Exhibit 99.2
Execution Copy
UNS GAS, INC.
UNISOURCE ENERGY SERVICES, INC.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ 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 GAS, 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
GasCo 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 (i) 6.23%
guaranteed senior notes due August 11, 2011 in an aggregate
principal amount of $50,000,000 (the Series A Notes)
and (ii) 6.23% guaranteed senior notes due August 11, 2015 in
an aggregate principal amount of $50,000,000 (the Series B
Notes and, together with the Series A Notes, 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 Series A
Notes and the Series B Notes shall be substantially in the
form set out in Exhibit 1-A and Exhibit 1-B, respectively,
with such changes therefrom, if any, as may be approved by
you and the Company. The Series of a Note refers to whether
a Note is a Series A Note or a Series B Note.
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 and the respective Series
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 and
respective Series 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 ▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ 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 of each Series to be
purchased by you in the form of a single Note of such Series
(or such greater number of Notes of such Series 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 4945086759 at ▇▇▇▇▇ Fargo Bank, ABA Number ▇▇▇▇▇▇▇▇▇.
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.
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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:
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
GasCo 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
▇▇▇▇▇▇ ▇▇▇▇ 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 ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.,
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
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the Company hereby instructs its counsel to deliver such
opinion to you), and (c) from Freshfields Bruckhaus ▇▇▇▇▇▇▇▇
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.
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, ElecCo, the Guarantor
and the Purchasers shall enter into the ElecCo 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 each Series of
Notes.
4.10 Changes in Corporate Structure
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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 GasCo Purchase Agreement.
4.11 Acquisition Transaction
(a) You shall have received a true and correct copy of the
GasCo Purchase Agreement. The GasCo 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 GasCo
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
ElecCo 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:
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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
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
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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 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
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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.
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.
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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 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
▇▇▇▇, 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 ▇▇▇▇, 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
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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 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
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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 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 GasCo 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.
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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 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 GasCo
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 GasCo 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.
Page 12
(c) With respect to such Obligor and its Affiliates, the
GasCo 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 GasCo Purchase Agreement and each other
agreement implementing 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
Page 13
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 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") ▇▇-▇ (▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇,
▇▇▇▇), ▇▇ (▇▇) 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.
Page 14
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
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
Page 15
(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 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
Page 16
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:
(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
Page 17
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
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
Page 18
(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 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, any Series 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 holder of such
Series of Notes 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 the Series of Notes to be prepaid on
such date, the Series and 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 holder of Notes of the
Series to be prepaid 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 any Series, the
principal amount of the Notes of such Series to be prepaid
shall be allocated among all of the Notes of such Series 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
Page 19
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.
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
Page 20
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.
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 ▇▇▇▇ 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 such Remaining
Scheduled Payment.
Page 21
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 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,
Page 22
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.
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
Page 23
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;
(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.
Page 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 ▇▇▇▇▇'▇ 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);
Page 25
(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
Page 26
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,
Page 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 $7,000,000 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 $43,000,000.
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.
Page 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 GasCo 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 GasCo 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 GasCo 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 GasCo Guaranteed Obligations shall be
extended, waived or renewed, or the Company shall be
released from any of the GasCo Guaranteed Obligations, or
any of the GasCo Guaranteed Obligations shall be
subordinated in right of payment to any other liability of
the Company;
Page 29
(b) any of the acts mentioned herein or any agreement or
instrument referred to herein or otherwise in connection
with the GasCo Guaranteed Obligations shall be done or
omitted;
(c) any of the GasCo Guaranteed Obligations shall be
accelerated or otherwise become due prior to their stated
maturity, or any of the GasCo 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 GasCo Guaranteed Obligations shall be waived, or
any other guarantee of any of the GasCo 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 GasCo 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 ▇▇▇▇▇▇▇
▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ 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
Page 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 GasCo
Guaranteed Obligations to perform, willful or otherwise, any
provision hereunder or any agreement or instrument referred
to herein or otherwise in connection with the GasCo
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 GasCo 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 GasCo 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 GasCo
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 GasCo
Guaranteed Obligations or the obligations of any other
guarantor or obligor in respect of any of the GasCo
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 GasCo 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 GasCo Guaranteed
Obligations, it being understood that this Section 11 is a
guarantee of payment and not just collection.
11.3 Subrogation
Page 31
The Guarantor hereby agrees that until the payment and
satisfaction in full of all GasCo 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 GasCo 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 GasCo 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 GasCo 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 GasCo Guaranteed Obligations is
rescinded or must be otherwise restored by any holder of any
of the GasCo 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 GasCo 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
GasCo 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 GasCo 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
Page 32
as otherwise provided in Section 10.2(b), the Guarantor will
continue to be obligated hereunder in respect of the GasCo
Guaranteed Obligations, whether or not the GasCo 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 GasCo 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
Page 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,
Page 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.
Page 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
Page 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
Page 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) of the
same Series 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-A or Exhibit 1-B, as
applicable. 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 of the same Series, 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 ▇▇▇▇▇ Fargo Bank
in such jurisdiction. The Company may at any time, by
notice to each Noteholder, change the
Page 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).
Page 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,
Page 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,
Page 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., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ 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
Page 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.
Page 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.
Page 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 GAS, INC.
By ____________________________
Name:
Title:
UNISOURCE ENERGY SERVICES, INC.
By ____________________________
Name:
Title:
The foregoing is hereby agreed to as of the date thereof.
▇▇▇▇ ▇▇▇▇▇▇▇ LIFE INSURANCE COMPANY
By ____________________________
Name:
Title:
▇▇▇▇ ▇▇▇▇▇▇▇ VARIABLE
LIFE INSURANCE COMPANY
By ____________________________
Name:
Title:
INVESTORS PARTNER
LIFE INSURANCE COMPANY
By ____________________________
Name:
Title:
▇▇▇▇ ▇▇▇▇▇▇▇ INSURANCE
COMPANY OF VERMONT
By ____________________________
Name:
Title:
TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA
By ____________________________
Name:
Title:
ALLSTATE LIFE INSURANCE COMPANY
By ____________________________
Name:
Title: Authorized Signatory
By ____________________________
Name:
Title: Authorized Signatory
Page 47
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 GasCo 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:
Page 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 Gas, 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
Page 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
Page 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 means UNS Electric, Inc., a corporation
incorporated under the law of the State of Arizona.
ElecCo Note Purchase and Guaranty Agreement means the
Note Purchase and Guaranty Agreement dated as of the date
hereof between ElecCo, the Guarantor and the Purchasers.
ElecCo Notes means the notes issued by ElecCo pursuant
to the ElecCo Note Purchase and Guaranty Agreement.
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,
Page 51
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.
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 Guaranteed Obligations is defined in Section 11.1.
GasCo Purchase Agreement is defined in Section 1.1(c).
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.
Page 52
Governmental Rule means any statute, law, regulation,
ordinance, rule, judgment, order, decree, permit,
license, concession, directive, guideline, policy or
rule of common law, requirement of, or other
governmental restriction or any similar form of
decision of or determination by, or any interpretation
or administration of any of the foregoing by, any
Governmental Authority, whether now or hereafter in
effect.
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
Page 53
applicable law (including, without limitation, asbestos, urea
formaldehyde foam insulation and polycholorinated biphenyls).
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.
Page 54
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
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.
Page 55
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.
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;
Page 56
(d) any attachment or judgment Lien, unless the judgment it
secures shall not, within sixty days after the entry
thereof, have been discharged or execution thereof stayed
pending appeal, or shall not have been discharged within
sixty days after the expiration of any such stay;
(e) leases or subleases granted to others, easements,
rights-of-way, restrictions and other similar charges or
encumbrances, in each case incidental to, and not
interfering with, the ordinary conduct of the business of
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
Page 57
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.
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, ▇▇▇▇▇▇ 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.
Page 58
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.
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.
Series is defined in Section 1.2.
Series A Notes is defined in Section 1.2.
Series B Notes is defined in Section 1.2.
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.
Page 59
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.
Page 60
EXHIBIT 1-A
FORM OF SERIES A NOTE
UNS GAS, INC.
6.23% SERIES A SENIOR NOTE DUE AUGUST 11, 2011
No. [_____] [Date]
$[_______] PPN 90312* AA 2
FOR VALUE RECEIVED, the undersigned, UNS GAS, 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, 2011, 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 6.23% 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 8.23%.
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 a series of 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 GAS, INC.
By_________________________
Name:
Title:
EXHIBIT 1-B
FORM OF SERIES B NOTE
UNS GAS, INC.
6.23% SENIOR NOTE DUE AUGUST 11, 2015
No. [_____] [Date]
$[_______] PPN 90312* AB 0
FOR VALUE RECEIVED, the undersigned, UNS GAS, 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, 2015, 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 6.23% 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 8.23%.
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 a series of Senior Notes (herein called
the Notes) issued pursuant to separate Note Purchase
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 GAS, INC.
By_________________________
Name:
Title:
August 11, 2003
UNS GAS, INC.
UNISOURCE ENERGY SERVICES, INC.
SERIES A GUARANTEED SENIOR NOTES DUE AUGUST 11, 2011
SERIES B GUARANTEED SENIOR NOTES DUE AUGUST 11, 2015
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NOTE PURCHASE AND
GUARANTY AGREEMENT
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