Exhibit 99.1
TERM LOAN AGREEMENT
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This Agreement, dated as of August 8, 2003, is made by and
among (1) UNISOURCE ENERGY CORPORATION, an Arizona corporation
(the "Borrower"), (2) the initial lender listed on the signature
page hereof and each other financial institution that becomes a
party hereto pursuant to the terms hereof (the "Lenders") and
(3) UNION BANK OF CALIFORNIA, N.A., a national banking
association, as administrative agent for the Lenders (in such
capacity, the "Administrative Agent") and as arranger of the
credit facility provided hereby (in such capacity, the
"Arranger").
ARTICLE 1
DEFINITIONS AND INTERPRETATION
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Section 1.1 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.
"Acquisition" means any transaction, or series of
related transactions, consummated on or after the date hereof by
which the Borrower and/or any of its Consolidated Subsidiaries
directly or indirectly (a) acquires any ongoing business or all
or substantially all of the assets of any Person engaged in any
ongoing business, whether through a purchase of assets, a merger
or otherwise, (b) acquires control of securities of a Person
engaged in an ongoing business representing more than 50% of the
ordinary voting power for the election of directors or other
governing position if the business affairs of such Person are
managed by a board of directors or other governing body or (c)
acquires control of more than 50% of the ownership interest in
any partnership, joint venture, limited liability company,
business trust or other Person engaged in an ongoing business
that is not managed by a board of directors or other governing
body.
"Acquisition Agreement" means, collectively, (a) the
Asset Purchase Agreement dated October 29, 2002 between Citizens
Communications and the Borrower relating to the electric-utility
business of Citizens Communications in Arizona and (b) the Asset
Purchase Agreement dated October 29, 2002 between Citizens
Communications and the Borrower relating to the gas-utility
business of Citizens Communications in Arizona.
"Adjusted LIBO Rate" means, with respect to each
Interest Period for each Eurodollar Borrowing, the interest rate
per annum (rounded upwards, if necessary, to the next
1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period
multiplied by (b) the Statutory Reserve Rate.
"Administrative Agent" has the meaning set forth in the
recital of parties to this Agreement.
"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.
"Alternate Base Rate" means, for any day, a rate per
annum equal to the greater of (a) the Federal Funds Effective
Rate in effect on such day plus 1/2 of 1% and (b) the Reference
Rate in effect on such day. Any change in the Alternate Base
Rate due to a change in the Federal Funds Effective Rate or the
Reference Rate shall be effective from and including the
effective date of such change in the Federal Funds Effective Rate
or the Reference Rate, respectively.
"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" has the meaning set forth in the recital of
parties to this Agreement.
"Assignment and Acceptance" means an assignment and
acceptance entered into by a Lender and an assignee (with the
consent of any party whose consent is required by Section 9.4),
and accepted by the Administrative Agent, in the form of
Exhibit B 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.
"Borrower" has the meaning set forth in the recital of
parties to this Agreement.
"Borrowing" means Loans of the same Type that are 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; provided, however, that, so long as there is only one
Lender, each Borrowing shall be comprised of a single Loan.
"Borrowing Request" means a request by the Borrower for
a Borrowing in accordance with Section 2.3.
"Business Day" means any day that is not a Saturday,
Sunday or other day on which commercial banks in Los Angeles are
authorized or required by law to remain closed; provided,
however, 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.
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"Capital Lease Investment" of any Person means the
aggregate outstanding capitalized amount of Capital Lease
Obligations 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. The amount of such
obligations shall be the capitalized amount thereof determined in
accordance with GAAP.
"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, for
purposes of Section 2.11(b), by any lending office of such Lender
or by such Lender'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.
"Citizens Communications" means Citizens Communications
Company, a Delaware corporation.
"Code" means the Internal Revenue Code of 1986.
"Collateral" means the "Collateral" as defined in the
Stock Pledge Agreement.
"Commitment" means the commitment of UBOC to make up to
two Loans to the Borrower, as requested thereby pursuant to
Section 2.1, in an aggregate amount not exceeding $56,000,000.
"Consolidated EBITDA" means, for any fiscal period of
the Borrower, with respect to the Borrower and its Consolidated
Subsidiaries, (a) Consolidated Net Income for such period, plus
(b) to the extent deducted in computing such Consolidated Net
Income, without duplication, the sum of (i) income tax expense,
(ii) interest expense, (iii) depreciation and amortization
expense, (iv) any extraordinary or nonrecurring losses and
(v) other noncash items reducing Consolidated Net Income, minus
(c) to the extent added in computing such Consolidated Net
Income, without duplication, the sum of (i) any extraordinary or
nonrecurring gains and (ii) 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 of the Borrower, the aggregate of all payments by the
Borrower and its 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 its Consolidated Subsidiaries.
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"Consolidated Net Income" means, for any fiscal period
of the Borrower, net income of the Borrower and its 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 Tangible Net Worth" means, as of the last
day of any fiscal quarter of the Borrower, (a) common stock
equity of the Borrower as of such day minus (b) the aggregate
amount of all intangible assets (other than intangible assets
eligible for cost recovery through regulatory rates) on the
consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of such day, all as determined on a consolidated
basis in accordance with GAAP.
"Consolidated Total Indebtedness" means, as of the last
day of any fiscal quarter of the Borrower, with respect to the
Borrower and its Consolidated Subsidiaries, (a) the sum of
(i) the aggregate outstanding principal amount of the Loans,
(ii) the aggregate outstanding principal amount of other
Indebtedness for borrowed money (including Guarantees thereof),
(iii) the aggregate outstanding principal amount of all
obligations in respect of Hedging Agreements (computed as set
forth in the penultimate sentence of the definition of "Material
Indebtedness" in this Section 1.1) and (iv) the aggregate
outstanding capitalized amount of Capital Lease Obligations,
minus (b) the aggregate outstanding capitalized amount of Capital
Lease Investments, all as determined on a consolidated basis in
accordance with GAAP.
"Control" means the possession, direct or indirect, of
the power to direct or cause the direction of the management or
policies of a Person, whether through the ability to exercise
voting power, by contract or otherwise. "Controlling" and
"Controlled" have meanings correlative thereto.
"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 the Borrower's Annual
Report on Form 10-K for the fiscal year ended December 31, 2002,
the Borrower's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 2003 and the Borrower's Current Reports
on Form 8-K dated July 3, 2003 and July 22, 2003, in each case as
filed with the Securities and Exchange Commission.
"dollars" or "$" refers to lawful money of the United
States of America.
"Effective Date" means the date on which the conditions
specified in Section 4.1 are satisfied (or waived in accordance
with Section 9.2).
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"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 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.
"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.
"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 or the receipt by the Borrower or
any ERISA Affiliate from a plan administrator of any notice
relating to the administrator's intent to terminate any Plan;
(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 7.
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"Excluded Taxes" means, with respect to the
Administrative Agent, any Lender or any other recipient of any
payment to be made by or on account of any obligation of the
Borrower hereunder, (a) 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 2.15(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 2.13(d), except to the extent that such
Foreign Lender (or its assignor, if any) was entitled, at the
time of designation of a new lending office (or assignment), to
receive additional amounts from the Borrower with respect to such
withholding tax pursuant to Section 2.13(a).
"Fair Value" means, with respect to any assets,
business or property owned by the Borrower or any of its
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 (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 it.
"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 or any state or other political subdivision thereof.
"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 of any 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.
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"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, however,
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 and wastes and all hazardous or toxic
substances, wastes and other pollutants, including petroleum and
petroleum distillates, asbestos and asbestos-containing
materials, polychlorinated biphenyls, radon 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, commodity price
protection agreement or other interest or currency exchange rate
or commodity price hedging arrangement.
"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 (i)
shall include the Indebtedness of any other individual or 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 individual or entity, except to the extent the terms of such
Indebtedness provide that such Person is not liable therefor, and
(ii) shall exclude obligations of such Person in respect of
deposits made with such
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Person in the ordinary course of business by customers of such
Person to secure such customers' obligations to pay for utility
services to be provided by such Person.
"Indemnified Taxes" means Taxes other than Excluded
Taxes.
"Indemnitee" has the meaning set forth in Section
9.3(b).
"Interest Election Request" means a request by the
Borrower, substantially in the form of Exhibit A, to convert or
continue a Borrowing in accordance with Section 2.5.
"Interest Payment Date" means (a) with respect to any
ABR Loan, November 10, 2003, February 9, 2004 and May 10, 2004
and (b) with respect to any Eurodollar Loan, the last day of each
Interest Period applicable to the Borrowing of which such Loan is
a part.
"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 or on which an ABR Borrowing is converted into such
Borrowing and thereafter shall be the effective date of the most
recent continuation of such Borrowing) and ending on the
numerically corresponding day in the calendar month that is one,
two or three months thereafter, as the Borrower may elect;
provided, however, that (a) 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 (b) 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.
"Investment" means (a) any purchase or other
acquisition of any capital stock, evidence of indebtedness or
other security (including any option, warrant or other right to
acquire any of the foregoing) issued by any Person, (b) the
making of any loan or other advance to any Person, (c) the
Guarantee of any obligation of any Person, (d) the making of any
investment in any Person or (e) the acquisition of any other
interest in any Person; provided, however, that "Investment"
shall not include (i) acquiring short-term debt obligations of
any Person in the ordinary course of business in connection with
customary cash-management operations or (ii) entering into any
Hedge Agreement.
"Lenders" has the meaning set forth in the recital of
parties to this Agreement; provided, however, that such term
shall not include any Person that ceases to be a party hereto
pursuant to an Assignment and Acceptance.
"LIBO Rate" means, with respect to any Eurodollar
Borrowing for any Interest Period, the rate appearing on Page
3750 of the Telerate Service (or on any successor or substitute
page of such Service, or any successor to or substitute for such
Service, providing rate quotations comparable to those currently
provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing
quotations of interest rates
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applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to
the commencement of such Interest Period, as the rate for dollar
deposits with a maturity comparable to such Interest Period. In
the event that such rate is not available at such time for any
reason, then the "LIBO Rate" with respect to such Eurodollar
Borrowing for such Interest Period shall be the rate 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 immediately available funds in the London interbank market at
approximately 12:00 noon, London time, two Business Days prior to
the commencement 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-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.
"Loan Documents" means this Agreement, the Stock Pledge
Agreement, any promissory notes delivered by the Borrower
hereunder and any agreement concerning payment of fees to the
Administrative Agent or the Arranger entered into in connection
herewith.
"Loans" has the meaning set forth in Section 2.1.
"Material Adverse Effect" means a material adverse
effect on (a) the financial condition, results of operations,
business or prospects of the Borrower and its Subsidiaries taken
as a whole, (b) the ability of the Borrower to perform any of its
obligations under any Loan Document or (c) the rights of or
benefits available to the Administrative Agent or the Lenders
under any Loan Document.
"Material Indebtedness" means Indebtedness (other than
the Loans), or obligations in respect of one or more Hedging
Agreements, of any one or more of the Borrower and its
Significant Subsidiaries in an aggregate principal amount
exceeding $15,000,000. 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 nonrecourse to the
Borrower and its Subsidiaries.
"Maturity Date" means May 10, 2004.
"Millennium Energy Holdings" means Millennium Energy
Holdings, Inc., an Arizona corporation.
"Multiemployer Plan" means a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
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"Net Cash Proceeds" means: (a) with respect to any
sale, transfer or other disposition of any asset by any Person,
the difference between (i) the aggregate amount received by such
Person or any Affiliate thereof in cash or cash equivalents
(including any cash or cash equivalents received by way of
deferred payment pursuant to a note receivable, other noncash
consideration or otherwise, but only as and when such cash or
cash equivalents are so received) in connection with such
transaction, minus (ii) the sum of (A) the reasonable and
customary fees, commissions and other out-of-pocket expenses
incurred and paid or payable by such Person or Affiliate in
connection with such transaction (other than amounts payable by
such Person or Affiliate to other Affiliates thereof), (B) Debt
(other than the Loans) required to be paid by such Person or
Affiliate as a result of such transaction and (C) federal, state
and local taxes incurred and paid or payable by such Person or
Affiliate in connection with such transaction (provided, however,
that any amounts payable by Tri-State to UniSource Energy
Development for reimbursement of internal or third-party costs
incurred by UniSource Energy Development in connection with
Springerville Unit 3, as a development fee to compensate
UniSource Energy Development for the efforts expended thereby to
develop Springerville Unit 3 or otherwise in connection with the
contemplated assignment from Tucson Electric to Tri-State of
certain development and other rights with respect to
Springerville Unit 3, shall in any case be considered "Net Cash
Proceeds"); and (b) with respect to any sale or issuance of any
debt securities or equity interests (including stock, membership
interests or partnership interests) in any Person, or any
warrants, options or other rights to acquire such equity
interests (including any convertible securities), by any Person,
the amount equal to the difference between (i) the aggregate
amount received by such Person in cash or cash equivalents
(including any cash or cash equivalents received by way of
deferred payment pursuant to a note receivable, other noncash
consideration or otherwise, but only as and when such cash or
cash equivalents are so received) in connection with such
transaction, minus (ii) the reasonable and customary fees,
commissions and other out-of-pocket expenses incurred and paid or
payable by such Person in connection with such transaction (other
than amounts payable to Affiliates of such Person).
"Obligations" means (a) 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, when and as due, whether at
maturity, by acceleration, upon one or more dates set for
prepayment or otherwise, and 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.
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"PBGC" means the Pension Benefit Guaranty Corporation
referred to and defined in ERISA.
"Permitted Liens" means such of the following as to
which no enforcement, collection, execution, levy or foreclosure
proceeding has been commenced: (a) Liens for taxes, assessments
and governmental charges or levies to the extent not required to
be paid under Section 5.4; (b) Liens imposed by law, such as
materialmen's, mechanics', carriers', workmen's and repairmen's
Liens and other similar Liens arising in the ordinary course of
business securing obligations that are not overdue for a period
of more than 90 days; (c) pledges or deposits to secure
obligations under workers' compensation laws or similar
legislation or to secure public or statutory obligations; (d)
easements, rights of way and other encumbrances on title to real
property that do not render title to the property encumbered
thereby unmarketable or materially and adversely affect the use
of such property for its current purposes; and (e) deposits to
secure the performance of bids, trade contracts (other than for
borrowed money), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of like nature
incurred in the ordinary course of business.
"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.
"Reference Rate" means the variable rate of interest
per annum established by UBOC from time to time as its "reference
rate." Such "reference rate" is set by UBOC as a general
reference rate of interest, taking into account such factors as
UBOC may deem appropriate, it being understood that many of
UBOC'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 UBOC 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 9.4.
"Related Parties" means, with respect to any specified
Person, such Person's Affiliates and the respective directors,
trustees, officers, employees, agents and advisors of such Person
and such Person's Affiliates.
"Required Lenders" means, at any time, Lenders owed at
least a majority of the Obligations then outstanding.
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"Restricted Payment" means (a) 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 (b) any payment (whether in cash, securities or other
property), including any sinking-fund payment 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.
"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.
"Significant Subsidiary" means (a) Tucson Electric, (b)
UniSource Energy Services, (c) Millennium Energy Holdings, (d)
any Subsidiary that directly or indirectly owns or Controls any
other Significant Subsidiary and (e) any other Subsidiary of
which the Borrower's 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 5.1 was greater than or equal to 10% of the
consolidated total assets as of such date of the Borrower and its
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.
"Springerville Unit 3" means a new, approximately 400-
megawatt coal-fired electricity generating facility to be
constructed immediately west of that portion of Tucson Electric's
Springerville Generating Station in Apache County, Arizona known
as Unit 2.
"Statutory Reserve Rate" means a fraction (expressed as
a decimal), the numerator of which is the number one and the
denominator of which is the number one minus the aggregate of the
maximum reserve percentages (including any marginal, special,
emergency or supplemental reserves), expressed as a decimal,
established by the Board with respect to eurocurrency funding
(currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board). Such reserve percentages shall
include those imposed pursuant to such Regulation D. Eurodollar
Loans shall be deemed to constitute eurocurrency funding and to
be subject to such reserve requirements without benefit of or
credit for proration, exemptions or offsets that may be available
from time to time to any Lender under such Regulation D or any
comparable regulation. The Statutory Reserve Rate shall be
adjusted automatically on and as of the effective date of any
change in any reserve percentage.
"Stock Pledge Agreement" means the Stock Pledge
Agreement executed by the Borrower in favor of the Administrative
Agent and delivered thereto pursuant to this Agreement.
"subsidiary" means, with respect to any Person (the
"parent") at any date, (a) 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
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statements if such financial statements were prepared in
accordance with GAAP as of such date or (b) any other
corporation, limited liability company, partnership, association
or other entity 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 by, or that is, as of such date,
otherwise Controlled by, the parent or one or more subsidiaries
of the parent or by the parent and 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 the Loans and the use of the proceeds
thereof.
"Tri-State" means Tri-State Generation and Transmission
Association, Inc., a Colorado cooperative corporation.
"Tucson Electric" means Tucson Electric Power Company,
an Arizona corporation.
"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.
"UBOC" means Union Bank of California, N.A., a national
banking association, in its individual capacity.
"UniSource Energy Development" means UniSource Energy
Development Company, an Arizona corporation.
"UniSource Energy Services" means UniSource Energy
Services, Inc., an Arizona corporation.
"Utility Business" means the business, whether engaged
in directly or through one or more Affiliates, 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 any utility Affiliate of 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.
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Section 1.2 Classification of Loans and Borrowings. For
purposes of this Agreement, Loans may be classified and referred
to by Type (e.g., a "Eurodollar Loan"). Borrowings also may be
classified and referred to by Type (e.g., an "ABR Borrowing").
Section 1.3 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 (subject to any restrictions on such successors and
assign set forth herein), (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, (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, and (f) all
references to statutes shall be construed to include all
statutory provisions consolidating, amending or replacing the
statute referred to.
Section 1.4 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, however, that, if the
Borrower notifies the Administrative Agent that the Borrower
requests an amendment to any provision hereof to eliminate the
effect of any change occurring after the date hereof in GAAP or
in the application thereof on the operation of such provision (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 before such change
shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.
ARTICLE 2
LOANS
-----
Section 2.1 Commitment. UBOC hereby agrees, on the terms
and conditions set forth in this Agreement, to make up to two
loans ("Loans") to the Borrower, each comprising a Borrowing, on
the Effective Date and/or on the first Business Day thereafter,
in amount(s) requested by the Borrower whose total does not
exceed the Commitment. Upon the making of
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Loan(s) pursuant to this Section, the unused portion, if any, of
the Commitment shall terminate. Amounts borrowed hereunder and
prepaid or otherwise repaid may not be reborrowed.
Section 2.2 Borrowing.
(a) Subject to Section 2.10, each Borrowing shall be
comprised entirely of ABR Loans or Eurodollar 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, however, 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.
(b) At the commencement of each Interest Period for
each Eurodollar Borrowing, such Borrowing shall be in an
aggregate amount that is not less than $5,000,000 in increments
of $1,000,000. At the time that each ABR Borrowing is made, such
Borrowing shall be in an aggregate amount that is not less than
$5,000,000 in increments of $1,000,000. Borrowings of more than
one Type may be outstanding at the same time; provided, however,
that there shall not at any time be more than a total of five
Eurodollar Borrowings outstanding.
(c) Notwithstanding any other provision of this
Agreement, the Borrower shall not be entitled to elect to convert
to or continue a Eurodollar Borrowing if the Interest Period
requested with respect thereto would end after the Maturity Date.
Section 2.3 Request for Borrowing. To request a Loan
pursuant to Section 2.1, the Borrower shall notify the
Administrative Agent of such request by telephone (a) in the case
of a Eurodollar Loan, not later than 12:00 noon, California time,
three Business Days before the date of the proposed Loan or (b)
in the case of an ABR Loan, not later than 12:00 noon, California
time, on the day of the proposed Loan. 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 2.2: (i) the
amount of the requested Loan; (ii) the date of such Loan, which
shall be a Business Day; (iii) whether such Loan is to be an ABR
Loan or a Eurodollar Loan; (iv) in the case of a Eurodollar Loan,
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 2.4. If no election as to the
Type of Loan is specified, then the requested Loan shall be an
ABR Loan. If no Interest Period is specified with respect to any
requested Eurodollar Loan, then the Borrower shall be deemed to
have selected an Interest Period of one month's duration.
Section 2.4 Funding of Borrowings. The Administrative
Agent will make the initial Loan(s) to the Borrower pursuant to
Section 2.1 by wire-transferring the amount(s) thereof, in
immediately available funds, to an account of the Borrower
designated thereby in the applicable Borrowing Request.
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Section 2.5 Interest Elections.
(a) Each Borrowing made pursuant to Section 2.1 shall
initially be of the Type specified in the applicable Borrowing
Request and, in the case of a Eurodollar Borrowing, shall have an
initial Interest Period as specified in such Borrowing Request.
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 (i) in the case of continuation of, or conversion
to, a Eurodollar Borrowing, not later than 12:00 noon, California
time, three Business Days before the date of the proposed
continuation or conversion or (ii) in the case of conversion to
an ABR Borrowing, not later than 12:00 noon, California time, one
Business Day before the date of the proposed conversion. 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.
(c) Each telephonic and written Interest Election
Request shall specify the following information in compliance
with Section 2.2: (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 to
be 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.
(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, if an
Event of Default has occurred and is continuing and the
Administrative Agent, at the request of the Required Lenders, so
notifies the Borrower, then, so long as an Event of Default is
continuing (i) no outstanding Borrowing may be converted to or
continued as a
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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 2.6 Repayment of Loans; Evidence of Debt.
(a) The Borrower hereby unconditionally promises to
pay to the Administrative Agent on the Maturity Date, for the
account of each Lender, the then unpaid principal amount of each
Loan.
(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.
(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, however, that the failure of any
Lender 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 in accordance with the terms
of this Agreement.
(e) Any Lender may request that Loans 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 9.4) 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 2.7 Optional 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,
subject to prior notice in accordance with paragraph (b) of this
Section.
(b) The Borrower shall notify the Administrative Agent
by telephone (confirmed by telecopy) of any prepayment hereunder
not later than 12:00 noon, California time, three Business Days
before the date of prepayment. Each such notice shall be
irrevocable and
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shall specify the prepayment date and the principal amount of
each Borrowing or portion thereof to be prepaid. 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 2.2. Each prepayment of a Borrowing
shall be applied ratably to the Loans included in the prepaid
Borrowing.
Section 2.8 Mandatory Prepayment of Loans.
(a) If the acquisition by UniSource Energy Services,
through two wholly owned Subsidiaries thereof, of the Arizona
electric-utility and gas-utility businesses currently owned by
Citizens Communications is not consummated in accordance with the
terms of the Acquisition Agreement, without any waiver or
amendment not consented to by the Administrative Agent of any
term, provision or condition set forth therein and in compliance
with all applicable law, by August 15, 2003, the Borrower will
repay the outstanding Loans in full on that date.
(b) The Borrower will, within three Business Days
after each date of receipt by the Borrower or any Subsidiary of
Net Cash Proceeds from (i) the sale, transfer or other
disposition by the Borrower or any Subsidiary of any direct or
indirect interest in, or rights with respect to, Springerville
Unit 3, including the contemplated assignment from Tucson
Electric to Tri-State of certain development and other rights
with respect to Springerville Unit 3, (ii) the sale or issuance,
in any capital markets transaction, of any debt securities of or
equity interests in the Borrower or any warrants, options or
other rights to acquire any such equity interest or (iii) the
sale or issuance, in any capital markets transaction, of any debt
securities of UniSource Energy Services and/or any one or more
Subsidiaries of UniSource Energy Services after August 11, 2003
(but excluding in any case a loan in an amount up to $21,000,000
that may be made by the Borrower to a Subsidiary of UniSource
Energy Services from the proceeds of the Loans), prepay an
aggregate principal amount of Loans composing all or part of the
same Borrowings equal to 100% of the amount of such Net Cash
Proceeds.
Section 2.9 Interest.
(a) The Loans comprising each ABR Borrowing shall bear
interest at the rate equal at all times to the sum of the
Alternate Base Rate plus 3.875% per annum.
(b) The Loans comprising each Eurodollar Borrowing
shall bear interest during each Interest Period for such Loans at
the rate equal to the sum of the Adjusted LIBO Rate for such
Interest Period plus 4.875% per annum.
(c) Notwithstanding the foregoing, if any principal of
or interest on any Loan or any 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 (i) in the case of overdue principal of any
Loan, 2% per annum plus the rate otherwise applicable to such
Loan as provided in the preceding
- 18 -
paragraphs of this Section or (ii) in the case of any other
amount, 2% per annum plus the rate applicable to ABR Loans as
provided in paragraph (a) of this Section.
(d) Accrued interest on each Loan shall be payable in
arrears on each Interest Payment Date for such Loan and upon the
Maturity Date; provided, however, that (i) interest accrued
pursuant to paragraph (c) of this Section shall be payable on
demand, (ii) in the event of any repayment or prepayment of any
Loan, accrued interest on the principal amount repaid or prepaid
shall be payable on the date of such repayment or prepayment and
(iii) 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.
(e) 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 2.10 Alternate Rate of Interest. If prior to the
commencement of any Interest Period for a Eurodollar Borrowing,
(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 (i) the
Administrative Agent shall give notice thereof to the Borrower
and the Lenders by telephone or telecopy as promptly as
practicable thereafter, and (ii) until the Administrative Agent
notifies the Borrower and the Lenders that the circumstances
giving rise to such notice no longer exist, any Interest Election
Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be
ineffective.
Section 2.11 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 (except any such reserve
requirement reflected in the Adjusted LIBO Rate, where
applicable) or (ii) impose on any Lender or the London interbank
market any other condition affecting this Agreement or Eurodollar
Loans made by such Lender, 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 reduce the amount of any sum
received or receivable by such Lender hereunder (whether of
principal, interest or otherwise), then the Borrower will pay to
the Administrative Agent, for the account of such Lender, such
additional amount or amounts as will compensate such Lender for
such additional costs incurred or reduction suffered.
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(b) If any Lender 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 capital or on the
capital of such Lender's holding company, if any, as a
consequence of this Agreement or the Loans made by such Lender,
to a level below that which such Lender or such Lender's holding
company could have achieved but for such Change in Law (taking
into consideration such Lender's policies and the policies of
such Lender's holding company with respect to capital adequacy),
then from time to time the Borrower will pay to such Lender such
additional amount or amounts as will compensate such Lender or
such Lender's holding company for any such reduction suffered.
(c) A certificate of a Lender setting forth the amount
or amounts necessary to compensate such Lender or its holding
company, as the case may be, as specified in 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 the amount shown as due on any such certificate within 10
days after receipt thereof.
(d) Failure or delay on the part of any Lender to
demand compensation pursuant to this Section shall not constitute
a waiver of such Lender's right to demand such compensation;
provided, however, that the Borrower shall not be required to
compensate a Lender pursuant to this Section for any increased
costs or reductions incurred more than 270 days prior to the date
that such Lender notifies the Borrower of the Change in Law
giving rise to such increased costs or reductions and of such
Lender's intention to claim compensation therefor; further
provided, however, 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 2.12 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 any prepayment of a Eurodollar Loan, whether as a
result of the occurrence of an Event of Default or otherwise),
(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 on the date
specified in any notice delivered pursuant hereto or (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 2.15, 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 and 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
- 20 -
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 10 days after receipt thereof.
Section 2.13 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, however, 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 or Lender
(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 and each Lender, within 10 days after written demand
therefor, for the full amount of any Indemnified Taxes or Other
Taxes paid by the Administrative Agent or such Lender, 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 by the Administrative
Agent on its own behalf or on behalf of a Lender, 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 that is entitled to an
exemption from or reduction of withholding tax under the law of
the jurisdiction in which the Borrower is located, or under any
treaty to which such jurisdiction is a party, with respect to
payments under this Agreement 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 applicable law or reasonably
requested by the Borrower as will permit such payments to be made
without withholding or at a reduced rate.
(e) In addition, the Borrower or the Administrative
Agent shall pay any Other Taxes to the relevant Governmental
Authority in accordance with applicable law.
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Section 2.14 Payments Generally; Pro Rata Treatment;
Sharing of Setoffs.
(a) The Borrower shall make each payment required to
be made by it hereunder or under any other Loan Document (whether
of principal or interest, or of amounts payable under Section
2.11, 2.12 or 2.13, or otherwise) prior to 1:00 p.m., California
time, on the date when due, in immediately available funds,
without setoff, 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 at 000 Xxxxx Xxxxxxxx
Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx, except that payments
pursuant to Sections 2.11, 2.12, 2.13 and 9.3 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 payment accruing interest, interest thereon 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 and interest then due hereunder, such funds
shall be applied (i) first, towards payment of interest then due
hereunder, ratably among the parties entitled thereto in
accordance with the amounts of interest then due to such parties,
and (ii) second, towards payment of principal then due hereunder,
ratably among the parties entitled thereto in accordance with the
amounts of principal then due to such parties.
(c) If any Lender shall, by exercising any right of
setoff or counterclaim or otherwise, obtain payment in respect of
any principal of or interest on any of its Loans resulting in
such Lender receiving payment of a greater proportion of the
aggregate amount of its Loans 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 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; provided, however, 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 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 setoff and counterclaim with
respect to such
- 22 -
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 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 the
amount due. In such event, if the Borrower has not in fact made
such payment, then each of the Lenders severally agrees to repay
to the Administrative Agent forthwith on demand the amount so
distributed to such Lender 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 practice on interbank compensation.
(e) If any Lender shall fail to make any payment
required to be made by it pursuant to Section 2.14(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 2.15 Mitigation Obligations; Replacement of Lenders.
(a) If any Lender requests compensation under Section
2.11, 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 2.13, 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 2.11 or 2.13, 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 any Lender requests compensation under Section
2.11, 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 2.13, or if any Lender defaults in
its obligation to fund Loans hereunder, 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 9.4), 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, however, that
(i) the Borrower shall have received the prior written consent of
the Administrative Agent, 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, accrued
interest thereon and all other amounts payable to it hereunder,
from the assignee (to the extent of
- 23 -
such outstanding principal and accrued interest) 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 2.11 or payments required to be made pursuant to Section
2.13, 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 2.16 Illegality. Notwithstanding any other
provision of this Agreement, if any Change in Law makes it
unlawful, or any Governmental Authority asserts that it is
unlawful, for any Lender to perform its obligations hereunder to
make, continue or convert into Eurodollar Loans, then, on notice
thereof and demand therefor by such Lender to the Borrower
through the Administrative Agent, (a) the obligation of such
Lender to make, continue or convert into Eurodollar Loans shall
be suspended until the Administrative Agent notifies the Borrower
that such Lender has determined that the circumstances causing
such suspension no longer exist, and (b) the Borrower will
forthwith prepay in full all Eurodollar Loans of such Lender then
outstanding, together with accrued and unpaid interest thereon,
unless the Borrower, within five Business Days of such notice and
demand, converts all Eurodollar Loans of all Lenders then
outstanding into ABR Loans in accordance with the terms hereof.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
------------------------------
The Borrower represents and warrants to the Lenders that:
Section 3.1 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 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 3.2 Authorization; Enforceability. The
Transactions are within the Borrower's corporate 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, and each other Loan
Document to which the Borrower is to be a party, when executed
and delivered by the Borrower, 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 3.3 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
- 24 -
Governmental Authority, except for (i) the filing of a UCC-1
financing statement with the Arizona Secretary of State to
perfect a Lien in favor of the Administrative Agent on certain of
the Collateral and (ii) regulatory approvals required in order
for the Administrative Agent to exercise the remedial provisions
of the Stock Pledge Agreement with respect to the common stock of
UniSource Energy Services, (b) will not violate any applicable
law or regulation or the charter, bylaws or other organizational
documents of the Borrower or any of its Consolidated Subsidiaries
or any order of any Governmental Authority, (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 Stock Pledge Agreement.
Section 3.4 Financial Condition; No Material Adverse
Change.
(a) The Borrower has heretofore furnished to the
Lenders the consolidated balance sheets and statements of income,
stockholders' equity and cash flows for the Borrower and its
Consolidated Subsidiaries (i) as of and for the fiscal year ended
December 31, 2002, which are reported on by
PricewaterhouseCoopers LLP, independent public accountants, and
(ii) as of and for the fiscal quarter and the portion of the
fiscal year ended March 31, 2003, certified by its chief
financial officer. Such financial statements 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 referred to in clause
(ii) above. 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. Other than as explicitly
disclosed in the Disclosure Documents, during the period from
December 31, 2002 to and including the Effective Date there has
been no sale, 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, 2002.
(b) Except to the extent that any specific change
explicitly disclosed in the Disclosure Documents may be so
considered, since December 31, 2002 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.
Section 3.5 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,
- 25 -
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, trade
names, 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 3.6 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, referee 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 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.
(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 3.7 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 laws, regulations and orders of any Governmental Authority
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 3.8 Investment and Holding 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.
- 26 -
(b) The Borrower and its Consolidated Subsidiaries are
exempt from all provisions of the Public Utility Holding Company
Act of 1935, except Section 9(a)(2) thereof; and no order,
consent, approval or authorization is required under such Act in
connection with the making of the Loans hereunder or the
consummation of any of the other Transactions.
Section 3.9 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 3.10 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, would 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 by more than $25,000,000 the fair-market
value of the assets of such Plan, and the present value of all
accumulated benefit obligations of all underfunded Plans (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 by
more than $25,000,000 the fair-market value of the assets of all
such underfunded Plans.
Section 3.11 Stock Pledge Agreement. The provisions of
the Stock Pledge Agreement are effective to create, in favor of
the Administrative Agent for the benefit of the Lenders, legal,
valid and enforceable Liens on or in all of the Collateral, and
all necessary deliveries of property have been made 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 the
Stock Pledge Agreement constitute perfected Liens on or in all
rights, titles, estates and interests of the Borrower in the
Collateral, 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 effective mortgage,
financing statement or other instrument or recordation covering
all or any part of the Collateral is on file in any recording or
filing office, except as may have been filed in favor of the
Administrative Agent.
Section 3.12 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, would result in a Material Adverse Effect. None of
the 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 or delivered)
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
- 27 -
were made, not misleading; provided, however, 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.
Section 3.13 UniSource Energy Services. UniSource Energy
Services has been established by the Borrower to acquire pursuant
to the terms of the Acquisition Agreement, and thereafter to own
and operate, through two Subsidiaries of UniSource Energy
Services, the Arizona electric-utility and gas-utility businesses
currently owned by Citizens Communications. No Affiliate of the
Borrower other than a wholly owned Subsidiary of UniSource Energy
Services will be used to acquire, own or operate any part of such
businesses.
Section 3.14 Ownership of Subsidiaries. The Borrower is
the legal and beneficial owner of all of the outstanding capital
stock of Tucson Electric (except for 121 shares of common stock
thereof), UniSource Energy Services, Millennium Energy Holdings
and UniSource Energy Development. None of such stock owned by
the Borrower is subject to any Lien, except for Liens on the
stock of UniSource Energy Services, Millennium Energy Holdings
and UniSource Energy Development in favor of the Administrative
Agent.
ARTICLE 4
CONDITIONS PRECEDENT
--------------------
Section 4.1 Effective Date. The obligation of UBOC to
make Loans shall not become effective until the date on which
each of the following conditions is satisfied (or waived in
accordance with Section 9.2):
(a) The Administrative Agent (or its counsel) shall
have received from each party to the Loan Documents either (i) a
counterpart of such Loan Document 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
such Loan Document) that such party has signed a counterpart of
such Loan Document.
(b) The Administrative Agent shall have received a
favorable written opinion (addressed to the Administrative Agent
and the Lenders and dated the Effective Date) of each of (i)
Xxxxxxx Xxxxxx, General Counsel for the Borrower, and (ii) Xxxxxx
Xxxx & Priest LLP, counsel for the Borrower, in each case
covering such matters relating to the Borrower, the Loan
Documents or the Transactions as the Required Lenders shall
reasonably request.
(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 or the Transactions, all in form and
substance satisfactory to the Administrative Agent and its
counsel.
- 28 -
(d) The representations and warranties of the Borrower
set forth in the Loan Documents shall be true and correct, no
Default shall have occurred and be continuing, 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 of the Borrower, confirming the same 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 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 stock
certificates representing all of the outstanding capital stock of
UniSource Energy Services, Millennium Energy Holdings and
UniSource Energy Development, together in each case with undated
stock powers duly executed by the Borrower in blank.
Notwithstanding the foregoing, the obligation of UBOC to make up
to two Loans hereunder shall not become effective unless each of
the foregoing conditions is satisfied (or waived pursuant to
Section 9.2) at or prior to 1:00 p.m., California time, on
August 8, 2003, and in the event such conditions are not so
satisfied or waived, the Commitment and the obligations of UBOC
hereunder shall terminate at such time.
Section 4.2 Each Borrowing. The obligation of UBOC to
make a Loan on the occasion of each Borrowing pursuant to Section
2.1 is subject to the satisfaction of the following conditions:
(a) the representations and warranties of the Borrower
set forth in the Loan Documents shall be true and correct on and
as of the date of such Borrowing; and
(b) at the time of, and immediately after giving
effect to, such Borrowing, no Default shall have occurred and be
continuing.
Each Borrowing 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 5
AFFIRMATIVE COVENANTS
---------------------
Until the Commitment has expired or been terminated and the
principal of and interest on each Loan have been paid in full,
the Borrower covenants and agrees with the Lenders that:
Section 5.1 Financial Statements and Other Information.
The Borrower will furnish to the Administrative Agent and
each Lender (or in any instance in which the Borrower shall so
- 29 -
request, the Borrower will furnish copies to the Administrative
Agent and the Administrative Agent will 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 quarterly fiscal
periods of each fiscal year of the Borrower, or 15 days after the
date on which its quarterly report for such quarterly fiscal
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 such fiscal year to the
end of such period, consolidated statements of cash flows of the
Borrower and its Consolidated Subsidiaries from the beginning of
such fiscal year to the end of such period and the related
consolidated balance sheet 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 stating that the financial
statements fairly present in all material respects the
consolidated financial condition and results of operations, as
applicable, 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);
(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 sheet 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 their 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 each delivery of financial
statements under paragraph (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 6.7, 6.8
and 6.9 and (iii) stating whether any change in GAAP or in the
application thereof not disclosed in any prior such certificate
has occurred since the date of the audited financial statements
referred to in Section 3.4 and, if any such change has occurred,
specifying the effect of such change on the financial statements
accompanying such certificate;
(d) concurrently with each delivery of financial
statements under paragraph (b) above, a certificate of the
accounting firm that reported on such financial statements
stating whether such firm obtained knowledge during the course of
their examination of such financial
- 30 -
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 with the Securities and Exchange
Commission 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 notices of default under the documentation for any Sale
Leaseback of the Borrower or any Consolidated Subsidiary, any
notices of nonpayment 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 (ii) any written notices from the ACC of
noncompliance 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) concurrently with any delivery of financial
statements under paragraph (a) or (b) above, consolidating
statements of income for the applicable periods and consolidating
balance sheets as of the end of such periods, accompanied (i) in
the case of a delivery of financial statements under paragraph
(a) above, by a certificate of a Financial Officer of the
Borrower stating 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 paragraph (b) above, by (A) a certificate of a
Financial Officer of the Borrower stating 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
paragraph (b) above stating 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 paragraph; and
(j) promptly following any request therefor, such
other information regarding the operations, business affairs and
financial condition of the Borrower or any Subsidiary, or
- 31 -
compliance with the terms of any Loan Document, 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 and the
financial statements contained in any quarterly or annual reports
filed with the Securities and Exchange Commission are prepared 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
paragraph (a) or (b), as the case may be, of this Section 5.1.
Section 5.2 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, referee 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, either individually or in the aggregate,
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, would
result in liability of the Borrower and its Subsidiaries in an
aggregate amount exceeding $25,000,000; and
(d) any other development that, either individually or
in the aggregate, 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 5.3 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, either individually or in
the aggregate, to result in a Material Adverse Effect; provided,
however, that the foregoing shall not prohibit any merger,
consolidation, liquidation or dissolution permitted under Section
6.3.
Section 5.4 Payment of Obligations. The Borrower will
pay, and will cause each of its Consolidated Subsidiaries to pay,
before the same shall become delinquent or in default, all of its
obligations, including Tax liabilities and assessments (including
water assessments by the Arizona State Land Department), that, if
not paid, could reasonably be expected, either individually or in
the aggregate, to result in a Material Adverse Effect, except
where (a) the
- 32 -
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, either individually or in the aggregate,
to result in a Material Adverse Effect.
Section 5.5 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, however, 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 6.4, 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 is customarily maintained by
companies engaged in the same or similar businesses operating in
the same or similar locations.
Section 5.6 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 Consolidated 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 5.7 Compliance with Laws. The Borrower will, and
will cause each of its Consolidated Subsidiaries to, comply with
all laws, rules, regulations and orders of any Governmental
Authority applicable to it or its property, 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 5.8 Use of Proceeds. The Borrower will use the
proceeds of the Loans only to fund part of its equity investment
in UniSource Energy Services. The Borrower will cause UniSource
Energy Services to use the proceeds of such equity investment
only to pay a portion of the purchase price for UniSource Energy
Service's acquisition, through two wholly owned Subsidiaries
thereof, of the Arizona electric-utility and gas-utility
businesses currently owned by Citizens Communications. No part
of the proceeds of any Loan 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.
- 33 -
Section 5.9 Environmental Laws.
(a) The Borrower will, and will cause each of its
Consolidated Subsidiaries to, (i) comply with, and use
commercially reasonable efforts to insure compliance by all of
its tenants and subtenants, if any, with, all Environmental Laws
and (ii) obtain, comply with and maintain, and use commercially
reasonable efforts to insure that all of its tenants and
subtenants obtain, comply with and maintain, any and all
licenses, approvals, registrations and permits required by
Environmental Laws, except to the extent that failure to do so,
either individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect;
(b) The Borrower will, and will cause each of its
Consolidated Subsidiaries to, (i) 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, either individually or in the
aggregate, to have a Material Adverse Effect and (ii) 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, either individually or in the aggregate,
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
to grant, preserve, protect or perfect the Liens created or
intended to be created by the Stock Pledge Agreement 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 Stock Pledge Agreement.
ARTICLE 6
NEGATIVE COVENANTS
------------------
Until the Commitment has expired or terminated and the
principal of and interest on each Loan have been paid in full,
the Borrower covenants and agrees with the Lenders that:
Section 6.1 Indebtedness. The Borrower will not, and
will not permit UniSource Energy Services or any Consolidated
Subsidiary thereof to, create, incur, assume or suffer to exist
any Indebtedness other than the following:
(a) Indebtedness of the Borrower outstanding on the
date hereof, including any refinancing of such Indebtedness that
does not increase the principal amount thereof outstanding at the
time of such refinancing;
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(b) Indebtedness of the Borrower outstanding under the
Loan Documents;
(c) Indebtedness of the Borrower, UniSource Energy
Services or any Subsidiary of UniSource Energy Services whose
proceeds are used to make a prepayment in accordance with Section
2.8(b)(ii) or (iii), as applicable;
(d) Indebtedness of Consolidated Subsidiaries of
UniSource Energy Services, not exceeding $160,000,000 in
aggregate principal amount, whose proceeds are used solely to
finance a portion of the acquisition price payable under the
Acquisition Agreement;
(e) revolving Indebtedness of Consolidated
Subsidiaries of UniSource Energy Services, not exceeding
$50,000,000 in aggregate principal amount at any time
outstanding, for working capital purposes; and
(f) Guarantees by UniSource Energy Services of the
Indebtedness described in paragraphs (d) and (e) above.
Section 6.2 Liens. The Borrower will not, and will not
permit UniSource Energy Services or any Consolidated Subsidiary
thereof to, create, incur, assume or permit to exist any Lien on
any property or asset now owned or hereafter acquired by it, or
assign or sell any income or revenues or rights in respect of any
thereof, except:
(a) Liens existing on the date hereof; provided,
however, that no such Lien is spread to cover any additional
property and the amount of the Indebtedness secured thereby is
not increased;
(b) Liens created pursuant to the Loan Documents;
(c) Permitted Liens;
(d) any Lien on any property or asset, which Lien
existed prior to the acquisition thereof by the Borrower or by
UniSource Energy Services or any Consolidated Subsidiary thereof,
as applicable; provided, however, that such Lien is not created
in contemplation of or in connection with such acquisition, such
Lien is not spread to cover any other property of the Borrower or
of UniSource Energy Services or any Consolidated Subsidiary
thereof, as applicable, and the amount of Indebtedness secured
thereby is not increased; and
(e) any Liens created to secure Indebtedness of the
Borrower or any Consolidated Subsidiary which refinances
Indebtedness outstanding on the date of this Agreement, so long
as such Liens (i) apply to no more property, and have no greater
priority, than the Liens in effect on the date hereof and (ii)
secure Indebtedness in a principal amount no greater than the
Indebtedness being refinanced.
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Section 6.3 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 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) Millennium
Energy Holdings may dispose of any or all of the stock of any of
its Consolidated Subsidiaries.
(b) The Borrower will not, and will not permit any of
its Consolidated Subsidiaries other than Millennium Energy
Holdings and its Consolidated Subsidiaries to, engage to any
material extent in any business other than the Utility Business.
Section 6.4 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, businesses
or assets (including leasehold interests), whether now owned or
hereafter acquired, except:
(i) sales of inventory and other property in the
ordinary course of business;
(ii) sales of property, businesses or assets by
Millennium Energy Holdings or any of its Consolidated
Subsidiaries;
(iii) sales of property in connection with any
securitization (e.g., of stranded costs) or sale of assets
required by law; provided, however, that not less than 80% of the
proceeds of such securitization or sale are applied to reduce
outstanding Indebtedness of the Borrower or any of its
Consolidated Subsidiaries;
(iv) sales, leases, assignments, transfers and
other dispositions of any property, businesses or assets by any
Consolidated Subsidiary to the Borrower or to any other
Consolidated Subsidiary; provided, however, that any investments
by the Borrower and its Consolidated Subsidiaries in, and
contributions by the Borrower and its Consolidated Subsidiaries
to, Consolidated Subsidiaries shall be deemed not to constitute
transfers of assets subject to the limitations of this
Section 6.4 to the extent such investments or contributions are
made in cash;
(v) any sale, transfer or other disposition by
the Borrower or any Subsidiary of any direct or indirect interest
in, or rights with respect to, Springerville Unit 3,
- 36 -
including the contemplated assignment from Tucson Electric to
Tri-State of certain development and other rights with respect to
Springerville Unit 3, but only if and to the extent that the
proceeds of such sale, transfer or other disposition are used to
make a prepayment in accordance with Section 2.8(b)(i); and
(vi) in addition to the foregoing, sales of
property, businesses or assets (including receivables and
leasehold interests) with an aggregate Fair Value not in excess
of $250,000,000.
(b) The Borrower will not, and will not permit any
Consolidated Subsidiary to, sell, lease, assign, transfer or
otherwise dispose of all or any substantial part of its
generating assets (including leasehold interests), whether now
owned or hereafter acquired, except as required by applicable
law.
Section 6.5 Restricted Payments. The Borrower will not
declare or make, or agree to declare or make, directly or
indirectly, any Restricted Payment at any time that any Default
has occurred and is continuing or if any Default would occur as a
result of such action, except that (a) the Borrower may declare
and pay dividends with respect to its capital stock payable
solely in additional shares of its common stock and (b) 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.
Section 6.6 Investments and Acquisitions. Prior to the
making of any Investment or the consummation of any Acquisition
by the Borrower or any of its Consolidated Subsidiaries, the
amount or purchase price of which, as the case may be, when
aggregated with the amounts and purchase prices of all other
Investments and Acquisitions made by the Borrower and its
Subsidiaries on or after the date hereof, would exceed
$30,000,000 in the aggregate, the Borrower will deliver to the
Administrative Agent (a) a certificate certifying that no Default
has occurred and is continuing or would result from such
Investment or Acquisition and (b) pro forma financial statements
in support of such certification, all in a form reasonably
satisfactory to the Administrative Agent.
Section 6.7 Consolidated Tangible Net Worth. The Borrower
will not permit Consolidated Tangible Net Worth as of the end of
any fiscal quarter of the Borrower, commencing with the fiscal
quarter ended on June 30, 2003, to be less than the sum of (a)
$420,000,000 plus (b) 40% of the aggregate of all positive net
income of the Borrower and its Consolidated Subsidiaries after
March 31, 2003 plus (c) 75% of the Net Cash Proceeds of any
equity offering by the Borrower after March 31, 2003, all as
evidenced by the financial statements to be delivered pursuant to
Section 5.1(a) or (b), as applicable.
Section 6.8 Cash Coverage Ratio. The Borrower will not
permit the ratio of Consolidated EBITDA to Consolidated Interest
Expense, in each case for the twelve-month period ended on the
last day of any fiscal quarter of the Borrower, commencing with
the fiscal quarter ended on June 30, 2003, to be less than 1.8 to
1.0, as evidenced by the financial statements to be delivered
pursuant to Section 5.1(a) or (b), as applicable.
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Section 6.9 Leverage Test. The Borrower will not permit
the ratio of (a) Consolidated Total Indebtedness as of the last
day of any fiscal quarter of the Borrower, commencing with the
fiscal quarter ended on June 30, 2003, to (b) Consolidated EBITDA
for the twelve-month period ended on such day to be greater than
6.25 to 1.0, as evidenced by the financial statements to be
delivered pursuant to Section 5.1(a) or (b), as applicable.
Section 6.10 Transactions with Affiliates. The Borrower
will not, and will not permit any of its 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, except (a) in the
ordinary course of business and 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
its Consolidated Subsidiaries not involving any other Affiliate
and (c) any Restricted Payment permitted by Section 6.5.
Section 6.11 Change in Nature of Business. The Borrower
will not, and will not permit any Consolidated Subsidiary other
than Millennium Energy Holdings and its Consolidated Subsidiaries
to, make any material change in the nature of its business as
carried on as of the date hereof.
ARTICLE 7
EVENTS OF DEFAULT
-----------------
If any of the following events (each an "Event of Default")
shall occur:
(a) the Borrower shall fail to pay any principal of
any Loan, when and as the same shall become due and payable,
whether at the scheduled due date thereof, at a date fixed for
prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any
Loan or any other amount (other than an amount referred to in
paragraph (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 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 when made or
deemed made;
(d) the Borrower shall fail to observe or perform any
covenant, condition or agreement contained in Section 5.2, 5.3
(with respect to the Borrower's existence) or 5.8 or in
Article 6;
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(e) the Borrower shall fail to observe or perform any
covenant, condition or agreement contained in any Loan Document
(other than any of those specified in paragraph (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 nonoccurrence of any event or
condition) or defeasance thereof, prior to its scheduled
maturity; provided, however, that this paragraph (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;
(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 paragraph (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 or orders for the payment of
money in an aggregate amount in excess of $20,000,000 shall be
rendered against the Borrower, any
- 39 -
Consolidated 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 Consolidated
Subsidiary to enforce any such judgment or order;
(l) an ERISA Event shall have occurred that, when
taken together with all other ERISA Events that have occurred,
would result in a Material Adverse Effect;
(m) any Lien purported to be created under the Stock
Pledge Agreement shall cease to be, or shall be asserted by the
Borrower not to be, a valid and perfected Lien on any collateral
subject thereto with the priority required by the Stock Pledge
Agreement, except (i) as a result of the sale or other
disposition of the applicable Collateral in a transaction
permitted under the Loan Documents or (ii) as a result of the
Administrative Agent's failure to maintain possession of any
stock certificate or other instruments delivered to it under the
Stock Pledge Agreement; or
(n) any material provision of any Loan Document shall
for any reason cease to be valid and binding on, or enforceable
against, in any material respect, or the Borrower shall so state
in writing;
then, and in every such event (other than an event with respect
to the Borrower described in paragraph (h) or (i) of this
Article), and at any time thereafter during the continuance of
such event, the Administrative Agent may, and at the request of
the Required Lenders shall, by notice to the Borrower, take any
or all of the following actions, at the same or different times:
(i) terminate the Commitment, and thereupon the Commitment shall
terminate immediately, and/or (ii) declare the Loans 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 so declared to be due and payable,
together with accrued interest thereon and all 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; and
in case of any event with respect to the Borrower described in
paragraph (h) or (i) of this Article, the Commitment shall
automatically terminate, and the principal of the Loans then
outstanding, together with accrued interest thereon and all other
obligations of the Borrower accrued hereunder, 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.
ARTICLE 8
THE ADMINISTRATIVE AGENT
------------------------
Section 8.1 Authorization. Each of the Lenders 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.
- 40 -
Section 8.2 Administrative Agent and Affiliates. 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.
Section 8.3 Duties of Administrative Agent. 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 9.2),
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 9.2) 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 4 or elsewhere in any Loan Document, other than to
confirm receipt of items expressly required to be delivered to
the Administrative Agent.
Section 8.4 Reliance by Administrative 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, 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, whether orally (including by
telephone) or in writing (in any medium), 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.
- 41 -
Section 8.5 Sub-Agents. 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 of the Administrative Agent's
duties and exercise its rights and powers through their
respective Related Parties. The exculpatory provisions of this
Article 8 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.
Section 8.6 Successor Administrative Agent. Subject to
the appointment and acceptance of a successor Administrative
Agent as provided in this Section, the Administrative Agent may
resign at any time by notifying the Lenders and the Borrower.
Upon any such resignation, the Required Lenders shall have the
right, in consultation with the Borrower, to appoint a successor;
provided, however, that no such consultation shall be required if
a Default has occurred and is continuing. 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,
appoint a successor Administrative Agent, which shall be a bank.
Upon the acceptance by a successor of its appointment as
Administrative Agent hereunder, 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 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
hereunder, the provisions of this Article and Section 9.3 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 the retiring Administrative Agent was acting as
Administrative Agent.
Section 8.7 Lender Credit Decision. 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 related agreement, or any
document furnished hereunder or thereunder.
ARTICLE 9
MISCELLANEOUS
-------------
Section 9.1 Notices. Except in the case of notices and
other communications expressly permitted to be given by
telephone, all notices and other communications provided for
- 42 -
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:
(a) if to the Borrower, to it at Xxx Xxxxx Xxxxxx
Xxxxxx, Xxxxxx, Xxxxxxx 00000, Attention of Chief Financial
Officer (Telecopy No. (000) 000-0000);
(b) if to the Administrative Agent, to it at 000 Xxxxx
Xxxxxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000, Attention of
Energy Capital Services (Telecopy No. (000) 000-0000); and
(c) if to any Lender, to it at its address (or
telecopy number) set forth on its signature page hereto or in the
Assignment and Acceptance by which it becomes a party to this
Agreement.
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 9.2 Waivers; Amendments.
(a) No failure or delay by the Administrative Agent or
any Lender in exercising any right or power hereunder or under
any other Loan Document 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 and the Lenders hereunder
and under the other Loan Documents 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 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 shall not be construed as a waiver of any
Default, regardless of whether the Administrative Agent or any
Lender 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 (other than a promissory
note issued hereunder or fee agreement entered into pursuant
hereto), 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; provided,
however, that no such agreement shall (i) increase the Commitment
without the written consent of UBOC, (ii) reduce the principal
amount of any Loan or reduce the rate of interest thereon without
the written consent of each
- 43 -
Lender affected thereby, (iii) postpone the scheduled date of
payment of the principal amount of any Loan, or any interest
thereon, or reduce the amount of, waive or excuse any such
payment, or postpone the scheduled date of expiration of the
Commitment, without the written consent of each Lender affected
thereby, (iv) change Section 2.14(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, or (vi) release all or substantially all of the
Collateral from the Liens of the Stock Pledge Agreement without
the consent of each Lender; further provided, however, that no
such agreement shall amend, modify or otherwise affect the rights
or duties of the Administrative Agent hereunder without the prior
written consent of the Administrative Agent.
Section 9.3 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 Affiliates (including due diligence expenses
and the reasonable fees, charges and disbursements of counsel for
the Administrative Agent) 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 Administrative Agent in connection
with any evaluations of Collateral conducted by it, (iii) all
out-of-pocket expenses incurred by the Administrative Agent or
any Lender, including the fees, charges and disbursements of any
counsel for the Administrative Agent 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 hereunder, including all
such out-of-pocket expenses incurred during any workout,
restructuring or negotiations in respect of the Loans.
(b) The Borrower shall indemnify the Administrative
Agent, the Arranger, 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 other
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 the use of
the proceeds thereof, (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, however, that such indemnity shall not, as to any
Indemnitee, be available to the extent
- 44 -
that such losses, claims, damages, liabilities or related
expenses are determined by a court of competent jurisdiction by a
final and nonappealable judgment to have resulted primarily from
the gross negligence, willful misconduct or bad faith 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 or
the Arranger under paragraph (a) or (b) of this Section, each
Lender severally agrees to pay to the Administrative Agent or the
Arranger, as the case may be, such Lender's pro rata share (based
on the Obligations owed to the Lenders at the time that the
applicable unreimbursed expense or indemnity payment is sought)
of such unpaid amount; provided, however, 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 or the Arranger 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 the use of the proceeds thereof.
(e) All amounts due under this Section shall be
payable promptly after written demand therefor.
Section 9.4 Successors and Assigns.
(a) The provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that
the Borrower may not assign or otherwise transfer any of its
rights or obligations hereunder without the prior written consent
of 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 and, to the
extent expressly contemplated hereby, the Related Parties of each
of the Administrative Agent, the Arranger 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 the Loans owing to it); provided,
however, 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 Borrower and the Administrative Agent 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 or an assignment of the entire
remaining amount of the assigning Lender's Loans, the aggregate
principal amount of the Loans of the assigning Lender subject to
each such assignment (determined as of the date the Assignment
and Acceptance 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
- 45 -
consents, (iii) each partial assignment by a Lender of its Loans
shall be made as an assignment of a proportionate part of all the
assigning Lender's rights and obligations under this Agreement in
respect of its Loans and (iv) the parties to each assignment
shall execute and deliver to the Administrative Agent an
Assignment and Acceptance, together with a processing and
recordation fee of $5,000; further provided, however, that any
consent of the Borrower otherwise required under this paragraph
shall not be required if an Event of Default shall have occurred
and be continuing. Subject to acceptance and recording thereof
pursuant to paragraph (d) of this Section, from and after the
effective date specified in each Assignment and Acceptance the
assignee thereunder shall be a party hereto and, to the extent of
the interest assigned by such Assignment and Acceptance, shall
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 Acceptance, be released
from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance 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 2.11, 2.12, 2.13 and 9.3). 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 Acceptance delivered
to it and a register for the recordation of the names and
addresses of the Lenders, and the principal amount of the Loans
owing to each Lender, pursuant to the terms hereof from time to
time (the "Register"). The entries in the Register shall be
conclusive, and the Borrower, the Administrative Agent 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 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 Acceptance executed by an assigning Lender and an assignee,
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 Acceptance 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 or the Administrative Agent, sell participations to one
or more banks or other entities (each a "Participant") in all or
a portion of such Lender's rights and obligations under this
Agreement (including all or a portion of the Loans owing to it);
provided, however, 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 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
- 46 -
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 the Loan Documents and to
approve any amendment, modification or waiver of any provision of
the Loan Documents; provided, however, 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 9.2(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 2.11, 2.12 and 2.13 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 9.8 as though it were a Lender;
provided, however, that such Participant agrees to be subject to
Section 2.14(c) as though it were a Lender.
(f) A Participant shall not be entitled to receive any
greater payment under Section 2.11 or 2.13 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 2.13 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 2.13(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, however, 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 or
Administrative Agent, assign or pledge all or any portion of its
rights under this Agreement, including the Loans and any notes or
other instruments evidencing its rights as a Lender under this
Agreement, to any holder of, trustee for, or other representative
of holders of, obligations owed or securities issued by such
fund, as security for such obligations or securities; provided,
however, that any foreclosure or similar action by such trustee
or representative shall be subject to the provisions of Section
9.4(b) concerning assignments.
Section 9.5 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 (a) 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,
regardless of any investigation made by any such other party or
on its behalf and notwithstanding that the Administrative Agent
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 (b) shall continue in full force and
effect as long as the principal of or any accrued interest on any
Loan or any other amount payable under this Agreement is
outstanding and unpaid. The provisions of Sections 2.11, 2.12,
2.13 and 9.3 and Article 8 shall survive and remain in full force
and effect
- 47 -
regardless of the consummation of the transactions contemplated
hereby, the repayment of the Loans, the expiration or termination
of the Commitment or the termination of this Agreement or any
provision hereof.
Section 9.6 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 or the
Arranger 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 4.1,
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 9.7 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 9.8 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 9.9 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 California.
(b) The Borrower hereby irrevocably and
unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of the Superior Court of the State of
California sitting in the City of Los Angeles and of the United
States District Court for the Central District of California, 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
- 48 -
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 California State
court 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 Agreement or any other
Loan Document shall affect any right that the Administrative
Agent 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 9.1. 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 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
- 49 -
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 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 the Administrative Agent 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 the Administrative Agent or any Lender on a
nonconfidential basis prior to disclosure by the Borrower;
provided, however, that (A) in the case of information received
from the Borrower after the date hereof, such information shall
be considered "Information" only if it is clearly identified at
the time of delivery as confidential, and (B) notwithstanding
anything herein to the contrary, "Information" shall not include,
and the Administrative Agent and each Lender may disclose to any
and all Persons, any information with respect to the United
States federal income tax treatment and United States federal
income tax structure of the transactions contemplated hereby or
any materials of any kind that are provided to the Administrative
Agent or such Lender relating to such tax treatment and tax
structure. 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.
[THIS SPACE HAS BEEN LEFT BLANK INTENTIONALLY.]
- 50 -
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.
UNISOURCE ENERGY CORPORATION
By:
--------------------------------
Xxxxx X. Xxxxxx
Vice President, Chief Financial
Officer and Treasurer
UNION BANK OF CALIFORNIA, N.A.,
as Administrative Agent
and Lender
By:
--------------------------------
Name:
------------------------------
Title
-----------------------------
Address for Notice
------------------
Union Bank of California, N.A.
000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopier: (000) 000-0000
Attention: Energy Capital Services
S-1
---------------------------------------------------------------------------
TERM LOAN AGREEMENT
among
UNISOURCE ENERGY CORPORATION
and
THE LENDERS PARTY HERETO
and
UNION BANK OF CALIFORNIA, N.A.,
as Administrative Agent and Arranger
August 8, 2003
---------------------------------------------------------------------------
TABLE OF CONTENTS
Page
----
ARTICLE 1 DEFINITIONS AND INTERPRETATION..................................1
Section 1.1 Defined Terms............................................1
Section 1.2 Classification of Loans and Borrowings..................14
Section 1.3 Terms Generally.........................................14
Section 1.4 Accounting Terms; GAAP..................................14
ARTICLE 2 LOANS..........................................................14
Section 2.1 Commitment..............................................14
Section 2.2 Borrowing...............................................15
Section 2.3 Request for Borrowing...................................15
Section 2.4 Funding of Borrowings...................................15
Section 2.5 Interest Elections......................................16
Section 2.6 Repayment of Loans; Evidence of Debt....................17
Section 2.7 Optional Prepayment of Loans............................17
Section 2.8 Mandatory Prepayment of Loans...........................18
Section 2.9 Interest................................................18
Section 2.10 Alternate Rate of Interest..............................19
Section 2.11 Increased Costs.........................................19
Section 2.12 Break Funding Payments..................................20
Section 2.13 Taxes...................................................21
Section 2.14 Payments Generally; Pro Rata Treatment;.................22
Sharing of Setoffs.
Section 2.15 Mitigation Obligations; Replacement of Lenders..........23
Section 2.16 Illegality..............................................24
ARTICLE 3 REPRESENTATIONS AND WARRANTIES.................................24
Section 3.1 Organization; Powers....................................24
Section 3.2 Authorization; Enforceability...........................24
Section 3.3 Governmental Approvals; No Conflicts....................24
Section 3.4 Financial Condition; No Material Adverse Change.........25
Section 3.5 Properties..............................................25
Section 3.6 Litigation and Environmental Matters....................26
Section 3.7 Compliance with Laws and Agreements.....................26
Section 3.8 Investment and Holding Company Status...................26
Section 3.9 Taxes...................................................27
Section 3.10 ERISA...................................................27
Section 3.11 Stock Pledge Agreement..................................27
Section 3.12 Disclosure..............................................27
Section 3.13 UniSource Energy Services...............................28
Section 3.14 Ownership of Subsidiaries...............................28
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ARTICLE 4 CONDITIONS PRECEDENT...........................................28
Section 4.1 Effective Date..........................................28
Section 4.2 Each Borrowing..........................................29
ARTICLE 5 AFFIRMATIVE COVENANTS..........................................29
Section 5.1 Financial Statements and Other Information..............29
Section 5.2 Notices of Material Events..............................32
Section 5.3 Existence; Conduct of Business..........................32
Section 5.4 Payment of Obligations..................................32
Section 5.5 Maintenance of Properties; Insurance....................33
Section 5.6 Books and Records; Inspection Rights....................33
Section 5.7 Compliance with Laws....................................33
Section 5.8 Use of Proceeds.........................................33
Section 5.9 Environmental Laws......................................34
Section 5.10 Further Assurances......................................34
ARTICLE 6 NEGATIVE COVENANTS.............................................34
Section 6.1 Indebtedness............................................34
Section 6.2 Liens...................................................35
Section 6.3 Fundamental Changes.....................................36
Section 6.4 Sale of Assets..........................................36
Section 6.5 Restricted Payments.....................................37
Section 6.6 Investments and Acquisitions............................37
Section 6.7 Consolidated Tangible Net Worth.........................37
Section 6.8 Cash Coverage Ratio.....................................37
Section 6.9 Leverage Test...........................................38
Section 6.10 Transactions with Affiliates............................38
Section 6.11 Change in Nature of Business............................38
ARTICLE 7 EVENTS OF DEFAULT..............................................38
ARTICLE 8 THE ADMINISTRATIVE AGENT.......................................40
Section 8.1 Authorization...........................................40
Section 8.2 Administrative Agent and Affiliates.....................41
Section 8.3 Duties of Administrative Agent..........................41
Section 8.4 Reliance by Administrative Agent........................41
Section 8.5 Sub-Agents..............................................42
Section 8.6 Successor Administrative Agent..........................42
Section 8.7 Lender Credit Decision..................................42
ARTICLE 9 MISCELLANEOUS..................................................42
Section 9.1 Notices.................................................42
Section 9.2 Waivers; Amendments.....................................43
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Section 9.3 Expenses; Indemnity; Damage Waiver......................44
Section 9.4 Successors and Assigns..................................45
Section 9.5 Survival................................................47
Section 9.6 Counterparts; Integration; Effectiveness................48
Section 9.7 Severability............................................48
Section 9.8 Right of Setoff.........................................48
Section 9.9 Governing Law; Jurisdiction; Consent To.................48
Service of Process
Section 9.10 Waiver of Jury Trial....................................49
Section 9.11 Headings................................................49
Section 9.12 Confidentiality.........................................49
EXHIBITS
Exhibit A Interest Election Request
Exhibit B Assignment and Acceptance
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