Filed by Bowne Pure Compliance




Exhibit 4(x)(3)

[EXECUTION COPY]




AMENDMENT NO. 2




TO

AMENDED AND RESTATED CREDIT AGREEMENT




This AMENDMENT NO. 2, dated as of July 31, 2008 (this “Amendment”), is made by and among UNS
ELECTRIC, INC., an Arizona corporation (“UNS Electric”), UNS GAS, INC., an Arizona corporation
(“UNS Gas”, and together with UNS Electric being referred to herein, individually, as a “Borrower”
and, collectively, as the “Borrowers”), UNISOURCE ENERGY SERVICES, INC., an Arizona corporation
(the “Guarantor”), the lenders listed on the signature pages of this Amendment as “Lenders” (such
lenders, together with their respective permitted assignees from time to time, being referred to
herein, collectively, as the “Lenders”), and UNION BANK OF CALIFORNIA, N.A., as administrative
agent for the Lenders (in such capacity, the “Administrative Agent”).



PRELIMINARY STATEMENT:




The Borrowers, the Guarantor, the Lenders and the Administrative Agent previously entered into
that certain Amended and Restated Credit Agreement, dated as of August 11, 2006, as amended by
Amendment No. 1 thereto, dated as of April 30, 2007 (as so amended, the “Existing Agreement”, as
further amended by this Amendment, the “Amended Agreement”, and as the Amended Agreement may
hereafter be amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”). The Borrowers and the Lenders desire to amend Section 8.03(a) of the Existing
Agreement in order to exclude, during the period from the effective date of this Amendment until
August 11, 2008, certain Long Term Debt of UNS Electric that it intends to incur prior to August
11, 2008 and utilize to repay, on the maturity date thereof, its existing 7.61% Senior Notes due
August 11, 2008. Each of the Borrowers, the Guarantor and the Required Lenders has agreed to such
amendment, on the terms and conditions set forth herein. The parties therefore agree as follows
(capitalized terms used but not defined herein having the meanings assigned such terms in the
Existing Agreement):



SECTION 1. Amendment to Existing Agreement. The Existing Agreement is, effective as of the
date hereof and subject to the satisfaction of the conditions precedent set forth in Section 2
hereof, hereby amended as follows:



(a) Consolidated Leverage Ratio. Section 8.03(a) of the Existing Agreement is hereby amended
and restated in its entirety to read as follows:




“(a) Consolidated Leverage Ratio. Such Borrower shall maintain at all times a ratio
of such Borrower’s Consolidated Long Term Debt to its Consolidated Total Capitalization of
not greater than (i) in the case of UNS Gas, 0.67 to 1.00, and (ii) in the case of UNS
Electric, 0.65 to 1.00; provided, however, that, solely for purposes of calculating such
ratio pursuant to the foregoing clause (ii) during the period from July 31, 2008 until the
repayment in full of UNS Electric’s existing Notes (as defined in the Note Purchase
Agreement to which UNS Electric is a party) (the “Existing UNS Electric Notes”) (but in
any event no later than August 11, 2008), the portion of any Long Term Debt of UNS
Electric incurred on or after July 31, 2008 that UNS Electric intends to utilize to repay
in full, on or before the maturity date thereof, the Existing UNS Electric Notes shall be
excluded from UNS Electric’s Consolidated Long Term Debt and Consolidated Total
Capitalization (provided, that UNS Electric shall have delivered to the Administrative
Agent, within two (2) Business Days after the date on which UNS Electric incurs such Long
Term Debt, an Officer’s Certificate certifying that the proceeds of such Long Term Debt
will be utilized to repay in full the Existing UNS Electric Notes on or before the
maturity date thereof).”




 


 









 





SECTION 2. Conditions of Effectiveness of Amendment. The amendment to the Existing Agreement
set forth in Section 1 hereof shall become effective as of the date hereof when, and only when, the
Administrative Agent shall have received counterparts of this Amendment executed by the Borrowers,
the Guarantor and the Required Lenders.



SECTION 3. Representations and Warranties of the Borrowers. Each Borrower represents and
warrants as follows:



(a) The execution and delivery by such Borrower of this Amendment, and the performance by such
Borrower of this Amendment and the Amended Agreement, are within such Borrower’s organizational
powers and have been duly authorized by all necessary corporate and, if required, stockholder
action, and do not and will not (i) violate any Requirement of Law, (ii) violate or result in a
default under any indenture, agreement or other instrument binding upon such Borrower or any of its
Subsidiaries or its assets, or give rise to a right thereunder to require any payment to be made by
such Borrower or any of its Subsidiaries, or (iii) result in the creation or imposition of any Lien
on any asset of such Borrower or any of its Subsidiaries. This Amendment has been duly executed
and delivered by such Borrower.



(b) The execution and delivery by such Borrower of this Amendment, and the performance by such
Borrower of this Amendment and the Amended Agreement, do not require any consent or approval of,
registration or filing with, or any other action by, any Governmental Authority, except as set
forth in Section 7.01(g) of the Amended Agreement.



(c) Each of this Amendment and the Amended Agreement constitutes a legal, valid and binding
obligation of such Borrower, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting the enforcement of
creditors’ rights generally and subject to general principles of equity, regardless of whether
considered in a proceeding in equity or at law.



(d) No Default or Event of Default with respect to such Borrower or the Guarantor has occurred
and is continuing.



 


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SECTION 4. Reference to and Effect on the Existing Agreement. (a) Upon the effectiveness of
this Amendment: (i) each reference in the Existing Agreement to “this Agreement”, “hereunder”,
“hereof” or words of like import referring to the Existing Agreement shall mean and be a reference
to the Credit Agreement; and (ii) each reference in any other Loan Document to “the Credit
Agreement”, “thereunder”, “thereof” or words of like import referring to the Existing Agreement
shall mean and be a reference to the Credit Agreement.



(b) Except as specifically amended above, the Existing Agreement shall continue to be in full
force and effect and is hereby in all respects ratified and confirmed.



(c) The execution, delivery and effectiveness of this Amendment shall not, except as expressly
provided herein, operate as a waiver of any right, power or remedy of the Lenders, the Issuing
Banks or the Administrative Agent under the Existing Agreement or any other Loan Document, nor
constitute a waiver of any provision of the Existing Agreement or any other Loan Document.



SECTION 5. Costs and Expenses. The Borrowers agree to pay on demand all reasonable
out-of-pocket expenses of the Administrative Agent in connection with the preparation, negotiation,
syndication, execution and delivery of this Amendment and the other instruments and documents to be
delivered hereunder, including, without limitation, the reasonable fees, charges and disbursements
of counsel to the Administrative Agent with respect thereto and with respect to advising the
Administrative Agent as to its rights and responsibilities hereunder and thereunder, and all
out-of-pocket expenses incurred by the Administrative Agent, any Issuing Bank or any Lender
(including, without limitation, the fees, charges and disbursements of any counsel for the
Administrative Agent, any Issuing Bank or any Lender) in connection with the enforcement (whether
through negotiations, legal proceedings or otherwise) of this Amendment.


 


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SECTION 6. Execution in Counterparts. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which taken together shall
constitute but one and the same instrument. In furtherance of the foregoing, it is understood and
agreed that
signatures hereto submitted by facsimile or other electronic transmission shall be deemed to
be, and shall constitute, original signatures.



SECTION 7. Governing Law. This Amendment shall be governed by, and construed in accordance
with, the laws of the State of the New York.



[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]






 


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



	 	 	 	 	 
	 	UNS ELECTRIC, INC., as a Borrower

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	UNS GAS, INC., as a Borrower

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	UNISOURCE ENERGY SERVICES, INC.,
 as Guarantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	UNION BANK OF CALIFORNIA, N.A.,
 as
Administrative Agent and a Lender

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 


Signature Page to Amendment No. 2 to UNS Gas, Inc./UNS Electric, Inc. Credit Agreement




 


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	 	THE BANK OF NEW YORK MELLON, as a Lender

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	WELLS FARGO BANK, NATIONAL ASSOCIATION, as a Lender

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	ABN AMRO BANK N.V., as a Lender

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	JPMORGAN CHASE BANK, N.A., as a Lender

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



Signature Page to Amendment No. 2 to UNS Gas, Inc./UNS Electric, Inc. Credit Agreement





 


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	 	WACHOVIA BANK, NATIONAL
ASSOCIATION,
 as a Lender

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



Signature Page to Amendment No. 2 to UNS Gas, Inc./UNS Electric, Inc. Credit Agreement





 


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