Document:

Amended and Restated Credit Agreement (TEP)

     

    Exhibit
      4.3

     

    [EXECUTION
      COPY]

    

    

    

    

    

    
      
        

        

      

       

    

     

    AMENDED
      AND RESTATED CREDIT AGREEMENT

     

    dated
      as
      of

     

    August
      11, 2006

     

    among

     

    TUCSON
      ELECTRIC POWER COMPANY,

    as
      Borrower,

    

    THE
      LENDERS PARTY HERETO,

    

    THE
      ISSUING BANKS PARTY HERETO,

    

    THE
      BANK OF NEW YORK and JPMORGAN CHASE BANK, N.A.,

    as
      Co-Syndication Agents,

    

    WELLS
      FARGO BANK, NATIONAL ASSOCIATION and ABN AMRO BANK N.V.,

    as
      Co-Documentation Agents,

     

    and

     

    UNION
      BANK OF CALIFORNIA, N.A.,

     

    as
      Administrative Agent

     

     

     

    
      

      

    

     

    

    UNION
      BANK OF CALIFORNIA, N.A.,

    as
      Lead Arranger

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    TABLE
      OF
      CONTENTS

     

    Page

    
      

        
          
            
              
                	
                         

                        ARTICLE
                          I    Definitions

                         

                      	
                         

                        1

                         

                      
	
                        SECTION
                          1.01.

                      	
                        Defined
                          Terms

                      	
                        1

                      
	
                        SECTION
                          1.02.

                      	
                        Classification
                          of Loans and Borrowings

                      	
                        18

                      
	
                        SECTION
                          1.03.

                      	
                        Terms
                          Generally

                      	
                        18

                      
	
                        SECTION
                          1.04.

                      	
                        Accounting
                          Terms; GAAP

                      	
                        18

                      
	
                        SECTION
                          1.05.

                      	
                        Pro
                          Forma Calculations

                      	
                        19

                      
	
                         

                        ARTICLE
                          II    The
                          Credits

                         

                      	
                         

                        19

                         

                      
	
                        SECTION
                          2.01.

                      	
                        Revolving
                          Commitments

                      	
                        19

                      
	
                        SECTION
                          2.02.

                      	
                        Loans
                          and Borrowings

                      	
                        19

                      
	
                        SECTION
                          2.03.

                      	
                        Requests
                          for Revolving Borrowings

                      	
                        20

                      
	
                        SECTION
                          2.04.

                      	
                        Letters
                          of Credit

                      	
                        20

                      
	
                        SECTION
                          2.05.

                      	
                        Funding
                          of Borrowings

                      	
                        28

                      
	
                        SECTION
                          2.06.

                      	
                        Interest
                          Elections

                      	
                        29

                      
	
                        SECTION
                          2.07.

                      	
                        Termination
                          and Reduction of Commitments

                      	
                        30

                      
	
                        SECTION
                          2.08.

                      	
                        Repayment
                          of Loans; Evidence of Debt

                      	
                        31

                      
	
                        SECTION
                          2.09.

                      	
                        Prepayment
                          of Loans

                      	
                        32

                      
	
                        SECTION
                          2.10.

                      	
                        Fees

                      	
                        33

                      
	
                        SECTION
                          2.11.

                      	
                        Interest

                      	
                        34

                      
	
                        SECTION
                          2.12.

                      	
                        Alternate
                          Rate of Interest

                      	
                        34

                      
	
                        SECTION
                          2.13.

                      	
                        Increased
                          Costs

                      	
                        35

                      
	
                        SECTION
                          2.14.

                      	
                        Break
                          Funding Payments

                      	
                        36

                      
	
                        SECTION
                          2.15.

                      	
                        Taxes

                      	
                        37

                      
	
                        SECTION
                          2.16.

                      	
                        Payments
                          Generally; Pro Rata Treatment; Sharing of Set-offs

                      	
                        37

                      
	
                        SECTION
                          2.17.

                      	
                        Mitigation
                          Obligations; Replacement of Lenders

                      	
                        39

                      
	
                        SECTION
                          2.18.

                      	
                        New
                          Lenders

                      	
                        40

                      
	
                         

                        ARTICLE
                          III    Representations
                          and Warranties

                         

                      	
                         

                        40

                         

                      
	
                        SECTION
                          3.01.

                      	
                        Organization;
                          Powers

                      	
                        40

                      
	
                        SECTION
                          3.02.

                      	
                        Authorization;
                          Enforceability

                      	
                        41

                      
	
                        SECTION
                          3.03.

                      	
                        Governmental
                          Approvals; No Conflicts

                      	
                        41

                      
	
                        SECTION
                          3.04.

                      	
                        Financial
                          Condition; No Material Adverse Change; Secured
                          Indebtedness

                      	
                        41

                      
	
                        SECTION
                          3.05.

                      	
                        Properties

                      	
                        42

                      
	
                        SECTION
                          3.06.

                      	
                        Litigation
                          and Environmental Matters

                      	
                        42

                      
	
                        SECTION
                          3.07.

                      	
                        Compliance
                          with Laws and Agreements

                      	
                        43

                      
	
                        SECTION
                          3.08.

                      	
                        Federal
                          Regulations

                      	
                        43

                      
	
                        SECTION
                          3.09.

                      	
                        Investment
                          Company Status

                      	
                        43

                      
	
                        SECTION
                          3.10.

                      	
                        Taxes

                      	
                        43

                      
	
                        SECTION
                          3.11.

                      	
                        ERISA

                      	
                        43

                      

              

               

              
                
                  
                  

                

                
                  i

                  
                    

                  

                

                
                  
                  

                

              

               

              Page

               

              
                	
                        SECTION
                          3.12.

                      	
                        Security
                          Documents

                      	
                        44

                      
	
                        SECTION
                          3.13.

                      	
                        Disclosure

                      	
                        44

                      
	
                        SECTION
                          3.14.

                      	
                        Solvency

                      	
                        45

                      
	
                        SECTION
                          3.15.

                      	
                        Labor
                          Matters

                      	
                        45

                      
	
                        SECTION
                          3.16.

                      	
                        Anti-Terrorism
                          Laws

                      	
                        45

                      
	
                         

                        ARTICLE
                          IV    Conditions

                         

                      	
                         

                        46

                         

                      
	
                        SECTION
                          4.01.

                      	
                        Effective
                          Date

                      	
                        46

                      
	
                        SECTION
                          4.02.

                      	
                        Each
                          Credit Event

                      	
                        47

                      
	
                         

                        ARTICLE
                          V    Affirmative
                          Covenants

                         

                      	
                         

                        48

                         

                      
	
                        SECTION
                          5.01.

                      	
                        Financial
                          Statements and Other Information

                      	
                        49

                      
	
                        SECTION
                          5.02.

                      	
                        Notices
                          of Material Events

                      	
                        51

                      
	
                        SECTION
                          5.03.

                      	
                        Existence;
                          Conduct of Business

                      	
                        51

                      
	
                        SECTION
                          5.04.

                      	
                        Payment
                          of Obligations

                      	
                        52

                      
	
                        SECTION
                          5.05.

                      	
                        Maintenance
                          of Properties; Insurance

                      	
                        52

                      
	
                        SECTION
                          5.06.

                      	
                        Books
                          and Records; Inspection Rights

                      	
                        52

                      
	
                        SECTION
                          5.07.

                      	
                        Compliance
                          with Laws and Agreements

                      	
                        52

                      
	
                        SECTION
                          5.08.

                      	
                        Use
                          of Proceeds and Letters of Credit

                      	
                        52

                      
	
                        SECTION
                          5.09.

                      	
                        Environmental
                          Laws

                      	
                        53

                      
	
                        SECTION
                          5.10.

                      	
                        Further
                          Assurances

                      	
                        53

                      
	
                         

                        ARTICLE
                          VI    Negative
                          Covenants

                         

                      	
                         

                        53

                         

                      
	
                        SECTION
                          6.01.

                      	
                        Indebtedness

                      	
                        54

                      
	
                        SECTION
                          6.02.

                      	
                        Liens

                      	
                        54

                      
	
                        SECTION
                          6.03.

                      	
                        Fundamental
                          Changes

                      	
                        54

                      
	
                        SECTION
                          6.04.

                      	
                        Sale
                          of Assets

                      	
                        55

                      
	
                        SECTION
                          6.05.

                      	
                        Restricted
                          Payments

                      	
                        56

                      
	
                        SECTION
                          6.06.

                      	
                        Cash
                          Coverage Ratio

                      	
                        57

                      
	
                        SECTION
                          6.07.

                      	
                        Leverage
                          Test

                      	
                        57

                      
	
                        SECTION
                          6.08.

                      	
                        Amendments
                          to Documents

                      	
                        57

                      
	
                        SECTION
                          6.09.

                      	
                        Sale
                          Leaseback Transactions

                      	
                        57

                      
	
                        SECTION
                          6.10.

                      	
                        Release
                          of Collateral under the Mortgage Indenture

                      	
                        57

                      
	
                        SECTION
                          6.11.

                      	
                        Transactions
                          with Affiliates

                      	
                        58

                      
	
                        SECTION
                          6.12.

                      	
                        Limitation
                          on Hedge Agreements

                      	
                        58

                      
	
                        SECTION
                          6.13.

                      	
                        Restrictive
                          Agreements

                      	
                        58

                      
	
                         

                        ARTICLE
                          VII    Events
                          of Default

                         

                      	
                         

                        58

                         

                      
	
                         

                        ARTICLE
                          VIII    The
                          Administrative Agent

                         

                      	
                         

                        61

                         

                      
	
                         

                        ARTICLE
                          IX     Miscellaneous

                         

                      	
                         

                        64

                         

                      

              

               

              
                
                  
                  

                

                
                  ii

                  
                    

                  

                

                
                  
                  

                

              

               

              Page

               

              
                	
                        SECTION
                          9.01.

                      	
                        Notices

                      	
                        64

                      
	
                        SECTION
                          9.02.

                      	
                        Waivers;
                          Amendments

                      	
                        64

                      
	
                        SECTION
                          9.03.

                      	
                        Expenses;
                          Indemnity; Damage Waiver

                      	
                        66

                      
	
                        SECTION
                          9.04.

                      	
                        Successors
                          and Assigns

                      	
                        67

                      
	
                        SECTION
                          9.05.

                      	
                        Survival

                      	
                        70

                      
	
                        SECTION
                          9.06.

                      	
                        Counterparts;
                          Integration; Effectiveness

                      	
                        71

                      
	
                        SECTION
                          9.07.

                      	
                        Severability

                      	
                        71

                      
	
                        SECTION
                          9.08.

                      	
                        Right
                          of Setoff

                      	
                        71

                      
	
                        SECTION
                          9.09.

                      	
                        Governing
                          Law; Jurisdiction; Consent to Service of Process

                      	
                        71

                      
	
                        SECTION
                          9.10.

                      	
                        WAIVER
                          OF JURY TRIAL

                      	
                        72

                      
	
                        SECTION
                          9.11.

                      	
                        Headings

                      	
                        72

                      
	
                        SECTION
                          9.12.

                      	
                        Confidentiality

                      	
                        72

                      
	
                        SECTION
                          9.13.

                      	
                        Interest
                          Rate Limitation

                      	
                        73

                      
	
                        SECTION
                          9.14.

                      	
                        Patriot
                          Act Notice

                      	
                        73

                      

              

            

          

        

      

    

     

    SCHEDULES:

     

    Schedule
      1.01 --
      Pricing Schedule

    Schedule
      2.01 -- Commitments 

    Schedule
      2.04 -- Letters of Credit 

     

    EXHIBITS:

     

    Exhibit
      A
      -- Form
      of
      Assignment and Assumption

    Exhibit
      B
      -- Form
      of
      Bond Delivery Agreement

    Exhibit
      C-1 -- Form
      of
      Revenue Bond Pledge Agreement 

    Exhibit
      C-2 -- Form
      of
      Revenue Bond Pledge Agreement (Custodian)

    Exhibit
      D-1 -- Sixth
      Supplemental Indenture

    Exhibit
      D-2 -- Form
      of
      Seventh Supplemental Indenture

    Exhibit
      E-1 -- Form
      of
      Opinion of Raymond S. Heyman, Esq., General Counsel for the Borrower

    Exhibit
      E-2 -- Form
      of
      Opinion of Thelen Reid & Priest LLP, New York counsel for the
      Borrower

    Exhibit
      E-3 -- Form
      of
      Opinion of Rodey, Dickason, Sloan, Akin & Robb, PA, special New Mexico
      counsel for the Borrower

     

    
      
        
        

      

      
        iii

        
          

        

      

      
        
        

      

    

     

    This
      AMENDED AND RESTATED CREDIT AGREEMENT, dated as of August 11, 2006, among TUCSON
      ELECTRIC POWER COMPANY, an Arizona corporation, the lenders listed on the
      signature pages hereto as “Existing Lenders” (the “Existing
      Lenders”),
      the
      lenders listed on the signature pages hereto as “New Lenders” (the “New
      Lenders”),
      the
      other LENDERS from time to time party hereto, the ISSUING BANKS party hereto,
      THE BANK OF NEW YORK and JPMORGAN CHASE BANK, N.A., as Co-Syndication Agents,
      WELLS FARGO BANK, NATIONAL ASSOCIATION and ABN AMRO BANK N.V., as
      Co-Documentation Agents, and UNION BANK OF CALIFORNIA, N.A., as Administrative
      Agent.

     

    RECITALS

     

    The
      Borrower, the Existing Lenders, the issuing banks party thereto, Wells Fargo
      Bank, National Association, as syndication agent, Allied Irish Banks, p.l.c.,
      as
      documentation agent, and Union Bank of California, N.A., as administrative
      agent, previously entered into that certain Credit Agreement, dated as of May
      4,
      2005 (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

     

    SECTION
      1.01. Defined
      Terms.
      As used
      in this Agreement, the following terms have the meanings specified
      below:

     

    “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.

     

    “ACC”
means
      the Arizona Corporation Commission.

     

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

     

    “Administrative
      Agent”
means
      Union Bank, in its capacity as administrative agent for the
      Lenders.

     

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

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    “Affiliate”
means,
      with respect to a specified Person, another Person that directly, or indirectly
      through one or more intermediaries, Controls or is Controlled by or is under
      common Control with the Person specified.

     

    “Agents”
means
      the Co-Documentation Agents, the Co-Syndication Agents and the Administrative
      Agent.

     

    “Aggregate
      Commitment”
means,
      with respect to each Lender, such Lender’s Revolving Commitment and Revenue Bond
      Commitment, in an aggregate amount no greater than (i) the amount set forth
      opposite such Lender’s name on Schedule 2.01, or (ii) if such Lender has entered
      into one or more Assignment and Assumptions, the amount set forth for such
      Lender in the Register maintained by the Administrative Agent pursuant to
      Section 9.04(c), in each case as such amount may be reduced from time to time
      pursuant to Section 2.07. “Aggregate
      Commitments”
means
      the total of the Lenders’ Aggregate Commitments hereunder. The
      Aggregate Commitments shall in no event exceed $490,587,047.19.

     

    “Agreement”
means
      this Amended and Restated Credit Agreement, dated as of August 11, 2006, by
      and
      among the Borrower, the Lenders party hereto, the Issuing Banks party hereto,
      the Co-Documentation Agents, the Co-Syndication Agents and the Administrative
      Agent.

     

    “Alternate
      Base Rate”
means,
      for any day, a rate per
      annum
      equal to
      the greater of (a) the Reference Rate in effect on such day and (b) the Federal
      Funds Effective Rate in effect on such day plus 1/2 of 1%. Any change in the
      Alternate Base Rate due to a change in the Reference Rate or the Federal Funds
      Effective Rate shall be effective from and including the effective date of
      such
      change in the Reference Rate or the Federal Funds Effective Rate,
      respectively.

     

    “Anti-Terrorism
      Laws”
has
      the
      meaning provided in Section 3.16(a).

     

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

     

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

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    “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 Loan, a rate per
      annum
      during
      each Interest Period equal at all times to the sum of the Adjusted LIBO Rate
      for
      such Interest Period plus
      the
      Applicable Margin in effect from time to time during such Interest
      Period.

     

    “Approved
      Fund”
means,
      with respect to any Lender that is a fund that invests in commercial loans,
      any
      other fund that invests in commercial loans and is managed or advised by the
      same investment advisor as such Lender or by an Affiliate of such investment
      advisor.

     

    “Arranger”
means
      Union Bank, as Lead Arranger for the credit facilities established by this
      Agreement.

     

    “Assignment
      and Assumption”
means
      an Assignment and Assumption entered into by a Lender and an assignee (with
      the
      consent of any party whose consent is required by Section 9.04), and accepted by
      the Administrative Agent, in the form of Exhibit A or any other form approved
      by
      the Administrative Agent.

     

    “Board”
means
      the Board of Governors of the Federal Reserve System of the United States of
      America.

     

    “Bond
      Delivery Agreement”
means,
      collectively, the Bond Delivery Agreement, dated as of May 4, 2005, between
      the
      Borrower and the Administrative Agent, and any additional or replacement Bond
      Delivery Agreement between the Borrower and the Administrative Agent,
      substantially in the form of Exhibit B, executed and delivered pursuant to
      the terms of this Agreement in connection with any issuance of Collateral
      Mortgage Bonds after the Effective Date.

     

    “Borrower”
means
      Tucson Electric Power Company, an Arizona corporation.

     

    “Borrowing”
means
      Loans of the same Type, made (or deemed made), converted or continued on the
      same date and, in the case of Eurodollar Loans, as to which a single Interest
      Period is in effect.

     

    “Borrowing
      Request”
means
      a
      request by the Borrower for a Revolving Borrowing in accordance with Section
      2.03.

     

    “Business
      Day”
means
      any day that is not 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
      remain closed; provided
      that,
      when used in connection with a Eurodollar Loan, the term “Business
      Day”
shall
      also exclude any day on which banks are not open for dealings in dollar deposits
      in the London interbank market.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    “Capital
      Lease Investment”
of
      any
      Person means the aggregate outstanding capitalized amount of Capital Lease
      Obligations of the Borrower and the 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.

     

    “Change
      in Law”
means
      (a) the adoption of any law, rule or regulation after the date of this
      Agreement, (b) any change in any law, rule or regulation or in the
      interpretation or application thereof by any Governmental Authority after the
      date of this Agreement or (c) compliance by any Lender or any Issuing Bank
      (or,
      for purposes of Section 2.13(b), by any lending office of such Lender or by
      such
      Lender’s or such Issuing Bank’s holding company, if any) with any request,
      guideline or directive (whether or not having the force of law) of any
      Governmental Authority made or issued after the date of this
      Agreement.

     

    “Change
      in Control”
means
      the failure of UniSource Energy to own and control, of record and beneficially,
      directly or indirectly, Capital Stock of the Borrower representing 100% of
      the
      aggregate ordinary voting power of the Borrower, free and clear of all
      Liens.

     

    “Class”,
      when
      used in reference to any Loan or Borrowing, refers to whether such Loan, or
      the
      Loans comprising such Borrowing, are Revolving Loans or Revenue Bond Loans,
      and
      when used in reference to any Commitment, refers to whether such Commitment
      is a
      Revolving Commitment or a Revenue Bond Commitment.

     

    “Code”
means
      the Internal Revenue Code of 1986, as amended from time to time.

     

    “Co-Documentation
      Agents”
means
      Wells Fargo Bank, National Association and ABN AMRO Bank N.V., in their capacity
      as co-documentation agents for the Lenders.

     

    “Collateral”
means
      the Collateral Mortgage Bonds and any and all “Collateral”, as defined in any
      applicable Security Document.

     

    “Collateral
      Mortgage Bonds”
means
      the Second Mortgage Bonds, Collateral Series E, substantially in the form
      attached to the Sixth Supplemental Indenture, and any replacement Mortgage
      Bonds
      issued after the Effective Date pursuant to the terms of this Agreement and
      the
      Seventh Supplemental Indenture and delivered to the Administrative Agent
      pursuant to a Bond Delivery Agreement.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

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

     

    “Consolidated
      EBITDA”
means,
      for any fiscal period, with respect to the Borrower and the Consolidated
      Subsidiaries, Consolidated Net Income for such period plus,
      to the
      extent deducted in computing such Consolidated Net Income, without duplication,
      the sum of (a) income tax expense, (b) interest expense, (c) depreciation and
      amortization expense, (d) any extraordinary or non-recurring losses and (e)
      other noncash items reducing Consolidated Net Income, minus,
      to the
      extent added in computing such Consolidated Net Income, without duplication,
      the
      sum of (i) interest income, (ii) any extraordinary or non-recurring gains and
      (iii) other noncash items increasing Consolidated Net Income, all as determined
      on a consolidated basis in accordance with GAAP.

     

    “Consolidated
      Interest Expense”
means,
      for any fiscal period, the aggregate of all payments by the Borrower and the
      Consolidated Subsidiaries for such period that, in accordance with GAAP, are
      or
      should be included in “interest paid, net of amounts capitalized” and “capital
      lease interest paid” reflected in the statement of cash flows for the Borrower
      and the Consolidated Subsidiaries, less the amount of capital lease interest
      income paid to the Borrower or any Consolidated Subsidiary for such period
      that
      is not reflected in Consolidated EBITDA for such period, all as determined
      on a
      consolidated basis in accordance with GAAP.

     

    “Consolidated
      Net Income”
means,
      for any fiscal period, net income of the Borrower and the Consolidated
      Subsidiaries for such period, determined on a consolidated basis in accordance
      with GAAP.

     

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

     

    “Consolidated
      Total Indebtedness”
means,
      as of the last day of any fiscal quarter, (a) the sum (without duplication)
      for
      the Borrower and the Consolidated Subsidiaries as of such day of (i) the
      aggregate outstanding principal amount of the Loans and LC Disbursements, (ii)
      the aggregate outstanding principal amount of other Indebtedness for borrowed
      money (including Guarantees thereof), (iii) the principal amount of all
      obligations in respect of Hedging Agreements of the Borrower and the
      Consolidated Subsidiaries (computed as set forth in the penultimate sentence
      of
      the definition of “Material Indebtedness”) and (iv) the aggregate outstanding
      capitalized amount of Capital Lease Obligations, minus
      (b) the
      sum (without duplication) as of such day of (i) the aggregate outstanding
      capitalized amount of the Capital Lease Investments of the Borrower and the
      Consolidated Subsidiaries as of such day and (ii) to the extent included in
      clause (a)(ii) above, any Treasury Indebtedness of the Borrower and the
      Consolidated Subsidiaries as of such day, all as determined on a consolidated
      basis in accordance with GAAP.

     

    “Control”
means
      the possession, directly or indirectly, of the power to direct or cause the
      direction of the management or policies of a Person, whether through the ability
      to

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    exercise
      voting power, by contract or otherwise. “Controlling”
and
      “Controlled”
have
      meanings correlative thereto.

     

    “Co-Syndication
      Agents”
means
      The Bank of New York and JPMorgan Chase Bank, N.A., in their capacity as
      co-syndication agents for the Lenders. 

     

    “Credit
      Exposure”
means,
      with respect to any Lender at any time, the sum of such Lender’s Revolving
      Credit Exposure and its Revenue Bond Credit Exposure at such time.

     

    “Default”
means
      any event or condition which constitutes an Event of Default or which upon
      notice, lapse of time or both would, unless cured or waived, become an Event
      of
      Default.

     

    “Disclosure
      Documents”
means
      (i) the Borrower’s Annual Report on Form 10-K for the fiscal year ended December
      31, 2005, as filed with the Securities and Exchange Commission, (ii) the
      Borrower’s Quarterly Reports on Form 10-Q for the fiscal quarters ended March
      31, 2006 and June 30, 2006, as filed with the Securities and Exchange
      Commission, and (iii) the Current Reports on Form 8-K of the Borrower as filed
      with the Securities and Exchange Commission on May 25, 2006, June 6, 2006,
      June
      12, 2006, June 26, 2006, June 27, 2006, July 5, 2006 and August 8,
      2006.

     

    “dollars”
or
      “$”
refers
      to lawful money of the United States of America.

     

    “Effective
      Date”
means
      the date on which the conditions specified in Section 4.01 are satisfied (or
      waived in accordance with Section 9.02).

     

    “Environmental
      Laws”
means
      all laws, rules, regulations, codes, ordinances, orders, decrees, judgments,
      injunctions, notices or binding agreements issued, promulgated or entered into
      by any Governmental Authority, relating in any way to the environment,
      preservation or reclamation of natural resources, the management, release or
      threatened release of any Hazardous Material or to health and safety
      matters.

     

    “Environmental
      Liability”
means
      any liability, contingent or otherwise (including any liability for damages,
      costs of environmental remediation, fines, penalties or indemnities), of the
      Borrower or any Subsidiary 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.

     

    “ERISA
      Affiliate”
means
      any trade or business (whether or not incorporated) that, together with the
      Borrower, is treated as a single employer under Section 414(b) or (c) of the
      Code or, solely for purposes of Section 302 of ERISA and Section 412 of the
      Code, is treated as a single employer under Section 414 of the
      Code.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    “ERISA
      Event”
means
      (a) any “reportable event”, as defined in Section 4043 of ERISA or the
      regulations issued thereunder with respect to a Plan (other than an event for
      which the 30-day notice period is waived); (b) the existence with respect to
      any
      Plan of an “accumulated funding deficiency” (as defined in Section 412 of the
      Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant
      to
      Section 412(d) of the Code or Section 303(d) of ERISA of an application for
      a
      waiver of the minimum funding standard with respect to any Plan; (d) the
      incurrence by the Borrower or any of its ERISA Affiliates of any liability
      under
      Title IV of ERISA with respect to the termination of any Plan; (e) the receipt
      by the Borrower or any ERISA Affiliate from the PBGC of any notice of its intent
      to institute proceedings to terminate any Plan or to appoint a trustee to
      administer any Plan under Section 4042 of ERISA or the providing of notice
      by a
      plan administrator of the intent to terminate any Plan under Section 4041 of
      ERISA; (f) the incurrence by the Borrower or any of its ERISA Affiliates of
      any
      liability with respect to the withdrawal or partial withdrawal from any Plan
      or
      Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate
      of
      any notice, or the receipt by any Multiemployer Plan from the Borrower or any
      ERISA Affiliate 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”,
      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 Adjusted LIBO Rate.

     

    “Event
      of Default”
has
      the
      meaning assigned to such term in Article VII.

     

    “Excluded
      Taxes”
means,
      with respect to the Administrative Agent, any Lender, any Issuing Bank or any
      other recipient of any payment to be made by or on account of any obligation
      of
      the Borrower hereunder, (a) income or franchise taxes imposed on (or measured
      by) its net income by the United States of America, or by the jurisdiction
      under
      the laws of which such recipient is organized or in which its principal office
      is located or, in the case of any Lender, in which its applicable lending office
      is located, (b) any branch profits taxes imposed by the United States of America
      or any similar tax imposed by any other jurisdiction in which such recipient
      is
      located and (c) in the case of a Foreign Lender (other than an assignee pursuant
      to a request by the Borrower under Section 2.17(b)), any withholding tax that
      is
      imposed by the United States of America on amounts payable to such Foreign
      Lender at the time such Foreign Lender becomes a party to this Agreement (or
      designates a new lending office) or is attributable to such Foreign Lender’s
      failure to comply with Section 2.15(d).

     

    “Executive
      Order”
has
      the
      meaning provided in Section 3.16(a).

     

    “Existing
      Credit Agreement”
has
      the
      meaning assigned to such term in the recitals to this Agreement. 

     

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

     

    “Existing
      Letters of Credit”
means
      the Letters of Credit set forth on Schedule 2.04.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    “Fair
      Value”
means,
      with respect to any assets or property owned by the Borrower or any of the
      Consolidated Subsidiaries, the fair market value thereof as determined from
      time
      to time by the Board of Directors (or a duly constituted committee thereof)
      of
      the Borrower or such Consolidated Subsidiary in good faith.

     

    “Federal
      Funds Effective Rate”
means,
      for any day, the weighted average 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 of the quotations for such day for such
      transactions received by the Administrative Agent from three Federal funds
      brokers of recognized standing selected by it.

     

    “Final
      Maturity Date”
means
      the later to occur of (i) May 4, 2010 and (ii) if (and only if) the conditions
      set forth in Section 4.02(c) have been satisfied, August 11,
      2011.

     

    “Financial
      Officer”
means
      the chief financial officer, principal accounting officer, treasurer or
      controller of the Borrower.

     

    “Foreign
      Lender”
means
      any Lender that is organized under the laws of a jurisdiction other than the
      United States of America.

     

    “GAAP”
means
      generally accepted accounting principles in the United States of
      America.

     

    “Governmental
      Authority”
means
      the government of the United States of America, any other nation or any
      political subdivision thereof, whether state or local, and any agency,
      authority, instrumentality, regulatory body, court, central bank or other entity
      exercising executive, legislative, judicial, taxing, regulatory or
      administrative powers or functions of or pertaining to government.

     

    “Guarantee”
of
      or
      by any Person (the “guarantor”)
      means
      any obligation, contingent or otherwise, of the guarantor guaranteeing or having
      the economic effect of guaranteeing any Indebtedness or other obligation of
      any
      other Person (the “primary
      obligor”)
      in any
      manner, whether directly or indirectly, and including any obligation of the
      guarantor, direct or indirect, (a) to purchase or pay (or advance or supply
      funds for the purchase or payment of) such Indebtedness or other obligation
      or
      to purchase (or to advance or supply funds for the purchase of) any security
      for
      the payment thereof, (b) to purchase or lease property, securities or services
      for the purpose of assuring the owner of such Indebtedness or other obligation
      of the payment thereof, (c) to maintain working capital, equity capital or
      any
      other financial statement condition or liquidity of the primary obligor so
      as to
      enable the primary obligor to pay such Indebtedness or other obligation or
      (d)
      as an account party in respect of any letter of credit or letter of guaranty
      issued to support such Indebtedness or obligation; provided,
      that
      the term Guarantee shall not include endorsements for collection or deposit
      in
      the ordinary course of business.

     

    “Hazardous
      Materials”
means
      all explosive or radioactive substances or wastes and all hazardous or toxic
      substances, wastes or other pollutants, including petroleum or petroleum
      distillates, asbestos or asbestos containing materials, polychlorinated
      biphenyls, radon

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    gas,
      infectious or medical wastes and all other substances or wastes of any nature
      regulated pursuant to any Environmental Law.

     

    “Hedging
      Agreement”
means
      any interest rate protection agreement, foreign currency exchange agreement
      or
      other interest or currency exchange rate hedging arrangement.

     

    “Increasing
      Existing Lender”
has
      the
      meaning assigned to such term in Section 2.18.

     

    “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 Guarantees by such Person 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.

     

    “Indemnified
      Taxes”
means
      Taxes other than Excluded Taxes. 

     

    “Index
      Debt”
means
      the long-term, senior secured Indebtedness of the Borrower issued under the
      Mortgage Indenture that is not guaranteed by any other Person or subject to
      any
      other credit enhancement.

     

    “Information
      Memorandum”
means
      the Confidential Information Memorandum dated July 2006 relating to the Borrower
      and the Transactions.

     

    “Interest
      Election Request”
means
      a
      request by the Borrower to convert or continue a Loan in accordance with Section
      2.06.

     

    “Interest
      Payment Date”
means
      (a) with respect to any ABR Loan, the last Business Day of each March, June,
      September and December, commencing with September 29, 2006, and (b) with
      respect to any Eurodollar Loan, the last day of the Interest Period applicable
      to the Borrowing of which such Loan is a part and, in the case of a Eurodollar
      Borrowing with an Interest Period of more than three months’ duration, each day
      prior to the last day of such Interest Period that occurs at intervals of three
      months’ duration after the first day of such Interest Period.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    “Interest
      Period”
means,
      with respect to any Eurodollar Borrowing, the period commencing on the date
      of
      such Borrowing (which initially shall be the date on which such Borrowing is
      made and thereafter shall be the effective date of the most recent conversion
      or
      continuation of such Borrowing) and ending on the numerically corresponding
      day
      in the calendar month that is one, two, three or six months thereafter, as
      the
      Borrower may elect; provided,
      that
      (i) if any Interest Period would end on a day other than a Business Day, such
      Interest Period shall be extended to the next succeeding Business Day unless
      such next succeeding Business Day would fall in the next calendar month, in
      which case such Interest Period shall end on the next preceding Business Day
      and
      (ii) 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.

     

    “Issuing
      Bank”
means
      each Lender (or other commercial bank or financial institution satisfactory
      to
      the Administrative Agent) executing this Agreement as an Issuing Bank, in its
      capacity as an issuer of Letters of Credit hereunder, and each of its successors
      in such capacity as provided in Section 2.04(j).

     

    “LC
      Disbursement”
means
      either a Revolving LC Disbursement or a Revenue Bond LC Disbursement.
“LC
      Disbursements”
means
      the Revolving LC Disbursements and the Revenue Bond LC
      Disbursements.

     

    “Lenders”
means
      the Persons listed on Schedule 2.01 and any other Person that shall have become
      a party hereto pursuant to an Assignment and Assumption, other than any such
      Person that ceases to be a party hereto pursuant to an Assignment and
      Assumption.

     

    “Letter
      of Credit”
means
      any letter of credit issued pursuant to this Agreement (including any Revolving
      Letter of Credit and each Revenue Bond Letter of Credit).

     

    “LIBO
      Rate”
means,
      with respect to any Eurodollar Borrowing for any Interest Period, the rate
      per
      annum
      determined by the Administrative Agent at approximately 11:00 a.m., London
      time,
      on the date that is two 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 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 “LIBO
      Rate”
with
      respect to such Eurodollar Borrowing 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
      Business Days prior to the beginning of such Interest Period.

     

    “Lien”
means,
      with respect to any asset, (a) any mortgage, deed of trust, lien, pledge,
      hypothecation, encumbrance, charge or security interest in, on or of such asset,
      (b) the interest of a vendor or a lessor under any conditional sale agreement,
      capital lease or title 

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    retention
      agreement (or any financing lease having substantially the same economic effect
      as any of the foregoing) relating to such asset and (c) in the case of
      securities, any purchase option, call or similar right of a third party with
      respect to such securities.

     

    “Lien
      of the Mortgage Indenture”
has
      the
      meaning assigned to the phrases “Lien of this Indenture” and “lien hereof” in
      the Mortgage Indenture.

     

    “Loan
      Documents”
means
      this Agreement, any promissory notes delivered pursuant to Section 2.08(e),
      the
      Bond Delivery Agreement, the Sixth Supplemental Indenture (until the
      effectiveness of the Seventh Supplemental Indenture), the Seventh Supplemental
      Indenture (upon the execution and delivery thereof pursuant to the terms of
      this
      Agreement), the Collateral Mortgage Bonds, the Revenue Bond Pledge Agreements
      and the other Security Documents.

     

    “Loans”
means
      the loans made (or deemed made) by the Lenders to the Borrower pursuant to
      this
      Agreement, including any Revolving Loans and any Revenue Bond
      Loans.

     

    “Material
      Adverse Effect”
means
      a
      material adverse effect on (a) the financial condition, results of operations,
      business or prospects of the Borrower and the Subsidiaries taken as a whole,
      (b)
      the ability of the Borrower to perform any of its obligations under any Loan
      Document or the Mortgage Indenture or (c) the rights of or benefits available
      to
      the Lenders under any Loan Document or the Mortgage Indenture.

     

    “Material
      Indebtedness”
means
      Indebtedness (other than the Loans, LC Disbursements and Letters of Credit),
      or
      obligations in respect of one or more Hedging Agreements, of any one or more
      of
      the Borrower and the Significant Subsidiaries in an aggregate principal amount
      exceeding $20,000,000. For purposes of determining Material Indebtedness, the
      “principal amount” of the obligations of the Borrower or any Subsidiary in
      respect of any Hedging Agreement at any time shall be the maximum aggregate
      amount (giving effect to any netting agreements) that the Borrower or such
      Subsidiary would be required to pay if such Hedging Agreement were terminated
      at
      such time. “Material Indebtedness” shall not include at any time any
      Indebtedness that is non-recourse to the Borrower and its Significant
      Subsidiaries.

     

    “Moody’s”
means
      Moody’s Investors Service, Inc., and its successors.

     

    “Mortgage
      Bonds”
means
      the Borrower’s Mortgage Bonds issued under the Mortgage Indenture.

     

    “Mortgage
      Indenture”
means
      the Indenture of Mortgage and Deed of Trust, dated as of December 1, 1992,
      between the Borrower and The Bank of New York (as successor in trust to Bank
      of
      Montreal Trust Company), as trustee, as amended, supplemented or otherwise
      modified from time to time.

     

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

     

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

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    “Obligations”
means
      (a)(i) the principal of and premium, if any, and interest (including interest
      accruing during the pendency of any bankruptcy, insolvency, receivership or
      other similar proceeding, regardless of whether allowed or allowable in such
      proceeding) on the Loans and LC Disbursements, when and as due, whether at
      maturity, by acceleration, upon one or more dates set for prepayment or
      otherwise, (ii) each other payment required to be made by the Borrower under
      this Agreement in respect of any Letter of Credit, when and as due, and (iii)
      all other monetary obligations, including fees, costs, expenses and indemnities,
      whether primary, secondary, direct, contingent, fixed or otherwise (including
      monetary obligations incurred during the pendency of any bankruptcy, insolvency,
      receivership or other similar proceeding, regardless of whether allowed or
      allowable in such proceeding), of the Borrower under this Agreement and the
      other Loan Documents; and (b) the due and punctual performance of all other
      covenants, agreements, obligations and liabilities of the Borrower under or
      pursuant to this Agreement and the other Loan Documents.

     

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

     

    “Participant”
has
      the
      meaning assigned to such term in Section 9.04(e).

     

    “Patriot
      Act”
has
      the
      meaning assigned to such term in Section 9.14.

     

    “PBGC”
means
      the Pension Benefit Guaranty Corporation referred to and defined in ERISA and
      any successor entity performing similar functions.

     

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

     

    “Person”
means
      any natural person, corporation, limited liability company, trust, joint
      venture, association, company, partnership, Governmental Authority or other
      entity.

     

    “Plan”
means
      any employee pension benefit plan (other than a Multiemployer Plan) subject
      to
      the provisions of Title IV of ERISA or Section 412 of the Code or Section 302
      of
      ERISA, and in respect of which the Borrower or any ERISA Affiliate 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. 

     

    “PPD
      Repayment Date”
has
      the
      meaning assigned to such term in Section 2.04(f)(ii).

     

    “Purchase
      Price Disbursement”
has
      the
      meaning assigned to such term in Section 2.04(f)(ii).

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

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

     

    “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 set forth in Section 9.04(c). 

     

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

     

    “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, officers, employees, agents and advisors of such Person
      and such Person’s Affiliates.

     

    “Required
      Lenders”
means,
      at any time, Lenders having Credit Exposures and unused Aggregate Commitments
      representing a majority of the sum of the total Credit Exposures and the total
      unused Aggregate Commitments at such time.

     

    “Requirement
      of Law”
means,
      as to any Person, the Certificate of Incorporation and By-Laws or other
      organizational or governing documents of such Person, and any law, treaty,
      rule
      or regulation 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 assets or to which such Person or any of its property or assets
      is
      subject.

     

    “Restricted
      Payment”
means
      any dividend or other distribution (whether in cash, securities or other
      property) with respect to any shares of any class of Capital Stock of the
      Borrower, or any payment (whether in cash, securities or other property),
      including any sinking fund or similar deposit, on account of the purchase,
      redemption, retirement, acquisition, cancellation or termination of any such
      shares of Capital Stock of the Borrower or any option, warrant or other right
      to
      acquire any such shares of Capital Stock of the Borrower.

     

    “Revenue
      Bond Commitment”
means,
      with respect to each Revenue Bond Lender, the commitment of such Lender to
      participate in the Revenue Bond Letters of Credit and all Revenue Bond LC
      Disbursements and to make Revenue Bond Loans hereunder, expressed as an amount
      representing the maximum aggregate permitted amount of such Lender’s Revenue
      Bond Credit Exposure hereunder, as such commitment may be (a) reduced from
      time
      to time pursuant to Section 2.07 and (b) reduced or increased from time to
      time
      pursuant to assignments by or to such Lender pursuant to Section 9.04. The
      initial amount of each Revenue Bond Lender’s Revenue Bond Commitment is set
      forth on Schedule 2.01, or in the Assignment and Assumption pursuant to which
      such Revenue Bond Lender shall have assumed its Revenue Bond 

     

    
      
        
        

      

      
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    Commitment,
      as applicable. The initial aggregate amount of the Revenue Bond Commitments
      is
      $340,587,047.19.

     

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

     

    “Revenue
      Bond Indenture”
means,
      with respect to any Revenue Bond Letter of Credit, the Revenue Bond Indenture,
      as amended and supplemented from time to time, in respect of the Revenue Bonds
      referenced on Schedule 2.04 for such Revenue Bond Letter of Credit, as
      applicable.

     

    “Revenue
      Bond Issuing Bank”
means,
      with respect to each outstanding Revenue Bond Letter of Credit, the Issuing
      Bank
      that has issued such Revenue Bond Letter of Credit.

     

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

     

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

     

    “Revenue
      Bond Lender”
means
      a
      Lender having a Revenue Bond Commitment.

     

    “Revenue
      Bond Letters of Credit”
means
      the Letters of Credit issued (or deemed issued) pursuant to Section
      2.04(a)(ii).

     

    “Revenue
      Bond Loan”
has
      the
      meaning set forth in Section 2.04(f)(iii) hereof.

     

    “Revenue
      Bond Loan Agreement”
means,
      with respect to any Revenue Bond Letter of Credit, the Revenue Bond Loan
      Agreement in respect of the Revenue Bonds referenced on Schedule 2.04 for such
      Revenue Bond Letter of Credit, as applicable.

     

    “Revenue
      Bond Pledge Agreement”
means,
      individually, any pledge agreement in substantially the form of Exhibit C-1
      or
      Exhibit C-2 (as applicable) and otherwise satisfactory to the applicable Issuing
      Bank and the Administrative Agent. “Revenue
      Bond Pledge Agreements”
means,
      collectively, all Revenue Bond Pledge Agreements.

     

    “Revenue
      Bonds”
means,
      with respect to any Revenue Bond Letter of Credit, the Revenue Bonds referenced
      on Schedule 2.04 for such Revenue Bond Letter of Credit.

     

    
      
        
        

      

      
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    “Revenue
      Bond Trustee”
means,
      with respect to any Revenue Bond Letter of Credit, the trustee and/or agent,
      as
      applicable, named in such Revenue Bond Letter of Credit’s Revenue Bond
      Indenture, and any successor or assign thereof.

     

    “Revolving
      Availability Period”
means
      the period from and including the Effective Date to but excluding the earlier
      to
      occur of (a) the Final Maturity Date and (b) the date of the termination of
      the
      Revolving Commitments.

     

    “Revolving
      Commitment”
means,
      with respect to each Revolving Lender, the commitment of such Lender to make
      Revolving Loans hereunder and to participate in Revolving Letters of Credit
      and
      Revolving LC Disbursements, expressed as an amount representing the maximum
      aggregate permitted amount of such Lender’s Revolving Credit Exposure hereunder,
      as such commitment may be (a) reduced from time to time pursuant to Section
      2.07
      and (b) reduced or increased from time to time pursuant to assignments by or
      to
      such Lender pursuant to Section 9.04. The initial amount of each Revolving
      Lender’s Revolving Commitment is set forth on Schedule 2.01, or in the
      Assignment and Assumption pursuant to which such Revolving Lender shall have
      assumed its Revolving Commitment, as applicable. The initial aggregate amount
      of
      the Revolving Commitments is $150,000,000.

     

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

     

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

     

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

     

    “Revolving
      Lender”
means
      a
      Lender having a Revolving Commitment. 

     

    “Revolving
      Letters of Credit”
means
      the Letters of Credit issued pursuant to Section 2.04(a)(i).

     

    “Revolving
      Loan”
means
      a
      Loan made by a Revolving Lender pursuant to Sections 2.01 and 2.03.

     

    “Sale
      Leaseback”
means
      any transaction or series of related transactions pursuant to which the Borrower
      or any of its Subsidiaries sells, transfers or otherwise disposes of any
      property, real or personal, whether now owned or hereafter acquired, and
      thereafter rents or leases such property or other property that it intends
      to
      use for substantially the same purpose or purposes as the property being sold,
      transferred or disposed of.

     

    “San
      Carlos”
means
      San Carlos Resources Inc., an Arizona corporation.

     

    
      
        
        

      

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

     

    “Security
      Documents”
means
      the Mortgage Indenture, the Sixth Supplemental Indenture (until the
      effectiveness of the Seventh Supplemental Indenture), the Seventh Supplemental
      Indenture (upon the execution and delivery thereof pursuant to the terms of
      this
      Agreement), the Collateral Mortgage Bonds, the Bond Delivery Agreement, the
      Revenue Bond Pledge Agreements, and each other security agreement or other
      instrument or document executed and delivered pursuant to Section 4.02(c) or
      5.10 or pursuant to any of the foregoing documents to secure any of the
      Obligations.

     

    “Seventh
      Supplemental Indenture”
means
      Supplemental Indenture No. 7 under the Mortgage Indenture, substantially in
      the form of Exhibit D-2.

     

    “Significant
      Subsidiary”
means
      (a) San Carlos, (b) any Subsidiary that directly or indirectly owns or Controls
      any other Significant Subsidiary and (c) any other Subsidiary of the Borrower
      whose direct or indirect proportionate share of consolidated total assets as
      of
      the end of the most recent fiscal quarter for which financial statements have
      been delivered pursuant to Section 5.01 was greater than or equal to 15% of
      the
      consolidated total assets as of such date of the Borrower and the Consolidated
      Subsidiaries, taken as a whole. For purposes of making the determinations
      required by this definition, revenues and assets of foreign Subsidiaries shall
      be converted into dollars at the rates used in preparing the consolidated
      balance sheet of the Borrower included in the applicable financial
      statements.

     

    “Sixth
      Supplemental Indenture”
means
      Supplemental Indenture No. 6, dated as of May 1, 2005, between the Borrower
      and The Bank of New York (as successor in trust to Bank of Montreal Trust
      Company), as trustee, a copy of which is attached hereto as Exhibit
      D-1.

     

    “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.

     

    “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 

     

    
      
        
        

      

      
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    or
      supplemental reserves) expressed as a decimal established by the Board with
      respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred
      to as “Eurocurrency Liabilities” in Regulation D). Such reserve percentages
      shall include those imposed pursuant to Regulation D. Eurodollar 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 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,
      with respect to any Person (the “parent”)
      at any
      date, any corporation, limited liability company, partnership, association
      or
      other entity the accounts of which would be consolidated with those of the
      parent in the parent’s consolidated financial statements if such financial
      statements were prepared in accordance with GAAP as of such date, as well as
      any
      other corporation, limited liability company, partnership, association or other
      entity (a) of which securities or other ownership interests representing more
      than 50% of the equity or more than 50% of the ordinary voting power or, in
      the
      case of a partnership, more than 50% of the general partnership interests are,
      as of such date, owned, controlled or held, or (b) that is, as of such
      date, otherwise Controlled, by the parent or one or more subsidiaries of the
      parent.

     

    “Subsidiary”
means
      any subsidiary of the Borrower.

     

    “Taxes”
means
      any and all present or future taxes, levies, imposts, duties, deductions,
      charges or withholdings imposed by any Governmental Authority.

     

    “Transactions”
means
      the execution, delivery and performance by the Borrower of this Agreement and
      the other Loan Documents, the borrowing of Loans, the use of the proceeds
      thereof, the issuance of Letters of Credit, the issuance of Collateral Mortgage
      Bonds to the Administrative Agent under the Sixth Supplemental Indenture and
      the
      corresponding Bond Delivery Agreement, and the issuance (if any) of Collateral
      Mortgage Bonds to the Administrative Agent under the Seventh Supplemental
      Indenture and the corresponding Bond Delivery Agreement.

     

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

     

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

     

    “UniSource
      Energy”
means
      UniSource Energy Corporation, an Arizona corporation.

     

    
      
        
        

      

      
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    “Utility
      Business”
means
      the business of producing, developing, generating, transmitting, distributing,
      selling or supplying electrical energy 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 Borrower to enter.

     

    “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. Classification
      of Loans and Borrowings.
      For
      purposes of this Agreement, Loans may be classified and referred to by Class
      (e.g.,
      a
“Revolving
      Loan”)
      or by
      Type (e.g.,
      a
“Eurodollar
      Loan”)
      or by
      Class and Type (e.g.,
      a
“Eurodollar
      Revolving Loan”).
      Borrowings also may be classified and referred to by Class (e.g.,
      a
“Revolving
      Borrowing”)
      or by
      Type (e.g.,
      a
“Eurodollar
      Borrowing”)
      or by
      Class and Type (e.g.,
      a
“Eurodollar
      Revolving Borrowing”).

     

    SECTION
      1.03. Terms
      Generally.
      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
      (a) 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, supplemented or otherwise modified
      (subject to any restrictions on such amendments, supplements or modifications
      set forth herein), (b) any reference herein to any Person shall be construed
      to
      include such Person’s successors and assigns, (c) 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,
      (d)
      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 and (e) the words “asset” and “property” shall be construed to
      have the same meaning and effect and to refer to any and all tangible and
      intangible assets and properties, including cash, securities, accounts and
      contract rights.

     

    SECTION
      1.04. Accounting
      Terms; GAAP.
      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
      the Borrower notifies the Administrative Agent that the Borrower requests an
      amendment to any provision hereof (including the effects of the application
      or
      discontinuance of the application of accounting for the effects of regulation
      to
      all or any portion of the Borrower’s operations) 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 (or if the Administrative Agent notifies the
      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

     

    
      
        
        

      

      
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    before
      such change shall have become effective until such notice shall have been
      withdrawn or such provision amended in accordance herewith.

     

    SECTION
      1.05. Pro
      Forma
      Calculations.
      All
pro
      forma
      calculations permitted or required to be made by the Borrower or any Subsidiary
      pursuant to this Agreement shall (a) include only those adjustments that would
      be permitted or required by Regulation S-X under the Securities Act of 1933,
      as
      amended, and (b) be certified to by a Financial Officer as having been prepared
      in good faith based upon assumptions believed to be reasonable.

     

    ARTICLE
      II

    The
      Credits

     

    SECTION
      2.01. Revolving
      Commitments.
      Subject
      to the terms and conditions set forth herein, each Revolving Lender agrees
      to
      make Revolving Loans to the Borrower from time to time during the Revolving
      Availability Period in an aggregate principal amount that will not result in
      (a)
      such Revolving Lender’s Revolving Credit Exposure exceeding its Revolving
      Commitment, (b) the aggregate Revolving Credit Exposures exceeding the aggregate
      Revolving Commitments or (c) until the conditions set forth in Section 4.02(c)
      have been satisfied, the aggregate Revolving Credit Exposures exceeding
      $60,000,000. Within the foregoing limits and subject to the terms and conditions
      set forth herein, the Borrower may borrow, prepay and reborrow Revolving
      Loans.

     

    SECTION
      2.02. Loans
      and Borrowings.

     

    (a)    Each
      Revolving Loan shall be made as part of a Borrowing consisting of Revolving
      Loans made by the Revolving Lenders ratably in accordance with their respective
      Revolving Commitments. The failure of any Revolving Lender to make any Revolving
      Loan required to be made by it shall not relieve any other Revolving Lender
      of
      its obligations hereunder; provided
      that the
      Revolving Commitments of the Revolving Lenders are several and no Revolving
      Lender shall be responsible for any other Revolving Lender’s failure to make
      Revolving Loans as required.

     

    (b)    Subject
      to Section 2.12, each Revolving Borrowing shall be comprised entirely of ABR
      Revolving Loans or Eurodollar Revolving Loans as the Borrower may request in
      accordance herewith. Each Lender at its option may make any Eurodollar Loan
      by
      causing any domestic or foreign branch or Affiliate of such Lender to make
      such
      Loan; provided
      that any
      exercise of such option shall not affect the obligation of the Borrower to
      repay
      such Loan in accordance with the terms of this Agreement.

     

    (c)    At
      the
      commencement of each Interest Period for any Eurodollar Borrowing, such
      Borrowing shall be in an aggregate amount that is an integral multiple of
      $1,000,000 and not less than $5,000,000. At the time that each ABR Revolving
      Borrowing is made, such Borrowing shall be in an aggregate amount that is an
      integral multiple of $1,000,000 and not less than $1,000,000; provided
      that an
      ABR Revolving Borrowing may be in an aggregate amount that is equal to the
      entire unused balance of the total Revolving Commitments or that is required
      to
      finance the reimbursement of a Revolving LC Disbursement as contemplated by
      Section 2.04(f)(i)(A). Borrowings of more than one Type may be
      outstanding

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    at
      the
      same time; provided
      that
      there shall not at any time be more than a total of ten (10) Eurodollar
      Borrowings outstanding.

     

    (d)    Notwithstanding
      any other provision of this Agreement, the Borrower shall not be entitled to
      request, or to elect to convert or continue, any Eurodollar Borrowing if the
      Interest Period requested with respect thereto would end after the Final
      Maturity Date.

     

    SECTION
      2.03. Requests
      for Revolving Borrowings.
      To
      request a Revolving Borrowing, the Borrower shall notify the Administrative
      Agent of such request by telephone (a) in the case of a Eurodollar Borrowing,
      not later than 11:00 a.m., Los Angeles, California time, three Business Days
      before the date of the proposed Borrowing or (b) in the case of an ABR
      Borrowing, not later than 11:00 a.m., Los Angeles, California time, one Business
      Day before the date of the proposed Borrowing; provided
      that any
      such notice of an ABR Revolving Borrowing to finance the reimbursement of an
      LC
      Disbursement as contemplated by Section 2.04(f)(i) may be given not later than
      9:00 a.m., Los Angeles, California time, on the date of the proposed Borrowing.
      Each such telephonic Borrowing Request shall be irrevocable and shall be
      confirmed promptly by hand delivery or telecopy to the Administrative Agent
      of a
      written Borrowing Request in a form approved by the Administrative Agent and
      signed by the Borrower. Each such telephonic and written Borrowing Request
      shall
      specify the following information in compliance with Section 2.02:

     

    (i)    the
      aggregate amount of the requested Borrowing;

     

    (ii)    the
      date
      of such Borrowing, which shall be a Business Day;

     

    (iii)   whether
      such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;

     

    (iv)  
in
      the
      case of a Eurodollar Borrowing, the initial Interest Period to be applicable
      thereto, which shall be a period contemplated by the definition of the term
      “Interest Period”; and

     

    (v)   the
      location and number of the Borrower’s account to which funds are to be
      disbursed, which shall comply with the requirements of Section
      2.05.

     

    If
      no
      election as to the Type of Revolving Borrowing is specified, then the requested
      Revolving Borrowing shall be an ABR Revolving Borrowing. If no Interest Period
      is specified with respect to any requested Eurodollar Revolving Borrowing,
      then
      the Borrower shall be deemed to have selected an Interest Period of one month’s
      duration. Promptly following receipt of a Borrowing Request in accordance with
      this Section, the Administrative Agent shall advise each Revolving Lender of
      the
      details thereof and of the amount of such Revolving Lender’s Loan to be made as
      part of the requested Borrowing.

     

    SECTION
      2.04. Letters
      of Credit.

     

    (a)    General.
      (i)
      Subject to the terms and conditions set forth herein, the Borrower may request
      the issuance of Revolving Letters of Credit for its own account, in a form
      reasonably acceptable to the Administrative Agent and the applicable Issuing
      Bank, at any time

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    and
      from
      time to time during the period from the Effective Date through and including
      the
      date that occurs ten (10) Business Days prior to the end of the Revolving
      Availability Period. 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 the Borrower to, or
      entered into by the Borrower with, any Issuing Bank relating to any Revolving
      Letter of Credit, the terms and conditions of this Agreement shall control.
      

     

    (ii)    Subject
      to the terms and conditions set forth herein, the Borrower may request the
      issuance (or, in the case of the Existing Letters of Credit, the amendment)
      of
      Revenue Bond Letters of Credit on the Effective Date for its own account, in
      a
      form reasonably acceptable to the Administrative Agent and the applicable
      Issuing Bank. 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 the Borrower to, or entered into
      by
      the Borrower with, any Issuing Bank relating to any Revenue Bond Letter of
      Credit, the terms and conditions of this Agreement shall control. In addition,
      as of the Effective Date, each of the Existing Letters of Credit shall be deemed
      to be issued under this Agreement as a Revenue Bond Letter of
      Credit.

     

    (b)   Issuance
      and Amendment.
      (i) To
      request the issuance of a Revolving Letter of Credit (or the amendment, renewal
      or extension of an outstanding Revolving Letter of Credit), the Borrower shall
      hand deliver or telecopy (or transmit by electronic communication, if
      arrangements for doing so have been approved by the applicable Issuing Bank)
      to
      the applicable Issuing Bank and the Administrative Agent (reasonably in advance
      of the requested date of issuance, amendment, renewal or extension) a notice
      requesting the issuance of a Revolving Letter of Credit, or identifying the
      Revolving Letter of Credit to be amended, renewed or extended, and specifying
      the date of issuance, amendment, renewal or extension (which shall be a Business
      Day), the date on which such Revolving Letter of Credit is to expire (which
      shall comply with paragraph (d) of this Section), the amount of such Revolving
      Letter of Credit, the name and address of the beneficiary thereof and such
      other
      information as shall be necessary to prepare, amend, renew or extend such
      Revolving Letter of Credit. The Administrative Agent shall, promptly after
      its
      receipt thereof, distribute a copy of each such notice to the Lenders. If
      requested by the applicable Issuing Bank, the Borrower also shall submit a
      letter of credit application on such Issuing Bank’s standard form in connection
      with any request for a Revolving Letter of Credit. Upon the issuance, amendment,
      renewal or extension of any Revolving Letter of Credit, the applicable Issuing
      Bank shall provide notice and a copy thereof to the Administrative Agent, which
      shall promptly furnish copies thereof to the Lenders.

     

    (ii)    Any
      Revenue Bond Letter of Credit may be amended by the applicable Issuing Bank
      at
      the request of the Borrower and with the consent of the Administrative Agent;
      provided,
      that no
      such amendment shall increase the stated amount of a Revenue Bond Letter of
      Credit or extend the expiration date thereof beyond the last permissible date
      referred to in paragraph (d) below. To request an amendment to an outstanding
      Revenue Bond Letter of Credit, the Borrower shall hand deliver or telecopy
      to
      the applicable Issuing Bank and the Administrative Agent (no less than three
      Business Days (or such shorter period of time as acceptable to the applicable
      Issuing Bank and the Administrative Agent) in advance of the requested date
      of
      amendment) a notice identifying the Revenue Bond Letter of Credit to be amended
      and specifying the date of amendment (which shall be a Business Day), the amount
      of

     

    
      
        
        

      

      
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    such
      Revenue Bond Letter of Credit, the name and address of the beneficiary thereof
      and such other information as shall be necessary to amend such Revenue Bond
      Letter of Credit. The Administrative Agent shall, promptly after its receipt
      thereof, distribute a copy of each such notice to the Lenders. Upon the
      amendment of any Revenue Bond Letter of Credit, the applicable Issuing Bank
      shall provide notice and a copy thereof to the Administrative Agent, which
      shall
      promptly furnish copies thereof to the Lenders.

     

    (c)    Limitation
      of Amount.
      A
      Letter of Credit shall be issued, amended or extended only if (and upon
      issuance, amendment or extension of each Letter of Credit the Borrower shall
      be
      deemed to represent and warrant that), after giving effect to such issuance,
      amendment or extension (i) the Revolving Credit Exposure shall not exceed the
      aggregate amount of the Revolving Commitments, (ii) the Revenue Bond Credit
      Exposure shall not exceed the aggregate amount of the Revenue Bond Commitments
      and (iii) until the conditions set forth in Section 4.02(c) have been satisfied,
      the Revolving Credit Exposure shall not exceed $60,000,000.

     

    (d)    Expiration
      Date.
      Each
      Revolving Letter of Credit shall expire at or prior to the close of business
      on
      the earlier to occur of (i) the date one year after the date of the issuance
      of
      such Revolving Letter of Credit (or, in the case of any renewal or extension
      thereof, one year after such renewal or extension) and (ii) the date that is
      five Business Days prior to the Final Maturity Date; provided
      that any
      Revolving Letter of Credit with a one-year term may provide for the renewal
      thereof for additional one-year periods (which shall in no event extend beyond
      the date referred to in clause (ii) above). Each Revenue Bond Letter of Credit
      shall expire not later than the close of business on the Final Maturity Date
      (and, upon the satisfaction of the conditions set forth in Section 4.02(c),
      each
      Revenue Bond Letter of Credit shall be promptly amended by the applicable
      Issuing Bank to extend the stated expiration date thereof to August 11, 2011
      (or
      such earlier date as may be requested by the Borrower)).

    

    (e)    (i) Participations
      of Revolving Lenders.
      On the
      Effective Date, without any further action on the part of any Issuing Bank
      or
      the Revolving Lenders, each Issuing Bank issuing one or more Revolving Letters
      of Credit (whether on the Effective Date or at any time thereafter) pursuant
      to
      this Section hereby grants to each Revolving Lender, and each Revolving Lender
      hereby acquires from such Issuing Bank, a participation in each such Revolving
      Letter of Credit equal to such Revolving Lender’s Applicable Percentage of the
      aggregate amount available to be drawn under such Revolving Letter of Credit.
      In
      consideration and in furtherance of the foregoing, each Revolving Lender hereby
      absolutely and unconditionally agrees to pay to the Administrative Agent, for
      the account of the applicable Issuing Bank, such Revolving Lender’s Applicable
      Percentage of each Revolving LC Disbursement made by such Issuing Bank and
      not
      reimbursed by the Borrower on the date due as provided in paragraph (f)(i)(A)
      of
      this Section, or of any reimbursement payment in respect of a Revolving LC
      Disbursement required to be refunded to the Borrower for any reason. Each
      Revolving Lender acknowledges and agrees that its obligation to acquire and
      fund
      participations in respect of Revolving Letters of Credit pursuant to this
      subparagraph (i) is absolute, unconditional and irrevocable and shall not be
      affected by any circumstance whatsoever, including any amendment, renewal or
      extension of any Revolving Letter of Credit or the occurrence and continuance
      of
      a Default or the reduction or termination of the Revolving Commitments, and
      that
      each such payment shall be made without any offset, abatement, withholding
      or
      reduction whatsoever. For the avoidance of doubt, the

     

    
      
        
        

      

      
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    parties
      hereto acknowledge and agree that the funding by a Revolving Lender of its
      participation interest in any Revolving LC Disbursement shall not constitute
      a
      reimbursement by the Borrower of such Revolving LC Disbursement.

     

    (ii)    Participations
      of Revenue Bond Lenders.
      On the
      Effective Date, without any further action on the part of any Issuing Bank
      or
      the Revenue Bond Lenders, each Issuing Bank issuing (or deemed to be issuing)
      one or more Revenue Bond Letters of Credit hereby grants to each Revenue Bond
      Lender, and each Revenue Bond Lender hereby acquires from such Issuing Bank,
      a
      participation in each such Revenue Bond Letter of Credit equal to such Revenue
      Bond Lender’s Applicable Percentage of the aggregate amount available to be
      drawn under such Revenue Bond Letter of Credit. In consideration and in
      furtherance of the foregoing, each Revenue Bond Lender hereby absolutely and
      unconditionally agrees to pay to the Administrative Agent, for the account
      of
      the applicable Issuing Bank, such Revenue Bond Lender’s Applicable Percentage of
      each Revenue Bond LC Disbursement made by such Issuing Bank and not reimbursed
      by the Borrower on the date due as provided in paragraph (f)(i)(B) of this
      Section (without giving effect to paragraph (f)(ii) of this Section), or of
      any
      reimbursement payment in respect of a Revenue Bond LC Disbursement required
      to
      be refunded to the Borrower for any reason. Each Revenue Bond Lender
      acknowledges and agrees that its obligation to acquire and fund participations
      in respect of Revenue Bond Letters of Credit pursuant to this subparagraph
      (ii)
      is absolute, unconditional and irrevocable and shall not be affected by any
      circumstance whatsoever, including any amendment, renewal or extension of any
      Revenue Bond Letter of Credit or the occurrence and continuance of a Default
      or
      the reduction or termination of the Revenue Bond Commitments, and that each
      such
      payment shall be made without any offset, abatement, withholding or reduction
      whatsoever. For the avoidance of doubt, the parties hereto acknowledge and
      agree
      that the funding by a Revenue Bond Lender of its participation interest in
      any
      Revenue Bond LC Disbursement shall not constitute a reimbursement by the
      Borrower of such Revenue Bond LC Disbursement.

     

    (f)    Reimbursement.
      (i)  (A) If any Issuing Bank shall make any Revolving LC Disbursement,
      the Borrower shall reimburse such Revolving LC Disbursement by paying to the
      Administrative Agent an amount equal to such Revolving LC Disbursement not
      later
      than 11:00 a.m., Los Angeles, California time, on the date that such Revolving
      LC Disbursement is made, if the Borrower shall have received notice of such
      Revolving LC Disbursement prior to 9:00 a.m., Los Angeles, California time,
      on
      such date, or, if such notice has not been received by the Borrower prior to
      such time on such date, then not later than 11:00 a.m., Los Angeles, California
      time, on the Business Day immediately following the day that the Borrower
      receives such notice; provided
      that the
      Borrower may, subject to the conditions to borrowing set forth herein, request
      in accordance with Sections 2.01 and 2.03 that such payment be financed with
      an
      ABR Revolving Borrowing in an equivalent amount and, to the extent so financed,
      the Borrower’s obligation to make such payment shall be discharged and replaced
      by the resulting ABR Revolving Borrowing.

     

    (B)    If
      any
      Issuing Bank shall make any Revenue Bond LC Disbursement, the Borrower shall,
      except as provided in paragraph (ii) below, reimburse such Revenue Bond LC
      Disbursement by paying to the Administrative Agent an amount equal to such
      Revenue Bond LC Disbursement not later than 11:00 a.m., Los Angeles, California
      time, on the date that such Revenue Bond LC Disbursement is made, if the
      Borrower shall have received

     

    
      
        
        

      

      
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    notice
      of
      such Revenue Bond LC Disbursement prior to 9:00 a.m., Los Angeles, California
      time, on such date, or, if such notice has not been received by the Borrower
      prior to such time on such date, then not later than 11:00 a.m., Los Angeles,
      California time, on the Business Day immediately following the day that the
      Borrower receives such notice; provided
      that the
      Borrower may, subject to the conditions to borrowing set forth herein, request
      in accordance with Sections 2.01 and 2.03 that such payment be financed with
      an
      ABR Revolving Borrowing in an equivalent amount and, to the extent so financed,
      the Borrower’s obligation to make such payment shall be discharged and replaced
      by the resulting ABR Revolving Borrowing.

     

    (ii)    In
      the
      case of any Revenue Bond LC Disbursement to fund the payment of the purchase
      price (to the extent such purchase price is attributable to the principal of
      a
      Revenue Bond) of any Revenue Bond that the Borrower is unable to remarket prior
      to the day on which payment of the purchase price of such Revenue Bond is due
      to
      the holder or owner thereof (a “Purchase
      Price Disbursement”),
      the
      Borrower shall reimburse such Purchase Price Disbursement (to the extent not
      reimbursed by a Revenue Bond Loan pursuant to paragraph (iii) below) on or
      prior
      to the earliest to occur of (A) the Final Maturity Date, (B) the date on which
      such Revenue Bond is redeemed or cancelled pursuant to the applicable Revenue
      Bond Indenture, (C) the date on which such Revenue Bond is remarketed pursuant
      to the applicable Revenue Bond Indenture, and (D) the date on which the
      applicable Revenue Bond Letter of Credit is replaced by an alternate letter
      of
      credit or other security arrangement in accordance with the terms of the
      applicable Revenue Bond Indenture (such earliest date being referred to herein
      as the “PPD
      Repayment Date”);
      provided
      that (x)
      such Revenue Bond shall be promptly delivered to the applicable Issuing Bank
      (or
      to its bailee or custodian, if applicable) and pledged to the applicable Issuing
      Bank under a Revenue Bond Pledge Agreement, (y) any portion of such Purchase
      Price Disbursement may be reimbursed at any time by or on behalf of the Borrower
      on one Business Day’s notice stating the amount to be reimbursed (which shall be
      $100,000 or a whole multiple thereof) and directing such Issuing Bank to deliver
      Revenue Bonds held by or for the account of such Issuing Bank to or upon the
      order of the Borrower against repayment of the portion of such Purchase Price
      Disbursement attributable to such Revenue Bonds with the proceeds of the
      remarketing of such Revenue Bonds and specifying the principal amount of Revenue
      Bonds to be so delivered (provided,
      however,
      that if
      all or any portion of such Purchase Price Disbursement was reimbursed with
      the
      proceeds of a Revenue Bond Loan pursuant to paragraph (iii) below, such Issuing
      Bank shall deliver such Revenue Bonds pursuant to this clause (y) only if and
      to
      the extent that such Revenue Bond Loan has been repaid or prepaid by the
      Borrower in accordance with the terms of this Agreement (including, without
      limitation, Sections 2.09(d)) with the proceeds of such remarketing), and (z)
      upon payment to the Administrative Agent for the account of such Issuing Bank
      of
      the amount of any such repayment, together with accrued interest to the date
      of
      such repayment on the amount of the Purchase Price Disbursement to be
      reimbursed, the outstanding obligations of the Borrower in respect of such
      Purchase Price Disbursement shall be reduced by the amount of such
      reimbursement, interest shall cease to accrue on the amount so reimbursed and
      such Issuing Bank shall release to or upon the order of the Borrower from the
      pledge and security interest created by the applicable Revenue Bond Pledge
      Agreement a principal amount of Revenue Bonds held under such Revenue Bond
      Pledge Agreement equal to the amount of such repayment; provided
      that,
      prior to the release of such Revenue Bonds, (1) the Borrower shall have paid
      to
      the Administrative Agent the amount of any Revenue Bond LC Disbursement made
      in
      connection with the purchase of such Revenue Bonds to pay the interest portion
      of the purchase price thereof and (2) the

     

    
      
        
        

      

      
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    Borrower
      shall have repaid or prepaid, in accordance with the terms of this Agreement
      (including, without limitation, Sections 2.09(d)), all Revenue Bond Loans the
      proceeds of which were used to reimburse such Purchase Price Disbursement,
      together with accrued interest thereon to the date of such repayment or
      prepayment and any amounts required to be paid pursuant to Section 2.14 in
      connection with such repayment or prepayment. The provisions of Section
      2.04(f)(i)(B) shall apply with respect to any portion of any such Revenue Bond
      LC Disbursement made on the Final Maturity Date, as if it were a Revenue Bond
      LC
      Disbursement in respect of which the Borrower received notice prior to 9:00
      a.m., Los Angeles, California time, on the Final Maturity Date. Whenever an
      Issuing Bank is holding Revenue Bonds pursuant to a Revenue Bond Pledge
      Agreement in respect of a Revenue Bond Letter of Credit and accordingly receives
      a payment of interest on such pledged Revenue Bonds, such Issuing Bank shall
      promptly deliver such interest so received to the Administrative Agent for
      application to (I) the payment of accrued and unpaid interest on all outstanding
      Purchase Price Disbursements of such Issuing Bank in respect of such Revenue
      Bond Letter of Credit or (II) to the extent the Revenue Bond Banks have
      reimbursed such Issuing Bank for such Purchase Price Disbursements pursuant
      to
      paragraph (iii) below, the payment of accrued and unpaid interest on all
      outstanding Revenue Bond Loans made by the Revenue Bond Banks in respect of
      such
      Purchase Price Disbursements. If the amount of interest so received exceeds
      the
      amount of accrued and unpaid interest on such Purchase Price Disbursements
      or
      Revenue Bond Loans (as the case may be) on the date of receipt, such Issuing
      Bank shall promptly deliver all such interest received to the Administrative
      Agent and the Administrative Agent shall hold the unused balance of such
      interest and apply it on a daily basis to interest accrued on such Purchase
      Price Disbursements or Revenue Bond Loans (as the case may be). 

     

    (iii)    If
      the
      Borrower fails to make any payment due under paragraph (i)(A) above with respect
      to a Revolving LC Disbursement, the Administrative Agent shall notify each
      Revolving Lender of the applicable Revolving LC Disbursement and such Revolving
      Lender’s Applicable Percentage thereof. Upon receipt of such notice, each
      Revolving Lender shall make available to the Administrative Agent such Revolving
      Lender’s Applicable Percentage of the payment then due from the Borrower, in
      immediately available funds, by 10:00 a.m., Los Angeles, California time,
      on the next succeeding Business Day after the date of such notice, in the same
      manner as provided in Section 2.05 with respect to Revolving Loans made by
      Revolving Lenders, and the Administrative Agent shall promptly pay to the
      applicable Issuing Bank the amounts so received by it from the Revolving
      Lenders. If the Borrower fails to reimburse the applicable Issuing Bank for
      any
      Revenue Bond LC Disbursement (including any Purchase Price Disbursement) at
      or
      prior to 11:00 a.m., Los Angeles, California time, on the Business Day
      immediately following the date of such Revenue Bond LC Disbursement, the
      Administrative Agent shall notify each Revenue Bond Lender of the applicable
      Revenue Bond LC Disbursement and such Revenue Bond Lender’s Applicable
      Percentage thereof. Upon receipt of such notice, each Revenue Bond Lender shall
      make available to the Administrative Agent such Revenue Bond Lender’s Applicable
      Percentage of the payment then due from the Borrower, in immediately available
      funds, by 10:00 a.m., Los Angeles, California time, on the next succeeding
      Business Day after the date of such notice, in the same manner as provided
      in
      Section 2.05 with respect to Revolving Loans made by Revolving Lenders, and
      the
      Administrative Agent shall promptly pay to the applicable Issuing Bank the
      amounts so received by it from the Revenue Bond Lenders. Promptly following
      receipt by the Administrative Agent of any payment pursuant to paragraph (i)
      or
      (ii) above in respect of any LC Disbursement, the

     

    
      
        
        

      

      
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    Administrative
      Agent shall distribute such payment to the applicable Issuing Bank or, (A)
      to
      the extent that Revolving Lenders have made payments pursuant to this paragraph
      to reimburse such Issuing Bank in connection with an unreimbursed Revolving
      LC
      Disbursement, then to such Revolving Lenders as their interests may appear,
      and
      (B) to the extent that Revenue Bond Lenders have made payments pursuant to
      this
      paragraph to reimburse such Issuing Bank in connection with an unreimbursed
      Revenue Bond LC Disbursement, then to such Revenue Bond Lenders as their
      interests may appear. Any payment made by a Lender pursuant to this paragraph
      to
      reimburse an Issuing Bank for any LC Disbursement shall not constitute a Loan
      and shall not relieve the Borrower of its obligation, if any, to reimburse
      such
      LC Disbursement; provided,
      however,
      that on
      the date that the Revenue Bond Lenders reimburse the applicable Issuing Bank
      for
      a Purchase Price Disbursement, that portion of such reimbursement payment equal
      to the principal amount of the Revenue Bonds purchased with the proceeds of
      such
      Purchase Price Disbursement shall be deemed to constitute a loan made by the
      Revenue Bond Lenders to the Borrower on such date in the amount of such
      principal amount (each such loan being a “Revenue
      Bond Loan”),
      and
      the Borrower’s obligation to reimburse such Purchase Price Disbursement shall be
      discharged and replaced by such Revenue Bond Loan (it being understood and
      agreed that any Purchase Price Disbursement so discharged and replaced shall
      no
      longer constitute an unreimbursed Revenue Bond LC Disbursement hereunder).
      Each
      Revenue Bond Loan shall initially bear interest at the Applicable Rate for
      ABR
      Loans, and thereafter may be converted or continued pursuant to Section 2.06.
      

     

    (g)    Obligations
      Absolute.
      The
      Borrower’s obligation to reimburse LC Disbursements as provided in paragraph (f)
      above shall be absolute, unconditional and irrevocable, and shall be performed
      strictly in accordance with the terms of this Agreement under any and all
      circumstances whatsoever and irrespective of (i) any lack of validity or
      enforceability of any Letter of Credit, this Agreement or any other Loan
      Document, or any term or provision therein, (ii) any draft or other document
      presented under a Letter of Credit proving to be forged, fraudulent or invalid
      in any respect or any statement therein being untrue or inaccurate in any
      respect, (iii) payment by an Issuing Bank under a Letter of Credit against
      presentation of a draft or other document that does not comply with the terms
      of
      such Letter of Credit, or (iv) any other event or circumstance whatsoever,
      whether or not similar to any of the foregoing, that might, but for the
      provisions of this Section, constitute a legal or equitable discharge of, or
      provide a right of setoff against, the Borrower’s obligations hereunder. None of
      the Administrative Agent, the Revolving Lenders, the Revenue Bond Lenders,
      the
      Issuing Banks or any of their Related Parties shall have any liability or
      responsibility by reason of or in connection with the issuance or transfer
      of
      any Letter of Credit or any payment or failure to make any payment thereunder
      (irrespective of any of the circumstances referred to in the preceding
      sentence), or any error, omission, interruption, loss or delay in transmission
      or delivery of any draft, notice or other communication under or relating to
      any
      Letter of Credit (including any document required to make a drawing thereunder),
      any error in interpretation of technical terms or any consequence arising from
      causes beyond the control of the applicable Issuing Bank; provided
      that the
      foregoing shall not be construed to excuse such Issuing Bank from liability
      to
      the Borrower to the extent of any direct damages (as opposed to consequential
      damages, claims in respect of which are hereby waived by the Borrower to the
      extent permitted by applicable law) suffered by the Borrower that are caused
      by
      such Issuing Bank’s failure to exercise care when determining whether drafts and
      other documents presented under a Letter of Credit comply with the terms
      thereof. The parties hereto expressly agree that, in the absence of gross
      negligence or willful

     

    
      
        
        

      

      
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    misconduct
      on the part of an Issuing Bank (as finally determined by a court of competent
      jurisdiction), such Issuing Bank shall be deemed to have exercised care in
      each
      such determination. In furtherance of the foregoing and without limiting the
      generality thereof, the parties agree that, with respect to documents presented
      which appear on their face to be in substantial compliance with the terms of
      a
      Letter of Credit, the applicable Issuing Bank may, in its sole discretion,
      either accept and make payment upon such documents without responsibility for
      further investigation, regardless of any notice or information to the contrary,
      or refuse to accept and make payment upon such documents if such documents
      are
      not in strict compliance with the terms of such Letter of Credit.

     

    (h)    Disbursement
      Procedures.
      Each
      Issuing Bank shall, promptly following its receipt thereof, examine all
      documents purporting to represent a demand for payment under a Letter of Credit.
      Such Issuing Bank shall promptly notify the Administrative Agent and the
      Borrower by telephone (confirmed by telecopy) of such demand for payment and
      whether such Issuing Bank has made or will make an LC Disbursement thereunder;
      provided
      that any
      failure to give or delay in giving such notice shall not relieve the Borrower
      of
      its obligation to reimburse such Issuing Bank and the Revolving Lenders or
      Revenue Bond Lenders with respect to any such LC Disbursement.

     

    (i)    Interim
      Interest.
      If an
      Issuing Bank shall make any LC Disbursement, then, (i) in the case of any
      Revolving LC Disbursements, unless the Borrower shall reimburse such Revolving
      LC Disbursement in full on the date such Revolving LC Disbursement is made
      or
      (ii) in the case of any Revenue Bond LC Disbursements, unless the Borrower
      shall
      reimburse such Revenue Bond LC Disbursement in full on the date such Revenue
      Bond LC Disbursement is made, in each case the unpaid amount thereof shall
      bear
      interest, for each day from and including the date such LC Disbursement is
      made
      to but excluding the date that the Borrower reimburses such LC Disbursement
      (or
      such reimbursement obligation of the Borrower has been discharged pursuant
      to
      the terms of Section 2.04(f)(i) or (iii)), at a fluctuating interest rate
per
      annum
      equal to
      the Applicable Rate for ABR Loans; provided,
      that,
      if the Borrower fails to reimburse such LC Disbursement when due pursuant to
      paragraph (f) of this Section, then Section 2.11(b) shall apply. Interest
      accrued pursuant to this paragraph shall be for the account of the applicable
      Issuing Bank, except that interest accrued on and after the date of payment
      by
      any Revolving Lender or any Revenue Bond Lender, as the case may be, to
      reimburse an Issuing Bank shall be for the account of such Revolving Lender
      or
      Revenue Bond Lender, as applicable, to the extent of such payment.

     

    (j)    Replacement
      of an Issuing Bank.
      Any
      Issuing Bank may be replaced at any time by written agreement among the Borrower
      and the Administrative Agent; provided,
      however,
      that
      (i) each Issuing Bank shall be (A) a Lender or (B) another commercial bank
      or
      other financial institution satisfactory to the Administrative Agent, and (ii)
      the Administrative Agent shall review any such proposed agreement for form
      only
      and not with respect to the identity of any successor Issuing Bank or the
      identity of the Issuing Bank to be replaced. The Administrative Agent shall
      notify the Lenders of any such replacement of an Issuing Bank. At the time
      any
      such replacement shall become effective, the Borrower shall pay all unpaid
      fees
      accrued for the account of the replaced Issuing Bank pursuant to Section 2.10(b)
      and shall return to such Issuing Bank each Letter of Credit issued by such
      Issuing Bank. From and after the effective date of any such replacement, (1)
      the
      successor Issuing Bank shall have all the rights

     

    
      
        
        

      

      
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    and
      obligations of an Issuing Bank under this Agreement with respect to Letters
      of
      Credit to be issued by it on such effective date or thereafter and (2)
      references herein to the term “Issuing Bank” shall be deemed to refer to such
      successor or to any previous Issuing Bank, or to such successor and all previous
      Issuing Banks, as the context shall require. After the replacement of an Issuing
      Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall
      continue to have all the rights and obligations of an Issuing Bank under this
      Agreement with respect to Letters of Credit issued by it prior to such
      replacement, but shall not be required to issue additional Letters of
      Credit.

     

    (k)    Acceleration
      of Revenue Bonds.
      If any
      Event of Default shall occur and be continuing, the Administrative Agent may,
      and at the request of the Required Lenders shall, direct the applicable Issuing
      Bank to take such steps as are required and available to it under any Revenue
      Bond Indenture to cause the Revenue Bond Trustee thereunder to declare the
      principal amount of all Revenue Bonds then outstanding thereunder to be
      immediately due and payable and, to the extent necessary to make all payments
      then due and payable on the Revenue Bonds, require all necessary drawings under
      the applicable Letter of Credit to be made in respect thereof, whereupon such
      Issuing Bank shall pay from its general funds the amounts so drawn and such
      amounts, all interest thereon and all other amounts payable by the Borrower
      hereunder in respect thereof shall automatically be forthwith due and
      payable.

     

    SECTION
      2.05. Funding
      of Borrowings.

     

    (a)    Each
      Lender shall make each Loan to be made by it hereunder on the proposed date
      thereof by wire transfer of immediately available funds by 10:00 a.m., Los
      Angeles, California time, to the account of the Administrative Agent most
      recently designated by it for such purpose by notice to the Lenders. In the
      case
      of Revolving Loans, the Administrative Agent will make such Loans available
      to
      the Borrower by promptly crediting the amounts so received, in like funds,
      to an
      account of the Borrower designated by the Borrower in the applicable Borrowing
      Request; provided
      that
      Loans made to finance the reimbursement of an LC Disbursement as provided in
      Section 2.04(f) shall be remitted by the Administrative Agent to the applicable
      Issuing Bank.

     

    (b)    Unless
      the Administrative Agent shall have received notice from a Revolving Lender
      prior to the proposed date of any Revolving Borrowing that such Revolving Lender
      will not make available to the Administrative Agent such Revolving Lender’s
      share of such Borrowing, the Administrative Agent may in its sole discretion
      assume that such Revolving Lender has made such share available on such date
      in
      accordance with paragraph (a) of this Section and may, in reliance upon such
      assumption, make available to the Borrower a corresponding amount. In such
      event, if a Revolving Lender has not in fact made its share of the applicable
      Borrowing available to the Administrative Agent, then the applicable Revolving
      Lender and the Borrower severally agree to pay to the Administrative Agent
      forthwith on demand such corresponding amount with interest thereon, for each
      day from and including the date such amount is made available to the Borrower
      to
      but excluding the date of payment to the Administrative Agent, at (i) in the
      case of such Revolving Lender, the greater of the Federal Funds Effective Rate
      and a rate determined by the Administrative Agent in accordance with banking
      industry rules on interbank compensation or (ii) in the case of the Borrower,
      the interest rate applicable to ABR Loans. If such Revolving Lender pays such
      amount to the

     

    
      
        
        

      

      
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    Administrative
      Agent, then such amount shall constitute such Revolving Lender’s Loan included
      in such Borrowing.

     

    SECTION
      2.06. Interest
      Elections.

     

    (a)    Each
      Borrowing of (i) Revolving Loans initially shall be of the Type specified in
      the
      applicable Borrowing Request and, in the case of a Eurodollar Revolving
      Borrowing, shall have an initial Interest Period as specified in such Borrowing
      Request, and (ii) Revenue Bond Loans initially shall be an ABR Borrowing.
      Thereafter, the Borrower may elect to convert such Borrowing to a different
      Type
      or to continue such Borrowing and, in the case of a Eurodollar Borrowing, may
      elect Interest Periods therefor, all as provided in this Section. The Borrower
      may elect different options with respect to different portions of the affected
      Borrowing, in which case each such portion shall be allocated ratably among
      the
      Lenders holding the Loans comprising such Borrowing, and the Loans comprising
      each such portion shall be considered a separate Borrowing.

     

    (b)    To
      make
      an election pursuant to this Section, the Borrower shall notify the
      Administrative Agent of such election by telephone by the time that a Borrowing
      Request would be required under Section 2.03 if the Borrower were requesting
      a
      Borrowing of the Type resulting from such election to be made on the effective
      date of such election. Each such telephonic Interest Election Request shall
      be
      irrevocable and shall be confirmed promptly by hand delivery or telecopy to
      the
      Administrative Agent of a written Interest Election Request in a form approved
      by the Administrative Agent and signed by the Borrower.

     

    (c)    Each
      telephonic and written Interest Election Request shall specify the following
      information in compliance with Section 2.02:

     

    (i)    the
      Borrowing to which such Interest Election Request applies and, if different
      options are being elected with respect to different portions thereof, the
      portions thereof to be allocated to each resulting Borrowing (in which case
      the
      information to be specified pursuant to clauses (iii) and (iv) below shall
      be
      specified for each resulting Borrowing); 

     

    (ii)    the
      effective date of the election made pursuant to such Interest Election Request,
      which shall be a Business Day;

     

    (iii)    whether
      the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;
      and

     

    (iv)    if
      the
      resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be
      applicable thereto after giving effect to such election, which shall be a period
      contemplated by the definition of the term “Interest Period”.

     

    If
      any
      such Interest Election Request requests a Eurodollar Borrowing but does not
      specify an Interest Period, then the Borrower shall be deemed to have selected
      an Interest Period of one month’s duration.

     

    
      
        
        

      

      
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    (d)    Promptly
      following receipt of an Interest Election Request, the Administrative Agent
      shall advise each Lender of the details thereof and of such Lender’s portion of
      each resulting Borrowing.

     

    (e)    If
      the
      Borrower fails to deliver a timely Interest Election Request with respect to
      a
      Eurodollar Borrowing prior to the end of the Interest Period applicable thereto,
      then, unless such Borrowing is repaid as provided herein, at the end of such
      Interest Period such Borrowing shall be converted to an ABR Borrowing.
      Notwithstanding any contrary provision hereof, (i) if an Event of Default has
      occurred and is continuing (A) no outstanding Borrowing may be converted to
      or
      continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar
      Borrowing shall be converted to an ABR Borrowing at the end of the Interest
      Period applicable thereto.

     

    SECTION
      2.07. Termination
      and Reduction of Commitments.

     

    (a)    Unless
      previously terminated, each of the Revolving Commitments and the Revenue Bond
      Commitments shall terminate on the Final Maturity Date. If any Letter of Credit
      remains outstanding on the Final Maturity Date, the Borrower will deposit with
      the Administrative Agent an amount in cash equal to 105% of the aggregate
      undrawn amount of such Letter of Credit to secure the Borrower’s reimbursement
      obligations with respect to any drawings that may occur thereunder.

     

    (b)    The
      Borrower may at any time terminate, or from time to time reduce, the Revolving
      Commitments; provided
      that (i)
      each reduction of the Revolving Commitments shall be in an amount that is an
      integral multiple of $1,000,000 and not less than $5,000,000 and (ii) the
      Borrower shall not terminate or reduce any Revolving Commitments if, after
      giving effect to such termination or reduction and any concurrent prepayment
      of
      the Revolving Loans in accordance with Section 2.09, the aggregate Revolving
      Credit Exposures would exceed the aggregate Revolving Commitments. The Borrower
      may at any time terminate, or from time to time reduce, the Revenue Bond
      Commitments; provided
      that (i)
      each reduction of the Revenue Bond Commitments shall be in an amount that is
      an
      integral multiple of $1,000,000 and not less than $5,000,000 and (ii) the
      Borrower shall not terminate or reduce any Revenue Bond Commitments if, after
      giving effect to such termination or reduction and any concurrent prepayment
      of
      the Revenue Bond Loans in accordance with Section 2.09, the aggregate Revenue
      Bond Credit Exposure would exceed the aggregate Revenue Bond Commitments.

     

    (c)    In
      the
      event that any Revenue Bonds shall be redeemed, repaid or otherwise retired,
      the
      Borrower shall, to the extent permitted under the documentation for such Revenue
      Bonds, and after reimbursement of any LC Disbursement made in connection with
      such redemption, repayment or retirement, permanently reduce the stated amount
      of the applicable Letter of Credit and, if such reduction is with respect to
      a
      Revenue Bond Letter of Credit, the Revenue Bond Commitments hereunder shall
      be
      automatically and permanently ratably reduced by an aggregate amount equal
      to
      the amount of such reduction as of the date such reduction becomes effective.
      

     

    (d)    The
      Borrower shall notify the Administrative Agent of any election or requirement
      to
      terminate or reduce the Revolving Commitments or the Revenue Bond

     

    
      
        
        

      

      
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    Commitments
      under paragraph (b) or (c) of this Section at least three Business Days prior
      to
      the effective date of such termination or reduction (or as soon as practicable
      but in any event no later than such effective date, in the case of a reduction
      under paragraph (c)), specifying such election and the effective date thereof.
      Promptly following receipt of any notice, the Administrative Agent shall advise
      the Lenders of the contents thereof. Each notice delivered by the Borrower
      pursuant to this Section shall be irrevocable; provided
      that a
      notice of termination of the Revolving Commitments or the Revenue Bond
      Commitments delivered by the Borrower may state that such notice is conditioned
      upon the effectiveness of other credit facilities, in which case such notice
      may
      be revoked by the Borrower (by notice to the Administrative Agent on or prior
      to
      the specified effective date) if such condition is not satisfied. Any
      termination or reduction of the Revolving Commitments or the Revenue Bond
      Commitments shall be permanent. Each reduction of the Revolving Commitments
      or
      the Revenue Bond Commitments shall be made ratably among the Revolving Lenders
      or Revenue Bond Lenders, as the case may be, ratably in accordance with their
      Applicable Percentages.

     

    SECTION
      2.08. Repayment
      of Loans; Evidence of Debt.

     

    (a)    The
      Borrower hereby unconditionally promises to pay to the Administrative Agent
      (i)
      for the account of each Revolving Lender the then unpaid principal amount of
      each Revolving Loan on the Final Maturity Date, (ii) for the account of each
      Revenue Bond Lender the unpaid principal amount of each Revenue Bond Loan on
      the
      applicable PPD Repayment Date and (iii) for the account of each Lender all
      accrued and unpaid interest on the Loans and all other Obligations on the Final
      Maturity Date. 

     

    (b)    Each
      Lender shall maintain in accordance with its usual practice an account or
      accounts evidencing the indebtedness of the Borrower to such Lender resulting
      from each Loan made by such Lender, including the amounts of principal and
      interest payable and paid to such Lender from time to time hereunder. Each
      Issuing Bank shall maintain in accordance with its usual practice an account
      or
      accounts evidencing the indebtedness of the Borrower to such Issuing Bank
      resulting from each LC Disbursement made by such Issuing Bank, including the
      amounts of principal and interest payable and paid to such Issuing Bank from
      time to time hereunder.

     

    (c)    The
      Administrative Agent shall maintain accounts in which it shall record (i) the
      amount of each Loan made hereunder, the Type thereof and the Interest Period
      applicable thereto, (ii) the amount of any principal or interest due and payable
      or to become due and payable from the Borrower to each Lender hereunder and
      (iii) the amount of any sum received by the Administrative Agent hereunder
      for
      the account of the Lenders and each Lender’s share thereof.

     

    (d)    The
      entries made in the accounts maintained pursuant to paragraph (b) or (c) of
      this
      Section shall be prima facie
      evidence
      of the existence and amounts of the obligations recorded therein; provided
      that the
      failure of any Lender, any Issuing Bank or the Administrative Agent to maintain
      such accounts or any error therein shall not in any manner affect the obligation
      of the Borrower to repay the Loans and LC Disbursements in accordance with
      the
      terms of this Agreement.

     

    
      
        
        

      

      
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    (e)    Any
      Lender may request that Loans of any Class made by it be evidenced by a
      promissory note. In such event, the Borrower 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 9.04) 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
      2.09. Prepayment
      of Loans.

     

    (a)    The
      Borrower shall have the right at any time and from time to time to prepay any
      Borrowing, in whole or in part, without premium or penalty (subject, in the
      case
      of any prepayment of a Eurodollar Borrowing, to Section 2.14), subject to prior
      notice in accordance with paragraph (d) of this Section.

     

    (b)    On
      the
      date of any termination of the Revolving Commitments, the Borrower shall repay
      or prepay all outstanding Revolving Borrowings. If, as a result of any partial
      reduction of the Revolving Commitments, the sum of the Revolving Credit
      Exposures would exceed the total Revolving Commitments after giving effect
      thereto, then the Borrower shall, on the date of such reduction, repay or prepay
      Revolving Borrowings in an amount equal to such excess.

     

    (c)    Prior
      to
      any optional or mandatory prepayment of Borrowings hereunder, the Borrower
      shall
      select the Borrowing or Borrowings to be prepaid and shall specify such
      selection in the notice of such prepayment pursuant to paragraph (d) of this
      Section.

     

    (d)    The
      Borrower shall notify the Administrative Agent by telephone (confirmed by
      telecopy) of any prepayment hereunder (i) in the case of prepayment of a
      Eurodollar Borrowing, not later than 11:00 a.m., Los Angeles, California time,
      three Business Days before the date of prepayment or (ii) in the case of
      prepayment of an ABR Borrowing, not later than 11:00 a.m., Los Angeles,
      California time, one Business Day before the date of prepayment. Each such
      notice shall be irrevocable and shall specify the prepayment date and the
      principal amount of each Borrowing or portion thereof to be prepaid;
provided,
      that if
      a notice of prepayment is given in connection with a conditional notice of
      termination of the Revolving Commitments or the Revenue Bond Commitments as
      contemplated by Section 2.07, then such notice of prepayment may be revoked
      if
      such notice of termination is revoked in accordance with Section 2.07. Promptly
      following receipt of any such notice, the Administrative Agent shall advise
      the
      Lenders of the contents thereof. Each partial prepayment of any Borrowing shall
      be in an amount that would be permitted in the case of an advance of a Borrowing
      of the same Type as provided in Section 2.02. Each prepayment of a Borrowing
      shall be applied ratably to the Loans included in the prepaid Borrowing.
      Prepayments shall be accompanied by accrued interest to the extent required
      by
      Section 2.11 and by any amounts required to be paid pursuant to Section 2.14
      in
      connection with such prepayment.

     

    
      
        
        

      

      
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    SECTION
      2.10. Fees.

     

    (a)    The
      Borrower agrees to pay to the Administrative Agent for the account of each
      Revolving Lender a commitment fee, which shall accrue at a rate per
      annum
      equal to
      the Commitment Fee Rate in effect from time to time on the daily unused amount
      of the Revolving Commitment of such Revolving Lender during the period from
      and
      including the Effective Date to but excluding the date on which such Revolving
      Commitment terminates. Accrued commitment fees shall be payable in arrears
      on
      the last Business Day of March, June, September and December of each year,
      commencing with September 29, 2006, and on the date on which the Revolving
      Commitments terminate. All commitment fees shall be computed on the basis of
      a
      year of 360 days and shall be payable for the actual number of days elapsed
      (including the first day but excluding the last day).

     

    (b)    The
      Borrower agrees to pay (i) to the Administrative Agent for the account of each
      Lender a participation fee with respect to its participations in Letters of
      Credit, which participation fee shall accrue at a rate per
      annum
      equal to
      the Applicable Margin in effect from time to time for Eurodollar Loans, on
      the
      daily aggregate amount of the sum of (A) such Lender’s Revolving LC Exposure
      (excluding any portion thereof attributable to unreimbursed Revolving LC
      Disbursements) and (B) such Lender’s Revenue Bond LC Exposure (excluding any
      portion thereof attributable to unreimbursed Revenue Bond LC Disbursements),
      during the period from and including the Effective Date to but excluding the
      Final Maturity 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
      the 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 or processing of drawings thereunder. Accrued participation fees in
      respect of Letters of Credit shall be due and payable on the last Business
      Day
      of March, June, September and December of each year, commencing with
      September 29, 2006; provided
      that (1)
      all such fees payable in respect of the Revolving Letters of Credit shall be
      payable on the date on which the Revolving Commitments terminate, and any such
      fees accruing after the date on which the Revolving Commitments terminate shall
      be payable on demand, and (2) all such fees payable in respect of the Revenue
      Bond Letters of Credit shall be payable on the date on which the Revenue Bond
      Commitments terminate, and any such fees accruing after the date on which the
      Revenue Bond Commitments terminate shall be payable on demand; provided,
      further,
      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.
      Any
      other fees payable to any Issuing Bank pursuant to this paragraph shall be
      payable within ten (10) days after demand. All participation fees and fronting
      fees shall be computed on the basis of a year of 360 days and shall be payable
      for the actual number of days elapsed (including the first day but excluding
      the
      last day).

     

    (c)    The
      Borrower agrees to pay to the Administrative Agent, for its own account, fees
      payable in the amounts and at the times separately agreed upon by the Borrower
      and the Administrative Agent.

     

    (d)    All
      fees
      payable hereunder shall be paid on the dates due, in immediately available
      funds, to the Administrative Agent (or to the applicable Issuing Bank, in the
      case of

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

     

    fees
      payable to any Issuing Bank) for distribution, in the case of commitment fees
      and participation fees, to the Lenders. Fees paid shall not be refundable under
      any circumstances.

     

    SECTION
      2.11. Interest.

     

    (a)    The
      Borrower shall pay interest on the unpaid principal amount of each Loan owing
      to
      each Lender from the date of such Loan until such principal amount shall be
      paid
      in full, at the Applicable Rate for such Loan.

     

    (b)    Notwithstanding
      the foregoing, upon the occurrence and during the continuance of an Event of
      Default, (i) each ABR Loan shall bear interest at a rate of 2.0% per
      annum
      in
      excess of the rate set forth in paragraph (a) of this Section and (ii) each
      Eurodollar Loan shall bear interest at a rate of 2.0% per
      annum
      in
      excess of the rate set forth in paragraph (a) 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 the 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 (a) of this Section
      or (B) in the case of any other amount, 2.0% plus
      the
      Applicable Rate for ABR Loans.

     

    (c)    Accrued
      interest on each Loan shall be payable in arrears on each Interest Payment
      Date
      for such Loan and (i) in the case of Revolving Loans, upon termination of the
      Revolving Commitments, and (ii) in the case of Revenue Bond Loans, upon
      termination of the Revenue Bond Commitments, and accrued interest on each LC
      Disbursement that bears interest at the Applicable Rate for ABR Loans shall
      be
      payable in arrears on each Interest Payment Date applicable to ABR Loans;
provided
      that (A)
      interest accrued pursuant to paragraph (b) of this Section shall be payable
      on
      demand, (B) in the event of any repayment or prepayment of any Loan or LC
      Disbursement, accrued interest on the principal amount repaid or prepaid shall
      be payable on the date of such repayment or prepayment and (C) in the event
      of
      any conversion of any Eurodollar Loan prior to the end of the current Interest
      Period therefor, accrued interest on such Loan shall be payable on the effective
      date of such conversion.

     

    (d)    All
      interest hereunder shall be computed on the basis of a year of 360 days, except
      that interest computed by reference to the Alternate Base Rate at times when
      the
      Alternate Base Rate is based on the Reference Rate shall be computed on the
      basis of a year of 365 days (or 366 days in a leap year), and in each case
      shall
      be payable for the actual number of days elapsed (including the first day but
      excluding the last day). The applicable Alternate Base Rate or Adjusted LIBO
      Rate shall be determined by the Administrative Agent, and such determination
      shall be conclusive absent manifest error.

     

    SECTION
      2.12. Alternate
      Rate of Interest.
      If
      prior to the commencement of any Interest Period for a Eurodollar
      Borrowing:

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

     

    (a)    the
      Administrative Agent determines (which determination shall be conclusive absent
      manifest error) that adequate and reasonable means do not exist for ascertaining
      the Adjusted LIBO Rate or LIBO Rate, as applicable, for such Interest Period;
      or

     

    (b)    the
      Administrative Agent is advised by the Required Lenders that the Adjusted LIBO
      Rate or LIBO Rate, as applicable, for such Interest Period will not adequately
      and fairly reflect the cost to such Lenders of making or maintaining their
      Loans
      included in such Borrowing for such Interest Period;

     

    then
      the
      Administrative Agent shall give notice thereof to the Borrower and the Lenders
      by telephone or telecopy as promptly as practicable thereafter and, until the
      Administrative Agent notifies the Borrower and the Lenders that the
      circumstances giving rise to such notice no longer exist, (i) any Interest
      Election Request that requests the conversion of any Borrowing to, or
      continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective,
      and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
      Borrowing shall be made as an ABR Borrowing.

     

    SECTION
      2.13. Increased
      Costs.
      

     

    (a)    If
      any
      Change in Law shall:

     

    (i)    impose,
      modify or deem applicable any reserve, special deposit or similar requirement
      against assets of, deposits with or for the account of, or credit extended
      by,
      any Lender or the Administrative Agent (except any such reserve requirement
      reflected in the Adjusted LIBO Rate, where applicable) or any Issuing Bank;
      or

     

    (ii)    impose
      on
      any Lender, any Issuing Bank, the Administrative Agent or the London interbank
      market any other condition affecting this Agreement or Eurodollar Loans made
      by
      such Lender or any Letter of Credit or participation therein;

     

    and
      the
      result of any of the foregoing shall be to increase the cost to such Lender
      of
      making or maintaining any Eurodollar Loan (or of maintaining its obligation
      to
      make any such Loan) or to increase the cost to such Lender, such Issuing Bank
      or
      the Administrative Agent of participating in, issuing or maintaining any Letter
      of Credit or to reduce the amount of any sum received or receivable by such
      Lender, such Issuing Bank or the Administrative Agent hereunder (whether of
      principal, interest or otherwise), then the Borrower will pay to such Lender,
      such Issuing Bank or the Administrative Agent, as the case may be, such
      additional amount or amounts as will compensate such Lender, such Issuing Bank
      or the Administrative Agent, as the case may be, for such additional costs
      incurred or reduction suffered.

     

    (b)    If
      any
      Lender or any Issuing Bank determines that any Change in Law regarding capital
      requirements has or would have the effect of reducing the rate of return on
      such
      Lender’s or such Issuing Bank’s capital or on the capital of such Lender’s or
      such Issuing Bank’s holding company, if any, as a consequence of this Agreement
      or the Loans made by, or participations in Letters of Credit held by, such
      Lender, or the Letters of Credit issued by such Issuing Bank, to a level below
      that which such Lender or such Issuing Bank or such Lender’s or such Issuing
      Bank’s holding company could have achieved but for such Change in Law (taking
      into consideration such Lender’s or such Issuing Bank’s policies and the
      policies of such

     

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

     

    Lender’s
      or such Issuing Bank’s holding company with respect to capital adequacy), then
      from time to time the Borrower will pay to such Lender or such Issuing Bank,
      as
      the case may be, such additional amount or amounts as will compensate such
      Lender or such Issuing Bank or such Lender’s or such Issuing Bank’s holding
      company for any such reduction suffered.

     

    (c)    A
      certificate of a Lender or an Issuing Bank setting forth the amount or amounts
      necessary to compensate such Lender or such Issuing Bank or its holding company,
      as the case may be, as specified in paragraph (a) or (b) of this Section shall
      be delivered to the Borrower and shall be conclusive absent manifest error.
      The
      Borrower shall pay such Lender or such Issuing Bank, as the case may be, the
      amount shown as due on any such certificate within ten (10) days after
      receipt thereof.

     

    (d)    Failure
      or delay on the part of any Lender or any Issuing Bank to demand compensation
      pursuant to this Section shall not constitute a waiver of such Lender’s or such
      Issuing Bank’s right to demand such compensation; provided
      that the
      Borrower shall not be required to compensate a Lender or an Issuing Bank
      pursuant to this Section for any increased costs or reductions incurred more
      than 270 days prior to the date that such Lender or such Issuing Bank, as the
      case may be, notifies the Borrower of the Change in Law giving rise to such
      increased costs or reductions and of such Lender’s or such Issuing Bank’s
      intention to claim compensation therefor; provided further
      that, if
      the Change in Law giving rise to such increased costs or reductions is
      retroactive, then the 270-day period referred to above shall be extended to
      include the period of retroactive effect thereof.

     

    SECTION
      2.14. Break
      Funding Payments.
      In the
      event of (a) the payment of any principal of any Eurodollar Loan other than
      on
      the last day of an Interest Period applicable thereto (including as a result
      of
      an Event of Default), (b) the conversion of any Eurodollar Loan other than
      on
      the last day of the Interest Period applicable thereto, (c) the failure to
      borrow, convert, continue or prepay any Loan or LC Disbursement on the date
      specified in any notice delivered pursuant hereto (regardless of whether such
      notice may be revoked under Section 2.09(b) and is revoked in accordance
      therewith), (d) the assignment of any Eurodollar Loan other than on the last
      day
      of the Interest Period applicable thereto as a result of a request by the
      Borrower pursuant to Section 2.17, or (e) the revocation of any notice of
      prepayment pursuant to Sections 2.07 and 2.09, then, in any such event, the
      Borrower shall compensate each applicable Lender for the loss, cost and expense
      attributable to such event. In the case of a Eurodollar Loan, such loss, cost
      or
      expense to any applicable Lender shall be deemed to include an amount determined
      by such Lender to be the excess, if any, of (i) the amount of interest which
      would have accrued on the principal amount of such Loan had such event not
      occurred, at the Adjusted LIBO Rate that would have been applicable to such
      Loan, for the period from the date of such event to the last day of the then
      current Interest Period therefor (or, in the case of a failure to borrow,
      convert or continue, for the period that would have been the Interest Period
      for
      such Loan), over (ii) the amount of interest which would accrue on such
      principal amount for such period at the interest rate which such Lender would
      bid were it to bid, at the commencement of such period, for dollar deposits
      of a
      comparable amount and period from other banks in the Eurodollar market. A
      certificate of any Lender setting forth any amount or amounts that such Lender
      is entitled to receive pursuant to this Section shall be delivered to the
      Borrower and shall be conclusive absent manifest error. The Borrower shall
      pay
      such Lender the amount shown as due on any such certificate within ten
      (10) days after receipt thereof.

     

    
      
        
        

      

      
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    SECTION
      2.15. Taxes.

     

    (a)    Any
      and
      all payments by or on account of any obligation of the Borrower hereunder or
      under any other Loan Document shall be made free and clear of and without
      deduction for any Indemnified Taxes or Other Taxes; provided
      that if
      the Borrower shall be required to deduct any Indemnified Taxes or Other Taxes
      from such payments, then (i) the sum payable shall be increased as necessary
      so
      that after making all required deductions (including deductions applicable
      to
      additional sums payable under this Section) the Administrative Agent, Lender
      or
      Issuing Bank (as the case may be) receives an amount equal to the sum it would
      have received had no such deductions been made, (ii) the Borrower shall make
      such deductions and (iii) the Borrower shall pay the full amount deducted to
      the
      relevant Governmental Authority in accordance with applicable law.

     

    (b)    The
      Borrower shall indemnify the Administrative Agent, each Lender and each Issuing
      Bank, within ten (10) days after written demand therefor, for the full
      amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent,
      such Lender or such Issuing Bank, as the case may be, on or with respect to
      any
      payment by or on account of any obligation of the Borrower hereunder or under
      any other Loan Document (including Indemnified Taxes or Other Taxes imposed
      or
      asserted on or attributable to amounts payable under this Section) and any
      penalties, interest and reasonable expenses arising therefrom or with respect
      thereto, whether or not such Indemnified Taxes or Other Taxes were correctly
      or
      legally imposed or asserted by the relevant Governmental Authority. A
      certificate as to the amount of such payment or liability delivered to the
      Borrower by a Lender or an Issuing Bank, or by the Administrative Agent on
      its
      own behalf or on behalf of a Lender or an Issuing Bank, shall be conclusive
      absent manifest error.

     

    (c)    As
      soon
      as practicable after any payment of Indemnified Taxes or Other Taxes by the
      Borrower to a Governmental Authority, the Borrower shall deliver to the
      Administrative Agent the original or a certified copy of a receipt issued by
      such Governmental Authority evidencing such payment, a copy of the return
      reporting such payment or other evidence of such payment reasonably satisfactory
      to the Administrative Agent.

     

    (d)    Any
      Foreign Lender shall deliver to the Borrower (with a copy to the Administrative
      Agent), at the time or times prescribed by applicable law, such properly
      completed and executed documentation prescribed by the law of the jurisdiction
      in which the Borrower is located, or any treaty to which such jurisdiction
      is a
      party, or reasonably requested by the Borrower as will permit such payments
      to
      be made without withholding.

     

    (e)    In
      addition, the Borrower or the Administrative Agent shall pay any Other Taxes
      to
      the relevant Governmental Authority in accordance with applicable
      law.

     

    SECTION
      2.16. Payments
      Generally; Pro Rata Treatment; Sharing of Set-offs.

     

    (a)    The
      Borrower shall make each payment required to be made by it hereunder or under
      any other Loan Document (whether of principal, interest, fees or reimbursement
      of LC Disbursements, or of amounts payable under Section 2.13, 2.14 or 2.15,
      or
      otherwise) prior to 10:00 a.m., Los Angeles, California time, on the date when
      due, in

     

    
      
        
        

      

      
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    immediately
      available funds, without set-off, counterclaim, recoupment or deduction of
      any
      kind. Any amounts received after such time on any date may, in the discretion
      of
      the Administrative Agent, be deemed to have been received on the next succeeding
      Business Day for purposes of calculating interest thereon. All such payments
      shall be made to the Administrative Agent at its offices located at 445 South
      Figueroa Street, Los Angeles, California 90071 (or such other office as the
      Administrative Agent shall from time to time designate to the Borrower), except
      payments to be made directly to an Issuing Bank as expressly provided herein
      and
      except that payments pursuant to Sections 2.13, 2.14, 2.15 and 9.03 shall be
      made directly to the Persons entitled thereto and payments pursuant to other
      Loan Documents shall be made to the Persons specified therein. The
      Administrative Agent shall distribute any such payments received by it for
      the
      account of any other Person to the appropriate recipient promptly following
      receipt thereof. If any payment hereunder or under any other Loan Document
      shall
      be due on a day that is not a Business Day, the date for payment shall be
      extended to the next succeeding Business Day, and, in the case of any fees
      payable pursuant to Section 2.10 or any payment accruing interest, such fees
      and
      such interest shall be payable for the period of such extension. All payments
      under each Loan Document shall be made in dollars.

     

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

     

    (c)    If
      any
      Lender shall, by exercising any right of set-off or counterclaim or otherwise,
      obtain payment in respect of any principal of or interest on any of its Loans
      or
      participations in LC Disbursements resulting in such Lender receiving payment
      of
      a greater proportion of the aggregate amount of its Loans and participations
      in
      LC Disbursements and accrued interest thereon than the proportion received
      by
      any other Lender, then the Lender receiving such greater proportion shall
      purchase (for cash at face value) participations in the Loans and participations
      in LC Disbursements of other Lenders to the extent necessary so that the benefit
      of all such payments shall be shared by the Lenders ratably in accordance with
      the aggregate amount of principal of and accrued interest on their respective
      Loans and participations in LC Disbursements; provided
      that (i)
      if any such participations are purchased and all or any portion of the payment
      giving rise thereto is recovered, such participations shall be rescinded and
      the
      purchase price restored to the extent of such recovery, without interest, and
      (ii) the provisions of this paragraph shall not be construed to apply to any
      payment made by the Borrower pursuant to and in accordance with the express
      terms of this Agreement or any payment obtained by a Lender as consideration
      for
      the assignment of or sale of a participation in any of its Loans or
      participations in LC Disbursements to any assignee or participant, other than
      to
      the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions
      of this paragraph shall apply). The Borrower consents to the foregoing and
      agrees, to the extent it may effectively do so under applicable law, that any
      Lender acquiring a participation pursuant to the foregoing arrangements may
      exercise against the Borrower rights of set-off and counterclaim

     

    
      
        
        

      

      
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    with
      respect to such participation as fully as if such Lender were a direct creditor
      of the Borrower in the amount of such participation.

     

    (d)    Unless
      the Administrative Agent shall have received notice from the Borrower prior
      to
      the date on which any payment is due to the Administrative Agent for the account
      of the Lenders or any Issuing Bank hereunder that the Borrower will not make
      such payment, the Administrative Agent may assume that the Borrower has made
      such payment on such date in accordance herewith and may, in reliance upon
      such
      assumption, distribute to the Lenders or such Issuing Bank, as the case may
      be,
      the amount due. In such event, if the Borrower has not in fact made such
      payment, then each of the Lenders and each of the Issuing Banks, as the case
      may
      be, severally agrees to repay to the Administrative Agent forthwith on demand
      the amount so distributed to such Lender or such Issuing Bank with interest
      thereon, for each day from and including the date such amount is distributed
      to
      it to but excluding the date of payment to the Administrative Agent, at the
      greater of the Federal Funds Effective Rate and a rate determined by the
      Administrative Agent in accordance with banking industry rules on interbank
      compensation.

     

    (e)    If
      any
      Lender shall fail to make any payment required to be made by it pursuant to
      Section 2.04(e) or (f), 2.05(b) or 2.16(d), then the Administrative Agent may,
      in its discretion (notwithstanding any contrary provision hereof), apply any
      amounts thereafter received by the Administrative Agent for the account of
      such
      Lender to satisfy such Lender’s obligations under such Sections until all such
      unsatisfied obligations are fully paid.

     

    SECTION
      2.17. Mitigation
      Obligations; Replacement of Lenders.

     

    (a)    If
      any
      Lender requests compensation under Section 2.13, or if the Borrower is required
      to pay any additional amount to any Lender or any Governmental Authority for
      the
      account of any Lender pursuant to Section 2.15, then such Lender shall use
      reasonable efforts to designate a different lending office for funding or
      booking its Loans hereunder or to assign its rights and obligations hereunder
      to
      another of its offices, branches or affiliates, if, in the judgment of such
      Lender, such designation or assignment (i) would eliminate or reduce amounts
      payable pursuant to Section 2.13 or 2.15, as the case may be, in the future
      and
      (ii) would not subject such Lender to any unreimbursed cost or expense and
      would
      not otherwise be disadvantageous to such Lender. The Borrower hereby agrees
      to
      pay all reasonable costs and expenses incurred by any Lender in connection
      with
      any such designation or assignment.

     

    (b)    If
      (i)
      any Lender requests compensation under Section 2.13, (ii) the Borrower is
      required to pay any additional amount to any Lender or any Governmental
      Authority for the account of any Lender pursuant to Section 2.15, (iii) any
      Lender defaults in its obligation to fund Loans hereunder, or (iv) any Lender
      has not consented to a proposed amendment, waiver or modification under this
      Agreement that requires the consent of all Lenders and which has been approved
      by Required Lenders, then the Borrower may, at its sole expense and effort,
      upon
      notice to such Lender and the Administrative Agent, require such Lender to
      assign and delegate, without recourse (in accordance with and subject to the
      restrictions contained in Section 9.04), all its interests, rights and
      obligations under this Agreement to an assignee that shall assume such
      obligations (which assignee may be another Lender, if a Lender accepts such
      assignment); provided
      that (i)
      the Borrower shall have received the prior written consent of the
      Administrative

     

    
      
        
        

      

      
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    Agent
      and
      each Issuing Bank, which consent shall not unreasonably be withheld, (ii) such
      Lender shall have received payment of an amount equal to the outstanding
      principal of its Loans and participations in LC Disbursements, accrued interest
      thereon, accrued fees and all other amounts payable to it hereunder, from the
      assignee (to the extent of such outstanding principal and accrued interest
      and
      fees) or the Borrower (in the case of all other amounts) and (iii) in the case
      of any such assignment resulting from a claim for compensation under Section
      2.13 or payments required to be made pursuant to Section 2.15, such assignment
      will result in a reduction in such compensation or payments. A Lender shall
      not
      be required to make any such assignment and delegation if, prior thereto, as
      a
      result of a waiver by such Lender or otherwise, the circumstances entitling
      the
      Borrower to require such assignment and delegation cease to apply.

     

    SECTION
      2.18. New
      Lenders.
      On the
      Effective Date, each New Lender and Increasing Existing 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,
      (a)
      the outstanding Revolving Loans owing to each Revolving Lender shall equal
      such
      Revolving Lender’s Applicable Percentage of the aggregate amount of Revolving
      Loans owing to all Revolving Lenders and (b) the outstanding Revenue Bond Loans
      owing to each Revenue Bond Lender shall equal such Revenue Bond Lender’s
      Applicable Percentage of the aggregate amount of Revenue Bond Loans owing to
      all
      Revenue Bond Lenders. In
      addition, on the Effective Date, each New Lender and Increasing Existing 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 Existing 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, (i) each Revolving Lender’s participations in outstanding Revolving
      Letters of Credit and Revolving LC Disbursements shall equal such Revolving
      Lender’s Applicable Percentage of the aggregate amount of such participations
      held by all of the Revolving Lenders and (ii) each Revenue Bond Lender’s
      participations in outstanding Revenue Bond Letters of Credit and Revenue Bond
      LC
      Disbursements shall equal such Revenue Bond Lender’s Applicable Percentage of
      the aggregate amount of such participations held by all of the Revenue Bond
      Lenders.
      As used
      herein, the term “Increasing
      Existing Lender”
means
      each Existing Lender whose Aggregate Commitment (as set forth on Schedule 2.01)
      exceeds its Aggregate Commitment (as defined in the Existing Credit Agreement)
      under the Existing Credit Agreement.

     

    ARTICLE
      III

    Representations
      and Warranties

     

    The
      Borrower represents and warrants to the Administrative Agent, the Lenders and
      the Issuing Banks that:

     

    SECTION
      3.01. Organization;
      Powers.
      The
      Borrower and each of its Consolidated Subsidiaries is duly organized, validly
      existing and in good standing under the laws of the jurisdiction of its
      organization, has all requisite corporate, partnership, limited liability
      company or other applicable organizational power and authority to carry on
      its
      business as now 

     

    
      
        
        

      

      
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    conducted
      and, except where the failure to do so, individually or in the aggregate, could
      not reasonably be expected to result in a Material Adverse Effect, is qualified
      to do business, in and is in good standing, in every jurisdiction where such
      qualification is required.

     

    SECTION
      3.02. Authorization;
      Enforceability.
      The
      Transactions are within the Borrower’s organizational powers and have been duly
      authorized by all necessary corporate and, if required, stockholder action.
      This
      Agreement has been duly executed and delivered by the Borrower and constitutes,
      the Mortgage Indenture constitutes, and each other Loan Document to which the
      Borrower is to be a party, when executed and delivered by the Borrower (and,
      in
      the case of the Collateral Mortgage Bonds, authenticated by the trustee
      therefor), will constitute, a legal, valid and binding obligation of the
      Borrower, enforceable in accordance with its terms, subject to applicable
      bankruptcy, insolvency, reorganization, moratorium or other laws affecting
      creditors’ rights generally and subject to general principles of equity,
      regardless of whether considered in a proceeding in equity or at
      law.

     

    SECTION
      3.03. Governmental
      Approvals; No Conflicts.
      The
      Transactions (a) do not require any consent or approval of, registration or
      filing with, or any other action by, any Governmental Authority, except for
      (i)
      until the satisfaction of the conditions set forth in Section 4.02(c)(i), the
      approval of the ACC that is required for the extension of the Final Maturity
      Date from May 4, 2010 to August 11, 2011 and the increase in the Aggregate
      Commitments above $400,587,047.19,
      (ii) such other approvals of the
      ACC
      that have been obtained and are in full force and effect, and (iii) filings
      necessary to perfect Liens created under the Loan Documents (other than the
      Lien
      of the Mortgage Indenture, in respect of which all requisite filings have been
      made), (b) will not violate any Requirement of Law, (c) will not violate or
      result in a default under any indenture, agreement or other instrument binding
      upon the Borrower or any of its Consolidated Subsidiaries or its assets, or
      give
      rise to a right thereunder to require any payment to be made by the Borrower
      or
      any of its Consolidated Subsidiaries, and (d) will not result in the creation
      or
      imposition of any Lien on any asset of the Borrower or any of its Consolidated
      Subsidiaries, except Liens created under the Loan Documents or under the
      Mortgage Indenture.

     

    SECTION
      3.04. Financial
      Condition; No Material Adverse Change; Secured Indebtedness.

     

    (a)    The
      audited consolidated balance sheet and related statements of income,
      stockholders’ equity and cash flows of the Borrower and its Consolidated
      Subsidiaries for the fiscal year ended December 31, 2005 and the most recent
      financial statements delivered by the Borrower pursuant to Section 5.01(a)
      or
      (b), in each case, present fairly, in all material respects, the financial
      position and results of operations and cash flows of the Borrower and its
      Consolidated 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 5.01(a). Neither the
      Borrower nor any of its Consolidated Subsidiaries had, at the date of the most
      recent balance sheet referred to above, any Guarantee, 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, is material to the Borrower and its
      Consolidated Subsidiaries, taken as a whole, and which is not reflected in
      the
      foregoing statements or in the notes thereto. During the period from
      December 31, 2005 to and including the Effective Date there has been no
      sale,

     

    
      
        
        

      

      
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    transfer
      or other disposition by the Borrower or any of its Consolidated Subsidiaries
      of
      any part of its business or property, and no purchase or other acquisition
      of
      any business or property (including any Capital Stock of any other Person),
      which, in either case, is material in relation to the consolidated financial
      condition of the Borrower and its Consolidated Subsidiaries taken as a whole
      at
      December 31, 2005.

     

    (b)    Except
      to
      the extent that any specific change is explicitly disclosed in the Disclosure
      Documents, since December 31, 2005, there has been no material adverse
      change in the financial condition, results of operations, business or prospects
      of the Borrower and its Consolidated Subsidiaries, taken as a
      whole.

     

    (c)    As
      of the
      Effective Date, there is $538,900,000 in aggregate principal amount of Mortgage
      Bonds outstanding.

     

    SECTION
      3.05. Properties.

     

    (a)    Other
      than as explicitly disclosed in the Disclosure Documents, each of the Borrower
      and its Consolidated Subsidiaries has good title to, or valid leasehold
      interests in, and enjoys peaceful and undisturbed possession of, all its real
      and personal property material to its business, except for minor defects in
      title that do not interfere with its ability to conduct its business as
      currently conducted or to utilize such properties for their intended
      purposes.

     

    (b)    Each
      of
      the Borrower and its Consolidated Subsidiaries owns, or is licensed to use,
      all
      trademarks, tradenames, copyrights, patents and other intellectual property
      material to its business, and the use thereof by the Borrower and its
      Subsidiaries does not infringe upon the rights of any other Person, except
      for
      any such infringements that, individually or in the aggregate, could not
      reasonably be expected to result in a Material Adverse Effect.

     

    SECTION
      3.06. Litigation
      and Environmental Matters.

     

    (a)    Except
      as
      explicitly disclosed in the Disclosure Documents, there are no actions, suits
      or
      proceedings by or before any arbitrator or Governmental Authority pending
      against or, to the knowledge of the Borrower, threatened against or affecting
      the Borrower or any of its Consolidated Subsidiaries (i) as to which there
      is a
      reasonable possibility of an adverse determination and that, if adversely
      determined, would, individually or in the aggregate, result in a Material
      Adverse Effect or (ii) that involve any of the Loan Documents, the Mortgage
      Indenture or the Transactions.

     

    (b)    Except
      as
      explicitly disclosed in the Disclosure Documents, and except with respect to
      any
      other matters that, individually or in the aggregate, could not reasonably
      be
      expected to result in a Material Adverse Effect, neither the Borrower nor any
      of
      its Consolidated Subsidiaries (i) has failed to comply with any Environmental
      Law or to obtain, maintain or comply with any permit, license or other approval
      required under any Environmental Law, (ii) has become subject to any
      Environmental Liability, (iii) has received notice of any claim with respect
      to
      any Environmental Liability or (iv) knows of any basis for any Environmental
      Liability.

     

    
      
        
        

      

      
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    (c)    Since
      the
      date of this Agreement, there has been no change in the status of any matter
      disclosed in the Disclosure Documents that, individually or in the aggregate,
      has resulted in, or materially increased the likelihood of, a Material Adverse
      Effect.

     

    SECTION
      3.07. Compliance
      with Laws and Agreements.
      Except
      as explicitly disclosed in the Disclosure Documents, each of the Borrower and
      its Consolidated Subsidiaries is in compliance with all Requirements of Law,
      including the Fair Labor Standards Act, the Americans with Disabilities Act,
      the
      Foreign Corrupt Practices Act and Anti-Terrorism Laws, applicable to it or
      its
      property and all indentures, agreements and other instruments binding upon
      it or
      its property, except where the failure to be in compliance, individually or
      in
      the aggregate, could not reasonably be expected to result in a Material Adverse
      Effect. No Default has occurred and is continuing.

     

    SECTION
      3.08. Federal
      Regulations.
      No part
      of the proceeds of any Loans will be used for “purchasing” or “carrying” any
“margin stock” within the respective meanings of each of the quoted terms under
      Regulation U as now and from time to time hereafter in effect or for any purpose
      that violates the provisions of the regulations of the Board. If requested
      by
      any Lender or the Administrative Agent, the Borrower will furnish to the
      Administrative Agent and each Lender a statement to the foregoing effect in
      conformity with the requirements of FR Form G-3 or FR Form U-1 referred to
      in
      Regulation U.

     

    SECTION
      3.09. Investment
      Company Status.

     

    (a)    Neither
      the Borrower nor any of its Consolidated Subsidiaries is an “investment company”
or a company “controlled” by an “investment company” as defined in, or subject
      to regulation under, the Investment Company Act of 1940.

     

    (b)    The
      Borrower is not subject to regulation under any Requirement of Law (other than
      Regulation X of the Board and Requirements of Law pertaining to utility
      regulation) which limits its ability to incur Indebtedness.

     

    SECTION
      3.10. Taxes.
      Each of
      the Borrower and its Consolidated Subsidiaries has timely filed or caused to
      be
      filed all Tax returns and reports required to have been filed and has paid
      or
      caused to be paid all Taxes required to have been paid by it, except (a) Taxes
      that are being contested in good faith by appropriate proceedings and for which
      the Borrower or such Subsidiary, as applicable, has set aside on its books
      adequate reserves or (b) to the extent that the failure to do so could not
      reasonably be expected to result in a Material Adverse Effect.

     

    SECTION
      3.11. ERISA.
      No
      ERISA Event has occurred or is reasonably expected to occur that, when taken
      together with all other such ERISA Events for which liability is reasonably
      expected to occur, could reasonably be expected to result in a Material Adverse
      Effect. The present value of all accumulated benefit obligations under each
      Plan
      (based on the assumptions used for purposes of Statement of Financial Accounting
      Standards No. 87) did not, as of the date of the most recent financial
      statements reflecting such amounts, exceed the fair market value of the assets
      of such Plan by an amount that has resulted or could reasonably be expected
      to
      result in a Material Adverse Effect. The present value of all accumulated
      benefit obligations of all underfunded Plans (based on the assumptions used
      for
      purposes of Statement of

     

    
      
        
        

      

      
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    Financial
      Accounting Standards No. 87) did not, as of the date of the most recent
      financial statements reflecting such amounts, exceed the fair market value
      of
      the assets of all such underfunded Plans by an amount that has resulted or
      could
      reasonably be expected to result in a Material Adverse Effect.

     

    SECTION
      3.12. Security
      Documents.

     

    (a)    The
      Collateral Mortgage Bonds are entitled to the benefits of the Mortgage Indenture
      and secured by the Lien of the Mortgage Indenture. Upon delivery of the
      Collateral Mortgage Bonds to the Administrative Agent under a Bond Delivery
      Agreement and at all times thereafter, the Collateral Mortgage Bonds will be
      “Outstanding” and the Administrative Agent will be the “Holder” of the
      Collateral Mortgage Bonds for all purposes of the Mortgage Indenture. The
      Mortgage Indenture constitutes a valid mortgage lien on and a valid and
      perfected security interest in the properties or franchises described therein
      as
      being subject to the Lien of the Mortgage Indenture. As of the Effective Date
      no
      material properties or franchises subject to the Lien of the Mortgage Indenture
      have been released from such Lien, and, as of any subsequent date, no such
      properties or franchises shall have been released from the Lien of the Mortgage
      Indenture except in accordance with the terms thereof and hereof.

     

    (b)    The
      provisions of the Security Documents not covered by paragraph (a) above are
      effective to create, in favor of the Administrative Agent for the benefit of
      the
      secured parties thereunder, legal, valid and enforceable Liens on or in all
      of
      the Collateral subject thereto, and all necessary deliveries of property to
      the
      Administrative Agent and all necessary and appropriate recordings and filings
      have been made in all necessary and appropriate public offices so that the
      Liens
      created by such Security Documents constitute perfected Liens on or in all
      rights, titles, estates and interests of the Borrower and any applicable
      Subsidiaries in the Collateral covered thereby, prior and superior to all other
      Liens and all necessary and appropriate consents to the creation and perfection
      of such Liens have been obtained. No mortgage or financing statement or other
      instrument or recordation covering all or any part of the Collateral is on
      file
      in any recording office which has not been terminated or released, except as
      may
      have been filed in favor of the Administrative Agent.

     

    SECTION
      3.13. Disclosure.
      The
      Borrower has disclosed to 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 nor any of the other reports, financial statements,
      certificates or other information furnished by or on behalf of the Borrower
      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 misstatement of a material 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, the Borrower 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.

     

    
      
        
        

      

      
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    SECTION
      3.14. Solvency.
      On the
      Effective Date, the Borrower is Solvent.

     

    SECTION
      3.15. Labor
      Matters.
      There
      are no strikes or other labor disputes against the Borrower or any of its
      Subsidiaries pending or, to the knowledge of the Borrower, threatened that
      (individually or in the aggregate) could reasonably be expected to have a
      Material Adverse Effect. Hours worked by and payment made to employees of the
      Borrower and 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 the Borrower 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 the Borrower or the relevant Subsidiary.

     

    SECTION
      3.16. Anti-Terrorism
      Laws.

     

    (a)    Neither
      the Borrower nor, to the knowledge of the Borrower, any of its Affiliates is
      in
      violation of any Requirement of Law relating to terrorism or money laundering
      (“Anti-Terrorism
      Laws”),
      including Executive Order No. 13224 on Terrorist Financing, effective
      September 24, 2001 (the “Executive
      Order”),
      and
      the Uniting and Strengthening America by Providing Appropriate Tools Required
      to
      Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56.

     

    (b)    Neither
      the Borrower nor, to the knowledge of the Borrower, any of its Affiliates is
      any
      of the following:

     

    (i)    a
      Person
      that is listed in the annex to, or is otherwise subject to the provisions of,
      the Executive Order;

     

    (ii)    a
      Person
      owned or controlled by, or acting for or on behalf of, any Person that is listed
      on the Annex to, or is otherwise subject to the provisions of, the Executive
      Order;

     

    (iii)    a
      Person
      with whom the Borrower is prohibited from dealing or otherwise engaging in
      any
      transaction by any Anti-Terrorism Law;

     

    (iv)    a
      Person
      who commits, threatens or conspires to commit or supports “terrorism” as defined
      in the Executive Order; or

     

    (v)    a
      Person
      that is named as a “specially designated national or blocked person” on the most
      current list published by the U.S. Treasury Department Office of Foreign Assets
      Control at its official website or any replacement website or other replacement
      official publication of such list.

     

    (c)    Neither
      the Borrower nor, to the knowledge of the Borrower, any of its Affiliates (i)
      conducts any business or engages in making or receiving any contribution of
      funds, goods or services to or for the benefit of any Person described in clause
      (b)(i), (ii), (iii) or (v) above or, to the knowledge of the Borrower, clause
      (b)(iv) above; (ii) deals in, or otherwise engages in any transaction relating
      to, any property or interest in property blocked pursuant to

     

    
      
        
        

      

      
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    the
      Executive Order; or (iii) engages in or conspires to engage in any transaction
      that evades or avoids, or has the purposes of evading or avoiding, or attempts
      to violate, any of the prohibitions set forth in any Anti-Terrorism
      Law.

     

    (d)    No
      broker
      or other agent (other than the Arranger) is acting for the benefit of the
      Borrower or any of its Affiliates, or benefiting in any capacity, in each case
      in connection with the Loan Documents.

     

    ARTICLE
      IV

    Conditions

     

    SECTION
      4.01. Effective
      Date.
      This
      Agreement, and the obligations of the Lenders to make Loans and acquire
      participations in Letters of Credit, and the obligations of the Issuing Banks
      to
      issue Letters 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 9.02):

     

    (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) evidence satisfactory to the Administrative Agent (which may include
      telecopy 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 a favorable written opinion (addressed
      to the Administrative Agent, the Issuing Banks and the Lenders and dated the
      Effective Date) of each of (i) Raymond S. Heyman, Esq., General Counsel for
      the
      Borrower, substantially in the form of Exhibit E-1, (ii) Thelen Reid &
Priest LLP, New York counsel for the Borrower, substantially in the form of
      Exhibit E-2, and (iii) Rodey, Dickason, Sloan, Akin & Robb, PA, special New
      Mexico counsel for the Borrower, substantially in the form of Exhibit E-3,
      and
      covering such other matters relating to the Borrower, the Loan Documents, the
      Mortgage Indenture, the Lien of the Mortgage Indenture or the Transactions
      as
      the Required Lenders shall reasonably request. The Borrower hereby requests
      such
      counsel to deliver such opinions.

     

    (c)    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 Borrower, the authorization
      of
      the Transactions and any other legal matters relating to the Borrower, the
      Loan
      Documents, the Mortgage Indenture, the Lien of the Mortgage Indenture or the
      Transactions, all in form and substance satisfactory to the Administrative
      Agent
      and its counsel.

     

    (d)    The
      conditions set forth in paragraphs (a) and (b) of Section 4.02 shall be
      satisfied, and the Administrative Agent shall have received a certificate,
      dated
      the Effective Date and signed by the President, a Vice President or a Financial
      Officer, confirming compliance with such conditions as of the Effective
      Date.

     

    (e)    The
      Administrative Agent and the Arranger shall have received all fees and other
      amounts due and payable on or prior to the Effective Date, including all
      up-front fees

     

    
      
        
        

      

      
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    and,
      to
      the extent invoiced, reimbursement or payment of all out-of-pocket expenses
      required to be reimbursed or paid by the Borrower hereunder or under any other
      Loan Document.

     

    (f)    The
      Administrative Agent shall have received (i) counterparts of each Revenue Bond
      Pledge Agreement, in each case signed on behalf of the Borrower and any other
      parties thereto; and (ii) copies of any amendments or supplements, entered
      into
      at any time after May 4, 2005, to the Mortgage Indenture, the Revenue Bond
      Indentures, the Revenue Bond Loan Agreements and all related agreements with
      respect to the Revenue Bonds, certified by an authorized officer of the Borrower
      as being a true, correct and complete copy thereof and as being in full force
      and effect.

     

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

     

    (h)    The
      Borrower and its Subsidiaries shall have outstanding no indebtedness or
      preferred stock other than (a) the Obligations, and (b) the Indebtedness
      described in the most recent financial statements of the Borrower and its
      Consolidated Subsidiaries referenced in Section 3.04(a).

     

    (i)    Except
      as
      contemplated in Section 4.02(c)(i), all requisite Governmental Authorities
      (including, without limitation, the ACC and all other regulatory authorities)
      and third parties shall have approved or consented to this Agreement and the
      other Loan Documents and the other transactions contemplated hereby and thereby
      to the extent required, no stay of any applicable regulatory approval shall
      have
      been issued and there shall be no litigation or other governmental,
      administrative or judicial action, actual or threatened, that could reasonably
      be expected to restrain, prevent or impose burdensome conditions on this
      Agreement and the other Loan Documents or the Transactions.

     

    (j)    The
      Administrative Agent, the Issuing Banks 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.

     

    (k)    The
      Capital Stock of the Borrower (to the extent owned by UniSource Energy, which
      owns all Capital Stock of the Borrower) shall all be free and clear of any
      Liens.

     

    SECTION
      4.02. Each
      Credit Event.
      The
      obligation of an Issuing Bank to issue a Letter of Credit (or to issue any
      amendment of a Letter of Credit having the effect of extending the stated
      expiration date thereof, increasing the amount available for drawing thereunder
      or otherwise altering any of the material terms or conditions thereof), and
      the
      obligation of each Revolving Lender to make a Revolving Loan on the occasion
      of
      any Borrowing that increases the amount of the Revolving Loans of any Revolving
      Lender outstanding, shall be subject to the satisfaction of the following
      conditions:

     

    (a)    The
      representations and warranties of the Borrower set forth in this Agreement
      and
      the other Loan Documents shall be true and correct on and as of the date of
      such
      issuance or Borrowing, as the case may be, both before and after giving effect
      thereto and (in the case of any Borrowing) the application of the proceeds
      thereof, as though made on and as of such

     

    
      
        
        

      

      
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    date
      (except where such representations and warranties expressly relate to an earlier
      date, in which case such representations and warranties shall have been true
      and
      correct as of such earlier date).

     

    (b)    At
      the
      time of and immediately after giving effect to such issuance or Borrowing (as
      the case may be), no Default or Event of Default shall have occurred and be
      continuing.

     

    (c)    In
      the
      case of any Revolving Borrowing and/or issuance of a Revolving Letter of Credit
      (or issuance of any amendment of a Revolving Letter of Credit having the effect
      of increasing the amount available for drawing thereunder) that would result
      in
      the utilization of greater than $60,000,000 of the Revolving Commitments, the
      Administrative Agent shall have received on or before the date thereof:
      (i) a copy of an order of the ACC, in form and substance satisfactory to
      the Administrative Agent, authorizing (A) the increase in the aggregate amount
      of the Revolving Commitments provided by this Agreement, (B) the extension
      of
      the maturity date of the credit facilities established by this Agreement, and
      (C) the issuance of Collateral Mortgage Bonds in an aggregate principal amount
      not less than the Aggregate Commitments, certified by an officer of the Borrower
      as being a true, correct and complete copy thereof and as being in full force
      and effect; (ii) new Collateral Mortgage Bonds issued pursuant to the Seventh
      Supplemental Indenture in an aggregate principal amount not less than the
      Aggregate Commitments, in replacement of the previously issued Collateral
      Mortgage Bonds (which shall be returned by the Administrative Agent to the
      Borrower for cancellation), duly issued and authenticated under the Mortgage
      Indenture, together with a Bond Delivery Agreement duly executed by the Borrower
      with respect to such new Collateral Mortgage Bonds; (iii) a duly executed
      copy of the Seventh Supplemental Indenture and all other documents, instruments
      and filings relating to the issuance and authentication of such new Collateral
      Mortgage Bonds under the Mortgage Indenture; and (iv) a favorable written
      opinion of counsel to the Borrower with respect to such ACC order and such
      new
      Collateral Mortgage Bonds, in form and substance satisfactory to the
      Administrative Agent.

     

    Each
      Revolving Borrowing and issuance of a Letter of Credit (or any amendment of
      a
      Letter of Credit having the effect of extending the stated expiration date
      thereof, increasing the amount available for drawing thereunder or otherwise
      altering any of the material terms or conditions thereof) shall be deemed to
      constitute a representation and warranty by the Borrower on the date thereof
      as
      to the matters specified in paragraphs (a) and (b) of this Section.

     

    ARTICLE
      V

    Affirmative
      Covenants

     

    Until
      the
      Aggregate Commitments have expired or been terminated, the principal of and
      interest on each Loan and all fees and other amounts payable hereunder have
      been
      paid in full, all Letters of Credit have expired or terminated and all LC
      Disbursements have been reimbursed in full, the Borrower covenants and agrees
      with the Administrative Agent, the Issuing Banks and the Lenders
      that:

      
      

     

    
      
        
        

      

      
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    SECTION
      5.01. Financial
      Statements and Other Information.
      The
      Borrower will furnish to the Administrative Agent (and the Administrative Agent
      will, promptly after its receipt thereof, forward such copies to the
      Lenders):

     

    (a)    as
      soon
      as available and in any event within 60 days after the end of each of the first
      three fiscal quarterly periods of each fiscal year of the Borrower, or 15 days
      after the date on which its quarterly report for such fiscal quarterly period
      is
      required to be filed with the Securities and Exchange Commission, whichever
      is
      later, consolidated statements of income of the Borrower and its Consolidated
      Subsidiaries for such period and for the period from the beginning of the
      respective fiscal year to the end of such period, consolidated statements of
      cash flows of the Borrower and its Consolidated Subsidiaries from the beginning
      of the applicable fiscal year to the end of such period and the related
      consolidated balance sheets as of the end of such period, setting forth in
      each
      case in comparative form the corresponding consolidated figures for the
      corresponding period in the preceding fiscal year, accompanied by a certificate
      of a Financial Officer of the Borrower, which certificate shall state that
      the
      financial statements fairly present in all material respects the consolidated
      financial condition and results of operations, as the case may be, of the
      Borrower and its Consolidated Subsidiaries in accordance with GAAP, consistently
      applied (except where noted), as of the end of, and for, such period (subject
      to
      normal year-end audit adjustments and the absence of footnotes);

     

    (b)    as
      soon
      as available and in any event within 105 days after the end of each fiscal
      year
      of the Borrower, or 15 days after the date on which its annual report for such
      fiscal year is required to be filed with the Securities and Exchange Commission,
      whichever is later, consolidated statements of income and cash flows of the
      Borrower and its Consolidated Subsidiaries for such year and the related
      consolidated balance sheets as of the end of such year, setting forth in each
      case in comparative form the corresponding consolidated figures for the
      preceding fiscal year, and accompanied by an opinion of independent public
      accountants of recognized national standing selected by the Borrower, which
      opinion shall not contain any qualification or exception as to the scope of
      such
      audit and shall state that the consolidated financial statements fairly present
      in all material respects the consolidated financial condition and results of
      operations of the Borrower and its Consolidated Subsidiaries as of the end
      of,
      and for, such fiscal year and have been prepared in accordance with GAAP,
      consistently applied (except where noted);

     

    (c)    concurrently
      with any delivery of financial statements under clause (a) or (b) above, a
      certificate of a Financial Officer of the Borrower (i) certifying as to whether
      a Default has occurred and, if a Default has occurred, specifying the details
      thereof and any action taken or proposed to be taken with respect thereto,
      (ii)
      setting forth reasonably detailed calculations demonstrating compliance with
      Sections 6.06 and 6.07 and (iii) stating whether any change in GAAP or in the
      application thereof not disclosed in any prior such certificate has occurred
      since December 31, 2005 and, if any such change has occurred, specifying the
      effect of such change on the financial statements accompanying such
      certificate;

     

    (d)    concurrently
      with any delivery of financial statements under clause (b) above, a certificate
      of the accounting firm that reported on such financial statements stating
      whether they obtained knowledge during the course of their examination of such
      financial 

     

    
      
        
        

      

      
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    statements
      of any Default (which certificate may be limited to the extent required by
      accounting rules or guidelines);

     

    (e)    promptly
      upon their becoming available, copies of all registration statements (other
      than
      on Form S-8 or any successor form) and regular periodic reports, if any, that
      the Borrower shall have filed pursuant to Section 13(a) or 15 of the Securities
      Exchange Act of 1934, as amended, with the Securities and Exchange Commission
      (or any governmental agency substituted therefor) or filed with any national
      securities exchange;

     

    (f)    promptly
      upon the mailing thereof to the shareholders of the Borrower generally, copies
      of all financial statements, reports and proxy statements so
      mailed;

     

    (g)    promptly
      upon their becoming available, copies of all current reports on Form 8-K filed
      by the Borrower with the Securities and Exchange Commission, and all similar
      reports filed with any national securities exchange;

     

    (h)    promptly
      upon their becoming available, copies of (i) any certified resolutions of the
      Board of Directors of the Borrower and net earnings certificates delivered
      under
      the Mortgage Indenture in connection with the issuance of Bonds upon the basis
      of net property additions or deposits of cash; any certificates of a Financial
      Officer under either Indenture with respect to amounts charged to replacement
      reserve, detailing insurance on the Borrower’s property or showing compliance by
      the Borrower with the covenants contained in such Indenture; any supplemental
      indentures to either Indenture; any redemption notices under either Indenture;
      and any notices of defaults under either Indenture or accelerations of Bonds;
      (ii) any notices of default under the documentation for any Sale Leaseback
      of
      the Borrower or any Consolidated Subsidiary, any notices of non-payment of
      rent
      or any other material amounts owing under any such Sale Leaseback documentation
      and any notices of acceleration of any amounts due under any such Sale Leaseback
      documentation; and (iii) any written notices from the ACC of non-compliance
      by
      the Borrower or any of its Consolidated Subsidiaries with any material ACC
      decision or with any other rules, regulations or orders of the ACC, and any
      written notices of any extraordinary audit or investigation by the ACC into
      the
      business, affairs or operations of the Borrower or any of its Consolidated
      Subsidiaries;

     

    (i)    
as
      soon
      as practicable and in any event within five Business Days after the Borrower
      receives written notice of an upgrading or a downgrading of the Index Debt
      by
      any Rating Agency, a notice of such upgrading or downgrading;

     

    (j)    
if
      requested by the Administrative Agent, concurrently with any delivery of
      financial statements under clause (a) or (b) above, consolidating statements
      of
      income and cash flows for the applicable periods and the consolidating balance
      sheets as of the end of such periods, accompanied (i) in the case of a delivery
      of financial statements under clause (a) above, by a certificate of a Financial
      Officer of the Borrower, which certificate shall state that such financial
      statements fairly present in all material respects the consolidating financial
      condition and results of operations, as the case may be, of the Borrower and
      its
      Consolidated Subsidiaries in accordance with GAAP, consistently applied (except
      where noted), as of the end of, and for, the applicable period (subject to
      normal year-end audit adjustments), and (ii) in the case of a delivery of
      financial statements under clause (b) above, by (A) a certificate of a Financial
      Officer

     

    
      
        
        

      

      
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    of
      the
      Borrower, which certificate shall state that such consolidating financial
      statements fairly present in all material respects the financial condition
      and
      results of operations of the Borrower and its Consolidated Subsidiaries as
      of
      the end of, and for, the applicable fiscal year and have been prepared in
      accordance with GAAP, consistently applied (except where noted), and (B) a
      certificate of the independent public accountants referred to in clause (i)
      of
      paragraph (b) above, which certificate should state that such consolidating
      financial statements are the consolidating financial statements that served
      as
      the basis for the audited consolidated financial statements in respect of which
      such accountants delivered the opinion referred to in such clause (i);
      and

     

    (k)    promptly
      following any request therefor, such other information regarding the operations,
      business affairs and financial condition of the Borrower or any Subsidiary,
      or
      compliance with the terms of any Loan Document or the Mortgage Indenture, as
      the
      Administrative Agent or any Lender may reasonably request.

     

    So
      long
      as the Borrower is subject to the financial reporting requirements of the
      Securities Exchange Act of 1934, as amended, and the financial statements
      contained in any quarterly or annual reports filed with the Securities and
      Exchange Commission in accordance with such Act and the rules and regulations
      promulgated thereunder, such financial statements may be delivered by the
      Borrower in satisfaction of its obligations to deliver consolidated financial
      statements pursuant to clauses (a) or (b), as the case may be, of this Section
      5.01.

     

    SECTION
      5.02. Notices
      of Material Events.
      The
      Borrower will furnish to the Administrative Agent and each Lender prompt written
      notice of the following:

     

    (a)    the
      occurrence of any Default;

     

    (b)    the
      filing or commencement of any action, suit or proceeding by or before any
      arbitrator or Governmental Authority against or affecting the Borrower or any
      Affiliate thereof as to which there is a reasonable possibility of an adverse
      determination and that, if adversely determined, could reasonably be expected
      to
      result in a Material Adverse Effect;

     

    (c)    the
      occurrence of any ERISA Event that, alone or together with any other ERISA
      Events that have occurred, could reasonably be expected to result in liability
      of the Borrower and its Subsidiaries in an aggregate amount exceeding
      $25,000,000; and

     

    (d)    any
      other
      development that results in, or could reasonably be expected to result in,
      a
      Material Adverse Effect.

     

    Each
      notice delivered under this Section shall be accompanied by a statement of
      a
      Financial Officer or other executive officer of the Borrower setting forth
      the
      details of the event or development requiring such notice and any action taken
      or proposed to be taken with respect thereto.

     

    SECTION
      5.03. Existence;
      Conduct of Business.
      The
      Borrower will, and will cause each of its Consolidated Subsidiaries to, do
      or
      cause to be done all things necessary to preserve, renew and keep in full force
      and effect its legal existence and the rights, licenses, permits, privileges
      and
      franchises material to the conduct of its business, except to the extent the
      failure to do so could not reasonably be expected to result in a Material
      Adverse Effect; provided

     

    
      
        
        

      

      
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    that
      the
      foregoing shall not prohibit any merger, consolidation, liquidation or
      dissolution permitted under Section 6.03.

     

    SECTION
      5.04. Payment
      of Obligations.
      The
      Borrower will, and will cause each of its Consolidated Subsidiaries to, pay
      its
      obligations, including Tax liabilities and assessments (including water
      assessments by the Arizona State Land Department), that, if not paid, could
      reasonably be expected to result in a Material Adverse Effect, before the same
      shall become delinquent or in default, except where (a) the validity or amount
      thereof is being contested in good faith by appropriate proceedings, (b) the
      Borrower or such Subsidiary has set aside on its books adequate reserves with
      respect thereto to the extent required by and otherwise in accordance with
      GAAP
      and (c) the failure to make payment pending such contest could not reasonably
      be
      expected to result in a Material Adverse Effect.

     

    SECTION
      5.05. Maintenance
      of Properties; Insurance.
      The
      Borrower will, and will cause each of its Consolidated Subsidiaries to, (a)
      keep
      and maintain all property material to the conduct of its business in good
      working order and condition, ordinary wear and tear excepted; provided
      that the
      Borrower or any of its Consolidated Subsidiaries may discontinue the operation
      of any of its properties to the extent, in the judgment of the Borrower, it
      is
      no longer advisable to operate such property, or to the extent the Borrower
      or
      such Subsidiary intends to sell or otherwise dispose of such property, which
      disposition is not prohibited by Section 6.04; and (b) maintain, with
      financially sound and reputable insurance companies, or through its own program
      of self-insurance, insurance in such amounts and against such risks as are
      customarily maintained by companies engaged in the same or similar businesses
      operating in the same or similar locations.

     

    SECTION
      5.06. Books
      and Records; Inspection Rights.
      The
      Borrower will, and will cause each of its Consolidated 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. The Borrower will, and will cause
      each
      of its Subsidiaries to, permit any representatives designated by the
      Administrative Agent or any Lender, upon reasonable prior notice, to visit
      and
      inspect its properties, and, subject to contractual or statutory limitations
      regarding confidential or proprietary information, to examine and make extracts
      from its books and records, and to discuss its affairs, finances and condition
      with its officers, all at such reasonable times and as often as reasonably
      requested.

     

    SECTION
      5.07. Compliance
      with Laws and Agreements.
      The
      Borrower will, and will cause each of its Subsidiaries to, comply with (a)
      all
      laws, rules, regulations and orders of any Governmental Authority applicable
      to
      it or its property (including, without limitation, ERISA and Environmental
      Laws)
      and (b) the Revenue Bond Loan Agreements, in each case except where the failure
      to do so, individually or in the aggregate, could not reasonably be expected
      to
      result in a Material Adverse Effect.

     

    SECTION
      5.08. Use
      of
      Proceeds and Letters of Credit.
      The
      proceeds of the Loans and the Revolving Letters of Credit will be used only
      for
      general corporate purposes.
      No
      part
      of the proceeds of any Loan or of any Letter of Credit will be used, whether
      directly or indirectly, for any purpose that entails a violation of any of
      the
      regulations of the Board, including Regulations U and X. Each Revenue Bond
      Letter of Credit will be issued only to

     

    
      
        
        

      

      
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    support
      the Revenue Bonds set forth on Schedule 2.04 corresponding to such Revenue
      Bond
      Letter of Credit.

     

    SECTION
      5.09. Environmental
      Laws.

     

    (a)    The
      Borrower will, and will cause each of its Consolidated Subsidiaries to, comply
      with, and use commercially reasonable efforts to insure compliance by all
      tenants and subtenants, if any, with, all Environmental Laws, and will, and
      will
      cause each of its Consolidated Subsidiaries to, obtain and comply with and
      maintain, and use commercially reasonable efforts to insure that all tenants
      and
      subtenants obtain and comply with and maintain, any and all licenses, approvals,
      registrations or permits required by Environmental Laws, except to the extent
      that failure to do so could not reasonably be expected to have a Material
      Adverse Effect;

     

    (b)    The
      Borrower will, and will cause each of its Consolidated Subsidiaries to, conduct
      and complete all investigations, studies, sampling and testing, and all
      remedial, removal and other actions required under Environmental Laws, except
      to
      the extent that the failure to take such actions could not reasonably be
      expected to have a Material Adverse Effect, and promptly comply with all lawful
      orders and directives of all Governmental Authorities respecting Environmental
      Laws, except to the extent that the same are being contested in good faith
      by
      appropriate proceedings and the pendency of such proceedings could not
      reasonably be expected to have a Material Adverse Effect.

     

    SECTION
      5.10. Further
      Assurances.
      The
      Borrower will, and will cause each of its Consolidated Subsidiaries to, execute
      any and all further documents, financing statements, agreements and instruments,
      and take all such further actions (including the filing and recording of
      financing statements, fixture filings, mortgages, deeds of trust and other
      documents), which may be required under any applicable law, or which the
      Administrative Agent or the Required Lenders may reasonably request, to
      effectuate the transactions contemplated by the Loan Documents or under the
      Mortgage Indenture or to grant, preserve, protect or perfect the Liens created
      or intended to be created by the Mortgage Indenture or the Security Documents
      or
      the validity or priority of any such Lien, all at the expense of the Borrower.
      The Borrower also agrees to provide to the Administrative Agent, from time
      to
      time upon request, evidence reasonably satisfactory to the Administrative Agent
      as to the perfection and priority of the Liens created or intended to be created
      by the Security Documents or by or under the Mortgage Indenture.

     

    ARTICLE
      VI

    Negative
      Covenants

     

    Until
      the
      Aggregate Commitments have expired or been terminated, the principal of and
      interest on each Loan and all fees and other amounts payable hereunder have
      been
      paid in full, all Letters of Credit have expired or terminated and all LC
      Disbursements have been reimbursed in full, the Borrower covenants and agrees
      with the Administrative Agent, the Issuing Banks and the Lenders
      that:

     

    
      
        
        

      

      
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    SECTION
      6.01. Indebtedness.
      The
      Borrower will not permit:

     

    (a)    the
      aggregate principal amount of Mortgage Bonds outstanding at any time to exceed
      the sum of (i) $750,000,000 plus
      (ii) the excess, if any, of (x) the aggregate amount of the Revolving
      Commitments over (y) $60,000,000; provided
      that
      there shall be disregarded for purposes of any determination under this
      paragraph the principal amount of any outstanding Mortgage Bonds which (A)
      are
      to be redeemed or paid at maturity within 90 days after the date of such
      determination or (B) evidence or secure the Borrower’s obligations in respect of
      industrial development revenue bonds of the same principal amount (or related
      reimbursement obligations) which are to be redeemed or paid at maturity within
      90 days after the date of such determination; provided,
      however,
      that
      (1) in the case of any such redemption, either irrevocable and unconditional
      notice of redemption shall have been given or irrevocable and unconditional
      instructions shall have been given to the related trustee to give such notice
      of
      redemption and (2) in the case of any such redemption or payment, cash in an
      amount sufficient to redeem or repay the Mortgage Bonds to be disregarded (or
      the obligations evidenced or secured thereby) shall have been deposited with
      the
      applicable trustee for the redemption or payment thereof; or

     

    (b)    the
      aggregate amount of Guarantees by the Borrower and the Consolidated Subsidiaries
      (other than Guarantees of the Obligations and other than Guarantees by the
      Borrower or any Consolidated Subsidiary of Indebtedness or obligations of the
      Borrower or a Consolidated Subsidiary) outstanding at any time to exceed
      $30,000,000.

     

    SECTION
      6.02. Liens.
      The
      Borrower will not, and will not permit any Subsidiary to, create, incur, assume
      or permit to exist any Lien on the Mortgaged Property (as defined in the
      Mortgage Indenture) now owned or hereafter acquired by the Borrower, or any
      income therefrom, prior to the Lien of the Mortgage Indenture, except Permitted
      Encumbrances and Prepaid Liens (as such terms are defined in the Mortgage
      Indenture) and any other Liens expressly permitted pursuant to Section 5 of
      Article IV of the Mortgage Indenture.

     

    SECTION
      6.03. Fundamental
      Changes.

     

    (a)    The
      Borrower will not, and will not permit any of its Consolidated Subsidiaries
      to,
      merge into or consolidate with any other Person, or permit any other Person
      to
      merge into or consolidate with it, or sell, transfer, lease or otherwise dispose
      of (in one transaction or in a series of transactions) its assets as an entirety
      or substantially as an entirety, or all or substantially all of the Capital
      Stock of any of its Consolidated Subsidiaries (in each case, whether now owned
      or hereafter acquired), or liquidate or dissolve, except that, if at the time
      thereof and immediately after giving effect thereto no Default shall have
      occurred and be continuing (i) any Person may merge into the Borrower in a
      transaction in which the Borrower is the surviving corporation, (ii) any
      Consolidated Subsidiary may merge with any other Consolidated Subsidiary, and
      (iii) the Borrower may merge with or into or consolidate with or transfer its
      assets as an entirety or substantially as an entirety to any Person, so long
      as
      (A) immediately prior to and immediately after giving effect to such merger,
      consolidation or transfer, the Person with or into which the Borrower shall
      ultimately merge or consolidate or to whom the Borrower shall ultimately
      transfer its assets as an entirety or substantially as an entirety is in the
      Utility Business; (B) the Required Lenders shall have determined (so long
      as

     

    
      
        
        

      

      
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    such
      determination is exercised in good faith and after consultation with the
      Borrower) that the rating of the first mortgage bonds (or bonds otherwise
      denominated that benefit from a first Lien on such Person’s utility assets, or,
      if such Person has no first mortgage bonds, the rating of the senior unsecured
      long-term Indebtedness of such Person that is not guaranteed and does not
      benefit from any other credit enhancement) of the surviving Person of any such
      merger, consolidation, acquisition or transfer of assets shall be at least
      BBB-
      or higher by S&P and Baa3 or higher by Moody’s (unless the requirements of
      this clause (B) shall have been waived by the Required Lenders); provided
      that the
      requirement of this clause (B) shall be deemed to have been satisfied if, prior
      to the consummation of any such merger, consolidation or transfer, the Borrower
      shall have delivered written evidence from each such Rating Agency to the effect
      that, upon such merger, consolidation or transfer, the applicable rating of
      such
      surviving Person would be equal to or higher than the ratings specified in
      this
      clause (B); (C) in the case of any merger or consolidation or transfer of assets
      in which the Borrower is not the surviving corporation, the Person formed by
      any
      such consolidation or transfer of assets or into which the Borrower shall be
      merged or consolidated or to which such assets are transferred shall have
      executed an agreement in form reasonably satisfactory to the Administrative
      Agent containing an assumption by the surviving Person of the due and punctual
      performance of each obligation, agreement, covenant and condition of each of
      the
      Loan Documents and the Mortgage Indenture to be performed or complied with
      by
      the Borrower; and (D) the Administrative Agent shall have received an opinion
      of
      counsel, in form and substance reasonably satisfactory to the Administrative
      Agent and its counsel, with respect to the due authorization, execution,
      delivery, validity and enforceability of the assumption agreement referred
      to in
      clause (C) of this Section 6.03, of the enforceability and continuation of
      the
      Liens created pursuant to the Security Documents and such other matters as
      the
      Required Lenders may reasonably require.

     

    (b)    The
      Borrower will not, and will not permit any of its Consolidated Subsidiaries
      to,
      engage to any material extent in any business other than the Utility
      Business.

     

    SECTION
      6.04. Sale
      of Assets.

     

    (a)    The
      Borrower will not, and will not permit any of its Consolidated Subsidiaries
      to,
      convey, sell, lease, assign, transfer or otherwise dispose of any of its
      property, business or assets (including leasehold interests), whether now owned
      or hereafter acquired, except:

     

    (i)    
inventory
      and other property in the ordinary course of business; 

     

    (ii)    sales
      of
      accounts receivable;

     

    (iii)   property,
      businesses or assets (including receivables and leasehold interests) with an
      aggregate Fair Value not in excess of $250,000,000; provided
      that the
      aggregate Fair Value of such property, businesses or assets permitted to be
      disposed of pursuant to this clause (iii) shall be increased on a dollar for
      dollar basis by the aggregate amount of each reduction of the Aggregate
      Commitments in respect of which the Borrower shall have given the Administrative
      Agent, for the benefit of the Lenders, written evidence of the Borrower’s
      agreement not to issue Indebtedness under the Mortgage Indenture based upon
      the
      Mortgage Bonds retired in connection with such reduction;

     

    
      
        
        

      

      
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    (iv)  
property
      in connection with any securitization (e.g.,
      stranded costs) or sale of assets required by law; and

     

    (v)   any
      sale
      of the Borrower’s assets as an entirety or substantially as an entirety in
      accordance with Section 6.03, provided
      that any
      assets of the Borrower not included in such sale shall be deemed to have been
      disposed of in a transaction subject to the limitations of this Section 6.04,
      including the dollar limit set forth in clause (iii) above;

     

    provided,
      that
      any Consolidated Subsidiary may convey, sell, lease, assign, transfer or
      otherwise dispose of any of its property, business or assets to the Borrower
      or
      any other Consolidated Subsidiary. Investments by the Borrower and the
      Consolidated Subsidiaries in, and contributions by the Borrower and the
      Consolidated Subsidiaries to, Consolidated Subsidiaries shall be deemed not
      to
      constitute transfers of assets subject to the limitations of this Section 6.04
      to the extent such investments or contributions are made in cash.

     

    (b)    Without
      limitation of subsection (a) above, the Borrower will not, and will not permit
      any of its Consolidated Subsidiaries to, convey, sell, lease, assign, transfer
      or otherwise dispose of all or substantially all of its generating assets
      (including leasehold interests), whether now owned or hereafter acquired, except
      as required by applicable law.

     

    SECTION
      6.05. Restricted
      Payments.

     

    (a)    The
      Borrower will not declare or make, or agree to pay or make, directly or
      indirectly, any Restricted Payment at any time that any Default has occurred
      and
      is continuing or would occur as a result of such action, except that (i) the
      Borrower may declare and pay dividends with respect to its capital stock payable
      solely in additional shares of its common stock and (ii) the Borrower may make
      Restricted Payments pursuant to and in accordance with stock option plans or
      other benefit plans for management or employees of the Borrower and its
      Subsidiaries.

     

    (b)    The
      Borrower will not, and will not permit any Consolidated Subsidiary to, directly
      or indirectly, purchase or acquire any Capital Stock, evidences of indebtedness
      or other securities (including any option, warrant or other right to acquire
      any
      of the foregoing) of, make any loans or advances to, Guarantee any obligations
      of, or make any investment or otherwise acquire any other interest in, any
      Affiliate of the Borrower (other than a Consolidated Subsidiary) (each of the
      foregoing, an “Affiliate
      Investment”),
      at
      any time that a Default has occurred and is continuing or, as a result of the
      making of such Affiliate Investment, would occur or would be deemed to occur
      pursuant to the next sentence. For purposes of determining whether a Default
      would be deemed to occur under Section 6.06 or 6.07 as a result of an Affiliate
      Investment, the applicable computations shall be made as if the Affiliate
      Investment were a dividend and did not result in the creation of any
      asset.

     

    
      
        
        

      

      
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    SECTION
      6.06. Cash
      Coverage Ratio.
      The
      Borrower will not permit the ratio of (a) Consolidated EBITDA to (b)
      Consolidated Interest Expense, in each case for the twelve-month period ended
      on
      the last day of any fiscal quarter commencing with the fiscal quarter ended
      June
      30, 2006, to be less than 2.25 to 1.0.

     

    SECTION
      6.07. Leverage
      Test.
      The
      Borrower will not permit the ratio of (a) Consolidated Total Indebtedness at
      the
      end of any fiscal quarter to (b) Consolidated EBITDA for the twelve-month period
      ended on such date to be greater than the amount specified in the chart below
      for the period in which such date shall occur:

    

    
      	
              Period

            	
              Maximum
                Ratio

            
	
              From
                the Effective Date through and including December 31, 2006

            	
              4.50

            
	
              From
                January 1, 2007 through and including December 31, 2007

            	
              4.25

            
	
              From
                and after January 1, 2008

            	
              4.00

            

    

     

    SECTION
      6.08. Amendments
      to Documents.
      The
      Borrower will not, and will not permit any Consolidated Subsidiary to, amend,
      modify or change, or consent or agree to any amendment, modification or change
      to, the Mortgage Indenture, the Sixth Supplemental Indenture, the Seventh
      Supplemental Indenture (upon the execution and delivery thereof pursuant to
      the
      terms of this Agreement), any Revenue Bond Indenture, any Revenue Bond Loan
      Agreement or any Revenue Bonds without the prior written consent of the Required
      Lenders and any Issuing Bank affected thereby, provided
      that (i)
      such consent shall not be required in connection with any amendment of the
      Mortgage Indenture for which the Mortgage Indenture does not require the consent
      of any bondholder, (ii) such consent shall not be unreasonably withheld with
      respect to any amendment of the Mortgage Indenture that has been approved by
      bondholders entitled to vote under the Mortgage Indenture who hold bonds in
      an
      aggregate principal amount greater than the principal amount of the Collateral
      Mortgage Bonds and (iii) such consent shall not be required in connection with
      any amendment of any Revenue Bond Indenture, any Revenue Bond Loan Agreement
      or
      any Revenue Bonds to provide for a mandatory tender of Revenue Bonds at any
      time
      when such Revenue Bonds are currently subject to mandatory redemption at a
      purchase price which does not exceed the applicable redemption
      price.

     

    SECTION
      6.09. Sale
      Leaseback Transactions.
      The
      Borrower will not, and will not permit any of its Subsidiaries to, enter into
      any Sale Leaseback if the aggregate annual basic rent payments under all Sale
      Leasebacks entered into by the Borrower and its Subsidiaries after the date
      hereof would exceed $20,000,000 in any fiscal year after giving effect to such
      Sale Leaseback.

     

    SECTION
      6.10. Release
      of Collateral under the Mortgage Indenture.
      The
      Borrower will not, and will not permit any of its Subsidiaries to, permit any
      asset (including any

     

    
      
        
        

      

      
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    cash)
      to
      be released from the Lien of the Mortgage Indenture other than in accordance
      with the terms and provisions of the Mortgage Indenture.

     

    SECTION
      6.11. Transactions
      with Affiliates.
      The
      Borrower will not, and will not permit any of the Consolidated 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 which are not Consolidated
      Subsidiaries, except (a) at prices and on terms and conditions not less
      favorable to the Borrower or such Subsidiary than could be obtained on an
      arm’s-length basis from unrelated third parties, (b) transactions between or
      among the Borrower and the Consolidated Subsidiaries not involving any other
      Affiliate, (c) any Restricted Payment permitted by Section 6.05(a), (d) 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, (e) tax sharing arrangements
      on customary terms for similarly situated companies, (f) customary fees paid
      to
      members of the board of directors of the Borrower and the Consolidated
      Subsidiaries who are not officers of the Borrower or any Subsidiary and (g)
      transactions to acquire, either through asset purchases, mergers or purchases
      of
      Capital Stock, the business and operations of Southwest Energy Solutions, Inc.
      or Millennium Environmental Group, Inc.

     

    SECTION
      6.12. Limitation
      on Hedge Agreements.
      The
      Borrower will not, and will not permit any of the Consolidated Subsidiaries
      to,
      enter into any Hedge Agreement other than Hedge Agreements entered into in
      the
      ordinary course of business.

     

    SECTION
      6.13. Restrictive
      Agreements.
      The
      Borrower will not, and will not permit any of its Consolidated Subsidiaries
      to,
      directly or indirectly, enter into, incur or permit to exist any agreement
      or
      other arrangement that prohibits, restricts or imposes any condition upon the
      ability of any Consolidated Subsidiary to pay dividends or other distributions
      with respect to any shares of its Capital Stock or to make or repay loans or
      advances to the Borrower or any other Consolidated Subsidiary or to Guarantee
      Indebtedness of the Borrower or any other Consolidated Subsidiary; provided
      that the
      foregoing shall not apply to restrictions and conditions (i) imposed by law,
      (ii) imposed by any Loan Document, (iii) contained in agreements entered into
      after the Effective Date which contain restrictions no more restrictive than
      those contained in the Loan Documents and (iv) contained in agreements relating
      to the sale of a Subsidiary pending such sale; provided
      in the
      case of this clause (iv) such restrictions and conditions apply only to the
      Subsidiary that is to be sold and such sale is permitted hereunder.

     

    ARTICLE
      VII

    Events
      of Default

     

    If
      any of
      the following events (“Events
      of Default”)
      shall
      occur:

     

    (a)    the
      Borrower shall fail to pay any principal of any Loan or any reimbursement
      obligation in respect of any LC Disbursement when and as the same shall become
      due and payable, whether at the due date thereof or at a date fixed for
      prepayment thereof or otherwise, subject in the case of any such reimbursement
      obligation to a grace period of two days;

     

    
      
        
        

      

      
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    (b)    the
      Borrower shall fail to pay any interest on any Loan or any fee or any other
      amount (other than an amount referred to in clause (a) of this Article) payable
      under this Agreement or any other Loan Document, when and as the same shall
      become due and payable, and such failure shall continue unremedied for a period
      of five days;

     

    (c)    any
      representation or warranty made or deemed made by or on behalf of the Borrower
      or any Consolidated Subsidiary in or in connection with any Loan Document or
      any
      amendment or modification thereof or waiver thereunder, or in any report,
      certificate, financial statement or other document furnished pursuant to or
      in
      connection with any Loan Document or any amendment or modification thereof
      or
      waiver thereunder, shall prove to have been incorrect in any material respect
      when made or deemed made;

     

    (d)    the
      Borrower shall fail to observe or perform any covenant, condition or agreement
      contained in Section 5.02, 5.03 (with respect to the Borrower’s existence) or
      5.08 or in Article VI;

     

    (e)    the
      Borrower shall fail to observe or perform any covenant, condition or agreement
      contained in any Loan Document (other than those specified in clause (a), (b)
      or
      (d) of this Article), and such failure shall continue unremedied for a period
      of
      30 days after notice thereof from the Administrative Agent to the Borrower
      (which notice will be given at the request of any Lender);

     

    (f)    the
      Borrower or any Significant Subsidiary shall fail to make any payment of
      principal (regardless of amount) in respect of any Material Indebtedness, when
      and as the same shall become due and payable;

     

    (g)    any
      event
      or condition occurs that results in any Material Indebtedness becoming due
      prior
      to its scheduled maturity or that enables or permits (with or without the giving
      of notice, the lapse of time or both) the holder or holders of any Material
      Indebtedness or any trustee or agent on its or their behalf to cause any
      Material Indebtedness to become due, or to require the prepayment, repurchase,
      redemption (other than pursuant to provisions permitting the tendering of such
      Indebtedness from time to time for repurchase or redemption without regard
      to
      the occurrence or non-occurrence of any event or condition) or defeasance
      thereof, prior to its scheduled maturity; provided
      that
      this clause (g) shall not apply to secured Indebtedness that becomes due as
      a
      result of the voluntary sale or transfer of the property or assets securing
      such
      Indebtedness;

     

    (h)    an
      involuntary proceeding shall be commenced or an involuntary petition shall
      be
      filed seeking (i) liquidation, reorganization or other relief in respect of
      the
      Borrower or any Significant Subsidiary or its debts, or of a substantial part
      of
      its assets, under any Federal, state or foreign bankruptcy, insolvency,
      receivership or similar law now or hereafter in effect or (ii) the appointment
      of a receiver, trustee, custodian, sequestrator, conservator or similar official
      for the Borrower or any Significant Subsidiary or for a substantial part of
      its
      assets, and, in any such case, such proceeding or petition shall continue
      undismissed for 60 days or an order or decree approving or ordering any of
      the
      foregoing shall be entered;

     

    
      
        
        

      

      
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    (i)    
the
      Borrower or any Significant Subsidiary shall (i) voluntarily commence any
      proceeding or file any petition seeking liquidation, reorganization or other
      relief under any Federal, state or foreign bankruptcy, insolvency, receivership
      or similar law now or hereafter in effect, (ii) consent to the institution
      of,
      or fail to contest in a timely and appropriate manner, any proceeding or
      petition described in clause (h) of this Article, (iii) apply for or consent
      to
      the appointment of a receiver, trustee, custodian, sequestrator, conservator
      or
      similar official for the Borrower or any Significant Subsidiary or for a
      substantial part of its assets, (iv) file an answer admitting the material
      allegations of a petition filed against it in any such proceeding, (v) make
      a
      general assignment for the benefit of creditors or (vi) take any action for
      the
      purpose of effecting any of the foregoing;

     

    (j)    
the
      Borrower or any Significant Subsidiary shall become unable, admit in writing
      its
      inability or fail generally to pay its debts as they become due;

     

    (k)    one
      or
      more judgments for the payment of money in an aggregate amount in excess of
      $20,000,000 shall be rendered against the Borrower, any Significant Subsidiary
      or any combination thereof and the same shall remain undischarged for a period
      of 30 consecutive days during which execution shall not be effectively stayed,
      or any action shall be legally taken by a judgment creditor to attach or levy
      upon any assets of the Borrower or any Significant Subsidiary to enforce any
      such judgment;

     

    (l)    
an
      ERISA
      Event shall have occurred that, when taken together with all other ERISA Events
      that have occurred, has resulted or could reasonably be expected to result
      in a
      Material Adverse Effect;

     

    (m)   (i)
      any
      Lien purported to be created under any Security Document or the Mortgage
      Indenture shall cease to be, or shall be asserted by the Borrower or any
      Consolidated Subsidiary not to be, a valid and perfected Lien on any collateral
      subject thereto, with the priority required by the applicable Security Document
      or the Mortgage Indenture, as applicable, except (A) as a result of the sale
      or
      other disposition of the applicable Collateral in a transaction permitted under
      the Loan Documents or (B) as a result of the Administrative Agent’s failure to
      maintain possession of any stock certificates, promissory notes or other
      instruments delivered to it under any Security Document, or (ii) any Collateral
      Mortgage Bond shall for any reason (x) cease to be entitled to the benefits
      of
      the Mortgage Indenture or to be secured by the Lien of the Mortgage Indenture
      equally and ratably with all other bonds, if any, outstanding under the Mortgage
      Indenture or (y) cease to be a legal, valid and binding obligation of the
      Borrower; or

     

    (n)    any
      Change in Control shall occur; or

     

    (o)    any
      material provision of this Agreement or any other Loan Document to which the
      Borrower 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 the Borrower, or the Borrower shall so assert in writing;

     

    then,
      and
      in every such event (other than an event with respect to the Borrower described
      in clause (h) or (i) of this Article), and at any time thereafter during the
      continuance of such event, (A) the Revenue Bond Issuing Banks (in the case
      of
      clauses (iii) and (vi) below) shall, at the

     

    
      
        
        

      

      
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    request
      of the Administrative Agent or the Required Lenders, and (B) the Administrative
      Agent may, and at the request of the Required Lenders shall, in each case by
      notice to the Borrower, take any or all of the following actions, at the same
      or
      different times: (i) terminate the Aggregate Commitments, and thereupon the
      Aggregate Commitments shall terminate immediately, (ii) declare the Loans and
      LC
      Disbursements then outstanding to be due and payable in whole (or in part,
      in
      which case any principal not so declared to be due and payable may thereafter
      be
      declared to be due and payable), and thereupon the principal of the Loans and
      LC
      Disbursements so declared to be due and payable, together with accrued interest
      thereon and all fees and other obligations of the Borrower accrued hereunder,
      shall become due and payable immediately, without presentment, demand, protest
      or other notice of any kind, all of which are hereby waived by the Borrower,
      (iii) take any action under Section 2.04(k), (iv) deliver a notice of redemption
      under the Sixth Supplemental Indenture or the Seventh Supplemental Indenture
      (as
      applicable) stating that such notice is being delivered pursuant to this Article
      VII, (v) require
      the Borrower to (in which case the Borrower shall) deposit immediately with
      the
      Administrative Agent cash collateral in
      an
      amount
      equal to the aggregate
      undrawn
      amount of all outstanding Letters of Credit at such time, to
      be
      held by the Administrative Agent (for the benefit of the Issuing Banks and
      the
      Lenders) as security
      for the Borrower’s reimbursement obligations in respect of such Letters of
      Credit, and (vi) direct the Revenue Bond Issuing Banks to (in which case the
      Revenue Bond Issuing Banks shall) exercise the rights and remedies available
      under the Revenue Bond Pledge Agreements and, in addition thereto, all the
      rights and remedies of a secured party on default under the Uniform Commercial
      Code as in effect in the State of New York at that time in respect of the
      Collateral (as defined in the Revenue Bond Pledge Agreements); and in case
      of
      any event with respect to the Borrower described in clause (h) or (i) of this
      Article, the Aggregate Commitments shall automatically terminate and the
      principal of the Loans and LC Disbursements then outstanding, together with
      accrued interest thereon and all fees and other obligations of the Borrower
      accrued hereunder and the cash collateral referred to in clause (v) above,
      shall
      automatically become due and payable, without presentment, demand, protest
      or
      other notice of any kind, all of which are hereby waived by the Borrower.
Notwithstanding
      anything to the contrary contained herein, no notice given or declaration made
      by the Administrative Agent pursuant to this Article VII 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.

     

    ARTICLE
      VIII

    The
      Administrative Agent

     

    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. The Required Lenders or the Borrower
      may
      at any time, with the consent of the Borrower (provided
      that
      such consent shall not be required if an Event of Default under clause (a),
      (b),
      (h), (i) or (j) of Article VII shall have occurred and is continuing) or the
      Required Lenders, as the case may be, replace the Administrative Agent (it
      being
      understood that any such replacement Administrative Agent shall be a Person
      that
      serves as Administrative Agent for other credit facilities of a comparable
      size), provided
      that the
      Required Lenders or the Borrower

     

    
      
        
        

      

      
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    may
      not
      replace the Administrative Agent unless, after giving effect to such replacement
      and each contemporaneous assignment, the Required Lenders or the Borrower shall
      have arranged in connection with such replacement, to the extent requested
      by
      the Administrative Agent, that (a) neither the Administrative Agent nor any
      of
      its Affiliates shall have outstanding any Letter of Credit, Loan, LC
      Disbursement, Revolving Commitment, Revenue Bond Commitment or other obligation
      of any kind under this Agreement or any other Loan Document and (b) each of
      the
      Administrative Agent and its Affiliates shall have received payment in full
      of
      all amounts owing to it under or in respect of this Agreement and each other
      Loan Document.

     

    The
      bank
      serving as the 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 bank and its Affiliates
      may accept deposits from, lend money to and generally engage in any kind of
      business with the Borrower or any Subsidiary or other Affiliate thereof as
      if it
      were not the Administrative Agent hereunder.

     

    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, (a) the Administrative Agent shall not be subject to any
      fiduciary or other implied duties, regardless of whether a Default has occurred
      and is continuing, (b) 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 9.02), and (c) 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 Borrower or any of its Subsidiaries that is
      communicated to or obtained by the bank 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 9.02) 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 unless and until
      written notice thereof is given to the Administrative Agent by the Borrower
      or a
      Lender, and the Administrative Agent shall not be responsible for or have any
      duty to ascertain or inquire into (i) any statement, warranty or representation
      made in or in connection with any Loan Document, (ii) the contents of any
      certificate, report or other document delivered hereunder or in connection
      herewith, (iii) the performance or observance of any of the covenants,
      agreements or other terms or conditions set forth in any Loan Document, (iv)
      the
      validity, enforceability, effectiveness or genuineness of any Loan Document
      or
      any other agreement, instrument or document, or (v) the satisfaction of any
      condition set forth in Article IV or elsewhere in any Loan Document, other
      than
      to confirm receipt of items expressly required to be delivered to the
      Administrative Agent. Notwithstanding anything herein to the contrary, no Lender
      identified as a Co-Syndication Agent or a Co-Documentation Agent shall have
      any
      separate duties, responsibilities, obligations or authority as Co-Syndication
      Agent or Co-Documentation Agent.

     

    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,

     

    
      
        
        

      

      
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    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
      the
      Borrower), independent accountants and other experts selected by it, and shall
      not be liable for any action taken or not taken by it in accordance with the
      advice of any such counsel, accountants or experts.

     

    The
      Administrative Agent may perform any and all its duties and exercise its rights
      and powers by or through any 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
      paragraphs 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.

     

    Subject
      to the appointment and acceptance of a successor Administrative Agent as
      provided in this paragraph, the Administrative Agent may resign at any time
      by
      notifying the Lenders, the Issuing Banks and the Borrower. Upon any such
      resignation, the Required Lenders shall have the right, in consultation with
      the
      Borrower, 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 any commercial
      bank organized under the laws of the United States of America or any State
      thereof having a combined capital and surplus and undivided profits of not
      less
      than $500,000,000, or an Affiliate of any such bank.

     

    Upon
      the
      acceptance of its appointment as Administrative Agent hereunder by a successor
      or replacement, such successor or replacement shall succeed to and become vested
      with all the rights, powers, privileges and duties of the retiring or replaced
      Administrative Agent, and the retiring or replaced Administrative Agent shall
      be
      discharged from its duties and obligations hereunder. The fees payable by the
      Borrower to a successor Administrative Agent shall be the same as those payable
      to its predecessor unless otherwise agreed between the Borrower and such
      successor. After the Administrative Agent’s resignation or replacement
      hereunder, the provisions of this Article and Section 9.03 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.

     

    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

     

    
      
        
        

      

      
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    taking
      or
      not taking action under or based upon this Agreement, any other Loan Document
      or
      related agreement or any document furnished hereunder or
      thereunder.

     

    ARTICLE
      IX

    Miscellaneous

     

    SECTION
      9.01. Notices.
      

     

    (a)    Except
      in
      the case of notices and other communications expressly permitted to be given
      by
      telephone (and subject to paragraph (b) below), all notices and other
      communications provided for herein shall be in writing and shall be delivered
      by
      hand or overnight courier service, mailed by certified or registered mail or
      sent by telecopy, as follows:

     

    (i)    
if
      to the
      Borrower, to it at One South Church Avenue, Tucson, Arizona 85701, Attention
      of
      Chief Financial Officer (Telecopy No. (520) 884-3612); 

     

    (ii)    if
      to the
      Administrative Agent, to Union Bank of California, N.A., 445 South Figueroa
      Street, 15th
      Floor,
      Los Angeles, California 90071, Attention of Kevin Zitar (Telecopy No. (213)
      236-4096); and 

     

    (iii)   if
      to any
      other Agent, any Issuing Bank or any Lender, to it at its address (or telecopy
      number) set forth in its Administrative Questionnaire.

     

    (b)    Notices
      and other communications to the Lenders hereunder may be delivered or furnished
      by electronic communications pursuant to procedures approved by the
      Administrative Agent; provided
      that the
      foregoing shall not apply to notices pursuant to Article II unless otherwise
      agreed by the Administrative Agent and the applicable Lender. The Administrative
      Agent or the Borrower may, in its discretion, agree to accept notices and other
      communications to it hereunder by electronic communications pursuant to
      procedures approved by it; provided
      that
      approval of such procedures may be limited to particular notices or
      communications. 

     

    (c)    Any
      party
      hereto may change its address or telecopy number for notices and other
      communications hereunder by notice to the other parties hereto. All notices
      and
      other communications given to any party hereto in accordance with the provisions
      of this Agreement shall be deemed to have been given on the date of
      receipt.

     

    SECTION
      9.02. Waivers;
      Amendments.

     

    (a)    No
      failure or delay by the Administrative Agent, any Issuing Bank or any Lender
      in
      exercising any right or power hereunder or under any other Loan Document or
      the
      Mortgage Indenture shall operate as a waiver thereof, nor shall any single
      or
      partial exercise of any such right or power, or any abandonment or
      discontinuance of steps to enforce such a right or power, preclude any other
      or
      further exercise thereof or the exercise of any other right or power. The rights
      and remedies of the Administrative Agent, the Issuing Banks and the Lenders
      hereunder and under the other Loan Documents and the Mortgage Indenture are
      cumulative and are not exclusive of any rights or remedies that they would
      otherwise have. No waiver of any provision of any Loan Document or consent
      to
      any departure by the Borrower therefrom shall in

     

    
      
        
        

      

      
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    any
      event
      be effective unless the same shall be permitted by paragraph (b) of this
      Section, and then such waiver or consent shall be effective only in the specific
      instance and for the purpose for which given. Without limiting the generality
      of
      the foregoing, the making of a Loan or issuance of a Letter of Credit shall
      not
      be construed as a waiver of any Default, regardless of whether the
      Administrative Agent, any Lender or any Issuing Bank may have had notice or
      knowledge of such Default at the time.

     

    (b)    Neither
      this Agreement nor any other Loan Document nor any provision hereof or thereof
      may be waived, amended or modified except, in the case of this Agreement,
      pursuant to an agreement or agreements in writing entered into by the Borrower
      and the Required Lenders or by the Borrower and the Administrative Agent with
      the consent of the Required Lenders or, in the case of any other Loan Document,
      pursuant to an agreement or agreements in writing entered into by the
      Administrative Agent and the Borrower, in each case with the consent of the
      Required Lenders or, in the case of the Sixth Supplemental Indenture, the
      Seventh Supplemental Indenture or the Collateral Mortgage Bonds, in each case
      with the consent of the Required Lenders and as provided by the Mortgage
      Indenture with the Administrative Agent exercising the rights of the holder
      of
      the Collateral Mortgage Bonds and acting at the direction of the Required
      Lenders; provided
      that no
      such agreement shall (i) increase any Revolving Commitment or Revenue Bond
      Commitment of any Lender without the written consent of such Lender, (ii) reduce
      the principal amount of any Loan or LC Disbursement or reduce the rate of
      interest thereon, or reduce any fees payable hereunder, or change the definition
      of “Applicable Margin” or “Commitment Fee Rate”, in each case without the
      written consent of each Lender affected thereby, (iii) postpone the scheduled
      date of payment of the principal amount of any Loan or LC Disbursement, or
      any
      interest thereon, or any fees payable hereunder, or reduce the amount of, waive
      or excuse any such payment, or postpone the scheduled date of expiration of
      any
      Revolving Commitment or Revenue Bond Commitment, without the written consent
      of
      each Lender affected thereby, (iv) change Section 2.16(b) or (c) in a manner
      that would alter the pro
      rata
      sharing
      of payments required thereby, without the written consent of each Lender, (v)
      change any of the provisions of this Section or the definition of “Required
      Lenders” or any other provision of any Loan Document specifying the number or
      percentage of Lenders required to waive, amend or modify any rights hereunder
      or
      make any determination or grant any consent hereunder, without the written
      consent of each Lender, (vi) amend or waive any of the conditions set forth
      in
      Section 4.02(c), without the written consent of each Lender, or (vii) release
      all or any portion of the Collateral Mortgage Bonds or release all or
      substantially all of any other Collateral from the Liens of the Security
      Documents without the consent of each Lender, in each case except for any such
      release expressly permitted hereunder or under any Security Document;
provided further
      that no
      such agreement shall amend, modify or otherwise affect the rights or duties
      of
      any Agent or any Issuing Bank hereunder without the prior written consent of
      such Agent or Issuing Bank, as the case may be. Notwithstanding the foregoing,
      any provision of this Agreement requiring the consent of a Lender unwilling
      to
      provide such consent may be amended by an agreement in writing entered into
      by
      the Borrower, the Required Lenders, the Issuing Banks and the Administrative
      Agent if (1) by the terms of such agreement the Aggregate Commitment of each
      such opposing Lender shall terminate upon the effectiveness of such amendment
      and (2) at the time such amendment becomes effective, each such opposing Lender
      receives payment in full of the principal of and interest accrued on each Loan
      made by it and all other amounts owing to it or accrued for its account under
      the Loan Documents.

     

    
      
        
        

      

      
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    SECTION
      9.03. Expenses;
      Indemnity; Damage Waiver.

     

    (a)    The
      Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the
      Administrative Agent, the Arranger and their respective Affiliates (including
      due diligence expenses and the reasonable fees, charges and disbursements of
      counsel for the Administrative Agent and the Arranger) in connection with the
      arrangement and syndication of the credit facilities provided for herein, the
      preparation, execution, delivery and administration of the Loan Documents or
      any
      amendments, modifications or waivers of the provisions thereof (whether or
      not
      the transactions contemplated hereby or thereby shall be consummated); (ii)
      all
      out-of-pocket expenses and charges of the Arranger in connection with any
      evaluations of Collateral conducted by it; (iii) all reasonable out-of-pocket
      expenses incurred by any Issuing Bank in connection with the issuance, amendment
      or extension of any Letter of Credit or any demand for payment thereunder;
      and
      (iv) all out-of-pocket expenses incurred by the Administrative Agent, any
      Issuing Bank or any Lender, including the fees, charges and disbursements of
      any
      counsel for the Administrative Agent, any Issuing Bank or any Lender, in
      connection with the enforcement or protection of its rights in connection with
      the Loan Documents, including its rights under this Section, or in connection
      with the Loans made or Letters of Credit issued hereunder, including all such
      out-of-pocket expenses incurred during any workout, restructuring or
      negotiations in respect of such Loans or Letters of Credit. 

     

    (b)    The
      Borrower shall indemnify the Administrative Agent, the Arranger, each Issuing
      Bank and each Lender, and each Related Party of any of the foregoing Persons
      (each such Person being called an “Indemnitee”)
      against, and hold each Indemnitee harmless from, any and all losses, claims,
      damages, liabilities and related expenses, including the fees, charges and
      disbursements of any counsel for any Indemnitee, incurred by or asserted against
      any Indemnitee arising out of, in connection with, or as a result of (i) the
      execution or delivery of any Loan Document or any agreement or instrument
      contemplated hereby, the performance by the parties to the Loan Documents of
      their respective obligations thereunder or the consummation of the Transactions
      or any other transactions contemplated thereby, (ii) any Loan or Letter of
      Credit or the 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 strictly comply with
      the terms of such Letter of Credit), (iii) any actual or alleged presence or
      release of Hazardous Materials on or from any property owned or operated by
      the
      Borrower or any of its Subsidiaries, or any Environmental Liability related
      in
      any way to the Borrower or any of its Subsidiaries, 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 and
      regardless of whether any Indemnitee is a party thereto; provided
      that
      such indemnity shall not, as to any Indemnitee, 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 primarily from the gross negligence or willful misconduct of such
      Indemnitee.

     

    (c)    To
      the
      extent that the Borrower fails to pay any amount required to be paid by it
      to
      the Administrative Agent, the Arranger or any Issuing Bank under paragraph
      (a)
      or (b) of this Section, each Lender severally agrees to pay to the
      Administrative Agent, the Arranger or such Issuing Bank, as the case may be,
      such Lender’s Percentage (determined as of the time that the applicable
      unreimbursed expense or indemnity payment is sought) of such unpaid
      amount;

     

    
      
        
        

      

      
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    provided
      that the
      unreimbursed expense or indemnified loss, claim, damage, liability or related
      expense, as the case may be, was incurred by or asserted against the
      Administrative Agent, the Arranger or such Issuing Bank in its capacity as
      such.

     

    (d)    To
      the
      extent permitted by applicable law, the Borrower shall not assert, and hereby
      waives, any claim against any Indemnitee, 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 or thereby, the Transactions, any Loan or Letter of Credit or the use
      of
      the proceeds thereof.

     

    (e)    All
      amounts due under this Section shall be payable promptly after delivery to
      the
      Borrower of a reasonably detailed statement therefor.

     

    SECTION
      9.04. Successors
      and Assigns.

     

    (a)    The
      provisions of this Agreement shall be binding upon and inure to the benefit
      of
      the parties hereto and their respective successors and assigns permitted hereby
      (including any Affiliate of any Issuing Bank that issues any Letter of Credit),
      except that the Borrower may not assign or otherwise transfer any of its rights
      or obligations hereunder without the prior written consent of each Lender (and
      any attempted assignment or transfer by the Borrower without such consent shall
      be null and void). Nothing in this Agreement, expressed or implied, shall be
      construed to confer upon any Person (other than the parties hereto, their
      respective successors and assigns permitted hereby (including any Affiliate
      of
      any Issuing Bank that issues any Letter of Credit) and, to the extent expressly
      contemplated hereby, the Related Parties of each of the Agents, the Arranger,
      the Issuing Banks and the Lenders) any legal or equitable right, remedy or
      claim
      under or by reason of this Agreement.

     

    (b)    Any
      Lender may assign to one or more assignees all or a portion of its rights and
      obligations under this Agreement (including all or a portion of its Revolving
      Commitment and the Revolving Loans owing to it or all or a portion of its
      Revenue Bond Commitment and the Revenue Bond Loans owing to it); provided
      that
      (i) except in the case of an assignment to a Lender, an Affiliate of a
      Lender or an Approved Fund of any Lender, each of the Administrative Agent
      and
      the Issuing Banks must give its prior written consent to such assignment (which
      consent shall not be unreasonably withheld), (ii) except in the case of an
      assignment to a Lender, an Affiliate of a Lender or an Approved Fund of any
      Lender, the Borrower must give its prior written consent to such assignment
      (which consent shall not be unreasonably withheld), (iii) except in the case
      of
      an assignment to a Lender, an Affiliate of a Lender or an Approved Fund of
      any
      Lender, or an assignment of the entire remaining amount of the assigning
      Lender’s Aggregate Commitment, the amount of the Revolving Loan Commitment
      and/or Revenue Bond Commitment of the assigning Lender subject to each such
      assignment (determined as of the date the Assignment and Assumption with respect
      to such assignment is delivered to the Administrative Agent) shall be in an
      aggregate amount of not less than $5,000,000 unless each of the Borrower and
      the
      Administrative Agent otherwise consent, (iv) the parties to each assignment
      shall execute and deliver to the Administrative Agent an Assignment and
      Assumption, together with a processing and recordation fee of $3,500, and (v)
      the assignee, if it shall not be a Lender, shall deliver to the Administrative
      Agent an Administrative

     

    
      
        
        

      

      
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    Questionnaire;
      and provided further
      that any
      consent of the Borrower otherwise required under this paragraph shall not be
      required (A) if an Event of Default shall have occurred and be continuing or
      (B)
      in connection with the initial syndication of the Aggregate Commitments and
      Loans. Subject to acceptance and recording thereof pursuant to paragraph (d)
      of
      this Section, from and after the effective date specified in each Assignment
      and
      Assumption the assignee thereunder shall be a party hereto and, to the extent
      of
      the interest assigned by such Assignment and Assumption, have the rights and
      obligations of a Lender under this Agreement, and the assigning Lender
      thereunder shall, to the extent of the interest assigned by such Assignment
      and
      Assumption, be released from its obligations under this Agreement (and, in
      the
      case of an Assignment and Assumption covering all of the assigning Lender’s
      rights and obligations under this Agreement, such Lender shall cease to be
      a
      party hereto but shall continue to be entitled to the benefits of Sections
      2.13,
      2.14, 2.15 and 9.03). Any assignment or transfer by a Lender of rights or
      obligations under this Agreement that does not comply with this paragraph shall
      be treated for purposes of this Agreement as a sale by such Lender of a
      participation in such rights and obligations in accordance with paragraph (e)
      of
      this Section.

     

    (c)    The
      Administrative Agent, acting for this purpose as an agent of the Borrower,
      shall
      maintain at one of its offices in California a copy of each Assignment and
      Assumption delivered to it and a register for the recordation of the names
      and
      addresses of the Lenders, and the Aggregate Commitments of, and principal amount
      of the Loans and LC Disbursements owing to, each Lender pursuant to the terms
      hereof from time to time (the “Register”).
      The
      entries in the Register shall be conclusive, and the Borrower, the
      Administrative Agent, the Issuing Banks and the Lenders may treat each Person
      whose name is recorded in the Register pursuant to the terms hereof as a Lender
      hereunder for all purposes of this Agreement, notwithstanding notice to the
      contrary. The Register shall be available for inspection by the Borrower, any
      Issuing Bank and any Lender at any reasonable time and from time to time upon
      reasonable prior notice.

     

    (d)    Upon
      its
      receipt of a duly completed Assignment and Assumption executed by an assigning
      Lender and an assignee, the assignee’s completed Administrative Questionnaire
      (unless the assignee shall already be a Lender hereunder), the processing and
      recordation fee referred to in paragraph (b) of this Section and any written
      consent to such assignment required by paragraph (b) of this Section, the
      Administrative Agent shall accept such Assignment and Assumption and record
      the
      information contained therein in the Register. No assignment shall be effective
      for purposes of this Agreement unless it has been recorded in the Register
      as
      provided in this paragraph.

     

    (e)    Any
      Lender may, without the consent of the Borrower, the Administrative Agent or
      any
      Issuing Bank, sell participations to one or more banks or other entities (a
      “Participant”)
      in all
      or a portion of such Lender’s rights and obligations under this Agreement
      (including all or a portion of its Revolving Commitment and the Revolving Loans
      owing to it or all or a portion of its Revenue Bond Commitment and the Revenue
      Bond Loans owing to it); provided
      that (i)
      such Lender’s obligations under this Agreement shall remain unchanged, (ii) such
      Lender shall remain solely responsible to the other parties hereto for the
      performance of such obligations and (iii) the Borrower, 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

     

    
      
        
        

      

      
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    which
      a
      Lender sells such a participation shall provide that such Lender shall retain
      the sole right to enforce the Loan Documents and to approve any amendment,
      modification or waiver of any provision of the Loan Documents; 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 9.02(b) that affects such Participant.
      Subject to paragraph (f) of this Section, the Borrower agrees that each
      Participant shall be entitled to the benefits of Sections 2.13, 2.14 and 2.15
      to
      the same extent as if it were a Lender and had acquired its interest by
      assignment pursuant to paragraph (b) of this Section. To the extent permitted
      by
      law, each Participant also shall be entitled to the benefits of Section 9.08
      as
      though it were a Lender, provided such Participant agrees to be subject to
      Section 2.16(c) as though it were a Lender.

     

    (f)    A
      Participant shall not be entitled to receive any greater payment under Section
      2.13 or 2.15 than the applicable Lender would have been entitled to receive
      with
      respect to the participation sold to such Participant, unless the sale of the
      participation to such Participant is made with the Borrower’s prior written
      consent. A Participant that would be a Foreign Lender if it were a Lender shall
      not be entitled to the benefits of Section 2.15 unless the Borrower is notified
      of the participation sold to such Participant and such Participant agrees,
      for
      the benefit of the Borrower, to comply with Section 2.15(d) as though it were
      a
      Lender.

     

    (g)    Any
      Lender may at any time pledge or assign a security interest in all or any
      portion of its rights under this Agreement to secure obligations of such Lender,
      including any pledge or assignment to secure obligations to a Federal Reserve
      Bank, and this Section shall not apply to any such pledge or assignment of
      a
      security interest; provided
      that no
      such pledge or assignment of a security interest shall release a Lender from
      any
      of its obligations hereunder or substitute any such pledgee or assignee for
      such
      Lender as a party hereto. In the case of any Lender that is a fund that invests
      in bank loans, such Lender may, without the consent of the Borrower, the Issuing
      Banks or the Administrative Agent, assign or pledge all or any portion of its
      rights under this Agreement, including the Loans and notes or any other
      instrument evidencing its rights as a Lender under this Agreement, to any holder
      of, trustee for, or any other representative of holders of, obligations owed
      or
      securities issued by, such fund, as security for such obligations or securities;
      provided
      that any
      foreclosure or similar action by such trustee or representative shall be subject
      to the provisions of this Section 9.04(b) concerning assignments.

     

    (h)    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 Borrower, the option to provide to the Borrower
      all
      or any part of any Loan that such Granting Lender would otherwise be obligated
      to make to the Borrower pursuant to this Agreement or the option to pay to
      the
      Administrative Agent for the account of the applicable Issuing Bank all or
      any
      part of such Granting Lender’s Applicable Percentage of any LC Disbursement made
      by such Issuing Bank and not reimbursed by the Borrower that such Granting
      Lender would otherwise be obligated to pay to the Administrative Agent for
      the
      account of the applicable Issuing Bank pursuant to this Agreement, as the case
      may be; provided
      that (i)
      nothing herein shall constitute a commitment by any SPC to make any Loan or
      to
      pay such Granting Lender’s Applicable Percentage of any LC Disbursement
      reimbursement obligation and (ii) if an SPC elects not to exercise such option
      or otherwise fails to provide all or any part of such Loan or to

     

    
      
        
        

      

      
        69

        
          

        

      

      
        
        

      

    

     

    pay
      all
      or any part of such Granting Lender’s Applicable Percentage of any LC
      Disbursement reimbursement obligation, the Granting Lender shall be obligated
      to
      make such Loan or to pay its Applicable Percentage of any LC Disbursement
      reimbursement obligation, as the case may be, pursuant to the terms hereof.
      The
      making of a Loan by an SPC or the payment by such SPC of such Granting Lender’s
      Applicable Percentage of any LC Disbursement reimbursement obligation hereunder
      shall utilize the Revolving Commitment or Revenue Bond Commitment, as
      applicable, of the Granting Lender to the same extent, and as if, such Loan
      were
      made by such Granting Lender or such LC Disbursement reimbursement obligation
      were paid 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 (all liability for which shall remain with the Granting Lender).
      In
      furtherance of the foregoing, each party hereto hereby agrees (which agreement
      shall survive the termination of this Agreement) that, prior to the date that
      is
      one year and one day after the payment in full of all outstanding commercial
      paper or other senior indebtedness of any SPC, it will not institute against,
      or
      join any other person in instituting against, such SPC in connection with its
      activities as an SPC hereunder 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 in this
      Section 9.04, any SPC may (A) with notice to, but without the prior written
      consent of, the Borrower, the Issuing Banks and the Administrative Agent and
      without paying any processing fee therefor, assign all or a portion of its
      interests in any Loans or LC Disbursement reimbursement obligations to the
      Granting Lender or to any financial institutions (consented to by the Borrower
      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
      or
      payment of LC Disbursement reimbursement obligations and (ii) disclose on a
      confidential basis consistent with the provisions of Section 9.12 any non-public
      information relating to its Loans or LC Disbursement reimbursement obligations
      to any rating agency, commercial paper dealer or provider of any surety,
      guarantee or credit or liquidity enhancement to such SPC. The provisions of
      this
      Section relating any SPC may not be amended without the written consent of
      such
      SPC.

     

    SECTION
      9.05. Survival.
      All
      covenants, agreements, representations and warranties made by the Borrower
      in
      the Loan Documents and in the certificates or other instruments delivered in
      connection with or pursuant to this Agreement or any other Loan Document shall
      be considered to have been relied upon by the other parties hereto and shall
      survive the execution and delivery of the Loan Documents and the making of
      any
      Loans and issuance of any Letters of Credit, regardless of any investigation
      made by any such other party or on its behalf and notwithstanding that any
      Agent, any Issuing Bank or any Lender may have had notice or knowledge of any
      Default or incorrect representation or warranty at the time any credit is
      extended hereunder, and shall continue in full force and effect as long as
      the
      principal of or any accrued interest on any Loan or any fee or any other amount
      payable under this Agreement is outstanding and unpaid or any Letter of Credit
      is outstanding and so long as any Revolving Commitment or Revenue Bond
      Commitment has not expired or terminated. The provisions of Sections 2.13,
      2.14,
      2.15 and 9.03 and Article VIII shall survive and remain in full force and effect
      regardless of the consummation of the transactions contemplated hereby, the
      repayment of the Loans, the expiration or termination of the Letters of Credit
      and the Aggregate Commitments or the termination of this Agreement or any
      provision hereof.

     

    
      
        
        

      

      
        70

        
          

        

      

      
        
        

      

    

     

    SECTION
      9.06. Counterparts;
      Integration; Effectiveness.
      This
      Agreement may be executed in counterparts (and by different parties hereto
      on
      different counterparts), each of which shall constitute an original, but all
      of
      which when taken together shall constitute a single contract. This Agreement,
      the other Loan Documents and any separate letter agreements with respect to
      fees
      payable to the Administrative Agent, the Arranger and the Issuing Banks
      constitute the entire contract among the parties relating to the subject matter
      hereof and supersede any and all previous agreements and understandings, oral
      or
      written, relating to the subject matter hereof. Except as provided in Section
      4.01, this Agreement shall become effective when it shall have been executed
      by
      the Administrative Agent and when the Administrative Agent shall have received
      counterparts hereof which, when taken together, bear the signatures of each
      of
      the other parties hereto, and thereafter shall be binding upon and inure to
      the
      benefit of the parties hereto and their respective successors and assigns.
      Delivery of an executed counterpart of a signature page of this Agreement by
      telecopy shall be effective as delivery of a manually executed counterpart
      of
      this Agreement.

     

    SECTION
      9.07. Severability.
      Any
      provision of this Agreement held to be invalid, illegal or unenforceable in
      any
      jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
      such invalidity, illegality or unenforceability without affecting the validity,
      legality and enforceability of the remaining provisions hereof; and the
      invalidity of a particular provision in a particular jurisdiction shall not
      invalidate such provision in any other jurisdiction.

     

    SECTION
      9.08. Right
      of Setoff.
      If an
      Event of Default shall have occurred and be continuing, each Lender and each
      of
      its Affiliates is hereby authorized at any time and from time to time, to the
      fullest extent permitted by law, to set off and apply any and all deposits
      (general or special, time or demand, provisional or final) at any time held
      and
      other obligations at any time owing by such Lender or Affiliate to or for the
      credit or the account of the Borrower against any of and all the obligations
      of
      the Borrower now or hereafter existing under this Agreement held by such Lender,
      irrespective of whether or not such Lender shall have made any demand under
      this
      Agreement and although such obligations may be unmatured. The rights of each
      Lender under this Section are in addition to other rights and remedies
      (including other rights of setoff) which such Lender may have.

     

    SECTION
      9.09. Governing
      Law; Jurisdiction; Consent to Service of Process.

     

    (a)    This
      Agreement shall be construed in accordance with and governed by the law of
      the
      State of New York.

     

    (b)    The
      Borrower hereby irrevocably and unconditionally submits, for itself and its
      property, to the nonexclusive jurisdiction of the Supreme Court of the State
      of
      New York sitting in New York County and of the United States District Court
      of
      the Southern District of New York, and any appellate court from any thereof,
      in
      any action or proceeding arising out of or relating to any Loan Document, or
      for
      recognition or enforcement of any judgment, and each of the parties hereto
      hereby irrevocably and unconditionally agrees that all claims in respect of
      any
      such action or proceeding may be heard and determined in such New York State
      or,
      to the extent permitted by law, in such Federal court. Each of the parties
      hereto agrees that a final judgment in any such action or proceeding shall
      be
      conclusive and may be enforced in other jurisdictions by suit on the judgment
      or
      in any other manner provided by law. Nothing
      in this

     

    
      
        
        

      

      
        71

        
          

        

      

      
        
        

      

    

     

    Agreement
      or any other Loan Document shall affect any right that the Administrative Agent,
      any Issuing Bank or any Lender may otherwise have to bring any action or
      proceeding relating to this Agreement or any other Loan Document against the
      Borrower or its properties in the courts of any jurisdiction.

     

    (c)    The
      Borrower hereby irrevocably and unconditionally waives, to the fullest extent
      it
      may legally and effectively do so, any objection which it may now or hereafter
      have to the laying of venue of any suit, action or proceeding arising out of
      or
      relating to this Agreement or any other Loan Document in any court referred
      to
      in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably
      waives, to the fullest extent permitted by law, the defense of an inconvenient
      forum to the maintenance of such action or proceeding in any such
      court.

     

    (d)    Each
      party to this Agreement irrevocably consents to service of process in the manner
      provided for notices in Section 9.01. Nothing in this Agreement or any other
      Loan Document will affect the right of any party to this Agreement to serve
      process in any other manner permitted by law.

     

    SECTION
      9.10. WAIVER
      OF JURY TRIAL.
      EACH
      PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
      ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR
      INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
      CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).
      EACH
      PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
      OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
      WOULD
      NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
      ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
      INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
      CERTIFICATIONS IN THIS SECTION.

     

    SECTION
      9.11. Headings.
      Article
      and Section headings and the Table of Contents used herein are for convenience
      of reference only, are not part of this Agreement and shall not affect the
      construction of, or be taken into consideration in interpreting, this
      Agreement.

     

    SECTION
      9.12. Confidentiality.
      Each of
      the Administrative Agent, the Issuing Banks and the Lenders agrees to maintain
      the confidentiality of the Information (as defined below), except that
      Information may be disclosed (a) to its and its Affiliates’ directors, officers,
      employees and agents, including accountants, auditors, legal counsel and other
      advisors (it being understood that the Persons to whom such disclosure is made
      will be informed of the confidential nature of such Information and instructed
      to keep such Information confidential), (b) to the extent requested by any
      regulatory authority, (c) to the extent required by applicable laws or
      regulations or by any subpoena or similar legal process, (d) to any other party
      to this Agreement, (e) in connection with the exercise of any remedies hereunder
      or any suit, action or proceeding relating to this Agreement or any other Loan
      Document or the enforcement of rights hereunder, (f) subject to an agreement
      containing provisions substantially the same as those of this Section, to (i)
      any assignee of or Participant in, or any prospective assignee of or
      Participant

     

    
      
        
        

      

      
        72

        
          

        

      

      
        
        

      

    

     

    in,
      any
      of its rights or obligations under this Agreement or (ii) any actual or
      prospective counterparty (or its advisors) to any swap or derivative transaction
      relating to the Borrower and its obligations, (g) with the consent of the
      Borrower or (h) to the extent such Information (i) becomes publicly available
      other than as a result of a breach of this Section or (ii) becomes available
      to
      any Agent, any Issuing Bank or any Lender on a nonconfidential basis from a
      source other than the Borrower. For the purposes of this Section, “Information”
means
      all information received from the Borrower relating to the Borrower or its
      business, other than any such information that is available to any Agent, any
      Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by
      the
      Borrower; provided
      that, in
      the case of information received from the Borrower after the date hereof, such
      information is clearly identified at the time of delivery as confidential.
      Any
      Person required to maintain the confidentiality of Information as provided
      in
      this Section shall be considered to have complied with its obligation to do
      so
      if such Person has exercised the same degree of care to maintain the
      confidentiality of such Information as such Person would accord to its own
      confidential information.

     

    SECTION
      9.13. Interest
      Rate Limitation.
      Notwithstanding anything herein to the contrary, if at any time the interest
      rate applicable to any Loan or LC Disbursement, together with all fees, charges
      and other amounts which are treated as interest on such Loan or LC Disbursement
      under applicable law (collectively the “Charges”),
      shall
      exceed the maximum lawful rate (the “Maximum
      Rate”)
      which
      may be contracted for, charged, taken, received or reserved by the Lender
      holding such Loan or LC Disbursement in accordance with applicable law, the
      rate
      of interest payable in respect of such Loan hereunder, together with all Charges
      payable in respect thereof, shall be limited to the Maximum Rate and, to the
      extent lawful, the interest and Charges that would have been payable in respect
      of such Loan but were not payable as a result of the operation of this Section
      shall be cumulated and the interest and Charges payable to such Lender in
      respect of other Loans or periods shall be increased (but not above the Maximum
      Rate therefor) until such cumulated amount, together with interest thereon
      at
      the Federal Funds Effective Rate to the date of repayment, shall have been
      received by such Lender.

     

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

    

    
      
        
        

      

      
        73

        
          

        

      

      
        
        

      

    

     

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

     

    
      
        
          	 	
                  TUCSON
                    ELECTRIC POWER COMPANY

                   

                
	 	
                  By:

                	/s/
                  Kevin P. Larson
	 	 	
                  Name:

                	 Kevin
                  P. Larson
	 	 	
                  Title:

                	 Sr.
                  Vice President, CFO and
                  Treasurer

        

      

    

     

     

    
      	
            	
              UNION
                BANK OF CALIFORNIA, N.A., as
Administrative Agent and as an
                Existing Lender

               

            
	 	
              By:

            	 /s/
              Kevin M. Zitar
	 	 	
              Name:

            	 Kevin
              M. Zitar
	 	 	
              Title:

            	 Vice
              President

    

     

    
      
        
        

      

      
        
          S-1

           

          Signature
            Page to Credit Agreement

        

        
          

        

      

      
        
        

      

    

     

    
      	
            	
              
                THE
                  BANK OF NEW YORK, as Co-Syndication
Agent, as an Issuing Bank and as an
                  Existing Lender

              

               

            
	 	
              By:

            	 /s/
              John-Paul Marotta
	 	 	
              Name:

            	 John-Paul
              Marotta
	 	 	
              Title:

            	 Managing
              Director

    

     

    
      
        
        

      

      
        
          S-2

           

          
            Signature
              Page to Credit Agreement

          

        

        
          

        

      

      
        
        

      

    

     

    
      	
            	
              
                JPMORGAN
                  CHASE BANK, N.A., as
Co-Syndication Agent and as an Existing
                  Lender

                 

              

            
	 	
              By:

            	 /s/
              Nancy R. Barwig
	 	 	
              Name:

            	 Nancy
              R. Barwig
	 	 	
              Title:

            	 Vice
              President

    

     

    
      
        
        

      

      
        
          S-3

           

          
            Signature
              Page to Credit Agreement

          

        

        
          

        

      

      
        
        

      

    

     

    
      	
            	
              
                
                  WELLS
                    FARGO BANK, NATIONAL ASSOCIATION, as
Co-Documentation Agent and as an
                    Existing Lender

                   

                

              

            
	 	
              By:

            	 /s/
              Clyde Gossert
	 	 	
              Name:

            	 Clyde
              Gossert
	 	 	
              Title:

            	 Vice
              President

    

     

    
      
        
        

      

      
        
          S-4

           

          
            Signature
              Page to Credit Agreement

          

        

        
          

        

      

      
        
        

      

    

     

    
      	
            	
              
                
                  ABN
                    AMRO BANK N.V. (as successor to
LASALLE BANK NATIONAL
                    ASSOCIATION),
as Co-Documentation Agent and as an Existing
                    Lender

                   

                

              

            
	 	
              By:

            	 /s/
              James L. Moyes
	 	 	
              Name:

            	 James
              L. Moyes
	 	 	
              Title:

            	 Managing
              Director

    

     

    
      	
            	
              By:

            	 /s/
              Todd D. Vaubel
	 	 	
              Name:

            	 Todd
              D. Vaubel
	 	 	
              Title:

            	 Assistant
              Vice President

    

    

    
      
        
        

      

      
        
          S-5

           

          
            Signature
              Page to Credit Agreement

          

        

        
          

        

      

      
        
        

      

    

     

    
      	
            	
              
                
                  
                    CREDIT
                      SUISSE (as
                      successor to CREDIT SUISSE FIRST BOSTON, acting through its
                      New York
                      Branch), as an Issuing Bank

                  

                   

                

              

            
	 	
              By:

            	 /s/
              David Dodd
	 	 	
              Name:

            	 David
              Dodd
	 	 	
              Title:

            	 Vice
              President

    

    
      	
            	
              By:

            	 /s/
Shaheen
              Malik
	 	 	
              Name:

            	 Shaheen
              Malik
	 	 	
              Title:

            	 Associate

    

     

    
      
        
        

      

      
        
          S-6

           

          
            Signature
              Page to Credit Agreement

          

        

        
          

        

      

      
        
        

      

    

     

    
      	
            	
              
                
                  
                    BANK
                      HAPOALIM B.M.,
                      as a New Lender

                     

                  

                

              

            
	 	
              By:

            	 /s/
              Shaun Breidbart
	 	 	
              Name:

            	 Shaun
              Breidbart
	 	 	
              Title:

            	 Vice
              President

      
        	
              	
                By:

              	 /s/
                Frederic S. Becker
	 	 	
                Name:

              	 Frederic
                S. Becker
	 	 	
                Title:

              	 Senior
                Vice President

      

    
      
        
        

      

      
        
          S-7

           

          
            Signature
              Page to Credit Agreement

          

        

        
          

        

      

      
        
        

      

    

     

    
      	
            	
              
                
                  BAYERISCHE
                    LANDESBANK,
                    CAYMAN
ISLANDS BRANCH, as an Existing Lender

                   

                

              

            
	 	
              By:

            	 /s/
              John Gregory
	 	 	
              Name:

            	 John
              Gregory
	 	 	
              Title:

            	 Vice
              President

    

     

    
      	
            	
              By:

            	 /s/
              Norman McClave
	 	 	
              Name:

            	 Norman
              McClave
	 	 	
              Title:

            	 First
              Vice President

    

     

    
      
        
        

      

      
        
          S-8

           

          
            Signature
              Page to Credit Agreement

          

        

        
          

        

      

      
        
        

      

    

     

    
      	
            	
              
                
                  
                    BNP
                      PARIBAS,
                      as an Existing Lender

                  

                

              

            
	 	
              By:

            	 /s/
              Francis J. Delaney
	 	 	
              Name:

            	 Francis
              J. Delaney
	 	 	
              Title:

            	 Managing
              Director

       

      
        	
              	
                By:

              	 /s/
                Leonardo Osorio
	 	 	
                Name:

              	 Leonardo
                Osorio
	 	 	
                Title:

              	 Director

      

    

     

    
      
        
        

      

      
        
          S-9

           

          
            Signature
              Page to Credit Agreement

          

        

        
          

        

      

      
        
        

      

    

     

    
      	
            	
              
                
                  
                    
                      COBANK,
                        ACB,
                        as a New Lender

                    

                  

                

              

            
	 	
              By:

            	 /s/
              John Guilds
	 	 	
              Name:

            	 John
              Guilds
	 	 	
              Title:

            	 Vice
              President

       

      
        
          
          

        

        
          
            S-10

             

            
              Signature
                Page to Credit Agreement

            

          

          
            

          

        

        
          
          

        

      

    

    

    
      	
            	
              
                
                  
                    
                      COMERICA
                        WEST INCORPORATED,
                        as an Existing New Lender

                    

                  

                

              

            
	 	
              By:

            	 /s/
              Fatima Arshad
	 	 	
              Name:

            	 Fatima
              Arshad
	 	 	
              Title:

            	 Corporate
              Banking Representative

    

     

    
      
        
        

      

      
        
          S-11

           

          
            Signature
              Page to Credit Agreement

          

        

        
          

        

      

      
        
        

      

    

     

    
      	
            	
              
                
                  
                    
                      
                        COMMERZBANK
                          AG, NEW YORK AND
CAYMAN BRANCHES,
                          as an Existing Lender

                      

                    

                  

                

              

            
	 	
              By:

            	 /s/
              Andrew Campbell
	 	 	
              Name:

            	 Andrew
              Campbell
	 	 	
              Title:

            	 Senior
              Vice President

       

      
        	
              	
                By:

              	 /s/
                Andrew Kjoller
	 	 	
                Name:

              	 Andrew
                Kjoller
	 	 	
                Title:

              	 Vice
                President

      

       

    

    
      
        
        

      

      
        
          S-12

           

          
            Signature
              Page to Credit Agreement

          

        

        
          

        

      

      
        
        

      

    

     

    
      	
            	
              
                
                  
                    
                      
                        DRESDNER
                          BANK AG, NEW YORK AND
GRAND CAYMAN BRANCHES,
                          as a New Lender

                      

                    

                  

                

              

            
	 	
              By:

            	 /s/
              Thomas R. Brady
	 	 	
              Name:

            	 Thomas
              R. Brady
	 	 	
              Title:

            	 Director

       

      
        	
              	
                By:

              	 /s/
                Mark McGuiban
	 	 	
                Name:

              	 Mark
                McGuiban
	 	 	
                Title:

              	 Vice
                President

      

    

     

    
      
        
        

      

      
        
          S-13

           

          
            Signature
              Page to Credit Agreement

          

        

        
          

        

      

      
        
        

      

    

     

    
      	
            	
              
                
                  
                    
                      
                        
                          
                            KBC
                              BANK, N.V.,
                              as a New Lender

                          

                           

                        

                      

                    

                  

                

              

            
	 	
              By:

            	 /s/
              Eric Raskin
	 	 	
              Name:

            	 Eric
              Raskin
	 	 	
              Title:

            	 Vice
              President

    

     

    
      	
            	
              By:

            	 /s/
              Robert Snauffer
	 	 	
              Name:

            	 Robert
              Snauffer
	 	 	
              Title:

            	 First
              Vice President

    

     

    
      
        
        

      

      
        
          S-14

           

          
            Signature
              Page to Credit Agreement

          

        

        
          

        

      

      
        
        

      

    

     

    
      	
            	
              
                
                  
                    
                      
                        LLOYDS
                          TSB BANK PLC, as an Existing Lender

                         

                      

                    

                  

                

              

            
	 	
              By:

            	 /s/
              Russell Protti
	 	 	
              Name:

            	 Russell
              Protti
	 	 	
              Title:

            	 AVP,
              Project Finance 

       

      
        	
              	
                By:

              	 /s/
                Paul D. Briamonte
	 	 	
                Name:

              	 Paul
                D. Briamonte
	 	 	
                Title:

              	 Director
                Project Finance

      

    

     

    
      
        
        

      

      
        
          S-15

           

          
            Signature
              Page to Credit Agreement

          

        

        
          

        

      

      
        
        

      

    

    
       

    

    
      	
            	
              
                
                  
                    
                      
                        
                          
                            
                              
                                SOVEREIGN
                                  BANK,
                                  as an Existing Lender

                              

                            

                          

                           

                        

                      

                    

                  

                

              

            
	 	
              By:

            	 /s/
              Elisabet C. Hayes
	 	 	
              Name:

            	 Elisabet
              C. Hayes
	 	 	
              Title:

            	 Vice
              President

    

     

    
      
        
        

      

      
        
          S-16

           

          
            Signature
              Page to Credit Agreement

          

        

        
          

        

      

      
        
        

      

    

     

    
      	
            	
              
                
                  
                    
                      
                        
                          
                            
                              
                                THE
                                  BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK BRANCH
                                  (as successor by
                                  merger to UFJ Bank Limited), as an Existing
                                  Lender

                              

                            

                          

                           

                        

                      

                    

                  

                

              

            
	 	
              By:

            	 /s/
              Chi-Cheng Chen
	 	 	
              Name:

            	 Chi-Cheng
              Chen
	 	 	
              Title:

            	 Authorized
              Signatory

    

     

    
      
        
        

      

      
        
          S-17

           

          
            Signature
              Page to Credit Agreement

          

        

        
          

        

      

      
        
        

      

    

    
      	
            	
              
                
                  
                    
                      
                        
                          
                            
                              
                                U.S.
                                  BANK NATIONAL ASSOCIATION,
                                  as an Existing Lender

                              

                            

                          

                           

                        

                      

                    

                  

                

              

            
	 	
              By:

            	 /s/
              Dale Parshall
	 	 	
              Name:

            	 Dale
              Parshall
	 	 	
              Title:

            	 Vice
              President

    

     

    
      
        
        

      

      
        
          S-18

           

          
            Signature
              Page to Credit Agreement

          

        

        
          

        

      

      
        
        

      

    

     

    
      	
            	
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  WACHOVIA
                                    BANK, NATIONAL
ASSOCIATION,
                                    as a New Lender

                                

                              

                            

                          

                           

                        

                      

                    

                  

                

              

            
	 	
              By:

            	 /s/
              Paul Pritchett
	 	 	
              Name:

            	 Paul
              Pritchett
	 	 	
              Title:

            	 Vice
              President

    

     

    
      
        
        

      

      
        
          S-19

           

          
            Signature
              Page to Credit Agreement

          

        

        
          

        

      

      
        
        

      

       

    

    SCHEDULE
      1.01

    

    PRICING
      SCHEDULE

    

    The
      “Applicable Margin” and the “Commitment Fee Rate” for any day 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:

    

    
      	 	
               

              ≥BBB+/Baa1

            	
               

              BBB/Baa2

            	
               

              BBB-/Baa3

            	
               

              BB+/Ba1

            	
               

              ≤BB/Ba2

            
	
               

              Status

            	
               

              Level
                1

            	
               

              Level
                2

            	
               

              Level
                3

            	
               

              Level
                4

            	
               

              Level
                5

            
	
               

              Applicable
                Margin --
Eurodollar Loans

               

            	
               

              0.45%

            	
               

              0.55%

            	
               

              0.65%

            	
               

              0.875%

            	
               

              1.00%

            
	
               

              Applicable
                Margin --
ABR Loans

               

            	
               

              0.00%

            	
               

              0.00%

            	
               

              0.00%

            	
               

              0.00%

            	
               

              0.00%

            
	
               

              Commitment
                Fee Rate 

            	
               

              0.09%

               

            	
               

              0.11%

            	
               

              0.15%

            	
               

              0.175%

            	
               

              0.225%

            

    

     

    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 BBB+ or higher
      by
      S&P or
      Baa1 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
      Baa2 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
      Baa3 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 BB+ or higher
      by
      S&P or
      Ba1 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, no other Status exists.

     

    “Status”
refers
      to the determination of which of Level 1 Status, Level 2 Status, Level 3 Status,
      Level 4 Status, or Level 5 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 Moody’s or S&P, Level 5 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 Borrower and the Administrative Agent may select another
      nationally-recognized rating agency to substitute for Moody’s or S&P, as
      applicable, for purposes of the foregoing 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. 

     

    The
      Applicable Margin and Commitment Fee Rate shall be increased or decreased in
      accordance with the foregoing Schedule upon any change in the applicable ratings
      of the Index Debt. The ratings of the Index Debt in effect at any date are
      those
      in effect at the close of business on such date.

     

    
      
        
        

      

      
        2Amended and Restated Credit Agreement (UNS)

    Exhibit
      4.4

    

    [EXECUTION
      VERSION]

     

    
      

    

     

     

    $60,000,000

     

    AMENDED
      AND RESTATED CREDIT AGREEMENT

     

     

    Dated
      as
      of August 11, 2006,

     

    Among

     

    UNS
      ELECTRIC, INC.

    and

    UNS
      GAS, INC.,

    each
      as a Borrower

     

    and

     

    UNISOURCE
      ENERGY SERVICES, INC.,

    as
      Guarantor

     

    and

     

    THE
      BANKS NAMED HEREIN AND THE OTHER LENDERS

    FROM
      TIME TO TIME PARTY HERETO,

    as
      Lenders

     

    and

    

    THE
      BANK OF NEW YORK and JPMORGAN CHASE BANK, N.A.,

    as
      Co-Syndication Agents,

     

    and

    

    WELLS
      FARGO BANK, NATIONAL ASSOCIATION and ABN AMRO BANK N.V.,

    as
      Co-Documentation Agents,

     

    and

     

    UNION
      BANK OF CALIFORNIA, N.A.,

    as
      Administrative Agent

    

    

    
      

    

    

    UNION
      BANK OF CALIFORNIA, N.A.,

    as
      Lead Arranger

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    

      TABLE
        OF CONTENTS

       

      
        	
                 Section

                 

              	
                Page 

              
	 PRELIMINARY
                STATEMENTS	
                 1

              
	
                 

                  ARTICLE
                  I

                 

              	
                 

                DEFINITIONS
                  AND ACCOUNTING TERMS

                 

              	
                 

                1

                 

              
	
                    SECTION
                  1.01.

              	
                Certain
                  Defined Terms

              	
                1

              
	
                    SECTION
                  1.02.

              	
                Computation
                  of Time Periods; Construction

              	
                21

              
	
                    SECTION
                  1.03.

              	
                Accounting
                  Terms

              	
                21

              
	
                  

                  ARTICLE
                  II

              	
                 

                COMMITMENTS

                 

              	
                 

                22

                 

              
	
                    SECTION
                  2.01.

              	
                The
                  Commitments

              	
                22

              
	
                    SECTION
                  2.02.

              	
                Fees

              	
                22

              
	
                    SECTION
                  2.03.

              	
                Reduction
                  of the Commitments

              	
                23

              
	
                    SECTION
                  2.04.

              	
                Computations
                  of Outstandings

              	
                24

              
	
                 

                  ARTICLE
                  III

              	
                 

                LOANS

                 

              	
                 

                24

                 

              
	
                    SECTION
                  3.01.

              	
                Loans

              	
                24

              
	
                    SECTION
                  3.02.

              	
                Conversion
                  of Loans

              	
                25

              
	
                    SECTION
                  3.03.

              	
                Interest
                  Periods

              	
                26

              
	
                    SECTION
                  3.04.

              	
                Other
                  Terms Relating to the Making and Conversion of Loans

              	
                26

              
	
                    SECTION
                  3.05.

              	
                Repayment
                  of Loans; Interest

              	
                29

              
	
                    SECTION
                  3.06.

              	
                Additional
                  Interest on Eurodollar Rate Loans

              	
                29

              
	
                    SECTION
                  3.07.

              	
                New
                  Lenders

              	
                29

              
	
                 

                  ARTICLE
                  IV

                 

              	
                 

                LETTERS
                  OF CREDIT

                 

              	
                 

                30

                 

              
	
                    SECTION
                  4.01.

              	
                Issuing
                  Banks

              	
                30

              
	
                    SECTION
                  4.02.

              	
                Letters
                  of Credit

              	
                30

              
	
                    SECTION
                  4.03.

              	
                Issuing
                  Bank Fees

              	
                31

              
	
                    SECTION
                  4.04.

              	
                Reimbursement
                  to Issuing Banks

              	
                31

              
	
                    SECTION
                  4.05.

              	
                Obligations
                  Absolute

              	
                32

              
	
                    SECTION
                  4.06.

              	
                Liability
                  of Issuing Banks and the Lenders

              	
                32

              
	
                 

                  ARTICLE
                  V

                 

              	
                 

                PAYMENTS,
                  COMPUTATIONS AND YIELD PROTECTION

                 

              	
                 

                33

                 

              

      

       

      
        
          
          

        

        
          -i-

          
            

          

        

        
          
          

        

      

       

      
        	
                    SECTION
                  5.01.

              	
                Payments
                  and Computations

              	
                33

              
	
                    SECTION
                  5.02.

              	
                Interest
                  Rate Determination

              	
                35

              
	
                    SECTION
                  5.03.

              	
                Prepayments

              	
                35

              
	
                    SECTION
                  5.04.

              	
                Yield
                  Protection

              	
                36

              
	
                    SECTION
                  5.05.

              	
                Sharing
                  of Payments, Etc

              	
                37

              
	
                    SECTION
                  5.06.

              	
                Taxes

              	
                38

              
	
                 

                  ARTICLE
                  VI

                 

              	
                 

                CONDITIONS
                  PRECEDENT

                 

              	
                 

                40

                 

              
	
                    SECTION
                  6.01.

              	
                Conditions
                  Precedent to Effectiveness

              	
                40

              
	
                    SECTION
                  6.02.

              	
                Conditions
                  Precedent to Each Extension of Credit

              	
                41

              
	
                    SECTION
                  6.03.

              	
                Determinations
                  Under Section 6.01

              	
                42

              
	
                    SECTION
                  6.04.

              	
                Reliance
                  on Certificates

              	
                42

              
	
                 

                  ARTICLE
                  VII

                 

              	
                 

                REPRESENTATIONS
                  AND WARRANTIES

                 

              	
                 

                42

                 

              
	
                    SECTION
                  7.01.

              	
                Representations
                  and Warranties of the Obligors

              	
                42

              
	
                 

                  ARTICLE
                  VIII

                 

              	
                 

                COVENANTS
                  OF THE OBLIGORS

                 

              	
                 

                49

                 

              
	
                    SECTION
                  8.01.

              	
                Affirmative
                  Covenants

              	
                49

              
	
                    SECTION
                  8.02.

              	
                Negative
                  Covenants

              	
                55

              
	
                    SECTION
                  8.03.

              	
                Financial
                  Covenants

              	
                59

              
	
                 

                  ARTICLE
                  IX

                 

              	
                 

                DEFAULTS

                 

              	
                 

                60

                 

              
	
                    SECTION
                  9.01.

              	
                Events
                  of Default

              	
                60

              
	
                    SECTION
                  9.02.

              	
                Remedies

              	
                  
                  63

              
	
                 

                  ARTICLE
                  X

                 

              	
                 

                THE
                  ADMINISTRATIVE AGENT

                 

              	
                 

                64

                 

              
	
                    SECTION
                  10.01.

              	
                Authorization
                  and Action

              	
                64

              
	
                    SECTION
                  10.02.

              	
                Indemnification

              	
                66

              
	
                 

                  ARTICLE
                  XI

                 

              	
                 

                GUARANTY

                 

              	
                 

                66

                 

              
	
                    SECTION
                  11.01.

              	
                The
                  Guaranty

              	
                66

              
	
                    SECTION
                  11.02.

              	
                Obligations
                  Unconditional

              	
                67

              
	
                    SECTION
                  11.03.

              	
                Subrogation

              	
                69

              
	
                    SECTION
                  11.04.

              	
                Reinstatement

              	
                69

              
	
                    SECTION
                  11.05.

              	
                Remedies
                  Unaffected

              	
                70

              

      

       

      
        
          
          

        

        
          -ii-

          
            

          

        

        
          
          

        

      

       

      
        	
                    SECTION
                  11.06.

              	
                Continuing
                  Guarantee; Liability in Respect of Successor

              	
                70

              
	
                 

                  ARTICLE
                  XII

              	
                 

                MISCELLANEOUS

                 

              	
                 

                70

              
	
                    SECTION
                  12.01.

              	
                Amendments,
                  Etc.

              	
                70

              
	
                    SECTION
                  12.02.

              	
                Notices,
                  Etc

              	
                71

              
	
                    SECTION
                  12.03.

              	
                No
                  Waiver of Remedies

              	
                71

              
	
                    SECTION
                  12.04.

              	
                Costs,
                  Expenses and Indemnification

              	
                72

              
	
                    SECTION
                  12.05.

              	
                Right
                  of Set-off

              	
                73

              
	
                    SECTION
                  12.06.

              	
                Binding
                  Effect

              	
                73

              
	
                    SECTION
                  12.07.

              	
                Assignments
                  and Participation

              	
                73

              
	
                    SECTION
                  12.08.

              	
                Confidentiality

              	
                78

              
	
                    SECTION
                  12.09.

              	
                WAIVER
                  OF JURY TRIAL

              	
                78

              
	
                    SECTION
                  12.10.

              	
                Governing
                  Law; Submission to Jurisdiction

              	
                79

              
	
                    SECTION
                  12.11.

              	
                Relation
                  of the Parties; No Beneficiary

              	
                79

              
	
                    SECTION
                  12.12.

              	
                Execution
                  in Counterparts

              	
                79

              
	
                    SECTION
                  12.13.

              	
                Survival
                  of Agreement

              	
                79

              
	
                    SECTION
                  12.14.

              	
                Patriot
                  Act Notice

              	
                  
                  79

              

      

    

    

       

      Exhibits

       

      
        	
                EXHIBIT
                  A

              	
                -

              	
                Form
                  of Notice of Borrowing

              

      

      
        	
                EXHIBIT
                  B 

              	
                -

              	
                Form
                  of Notice of Conversion

              

      

      
        	
                EXHIBIT
                  C 

              	
                -

              	
                Form
                  of Opinion of Thelen Reid & Priest 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                  
Applicable
        Lending Offices

      SCHEDULE
        7.01(e)  Subsidiaries
        

      SCHEDULE
        7.01(h)  Material
        Litigation

      SCHEDULE
        7.01(n)  Existing
        Indebtedness

      SCHEDULE
        7.01(s)  Environmental
        Matters

       

      
        
          
          

        

        
          -iii-

          
            

          

        

        
          
          

        

      

    

     

    

       

      AMENDED
        AND RESTATED CREDIT AGREEMENT

       

      Dated
        as
        of August 11, 2006

       

      THIS
        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 of California, N.A. (“Union
                  Bank”),
                  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, the Guarantor, The Bank of New York, as
        syndication agent, Wells Fargo Bank, National Association, as documentation
        agent, and Union Bank of California, N.A., as administrative agent, previously
        entered into that certain Credit Agreement, dated as of April 15, 2005 (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
        Opinion and Order No. 66028 issued by the ACC on July 3, 2003.

       

      “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.

       

      “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.

       

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

       

      “Alternate
        Base Rate”
means,
        for any day, a rate per
        annum
        equal to
        the greater of (a) the Reference Rate in effect on such day and (b) the Federal
        Funds Effective Rate in effect on such day plus 1/2 of 1%. Any change in
        the
        Alternate Base Rate due to a change in the Reference Rate or the Federal
        Funds
        Effective Rate shall be effective from and including the effective date of
        such
        change in the Reference Rate or the Federal Funds Effective 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, (a) with respect to any Eurodollar Rate Loan, 1.0% per
        annum,
        and (b)
        with respect to any ABR Loan, 0.0% per
        annum. 
        Notwithstanding the foregoing, each of the foregoing Applicable Margins shall
        be

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      increased
        by 2.0% per
        annum
        upon the
        occurrence and during the continuance of an Event of Default.

       

      “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 Eurodollar Rate
        for
        such Interest Period plus
        the
        Applicable Margin in effect from time to time during such Interest
        Period.

       

      “Availability
        Sublimit”
means,
        with respect to any Borrower at any time, the lesser of (a) 75% 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(a) hereof. The Availability Sublimit for any Borrower shall in no event
        exceed (i) from the Closing Date until the date on which the conditions set
        forth in Section 6.02(b) have been satisfied, $30,000,000, and (ii) from
        and
        after the date on which the conditions set forth in Section 6.02(b) have
        been
        satisfied, $45,000,000.

       

      “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 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

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      described
        in clause (a) and which is also a day for trading by and between banks in
        Dollar
        deposits in the London interbank market.

       

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

       

      “Capital
        Lease Obligation”
means,
        with respect to any Person and a Capital Lease, the amount of the obligation
        of
        such Person as the lessee under such Capital Lease which would, in accordance
        with GAAP, appear as a liability on a balance sheet of such Person.

       

      “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 August 11, 2006
        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.

       

      “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 $60,000,000.

       

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

       

      “Consolidated
        Debt”
means,
        with respect to any Borrower as of any date of determination, the total of
        all
        Indebtedness of such Borrower and its Subsidiaries outstanding on such date,
        after eliminating all offsetting debits and credits between such Borrower
        and
        its Subsidiaries and all other items required to be eliminated in the course
        of
        the preparation of consolidated financial statements of such Borrower and
        its
        Subsidiaries in accordance with GAAP.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      “Consolidated
        Income Available for Interest Charges”
means,
        with respect to any Borrower for any period, Consolidated Net Income of such
        Borrower for such period plus all amounts deducted in the computation thereof
        on
        account of (a) Interest Charges, (b) taxes imposed on or measured by income
        or
        excess profits, and (c) the amount of all depreciation and amortization
        allowances and other non-cash expenses of such Borrower and its Subsidiaries
        for
        such period.

       

      “Consolidated
        Long Term Debt” means,
        with respect to any Borrower as of any date of determination, the total of
        all
        Long Term Debt of such Borrower and its Subsidiaries outstanding on such
        date,
        after eliminating all offsetting debits and credits between such Borrower
        and
        its Subsidiaries and all other items required to be eliminated in the course
        of
        the preparation of consolidated financial statements of such Borrower and
        its
        Subsidiaries in accordance with GAAP.

       

      “Consolidated
        Net Income”
means,
        with respect to any Borrower and with reference to any fiscal period, the
        net
        income (or loss) of such Borrower and its Subsidiaries for such period (taken
        as
        a cumulative whole), as determined in accordance with GAAP, after eliminating
        all offsetting debits and credits between such Borrower and its Subsidiaries
        and
        all other items required to be eliminated in the course of the preparation
        of
        consolidated financial statements of such Borrower and its Subsidiaries in
        accordance with GAAP, adjusted to exclude (a) any extraordinary gain or loss
        reflected in the net income (or loss) for such Borrower and its Subsidiaries
        for
        such period and (b) any cumulative effect of a change in accounting principles
        reflected in the net income (or loss) for such Borrower and its Subsidiaries
        for
        such period.

       

      “Consolidated
        Net Worth”
means,
        with respect to any Person at any time:

       

      (a)     the
        total
        assets of such Person and its Subsidiaries which would be shown as assets
        on a
        consolidated balance sheet of such Person and its Subsidiaries as of such
        time
        prepared in accordance with GAAP, after eliminating all amounts properly
        attributable to minority interests, if any, in the stock and surplus of
        Subsidiaries; minus 

       

      (b)     the
        total
        liabilities of such Person and its Subsidiaries which would be shown as
        liabilities on a consolidated balance sheet of such Person and its Subsidiaries
        as of such time prepared in accordance with GAAP; minus

       

      (c)     the
        net
        book value of all assets (other than intangible assets eligible for cost
        recovery through regulatory rates) of such Person and its Subsidiaries, after
        deducting any reserves applicable thereto, which would be treated as intangible
        under GAAP, including, without limitation, goodwill, trademarks, trade names,
        service marks, brand names, copyrights, patents, unamortized debt discount
        and
        expense and organizational expenses.

       

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

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      “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.

       

      “Current
        Maturities of Long Term Debt”
means,
        at any time and with respect to any item of Long Term Debt, the portion of
        such
        Long Term Debt outstanding at such time which by the terms of such Long Term
        Debt or the terms of any instrument or agreement relating thereto is due
        on
        demand or within one year from such time (whether by sinking fund, other
        required prepayment or final payment at maturity) and is not directly or
        indirectly renewable, extendible or refundable at the option of the obligor
        under an agreement or firm commitment in effect at such time to a date one
        year
        or more from such time.

       

      “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.

       

      “Default
        Rate”
means
        a
        rate per
        annum
        equal at
        all times to the Applicable Rate for an ABR Loan in effect from time to
        time.

       

      “Disclosure
        Documents”
means
        (i) the Annual Report on Form 10-K of UniSource Energy for the fiscal year
        ended
        December 31, 2005, as filed with the SEC, (ii) the Quarterly Reports on Form
        10-Q of UniSource Energy for the fiscal quarters ended March 31, 2006 and
        June
        30, 2006, as filed with the SEC, and (iii) the Current Reports on Form 8-K
        of
        UniSource Energy as filed with the SEC on May 25, 2006, June 6, 2006, June
        12,
        2006, June 26, 2006, June 27, 2006, July 5, 2006 and August 8,
        2006.

       

      “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.
         

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

        
           

          
            
              
              

            

            
              6

              
                

              

            

            
              
              

            

          

           

        

         

      

      “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 1.01 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), and (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.
        

       

      “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.

       

      “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,

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

                    
         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) the existence with respect to any Plan of such Obligor of an “accumulated
        funding deficiency” (as defined in Section 412 of the Code or Section 302 of
        ERISA), whether or not waived; (c) the filing pursuant to Section 412(d)
        of the
        Code or Section 303(d) 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.

       

      “Eurocurrency
        Liabilities”
has
        the
        meaning assigned to such term in Regulation D of the Board, as in effect
        from time to time. 

       

      “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 1.01 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, an interest rate per
        annum
        (rounded
        upwards, if necessary, to the nearest whole multiple of 1/16 of 1%) equal
        to the
        rate at which Dollar deposits are offered for such Interest Period as displayed
        on the Reuters Screen LIBO

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

       Page
        (or, if such rate is not displayed on the Reuters Screen LIBO Page, then
        on the
        Telerate Screen LIBO Page) at or about 9:00 A.M. (Los Angeles, California
        time)
        two Business Days prior to the beginning of such Interest Period for delivery
        on
        the first day of such Interest Period, and in an amount approximately equal
        to
        the amount of such Eurodollar Rate Loan and for a period approximately equal
        to
        such Interest Period. If for any Interest Period for a Eurodollar Rate Loan
        no
        such displayed rate is available, the Administrative Agent shall determine
        such
        rate based on the average rate at which the Administrative Agent is offered
        deposits in Dollars of such duration and in the amount of $5,000,000 by prime
        banks in the London interbank market as of approximately 11:00 A.M. (London,
        England time) two Business Days before the commencement of such Interest
        Period.

       

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

       

      “Eurodollar
        Reserve Percentage”
of
        any
        Lender for each Interest Period for each Eurodollar Rate Loan means the reserve
        percentage applicable to such Lender during such Interest Period (or if more
        than one such percentage shall be so applicable, the daily average of such
        percentages for those days in such Interest Period during which any such
        percentage shall be so applicable) under Regulation D or other regulations
        issued from time to time by the Board for determining the maximum reserve
        requirement (including any emergency, supplemental or other marginal reserve
        requirement) then applicable to such Lender with respect to liabilities or
        assets consisting of or including Eurocurrency Liabilities having a term
        equal
        to such Interest Period. 

       

      “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.

      “Extension
        of Credit”
means
        (i) the making of a Borrowing (including any Conversion), (ii) the issuance
        of a
        Letter of Credit, or (iii) 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).

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      “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 later to occur of (i) April 15, 2008 and (ii) if (and only if) the
        conditions set forth in Section 6.02(b) have been satisfied, August 11,
        2011.

       

      “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.

       

      “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).

       

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

      

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

       

      “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
        no
        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) is guaranteed by, or otherwise has the
        benefit of any Guaranty Obligation of, the Guarantor.

       

      “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).

       

      “Indebtedness”
with
        respect to any Person means, at any time, without duplication:

       

      (a)     its
        liabilities for borrowed money and its redemption obligations in respect
        of
        mandatorily redeemable Preferred Stock;

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      (b)     its
        liabilities for the deferred purchase price of Property acquired by such
        Person
        (excluding accounts payable arising in the ordinary course of business but
        including all liabilities created or arising under any conditional sale or
        other
        title retention agreement with respect to any such Property);

       

      (c)     all
        liabilities appearing on its balance sheet in accordance with GAAP in respect
        of
        Capital Leases;

       

      (d)     all
        liabilities for borrowed money secured by any Lien with respect to any Property
        owned by such Person (whether or not it has assumed or otherwise become liable
        for such liabilities);

       

      (e)     its
        liabilities in respect of letters of credit or instruments serving a similar
        function issued or accepted for its account by banks and other financial
        institutions (whether or not representing obligations for borrowed
        money);

       

      (f)     Swaps
        of
        such Person; and

       

      (g)     any
        Guaranty Obligation of such Person with respect to liabilities of a type
        described in any of clauses (a) through (f) above.

       

      Indebtedness
        of any Person shall include all obligations of such Person of the character
        described in clauses (a) through (g) above to the extent such Person remains
        legally liable in respect thereof notwithstanding that any such obligation
        is
        deemed to be extinguished under GAAP.

       

      “Information
        Memorandum”
means
        the Confidential Information Memorandum dated July 2006 relating to the Obligors
        and the Transactions.

       

      “Interest
        Charges”
means,
        with respect to any Borrower for any period, the sum (without duplication)
        of
        the following (in each case, eliminating all offsetting debits and credits
        between such Borrower and its Subsidiaries and all other items required to
        be
        eliminated in the course of the preparation of consolidated financial statements
        of such Borrower
        and its Subsidiaries in accordance with GAAP): (a) all interest in respect
        of
        Indebtedness of such Borrower and its Subsidiaries (including imputed interest
        on Capital Lease Obligations) deducted in determining Consolidated Net Income
        for such period, together with all interest capitalized or deferred during
        such
        period and not deducted in determining Consolidated Net Income for such period,
        and (b) to the extent actually paid, all debt discount and expense amortized
        or
        required to be amortized in the determination of Consolidated Net Income
        for
        such period.

       

      “Interest
        Coverage Ratio”
means,
        with respect to any Borrower for any period, the ratio of (a) Consolidated
        Income Available for Interest Charges of such Borrower for such period to
        (b)
        Interest Charges of such Borrower for such period.

       

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

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

      “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 as an Issuing Bank, such designee has agreed to act as an Issuing
        Bank hereunder, and the Administrative Agent has accepted such designee 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
        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 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
        $30,000,000. 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).

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      “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. 

       

      “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.

       

      “Long
        Term Debt”
means,
        with respect to any Borrower, all Indebtedness of such Borrower which by
        its
        terms or by the terms of any instrument or agreement relating thereto matures,
        or which is otherwise payable or unpaid, one year or more from, or is directly
        or indirectly renewable or extendible at the option of the obligor in respect
        thereof to a date one year or more (including, without limitation, an option
        of
        such obligor under a revolving credit or similar agreement obligating the
        lender
        or lenders to extend credit over a period of one year or more) from, the
        date of
        the creation thereof, provided
        that
        Long Term Debt shall include, as at any date of determination, Current
        Maturities of Long Term Debt.

       

      “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, (i) the Note Purchase and Guaranty Agreement, dated as of August
        11, 2003, among UNS Electric, the Guarantor and the Purchasers named therein,
        and (ii) the Note Purchase and Guaranty Agreement, dated as of August 11,
        2003,
        among UNS Gas, the Guarantor and the Purchasers named therein.

       

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

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

      “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.

       

      “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 a Senior Financial 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);

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

       

      (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;

       

      (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

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

       

       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; 

       

      (g)     Liens
        in
        existence on the Closing Date securing the payment or performance of any
        liabilities assumed by (i) UNS Gas pursuant to that certain asset purchase
        agreement, dated as of October 29, 2002, between UniSource Energy and Citizens
        Communications Company, pursuant to which Citizens Communications Company
        transferred certain assets (the “Gas
        Assets”)
        and
        liabilities to UNS Gas, and the agreements and instruments referred to therein,
        and (ii) UNS Electric pursuant to that certain asset purchase agreement,
        dated
        as of October 29, 2002, between UniSource Energy and Citizens Communications
        Company, pursuant to which Citizens Communications Company transferred certain
        assets (the “Electric
        Assets”,
        and
        together with the Gas Assets being referred to herein, collectively, as the
        “Assets”)
        and
        liabilities to UNS Electric, and the agreements and instruments referred
        to
        therein; and

       

      (h)     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 Section
        412 of the Code or Section 302 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. 

       

      “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.

       

      “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

       

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

       

       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, officers, employees and agents 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 (i)
        hold
        at least 51% of the then aggregate outstanding principal amount of the Loans
        owing to Lenders or (ii) if no Loans are then outstanding, have Percentages
        in
        the aggregate of at least 51%. 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.

       

      “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.

       

      “Responsible
        Officer”
means,
        with respect to any Obligor, any Senior Financial Officer of such Obligor
        and
        any other officer of such Obligor with responsibility for the administration
        of
        the relevant portion of this Agreement.

       

      “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

       

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

       

       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 (i) the Final Maturity Date and (ii) 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
        (i) 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 (ii) 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.

       

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

       

      “Senior
        Financial Officer”
means,
        with respect to any Person, the chief financial officer, principal accounting
        officer, treasurer or comptroller of such Person.

       

      “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.

       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

       

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

       

      “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.

       

      “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.

       

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

       

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

       

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

       

      “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

       

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

       at
        Title 31, Subtitle B, Chapter V of the Code of Federal Regulations, as amended,
        and any enabling legislation thereof.

       

      “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, supplemented or otherwise modified (subject to any restrictions
        on
        such amendments, restatements, 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.

       

      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

       

      
        
          
          

        

        
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      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, (ii) until the conditions set forth in Section 6.02(b) have
        been satisfied, the principal amount outstanding hereunder to exceed
        $40,000,000, or (iii) 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
        each
        Lender a commitment fee at a rate equal to 0.15% per
        annum
        on 50%
        of the daily amount of such Lender’s Available Commitment, from the date hereof,
        in the case of each Bank, and from the effective date specified in the Lender
        Assignment pursuant to which it became a Lender, in the case of each other
        Lender, until the Revolving Credit Termination Date, payable quarterly in
        arrears on the last day of each March, June, September and December, commencing
        on the first such date to occur following the date hereof, and on the Revolving
        Credit Termination Date.

       

      (b)     Each
        Borrower agrees to pay to the Administrative Agent for the account of each
        Lender a commission 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 with respect to Eurodollar 

       

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

       

      Rate
        Loans from time to time, payable quarterly in arrears on the last day of
        each
        March, June, September and December, commencing on the first such date to
        occur
        following the date hereof, and on the Letter of Credit Expiration
        Date.

       

      (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 a Responsible 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, 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) $45,000,000, (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 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

       

      
        
          
          

        

        
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       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 (i) until the date on which
        the
        conditions set forth in Section 6.02(b) shall have been satisfied, $40,000,000
        or (ii) 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.

       

      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.

       

      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      

       

      (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 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; if and so long as such
        non-performing Lender shall not repay such amount, and unless and until an
        Eligible Assignee shall have assumed
        and performed the obligations of such non-performing Lender, all computations
        by
        the Administrative Agent of Percentages, Commitments and payments hereunder
        shall be made without regard to the Commitments, or outstanding Loans, of
        such
        non-performing Lender, and any amounts paid to the Administrative Agent for
        the
        account of such non-performing Lender shall be held by the Administrative
        Agent
        in trust for such non-performing Lender in a non-interest-bearing special
        purpose account. 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

       

      
        
          
          

        

        
          25

          
            

          

        

        
          
          

        

      

       

       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;

       

      (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;

       

      
        
          
          

        

        
          26

          
            

          

        

        
          
          

        

      

       

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

       

      (iii)     at
        no
        time shall more than eight (8) 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.

       

      (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. 

       

      
        
          
          

        

        
          27

          
            

          

        

        
          
          

        

      

       

      (c)     If the
        Required Lenders shall, at least one Business Day before the date of any
        requested Borrowing, notify the Administrative Agent that the 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 Section 3.06, or shall become a non-performing
        Lender under Section 3.01(c) or Section 4.04(c), 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 3.06, Section 3.01(c) or
        Section 4.04(c), 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 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.

       

      
        
          
          

        

        
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      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 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.

       

      SECTION
        3.06. Additional Interest on Eurodollar Rate Loans.
        Each
        Borrower shall pay to the Administrative Agent for the account of each Lender
        any costs actually incurred by such Lender with respect to Eurodollar Rate
        Loans
        made to such Borrower that are attributable to such Lender’s compliance with
        regulations of the Board requiring the maintenance of reserves with respect
        to
        liabilities or assets consisting of or including Eurocurrency Liabilities.
        Such
        costs shall be paid to the Administrative Agent for the account of such Lender
        in the form of additional interest on the unpaid principal amount of each
        Eurodollar Rate Loan of such Lender made to such Borrower, from the date
        of such
        Eurodollar Rate Loan until such principal amount is paid in full, at an interest
        rate per
        annum
        equal at
        all times to the remainder obtained by subtracting (i) the Eurodollar Rate
        for
        the Interest Period for such Eurodollar Rate Loan from (ii) the rate obtained
        by
        dividing such Eurodollar Rate by a percentage equal to 100% minus the Eurodollar
        Reserve Percentage of such Lender for such Interest Period, payable on each
        date
        on which interest is payable on such Eurodollar Rate Loan (but in no event
        earlier than five Business Days after the Borrower’s receipt of the certificate
        referred to in the last sentence of this Section 3.06). Such additional interest
        shall be determined by such Lender and notified to the applicable Borrower
        through the Administrative Agent. A certificate as to the amount of such
        additional interest and giving a reasonable explanation and calculation thereof
        shall be submitted to the applicable Borrower and the Administrative Agent
        by
        such Lender and shall be conclusive and binding for all purposes, absent
        manifest error.

       

      SECTION
        3.07. New Lenders.
        On
        the
        Closing Date, each New Lender and Increasing Lender (as hereinafter defined)
        shall purchase by assignment from the Existing

       

      
        
          
          

        

        
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      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. 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.
        Nothing contained herein shall be deemed to require any Lender to agree to
        act
        as an Issuing Bank, if it does not so desire.

       

      SECTION
        4.02. Letters of Credit.
        (a)
        Each 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 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.

       

      
        
          
          

        

        
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      (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.

       

      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.

       

      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

       

      
        
          
          

        

        
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      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, 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.

       

      (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 

       

      
        
          
          

        

        
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      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 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

       

      
        
          
          

        

        
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       information
        contained therein in the Register pursuant to Section 12.07, 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.

       

      (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 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 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 on such due date an amount
        equal to the amount then due by such Borrower to such Lender. If and to the
        extent such Borrower shall not have so made such payment in full to the
        Administrative Agent, such Lender shall repay to the Administrative Agent
        forthwith on demand such amount distributed to such Lender, together with
        interest thereon, for each day from the date such amount is distributed to
        such
        Lender until the date such Lender repays such amount to the Administrative
        Agent, at the Federal Funds Effective Rate.

       

      (f)     Any
        fees,
        interest, costs, expenses or other amount (other than the principal amount
        of
        any Loan, which shall accrue interest at the Applicable Rate for such Loan)
        payable by the Borrower hereunder or under any of the Promissory Notes that
        is
        not paid when due (whether at stated maturity, by acceleration or otherwise)
        shall (to the fullest extent permitted by

       

      
        
          
          

        

        
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      law)
        bear
        interest, from the date when due until paid in full, at a rate per
        annum
        equal at
        all times to the Default Rate, payable on demand. 

       

      (g)     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.

       

      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 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

       

      
        
          
          

        

        
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      (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, or (ii) the compliance with
        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, 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, 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, or if
        any
        Borrower shall Convert any Eurodollar Rate Loans on any day other than the
        last
        day of the Interest Period therefor, such Borrower shall, promptly after
        demand
        by such 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 or Conversion, 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 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

       

      
        
          
          

        

        
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      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 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 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,
        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 to provide such notice or to make demand for payment
        under said subsection shall not constitute a waiver of such Lender’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 for any amounts or
        costs
        incurred under subsection (a), (b) or (c) above, more than 270 days prior
        to the
        date that such Lender 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 to such compensation. If any Lender shall
        subsequently determine that any amount demanded and collected under this
        Section
        5.04 was done so in error, such Lender 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

       

      
        
          
          

        

        
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       the
        fullest extent permitted by law, exercise all its rights of payment (including
        the right of set-off) with respect to such participation as fully as if such
        Lender were the direct creditor of 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, 

       

      
        
          
          

        

        
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      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.

       

      (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 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 Union Bank, 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) Thelen Reid & Priest 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 the
        President, a Vice President or a Senior Financial 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 by the President, a Vice President or a Senior Financial 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 

       

      
        
          
          

        

        
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      applicable
        “know your customer” and anti-money laundering rules and regulations, including
        without limitation the Patriot Act, with respect to the Obligors. 

       

      (h)     The
        Administrative Agent 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)     Except
        as
        contemplated in Section 6.02(b)(i), 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 any amendments
        or
        supplements, entered into at any time after April 15, 2005, to the Note Purchase
        Agreement to which such Borrower is a party.

       

      (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 (a) 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):

       

      (i)     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 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
        

       

      
        
          
          

        

        
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      relate
        to
        an earlier date, in which case such representations and warranties were true
        and
        correct as of such earlier date); and

       

      (ii)     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; and

       

      (b)     in
        the
        case of any Extension of Credit that would result in the utilization of greater
        than $40,000,000 of the Commitments, the Administrative Agent shall have
        received on or before the date thereof: (i) a certified copy of an order
        of the
        ACC, in form and substance satisfactory to the Administrative Agent, authorizing
        (A) the increase in the aggregate amount of the Commitments provided by this
        Agreement and (B) the extension of the maturity date of the credit facilities
        established by this Agreement; and (ii) a favorable written opinion of counsel
        to the Obligors with respect to such ACC order, in form and substance
        satisfactory to the Administrative Agent.

       

      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 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 

       

      
        
          
          

        

        
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      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.

       

      (c)     Disclosure;
        No Material Adverse Change; Etc.
        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. 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, 2005, 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. 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, 2005) present fairly,
        in all
        material respects, the financial position and results of operations and cash
        flows of such Obligor

       

      
        
          
          

        

        
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       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, 2005 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.

       

      (e)     Organization
        and Ownership of Shares of Subsidiaries. 

       

      (i)     As
        of the
        Closing Date, Schedule 7.01(e) contains (except as noted therein) complete
        and
        correct lists of (i) 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)
        each
        Obligor’s directors and senior officers, and (iii) the Obligors’ Affiliates,
        other than Subsidiaries.

       

      (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. 

       

      
        
          
          

        

        
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      (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.

       

      (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 (i) until the satisfaction of the conditions set forth
        in
        Section 6.02(b)(i), the approval of the ACC that is required for the extension
        of the Final Maturity Date from April 15, 2008 and the increase in the
        Commitments above $40,000,000 and (ii) the ACC Order, which ACC Order has
        been
        obtained and is in full force and effect.

       

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

       

      (i)     Except
        as
        disclosed in Schedule 7.01(h), 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

       

      
        
          
          

        

        
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      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.

       

      (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 401(a)(29)
        or 412 of the Code, other than such liabilities or Liens as would not be
        individually or in the aggregate Material.

       

      (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

       

      
        
          
          

        

        
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      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.

       

      (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)     Except
        as
        described therein, Schedule 7.01(n) sets forth a complete and correct list
        of
        all outstanding Indebtedness of such Obligor and each of its Subsidiaries
        as of
        the Closing Date. Neither such Obligor nor any such Subsidiary 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

       

      
        
          
          

        

        
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      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.

       

      (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 Schedule
        7.01(s):

       

      (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.

       

      
        
          
          

        

        
          48

          
            

          

        

        
          
          

        

      

       

      (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.

       

      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 a Senior Financial 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

       

      
        
          
          

        

        
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      (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

       

      (1)     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,
        and

       

      (2)     a
        certificate of such accountants stating that they have reviewed this Agreement
        and stating further whether, in making their audit, they have become aware
        of
        any condition or event that then constitutes a Default or an Event of Default
        resulting from a breach of the provisions of any of Sections 8.02(d), 8.02(e),
        8.03(a) and 8.03(b) hereof, and, if they are aware that any such condition
        or
        event then exists, specifying the nature and period of the existence thereof
        (it
        being understood that such accountants shall not be liable, directly or
        indirectly, for any failure to obtain knowledge of any Default or Event of
        Default),

       

      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 certificate described in clause (2)
        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 a Responsible 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

       

      
        
          
          

        

        
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         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 a Responsible 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 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;
        

       

      
        
          
          

        

        
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      (viii) Default
        and Litigation
        -
        promptly, and in any event within five days after a Responsible 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; and

       

      (ix)     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.

       

      (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 a Senior Financial 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 Sections 8.03(a) and 8.03(b) during the quarterly or annual
        period covered by the statements then being furnished; 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.

       

      
        
          
          

        

        
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      (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

       

      (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,

       

      
        
          
          

        

        
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      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.

       

      (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)     Corporate
        Separateness. The
        Guarantor, for so long as it is an Obligor, shall at all times maintain its
        separate existence and, specifically, shall conduct its affairs in accordance
        with the following:

       

      (i)     the
        Guarantor shall: (A) maintain and prepare separate financial reports and
        financial statements in accordance with GAAP, showing its assets and liabilities
        separate and apart from those of any other Person other than its Subsidiaries,
        and will not have its assets listed on the financial statement of any other
        Person (provided,
        that
        the Guarantor’s assets may be included in a consolidated financial statement of
        a Person of which the Guarantor is a Subsidiary, if inclusion on such
        consolidated financial statement is required to comply with the requirements
        of
        GAAP); (B) maintain its books, records and bank accounts separate from those
        of
        its Affiliates and any other Person other than its Subsidiaries; and (C)
        not
        permit any of its Affiliates independent access to its bank
        accounts;

       

      (ii)     the
        Guarantor shall not commingle or pool any of its funds or other assets with
        those of any of its Affiliates or any other Person other than its Subsidiaries,
        and it shall hold all of its assets in its own name;

       

      
        
          
          

        

        
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      (iii)    
the
        Guarantor shall conduct its own business in its own name and shall not operate,
        or purport to operate, collectively as a single or consolidated business
        entity
        with respect to any Person other than its Subsidiaries;

       

      (iv)    
the
        Guarantor shall, insofar as is consistent with commercial and business
        circumstances affecting its business and financial condition, remain Solvent
        and
        pay its own debts, liabilities and expenses (including overhead expenses,
        if
        any) only out of its own assets as the same shall become due;

       

      (v)     the
        Guarantor has done, or caused to be done, and shall do, all things necessary
        to
        observe all corporate formalities and other organizational formalities of
        the
        jurisdiction in which it is organized, and preserve its existence;

       

      (vi)           
        the
        Guarantor shall, to the extent it utilizes stationary, invoices and checks,
        maintain and utilize separate stationery, invoices and checks bearing its
        own
        name;

       

      (vii)           
        the
        Guarantor shall, at all times, hold itself out to the public as a legal entity
        separate and distinct from any other Person other than its Subsidiaries and
        shall correct any known misunderstanding regarding its separate
        identity;

       

      (viii)           the
        Guarantor shall not identify itself as a division of any other
        Person;

       

      (ix)             the
        Guarantor shall maintain its assets in such a manner that it will not be
        costly
        or difficult to segregate, ascertain or identify its individual assets from
        those of any of its Affiliates or any other Person other than its
        Subsidiaries;

       

      (x)              
        the
        Guarantor shall not use its separate existence to abuse creditors or to
        perpetrate a fraud, injury, or injustice on creditors in violation of applicable
        law;

       

      (xi)             
        the
        Guarantor shall not, in connection with the Loan Documents, act with an intent
        to hinder, delay, or defraud any of its creditors in violation of applicable
        law; and  (xii) the
        Guarantor shall not pledge its assets for the benefit of any Person, except
        as
        permitted by the Loan Documents.

       

      (j)     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, enter
        into
        directly or indirectly any transaction or Material group of related

       

      
        
          
          

        

        
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       transactions
        (including, without limitation, the purchase, lease, sale or exchange of
        Properties of any kind or the rendering of any service) with any of its
        Affiliates (other than a Borrower or another Subsidiary), except in the ordinary
        course and pursuant to the reasonable requirements of such Obligor’s or such
        Subsidiary’s business and upon fair and reasonable terms no less favorable to
        such Obligor or such Subsidiary than would be obtainable in a comparable
        arm’s-length transaction with a Person not an Affiliate; provided
        that the
        foregoing shall not prohibit (i) shared corporate or administrative
        services and staffing with Affiliates, including, without limitation,
        accounting, legal, human resources and treasury operations, provided on
        customary terms for similarly situated companies and otherwise as set forth
        above or on a fully allocated cost basis and (ii) transactions conducted in
        a manner required by applicable law, rule or regulation.

       

      (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:

       

      (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

       

      
        
          
          

        

        
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       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).

       

      (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.

       

      
        
          
          

        

        
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      (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).

       

      (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.

       

      
        
          
          

        

        
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      (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, 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.

       

      (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.

       

      (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 Covenants.
        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:

       

      (a)     Consolidated
        Leverage Ratio.
        Such
        Borrower shall maintain at all times a ratio of such Borrower’s Consolidated
        Long Term Debt to its Consolidated Total Capitalization of not greater than
        (i)
        in the case of UNS Gas, 0.67 to 1.00, and (ii) in the case of UNS Electric,
        0.65
        to 1.00.

       

      (b)     Interest
        Coverage Ratio.
        Such
        Borrower shall not permit its Interest Coverage Ratio for the
        four-fiscal-quarter period ended on the last day of each fiscal quarter,
        commencing with the fiscal quarter ending June 30, 2006, to be less than
        2.25 to
        1.00.

       

      
        
          
          

        

        
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      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)     Such
        Borrower shall fail to pay any principal of any Loan when due and payable
        in
        accordance with the terms hereof; or 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 days after any such interest, fees or
        other
        amount becomes due and payable in accordance with the terms hereof or thereof;
        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(j),
        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

       

      (e)     (i)
        such
        Borrower, any Subsidiary of such Borrower or, prior to the occurrence of
        the
        Guaranty Termination Date with respect to such Borrower, any other Subsidiary
        of
        the Guarantor (including, without limitation, the other Borrower) 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) such Borrower, any
        Subsidiary of such Borrower or, prior to the occurrence of the Guaranty
        Termination Date with respect to such Borrower, any other Subsidiary of the
        Guarantor (including, without limitation, the other Borrower) 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 

       

      
        
          
          

        

        
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      event
        or
        condition (other than the passage of time or the right of the holder of
        Indebtedness to convert such Indebtedness into equity interests), such Borrower,
        any Subsidiary of such Borrower or, prior to the occurrence of the Guaranty
        Termination Date with respect to such Borrower, any other Subsidiary of the
        Guarantor (including, without limitation, the other Borrower) 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 (it being understood and agreed that
        any
        Default or Event of Default pursuant to this subsection (e) 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, 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

       

      (f)     (i)
        such
        Borrower or, prior to the occurrence of the Guaranty Termination Date with
        respect to such Borrower, 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) such Borrower or, prior to the occurrence
        of the Guaranty Termination Date with respect to such Borrower, 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 (or one or more Persons
        are
        entitled to declare such Indebtedness to be), 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) such Borrower or, prior to
        the
        occurrence of the Guaranty Termination Date with respect to such Borrower,
        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 such Borrower or, prior to the occurrence
        of the Guaranty Termination Date with respect to such Borrower, the Guarantor
        to
        purchase or repay such Indebtedness; or

       

      (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

       

      
        
          
          

        

        
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       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

       

      (i)     a
        final
        judgment or judgments for the payment of money aggregating in excess of
        $4,000,000 are rendered against such Borrower, any of its Subsidiaries or,
        prior
        to occurrence of the Guaranty Termination Date with respect to such Borrower,
        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 a Borrower or, prior to the occurrence of the
        Guaranty Termination Date with respect to such Borrower, 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 such Borrower); or

       

      (j)     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

       

      
        
          
          

        

        
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      (k)     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 (k) 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

       

      (l)     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

       

      (m)     Any
        Change of Control shall occur; or

       

      (n)     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.

       

      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 

       

      
        
          
          

        

        
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      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.

       

      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 

       

      
        
          
          

        

        
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      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. 

       

      (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
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      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.

       

      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

       

      
        
          
          

        

        
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       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.

       

      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;

       

      
        
          
          

        

        
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      (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;

       

      (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;

       

      
        
          
          

        

        
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      (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;

       

      (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

       

      
        
          
          

        

        
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      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.

       

      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

       

      
        
          
          

        

        
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       interest
        on, any Loan, any Applicable Margin 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
        Termination Date”
        contained in Section 1.01, (viii) amend or waive any of the conditions set
        forth
        in Section 6.02(b), or (ix) 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. 

       

      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 1.01; (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

       

      
        
          
          

        

        
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      exercise
        of any other right. The remedies herein provided are cumulative and not
        exclusive of any remedies provided by law.

       

      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 and each Lender
        (including the fees and disbursements of counsel to the Administrative Agent
        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 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)     Each
        Borrower’s obligations under this Section 12.04 shall survive the repayment of
        all amounts owing to the Lenders, the Issuing Banks 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
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      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. Each Lender and 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.

       

      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

       

      
        
          
          

        

        
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       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, and (iv) 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 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. 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.

       

      (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 

       

      
        
          
          

        

        
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      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 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. 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 (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 

       

      
        
          
          

        

        
          75

          
            

          

        

        
          
          

        

      

       

      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.

       

      (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

       

      
        
          
          

        

        
          76

          
            

          

        

        
          
          

        

      

       

       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.

       

      (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

       

      
        
          
          

        

        
          77

          
            

          

        

        
          
          

        

      

       

      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.

       

      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

       

      
        
          
          

        

        
          78

          
            

          

        

        
          
          

        

      

       

      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
        (i)
        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, (ii) agrees that all claims in such action may be decided
        in such
        court, (iii) waives, to the fullest extent it may effectively do so, the
        defense
        of an inconvenient forum and (iv) 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.

       

      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

       

      
        
          
          

        

        
          79

          
            

          

        

        
          
          

        

      

       

      information
        that will allow such Lender or the Administrative Agent, as applicable, to
        identify each Obligor in accordance with the Patriot Act.

      

      [REMAINDER
        OF PAGE INTENTIONALLY LEFT BLANK]

       

      
        
          
          

        

        
          80

          
            

          

        

        
          
          

        

      

    

     

    
      
         

        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:	 
Sr.
                                  Vice President and
                                  Treasurer
	 	 	
                                   

                                

                        

                         

                        
                          
                             

                            
                              
                                
                                  	 	
                                          UNION
                                            BANK OF CALIFORNIA, N.A., as Administrative
                                            Agent

                                           

                                           

                                        
	 	
                                          By:

                                        	 /s/
                                          Kevin M. Zitar
	 	 	
                                          Name:  
                                            

                                        	
                                           Kevin M. Zitar

                                        
	 	 	Title:	 Vice
                                          President
	 	 	
                                           

                                        

                                

                                 

                                
                                  
                                    
                                    

                                  

                                  
                                    
                                      S-1

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

                                    

                                    
                                      

                                    

                                  

                                  
                                    
                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
                                       

        
          
            
              	
                       Commitment

                    	
                       Existing
                        Bank

                       

                    
	
                           
$8,000,000

                    	
                      THE
                        BANK OF NEW YORK

                       

                       

                    
	 	
                      By:

                    	 /s/
                      John-Paul Marotta
	 	 	
                      Name:  
                        

                    	
                       John-Paul Marotta

                    
	 	 	Title:	 Managing
                      Director
	 	 	
                       

                    

            

             

            
              
                
                

              

              
                
                  S-2

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

                  

                

                
                  

                

              

              
                
                

              

            

          

        

      

    

     

    
                                     

      
        
          
            	
                     Commitment

                  	
                     Existing
                      Bank

                     

                  
	
                         
$15,000,000

                  	
                    UNION
                      BANK OF CALIFORNIA, N.A.

                     

                     

                  
	 	
                    By:

                  	 /s/
                    Kevin M. Zitar
	 	 	
                    Name:  
                      

                  	
                     Kevin M. Zitar

                  
	 	 	Title:	 Vice
                    President
	 	 	
                     

                  

          

           

          
            
              
              

            

            
              
                S-3

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

                

              

              
                

              

            

            
              
              

            

          

        

      

    

     

    
                                     

      
        
          
            	
                     Commitment

                  	
                     Existing
                      Bank

                     

                  
	
                         
$15,000,000

                  	
                    WELLS
                      FARGO BANK, NATIONAL

                    ASSOCIATION

                     

                     

                  
	 	
                    By:

                  	 /s/
                    Clyde Gossert
	 	 	
                    Name:  
                      

                  	
                     Clyde Gossert

                  
	 	 	Title:	 Vice
                    President
	 	 	
                     

                  

          

           

          
             

            
              
                
                

              

              
                
                  S-4

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

                  

                

                
                  

                

              

              
                
                

              

            

             

            
                                             

              
                
                  
                    	
                             Commitment

                          	
                             Existing
                              Bank

                             

                          
	
                                 
$8,000,000

                          	
                            JPMORGAN
                              CHASE BANK, N.A.

                             

                             

                          
	 	
                            By:

                          	 /s/
                            Nancy R. Barwig
	 	 	
                            Name:  
                              

                          	
                             Nancy R. Barwig

                          
	 	 	Title:	 Vice
                            President
	 	 	
                             

                          

                  

                   

                  
                     

                    
                      
                        
                        

                      

                      
                        
                          S-5

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

                          

                        

                        
                          

                        

                      

                      
                        
                        

                      

                    

                     

                    
                                                     

                      
                        
                          
                            	
                                     Commitment

                                  	
                                     Existing
                                      Bank

                                     

                                  
	
                                         
$6,000,000

                                  	
                                    WACHOVIA
                                      BANK, NATIONAL

                                    ASSOCIATION

                                     

                                     

                                  
	 	
                                    By:

                                  	 /s/
                                    Paul Pritchett
	 	 	
                                    Name:  
                                      

                                  	
                                     Paul Pritchett

                                  
	 	 	Title:	 Vice
                                    President
	 	 	
                                     

                                  

                          

                           

                          
                             

                            
                              
                                
                                

                              

                              
                                
                                  S-6

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

                                  

                                

                                
                                  

                                

                              

                              
                                
                                

                              

                            

                             

                            
                                                             

                              
                                
                                  
                                    	
                                             Commitment

                                          	
                                             New
                                              Bank

                                             

                                          
	
                                                 
$8,000,000

                                          	
                                            ABN
                                              AMRO BANK N.V.

                                             

                                             

                                          
	 	
                                            By:

                                          	 /s/
                                            James L. Moyes
	 	 	
                                            Name:  
                                              

                                          	
                                             James L. Moyes

                                          
	 	 	Title:	 Managing
                                            Director
	 	 	
                                             

                                          

                                  

                                  
                                    	
                                          	
                                            By:

                                          	 /s/
                                            Todd D. Vaubel
	 	 	
                                            Name:  
                                              

                                          	
                                             Todd D. Vaubel

                                          
	 	 	Title:	 Assistant
                                            Vice President
	 	 	
                                             

                                          

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
        
        

      

      
        
          S-7

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

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