Exhibit 99.3
EXECUTION COPY
UNS ELECTRIC, INC.
UNISOURCE ENERGY SERVICES, INC.
Xxx Xxxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxx 85701
New York, New York
as of August 11, 2003
TO EACH OF THE PURCHASERS LISTED IN
THE ATTACHED SCHEDULE A:
Ladies and Gentlemen:
UNS ELECTRIC, INC., a corporation incorporated under the law of the State of
Arizona (the Company) and UNISOURCE ENERGY SERVICES, INC., a corporation
incorporated under the law of the State of Arizona (the Guarantor and,
together with the Company, the Obligors) agree with you as follows:
1. INTRODUCTORY MATTERS: AUTHORIZATION OF NOTES
1.1 Introductory Matters
(a) Certain capitalized terms used in this Agreement are defined in
Schedule B; references to a "Schedule" or an "Exhibit" are, unless
otherwise specified, to a Schedule or an Exhibit attached to this
Agreement.
(b) The Guarantor is a wholly owned subsidiary of UniSource Energy. The
Company is a wholly owned Subsidiary of the Guarantor.
(c) UniSource Energy and Citizens have entered into an asset purchase
agreement dated as of October 29, 2002 (the ElecCo Purchase Agreement)
pursuant to which Citizens will transfer certain assets (the Assets) and
liabilities to the Company (the Acquisition).
(d) In order to fund a portion of the purchase price of the Acquisition,
the Company proposes to issue Notes as described herein.
1.2 Authorization of Notes
The Company will authorize the issue and sale of its 7.61% guaranteed senior
notes due August 11, 2008 in an aggregate principal amount of $60,000,000 (the
Notes, such term
to include any such notes issued in substitution therefor pursuant to Section
14 of this Agreement or the Other Agreements (as hereinafter defined)). The
Notes shall be substantially in the form set out in Exhibit 1, with such
changes therefrom, if any, as may be approved by you and the Company.
2. Sale and Purchase of Notes
Subject to the terms and conditions of this Agreement, the Company will
issue and sell to you and you will purchase from the Company, at the Closing
provided for in Section 3, Notes in the principal amount specified opposite
your name in Schedule A at the purchase price of 100% of the principal amount
thereof. Contemporaneously with entering into this Agreement, the Company is
entering into separate Note Purchase Agreements (the Other Agreements)
identical with this Agreement with each of the other purchasers named in
Schedule A (the Other Purchasers), providing for the sale at such Closing to
each of the Other Purchasers of Notes in the principal amount specified
opposite its name in Schedule A. Your obligation hereunder and the
obligations of the Other Purchasers under the Other Agreements are several and
not joint obligations and you shall have no obligation under any Other
Agreement and no liability to any Person for the performance or non-
performance by any Other Purchaser thereunder.
3. Closing
The sale and purchase of the Notes to be purchased by you and the Other
Purchasers shall occur at the offices of Freshfields Bruckhaus Xxxxxxxx LLP,
000 Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 at 10:30 a.m., New
York City time, at a closing (the Closing) on August 11, 2003 or on such other
Business Day as may be agreed upon by the Company and you and the Other
Purchasers. At the Closing the Company will deliver to you the Notes to be
purchased by you in the form of a single Note (or such greater number of Notes
in denominations of at least $100,000 or any multiple of $1,000 in excess
thereof as you may request) dated the date of the Closing and registered in
your name (or in the name of your nominee), against delivery by you to the
Company or its order of immediately available funds in the amount of the
purchase price therefor by wire transfer of immediately available funds for
the account of the Company to account number 4945086726 at Xxxxx Fargo Bank,
ABA Number 000000000. If at the Closing the Company shall fail to tender such
Notes to you as provided above in this Section 3, or any of the conditions
specified in Section 4 shall not have been satisfied or waived, you shall, at
your election, be relieved of all further obligations under this Agreement,
without thereby waiving any rights you may have by reason of such failure or
such nonfulfillment.
4. CONDITIONS TO CLOSING
Your obligation to purchase and pay for the Notes to be sold to you at the
Closing is subject to the satisfaction or waiver, prior to or at the Closing,
of the following conditions:
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4.1 Representations and Warranties
(a) The representations and warranties of the Obligors in this Agreement
shall be correct when made and at the time of the Closing.
(b) The representations and warranties of Citizens in the ElecCo Purchase
Agreement shall be correct when made and at the time of the Closing.
4.2 Performance; No Default
Each Obligor shall have performed and complied with all agreements and
conditions contained in this Agreement required to be performed or complied
with by it prior to or at the Closing and after giving effect to the issue and
sale of the Notes (and the application of the proceeds thereof as contemplated
by Section 5.13) no Default or Event of Default shall have occurred and be
continuing. Neither any Obligor nor any Subsidiary of the Company shall have
entered into any transaction since the date of the Memorandum that would have
been prohibited by Sections 10.1, 10.3, 10.4 or 10.5 hereof had such Sections
applied since such date.
4.3 Compliance Certificates
(a) Officer's Certificate. Each Obligor shall have delivered to you an
Officer's Certificate, dated the date of the Closing, certifying that the
conditions specified in Sections 4.1(a), 4.2 and 4.10, to the extent such
conditions apply to such Obligor, have been fulfilled.
(b) Secretary's Certificate. Each Obligor shall have delivered to you a
certificate certifying as to the resolutions attached thereto and other
corporate proceedings relating to the authorization, execution and
delivery of the Financing Documents to which such Obligor is a party.
4.4 Opinions of Counsel
You shall have received opinions in form and substance satisfactory to you,
dated the date of the Closing (a) from Xxxxxx Xxxx and Priest LLP, special New
York counsel for the Company, covering the matters set forth in Exhibit 2-A
and covering such other matters incident to the transactions contemplated
hereby as you or your counsel may reasonably request (and the Company hereby
instructs its counsel to deliver such opinion to you), (b) from Xxxxxxx
Xxxxxx, Xx., general counsel for the Company and the Guarantor, covering the
matters set forth in Exhibit 2-B and covering such other matters incident to
the transactions contemplated hereby as you or your counsel may reasonably
request (and the Company hereby instructs its counsel to deliver such opinion
to you), and (c) from Freshfields Bruckhaus Xxxxxxxx LLP, your special New
York counsel in connection with such transactions, substantially in the form
set forth in Exhibit 2-C and covering such other matters incident to such
transactions as you may reasonably request.
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4.5 Purchase Permitted By Applicable Law, etc.
On the date of the Closing your purchase of Notes shall (i) be permitted by
the laws and regulations of each jurisdiction to which you are subject,
without recourse to provisions (such as Section 1405(a)(8) of the New York
Insurance Law) permitting limited investments by insurance companies without
restriction as to the character of the particular investment, (ii) not violate
any applicable law or regulation (including, without limitation, Regulation U,
T or X of the Board of Governors of the Federal Reserve System) and (iii) not
subject you to any tax, penalty or liability under or pursuant to any
applicable law or regulation, which law or regulation was not in effect on the
date hereof. If requested by you, you shall have received an Officer's
Certificate certifying as to such matters of fact as you may reasonably
specify to enable you to determine whether such purchase is so permitted.
4.6 Sale of Other Notes
Contemporaneously with the Closing the Company shall sell to the Other
Purchasers and the Other Purchasers shall purchase the Notes to be purchased
by them at the Closing as specified in Schedule A.
4.7 Related Transaction
Contemporaneously with the Closing, GasCo, the Guarantor and the Purchasers
shall enter into the GasCo Note Purchase and Guaranty Agreement and the
transactions contemplated thereby.
4.8 Payment of Special Counsel Fees
Without limiting the provisions of Section 16.1, the Company shall have paid
on or before the Closing the reasonable fees, charges and disbursements of
your special counsel referred to in Section 4.4 to the extent reflected in a
statement of such counsel rendered to the Company at least one Business Day
prior to the Closing.
4.9 Private Placement Number
A Private Placement number issued by Standard & Poor's CUSIP Service Bureau
(in cooperation with the Securities Valuation Office of the National
Association of Insurance Commissioners) shall have been obtained for the
Notes.
4.10 Changes in Corporate Structure
No Obligor shall have changed its jurisdiction of incorporation or been a
party to any merger or consolidation and shall not have succeeded to all or
any substantial part of the liabilities of any other entity except as provided
in the ElecCo Purchase Agreement.
4.11 Acquisition Transaction
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(a) You shall have received a true and correct copy of the ElecCo Purchase
Agreement. The ElecCo Purchase Agreement and each other agreement
implementing the transactions contemplated thereby shall have been duly
executed and delivered by the parties named therein, shall be in full
force and effect and no material default shall exist thereunder.
(b) All Governmental Approvals necessary under applicable Governmental
Rules to be obtained by Citizens, UniSource Energy, the Company or any of
their Affiliates in connection with the due execution and delivery of,
and performance by Citizens, UniSource Energy or any such Affiliate of
its obligations, and the exercise of its rights, under the ElecCo
Purchase Agreement shall have been duly obtained, shall have been validly
issued and shall be in full force and effect.
(c) You shall have received a copy of the order of the ACC issued July 3,
2003 approving the ACC Settlement Agreement as modified by such order.
Such order shall be final and in full force and effect.
(d) You shall have received a copy of the order of the Federal Energy
Regulatory Commission issued May 21, 2003 authorizing disposition of
jurisdictional facilities. Such order shall be final and in full force
and effect.
(e) You shall have received a copy of the order of the Securities and
Exchange Commission issued August 1, 2003 authorizing the acquisition by
UniSource Energy and the Guarantor of all of the common stock of the
Company. Such order shall be final and in full force and effect.
4.12 Proceedings and Documents
All corporate and other proceedings in connection with the transactions
contemplated by this Agreement and by the GasCo Note Purchase and Guaranty
Agreement and all documents and instruments incident to such transactions
shall be satisfactory to you and your special counsel, and you and your
special counsel shall have received all such counterpart originals or
certified or other copies of such documents as you or they may reasonably
request.
5. REPRESENTATIONS AND WARRANTIES OF THE OBLIGORS
Each Obligor represents and warrants to you that:
5.1 Organization; Power and Authority
Such Obligor is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, and is duly
qualified as a foreign corporation and is in good standing in each
jurisdiction in which such qualification is required by law, other than those
jurisdictions as to which the failure to be so qualified or in good standing
could not, individually or in the aggregate, reasonably be expected to have a
Material
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Adverse Effect. Such Obligor has the corporate power and authority to own or
hold under lease the Properties (including, without limitation, the Assets) it
purports to own or hold under lease, or proposes to own or hold under lease,
to transact the business it transacts and proposes to transact, to execute and
deliver the Financing Documents to which it is a party and to perform the
provisions thereof.
5.2 Authorization, etc.
Each Transaction Document to which such Obligor is a party has been duly
authorized by all necessary corporate action on the part of such Obligor, and
upon execution and delivery thereof each such Transaction Document will
constitute, a legal, valid and binding obligation of such Obligor enforceable
against such Obligor in accordance with its terms, except as such
enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and (ii) general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at
law).
5.3 Disclosure
The Company, through its agent, New Harbor Incorporated, has delivered to you
and each Other Purchaser a copy of a Confidential Information Memorandum,
dated April 2003 (the Memorandum), relating to the Acquisition and the
transactions contemplated hereby. The Memorandum fairly describes, in all
material respects, the Assets and the general nature of the business and
principal Properties of the Obligors and their Subsidiaries. Except as
disclosed in Schedule C, this Agreement, the Memorandum, the documents,
certificates or other writings delivered to you by or on behalf of the
Obligors in connection with the transactions contemplated hereby, taken as a
whole and giving effect to the transactions contemplated hereby and thereby,
do not contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading in light
of the circumstances under which they were made. Except as disclosed in the
Memorandum or as expressly described in Schedule C, or in one of the
documents, certificates or other writings identified therein, since October 9,
2002, there has been no change in the financial condition, operations,
business, Properties or prospects of any Obligor or any Subsidiary of the
Company except changes that individually or in the aggregate could not
reasonably be expected to have a Material Adverse Effect. There is no fact
known to such Obligor that could reasonably be expected to have a Material
Adverse Effect that has not been set forth herein or in the Memorandum or in
the other documents, certificates and other writings delivered to you by or on
behalf of the Obligors specifically for use in connection with the
transactions contemplated hereby.
5.4 Organization and Ownership of Shares of Subsidiaries
(a) Schedule D contains (except as noted therein) complete and correct
lists (i) of each Obligor's Subsidiaries, showing, as to each Subsidiary,
the correct name thereof, the jurisdiction of its organization, and the
percentage of shares of each
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class of its capital stock or similar equity interests outstanding owned
by the Company and each other Subsidiary, (ii) of each Obligor's
directors and senior officers, and (iii) of the Obligors' Affiliates,
other than Subsidiaries.
(b) All of the outstanding shares of capital stock or similar equity
interests of each Subsidiary shown in Schedule D as being owned by an
Obligor and its Subsidiaries have been validly issued, are fully paid and
nonassessable and are owned by such Obligor or another Subsidiary free
and clear of any Lien (except as otherwise disclosed in Schedule D).
(c) Each Subsidiary identified in Schedule D is a corporation or other
legal entity duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization, and is duly qualified as a
foreign corporation or other legal entity and is in good standing in each
jurisdiction in which such qualification is required by law, other than
those jurisdictions as to which the failure to be so qualified or in good
standing could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Each such Subsidiary has the
corporate or other power and authority to own or hold under lease the
Properties it purports to own or hold under lease and to transact the
business it transacts and proposes to transact.
(d) No Subsidiary of the Company is a party to, or otherwise subject to any
legal restriction or any agreement (other than this Agreement, the
agreements listed on Schedule D and customary limitations imposed by
corporate law statutes) restricting the ability of such Subsidiary to pay
dividends out of profits or make any other similar distributions of
profits to the Company or any of its Subsidiaries that owns outstanding
shares of capital stock or similar equity interests of such Subsidiary.
5.5 Compliance with Laws, Other Instruments, etc.
The execution, delivery and performance by each Obligor of each Transaction
Document to which it is a party will not (i) contravene, result in any breach
of, or constitute a default under, or result in the creation of any Lien in
respect of any Property of such Obligor or any Subsidiary of the Company
under, any indenture, mortgage, deed of trust, loan, purchase or credit
agreement, lease, corporate charter or by-laws, or any other agreement or
instrument to which such Obligor or any Subsidiary of the Company is bound or
by which such Obligor or any Subsidiary of the Company or any of their
respective Properties may be bound or affected, (ii) conflict with or result
in a breach of any of the terms, conditions or provisions of any order,
judgment, decree, or ruling of any court, arbitrator or Governmental Authority
applicable to such Obligor or any Subsidiary of the Company or (iii) violate
any provision of any statute or other rule or regulation of any Governmental
Authority applicable to such Obligor or any Subsidiary of the Company.
5.6 Governmental Authorizations, etc.
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No consent, approval or authorization of, or registration, filing or
declaration with, any Governmental Authority is required in connection with
the execution, delivery or performance by any Obligor of any Transaction
Document to which such Obligor is a party except for such approvals as have
been obtained and which are in full force and effect.
5.7 Litigation; Observance of Agreements, Statutes and Orders
(a) Except as disclosed in Schedule E, there are no actions, suits or
proceedings pending or, to the knowledge of any Obligor, threatened
against or affecting any Obligor or any Subsidiary of the Company or any
Property of any Obligor or any Subsidiary of the Company in any court or
before any arbitrator of any kind or before or by any Governmental
Authority that, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
(b) No Obligor and no Subsidiary is in default under any term of any
agreement or instrument to which it is a party or by which it is bound,
or any order, judgment, decree or ruling of any court, arbitrator or
Governmental Authority or is in violation of any applicable law,
ordinance, rule or regulation (including without limitation Environmental
Laws) of any Governmental Authority, which default or violation,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
5.8 Taxes
Such Obligor and the Subsidiaries of the Company have filed all tax returns
that are required to have been filed in any jurisdiction, and have paid all
taxes shown to be due and payable on such returns and all other taxes and
assessments levied upon them or their properties, assets, income or
franchises, to the extent such taxes and assessments have become due and
payable and before they have become delinquent, except for any taxes and
assessments (i) the amount of which is not individually or in the aggregate
Material or (ii) the amount, applicability or validity of which is currently
being contested in good faith by appropriate proceedings and with respect to
which such Obligor or Subsidiary of the Company, as the case may be, has
established adequate reserves in accordance with GAAP. Such Obligor knows of
no basis for any other tax or assessment that could reasonably be expected to
have a Material Adverse Effect. The charges, accruals and reserves on the
books of such Obligor and the Subsidiaries of the Company in respect of
Federal, state or other taxes for all fiscal periods are adequate.
5.9 Title to Property; Leases
Such Obligor and the Subsidiaries of the Company have and, after giving effect
to the Acquisition, will have good and sufficient title to their respective
properties that individually or in the aggregate are Material, including all
such properties purported to have been acquired by such Obligor or any
Subsidiary of the Company pursuant to the GasCo Purchase Agreement (except as
sold or otherwise disposed of in the ordinary
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course of business), in each case free and clear of Liens prohibited by this
Agreement. All leases that individually or in the aggregate are Material are
valid and subsisting and are in full force and effect in all material
respects.
5.10 Licenses, Permits, etc.
Except as disclosed in Schedule F:
(a) such Obligor and the Subsidiaries of the Company own or possess all
licenses, permits, franchises, authorizations, patents, copyrights,
service marks, trademarks and trade names, or rights thereto, that
individually or in the aggregate are Material, without known conflict
with the rights of others;
(b) to the best knowledge of such Obligor, no product of such Obligor
infringes in any material respect any license, permit, franchise,
authorization, patent, copyright, service xxxx, trademark, trade name or
other right owned by any other Person; and
(c) to the best knowledge of such Obligor, there is no Material violation
by any Person of any right of such Obligor or any Subsidiary of the
Company with respect to any patent, copyright, service xxxx, trademark,
trade name or other right owned or used by such Obligor or any Subsidiary
of the Company.
5.11 Compliance with ERISA
(a) Such Obligor and each ERISA Affiliate have operated and administered
each Plan in compliance with all applicable laws except for such
instances of noncompliance as have not resulted in and could not
reasonably be expected to result in a Material Adverse Effect. Neither
such Obligor nor any ERISA Affiliate has incurred any liability pursuant
to Title I or IV of ERISA (other than claims for benefits in the ordinary
course or PBGC premiums required by Title IV of ERISA) or the penalty or
excise tax provisions of the Code relating to employee benefit plans (as
defined in Section 3 of ERISA), and no event, transaction or condition
has occurred or exists that could reasonably be expected to result in the
incurrence of any such liability by such Obligor or any ERISA Affiliate,
or in the imposition of any Lien on any of the rights, Properties or
assets of such Obligor or any ERISA Affiliate, in either case pursuant to
Title I or IV of ERISA or to such penalty or excise tax provisions or to
Section 401(a)(29) or 412 of the Code, other than such liabilities or
Liens as would not be individually or in the aggregate Material.
(b) The present value of the aggregate benefit liabilities under each of
such Obligor's Plans (other than Multiemployer Plans), determined as of
the end of such Plan's most recently ended plan year on the basis of the
actuarial assumptions specified for funding purposes in such Plan's most
recent actuarial valuation report, did not exceed the aggregate current
value of the assets of such Plan allocable to such
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benefit liabilities by more than $14,000,000 in the case of any single
Plan and by more than $20,000,000 in the aggregate for all Plans. The
term "benefit liabilities" has the meaning specified in section 4001 of
ERISA and the terms "current value" and "present value" have the meaning
specified in section 3 of ERISA.
(c) Such Obligor and its ERISA Affiliates have not incurred withdrawal
liabilities (and are not subject to contingent withdrawal liabilities)
under section 4201 or 4204 of ERISA in respect of Multiemployer Plans
that individually or in the aggregate are Material.
(d) The expected postretirement benefit obligation (determined as of the
last day of such Obligor's most recently ended fiscal year in accordance
with Financial Accounting Standards Board Statement No. 106, without
regard to liabilities attributable to continuation coverage mandated by
section 4980B of the Code) of such Obligor and its Subsidiaries is not
Material.
(e) The execution and delivery of this Agreement and the issuance and sale
of the Notes hereunder will not involve any non-exempt transaction that
is: (i) subject to the prohibitions of section 406 of ERISA; or (ii) in
connection with which a tax could be imposed pursuant to section
4975(c)(1)(A)-(D) of the Code. The representation in the first sentence
of this Section 5.12(e) is made in reliance upon and subject to the
accuracy of your representation in Section 6.2 as to the sources of the
funds used to pay the purchase price of the Notes to be purchased by you.
5.12 Private Offering by the Company
Neither the Company nor the Guarantor nor anyone acting on its or their behalf
has offered the Notes, the Guaranties or any similar securities for sale to,
or solicited any offer to buy any of the same from, or otherwise approached or
negotiated in respect thereof with, any person other than you, the Other
Purchasers and not more than 2 other Institutional Investors, each of which
has been offered the Notes and the Guaranties at a private sale for
investment. Neither the Company nor anyone acting on its behalf has taken, or
will take, any action that would subject the issuance or sale of the Notes to
the registration requirements of Section 5 of the Securities Act.
5.13 Use of Proceeds; Margin Regulations
The Company will apply the proceeds of the sale of the Notes to consummate the
Acquisition. No part of the proceeds from the sale of the Notes hereunder
will be used, directly or indirectly, for the purpose of buying or carrying
any margin stock within the meaning of Regulation U of the Board of Governors
of the Federal Reserve System (12 CFR 221), or for the purpose of buying or
carrying or trading in any securities under such circumstances as to involve
the Company in a violation of Regulation X of said Board (12 CFR 224) or to
involve any broker or dealer in a violation of Regulation T of said Board (12
CFR 220). Margin stock does not constitute any of the consolidated assets of
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the Company and its Subsidiaries and the Company does not have any present
intention to acquire margin stock. As used in this Section 5.13, the terms
"margin stock" and "purpose of buying or carrying" shall have the meanings
assigned to them in said Regulation U.
5.14 Existing Indebtedness
(a) Except as described therein, Schedule G-1 sets forth a complete and
correct list of all outstanding Indebtedness of each Obligor and each
Subsidiary of the Company. Except as described therein, Schedule G-2
sets forth a complete and correct list of all outstanding Indebtedness to
be assumed by the Company pursuant to the ElecCo Purchase Agreement and
the transactions contemplated thereby. Neither such Obligor nor any
such Subsidiary is in default and no waiver of default is currently in
effect, in the payment of any principal or interest on any Indebtedness
of such Obligor or such Subsidiary and no event or condition exists with
respect to any Indebtedness of such Obligor or any such Subsidiary that
would permit (or that with notice or the lapse of time, or both, would
permit) one or more Persons to cause such Indebtedness to become due and
payable before its stated maturity or before its regularly scheduled
dates of payment.
(b) Except as disclosed in Schedule G-1, neither the Company nor any of its
Subsidiaries has agreed or consented to cause or permit in the future
(upon the happening of a contingency or otherwise) any of its property,
whether now owned or hereafter acquired, to be subject to a Lien not
permitted by Section 10.3.
5.15 Foreign Assets Control Regulations, etc.
Neither the sale of the Notes by the Company hereunder nor its use of the
proceeds thereof will violate the Trading with the Enemy Act, as amended, or
any of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.
5.16 Status under Certain Statutes
Neither the Company nor any Subsidiary of the Company is subject to regulation
under the Investment Company Act of 1940, as amended, or the Interstate
Commerce Act, as amended. Each Obligor and its Subsidiaries are exempt from
regulation under PUHCA, except as set forth in Section 9(a)(2) thereof.
5.17 Environmental Matters
Neither the Company nor any Subsidiary has knowledge of any claim or has
received any notice of any claim, and no proceeding has been instituted
raising any claim against the Company or any of its Subsidiaries or any of
their respective real Properties now or formerly owned, leased or operated by
any of them or other assets, alleging any damage to the environment or
violation of any Environmental Laws, except, in each case, such as
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could not reasonably be expected to result in a Material Adverse Effect.
Except as otherwise disclosed to you in writing:
(a) neither the Company nor any Subsidiary has knowledge of any facts which
would give rise to any claim, public or private, of violation of
Environmental Laws or damage to the environment emanating from, occurring
on or in any way related to real Properties now or formerly owned, leased
or operated by any of them, or in any way related to the Assets, or to
other assets or their use, except, in each case, such as could not
reasonably be expected to result in a Material Adverse Effect;
(b) neither the Company nor any of its Subsidiaries has stored any
Hazardous Materials on real Properties now or formerly owned, leased or
operated by any of them and has not disposed of any Hazardous Materials
in a manner contrary to any Environmental Laws in each case in any manner
that could reasonably be expected to result in a Material Adverse Effect;
and
(c) all buildings on all real Properties now owned, leased or operated by
the Company or any of its Subsidiaries are in compliance with applicable
Environmental Laws, except where failure to comply could not reasonably
be expected to result in a Material Adverse Effect.
5.18 Acquisition Transaction
(a) To the best knowledge of such Obligor, the representations and
warranties made by Citizens in the ElecCo Purchase Agreement were true
and correct when made and remain true and correct as of the date hereof.
(b) All Governmental Approvals necessary under applicable Governmental
Rules to be obtained by UniSource Energy or any of its Affiliates in
connection with the due execution and delivery of, and performance by
UniSource Energy or such Affiliate of its obligations, and the exercise
of its rights, under the ElecCo Purchase Agreement have been duly
obtained, have been validly issued and are in full force and effect. The
order of the Federal Energy Regulatory Commission issued May 21, 2003
authorizing disposition of jurisdictional facilities, the order of the
ACC issued July 3, 2003 approving the ACC Settlement Agreement and the
order of the Securities and Exchange Commission issued August 1, 2003
authorizing the acquisition by UniSource Energy and the Guarantor of all
of the common stock of the Company are each final and in full force and
effect.
(c) With respect to such Obligor and its Affiliates, the ElecCo Purchase
Agreement and each other agreement implementing the transactions
contemplated thereby has been duly executed and delivered by the parties
named therein, is in full force and effect and no material default exists
thereunder. With respect to each party thereto that is not an Affiliate
of such Obligor, to the best knowledge of such Obligor, the ElecCo
Purchase Agreement and each other agreement implementing
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the transactions contemplated thereby has been duly executed and
delivered by such party, is in full force and effect and no material
default exists thereunder.
5.19 Anti-Terrorism Order
Neither such Obligor nor any Subsidiary of the Company is a Sanctioned Person.
To the best knowledge of such Obligor, neither such Obligor nor any Subsidiary
of the Company has any legally binding contracts or agreements with any
Sanctioned Person.
6. REPRESENTATIONS OF THE PURCHASER
6.1 Purchase for Investment
You represent that you are purchasing the Notes for your own account or for
one or more separate accounts maintained by you or for the account of one or
more pension or trust funds and not with a view to the distribution thereof,
provided that the disposition of your or their Property shall at all times be
within your or their control. You understand that the Notes have not been
registered under the Securities Act and may be resold only if registered
pursuant to the provisions of the Securities Act or if an exemption from
registration is available, except under circumstances where neither such
registration nor such an exemption is required by law, and that the Company is
not required to register the Notes.
6.2 Source of Funds
You represent that at least one of the following statements is an accurate
representation as to each source of funds (a Source) to be used by you to pay
the purchase price of the Notes to be purchased by you hereunder:
(a) if you are an insurance company, the Source does not include assets
allocated to any separate account maintained by you in which any employee
benefit plan (or its related trust) has any interest, other than a
separate account that is maintained solely in connection with your fixed
contractual obligations under which the amounts payable, or credited, to
such plan and to any participant or beneficiary of such plan (including
any annuitant) are not affected in any manner by the investment
performance of the separate account; or
(b) the Source is an "insurance company general account" (as the term is
defined in Prohibited Transaction Exemption (PTE) 95-60 (issued July 12,
1995)) in respect of which the reserves and liabilities (as defined by
the annual statement for life insurance companies approved by the
National Association of Insurance Commissioners (the NAIC Annual
Statement)) for the general account contract(s) held by or on behalf of
any employee benefit plan together with the amount of the reserves and
liabilities for the general account contract(s) held by or on behalf of
any other employee benefit plans maintained by the same employer (or
affiliate thereof as defined in PTE 95-60) or by the same employee
organization in the
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general account do not exceed 10% of the total reserves and liabilities
of the general account (exclusive of separate account liabilities) plus
surplus as set forth in the NAIC Annual Statement filed with such
Purchaser's state of domicile; or
(c) the Source is either (i) an insurance company pooled separate account,
within the meaning of Prohibited Transaction Exemption ("PTE") 00-0
(xxxxxx Xxxxxxx 00, 0000), xx (xx) a bank collective investment fund,
within the meaning of the PTE 91-38 (issued July 12, 1991) and, except as
you have disclosed to the Company in writing pursuant to this paragraph
(c), no employee benefit plan or group of plans maintained by the same
employer or employee organization beneficially owns more than 10% of all
assets allocated to such pooled separate account or collective investment
fund; or
(d) the Source constitutes assets of an "investment fund" (within the
meaning of Part V of the QPAM Exemption) managed by a "qualified
professional asset manager" or "QPAM" (within the meaning of Part V of
the QPAM Exemption), no employee benefit plan's assets that are included
in such investment fund, when combined with the assets of all other
employee benefit plans established or maintained by the same employer or
by an affiliate (within the meaning of Section V(c)(1) of the QPAM
Exemption) of such employer or by the same employee organization and
managed by such QPAM, exceed 20% of the total client assets managed by
such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption are
satisfied, neither the QPAM nor a person controlling or controlled by the
QPAM (applying the definition of "control" in Section V(e) of the QPAM
Exemption) owns a 5% or more interest in the Company and (i) the identity
of such QPAM and (ii) the names of all employee benefit plans whose
assets are included in such investment fund have been disclosed to the
Company in writing pursuant to this paragraph (d); or
(e) the Source is a governmental plan; or
(f) the Source is one or more employee benefit plans, or a separate account
or trust fund comprised of one or more employee benefit plans, each of
which has been identified to the Company in writing pursuant to this
paragraph (f); or
(g) the Source does not include assets of any employee benefit plan, other
than a plan exempt from the coverage of ERISA.
As used in this Section 6.2, the terms employee benefit plan, governmental
plan, party in interest and separate account shall have the respective
meanings assigned to such terms in Section 3 of ERISA.
7. INFORMATION AS TO OBLIGORS
7.1 Financial and Business Information
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Each Obligor shall deliver to each Noteholder that is an Institutional
Investor:
(a) Quarterly Statements - within 60 days after the end of each quarterly
fiscal period in each fiscal year of such Obligor (other than the last
quarterly fiscal period of each such fiscal year), duplicate copies of,
(i) a consolidated balance sheet of such Obligor and its Subsidiaries
as at the end of such quarter,
(ii) consolidated statements of income of such Obligor and its
Subsidiaries, for such quarter and (in the case of the second and
third quarters) for the portion of the fiscal year ending with such
quarter, and
(iii) consolidated statements of cash flow for the period from the
beginning of such fiscal year to the end of such quarter,
setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year, all in reasonable
detail, prepared in accordance with GAAP applicable to quarterly
financial statements generally, and certified by a Senior Financial
Officer of such Obligor as fairly presenting, in all material respects,
the financial position of the companies being reported on and their
results of operations and cash flows, subject to changes resulting from
year-end adjustments, provided that delivery within the time period
specified above of copies of such Obligor's Quarterly Report on Form 10-Q
prepared in compliance with the requirements therefor and filed with the
Securities and Exchange Commission shall be deemed to satisfy the
requirements of this Section 7.1(a);
(b) Annual Statements - within 105 days after the end of each fiscal year
of such Obligor, duplicate copies of,
(i) a consolidated balance sheet of such Obligor and its
Subsidiaries, as at the end of such year, and
(ii) consolidated statements of income, changes in shareholders'
equity and cash flows of such Obligor and its Subsidiaries, for
such year, setting forth in each case in comparative form the
figures for the previous fiscal year, all in reasonable detail,
prepared in accordance with GAAP, and accompanied
(A) by an opinion thereon of independent certified public
accountants of recognized national standing, which opinion
shall state that such financial statements present fairly, in
all material respects, the financial position of the
companies being reported upon and their results of operations
and cash flows and have been prepared in conformity with
GAAP, and that the examination of such accountants in
connection with such financial statements has been
15
made in accordance with generally accepted auditing
standards, and that such audit provides a reasonable basis
for such opinion in the circumstances, and
(B) a certificate of such accountants stating that they have
reviewed this Agreement and stating further whether, in
making their audit, they have become aware of any condition
or event that then constitutes a Default or an Event of
Default resulting from a breach of the provisions of any of
Sections 10.4(c), 10.5 and 10.6 hereof, and, if they are
aware that any such condition or event then exists,
specifying the nature and period of the existence thereof (it
being understood that such accountants shall not be liable,
directly or indirectly, for any failure to obtain knowledge
of any Default or Event of Default),
provided that the delivery within the time period specified above of such
Obligor's Annual Report on Form 10-K for such fiscal year (together with such
Obligor's annual report to shareholders, if any, prepared pursuant to Rule 14a-
3 under the Exchange Act) prepared in accordance with the requirements
therefor and filed with the Securities and Exchange Commission, together with
the accountant's certificate described in clause (B) above, shall be deemed to
satisfy the requirements of this Section 7.1(b);
(c) SEC and Other Reports - promptly upon their becoming available, one
copy of (i) each financial statement, report, notice or proxy statement
sent by such Obligor or any Subsidiary to public securities holders
generally, and (ii) each regular or periodic report, each registration
statement (without exhibits except as expressly requested by such
Noteholder), and each prospectus and all amendments thereto filed by such
Obligor or any Subsidiary with the Securities and Exchange Commission and
of all press releases and other statements made available generally by
such Obligor or any Subsidiary to the public concerning developments that
are Material;
(d) Notice of Default or Event of Default - promptly, and in any event
within five days after a Responsible Officer becoming aware of the
existence of any Default or Event of Default or that any Person has given
any notice or taken any action with respect to a claimed default
hereunder or that any Person has given any notice or taken any action
with respect to a claimed default of the type referred to in Section
12(g), a written notice specifying the nature and period of existence
thereof and what action the Company or the Guarantor, as the case may be,
is taking or proposes to take with respect thereto;
(e) ERISA Matters - promptly, and in any event within five days after a
Responsible Officer becoming aware of any of the following, a written
notice setting forth the nature thereof and the action, if any, that the
Company (or the Guarantor, as the case may be), or an ERISA Affiliate
proposes to take with respect thereto:
16
(i) with respect to any Plan, any reportable event, as defined in
section 4043(b) of ERISA and the regulations thereunder, for which
notice thereof has not been waived pursuant to such regulations as
in effect on the date hereof; or
(ii) the taking by the PBGC of steps to institute, or the threatening
by the PBGC of the institution of, proceedings under section 4042
of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan, or the receipt by any Obligor or any ERISA
Affiliate of a notice from a Multiemployer Plan that such action
has been taken by the PBGC with respect to such Multiemployer Plan;
or
(iii) any event, transaction or condition that could result in the
incurrence of any liability by any Obligor or any ERISA Affiliate
pursuant to Title I or IV of ERISA (other than claims in the
ordinary course or PBGC premiums required by Title IV of ERISA) or
the penalty or excise tax provisions of the Code relating to
employee benefit plans, or in the imposition of any Lien on any of
the rights, properties or assets of such Obligor or any ERISA
Affiliate pursuant to Title I or IV of ERISA or such penalty or
excise tax provisions, if such liability or Lien, taken together
with any other such liabilities or Liens then existing, could
reasonably be expected to have a Material Adverse Effect;
(f) Notices from Governmental Authority - promptly, and in any event within
30 days of receipt thereof, copies of any notice to any Obligor or any
Subsidiary from any Federal or state Governmental Authority relating to
any order, ruling, statute or other law or regulation that could
reasonably be expected to have a Material Adverse Effect;
(g) ACC Communications - promptly, and in any event within 30 days of
receipt thereof, copies of any Material communication to any Obligor or
any Subsidiary from the ACC or any Material filing by such Obligor or
Subsidiary with the ACC relating to any breach of the ACC Settlement
Agreement or any matter that could reasonably be expected to cause or
constitute a Material Adverse Effect; and
(h) Requested Information - with reasonable promptness, such other data and
information relating to the business, operations, affairs, financial
condition, assets or properties of each Obligor or any of its
Subsidiaries or relating to the ability of such Obligor to perform its
obligations under the Financing Documents to which it is a party as from
time to time may be reasonably requested by any such Noteholder.
7.2 Officer's Certificate
17
Each set of financial statements delivered to a Noteholder pursuant to
Section 7.1(a) or Section 7.1(b) hereof shall be accompanied by a certificate
of a Senior Financial Officer of the Obligor delivering such financial
statements setting forth:
(a) Covenant Compliance - if such Obligor is the Company, the information
(including detailed calculations) required in order to establish whether
the Company was in compliance with the requirements of Section 10.6
hereof during the quarterly or annual period covered by the statements
then being furnished (including with respect to such Section the
calculations of the minimum amount permissible under the terms of such
Section, and the calculation of the amount then in existence); and
(b) Event of Default - a statement that such officer has reviewed the
relevant terms hereof and has made, or caused to be made, under his or
her supervision, a review of the transactions and conditions of such
Obligor and, if such Obligor is the Company, its Subsidiaries from the
beginning of the quarterly or annual period covered by the statements
then being furnished to the date of the certificate and that such review
shall not have disclosed the existence during such period of any
condition or event that constitutes a Default or an Event of Default or,
if any such condition or event existed or exists (including, without
limitation, any such event or condition resulting from the failure of the
Company or any Subsidiary of the Company to comply with any Environmental
Law), specifying the nature and period of existence thereof and what
action such Obligor shall have taken or proposes to take with respect
thereto.
7.3 Inspection
Each Obligor shall permit the representatives of each Noteholder that is an
Institutional Investor:
(a) No Default - if no Default or Event of Default then exists, at the
expense of such Noteholder and upon reasonable prior notice to such
Obligor, to visit the principal executive office of such Obligor, to
discuss the affairs, finances and accounts of such Obligor and the
Subsidiaries of the Company with such Obligor's officers, and (with the
consent of such Obligor, which consent will not be unreasonably withheld)
its independent public accountants, and (with the consent of such
Obligor, which consent will not be unreasonably withheld) to visit the
other offices and properties of such Obligor and the Subsidiaries of the
Company, all at such reasonable times and as often as may be reasonably
requested in writing; and
(b) Default - if a Default or Event of Default then exists, at the expense
of such Obligor to visit and inspect any of the offices or Properties of
such Obligor or any Subsidiary of the Company, to examine all their
respective books of account, records, reports and other papers, to make
copies and extracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective officers and independent
public accountants (and by this provision such Obligor
18
authorizes said accountants to discuss the affairs, finances and accounts
of such Obligor and the Subsidiaries of the Company), all at such times
and as often as may be requested.
8. PREPAYMENT OF THE NOTES
8.1 Optional Prepayments with Make-Whole Amount
The Company may, at its option, upon notice as provided below, prepay at any
time all, or from time to time any part of, the Notes, in an amount not less
than $5,000,000 in the case of a partial prepayment, at 100% of the principal
amount so prepaid, plus the Make-Whole Amount determined for the prepayment
date with respect to such principal amount. The Company will give each
Noteholder written notice of each optional prepayment under this Section 8.1
not less than 30 days and not more than 60 days prior to the date fixed for
such prepayment. Each such notice shall specify such date, the aggregate
principal amount of Notes to be prepaid on such date, the principal amount of
each Note held by such holder to be prepaid (determined in accordance with
Section 8.2), and the interest to be paid on the prepayment date with respect
to such principal amount being prepaid, and shall be accompanied by a
certificate of a Senior Financial Officer of the Company as to the estimated
Make-Whole Amount due in connection with such prepayment (calculated as if the
date of such notice were the date of the prepayment), setting forth the
details of such computation. Two Business Days prior to such prepayment, the
Company shall deliver to each Noteholder a certificate of a Senior Financial
Officer of the Company specifying the calculation of such Make-Whole Amount as
of the specified prepayment date.
8.2 Allocation of Partial Prepayments
In the case of each partial prepayment of less than all of the outstanding
principal amount of the Notes, the principal amount of the Notes to be prepaid
shall be allocated among all of the Notes at the time outstanding in
proportion, as nearly as practicable, to the respective unpaid principal
amounts thereof not theretofore called for prepayment.
8.3 Maturity; Surrender, etc.
In the case of each prepayment of Notes pursuant to this Section 8, the
principal amount of each Note to be prepaid shall mature and become due and
payable on the date fixed for such prepayment, together with interest on such
principal amount accrued to such date and the applicable Make-Whole Amount or
Modified Make-Whole Amount (as the case may be), if any. From and after such
date, unless the Company shall fail to pay such principal amount when so due
and payable, together with the interest and Make-Whole Amount or Modified Make-
Whole Amount (as the case may be), if any, as aforesaid, interest on such
principal amount shall cease to accrue. Any Note paid or prepaid in full
shall be surrendered to the Company and cancelled and shall not be reissued,
and no Note shall be issued in lieu of any prepaid principal amount of any
Note.
19
8.4 Change of Control
Promptly, and in any event within five (5) Business Days after the occurrence
of a Change of Control, the Company will give written notice thereof to each
Noteholder (each such notice, a Change of Control Notice), which notice shall
(i) refer specifically to this Section 8.4 and describe such Change of Control
in reasonable detail, (ii) specify the Change of Control Prepayment Date
(which date shall be not less than forty five (45) days and not more than
sixty (60) days after the date of the giving of such Change of Control Notice)
and the Response Date in respect thereof and (iii) offer to prepay all Notes
at 100% of the unpaid principal amount of such Notes, together with interest
accrued thereon to the Change of Control Prepayment Date. Each Noteholder
shall notify the Company of such Noteholder's acceptance or rejection of such
offer by giving written notice of such acceptance or rejection to the Company
no later than the Response Date, and the Company shall prepay on the Change of
Control Prepayment Date all of the Notes held by each Noteholder who has
accepted such offer in accordance with this Section 8.4 at a price in respect
of each Note held by such Noteholder equal to 100% of the unpaid principal
amount of such Note, together with interest accrued thereon to the Change of
Control Prepayment Date, plus the Modified Make-Whole Amount determined for
the Change of Control Prepayment Date with respect to such principal amount;
provided that the failure by any Noteholder to respond to such offer in
writing on or before the Response Date shall be deemed to be an acceptance of
such offer in respect of such Change of Control.
8.5 Purchase of Notes
The Company will not and will not permit any Affiliate to purchase, redeem,
prepay or otherwise acquire, directly or indirectly, any of the outstanding
Notes except upon the payment or prepayment of the Notes in accordance with
the terms of this Agreement and the Notes. The Company will promptly cancel
all Notes acquired by it or any Affiliate pursuant to any payment, prepayment
or purchase of Notes pursuant to any provision of this Agreement and no Notes
may be issued in substitution or exchange for any such Notes.
8.6 Make-Whole Amount
The term Make-Whole Amount means, with respect to any Note, an amount equal to
the excess, if any, of the Discounted Value of the Remaining Scheduled
Payments with respect to the Called Principal of such Note over the amount of
such Called Principal, provided that the Make-Whole Amount may in no event be
less than zero. For the purposes of determining the Make-Whole Amount, the
following terms have the following meanings:
Called Principal means, with respect to any Note, the principal of such
Note that is to be prepaid pursuant to Section 8.1 or 8.4, or has become
or is declared to be immediately due and payable pursuant to Section
13.1, as the context requires.
20
Discounted Value means, with respect to the Called Principal of any
Note, the amount obtained by discounting all Remaining Scheduled Payments
with respect to such Called Principal from their respective scheduled due
dates to the Settlement Date with respect to such Called Principal, in
accordance with accepted financial practice and at a discount factor
(applied on the same periodic basis as that on which interest on the
Notes is payable) equal to the Reinvestment Yield with respect to such
Called Principal.
Reinvestment Yield means, with respect to the Called Principal of any
Note, 50 basis points over the yield to maturity implied by (i) the
yields reported, as of 10:00 A.M. (New York City time) on the second
Business Day preceding the Settlement Date with respect to such Called
Principal, on the display designated as "Page 678" on the Telerate
Access Service (or such other display as may replace Page 678 on Telerate
Access Service) for actively traded U.S. Treasury securities having a
maturity equal to the Remaining Average Life of such Called Principal as
of such Settlement Date, or (ii) if such yields are not reported as of
such time or the yields reported as of such time are not ascertainable,
the Treasury Constant Maturity Series Yields reported, for the latest day
for which such yields have been so reported as of the second Business Day
preceding the Settlement Date with respect to such Called Principal, in
Federal Reserve Statistical Release H.15 (519) (or any comparable
successor publication) for actively traded U.S. Treasury securities
having a constant maturity equal to the Remaining Average Life of such
Called Principal as of such Settlement Date. Such implied yield will be
determined, if necessary, by (a) converting U.S. Treasury xxxx quotations
to bond-equivalent yields in accordance with accepted financial practice
and (b) interpolating linearly between (1) the actively traded U.S.
Treasury security with the duration closest to and greater than the
Remaining Average Life and (2) the actively traded U.S. Treasury security
with the duration closest to and less than the Remaining Average Life.
Remaining Average Life means, with respect to any Called Principal, the
number of years (calculated to the nearest one-twelfth year) obtained by
dividing (i) such Called Principal into (ii) the sum of the products
obtained by multiplying (a) the principal component of each Remaining
Scheduled Payment with respect to such Called Principal by (b) the number
of years (calculated to the nearest one-twelfth year) that will elapse
between the Settlement Date with respect to such Called Principal and the
scheduled due date of suchRemaining Scheduled Payment.
Remaining Scheduled Payments means, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be due after the Settlement Date with respect to such
Called Principal if no payment of such Called Principal were made prior
to its scheduled due date, provided that if such Settlement Date is not a
date on which interest payments are due to be made under the terms of the
Notes, then the amount of the next succeeding scheduled interest payment
will be reduced by the amount of interest accrued to
21
such Settlement Date and required to be paid on such Settlement Date
pursuant to Section 8.1, 8.4 or 13.1.
Settlement Date means, with respect to the Called Principal of any
Note, the date on which such Called Principal is to be prepaid pursuant
to Section 8.1 or 8.4, or has become or is declared to be immediately due
and payable pursuant to Section 13.1, as the context requires.
9. AFFIRMATIVE COVENANTS
Each Obligor covenants that so long as any of the Notes are outstanding:
9.1 Compliance with Law
Such Obligor shall and the Company shall cause each of its Subsidiaries to
comply with all laws, ordinances or governmental rules or regulations to which
each of them is subject, including, without limitation, Environmental Laws,
and will obtain and maintain in effect all licenses, certificates, permits,
franchises and other governmental authorizations necessary to the ownership of
their respective properties or to the conduct of their respective businesses,
in each case to the extent necessary to ensure that non-compliance with such
laws, ordinances or governmental rules or regulations or failures to obtain or
maintain in effect such licenses, certificates, permits, franchises and other
governmental authorizations could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
9.2 Insurance
Such Obligor shall and the Company shall cause each of its Subsidiaries to
maintain, with financially sound and reputable insurers, insurance with
respect to their respective Properties and businesses against such casualties
and contingencies, of such types, on such terms and in such amounts (including
deductibles, co-insurance and self-insurance, if adequate reserves are
maintained with respect thereto) as is customary in the case of entities of
established reputations engaged in the same or a similar business and
similarly situated.
9.3 Maintenance of Properties
Such Obligor shall and the Company shall cause each of its Subsidiaries to
maintain and keep, or cause to be maintained and kept, their respective
Properties in good repair, working order and condition (other than ordinary
wear and tear), so that the business carried on in connection therewith may be
properly conducted at all times, provided that this Section 9.3 shall not
prevent such Obligor or any Subsidiary of the Company from discontinuing the
operation and the maintenance of any of its Properties if such discontinuance
is desirable in the conduct of its business and such Obligor has concluded
that such discontinuance could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
22
9.4 Payment of Taxes and Claims
Such Obligor shall and the Company shall cause each of its Subsidiaries to
file all tax returns required to be filed in any jurisdiction and to pay and
discharge all taxes shown to be due and payable on such returns and all other
taxes, assessments, governmental charges, or levies imposed on them or any of
their properties, assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have become delinquent
and all claims for which sums have become due and payable that have or might
become a Lien on properties or assets of such Obligor or any Subsidiary of the
Company, provided that neither such Obligor nor any Subsidiary of the Company
need pay any such tax or assessment or claims if (i) the amount, applicability
or validity thereof is contested by such Obligor or such Subsidiary on a
timely basis in good faith and in appropriate proceedings, and such Obligor or
such Subsidiary has established adequate reserves therefor in accordance with
GAAP on the books of such Obligor or such Subsidiary or (ii) the nonpayment of
all such taxes and assessments in the aggregate could not reasonably be
expected to have a Material Adverse Effect.
9.5 Corporate Existence, etc.
Such Obligor shall at all times preserve and keep in full force and effect its
corporate existence. Subject to Section 10.2, the Company shall at all times
preserve and keep in full force and effect the corporate existence of each of
its Subsidiaries (unless merged into such Obligor or a Subsidiary) and all
rights and franchises of the Company and its Subsidiaries unless, in the good
faith judgment of the Company, the termination of or failure to preserve and
keep in full force and effect such corporate existence, right or franchise
could not, individually or in the aggregate, have a Material Adverse Effect.
9.6 Corporate Separateness
The Guarantor shall at all times maintain its separate existence and,
specifically, shall conduct its affairs in accordance with the following:
(a) the Guarantor shall: (i) maintain and prepare separate financial
reports and financial statements in accordance with GAAP, showing its
assets and liabilities separate and apart from those of any other Person
other than its Subsidiaries, and will not have its assets listed on the
financial statement of any other Person (provided, that the Guarantor's
assets may be included in a consolidated financial statement of a Person
of which the Guarantor is a Subsidiary, if inclusion on such consolidated
financial statement is required to comply with the requirements of GAAP;
(ii) maintain its books, records and bank accounts separate from those of
its Affiliates and any other Person other than its Subsidiaries; and
(iii) not permit any Affiliate independent access to its bank accounts;
(b) the Guarantor shall not commingle or pool any of its funds or other
assets with those of any Affiliate or any other Person other than its
Subsidiaries, and it shall hold all of its assets in its own name;
23
(c) the Guarantor shall conduct its own business in its own name and shall
not operate, or purport to operate, collectively as a single or
consolidated business entity with respect to any Person other than its
Subsidiaries;
(d) the Guarantor shall, insofar as is consistent with commercial and
business circumstances affecting its business and financial condition,
remain solvent and pay its own debts, liabilities and expenses (including
overhead expenses, if any) only out of its own assets as the same shall
become due;
(e) the Guarantor has done, or caused to be done, and shall do, all things
necessary to observe all corporate formalities and other organizational
formalities of the jurisdiction in which it is organized, and preserve
its existence;
(f) the Guarantor shall, to the extent it utilizes stationary, invoices and
checks, maintain and utilize separate stationery, invoices and checks
bearing its own name;
(g) the Guarantor shall, at all times, hold itself out to the public as a
legal entity separate and distinct from any other Person other than its
Subsidiaries and shall correct any known misunderstanding regarding its
separate identity;
(h) the Guarantor shall not identify itself as a division of any other
Person;
(i) the Guarantor shall maintain its assets in such a manner that it will
not be costly or difficult to segregate, ascertain or identify its
individual assets from those of any Affiliate or any other Person other
than its Subsidiaries;
(j) the Guarantor shall not use its separate existence to abuse creditors
or to perpetrate a fraud, injury, or injustice on creditors in violation
of applicable law;
(k) the Guarantor shall not, in connection with the Transaction Documents,
act with an intent to hinder, delay, or defraud any of its creditors in
violation of applicable law; and
(l) the Guarantor shall not pledge its assets for the benefit of any
Person, except as permitted by the Financing Documents.
9.7 Rating of Notes
The Company shall appeal the designation from the Securities Valuation Office
of the National Association of Insurance Commissioners in respect of the Notes
of '3' and use commercially reasonable efforts to try to persuade such Office
to designate the Notes as '2' or higher, it being recognized that there is no
assurance that the Notes will be designated as '2' or higher.
24
10. NEGATIVE COVENANTS
Each Obligor covenants that so long as any of the Notes are outstanding:
10.1 Transactions with Affiliates
Such Obligor shall not and the Company shall not permit any of its
Subsidiaries to enter into directly or indirectly any transaction or Material
group of related transactions (including without limitation the purchase,
lease, sale or exchange of Properties of any kind or the rendering of any
service) with any Affiliate (other than the Company or another Subsidiary),
except in the ordinary course and pursuant to the reasonable requirements of
the Company's or such Subsidiary's business and upon fair and reasonable terms
no less favorable to such Obligor or such Subsidiary than would be obtainable
in a comparable arm's-length transaction with a Person not an Affiliate;
provided that the foregoing shall not prohibit (i) shared corporate or
administrative services and staffing with Affiliates, including without
limitation accounting, legal, human resources and treasury operations,
provided on customary terms for similarly situated companies and otherwise as
set forth above or on a fully allocated cost basis and (ii) transactions
conducted in a manner required by applicable law, rule or regulation.
10.2 Merger, Consolidation, etc.
(a) Such Obligor shall not consolidate with or merge with any other Person
or convey, transfer or lease substantially all of its assets in a single
transaction or series of transactions to any Person, and the Guarantor
shall not sell or otherwise transfer any shares of the stock (or any
options or warrants to purchase stock or other Securities exchangeable
for or convertible into stock) of the Company to any Person unless:
(i) the successor formed by such consolidation or the survivor of
such merger or the Person that acquires by conveyance, transfer or
lease substantially all of the assets of such Obligor as an
entirety or the transferee of such shares of stock, as the case may
be, (any such Person, in relation to any such transaction involving
the Company a Company Successor and any such Person, in relation to
any such transaction involving the Guarantor a Guarantor
Successor), shall have a credit rating in respect of its long-term
debt from Standard & Poor's Ratings Service (a division of McGraw
Hill Companies) of 'BBB' or higher or from Xxxxx'x Investor
Services, Inc. of 'Baa2' or higher;
(ii) any Company Successor shall be primarily engaged in the utility
business;
(iii) any Company Successor or Guarantor Successor shall be a solvent
corporation organized and existing under the laws of the United
States or any State thereof (including the District of Columbia);
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(iv) if any Company Successor or Guarantor Successor is not such
Obligor, such Company Successor or Guarantor Successor, as the case
may be, (i) shall have executed and delivered to each Noteholder
its assumption of the due and punctual performance and observance
of each covenant and condition of this Agreement, the Other
Agreements and the Notes and (ii) shall have caused to be delivered
to each Noteholder an opinion of nationally recognized independent
counsel, or other independent counsel reasonably satisfactory to
the Required Holders, to the effect that all agreements or
instruments effecting such assumption are enforceable in accordance
with their terms and comply with the terms hereof;
(v) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing;
(vi) in the case of any Company Successor, immediately after giving
effect to such transaction, such Company Successor would be
permitted by the provisions of Section 10.5 hereof, as if such
Section 10.5 applied to such Company Successor, to incur at least
$1.00 of additional Indebtedness owing to a Person other than a
Subsidiary of such Obligor; and
(vii) in the case of any Guarantor Successor, immediately after giving
effect to such transaction, the Consolidated Net Worth of such
Guarantor Successor is an amount at least equal to the amount
specified therefor in Section 10.6;
provided; that this Section 10.2(a) shall not apply to the consolidation
or merger of a Wholly-Owned Subsidiary of the Company into the Company.
(b) No such conveyance, transfer or lease of substantially all of the
assets of the Company shall have the effect of releasing the Company or
any successor Person that shall theretofore have become such in the
manner prescribed in this Section 10.2 from its liability under this
Agreement or the Notes, or the Guarantor from its obligations hereunder
or under the Guaranties, except that the Guarantor shall be released from
its obligations hereunder and under the Guaranties if, in the case of any
such transaction that is permitted by Section 10.2(a), the Company
Successor or Guarantor Successor, as the case may be, shall have (i)
executed and delivered to each Noteholder its assumption of the due and
punctual performance and observance of the obligations of the Guarantor
under this Agreement and under the Guaranties, and (ii) caused to be
delivered to each Noteholder an opinion of nationally recognized
independent counsel, or other independent counsel reasonably satisfactory
to the Required Holders, to the effect that all agreements or instruments
effecting such assumption are enforceable in accordance with their terms
and comply with the terms hereof.
10.3 Liens
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Such Obligor shall not, and the Company shall not permit any of its
Subsidiaries to, directly or indirectly create, incur, assume or permit to
exist (upon the happening of a contingency or otherwise) any Lien (other than
Permitted Liens) securing Indebtedness for borrowed money on or with respect
to any Property or asset (including, without limitation, any document or
instrument in respect of goods or accounts receivable) of such Obligor or any
such Subsidiary, whether now owned or held or hereafter acquired, or any
income or profits therefrom or assign or otherwise convey any right to receive
income or profits (unless it makes, or causes to be made, effective provision
whereby the Notes will be equally and ratably secured with any and all other
Indebtedness thereby secured so long as such other Indebtedness shall be so
secured, such security to be pursuant to an agreement reasonably satisfactory
to the Required Holders and, in any such case, the Notes shall have the
benefit, to the fullest extent that, and with such priority as, the holders of
the Notes may be entitled under applicable law, of an equitable Lien on such
Property).
10.4 Restricted Payments
The Company shall not at any time, declare or make, or incur any liability to
declare or make, any Restricted Payment unless:
(a) such Restricted Payment would not violate any provision of any statute
or other rule or regulation of any Governmental Authority applicable to
the Company;
(b) immediately after giving effect to such action no Default or Event of
Default would exist; and
(c) immediately after giving effect to such action the Company and its
Subsidiaries would be permitted by the provisions of Section 10.5 hereof
to incur at least $1.00 of additional Indebtedness owing to a Person
other than a Subsidiary of the Company.
10.5 Incurrence of Indebtedness
(a) The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume, guarantee, or otherwise
become directly or indirectly liable with respect to, any Indebtedness,
unless on the date the Company or such Subsidiary becomes liable with
respect to any such Indebtedness and immediately after giving effect
thereto and the concurrent retirement of any other Indebtedness:
(i) no Default or Event of Default exists;
(ii) (x) at any time from the date hereof until September 30, 2004,
the ratio of Consolidated Long Term Debt to Consolidated Total
Capitalization does not exceed 0.67 to 1.00, and (y) at any time
on or after September 30,
27
2004, the ratio of Consolidated Long Term Debt to Consolidated
Total Capitalization does not exceed 0.65 to 1.00; and
(iii) the Interest Coverage Ratio for the period of four consecutive
fiscal quarters ending on, or most recently ended prior to, such
date (or, with respect to any Indebtedness for which the Company or
such Subsidiary becomes liable on or before September 30, 2004, the
period from the date hereof to such date) is not less than 2.50 to
1.00;
provided; nothing in this Section 10.5(a) shall prevent the Company or
its Subsidiaries from creating, incurring, assuming, guaranteeing, or
otherwise becoming directly or indirectly liable with respect to Current
Debt and Permitted Reimbursement Obligations in an aggregate amount not
to exceed $5,000,000 or such greater amount as would be permitted in
accordance with clauses (ii) and (iii) of this Section 10.5(a); and
provided; nothing in this Section 10.5(a) shall prevent any extension,
renewal or refinancing of any Indebtedness of the Company or its
Subsidiaries, provided that the principal amount of such Indebtedness
outstanding immediately before giving effect to such extension, renewal
or refunding is not increased and no Default or Event of Default exists
at the time of such extension, renewal or refunding.
(b) For the purposes of this Section 10.5:
(i) any Person becoming a Subsidiary after the date hereof shall be
deemed, at the time it becomes a Subsidiary, to have incurred all
of its then outstanding Indebtedness and pro forma effect shall be
given to the earnings of such Person; and
(ii) upon the creation, incurrence or assumption of any Indebtedness,
any other Indebtedness shall be deemed to be retired concurrently
with such action if (A) such other Indebtedness is retired with the
proceeds of such Indebtedness and (B) such other Indebtedness is
retired within 60 days of such action.
10.6 Minimum Net Worth
(a) The Guarantor shall not, at any time, permit its Consolidated Net Worth
to be less than $50,000,000.
(b) The Company shall not, at any time, permit its Consolidated Net Worth
to be less than $26,000,000.
10.7 Anti-Terrorism Order
Such Obligor shall not, and shall not permit any of its Subsidiaries to, enter
into any legally binding contracts or agreements with any Sanctioned Person.
28
11. GUARANTY
11.1 The Guaranty
The Guarantor hereby guarantees to each Purchaser and their respective
successors and assigns the prompt payment in full when expressed to be due
(whether at stated maturity, upon acceleration or optional prepayment or
otherwise) of the principal of and interest on any Notes at any time and from
time to time outstanding and all other amounts from time to time owing by the
Company hereunder (including interest on any past-due principal, interest or
any other amount), in each case strictly in accordance with the express terms
hereof (such obligations of the Company being herein collectively called the
ElecCo Guaranteed Obligations).
In addition, the Guarantor hereby further agrees, as an independent
obligation, that, if the Company fails to pay in full when expressed to be due
(whether at stated maturity, upon acceleration or optional prepayment or
otherwise) any of the ElecCo Guaranteed Obligations strictly in accordance
with the express terms hereof, the Guarantor will promptly pay the same,
without any demand or notice whatsoever, and that in the case of any extension
of time of payment or renewal of any of the ElecCo Guaranteed Obligations, the
same will be paid in full when expressed to be due (whether at stated
maturity, upon acceleration or optional prepayment or otherwise) in accordance
with the terms of such extension or renewal.
11.2 Obligations Unconditional
The obligations of the Guarantor under Section 11.1 are absolute and
unconditional, irrespective of the value, genuineness, validity, regularity or
enforceability of the obligations of the Company hereunder or under any other
agreement or instrument referred to herein and, to the fullest extent
permitted by applicable law, irrespective of any other circumstance whatsoever
that might otherwise constitute a legal or equitable discharge or defense of a
surety or guarantor, it being the intent of this Section 11.2 that the
obligations of the Guarantor hereunder shall be absolute and unconditional
under any and all circumstances. Without limiting the generality of the
foregoing, the occurrence of one or more of the following shall not preclude
the exercise by the Purchasers of any right, remedy or power hereunder or
alter or impair the liability of the Guarantor hereunder, which shall remain
absolute and unconditional as described above:
(a) at any time or from time to time, without notice to the Guarantor, the
time for any performance of or compliance with any of the ElecCo
Guaranteed Obligations shall be extended, waived or renewed, or the
Company shall be released from any of the ElecCo Guaranteed Obligations,
or any of the ElecCo Guaranteed Obligations shall be subordinated in
right of payment to any other liability of the Company;
29
(b) any of the acts mentioned herein or any agreement or instrument
referred to herein or otherwise in connection with the ElecCo Guaranteed
Obligations shall be done or omitted;
(c) any of the ElecCo Guaranteed Obligations shall be accelerated or
otherwise become due prior to their stated maturity, or any of the ElecCo
Guaranteed Obligations shall be amended, supplemented, restated or
otherwise modified in any respect, or any right hereunder or under any
agreement or instrument referred to herein or otherwise in connection
with the ElecCo Guaranteed Obligations shall be waived, or any other
guarantee of any of the ElecCo Guaranteed Obligations or any security
therefor shall be released, substituted or exchanged in whole or in part
or otherwise dealt with;
(d) the Company or any other guarantor or obligor in respect of any of the
ElecCo Guaranteed Obligations (i) becomes insolvent or is unable to pay
its debts or fails or admits in writing its inability generally to pay
its debts as they become due, (ii) makes a general assignment,
arrangement or composition with or for the benefit of its creditors,
(iii) institutes or has instituted against it a proceeding seeking a
judgment of insolvency or bankruptcy or any other relief under any
bankruptcy or insolvency law or other similar law affecting creditors'
rights, or a petition is presented for its winding-up or liquidation,
(iv) seeks or becomes subject to the appointment of an administrator,
provisional liquidator, conservator, receiver, trustee, custodian or
other similar official for it or for all or substantially all its assets,
(v) has a secured party take possession of all or substantially all
its assets or has a distress, execution, attachment, sequestration or
other legal process levied, enforced or sued on or against all or
substantially all its assets or (vi) causes or is subject to any event
with respect to it which, under the applicable laws of any jurisdiction,
has an analogous effect to any of the events specified in clauses (i),
(ii), (iii), (iv) or (v) above (any proceeding referred to in this
paragraph is herein referred to as an Insolvency Proceeding);
(e) this Agreement or any agreement or instrument referred to herein shall
be rejected (including pursuant to Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx
Bankruptcy Code, as amended) by an administrator, provisional liquidator,
conservator, receiver, trustee, custodian or other similar official for
the Company or for all or substantially all of the Company's assets in
any Insolvency Proceeding;
(f) the occurrence of any Default or Event of Default hereunder or the
occurrence of any similar event (howsoever described) under any agreement
or instrument referred to herein;
(g) except as otherwise provided in Section 10.2(b), any consolidation or
amalgamation of the Company with, any merger of the Company with or into,
or any transfer by the Company of all or substantially all of the
Company's assets to, another Person, any change in the legal or
beneficial ownership of ownership
30
interests issued by the Company, or any other change whatsoever in the
objects, capital structure, constitution or business of the Company;
(h) any delay, failure or inability of the Company or any other guarantor
or obligor in respect of any of the ElecCo Guaranteed Obligations to
perform, willful or otherwise, any provision hereunder or any agreement
or instrument referred to herein or otherwise in connection with the
ElecCo Guaranteed Obligations;
(i) the failure or breach of any representation or warranty (whether
written or oral) made by the Company or any other Person herein or any
agreement or instrument referred to herein or otherwise in connection
with the ElecCo Guaranteed Obligations; or any event or circumstance
constituting fraud in the inducement or any other similar event or
circumstance;
(j) any action or failure to act by any Purchaser that adversely affects
the Guarantor's right of subrogation arising by reason of any performance
by the Guarantor of its obligations under this Section 11;
(k) any suit or other action brought by, or any judgment in favor of, any
beneficiaries or creditors of, the Company or any other Person for any
reason whatsoever, including any suit or action in any way disaffirming,
repudiating, rejecting or otherwise calling into question any issue,
matter or thing in respect of this Agreement or any agreement or
instrument referred to herein or otherwise in connection with the ElecCo
Guaranteed Obligations;
(l) any lack or limitation of status or of power, incapacity or disability
of the Company or any other guarantor or obligor in respect of any of the
ElecCo Guaranteed Obligations; or
(m) any change in the laws, rules or regulations of any jurisdiction, or
any present or future action or order of any Governmental Authority,
amending, varying or otherwise affecting the validity or enforceability
of any of the ElecCo Guaranteed Obligations or the obligations of any
other guarantor or obligor in respect of any of the ElecCo Guaranteed
Obligations.
The Guarantor hereby expressly waives diligence, presentment, demand of
payment, protest and all notices whatsoever, and any requirement that the
Purchasers exhaust any right, power or remedy (including filing any proof of
claim relating to the ElecCo Guaranteed Obligations in any Insolvency
Proceeding) or proceed against the Company under this Agreement or any
agreement or instrument referred to herein, or against any other Person under
any other guarantee of, or security for, any of the ElecCo Guaranteed
Obligations, it being understood that this Section 11 is a guarantee of
payment and not just collection.
11.3 Subrogation
31
The Guarantor hereby agrees that until the payment and satisfaction in full of
all ElecCo Guaranteed Obligations it shall not exercise any right or remedy
(including the filing of any proof of claim in any Insolvency Proceeding)
against the Company or any other guarantor or obligor in respect of any of the
ElecCo Guaranteed Obligations or any security therefor arising by reason of
any performance by the Guarantor of its obligations under this Section 11,
whether by subrogation or otherwise. In the event that, prior to the payment
and satisfaction in full of all ElecCo Guaranteed Obligations, any amount is
received by the Guarantor from the Company in respect of the performance by
the Guarantor of its obligations under Section 11.1, whether by subrogation or
otherwise, the Guarantor will promptly following receipt thereof pay such
amount to the Noteholders (to each Noteholder in proportion, as nearly as
practicable, to the unpaid principal amount of Notes held by such Noteholder),
for application to any ElecCo Guaranteed Obligations then owing, whether
matured or unmatured.
11.4 Reinstatement
The obligations of the Guarantor under this Section 11 shall be automatically
reinstated if and to the fullest extent that for any reason any payment by or
on behalf of the Company in respect of the ElecCo Guaranteed Obligations is
rescinded or must be otherwise restored by any holder of any of the ElecCo
Guaranteed Obligations, whether as a result of any Insolvency Proceeding or
otherwise, all as though such payment had not been made, and the Guarantor
agrees that it will indemnify each Noteholder on demand for all reasonable
costs and expenses (including the reasonable fees and disbursements of
counsel) incurred by such Purchaser in connection with such rescission or
restoration, including any such costs and expenses incurred in defending
against any claim alleging that such payment constituted a preference,
fraudulent transfer or similar payment under any bankruptcy, insolvency or
similar law.
11.5 Remedies Unaffected
The Guarantor agrees that, as between the Guarantor and the Purchasers the
ElecCo Guaranteed Obligations may be declared to be forthwith due and payable
as provided herein (and shall be deemed to have become automatically due and
payable in the circumstances provided in Section 13.1(a)) for purposes of
Section 11.1, notwithstanding any stay (including under the United States
Bankruptcy Code, as amended), injunction or other prohibition preventing the
same as against the Company, and that, in such event, the ElecCo Guaranteed
Obligations (whether or not due and payable by the Company) shall forthwith
become due and payable by the Guarantor for purposes of Section 11.1.
11.6 Continuing Guarantee; Liability in Respect of Successor
(a) The guarantee in this Section 11 is a continuing guarantee, and shall
apply to all ElecCo Guaranteed Obligations whenever arising.
(b) In the event that the Company shall consolidate or amalgamate with, or
merge with or into, or transfer all or substantially all its assets to,
another Person, except
32
as otherwise provided in Section 10.2(b), the Guarantor will continue to
be obligated hereunder in respect of the ElecCo Guaranteed Obligations,
whether or not the ElecCo Guaranteed Obligations are assumed by such
Person, and each reference herein to the Company shall thereafter instead
be a reference to such Person.
12. EVENTS OF DEFAULT
An "Event of Default" shall exist if any of the following conditions or events
shall occur and be continuing:
(a) the Company defaults in the payment of any principal or Make-Whole
Amount or Modified Make-Whole Amount, if any, on any Note when the same
becomes due and payable, whether at maturity or at a date fixed for
prepayment or by declaration or otherwise; or
(b) the Company defaults in the payment of any interest on any Note for
more than five Business Days after the same becomes due and payable; or
(c) any Obligor defaults in the performance of or compliance with any term
contained in Sections 7.1(d), 8.4, 9.5, or 10.1 through 10.7 (inclusive);
or
(d) any Obligor defaults in the performance of or compliance with any term
contained herein (other than those referred to in paragraphs (a), (b) and
(c) of this Section 12) and such default is not remedied within 30 days
after the earlier of (i) a Responsible Officer of such Obligor obtaining
actual knowledge of such default and (ii) such Obligor receiving written
notice of such default from any Noteholder (any such written notice to
be identified as a "notice of default" and to refer specifically to this
paragraph (d) of Section 12); or
(e) any representation or warranty made in writing by or on behalf of
Citizens or any Affiliate of Citizens or by any officer of Citizens or
such Affiliate in the ElecCo Purchase Agreement or in any writing
furnished in connection with the transactions contemplated thereby proves
to have been false or incorrect in any material respect on the date as of
which made provided that such representation or warranty pertains to an
event or condition that could reasonably be expected to cause or
constitute a Material Adverse Effect; or
(f) any representation or warranty made in writing by or on behalf of any
Obligor or by any officer of any Obligor in this Agreement or in any
writing furnished in connection with the transactions contemplated hereby
proves to have been false or incorrect in any material respect on the
date as of which made; or
(g) (i) any Subsidiary of the Guarantor is in default (as principal or as
guarantor or other surety) in the payment of any principal of or premium
or make-whole amount or interest on any Indebtedness that is outstanding
in an aggregate
33
principal amount of at least $4,000,000 beyond any period of grace
provided with respect thereto, or (ii) any such Subsidiary is in default
in the performance of or compliance with any term of any evidence of any
Indebtedness in an aggregate outstanding principal amount of at least
$4,000,000 or of any mortgage, indenture or other agreement relating
thereto or any other condition exists, and as a consequence of such
default or condition such Indebtedness has become, or has been declared,
due and payable before its stated maturity or before its regularly
scheduled dates of payment, or (iii) as a consequence of the occurrence
or continuation of any event or condition (other than the passage of
time or the right of the holder of Indebtedness to convert such
Indebtedness into equity interests), such Subsidiary has become
obligated to purchase or repay Indebtedness before its regular maturity
or before its regularly scheduled dates of payment in an aggregate
outstanding principal amount of at least $4,000,000; or
(h) (i) any Obligor is in default (as principal or as guarantor or other
surety) in the payment of any principal of or premium or make-whole
amount or interest on any Indebtedness that is outstanding in an
aggregate principal amount of at least $4,000,000 beyond any period of
grace provided with respect thereto, or (ii) any Obligor is in default in
the performance of or compliance with any term of any evidence of any
Indebtedness in an aggregate outstanding principal amount of at least
$4,000,000 or of any mortgage, indenture or other agreement relating
thereto or any other condition exists, and as a consequence of such
default or condition such Indebtedness has become, or has been declared
(or one or more Persons are entitled to declare such Indebtedness to
be), due and payable before its stated maturity or before its regularly
scheduled dates of payment, or (iii) as a consequence of the occurrence
or continuation of any event or condition (other than the passage of time
or the right of the holder of Indebtedness to convert such Indebtedness
into equity interests), (x) any Obligor has become obligated to purchase
or repay Indebtedness before its regular maturity or before its regularly
scheduled dates of payment in an aggregate outstanding principal amount
of at least $4,000,000, or (y) one or more Persons have the right to
require any Obligor so to purchase or repay such Indebtedness; or
(i) any Obligor or any Subsidiary (i) is generally not paying, or admits in
writing its inability to pay, its debts as they become due, (ii) files,
or consents by answer or otherwise to the filing against it of, a
petition for relief or reorganization or arrangement or any other
petition in bankruptcy, for liquidation or to take advantage of any
bankruptcy, insolvency, reorganization, moratorium or other similar law
of any jurisdiction, (iii) makes an assignment for the benefit of its
creditors, (iv) consents to the appointment of a custodian, receiver,
trustee or other officer with similar powers with respect to it or with
respect to any substantial part of its Property, (v) is adjudicated as
insolvent or to be liquidated, or (vi) takes corporate action for the
purpose of any of the foregoing; or
(j) a court or governmental authority of competent jurisdiction enters an
order appointing, without consent by any Obligor or any Subsidiary, a
custodian,
34
receiver, trustee or other officer with similar powers with respect to
any Obligor or any Subsidiary or with respect to any substantial part of
any of their Property, or constituting an order for relief or approving a
petition for relief or reorganization or any other petition in bankruptcy
or for liquidation or to take advantage of any bankruptcy or insolvency
law of any jurisdiction, or ordering the dissolution, winding-up or
liquidation of any Obligor or any Subsidiary, or any such petition shall
be filed against any Obligor or any Subsidiary and such petition shall
not be dismissed within 60 days; or
(k) a final judgment or judgments for the payment of money aggregating in
excess of $4,000,000 are rendered against the Company or any of its
Subsidiaries and which judgments are not, within 60 days after entry
thereof, bonded, discharged or stayed pending appeal, or are not
discharged within 60 days after the expiration of such stay; or
(l) if (i) any Plan shall fail to satisfy the minimum funding standards of
ERISA or the Code for any plan year or part thereof or a waiver of such
standards or extension of any amortization period is sought or granted
under section 412 of the Code, (ii) the PBGC shall have instituted
proceedings under ERISA section 4042 to terminate or appoint a trustee to
administer any Plan or the PBGC shall have notified any Obligor or any
ERISA Affiliate that a Plan may become a subject of any such proceedings,
(iii) the aggregate "amount of unfunded benefit liabilities" (within the
meaning of section 4001(a)(18) of ERISA) under all Plans, determined on a
termination basis as of the end of any Plan year in accordance with Title
IV of ERISA, shall exceed $30,000,000, (iv) any Obligor or any ERISA
Affiliate shall have incurred or is reasonably expected to incur any
liability pursuant to Title I or IV of ERISA (other than claims for
benefits in the ordinary course or PBGC premiums required under Title IV
of ERISA) or the penalty or excise tax provisions of the Code relating to
employee benefit plans, (v) any Obligor or any ERISA Affiliate withdraws
from any Multiemployer Plan, or (vi) any Obligor or any Subsidiary
establishes or amends any employee welfare benefit plan that provides
post-employment welfare benefits (other than Plans established at the
time of the Acquisition to cover retirees or former employees of Citizens
as required by the GasCo Purchase Agreement) in a manner that would
increase the liability of such Obligor or Subsidiary thereunder; and any
such event or events described in clauses (i) through (vi) above, either
individually or together with any other such event or events, would
reasonably be expected to have a Material Adverse Effect. As used in
this Section 12(l), the terms "employee benefit plan" and "employee
welfare benefit plan" shall have the respective meanings assigned to such
terms in Section 3 of ERISA; or
(m) the Guarantor shall fail to observe or perform any of its obligations
contained in Section 11 or shall renounce in writing its obligations with
respect thereto.
35
13. REMEDIES ON DEFAULT, ETC.
13.1 Acceleration
(a) If an Event of Default with respect to any Obligor described in Section
12(i) or 12(j) (other than an Event of Default described in clause (i) of
Section 12(i) or described in clause (vi) of Section 12(i) by virtue of
the fact that such clause encompasses clause (i) of Section 12(i)) has
occurred, all the Notes then outstanding shall automatically become
immediately due and payable.
(b) If any other Event of Default has occurred and is continuing, the
Required Holders may at any time at its or their option, by notice or
notices to the Company, declare all the Notes then outstanding to be
immediately due and payable.
(c) If any Event of Default described in Section 12(a) or 12(b) has
occurred and is continuing, any holder or holders of Notes at the time
outstanding affected by such Event of Default may at any time, at its or
their option, by notice or notices to the Company, declare all the Notes
held by it or them to be immediately due and payable.
Upon any Notes becoming due and payable under this Section 13.1, whether
automatically or by declaration, such Notes will forthwith mature and the
entire unpaid principal amount of such Notes, plus (x) all accrued and unpaid
interest thereon and (y) the Make-Whole Amount determined in respect of such
principal amount (to the full extent permitted by applicable law), shall all
be immediately due and payable, in each and every case without presentment,
demand, protest or further notice, all of which are hereby waived. The
Company acknowledges, and the parties hereto agree, that each Noteholder has
the right to maintain its investment in the Notes free from repayment by the
Company (except as herein specifically provided for) and that the provision
for payment of a Make-Whole Amount by the Company in the event that the Notes
are prepaid or are accelerated as a result of an Event of Default, is intended
to provide compensation for the deprivation of such right under such
circumstances.
13.2 Other Remedies
If any Default or Event of Default has occurred and is continuing, and
irrespective of whether any Notes have become or have been declared
immediately due and payable under Section 13.1, the holder of any Note at the
time outstanding may proceed to protect and enforce the rights of such holder
by an action at law, suit in equity or other appropriate proceeding, whether
for the specific performance of any agreement contained herein or in any Note,
or for an injunction against a violation of any of the terms hereof or
thereof, or in aid of the exercise of any power granted hereby or thereby or
by law or otherwise.
13.3 Rescission
36
At any time after any Notes have been declared due and payable pursuant to
clause (b) or (c) of Section 13.1, the Required Holders, by written notice to
the Company, may rescind and annul any such declaration and its consequences
if (a) the Company has paid all overdue interest on the Notes, all principal
of and Make-Whole Amount or Modified Make-Whole Amount, if any, on any Notes
that are due and payable and are unpaid other than by reason of such
declaration, and all interest on such overdue principal and Make-Whole Amount
or Modified Make-Whole Amount, if any, and (to the extent permitted by
applicable law) any overdue interest in respect of the Notes, at the Default
Rate, (b) all Events of Default and Defaults, other than non-payment of
amounts that have become due solely by reason of such declaration, have been
cured or have been waived pursuant to Section 18, and (c) no judgment or
decree has been entered for the payment of any monies due pursuant hereto or
to the Notes. No rescission and annulment under this Section 13.3 will extend
to or affect any subsequent Event of Default or Default or impair any right
consequent thereon.
13.4 No Waivers or Election of Remedies, Expenses, etc.
No course of dealing and no delay on the part of any Noteholder in exercising
any right, power or remedy shall operate as a waiver thereof or otherwise
prejudice such Noteholder's rights, powers or remedies. No right, power or
remedy conferred by this Agreement or by any Note upon any holder thereof
shall be exclusive of any other right, power or remedy referred to herein or
therein or now or hereafter available at law, in equity, by statute or
otherwise. Without limiting the obligations of the Company under Section 16,
the Company will pay to the each Noteholder on demand such further amount as
shall be sufficient to cover all costs and expenses of such Noteholder
incurred in any enforcement or collection under this Section 13, including,
without limitation, reasonable attorneys' fees, expenses and disbursements.
14. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES
14.1 Registration of Notes
The Company shall keep at its principal executive office a register for the
registration and registration of transfers of Notes. The name and address of
each Noteholder, each transfer thereof and the name and address of each
transferee of one or more Notes shall be registered in such register. Prior
to due presentment for registration of transfer, the Person in whose name any
Note shall be registered shall be deemed and treated as the owner and holder
thereof for all purposes hereof, and the Company shall not be affected by any
notice or knowledge to the contrary. The Company shall give to any holder of
a Note that is an Institutional Investor promptly upon request therefor, a
complete and correct copy of the names and addresses of all registered
Noteholders.
14.2 Transfer and Exchange of Notes
Upon surrender of any Note at the principal executive office of the Company
for registration of transfer or exchange (and in the case of a surrender for
registration of
37
transfer, duly endorsed or accompanied by a written instrument of transfer
duly executed by the registered holder of such Note or his attorney duly
authorized in writing and accompanied by the address for notices of each
transferee of such Note or part thereof), the Company shall execute and
deliver, at the Company's expense (except as provided below), one or more new
Notes (as requested by the holder thereof) in exchange therefor, in an
aggregate principal amount equal to the unpaid principal amount of the
surrendered Note. Each such new Note shall be payable to such Person as such
holder may request and shall be substantially in the form of Exhibit 1. Each
such new Note shall be dated and bear interest from the date to which interest
shall have been paid on the surrendered Note or dated the date of the
surrendered Note if no interest shall have been paid thereon. The Company may
require payment of a sum sufficient to cover any stamp tax or governmental
charge imposed in respect of any such transfer of Notes. Notes shall not be
transferred in denominations of less than $100,000, provided that if necessary
to enable the registration of transfer by a holder of its entire holding of
Notes, one Note may be in a denomination of less than $100,000. Any
transferee, by its acceptance of a Note registered in its name (or the name of
its nominee), shall be deemed to have made the representation set forth in
Section 6.2.
14.3 Replacement of Notes
Upon receipt by the Company of evidence reasonably satisfactory to it of the
ownership of and the loss, theft, destruction or mutilation of any Note (which
evidence shall be, in the case of an Institutional Investor, notice from such
Institutional Investor of such ownership and such loss, theft, destruction or
mutilation), and
(a) in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to it (provided that if the holder of such Note is, or is a
nominee for, an original Purchaser or another holder of a Note that is an
Institutional Investor, such Person's own unsecured agreement of
indemnity shall be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation thereof,
the Company at its own expense shall execute and deliver, in lieu thereof, a
new Note, dated and bearing interest from the date to which interest shall
have been paid on such lost, stolen, destroyed or mutilated Note or dated the
date of such lost, stolen, destroyed or mutilated Note if no interest shall
have been paid thereon.
15. PAYMENTS ON NOTES
15.1 Place of Payment
Subject to Section 15.2, payments of principal, Make-Whole Amount and Modified
Make-Whole Amount, if any, and interest becoming due and payable on the Notes
shall be made in New York, New York at the principal office of Xxxxx Fargo
Bank in such jurisdiction. The Company may at any time, by notice to each
Noteholder, change the
38
place of payment of the Notes so long as such place of payment shall be either
the principal office of the Company in such jurisdiction or the principal
office of a bank or trust company in such jurisdiction.
15.2 Home Office Payment
So long as you or your nominee shall be the holder of any Note, and
notwithstanding anything contained in Section 15.1 or in such Note to the
contrary, the Company will pay all sums becoming due on such Note for
principal, Make-Whole Amount or Modified Make-Whole Amount, if any, and
interest by the method and at the address specified for such purpose below
your name in Schedule A, or by such other method or at such other address as
you shall have from time to time specified to the Company in writing for such
purpose, without the presentation or surrender of such Note or the making of
any notation thereon, except that upon written request of the Company made
concurrently with or reasonably promptly after payment or prepayment in full
of any Note, you shall surrender such Note for cancellation, reasonably
promptly after any such request, to the Company at its principal executive
office or at the place of payment most recently designated by the Company
pursuant to Section 15.1. Prior to any sale or other disposition of any Note
held by you or your nominee you will, at your election, either endorse thereon
the amount of principal paid thereon and the last date to which interest has
been paid thereon or surrender such Note to the Company in exchange for a new
Note or Notes pursuant to Section 14.2. The Company will afford the benefits
of this Section 15.2 to any Institutional Investor that is the direct or
indirect transferee of any Note purchased by you under this Agreement and that
has made the same agreement relating to such Note as you have made in this
Section 15.2.
16. EXPENSES, ETC
16.1 Transaction Expenses
Whether or not the transactions contemplated hereby are consummated, the
Company will pay all costs and expenses (including reasonable attorneys' fees
of a special counsel and, if reasonably required, local, regulatory or other
counsel) incurred by you and each Other Purchaser or Noteholder in connection
with such transactions and in connection with any amendments, waivers or
consents under or in respect of this Agreement or the Notes (whether or not
such amendment, waiver or consent becomes effective), including, without
limitation: (a) the costs and expenses incurred in enforcing or defending (or
determining whether or how to enforce or defend) any rights under this
Agreement or the Notes or in responding to any subpoena or other legal process
or informal investigative demand issued in connection with this Agreement or
the Notes, or by reason of being a Noteholder, and (b) the costs and expenses,
including financial advisors' fees, incurred in connection with the insolvency
or bankruptcy of any Obligor or any Subsidiary or in connection with any work-
out or restructuring of the transactions contemplated hereby and by the Notes.
The Company will pay, and will save you and each other Noteholder harmless
from, all claims in respect of any fees, costs or expenses if any, of brokers
and finders (other than those retained by you).
39
16.2 Survival
The obligations of the Company under this Section 16 will survive the payment
or transfer of any Note, the enforcement, amendment or waiver of any provision
of this Agreement or the Notes, and the termination of this Agreement.
17. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT
All representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the Notes, the purchase or
transfer by you of any Note or portion thereof or interest therein and the
payment of any Note, and may be relied upon by any subsequent Noteholder,
regardless of any investigation made at any time by or on behalf of you or any
other Noteholder. All statements contained in any certificate or other
instrument delivered by or on behalf of any Obligor pursuant to this Agreement
shall be deemed representations and warranties of such Obligor under this
Agreement. Subject to the preceding sentence, this Agreement and the Notes
embody the entire agreement and understanding between you and the Obligors and
supersede all prior agreements and understandings relating to the subject
matter hereof.
18. AMENDMENT AND WAIVER
18.1 Requirements
This Agreement and the Notes may be amended, and the observance of any term
hereof or of the Notes may be waived (either retroactively or prospectively),
with (and only with) the written consent of the Obligors and the Required
Holders, except that (a) no amendment or waiver of any of the provisions of
Section 1, 2, 3, 4, 5, 6 or 22 hereof, or any defined term (as it is used
therein), will be effective as to you unless consented to by you in writing,
and (b) no such amendment or waiver may, without the written consent of each
Noteholder affected thereby, (i) subject to the provisions of Section 13
relating to acceleration or rescission, change the amount or time of any
prepayment or payment of principal of, or reduce the rate or change the time
of payment or method of computation of interest or of the Make-Whole Amount or
Modified Make-Whole Amount on, the Notes, (ii) change the percentage of the
principal amount of the Notes the holders of which are required to consent to
any such amendment or waiver, or (iii) amend any of Sections 8, 12(a), 12(b),
13, 18 or 21.
18.2 Solicitation of Holders of Notes
(a) Solicitation. The Company will provide each Noteholder (irrespective
of the amount of Notes then owned by it) with sufficient information,
sufficiently far in advance of the date a decision is required, to enable
such Noteholder to make an informed and considered decision with respect
to any proposed amendment, waiver or consent in respect of any of the
provisions hereof or of the Notes. The Company will deliver executed or
true and correct copies of each amendment,
40
waiver or consent effected pursuant to the provisions of this Section 18
to each Noteholder promptly following the date on which it is executed
and delivered by, or receives the consent or approval of, the requisite
holders of Notes.
(b) Payment. No Obligor will directly or indirectly pay or cause to be paid
any remuneration, whether by way of supplemental or additional interest,
fee or otherwise, or grant any security, to any Noteholder as
consideration for or as an inducement to the entering into by any
Noteholder or any waiver or amendment of any of the terms and provisions
hereof unless such remuneration is concurrently paid, or security is
concurrently granted, on the same terms, ratably to each Noteholder even
if such Noteholder did not consent to such waiver or amendment.
18.3 Binding Effect, etc.
Any amendment or waiver consented to as provided in this Section 18 applies
equally to all Noteholders and is binding upon them and upon each future
Noteholder and upon the Company without regard to whether any Note has been
marked to indicate such amendment or waiver. No such amendment or waiver will
extend to or affect any obligation, covenant, agreement, Default or Event of
Default not expressly amended or waived or impair any right consequent
thereon. No course of dealing between the Company and any Noteholder nor any
delay in exercising any rights hereunder or under any Note shall operate as a
waiver of any rights of any holder of such Note. As used herein, the term
"this Agreement" and references thereto shall mean this Agreement as it may
from time to time be amended or supplemented.
18.4 Notes held by Company, etc.
Solely for the purpose of determining whether the holders of the requisite
percentage of the aggregate principal amount of Notes then outstanding
approved or consented to any amendment, waiver or consent to be given under
this Agreement or the Notes, or have directed the taking of any action
provided herein or in the Notes to be taken upon the direction of the holders
of a specified percentage of the aggregate principal amount of Notes then
outstanding, Notes directly or indirectly owned by the Company or any of its
Affiliates shall be deemed not to be outstanding.
19. NOTICES
All notices and communications provided for hereunder shall be in writing and
sent (a) by telecopy if the sender on the same day sends a confirming copy of
such notice by a recognized overnight delivery service (charges prepaid), or
(b) by registered or certified mail with return receipt requested (postage
prepaid), or (c) by a recognized overnight delivery service (with charges
prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or it at the address specified
for such communications in Schedule A , or at such other address as
you or it shall have specified to the Company in writing,
41
(ii) if to any other Noteholder, to such Noteholder at such address as
such other Noteholder shall have specified to the Company in
writing,
(iii) if to the Company, to the Company at its address set forth at the
beginning hereof to the attention of the Chief Financial Officer,
or at such other address as the Company shall have specified to
each Noteholder in writing, or
(iv) if to the Guarantor, to the Guarantor at UniSource Energy
Services, Inc., Xxx Xxxxx Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxx
00000 to the attention of the Chief Financial Officer, or at such
other address as the Guarantor shall have specified to each
Noteholder in writing.
Notices under this Section 19 will be deemed given only when actually
received.
20. REPRODUCTION OF DOCUMENTS
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by you at the Closing (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished to you, may be reproduced by you by any
photographic, photostatic, microfilm, microcard, miniature photographic or
other similar process and you may destroy any original document so reproduced.
The Obligors agree and stipulate that, to the extent permitted by applicable
law, any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding (whether or not the
original is in existence and whether or not such reproduction was made by you
in the regular course of business) and any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
This Section 20 shall not prohibit any Obligor or any Noteholder from
contesting any such reproduction to the same extent that it could contest the
original, or from introducing evidence to demonstrate the inaccuracy of any
such reproduction.
21. CONFIDENTIAL INFORMATION
For the purposes of this Section 21, Confidential Information means
information delivered to you by or on behalf of any Obligor or any Subsidiary
in connection with the transactions contemplated by or otherwise pursuant to
this Agreement that is proprietary in nature and that was clearly marked or
labeled or otherwise adequately identified when received by you as being
confidential information of such Obligor or such Subsidiary, provided that
such term does not include information that (a) was publicly known or
otherwise known to you prior to the time of such disclosure, (b) subsequently
becomes publicly known through no act or omission by you or any person acting
on your behalf, (c) otherwise becomes known to you other than through
disclosure by any Obligor or any Subsidiary or (d) constitutes financial
statements delivered to you under Section 7.1 that are otherwise publicly
available. You will maintain the confidentiality of such
42
Confidential Information in accordance with procedures adopted by you in good
faith to protect confidential information of third parties delivered to you,
provided that you may deliver or disclose Confidential Information to (i) your
directors, officers, employees, agents, attorneys and affiliates (to the
extent such disclosure reasonably relates to the administration of the
investment represented by your Notes), (ii) your financial advisors and other
professional advisors who agree to hold confidential the Confidential
Information substantially in accordance with the terms of this Section 21,
(iii) any other Noteholder, (iv) any Institutional Investor to which you sell
or offer to sell such Note or any part thereof or any participation therein
(if such Person has agreed in writing prior to its receipt of such
Confidential Information to be bound by the provisions of this Section 21),
(v) any Person from which you offer to purchase any security of the Company
(if such Person has agreed in writing prior to its receipt of such
Confidential Information to be bound by the provisions of this Section 21),
(vi) any federal or state regulatory authority having jurisdiction over you,
(vii) the National Association of Insurance Commissioners or any similar
organization, or any nationally recognized rating agency that requires access
to information about your investment portfolio or (viii) any other Person to
which such delivery or disclosure may be necessary or appropriate (w) to
effect compliance with any law, rule, regulation or order applicable to you,
(x) in response to any subpoena or other legal process, (y) in connection with
any litigation to which you are a party or (z) if an Event of Default has
occurred and is continuing, to the extent you may reasonably determine such
delivery and disclosure to be necessary or appropriate in the enforcement or
for the protection of the rights and remedies under your Notes and this
Agreement. Each Noteholder, by its acceptance of a Note, will be deemed to
have agreed to be bound by and to be entitled to the benefits of this Section
21 as though it were a party to this Agreement. On reasonable request by the
Company in connection with the delivery to any Noteholder of information
required to be delivered to such Noteholder under this Agreement or requested
by such Noteholder (other than a Noteholder that is a party to this Agreement
or its nominee), such Noteholder will enter into an agreement with the
Obligors embodying the provisions of this Section 21.
22. SUBSTITUTION OF PURCHASER
You shall have the right to substitute any one of your Affiliates as the
purchaser of the Notes that you have agreed to purchase hereunder, by written
notice to the Company, which notice shall be signed by both you and such
Affiliate, shall contain such Affiliate's agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in Section 6. Upon
receipt of such notice, wherever the word "you" is used in this Agreement
(other than in this Section 22), such word shall be deemed to refer to such
Affiliate in lieu of you. In the event that such Affiliate is so substituted
as a purchaser hereunder and such Affiliate thereafter transfers to you all of
the Notes then held by such Affiliate, upon receipt by the Company of notice
of such transfer, wherever the word "you" is used in this Agreement (other
than in this Section 22), such word shall no longer be deemed to refer to such
Affiliate, but shall refer to you, and you shall have all the rights of an
original holder of the Notes under this Agreement.
43
23. MISCELLANEOUS
23.1 Successors and Assigns
All covenants and other agreements contained in this Agreement by or on behalf
of any of the parties hereto bind and inure to the benefit of their respective
successors and assigns (including, without limitation, any subsequent
Noteholder) whether so expressed or not.
23.2 Payments Due on Non-Business Days
Anything in this Agreement or the Notes to the contrary notwithstanding, any
payment of principal of or Make-Whole Amount or Modified Make-Whole Amount or
interest on any Note that is due on a date other than a Business Day shall be
made on the next succeeding Business Day without including the additional days
elapsed in the computation of the interest payable on such next succeeding
Business Day.
23.3 Severability
Any provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.
23.4 Construction
Each covenant contained herein shall be construed (absent express provision to
the contrary) as being independent of each other covenant contained herein, so
that compliance with any one covenant shall not (absent such an express
contrary provision) be deemed to excuse compliance with any other covenant.
Where any provision herein refers to action to be taken by any Person, or
which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person.
23.5 Counterparts
This Agreement may be executed in any number of counterparts, each of which
shall be an original but all of which together shall constitute one
instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.
23.6 Governing Law
This Agreement shall be construed in accordance with, and this Agreement and
all matters arising out of or relating in any way whatsoever to this Agreement
(whether in contract, tort or otherwise) shall be governed by, the law of the
State of New York.
44
If you are in agreement with the foregoing, please sign the form of agreement
on the accompanying counterpart of this Agreement and return it to the Company
and the Guarantor, whereupon the foregoing shall become a binding agreement
between you, the Company and the Guarantor.
Very truly yours,
UNS ELECTRIC, INC.
By
-----------------------------
Name:
Title:
UNISOURCE ENERGY SERVICES, INC.
By
-----------------------------
Name:
Title:
The foregoing is hereby
agreed to as of the
date thereof.
XXXX XXXXXXX LIFE INSURANCE COMPANY
By
-----------------------------
Name:
Title:
XXXX XXXXXXX VARIABLE
LIFE INSURANCE COMPANY
By
-----------------------------
Name:
Title:
INVESTORS PARTNER
LIFE INSURANCE COMPANY
By
-----------------------------
Name:
Title:
XXXX XXXXXXX INSURANCE
COMPANY OF VERMONT
By
-----------------------------
Name:
Title:
XXXXXXX SACHS INTERNATIONAL*
_______________________________
By
-----------------------------
Name:
Title:
-----------------------------------------------------------------------------
* Notwithstanding the first sentence of Section 6.1 of this Agreement, the
Company acknowledges and agrees that (i) Xxxxxxx Xxxxx International is
executing this Agreement in connection with a collateral debt obligation
transaction (the CDO Transaction) pursuant to which Xxxx Xxxxxxx Life
Insurance Company will serve as the portfolio advisor to Signature 7 L.P.,
which is an institutional investor, (ii) if the closing of the CDO Transaction
occurs, Xxxxxxx Sachs International will sell the Notes to Signature 7 L.P.
and (iii) the representations and warranties made by Xxxxxxx Xxxxx
International in the first sentence of Section 6.1 of this Agreement shall be
construed in light of the circumstances described in (i) and (ii) above.
TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA
By
-----------------------------
Name:
Title:
CIT COMMUNICATIONS FINANCE CORPORATION
By
-----------------------------
Name:
Title:
SCHEDULE B
DEFINED TERMS
As used herein, the following terms have the respective meanings set forth
below or set forth in the Section hereof following such term:
ACC means the Arizona Corporation Commission.
ACC Settlement Agreement means the settlement agreement dated as of April 1,
2003 between the Staff of the ACC Utilities Division, UniSource Energy, Tucson
Electric Power and Citizens.
Acquisition is defined in Section 1.1(c).
Acquisition Documents means the ElecCo Purchase Agreement and the agreements
and instruments referred to therein.
Affiliate means, at any time, and with respect to any Person, (a) any other
Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person, and (b) any Person beneficially owning or holding, directly
or indirectly, 10% or more of any class of voting or equity interests of any
Obligor or any Subsidiary or any corporation of which any Obligor and its
Subsidiaries beneficially own or hold, in the aggregate, directly or
indirectly, 10% or more of any class of voting or equity interests. As used
in this definition, Control means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise. Unless the context otherwise clearly requires, any reference to an
"Affiliate" is a reference to an Affiliate of an Obligor.
Assets is defined in Section 1.1(c).
Business Day means any day other than a Saturday, a Sunday or a day on which
commercial banks in New York City are required or authorized to be closed.
Capital Lease means, at any time, a lease with respect to which the lessee is
required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
Capital Lease Obligation means, with respect to any Person and a Capital
Lease, the amount of the obligation of such Person as the lessee under such
Capital Lease which would, in accordance with GAAP, appear as a liability on a
balance sheet of such Person.
Change of Control means any of the following events or circumstances:
48
(a) the failure of UniSource Energy directly or indirectly to beneficially
own in the aggregate at least a majority of the shares of the Guarantor's
voting stock outstanding; and
(b) the acquisition after the date hereof by any person (as such term is
used in section 13(d) and section 14(d)(2) of the Exchange Act as in
effect on the date of the Closing) other than UniSource Energy or related
persons constituting a group (as such term is used in Rule 13d-5 under
the Exchange Act as in effect on the date of the Closing) of the power to
elect, appoint or cause the election or appointment of at least a
majority of the members of the board of directors of the Guarantor,
through beneficial ownership of the capital stock of the Guarantor or
otherwise; provided that the acquisition by any such person or group of
the power to elect at least a majority of the Board of Directors of
UniSource Energy shall not be deemed to constitute the acquisition of the
power to elect at least a majority of the Board of Directors of the
Guarantor by a person other than UniSource Energy for the purpose of this
subsection (b).
Change of Control Notice is defined in Section 8.4.
Change of Control Prepayment Date is defined in Section 8.4.
Citizens means Citizens Communications Company, a corporation incorporated
under the law of the State of Delaware.
Closing is defined in Section 3.
Code means the Internal Revenue Code of 1986, as amended from time to time,
and the rules and regulations promulgated thereunder from time to time.
Company means UNS Electric, Inc., a corporation incorporated under the law of
the State of Arizona.
Company Successor is defined in Section 10.2(a)(i).
Confidential Information is defined in Section 21.
Consolidated Debt means, with respect to any Obligor as of any date of
determination, the total of all Indebtedness of such Obligor and its
Subsidiaries outstanding on such date, after eliminating all offsetting debits
and credits between such Obligor and its Subsidiaries and all other items
required to be eliminated in the course of the preparation of consolidated
financial statements of such Obligor and its Subsidiaries in accordance with
GAAP.
Consolidated Income Available for Interest Charges means, with respect to any
period, Consolidated Net Income of the Company for such period plus all
amounts deducted in the computation thereof on account of (a) Interest
Charges, (b) taxes imposed on or measured by income or excess profits, and (c)
the amount of all depreciation and
49
amortization allowances and other non cash expenses of the Company and its
Subsidiaries for such period.
Consolidated Long Term Debt means, as of any date of determination, the total
of all Long Term Debt of the Company and its Subsidiaries outstanding on such
date, after eliminating all offsetting debits and credits between the Company
and its Subsidiaries and all other items required to be eliminated in the
course of the preparation of consolidated financial statements of the Company
and its Subsidiaries in accordance with GAAP
Consolidated Net Income means, with respect to any Obligor and with reference
to any fiscal period, the net income (or loss) of such Obligor and its
Subsidiaries for such period (taken as a cumulative whole), as determined in
accordance with GAAP, after eliminating all offsetting debits and credits
between such Obligor and its Subsidiaries and all other items required to be
eliminated in the course of the preparation of consolidated financial
statements of such Obligor and its Subsidiaries in accordance with GAAP,
adjusted to exclude (a) any extraordinary gain or loss reflected in the net
income (or loss) for the Company and its Subsidiaries for such period and (b)
any cumulative effect of a change in accounting principles reflected in the
net income (or loss) for the Company and its Subsidiaries for such period.
Consolidated Net Worth means, with respect to any Person at any time:
(a) the total assets of such Person and its Subsidiaries which would be
shown as assets on a consolidated balance sheet of such Person and its
Subsidiaries as of such time prepared in accordance with GAAP, after
eliminating all amounts properly attributable to minority interests, if
any, in the stock and surplus of Subsidiaries; minus
(b) the total liabilities of such Person and its Subsidiaries which would
be shown as liabilities on a consolidated balance sheet of such Person
and its Subsidiaries as of such time prepared in accordance with GAAP;
minus
(c) the net book value of all assets (other than intangible assets eligible
for cost recovery through regulatory rates) of such Person and its
Subsidiaries, after deducting any reserves applicable thereto, which
would be treated as intangible under GAAP, including, without limitation,
good will, trademarks, trade names, service marks, brand names,
copyrights, patents, unamortized debt discount and expense, and
organizational expenses.
Consolidated Total Capitalization means at any time, the sum of Consolidated
Net Worth of the Company and Consolidated Debt of the Company at such time.
Current Debt means, with respect to any Person, all Indebtedness of such
Person which by its terms or by the terms of any instrument or agreement
relating thereto matures on demand or within one year from the date of the
creation thereof and is not directly or
50
indirectly renewable or extendible at the option of the obligor in respect
thereof to a date one year or more from such date without meeting the
conditions applicable to a new borrowing.
Current Maturities of Long Term Debt means, at any time and with respect to
any item of Long Term Debt, the portion of such Long Term Debt outstanding at
such time which by the terms of such Long Term Debt or the terms of any
instrument or agreement relating thereto is due on demand or within one year
from such time (whether by sinking fund, other required prepayment or final
payment at maturity) and is not directly or indirectly renewable, extendible
or refundable at the option of the obligor under an agreement or firm
commitment in effect at such time to a date one year or more from such time.
Default means an event or condition the occurrence or existence of which
would, with the lapse of time or the giving of notice or both, become an Event
of Default.
Default Rate means that rate of interest that is 2% per annum above the rate
of interest stated in clause (a) of the first paragraph of the Notes.
Distribution means, in respect of any corporation, association or other
business entity:
(a) dividends or other distributions or payments on capital stock or other
equity interest of such corporation, association or other business entity
(except distributions in such stock or other equity interest); and
(b) the redemption or acquisition of such stock or other equity interests
or of warrants, rights or other options to purchase such stock or other
equity interests (except when solely in exchange for such stock or other
equity interests) unless made, contemporaneously, from the net proceeds
of a sale of such stock or other equity interests.
ElecCo Guaranteed Obligations is defined in Section 11.1.
ElecCo Purchase Agreement is defined in Section 1.1(c).
Environmental Laws means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or
the release of any materials into the environment, including but not limited
to those related to hazardous substances or wastes, air emissions and
discharges to waste or public systems.
ERISA means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the rules and regulations promulgated thereunder from
time to time in effect.
51
ERISA Affiliate means, with respect to an Obligor, any trade or business
(whether or not incorporated) that is treated as a single employer together
with such Obligor under section 414 of the Code.
Event of Default is defined in Section 12.
Exchange Act means the Securities Exchange Act of 1934, as amended.
Fair Market Value means, at any time and with respect to any Property, the
sale value of such Property that would be realized in an arm's-length sale at
such time between an informed and willing buyer and an informed and willing
seller (neither being under a compulsion to buy or sell).
Financing Documents means this Agreement, the Other Agreements, and the Notes.
GAAP means generally accepted accounting principles as in effect from time to
time in the United States of America.
GasCo means UNS Gas, Inc., a corporation incorporated under the law of the
State of Arizona.
GasCo Note Purchase and Guaranty Agreement means the Note Purchase and
Guaranty Agreement dated as of the date hereof between GasCo, the Guarantor
and the Purchasers.
GasCo Notes means the notes issued by GasCo pursuant to the GasCo Note
Purchase and Guaranty Agreement.
Governmental Approval means all approvals, permits, waivers, exemptions,
consents, variances, franchises, registrations, authorizations, licenses or
similar orders of, or from, any Governmental Authority.
Governmental Authority means:
(a) the government of
(i) the United States of America or any State or other political
subdivision thereof, or
(ii) any jurisdiction in which any Obligor or any Subsidiary thereof
conducts all or any part of its business, or which asserts
jurisdiction over any Properties of any Obligor or any Subsidiary
thereof, or
(b) any entity exercising executive, legislative, judicial, regulatory or
administrative functions of, or pertaining to, any such government.
Governmental Rule means any statute, law, regulation, ordinance, rule,
judgment, order, decree, permit, license, concession, directive, guideline,
policy or rule of common law,
52
requirement of, or other governmental restriction or any similar form of
decision of or determination by, or any interpretation or administration of
any of the foregoing by, any Governmental Authority, whether now or hereafter
in effect.
Guaranties means, collectively, the guaranty set forth in Section 11 of this
Agreement and the Other Agreements.
Guarantor means UniSource Energy Services, Inc., a corporation incorporated
under the law of the State of Arizona.
Guarantor Successor is defined in Section 10.2(a)(i).
Guaranty Obligation means, with respect to any Person, any obligation (except
the endorsement in the ordinary course of business of negotiable instruments
for deposit or collection) of such Person guaranteeing or in effect
guaranteeing any Indebtedness, dividend or other obligation of any other
Person in any manner, whether directly or indirectly, including (without
limitation) obligations incurred through an agreement, contingent or
otherwise, by such Person:
(a) to purchase such Indebtedness or obligation or any Property
constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment of such
Indebtedness or obligation, or (ii) to maintain any working capital or
other balance sheet condition or any income statement condition of any
other Person or otherwise to advance or make available funds for the
purchase or payment of such Indebtedness or obligation;
(c) to lease Properties or to purchase Properties or services primarily for
the purpose of assuring the owner of such Indebtedness or obligation of
the ability of any other Person to make payment of the Indebtedness or
obligation; or
(d) otherwise to assure the owner of such Indebtedness or obligation
against loss in respect thereof.
In any computation of the Indebtedness or other liabilities of the obligor
under any Guaranty Obligation, the Indebtedness or other obligations that are
the subject of such Guaranty Obligation shall be assumed to be direct
obligations of such obligor.
Hazardous Material means any and all pollutants, toxic or hazardous wastes or
any other substances that might pose a hazard to health or safety, the removal
of which may be required or the generation, manufacture, refining, production,
processing, treatment, storage, handling, transportation, transfer, use,
disposal, release, discharge, spillage, seepage, or filtration of which is or
shall be restricted, prohibited or penalized by any applicable law (including,
without limitation, asbestos, urea formaldehyde foam insulation and
polycholorinated biphenyls).
53
holder means, with respect to any Note, the Person in whose name such Note is
registered in the register maintained by the Company pursuant to Section 14.1.
Indebtedness with respect to any Person means, at any time, without
duplication,
(a) its liabilities for borrowed money and its redemption obligations in
respect of mandatorily redeemable Preferred Stock;
(b) its liabilities for the deferred purchase price of Property acquired by
such Person (excluding accounts payable arising in the ordinary course of
business but including all liabilities created or arising under any
conditional sale or other title retention agreement with respect to any
such Property);
(c) all liabilities appearing on its balance sheet in accordance with GAAP
in respect of Capital Leases;
(d) all liabilities for borrowed money secured by any Lien with respect to
any Property owned by such Person (whether or not it has assumed or
otherwise become liable for such liabilities);
(e) all its liabilities in respect of letters of credit or instruments
serving a similar function issued or accepted for its account by banks
and other financial institutions (whether or not representing
obligations for borrowed money);
(f) Swaps of such Person; and
(g) any Guaranty Obligation of such Person with respect to liabilities of a
type described in any of clauses (a) through (f) hereof.
Indebtedness of any Person shall include all obligations of such Person of the
character described in clauses (a) through (g) to the extent such Person
remains legally liable in respect thereof notwithstanding that any such
obligation is deemed to be extinguished under GAAP.
Insolvency Proceeding is defined in Section 11.2(d).
Institutional Investor means (a) any original purchaser of a Note and any
Affiliate thereof, (b) any holder of a Note holding more than $4,000,000 of
the aggregate principal amount of the Notes then outstanding and any Affiliate
thereof, and (c) any bank, trust company, savings and loan association or
other financial institution, any pension plan, any investment company, any
insurance company, any broker or dealer, or any other similar financial
institution or entity, regardless of legal form, and any Affiliate thereof.
Interest Charges means, with respect to any period, the sum (without
duplication) of the following (in each case, eliminating all offsetting debits
and credits between the Company and its Subsidiaries and all other items
required to be eliminated in the course of the preparation of consolidated
financial statements of the Company and its
54
Subsidiaries in accordance with GAAP): (a) all interest in respect of
Indebtedness of the Company and its Subsidiaries (including imputed interest
on Capital Lease Obligations) deducted in determining Consolidated Net Income
for such period, together with all interest capitalized or deferred during
such period and not deducted in determining Consolidated Net Income for such
period, and (b) to the extent actually paid, all debt discount and expense
amortized or required to be amortized in the determination of Consolidated Net
Income for such period.
Interest Coverage Ratio means, with respect to the Company for any period, the
ratio of (a) Consolidated Income Available for Interest Charges for such
period to (b) Interest Charges for such period.
Lien means, with respect to any Person, any mortgage, lien, pledge, charge,
security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease, upon or
with respect to any Property or asset of such Person (including in the case of
stock, stockholder agreements, voting trust agreements and all similar
arrangements).
Long Term Debt means, with respect to any Person, all Indebtedness of such
Person which by its terms or by the terms of any instrument or agreement
relating thereto matures, or which is otherwise payable or unpaid, one year or
more from, or is directly or indirectly renewable or extendible at the option
of the obligor in respect thereof to a date one year or more (including,
without limitation, an option of such obligor under a revolving credit or
similar agreement obligating the lender or lenders to extend credit over a
period of one year or more) from, the date of the creation thereof, provided
that Long Term Debt shall include, as at any date of determination, Current
Maturities of Long Term Debt.
Make-Whole Amount is defined in Section 8.6.
Material means, with respect to an Obligor, material in relation to the
business, operations, affairs, financial condition, assets, Properties or
prospects of such Obligor and its Subsidiaries taken as a whole.
Material Adverse Effect means, with respect to an Obligor, a material adverse
effect on (a) the business, operations, affairs, financial condition, assets
or Properties of such Obligor and its Subsidiaries taken as a whole, or (b)
the ability of such Obligor to perform its obligations under this Agreement
and the Notes, or (c) the validity or enforceability of this Agreement or the
Notes.
Memorandum is defined in Section 5.3.
Modified Make-Whole Amount means the Make-Whole Amount; provided that the
definition of "Reinvestment Yield'' in the definition of Make-Whole Amount
shall be amended such that 50 basis points shall be replaced with 150 basis
points.
55
Multiemployer Plan means any Plan that is a "multiemployer plan" (as such term
is defined in section 4001(a)(3) of ERISA).
Noteholders means the holders from time to time of the Notes.
Notes is defined in Section 1.
Officer's Certificate means, with respect to an Obligor, a certificate of a
Senior Financial Officer of such Obligor or of any other officer of such
Obligor whose responsibilities extend to the subject matter of such
certificate.
Other Agreements is defined in Section 2.
Other Purchasers is defined in Section 2.
PBGC means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA or any successor thereto.
Person means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization, or a government or
agency or political subdivision thereof.
Permitted Lien means, with respect to any Person, each of the following:
(a) Liens for taxes, assessments or other governmental charges which are
not yet due and payable or the payment of which is not at the time
required by Section 9.4 of this Agreement;
(b) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen and other similar Liens, in each case, incurred in
the ordinary course of business for sums not yet due and payable or the
payment of which is not at the time required by Section 9.4 of this
Agreement;
(c) Liens (other than any Lien imposed by ERISA) incurred or deposits made
in the ordinary course of business (i) in connection with workers'
compensation, unemployment insurance and other types of social security
or retirement benefits, or (ii) to secure (or to obtain letters of credit
that secure) the performance of tenders, statutory obligations, surety
bonds, appeal bonds, bids, leases (other than Capital Leases),
performance bonds, purchase, construction or sales contracts and other
similar obligations, in each case not incurred or made in connection with
the borrowing of money, the obtaining of advances or credit or the
payment of the deferred purchase price of Property;
(d) any attachment or judgment Lien, unless the judgment it secures shall
not, within sixty days after the entry thereof, have been discharged or
execution thereof stayed pending appeal, or shall not have been
discharged within sixty days after the expiration of any such stay;
56
(e) leases or subleases granted to others, easements, rights-of-way,
restrictions and other similar charges or encumbrances, in each case
incidental to, and not interfering with, the ordinary conduct of the
business of the Company, provided that such Liens do not, in the
aggregate, materially detract from the value of such Property;
(f) any Lien created to secure all or any part of the purchase price, or to
secure Indebtedness incurred or assumed to pay all or any part of the
purchase price or cost of construction, of property (or any improvement
thereon) acquired or constructed by such Person or a Subsidiary of such
Person after the date of the Closing, provided that:
(i) any such Lien shall extend solely to the item or items of such
property (or improvement thereon) so acquired or constructed and,
if required by the terms of the instrument originally creating such
Lien, other property (or improvement thereon) which is an
improvement to or is acquired for specific use in connection with
such acquired or constructed property (or improvement thereon) or
which is real property being improved by such acquired or
constructed property (or improvement thereon);
(ii) the principal amount of the Indebtedness secured by any such Lien
shall not, at the time such Lien is created, exceed an amount equal
to the lesser of (A) the cost to such Person or such Subsidiary of
the property (or improvement thereon) so acquired or constructed
and (B) the Fair Market Value (as determined in good faith by the
board of directors of such Person) of such property (or improvement
thereon) at the time of such acquisition or construction; and
(iii) any such Lien shall be created contemporaneously with, or within
90 days after, the acquisition or construction of such property;
(g) Liens in existence on the date of the Closing securing the payment or
performance of any liabilities assumed by the Company pursuant to the
Acquisition Documents; and
(h) with respect to any Asset which consists of a leasehold or other
possessory interest in real property, Liens to which the underlying fee
estate in such real property is subject that do not and will not result
in a Material Adverse Effect.
Permitted Reimbursement Obligation means any liability of the Company of the
type referred to in clause (e) of the definition of "Indebtedness" provided
that such liability is not created in connection with a letter of credit or
instrument serving a similar function related to Indebtedness for money
borrowed and provided such liability is immediately due and payable upon the
related payment under such letter of credit or similar instrument.
57
Plan means, with respect to an Obligor, an "employee benefit plan" (as defined
in section 3(3) of ERISA) that is subject to Title IV of ERISA and Section 412
of the Code and that is or, within the preceding five years, has been
established or maintained, or to which contributions are or, within the
preceding five years, have been made or required to be made, by such Obligor
or any ERISA Affiliate or with respect to which such Obligor or any ERISA
Affiliate may have any liability.
Preferred Stock means any class of capital stock of a corporation that is
preferred over any other class of capital stock of such corporation as to the
payment of dividends or the payment of any amount upon liquidation or
dissolution of such corporation.
Property or Properties means, unless otherwise specifically limited, real or
personal property of any kind, tangible or intangible, xxxxxx or inchoate.
PUHCA means the Public Utility Holding Company Act of 1935, as amended.
QPAM Exemption means Prohibited Transaction Class Exemption 84-14 issued by
the United States Department of Labor.
Required Holders means, at any time, the holders of at least 51% in principal
amount of the Notes at the time outstanding (exclusive of Notes then owned by
the Company or any of its Affiliates).
Response Date is defined in Section 8.4.
Responsible Officer means any Senior Financial Officer of an Obligor and any
other officer of an Obligor with responsibility for the administration of the
relevant portion of this agreement.
Restricted Payment means any Distribution in respect of any Person or any
Subsidiary of such Person (other than on account of capital stock or other
equity interests of a Subsidiary owned legally and beneficially by such Person
or another Subsidiary of such Person), including, without limitation, any
Distribution resulting in the acquisition by such Person of Securities which
would constitute treasury stock. For purposes of this Agreement, the amount
of any Restricted Payment made in Property shall be the greater of (x) the
Fair Market Value of such Property (as determined in good faith by the board
of directors (or equivalent governing body) of the Person making such
Restricted Payment) and (y) the net book value thereof on the books of such
Person, in each case determined as of the date on which such Restricted
Payment is made.
Sanctioned Person means (i) any Person designated in the list of Specially
Designated Nationals and Blocked Persons published by the Office of Foreign
Assets Control of the U.S. Department of the Treasury, as amended from time to
time; and (ii) any other Person with which transactions are prohibited under
U.S. Economic Sanctions Law.
Securities Act means the Securities Act of 1933, as amended from time to time.
58
Security has the meaning set forth in section 2(1) of the Securities Act.
Senior Financial Officer means, with respect to any Person, the chief
financial officer, principal accounting officer, treasurer or comptroller of
such Person.
Subsidiary means, as to any Person, any corporation, association or other
business entity in which such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries owns sufficient equity or
voting interests to enable it or them (as a group) ordinarily, in the absence
of contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if
more than a 50% interest in the profits or capital thereof is owned by such
Person or one or more of its Subsidiaries or such Person and one or more of
its Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of
its Subsidiaries). Unless the context otherwise clearly requires, any
reference to a Subsidiary is a reference to a Subsidiary of the Guarantor.
Swaps means, with respect to any Person, payment obligations with respect to
interest rate swaps, currency swaps and similar obligations obligating such
Person to make payments, whether periodically or upon the happening of a
contingency. For the purposes of this Agreement, the amount of the obligation
under any Swap shall be the amount determined in respect thereof as of the end
of the then most recently ended fiscal quarter of such Person, based on the
assumption that such Swap had terminated at the end of such fiscal quarter,
and in making such determination, if any agreement relating to such Swap
provides for the netting of amounts payable by and to such Person thereunder
or if any such agreement provides for the simultaneous payment of amounts by
and to such Person, then in each such case, the amount of such obligation
shall be the net amount so determined.
Transaction Documents means the Financing Documents and the Acquisition
Documents.
UniSource Energy means UniSource Energy Corporation, a corporation
incorporated under the law of the State of Arizona.
U.S. Economic Sanctions Law means (a) the International Emergency Economic
Powers Act of 1977, as amended, the Trading with the Enemy Act of 1917, as
amended, and any executive order issued thereunder and in effect from time to
time and (b) the foreign assets control regulations of the U.S. Department of
the Treasury, codified at Title 31, Subtitle B, Chapter V of the Code of
Federal Regulations, as amended, and any enabling legislation thereof.
Wholly-Owned Subsidiary means, at any time, any Subsidiary one hundred percent
(100%) of all of the equity interests (except directors' qualifying shares)
and voting interests of which are owned by any one or more of any Obligor and
such Obligor's other Wholly-Owned Subsidiaries at such time.
59
EXHIBIT 1
FORM OF NOTE
UNS ELECTRIC, INC.
7.61% SENIOR NOTE DUE AUGUST 11, 2008
No. [-------] [Date]
$[-------] PPN 90312# AA 8
FOR VALUE RECEIVED, the undersigned, UNS ELECTRIC, INC. (herein called the
Company), a corporation organized and existing under the laws of the State of
Arizona, hereby promises to pay to [-----------], or registered assigns, the
principal sum of [------------------] DOLLARS on August 11, 2008, with
interest (computed on the basis of a 360-day year of twelve 30-day months) (a)
on the unpaid balance thereof at the rate of 7.61% per annum from the date
hereof, payable semiannually, on the 15th day of February and August in each
year, commencing with the February or August next succeeding the date hereof,
until the principal hereof shall have become due and payable, and (b) to the
extent permitted by law on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any overdue
payment of any Make-Whole Amount or Modified Make-Whole Amount (each as
defined in the Note Purchase Agreements referred to below), payable
semiannually as aforesaid (or, at the option of the registered holder hereof,
on demand), at a rate per annum from time to time equal to 9.61%.
Payments of principal of, interest on and any Make-Whole Amount or Modified
Make-Whole Amount with respect to this Note are to be made in lawful money of
the United States of America in New York, New York or at such other place as
the Company shall have designated by written notice to the holder of this Note
as provided in the Note Purchase Agreements referred to below.
This Note is one of the Senior Notes (herein called the Notes) issued pursuant
to separate Note Purchase and Guaranty Agreements, dated as of August 11, 2003
(as from time to time amended, the Note Purchase Agreements), between the
Company, UniSource Energy Services, Inc. and the respective Purchasers named
therein and is entitled to the benefits thereof. Each holder of this Note
will be deemed, by its acceptance hereof, (i) to have agreed to the
confidentiality provisions set forth in Section 21 of the Note Purchase
Agreements and (ii) to have made the representation set forth in Section 6.2
of the Note Purchase Agreements. This Note is guaranteed pursuant to and in
accordance with the terms of the Note Purchase Agreement. Subject to the
terms of said Note Purchase
Agreement, the holder of this Note is entitled to enforce the provisions of
such Note Purchase Agreement, and to enjoy the benefits thereof.
This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment
and for all other purposes, and the Company will not be affected by any notice
to the contrary.
The Company will make required prepayments of principal on the dates and in
the amounts specified in the Note Purchase Agreements. This Note is also
subject to optional prepayment, in whole or from time to time in part, at the
times and on the terms specified in the Note Purchase Agreements, but not
otherwise.
If an Event of Default, as defined in the Note Purchase Agreements, occurs and
is continuing, the principal of this Note may be declared or otherwise become
due and payable in the manner, at the price (including any applicable Make-
Whole Amount or Modified Make-Whole Amount) and with the effect provided in
the Note Purchase Agreements.
This Note shall be construed in accordance with, and this Note and all matters
arising out of or relating in any way whatsoever to this Note (whether in
contract, tort or otherwise) shall be governed by, the law of the State of New
York.
UNS ELECTRIC, INC.
By __________________________
Name:
Title:
August 11, 2003
UNS ELECTRIC, INC.
UNISOURCE ENERGY SERVICES, INC.
GUARANTEED SENIOR NOTES DUE AUGUST 11, 2008
==========================================
NOTE PURCHASE AND
GUARANTY AGREEMENT
==========================================
