Exhibit 10.11.2

 

GRAPHIC [g289431kf01i001.gif]

 

U.S. $125,000,000

 

TERM LOAN AGREEMENT

 

Dated as of November 29, 2012

 

among

 

PINNACLE WEST CAPITAL CORPORATION,

as Borrower,

 

THE LENDERS PARTY HERETO,

 

JPMORGAN CHASE BANK, N.A.,

as Agent,

 

SUNTRUST BANK,

as Syndication Agent,

 

U.S. BANK NATIONAL ASSOCIATION,

as Documentation Agent,

 

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J.P. MORGAN SECURITIES LLC,

SUNTRUST ROBINSON HUMPHREY, INC.,

and

U.S. BANK NATIONAL ASSOCIATION,

 

as Joint Lead Arrangers and as Joint Bookrunners

 

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TABLE OF CONTENTS

 

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

1

 

 

 

Section 1.01

Certain Defined Terms

1

Section 1.02

Other Interpretive Provisions

14

Section 1.03

Accounting Terms

14

Section 1.04

Rounding

15

Section 1.05

Times of Day

15

 

 

 

ARTICLE II

AMOUNTS AND TERMS OF THE LOANS

15

 

 

 

Section 2.01

The Loans

15

Section 2.02

Making the Loans

15

Section 2.03

Agent’s Fees

17

Section 2.04

Repayment of Loans

17

Section 2.05

Interest on Loans

17

Section 2.06

Interest Rate Determination

18

Section 2.07

Optional Conversion of Loans

19

Section 2.08

Prepayments of Loans

19

Section 2.09

Increased Costs

20

Section 2.10

Illegality

21

Section 2.11

Payments and Computations

21

Section 2.12

Taxes

22

Section 2.13

Sharing of Payments, Etc.

26

Section 2.14

Evidence of Debt

27

Section 2.15

Use of Proceeds

28

Section 2.16

Affected Lenders

28

Section 2.17

Replacement of Lenders

28

 

 

 

ARTICLE III

CONDITIONS PRECEDENT

29

 

 

 

Section 3.01

Conditions Precedent to Effectiveness

29

Section 3.02

Determinations Under Section 3.01

30

 

 

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

31

 

 

 

Section 4.01

Representations and Warranties of the Borrower

31

 

 

 

ARTICLE V

COVENANTS OF THE BORROWER

34

 

 

 

Section 5.01

Affirmative Covenants

34

Section 5.02

Negative Covenants

37

Section 5.03

Financial Covenant

38

 

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ARTICLE VI

EVENTS OF DEFAULT

38

 

 

 

Section 6.01

Events of Default

38

 

 

 

ARTICLE VII

THE AGENT

40

 

 

 

Section 7.01

Appointment and Authority

40

Section 7.02

Rights as a Lender

41

Section 7.03

Exculpatory Provisions

41

Section 7.04

Reliance by Agent

42

Section 7.05

Delegation of Duties

42

Section 7.06

Resignation of Agent

42

Section 7.07

Non-Reliance on Agent and Other Lenders

43

Section 7.08

No Other Duties, Etc.

43

 

 

 

ARTICLE VIII

MISCELLANEOUS

43

 

 

 

Section 8.01

Amendments, Etc.

43

Section 8.02

Notices, Etc.

44

Section 8.03

No Waiver; Cumulative Remedies; Enforcement

46

Section 8.04

Costs and Expenses; Indemnity; Damage Waiver

46

Section 8.05

Right of Set-off

48

Section 8.06

Effectiveness; Binding Effect

48

Section 8.07

Successors and Assigns

49

Section 8.08

Confidentiality

52

Section 8.09

Governing Law

53

Section 8.10

Counterparts; Integration

53

Section 8.11

Jurisdiction, Etc.

53

Section 8.12

Payments Set Aside

53

Section 8.13

Patriot Act

54

Section 8.14

Waiver of Jury Trial

54

Section 8.15

No Advisory or Fiduciary Responsibility

54

Section 8.16

Survival of Representations and Warranties

55

Section 8.17

Severability

55

 

 

 

Schedules

 

 

 

 

 

Schedule 1.01

Commitments and Ratable Shares

 

Schedule 4.01(j)

Subsidiaries

 

Schedule 4.01(k)

Existing Indebtedness

 

Schedule 8.02

Certain Addresses for Notices

 

 

 

 

Exhibits

 

 

 

 

 

Exhibit A

Form of Note

 

Exhibit B

Form of Notice of Initial Borrowing

 

Exhibit C

Form of Assignment and Assumption

 

Exhibit D

Form of Interest Election Request

 

 

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TERM LOAN AGREEMENT

 

Dated as of November 29, 2012

 

PINNACLE WEST CAPITAL CORPORATION, an Arizona corporation (the “Borrower”), the
banks, financial institutions and other institutional lenders (the “Initial
Lenders”) listed on the signature pages hereof, SUNTRUST BANK, as Syndication
Agent, U.S. BANK NATIONAL ASSOCIATION, as Documentation Agent, and JPMORGAN
CHASE BANK, N.A., as Agent for the Lenders (as hereinafter defined), agree as
follows:

 

The Borrower has requested that the Lenders provide a $125,000,000 term loan
facility for the purposes set forth herein, and the Lenders are willing to do so
on the terms and conditions set forth herein.

 

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

 

ARTICLE I

 

DEFINITIONS AND ACCOUNTING TERMS

 

Section 1.01          Certain Defined Terms.  As used in this Agreement, the
following terms shall have the following meanings:

 

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

 

“Affected Lender” means any Lender, as reasonably determined by the Agent or, if
the Agent is the Affected Lender, by the Required Lenders, that (a) has failed
to (i) fund all or any portion of its Loans or (ii) pay to the Agent or any
other Lender any other amount required to be paid by it under this Agreement,
(b) has notified the Borrower, the Agent or any Lender in writing of its
intention not to fund a Loan or any of its other funding obligations under this
Agreement, (c) has failed, within three Business Days after written request by
the Agent, or, if the Agent is the Affected Lender, by the Required Lenders, to
confirm that it will comply with the terms of this Agreement relating to its
obligations to fund a Loan or (d) shall (or whose parent company shall)
generally not pay its debts as such debts become due, or shall admit in writing
its inability to pay its debts generally, or shall make a general assignment for
the benefit of creditors; or shall have had any proceeding instituted by or
against such Lender (or its parent company) seeking to adjudicate it as bankrupt
or insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee, administrator, assignee for the benefit of creditors or similar Person
charged with reorganization or liquidation of its business or custodian for it
or for any substantial part of its property and, in the case of any such
proceeding instituted against it (but not instituted by it), either such
proceeding shall remain undismissed or unstayed for a period of 30 days, or any
of the actions sought in such proceeding (including, without limitation, the
entry of an order for relief against, or the appointment of a

 

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receiver, trustee, administrator, assignee for the benefit of creditors or
similar Person charged with reorganization or liquidation of its business or
custodian for, it or for any substantial part of its property) shall occur, or
shall take (or whose parent company shall take) any corporate action to
authorize any of the actions set forth above in this subsection (d), provided
that a Lender shall not be deemed to be an Affected Lender solely by virtue of
the ownership or acquisition of any equity interest in such Lender or any Person
that directly or indirectly controls such Lender by a Governmental Authority or
an instrumentality thereof.

 

“Affiliate” means, as to any Person, any other Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person or is a director or officer of such Person.  For purposes of this
definition, the term “control” (including the terms “controlling”, “controlled
by” and “under common control with”) of a Person means the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of Voting Stock, by
contract or otherwise.

 

“Agent” means JPMorgan Chase Bank, N.A., in its capacity as administrative agent
under any of the Loan Documents, or any successor administrative agent.

 

“Agent’s Account” means the account of the Agent designated as such by the Agent
to the Lenders and the Borrower from time to time.

 

“Agent’s Office” means the Agent’s address specified in Section 8.02(a) and, as
appropriate, the Agent’s Account, or such other address or account as the Agent
may from time to time notify to the Borrower and the Lenders.

 

“Agreement” means this Term Loan Agreement, dated as of November 29, 2012, among
the Borrower, the Lenders named herein and from time to time party hereto, the
Syndication Agent, the Documentation Agent and the Agent, together with all
schedules and exhibits hereto.

 

“Applicable Lending Office” means, with respect to each Lender, such Lender’s
Domestic Lending Office in the case of a Base Rate Loan and such Lender’s
Eurodollar Lending Office in the case of a Eurodollar Rate Loan.

 

“Applicable Rate” means, from time to time, the following percentages per annum
determined by reference to the Public Debt Rating as set forth below:

 

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Public Debt Rating
S&P/Moody’s

 

Base Rate Loan

 

Eurodollar Rate Loan

 

Level 1
> A-/A3

 

0.000

%

0.875

%

Level 2
< Level 1 but
> BBB+/Baa1

 

0.000

%

1.000

%

Level 3
< Level 2 but
> BBB/Baa2

 

0.100

%

1.100

%

Level 4
< Level 3 but
> BBB-/Baa3

 

0.250

%

1.250

%

Level 5
< Level 4

 

0.500

%

1.500

%

 

“Approved Fund” means any Fund that is administered or managed by (a) a Lender,
(b) an Affiliate of a Lender or (c) an entity or an Affiliate of any entity that
administers or manages a Lender.

 

“APS” means Arizona Public Service Company, an Arizona corporation.

 

“Arrangers” means each of J.P. Morgan Securities LLC, SunTrust Robinson
Humphrey, Inc., and U.S. Bank National Association, together with their
successors and assigns.

 

“Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an Eligible Assignee, and accepted by the Agent, in substantially the
form of Exhibit C hereto.

 

“Authorized Officer” means the chairman of the board, chief executive officer,
chief operating officer, chief financial officer, chief accounting officer,
president, any vice president, treasurer, controller or any assistant treasurer
of the Borrower.

 

“Base Rate” means for any day a rate per annum equal to the greatest of (a) the
Prime Rate in effect on such day, (b) the Federal Funds Rate in effect on such
day plus ½ of 1.00% and (c) the Eurodollar Rate for a one month Interest Period
on such day (or if such day is not a Business Day, the immediately preceding
Business Day) plus 1.00%, provided that, for the avoidance of doubt, the
Eurodollar Rate for any day shall be based on the rate appearing on Reuters
Screen LIBOR01 Page (or on any successor or substitute page of such service) at
approximately 11:00 a.m. London time on such day.  Any change in the Base Rate
due to a change in the Prime Rate, the Federal Funds Rate or the Eurodollar Rate
shall be effective from and including the effective date of such change in the
Prime Rate, the Federal Funds Rate or the Eurodollar Rate, respectively.

 

“Base Rate Loan” means a Loan that bears interest as provided in
Section 2.05(a)(i).

 

“Borrower” has the meaning given to such term in the introductory paragraph
hereof.

 

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“Borrower Information” has the meaning specified in Section 8.08.

 

“Borrowing” means Loans of the same Type that are made, Converted or continued
on the same date and, in the case of Eurodollar Rate Loans, as to which a single
Interest Period is in effect.

 

“Business Day” means a day of the year on which banks are not required or
authorized by Law to close in New York, New York or Phoenix, Arizona and, if the
applicable Business Day relates to any Loan in which interest is calculated by
reference to the Eurodollar Rate, on which dealings are carried on in the London
interbank market.

 

“Capital Lease” means, at any time, a lease with respect to which the lessee is
required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.

 

“Capital Lease Obligations” means as to any Person, the obligations of such
Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) real and/or personal property, which obligations are
required to be classified and accounted for as a Capital Lease on the balance
sheet of such Person under GAAP and, for the purposes of this Agreement, the
amount of such obligations shall be the capitalized amount thereof, determined
in accordance with GAAP.

 

“Change in Law” means the occurrence, after the date of this Agreement, of any
of the following:  (a) the adoption of any Law, (b) any change in any Law or in
the administration, interpretation or application thereof by any Governmental
Authority or (c) the making or issuance of any request, guideline or directive
(whether or not having the force of law) by any Governmental Authority;
provided, however, that notwithstanding anything herein to the contrary, (i) the
Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests,
rules, guidelines, requirements and directives thereunder, issued in connection
therewith or in implementation thereof, and (ii) all requests, rules,
guidelines, requirements and directives promulgated by the Bank for
International Settlements, the Basel Committee on Banking Supervision (or any
successor or similar authority) or the United States or foreign regulatory
authorities, in each case pursuant to Basel III, shall in each case be deemed to
a “Change in Law” regardless of the date enacted, adopted, issued or
implemented.

 

“Commitment” means, as to any Lender, its obligation to make a Loan to the
Borrower pursuant to Section 2.01, in an aggregate principal amount not to
exceed the amount set forth opposite such Lender’s name on Schedule 1.01 under
the column “Commitment”. “Commitments” means the total of the Lenders’
Commitments hereunder.  The Commitments shall in no event exceed $125,000,000.

 

“Consolidated” refers to the consolidation of accounts in accordance with GAAP.

 

“Consolidated Indebtedness” means, at any date, the Indebtedness of the Borrower
and its Consolidated Subsidiaries determined on a Consolidated basis as of such
date; provided, however, that so long as the creditors of the VIE Lessor Trusts
have no recourse to the assets of APS or the Borrower, “Consolidated
Indebtedness” shall not include any Indebtedness or other obligations of the VIE
Lessor Trusts.

 

4

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“Consolidated Net Worth” means, at any date, the sum as of such date of (a) the
par value (or value stated on the books of the Borrower) of all classes of
capital stock of the Borrower and its Subsidiaries, excluding the Borrower’s
capital stock owned by the Borrower and/or its Subsidiaries, plus (or minus in
the case of a surplus deficit) (b) the amount of the Consolidated surplus,
whether capital or earned, of the Borrower, determined in accordance with GAAP
as of the end of the most recent calendar month (excluding the effect on the
Borrower’s accumulated other comprehensive income/loss of the ongoing
application of Accounting Standards Codification Topic 815).

 

“Consolidated Subsidiary” means, at any date, any Subsidiary or other entity the
accounts of which would be Consolidated with those of the Borrower on its
Consolidated financial statements if such financial statements were prepared as
of such date; provided that in no event will Consolidated Subsidiaries include
the VIE Lessor Trusts.

 

“Convert”, “Conversion” and “Converted” each refers to a conversion of Loans of
one Type into Loans of the other Type pursuant to Section 2.06, Section 2.07 or
Section 2.10.

 

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

 

“Default” means any Event of Default or any event that would constitute an Event
of Default but for the requirement that notice be given or time elapse or both.

 

“Documentation Agent” means U.S. Bank National Association in its capacity as
documentation agent for the Lenders.

 

“Dollars” or “$” means dollars of the United States of America.

 

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

 

“Effective Date” has the meaning specified in Section 3.01.

 

“Eligible Assignee” means any Person that meets the requirements to be an
assignee under Section 8.07(b)(iii), (v) and (vi) (subject to such consents, if
any, as may be required under Section 8.07(b)(iii)).

 

“Environmental Action” means any action, suit, demand, demand letter, claim,
notice of non-compliance or violation, notice of liability or potential
liability, investigation, proceeding, consent order or consent agreement
relating in any way to any Environmental Law, Environmental Permit or Hazardous
Materials or arising from alleged injury or threat of injury to health, safety
or the environment and relating to any Environmental Law, including, without
limitation, (a) by any Governmental Authority for enforcement, cleanup, removal,
response,

 

5

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remedial or other actions or damages and (b) by any Governmental Authority or
any third party for damages, contribution, indemnification, cost recovery,
compensation or injunctive relief.

 

“Environmental Law” means any federal, state, local or foreign statute, law,
ordinance, rule, regulation, code, order, judgment, decree or judicial or agency
interpretation, policy or guidance relating to pollution or protection of the
environment, natural resources or, to the extent relating to exposure to
Hazardous Materials, human health or safety, including, without limitation,
those relating to the use, handling, transportation, treatment, storage,
disposal, release or discharge of Hazardous Materials.

 

“Environmental Permit” means any permit, approval, identification number,
license or other authorization required under any Environmental Law.

 

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

 

“ERISA Affiliate” means any trade or business (whether or not incorporated)
under common control with the Borrower within the meaning of Section 414(b) or
(c) of the Internal Revenue Code (and Sections 414(m) and (o) of the Internal
Revenue Code for purposes of provisions relating to Section 412 or 430 of the
Internal Revenue Code).

 

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

 

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

 

“Eurodollar Rate” means , with respect to any Eurodollar Rate Loan for any
Interest Period, the rate appearing on Reuters Screen LIBOR01 Page (or on any
successor or substitute page of such service, or any successor to or substitute
for such service, providing rate quotations comparable to those currently
provided on such page of such service, as determined by the Agent from time to
time for purposes of providing quotations of interest rates applicable to
deposits in U.S. Dollars in the London interbank market) at approximately
11:00 a.m., London time, two (2) Business Days prior to the commencement of such
Interest Period, as the rate for deposits in U.S. Dollars with a maturity
comparable to such Interest Period.  In the event that such rate is not
available at such time for any reason, then the “Eurodollar Rate” with respect
to such Eurodollar

 

6

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Rate Loan for such Interest Period shall be the rate at which deposits in U.S.
Dollars in an amount equal to $5,000,000 and for a maturity comparable to such
Interest Period are offered by the principal London office of the Agent in
immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two (2) Business Days prior to the commencement of such
Interest Period.

 

“Eurodollar Rate Loan” means a Loan that bears interest at a rate based on the
Eurodollar Rate (other than a Base Rate Loan bearing interest at a rate based on
the Eurodollar Rate).

 

“Events of Default” has the meaning specified in Section 6.01.

 

“Excluded Taxes” means, with respect to the Agent, any Lender or any other
recipient of any payment to be made by or on account of any obligation of the
Borrower hereunder, (a) Taxes imposed on or measured by its overall net income
(however denominated), and franchise Taxes imposed on it (in lieu of net income
Taxes), by the United States of America or the jurisdiction (or any political
subdivision thereof) under the Laws of which such recipient is organized or does
business or in which its principal office is located or, in the case of any
Lender, in which its Applicable Lending Office is located, (b) any branch
profits Taxes imposed by the United States of America or any similar Tax imposed
by any other jurisdiction in which the Borrower is located, (c) any backup
withholding Tax that is required by the Internal Revenue Code to be withheld
from amounts payable to a Lender that has failed to comply with clause (A) of
Section 2.12(e)(ii), (d) in the case of a Foreign Lender (other than as agreed
to between any assignee and the Borrower pursuant to a request by the Borrower
under Section 2.17), any United States of America withholding Tax that (i) is
required to be imposed on amounts payable to such Foreign Lender pursuant to the
Laws in force at the time such Foreign Lender becomes a party hereto (or
designates a new Applicable Lending Office) or (ii) is attributable to such
Foreign Lender’s failure or inability (other than as a result of a Change in
Law) to comply with clause (B) of Section 2.12(e)(ii), except to the extent that
such Foreign Lender (or its assignor, if any) was entitled, at the time of
designation of a new Applicable Lending Office (or assignment), to receive
additional amounts from the Borrower with respect to such withholding Tax
pursuant to Section 2.12(a)(i) or (ii); and (e) any United States withholding
Tax imposed by FATCA.

 

“Existing Term Loan Agreement” shall have the meaning specified in
Section 3.01(e)(x).

 

“FATCA” means Sections 1471 through 1474 of the Internal Revenue Code, as of the
date of this Agreement (or any amended or successor version that is
substantively comparable and not materially more onerous to comply with), any
current or future regulations or official interpretations thereof and any
agreement entered into pursuant to Section 1471(b)(1) of the Internal Revenue
Code.

 

“Federal Funds Rate” means, for any day, the weighted average (rounded upwards,
if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published on the next succeeding Business Day by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day that
is a Business Day, the average (rounded upwards, if necessary, to the next 1/100
of 1%) of the quotations for such day for such transactions received by the
Agent from three Federal funds brokers of recognized standing selected by it.

 

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“Fee Letter” means that certain Administrative Agent Fee Letter dated as of
November 29, 2012, between the Agent and the Borrower, as amended, modified,
restated or supplemented from time to time.

 

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

 

“Four Corners Acquisition” means the acquisition by APS from Southern California
Edison Company (“SCE”) of SCE’s interests in Units 4 and 5 of the Four Corners
Power Plant near Farmington, New Mexico, pursuant to the Purchase and Sale
Agreement, dated as of November 8, 2010, by and between SCE and APS.

 

“Fund” means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.

 

“GAAP” has the meaning specified in Section 1.03.

 

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

 

“Guarantee” means as to any Person, any obligation, contingent or otherwise, of
such Person directly or indirectly guaranteeing any Indebtedness of any other
Person or in any manner providing for the payment of any Indebtedness of any
other Person or otherwise protecting the holder of such Indebtedness against
loss (whether by virtue of partnership arrangements, agreements to keep well, to
purchase assets, goods, securities or services, or to take-or-pay or otherwise),
provided that the term “Guarantee” shall not include endorsements for collection
or deposit in the ordinary course of business.  The term “Guarantee” used as a
verb has a corresponding meaning.

 

“Hazardous Materials” means (a) petroleum and petroleum products, byproducts or
breakdown products, radioactive materials, asbestos-containing materials,
polychlorinated biphenyls and radon gas and (b) any other chemicals, materials
or substances designated, classified or regulated as hazardous or toxic or as a
pollutant or contaminant under any Environmental Law.

 

“Hedge Agreement” means any interest rate swap, cap or collar agreement,
interest rate future or option contract, currency swap agreement, currency
future or option contract, commodity future or option contract, commodity
forward contract or other similar agreement.

 

“Indebtedness” means as to any Person at any date (without duplication):
(a) indebtedness created, issued, incurred or assumed by such Person for
borrowed money or

 

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evidenced by bonds, debentures, notes or similar instruments; (b) all
obligations of such Person to pay the deferred purchase price of property or
services, excluding, however, trade accounts payable (other than for borrowed
money) arising in, and accrued expenses incurred in, the ordinary course of
business of such Person so long as such trade accounts payable are paid within
180 days of the date incurred (unless subject to a good faith dispute); (c) all
Indebtedness secured by a Lien on any asset of such Person, to the extent such
Indebtedness has been assumed by, or is a recourse obligation of, such Person;
(d) all Guarantees by such Person; (e) all Capital Lease Obligations of such
Person; and (f) the amount of all reimbursement obligations of such Person
(whether contingent or otherwise) in respect of letters of credit, bankers’
acceptances, surety or other bonds and similar instruments in support of
Indebtedness.

 

“Indemnified Taxes” means Taxes, other than Excluded Taxes or Other Taxes,
imposed on or with respect to any payment made by or on account of any
obligation of the Borrower under any Loan Document.

 

“Initial Borrowing” means the Loans made by the Initial Lenders on the Effective
Date pursuant to Section 2.01 hereof.

 

“Initial Lenders” has the meaning given to such term in the introductory
paragraph hereof.

 

“Interest Election Request” means a written request by the Borrower to Convert
or continue a Borrowing in accordance with the definition of “Interest Period”
contained in this Section 1.01 and/or Section 2.07, as applicable, in each case
in substantially the form of Exhibit D hereto.

 

“Interest Period” means, for each Eurodollar Rate Loan comprising part of the
same Borrowing, the period commencing on (i) the date such Eurodollar Rate Loan
is disbursed, (ii) the date of the Conversion of any Base Rate Loan into such
Eurodollar Rate Loan or (iii) the effective date of the most recent continuation
of such Eurodollar Rate Loan, as the case may be, and ending on the last day of
the period selected by the Borrower pursuant to the provisions below and,
thereafter, each subsequent period commencing on the last day of the immediately
preceding Interest Period and ending on the last day of the period selected by
the Borrower pursuant to the provisions below.  The duration of each such
Interest Period shall be one, two, three or six months, as the Borrower may,
upon notice (in the form of an Interest Election Request duly completed and
executed by the Borrower) received by the Agent not later than 12:00 noon on the
third Business Day prior to the first day of such Interest Period, select;
provided, however, that:

 

(a)           the Borrower may not select any Interest Period that ends after
the Maturity Date;

 

(b)           Interest Periods commencing on the same date for Eurodollar Rate
Loans comprising part of the same Borrowing shall be of the same duration;

 

(c)           whenever the last day of any Interest Period would otherwise occur
on a day other than a Business Day, the last day of such Interest Period shall
be extended to

 

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occur on the next succeeding Business Day, provided, however, that, if such
extension would cause the last day of such Interest Period to occur in the next
following calendar month, the last day of such Interest Period shall occur on
the next preceding Business Day; and

 

(d)           whenever the first day of any Interest Period occurs on a day of
an initial calendar month for which there is no numerically corresponding day in
the calendar month that succeeds such initial calendar month by the number of
months equal to the number of months in such Interest Period, such Interest
Period shall end on the last Business Day of such succeeding calendar month.

 

“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and rulings issued thereunder.

 

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

 

“Lenders” means the Initial Lenders and each Person that shall become a party
hereto pursuant to Section 8.07.

 

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or otherwise), charge or other
security interest or preferential arrangement that has the practical effect of
creating a security interest, including, without limitation, the lien or
retained security title of a conditional vendor and any easement, right of way
or other encumbrance on title to real property, and any Capital Lease having
substantially the same economic effect as any of the foregoing.

 

“Loans” has the meaning specified in Section 2.01.

 

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

 

“Material Adverse Effect” means a material adverse effect on (a) the financial
condition, operations, business or properties of the Borrower and its
Subsidiaries (excluding SunCor Development Company and its Subsidiaries) taken
as a whole, (b) the rights and remedies of the Agent or any Lender under this
Agreement or any Note or (c) the ability of the Borrower to perform its
obligations under this Agreement or any Note.

 

“Material Subsidiary” means APS and, at any time, each other Subsidiary of the
Borrower (excluding SunCor Development Company and its Subsidiaries) which as of
such time meets the definition of a “significant subsidiary” included as of the
date hereof in Regulation S-X of the Securities and Exchange Commission or whose
assets at such time exceed 10% of the assets of the Borrower and the
Subsidiaries (on a Consolidated basis).

 

“Maturity Date” means November 27, 2015.

 

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

 

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

 

“Note” means a promissory note of the Borrower payable to the order of any
Lender, delivered pursuant to a request made under Section 2.14, in
substantially the form of Exhibit A hereto.

 

“Notice of Initial Borrowing” has the meaning specified in Section 2.02(a).

 

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

 

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

 

“Participant” has the meaning specified in Section 8.07(d).

 

“Participant Register” has the meaning specified in Section 8.07(d).

 

“PBGC” means the Pension Benefit Guaranty Corporation.

 

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

 

“Percentage” means, with respect to any Lender at any time, a fraction the
numerator of which is the outstanding principal amount of such Lender’s Loans at
such time and the denominator of which is the aggregate outstanding principal
amount of all Loans at such time; provided, that (i) the initial Percentage of
each Lender shall be the percentage set forth opposite such Lender’s name on
Schedule 1.01 under the column “Ratable Share” and (ii) if the outstanding
principal amount of all Loans has been repaid in full, the Percentage of each
Lender shall be such Lender’s Percentage as in effect immediately prior to such
repayment.

 

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“Person” means an individual, partnership, corporation (including a business
trust), joint stock company, trust, unincorporated association, joint venture,
limited liability company or other entity, or a government or any political
subdivision or agency thereof.

 

“Plan” means any “employee benefit plan” (as such term is defined in
Section 3(3) of ERISA) established by the Borrower or, with respect to any such
plan that is subject to Section 412 or 430 of the Internal Revenue Code or Title
IV of ERISA, any ERISA Affiliate.

 

“Prime Rate” means the rate of interest per annum publicly announced from time
to time by JPMorgan Chase Bank, N.A. as its prime rate in effect at its
principal office in New York, New York; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective.

 

“Public Debt Rating” means, as of any date, (i) the rating that has been most
recently announced by either S&P or Moody’s, as the case may be, applicable to
any outstanding class of non-credit enhanced long-term senior unsecured debt
issued by the Borrower, including any bank facility rating (or, if any such
rating agency shall have issued more than one such rating, the lowest such
rating issued by such rating agency) or (ii) if neither S&P nor Moody’s has in
effect any rating for any class of non-credit enhanced long-term senior
unsecured debt issued by the Borrower and outstanding on such date, including
any bank facility rating, the Borrower’s long-term issuer rating that has been
most recently announced by either S&P or Moody’s, as the case may be.  For
purposes of the foregoing, (a) if only one of S&P and Moody’s shall have in
effect a Public Debt Rating, the Applicable Rate shall be determined by
reference to the available rating; (b) if neither S&P nor Moody’s shall have in
effect a Public Debt Rating, the Applicable Rate will be set in accordance with
Level 5 under the definition of “Applicable Rate”; (c) if the ratings
established by S&P and Moody’s shall fall within different levels, the
Applicable Rate shall be based upon the higher rating unless such ratings differ
by two or more levels, in which case the applicable level will be deemed to be
one level below the higher of such levels; (d) if any rating established by S&P
or Moody’s shall be changed (other than as a result of a change in the basis on
which ratings are established), such change shall be effective as of the date on
which such change is first announced publicly by the rating agency making such
change; and (e) if S&P or Moody’s shall change the basis on which ratings are
established, each reference to the Public Debt Rating announced by S&P or
Moody’s, as the case may be, shall refer to the then equivalent rating by S&P or
Moody’s, as the case may be.

 

“PVNGS” means the Palo Verde Nuclear Generating Station.

 

“Ratable Share” of any amount means, with respect to any Lender at any time, the
product of such amount times such Lender’s Percentage.

 

“Register” has the meaning specified in Section 8.07(c).

 

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

 

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

 

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issued under Section 4043, as in effect as of the date of this Agreement (the
“Section 4043 Regulations”).  Any changes made to the Section 4043 Regulations
that become effective after the Effective Date shall have no impact on the
definition of Reportable Event as used herein unless otherwise amended by the
Borrower and the Required Lenders.

 

“Required Lenders” means, as of any date of determination, but subject to
Section 2.16, Lenders holding in the aggregate more than 50% of the aggregate
outstanding principal amount of all Loans (or, if all Loans have been repaid in
full, more than 50% of the aggregate amount of all outstanding Obligations).

 

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

 

“SEC Reports” means the Borrower’s (i) Form 10-K Report for the fiscal year
ended December 31, 2011, (ii) Form 10-Q Reports for the quarters ended March 31,
2012, June 30, 2012 and September 30, 2012 and (iii) form 8-K Reports filed on
January 9, 2012, January 12, 2012, February 3, 2012, April 18, 2012, May 3, 2012
(with regard to information in item 8.01 only), May 16, 2012, May 22, 2012 and
June 22, 2012, in each case, as filed with the Securities and Exchange
Commission.

 

“Subsidiary” of any Person means any corporation, partnership, joint venture,
limited liability company, trust or estate of which (or in which) more than 50%
of (a) the issued and outstanding Voting Stock, (b) the interest in the capital
or profits of such limited liability company, partnership or joint venture or
(c) the beneficial interest in such trust or estate, is at the time directly or
indirectly owned or controlled by such Person, by such Person and one or more of
its other Subsidiaries or by one or more of such Person’s other Subsidiaries;
provided that in no event will Subsidiaries include the VIE Lessor Trusts.

 

“Syndication Agent” means SunTrust Bank, in its capacity as syndication agent
for the Lenders.

 

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

 

“Type”, when used in reference to any Loan or Borrowing, refers to whether the
rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the Eurodollar Rate or the Base Rate.

 

“VIE Lessor Trusts” means the three (3) separate variable-interest entity lessor
trusts that purchased from, and leased back to, APS certain interests in the
PVNGS Unit 2 and related common facilities, as described in Note 20 of the Notes
to Consolidated Financial Statements set forth in the Borrower’s Annual Report
on Form 10-K for the fiscal year ended December 31, 2011.

 

“Voting Stock” means capital stock issued by a corporation, or equivalent
interests in any other Person, the holders of which are ordinarily, in the
absence of contingencies, entitled to vote

 

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for the election of directors (or persons performing similar functions) of such
Person, even if the right so to vote has been suspended by the happening of such
a contingency.

 

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

 

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

 

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

 

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

 

Section 1.03          Accounting Terms.  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 generally accepted accounting
principles as in effect from time to time, applied on a basis consistent (except
for changes concurred in by the Borrower’s independent public accountants) with
the most recent audited Consolidated financial statements of the Borrower
delivered to the Agent (“GAAP”).  If at any time any change in GAAP or in the
interpretation thereof would affect the computation of any financial ratio or
requirement set forth in any Loan Document, and either the Borrower or the
Required Lenders shall so request, the Agent, the Lenders and the Borrower shall
negotiate in good faith to amend such ratio or requirement to preserve the

 

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original intent thereof in light of such change in GAAP or in the interpretation
thereof (subject to the approval of the Required Lenders); provided that, unless
and until so amended, such ratio or requirement shall continue to be computed in
accordance with GAAP prior to such change therein.

 

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

 

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

 

ARTICLE II

 

AMOUNTS AND TERMS OF THE LOANS

 

Section 2.01          The Loans.

 

Subject to the terms and conditions hereof (including, without limitation,
Section 3.01), each Lender, by its acceptance hereof, severally agrees to make a
one-time loan (individually, a “Loan” and, collectively, the “Loans”) to the
Borrower on the Effective Date in Dollars in an aggregate principal amount equal
to such Lender’s Commitment.  As provided in Section 2.05, the Borrower may
elect that each Borrowing of Loans be either Base Rate Loans or Eurodollar Rate
Loans.  Amounts borrowed by the Borrower hereunder and prepaid or otherwise
repaid may not be reborrowed.  Unless an earlier maturity is provided for
hereunder, all Loans shall mature and be due and payable on the Maturity Date. 
The Commitments shall immediately and automatically terminate upon the earlier
of (i) 5:00 p.m. on the Effective Date and (ii) the making of the Loans pursuant
to this Section 2.01.

 

Section 2.02          Making the Loans.

 

(a)           The Initial Borrowing shall be made on notice, given not later
than (x) 12:00 noon on the third Business Day prior to the Effective Date in the
case of an Initial Borrowing consisting of Eurodollar Rate Loans or (y) 12:00
noon on the Business Day prior to the Effective Date in the case of an Initial
Borrowing consisting of Base Rate Loans, by the Borrower to the Agent, which
shall give to each Lender prompt notice thereof by facsimile.  Such notice of
the Initial Borrowing (the “Notice of Initial Borrowing”) shall be in writing or
by facsimile in substantially the form of Exhibit B hereto, specifying therein
the requested (i) date of the Initial Borrowing (which shall be the Effective
Date and a Business Day), (ii) Type of Loans comprising the Initial Borrowing,
(iii) aggregate amount of the Initial Borrowing, and (iv) in the case of an
Initial Borrowing consisting of Eurodollar Rate Loans, initial Interest Period
for each such Loan.  Each Lender shall, before 2:00 p.m. on the date of the
Initial Borrowing, make available for the account of its Applicable Lending
Office to the Agent at the Agent’s Account, in same day funds, such Lender’s
Ratable Share of the Initial Borrowing.  After the Agent’s receipt of such funds
and upon fulfillment of the applicable conditions set forth in Article III, the

 

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Agent will make such funds available to the Borrower at the Agent’s address
referred to in Section 8.02 or as requested by the Borrower in the Notice of
Initial Borrowing.

 

(b)           Anything in subsection (a) above to the contrary notwithstanding,
(i) the Borrower may not select Eurodollar Rate Loans for any Borrowing if the
aggregate amount of such Borrowing is less than $5,000,000 (or an integral
multiple of $1,000,000 in excess thereof) or if the obligation of the Lenders to
make Eurodollar Rate Loans shall then be suspended pursuant to Section 2.06 or
2.10, and (ii) at no time shall there be more than three (3) different Interest
Periods outstanding for Eurodollar Rate Loans.

 

(c)           The Notice of Initial Borrowing shall be irrevocable and binding
on the Borrower.  If the Notice of Initial Borrowing specifies that the Initial
Borrowing is to be comprised of Eurodollar Rate Loans, the Borrower shall
indemnify each Lender against any loss, cost or expense reasonably incurred by
such Lender as a result of any failure (i) to fulfill on or before the date
specified in the Notice of Initial Borrowing the applicable conditions set forth
in Article III or (ii) to otherwise borrow the Eurodollar Rate Loans requested
by the Borrower in the Notice of Initial Borrowing on such date (and shall set
forth such indemnification obligation in the Notice of Initial Borrowing),
including, without limitation, any loss (excluding loss of anticipated profits),
cost or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by such Lender to fund the Loan to be made by
such Lender as part of the Initial Borrowing when such Loan, as a result of any
such failure, is not made on such date.

 

(d)           Unless the Agent shall have received notice from a Lender prior to
the time of the Initial Borrowing that such Lender will not make available to
the Agent such Lender’s Ratable Share of the Initial Borrowing, the Agent may
assume that such Lender has made such portion available to the Agent on the date
of the Initial Borrowing in accordance with subsection (a) of this Section 2.02
and the Agent may, in reliance upon such assumption, make available to the
Borrower on such date a corresponding amount.  If and to the extent that such
Lender shall not have so made such Ratable Share available to the Agent, such
Lender and the Borrower severally agree to repay to the Agent within one
Business Day after demand for such Lender and within three Business Days after
demand for the Borrower such corresponding amount together with interest
thereon, for each day from the date such amount is made available to the
Borrower until the date such amount is repaid to the Agent, at (i) in the case
of the Borrower, the interest rate applicable at the time to Loans comprising
the Initial Borrowing and (ii) in the case of such Lender, the Federal Funds
Rate.  If the Borrower and such Lender shall pay such interest to the Agent for
the same or an overlapping period, the Agent shall promptly remit to the
Borrower the amount of such interest paid by the Borrower for such period.  If
such Lender shall repay to the Agent such corresponding amount, such amount so
repaid shall constitute such Lender’s Loan as part of the Initial Borrowing for
purposes of this Agreement.

 

(e)           The failure of any Lender to make the Loan to be made by it as
part of the Initial Borrowing shall not relieve any other Lender of its
obligation, if any, hereunder to make its Loan on the date of the Initial
Borrowing, but no Lender shall be responsible for the failure of any other
Lender to make the Loan to be made by such other Lender on the date of the
Initial Borrowing.

 

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Section 2.03          Agent’s Fees.  The Borrower shall pay to the Agent for its
own account such fees as are agreed between the Borrower and the Agent pursuant
to the Fee Letter between the Borrower and the Agent.

 

Section 2.04          Repayment of Loans.  The Borrower hereby unconditionally
agrees to pay to the Agent on the Maturity Date, for the account of the Lenders
and the Agent, the then unpaid principal amount of the Loans, together with all
accrued and unpaid interest thereon, and all other outstanding Obligations.

 

Section 2.05          Interest on Loans.

 

(a)           Scheduled Interest.  The Borrower shall pay interest on the unpaid
principal amount of each Loan owing to each Lender from the date of such Loan
until such principal amount shall be paid in full, at the following rates per
annum:

 

(i)            Base Rate Loans.  During such periods as such Loan is a Base Rate
Loan, a rate per annum equal at all times to the sum of (x) the Base Rate in
effect from time to time plus (y) the Applicable Rate for Base Rate Loans in
effect from time to time, payable in arrears quarterly on the last day of each
March, June, September and December during such periods and on the date such
Base Rate Loan shall be Converted or paid in full.

 

(ii)           Eurodollar Rate Loans.  During such periods as such Loan is a
Eurodollar Rate Loan, a rate per annum equal at all times during each Interest
Period for such Loan to the sum of (x) the Eurodollar Rate for such Interest
Period for such Loan plus (y) the Applicable Rate for Eurodollar Rate Loans in
effect from time to time, payable in arrears on the last day of such Interest
Period and, if such Interest Period has a duration of more than three months, on
each day that occurs during such Interest Period every three months from the
first day of such Interest Period and on the date such Eurodollar Rate Loan
shall be Converted or paid in full.

 

(b)           Default Interest.  Upon the occurrence and during the continuance
of an Event of Default under Section 6.01(a), the Agent may, and upon the
request of the Required Lenders shall, require the Borrower to pay interest
(“Default Interest”) on (i) the unpaid principal amount of each Loan owing to
each Lender, payable in arrears on the dates referred to in clause (a)(i) or
(a)(ii) above, at a rate per annum equal at all times to 2% per annum above the
rate per annum required to be paid on such Loan pursuant to clause (a)(i) or
(a)(ii) above and (ii) to the fullest extent permitted by Law, the amount of any
interest, fee or other amount payable hereunder that is not paid when due, from
the date such amount shall be due until such amount shall be paid in full,
payable in arrears on the date such amount shall be paid in full and on demand,
at a rate per annum equal at all times to 2% per annum above the rate per annum
required to be paid on Base Rate Loans pursuant to clause (a)(i) above,
provided, however, that following acceleration of the Loans pursuant to
Section 6.01, Default Interest shall accrue and be payable hereunder whether or
not previously required by the Agent.

 

(c)           Interest Rate Limitation.  Nothing contained in this Agreement or
in any other Loan Document shall be deemed to establish or require the payment
of interest to any Lender at

 

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a rate in excess of the maximum rate permitted by applicable Law.  If the amount
of interest payable for the account of any Lender on any interest payment date
would exceed the maximum amount permitted by applicable Law to be charged by
such Lender, the amount of interest payable for its account on such interest
payment date shall be automatically reduced to such maximum permissible amount. 
In the event of any such reduction affecting any Lender, if from time to time
thereafter the amount of interest payable for the account of such Lender on any
interest payment date would be less than the maximum amount permitted by
applicable Law to be charged by such Lender, then the amount of interest payable
for its account on such subsequent interest payment date shall be automatically
increased to such maximum permissible amount, provided that at no time shall the
aggregate amount by which interest paid for the account of any Lender has been
increased pursuant to this sentence exceed the aggregate amount by which
interest paid for its account has theretofore been reduced pursuant to the
previous sentence.

 

Section 2.06          Interest Rate Determination.

 

(a)           The Agent shall give prompt notice to the Borrower and the Lenders
of the applicable interest rate determined by the Agent for purposes of
Section 2.05(a).

 

(b)           If the Required Lenders determine that for any reason in
connection with any request for a Eurodollar Rate Loan or a Conversion to or
continuation thereof that (a) Dollar deposits are not being offered to banks in
the London interbank eurodollar market for the applicable amount and Interest
Period of such Eurodollar Rate Loan, (b) adequate and reasonable means do not
exist for determining the Eurodollar Rate for any requested Interest Period with
respect to a proposed Eurodollar Rate Loan, or (c) the Eurodollar Rate for any
requested Interest Period with respect to a proposed Eurodollar Rate Loan does
not adequately and fairly reflect the cost to such Lenders of funding such Loan,
the Agent will promptly so notify the Borrower and each Lender, whereupon each
Eurodollar Rate Loan will automatically on the last day of the then existing
Interest Period therefor Convert into a Base Rate Loan.  Thereafter, the
obligation of the Lenders to make or maintain Eurodollar Rate Loans shall be
suspended until the Agent (upon the instruction of the Required Lenders) revokes
such notice.  Upon receipt of such notice, the Borrower may revoke any pending
request for a Borrowing of, Conversion to or continuation of Eurodollar Rate
Loans or, failing that, will be deemed to have Converted such request into a
request for a Base Rate Loan in the amount specified therein.

 

(c)           If the Borrower shall fail to select the duration of any Interest
Period for any Eurodollar Rate Loans in accordance with the provisions contained
in the definition of “Interest Period” in Section 1.01, the Agent will forthwith
so notify the Borrower and the Lenders and such Loans will automatically, on the
last day of the then existing Interest Period therefor, Convert into Base Rate
Loans.

 

(d)           On the date on which the aggregate unpaid principal amount of
Eurodollar Rate Loans comprising any Borrowing shall be reduced, by payment or
prepayment or otherwise, to less than $5,000,000, such Loans shall automatically
Convert into Base Rate Loans.

 

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(e)           Upon the occurrence and during the continuance of any Event of
Default,

 

(i)            with respect to Eurodollar Rate Loans, each such Loan will
automatically, on the last day of the then existing Interest Period therefor,
Convert into a Base Rate Loan (or if such Loan is then a Base Rate Loan, will
continue as a Base Rate Loan); and

 

(ii)           the obligation of the Lenders to Convert Loans into Eurodollar
Rate Loans shall be suspended until the Agent shall notify the Borrower and the
Lenders that the circumstances causing such suspension no longer exist.

 

Section 2.07          Optional Conversion of Loans.  The Borrower may on any
Business Day, upon notice given to the Agent (in the form of an Interest
Election Request duly completed and executed by the Borrower) not later than
12:00 noon on the third Business Day prior to the date of the proposed
Conversion and subject to the provisions of Sections 2.06 and 2.10, Convert all
or any portion of the Loans of one Type comprising the same Borrowing into Loans
of the other Type; provided, however, that (a) any Conversion of Eurodollar Rate
Loans into Base Rate Loans shall be made only on the last day of an Interest
Period for such Eurodollar Rate Loans, (b) any Conversion of Base Rate Loans
into Eurodollar Rate Loans shall be in an amount not less than the minimum
amount specified in Section 2.02(b) and (c) no Conversion of any Loans shall
result in more separate Borrowings than permitted under Section 2.02(b).  Each
such notice of a Conversion shall, within the restrictions specified above,
specify (i) the date of such Conversion, (ii) the Loans to be Converted and
(iii) if such Conversion is into Eurodollar Rate Loans, the duration of the
initial Interest Period for each such Loan.  Each Interest Election Request
shall be irrevocable and binding on the Borrower.

 

Section 2.08          Prepayments of Loans.

 

(a)           Optional.  At any time and from time to time, the Borrower shall
have the right to prepay the Loans, in whole or in part, without premium or
penalty (except as provided in clause (z) below), upon notice at least two
Business Days’ prior to the date of such prepayment, in the case of Eurodollar
Rate Loans, and not later than 11:00 a.m. on the date of such prepayment, in the
case of Base Rate Loans, to the Agent specifying the proposed date of such
prepayment and the aggregate principal amount and Type of the Loans to be
prepaid (and, in the case of Eurodollar Rate Loans, the Interest Period of the
Borrowing pursuant to which made); provided, however, that (x) each partial
prepayment shall be in an aggregate principal amount of $5,000,000 or an
integral multiple of $1,000,000 in excess thereof, (y) accrued interest to the
date of prepayment on the principal amount prepaid shall be payable by the
Borrower on the date of such prepayment, and (z) in the event of any such
prepayment of a Eurodollar Rate Loan, the Borrower shall be obligated to
reimburse the Lenders in respect thereof pursuant to Section 8.04(e).  Each
prepayment of Loans shall be applied ratably to the outstanding principal amount
of each Lender’s Loan in accordance with such Lender’s Ratable Share.

 

(b)           Mandatory.  The Borrower shall prepay the aggregate principal
amount of the Loans, together with accrued interest to the date of prepayment on
the principal amount prepaid, without requirement of demand therefor, or shall
pay or prepay any other Indebtedness then outstanding at any time, when and to
the extent required to comply with applicable Laws of any Governmental Authority
or applicable resolutions of the Board of Directors of the Borrower.

 

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Section 2.09          Increased Costs.

 

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

 

(i)            impose, modify or deem applicable any reserve, special deposit,
compulsory loan, insurance charge or similar requirement against assets of,
deposits with or for the account of, or credit extended or participated in by,
any Lender (except any reserve requirement contemplated by Section 2.09(e));

 

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

 

(iii)          subject the Agent or any Lender to any Taxes (other than
(A) Indemnified Taxes, (B) Excluded Taxes and (C) Other Taxes) on its loans,
loan principal, letters of credit, commitments, or other obligations, or its
deposits, reserves, other liabilities or capital attributable thereto;

 

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

 

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

 

(c)           Certificates for Reimbursement.  A certificate of a Lender setting
forth the amount or amounts necessary to compensate such Lender or its holding
company, as the case may be, as specified in subsection (a) or (b) of this
Section and delivered to the Borrower shall be conclusive and binding upon all
parties absent manifest error.  The Borrower shall pay such Lender the amount
shown as due on any such certificate within 30 days after receipt thereof.

 

(d)           Delay in Requests.  Failure or delay on the part of any Lender to
demand compensation pursuant to the foregoing provisions of this Section shall
not constitute a waiver of such Lender’s right to demand such compensation,
provided that the Borrower shall not be required to compensate a Lender pursuant
to the foregoing provisions of this Section for any

 

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increased costs incurred or reductions suffered more than three months prior to
the date that such Lender notifies the Borrower of the Change in Law giving rise
to such increased costs or reductions and of such Lender’s intention to claim
compensation therefor (except that, if the Change in Law giving rise to such
increased costs or reductions is retroactive, then the three-month period
referred to above shall be extended to include the period of retroactive effect
thereof).

 

(e)           Reserves on Eurodollar Rate Loans.  The Borrower shall pay to each
Lender, as long as such Lender shall be required to maintain reserves with
respect to liabilities or assets consisting of or including Eurocurrency funds
or deposits (currently known as “Eurocurrency liabilities”), additional interest
on the unpaid principal amount of each Eurodollar Rate Loan equal to the actual
costs of such reserves allocated to such Loan by such Lender (as determined by
such Lender in good faith, which determination shall be conclusive absent
manifest error), which shall be due and payable on each date on which interest
is payable on such Loan, provided the Borrower shall have received at least 30
days’ prior notice (with a copy to the Agent) of such additional interest from
such Lender.  If a Lender fails to give notice 30 days prior to the relevant
interest payment date, such additional interest shall be due and payable 30 days
from receipt of such notice.

 

Section 2.10          Illegality.  If any Lender shall have determined in good
faith that the introduction of or any change in any applicable Law or in the
interpretation or administration thereof by any Governmental Authority charged
with the interpretation or administration thereof, or compliance with any
guideline or request from any such Governmental Authority (whether or not having
the force of law), makes it unlawful for any Lender or its Applicable Lending
Office to make, maintain or fund Eurodollar Rate Loans, or to determine or
charge interest rates based upon the Eurodollar Rate, or any Governmental
Authority has imposed material restrictions on the authority of such Lender to
purchase or sell, or to take deposits of, Dollars in the London interbank
market, then, on notice thereof by such Lender to the Borrower through the
Agent, any obligation of such Lender to make or continue Eurodollar Rate Loans
or to Convert Base Rate Loans to Eurodollar Rate Loans shall be suspended until
such Lender notifies the Agent and the Borrower that the circumstances giving
rise to such determination no longer exist.  Upon receipt of such notice, the
Borrower shall, upon demand from such Lender (with a copy to the Agent), prepay
or, if applicable, Convert all Eurodollar Rate Loans of such Lender to Base Rate
Loans, either on the last day of the Interest Period therefor, if such Lender
may lawfully continue to maintain such Eurodollar Rate Loans to such day, or
immediately, if such Lender may not lawfully continue to maintain such
Eurodollar Rate Loans.  Upon any such prepayment or Conversion, the Borrower
shall also pay accrued interest on the amount so prepaid or Converted.

 

Section 2.11          Payments and Computations.

 

(a)           All payments to be made by the Borrower shall be made without
condition or deduction for any counterclaim, defense, recoupment or setoff.  The
Borrower shall make each payment hereunder not later than 1:00 p.m. on the day
when due in Dollars to the Agent at the Agent’s Account in same day funds.  The
Agent will promptly thereafter cause to be distributed like funds relating to
the payment of principal, interest or fees ratably (other than amounts payable
pursuant to Section 2.09, 2.10, 2.12, 2.17 or 8.04(e)) to the Lenders for the
account of their respective Applicable Lending Offices, and like funds relating
to the payment of any other

 

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amount payable to any Lender to such Lender for the account of its Applicable
Lending Office, in each case to be applied in accordance with the terms of this
Agreement.  Upon its acceptance of an Assignment and Assumption and recording of
the information contained therein in the Register pursuant to Section 8.07(c),
from and after the effective date specified in such Assignment and Assumption,
the Agent shall make all payments hereunder and under the Notes in respect of
the interest assigned thereby to the Lender assignee thereunder, and the parties
to such Assignment and Assumption shall make all appropriate adjustments in such
payments for periods prior to such effective date directly between themselves.

 

(b)           All computations of interest based on the Base Rate (when the Base
Rate is based on the Prime Rate) shall be made by the Agent on the basis of a
year of 365 or 366 days, as the case may be, and all other computations of
interest and fees hereunder (including computations of interest based on the
Eurodollar Rate and the Federal Funds Rate) shall be made by the Agent on the
basis of a year of 360 days, in each case for the actual number of days
(including the first day but excluding the last day) occurring in the period for
which such interest or fees are payable.  Each determination by the Agent of an
interest rate hereunder shall be conclusive and binding for all purposes, absent
manifest error.

 

(c)           Whenever any payment hereunder or under the Notes shall be stated
to be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or fees, as the case may be;
provided, however, that, if such extension would cause payment of interest on or
principal of Eurodollar Rate Loans to be made in the next following calendar
month, such payment shall be made on the next preceding Business Day.

 

(d)           Unless the Agent shall have received notice from the Borrower
prior to the date on which any payment is due to the Lenders hereunder that the
Borrower will not make such payment in full, the Agent may assume that the
Borrower has made such payment in full to the Agent on such date and the Agent
may, in reliance upon such assumption, cause to be distributed to each Lender on
such due date an amount equal to the amount then due to such Lender.  If and to
the extent the Borrower shall not have so made such payment in full to the
Agent, each Lender shall repay to the Agent forthwith on demand such amount
distributed to such Lender together with interest thereon, for each day from the
date such amount is distributed to such Lender until the date such Lender repays
such amount to the Agent, at the Federal Funds Rate.

 

Section 2.12          Taxes.

 

(a)           Payments Free of Taxes; Obligation to Withhold; Payments on
Account of Taxes.

 

(i)            Any and all payments by or on account of any obligation of the
Borrower hereunder or under any other Loan Document shall to the extent
permitted by applicable Laws be made free and clear of and without reduction or
withholding for any Taxes.  If, however, applicable Laws require the Borrower or
the Agent to withhold or deduct any Tax, such Tax shall be withheld or deducted
in accordance with such Laws as determined by the Borrower or the Agent, as the
case may be, upon the basis of the information and documentation to be delivered
pursuant to subsection (e) below.

 

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(ii)           If the Borrower or the Agent shall be required by the Internal
Revenue Code to withhold or deduct any Taxes, including both United States of
America Federal backup withholding and withholding Taxes, from any payment, then
(A) the Agent shall withhold or make such deductions as are determined by the
Agent to be required based upon the information and documentation it has
received pursuant to subsection (e) below, (B) the Agent shall timely pay the
full amount withheld or deducted to the relevant Governmental Authority in
accordance with the Internal Revenue Code, and (C) to the extent that the
withholding or deduction is made on account of Indemnified Taxes or Other Taxes,
the sum payable by the Borrower shall be increased as necessary so that after
any required withholding or the making of all required deductions (including
deductions applicable to additional sums payable under this Section) the Agent
or each Lender, as the case may be, receives an amount equal to the sum it would
have received had no such withholding or deduction been made.

 

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

 

(c)           Tax Indemnifications.

 

(i)            Without limiting the provisions of subsection (a) or (b) above,
the Borrower shall, and does hereby, indemnify the Agent and each Lender, and
shall make payment in respect thereof within 30 days after written demand
therefor, for the full amount of any Indemnified Taxes or Other Taxes (including
Indemnified Taxes or Other Taxes imposed or asserted on or attributable to
amounts payable under this Section) withheld or deducted by the Borrower or the
Agent or paid by the Agent or such Lender, as the case may be, and any
penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority.  The
Borrower shall also, and does hereby, indemnify the Agent, and shall make
payment in respect thereof within 10 days after demand therefor, for any amount
which a Lender for any reason fails to pay indefeasibly to the Agent as required
by clause (ii) of this subsection.  A certificate as to the amount of any such
payment or liability delivered to the Borrower by a Lender (with a copy to the
Agent), or by the Agent on its own behalf or on behalf of a Lender, shall be
conclusive absent manifest error.

 

(ii)           Each Lender shall severally indemnify the Agent, within 30 days
after demand therefor, for (i) any Indemnified Taxes and Other Taxes
attributable to such Lender (but only to the extent that the Borrower has not
already indemnified the Agent for such Indemnified Taxes and Other Taxes and
without limiting the obligation of the Borrower to do so), (ii) any Taxes
attributable to such Lender’s failure to comply with the provisions of
Section 8.07(d) relating to the maintenance of a Participant Register and
(iii) any Excluded Taxes attributable to such Lender, in each case, that are
payable or paid by the Agent in connection with any Loan Document, and any
reasonable expenses arising therefrom or with respect thereto, whether or not
such Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority.  A certificate as to the amount of such payment or
liability delivered to any Lender by the Agent shall be

 

23

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conclusive absent manifest error.  Each Lender hereby authorizes the Agent to
set off and apply any and all amounts at any time owing to such Lender under any
Loan Document or otherwise payable by the Agent to the Lender from any other
source against any amount due to the Agent under this clause (ii).

 

(d)           Evidence of Payments.  Upon request by the Borrower or the Agent,
as the case may be, after any payment of Taxes by the Borrower or by the Agent
to a Governmental Authority as provided in this Section 2.12, the Borrower shall
deliver to the Agent or the Agent shall deliver to the Borrower, as the case may
be, the original or a certified copy of a receipt issued by such Governmental
Authority evidencing such payment, a copy of any return required by Laws to
report such payment or other evidence of such payment reasonably satisfactory to
the Borrower or the Agent, as the case may be.

 

(e)           Status of Lenders; Tax Documentation.

 

(i)            Each Lender shall deliver to the Borrower and to the Agent, at
the time or times prescribed by applicable Laws or when reasonably requested by
the Borrower or the Agent, such properly completed and executed documentation
prescribed by applicable Laws or by the taxing authorities of any jurisdiction
and such other reasonably requested information as will permit the Borrower or
the Agent, as the case may be, to determine (A) whether or not payments made
hereunder or under any other Loan Document are subject to Taxes, (B) if
applicable, the required rate of withholding or deduction, and (C) such Lender’s
entitlement to any available exemption from, or reduction of, applicable Taxes
in respect of all payments to be made to such Lender by the Borrower pursuant to
this Agreement or otherwise to establish such Lender’s status for withholding
tax purposes in the applicable jurisdiction.

 

(ii)           Without limiting the generality of the foregoing, if the Borrower
is resident for tax purposes in the United States of America,

 

(A)          any Lender that is a “United States person” within the meaning of
Section 7701(a)(30) of the Internal Revenue Code shall deliver to the Borrower
and the Agent executed originals of Internal Revenue Service Form W-9 or such
other documentation or information prescribed by applicable Laws or reasonably
requested by the Borrower or the Agent as will enable the Borrower or the Agent,
as the case may be, to determine whether or not such Lender is subject to backup
withholding or information reporting requirements; and

 

(B)          each Foreign Lender that is entitled under the Internal Revenue
Code or any applicable treaty to an exemption from or reduction of withholding
tax with respect to payments hereunder or under any other Loan Document shall
deliver to the Borrower and the Agent (in such number of copies as shall be
requested by the recipient) on or prior to the date on which such Foreign Lender
becomes a Lender under this Agreement (and from time to time thereafter upon the
request of the Borrower or the Agent, but only if such Foreign Lender is legally
entitled to do so), whichever of the following is applicable:

 

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(1)           executed originals of Internal Revenue Service Form W-8BEN
claiming eligibility for benefits of an income tax treaty to which the United
States of America is a party,

 

(2)           executed originals of Internal Revenue Service Form W-8ECI,

 

(3)           executed originals of Internal Revenue Service Form W-8IMY and all
required supporting documentation,

 

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

 

(5)           executed originals of any other form prescribed by applicable Laws
as a basis for claiming exemption from or a reduction in United States of
America Federal withholding tax together with such supplementary documentation
as may be prescribed by applicable Laws to permit the Borrower or the Agent to
determine the withholding or deduction required to be made.

 

(iii)          Each Lender shall promptly (A) notify the Borrower and the Agent
of any change in circumstances which would modify or render invalid any claimed
exemption or reduction, and (B) take such steps as shall not be materially
disadvantageous to it, in the reasonable judgment of such Lender, and as may be
reasonably necessary (including the re-designation of its Applicable Lending
Office) to avoid any requirement of applicable Laws of any jurisdiction that the
Borrower or the Agent make any withholding or deduction for taxes from amounts
payable to such Lender.

 

(iv)          If a payment made to a Lender under any Loan Document would be
subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to
fail to comply with the applicable reporting requirements of FATCA (including
those contained in Section 1471(b) or 1472(b) of the Internal Revenue Code, as
applicable), such Lender shall deliver to each of the Borrower and the Agent at
the time or times prescribed by law and at such time or times reasonably
requested by the Borrower or the Agent such documentation prescribed by
applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the
Internal Revenue Code) and such additional documentation reasonably requested by
the Borrower or the Agent as may be necessary for the Borrower and the Agent to
comply with their obligations under FATCA and to determine that such Lender has
complied with such Lender’s obligations under FATCA or to determine the amount
to deduct and withhold from such payment.  Solely for

 

25

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purposes of this clause (iv), “FATCA” shall include any amendments made to FATCA
after the date of this Agreement.

 

(f)            Treatment of Certain Refunds.  Unless required by applicable
Laws, at no time shall the Agent have any obligation to file for or otherwise
pursue on behalf of a Lender, or have any obligation to pay to any Lender, any
refund of Taxes withheld or deducted from funds paid for the account of such
Lender.  If the Agent or any Lender determines, in its sole discretion, that it
has received a refund of any Taxes as to which it has been indemnified by the
Borrower or with respect to which the Borrower has paid additional amounts
pursuant to this Section, it shall pay to the Borrower an amount equal to such
refund (but only to the extent of indemnity payments made, or additional amounts
paid, by the Borrower under this Section with respect to the Taxes giving rise
to such refund), net of all reasonable out-of-pocket expenses incurred by the
Agent or such Lender, as the case may be, and without interest (other than any
interest paid by the relevant Governmental Authority with respect to such
refund), provided that the Borrower, upon the request of the Agent or such
Lender, agrees to repay the amount paid over to the Borrower (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority) to the Agent or such Lender in the event the Agent or such Lender is
required to repay such refund to such Governmental Authority.  This subsection
shall not be construed to require the Agent or any Lender to make available its
tax returns (or any other information relating to its taxes that it deems
confidential) to the Borrower or any other Person.

 

(g)           Payments.  Failure or delay on the part of the Agent or any Lender
to demand compensation pursuant to the foregoing provisions of this Section 2.12
shall not constitute a waiver of the Agent’s or such Lender’s right to demand
such compensation, provided that the Borrower shall not be required to
compensate the Agent or a Lender pursuant to the foregoing provisions of this
Section 2.12 for any Indemnified Taxes or Other Taxes imposed or asserted by the
relevant Governmental Authority more than three months prior to the date that
the Agent or such Lender, as the case may be, claims compensation with respect
thereto (except that, if a Change in Law giving rise to such Indemnified Taxes
or Other Taxes is retroactive, then the three-month period referred to above
shall be extended to include the period of retroactive effect thereof).

 

(h)           The Agent and each Lender agrees to cooperate with any reasonable
request made by the Borrower in respect of a claim of a refund in respect of
Indemnified Taxes as to which it has been indemnified by the Borrower or with
respect to which the Borrower has paid additional amounts pursuant to this
Section 2.12 if (i) the Borrower has agreed in writing to pay all of the Agent’s
or such Lender’s reasonable out-of-pocket costs and expenses relating to such
claim, (ii) the Agent or such Lender determines, in its good faith judgment,
that it would not be disadvantaged, unduly burdened or prejudiced as a result of
such claim and (iii) the Borrower furnishes, upon request of the Agent or such
Lender, an opinion of tax counsel (such opinion, which can be reasoned, and such
counsel to be reasonably acceptable to such Lender or the Agent) that the
Borrower is likely to receive a refund or credit.

 

Section 2.13          Sharing of Payments, Etc.  If any Lender shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) on account of the Loans owing to it (other than pursuant
to Section  2.09, 2.10, 2.12, 2.17 or 8.04(e) or any payment obtained by a
Lender as consideration for the assignment of or sale of a

 

26

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participation in any of its Loans to any assignee or participant, other than to
the Borrower or any Subsidiary thereof if permitted hereby (as to which the
provisions of this Section 2.13 shall apply) in excess of its Ratable Share of
payments on account of the Loans obtained by all the Lenders, such Lender shall
forthwith purchase from the other Lenders (for cash at face value) such
participations in the Loans owing to them as shall be necessary to cause such
purchasing Lender to share the excess payment ratably with each of them;
provided, however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, such purchase from each Lender
shall be rescinded and such Lender shall repay to the purchasing Lender the
purchase price to the extent of such recovery together with an amount equal to
such Lender’s ratable share (according to the proportion of (i) the amount of
such Lender’s required repayment to (ii) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered.  The Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to this Section 2.13 may, to the fullest extent permitted by Law,
exercise all its rights of payment (including the right of set-off) with respect
to such participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.

 

Section 2.14          Evidence of Debt.

 

(a)           Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of the Borrower to such
Lender resulting from each Loan owing to such Lender from time to time,
including the amounts of principal and interest payable and paid to such Lender
from time to time hereunder in respect of Loans.  The Borrower agrees that upon
notice by any Lender to the Borrower (with a copy of such notice to the Agent)
to the effect that a Note is required or appropriate in order for such Lender to
evidence (whether for purposes of pledge, enforcement or otherwise) the Loans
owing to, or to be made by, such Lender, the Borrower shall promptly execute and
deliver to such Lender a Note payable to the order of such Lender in a principal
amount equal to the Loans owing to, or to be made by, such Lender.

 

(b)           The Register maintained by the Agent pursuant to
Section 8.07(c) shall include a control account, and a subsidiary account for
each Lender, in which accounts (taken together) shall be recorded (i) the date
and amount of each Borrowing made hereunder, the Type of Loans comprising such
Borrowing and, if appropriate, the Interest Period applicable thereto, (ii) the
terms of each Assignment and Assumption delivered to and accepted by it,
(iii) the amount of any principal or interest due and payable or to become due
and payable from the Borrower to each Lender hereunder and (iv) the amount of
any sum received by the Agent from the Borrower hereunder and each Lender’s
share thereof.

 

(c)           Entries made in good faith by the Agent in the Register pursuant
to subsection (b) above, and by each Lender in its account or accounts pursuant
to subsection (a) above, shall be prima facie evidence of the amount of
principal and interest due and payable or to become due and payable from the
Borrower to, in the case of the Register, each Lender and, in the case of such
account or accounts, such Lender, under this Agreement, absent manifest error;
provided, however, that the failure of the Agent or such Lender to make an
entry, or any finding that an entry is incorrect, in the Register or such
account or accounts shall not limit or otherwise affect the obligations of the
Borrower under this Agreement.

 

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Section 2.15          Use of Proceeds.  The proceeds of the Loans shall be
available (and the Borrower agrees that it shall use such proceeds) solely to
repay and refinance the outstanding loans under the Existing Term Loan
Agreement.

 

Section 2.16          Affected Lenders.  Notwithstanding any provision of this
Agreement to the contrary, if any Lender becomes an Affected Lender, then the
following provisions shall apply for so long as such Lender is an Affected
Lender:

 

(a)           the outstanding principal amount of the Loans of such Affected
Lender shall not be included in determining whether the Required Lenders have
taken or may take any action hereunder (including any consent to any amendment
or waiver pursuant to Section 8.01), other than any waiver, amendment or
modification requiring the consent of all Lenders or of each Lender affected;

 

(b)           to the extent the Agent receives any payments or other amounts for
the account of an Affected Lender under this Agreement, such Affected Lender
shall be deemed to have requested that the Agent use such payment or other
amount to fulfill such Affected Lender’s previously unsatisfied obligations to
fund a Loan under Section 2.01 or any other unfunded payment obligation of such
Affected Lender under this Agreement; and

 

(c)           for the avoidance of doubt, the Borrower, the Agent and each other
Lender shall retain and reserve its other rights and remedies respecting each
Affected Lender.

 

In the event that the Agent and the Borrower each agrees that an Affected Lender
has adequately remedied all matters that caused such Lender to be an Affected
Lender, then this Section 2.16 will no longer apply to such Lender.

 

Section 2.17          Replacement of Lenders.   If any Lender requests
compensation under Section 2.09, or if the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for the account of
any Lender pursuant to Section 2.12, or if any Lender is an Affected Lender,
then the Borrower may, at its sole expense and effort, upon notice to such
Lender and the Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in, and
consents required by, Section 8.07), all of its interests, rights and
obligations under this Agreement and the related Loan Documents to one or more
assignees that shall assume such obligations (which any such assignee may be
another Lender (other than an Affected Lender), if such Lender accepts such
assignment), provided that:

 

(a)           the Borrower shall have paid to the Agent the assignment fee
specified in Section 8.07(b);

 

(b)           such Lender shall have received payment of an amount equal to the
outstanding principal amount of its Loans, accrued interest thereon, accrued
fees and all other amounts payable to it hereunder and under the other Loan
Documents (including any amounts under Section 8.04(e)) from the assignee (to
the extent of such outstanding principal and accrued interest and fees) or the
Borrower (in the case of all other amounts);

 

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(c)           in the case of any such assignment resulting from a claim for
compensation under Section 2.09 or payments required to be made pursuant to
Section 2.12, such assignment will result in a reduction in such compensation or
payments thereafter; and

 

(d)           such assignment does not conflict with applicable Laws.

 

A Lender shall not be required to make any such assignment or delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrower to require such assignment and delegation
cease to apply.

 

ARTICLE III

 

CONDITIONS PRECEDENT

 

Section 3.01          Conditions Precedent to Effectiveness.  This Agreement
shall become effective on and as of the first date (the “Effective Date”) on
which the following conditions precedent have been satisfied:

 

(a)           The Lenders shall have been given such access to the management,
records, books of account, contracts and properties of the Borrower and its
Subsidiaries as they shall have requested.

 

(b)           The Borrower shall have paid all accrued fees and agreed expenses
of the Agent, the Arrangers and the Lenders, including but not limited to all
fees payable pursuant to the Fee Letter, and the reasonable accrued fees and
expenses of counsel to the Agent that have been invoiced at least one Business
Day prior to the Effective Date.

 

(c)           On the Effective Date, the following statements shall be true and
the Agent shall have received a certificate signed by a duly authorized officer
of the Borrower, dated the Effective Date, stating that:

 

(i)            The representations and warranties contained in Section 4.01 are
true and correct on and as of the Effective Date, both before and after giving
effect to the Initial Borrowing and the application of the proceeds thereof, as
though made on and as of such date; and

 

(ii)           No event has occurred and is continuing, or would result from the
Initial Borrowing or the application of the proceeds thereof, that constitutes a
Default.

 

(d)           The Agent shall have received the Notice of Initial Borrowing
pursuant to Section 2.02.

 

(e)           The Agent shall have received on or before the Effective Date the
following, each dated such day, in form and substance satisfactory to the Agent
and the Lenders:

 

(i)            Receipt by the Agent of executed counterparts of this Agreement
properly executed by a duly authorized officer of the Borrower and by each
Lender.

 

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(ii)           The Notes, payable to the order of the Lenders to the extent
requested by any Lender pursuant to Section 2.14(a).

 

(iii)          The articles of incorporation of the Borrower certified to be
true and complete as of a recent date by the appropriate governmental authority
of the state or other jurisdiction of its incorporation and certified by a
secretary, assistant secretary or associate secretary of the Borrower to be true
and correct as of the Effective Date.

 

(iv)          The bylaws of the Borrower certified by a secretary, assistant
secretary or associate secretary of the Borrower to be true and correct as of
the Effective Date.

 

(v)           Certified copies of the resolutions of the Board of Directors of
the Borrower approving this Agreement and the Notes, and of all documents
evidencing other necessary corporate action, third party consents and
governmental approvals, if any, with respect to this Agreement and the Notes.

 

(vi)          A certificate of the secretary, assistant secretary or associate
secretary of the Borrower certifying the names and true signatures of the
officers of the Borrower authorized to sign this Agreement and the Notes and the
other documents to be delivered hereunder.

 

(vii)         A certificate as of a recent date from the Borrower’s state of
incorporation evidencing that the Borrower is in good standing in such state.

 

(viii)        A favorable opinion of counsel for the Borrower, in form and
substance reasonably acceptable to the Lenders.

 

(ix)          A written opinion of Sidley Austin LLP, special New York counsel
for the Agent, addressed to the Agent and the Lenders, with respect to the
enforceability of this Agreement and the Notes issued on the Effective Date, in
form and substance reasonably acceptable to the Agent.

 

(x)           Evidence that that certain Credit Agreement, dated as of
February 23, 2011, by and among the Borrower, the lenders from time to time
parties thereto, and Union Bank, N.A., as agent (as the same shall have been
amended or otherwise modified prior to the date hereof, the “Existing Term Loan
Agreement”) shall have been terminated and cancelled and all indebtedness
thereunder shall have been (or shall concurrently with the funding of the Loans
hereunder be) fully repaid.

 

Section 3.02          Determinations Under Section 3.01.  For purposes of
determining compliance with the conditions specified in Section 3.01 and the
satisfaction of each Lender with respect to letters delivered to it from the
Borrower as set forth in Sections 4.01(a), 4.01(e) and 4.01(f), each Lender that
has signed this Agreement shall be deemed to have consented to, approved or
accepted or to be satisfied with each document or other matter required
thereunder to be consented to or approved by or acceptable or satisfactory to
the Lenders unless an officer of the Agent responsible for the transactions
contemplated by this Agreement shall have received notice from such Lender prior
to the date that the Borrower designates as the proposed Effective

 

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Date, specifying its objection thereto.  The Agent shall promptly notify the
Lenders and the Borrower of the occurrence of the Effective Date.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES

 

Section 4.01          Representations and Warranties of the Borrower.  The
Borrower represents and warrants as follows:

 

(a)           Each of the Borrower and each Material Subsidiary:  (i) is a
corporation or other entity duly organized and validly existing under the Laws
of the jurisdiction of its incorporation or organization; (ii) has all requisite
corporate or if the Material Subsidiary is not a corporation, other comparable
power necessary to own its assets and carry on its business as presently
conducted; (iii) has all governmental licenses, authorizations, consents and
approvals necessary to own its assets and carry on its business as presently
conducted, if the failure to have any such license, authorization, consent or
approval is reasonably likely to have a Material Adverse Effect and except as
disclosed to the Agent in the SEC Reports or by means of a letter from the
Borrower to the Lenders (such letter, if any, to be delivered to the Agent for
prompt distribution to the Lenders) delivered prior to the execution and
delivery of this Agreement (which, in each case, shall be satisfactory to each
Lender in its sole discretion) and except that (A) APS from time to time may
make minor extensions of its lines, plants, services or systems prior to the
time a related franchise, certificate of convenience and necessity, license or
permit is procured, (B) from time to time communities served by APS may become
incorporated and considerable time may elapse before such a franchise is
procured, (C) certain such franchises may have expired prior to the
renegotiation thereof, (D) certain minor defects and exceptions may exist which,
individually and in the aggregate, are not material and (E) certain franchises,
certificates, licenses and permits may not be specific as to their geographical
scope); and (iv) is qualified to do business in all jurisdictions in which the
nature of the business conducted by it makes such qualification necessary and
where failure so to qualify is reasonably likely to have a Material Adverse
Effect.

 

(b)           The execution, delivery and performance by the Borrower of this
Agreement and the other Loan Documents, and the consummation of the transactions
contemplated hereby, are within the Borrower’s corporate powers, have been duly
authorized by all necessary corporate action, and do not (i) contravene the
Borrower’s articles of incorporation or by-laws, (ii) contravene any Law,
decree, writ, injunction or determination of any Governmental Authority, in each
case applicable to or binding upon the Borrower or any of its properties,
(iii) contravene any contractual restriction binding on or affecting the
Borrower or (iv) cause the creation or imposition of any Lien upon the assets of
the Borrower or any Material Subsidiary, except for Liens created under this
Agreement and except where such contravention or creation or imposition of such
Lien is not reasonably likely to have a Material Adverse Effect.

 

(c)           No authorization or approval or other action by, and no notice to
or filing with, any Governmental Authority is required for the due execution,
delivery and performance by the Borrower of this Agreement or the Notes to be
delivered by it.

 

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(d)           This Agreement has been, and each of the other Loan Documents upon
execution and delivery will have been, duly executed and delivered by the
Borrower.  This Agreement is, and each of the other Loan Documents upon
execution and delivery will be, the legal, valid and binding obligation of the
Borrower enforceable against the Borrower in accordance with their respective
terms, subject, however, to the application by a court of general principles of
equity and to the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar Laws affecting creditors’ rights
generally.

 

(e)           The Consolidated balance sheet of the Borrower as of December 31,
2011, and the related Consolidated statements of income and cash flows of the
Borrower for the fiscal year then ended, accompanied by an opinion thereon of
Deloitte & Touche LLP, independent registered public accountants, and the
Consolidated balance sheet of the Borrower as of September 30, 2012, and the
related Consolidated statements of income and cash flows of the Borrower for the
nine months then ended, duly certified by the chief financial officer of the
Borrower, copies of which have been furnished to the Agent, fairly present in
all material respects, subject, in the case of said balance sheet as of
September 30, 2012, and said statements of income and cash flows for the nine
months then ended, to year-end audit adjustments, the Consolidated financial
condition of the Borrower as at such dates and the Consolidated results of the
operations of the Borrower for the periods ended on such dates, all in
accordance with GAAP (except as disclosed therein).  Except as disclosed to the
Agent in the SEC Reports or by means of a letter from the Borrower to the
Lenders (such letter, if any, to be delivered to the Agent for prompt
distribution to the Lenders) delivered prior to the execution and delivery of
this Agreement (which, in each case, shall be satisfactory to each Lender in its
sole discretion), since December 31, 2011, there has been no Material Adverse
Effect.

 

(f)            There is no pending or, to the knowledge of an Authorized Officer
of the Borrower, threatened action, suit, investigation, litigation or
proceeding, including, without limitation, any Environmental Action, affecting
the Borrower or any of its Subsidiaries before any court, governmental agency or
arbitrator that (i) purports to affect the legality, validity or enforceability
of this Agreement or any other Loan Document or the consummation of the
transactions contemplated hereby or (ii) would be reasonably likely to have a
Material Adverse Effect (except as disclosed to the Agent in the SEC Reports or
by means of a letter from the Borrower to the Lenders (such letter, if any, to
be delivered to the Agent for prompt distribution to the Lenders) delivered
prior to the execution and delivery of this Agreement (which, in each case,
shall be satisfactory to each Lender in its sole discretion)), and there has
been no adverse change in the status, or financial effect on the Borrower or any
of its Subsidiaries, of such disclosed litigation that would be reasonably
likely to have a Material Adverse Effect.

 

(g)           No proceeds of any Loan will be used to acquire any equity
security not issued by the Borrower of a class that is registered pursuant to
Section 12 of the Securities Exchange Act of 1934.

 

(h)           The Borrower is not engaged in the business of extending credit
for the purpose of purchasing or carrying margin stock (within the meaning of
Regulation U issued by the Board of Governors of the Federal Reserve System),
and no proceeds of any Loan will be used to purchase or carry any margin stock
or to extend credit to others for the purpose of purchasing or carrying any
margin stock, in any case in violation of Regulation U.  After application of
the

 

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proceeds of any Loan, not more than 25% of the value of the assets subject to
any restriction under this Agreement on the right to sell, pledge, transfer, or
otherwise dispose of such assets is represented by margin stock.

 

(i)            The Borrower and its Subsidiaries have filed all United States of
America Federal income Tax returns and all other material Tax returns which are
required to be filed by them and have paid all Taxes due pursuant to such
returns or pursuant to any assessment received by the Borrower or any of its
Subsidiaries, except to the extent that (i) such Taxes are being contested in
good faith and by appropriate proceedings and that appropriate reserves for the
payment thereof have been maintained by the Borrower and its Subsidiaries in
accordance with GAAP or (ii) the failure to make such filings or such payments
is not reasonably likely to have a Material Adverse Effect.  The charges,
accruals and reserves on the books of the Borrower and its Material Subsidiaries
as set forth in the most recent financial statements of the Borrower delivered
to the Agent pursuant to Section 4.01(e) or Section 5.01(h)(i) or (ii) hereof in
respect of Taxes and other governmental charges are, in the opinion of the
Borrower, adequate.

 

(j)            Set forth on Schedule 4.01(j) hereto (as such schedule may be
modified from time to time by the Borrower by written notice to the Agent) is a
complete and accurate list of all the Material Subsidiaries of the Borrower.

 

(k)           Set forth on Schedule 4.01(k) hereto is a complete and accurate
list identifying any Indebtedness of the Borrower outstanding in a principal
amount equal to or exceeding $5,000,000 and which is not described in the
financial statements referred to in Section 4.01(e).

 

(l)            The Borrower is not an “investment company”, or a company
“controlled” by an “investment company”, within the meaning of the Investment
Company Act of 1940, as amended.

 

(m)          No report, certificate or other written information furnished by
the Borrower or any of its Subsidiaries to the Agent, any Arranger or any Lender
in connection with the transactions contemplated hereby and the negotiation of
this Agreement or delivered hereunder or any other Loan Document (as modified or
supplemented by other information so furnished) at the time so furnished, when
taken together as a whole with all such written information so furnished,
contains an untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except as would not
reasonably be expected to result in a Material Adverse Effect; provided that
with respect to any projected financial information, forecasts, estimates or
forward-looking information, the Borrower represents only that such information
and materials have been prepared in good faith on the basis of assumptions
believed to be reasonable at the time of preparation of such forecasts, and no
representation or warranty is made as to the actual attainability of any such
projections, forecasts, estimates or forward-looking information.

 

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ARTICLE V

 

COVENANTS OF THE BORROWER

 

Section 5.01          Affirmative Covenants.  So long as any Loan or any other
Obligations shall remain unpaid, the Borrower shall:

 

(a)           Compliance with Laws, Etc.  (i) Comply, and cause each of its
Material Subsidiaries to comply, in all material respects, with all applicable
Laws of Governmental Authorities, such compliance to include, without
limitation, compliance with ERISA and Environmental Laws, unless the failure to
so comply is not reasonably likely to have a Material Adverse Effect and
(ii) comply at all times with all Laws, orders, decrees, writs, injunctions or
determinations of any Governmental Authority relating to the incurrence or
maintenance of Indebtedness by the Borrower, unless the failure to so comply is
not reasonably likely to have a Material Adverse Effect.

 

(b)           Payment of Taxes, Etc.  Pay and discharge, and cause each of its
Subsidiaries to pay and discharge, before the same shall become delinquent, all
Taxes, imposed upon it or upon its property; provided, however, that neither the
Borrower nor any of its Subsidiaries shall be required to pay or discharge any
such Tax (i) that is being contested in good faith and by proper proceedings and
as to which appropriate reserves are being maintained in accordance with GAAP or
(ii) if the failure to pay such Tax is not reasonably likely to have a Material
Adverse Effect.

 

(c)           Maintenance of Insurance.  Maintain, and cause each of its
Material Subsidiaries to maintain, insurance with responsible and reputable
insurance companies or associations in such amounts and covering such risks as
is usually carried by companies engaged in similar businesses and owning similar
properties in the same general areas in which the Borrower or such Material
Subsidiary operates; provided, however, that the Borrower and its Subsidiaries
may self-insure to the same extent as other companies engaged in similar
businesses and owning similar properties in the same general areas in which the
Borrower or such Subsidiary operates and to the extent consistent with prudent
business practice.

 

(d)           Preservation of Corporate Existence, Etc.  Preserve and maintain,
and cause each of its Material Subsidiaries to preserve and maintain, its
corporate existence, rights (charter and statutory) and franchises (other than
“franchises” as described in Arizona Revised Statutes, Section 40-283 or any
successor provision) reasonably necessary in the normal conduct of its business,
if the failure to maintain such rights or privileges is reasonably likely to
have a Material Adverse Effect, and, in the case of APS, will cause APS to use
its commercially reasonable efforts to preserve and maintain such franchises
reasonably necessary in the normal conduct of its business, except that (i) APS
from time to time may make minor extensions of its lines, plants, services or
systems prior to the time a related franchise, certificate of convenience and
necessity, license or permit is procured, (ii) from time to time communities
served by APS may become incorporated and considerable time may elapse before
such a franchise is procured, (iii) certain such franchises may have expired
prior to the renegotiation thereof, (iv) certain minor defects and exceptions
may exist which, individually and in the aggregate, are not material and
(v) certain franchises, certificates, licenses and permits may not be specific
as to their

 

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geographical scope; provided, however, that the Borrower and its Subsidiaries
may consummate any merger or consolidation permitted under Section 5.02(b).

 

(e)           Visitation Rights.  At any reasonable time and from time to time,
permit and cause each of its Subsidiaries to permit the Agent or any of the
Lenders or any agents or representatives thereof, to examine and make copies of
and abstracts from the records and books of account of, and visit the properties
of, the Borrower and any of its Subsidiaries, and to discuss the affairs,
finances and accounts of the Borrower and any of its Subsidiaries with any of
their officers or directors; provided, however, that the Borrower and its
Subsidiaries reserve the right to restrict access to any of its properties in
accordance with reasonably adopted procedures relating to safety and security;
and provided further that the costs and expenses incurred by such Lender or its
agents or representatives in connection with any such examinations, copies,
abstracts, visits or discussions shall be, upon the occurrence and during the
continuation of a Default, for the account of the Borrower and, in all other
circumstances, for the account of such Lender.

 

(f)            Keeping of Books.  Keep, and cause each of its Material
Subsidiaries to keep, proper books of record and account, in which full and
correct entries shall be made of all financial transactions and the assets and
business of the Borrower and each such Subsidiary in a manner that permits the
preparation of financial statements in accordance with GAAP.

 

(g)           Maintenance of Properties, Etc.  Keep, and cause each Material
Subsidiary to keep, all property useful and necessary in its business in good
working order and condition (ordinary wear and tear excepted), if the failure to
do so is reasonably likely to have a Material Adverse Effect, it being
understood that this covenant relates only to the working order and condition of
such properties and shall not be construed as a covenant not to dispose of
properties.

 

(h)           Reporting Requirements.  Furnish to the Agent:

 

(i)            as soon as available and in any event within 50 days after the
end of each of the first three fiscal quarters of each fiscal year of the
Borrower, (A) for each such fiscal quarter of the Borrower, Consolidated
statements of income and cash flows of the Borrower for such fiscal quarter and
the related Consolidated balance sheet of the Borrower as at the end of such
fiscal quarter setting forth in each case in comparative form the corresponding
figures for the corresponding fiscal quarter (or, in the case of the balance
sheet, as of the end of) in the preceding fiscal year and (B) for the period
commencing at the end of the previous fiscal year and ending with the end of
each fiscal quarter, Consolidated statements of income and cash flows of the
Borrower for such period setting forth in each case in comparative form the
corresponding figures for the corresponding period in the preceding fiscal year;
provided that so long as the Borrower remains subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended, the Borrower
may provide, in satisfaction of the requirements of this first sentence of this
Section 5.01(h)(i), its report on Form 10-Q for such fiscal quarter.  Each set
of financial statements provided under this Section 5.01(h)(i) shall be
accompanied by a certificate of an Authorized Officer, which certificate shall
state that said Consolidated financial statements fairly present in all material
respects the Consolidated financial condition and results of operations of the
Borrower in accordance with GAAP (except as

 

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disclosed therein) as at the end of, and for, such period (subject to normal
year-end audit adjustments) and shall set forth reasonably detailed calculations
demonstrating compliance with Section 5.03;

 

(ii)           as soon as available and in any event within 90 days after the
end of each fiscal year of the Borrower, audited Consolidated statements of
income and cash flows of the Borrower for such year and the related Consolidated
balance sheet of the Borrower as at the end of such year, setting forth in each
case in comparative form the corresponding figures for the preceding fiscal
year; provided that, so long as the Borrower remains subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended, the Borrower
may provide, in satisfaction of the requirements of this first sentence of this
Section 5.01(h)(ii), its report on Form 10-K for such fiscal year.  Each set of
financial statements provided pursuant to this Section 5.01(h)(ii) shall be
accompanied by (A) an opinion thereon of independent certified public
accountants of recognized national standing, which opinion shall state that said
Consolidated financial statements fairly present in all material respects the
Consolidated financial condition and results of operations of the Borrower as at
the end of, and for, such fiscal year, in accordance with GAAP (except as
disclosed therein) and (B) a certificate of an Authorized Officer, which
certificate shall set forth reasonably detailed calculations demonstrating
compliance with Section 5.03;

 

(iii)          as soon as possible and in any event within five days after any
Authorized Officer of the Borrower knows of the occurrence of each Default
continuing on the date of such statement, a statement of an Authorized Officer
of the Borrower setting forth details of such Default and the action that the
Borrower has taken and proposes to take with respect thereto;

 

(iv)          promptly after the sending or filing thereof, copies of all
reports and registration statements (other than exhibits thereto and
registration statements on Form S-8 or its equivalent) that the Borrower or any
Subsidiary files with the Securities and Exchange Commission;

 

(v)           promptly after an Authorized Officer becomes aware of the
commencement thereof, notice of all actions and proceedings before any court,
governmental agency or arbitrator affecting the Borrower or any of its
Subsidiaries of the type described in Section 4.01(f), except, with respect to
any matter referred to in Section 4.01(f)(ii), to the extent disclosed in a
report on Form 8-K, Form 10-Q or Form 10-K of the Borrower;

 

(vi)          promptly after an Authorized Officer becomes aware of the
occurrence thereof, notice of any change by Moody’s or S&P of its respective
Public Debt Rating or of the cessation (or subsequent commencement) by Moody’s
or S&P of publication of its respective Public Debt Rating;

 

(vii)         promptly after the occurrence thereof, notice of the occurrence of
any ERISA Event, together with (x) a written statement of an Authorized Officer
of the Borrower specifying the details of such ERISA Event and the action that
the Borrower

 

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has taken and proposes to take with respect thereto, (y) a copy of any notice
with respect to such ERISA Event that may be required to be filed with the PBGC
and (z) a copy of any notice delivered by the PBGC to the Borrower or an ERISA
Affiliate with respect to such ERISA Event; and

 

(viii)        such other information respecting the Borrower or any of its
Subsidiaries as any Lender through the Agent may from time to time reasonably
request.

 

Information required to be delivered pursuant to Sections 5.01(h)(i), (ii) and
(iv) above shall be deemed to have been delivered on the date on which the
Borrower provides notice to the Agent that such information has been posted on
the Borrower’s website on the Internet at www.pinnaclewest.com, at
sec.gov/edaux/searches.htm or at another website identified in such notice and
accessible by the Lenders without charge; provided that (i) such notice may be
included in a certificate delivered pursuant to Section 5.01(h)(i) or (ii) and
(ii) the Borrower shall deliver paper copies of the information referred to in
Section 5.01(h)(i), (ii), and (iv) to any Lender which requests such delivery.

 

(i)            Change in Nature of Business.  Conduct directly or through its
Subsidiaries the same general type of business conducted by the Borrower and its
Material Subsidiaries on the date hereof.

 

(j)            Ownership of APS.  Except to the extent permitted under
Section 5.02(b), at all times continue to own directly or indirectly at least
80% of the outstanding capital stock of APS.

 

Section 5.02          Negative Covenants.  So long as Loan or any other
Obligations shall remain unpaid, the Borrower shall not:

 

(a)           Liens, Etc.  Directly or indirectly create, incur, assume or
permit to exist any Lien securing Indebtedness for borrowed money on or with
respect to any property or asset (including, without limitation, the capital
stock of APS) of the Borrower, whether now owned or held or hereafter acquired
(unless it makes, or causes to be made, effective provision whereby the
Obligations will be equally and ratably secured with any and all other
obligations thereby secured so long as such other Indebtedness shall be so
secured, such security to be pursuant to an agreement reasonably satisfactory to
the Required Lenders); provided, however, that this Section 5.02(a) shall not
apply to Liens securing Indebtedness for borrowed money (other than Indebtedness
for borrowed money secured by the capital stock of APS) which do not in the
aggregate exceed at any time outstanding the principal amount of $50,000,000.

 

(b)           Mergers, Etc.  Merge or consolidate with or into any Person, or
permit any of its Material Subsidiaries to do so, except that (i) any Material
Subsidiary of the Borrower may merge or consolidate with or into any other
Material Subsidiary of the Borrower, (ii) any Subsidiary of the Borrower may
merge into the Borrower or any Material Subsidiary of the Borrower and (iii) the
Borrower or any Material Subsidiary may merge with any other Person so long as
the Borrower or such Material Subsidiary is the surviving corporation, provided,
in each case, that no Default shall have occurred and be continuing at the time
of such proposed transaction or would result therefrom.

 

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(c)           Sales, Etc. of Assets.  Sell, lease, transfer or otherwise dispose
of, or permit any of its Material Subsidiaries to sell, lease, transfer or
otherwise dispose of, any assets, or grant any option or other right to
purchase, lease or otherwise acquire any assets to any Person other than the
Borrower or any Subsidiary of the Borrower, except (i) dispositions in the
ordinary course of business, including, without limitation, sales or other
dispositions of electricity and related and ancillary services, other
commodities, emissions credits and similar mechanisms for reducing pollution,
and damaged, obsolete, worn out or surplus property no longer required or useful
in the business or operations of the Borrower or any of its Subsidiaries,
(ii) sale or other disposition of patents, copyrights, trademarks or other
intellectual property that are, in the Borrower’s reasonable judgment, no longer
economically practicable to maintain or necessary in the conduct of the business
of the Borrower or its Subsidiaries and any license or sublicense of
intellectual property that does not interfere with the business of the Borrower
or any Material Subsidiary, (iii) in a transaction authorized by subsection
(b) of this Section, (iv) individual dispositions occurring in the ordinary
course of business which involve assets with a book value not exceeding
$5,000,000, (v) sales, leases, transfers or other dispositions of assets during
the term of this Agreement having an aggregate book value not to exceed 30% of
the total of all assets properly appearing on the most recent balance sheet of
the Borrower provided pursuant to Section 4.01(e) or 5.01(h)(ii) hereof, (vi) at
any time following the consummation of the Four Corners Acquisition and the
closure by APS of Units 1, 2 and 3 of the Four Corners Power Plant near
Farmington, New Mexico, as described in the SEC Reports, disposition of all or
any portion of APS’ interests in such Units 1, 2 and 3, and (vii) any Lien
permitted under Section 5.02(a).

 

Section 5.03          Financial Covenant.  So long as any Loan or any other
Obligations shall remain unpaid, the Borrower will maintain a ratio of
(a) Consolidated Indebtedness to (b) the sum of Consolidated Indebtedness plus
Consolidated Net Worth of not greater than 0.65 to 1.

 

ARTICLE VI

 

EVENTS OF DEFAULT

 

Section 6.01          Events of Default.  If any of the following events
(“Events of Default”) shall occur and be continuing:

 

(a)           The Borrower shall fail to pay when due (i) any principal of any
Loan or (ii) any interest on any Loan or any fees or other amounts payable under
this Agreement or any other Loan Documents, and (in the case of this clause
(ii) only) such failure shall continue for a period of three Business Days; or

 

(b)           Any representation or warranty made by the Borrower herein or by
the Borrower (or any of its officers) in any certificate or other document
delivered in connection with this Agreement or any other Loan Document shall
prove to have been incorrect in any material respect when made or deemed made or
furnished; or

 

(c)           (i) The Borrower shall fail to perform or observe any term,
covenant or agreement contained in Section 5.01(d) (as to the corporate
existence of the Borrower), Section 5.01(h)(iii), Section 5.01(h)(vi),
Section 5.01(j), Section 5.02 or Section 5.03; or (ii) the Borrower shall fail
to perform or observe any term, covenant or agreement contained in
Section 5.01(e) if such

 

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failure shall remain unremedied for 15 days after written notice thereof shall
have been given to the Borrower by the Agent or any Lender; or (iii) the
Borrower shall fail to perform or observe any other term, covenant or agreement
contained in this Agreement or any other Loan Document on its part to be
performed or observed if such failure shall remain unremedied for 30 days after
written notice thereof shall have been given to the Borrower by the Agent or any
Lender; or

 

(d)           (i) The Borrower or any of its Material Subsidiaries shall fail to
pay (A) any principal of or premium or interest on any Indebtedness that is
outstanding in a principal amount of at least $35,000,000 in the aggregate (but
excluding Indebtedness outstanding hereunder), or (B) an amount, or post
collateral as contractually required in an amount, of at least $35,000,000 in
respect of any Hedge Agreement, of the Borrower or such Material Subsidiary (as
the case may be), in each case, when the same becomes due and payable (whether
by scheduled maturity, required prepayment, acceleration, demand or otherwise),
and such failure shall continue after the applicable grace period, if any,
specified in the agreement or instrument relating to such Indebtedness or Hedge
Agreement; or (ii) any event of default shall exist under any agreement or
instrument relating to any such Indebtedness and shall continue after the
applicable grace period, if any, specified in such agreement or instrument, if
the effect of such event is to accelerate, or to permit the acceleration of, the
maturity of such Indebtedness; or

 

(e)           The Borrower or any of its Material Subsidiaries shall fail to pay
any principal of or premium or interest in respect of any operating lease in
respect of which the payment obligations of the Borrower have a present value of
at least $35,000,000, when the same becomes due and payable (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise), and
such failure shall continue after the applicable grace period, if any, specified
in such operating lease, if the effect of such failure is to terminate, or to
permit the termination of, such operating lease; or

 

(f)            The Borrower or any of its Material Subsidiaries shall generally
not pay its debts as such debts become due, or shall admit in writing its
inability to pay its debts generally, or shall make a general assignment for the
benefit of creditors; or any proceeding shall be instituted by or against the
Borrower or any of its Material Subsidiaries seeking to adjudicate it a bankrupt
or insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under any
Debtor Relief Law, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, custodian or other similar official for it
or for any substantial part of its property and, in the case of any such
proceeding instituted against it (but not instituted by it), either such
proceeding shall remain undismissed or unstayed for a period of 60 days, or any
of the actions sought in such proceeding (including, without limitation, the
entry of an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, it or for any substantial part of its
property) shall occur; or the Borrower or any of its Material Subsidiaries shall
take any corporate action to authorize any of the actions set forth above in
this subsection (f); or

 

(g)           Judgments or orders for the payment of money that exceed any
applicable insurance coverage (the insurer of which shall be rated at least “A”
by A.M. Best Company) by more than $35,000,000 in the aggregate shall be
rendered against the Borrower or any Material Subsidiary and such judgments or
orders shall continue unsatisfied or unstayed for a period of 45 days; or

 

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(h)           (i) Any “person” or “group” (as such terms are used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any
employee benefit plan of such person or its subsidiaries, and any person or
entity acting in its capacity as trustee, agent or other fiduciary or
administrator of any such plan) becomes the “beneficial owner” (as defined in
Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934), directly or
indirectly, of 30% or more of the equity securities of the Borrower entitled to
vote for members of the board of directors of the Borrower; or (ii) during any
period of 24 consecutive months, a majority of the members of the board of
directors of the Borrower cease (other than due to death or disability) to be
composed of individuals (A) who were members of that board on the first day of
such period, (B) whose election or nomination to that board was approved by
individuals referred to in clause (A) above constituting at the time of such
election or nomination at least a majority of that board or (C) whose election
or nomination to that board was approved by individuals referred to in clauses
(A) and (B) above constituting at the time of such election or nomination at
least a majority of that board; or

 

(i)            (i) An ERISA Event occurs with respect to a Pension Plan or
Multiemployer Plan which has resulted or could reasonably be expected to result
in liability of the Borrower under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of $35,000,000;
or (ii) the Borrower or any ERISA Affiliate fails to pay when due, after the
expiration of any applicable grace period, any installment payment with respect
to its withdrawal liability under Section 4201 of ERISA under a Multiemployer
Plan in an aggregate amount in excess of $35,000,000;

 

then, and in any such event, the Agent shall at the request, or may with the
consent, of the Required Lenders, by notice to the Borrower, (i) declare the
Loans, all interest thereon and all other amounts payable under this Agreement
to be forthwith due and payable, whereupon the Loans, all such 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; provided, however, that in the event of an actual or
deemed entry of an order for relief with respect to the Borrower under the
Bankruptcy Code of the United States of America, the Loans, all such interest
and all such amounts shall automatically become and be due and payable, without
presentment, demand, protest or any notice of any kind, all of which are hereby
expressly waived by the Borrower, and (ii) exercise all rights and remedies
available to it under this Agreement, the other Loan Documents and applicable
Law.

 

ARTICLE VII

 

THE AGENT

 

Section 7.01          Appointment and Authority.  Each of the Lenders hereby
irrevocably appoints JPMorgan Chase Bank, N.A. to act on its behalf as the Agent
hereunder and under the other Loan Documents and authorizes the Agent to take
such actions on its behalf and to exercise such powers as are delegated to the
Agent by the terms hereof or thereof, together with such actions and powers as
are reasonably incidental thereto.  Except as set forth in Section 7.06, the
provisions of this Article are solely for the benefit of the Agent and the
Lenders, and neither the Borrower nor any of its Affiliates shall have rights as
a third party beneficiary of any of such provisions.

 

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Section 7.02          Rights as a Lender.  The Person serving as the Agent
hereunder shall have the same rights and powers in its capacity as a Lender as
any other Lender and may exercise the same as though it were not the Agent and
the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or
unless the context otherwise requires, include the Person serving as the Agent
hereunder in its individual capacity.  Such Person and its Affiliates may accept
deposits from, lend money to, act as the financial advisor or in any other
advisory capacity for and generally engage in any kind of business with the
Borrower or any Subsidiary or other Affiliate thereof as if such Person were not
the Agent hereunder and without any duty to account therefor to the Lenders.

 

Section 7.03          Exculpatory Provisions.  The Agent shall not have any
duties or obligations except those expressly set forth herein and in the other
Loan Documents.  Without limiting the generality of the foregoing, the Agent:

 

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

 

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

 

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

 

The Agent shall not be liable for any action taken or not taken by it (i) with
the consent or at the request of the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary, or as the Agent shall believe
in good faith shall be necessary, under the circumstances as provided in
Section 6.01 and Section 8.01) or (ii) in the absence of its own gross
negligence or willful misconduct.  The Agent shall be deemed not to have
knowledge of any Default unless and until notice describing such Default is
given to the Agent by the Borrower or a Lender.

 

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

 

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Section 7.04          Reliance by Agent.  The Agent shall be entitled to rely
upon, and shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing
(including any electronic message, internet or intranet website posting or other
distribution) believed by it to be genuine and to have been signed, sent or
otherwise authenticated by the proper Person.  The Agent also may rely upon any
statement made to it orally or by telephone and believed by it to have been made
by the proper Person, and shall not incur any liability for relying thereon.  In
determining compliance with any condition hereunder to the making of any Loan
that by its terms must be fulfilled to the satisfaction of a Lender, the Agent
may presume that such condition is satisfactory to such Lender unless the Agent
shall have received notice to the contrary from such Lender prior to the making
of such Loan.  The Agent may consult with legal counsel (who may be counsel for
the Borrower), independent accountants and other experts selected by it, and
shall not be liable for any action taken or not taken by it in good faith in
accordance with the advice of any such counsel, accountants or experts.

 

Section 7.05          Delegation of Duties.  The Agent may perform any and all
of its duties and exercise its rights and powers hereunder or under any other
Loan Document by or through any one or more sub-agents appointed by the Agent. 
The Agent and any such sub-agent may perform any and all of its duties and
exercise its rights and powers by or through their respective Related Parties. 
The exculpatory provisions of this Article shall apply to any such sub-agent and
to the Related Parties of the Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Agent.

 

Section 7.06          Resignation of Agent.  The Agent may at any time give
notice of its resignation to the Lenders and the Borrower.  Upon receipt of any
such notice of resignation, the Required Lenders shall have the right, with the
consent of the Borrower so long as no Event of Default has occurred and is
continuing, to appoint a successor, which shall be a bank with an office in the
United States of America, or an Affiliate of any such bank with an office in the
United States of America.  If no such successor shall have been so appointed by
the Required Lenders and shall have accepted such appointment within 45 days
after the retiring Agent gives notice of its resignation, then the retiring
Agent may, on behalf of the Lenders, appoint a successor Agent meeting the
qualifications set forth above; provided that if the Agent shall notify the
Borrower and the Lenders that no qualifying Person has accepted such
appointment, then such resignation shall nonetheless become effective in
accordance with such notice and (1) the retiring Agent shall be discharged from
its duties and obligations hereunder and under the other Loan Documents (except
that in the case of any collateral security held by the Agent on behalf of the
Lenders under any of the Loan Documents, the retiring Agent shall continue to
hold such collateral security until such time as a successor Agent is appointed)
and (2) all payments, communications and determinations provided to be made by,
to or through the Agent shall instead be made by or to each Lender directly,
until such time as the Required Lenders appoint a successor Agent as provided
for above in this Section.  Upon the acceptance of a successor’s appointment as
Agent hereunder, such successor shall succeed to and become vested with all of
the rights, powers, privileges and duties of the retiring (or retired) Agent,
and the retiring Agent shall be discharged from all of its duties and
obligations hereunder or under the other Loan Documents (if not already
discharged therefrom as provided above in this Section).  The fees payable by
the Borrower to a successor Agent shall be as agreed between the Borrower and
such

 

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successor.  After the retiring Agent’s resignation hereunder and under the other
Loan Documents, the provisions of this Article and Section 8.04 shall continue
in effect for the benefit of such retiring Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while the retiring Agent was acting as Agent.

 

Section 7.07          Non-Reliance on Agent and Other Lenders.  Each Lender
acknowledges that it has, independently and without reliance upon the Agent or
any other Lender or any of their Related Parties and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement.  Each Lender also acknowledges that it
will, independently and without reliance upon the Agent or any other Lender or
any of their Related Parties and based on such documents and information as it
shall from time to time deem appropriate, continue to make its own decisions in
taking or not taking action under or based upon this Agreement, any other Loan
Document or any related agreement or any document furnished hereunder or
thereunder.

 

Section 7.08          No Other Duties, Etc.  Anything herein to the contrary
notwithstanding, none of the Arrangers, the Syndication Agent, the Documentation
Agent or any other agents listed on the cover page hereof shall have any powers,
duties or responsibilities under this Agreement or any of the other Loan
Documents, except in its capacity, as applicable, as the Agent or a Lender
hereunder.

 

ARTICLE VIII

 

MISCELLANEOUS

 

Section 8.01          Amendments, Etc.  No amendment or waiver of any provision
of this Agreement or any other Loan Document, nor consent to any departure by
the Borrower therefrom, shall in any event be effective unless the same shall be
in writing and signed by the Required Lenders, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; provided, however, that no amendment, waiver or consent shall

 

(a)           unless agreed to by each Lender directly affected thereby,
(i) reduce or forgive the principal amount of any Loan, reduce the rate of or
forgive any interest thereon (provided that only the consent of the Required
Lenders shall be required to waive the applicability of any post-default
increase in interest rates), or reduce or forgive any fees hereunder (other than
fees payable to the Agent or the Arrangers for their own respective accounts),
(ii) extend the final scheduled maturity date or any other scheduled date for
the payment of any principal of or interest on any Loan, or extend the time of
payment of any fees hereunder (other than fees payable to the Agent or the
Arrangers for their own respective accounts), or (iii) increase any Commitment
of any such Lender over the amount thereof in effect or extend the maturity
thereof (it being understood that a waiver of any Default, if agreed to by the
Required Lenders or all Lenders (as may be required hereunder with respect to
such waiver), shall not constitute such an increase);

 

(b)           unless agreed to by all of the Lenders, (i) reduce the percentage
of the aggregate Commitments or of the aggregate unpaid principal amount of the
Loans, or the number or

 

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percentage of Lenders, that shall be required for the Lenders or any of them to
take or approve, or direct the Agent to take, any action hereunder or under any
other Loan Document (including as set forth in the definition of “Required
Lenders”), (ii) change any other provision of this Agreement or any of the other
Loan Documents requiring, by its terms, the consent or approval of all the
Lenders for any amendment, modification, waiver, discharge or termination
thereof or any consent to any departure by the Borrower therefrom, or
(iii) change or waive any provision of Section 2.13, any other provision of this
Agreement or any other Loan Document requiring pro rata treatment of any
Lenders, or this Section 8.01 or Section 2.17(b); and

 

(c)           unless agreed to by the Agent in addition to the Lenders required
as provided hereinabove to take such action, affect the respective rights or
obligations of the Agent hereunder or under any of the other Loan Documents.

 

Section 8.02          Notices, Etc.

 

(a)           All notices and other communications provided for hereunder shall
be either (x) in writing (including facsimile communication) and mailed, faxed
or delivered or (y) delivered, furnished, distributed or made available as and
to the extent set forth in Sections 8.02(b) and (c), if to the Borrower, at the
address specified on Schedule 8.02; if to any Lender, at its Domestic Lending
Office; and if to the Agent, at the address specified on Schedule 8.02; or, as
to the Borrower or the Agent, at such other address as shall be designated by
such party in a written notice to the other parties and, as to each other party,
at such other address as shall be designated by such party in a written notice
to the Borrower and the Agent.  All such notices and communications shall, when
mailed or faxed, be effective when deposited in the mails or faxed,
respectively, except that notices and communications to the Agent pursuant to
Article II, III or VII shall not be effective until received by the Agent.
 Delivery by facsimile of an executed counterpart of any amendment or waiver of
any provision of this Agreement or the Notes or of any Exhibit hereto to be
executed and delivered hereunder shall be effective as delivery of a manually
executed counterpart thereof.  Notices delivered through electronic
communications to the extent provided in subsection (b) below, shall be
effective as provided in such subsection (b).  Upon request of the Borrower, the
Agent will provide to the Borrower (i) copies of each Administrative
Questionnaire or (ii) the address of each Lender.

 

(b)           Notices and other communications to the Lenders and the Agent
hereunder may be delivered or furnished by electronic communication (including
e-mail and Internet or intranet websites) pursuant to procedures approved by the
Agent and agreed to by the Borrower, provided that the foregoing shall not apply
to notices to any Lender pursuant to Article II if such Lender has notified the
Agent and the Borrower that it is incapable of receiving notices under such
Article by electronic communication.  The Agent or the Borrower may, in its
discretion, agree to accept notices and other communications to it hereunder by
electronic communications pursuant to procedures approved by it, provided that
approval of such procedures may be limited to particular notices or
communications.  Unless the Agent and the Borrower otherwise agree, (i) notices
and other communications sent to an e-mail address shall be deemed received upon
the sender’s receipt of an acknowledgement from the intended recipient (such as
by the “return receipt requested” function, as available, return e-mail or other
written acknowledgement), provided that if such notice or other communication is
not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening

 

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of business on the next business day for the recipient, and (ii) notices or
communications posted to an Internet or intranet website shall be deemed
received upon the deemed receipt by the intended recipient at its e-mail address
as described in the foregoing clause (i) of notification that such notice or
communication is available and identifying the website address therefor.

 

(c)           The Borrower agrees that the Agent may make materials delivered to
the Agent pursuant to Sections 5.01(h)(i), (ii) and (iv), as well as any other
written information, documents, instruments and other material relating to the
Borrower or any of its Subsidiaries and relating to this Agreement, the Notes or
the transactions contemplated hereby, or any other materials or matters relating
to this Agreement, the Notes or any of the transactions contemplated hereby
(collectively, the “Communications”) available to the Lenders by posting such
notices on Intralinks or a substantially similar electronic system (the
“Platform”).  The Borrower acknowledges that (i) the distribution of material
through an electronic medium is not necessarily secure and that there are
confidentiality and other risks associated with such distribution, (ii) the
Platform is provided “as is” and “as available” and (iii) neither the Agent nor
any of its Affiliates warrants the accuracy, adequacy or completeness of the
Communications or the Platform and each expressly disclaims liability for errors
or omissions in the Communications or the Platform.  No warranty of any kind,
express, implied or statutory, including, without limitation, any warranty of
merchantability, fitness for a particular purpose, non-infringement of third
party rights or freedom from viruses or other code defects, is made by the Agent
or any of its Affiliates in connection with the Platform.

 

(d)           Each Lender agrees that notice to it (as provided in the next
sentence) (a “Notice”) specifying that any Communications have been posted to
the Platform shall constitute effective delivery of such information, documents
or other materials to such Lender for purposes of this Agreement; provided that
if requested by any Lender the Agent shall deliver a copy of the Communications
to such Lender by e-mail, facsimile or mail.  Each Lender agrees (i) to notify
the Agent in writing of such Lender’s e-mail address to which a Notice may be
sent by electronic transmission (including by electronic communication) on or
before the date such Lender becomes a party to this Agreement (and from time to
time thereafter to ensure that the Agent has on record an effective e-mail
address for such Lender) and (ii) that any Notice may be sent to such e-mail
address.

 

(e)           The Borrower hereby acknowledges that certain of the Lenders may
be “public-side” Lenders (i.e., Lenders that do not wish to receive material
non-public information with respect to the Borrower or its securities) (each, a
“Public Lender”).  The Borrower hereby agrees that (w) all Communications that
are to be made available to Public Lenders shall be clearly and conspicuously
marked “PUBLIC” which shall mean that the word “PUBLIC” shall appear prominently
on the first page thereof; (x) by marking Communications “PUBLIC,” the Borrower
shall be deemed to have authorized the Agent, the Arrangers and the Lenders to
treat such Communications as not containing any material non-public information
with respect to the Borrower or its securities for purposes of United States of
America federal and state securities laws; (y) all Communications marked
“PUBLIC” are permitted to be made available through a portion of the Platform
designated as “Public Investor;” and (z) the Agent and the Arrangers shall be
entitled to treat any Communications that are not marked “PUBLIC” as being
suitable only for posting on a portion of the Platform not marked as “Public
Investor.”  Notwithstanding the foregoing, the Borrower shall be under no
obligation to mark any Communications

 

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“PUBLIC.” Notwithstanding anything to the contrary herein, the Borrower and the
Agent need not provide to any Public Lender any information, notice, or other
document hereunder that is not public information, including without limitation,
the Notice of Initial Borrowing and any notice of Default.

 

Section 8.03          No Waiver; Cumulative Remedies; Enforcement.  No failure
by any Lender or the Agent to exercise, and no delay by any such Person in
exercising, any right, remedy, power or privilege hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege.  The rights,
remedies, powers and privileges herein provided are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by Law.

 

Notwithstanding anything to the contrary contained herein or in any other Loan
Document, the authority to enforce rights and remedies hereunder and under the
other Loan Documents against the Borrower shall be vested exclusively in, and
all actions and proceedings at Law in connection with such enforcement shall be
instituted and maintained exclusively by, the Agent in accordance with
Article VI for the benefit of all the Lenders; provided, however, that the
foregoing shall not prohibit (a) the Agent from exercising on its own behalf the
rights and remedies that inure to its benefit (solely in its capacity as Agent)
hereunder and under the other Loan Documents, (b) any Lender from exercising
setoff rights in accordance with Section 8.05 (subject to the terms of
Section 2.13), or (c) any Lender from filing proofs of claim or appearing and
filing pleadings on its own behalf during the pendency of a proceeding relative
to the Borrower under any Debtor Relief Law; and provided, further, that if at
any time there is no Person acting as Agent hereunder and under the other Loan
Documents, then (i) the Required Lenders shall have the rights otherwise
ascribed to the Agent pursuant to Article VI and (ii) in addition to the matters
set forth in clauses (b) and (c) of the preceding proviso and subject to
Section 2.13, any Lender may, with the consent of the Required Lenders, enforce
any rights and remedies available to it and as authorized by the Required
Lenders.

 

Section 8.04          Costs and Expenses; Indemnity; Damage Waiver.

 

(a)           The Borrower agrees to pay on demand all costs and expenses of the
Agent in connection with the administration, modification and amendment of this
Agreement, the Notes and the other Loan Documents to be delivered hereunder,
including, without limitation, the reasonable fees and expenses of counsel for
the Agent with respect thereto and with respect to advising the Agent as to its
rights and responsibilities under this Agreement.  The Borrower further agrees
to pay on demand all costs and expenses of the Agent and the Lenders, if any
(including, without limitation, reasonable counsel fees and expenses), in
connection with the enforcement (whether through negotiations, legal proceedings
or otherwise) of this Agreement, the Notes and the other Loan Documents to be
delivered hereunder, including, without limitation, reasonable fees and expenses
of counsel for the Agent and each Lender in connection with the enforcement of
rights under this Section 8.04(a).

 

(b)           The Borrower agrees to indemnify and hold harmless the Agent (and
any sub-agent thereof), each Lender, each Arranger, the Syndication Agent, the
Documentation Agent and each Related Party of any of the foregoing (each, an
“Indemnified Party”) from and against

 

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any and all claims, damages, losses, liabilities and expenses (including,
without limitation, reasonable fees and expenses of counsel) incurred by or
asserted or awarded against any Indemnified Party, in each case arising out of
or in connection with or by reason of (including, without limitation, in
connection with any investigation, litigation or proceeding or preparation of a
defense in connection therewith, whether based on contract, tort or any other
theory) (i) the Notes, this Agreement, any other Loan Document, any of the
transactions contemplated herein or the actual or proposed use of the proceeds
of any Loan, or (ii) the actual or alleged presence of Hazardous Materials on
any property of the Borrower or any of its Subsidiaries or any Environmental
Action relating in any way to the Borrower or any of its Subsidiaries, provided
that such indemnity shall not, as to any Indemnified Party, be available to the
extent (a) such fees and expenses are expressly stated in this Agreement to be
payable by the Indemnified Party, included expenses payable under Section 2.12,
Section 5.01(e) and Section 8.07(b) or (b) such claim, damage, loss, liability
or expense is found in a final, non-appealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party’s gross negligence,
willful misconduct or material breach of its obligations under this Agreement,
in which case any fees and expenses previously paid or advanced by the Borrower
to such Indemnified Party in respect of such indemnified obligation will be
returned by such Indemnified Party.  In the case of an investigation, litigation
or other proceeding to which the indemnity in this Section 8.04(b) applies, such
indemnity shall be effective whether or not such investigation, litigation or
proceeding is brought by the Borrower, its directors, equityholders or creditors
or an Indemnified Party or any other Person, whether or not any Indemnified
Party is otherwise a party thereto, and whether or not the transactions
contemplated hereby are consummated, provided that if the Borrower and such
Indemnified Party are adverse parties in any such litigation or proceeding, and
the Borrower prevails in a final, non-appealable judgment by a court of
competent jurisdiction, any fees or expenses previously paid or advanced by the
Borrower to such Indemnified Party pursuant to this Section 8.04(b) will be
returned by such Indemnified Party.

 

(c)           To the extent that the Borrower for any reason fails to
indefeasibly pay any amount required under subsection (a) or (b) of this
Section to be paid by it to the Agent (or any sub-agent thereof) or any Related
Party of any of the foregoing (and without limiting its obligation to do so),
each Lender severally agrees to pay to the Agent (or any such sub-agent) or such
Related Party, as the case may be, such Lender’s Ratable Share (determined as of
the time that the applicable unreimbursed expense or indemnity payment is
sought) of such unpaid amount, provided that the unreimbursed expense or
indemnified loss, claim, damage, liability or related expense, as the case may
be, was incurred by or asserted against the Agent (or any such sub-agent) in its
capacity as such, or against any Related Party of any of the foregoing acting
for the Agent (or any such sub-agent) in connection with such capacity.

 

(d)           Without limiting the rights of indemnification of the Indemnified
Parties set forth in this Agreement with respect to liabilities asserted by
third parties, each party hereto also agrees not to assert any claim for
special, indirect, consequential or punitive damages against the other parties
hereto, or any Related Party of any party hereto, on any theory of liability,
arising out of or otherwise relating to the Notes, this Agreement, any other
Loan Document, any of the transactions contemplated herein or the actual or
proposed use of the proceeds of the Loans.  No Indemnified Party shall be liable
for any damages arising from the use by unintended recipients of any information
or other materials distributed by it through telecommunications, electronic or
other information transmission systems (including Intralinks, SyndTrak or
similar systems) in

 

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connection with this Agreement or the other Loan Documents, provided that such
indemnity shall not, as to any Indemnified Party, be available to the extent
such damages are found in a final, non-appealable judgment by a court of
competent jurisdiction to have resulted from such Indemnified Party’s gross
negligence or willful misconduct.

 

(e)           If any payment of principal of, or Conversion of, any Eurodollar
Rate Loan is made by the Borrower to or for the account of a Lender other than
on the last day of the Interest Period for such Loan, as a result of a payment
or Conversion pursuant to Section 2.06(d) or (e), 2.08 or 2.10, acceleration of
the maturity of the Loans pursuant to Section 6.01 or for any other reason, or
by an Eligible Assignee to a Lender other than on the last day of the Interest
Period for such Loan upon an assignment of rights and obligations under this
Agreement pursuant to Section 8.07 as a result of a demand by the Borrower
pursuant to Section 2.17, the Borrower shall, upon demand by such Lender (with a
copy of such demand to the Agent), pay to the Agent for the account of such
Lender any amounts required to compensate such Lender for any additional losses,
costs or expenses that it may reasonably incur as a result of such payment or
Conversion, including, without limitation, any loss (excluding loss of
anticipated profits), cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by any Lender to fund or
maintain such Loan.

 

(f)            Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
Sections 2.09, 2.12 and 8.04 shall survive the payment in full of principal,
interest and all other amounts payable hereunder and under the Notes.

 

Section 8.05          Right of Set-off.  Upon (i) the occurrence and during the
continuance of any Event of Default and (ii) the making of the request or the
granting of the consent specified by Section 6.01 to authorize the Agent to
declare the Loans due and payable pursuant to the provisions of Section 6.01,
each Lender and each of its Affiliates is hereby authorized at any time and from
time to time, to the fullest extent permitted by Law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by such Lender or any
such Affiliate to or for the credit or the account of the Borrower against any
and all of the obligations of the Borrower now or hereafter existing under this
Agreement or any other Loan Document to such Lender, whether or not such Lender
shall have made any demand under this Agreement or such Note and although such
obligations may be contingent or unmatured or are owed to a branch or office of
such Lender different from the branch or office holding such deposit or
obligated on such indebtedness.  Each Lender agrees promptly to notify the
Borrower after any such set-off and application, provided that the failure to
give such notice shall not affect the validity of such set-off and application. 
The rights of each Lender under this Section are in addition to other rights and
remedies (including, without limitation, other rights of set-off) that such
Lender may have.

 

Section 8.06          Effectiveness; Binding Effect.  Except as provided in
Section 3.01, this Agreement shall become effective when it shall have been
executed by the Borrower and the Agent and when the Agent shall have received
counterparts hereof that, when taken together, bear the signatures of each of
the other parties hereto and thereafter shall be binding upon and inure to the
benefit of the Borrower, the Agent and each Lender and their respective
successors and assigns, except that the Borrower shall not have the right to
assign its rights hereunder or any

 

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interest herein without the prior written consent of the Lenders (and any
purported assignment without such consent shall be null and void).

 

Section 8.07          Successors and Assigns.

 

(a)           The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that the Borrower may not assign or otherwise transfer
any of its rights or obligations hereunder without the prior written consent of
the Agent and each Lender (and any purported assignment or transfer without such
consent shall be null and void) and no Lender may assign or otherwise transfer
any of its rights or obligations hereunder except (i) to an assignee in
accordance with the provisions of subsection (b) of this Section, (ii) by way of
participation in accordance with the provisions of subsection (d) of this
Section, or (iii) by way of pledge or assignment of a security interest subject
to the restrictions of subsection (f) of this Section.  Nothing in this
Agreement, expressed or implied, shall be construed to confer upon any Person
(other than the parties hereto, their respective successors and assigns
permitted hereby, Participants to the extent provided in subsection (d) of this
Section and, to the extent expressly contemplated hereby, the Related Parties of
each of the Agent and the Lenders) any legal or equitable right, remedy or claim
under or by reason of this Agreement.

 

(b)           Any Lender may at any time assign to one or more assignees (other
than to an Affected Lender) all or a portion of its rights and obligations under
this Agreement (including all or a portion of the Loans owing to it at such
time); provided that any such assignment shall be subject to the following
conditions:

 

(i)            Minimum Amounts.

 

(A)          in the case of an assignment of the entire principal amount of the
assigning Lender’s Loans at the time owing to it or in the case of an assignment
to a Lender, no minimum amount need be assigned; and

 

(B)          in any case not described in subsection (b)(i)(A) of this Section,
the aggregate outstanding principal amount of the Loans of the assigning Lender
subject to each such assignment, determined as of the date the Assignment and
Assumption with respect to which such assignment is delivered to the Agent or,
if “Trade Date” is specified in the Assignment and Assumption, as of the Trade
Date, shall not be less than $5,000,000 unless each of the Agent and, so long as
no Event of Default has occurred and is continuing, the Borrower otherwise
consents (each such consent not to be unreasonably withheld or delayed).

 

(ii)           Proportionate Amounts.  Each partial assignment shall be made as
an assignment of a proportionate part of all the assigning Lender’s rights and
obligations under this Agreement with respect to the Loans assigned, and each
such assignment shall be of a constant, and not a varying, percentage of all
rights and obligations under this Agreement;

 

(iii)          Required Consents.  No consent shall be required for any
assignment except to the extent required by subsection (b)(i)(B) of this
Section and, in addition:

 

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(A)          the consent of the Borrower (such consent not to be unreasonably
withheld or delayed; provided that the Borrower shall be deemed to have
consented to any such assignment unless it shall object thereto by written
notice to the Agent within ten (10) Business Days after having received notice
thereof) shall be required unless (1) an Event of Default has occurred and is
continuing at the time of such assignment or (2) such assignment is to a Lender,
an Affiliate of a Lender or an Approved Fund; and

 

(B)          the consent of the Agent (such consent not to be unreasonably
withheld or delayed) shall be required if such assignment is to a Person that is
not a Lender, an Affiliate of a Lender or an Approved Fund with respect to such
Lender.

 

(iv)          Assignment and Assumption.  The parties to each assignment shall
execute and deliver to the Agent an Assignment and Assumption, together with a
processing and recordation fee in the amount of $3,500; provided, however, that
no such fee shall be payable in the case of an assignment made at the request of
the Borrower to an existing Lender.  The assignee, if it is not a Lender, shall
deliver to the Agent an Administrative Questionnaire.

 

(v)           No Assignment to Borrower.  No such assignment shall be made to
the Borrower or any of the Borrower’s Affiliates or Subsidiaries.

 

(vi)          No Assignment to Natural Persons.  No such assignment shall be
made to a natural person.

 

Subject to acceptance and recording thereof by the Agent pursuant to subsection
(c) of this Section and notice thereof to the Borrower, from and after the
effective date specified in each Assignment and Assumption, the assignee
thereunder shall be a party to this Agreement and, to the extent of the interest
assigned by such Assignment and Assumption, have the rights and obligations of a
Lender under this Agreement, and the assigning Lender thereunder shall, to the
extent of the interest assigned by such Assignment and Assumption, be released
from its obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto) but shall continue
to be entitled to the benefits of Sections 2.09, 2.12 and 8.04 with respect to
facts and circumstances occurring prior to the effective date of such
assignment.  Upon request, the Borrower (at its expense) shall execute and
deliver a Note to the assignee Lender.  Any assignment or transfer by a Lender
of rights or obligations under this Agreement that does not comply with this
subsection shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
subsection (d) of this Section.

 

(c)           Register.  The Agent shall maintain at the Agent’s Office a copy
of each Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitments of,
and principal amounts of the Loans owing to, each Lender pursuant to the terms
hereof from time to time (the “Register”).  The entries in the Register shall be
conclusive, absent manifest error, and the Borrower, the Agent and the Lenders

 

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may treat each Person whose name is recorded in the Register pursuant to the
terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary.  The Register shall be available for
inspection by the Borrower and any Lender, at any reasonable time and from time
to time upon reasonable prior notice.

 

(d)           Participations.  Any Lender may at any time, without the consent
of, or notice to, the Borrower or the Agent, sell participations to any Person
(other than a natural person, an Affected Lender or the Borrower or any of the
Borrower’s Affiliates or Subsidiaries) (each, a “Participant”) in all or a
portion of such Lender’s rights and/or obligations under this Agreement
(including all or a portion of the Loans owing to it); provided that (i) such
Lender’s obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) the Borrower, the Agent and the Lenders
shall continue to deal solely and directly with such Lender in connection with
such Lender’s rights and obligations under this Agreement and (iv) no
participant under any such participation shall have any right to approve any
amendment or waiver of any provision of this Agreement or any Note, or any
consent to any departure by the Borrower therefrom, except to the extent that
such amendment, waiver or consent would reduce the principal of, or interest on,
any Obligations or any fees or other amounts payable hereunder, in each case to
the extent subject to such participation, or postpone any date fixed for any
payment of principal of, or interest on, any Obligations or any fees or other
amounts payable hereunder, in each case to the extent subject to such
participation.

 

Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, waiver or other modification addressing the matters set forth
in clause (iv) above to the extent subject to such participation.  Subject to
subsection (e) of this Section, the Borrower agrees that each Participant shall
be entitled to the benefits of Sections 2.09, 2.12 and 8.04(e) to the same
extent as if it were a Lender and had acquired its interest by assignment
pursuant to subsection (b) of this Section.  To the extent permitted by Law,
each Participant also shall be entitled to the benefits of Section 8.05 as
though it were a Lender, provided such Participant agrees to be subject to
Section 2.13 as though it were a Lender.  Each Lender that sells a participation
shall, acting solely for this purpose as an agent of the Borrower, maintain a
register on which it enters the name and address of each Participant and the
principal amounts (and stated interest) of each Participant’s interest in the
Loans or other obligations under the Loan Documents (the “Participant
Register”); provided that no Lender shall have any obligation to disclose all or
any portion of the Participant Register (including the identity of any
Participant or any information relating to a Participant’s interest in any Loans
or its other obligations under any Loan Document) to any Person except to the
extent that such disclosure is necessary to establish that such Loan or other
obligation is in registered form under Section 5f.103-1(c) of the United States
Treasury Regulations.  The entries in the Participant Register shall be
conclusive absent manifest error, and such Lender shall treat each Person whose
name is recorded in the Participant Register as the owner of such participation
for all purposes of this Agreement notwithstanding any notice to the contrary. 
For the avoidance of doubt, the Agent (in its capacity as Agent) shall have no
responsibility for maintaining a Participant Register.

 

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(e)           Limitations upon Participant Rights.  A Participant shall not be
entitled to receive any greater payment under Section 2.09 or 2.12 than the
applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to
such Participant is made with the Borrower’s prior written consent.  A
Participant that would be a Foreign Lender if it were a Lender shall not be
entitled to the benefits of Section 2.12 unless the Borrower is notified of the
participation sold to such Participant and such Participant agrees, for the
benefit of the Borrower, to comply with Section 2.12(e) as though it were a
Lender.

 

(f)            Certain Pledges.  Any Lender may at any time pledge or assign a
security interest in all or any portion of its rights under this Agreement
(including under its Note, if any) to secure obligations of such Lender,
including any pledge or assignment to secure obligations to a Federal Reserve
Bank; provided that no such pledge or assignment shall release such Lender from
any of its obligations hereunder or substitute any such pledgee or assignee for
such Lender as a party hereto.

 

(g)           The words “execution,” “signed,” “signature,” and words of like
import in any Assignment and Assumption shall be deemed to include electronic
signatures or the keeping of records in electronic form, each of which shall be
of the same legal effect, validity or enforceability as a manually executed
signature or the use of a paper-based recordkeeping system, as the case may be,
to the extent and as provided for in any applicable Law, including the Federal
Electronic Signatures in Global and National Commerce Act, the New York State
Electronic Signatures and Records Act, or any other similar state Laws based on
the Uniform Electronic Transactions Act.

 

Section 8.08          Confidentiality.  Neither the Agent nor any Lender may
disclose to any Person any confidential, proprietary or non-public information
of the Borrower furnished to the Agent or the Lenders by the Borrower (such
information being referred to collectively herein as the “Borrower
Information”), except that each of the Agent and the Lenders may disclose
Borrower Information (i) to its and its affiliates’ employees, officers,
directors, agents and advisors having a need to know in connection with this
Agreement (it being understood that the Persons to whom such disclosure is made
will be informed of the confidential nature of such Borrower Information and
instructed to keep such Borrower Information confidential on substantially the
same terms as provided herein), (ii) to the extent requested by any regulatory
authority, (iii) to the extent required by applicable Laws or regulations or by
any subpoena or similar legal process, (iv) to any other party to this
Agreement, (v) in connection with the exercise of any remedies hereunder or any
suit, action or proceeding relating to this Agreement or the enforcement of
rights hereunder, (vi) subject to an agreement containing provisions
substantially the same as those of this Section 8.08, (A) to any assignee or
participant or prospective assignee or participant, (B) to any direct, indirect,
actual or prospective counterparty (and its advisor) to any swap, derivative or
securitization transaction related to the obligations under this Agreement and
(C) to any credit insurance provider relating to the Borrower and its
Obligations, (vii) to the extent such Borrower Information (A) is or becomes
generally available to the public on a non-confidential basis other than as a
result of a breach of this Section 8.08 by the Agent or such Lender or their
Related Parties, or (B) is or becomes available to the Agent or such Lender on a
nonconfidential basis from a source other than the Borrower (provided that the
source of such information was not known by the recipient after inquiry to be
bound by a

 

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confidentiality agreement with or other contractual, legal or fiduciary
obligation of confidentiality to the Borrower or any other Person with respect
to such information) and (viii) with the consent of the Borrower.  The
obligations under this Section 8.08 shall survive for two calendar years after
the date of the termination of this Agreement.

 

Section 8.09          Governing Law.  This Agreement and the Notes shall be
governed by, and construed in accordance with, the Laws of the State of New York
(including Sections 5-1401 and 5-1402 of the General Obligations Law but
otherwise without regard to conflict of law principles).

 

Section 8.10          Counterparts; Integration.  This Agreement may be executed
in counterparts (and by different parties hereto in different counterparts),
each of which shall constitute an original, but all of which when taken together
shall constitute a single contract.  Delivery of an executed counterpart of a
signature page of this Agreement by telecopy or other electronic imaging means
shall be effective as delivery of a manually executed counterpart of this
Agreement.  This Agreement and the other Loan Documents constitute the entire
contract among the parties relating to the subject matter hereof and supersede
any and all previous agreements and understandings, oral or written, relating to
the subject matter hereof.

 

Section 8.11          Jurisdiction, Etc.

 

(a)           Each of the parties hereto hereby submits to the non-exclusive
jurisdiction of any New York State court or federal court of the United States
of America sitting in New York City, and any appellate court from any thereof,
in any action or proceeding arising out of or relating to this Agreement or the
other Loan Documents, or for recognition or enforcement of any judgment, and
each of the parties hereto hereby agrees that all claims in respect of any such
action or proceeding may be heard and determined in any such New York State
court or, to the extent permitted by Law, in such federal court.  Nothing in
this Agreement shall affect any right that any party may otherwise have to bring
any action or proceeding relating to this Agreement or the Notes in the courts
of any jurisdiction.

 

(b)           Each of the parties hereto irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection that
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or the Notes in any New
York State court or federal court of the United States of America sitting in New
York City, and any appellate court from any thereof.  Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by Law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.

 

Section 8.12          Payments Set Aside.  To the extent that any payment by or
on behalf of the Borrower is made to the Agent or any Lender, or the Agent or
any Lender exercises its right of setoff, and such payment or the proceeds of
such setoff or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including pursuant to any
settlement entered into by the Agent or such Lender in its discretion) to be
repaid to a trustee, receiver or any other party, in connection with any
proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of
such recovery, the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment

 

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had not been made or such setoff had not occurred, and (b) each Lender severally
agrees to pay to the Agent upon demand its applicable share (without
duplication) of any amount so recovered from or repaid by the Agent, plus
interest thereon from the date of such demand to the date such payment is made
at a rate per annum equal to the Federal Funds Rate from time to time in
effect.  The obligations of the Lenders under clause (b) of the preceding
sentence shall survive the payment in full of the Obligations and the
termination of this Agreement.

 

Section 8.13          Patriot Act.  The Agent and each Lender hereby notifies
the Borrower that pursuant to the requirements of the USA Patriot Act (Title III
of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is
required to obtain, verify and record information that identifies each borrower
(including the Borrower), guarantor or grantor (the “Loan Parties”), which
information includes the name and address of each Loan Party and other
information that will allow such Lender to identify such Loan Party in
accordance with the Act.  The Borrower shall provide, to the extent commercially
reasonable, such information and take such actions as are reasonably requested
by the Agent or any Lender in order to assist the Agent and such Lender in
maintaining compliance with the Act.

 

Section 8.14          Waiver of Jury Trial.  EACH OF THE BORROWER, THE AGENT AND
THE LENDERS HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES OR ANY OTHER LOAN
DOCUMENT OR THE ACTIONS OF THE BORROWER, THE AGENT OR ANY LENDER IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.

 

Section 8.15          No Advisory or Fiduciary Responsibility.  In connection
with all aspects of each transaction contemplated hereby, the Borrower
acknowledges and agrees that: (i) the credit facilities provided for hereunder
and any related arranging or other services in connection therewith (including
in connection with any amendment, waiver or other modification hereof or of any
other Loan Document) are an arm’s-length commercial transaction between the
Borrower, on the one hand, and the Agent, each of the Lenders and each of the
Arrangers, on the other hand, and the Borrower is capable of evaluating and
understanding and understands and accepts the terms, risks and conditions of the
transactions contemplated hereby and by the other Loan Documents (including any
amendment, waiver or other modification hereof or thereof); (ii) in connection
with the process leading to such transaction, each of the Agent, the Lenders and
the Arrangers is and has been acting solely as a principal and is not the
financial advisor, agent or fiduciary, for the Borrower or any of its
Affiliates, stockholders, creditors or employees or any other Person;
(iii) neither the Agent nor any Lender or Arranger has assumed or will assume an
advisory, agency or fiduciary responsibility in favor of the Borrower with
respect to any of the transactions contemplated hereby or the process leading
thereto, including with respect to any amendment, waiver or other modification
hereof or of any other Loan Document (irrespective of whether the Agent or any
Lender or Arranger has advised or is currently advising the Borrower or any of
its Affiliates on other matters) and neither the Agent nor any Lender or
Arranger has any obligation to the Borrower with respect to the transactions
contemplated hereby except those obligations expressly set forth herein and in
the other Loan Documents; (iv) the Agent, each of the Lenders and the Arrangers
and their respective Affiliates may be engaged in a broad range of transactions
that involve interests that differ from those of the Borrower and its
Affiliates, and

 

54

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neither the Agent nor any Lender or Arranger has any obligation to disclose any
of such interests by virtue of any advisory, agency or fiduciary relationship;
and (v) the Agent and each Lender and Arranger have not provided and will not
provide any legal, accounting, regulatory or tax advice with respect to any of
the transactions contemplated hereby (including any amendment, waiver or other
modification hereof or of any other Loan Document) and the Borrower has
consulted its own legal, accounting, regulatory and tax advisors to the extent
it has deemed appropriate.  The Borrower hereby waives and releases, to the
fullest extent permitted by Law, any claims that it may have against the Agent
and each Lender and Arranger with respect to any breach or alleged breach of
agency or fiduciary duty in connection with the Loan Documents.

 

Section 8.16          Survival of Representations and Warranties.  All
representations and warranties made hereunder and in any other Loan Document or
other document delivered pursuant hereto or thereto or in connection herewith or
therewith shall survive the execution and delivery hereof and thereof.  Such
representations and warranties have been or will be relied upon by the Agent and
each Lender, regardless of any investigation made by the Agent or any Lender or
on their behalf, and shall continue in full force and effect as long as any Loan
or any other Obligation hereunder shall remain unpaid or unsatisfied.

 

Section 8.17          Severability.  If any provision of this Agreement or the
other Loan Documents is held to be illegal, invalid or unenforceable, (a) the
legality, validity and enforceability of the remaining provisions of this
Agreement and the other Loan Documents shall not be affected or impaired thereby
and (b) the parties shall endeavor in good faith negotiations to replace the
illegal, invalid or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the illegal, invalid or
unenforceable provisions.  The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGES FOLLOW]

 

55

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

 

 

PINNACLE WEST CAPITAL CORPORATION

 

 

 

 

 

 

By:

/s/ Lee R. Nickloy

 

 

 

 

 

Name:

Lee R. Nickloy

 

 

Title:

Vice President and Treasurer

 

Signature Page to

Pinnacle West Term Loan Agreement

 

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ADMINISTRATIVE AGENT:

JPMORGAN CHASE BANK, N.A., as Agent

 

 

 

 

 

 

By:

/s/ Nancy R. Barwig

 

 

 

 

 

Name:

Nancy R. Barwig

 

 

Title:

Credit Executive

 

Signature Page to

Pinnacle West Term Loan Agreement

 

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LENDERS:

JPMORGAN CHASE BANK, N.A., as a Lender

 

 

 

 

 

 

By:

/s/ Nancy R. Barwig

 

 

 

 

 

Name:

Nancy R. Barwig

 

 

Title:

Credit Executive

 

Signature Page to

Pinnacle West Term Loan Agreement

 

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SUNTRUST BANK, as a Lender

 

 

 

 

 

 

By:

/s/ Andrew Johnson

 

 

 

 

 

Name:

Andrew Johnson

 

 

Title:

Director

 

Signature Page to

Pinnacle West Term Loan Agreement

 

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U.S. BANK NATIONAL ASSOCIATION, as a Lender

 

 

 

 

 

 

By:

/s/ Holland H. Williams

 

 

 

 

 

Name:

Holland H. Williams

 

 

Title:

AVP & Portfolio Manager

 

Signature Page to

Pinnacle West Term Loan Agreement

 

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UMB BANK ARIZONA, N.A., as a Lender

 

 

 

 

 

 

By:

/s/ James S. Patterson, Jr.

 

 

 

 

 

Name:

James S. Patterson, Jr.

 

 

Title:

Chief Executive Officer

 

Signature Page to

Pinnacle West Term Loan Agreement

 

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NATIONAL BANK OF ARIZONA, as a Lender

 

 

 

 

 

 

By:

/s/ Gary J. Naquin

 

 

 

 

 

Name:

Gary J. Naquin

 

 

Title:

Senior Vice President

 

Signature Page to

Pinnacle West Term Loan Agreement

 

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SCHEDULE 1.01

 

COMMITMENTS AND RATABLE SHARES

 

Lender

 

Commitment

 

Ratable Share

 

 

 

 

 

 

 

 

JPMorgan Chase Bank, N.A.

 

$

50,000,000.00

 

40.00

%

 

 

 

 

 

 

 

SunTrust Bank

 

$

25,000,000.00

 

20.00

%

 

 

 

 

 

 

 

U.S. Bank National Association

 

$

25,000,000.00

 

20.00

%

 

 

 

 

 

 

 

UMB Bank Arizona, N.A.

 

$

15,000,000.00

 

12.00

%

 

 

 

 

 

 

 

National Bank of Arizona

 

$

10,000,000.00

 

8.00

%

 

 

 

 

 

 

 

TOTAL

 

$

125,000,000.00

 

100.00

%

 

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SCHEDULE 4.01(j)

 

SUBSIDIARIES

 

Arizona Public Service Company

 

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SCHEDULE 4.01(k)

 

EXISTING INDEBTEDNESS

 

None.

 

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SCHEDULE 8.02

 

CERTAIN ADDRESSES FOR NOTICES

 

BORROWER:

 

 

 

 

Pinnacle West Capital Corporation

 

400 North Fifth Street

 

Mail Station 9040

 

Phoenix, AZ 85004

 

Attention:

Treasurer

 

Telephone:

(602) 250-3300

 

Telecopier:

(602) 250-3902

 

Electronic

Lee.Nickloy@PinnacleWest.com

 

 

AGENT:

 

 

Notices relating to Borrowing requests or Interest Election Requests:

 

 

 

JPMorgan Chase Bank, N.A.

 

10 S. Dearborn St.

 

Mail Code IL1-0010

 

Chicago, IL 60603

 

Facsimile No.: (888) 292-9533

 

Telephone No.: (312) 385-7080

 

Attention:  Darren Cunningham

 

Email:  darren.cunningham@jpmchase.com

 

Notices other than with respect to Borrowing requests or Interest Election
Requests:

 

 

 

JPMorgan Chase Bank, N.A.

 

10 S. Dearborn St.

 

Mail Code IL1-0090

 

Chicago, IL 60603

 

Facsimile No.: (312) 732-1762

 

Telephone No.: (312) 732-1838

 

Attention:  Nancy Barwig

 

Email:  nancy.r.barwig@jpmorgan.com

 

With a copy to the Portfolio Management Administration:

 

 

 

JPMorgan Chase Bank, N.A.

 

10 S. Dearborn St.

 

Mail Code IL1-0874

 

Chicago, IL 60603

 

Facsimile No.: (312) 325-3150

 

Telephone No.: (312) 325-3238

 

Attention:  Lisa Tverdek

 

Email:  lisa.tverdek@jpmorgan.com

 

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