Exhibit 4.4






Exhibit 4.4




[Execution Version]




 

 








$100,000,000




SECOND AMENDED AND RESTATED CREDIT AGREEMENT



dated as of November 9, 2010,



among

UNS ELECTRIC, INC. and UNS GAS, INC.,

each as a Borrower,



UNISOURCE ENERGY SERVICES, INC.,

as Guarantor,



THE BANKS NAMED HEREIN AND THE OTHER LENDERS

FROM TIME TO TIME PARTY HERETO,

as Lenders,



JPMORGAN CHASE BANK, N.A., SUNTRUST BANK

and WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Co-Syndication Agents,



BANK OF AMERICA, N.A. and U.S. BANK NATIONAL ASSOCIATION,

as Co-Documentation Agents,



and



UNION BANK, N.A.,

as Administrative Agent






 

 




UNION BANK, N.A., J.P. MORGAN SECURITIES LLC, SUNTRUST ROBINSON

HUMPHREY, INC. and WELLS FARGO SECURITIES, LLC

as Joint Lead Arrangers














 


 









 











TABLE OF CONTENTS




	 	 	 	 	 	 	 
	Section	 	 	 	Page	 
	 
	 	 	 	 	 	 
	PRELIMINARY STATEMENTS	 	 	1	 
	 
	 	 	 	 	 	 
	ARTICLE I DEFINITIONS AND ACCOUNTING TERMS	 	 	2	 
	 
	 	 	 	 	 	 
	SECTION 1.01.
	 	Certain Defined Terms	 	 	1	 
	SECTION 1.02.
	 	Computation of Time Periods; Construction	 	 	23	 
	SECTION 1.03.
	 	Accounting Terms	 	 	24	 
	 
	 	 	 	 	 	 
	ARTICLE II COMMITMENTS	 	 	24	 
	 
	 	 	 	 	 	 
	SECTION 2.01.
	 	The Commitments	 	 	24	 
	SECTION 2.02.
	 	Fees	 	 	24	 
	SECTION 2.03.
	 	Reduction of the Commitments	 	 	25	 
	SECTION 2.04.
	 	Computations of Outstandings	 	 	26	 
	SECTION 2.05.
	 	Defaulting Lenders	 	 	26	 
	 
	 	 	 	 	 	 
	ARTICLE III LOANS	 	 	29	 
	 
	 	 	 	 	 	 
	SECTION 3.01.
	 	Loans	 	 	29	 
	SECTION 3.02.
	 	Conversion of Loans	 	 	30	 
	SECTION 3.03.
	 	Interest Periods	 	 	30	 
	SECTION 3.04.
	 	Other Terms Relating to the Making and Conversion of Loans	 	 	31	 
	SECTION 3.05.
	 	Repayment of Loans; Interest	 	 	33	 
	SECTION 3.06.
	 	New Lenders	 	 	34	 
	 
	 	 	 	 	 	 
	ARTICLE IV LETTERS OF CREDIT	 	 	34	 
	 
	 	 	 	 	 	 
	SECTION 4.01.
	 	Issuing Banks	 	 	34	 
	SECTION 4.02.
	 	Letters of Credit	 	 	35	 
	SECTION 4.03.
	 	Issuing Bank Fees	 	 	36	 
	SECTION 4.04.
	 	Reimbursement to Issuing Banks	 	 	36	 
	SECTION 4.05.
	 	Obligations Absolute	 	 	37	 
	SECTION 4.06.
	 	Liability of Issuing Banks and the Lenders	 	 	37	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	ARTICLE V PAYMENTS, COMPUTATIONS AND YIELD PROTECTION	 	 	38	 
	 
	 	 	 	 	 	 
	SECTION 5.01.
	 	Payments and Computations	 	 	38	 
	SECTION 5.02.
	 	Interest Rate Determination	 	 	40	 
	SECTION 5.03.
	 	Prepayments	 	 	40	 
	SECTION 5.04.
	 	Yield Protection	 	 	40	 
	SECTION 5.05.
	 	Sharing of Payments, Etc.	 	 	42	 
	SECTION 5.06.
	 	Taxes	 	 	43	 





 












 









	 	 	 	 	 	 	 
	Section	 	 	 	Page	 
	 
	 	 	 	 	 	 
	ARTICLE VI CONDITIONS PRECEDENT	 	 	45	 
	 
	 	 	 	 	 	 
	SECTION 6.01.
	 	Conditions Precedent to Effectiveness	 	 	45	 
	SECTION 6.02.
	 	Conditions Precedent to Each Extension of Credit	 	 	46	 
	SECTION 6.03.
	 	Determinations Under Section 6.01	 	 	47	 
	SECTION 6.04.
	 	Reliance on Certificates	 	 	47	 
	 
	 	 	 	 	 	 
	ARTICLE VII REPRESENTATIONS AND WARRANTIES	 	 	47	 
	 
	 	 	 	 	 	 
	SECTION 7.01.
	 	Representations and Warranties of the Obligors	 	 	47	 
	 
	 	 	 	 	 	 
	ARTICLE VIII COVENANTS OF THE OBLIGORS	 	 	54	 
	 
	 	 	 	 	 	 
	SECTION 8.01.
	 	Affirmative Covenants	 	 	54	 
	SECTION 8.02.
	 	Negative Covenants	 	 	59	 
	SECTION 8.03.
	 	Financial Covenant	 	 	63	 
	 
	 	 	 	 	 	 
	ARTICLE IX DEFAULTS	 	 	63	 
	 
	 	 	 	 	 	 
	SECTION 9.01.
	 	Events of Default	 	 	63	 
	SECTION 9.02.
	 	Remedies	 	 	67	 
	 
	 	 	 	 	 	 
	ARTICLE X THE ADMINISTRATIVE AGENT	 	 	68	 
	 
	 	 	 	 	 	 
	SECTION 10.01.
	 	Authorization and Action	 	 	68	 
	SECTION 10.02.
	 	Indemnification	 	 	70	 
	 
	 	 	 	 	 	 
	ARTICLE XI GUARANTY	 	 	70	 
	 
	 	 	 	 	 	 
	SECTION 11.01.
	 	The Guaranty	 	 	70	 
	SECTION 11.02.
	 	Obligations Unconditional	 	 	71	 
	SECTION 11.03.
	 	Subrogation	 	 	73	 
	SECTION 11.04.
	 	Reinstatement	 	 	73	 
	SECTION 11.05.
	 	Remedies Unaffected	 	 	74	 
	SECTION 11.06.
	 	Continuing Guarantee; Liability in Respect of Successor	 	 	74	 
	 
	 	 	 	 	 	 
	ARTICLE XII MISCELLANEOUS	 	 	74	 
	 
	 	 	 	 	 	 
	SECTION 12.01.
	 	Amendments, Etc.	 	 	74	 
	SECTION 12.02.
	 	Notices, Etc.	 	 	75	 
	SECTION 12.03.
	 	No Waiver of Remedies	 	 	75	 
	SECTION 12.04.
	 	Costs, Expenses and Indemnification	 	 	76	 
	SECTION 12.05.
	 	Right of Set-off	 	 	77	 





 


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	Section	 	 	 	Page	 
	 
	 	 	 	 	 	 
	SECTION 12.06.
	 	Binding Effect	 	 	78	 
	SECTION 12.07.
	 	Assignments and Participation	 	 	78	 
	SECTION 12.08.
	 	Confidentiality	 	 	83	 
	SECTION 12.09.
	 	WAIVER OF JURY TRIAL	 	 	83	 
	SECTION 12.10.
	 	Governing Law; Submission to Jurisdiction	 	 	83	 
	SECTION 12.11.
	 	Relation of the Parties; No Beneficiary	 	 	84	 
	SECTION 12.12.
	 	Execution in Counterparts	 	 	84	 
	SECTION 12.13.
	 	Survival of Agreement	 	 	84	 
	SECTION 12.14.
	 	Patriot Act Notice	 	 	84	 
	 
	 	 	 	 	 	 
	Exhibits
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	EXHIBIT A —
	 	Form of Notice of Borrowing	 	 	 	 
	EXHIBIT B —
	 	Form of Notice of Conversion	 	 	 	 
	EXHIBIT C —	 	Form of Opinion of Morgan, Lewis & Bockius LLP, New York counsel to the Obligors
	EXHIBIT D —	 	Form of Opinion of the General Counsel of the Guarantor and counsel to the Borrowers
	EXHIBIT E —
	 	Form of Lender Assignment	 	 	 	 
	 
	 	 	 	 	 	 
	Schedules
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	SCHEDULE 1.01
	 	Pricing Schedule	 	 	 	 
	SCHEDULE 1.02
	 	Applicable Lending Offices	 	 	 	 
	SCHEDULE 4.02
	 	Existing Letters of Credit	 	 	 	 
	SCHEDULE 7.01(e)
	 	Subsidiaries	 	 	 	 
	 
	 	 	 	 	 	 





 


-iii-











 




SECOND AMENDED AND RESTATED CREDIT AGREEMENT




Dated as of November 9, 2010




THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT is made by and among:




	 	(i)	 	UNS Electric, Inc., an Arizona corporation (“UNS Electric”),
and 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”),

	 
	 	(ii)	 	UniSource Energy Services, Inc., an Arizona corporation (the
“Guarantor”),

	 
	 	(iii)	 	the banks listed on the signature pages hereof as “Existing
Lenders” (the “Existing Lenders”), the banks listed on the signature pages
hereof as “New Lenders” (the “New Lenders”, and together with the Existing
Lenders being referred to herein, collectively, as the “Banks”), and the other
Lenders (as hereinafter defined) from time to time party hereto, and

	 
	 	(iv)	 	Union Bank, N.A. (formerly known as Union Bank of California,
N.A.), as administrative agent (in such capacity, together with its successors
and assigns in such capacity, the “Administrative Agent”) for the Lenders
hereunder.






PRELIMINARY STATEMENTS




The Borrowers, the Existing Lenders, certain other lenders, the Guarantor and the
Administrative Agent previously entered into that certain Amended and Restated Credit Agreement,
dated as of August 11, 2006 (as amended, supplemented or otherwise modified from time to time prior
to the date hereof, the “Existing Credit Agreement”). The parties hereto desire to amend and
restate the Existing Credit Agreement, on the terms and conditions set forth herein.



NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained,
the parties hereto hereby agree that the Existing Credit Agreement is hereby amended and restated
in its entirety, without novation, 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:



“ABR”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or
the Loans comprising such Borrowing, are bearing interest at a rate determined by reference
to the Alternate Base Rate.



“ABR Loan” means a Loan that bears interest as provided in Section 3.05(b)(i).



“ACC” means the Arizona Corporation Commission.



“ACC Order” means the Order (Decision No. 71917) issued by the ACC on October 11, 2010
(and docketed on October 12, 2010) in Docket Nos. E-04204A-09-0582 and G-04204A-09-0582.



“ACC Settlement Agreement” means the settlement agreement dated as of April 1, 2003
between the Staff of the ACC Utilities Division, UniSource Energy, Tucson Electric Power
Company and Citizens Communications Company.



“Adjusted Eurodollar Rate” means, with respect to any Eurodollar Rate Loan for any
Interest Period, an interest rate per annum equal to (a) the Eurodollar Rate for such
Interest Period multiplied by (b) the Statutory Reserve Rate.



“Administrative Agent” has the meaning assigned to such term in the preamble hereto.



“Affiliate” means, at any time, and with respect to any Person, (a) any other Person
that at such time directly or indirectly through one or more intermediaries Controls, or is
Controlled by, or is under common Control with, such first Person, and (b) any Person
beneficially owning or holding, directly or indirectly, 10% or more of any class of voting
or equity interests of any Obligor or any Subsidiary or any Person of which any Obligor and
its Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly, 10% or
more of any class of voting or equity interests. As used in this definition, “Control”
means the possession, directly or indirectly, of the power to direct or cause the direction
of the management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise. Unless the context otherwise clearly requires, any
reference to an “Affiliate” is a reference to an Affiliate of an Obligor.



“Aggregate Exposure” means, at any time, the sum of (a) the aggregate outstanding
principal amount of Loans at such time plus (b) the LC Exposure at such time. The Aggregate
Exposure of any Lender at any time shall be its Percentage of the total Aggregate Exposure
at such time.



“Agreement” means this Second Amended and Restated Credit Agreement, as amended,
supplemented or otherwise modified from time to time.



“Allocated Unused Commitment Amount” means, for any day for any Borrower, an amount
(but not less than zero) equal to:




(a) 50% of the aggregate amount of the Commitments, minus


 


2









 






(b) the sum of (A) the aggregate principal amount of all Loans made to such
Borrower outstanding on such day and (B) the aggregate LC Outstandings of all
Letters of Credit issued at the request of such Borrower and outstanding on such
day, in each case after giving effect to all Extensions of Credit or prepayments to
be made on such day and the application of the proceeds thereof, minus




(c) the excess (if any) of (i) the sum of (A) the aggregate principal amount of
all Loans made to the other Borrower outstanding on such day and (B) the aggregate
LC Outstandings of all Letters of Credit issued at the request of the other Borrower
and outstanding on such day, in each case after giving effect to all Extensions of
Credit or prepayments to be made on such day and the application of the proceeds
thereof, over (ii) 50% of the aggregate amount of the Commitments;


provided, however, that if, for any reason (including, without limitation, the occurrence of
any event set forth in clause (i), (ii) or (iii) of Section 2.03(c)), there is only one
Borrower hereunder, the Allocated Unused Commitment Amount of such Borrower on any day shall
equal the Available Commitments on such day.




“Alternate Base Rate” means, for any day, a rate per annum equal to the greatest of (a)
the Reference Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on
such day plus 1/2 of 1%, and (c) the Adjusted Eurodollar Rate for an Interest Period of one
month beginning on such day (or, if such day is not a Business Day, the immediately
preceding Business Day) plus 1.0%. Any change in the Alternate Base Rate due to a change in
the Reference Rate, the Federal Funds Effective Rate or the Adjusted Eurodollar Rate shall
be effective from and including the effective date of such change in the Reference Rate, the
Federal Funds Effective Rate or the Adjusted Eurodollar Rate, respectively.



“Applicable Lending Office” means, with respect to each Lender, (i) such Lender’s
Domestic Lending Office, in the case of an ABR Loan, and (ii) such Lender’s Eurodollar
Lending Office, in the case of a Eurodollar Rate Loan.



“Applicable Margin” means for any day for any Borrower, with respect to any Eurodollar
Rate Loan or ABR Loan, as the case may be, made (or deemed made) to such Borrower, the
applicable percentage per annum determined in accordance with the Pricing Schedule attached
hereto as Schedule 1.01.



“Applicable Rate” means:



(i) in the case of each ABR Loan, a rate per annum equal at all times to the sum of the
Alternate Base Rate in effect from time to time plus the Applicable Margin in effect from
time to time; and



(ii) in the case of each Eurodollar Rate Loan comprising part of the same Borrowing, a
rate per annum during each Interest Period equal at all times to the
sum of the Adjusted Eurodollar Rate for such Interest Period plus the Applicable Margin
in effect from time to time during such Interest Period.


 


3









 





“Arrangers” means Union Bank, J.P. Morgan Securities LLC, SunTrust Robinson Humphrey,
Inc. and Wells Fargo Securities, LLC, as Joint Lead Arrangers for the credit facilities
established by this Agreement.



“Authorized Officer” means, with respect to any Person, the president, any vice
president, the chief financial officer, the principal accounting officer, the treasurer or
the controller of such Person.



“Availability Sublimit” means, with respect to any Borrower at any time, the lesser of
(a) 70% of the aggregate amount of the Commitments at such time and (b) the maximum amount
of Indebtedness that such Borrower may incur at such time pursuant to Section 10.5 of the
Note Purchase Agreement to which it is a party and Sections 8.02(e) and 8.03 hereof;
provided, however, that if, for any reason (including, without limitation, the occurrence of
any event set forth in clause (i), (ii) or (iii) of Section 2.03(c)), there is only one
Borrower hereunder, the Availability Sublimit of such Borrower at any time shall equal the
aggregate amount of the Commitments at such time; and provided further, however, that the
Availability Sublimit for any Borrower shall in no event exceed $70,000,000.



“Available Commitment” means, for each Lender on any day, the unused portion of such
Lender’s Commitment, computed after giving effect to all Extensions of Credit or prepayments
to be made on such day and the application of proceeds therefrom. “Available Commitments”
means the aggregate of the Lenders’ Available Commitments.



“Board” means the Board of Governors of the Federal Reserve System of the United States
of America (or any successor).



“Borrower” or “Borrowers” has the meaning assigned to such term in the preamble hereto.



“Borrower Successor” has the meaning assigned to such term in Section 8.02(b).



“Borrowing” means a borrowing consisting of Loans of the same Type, having the same
Interest Period and made (or deemed made) or Converted on the same day by the Lenders,
ratably in accordance with their respective Percentages. Any Borrowing consisting of Loans
of a particular Type may be referred to as being a Borrowing of such “Type”. All Loans of
the same Type, having the same Interest Period and made or Converted on the same day shall
be deemed a single Borrowing hereunder until repaid or next Converted.



“Business Day” means (a) for all purposes other than as covered by clause (b) below, a
day other than a Saturday, Sunday or other day on which commercial banks in New York City or
Los Angeles, California are authorized or required by law to close and (b) with respect to
all notices and determinations in connection with, and payments of principal and interest
on, Eurodollar Rate Loans, any day which is a Business Day
described in clause (a) and which is also a day for trading by and between banks in
Dollar deposits in the London interbank market.


 


4









 





“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 Investment” of any Person means, with respect to any Borrower, the
aggregate outstanding capitalized amount of Capital Lease Obligations of such Borrower and
its Consolidated Subsidiaries that are owned by such Person and in respect of which such
Person has the right to receive all future payments to be made.



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



“Capital Stock” means any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all equivalent
ownership interests in a Person (other than a corporation) and any and all warrants, rights
or options to purchase any of the foregoing.



“Cash Collateralize” means to pledge and deposit with or deliver to the Administrative
Agent, for the benefit of the Administrative Agent or the Issuing Banks (as applicable) and
the Lenders, as collateral for the LC Exposure or the obligations of the Lenders to fund
participations in respect thereof (as the context may require), cash or deposit account
balances or, if the Issuing Bank(s) benefitting from such collateral shall agree in its sole
discretion, other credit support, in each case pursuant to documentation in form and
substance satisfactory to (a) the Administrative Agent and (b) the applicable Issuing Banks.
“Cash Collateral” shall have a meaning correlative to the foregoing and shall include the
proceeds of such cash collateral and other credit support.



“Change of Control” means the failure of UniSource Energy directly or indirectly to
beneficially own 100% of the shares of each Obligor’s voting stock outstanding.



“Closing Date” means the date upon which each of the conditions precedent enumerated in
Section 6.01 and, only with respect to the initial Extension of Credit, Section 6.02 has
been fulfilled to the satisfaction of the Lenders, the Administrative Agent and the
Borrowers. The Closing Date shall take place on or before November 9, 2010 at the offices
of Hughes Hubbard & Reed LLP, One Battery Park Plaza, New York, New York 10004, at 10:00
A.M. (New York, New York time), or such other time and/or location as the parties hereto may
mutually agree.



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


 


5









 





“Commitment” means, for each Lender, the obligation of such Lender to make Loans to any
Borrower and to participate in Extensions of Credit resulting from the issuance (or
extension, modification or amendment) of any Letter of Credit in an aggregate amount no
greater than (i) the amount set forth opposite such Lender’s name on the signature pages
hereof or (ii) if such Lender has entered into one or more Lender Assignments, the amount
set forth for such Lender in the Register maintained by the Administrative Agent pursuant to
Section 12.07(c), in each such case as such amount may be reduced from time to time pursuant
to Section 2.03. “Commitments” means the total of the Lenders’ Commitments hereunder. The
Commitments shall in no event exceed $100,000,000.



“Commitment Fee Rate” means for any day for any Borrower, the applicable percentage per
annum determined in accordance with the Pricing Schedule attached hereto as Schedule 1.01.



“Confidential Information” has the meaning assigned to such term in Section 12.08.



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



“Consolidated Subsidiary” means, at any date with respect to any Borrower, each
Subsidiary of such Borrower the accounts of which would be consolidated with those of such
Borrower in such Borrower’s consolidated financial statements if such financial statements
were prepared in accordance with GAAP as of such date.



“Consolidated Total Capitalization” means, with respect to any Borrower at any time,
the sum of Consolidated Net Worth and Consolidated Total Indebtedness of such Borrower at
such time.



“Consolidated Total Indebtedness” means, at any date with respect to any Borrower, (a)
the sum (without duplication) for such Borrower and its Consolidated Subsidiaries as of such
date of (i) the aggregate principal amount of all Loans made to such Borrower outstanding on
such date, after giving effect to all Extensions of Credit to be made on such date and the
application of the proceeds thereof, (ii) the aggregate LC Outstandings of all Letters of
Credit issued at the request of such Borrower outstanding on such date, after giving effect
to all Extensions of Credit to be made on such date and the application of the proceeds
thereof, (iii) the aggregate outstanding principal amount of other Indebtedness for borrowed
money (including Guaranty Obligations in respect thereof) of such Borrower and its
Consolidated Subsidiaries and (iv) the aggregate outstanding capitalized amount of Capital
Lease Obligations, minus 


 


6









 




 (b) the sum (without duplication) as of such date of (i) the aggregate outstanding capitalized amount of the
Capital Lease Investments of such Borrower and its Consolidated Subsidiaries as of such date
and (ii) to the extent included in clause (a)(iii) above, any Treasury Indebtedness of such
Borrower and its Consolidated Subsidiaries as of such date, all as determined on a
consolidated basis in accordance with GAAP; provided, however, that there shall be
disregarded for purposes of the determination of Consolidated Total Indebtedness of any
Borrower (A) the aggregate outstanding principal amount of any Indebtedness for borrowed
money of such Borrower or any of its Subsidiaries for which (1) cash in an amount sufficient
to repay and discharge in full such Indebtedness on its scheduled maturity date or
redemption date shall have been irrevocably deposited in trust with a trustee, escrow agent,
paying agent or similar agent for the payment thereof on such maturity date or redemption
date (as the case may be), and (2) such Borrower or such Subsidiary (as the case may be)
shall have irrevocably instructed such trustee, escrow agent, paying agent or similar agent
(as the case may be) to apply all such cash to the repayment and discharge of such
Indebtedness on such maturity date or redemption date (as the case may be), and (B) solely
with respect to UNS Gas during the period from July 11, 2011 until the repayment in full of
the Existing UNS Gas Notes (but in any event no later than August 11, 2011), the aggregate
outstanding principal amount of any Indebtedness for borrowed money of UNS Gas incurred on
or after July 11, 2011 that UNS Gas intends to utilize to repay in full, on or before the
maturity date thereof, the Existing UNS Gas Notes (provided, that UNS Gas shall have
delivered to the Administrative Agent, within two (2) Business Days after the date on which
UNS Gas incurs such Indebtedness for borrowed money, an Officer’s Certificate certifying
that the proceeds of such Indebtedness will be utilized to repay in full the Existing UNS
Gas Notes on or before the maturity date thereof).




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



“Conversion”, “Convert” or “Converted” refers to a conversion of Loans of one Type into
Loans of another Type, or to the selection of a new, or the renewal of the same, Interest
Period for Loans, as the case may be, pursuant to Section 3.02.



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



“Default” means any of the events specified in Section 9.01, whether or not any
requirement for the giving of notice, the lapse of time, or both, has been satisfied.


 


7









 





“Defaulting Lender” means, subject to Section 2.05(b), any Lender that, as determined
by the Administrative Agent, (a) has failed to fund any portion of its Loans hereunder,
within three (3) Business Days of the date required to be funded by it hereunder, unless
such Lender notifies the Administrative Agent in writing that such
failure is the result of such Lender’s good faith determination that a condition
precedent to funding (specifically identified and including the particular Default or Event
of Default, if any) has not been satisfied, (b) has failed to fund any portion of its
participations in respect of Letters of Credit or any other amounts required to be funded or
paid by such Lender hereunder (other than its Loans), within three (3) Business Days of the
date required to be funded by it hereunder, (c) has notified the Borrower, the
Administrative Agent or any Issuing Bank that it does not intend to comply with its funding
obligations, or has made a public statement to that effect, with respect to its funding
obligations hereunder (unless such notice or public statement indicates that such position
is based on such Lender’s good faith determination that a condition precedent (specifically
identified and including the particular Default or Event of Default, if any) to funding a
Loan under this Agreement cannot be satisfied) or under other agreements in which it commits
to extend credit, (d) has failed, within three (3) Business Days after request by the
Administrative Agent, to confirm in a manner satisfactory to the Administrative Agent that
it will comply with its funding obligations, or (e) has, or has a direct or indirect parent
company that has, (i) become the subject of a proceeding under any Debtor Relief Law, (ii)
had a receiver, conservator, trustee, administrator, assignee for the benefit of creditors
or similar Person charged with reorganization or liquidation of its business or a custodian
appointed for it, or (iii) taken any action in furtherance of, or indicated its consent to,
approval of or acquiescence in any such proceeding or appointment, provided that a Lender
shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any
equity interest in that Lender or any direct or indirect parent company thereof by a
Governmental Authority.



“Disclosure Documents” means (i) the Annual Report on Form 10-K of UniSource Energy for
the fiscal year ended December 31, 2009, as filed with the SEC, and (ii) the Quarterly
Reports on Form 10-Q of UniSource Energy for the fiscal quarters ended March 31, 2010, June
30, 2010 and September 30, 2010, as filed with the SEC.



“Disposition” means, with respect to any Property, any sale, lease, sale and leaseback,
assignment, conveyance, transfer or other disposition thereof; and the terms “Dispose” and
“Disposed of” shall have correlative meanings.



“Distribution” means, in respect of any corporation, association or other business
entity:




(a) dividends or other distributions or payments on capital stock or other
equity interests of such corporation, association or other business entity (except
distributions in such stock or other equity interests); and




(b) the redemption or acquisition of such stock or other equity interests or of
warrants, rights or other options to purchase such stock or other equity interests
(except when solely in exchange for such stock or other equity interests) unless
made, contemporaneously, from the net proceeds of a sale of such stock or other
equity interests.



“Dodd-Frank Act” means the Dodd-Frank Wall Street Reform and Consumer Protection Act
(Public Law 111-203), as amended.


 


8









 





“Dollars” and the sign “$” each means lawful money of the United States.



“Domestic Lending Office” means, with respect to any Lender, the office or Affiliate of
such Lender specified as its “Domestic Lending Office” opposite its name on Schedule 1.02
hereto or in the Lender Assignment pursuant to which it became a Lender, or such other
office or Affiliate of such Lender as such Lender may from time to time specify in writing
to the Borrower and the Administrative Agent.



“Eligible Assignee” means (a) a commercial bank or trust company organized under the
laws of the United States, or any State thereof; (b) a commercial bank organized under the
laws of any other country that is a member of the OECD, or a political subdivision of any
such country, provided that such bank is acting through a branch or agency located in the
United States; (c) the central bank of any country that is a member of the OECD; (d) any
other commercial bank or other financial institution engaged generally in the business of
extending credit or purchasing debt instruments; and (e) a Lender or an Affiliate of a
Lender; provided, however, that (A) any such Person described in clauses (a) through (e)
above shall also (i) have outstanding unsecured indebtedness that is rated A- or better by
S&P or A3 or better by Moody’s (or an equivalent rating by another nationally-recognized
credit rating agency of similar standing if neither of such corporations is then in the
business of rating unsecured indebtedness of entities engaged in such businesses) or (ii)
have combined capital and surplus (as established in its most recent report of condition to
its primary regulator) of not less than $250,000,000 (or its equivalent in foreign
currency), (B) any Person described in clause (b), (c), or (d) above, shall, on the date on
which it is to become a Lender hereunder, (1) be entitled to receive payments hereunder
without deduction or withholding of any United States Federal income taxes (as contemplated
by Section 5.06) and (2) not be incurring any losses, costs or expenses of the type for
which such Person could demand payment under Section 5.04(a) or (c) (except to the extent
that, in the absence of the making of an assignment to such Person, the assigning Lender
would have incurred an equal or greater amount of such losses, costs or expenses and such
losses, costs or expenses would have been payable by the Borrowers to such assigning Lender
hereunder), (C) any Person described in clause (a), (b), (c), (d) or (e) above that is not a
Lender shall, in addition, be acceptable to each Issuing Bank based upon its then-existing
credit criteria, and (D) in no event shall a Defaulting Lender, a Subsidiary of a Defaulting
Lender, any Borrower, or any Affiliate or Subsidiary of any Borrower constitute an Eligible
Assignee.



“Environmental Laws” means any and all Federal, state, local, and foreign statutes,
laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions,
grants, franchises, licenses, agreements or governmental restrictions relating to pollution
and the protection of the environment or the release of any materials into the environment,
including but not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.


 


9









 





“Environmental Liability” means, with respect to any Person, any liability, contingent
or otherwise (including any liability for damages, costs of environmental remediation,
fines, penalties or indemnities), of such Person or any of its Subsidiaries directly or
indirectly resulting from or based upon (a) violation of any Environmental
Law, (b) the generation, use, handling, transportation, storage, treatment or disposal
of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or
threatened release of any Hazardous Materials into the environment or (e) any contract,
agreement or other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing.



“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time
to time, and the rules and regulations promulgated thereunder from time to time in effect.



“ERISA Affiliate” means, with respect to any Obligor, any trade or business (whether
or not incorporated) that is treated as a single employer together with such Obligor under
section 414 of the Code.



“ERISA Event” means, with respect to any Obligor, (a) any “reportable event”, as
defined in Section 4043 of ERISA or the regulations issued thereunder with respect to any
Plan of such Obligor (other than an event for which the 30-day notice period is waived); (b)
a determination that any Plan is in “at risk” status (within the meaning of Section 430 of
the Code or Section 303 of ERISA); (c) the filing pursuant to Section 412(c) of the Code or
Section 302(c) of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan of such Obligor; (d) the incurrence by such Obligor or any of its ERISA
Affiliates of any liability under Title IV of ERISA with respect to the termination of any
Plan of such Obligor; (e) the receipt by such Obligor or any of its ERISA Affiliates from
the PBGC of any notice of its intent to institute proceedings to terminate any Plan of such
Obligor or to appoint a trustee to administer any Plan of such Obligor under Section 4042 of
ERISA or the providing of notice by a plan administrator of the intent to terminate any Plan
of such Obligor under Section 4041 of ERISA; (f) the incurrence by such Obligor or any of
its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal
from any Plan or Multiemployer Plan of such Obligor; or (g) the receipt by such Obligor or
any of its ERISA Affiliates of any notice, or the receipt by any Multiemployer Plan from
such Obligor or any of its ERISA Affiliates of any notice, concerning the imposition of
Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be,
insolvent or in reorganization, within the meaning of Title IV of ERISA.



“Eurodollar Lending Office” means, with respect to any Lender, the office or Affiliate
of such Lender specified as its “Eurodollar Lending Office” opposite its name on Schedule
1.02 hereto or in the Lender Assignment pursuant to which it became a Lender (or, if no such
office or Affiliate is specified, its Domestic Lending Office), or such other office or
Affiliate of such Lender as such Lender may from time to time specify in writing to the
Borrower and the Administrative Agent.



“Eurodollar Rate” means, for each Interest Period for each Eurodollar Rate Loan made as
part of the same Borrowing, the rate per annum determined by the Administrative Agent at
approximately 11:00 a.m., London time, on the date that is two (2) Business Days prior to
the commencement of such Interest Period by reference to the British Bankers’ Association
Interest Settlement Rates for deposits in Dollars (as set forth by the Bloomberg Information
Service or any successor thereto or any other service selected by the


 


10









 




Administrative Agent which has been nominated by the British Bankers’
Association as an authorized information vendor for the purpose of displaying such rates)
for a period equal to such Interest Period; provided that, to the extent that an interest
rate is not ascertainable pursuant to the foregoing provisions of this definition, the
“Eurodollar Rate” with respect to such Eurodollar Rate Loan for such Interest Period shall
be the rate per annum at which Dollar deposits of $5,000,000 and for a maturity comparable
to such Interest Period would be offered to the Administrative Agent in the London interbank
market at approximately 12:00 noon, London time, on the date that is two (2) Business Days
prior to the beginning of such Interest Period.




“Eurodollar Rate Loan” means a Loan that bears interest as provided in Section
3.05(b)(ii).



“Event of Default” means any of the events specified in Section 9.01, provided that any
requirement for the giving of notice, the lapse of time, or both, has been satisfied.



“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time,
and the rules and regulations promulgated thereunder from time to time.



“Existing Credit Agreement” has the meaning assigned to such term in the preliminary
statements hereto.



“Existing Lenders” has the meaning assigned to such term in the preamble hereto.



“Existing Letters of Credit” means, with respect to each Borrower, the letters of
credit set forth on Schedule 4.02 that have been issued for the account of such Borrower
pursuant to the Existing Credit Agreement.



“Existing UNS Gas Notes” means the Series A Notes (as defined in the UNS Gas Note
Purchase Agreement) issued by UNS Gas that are outstanding on the Closing Date and that
mature on August 11, 2011.



“Extension of Credit” means (a) the making of a Borrowing (including any Conversion),
(b) the issuance of a Letter of Credit, or (c) the amendment of any Letter of Credit having
the effect of extending the stated termination date thereof, increasing the LC Outstandings
thereunder, or otherwise altering any of the material terms or conditions thereof.



“Fair Market Value” means, at any time and with respect to any Property, the sale value
of such Property that would be realized in an arm’s-length sale at such time between an
informed and willing buyer and an informed and willing seller (neither being under a
compulsion to buy or sell).


 


11









 





“Federal Funds Effective Rate” means, for any period, a fluctuating interest rate per
annum equal for each day during such period to 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 Administrative Agent from three Federal funds brokers of
recognized standing selected by the Administrative Agent.



“Fee Letter” has the meaning assigned to such term in Section 2.02(c).



“Final Maturity Date” means the date that occurs four (4) years after the Closing Date.



“Foreign Lender” means any Lender that is organized under the laws of a jurisdiction
other than that in which the Borrowers are located. 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.



“Fronting Exposure” means, at any time there is a Defaulting Lender, such Defaulting
Lender’s Percentage of the aggregate LC Exposure, other than LC Exposure as to which such
Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash
Collateralized in accordance with the terms hereof.



“GAAP” means generally accepted accounting principles in the United States of America
as in effect from time to time.



“Governmental Approval” means all authorizations, approvals, certificates, permits,
waivers, exemptions, consents, variances, franchises, registrations, filings,
authorizations, licenses or similar orders of, or from, any Governmental Authority.



“Governmental Authority” means (a) the government of (i) the United States of America
or any State or other political subdivision thereof, or (ii) any jurisdiction in which any
Obligor or any Subsidiary thereof conducts all or any part of its business, or which asserts
jurisdiction over any Properties of any Obligor or any Subsidiary thereof, or (b) any entity
exercising executive, legislative, judicial, regulatory or administrative functions of, or
pertaining to, any such government.



“Governmental Rule” means any statute, law, regulation, ordinance, rule, judgment,
order, decree, permit, license, concession, directive, guideline, policy or rule of common
law, requirement of, or other governmental restriction or any similar form of decision of or
determination by, or any interpretation or administration of any of the foregoing by, any
Governmental Authority, whether now or hereafter in effect.



“Granting Lender” has the meaning assigned to such term in Section 12.07(j).



“Guarantor” has the meaning assigned to such term in the preamble hereto.



“Guarantor Successor” has the meaning assigned to such term in Section 8.02(b).


 


12









 





“Guaranty” means the guaranty set forth in Article XI of this Agreement.



“Guaranty Obligation” means, with respect to any Person, any obligation (except the
endorsement in the ordinary course of business of negotiable instruments for deposit or
collection) of such Person guaranteeing or in effect guaranteeing any Indebtedness, dividend
or other obligation of any other Person in any manner, whether directly or indirectly,
including, without limitation, obligations incurred through an agreement, contingent or
otherwise, by such Person:




(a) to purchase such Indebtedness or obligation or any Property constituting
security therefor;




(b) to advance or supply funds (i) for the purchase or payment of such
Indebtedness or obligation, or (ii) to maintain any working capital or other balance
sheet condition or any income statement condition of any other Person or otherwise
to advance or make available funds for the purchase or payment of such Indebtedness
or obligation;




(c) to lease Properties or to purchase Properties or services primarily for the
purpose of assuring the owner of such Indebtedness or obligation of the ability of
any other Person to make payment of the Indebtedness or obligation; or




(d) otherwise to assure the owner of such Indebtedness or obligation against
loss in respect thereof.


In any computation of the Indebtedness or other liabilities of the obligor under any
Guaranty Obligation, the Indebtedness or other obligations that are the subject of such
Guaranty Obligation shall be assumed to be direct obligations of such obligor.




“Guaranty Termination Date” means, with respect to any Borrower, the first date after
the Closing Date on which such Borrower shall have delivered to the Administrative Agent a
certificate signed by an Authorized Officer of such Borrower certifying that the Guarantor
has been or, concurrently with the release and discharge of the Guarantor’s Guaranty
Obligations under Article XI of this Agreement, will be released and discharged as a
guarantor of all Indebtedness of such Borrower (including, without limitation, Indebtedness
under the Note Purchase Agreement to which such Borrower is a party, but excluding
Indebtedness under this Agreement) that is guaranteed by, or otherwise has the benefit of
any Guaranty Obligation of, the Guarantor; provided, however, that the Guaranty Termination
Date with respect to such Borrower shall be deemed not to have occurred if any statement in
such certificate proves to be false or incorrect on the date made.



“Hazardous Material” means any and all pollutants, toxic or hazardous wastes or any
other substances that might pose a hazard to health or safety, the removal of which may be
required or the generation, manufacture, refining, production, processing, treatment,
storage, handling, transportation, transfer, use, disposal, release, discharge, spillage,
seepage, or filtration of which is or shall be restricted, prohibited or penalized by
any applicable law (including, without limitation, asbestos, urea formaldehyde foam
insulation and polycholorinated biphenyls).


 


13









 





“Indebtedness” of any Person means, without duplication, (a) all obligations of such
Person for borrowed money or with respect to deposits or advances of any kind, (b) all
obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c)
all obligations of such Person upon which interest charges are customarily paid, (d) all
obligations of such Person under conditional sale or other title retention agreements
relating to property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding current accounts payable
incurred in the ordinary course of business), (f) all Indebtedness of others secured by (or
for which the holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien on property owned or acquired by such Person, whether or not the
Indebtedness secured thereby has been assumed, (g) all Guaranty Obligations of such Person
in respect of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i)
all obligations, contingent or otherwise, of such Person as an account party in respect of
letters of credit and letters of guaranty and (j) all obligations, contingent or otherwise,
of such Person in respect of bankers’ acceptances. The Indebtedness of any Person shall
include the Indebtedness of any other entity (including any partnership in which such Person
is a general partner) to the extent such Person is liable therefor as a result of such
Person’s ownership interest in or other relationship with such entity, except to the extent
the terms of such Indebtedness provide that such Person is not liable therefor.



“Index Debt” means, with respect to each Borrower, the Indebtedness of such Borrower
under this Agreement.



“Information Memorandum” means the Confidential Information Memorandum dated October
2010 relating to the Obligors and the Transactions.



“Interest Period” has the meaning assigned to such term in Section 3.03.



“Issuing Bank” means any Lender designated by a Borrower, and acceptable to the
Administrative Agent, in accordance with Section 4.01, as the issuer of a Letter of Credit
pursuant to an Issuing Bank Agreement. As of the Closing Date, the Borrowers have
designated Union Bank, JPMorgan Chase Bank, N.A. and Wells Fargo Bank, National Association
as Issuing Banks, each designee has agreed to act as an Issuing Bank hereunder, and the
Administrative Agent has accepted such designees pursuant to Section 4.01.



“Issuing Bank Agreement” means an agreement between an Issuing Bank and a Borrower, in
form and substance satisfactory to the Administrative Agent, providing for the issuance of
one or more Letters of Credit, in form and substance satisfactory to the Administrative
Agent, in support of general corporate activities of such Borrower.



“LC Disbursement” means a payment made by an Issuing Bank pursuant to a Letter of
Credit.


 


14









 





“LC Exposure” means at any time, the sum of (a) the aggregate undrawn amount of all
outstanding Letters of Credit at such time plus (b) the aggregate amount of all LC
Disbursements that have not yet been reimbursed by or on behalf of the applicable Borrower
at such time. The LC Exposure of any Lender at any time shall be its Percentage of the
total LC Exposure at such time.



“LC Payment Notice” has the meaning assigned to such term in Section 4.04(b).



“LC Outstandings” means, for any Letter of Credit on any date of determination, the
maximum amount available to be drawn under such Letter of Credit at any time on or after
such date (assuming the satisfaction of all conditions for drawing enumerated therein).



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



“Lenders” means the Banks listed on the signature pages hereof, each Eligible Assignee
that shall become a party hereto pursuant to Section 12.07, and, to the extent provided in
Section 4.04(c), each Issuing Bank.



“Letter of Credit” means a letter of credit issued (or deemed issued) by an Issuing
Bank pursuant to Section 4.02, as such letter of credit may from time to time be amended,
modified or extended in accordance with the terms of this Agreement and the Issuing Bank
Agreement to which it relates.



“Letter of Credit Expiration Date” means the date that occurs five Business Days prior
to the Final Maturity Date.



“Letter of Credit Sublimit” means $50,000,000. In no event shall the aggregate LC
Outstandings of all Letters of Credit outstanding on any date of determination (after giving
effect to all Extensions of Credit on such date) exceed the Letter of Credit Sublimit.



“Lien” means, with respect to any Person, any mortgage, lien, pledge, charge, security
interest or other encumbrance, or any interest or title of any vendor, lessor, lender or
other secured party to or of such Person under any conditional sale or other title retention
agreement or Capital Lease, upon or with respect to any Property or asset of such Person
(including in the case of stock, stockholder agreements, voting trust agreements and all
similar arrangements).



“Loan” means a loan by a Lender to a Borrower pursuant to Section 3.01 (or deemed made
pursuant to Section 4.04(c) or (d)), and refers to an ABR Loan or a Eurodollar Rate Loan
(each of which shall be a “Type” of Loan). All Loans by a Lender of the same Type, having
the same Interest Period and made or Converted on the same day shall be deemed to be a
single Loan by such Lender until repaid or next Converted.


 


15









 





“Loan Documents” means this Agreement, any Promissory Notes, the Fee Letter, and the
Issuing Bank Agreement(s), and any amendment, waiver, supplement or other modification to
any of the foregoing.



“Material” means, with respect to any Obligor, material in relation to the business,
operations, affairs, financial condition, assets, Properties or prospects of such Obligor
and its Subsidiaries taken as a whole.



“Material Adverse Effect” means, with respect to any Obligor, a material adverse effect
on (a) the business, operations, affairs, financial condition, assets or Properties of such
Obligor and its Subsidiaries taken as a whole, or (b) the ability of such Obligor to perform
its obligations under this Agreement and the other Loan Documents to which it is a party, or
(c) the validity or enforceability of this Agreement or any other Loan Document to which it
is a party.



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



“Multiemployer Plan” means, with respect to any Obligor, a “multiemployer plan” (as
such term is defined in Section 4001(a)(3) of ERISA) that is subject to Title IV of ERISA
and to which such Obligor or any ERISA Affiliate of such Obligor is making or accruing an
obligation to make contributions, or has within any of the preceding five plan years made or
accrued an obligation to make contributions.



“New Lenders” has the meaning assigned to such term in the preamble hereto.



“Note Purchase Agreements” means, collectively, the UNS Electric Note Purchase
Agreement and the UNS Gas Note Purchase Agreement.



“Notice of Borrowing” has the meaning assigned to such term in Section 3.01(a).



“OECD” means the Organization for Economic Cooperation and Development.



“Obligations” means, with respect to any Borrower, the unpaid principal of and interest
on (including, without limitation, interest accruing after the maturity of the Loans made to
such Borrower and interest accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to such
Borrower, whether or not a claim for post-filing or post-petition interest is allowed in
such proceeding) the Loans made to such Borrower and all other obligations and liabilities
of such Borrower to the Administrative Agent, any Issuing Bank or any Lender, whether direct
or indirect, absolute or contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, this Agreement, any
Promissory Note, any Letter of Credit, any other Loan Document or any other document made,
delivered or given in connection herewith or therewith, whether on account of principal,
interest, fees, indemnities, costs, expenses (including, without limitation, all fees,
charges and disbursements of counsel to the Administrative Agent, any Issuing Bank or any
Lender that are required to be paid by such Borrower pursuant hereto) or otherwise. Each
Borrower’s Obligations are and shall be the several
obligations of such Borrower, and shall not be the joint and several obligations of the
Borrowers.


 


16









 





“Obligors” means the Borrowers and, prior to the occurrence of the Guaranty Termination
Date with respect to both Borrowers, the Guarantor.



“Officer’s Certificate” means, with respect to an Obligor, a certificate of an
Authorized Officer of such Obligor or of any other officer of such Obligor whose
responsibilities extend to the subject matter of such certificate.



“Participant” has the meaning assigned to such term in Section 12.07(e).



“PBGC” means the Pension Benefit Guaranty Corporation referred to in ERISA or any
successor thereto.



“Percentage” means, for any Lender on any date of determination, the percentage
obtained by dividing such Lender’s Commitment on such date by the total of the Commitments
on such date, and multiplying the quotient so obtained by 100%. In the event that the
Commitments have been terminated, each Lender’s Percentage shall be calculated on the basis
of the Commitments in effect immediately prior to such termination, giving effect to any
assignments.



“Person” means an individual, partnership, corporation, limited liability company,
association, trust, unincorporated organization, or a government or agency or political
subdivision thereof.



“Permitted Lien” means, with respect to any Person, each of the following:




(a) Liens for taxes, assessments or other governmental charges which are not
yet due and payable or the payment of which is not at the time required by Section
8.01(g);




(b) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen and other similar Liens, in each case, incurred in the
ordinary course of business for sums not yet due and payable or the payment of which
is not at the time required by Section 8.01(g);




(c) Liens (other than any Lien imposed by ERISA) incurred or deposits made in
the ordinary course of business (i) in connection with workers’ compensation,
unemployment insurance and other types of social security or retirement benefits, or
(ii) to secure (or to obtain letters of credit that secure) the performance of
tenders, statutory obligations, surety bonds, appeal bonds, bids, leases (other than
Capital Leases), performance bonds, purchase, construction or sales contracts and
other similar obligations, in each case not incurred or made in connection with the
borrowing of money, the obtaining of advances or credit or the payment of the
deferred purchase price of Property;


 


17









 






(d) any attachment or judgment Lien, unless the judgment it secures shall not,
within sixty days after the entry thereof, have been discharged or execution thereof
stayed pending appeal, or shall not have been discharged within sixty days after the
expiration of any such stay;




(e) leases or subleases granted to others, easements, rights-of-way,
restrictions and other similar charges or encumbrances, in each case incidental to,
and not interfering with, the ordinary conduct of the business of such Person,
provided that such Liens do not, in the aggregate, materially detract from the value
of such Person’s Property subject to any such leases, subleases, easements,
rights-of-way, restrictions or other similar charges or encumbrances;




(f) any Lien created to secure all or any part of the purchase price, or to
secure Indebtedness incurred or assumed to pay all or any part of the purchase price
or cost of construction, of property (or any improvement thereon) acquired or
constructed by such Person or a Subsidiary of such Person after the Closing Date,
provided that:




(i) any such Lien shall extend solely to the item or items of such
property (or improvement thereon) so acquired or constructed and, if
required by the terms of the instrument originally creating such Lien, other
property (or improvement thereon) which is an improvement to or is acquired
for specific use in connection with such acquired or constructed property
(or improvement thereon) or which is real property being improved by such
acquired or constructed property (or improvement thereon);




(ii) the principal amount of the Indebtedness secured by any such Lien
shall not, at the time such Lien is created, exceed an amount equal to the
lesser of (A) the cost to such Person or such Subsidiary of the property (or
improvement thereon) so acquired or constructed and (B) the Fair Market
Value (as determined in good faith by the board of directors of such Person)
of such property (or improvement thereon) at the time of such acquisition or
construction; and




(iii) any such Lien shall be created contemporaneously with, or within
90 days after, the acquisition or construction of such property; and




(g) with respect to any Asset which consists of a leasehold or other possessory
interest in real property, Liens to which the underlying fee estate in such real
property is subject that do not and could not reasonably be expected to result in a
Material Adverse Effect.



“Plan” means, with respect to any Obligor, any employee pension benefit plan (other
than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Sections 412
and 430 of the Code or Sections 302 and 303 of ERISA, and in respect of which such Obligor
or any of its ERISA Affiliates is (or, if such plan were terminated,
would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section
3(5) of ERISA.


 


18









 





“Preferred Stock” means any class of capital stock of a corporation that is preferred
over any other class of capital stock of such corporation as to the payment of dividends or
the payment of any amount upon liquidation or dissolution of such corporation.



“Promissory Note” means any promissory note of any Borrower payable to the order of a
Lender (and, if requested, its registered assigns), issued pursuant to Section 3.01(d); and
“Promissory Notes” means any or all of the foregoing.



“Property” or “Properties” means, unless otherwise specifically limited, real or
personal property of any kind, tangible or intangible, choate or inchoate, including cash,
securities, accounts and contract rights; and the words “asset” and “property” as used
herein shall be construed to have the same meaning and effect as the foregoing.



“Rating Agencies” means each of Moody’s and S&P.



“Recipient” has the meaning assigned to such term in Section 12.08.



“Reference Rate” means the variable rate of interest per annum established by Union
Bank from time to time as its “reference rate”. Such “reference rate” is set by Union Bank
as a general reference rate of interest, taking into account such factors as Union Bank may
deem appropriate, it being understood that many of Union Bank’s commercial or other loans
are priced in relation to such rate, that it is not necessarily the lowest or best rate
actually charged to any customer and that Union Bank may make various commercial or other
loans at rates of interest having no relationship to such rate. For purposes of this
Agreement, each change in the Reference Rate shall be effective as of the opening of
business on the date announced as the effective date of any change in such “reference rate”.



“Register” has the meaning assigned to such term in Section 12.07(c).



“Regulation U” means Regulation U of the Board as in effect from time to time.



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



“Request for Issuance” has the meaning assigned to such term in Section 4.02(a).



“Required Lenders” means, on any date of determination, Lenders that, collectively, on
such date (a) hold at least 51% of the then aggregate outstanding principal amount of the
Loans owing to Lenders or (b) if no Loans are then outstanding, have Percentages in the
aggregate of at least 51%; provided, that the aggregate outstanding principal amount of the
Loans owing to any Defaulting Lender and the Commitment of any Defaulting Lender shall be
excluded for purposes of making a
determination of Required Lenders. Any determination of those Lenders constituting the
Required Lenders shall be made by the Administrative Agent and shall be conclusive and
binding on all parties absent manifest error.


 


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“Requirement of Law” means, as to any Person, the articles of incorporation and by-laws
or other organizational or governing documents of such Person, and any Governmental Rules or
determination of an arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its Property or to which such Person or
any of its Property is subject.



“Restricted Payment” means (i) any Distribution in respect of any Person or any
Subsidiary of such Person (other than on account of capital stock or other equity interests
of a Subsidiary owned legally and beneficially by such Person or another Subsidiary of such
Person), including, without limitation, any Distribution resulting in the acquisition by
such Person of Securities which would constitute treasury stock, (ii) the purchase or
acquisition (including pursuant to any merger with any Person that was not a wholly-owned
Subsidiary of such Person prior to such merger) of any capital stock, evidences of
indebtedness or other securities (including any option, warrant or other right to acquire
any of the foregoing) of any other Person, (iii) the making of any loans or advances to, or
any other investment in, any other Person, and (iv) the purchase or acquisition (in one
transaction or a series of transactions) of any assets of any other Person constituting a
business unit. For purposes of this Agreement, the amount of any Restricted Payment made in
Property shall be the greater of (x) the Fair Market Value of such Property (as determined
in good faith by the board of directors (or equivalent governing body) of the Person making
such Restricted Payment) and (y) the net book value thereof on the books of such Person, in
each case determined as of the date on which such Restricted Payment is made.



“Revolving Credit Termination Date” means the earlier to occur of (a) the Final
Maturity Date and (b) the date of termination or reduction in whole of the Commitments
pursuant to Section 2.03 or 9.02.



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



“Sanctioned Person” means (a) any Person designated in the list of Specially Designated
Nationals and Blocked Persons published by the Office of Foreign Assets Control of the U.S.
Department of the Treasury, as amended from time to time; and (b) any other Person with
which transactions are prohibited under U.S. Economic Sanctions Law.



“SEC” means the Securities and Exchange Commission (or any successors thereto or an
analogous Governmental Authority).



“Securities Act” means the Securities Act of 1933, as amended from time to time, and
the rules and regulations promulgated thereunder from time to time in effect.


 


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“Security” has the meaning set forth in section 2(a)(1) of the Securities Act.



“Solvent” means, with respect to any Person as of any date of determination, that (a)
the amount of the “present fair saleable value” of the assets of such Person will, as of
such date, exceed the amount of all “liabilities of such Person, contingent or otherwise”,
as of such date, as such quoted terms are determined in accordance with applicable federal
and state laws governing determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date, be greater than the
amount that will be required to pay the liability of such Person on its debts as such debts
become absolute and matured, (c) such Person will not have, as of such date, an unreasonably
small amount of capital with which to conduct its business, and (d) such Person will be able
to pay its debts as they mature. For purposes of this definition, (i) “debt” means
liability on a “claim”, and (ii) “claim” means any (x) right to payment, whether or not such
a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y) right to an
equitable remedy for breach of performance if such breach gives rise to a right to payment,
whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent,
matured or unmatured, disputed, undisputed, secured or unsecured.



“SPC” has the meaning assigned to such term in Section 12.07(j).



“Statutory Reserve Rate” means a fraction (expressed as a decimal), the numerator of
which is the number one and the denominator of which is the number one minus the aggregate
of the maximum reserve percentages (including any marginal, special, emergency or
supplemental reserves) expressed as a decimal established by the Board with respect to the
Eurodollar Rate, for eurocurrency funding (currently referred to as “Eurocurrency
Liabilities” in Regulation D of the Board). Such reserve percentages shall include those
imposed pursuant to such Regulation D. Eurodollar Rate Loans shall be deemed to constitute
eurocurrency funding and to be subject to such reserve requirements without benefit of or
credit for proration, exemptions or offsets that may be available from time to time to any
Lender under such Regulation D or any comparable regulation. The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change in any reserve
percentage.



“Subsidiary” means, as to any Person, any corporation, association or other business
entity in which such Person or one or more of its Subsidiaries or such Person and one or
more of its Subsidiaries owns sufficient equity or voting interests to enable it or them (as
a group) ordinarily, in the absence of contingencies, to elect a majority of the directors
(or Persons performing similar functions) of such entity, and any partnership or joint
venture if more than a 50% interest in the profits or capital thereof is owned by such
Person or one or more of its Subsidiaries or such Person and one or more of its Subsidiaries
(unless such partnership can and does ordinarily take major business actions without the
prior approval of such Person or one or more of its Subsidiaries). Unless the context
otherwise clearly requires, any reference to a Subsidiary is a reference to a Subsidiary of
an Obligor.


 


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“Swaps” means, with respect to any Person, payment obligations with respect to interest
rate swaps, currency swaps and similar obligations obligating such Person to make payments,
whether periodically or upon the happening of a contingency. For the purposes of this
Agreement, the amount of the obligation under any Swap shall be the amount determined in
respect thereof as of the end of the then most recently ended fiscal quarter of such Person,
based on the assumption that such Swap had terminated at the end of such fiscal quarter, and
in making such determination, if any agreement relating to such Swap provides for the
netting of amounts payable by and to such Person thereunder or if any such agreement
provides for the simultaneous payment of amounts by and to such Person, then in each such
case, the amount of such obligation shall be the net amount so determined.



“Transactions” means the execution, delivery and performance by the Obligors of this
Agreement and the other Loan Documents, the issuance of Letters of Credit, the borrowing of
Loans and the use of the proceeds thereof.



“Treasury Indebtedness” means, with respect to any Person, the aggregate outstanding
principal amount of Indebtedness of such Person and its Subsidiaries that is owned by such
Person or its Subsidiaries and in respect of which such Person or one or more of its
Subsidiaries has the right to receive, pursuant to the terms of such Indebtedness, all
future principal, interest and other payments to be made with respect thereto.



“Type” has the meaning assigned to such term (a) in the definition of “Loan” when used
in such context and (b) in the definition of “Borrowing” when used in such context.



“Union Bank” means Union Bank, N.A., a national banking association.



“UniSource Energy” means UniSource Energy Corporation, a corporation incorporated under
the law of the State of Arizona.



“UNS Electric” has the meaning assigned to such term in the preamble hereto.



“UNS Electric Note Purchase Agreement” means that certain Note Purchase and Guaranty
Agreement, dated as of August 5, 2008, among UNS Electric, the Guarantor and the Purchasers
named therein, as the same may be amended, restated, supplemented, refinanced, replaced or
otherwise modified from time to time.



“UNS Gas” has the meaning assigned to such term in the preamble hereto.



“UNS Gas Note Purchase Agreement” means that certain Note Purchase and Guaranty
Agreement, dated as of August 11, 2003, among UNS Gas, the Guarantor and the Purchasers
named therein, as the same may be amended, restated, supplemented, refinanced, replaced or
otherwise modified from time to time.



“U.S. Economic Sanctions Law” means (a) the International Emergency Economic Powers Act
of 1977, as amended, the Trading with the Enemy Act of 1917, as amended, and any executive
order issued thereunder and in effect from time to time and
(b) the foreign assets control regulations of the U.S. Department of the Treasury,
codified at Title 31, Subtitle B, Chapter V of the Code of Federal Regulations, as amended,
and any enabling legislation thereof.


 


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“Utility Business” means the business of producing, developing, generating,
transmitting, distributing, selling or supplying electrical energy or natural gas for any
purpose, or any business incidental thereto or necessary in connection therewith, or any
business reasonably desirable in connection therewith which the ACC or other utility
regulatory body shall have authorized the Guarantor or any Subsidiary to enter.




“Wholly-Owned Subsidiary” means, at any time, any Subsidiary one hundred percent (100%)
of all of the equity interests (except directors’ qualifying shares) and voting interests of
which are owned by any one or more of any Obligor and such Obligor’s other Wholly-Owned
Subsidiaries at such time.




“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in
Part I of Subtitle E of Title IV of ERISA.



SECTION 1.02. Computation of Time Periods; Construction. (a) Unless otherwise indicated,
each reference in this Agreement to a specific time of day is a reference to Los Angeles,
California time. In the computation of periods of time under this Agreement, any period of a
specified number of days or months shall be computed by including the first day or month occurring
during such period and excluding the last such day or month. Unless the context requires
otherwise, in the case of a period of time “from” a specified date “to” or “until” a later
specified date, the word “from” means “from and including” and the words “to” and “until” each
means “to but excluding”.



(b) Unless the context requires otherwise, 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 herein shall be construed as referring to such agreement, instrument or other document as
from time to time amended, restated, replaced, supplemented or otherwise modified (subject to any
restrictions on such amendments, restatements, replacements, supplements or modifications set forth
herein), (ii) any reference herein to any Person shall be construed to include such Person’s
successors and assigns, (iii) the words “herein”, “hereof” and “hereunder”, and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to any particular
provision hereof and (iv) all references herein to Articles, Sections, Exhibits and Schedules shall
be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement.


 


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SECTION 1.03. Accounting Terms. Except as otherwise expressly provided herein, all terms of
an accounting or financial nature shall be construed in accordance with GAAP, as in effect from
time to time; provided that, if a Borrower notifies the Administrative Agent that such Borrower
requests an amendment to any provision hereof to eliminate the effect of any change
occurring after the date hereof in GAAP or in the application thereof on the operation of such
provision (including the effects of the application or discontinuance of the application of
accounting for the effects of regulation to all or any portion of such Borrower’s operations), or
if the Administrative Agent notifies a Borrower that the Required Lenders request an amendment to
any provision hereof for such purpose, regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision shall be interpreted
on the basis of GAAP as in effect and applied immediately before such change shall have become
effective until such notice shall have been withdrawn or such provision amended in accordance
herewith.



ARTICLE II

COMMITMENTS




SECTION 2.01. The Commitments. (a) Each Lender severally agrees, on the terms and conditions
hereinafter set forth, to make Loans to each Borrower and to participate in the issuance of Letters
of Credit (and the LC Outstandings thereunder) during the period from the Closing Date until the
Revolving Credit Termination Date, in an aggregate outstanding amount not to exceed on any day such
Lender’s Available Commitment (after giving effect to all Extensions of Credit to be made on such
day and the application of the proceeds thereof). Within the limits hereinafter set forth, each
Borrower may, from the Closing Date until the Revolving Credit Termination Date, request Extensions
of Credit hereunder, prepay Loans, or reduce or cancel Letters of Credit, and use the resulting
increase in the Available Commitments for further Extensions of Credit in accordance with the terms
hereof.



(b) In no event shall any Borrower be entitled to request or receive any Extensions of Credit
that would cause (i) the principal amount outstanding hereunder to exceed the Commitments or (ii)
the sum of (A) the aggregate outstanding principal amount of Loans made to such Borrower and (B)
the aggregate LC Outstandings of all Letters of Credit issued at the request of such Borrower and
then outstanding, in each case after giving effect to such Extensions of Credit and the application
of the proceeds thereof, to exceed such Borrower’s Availability Sublimit.



SECTION 2.02. Fees. (a) Each Borrower agrees to pay to the Administrative Agent for the
account of the Lenders a commitment fee, which shall accrue at a rate per annum equal to such
Borrower’s Commitment Fee Rate in effect from time to time on the daily amount of such Borrower’s
Allocated Unused Commitment Amount, during the period from and including the Closing Date to but
excluding the Revolving Credit Termination Date. Accrued commitment fees shall be payable
quarterly in arrears on the last Business Day of March, June, September and December of each year,
commencing with December 31, 2010, and on the Revolving Credit Termination Date. The
Administrative Agent shall, promptly after its receipt of such commitment fees from any Borrower,
pay such commitment fees to the Lenders ratably in accordance with their respective Percentages, in
accordance with Section 5.01.


 


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(b) Each Borrower agrees to pay (i) to the Administrative Agent for the account of each Lender
a participation fee on the daily aggregate amount of the LC Outstandings of all Letters of Credit
issued at the request of such Borrower, from the date hereof until the Letter of Credit Expiration
Date, at a rate per annum equal to the Applicable Margin in effect from time to
time for Eurodollar Rate Loans, payable quarterly in arrears on the last Business Day of each
March, June, September and December, commencing with December 31, 2010, and on the Letter of Credit
Expiration Date, and (ii) to each Issuing Bank, for its own account, a fronting fee payable in the
amounts and at the times separately agreed upon by such Borrower and such Issuing Bank, as well as
such Issuing Bank’s standard fees with respect to the issuance, amendment, renewal or extension of
any Letter of Credit issued at the request of such Borrower or processing of drawings thereunder;
provided, however, that upon the occurrence and during the continuance of an Event of Default, the
participation fees payable pursuant to clause (i) above shall be increased by 200 basis points per
annum.



(c) In addition to the fees provided for in subsections (a) and (b) above, the Borrowers shall
pay to the Administrative Agent, for its own account, such other fees as are provided for in that
certain letter agreement, dated the Closing Date, among the Borrowers and the Administrative Agent
(the “Fee Letter”), in the amounts and at the times specified therein.



SECTION 2.03. Reduction of the Commitments. (a) The Commitments shall be automatically and
permanently terminated on the Revolving Credit Termination Date.



(b) The Borrowers may, upon at least three Business Days’ prior written notice (duly executed
by an Authorized Officer of each Borrower) to the Administrative Agent (which shall promptly
distribute copies thereof to the Lenders), terminate in whole or reduce ratably in part the unused
portions of the Commitments; provided that any such partial reduction shall be in the aggregate
amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof; and provided,
further, that the Commitments shall in no event be reduced to an amount which is less than the
aggregate LC Outstandings on the date of such reduction.



(c) In the event that, at any time, (i) all or a majority of the voting capital stock of any
Borrower or Borrower Successor is sold, transferred or otherwise conveyed to any Person (other than
a Wholly-Owned Subsidiary), (ii) all or substantially all of the assets of any Borrower or Borrower
Successor are sold, transferred, leased or otherwise conveyed to any Person (other than a
Wholly-Owned Subsidiary), or (iii) any Borrower or Borrower Successor no longer constitutes a
Subsidiary of the Guarantor, in each case as a result of or pursuant to a transaction (or series of
transactions) permitted hereunder (including Section 8.02(b)) or otherwise, then (A) all
Obligations of such Borrower or Borrower Successor (as the case may be) shall be immediately due
and payable, (B) all outstanding Letters of Credit issued at the request and for the account of
such Borrower or Borrower Successor (as the case may be) shall be cancelled, or such Borrower or
Borrower Successor (as the case may be) shall pay immediately to the Administrative Agent an amount
equal to the aggregate LC Outstandings of all such Letters of Credit, to be held by the
Administrative Agent (for its benefit and the benefit of the Issuing Banks and the Lenders) as Cash
Collateral securing such LC Outstandings and such Borrower’s or Borrower Successor’s (as the case
may be) reimbursement obligations with respect thereto, (C) the Commitments shall be automatically
and permanently reduced by an amount equal to the excess (if any) of (1) the aggregate amount of
the Commitments at such time over (2) $70,000,000, (D) such Borrower or Borrower Successor (as the
case may be) shall no longer be permitted to request or receive any Extension of Credit and (E)
upon the payment in full of all outstanding Obligations of such Borrower or Borrower Successor (as
the case may be) and the satisfaction of the requirements set forth in clause (B) above, such
Borrower or


 


25









 





Borrower Successor (as the case may be) shall automatically and immediately cease to be a party to this Agreement; provided, however, that
this paragraph (c) shall not apply to any transaction described in clause (i), (ii) or (iii) above
with respect to any Borrower if (x) the Commitments have previously been reduced pursuant to clause
(C) above, (y) such Borrower is the only borrower under this Agreement and (z) in connection with
such transaction, both a Guarantor Successor and a Borrower Successor have assumed all obligations
of the Guarantor (if any) and such Borrower, respectively, under this Agreement and the other Loan
Documents in accordance with Section 8.02(b)(i)(D), and the other conditions set forth in Section
8.02(b)(i)(A) through (E) have been satisfied.




SECTION 2.04. Computations of Outstandings. Whenever reference is made in this Agreement to
the principal amount outstanding on any date under this Agreement, such reference shall refer to
the sum of (a) the aggregate principal amount of all Loans outstanding on such date plus (b) the
aggregate LC Outstandings of all Letters of Credit outstanding on such date, in each case after
giving effect to all Extensions of Credit to be made on such date and the application of the
proceeds thereof. At no time shall the principal amount outstanding under this Agreement exceed
the aggregate amount of the Commitments, and at no time shall the portion of the principal amount
outstanding under this Agreement attributed to any Borrower exceed such Borrower’s Availability
Sublimit. References to the unused portion of the Commitments shall refer to the excess, if any,
of the Commitments over the principal amount outstanding hereunder; and references to the unused
portion of any Lender’s Commitment shall refer to such Lender’s Percentage of the unused
Commitments.




SECTION 2.05. Defaulting Lenders.



(a) Adjustments. Notwithstanding anything to the contrary contained in this Agreement, if any
Lender becomes a Defaulting Lender, then, until such time as such Lender is no longer a Defaulting
Lender, to the extent permitted by applicable law:




(i) Waivers and Amendments. Such Defaulting Lender’s right to approve or disapprove
any amendment, waiver or consent with respect to this Agreement shall be restricted as set
forth in Section 12.01.




(ii) Reallocation of Payments. Any payment of principal, interest, fees or other
amounts received by the Administrative Agent for the account of such Defaulting Lender
(whether voluntary or mandatory, at maturity, pursuant to Article IX or otherwise, and
including any amounts made available to the Administrative Agent by such Defaulting Lender
pursuant to Section 12.05), shall be applied at such time or times as may be determined by
the Administrative Agent as follows: first, to the payment of any amounts owing by such
Defaulting Lender to the Administrative Agent hereunder; second, to the payment on a pro
rata basis of any amounts owing by such Defaulting Lender to the Issuing Banks hereunder;
third, if so determined by the Administrative Agent or requested by any Issuing Bank, to be
held as Cash Collateral for future funding obligations of such Defaulting Lender of any
participations in any Letters of Credit; fourth, to the payment of any amounts owing to the
Lenders or the Issuing Banks as a result of any judgment of a court of competent
jurisdiction obtained by any Lender or such Issuing Bank against such Defaulting Lender as a
result of such Defaulting Lender’s breach of its obligations under this Agreement; fifth, so
long as no Default or Event of Default exists with respect to any Borrower (or, prior to the
occurrence of the Guaranty


 


26









 






Termination Date with respect to such Borrower, the Guarantor), to the payment of any
amounts owing to such Borrower as a result of any judgment of a court of competent
jurisdiction obtained by such Borrower against such Defaulting Lender as a result of such
Defaulting Lender’s breach of its obligations under this Agreement; and sixth, to such
Defaulting Lender or as otherwise directed by a court of competent jurisdiction, provided
that if such payment is a payment of the principal amount of any LC Disbursements in respect
of which such Defaulting Lender has not fully funded its appropriate share, such payment
shall be applied solely to pay LC Disbursements owed to the applicable Issuing Banks on a
pro rata basis (or, to the extent that the non-Defaulting Lenders have reimbursed such
Issuing Banks for such LC Disbursements, to the non-Defaulting Lenders on a pro rata basis)
prior to being applied to the payment of any LC Disbursements owed to such Defaulting
Lender. Any payments, prepayments or other amounts paid or payable to a Defaulting Lender
that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash
Collateral pursuant to this Section 2.05(a)(ii) shall be deemed paid to and redirected by
such Defaulting Lender, and each Lender irrevocably consents thereto.




(iii) Certain Fees. Such Defaulting Lender shall not be entitled to receive any
commitment fee pursuant to Section 2.02(a) or any participation fee pursuant to Section
2.02(b), in each case for any period during which it is a Defaulting Lender.




(iv) Reallocation of Percentages to Reduce Fronting Exposure. During any period in
which there is a Defaulting Lender under this Agreement, for purposes of computing the
amount of the obligation of each non-Defaulting Lender hereunder to acquire or fund
participations in Letters of Credit issued at the request of any Borrower pursuant to
Section 4.04 (including, without limitation, for purposes of determining the amount of
participation fees payable to such non-Defaulting Lender pursuant to Section 2.02(b)), the
“Percentage” of each non-Defaulting Lender hereunder shall be computed without giving effect
to the Commitment of such Defaulting Lender; provided, that (A) each such reallocation with
respect to Letters of Credit issued at the request of any Borrower shall be given effect
only if, at the date the applicable Lender becomes a Defaulting Lender, no Default or Event
of Default exists with respect to such Borrower (or, prior to the occurrence of the Guaranty
Termination Date with respect to such Borrower, the Guarantor), and (B) the obligation of
each non-Defaulting Lender to acquire or fund participations in Letters of Credit at any
time shall not exceed the unused positive difference, if any, of (1) the Commitment of such
non-Defaulting Lender minus (2) the Aggregate Exposure of such non-Defaulting Lender at such
time.



(b) Defaulting Lender Cure. If the Borrowers, the Administrative Agent and the Issuing Banks
agree in writing in their sole discretion that a Lender should no longer be deemed to be a
Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the
effective date specified in such notice and subject to any conditions set forth therein (which may
include arrangements with respect to any Cash Collateral), such Lender will, to the extent
applicable, take such action as the Administrative Agent may determine to be necessary to cause the
funded and unfunded participations in Letters of Credit to be held on a pro rata basis by the
Lenders in accordance with their Percentages (without giving effect to Section 2.05(a)(iv)),
whereupon such Lender will cease to be a Defaulting Lender, provided that no
adjustments will be made retroactively with respect to fees accrued or payments made by or on
behalf of any Borrower while such Lender was a Defaulting Lender, and provided, further, that
except to the extent otherwise expressly agreed by the affected parties, no change hereunder from
Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder
arising from such Lender’s having been a Defaulting Lender.


 


27









 





(c) Cash Collateral. At any time that there shall exist a Defaulting Lender, immediately upon
the request of the Administrative Agent or any Issuing Bank, each Borrower shall deliver to the
Administrative Agent Cash Collateral in an amount sufficient to cover all Fronting Exposure (after
giving effect to Section 2.05(a)(iv) and any Cash Collateral provided by the Defaulting Lender)
with respect to Letters of Credit issued at the request of such Borrower and any outstanding LC
Disbursements in respect of such Letters of Credit. All Cash Collateral (other than credit support
not constituting funds subject to deposit) shall be maintained in blocked, non-interest bearing
deposit accounts at the Administrative Agent. Each Borrower, and to the extent provided by any
Lender, such Lender, hereby grants to (and subjects to the control of) the Administrative Agent,
for the benefit of the Administrative Agent, the Issuing Banks and the Lenders, and agrees to
maintain, a first priority security interest in all such cash, deposit accounts and all balances
therein, and all other property so provided as collateral pursuant hereto, and in all proceeds of
the foregoing, all as security for the obligations to which such Cash Collateral may be applied
pursuant to this subsection (c). If at any time the Administrative Agent determines that Cash
Collateral is subject to any right or claim of any Person other than the Administrative Agent as
herein provided, or that the total amount of such Cash Collateral is less than the applicable
Fronting Exposure and other obligations secured thereby, each applicable Borrower or the relevant
Defaulting Lender will, promptly upon demand by the Administrative Agent, pay or provide to the
Administrative Agent additional Cash Collateral in an amount sufficient to eliminate such
deficiency. Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral
provided under this subsection (c), Section 2.05(a)(ii) or Article IX in respect of Letters of
Credit shall be held and applied to the satisfaction of the specific LC Exposure, obligations to
fund participations therein (including, as to Cash Collateral provided by a Defaulting Lender, any
interest accrued on such obligation) and other obligations for which the Cash Collateral was so
provided, prior to any other application of such property as may be provided for herein. Cash
Collateral (or the appropriate portion thereof) provided to reduce Fronting Exposure or other
obligations shall be released promptly following (i) the elimination of the applicable Fronting
Exposure or other obligations giving rise thereto (including by the termination of Defaulting
Lender status of the applicable Lender (or, as appropriate, its assignee following compliance with
Section 12.07(a)(iv)) or (ii) the Administrative Agent’s good faith determination that there exists
excess Cash Collateral, provided that (x) any Cash Collateral furnished by or on behalf of a
Borrower shall not be released during the continuance of a Default or Event of Default with respect
to such Borrower or, prior to the occurrence of the Guaranty Termination Date with respect to such
Borrower, the Guarantor (and following application as provided in this subsection (c) may, during
the continuance of an Event of Default with respect to such Borrower (or, prior to the occurrence
of the Guaranty Termination Date with respect to such Borrower, the Guarantor), be otherwise
applied in accordance with Article IX), and (y) the Person providing Cash Collateral and the
Issuing Banks may agree that Cash Collateral shall not be released but instead held to support
future anticipated Fronting Exposure or other obligations.


 


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ARTICLE III

LOANS




SECTION 3.01. Loans. (a) Each Borrower may request a Borrowing (other than a Conversion) by
delivering a notice (a “Notice of Borrowing”) to the Administrative Agent no later than 11:00 A.M.
on the third Business Day or, in the case of ABR Loans, on the first Business Day, prior to the
date of the proposed Borrowing. The Administrative Agent shall give each Lender prompt notice of
each Notice of Borrowing. Each Notice of Borrowing shall be in substantially the form of Exhibit A
and shall specify the requested (i) date of such Borrowing (which shall be a Business Day, but in
no event later than the Business Day immediately preceding the Revolving Credit Termination Date),
(ii) Type of Loans to be made in connection with such Borrowing, (iii) Interest Period, if any, for
such Loans and (iv) amount of such Borrowing. Each proposed Borrowing shall conform to the
requirements of Sections 3.03 and 3.04.



(b) Each Lender shall, before 10:00 A.M. on the date of such Borrowing, make available for the
account of its Applicable Lending Office to the Administrative Agent at the Administrative Agent’s
address referred to in Section 12.02, in same day funds, such Lender’s Percentage of such
Borrowing. After the Administrative Agent’s receipt of such funds and upon fulfillment of the
applicable conditions set forth in Article VI, the Administrative Agent will make such funds
available to the applicable Borrower at the Administrative Agent’s aforesaid address.
Notwithstanding the foregoing, unless the Administrative Agent shall have received notice from a
Lender prior to the date of any Borrowing that such Lender will not make available to the
Administrative Agent such Lender’s Percentage of such Borrowing, the Administrative Agent may
assume that such Lender has made such Percentage available to the Administrative Agent on the date
of such Borrowing in accordance with the first sentence of this subsection (b), and the
Administrative Agent may, in reliance upon such assumption, make available to the applicable
Borrower on such date a corresponding amount.



(c) If and to the extent that any Lender (a “non-performing Lender”) shall not have made
available to the Administrative Agent, in accordance with subsection (b) above, such Lender’s
Percentage of any Borrowing, the non-performing Lender and the applicable Borrower severally agree
to repay to the Administrative Agent forthwith on demand corresponding amounts (not to exceed the
aggregate amount that such non-performing Lender failed to make available to the Administrative
Agent), together with interest thereon for each day from the date such amount is made available to
such Borrower until the date such amount is repaid to the Administrative Agent, at (i) in the case
of such Borrower, the interest rate applicable at the time to Loans made in connection with such
Borrowing and (ii) in the case of such Lender, the Federal Funds Effective Rate. Within the limits
of each Lender’s Available Commitment and subject to the other terms and conditions set forth in
this Agreement for the making of Loans, each Borrower may request (and the Lenders shall honor) one
or more additional Borrowings from the performing Lenders to fund such repayment to the
Administrative Agent. If a non-performing Lender shall repay to the Administrative Agent such
corresponding amount in full (with interest as above provided), (x) the Administrative Agent shall
apply such corresponding amount and interest to the repayment to the Administrative Agent (or
repayment of Loans made to fund such repayment to the Administrative Agent), and shall make any
remainder available to the applicable Borrower and (y) such amount so repaid shall be deemed to
constitute such Lender’s


 


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 Loan, made as part of such Borrowing for purposes of this Agreement as if funded
concurrently with the other Loans made as part of such Borrowing, and such Lender shall forthwith
cease to be deemed a non-performing Lender. Nothing herein shall in any way limit, waive or
otherwise reduce any claims that any party hereto may have against any non-performing Lender. The
failure of any Lender to make the Loan to be made by it as part of any Borrowing shall not relieve
any other Lender of its obligation, if any, hereunder to make its Loan on the date of such
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 any Borrowing.




(d) Any Lender may request that Loans made by it hereunder be evidenced by a Promissory Note.
In such event, the Borrowers shall prepare, execute and deliver to such Lender a Promissory Note
payable to the order of such Lender (or, if requested by such Lender, to such Lender and its
registered assigns) and in a form approved by the Administrative Agent. Thereafter, the Loans
evidenced by such Promissory Note and interest thereon shall at all times (including after
assignment pursuant to Section 12.07) be represented by one or more Promissory Notes in such form
payable to the order of the payee named therein (or, if such Promissory Note is a registered note,
to such payee and its registered assigns).



SECTION 3.02. Conversion of Loans. Each Borrower may from time to time Convert any Loan (or
portion thereof) of any Type made to such Borrower to one or more Loans of the same or any other
Type by delivering a notice of such Conversion (a “Notice of Conversion”) to the Administrative
Agent no later than 11:00 A.M. on (x) the third Business Day prior to the date of any proposed
Conversion into a Eurodollar Rate Loan and (y) the first Business Day prior to the date of any
proposed Conversion into an ABR Loan. The Administrative Agent shall give each Lender prompt
notice of each Notice of Conversion. Each Notice of Conversion shall be in substantially the form
of Exhibit B and shall specify (i) the requested date of such Conversion (which shall be a Business
Day), (ii) the Type of, and Interest Period, if any, applicable to, the Loans (or portions thereof)
proposed to be Converted, (iii) the requested Type of Loans to which such Loans (or portions
thereof) are proposed to be Converted, (iv) the requested initial Interest Period, if any, to be
applicable to the Loans resulting from such Conversion and (v) the aggregate amount of Loans (or
portions thereof) proposed to be Converted. Each proposed Conversion shall be subject to the
provisions of Sections 3.03 and 3.04.



SECTION 3.03. Interest Periods. The period between the date of each Eurodollar Rate Loan and
the date of payment in full of such Loan shall be divided into successive periods (“Interest
Periods”) for purposes of computing interest applicable thereto. The initial Interest Period for
each such Loan shall begin on the day such Loan is made, and each subsequent Interest Period shall
begin on the last day of the immediately preceding Interest Period for such Loan. The duration of
each Interest Period shall be one, two, three or six months, as the applicable Borrower may, in
accordance with Section 3.01 or 3.02, select; provided, however, that:




(i) a Borrower may not select any Interest Period that ends after the Revolving Credit
Termination Date;


 


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(ii) 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 occur on the next
succeeding Business Day, provided 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




(iii) any Interest Period that commences on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding day in the last calendar month
of such Interest Period) shall end on the last Business Day of the last calendar month of
such Interest Period.



SECTION 3.04. Other Terms Relating to the Making and Conversion of Loans. (a)
Notwithstanding anything in Section 3.01 or 3.02 to the contrary:




(i) each Borrowing (other than a Borrowing deemed made under Section 4.04(c) or (d))
shall be in an aggregate amount not less than $1,000,000 or an integral multiple of
$1,000,000 in excess thereof (or, in each case, such lesser amount as shall be equal to the
total amount of the Available Commitments on such date, after giving effect to all other
Extensions of Credit to be made on such date), and shall consist of Loans of the same Type,
having the same Interest Period and made or Converted on the same day by the Lenders ratably
according to their respective Percentages;




(ii) a Borrower may request that more than one Borrowing be made on the same day;




(iii) at no time shall more than ten (10) different Borrowings comprising Eurodollar
Rate Loans be outstanding hereunder;




(iv) no Eurodollar Rate Loan may be Converted on a date other than the last day of the
Interest Period applicable to such Loan unless the corresponding amounts, if any, payable to
the Lenders pursuant to Section 5.04(b) are paid contemporaneously with such Conversion;




(v) if a Borrower shall either fail to give a timely Notice of Conversion pursuant to
Section 3.02 in respect of any Loans made to such Borrower or fail, in any Notice of
Conversion that has been timely given by such Borrower, to select the duration of any
Interest Period for Loans to be Converted into Eurodollar Rate Loans in accordance with
Section 3.03, such Loans shall, on the last day of the then existing Interest Period
therefor, automatically Convert into, or remain as, as the case may be, ABR Loans; and




(vi) if an Event of Default has occurred and is continuing with respect to any Borrower
or, prior to the occurrence of the Guaranty Termination Date with respect to such Borrower,
the Guarantor, (A) no outstanding Loans made to such Borrower may be Converted to or
continued as Eurodollar Rate Loans and (B) unless repaid, each Eurodollar Rate Loan made to
such Borrower shall be Converted to an ABR Loan at the end of the Interest Period applicable
thereto.


 


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(b) If any Lender shall notify the Administrative Agent that the introduction of or any change
in, or in the interpretation of, any law or regulation makes it unlawful, or that any central
bank or other Governmental Authority asserts that it is unlawful, for such Lender or its
Applicable Lending Office to perform its obligations hereunder to make, or to fund or maintain,
Eurodollar Rate Loans hereunder, (i) the obligation of such Lender to make, or to Convert Loans
into, Eurodollar Rate Loans for any Borrowing from such Lender shall be forthwith suspended until
the earlier to occur of the date upon which (A) such Lender shall cease to be a party hereto and
(B) it is no longer unlawful for such Lender to make, fund or maintain Eurodollar Rate Loans, and
(ii) if the maintenance of Eurodollar Rate Loans then outstanding through the last day of the
Interest Period therefor would cause such Lender to be in violation of such law, regulation or
assertion, such Lender may require each Borrower to either prepay or Convert all Eurodollar Rate
Loans made by such Lender to such Borrower within five days after such Borrower’s receipt of such
notice, and if such Borrower shall not have so prepaid or Converted such Eurodollar Rate Loans by
such fifth day, then such Eurodollar Rate Loans shall be deemed automatically Converted to ABR
Loans on such fifth day. Promptly upon becoming aware that the circumstances that caused such
Lender to deliver such notice no longer exist, such Lender shall deliver notice thereof to the
Administrative Agent (but the failure to do so shall impose no liability upon such Lender).
Promptly upon receipt of such notice from such Lender (or upon such Lender’s assigning all of its
Commitments, Loans, participation and other rights and obligations hereunder to an Eligible
Assignee), the Administrative Agent shall deliver notice thereof to the Borrowers and the Lenders
and such suspension shall terminate.



(c) If the Required Lenders shall, at least one Business Day before the date of any requested
Borrowing, notify the Administrative Agent that the Adjusted Eurodollar Rate for Eurodollar Rate
Loans to be made in connection with such Borrowing will not adequately reflect the cost to such
Required Lenders of making, funding or maintaining their respective Eurodollar Rate Loans for such
Borrowing, the right of the Borrowers to select Eurodollar Rate Loans for such Borrowing and any
subsequent Borrowing shall be suspended until the Administrative Agent shall notify the Borrowers
and the Lenders that the circumstances causing such suspension no longer exist, and each Loan to be
made or Converted in connection with such Borrowing shall be an ABR Loan.



(d) If any Lender shall have delivered a notice to any Borrower or the Administrative Agent
described in Section 3.04(b), or shall become a non-performing Lender under Section 3.01(c) or
Section 4.04(c) (or is otherwise a Defaulting Lender), and if and so long as such Lender shall not
have withdrawn such notice or corrected such non-performance in accordance with said Section
3.04(b), Section 3.01(c) or Section 4.04(c) (or otherwise continues to be deemed a Defaulting
Lender), the Borrowers or the Administrative Agent may demand that such Lender assign in accordance
with Section 12.07, to one or more Eligible Assignees designated by the Borrowers or the
Administrative Agent, all (but not less than all) of such Lender’s Commitments, Loans,
participation and other rights and obligations hereunder; provided that any such demand by the
Borrowers during the continuance of a Default or an Event of Default shall be ineffective without
the consent of the Required Lenders. If, within 30 days following any such demand by the
Administrative Agent or the Borrowers, any such Eligible Assignee so designated shall fail to
consummate such assignment on terms reasonably satisfactory to such Lender, or the Borrowers and
the Administrative Agent shall have failed to designate any such Eligible Assignee, then such
demand by the Borrowers or the Administrative Agent shall become ineffective, it being understood
for purposes of this provision that such assignment shall be conclusively deemed to be on terms
reasonably satisfactory to such Lender, and such


 


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Lender shall be compelled to consummate such assignment forthwith, if such Eligible Assignee (i)
shall agree to such assignment in substantially the form of the Lender Assignment attached hereto
as Exhibit E and (ii) shall tender payment to such Lender in an amount equal to the full
outstanding Dollar amount accrued in favor of such Lender hereunder (as computed in accordance with
the records of the Administrative Agent), including, without limitation, all accrued interest and
fees and, to the extent not paid by the Borrowers, any payments required pursuant to Section
5.04(b).




(e) Each Notice of Borrowing and Notice of Conversion shall be irrevocable and binding on the
applicable Borrower. In the case of any Borrowing which the related Notice of Borrowing or Notice
of Conversion specifies is to be comprised of Eurodollar Rate Loans, the applicable Borrower shall
severally indemnify each Lender against any loss, cost or expense incurred by such Lender as a
result of any failure by such Borrower to fulfill, on or before the date specified in such Notice
of Borrowing or Notice of Conversion for such Borrowing, the applicable conditions (if any) set
forth in this Article III (other than failure pursuant to the provisions of Section 3.04(c) hereof)
or in Article VI, including any such loss (including 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 when such Loan, as a result of such failure, is
not made on such date.




SECTION 3.05. Repayment of Loans; Interest.



(a) Principal. Each Borrower shall repay in full, on the Revolving Credit Termination Date,
the outstanding principal amount of the Loans made to such Borrower.



(b) Interest. Each Borrower shall pay interest on the unpaid principal amount of each Loan
made to such Borrower from the date of such Loan until such principal amount shall be paid in full,
at the Applicable Rate for such Loan, payable as follows:




(i) ABR Loans. If such Loan is an ABR Loan, interest thereon shall be payable
quarterly in arrears on the last Business Day of each March, June, September and December,
on the date of any Conversion of such ABR Loan and on the date such ABR Loan shall become
due and payable or shall otherwise be paid in full; provided, however, that interest
accruing on the principal amount of any ABR Loan that is not paid when due (whether at
stated maturity, by acceleration or otherwise) shall be payable on demand.




(ii) Eurodollar Rate Loans. If such Loan is a Eurodollar Rate Loan, interest thereon
shall be payable on the last day of each Interest Period for such Loan and, if the Interest
Period for such Loan has a duration of more than three months, on that day of each third
month during such Interest Period that corresponds to the first day of such Interest Period
(or, if any such month does not have a corresponding day, then on the last day of such
month); provided, however, that interest accruing on the principal amount of any Eurodollar
Rate Loan that is not paid when due (whether at stated maturity, by acceleration or
otherwise) shall be payable on demand.


 


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(c) Default Interest. Notwithstanding the foregoing, upon the occurrence and during the
continuance of an Event of Default with respect to any Borrower (or, prior to the occurrence of the
Guaranty Termination Date with respect to such Borrower, the Guarantor), (i) each ABR Loan made to
such Borrower shall bear interest at a rate of 2.0% per annum in excess
of the rate set forth in paragraph (b) of this Section and (ii) each Eurodollar Rate Loan
shall bear interest at a rate of 2.0% per annum in excess of the rate set forth in paragraph (b) of
this Section until the Interest Period applicable thereto shall have expired and thereafter at a
per annum rate equal to the Applicable Rate for ABR Loans plus 2.0%. In addition, if any principal
of or interest on any Loan or LC Disbursement or any fee or other amount payable by any Borrower
hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to
(A) in the case of overdue principal of any Loan, 2.0% plus the rate otherwise applicable to such
Loan as provided in paragraph (b) of this Section or (B) in the case of any other amount, 2.0% plus
the Applicable Rate for ABR Loans. Interest accrued pursuant to this paragraph (c) shall be
payable on demand.



SECTION 3.06. New Lenders. On the Closing Date, each New Lender and Increasing Lender (as
hereinafter defined) shall purchase by assignment from the Existing Lenders such portion of the
Loans (if any) owing to them as shall be designated by the Administrative Agent such that, after
giving effect to all such purchases and assignments, the outstanding Loans owing to each Lender
shall equal such Lender’s Percentage of the aggregate amount of Loans owing to all Lenders. In
addition, on the Closing Date, each New Lender and Increasing Lender shall be deemed to have
purchased by assignment from the Existing Lenders (and the Existing Lenders shall be deemed to have
assigned to the New Lenders and the Increasing Lenders) a portion of the participations (if any)
then held by the Existing Lenders in each outstanding Letter of Credit and LC Disbursement, such
that, after giving effect to all such deemed purchases and assignments, each Lender’s
participations in outstanding Letters of Credit and LC Disbursements shall equal such Lender’s
Percentage of the aggregate amount of such participations held by all of the Lenders. As used
herein, the term “Increasing Lender” means each Existing Lender whose Commitment (as set forth on
the signature pages hereof) exceeds its Commitment (as defined in the Existing Credit Agreement)
under the Existing Credit Agreement.



ARTICLE IV

LETTERS OF CREDIT




SECTION 4.01. Issuing Banks. Subject to the terms and conditions hereof, each Borrower may
from time to time identify and arrange for one or more Lenders to act as Issuing Banks hereunder.
Notice of any such designation by a Borrower shall be given to the Administrative Agent at least
four Business Days prior to the first date upon which such Borrower proposes that such Issuing Bank
issue its first Letter of Credit, so as to provide adequate time for such proposed Issuing Bank to
be approved by the Administrative Agent hereunder (such approval not to be unreasonably withheld).
Within two Business Days following the receipt of any such designation of a proposed Issuing Bank,
the Administrative Agent shall notify the applicable Borrower as to whether such designee is
acceptable to the Administrative Agent. In the event of any inconsistency between the terms and
conditions of this Agreement and the terms and conditions of any form of letter of credit
application or other agreement submitted by a Borrower to, or entered into by a Borrower with, any
Issuing Bank relating to any Letter of Credit or the obligation of the Issuing Bank to issue
Letters of Credit hereunder (including, without limitation, any Issuing Bank Agreement), the terms
and conditions of this Agreement shall control; provided, however, that any such agreement between
a Borrower
and any Issuing Bank may set forth the maximum aggregate stated amount of all Letters of
Credit at any one time outstanding that such Issuing Bank will issue hereunder, and the obligation
of such Issuing Bank to issue Letters of Credit hereunder shall be subject to such maximum amount.
Nothing contained herein shall be deemed to require any Lender to agree to act as an Issuing Bank,
if it does not so desire.


 


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SECTION 4.02. Letters of Credit. (a) Each Letter of Credit (other than an Existing Letter of
Credit) shall be issued (or the stated maturity thereof extended or terms thereof modified or
amended) on not less than three Business Days’ prior written notice thereof by the applicable
Borrower to the Administrative Agent (which shall promptly distribute copies thereof to the
Lenders) and the relevant Issuing Bank. Each such notice (a “Request for Issuance”) shall specify
(i) the date (which shall be a Business Day, but in no event later than the date that occurs ten
(10) Business Days prior to the Revolving Credit Termination Date) of issuance of such Letter of
Credit (or the date of effectiveness of such extension, modification or amendment) and the stated
expiry date thereof (which shall be no later than the date that occurs one year from the date of
issuance of such Letter of Credit (or, in the case of any extension of a Letter of Credit, one year
from the date of effectiveness of such extension), and in any event no later than the Letter of
Credit Expiration Date, (ii) the proposed stated amount of such Letter of Credit (which shall not
be less than $250,000) and (iii) such other information as shall demonstrate compliance of such
Letter of Credit with the requirements specified therefor in this Agreement and the relevant
Issuing Bank Agreement. Each Request for Issuance shall be irrevocable unless modified or
rescinded by the applicable Borrower not less than one Business Day prior to the proposed date of
issuance (or effectiveness) specified therein. Not later than 10:00 A.M. on the proposed date of
issuance (or effectiveness) specified in such Request for Issuance, and upon fulfillment of the
applicable conditions precedent and the other requirements set forth herein and in the relevant
Issuing Bank Agreement, such Issuing Bank shall issue (or extend, amend or modify) such Letter of
Credit and provide notice and a copy thereof to the Administrative Agent, which shall promptly
furnish copies thereof to the Lenders. Notwithstanding any provision to the contrary contained in
this Agreement, an Issuing Bank shall have no obligation to issue, amend, renew or extend any
Letter of Credit if at such time a Defaulting Lender exists, unless (A) such Issuing Bank has
entered into arrangements satisfactory to such Issuing Bank (in its sole discretion) with the
applicable Borrower or such Defaulting Lender to eliminate such Issuing Bank’s risk with respect to
such Defaulting Lender’s Percentage of its participation interest in such Letter of Credit or (B)
such Issuing Bank is satisfied that such risk has been reallocated in its entirety to the
non-Defaulting Lenders pursuant to Section 2.05(a)(iv).



(b) Each Lender severally agrees with such Issuing Bank to participate in the Extension of
Credit resulting from the issuance (or extension, modification or amendment) of such Letter of
Credit, in the manner and the amount provided in Section 4.04(b), and the issuance of such Letter
of Credit shall be deemed to be a confirmation by such Issuing Bank and each Lender of such
participation in such amount.



(c) Notwithstanding anything herein to the contrary, the aggregate LC Outstandings of all
Letters of Credit outstanding at any one time shall not exceed the Letter of Credit Sublimit.



(d) As of the Closing Date, each of the Existing Letters of Credit shall be deemed to be
issued under this Agreement as a Letter of Credit.


 


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SECTION 4.03. Issuing Bank Fees. Each Borrower shall pay directly to each Issuing Bank such
fees and expenses, if any, specified to be paid by it to such Issuing Bank pursuant to the Issuing
Bank Agreement to which such Borrower and such Issuing Bank are parties, at the times, and in the
manner, specified in such Issuing Bank Agreement. In addition, each Borrower shall pay all
reasonable out-of-pocket expenses incurred by any Issuing Bank in connection with the issuance,
amendment or extension of any Letter of Credit issued by such Issuing Bank at the request of such
Borrower or any demand for payment thereunder.



SECTION 4.04. Reimbursement to Issuing Banks. (a) Each Borrower hereby agrees to pay to the
Administrative Agent for the account of each Issuing Bank, on demand made by such Issuing Bank to
such Borrower and the Administrative Agent, on and after each date on which such Issuing Bank shall
pay any amount under any Letter of Credit issued by such Issuing Bank at the request of such
Borrower, a sum equal to the amount so paid plus interest on such amount from the date so paid by
such Issuing Bank until repayment to such Issuing Bank in full at a fluctuating interest rate per
annum equal at all times to the Applicable Rate for ABR Loans.



(b) If any Issuing Bank shall not have been reimbursed in full for any payment made by such
Issuing Bank under any Letter of Credit issued by such Issuing Bank on the date of such payment,
such Issuing Bank shall give the Administrative Agent and each Lender prompt notice thereof (an “LC
Payment Notice”) no later than 10:00 A.M. on the Business Day immediately succeeding the date of
such payment by such Issuing Bank. Each Lender severally agrees to purchase a participation in the
reimbursement obligation of the applicable Borrower to such Issuing Bank under subsection (a)
above, by paying to the Administrative Agent for the account of such Issuing Bank an amount equal
to such Lender’s Percentage of such unreimbursed amount paid by such Issuing Bank, plus interest on
such amount at a rate per annum equal to the Federal Funds Effective Rate from the date of such
payment by such Issuing Bank to the date of payment to such Issuing Bank by such Lender. Each such
payment by a Lender shall be made not later than 1:00 P.M. on the later to occur of (i) the
Business Day immediately following the date of such payment by such Issuing Bank and (ii) the
Business Day on which such Lender shall have received an LC Payment Notice from such Issuing Bank.
Each Lender’s obligation to make each such payment to the Administrative Agent for the account of
such Issuing Bank shall be several and shall not be affected by (A) the occurrence or continuance
of any Default or Event of Default, (B) the failure of any other Lender to make any payment under
this Section 4.04, or (C) the date of the drawing under the applicable Letter of Credit issued by
such Issuing Bank. Each Lender further agrees that each such payment shall be made without any
offset, abatement, withholding or reduction whatsoever.



(c) The failure of any Lender to make any payment to the Administrative Agent for the account
of an Issuing Bank in accordance with subsection (b) above shall not relieve any other Lender of
its obligation to make payment, but no Lender shall be responsible for the failure of any other
Lender. If any Lender (a “non-performing Lender”) shall fail to make any payment to the
Administrative Agent for the account of an Issuing Bank in accordance with subsection (b) above
within five Business Days after such Lender’s receipt of the LC Payment Notice relating thereto,
then, for so long as such failure shall continue (and such Issuing Bank has not otherwise been
reimbursed for such payment), such Issuing Bank shall be deemed, for purposes of Section 5.05 and
Article IX hereof, to be a Lender hereunder owed a Loan in an amount equal to the
outstanding principal amount due and payable by such Lender to the Administrative Agent for
the account of such Issuing Bank pursuant to subsection (b) above.


 


36









 





(d) Each participation purchased by a Lender under subsection (b) above shall constitute an
ABR Loan deemed made by such Lender to the applicable Borrower on the date of such payment by the
relevant Issuing Bank under the applicable Letter of Credit issued by such Issuing Bank at the
request of such Borrower (irrespective of such Borrower’s noncompliance, if any, with the
conditions precedent for Loans hereunder); and all such payments by the Lenders in respect of any
one such payment by such Issuing Bank shall constitute a single Borrowing hereunder.



SECTION 4.05. Obligations Absolute. The payment obligations of each Lender under Section
4.04(b) and of each Borrower under this Agreement in respect of any payment under any Letter of
Credit and any Loan deemed made under Section 4.04(c) or (d) shall be unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all
circumstances, including the following circumstances:




(i) any lack of validity or enforceability of any Loan Document or any other agreement
or instrument relating thereto or to such Letter of Credit;




(ii) any amendment or waiver of, or any consent to departure from, all or any of the
Loan Documents;




(iii) the existence of any claim, set-off, defense or other right which any Borrower
may have at any time against any beneficiary, or any transferee, of such Letter of Credit
(or any Persons for whom any such beneficiary or any such transferee may be acting), any
Issuing Bank, or any other Person, whether in connection with this Agreement, the
transactions contemplated herein or by such Letter of Credit, or any unrelated transaction;




(iv) any statement or any other document presented under such Letter of Credit proving
to be forged, fraudulent, invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect;




(v) payment in good faith by any Issuing Bank under any Letter of Credit issued by such
Issuing Bank against presentation of a draft or certificate which does not comply with the
terms of such Letter of Credit; or




(vi) any other circumstance or happening whatsoever, whether or not similar to any of
the foregoing.



SECTION 4.06. Liability of Issuing Banks and the Lenders. Each Borrower assumes all risks of
the acts and omissions of any beneficiary or transferee of any Letter of Credit issued at the
request of such Borrower in connection with such Letter of Credit, and neither the Issuing Bank
that has issued such Letter of Credit, the Lenders nor any of their respective officers, directors,
employees, agents or Affiliates shall be liable or responsible for (a) the use that may be made of
such Letter of Credit or any acts or omissions of any beneficiary or transferee thereof in
connection therewith; (b) the validity, sufficiency or genuineness of documents, or of any


 


37









 





endorsement thereon, even if such documents should prove to be in any or
all respects invalid, insufficient, fraudulent or forged; (c) payment by such Issuing Bank against
presentation of documents that do not comply with the terms of such Letter of Credit, including
failure of any documents to bear any reference or adequate reference to such Letter of Credit; or
(d) any other circumstances whatsoever in making or failing to make payment under such Letter of
Credit, except that the applicable Borrower shall have the right to bring suit against such Issuing
Bank, and such Issuing Bank shall be liable to such Borrower and any Lender, to the extent of any
direct, as opposed to consequential, damages suffered by such Borrower or such Lender which such
Borrower or such Lender proves were caused by such Issuing Bank’s willful misconduct or gross
negligence, including such Issuing Bank’s willful failure to make timely payment under such Letter
of Credit following the presentation to it by the beneficiary thereof of a draft and accompanying
certificate(s) which strictly comply with the terms and conditions of such Letter of Credit. In
furtherance and not in limitation of the foregoing, any Issuing Bank may accept sight drafts and
accompanying certificates presented under any Letter of Credit issued by such Issuing Bank that
appear on their face to be in order, without responsibility for further investigation.
Notwithstanding the foregoing, no Lender shall be obligated to indemnify any Borrower for damages
caused by any Issuing Bank’s willful misconduct or gross negligence, and the obligation of each
Borrower to reimburse the Lenders hereunder in accordance with the terms hereof shall be absolute
and unconditional, notwithstanding the gross negligence or willful misconduct of any Issuing Bank.




ARTICLE V

PAYMENTS, COMPUTATIONS AND

YIELD PROTECTION




SECTION 5.01. Payments and Computations. (a) The Borrowers shall make each payment hereunder
and under the other Loan Documents not later than 10:00 A.M. on the day when due in Dollars to the
Administrative Agent at its address referred to in Section 12.02 in same day funds, except payments
to be made directly to any Issuing Bank as expressly provided herein; any payment received after
10:00 A.M. shall be deemed to have been received at the start of business on the next succeeding
Business Day. The Administrative Agent will promptly thereafter cause to be distributed like funds
relating to the payment of principal, interest, fees or other amounts payable to the Lenders, to
the respective Lenders to which the same are payable, for the account of their respective
Applicable Lending Offices, in each case to be applied in accordance with the terms of this
Agreement. If and to the extent that any distribution of any payment from a Borrower required to
be made to any Lender pursuant to the preceding sentence shall not be made in full by the
Administrative Agent on the date such payment was received by the Administrative Agent, the
Administrative Agent shall pay to such Lender, upon demand, interest on the unpaid amount of such
distribution, at a rate per annum equal to the Federal Funds Effective Rate, from the date of such
payment by such Borrower to the Administrative Agent to the date of payment in full by the
Administrative Agent to such Lender of such unpaid amount. Upon the Administrative Agent’s
acceptance of a Lender Assignment and recording of the information contained therein in the
Register pursuant to Section 12.07(c), from and after the effective date specified in such Lender
Assignment, the Administrative Agent shall make all payments hereunder and under any Promissory
Notes in respect of the interest assigned thereby to the Lender assignee thereunder, and the
parties to such Lender Assignment shall make all
appropriate adjustments in such payments for periods prior to such effective date directly
between themselves.


 


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(b) Each Borrower hereby authorizes the Administrative Agent, each Lender and each Issuing
Bank, if and to the extent payment owed by such Borrower to the Administrative Agent, such Lender
or such Issuing Bank, as the case may be, is not made when due hereunder (or, in the case of a
Lender, under any Promissory Note held by such Lender), to charge from time to time against any or
all of such Borrower’s accounts with the Administrative Agent, such Lender or such Issuing Bank, as
the case may be, any amount so due.



(c) All computations of interest based on the Alternate Base Rate (when the Alternate Base
Rate is based on the Reference Rate) shall be made by the Administrative Agent on the basis of a
year of 365 or 366 days, as the case may be. All other computations of interest and fees hereunder
(including computations of interest based on the Adjusted Eurodollar Rate and the Federal Funds
Effective Rate) shall be made by the Administrative Agent on the basis of a year of 360 days. In
each such case, such computation shall be made 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 such determination by the Administrative Agent or a Lender shall be conclusive and
binding for all purposes, absent manifest error.



(d) Whenever any payment hereunder or under any other Loan Document 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
and fees hereunder; 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.



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



(f) If at any time insufficient funds are received by and available to the Administrative
Agent to pay fully all amounts of principal, interest and fees then due by any Borrower hereunder,
such funds shall be applied (i) first, towards payment of interest and fees then due by such
Borrower hereunder, ratably among the parties entitled thereto in accordance with the amounts of
interest and fees then due from such Borrower to such parties, and (ii)
second, towards payment of principal then due by such Borrower hereunder, ratably among the
parties entitled thereto.


 


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SECTION 5.02. Interest Rate Determination. The Administrative Agent shall give prompt notice
to the applicable Borrower and the Lenders of the interest rate determined by the Administrative
Agent for purposes of Section 3.05(b)(i) or (ii) applicable to Loans made (or deemed made) to such
Borrower.



SECTION 5.03. Prepayments. No Borrower shall have any right to prepay any principal amount of
any Loans made to such Borrower other than as provided in subsections (a) and (b) below.



(a) Each Borrower may, upon at least three Business Days’ written notice, with respect to
Eurodollar Rate Loans, and one Business Day’s written notice, with respect to ABR Loans, to the
Administrative Agent stating the proposed date and the aggregate principal amount of the
prepayment, and if such notice is given such Borrower shall, prepay the outstanding principal
amounts of Loans made to such Borrower as part of the same Borrowing, in whole or ratably in part,
together with (i) accrued interest to the date of such prepayment on the principal amount prepaid
and (ii) in the case of Eurodollar Rate Loans, any amount payable to the Lenders pursuant to
Section 5.04(b); provided, however, that each partial prepayment shall be in an aggregate principal
amount of not less than $1,000,000 or an integral multiple of $1,000,000 in excess thereof.



(b) On the date of any termination or reduction of the Commitments pursuant to Section 2.03,
the Borrowers shall pay or prepay so much of the principal amount outstanding hereunder as shall be
necessary in order that the aggregate principal amount outstanding hereunder (after giving effect
to all Extensions of Credit to be made on such date and the application of the proceeds thereof)
will not exceed the Commitments (and, with respect to each Borrower, such Borrower’s Availability
Sublimit) following such termination or reduction, together with (i) accrued interest to the date
of such prepayment on the principal amount prepaid and (ii) in the case of prepayments of
Eurodollar Rate Loans, any amount payable to the Lenders pursuant to Section 5.04(b). In
connection with any partial reduction of the Commitments pursuant to Section 2.03(b), the Borrowers
shall designate, in the written notice delivered to the Administrative Agent pursuant to Section
2.03(b), which outstanding Borrowings will be prepaid pursuant to this subsection (b) on the date
of such reduction; provided, that if the Borrowers fail to provide such designation, the
prepayments required by this subsection (b) shall be applied (A) on a pro rata basis to the
outstanding Borrowings of each Borrower, and (B) to outstanding ABR Loans up to the full amount
thereof before they are applied to outstanding Eurodollar Rate Loans (in the order of the remaining
duration of their respective Interest Periods (the Eurodollar Rate Loans with the shortest
remaining Interest Period to be prepaid first)).




SECTION 5.04. Yield Protection.



(a) Increased Costs. If, due to either (i) the introduction of or any change in or in the
interpretation of any law or regulation after the date hereof (including, without limitation, any
regulations adopted under the Dodd-Frank Act after the date of this Agreement), or (ii) the
compliance with any guideline or request from any central bank or other governmental authority
(whether or not having the


 


40









 




 force of law) issued or made after the date hereof, there shall be reasonably incurred any increase in (A) the cost to any Lender of agreeing to make or making,
funding or maintaining Eurodollar Rate Loans, or of participating in the issuance, maintenance or
funding of any Letter of Credit, or (B) the cost to any Issuing Bank of issuing or maintaining any
Letter of Credit, then the Borrowers shall from time to time, promptly after receipt of written
demand by such Lender or Issuing Bank, as the case may be (with a copy of such demand to the
Administrative Agent), pay to the Administrative Agent for the account of such Lender or Issuing
Bank, as the case may be, additional amounts sufficient to compensate such Lender or Issuing Bank,
as the case may be, for such increased cost. A certificate as to the amount of such increased cost
and giving a reasonable explanation and calculation thereof shall be submitted to the Borrowers and
the Administrative Agent by such Lender or such Issuing Bank, as the case may be, shall constitute
such demand and shall be conclusive and binding for all purposes, absent manifest error.




(b) Breakage. If (i) due to any prepayment pursuant to Section 5.03, an acceleration of
maturity of the Loans pursuant to Section 9.02, or any other reason, any Lender receives payments
of principal of any Eurodollar Rate Loan made to any Borrower other than on the last day of the
Interest Period relating to such Loan, (ii) any Borrower shall Convert any Eurodollar Rate Loans on
any day other than the last day of the Interest Period therefor, (iii) any Borrower shall fail to
borrow, Convert or prepay any Eurodollar Rate Loan on the date specified in any notice delivered
pursuant hereto, or (iv) any Eurodollar Rate Loan shall be assigned other than on the last day of
the Interest Period applicable thereto as a result of a request by any Borrower pursuant to Section
3.04(d), such Borrower shall, promptly after demand by any Lender (with a copy of such demand to
the Administrative Agent), pay to the Administrative Agent for the account of such Lender any
amounts required to compensate such Lender for additional losses, costs, or expenses (including
anticipated lost profits) that such Lender may reasonably incur as a result of such payment,
Conversion, failure or assignment (as the case may be), including any loss, cost or expense
incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such
Lender to fund or maintain such Loan. For purposes of this subsection (b) and Section 3.04(e), a
certificate setting forth the amount of such additional losses, costs, or expenses and giving a
reasonable explanation and calculation thereof shall be submitted to the applicable Borrower and
the Administrative Agent by such Lender, shall constitute such demand and shall be conclusive and
binding for all purposes, absent manifest error.



(c) Capital. If any Lender or Issuing Bank determines that (i) the introduction of or any
change in or in the interpretation of any law or regulation after the date hereof (including,
without limitation, any regulations adopted under the Dodd-Frank Act after the date of this
Agreement) or (ii) compliance with any law or regulation or any guideline or request from any
central bank or other governmental authority (whether or not having the force of law) issued or
made after the date hereof, affects or would affect the amount of capital required or expected to
be maintained by such Lender or Issuing Bank, whether directly, or indirectly as a result of
commitments of any corporation controlling such Lender or Issuing Bank (but without duplication),
and the amount of such capital is increased by or based upon (A) the existence of such Lender’s or
Issuing Bank’s commitment to lend or issue or participate in any Letter of Credit hereunder, (B)
the participation in or issuance or maintenance of any Letter of Credit or Loan or (C) other
similar such commitments, then, promptly after demand by such Lender or Issuing Bank, the Borrowers
shall pay to the Administrative Agent for the account of such Lender or Issuing Bank from time to
time as specified by such Lender or Issuing Bank additional amounts


 


41









 





sufficient to compensate such Lender or Issuing Bank in the light of such
circumstances, to the extent that such Lender or Issuing Bank reasonably determines such increase
in capital to be allocable to the transactions contemplated hereby. A certificate as to such
amounts and giving a reasonable explanation and calculation thereof (to the extent permitted by
law) shall be submitted to the Borrowers and the Administrative Agent by such Lender or Issuing
Bank and shall be conclusive and binding for all purposes, absent manifest error.




(d) Notices, Etc. Each Lender and each Issuing Bank (as applicable) hereby agrees to use its
best efforts to notify the Borrowers of the occurrence of any event referred to in subsection (a),
(b) or (c) of this Section 5.04 promptly after becoming aware of the occurrence thereof. Each
Borrower shall pay the Administrative Agent, for the account of such Lender or such Issuing Bank
(as the case may be), the amount shown as due by such Borrower on any certificate delivered
pursuant to this Section 5.04 within ten (10) Business Days after its receipt of the same. The
failure of any Lender or any Issuing Bank to provide such notice or to make demand for payment
under said subsection shall not constitute a waiver of such Lender’s or such Issuing Bank’s rights
hereunder; provided that, notwithstanding any provision to the contrary contained in this Section
5.04, a Borrower shall not be required to reimburse any Lender or any Issuing Bank for any amounts
or costs incurred under subsection (a), (b) or (c) above, more than 270 days prior to the date that
such Lender or such Issuing Bank, as the case may be, notifies such Borrower in writing thereof, in
each case unless, and to the extent that, any such amounts or costs so incurred shall relate to the
retroactive application of any event notified to such Borrower which entitles such Lender or such
Issuing Bank, as the case may be, to such compensation. If any Lender or Issuing Bank shall
subsequently determine that any amount demanded and collected under this Section 5.04 was done so
in error, such Lender or such Issuing Bank, as the case may be, will promptly return such amount to
the applicable Borrower.



(e) Survival of Obligations. Subject to subsection (d) above, the Borrowers’ obligations
under this Section 5.04 shall survive the repayment of all other amounts owing to the Lenders, the
Administrative Agent and the Issuing Banks under the Loan Documents and the termination of the
Commitments.



SECTION 5.05. 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 5.04 or 12.07) in excess of its ratable share
of payments obtained by all the Lenders on account of the Loans of such Lenders, such Lender shall
forthwith purchase from the other Lenders such participation 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. Each Borrower agrees that any Lender so purchasing a participation from
another Lender pursuant to this Section 5.05 may, to the fullest extent permitted by law, exercise
all its rights of payment (including the right of set-off) with respect to such


 


42









 




participation as fully as if such Lender were the direct creditor of
such Borrower in the amount of such participation. Notwithstanding the foregoing, if any Lender
shall obtain any such excess payment involuntarily, such Lender may, in lieu of purchasing
participations from the other Lenders in accordance with this Section 5.05, on the date of receipt
of such excess payment, return such excess payment to the Administrative Agent for distribution in
accordance with Section 5.01(a).




SECTION 5.06. Taxes. (a) All payments by a Borrower hereunder and under the other Loan
Documents shall be made in accordance with Section 5.01, free and clear of and without deduction
for all present or future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of each Lender, each Issuing Bank and the
Administrative Agent, taxes imposed on its overall net or gross income, receipts, capital, net
worth, privilege of transacting business or corporate franchise taxes imposed on it by the
jurisdiction under the laws of which such Lender, such Issuing Bank or the Administrative Agent (as
the case may be) is organized or any political subdivision thereof and, in the case of each Lender,
taxes imposed on its overall net or gross income, receipts, capital, net worth, privilege of
transacting business or corporate franchise taxes imposed on it by the jurisdiction of such
Lender’s Applicable Lending Office or any political subdivision thereof (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter
referred to as “Taxes”). If any Borrower shall be required by law to deduct any Taxes from or in
respect of any sum payable by such Borrower hereunder or under any other Loan Document to any
Lender, any Issuing Bank or the Administrative Agent, (i) the sum payable shall be increased as may
be necessary so that after making all required deductions (including deductions applicable to
additional sums payable under this Section 5.06) such Lender, such Issuing Bank or the
Administrative Agent (as the case may be) receives an amount equal to the sum it would have
received had no such deductions been made, (ii) such Borrower shall make such deductions, and (iii)
such Borrower shall pay the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable law.



(b) In addition, each Borrower agrees to pay any present or future stamp or documentary taxes
or any other similar taxes or charges that arise from any payment made by such Borrower hereunder
or under any other Loan Document to which it is a party or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any other Loan Document
(hereinafter referred to as “Other Taxes”).



(c) The Borrowers will indemnify each Lender, each Issuing Bank and the Administrative Agent
for the full amount of Taxes and Other Taxes (including any Taxes and any Other Taxes imposed by
any jurisdiction on amounts payable under this Section 5.06) paid by such Lender, such Issuing Bank
or the Administrative Agent (as the case may be) and any liability (including penalties, interest
and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes
were correctly or legally asserted. This indemnification shall be made within 30 days from the
date such Lender, such Issuing Bank or the Administrative Agent (as the case may be) makes written
demand therefor. Nothing herein shall preclude the right of any Borrower to contest any such Taxes
or Other Taxes so paid, and each Lender, each Issuing Bank and the Administrative Agent (as the
case may be) will, following notice from, and at the expense of, such Borrower, reasonably
cooperate with such Borrower to preserve such Borrower’s rights to contest such Taxes or Other
Taxes.


 


43









 





(d) Within 30 days after the date of any payment of Taxes, the applicable Borrower will
furnish to the Administrative Agent, at its address referred to in Section 12.02, the original or a
certified copy of a receipt evidencing payment thereof.



(e) Each Bank represents and warrants that either (i) it is organized under the laws of a
jurisdiction within the United States or (ii) it has delivered to the Borrowers or the
Administrative Agent duly completed copies of such form or forms prescribed by the United States
Internal Revenue Service indicating that such Bank is entitled to receive payments without
deduction or withholding of any United States federal income taxes, as permitted by the Code or any
tax treaty to which the United States is a party. Each other Lender agrees that, on or prior to
the date upon which it shall become a party hereto, and upon the reasonable request from time to
time of the Borrowers or the Administrative Agent, such Lender will deliver to the Borrowers and
the Administrative Agent (to the extent that it is not prohibited by law from doing so) either (A)
a statement that it is organized under the laws of a jurisdiction within the United States or (B)
duly completed copies of such form or forms as may from time to time be prescribed by the United
States Internal Revenue Service, indicating that such Lender is entitled to receive payments
without deduction or withholding of any United States federal income taxes, as permitted by the
Internal Revenue Code. Each Bank that has delivered, and each other Lender that hereafter
delivers, to the Borrowers and the Administrative Agent the form or forms referred to in the two
preceding sentences further undertakes to deliver to the Borrowers and the Administrative Agent, to
the extent that it is not prohibited by law from doing so, further copies of such form or forms, or
successor applicable form or forms, as the case may be, as and when any previous form filed by it
hereunder shall expire or shall become incomplete or inaccurate in any respect. Each Lender
represents and warrants that each such form supplied by it to the Administrative Agent and the
Borrowers pursuant to this subsection (e), and not superseded by another form supplied by it, is or
will be, as the case may be, complete and accurate, and such Lender acknowledges and agrees that
nothing contained herein shall in any way limit, waive, or otherwise reduce any claim that the
Administrative Agent or the Borrowers may have against such Lender in the event that any such form
shall not be complete and accurate.



(f) Any Lender claiming any additional amounts payable pursuant to this Section 5.06 shall use
its best efforts (consistent with its internal policy and legal and regulatory restrictions) to
change the jurisdiction of its Applicable Lending Office if the making of such a change would avoid
the need for, or reduce the amount of, any such additional amounts that may thereafter accrue and
would not, in the reasonable judgment of such Lender, be otherwise disadvantageous to such Lender.



(g) Without prejudice to the survival of any other agreement of the Borrowers hereunder, the
agreements and obligations of the Borrowers contained in this Section 5.06 shall survive the
repayment of all other amounts owing to the Lenders, the Administrative Agent and the Issuing Banks
under the Loan Documents and the termination of the Commitments. If and to the extent that the
obligations of the Borrowers under this Section 5.06 are unenforceable for any reason, the
Borrowers agree to make the maximum contribution to the payment and satisfaction thereof which is
permissible under applicable law.


 


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ARTICLE VI

CONDITIONS PRECEDENT




SECTION 6.01. Conditions Precedent to Effectiveness. This Agreement, and the obligation of
each Lender or Issuing Bank, as the case may be, to make Extensions of Credit hereunder, shall not
become effective until the date on which each of the following conditions is satisfied (or waived
in accordance with Section 12.01):



(a) The Administrative Agent (or its counsel) shall have received from each party hereto
either (i) a counterpart of this Agreement signed on behalf of such party or (ii) written evidence
satisfactory to the Administrative Agent (which may include telecopy or other electronic
transmission of a signed signature page of this Agreement) that such party has signed a counterpart
of this Agreement.



(b) The Administrative Agent shall have received (i) Issuing Bank Agreements, duly executed by
each of the Borrowers and each Issuing Bank party hereto on the Closing Date, in form and substance
satisfactory to the Administrative Agent, (ii) the Fee Letter, duly executed by the Borrowers, in
form and substance satisfactory to the Administrative Agent, and (iii) the Promissory Notes (if
requested by any Lender pursuant to Section 3.01(d)), duly executed by the applicable Borrower.



(c) The Administrative Agent shall have received a favorable written opinion (addressed to the
Administrative Agent, the Issuing Banks and the Lenders and dated the Closing Date) of (i) Morgan,
Lewis & Bockius LLP, New York counsel for the Obligors, substantially in the form of Exhibit C, and
(ii) Raymond S. Heyman, Esq., General Counsel for the Guarantor and counsel for the Borrowers,
substantially in the form of Exhibit D. The Obligors hereby request such counsel to deliver such
opinions.



(d) The Administrative Agent shall have received such documents and certificates as the
Administrative Agent or its counsel may reasonably request relating to the organization, existence
and good standing of the Obligors, the authorization of the Transactions and any other legal
matters relating to the Obligors, the Loan Documents or the Transactions, all in form and substance
satisfactory to the Administrative Agent and its counsel.



(e) The representations and warranties of the Obligors set forth in this Agreement and the
other Loan Documents shall be true and correct, no Default or Event of Default shall have occurred
and be continuing, and the Administrative Agent shall have received a certificate, dated the
Closing Date and signed by an Authorized Officer of each Obligor, confirming the same as of the
Closing Date.



(f) The Administrative Agent shall have received a certificate, dated the Closing Date and
signed an Authorized Officer of each Obligor, confirming compliance with the conditions set forth
in this Section 6.01.



(g) The Administrative Agent and the Lenders shall have received all documentation and other
information required by bank regulatory authorities under applicable “know your customer” and
anti-money laundering rules and regulations, including without limitation the Patriot Act, with
respect to the Obligors.


 


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(h) The Administrative Agent and the Arrangers shall have received all fees and other amounts
due and payable on or prior to the Closing Date, including all up-front fees and, to the extent
invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid
by the Borrowers hereunder or under any other Loan Document.



(i) On the Closing Date, all accrued and unpaid interest and fees payable by the Borrowers
under the Existing Credit Agreement shall have been paid in full.



(j) All requisite Governmental Authorities and third parties, if any, shall have approved or
consented to this Agreement, the other Loan Documents and the Transactions to the extent required
and material (and the Administrative Agent shall have received certified copies of all such
approvals and consents, which shall be in form and substance satisfactory to the Administrative
Agent and the Lenders), no stay of any applicable regulatory approval shall have been issued and
there shall be no litigation, governmental, administrative or judicial action, actual or, to the
knowledge of the Obligors, threatened, that could reasonably be expected to restrain, prevent or
impose burdensome conditions on this Agreement, the other Loan Documents or the Transactions.



(k) The Administrative Agent shall have received true, correct and complete copies, certified
as to authenticity by the applicable Borrower, of the Note Purchase Agreement to which such
Borrower is a party, together with any amendments or supplements thereto.



(l) The Administrative Agent shall have received such other approvals, opinions and documents
as any Lender, through the Administrative Agent, may reasonably request.



SECTION 6.02. Conditions Precedent to Each Extension of Credit. The obligation of each Lender
or Issuing Bank, as the case may be, to make an Extension of Credit (including the initial
Extension of Credit, but excluding Conversions) to or for the account of any Borrower shall be
subject to the further conditions precedent that, on the date of such Extension of Credit and after
giving effect thereto, the following statements shall be true (and each of the giving of the
applicable notice or request with respect thereto and the making of such Extension of Credit shall
constitute a representation and warranty by such Borrower that, on the date of such Extension of
Credit, such statements are true):



(a) the representations and warranties of such Borrower and, prior to the occurrence of the
Guaranty Termination Date with respect to such Borrower, the Guarantor contained in this Agreement
and the other Loan Documents (other than, with respect to any Extension of Credit made after the
Closing Date, the representations and warranties set forth in Sections 7.01(c)(ii), 7.01(c)(iii)
and 7.01(h)(i)(B)) are true and correct on and as of the date of such Extension of Credit, before
and after giving effect to such Extension of Credit and to the application of the proceeds thereof,
as though made on and as of such date (except for any such representations and warranties that
expressly relate to an earlier date, in which case such representations and warranties were true
and correct as of such earlier date); and



(b) no Default or Event of Default with respect to such Borrower or, prior to the occurrence
of the Guaranty Termination Date with respect to such Borrower, the Guarantor has occurred and is
continuing, or would result from such Extension of Credit or the application of the proceeds
thereof.


 


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SECTION 6.03. Determinations Under Section 6.01. For purposes of determining compliance with
the conditions specified in Section 6.01, each Lender 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 Administrative Agent responsible for the transactions contemplated by this Agreement shall have
received written notice from such Lender or prior to the Closing Date specifying its objection
thereto.



SECTION 6.04. Reliance on Certificates. The Lenders, the Issuing Banks and the Administrative
Agent shall be entitled to rely conclusively upon the certificates delivered from time to time by
officers of an Obligor as to the names, incumbency, authority and signatures of the respective
individuals named therein until such time as the Administrative Agent may receive a replacement
certificate, in form acceptable to the Administrative Agent, from an officer of such Obligor
identified to the Administrative Agent as having authority to deliver such certificate, setting
forth the names and true signatures of the officers and other representatives of such Obligor
thereafter authorized to act on behalf of such Obligor.



ARTICLE VII

REPRESENTATIONS AND WARRANTIES




SECTION 7.01. Representations and Warranties of the Obligors. To induce the Administrative
Agent, the Issuing Banks and the Lenders to enter into this Agreement and to make Extensions of
Credit, each Obligor hereby represents and warrants to the Administrative Agent, each Issuing Bank
and each Lender that:



(a) Organization; Power and Authority. Such Obligor is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of incorporation, and is duly
qualified as a foreign corporation and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which the failure to be so
qualified or in good standing could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect. Such Obligor has the corporate power and authority to own or
hold under lease the Properties it purports to own or hold under lease, or proposes to own or hold
under lease, to transact the business it transacts and proposes to transact, to execute and deliver
the Loan Documents to which it is a party and to perform the provisions thereof.



(b) Authorization, Execution and Delivery. Each Loan Document to which such Obligor is a
party has been duly authorized by all necessary corporate action on the part of such Obligor, and
upon execution and delivery thereof each such Loan Document will constitute a legal, valid and
binding obligation of such Obligor enforceable against such Obligor in accordance with its terms,
except as such enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights
generally and (ii) general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law). Each Loan Document to which such Obligor is a
party has been duly executed and delivered by such Obligor.


 


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(c) Disclosure; No Material Adverse Change; Etc.




(i) Such Obligor has disclosed to the Administrative Agent and the Lenders all
agreements, instruments and corporate or other restrictions to which it or any of its
Subsidiaries is subject, and all other matters known to it, that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect. Neither the
Information Memorandum, the Disclosure Documents nor any of the other reports, financial
statements, certificates or other information furnished by or on behalf of such Obligor to
the Administrative Agent or any Lender in connection with the negotiation of this Agreement
or any other Loan Document or delivered hereunder (as modified or supplemented by, and taken
together with, other information so furnished) contains any material misstatement of a fact
or omits to state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided that, with respect
to forward looking statements, such Obligor represents only that such information was
prepared in good faith based upon assumptions believed to be reasonable at the time and
notes that there can be no assurance that such expectations, beliefs or projections will be
achieved or accomplished and that such projections are subject to an increasing degree of
uncertainty as they relate to later periods of time.




(ii) Except as disclosed in the Information Memorandum, the Disclosure Documents or in
one of the documents, certificates or other writings identified therein, since December 31,
2009, there has been no change in the financial condition, operations, business, Properties
or prospects of any Obligor or any Subsidiary of any Obligor except changes that
individually or in the aggregate could not reasonably be expected to have a Material Adverse
Effect.




(iii) There is no fact known to such Obligor that could reasonably be expected to have
a Material Adverse Effect that has not been set forth herein or in the Information
Memorandum, the Disclosure Documents or the other documents, certificates and other writings
delivered to the Administrative Agent and the Lenders prior to the Closing Date by or on
behalf of the Obligors specifically for use in connection with the transactions contemplated
hereby.



(d) Financial Condition. The most recent financial statements delivered by such Obligor
pursuant to Section 8.01(a)(i) or (ii) (including, without limitations, the financial statements of
the Obligors for the fiscal year ended December 31, 2009) present fairly, in all material respects,
the financial position and results of operations and cash flows of such Obligor and its
Subsidiaries as of such dates and for such periods in accordance with GAAP, subject to year-end
audit adjustments and the absence of footnotes in the case of the statements delivered pursuant to
Section 8.01(a)(i). Neither such Obligor nor any of its Subsidiaries had, at the date of the most
recent balance sheet referred to above, any Guaranty Obligation, contingent liability or liability
for taxes, or any long-term lease or unusual forward or long-term commitment, including any
interest rate or foreign currency swap or exchange transaction, which, in any case, was material to
such Obligor and its Subsidiaries, taken as a whole, and which was not reflected in the foregoing
statements or in the notes thereto. During the period from December 31, 2009 to and including the
date hereof there has been no Disposition by such Obligor or any of its Subsidiaries of any
material part of its business or Property.


 


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(e) Organization and Ownership of Shares of Subsidiaries of each Obligor.




(i) As of the Closing Date, Schedule 7.01(e) contains (except as noted therein)
complete and correct lists of such Obligor’s Subsidiaries, showing, as to each Subsidiary,
the correct name thereof, the jurisdiction of its organization, and the percentage of shares
of each class of its capital stock or similar equity interests outstanding owned by such
Obligor and each other Subsidiary.




(ii) All of the outstanding shares of capital stock or similar equity interests of each
Subsidiary shown in Schedule 7.01(e) as being owned by an Obligor and its Subsidiaries have
been validly issued, are fully paid and nonassessable and are owned by such Obligor or
another Subsidiary free and clear of any Lien (except as otherwise disclosed in Schedule
7.01(e)).




(iii) Each Subsidiary identified in Schedule 7.01(e) is a corporation or other legal
entity duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization, and is duly qualified as a foreign corporation or other legal
entity and is in good standing in each jurisdiction in which such qualification is required
by law, other than those jurisdictions as to which the failure to be so qualified or in good
standing could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Each such Subsidiary has the corporate or other power and
authority to own or hold under lease the Properties it purports to own or hold under lease
and to transact the business it transacts and proposes to transact.




(iv) No Subsidiary of any Borrower is a party to any agreement, or otherwise subject to
any legal restriction, restricting the ability of such Subsidiary to pay dividends out of
profits or make any other similar distributions of profits to such Borrower or any of its
Subsidiaries that owns outstanding shares of capital stock or similar equity interests of
such Subsidiary, other than (A) this Agreement and the other Loan Documents, (B) the
agreements listed on Schedule 7.01(e), (C) customary limitations imposed by corporate law
statutes and (D) any covenant contained in an agreement evidencing Indebtedness permitted to
be incurred by such Subsidiary pursuant to Section 8.02(e) that restricts the payment of a
dividend or distribution upon the occurrence and during the continuance of a default
thereunder.



(f) Compliance with Laws, Other Instruments, etc. The execution, delivery and performance by
such Obligor of each Loan Document to which it is a party will not (i) contravene, result in any
breach of, or constitute a default under, or result in the creation of any Lien in respect of any
Property of such Obligor or any of its Subsidiaries under, any indenture, mortgage, deed of trust,
loan, purchase or credit agreement, lease, corporate charter or by-laws, or any other agreement or
instrument to which such Obligor or any such Subsidiary is bound or by which such Obligor or any
such Subsidiary or any of their respective Properties may be bound or affected, (ii) conflict with
or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree,
or ruling of any court, arbitrator or Governmental Authority applicable to such Obligor or any of
its Subsidiaries or (iii) violate any provision of any Governmental Rule applicable to such Obligor
or any of its Subsidiaries.


 


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(g) Governmental Authorizations, etc. No consent, approval or authorization of, or
registration, filing or declaration with, any Governmental Authority is required in connection with
the execution, delivery or performance by such Obligor of any Loan Document to which it is a party,
except for the ACC Order, which ACC Order has been obtained and is in full force and effect. After
giving effect to each Extension of Credit to or for the account of any Borrower and the application
of the proceeds thereof, such Borrower is in compliance with all applicable requirements, if any,
contained in the ACC Order.




(h) Litigation; Observance of Agreements, Statutes and Orders.




(i) Except as disclosed in the Disclosure Documents, there are no actions, suits or
proceedings pending or, to the knowledge of such Obligor, threatened against or affecting
such Obligor or any of its Subsidiaries or any Property of such Obligor or any of its
Subsidiaries in any court or before any arbitrator of any kind or before or by any
Governmental Authority (A) that involve any of the Loan Documents or the Transactions or (B)
that, individually or in the aggregate, could reasonably be expected to have a Material
Adverse Effect.




(ii) Neither such Obligor nor any of its Subsidiaries is in default under any term of
any agreement or instrument to which it is a party or by which it is bound, or any order,
judgment, decree or ruling of any court, arbitrator or Governmental Authority or is in
violation of any applicable law, ordinance, rule or regulation (including, without
limitation, Environmental Laws) of any Governmental Authority, which default or violation,
individually or in the aggregate, could reasonably be expected to have a Material Adverse
Effect.



(i) Taxes. Such Obligor and each of its Subsidiaries have filed all tax returns that are
required to have been filed in any jurisdiction, and have paid all taxes shown to be due and
payable on such returns and all other taxes and assessments levied upon them or their Properties,
income or franchises, to the extent such taxes and assessments have become due and payable and
before they have become delinquent, except for any taxes and assessments (i) the amount of which is
not individually or in the aggregate Material or (ii) the amount, applicability or validity of
which is currently being contested in good faith by appropriate proceedings and with respect to
which such Obligor or such Subsidiary, as the case may be, has established adequate reserves in
accordance with GAAP. Such Obligor knows of no basis for any other tax or assessment that could
reasonably be expected to have a Material Adverse Effect. The charges, accruals and reserves on
the books of such Obligor and its Subsidiaries in respect of Federal, state or other taxes for all
fiscal periods are adequate.



(j) Title to Property; Leases. Such Obligor and its Subsidiaries have good and sufficient
title to their respective properties that individually or in the aggregate are Material, in each
case free and clear of Liens prohibited by this Agreement. All leases that individually or in the
aggregate are Material are valid and subsisting and are in full force and effect in all Material
respects.


 


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(k) Licenses, Permits, etc.




(i) Such Obligor and its Subsidiaries own or possess all licenses, permits, franchises,
authorizations, patents, copyrights, service marks, trademarks and trade names, or rights
thereto, that individually or in the aggregate are Material, without known conflict with the
rights of others;




(ii) to the best knowledge of such Obligor, no product of such Obligor infringes in any
material respect any license, permit, franchise, authorization, patent, copyright, service
mark, trademark, trade name or other right owned by any other Person; and




(iii) to the best knowledge of such Obligor, there is no Material violation by any
Person of any right of such Obligor or any of its Subsidiaries with respect to any patent,
copyright, service mark, trademark, trade name or other right owned or used by such Obligor
or such Subsidiary.




(l) Compliance with ERISA.




(i) Such Obligor and each of its ERISA Affiliates have operated and administered each
Plan in compliance with all applicable laws except for such instances of noncompliance as
have not resulted in and could not reasonably be expected to result in a Material Adverse
Effect. Neither such Obligor nor any of its ERISA Affiliates has incurred any liability
pursuant to Title I or IV of ERISA (other than claims for benefits in the ordinary course or
PBGC premiums required by Title IV of ERISA) or the penalty or excise tax provisions of the
Code relating to employee benefit plans (as defined in Section 3 of ERISA), and no event,
transaction or condition has occurred or exists that could reasonably be expected to result
in the incurrence of any such liability by such Obligor or any of its ERISA Affiliates, or
in the imposition of any Lien on any of the rights or Properties of such Obligor or any of
its ERISA Affiliates, in either case pursuant to Title I or IV of ERISA or to such penalty
or excise tax provisions or to Section 412 or 430 of the Code or in contravention of Section
436(c) of the Code, other than such liabilities or Liens as have not resulted in and could
not reasonably be expected to result in a Material Adverse Effect.




(ii) The present value of the aggregate benefit liabilities under each of such
Obligor’s Plans (other than Multiemployer Plans), determined as of the end of such Plan’s
most recently ended plan year on the basis of the actuarial assumptions specified for
funding purposes in such Plan’s most recent actuarial valuation report, did not exceed the
aggregate current value of the assets of such Plan allocable to such benefit liabilities by
an amount, in the case of any single Plan or in the aggregate for all Plans, that has
resulted or could reasonably be expected to result in a Material Adverse Effect. The term
“benefit liabilities” has the meaning specified in section 4001 of ERISA and the terms
“current value” and “present value” have the meaning specified in section 3 of ERISA.




(iii) Such Obligor and its ERISA Affiliates have not incurred withdrawal liabilities
(and are not subject to contingent withdrawal liabilities) under section 4201 or 4204 of
ERISA in respect of Multiemployer Plans that individually or in the aggregate have resulted
or could reasonably be expected to result in a Material Adverse Effect.


 


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(iv) The expected postretirement benefit obligations (determined as of the last day of
such Obligor’s most recently ended fiscal year in accordance with Financial Accounting
Standards Board Statement No. 106, without regard to liabilities attributable to
continuation coverage mandated by section 4980B of the Code) of such Obligor and its
Subsidiaries could not reasonably be expected to result in a Material Adverse Effect.



(m) Use of Proceeds; Margin Regulations. Each Borrower will apply the proceeds of all Loans
made to such Borrower and utilize Letters of Credit issued hereunder for general corporate
purposes. No part of the proceeds of any Loan made to such Borrower and no Letter of Credit issued
at the request of such Borrower will be used, directly or indirectly, for the purpose of buying or
carrying any margin stock within the meaning of Regulation U, or for the purpose of buying or
carrying or trading in any securities under such circumstances as to involve such Borrower in a
violation of Regulation X of the Board or to involve any broker or dealer in a violation of
Regulation T of the Board. As used in this Section 7.01(m), the terms “margin stock” and “purpose
of buying or carrying” shall have the meanings assigned to them in Regulation U.




(n) Existing Indebtedness.




(i) Neither such Obligor nor any of its Subsidiaries is in default and no waiver of
default is currently in effect, in the payment of any principal or interest on any
Indebtedness of such Obligor or such Subsidiary and no event or condition exists with
respect to any Indebtedness of such Obligor or any such Subsidiary that would permit (or
that with the giving of notice or the lapse of time, or both, would permit) one or more
Persons to cause such Indebtedness to become due and payable before its stated maturity or
before its regularly scheduled dates of payment.




(ii) Neither such Obligor nor any of its Subsidiaries has agreed or consented to cause
or permit in the future (upon the happening of a contingency or otherwise) any of its
Property, whether now owned or hereafter acquired, to be subject to a Lien not permitted by
Section 8.02(c).



(o) Foreign Assets Control Regulations, etc. None of the Transactions will violate the
Trading with the Enemy Act, as amended, or any of the foreign assets control regulations of the
United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.



(p) Status under Certain Statutes. Neither such Obligor nor any of its Subsidiaries is
subject to regulation under the Investment Company Act of 1940, as amended, or the Interstate
Commerce Act, as amended.



(q) Anti-Terrorism Order. Neither such Obligor nor any of its Subsidiaries is a Sanctioned
Person. To the best knowledge of such Obligor, neither such Obligor nor any of its Subsidiaries
has any legally binding contracts or agreements with any Sanctioned Person.


 


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(r) Labor Matters. There are no strikes or other labor disputes against such Obligor or any
of its Subsidiaries pending or, to the knowledge of such Obligor, threatened that (individually or
in the aggregate) could reasonably be expected to have a Material Adverse
Effect. Hours worked by and payments made to employees of such Obligor or any of its
Subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable
requirement of law dealing with such matters that (individually or in the aggregate) could
reasonably be expected to have a Material Adverse Effect. All payments due from such Obligor or
any of its Subsidiaries on account of employee health and welfare insurance that (individually or
in the aggregate) could reasonably be expected to have a Material Adverse Effect if not paid have
been paid or accrued as a liability on the books of such Obligor or the relevant Subsidiary.



(s) Environmental Matters. Neither such Obligor nor any of its Subsidiaries has knowledge of
any claim or has received any notice of any claim, and no proceeding has been instituted raising
any claim against such Obligor or any of its Subsidiaries or any of their respective real
Properties now or formerly owned, leased or operated by any of them or other Properties, alleging
any damage to the environment or violation of any Environmental Laws, except, in each case, such as
could not reasonably be expected to result in a Material Adverse Effect. Except as disclosed in
the Disclosure Documents:




(i) neither such Obligor nor any of its Subsidiaries has knowledge of any facts which
would give rise to any claim, public or private, of violation of Environmental Laws or
damage to the environment emanating from, occurring on or in any way related to real
Properties now or formerly owned, leased or operated by any of them, or in any way related
to its Properties or their use, except, in each case, such as could not reasonably be
expected to result in a Material Adverse Effect;




(ii) neither such Obligor nor any of its Subsidiaries has stored any Hazardous
Materials on real Properties now or formerly owned, leased or operated by any of them and
has not disposed of any Hazardous Materials in a manner contrary to any Environmental Laws
in each case in any manner that could reasonably be expected to result in a Material Adverse
Effect; and




(iii) all buildings on all real Properties now owned, leased or operated by such
Obligor or any of its Subsidiaries are in compliance with applicable Environmental Laws,
except where failure to comply could not reasonably be expected to result in a Material
Adverse Effect.



(t) Solvency. Each Obligor is, and after giving effect to the incurrence of all Indebtedness
and obligations being incurred in connection herewith and the Transactions will be, Solvent.


 


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ARTICLE VIII

COVENANTS OF THE OBLIGORS




SECTION 8.01. Affirmative Covenants. Each Obligor covenants and agrees that so long as any
Loan or any other amount payable hereunder or under any Promissory Note shall remain unpaid, any
Letter of Credit shall remain outstanding or any Lender shall have any Commitment:



(a) Financial and Business Information. Such Obligor shall deliver to the Administrative
Agent, with a copy for each Lender (and the Administrative Agent will forward such copies to the
Lenders):




(i) Quarterly Statements — within 60 days after the end of each quarterly fiscal
period in each fiscal year of such Obligor (other than the last quarterly fiscal period of
each such fiscal year), copies of,




(A) a consolidated balance sheet of such Obligor and its Subsidiaries as at the
end of such quarter,




(B) consolidated statements of income of such Obligor and its Subsidiaries, for
such quarter and (in the case of the second and third quarters) for the portion of
the fiscal year ending with such quarter, and




(C) consolidated statements of cash flow for the period from the beginning of
such fiscal year to the end of such quarter,




setting forth in each case in comparative form the figures for the corresponding periods in
the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP
applicable to quarterly financial statements generally, and certified by an Authorized
Officer of such Obligor as fairly presenting, in all material respects, the financial
position of the companies being reported on and their results of operations and cash flows,
subject to changes resulting from year-end adjustments, provided that delivery within the
time period specified above of copies of such Obligor’s Quarterly Report on Form 10-Q, if
any, prepared in compliance with the requirements therefor and filed with the SEC shall be
deemed to satisfy the requirements of this Section 8.01(a)(i);




(ii) Annual Statements — within 105 days after the end of each fiscal year of such
Obligor, copies of,




(A) a consolidated balance sheet of such Obligor and its Subsidiaries, as at
the end of such year, and




(B) consolidated statements of income, changes in shareholders’ equity and cash
flows of such Obligor and its Subsidiaries, for such year, setting forth in each
case in comparative form the figures for the previous fiscal year, all in reasonable
detail, prepared in accordance with GAAP,




and accompanied by an opinion thereon of independent certified public accountants of
recognized national standing, which opinion shall not contain any qualification or exception
as to the scope of such audit and shall state that such financial statements present fairly,
in all material respects, the financial position of the companies being reported upon and
their results of operations and cash flows and have been prepared in conformity with GAAP,
and that the examination of such accountants in connection with such financial statements
has been made in accordance with generally accepted auditing standards, and that such audit
provides a reasonable basis for such opinion in the circumstances;


 


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provided, that the delivery within the time period specified above of such Obligor’s Annual
Report on Form 10-K (if any) for such fiscal year (together with such Obligor’s annual
report to shareholders, if any, prepared pursuant to Rule 14a-3 under the Exchange Act)
prepared in accordance with the requirements therefor and filed with the SEC, together with
the accountant’s opinion described above, shall be deemed to satisfy the requirements of
this Section 8.01(a)(ii);




(iii) SEC and Other Reports — promptly upon their becoming available, one copy of (A)
each financial statement, report, notice or proxy statement sent by such Obligor or any of
its Subsidiaries to public securities holders generally, and (B) each regular or periodic
report, each registration statement (without exhibits except as expressly requested by the
Administrative Agent or a Lender), and each prospectus and all amendments thereto filed by
such Obligor or any of its Subsidiaries with the SEC and of all press releases and other
statements made available generally by such Obligor or any of its Subsidiaries to the public
concerning developments that are Material;




(iv) Notice of Default or Event of Default — promptly, and in any event within five
days after an Authorized Officer of such Obligor becoming aware of the existence of any
Default or Event of Default or that any Person has given any notice or taken any action with
respect to a claimed default hereunder or that any Person has given any notice or taken any
action with respect to a claimed default of the type referred to in Section 9.01(e), a
written notice specifying the nature and period of existence thereof and what action the
applicable Obligor is taking or proposes to take with respect thereto;




(v) ERISA Matters — promptly, and in any event within five days after an Authorized
Officer of such Obligor becoming aware of any of the following, a written notice setting
forth the nature thereof and the action, if any, that the applicable Obligor or an ERISA
Affiliate of such Obligor proposes to take with respect thereto:




(A) with respect to any Plan, any reportable event, as defined in section
4043(b) of ERISA and the regulations thereunder, for which notice thereof has not
been waived pursuant to such regulations as in effect on the date hereof; or




(B) (1) the taking by the PBGC of steps to institute, or the threatening by the
PBGC of the institution of, proceedings under section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan, (2) the
providing of notice by a plan administrator of the intent to terminate any Plan
under section 4041 of ERISA, or (3) the receipt by such Obligor or any of its ERISA
Affiliates of a notice, or the receipt by any Multiemployer Plan from such Obligor
or any of its ERISA Affiliates of any notice, concerning the imposition of
withdrawal liability under section 4201 or 4204 of ERISA or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within
the meaning of Title IV of ERISA; or




(C) any event (including, without limitation, any ERISA Event), transaction or
condition that could result in the incurrence of any liability by such Obligor or
any of its ERISA Affiliates pursuant to Title I or IV of ERISA (other than claims in
the ordinary course or PBGC premiums required by Title IV of ERISA) or the penalty or excise


 


55









 






 tax provisions of the Code relating to employee
benefit plans, or in the imposition of any Lien on any of the rights or Properties
of such Obligor or any of its ERISA Affiliates pursuant to Title I or IV of ERISA or
such penalty or excise tax provisions, if such liability or Lien, taken together
with any other such liabilities or Liens then existing, could reasonably be expected
to have a Material Adverse Effect;




(vi) Notices from Governmental Authority — promptly, and in any event within 30 days
of receipt thereof, copies of any notice to such Obligor or any of its Subsidiaries from any
Federal or state Governmental Authority relating to any order, ruling, statute or other law
or regulation that could reasonably be expected to have a Material Adverse Effect;




(vii) ACC Communications — promptly, and in any event within 30 days of receipt
thereof, copies of any Material communication to such Obligor or any of its Subsidiaries
from the ACC or any Material filing by such Obligor or any of its Subsidiaries with the ACC
relating to any breach of the ACC Settlement Agreement or any matter that could reasonably
be expected to cause or constitute a Material Adverse Effect;




(viii) Default and Litigation — promptly, and in any event within five days after an
Authorized Officer of such Obligor becoming aware of any of the following, a written notice
setting forth the nature thereof and the action, if any, that the applicable Obligor
proposes to take with respect thereto:




(A) any default or event of default under any Contractual Obligation (other
than under the Loan Documents) of such Obligor or any of its Subsidiaries that, if
not cured or waived, could reasonably be expected to have a Material Adverse Effect;




(B) any litigation, investigation or proceeding which may exist at any time
between such Obligor or any of its Subsidiaries and any Governmental Authority that,
if adversely determined, could reasonably be expected to have a Material Adverse
Effect; or




(C) any litigation or proceeding affecting such Obligor or any of its
Subsidiaries in which the amount involved is greater than $4,000,000 and not covered
by insurance or in which injunctive or similar relief is sought;




(ix) Change in Ratings of Index Debt —  as soon as practicable and in any event within
five (5) Business Days after any Obligor receives written notice of an upgrading or a
downgrading of any Borrower’s Index Debt by any Rating Agency, a notice of such upgrading or
downgrading; and




(x) Requested Information — with reasonable promptness, such other data and
information relating to the business, operations, affairs, financial condition or Properties
of such Obligor or any of its Subsidiaries or relating to the ability of such Obligor to
perform its obligations under the Loan Documents to which it is a party as from time to
time may be reasonably requested by the Administrative Agent or any Lender.


 


56









 





(b) Officer’s Certificate. Each set of financial statements delivered to the Administrative
Agent pursuant to Section 8.01(a)(i) or Section 8.01(a)(ii) shall be accompanied by a certificate
of an Authorized Officer of the Obligor delivering such financial statements setting forth:




(i) Covenant Compliance — if such Obligor is a Borrower, the information (including
detailed calculations) required in order to establish whether such Borrower was in
compliance with the requirements of Section 8.03 during the quarterly or annual period
covered by the statements then being furnished (including, without limitation, a listing of
any Indebtedness for borrowed money of such Borrower or any of its Subsidiaries that has
been disregarded, at any time during such period, for purposes of the determination of
Consolidated Total Indebtedness pursuant to the proviso contained in the definition thereof
set forth in Section 1.01); and




(ii) Event of Default — a statement that such officer has reviewed the relevant terms
hereof and has made, or caused to be made, under his or her supervision, a review of the
transactions and conditions of such Obligor and its Subsidiaries from the beginning of the
quarterly or annual period covered by the statements then being furnished to the date of the
certificate and that such review shall not have disclosed the existence during such period
of any condition or event that constitutes a Default or an Event of Default or, if any such
condition or event existed or exists (including, without limitation, any such event or
condition resulting from the failure of such Obligor or any of its Subsidiaries to comply
with any Environmental Law), specifying the nature and period of existence thereof and what
action such Obligor shall have taken or proposes to take with respect thereto.



(c) Books and Records; Inspection. Such Obligor will, and will cause each of its Subsidiaries
to, keep proper books of record and account in which entries are made of all dealings and
transactions in relation to its business and activities, all in accordance with customary and
prudent business practices. Such Obligor shall permit the representatives of the Administrative
Agent and each Lender:




(i) No Default — if no Default or Event of Default with respect to such Obligor then
exists, at the expense of the Administrative Agent or such Lender (as the case may be) and
upon reasonable prior notice to such Obligor, to visit the principal executive office of
such Obligor, to discuss the affairs, finances and accounts of such Obligor and its
Subsidiaries with such Obligor’s officers, and (with the consent of such Obligor, which
consent will not be unreasonably withheld) its independent public accountants, and (with the
consent of such Obligor, which consent will not be unreasonably withheld) to visit the other
offices and Properties of such Obligor and its Subsidiaries, all at such reasonable times
and as often as may be reasonably requested in writing; and


 


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(ii) Default — if a Default or Event of Default with respect to such Obligor then
exists, at the expense of such Obligor, to visit and inspect any of the offices or
Properties of such Obligor or any of its Subsidiaries, to examine all their respective
books of account, records, reports and other papers, to make copies and extracts therefrom,
and to discuss their respective affairs, finances and accounts with their respective
officers and independent public accountants (and by this provision such Obligor authorizes
said accountants to discuss the affairs, finances and accounts of such Obligor and its
Subsidiaries), all at such times and as often as may be requested.



(d) Compliance with Law. Such Obligor shall, and shall cause each of its Subsidiaries to,
comply with all Governmental Rules to which each of them is subject, including, without limitation,
ERISA and Environmental Laws, and will obtain and maintain in effect all Governmental Approvals
necessary to the ownership of their respective Properties or to the conduct of their respective
businesses, in each case to the extent necessary to ensure that non-compliance with such
Governmental Rules or failures to obtain or maintain in effect such Governmental Approvals could
not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.



(e) Insurance. Such Obligor shall, and shall cause each of its Subsidiaries to, maintain,
with financially sound and reputable insurers, or through its own program of self-insurance,
insurance with respect to their respective Properties and businesses against such casualties and
contingencies, of such types, on such terms and in such amounts (including deductibles,
co-insurance and self-insurance, if adequate reserves are maintained with respect thereto) as is
customary in the case of entities of established reputations engaged in the same or a similar
business and similarly situated.



(f) Maintenance of Properties. Such Obligor shall, and shall cause each of its Subsidiaries
to, maintain and keep, or cause to be maintained and kept, their respective Properties in good
repair, working order and condition (other than ordinary wear and tear), so that the business
carried on in connection therewith may be properly conducted at all times, provided that this
Section 8.01(f) shall not prevent such Obligor or any such Subsidiary from discontinuing the
operation and the maintenance of any of its Properties if such discontinuance is desirable in the
conduct of its business and such Obligor has concluded that such discontinuance could not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.



(g) Payment of Taxes, Obligations and Claims. Such Obligor shall, and shall cause each of its
Subsidiaries to, file all tax returns required to be filed in any jurisdiction and pay and
discharge (i) all taxes shown to be due and payable on such returns and all other taxes,
assessments, governmental charges, or levies imposed on them or any of their Properties, income or
franchises, to the extent such taxes and assessments have become due and payable and before they
have become delinquent, and (ii) all claims and other obligations of whatever nature for which sums
have become due and payable that have or might become a Lien on Properties of such Obligor or any
such Subsidiary, provided that neither such Obligor nor any such Subsidiary need pay any such tax,
assessment. claims or obligations if (A) the amount, applicability or validity thereof is contested
by such Obligor or such Subsidiary on a timely basis in good faith and in appropriate proceedings,
and such Obligor or such Subsidiary has established adequate reserves therefor in accordance with
GAAP on the books of such Obligor or such Subsidiary or (B) the nonpayment of all such taxes,
assessments, claims and obligations in the aggregate could not reasonably be expected to have a
Material Adverse Effect.




 


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(h) Legal Existence, etc. Such Obligor shall at all times preserve and keep in full force and
effect its legal existence. Subject to Section 8.02(b), such Obligor shall at all times preserve
and keep in full force and effect the legal existence of each of its Subsidiaries (unless merged
into such Obligor or a Subsidiary) and all rights and franchises of such Obligor and its
Subsidiaries unless, in the good faith judgment of such Obligor, the termination of or failure to
preserve and keep in full force and effect such legal existence, right or franchise could not,
individually or in the aggregate, have a Material Adverse Effect.



(i) Maintain Ownership of Subsidiaries. At all times prior to the occurrence of the Guaranty
Termination Date with respect to each Borrower, the Guarantor shall maintain, directly or
indirectly, legal and beneficial ownership of all of the outstanding capital stock of such
Borrower, free and clear of any Liens; provided that the foregoing shall not prohibit any merger,
consolidation, sale or transfer permitted under Section 8.02(b).



SECTION 8.02. Negative Covenants. Each Obligor covenants and agrees that so long as any Loan
or any other amount payable hereunder or under any Promissory Note shall remain unpaid, any Letter
of Credit shall remain outstanding or any Lender shall have any Commitment:



(a) Transactions with Affiliates. Such Obligor shall not, and shall not permit any of its
Subsidiaries to, sell, lease or otherwise transfer any property or assets to, or purchase, lease or
otherwise acquire any property or assets from, or otherwise engage in any other transactions with,
any of its Affiliates, except, subject to Section 8.02(b) and the other terms and conditions
contained in this Agreement and the other Loan Documents, (i) at prices and on terms and conditions
(A) not less favorable to such Obligor or such Subsidiary than could be obtained on an arm’s-length
basis from unrelated third parties or (B) as approved by the ACC or the Federal Energy Regulatory
Commission, (ii) transactions between or among such Obligor and its Subsidiaries not involving any
other Affiliate, (iii) any Restricted Payment permitted by Section 8.02(d), (iv) shared corporate
or administrative services and staffing with Affiliates, including accounting, legal, human
resources and treasury operations, provided on customary terms for similarly situated companies,
(v) tax sharing arrangements on customary terms for similarly situated companies, and (vi)
customary fees paid to members of the board of directors of such Obligor and its Subsidiaries who
are not officers of such Obligor or any of its Subsidiaries.




(b) Merger, Consolidation, etc.




(i) Such Obligor shall not consolidate with or merge with any other Person or convey,
transfer or lease all or substantially all of its assets in a single transaction or series
of transactions to any Person, and, prior to the occurrence of the Guaranty Termination Date
with respect to each Borrower, the Guarantor shall not sell or otherwise transfer any shares
of the stock (or any options or warrants to purchase stock or other Securities exchangeable
for or convertible into stock) of such Borrower to any Person unless:


 


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(A) the successor formed by such consolidation or the survivor of such merger
or the Person that acquires by conveyance, transfer or lease substantially all of
the assets of such Obligor as an entirety or the transferee of such shares of
stock, as the case may be (any such Person, in relation to any such transaction
involving a Borrower, being referred to herein as a “Borrower Successor”, and any
such Person, in relation to any such transaction involving the Guarantor, being
referred to herein as a “Guarantor Successor”), shall have a credit rating in
respect of its long-term debt from S&P of “BBB” or higher or from Moody’s of “Baa2”
or higher;




(B) any Borrower Successor shall be primarily engaged in the Utility Business;




(C) any Borrower Successor or, for so long as the Guarantor (or any Guarantor
Successor) is an Obligor, Guarantor Successor shall be a Solvent corporation
organized and existing under the laws of the United States or any State thereof
(including the District of Columbia);




(D) if any Borrower Successor or Guarantor Successor is not such Obligor, such
Borrower Successor or, for so long as the Guarantor (or any Guarantor Successor) is
an Obligor, Guarantor Successor, as the case may be, (1) shall have executed and
delivered to the Administrative Agent its assumption of the due and punctual
performance and observance of each covenant and condition of this Agreement and the
other Loan Documents to which it is a party and (2) shall have caused to be
delivered to the Administrative Agent an opinion of nationally recognized
independent counsel, or other independent counsel reasonably satisfactory to the
Required Lenders, to the effect that all agreements or instruments effecting such
assumption are enforceable in accordance with their terms and comply with the terms
hereof; and




(E) immediately after giving effect to such transaction and, if any Borrower
Successor or Guarantor Successor is not such Obligor, the effectiveness of all
agreements and instruments effecting the assumption (if any) required pursuant to
clause (D) above, no Default or Event of Default shall have occurred and be
continuing;




provided, however, that (1) this Section 8.02(b)(i) shall not apply to the consolidation or
merger of a Wholly-Owned Subsidiary of a Borrower into such Borrower; and (2)
notwithstanding the foregoing, any Borrower may at any time convey, transfer or lease all or
substantially all of its assets in a single transaction or series of transactions to any
other Person, and the Guarantor may at any time sell or otherwise transfer all or a majority
of the voting capital stock of any Borrower to any other Person, in each case so long as (x)
such Borrower or the Guarantor (for so long as it is an Obligor), as the case may be, shall
have received consideration in respect thereof in an amount not less than the Fair Market
Value of such assets or capital stock, as the case may (as determined in good faith by the
board of directors of such Obligor), and (y) if such other Person is not a Wholly-Owned
Subsidiary, the requirements set forth in Section 2.03(c) in connection with such
transaction are satisfied (provided, however, that this clause (2) shall not apply to any
such transaction if such Borrower is the only borrower under this Agreement at such time, it
being understood and agreed that in such circumstance both a Guarantor Successor and a
Borrower Successor shall have assumed all obligations of the Guarantor
(for so long as the Guarantor is an Obligor) and such Borrower, respectively, under this
Agreement and the other Loan Documents in accordance with clause (D) above and the other
conditions set forth in clauses (A) through (E) above shall be satisfied).


 


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(ii) No such conveyance, transfer or lease of substantially all of the assets of any
Borrower shall have the effect of releasing such Borrower or any successor Person that shall
theretofore have become such in the manner prescribed in this Section 8.02(b) from its
liability under this Agreement or the other Loan Documents, or the Guarantor from its
obligations hereunder or under the Guaranty, except that, if the Guaranty Termination Date
has not occurred with respect to both Borrowers, the Guarantor shall be released from its
obligations hereunder and under the Guaranty if, in the case of any such transaction that is
permitted by Section 8.02(b)(i), the Guarantor Successor shall have (A) executed and
delivered to the Administrative Agent its assumption of the due and punctual performance and
observance of the obligations of the Guarantor under this Agreement and under the Guaranty,
and (B) caused to be delivered to the Administrative Agent an opinion of nationally
recognized independent counsel, or other independent counsel reasonably satisfactory to the
Administrative Agent, to the effect that all agreements or instruments effecting such
assumption are enforceable in accordance with their terms and comply with the terms hereof.




(c) Liens.




(i) The Guarantor (for so long as it is an Obligor) shall not directly or indirectly
create, incur, assume or permit to exist (upon the happening of a contingency or otherwise)
any Lien (other than Permitted Liens) securing Indebtedness for borrowed money on or with
respect to any Property (including, without limitation, any document or instrument in
respect of goods or accounts receivable) of the Guarantor, whether now owned or held or
hereafter acquired, or any income or profits therefrom or assign or otherwise convey any
right to receive income or profits (unless it makes, or causes to be made, effective
provision whereby its obligations with respect to the Guaranty will be equally and ratably
secured with any and all other Indebtedness thereby secured so long as such other
Indebtedness shall be so secured, such security to be pursuant to an agreement reasonably
satisfactory to the Administrative Agent and, in any such case, the Guarantor’s obligations
with respect to the Guaranty shall have the benefit, to the fullest extent that, and with
such priority as, the Lenders, the Administrative Agent and the Issuing Banks may be
entitled under applicable law, of an equitable Lien on such Property).




(ii) Such Borrower shall not, and shall not permit any of its Subsidiaries to, directly
or indirectly create, incur, assume or permit to exist (upon the happening of a contingency
or otherwise) any Lien (other than Permitted Liens) securing Indebtedness for borrowed money
on or with respect to any Property (including, without limitation, any document or
instrument in respect of goods or accounts receivable) of such Borrower or any such
Subsidiary, whether now owned or held or hereafter acquired, or any income or profits
therefrom or assign or otherwise convey any right to receive income or profits (unless it
makes, or causes to be made, effective provision whereby the Obligations of such Borrower
will be equally and ratably secured with any and all other Indebtedness thereby secured so
long as such other Indebtedness shall be so secured, such security to
be pursuant to an agreement reasonably satisfactory to the Administrative Agent and, in
any such case, the Obligations of such Borrower shall have the benefit, to the fullest
extent that, and with such priority as, the Lenders, the Administrative Agent and the
Issuing Banks may be entitled under applicable law, of an equitable Lien on such Property).


 


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(d) Restricted Payments. Such Borrower shall not at any time declare or make, or incur any
liability to declare or make, any Restricted Payment unless:




(i) such Restricted Payment would not violate any Requirement of Law applicable to such
Borrower; and




(ii) immediately after giving effect to such action no Default or Event of Default with
respect to such Borrower or the Guarantor would exist.




(e) Incurrence of Indebtedness.




(i) Such Borrower shall not, and shall not permit any of its Subsidiaries to, directly
or indirectly, create, incur, assume, guarantee, or otherwise become directly or indirectly
liable with respect to, any Indebtedness, unless on the date such Borrower or such
Subsidiary becomes liable with respect to any such Indebtedness and immediately after giving
effect thereto and the concurrent retirement of any other Indebtedness, (A) no Default or
Event of Default with respect to such Borrower or, prior to the occurrence of the Guaranty
Termination Date with respect to such Borrower, the Guarantor shall have occurred and be
continuing, and (B) such Borrower is in compliance with Section 10.5(a)(iii) of the Note
Purchase Agreement to which it is a party (or the corresponding provision of any agreement
that amends, restates, refinances or otherwise replaces such Note Purchase Agreement)
(provided, that this clause (B) shall apply only so long as such Borrower is required to
comply with the “Interest Coverage Ratio” (as defined in such Note Purchase Agreement) set
forth in such Section 10.5(a)(iii) or any such corresponding provision).




(ii) For the purposes of this Section 8.02(e):




(A) any Person becoming a Subsidiary after the date hereof shall be deemed, at
the time it becomes a Subsidiary, to have incurred all of its then outstanding
Indebtedness and pro forma effect shall be given to the earnings of such Person; and




(B) upon the creation, incurrence or assumption of any Indebtedness, any other
Indebtedness shall be deemed to be retired concurrently with such action if (1) such
other Indebtedness is retired with the proceeds of such Indebtedness and (2) such
other Indebtedness is retired within 60 days of such action.



(f) Anti-Terrorism Order. Such Obligor shall not, and shall not permit any of its
Subsidiaries to, enter into any legally binding contracts or agreements with any Sanctioned Person.


 


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(g) Change in Nature of Business. Such Obligor will not, and will not permit any of its
Subsidiaries to, engage to any material extent in any business other than businesses of the type
conducted by such Obligor and its Subsidiaries on the date of execution of this Agreement and
businesses reasonably related thereto.



SECTION 8.03. Financial Covenant. Each Borrower covenants and agrees that so long as any Loan
or any other amount payable hereunder or under any Promissory Note shall remain unpaid, any Letter
of Credit shall remain outstanding or any Lender shall have any Commitment, such Borrower shall
maintain at all times a ratio of such Borrower’s Consolidated Total Indebtedness to its
Consolidated Total Capitalization of not greater than 0.65 to 1.00.



ARTICLE IX

DEFAULTS




SECTION 9.01. Events of Default. As to each Borrower, if any of the following events shall
occur and be continuing, the Administrative Agent and the Lenders shall be entitled to exercise the
remedies with respect to such Borrower set forth in Section 9.02:



(a) (i) Such Borrower shall fail to pay any principal of any Loan when due and payable in
accordance with the terms hereof; or (ii) such Borrower shall fail to pay any interest on any Loan,
any fees or any other amount payable hereunder or under any other Loan Document, within five (5)
days after any such interest, fees or other amount becomes due and payable in accordance with the
terms hereof or thereof; or (iii) such Borrower shall fail to deposit, post, deliver or otherwise
furnish Cash Collateral when required to do so pursuant to the terms of this Agreement, and such
failure shall continue unremedied for a period of five (5) days; or



(b) Any representation or warranty made or deemed made by such Borrower or, prior to the
occurrence of the Guaranty Termination Date with respect to such Borrower, the Guarantor herein or
in any other Loan Document or that is contained in any certificate, document or financial or other
statement furnished by such Borrower or the Guarantor at any time under or in connection with this
Agreement or any other Loan Document shall prove to have been inaccurate in any material respect on
or as of the date made or deemed made or furnished; or



(c) Such Borrower or, prior to the occurrence of the Guaranty Termination Date with respect to
such Borrower, the Guarantor shall default in the observance or performance of any agreement
contained in Section 8.01(a)(iv), 8.01(h), 8.01(i), 8.02 or 8.03; or



(d) Such Borrower or, prior to the occurrence of the Guaranty Termination Date with respect to
such Borrower, the Guarantor shall default in the observance or performance of any other agreement
contained in this Agreement or any other Loan Document to which it is a party (other than those
referred to in paragraphs (a), (b) and (c) of this Section) and such default is not remedied within
30 days after such Borrower or the Guarantor, as applicable, receives written notice of such
default from the Administrative Agent (any such written notice to be identified as a “notice of
default” and to refer specifically to this Section 9.01(d)) (which notice will be given at the
request of any Lender); or


 


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(e) With respect to UNS Electric, (i) UNS Electric, any Subsidiary of UNS Electric or, prior
to the occurrence of the Guaranty Termination Date with respect to UNS Electric, the Guarantor is
in default (as principal or as guarantor or other surety) in the payment of any principal of or
premium or make-whole amount or interest on any Indebtedness that is outstanding in an aggregate
principal amount of at least $10,000,000 beyond any period of grace provided with respect thereto,
or (ii) UNS Electric, any Subsidiary of UNS Electric or, prior to the occurrence of the Guaranty
Termination Date with respect to UNS Electric, the Guarantor is in default in the performance of or
compliance with any term of any evidence of any Indebtedness in an aggregate outstanding principal
amount of at least $10,000,000 or of any mortgage, indenture or other agreement relating thereto or
any other condition exists, and as a consequence of such default or condition such Indebtedness has
become, or has been declared, due and payable before its stated maturity or before its regularly
scheduled dates of payment, or (iii) as a consequence of the occurrence or continuation of any
event or condition (other than the passage of time or the right of the holder of Indebtedness to
convert such Indebtedness into equity interests), (x) UNS Electric, any Subsidiary of UNS Electric
or, prior to the occurrence of the Guaranty Termination Date with respect to UNS Electric, the
Guarantor has become obligated to purchase or repay Indebtedness before its regular maturity or
before its regularly scheduled dates of payment in an aggregate outstanding principal amount of at
least $10,000,000, or (y) one or more Persons have the right to require UNS Electric, any
Subsidiary of UNS Electric or, prior to the occurrence of the Guaranty Termination Date with
respect to UNS Electric, the Guarantor to purchase or repay such Indebtedness (it being understood
and agreed that any Default or Event of Default pursuant to this subsection (e) with respect to any
Subsidiary of UNS Electric or, prior to the occurrence of the Guaranty Termination Date with
respect to UNS Electric, the Guarantor shall be deemed, for all purposes of this Agreement, to be a
Default or an Event of Default (as the case may be) with respect to UNS Electric); or



(f) With respect to UNS Gas, (i) UNS Gas, any Subsidiary of UNS Gas or, prior to the
occurrence of the Guaranty Termination Date with respect to UNS Gas, the Guarantor is in default
(as principal or as guarantor or other surety) in the payment of any principal of or premium or
make-whole amount or interest on any Indebtedness that is outstanding in an aggregate principal
amount of at least $4,000,000 beyond any period of grace provided with respect thereto, or (ii) UNS
Gas, any Subsidiary of UNS Gas or, prior to the occurrence of the Guaranty Termination Date with
respect to UNS Gas, the Guarantor is in default in the performance of or compliance with any term
of any evidence of any Indebtedness in an aggregate outstanding principal amount of at least
$4,000,000 or of any mortgage, indenture or other agreement relating thereto or any other condition
exists, and as a consequence of such default or condition such Indebtedness has become, or has been
declared, due and payable before its stated maturity or before its regularly scheduled dates of
payment, or (iii) as a consequence of the occurrence or continuation of any event or condition
(other than the passage of time or the right of the holder of Indebtedness to convert such
Indebtedness into equity interests), (x) UNS Gas, any Subsidiary of UNS Gas or, prior to the
occurrence of the Guaranty Termination Date with respect to UNS Gas, the Guarantor has become
obligated to purchase or repay Indebtedness before its regular maturity or before its regularly
scheduled dates of payment in an aggregate outstanding principal amount of at least $4,000,000, or
(y) one or more Persons have the right to require UNS Gas, any Subsidiary of UNS Gas or, prior to
the occurrence of the Guaranty Termination Date with respect to UNS Gas, the Guarantor to purchase
or repay such Indebtedness (it being understood and agreed that any Default or Event of Default
pursuant to
this subsection (f) with respect to any Subsidiary of UNS Gas or, prior to the occurrence of
the Guaranty Termination Date with respect to UNS Gas, the Guarantor shall be deemed, for all
purposes of this Agreement, to be a Default or an Event of Default (as the case may be) with
respect to UNS Gas); or


 


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(g) such Borrower, any Subsidiary of such Borrower or, prior to the occurrence of the Guaranty
Termination Date with respect to such Borrower, the Guarantor or any other Subsidiary of the
Guarantor (including, without limitation, the other Borrower) (i) is generally not paying, or
admits in writing its inability to pay, its debts as they become due, (ii) files, or consents by
answer or otherwise to the filing against it of, a petition for relief or reorganization or
arrangement or any other petition in bankruptcy, for liquidation or to take advantage of any
bankruptcy, insolvency, reorganization, moratorium or other similar law of any jurisdiction, (iii)
makes an assignment for the benefit of its creditors, (iv) consents to the appointment of a
custodian, receiver, trustee or other officer with similar powers with respect to it or with
respect to any substantial part of its Property, (v) is adjudicated as insolvent or to be
liquidated, or (vi) takes corporate action for the purpose of any of the foregoing (it being
understood and agreed that any Default or Event of Default pursuant to this subsection (g) with
respect to any Borrower, any Subsidiary of such Borrower or, prior to the occurrence of the
Guaranty Termination Date with respect to such Borrower, the Guarantor or any other Subsidiary of
the Guarantor (including, without limitation, the other Borrower) shall be deemed, for all purposes
of this Agreement, to be a Default or an Event of Default (as the case may be) with respect to such
Borrower); or



(h) a court or governmental authority of competent jurisdiction enters an order (i)
appointing, without consent by such Borrower, any Subsidiary of such Borrower or, prior to the
occurrence of the Guaranty Termination Date with respect to such Borrower, the Guarantor or any
other Subsidiary of the Guarantor (including, without limitation, the other Borrower), a custodian,
receiver, trustee or other officer with similar powers (A) with respect to such Borrower, any
Subsidiary of such Borrower or, prior to the occurrence of the Guaranty Termination Date with
respect to such Borrower, the Guarantor or any other Subsidiary of the Guarantor (including,
without limitation, the other Borrower) or (B) with respect to any substantial part of the Property
of such Borrower, any Subsidiary of such Borrower or, prior to the occurrence of the Guaranty
Termination Date with respect to such Borrower, the Guarantor or any other Subsidiary of the
Guarantor (including, without limitation, the other Borrower), or (ii) constituting an order for
relief or approving a petition for relief or reorganization or any other petition in bankruptcy or
for liquidation or to take advantage of any bankruptcy or insolvency law of any jurisdiction, or
ordering the dissolution, winding-up or liquidation of such Borrower, any Subsidiary of such
Borrower or, prior to the occurrence of the Guaranty Termination Date with respect to such
Borrower, the Guarantor or any other Subsidiary of the Guarantor (including, without limitation,
the other Borrower), or any such petition shall be filed against such Borrower, any Subsidiary of
such Borrower or, prior to the occurrence of the Guaranty Termination Date with respect to such
Borrower, the Guarantor or any other Subsidiary of the Guarantor (including, without limitation,
the other Borrower) and such petition shall not be dismissed within 60 days (it being understood
and agreed that any Default or Event of Default pursuant to this subsection (h) with respect to any
Borrower, any Subsidiary of such Borrower or, prior to the occurrence of the Guaranty Termination
Date with respect to such Borrower, the Guarantor or any other Subsidiary of the Guarantor
(including, without limitation, the other
Borrower) shall be deemed, for all purposes of this Agreement, to be a Default or an Event of
Default (as the case may be) with respect to such Borrower); or


 


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(i) with respect to UNS Electric, a final judgment or judgments for the payment of money
aggregating in excess of $10,000,000 are rendered against UNS Electric, any of its Subsidiaries or,
prior to occurrence of the Guaranty Termination Date with respect to UNS Electric, the Guarantor
and such judgment or judgments are not, within 60 days after entry thereof, bonded, discharged or
stayed pending appeal, or are not discharged within 60 days after the expiration of such stay (it
being understood and agreed that any Default or Event of Default pursuant to this subsection (i)
with respect to any Subsidiary of UNS Electric or, prior to the occurrence of the Guaranty
Termination Date with respect to UNS Electric, the Guarantor shall be deemed, for all purposes of
this Agreement, to be a Default or an Event of Default (as the case may be) with respect to UNS
Electric); or



(j) with respect to UNS Gas, a final judgment or judgments for the payment of money
aggregating in excess of $4,000,000 are rendered against UNS Gas, any of its Subsidiaries or, prior
to occurrence of the Guaranty Termination Date with respect to UNS Gas, the Guarantor and such
judgment or judgments are not, within 60 days after entry thereof, bonded, discharged or stayed
pending appeal, or are not discharged within 60 days after the expiration of such stay (it being
understood and agreed that any Default or Event of Default pursuant to this subsection (j) with
respect to any Subsidiary of UNS Gas or, prior to the occurrence of the Guaranty Termination Date
with respect to UNS Gas, the Guarantor shall be deemed, for all purposes of this Agreement, to be a
Default or an Event of Default (as the case may be) with respect to UNS Gas); or



(k) an ERISA Event with respect to such Borrower or, prior to the occurrence of the Guaranty
Termination Date with respect to such Borrower, the Guarantor shall have occurred that, when taken
together with all other such ERISA Events that have occurred, has resulted or could reasonably be
expected to result in a Material Adverse Effect; or



(l) prior to the occurrence of the Guaranty Termination Date with respect to such Borrower,
the Guarantor shall fail to observe or perform any of its obligations contained in Article XI or
shall renounce in writing its obligations with respect thereto (it being understood and agreed that
any Default or Event of Default pursuant to this subsection (l) with respect to the Guarantor that
occurs prior to the occurrence of the Guaranty Termination Date with respect to a Borrower shall be
deemed, for all purposes of this Agreement, to be a Default or an Event of Default (as the case may
be) with respect to such Borrower); or



(m) Any material provision of this Agreement or any other Loan Document to which such Borrower
or the Guarantor is a party shall for any reason, except to the extent permitted by the express
terms hereof or thereof, cease to be valid and binding on or enforceable against such Borrower or,
prior to the occurrence of the Guaranty Termination Date with respect to such Borrower, the
Guarantor, or such Borrower or the Guarantor shall so assert in writing; or




(n) Any Change of Control shall occur; or



(o) Any Governmental Approval required to be made or obtained by such Borrower or, prior to
the occurrence of the Guaranty Termination Date with respect to such Borrower, the
Guarantor in connection with the Transactions shall be rescinded, revoked, otherwise
terminated, or amended or modified in any manner which is materially adverse to the interests of
the Lenders, the Issuing Banks and the Administrative Agent.


 


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SECTION 9.02. Remedies. If any Event of Default has occurred and is continuing with respect
to a Borrower or, prior to the occurrence of the Guaranty Termination Date with respect to such
Borrower, the Guarantor, then the Administrative Agent shall at the request, or may with the
consent, of the Required Lenders, upon notice to such Borrower (i) declare the Commitments and the
obligation of each Lender to make Loans to such Borrower (other than Loans under Section 4.04(b))
or Convert Loans of such Borrower and of any Issuing Bank to issue a Letter of Credit at the
request of such Borrower to be terminated, whereupon the same shall forthwith terminate, (ii)
declare the principal amount of Loans made to such Borrower outstanding hereunder, all interest
thereon and all other amounts payable by such Borrower under this Agreement and the other Loan
Documents to be forthwith due and payable, whereupon the principal amount of such Loans, all such
interest and all such other 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 such Borrower, and/or (iii) require such Borrower to pay immediately to the
Administrative Agent an amount equal to the aggregate LC Outstandings of all outstanding Letters of
Credit issued at the request of such Borrower, to be held by the Administrative Agent (for its
benefit and the benefit of the Issuing Banks and the Lenders) as Cash Collateral securing such LC
Outstandings and such Borrower’s reimbursement obligations with respect thereto; provided, however,
upon the occurrence of any Event of Default specified in Section 9.01(g) or Section 9.01(h) with
respect to any Borrower (other than an Event of Default described in clause (i) of Section 9.01(g)
or described in clause (vi) of Section 9.01(g) by virtue of the fact that such clause encompasses
clause (i) of Section 9.01(g)), (A) the Commitments and the obligation of each Lender to make Loans
to such Borrower and of any Issuing Bank to issue any Letter of Credit at the request of such
Borrower shall automatically be terminated, (B) the principal amount of Loans made to such Borrower
outstanding hereunder, all interest thereon and all other amounts payable by such Borrower under
this Agreement and the other Loan Documents shall automatically become and be immediately due and
payable, without presentment, demand, protest or any notice of any kind, all of which are hereby
expressly waived by such Borrower(s), and (C) such Borrower shall pay immediately to the
Administrative Agent an amount equal to the aggregate LC Outstandings of all outstanding Letters of
Credit issued at the request of such Borrower, to be held by the Administrative Agent (for its
benefit and the benefit of the Issuing Banks and the Lenders) as Cash Collateral securing such LC
Outstandings and such Borrower’s reimbursement obligations with respect thereto. Notwithstanding
anything to the contrary contained herein, no notice given or declaration made by the
Administrative Agent pursuant to this Section 9.02 shall affect (1) the obligation of any Issuing
Bank to make any payment under any Letter of Credit issued by such Issuing Bank in accordance with
the terms of such Letter of Credit or (2) the participatory interest of each Lender in each such
payment.


 


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ARTICLE X

THE ADMINISTRATIVE AGENT





SECTION 10.01. Authorization and Action.



(a) Each of the Lenders and the Issuing Banks hereby irrevocably appoints the Administrative
Agent as its agent and authorizes the Administrative Agent to take such actions on its behalf and
to exercise such powers as are delegated to the Administrative Agent by the terms of the Loan
Documents, together with such actions and powers as are reasonably incidental thereto.



(b) Any Lender serving as Administrative Agent hereunder shall have the same rights and powers
in its capacity as a Lender as any other Lender and may exercise the same as though it were not the
Administrative Agent, and such Lender and its Affiliates may accept deposits from, lend money to
and generally engage in any kind of business with the Obligors or any of their Subsidiaries or
other Affiliates thereof as if it were not the Administrative Agent hereunder.



(c) The Administrative Agent shall not have any duties or obligations except those expressly
set forth in the Loan Documents. Without limiting the generality of the foregoing, (i) the
Administrative Agent (in such capacity) shall not be subject to any fiduciary or other implied
duties, regardless of whether a Default or an Event of Default has occurred and is continuing, (ii)
the Administrative Agent shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly contemplated by the Loan
Documents that the Administrative Agent is required to exercise in writing by the Required Lenders
(or such other number or percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 12.01), and (iii) except as expressly set forth in the Loan Documents, the
Administrative Agent shall not have any duty to disclose, and shall not be liable for the failure
to disclose, any information relating to the Obligors or any of their Subsidiaries or Affiliates
that is communicated to or obtained by the Lender serving as Administrative Agent or any of its
Affiliates in any capacity. The Administrative Agent shall not be liable for any action taken or
not taken by it with the consent or at the request of the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as provided in Section
12.01) or in the absence of its own gross negligence or willful misconduct. The Administrative
Agent shall be deemed not to have knowledge of any Default or Event of Default unless and until
written notice thereof is given to the Administrative Agent by an Obligor or a Lender (in which
case the Administrative Agent shall promptly give a copy of such written notice to the Lenders and
the Issuing Banks). The Administrative Agent shall not be responsible to any of the Lenders or
Issuing Banks for or have any duty to ascertain or inquire into (A) any statement, warranty or
representation made in or in connection with any Loan Document, (B) the contents of any
certificate, report or other document delivered thereunder or in connection therewith, (C) the
performance or observance of any of the covenants, agreements or other terms or conditions set
forth in any Loan Document, (D) the validity, enforceability, effectiveness or genuineness of any
Loan Document or any other agreement, instrument or document, or (E) the satisfaction of any
condition set forth in Article VI or elsewhere in any Loan Document, other than to confirm receipt
of items expressly required to be delivered to the Administrative Agent.


 


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(d) The Administrative Agent shall be entitled to rely upon, and shall not incur any liability
for relying upon, any notice, request, certificate, consent, statement, instrument,
document or other writing believed by it to be genuine and to have been signed or sent by the
proper Person. The Administrative Agent also may rely upon any statement made to it orally or by
telephone and believed by it to be made by the proper Person, and shall not incur any liability for
relying thereon. The Administrative Agent may consult with legal counsel (who may be counsel for
any Obligor), 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.



(e) The Administrative Agent may perform any and all its duties and exercise its rights and
powers by or through one or more sub-agents appointed by the Administrative Agent. The
Administrative Agent and any such sub-agent may perform any and all its duties and exercise its
rights and powers through their respective Related Parties. The exculpatory provisions of the
preceding subsections of this Section 10.01 shall apply to any such sub-agent and to the Related
Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective
activities in connection with the syndication of the credit facilities provided for herein as well
as activities as Administrative Agent.



(f) Subject to the appointment and acceptance of a successor Administrative Agent as provided
in this subsection (f), the Administrative Agent may resign at any time by notifying the Lenders,
the Issuing Banks and the Obligors. Upon any such resignation, the Required Lenders shall have the
right, in consultation with the Borrowers, to appoint a successor. If no successor shall have been
so appointed by the Required Lenders and shall have accepted such appointment within 30 days after
the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative
Agent may, on behalf of the Lenders and the Issuing Banks, appoint a successor Administrative Agent
which shall be a Lender or an Affiliate of a Lender. Upon the acceptance of its appointment as
Administrative Agent hereunder by a successor, such successor shall succeed to and become vested
with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the
retiring Administrative Agent shall be discharged from its duties and obligations hereunder. The
fees payable by the Borrowers to a successor Administrative Agent shall be the same as those
payable to its predecessor unless otherwise agreed between the Borrowers and such successor. After
the Administrative Agent’s resignation hereunder, the provisions of this Article and Section 12.04
shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and
their respective Related Parties in respect of any actions taken or omitted to be taken by any of
them while it was acting as Administrative Agent.



(g) Each Lender acknowledges that it has independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each
Lender also acknowledges that it will, independently and without reliance upon the Administrative
Agent or any other Lender 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.



(h) Anything herein to the contrary notwithstanding, no Co-Syndication Agent, Co-Documentation
Agent or Joint Lead Arranger listed on the cover page hereof shall have any
rights, powers, duties or responsibilities under this Agreement or any of the other Loan
Documents, except in its capacity as a Lender hereunder.


 


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SECTION 10.02. Indemnification. The Lenders agree to indemnify the Administrative Agent (to
the extent not reimbursed by the Obligors), ratably according to the respective Percentages of the
Lenders, from and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by, or asserted against the Administrative Agent in any way relating to
or arising out of this Agreement or any other Loan Document (other than the Fee Letter) or any
action taken or omitted by the Administrative Agent under this Agreement or any other Loan Document
(other than the Fee Letter), provided that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Administrative Agent’s gross negligence or willful misconduct, as
determined by the final and nonappealable judgment of a court of competent jurisdiction. Without
limitation of the foregoing, each Lender agrees to reimburse the Administrative Agent promptly upon
demand for its ratable share of any out-of-pocket expenses (including counsel fees) incurred by the
Administrative Agent in connection with the preparation, execution, syndication, delivery,
administration, modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this
Agreement or any other Loan Document (other than the Fee Letter) to the extent that the
Administrative Agent is entitled to reimbursement for such expenses pursuant to Section 12.04 but
is not reimbursed for such expenses by the Obligors.



ARTICLE XI

GUARANTY




SECTION 11.01. The Guaranty. The Guarantor hereby guarantees to each Lender, each Issuing
Bank, the Administrative Agent and their respective successors and assigns the prompt payment in
full of all unpaid principal of and interest on (including, without limitation, interest accruing
after the maturity of the Loans and interest accruing after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to
any Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such
proceeding) the Loans and all other Obligations of each Borrower to the Administrative Agent, any
Issuing Bank or any Lender, whether direct or indirect, absolute or contingent, due or to become
due, or now existing or hereafter incurred, which may arise under, out of, or in connection with,
this Agreement, any Letter of Credit, any other Loan Document or any other document made, delivered
or given in connection herewith or therewith, whether on account of principal, interest, fees,
indemnities, costs, expenses (including, without limitation, all reasonable fees, charges and
disbursements of counsel to the Administrative Agent, any Issuing Bank or any Lender that are
required to be paid by the Borrowers pursuant hereto) or otherwise, in each case strictly in
accordance with the express terms hereof (such obligations of each Borrower being herein
collectively called, in respect of such Borrower, the “Guaranteed Obligations”), and agrees to pay
any and all expenses (including, without limitation, reasonable fees and expenses of counsel)
incurred by the Administrative Agent, the Issuing Banks or the Lenders in enforcing any rights
under this Article XI. Without limiting the generality of the foregoing, the Guarantor’s liability
shall extend to all amounts that constitute
part of the Guaranteed Obligations and would be owed by a Borrower to the Administrative
Agent, the Issuing Banks or the Lenders under this Agreement and the other Loan Documents but for
the fact that they are unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving any Borrower.


 


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In addition, the Guarantor hereby further agrees, as an independent obligation, that, if a
Borrower fails to pay in full when expressed to be due (whether at stated maturity, upon
acceleration or optional prepayment or otherwise) any of the Guaranteed Obligations strictly in
accordance with the express terms hereof, the Guarantor will promptly pay the same, without any
demand or notice whatsoever, and that in the case of any extension of time of payment or renewal of
any of the Guaranteed Obligations, the same will be paid in full when expressed to be due (whether
at stated maturity, upon acceleration or optional prepayment or otherwise) in accordance with the
terms of such extension or renewal.



SECTION 11.02. Obligations Unconditional. The obligations of the Guarantor under Section
11.01 are irrevocable, absolute and unconditional, irrespective of the value, genuineness,
validity, regularity or enforceability of the obligations of a Borrower hereunder or under any
other agreement or instrument referred to herein and, to the fullest extent permitted by applicable
law, irrespective of any other circumstance whatsoever that might otherwise constitute a legal or
equitable discharge or defense of a surety or guarantor, it being the intent of this Section 11.02
that the obligations of the Guarantor hereunder shall be irrevocable, absolute and unconditional
under any and all circumstances. Without limiting the generality of the foregoing, the occurrence
of one or more of the following shall not preclude the exercise by the Lenders, the Issuing Banks
or the Administrative Agent of any right, remedy or power hereunder or alter or impair the
liability of the Guarantor hereunder, which shall remain irrevocable, absolute and unconditional as
described above:



(a) at any time or from time to time, without notice to the Guarantor, the time for any
performance of or compliance with any of the Guaranteed Obligations shall be extended, waived or
renewed, or a Borrower shall be released from any of the Guaranteed Obligations, or any of the
Guaranteed Obligations shall be subordinated in right of payment to any other liability of a
Borrower;



(b) any of the acts mentioned herein or any agreement or instrument referred to herein or
otherwise in connection with the Guaranteed Obligations shall be done or omitted;



(c) any of the Guaranteed Obligations shall be accelerated or otherwise become due prior to
their stated maturity, or any of the Guaranteed Obligations shall be amended, supplemented,
restated or otherwise modified in any respect, or any right hereunder or under any agreement or
instrument referred to herein or otherwise in connection with the Guaranteed Obligations shall be
waived, or any other guarantee of any of the Guaranteed Obligations or any security therefor shall
be released, substituted or exchanged in whole or in part or otherwise dealt with;


 


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(d) a Borrower or any other guarantor or obligor in respect of any of the Guaranteed
Obligations (i) becomes insolvent or is unable to pay its debts or fails or admits in writing its
inability generally to pay its debts as they become due, (ii) makes a general assignment,
arrangement or composition with or for the benefit of its creditors, (iii) institutes or has
instituted
against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief
under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a
petition is presented for its winding-up or liquidation, (iv) seeks or becomes subject to the
appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian
or other similar official for it or for all or substantially all its assets, (v) has a secured
party take possession of all or substantially all its assets or has a distress, execution,
attachment, sequestration or other legal process levied, enforced or sued on or against all or
substantially all its assets or (vi) causes or is subject to any event with respect to it which,
under the applicable laws of any jurisdiction, has an analogous effect to any of the events
specified in clauses (i), (ii), (iii), (iv) or (v) above (any proceeding referred to in this
paragraph is herein referred to as an “Insolvency Proceeding”);



(e) this Agreement or any agreement or instrument referred to herein shall be rejected
(including pursuant to Section 365 of the United States Bankruptcy Code, as amended) by an
administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar
official for a Borrower or for all or substantially all of a Borrower’s assets in any Insolvency
Proceeding;



(f) the occurrence of any Default or Event of Default hereunder or the occurrence of any
similar event (howsoever described) under any agreement or instrument referred to herein;



(g) except as otherwise provided in Section 8.02(b)(ii), any consolidation or amalgamation of
a Borrower with, any merger of a Borrower with or into, or any transfer by a Borrower of all or
substantially all of such Borrower’s assets to, another Person, any change in the legal or
beneficial ownership of ownership interests issued by a Borrower, or any other change whatsoever in
the objects, capital structure, constitution or business of a Borrower;



(h) any delay, failure or inability of a Borrower or any other guarantor or obligor in respect
of any of the Guaranteed Obligations to perform, willful or otherwise, any provision hereunder or
any agreement or instrument referred to herein or otherwise in connection with the Guaranteed
Obligations;



(i) the failure or breach of any representation or warranty (whether written or oral) made by
a Borrower or any other Person herein or in any agreement or instrument referred to herein or
otherwise in connection with the Guaranteed Obligations; or any event or circumstance constituting
fraud in the inducement or any other similar event or circumstance;



(j) any action or failure to act by any Lender, any Issuing Bank or the Administrative Bank
that adversely affects the Guarantor’s right of subrogation arising by reason of any performance by
the Guarantor of its obligations under this Article XI;



(k) any suit or other action brought by, or any judgment in favor of, any beneficiaries or
creditors of, a Borrower or any other Person for any reason whatsoever, including any suit or
action in any way disaffirming, repudiating, rejecting or otherwise calling into question any
issue, matter or thing in respect of this Agreement, the other Loan Documents or any agreement or
instrument referred to herein or therein or otherwise in connection with the Guaranteed
Obligations;


 


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(l) the existence of any claim, set-off, defense or other right which the Guarantor may have
at any time against the Administrative Agent, any Issuing Bank, any Lender or any other Person,
whether in connection with this Guaranty, the Transactions or any unrelated transaction;



(m) any lack or limitation of status or of power, incapacity or disability of a Borrower or
any other guarantor or obligor in respect of any of the Guaranteed Obligations; or



(n) any change in the laws, rules or regulations of any jurisdiction, or any present or future
action or order of any Governmental Authority, amending, varying or otherwise affecting the
validity or enforceability of any of the Guaranteed Obligations or the obligations of any other
guarantor or obligor in respect of any of the Guaranteed Obligations.



The Guarantor hereby expressly waives diligence, presentment, demand of payment, protest and all
notices whatsoever, and any requirement that the Lenders, the Issuing Banks or the Administrative
Agent exhaust any right, power or remedy (including filing any proof of claim relating to the
Guaranteed Obligations in any Insolvency Proceeding) or proceed against any Borrower under this
Agreement, any other Loan Document or any agreement or instrument referred to herein or therein, or
against any other Person under any other guarantee of, or security for, any of the Guaranteed
Obligations, it being understood that this Article XI is a guarantee of payment and not just
collection.



SECTION 11.03. Subrogation. The Guarantor hereby agrees that until the payment and
satisfaction in full of all Guaranteed Obligations it shall not exercise any right or remedy
(including the filing of any proof of claim in any Insolvency Proceeding) against a Borrower or any
other guarantor or obligor in respect of any of the Guaranteed Obligations or any security therefor
arising by reason of any performance by the Guarantor of its obligations under this Article XI,
whether by subrogation or otherwise. In the event that, prior to the payment and satisfaction in
full of all Guaranteed Obligations, any amount is received by the Guarantor from a Borrower in
respect of the performance by the Guarantor of its obligations under this Article XI, whether by
subrogation or otherwise, the Guarantor will promptly following receipt thereof pay such amount to
the Administrative Agent for application to any Guaranteed Obligations then owing, whether matured
or unmatured.



SECTION 11.04. Reinstatement. The obligations of the Guarantor under this Article XI shall be
automatically reinstated if and to the fullest extent that for any reason any payment by or on
behalf of a Borrower in respect of the Guaranteed Obligations is rescinded or must be otherwise
restored by any holder of any of the Guaranteed Obligations, whether as a result of any Insolvency
Proceeding or otherwise, all as though such payment had not been made, and the Guarantor agrees
that it will indemnify each Lender, each Issuing Bank and the Administrative Agent on demand for
all reasonable costs and expenses (including the reasonable fees and disbursements of counsel)
incurred by such Lender, such Issuing Bank and the Administrative Agent in connection with such
rescission or restoration, including any such costs and expenses incurred in defending against any
claim alleging that such payment constituted a preference, fraudulent transfer or similar payment
under any bankruptcy, insolvency or similar law.


 


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SECTION 11.05. Remedies Unaffected. The Guarantor agrees that, as between the Guarantor and
the Lenders, the Issuing Banks and the Administrative Agent, the Guaranteed
Obligations may be declared to be forthwith due and payable as provided herein (and shall be
deemed to have become automatically due and payable in the circumstances provided in the proviso
contained in Section 9.02) for purposes of Section 11.01, notwithstanding any stay (including under
the United States Bankruptcy Code, as amended), injunction or other prohibition preventing the same
as against a Borrower, and that, in such event, the Guaranteed Obligations (whether or not due and
payable by the Borrowers) shall forthwith become due and payable by the Guarantor for purposes of
Section 11.01.




SECTION 11.06. Continuing Guarantee; Liability in Respect of Successor.



(a) The guarantee in this Article XI is a continuing guarantee, and shall apply to all
Guaranteed Obligations whenever arising.



(b) In the event that a Borrower shall consolidate or amalgamate with, or merge with or into,
or transfer all or substantially all its assets to, another Person, except as otherwise provided in
Section 8.02(b)(ii), the Guarantor will continue to be obligated hereunder in respect of the
Guaranteed Obligations, whether or not the Guaranteed Obligations are assumed by such Person, and
each reference herein to such Borrower shall thereafter instead be a reference to such Person.



(c) Notwithstanding any other provision contained in this Article XI to the contrary, this
Guaranty shall automatically terminate as to any Borrower upon the occurrence of the Guaranty
Termination Date with respect to such Borrower.



ARTICLE XII

MISCELLANEOUS




SECTION 12.01. Amendments, Etc. No amendment or waiver of any provision of this Agreement or
any other Loan Document, nor consent to any departure by any Obligor 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, unless in writing and
signed by all the Lenders, do any of the following: (i) waive, modify or eliminate any of the
conditions specified in Article VI, (ii) increase the Commitments of the Lenders or subject the
Lenders to any additional obligations, (iii) reduce the principal of, or interest on, any Loan, any
Applicable Margin, the Commitment Fee Rate or any fees or other amounts payable hereunder (other
than fees payable to the Administrative Agent pursuant to Section 2.02(c)), (iv) extend the
Revolving Credit Termination Date or the Letter of Credit Expiration Date or postpone any date
fixed for any payment of principal of, or interest on, any Loan or any fees or other amounts
payable hereunder (other than fees payable to the Administrative Agent pursuant to Section
2.02(c)), (v) change the definition of “Required Lenders” contained in Section 1.01 or change any
other provision that specifies the percentage of the Commitments or of the aggregate unpaid
principal amount of the Loans or the number of Lenders which shall be required for the Lenders or
any of them to take any action hereunder, (vi) amend any Loan Document in a manner intended to
prefer one or more Lenders over any other Lenders, (vii) release the Guaranty, in whole or in part,
except for any such release expressly permitted hereunder, or change the definition of “Guaranty



 


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Termination Date” contained in Section 1.01, or (viii) amend, waive or modify this Section 12.01; and provided, further, that
no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in
addition to the Lenders required above to take such action, affect the rights or duties of the
Administrative Agent under this Agreement or any other Loan Document; and provided, further, that
no amendment, waiver or consent shall, unless in writing and signed by each Issuing Bank in
addition to the Lenders required above to take such action, affect the rights or duties of any
Issuing Bank under this Agreement or any other Loan Document. Any request from a Borrower for any
amendment, waiver or consent under this Section 12.01 shall be addressed to the Administrative
Agent. Notwithstanding any provision to the contrary contained herein, no Defaulting Lender shall
have any right to approve or disapprove any amendment, waiver or consent hereunder (and any
amendment, waiver or consent which by its terms requires the consent of all Lenders may be effected
with the consent of the Lenders other than Defaulting Lenders), provided, however, that (x) the
Commitment of any Defaulting Lender may not be increased or extended without the consent of such
Defaulting Lender, (y) any waiver, amendment or modification requiring the consent of all Lenders
or each affected Lender that by its terms (A) affects any Defaulting Lender more adversely than
other affected Lenders or (B) extends the date fixed for payment of principal or interest owing to
such Defaulting Lender hereunder, reduces the principal amount of any obligation owing to such
Defaulting Lender hereunder, or reduces the amount of or the rate of interest on any amount owing
to such Defaulting Lender or of any fee payable to such Defaulting Lender hereunder, shall require
the consent of such Defaulting Lender, and (z) any waiver, amendment or modification that alters
the terms of this proviso shall require the consent of such Defaulting Lender.




SECTION 12.02. Notices, Etc. All notices and other communications provided for hereunder and
under the other Loan Documents shall be in writing (including telegraphic, facsimile, telex or
cable communication) and mailed, telegraphed, telecopied, telexed, cabled or delivered, (i) if to
any Borrower, at its address at One South Church Avenue, Suite 1820, Tucson, Arizona 85701,
Attention: Chief Financial Officer (Telecopy No. (520) 884-3612); (ii) if to the Guarantor, at its
address at One South Church Avenue, Suite 200, Tucson, Arizona 85701, Attention: Chief Financial
Officer (Telecopy No. (520) 884-3612); (iii) if to any Bank, at its Domestic Lending Office
specified opposite its name on Schedule 1.02; (iv) if to any Issuing Bank, at its address specified
in the Issuing Bank Agreement to which it is a party; (v) if to any Lender other than a Bank, at
its Domestic Lending Office specified in the Lender Assignment pursuant to which it became a
Lender; and (vi) if to the Administrative Agent, at its address at 445 South Figueroa Street, Los
Angeles, California 90071, Attention: Kevin Zitar (Telecopy No. (213) 236-4096); or, as to each
party, at such other address as shall be designated by such party in a written notice to the other
parties. All such notices and communications shall, when mailed, telegraphed, telecopied, telexed
or cabled, be effective five days after being deposited in the mails, or when delivered to the
telegraph company, telecopied, confirmed by telex answerback or delivered to the cable company,
respectively, except that notices and communications to the Administrative Agent pursuant to
Article II, III, or X shall not be effective until received by the Administrative Agent.



SECTION 12.03. No Waiver of Remedies. No failure on the part of any Lender, any Issuing Bank
or the Administrative Agent to exercise, and no delay in exercising, any right hereunder or under
any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise
of any such right preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and not exclusive of
any remedies provided by law.


 


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SECTION 12.04. Costs, Expenses and Indemnification. (a) The Borrowers agree to pay, promptly
after delivery to the Borrowers of a reasonably detailed statement therefor, all reasonable costs
and expenses of the Administrative Agent in connection with the preparation, negotiation,
syndication, execution and delivery of the Loan Documents and any proposed modification, amendment,
waiver or consent relating to any Loan Document, including the reasonable fees and disbursements of
counsel to the Administrative Agent with respect thereto and with respect to the administration of,
and advising the Administrative Agent as to its rights and responsibilities under, this Agreement
and the other Loan Documents. The Borrowers further agree to pay, promptly after delivery to the
Borrowers of a reasonably detailed statement therefor, all costs and expenses of the Administrative
Agent, the Issuing Banks and each Lender (including the fees and disbursements of counsel to the
Administrative Agent, counsel for each Issuing Bank and counsel for each Lender) in connection with
the enforcement (whether through negotiations, legal proceedings or otherwise) of this Agreement,
the other Loan Documents and the other documents to be delivered hereunder.



(b) Each Borrower shall indemnify the Administrative Agent, each Arranger, each Issuing Bank,
each Lender, and each Related Party of any of the foregoing Persons (each such Person being called
an “Indemnified Person”) against, and hold each Indemnified Person harmless from, any and all
losses, claims, damages, liabilities and related expenses, including the reasonable fees, charges
and disbursements of any counsel for any Indemnified Person (whether or not such Indemnified Person
is named as a party to any proceeding or is otherwise subjected to judicial or legal process
arising from any such proceeding), incurred by or asserted against any Indemnified Person arising
out of, in connection with, or as a result of (i) the execution or delivery of any Loan Document or
any other agreement or instrument contemplated hereby or thereby, the performance by the parties to
the Loan Documents of their respective obligations thereunder or the consummation of the
transactions contemplated hereby or thereby, (ii) any Loan, Letter of Credit or other Extension of
Credit to such Borrower or the use or proposed use of the proceeds therefrom (including any refusal
by any Issuing Bank to honor a demand for payment under a Letter of Credit if the documents
presented in connection with such demand do not comply with the terms of such Letter of Credit),
(iii) any actual or alleged presence or release of any Hazardous Materials on or from any property
owned or operated by such Borrower or any of its Affiliates, or any Environmental Liability related
in any way to such Borrower or any of its Affiliates, or (iv) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory; provided that such indemnity shall not, as to any Indemnified
Person, be available to the extent that such losses, claims, damages, liabilities or related
expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to
have resulted from the gross negligence or willful misconduct of such Indemnified Person.



(c) To the extent permitted by applicable law, the Borrowers shall not assert, and each
Borrower hereby waives, any claim against any Indemnified Person, on any theory of liability, for
special, indirect, consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement, any other Loan
Document or any agreement or instrument contemplated hereby, the Transactions, any Loan or
Letter of Credit or the use of the proceeds thereof.


 


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(d) Each Borrower’s obligations under this Section 12.04 shall survive the repayment of all
amounts owing to the Lenders, the Issuing Banks, the Arrangers and the Administrative Agent under
the Loan Documents and the termination of the Commitments. If and to the extent that the
obligations of a Borrower under this Section 12.04 are unenforceable for any reason, such Borrower
agrees to make the maximum contribution to the payment and satisfaction thereof which is
permissible under applicable law, which contribution shall in any event not exceed the amount that
such Borrower would otherwise have been obligated to pay under this Section 12.04.



SECTION 12.05. Right of Set-off. (a) Upon (i) the occurrence and during the continuance of
any Event of Default with respect to a Borrower or the Guarantor and (ii) the making of the request
or the granting of the consent specified by Section 9.02 to authorize the Administrative Agent to
declare the principal amount outstanding hereunder as to a Borrower to be due and payable pursuant
to the provisions of Section 9.02, each Lender and Issuing Bank 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 Issuing Bank to or for the credit or the account
of the applicable Borrower(s) or, prior to the occurrence of the Guaranty Termination Date with
respect to such Borrower(s), the Guarantor, against any and all of the obligations of such
Borrower(s) or the Guarantor, respectively, to such Lender or Issuing Bank (as the case may be)
existing under any Loan Document and any Promissory Notes of such Borrower held by such Lender or
the applicable Issuing Bank Agreement to which such Issuing Bank is a party, as the case may be,
irrespective of whether or not such Lender or Issuing Bank shall have made any demand under such
Loan Document, such Promissory Notes or such Issuing Bank Agreement, as the case may be, and
although such obligations may be unmatured; provided, that in the event that any Defaulting Lender
shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately
to the Administrative Agent for further application in accordance with the provisions of Section
2.05 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds
and deemed held in trust for the benefit of the Administrative Agent, the Issuing Banks and the
Lenders, and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a
statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to
which it exercised such right of setoff. Each Lender and each Issuing Bank agrees to notify
promptly the applicable Borrower(s) or the Guarantor (as applicable) after any such set-off and
application made by such Lender or Issuing Bank, provided that the failure to give such notice
shall not affect the validity of such set-off and application. The rights of each Lender and
Issuing Bank under this Section 12.05 are in addition to other rights and remedies (including other
rights of set-off) which such Lender and Issuing Bank may have.



(b) Each Borrower agrees that it shall have no right of off-set, deduction or counterclaim in
respect of its obligations hereunder, and that the obligations of the Lenders hereunder are several
and not joint. Nothing contained herein shall constitute a relinquishment or waiver of such
Borrower’s rights to any independent claim that such Borrower may have against the Administrative
Agent or any Lender for the Administrative Agent’s or such Lender’s, as the case may be, gross
negligence or willful misconduct, but no Lender shall be liable for any
such conduct on the part of the Administrative Agent or any other Lender, and the
Administrative Agent shall be liable for any such conduct on the part of any Lender.


 


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SECTION 12.06. Binding Effect. This Agreement shall become effective when it shall have been
executed by the Obligors and the Administrative Agent and when the Administrative Agent shall have
been notified by each Bank that such Bank has executed it and thereafter shall be binding upon and
inure to the benefit of the Obligors, the Administrative Agent and each Lender and their respective
successors and assigns, except that no Obligor shall have the right to assign its rights hereunder
or any interest herein without the prior written consent of the Lenders.



SECTION 12.07. Assignments and Participation. (a) Each Lender may, with the consent of the
Borrowers, the Administrative Agent and the Issuing Banks (such consent not to be unreasonably
withheld or delayed and, in the case of the Borrowers, shall not be required if an Event of Default
has occurred and is continuing), assign to one or more banks or other financial institutions all or
a portion of its rights and obligations under this Agreement and the other Loan Documents
(including all or a portion of its Commitment, the Loans owing to it and any Promissory Notes held
by it); provided, however, that (i) each such assignment shall be of a constant, and not a varying,
percentage of all of the assigning Lender’s rights and obligations under this Agreement, (ii) the
amount of the Commitment of the assigning Lender being assigned pursuant to each such assignment
(determined as of the date of the Lender Assignment with respect to such assignment) shall in no
event be less than the lesser of the aggregate amount of such Lender’s Commitment and $5,000,000,
(iii) each such assignment shall be to an Eligible Assignee, (iv) in connection with any assignment
of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective
unless and until, in addition to the other conditions thereto set forth herein, the parties to the
assignment shall make such additional payments to the Administrative Agent in an aggregate amount
sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by
the assignee of participations or subparticipations, or other compensating actions, to each of
which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in
full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent, any
Issuing Bank or any Lender hereunder (and interest accrued thereon) and (y) acquire (and fund as
appropriate) its full pro rata share of all participations in Letters of Credit in accordance with
its Percentage, and (v) the parties to each such assignment shall execute and deliver to the
Administrative Agent, for its acceptance and recording in the Register, a Lender Assignment,
together with any Promissory Notes subject to such assignment and a processing and recordation fee
(payable by the assigning Lender or such assignee) of $3,500; and provided further, however, that
the consent of the Borrowers and the Administrative Agent shall not be required for any assignments
by a Lender to any of its Affiliates or to any other Lender or any of its Affiliates. Upon such
execution, delivery, acceptance and recording, from and after the effective date specified in each
Lender Assignment, which effective date shall be at least five Business Days after the execution
thereof (or such earlier date acceptable to the Administrative Agent), (A) the assignee thereunder
shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned
to it pursuant to such Lender Assignment, have the rights and obligations of a Lender hereunder and
(B) the Lender assignor thereunder shall, to the extent that rights and obligations hereunder have
been assigned by it to an Eligible Assignee pursuant


 


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to such Lender Assignment, relinquish its
rights and be released from its obligations under this
 Agreement (and, in the case of a Lender Assignment covering all or the remaining portion of an
assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a
party hereto); provided, however, that the limitation set forth in clause (iii) above shall not
apply if an Event of Default shall have occurred and be continuing and the Administrative Agent
shall have declared any Loans to be, or any Loans shall have automatically become, immediately due
and payable hereunder. Notwithstanding anything to the contrary contained in this Agreement, any
Lender may at any time assign all or any portion of the Loans owing to it to any Affiliate of such
Lender, provided, that such Affiliate is not a Defaulting Lender or a Subsidiary of a Defaulting
Lender. No such assignment, other than to an Eligible Assignee in accordance with this Section
12.07, shall release the assigning Lender from its obligations hereunder. Notwithstanding the
foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender
hereunder shall become effective under applicable law without compliance with the provisions of
this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for
all purposes of this Agreement until such compliance occurs.




(b) By executing and delivering a Lender Assignment, the Lender assignor thereunder and the
assignee thereunder confirm to and agree with each other and the other parties hereto as follows:
(i) other than as provided in such Lender Assignment, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with any Loan Document or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of any Loan Document or any other
instrument or document furnished pursuant thereto; (ii) such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to the financial condition of
any Obligor or the performance or observance by any Obligor of any of its obligations under any
Loan Document or any other instrument or document furnished pursuant thereto; (iii) such assignee
confirms that it has received a copy of each Loan Document, together with copies of the financial
statements referred to in Section 7.01(d) of this Agreement and such other documents and
information as it has deemed appropriate to make its own credit analysis and decision to enter into
such Lender Assignment; (iv) such assignee will, independently and without reliance upon the
Administrative Agent, such assigning Lender or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Loan Documents; (v) such assignee confirms that it is an
Eligible Assignee (unless an Event of Default shall have occurred and be continuing and the
Administrative Agent shall have declared any Loans to be immediately due and payable hereunder, in
which case no such confirmation is necessary); (vi) such assignee appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise such powers under
the Loan Documents as are delegated to the Administrative Agent by the terms thereof, together with
such powers as are reasonably incidental thereto; and (vii) such assignee agrees that it will
perform in accordance with their terms all of the obligations which by the terms of the Loan
Documents are required to be performed by it as a Lender.



(c) The Administrative Agent shall maintain at its address referred to in Section 12.02 a copy
of each Lender Assignment delivered to and accepted by it and a register for the recordation of the
names and addresses of the Lenders and the Commitment of, and principal amount of the Loans owing
to, each Lender from time to time (the “Register”). The entries in the Register shall be



 


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 conclusive and binding for all purposes, absent manifest error, and the Obligors, the Administrative Agent, the Issuing Banks and the Lenders may treat each Person
whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. In
addition the Administrative Agent shall maintain in the Register information regarding the
designation, and revocation of designation, of any Lender as a Defaulting Lender. The Register
shall be available for inspection by the Borrowers, any Issuing Bank or any Lender at any
reasonable time and from time to time upon reasonable prior notice.




(d) Upon its receipt of a Lender Assignment executed by an assigning Lender and an assignee
representing that it is an Eligible Assignee (unless an Event of Default shall have occurred and be
continuing and the Administrative Agent shall have declared any Loans to be immediately due and
payable hereunder, in which case no such representation is necessary), together with any Promissory
Notes subject to such assignment, the processing and recordation fee referred to in subsection (a)
above and any written consent to such assignment required by subsection (a) above, the
Administrative Agent shall, if such Lender Assignment has been completed and is in substantially
the form of Exhibit E, (i) accept such Lender Assignment, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to the Borrowers. New and/or
replacement Promissory Notes payable to the assignee and the assigning Lender (if the assigning
Lender assigned less than all of its rights and obligations hereunder) shall be issued upon request
pursuant to Section 3.01(d), and shall be dated the effective date of such Lender Assignment.



(e) Each Lender may sell participations to one or more banks or other financial institutions
(other than (x) a Defaulting Lender, (y) any Subsidiary of a Defaulting Lender and (z) for the
avoidance of doubt, any Borrower or any Affiliate or Subsidiary of any Borrower) (a “Participant”)
in or to all or a portion of its rights and obligations under the Loan Documents (including all or
a portion of its Commitment, the Loans owing to it and any Promissory Notes held by it); provided,
however, that (i) such Lender’s obligations under this Agreement (including its Commitment to the
Borrowers hereunder) shall remain unchanged, (ii) such Lender shall remain solely responsible to
the other parties hereto for the performance of such obligations, (iii) such Lender shall remain
the holder of any such Promissory Notes for all purposes of this Agreement, and (iv) the Obligors,
the Administrative Agent, the Issuing Banks and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and obligations under this
Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall
provide that such Lender shall retain the sole right to enforce this Agreement and the other Loan
Documents and to approve any amendment, modification or waiver of any provision of this Agreement
or any other Loan Document; provided, that such agreement or instrument may provide that such
Lender will not, without the consent of the Participant, agree to any amendment, modification or
waiver described in the first proviso to Section 12.01 that affects such Participant. Subject to
subsection (f) below, the Obligors agree that each Participant shall be entitled to the benefits of
Sections 5.04 and 5.06 (and subject to the related obligations under such Sections) to the same
extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection
(a) above. To the extent permitted by law, each Participant shall also be entitled to the benefits
of Section 12.05(a) as though it were a Lender, provided such Participant agrees to be subject to
Section 5.05 as though it were a Lender.


 


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(f) A Participant shall not be entitled to receive any greater payment under Section 5.04 or
5.06 than the applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant. A Participant that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of Section 5.06 unless the Borrowers are notified of
the participation sold to such Participant and such Participant agrees, for the benefit of the
Borrowers, to comply with Section 5.06 as though it were a Lender.



(g) Any Lender may, in connection with any assignment or participation or proposed assignment
or participation pursuant to this Section 12.07, disclose to the assignee or Participant or
proposed assignee or Participant, any information relating to the Obligors furnished to such Lender
by or on behalf of any Obligor; provided that prior to any such disclosure, the assignee or
Participant or proposed assignee or Participant shall agree, in accordance with the terms of
Section 12.08, to preserve the confidentiality of any Confidential Information received by it from
such Lender.



(h) If any Lender (or any Participant to which such Lender has sold a participation) shall
make any demand for payment under Section 5.04(a) or (c), then within 30 days after any such demand
(if, but only if, such demanded payment has been made by the Borrowers), the Borrowers may, with
the approval of the Administrative Agent (which approval shall not be unreasonably withheld) and
provided that no Default or Event of Default shall then have occurred and be continuing, demand
that such Lender assign, at the sole cost and expense of the Borrowers, in accordance with this
Section 12.07 to one or more Eligible Assignees designated by the Borrowers, all (but not less than
all) of such Lender’s Commitment and the Loans owing to it within the period ending on the later to
occur of (x) the last day of the 30-day period described above and (y) the last day of the longest
of the then current Interest Periods for such Loans. If any such Eligible Assignee designated by
the Borrowers shall fail to consummate such assignment on terms acceptable to such Lender, or if
the Borrowers shall fail to designate any such Eligible Assignees for all or part of such Lender’s
Commitment or Loans, then such demand by the Borrowers shall become ineffective; it being
understood for purposes of this subsection (h) that such assignment shall be conclusively deemed to
be on terms acceptable to such Lender, and such Lender shall be compelled to consummate such
assignment to an Eligible Assignee designated by the Borrowers, if such Eligible Assignee (1) shall
agree to such assignment by entering into a Lender Assignment with such Lender and (2) shall offer
compensation to such Lender in an amount equal to all amounts then owing by the Borrowers to such
Lender hereunder and under any Promissory Notes made by the Borrowers to such Lender, whether for
principal, interest, fees, costs or expenses (other than the demanded payment referred to above,
and payable by the Borrowers as a condition to the Borrowers’ right to demand such assignment) or
otherwise (including, without limitation, to the extent not paid by the Borrowers, any payments
required pursuant to Section 5.04(b)). Notwithstanding anything set forth above in this subsection
(h) to the contrary, the Borrowers shall not be entitled to compel the assignment by any Lender
demanding payment under Section 5.04(a) of its Commitment and Loans if, prior to or promptly
following any such demand by the Borrowers, such Lender shall have changed or shall change, as the
case may be, its Applicable Lending Office for its Eurodollar Rate Loans so as to eliminate the
further incurrence of such increased cost. In furtherance of the foregoing, any such Lender
demanding payment or giving notice as provided above agrees to use reasonable efforts to so change
its Applicable Lending Office if, to do so, would not result in the incurrence
by such Lender of additional costs or expenses which it deems material or, in the sole
judgment of such Lender, be inadvisable for regulatory, competitive or internal management reasons.


 


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(i) Anything in this Section 12.07 to the contrary notwithstanding, any Lender may assign and
pledge all or any portion of its Commitment and the Loans owing to it to any Federal Reserve Bank
(and its transferees) as collateral security pursuant to Regulation A of the Board and any
Operating Circular issued by such Federal Reserve Bank. No such assignment shall release the
assigning Lender from its obligations hereunder.



(j) Notwithstanding anything to the contrary contained herein, any Lender (a “Granting
Lender”) may grant to a special purpose funding vehicle (an “SPC”), identified as such in writing
from time to time by the Granting Lender to the Administrative Agent and the Borrowers, the option
to fund all or any part of any Loan that such Granting Lender would otherwise be obligated to fund
pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any
SPC to make any Loan, and (ii) nothing herein shall excuse any Granting Lender from its obligations
hereunder. The funding of a Loan by an SPC hereunder shall utilize the Commitment of the Granting
Lender to the same extent, and as if, such Loan were funded by such Granting Lender. Each party
hereto hereby agrees that no SPC shall be liable for any indemnity or similar payment obligation
under this Agreement for which a Lender would otherwise be liable for so long as, and to the
extent, the Granting Lender provides such indemnity or makes such payment. In furtherance of the
foregoing, each Lender hereby agrees (which agreement shall survive the termination of this
Agreement) that, prior to the date that is one year and one day after the payment in full of all
outstanding commercial paper or other senior indebtedness of any SPC, it will not institute
against, or join any other Person in instituting against, such SPC any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings under the laws of the United States or any State
thereof. In addition, notwithstanding anything to the contrary contained in this subsection (j),
any SPC may, with prior notice to, but without the prior written consent of, the Borrowers and the
Administrative Agent and without paying any processing fee therefor, assign all or a portion of its
interests in any Loans to the Granting Lender or to any financial institutions (consented to by the
Borrowers and the Administrative Agent) providing liquidity and/or credit support to or for the
account of such SPC to support the funding or maintenance of Loans. This subsection (j) may not be
amended without the prior written consent of each Granting Lender, all or any part of whose Loans
are being funded by an SPC at the time of such amendment. Notwithstanding the foregoing provisions
of this subsection, (1) an SPC shall not be deemed to be a Lender or a Participant and shall have
no rights under this Agreement except as provided in this subsection (j), and in particular, but
not by way of limitation, shall have no rights to compensation for increased costs pursuant to
Article III or Section 5.04 or 5.06, (2) the Granting Lender’s obligations under this Agreement
(including its Commitment to the Borrowers hereunder) shall remain unchanged, (3) the Granting
Lender shall remain solely responsible to the other parties hereto for the performance of such
obligations, (4) the Granting Lender shall remain the holder of any Promissory Notes for all
purposes of this Agreement, (5) the Obligors, the Administrative Agent, the Issuing Banks and the
other Lenders shall continue to deal solely and directly with the Granting Lender in connection
with such Granting Lender’s rights and obligations under this Agreement, and (6) the Granting
Lender shall indemnify and hold the Borrowers harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which may be incurred
or shall arise as a result of any grant to an SPC contemplated hereunder.


 


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SECTION 12.08. Confidentiality. In connection with the negotiation and administration of this
Agreement and the other Loan Documents, each Obligor has furnished and will from time to time
furnish to the Administrative Agent, the Issuing Banks and the Lenders (each, a “Recipient”)
written information which is identified to the Recipient when delivered as confidential (such
information, other than any such information which (a) was publicly available, or otherwise known
to the Recipient, at the time of disclosure, (b) subsequently becomes publicly available other than
through any act or omission by the Recipient or (c) otherwise subsequently becomes known to the
Recipient other than through a Person whom the Recipient knows to be acting in violation of his or
its obligations to any Obligor, being hereinafter referred to as “Confidential Information”). The
Recipient will not knowingly disclose any such Confidential Information to any third party (other
than to those persons who have a confidential relationship with the Recipient), and will take all
reasonable steps to restrict access to such information in a manner designed to maintain the
confidential nature of such information, in each case until such time as the same ceases to be
Confidential Information or as any Obligor may otherwise instruct. It is understood, however, that
the foregoing will not restrict the Recipient’s ability to freely exchange such Confidential
Information with its Affiliates or with prospective participants in or assignees of the Recipient’s
position herein, but the Recipient’s ability to so exchange Confidential Information shall be
conditioned upon any such Affiliate’s or prospective participant’s or assignee’s (as the case may
be) entering into an agreement as to confidentiality similar to this Section 12.08. It is further
understood that the foregoing will not prohibit the disclosure of any or all Confidential
Information if and to the extent that such disclosure may be required (i) by a regulatory agency or
otherwise in connection with an examination of the Recipient’s records by appropriate authorities,
(ii) pursuant to court order, subpoena or other legal process, (iii) otherwise as required by law,
or (iv) in order to protect such Recipient’s interests or its rights or remedies hereunder or under
the other Loan Documents; in the event of any required disclosure under clause (ii), (iii) or (iv),
above, the Recipient agrees to use reasonable efforts to inform the Obligors as promptly as
practicable to the extent not prohibited by law.



SECTION 12.09. WAIVER OF JURY TRIAL. THE BORROWERS, THE GUARANTOR, THE ADMINISTRATIVE AGENT,
THE ISSUING BANKS AND THE LENDERS EACH HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR ANY OTHER INSTRUMENT OR DOCUMENT DELIVERED HEREUNDER OR THEREUNDER.



SECTION 12.10. Governing Law; Submission to Jurisdiction. This Agreement and the Promissory
Notes shall be governed by, and construed in accordance with, the laws of the State of New York.
The Borrowers, the Guarantor, the Lenders, the Issuing Banks and the Administrative Agent each (a)
irrevocably submits to the non-exclusive jurisdiction of any New York State court or Federal court
sitting in New York City in any action arising out of any Loan Document, (b) agrees that all claims
in such action may be decided in such court, (c) waives, to the fullest extent it may effectively
do so, the defense of an inconvenient forum and (d) consents
to the service of process by mail. A final judgment in any such action shall be conclusive
and may be enforced in other jurisdictions. Nothing herein shall affect the right of any party to
serve legal process in any manner permitted by law or affect its right to bring any action in any
other court.


 


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SECTION 12.11. Relation of the Parties; No Beneficiary. No term, provision or requirement,
whether express or implied, of any Loan Document, or actions taken or to be taken by any party
thereunder, shall be construed to create a partnership, association, or joint venture between such
parties or any of them. No term or provision of the Loan Documents shall be construed to confer a
benefit upon, or grant a right or privilege to, any Person other than the parties hereto. The
Obligors hereby acknowledge that none of the Administrative Agent, the Issuing Banks nor the
Lenders has any fiduciary relationship with or fiduciary duty to any Obligor arising out of or in
connection with this Agreement or any of the other Loan Documents, and the relationship between the
Administrative Agent, the Issuing Banks and the Lenders, on the one hand, and the Obligors, on the
other hand, in connection herewith or therewith is solely, with respect to the Borrowers, that of
creditor and debtor and, with respect to the Guarantor, that of beneficiary and guarantor.



SECTION 12.12. Execution in Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall constitute one and
the same Agreement.



SECTION 12.13. Survival of Agreement. All covenants, agreements, representations and
warranties made herein and in the certificates pursuant hereto shall be considered to have been
relied upon by the Administrative Agent, the Issuing Banks and the Lenders and shall survive the
making by the Lenders of the Extensions of Credit and the execution and delivery to the Lenders of
any Promissory Notes evidencing the Extensions of Credit and shall continue in full force and
effect so long as any Promissory Note or any amount due hereunder or under any other Loan Document
is outstanding and unpaid, any Letter of Credit is outstanding, or any Commitment of any Lender has
not been terminated.



SECTION 12.14. Patriot Act Notice. Each Lender and the Administrative Agent (for itself and
not on behalf of any other party) hereby notifies the Obligors that, pursuant to the requirements
of the USA Patriot Act, Title III of Pub. L. 107-56, signed into law October 26, 2001 (the “Patriot
Act”), it is required to obtain, verify and record information that identifies each Obligor, which
information includes the name and address of each Obligor and other information that will allow
such Lender or the Administrative Agent, as applicable, to identify each Obligor in accordance with
the Patriot Act.



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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.



	 	 	 	 	 
	 	UNS ELECTRIC, INC., as a Borrower

 	 
	 	By 	 /s/ Kevin P. Larson
 	 
	 	 	Name:  	Kevin P. Larson 	 
	 	 	Title:  	Vice President and Treasurer 	 
	 
	 	UNS GAS, INC., as a Borrower

 	 
	 	By 	 /s/ Kevin P. Larson
 	 
	 	 	Name:  	Kevin P. Larson 	 
	 	 	Title:  	Vice President and Treasurer 	 
	 
	 	UNISOURCE ENERGY SERVICES, INC.,

as Guarantor

 	 
	 	By 	 /s/ Kevin P. Larson
 	 
	 	 	Name:  	Kevin P. Larson 	 
	 	 	Title:  	Vice President and Treasurer 	 
	 
	 	UNION BANK, N.A., as Administrative
Agent

 	 
	 	By 	 /s/ Jeffrey P. Fesenmaier
 	 
	 	 	Name:  	Jeffrey P. Fesenmaier 	 
	 	 	Title:  	Vice President 	 
	 



Signature Page to UNS Electric, Inc. and UNS Gas, Inc. Second Amended and Restated Credit Agreement



 


S-1









 











	 	 	 	 	 
	Commitment



$16,000,000.00 	Existing Lender



UNION BANK, N.A. (formerly known as 

Union Bank of California, N.A.)

 	 
	 	By 	 /s/ Jeffrey P. Fesenmaier
 	 
	 	 	Name:  	Jeffrey P. Fesenmaier 	 
	 	 	Title:  	Vice President 	 
	 



Signature Page to UNS Electric, Inc. and UNS Gas, Inc. Second Amended and Restated Credit Agreement



 


S-2









 








	 	 	 	 	 
	Commitment



$16,000,000.00 	Existing Lender



WELLS FARGO BANK, NATIONAL

ASSOCIATION

 	 
	 	By 	 /s/ Yann Blindert
 	 
	 	 	Name:  	Yann Blindert 	 
	 	 	Title:  	Vice President 	 
	 



Signature Page to UNS Electric, Inc. and UNS Gas, Inc. Second Amended and Restated Credit Agreement



 


S-3









 








	 	 	 	 	 
	Commitment



$16,000,000.00 	Existing Lender



JPMORGAN CHASE BANK, N.A.

 	 
	 	By 	 /s/ Nancy R. Barwig
 	 
	 	 	Name:  	Nancy R. Barwig 	 
	 	 	Title:  	Credit Executive 	 
	 



Signature Page to UNS Electric, Inc. and UNS Gas, Inc. Second Amended and Restated Credit Agreement



 


S-4









 










	 	 	 	 	 
	Commitment



$16,000,000.00 	New Lender



SUNTRUST BANK

 	 
	 	By 	 /s/ C. David Yates
 	 
	 	 	Name:  	C. David Yates 	 
	 	 	Title:  	Managing Director 	 
	 



Signature Page to UNS Electric, Inc. and UNS Gas, Inc. Second Amended and Restated Credit Agreement



 


S-5









 







	 	 	 	 	 
	Commitment



$11,000,000.00 	New Lender



BANK OF AMERICA, N.A.

 	 
	 	By 	 /s/ Justin Martin
 	 
	 	 	Name:  	Justin Martin 	 
	 	 	Title:  	Vice President 	 
	 



Signature Page to UNS Electric, Inc. and UNS Gas, Inc. Second Amended and Restated Credit Agreement



 


S-6









 







	 	 	 	 	 
	Commitment



$11,000,000.00 	New Lender 



U.S. BANK NATIONAL ASSOCIATION

 	 
	 	By 	 /s/ Holland H. Williams
 	 
	 	 	Name:  	Holland H. Williams 	 
	 	 	Title:  	AVP & Portfolio Mgr. 	 
	 



Signature Page to UNS Electric, Inc. and UNS Gas, Inc. Second Amended and Restated Credit Agreement



 


S-7









 







	 	 	 	 	 
	Commitment



$9,000,000.00 	New Lender



CREDIT SUISSE AG, CAYMAN 

ISLANDS BRANCH

 	 
	 	By 	 /s/ Shaheen Malik
 	 
	 	 	Name:  	Shaheen Malik 	 
	 	 	Title:  	Vice President 	 
	 
	 	 	 
	 	By 	 /s/ Rahul Parmar
 	 
	 	 	Name:  	Rahul Parmar 	 
	 	 	Title:  	Associate 	 
	 



Signature Page to UNS Electric, Inc. and UNS Gas, Inc. Second Amended and Restated Credit Agreement



 


S-8









 







	 	 	 	 	 
	Commitment



$5,000,000.00 	Existing Lender



THE BANK OF NEW YORK MELLON 

(formerly known as The Bank of New York)

 	 
	 	By 	 /s/ Mark W. Rogers
 	 
	 	 	Name:  	Mark W. Rogers 	 
	 	 	Title:  	Vice President 	 
	 



Signature Page to UNS Electric, Inc. and UNS Gas, Inc. Second Amended and Restated Credit Agreement





 


S-9











 

\


SCHEDULE 1.01




PRICING SCHEDULE




The “Applicable Margin” and the “Commitment Fee Rate” for any day for any Borrower are the
respective annual percentage rates set forth below in the applicable row under the column
corresponding to the Status that exists on such day for such Borrower, which Status shall be
determined based on the applicable ratings of such Borrower’s Index Debt on such day:



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Level 1	 	 	Level 2	 	 	Level 3	 	 	Level 4	 	 	Level 5	 	 	Level 6	 
	 	 	3A-/A3	 	 	BBB+/Baa1	 	 	BBB/Baa2	 	 	BBB-/Baa3	 	 	BB+/Ba1	 	 	£BB/Ba2	 
	Applicable Margin
— Eurodollar Rate
Loans
	 	 	1.625	%	 	 	1.875	%	 	 	2.125	%	 	 	2.50	%	 	 	3.00	%	 	 	3.50	%
	Applicable Margin
— ABR Loans
	 	 	0.625	%	 	 	0.875	%	 	 	1.125	%	 	 	1.50	%	 	 	2.00	%	 	 	2.50	%
	Commitment Fee Rate
	 	 	0.175	%	 	 	0.225	%	 	 	0.350	%	 	 	0.450	%	 	 	0.600	%	 	 	0.750	%





For purposes of this Pricing Schedule, the following terms have the following meanings:




“Level 1 Status” exists at any date if, at such date, the Index Debt is rated either A- or
higher by S&P or A3 or higher by Moody’s.



“Level 2 Status” exists at any date if, at such date (i) the Index Debt is rated either BBB+
or higher by S&P or Baa1 or higher by Moody’s and (ii) Level 1 Status does not exist.



“Level 3 Status” exists at any date if, at such date (i) the Index Debt is rated either BBB or
higher by S&P or Baa2 or higher by Moody’s and (ii) neither Level 1 Status nor Level 2 Status
exists.



“Level 4 Status” exists at any date if, at such date (i) the Index Debt is rated either BBB-
or higher by S&P or Baa3 or higher by Moody’s and (ii) none of Level 1 Status, Level 2 Status or
Level 3 Status exists.



“Level 5 Status” exists at any date if, at such date (i) the Index Debt is rated either BB+ or
higher by S&P or Ba1 or higher by Moody’s and (ii) none of Level 1 Status, Level 2 Status, Level 3
Status or Level 4 Status exists.



“Level 6 Status” exists at any date if, at such date, no other Status exists.


 


 









 





“Status” refers to the determination of which of Level 1 Status, Level 2 Status, Level 3
Status, Level 4 Status, Level 5 Status or Level 6 Status exists at any date.



Notwithstanding the foregoing, if the Index Debt is split-rated and the ratings differential
is two or more ratings levels, the Status shall be determined assuming that (a) the higher rating
is equal to the midpoint of the two ratings (e.g., for a split rating of BBB+/Baa3, BBB is the
midpoint and will be deemed to be the higher rating, and for a split rating of BB/Baa1, Baa3 is the
midpoint and will be deemed to be the higher rating) or (b) if there is no exact midpoint, the
higher rating is equal to the higher of the two middle intermediate ratings (e.g., for a split
rating of BBB+/Ba1, BBB is the higher of the two middle intermediate ratings and will be deemed to
be the higher rating, and for a split rating of BB/Baa2, Baa3 is the higher of the two middle
intermediate ratings and will be deemed to be the higher rating).



If at any time the Index Debt is unrated by both Moody’s and S&P, Level 6 Status shall exist;
provided that if the reason that there is no such Moody’s rating or S&P rating results from Moody’s
or S&P, as the case may be, ceasing to issue debt ratings generally, then the Borrowers and the
Administrative Agent may select another nationally-recognized rating agency to substitute for
Moody’s or S&P, as applicable, for purposes of this Pricing Schedule (and all references herein to
Moody’s or S&P, as applicable, shall refer to such substitute rating agency), and until a
substitute nationally-recognized rating agency is so selected the Status shall be determined by
reference to the rating most recently in effect prior to such cessation; and provided, further,
that if the Index Debt is rated by only one of Moody’s or S&P, the Status shall be determined by
reference to the rating of such Rating Agency.



The Applicable Margin and Commitment Fee Rate applicable to any Borrower (and, accordingly,
the Status of such Borrower at any date) shall be based on the applicable ratings in effect from
time to time on such Borrower’s Index Debt. The Applicable Margin and Commitment Fee Rate
applicable to each Borrower shall be increased or decreased in accordance with the foregoing
Pricing Schedule upon any change in the applicable ratings of the Index Debt of such Borrower. The
ratings of the Index Debt in effect at any date is that in effect at the close of business on such
date.


 


 









 





EXHIBIT A




FORM OF NOTICE OF BORROWING




[Date]




Union Bank, N.A., as Administrative

     Agent for the Lenders party to the

     Credit Agreement referred to below




Attention: ________________________





Ladies and Gentlemen:




The undersigned, [UNS Electric, Inc.] [UNS Gas, Inc.] (the “Borrower”), refers to the Second
Amended and Restated Credit Agreement, dated as of November 9, 2010 (as amended, restated, modified
or supplemented from time to time, the “Credit Agreement”, the terms defined therein and not
otherwise defined herein being used herein as therein defined), among the Borrower and [UNS
Electric, Inc.] [UNS Gas, Inc.], as Borrowers, UniSource Energy Services, Inc., as Guarantor, the
Banks named therein and the other Lenders from time to time party thereto, and Union Bank, N.A.
(formerly known as Union Bank of California, N.A.), as Administrative Agent, and hereby gives you
notice, irrevocably, pursuant to Section 3.01 of the Credit Agreement that the undersigned hereby
requests a Borrowing under the Credit Agreement, and in that connection sets forth below the
information relating to such Borrowing (the “Proposed Borrowing”) as required by Section 3.01(a) of
the Credit Agreement:




(i) The Business Day of the Proposed Borrowing is _____ __, ____.



(ii) The Type of Loans comprising the Proposed Borrowing is [ABR Loans] [Eurodollar Rate
Loans].




(iii) The aggregate principal amount of the Proposed Borrowing is $______.



[(iv) The initial Interest Period for each Loan made as part of the Proposed Borrowing is _____
months.]1




 





	 	 	 
	1.	 	To be included for a Proposed Borrowing comprised of Eurodollar
Rate Loans only.



 


A-1 









 









The undersigned hereby certifies that, and acknowledges that the delivery of this Notice of
Borrowing shall constitute a representation and warranty by the Borrower that, on the date of the
Proposed Borrowing, the statements contained in Section 6.02 of the Credit Agreement are true and
correct (unless the Borrower informs the Administrative Agent otherwise prior to the date of the
Proposed Borrowing, in which case the Proposed Borrowing shall not be made).



	 	 	 	 	 
	 	Very truly yours,



[UNS ELECTRIC, INC.] [UNS GAS, INC.]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 


 


A-2 









 





	 	 	 	 	 



EXHIBIT B




FORM OF NOTICE OF CONVERSION




[Date]




Union Bank, N.A., as Administrative

     Agent for the Lenders party to the

     Credit Agreement referred to below




Attention: ________________________





Ladies and Gentlemen:





The undersigned, [UNS Electric, Inc.] [UNS Gas, Inc.] (the “Borrower”), refers to the Second
Amended and Restated Credit Agreement, dated as of November 9, 2010 (as amended, restated, modified
or supplemented from time to time, the “Credit Agreement”, the terms defined therein and not
otherwise defined herein being used herein as therein defined), among the Borrower and [UNS
Electric, Inc.] [UNS Gas, Inc.], as Borrowers, UniSource Energy Services, Inc., as Guarantor, the
Banks named therein and the other Lenders from time to time party thereto, and Union Bank, N.A.
(formerly known as Union Bank of California, N.A.), as Administrative Agent, and hereby gives you
notice, irrevocably, pursuant to Section 3.02 of the Credit Agreement that the undersigned hereby
requests a Conversion under the Credit Agreement, and in that connection sets forth below the
information relating to such Conversion (the “Proposed Conversion”) as required by Section 3.02 of
the Credit Agreement:




(i) The Business Day of the Proposed Conversion is _____ __, ___.



(ii) The Type of Loans comprising the Proposed Conversion is [ABR Loans] [Eurodollar Rate
Loans having an Interest Period of ____ month(s)].




(iii) The aggregate amount of the Proposed Conversion is $_____.



(iv) The Type of Loans to which such Loans are proposed to be Converted is [ABR Loans]
[Eurodollar Rate Loans].



[(v) The initial Interest Period for each Loan made as part of the Proposed Conversion is ____
month(s).]1




 





	 	 	 
	1.	 	To be included for a Proposed Conversion to Eurodollar Rate Loans
only.



 


B-1 









 









The undersigned hereby certifies that the Borrower’s request for the Proposed Conversion is
made in compliance with Sections 3.02, 3.03 and 3.04(a) and (e) of the Credit
Agreement. [The undersigned hereby acknowledges that the delivery of this Notice of
Conversion shall constitute a representation and warranty by the Borrower that, on the date of the
Proposed Conversion, no Event of Default has occurred and is continuing (unless the Borrower
informs the Administrative Agent otherwise prior to the date of the Proposed Conversion, in which
case the Proposed Conversion shall not be made).]2



	 	 	 	 	 
	 	Very truly yours,



[UNS ELECTRIC, INC.] [UNS GAS, INC.]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 




 





	 	 	 
	2.	 	Include this bracketed sentence for Conversions to Eurodollar Rate
Loans, and delete if Conversion is into ABR Loans.



 


B-2 









 












EXHIBIT C




[FORM OF OPINION OF MORGAN, LEWIS & BOCKIUS LLP]




November 9, 2010




Union Bank, N.A.,

   as Administrative Agent, an Issuing Bank and a Lender

445 South Figueroa Street, 15th Floor

Los Angeles, California 90071




The Lenders and Issuing Banks listed on Schedule I hereto




Ladies and Gentlemen:





We are counsel to UNS Electric, Inc., an Arizona corporation (“UNS Electric”), UNS Gas, Inc.,
an Arizona corporation (“UNS Gas”, and together with UNS Electric, the “Borrowers” and each a
“Borrower”), and UniSource Energy Services, Inc., an Arizona corporation (“UES”, and together with
the Borrowers, the “Obligors” and each an “Obligor”), and have acted as such in connection with the
Second Amended and Restated Credit Agreement, dated as of November 9, 2010, among UNS Electric and
UNS Gas, each as a Borrower, UES, as Guarantor, the Lenders party thereto and Union Bank, N.A.
(formerly known as Union Bank of California, N.A.), as Administrative Agent (hereinafter, the
“Second Amended and Restated Credit Agreement”). Unless otherwise specified herein, capitalized
terms used herein have the respective meanings set forth in the Second Amended and Restated Credit
Agreement.



In so acting we have reviewed all corporate proceedings of (i) the Borrowers in connection
with the authorization, execution and delivery of the Fee Letter, the Promissory Notes executed and
delivered by the Borrowers on the date hereof (the “Notes”) and the Issuing Bank Agreements
executed and delivered by the Borrowers on the date hereof (the “Issuing Bank Agreements”) and (ii)
the Obligors in connection with the authorization, execution and delivery of the Second Amended and
Restated Credit Agreement. We have also examined such other documents and satisfied ourselves as
to such other matters as we have deemed necessary as a basis for the opinions set forth below. We
have relied as to various questions of fact upon the representations and warranties of the Obligors
contained in the Second Amended and Restated Credit Agreement and in the certificates of public
officials and officers of the Obligors delivered thereunder.



Based upon and subject to the foregoing, and subject also to the qualifications hereinafter
set forth, we are of the opinion that:


 


 









 





November 9, 2010

Page 2




1. Each Obligor (a) is a corporation duly organized, validly existing and in good standing
under the laws of the State of Arizona and (b) has the corporate power and authority to own and
operate its property and to conduct the business in which it is currently engaged.



2. Each Obligor has the corporate power and authority to execute, deliver and perform the Loan
Documents to which it is a party and each Borrower has the corporate power and authority to borrow
and request the issuance of Letters of Credit under the Second Amended and Restated Credit
Agreement and each Obligor has taken all necessary corporate action to authorize the execution,
delivery and performance of the Loan Documents to which it is a party, and each Borrower has taken
all necessary corporate action to authorize the borrowings and requests for issuance of Letters of
Credit under the Second Amended and Restated Credit Agreement.



3. The Second Amended and Restated Credit Agreement and, in the case of each Borrower, the Fee
Letter, the Notes and the Issuing Bank Agreements, have been duly and validly executed and
delivered on behalf of each Obligor party thereto and constitute legal, valid and binding
obligations of each Obligor, enforceable against each Obligor in accordance with their respective
terms except as enforceability may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium or similar laws relating to or affecting the enforcement of creditors’
rights generally, including, without limitation, laws relating to fraudulent transfers or
conveyances, preferences and equitable subordination, and by general equitable principles
(regardless of whether such enforceability is considered in a proceeding in equity or at law), and
subject to any principles of public policy limiting the right to enforce indemnification or
contribution provisions contained in the Second Amended and Restated Credit Agreement with respect
to liabilities under federal or state securities laws.



4. No consent or authorization of, filing with or other act by or in respect of, any
Governmental Authority of the State of New York, the Federal Energy Regulatory Commission (“FERC”)
or the Arizona Corporation Commission (“ACC”) is required in connection with the execution,
delivery or performance by any Obligor of the Loan Documents to which it is a party, or for
borrowings or requests for issuance of Letters of Credit by each Borrower under the Second Amended
and Restated Credit Agreement, except for the ACC Order (which has been obtained and is, to the
best of our knowledge, in full force and effect); provided, however, that we express no opinion in
this paragraph as to compliance with the securities or “blue sky” laws of any jurisdiction.



5. The execution, delivery and performance by each Obligor of the Loan Documents to which it
is a party, and the borrowings and requests for issuance of Letters of Credit under the Second
Amended and Restated Credit Agreement, will not (i) violate any applicable law of the State of New
York or any law administered by, or any rule or regulation of, the FERC or the ACC, (ii) violate
the Articles of Incorporation or the Bylaws, as amended, of such Obligor, or (iii) result in, or
require, the creation or imposition of any Lien on any of the properties or revenues of such
Obligor other than as contemplated by the Second Amended and Restated Credit Agreement.


 


 









 





November 9, 2010

Page 3




6. Each Obligor 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.



This opinion is limited to the laws of the States of Arizona and New York and the federal laws
of the United States of America. As to all matters of Arizona law, we have, with your consent,
relied upon the opinion of even date herewith rendered to you by Raymond S. Heyman, Esq., Senior
Vice President and General Counsel of UES, and the opinions expressed herein upon such reliance are
subject to the same assumptions, qualifications and limitations set forth therein.



Raymond S. Heyman is authorized to rely upon this letter as to matters of New York law, the
Federal Power Act, as amended, and the Investment Company Act of 1940, as amended. This letter is
not being delivered for the benefit of, nor may it be relied upon by, any person or entity to which
it is not specifically addressed or by which reliance is not expressly authorized hereby.
Notwithstanding the foregoing, persons who subsequently become Lenders (or participants in
accordance with the terms of the Second Amended and Restated Credit Agreement) or Issuing Banks may
rely on this letter as of the time of its delivery on the date hereof as if this letter were
addressed to them.



	 	 	 	 	 
	 	Very truly yours,



MORGAN, LEWIS & BOCKIUS LLP

 	 
	 	 	 
	 	 	 
	 	 	 


 


 









 





	 	 	 	 	 



SCHEDULE I




LENDERS




BANK OF AMERICA, N.A.




CREDIT SUISSE, NEW YORK BRANCH




JPMORGAN CHASE BANK, N.A.




SUNTRUST BANK




THE BANK OF NEW YORK MELLON




UNION BANK, N.A.




U.S. BANK NATIONAL ASSOCIATION




WELLS FARGO BANK, NATIONAL ASSOCIATION




ISSUING BANKS




JPMORGAN CHASE BANK, N.A.





UNION BANK, N.A.




WELLS FARGO BANK, NATIONAL
ASSOCIATION



 


 









 





EXHIBIT D




[**Form of Opinion of the General Counsel of the Borrower**]




November 9, 2010




Union Bank, N.A.,

   as Administrative Agent, an Issuing Bank and a Lender

445 South Figueroa Street, 15th Floor

Los Angeles, California 90071




The Lenders and Issuing Banks listed on Schedule I hereto




Ladies and Gentlemen:





I am Senior Vice President and General Counsel of UniSource Energy Corporation, an Arizona
corporation (the “Company”), and have acted as such in connection with the Second Amended and
Restated Credit Agreement, dated as of November 9, 2010, among the Company, as Borrower, the
Lenders party thereto, the Co-Syndication Agents named therein, the Co-Documentation Agents named
therein, and Union Bank, N.A. (formerly known as Union Bank of California, N.A.), as Administrative
Agent (hereinafter, the “Second Amended and Restated Credit Agreement”). Unless otherwise
specified herein, capitalized terms used herein have the respective meanings set forth in the
Second Amended and Restated Credit Agreement.



In so acting I have reviewed all corporate proceedings of the Company in connection with the
authorization, execution and delivery of that certain fee letter agreement, dated November 9, 2010,
between the Company and the Administrative Agent (the “Fee Letter”), the Second Amended and
Restated Credit Agreement, the promissory notes executed and delivered by the Company on the date
hereof pursuant to Section 2.08(e) of the Second Amended and Restated Credit Agreement (the
“Notes”) and the Borrower Pledge Agreement. I have also examined such other documents and
satisfied myself as to such other matters as I have deemed necessary as a basis for the opinions
set forth below. I have relied as to various questions of fact upon the representations and
warranties of the Company contained in the Second Amended and Restated Credit Agreement and the
Borrower Pledge Agreement, and in the certificates of public officials and officers of the Company
delivered thereunder.



Based upon and subject to the foregoing, and subject also to the qualifications hereinafter
set forth, I am of the opinion that:




1. Each of the Company, UES, Millennium and UED (a) is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Arizona and (b) has the corporate power and authority to own and operate its property
and to conduct the business in which it is currently engaged.


 


 









 





November 9, 2010

Page 2





2. The Company has the corporate power and authority to execute, deliver and perform
the Second Amended and Restated Credit Agreement and to borrow and request the issuance of
Letters of Credit thereunder, to execute, deliver and perform the Borrower Pledge Agreement,
the Notes and the Fee Letter, and to grant the security interest contemplated by the
Borrower Pledge Agreement, and has taken all necessary corporate action to authorize the
execution, delivery and performance of (i) the Fee Letter, (ii) the Second Amended and
Restated Credit Agreement and to borrow and request the issuance of Letters of Credit
thereunder, (iii) the Notes and (iv) the Borrower Pledge Agreement and to grant the security
interest contemplated therein.




3. The Fee Letter, the Second Amended and Restated Credit Agreement, the Notes and the
Borrower Pledge Agreement have been duly and validly executed and delivered on behalf of the
Company and constitute legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their respective terms except as enforceability may
be limited by bankruptcy, insolvency, reorganization, receivership, moratorium or similar
laws relating to or affecting the enforcement of creditors’ rights generally, including,
without limitation, laws relating to fraudulent transfers or conveyances, preferences and
equitable subordination, and by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law), and subject to any
principles of public policy limiting the right to enforce indemnification or contribution
provisions contained in the Second Amended and Restated Credit Agreement with respect to
liabilities under federal or state securities laws.




4. No consent or authorization of, filing with or other act by or in respect of, any
Governmental Authority or any other Person is required in connection with the execution,
delivery or performance by the Company of the Fee Letter, the Second Amended and Restated
Credit Agreement, the Notes or the Borrower Pledge Agreement, for borrowings and requests
for issuance of Letters of Credit by the Company under the Second Amended and Restated
Credit Agreement or for the grant of the security interest contemplated by the Borrower
Pledge Agreement, except for the filing of a UCC-1 financing statement with the Arizona
Secretary of State to perfect the Lien of the Administrative Agent on certain of the
Collateral (as defined in the Borrower Pledge Agreement) and except for the receipt of any
required regulatory approvals prior to the exercise of the remedial provisions of the
Borrower Pledge Agreement in respect of the common stock of a Subsidiary which owns or
controls a company subject to regulation as a utility; provided, however, that I express no
opinion in this paragraph as to compliance with the securities or “blue sky” laws of any
jurisdiction.


 


 









 





November 9, 2010

Page 3





5. The execution, delivery and performance by the Company of the Fee Letter, the Second
Amended and Restated Credit Agreement, the Notes and the Borrower Pledge Agreement, the
borrowings and requests for issuance of Letters of Credit under
the Second Amended and Restated Credit Agreement and the grant of the security interest
contemplated by the Borrower Pledge Agreement will not (a) violate any law, rule or
regulation of any Governmental Authority, which, in my experience, is normally applicable to
transactions of the type contemplated thereby or to entities similar to the Company, (b)
violate any order of any Governmental Authority of which I have knowledge, (c) violate the
Amended and Restated Articles of Incorporation or Bylaws, as amended, of the Company, (d)
violate or result in a default under any indenture, agreement or other instrument of which I
have knowledge binding upon the Company or its assets or (e) result in, or require, the
creation or imposition of any Lien on any of the Company’s properties or revenues other than
as contemplated by the Borrower Pledge Agreement and the Second Amended and Restated Credit
Agreement.




6. The Company is the legal and beneficial owner of all of the outstanding capital
stock of UES, Millennium and UED. All of the outstanding capital stock of UES is
represented by common stock certificate number 1; all of the outstanding capital stock of
Millennium is represented by common stock certificate number 3; and all of the outstanding
capital stock of UED is represented by common stock certificate number 2. All such capital
stock has been duly authorized and validly issued and is fully paid and nonassessable.




7. Except as disclosed in the Disclosure Documents, there are no actions, suits or
proceedings by or before any arbitrator, referee or Governmental Authority pending against
or, to my knowledge, threatened against or affecting the Company or any of its Consolidated
Subsidiaries (a) as to which there is, in my judgment, a reasonable possibility of an
adverse determination and that, if adversely determined, would individually or in the
aggregate, in my judgment, result in a Material Adverse Effect or (b) that involves the
Second Amended and Restated Credit Agreement or any other Loan Document, or any transactions
contemplated therein.



This opinion is limited to the laws of the States of Arizona and New York, and the federal
laws of the United States of America. As to all matters of New York law, the Federal Power Act, as
amended, or the Investment Company Act of 1940, as amended, I have, with your consent, relied upon
the opinion of even date herewith rendered to you by Morgan, Lewis & Bockius LLP of New York, New
York, and the opinions expressed herein upon such reliance are subject to the same assumptions,
qualifications and limitations set forth therein.


 


 









 





November 9, 2010

Page 4




Morgan, Lewis & Bockius LLP of New York, New York is authorized to rely upon this letter as to
matters of Arizona law. This letter is not being delivered for the benefit, nor may it be relied
upon by, any person or entity to which it is not specifically addressed or by which reliance is not
expressly authorized hereby. Notwithstanding the foregoing, persons who subsequently become
Lenders (or participants in accordance with the terms of the Credit Agreement) or Issuing Banks may
rely on this letter as of the time of its delivery on the date hereof as if this letter were
addressed to them.



	 	 	 	 	 
	 	Very truly yours,



Raymond S. Heyman

 	 
	 	 	 
	 	 	 
	 	 	 


 


 









 





	 	 	 	 	 



SCHEDULE I




LENDERS




BANK OF AMERICA, N.A.




JPMORGAN CHASE BANK, N.A.




SUNTRUST BANK




UNION BANK, N.A.




U.S. BANK NATIONAL ASSOCIATION




WELLS FARGO BANK, NATIONAL ASSOCIATION




CREDIT SUISSE, NEW YORK BRANCH




THE BANK OF NEW YORK MELLON




ISSUING BANKS




JPMORGAN CHASE BANK, N.A.





UNION BANK, N.A.




WELLS FARGO BANK, NATIONAL ASSOCIATION



 


 









 





EXHIBIT E




FORM OF LENDER ASSIGNMENT




Dated _______ ___, ____





Reference is made to the Second Amended and Restated Credit Agreement, dated as of November 9,
2010 (said Agreement, as it may be amended, restated, supplemented or otherwise modified from time
to time, being the “Credit Agreement”, the terms defined therein and not otherwise defined herein
being used herein as therein defined), among UNS Electric, Inc. and UNS Gas, Inc. (each,
individually, being referred to herein as a “Borrower” and, collectively, as the “Borrowers”),
UniSource Energy Services, Inc. (the “Guarantor” and, together with the Borrowers, being referred
to herein, individually, as an “Obligor” and, collectively, as the “Obligors”), the Banks named
therein and the other Lenders from time to time party thereto, and Union Bank, N.A. (formerly known
as Union Bank of California, N.A.), as Administrative Agent. Pursuant to the Credit Agreement,
_______________ (the “Assignor”) has committed to make loans (“Loans”) to the Borrowers [,
which Loans are evidenced by a promissory note (the “Note”) issued by the Borrowers to the
Assignor,] and to participate in Extensions of Credit resulting from the issuance (or extension,
modification or amendment) of any Letter of Credit.




The Assignor and ____________ (the “Assignee”) agree as follows:



1. The Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases
and assumes from the Assignor, that interest in and to all of the Assignor’s rights and obligations
under the Credit Agreement as of the date hereof which represents the percentage interest specified
on Schedule 1 of all outstanding rights and obligations under the Credit Agreement (the “Assigned
Interest”), including, without limitation, such interest in the Assignor’s Commitment[,] [and] the
Loans owing to the Assignor [and the Note held by the Assignor]. After giving effect to such sale
and assignment, the Assignee’s Commitment and the amount of the Loans owing to the Assignee will be
as set forth in Section 2 of Schedule 1. The effective date of this sale and assignment shall be
the date specified in Section 3 of Schedule 1 hereto (the “Effective Date”).



2. On _____ __, ___, the Assignee will pay to the Assignor, in same day funds, at such
address and account as the Assignor shall advise the Assignee, $_________, and (subject to the
satisfaction of the requirements set forth in Section 12.07(d) of the Credit Agreement) the sale
and assignment contemplated hereby shall thereupon become effective as of the Effective Date. From
and after the Effective Date, the Assignor agrees that the Assignee shall be entitled to all
rights, powers and privileges of the Assignor under the


 





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Credit Agreement [and the Note] to the
extent of the Assigned Interest,
including without limitation (i) the right to receive all payments in respect of the Assigned
Interest for the period from and after the Effective Date, whether on account of principal,
interest, fees, indemnities in respect of claims arising after the Effective Date, increased costs,
additional amounts or otherwise, (ii) the right to vote and to instruct the Administrative Agent
under the Credit Agreement according to its Percentage based on the Assigned Interest, (iii) the
right to set-off and to appropriate and apply deposits of a Borrower as set forth in the Credit
Agreement and (iv) the right to receive notices, requests, demands and other communications. The
Assignor agrees that it will promptly remit to the Assignee any amount received by it in respect of
the Assigned Interest for the period from and after the Effective Date (whether from a Borrower,
the Administrative Agent or otherwise) in the same funds in which such amount is received by the
Assignor.




3. The Assignor (i) represents and warrants that it is the legal and beneficial owner of the
interest being assigned by it hereunder and that such interest is free and clear of any adverse
claim; (ii) makes no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with any Loan Document or the
execution, legality, validity, enforceability, genuineness, sufficiency or value of any Loan
Document or any other instrument or document furnished pursuant thereto; (iii) makes no
representation or warranty and assumes no responsibility with respect to the financial condition of
any Obligor or the performance or observance by any Obligor of any of its obligations under any
Loan Document or any other instrument or document furnished pursuant thereto; and (iv) represents
and warrants to the Assignee and the Administrative Agent that it has duly executed and delivered
this Assignment and that the execution, delivery and performance by the Assignor of this Assignment
have been duly authorized by all necessary action (corporate or otherwise). Except as specified in
this Section 3, the assignment of the Assigned Interest contemplated hereby shall be without
recourse to the Assignor.



4. The Assignee (i) confirms that it has received a copy of each Loan Document, together with
copies of the financial statements referred to in Section 7.01(d) of the Credit Agreement and such
other documents and information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and purchase the Assigned Interest, (ii) agrees that it
will, independently and without reliance upon the Administrative Agent, the Assignor or any other
Lender and based on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under the Loan Documents,
(iii) appoints and authorizes the Administrative Agent to take such action as agent on its behalf
and to exercise such powers under the Loan Documents as are delegated to the Administrative Agent
by the terms thereof, together with such powers as are reasonably incidental thereto, (iv) agrees
that it will perform in accordance with their terms all of the obligations which by the terms of
the Loan Documents are required to be performed by it as a Lender [,][and] (v) represents and
warrants to the Assignor and the Administrative Agent that it has duly executed and delivered this
Assignment and that the execution,
delivery and performance by the Assignee of this Assignment have been duly authorized by all
necessary action (corporate or otherwise) [and (vi) confirms that it satisfies the requirements of
an Eligible Assignee]1.






 





	 	 	 
	1	 	This representation from the Assignee is required
unless an Event of Default shall have occurred and be continuing and the
Administrative Agent shall have declared any Loans to be, or any Loans shall
have automatically become, immediately due and payable.










 


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5. This Assignment may be executed in any number of counterparts and by different parties in
separate counterparts, each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute but one and the same instrument.



6. This Assignment shall be governed by, and construed in accordance with, the laws of the
State of New York.



IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be executed by their
respective officers thereunto duly authorized, as of the date first above written, such execution
being made on Schedule 1 hereto.




 


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Schedule 1

to

Assignment Agreement

Dated ______ __, ___




	 	 	 	 	 
	Section 1.
	 	 	 	 
	 
	 	 	 	 
	Percentage Interest:
	 	 	____	%
	 
	 	 	 	 
	Section 2.
	 	 	 	 
	 
	 	 	 	 
	Assignee’s Commitment:
	 	$	 	 
	 
	 	 	 	 
	Outstanding Principal Amount of
Loans owing to the Assignee:
	 	$	 	 
	 
	 	 	 	 
	Section 3.
	 	 	 	 
	 
	 	 	 	 
	Effective Date:2
	 	 	_____ __, ___	 






	 	 	 	 	 
	 	[NAME OF ASSIGNOR]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	[NAME OF ASSIGNEE]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 





 




	 	 	 
	2	 	Such date must be at least five Business Days after the
date of the Lender Assignment (or such earlier date acceptable to the
Administrative Agent).




 


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Consented to:3




	 	 	 	 	 
	UNS ELECTRIC, INC.

 	 	 
	By:  	 	 	 
	 	Name:  	 	 	 
	 	Title:  	 	 	 
	 
	UNS GAS, INC.

 	 	 
	By:  	 	 	 
	 	Name:  	 	 	 
	 	Title:  	 	 	 
	 
	UNION BANK, N.A., as Administrative Agent

 	 	 
	By:  	 	 	 
	 	Name:  	 	 	 
	 	Title:  	 	 	 
	 
	[ISSUING BANK]

 	 	 
	By:  	 	 	 
	 	Name:  	 	 	 
	 	Title:  	 	 	 
	 





 




	 	 	 
	3	 	Consent of the Borrowers and the Administrative Agent
is required for all assignments except (i) for any assignment by a Lender to
any of its Affiliates or to any other Lender or any of its Affiliates and (ii)
the consent of the Borrowers is not required if an Event of Default has
occurred and is continuing. Consent of each Issuing Bank is required for all
assignments.




 


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SCHEDULE 1.02




Applicable Lending Offices




	 	 	 	 	 
	Bank	 	Domestic Lending Office	 	Eurodollar Lending Office
	Bank of America, N.A.
	 	2001 Clayton Rd	 	same
	 
	 	Concord, CA 94520-2405	 	 
	 
	 	Attention: Jennifer Baines	 	 
	 
	 	Phone: (925) 675-8409	 	 
	 
	 	Fax: (888) 969-2294	 	 
	 
	 	 	 	 
	Credit Suisse AG, Cayman
	 	Eleven Madison Avenue	 	same
	Islands Branch
	 	New York, NY 10010	 	 
	 
	 	Attention: Shaheen Malik	 	 
	 
	 	Phone: (212) 538-4047	 	 
	 
	 	Fax: (212) 322-0420	 	 
	 
	 	 	 	 
	JPMorgan Chase Bank, N.A.
	 	10 S. Dearborn St., Floor 7	 	same
	 
	 	Chicago, IL 60603	 	 
	 
	 	Attention: Non Agented Servicing Team	 	 
	 
	 	Phone: (312) 385-7072	 	 
	 
	 	Fax: (312) 256-2608	 	 
	 
	 	 	 	 
	SunTrust Bank
	 	303 Peachtree St. 4th Floor	 	same
	 
	 	Atlanta, GA 30308	 	 
	 
	 	Attention: Nicole Moffett	 	 
	 
	 	Phone: (770) 352-5162	 	 
	 
	 	Fax: (404) 558-4402	 	 





 












 









	 	 	 	 	 
	Bank	 	Domestic Lending Office	 	Eurodollar Lending Office
	The Bank of New York Mellon
	 	One Wall Street	 	same
	 
	 	New York, NY 10286	 	 
	 
	 	Attention:  Amanda Bray	 	 
	 
	 	Telephone:  (315) 765-4305	 	 
	 
	 	Fax:  (315) 765-4537	 	 
	 
	 	 	 	 
	Union Bank, N.A.
	 	445 South Figueroa Street, 15th Floor	 	same
	 
	 	Los Angeles, CA 90071	 	 
	 
	 	Attention:  Kevin Zitar	 	 
	 
	 	Telephone:  (213) 236-5503	 	 
	 
	 	Fax:  (213) 236-4096	 	 
	 
	 	 	 	 
	U.S. Bank National Association
	 	800 Nicollet Mall	 	same
	 
	 	Minneapolis, MN 55402	 	 
	 
	 	Attention: Yvonne Brenne	 	 
	 
	 	Phone: (612) 303-3763	 	 
	 
	 	Fax: (612) 303-2265	 	 
	 
	 	 	 	 
	Wells Fargo Bank, National
	 	1700 Lincoln Street, MAC C7300-059	 	same
	Association
	 	Denver, CO 80203	 	 
	 
	 	Attention:  Tanya Ivie	 	 
	 
	 	Telephone:  (303) 863-6102	 	 
	 
	 	Fax:  (303) 863-2729	 	 





 












 








SCHEDULE 4.02




Existing Letters of Credit




For the account of UNS Electric, Inc.:




	 	 	 	 	 	 	 	 	 	 	 
	 	 	Letter of Credit	 	 	 	 	 	 
	Issuing Bank	 	Number	 	Stated Amount	 	Issuance Date	 	Expiration Date
	 
	 	 	 	 	 	 	 	 	 	 
	Union Bank, N.A.

	 	S305742M
	 	$	1,500,000.00	 	 	06/09/2008
	 	03/31/2011
	Union Bank, N.A.

	 	S306450M
	 	$	2,000,000.00	 	 	08/11/2008
	 	12/31/2010
	Union Bank, N.A.

	 	S308095M
	 	$	1,500,000.00	 	 	01/27/2009
	 	12/31/2010
	Union Bank, N.A.

	 	S308597M
	 	$	12,000,000.00	 	 	03/17/2009
	 	03/31/2011
	Union Bank, N.A.

	 	S313927M
	 	$	1,000,000.00	 	 	06/04/2010
	 	05/28/2011






For the account of UNS Gas, Inc.:




None




 












 







Schedule 7.01(e)




Subsidiaries




A. UNS Gas, Inc.





	 	1.	 	Subsidiaries: None







	 	2.	 	Jurisdiction of Organization: Arizona






B. UNS Electric, Inc.





	 	1.	 	Subsidiaries: None







	 	2.	 	Jurisdiction of Organization: Arizona






C. UniSource Energy Services, Inc.





	 	1.	 	Subsidiaries: UniSource Energy Services, Inc. (the Guarantor) has two
subsidiaries: UNS Gas, Inc. and UNS Electric, Inc. The Guarantor owns 100 percent of
the common stock of each subsidiary. UNS Gas, Inc. and UNS Electric, Inc. have not
issued any other class of capital stock or similar equity interest. UNS Gas, Inc. and
UNS Electric, Inc. have no subsidiaries.







	 	2.	 	Jurisdiction of Organization: Arizona