1 million from Texas customers for the proposed sharing ofwholesale 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 areduction 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 wereapproved 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 2003application, SPS proposed to surcharge $13.2 million and related interest for fuel cost under-recoveries incurred through March 2003. In June2003, the Administrative Law Judge approved the increased fuel factors on an interim basis subject to hearings and completion of the case. Theincreased fuel factors became effective in July 2003. In July 2003, a unanimous settlement was reached adopting the surcharge and providingfor the implementation of an expedited procedure for revising the fixed fuel factors on a semi-annual basis. The surcharge will be collectedfrom customers over an eight-month period. In August 2003, the PUCT approved the settlement and the new proposed fuel cost recoveryprocess 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 newsurcharge 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 decisionon SPS’s fuel proceeding approving SPS utilizing a monthly fuel factor. SPS had been utilizing an annual fuel factor, which had allowedsignificant 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 decisionis 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 inDecember 2002. At the hearing, the MPUC deferred any decision. Instead, the MPUC indicated NSP-

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Minnesota could submit a supplemental or revised application to explain certain recent changes to the proposal and to respond to a number ofissues and questions posed by the MPUC advisory staff. No MPUC order will be issued, and no decision has been made regarding when therevised 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 electrictransmission system to TRANSLink, of which SPS would be a participant. In March 2003, the Southwest Power Pool and the MISO cancelledtheir 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 ofTRANSLink 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 theprobable 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. Kinggenerating plant. The MPCA based its notice of violation in part on an environmental protection agency (EPA) determination that thereplacement 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 handlingsystems is unlikely to require the installation of any emission controls not currently in place on the plant. It may impose additional monitoringrequirements that would not have material impact on NSP-Minnesota or its operations. In addition, the MPCA or EPA may impose civilpenalties 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 tocomments 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 ofcontamination from certain hazardous substances at several sites. In many situations, Xcel Energy’s Utility Subsidiaries are pursuing, or intendto pursue, insurance claims and believe they will recover some portion of these costs through such claims. Additionally, where applicable, XcelEnergy’s Utility Subsidiaries are pursuing, or intend to pursue, recovery from other potentially responsible parties and through the rateregulatory process. To the extent any costs are not recovered through the options listed above, Xcel Energy’s Utility Subsidiaries would berequired 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 havebeen filed as a result of a Dec. 11, 1998 gas explosion that killed four persons (including two employees of NSP-Minnesota), injured severalothers and damaged numerous buildings. Most of the lawsuits name as defendants, NSP-Minnesota, Seren, Cable Constructors, Inc. (CCI) (thecontractor 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, plaintiffsare bringing a similar motion against NSP-Minnesota. NSP-Minnesota maintains that this motion is without merit. Oral arguments aretentatively 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 “alldocuments related to natural gas and electricity trading” (June 2002 subpoenas). Since that time, Xcel Energy has produced documents andother materials in response to numerous, more specific requests under the June 2002 subpoenas. Certain of these requests and Xcel Energy’sresponses 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 industrypublications. Xcel Energy has produced documents and other materials in response to the January 2003 subpoena. Xcel Energy is cooperatingin 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 acomplaint and request for investigation against SPS before the FERC. Golden Spread alleged SPS has violated provisions of a commitment anddispatch service agreement pursuant to which SPS conducts joint dispatch of SPS and Golden Spread resources. SPS filed a complaint againstGolden Spread in which it has alleged that Golden Spread has failed to adhere to certain requirements of the commitment and dispatch serviceagreement. Both complaints were set for hearing and the FERC ordered settlement judge procedures. In May 2003, SPS and Golden Spreadreached a settlement that was approved by the FERC in July 2003. The $5-million accrued costs for payments under the settlement have beendeferred 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.

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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 ofcommitments and contingent liabilities, including those regarding public liability for claims resulting from any nuclear incident and areincorporated herein by reference. Following are unresolved contingencies, which are material to the financial position of Xcel Energy’s UtilitySubsidiaries:

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

NSP-Minnesota

Financing Activity - At June 30, 2003, NSP-Minnesota had approximately $115 million of short-term debt outstanding at a weighted averageinterest 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 ofsecured 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, itswholly 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 Energyholding 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 firstmortgage bonds due 2010. These issuances replaced first mortgage bonds, which matured in March and April of 2003, and helped fund theredemption 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 SECunder the PUHCA limiting the amount of dividends NSP-Minnesota can pay to Xcel Energy. These restrictions include, but may not be limitedto, the following:

NSP-Wisconsin

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

PSCo

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

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

On June 30, 2003, PSCo redeemed its $145 million of 8.75 percent first mortgage bonds due March 1, 2022. The redemption price was100 percent of the principal amount plus a 3.76 percent call premium and accrued interest.

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

• 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.

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

• payment of dividends only from retained earnings.

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

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The redemptions were temporarily funded from the $300 million short-term credit facility, the $350 million revolving credit facility, and cashon 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 Facilityat 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 thePUHCA limiting the amount of dividends PSCo can pay to Xcel Energy. These restrictions include, but may not be limited to, the following:

SPS

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

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

SFAS No. 150 must be applied immediately to instruments entered into or modified after May 31, 2003, and to all other instruments that existbeginning 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 DerivativeInstruments and Hedging Activities” (SFAS No. 133). This statement requires that all derivative instruments as defined by SFAS No. 133 berecorded on the balance sheet at fair value unless exempted. Changes in a derivative instrument’s fair value must be recognized currently inearnings unless the derivative has been designated in a qualifying hedging relationship. The application of hedge accounting allows aderivative instrument’s gains and losses to offset related results of the hedged item in the statement of operations, to the extent effective. SFASNo. 133 requires that the hedging relationship be highly effective and that a company formally designate a hedging relationship to apply hedgeaccounting.

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• maintenance of a minimum equity ratio of 30 percent;



• maintenance of a minimum equity ratio of 30 percent;



• instruments that represent, or are indexed to, an obligation to buy back the issuer’s shares, regardless whether the instrument issettled 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.

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

Cash Flow Hedges

Xcel Energy’s Utility Subsidiaries enter into derivative instruments to manage their exposure to changes in commodity prices. These derivativeinstruments take the form of fixed-price, floating-price or index sales, or purchases and options, such as puts, calls and swaps. These derivativeinstruments are designated as cash flow hedges for accounting purposes, and the changes in the fair value of these instruments are recorded as acomponent 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 thehedged purchase or sales transaction is completed. This could include the physical purchases or sales of electric energy or the use of natural gasto generate electric energy. As of June 30, 2003, NSP-Minnesota, NSP-Wisconsin, PSCo and SPS had no gains or losses accumulated in OtherComprehensive 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 duringthe three months ended June 30, 2003 and 2002, respectively. PSCo recorded gains of $0 and $1.0 million related to ineffectiveness oncommodity 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. Thesederivative instruments are designated as cash flow hedges for accounting purposes, and the change in the fair value of these instruments isrecorded as a component of Other Comprehensive Income. SPS expects to reclassify into earnings through June 2004 net losses from OtherComprehensive 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 recordedas a component of revenue, hedging transactions for fuel used in energy generation are recorded as a component of fuel costs, and hedgingtransactions for interest rate swaps are recorded as a component of interest expense.

Derivatives Not Qualifying for Hedge Accounting

NSP-Minnesota and PSCo have trading operations that enter into derivative instruments. These derivative instruments are accounted for on amark-to-market basis in their respective Consolidated Statements of Operations. All derivative instruments are recorded at the amount of the

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)

* In accordance with SFAS 71 — “Accounting for the Effects of Certain Types of Regulation,” certain costs/benefits have been deferred asthey will be recovered in future periods from customers.

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 0.9After-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)

gain or loss from the transaction within Operating Revenues on the Consolidated Statements of Operations.

Normal Purchases or Normal Sales

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

27

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 tradingoperations qualify for a normal designation.

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

Pending Accounting Change

In April 2003, the Financial Accounting Standards Board (FASB) issued SFAS No. 149 — “Amendment of Statement 133 on DerivativeInstruments 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 clarifiesthe discussion around initial net investment, clarifies when a derivative contains a financing component and amends the definition of anunderlying to conform it to language used in FASB Interpretation No. 45. In addition, SFAS No. 149 also incorporates certain implementationissues 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 prospectivebasis. The Utility Subsidiaries are currently assessing SFAS No. 149, but do not anticipate that it will have a material impact on consolidatedresults 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 SFASNo. 133 Implementation Issue No. C20 as supplemental guidance to SFAS No. 133 Implementation Issue No. C11. The effective date of theImplementation guidance of Issue No. C20 is the first day for the first fiscal quarter beginning after July 10, 2003, which for Xcel Energy’sUtility Subsidiaries is the fourth quarter. The Utility Subsidiaries are currently in the process of reviewing and interpreting this guidance and donot currently anticipate any material adverse financial impact due to the implementation of Issue No. C20 guidance.

7. Segment Information (NSP-Minnesota, NSP-Wisconsin, PSCo and SPS)

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 inthe Electric Utility segment. All Other represents activity of unregulated subsidiaries and other operations of the Utility Subsidiaries.

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NSP-Minnesota

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Electric Natural Gas All Consolidated(Thousands of Dollars) Utility Utility Other Total

Three months ended June 30, 2003Revenues from:

External customers $ 573,481 $ 87,205 $ 4,744 $ 665,430Internal customers 158 1,673 — 1,831

Total revenue 573,639 88,878 4,744 667,261Segment net income $ 23,704 $ (4,829) $ 766 $ 19,641Three months ended June 30, 2002Revenues from:

External customers $ 561,828 $ 90,076 $ 5,231 $ 657,135Internal customers 132 (294) — (162)

Total revenue 561,960 89,782 5,231 656,973Segment net income $ 41,247 $ 2,076 $ (899) $ 42,424Six months ended June 30, 2003Revenues from:

External customers $1,161,603 $419,648 $10,938 $1,592,189Internal customers 347 2,480 — 2,827

Total revenue 1,161,950 422,128 10,938 1,595,016Segment net income $ 48,543 $ 12,988 $ 2,561 $ 64,092Six months ended June 30, 2002Revenues from:

External customers $1,102,647 $277,289 $11,964 $1,391,900Internal customers 295 29 — 324

Total revenue 1,102,942 277,318 11,964 1,392,224Segment net income $ 61,964 $ 12,701 $ 792 $ 75,457

NSP-Wisconsin

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External customers $108,016 $15,814 $ 51 $123,881Internal customers 32 473 — 505

Total revenue 108,048 16,287 51 124,386Segment net income $ 5,482 $ (583) $ (52) $ 4,847Three months ended June 30, 2002Revenues from:


Total revenue 110,189 18,845 25 129,059Segment net income $ 13,043 $ (35) $(590) $ 12,418Six months ended June 30, 2003Revenues from:

External customers $228,503 $79,680 $ 138 $308,321Internal customers 71 1,040 — 1,111

Total revenue 228,574 80,720 138 309,432Segment net income $ 20,848 $ 3,906 $ (53) $ 24,701Six months ended June 30, 2002Revenues from:


Total revenue 227,111 59,239 111 286,461Segment net income $ 27,305 $ 3,870 $(806) $ 30,369

PSCo

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

SPS

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, 2003and 2002, respectively. Revenues from external customers were $528.9 million and $478.6 million for the six months ended June 30, 2003 and2002, respectively.

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External customers $494,721 $161,646 $ 4,722 $ 661,089Internal customers 75 15 — 90

Total revenue 494,796 161,661 4,722 661,179Segment net income $ 21,268 $ 8,951 $ 3,435 $ 33,654Three months ended June 30, 2002Revenues from:

External customers $453,094 $115,550 $ 5,213 $ 573,857Internal customers 69 13 — 82

Total revenue 453,163 115,563 5,213 573,939Segment net income $ 53,443 $ 7,113 $ 1,805 $ 62,361Six months ended June 30, 2003Revenues from:

External customers $987,091 $418,311 $11,370 $1,416,772Internal customers 143 27 — 170

Total revenue 987,234 418,338 11,370 1,416,942Segment net income $ 56,982 $ 41,617 $ 5,142 $ 103,741Six months ended June 30, 2002Revenues from:

External customers $887,092 $432,401 $12,978 $1,332,471Internal customers 120 27 — 147

Total revenue 887,212 432,428 12,978 1,332,618Segment net income $ 85,264 $ 38,013 $ 5,776 $ 129,053

8. Comprehensive Income (NSP-Minnesota, NSP-Wisconsin, PSCo, SPS)

NSP-Minnesota

The components of total comprehensive income are shown below:

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 ofNSP-Minnesota’s marketable securities.

NSP-Wisconsin


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 ofNSP-Wisconsin’s marketable securities.

PSCo



(Millions of Dollars) 2003 2002 2003 2002

Net income $19.6 $42.4 $64.1 $75.5Other comprehensive income:After-tax net unrealized gains (losses) on derivatives accounted for as hedges

(see Note 6) (1.2) 0.7 (1.2) 0.6After-tax net realized (gains) losses on derivative transactions reclassified into

earnings (see Note 6) — (0.1) — (0.3)Regulatory deferral of costs to be recovered 1.2 — 1.2 —

Other comprehensive income — 0.6 — 0.3

Comprehensive income $19.6 $43.0 $64.1 $75.8



Net income $ 4.8 $12.4 $24.7 $30.3Other comprehensive income:After-tax net unrealized gains (losses) on derivatives accounted for as hedges

(see Note 6) (0.2) — (0.2) —Regulatory deferral of costs to be recovered 0.2 — 0.2 —

Other comprehensive income — — — —

Comprehensive income $ 4.8 $12.4 $24.7 $30.3



Net income $33.7 $62.4 $103.7 $129.1Other comprehensive income:After-tax net unrealized gains (losses) on derivatives accounted for as

hedges (see Note 6) (4.9) 0.3 (3.7) 9.0

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After-tax net realized (gains) losses on derivative transactions reclassifiedinto earnings (see Note 6) (0.6) (4.2) (0.2) (5.0)

Regulatory deferral of costs to be recovered 2.9 — 2.9 —

Other comprehensive income (loss) (2.6) (3.9) (1.0) 4.0

Comprehensive income $31.1 $58.5 $102.7 $133.1

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

SPS


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

9. Nuclear Fuel Storage — Prairie Island Legislation (NSP-Minnesota)

On May 29, 2003, the Minnesota Legislature enacted legislation, which will enable NSP-Minnesota to store at least 12 more casks of spent fueloutside the Prairie Island nuclear generating plant, allowing NSP-Minnesota to continue to operate the facility and store spent-fuel there untilthe licenses with the Nuclear Regulatory Commission (NRC) expire in 2013 and 2014. The legislation transfers from the state Legislature tothe MPUC the primary authority concerning future spent-fuel storage issues and allows for additional storage of spent nuclear fuel in the eventthe NRC extends the licenses of Prairie Island and the Monticello Nuclear generating plant and the MPUC grants a certificate of need for suchadditional storage without an affirmative vote from the state Legislature. The legislation requires Xcel Energy to add at least 300 megawatts ofadditional 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’sconservation program expenditures (estimated at $2 million per year) to the University of Minnesota for renewable energy research; and anincrease in funding commitments to the previously-established Renewable Development Fund from $500,000 per installed cask per year to atotal of $16 million per year beginning in 2003. The legislation also designated $10 million in one-time grants to the University of Minnesotafor additional renewable energy research, which is to be funded from commitments already made to the Renewable Development Fund. Nearlyall of the cost increases to NSP-Minnesota from these required payments and funding commitments are expected to be recoverable in customerrates, mainly through existing cost recovery mechanisms. Funding commitments to the Renewable Development Fund would terminate afterthe Prairie Island plant discontinues operation unless the MPUC determines that Xcel Energy failed to make a good faith effort to move thewaste, in which case NSP-Minnesota would have to make payments in the amount of $7.5 million per year.

10. Pension Plan Change and Impacts (SPS)

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

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Net income $ 18.9 $13.4 $ 29.0 $28.2Other comprehensive income:After-tax net unrealized gains (losses) on derivatives accounted for as

hedges (see Note 6) (3.1) 1.2 (2.7) 0.9After-tax net realized (gains) losses on derivative transactions reclassified

into earnings (see Note 6) 0.1 (0.1) 0.1 0.1Minimum pension liability (24.8) — (24.8) —

Other comprehensive income (loss) (27.8) 1.1 (27.4) 1.0

Comprehensive income (loss) $ (8.9) $14.5 $ 1.6 $29.2

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

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS

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

Forward-Looking Information

The following discussion and analysis by management focuses on those factors that had a material effect on the financial condition and resultsof operations of Xcel Energy’s Utility Subsidiaries during the periods presented, or are expected to have a material impact in the future. Itshould 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-lookingstatements that are subject to certain risks, uncertainties and assumptions. Such forward-looking statements are intended to be identified in thisdocument by the words “anticipate,” “estimate,” “expect,” “objective,” “outlook,” “possible,” “potential” and similar expressions. Actualresults may vary materially. Factors that could cause actual results to differ materially include, but are not limited to:

Financial Market Risks

The Utility Subsidiaries of Xcel Energy are exposed to market risks, including changes in commodity prices and interest rates as disclosed inManagement’s Discussion and Analysis in their annual reports on Form 10-K for the year ended Dec. 31, 2002. Commodity price and interestrate 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 nucleardecommissioning are recovered through NSP-Minnesota rates, fluctuations in investment fair value do not affect NSP-Minnesota’sconsolidated 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 salescommitments, physical forward contracts and commodity derivative instruments. VaR for hedges associated with generating assets andcommodity contracts, assuming a five-day holding period for electricity and a two-day holding period for natural gas, for the three monthsended June 30, 2003, is as follows:

• general economic conditions, including their impact on capital expenditures and the ability of Xcel Energy’s Utility Subsidiaries toobtain 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 UtilitySubsidiaries of Xcel Energy;

• unusual weather;

• state, federal and foreign legislative and regulatory initiatives that affect cost and investment recovery, have an impact on ratestructures 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 andExchange Commission (SEC), including Exhibit 99.01 to this Report on Form 10-Q for the quarter ended June 30, 2003.

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

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(1) Comprises transactions for both NSP-Minnesota and PSCo.

Energy Trading and Hedging Activities

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 alimited number of wholesale commodity transactions. The Utility Subsidiaries utilize forward contracts for the purchase and sale of electricityand capacity, over-the-counter swap contracts, exchange-traded natural gas futures and options, transmission contracts, natural gastransportation 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 tomarket in accordance with Emerging Issues Task Force (EITF) 02-3 and SFAS No. 133. Changes in fair value of energy trading contracts thatdo 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:

Trading Contracts

Hedge Contracts

1 — Prices actively quoted or based on actively quoted prices.

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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 FairValue $ 2,181 $ — $ — $ — $ 2,181

Futures/Forwards


NSP-Minnesota 2 $ (1,760) $ — $ — $ — $ (1,760)NSP-Wisconsin 2 (304) — — — (304)PSCo 1 1,047 — — — 1,047

2 (9,230) — — — (9,230)

Total Futures/Forwards FairValue $(10,247) $ — $ — $ — $(10,247)

Options


NSP-Minnesota 2 $(200) $ — $ — $ — $ (200)PSCo 2 (311) 1,980 1,669

Total Futures/Forwards FairValue $(511) $1,980 $ — $ — $1,469

2 — Prices based on models and other valuation methods. These represent the fair value of positions calculated using internal models whendirectly and indirectly quoted external prices or prices derived from external sources are not available. Internal models incorporate the use ofoptions pricing and estimates of the present value of cash flows based upon underlying contractual terms. The models reflect management’sestimates, taking into account observable market prices, estimated market prices in the absence of quoted market prices, the risk-free marketdiscount rate, volatility factors, estimated correlations of energy commodity prices and contractual volumes. Market price uncertainty and otherrisks 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 MANAGEMENT’S DISCUSSION AND ANALYSIS

RESULTS OF OPERATIONS

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

Electric Utility and Commodity Trading Margins

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

NSP-Minnesota has two distinct forms of wholesale sales: short-term wholesale and electric commodity trading. Short-term wholesale refers toelectric sales for resale (excluding sales to retail and municipal customers), which are associated with energy produced from NSP-Minnesota’sgeneration assets or energy and capacity purchased to serve native load. Electric commodity trading refers to the sales for resale activity ofpurchasing 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. Tradingmargins 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

36

Base ElectricElectric Short-Term Commodity Consolidated

(Millions of Dollars) Utility Wholesale Trading Total

Six months ended June 30, 2003Electric utility revenue $1,094 $ 65 $ — $1,159Electric fuel and purchased power (380) (34) — (414)Electric trading revenue — — 28 28Electric 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, 2002Electric utility revenue $1,053 $ 49 $ — $1,102Electric fuel and purchased power (343) (34) — (377)Electric trading revenue — — 18 18Electric 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%

compared with the same period in 2002. The increase in revenues and margins reflects sales growth and the recovery in 2003 of increasedelectric fuel costs and of the 2003 $10-million renewable development fund payments (for which a corresponding charge to depreciationexpense was recorded), through the fuel clause mechanism and interchange agreement with NSP-Wisconsin. These increases were offset by theimpact 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 morefavorable prices on electric sales to other utilities.

Natural Gas Utility Margins

The following table details the change in natural gas revenue and margin. The cost of natural gas tends to vary with changing salesrequirements and unit cost of natural gas purchases. However, due to purchased natural gas cost recovery mechanisms for sales to retailcustomers, 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 thecost of natural gas, which are largely passed on to customers through various rate adjustment clauses. Natural gas margin for the first sixmonths of 2003 increased by $2 million, or 2.2 percent, compared with the first six months of 2002, primarily due to sales growth andfavorable weather in 2003, partially offset by lower margins from transportation services.

Non-Fuel Operating Expense and Other Items

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 outageat 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, comparedwith 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 thecosts of staff consolidations. The charges related to severance costs for utility operations resulting from restaffing plans of several operatingand 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 withthe 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 toreduce 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. Thechange in the effective tax rate between years primarily reflects adjustments to 2002 and year-to-date 2003 state tax accruals recorded in 2003related to updated income apportionment by state, a higher ratio of tax credits to lower income levels and NSP-Minnesota adjustments due tofavorable income tax audit settlements in 2003.

37


(Millions of Dollars) 2003 2002

Natural gas utility revenue $ 422 $ 277Cost of natural gas sold and transported (331) (188)

Natural gas utility margin $ 91 $ 89

NSP-WISCONSIN MANAGEMENT’S DISCUSSION AND ANALYSIS


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.

Electric Utility Margins

The following table details the change in electric revenue and margin. Electric production expenses tend to vary with the quantity of electricityrequired and changes in the unit costs of fuel and purchased power. The fuel and purchased power cost recovery mechanism of the Wisconsinjurisdiction does not allow for complete recovery of all such cost increases and, therefore, dramatic changes in costs or periods of extremetemperatures 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 sixmonths of 2002, primarily due to lower fuel cost recovery through rates and higher unit costs of fuel and purchased power in 2003. Salesgrowth, favorable weather in 2003, and higher billings to NSP-Minnesota for energy delivered and cost allocations partially offset the margindecreases.


The following table details the change in natural gas revenue and margin. The cost of natural gas tends to vary with changing salesrequirements 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 sixmonths of 2002, primarily due to significant increases in the cost of natural gas, which is largely recovered through various purchased naturalgas cost recovery mechanisms. Natural gas margin increased by approximately $3 million, or 18.8 percent, in the first six months of 2003 dueto 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, comparedwith the first six months of 2002, primarily due to higher incentive and other benefit costs partially offset by lower transmission interchangecharges from NSP-Minnesota.

Depreciation and Amortization Expense increased by approximately $1.3 million, or 5.9 percent, in the first six months of 2003, comparedwith 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 thecosts of staff consolidations. The charges related to severance costs for utility operations resulting from restaffing plans of several operating



Total electric utility revenue $ 229 $ 227Electric fuel and purchased power (112) (105)

Total electric utility margin $ 117 $ 122



Natural gas revenue $ 81 $ 59Cost of natural gas sold and transported (62) (43)


and corporate support areas of Xcel Energy.

38

PSCo’s MANAGEMENT’S DISCUSSION AND ANALYSIS


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 Utility and Commodity Trading Margins

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

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

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 sixmonths 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 sixmonths of 2002. The lower base electric margins reflect higher demand costs, which are not recoverable under the IAC, the positive impact ofincentive cost adjustment mechanisms in 2002 and unfavorable weather in 2003. Sales growth and the implementation of an air-qualityimprovement rider for the recovery of investments and related costs to improve air quality in Colorado partially offset the margin decrease in2003.


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

Base ElectricElectric Short-Term Commodity Consolidated

(Millions of Dollars) Utility Wholesale Trading Total

Six months ended June 30, 2003Electric utility revenue $ 955 $ 32 $ — $ 987Electric fuel and purchased power (497) (34) — (531)Electric trading revenue — — 104 104Electric trading costs — — (104) (104)

Gross margin before operating expenses $ 458 $ (2) $ — $ 456

Margin as a percentage of revenue 48.0% (6.3)% —% 41.8%Six months ended June 30, 2002Electric utility revenue $ 860 $ 30 $ — $ 890Electric fuel and purchased power (375) (31) — (406)Electric trading revenue — — 790 790Electric trading costs — — (792) (792)

Gross margin before operating expenses $ 485 $ (1) $ (2) $ 482

Margin as a percentage of revenue 56.4% (3.3)% (0.3)% 28.7%

Natural gas revenue for the first six months of 2003 decreased by approximately $14 million, or 3.3 percent, compared with the first six monthsof 2002, largely due to lower revenues recognized for cost recovery levels approved under the GCA. Natural gas margin for the first six monthsof 2003 decreased by approximately $4 million, or 2.4 percent, compared with the first six months of 2002, primarily due to warmer winterweather, which is less favorable for natural gas sales. GCA recovery was lower in 2003 despite higher natural gas costs in 2003 compared to2002. 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, comparedto 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 comparedwith the first six months of 2002, primarily due to decreased amortization of capitalized software and to depreciation of Arapahoe plant units1and 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 monthsof 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 ratefor 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 effectivetax rate between years is due primarily to a higher ratio of tax credits to lower income levels.

SPS’ MANAGEMENT’S DISCUSSION AND ANALYSIS


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

Electric Utility Margins

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

40



Natural gas revenue $ 418 $ 432Cost of natural gas sold and transported (252) (262)


BaseElectric Short-Term Consolidated

(Millions of Dollars) Utility Wholesale Total

Six months ended June 30, 2003Electric utility revenue $ 525 $ 4 $ 529Electric fuel and purchased power (308) (3) (311)

Gross margin before operating expenses $ 217 $ 1 $ 218

Margin as a percentage of revenue 41.3% 25.0% 41.2%

Base electric utility revenue increased by approximately $49 million, or 10.3 percent, for the first six months of 2003, compared with the firstsix 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 recoveredthrough electric rates, partially offset by the unfavorable effects of lower average temperatures, and lower sharing of commodity tradingmargins with PSCo and NSP-Minnesota through the JOA. The decrease in base electric margin was primarily due to the effects of lowercapacity sales, the settlement of the Texas fuel proceeding, the unfavorable effects of lower average temperatures and lower revenues sharedthrough the JOA.

Non-Fuel Operating Expense and Other Costs

Other Operating and Maintenance Expense increased by approximately $3.1 million, or 4.0 percent, for the first six months of 2003, comparedwith the first six months of 2002. The increase is primarily due to higher incentive and other employee benefit costs partially offset by loweroutage 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 thefirst 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 tocomply with transition to retail competition legislation in Texas and New Mexico. During the first quarter of 2002, SPS entered into asettlement agreement with intervenors regarding the recovery of restructuring costs in Texas, subject to approval by the state regulatorycommission. Based on the settlement agreement, SPS wrote off pretax restructuring costs of approximately $5 million in 2002, which arereported as special charges.

Item 4. CONTROLS AND PROCEDURES

Xcel Energy’s Utility Subsidiaries maintain a set of disclosure controls and procedures designed to ensure that information required to bedisclosed in reports that are filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reportedwithin 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 ChiefExecutive Officers (CEO) and Chief Financial Officers (CFO) of such Utility Subsidiaries, of the effectiveness of our disclosure controls andprocedures, the CEO and CFO of each Utility Subsidiary have concluded that such Utility Subsidiaries’ disclosure controls and procedures areeffective.

No change in the Utility Subsidiaries’ internal control over financial reporting has occurred during the registrant’s most recent fiscal quarterthat 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 factorsthat could significantly affect these controls.

Part II. OTHER INFORMATION

Item 1. Legal ProceedingsIn the normal course of business, various lawsuits and claims have arisen against the Utility Subsidiaries of Xcel Energy. Management, afterconsultation with legal counsel, has recorded an estimate of the probable cost of settlement or other disposition for such matters. See Notes 3and 4 of the Financial Statements in this Form 10-Q for further discussion of legal proceedings, including Regulatory Matters andCommitments 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 newsignificant cases to report against the Utility Subsidiaries of Xcel Energy and there have been no notable changes in the previously reportedproceedings, except as set forth below.

BaseElectric Short-Term Consolidated

(Millions of Dollars) Utility Wholesale Total

Six months ended June 30, 2002Electric utility revenue $ 476 $ 3 $ 479Electric fuel and purchased power (253) (3) (256)

Gross margin before operating expenses $ 223 $— $ 223

Margin as a percentage of revenue 46.8% —% 46.6%

NSP-Minnesota

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

NSP-Wisconsin

On Sept. 25, 2000, NSP-Wisconsin was served with a complaint in Eau Claire County Circuit Court, Wisconsin, on behalf of Claron and JaniceStubrud. The complaint alleged that stray voltage from NSP-Wisconsin’s system harmed their dairy herd resulting in lost milk production, lostprofits and income, property damage, and injury to their dairy herd. The complaint also alleged that NSP-Wisconsin acted willfully andwantonly, entitling plaintiffs to treble damages. The plaintiffs alleged farm damages of approximately $3.8 million, $2.7 million of whichrepresents prejudgment interest. On March 28, 2003, the trial court granted partial summary judgment to NSP-Wisconsin and dismissedplaintiffs’ claims for strict products liability, trespass, treble damages, and prejudgment interest. Plaintiffs’ negligence and nuisance claims areexpected 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 byDennis and Kathy Weber, served NSP-Wisconsin with a third-party summons and complaint. The Webers purchased a dairy farm from theNigons in June 2000, and allege that the Nigons misrepresented the existence of stray voltage problems at the farm. The Nigons have joinedNSP-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’srepresentations regarding stray voltage levels at the farm. NSP-Wisconsin is not aware of the amount of damages being claimed by the Webers.

SPS

On July 24, 1995, Lamb County Electric Cooperative, Inc. (LCEC) petitioned the PUCT for a cease and desist order against SPS. LCECalleged that SPS had been unlawfully providing service to oil field customers and their facilities in LCEC’s singly certificated area. LambCounty has also sued SPS in Texas state court. In April 2003, the PUCT approved a recommended proposal for decision. SPS defended itsservice 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 newcustomers. The PUCT decided that SPS was authorized to serve the oil field operations and denied LCEC’s request for a cease and desist order.

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

The following Exhibits are filed with this report:

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4.01 Credit Agreement dated May 16, 2003, among NSP-Minnesota, Wells Fargo Bank N.A., Bank One N.A. andother financial institutions.

(b) Reports on Form 8-K

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 ofthis report:

NSP-Minnesota

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.

43

4.02 Credit Agreement dated May 16, 2003 among PSCo, Wells Fargo N.A., Bank One N.A. and other financialinstitutions.

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-OxleyAct of 2002 — NSP-Minnesota.

32.02 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-OxleyAct of 2002 — NSP-Wisconsin.

32.03 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-OxleyAct of 2002 — PSCo.

32.04 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-OxleyAct of 2002 — SPS.

99.01 Statement pursuant to Private Securities Litigation Reform Act.

NORTHERN STATES POWER CO. (A MINNESOTA CORPORATION) SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by theundersigned thereunto duly authorized on Aug. 14, 2003.

44

Northern States Power Co. (a Minnesota corporation)

(Registrant)

/s/ DAVID E. RIPKA

David E. RipkaVice President and Controller

/s/ RICHARD C. KELLY

Richard C. KellyVice President and Chief Financial Officer

NORTHERN STATES POWER CO. (A WISCONSIN CORPORATION) SIGNATURES


45

Northern States Power Co. (a Wisconsin corporation)

(Registrant)

/s/ DAVID E. RIPKA




PUBLIC SERVICE CO. OF COLORADO SIGNATURES


46

Public Service Co. of Colorado

(Registrant)

/s/ DAVID E. RIPKA




SOUTHWESTERN PUBLIC SERVICE CO. SIGNATURES


47

Southwestern Public Service Co.

(Registrant)

/s/ DAVID E. RIPKA




EXHIBIT 4.01

CREDIT AGREEMENT

among

NORTHERN STATES POWER COMPANY;

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Administrative Agent;

BANK ONE, NA,

as Syndication Agent;

and

THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO

Closing Date: May 16, 2003

$275,000,000 Revolving Credit Facility

WELLS FARGO BANK, NATIONAL ASSOCIATIONand

BANC ONE CAPITAL MARKETS, INC.,Co-Lead Arrangers

TABLE OF CONTENTS

ARTICLE I DefinitionsSection 1.1 DefinitionsSection 1.2 Times

ARTICLE II Amount and Terms of the Loans and Letters of CreditSection 2.1 Committed AdvancesSection 2.2 Procedure for Making AdvancesSection 2.3 InterestSection 2.4 Limitation of OutstandingsSection 2.5 Principal and Interest Payment DatesSection 2.6 Level Status and MarginsSection 2.7 Letters of CreditSection 2.8 Facility and Utilization FeesSection 2.9 Other FeesSection 2.10 Termination or Reduction of the CommitmentSection 2.11 Voluntary PrepaymentsSection 2.12 Computation of Interest and FeesSection 2.13 PaymentsSection 2.14 Payment on Nonbusiness DaysSection 2.15 Use of Advances and Letters of CreditSection 2.16 Yield Protection; Funding IndemnificationSection 2.17 TaxesSection 2.18 Capital AdequacySection 2.19 Extension of Termination DateSection 2.20 Mandatory Assignment of Bank’s Interest

ARTICLE III Conditions PrecedentSection 3.1 Conditions to EffectivenessSection 3.2 Initial Conditions Precedent

ARTICLE IV Representations and WarrantiesSection 4.1 Corporate Existence and PowerSection 4.2 Authorization of Borrowing; No Conflict as to Law or AgreementsSection 4.3 Legal AgreementsSection 4.4 SubsidiariesSection 4.5 Financial ConditionSection 4.6 Adverse ChangeSection 4.7 LitigationSection 4.8 Hazardous SubstancesSection 4.9 Regulation USection 4.10 TaxesSection 4.11 Burdensome RestrictionsSection 4.12 Titles and LiensSection 4.13 ERISASection 4.14 Securities Law MattersSection 4.15 Investment Company ActSection 4.16 Public Utility Holding Company ActSection 4.17 IndentureSection 4.18 Authentication of BondsSection 4.19 SolvencySection 4.20 Swap ObligationsSection 4.21 InsuranceSection 4.22 Compliance With Laws

ARTICLE V Affirmative Covenants of the BorrowerSection 5.1 Financial StatementsSection 5.2 Books and Records; Inspection and ExaminationSection 5.3 Compliance with LawsSection 5.4 Payment of Taxes and Other ClaimsSection 5.5 Maintenance of PropertiesSection 5.6 InsuranceSection 5.7 Preservation of Corporate ExistenceSection 5.8 Delivery of InformationSection 5.9 Use of Proceeds

ARTICLE VI Negative CovenantsSection 6.1 LiensSection 6.2 Dividends

Section 6.3 Sale of AssetsSection 6.4 Consolidation and MergerSection 6.5 Hazardous SubstancesSection 6.6 Restrictions on Nature of BusinessSection 6.7 Transactions with AffiliatesSection 6.8 Ratio of Funded Debt to Total CapitalSection 6.9 Interest Coverage RatioSection 6.10 Securities Laws

ARTICLE VII Events of Default, Rights and RemediesSection 7.1 Events of DefaultSection 7.2 Rights and RemediesSection 7.3 Pledge of Cash Collateral Account

ARTICLE VIII The AgentSection 8.1 AuthorizationSection 8.2 Distribution of Payments and ProceedsSection 8.3 ExpensesSection 8.4 Payments Received Directly by BanksSection 8.5 IndemnificationSection 8.6 ExculpationSection 8.7 Agent and AffiliatesSection 8.8 Credit InvestigationSection 8.9 ResignationSection 8.10 AssignmentsSection 8.11 ParticipationsSection 8.12 Limitation on Assignments and ParticipationsSection 8.13 Disclosure of InformationSection 8.14 TitlesSection 8.15 Agent not Offering Bonds

ARTICLE IX MiscellaneousSection 9.1 No Waiver; Cumulative RemediesSection 9.2 Amendments, EtcSection 9.3 NoticeSection 9.4 Costs and ExpensesSection 9.5 Indemnification by BorrowerSection 9.6 Execution in CounterpartsSection 9.7 Binding Effect, AssignmentSection 9.8 Governing LawSection 9.9 Severability of ProvisionsSection 9.10 Consent to JurisdictionSection 9.11 Waiver of Jury TrialSection 9.12 Prior AgreementsSection 9.13 General ReleaseSection 9.14 Recalculation of Covenants Following Accounting Practices ChangeSection 9.15 HeadingsSection 9.16 Nonliability of Banks

EX-4.01 Credit AgreementEX-4.02 Credit AgreementEX-4.03 Credit AgreementEX-4.04 Credit AgreementEX-31.01 Certification to Sec. 302 - NSP-MinnesotaEX-31.02 Certification to Sec. 302 - NSP-WisconsinEX-31.03 Certification to Sec. 302 - PSCoEX-31.04 Certification to Sec. 302 - SPSEX-32.01 Certification to Sec. 906 - NSP-MinnesotaEX-32.02 Certification to Sec. 906 - NSP-WisconsinEX-32.03 Certification to Sec. 906 - PSCoEX-32.04 Certification to Sec. 906 - SPSEX-99.01 Statement-Securities Litigation Reform

TABLE OF CONTENTS

ARTICLE I DEFINITIONS 1Section 1.1 Definitions 1Section 1.2 Times 13

ARTICLE II AMOUNT AND TERMS OF THE LOANS AND LETTERS OF CREDIT 13Section 2.1 Committed Advances 13Section 2.2 Procedure for Making Advances 13Section 2.3 Interest 14Section 2.4 Limitation of Outstandings 15Section 2.5 Principal and Interest Payment Dates 16Section 2.6 Level Status and Margins 16Section 2.7 Letters of Credit 17Section 2.8 Facility and Utilization Fees 19Section 2.9 Other Fees 20Section 2.10 Termination or Reduction of the Commitment 20Section 2.11 Voluntary Prepayments 20Section 2.12 Computation of Interest and Fees 20Section 2.13 Payments 20Section 2.14 Payment on Nonbusiness Days 21Section 2.15 Use of Advances and Letters of Credit 21Section 2.16 Yield Protection; Funding Indemnification 21Section 2.17 Taxes. 22Section 2.18 Capital Adequacy 24Section 2.19 Extension of Termination Date 25Section 2.20 Mandatory Assignment of Bank’s Interest 26

ARTICLE III CONDITIONS PRECEDENT 26Section 3.1 Initial Conditions Precedent 27Section 3.2 Conditions Precedent to All Advances and Letters of Credit 28

ARTICLE IV REPRESENTATIONS AND WARRANTIES 28Section 4.1 Corporate Existence and Power 28Section 4.2 Authorization of Borrowing; No Conflict as to Law or Agreements 28Section 4.3 Legal Agreements 29Section 4.4 Subsidiaries 30Section 4.5 Financial Condition 30Section 4.6 Adverse Change 30Section 4.7 Litigation 30Section 4.8 Hazardous Substances 30Section 4.9 Regulation U 31Section 4.10 Taxes 31Section 4.11 Burdensome Restrictions 31Section 4.12 Titles and Liens 31Section 4.13 ERISA 32

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Section 4.14 Securities Law Matters 32Section 4.15 Investment Company Act 33Section 4.16 Public Utility Holding Company Act 33Section 4.17 Indenture 33Section 4.18 Authentication of Bonds 34Section 4.19 Solvency 34Section 4.20 Swap Obligations 34Section 4.21 Insurance 34Section 4.22 Compliance With Laws 34

ARTICLE V AFFIRMATIVE COVENANTS OF THE BORROWER 34Section 5.1 Financial Statements 34Section 5.2 Books and Records; Inspection and Examination 36Section 5.3 Compliance with Laws 37Section 5.4 Payment of Taxes and Other Claims 37Section 5.5 Maintenance of Properties 37Section 5.6 Insurance 37Section 5.7 Preservation of Corporate Existence 37Section 5.8 Delivery of Information 38Section 5.9 Use of Proceeds 38

ARTICLE VI NEGATIVE COVENANTS 38Section 6.1 Liens 38Section 6.2 Dividends 40Section 6.3 Sale of Assets 40Section 6.4 Consolidation and Merger 40Section 6.5 Hazardous Substances 41Section 6.6 Restrictions on Nature of Business 41Section 6.7 Transactions with Affiliates 41Section 6.8 Ratio of Funded Debt to Total Capital 42Section 6.9 Interest Coverage Ratio 42Section 6.10 Securities Laws 42

ARTICLE VII EVENTS OF DEFAULT, RIGHTS AND REMEDIES 42Section 7.1 Events of Default 42Section 7.2 Rights and Remedies 45Section 7.3 Pledge of Cash Collateral Account 46

ARTICLE VIII THE AGENT 47Section 8.1 Authorization 47Section 8.2 Distribution of Payments and Proceeds 47Section 8.3 Expenses 48Section 8.4 Payments Received Directly by Banks 48Section 8.5 Indemnification 48Section 8.6 Exculpation 49Section 8.7 Agent and Affiliates 49Section 8.8 Credit Investigation 50

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Section 8.9 Resignation 50Section 8.10 Assignments 50Section 8.11 Participations 54Section 8.12 Limitation on Assignments and Participations 54Section 8.13 Disclosure of Information 54Section 8.14 Titles 55Section 8.15 Agent not Offering Bonds 55

ARTICLE IX MISCELLANEOUS 55Section 9.1 No Waiver; Cumulative Remedies 55Section 9.2 Amendments, Etc. 56Section 9.3 Notice 57Section 9.4 Costs and Expenses 57Section 9.5 Indemnification by Borrower 57Section 9.6 Execution in Counterparts 58Section 9.7 Binding Effect, Assignment 58Section 9.8 Governing Law 58Section 9.9 Severability of Provisions 58Section 9.10 Consent to Jurisdiction 58Section 9.11 Waiver of Jury Trial 59Section 9.12 Prior Agreements 59Section 9.13 General Release 59Section 9.14 Recalculation of Covenants Following Accounting Practices Change 59Section 9.15 Headings 59Section 9.16 Nonliability of Banks 60

CREDIT AGREEMENT

Dated as of May 16, 2003

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

ARTICLE IDefinitions

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 thisArticle 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 thestandards 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 orconsolidated with the Borrower or any Subsidiary of the Borrower after the date hereof; or any Person with respect to whom all or asubstantial 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 commoncontrol with such Person. A Person shall be deemed to control another Person if the controlling Person owns 25% or more of the votingsecurities (or other ownership interests) of the controlled Person or possesses, directly or indirectly, the power to direct or cause thedirection 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.

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“Agreement” means this Credit Agreement, as it may be amended, modified or restated from time to time in accordance withSection 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 Parentauthorizing and/or restricting the indebtedness that may be created from time to time hereunder (whether on account of Advances, Lettersof 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 thatbecomes 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 Banksseverally.

“Business Day” means (i) with respect to any borrowing, payment or rate selection of Eurodollar Rate Fundings, a day (other than aSaturday or Sunday) on which banks generally are open in Minnesota and New York for the conduct of substantially all of theircommercial lending activities, interbank wire transfers can be made on the Fedwire system and dealings in United States dollars are carriedon in the London interbank market and (ii) for all other purposes, a day (other than a Saturday or Sunday) on which banks generally areopen in Minnesota and New York for the conduct of substantially all of their commercial lending activities and interbank wire transferscan 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 toSection 2.7(g) or Section 7.2(c).

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“Change of Control” means, with respect to any corporation, either (i) the acquisition by any “person” or “group” (as those terms areused 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, exceptthat a Person shall be deemed to have beneficial ownership of all securities that such Person has the right to acquire, whether such right isexercisable immediately or only after the passage of time), directly or indirectly, of 25% or more of the then-outstanding voting capitalstock of such corporation; or (ii) a change in the composition of the board of directors of such corporation or any corporate parent of suchcorporation 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 officeprior to such date, and (ii) those members of the board of directors of the applicable corporation who assumed office after such date andwhose appointment or nomination for election by that corporation’s shareholders was approved by a vote of at least 50% of the directors ofsuch 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 Creditpursuant 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 anyAssignment Certificate, unless said amount is reduced pursuant to Section 2.10 or 2.19, in which event it means the amount to which saidamount is reduced.

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

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

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“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 inaccordance 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 thisdefinition (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 acombined capital and surplus of at least $250,000,000; (b) a commercial bank organized under the laws of any other country which is amember of the Organization for Economic Cooperation and Development, or a political subdivision of any such country, and having acombined capital and surplus of at least $250,000,000, provided that such bank is acting through a branch or agency located in the UnitedStates; 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 etseq., 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., theClean 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 fromtime to time amended.

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“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 controlledgroup of corporations or a controlled group of trades or businesses, as described in sections 414(b) and 414(c), respectively, of the InternalRevenue 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 ofapproximately 11:00 a.m. London time on the date two Business Days before the commencement of such Interest Period as the rate atwhich dollar deposits in immediately available funds are offered on the London interbank dollar market; provided, however, that if suchpage is no longer available, the Eurodollar Base Rate shall be determined by the Agent on the basis of a substantially comparable sourceselected 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 approximatelyequal to the amount for which a Eurodollar Rate has been requested and maturing at the end of such Interest Period, by (b) a percentageequal to 100% minus the Federal Reserve System reserve requirement (expressed as a percentage) imposed under Regulation D onEurocurrency 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 EurodollarRate.

“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 federalfunds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published for such day by theFederal 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 quotationsfor such day for such transactions received by the Agent from three federal funds brokers of recognized standing selected by it, it beingunderstood that the Federal

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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 bepaid 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 theBorrower (by assignment from the Parent) and the Trustee, as previously amended and supplemented (including by the Restated Indentureand 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 theBase 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 FloatingRate.

“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 andunpaid balance of the purchase price owing by such Person on account of any assets or services purchased (other than trade payables andother accrued liabilities incurred in the ordinary course of business that are not overdue by more than 180 days unless being contested ingood 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 onany 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 (otherthan 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 andbankers’ acceptances issued for the account of such Person, and without duplication, all drafts drawn thereunder (other than such letters ofcredit, bankers’ acceptances and drafts for the deferred purchase price of assets or services to the extent such purchase price is excludedfrom clause (ii) above); (viii) net obligations of such Person under Swap

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Contracts which constitute interest rate agreements or currency agreements; (ix) guaranty obligations of such Person with respect toindebtedness for borrowed money of another Person (including Affiliates); (x) Off-Balance Sheet Liabilities; and (xi) in the case of theBorrower, any amounts due under the TOPrS; provided, however, that in no event shall any calculation of Funded Debt of the Borrowerinclude (y) deferred taxes, or (z) so long as the Bonds are held as security under the Pledge Agreement and have not been sold or otherwisedisposed 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 theaccounting practices applied in the financial statements of the Borrower referred to in Section 4.5, except for changes concurred in byBorrower’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 orhazardous 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 periodending 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 andits Subsidiaries (determined on a consolidated basis) for such period, including but not limited to the interest portion of any CapitalizedLease and interest expenses associated with the TOPrS; provided, however, that the foregoing shall be adjusted to reflect only the neteffect of any interest rate swap, interest hedging transaction or other similar arrangement entered into by the Borrower or any Subsidiary toreduce 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 monthsbeginning 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.

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“L/C Amount” means the sum of (i) the aggregate face amount of any issued and outstanding Letters of Credit, plus (ii) amounts drawnunder 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 similaragreement.

“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 theBorrower 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 LoanDocuments which the Borrower may now or at any time hereafter owe to any Bank or the Agent, whether such debt, liability or obligationnow exists or is hereafter created or incurred, whether it is direct or indirect, due or to become due, absolute or contingent, primary orsecondary, liquidated or unliquidated, or sole, joint, several or joint and several, including but not limited to principal of and interest on theNotes 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 ornotes 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.

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“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, thearticles 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 aggregateCommitment 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 extensionsof 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 respectto any Bank that is a fund which invests in bank loans and similar extensions of credit, any other fund that invests in bank loans andsimilar 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 CommitmentAmounts of all of the Banks. For purposes of this definition only, following the Commitment Termination Date, each Bank’s CommitmentAmount 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 orarising under Swap Contracts, provided that each of the following criteria is satisfied: (a) such obligations are (or were) entered into bysuch 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 inconjunction 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

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any provision (“walk-away” provision) exonerating the non-defaulting party from its obligations to make payments on outstandingtransactions 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 Affiliateand 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 theBonds and all proceeds thereof to secure the payment of the Notes and all other present and future obligations of the Borrower to the Agentand the Banks arising under or pursuant to this Agreement, together with all amendments, modifications and restatements of such SecurityAgreement.

“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’sbase rates and serves as the basis upon which effective rates of interest are calculated for those loans making reference thereto, and isevidenced 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, TheBank of New York and U.S. Bank National Association, as Co-Agents thereunder; and the other “Banks” named therein, together with allamendments, modifications and restatements thereof.

“Reportable Event” means (i) a “reportable event,” described in Section 4043 of ERISA and the regulations issued thereunder, inrespect 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 anotice is required to be filed under Section 4041 of ERISA, (iv) any other event or condition that could reasonably be expected toconstitute grounds for termination by the Pension Benefit Guaranty Corporation of, or the appointment by the appropriate United StatesDistrict Court of a trustee to administer, any Plan, or (v) a complete or partial withdrawal from a Multiemployer Plan as described inSections 4203 and 4205 of ERISA.

“Required Banks” means one or more Banks (including, where relevant, Additional Banks) having an aggregate Percentage greater than50%.

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

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“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 shallsell or otherwise transfer any real or personal property and concurrently therewith lease, or repurchase under an extended purchasecontract, 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 Personis (A) greater than the total liabilities (including contingent liabilities) of such Person, and (B) not less than the amount that will berequired to pay the probable liabilities on such Person’s debts as they come due, considering all financing alternatives and potential assetsales reasonably available to such Person; (ii) such Person’s capital is not unreasonably small in relation to its business or anycontemplated or undertaken transaction; (iii) such Person does not intend to incur, or believe (nor should it reasonably believe) that it willincur, debts beyond its ability to pay such debts as they become due; and (iv) such Person is “solvent” within the meaning given that termand similar terms under applicable laws relating to fraudulent transfers and conveyances. For purposes of this definition, the amount of anycontingent 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 powerunder ordinary circumstances to elect a majority of the board of directors of such corporation, irrespective of whether or not at the timestock of any other class or classes shall have or might have voting power by reason of the happening of any contingency, is at the timedirectly 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 theBorrower and one or more other Subsidiaries, or by one or more other Subsidiaries, and (iii) any limited liability company or other form ofbusiness organization the effective control of which is held by the Borrower, the Borrower and one or more other Subsidiaries, or by one ormore other Subsidiaries.

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“Swap Contracts” means any agreement, whether or not in writing, relating to any transaction that is a rate swap, basis swap, forwardrate 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 optionor any other similar transaction (including any option to enter into any of the foregoing) or any combination of the foregoing, and, unlessthe 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 taxretention lease or (ii) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet ofsuch Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as indebtedness of such Person (withoutregard to accounting treatment). The amount of Synthetic Lease Obligations of any Person under any such lease or agreement shall be theamount which would be shown as a liability on a balance sheet of such Person prepared in accordance with GAAP if such lease oragreement were accounted for as a Capitalized Lease.

“Tangible Net Worth” means shareholders’ equity (including preferred stock), less intangible assets included in calculating suchshareholders’ equity, all determined in accordance with GAAP. For purposes of the foregoing calculation, intangible assets shall includebut not be limited to the value of patents, trademarks, trade names, copyrights, licenses, premiums paid on indebtedness, good will, prepaidexpenses, deferred charges and treasury stock. Tangible Net Worth with respect to the Borrower shall at all times be determined withrespect 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 throughNSP 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 retainedearnings and which excludes the TOPrS to the extent included in Funded Debt, and (B) Funded Debt, all determined with respect to theBorrower 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.

Section 1.2 Times

All references to times of day in this Agreement shall be references to Minneapolis, Minnesota 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 anyAccounting Practices Change, then the Borrower’s compliance with the covenants set forth in Sections 6.8 and 6.9 shall be determined on thebasis of generally accepted accounting principles in effect immediately before giving effect to the Accounting Practices Change, until suchcovenants are amended in a manner satisfactory to the Borrower and the Required Banks in accordance with Section 9.14 hereof.

ARTICLE IIAmount and Terms of the Loans and Letters of Credit

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 Borrowerfrom time to time during the period from the date hereof to and including the Commitment Termination Date in an aggregate amount not toexceed 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 thisSection 2.1. The Advances made by each Bank under this Section 2.1 shall be evidenced by and repayable with interest in accordance with asingle promissory note of the Borrower (each, a “Note”) payable to the order of that Bank, substantially in the form of Exhibit B hereto, datedthe 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.

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 personpurporting to be authorized to request Advances on behalf of the Borrower. Each such notice or request shall specify (i) the date of therequested Borrowing, (ii) the amount thereof, and (iii) if any portion of such Borrowing will bear interest at a Eurodollar Rate, the InterestPeriod selected by the Borrower with

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“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.

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 occuror, 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 whichsuch Borrowing is to occur. Concurrent with any such notice or request, the Borrower shall deliver to the Agent in writing (which may be byfacsimile transmission) the certificate required by Section 3.3(b). Upon receiving a request for a Borrowing under Section 2.1, and in any eventnot 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 EurodollarRate, 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 theInterest Period selected by the Borrower. Upon fulfillment of the applicable conditions set forth in Article III, each Bank shall remit itsPercentage of the requested Borrowing to the Agent in immediately available funds. So long as a Bank receives notice of the requestedBorrowing 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 aEurodollar Rate, the close of business on the day that the request is received, that Bank will make its Advance with respect to that Borrowingavailable 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 suchnotice. Prior to the close of business on the day of the requested Borrowing, the Agent shall disburse such funds by crediting the same to theBorrower’s demand deposit account maintained with the Agent or in such other manner as the Agent and the Borrower may from time to timeagree. The Agent shall have no obligation to disburse the requested Borrowing if any condition set forth in Article III has not been satisfied onthe 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 deliveringan appropriate confirmation certificate to the Agent. However, the Borrower shall be obligated to repay all Advances for which it actuallyreceived the moneys (including but not limited to all Advances the proceeds of which were deposited in any account of the Borrower) or inrespect of which the Agent reasonably believed the person requesting the same to be authorized to do so, notwithstanding the fact that theperson requesting the same was not in fact authorized so to do. Any request for an Advance shall be deemed to be a representation that thestatements set forth in Section 3.3 are correct.

Section 2.3 Interest

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(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 theFloating Rate.

Section 2.4 Limitation of Outstandings.

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

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(c) At the election of the Borrower, which may be exercised from time to time, the Borrower may request in writing or by telephonethat a Eurodollar Rate be applicable for the portion of the outstanding principal balance of the Notes (including any Advance requested orto be requested) and for the Interest Period indicated by the Borrower in its request. The portion of the outstanding balance of the Notes forwhich 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 theapplicable Interest Period, either (1) bear interest at the Floating Rate, or (2) bear interest at a Eurodollar Rate with respect to which theInterest Period expires on such first day. In no event may the Borrower select an Interest Period extending beyond the CommitmentTermination Date. A request for a Eurodollar Rate (i) must be received by the Agent before 10:00 a.m. on the day three Business Daysbefore the first day of the proposed Interest Period (and the Agent shall give the Banks prompt notice thereof), and (ii) may not berescinded by the Borrower after such request has been made. Subject to the terms and conditions set forth herein, the applicable EurodollarRate shall (subject to fluctuations in the applicable Eurodollar Rate Margin) be the interest rate applicable for the proposed Interest Periodto the portion of the outstanding principal balance of the Note to which the Eurodollar Rate request related (and the remaining part of theprincipal balance of the Note, if any, shall continue to bear interest at the rate or rates previously applicable to such amounts). At thetermination of such Interest Period, the interest rate applicable to the portion of the principal balance of the Note to which the EurodollarRate request was applicable shall revert to the Floating Rate unless a new Eurodollar Rate request is made by the Borrower in accordancewith this Agreement. Notwithstanding anything to the contrary in this Section, (i) the Agent shall have no obligation to permit theapplication of a Eurodollar Rate for any Interest Period if any Bank, in its sole discretion, determines that deposits in amounts equal to therequested amount and maturing at the end of the proposed Interest Period are not readily available to such Bank from major banks in theLondon interbank market and (ii) without the consent of the Required Banks, the Agent will not permit the application of a Eurodollar Ratefor 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 EurodollarRate, the applicable Eurodollar Rate and the date on which the Interest Period applicable to such Eurodollar Rate expires.

Section 2.5 Principal and Interest Payment Dates.

Section 2.6 Level Status and Margins.

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(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 onthe 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 thebeginning of the Interest Period and after each such interest payment date thereafter, and on the last day of the Interest Period and on theCommitment 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&Pand Moody’s, in accordance with the following table:

Level I Level II Level III Level IV Level V

S&P A- or better BBB+ or better, butless than A-

BBB or better, butless than BBB+

BBB- or better, butless than BBB

Less than BBB-

Moody’s A3 or better Baa1 or better, but lessthan A3

Baa2 or better, but lessthan Baa1

Baa3 or better, but lessthan Baa2

Less than Baa3

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 theapplicable columns are adjacent to each other, the Level Status in effect shall be based on the rightmost of the applicable columns, (ii) ifthe applicable columns are separated by a single column, the Level Status in effect shall be based on the column between those twocolumns, and (iii) if the applicable columns are separated by two or more columns, the Level Status in effect shall be based on thecolumn 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 LevelStatus in the table in paragraph (a) shall be adjusted in such manner as the Required Banks may reasonably determine tocorrespond with the applicable

Section 2.7 Letters of Credit.

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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 inparagraph (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 thebasis of the Borrower’s Level Status, in accordance with the following table:


Floating Rate Margin 0% 0% 0% 0.125% 0.650%Eurodollar Rate Margin 0.750% 0.850% 0.950% 1.125% 1.650%Facility Fee Rate 0.125% 0.150% 0.175% 0.250% 0.350%

(d) Upon the occurrence of any Event of Default, and so long as such Event of Default continues without written waiver thereof by theBanks, a default increment equal to 200 basis points (2.00%) shall be added to the Floating Rate Margin, Eurodollar Rate Margin andFacility Fee Rate. Inclusion of such default increment in calculating the Floating Rate Margin, Eurodollar Rate Margin and Facility FeeRate shall not be deemed a waiver or excuse of any such Event of Default.

(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 exceedthe aggregate Commitment Amounts, or (ii) the face amount of that Letter of Credit, together with the then-applicable L/C Amount, wouldexceed the L/C Sublimit.

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(b) At least three days prior to the issuance of each Letter of Credit, the Borrower shall execute a letter of credit application andreimbursement 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, noLetter 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 anannual rate equal to the Eurodollar Rate Margin applied to the face amount of that Letter of Credit outstanding from time to time, from andincluding the date of issuance of that Letter of Credit until the expiration thereof, payable in arrears on the last day of each calendar quarterand on the Commitment Termination Date and, if later, the expiration date of such Letter of Credit. In addition, the Borrower shall pay orreimburse the Issuing Bank for such additional fees as are specified in the Fee Letters and for such normal and customary costs andexpenses as are incurred or charged by the Issuing Bank in issuing, effecting payment under, amending or otherwise administering anyLetter 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 isnot earlier made, on the Commitment Termination Date), together with interest at the Floating Rate from the date that such draft is paid bythe Issuing Bank until payment of such amount in full. The Issuing Bank shall provide notice to the Borrower of payment of the draftwithin one Business Day of such payment. The Issuing Bank may (at its option) charge any deposit account maintained by the Borrowerwith 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 faceamount of that Letter of Credit. If the Issuing Bank makes any payment pursuant to the terms of any Letter of Credit and is not promptlyreimbursed, the Issuing Bank may request that each other Bank pay such Bank’s Percentage of the unreimbursed amount. Upon receipt ofany such request prior to 1:30 p.m. on a Business Day, the recipient shall be unconditionally and irrevocably obligated to pay itsPercentage of the unreimbursed amount to the Issuing Bank in immediately available funds prior to 3:00 p.m. on such date. Noticesreceived 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 whendue hereunder, interest on the unpaid amount shall accrue from and including the date of the Issuing Bank’s request to the date of paymentat the Federal Funds Rate. After making any payment to the Issuing Bank under this subsection in connection with a particular Letter ofCredit, a Bank shall be entitled to participate to the extent of its Percentage in the related reimbursements received by the Issuing Bankfrom the Borrower or otherwise. Upon receiving any such reimbursement, the Issuing Bank will distribute

Section 2.8 Facility and Utilization Fees.

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to each Bank its Percentage of such reimbursement. At the option of the Agent, payment by the Banks hereunder may be deemed anAdvance 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 BusinessDay preceding the Commitment Termination Date, an amount equal to the then-applicable L/C Amount, less the balance (if any) thenoutstanding 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 FacilityFee Rate applied to the aggregate amount of the Commitments outstanding hereunder from the Effective Date through the CommitmentTermination 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-applicableUtilization Fee Rate applied to the average daily Outstandings. The Utilization Fee Rate in effect on any day shall be an annual ratedetermined on the basis of the Outstandings Percentage and Level Status on that day, in accordance with the following table:

OutstandingsPercentage/ 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 facility fee and utilization fee set forth in this Section shall be due and payable quarterly in arrears on the last day of eachMarch, June, September and December during the term of the Commitments. Any facility and utilization fees remaining unpaid on theCommitment Termination Date shall be due and payable on that date.

Section 2.9 Other Fees.

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’sown account and not for the benefit of the Banks, certain additional fees in the amounts set forth in the Fee Letters.

Section 2.10 Termination or Reduction of the Commitment.

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 promptlynotify the Banks) permanently to terminate the Commitments in whole or permanently to reduce the Commitment Amounts in part, withoutpenalty 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 CommitmentAmounts shall be pro rata as to each Bank in accordance with that Bank’s Percentage, and (iv) no reduction shall reduce the CommitmentAmounts to an amount less than the sum of the aggregate Advances and the L/C Amount outstanding (after giving effect to any prepayments ofAdvances to be made on or prior to the effective date of such reduction) at the time.

Section 2.11 Voluntary Prepayments.

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) anyprepayment by the Borrower hereunder shall be applied pro rata to the prepayment of each Bank’s Note, (ii) any prepayment of the full amountof Notes shall include accrued interest thereon, (iii) any prepayment of any portion of the principal balance of the Notes which, at the time ofsuch prepayment, bears interest at a Eurodollar Rate shall be accompanied by compensation as specified in Section 2.16(b), and (iv) eachprepayment 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 noprepayment of any portion of the Notes bearing interest at a Eurodollar Rate may be made in a principal amount less than $5,000,000. Eachpartial 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.

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 or366 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 yearof 360 days.

Section 2.13 Payments.

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 immediatelyavailable funds, without setoff or

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counterclaim. Payments received after noon on any day shall be deemed received on the next succeeding Business Day. The Borrower agreesthat 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 facieevidence of such principal balance. The Borrower hereby authorizes the Agent to charge against the Borrower’s account with the Agent anamount 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.

Section 2.14 Payment on Nonbusiness Days.

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 paymentmay be made on the next succeeding Business Day, and such extension of time shall in each case be included in the computation of payment ofinterest on such Note or the fees hereunder, as the case may be.

Section 2.15 Use of Advances and Letters of Credit.

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

Section 2.16 Yield Protection; Funding Indemnification.

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

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(a) If at any time after the date hereof any adoption of or change in any applicable law, rule or regulation or the interpretation oradministration 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 oftaxation of payments to any Bank of the principal of or interest on any portion of the principal balance of that Bank’s Notebearing interest at a Eurodollar Rate (except for the imposition of or changes in the rate of Excluded Taxes (as defined inSection 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 withor for the

Section 2.17 Taxes.

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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 principalbalance of that Bank’s Note bearing interest at a Eurodollar Rate and the result of any of the foregoing would be to increase thecost to that Bank of making or maintaining any such portion or to reduce any sum received or receivable by that Bank withrespect 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 compensatethat Bank for such increased cost or reduction. A Bank shall not make demand hereunder unless that Bank is generally imposing suchincreased costs on its similarly situated customers. No Bank may demand such compensation more than 90 days following the end of theInterest Period with respect to which such demand is made; provided, however, that the foregoing shall in no way limit the right of anyBank to demand compensation to the extent that such compensation relates to the retroactive application of any law, rule or regulation ifsuch demand is made within 90 days after the adoption of or change in such law, rule or regulation. A certificate in reasonable detail ofthat Bank setting forth the basis for the determination of such additional amount or amounts shall be promptly submitted by that Bank tothe 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 forrequesting such amounts), for all losses and expenses in respect of any interest or other consideration paid by that Bank to lenders of fundsborrowed by it or deposited with it to maintain any portion of the principal balance of the Note at a Eurodollar Rate which that Bank maysustain to the extent not otherwise compensated for hereunder and not mitigated by the reemployment of such funds if any prepayment ofany 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 orin part of an Advance bearing interest at a Eurodollar Rate fails to occur. A certificate as to any such loss or expense (includingcalculations, in reasonable detail, showing how that Bank computed such loss or expense) shall be promptly submitted by that Bank to theBorrower and shall, in the absence of manifest error, be conclusive and binding as to the amount thereof. Such loss or expense may becomputed as though that Bank acquired deposits in the London interbank market to fund that portion of the principal balance whether ornot 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 orthe Notes shall be made without any setoff or other counterclaim, and free and clear of and without deduction

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for or on account of any present or future taxes now or hereafter imposed by any governmental or other authority, except to the extent thatsuch deduction or withholding is compelled by law. As used herein, the term “Taxes” shall include all income, excise and other taxes ofwhatever nature (other than taxes based on or measured by the net income of the Payee (or franchise taxes in lieu thereof) and imposed bythe government or other authority of the country, state or political subdivision in which such Payee is incorporated or in which its principalexecutive 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 covenantscontained 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 suchdeductions or withholdings (including any required deduction or withholding on such additional amounts) shall equal theamount 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 tothe 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 maypay such Taxes and the Borrower promptly shall reimburse such Payee to the full extent otherwise required by such paragraph. Theobligations of the Borrower under this Section 2.17 shall survive any termination of this Agreement. Each Bank by its execution of thisAgreement represents (and each additional Bank by its execution of any Assignment Certificate pursuant to Section 8.10 shall be deemedto represent) to each other Bank, the Agent and the Borrower that if such Bank or additional Bank is organized under the laws of anyjurisdiction other than the United States or any state thereof, such Bank or additional Bank has furnished to the Agent and the Borrowereither U.S. Internal Revenue Service Form W-8BEN, or U.S. Internal Revenue Service Form W-8ECI, as applicable (wherein such Bankclaims 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 theamount of any offsetting tax benefit which such Bank receives as a result of the Borrower’s payment

Section 2.18 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 requirethe 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:

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to the relevant authorities as reasonably determined by such Bank; provided, however, that (i) such Bank shall be the sole judge of theamount of such tax benefit and the date on which it is received, (ii) no Bank shall be obliged to disclose information regarding its taxaffairs 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 shallpromptly remit to such Bank the amount certified by such Bank to be the amount necessary to restore such Bank to the position it wouldhave 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 politicalsubdivision thereof asserts a claim that the Agent or the Borrower did not properly withhold tax from amounts paid to or for the account ofany Bank (because the appropriate form was not delivered or properly completed, because such Bank failed to notify the Agent or theBorrower of a change in circumstances which rendered its exemption from withholding ineffective, or for any other reason), such Bankshall indemnify the Agent or the Borrower, as applicable, fully for all amounts paid, directly or indirectly, by the Agent or the Borrower, asapplicable, as tax, withholding therefor, or otherwise, including penalties and interest, and including taxes imposed by any jurisdiction onamounts 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 ofthe Agent or the Borrower, as applicable). The obligations of the Bank under this Section 2.17(d) shall survive the payment of theObligations 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 Bankunder this Agreement during such period, by (ii) the average capital that Bank is required to maintain during such period as a result of itsbeing a party to this Agreement, as determined by that Bank based upon its total capital requirements and a reasonable attribution formulathat takes account of the Capital Adequacy Rules then in effect. Return may be calculated for each calendar quarter and for the shorterperiod between the end of a calendar quarter and the date of termination in whole of this Agreement.

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 ademand for payment of the amount necessary to restore that Bank’s Return for the quarter in which the notice is sent and, if applicable, thepreceding quarter, and shall state in reasonable detail the cause for the reduction in its Return and its calculation of the amount of suchreduction. Thereafter, that Bank may send a new notice with respect to each calendar quarter setting forth the calculation of the reduced Returnfor that quarter and including a demand for payment of the amount necessary to restore its Return for that quarter. In such event, the Borrowershall pay the Bank such amount within 30 days after demand by such Bank. A Bank’s calculation in any such notice shall be conclusive andbinding absent demonstrable error. A Bank shall not make demand hereunder unless that Bank is generally imposing such increased costs onits similarly situated customers. No Bank may demand any compensation hereunder more than 45 days following the end of the quarter forwhich compensation is sought.

Section 2.19 Extension of Termination Date

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

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(b) “Capital Adequacy Rule” means any law, rule, regulation or guideline regarding capital adequacy that applies to any Bank, or theinterpretation thereof by any governmental or regulatory authority. Capital Adequacy Rules include rules requiring financial institutions tomaintain 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, butthe term does not include any changes in applicable requirements that at the date hereof are scheduled to take place under the existingCapital Adequacy Rules or any increases in the capital that any Bank is required to maintain to the extent that the increases are requireddue 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 madehereunder (to the extent provided in Section 8.11 only); and any bank holding company with respect to any of the foregoing.

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

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), a demand for payment pursuant to Section 2.17or 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 hasoccurred and is continuing) at its expense require such Bank to assign, in whole and in accordance with Section 8.10 (including the executionof an Assignment Certificate and all other applicable documents, and the payment of any fees required under Section 8.10), all of its rights andobligations hereunder and under such Bank’s Note, including but not limited to such Bank’s Commitment, to an Eligible Lender identified bythe Borrower and willing to become a Bank hereunder. Such Bank may be an existing Bank hereunder. Notwithstanding the foregoing, theBorrower may not compel the resignation of any Bank as the Agent except as provided in Section 8.9.

ARTICLE IIIConditions Precedent

Section 3.1 Conditions to Effectiveness.

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 thefollowing, each in form and substance satisfactory to each Bank:

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

Section 3.2 Initial Conditions Precedent.

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 shallhave 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:

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(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 bepaid and the Commitments thereunder will be terminated.



(c) The Pledge Agreement, properly executed on behalf of the Borrower.

(d) The Bonds, properly issued by the Borrower.

(e) The Fee Letters, 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 ofthe Loan Documents and other documents contemplated hereunder have been duly approved by all necessary action of the Board ofDirectors of the Borrower, and attaching true and correct copies of the applicable resolutions granting such approval, (ii) certifying thatattached 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 documentscontemplated 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.

Section 3.3 Conditions Precedent to All Advances and Letters of Credit.

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 furtherconditions precedent that on the date of such Advance or Letter of Credit:

ARTICLE IVRepresentations 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 theirrespective jurisdictions of incorporation, and are each duly licensed or qualified to transact business in all jurisdictions where the character ofthe property owned or leased or the nature of the business transacted by them makes such licensing or qualification necessary, except where thefailure to be so licensed or qualified (i) will not permanently preclude the Borrower or any Subsidiary from maintaining any material action inany 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 otherMaterial Adverse Change. The Borrower has all requisite power and authority, corporate or otherwise, to conduct its business, to own itsproperties and to execute and deliver, and to perform all of its obligations under, the Loan Documents, the Bonds and the First MortgageIndenture.

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

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

(a) The representations and warranties contained in Article IV are correct on and as of the date of such Advance or Letter of Credit asthough 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’slegal 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 anEvent of Default.

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

Section 4.3 Legal Agreements.

This Agreement, the other Loan Documents, the Bonds and the Indenture constitute the legal, valid and binding obligations of the Borrowerenforceable against the Borrower in accordance with their respective terms, except to the extent that such enforcement may be limited bybankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally or by general equitable principles. Withoutlimiting the generality of the foregoing, the Bonds have been duly executed, issued and delivered by the Borrower and duly authenticated bythe Trustee, and the Bonds will be entitled to the benefits provided by the Indenture.

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time hereunder, the issuance of the Bonds, and the consummation of the transactions herein and therein contemplated, have been dulyauthorized by all necessary corporate action and do not and will not (i) require any consent or approval of the stockholders of theBorrower, 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 ofwhich has been obtained and is in full force and effect, (ii) violate any provision of any law, rule or regulation (including, withoutlimitation, Regulation X of the Board of Governors of the Federal Reserve System and Section 7 of the Exchange Act or any regulationpromulgated thereunder) or of any order, writ, injunction or decree presently in effect having applicability to the Borrower or of theOrganizational Documents of the Borrower, (iii) result in a breach of or constitute a default under any indenture or loan or creditagreement or any other material agreement, lease or instrument to which the Borrower or any Subsidiary is a party or by which it or itsproperties may be bound or affected, or (iv) result in, or require, the creation or imposition of any Lien or other charge or encumbrance ofany nature (other than the Liens created under the Pledge Agreement and the Indenture) upon or with respect to any of the properties nowowned 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-termdebt 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 willconstitute short-term debt for purposes of such Authorizing Order. As of the date hereof, the aggregate principal amount of Borrower’sshort-term debt outstanding (excluding indebtedness under the Prior Credit Agreement but including assumed Advances hereunder in anaggregate amount equal to the aggregate Commitment Amounts) does not exceed 15% of Borrower’s total capitalization.

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 ofthe Borrower or any other Subsidiary in each as of the date of this Agreement. The Borrower has no Restricted Subsidiaries as of the datehereof except as designated on Schedule 4.4. Except as otherwise indicated in that Schedule, all shares of each Subsidiary owned by theBorrower or by any such other Subsidiary are validly issued and fully paid and nonassessable.

Section 4.5 Financial Condition.

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

Section 4.6 Adverse Change.

There has been no Material Adverse Change since December 31, 2002.

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 againstor 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 AdverseChange. Other than any liability incident to any litigation, arbitration or proceeding which could not reasonably be expected to have a MaterialAdverse Effect, the Borrower has no material contingent obligations not provided for or disclosed in the financial statements referred to inSection 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 anySubsidiary or other Person has ever caused or permitted any Hazardous Substance to be disposed of on, under or at any real property which isoperated by the Borrower or any Subsidiary or in which the Borrower or any Subsidiary has any interest, except to the extent that such disposalcan not reasonably be expected to result in a Material Adverse Change; and (ii) no such real property has ever been used (either by theBorrower or by any Subsidiary or other Person) as a dump site or permanent or

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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 Advancewill 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 taxesrequired to be withheld and paid by them. The Borrower and its Subsidiaries have each filed all federal, state and local tax returns which to theknowledge of the officers of the Borrower or any Subsidiary are required to be filed, and the Borrower and its Subsidiaries have each paid orcaused 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 suchtaxes have become due, other than taxes whose amount, applicability or validity is being contested in good faith by appropriate proceedingsand 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.

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 itsSubsidiaries, taken as a whole, which it purports to own or which are reflected as owned on its books and records, and the Borrower has goodand valid title to all real and fixed property and leasehold rights described or enumerated in the Indenture (except such properties as have beenreleased from the Lien thereof in accordance with the terms thereof), in each case free and clear of all Liens and encumbrances, except forLiens and encumbrances permitted by Section 6.1 and covenants, restrictions, rights, easements and minor irregularities in title which do notmaterially interfere with the business or operations of the Borrower and its Subsidiaries taken as a whole.

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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 lastday of the most recent fiscal year of such Plan ended prior to the date hereof, and no liability to the Pension Benefit Guaranty Corporation orthe 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 financialstatements, neither the Borrower nor any Subsidiary has any contingent liability with respect to any post-retirement benefit under a WelfarePlan in excess of $50,000,000, other than liability for continuation coverage described in Part 6 of Subtitle B of Title I of ERISA.

Section 4.14 Securities Law Matters.

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(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 6of 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 Bondsto 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 hasoffered 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 theAgent hereunder. The Borrower will take reasonable precautions designed to insure that any offer or sale, direct or indirect, in the UnitedStates or to any U.S. person (as defined in Rule 902 under the Act) of any Bonds or any substantially similar security issued by theBorrower, within six months subsequent to the delivery of the Bonds to the Agent, is made under restrictions and other circumstancesreasonably designed not to affect the status of the offer and sale of the Bonds contemplated by this Agreement as a transaction exemptfrom 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 contemplatedby this Agreement.

Section 4.15 Investment Company Act.

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 inthe 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 anyrequirement for SEC approval under PUHCA.

Section 4.17 Indenture.

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(a) All conditions precedent set forth in the Indenture with respect to the Assignment and Assumption Agreement dated as ofAugust 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 ofthe 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 counselfor the Agent.

(f) In connection with the issuance and delivery of the Bonds to the Agent as contemplated by this Agreement and the PledgeAgreement, 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 toBNY Midwest Trust Company in accordance with the terms of the Indenture.

Section 4.18 Authentication of Bonds.

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

Section 4.19 Solvency.

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

Section 4.20 Swap Obligations.

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

Section 4.21 Insurance.

The properties of the Borrower and its Subsidiaries are insured with financially sound and reputable insurance companies not Affiliates of theBorrower, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similarbusinesses and owning similar properties in localities where the Borrower and such Subsidiaries operate.

Section 4.22 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 jurisdictionover the conduct of their respective businesses or the ownership of their respective properties, assets and rights.

ARTICLE VAffirmative 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 thefollowing requirements, unless the Required Banks shall otherwise consent in writing:

Section 5.1 Financial Statements.

The Borrower will deliver to the Agent and each Bank:

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(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 auditreport of the Borrower and its Subsidiaries prepared by nationally recognized independent certified public

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accountants, which annual report shall include the balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal year andthe 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 theBorrower, balance sheet of the Borrower and its Subsidiaries as at the end of such quarter and related statements of earnings and cashflows of the Borrower and its Subsidiaries for such quarter and for the year to date, in reasonable detail and prepared on a consolidatedbasis 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 thechief 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 substancereasonably acceptable to the Agent, addressed to the Agent and the Banks, advising the Agent and the Banks of such issuance, stating therestrictions, if any, that such Authorizing Order imposes on the Borrower’s ability to obtain Borrowings or Letters of Credit hereunder, andattaching 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 anySubsidiary 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 orregulatory agency affecting the Borrower or any Restricted Subsidiary of the type described in Section 4.7 or which seek a monetaryrecovery 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 knowledgeof the occurrence of any Default or Event of Default, notice of such occurrence, together with a detailed statement by a responsible officerof 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 ofthe Internal Revenue Code or Section 406 of ERISA) in connection with any Plan or any trust created thereunder, which could reasonablybe 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

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 completeentries will be made in accordance with GAAP. Upon request of any Applicable Party, as defined below, the Borrower will, and will causeeach Subsidiary to, give any representative of such Applicable Party access to, and permit such representative to examine, copy or makeextracts 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 bonafide non-disclosure agreement not entered into primarily for the purpose of evading the requirements of this Section), to inspect any of itsproperties (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 assuch Applicable Party may reasonably request. As used in this Section 5.2, “Applicable Party” means (i) so long as any Event of Default hasoccurred 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 waypreclude any Bank from discussing the general affairs, finances and accounts of the Borrower with any of its principal officers at such timesduring normal business hours and as often as may be agreed to between the Borrower and such Bank.

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respect thereto, and, when known, any action taken or threatened by the Internal Revenue Service, the Pension Benefit GuarantyCorporation 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 thePension Benefit Guaranty Corporation’s intent to terminate any Plan or to have a trustee appointed to administer any Plan, and (b) allnotices received by the Borrower, any Restricted Subsidiary or any ERISA Affiliate from a Multiemployer Plan concerning the impositionor amount of withdrawal liability imposed pursuant to Section 4202 of ERISA, which withdrawal liability individually or in the aggregateexceeds $50,000,000.

(j) All notices required to be delivered under Section 9.14.

(k) Promptly after it obtains knowledge of any such change, notice (by telephone, followed by written notice sent promptly thereafter inaccordance 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 thedetails 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 Bankmay from time to time reasonably request.

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 noncompliancewith which would effect a Material Adverse Change.

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 leviedor 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 anySubsidiary shall be required to pay any such tax, assessment, charge or claim (i) whose amount, applicability or validity is being contested ingood faith by appropriate proceedings and for which the Borrower or such Subsidiary has provided adequate reserves in accordance withGAAP 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 itsbusiness in good condition, repair and working order; provided, however, that nothing in this Section shall prevent the Borrower or anySubsidiary from discontinuing the operation and maintenance of, or disposing of, any of its properties if (i) (A) such discontinuance ordisposition is, in the reasonable judgment of the Borrower or that Subsidiary, desirable in the conduct of its business, and (B) no Default orEvent of Default exists at the time of, or will be caused by, such discontinuance or disposition or (ii) such discontinuance or disposition relatesto obsolete or worn-out property.


The Borrower will, and will cause each Restricted Subsidiary to, obtain and maintain insurance with insurers reasonably believed by theBorrower or such Restricted Subsidiary to be responsible and reputable, in such amounts and against such risks as is usually carried bycompanies in similar circumstances engaged in similar business and owning similar properties in the same general areas in which the Borroweror 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, privilegesand franchises; provided, however, that neither the Borrower nor any Restricted Subsidiary shall be required to preserve any of its

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rights, privileges and franchises or to maintain its corporate existence if (i) its Board of Directors shall reasonably determine that thepreservation 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.

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 ofBonds, the Borrower agrees to furnish at its expense, upon request, to holders of Bonds and prospective purchasers of securities informationsatisfying the requirements of subsection (d)(4)(i) of Rule 144A under the Act.

Section 5.9 Use of Proceeds.

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, norwill 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 definedin Regulation U) or to make any acquisition of any corporation, limited liability company or other business entity unless, prior to making suchacquisition, the Borrower or such Subsidiary shall have obtained written approval from the board of directors or other governing body of suchentity.

ARTICLE VINegative Covenants

So long as any Note shall remain unpaid or any Commitment or L/C Amount shall be outstanding, the Borrower agrees that, without the priorwritten 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 notpermit 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:

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

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(b) Materialmen’s, merchants’, carriers’ worker’s, repairer’s, or other like liens arising in the ordinary course of business to the extentnot 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 othersimilar laws, or to secure the performance of bids, tenders, contracts (other than for the repayment of borrowed money) or leases or tosecure statutory obligations or surety or appeal bonds, or to secure indemnity, performance or other similar bonds in the ordinary course ofbusiness.

(d) Zoning restrictions, easements, licenses, restrictions on the use of real property or minor irregularities in title thereto, which do notmaterially impair the use of such property in the operation of the business of the Borrower and its Subsidiaries taken as a whole or thevalue 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 the90th day following the acquisition or completion of construction of such property by the Borrower or its applicable Subsidiary, and (ii) nosuch 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 propertiesin working order.

(f) Liens granted by any Acquisition Target prior to the acquisition by the Borrower or any Subsidiary of any interest in suchAcquisition Target or its assets, so long as (i) such Lien was granted by the Acquisition Target prior to such acquisition and not incontemplation thereof, and (ii) no such Lien extends to any assets of the Borrower or any Subsidiary other than the assets of theAcquisition Target and improvements and modifications thereto necessary to maintain such properties in working order or, in the case ofan 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 hereofand listed in Schedule 6.1 hereto.

(h) Liens created under or in connection with the First Mortgage Indenture.

(i) Liens permitted under the First Mortgage Indenture as such First Mortgage Indenture exists on the date hereof, without regard to anywaiver, 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 amountof such indebtedness secured by any such Lien does not exceed the amount of such refinanced

Section 6.2 Dividends.

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 ormake any payment on account of the purchase, redemption or other retirement of any shares of such stock or make any distribution in respectthereof, either directly or indirectly, at any time following and during the continuance of any Default or Event of Default arising underparagraph (a), (b), (i) or (j) of Section 7.1.

Section 6.3 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 theAssets of the Borrower and its Subsidiaries (whether in one transaction or in a series of transactions) to any other Person other than (i) in theordinary 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 otherenergy-related assets; provided, however, that a wholly-owned Subsidiary of the Borrower may sell, lease, or transfer all or a substantial part ofits assets to the Borrower or another wholly-owned Subsidiary of the Borrower, and the Borrower or such other wholly-owned Subsidiary, asthe 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. Forpurposes 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 itsSubsidiaries on a consolidated basis as determined in accordance with GAAP, as shown on the most recent balance sheet of the Borrower andits Subsidiaries available as of the date of determination. Notwithstanding the foregoing, the operating agreement between TRANSLinkTransmission Co., LLC and the Borrower shall not be treated as a disposition for the purposes of this Section 6.3.

Section 6.4 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 transactionanalogous in purpose or effect to a consolidation

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indebtedness immediately prior to the refinancing. Liens do not extend to assets other than those encumbered prior to such refinancing andimprovements 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 notat any time exceed 10% of the Tangible Net Worth of the Borrower and its Subsidiaries.

or merger) all or substantially all of the assets of any other Person; provided, however, that the restrictions contained in this Section shall notapply 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) noDefault or Event of Default exists at the time of, or will be caused by, such consolidation, merger, conveyance or transfer, and (ii) the Borrowershall 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.

Section 6.6 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.

Section 6.7 Transactions with Affiliates.

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

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

(b) Distributions to the extent not prohibited by Section 6.2.

(c) Loans to Northern States Power Company (a Wisconsin corporation) to provide working capital so long as the aggregate principalamount 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 SECor 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.

Section 6.8 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 theBorrower and its Subsidiaries as at the end of each fiscal quarter of the Borrower, to be greater than 0.60 to 1.

Section 6.9 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 lessthan 2.75 to 1.

Section 6.10 Securities Laws.

The Borrower agrees with the Agent:

ARTICLE VIIEvents of Default, Rights and Remedies

Section 7.1 Events of Default.

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

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

(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 investmentcompany, unit investment trust, closed-end investment company or face-amount certificate company that is or is required to be registeredunder 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” (asdefined in Rule 144 under the Act) to, resell any of the Bonds which constitute “restricted securities” under Rule 144 that have beenreacquired 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 theBorrower’s behalf offer the Bonds, or any substantially similar security of the Borrower for sale to, or solicit offers to buy any suchsecurity from, any person, it being understood that such agreement is made with a view to bringing the offer and sale of the Bondshereunder within the exception provided by Section 4(2) of the Act and Rule 506 thereunder.

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

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(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 samebecome 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 LoanDocument (including but not limited to Section 6.5, but excluding any other covenant or agreement a default in whose performance orwhose breach is elsewhere in this Section specifically dealt with), and the continuance of such default or breach for a period of 30 daysafter the Agent, at the request of any Bank, has given notice to the Borrower specifying such default or breach and requiring it to beremedied.

(e) Any representation or warranty made by the Borrower in this Agreement or any other Loan Document or by the Borrower (or any ofits officers) in any certificate, instrument, or statement contemplated by or made or delivered pursuant to or in connection with thisAgreement, 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; orthe principal amount outstanding under the Bonds shall at any time be less than the greater of the Outstandings or the CommitmentAmounts.

(g) A default in the payment when due (after giving effect to any applicable grace periods) of principal or interest with respect to anyindebtedness or any Swap Contract of the Borrower or any Subsidiary (other than indebtedness arising hereunder) if the aggregate amountof 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 anySwap Contract of the Borrower or any Subsidiary (other than to the Banks) or under any indenture or other instrument under which anysuch 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 ofsuch indebtedness (or trustee or agent on behalf of such holder) to cause such indebtedness to come due prior to its stated maturity or is tocause 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 allsuch indebtedness and Swap Contracts as to which such defaults have occurred and are continuing is less than $50,000,000; providedfurther that if such default shall be cured by the Borrower or

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such Subsidiary, or waived by the holders of such indebtedness or counterparties in respect of such Swap Contracts, in each case prior tothe commencement of any action under Section 7.2 and as may be permitted by such evidence of indebtedness, indenture, otherinstrument, or Swap Contract, then the Event of Default hereunder by reason of such default shall be deemed likewise to have beenthereupon 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 itsdebts as they mature, or make an assignment for the benefit of creditors; or the Borrower or any Restricted Subsidiary shall apply for orconsent 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 suchappointment 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 theBorrower or any Restricted Subsidiary and such judgment, writ, or similar process shall not be released, vacated, stayed or fully bondedwithin 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 theBorrower or that Restricted Subsidiary as debtor; or an involuntary petition shall be filed against the Borrower or any Restricted Subsidiaryunder the United States Bankruptcy Code, and such petition shall not have been dismissed within 60 days after such filing; or an order forrelief 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 respectto 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 ofsuch judgment, decree or order, together with the amount of all other such judgments, decrees and orders then outstanding, less (in eachcase) the portion thereof covered by insurance proceeds, is greater than $50,000,000 and if such judgment, decree or order remainsunsatisfied and in effect for any period of 30 consecutive days without a stay of execution.

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, theAgent may, with the consent of the Required Banks, and shall, upon the request of the Required Banks, exercise any or all of the followingrights and remedies:

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(m) Any Plan shall have been terminated as a result of which the Borrower or any Subsidiary or ERISA Affiliate has incurred anunfunded liability in excess of $50,000,000; or a trustee shall have been appointed by an appropriate United States District Court toadminister any Plan or the Pension Benefit Guaranty Corporation shall have instituted proceedings to terminate any Plan or to appoint atrustee to administer any Plan and in either case such action could reasonably be expected to result in liability to the Borrower or anySubsidiary in excess of $50,000,000, or withdrawal liability in excess of $50,000,000 shall have been asserted against the Borrower or anySubsidiary or ERISA Affiliate by a Multiemployer Plan; or the Borrower or any Subsidiary or ERISA Affiliate shall have incurred anyjoint and several liability to the Pension Benefit Guaranty Corporation, the Internal Revenue Service or the Department of Labor, or theBorrower or any Subsidiary shall have incurred any other liability to the Pension Benefit Guaranty Corporation, the Internal RevenueService or the Department of Labor, in excess of $50,000,000 with respect to any Plan; or any Reportable Event that the Required Banksmay determine in good faith could reasonably be expected to constitute grounds for the termination of any Plan by the Pension BenefitGuaranty Corporation, for the appointment by the appropriate United States District Court of a trustee to administer any Plan or for theimposition of withdrawal liability with respect to a Multiemployer Plan, and which, in any such case, could reasonably be expected toresult in liability to Borrower or any Subsidiary or ERISA Affiliate in excess of $50,000,000, shall have occurred and be continuing30 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 outstandingor the conduct of the Borrower’s business substantially as presently conducted shall be suspended or revoked or shall fail to be renewedupon expiration.

(o) Any court, government or governmental agency shall condemn, seize or otherwise appropriate, or take custody or control of, all orany 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 theCommitment Termination Date (or earlier, if required by Section 7.2(c)) an amount equal to the face amount of all outstanding Letters ofCredit.

Notwithstanding the foregoing, upon the occurrence of an Event of Default described in Section 7.1(j) hereof (whether or not such Event ofDefault also arises under Section 7.1(i) hereof), the Commitments shall terminate and the entire unpaid principal amount of the Notes thenoutstanding, all interest accrued and unpaid thereon, and all other amounts payable under this Agreement shall be immediately due and payablewithout presentment, demand, protest or notice of any kind.

Section 7.3 Pledge of Cash Collateral Account.

The Borrower hereby pledges, and grants the Agent, as agent for the Banks, including the Issuing Bank, a security interest in, all sums held inthe Cash Collateral Account from time to time and all proceeds thereof as security for the payment of all amounts due and to become due fromthe Borrower to the Issuing Bank, the Agent and/or the Banks pursuant to this Agreement, including but not limited to both principal of andinterest on the Notes and all

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

(b) The Agent may, by notice to the Borrower, declare the entire unpaid principal amount of the Notes then outstanding, all interestaccrued 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 orfurther 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 CashCollateral Account immediately available funds equal to the aggregate face amount of all such outstanding Letters of Credit (less anyamounts 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 theBorrower to the payment of the Notes then outstanding, including interest accrued thereon, and of all other sums then owing by theBorrower hereunder. For purposes of this paragraph (d), “Bank” means the Banks, as defined elsewhere in this Agreement, and anyparticipant 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 CashCollateral Account.

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

renewals, extensions and modifications thereof and any notes issued in substitution therefor, and specifically including the Borrower’sobligation to reimburse the Issuing Bank for any amount drawn under any Letter of Credit, whether such reimbursement obligation arisesdirectly under this Agreement or under a separate reimbursement agreement. Upon request of the Borrower, the Agent shall permit theBorrower to withdraw from the Cash Collateral Account, so long as no Default or Event of Default then exists, the lesser of (i) the ExcessBalance (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 Accountexceeds the L/C Amount, and (B) prior to the fifth Business Day preceding the Commitment Termination Date, the balance of the CashCollateral Account. The Agent shall have full control of the Cash Collateral Account, and, except as set forth above, the Borrower shall haveno right to withdraw the funds maintained in the Cash Collateral Account.

ARTICLE VIIIThe Agent

Section 8.1 Authorization.

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 extentprovided herein or in any document or instrument delivered hereunder or in connection herewith, and to take such other action as may bereasonably incidental thereto.

Section 8.2 Distribution of Payments and Proceeds.

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(a) After deduction of any costs of collection as hereinafter provided, the Agent shall remit to each Bank that Bank’s Percentage of allpayments of principal, interest, Letter of Credit fees payable under Section 2.7(d) and facility and utilization fees payable under Section2.8 that are received by the Agent under the Loan Documents. Each Bank’s interest in the Loan Documents shall be payable solely frompayments, collections and proceeds actually received by the Agent under the Loan Documents; and the Agent’s only liability to the Bankshereunder 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, upondemand, its Percentage of such payments, collections or proceeds, together with its Percentage of interest or penalties, if any, payable bythe Agent in connection with such refund. The Agent may, in its sole discretion, make payment to the Banks in anticipation of receipt ofpayment from the Borrower. If the Agent fails to receive any such anticipated payment from the Borrower, each Bank shall promptlyrefund to the Agent, upon demand, any such payment made to it in anticipation of payment from

Section 8.3 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 LoanDocument (including but not limited to all reasonable attorney’s fees, foreclosure expenses and advances made to protect the security ofcollateral, if any, but excluding any costs, expenses, damages or liabilities arising from the gross negligence or willful misconduct of theAgent). 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 itsPercentage of the difference between (i) such costs, expenses, damages and liabilities, and (ii) such payments, collections and proceeds.

Section 8.4 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 orotherwise) on account of principal of or interest on any Note other than through distributions made in accordance with Section 8.2, such Bankor holder shall promptly give notice of such fact to the Agent and shall purchase from the other Banks or holders such participations in theNotes held by them as shall be necessary to cause the purchasing Bank or holder to share the excess payment or other recovery ratably witheach of them; provided, however, that if all or any portion of the excess payment or other recovery is thereafter recovered from suchpurchasing Bank or holder, the purchase shall be rescinded and the purchasing Bank restored to the extent of such recovery (but withoutinterest thereon).

Section 8.5 Indemnification.

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

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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 suchdate.

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

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

Section 8.6 Exculpation.

Section 8.7 Agent and Affiliates.

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

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(a) The Agent shall be entitled to rely upon advice of counsel concerning legal matters, and upon this Agreement, any Loan Documentand any schedule, certificate, statement, report, notice or other writing which it in good faith believes to be genuine or to have beenpresented by a proper person. Neither the Agent nor any of its directors, officers, employees or agents shall (a) be responsible for anyrecitals, representations or warranties contained in, or for the execution, validity, genuineness, effectiveness or enforceability of thisAgreement, any Loan Document, or any other instrument or document delivered hereunder or in connection herewith, (b) be responsiblefor the validity, genuineness, perfection, effectiveness, enforceability, existence, value or enforcement of any collateral security, (c) beunder any duty to inquire into or pass upon any of the foregoing matters, or to make any inquiry concerning the performance by theBorrower 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, exceptfor its or their own gross negligence or willful misconduct. The appointment of Wells Fargo as Agent hereunder shall in no way impair oraffect 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 anadministrative relationship between the Agent and the Banks, in each case as independent contracting parties. However, the obligations ofthe Agent shall be limited to those expressly set forth herein. In no event shall the use of such term create or imply any fiduciaryrelationship 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.

Section 8.8 Credit Investigation.

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

Section 8.9 Resignation.

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 ofthe Agent, the Required Banks shall as promptly as practicable appoint a Bank as a successor Agent; provided, however, that so long as noDefault or Event of Default has occurred and is continuing at such time, no such successor Agent may be appointed without the prior writtenconsent of the Borrower. If no such successor Agent shall have been so appointed by the Required Banks and shall have accepted suchappointment 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 anyState thereof. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon beentitled to receive from the prior Agent such documents of transfer and assignment as such successor Agent may reasonably request and theresigning Agent shall be discharged from its duties and obligations under this Agreement. After any resignation pursuant to this Section, theprovisions 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 anAgent hereunder.

Section 8.10 Assignments.

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(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 theNote 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 Bankassigning its entire Note and Commitment to the Applicant. Any Bank proposing an assignment hereunder shall give notice of suchassignment to the Agent and the Borrower at least ten Business Days prior to such assignment (unless the Agent consents to a shorterperiod 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

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 extentof the reduction of such Bank’s Percentage, and (c) the Additional Bank shall become a party hereto and shall be entitled to all rights, benefitsand privileges accorded to a Bank herein and in each other document or instrument executed

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assignment hereunder may be made only with the prior written consent of the Agent and the Borrower; provided, however, that (i) in noevent shall such consent be unreasonably withheld, and (ii) the consent of the Borrower shall not be required if a Default or Event ofDefault 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 tothis Agreement and to evidence the assignment of the applicable portion of the assigning Bank’s Commitment and Notes in accordanceherewith:

(i) the Borrower, such Bank, such Applicant, and the Agent shall, on or before the Adjustment Date, execute and deliver to theAgent an Assignment Certificate (provided that, if a Default or Event of Default has occurred and is continuing on theapplicable Adjustment Date, the assignment will be effective whether the Borrower signs it or not), in substantially the form ofExhibit 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 Banka new Note, payable to the order of the Applicant in an amount corresponding to the applicable interest in the assigning Bank’srights and obligations acquired by such Applicant pursuant to such assignment, and, if the assigning Bank has retained interestsin such rights and obligations, a new Note, payable to the order of that Bank in an amount corresponding to such retainedinterests. Such new Notes shall be in an aggregate principal amount equal to the principal amount of the Note to be replaced bysuch new Notes (or, if less, the Commitment Amount of the assigning Bank prior to giving effect to such assignment, unlesssuch assignment is made after the Commitment Termination Date, in which case the aggregate principal amount of the newNotes shall equal the outstanding principal balance of the Note to be replaced by such new Notes), shall be dated the effectivedate of such assignment and shall otherwise be in the form of the Note to be replaced thereby. Such new Notes shall be issued insubstitution for, but not in satisfaction or payment of, the Note being replaced thereby; and

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

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

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(c) In order to facilitate the addition of Additional Banks hereto, the Borrower shall (subject to the written agreement of any prospectiveAdditional Bank to be subject to the confidentiality provisions of Section 8.13) provide all reasonable assistance requested by each Bankand 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 reasonablyrequest, and the participation by officers of the Borrower in a meeting or teleconference call with any Applicant upon the reasonablerequest 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 consentof the Borrower or the Agent) to sell, assign, transfer, or negotiate all or any part of its Commitment, Advances, Notes, andother rights and obligations under this Agreement and the Loan Documents to one or more Affiliates of such Bank, providedthat, 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 suchAffiliate 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 consentof the Borrower or the Agent) to sell, assign, transfer, or negotiate all or any part of its Commitment, Advances, Notes, andother 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 theobligations so transferred (except, in any event, to the extent that the Borrower, any other Bank or the Agent has rights againstsuch transferring Bank as a result of any default by such transferring Bank under this Agreement);

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

(f) Notwithstanding anything to the contrary contained herein, any Bank (a “Granting Bank”) may grant to a special purpose fundingvehicle (an “SPC”) of such Granting Bank, identified as such in writing from time to time by the Granting Bank to the Agent and theBorrower, the option to provide to the Borrower all or any part of any Advance that such Granting Bank would otherwise be obligated tomake to the applicable Borrower pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPC tomake any Advance, (ii) if an SPC elects not to exercise such option or otherwise fails to provide all or any part of such Advance, theGranting Bank shall be obligated to make such Advance pursuant to the terms hereof, (iii) such Granting Bank’s other obligations underthis Agreement shall remain unchanged, (iv) such Granting Bank shall remain solely responsible to the other parties hereto for theperformance of such obligations, and (v) the Borrower, the Agent and the other Banks shall continue to deal solely and directly with suchGranting Bank in connection with such Granting Bank’s rights and obligations under this Agreement (including any rights and obligationsassigned to such SPC). The making of an Advance by an SPC hereunder shall be deemed to utilize the Commitment of the applicableGranting Bank to the same extent, and as if, such Advance were made by such Granting Bank. Each party hereto hereby agrees that noSPC shall be liable for any indemnity or similar payment obligation under this Agreement (all liability for which shall remain with theapplicable Granting Bank). All notices hereunder to any Granting Bank or the related SPC, and all payments in respect of the Obligationsdue to such Granting Bank or the related SPC, shall be made to such Granting Bank. In addition, each Granting Bank shall vote as a Bankhereunder without giving effect to any assignment under this paragraph (f), and no SPC shall have any vote as a Bank under thisAgreement for any purpose. In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive thetermination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding seniorindebtedness 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 writtenconsent of, the Borrower or the Agent and without paying any transfer fee therefor, assign all or a portion of its interests in its right torepayment of any Advances to its Granting Bank or to any financial institutions providing liquidity and/or credit support to or for theaccount of such SPC to fund the Advances made by such SPC or to support the securities (if any) issued by such SPC to fund suchAdvances and (ii) disclose on a confidential basis, to the extent such disclosure would be permitted under Section 8.13 as if such SPC werea 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

Section 8.11 Participations

Each Bank may grant participations in a portion of its Notes, Letter of Credit participations and Commitments to any Eligible Lender, uponprior written notice to the Agent but without the consent of the Agent or the Borrower, but only so long as the principal amount of theparticipation 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 anysuch 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 actiondescribed in paragraph (a) of Section 9.2. No Bank shall, as between the Borrower and such Bank, be relieved of any of its obligationshereunder as a result of any such granting of a participation. The Borrower hereby acknowledges and agrees that any participant described inthis 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 shallnot be entitled to receive any more than the Bank selling such participation would have received had such sale not taken place).

Section 8.12 Limitation on Assignments and Participations.

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 LoanDocument or Commitment.

Section 8.13 Disclosure of Information.

The Agent and the Banks shall keep confidential (and cause their respective officers, directors, employees, agents and representatives to keepconfidential) 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 anyother Bank; (ii) to any Affiliate of any Bank in connection with the transactions contemplated hereby, provided that such Affiliate has beeninformed of the confidential nature of such information; (iii) to legal counsel, accountants and other professional advisors to the Agent or suchBank; (iv) to any regulatory body having jurisdiction over any Bank or the Agent; (v) to the extent required by applicable laws and regulationsor by any subpoena or similar legal process, or requested by any governmental agency or authority; (vi) to the extent such DisclosedInformation (A) becomes publicly available other than as a result of a breach of this Agreement, (B) becomes available to the Agent or suchBank 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 anon-

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such SPC. No amendment to this paragraph (f) that affects the rights of an SPC that has made an advance hereunder shall be effectivewithout 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 ofits rights under this Agreement and that Bank’s Note in favor of any Federal Reserve Bank in accordance with Regulation A of the Boardof Governors of the Federal Reserve System.

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 suchSubsidiary shall have consented to such disclosure in writing; (viii) to the extent reasonably deemed necessary by the Agent or any Bank in theenforcement of the remedies of the Agent and the Banks provided under the Loan Documents; or (ix) in connection with any potentialassignment or participation in the interest granted hereunder, provided that any such potential assignee or participant shall have executed aconfidentiality agreement imposing on such potential assignee or participant substantially the same obligations as are imposed on the Agentand 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 maydisclose without limitation of any kind, any information with respect to the “tax treatment” and “tax structure” (in each case, within themeaning of Treasury Regulation Section 1.6011-4) of the transactions contemplated hereby and all materials of any kind (including opinions orother tax analyses) that are provided to the Agent or such Bank relating to such tax treatment and tax structure; provided that with respect toany document or similar item that in either case contains information concerning the tax treatment or tax structure of the transaction as well asother information, this sentence shall only apply to such portions of the document or similar item that relate to the tax treatment or tax structureof the Notes, Letters of Credit and transactions contemplated hereby. The Borrower and its Subsidiaries may also disclose without limitationthe “tax treatment” and “tax structure” of the transactions contemplated hereby.

Section 8.14 Titles.

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

Section 8.15 Agent not Offering Bonds.

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

ARTICLE IXMiscellaneous

Section 9.1 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 waiverthereof; nor shall any Bank’s acceptance of

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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 orremedy under the Loan Documents; nor shall any single or partial exercise of any such right, power or remedy preclude any other or furtherexercise thereof or the exercise of any other right, power or remedy under the Loan Documents. The remedies provided in the Loan Documentsare cumulative and not exclusive of any remedies provided by law.

Section 9.2 Amendments, Etc.

No amendment or waiver of any provision of any Loan Document or consent to any departure by the Borrower therefrom shall be effectiveunless 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 RequiredBanks), and any such waiver shall be effective only in the specific instance and for the specific purpose for which given. Notwithstanding theforegoing:

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(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 withthe 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 otheraction 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 feescharged 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, facilityfees 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 termsof 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 Documentunless in writing and signed by the Agent.

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 othercircumstances.

Section 9.3 Notice.

Except as otherwise expressly provided herein, all notices and other communications hereunder shall be in writing and shall be (i) personallydelivered, (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 ortelecopier 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 otheraddress or telecopier number as may hereafter be designated in a notice by that party to the other party complying with the terms of thisSection. All such notices or other communications shall be deemed to have been given on (i) the date received if delivered personally, (ii) fivebusiness days after the date of posting, if delivered by mail, (iii) the date of receipt, if delivered by Federal Express or similar expediteddelivery service, or (iv) the date of transmission if delivered by telecopy, except that notices or requests to the Banks pursuant to any of theprovisions of Article II shall not be effective as to any Bank until received by that Bank.

Section 9.4 Costs and Expenses.

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 andthereunder, and (ii) all costs and expenses incurred by the Agent or any Bank in connection with the workout or enforcement of the LoanDocuments and the other instruments and documents to be delivered hereunder and thereunder; including, in each case, reasonable fees andout-of-pocket expenses of counsel with respect thereto, whether paid to outside counsel or allocated to the Agent or such Bank by in-housecounsel. The Borrower also agrees to pay and reimburse the Agent for all of its out-of-pocket and allocated costs incurred in connection witheach audit or examination conducted by the Agent, its employees or agents, which audits and examinations shall be for the sole benefit of theAgent and the Banks.

Section 9.5 Indemnification by Borrower.

The Borrower hereby agrees to indemnify the Agent and the Banks and each officer, director, employee and agent thereof (herein individuallyeach called an “Indemnitee” and collectively called the “Indemnitees”) from and against any and all losses, claims, damages, reasonableexpenses (including, without limitation, reasonable attorneys’ fees) and liabilities (all of the foregoing being herein called the “IndemnifiedLiabilities”) incurred by an Indemnitee in

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

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

Section 9.6 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 deliveredshall be deemed to be an original and all of which counterparts of this Agreement or such other Loan Document, as the case may be, takentogether, shall constitute but one and the same instrument.

Section 9.7 Binding Effect, Assignment.

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 eachof the Banks.

Section 9.8 Governing Law.

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

Section 9.9 Severability of Provisions.

Any provision of this Agreement which is prohibited or unenforceable shall be ineffective to the extent of such prohibition or unenforceabilitywithout invalidating the remaining provisions hereof.

Section 9.10 Consent to Jurisdiction.

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

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located in such State, (ii) consents to the jurisdiction of each such court in any suit, action or proceeding, (iii) waives any objection which itmay 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 proceedinghas been brought in an inconvenient forum, and (iv) agrees that a final judgment in any such suit, action or proceeding shall be conclusive andmay be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

Section 9.11 Waiver of Jury Trial.

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

Section 9.12 Prior Agreements.

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

Section 9.13 General Release.

The Borrower hereby absolutely and unconditionally releases and forever discharges each Indemnitee (as defined in Section 9.5) from any andall claims, demands or causes of action (arising from the beginning of time to and including the date of this Agreement) of any kind, nature ordescription, 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 tohave 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 CreditAgreement 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 followingsuch 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 toreflect the effects of such Accounting Practices Change.

Section 9.15 Headings.

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

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Section 9.16 Nonliability of Banks.

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 ofborrower and lender. Neither the Agent, either Co-Lead Arranger, any Bank nor the Issuing Bank shall have any fiduciary responsibilities tothe Borrower. Neither the Agent, either Co-Lead Arranger, any Bank nor the Issuing Bank undertakes any responsibility to the Borrower toreview or inform the Borrower of any matter in connection with any phase of the Borrower’s business or operations. The Borrower agrees thatneither 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 transactionscontemplated and the relationship established by the Loan Documents, or any act, omission or event occurring in connection therewith, unlessit is determined in a final non-appealable judgment by a court of competent jurisdiction that such losses resulted from (i) the gross negligenceor willful misconduct of the party from which recovery is sought or (ii) the Issuing Bank’s failure to pay any Letter of Credit after thepresentation to it of a request strictly complying with the terms and conditions of such Letter of Credit. Neither the Agent, either Co-LeadArranger, any Bank nor the Issuing Bank shall have any liability with respect to, and the Borrower hereby waives, releases and agrees not tosue for, any special, indirect or consequential damages suffered by the Borrower in connection with, arising out of, or in any way related to theLoan Documents or the transactions contemplated thereby.

[Signature Pages Follow]

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

[Signature Page to Northern States Power Company Credit Agreement]

NORTHERN STATES POWERCOMPANY

By /s/ Ben G.S. Fowke III

Its Vice President and Treasurer


WELLS FARGO BANK, NATIONALASSOCIATION, as Agent and as aBank

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


THE BANK OF NEW YORK

By /s/

Its Managing Director


KEY BANK NATIONAL ASSOCIATION

By /s/

Its Vice President


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


BARCLAYS BANK PLC

By /s/ Sydney G. Dennis

Its Director


CITICORP, USA

By /s/ Dhaya Ranganathan

Its Vice President


JPMORGAN CHASE BANK

By /s/ Peter M. Ling



U.S. BANK NATIONAL ASSOCIATION

By /s/ Christine J. Geer

Its Corporate Banking Officer


CREDIT SUISSE FIRST BOSTON,

Cayman Island Branch

By /s/ Sarah Wu

Its Vice President

By /s/ David J. Dodd

Its Associate


BMO NESBITT BURNS FINANCING,INC.

By /s/ Thomas H. Peer

Its Vice President


GOLDMAN SACHS CREDITPARTNERS L.P.

By /s/ Stephen B. King

Its Authorized Signatory


BANK OF OKLAHOMA, N.A.

By Thomas M. Foncannon


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

Schedule 4.2 Regulatory Consents

Schedule 4.4 Subsidiaries

Schedule 4.7 Litigation

Schedule 4.8 Environmental Matters

Schedule 4.22 Compliance with Laws

Schedule 6.1 Liens

EXHIBIT A

COMMITMENT AMOUNTS AND ADDRESSES

Name Commitment Amount Notice Address

Northern States Power Company N/A 800 Nicollet MallMinneapolis, Minnesota 55402Attention: Mary SchellTelecopier: 612-215-5370

Wells Fargo Bank, NationalAssociation, as Agent

N/A MAC N9305-031Sixth and MarquetteMinneapolis, Minnesota 55479Attention: Scott BjeldeTelecopier: 612-667-2276

Wells Fargo Bank, NationalAssociation, as a Bank

$37,400,000 MAC N9305-031Sixth and MarquetteMinneapolis, Minnesota 55479Attention: Scott BjeldeTelecopier: 612-667-2276

Bank One, N.A. (Main Branch,Chicago)

$37,400,000 One Bank One Plaza, Suite IL1-0363Chicago, Illinois 60670-0363Attention: Jane BekTelecopier: 312-732-5435

Bank of New York $24,200,000 One Wall Street19th FloorNew York, New York 10286Attention: Cynthia HowellsTelecopier: 212-635-7923

Key Bank National Association $24,200,000 601 108th Ave. N.E. – 5th FloorMail Code: WA-31-18-0312Bellevue, WA 98004Attention: Kevin SmithTelecopier: (425) 709-4587

UBS AG, Cayman IslandsBranch

$24,200,000 677 Washington BoulevardStamford, CT 06901Attention: Marie HaddadTelecopier: (203) 719-3888

Bank of Tokyo-Mitsubishi Ltd.,Chicago Branch

$17,600,000 601 Carlson ParkwaySuite 370Minnetonka, MN 55503Attention: Patrick McCueTelecopier: (952) 473-5152

Barclays Bank PLC $17,600,000 200 Park Avenue – 4th FloorNew York, NY 10166Attention: Sydney DennisTelecopier: (212) 412-2441

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Citicorp, USA $17,600,000 388 Greenwich Street, 21st FloorNew York, NY 10013Attention: Amit VasaniTelecopier: (212) 816-8098

JPMorgan Chase Bank $17,600,000 270 Park Avenue – 5th FloorNew York, NY 10017Attention: Peter Ling

US Bank National Association $17,600,000 800 Nicollet MallMinneapolis, MN 55402Attention: Christine GeerTelecopier: (612) 303-2265

Credit Suisse First Boston,Cayman Islands Branch

$13,200,000 Eleven Madison AvenueNew York, NY 10010Attention: Sarah WuTelecopier: (212) 325-8321

BMO Nesbitt Burns Financing, Inc. $11,000,000 3 Times Square – 28th FloorNew York, NY 10036Attention: Thomas PeerTelecopier: (212) 605-1451

Goldman Sachs Credit Partners, L.P. $11,000,000 85 Broad Street—6th FloorNew York, NY 10004Attention: Philip F. GreenTelecopier: (212) 428-1243

Bank of Oklahoma, N.A $4,400,000 1625 Broadway—Suite 1570Denver, CO 80202Attention: Tom FoncannonTelecopier: (303) 534-9499

EXHIBIT B

PROMISSORY NOTE

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 Bankto the Borrower pursuant to Section 2.1 of the Credit Agreement dated May 16, 2003 among the Borrower, Wells Fargo Bank, NationalAssociation, as Agent (in such capacity, the “Agent”), and various Banks, including the Bank (together with all amendments, modificationsand restatements thereof, the “Credit Agreement”), and to pay interest on the principal balance of this Note outstanding from time to time at therate 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 ofpayments of principal and interest required hereunder, for the acceleration of this Note upon an Event of Default and for the mandatory andvoluntary 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.

$ Minneapolis, Minnesota, 200


By

Its

EXHIBIT CCOMPLIANCE CERTIFICATE

, 20

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

The Banks, as defined under the CreditAgreement described below

Ladies and Gentlemen:

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 definedtherein. All terms defined in the Credit Agreement and not otherwise defined herein shall have the meanings given them in the CreditAgreement.

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:

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

(a) I am the [**chief financial officer/treasurer] of the Borrower, and I am familiar with the financial statements andfinancial 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 inSections 6.8 and 6.9 as of the Effective Date:

Very truly yours,

NORTHERN STATES POWER COMPANY

By:

Its:

ANNEX 1 TO COMPLIANCE CERTIFICATE

Funded Debt to Total Capital (Section 6.9)

1. FundedDebt

(a) Long-term debt (including current maturities) $

(b) Commercial paper & 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) TOPrS of the Borrower $

(h) Guaranties of indebtedness of others $

(i) Other Funded Debt $

(j) Total Funded Debt (sum of Items (a) through (i)) $

$

2. Capitalization

(a) Common Stock $

(b) Premium on Common Stock $

(c) Retained Earnings $

(d) Stockholder’s Equity(sum of Items (a) through(c))

$

(e) Funded Debt (from Item 1(j) above) $

(f) Capitalization (sum of Items (d) and (e)) $

3. Funded Debt to Total Capital (Ratio of Item 1(j) toItem 2(f))(not to be greater than 0.60 to 1.0) to 1.


Interest Coverage Ratio (Section 6.10)

1. EBIT

(a) Consolidated Net Income $

(b) Interest Expense (including TOPrS) $

(c) Income Taxes $

(d) Excluding Non-operating Gains and Losses (net of income tax) $

(e) EBIT (total of (a)+(b)+(c)±(d)) $

$

2. Interest Expense (including TOPrS) $

3. Interest Coverage Ratio (Ratio of Item 1(e) toItem 2)(not to be less than 2.75 to 1.0) to 1.0

EXHIBIT D

OPINION LETTER

[See Attached]

[Opinion of Gary Johnson]

May 16, 2003

To the Persons identified onSchedule I hereto


I am the General Counsel of Northern States Power Company (the “Borrower”) and have represented the Borrower in connection withthe execution and delivery by the Borrower of the Credit Agreement dated as of May 16, 2003 (the “Credit Agreement”) by and between theBorrower, Wells Fargo Bank, National Association, as administrative agent (in such capacity, the “Agent”) and the financial institutions whichare party thereto (the “Banks”). This opinion is delivered to you pursuant to Section 3.1(h) of the Credit Agreement. Capitalized terms usedherein 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 LoanDocuments, and have made such further investigation and examined such further documents as I deemed necessary to render an informedopinion on the matters hereinafter set forth. I have assumed: (a) the genuineness of the signatures on all documents and instruments (other thanthe signatures of the officers of Borrower), the authenticity of all documents submitted as originals, the conformity to originals of alldocuments submitted as photostatic or certified copies, and the accuracy and completeness of all corporate records made available to me by theBorrower; (b) that each of the parties (other than the Borrower) to the Loan Documents has the legal capacity, power and authority required forit to enter into the Loan Documents to which it is a party, and to perform its respective obligations thereunder; (c) that all such parties (exceptwith 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 LoanDocuments 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 lawsother than the laws of the State of Minnesota.

Based on such examination and investigation, it is my opinion that:

1. Each of the Borrower and its Subsidiaries is a corporation duly incorporated, validly existing and in good standing under the laws ofthe state of its incorporation, and is duly licensed or qualified to transact business in all jurisdictions where the character of theproperty owned or leased or the nature of the business transacted by it makes such licensing or qualification necessary, except wherethe failure to be so licensed or qualified (i) will not permanently preclude the Borrower or such Subsidiary from maintaining anymaterial 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 theBorrower’s Annual Report on Form 10-K for the year ended December 31, 2002 filed with the SEC and to own its properties. TheBorrower 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, validand binding obligations, enforceable in accordance with their respective terms (including in the case of the Notes and the Bondsagainst claims of usury), except (i) to the extent that such enforcement may be limited by bankruptcy, insolvency or similar lawsaffecting the enforcement of creditors’ rights generally or by general equitable principles, (ii) to the extent that the indemnificationprovisions 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 theperfection 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 authenticationthereof 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 fromtime to time thereunder and the consummation of the transactions therein contemplated, have been duly authorized by all necessarycorporate 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 orinstrumentality,

domestic or foreign, other than (A) those consents described in Schedule 4.2 to the Credit Agreement, all of which consents havebeen obtained and remain in full force and effect, (B) those filings required to perfect the security interests created under the LoanDocuments 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 Articlesof Incorporation or Bylaws of the Borrower, (iii) result in a breach of or constitute a default under any indenture or loan or creditagreement or any other material agreement, lease or instrument to which the Borrower is a party or by which it or its properties maybe bound, or (iv) result in, or require, the creation or imposition of any Lien or other charge or encumbrance of any nature (other thanthe Liens created under the Loan Documents and the Indenture) upon or with respect to any of the properties now owned or hereafteracquired 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 proceedingspending 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 MaterialAdverse Change.

7. The Indenture is in proper form, conforming to the laws of the States of Minnesota, North Dakota, and South Dakota, to give andcreate the Lien which it purports to create and has been and now is duly and properly recorded or filed in all places necessary toeffectuate 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) taxesand 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 courseof its business, certain minor defects in title which are not material, defects in title to certain properties which are not essential to theBorrower’s business; and mechanics’ lien claims being contested or not of record or for the satisfaction or discharge of whichadequate 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, withall other bonds duly issued and outstanding under the Indenture by a valid and direct first mortgage Lien of the Indenture on all ofthe real and fixed properties, leasehold rights, franchises, and

This opinion is rendered only with respect to the laws and the regulations which are in effect as of the date hereof. I assume noresponsibility for updating this opinion to take into account any event, action, interpretation or change of law occurring subsequent to the datehereof 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 theLoan Documents and the transactions contemplated thereby, and may not be relied upon by, and copies may not be delivered to, any otherperson or be used for any other purpose without our prior written consent. I hereby consent to reliance hereon by any future participant orassignee of the Bank’s interests under the Credit Agreement as expressly permitted by Section 8.10 of the Credit Agreement; provided thatsuch 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 noresponsibility or obligation to update this opinion, to consider its applicability or correctness to other than its addressees, or to take into accountchanges in law, facts or any other development of which I may later become aware.

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 andoutstanding under the Indenture by a valid and direct first mortgage lien (subject to permitted liens as defined in the Indenture) on allreal and fixed property hereafter acquired by the Borrower in conformity with the terms of the Indenture, except as the United StatesBankruptcy Code may affect the validity of the Lien of such Indenture on property acquired after the commencement of a case undersuch Act, except as to the prior Lien of the Trustee under the Indenture in certain events specified therein, and except as otherwiseprovided 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 ofAugust 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 ofshort-term debt so long as the aggregate principal amount of short-term debt outstanding does not exceed 15% of the Borrower’stotal capitalization. All obligations in respect of the Notes and the Bonds will constitute short-term indebtedness for purposes of theMPUC Order. The MPUC Order is in full force and effect on the date hereof.

Very truly yours,

[NSP - Opinion of Jones Day}

May 16, 2003

The Persons identifiedon Schedule I hereto


We have acted as special counsel for Northern States Power Company, a Minnesota corporation (the “Borrower”), in connection with theCredit 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 isdelivered to you pursuant to Section 3.1(h) of the Credit Agreement. Capitalized terms used herein and not otherwise defined herein have themeanings assigned to such terms in the Credit Agreement. With your permission, all assumptions and statements of reliance herein have beenmade without any independent investigation or verification on our part except to the extent, if any, otherwise expressly stated, and we expressno 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 necessaryfor the purposes of this opinion. We have examined, among other documents, (i) a copy of the Credit Agreement, (ii) the form of Note attachedas 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 suchexaminations, we have assumed the legal capacity of all natural persons executing documents, the genuineness of all signatures, theauthenticity of original and certified documents and the conformity to original or certified copies of all copies submitted to us as conformed orreproduction copies. As to various questions of fact relevant to the opinions expressed herein, we have relied upon, and assume the accuracyof, representations and warranties contained in the Documents and certificates and oral or written statements and other information of or fromrepresentatives of the Borrower and others and assume compliance on the part of the Borrower and each other party to the Documents withtheir 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 businessactivities and properties of the Borrower, based upon review of the Annual Report on Form 10-K for the fiscal year ended December 31, 2001filed 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 bythe Credit Agreement.

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

The opinions set forth above are subject to the following qualifications:

(a) Assuming that the issuance and sale of the Bonds have been duly authorized and approved by an order of the Minnesota PublicUtilities Commission and such order is in full force and effect on the date hereof, no approval, authorization, consent or order ofany 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 theperformance by the Borrower of its obligations thereunder do not violate any present law, or present regulation of anygovernmental agency or authority, of the United States of America applicable to the Borrower or its property, including withoutlimitation 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 definedin 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 HoldingCompany 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.

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

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 orany 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 witha federally insured depository institution. Our opinions are limited to those expressly set forth herein, and we express no opinions byimplication.

The opinions expressed herein are solely for the benefit of the addressees hereof in connection with the transaction referred to herein and maynot 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 tothe 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 noresponsibility or obligation to update this opinion, to consider its applicability or correctness to other than its addressees, or to take into accountchanges in law, facts or any other development of which we may later become aware.

2. For purposes of our opinions above, we have assumed that (i) the Borrower is a corporation validly existing and in good standing inits 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 filingsand 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) theDocuments 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.

Very truly yours,

EXHIBIT E

ASSIGNMENT CERTIFICATE

Assigning Bank:

Applicant:

This Certificate (the “Certificate”) is delivered pursuant to Section 8.10 of the Credit Agreement dated as of May 16, 2003 (together withall amendments, supplements, restatements and other modifications, if any, from time to time made thereto, the “Credit Agreement”), amongNorthern States Power Company, a Minnesota corporation (the “Borrower”), Wells Fargo Bank, National Association, as lead arranger andadministrative 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 namedabove pursuant to Section 8.10 of the Credit Agreement, and the Applicant wishes to become an Additional Bank pursuant thereto. ThisCertificate is an Assignment Certificate, as defined in the Credit Agreement, and is executed for purposes of informing the Agent and theBorrower of the transactions contemplate hereby and obtaining the consent of the Agent and the Borrower to the extent required under theCredit Agreement.

Accordingly, the undersigned hereby agree as follows:

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’sinterest under the Loan Documents shall be for the account of the Assigning Bank. Any interest, fees and other payments accruing on and afterthe Effective Date with respect to the interests assigned hereunder shall be for the account of the Applicant. Each of the Assigning Bank andthe 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 otherparty 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 theEffective Date, (i) the Agent has received counterparts of this Certificate duly executed and delivered by the Borrower (unless the Borrower’sconsent to the assignment hereunder is not required under Section 8.10 of the Credit Agreement), the Assigning Bank, the Agent and theApplicant, (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 termsand 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 AssigningBank’s Commitment in the amount of such Assigned Commitment Amount), (ii) the principal amount of Advances under Section 2.1 owing tothe Applicant shall be the amount designated as the “Assigned Committed Advances” opposite the Applicant’s signature below, and (iii) theApplicant’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 asthe “Retained Commitment Amount” opposite the Assigning Bank’s signature below (and the Assigning Bank shall be relieved of all of itsobligations under the Credit Agreement to the extent of the reduction in its Commitment Amount in accordance herewith), (ii) the principalamount 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 “RetainedPercentage” 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) aNote payable to the order of the Applicant in a face principal amount equal to the Applicant’s “Assigned Commitment Amount” (or, if theEffective Date is after the Commitment Termination Date, the Applicant’s “Assigned Committed Advances”), in substantially the form ofExhibit A to the Credit Agreement, and (ii) a Note payable to the order of the Assigning Bank in the amount of the “Retained CommitmentAmount” (or, if the Effective Date is after the Commitment Termination Date, the Assigning Bank’s “Retained Committed Advances”), insubstantially the form of Exhibit A to the Credit Agreement. The Agent shall deliver the foregoing Notes to the Applicant and the AssigningBank 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 ofthe 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) shallbe entitled to all rights, benefits and privileges accorded to a Bank in the Credit Agreement, (ii) shall be subject to all obligations of a Bankthereunder, 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 CreditAgreement and the Loan Documents.

9. Independent Credit Decision. The Applicant (a) acknowledges that it has received a copy of the Credit Agreement and the Schedulesand Exhibits thereto, together with copies of the most recent financial statements referred to in Section 4.5 or 5.1 of the Credit Agreement, andsuch other documents and information as it has deemed appropriate to make its own credit and legal analysis and decision to enter into thisAssignment Certificate; (b) acknowledges and agrees that in becoming an Additional Bank and in making any Advance under the CreditAgreement, 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 suchdocuments and information as it shall deem appropriate at the time, continue to make its own credit and legal decisions in taking or not takingaction 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 notax 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 theBorrower prior to the time that the Agent or Borrower is required to make any payment of principal, interest or fees hereunder, duplicateexecuted originals of U.S. Internal Revenue Service Form W-8ECI or W-8BEN (or appropriate replacement forms) and agrees to provide newForms W-8ECI or W-8BEN (or appropriate replacement forms) upon the expiration of any previously delivered form or comparable statementsin accordance with applicable U.S. law and regulations and amendments thereto, duly executed and completed by the Applicant, and (c) agreesto 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 writtenrequest of the Agent, execute and deliver such further documents and do such further acts and things as the Agent may reasonably request inorder 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 counterpartsshall be deemed to be an original and all of which shall together constitute one and the same certificate. Matters relating to this Certificate shallbe 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.

Consent of Agent

The Agent hereby consents to the foregoing Assignment.

Retained Committed Advances:$ [Assigning Bank]

Retained Commitment Amount:$

Retained Percentage: % By

Its

Assigned Committed Advances:$ [Applicant]

Assigned Commitment Amount:$

Assigned Percentage: % By

Its

Notice Address:

Telecopier:

WELLS FARGO BANK, NATIONALASSOCIATION

By

Its

Consent of Borrower

The Borrower hereby consents to the foregoing Assignment.


By

Its

EXHIBIT F

BORROWING CERTIFICATE

, 200

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

MAC N9305-031Sixth Street and Marquette AvenueMinneapolis, Minnesota 55479


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 Banksthat are parties thereto. As used herein, terms defined in the Credit Agreement and not otherwise defined herein have the meanings given themin 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 underSection 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 anydraw under such Letter of Credit)] requested by the Borrower (i) has been duly authorized by the Borrower’s board of directors pursuant to itsresolution 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 UtilitiesCommission], 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 havebeen 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 anydraw under such Letter of Credit)] requested by the Borrower complies with all applicable requirements of each board resolution andauthorization of the Minnesota Public Utilities Commission described above, including but not limited to any applicable limitation on theaggregate amount of debt that the Borrower may have outstanding at any one time.

NORTHERN STATES POWER COMPANY

By

Its

Attachment 1

Terms of Borrowing:

Terms of Letter of Credit:

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 bearinterest 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 .

SCHEDULE 4.2

CONSENTS

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

Minnesota Public Utilities Commission

SCHEDULE 4.4

SUBSIDIARIES

*Denotes Restricted Subsidiary

United Power and Land Company (100%)*NSP Financing I (100%)*NSP Financing II (100%)*NSP Nuclear Corporation (100%)

SCHEDULE 4.7

LITIGATION

1. See disclosure regarding legal proceedings of the Borrower under the heading NSP-Minnesota in Item 3 of the Borrower’s Annual Reporton 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 FinancialStatements contained in the 2002 Form 10-K.

2. SchlumberSema, Inc. v. Xcel Energy Inc – Under a 1996 Data Services Agreement (DSA), SchlumberSema, Inc. (SLB) providesautomated meter reading, distribution automation, and other data services to NSP-Minnesota. In September 2002, NSP-Minnesota issuedwritten notice that SLB had committed events of default under the DSA, including SLB’s nonpayment of approximately $7.4 million fordistribution automation assets. In November 2002, SLB demanded arbitration before the American Arbitration Association and assertedvarious 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 allegedfailure to sign the DA Transfer Agreement was cured, released, waived and/or barred by this court’s Order of May 4, 2000 approving the saleof CellNet Data Systems, Inc.’s assets to SLB”. NSP-Minnesota will vigorously oppose this motion.

SCHEDULE 4.8

ENVIRONMENTAL MATTERS

See disclosure regarding environmental contingencies of the Borrower in Note 13 to the Consolidated Financial Statements contained in the2002 Form 10-K.

SCHEDULE 4.22

COMPLIANCE WITH LAWS

See disclosure regarding legal proceedings of the Borrower under the heading NSP-Minnesota in Item 3 of the Borrower’s Annual Report onForm 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 FinancialStatements contained in the 2002 Form 10-K.

SCHEDULE 6.1

LIENS

None

a

EXHIBIT 4.02

EXECUTIONCOUNTERPART

CREDIT AGREEMENT

among

PUBLIC SERVICE COMPANY OF COLORADO;

BANK ONE, NA,as Administrative Agent;

WELLS FARGO BANK, NATIONAL ASSOCIATION,as Syndication Agent;

and


Closing Date: May 16, 2003

$350,000,000 Revolving Credit Facility

BANC ONE CAPITAL MARKETS, INC.and

WELLS FARGO BANK, NATIONAL ASSOCIATION,Co-Lead Arrangers

CREDIT AGREEMENT

Dated as of May 16, 2003

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

ARTICLE IDEFINITIONS

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 thisArticle 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 standardsof 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 orconsolidated with the Borrower or any Subsidiary of the Borrower after the date hereof; or any Person with respect to whom all or a substantialpart 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.

“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 controlwith such Person. A Person shall be deemed to control another Person if the controlling Person owns 25% or more of the voting securities (orother ownership interests) of the controlled Person or possesses, directly or indirectly, the power to direct or cause the direction of themanagement 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 sumof the Federal Funds Effective Rate for such day plus 1/2% per annum.

“Assignment Agreement” has the meaning set forth in Section 9.1.

“Authorizing Order” means any order of the Public Utilities Commission of the State of Colorado or any other regulatory body havingjurisdiction 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 thatbecomes 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 Banksseverally.

“Business Day” means (i) with respect to any borrowing, payment or rate selection of Eurodollar Rate Fundings, a day (other than aSaturday or Sunday) on which banks generally are open in Chicago and New York for the conduct of substantially all of their commerciallending activities, interbank wire transfers can be made on the Fedwire system and dealings in United States dollars are carried on in theLondon interbank market and (ii) for all other purposes, a day (other than a Saturday or Sunday) on which banks generally are open in Chicagofor 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 toSection 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 usedin 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 aPerson shall be deemed to have beneficial ownership of all securities that such Person has the right to acquire, whether such right is exercisableimmediately or only after the passage of time), directly or indirectly, of 25% or more of the then-outstanding voting capital stock of suchcorporation; or (ii) a change in the composition of the board of directors of such corporation or any corporate parent of such corporation suchthat continuing directors cease to constitute more

2

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 ofdirectors of the applicable corporation who assumed office prior to such date, and (ii) those members of the board of directors of the applicablecorporation who assumed office after such date and whose appointment or nomination for election by that corporation’s shareholders wasapproved 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 pursuantto Article II.

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

“Commitment Termination Date” means May 14, 2004, or the earlier date of termination in whole of the Commitments pursuant toSection 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 mayfrom time to time agree upon in writing, executed by the chief financial officer or treasurer of the Borrower, (i) setting forth relevant facts inreasonable 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 interimfinancial statements, to year-end audit adjustments, and (iii) stating whether or not such officer has knowledge of the occurrence of any Defaultor 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:

plus

3

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



“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 acombined capital and surplus of at least $250,000,000; (b) a commercial bank organized under the laws of any other country which is amember of the Organization for Economic Cooperation and Development, or a political subdivision of any such country, and having acombined capital and surplus of at least $250,000,000, provided that such bank is acting through a branch or agency located in the UnitedStates; 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., theResource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq., the Hazardous Materials Transportation Act, 49 U.S.C. § 1802 et seq., theToxic 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 WaterAct, 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 controlledgroup of corporations or a controlled group of trades or businesses, as described in sections 414(b) and 414(c), respectively, of the InternalRevenue 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) twoBusiness Days prior to the first day of such Interest Period, and having a maturity equal to such Interest Period, provided that (i) if ReutersScreen FRBD is not available to the Agent for any reason, the applicable Eurodollar Base Rate for the relevant Interest Period shall instead bethe applicable British Bankers’ Association Interest Settlement Rate for deposits in U.S. dollars as reported by any other generally recognizedfinancial information service as of 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, and having amaturity equal to such Interest Period, and (ii) if no such British Bankers’ Association Interest Settlement Rate is available to the Agent, theapplicable Eurodollar Base Rate for the relevant Interest Period shall instead be the rate determined by the Agent to be the rate at which BankOne or one of its Affiliate banks offers to place deposits in U.S. dollars with first-class banks in the London interbank market at approximately11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, in the approximate amount of Bank One’s relevantEurodollar 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) theEurodollar Base Rate applicable to such

4

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

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

“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.

“Excluded Taxes” has the meaning specified in Section 2.17.

“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 overnightFederal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published for suchday (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 suchrate 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 suchtransactions 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 paidby 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 theBorrower to U.S. Bank Trust National Association (formerly, First Trust of New York, National Association), as successor trustee to MorganGuaranty 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 NationalAssociation, 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, ineach case changing when and as the Alternate Base Rate changes.

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

“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 andunpaid balance of the purchase price owing by such Person on account of any assets or services purchased (other than trade payables and otheraccrued 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 anote or a similar written instrument; (iii) all Capitalized Lease obligations; (iv) all indebtedness secured by a Lien on any property owned bysuch Person, whether or not such indebtedness has been assumed by such Person or is nonrecourse to such Person; (v) notes payable and draftsaccepted representing extensions of credit whether or not representing obligations for borrowed money (other than such notes or drafts for thedeferred purchase price of assets or services to the extent such purchase price is excluded from clause (ii) above); (vi) indebtedness evidencedby bonds, notes or similar written instrument; (vii) the face amount of all letters of credit and bankers’ acceptances issued for the account ofsuch Person, and without duplication, all drafts drawn thereunder (other than such letters of credit, bankers’ acceptances and drafts for thedeferred purchase price of assets or services to the extent such purchase price is excluded from clause (ii) above); (viii) net obligations of suchPerson under Swap Contracts which constitute interest rate agreements or currency agreements; (ix) guaranty obligations of such Person withrespect 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 anycalculation of Funded Debt of the Borrower include (y) deferred taxes, or (z) so long as the Pledged Securities are held by the Agent pursuantto 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 accountingpractices applied in the financial statements of the Borrower referred to in Section 4.5, except for changes concurred in by Borrower’sindependent 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, chemicalwaste, radioactive material, explosives, known carcinogens, petroleum products and by-products and other dangerous, toxic or hazardouspollutants, 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.

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“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 endingon 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 itsSubsidiaries (determined on a consolidated basis) for such period, including but not limited to the interest portion of any Capitalized Lease andinterest expenses associated with Trust Preferred Securities; provided, however, that the foregoing shall be adjusted to reflect only the neteffect of any interest rate swap, interest hedging transaction or other similar arrangement entered into by the Borrower or any Subsidiary toreduce 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 monthsbeginning 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 drawnunder Letters of Credit for which the Banks have neither been reimbursed nor made any Advance.

“L/C Application” has the meaning set forth in Section 2.7.

“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.

“Lien” means any mortgage, deed of trust, lien, pledge, security interest or other charge or encumbrance, of any kind whatsoever, includingbut 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 theBorrower 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 ona consolidated basis as determined in accordance with GAAP, as shown on the most recent balance sheet of the Borrower and its Subsidiariesavailable as of the date of the determination.

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

“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 Documentswhich 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 ishereafter created or incurred, whether it is direct or indirect, due or to become due, absolute or contingent, primary or secondary, liquidated orunliquidated, or sole, joint, several or joint and several, including but not limited to principal of and interest on the Notes and all fees due underthis Agreement, any Fee Letter or any other Loan Documents and the obligation to fully fund the Cash Collateral Account pursuant toSection 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 notesreceivable sold by such Person, (ii) any liability under any Sale and Leaseback Transaction which is not a Capitalized Lease and (iii) allSynthetic 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, thearticles of organization and operating agreement of such company, and (iv) with respect to any entity, any and all other shareholder, partner ormember 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 aggregateCommitment 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 ofcredit 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 anyBank that is a fund which invests in bank loans and similar extensions of credit, any other fund that invests in bank loans and similarextensions of credit and is managed by the same investment advisor as such Bank or by an Affiliate of such investment advisor.

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“Payment Demand” means a written notice given by the Agent to the Trustee stating that the principal of the Pledged Securities has becomedue 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 CommitmentAmounts of all of the Banks. For purposes of this definition only, following the Commitment Termination Date, each Bank’s CommitmentAmount 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 arisingunder Swap Contracts, provided that each of the following criteria is satisfied: (a) such obligations are (or were) entered into by such Person inthe ordinary course of business for the purpose of directly mitigating risks associated with liabilities, commitments or assets held or to be heldby such Person or its Subsidiaries, changes in the value of securities issued by such Person or its Subsidiaries in conjunction with a securitiesrepurchase program not otherwise prohibited hereunder, and not for purposes of speculation or taking a “market view;” and (b) such SwapContracts do not contain any provision (“walk-away” provision) exonerating the non-defaulting party from its obligations to make payments onoutstanding 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 byTitle IV of ERISA.

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

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

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

“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.

“Reportable Event” means (i) a “reportable event”, described in Section 4043 of ERISA and the regulations issued thereunder, in respect ofany 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 isrequired to be filed under Section 4041 of ERISA, (iv) any other event or condition that could reasonably be expected to constitute grounds fortermination by the Pension Benefit Guaranty

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Corporation of, or the appointment by the appropriate United States District Court of a trustee to administer, any Plan, or (v) a complete orpartial 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 than50%.

“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) withrespect to which the Borrower is in any other manner obligated for the payment of money or otherwise to provide financial support, or (iii) aresecured 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 orotherwise 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 topay the probable liabilities on such Person’s debts as they come due, considering all financing alternatives and potential asset sales reasonablyavailable to such Person; (ii) such Person’s capital is not unreasonably small in relation to its business or any contemplated or undertakentransaction; (iii) such Person does not intend to incur, or believe (nor should it reasonably believe) that it will incur, debts beyond its ability topay such debts as they become due; and (iv) such Person is “solvent” within the meaning given that term and similar terms under applicablelaws relating to fraudulent transfers and conveyances. For purposes of this definition, the amount of any contingent liability at any time shall becomputed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that would reasonablybe 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 powerunder ordinary circumstances to elect a majority of the board of directors of such corporation, irrespective of whether or not at the time stock ofany other class or classes shall have or might have voting power by reason of the happening of any contingency, is at the time directly orindirectly owned by the Borrower, by the Borrower and one or more other Subsidiaries, or by one or more other Subsidiaries, (ii) anypartnership of which more than 50% of the partnership interest therein are directly or indirectly owned by the Borrower, by the Borrower andone or more other Subsidiaries, or by one or more other Subsidiaries, and (iii) any limited liability company or other form of businessorganization

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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 ratetransaction, commodity swap, commodity option, equity or equity index swap or option, bond, note or bill option, interest rate option, forwardforeign exchange transaction, cap, collar or floor transaction, currency swap, cross-currency rate swap, swaption, currency option or any othersimilar transaction (including any option to enter into any of the foregoing) or any combination of the foregoing, and, unless the contextotherwise 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 retentionlease or (ii) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person butwhich, upon the insolvency or bankruptcy of such Person, would be characterized as indebtedness of such Person (without regard to accountingtreatment). The amount of Synthetic Lease Obligations of any Person under any such lease or agreement shall be the amount which would beshown as a liability on a balance sheet of such Person prepared in accordance with GAAP if such lease or agreement were accounted for as aCapitalized Lease.

“Tangible Net Worth” means shareholders’ equity (including preferred stock), less intangible assets included in calculating suchshareholders’ equity, all determined in accordance with GAAP. For purposes of the foregoing calculation, intangible assets shall include butnot be limited to the value of patents, trademarks, trade names, copyrights, licenses, premiums paid on indebtedness, good will, prepaidexpenses, deferred charges and treasury stock. Tangible Net Worth with respect to the Borrower shall at all times be determined with respect tothe 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 retainedearnings and which excludes the Trust Preferred Securities to the extent included in Funded Debt), and (B) Funded Debt, all determined withrespect 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 preferredsecurities have the following characteristics:

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(i) such Trust Preferred Securities Subsidiary lends substantially all of the proceeds from the issuance of such preferred securities to theBorrower or a wholly-owned direct or indirect Subsidiary of the Borrower in exchange for subordinated debt issued by the Borrower orsuch 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 thedeferral of interest payments on the subordinated debt; and

“Trust Preferred Securities Subsidiary” means any Delaware business trust (or similar entity) (i) all of the common equity interest of whichis owned (either directly or indirectly through one or more wholly-owned Subsidiaries of the Borrower) at all times by the Borrower, (ii) thathas been formed for the purpose of issuing Trust Preferred Securities and (iii) substantially all of the assets of which consist at all times solelyof subordinated debt issued by the Borrower or a wholly-owned direct or indirect Subsidiary of the Borrower (as the case may be) andpayments 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 anysuccessor 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.

Section 1.2 Times.

All references to times of day in this Agreement shall be references to Chicago, Illinois 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 anyAccounting Practices Change, then the Borrower’s compliance with the covenants set forth in Section 6.7 and 6.8 shall be determined on thebasis of generally accepted accounting principles in effect immediately before giving effect to the Accounting Practices Change, until suchcovenants are amended in a manner satisfactory to the Borrower and the Required Banks in accordance with Section 10.13 hereof.

ARTICLE IIAMOUNT AND TERMS OF THE LOANS AND LETTERS OF CREDIT

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 Borrowerfrom time to time during the period from the date hereof to and including the Commitment Termination Date in an aggregate amount not toexceed 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

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

Amount, the Borrower may borrow, prepay pursuant to Section 2.11 and reborrow under this Section 2.1. The Advances made by each Bankunder 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 intereston 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 personpurporting to be authorized to request Advances on behalf of the Borrower. Each such notice or request shall specify (i) the date of therequested Borrowing, (ii) the amount thereof, and (iii) if any portion of such Borrowing will bear interest at a Eurodollar Rate, the InterestPeriod 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 dayon 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 threeBusiness Days prior to the date on which such Borrowing is to occur. Concurrent with any such notice or request, the Borrower shall deliver tothe Agent in writing (which may be by facsimile transmission) the certificate required by Section 3.3(b). Upon receiving a request for aBorrowing 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 requestedBorrowing 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 Banksof the amount of the requested Borrowing, the amount of each Bank’s Advance with respect thereto, and, if applicable, the fact that theBorrower has elected a Eurodollar Rate and the Interest Period selected by the Borrower. Upon fulfillment of the applicable conditions set forthin Article III, each Bank shall remit its Percentage of the requested Borrowing to the Agent in immediately available funds. So long as a Bankreceives notice of the requested Borrowing prior to 1:30 p.m. on the date that the requested Borrowing is to occur, or, if the requestedBorrowing 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 Advancewith 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. onthe 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 bycrediting the same to the Borrower’s demand deposit account maintained with the Agent or in such other manner as the Agent and theBorrower may from time to time agree. The Agent shall have no obligation to disburse the requested Borrowing if any condition set forth inArticle 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 integralmultiple 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 anAdvance by executing and delivering an appropriate confirmation certificate to the Agent. However, the Borrower shall be obligated to repayall Advances for which it actually received the moneys (including but not limited to all Advances the proceeds of which were deposited in anyaccount 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 tobe a representation that the statements set forth in Section 3.3 are correct.

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Section 2.3 Interest.

Section 2.4 Limitation of Outstandings.

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

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

(b) Unless the Borrower elects a Eurodollar Rate pursuant to this Section, the principal balance of each Advance shall bear interest atthe 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 telephonethat a Eurodollar Rate be applicable for the portion of the outstanding principal balance of the Advances (including any Advance requestedor to be requested) and for the Interest Period indicated by the Borrower in its request. The portion of the outstanding balance of theAdvances for which a Eurodollar Rate is requested (i) must be in the amount (as to all Advances combined) of $5,000,000 or an integralmultiple of $1,000,000 greater than $5,000,000, and (ii) if such request relates to Advances already outstanding, must, on the first day ofthe applicable Interest Period, either (1) bear interest at the Floating Rate, or (2) bear interest at a Eurodollar Rate with respect to which theInterest Period expires on such first day. In no event may the Borrower select an Interest Period extending beyond the CommitmentTermination Date. A request for a Eurodollar Rate (i) must be received by the Agent before 10:00 a.m. on the day three Business Daysbefore the first day of the proposed Interest Period (and the Agent shall give the Banks prompt notice thereof), and (ii) may not berescinded by the Borrower after such request has been made. Subject to the terms and conditions set forth herein, the applicable EurodollarRate shall (subject to fluctuations in the applicable Eurodollar Rate Margin) be the interest rate applicable for the proposed Interest Periodto the portion of the outstanding principal balance of the Advances to which the Eurodollar Rate request related. At the termination of suchInterest Period, the interest rate applicable to the portion of the principal balance of the Advances to which the Eurodollar Rate request wasapplicable shall revert to the Floating Rate unless a new Eurodollar Rate request is made by the Borrower in accordance with thisAgreement. Notwithstanding anything to the contrary in this Section, (i) the Agent shall have no obligation to permit the application of aEurodollar Rate for any Interest Period if any Bank, in its sole discretion, determines that deposits in amounts equal to the requestedamount and maturing at the end of the proposed Interest Period are not readily available to such Bank from major banks in the Londoninterbank market, and (ii) without the consent of the Required Banks, the Agent will not permit the application of a Eurodollar Rate for anyInterest Period if a Default or Event of Default has occurred and is continuing when the request for the Eurodollar Rate is made. Absentmanifest error, the records of the Agent shall be conclusive evidence as to the amount of the Advances bearing interest at a EurodollarRate, the applicable Eurodollar Rate and the date on which the Interest Period applicable to such Eurodollar Rate expires.

Section 2.5 Principal and Interest Payment Dates.

Section 2.6 Level Status and Margins.

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(a) Interest. Interest accruing on the principal balance of the Floating Rate Advances shall be due and payable on the last day of eachMarch, June, September and December and on the Commitment Termination Date. Interest accruing at a Eurodollar Rate shall be due andpayable 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 threemonths after the beginning of the Interest Period and after each such interest payment date thereafter, and on the last day of the InterestPeriod 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 Securitiesby S&P and Moody’s, in accordance with the following table:


S&P A- or better BBB+ orbetter, butless than A-

BBB orbetter, butless than BBB+

BBB- orbetter, butless than BBB

Less thanBBB-

Moody’s A3 or better Baa1 orbetter, butless than A3

Baa2 orbetter, butless than Baa1

Baa3 orbetter, butless than Baa2

Less thanBaa3

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 theapplicable columns are adjacent to each other, the Level Status in effect shall be based on the rightmost of the applicable columns, (ii) ifthe applicable columns are separated by a single column, the Level Status in effect shall be based on the column between those twocolumns, and (iii) if the applicable columns are separated by two or more columns, the Level Status in effect shall be based on the columnto the immediate left of the rightmost applicable column.


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

Section 2.7 Letters of Credit.

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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 inparagraph (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 LevelStatus V.

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


Floating Rate Margin 0% 0% 0% 0.125% 0.650%Eurodollar Rate Margin 0.750% 0.850% 0.950% 1.125% 1.650%Facility Fee Rate 0.125% 0.150% 0.175% 0.250% 0.350%

(d) Upon the occurrence of any Event of Default, and so long as such Event of Default continues without written waiver thereof by theBanks, a default increment equal to 200 basis points (2.00%) shall be added to the Floating Rate Margin, Eurodollar Rate Margin andFacility Fee Rate. Inclusion of such default increment in calculating the Floating Rate Margin, Eurodollar Rate Margin and Facility FeeRate shall not be deemed a waiver or excuse of any such Event of Default.

(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, wouldexceed the aggregate Commitment Amounts, or (ii) the face amount of that Letter of Credit, together with the then-applicable L/CAmount, 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 andreimbursement agreement (an “L/C Application”) in the Issuing Bank’s standard form, as required by the Issuing Bank.

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(c) Each Letter of Credit shall be issued in a form acceptable to the Issuing Bank. Unless otherwise approved by all of the Banks, noLetter 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 anannual rate equal to the Eurodollar Rate Margin applied to the face amount of that Letter of Credit outstanding from time to time, from andincluding the date of issuance of that Letter of Credit until the expiration thereof, payable in arrears on the last day of each calendar quarterand on the Commitment Termination Date and, if later, the expiry date of such Letter of Credit. The Borrower shall also pay to the IssuingBank 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 Letterof Credit, payable in arrears on the last day of each calendar quarter and on the Commitment Termination Date and, if later, the expiry dateof such Letter of Credit. In addition, the Borrower shall pay or reimburse the Issuing Bank for such additional fees as are specified in theFee Letters and for such normal and customary costs and expenses as are incurred or charged by the Issuing Bank in issuing, effectingpayment 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 notearlier made, on the Commitment Termination Date) for any amount to be paid by the Issuing Bank upon any drawing under any Letter ofCredit issued by the Issuing Bank, without presentment, protest or other formalities of any kind; provided that the Borrower shall nothereby be precluded from asserting any claim for direct (but not consequential) damages suffered by the Borrower to the extent, but only tothe extent, caused by (i) the willful misconduct or gross negligence of the Issuing Bank in determining whether a request presented underany 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 Letterof Credit issued by it after the presentation to it of a request strictly complying with the terms and conditions of such Letter of Credit. Allsuch 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 Creditwithin 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 faceamount of that Letter of Credit. If the Issuing Bank makes any payment pursuant to the terms of any Letter of Credit and is not promptlyreimbursed, the Issuing Bank may request that each other Bank pay such Bank’s Percentage of the unreimbursed amount. Upon receipt ofany such request prior to 1:30 p.m. on a Business Day, the recipient shall be unconditionally and irrevocably obligated to pay itsPercentage of the unreimbursed amount to the Issuing Bank in immediately available funds prior to 3:00 p.m. on such date. Noticesreceived 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 whendue hereunder, interest on the unpaid amount shall accrue

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from and including the date of the Issuing Bank’s request to the date of payment at the Federal Funds Effective Rate. After making anypayment to the Issuing Bank under this subsection in connection with a particular Letter of Credit, a Bank shall be entitled to participate tothe extent of its Percentage in the related reimbursements received by the Issuing Bank from the Borrower or otherwise. Upon receivingany 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 BusinessDay preceding the Commitment Termination Date, an amount equal to the then-applicable L/C Amount, less the balance (if any) thenoutstanding 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 andirrespective of any setoff, counterclaim or defense to payment which the Borrower may have or have had against the Issuing Bank, anyBank or any beneficiary of a Letter of Credit. The Borrower further agrees with the Issuing Bank and the Banks that neither the IssuingBank nor any Bank shall be responsible for, and the Borrower’s reimbursement obligation in respect of any Letter of Credit shall not beaffected by, among other things, the validity or genuineness of documents or of any endorsements thereon, even if such documents shouldin 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 anyclaims or defenses whatsoever of the Borrower or of any of its Affiliates against the beneficiary of any Letter of Credit or any suchtransferee. The Issuing Bank shall not be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of anymessage or advice, however transmitted, in connection with any Letter of Credit. The Borrower agrees that any action taken or omitted bythe Issuing Bank or any Bank under or in connection with any Letter of Credit and the related drafts and documents, if done without grossnegligence or willful misconduct, shall be binding upon the Borrower and shall not put the Issuing Bank or any Bank under any liability tothe 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 theIssuing 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 documentbelieved 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 uponadvice and statements of legal counsel, independent accountants and other experts selected by the Issuing Bank. The Issuing Bank shall befully justified in failing or refusing to take any action under this Agreement unless it shall first have received such advice or concurrence ofthe Required Banks as it reasonably deems appropriate or it shall first be indemnified to its reasonable satisfaction by the Banks againstany and all liability and expense which

Section 2.8 Facility and Utilization Fees.

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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 arequest of the Required Banks, and such request and any action taken or failure to act pursuant thereto shall be binding upon the Banks andany 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 respectivedirectors, officers, agents and employees, from and against any and all claims and damages, losses, liabilities, costs or expenses whichsuch Bank, the Issuing Bank or the Agent may incur (or which may be claimed against such Bank, the Issuing Bank or the Agent by anyPerson whatsoever) by reason of or in connection with the issuance, execution and delivery or transfer of or payment or failure to payunder 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 fulfillor comply with its obligations to the Issuing Bank hereunder (but nothing herein contained shall affect any rights the Borrower may haveagainst any defaulting Bank) or (ii) by reason of or on account of the Issuing Bank issuing any Letter of Credit which specifies that theterm “Beneficiary” included therein includes any successor by operation of law of the named Beneficiary, but which Letter of Credit doesnot require that any drawing by any such successor Beneficiary be accompanied by a copy of a legal document, satisfactory to the IssuingBank, 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 Creditissued 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 ofCredit after the presentation to it of a request strictly complying with the terms and conditions of such Letter of Credit. Nothing in thisSection 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 anddisbursements), claim, demand, action, loss or liability (except such as result from such indemnitees’ gross negligence or willfulmisconduct or the Issuing Bank’s failure to pay under any Letter of Credit after the presentation to it of a request strictly complying withthe terms and conditions of the Letter of Credit) that such indemnitees may suffer or incur in connection with this Section 2.7 or any actiontaken 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 FacilityFee Rate applied to the

Section 2.9 Other Fees.

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’sown account and not for the benefit of the Banks, certain additional fees in the amounts set forth in the Fee Letters.

Section 2.10 Termination or Reduction of the Commitment.

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 promptlynotify the Banks) permanently to terminate the Commitments in whole or permanently to reduce the Commitment Amounts in part, withoutpenalty 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 CommitmentAmounts shall be pro rata as to each Bank in accordance with that Bank’s Percentage, and (iv) no reduction shall reduce the CommitmentAmounts to an amount less than the sum of the

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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-applicableUtilization Fee Rate applied to the average daily Outstandings. The Utilization Fee Rate in effect on any day shall be an annual ratedetermined on the basis of the Outstandings Percentage and Level Status on that day, in accordance with the following table:

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 facility fee and utilization fee set forth in this Section shall be due and payable quarterly in arrears on the last day of eachMarch, June, September and December during the term of the Commitments. Any facility and utilization fees remaining unpaid on theCommitment 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 theeffective date of such reduction) at the time.

Section 2.11 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 thefull amount of the Advances shall include accrued interest thereon, (iii) any prepayment of any portion of the principal balance of anyAdvances which, at the time of such prepayment, bears interest at a Eurodollar Rate shall be accompanied by compensation as specified inSection 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 aEurodollar Rate shall be made in a principal amount of $5,000,000 or higher integral multiple of $1,000,000. Each partial prepayment ofprincipal on the Advances shall be applied, first, to that portion of such Advances bearing interest at the Floating Rate, and, second, to thatportion of such Advances bearing interest at a Eurodollar Rate.

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 or366 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 yearof 360 days.

Section 2.13 Payments.

All payments of principal and interest under the Advances and L/C Amounts and of the fees hereunder shall be made to the Agent inimmediately available funds, without setoff or counterclaim. Payments received after noon on any day shall be deemed received on the nextsucceeding Business Day. The Borrower agrees that the amount shown on the books and records of each Bank as being the principal balance ofthat Bank’s Obligations, if any, shall be prima facie evidence of such principal balance. The Borrower hereby authorizes the Agent to chargeagainst 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 Agentand the Banks under this Agreement, or (at the Banks’ option) to effect a Borrowing in such amount, all without receipt of any request for suchcharge or Borrowing.

Section 2.14 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 bemade on the next succeeding Business Day, and such extension of time shall in each case be included in the computation of payment of intereston such Obligations or the fees hereunder, as the case may be.

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Section 2.15 Use of Advances and Letters of Credit.

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

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:

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(a) If at any time after the date hereof any adoption of or change in any applicable law, rule or regulation or the interpretation oradministration 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 oftaxation of payments to any Bank of the principal of or interest on any portion of the principal balance of that Bank’s Advancesbearing 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 withor 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 theprincipal balance of that Bank’s Advances bearing interest at a Eurodollar Rate and the result of any of the foregoing would beto increase the cost to that Bank of making or maintaining any such portion or to reduce any sum received or receivable by thatBank 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 compensatethat Bank for such increased cost or reduction. A Bank shall not make demand hereunder unless that Bank is generally imposing suchincreased costs on its similarly situated customers. No Bank may demand such compensation more than 90 days following the end of theInterest Period with respect to which such demand is made; provided, however, that the foregoing shall in no way limit the right of anyBank to demand compensation to the extent that such compensation relates to the retroactive application of any law, rule or regulation ifsuch demand is made within 90 days after the adoption of or change in such law, rule or

Section 2.17 Taxes.

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

(b) The Borrower shall also compensate any Bank, upon written request by that Bank (which request shall set forth the basis forrequesting such amounts), for all losses and expenses in respect of any interest or other consideration paid by that Bank to lenders of fundsborrowed by it or deposited with it to maintain any portion of the principal balance of the Advances at a Eurodollar Rate which that Bankmay sustain to the extent not otherwise compensated for hereunder and not mitigated by the reemployment of such funds if anyprepayment of any such portion occurs on a date that is not the expiration date of the relevant Interest Period or if a Borrowing orprepayment in whole or in part of an Advance bearing interest at a Eurodollar Rate fails to occur. A certificate as to any such loss orexpense (including calculations, in reasonable detail, showing how that Bank computed such loss or expense) shall be promptly submittedby that Bank to the Borrower and shall, in the absence of manifest error, be conclusive and binding as to the amount thereof. Such loss orexpense may be computed as though that Bank acquired deposits in the London interbank market to fund that portion of the principalbalance 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 orthe Notes shall be made without any setoff or other counterclaim, and free and clear of and without deduction for or on account of anypresent or future taxes now or hereafter imposed by any governmental or other authority, except to the extent that such deduction orwithholding 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 governmentor other authority of the country, state or political subdivision in which such Payee is incorporated or in which its principal executive officeor the office through which the Payee is acting is located (“Excluded Taxes”)) as well as all levies, imposts, duties, charges, or fees ofwhatever nature. If the Borrower is compelled by law to make any such deductions or withholdings it will:


(ii) except to the extent that such deduction or withholding results from a breach by any Payee of the representations and covenantscontained 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 suchdeductions or withholdings (including any required deduction or withholding on such additional amounts) shall equal theamount such

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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 tothe 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 maypay such Taxes and the Borrower promptly shall reimburse such Payee to the full extent otherwise required by such paragraph. Theobligations of the Borrower under this Section 2.17 shall survive any termination of this Agreement. Each Bank by its execution of thisAgreement represents (and each additional Bank by its execution of any Assignment Agreement pursuant to Section 9.1 shall be deemed torepresent) to each other Bank, the Agent and the Borrower that if such Bank is organized under the laws of any jurisdiction other than theUnited 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 fromU.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 theamount of any offsetting tax benefit which such Bank receives as a result of the Borrower’s payment to the relevant authorities asreasonably determined by such Bank; provided, however, that (i) such Bank shall be the sole judge of the amount of such tax benefit andthe 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 shallsubsequently determine that it has lost the benefit of all or a portion of such tax benefit, the Borrower shall promptly remit to such Bankthe 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 hadbeen 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 politicalsubdivision thereof asserts a claim that the Agent or the Borrower did not properly withhold tax from amounts paid to or for the account ofany Bank (because the appropriate form was not delivered or properly completed, because such Bank failed to notify the Agent or theBorrower of a change in circumstances which rendered its exemption from withholding ineffective, or for any other reason), such Bankshall indemnify the Agent or the Borrower, as applicable, fully for all amounts paid, directly or indirectly, by the Agent or the Borrower, asapplicable, as tax, withholding therefor, or otherwise, including penalties and interest, and including taxes imposed by any jurisdiction onamounts 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 ofthe Agent or

Section 2.18 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 requirethe 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:

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 ademand for payment of the amount necessary to restore that Bank’s Return for the quarter in which the notice is sent and, if applicable, thepreceding quarter, and shall state in reasonable detail the cause for the reduction in its Return and its calculation of the amount of suchreduction. Thereafter, that Bank may send a new notice with respect to each calendar quarter setting forth the calculation of the reduced Returnfor that quarter and including a demand for payment of the amount necessary to restore its Return for that quarter. In such event, the Borrowershall pay the Bank such amount within 30 days after demand by such Bank. A Bank’s calculation in any such notice shall be conclusive andbinding absent demonstrable error. A Bank shall not make demand hereunder unless that Bank is

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the Borrower, as applicable). The obligations of the Bank under this Section 2.17(d) shall survive the payment of the Obligations andtermination 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 Bankunder this Agreement during such period, by (ii) the average capital that Bank is required to maintain during such period as a result of itsbeing a party to this Agreement, as determined by that Bank based upon its total capital requirements and a reasonable attribution formulathat takes account of the Capital Adequacy Rules then in effect. Return may be calculated for each calendar quarter and for the shorterperiod 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 theinterpretation thereof by any governmental or regulatory authority. Capital Adequacy Rules include rules requiring financial institutions tomaintain 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, butthe term does not include any changes in applicable requirements that at the date hereof are scheduled to take place under the existingCapital Adequacy Rules or any increases in the capital that any Bank is required to maintain to the extent that the increases are requireddue 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 inthe 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 than45 days following the end of the quarter for which compensation is sought.

Section 2.19 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 2.17or 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 ifsuch 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 Agreementand all other applicable documents, and the payment of any fees required under Section 9.1), all of its rights and obligations hereunder andunder such Bank’s Note, including but not limited to such Bank’s Commitment, to an Eligible Bank identified by the Borrower and willing tobecome a Bank hereunder. Such Bank may be an existing Bank hereunder. Notwithstanding the foregoing, the Borrower may not compel theresignation of any Bank as the Agent except as provided in Section 8.12.

ARTICLE IIICONDITIONS PRECEDENT

Section 3.1 Conditions to Effectiveness.

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 thefollowing, each in form and substance satisfactory to each Bank:

Section 3.2 Initial Conditions Precedent.

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 shallhave 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:

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


Section 3.3 Conditions Precedent to All Advances and Letters of Credit.

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 furtherconditions precedent that on the date of such Advance or Letter of Credit:

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(c) The Pledged Securities, properly issued by the Borrower pursuant to the First Collateral Trust Securities Indenture, in the principalamount of $350,000,000, copies of the First Mortgage Bonds, properly issued by the Borrower to the Trustee pursuant to the FirstMortgage Bond Indenture, in the principal amount of $350,000,000, as the basis for issuance of the Pledged Securities, and the relatedsupplemental indentures to the First Collateral Trust Securities Indenture and the First Mortgage Bond Indenture, company orders andbond 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 ofthe Loan Documents and other documents contemplated hereunder have been duly approved by all necessary action of the Board ofDirectors of the Borrower, and attaching true and correct copies of the applicable resolutions granting such approval, (ii) certifying thatattached 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 documentscontemplated 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 performanceby the Borrower of this Agreement and the other Loan Documents to which it is a party and the transactions contemplated hereby andthereby.

(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 thePledged 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 asthough made on and as of such

ARTICLE IVREPRESENTATIONS AND WARRANTIES


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 theirrespective jurisdictions of incorporation, and are each duly licensed or qualified to transact business in all jurisdictions where the character ofthe property owned or leased or the nature of the business transacted by them makes such licensing or qualification necessary, except where thefailure to be so licensed or qualified (i) will not permanently preclude the Borrower or any Subsidiary from maintaining any material action inany 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 otherMaterial Adverse Change. The Borrower has all requisite power and authority, corporate or otherwise, to conduct its business, to own itsproperties and to execute, deliver, and perform all of its obligations under, the Loan Documents, the Pledged Securities, the Related FirstMortgage Bonds and the Indentures.

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

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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’slegal 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 anEvent of Default.

(a) The execution, delivery and performance by the Borrower of the Loan Documents, the Indentures and the Pledged Securities, theborrowings from time to time hereunder, the issuance of the Pledged Securities, the issuance of the Related First Mortgage Bonds and theconsummation of the transactions herein and therein contemplated, have been duly authorized by all necessary corporate action and do notand 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 orforeign, other than those consents described in Schedule 4.2, each of which has been obtained and is in full force and effect, (ii) violate anyprovision of any law, rule or regulation (including, without limitation, Regulation X of the Board of Governors of the Federal ReserveSystem and Section 7 of the Exchange Act or any regulation promulgated thereunder) or of any order, writ, injunction or decree presentlyin effect having applicability to the Borrower or of the Organizational Documents of the Borrower, (iii) result in a breach of or constitute adefault under any indenture or loan or

Section 4.3 Legal Agreements.

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 extentthat such enforcement may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally or bygeneral equitable principles. Without limiting the generality of the foregoing, the Pledged Securities have been duly executed, issued anddelivered by the Borrower and duly authenticated by the Trustee, and the Pledged Securities will be entitled to the benefits provided by theFirst Collateral Trust Securities Indenture and the Related First Mortgage Bonds have been duly executed, issued and delivered by theBorrower and duly authenticated by the trustee under the First Mortgage Bond Indenture, and the Related First Mortgage Bonds will be entitledto 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 ofthe Borrower or any other Subsidiary in each as of the date of this Agreement. The Borrower has no Restricted Subsidiaries as of the datehereof except as designated on Schedule 4.4. Except as otherwise indicated in that Schedule, all shares of each Subsidiary owned by theBorrower 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 theyear ended and as of December 31, 2002 and the unaudited consolidated financial statements of the Borrower and its Subsidiaries for thequarter ended and as of March 31, 2003. Those financial statements fairly present in all material respects the financial condition of theBorrower on the dates thereof and the results of its operations and cash flows for the periods then ended, and were prepared in accordance withGAAP as then in effect. The information, exhibits and reports furnished by the Borrower to the Agent and the Banks, taken as a whole, inconnection with the negotiation of or compliance with

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credit agreement or any other material agreement, lease or instrument to which the Borrower or any Subsidiary is a party or by which it orits properties may be bound or affected, or (iv) result in, or require, the creation or imposition of any Lien or other charge or encumbranceof any nature (other than the Liens created under this Agreement, the First Collateral Trust Securities Indenture and the First MortgageBond 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 PledgedSecurities, the Related First Mortgage Bonds and the incurrence by the Borrower of the Obligations under this Agreement.

the Loan Documents did not contain any material misstatement of fact or omit to state a material fact or any fact necessary to make thestatements contained therein not misleading.

Section 4.6 Adverse Change.

There has been no Material Adverse Change since December 31, 2002.

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 againstor 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 AdverseChange. Other than any liability incident to any litigation, arbitration or proceeding which could not reasonably be expected to have a MaterialAdverse Effect, the Borrower has no material contingent obligations not provided for or disclosed in the financial statements referred to inSection 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 anySubsidiary or other Person has ever caused or permitted any Hazardous Substance to be disposed of on, under or at any real property which isoperated by the Borrower or any Subsidiary or in which the Borrower or any Subsidiary has any interest, except to the extent that such disposalcan not reasonably be expected to result in a Material Adverse Change; and (ii) no such real property has ever been used (either by theBorrower or by any Subsidiary or other Person) as a dump site or permanent or temporary storage site for any Hazardous Substance in amanner 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 Advancewill 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 taxesrequired to be withheld and paid by them. The Borrower and its Subsidiaries have each filed all federal, state and local tax returns which to theknowledge of the officers of the Borrower or any Subsidiary are required to be filed, and the Borrower and its Subsidiaries have each paid orcaused 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 suchtaxes have become due, other than taxes whose amount, applicability or validity is being

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contested in good faith by appropriate proceedings and for which the Borrower or applicable Subsidiary has provided adequate reserves inaccordance 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.

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 itsSubsidiaries, taken as a whole, which it purports to own or which are reflected as owned on its books and records, and the Borrower has goodand valid title to all real and fixed property and leasehold rights described or enumerated in the First Collateral Trust Securities Indenture andin the First Mortgage Bond Indenture (except, in each case, such properties as have been released from the Lien thereof in accordance with theterms thereof), in each case free and clear of all Liens and encumbrances, except for Liens and encumbrances permitted by Section 6.1 andcovenants, restrictions, rights, easements and minor irregularities in title which do not materially interfere with the business or operations of theBorrower 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 lastday of the most recent fiscal year of such Plan ended prior to the date hereof, and no liability to the Pension Benefit Guaranty Corporation orthe 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.

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(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 anational 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 thePledged Securities to the Agent) the Pledged Securities by means of any general solicitation or general advertising within the meaning ofRule 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 hasoffered or sold to any person any

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 termis 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 anyrequirement for SEC approval under PUHCA.

Section 4.17 Indenture.

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Pledged Securities, or any securities of the same or a similar class as the Pledged Securities, other than the Pledged Securities delivered tothe Agent hereunder. The Borrower will take reasonable precautions designed to insure that any offer or sale, direct or indirect, in theUnited States or to any U.S. person (as defined in Rule 902 under the Act) of any Pledged Securities or any substantially similar securityissued by the Borrower, within six months subsequent to the delivery of the Pledged Securities to the Agent, is made under restrictions andother circumstances reasonably designed not to affect the status of the offer and sale of the Pledged Securities contemplated by thisAgreement 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 themanner contemplated by this Agreement.

(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 underthe 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 respectto the Borrower.

(c) Substantially all of the property, whether real, personal or mixed, of the electric utility business of the Borrower is subject to theLiens of the First Collateral Trust Securities Indenture. Substantially all of the property, whether real, personal or mixed, of the Borroweris 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 Indentureand 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 inconnection with the

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 hasbeen no change in the facts and circumstances set forth in the application to the Trustee for authentication of the Pledged Securities (and thedocuments submitted therewith) from the date of such application to the date hereof. All covenants and conditions precedent to theauthentication and delivery of the Related First Mortgage Bonds have been complied with, and there has been no change in the facts andcircumstances set forth in the application to the trustee under the First Mortgage Bond Indenture for authentication of the Related FirstMortgage Bonds (and the documents submitted therewith) from the date of such application to the date hereof.

Section 4.19 Solvency.

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

Section 4.20 Swap Obligations.

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


The properties of the Borrower and its Subsidiaries are insured with financially sound and reputable insurance companies not Affiliates of theBorrower, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similarbusinesses and owning similar properties in localities where the Borrower and such Subsidiaries operate.

Section 4.22 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 jurisdictionover the conduct of their respective businesses or the ownership of their respective properties, assets and rights.

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Pledged Securities and the Related First Mortgage Bonds are not required to be qualified under the Trust Indenture Act and, in connectionwith the issuance and delivery of the Pledged Securities to the Agent as contemplated by this Agreement, the First Collateral TrustSecurities Indenture and the First Mortgage Bond Indenture are not required to be qualified under the Trust Indenture Act.

ARTICLE VAFFIRMATIVE 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 thefollowing requirements, unless the Required Banks shall otherwise consent in writing:

Section 5.1 Financial Statements; Other Notices.


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(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 auditreport of the Borrower and its Subsidiaries prepared by nationally recognized independent certified public accountants, which annualreport shall include the balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal year and the related statements ofincome, shareholders’ equity and cash flows of the Borrower and its Subsidiaries for the fiscal year then ended, all presented on aconsolidated 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 theBorrower, a balance sheet of the Borrower and its Subsidiaries as at the end of such quarter and related statements of earnings and cashflows of the Borrower and its Subsidiaries for such quarter and for the year to date, in reasonable detail and prepared on a consolidatedbasis 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 thechief 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 substancereasonably acceptable to the Agent, addressed to the Agent and the Banks, advising the Agent and the Banks of such issuance, stating therestrictions, if any, that such Authorizing Order imposes on the Borrower’s ability to obtain Borrowings or Letters of Credit hereunder, andattaching 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 anySubsidiary 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 orregulatory agency affecting the Borrower or any Restricted Subsidiary of the type described in Section 4.7 or which seek a monetaryrecovery against the Borrower or any Restricted Subsidiary combined in excess of $50,000,000.

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 completeentries will be made in accordance with GAAP. Upon request of any Applicable Party, as defined below, the Borrower will, and will causeeach Subsidiary to, give any representative of such Applicable Party access to, and permit such representative to examine, copy or makeextracts 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 bonafide non-disclosure agreement not entered into primarily for the purpose of evading the requirements of this Section), to inspect any of itsproperties (subject to such physical security

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(g) As promptly as practicable (but in any event not later than five Business Days) after an officer of the Borrower obtains knowledgeof the occurrence of any Default or Event of Default, notice of such occurrence, together with a detailed statement by a responsible officerof 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 4975of the Internal Revenue Code or Section 406 of ERISA) in connection with any Plan or any trust created thereunder which couldreasonably be expected to result in a liability to the Borrower or any Subsidiary in excess of $50,000,000, a written notice specifying thenature thereof, what action the Borrower has taken, is taking or proposes to take with respect thereto, and, when known, any action takenor 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 thePension Benefit Guaranty Corporation’s intent to terminate any Plan or to have a trustee appointed to administer any Plan, and (b) allnotices received by the Borrower, any Restricted Subsidiary or any ERISA Affiliate from a Multiemployer Plan concerning the impositionor amount of withdrawal liability imposed pursuant to Section 4202 of ERISA, which withdrawal liability individually or in the aggregateexceeds $50,000,000.


(k) Promptly after it obtains knowledge of any such change, notice (by telephone, followed by written notice transmitted promptlythereafter in accordance with Section 10.4) of any change in the rating by S&P or Moody’s of the First Collateral Trust Securities, togetherwith 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 beenplaced 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 Bankmay 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 itsprincipal officers, all at such times during normal business hours, upon reasonable notice, and as often as such Applicable Party mayreasonably 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 fromdiscussing the general affairs, finances and accounts of the Borrower with any of its principal officers at such times during normal businesshours and as often as may be agreed to between the Borrower and such Bank.

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 noncompliancewith which would effect a Material Adverse Change.

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 leviedor 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 anySubsidiary shall be required to pay any such tax, assessment, charge or claim (i) whose amount, applicability or validity is being contested ingood faith by appropriate proceedings and for which the Borrower or such Subsidiary has provided adequate reserves in accordance withGAAP 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 itsbusiness in good condition, repair and working order; provided, however, that nothing in this Section shall prevent the Borrower or anySubsidiary from discontinuing the operation and maintenance of, or disposing of, any of its properties if (i) (A) such discontinuance ordisposition is, in the reasonable judgment of the Borrower or that Subsidiary, desirable in the conduct of its business, and (B) no Default orEvent of Default exists at the time of, or will be caused by, such discontinuance or disposition, or (ii) such discontinuance or disposition relatesto obsolete or worn-out property.


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

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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, privilegesand 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 ormaintenance thereof is no longer desirable in the conduct of the business of the Borrower or that Restricted Subsidiary, and (ii) no Default orEvent of Default exists upon, or will be caused by, the termination of such right, privilege, franchise or existence; provided, further, that in noevent 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 ofPledged Securities, the Borrower agrees to furnish at its expense, upon request, to holders of Pledged Securities and prospective purchasers ofsecurities information satisfying the requirements of subsection (d)(4)(i) of Rule 144A under the Act.

Section 5.9 Use of Proceeds.

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, norwill 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 definedin Regulation U) or to make any acquisition of any corporation, partnership, limited liability company or other business entity unless, prior tomaking such acquisition, the Borrower or such Subsidiary shall have obtained written approval from the board of directors or other governingbody of such entity.

ARTICLE VINEGATIVE COVENANTS

So long as any Note shall remain unpaid or any Commitment or L/C Amount shall be outstanding, the Borrower agrees that, without the priorwritten 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 notpermit 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:

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(b) Materialmen’s, merchants’, carriers’ worker’s, repairer’s, or other like liens arising in the ordinary course of business to the extentnot 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 othersimilar laws, or to secure the performance of bids, tenders, contracts (other than for the repayment of borrowed money) or leases or tosecure statutory obligations or surety or appeal bonds, or to secure indemnity, performance or other similar bonds in the ordinary course ofbusiness.

(d) Zoning restrictions, easements, licenses, restrictions on the use of real property or minor irregularities in title thereto, which do notmaterially impair the use of such property in the operation of the business of the Borrower and its Subsidiaries taken as a whole or thevalue 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 the90th day following the acquisition or completion of construction of such property by the Borrower or its applicable Subsidiary, and (ii) nosuch 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 propertiesin working order.

(f) Liens granted by any Acquisition Target prior to the acquisition by the Borrower or any Subsidiary of any interest in suchAcquisition Target or its assets, so long as (i) such Lien was granted by the Acquisition Target prior to such acquisition and not incontemplation thereof, and (ii) no such Lien extends to any assets of the Borrower or any Subsidiary other than the assets of theAcquisition Target and improvements and modifications thereto necessary to maintain such properties in working order or, in the case ofan 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 hereofand 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 MortgageBond Indenture.

(i) Liens permitted under the First Collateral Trust Securities Indenture and the First Mortgage Bond Indenture as such indentures existon 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 amountof such indebtedness secured by any such Lien does not exceed the amount of such refinanced indebtedness immediately prior to therefinancing and Liens do not extend to assets other than those encumbered prior to such refinancing and improvements and modificationsthereto.

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 theAssets of the Borrower and its Subsidiaries (whether in one transaction or in a series of transactions) to any other Person other than (i) in theordinary 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 otherenergy-related assets; provided, however, that a wholly-owned Subsidiary of the Borrower may sell, lease, or transfer all or a substantial part ofits assets to the Borrower or another wholly-owned Subsidiary of the Borrower, and the Borrower or such other wholly-owned Subsidiary, asthe 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 asa 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 transactionanalogous in purpose or effect to a consolidation or merger) all or substantially all of the assets of any other Person; provided, however, thatthe restrictions contained in this Section shall not apply to or prevent the consolidation or merger of any Person with, or a conveyance ortransfer 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, suchconsolidation, 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.

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.

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

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 toany Affiliate of the Borrower or (ii) enter into any transaction or series of transactions, whether or not in the ordinary course of business, withany officer, director, shareholder, Affiliate (other than a Subsidiary) of the Borrower; provided, however, that the foregoing shall not prohibitany of the following:

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 theBorrower 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 lessthan 2.75 to 1.

ARTICLE VIIEVENTS OF DEFAULT, RIGHTS AND REMEDIES

Section 7.1 Events of Default.

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

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

(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 theBorrower and/or its Subsidiaries, complying with the requirements of FERC Order No. 2000.

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

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(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 samebecome 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 LoanDocument (including but not limited to Section 6.4, but excluding any other covenant or agreement a default in whose performance orwhose breach is elsewhere in this Section specifically dealt with), and the continuance of such default or breach for a period of 30 daysafter the Agent, at the request of any Bank, has given notice to the Borrower specifying such default or breach and requiring it to beremedied.

(e) Any representation or warranty made by the Borrower in this Agreement or any other Loan Document or by the Borrower (or any ofits officers) in any certificate, instrument, or statement contemplated by or made or delivered pursuant to or in connection with thisAgreement, 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 withtheir terms; or the principal amount outstanding under the Pledged Securities shall at any time be less than the greater of the Outstandingsor 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 anyindebtedness or any Swap Contract of the Borrower or any Subsidiary (other than the Obligations) if the aggregate amount of all suchindebtedness 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 anySwap Contract of the Borrower or any Subsidiary (other than the Obligations) or under any indenture or other instrument under which anysuch 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 ofsuch indebtedness (or trustee or agent on behalf of such holder) to cause such indebtedness to come due prior to its stated maturity or is tocause 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 allsuch indebtedness and Swap Contracts as to which such defaults have occurred and are continuing is less than $50,000,000; providedfurther that if such default shall be cured by the Borrower or such Subsidiary, or waived by the holders of such indebtedness orcounterparties in respect of such Swap Contracts, in each case prior to

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the commencement of any action under Section 7.2 and as may be permitted by such evidence of indebtedness, indenture, other instrumentor Swap Contract, then the Event of Default hereunder by reason of such default shall be deemed likewise to have been thereupon cured orwaived.

(i) The Borrower or any Restricted Subsidiary shall be adjudicated a bankrupt or insolvent, or admit in writing its inability to pay itsdebts as they mature, or make an assignment for the benefit of creditors; or the Borrower or any Restricted Subsidiary shall apply for orconsent 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 suchappointment 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 theBorrower or any Restricted Subsidiary and such judgment, writ, or similar process shall not be released, vacated, stayed or fully bondedwithin 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 theBorrower or that Restricted Subsidiary as debtor; or an involuntary petition shall be filed against the Borrower or any Restricted Subsidiaryunder the United States Bankruptcy Code, and such petition shall not have been dismissed within 60 days after such filing; or an order forrelief 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 respectto 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 ofsuch judgment, decree or order, together with the amount of all other such judgments, decrees and orders then outstanding, less (in eachcase) the portion thereof covered by insurance proceeds, is greater than $50,000,000 and if such judgment, decree or order remainsunsatisfied 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 anunfunded liability in excess of $50,000,000; or a trustee shall have been appointed by an appropriate United States District Court toadminister any Plan, or the Pension Benefit Guaranty Corporation shall have instituted proceedings to terminate any Plan or to appoint atrustee to administer any Plan and in either case such action could reasonably be expected to result in liability to

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, theAgent may, with the consent of the Required Banks, and shall, upon the request of the Required Banks, exercise any or all of the followingrights and remedies:

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the Borrower or any Subsidiary in excess of $50,000,000, or withdrawal liability in excess of $50,000,000 shall have been asserted againstthe Borrower or any Subsidiary or ERISA Affiliate by a Multiemployer Plan; or the Borrower or any Subsidiary or ERISA Affiliate shallhave incurred any joint and several liability to the Pension Benefit Guaranty Corporation, the Internal Revenue Service or the Departmentof Labor, or the Borrower or any Subsidiary shall have incurred any other liability to the Pension Benefit Guaranty Corporation, theInternal Revenue Service or the Department of Labor in excess of $50,000,000 with respect to any Plan; or any Reportable Event that theRequired Banks may determine in good faith could reasonably be expected to constitute grounds for the termination of any Plan by thePension Benefit Guaranty Corporation, for the appointment by the appropriate United States District Court of a trustee to administer anyPlan or for the imposition of withdrawal liability with respect to a Multiemployer Plan, and which, in any such case, could reasonably beexpected to result in liability to the Borrower or any Subsidiary or any ERISA Affiliate in excess of $50,000,000 shall have occurred andbe 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 outstandingor the conduct of the Borrower’s business substantially as presently conducted shall be suspended or revoked or shall fail to be renewedupon expiration.

(o) Any court, government or governmental agency shall condemn, seize or otherwise appropriate, or take custody or control of, all orany 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 theCommitment Termination Date (or earlier, if required pursuant to Section 7.2(c)) an amount equal to the aggregate face amount of alloutstanding Letters of Credit.

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

(b) The Agent may, by notice to the Borrower, declare the entire unpaid principal amount of the Obligations then outstanding, allinterest accrued and unpaid thereon, and all other Obligations payable under this Agreement to be forthwith due and payable, whereuponthe 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.

Notwithstanding the foregoing, upon the occurrence of an Event of Default described in Section 7.1(j) hereof (whether or not such Event ofDefault also arises under Section 7.1(i) hereof), the Commitments shall terminate and the entire unpaid principal amount of the Notes thenoutstanding, all interest accrued and unpaid thereon, and all other amounts payable under this Agreement shall be immediately due and payablewithout presentment, demand, protest or notice of any kind.

Section 7.3 Pledge of Cash Collateral Account.

The Borrower hereby pledges, and grants the Agent, as agent for the Banks, including the Issuing Bank, a security interest in, all sums held inthe Cash Collateral Account from time to time and all proceeds thereof as security for the payment of all amounts due and to become due fromthe Borrower to the Issuing Bank, the Agent and/or the Banks pursuant to this Agreement, including but not limited to both principal of andinterest on the Notes and all renewals, extensions and modifications thereof and any notes issued in substitution therefor, and specificallyincluding the Borrower’s obligation to reimburse the Issuing Bank for any amount drawn under any Letter of Credit, whether suchreimbursement 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, thelesser of (i) the Excess Balance (as defined below), or (ii) the balance of the Cash Collateral Account. If a Default or Event of Default thenexists, the Agent shall, upon the request of the Borrower apply the Excess Balance to the payment of the Obligations. As used herein, “ExcessBalance” means (A) after the fifth Business Day preceding the Commitment Termination Date, the amount by which the balance of the CashCollateral Account exceeds the L/C Amount, and (B) prior to the fifth Business Day preceding the Commitment Termination Date, the balanceof the Cash Collateral Account. The Agent shall have full control

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(c) If any Letter of Credit remains outstanding, the Agent may, by notice to the Borrower, require the Borrower to deposit in the CashCollateral 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 theBorrower to the payment of the Obligations then outstanding, including accrued interest. For purposes of this paragraph (d), “Bank” meansthe Banks, as defined elsewhere in this Agreement, and any participant in the loans made hereunder; provided, however, that each suchparticipant, by exercising its rights under this paragraph (d), agrees that it shall be obligated under Section 8.17 with respect to suchpayment 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 CashCollateral Account.

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

of the Cash Collateral Account, and, except as set forth above, the Borrower shall have no right to withdraw the funds maintained in the CashCollateral Account.

Section 7.4 Provisions Regarding Pledged Securities.

(a) Pledged Securities. The Borrower covenants and agrees that, for the purpose of providing security for the payment of the principal ofthe 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. ThePledged Securities shall mature on May 14, 2004, unless payable prior thereto upon an Event of Default under Section 7.1(a), (b), or (p) orupon 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 thePledged Securities at any time while any Commitment or Letter of Credit remains outstanding, and (y) the Agent shall not demand payment ofthe 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 obligationof the Borrower to pay principal on the Pledged Securities as the same shall have come due and payable shall have been fully satisfied anddischarged unless and until the Trustee shall have received a Payment Demand from the Agent stating that the principal of Pledged Securitieshas become due and payable and specifying the amount of funds required to make such payment. Notwithstanding anything to the contrarycontained herein, the aggregate amount actually due on the Pledged Securities shall not exceed the aggregate principal amount of the Advancesand 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 PledgedSecurities 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 Securitiesshall be deemed satisfied and discharged as to the reduced or terminated unutilized portion of the Commitments, as and to the extent providedin 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 PledgedSecurities 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 themeanings of Rule 501(a) of Regulation D

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and is acquiring its interest in the Pledged Securities hereunder as security for the Obligations and not with a view to any sale or distributionthereof within the meaning of the Act.

ARTICLE VIIITHE AGENT

Section 8.1 Appointment; Nature of Relationship.

Bank One is hereby appointed by each of the Banks as its contractual representative (herein referred to as the “Agent”) hereunder and undereach other Loan Document, and each of the Banks irrevocably authorizes the Agent to act as the contractual representative of such Bank withthe rights and duties expressly set forth herein and in the other Loan Documents. The Agent agrees to act as such contractual representativeupon the express conditions contained in this Article VIII. Notwithstanding the use of the defined term “Agent,” it is expressly understood andagreed that the Agent shall not have any fiduciary responsibilities to any Bank by reason of this Agreement or any other Loan Document andthat the Agent is merely acting as the contractual representative of the Banks with only those duties as are expressly set forth in this Agreementand the other Loan Documents. In its capacity as the Banks’ contractual representative, the Agent (i) does not hereby assume any fiduciaryduties 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 theother Loan Documents. Each of the Banks hereby agrees to assert no claim against the Agent on any agency theory or any other theory ofliability 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 eachthereof, together with such powers as are reasonably incidental thereto. The Agent shall have no implied duties to the Banks, or any obligationto the Banks to take any action thereunder except any action specifically provided by the Loan Documents to be taken by the Agent.

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 actiontaken or omitted to be taken by it or them hereunder or under any other Loan Document or in connection herewith or therewith except to theextent such action or inaction is determined in a final non-appealable judgment by a court of competent jurisdiction to have arisen from thegross 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, orverify (a) any statement, warranty or representation made in connection with any Loan Document or any borrowing hereunder; (b) theperformance

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or observance of any of the covenants or agreements of any obligor under any Loan Document, including, without limitation, any agreement byan obligor to furnish information directly to each Bank; (c) the satisfaction of any condition specified in Article III, except receipt of itemsrequired 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 connectiontherewith, or (f) the financial condition of the Borrower or of any of the Borrower’s Subsidiaries. The Agent shall have no duty to disclose tothe Banks information that is not required to be furnished by the Borrower to the Agent at such time, but is voluntarily furnished by theBorrower to the Agent (either in its capacity as Agent or in its individual capacity).

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 inaccordance with written instructions signed by the Required Banks (or, when expressly required hereunder, all of the Banks), and suchinstructions and any action taken or failure to act pursuant thereto shall be binding on all of the Banks. The Banks hereby acknowledge that theAgent shall be under no duty to take any discretionary action permitted to be taken by it pursuant to the provisions of this Agreement or anyother Loan Document unless it shall be requested in writing to do so by the Required Banks. The Agent shall be fully justified in failing orrefusing to take any action hereunder and under any other Loan Document unless it shall first be indemnified to its satisfaction by the Bankspro 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 Agent hereunder and under any other Loan Document by or through employees, agents, andattorneys-in-fact and shall not be answerable to the Banks, except as to money or securities received by it or its authorized agents, for thedefault or misconduct of any such agents or attorneys-in-fact selected by it with reasonable care. The Agent shall be entitled to advice ofcounsel concerning the contractual arrangement between the Agent and the Banks and all matters pertaining to the Agent’s duties hereunderand 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 believedby 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 theopinion 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 havebeen terminated, in proportion to their Commitments immediately prior to such termination) (i) for any amounts not reimbursed by theBorrower for which the Agent is entitled to reimbursement by the Borrower under the Loan

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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 connectionwith 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 inconnection therewith or the transactions contemplated thereby (including, without limitation, for any such amounts incurred by or assertedagainst the Agent in connection with any dispute between the Agent and any Bank or between two or more of the Banks), or the enforcementof 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 tothe extent any of the foregoing is found in a final non-appealable judgment by a court of competent jurisdiction to have resulted from the grossnegligence or willful misconduct of the Agent and (ii) any indemnification required pursuant to Section 2.17(d) shall, notwithstanding theprovisions of this Section 8.8, be paid by the relevant Bank in accordance with the provisions thereof. The obligations of the Banks under thisSection 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 hereunder unless the Agenthas received written notice from a Bank or the Borrower referring to this Agreement describing such Default or Event of Default and statingthat 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 theBanks.

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 respectto 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 andits Affiliates may accept deposits from, lend money to, and generally engage in any kind of trust, debt, equity or other transaction, in additionto those contemplated by this Agreement or any other Loan Document, with the Borrower or any of its Subsidiaries in which the Borrower orsuch Subsidiary is not restricted hereby from engaging with any other Person. The Agent, in its individual capacity, is not obligated to remain aBank.

Section 8.11 Bank Credit Decision.

Each Bank acknowledges that it has, independently and without reliance upon the Agent, the Arranger or any other Bank and based on thefinancial statements prepared by the Borrower and such other documents and information as it has deemed appropriate, made its own creditanalysis and decision to enter into this Agreement and the other Loan Documents. Each Bank also acknowledges that it will, independently andwithout reliance upon the Agent, the Arranger or

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any other Bank and based on such documents and information as it shall deem appropriate at the time, continue to make its own creditdecisions in taking or not taking action under this Agreement and the other Loan Documents.

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 theappointment of a successor Agent or, if no successor Agent has been appointed, forty-five days after the retiring Agent gives notice of itsintention to resign. The Agent may be removed at any time with or without cause by written notice received by the Agent from the RequiredBanks, such removal to be effective on the date specified by the Required Banks; provided that the Agent may not be removed unless theAgent (in its individual capacity) and any affiliate thereof acting as Issuing Bank is relieved of all of its duties as Issuing Bank pursuant todocumentation reasonably satisfactory to such Person on or prior to the date of such removal. Upon any such resignation or removal, theRequired Banks shall have the right to appoint, on behalf of the Borrower and the Banks, a Bank as a successor Agent. If no successor Agentshall have been so appointed by the Required Banks within thirty days after the resigning Agent’s giving notice of its intention to resign, thenthe resigning Agent may appoint, on behalf of the Borrower and the Banks, a successor Agent. Notwithstanding the foregoing, (i) the Agentmay at any time without the consent of any Bank and with the consent of the Borrower, not to be unreasonably withheld or delayed, appointany of its Affiliates which is a commercial bank as a successor Agent hereunder and (ii) so long as no Event of Default exists, no successorAgent may be appointed without the prior written consent of the Borrower, not to be unreasonably withheld or delayed. If the Agent hasresigned or been removed and no successor Agent has been appointed, the Banks may perform all the duties of the Agent hereunder and theBorrower shall make all payments in respect of the Obligations to the applicable Bank and for all other purposes shall deal directly with theBanks. No successor Agent shall be deemed to be appointed hereunder until such successor Agent has accepted the appointment. Any suchsuccessor Agent shall be a commercial bank having capital and retained earnings of at least $100,000,000. Upon the acceptance of anyappointment 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, theresigning or removed Agent shall be discharged from its duties and obligations hereunder and under the Loan Documents. After theeffectiveness of the resignation or removal of an Agent, the provisions of this Article VIII shall continue in effect for the benefit of such Agentin 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. Inthe event that there is a successor to the Agent by merger, or the Agent assigns its duties and obligations to an Affiliate pursuant to thisSection 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 newAgent.

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 suchAffiliate (and such Affiliate’s directors, officers, agents and employees) which performs duties in connection with this Agreement shall beentitled

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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 Titles.

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 orany other Loan Document on account of such identification other than those applicable in their capacity (if any) as Banks. Each Bankacknowledges that it has not relied, and will not rely, on any Person so identified in deciding to enter into this Agreement or in taking orrefraining from taking any action hereunder or pursuant hereto.

Section 8.15 Distribution of Payments and Proceeds.

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(a) After deduction of any costs of collection as hereinafter provided, the Agent shall remit to each Bank that Bank’s Percentage of allpayments of principal, interest, Letter of Credit fees payable under Section 2.7(d) and facility and utilization fees payable under Section2.8 that are received by the Agent under the Loan Documents. Each Bank’s interest in the Loan Documents shall be payable solely frompayments, collections and proceeds actually received by the Agent under the Loan Documents; and the Agent’s only liability to the Bankshereunder 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, upondemand, its Percentage of such payments, collections or proceeds, together with its Percentage of interest or penalties, if any, payable bythe Agent in connection with such refund. The Agent may, in its sole discretion, make payment to the Banks in anticipation of receipt ofpayment from the Borrower. If the Agent fails to receive any such anticipated payment from the Borrower, each Bank shall promptlyrefund to the Agent, upon demand, any such payment made to it in anticipation of payment from the Borrower, together with interest foreach 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 asrequired hereunder, or if the principal balance of any Bank’s Note is for any other reason less than its Percentage of the aggregate principalbalances of the Notes then outstanding, the Agent may remit all payments received by it to the other Banks until such payments havereduced the aggregate amounts owed by the Borrower to the extent that the aggregate amount owing to such Bank hereunder is equal to itsPercentage of the aggregate amount owing to all of the Banks hereunder. The provisions of this paragraph are intended only to set forthcertain rules for the application of payments, proceeds and collections in the event that a Bank has breached its obligations hereunder andshall not be deemed to excuse any Bank from such obligations.

Section 8.16 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 LoanDocument (including but not limited to all reasonable attorney’s fees, foreclosure expenses and advances made to protect the security ofcollateral, if any, but excluding any costs, expenses, damages or liabilities arising from the gross negligence or willful misconduct of theAgent). 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 itsPercentage of the difference between (i) such costs, expenses, damages and liabilities, and (ii) such payments, collections and proceeds.

Section 8.17 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 orotherwise) on account of principal of or interest on any Note other than through distributions made in accordance with Section 8.2, such Bankor holder shall promptly give notice of such fact to the Agent and shall purchase from the other Banks or holders such participations in theNotes held by them as shall be necessary to cause the purchasing Bank or holder to share the excess payment or other recovery ratably witheach of them; provided, however, that if all or any portion of the excess payment or other recovery is thereafter recovered from suchpurchasing Bank or holder, the purchase shall be rescinded and the purchasing Bank restored to the extent of such recovery (but withoutinterest thereon).

Section 8.18 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 thePledged Securities and subsequent distribution of proceeds thereunder, constitutes or will constitute an offer of any security, a solicitation of anoffer to buy any security, or a placement of any security.

ARTICLE IXASSIGNMENTS AND PARTICIPATIONS

Section 9.1 Assignments.

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(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 ofthe Obligations and Commitment so assigned in any assignment shall be not less than $5,000,000, and the assigning Bank shall retain atleast $5,000,000 of such Obligations and Commitment for its own account; provided, however, that the foregoing restriction shall notapply to a Bank assigning its entire Obligations and Commitment to the Applicant. Any Bank proposing an assignment hereunder shallgive notice of such assignment to the Agent and the Borrower at least ten

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 extentof the reduction of such Bank’s Percentage, and (c) the Additional Bank shall become a party hereto and shall be entitled to all rights, benefitsand privileges accorded to a Bank herein and in each other document or instrument executed pursuant hereto and subject to all obligations of aBank hereunder, including

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Business Days prior to such assignment (unless the Agent consents to a shorter period of time). Such notice shall specify the identity ofsuch Applicant and the Percentage which it proposes that such Applicant acquire (which Percentage shall be the same for the Commitmentand the Note held by the assigning Bank). Any assignment hereunder may be made only with the prior written consent of the Agent, theIssuing Bank and the Borrower; provided, however, that (i) in no event shall such consent be unreasonably withheld, and (ii) the consent ofthe 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 partyto this Agreement and to evidence the assignment of the applicable portion of the assigning Bank’s Commitment, Letter of Creditparticipations 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 anddeliver to the Agent an Assignment Agreement (provided that, if a Default or Event of Default has occurred and is continuingon the applicable Adjustment Date, the assignment will be effective whether the Borrower signs it or not), in substantially theform 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 Banka new Note, payable to the order of the Applicant in an amount corresponding to the applicable interest in the assigning Bank’srights and obligations acquired by such Applicant pursuant to such assignment, and, if the assigning Bank has retained interestsin such rights and obligations, a new Note, payable to the order of that Bank in an amount corresponding to such retainedinterests. Such new Notes shall be in an aggregate principal amount equal to the principal amount of the Note to be replaced bysuch new Notes (or, if less, the Commitment Amount of the assigning Bank prior to giving effect to such assignment, unlesssuch assignment is made after the Commitment Termination Date, in which case the aggregate principal amount of the newNotes shall equal the outstanding principal balance of the Note to be replaced by such new Notes), shall be dated the effectivedate of such assignment and shall otherwise be in the form of the Note to be replaced thereby. Such new Notes shall be issuedin substitution for, but not in satisfaction or payment of, the Note being replaced thereby; and

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.

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

53

(c) In order to facilitate the addition of Additional Banks hereto, the Borrower shall (subject to the written agreement of any prospectiveAdditional Bank to be subject to the confidentiality provisions of Section 10.1) provide all reasonable assistance requested by each Bankand 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 reasonablyrequest and the participation by officers of the Borrower in a meeting or teleconference call with any Applicant upon the reasonablerequest 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 consentof the Borrower or the Agent) to sell, assign, transfer, or negotiate all or any part of its Commitment, Advances, Notes, andother rights and obligations under this Agreement and the Loan Documents to one or more Affiliates of such Bank, providedthat, 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 suchAffiliate 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 consentof the Borrower or the Agent) to sell, assign, transfer, or negotiate all or any part of its Commitment, Advances, Notes, andother 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 theobligations so transferred (except, in any event, to the extent that the Borrower, any other Bank or the Agent has rights againstsuch transferring Bank as a result of any default by such transferring Bank under this Agreement);

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

(f) Notwithstanding anything to the contrary contained herein, any Bank (a “Granting Bank”) may grant to a special purpose fundingvehicle (an “SPC”) of such Granting Bank, identified as such in writing from time to time by the Granting Bank to

54

the Agent and the Borrower, the option to provide to the Borrower all or any part of any Advance that such Granting Bank wouldotherwise be obligated to make to the applicable Borrower pursuant to this Agreement; provided that (i) nothing herein shall constitute acommitment 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 partof such Advance, the Granting Bank shall be obligated to make such Advance pursuant to the terms hereof, (iii) such Granting Bank’sother obligations under this Agreement shall remain unchanged, (iv) such Granting Bank shall remain solely responsible to the otherparties hereto for the performance of such obligations, and (v) the Borrower, the Agent and the other Banks shall continue to deal solelyand directly with such Granting Bank in connection with such Granting Bank’s rights and obligations under this Agreement (including anyrights and obligations assigned to such SPC). The making of an Advance by an SPC hereunder shall be deemed to utilize the Commitmentof the applicable Granting Bank to the same extent, and as if, such Advance were made by such Granting Bank. Each party hereto herebyagrees that no SPC shall be liable for any indemnity or similar payment obligation under this Agreement (all liability for which shallremain with the applicable Granting Bank). All notices hereunder to any Granting Bank or the related SPC, and all payments in respect ofthe Obligations due to such Granting Bank or the related SPC, shall be made to such Granting Bank. In addition, each Granting Bank shallvote as a Bank hereunder without giving effect to any assignment under this paragraph (f), and no SPC shall have any vote as a Bank underthis Agreement for any purpose. In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive thetermination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding seniorindebtedness 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 writtenconsent of, the Borrower or the Agent and without paying any transfer fee therefor, assign all or a portion of its interests in its right torepayment of any Advances to its Granting Bank or to any financial institutions providing liquidity and/or credit support to or for theaccount of such SPC to fund the Advances made by such SPC or to support the securities (if any) issued by such SPC to fund suchAdvances and (ii) disclose on a confidential basis, to the extent such disclosure would be permitted under Section 10.1 as if such SPC werea 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 hasmade 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 ofits rights under this Agreement and that Bank’s Note in favor of any Federal Reserve Bank in accordance with Regulation A of the Boardof Governors of the Federal Reserve System.

Section 9.2 Participations.

Each Bank may grant participations in a portion of its Advances, Letter of Credit participations and Commitments to any Eligible Lender, uponprior written notice to the Agent but without the consent of the Agent or the Borrower, but only so long as the principal amount of theparticipation 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 anysuch 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 actiondescribed in paragraph (a) of Section 10.3. No Bank shall, as between the Borrower and such Bank, be relieved of any of its obligationshereunder as a result of any such granting of a participation. The Borrower hereby acknowledges and agrees that any participant described inthis 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 shallnot 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 LoanDocument or Commitment.

ARTICLE XMISCELLANEOUS

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 keepconfidential) 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 anyother Bank; (ii) to any Affiliate of any Bank in connection with the transactions contemplated hereby, provided that such Affiliate has beeninformed of the confidential nature of such information; (iii) to legal counsel, accountants and other professional advisors to the Agent or suchBank; (iv) to any regulatory body having jurisdiction over any Bank or the Agent; (v) to the extent required by applicable laws and regulationsor by any subpoena or similar legal process, or requested by any governmental agency or authority; (vi) to the extent such DisclosedInformation (A) becomes publicly available other than as a result of a breach of this Agreement, (B) becomes available to the Agent or suchBank 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 anon-confidential basis prior to its disclosure to the Agent or such Bank by the Borrower or a Subsidiary; (vii) to the extent the Borrower orsuch Subsidiary shall have consented to such disclosure in writing; (viii) to the extent reasonably deemed necessary by the Agent or any Bankin the enforcement of the remedies of the Agent and the Banks provided under the Loan Documents; or (ix) in connection with any potentialassignment or participation in the interest granted hereunder, provided that any such potential assignee or participant shall have executed aconfidentiality agreement imposing on such

55

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 maydisclose without limitation of any kind, any information with respect to the “tax treatment” and “tax structure” (in each case, within themeaning of Treasury Regulation Section 1.6011-4) of the transactions contemplated hereby and all materials of any kind (including opinions orother tax analyses) that are provided to the Agent or such Bank relating to such tax treatment and tax structure; provided that with respect toany document or similar item that in either case contains information concerning the tax treatment or tax structure of the transaction as well asother information, this sentence shall only apply to such portions of the document or similar item that relate to the tax treatment or tax structureof the Advances, Letters of Credit and transactions contemplated hereby. The Borrower and its Subsidiaries may also disclose withoutlimitation 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 waiverthereof; nor shall any Bank’s acceptance of payments while any Default or Event of Default is outstanding operate as a waiver of such Defaultor Event of Default, or any right, power or remedy under the Loan Documents; nor shall any single or partial exercise of any such right, poweror remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy under the Loan Documents. Theremedies provided in the Loan Documents are cumulative and not exclusive of any remedies provided by law.

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 effectiveunless 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 RequiredBanks), and any such waiver shall be effective only in the specific instance and for the specific purpose for which given. Notwithstanding theforegoing:

56

(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 withthe consent or at the request of each of the Banks):

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


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

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 othercircumstances.

Section 10.4 Notice.

Except as otherwise expressly provided herein, all notices and other communications hereunder shall be in writing and shall be (i) personallydelivered, (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 ortelecopier 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 otheraddress or telecopier number as may hereafter be designated in a notice by that party to the other party complying with the terms of thisSection. All such notices or other communications shall be deemed to have been given on (i) the date received if delivered personally, (ii) fivebusiness days after the date of posting, if delivered by mail, (iii) the date of receipt, if delivered by Federal Express or similar expediteddelivery service, or (iv) the date of transmission if delivered by telecopy, except that notices or requests to the Banks pursuant to any of theprovisions of Article II shall not be effective as to any Bank until received by that Bank.

Section 10.5 Costs and Expenses.

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 andthereunder, and (ii) all costs and expenses incurred by the Agent or any Bank in connection with the workout or enforcement of the LoanDocuments and the other instruments and documents to

57

(iv) Forgive any indebtedness of the Borrower arising under this Agreement or the Notes, or reduce the rate of interest or any feescharged 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, facilityfees 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 PledgedSecurities 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 Documentunless 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 theBorrower or obligations of any Bank or the Agent hereunder shall be effective unless the Borrower shall have consented thereto in writing.

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 theAgent for all of its out-of-pocket and allocated costs incurred in connection with each audit or examination conducted by the Agent, itsemployees or agents, which audits and examinations shall be for the sole benefit of the Agent and the Banks.

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 individuallyeach called an “Indemnitee” and collectively called the “Indemnitees”) from and against any and all losses, claims, damages, reasonableexpenses (including, without limitation, reasonable attorneys’ fees) and liabilities (all of the foregoing being herein called the “IndemnifiedLiabilities”) incurred by an Indemnitee in connection with or arising out of the execution or delivery of this Agreement or any agreement orinstrument contemplated hereby, the performance by the parties hereto of their respective obligations hereunder or the use of the proceeds ofany Advance or Letter of Credit hereunder (including but not limited to any such loss, claim, damage, expense or liability arising out of anyclaim that any Environmental Law has been breached with respect to any activity or property of the Borrower), except for any portion of suchlosses, claims, damages, expenses or liabilities incurred solely as a result of the gross negligence or willful misconduct of the applicableIndemnitee. If and to the extent that the foregoing indemnity may be unenforceable for any reason, the Borrower hereby agrees to make themaximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. Allobligations provided for in this Section shall survive any termination of this Agreement. Notwithstanding the foregoing, the Borrower shall notbe obligated to indemnify any Indemnitee in respect of any Indemnified Liabilities arising as a result of the Issuing Bank’s failure to pay underany Letter of Credit after the presentation to it of a request strictly complying with the terms and conditions of such Letter of Credit.

Section 10.7 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 deliveredshall be deemed to be an original and all of which counterparts of this Agreement or such other Loan Document, as the case may be, takentogether, shall constitute but one and the same instrument.

Section 10.8 Binding Effect, Assignment.

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 eachof the Banks.

Section 10.9 Governing Law.

THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALLBE CONSTRUED IN ACCORDANCE

58

WITH THE INTERNAL LAWS (INCLUDING, WITHOUT LIMITATION, 735 ILCS SECTION 105/5-1 ET SEQ, BUT OTHERWISEWITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS) OF THE STATE OF ILLINOIS, BUT GIVING EFFECT TOFEDERAL LAWS APPLICABLE TO NATIONAL BANKS.

Section 10.10 Severability of Provisions.

Any provision of this Agreement which is prohibited or unenforceable shall be ineffective to the extent of such prohibition or unenforceabilitywithout invalidating the remaining provisions hereof.

Section 10.11 Consent to Jurisdiction.

EACH PARTY HERETO HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITEDSTATES FEDERAL OR ILLINOIS STATE COURT SITTING IN CHICAGO, ILLINOIS IN ANY ACTION OR PROCEEDINGARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND EACH PARTY HERETO HEREBY IRREVOCABLYAGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED INANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THEVENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS ANINCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT, ANY BANK OR THE ISSUINGBANK TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. ANYJUDICIAL PROCEEDING BY THE BORROWER AGAINST THE AGENT OR ANY BANK OR ANY AFFILIATE OF THEAGENT 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 10.12 Waiver of Jury Trial.

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

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 followingsuch 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 toreflect the effects of such Accounting Practices Change.

59

Section 10.14 Headings.

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

Section 10.15 Nonliability of Banks.

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 ofborrower and lender. Neither the Agent, either Co-Lead Arranger, any Bank nor the Issuing Bank shall have any fiduciary responsibilities tothe Borrower. Neither the Agent, either Co-Lead Arranger, any Bank nor the Issuing Bank undertakes any responsibility to the Borrower toreview or inform the Borrower of any matter in connection with any phase of the Borrower’s business or operations. The Borrower agrees thatneither 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 transactionscontemplated and the relationship established by the Loan Documents, or any act, omission or event occurring in connection therewith, unlessit is determined in a final non-appealable judgment by a court of competent jurisdiction that such losses resulted from (i) the gross negligenceor willful misconduct of the party from which recovery is sought or (ii) the Issuing Bank’s failure to pay any Letter of Credit after thepresentation to it of a request strictly complying with the terms and conditions of such Letter of Credit. Neither the Agent, either Co-LeadArranger, any Bank nor the Issuing Bank shall have any liability with respect to, and the Borrower hereby waives, releases and agrees not tosue for, any special, indirect or consequential damages suffered by the Borrower in connection with, arising out of, or in any way related to theLoan Documents or the transactions contemplated thereby.


60

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

S-1

[Signature Page to Public Service Company of Colorado Credit Agreement]

PUBLIC SERVICE COMPANY OFCOLORADO

By /s/ Ben G.S. Fowke III

Its Vice President and Treasurer

S-2


BANK ONE, NA(Main Branch, Chicago), as AdministrativeAgent and as a Bank

By /s/ Jane A. Bek

Its Director

S-3


WELLS FARGO BANK, NATIONALASSOCIATION, as Syndication Agent and as aBank

By /s/ Scott D. Bjelde

Its Vice President and Senior Banker

By /s/ Christopher A. Cudak


S-4


THE BANK OF NEW YORK, asCo-Documentation Agent and a Bank

By /s/


S-5


KEYBANK NATIONAL ASSOCIATION, asCo-Documentation Agent and a Bank

By /s/

Its Vice President

S-6


UBS AG, CAYMAN ISLANDS BRANCH, asCo-Documentation Agent and a Bank

By /s/

Its Director

By /s/

Its Associate Director

S-7


US BANK NATIONAL ASSOCIATION, as aBank

By /s/ Christine J. Geer

Its Corporate Banking Officer

S-8


CITIBANK, N.A., as a Bank

By /s/ Dhaya Ranganathan

Its Vice President

S-9


JPMORGAN CHASE BANK, as a Bank

By /s/ Peter M. Ling


S-10


BARCLAYS BANK PLC, as a Bank

By /s/ Sydney G. Dennis

Its Director

S-11


BANK OF TOKYO-MITSUBISHI, LTD.,HOUSTON AGENCY, as a Bank

By /s/ D Barnell

Its Vice President

By /s/ John M Mearns

Its VP and Manager

S-12


CREDIT SUISSE FIRST BOSTON CAYMANISLAND BRANCH, as a Bank

By /s/ Sarah Wu

Its Vice President

By /s/ David J. Dodd

Its Associate

S-13


GOLDMAN SACHS CREDIT PARTNERS L.P.,as a Bank

By /s/ Stephen B. King

Its Authorized Signatory

S-14


BMO NESBITT BURNS FINANCING, INC., asa Bank

By /s/ Thomas H. Peer

Its Vice President

S-15


COMMERZBANK AG, NEW YORK ANDGRAND CAYMAN BRANCHES, as a Bank

By Dempsey Gable


By /s/ Andrew Kjoller

Its Vice President

S-16


BANK OF OKLAHOMA, N.A., as a Bank

By Thomas M. Foncannon


EXHIBIT A


Exhibit A-1


Public Service Company of Colorado N/A Xcel Energy Inc.800 Nicollet Mall, Suite 2900Minneapolis, MN 55402Attention: Mary SchellTelecopier: 612-215-5370

Bank One, NA, as Agent N/A One Bank One Plaza, Suite IL1-0363Chicago, IL 60670-0363Attention: Jane BekTelecopier: 312-732-5435

Bank One, NA (Main Branch, Chicago), as Co-LeadArranger and a Bank

$37,600,000 One Bank One Plaza, Suite IL1-0363Chicago, IL 60670-0363Attention: Jane BekTelecopier: 312-732-5435

Wells Fargo Bank, National Association, as SyndicationAgent and as a Bank

$37,600,000 MAC N9305-031Sixth and MarquetteMinneapolis, MN 55479Attention: Scott BjeldeTelecopier: 612-667-2276

The Bank of New York, as Co-Documentation Agent anda Bank

$30,800,000 One Wall Street, 19th FloorNew York, NY 10286Attention: Cynthia HowellsTelecopier: 212-685-7552

KeyBank National Association, as Co-DocumentationAgent and a Bank

$30,800,000 127 Public Square, 6th FloorCleveland, OH 44114Attention: Kathy A. KoenigTelecopier: 216-689-4981

UBS AG, Cayman Islands Branch, as Co-DocumentationAgent and a Bank

$30,800,000 677 Washington BoulevardStamford, CT 06901Attention: Marie HaddadTelecopier: 203-719-3888

US Bank NationalAssociation, as a Bank

$22,400,000 800 Nicollet MallMinneapolis, MN 55402Attention: Christine GeerTelecopier: 612-303-2265

Citibank, N.A., as a Bank $22,400,000 388 Greenwich Street, 21st FloorNew York, NY 10013Attention: Amit VasaniTelecopier: 212-816-8098

Exhibit A-2


JPMorgan Chase Bank, as a Bank $22,400,000 270 Park Avenue, 3rd FloorNew York, NY 10017Attention: Peter LingTelecopier: 212-270-

Barclays Bank PLC, as a Bank $22,400,000 200 Park Avenue, 4th FloorNew York, NY 10166Attention: Sydney DennisTelecopier: 212-412-2441

Bank of Tokyo-Mitsubishi, Ltd., Houston Agencyas a Bank

$22,400,000 601 Carlson Parkway, Suite 370Minnetonka, MN 55503Attention: Patrick McCueTelecopier: 952-473-5152

Credit Suisse First Boston Cayman IslandBranch, as a Bank

$16,800,000 Eleven Madison AvenueNew York, NY 10010Attention: Sarah WuTelecopier: 212-325-8321

Goldman Sachs Credit Partners L.P., as a Bank $14,000,000 85 Broad Street, 6th FloorNew York, NY 10004Attention: Philip F. GreenTelecopier: 212-428-1243

BMO Nesbitt Burns Financing, Inc., as a Bank $14,000,000 3 Times Square, 28th FloorNew York, NY 10036Attention: Thomas PeerTelecopier: 212-605-1451

Commerzbank AG, New York and GrandCayman Branches, as a Bank

$20,000,000 20 South Clark Street, Suite 2700Chicago, IL 60603Attention: Mr. J. Timothy ShortlyTelecopier: 312-236-2827

Bank of Oklahoma, N.A., as a Bank $5,600,000 1625 Broadway, Suite 1570Denver, CO 80202Attention: Tom FoncannonTelecopier: 303-534-9499

EXHIBIT B

PROMISSORY NOTE

, 200

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 principalamount of all advances made by the Bank to the Borrower pursuant to Section 2.1 of the Credit Agreement dated May 16, 2003 among theBorrower, 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 fromtime 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 ofpayments of principal and interest required hereunder, for the acceleration of this Note upon an Event of Default and for the mandatory andvoluntary 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.

Exhibit B-1

$ Chicago, Illinois

PUBLIC SERVICE COMPANY OF COLORADO

By

Its

EXHIBIT C

COMPLIANCE CERTIFICATE

,

Bank One, NA,for itself and as Agent under the CreditAgreement described below


Compliance Certificate


Reference is made to the Credit Agreement dated May , 2003 among Public Service Company of Colorado (the “Borrower”), BankOne, 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 CreditAgreement.

This is a Compliance Certificate submitted in connection with the Borrower’s financial statements (the “Statements”) 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

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


(c) The computations on the Annexes hereto set forth the Borrower’s compliance or non-compliance with the requirementsset forth in Section 6.7 and 6.8 as of the Effective Date.

Exhibit C-2

Very truly yours,

PUBLIC SERVICE COMPANY OF COLORADO

By

Its



Exhibit C-3

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) toItem 2(f))(not to be greater than 0.60 to 1.0) _______________ to 1.



Exhibit C-4

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)±(d)) $______________

2. Interest Expense (including Trust Preferred Securities) $_____________

3. Interest Coverage Ratio (Ratio of Item 1(e) toItem 2)(not to be greater than 2.75 to 1.0)

______________to 1.0

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 orextended 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 andassumes from the Assignor, an interest in and to the Assignor’s rights and obligations under the Credit Agreement and the other LoanDocuments, such that after giving effect to such assignment the Assignee shall have purchased pursuant to this Assignment Agreement thepercentage interest specified in Item 3 of Schedule 1 of all outstanding rights and obligations under the Credit Agreement and the other LoanDocuments relating to the facilities listed in Item 3 of Schedule 1. The aggregate Commitment (or Loans, if the applicable Commitment hasbeen 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 inItem 5 of Schedule 1 or two Business Days (or such shorter period agreed to by the Agent) after this Assignment Agreement, together with anyconsents required under the Credit Agreement, are delivered to the Agent. In no event will the Effective Date occur if the payments required tobe 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, onthe Effective Date, the amount agreed to by the Assignor and the Assignee. On and after the Effective Date, the Assignee shall be entitled toreceive from the Agent all payments of principal, interest and fees with respect to the interest assigned hereby. The Assignee will promptlyremit to the Assignor any interest on Loans and fees received from the Agent which relate to the portion of the Commitment or Loans assignedto the Assignee hereunder for periods prior to the Effective Date and not previously paid by the Assignee to the Assignor. In the event thateither party hereto receives any payment to which the other party hereto is entitled under this Assignment Agreement, then the party receivingsuch 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 Agentin 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 andwarrants 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 Assignorand (iii) the execution and delivery of this Assignment Agreement by the Assignor is duly authorized. It is understood and agreed that theassignment and assumption hereunder are made without recourse to the Assignor and that the Assignor makes no other representation orwarranty of any kind to the Assignee. Neither the Assignor nor any of its officers, directors, employees, agents or attorneys shall be responsiblefor (i) the due execution, legality, validity, enforceability, genuineness, sufficiency or collectability of any Loan Document, including withoutlimitation, documents granting the Assignor and the other Banks a security interest in assets of the Borrower or any guarantor, (ii) anyrepresentation, warranty or statement made in or in connection with any of the Loan Documents, (iii) the financial condition orcreditworthiness of the Borrower or any guarantor, (iv) the performance of or compliance with any of the terms or provisions of any of theLoan 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 actiontaken 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 theCredit Agreement, together with copies of the financial statements requested by the Assignee and such other documents and information as ithas 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 shalldeem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, (iii) appointsand authorizes the Agent to take such action as agent on its behalf and to exercise such powers under the Loan Documents as are delegated tothe Agent by the terms thereof, together with such powers as are reasonably incidental thereto, (iv) confirms that the execution and delivery ofthis Assignment Agreement by the Assignee is duly authorized, (v) agrees that it will perform in accordance with their terms all of theobligations which by the terms of the Loan Documents are required to be performed by it as a Bank, (vi) agrees that its payment instructionsand notice instructions are as set forth in the attachment to Schedule 1, (vii) confirms that none of the funds, monies, assets or otherconsideration being used to make the purchase and assumption hereunder are “plan assets” as defined under ERISA and that its rights, benefitsand interests in and under the Loan Documents will not be “plan assets” under ERISA, and (viii) agrees to indemnify and hold the Assignorharmless against all losses, costs and expenses (including, without limitation, reasonable attorneys’ fees) and liabilities incurred by theAssignor in connection with or arising in any manner from the Assignee’s nonperformance of the obligations assumed under this AssignmentAgreement. The Assignee (a) represents and warrants to the Agent and the Borrower that under applicable law and treaties no tax will berequired 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 thetime 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 withapplicable 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 ofIllinois.

9. NOTICES. Notices shall be given under this Assignment Agreement in the manner set forth in the Credit Agreement. For the purposehereof, 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 byfacsimile of an executed counterpart of this Assignment Agreement shall be deemed to constitute due and sufficient delivery of suchcounterpart 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 executingSchedule 1 hereto as of the date first above written.

Exhibit E-3

SCHEDULE 1

to Assignment Agreement

N/A***[Assignor/Assigneeto pay 100% of fee][Fee waived by Agent]

Exhibit E-4

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 theAssignor, 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 AggregateCommitment (Advances) purchased under theAssignment Agreement** ______%

b Amount of Assignor’s Commitmentpurchased under the AssignmentAgreement** $______

4. Assignee’s Commitment (or Loanswith respect to terminatedCommitments) purchasedhereunder: $____________________

5. Proposed Effective Date: _____________________________

6. Non-standard Recordation Fee Arrangement

Accepted and Agreed:

Exhibit E-5

[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]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

ACCEPTED AND CONSENTED TO****BY ACCEPTED AND CONSENTEDTO BY

PUBLIC SERVICECOMPANY OF COLORADO

BANK ONE, NA, as Agent

By: By:

Title Title

Attachment to SCHEDULE 1 to ASSIGNMENT AGREEMENT

ADMINISTRATIVE INFORMATION SHEET

Attach Assignor’s Administrative Information Sheet, which mustinclude notice addresses for the Assignor and the Assignee

(Sample form shown below)

ASSIGNOR INFORMATION

Contact:

Payment Information:

ASSIGNEE INFORMATION

Credit Contact:

Exhibit E-7

Name: Telephone No.:

Fax No.: Telex No.:

Answerback:

Name & ABA # of Destination Bank:

Account Name & Number for Wire Transfer:

Other Instructions:

Address for Notices for Assignor:

Name: Telephone No.:

Fax No.: Telex No.:

Answerback:

Key Operations Contacts:

Payment Information:



Other Instructions:

Address for Notices for Assignee:

Exhibit E-8

Booking Installation: Booking Installation:Name: Name:Telephone No.: Telephone No.:Fax No.: Fax No.:Telex No.: Telex No.:Answerback: Answerback:

BANK ONE INFORMATION

Assignee will be called promptly upon receipt of the signed agreement.

Initial Funding Standards:

Libor Fund 2 days after rates are set.

Exhibit E-9

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)

Bank One Wire Instructions: 1 Bank One, NA, ABA # 071000013LS2 Incoming Account # 481152860000Ref:

Address for Notices for Bank One: 1 Bank One Plaza, Chicago, IL 60670Attn: Agency Compliance Division,Suite IL1-0353Fax No. (312) 732-2038 or (312) 732-4339

EXHIBIT F


, 200

Bank One, NA,for itself and as Agent under the Credit Agreement described belowAgreement described below

1 Bank One PlazaChicago, Illinois 60670


Re: $350,000,000 Public Service Company of Colorado Credit Facility


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 partiesthereto. As used herein, terms defined in the Credit Agreement and not otherwise defined herein have the meanings given them in the CreditAgreement.

The Borrower has requested [a Borrowing to be made under Section 2.1 of the Credit Agreement] [a Letter of Credit to be issued underSection 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 anydraw under such Letter of Credit)] requested by the Borrower (i) has been duly authorized by the Borrower’s board of directors pursuant to itsresolution dated , (ii) has been duly authorized by the Public Utilities Commission of the State of Colorado pursuant to itsorder dated [** alternate for clause (ii): does not and will not require any authorization, consent or approval of the PublicUtilities Commission of the State of Colorado], and (iii) does not and will not require any other authorization, consent or approval by anygovernmental 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).

Exhibit F-1

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

Exhibit F-2

PUBLIC SERVICE COMPANY OFCOLORADO

By

Its

Attachment 1

Terms of Borrowing:

Terms of Letter of Credit:

Exhibit F-3

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 tobear 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 .

SCHEDULE 4.2

CONSENTS

The approvals or authorizations of the following regulatory bodies, depending upon the characterization of the Borrowings under theAgreement, 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


SCHEDULE 4.7

LITIGATION

1. See disclosure regarding legal proceedings of the Borrower in Note 13 to the Consolidated Financial Statements contained in theBorrower’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 allegingPSCo has been improperly collecting certain fuel and purchased energy costs through the wholesale fuel cost adjustment clause included intheir rates. The FERC consolidated these complaints and set them for hearing and settlement judge procedures. In November 2002, the ChiefJudge terminated settlement procedures after settlement was not reached. The Complainants’ filed initial testimony in late April 2003 claimingthe improper inclusion of fuel and purchased energy costs in the range of $40-50 million related to the 1996 to 2002 period. The Company iscurrently 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 isconducting a proceeding to review and approve the incurred and recoverable 2001 costs under the ICA. In April 2003, the CPUC Staff and anintervenor filed testimony recommending disallowance of fuel and purchased energy costs which, if granted, would result in a $30 millionreduction in recoverable 2001 ICA costs. The Company is currently analyzing the testimony of the CPUC Staff and the intervenor and will filerebuttal testimony in June 2003. The hearings on this matter are scheduled to commence in July 2003. If CPUC Staff and the intervenor aresuccessful, recommended disallowances would also result in a reduction of the recoverable 2002 ICA costs. A review of the 2002 recoverableICA 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 rateproceedings, without the adjustments proposed by various parties. Pending the outcome of these regulatory proceedings, we cannot at this timedetermine whether any customer refunds or disallowances of PSCo’s deferred costs will be required.

SCHEDULE 4.8


See disclosure regarding environmental contingencies of the Borrower in Note 13 to the Consolidated Financial Statements contained in the2002 Form 10-K.

SCHEDULE 4.22


1. See disclosure regarding legal proceedings of the Borrower in Note 13 to the Consolidated Financial Statements contained in theBorrower’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 allegingPSCo has been improperly collecting certain fuel and purchased energy costs through the wholesale fuel cost adjustment clause included intheir rates. The FERC consolidated these complaints and set them for hearing and settlement judge procedures. In November 2002, the ChiefJudge terminated settlement procedures after settlement was not reached. The Complainants’ filed initial testimony in late April 2003 claimingthe improper inclusion of fuel and purchased energy costs in the range of $40-50 million related to the 1996 to 2002 period. The Company iscurrently 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 isconducting a proceeding to review and approve the incurred and recoverable 2001 costs under the ICA. In April 2003, the CPUC Staff and anintervenor filed testimony recommending disallowance of fuel and purchased energy costs which, if granted, would result in a $30 millionreduction in recoverable 2001 ICA costs. The Company is currently analyzing the testimony of the CPUC Staff and the intervenor and will filerebuttal testimony in June 2003. The hearings on this matter are scheduled to commence in July 2003. If CPUC Staff and the intervenor aresuccessful, recommended disallowances would also result in a reduction of the recoverable 2002 ICA costs. A review of the 2002 recoverableICA 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 rateproceedings, without the adjustments proposed by various parties. Pending the outcome of these regulatory proceedings, we cannot at this timedetermine whether any customer refunds or disallowances of PSCo’s deferred costs will be required.

SCHEDULE 6.1

LIENS

None.

TABLE OF CONTENTS

-i-

PageARTICLE I DEFINITIONS 1

Section 1.1 Definitions 1Section 1.2 Times 12Section 1.3 Accounting Terms and Determinations 12

ARTICLE II AMOUNT AND TERMS OF THE LOANS AND LETTERS OF CREDIT 12Section 2.1 Committed Advances 12Section 2.2 Procedure for Making Advances 13Section 2.3 Interest 14Section 2.4 Limitation of Outstandings 14Section 2.5 Principal and Interest Payment Dates 15Section 2.6 Level Status and Margins 15Section 2.7 Letters of Credit 16Section 2.8 Facility and Utilization Fees 19Section 2.9 Other Fees 20Section 2.10 Termination or Reduction of the Commitment 20Section 2.11 Voluntary Prepayments 21Section 2.12 Computation of Interest and Fees 21Section 2.13 Payments 21Section 2.14 Payment on Nonbusiness Days 21Section 2.15 Use of Advances and Letters of Credit 22Section 2.16 Increased Costs or Reduction of Yield 22Section 2.17 Taxes 23Section 2.18 Capital Adequacy 25Section 2.19 Mandatory Assignment of Bank’s Interest 26

ARTICLE III CONDITIONS PRECEDENT 26Section 3.1 Conditions to Effectiveness 26Section 3.2 Initial Conditions Precedent 26Section 3.3 Conditions Precedent to All Advances and Letters of Credit 27

ARTICLE IV REPRESENTATIONS AND WARRANTIES 28Section 4.1 Corporate Existence and Power 28Section 4.2 Authorization of Borrowing; No Conflict as to Law or Agreements 28Section 4.3 Legal Agreements 29Section 4.4 Subsidiaries 29Section 4.5 Financial Condition; Other Information 29Section 4.6 Adverse Change 30Section 4.7 Litigation 30Section 4.8 Hazardous Substances 30Section 4.9 Regulation U 30

TABLE OF CONTENTS(continued)

-ii-

PageSection 4.10 Taxes 30Section 4.11 Burdensome Restrictions 31Section 4.12 Titles and Liens 31Section 4.13 ERISA 31Section 4.14 Securities Law Matters 31Section 4.15 Investment Company Act 32Section 4.16 Public Utility Holding Company Act 32Section 4.17 Indenture 32Section 4.18 Authentication of Pledged Securities and Related First Mortgage Bonds 33Section 4.19 Solvency 33Section 4.20 Swap Obligations 33Section 4.21 Insurance 33Section 4.22 Compliance With Laws 33

ARTICLE V AFFIRMATIVE COVENANTS OF THE BORROWER 34Section 5.1 Financial Statements; Other Notices 34Section 5.2 Books and Records; Inspection and Examination 35Section 5.3 Compliance with Laws 36Section 5.4 Payment of Taxes and Other Claims 36Section 5.5 Maintenance of Properties 36Section 5.6 Insurance 36Section 5.7 Preservation of Corporate Existence 37Section 5.8 Delivery of Information 37Section 5.9 Use of Proceeds 37

ARTICLE VI NEGATIVE COVENANTS 37Section 6.1 Liens 37Section 6.2 Sale of Assets 39Section 6.3 Consolidation and Merger 39Section 6.4 Hazardous Substances 39Section 6.5 Restrictions on Nature of Business 39Section 6.6 Transactions with Affiliates 40Section 6.7 Ratio of Funded Debt to Total Capital 40Section 6.8 Interest Coverage Ratio 40

ARTICLE VII EVENTS OF DEFAULT, RIGHTS AND REMEDIES 40Section 7.1 Events of Default 40Section 7.2 Rights and Remedies 43Section 7.3 Pledge of Cash Collateral Account 44Section 7.4 Provisions Regarding Pledged Securities 45

TABLE OF CONTENTS(continued)

-iii-

PageARTICLE VIII THE AGENT 46

Section 8.1 Appointment; Nature of Relationship 46Section 8.2 Powers 46Section 8.3 General Immunity 46Section 8.4 No Responsibility for Loans, Recitals, etc 46Section 8.5 Action on Instructions of Banks 47Section 8.6 Employment of Agents and Counsel 47Section 8.7 Reliance on Documents; Counsel 47Section 8.8 Agent’s Reimbursement and Indemnification 47Section 8.9 Notice of Default 48Section 8.10 Rights as a Bank 48Section 8.11 Bank Credit Decision 48Section 8.12 Successor Agent 49Section 8.13 Delegation to Affiliates 49Section 8.14 Titles 50Section 8.15 Distribution of Payments and Proceeds 50Section 8.16 Expenses 51Section 8.17 Payments Received Directly by Banks 51Section 8.18 Agent not Offering Bonds 51

ARTICLE IX ASSIGNMENTS AND PARTICIPATIONS 51Section 9.1 Assignments 51Section 9.2 Participations 55Section 9.3 Limitation on Assignments and Participations 55

ARTICLE X MISCELLANEOUS 55Section 10.1 Disclosure of Information 55Section 10.2 No Waiver; Cumulative Remedies 56Section 10.3 Amendments, Etc 56Section 10.4 Notice 57Section 10.5 Costs and Expenses 57Section 10.6 Indemnification by Borrower 58Section 10.7 Execution in Counterparts 58Section 10.8 Binding Effect, Assignment 58Section 10.9 Governing Law 58Section 10.10 Severability of Provisions 59Section 10.11 Consent to Jurisdiction 59Section 10.12 Waiver of Jury Trial 59Section 10.13 Recalculation of Covenants Following Accounting Practices Change 59Section 10.14 Headings 60Section 10.15 Nonliability of Banks 60

TABLE OF CONTENTS

EXHIBITS AND SCHEDULES

-iv-

Exhibit A Commitment Amounts and AddressesExhibit B NoteExhibit C Compliance CertificateExhibit D Opinion of Borrower’s CounselExhibit E Assignment CertificateExhibit F Borrowing Certificate

Schedule 4.2 ConsentsSchedule 4.4 SubsidiariesSchedule 4.7 LitigationSchedule 4.8 Environmental MattersSchedule 4.22 Compliance with LawsSchedule 6.1 Liens

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 SouthwesternPublic Service Company, the Lenders and Bank One, NA, a national bankingassociation having its principal office in Chicago, Illinois, as Agent. Theparties hereto agree as follows:

ARTICLE I.

DEFINITIONS

As used in this Agreement:

"Acquisition" means any transaction, or any series of relatedtransactions, consummated on or after the date of this Agreement, by which theBorrower or any of its Subsidiaries (i) acquires any going business or all orsubstantially all of the assets of any firm, corporation or limited liabilitycompany, or division thereof, whether through purchase of assets, merger orotherwise or (ii) directly or indirectly acquires (in one transaction or as themost recent transaction in a series of transactions) at least a majority (innumber of votes) of the securities of a corporation which have ordinary votingpower for the election of directors (other than securities having such poweronly by reason of the happening of a contingency) or a majority (by percentageor voting power) of the outstanding ownership interests of a partnership orlimited liability company.

"Advance" means a borrowing hereunder, (i) made by the Lenders on thesame Borrowing Date, or (ii) converted or continued by the Lenders on the samedate of conversion or continuation, consisting, in either case, of the aggregateamount of the several Loans of the same Type and, in the case of EurodollarLoans, for the same Interest Period.

"Affected Lender" is defined in Section 2.19.

"Affiliate" of any Person means any other Person directly or indirectlycontrolling, controlled by or under common control with such Person. A Personshall be deemed to control another Person if the controlling Person owns 10% ormore of any class of voting securities (or other ownership interests) of thecontrolled Person or possesses, directly or indirectly, the power to direct orcause 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 ofthe Lenders pursuant to Article X, and not in its individual capacity as aLender, and any successor Agent appointed pursuant to Article X.

"Aggregate Commitment" means the aggregate of the Commitments of allthe Lenders, as reduced from time to time pursuant to the terms hereof.

"Aggregate Outstanding Credit Exposure" means, at any time, theaggregate of the Outstanding Credit Exposure of all Lenders.

"Agreement" means this credit agreement, as it may be amended ormodified and in effect from time to time.

"Agreement Accounting Principles" means generally accepted accountingprinciples as in effect from time to time, applied in a manner consistent withthat used in preparing the financial statements referred to in Section 5.4.

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

"Applicable Margin" means, with respect to Advances of any Type at anytime, the percentage rate per annum which is applicable at such time withrespect to Advances of such Type as set forth in the Pricing Schedule.

"Arranger" means Banc One Capital Markets, Inc., a Delawarecorporation, and its successors, in its capacity as Lead Arranger and Sole BookRunner.

"Article" means an article of this Agreement unless another document isspecifically referenced.

"Authorized Officer" means any of the following officers of theBorrower, acting singly: the Chairman of the Board, the Chief Executive Officer,the Vice Chairman of the Board, the Chief Operating Officer, the President, theChief 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 havingits principal office in Chicago, Illinois, in its individual capacity, and itssuccessors.

"Borrower" means Southwestern Public Service Company, a New Mexicocorporation, 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 rateselection of Eurodollar Advances, a day (other than a Saturday or Sunday) onwhich banks generally are open in Chicago and New York for the conduct ofsubstantially all of their commercial lending activities, interbank wiretransfers can be made on the Fedwire system and dealings in United Statesdollars are carried on in the London interbank market and (ii) for all otherpurposes, a day (other than a Saturday or Sunday) on which banks generally areopen in Chicago for the conduct of substantially all of their commercial lendingactivities and interbank wire transfers can be made on the Fedwire system.

2

"Capitalized Lease" of a Person means any lease of Property by suchPerson as lessee which would be capitalized on a balance sheet of such Personprepared in accordance with Agreement Accounting Principles.

"Capitalized Lease Obligations" of a Person means the amount of theobligations of such Person under Capitalized Leases which would be shown as aliability on a balance sheet of such Person prepared in accordance withAgreement Accounting Principles.

"Code" means the Internal Revenue Code of 1986, as amended, reformed orotherwise modified from time to time.

"Commitment" means, for each Lender, the obligation of such Lender tomake Loans and to participate in Letters of Credit, in an aggregate amount notexceeding the amount set forth opposite its signature below or as set forth inany assignment that has become effective pursuant to Section 12.3.2, as suchamount may be modified from time to time pursuant to the terms hereof.

"Commitment Fee Rate" means, at any time, the percentage rate per annumat which Commitment Fees are accruing on the unused portion of the AggregateCommitment at such time as set forth in the Pricing Schedule.

"Consolidated EBITDA" means, for any period, (a) the consolidated netincome of the Company and its Subsidiaries for such period, excluding allnon-operating gains and losses (including extraordinary or unusual gains andlosses, gains and losses from discontinuance of operations, gains and lossesarising from the sale of assets (other than inventory or in connection with aQualified Receivables Transaction) and other non-recurring gains and losses),plus (b) to the extent deducted in determining the amount in clause (a) (butwithout 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 consolidatedinterest expense of the Company and its Subsidiaries for such period (includingimputed interest on Capitalized Leases and, to the extent not otherwise includedin consolidated interest expense, distributions on Trust Preferred Securities,but excluding "other financing costs" as shown on the Borrower’s consolidatedstatements of income).

"Contingent Obligation" of a Person means any agreement, undertakingor arrangement by which such Person assumes, guarantees, endorses, contingentlyagrees to purchase or provide funds for the payment of, or otherwise becomes oris contingently liable upon, the obligation or liability of any other Person, oragrees to maintain the net worth or working capital or other financial conditionof any other Person, or otherwise assures any creditor of such other Personagainst loss, including, without limitation, any comfort letter, operatingagreement, take or pay contract, application for a letter of credit or theobligations of any such Person as general partner of a partnership with respectto the liabilities of the partnership.

"Conversion/Continuation Notice" is defined in Section 2.9.

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"Controlled Group" means all members of a controlled group ofcorporations or other business entities and all trades or businesses (whether ornot incorporated) under common control which, together with the Borrower or anyof its Subsidiaries, are treated as a single employer under Section 414 of theCode.

"Credit Extension" means the making of an Advance or the issuance of aLetter 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’ equityplus, to the extent not included in stockholders’ equity, Mandatorily RedeemableStock, 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 andforeign 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 onhuman health, (iii) emissions, discharges or releases of pollutants,contaminants, hazardous substances or wastes into surface water, ground water orland, or (iv) the manufacture, processing, distribution, use, treatment,storage, disposal, transport or handling of pollutants, contaminants, hazardoussubstances or wastes or the clean-up or other remediation thereof.

"ERISA" means the Employee Retirement Income Security Act of 1974, asamended from time to time, and any rule or regulation issued thereunder.

"Eurodollar Advance" means an Advance which, except as otherwiseprovided in Section 2.11, bears interest at the applicable Eurodollar Rate.

"Eurodollar Base Rate" means, with respect to a Eurodollar Advance forthe relevant Interest Period, the applicable British Bankers’ AssociationInterest Settlement Rate for deposits in U.S. dollars appearing on ReutersScreen FRBD as of 11:00 a.m. (London time) two Business Days prior to the firstday of such Interest Period, and having a maturity equal to such InterestPeriod, provided that (i) if Reuters Screen FRBD is not available to the Agentfor any reason, the applicable Eurodollar Base Rate for the relevant InterestPeriod shall instead be the applicable British Bankers’ Association InterestSettlement Rate for deposits in U.S. dollars as reported by any other generallyrecognized financial information service as of 11:00 a.m. (London time) twoBusiness Days prior to the first day of such Interest Period, and having amaturity equal to such Interest Period, and (ii) if no such British Bankers’Association Interest Settlement Rate is available to the Agent, the applicableEurodollar Base Rate for the relevant Interest Period shall instead be the ratedetermined by the Agent to be the rate at which Bank One or one of its Affiliatebanks offers to place deposits in U.S. dollars with first-class banks in theLondon interbank market at approximately 11:00 a.m. (London time) two BusinessDays prior to the first day of such Interest Period, in the approximate amountof Bank One’s relevant Eurodollar Loan and having a maturity equal to suchInterest Period.

"Eurodollar Loan" means a Loan which, except as otherwise provided inSection 2.11, bears interest at the applicable Eurodollar Rate.

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"Eurodollar Rate" means, with respect to a Eurodollar Advance for therelevant Interest Period, the sum of (i) the quotient of (a) the Eurodollar BaseRate applicable to such Interest Period, divided by (b) one minus the ReserveRequirement (expressed as a decimal) applicable to such Interest Period, plus(ii) the Applicable Margin.

"Excluded Taxes" means, in the case of each Lender or applicableLending Installation and the Agent, taxes imposed on its overall net income, andfranchise taxes imposed on it, by (i) the jurisdiction under the laws of whichsuch Lender or the Agent is incorporated or organized or (ii) the jurisdictionin which the Agent’s or such Lender’s principal executive office or suchLender’s applicable Lending Installation is located.

"Exhibit" refers to an exhibit to this Agreement, unless anotherdocument is specifically referenced.

"Existing Agreement" means the Credit Agreement dated as of February19, 2002, as amended to the date of this Agreement, among the Borrower, thelenders party thereto, and Bank One, NA, as agent for said lenders.

"Existing LC" means letter of credit number SLT750771 issued by Issuerfor the account of the Borrower in favor of Southwest Power Pool.

"Facility Termination Date" means February 17, 2004 or any earlier dateon which the Aggregate Commitment is reduced to zero or otherwise terminatedpursuant to the terms hereof.

"Federal Funds Effective Rate" means, for any day, an interest rate perannum equal to the weighted average of the rates on overnight Federal fundstransactions with members of the Federal Reserve System arranged by Federalfunds brokers on such day, as published for such day (or, if such day is not aBusiness Day, for the immediately preceding Business Day) by the Federal ReserveBank of New York, or, if such rate is not so published for any day which is aBusiness Day, the average of the quotations at approximately 10:00 a.m. (Chicagotime) on such day on such transactions received by the Agent from three Federalfunds brokers of recognized standing selected by the Agent in its solediscretion.

"Final Maturity Date" means February 17, 2004.

"Floating Rate" means, for any day, a rate per annum equal to (i) theAlternate Base Rate for such day plus (ii) the Applicable Margin, in each casechanging when and as the Alternate Base Rate changes.

"Floating Rate Advance" means an Advance which, except as otherwiseprovided in Section 2.11, bears interest at the Floating Rate.

"Floating Rate Loan" means a Loan which, except as otherwise providedin Section 2.11, bears interest at the Floating Rate.

"Indebtedness" means, with respect to any Person, all (but withoutduplication) 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

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Person’s business payable on terms customary in the trade), (iii) direct orcontingent obligations arising under letters of credit, banker’s acceptances,bank guaranties, surety bonds and similar instruments, (iv) obligations, whetheror not assumed, secured by Liens or payable out of the proceeds or productionfrom Property now or hereafter owned or acquired by such Person, (v) obligationswhich are evidenced by notes or other instruments, (vi) obligations of suchPerson to purchase accounts, securities or other Property arising out of or inconnection with the sale of the same or substantially similar accounts,securities or Property, (vii) Capitalized Lease Obligations, (viii) netliabilities under interest rate swap, exchange or cap agreements, (ix) SyntheticLease Obligations, (x) obligations under other transactions which are thefunctional equivalent, or take the place, of borrowing but which do notconstitute a liability on the consolidated balance sheet of such Person and (xi)Contingent Obligations in respect of any of the foregoing; provided thatIndebtedness shall not include obligations arising under Qualified ReceivablesTransactions.

"Interest Coverage Ratio" means, as of the last day of any fiscalquarter of the Borrower, the ratio of (i) Consolidated EBITDA for thefour-quarter period ending on such day to (ii) Consolidated Interest Expense forsuch period.

"Interest Period" means, with respect to a Eurodollar Advance, a periodof one, two or three months commencing on a Business Day selected by theBorrower pursuant to this Agreement. Such Interest Period shall end on the daywhich 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 lastBusiness Day of such next, second or third succeeding month. If an InterestPeriod would otherwise end on a day which is not a Business Day, such InterestPeriod shall end on the next succeeding Business Day, provided that if said nextsucceeding Business Day falls in a new calendar month, such Interest Periodshall end on the immediately preceding Business Day.

"Investment" of a Person means any loan, advance (other thancommission, travel and similar advances to officers and employees made in theordinary course of business), extension of credit (other than accountsreceivable arising in the ordinary course of business on terms customary in thetrade) or contribution of capital by such Person; stocks, bonds, mutual funds,partnership interests, notes, debentures or other securities owned by suchPerson; any deposit accounts and certificate of deposit owned by such Person;and structured notes, derivative financial instruments and other similarinstruments or contracts owned by such Person.

"Issuer" means Bank One in its capacity as issuer of Letters of Credithereunder.

"Lenders" means the lending institutions listed on the signature pagesof 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 listedon its administrative questionnaire or on the signature pages hereof orotherwise selected by such Lender or the Agent pursuant to Section 2.17.

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"Letter of Credit" means the Existing LC or a letter of credit issuedpursuant 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 perannum applicable to Letter of Credit Fees at such time as set forth in thePricing Schedule.

"Letter of Credit Obligations means, at any time, the sum, withoutduplication, of (i) the aggregate undrawn stated amount of all Letters of Creditat such time plus (ii) the aggregate unpaid amount of all ReimbursementObligations 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 ornature whatsoever (including, without limitation, the interest of a vendor orlessor under any conditional sale, Capitalized Lease or other title retentionagreement).

"Loan" means, with respect to a Lender, such Lender’s loan madepursuant to Article II (or any conversion or continuation thereof).

"Loan Documents" means this Agreement, any Notes issued pursuant toSection 2.13, any Letter of Credit and any Letter of Credit Application.

"Mandatorily Redeemable Stock" means, with respect to any Person, anyshare 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, orconvertible into any Indebtedness or other liability of such Person, (i) at afixed 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 theoccurrence of a condition not solely within the control of such Person, such asa redemption required to be made out of future earnings or (b) convertible intoMandatorily Redeemable Stock.

"Material Adverse Effect" means a material adverse effect on (i) thebusiness, Property, condition (financial or otherwise), results of operations,or prospects of the Borrower and its Subsidiaries taken as a whole, (ii) theability 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 rightsor 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)

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"Moody’s" means Moody’s Investors Service, Inc.

"Multiemployer Plan" means a Plan maintained pursuant to a collectivebargaining agreement or any other arrangement to which the Borrower or anymember of the Controlled Group is a party to which more than one employer isobligated 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 Lenderpursuant to Section 2.13 in the form of Exhibit D.

"Obligations" means all unpaid principal of and accrued and unpaidinterest on the Loans, all Reimbursement Obligations, all accrued and unpaidfees and all expenses, reimbursements, indemnities and other obligations of theBorrower to the Lenders or to any Lender, the Agent, the Issuer or anyindemnified party arising under the Loan Documents.

"Off-Balance Sheet Liability" of a Person means (i) any repurchaseobligation or liability of such Person with respect to accounts or notesreceivable sold by such Person, (ii) any liability under any sale and leasebacktransaction which is not a Capitalized Lease, (iii) all Synthetic LeaseObligations of such Person and (iv) any obligation arising with respect to anyother transaction which is the functional equivalent of or takes the place ofborrowing but which does not constitute a liability on the balance sheet of suchPerson, but excluding from this clause (iv) any Operating Lease which does notgive rise to Synthetic Lease Obligations.

"Operating Lease" of a Person means any lease of Property (other than aCapitalized Lease) by such Person as lessee.

"Outstanding Credit Exposure" means, as to any Lender at any time, thesum 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 CreditObligations 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 andDecember.

"PBGC" means the Pension Benefit Guaranty Corporation, or any successorthereto.

"Person" means any natural person, corporation, firm, joint venture,partnership, limited liability company, association, enterprise, trust or otherentity or organization, or any government or political subdivision or anyagency, department or instrumentality thereof.

"Plan" means an employee pension benefit plan which is covered by TitleIV of ERISA or subject to the minimum funding standards under Section 412 of theCode as to which the Borrower or any member of the Controlled Group may have anyliability.

"Pricing Schedule" means the Schedule attached hereto identified assuch.

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"Prime Rate" means a rate per annum equal to the prime rate of interestannounced 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 oftransactions pursuant to which the Borrower or any Subsidiary sells, conveys,pledges or otherwise transfers to a newly-formed Subsidiary or other specialpurpose entity, or any other Person, any accounts receivable (including chattelpaper, instruments and general intangibles) or notes receivable and the rightsand certain other property related thereto, provided that all of the terms andconditions of such transaction or series of transactions, including the amountand type of any recourse to the Borrower or any Subsidiary with respect to theassets transferred, are reasonably acceptable to the Agent.

"Receivables Transaction Attributed Obligations" means, at any timewith respect to any Qualified Receivables Transaction, the unrecovered purchaseprice on such date of all assets sold, conveyed, pledged or otherwisetransferred by the Borrower or any Subsidiary to the third-party conduit entityor other receivables credit provider under such Qualified ReceivablesTransaction.

"Regulation D" means Regulation D of the Board of Governors of theFederal Reserve System as from time to time in effect and any successor theretoor other regulation or official interpretation of said Board of Governorsrelating to reserve requirements applicable to member banks of the FederalReserve System.

"Regulation U" means Regulation U of the Board of Governors of theFederal Reserve System as from time to time in effect and any successor or otherregulation or official interpretation of said Board of Governors relating to theextension of credit by banks for the purpose of purchasing or carrying marginstocks applicable to member banks of the Federal Reserve System.

"Reimbursement Obligations" means, at any time, the aggregate of allobligations of the Borrower then outstanding under Section 2.20 to reimburse theIssuer for amounts paid by the Issuer in respect of any one or more drawingsunder Letters of Credit.

"Reportable Event" means a reportable event as defined in Section 4043of 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 waivedthe requirement of Section 4043(a) of ERISA that it be notified within 30 daysof the occurrence of such event, provided, however, that a failure to meet theminimum funding standard of Section 412 of the Code and of Section 302 of ERISAshall be a Reportable Event regardless of the issuance of any such waiver of thenotice requirement in accordance with either Section 4043(a) of ERISA or Section412(d) of the Code; and provided, further, that the events described on Schedule5.9 shall not constitute a Reportable

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Event unless the Required Lenders determine that such events have had or arereasonably 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 principalamount of the Aggregate Outstanding Credit Exposure.

"Reserve Requirement" means, with respect to an Interest Period, themaximum aggregate reserve requirement (including all basic, supplemental,marginal and other reserves) which is imposed under Regulation D on Eurocurrencyliabilities.

"S&P" means Standard and Poor’s Ratings Services, a division of TheMcGraw Hill Companies, Inc.

"Sale and Leaseback Transaction" means any sale or other transfer ofProperty by any Person with the intent to lease such Property as lessee.

"Schedule" refers to a specific schedule to this Agreement, unlessanother document is specifically referenced.

"SEC" means the Securities and Exchange Commission.

"Section" means a numbered section of this Agreement, unless anotherdocument is specifically referenced.

"Significant Subsidiary" means, as of any date of determination, eachSubsidiary 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 anymember of the Controlled Group for employees of the Borrower or any member ofthe Controlled Group.

"Subsidiary" of a Person means (i) any corporation more than 50% of theoutstanding securities having ordinary voting power of which shall at the timebe owned or controlled,

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directly or indirectly, by such Person or by one or more of its Subsidiaries orby such Person and one or more of its Subsidiaries, or (ii) any partnership,limited liability company, association, joint venture or similar businessorganization more than 50% of the ownership interests having ordinary votingpower of which shall at the time be so owned or controlled. Unless otherwiseexpressly provided, all references herein to a "Subsidiary" shall mean aSubsidiary of the Borrower.

"Substantial Portion" means, with respect to the Property of theBorrower and its Subsidiaries, Property which (i) represents more than 10% ofthe consolidated assets of the Borrower and its Subsidiaries as would be shownin the consolidated financial statements of the Borrower and its Subsidiaries asat the beginning of the twelve-month period ending with the month in which suchdetermination is made, or (ii) is responsible for more than 10% of theconsolidated net sales or of the consolidated net income of the Borrower and itsSubsidiaries as reflected in the financial statements referred to in clause (i)above.

"Synthetic Lease Obligation" means the monetary obligation of a Personunder (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 obligationsthat do not appear on the balance sheet of such Person but which, upon theinsolvency or bankruptcy of such Person, would be characterized as indebtednessof such Person (without regard to accounting treatment). The amount of SyntheticLease Obligations of any Person under any such lease or agreement shall be theamount which would be shown as a liability on a balance sheet of such Personprepared in accordance with Agreement Accounting Principles if such lease oragreement 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 withrespect to the foregoing, but excluding Excluded Taxes and Other Taxes.

"Total Debt" means all Indebtedness of the Borrower and itsSubsidiaries (including Trust Preferred Securities, but excluding MandatorilyRedeemable Stock), determined on a consolidated basis in accordance withAgreement Accounting Principles. For purposes of calculating Total Debt,obligations under interest rate swaps and similar arrangements shall be markedto 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 FloatingRate Advance or a Eurodollar Advance.

"Unfunded Liabilities" means the amount (if any) by which the presentvalue of all vested and unvested accrued benefits under all Single EmployerPlans exceeds the fair market value of all such Plan assets allocable to suchbenefits, all determined as of the then most recent valuation date for suchPlans using PBGC actuarial assumptions for single employer plan terminations.

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"Unmatured Default" means an event which but for the lapse of time orthe giving of notice, or both, would constitute a Default.

"Wholly-Owned Subsidiary" of a Person means (i) any Subsidiary all ofthe outstanding voting securities of which shall at the time be owned orcontrolled, directly or indirectly, by such Person or one or more Wholly-OwnedSubsidiaries of such Person, or by such Person and one or more Wholly-OwnedSubsidiaries of such Person, or (ii) any partnership, limited liability company,association, joint venture or similar business organization 100% of theownership interests having ordinary voting power of which shall at the time beso owned or controlled.

The foregoing definitions shall be equally applicable to both thesingular and plural forms of the defined terms.

ARTICLE II.

THE CREDITS

2.1 Commitment. From and including the date of this Agreement andprior to the Facility Termination Date, subject to the terms and conditions setforth in this Agreement, (a) each Lender severally agrees to make Loans to theBorrower from time to time in amounts not to exceed in the aggregate at any onetime outstanding the amount of its Commitment and (b) the Issuer agrees to issueLetters of Credit for the account of the Borrower in an aggregate amount not toexceed $10,000,000 (and each Lender severally agrees to participate in each suchLetter of Credit as more fully set forth in Section 2.20). Subject to the termsof this Agreement, the Borrower may borrow, repay and reborrow at any time priorto the Facility Termination Date. The Commitments hereunder shall expire on theFacility Termination Date. Any repayments of Loans after the FacilityTermination Date may not be reborrowed.

2.2 Required Payments; Maturity. The Aggregate Outstanding CreditExposure and all other unpaid Obligations shall be paid in full (or, the case ofany Letter of Credit, a Letter of Credit Collateral Account shall be establishedin accordance with Section 2.20(xi)) by the Borrower on the Final Maturity Date.

2.3 Ratable Loans. Each Advance hereunder shall consist of Loansmade from the several Lenders ratably in proportion to the ratio that theirrespective Commitments bear to the Aggregate Commitment.

2.4 Types of Advances. The Advances may be Floating Rate Advancesor Eurodollar Advances, or a combination thereof, selected by the Borrower inaccordance with Sections 2.8 and 2.9.

2.5 Commitment Fee; Changes in Aggregate Commitment; Up-FrontFees.

(i) The Borrower agrees to pay to the Agent for the account ofeach Lender a commitment fee at a per annum rate equal to the Commitment FeeRate on the daily unused portion of such Lender’s Commitment from the datehereof to and including the Facility Termination Date, payable on each PaymentDate hereafter and on the Facility Termination Date.

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(ii) The Borrower may permanently reduce the Aggregate Commitmentin 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 theamount of the Aggregate Commitment may not be reduced below the AggregateOutstanding Credit Exposure. All accrued commitment fees shall be payable on theeffective date of any termination of the obligations of the Lenders to makeLoans hereunder.

(iii) The Borrower may, from time to time, by means of a letterdelivered to the Agent substantially in the form of Exhibit E, request that theAggregate Commitment be increased to up to $125,000,000 (less the amount of anyprevious reductions of the Aggregate Commitment pursuant to clause (ii) above)by (a) increasing the Commitment of one or more Lenders which have agreed tosuch increase and/or (b) adding one or more commercial banks or other Persons asa party hereto (each an "Additional Lender") with a Commitment in an amountagreed to by any such Additional Lender; provided that no Additional Lendershall be added as a party hereto without the written consent of the Agent (whichshall not be unreasonably withheld) or if a Default or an Unmatured Defaultexists. Any increase in the Aggregate Commitment pursuant to this clause (iii)shall be effective three Business Days after the date on which the Agent hasreceived (and, to the extent applicable, consented to) the applicable increaseletter in the form of Annex 1 to Exhibit E (in the case of an increase in theCommitment of an existing Lender) or assumption letter in the form of Annex 2 toExhibit E (in the case of an Additional Lender). The Agent shall promptly notifythe Borrower and the Lenders of any increase in the amount of the AggregateCommitment pursuant to this clause (iii) and of each Lender’s pro rata share ofthe Aggregate Commitment of each Lender after giving effect thereto. TheBorrower acknowledges that, in order to maintain ratable Advances in accordancewith each Lender’s pro rata share of the Aggregate Commitment, prepayment of allor portions of certain ratable Advances may be required on the date of anyincrease in the Aggregate Commitment pursuant to this clause (iii) (and any suchprepayment shall be subject to the provisions of Section 3.4).

(iv) The Borrower agrees to pay to the Agent on behalf of eachLender on the date the Borrower signs this Agreement an up-front fee in theamount previously agreed upon among the Company, the Agent and such Lender.

2.6 Minimum Amount of Each Advance. Each Eurodollar Advance shallbe in the minimum amount of $1,000,000 (and in multiples of $100,000 if inexcess thereof), and each Floating Rate Advance shall be in the minimum amountof $1,000,000 (and in multiples of $100,000 if in excess thereof), provided thatany Floating Rate Advance may be in the amount of the unused AggregateCommitment.

2.7 Optional Principal Payments. The Borrower may from time totime 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 RateAdvances upon two Business Days’ prior notice to the Agent. The Borrower mayfrom time to time pay, subject to the payment of any funding indemnificationamounts required by Section 3.4 but without penalty or premium, all outstandingEurodollar Advances, or, in a minimum aggregate amount of $1,000,000 or anyintegral multiple of $100,000 in excess thereof, any portion of the outstandingEurodollar Advances upon three Business Days’ prior notice to the Agent.

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2.8 Method of Selecting Types and Interest Periods for NewAdvances. The Borrower shall select the Type of Advance and, in the case of eachEurodollar Advance, the Interest Period applicable thereto from time to time.The Borrower shall give the Agent irrevocable notice (a "Borrowing Notice") notlater than 10:00 a.m. (Chicago time) at least one Business Day before theBorrowing Date of each Floating Rate Advance and three Business Days before theBorrowing 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 shallmake available its Loan or Loans in funds immediately available in Chicago tothe Agent at its address specified pursuant to Article XIII. The Agent will makethe funds so received from the Lenders available to the Borrower at the Agent’saforesaid address.

2.9 Conversion and Continuation of Outstanding Advances. FloatingRate Advances shall continue as Floating Rate Advances unless and until suchFloating Rate Advances are converted into Eurodollar Advances pursuant to thisSection 2.9 or are repaid in accordance with Section 2.7. Each EurodollarAdvance shall continue as a Eurodollar Advance until the end of the thenapplicable Interest Period therefor, at which time such Eurodollar Advance shallbe automatically converted into a Floating Rate Advance unless (x) suchEurodollar Advance is or was repaid in accordance with Section 2.7 or (y) theBorrower shall have given the Agent a Conversion/Continuation Notice (as definedbelow) requesting that, at the end of such Interest Period, such EurodollarAdvance continue as a Eurodollar Advance for the same or another InterestPeriod. Subject to the terms of Section 2.6, the Borrower may elect from time totime to convert all or any part of a Floating Rate Advance into a EurodollarAdvance. The Borrower shall give the Agent irrevocable notice (a"Conversion/Continuation Notice") of each conversion of a Floating Rate Advanceinto a Eurodollar Advance or continuation of a Eurodollar Advance not later than10:00 a.m. (Chicago time) at least three Business Days prior to the date of therequested 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 Advanceshall bear interest on the outstanding principal amount thereof, for each dayfrom and including the date such Advance is made or is automatically convertedfrom a Eurodollar Advance into a Floating Rate Advance

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pursuant to Section 2.9, to but excluding the date it is paid or is convertedinto a Eurodollar Advance pursuant to Section 2.9 hereof, at a rate per annumequal to the Floating Rate for such day. Changes in the rate of interest on thatportion of any Advance maintained as a Floating Rate Advance will take effectsimultaneously with each change in the Alternate Base Rate. Each EurodollarAdvance shall bear interest on the outstanding principal amount thereof from andincluding the first day of the Interest Period applicable thereto to (but notincluding) the last day of such Interest Period at the interest rate determinedby the Agent as applicable to such Eurodollar Advance based upon the Borrower’sselections under Sections 2.8 and 2.9 and otherwise in accordance with the termshereof. No Interest Period may end after the Final Maturity Date.

2.11 Rates Applicable After Default. Notwithstanding anything tothe contrary contained in Section 2.8 or 2.9, during the continuance of aDefault or Unmatured Default the Required Lenders may, at their option, bynotice to the Borrower (which notice may be revoked at the option of theRequired Lenders notwithstanding any provision of Section 8.2 requiringunanimous consent of the Lenders to changes in interest rates), declare that noAdvance 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 theRequired Lenders notwithstanding any provision of Section 8.2 requiringunanimous consent of the Lenders to changes in interest rates), declare that (i)each Eurodollar Advance shall bear interest for the remainder of the applicableInterest 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 perannum equal to the Floating Rate in effect from time to time plus 2% per annumand (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, theinterest rates set forth in clauses (i) and (ii) above and the increase in theLetter of Credit Fee Rate set forth in clause (iii) above shall be applicable toall applicable Credit Extensions without any election or action on the part ofthe Agent or any Lender.

2.12 Method of Payment. All payments of the Obligations hereundershall be made, without setoff, deduction, or counterclaim, in immediatelyavailable funds to the Agent at the Agent’s address specified pursuant toArticle XIII, or at any other Lending Installation of the Agent specified inwriting by the Agent to the Borrower, by noon (local time) on the date when dueand shall be applied ratably by the Agent among the Lenders. Each paymentdelivered to the Agent for the account of any Lender shall be delivered promptlyby the Agent to such Lender in the same type of funds that the Agent received atits address specified pursuant to Article XIII or at any Lending Installationspecified in a notice received by the Agent from such Lender. The Agent ishereby authorized to charge the account of the Borrower maintained with Bank Onefor each payment of principal, interest, Reimbursement Obligations and fees asit becomes due hereunder.

2.13 Noteless Agreement; Evidence of Indebtedness. (i) Each Lendershall maintain in accordance with its usual practice an account or accountsevidencing the indebtedness of the Borrower to such Lender resulting from eachLoan made by such Lender from time to time, including the amounts of principaland interest payable and paid to such Lender from time to time hereunder.

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(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 Periodwith respect thereto, (b) the amount of any principal or interest due andpayable 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 Letterof Credit Obligations outstanding at any time and (d) the amount of any sumreceived by the Agent hereunder from the Borrower and each Lender’s sharethereof.

(iii) The entries maintained in the accounts maintained pursuant toparagraphs (i) and (ii) above shall be prima facie evidence of the existence andamounts of the Obligations therein recorded; provided that the failure of theAgent or any Lender to maintain such accounts or any error therein shall not inany manner affect the obligation of the Borrower to repay the Obligations inaccordance with their terms.

(iv) Any Lender may request that its Loans be evidenced by a Note. Insuch event, the Borrower shall prepare, execute and deliver to such Lender aNote payable to the order of such Lender. Thereafter, the Loans evidenced bysuch Note and interest thereon shall at all times (including after anyassignment pursuant to Section 12.3) be represented by one or more Notes payableto the order of the payee named therein or any assignee pursuant to Section12.3, except to the extent that any such Lender or assignee subsequently returnsany such Note for cancellation and requests that such Loans once again beevidenced as described in paragraphs (i) and (ii) above.

2.14 Telephonic Notices. The Borrower hereby authorizes the Lendersand the Agent to extend, convert or continue Advances, effect selections ofTypes of Advances and to transfer funds based on telephonic notices made by anyperson or persons the Agent or any Lender in good faith believes to be acting onbehalf of the Borrower, it being understood that the foregoing authorization isspecifically intended to allow Borrowing Notices and Conversion/ContinuationNotices to be given telephonically. The Borrower agrees to deliver promptly tothe Agent a written confirmation, if such confirmation is requested by the Agentor any Lender, of each telephonic notice signed by an Authorized Officer. If thewritten confirmation differs in any material respect from the action taken bythe Agent and the Lenders, the records of the Agent and the Lenders shall governabsent manifest error.

2.15 Interest Payment Dates; Interest and Fee Basis. Interestaccrued 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 dateon which the Floating Rate Advance is prepaid, whether due to acceleration orotherwise, and at maturity. Interest accrued on that portion of the outstandingprincipal amount of any Floating Rate Advance converted into a EurodollarAdvance on a day other than a Payment Date shall be payable on the date ofconversion. Interest accrued on each Eurodollar Advance shall be payable on thelast day of its applicable Interest Period, on any date on which the EurodollarAdvance is prepaid, whether by acceleration or otherwise, and at maturity.Interest accrued on each Eurodollar Advance having an Interest Period longerthan three months shall also be payable on the last day of each three-monthinterval during such Interest Period. Interest and commitment fees shall becalculated for actual days elapsed on the basis of a 360-day year, except thatinterest accruing at the Prime Rate shall be calculated for actual days elapsedon the basis of a 365, or when appropriate 366, day year. Interest shall bepayable for the day an Advance is made but not for the day of any payment on theamount paid if

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payment is received prior to noon (local time) at the place of payment. If anypayment of principal of or interest on an Advance shall become due on a daywhich is not a Business Day, such payment shall be made on the next succeedingBusiness Day and, in the case of a principal payment, such extension of timeshall be included in computing interest in connection with such payment.

2.16 Notification of Advances, Interest Rates, Prepayments andCommitment Reductions. Promptly after receipt thereof, the Agent will notifyeach Lender of the contents of each Aggregate Commitment reduction notice,Borrowing Notice, Conversion/Continuation Notice, and repayment notice receivedby it hereunder. The Agent will notify each Lender of the interest rateapplicable to each Eurodollar Advance promptly upon determination of suchinterest rate and will give each Lender prompt notice of each change in theAlternate Base Rate.

2.17 Lending Installations. Each Lender may book its Loans at anyLending Installation selected by such Lender and may change its LendingInstallation from time to time. All terms of this Agreement shall apply to anysuch Lending Installation and the Loans and any Notes issued hereunder shall bedeemed 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 accordancewith Article XIII, designate replacement or additional Lending Installationsthrough which Loans will be made by it and for whose account Loan payments areto be made.

2.18 Non-Receipt of Funds by the Agent. Unless the Borrower or aLender, as the case may be, notifies the Agent prior to the date on which it isscheduled to make payment to the Agent of (i) in the case of a Lender, theproceeds 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 notintend to make such payment, the Agent may assume that such payment has beenmade. The Agent may, but shall not be obligated to, make the amount of suchpayment available to the intended recipient in reliance upon such assumption. Ifsuch Lender or the Borrower, as the case may be, has not in fact made suchpayment to the Agent, the recipient of such payment shall, on demand by theAgent, repay to the Agent the amount so made available together with interestthereon in respect of each day during the period commencing on the date suchamount was so made available by the Agent until the date the Agent recovers suchamount at a rate per annum equal to (x) in the case of payment by a Lender, theFederal 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 caseof payment by the Borrower, the interest rate applicable to the relevant Loan.

2.19 Replacement of Lender. If the Borrower is required pursuant toSection 3.1, 3.2 or 3.5 to make any additional payment to any Lender or if anyLender’s obligation to make or continue, or to convert Floating Rate Advancesinto, Eurodollar Advances shall be suspended pursuant to Section 3.3 (any Lenderso affected an "Affected Lender"), the Borrower may elect, if such amountscontinue to be charged or such suspension is still effective, to replace suchAffected Lender as a Lender party to this Agreement, provided that no Default orUnmatured Default shall have occurred and be continuing at the time of suchreplacement, and provided, further, that, concurrently with such replacement,(i) another bank or other entity which is reasonably satisfactory to theBorrower and the Agent shall agree, as of such date, to purchase for cash theAdvances and other Obligations due to the Affected Lender pursuant to anassignment substantially in the form of Exhibit B and to become a Lender for allpurposes under

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this Agreement and to assume all obligations of the Affected Lender to beterminated as of such date and to comply with the requirements of Section 12.3applicable to assignments, and (ii) the Borrower shall pay to such AffectedLender in same day funds on the day of such replacement (A) all interest, feesand other amounts then accrued but unpaid to such Affected Lender by theBorrower hereunder to and including the date of termination, including withoutlimitation 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 tosuch Lender on the day of such replacement under Section 3.4 had the Loans ofsuch Affected Lender been prepaid on such date rather than sold to thereplacement Lender.

2.20 Letters of Credit.

(i) Issuance. The Issuer hereby agrees, on the terms andconditions set forth in this Agreement, to issue standby letters of credit andto renew, extend, increase, decrease or otherwise modify Letters of Credit("Modify," and each such action a "Modification") from time to time from andincluding the date of this Agreement and prior to the Facility Termination Dateupon the request of the Borrower; provided that immediately after each suchLetter of Credit is issued or Modified, (i) the aggregate amount of theoutstanding LC Obligations shall not exceed $10,000,000 and (ii) the AggregateOutstanding Credit Exposure shall not exceed the Aggregate Commitment. No Letterof Credit shall have an expiry date later than the scheduled FacilityTermination Date. By their execution of this Agreement, the Borrower, eachLender, the Issuer and the Agent agree that, effective as of the date of thisAgreement, the Existing LC shall be a Letter of Credit under this Agreement andsubject to the terms hereof.

(ii) Participations. On the date of this Agreement, with respect tothe Existing LC, and upon the issuance of each other Letter of Credit or theModification of any Letter of Credit in accordance with this Section 2.20, theIssuer shall be deemed, without further action by any party hereto, to haveunconditionally and irrevocably sold to each Lender, and each Lender shall bedeemed, without further action by any party hereto, to have unconditionally andirrevocably purchased from the Issuer, a participation in such Letter of Credit(and each Modification thereof) and the related LC Obligations in proportion toits pro rata share of the Aggregate Commitment.

(iii) Notice. Subject to Section 2.20(i), the Borrower shall givethe Issuer notice prior to 10:00 a.m. (Chicago time) at least three BusinessDays prior to the proposed date of issuance or Modification of each Letter ofCredit, specifying the beneficiary, the proposed date of issuance (orModification) and the expiry date of such Letter of Credit, and describing theproposed terms of such Letter of Credit and the nature of the transactionsproposed to be supported thereby. Upon receipt of such notice, the Issuer shallpromptly notify the Agent, and the Agent shall promptly notify each Lender, ofthe contents thereof and of the amount of such Lender’s participation in suchproposed Letter of Credit. The issuance or Modification by the Issuer of anyLetter of Credit shall, in addition to the conditions precedent set forth inArticle IV (the satisfaction of which the Issuer shall have no duty toascertain), be subject to the conditions precedent that such Letter of Creditshall be satisfactory to the Issuer and that the Borrower shall have executedand delivered such application agreement and/or such other instruments andagreements relating to such Letter of Credit as the Issuer shall have reasonablyrequested (each a

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"Letter of Credit Application"). In the event of any conflict between the termsof this Agreement and the terms of any Letter of Credit Application, the termsof 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 prorata 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 tothe Letter of Credit Fee Rate in effect from time to time on the undrawn statedamount available under such Letter of Credit, such fee to be payable in arrearson each Payment Date. The Borrower shall also pay to the Issuer for its ownaccount (x) a fronting fee in the amount agreed to by the Issuer and theBorrower from time to time, with such fee to be payable in arrears on eachPayment Date, and (y) documentary and processing charges in connection with theissuance or Modification of and draws under Letters of Credit in accordance withthe Issuer’s standard schedule for such charges as in effect from time to time.

(v) Administration; Reimbursement by Lenders. Upon receipt fromthe beneficiary of any Letter of Credit of any demand for payment under suchLetter of Credit, the Issuer shall notify the Agent and the Agent shall promptlynotify the Borrower and each other Lender as to the amount to be paid by theIssuer as a result of such demand and the proposed payment date (the "Letter ofCredit Payment Date"). The responsibility of the Issuer to the Borrower and eachLender shall be only to determine that the documents (including each demand forpayment) delivered under each Letter of Credit in connection with suchpresentment shall be in conformity in all material respects with such Letter ofCredit. The Issuer shall endeavor to exercise the same care in its issuance andadministration of Letters of Credit as it does with respect to letters of creditin which no participations are granted, it being understood that in the absenceof any gross negligence or willful misconduct by the Issuer, each Lender shallbe unconditionally and irrevocably obligated, without regard to the occurrenceof any Default or any condition precedent whatsoever, to reimburse the Issuer ondemand for (i) such Lender’s pro rata share (determined by such Lender’s prorata share of the Aggregate Commitment) of the amount of each payment made bythe Issuer under each applicable Letter of Credit to the extent such amount isnot 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 applicablepayment by the Issuer to the date on which such Lender pays the amount to bereimbursed by it, at a rate of interest per annum equal to the Federal FundsEffective Rate or, beginning on third Business Day after demand for such amountby the Issuer, the rate applicable to Floating Rate Advances.

(vi) Reimbursement by Borrower. The Borrower shall be irrevocablyand unconditionally obligated to reimburse the Issuer on or before theapplicable Letter of Credit Payment Date for any amount to be paid by the Issuerupon any drawing under any Letter of Credit issued by the Issuer, withoutpresentment, demand, protest or other formalities of any kind; provided that theBorrower shall not hereby be precluded from asserting any claim for direct (butnot consequential) damages suffered by the Borrower to the extent, but only tothe extent, caused by (i) the willful misconduct or gross negligence of theIssuer in determining whether a request presented under any Letter of Creditissued by it complied with the terms of such Letter of Credit or (ii) theIssuer’s failure to pay under any Letter of Credit issued by it after thepresentation to it of a request strictly complying with the terms and conditionsof such Letter of Credit. All such amounts paid by the Issuer and remainingunpaid by the Borrower shall bear interest, payable on demand, for each dayuntil paid at a rate per annum equal to the sum of 2%

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plus the rate applicable to Floating Rate Advances. The Issuer will pay to eachLender ratably in accordance with its pro rata share of the Aggregate Commitmentall amounts received by it from the Borrower for application in payment, inwhole or in part, of the Reimbursement Obligation in respect of any Letter ofCredit issued by the Issuer, but only to the extent such Lender has made paymentto the Issuer in respect of such Letter of Credit pursuant to Section 2.20(v).

(vii) Obligations Absolute. The Borrower’s obligations under thisSection 2.20 shall be absolute and unconditional under any and all circumstancesand irrespective of any setoff, counterclaim or defense to payment which theBorrower may have or have had against the Issuer, any Lender or any beneficiaryof a Letter of Credit. The Borrower further agrees with the Issuer and theLenders that neither the Issuer nor any Lender shall be responsible for, and theBorrower’s Reimbursement Obligation in respect of any Letter of Credit shall notbe affected by, among other things, the validity or genuineness of documents orof any endorsements thereon, even if such documents should in fact prove to bein any or all respects invalid, fraudulent or forged, or any dispute between oramong the Borrower, any of its Affiliates, the beneficiary of any Letter ofCredit or any financing institution or other party to whom any Letter of Creditmay be transferred or any claims or defenses whatsoever of the Borrower or ofany of its Affiliates against the beneficiary of any Letter of Credit or anysuch transferee. The Issuer shall not be liable for any error, omission,interruption or delay in transmission, dispatch or delivery of any message oradvice, however transmitted, in connection with any Letter of Credit. TheBorrower agrees that any action taken or omitted by the Issuer or any Lenderunder or in connection with any Letter of Credit and the related drafts anddocuments, if done without gross negligence or willful misconduct, shall bebinding upon the Borrower and shall not put the Issuer or any Lender under anyliability to the Borrower. Nothing in this Section 2.20(vii) is intended tolimit the right of the Borrower to make a claim against the Issuer for damagesas contemplated by the proviso to the first sentence of Section 2.20(vi).

(viii) Actions of Issuer. The Issuer shall be entitled to rely, andshall 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 otherdocument believed by it to be genuine and correct and to have been signed, sentor made by the proper Person or Persons, and upon advice and statements of legalcounsel, independent accountants and other experts selected by the Issuer. TheIssuer shall be fully justified in failing or refusing to take any action underthis Agreement unless it shall first have received such advice or concurrence ofthe Required Lenders as it reasonably deems appropriate or it shall first beindemnified to its reasonable satisfaction by the Lenders against any and allliability and expense which may be incurred by it by reason of taking orcontinuing to take any such action. Notwithstanding any other provision of thisSection 2.20, the Issuer shall in all cases be fully protected in acting, or inrefraining from acting, under this Agreement in accordance with a request of theRequired Lenders, and such request and any action taken or failure to actpursuant thereto shall be binding upon the Lenders and any future holders of aparticipation in any Letter of Credit.

(ix) Indemnification. The Borrower hereby agrees to indemnify andhold harmless each Lender, the Issuer and the Agent, and their respectivedirectors, officers, agents and employees, from and against any and all claimsand damages, losses, liabilities, costs or expenses which such Lender, theIssuer or the Agent may incur (or which may be claimed against such

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Lender, the Issuer or the Agent by any Person whatsoever) by reason of or inconnection with the issuance, execution and delivery or transfer of or paymentor failure to pay under any Letter of Credit or any actual or proposed use ofany Letter of Credit, including, without limitation, any claims, damages,losses, liabilities, costs or expenses which the Issuer may incur by reason ofor in connection with (i) the failure of any other Lender to fulfill or complywith its obligations to the Issuer hereunder (but nothing herein contained shallaffect 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 whichspecifies that the term "Beneficiary" included therein includes any successor byoperation of law of the named Beneficiary, but which Letter of Credit does notrequire that any drawing by any such successor Beneficiary be accompanied by acopy of a legal document, satisfactory to the Issuer, evidencing the appointmentof such successor Beneficiary; provided that the Borrower shall not be requiredto 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 indetermining whether a request presented under any Letter of Credit issued by theIssuer complied with the terms of such Letter of Credit or (y) the Issuer’sfailure to pay under any Letter of Credit after the presentation to it of arequest strictly complying with the terms and conditions of such Letter ofCredit. Nothing in this Section 2.20(ix) is intended to limit the obligations ofthe Borrower under any other provision of this Agreement.

(X) Lenders’ Indemnification. Each Lender shall, ratably inaccordance with its pro rata share of the Aggregate Commitment, indemnify theIssuer, its affiliates and its directors, officers, agents and employees (to theextent not reimbursed by the Borrower) against any cost, expense (includingreasonable counsel fees and disbursements), claim, demand, action, loss orliability (except such as result from such indemnitees’ gross negligence orwillful misconduct or the Issuer’s failure to pay under any Letter of Creditafter the presentation to it of a request strictly complying with the terms andconditions of the Letter of Credit) that such indemnitees may suffer or incur inconnection with this Section 2.20 or any action taken or omitted by suchindemnitees hereunder.

(xi) Letter of Credit Collateral Account. The Borrower agrees thatit will, upon the request of the Agent or the Required Lenders and until thefinal expiration date of any Letter of Credit and thereafter as long as anyamount is payable to the Issuer or the Lenders in respect of any Letter ofCredit, maintain a special collateral account pursuant to arrangementssatisfactory to the Agent (the "Letter of Credit Collateral Account") at theAgent’s office at the address specified pursuant to Article XIII, in the name ofsuch Borrower but under the sole dominion and control of the Agent, for thebenefit of the Lenders and in which the Borrower shall have no interest otherthan as set forth in Section 8.1. The Borrower hereby pledges, assigns andgrants to the Agent, on behalf of and for the ratable benefit of the Lenders andthe Issuer, a security interest in all of the Borrower’s right, title andinterest in and to all funds which may from time to time be on deposit in theLetter of Credit Collateral Account to secure the prompt and complete paymentand performance of the Obligations. The Agent will invest any funds on depositfrom time to time in the Letter of Credit Collateral Account in certificates ofdeposit of Bank One having a maturity not exceeding 30 days. Nothing in thisSection 2.20(xi) shall either obligate the Agent to require the Borrower todeposit any funds in the Letter of Credit Collateral Account or limit the rightof the Agent to release any funds held in the Letter of Credit CollateralAccount in each case other than as required by Section 8.1; provided that if oneor more Letters

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of Credit are outstanding on the Facility Termination Date, the Borrower shalldeposit funds in the Letter of Credit Collateral Account in an amount equal tothe stated amount of all such Letters of Credit, and such account shall at alltimes thereafter have a balance in excess of the full amount available to bedrawn under such Letters of Credit.

(xii) Rights as a Lender. In its capacity as a Lender, the Issuershall 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 orquasi-governmental rule, regulation, policy, guideline or directive (whether ornot having the force of law), or any change in the interpretation oradministration thereof by any governmental or quasi-governmental authority,central bank or comparable agency charged with the interpretation oradministration thereof, or compliance by any Lender, any applicable LendingInstallation or the Issuer with any request or directive (whether or not havingthe 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 itsEurodollar Loans, Letters of Credit or Commitment or to reduce the returnreceived by such Lender, the applicable Lending Installation or the Issuer inconnection with such Eurodollar Loans, Letters of Credit or Commitment, then,within 15 days of demand by such Lender or the Issuer, the Borrower shall

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pay such Lender or the Issuer such additional amount or amounts as willcompensate such Lender or the Issuer for such increased cost or reduction inamount received.

3.2 Changes in Capital Adequacy Regulations. If a Lender or theIssuer determines the amount of capital required or expected to be maintained bysuch Lender, the Issuer, any Lending Installation of such Lender or anycorporation controlling such Lender or the Issuer is increased as a result of aChange, then, within 15 days of demand by such Lender or the Issuer, theBorrower shall pay such Lender or the Issuer the amount necessary to compensatefor any shortfall in the rate of return on the portion of such increased capitalwhich such Lender or the Issuer determines is attributable to this Agreement,its Outstanding Credit Exposure or its Commitment to make Loans and issue orparticipate in Letters of Credit, as the case may be, hereunder (after takinginto 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-BasedCapital 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 thedate of this Agreement which affects the amount of capital required or expectedto be maintained by any Lender, any Lending Installation or the Issuer or anycorporation controlling any Lender or the Issuer. "Risk-Based CapitalGuidelines" means (i) the risk-based capital guidelines in effect in the UnitedStates on the date of this Agreement, including transition rules, and (ii) thecorresponding capital regulations promulgated by regulatory authorities outsidethe United States implementing the July 1988 report of the Basle Committee onBanking Regulation and Supervisory Practices Entitled "International Convergenceof Capital Measurements and Capital Standards," including transition rules, andany amendments to such regulations adopted prior to the date of this Agreement.

3.3 Availability of Types of Advances. If any Lender determinesthat maintenance of its Eurodollar Loans at a suitable Lending Installationwould violate any applicable law, rule, regulation, or directive, whether or nothaving the force of law, or if the Required Lenders determine that (i) depositsof a type and maturity appropriate to match fund Eurodollar Advances are notavailable or (ii) the interest rate applicable to Eurodollar Advances does notaccurately reflect the cost of making or maintaining Eurodollar Advances, thenthe Agent shall suspend the availability of Eurodollar Advances and require anyaffected 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 bySection 3.4.

3.4 Funding Indemnification. If any payment of a EurodollarAdvance occurs on a date which is not the last day of the applicable InterestPeriod, whether because of acceleration, prepayment or otherwise, or aEurodollar Advance is not made on the date specified by the Borrower for anyreason other than default by the Lenders, the Borrower will indemnify eachLender for any loss or cost incurred by it resulting therefrom, including,without limitation, any loss or cost in liquidating or employing depositsacquired to fund or maintain such Eurodollar Advance.

3.5 Taxes. (i) All payments by the Borrower to or for the accountof any Lender, the Issuer or the Agent hereunder or under any Note shall be madefree and clear of and without deduction for any and all Taxes. If the Borrowershall be required by law to deduct any Taxes

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from or in respect of any sum payable hereunder to any Lender, the Issuer or theAgent, (a) the sum payable shall be increased as necessary so that after makingall required deductions (including deductions applicable to additional sumspayable under this Section 3.5) such Lender, the Issuer or the Agent (as thecase may be) receives an amount equal to the sum it would have received had nosuch deductions been made, (b) the Borrower shall make such deductions, (c) theBorrower shall pay the full amount deducted to the relevant authority inaccordance with applicable law and (d) the Borrower shall furnish to the Agentthe original copy of a receipt evidencing payment thereof within 30 days aftersuch payment is made.

(ii) In addition, the Borrower hereby agrees to pay any present orfuture stamp or documentary taxes and any other excise or property taxes,charges or similar levies which arise from any payment made hereunder or underany 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 CreditApplication ("Other Taxes").

(iii) The Borrower hereby agrees to indemnify the Agent, each Lenderand the Issuer for the full amount of Taxes or Other Taxes (including, withoutlimitation, any Taxes or Other Taxes imposed on amounts payable under thisSection 3.5) paid by the Agent, such Lender or the Issuer and any liability(including penalties, interest and expenses) arising therefrom or with respectthereto. Payments due under this indemnification shall be made within 30 days ofthe date the Agent, such Lender or the Issuer makes demand therefor pursuant toSection 3.6.

(iv) Each Lender that is not incorporated under the laws of the UnitedStates of America or a state thereof (each a "Non-U.S. Lender") agrees that itwill, 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 ofUnited States Internal Revenue Service Form 1001 or 4224, certifying in eithercase that such Lender is entitled to receive payments under this Agreementwithout deduction or withholding of any United States federal income taxes, and(ii) deliver to each of the Borrower and the Agent a United States InternalRevenue Form W-8 or W-9, as the case may be, and certify that it is entitled toan exemption from United States backup withholding tax. Each Non-U.S. Lenderfurther undertakes to deliver to each of the Borrower and the Agent (x) renewalsor additional copies of such form (or any successor form) on or before the datethat such form expires or becomes obsolete, and (y) after the occurrence of anyevent requiring a change in the most recent forms so delivered by it, suchadditional forms or amendments thereto as may be reasonably requested by theBorrower or the Agent. All forms or amendments described in the precedingsentence shall certify that such Lender is entitled to receive payments underthis Agreement without deduction or withholding of any United States federalincome taxes, unless an event (including without limitation any change intreaty, law or regulation) has occurred prior to the date on which any suchdelivery would otherwise be required which renders all such forms inapplicableor which would prevent such Lender from duly completing and delivering any suchform or amendment with respect to it and such Lender advises the Borrower andthe Agent that it is not capable of receiving payments without any deduction orwithholding of United States federal income tax.

(v) For any period during which a Non-U.S. Lender has failed to providethe Borrower with an appropriate form pursuant to clause (iv), above (unlesssuch failure is due to a change in treaty, law or regulation, or any change inthe interpretation or administration thereof by any

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governmental authority, occurring subsequent to the date on which a formoriginally was required to be provided), such Non-U.S. Lender shall not beentitled to indemnification under this Section 3.5 with respect to Taxes imposedby the United States; provided that, should a Non-U.S. Lender which is otherwiseexempt from or subject to a reduced rate of withholding tax become subject toTaxes 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 shallreasonably request to assist such Non-U.S. Lender to recover such Taxes.

(vi) Any Lender that is entitled to an exemption from or reduction ofwithholding tax with respect to payments under this Agreement or any Notepursuant to the law of any relevant jurisdiction or any treaty shall deliver tothe Borrower (with a copy to the Agent), at the time or times prescribed byapplicable law, such properly completed and executed documentation prescribed byapplicable law as will permit such payments to be made without withholding or ata reduced rate.

(vii) If the U.S. Internal Revenue Service or any other governmentalauthority of the United States or any other country or any political subdivisionthereof asserts a claim that the Agent did not properly withhold tax fromamounts paid to or for the account of any Lender (because the appropriate formwas not delivered or properly completed, because such Lender failed to notifythe Agent of a change in circumstances which rendered its exemption fromwithholding ineffective, or for any other reason), such Lender shall indemnifythe Agent fully for all amounts paid, directly or indirectly, by the Agent astax, withholding therefor, or otherwise, including penalties and interest, andincluding taxes imposed by any jurisdiction on amounts payable to the Agentunder this subsection, together with all costs and expenses related thereto(including attorneys fees and time charges of attorneys for the Agent, whichattorneys may be employees of the Agent). The obligations of the Lenders underthis Section 3.5(vii) shall survive the payment of the Obligations andtermination of this Agreement.

3.6 Lender Statements; Survival of Indemnity. To the extentreasonably possible, each Lender shall designate an alternate LendingInstallation with respect to its Eurodollar Loans to reduce any liability of theBorrower to such Lender under Sections 3.1, 3.2 and 3.5 or to avoid theunavailability of Eurodollar Advances under Section 3.3, so long as suchdesignation is not, in the judgment of such Lender, disadvantageous to suchLender. Each Lender shall deliver a written statement of such Lender to theBorrower (with a copy to the Agent) as to the amount due, if any, under Section3.1, 3.2, 3.4 or 3.5. Such written statement shall set forth in reasonabledetail the calculations upon which such Lender determined such amount and shallbe final, conclusive and binding on the Borrower in the absence of manifesterror. Determination of amounts payable under such Sections in connection with aEurodollar Loan shall be calculated as though each Lender funded its EurodollarLoan through the purchase of a deposit of the type and maturity corresponding tothe deposit used as a reference in determining the Eurodollar Rate applicable tosuch Loan, whether in fact that is the case or not. Unless otherwise providedherein, the amount specified in the written statement of any Lender shall bepayable on demand after receipt by the Borrower of such written statement. Theobligations of the Borrower under Sections 3.1, 3.2, 3.4 and 3.5 shall survivepayment of the Obligations and termination of this Agreement.

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ARTICLE IV.

CONDITIONS PRECEDENT

4.1 Initial Credit Extension. The Lenders and the Issuer shall notbe required to make the initial Credit Extension hereunder unless the Borrowerhas 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).

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(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 tomake 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 ofCredit shall constitute a representation and warranty by the Borrower that theconditions 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 itsSubsidiaries is a corporation, partnership or limited liability company duly andproperly incorporated or organized, as the case may be, validly existing and (tothe extent such concept applies to such entity) in good standing under the lawsof its jurisdiction of incorporation or organization and has all requisiteauthority to conduct its business in each jurisdiction in which its business isconducted.

5.2 Authorization and Validity. The Borrower has the corporatepower and authority and legal right to execute and deliver the Loan Documentsand to perform its obligations thereunder. The execution and delivery by theBorrower of the Loan Documents and the performance of its obligations thereunderhave been duly authorized by proper corporate proceedings. After giving effectto each Credit Extension hereunder, the aggregate amount of all Indebtedness andborrowings of the Borrower will not exceed the maximum amount of Indebtednessand borrowings authorized by the Borrower’s Board of Directors. The LoanDocuments constitute legal, valid and binding obligations of the Borrowerenforceable against the Borrower in accordance with their terms, except asenforceability may be limited by bankruptcy, insolvency or similar lawsaffecting the enforcement of creditors’ rights generally.

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5.3 No Conflict; Government Consent. Neither the execution anddelivery by the Borrower of the Loan Documents, nor the consummation of thetransactions therein contemplated, nor compliance with the provisions thereofwill violate (i) any law, rule, regulation, order, writ, judgment, injunction,decree or award binding on the Borrower or any of its Subsidiaries, or (ii) theBorrower’s or any Subsidiary’s articles or certificate of incorporation,partnership agreement, certificate of partnership, articles or certificate oforganization, bylaws, or operating or other management agreement, as the casemay be, or (iii) the provisions of any indenture, instrument or agreement towhich the Borrower or any of its Subsidiaries is a party or is subject, or bywhich it, or its Property, is bound, or conflict with or constitute a defaultthereunder, 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 ofany such indenture, instrument or agreement. No order, consent, adjudication,approval, license, authorization, or validation of, or filing, recording orregistration with, or exemption by, or other action in respect of anygovernmental or public body or authority, or any subdivision thereof, which hasnot been obtained by the Borrower or any of its Subsidiaries and is in fullforce and effect, is required to be obtained by the Borrower or any of itsSubsidiaries in connection with the execution and delivery of the LoanDocuments, the borrowings under this Agreement, the payment and performance bythe Borrower of the Obligations or the legality, validity, binding effect orenforceability of any of the Loan Documents, except that the Borrower isrequired to make a notice filing with the SEC pursuant to the SEC’s Rule 52adopted 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 thepreceding sentence within the time limited prescribed therefor and furtherrepresents that no further consent, approval, license, authorization orvalidation of the SEC is required in connection therewith.

5.4 Financial Statements. The September 30, 2002 consolidatedfinancial statements of the Borrower and its Subsidiaries heretofore deliveredto the Lenders were prepared in accordance with generally accepted accountingprinciples in effect on the date such statements were prepared and fairlypresent the consolidated financial condition and operations of the Borrower andits Subsidiaries at such date and the consolidated results of their operationsfor the period then ended.

5.5 Material Adverse Change. Since September 30, 2002 no event hasoccurred which could reasonably be expected to have a Material Adverse Effect.

5.6 Taxes. The Borrower and its Subsidiaries have filed all UnitedStates federal tax returns and all other tax returns which are required to befiled and have paid all taxes due pursuant to said returns or pursuant to anyassessment received by the Borrower or any of its Subsidiaries, except suchtaxes, if any, as are being contested in good faith and as to which adequatereserves have been provided in accordance with Agreement Accounting Principlesand as to which no Lien exists. The United States income tax returns of theBorrower and its Subsidiaries have been audited by the Internal Revenue Servicethrough the fiscal year ended July 31, 1997. No tax liens have been filedagainst the Borrower or any Subsidiary. The charges, accruals and reserves onthe books of the Borrower and its Subsidiaries in respect of any taxes or othergovernmental charges are adequate.

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5.7 Litigation and Contingent Obligations. Except as described onSchedule 5.7 or in the Borrower’s annual report on Form 10K for the year endedDecember 31, 2001 and the Borrower’s quarterly reports on Form 10Q for theperiods ended March 31, 2002, June 30, 2002 and September 30, 2002, there is nolitigation, arbitration, governmental investigation, proceeding or inquirypending or, to the knowledge of any of their officers, threatened against oraffecting the Borrower or any of its Subsidiaries which could reasonably beexpected to have a Material Adverse Effect or which seeks to prevent, enjoin ordelay the making of any Loans. Other than any liability incident to anylitigation, arbitration or proceeding which could not reasonably be expected tohave a Material Adverse Effect, the Borrower has no material contingentobligations not provided for or disclosed in the financial statements referredto in Section 5.4.

5.8 Subsidiaries. As of the date of this Agreement, the Borrowerhas no Subsidiaries other than Southwestern Public Service Capital I.

5.9 ERISA. The Unfunded Liabilities of all Single Employer Plansdo not in the aggregate exceed $25,000,000. Each Plan complies in all materialrespects with all applicable requirements of law and regulations, no ReportableEvent has occurred with respect to any Plan, neither the Borrower nor any othermember 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 beentaken to reorganize or terminate any Plan. Neither the Borrower nor any othermember of the Controlled Group is party to any Multiemployer Plan.

5.10 Accuracy of Information. No information, exhibit or reportfurnished by the Borrower or any of its Subsidiaries to the Agent or to anyLender in connection with the negotiation of, or compliance with, the LoanDocuments contained any material misstatement of fact or omitted to state amaterial fact or any fact necessary to make the statements contained therein notmisleading.

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 itsSubsidiaries which are subject to any limitation on sale, pledge, or otherrestriction hereunder.

5.12 Material Agreements. Neither the Borrower nor any Subsidiaryis a party to any agreement or instrument or subject to any charter or othercorporate restriction which could reasonably be expected to have a MaterialAdverse Effect. Neither the Borrower nor any Subsidiary is in default in theperformance, observance or fulfillment of any of the obligations, covenants orconditions contained in (i) any agreement to which it is a party, which defaultcould reasonably be expected to have a Material Adverse Effect or (ii) anyagreement or instrument evidencing or governing Indebtedness.

5.13 Compliance With Laws. The Borrower and its Subsidiaries havecomplied in all material respects with all applicable statutes, rules,regulations, orders and restrictions of any domestic or foreign government orany instrumentality or agency thereof having jurisdiction over the conduct oftheir respective businesses or the ownership of their respective Property.

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5.14 Plan Assets; Prohibited Transactions. The Borrower is not anentity deemed to hold "plan assets" within the meaning of 29 C.F.R. Section2510.3-101 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 Section4975 of the Code), and neither the execution of this Agreement nor the making ofLoans hereunder gives rise to a prohibited transaction within the meaning ofSection 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 thebusiness of the Borrower and its Subsidiaries, in the course of which theyidentify and evaluate potential risks and liabilities accruing to the Borrowerdue to Environmental Laws. On the basis of this consideration, the Borrower hasconcluded that Environmental Laws cannot reasonably be expected to have aMaterial Adverse Effect. Neither the Borrower nor any Subsidiary has receivedany notice to the effect that its operations are not in material compliance withany of the requirements of applicable Environmental Laws or are the subject ofany federal or state investigation evaluating whether any remedial action isneeded to respond to a release of any toxic or hazardous waste or substance intothe environment, which noncompliance or remedial action could reasonably beexpected to have a Material Adverse Effect.

5.16 Investment Company Act. Neither the Borrower nor anySubsidiary 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 asubsidiary of Xcel Energy Inc., which is a regulated "holding company" withinthe meaning of the Public Utility Holding Company Act of 1935, as amended.

5.18 Insurance. The Borrower and its Subsidiaries maintain aself-insurance program and maintain with financially sound and reputableinsurance companies insurance on all their Property of a character usuallyinsured by entities in the same or similar businesses similarly situated againstloss or damage of the kinds and in the amounts, customarily insured against bysuch entities, and maintain such other insurance as is usually carried by suchentities.

ARTICLE VI.

COVENANTS

During the term of this Agreement, unless the Required Lenders shallotherwise consent in writing:

6.1 Financial Reporting. The Borrower will maintain, for itselfand each Subsidiary, a system of accounting established and administered inaccordance 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

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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 eachSubsidiary to, use the proceeds of the Credit Extensions for general corporatepurposes and to repay outstanding Credit Extensions. The Borrower will not, norwill it permit any Subsidiary to, use any of the proceeds of the CreditExtensions to purchase or carry any "margin stock" (as defined in Regulation U)or to make any hostile Acquisition.

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6.3 Notice of Default. The Borrower will, and will cause eachSubsidiary to, give prompt notice in writing to the Lenders within five (5) daysof the occurrence of any Default or Unmatured Default and of any otherdevelopment, financial or otherwise, which could reasonably be expected to havea Material Adverse Effect (it being understood and agreed that the Borrower andits Subsidiaries shall not be required to make separate disclosure under thisSection 6.3 of occurrences or developments which have previously been disclosedto the Lenders in any financial statements or other information delivered to theLenders pursuant to Section 6.1).

6.4 Conduct of Business. The Borrower will, and will cause eachSubsidiary to, carry on and conduct its business in substantially the samemanner and in substantially the same fields of enterprise as it is presentlyconducted and do all things necessary to remain duly incorporated or organized,validly existing and (to the extent such concept applies to such entity) in goodstanding as a domestic corporation, partnership or limited liability company inits jurisdiction of incorporation or organization, as the case may be, andmaintain all requisite authority to conduct its business in each jurisdiction inwhich 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, profitsor Property, except those which are being contested in good faith by appropriateproceedings and with respect to which adequate reserves have been set aside inaccordance with Agreement Accounting Principles.

6.6 Insurance. The Borrower will, and will cause each Subsidiaryto, maintain a self-insurance program, and maintain with financially sound andreputable insurance companies insurance on all their Property in such amountsand covering such risks as is consistent with sound business practice, and theBorrower will furnish to any Lender upon request full information as to theinsurance carried.

6.7 Compliance with Laws. The Borrower will, and will cause eachSubsidiary 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 couldreasonably be expected to have a Material Adverse Effect.

6.8 Maintenance of Properties. The Borrower will, and will causeeach Subsidiary to, do all things necessary to maintain, preserve, protect andkeep its Property in good repair, working order and condition, and make allnecessary and proper repairs, renewals and replacements so that its businesscarried on in connection therewith may be properly conducted at all times.

6.9 Inspection. The Borrower will, and will cause each Subsidiaryto, permit the Agent and the Lenders, by their respective representatives andagents, to inspect any of the Property, books and financial records of theBorrower and each Subsidiary, to examine and make copies of the books ofaccounts and other financial records of the Borrower and each Subsidiary, and todiscuss the affairs, finances and accounts of the Borrower and each Subsidiarywith, and

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to be advised as to the same by, their respective officers at such reasonabletimes and intervals as the Agent or any Lender may designate.

6.10 Merger. The Borrower will not, nor will it permit anySubsidiary 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 orconsolidation, no Default or Unmatured Default shall have occurred and becontinuing, then (i) any Subsidiary may merge with the Borrower or aWholly-Owned Subsidiary and (ii) the Borrower may merge or consolidate with anyother Person so long as the Borrower is the surviving entity.

6.11 Sale of Assets. The Borrower will not, nor will it permit anySubsidiary to, lease, sell or otherwise dispose of its Property to any otherPerson, 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 anytime 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 theInterest Coverage Ratio as of the last day of any fiscal quarter to be less than2.75 to 1.0.

6.14 Liens. The Borrower will not, nor will it permit anySubsidiary to, create, incur, or suffer to exist any Lien in, of or on theProperty of the Borrower or any of its Subsidiaries, except:

(a) Liens for taxes, assessments or governmental charges or levies onits Property if the same shall not at the time be delinquent or thereafter canbe paid without penalty, or are being contested in good faith and by appropriateproceedings and for which adequate reserves in accordance with AgreementAccounting Principles shall have been set aside on its books.

(b) Liens imposed by law, such as carriers’, warehousemen’s andmechanics’ liens and other similar liens arising in the ordinary course ofbusiness which secure payment of obligations not more than 60 days past due orwhich are being contested in good faith by appropriate proceedings and for whichadequate reserves shall have been set aside on its books.

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(c) Liens arising out of pledges or deposits under worker’scompensation laws, unemployment insurance, old age pensions, or other socialsecurity or retirement benefits, or similar legislation.

(d) Utility easements, building restrictions and such otherencumbrances or charges against real property as are of a nature generallyexisting with respect to properties of a similar character and which do not inany material way affect the marketability of the same or interfere with the usethereof 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 ReceivablesTransactions.

(g) Purchase money Liens arising in the ordinary course of business;provided that the aggregate amount of Indebtedness secured by all such Liensshall not at any time exceed $5,000,000.

6.15 Intercompany Transactions. The Borrower will not, and will notpermit 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 anySubsidiary thereof); or (b) enter into any other transaction with Xcel EnergyInc. or any Affiliate thereof (other than the Borrower or any Subsidiarythereof) except in the ordinary course of business and pursuant to thereasonable requirements of the Borrower’s or such Subsidiary’s business and uponfair and reasonable terms no less favorable to the Borrower or such Subsidiarythan the Borrower or such Subsidiary would obtain in a comparable arms’ lengthtransaction with unrelated third parties. Nothing in this Section 6.15 shallrestrict the ability of the Borrower to pay dividends to Xcel Energy Inc. solong as no Default or Unmatured Default exists or would result therefrom.

6.16 Off-Balance Sheet Liabilities. The Borrower will not at anytime permit the aggregate amount of all Off-Balance Sheet Liabilities (excluding(i) Receivables Transaction Attributed Obligations and (ii) the existingOff-Balance Sheet Liabilities listed on Schedule 6.16) of the Borrower and itsSubsidiaries to exceed $100,000,000.

6.17 Receivables Transaction Attributed Obligations. The Borrowerwill not at any time permit the aggregate amount of all Receivables TransactionAttributed Obligations to exceed $75,000,000.

ARTICLE VII.

DEFAULTS

The occurrence of any one or more of the following events shallconstitute a Default:

7.1 Any representation or warranty made or deemed made by or onbehalf of the Borrower or any of its Subsidiaries to the Lenders or the Agentunder or in connection with this Agreement, any Loan, or any certificate orinformation delivered in connection with this Agreement or any other LoanDocument shall be materially false on the date as of which made.

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7.2 Nonpayment of principal of any Loan when due, nonpayment ofany Reimbursement Obligation within one Business Day after the same becomes due,or nonpayment of interest upon any Loan or of any commitment fee, Letter ofCredit Fee or other obligations under any of the Loan Documents within five daysafter the same becomes due.

7.3 The breach by the Borrower of any of the terms or provisionsof Section 6.2, 6.3, 6.10, 6.12 or 6.13.

7.4 The breach by the Borrower (other than a breach whichconstitutes a Default under another Section of this Article VII) of any of theterms or provisions of this Agreement which is not remedied within five daysafter written notice from the Agent or any Lender.

7.5 Failure of the Borrower and/or any of its SignificantSubsidiaries to pay when due any Indebtedness aggregating in excess of$25,000,000 ("Material Indebtedness"); or the default by the Borrower and/or anyof its Significant Subsidiaries in the performance of any term, provision orcondition contained in any agreement under which any such Material Indebtednesswas 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 orholders of such Material Indebtedness to cause, such Indebtedness to become dueprior to its stated maturity; or any Material Indebtedness of the Borrowerand/or any of its Significant Subsidiaries shall be declared to be due andpayable or required to be prepaid or repurchased (other than by a regularlyscheduled payment) prior to the stated maturity thereof; or the Borrower or anyof its Significant Subsidiaries shall not pay, or admit in writing its inabilityto 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 bankruptcylaws as now or hereafter in effect, (ii) make an assignment for the benefit ofcreditors, (iii) apply for, seek, consent to, or acquiesce in, the appointmentof a receiver, custodian, trustee, examiner, liquidator or similar official forit or any Substantial Portion of its Property, (iv) institute any proceedingseeking an order for relief under the Federal bankruptcy laws as now orhereafter in effect or seeking to adjudicate it a bankrupt or insolvent, orseeking dissolution, winding up, liquidation, reorganization, arrangement,adjustment or composition of it or its debts under any law relating tobankruptcy, insolvency or reorganization or relief of debtors or fail to file ananswer or other pleading denying the material allegations of any such proceedingfiled against it, (v) take any corporate or partnership action to authorize oreffect any of the foregoing actions set forth in this Section 7.6 or (vi) failto contest in good faith any appointment or proceeding described in Section 7.7.

7.7 Without the application, approval or consent of the Borroweror any of its Significant Subsidiaries, a receiver, trustee, examiner,liquidator or similar official shall be appointed for the Borrower or any of itsSignificant Subsidiaries or any Substantial Portion of its Property, or aproceeding described in Section 7.6(iv) shall be instituted against the Borroweror any of its Significant Subsidiaries and such appointment continuesundischarged or such proceeding continues undismissed or unstayed for a periodof 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 anyportion of the Property of the Borrower and its Subsidiaries which, when takentogether with all other Property of the Borrower and its

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Subsidiaries so condemned, seized, appropriated, or taken custody or control of,during the twelve-month period ending with the month in which any such actionoccurs, constitutes a Substantial Portion.

7.9 The Borrower or any of its Significant Subsidiaries shall failwithin 30 days to pay, bond or otherwise discharge one or more (i) judgments ororders for the payment of money in excess of $25,000,000 (or the equivalentthereof in currencies other than U.S. Dollars) in the aggregate, or (ii)nonmonetary judgments or orders which, individually or in the aggregate, couldreasonably be expected to have a Material Adverse Effect, which judgment(s), inany such case, is/are not stayed on appeal or otherwise being appropriatelycontested in good faith.

7.10 The Unfunded Liabilities of all Single Employer Plans shallexceed in the aggregate $25,000,000; any Reportable Event shall occur inconnection with any Plan which has resulted or could reasonably be expected toresult 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 togive rise to a Lien under section 302(f) of ERISA; or the Borrower or any othermember 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 bythe Borrower, any of its Significant Subsidiaries or any other Person of anytoxic or hazardous waste or substance into the environment, or (ii) violate anyEnvironmental Law, which, in the case of an event described in clause (i) orclause (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 andcorrect.

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 outstandingshares 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 respectto the Borrower, the obligations of the Lenders to make Loans hereunder and theobligation and power of the Issuer to issue Letters of Credit shallautomatically terminate and the Obligations shall immediately become due andpayable without any election or action on the part of the Agent, any Lender orthe Issuer and the Borrower will be and become thereby unconditionallyobligated, without any further notice, act or demand, to pay to the Agent anamount in immediately available funds, which funds shall be held in the Letterof Credit Collateral Account, equal to the excess of (x) the amount of LCObligations at such time over (y) the amount on deposit in the Letter of CreditCollateral Account at such time which is free and clear of all rights and claimsof third parties and has not been applied against the Obligations (suchdifference, the "Collateral Shortfall Amount"). If any other Default occurs andis continuing, the Required Lenders (or the Agent

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with the consent of the Required Lenders) may (a) terminate or suspend theobligations of the Lenders to make Loans hereunder and the obligation and powerof the Issuer to issue Letters of Credit, or declare the Obligations to be dueand payable, or both, whereupon the Obligations shall become immediately due andpayable, without presentment, demand, protest or notice of any kind, all ofwhich the Borrower hereby expressly waives, and/or (b) upon notice to theBorrower and in addition to the continuing right to demand payment of allamounts payable under this Agreement, make demand on the Borrower to pay, andthe Borrower will, forthwith upon such demand and without any further notice oract, pay to the Agent in immediately available funds the Collateral ShortfallAmount, which funds shall be deposited in the Letter of Credit CollateralAccount.

(ii) If at any time while any Default exists, the Agent determines thatthe Collateral Shortfall Amount at such time is greater than zero, the Agent maymake demand on the Borrower to pay, and the Borrower will, forthwith upon suchdemand and without any further notice or act, pay to the Agent in immediatelyavailable funds the Collateral Shortfall Amount, which funds shall be depositedin the Letter of Credit Collateral Account.

(iii) The Agent may at any time or from time to time, after funds aredeposited in the Letter of Credit Collateral Account, apply such funds to thepayment of the Obligations and any other amounts as shall from time to time havebecome due and payable by the Borrower to the Lenders or the Issuer under theLoan Documents.

(iv) At any time while any Default is continuing, neither the Borrowernor any Person claiming on behalf of or through the Borrower shall have anyright to withdraw any of the funds held in the Letter of Credit CollateralAccount. After all of the Obligations have been indefeasibly paid in full andthe Aggregate Commitment has been terminated, any funds remaining in the Letterof Credit Collateral Account shall be returned by the Agent to the Borrower orpaid to whomever may be legally entitled thereto at such time.

If, within 30 days after acceleration of the maturity of theObligations or termination of the obligations of the Lenders to make Loanshereunder as a result of any Default (other than any Default as described inSection 7.6 or 7.7 with respect to the Borrower) and before any judgment ordecree for the payment of the Obligations due shall have been obtained orentered, the Required Lenders (in their sole discretion) shall so direct, theAgent shall, by notice to the Borrower, rescind and annul such accelerationand/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 RequiredLenders) and the Borrower may enter into agreements supplemental hereto for thepurpose of adding or modifying any provisions to the Loan Documents or changingin any manner the rights of the Lenders or the Borrower hereunder or waiving anyDefault 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

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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 beeffective without the written consent of the Agent, and no amendment of anyprovision to this Agreement relating to the Issuer shall be effective withoutthe written consent of the Issuer. The Agent may waive payment of the feerequired under Section 12.3.2 without obtaining the consent of any other partyto 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 shallimpair such right or be construed to be a waiver of any Default or anacquiescence therein, and the making of a Credit Extension notwithstanding theexistence of a Default or the inability of the Borrower to satisfy theconditions precedent to such Credit Extension shall not constitute any waiver oracquiescence. Any single or partial exercise of any such right shall notpreclude other or further exercise thereof or the exercise of any other right,and no waiver, amendment or other variation of the terms, conditions orprovisions of the Loan Documents whatsoever shall be valid unless in writingsigned by the Lenders required pursuant to Section 8.2, and then only to theextent in such writing specifically set forth. All remedies contained in theLoan Documents or by law afforded shall be cumulative and all shall be availableto the Agent, the Lenders and the Issuer until the Obligations have been paid infull.

ARTICLE IX.

GENERAL PROVISIONS

9.1 Survival of Representations. All representations andwarranties of the Borrower contained in this Agreement shall survive the makingof the Credit Extensions herein contemplated.

9.2 Governmental Regulation. Anything contained in this Agreementto the contrary notwithstanding, no Issuer or Lender shall be obligated toextend credit to the Borrower in violation of any limitation or prohibitionprovided by any applicable statute or regulation.

9.3 Headings. Section headings in the Loan Documents are forconvenience of reference only, and shall not govern the interpretation of any ofthe provisions of the Loan Documents.

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9.4 Entire Agreement. The Loan Documents embody the entireagreement and understanding among the Borrower, the Agent, the Lenders and theIssuer and supersede all prior agreements and understandings among the Borrower,the Agent, the Lenders and the Issuer relating to the subject matter thereofother than the fee letter described in Section 10.13.

9.5 Several Obligations; Benefits of this Agreement. Therespective obligations of the Lenders hereunder are several and not joint and noLender shall be the partner or agent of any other (except to the extent to whichthe Agent is authorized to act as such). The failure of any Lender to performany of its obligations hereunder shall not relieve any other Lender from any ofits obligations hereunder. This Agreement shall not be construed so as to conferany right or benefit upon any Person other than the parties to this Agreementand their respective successors and assigns, provided that the parties heretoexpressly agree that the Arranger shall enjoy the benefits of the provisions ofSections 9.6, 9.10 and 10.11 to the extent specifically set forth therein andshall have the right to enforce such provisions on its own behalf and in its ownname to the same extent as if it were a party to this Agreement.

9.6 Expenses; Indemnification. (i) The Borrower shall reimbursethe Agent and the Arranger for all reasonable costs, internal charges andout-of-pocket expenses (including reasonable attorneys’ fees and reasonable timecharges of attorneys for the Agent, which attorneys may be employees of theAgent) paid or incurred by the Agent or the Arranger in connection with thepreparation, negotiation, execution, delivery, syndication, review, amendment,modification, and administration of the Loan Documents. The Borrower also agreesto reimburse the Agent, the Arranger, the Lenders and the Issuer for allreasonable costs, internal charges and out-of-pocket expenses (includingreasonable attorneys’ fees and reasonable time charges of attorneys for theAgent, the Arranger, the Lenders and the Issuer, which attorneys may beemployees of the Agent, the Arranger, the Lenders or the Issuer) paid orincurred by the Agent, the Arranger, any Lender or the Issuer in connection withthe collection and enforcement of the Loan Documents.

(ii) The Borrower hereby further agrees to indemnify the Agent, theArranger, each Lender, the Issuer, their respective affiliates, and each oftheir directors, officers and employees against all losses, claims, damages,penalties, judgments, liabilities and reasonable expenses (including, withoutlimitation, all reasonable expenses of litigation or preparation thereforwhether or not the Agent, the Arranger, any Lender, the Issuer or any affiliateis a party thereto) which any of them may pay or incur arising out of orrelating to this Agreement, the other Loan Documents, the transactionscontemplated hereby or the direct or indirect application or proposedapplication of the proceeds of any Credit Extension hereunder except to theextent that they are determined in a final non-appealable judgment by a court ofcompetent jurisdiction to have resulted from the gross negligence or willfulmisconduct of the party seeking indemnification. The obligations of the Borrowerunder this Section 9.6 shall survive the termination of this Agreement.

9.7 Numbers of Documents. All statements, notices, closingdocuments, and requests hereunder shall be furnished to the Agent withsufficient counterparts so that the Agent may furnish one to each of theLenders.

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9.8 Accounting. Except as provided to the contrary herein, allaccounting terms used herein shall be interpreted and all accountingdeterminations hereunder shall be made in accordance with Agreement AccountingPrinciples.

9.9 Severability of Provisions. Any provision in any Loan Documentthat is held to be inoperative, unenforceable, or invalid in any jurisdictionshall, as to that jurisdiction, be inoperative, unenforceable, or invalidwithout affecting the remaining provisions in that jurisdiction or theoperation, enforceability, or validity of that provision in any otherjurisdiction, and to this end the provisions of all Loan Documents are declaredto be severable.

9.10 Nonliability of Lenders. The relationship between the Borroweron the one hand and the Lenders, the Issuer and the Agent on the other handshall be solely that of borrower and lender. Neither the Agent, the Arranger,any Lender nor the Issuer shall have any fiduciary responsibilities to theBorrower. Neither the Agent, the Arranger, any Lender nor the Issuer undertakesany responsibility to the Borrower to review or inform the Borrower of anymatter in connection with any phase of the Borrower’s business or operations.The Borrower agrees that neither the Agent, the Arranger, any Lender nor theIssuer shall have liability to the Borrower (whether sounding in tort, contractor otherwise) for losses suffered by the Borrower in connection with, arisingout of, or in any way related to, the transactions contemplated and therelationship established by the Loan Documents, or any act, omission or eventoccurring in connection therewith, unless it is determined in a finalnon-appealable judgment by a court of competent jurisdiction that such lossesresulted from the gross negligence or willful misconduct of the party from whichrecovery is sought. Neither the Agent, the Arranger, any Lender nor the Issuershall have any liability with respect to, and the Borrower hereby waives,releases and agrees not to sue for, any special, indirect or consequentialdamages suffered by the Borrower in connection with, arising out of, or in anyway related to the Loan Documents or the transactions contemplated thereby.

9.11 Limited Disclosure. (a) Notwithstanding anything to thecontrary herein, the Borrower, each Lender and the Agent hereby agree that, fromthe commencement of discussions with respect to the facility established by thisAgreement (the "Facility"), the Borrower, each Lender and the Agent (and each oftheir respective, and their respective Affiliates’, employees, officers,directors, representatives, advisors and agents) are permitted to disclose toany and all Persons, without limitation of any kind, the structure and taxaspects (as such terms are used in sections 6011 and 6111 of the Code) of theFacility, and all materials or any kind (including opinions or other taxanalyses) that are provided to the Borrower, any Lender or the Agent related tosuch structure and tax aspects. In this regard, each of the Borrower, eachLender and the Agent acknowledges and agrees that the disclosure of thestructure or tax aspects of the Facility is not limited in any way by an expressor implied understanding or agreement, oral or written (whether or not suchunderstanding or agreement is legally binding). Furthermore, each of theBorrower, each Lender and the Agent acknowledges and agrees that it does notknow or have reason to know that its use or disclosure of information relatingto 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 thebenefit of any other Person.

(b) Neither the Agent nor any Lender may disclose to any Person anySpecified Information (as defined below) except to its, and its Affiliates’,officers, employees, agents,

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accountants, legal counsel, advisors and other representatives who have a needto know such Specified Information. "Specified Information" means informationthat the Borrower furnishes to the Agent or any Lender in a writing designatedas confidential, but does not include any such information that (i) relates tothe "structure" or "tax aspects" of the transactions contemplated by thisAgreement, as such terms are used in Sections 6011, 6111 and 6112 of the Codeand the regulations promulgated thereunder or (ii) is or becomes generallyavailable to the public or that is or becomes available to the Agent or suchLender from a source other than the Borrower.

(c) The provisions of subsection (b) above shall not apply to SpecifiedInformation (i) that is a matter of general public knowledge or has heretoforebeen 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 and6112 of the Code, (iii) that is requested by any regulatory body withjurisdiction over the Agent or any Lender, or (iv) that is disclosed to legalcounsel, accountants and other professional advisors to such Lender, inconnection with the exercise of any right or remedy hereunder or under any Noteor any suit or other litigation or proceeding relating to this Agreement or anyNote, to a rating agency if required by such agency in connection with a ratingrelating to Credit Extensions hereunder or to assignees or participants orpotential assignees or participants who agree to be bound by the provisions ofthis Section 9.11.

(d) The provisions of this Section 9.11 supersede any confidentialityobligations of any Lender or the Agent relating to the Facility under anyagreement between the Borrower and any such party. The parties hereto agree thatany such confidentiality obligations of any Lender or the Agent shall be deemedvoid ab initio to the extent the same relate to the Facility.

9.12 Nonreliance. Each Lender hereby represents that it is notrelying on or looking to any margin stock (as defined in Regulation U of theBoard of Governors of the Federal Reserve System) for the repayment of theCredit 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 timemay hold investments in, make other loans to or have other relationships withthe Borrower and its Affiliates, and (ii) waive any liability of Bank One orsuch Affiliate of Bank One to the Borrower or any Lender, respectively, arisingout of or resulting from such investments, loans or relationships other thanliabilities arising out of the gross negligence or willful misconduct of BankOne or its Affiliates.

ARTICLE X.

THE AGENT

10.1 Appointment; Nature of Relationship. Bank One, is herebyappointed by each of the Lenders as its contractual representative (hereinreferred to as the "Agent") hereunder and under each other Loan Document, andeach of the Lenders irrevocably authorizes the Agent to act as the contractualrepresentative of such Lender with the rights and duties expressly set forthherein and in the other Loan Documents. The Agent agrees to act as suchcontractual representative upon the express conditions contained in this ArticleX. Notwithstanding the use of the defined term "Agent," it is expresslyunderstood and agreed that the Agent shall not have

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any fiduciary responsibilities to any Lender by reason of this Agreement or anyother Loan Document and that the Agent is merely acting as the contractualrepresentative of the Lenders with only those duties as are expressly set forthin this Agreement and the other Loan Documents. In its capacity as the Lenders’contractual representative, the Agent (i) does not hereby assume any fiduciaryduties to any of the Lenders, (ii) is a "representative" of the Lenders withinthe meaning of Section 9-105 of the Uniform Commercial Code and (iii) is actingas an independent contractor, the rights and duties of which are limited tothose expressly set forth in this Agreement and the other Loan Documents. Eachof the Lenders hereby agrees to assert no claim against the Agent on any agencytheory or any other theory of liability for breach of fiduciary duty, all ofwhich claims each Lender hereby waives.

10.2 Powers. The Agent shall have and may exercise such powersunder the Loan Documents as are specifically delegated to the Agent by the termsof 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 theLenders to take any action thereunder except any action specifically provided bythe 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 orany Lender for any action taken or omitted to be taken by it or them hereunderor under any other Loan Document or in connection herewith or therewith exceptto the extent such action or inaction is determined in a final non-appealablejudgment by a court of competent jurisdiction to have arisen from the grossnegligence or willful misconduct of such Person.

10.4 No Responsibility for Loans, Recitals, etc. Neither the Agentnor any of its directors, officers, agents or employees shall be responsible foror have any duty to ascertain, inquire into, or verify (a) any statement,warranty or representation made in connection with any Loan Document or anyborrowing hereunder; (b) the performance or observance of any of the covenantsor agreements of any obligor under any Loan Document, including, withoutlimitation, any agreement by an obligor to furnish information directly to eachLender; (c) the satisfaction of any condition specified in Article IV, exceptreceipt of items required to be delivered solely to the Agent; (d) the existenceor possible existence of any Default or Unmatured Default; (e) the validity,enforceability, effectiveness, sufficiency or genuineness of any Loan Documentor any other instrument or writing furnished in connection therewith, or (f) thefinancial 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 notrequired to be furnished by the Borrower to the Agent at such time, but isvoluntarily furnished by the Borrower to the Agent (either in its capacity asAgent or in its individual capacity).

10.5 Action on Instructions of Lenders. The Agent shall in allcases be fully protected in acting, or in refraining from acting, hereunder andunder any other Loan Document in accordance with written instructions signed bythe Required Lenders (or, when expressly required hereunder, all of theLenders), and such instructions and any action taken or failure to act pursuantthereto shall be binding on all of the Lenders. The Lenders hereby acknowledgethat the Agent shall be under no duty to take any discretionary action permittedto be taken by it pursuant to the provisions of this Agreement or any other LoanDocument unless it shall be requested in writing to do so by the RequiredLenders. The Agent shall be fully justified in

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failing or refusing to take any action hereunder and under any other LoanDocument unless it shall first be indemnified to its satisfaction by the Lenderspro rata against any and all liability, cost and expense that it may incur byreason of taking or continuing to take any such action.

10.6 Employment of Agents and Counsel. The Agent may execute any ofits duties as Agent hereunder and under any other Loan Document by or throughemployees, agents, and attorneys-in-fact and shall not be answerable to theLenders, except as to money or securities received by it or its authorizedagents, for the default or misconduct of any such agents or attorneys-in-factselected by it with reasonable care. The Agent shall be entitled to advice ofcounsel concerning the contractual arrangement between the Agent and the Lendersand all matters pertaining to the Agent’s duties hereunder and under any otherLoan Document.

10.7 Reliance on Documents; Counsel. The Agent shall be entitled torely upon any Note, notice, consent, certificate, affidavit, letter, telegram,statement, paper or document believed by it to be genuine and correct and tohave been signed or sent by the proper person or persons, and, in respect tolegal matters, upon the opinion of counsel selected by the Agent, which counselmay be employees of the Agent.

10.8 Agent’s Reimbursement and Indemnification. The Lenders agreeto reimburse and indemnify the Agent ratably in proportion to their respectiveCommitments (or, if the Commitments have been terminated, in proportion to theirCommitments immediately prior to such termination) (i) for any amounts notreimbursed by the Borrower for which the Agent is entitled to reimbursement bythe Borrower under the Loan Documents, (ii) for any other expenses incurred bythe 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 inconnection with any dispute between the Agent and any Lender or between two ormore of the Lenders) and (iii) for any liabilities, obligations, losses,damages, penalties, actions, judgments, suits, costs, expenses or disbursementsof any kind and nature whatsoever which may be imposed on, incurred by orasserted against the Agent in any way relating to or arising out of the LoanDocuments or any other document delivered in connection therewith or thetransactions contemplated thereby (including, without limitation, for any suchamounts incurred by or asserted against the Agent in connection with any disputebetween the Agent and any Lender or between two or more of the Lenders), or theenforcement of any of the terms of the Loan Documents or of any such otherdocuments, provided that (i) no Lender shall be liable for any of the foregoingto the extent any of the foregoing is found in a final non-appealable judgmentby a court of competent jurisdiction to have resulted from the gross negligenceor willful misconduct of the Agent and (ii) any indemnification requiredpursuant to Section 3.5(vii) shall, notwithstanding the provisions of thisSection 10.8, be paid by the relevant Lender in accordance with the provisionsthereof. The obligations of the Lenders under this Section 10.8 shall survivepayment of the Obligations and termination of this Agreement.

10.9 Notice of Default. The Agent shall not be deemed to haveknowledge or notice of the occurrence of any Default or Unmatured Defaulthereunder unless the Agent has received written notice from a Lender or theBorrower referring to this Agreement describing such Default or UnmaturedDefault and stating that such notice is a "notice of default". In the event thatthe Agent receives such a notice, the Agent shall give prompt notice thereof tothe Lenders.

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10.10 Rights as a Lender. In the event the Agent is a Lender, theAgent shall have the same rights and powers hereunder and under any other LoanDocument with respect to its Commitment and its Loans as any Lender and mayexercise 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 contextotherwise indicates, include the Agent in its individual capacity. The Agent andits Affiliates may accept deposits from, lend money to, and generally engage inany kind of trust, debt, equity or other transaction, in addition to thosecontemplated by this Agreement or any other Loan Document, with the Borrower orany of its Subsidiaries in which the Borrower or such Subsidiary is notrestricted hereby from engaging with any other Person. The Agent, in itsindividual 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 otherLender and based on the financial statements prepared by the Borrower and suchother documents and information as it has deemed appropriate, made its owncredit analysis and decision to enter into this Agreement and the other LoanDocuments. Each Lender also acknowledges that it will, independently and withoutreliance upon the Agent, the Arranger or any other Lender and based on suchdocuments and information as it shall deem appropriate at the time, continue tomake its own credit decisions in taking or not taking action under thisAgreement and the other Loan Documents.

10.12 Successor Agent. The Agent may resign at any time by givingwritten notice thereof to the Lenders and the Borrower, such resignation to beeffective upon the appointment of a successor Agent or, if no successor Agenthas been appointed, forty-five days after the retiring Agent gives notice of itsintention to resign. The Agent may be removed at any time with or without causeby written notice received by the Agent from the Required Lenders, such removalto be effective on the date specified by the Required Lenders; provided that theAgent may not be removed unless the Agent (in its individual capacity) and anyaffiliate thereof acting as Issuer is relieved of all of its duties as Issuerpursuant to documentation reasonably satisfactory to such Person on or prior tothe date of such removal. Upon any such resignation or removal, the RequiredLenders shall have the right to appoint, on behalf of the Borrower and theLenders, a successor Agent. If no successor Agent shall have been so appointedby the Required Lenders within thirty days after the resigning Agent’s givingnotice of its intention to resign, then the resigning Agent may appoint, onbehalf of the Borrower and the Lenders, a successor Agent. Notwithstanding theprevious sentence, the Agent may at any time without the consent of any Lenderand with the consent of the Borrower, not to be unreasonably withheld ordelayed, appoint any of its Affiliates which is a commercial bank as a successorAgent hereunder. If the Agent has resigned or been removed and no successorAgent has been appointed, the Lenders may perform all the duties of the Agenthereunder and the Borrower shall make all payments in respect of the Obligationsto the applicable Lender and for all other purposes shall deal directly with theLenders. No successor Agent shall be deemed to be appointed hereunder until suchsuccessor Agent has accepted the appointment. Any such successor Agent shall bea 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 therights, powers, privileges and duties of the resigning or removed Agent. Uponthe effectiveness of the resignation or removal of the Agent, the resigning orremoved Agent shall be discharged from its duties and obligations hereunder andunder the Loan Documents. After the effectiveness of the resignation or removalof an Agent,

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the provisions of this Article X shall continue in effect for the benefit ofsuch Agent in respect of any actions taken or omitted to be taken by it while itwas acting as the Agent hereunder and under the other Loan Documents. In theevent that there is a successor to the Agent by merger, or the Agent assigns itsduties and obligations to an Affiliate pursuant to this Section 10.12, then theterm "Prime Rate" as used in this Agreement shall mean the prime rate, base rateor other analogous rate of the new Agent.

10.13 Agent’s Fee. The Borrower agrees to pay to the Agent, for itsown account, the fees agreed to by the Borrower and the Agent pursuant to thatcertain letter agreement dated January 23, 2003, or as otherwise agreed fromtime to time.

10.14 Delegation to Affiliates. The Borrower and the Lenders agreethat the Agent may delegate any of its duties under this Agreement to any of itsAffiliates. Any such Affiliate (and such Affiliate’s directors, officers, agentsand employees) which performs duties in connection with this Agreement shall beentitled to the same benefits of the indemnification, waiver and otherprotective provisions to which the Agent is entitled under Articles IX and X.

10.15 Syndication Agent. No Lender identified on the cover page, thesignature pages or otherwise in this Agreement, or in any document relatedhereto, as being the "Syndication Agent" shall have any right, power,obligation, liability, responsibility or duty under this Agreement in suchcapacity other than those applicable to all Lenders. Each Lender acknowledgesthat it has not relied, and will not rely, on the Syndication Agent in decidingto enter into this Agreement or in taking or refraining from taking any actionhereunder or pursuant hereto.

ARTICLE XI.

SETOFF; RATABLE PAYMENTS

11.1 Setoff. In addition to, and without limitation of, any rightsof the Lenders under applicable law, if the Borrower becomes insolvent, howeverevidenced, or any Default occurs, any and all deposits (including all accountbalances, whether provisional or final and whether or not collected oravailable) and any other Indebtedness at any time held or owing by any Lender orany Affiliate of any Lender to or for the credit or account of the Borrower maybe offset and applied toward the payment of the Obligations owing to suchLender, whether or not the Obligations, or any part thereof, shall then be due.

11.2 Ratable Payments. If any Lender, whether by setoff orotherwise, has payment made to it upon its Outstanding Credit Exposure (otherthan payments received pursuant to Section 3.1, 3.2, 3.4 or 3.5 and paymentsmade to the Issuer in respect of Reimbursement Obligations so long as theLenders have not funded their participations therein) in a greater proportionthan that received by any other Lender, such Lender agrees, promptly upondemand, to purchase a portion of the Aggregate Outstanding Credit Exposure heldby the other Lenders so that after such purchase each Lender will hold itsratable proportion of the Aggregate Outstanding Credit Exposure. If any Lender,whether in connection with setoff or amounts which might be subject to setoff orotherwise, receives collateral or other protection for its Obligations or suchamounts which may be subject to setoff, such Lender agrees, promptly upon

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demand, to take such action necessary such that all Lenders share in thebenefits of such collateral ratably in proportion to their Aggregate OutstandingCredit Exposure. In case any such payment is disturbed by legal process, orotherwise, appropriate further adjustments shall be made.

ARTICLE XII.

BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS

12.1 Successors and Assigns. The terms and provisions of the LoanDocuments shall be binding upon and inure to the benefit of the Borrower and theLenders and their respective successors and assigns, except that (i) theBorrower shall not have the right to assign its rights or obligations under theLoan Documents and (ii) any assignment by any Lender must be made in compliancewith Section 12.3. The parties to this Agreement acknowledge that clause (ii) ofthis Section 12.1 relates only to absolute assignments and does not prohibitassignments creating security interests, including, without limitation, anypledge or assignment by any Lender of all or any portion of its rights underthis Agreement and any Note to a Federal Reserve Bank; provided that no suchpledge or assignment creating a security interest shall release the transferorLender from its obligations hereunder unless and until the parties thereto havecomplied with the provisions of Section 12.3. The Agent may treat the Personwhich made any Loan or which holds any Note as the owner thereof for allpurposes 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 Noteto direct payments relating to such Loan or Note to another Person. Any assigneeof the rights to any Loan or any Note agrees by acceptance of such assignment tobe 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 orgiving such authority or consent is the owner of the rights to any Loan (whetheror not a Note has been issued in evidence thereof), shall be conclusive andbinding 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.

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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 eachLender to disclose to any Participant or Purchaser or any other Person acquiringan interest in the Loan Documents by operation of law (each a "Transferee") andany prospective Transferee any and all information in such Lender’s possessionconcerning the creditworthiness of the Borrower and its Subsidiaries, includingwithout limitation any information contained in any Reports; provided that eachTransferee and prospective Transferee agrees to be bound by Section 9.11 of thisAgreement.

12.5 Tax Treatment. If any interest in any Loan Document istransferred to any Transferee which is organized under the laws of anyjurisdiction other than the United States or any State thereof, the transferorLender shall cause such Transferee, concurrently with the effectiveness of suchtransfer, to comply with the provisions of Section 3.5(iv).

ARTICLE XIII.

NOTICES

13.1 Notices. Except as otherwise permitted by Section 2.14 withrespect to borrowing notices, all notices, requests and other communications toany 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 setforth on the signature pages hereof, (y) in the case of any Lender, at itsaddress 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 suchparty may hereafter specify for the purpose by notice to the Agent and theBorrower in accordance with the provisions of this Section 13.1. Each suchnotice, request or other communication shall be effective (i) if given byfacsimile transmission, when transmitted to the facsimile number specified inthis Section and confirmation of receipt is received, or (ii) if given by anyother means, when delivered (or, in the case of electronic transmission,received) at the address specified in this Section; provided that notices to theAgent under Article II shall not be effective until received.

13.2 Change of Address. The Borrower, the Agent and any Lender mayeach change the address for service of notice upon it by a notice in writing tothe other parties hereto.

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ARTICLE XIV.

COUNTERPARTS

This Agreement may be executed in any number of counterparts, all ofwhich taken together shall constitute one agreement, and any of the partieshereto may execute this Agreement by signing any such counterpart. ThisAgreement shall be effective when it has been executed by the Borrower, theAgent and the Lenders and each party has notified the Agent by facsimiletransmission 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 CONTAININGA CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCEWITH THE INTERNAL LAWS (INCLUDING, WITHOUT LIMITATION, 735 ILCS SECTION 105/5-1ET SEQ, BUT OTHERWISE WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS) OF THESTATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONALBANKS.

15.2 CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLYSUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL ORILLINOIS STATE COURT SITTING IN CHICAGO, ILLINOIS IN ANY ACTION OR PROCEEDINGARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND THE BORROWER HEREBYIRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAYBE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTIONIT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION ORPROCEEDING 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 TOBRING PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION.ANY JUDICIAL PROCEEDING BY THE BORROWER AGAINST THE AGENT OR ANY LENDER OR ANYAFFILIATE OF THE AGENT OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANYMATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOANDOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS.

15.3 WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT, THE ISSUER ANDEACH LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING,DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OROTHERWISE) IN ANY WAY

49

ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THERELATIONSHIP ESTABLISHED THEREUNDER.

15.4 Maximum Interest Rate. No provision of the Loan Documentsshall require the payment or permit the collection of interest in excess of themaximum permitted by applicable law ("Maximum Rate"). If any interest in excessof the Maximum Rate is provided for or shall be adjudicated to be provided forin the Notes or otherwise in connection with this Agreement, the provisions ofthis Section 15.4 shall govern and prevail and neither the Borrower nor thesureties, guarantors, successors or assigns of the Borrower shall be obligatedto pay the excess amount of the interest or any other excess sum paid for theuse, forbearance, or detention of sums loaned. In the event the Agent or anyLender ever receives, collects or applies as interest any amount in excess ofthe Maximum Rate, the amount by which such amount exceeds the Maximum Rate shallbe applied as a payment and reduction of the principal of indebtedness evidencedby 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.

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IN WITNESS WHEREOF, the Borrower, the Lenders and the Agent haveexecuted this Agreement as of the date first above written.


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

<TABLE><CAPTION>--------------------------------------------------------------------------------- APPLICABLE LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V MARGIN STATUS STATUS STATUS STATUS STATUS---------------------------------------------------------------------------------<S> <C> <C> <C> <C> <C>Eurodollar Rate 0.875% 1.000% 1.250% 1.500% 2.500%---------------------------------------------------------------------------------Floating Rate zero% zero% zero% zero% 1.00%---------------------------------------------------------------------------------</TABLE>

<TABLE><CAPTION>--------------------------------------------------------------------------------- LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V FEES STATUS STATUS STATUS STATUS STATUS---------------------------------------------------------------------------------<S> <C> <C> <C> <C> <C>Commitment Fee Rate 0.125% 0.150% 0.175% 0.250% 0.350%---------------------------------------------------------------------------------Letter of Credit Fee Rate 0.875% 1.000% 1.250% 1.500% 2.500%---------------------------------------------------------------------------------</TABLE>

For the purposes of this Schedule, the following terms have thefollowing meanings, subject to the final paragraph of this Schedule:

"Level I Status" exists at any date if, on such date, the Borrower’sMoody’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 Borrowerhas not qualified for Level I Status and (ii) the Borrower’s Moody’s Rating isBaa1 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) theBorrower has not qualified for Level I Status or Level II Status; and (ii) theBorrower’s Moody’s Rating is Baa2 or better and the Borrower’s S&P Rating is BBBor better.

"Level IV Status" exists at any date if, on such date, (i) the Borrowerhas 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&PRating is BBB- or better.

"Level V Status" exists at any date if, on such date, the Borrower hasnot qualified for Level I Status, Level II Status, Level III Status or Level IVStatus.

"Moody’s Rating" means, at any time, the rating issued by Moody’s andthen in effect with respect to the Borrower’s senior unsecured long-term debtsecurities without third-party credit enhancement.

"S&P Rating" means, at any time, the rating issued by S&P and then ineffect with respect to the Borrower’s senior unsecured long-term debt securitieswithout third-party credit enhancement.

"Status" means Level I Status, Level II Status, Level III Status, LevelIV Status or Level V Status.

The Applicable Margin, the Commitment Fee Rate and the Letter of CreditFee Rate shall be determined in accordance with the foregoing table based on theBorrower’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 isthat in effect at the close of business on such date. If at any time theBorrower 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 desistorder against the Borrower. LCEC alleged that the Borrower had been unlawfullyproviding service to oil-field customers and their facilities in LCEC’s singlycertificated area. The Borrower responded that it was lawfully entitled to serveoil field customers under "grandfather rights" granted to it in the same orderthat granted LCEC its certificated area. Ultimately, the Commission issued anorder granting the Borrower’s motion for summary disposition, thus denyingLCEC’s petition. LCEC appealed the Commission’s order to district court, whichupheld the order. LCEC then appealed to the Third Court of Appeals, whichreversed the district court judgment and remanded the case to the Commission foran evidentiary hearing. The LCEC complaint was transferred to the State Officeof Administrative Hearings (SOAH) for processing. A hearing on the merits washeld October 7-10, 2002, and we are currently waiting for a Proposal ForDecision from the SOAH Administrative Law Judge. In related litigation, onOctober 18, 1996, LCEC filed an action for damages based on its claim that theBorrower has been unlawfully providing service to oil field customers in itscertificated area. This case has remained dormant pending a final determinationby the PUCT of the lawfulness of the service. Damages resulting from a decisionadverse 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 Eventoccurred on November 22, 2002, when five former officers of NRG Energy, Inc. awholly owned subsidiary of Xcel Energy Inc., filed an involuntary petition inthe United States Bankruptcy Court, District of Minnesota, alleging non-paymentof certain obligations arising out of their employment with NRG Energy, Inc.

Xcel Energy Inc., as plan sponsor of the Xcel Energy Pension Plan, ofwhich NRG Energy, Inc. is a participating employer, has complied with thePension Benefit Guaranty Corporation’s Reporting and Notification requirements,and takes the position that the Involuntary Petition has no impact on the fundedstatus 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 ofRed River Authority of Texas Adjustable Rate Tender Securities (PollutionControl Revenue Refunding Bonds, Southwestern Public Service Company Project),Series 1996

2. Liens in connection with the $57,300,000 aggregate principal amount ofPotter 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 ofRed River Authority of Texas Adjustable Rate Tender Securities (PollutionControl 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 relatedconstruction contracts, transmission agreement and power sales agreement

5. Leases with respect to assets or Property of the Southwestern PublicService Company entered into in the ordinary course of business

6. Liens in connection with any attachment, decree or judgment notconstituting 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 theaggregate 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


We have acted as counsel for Southwestern Public Service Company (the"Borrower") and have represented the Borrower in connection with its executionand delivery of a Credit Agreement dated as of February 18, 2003 (the"Agreement"), among the Borrower, the Lenders named therein, Bank One, NA, asAgent, 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 inan aggregate principal amount not exceeding $125,000,000 at any one timeoutstanding. All capitalized terms used in this opinion and not otherwisedefined herein shall have the meanings attributed to them in the Agreement.

We are not general counsel to the Borrower, and our representationconsists of advising the Borrower on corporate matters as to which we have beenspecifically consulted. In connection with this opinion, we have examined theoriginals or photocopies of the Agreement, the Notes executed and to be executedby the Borrower, and such corporate records, agreements and instruments of theBorrower, certificates of public officials and of officers of the Borrower, suchother documents and records, and such matters of law, as we have deemednecessary or appropriate for purposes of the opinions rendered below. In suchexamination, we have assumed the genuineness of all signatures (other than thoseof the Borrower), the authenticity of all documents submitted to us as copiesand the authenticity of the originals of such latter documents. In addition,where relevant facts were not independently established, we have relied as tomatters of fact (but not conclusions of law) upon the aforesaid agreements,corporate records, instruments, documents and certificates, discussions withofficers and representatives of the Borrower, the representations and warrantiesof the Borrower contained in the Agreement and the certificates of officers ofthe Borrower being delivered to you in connection with the Agreement. Inrendering this opinion, we have also assumed that the Agreement has been dulyauthorized, executed and delivered by, and is the legal, valid and bindingagreement of, and is enforceable against, the Lenders.

Based on the foregoing examination, and subject to the limitations andqualifications 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 allrequisite authority to conduct its business in each jurisdiction in whichqualification 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 LoanDocuments and the performance by the Borrower of its obligations thereunder havebeen duly authorized by proper corporate proceedings on the part of the Borrowerand 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 bythe Borrower and constitute the legal, valid and binding obligations of theBorrower enforceable against the Borrower in accordance with their terms exceptto the extent the enforcement thereof may be limited by bankruptcy, insolvencyor similar laws affecting the enforcement of creditors’ rights generally andsubject also to the availability of equitable remedies if equitable remedies aresought.

4. Except as set forth in the Borrower’s Annual Report on Form10-K for the fiscal year ended December 31, 2001, the Borrower’s Quarterlyreports on Form 10-Q for the quarters ended March 31, 2002, June 30, 2002, andSeptember 30, 2002, and in Schedule 5.7 to the Agreement, there is nolitigation, arbitration, governmental investigation, proceeding or inquirypending or, to the best of our knowledge after due inquiry, threatened againstthe Borrower which, if adversely determined, could reasonably be expected tohave a Material Adverse Effect.

5. No order, consent, adjudication, approval, license,authorization, or validation of, or filing, recording or registration with, orexemption by, or other action in respect of any governmental or public body orauthority, or any subdivision thereof which has not been obtained by theBorrower is required to be obtained by the Borrower in connection with theexecution and delivery of the Loan Documents, the borrowings under theAgreement, the payment and performance by the Borrower of the Obligations, orthe legality, validity, binding effect or enforceability of any of the LoanDocuments.

This opinion is subject to and qualified in all respects by thefollowing:

1. This opinion is limited to federal law and the laws of NewMexico as in effect on the date hereof, and we disclaim any responsibility toinform 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 thelaws of any other jurisdiction; (b) state and federal securities, tax, and ERISAlaws, rules, and regulations; or (c) potential liability imposed by any of theforegoing laws with respect to the transactions contemplated by the Agreement.

2. We express no opinion not expressly stated herein, and nofurther or other opinion shall be implied.

This opinion is being delivered solely in connection with the closingunder the Agreement that is being consummated on the date hereof. The opinionsexpressed herein are based upon the laws mentioned above in effect on the datehereof, and we assume no obligation to revise or supplement this letter to takeinto account any event, action, interpretation, change of circumstance, changeof law or other matters coming to our attention after the date hereof.

This opinion may be relied upon by the Agent, the Lenders, and theirparticipants, 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 heretoagree as follows:

1. PRELIMINARY STATEMENT. The Assignor is a party to a CreditAgreement (which, as it may be amended, modified, renewed or extended from timeto time is herein called the "Credit Agreement") described in Item 1 of Schedule1 attached hereto ("Schedule 1"). Capitalized terms used herein and nototherwise defined herein shall have the meanings attributed to them in theCredit Agreement.

2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells andassigns to the Assignee, and the Assignee hereby purchases and assumes from theAssignor, an interest in and to the Assignor’s rights and obligations under theCredit Agreement and the other Loan Documents, such that after giving effect tosuch assignment the Assignee shall have purchased pursuant to this AssignmentAgreement the percentage interest specified in Item 3 of Schedule 1 of alloutstanding rights and obligations under the Credit Agreement and the other LoanDocuments relating to the facilities listed in Item 3 of Schedule 1. Theaggregate Commitment (or Loans, if the applicable Commitment has beenterminated) purchased by the Assignee hereunder is set forth in Item 4 ofSchedule 1.

3. EFFECTIVE DATE. The effective date of this AssignmentAgreement (the "Effective Date") shall be the later of the date specified inItem 5 of Schedule 1 or two Business Days (or such shorter period agreed to bythe Agent) after this Assignment Agreement, together with any consents requiredunder the Credit Agreement, are delivered to the Agent. In no event will theEffective Date occur if the payments required to be made by the Assignee to theAssignor on the Effective Date are not made on the proposed Effective Date.

4. PAYMENT OBLIGATIONS. In consideration for the sale andassignment of Loans hereunder, the Assignee shall pay the Assignor, on theEffective Date, the amount agreed to by the Assignor and the Assignee. On andafter the Effective Date, the Assignee shall be entitled to receive from theAgent all payments of principal, interest and fees with respect to the interestassigned hereby. The Assignee will promptly remit to the Assignor any intereston Loans and fees received from the Agent which relate to the portion of theCommitment or Loans assigned to the Assignee hereunder for periods prior to theEffective Date and not previously paid by the Assignee to the Assignor. In theevent that either party hereto receives any payment to which the other partyhereto is entitled under this Assignment Agreement, then the party receivingsuch amount shall promptly remit it to the other party hereto.

5. RECORDATION FEE. The Assignor and Assignee each agree to payone-half of the recordation fee required to be paid to the Agent in connectionwith this Assignment Agreement unless otherwise specified in Item 6 of Schedule1.

6. REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE ASSIGNOR’SLIABILITY. 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) suchinterest 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 isduly authorized. It is understood and agreed that the assignment and assumptionhereunder are made without recourse to the Assignor and that the Assignor makesno other representation or warranty of any kind to the Assignee. Neither theAssignor nor any of its officers, directors, employees, agents or attorneysshall 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 otherLenders a security interest in assets of the Borrower or any guarantor, (ii) anyrepresentation, warranty or statement made in or in connection with any of theLoan Documents, (iii) the financial condition or creditworthiness of theBorrower or any guarantor, (iv) the performance of or compliance with any of theterms or provisions of any of the Loan Documents, (v) inspecting any of theproperty, books or records of the Borrower, (vi) the validity, enforceability,perfection, priority, condition, value or sufficiency of any collateral securingor purporting to secure the Loans or (vii) any mistake, error of judgment, oraction taken or omitted to be taken in connection with the Loans or the LoanDocuments.

7. REPRESENTATIONS AND UNDERTAKINGS OF THE ASSIGNEE. The Assignee(i) confirms that it has received a copy of the Credit Agreement, together withcopies of the financial statements requested by the Assignee and such otherdocuments and information as it has deemed appropriate to make its own creditanalysis and decision to enter into this Assignment Agreement, (ii) agrees thatit will, independently and without reliance upon the Agent, the Assignor or anyother Lender and based on such documents and information at it shall deemappropriate at the time, continue to make its own credit decisions in taking ornot taking action under the Loan Documents, (iii) appoints and authorizes theAgent to take such action as agent on its behalf and to exercise such powersunder the Loan Documents as are delegated to the Agent by the terms thereof,together with such powers as are reasonably incidental thereto, (iv) confirmsthat the execution and delivery of this Assignment Agreement by the Assignee isduly authorized, (v) agrees that it will perform in accordance with their termsall of the obligations which by the terms of the Loan Documents are required tobe performed by it as a Lender, (vi) agrees that its payment instructions andnotice instructions are as set forth in the attachment to Schedule 1, (vii)confirms that none of the funds, monies, assets or other consideration beingused to make the purchase and assumption hereunder are "plan assets" as definedunder ERISA and that its rights, benefits and interests in and under the LoanDocuments will not be "plan assets" under ERISA, (viii) agrees to indemnify andhold the Assignor harmless against all losses, costs and expenses (including,without limitation, reasonable attorneys’ fees) and liabilities incurred by theAssignor in connection with or arising in any manner from the Assignee’snonperformance of the obligations assumed under this Assignment Agreement, and(ix) if applicable, attaches the forms prescribed by the Internal RevenueService of the United States certifying that the Assignee is entitled to receivepayments under the Loan Documents without deduction or withholding of any UnitedStates federal income taxes.

8. GOVERNING LAW. This Assignment Agreement shall be governed bythe internal law, and not the law of conflicts, of the State of Illinois.

9. NOTICES. Notices shall be given under this AssignmentAgreement in the manner set forth in the Credit Agreement. For the purposehereof, the addresses of the parties

Exhibit B-2

hereto (until notice of a change is delivered) shall be the address set forth inthe attachment to Schedule 1.

10. COUNTERPARTS; DELIVERY BY FACSIMILE. This Assignment Agreementmay be executed in counterparts. Transmission by facsimile of an executedcounterpart of this Assignment Agreement shall be deemed to constitute due andsufficient delivery of such counterpart and such facsimile shall be deemed to bean original counterpart of this Assignment Agreement.

IN WITNESS WHEREOF, the duly authorized officers of the parties hereto haveexecuted this Assignment Agreement by executing Schedule 1 hereto as of the datefirst above written.

Exhibit B-3

SCHEDULE 1 to Assignment 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


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: ____________________


N/A*** [Assignor/Assignee to pay 100% of fee] [Fee waived by Agent]

Exhibit B-4


[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 AgentSERVICE COMPANY

By:______________________________ By:___________________________________Title ___________________________ Title:________________________________




Exhibit B-6



Attach Assignor’s Administrative Information Sheet, which must include notice addresses for the Assignor and the Assignee (Sample form shown below)


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:__________________


CREDIT CONTACT:

Name:____________________________ Telephone No.:________________________Fax No.:_________________________ Telex No.:____________________________ Answerback:___________________________

Exhibit B-7

KEY OPERATIONS CONTACTS:





Other Instructions:

ADDRESS FOR NOTICES FOR ASSIGNEE:

Exhibit B-8

BANK ONE INFORMATION

Assignee will be called promptly upon receipt of the signedagreement.

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:


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 samemay be amended or modified, the "Credit Agreement"), among Southwestern PublicService Company (the "Borrower"), the Lenders named therein and the Agent.Capitalized terms used herein and not otherwise defined herein shall have themeanings assigned thereto in the Credit Agreement.

The Agent is specifically authorized and directed to act upon thefollowing standing money transfer instructions with respect to the proceeds ofCredit Extensions or other extensions of credit from time to time until receiptby the Agent of a specific written revocation of such instructions by theBorrower, provided that the Agent may otherwise transfer funds as hereafterdirected in writing by the Borrower in accordance with Section 13.1 of theCredit Agreement or based on any telephonic notice made in accordance withSection 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 theLender to the Borrower pursuant to Article II of the Agreement (as hereinafterdefined), in immediately available funds at the main office of Bank One, NA inChicago, Illinois, as Agent, together with interest on the unpaid principalamount hereof at the rates and on the dates set forth in the Agreement. TheBorrower shall pay the principal of and accrued and unpaid interest on the Loansin full on the Final Maturity Date.

The Lender shall, and is hereby authorized to, record on theschedule attached hereto, or to otherwise record in accordance with its usualpractice, the date and amount of each Loan and the date and amount of eachprincipal payment hereunder.

This Note is one of the Notes issued pursuant to, and isentitled 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, isherein called the "Agreement"), among the Borrower, the lenders party thereto,including the Lender, and Bank One, NA, as Agent, to which Agreement referenceis 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 itsmaturity date accelerated. Capitalized terms used herein and not otherwisedefined herein are used with the meanings attributed to them in the Agreement.

Notwithstanding anything to the contrary in this Note, noprovision of this Note shall require the payment or permit the collection ofinterest 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 beadjudicated to be so provided, in this Note or otherwise in connection with theloan transaction, the provisions of this paragraph shall govern and prevail, andneither the Borrower nor the sureties, guarantors, successors or assigns of theBorrower shall be obligated to pay the excess of the interest or any otherexcess sum paid for the use, forbearance, or detention of sums loaned. If forany reason interest in excess of the Maximum Rate shall be deemed charged,required or permitted by any court of competent jurisdiction, the excess shallbe applied a payment and reduction of the principal of indebtedness evidenced bythis Note, and, if the principal amount has been paid in full, any remainingexcess shall forthwith be paid to the Borrower.

Exhibit D-1

This Note shall be construed in accordance with the internallaws (and not the law of conflicts) of the State of Illinois, but giving effectto Federal laws applicable to national banks.


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____________,

<TABLE><CAPTION>---------------------------------------------------------------------------------------------------------------- Principal Maturity Principal Date Amount of Loan of Interest Period Amount Paid Unpaid Balance----------------------------------------------------------------------------------------------------------------<S> <C> <C> <C> <C>

----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------</TABLE>

Exhibit D-3

EXHIBIT E

FORM OF INCREASE REQUEST

_________________________, 20___

Bank One, NA, as Agent under theCredit Agreement referred to below

Ladies/Gentlemen:

Please refer to the Credit Agreement dated as of February 18, 2003among Southwestern Public Service Company (the "Borrower"), various financialinstitutions and Bank One, NA, as Agent (as amended, modified, extended orrestated from time to time, the "Credit Agreement"). Capitalized terms used butnot defined herein have the respective meanings set forth in the CreditAgreement.

In accordance with Section 2.5(iii) of the Credit Agreement, theBorrower requests an increase in the Aggregate Commitment from $__________ to$__________. Such increase shall be made by [increasing the Commitment of____________ from $________ to $________] [adding _____________ as a Lenderunder the Credit Agreement with a Commitment of $____________] as set forth inthe letter attached hereto. Such increase shall be effective three Business Daysafter the date that the Agent accepts the letter attached hereto or such otherdate as is agreed among the Borrower, the Agent and the [increasing] [new]Lender.

Very truly yours,


By: __________________________________ Name: ________________________________ Title: _______________________________

Exhibit E-1

ANNEX I TO EXHIBIT E

[Date]


Ladies/Gentlemen:

Please refer to the letter dated __________, 20__ from SouthwesternPublic Service Company (the "Borrower") requesting an increase in the AggregateCommitment from $__________ to $__________ pursuant to Section 2.5(iii) of theCredit Agreement dated as of February 18, 2003 among the Borrower, variousfinancial institutions and Bank One, NA, as Agent (as amended, modified,extended or restated from time to time, the "Credit Agreement"). Capitalizedterms used but not defined herein have the respective meanings set forth in theCredit Agreement.

The undersigned hereby confirms that it has agreed to increase itsCommitment under the Credit Agreement from $__________ to $__________ effectiveon the date which is three Business Days after the acceptance hereof by theAgent or on such other date as may be agreed among the Borrower, the Agent andthe undersigned.

Very truly yours,

[NAME OF INCREASING BANK]

By:_________________________ Title:______________________

Accepted as of

_________, ____


By: __________________________________Name: ________________________________Title: _______________________________

Exhibit E-2

ANNEX II TO EXHIBIT E

[Date]


Ladies/Gentlemen:

Please refer to the letter dated __________, 20___ from SouthwesternPublic Service Company (the "Borrower") requesting an increase in the AggregateCommitment from $__________ to $__________ pursuant to Section 2.5(iii) of theCredit Agreement dated as of February 18, 2003 among the Borrower, variousfinancial institutions and Bank One, NA, as Agent (as amended, modified,extended or restated from time to time, the "Credit Agreement"). Capitalizedterms used but not defined herein have the respective meanings set forth in theCredit Agreement.

The undersigned hereby confirms that it has agreed to become a Lenderunder the Credit Agreement with a Commitment of $__________ effective on thedate which is three Business Days after the acceptance hereof, and consenthereto, 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 theCredit Agreement and the Schedules and Exhibits thereto, together with copies ofthe most recent financial statements delivered by the Borrower pursuant to theCredit Agreement, and such other documents and information as it has deemedappropriate to make its own credit and legal analysis and decision to become aLender under the Credit Agreement; and (b) agrees that it will, independentlyand without reliance upon the Agent or any other Lender and based on suchdocuments and information as it shall deem appropriate at the time, continue tomake its own credit and legal decisions in taking or not taking action under theCredit Agreement.

The undersigned represents and warrants that (i) it is duly organizedand existing and it has full power and authority to take, and has taken, allaction necessary to execute and deliver this letter and to become a Lender underthe Credit Agreement; and (ii) no notices to, or consents, authorizations orapprovals 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 itsobligations 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 connectionwith 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 theundersigned becomes a Lender under the Credit Agreement as set forth in thesecond paragraph hereof, the undersigned will be bound by the terms of theCredit Agreement as fully and to the same extent as if the undersigned were anoriginal Lender under the Credit Agreement.

Very truly yours,

[NAME OF NEW LENDER]

By:_________________________ Title:______________________

Accepted and consented to as of______________, 20___


By: _____________________________Name: ___________________________Title: ____________________________

Exhibit E-4

EXHIBIT F

FORM OF COMPLIANCE CERTIFICATE

_________________________, 20___


Ladies/Gentlemen:

Please refer to the Credit Agreement dated as of February 18, 2003among Southwestern Public Service Company (the "Borrower"), various financialinstitutions and Bank One, NA, as Agent (as amended, modified, extended orrestated from time to time, the "Credit Agreement"). Capitalized terms used butnot defined herein have the respective meanings set forth in the CreditAgreement.

The Borrower certifies to you that (a) set forth on the Annexes heretoare correct calculations of the financial covenants set forth in Sections 6.12and 6.13 of the Credit Agreement as of _______________; and (b) no Default orUnmatured Default exists as of the date of this Certificate[, except asspecified in reasonable detail below:]

Very truly yours,


By: __________________________________ Name: ________________________________ Title: _______________________________

Exhibit F-1


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



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

<TABLE><CAPTION> PAGE<S> <C> <C>ARTICLE I. DEFINITIONS............................................................................... 1

ARTICLE II. THE CREDITS............................................................................... 12

2.1 Commitment.................................................................................... 12

2.2 Required Payments; Maturity................................................................... 12

2.3 Ratable Loans................................................................................. 12

2.4 Types of Advances............................................................................. 12

2.5 Commitment Fee; Changes in Aggregate Commitment; Up-Front Fees................................ 12

2.6 Minimum Amount of Each Advance................................................................ 13

2.7 Optional Principal Payments................................................................... 13

2.8 Method of Selecting Types and Interest Periods for New Advances............................... 13

2.9 Conversion and Continuation of Outstanding Advances........................................... 14

2.10 Changes in Interest Rate, etc................................................................. 14

2.11 Rates Applicable After Default................................................................ 15

2.12 Method of Payment............................................................................. 15

2.13 Noteless Agreement; Evidence of Indebtedness.................................................. 15

2.14 Telephonic Notices............................................................................ 16

2.15 Interest Payment Dates; Interest and Fee Basis................................................ 16

2.16 Notification of Advances, Interest Rates, Prepayments and Commitment Reductions............... 17

2.17 Lending Installations......................................................................... 17

2.18 Non-Receipt of Funds by the Agent............................................................. 17

2.19 Replacement of Lender......................................................................... 17

2.20 Letters of Credit............................................................................. 18

(i) Issuance............................................................................. 18

(ii) Participations....................................................................... 18

(iii) Notice............................................................................... 18

(iv) Letter of Credit Fees................................................................ 19

(v) Administration; Reimbursement by Lenders............................................. 19

(vi) Reimbursement by Borrower............................................................ 19

(vii) Obligations Absolute................................................................. 20</TABLE>

-i-

TABLE OF CONTENTS (continued)

<TABLE><CAPTION> PAGE<S> <C> (viii) Actions of Issuer.................................................................... 20

(ix) Indemnification...................................................................... 20

(x) Lenders’ Indemnification............................................................. 21

(xi) Letter of Credit Collateral Account.................................................. 21

(xii) Rights as a Lender................................................................... 22

ARTICLE III. YIELD PROTECTION; TAXES................................................................... 22

3.1 Yield Protection.............................................................................. 22

3.2 Changes in Capital Adequacy Regulations....................................................... 23

3.3 Availability of Types of Advances............................................................. 23

3.4 Funding Indemnification....................................................................... 23

3.5 Taxes......................................................................................... 24

3.6 Lender Statements; Survival of Indemnity...................................................... 25

ARTICLE IV. CONDITIONS PRECEDENT...................................................................... 26

4.1 Initial Credit Extension...................................................................... 26

4.2 Each Credit Extension......................................................................... 27

ARTICLE V. REPRESENTATIONS AND WARRANTIES............................................................ 27

5.1 Existence and Standing........................................................................ 27

5.2 Authorization and Validity.................................................................... 27

5.3 No Conflict; Government Consent............................................................... 28

5.4 Financial Statements.......................................................................... 28

5.5 Material Adverse Change....................................................................... 28

5.6 Taxes......................................................................................... 28

5.7 Litigation and Contingent Obligations......................................................... 29

5.8 Subsidiaries.................................................................................. 29

5.9 ERISA......................................................................................... 29

5.10 Accuracy of Information....................................................................... 29

5.11 Regulation U.................................................................................. 29

5.12 Material Agreements........................................................................... 29

5.13 Compliance With Laws.......................................................................... 29

5.14 Plan Assets; Prohibited Transactions.......................................................... 30</TABLE>

-ii-


<TABLE><CAPTION> PAGE<S> <C> 5.15 Environmental Matters......................................................................... 30

5.16 Investment Company Act........................................................................ 30

5.17 Public Utility Holding Company Act............................................................ 30

5.18 Insurance..................................................................................... 30

ARTICLE VI. COVENANTS................................................................................. 30

6.1 Financial Reporting........................................................................... 30

6.2 Use of Proceeds............................................................................... 32

6.3 Notice of Default............................................................................. 32

6.4 Conduct of Business........................................................................... 32

6.5 Taxes......................................................................................... 32

6.6 Insurance..................................................................................... 32

6.7 Compliance with Laws.......................................................................... 32

6.8 Maintenance of Properties..................................................................... 33

6.9 Inspection.................................................................................... 33

6.10 Merger........................................................................................ 33

6.11 Sale of Assets................................................................................ 33

6.12 Debt to Capitalization Ratio.................................................................. 33

6.13 Interest Coverage Ratio....................................................................... 33

6.14 Liens......................................................................................... 34

6.15 Intercompany Transactions..................................................................... 34

6.16 Off-Balance Sheet Liabilities................................................................. 34

6.17 Receivables Transaction Attributed Obligations................................................ 34

ARTICLE VII. DEFAULTS.................................................................................. 35

ARTICLE VIII. ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES............................................ 36

8.1 Acceleration; Letter of Credit Collection Account............................................. 37

8.2 Amendments.................................................................................... 38

8.3 Preservation of Rights........................................................................ 38

ARTICLE IX. GENERAL PROVISIONS........................................................................ 38

9.1 Survival of Representations................................................................... 39

9.2 Governmental Regulation....................................................................... 39</TABLE>

-iii-


<TABLE><CAPTION> PAGE<S> <C> 9.3 Headings...................................................................................... 39

9.4 Entire Agreement.............................................................................. 39

9.5 Several Obligations; Benefits of this Agreement............................................... 39

9.6 Expenses; Indemnification..................................................................... 39

9.7 Numbers of Documents.......................................................................... 40

9.8 Accounting.................................................................................... 40

9.9 Severability of Provisions.................................................................... 40

9.10 Nonliability of Lenders....................................................................... 40

9.11 Limited Disclosure............................................................................ 40

9.12 Nonreliance................................................................................... 41

9.13 Disclosure.................................................................................... 42

ARTICLE X. THE AGENT................................................................................. 42

10.1 Appointment; Nature of Relationship........................................................... 42

10.2 Powers........................................................................................ 42

10.3 General Immunity.............................................................................. 42

10.4 No Responsibility for Loans, Recitals, etc.................................................... 43

10.5 Action on Instructions of Lenders............................................................. 43

10.6 Employment of Agents and Counsel.............................................................. 43

10.7 Reliance on Documents; Counsel................................................................ 43

10.8 Agent’s Reimbursement and Indemnification..................................................... 43

10.9 Notice of Default............................................................................. 44

10.10 Rights as a Lender............................................................................ 44

10.11 Lender Credit Decision........................................................................ 44

10.12 Successor Agent............................................................................... 45

10.13 Agent’s Fee................................................................................... 45

10.14 Delegation to Affiliates...................................................................... 45

10.15 Syndication Agent............................................................................. 46

ARTICLE XI. SETOFF; RATABLE PAYMENTS.................................................................. 46

11.1 Setoff........................................................................................ 46

11.2 Ratable Payments.............................................................................. 46</TABLE>

-iv-


<TABLE><CAPTION> PAGE<S> <C>ARTICLE XII. BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS......................................... 46

12.1 Successors and Assigns........................................................................ 46

12.2 Participations................................................................................ 47

12.3 Assignments................................................................................... 48

12.4 Dissemination of Information.................................................................. 49

12.5 Tax Treatment................................................................................. 49

ARTICLE XIII. NOTICES................................................................................... 49

13.1 Notices....................................................................................... 49

13.2 Change of Address............................................................................. 49

ARTICLE XIV. COUNTERPARTS.............................................................................. 49

ARTICLE XV. CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL; MAXIMUM INTEREST RATE....... 50

15.1 CHOICE OF LAW................................................................................. 50

15.2 CONSENT TO JURISDICTION....................................................................... 50

15.3 WAIVER OF JURY TRIAL.......................................................................... 50

15.4 Maximum Interest Rate......................................................................... 50</TABLE>

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-

Exhibit 4.04================================================================================

CREDIT AGREEMENT

AMONG

PUBLIC SERVICE COMPANY OF COLORADO;

KEYBANK NATIONAL ASSOCIATION, AS ADMINISTRATIVE AGENT, BOOK MANAGER AND LEAD ARRANGER;

AND


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, asdefined below and KeyBank National Association, a national banking associationhaving its principal office in Cleveland, Ohio, as administrative agent, bookmanager 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 orunless the context otherwise requires, the terms defined in this Article havethe meanings assigned to them in this Article, and include the plural as well asthe singular.

"Accounting Practices Change" means any change in the Borrower’saccounting practices that is permitted or required under the standards of theFinancial Accounting Standards Board.

"Acquisition Target" means any Person becoming a Subsidiary of theBorrower after the date hereof; any Person that is merged into or consolidatedwith the Borrower or any Subsidiary of the Borrower after the date hereof; orany Person with respect to whom all or a substantial part of that Person’sassets are acquired by the Borrower or any Subsidiary of the Borrower after thedate hereof.

"Act" means the Securities Act of 1933, as amended.

"Additional Bank" means a financial institution that becomes a Bankpursuant to the procedures set forth in Section 9.1.

"Agent-Related Persons" means the Agent (including any successoragent), 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 toArticle II.

"Affiliate" means, with respect to any Person, any other Persondirectly or indirectly controlling, controlled by, or under common control withsuch Person. A Person shall be deemed to control another Person if thecontrolling Person owns 25% or more of the voting securities (or other ownershipinterests) of the controlled Person or possesses, directly or indirectly, thepower to direct or cause the direction of the management or policies of thecontrolled Person, whether through ownership of stock, by contract or otherwise.

"Agent" means KeyBank acting in its capacity as administrative agentfor itself and the other Banks hereunder.

"Agreement" means this Credit Agreement, as it may be amended, modifiedor restated from time to time in accordance with Section 9.2.

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

"Arranger" means KeyBank, in its capacity as lead arranger and solebook manager.

"Assignment Agreement" has the meaning set forth in Section 9.1.

"Authorizing Order" means any order of the PUC or any other regulatorybody having jurisdiction over the Borrower or the Parent authorizing and/orrestricting 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 Bankpursuant to the procedures set forth in Section 9.1, collectively.

"Borrower" means Public Service Company of Colorado, a Coloradocorporation and a party to this Agreement.

"Borrowing" means a borrowing under Article II consisting of Advancesmade to the Borrower at the same time by each of the Banks severally.

"Business Day" means (i) with respect to any borrowing, payment or rateselection 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 substantiallyall of their commercial lending activities, interbank wire transfers can be madeon the Fedwire system and dealings in United States dollars are carried on inthe London interbank market and (ii) for all other purposes, a day (other than aSaturday or Sunday) on which banks generally are open in New York for theconduct of substantially all of their commercial lending activities andinterbank wire transfers can be made on the Fedwire system.

"Capitalized Lease" means any lease that in accordance with GAAP shouldbe 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 Sections13(d) and 14(d) of the Exchange Act) of beneficial ownership (as defined inRules 13d-3 and 13d-5 of the SEC, except that a Person shall be deemed to havebeneficial ownership of all securities that such Person has the right toacquire, whether such right is exercisable immediately or only after the passageof time), directly or indirectly, of 25% or more of the then-outstanding votingcapital stock of such corporation; or (ii) a change in the composition of theboard of directors of such corporation or any corporate parent of suchcorporation such that continuing directors cease to constitute more than 50% ofsuch board of directors. As used in this definition, "continuing directors"means, as of any date, (i) those members of the board of directors of theapplicable corporation who

2

assumed office prior to such date, and (ii) those members of the board ofdirectors of the applicable corporation who assumed office after such date andwhose appointment or nomination for election by that corporation’s shareholderswas approved by a vote of at least 50% of the directors of such corporation inoffice immediately prior to such appointment or nomination.

"Code" means the Internal Revenue Code of 1986, as amended from time totime, or any successor statute thereto.

"Commitment" means, with respect to each Bank, that Bank’s commitmentto make Advances pursuant to Article II.

"Commitment Amount" means, with respect to each Bank, the amount setforth 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 toSection 7.2.

"Compliance Certificate" means a certificate in substantially the formof Exhibit C, or such other form as the Borrower and the Banks may from time totime agree upon in writing, executed by the chief financial officer or treasurerof the Borrower, (i) setting forth relevant facts in reasonable detail thecomputations as to whether or not the Borrower is in compliance with therequirements set forth in Sections 6.7 and 6.8 (ii) stating that the financialstatements delivered therewith have been prepared in accordance with GAAP,subject, in the case of interim financial statements, to year-end auditadjustments, and (iii) stating whether or not such officer has knowledge of theoccurrence of any Default or Event of Default hereunder not theretofore reportedor remedied and, if so, stating in reasonable detail the facts with respectthereto.

"Debtor Relief Laws" means the Bankruptcy Code of the United States ofAmerica, and all other liquidation, conservatorship, bankruptcy, assignment forthe benefit of creditors, moratorium, rearrangement, receivership, insolvency,reorganization, or similar debtor relief Laws of the United States of America orother applicable jurisdictions from time to time in effect affecting the rightsof creditors generally.

"Debt Securities" means any debt issued by any Person consisting ofbonds, debentures, senior or subordinated notes or other debt securities, inexchange for cash.

"Default" means an event that, with the giving of notice, the passageof 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):



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

"Eligible Lender" means (a) a financial institution organized under thelaws of the United States, or any state thereof, and having a combined capitaland surplus of at least $250,000,000; (b) a commercial bank organized under thelaws of any other country which is a member of the Organization for EconomicCooperation and Development, or a political subdivision of any such country, andhaving a combined capital and surplus of at least $250,000,000, provided thatsuch 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 entityidentified 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 ResourceConservation and Recovery Act, 42 U.S.C. Section 6901 et seq., the HazardousMaterials Transportation Act, 49 U.S.C. Section 1802 et seq., the ToxicSubstances Control Act, 15 U.S.C. Section 2601 et seq., the Federal WaterPollution Control Act, 33 U.S.C. Section 1252 et seq., the Clean Water Act, 33U.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 theenvironment, all as may be from time to time amended.

"Equity Securities" of any Person means (a) all common stock, preferredstock, participations, shares, partnership interests or other equity interestsin such Person (regardless of how designated and whether or not voting ornon-voting) and (b) all warrants, options and other rights to acquire any of theforegoing, other than convertible debt securities which have not been convertedinto common stock, preferred stock, participations, shares, partnershipinterests or other equity interests in any such Person.

"ERISA" means the Employee Retirement Income Security Act of 1974, asamended.

"ERISA Affiliate" means any trade or business (whether or notincorporated) that is, along with the Borrower, a member of a controlled groupof corporations or a controlled group of trades or businesses, as described insections 414(b) and 414(c), respectively, of the Code.

"Eurodollar Base Rate" means, with respect to a Eurodollar Rate Fundingfor the relevant Interest Period, the applicable British Bankers’ AssociationInterest Settlement Rate for deposits in U.S. dollars appearing on ReutersScreen FRBD as of 11:00 a.m. (London time) two Business Days prior to the firstday of such Interest Period, and having a maturity equal to such InterestPeriod, provided that (i) if Reuters Screen FRBD is not available to the Agentfor any reason, the

4

applicable Eurodollar Base Rate for the relevant Interest Period shall insteadbe the applicable British Bankers’ Association Interest Settlement Rate fordeposits in U.S. dollars as reported by any other generally recognized financialinformation service as of 11:00 a.m. (London time) two Business Days prior tothe first day of such Interest Period, and having a maturity equal to suchInterest Period, and (ii) if no such British Bankers’ Association InterestSettlement Rate is available to the Agent, the applicable Eurodollar Base Ratefor the relevant Interest Period shall instead be the rate determined by theAgent to be the rate at which KeyBank or one of its Affiliate banks offers toplace deposits in U.S. dollars with first-class banks in the London interbankmarket at approximately 11:00 a.m. (London time) two Business Days prior to thefirst day of such Interest Period, in the approximate amount of KeyBank’srelevant Eurodollar Rate Funding and having a maturity equal to such InterestPeriod.

"Eurodollar Rate" means, with respect to a Eurodollar Rate Funding forthe relevant Interest Period, the sum of (i) the quotient of (a) the EurodollarBase Rate applicable to such Interest Period, divided by (b) one minus theReserve 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 theprincipal balance of the Advances, bearing interest at a Eurodollar Rate.

"Eurodollar Rate Margin" means a percentage, determined as set forth inSection 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 theamount 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 perannum equal to the weighted average of the rates on overnight Federal fundstransactions with members of the Federal Reserve System arranged by Federalfunds brokers on such day, as published for such day (or, if such day is not aBusiness Day, for the immediately preceding Business Day) by the Federal ReserveBank of New York, or, if such rate is not so published for any day which is aBusiness Day, the average of the quotations at approximately 10:00 a.m. on suchday on such transactions received by the Agent from three Federal funds brokersof recognized standing selected by the Agent in its sole discretion.

"Fee Letter" means the separate agreement dated as of the EffectiveDate between the Borrower and the Agent, setting forth the terms of certain feesto be paid by the Borrower to the Agent for the Agent’s own behalf.

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"First Collateral Trust Securities" means securities issued pursuant tothe terms of the First Collateral Trust Securities Indenture.

"First Collateral Trust Securities Indenture" means the Indenture datedas of October 1, 1993 as amended or supplemented from time to time, from theBorrower to U.S. Bank Trust National Association (formerly, First Trust of NewYork, National Association), as successor trustee to Morgan Guaranty TrustCompany of New York.

"First Mortgage Bond Indenture" means the Indenture dated as ofDecember 1, 1939 from the Borrower to U.S. Bank Trust National Association, assuccessor trustee thereunder, as amended or supplemented from time to time.

"First Mortgage Bonds" means bonds issued pursuant to the terms of theFirst Mortgage Bond Indenture.

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

"Floating Rate Funding" means any Borrowing, or any portion of theprincipal balance of the Advances, bearing interest at the Floating Rate.

"Floating Rate Margin" means a percentage, determined as set forth inSection 2.6.

"Funded Debt" of any Person means (without duplication) (i) allindebtedness of such Person for borrowed money; (ii) the deferred and unpaidbalance of the purchase price owing by such Person on account of any assets orservices purchased (other than trade payables and other accrued liabilitiesincurred in the ordinary course of business that are not overdue by more than180 days unless being contested in good faith) if such purchase price is (A) duemore than nine months from the date of incurrence of the obligation in respectthereof or (B) evidenced by a note or a similar written instrument; (iii) allCapitalized Lease obligations; (iv) all indebtedness secured by a Lien on anyproperty owned by such Person, whether or not such indebtedness has been assumedby such Person or is nonrecourse to such Person; (v) notes payable and draftsaccepted representing extensions of credit whether or not representingobligations for borrowed money (other than such notes or drafts for the deferredpurchase price of assets or services to the extent such purchase price isexcluded from clause (ii) above); (vi) indebtedness evidenced by bonds, notes orsimilar written instrument; (vii) the face amount of all letters of credit andbankers’ acceptances issued for the account of such Person, and withoutduplication, all drafts drawn thereunder (other than such letters of credit,bankers’ acceptances and drafts for the deferred purchase price of assets orservices to the extent such purchase price is excluded from clause (ii) above);(viii) net obligations of such Person under Swap Contracts which constituteinterest rate agreements or currency agreements; (ix) guaranty obligations ofsuch 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 PreferredSecurities; provided, however, that in no event shall any calculation of FundedDebt of the Borrower include (y) deferred taxes, or (z) so long as the PledgedSecurities

6

are held by the Agent pursuant to this Agreement and have not been sold orotherwise disposed of by foreclosure, any obligation of the Borrower under thePledged Securities.

"GAAP" means generally accepted accounting principles as in effect fromtime to time applied on a basis consistent with the accounting practices appliedin the financial statements of the Borrower referred to in Section 4.5, exceptfor changes concurred in by the Borrower’s independent public accountants anddisclosed 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) anygovernmental 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 andby-products and other dangerous, toxic or hazardous pollutants, contaminants,chemicals, materials or substances listed or identified in, or regulated by, anyEnvironmental Law.

"Indentures" means the First Collateral Trust Securities Indenture andthe First Mortgage Bond Indenture.

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

"Interest Expense" means, with respect to any period, the aggregateinterest expense (including capitalized interest) of the Borrower and itsSubsidiaries (determined on a consolidated basis) for such period, including butnot limited to the interest portion of any Capitalized Lease and interestexpenses associated with Trust Preferred Securities; provided, however, that theforegoing shall be adjusted to reflect only the net effect of any interest rateswap, interest hedging transaction or other similar arrangement entered into bythe Borrower or any Subsidiary to reduce or eliminate variations in its interestexpenses.

"Interest Period" means, with respect to any Advance bearing interestat a Eurodollar Rate, a period of one, two or three months beginning on aBusiness Day, as elected by the Borrower.

"Investment Company Act" means the Investment Company Act of 1940, asamended.

"KeyBank" means KeyBank National Association, a national bankingassociation having its principal office in Cleveland, Ohio, in its individualcapacity, and its successors.

"Laws" or "Law" means all international, foreign, federal, state andlocal statutes, treaties, rules, guidelines, regulations, ordinances, codes andadministrative or judicial precedents or authorities, including theinterpretation or administration thereof by any Governmental Authority chargedwith 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, securityinterest or other charge or encumbrance, of any kind whatsoever, including butnot limited to the interest of the lessor or titleholder under any CapitalizedLease, title retention contract or similar agreement.

"Loan Documents" means this Agreement, the Notes and the PledgedSecurities, if issued pursuant to Section 7.3.

"Material Adverse Change" means a material adverse change in thebusiness, condition (financial or otherwise), or operations of the Borrower andits Subsidiaries taken as a whole.

"Material Part of the Assets" means assets with a net book value inexcess of 10% of the total assets of the Borrower and its Subsidiaries on aconsolidated basis as determined in accordance with GAAP, as shown on the mostrecent balance sheet of the Borrower and its Subsidiaries available as of thedate of the determination.

"Moody’s" means Moody’s Investors Service, Inc.

"Moody’s Rating" shall mean the rating assigned by Moody’s to theBorrower’s senior unsecured long-term debt.

"Multiemployer Plan" means a "multiemployer plan" as defined in Section4001(a)(3) of ERISA.

"Note" has the meaning set forth in Section 2.1.

"Obligations" means each and every debt, liability and obligation ofevery type and description arising under any of the Loan Documents which theBorrower may now or at any time hereafter owe to any Bank or the Agent, whethersuch debt, liability or obligation now exists or is hereafter created orincurred, whether it is direct or indirect, due or to become due, absolute orcontingent, primary or secondary, liquidated or unliquidated, or sole, joint,several or joint and several, including but not limited to principal of andinterest on the Notes and all fees due under this Agreement, the Fee Letter orany Loan Documents and the obligation to issue, execute and deliver the PledgedSecurities pursuant to Section 7.3.

"Off-Balance Sheet Liability" of a Person means (i) any repurchaseobligation or liability of such Person with respect to accounts or notesreceivable sold by such Person, (ii) any liability under any Sale and LeasebackTransaction which is not a Capitalized Lease and (iii) all Synthetic LeaseObligations of such Person.

"Operating Lease" of a Person means any lease of Property (other than aCapitalized Lease) by such Person as lessee.

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"Organizational Documents" means, (i) with respect to any corporation,the articles of incorporation and bylaws of such corporation, (ii) with respectto any partnership, the partnership agreement of such partnership, (iii) withrespect to any limited liability company, the articles of organization andoperating agreement of such company, and (iv) with respect to any entity, anyand all other shareholder, partner or member control agreements and similarorganizational documents relating to such entity.

"Outstandings" means, at any time, an amount equal to the aggregateprincipal balance of the Advances then outstanding.

"Outstandings Percentage" means, at any time, the ratio (expressed as apercentage) 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) anAffiliate of such Bank or (ii) any entity (whether a corporation, partnership,trust or otherwise) that is engaged in making, purchasing, holding or otherwiseinvesting in bank loans and similar extensions of credit in the ordinary courseof its business and is administered or managed by a Bank or an Affiliate of suchBank and (b) with respect to any Bank that is a fund which invests in bank loansand similar extensions of credit, any other fund that invests in bank loans andsimilar extensions of credit and is managed by the same investment advisor assuch Bank or by an Affiliate of such investment advisor.

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

"Percentage" means, with respect to each Bank, the ratio of (i) thatBank’s Commitment Amount, to (ii) the aggregate Commitment Amounts of all of theBanks. For purposes of this definition only, following the CommitmentTermination Date, each Bank’s Commitment Amount shall be deemed to be theprincipal balance outstanding of that Bank’s Note.

"Permitted Swap Obligations" means all obligations (contingent orotherwise) of the Borrower or any Subsidiary thereof existing or arising underSwap Contracts, provided that each of the following criteria is satisfied: (a)such obligations are (or were) entered into by such Person in the ordinarycourse of business for the purpose of directly mitigating risks associated withliabilities, commitments or assets held or to be held by such Person or itsSubsidiaries, changes in the value of securities issued by such Person or itsSubsidiaries in conjunction with a securities repurchase program not otherwiseprohibited hereunder, and not for purposes of speculation or taking a "marketview;" and (b) such Swap Contracts do not contain any provision ("walk-away"provision) exonerating the non-defaulting party from its obligations to makepayments on outstanding transactions to the defaulting party.

"Person" means any individual, corporation, partnership, limitedliability company, joint venture, association, joint-stock company, trust,unincorporated organization or government or any agency or political subdivisionthereof.

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"Plan" means an employee benefit plan established or maintained by theBorrower or any Subsidiary or ERISA Affiliate and covered by Title IV of ERISA.

"Pledged Securities" means those certain Securities (as defined in theFirst Collateral Trust Securities Indenture) to be issued in favor of the Agentfor the benefit of Banks under the First Collateral Trust Securities Indenturein accordance with the terms of Section 7.3 hereof.

"Pledged Securities Deliverables" means the following, each of which isto 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) allrequired certificates, covenants, consents, and approvals from all requisiteGovernmental Authorities required to authenticate and deliver the PledgedSecurities; (ii) a Pledged Securities Compliance Certificate executed by theChief Financial Officer or Treasurer or Chief Executive Officer of the Borrowerin the form of Exhibit G attached hereto; and (iii) a legal opinion of counselto the Borrower, reasonably satisfactory to the Agent, that the PledgedSecurities are duly authorized and valid and enforceable in accordance withtheir terms.

"Pledged Securities Order" means that certain Order of the CommissionGranting Application In Part, adopted by the PUC on March 26, 2003, as DecisionNo. C03-0306, relating to the Borrower’s issuance of Collateral Securities (asdefined in the Pledged Securities Order), Short-Term Debt Securities (as definedin the Pledged Securities Order) and Non-collateral Securities (as defined inthe Pledged Securities Order).

"Pledged Securities Shortfall" means the aggregate principal amount ofthe Outstandings less the aggregate amount of the Pledged Securities.

"Prepayment Proceeds" means cash proceeds from any issuance of EquitySecurities or Debt Securities of the Borrower, net of reasonable out-of-pockettransaction fees and expenses, including without limitation legal and accountingfees and expenses, other professional fees and expenses, recording tax expensesand commissions (including investment banking fees).

"Prime Rate" means a rate per annum equal to the prime rate of interestannounced by KeyBank (which is not necessarily the lowest rate charged to anycustomer), from time to time, changing when and as said prime rate changes. Suchprime rate is a rate set by KeyBank based upon various factors includingKeyBank’s costs and desired return, general economic conditions and otherfactors, and is used as a reference point for pricing some loans, which may bepriced at, above, or below such announced rate. Any change in such prime rateannounced by KeyBank shall take effect at the opening of business on the dayspecified in the public announcement of such change If KeyBank ceases toestablish or publish a prime rate, the applicable Alternate Base Rate thereaftershall be instead the prime rate reported in The Wall Street Journal (or theaverage 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% FirstMortgage Bonds, in an outstanding principal amount of $144,840,000, issuedpursuant to the First Mortgage Bond Indenture bearing interest at 8-3/4%, with amaturity date of March 1, 2022.

"PSCo Capital Trust I Securities" means the 7.60% Trust OriginatedPreferred Securities issued by PSCo Capital Trust I.

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"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 thebasis of which the Pledged Securities are issued and which, upon issuance of thePledged Securities, will be held by the trustee under the First Collateral TrustSecurities Indenture.

"Reportable Event" means (i) a "reportable event", described in Section4043 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) anaction to terminate a Plan for which a notice is required to be filed underSection 4041 of ERISA, (iv) any other event or condition that could reasonablybe expected to constitute grounds for termination by the Pension BenefitGuaranty Corporation of, or the appointment by the appropriate United StatesDistrict Court of a trustee to administer, any Plan, or (v) a complete orpartial withdrawal from a Multiemployer Plan as described in Sections 4203 and4205 of ERISA.

"Required Banks" means (i) in the case where there are two (2) or fewerBanks, an aggregate Percentage of 100%; or (ii) in the case where there are morethan two (2) Banks, an aggregate Percentage of at least 66.67% (including, inboth cases, where relevant, Additional Banks).

"Reserve Requirement" means, with respect to an Interest Period, themaximum aggregate reserve requirement (including all basic, supplemental,marginal and other reserves) which is imposed under Regulation D on Eurocurrencyliabilities.

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

"S&P" means Standard & Poors Ratings Group, a division of McGraw-HillCorporation.

"S&P Rating" shall mean the rating assigned by S&P to the Borrower’ssenior unsecured long-term debt.

"SEC" means the Securities and Exchange Commission.

"Sale and Leaseback Transaction" means any arrangement, directly orindirectly, with any Person whereby a seller or transferor shall sell orotherwise transfer any real or personal property and concurrently therewithlease, or repurchase under an extended purchase contract, conditional sales orother title retention agreement, the same or substantially similar property.

"Solvent" means, with respect to any Person, that as of the date ofdetermination (i) the fair market value of the property of such Person is (A)greater than the total liabilities (including contingent liabilities) of suchPerson, and (B) not less than the amount that will be required to pay theprobable liabilities on such Person’s debts as they come due, considering allfinancing alternatives and potential asset sales reasonably available to suchPerson; (ii) such Person’s

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capital is not unreasonably small in relation to its business or anycontemplated or undertaken transaction; (iii) such Person does not intend toincur, or believe (nor should it reasonably believe) that it will incur, debtsbeyond 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 applicablelaws relating to fraudulent transfers and conveyances. For purposes of thisdefinition, the amount of any contingent liability at any time shall be computedas the amount that, in light of all of the facts and circumstances existing atsuch time, represents the amount that would reasonably be expected to become anactual or matured liability.

"Subsidiary" means (i) any corporation of which more than 50% of theoutstanding shares of capital stock having general voting power under ordinarycircumstances 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 classesshall have or might have voting power by reason of the happening of anycontingency, is at the time directly or indirectly owned by the Borrower, by theBorrower and one or more other Subsidiaries, or by one or more otherSubsidiaries, (ii) any partnership of which more than 50% of the partnershipinterest therein are directly or indirectly owned by the Borrower, by theBorrower and one or more other Subsidiaries, or by one or more otherSubsidiaries, and (iii) any limited liability company or other form of businessorganization the effective control of which is held by the Borrower, theBorrower and one or more other Subsidiaries, or by one or more otherSubsidiaries.

"Swap Contracts" means any agreement, whether or not in writing,relating to any transaction that is a rate swap, basis swap, forward ratetransaction, commodity swap, commodity option, equity or equity index swap oroption, bond, note or bill option, interest rate option, forward foreignexchange transaction, cap, collar or floor transaction, currency swap,cross-currency rate swap, swaption, currency option or any other similartransaction (including any option to enter into any of the foregoing) or anycombination of the foregoing, and, unless the context otherwise clearlyrequires, any master agreement relating to or governing any or all of theforegoing.

"Synthetic Lease Obligation" means the monetary obligation of a Personunder (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 obligationsthat do not appear on the balance sheet of such Person but which, upon theinsolvency or bankruptcy of such Person, would be characterized as indebtednessof such Person (without regard to accounting treatment). The amount of SyntheticLease Obligations of any Person under any such lease or agreement shall be theamount which would be shown as a liability on a balance sheet of such Personprepared in accordance with GAAP if such lease or agreement were accounted foras a Capitalized Lease.

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

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

"Trust Indenture Act" means the Trust Indenture Act of 1939, asamended.

"Trust Preferred Securities" means any preferred securities issued by aTrust Preferred Securities Subsidiary, where such preferred securities have thefollowing 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 businesstrust (or similar entity) (i) all of the common equity interest of which isowned (either directly or indirectly through one or more wholly-ownedSubsidiaries of the Borrower) at all times by the Borrower, (ii) that has beenformed for the purpose of issuing Trust Preferred Securities and (iii)substantially all of the assets of which consist at all times solely ofsubordinated debt issued by the Borrower or a wholly-owned direct or indirectSubsidiary of the Borrower (as the case may be) and payments made from time totime on such subordinated debt.

"Trustee" means U.S. Bank Trust National Association, as successortrustee under the First Collateral Trust Securities Indenture, or any successortrustee thereunder.

"Welfare Plan" means a "welfare plan" as defined in Section 3(1) ofERISA.

SECTION 1.2 TIMES.

All references to times of day in this Agreement shall be references to NewYork, New York time unless otherwise specifically provided.

SECTION 1.3 ACCOUNTING TERMS AND DETERMINATIONS.

Unless otherwise specified herein, all accounting terms used herein shall beinterpreted, all accounting determinations hereunder shall be made, and allfinancial statements required to be delivered hereunder shall be prepared inaccordance with GAAP; provided that in the event of any Accounting PracticesChange, then the Borrower’s compliance with the covenants set forth

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in Section 6.7 and 6.8 shall be determined on the basis of generally acceptedaccounting principles in effect immediately before giving effect to theAccounting Practices Change, until such covenants are amended in a mannersatisfactory to the Borrower and the Required Banks in accordance with Section10.13 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 theconditions hereinafter set forth, to make Advances to the Borrower from time totime during the thirty (30) day period beginning on the Effective Date andending on the Commitment Termination Date in an aggregate amount not to exceedat any time outstanding that Bank’s Commitment Amount. Within the limits of eachBank’s Commitment Amount and the thirty (30) day draw period, the Borrower mayborrow (solely for the purposes set forth in Section 5.10) and prepay pursuantto Sections 2.10 and 2.11. The Advances made by each Bank under this Section 2.1shall be evidenced by and repayable with interest in accordance with a singlepromissory note of the Borrower (each, a "Note") payable to the order of thatBank, substantially in the form of Exhibit B hereto, dated the date hereof. EachAdvance shall bear interest on the unpaid principal amount thereof from the datethereof 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 theBorrower to the Agent or telephonic request from any person purporting to beauthorized to request Advances on behalf of the Borrower. Each such notice orrequest shall specify (i) the date of the requested Borrowing, (ii) the amountthereof, and (iii) if any portion of such Borrowing will bear interest at aEurodollar Rate, the Interest Period selected by the Borrower with respectthereto. Such notice or request must be received by the Agent not later than10:00 a.m. on the day on which such Borrowing is to occur or, if all or anyportion of the Borrowing will bear interest at a Eurodollar Rate, not later thanthree 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 theAgent in writing (which may be by facsimile transmission) the certificaterequired by Section 3.2(b). Upon receiving a request for a Borrowing underSection 2.1, and in any event not later than 1:30 p.m. on the date that therequested Borrowing is to occur, or, if the requested Borrowing is to bearinterest at a Eurodollar Rate, the close of business on the day that the requestis received, the Agent will notify the Banks of the amount of the requestedBorrowing, the amount of each Bank’s Advance with respect thereto, and, ifapplicable, the fact that the Borrower has elected a Eurodollar Rate and theInterest Period selected by the Borrower. Upon fulfillment of the applicableconditions set forth in Article III, each Bank shall remit its Percentage of therequested Borrowing to the Agent in immediately available funds. So long as aBank receives notice of the requested Borrowing prior to 1:30 p.m. on the datethat the requested Borrowing is to occur, or, if the requested Borrowing is tobear interest at a Eurodollar Rate, the close of business on the day that therequest is received, that Bank will make its Advance with respect to

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that Borrowing available to the Agent by wire transfer of immediately availablefunds to the Agent not later than 4:00 p.m. on the date called for in suchnotice. 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’sdemand deposit account maintained with the Agent or in such other manner as theAgent and the Borrower may from time to time agree. The Agent shall have noobligation to disburse the requested Borrowing if any condition set forth inArticle III has not been satisfied on the day of the requested Borrowing. Theinitial Borrowing shall be in the amount of $50,000,000 or an integral multipleof $1,000,000 greater than $50,000,000. Each subsequent Borrowing shall be inthe 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 anAdvance by executing and delivering an appropriate confirmation certificate tothe Agent. However, the Borrower shall be obligated to repay all Advances forwhich it actually received the moneys (including but not limited to all Advancesthe proceeds of which were deposited in any account of the Borrower) or inrespect of which the Agent reasonably believed the person requesting the same tobe authorized to do so, notwithstanding the fact that the person requesting thesame was not in fact authorized so to do. Any request for an Advance shall bedeemed to be a representation that (i) the representations and warranties inArticle IV are true and correct on and as of the date of such Advance (except tothe extent such representation or warranty specifically relates to an earlierdate); and (ii) no event has occurred and is continuing, or would result fromsuch 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

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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 aggregateamount 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:

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<TABLE><CAPTION>------------------------------------------------------------------------------------------------------------ LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V------------------------------------------------------------------------------------------------------------<S> <C> <C> <C> <C> <C>S&P A- or better BBB+ or better, BBB or better, BBB- or better, Less than BBB- but less than A- but less than but less than BBB BBB+------------------------------------------------------------------------------------------------------------MOODY’S A3 or better Baa1 or better, Baa2 or better, Baa3 or better, Less than Baa3 but less than A3 but less than but less than Baa1 Baa2------------------------------------------------------------------------------------------------------------</TABLE>

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.


(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:

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<TABLE><CAPTION>--------------------------------------------------------------------------------------------------------- LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V---------------------------------------------------------------------------------------------------------<S> <C> <C> <C> <C> <C>FLOATING RATE 0% 0% 0% 0.125% 0.650%MARGIN---------------------------------------------------------------------------------------------------------EURODOLLAR RATE 1.00% 1.125% 1.25% 1.625% 2.50%MARGIN---------------------------------------------------------------------------------------------------------</TABLE>

(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 thebenefit of the Banks, certain additional fees in the amounts set forth in theFee Letter.

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SECTION 2.9 TERMINATION OF THE COMMITMENT.

The Commitments shall terminate on the Commitment Termination Date and the Banksshall 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 orpremium, at any time and from time to time; provided that (i) any prepayment bythe Borrower hereunder shall be applied pro rata to the prepayment of eachBank’s Advances, (ii) any prepayment of the full amount of the Advances shallinclude accrued interest thereon, (iii) any prepayment of any portion of theprincipal balance of any Advances which, at the time of such prepayment, bearsinterest at a Eurodollar Rate shall be accompanied by compensation as specifiedin Section 2.16(b), and (iv) each prepayment of the Advances (other thanprepayment 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 partialprepayment of principal on the Advances shall be applied, first, to that portionof such Advances bearing interest at the Floating Rate, and, second, to thatportion 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 Securitiesafter the Effective Date (excluding loans made under the Existing CreditFacility or any intercompany loans, advances or capital contributions by anAffiliate of the Borrower), the Borrower shall use the Prepayment Proceeds toprepay, to the extent of such Prepayment Proceeds, the Advances. Such paymentshall be made within one (1) Business Day of the closing of such EquitySecurities or Debt Securities issuance. Any prepayment of any portion of theprincipal balance of any Advances pursuant to this Section 2.11, which, at thetime of such prepayment, bears interest at a Eurodollar Rate shall beaccompanied 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 becalculated based on the actual days elapsed in a year of 365 or 366 days, as thecase may be. All other interest and all fees hereunder shall be computed on thebasis 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

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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

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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 dueon a day other than a Business Day, such payment may be made on the nextsucceeding Business Day, and such extension of time shall in each case beincluded in the computation of payment of interest on such Obligations or thefees 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 theBorrower’s existing obligations under the PSCo 8-3/4% First Mortgage Bonds andthe 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 orother 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

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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 anyGovernmental Authority has asserted that it is unlawful, for any Bank to make,maintain or fund Eurodollar Rate Loans, or materially restricts the authority ofsuch Bank to purchase or sell, or to take deposits of, United States Dollars inthe applicable offshore United States dollar market, or to determine or chargeinterest rates based upon the Eurodollar Rate, then, on notice thereof by Bankto the Borrower through the Agent, any obligation of such Bank to makeEurodollar Rate Loans shall be suspended until Bank notifies the Agent and theBorrower that the circumstances giving rise to such determination no longerexist. Upon receipt of such notice, the Borrower shall, upon demand from suchBank (with a copy to the Agent), either prepay or convert, at the Borrower’soption, all Eurodollar Rate Loans of such Bank, either on the last day of theInterest Period thereof, if Bank may lawfully continue to maintain suchEurodollar Rate Loans to such day, or immediately, if Bank may not lawfullycontinue 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

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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:


(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

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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 resultof any Capital Adequacy Rule Change, that Bank may require the Borrower to payit the amount necessary to restore its Return to what it would have been hadthere 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

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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 afterthat Bank learns that its Return has been reduced, shall include a demand forpayment of the amount necessary to restore that Bank’s Return for the quarter inwhich the notice is sent and, if applicable, the preceding quarter, and shallstate in reasonable detail the cause for the reduction in its Return and itscalculation of the amount of such reduction. Thereafter, that Bank may send anew notice with respect to each calendar quarter setting forth the calculationof the reduced Return for that quarter and including a demand for payment of theamount necessary to restore its Return for that quarter. In such event, theBorrower shall pay the Bank such amount within 30 days after demand by suchBank. A Bank’s calculation in any such notice shall be conclusive and bindingabsent demonstrable error. A Bank shall not make demand hereunder unless thatBank is generally imposing such increased costs on its similarly situatedcustomers. No Bank may demand any compensation hereunder more than 45 daysfollowing 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 toSection 2.16(a) or a demand for payment pursuant to Section 2.17 or 2.18 or ifat any time the long-term unenhanced credit rating of any Bank falls below Baa2from Moody’s or below BBB from S&P or if such Bank is no longer rated by S&P orMoody’s, the Borrower may (so long as no Default or Event of Default hasoccurred and is continuing) at its expense require such Bank to assign, in wholeand in accordance with Section 9.1 (including the execution of an AssignmentAgreement and all other applicable documents, and the payment of any feesrequired under Section 9.1), all of its rights and obligations hereunder andunder such Bank’s Note, including but not limited to such Bank’s Commitment, toan Eligible Lender identified by the Borrower and willing to become a Bankhereunder. Such Bank may be an existing Bank hereunder. Notwithstanding theforegoing, the Borrower may not compel the resignation of any Bank as the Agentexcept 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 conditionprecedent that the Agent shall have received on or before the day of the firstAdvance (and, in any event, not later than June 25, 2003) all of the following,in form and substance satisfactory to each Bank:

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(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 suchAdvance:

(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.

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(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


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 respectivejurisdictions of incorporation, and are each duly licensed or qualified totransact business in all jurisdictions where the character of the property ownedor leased or the nature of the business transacted by them makes such licensingor qualification necessary, except where the failure to be so licensed orqualified (i) will not permanently preclude the Borrower or any Subsidiary frommaintaining any material action in any such jurisdiction even though such actionarose in whole or in part during the period of such failure, and (ii) will notresult in any other Material Adverse Change. The Borrower has all requisitepower and authority, corporate or otherwise, to conduct its business, to own itsproperties 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.

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(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, ifissued, and the Indentures constitute the legal, valid and binding obligationsof the Borrower enforceable against the Borrower in accordance with theirrespective terms, except to the extent that such enforcement may be limited bybankruptcy, insolvency or similar laws affecting the enforcement of creditors’rights generally or by general equitable principles. Without limiting thegenerality of the foregoing, as of the Pledged Securities Delivery Date, thePledged Securities will be (i) duly issued, executed and delivered by theBorrower; (ii) duly authenticated by the Trustee, and (iii) entitled to thebenefits provided by the First Collateral Trust Securities Indenture. On thePledged Securities Delivery Date, the Related First Mortgage Bonds will be (i)duly issued, executed and delivered by the Borrower; (ii) duly authenticated bythe trustee under the First Mortgage Bond Indenture and (iii) entitled to thebenefits 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 thedate of this Agreement and of the percentage of the ownership of the Borrower orany other Subsidiary in each as of the date of this Agreement. The Borrower hasno Restricted Subsidiaries as of the date hereof except as designated onSchedule 4.4. Except as otherwise indicated in that Schedule, all shares of eachSubsidiary owned by the Borrower or by any such other Subsidiary are validlyissued and fully paid and nonassessable.

SECTION 4.5 FINANCIAL CONDITION; OTHER INFORMATION.

The Borrower has heretofore furnished to the Banks the audited consolidatedfinancial statements of the Borrower and its Subsidiaries for the year ended andas of December 31, 2002 and the unaudited consolidated financial statements ofthe Borrower and its Subsidiaries for the quarter ended and as of March 31,2003. Those financial statements fairly present in all material respects thefinancial condition of the Borrower on the dates thereof and the results of itsoperations and cash flows for the periods then ended, and were prepared inaccordance with GAAP as then in effect. The information, exhibits and reportsfurnished by the Borrower to the Agent and the Banks, taken as a whole, inconnection with the negotiation of or compliance with the Loan Documents did notcontain any material misstatement of fact or omit to state a material fact orany 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.

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SECTION 4.7 LITIGATION.

Except as set forth in Schedule 4.7, there are no actions, suits or proceedingspending or, to the knowledge of the Borrower, threatened against or affectingthe Borrower or any Subsidiary or the properties of the Borrower or anySubsidiary before any court or governmental department, commission, board,bureau, agency or instrumentality, domestic or foreign, which could reasonablybe expected to effect a Material Adverse Change. Other than any liabilityincident to any litigation, arbitration or proceeding which could not reasonablybe expected to have a Material Adverse Effect, the Borrower has no materialcontingent obligations not provided for or disclosed in the financial statementsreferred 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 knowledgeafter reasonable inquiry, (i) neither the Borrower nor any Subsidiary or otherPerson has ever caused or permitted any Hazardous Substance to be disposed ofon, under or at any real property which is operated by the Borrower or anySubsidiary or in which the Borrower or any Subsidiary has any interest, exceptto the extent that such disposal can not reasonably be expected to result in aMaterial 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 orpermanent or temporary storage site for any Hazardous Substance in a manner thatcould 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 extendingcredit for the purpose of purchasing or carrying margin stock (within themeaning of Regulation U of the Board of Governors of the Federal ReserveSystem), and no part of the proceeds of any Advance will be used to purchase orcarry any margin stock or to extend credit to others for the purpose ofpurchasing or carrying any margin stock.

SECTION 4.10 TAXES.

The Borrower and its Subsidiaries have each paid or caused to be paid to theproper authorities when due all federal, state and local taxes required to bewithheld and paid by them. The Borrower and its Subsidiaries have each filed allfederal, state and local tax returns which to the knowledge of the officers ofthe Borrower or any Subsidiary are required to be filed, and the Borrower andits Subsidiaries have each paid or caused to be paid to the respective taxingauthorities all taxes as shown on said returns or on any assessment received byit to the extent such taxes have become due, other than taxes whose amount,applicability or validity is being contested in good faith by appropriateproceedings and for which the Borrower or applicable Subsidiary has providedadequate 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 requirementof law, which would reasonably be expected to effect a Material Adverse Change.

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SECTION 4.12 TITLES AND LIENS.

The Borrower or one of its Subsidiaries has good title to each of the propertiesand 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 onits books and records, and the Borrower has good and valid title to all real andfixed property and leasehold rights described or enumerated in the FirstCollateral Trust Securities Indenture and in the First Mortgage Bond Indenture(except, in each case, such properties as have been released from the Lienthereof in accordance with the terms thereof), in each case free and clear ofall Liens and encumbrances, except for Liens and encumbrances permitted bySection 6.1 and covenants, restrictions, rights, easements and minorirregularities in title which do not materially interfere with the business oroperations 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 inSection 302 of ERISA) in excess of $50,000,000 as of the last day of the mostrecent fiscal year of such Plan ended prior to the date hereof, and no liabilityto the Pension Benefit Guaranty Corporation or the Internal Revenue Service inexcess of such amount has been, or is expected by the Borrower or any Subsidiaryor ERISA Affiliate to be, incurred with respect to any Plan that could become aliability 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.


(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.

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(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 thePledged Securities, will not be an "investment company," as such term is definedin 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, asamended ("PUHCA"), as a "subsidiary" of a registered "holding company" withinthe meaning of PUHCA. However, the transactions contemplated by this Agreementare 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.

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(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 outstandingobligations under any Swap Contracts, other than Permitted Swap Obligations.

SECTION 4.20 INSURANCE.

The properties of the Borrower and its Subsidiaries are insured with financiallysound and reputable insurance companies not Affiliates of the Borrower, in suchamounts, with such deductibles and covering such risks as are customarilycarried by companies engaged in similar businesses and owning similar propertiesin 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 havecomplied in all material respects with all applicable statutes, rules,regulations, orders and restrictions of any domestic or foreign government orany instrumentality or agency thereof having jurisdiction over the conduct oftheir 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 RequiredBanks shall otherwise consent in writing:

SECTION 5.1 FINANCIAL STATEMENTS; OTHER NOTICES.


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(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

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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 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 booksof record and account for itself in which true and complete entries will be madein accordance with GAAP. Upon request of any Applicable Party, as defined below,the Borrower will, and will cause each Subsidiary to, give any representative ofsuch Applicable Party access to, and permit such representative to examine, copyor make extracts from, any and all books, records and documents in itspossession (except to the extent that such access is restricted by law or by abona fide non-disclosure agreement not entered into primarily for the purpose ofevading the requirements of this Section), to inspect any of its properties(subject to such physical security requirements as the Borrower or theapplicable Subsidiary may require) and to discuss its affairs, finances andaccounts with any of its principal officers, all at such times during normalbusiness hours, upon reasonable notice, and as often as such Applicable Partymay 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 orany Bank, and (ii) at all other times, the Agent. The provisions of this Section5.2 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 suchtimes during normal business hours and as often as may be agreed to between theBorrower and such Bank.

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SECTION 5.3 COMPLIANCE WITH LAWS.

The Borrower will, and will cause each Subsidiary to, comply with therequirements of applicable laws and regulations, the noncompliance with whichwould effect a Material Adverse Change and to conduct its and cause eachSubsidiary to conduct its operations and keep and maintain its property inmaterial 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, whendue, (a) all taxes, assessments and governmental charges levied or imposed uponit or upon its income or profits, or upon any properties belonging to it, priorto the date on which penalties attach thereto, (b) all federal, state and localtaxes 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 chargeupon any properties of the Borrower or any Subsidiary; provided, that neitherthe Borrower nor any Subsidiary shall be required to pay any such tax,assessment, charge or claim (i) whose amount, applicability or validity is beingcontested in good faith by appropriate proceedings and for which the Borrower orsuch Subsidiary has provided adequate reserves in accordance with GAAP or (ii)where failure to pay such tax, assessment, charge or claim could not reasonablybe 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 andmaintain, all of its properties necessary or useful in its business in goodcondition, repair and working order; provided, however, that nothing in thisSection shall prevent the Borrower or any Subsidiary from discontinuing theoperation and maintenance of, or disposing of, any of its properties if (i) (A)such discontinuance or disposition is, in the reasonable judgment of theBorrower 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, suchdiscontinuance or disposition, or (ii) such discontinuance or dispositionrelates to obsolete or worn-out property.

SECTION 5.6 INSURANCE.

The Borrower will, and will cause each Restricted Subsidiary to, obtain andmaintain insurance with insurers reasonably believed by the Borrower or suchRestricted Subsidiary to be responsible and reputable, in such amounts andagainst such risks as is usually carried by companies in similar circumstancesengaged in similar business and owning similar properties in the same generalareas 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 andmaintain its corporate existence and all of its rights, privileges andfranchises; provided, however, that neither the Borrower nor any RestrictedSubsidiary shall be required to preserve any of its rights, privileges andfranchises or to maintain its corporate existence if (i) its Board of Directorsshall reasonably determine that the preservation or maintenance thereof is nolonger desirable in the conduct of the business of the Borrower or thatRestricted Subsidiary, and (ii) no Default or

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Event of Default exists upon, or will be caused by, the termination of suchright, privilege, franchise or existence; provided, further, that in no eventshall the foregoing be construed to permit the Borrower to terminate itscorporate existence.

SECTION 5.8 DELIVERY OF INFORMATION.

At any time when the Borrower is not subject to Section 13 or 15(d) of theExchange Act, for the benefit of holders from time to time of PledgedSecurities, the Borrower agrees to furnish at its expense, upon request, toholders of Pledged Securities and prospective purchasers of securitiesinformation satisfying the requirements of subsection (d)(4)(i) of Rule 144Aunder the Act.

SECTION 5.9 PLEDGED SECURITIES CAPACITY.

The Borrower shall at all times between the Effective Date through and includingthe Pledged Securities Delivery Date (as defined in Section 7.3) maintainauthority under the Pledged Securities Order and any other order of the PUC orany Governmental Authority to issue (i) Collateral Securities (as defined in thePledged Securities Order) in the form of First Collateral Trust Bonds secured byrelated 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 ofShort-Term Debt Securities (as defined in the Pledged Securities Order) andNon-collateral Securities (as defined in the Pledged Securities Order) in theform of First Collateral Trust Bonds secured by related First Mortgage Bonds inan amount equal to the amount by which the Outstandings (after giving effect toany prepayment pursuant to Section 2.11 from the Prepayment Proceeds of suchDebt 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’sobligations under the PSCo 8-3/4% First Mortgage Bonds and the PSCo CapitalTrust 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 RequiredBanks:

SECTION 6.1 LIENS.

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


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(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.

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(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 ofthe Borrower and its Subsidiaries (whether in one transaction or in a series oftransactions) to any other Person other than (i) in the ordinary course ofbusiness, (ii) dispositions of property no longer used or useful in the businessof the Borrower or any Subsidiary and (iii) dispositions of assets the netproceeds of which are invested or re-invested, or held in cash orcash-equivalents for reinvestment, in other energy-related assets; provided,however, that a wholly-owned Subsidiary of the Borrower may sell, lease, ortransfer all or a substantial part of its assets to the Borrower or anotherwholly-owned Subsidiary of the Borrower, and the Borrower or such otherwholly-owned Subsidiary, as the case may be, may acquire all or substantiallyall of the assets of the Subsidiary so to be sold, leased or transferred to itand any such sale, lease or transfer shall not be included in determining if theBorrower and/or its Subsidiaries disposed of a Material Part of its Assets.Notwithstanding the foregoing, the operating agreement between TRANSLinkTransmission Co., LLC and the Borrower shall not be treated as a disposition forthe 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 anyother Person to merge into it, or acquire (in a transaction analogous in purposeor effect to a consolidation or merger) all or substantially all of the assetsof any other Person; provided, however, that the restrictions contained in thisSection shall not apply to or prevent the consolidation or merger of any Personwith, 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, suchconsolidation, merger, conveyance or transfer, and (ii) the Borrower shall bethe continuing or surviving corporation.

SECTION 6.4 HAZARDOUS SUBSTANCES.

The Borrower will not, and will not permit any Subsidiary to, cause or permitany Hazardous Substance to be disposed of in any manner, or on, under or at anyreal property which is operated by the Borrower or any Subsidiary or in whichthe Borrower or any Subsidiary has any interest, if such disposition couldreasonably 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 fromthat presently engaged in by the Borrower.

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SECTION 6.6 TRANSACTIONS WITH AFFILIATES.

The Borrower will not (i) make any loan or capital contribution to, or any otherinvestment in, any Affiliate or make any other cash transfer to any Affiliate ofthe 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 TotalCapital, determined on a consolidated basis with respect to the Borrower and itsSubsidiaries as at the end of each fiscal quarter of the Borrower, to be greaterthan 0.60 to 1.

SECTION 6.8 INTEREST COVERAGE RATIO.

The Borrower will not at any time permit its Interest Coverage Ratio, determinedas 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.

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(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

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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

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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 suchEvent of Default is waived by the Required Banks or cured, the Agent may, withthe consent of the Required Banks, and shall, upon the request of the RequiredBanks, 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

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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 Defaultdescribed in Section 7.1(j) hereof (whether or not such Event of Default alsoarises under Section 7.1(i) hereof), the Commitments shall terminate and theentire unpaid principal amount of the Notes then outstanding, all interestaccrued and unpaid thereon, and all other amounts payable under this Agreementshall be immediately due and payable without presentment, demand, protest ornotice of any kind.

SECTION 7.3 PROVISIONS REGARDING PLEDGED SECURITIES.

(a) Pledged Securities. In the event that all outstanding Obligationsare not paid in full on or before the date that is one hundred twenty (120) daysafter the Effective Date (the "Pledged Securities Delivery Date"), the Borrowercovenants and agrees that, for the purpose of providing security for the paymentof the principal of the Advances, it will issue, execute and deliver to theAgent on the Pledged Securities Delivery Date (i) Pledged Securities in anaggregate principal amount equal to the aggregate Outstandings; and (ii) thePledged Securities Deliverables. Notwithstanding the foregoing, in the eventthat the Borrower does not have lawful authority to issue, execute and deliverPledged Securities to the Agent in an amount equal to the aggregate amount ofthe Outstandings, then, on the Pledged Securities Delivery Date, the Borrowershall prepay the Advances to the extent of any Pledged Securities Shortfall(subject to any compensation due the Agent and/or Banks as specified in Section2.16(b)) and deliver to the Agent (x) Pledged Securities in an aggregateprincipal amount equal to the aggregate Outstandings after giving effect to suchprepayment; 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 Section7.1(a) or (b) or any other Event of Default that results in an acceleration ofthe outstanding principal amount of any Notes, the Pledged Securities shall beredeemable in whole or in part upon receipt by the Trustee and the Borrower of awritten demand (a "Redemption Demand") from the Agent specifying a date (the"Demand Redemption Date") (which may be the date of receipt by Borrower of theRedemption Demand) stating that there has been such an Event of Default anddemanding redemption of the Pledged Securities to the extent of the amount ofthe accelerated principal amount of the Notes. The Pledged Securities shallotherwise contain terms substantially similar to the terms of those Securities(as defined in the First Collateral Trust Securities Indenture) issued anddelivered in connection with the execution and delivery by Borrower of theExisting Credit Agreement.

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Notwithstanding the foregoing, (x) without the prior written consent ofthe Agent, the Borrower shall make no payment with respect to the PledgedSecurities at any time while any Advance remains outstanding, and (y) the Agentshall not demand payment of the Pledged Securities from any obligor thereunderprior to the occurrence of an Event of Default.

On the date which is thirty (30) days after the maturity of the PledgedSecurities, the Trustee may conclusively presume that the obligation of theBorrower to pay principal on the Pledged Securities as the same shall have comedue and payable shall have been fully satisfied and discharged unless and untilthe Trustee shall have received a Payment Demand from the Agent stating that theprincipal of Pledged Securities has become due and payable and specifying theamount of funds required to make such payment. Notwithstanding anything to thecontrary contained herein, the aggregate amount actually due on the PledgedSecurities shall not exceed the aggregate principal amount of the Advances.

(b) Effect of Termination or Reduction of Outstandings. Upon anyreduction or termination of the Outstandings, the Pledged Securities shall bedeemed satisfied and discharged as to the reduced or terminated portion of theOutstandings, as and to the extent provided in the Pledged Securities.

(c) Voting Restrictions. The Agent’s rights to vote or consent underthe First Collateral Trust Securities Indenture in respect of the PledgedSecurities shall be restricted as and to the extent provided in the PledgedSecurities.

(d) Restrictions on Transfer of Bonds. The Pledged Securities are nottransferable except to a successor to the Agent under this Agreement.

(e) Securities Act Representation. Each of the Agent and the Banksrepresents to the Borrower that it is an "accredited investor" within themeanings of Rule 501(a) of Regulation D and is acquiring its interest in thePledged Securities hereunder as security for the Obligations and not with a viewto 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 contractualrepresentative (herein referred to as the "Agent") hereunder and under eachother Loan Document, and each of the Banks irrevocably authorizes the Agent toact as the contractual representative of such Bank with the rights and dutiesexpressly set forth herein and in the other Loan Documents. The Agent agrees toact as such contractual representative upon the express conditions contained inthis Article VIII. Notwithstanding the use of the defined term "Agent," it isexpressly understood and agreed that the Agent shall not have any fiduciaryresponsibilities to any Bank by reason of this Agreement or any other LoanDocument and that the Agent is merely acting as the contractual representativeof the Banks with only those duties as are expressly set forth in this Agreementand the other Loan Documents. In its capacity as the Banks’ contractualrepresentative, the Agent (i) does not hereby assume any fiduciary duties to anyof the Banks, (ii) is a "representative" of the Banks within the meaning ofSection 9-105 of the Uniform

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Commercial Code and (iii) is acting as an independent contractor, the rights andduties of which are limited to those expressly set forth in this Agreement andthe other Loan Documents. Each of the Banks hereby agrees to assert no claimagainst the Agent on any agency theory or any other theory of liability forbreach 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 asare specifically delegated to the Agent by the terms of each thereof, togetherwith such powers as are reasonably incidental thereto. The Agent shall have noimplied duties to the Banks, or any obligation to the Banks to take any actionthereunder except any action specifically provided by the Loan Documents to betaken by the Agent. The Agent shall not be responsible for the negligence ormisconduct of any agent or attorney-in-fact that it selects with reasonablecare.

SECTION 8.3 GENERAL IMMUNITY.

Neither the Agent nor any of its directors, officers, agents or employees shallbe liable to the Borrower, the Banks or any Bank for any action taken or omittedto be taken by it or them hereunder or under any other Loan Document or inconnection herewith or therewith except to the extent such action or inaction isdetermined in a final non-appealable judgment by a court of competentjurisdiction to have arisen from the gross negligence or willful misconduct ofsuch Person.

SECTION 8.4 NO RESPONSIBILITY FOR LOANS, RECITALS, ETC.

Neither the Agent nor any of its directors, officers, agents or employees shallbe responsible for or have any duty to ascertain, inquire into, or verify (a)any statement, warranty or representation made in connection with any LoanDocument or any borrowing hereunder; (b) the performance or observance of any ofthe covenants or agreements of any obligor under any Loan Document, including,without limitation, any agreement by an obligor to furnish information directlyto 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) theexistence or possible existence of any Default or Event of Default; (e) thevalidity, enforceability, effectiveness, sufficiency or genuineness of any LoanDocument or any other instrument or writing furnished in connection therewith,or (f) the financial condition of the Borrower or of any of the Borrower’sSubsidiaries. The Agent shall have no duty to disclose to the Banks informationthat 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 itscapacity as the Agent or in its individual capacity). No Agent-Related Personshall be under any obligation to any Bank to ascertain or to inquire as to theobservance or performance of any of the agreements contained in, or conditionsof, 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 orAffiliates.

SECTION 8.5 ACTION ON INSTRUCTIONS OF BANKS.

The Agent shall in all cases be fully protected in acting, or in refraining fromacting, hereunder and under any other Loan Document in accordance with writteninstructions signed by the

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Required Banks (or, when expressly required hereunder, all of the Banks), andsuch instructions and any action taken or failure to act pursuant thereto shallbe binding on all of the Banks. The Banks hereby acknowledge that the Agentshall be under no duty to take any discretionary action permitted to be taken byit pursuant to the provisions of this Agreement or any other Loan Documentunless it shall be requested in writing to do so by the Required Banks. TheAgent shall be fully justified in failing or refusing to take any actionhereunder and under any other Loan Document unless it shall first be indemnifiedto its satisfaction by the Banks pro rata against any and all liability, costand expense that it may incur by reason of taking or continuing to take any suchaction.

SECTION 8.6 EMPLOYMENT OF AGENTS AND COUNSEL.

The Agent may execute any of its duties as the Agent hereunder and under anyother Loan Document by or through employees, agents, and attorneys-in-fact andshall not be answerable to the Banks, except as to money or securities receivedby it or its authorized agents, for the default or misconduct of any such agentsor attorneys-in-fact selected by it with reasonable care. The Agent shall beentitled to advice of counsel concerning the contractual arrangement between theAgent and the Banks and all matters pertaining to the Agent’s duties hereunderand 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 begenuine and correct and to have been signed or sent by the proper person orpersons, and, in respect to legal matters, upon the opinion of counsel selectedby 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 totheir respective Commitments (or, if the Commitments have been terminated, inproportion to their Commitments immediately prior to such termination) (i) forany amounts not reimbursed by the Borrower for which the Agent is entitled toreimbursement by the Borrower under the Loan Documents, (ii) for any otherexpenses incurred by the Agent on behalf of the Banks, in connection with thepreparation, execution, delivery, administration and enforcement of the LoanDocuments (including, without limitation, for any expenses incurred by the Agentin connection with any dispute between the Agent and any Bank or between two ormore of the Banks) and (iii) for any liabilities, obligations, losses, damages,penalties, actions, judgments, suits, costs, expenses or disbursements of anykind and nature whatsoever which may be imposed on, incurred by or assertedagainst the Agent in any way relating to or arising out of the Loan Documents orany other document delivered in connection therewith or the transactionscontemplated thereby (including, without limitation, for any such amountsincurred by or asserted against the Agent in connection with any dispute betweenthe Agent and any Bank or between two or more of the Banks), or the enforcementof 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 extentany of the foregoing is found in a final non-appealable judgment by a court ofcompetent jurisdiction to have resulted from the gross negligence or willfulmisconduct

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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 therelevant Bank in accordance with the provisions thereof. The obligations of theBanks under this Section 8.8 shall survive payment of the Obligations andtermination of this Agreement.

SECTION 8.9 NOTICE OF DEFAULT.

The Agent shall not be deemed to have knowledge or notice of the occurrence ofany Default or Event of Default, except with respect to defaults in the paymentof principal, interest and fees required to be paid to the Agent for the accountof Banks, unless the Agent shall have received written notice from a Bank or theBorrower referring to this Agreement, describing such Default or Event ofDefault and stating that such notice is a "notice of default". The Agent willnotify Banks of its receipt of any such notice. The Agent shall take such actionwith respect to such Default or Event of Default as may be directed by RequiredBanks in accordance with Article VII; provided, however, that unless and untilthe Agent has received any such direction, the Agent may (but shall not beobligated to) take such action, or refrain from taking such action, with respectto such Default or Event of Default as it shall deem advisable or in the bestinterest of Banks.

SECTION 8.10 RIGHTS AS A BANK.

In the event the Agent is a Bank, the Agent shall have the same rights andpowers hereunder and under any other Loan Document with respect to itsCommitment and its Advances as any Bank and may exercise the same as though itwere not the Agent, and the term "Bank" or "Banks" shall, at any time when theAgent is a Bank, unless the context otherwise indicates, include the Agent inits 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 othertransaction, in addition to those contemplated by this Agreement or any otherLoan Document, with the Borrower or any of its Subsidiaries in which theBorrower or such Subsidiary is not restricted hereby from engaging with anyother Person. The Agent, in its individual capacity, is not obligated to remaina Bank.

SECTION 8.11 BANK CREDIT DECISION; DISCLOSURE OF INFORMATION BY AGENT.

Each Bank acknowledges that no Agent-Related Person has made any representationor warranty to it, and that no act by the Agent hereinafter taken, including anyconsent to and acceptance of any assignment or review of the affairs of theBorrower and its Subsidiaries, shall be deemed to constitute any representationor warranty by any Agent-Related Person to any Bank as to any matter, includingwhether Agent-Related Persons have disclosed material information in theirpossession. Each Bank, including any Bank by assignment, represents to the Agentthat it has, independently and without reliance upon any Agent-Related Personand based on such documents and information as it has deemed appropriate, madeits own appraisal of and investigation into the business, prospects, operations,property, financial and other condition and creditworthiness of the Borrower andits Subsidiaries, and all applicable bank regulatory laws relating to thetransactions contemplated hereby, and made its own decision to enter into thisAgreement and to extend credit to the Borrower hereunder. Each Bank alsorepresents that it will, independently and without reliance upon anyAgent-Related Person and based on such

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documents and information as it shall deem appropriate at the time, continue tomake its own credit analysis, appraisals and decisions in taking or not takingaction under this Agreement and the other Loan Documents, and to make suchinvestigations as it deems necessary to inform itself as to the business,prospects, operations, property, financial and other condition andcreditworthiness of the Borrower. Except for notices, reports and otherdocuments expressly required to be furnished to Banks by the Agent herein, theAgent shall not have any duty or responsibility to provide any Bank with anycredit or other information concerning the business, prospects, operations,property, financial and other condition or creditworthiness of the Borrower orany of its Subsidiaries which may come into the possession of any Agent-RelatedPerson.

SECTION 8.12 SUCCESSOR AGENT.

The Agent may resign at any time by giving written notice thereof to the Banksand the Borrower, such resignation to be effective upon the appointment of asuccessor Agent or, if no successor Agent has been appointed, forty-five daysafter the retiring Agent gives notice of its intention to resign. The Agent maybe removed at any time with or without cause by written notice received by theAgent from the Required Banks, such removal to be effective on the datespecified by the Required Banks. Upon any such resignation or removal, theRequired Banks shall have the right to appoint, on behalf of the Borrower andthe Banks, a Bank as a successor Agent. If no successor Agent shall have been soappointed by the Required Banks within thirty days after the resigning Agent’sgiving notice of its intention to resign, then the resigning Agent may appoint,on behalf of the Borrower and the Banks, a successor Agent. Notwithstanding theforegoing, (i) the Agent may at any time without the consent of any Bank andwith 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 Agenthereunder and (ii) so long as no Event of Default exists, no successor Agent maybe appointed without the prior written consent of the Borrower, not to beunreasonably withheld or delayed. If the Agent has resigned or been removed andno successor Agent has been appointed, the Banks may perform all the duties ofthe Agent hereunder and the Borrower shall make all payments in respect of theObligations to the applicable Bank and for all other purposes shall dealdirectly with the Banks. No successor Agent shall be deemed to be appointedhereunder until such successor Agent has accepted the appointment. Any suchsuccessor Agent shall be a commercial bank having capital and retained earningsof at least $100,000,000. Upon the acceptance of any appointment as the Agenthereunder by a successor Agent, such successor Agent shall thereupon succeed toand become vested with all the rights, powers, privileges and duties of theresigning or removed Agent. Upon the effectiveness of the resignation or removalof the Agent, the resigning or removed Agent shall be discharged from its dutiesand obligations hereunder and under the Loan Documents. After the effectivenessof the resignation or removal of an Agent, the provisions of this Article VIIIshall continue in effect for the benefit of such Agent in respect of any actionstaken or omitted to be taken by it while it was acting as the Agent hereunderand under the other Loan Documents. In the event that there is a successor tothe Agent by merger, or the Agent assigns its duties and obligations to anAffiliate pursuant to this Section 8.12, then the term "Prime Rate" as used inthis Agreement shall mean the prime rate, base rate or other analogous rate ofthe new Agent.

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SECTION 8.13 DELEGATION TO AFFILIATES.

The Borrower and the Banks agree that the Agent may delegate any of its dutiesunder this Agreement to any of its Affiliates. Any such Affiliate (and suchAffiliate’s directors, officers, agents and employees) which performs duties inconnection with this Agreement shall be entitled to the same benefits of theindemnification, waiver and other protective provisions to which the Agent isentitled 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 beapplied, first, to pay or reimburse the Agent for all costs, expenses, damagesand liabilities at any time incurred by or imposed upon the Agent in connectionwith this Agreement or any other Loan Document (including but not limited to allreasonable attorney’s fees, foreclosure expenses and advances made to protectthe security of collateral, if any, but excluding any costs, expenses, damagesor

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liabilities arising from the gross negligence or willful misconduct of theAgent). If the Agent does not receive payments, collections or proceeds from theBorrower or its properties sufficient to cover any such costs, expenses, damagesor liabilities within 30 days after their incurrence or imposition, each Bankshall, 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) onaccount of principal of or interest on any Note other than through distributionsmade in accordance with Section 8.2, such Bank or holder shall promptly givenotice of such fact to the Agent and shall purchase from the other Banks orholders such participations in the Notes held by them as shall be necessary tocause the purchasing Bank or holder to share the excess payment or otherrecovery ratably with each of them; provided, however, that if all or anyportion of the excess payment or other recovery is thereafter recovered fromsuch purchasing Bank or holder, the purchase shall be rescinded and thepurchasing Bank restored to the extent of such recovery (but without interestthereon).

SECTION 8.17 AGENT NOT OFFERING BONDS.

Each Bank acknowledges that neither the Agent’s taking possession of the PledgedSecurities, nor its exercise of remedies with respect to the Pledged Securitiesand subsequent distribution of proceeds thereunder, constitutes or willconstitute an offer of any security, a solicitation of an offer to buy anysecurity, 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

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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 resultingadjustment of Percentages arising therefrom, (b) the assigning Bank shall berelieved of all obligations hereunder to the extent of the reduction of allobligations hereunder and to the extent of the reduction of such Bank’sPercentage, and (c) the Additional Bank shall become a party hereto and shall beentitled to all rights, benefits and privileges accorded to a Bank herein and ineach other document or instrument executed pursuant hereto and subject to allobligations of a Bank hereunder, including the right to approve or disapproveactions which, in accordance with the terms hereof, require the approval of theRequired 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

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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.


(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 negotiationpursuant 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

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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 Commitmentsto any Eligible Lender, upon prior written notice to the Agent but without theconsent of the Agent or the Borrower, but only so long as the principal amountof the participation so granted is no less than $5,000,000 (or, if theparticipant is a Participating Affiliate, no less than $1,000,000). No holder ofany such participation, other than an Affiliate of such Bank, shall be entitledto require

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such Bank to take or omit to take any action hereunder, except that such Bankmay agree with such participant that such Bank will not, without suchparticipant’s consent, agree to any action described in paragraph (a) of Section10.3. No Bank shall, as between the Borrower and such Bank, be relieved of anyof its obligations hereunder as a result of any such granting of aparticipation. The Borrower hereby acknowledges and agrees that any participantdescribed in this Section will, for purposes of Sections 2.16, 2.17 and 2.18only, be considered to be a Bank hereunder (provided that such participant shallnot be entitled to receive any more than the Bank selling such participationwould 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 itsrights or obligations under, or grant any participation in, any Loan Document orCommitment.

ARTICLE X MISCELLANEOUS

SECTION 10.1 DISCLOSURE OF INFORMATION.

The Agent and the Banks shall keep confidential (and cause their respectiveofficers, directors, employees, agents and representatives to keep confidential)all information, materials and documents furnished by the Borrower and itsSubsidiaries to the Agent or the Banks (the "Disclosed Information").Notwithstanding the foregoing, the Agent and each Bank may disclose DisclosedInformation (i) to the Agent or any other Bank; (ii) to any Affiliate of anyBank in connection with the transactions contemplated hereby, provided that suchAffiliate has been informed of the confidential nature of such information;(iii) to legal counsel, accountants and other professional advisors to the Agentor such Bank; (iv) to any regulatory body having jurisdiction over any Bank orthe Agent; (v) to the extent required by applicable laws and regulations or byany subpoena or similar legal process, or requested by any governmental agencyor authority; (vi) to the extent such Disclosed Information (A) becomes publiclyavailable other than as a result of a breach of this Agreement, (B) becomesavailable to the Agent or such Bank on a non-confidential basis from a sourceother than the Borrower or a Subsidiary, or (C) was available to the Agent orsuch Bank on a non-confidential basis prior to its disclosure to the Agent orsuch Bank by the Borrower or a Subsidiary; (vii) to the extent the Borrower orsuch Subsidiary shall have consented to such disclosure in writing; (viii) tothe extent reasonably deemed necessary by the Agent or any Bank in theenforcement of the remedies of the Agent and the Banks provided under the LoanDocuments; or (ix) in connection with any potential assignment or participationin the interest granted hereunder, provided that any such potential assignee orparticipant shall have executed a confidentiality agreement imposing on suchpotential assignee or participant substantially the same obligations as areimposed on the Agent and the Banks under this Section 10.1. Furthermore, theBorrower acknowledges and agrees that KeyBank may, after the successfulsyndication of the Facility, share certain information relating to transactionscontemplated hereby with standard industry database companies (including LoanPricing Corporation and Standard & Poor’s Leveraged Commentary & Data) inaccordance with customary industry practice.

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Notwithstanding anything herein to the contrary, information subject to thisSection 10.1 shall not include, and the Agent and each Bank may disclose withoutlimitation of any kind, any information with respect to the "tax treatment" and"tax structure" (in each case, within the meaning of Treasury Regulation Section1.6011-4) of the transactions contemplated hereby and all materials of any kind(including opinions or other tax analyses) that are provided to the Agent orsuch Bank relating to such tax treatment and tax structure; provided that withrespect to any document or similar item that in either case contains informationconcerning the tax treatment or tax structure of the transaction as well asother information, this sentence shall only apply to such portions of thedocument or similar item that relate to the tax treatment or tax structure ofthe Advances and transactions contemplated hereby. The Borrower and itsSubsidiaries may also disclose without limitation the "tax treatment" and "taxstructure" 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 orremedy under the Loan Documents shall operate as a waiver thereof; nor shall anyBank’s acceptance of payments while any Default or Event of Default isoutstanding operate as a waiver of such Default or Event of Default, or anyright, power or remedy under the Loan Documents; nor shall any single or partialexercise of any such right, power or remedy preclude any other or furtherexercise thereof or the exercise of any other right, power or remedy under theLoan Documents. The rights, remedies, powers and privileges herein or thereinprovided are cumulative and not exclusive of any rights, remedies, powers andprivileges provided by law. Any decision by Agent or any Bank not to requirepayment of any interest (including interest due under Section 2.6(d)), fee, costor other amount payable under any Loan Document or to calculate any amountpayable by a particular method on any occasion shall in no way limit or bedeemed a waiver of the Agent’s or such Bank’s right to require full paymentthereof, or to calculate an amount payable by another method that is notinconsistent 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 anydeparture by the Borrower therefrom shall be effective unless the same shall bein writing and signed by the Required Banks (or by the Agent with the consent orat the request of the Required Banks), and any such waiver shall be effectiveonly 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.


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(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 toany other or further notice or demand in similar or other circumstances.

SECTION 10.4 TRANSMISSION, NOTICE AND EFFECTIVENESS OF COMMUNICATIONS ANDSIGNATURES.

(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.

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(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 costsand 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 documentsprepared in connection herewith or therewith, including the Commitment Letter,dated May 27, 2003, by and between KeyBank and the Borrower (including theattached Summary of Terms and Conditions dated May 27, 2003) and theconsummation and administration of the transactions contemplated hereby andthereby, including all reasonable attorney fees and costs, and (b) to pay orreimburse the Agent and each Bank for all costs and expenses incurred inconnection with any refinancing, restructuring, reorganization (including abankruptcy reorganization), collection and enforcement or attempted enforcement,or preservation of any rights under any Loan Documents, and any other documentsprepared in connection herewith or therewith, or in connection with anyrefinancing, or restructuring of any such documents in the nature of a "workout"or of any insolvency or bankruptcy proceeding, including attorney fees andcosts. The foregoing costs and expenses shall include all reasonableout-of-pocket expenses incurred by the Agent and the cost of independent publicaccountants and other outside experts retained by the Agent or any Bank. Suchcosts and expenses shall also include administrative costs of the Agentreasonably attributable to the administration of the Loan Documents. Any amountpayable by the Borrower under this Section shall bear interest from the secondBusiness Day following the date of demand for payment at the Default Rate,unless waived by the Agent. The agreements in this Section shall surviverepayment of all Obligations.

SECTION 10.6 INDEMNIFICATION BY BORROWER.

The Borrower hereby agrees to indemnify the Agent and the Banks and eachofficer, director, employee and agent thereof (herein individually each calledan "Indemnitee" and collectively called the "Indemnitees") from and against anyand all losses, claims, damages, reasonable

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expenses (including, without limitation, reasonable attorneys’ fees) andliabilities (all of the foregoing being herein called the "IndemnifiedLiabilities") incurred by an Indemnitee in connection with or arising out of theexecution or delivery of this Agreement or any agreement or instrumentcontemplated hereby, the performance by the parties hereto of their respectiveobligations hereunder or the use of the proceeds of any Advance hereunder(including but not limited to any such loss, claim, damage, expense or liabilityarising out of any claim that any Environmental Law has been breached withrespect to any activity or property of the Borrower), except for any portion ofsuch losses, claims, damages, expenses or liabilities incurred solely as aresult of the gross negligence or willful misconduct of the applicableIndemnitee. If and to the extent that the foregoing indemnity may beunenforceable for any reason, the Borrower hereby agrees to make the maximumcontribution to the payment and satisfaction of each of the IndemnifiedLiabilities which is permissible under applicable law. All obligations providedfor 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 anyassignee or participant of any Bank or any Affiliate thereof (each, a"Proceeding Party") provided by law, upon the occurrence and during thecontinuance of any Event of Default, each Proceeding Party is authorized at anytime and from time to time, without prior notice to the Borrower, any suchnotice being waived by the Borrower to the fullest extent permitted by law, toproceed directly, by right of set-off, banker’s lien, or otherwise, against anyassets of the Borrower which may be in the hands of such Proceeding Party(including all general or special, time or demand, provisional or other depositsand other indebtedness owing by such Proceeding Party to or for the credit orthe account of the Borrower) and apply such assets against the Obligations,irrespective of whether such Proceeding Party shall have made any demandtherefor and although such Obligations may be unmatured. Each Bank agreespromptly to notify the Borrower and the Agent after any such set-off andapplication made by such Bank; provided, however, that the failure to give suchnotice 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 Partyclaiming through it), through the exercise of any right of setoff, banker’s lienor counterclaim against the Borrower or otherwise, receives payment on accountof the Outstandings held by it that is ratably more than any other Bank receivesin payment on account of the Outstandings held by such other Bank, then, subjectto applicable Laws: (a) the Bank, which acting on its behalf or through anyProceeding Party, exercises the right of setoff, banker’s lien or counterclaimor otherwise receives such payment shall purchase, and shall be deemed to havesimultaneously purchased, from the other Bank a participation in theOutstandings held by the other Bank and shall pay to the other Bank a purchaseprice in an amount so that the share of the Outstandings held by each Bank afterthe exercise of the right of setoff, banker’s lien or counterclaim or receipt ofpayment shall be in the same proportion that existed prior to the exercise ofthe right of setoff, banker’s lien or counterclaim or receipt of payment; and(b) such other adjustments and purchases of participations shall be made fromtime to time as shall be equitable to ensure that all Banks share any paymentobtained in respect of the Outstandings ratably in accordance with each Bank’s

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share of the Outstandings immediately prior to, and without taking into account,the payment; provided that, if all or any portion of a disproportionate paymentobtained as a result of the exercise of the right of setoff, banker’s lien,counterclaim or otherwise is thereafter recovered from the purchasing Bank bythe Borrower or any Person claiming through or succeeding to the rights of theBorrower, the purchase of a participation shall be rescinded and the purchaseprice thereof shall be restored to the extent of the recovery, but withoutinterest. Each Bank that purchases a participation in the Outstandings pursuantto this Section shall from and after the purchase have the right to give allnotices, requests, demands, directions and other communications under thisAgreement with respect to the portion of the Outstandings purchased to the sameextent as though the purchasing Bank were the original owner of the Outstandingspurchased. The Borrower expressly consents to the foregoing arrangements andagrees that any lender holding a participation in an Obligation so purchased mayexercise any and all rights of setoff, banker’s lien or counterclaim withrespect to the participation as fully as if lender were the original owner ofthe Obligation purchased; provided that such lender agrees to be bound by theterms of this Section 10.8.

SECTION 10.9 USURY.

Notwithstanding anything to the contrary contained in any Loan Document, theinterest and fees paid or agreed to be paid under the Loan Documents shall notexceed 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 feein an amount that exceeds the Maximum Rate, the excessive interest or fee shallbe applied to the principal of the Outstandings or, if it exceeds the unpaidprincipal, refunded to the Borrower. In determining whether the interest or afee contracted for, charged, or received by the Agent or a Bank exceeds theMaximum Rate, such Person may, to the extent permitted by applicable law, (a)characterize any payment that is not principal as an expense, fee, or premiumrather than interest, (b) exclude voluntary prepayments and the effects thereof,and (c) amortize, prorate, allocate, and spread in equal or unequal parts thetotal 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 connectionherewith or therewith shall survive the execution and delivery thereof but shallterminate the later of (a) when the Commitments are terminated and (b) when noObligations remain outstanding under any Loan Document. Such representations andwarranties 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 agreementsreferred to herein, comprises the complete and integrated agreement of theparties on the subject matter hereof and supersedes all prior agreements,written or oral, including without limitation, the Commitment Letter, dated May27, 2003 by and between KeyBank and the Borrower (the "Commitment Letter") andthe Term Sheet dated May 27, 2003 relating to the Commitment

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Letter, on the subject matter hereof. In the event of any conflict between theprovisions of this Agreement and those of any other Loan Document, theprovisions of this Agreement shall control and govern; provided that theinclusion of supplemental rights or remedies in favor of the Agent or the Banksin any other Loan Document shall not be deemed a conflict with this Agreement.Each Loan Document was drafted with the joint participation of the respectiveparties thereto and shall be construed neither against nor in favor of anyparty, 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 theAgent, do, execute and deliver such further acts and documents as any Bank orthe Agent from time to time reasonably requires for the assuring and confirmingunto 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 forconvenience of reference only and are not part of this Agreement or the otherLoan 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 themeaning of the Code, or any successor statute thereto (a "Foreign Bank") shalldeliver to the Agent, prior to receipt of any payment subject to withholdingunder the Code (or after accepting an assignment of an interest herein), twoduly signed completed copies of either Form W-8BEN or any successor thereto(relating to such Person and entitling it to a complete exemption fromwithholding on all payments to be made to such Person by the Borrower pursuantto this Agreement) or Form W-8ECI or any successor thereto (relating to allpayments to be made to such Person by the Borrower pursuant to this Agreement)of the United States Internal Revenue Service or such other evidencesatisfactory to the Borrower and the Agent that no withholding under the federalincome tax laws is required with respect to such Person. Thereafter and fromtime to time, each such Person shall (a) promptly submit to the Agent suchadditional duly completed and signed copies of one of such forms (or suchsuccessor forms as shall be adopted from time to time by the relevant UnitedStates taxing authorities) as may then be available under then current UnitedStates laws and regulations to avoid, or such evidence as is satisfactory to theBorrower and the Agent of any available exemption from, United Stateswithholding taxes in respect of all payments to be made to such Person by theBorrower pursuant to this Agreement, and (b) take such steps as shall not bematerially disadvantageous to it, in the reasonable judgment of such Bank, andas may be reasonably necessary (including the re-designation of its LendingOffice) to avoid any requirement of applicable laws that the Borrower make anydeduction or withholding for taxes from amounts payable to such Person. If suchPersons fails to deliver the above forms or other documentation, then the Agentmay withhold from any interest payment to such Person

60

an amount equivalent to the applicable withholding tax imposed by Sections 1441and 1442 of the Code, without reduction. If any Governmental Authority assertsthat the Agent did not properly withhold any tax or other amount from paymentsmade in respect of such Person, such Person shall indemnify the Agent therefor,including all penalties and interest and costs and expenses (includingreasonable attorney fees and costs) of the Agent. The obligation of Banks underthis Section shall survive the payment of all Obligations and the resignation orreplacement of the Agent.

SECTION 10.16 NATURE OF BANK’S OBLIGATIONS.

Nothing contained in this Agreement or any other Loan Document and no actiontaken by the Agent or Banks or any of them pursuant hereto or thereto may, ormay be deemed to, make Banks a partnership, an association, a joint venture orother entity, either among themselves or with the Borrower or any Affiliate ofthe Borrower. Each Bank’s obligation to make any Advance pursuant hereto isseveral and not joint or joint and several, and in the case of the initialAdvance only is conditioned upon the performance by all other Banks of theirobligations to make the initial Advance. A default by any Bank will not increasethe 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 ofcounterparts, each of which when so executed and delivered shall be deemed to bean original and all of which counterparts of this Agreement or such other LoanDocument, as the case may be, taken together, shall constitute but one and thesame instrument.

SECTION 10.18 BINDING EFFECT, ASSIGNMENT.

The Loan Documents shall be binding upon and inure to the benefit of the theBorrower and the Banks and their respective successors and assigns, except thatthe Borrower shall not have the right to assign its rights thereunder or anyinterest 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 LAWPROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (WITHOUTREGARD TO THE CONFLICT OF LAWS PROVISIONS) OF THE STATE OF NEW YORK, BUT GIVINGEFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.

SECTION 10.20 SEVERABILITY OF PROVISIONS.

Any provision of this Agreement which is prohibited or unenforceable shall beineffective to the extent of such prohibition or unenforceability withoutinvalidating the remaining provisions hereof.

61

SECTION 10.21 CONSENT TO JURISDICTION.

EACH PARTY HERETO HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTIONOF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK, NEWYORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOANDOCUMENTS AND EACH PARTY HERETO HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS INRESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCHCOURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TOTHE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THATSUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THEAGENT, ANY BANK TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANYOTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY THE BORROWER AGAINST THE AGENT ORANY BANK OR ANY AFFILIATE OF THE AGENT OR ANY BANK INVOLVING, DIRECTLY ORINDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITHANY 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 JUDICIALPROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING INTORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTEDWITH 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 promptlyupon becoming aware of the same. Promptly following such notice, the Borrowerand the Banks shall negotiate in good faith in order to effect any adjustmentsto Sections 6.7 and 6.8 necessary to reflect the effects of such AccountingPractices Change.

SECTION 10.24 HEADINGS.

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

SECTION 10.25 NONLIABILITY OF BANKS.

The relationship between the Borrower on the one hand and the Banks and theAgent on the other hand shall be solely that of borrower and lender. Neither theAgent nor any Bank shall have any fiduciary responsibilities to the Borrower.Neither the Agent nor any Bank undertakes any responsibility to the Borrower toreview or inform the Borrower of any matter in connection with any phase of theBorrower’s business or operations. The Borrower agrees that neither the

62

Agent nor any Bank shall have liability to the Borrower (whether sounding intort, contract or otherwise) for losses suffered by the Borrower in connectionwith, arising out of, or in any way related to, the transactions contemplatedand the relationship established by the Loan Documents, or any act, omission orevent occurring in connection therewith, unless it is determined in a finalnon-appealable judgment by a court of competent jurisdiction that such lossesresulted from the gross negligence or willful misconduct of the party from whichrecovery is sought. Neither the Agent nor any Bank shall have any liability withrespect to, and the Borrower hereby waives, releases and agrees not to sue for,any special, indirect or consequential damages suffered by the Borrower inconnection with, arising out of, or in any way related to the Loan Documents orthe transactions contemplated thereby.


63

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

PUBLIC SERVICE COMPANY OF COLORADO, A COLORADO CORPORATION

By /s/ Benjamin G.S. Fowke III --------------------------------------- Its Vice President & Treasurer -----------------------------------


S-1

KEYBANK NATIONAL ASSOCIATION, AS ADMINISTRATIVE AGENT, LEAD ARRANGER, BOOK MANAGER AND AS A BANK

By /s/ Keven D. Smith --------------------------------------- Its Vice President -----------------------------------


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 -----------------------------------


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 -----------------------------------


S-4

EXHIBIT A


<TABLE><CAPTION> NAME COMMITMENT AMOUNT NOTICE ADDRESS------------------------------------------ ----------------- -----------------------------<S> <C> <C>Public Service Company of N/A Xcel Energy Inc. Colorado 800 Nicollet Mall, Suite 2900 Minneapolis, MN 55402 Attention: Mary Schell Telecopier: 612-215-5370-------------------------------------------------------------------------------------------------------KeyBank National Association, as $100,000,000 127 Public Square, 6th Floor Agent and a Bank Cleveland, OH 44114 Attention: Kathy A. Koenig Telecopier: 216-689-4981-------------------------------------------------------------------------------------------------------UBS AG, Cayman Islands Branch, $100,000,000 677 Washington Boulevard as a Bank Stamford, CT 06901 Attention: Marie Haddad Telecopier: 203-719-3888-------------------------------------------------------------------------------------------------------Credit Suisse First Boston, Cayman $100,000,000 Eleven Madison Avenue Islands Branch, as a Bank New York, NY 10010 Attention: Sarah Wu Telecopier: 212-325-8321-------------------------------------------------------------------------------------------------------</TABLE>

Exhibit A-1

EXHIBIT B

FORM OF NOTE_______________________ ___________, 200_

FOR VALUE RECEIVED, the undersigned (the "Borrower"), hereby promises to pay tothe order of ________________ (the "Bank") on the Facility Termination Date (asdefined 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 toBank 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 (asamended, restated, extended, supplemented or otherwise modified in writing fromtime to time, the "Agreement;" the terms defined therein being used herein astherein defined).

Borrower promises to pay interest on the unpaid principal amount of each Advancefrom the date of such Advance until such principal amount is paid in full, atsuch interest rates, and payable at such times as are specified in the CreditAgreement.

All payments of principal and interest shall be made to the Agent for theaccount of Bank in United States dollars in immediately available funds at theAgent’s designated payment office.

If any amount is not paid in full when due hereunder, such unpaid amount shallbear interest, to be paid upon demand, from the due date thereof until the dateof actual payment (and before as well as after judgment) computed at the perannum rate set forth in the Credit Agreement.

This Note is one of the "Notes" referred to in the Credit Agreement. Referenceis hereby made to the Credit Agreement for rights and obligations of payment andprepayment, events of default and the right of Bank to accelerate the maturityhereof upon the occurrence of such events. Advances made by Bank shall beevidenced by one or more loan accounts or records maintained by Bank in theordinary course of business. Bank may also attach schedules to this Note andendorse thereon the date, amount and maturity of its Advances and payments withrespect thereto.

Borrower, for itself, its successors and assigns, hereby waives diligence,presentment, protest and demand and notice of protest, demand, dishonor andnon-payment of this Note.

Borrower agrees to pay all collection expenses, court costs and attorney feesand costs (whether or not litigation is commenced) which may be incurred by Bankin 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 THESTATE OF NEW YORK.


By __________________________________

Its ________________________________

Exhibit B-2

EXHIBIT C


__________________________, ______

KeyBank National Association, for itself and as Agent under the Credit Agreement described below

The Banks, as defined under the Credit Agreement described below



Reference is made to the Credit Agreement dated June __, 2003 amongPublic Service Company of Colorado (the "Borrower"), KeyBank NationalAssociation, as Agent, and the Banks, as defined therein (the "CreditAgreement").

All terms defined in the Credit Agreement and not otherwise definedherein shall have the meanings given them in the Credit Agreement.

This is a Compliance Certificate submitted in connection with theBorrower’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.


(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, exceptas 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



<TABLE><S> <C>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.</TABLE>

Exhibit C-3



<TABLE><S> <C>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)</TABLE>

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 heretoagree as follows:

1. PRELIMINARY STATEMENT. The Assignor is a party to a CreditAgreement (which, as it may be amended, modified, renewed or extended from timeto time is herein called the "Credit Agreement") described in Item 1 of Schedule1 attached hereto ("Schedule 1"). Capitalized terms used herein and nototherwise defined herein shall have the meanings attributed to them in theCredit Agreement.

2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells andassigns to the Assignee, and the Assignee hereby purchases and assumes from theAssignor, an interest in and to the Assignor’s rights and obligations under theCredit Agreement and the other Loan Documents, such that after giving effect tosuch assignment the Assignee shall have purchased pursuant to this AssignmentAgreement the percentage interest specified in Item 3 of Schedule 1 of alloutstanding rights and obligations under the Credit Agreement and the other LoanDocuments relating to the facilities listed in Item 3 of Schedule 1. Theaggregate Commitment (or Advances, if the applicable Commitment has beenterminated) purchased by the Assignee hereunder is set forth in Item 4 ofSchedule 1.

3. EFFECTIVE DATE. The effective date of this AssignmentAgreement (the "Effective Date") shall be the later of the date specified inItem 5 of Schedule 1 or two Business Days (or such shorter period agreed to bythe Agent) after this Assignment Agreement, together with any consents requiredunder the Credit Agreement, are delivered to the Agent. In no event will theEffective Date occur if the payments required to be made by the Assignee to theAssignor on the Effective Date are not made on the proposed Effective Date.

4. PAYMENT OBLIGATIONS. In consideration for the sale andassignment of Advances hereunder, the Assignee shall pay the Assignor, on theEffective Date, the amount agreed to by the Assignor and the Assignee. On andafter the Effective Date, the Assignee shall be entitled to receive from theAgent all payments of principal, interest and fees with respect to the interestassigned hereby. The Assignee will promptly remit to the Assignor any intereston Advances and fees received from the Agent which relate to the portion of theCommitment or Advances assigned to the Assignee hereunder for periods prior tothe Effective Date and not previously paid by the Assignee to the Assignor. Inthe event that either party hereto receives any payment to which the other partyhereto is entitled under this Assignment Agreement, then the party receivingsuch amount shall promptly remit it to the other party hereto.

5. RECORDATION FEE. The Assignor and Assignee each agree to payone-half of the recordation fee required to be paid to the Agent in connectionwith this Assignment Agreement unless otherwise specified in Item 6 of Schedule1.

6. REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE ASSIGNOR’SLIABILITY. 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) suchinterest 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 isduly authorized. It is understood and agreed that the assignment and assumptionhereunder are made without recourse to the Assignor and that the Assignor makesno other representation or warranty of any kind to the Assignee. Neither theAssignor nor any of its officers, directors, employees, agents or attorneysshall 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 otherBanks a security interest in assets of the Borrower or any guarantor, (ii) anyrepresentation, warranty or statement made in or in connection with any of theLoan Documents, (iii) the financial condition or creditworthiness of theBorrower or any guarantor, (iv) the performance of or compliance with any of theterms or provisions of any of the Loan Documents, (v) inspecting any of theproperty, books or records of the Borrower, (vi) the validity, enforceability,perfection, priority, condition, value or sufficiency of any collateral securingor purporting to secure the Advances or (vii) any mistake, error of judgment, oraction taken or omitted to be taken in connection with the Advances or the LoanDocuments.

7. REPRESENTATIONS AND UNDERTAKINGS OF THE ASSIGNEE. The Assignee(i) confirms that it has received a copy of the Credit Agreement, together withcopies of the financial statements requested by the Assignee and such otherdocuments and information as it has deemed appropriate to make its own creditanalysis and decision to enter into this Assignment Agreement, (ii) agrees thatit will, independently and without reliance upon the Agent, the Assignor or anyother Bank and based on such documents and information at it shall deemappropriate at the time, continue to make its own credit decisions in taking ornot taking action under the Loan Documents, (iii) appoints and authorizes theAgent to take such action as agent on its behalf and to exercise such powersunder the Loan Documents as are delegated to the Agent by the terms thereof,together with such powers as are reasonably incidental thereto, (iv) confirmsthat the execution and delivery of this Assignment Agreement by the Assignee isduly authorized, (v) agrees that it will perform in accordance with their termsall of the obligations which by the terms of the Loan Documents are required tobe performed by it as a Bank, (vi) agrees that its payment instructions andnotice instructions are as set forth in the attachment to Schedule 1, (vii)confirms that none of the funds, monies, assets or other consideration beingused to make the purchase and assumption hereunder are "plan assets" as definedunder ERISA and that its rights, benefits and interests in and under the LoanDocuments will not be "plan assets" under ERISA, and (viii) agrees to indemnifyand hold the Assignor harmless against all losses, costs and expenses(including, without limitation, reasonable attorneys’ fees) and liabilitiesincurred by the Assignor in connection with or arising in any manner from theAssignee’s nonperformance of the obligations assumed under this AssignmentAgreement. The Assignee (a) represents and warrants to the Agent and theBorrower that under applicable law and treaties no tax will be required to bewithheld by the Agent or the Borrower with respect to any payments to be made tothe Assignee hereunder, (b) agrees to furnish (if it is organized under the lawsof any jurisdiction other than the United States or any State thereof) to theAgent and the Borrower prior to the time that the Agent or Borrower is requiredto make any payment of principal, interest or fees hereunder, duplicate executedoriginals of U.S. Internal Revenue Service Form W-8ECI or W-8BEN (or appropriatereplacement forms) and agrees to provide new Forms W-8ECI or W-BEN (orappropriate replacement forms) upon the expiration of any previously deliveredform or comparable statements in accordance with applicable U.S.

Exhibit E-2

law and regulations and amendments thereto, duly executed and completed by theAssignee and (c) agrees to comply with all applicable U.S. laws and regulationswith regard to such withholding tax exemption.

8. GOVERNING LAW. This Assignment Agreement shall be governed bythe internal law, and not the law of conflicts, of the State of New York.

9. NOTICES. Notices shall be given under this AssignmentAgreement in the manner set forth in the Credit Agreement. For the purposehereof, the addresses of the parties hereto (until notice of a change isdelivered) shall be the address set forth in the attachment to Schedule 1.

10. COUNTERPARTS; DELIVERY BY FACSIMILE. This Assignment Agreementmay be executed in counterparts. Transmission by facsimile of an executedcounterpart of this Assignment Agreement shall be deemed to constitute due andsufficient delivery of such counterpart and such facsimile shall be deemed to bean original counterpart of this Assignment Agreement.

IN WITNESS WHEREOF, the duly authorized officers of the parties heretohave executed this Assignment Agreement by executing Schedule 1 hereto as of thedate first above written.

Exhibit E-3

SCHEDULE 1

TO ASSIGNMENT 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___


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: ___________________


N/A*** [Assignor/Assignee to pay 100% of fee] [Fee waived by Agent]

Exhibit E-4


[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 NATIONALCOMPANY OF COLORADO ASSOCIATION, as Agent

By:_______________________________ By:___________________________Title_____________________________ Title_________________________




Exhibit E-6



Attach Assignor’s Administrative Information Sheet, which must include notice addresses for the Assignor and the Assignee (Sample form shown below)


CONTACT:

Name:___________________________ Telephone No.:____________________Fax No.:________________________ Telex No.:________________________ Answerback:_______________________


Name & ABA # of Destination Bank: __________________________________Account Name & Number for Wire Transfer: __________________________________ __________________________________

Other Instructions:_____________________________________________________________

ADDRESS FOR NOTICES FOR ASSIGNOR: ____________________________


CREDIT CONTACT:

Name:___________________________ Telephone No.:____________________Fax No.:________________________ Telex No.:________________________ Answerback:_______________________

Exhibit E-7

KEY OPERATIONS CONTACTS:





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:


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


________________________, 200__

KeyBank National Association for itself and as Agent under the Credit Agreement described below[street][city, state, zip]


RE: $300,000,000 PUBLIC SERVICE COMPANY OF COLORADO CREDIT FACILITY


Reference is made to the Credit Agreement dated June __, 2003 (togetherwith all amendments, modifications and restatements thereof, the "CreditAgreement") among Public Service Company of Colorado (the "Borrower"), KeyBankNational Association, as Agent, and Banks that are parties thereto. As usedherein, terms defined in the Credit Agreement and not otherwise defined hereinhave the meanings given them in the Credit Agreement.

The Borrower has requested a Borrowing to be made under Section 2.1 ofthe 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 Borrowerand I am authorized to execute and deliver this Certificate to the Agent on thebehalf of Borrower. I hereby further certify that the Borrowing requested by theBorrower (i) has been duly authorized by the Borrower’s board of directorspursuant to its resolution dated ________________, (ii) has been duly authorizedby the Public Utilities Commission of the State of Colorado pursuant to itsorder dated _______________________ [** alternate for clause (ii): does not andwill not require any authorization, consent or approval of the Public UtilitiesCommission of the State of Colorado], (iii) does not and will not require anyother authorization, consent or approval by any governmental department,commission, board, bureau, agency or instrumentality, domestic or foreign, otherthan those that have been obtained, copies of which have been delivered to theAgent pursuant to Section 5.1(d) and (iv) will be used solely for the purpose ofpayment toward the PSCo 8-3/4% First Mortgage Bonds and the PSCo Capital Trust ISecurities.

Exhibit F-1

I further certify to you that the Borrowing requested by the Borrowercomplies with all applicable requirements of each board resolution and theauthorization of the Public Utilities Commission of the State of Coloradodescribed above, including but not limited to any applicable limitation on theaggregate amount of debt that the Borrower may have outstanding at any one time.


By____________________________________ Its_________________________________

Exhibit F-2

Attachment 1 to Borrowing CertificateTerms 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




Reference is made to the Credit Agreement dated June __, 2003 amongPublic Service Company of Colorado (the "Borrower"), KeyBank NationalAssociation, as Agent, and the Banks, as defined therein (the "CreditAgreement").

All terms defined in the Credit Agreement and not otherwise definedherein shall have the meanings given them in the Credit Agreement.

This is a Compliance Certificate submitted in connection with thePledged Securities being delivered by Borrower to the Agent in accordance withSection 7.3 of the Credit Agreement.


(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, exceptas 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, dependingupon the characterization of the Borrowings under the Agreement, may be requiredand 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


SCHEDULE 4.7

LITIGATION

1. See disclosure regarding legal proceedings of the Borrower in (i) Note13 to the Consolidated Financial Statements contained in the Borrower’s AnnualReport 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 thequarter 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 UtilityRegulation - Fuel, Purchased Gas and Resource Adjustment Clauses - PSCo in Item1 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 headingPSCo General Rate Case in footnote 3 to the financial statements in the 3/31/03Form 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 headingPSCo 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 apreliminary hearing to determine whether there may have been unjust andunreasonable charges for spot market bilateral sales in the Pacific Northwestfor the period December 25, 2000 through June 20, 2001. We supplied energy tothe Pacific Northwest markets during this period and have been

an active participant in the hearings. In September 2001, the presidingadministrative law judge concluded that prices in the Pacific Northwest duringthe referenced period were the result of a number of factors, including theshortage of supply, excess demand, drought and increased natural gas prices.Under these circumstances the administrative law judge concluded that the pricesin the Pacific Northwest markets were not unreasonable or unjust and no refundsshould be ordered. Subsequent to the ruling the FERC has allowed the parties torequest additional evidence regarding the use of certain strategies and how theymay have impacted the markets in the Pacific Northwest markets. For thereferenced period parties have claimed the total amount of transactions with ussubject to refund are $34 million.

On March 26, 2003, the FERC at its open meeting discussed thisproceeding. While the action that the FERC plans to take cannot be definitivelyascertained from that discussion, it appears that the FERC may conduct furtherproceedings to determine whether spot-market bilateral sales in the PacificNorthwest should be subject to refund.

If the proceedings before the FERC or the CPUC are not resolved in our favor, orif the CPUC, for any reason, does not grant us, in a timely manner, theincreases we have requested or does not approve the settlement agreement orissue a final rate order with new rates that are consistent with those providedfor in the settlement agreement, this could have a negative impact on ourfinancial condition and results of operations.

SCHEDULE 4.8


See disclosure regarding environmental contingencies of the Borrower in (i) Note13 to the Consolidated Financial Statements contained in the 2002 Form 10-K and(ii) the 3/31/03 Form 10-Q.

SCHEDULE 4.22


1. See disclosure regarding legal proceedings of the Borrower in (i) Note13 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 UtilityRegulation - Fuel, Purchased Gas and Resource Adjustment Clauses - PSCo in Item1 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 PSCoGeneral Rate Case in footnote 3 to the financial statements in the 3/31/03 Form10-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 headingPSCo 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 apreliminary hearing to determine whether there may have been unjust andunreasonable charges for spot market bilateral sales in the Pacific Northwestfor the period December 25, 2000 through June 20, 2001. We supplied energy tothe Pacific Northwest markets during this period and have been an activeparticipant in the hearings. In September 2001, the presiding administrative lawjudge concluded that prices in the Pacific Northwest during the referencedperiod 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 judgeconcluded that the prices in the Pacific Northwest markets were not unreasonableor unjust and no refunds should be ordered. Subsequent to the ruling the FERChas allowed the parties to request additional evidence regarding the use ofcertain strategies and how they may have impacted the markets in the PacificNorthwest markets. For the referenced period parties have claimed the totalamount of transactions with us subject to refund are $34 million.

On March 26, 2003, the FERC at its open meeting discussed thisproceeding. While the action that the FERC plans to take cannot be definitivelyascertained from that discussion, it appears that the FERC may conduct furtherproceedings to determine whether spot-market bilateral sales in the PacificNorthwest should be subject to refund.

If the proceedings before the FERC or the CPUC are not resolved in our favor, orif the CPUC, for any reason, does not grant us, in a timely manner, theincreases we have requested or does not approve the settlement agreement orissue a final rate order with new rates that are consistent with those providedfor in the settlement agreement, this could have a negative impact on ourfinancial condition and results of operations.

SCHEDULE 6.1

LIENS

NONE.

TABLE OF CONTENTS

<TABLE><CAPTION> PAGE<S> <C>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</TABLE>

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TABLE OF CONTENTS (continued)<TABLE><CAPTION> PAGE<S> <C> 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</TABLE>

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<TABLE><CAPTION> PAGE<S> <C>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</TABLE>

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<TABLE><CAPTION> PAGE<S> <C> 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</TABLE>

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TABLE OF CONTENTS

EXHIBITS AND SCHEDULESExhibit A Commitment Amounts and AddressesExhibit B NoteExhibit C Compliance CertificateExhibit D Opinion of Borrower’s CounselExhibit E Assignment CertificateExhibit F Borrowing CertificateExhibit G Pledged Securities Compliance Certificate

Schedule 4.2 ConsentsSchedule 4.4 SubsidiariesSchedule 4.7 LitigationSchedule 4.8 Environmental MattersSchedule 4.22 Compliance with LawsSchedule 6.1 Liens

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Exhibit 31.01 — Certifications

I, Wayne H. Brunetti, certify that:

Date: Aug. 14, 2003

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 tomake the statements made, in light of the circumstances under which such statements were made, not misleading with respect to theperiod covered by this report;

3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all materialrespects 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 (asdefined 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 oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to usby 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 aboutthe effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on suchevaluation; and

c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’smost recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or isreasonably 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 financialreporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalentfunction):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably 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’sinternal control over financial reporting.

/s/ WAYNE H. BRUNETTI

Wayne H. BrunettiChairman, President and Chief Executive Officer

I, Richard C. Kelly, certify that:

Date: Aug. 14, 2003

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 tomake the statements made, in light of the circumstances under which such statements were made, not misleading with respect to theperiod covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all materialrespects 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 (asdefined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:










I, Michael L. Swenson, certify that:

Date: Aug. 14, 2003

1. I have reviewed this quarterly report on Form 10-Q of NSP-Wisconsin;










/s/ MICHAEL L. SWENSON

Michael L. SwensonPresident and Chief Executive Officer


Date: Aug. 14, 2003

1. I have reviewed this quarterly report on Form 10-Q of NSP-Wisconsin;













I, Wayne H. Brunetti certify that:

Date: Aug. 14, 2003

1. I have reviewed this quarterly report on Form 10-Q of PSCo;













Date: Aug. 14, 2003

1. I have reviewed this quarterly report on Form 10-Q of PSCo;













I, Gary L. Gibson, certify that:

Date: Aug. 14, 2003

1. I have reviewed this quarterly report on Form 10-Q of SPS;










/s/ GARY L. GIBSON

Gary L. GibsonPresident and Chairman


Date: Aug. 14, 2003

1. I have reviewed this quarterly report on Form 10-Q of SPS;












Exhibit 32.01 — Officer Certification

CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of NSP-Minnesota on Form 10-Q for the quarter ended June 30, 2003, as filed with the Securitiesand Exchange Commission on the date hereof (Form 10-Q), each of the undersigned officers of the NSP-Minnesota certifies, pursuant to 18U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to such officer’s knowledge:

(1) The Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations ofXcel Energy as of the dates and for the periods expressed in the Form 10-Q.

Date: Aug. 14, 2003

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as aseparate disclosure document.

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwiseadopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has beenprovided to NSP-Minnesota and will be retained by NSP-Minnesota and furnished to the Securities and Exchange Commission or its staff uponrequest.








In connection with the Quarterly Report of NSP-Wisconsin on Form 10-Q for the quarter ended June 30, 2003, as filed with the Securitiesand Exchange Commission on the date hereof (Form 10-Q), each of the undersigned officers of the NSP-Wisconsin certifies, pursuant to 18U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to such officer’s knowledge:



Date: Aug. 14, 2003


A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwiseadopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has beenprovided to NSP-Wisconsin and will be retained by NSP-Wisconsin and furnished to the Securities and Exchange Commission or its staff uponrequest.

/s/ MICHAEL L. SWENSON

Michael L. SwensonPresident and Chief Executive Officer






In connection with the Quarterly Report of PSCo on Form 10-Q for the quarter ended June 30, 2003, as filed with the Securities andExchange Commission on the date hereof (Form 10-Q), each of the undersigned officers of the PSCo certifies, pursuant to 18 U.S.C.Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to such officer’s knowledge:



Date: Aug. 14, 2003


A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwiseadopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has beenprovided to PSCo and will be retained by PSCo and furnished to the Securities and Exchange Commission or its staff upon request.








In connection with the Quarterly Report of SPS on Form 10-Q for the quarter ended June 30, 2003, as filed with the Securities andExchange Commission on the date hereof (Form 10-Q), each of the undersigned officers of the SPS certifies, pursuant to 18 U.S.C.Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to such officer’s knowledge:


(2) The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operationsof Xcel Energy as of the dates and for the periods expressed in the Form 10-Q.

Date: Aug. 14, 2003


A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwiseadopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has beenprovided to SPS and will be retained by SPS and furnished to the Securities and Exchange Commission or its staff upon request.

/s/ GARY L. GIBSON

Gary L. GibsonPresident and Chairman



Exhibit 99.01Utility Subsidiaries of Xcel Energy Cautionary Factors

The Private Securities Litigation Reform Act provides a “safe harbor” for forward-looking statements to encourage such disclosures withoutthe threat of litigation, providing those statements are identified as forward-looking and are accompanied by meaningful, cautionary statementsidentifying important factors that could cause the actual results to differ materially from those projected in the statement. Forward-lookingstatements are made in written documents and oral presentations of the Utility Subsidiaries of Xcel Energy. These statements are based onmanagement’s beliefs as well as assumptions and information currently available to management. When used in the Utility Subsidiaries ofXcel Energy’s documents or oral presentations, the words “anticipate,” “estimate,” “expect,” “projected,” objective,” “outlook,” “forecast,”“possible,” “potential” and similar expressions are intended to identify forward-looking statements. In addition to any assumptions and otherfactors referred to specifically in connection with such forward-looking statements, factors that could cause the actual results of the UtilitySubsidiaries of Xcel Energy to differ materially from those contemplated in any forward-looking statements include, among others, thefollowing:

• Economic conditions, including inflation rates and monetary fluctuations;

• The risk of a significant slowdown in growth or decline in the U.S. economy, the risk of delay in growth recovery in the U.S.economy or the risk of increased cost for insurance premiums, security and other items as a consequence of the Sept. 11, 2001,terrorist attacks;

• Trade, monetary, fiscal, taxation and environmental policies of governments, agencies and similar organizations in geographic areaswhere the Utility Subsidiaries of Xcel Energy have a financial interest;

• Customer business conditions, including demand for their products or services and supply of labor and materials used in creatingtheir products and services;

• Financial or regulatory accounting principles or policies imposed by the Financial Accounting Standards Board, the SEC, the FederalEnergy Regulatory Commission and similar entities with regulatory oversight;

• Availability or cost of capital such as changes in: interest rates; market perceptions of the utility industry, Xcel Energy or any of itssubsidiaries; or security ratings;

• Factors affecting utility and nonutility operations such as unusual weather conditions; catastrophic weather-related damage;unscheduled generation outages, maintenance or repairs; unanticipated changes to fossil fuel, nuclear fuel or natural gas supply costsor availability due to higher demand, shortages, transportation problems or other developments; nuclear or environmental incidents;or electric transmission or natural gas pipeline constraints;

• Employee workforce factors, including loss or retirement of key executives, collective bargaining agreements with union employees,or work stoppages;

• Increased competition in the utility industry;

• State, federal and foreign legislative and regulatory initiatives that affect cost and investment recovery, have an impact on ratestructures and affect the speed and degree to which competition enters the electric and natural gas markets; industry restructuringinitiatives; transmission system operation and/or administration initiatives; recovery of investments made under traditionalregulation; nature of competitors entering the industry; retail wheeling; a new pricing structure; and former customers entering thegeneration market;

• Rate-setting policies or procedures of regulatory entities, including environmental externalities, which are values established byregulators assigning environmental costs to each method of electricity generation when evaluating generation resource options;

• Nuclear regulatory policies and procedures, including operating regulations and spent nuclear fuel storage;

• Social attitudes regarding the utility and power industries;

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

• Cost and other effects of legal and administrative proceedings, settlements, investigations and claims;

• Technological developments that result in competitive disadvantages and create the potential for impairment of existing assets;

• Factors associated with nonregulated investments, including conditions of final legal closing, foreign government actions, foreigneconomic and currency risks, political instability in foreign countries, partnership actions, competition, operating risks, dependence

The Utility Subsidiaries of Xcel Energy undertake no obligation to publicly update or revise any forward-looking statements, whether as aresult of new information, future events or otherwise. The foregoing review of factors should not be construed as exhaustive.

on certain suppliers and customers, domestic and foreign environmental and energy regulations; and

• Other business or investment considerations that may be disclosed from time to time in the SEC filings of the Utility Subsidiaries ofXcel Energy or in other publicly disseminated written documents.

xcel energy 10q 2q03_util

Economy & Finance