EXHIBIT 4.2
PLEDGE AGREEMENT
This PLEDGE AGREEMENT, dated as of April 15, 2005, between UNISOURCE
ENERGY CORPORATION, an Arizona corporation (the "Pledgor" or the "Borrower"),
and UNION BANK OF CALIFORNIA, N.A., as administrative agent (in such capacity,
the "Administrative Agent") for the lenders (the "Lenders") from time to time
parties to the Credit Agreement, dated as of April 15, 2005 (as the same may be
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among the Borrower, the Lenders, The Bank of New York, as
Syndication Agent, Commerzbank AG, New York and Grand Cayman Branches, as
Documentation Agent, and the Administrative Agent.
Recitals
A. Pursuant to the Credit Agreement, the Lenders have severally agreed
to make Loans and other extensions of credit (collectively, the "Extensions of
Credit") to the Borrower upon the terms and subject to the conditions set forth
therein. One or more Lenders or affiliates of Lenders may from time to time
enter into Hedge Agreements (as defined in the Credit Agreement) with the
Borrower.
B. It is a condition precedent to the obligation of the Lenders to
make their respective Extensions of Credit to the Borrower under the Credit
Agreement that the Pledgor shall have executed and delivered this Pledge
Agreement to the Administrative Agent for the benefit of the Lenders.
C. The Pledgor is the legal and beneficial owner of the shares of
stock, membership interests, partnership interests or similar equity interests,
as the case may be (such shares of stock, membership interests, partnership
interests or similar equity interests, as the case may be, together with any
shares of stock, membership interests, partnership interests or similar equity
interests, as the case may be, described in Section 8(b), the "Pledged Shares"),
described on Schedule I hereto, as such Schedule may be updated or amended from
time to time, and issued by the Persons named therein, which Pledged Shares
constitute the percentage of all the issued and outstanding shares of capital
stock, membership interests, partnership interests or similar equity interests,
as the case may be, of such Persons identified on such Schedule I, as such
Schedule may be updated or amended from time to time. The Pledgor is the legal
and beneficial owner of the Indebtedness owed to the Pledgor from any Subsidiary
(such Indebtedness, together with any future Indebtedness at any time owed to
the Pledgor from any Subsidiary, the "Pledged Debt") described on Schedule II
hereto, as such Schedule may be updated or amended from time to time.
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Agreement
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NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent, the Syndication Agent, the Documentation Agent and the
Lenders to enter into the Credit Agreement and to make Loans thereunder, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Pledgor hereby agrees with the Administrative Agent,
for the benefit of the Lenders, as follows:
1. Defined Terms.
(a) Unless otherwise defined herein, terms defined in the Credit
Agreement and used herein shall have the meanings given to them in the
Credit Agreement.
(b) As used herein, the term "Obligations" means the collective
reference to (i) the unpaid principal of and interest on the Loans and all
other obligations and liabilities of any nature of the Borrower to the
Administrative Agent or any Lender (including, without limitation, interest
accruing at the then-applicable rate provided in the Credit Agreement after
the maturity of the Loans and interest accruing at the then-applicable rate
provided in the Credit Agreement after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to the Borrower, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding),
whether direct or indirect, absolute or contingent, due or to become due,
now existing or hereafter incurred, that may arise under, out of, or in
connection with, the Credit Agreement, the other Loan Documents or any
other documents made, delivered or given in connection therewith, whether
on account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation,
all fees and disbursements of counsel to the Administrative Agent or to the
Lenders that are required to be paid by the Borrower or any Subsidiary
pursuant to the terms of the Credit Agreement or any other Loan Document)
and (ii) all obligations and liabilities of the Borrower to any Lender or
any affiliate of a Lender, whether direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter incurred, that
may arise under, out of, or in connection with, any Specified Hedge
Agreement or any other document made, delivered or given in connection
therewith.
(c) References to "Lenders" in this Pledge Agreement shall be
deemed to include affiliates of Lenders that may from time to time enter
into Specified Hedge Agreements with the Borrower.
(d) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Pledge Agreement shall refer to this
Pledge Agreement as a whole and not to any particular provision of this
Pledge Agreement, and Section references are to Sections of this Pledge
Agreement unless otherwise specified.
(e) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
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2. Grant of Security. The Pledgor hereby transfers, assigns and
pledges to the Administrative Agent for the benefit of the Lenders, and hereby
grants to the Administrative Agent for the benefit of the Lenders a security
interest in, the following, whether now owned or existing or hereafter acquired
or existing (collectively, the "Collateral"):
(a) the Pledged Shares and the certificates representing the
Pledged Shares and any interest of the Pledgor in the entries on the books
of any financial intermediary pertaining to the Pledged Shares, and all
dividends, cash, warrants, rights, instruments and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Pledged Shares;
(b) the Pledged Debt and the instruments evidencing the Pledged
Debt, and all interest, cash, instruments and other property or proceeds
from time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of the Pledged Debt; and
(c) to the extent not covered by clauses (a) and (b) above,
respectively, all proceeds of any or all of the foregoing Collateral. For
purposes of this Pledge Agreement, the term "proceeds" includes whatever is
receivable or received when Collateral or proceeds are sold, exchanged,
collected or otherwise disposed of, whether such disposition is voluntary
or involuntary, and includes, without limitation, proceeds of any indemnity
or guaranty payable to the Pledgor or the Administrative Agent from time to
time with respect to any of the Collateral.
3. Security for Obligations. This Pledge Agreement secures, and the
Collateral is collateral security for, the payment of all Obligations. Without
limiting the generality of the foregoing, this Pledge Agreement secures the
payment of all amounts that constitute part of the Obligations and would be owed
by the Pledgor to the Administrative Agent or the Lenders under the Loan
Documents but for the fact that they are unenforceable or not allowable due to
the existence of a bankruptcy, reorganization or similar proceeding involving
the Pledgor.
4. Delivery of the Collateral. All certificates or instruments, if
any, representing or evidencing the Collateral shall be promptly delivered to
and held by or on behalf of the Administrative Agent pursuant hereto and shall
be in suitable form for transfer by delivery, or shall be accompanied by duly
executed instruments of transfer or assignment in blank, all in form and
substance reasonably satisfactory to the Administrative Agent. The
Administrative Agent shall have the right, at any time after the occurrence and
during the continuance of an Event of Default and without notice to the Pledgor,
to transfer to or to register in the name of the Administrative Agent or any of
its nominees any or all of the Pledged Shares.
5. Representations and Warranties. The Pledgor represents and warrants
as follows:
(a) The Pledged Shares set forth on Schedule I hereto represents
the percentage of all the issued and outstanding Capital Stock of each
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domestic Subsidiary directly owned by the Pledgor as identified on Schedule
I, as such Schedule may be updated or amended from time to time.
(b) The Pledged Debt set forth on Schedule II hereto (as such
Schedule may be updated or amended from time to time) represents all
Indebtedness of any Subsidiary owed to the Pledgor.
(c) The Pledgor is the legal and beneficial owner of the
Collateral, as indicated on Schedule I and Schedule II, as such Schedules
may be updated or amended from time to time, pledged or assigned by the
Pledgor hereunder free and clear of any Lien, except for the Lien created
by this Pledge Agreement or Liens permitted under Section 8 hereof.
(d) As of the date of this Pledge Agreement, the Pledged Shares
pledged by the Pledgor hereunder have been duly authorized and validly
issued and are fully paid and non-assessable.
(e) The execution and delivery by the Pledgor of this Pledge
Agreement and the creation of a security interest in the Collateral pledged
by the Pledgor hereunder pursuant hereto create a valid and perfected first
priority security interest in the Collateral, prior to any other Liens,
securing the payment of the Obligations.
(f) The Pledgor has full power, authority and legal right to
create a security interest in all the Collateral pledged by the Pledgor
pursuant to this Pledge Agreement and will defend its and the
Administrative Agent's title or interest thereto or therein (and in the
proceeds thereof) against any and all Liens (other than the Lien of this
Pledge Agreement), however arising, or any and all Persons whomsoever.
(g) No authorization, approval or other action by, and no notice
to or filing with, any Government Authority or regulatory body, other than
the filing of a UCC-1 financing statement with the Arizona Secretary of
State, is required for either (i) the pledge by the Pledgor of the
Collateral pursuant to this Pledge Agreement and the grant by the Pledgor
of the security interest granted hereby, (ii) except as set forth in
Section 26, the execution, delivery or performance of this Pledge Agreement
by the Pledgor or (iii) except as set forth in Section 26, the exercise by
the Administrative Agent of the voting or other rights, or the remedies in
respect of the Collateral, provided for in this Pledge Agreement (except as
may be required in connection with a disposition of Collateral by laws
affecting the offering and sale of securities generally).
6. Further Assurances. The Pledgor agrees that at any time and from
time to time, at the expense of the Pledgor, it will promptly execute and
deliver all further instruments and documents, and take all further action, that
may be necessary, or that the Administrative Agent may reasonably request, in
order to perfect and protect any pledge, assignment or security interest granted
or purported to be granted hereby or to enable the Administrative Agent to
exercise and enforce its rights and remedies hereunder with respect to any
Collateral. The Pledgor hereby authorizes the Administrative Agent to file one
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or more financing or continuation statements, and amendments thereto, relative
to all or any part of the Collateral without the signature of the Pledgor.
7. Voting Rights, Dividends and Distributions; Etc.
(a) So long as no Event of Default shall have occurred and be
continuing:
(i) the Pledgor shall be entitled to exercise any and all
voting and other consensual rights pertaining to the Collateral or any
part thereof for any purpose not prohibited by the terms of this
Pledge Agreement or the other Loan Documents; and
(ii) the Administrative Agent shall execute and deliver (or
cause to be executed and delivered) to the Pledgor all such proxies
and other instruments as the Pledgor may reasonably request for the
purpose of enabling the Pledgor to exercise the voting and other
rights that it is entitled to exercise pursuant to paragraph (i)
above.
(b) Subject to paragraph (c) below, the Pledgor shall be entitled
to receive and retain and use, free and clear of the Lien of this Pledge
Agreement, any and all dividends, distributions, principal and interest
made or paid in respect of the Collateral; provided, however, that any and
all dividends and other distributions in equity securities included in the
Collateral shall be, and shall be forthwith delivered to the Administrative
Agent to hold as, Collateral and shall, if received by the Pledgor, be
received in trust for the benefit of the Administrative Agent, be
segregated from the other property or funds of the Pledgor and be forthwith
delivered to the Administrative Agent as Collateral in the same form as so
received (with any necessary indorsement).
(c) Upon written notice to the Pledgor by the Administrative
Agent following the occurrence and during the continuance of an Event of
Default (or upon the occurrence and during the continuance of an Event of
Default under clause (h) or (i) of Article VII of the Credit Agreement,
without any requirement that written or any other notice be given), but
subject to the terms of Section 26:
(i) all rights of the Pledgor to exercise or refrain from
exercising the voting and other consensual rights that it would
otherwise be entitled to exercise pursuant to Section 7(a)(i) shall
cease, and all such rights shall thereupon become vested in the
Administrative Agent, which shall thereupon have the sole right to
exercise or refrain from exercising such voting and other consensual
rights during the continuance of such Event of Default;
(ii) all rights of the Pledgor to receive the dividends,
distributions and principal and interest payments that the Pledgor
would otherwise be authorized to receive and retain pursuant to
Section 7(b) shall cease, and all such rights shall thereupon become
vested in the Administrative Agent, which shall thereupon have the
sole right to receive and hold as Collateral such dividends,
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distributions and principal and interest payments during the
continuance of such Event of Default;
(iii) all dividends, distributions and principal and
interest payments that are received by the Pledgor contrary to the
provisions of Section 7(b) and Section 7(c)(ii) shall be received in
trust for the benefit of the Administrative Agent, shall be segregated
from other funds of the Pledgor and shall forthwith be paid over to
the Administrative Agent as Collateral in the same form as so received
(with any necessary indorsements); and
(iv) in order to permit the Administrative Agent to receive
all dividends, distributions and principal and interest payments to
which it may be entitled under Section 7(b) above, to exercise the
voting and other consensual rights that it may be entitled to exercise
pursuant to Section 7(c)(i) above, and to receive all dividends,
distributions and principal and interest payments that it may be
entitled to under Section 7(c)(ii) above, the Pledgor shall, if
necessary, upon written notice from the Administrative Agent, from
time to time execute and deliver to the Administrative Agent
appropriate proxies, dividend payment orders and other instruments as
the Administrative Agent may reasonably request.
8. Transfers and Other Liens Additional Collateral; Etc.
(a) The Pledgor shall not (i) except as expressly permitted by
the Credit Agreement, sell or otherwise dispose of, or grant any option or
warrant with respect to, any of the Collateral, (ii) create, incur, assume
or suffer to exist any consensual Lien upon or with respect to the Capital
Stock of TEP, (iii) permit UES to create, incur, assume or suffer to exist
any consensual Lien upon or with respect to the Capital Stock of UNS Gas,
Inc. or UNS Electric, Inc., or (iv) create, incur, assume or suffer to
exist any consensual Lien upon or with respect to any of the Collateral,
except for the Lien under this Pledge Agreement, provided that in the event
the Pledgor sells assets or any other Collateral expressly permitted by the
Credit Agreement and such assets are or include Collateral, the
Administrative Agent shall release such Collateral to the Pledgor free and
clear of the Lien under this Pledge Agreement concurrently with the
consummation of such sale.
(b) The Pledgor shall (i) cause UES, UED and Millennium not to
issue any stock or other equity securities in addition to or in
substitution for the Pledged Shares issued by such Person, except to the
Pledgor; (ii) except as expressly permitted by the Credit Agreement, cause
each other issuer of Pledged Shares not to issue any stock or other
securities in addition to or in substitution for the Pledged Shares issued
by such issuer, except to the Pledgor; (iii) pledge hereunder, immediately
upon its acquisition (directly or indirectly) thereof, any and all
additional shares of stock or other securities of UES, UED, Millennium and,
to the extent required by Section 5.12 of the Credit Agreement, each other
direct domestic Subsidiary, and 66-2/3% of any and all additional shares of
stock or other securities of each direct foreign Subsidiary, in existence
on the date hereof or hereafter created or acquired, and such additional
shares of stock or other securities shall thereafter constitute Pledged
Shares for all purposes; provided that the Pledgor shall not be required to
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pledge, and the Pledged Shares shall not include the Capital Stock of, any
Subsidiary that is subject to regulation as a utility under the laws of any
state of the United States; and (iv) pledge hereunder, immediately upon its
acquisition or funding thereof, any and all Indebtedness which pursuant to
Section 6.01(a)(v) of the Credit Agreement is required to be pledged to the
Administrative Agent for the benefit of the Lenders.
9. Administrative Agent Appointed Attorney-in-Fact. The Pledgor hereby
irrevocably appoints the Administrative Agent as the Pledgor's attorney-in-fact,
with full authority in the place and stead of the Pledgor and in the name of the
Pledgor or otherwise to take any action and to execute any instrument, in each
case after the occurrence and during the continuance of an Event of Default,
that the Administrative Agent may deem reasonably necessary or advisable to
accomplish the purposes of this Pledge Agreement, including, without limitation,
to receive, indorse and collect all instruments made payable to the Pledgor
representing any dividend, distribution or principal or interest payment in
respect of the Collateral or any part thereof and to give full discharge for the
same.
10. The Administrative Agent's Duties. The powers conferred on the
Administrative Agent hereunder are solely to protect its interest in the
Collateral and shall not impose any duty upon it to exercise any such powers.
Except for the safe custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, the Administrative
Agent shall have no duty as to any Collateral, as to ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relative to any Pledged Shares, whether or not the Administrative
Agent or any Lender has or is deemed to have knowledge of such matters, or as to
the taking of any necessary steps to preserve rights against any parties or any
other rights pertaining to any Collateral. The Administrative Agent shall be
deemed to have exercised reasonable care in the custody and preservation of any
Collateral in its possession if such Collateral is accorded treatment
substantially equal to that which the Administrative Agen accords its own
property consisting of negotiable securities.
11. Remedies. If any Event of Default shall have occurred and be
continuing, the provisions set forth below shall apply, subject to the receipt
of any required regulatory approvals (including, without limitation, any
required approvals from the ACC) with respect to the portion of the Collateral
consisting of the common stock of a Subsidiary which owns or controls a company
subject to regulation as a utility:
(a) The Administrative Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party
upon default under the Uniform Commercial Code in effect in the State of
New York at such time (the "New York UCC") (whether or not the New York UCC
applies to the affected Collateral) and also may without notice except as
specified below, sell the Collateral or any part thereof in one or more
parcels at public or private sale, at any exchange broker's board or at any
of the Administrative Agent's offices or elsewhere, for cash, on credit or
for future delivery, as such time or times at such price or prices and upon
such other terms as are commercially reasonable irrespective of the impact
of any such sales on the market price of the Collateral. Each purchaser at
any such sale shall hold the property sold absolutely free from any claim
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or right on the part of the Pledgor, and the Pledgor hereby waives (to the
extent permitted by law) al rights of redemption, stay and/or appraisal
which it now has or may at any time in the future have under any rule of
law or statute now existing or hereafter enacted. The Pledgor agrees that,
to the extent notice of sale shall be required by law, at least ten days'
notice to the Pledgor of the time and place of any public sale or the time
after which any private sale is to be made shall constitute reasonable
notification. The Administrative Agent shall not be obligated to make any
sale of Collateral regardless of notice of sale having been given. The
Administrative Agent may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was
so adjourned. To the extent permitted by law, the Pledgor hereby waives any
claim against the Administrative Agent arising by reason of the fact that
the price at which any Collateral may have been sold at such a private sale
was less than the price that might have been obtained at a public sale,
even if the Administrative Agent accepts the first offer received and does
not offer such Collateral to more than one offeree.
(b) All cash and cash proceeds received by the Administrative
Agent in respect of any sale of, collection from, or other realization
upon, all or any part of the Collateral may, in the discretion of the
Administrative Agent, be held by the Administrative Agent as collateral
for, and/or then or at any time thereafter applied (after payment of any
amounts payable to the Administrative Agent pursuant to Section 9.03 of the
Credit Agreement) in whole or in part by the Administrative Agent for the
benefit of the Lenders against, all or any part of the Obligations in such
order as the Administrative Agent shall elect. Any surplus of such cash or
cash proceeds held by the Administrative Agent and remaining after payment
in full of all the Obligations shall be paid over to the Pledgor or to any
other Person that may be lawfully entitled to receive such surplus.
(c) The Administrative Agent may exercise any and all rights and
remedies of the Pledgor in respect of the Collateral.
(d) All payments received by the Pledgor after the occurrence and
during the continuance of an Event of Default in respect of the Collateral
shall be received in trust for the benefit of the Administrative Agent,
shall be segregated from other funds of the Pledgor and shall be forthwith
paid over to the Administrative Agent in the same form as so received (with
any necessary indorsement).
12. Amendments, etc. with Respect to the Obligations; Waiver of
Rights. The Pledgor shall remain obligated hereunder notwithstanding that,
without any reservation of rights against the Pledgor and without notice to or
further assent by the Pledgor, any demand for payment of any of the Obligations
made by the Administrative Agent or any Lender may be rescinded by such party
and any of the Obligations continued, and the Obligations, or the liability of
any other party upon or for any part thereof, or any collateral security or
guarantee therefor or right of offset with respect thereto, may, from time to
time, in whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by the Administrative Agent or any
Lender, and the Credit Agreement, the other Loan Documents and any other
documents executed and delivered in connection therewith and the Specified Hedge
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Agreements and any other documents executed and delivered in connection
therewith may be amended, modified, supplemented or terminated, in whole or in
part, as the Administrative Agent (or the Required Lenders, as the case may be,
or, in the case of any Specified Hedge Agreement, the Lender or Lender's
affiliate party thereto) may deem advisable from time to time, and any
collateral security, guarantee or right of offset at any time held by the
Administrative Agent or any Lender for the payment of the Obligations may be
sold, exchanged, waived, surrendered or released. Neither the Administrative
Agent nor any Lender shall have any obligation to protect, secure, perfect or
insure any Lien at any time held by it as security for the Obligations or for
this Pledge Agreement or any property subject thereto. When making any demand
hereunder against the Pledgor, the Administrative Agent or any Lender may, but
shall be under no obligation to, make a similar demand on any other pledgor, and
any failure by the Administrative Agent or any Lender to make any such demand or
to collect any payments from any other pledgor or any release of any other
pledgor shall not relieve the Pledgor of its obligations or liabilities
hereunder, and shall not impair or affect the rights and remedies, express or
implied, or as a matter of law, of the Administrative Agent or any Lender
against the Pledgor. For the purposes hereof, "demand" shall include the
commencement and continuance of any legal proceedings.
13. Continuing Security Interest, Assignments Under the Credit
Agreement. This Pledge Agreement shall create a continuing security interest in
the Collateral and shall (a) remain in full force and effect until the payment
in full in cash of the Obligations and the termination of all Commitments under
the Credit Agreement, (b) be binding upon the Pledgor, its successors and
assigns and (c) inure, together with the rights and remedies of the
Administrative Agent hereunder, to the benefit of the Administrative Agent, the
Lenders and their respective successors, transferees and assigns.
14. Reinstatement. This Pledge Agreement shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any of the Obligations is rescinded or must otherwise be
restored or returned by the Administrative Agent or any Lender upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Pledgor, or upon or as a result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, the Pledgor or any
substantial part of the property of the Pledgor, or otherwise, all as though
such payments had not been made.
15. Notices. All notices, requests and demands pursuant hereto shall
be made in accordance with Section 9.01 of the Credit Agreement, provided that
any such notice, request or demand shall be addressed to the Pledgor at the
notice address set forth under its signature below.
16. Counterparts. This Pledge Agreement may be executed by one or more
of the parties on any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the counterparts of this Pledge Agreement signed by the
Pledgor and the Administrative Agent shall be lodged with the Administrative
Agent and the Pledgor.
17. Severability. Any provision of this Pledge 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
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invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
18. Integration. This Pledge Agreement represents the agreement of the
Pledgor with respect to the subject matter hereof and there are no promises or
representations by the Administrative Agent or any Lender relative to the
subject matter hereof not reflected herein or in the other Loan Documents.
19. Amendments in Writing; No Waiver; Cumulative Remedies.
(a) None of the terms or provisions of this Pledge Agreement may
be waived, amended, supplemented or otherwise modified except by a written
instrument executed by the Pledgor and the Administrative Agent in
accordance with Section 9.02 of the Credit Agreement.
(b) Neither the Administrative Agent nor any Lender shall by any
act (except by a written instrument pursuant to Section 19(a)), delay,
indulgence, omission or otherwise be deemed to have waived any right or
remedy hereunder or to have acquiesced in any Default or in any breach of
any of the terms and conditions hereof. No failure to exercise, nor any
delay in exercising, on the part of the Administrative Agent or any Lender,
any right, power or privilege hereunder shall operate as a waiver thereof.
No single or partial exercise of any right, power or privilege hereunder
shall preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. A waiver by the Administrative Agent or
any Lender of any right or remedy hereunder on any one occasion shall not
be construed as a bar to any right or remedy that the Administrative Agent
or such Lender would otherwise have on any future occasion.
(c) The rights and remedies herein provided are cumulative, may
be exercised singly or concurrently and are not exclusive of any other
rights or remedies provided by law.
20. Section Headings. The Section headings used in this Pledge
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
21. Successors and Assigns. This Pledge Agreement shall be binding
upon the successors and assigns of the Pledgor and shall inure to the benefit of
the Administrative Agent and the Lenders and their successors and assigns;
provided that the Pledgor may not assign, transfer or delegate any of its rights
or obligations under this Pledge Agreement without the prior written consent of
the Administrative Agent, and any such attempted assignment, transfer or
delegation shall be null and void.
22. WAIVER OF JURY TRIAL. EACH OF THE PLEDGOR AND THE ADMINISTRATIVE
AGENT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS PLEDGE AGREEMENT AND FOR ANY COUNTERCLAIM
THEREIN.
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23. Submission to Jurisdiction; Waivers. The Pledgor hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Pledge Agreement or any other Loan Document, or
for recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the Courts of the State of New York,
the courts of the United States of America for the Southern District of New
York and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to the Pledgor at its address referred to in Section 15 or at such
other address of which the Administrative Agent shall have been notified
pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding
referred to in this Section 23 any special, exemplary, punitive or
consequential damages.
24. GOVERNING LAW. THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
25. Obligations Absolute; Waivers and Acknowledgments; Subrogation.
(a) Obligations Absolute. The obligations of the Pledgor under or
in respect of this Agreement are independent of the Obligations or any
other Obligations of the Borrower under or in respect of the Loan
Documents, and a separate action or actions may be brought and prosecuted
against the Pledgor to enforce this Agreement, irrespective of whether any
action is brought against any other Person or pursuant to any other Loan
Document or whether any other Person is joined in any such action or
actions. The liability of the Pledgor under this Agreement shall be
irrevocable, absolute and unconditional irrespective of, and the Pledgor
hereby irrevocably waives any defenses it may now have or hereafter acquire
in any way relating to, any or all of the following:
(i) any lack of validity or enforceability of any Loan
Document or any agreement or instrument relating thereto;
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(ii) any change in the time, manner or place of payment of,
or in any other term of, all or any of the Obligations or any other
Obligations of the Borrower under or in respect of the Loan Documents,
or any other amendment or waiver of or any consent to departure from
any Loan Document, including, without limitation, any increase in the
Obligations resulting from the extension of additional credit to the
Borrower or any of the Subsidiaries or otherwise;
(iii) any taking, exchange, release or non-perfection of any
Collateral or any other collateral, or any taking, release or
amendment or waiver of, or consent to departure from, any guaranty,
for all or any of the Obligations;
(iv) any manner of application of Collateral or any other
collateral, or proceeds thereof, to all or any of the Obligations, or
any manner of sale or other disposition of any Collateral or any other
collateral for all or any of the Obligations or any other Obligations
of the Borrower under the Loan Documents or any other assets of the
Borrower or any of the Subsidiaries;
(v) any change, restructuring or termination of the
corporate structure or existence of the Borrower or any of the
Subsidiaries;
(vi) any failure of the Administrative Agent or any Lender
to disclose to the Pledgor any information relating to the business,
condition (financial or otherwise), operations, performance or
properties of the Borrower now or hereafter known to the
Administrative Agent or any Lender (the Pledgor waiving any duty on
the part of Administrative Agent and the Lenders to disclose such
information);
(vii) the failure of any other Person to execute or deliver
any other agreement or the release or reduction of liability of any
other pledgor or any surety with respect to the Obligations; or
(viii) any other circumstance (including, without
limitation, any statute of limitations) or any existence of or
reliance on any representation by the Administrative Agent or any
Lender that might otherwise constitute a defense available to, or a
discharge of, the Pledgor or any surety.
(b) Waivers and Acknowledgments.
(i) The Pledgor hereby unconditionally and irrevocably
waives promptness, diligence, notice of acceptance, presentment,
demand for performance, notice of nonperformance, default,
acceleration, protest or dishonor and any other notice with respect to
any of the Obligations and this Agreement and any requirement that the
Administrative Agent or any Lender protect, secure, perfect or insure
any Lien or any property subject thereto or exhaust any right or take
any action against any other Person or any collateral.
(ii) The Pledgor hereby unconditionally and irrevocably
waives any right to revoke this Agreement and acknowledges that this
Agreement is continuing in nature and applies to all Obligations,
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whether existing now or in the future.
(iii) The Pledgor hereby unconditionally and irrevocably
waives (x) any defense arising by reason of any claim or defense based
upon an election of remedies by the Administrative Agent or any Lender
that in any manner impairs, reduces, releases or otherwise adversely
affects the subrogation, reimbursement, exoneration, contribution or
indemnification rights of the Pledgor or other rights of the Pledgor
to proceed against any guarantor or any other Person or any collateral
and (y) any defense based on any right of set-off or counterclaim
against or in respect of the obligations of the Pledgor hereunder.
(iv) The Pledgor acknowledges that the Administrative Agent
or any Lender may, without notice to or demand upon the Pledgor and
without affecting the liability of the Pledgor under this Agreement,
foreclose under any mortgage by nonjudicial sale, and the Pledgor
hereby waives any defense to the recovery by the Administrative Agent
or any Lender against the Pledgor of any deficiency after such
nonjudicial sale and any defense or benefits that may be afforded by
applicable law.
(v) The Pledgor hereby unconditionally and irrevocably
waives any duty on the part of the Administrative Agent or any the
Lender to disclose to the Pledgor any matter, fact or thing relating
to the business, condition (financial or otherwise), operations,
performance, properties or prospects of the Borrower or any of the
Subsidiaries now or hereafter known by the Administrative Agent or any
Lender.
(vi) The Pledgor acknowledges that it will receive
substantial direct and indirect benefits from the financing
arrangements contemplated by the Loan Documents and that the waivers
set forth in this Section 25 are knowingly made in contemplation of
such benefits.
(c) Subrogation. The Pledgor hereby unconditionally and
irrevocably agrees not to exercise any rights that it may now have or
hereafter acquire against any insider Person that arise from the existence,
payment, performance or enforcement of the Obligations under or in respect
of this Agreement or the enforcement of the security interests under this
Agreement, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification and any right
to participate in any claim or remedy of the Administrative Agent or any
Lender against any insider Person or any collateral, whether or not such
claim, remedy or right arises in equity or under contract, statute or
common law, including, without limitation, the right to take or receive
from any insider Person, directly or indirectly, in cash or other property
or by set-off or in any other manner, payment or security on account of
such claim, remedy or right, unless and until all of the Obligations and
all other amounts payable under this Agreement shall have been paid in full
in cash and the Commitments shall have expired or been terminated. If any
amount shall be paid to the Pledgor in violation of the immediately
preceding sentence at any time prior to the later of (i) the payment in
full in cash of the Obligations and all other amounts payable under this
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Agreement and (ii) the Final Maturity Date, such amount shall be received
and held in trust for the benefit of the Administrative Agent, shall be
segregated from other property and funds of the Pledgor and shall forthwith
be paid or delivered to the Administrative Agent in the same form as so
received (with any necessary endorsement or assignment) to be credited and
applied to the Obligations and all other amounts payable under this
Agreement, whether matured or unmatured, in accordance with the terms of
the Loan Documents, or to be held as collateral for any Obligations or
other amounts payable under this Agreement thereafter arising. If (x) all
of the Obligations and all other amounts payable under this Agreement shall
have been paid in full in cash and (y) the Final Maturity Date shall have
occurred, the Administrative Agent will, at the Pledgor's request and
expense, execute and deliver to the Pledgor appropriate documents, without
recourse and without representation or warranty, necessary to evidence the
transfer by subrogation to the Pledgor of an interest in the Obligations
resulting from such payment made by the Pledgor pursuant to this Agreement.
26. Actions Requiring Approval.
(a) If an Event of Default shall have occurred and be continuing,
the Pledgor shall take any action which the Administrative Agent may
request in the exercise of its rights and remedies under this Pledge
Agreement in order to transfer or assign the Collateral to the
Administrative Agent or to such one or more third parties as the
Administrative Agent may designate, or to a combination of the foregoing.
The parties hereto acknowledge that, in connection with the exercise of
remedies hereunder with respect to any portion of the Collateral consisting
of the common stock of a Subsidiary that owns or controls a company subject
to regulation as a utility, the receipt of consent or approval from certain
Governmental Authorities (including, without limitation, the ACC) may be
required. To enforce the provisions of this Section 26, the Administrative
Agent is empowered to seek from any Governmental Authority (including,
without limitation, the ACC), to the extent required, consent to or
approval of any involuntary transfer of control of any entity whose
Collateral is subject to this Pledge Agreement for the purpose of seeking a
bona fide purchaser to whom control will ultimately be transferred. The
Pledgor agrees to cooperate with any such purchaser and with the
Administrative Agent in the preparation, execution and filing of any forms
and providing any information that may be necessary or helpful in obtaining
any applicable Governmental Authority's consent to the assignment to such
purchaser of the Collateral. The Pledgor hereby agrees to consent to any
such involuntary transfer of control upon the request of the Administrative
Agent after and during the continuation of an Event of Default and, without
limiting any rights of the Administrative Agent under this Pledge
Agreement, to authorize the Administrative Agent to nominate a trustee or
receiver to assume control of the Collateral, subject only to required
judicial or other consent required by Governmental Authorities, in order to
effectuate the transactions contemplated in this Section 26. Such trustee
or receiver shall have all the rights and powers as provided to it by law
or court order, or to the Administrative Agent under this Pledge Agreement.
The Pledgor shall cooperate fully in obtaining the approval or consent of
each Governmental Authority required to effectuate the foregoing.
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(b) If an Event of Default shall have occurred and be continuing,
the Pledgor shall use its best efforts to assist in obtaining consent or
approval of any Governmental Authority (including, without limitation, the
ACC), if required, for any action or transactions contemplated by this
Pledge Agreement, including, without limitation, the preparation, execution
and filing of the transferor's or assignor's portion of any application or
applications for consent to the transfer of control or assignment necessary
or appropriate under applicable rules and regulations for approval of the
transfer or assignment of any portion of the Collateral.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, each of the undersigned has caused this Pledge
Agreement to be duly executed and delivered by its duly authorized officer as of
the day and year first above written.
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Address for Notices: UNISOURCE ENERGY CORPORATION
One South Church Avenue
Tucson, Arizona 85701 By: /s/ Kevin P. Larson
Attention: Chief Financial Officer -----------------------------
Telecopy No.: (520) 884-3612 Name: Kevin P. Larson
Title: Vice President
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UNION BANK OF CALIFORNIA, N.A., as
Administrative Agent
By: /s/ Kevin M. Zitar
-----------------------------
Name: Kevin M. Zitar
Title: Vice President
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SCHEDULE I
LIST OF PLEDGED SHARES
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Issuer Class of Stock Number Percentage of
Stock/Par Certificate of Outstanding
Value No(s) Shares Shares/Interests
- ------------------------------------------------------------------------------------------------
UniSource Energy Services, Inc. Common/No Par Value 1 1000 100%
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Millennium Energy Holdings, Inc. Common/$1.00 3 1 100%
- ------------------------------------------------------------------------------------------------
UniSource Energy Development Common/$1.00 2 1 100%
Company
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SCHEDULE II
LIST OF PLEDGED DEBT
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Maker Date Principal Original
Amount
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- --------------------------------------------------------------------------------
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