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DELAYED DRAW TERM LOAN AGREEMENT

Loan Agreement

DELAYED DRAW TERM LOAN AGREEMENT | Document Parties: PNM RESOURCES INC | MERRILL LYNCH BANK | MERRILL LYNCH, PIERCE, FENNER  SMITH INCORPORATED | PUBLIC SERVICE COMPANY OF NEW MEXICO | WACHOVIA BANK, NATIONAL ASSOCIATION | WACHOVIA CAPITAL MARKETS, LLC You are currently viewing:
This Loan Agreement involves

PNM RESOURCES INC | MERRILL LYNCH BANK | MERRILL LYNCH, PIERCE, FENNER SMITH INCORPORATED | PUBLIC SERVICE COMPANY OF NEW MEXICO | WACHOVIA BANK, NATIONAL ASSOCIATION | WACHOVIA CAPITAL MARKETS, LLC

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Title: DELAYED DRAW TERM LOAN AGREEMENT
Governing Law: New York     Date: 5/7/2008

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EXECUTION COPY
Exhibit 10.1
$300,000,000
DELAYED DRAW TERM LOAN AGREEMENT
among
PUBLIC SERVICE COMPANY OF NEW MEXICO
as Borrower,
THE LENDERS IDENTIFIED HEREIN,
MERRILL LYNCH CAPITAL CORPORATION,
as Administrative Agent
MORGAN STANLEY SENIOR FUNDING, INC.
and
WACHOVIA BANK, NATIONAL ASSOCIATION
as Co-Syndication Agents
DATED AS OF MAY 5, 2008
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED,
MORGAN STANLEY SENIOR FUNDING, INC.
and
WACHOVIA CAPITAL MARKETS, LLC,
as Joint Lead Arrangers and Joint Bookrunners

 

 


 
TABLE OF CONTENTS
         
    Page  
SECTION 1 DEFINITIONS AND ACCOUNTING TERMS
    1  
1.1 Definitions
    1  
1.2 Computation of Time Periods and Other Definitional Provisions
    19  
1.3 Accounting Terms/Calculation of Financial Covenants
    20  
1.4 Time
    20  
1.5 Rounding of Financial Covenants
    20  
1.6 References to Agreements and Requirement of Laws
    20  
 
       
SECTION 2 FACILITY
    21  
2.1 Loans
    21  
2.2 Continuations and Conversions
    22  
2.3 Minimum Amounts
    22  
2.4 Evidence of Debt
    23  
 
       
SECTION 3 GENERAL PROVISIONS APPLICABLE TO LOANS
    23  
3.1 Interest
    23  
3.2 Payments Generally
    24  
3.3 Prepayments
    25  
3.4 Fees
    26  
3.5 Payment in full at Maturity
    27  
3.6 Computations of Interest and Fees
    27  
3.7 Pro Rata Treatment
    28  
3.8 Sharing of Payments
    29  
3.9 Capital Adequacy
    29  
3.10 Eurodollar Provisions
    30  
3.11 Illegality
    30  
3.12 Requirements of Law; Reserves on Eurodollar Loans
    30  
3.13 Taxes
    31  
3.14 Compensation
    34  
3.15 Determination and Survival of Provisions
    34  
 
       
SECTION 4 CONDITIONS PRECEDENT TO CLOSING
    35  
4.1 Closing Conditions
    35  
 
       
SECTION 5 CONDITIONS TO ALL EXTENSIONS OF CREDIT
    37  
5.1 Funding Requirements
    37  
 
       
SECTION 6 REPRESENTATIONS AND WARRANTIES
    38  
6.1 Organization and Good Standing
    38  
6.2 Due Authorization
    38  
6.3 No Conflicts
    38  
6.4 Consents
    39  
6.5 Enforceable Obligations
    39  

 

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    Page  
6.6 Financial Condition
    39  
6.7 No Material Adverse Effect
    39  
6.8 No Default
    39  
6.9 Litigation
    39  
6.10 Taxes
    40  
6.11 Compliance with Law
    40  
6.12 ERISA
    40  
6.13 Use of Proceeds; Margin Stock
    41  
6.14 Government Regulation
    41  
6.15 Solvency
    42  
6.16 Disclosure
    42  
6.17 Environmental Matters
    42  
6.18 Material Leases
    42  
6.19 Material Lease Interest Payments and Discount Rate
    42  
 
       
SECTION 7 AFFIRMATIVE COVENANTS
    43  
7.1 Information Covenants
    43  
7.2 Financial Covenant
    45  
7.3 Preservation of Existence and Franchises
    46  
7.4 Books and Records
    46  
7.5 Compliance with Law
    46  
7.6 Payment of Taxes and Other Indebtedness
    46  
7.7 Insurance
    46  
7.8 Performance of Obligations
    47  
7.9 Use of Proceeds
    47  
7.10 Audits/Inspections
    47  
7.11 Letter of Credit Facility
    47  
7.12 Required Debt Offerings
    47  
7.13 Security
    48  
 
       
SECTION 8 NEGATIVE COVENANTS
    49  
8.1 Nature of Business
    49  
8.2 Consolidation and Merger
    49  
8.3 Sale or Lease of Assets
    49  
8.4 Affiliate Transactions
    49  
8.5 Liens
    50  
8.6 Accounting Changes
    51  
8.7 Negative Pledge Clause
    51  
8.8 Indebtedness
    51  
 
       
SECTION 9 EVENTS OF DEFAULT
    52  
9.1 Events of Default
    52  
9.2 Acceleration; Remedies
    54  
9.3 Allocation of Payments After Event of Default
    55  
 
       
SECTION 10 AGENCY PROVISIONS
    56  
10.1 Appointment and Authority
    56  

 

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    Page  
10.2 Rights as a Lender
    56  
10.3 Exculpatory Provisions
    56  
10.4 Reliance by Administrative Agent
    57  
10.5 Delegation of Duties
    57  
10.6 Resignation of Administrative Agent
    58  
10.7 Non-Reliance on Administrative Agent and Other Lenders
    58  
10.8 No Other Duties, Etc
    59  
10.9 Administrative Agent May File Proofs of Claim
    59  
 
       
SECTION 11 MISCELLANEOUS
    60  
11.1 Notices; Effectiveness; Electronic Communication
    60  
11.2 Right of Set-Off
    62  
11.3 Successors and Assigns
    62  
11.4 No Waiver; Remedies Cumulative
    65  
11.5 Attorney Costs, Expenses, Taxes and Indemnification by Borrower
    66  
11.6 Amendments, Etc
    67  
11.7 Most Favored Nation
    69  
11.8 Counterparts
    69  
11.9 Headings
    69  
11.10 Survival of Indemnification and Representations and Warranties
    69  
11.11 Governing Law; Venue; Service
    69  
11.12 Waiver of Jury Trial; Waiver of Consequential Damages
    70  
11.13 Severability
    70  
11.14 Further Assurances
    70  
11.15 Confidentiality
    70  
11.16 Entirety
    71  
11.17 Binding Effect; Continuing Agreement
    71  
11.18 Regulatory Statement
    72  
11.19 USA Patriot Act Notice
    72  
11.20 Acknowledgment
    72  
11.21 Replacement of Lenders
    73  
     
SCHEDULES
   
 
   
Schedule 1.1(a) Schedule 6.18
  Commitments
Material Leases
Schedule 6.19
  Material Lease Interest Payments and Discount Rate
Schedule 11.1
  Notices
 
   
EXHIBITS
   
 
   
Exhibit 2.1(b)
  Form of Notice of Borrowing
Exhibit 2.1(e)
  Form of Note
Exhibit 2.2
  Form of Notice of Continuation/Conversion
Exhibit 3.3(b)(iii)
  Form of Prepayment Option Notice
Exhibit 7.1(c)
  Form of Compliance Certificate
Exhibit 11.3(b)
  Form of Assignment and Assumption

 

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DELAYED DRAW TERM LOAN AGREEMENT
THIS DELAYED DRAW TERM LOAN AGREEMENT (this “ Agreement ”) is entered into as of May 5, 2008, among PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation, as Borrower, the Lenders, MORGAN STANLEY SENIOR FUNDING, INC. and WACHOVIA BANK, NATIONAL ASSOCIATION, as Co-Syndication Agents, MERRILL LYNCH CAPITAL CORPORATION, as Administrative Agent, and the Arrangers.
RECITALS
WHEREAS, the Borrower has requested the Lenders to provide a senior term loan facility to the Borrower in an aggregate principal amount of up to $300,000,000; and
WHEREAS, the Lenders party hereto have agreed to make the requested senior term loan facility available to the Borrower on the terms and conditions hereinafter set forth.
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
SECTION 1
DEFINITIONS AND ACCOUNTING TERMS
1.1 Definitions .
The following terms shall have the meanings specified herein (including the preamble and recitals hereto) unless the context otherwise requires. Defined terms herein shall include in the singular number the plural and in the plural the singular:
Act ” has the meaning set forth in Section 11.19.
Administrative Agent ” means Merrill Lynch Capital Corporation (in its capacity as administrative agent for the Lenders hereunder, together with its Affiliates) or any successor administrative agent appointed pursuant to Section 10.6 in such capacity.
Administrative Agent’s Office ” means the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 11.1 or such other address or account as the Administrative Agent may from time to time notify the Borrower and the Lenders.
Administrative Questionnaire ” means an Administrative Questionnaire in a form supplied by the Administrative Agent.
Affiliate ” means, with respect to any Person, any other Person directly or indirectly controlling (including but not limited to all directors and officers of such Person), controlled by or under direct or indirect common control with such Person. A Person shall be deemed to control a corporation if such Person possesses, directly or indirectly, the power (a) to vote 10% or more of the securities having ordinary voting power for the election of directors of such corporation or (b) to direct or cause direction of the management and policies of such corporation, whether through the ownership of voting securities, by contract or otherwise.

 

 


 
Agent Parties ” has the meaning set forth in Section 11.1(c).
Agent-Related Parties ” means the Agents, together with their respective Affiliates and the officers, directors, employees, agents and attorneys-in-fact of the Agents and their respective Affiliates.
Agents ” means collectively, the Administrative Agent, the Co-Syndication Agents and the Arrangers.
Agreement ” has the meaning set forth in the preamble hereto.
Applicable Percentage ” means, for Eurodollar Loans, Base Rate Loans, commitment fees, funding fees and duration fees, the appropriate applicable percentages, in each case (subject to the exception indicated below), corresponding to the Debt Rating in effect as of the most recent Calculation Date as shown below:
                                     
                Applicable   Applicable   Applicable
        Applicable   Applicable   Percentage   Percentage   Percentage
        Percentage for   Percentage for   for   for   for
Pricing       Eurodollar   Base Rate   Commitment   Funding   Duration
Level   Debt Rating   Loans   Loans   Fees   Fees   Fees
I
  At least Baa3 or
BBB-, but in any
event not lower
than Ba1 or BB+
  Greater of (i) 4.00% and (ii) the LCD Index Yield (expressed as a percentage, with each basis point equaling to 0.01%) less 0.50%.   Greater of (i) 3.00% and (ii) the LCD Index Yield (expressed as a percentage, with each basis point equaling to 0.01%) less 1.50%.     0.50 %     1.25 %     0.50 %
II
  Otherwise   Greater of (i) 5.00% and (ii) the LCD Index Yield (expressed as a percentage, with each basis point equaling to 0.01%) plus 0.50%.   Greater of (i) 4.00% and (ii) the LCD Index Yield (expressed as a percentage, with each basis point equaling to 0.01%) less 0.50%.     0.75 %     01.50 %     0.75 %

 

2


 
Except as set forth in the second sentence of this paragraph, on the Closing Date the Applicable Percentage shall be determined by reference to the then applicable Pricing Level determined by reference to the Borrower’s Debt Rating on such date. On the initial Borrowing Date, the Applicable Percentage for Eurodollar Loans and the Applicable Percentage for Base Rate Loans shall be determined hereunder by reference to both the then applicable Pricing Level determined by reference to the Borrower’s Debt Rating on such date, and within any such Pricing Level to the greater of the rate set forth under clause (i) or the rate set forth under clause (ii), each as set forth under the applicable columns in the table above, as calculated on such initial Borrowing Date by the Administrative Agent (whose determination shall be conclusive and binding on the Borrower and the Lenders absent manifest error); provided that, (A) if on such initial Borrowing Date the applicable Pricing Level is Pricing Level I, then the Applicable Percentage for Pricing Level I for the term of this Agreement shall be the greater of the rate determined pursuant to clause (i) or clause (ii), each as set forth under the applicable columns in the table above, as determined on the initial Borrowing Date, and the Applicable Percentage for Pricing Level II for the term of this Agreement shall be determined on each Calculation Date by adding 1.00% to such greater rate without recalculating the greater of clause (i) or clause (ii) or (B) if on the such initial Borrowing Date the applicable Pricing Level is Pricing Level II, then the Applicable Percentage for Pricing Level II for the term of this Agreement shall be the greater of the rate determined pursuant to clause (i) or clause (ii), each as set forth under the applicable columns in the table above, as determined on the initial Borrowing Date, and the Applicable Percentage for Pricing Level I for the term of this Agreement shall be determined on each Calculation Date by subtracting 1.00% from such greater rate without recalculating the greater of clause (i) or clause (ii). The Applicable Percentage shall be adjusted on the date (each a “ Calculation Date ”) one Business Day after the date on which the Borrower’s Debt Rating is upgraded or downgraded in a manner which requires a change in the then applicable Pricing Level set forth above, but in no event shall any determination of the Applicable Percentage on any Calculation Date require any new calculation to determine whether clause (i) or clause (ii) under the applicable columns for Eurodollar Loans and Base Rate Loans would result in a higher rate. If the Borrower does not have a Debt Rating from either S&P or Moody’s, then, with respect to the Debt Rating, Pricing Level II shall apply. Each Applicable Percentage shall be effective from one Calculation Date until the next Calculation Date. Any adjustment in the Applicable Percentage shall be applicable to all existing Eurodollar Loans and Base Rate Loans as well as any new Eurodollar Loans or Base Rate Loans made. The applicable Pricing Level for Applicable Percentage, as of the Closing Date, is Pricing Level I.
Approved Fund ” means any Fund that is administered or managed by (a) a Lender. (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
Arrangers ” means collectively, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley Senior Funding, Inc. and Wachovia Capital Markets, LLC, in their capacity as joint lead arrangers and joint bookrunners for the Facility, together with their respective Affiliates in such capacity.

 

3


 
Asset Sale Prepayment Event ” means a sale, lease or sub-lease (as lessor or sublessor), sale and leaseback, assignment, conveyance, transfer or other disposition to, or any exchange of Property with, any Person (other than Borrower) (including any sale or issuance of any Capital Stock of any Subsidiary of the Borrower) (any such event, a “ Disposition ”), in one transaction or a series of related transactions, of all or any part of Borrower’s or any of its Subsidiaries’ businesses or Properties of any kind, whether now owned or hereafter acquired, other than (i) inventory Disposed of in the ordinary course of business (excluding any such Dispositions by operations or divisions discontinued or to be discontinued), and (ii) Dispositions in one transaction or a series of related transactions that yield Net Cash Proceeds to the Borrower and its Subsidiaries of less than $25,000,000.
Assignment and Assumption ” means an Assignment and Assumption substantially in the form of Exhibit 11.3(b) .
Authorized Officer ” means any of the president, chief executive officer, chief financial officer or treasurer of the Borrower.
Availability Period ” means the period commencing on the Closing Date until the date that is 45 days prior to the Maturity Date (or such earlier date if the Commitments have been terminated prior to such date as provided herein).
Available Commitments ” means, as to any Lender at any time, an amount equal to the excess, if any, of (i) such Lender’s Commitment then in effect (taking into account any reductions pursuant to Section 2.1(d) and 3.3(b)) over (ii) the aggregate principal amount of Loans made by such Lender to the Borrower pursuant to Section 2.1.
Average Life Amount ” means the quotient obtained by dividing (i) the Discount to Par by (ii) 4.
Bankruptcy Code ” means the Bankruptcy Code in Title 11 of the United States Code, as amended, modified, succeeded or replaced from time to time.
Base Rate ” means for any day a fluctuating rate per annum equal to the higher of (a) the Federal Funds Rate plus 1/2 of 1% and (b)  the rate of interest in effect for such day as publicly announced from time to time by the Administrative Agent as its “prime rate” (the “ Prime Rate ”). The Prime Rate is a rate set by the Administrative Agent based upon various factors including the Administrative Agent’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such rate announced by the Administrative Agent shall take effect at the opening of business on the day specified in the public announcement of such change.
Base Rate Loan ” means any Loan bearing interest at a rate determined by reference to the Base Rate.
Borrower ” means Public Service Company of New Mexico, a New Mexico corporation, together with its successors and permitted assigns.
Borrower Materials ” has the meaning set forth in Section 11.1(c).

 

4


 
Borrower Obligations ” means, without duplication, all of the obligations of the Borrower to the Lenders, the Agents or the Agent-Related Parties, whenever arising, under this Agreement, the Notes or any of the other Credit Documents.
Borrowing ” means a borrowing consisting of Loans of the same Type and, in the case of Eurodollar Loans, having the same Interest Period made by each of the Lenders pursuant to Section 2.1.
Borrowing Date ” means any Business Day specified by the Borrower, or in the case of a Mandatory Borrowing, any Arranger, as a date on which the Borrower, or such Arranger, as the case may be, requests the Lenders to make Loans hereunder.
Businesses ” has the meaning set forth in Section 6.17.
Business Day ” means any day other than a Saturday, a Sunday, a legal holiday or a day on which banking institutions are authorized or required by Law or other governmental action to close in New York, New York; provided that in the case of Eurodollar Loans such day is also a day on which dealings are conducted by and between banks in the London interbank market.
Calculation Date ” has the meaning set forth in the definition of Applicable Percentage in this Section 1.1.
Capital Stock ” means (a) in the case of a corporation, all classes of capital stock of such corporation, (b) in the case of a partnership, partnership interests (whether general or limited), (c) in the case of a limited liability company, membership interests and (d) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person; including, in each case, all warrants, rights or options to purchase any of the foregoing.
Cash ” means money, currency or a credit balance in any demand or deposit account.
Change of Control ” means the failure of PNM Resources, Inc., a New Mexico corporation, to own and control 100% of the Voting Stock of the Borrower.
Claims ” has the meaning set forth in the definition of Environmental Claims in this Section 1.1.
Closing Date ” means the date of this Agreement, which is the first date all the conditions precedent in Section 4.1 are satisfied or waived in accordance with Section 11.6.
Co-Syndication Agents ” means Morgan Stanley Senior Funding, Inc. and Wachovia Bank, National Association, each in its capacity as co-syndication agents for the Facility, together with their respective Affiliates in such capacity.

 

5


 
Code ” means the Internal Revenue Code of 1986 and the rules and regulations promulgated thereunder, as amended, modified, succeeded or replaced from time to time.
Commitment ” means, as to each Lender, its obligation to make Loans to the Borrower pursuant to Section 2.1, in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Lender’s name on Schedule 1.1(a ) or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be reduced from time to time in accordance with this Agreement.
Commitment Letter ” means that certain commitment letter, dated as of April 27, 2008, among the Borrower, Merrill Lynch Bank USA, Merrill Lynch Capital Corporation, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley Senior Funding, Inc., Wachovia Bank, National Association, and Wachovia Capital Markets, LLC, as the same shall be amended, modified, supplemented or restated from time to time.
Committed Amount ” means $300,000,000.
Compensation Period ” has the meaning set forth in Section 3.2(c)(ii).
Compliance Certificate ” means a fully completed and duly executed officer’s certificate in the form of Exhibit 7.1(c) , together with a Covenant Compliance Worksheet.
Consolidated Capitalization ” means the sum of (a) all of the shareholders’ equity or net worth of the Borrower and its Subsidiaries, as determined in accordance with GAAP plus (b) Consolidated Indebtedness.
Consolidated Indebtedness ” means, as of any date of determination, with respect to the Borrower and its Subsidiaries on a consolidated basis, an amount equal to all Indebtedness of the Borrower and its Subsidiaries as of such date.
Contingent Obligation ” means, with respect to any Person, any direct or indirect liability of such Person with respect to any Indebtedness, liability or other obligation (the “ primary obligation ”) of another Person (the “ primary obligor ”), whether or not contingent, (a) to purchase, repurchase or otherwise acquire such primary obligation or any property constituting direct or indirect security therefor, (b) to advance or provide funds (i) for the payment or discharge of any such primary obligation or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency or any balance sheet item, level of income or financial condition of the primary obligor, (c) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor in respect thereof to make payment of such primary obligation or (d) otherwise to assure or hold harmless the owner of any such primary obligation against loss or failure or inability to perform in respect thereof; provided , however , that, with respect to the Borrower and its Subsidiaries, the term Contingent Obligation shall not include endorsements for collection or deposit in the ordinary course of business. The amount of any Contingent Obligation of any Person shall be deemed to be an amount equal to the maximum amount of such Person’s liability with respect to the stated or determinable amount of the primary obligation for which such Contingent Obligation is incurred or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder).

 

6


 
Covenant Compliance Worksheet ” shall mean a fully completed worksheet in the form of Schedule I to Exhibit 7.1(c) .
Credit Documents ” means this Agreement, the Notes, any Notice of Borrowing, any Notice of Continuation/Conversion, the Fee Letter, any security agreement, mortgage, deed of trust or other security document or intercreditor agreement entered into or executed by the Borrower or any of its Subsidiaries in connection with their obligations under Section 7.13, and any other document, agreement or instrument entered into or executed in connection with the foregoing.
Debt Incurrence Prepayment Event ” means any incurrence or issuance of any Indebtedness for borrowed money by the Borrower or any of its Subsidiaries (including pursuant to Section 7.12), other than (i) borrowings under the Existing Credit Agreement, (ii) issuances of letters of credit under the Letter of Credit Facility (or drawings under the letters of credit issued thereunder) and (iii) issuances or incurrences of Indebtedness, in one or in a series of related issuances or incurrences in a principal amount of less than $25,000,000.
Debt Rating ” means the long term unsecured senior non-credit enhanced debt rating of the Borrower by each of S&P and Moody’s.
Debtor Relief Laws ” means the Bankruptcy Code, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.
Default ” means any event, act or condition which with notice or lapse of time, or both, would constitute an Event of Default.
Default Rate ” means an interest rate equal to two percent (2%) plus the rate that otherwise would be applicable (or if no rate is applicable, the Base Rate plus two percent (2%) per annum).
Defaulting Lender ” means, at any time, any Lender that, (a) has failed to make a Loan or purchase or fund a Participation Interest (but only for so long as such Loan is not made or such Participation Interest is not purchased or funded), (b) has failed to pay to the Administrative Agent or any Lender an amount owed by such Lender pursuant to the terms of this Agreement (but only for so long as such amount has not been repaid) or (c) has been deemed insolvent or has become subject to a bankruptcy or insolvency proceeding or to a receiver, trustee or similar official.

 

7


 
Discount to Par ” means the difference obtained by subtracting (i) the LCD Index Average Bid (expressed as percentage of par) from (ii) 1.
Disposition ” has the meaning set forth in the definition of Asset Sale Prepayment Event in this Section 1.1. The terms “ Dispose ” and “ Disposed of ” shall have correlating meanings.
Dollars ” and “$” means dollars in lawful currency of the United States of America.
Eligible Assignee ” means (a) a Lender, (b) an Affiliate of a Lender, (c) an Approved Fund and (d) any other Person (other than a natural person) approved by the Administrative Agent and the Borrower (such approval not to be unreasonably withheld or delayed); provided that (i) the Borrower’s consent is not required during the existence and continuation of a Default or an Event of Default, (ii) approval by the Borrower shall be deemed given if no objection is received by the assigning Lender and the Administrative Agent from the Borrower within five Business Days after notice of such proposed assignment has been delivered to the Borrower and (iii) neither the Borrower nor any Subsidiary or Affiliate of the Borrower shall qualify as an Eligible Assignee.
Environmental Claims ” means any and all administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, accusations, allegations, notices of noncompliance or violation, investigations (other than internal reports prepared by any Person in the ordinary course of its business and not in response to any third party action or request of any kind) or proceedings relating in any way to any actual or alleged violation of or liability under any Environmental Law or relating to any permit issued, or any approval given, under any such Environmental Law (collectively, “ Claims ”), including, without limitation, (a) any and all Claims by Governmental Authorities for enforcement, cleanup, removal, response, remedial or other actions or damages pursuant to any applicable Environmental Law and (b) any and all Claims by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from Hazardous Substances or arising from alleged injury or threat of injury to human health or the environment.
Environmental Laws ” shall mean any and all federal, state and local laws, statutes, ordinances, rules, regulations, permits, licenses, approvals, rules of common law and orders of courts or Governmental Authorities, relating to the protection of human health or occupational safety or the environment, now or hereafter in effect and in each case as amended from time to time including, without limitation, requirements pertaining to the manufacture, processing, distribution, use, treatment, storage, disposal, transportation, handling, reporting, licensing, permitting, investigation or remediation of Hazardous Substances.
Equity Issuance Prepayment Event ” means the issuance of any Capital Stock by the Borrower or any of its Subsidiaries in any public offering (other than a public offering pursuant to a registration statement on Form S-8) or in any private placement, and including, in any event any capital contribution or other investment in, the Borrower by any Person, including the Parent.

 

8


 
ERISA ” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor statute, and all rules and regulations from time to time promulgated thereunder.
ERISA Affiliate ” means any Person (including any trade or business, whether or not incorporated) that would be deemed to be under “common control” with, or a member of the same “controlled group” as, the Borrower or any of its Subsidiaries, within the meaning of Sections 414(b), (c), (m) or (o) of the Code or Section 4001 of ERISA.
ERISA Event ” means: (a) a Reportable Event with respect to a Plan or a Multiemployer Plan; (b) a complete or partial withdrawal by the Borrower, any of its Subsidiaries or any ERISA Affiliate from a Multiemployer Plan, or the receipt by the Borrower, any of its Subsidiaries or any ERISA Affiliate of notice from a Multiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA, or that it is in endangered or critical status within the meaning of Section 432 of the Code or Section 305 or Title IV of ERISA, or that it intends to terminate or has terminated under Section 4041A of ERISA; (c) the distribution by the Borrower, any of its Subsidiaries or any ERISA Affiliate under Section 4041 or 4041A of ERISA of a notice of intent to terminate any Plan or the taking of any action to terminate any Plan; (d) the commencement of proceedings by the PBGC under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or the receipt by the Borrower, any of its Subsidiaries or any ERISA Affiliate of a notice from any Multiemployer Plan that such action has been taken by the PBGC with respect to such Multiemployer Plan; (e) the failure by Borrower, any of its Subsidiaries or any ERISA Affiliate to make any required contribution to a Multiemployer Plan, or the institution of a proceeding by any fiduciary of any Multiemployer Plan against the Borrower, any of its Subsidiaries or any ERISA Affiliate to enforce Section 515 of ERISA, which is not dismissed within thirty (30) days; (f) the imposition upon the Borrower, any of its Subsidiaries or any ERISA Affiliate of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, or the imposition or threatened imposition of any Lien upon any assets of the Borrower, any of its Subsidiaries or any ERISA Affiliate as a result of any alleged failure to comply with the Code or ERISA in respect of any Plan; (g) the engaging in or otherwise becoming liable for a nonexempt Prohibited Transaction by the Borrower, any of its Subsidiaries or any ERISA Affiliate; (h) a violation of the applicable requirements of Section 404 or 405 of ERISA or the exclusive benefit rule under Section 401(a) of the Code by any fiduciary of any Plan for which the Borrower, any of its Subsidiaries or any ERISA Affiliate may be directly or indirectly liable; (i) the adoption of an amendment to any Plan that, pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA, would result in the loss of tax-exempt status of the trust of which such Plan is a part if the Borrower, any of its Subsidiaries or any ERISA Affiliate fails to timely provide security to such Plan in accordance with the provisions of such sections or (j) the withdrawal of the Borrower, any of its Subsidiaries or any ERISA Affiliate from a Multiple Employer Plan during a plan year in which it was a substantial employer (as such term is defined in Section 4001(a)(2) of ERISA), or the termination of a Multiple Employer Plan; (k) the failure to make by its due date a required installment under Section 430(j) of the Code with respect to any Plan; or (l) a determination that any Plan is, or is expected to be, in “at risk” status (within the meaning of Title IV of ERISA.

 

9


 
Eurodollar Loan ” means a Loan bearing interest based at a rate determined by reference to the Eurodollar Rate.
Eurodollar Rate ” means, for any Interest Period with respect to a Eurodollar Loan, the greater of (i) the rate per annum equal to the British Bankers Association LIBOR Rate (“ BBA LIBOR ”), as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as designated by the Administrative Agent from time to time) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, for Dollar deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period and (ii) 3.00% per annum; provided that if on the initial Borrowing Date the Applicable Percentage for Eurodollar Loans is determined by reference to the rate set forth in clause (ii) under the applicable column in the table set forth in the definition of “Applicable Percentage”, then the “Eurodollar Rate” shall always be determined by reference to the rate per annum referred to in clause (i) above. If such rate referred to in clause (i) above is not available at such time for any reason, then the “Eurodollar Rate” referred to in clause (i) above for such Interest Period shall be the rate per annum determined by the Administrative Agent to be the rate at which deposits in Dollars for delivery on the first day of such Interest Period in same day funds in the approximate amount of the Eurodollar Loan being made, continued or converted by the Administrative Agent and with a term equivalent to such Interest Period would be offered by the Administrative Agent’s London Branch to major banks in the London interbank eurodollar market at their request at approximately 4:00 p.m. (London time) two Business Days prior to the commencement of such Interest Period.
Event of Default ” has the meaning set forth in Section 9.1.
Existing Credit Agreement ” means that certain Credit Agreement, dated as of August 17, 2005, among the Borrower, the lenders party thereto, Wachovia Bank, National Association, as administrative agent, Union Bank of California, N.A., as syndication agent, and Bank of America, N.A., Citibank, N.A. and JPMorgan Chase Bank, N.A., as co-documentation agents, as the same may have been previously amended, modified or supplemented prior to the Closing Date.
Facility ” means the credit facility constituting the Loans and the Commitments hereunder.
Federal Funds Rate ” means, for any day, the rate per annum equal to the weighted average (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to the Administrative Agent on such day on such transactions as determined by the Administrative Agent.

 

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Fee Letter ” means that certain fee letter, dated as of April 27, 2008, among the Borrower, Merrill Lynch Bank USA, Merrill Lynch Capital Corporation, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley Senior Funding, Inc., Wachovia Bank, National Association, and Wachovia Capital Markets, LLC, as the same shall be amended, modified, supplemented or restated from time to time.
Financial Officer ” means the chief financial officer, vice president-finance, principal accounting officer or treasurer of the Borrower.
First Mortgage Bonds ” means those first mortgage bonds issued pursuant to the FMB Indenture.
Fiscal Quarter ” means each of the calendar quarters ending as of the last day of each March, June, September and December.
Fiscal Year ” means the calendar year ending December 31.
FMB Indenture ” means the Indenture of Mortgage and Deed of Trust, dated as of June 1, 1947, between the Borrower and The Bank of New York (formerly Irving Trust Company), as trustee thereunder, as supplemented and amended.
Foreign Lender ” has the meaning set forth in Section 3.13(f).
Fund ” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding, or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.
Funding Fees ” has the meaning set forth in Section 3.4(b).
GAAP ” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the U.S. accounting profession) or that are promulgated by any Governmental Authority having appropriate jurisdiction.
Governmental Authority ” means any domestic or foreign nation or government, any state or other political subdivision thereof and any central bank thereof, any municipal, local, city or county government, and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing.

 

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Granting Lender ” has the meaning specified in Section 11.3(h).
Hazardous Substances ” means any substances or materials (a) that are or become defined as hazardous wastes, hazardous substances, pollutants, contaminants or toxic substances under any Environmental Law, (b) that are defined by any Environmental Law as toxic, explosive, corrosive, ignitable, infectious, radioactive, mutagenic or otherwise hazardous, (c) the presence of which require investigation or response under any Environmental Law, (d) that constitute a nuisance, trespass or health or safety hazard to Persons or neighboring properties, (e) that consist of underground or aboveground storage tanks, whether empty, filled or partially filled with any substance, or (f) that contain, without limitation, asbestos, polychlorinated biphenyls, urea formaldehyde foam insulation, petroleum hydrocarbons, petroleum derived substances or wastes, crude oil, nuclear fuel, natural gas or synthetic gas.
Hedging Agreements ” means, collectively, interest rate protection agreements, equity index agreements, foreign currency exchange agreements, option agreements or other interest or exchange rate or commodity price hedging agreements (other than forward contracts for the delivery of power or gas written by the Borrower to its jurisdictional and wholesale customers in the ordinary course of business).
Indebtedness ” means, with respect to any Person (without duplication), (a) all indebtedness and obligations of such Person for borrowed money or in respect of loans or advances of any kind, (b) all obligations of such Person evidenced by notes, bonds, debentures or similar instruments, (c) all reimbursement obligations of such Person with respect to surety bonds, letters of credit and bankers’ acceptances (in each case, whether or not drawn or matured and in the stated amount thereof), (d) all obligations of such Person to pay the deferred purchase price of property or services, (e) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person, (f) all obligations of such Person as lessee under leases that are or are required to be, in accordance with GAAP, recorded as capital leases, to the extent such obligations are required to be so recorded, (g) the net termination obligations of such Person under any Hedging Agreements, calculated as of any date as if such agreement or arrangement were terminated as of such date in accordance with the applicable rules under GAAP, (h) all Contingent Obligations of such Person, (i) all obligations and liabilities of such Person incurred in connection with any transaction or series of transactions providing for the financing of assets through one or more securitizations or in connection with, or pursuant to, any synthetic lease or similar off-balance sheet financing, (j) the aggregate amount of uncollected accounts receivable of such Person subject at the time of determination to a sale of receivables (or similar transaction) to the extent such transaction is effected with recourse to such Person (whether or not such transaction would be reflected on the balance sheet of such Person in accordance with GAAP), (k) all obligations, contingent or otherwise, under the Material Leases and (l) all indebtedness referred to in clauses (a) through (k) above secured by any Lien on any property or asset owned or held by such Person regardless of whether the indebtedness secured thereby shall have been assumed by such Person or is nonrecourse to the credit of such Person.

 

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Indemnified Liabilities ” has the meaning set forth in Section 11.5(b).
Indemnitees ” has the meaning set forth in Section 11.5(b).
Insured Series First Mortgage Bonds ” means First Mortgage Bonds in the aggregate principal amount of $65,000,000 pledged by the Borrower to secure guarantees of $65,000,000 principal amount of pollution control revenue bonds issued by the City of Farmington, New Mexico, for the benefit of the Borrower, which pollution control revenue bonds are also supported by a municipal bond insurance policy issued by AMBAC Indemnity Corporation.
Information ” has the meaning set forth in Section 11.15.
Interest Payment Date ” means, (a) as to any Eurodollar Loan, the last day of each Interest Period applicable to such Loan and the Maturity Date; provided , however , that if any Interest Period for a Eurodollar Loan exceeds three months, the respective dates that fall every three months after the beginning of such Interest Period shall also be Interest Payment Dates and (b) as to any Base Rate Loan, the last Business Day of each Fiscal Quarter and the Maturity Date.
Interest Period ” means, as to each Eurodollar Loan, the period commencing on the date such Eurodollar Loan is disbursed or converted to or continued as a Eurodollar Loan and ending on the date one, two, three or six months thereafter, as selected by the Borrower in its Notice of Borrowing or Notice of Continuation/Conversion; provided that:
(a) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day;
(b) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and
(c) no Interest Period shall extend beyond the Maturity Date.
Laws ” means, collectively, all international, foreign, federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.

 

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LCD ” has the meaning set forth in the definition of LCD Flow Name Index in this Section 1.1.
LCD Flow Name Index ” means the index of fifteen institutional borrower names published on a twice-weekly basis by the Leveraged Commentary & Data division of S&P (“ LCD ”) in the “LCD News” section of its website www.lcdcomps.com . Schedule 1.1(b) sets forth the fifteen institutional borrower names comprising such index as to the Closing Date; it being understood that the LCD may add or subtract names from such index from time to time and the LCD Flow Name Index shall be determined by reference to the institutional borrower names comprising such index on or immediately prior to the initial Borrowing Date.
LCD Index Average Bid ” means the average of all of the latest opening bid price data related to the term loans of each of the institutional borrower names comprising the LCD Flow Name Index and provided by the Markit Group Limited or one of its affiliates (“ Markit ”) to the LCD on or immediately prior to the initial Borrowing Date; provided that, if Markit ceases to exist and/or fails to provide any or all of such opening bid price data to the LCD for any or all of the institutional borrower names comprising the LCD Flow Name Index, the LCD Index Average Bid shall be determined by the Administrative Agent based on the latest average bid price obtained by the Administrative Agent from the Arrangers on or immediately prior to the initial Borrowing Date for any or all of the term loans that are not provided by Markit to the LCD (any such determination by the Administrative Agent shall be conclusive and binding on the Borrower and the Lenders absent manifest error).
LCD Index Average Coupon ” means the average of all of the latest interest rate margins related to the term loans of each of the institutional borrower names comprising the LCD Flow Name Index on or immediately prior to the initial Borrowing Date.
LCD Index Yield ” means the sum, expressed in basis points and rounded to the nearest whole basis point (with one basis point being equal to 0.01%), of (i) the quotient obtained by dividing (x) the LCD Index Average Coupon by (y) the LCD Index Average Bid (expressed as percentage of par) and (ii) the product obtained by multiplying (A) the quotient obtained by dividing (x) the Average Life Amount by (y) the LCD Index Average Bid (expressed as percentage of par) by (B) 100.
Lender ” means any of the Persons identified as a “Lender” on the signature pages hereto, and any Eligible Assignee which may become a Lender by way of assignment in accordance with the terms hereof, together with their successors and permitted assigns.
Lending Office ” means, as to any Lender, the office or offices of such Lender described as such in such Lender’s Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify the Borrower and the Administrative Agent.

 

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Letter of Credit Facility ” means the $100,000,000 letter of credit facility of the Borrower available pursuant to that certain Reimbursement Agreement, to be executed on or about May 5, 2008, among the Borrower, the lenders identified therein, and Deutsche Bank AG New York Branch, as administrative agent thereunder.
Lien ” means any mortgage, pledge, hypothecation, assignment, security interest, lien (statutory or otherwise), preference, priority, charge or other encumbrance of any nature, whether voluntary or involuntary, including, without limitation, the interest of any vendor or lessor under any conditional sale agreement, title retention agreement, capital lease or any other lease or arrangement having substantially the same effect as any of the foregoing.
Loans ” or “ Loans ” has the meaning set forth in Section 2.1(a).
Lordsburg Facility ” means the 72 megawatt gas fired combustion turbine generator in Lordsburg, New Mexico.
Luna Facility ” means the combined cycle power generation facility located near Deming, New Mexico, 33.3% of which is owned by the Borrower.
Mandatory Borrowing ” has the meaning set forth in Section 2.1(f).
Mandatory Prepayment Date ” has the meaning set forth in Section 3.3(b).
Margin Stock ” has the meaning ascribed to such term in Regulation U.
Markit ” has the meaning provided in the definition of LCD Index Average Bid in this Section 1.1.
Material Adverse Change ” has the meaning set forth in the Commitment Letter.
Material Adverse Effect ” means a material adverse effect upon (a) the business, assets, liabilities (actual or contingent), operations, condition (financial or otherwise) or prospects of the Borrower and its Subsidiaries, taken as a whole, (b) the ability of the Borrower to perform its obligations under this Agreement or any of the other Credit Documents or (c) the legality, validity or enforceability of this Agreement or any of the other Credit Documents or the rights and remedies of the Administrative Agent and the Lenders hereunder and thereunder.
Material Lease ” means any lease to the Borrower of its leasehold interests in (i) Unit 1 or Unit 2, and related common facilities, of the Palo Verde Nuclear Generating Station or (ii) the electric transmission line, and related facilities, known as the Eastern Interconnection Project, including, without limitation, any lease set forth on Schedule 6.18 hereto.
Maturity Date ” means the earlier of (i) April 30, 2009 and (ii) 45 days prior to such date if no Borrowing has been made hereunder pursuant to Section 2.1(a).

 

15


 
Moody’s ” means Moody’s Investors Service, Inc. and its successors.
Multiemployer Plan ” means any “multiemployer plan” within the meaning of Section 4001(a)(3) of ERISA.
Multiple Employer Plan ” means a Single Employer Plan to which the Borrower, any of its Subsidiaries or any ERISA Affiliate and at least one employer other than the Borrower, any of its Subsidiaries or any ERISA Affiliate are contributing sponsors.
Net Cash Proceeds ” means (a) in connection with any Asset Sale Prepayment Event or any Recovery Event, the proceeds thereof in the form of Cash (including any such proceeds received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable or otherwise, but only as and when received), net of attorneys’ fees, accountants’ fees, investment banking fees, amounts required to be applied to the repayment of Indebtedness secured by a Lien expressly permitted hereunder on any asset that is the subject of such Asset Sale Prepayment Event or Recovery Event and other customary fees and expenses actually incurred in connection therewith and net of taxes paid or reasonably estimated to be payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements), (b) in connection with any Debt Incurrence Prepayment Event the cash proceeds received from such issuance or incurrence, net of attorneys’ fees, investment banking fees, accountants’ fees, underwriting discounts, commissions and other customary fees and expenses actually incurred in connection therewith, and (c) in connection with any Equity Issuance Prepayment Event, the cash proceeds received from such issuance, net of attorneys’ fees, investment banking fees, accountants’ fees, underwriting discounts and commissions and other customary fees and expenses actually incurred in connection therewith.
Non-Consenting Lender ” has the meaning set forth in Section 11.21.
Notes ” means the promissory notes of the Borrower in favor of each of the Lenders evidencing the Loans provided pursuant to Section 2.1, individually or collectively, as appropriate, as such promissory notes may be amended, modified, supplemented, extended, renewed or replaced from time to time and as evidenced in the form of Exhibit 2.1(e) .
Notice of Borrowing ” means a request by the Borrower for a Loan in the form of Exhibit 2.1(b) .
Notice of Continuation/Conversion ” means a request by the Borrower to continue an existing Eurodollar Loan to a new Interest Period or to convert a Eurodollar Loan to a Base Rate Loan or a Base Rate Loan to a Eurodollar Loan, in the form of Exhibit 2.2 .
Other Taxes ” has the meaning set forth in Section 3.13(b).
Parent ” has the meaning set forth in Section 11.18(a).

 

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Participant ” has the meaning set forth in Section 11.3(d).
Participation Interest ” means the purchase by a Lender of a participation in any Loan as provided in Section 3.8.
PBGC ” means the Pension Benefit Guaranty Corporation and any successor thereto.
Person ” means any individual, partnership, joint venture, firm, corporation, limited liability company, association, trust or other enterprise (whether or not incorporated), or any Governmental Authority.
Plan ” means any “employee benefit plan” (within the meaning of Section 3(3) of ERISA) and with respect to which the Borrower, any of its Subsidiaries or any ERISA Affiliate is (or, if such plan were terminated at such time, would under Section 4062 or 4069 of ERISA be deemed to be) an “employer” within the meaning of Section 3(5) of ERISA.
PSNM Accounts Receivable Securitization ” means the electric and gas accounts receivable securitization program that was approved by the New Mexico Public Regulation Commission in Case 3838 and was executed by the Borrower and Bank of America, N.A. (successor by merger to Fleet National Bank), or an Affiliate thereof, on April 8, 2003, and any amendments, replacements or extensions thereof (so long as such amendments, replacements or extensions are not materially less favorable to the Borrower and its Subsidiaries).
Platform ” has the meaning set forth in Section 11.1(c).
Prepayment Amount ” has the meaning set forth in Section 3.3(b).
Prepayment Option Notice ” has the meaning set forth in Section 3.3(b).
Prime Rate ” has the meaning set forth in the definition of Base Rate in this Section 1.1.
Prohibited Transaction ” means any transaction described in (a) Section 406 of ERISA that is not exempt by reason of Section 408 of ERISA or by reason of a Department of Labor prohibited transaction individual or class exemption or (b) Section 4975(c) of the Code that is not exempt by reason of Section 4975(c)(2) or 4975(d) of the Code.
Property ” means any right, title or interest in or to any property or asset of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible.
Register ” has the meaning set forth in Section 11.3(c).
Regulations T, U and X ” means Regulations T, U and X, respectively, of the Federal Reserve Board, and any successor regulations.

 

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Reportable Event ” means (a) any “reportable event” within the meaning of Section 4043(c) of ERISA for which the notice under Section 4043(a) of ERISA has not been waived by the PBGC (including any failure to meet the minimum funding standard of, or timely make any required installment under, Section 412 of the Code or Section 302 of ERISA, regardless of the issuance of any waivers in accordance with Section 412(d) of the Code), (b) any such “reportable event” subject to advance notice to the PBGC under Section 4043(b)(3) of ERISA, (c) any application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code, and (d) a cessation of operations described in Section 4062(e) of ERISA.
Required Lenders ” means the holders of more than 50% of the sum of (i) the aggregate unpaid principal amount of the Loans then outstanding and (ii) the aggregate Available Commitments of all Lenders then in effect.
Requirement of Law ” means, with respect to any Person, the organizational documents of such Person and any Law applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject or otherwise pertaining to any or all of the transactions contemplated by this Agreement and the other Credit Documents.
Responsible Officer ” means the president, the chief executive officer, the co-chief executive officer, the chief financial officer, any executive officer, vice president-finance, principal accounting officer or treasurer of the Borrower, and any other officer or similar official thereof responsible for the administration of the obligations of the Borrower in respect of this Agreement and the other Credit Documents.
Sale of the Gas Assets ” means the sale of the Borrower’s natural gas transmission and distribution systems to New Mexico Gas Company, Inc. pursuant to the terms of that certain Asset Purchase Agreement, dated as of January 12, 2008, by and among the Borrower, Continental Energy Systems LLC and New Mexico Gas Company, Inc.
S&P ” means Standard & Poor’s Rating Service, a division of The McGraw-Hill Companies, Inc. and its successors.
SEC ” means the Securities and Exchange Commission or any successor thereto.
Single Employer Plan ” means any Plan which is covered by Title IV of ERISA or Section 412 of the Code, but which is not a Multiemployer Plan or Multiple Employer Plan.
Special Debt Incurrence Prepayment Event ” has the meaning set forth in Section 3.3(b).

 

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Solvent ” means, with respect to any Person as of a particular date, that on such date (a) such Person is able to pay its debts and other liabilities, Contingent Obligations and other commitments as they mature in the normal course of business, (b) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay as such debts and liabilities mature in their ordinary course, (c) such Person is not engaged in a business or a transaction, and is not about to engage in a business or a transaction, for which such Person’s assets would constitute unreasonably small capital after giving due consideration to the prevailing practice in the industry in which such Person is engaged or is to engage, (d) the fair value of the assets of such Person is greater than the total amount of liabilities, including, without limitation, Contingent Obligations, of such Person and (e) the present fair saleable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured.
SPC ” has the meaning set forth in Section 11.3(h).
Subsidiary ” means, as to any Person, (a) any corporation more than 50% of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time, any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned by such Person directly or indirectly through Subsidiaries, and (b) any partnership, association, joint venture or other entity in which such person directly or indirectly through Subsidiaries has more than a 50% equity interest at any time. Any reference to Subsidiary herein, unless otherwise identified, shall mean a Subsidiary, direct or indirect, of the Borrower. Any reference to a Subsidiary of the Borrower herein shall not include any Subsidiary that is inactive, has minimal or no assets and does not generate revenues.
Taxes ” has the meaning set forth in Section 3.13(a).
Total Assets ” means all assets of the Borrower as shown on its most recent quarterly consolidated balance sheet, as determined in accordance with GAAP.
Type ” means, with respect to a Loan, its character as a Base Rate Loan or a Eurodollar Loan.
Voting Stock ” means the Capital Stock of a Person that is then outstanding and normally entitled to vote in the election of directors and other securities of such Person convertible into or exercisable for such Capital Stock (whether or not such securities are then currently convertible or exercisable).
Withdrawal Liability ” means liability to a Multiemployer Plan or a Multiple Employer Plan as a result of a complete or partial withdrawal from such Plan, as such terms are defined in Title IV of ERISA.
1.2 Computation of Time Periods and Other Definitional Provisions .
For purposes of computation of periods of time hereunder, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding.” References in this Agreement to “Articles”, “Sections”, “Schedules” or “Exhibits” shall be to Articles, Sections, Schedules or Exhibits of or to this Agreement unless otherwise specifically provided.

 

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1.3 Accounting Terms/Calculation of Financial Covenants .
Except as otherwise expressly provided herein, all accounting terms used herein or incorporated herein by reference shall be interpreted, and all financial statements and certificates and reports as to financial matters required to be delivered to the Administrative Agent or the Lenders hereunder shall be prepared, in accordance with GAAP applied on a consistent basis. Notwithstanding anything to the contrary in this Agreement, for purposes of calculation of the financial covenants set forth in Section 7.2, all accounting determinations and computations thereunder shall be made in accordance with GAAP as in effect as of the date of this Agreement applied on a basis consistent with the application used in preparing the most recent financial statements of the Borrower. In the event that any changes in GAAP after such date are required to be applied to the Borrower and would affect the computation of the financial covenants contained in Section 7.2, such changes shall be followed only from and after the date this Agreement shall have been amended to take into account any such changes.
1.4 Time .
All references to time herein shall be references to Central Standard Time or Central Daylight Time, as the case may be, unless specified otherwise.
1.5 Rounding of Financial Covenants .
Any financial ratios required to be maintained by the Borrower pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).
1.6 References to Agreements and Requirement of Laws .
Unless otherwise expressly provided herein: (a) references to organization documents, agreements (including the Credit Documents) and other contractual instruments shall be deemed to include all subsequent amendments, restatements, extensions, supplements and other modifications thereto, but only to the extent that such amendments, restatements, extensions, supplements and other modifications are not prohibited by any Credit Document and (b) references to any Requirement of Law shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such Requirement of Law.

 

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SECTION 2
FACILITY
2.1 Loans .
(a) Commitment . Subject to the terms and conditions set forth herein, each Lender severally agrees to make term loans (each a “ Loan ” and, collectively, the “ Loans ”) in Dollars to the Borrower, at any time and from time to time during the Availability Period, but in any event, except with respect to Mandatory Borrowings, on no more than two occasions, in an amount not to exceed the amount of the Available Commitment of such Lender. The Loans may from time to time be Eurodollar Loans or Base Rate Loans, as determined by the Borrower and notified to the Administrative Agent in accordance with Sections 2.1(b) and 2.2. To the extent that, on the last day of the Availability Period, there remains any Available Commitments, all Commitments shall terminate on such date and the Lenders shall no longer be obligated to make Loans to the Borrower thereafter. Loans that are repaid or prepaid may not be reborrowed.
(b) Method of Borrowing for Loans . Other than with respect to Mandatory Borrowings, by no later than 11:00 a.m. (i) on the date of the requested Borrowing of Loans that will be Base Rate Loans and (ii) three Business Days prior to the date of the requested Borrowing of Loans that will be Eurodollar Loans, the Borrower shall telephone the Administrative Agent as well as submit a written Notice of Borrowing in the form of Exhibit 2.1(b) to the Administrative Agent setting forth (A) the amount requested, (B) the Borrowing Date, (C) the Type of Loan, (D) with respect to Loans that will be Eurodollar Loans, the Interest Period applicable thereto, and (E) certification that the Borrower has complied in all respects with Section 5. If the Borrower shall fail to specify (1) an Interest Period in the case of a Eurodollar Loan, then such Eurodollar Loan shall be deemed to have an Interest Period of one month or (2) the Type of Loan requested, then such Loan shall be deemed to be a Base Rate Loan.
(c) Funding of Loans . Upon receipt of a Notice of Borrowing (or in the case of any Mandatory Borrowing, receipt of written notice from the Arrangers), the Administrative Agent shall promptly inform the Lenders as to the terms thereof. Each such Lender shall make its pro rata share of the requested Borrowing available to the Administrative Agent in immediately available funds at the Administrative Agent’s Office not later than 1:00 p.m. on the Business Day specified in the applicable Notice of Borrowing. Upon satisfaction of the conditions set forth in Section 5 (except with respect to any Mandatory Borrowing), the amount of the requested Borrowing will then be made available to the Borrower by the Administrative Agent either by (i) crediting the account of the Borrower on the books of the Administrative Agent with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) the Administrative Agent by the Borrower.
(d) Voluntary Reductions of Commitments . Upon at least three Business Days’ notice, the Borrower shall have the right to permanently terminate or reduce the Commitments of the Lenders at any time or from time to time; provided that each partial reduction shall be in an aggregate amount at least equal to $5,000,000 and in integral multiples of $1,000,000 above such amount.
(e) Notes . At the request of any Lender, the Loans made by such Lender shall be evidenced by a duly executed promissory note of the Borrower to such Lender in substantially the form of Exhibit 2.1(e) .

 

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(f) Mandatory Borrowings . At any time on or after the occurrence of either (i) any downgrade of the Debt Ratings of the Borrower by S&P to a Debt Rating below the Debt Rating of the Borrower on the Closing Date or (ii) a downgrade of the Debt Rating of the Borrower by Moody’s below Baa3, any Arranger may require that the Borrower make a Borrowing of Loans hereunder (any such borrowing, a “ Mandatory Borrowing ”) by such Arranger providing written notice to the Administrative Agent and the Borrower by no later than 11:00 a.m. on the date of the requested Mandatory Borrowing, which notice shall set forth the amount of the Borrowing and the Borrowing Date. Mandatory Borrowings shall be made in accordance with Section 2.1(c) and notwithstanding (A) the amount of Mandatory Borrowing may not comply with the minimum amount for borrowings of Loans otherwise required hereunder, (B) the failure of any conditions specified in Section 5.1 to have been satisfied or (C) the existence of a Default or an Event of Default. All Loans made pursuant to any Mandatory Borrowing shall initially be Base Rate Loans, however, thereafter all or any portion of such Loans may be converted to Eurodollar Loans in accordance with the terms of Section 2.2.
2.2 Continuations and Conversions .
Subject to the terms below, the Borrower shall have the option, on any Business Day prior to the Maturity Date, to continue existing Eurodollar Loans for a subsequent Interest Period, to convert Base Rate Loans into Eurodollar Loans or to convert Eurodollar Loans into Base Rate Loans. By no later than 11:00 a.m. (a) on the date of the requested conversion of a Eurodollar Loan to a Base Rate Loan and (b) three Business Days prior to the date of the requested continuation of a Eurodollar Loan or conversion of a Base Rate Loan to a Eurodollar Loan, the Borrower shall provide telephonic notice to the Administrative Agent, followed promptly by a written Notice of Continuation/Conversion in the form of Exhibit 2.2 , setting forth whether the Borrower wishes to continue or convert such Loans. Notwithstanding anything herein to the contrary, (A) except as provided in Section 3.11, Eurodollar Loans may only be continued or converted into Base Rate Loans on the last day of the Interest Period applicable thereto, (B) Eurodollar Loans may not be continued nor may Base Rate Loans be converted into Eurodollar Loans during the existence and continuation of a Default or an Event of Default and (C) any request to continue a Eurodollar Loan that fails to comply with the terms hereof or any failure to request a continuation of a Eurodollar Loan at the end of an Interest Period shall be deemed a request to convert such Eurodollar Loan to a Base Rate Loan on the last day of the applicable Interest Period.
2.3 Minimum Amounts .
Each request for a borrowing, conversion or continuation shall be subject to the requirements that (a) each Eurodollar Loan shall be in a minimum amount of $5,000,000 and in integral multiples of $1,000,000 in excess thereof, (b) except with respect to Mandatory Borrowings, each Base Rate Loan shall be in a minimum amount of $3,000,000 and in integral multiples of $100,000 in excess thereof (or the remaining amount of outstanding Loans) and (c) no more than three Eurodollar Loans shall be outstanding hereunder at any one time. For the purposes of this Section 2.3, separate Eurodollar Loans that begin and end on the same date, as well as Eurodollar Loans that begin and end on different dates, shall all be considered as separate Eurodollar Loans.

 

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2.4 Evidence of Debt .
The Loans made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary course of business. The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Loans made by the Lenders to the Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to its Borrower Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.
SECTION 3
GENERAL PROVISIONS APPLICABLE
TO LOANS
3.1 Interest .
(a) Interest Rate . Subject to Section 3.1(b), (i) all Base Rate Loans shall accrue interest at a rate per annum equal to the Base Rate plus the Applicable Percentage and (ii) all Eurodollar Loans shall accrue interest at a rate per annum equal to the Eurodollar Rate plus the Applicable Percentage.
(b) Default Rate of Interest .
(i) After the occurrence, and during the continuation, of an Event of Default pursuant to Section 9.1(a), the principal of and, to the extent permitted by Law, interest on the Loans and any other amounts owing hereunder or under the other Credit Documents (including, without limitation, fees and expenses) shall bear interest, payable on demand, at the Default Rate.
(ii) After the occurrence, and during the continuation, of an Event of Default (other than an Event of Default pursuant to Section 9.1(a)), at the request of the Required Lenders, the principal of and, to the extent permitted by Law, interest on the Loan and any other amounts owing hereunder or under the other Credit Documents (including, without limitation, fees and expenses) shall bear interest, payable on demand, at the Default Rate.
(c) Interest Payments . Interest on Loans shall be due and payable in arrears on each Interest Payment Date.

 

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3.2 Payments Generally .
(a) No Deductions; Place and Time of Payments . All payments to be made by the Borrower shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein, all payments by the Borrower hereunder shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the Administrative Agent’s Office in Dollars and in immediately available funds not later than 2:00 p.m. on the date specified herein. The Administrative Agent will promptly distribute to each Lender its pro rata share (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender’s Lending Office. All payments received by the Administrative Agent after 2:00 p.m. shall deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue.
(b) Payment Dates . Subject to the definition of “ Interest Period ,” if any payment to be made by the Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be.
(c) Advances by Administrative Agent . Unless the Borrower or any Lender has notified the Administrative Agent, prior to the time any payment is required to be made by it to the Administrative Agent hereunder, that the Borrower or such Lender, as the case may be, will not make such payment, the Administrative Agent may assume that the Borrower or such Lender, as the case may be, has timely made such payment and may (but shall not be so required to), in reliance thereon, make available a corresponding amount to the Person entitled thereto. If and to the extent that such payment was not in fact made to the Administrative Agent in immediately available funds, then:
(i) if the Borrower failed to make such payment, each Lender shall forthwith on demand repay to the Administrative Agent the portion of such assumed payment that was made available to such Lender in immediately available funds, together with interest thereon in respect of each day from and including the date such amount was made available by the Administrative Agent to such Lender to the date such amount is repaid to the Administrative Agent in immediately available funds at the Federal Funds Rate from time to time in effect; and
(ii) if any Lender failed to make such payment, such Lender shall forthwith on demand pay to the Administrative Agent the amount thereof in immediately available funds, together with interest thereon for the period from the date such amount was made available by the Administrative Agent to the Borrower to the date such amount is recovered by the Administrative Agent (the “ Compensation Period ”) at a rate per annum equal to the Federal Funds Rate from time to time in effect. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Loan included in the applicable Borrowing. If such Lender does not pay such amount forthwith upon the Administrative Agent’s demand therefor, the Administrative Agent may make a demand therefor upon the Borrower, and the Borrower shall pay such amount to the Administrative Agent, together with interest thereon for the Compensation Period at a rate per annum equal to the rate of interest applicable to such Borrowing. Nothing herein shall be deemed to relieve any Lender from its obligation to fulfill its Commitment or to prejudice any rights which the Administrative Agent or the Borrower may have against any Lender as a result of any default by such Lender hereunder.

 

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A notice of the Administrative Agent to any Lender or the Borrower with respect to any amount owing under this subsection (c) shall be conclusive, absent manifest error.
(d) Several Obligations . The obligations of the Lenders hereunder to make Loans and to fund or purchase Participation Interests are several and not joint. The failure of any Lender to make any Loan or to fund or purchase any Participation Interest on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loan or fund or purchase its Participation Interest.
(e) Funding Offices . Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.
3.3 Prepayments .
(a) Voluntary Prepayments . The Borrower shall have the right to prepay the Loans in whole or in part from time to time without premium or penalty; provided , however , that (i) all prepayments under this Section 3.3(a) shall be subject to Section 3.14, (ii) Eurodollar Loans may only be prepaid on three Business Days’ prior written notice to the Administrative Agent and (iii) each such partial prepayment shall be in the minimum principal amount of $5,000,000 and integral multiples of $1,000,000 or, if less than such minimum amounts, the entire principal amount thereof then outstanding. Amounts prepaid pursuant to this Section 3.3(a) shall be applied as the Borrower may elect; provided , however , if the Borrower fails to specify, such prepayment shall be applied by the Administrative Agent, subject to Section 3.7, in such manner as it deems reasonably appropriate. Amounts prepaid pursuant to this Section 3.3(a) may not be reborrowed.
(b) Mandatory Prepayments .
(i) If on any date the Borrower or any of its Subsidiaries shall receive any Net Cash Proceeds from any Asset Sale Prepayment Event or Equity Issuance Prepayment Event, then an amount equal to 100% of such Net Cash Proceeds shall be applied on such date toward the prepayment of the Loans and the reduction of the Commitments as set forth in Section 3.3(b)(iii). If on any date the Borrower or any of its Subsidiaries shall receive any Net Cash Proceeds from any Debt Incurrence Prepayment Event, then within 5 Business Days after receipt of such Net Cash Proceeds, the Borrower shall prepay the Loans and/or reduce the amount of the Commitments in an amount equal to 100% of such Net Cash Proceeds as set forth in Section 3.3(b)(iii); provided , however , that with respect to the first $350,000,000 of Indebtedness issued or incurred by the Borrower or any of its Subsidiaries after the Closing Date (the “ Special Debt Incurrence Prepayment Event ”), the Borrower shall only be required to prepay the Loans and/or reduce the Commitments in an amount equal to 43% of such Net Cash Proceeds as set forth in Section 3.3(b)(iii).

 

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(ii) Amounts to be applied in connection with prepayments and Commitment reductions made pursuant to this Section 3.3(b) shall be applied, first , to the prepayment of the Loans in accordance with Section 3.7 and, second , to reduce permanently the Commitments. The application of any prepayment pursuant to this Section 3.3(b) shall be made, first , to Base Rate Loans and, second , to Eurodollar Loans. Each prepayment of the Loans under this Section 3.3(b) shall be accompanied by accrued interest to the date of such prepayment on the amount prepaid.
(iii) Notwithstanding anything to the contrary in Section 3.3(b)(iii) or in Section 3.7, with respect to the amount of Net Cash Proceeds received in connection with any Special Debt Incurrence Prepayment Event (the “ Prepayment Amount ”), the Borrower will, in lieu of applying such amount to the prepayment of the Loans and the reduction of Commitments as provided in clause (ii) above, on the date specified in Section 3.3(b)(i) for such prepayment, give the Administrative Agent telephonic notice (promptly confirmed in writing) requesting that the Administrative Agent prepare and provide to each Lender a notice (each, a “ Prepayment Option Notice ”) as described below. As promptly as practicable after receiving such notice from the Borrower, the Administrative Agent will send to each Lender a Prepayment Option Notice, which shall be in the form of Exhibit 3.3(b)(iii) , and shall include an offer by the Borrower to prepay and/or reduce on the date (each a “ Mandatory Prepayment Date ”) that is 10 Business Days after the date of the Prepayment Option Notice, the relevant Loans and/or relevant Commitments of such Lender by an amount equal to the portion of the Prepayment Amount indicated in such Lender’s Prepayment Option Notice as being applicable to such Lender’s Loans and Commitments. On the Mandatory Prepayment Date, the Borrower shall pay to the relevant Lenders the aggregate amount necessary to prepay that portion of the outstanding relevant Loans and/or to reduce that portion of the outstanding relevant Commitments in respect of which such Lenders have accepted prepayment as described above and the Borrower shall be entitled to retain the remaining portion of the Prepayment Amount not accepted by the relevant Lenders.
(iv) All prepayments pursuant to this Section 3.3(b) shall be subject to Section 3.14.
3.4 Fees .
(a) Commitment Fees . The Borrower agrees to pay to the Administrative Agent for the account of each Lender a commitment fee for the period from and including the Closing Date to and including the last day of the Availability Period, computed at the Applicable Percentage for commitment fees determined from day to day on the average daily amount of the Available Commitment of such Lender at the end of each day during the period for which payment is made, payable in arrears on the last Business Day of each Fiscal Quarter and the first Business Day following the end of the Availability Period (or, if earlier, the date on which all of the Commitments shall have been reduced to zero), commencing on the first of such dates to occur after the Closing Date.

 

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(b) Funding Fees . The Borrower agrees to pay to the Administrative Agent for the account of each Lender a funding fee (the “ Funding Fees ”) equal to the product of (i) the aggregate principal amount of Loans borrowed by the Borrower on each Borrowing Date from such Lender multiplied by (ii) the Applicable Percentage for Funding Fees on such Borrowing Date. The Funding Fees shall be due and payable on each Borrowing Date.
(c) Duration Fees . The Borrower agrees to pay to the Administrative Agent, for the account of each Lender a duration fee equal to the product of (i) the sum of (x) the Available Commitment of such Lender and (y) the aggregate outstanding principal amount of Loans held by such Lender, in each case on December 31, 2008 multiplied by (ii) the Applicable Percentage for duration fees on December 31, 2008. The durations fees shall be due and payable on December 31, 2008
(d) Administrative Fees . The Borrower agrees to pay to the Administrative Agent, for its own account, an annual administrative fee as agreed to between the Borrower and the Administrative Agent in the Fee Letter.
3.5 Payment in full at Maturity .
On the Maturity Date, the entire outstanding principal balance of all Loans, together with accrued but unpaid interest and all fees and other sums owing under the Credit Documents, shall be due and payable in full, unless accelerated sooner pursuant to Section 9.2; provided that if the Maturity Date is not a Business Day, then such principal, interest, fees and other sums shall be due and payable in full on the next preceding Business Day.
3.6 Computations of Interest and Fees .
(a) Calculation of Interest and Fees . Except for Base Rate Loans that are based upon the Prime Rate, in which case interest shall be computed on the basis of the actual number of days elapsed over a year of 365 or 366 days, as the case may be, all computations of interest and fees hereunder shall be made on the basis of the actual number of days elapsed over a year of 360 days. Interest shall accrue from and including the first date of Borrowing (or continuation or conversion) to but excluding the last day occurring in the period for which such interest is payable. Each determination by the Administrative Agent of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error.
(b) Usury . It is the intent of the Lenders and the Borrower to conform to and contract in strict compliance with applicable usury Law from time to time in effect. All agreements between the Lenders and the Borrower are hereby limited by the provisions of this subsection which shall override and control all such agreements, whether now existing or hereafter arising and whether written or oral. In no way, nor in any event or contingency (including but not limited to prepayment or acceleration of the maturity of any Borrower Obligation), shall the interest taken, reserved, contracted for, charged, or received under this Agreement, under the Notes or otherwise, exceed the maximum nonusurious amount permissible under applicable Law.

 

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If, from any possible construction of any of the Credit Documents or any other document, interest would otherwise be payable in excess of the maximum nonusurious amount, any such construction shall be subject to the provisions of this subsection and such documents shall be automatically reduced to the maximum nonusurious amount permitted under applicable Law, without the necessity of execution of any amendment or new document. If any Lender shall ever receive anything of value which is characterized as interest on the Loans under applicable Law and which would, apart from this provision, be in excess of the maximum nonusurious amount, an amount equal to the amount which would have been excessive interest shall, without penalty, be applied to the reduction of the principal amount owing on the Loans and not to the payment of interest, or refunded to the Borrower or the other payor thereof if and to the extent such amount which would have been excessive exceeds such unpaid principal amount of the Loans. The right to demand payment of the Loans or any other Indebtedness evidenced by any of the Credit Documents does not include the right to accelerate the payment of any interest which has not otherwise accrued on the date of such demand, and the Lenders do not intend to charge or receive any unearned interest in the event of such demand. All interest paid or agreed to be paid to the Lenders with respect to the Loans shall, to the extent permitted by applicable Law, be amortized, prorated, allocated, and spread throughout the full stated term (including any renewal or extension) of the Loans so that the amount of interest on account of the Loans does not exceed the maximum nonusurious amount permitted by applicable Law.
3.7 Pro Rata Treatment .
Except to the extent otherwise provided herein, including Section 3.3(b)(iii), each Borrowing, each payment or prepayment of principal of any Loan, each payment of interest, each payment of fees (other than administrative fees paid to the Administrative Agent), each conversion or continuation of any Loan and each reduction in the Commitments, shall be allocated pro rata among the relevant Lenders in accordance with their pro rata share according to the respective sum of (i) the outstanding principal amounts of the Loans then held by the Lenders and (ii) the aggregate Available Commitments then held by the Lenders; provided that, if any Lender shall have failed to pay its pro rata share of any Loan or fund or purchase its Participation Interest, then any amount to which such Lender would otherwise be entitled pursuant to this Section 3.7 shall instead be payable to the Administrative Agent until the share of such Loan or such Participation Interest not funded or purchased by such Lender has been repaid. In the event any principal, interest, fee or other amount paid to any Lender pursuant to this Agreement or any other Credit Document is rescinded or must otherwise be returned by the Administrative Agent, (a) such principal, interest, fee or other amount that had been satisfied by such payment shall be revived, reinstated and continued in full force and effect as if such payment had not occurred and (b) such Lender shall, upon the request of the Administrative Agent, repay to the Administrative Agent the amount so paid to such Lender, with interest for the period commencing on the date such payment is returned by the Administrative Agent until the date the Administrative Agent receives such repayment at a rate per annum equal to the Federal Funds Rate if repaid within two (2) Business Days after such request and thereafter at a rate per annum equal to the Base Rate.

 

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3.8 Sharing of Payments .
The Lenders agree among themselves that, except to the extent otherwise provided herein, in the event that any Lender shall obtain payment in respect of any Loan or any other obligation owing to such Lender under this Agreement through the exercise of a right of setoff, banker’s lien or counterclaim, or pursuant to a secured claim under Section 506 of the Bankruptcy Code or other security or interest arising from, or in lieu of, such secured claim, received by such Lender under any applicable Debtor Relief Law or other similar Law or otherwise, or by any other means, in excess of its pro rata share of such payment as provided for in this Agreement, such Lender shall promptly pay in cash or purchase from the other Lenders a participation in such Loans and other obligations in such amounts, and make such other adjustments from time to time, as shall be equitable to the end that all Lenders share such payment in accordance with their pro rata shares. The Lenders further agree among themselves that if payment to a Lender obtained by such Lender through the exercise of a right of setoff, banker’s lien, counterclaim or other event as aforesaid shall be rescinded or must otherwise be returned, each Lender which shall have shared the benefit of such payment shall, by payment in cash or a repurchase of a participation theretofore sold, return its share of that benefit (together with its share of any accrued interest payable with respect thereto) to each Lender whose payment shall have been rescinded or otherwise returned. The Borrower agrees that (a) any Lender so purchasing such a participation may, to the fullest extent permitted by Law, exercise all rights of payment, including setoff, banker’s lien or counterclaim, with respect to such participation as fully as if such Lender were a holder of such Loan or other obligation in the amount of such participation and (b) the Borrower Obligations that have been satisfied by a payment that has been rescinded or otherwise returned shall be revived, reinstated and continued in full force and effect as if such payment had not occurred. Except as otherwise expressly provided in this Agreement, if any Lender or the Administrative Agent shall fail to remit to any other Lender an amount payable by such Lender or the Administrative Agent to such other Lender pursuant to this Agreement on the date when such amount is due, such payments shall be made together with interest thereon for each date from the date such amount is due until the date such amount is paid to the Administrative Agent or such other Lender at a rate per annum equal to the Federal Funds Rate. If under any applicable Debtor Relief Law or other similar Law, any Lender receives a secured claim in lieu of a setoff to which this Section 3.8 applies, such Lender shall, to the extent practicable, exercise its rights in respect of such secured claim in a manner consistent with the rights of the Lenders under this Section 3.8 to share in the benefits of any recovery on such secured claim.
3.9 Capital Adequacy .
If any Lender determines that the introduction after the Closing Date of any Law, rule or regulation or other Requirement of Law regarding capital adequacy or any change therein or in the interpretation thereof, or compliance by such Lender (or its Lending Office) therewith, has or would have the effect of reducing the rate of return on the capital or assets of such Lender or any corporation controlling such Lender as a consequence of such Lender’s obligations hereunder (taking into consideration its policies with respect to capital adequacy and such Lender’s desired return on capital), then from time to time upon demand of such Lender (with a copy of such demand to the Administrative Agent), the Borrower shall pay to such Lender such additional amounts as will compensate such Lender for such reduction.

 

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3.10 Eurodollar Provisions .
If the Administrative Agent determines (which determination shall be conclusive and binding upon the Borrower) in connection with any request for a Eurodollar Loan or a conversion to or continuation thereof that (i) deposits in Dollars are not being offered to banks in the applicable offshore interbank market for the applicable amount and Interest Period of such Eurodollar Loan, (ii) adequate and reasonable means do not exist for determining the Eurodollar Rate for such Eurodollar Loan, or (iii) the Eurodollar Rate for such Eurodollar Loan does not adequately and fairly reflect the cost to the Lenders of funding such Eurodollar Loan, the Administrative Agent will promptly notify the Borrower and the Lenders. Thereafter, the obligation of the Lenders to make or maintain Eurodollar Loans shall be suspended until the Administrative Agent revokes such notice. Upon receipt of such notice, the Borrower may revoke any pending Notice of Borrowing or Notice of Continuation/Conversion with respect to Eurodollar Loans or, failing that, will be deemed to have converted such request into a request for a Borrowing of or, to the extent permitted hereunder, conversion into a Base Rate Loan in the amount specified therein.
3.11 Illegality .
If any Lender determines that any Requirement of Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund Eurodollar Loans, or materially restricts the authority of such Lender to purchase or sell, or to take deposits of Dollars in the London interbank market, or to determine or charge interest rates based upon the Eurodollar Rate, then, on notice thereof by such Lender to the Borrower through the Administrative Agent, any obligation of such Lender to make or continue Eurodollar Loans or to convert Base Rate Loans to Eurodollar Loans shall be suspended until such Lender notifies the Administrative Agent and the Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, the Borrower shall, upon demand to the Borrower from such Lender (with a copy to the Administrative Agent), prepay or, if applicable, convert all Eurodollar Loans of such Lender to Base Rate Loans, either on the last day of the Interest Period thereof, if such Lender may lawfully continue to maintain such Eurodollar Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such Eurodollar Loans. Upon any such prepayment or conversion, the Borrower shall also pay interest on the amount so prepaid or converted, together with any amounts due with respect thereto pursuant to Section 3.14.
3.12 Requirements of Law; Reserves on Eurodollar Loans .
(a) Changes in Law . If any Lender determines that as a result of the introduction of or any change in, or in the interpretation of, any Requirement of Law, or such Lender’s compliance therewith, there shall be any increase in the cost to such Lender of agreeing to make or making, funding or maintaining Eurodollar Loans, or a reduction in the amount received or receivable by such Lender in connection with any of the foregoing (excluding for purposes of this Section 3.12 any such increased costs or reduction in amount resulting from (i) Taxes or Other Taxes (as to which Section 3.13 shall govern) and (ii) reserve requirements contemplated by subsection (b) below), then from time to time, upon demand of such Lender (through the Administrative Agent), the Borrower shall pay to such Lender such additional amounts as will compensate such Lender for such increased cost or reduction in yield.

 

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(b) Reserves . The Borrower shall pay to each Lender (to the extent such Lender has not otherwise been compensated therefor hereunder), as long as such Lender shall be required to maintain reserves with respect to liabilities or assets consisting of or including Eurodollar funds or deposits (currently known as “Eurodollar liabilities”), additional interest on the unpaid principal amount of each Eurodollar Loan equal to the actual costs of such reserves allocated to such Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive absent demonstrable error), which shall be due and payable on each date on which interest is payable on such Loan; provided that the Borrower shall have received at least 15 days’ prior notice (with a copy to the Administrative Agent) of such additional interest from such Lender. If a Lender fails to give notice 15 days prior to the relevant Interest Payment Date, such additional interest shall be due and payable 15 days from receipt of such notice.
3.13 Taxes .
(a) Payment of Taxes . Any and all payments by the Borrower to or for the account of the Administrative Agent or any Lender under any Credit Document shall be made free and clear of and without deduction for any and all present or future income, stamp or other taxes, duties, levies, imposts, deductions, assessments, fees, withholdings or similar charges, and all liabilities with respect thereto, but excluding, in the case of the Administrative Agent and each Lender, taxes imposed on or measured by its net income, and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof) under the Laws of which the Administrative Agent or such Lender, as the case may be, is organized or maintains its Lending Office (all such non-excluded present or future income, stamp or other taxes, duties, levies, imposts, deductions, assessments, fees, withholdings or similar charges, and liabilities being hereinafter referred to as “ Taxes ”). If the Borrower shall be required by any Requirement of Law to deduct any Taxes from or in respect of any sum payable under any Credit Document to the Administrative Agent or any Lender, (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 3.13(a)), the Administrative Agent or such Lender, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions, (iii) the Borrower shall pay the full amount deducted to the relevant taxation authority or other Governmental Authority in accordance with applicable Requirements of Law, and (iv) within 30 days after the date of such payment, the Borrower shall furnish to the Administrative Agent (which shall forward the same to such Lender, if applicable) the original or a certified copy of a receipt evidencing payment thereof, to the extent such receipt is issued therefor, or other written proof of payment thereof that is reasonably satisfactory to the Administrative Agent.
(b) Additional Taxes . In addition, the Borrower agrees to pay any and all present or future stamp, court or documentary taxes and any other excise or property taxes or charges or similar levies which arise from any payment made under any Credit Document or from the execution, delivery, performance, enforcement or registration of, or otherwise with respect to, any Credit Document (hereinafter referred to as “ Other Taxes ”).

 

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(c) No Deduction for Taxes . If the Borrower shall be required to deduct or pay any Taxes or Other Taxes from or in respect of any sum payable under any Credit Document to the Administrative Agent or any Lender, the Borrower shall also pay to the Administrative Agent (for the account of such Lender) or to such Lender, at the time interest is paid, such additional amount that such Lender specifies as necessary to preserve the after-tax yield (after factoring in all taxes, including taxes imposed on or measured by net income) such Lender would have received if such Taxes or Other Taxes had not been imposed.
(d) Indemnification . The Borrower agrees to indemnify the Administrative Agent and each Lender for (i) the full amount of Taxes and Other Taxes (including any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this Section 3.13(d)) paid by the Administrative Agent and such Lender, and (ii) any liability (including penalties, interest and expenses) arising therefrom or with respect thereto.
(e) Exemption from Taxes . In the case of any payment hereunder or under any other Credit Document by or on behalf of the Borrower through an account or branch outside the United States, or on behalf of the Borrower by a payor that is not a United States person, if the Borrower determines that no taxes are payable in respect thereof, the Borrower shall furnish, or shall cause such payor to furnish, to the Administrative Agent, an opinion of counsel reasonably acceptable to the Administrative Agent stating that such payment is exempt from Taxes. For purposes of this subsection (e), the terms “United States” and “United States person” shall have the meanings specified in Section 7701 of the Code.
(f) Foreign Lenders . Each Lender that is a foreign corporation, foreign partnership or foreign trust within the meaning of the Code (a “ Foreign Lender ”) shall deliver to the Administrative Agent, prior to receipt of any payment subject to withholding under the Code, two duly signed completed copies of either IRS Form W-8BEN or any successor thereto (relating to such Lender and entitling it to an exemption from, or reduction of, withholding tax on all payments to be made to such Lender by the Borrower pursuant to this Agreement), as appropriate, or IRS Form W-8ECI or any successor thereto (relating to all payments to be made to such Lender by the Borrower pursuant to this Agreement) or such other evidence satisfactory to the Borrower and the Administrative Agent that such Lender is entitled to an exemption from, or reduction of, United States withholding tax. Thereafter and from time to time, each such Lender shall (i) promptly submit to the Administrative Agent such additional duly completed and signed copies of one of such forms (or such successor forms as shall be adopted from time to time by the relevant United States taxing authorities), as appropriate, as may reasonably be requested by the Borrower or the Administrative Agent and then be available under then current United States Laws and regulations to avoid, or such evidence as is satisfactory to the Borrower and the Administrative Agent of any available

 

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exemption from or reduction of, United States withholding taxes in respect of all payments to be made to such Lender by the Borr

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