SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For The Quarterly Period Ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
Commission File Number 1-5924
1
TUCSON ELECTRIC POWER COMPANY
Exact Name of Registrant as Specified in Its Charter)
ARIZONA 86-0062700
State or Other Jurisdiction of IRS Employer
Incorporation or Organization) Identification No.)
220 WEST SIXTH STREET, TUCSON, P.O. BOX 711
ARIZONA 85702
85701 Zip Code)
Address of Principal Executive
Offices)
520) 571-4000
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Indicate by check mark whether the registrant 1) has filed all reports
required to be filed by Section 13 or 15d) of the Securities Exchange Act of
1934 during the preceding 12 months or for such shorter period that the
registrant was required to file such reports), and 2) has been subject to such
filing requirements for the past 90 days.
Yes X No
At May 9, 1996, 160,652,959 shares of the registrant's Common Stock, no par
value the only class of Common Stock), were outstanding.
2
TABLE OF CONTENTS
Page
Definitions..............................................................ii
Independent Accountants' Report...........................................1
PART I - FINANCIAL INFORMATION
Item 1. -- Financial Statements
Comparative Consolidated Statements of Income Loss)..................2
Comparative Consolidated Statements of Cash Flows....................3
Comparative Consolidated Balance Sheets..............................4
Notes to Consolidated Financial Statements
Note 1. Rate Matters................................................5
Note 2. Tax Assessments.............................................5
Note 3. Income Taxes................................................6
Note 4. Long-Term Debt..............................................6
Note 5. Reclassification............................................6
Item 2. -- Management's Discussion and Analysis of Financial Condition and
Results of Operations
Overview.............................................................7
Rate Matters.........................................................7
Competition
Wholesale........................................................8
Retail...........................................................9
Accounting for the Effects of Regulation............................10
Dividends on Common Stock...........................................11
Earnings............................................................11
Results of Operations
Results of Utility Operations
Sales and Revenues..............................................12
i
Operating Expenses..............................................12
Other Income....................................................13
Interest Expense................................................13
Income Taxes....................................................13
Liquidity and Capital Resources..........................................14
Cash Flows......................................................14
Financing Developments..........................................14
PART II - OTHER INFORMATION
Item 1. -- Legal Proceedings
Tax Assessments..................................................16
Item 6. -- Exhibits and Reports on Form 8-K............................16
Signature Page...........................................................17
Exhibit Index............................................................18
DEFINITIONS
The abbreviations and acronyms used in the 1996 First Quarter Form 10-Q are
defined below:
ACC............... Arizona Corporation Commission.
Banks............. Various banks with which the Company has credit
relationships.
Board of Directors The Company's board of directors.
Century........... Century Power Corporation, an indirect subsidiary of
Catalyst and formerly known as Alamito Company.
Common Stock...... The Company's common stock, without par value.
ii
Company........... Tucson Electric Power Company.
Creditors......... Certain of the Company's creditors and lease participants
and Century and the Springerville Unit 1 Leases
participants.
Energy Act........ The Energy Policy Act of 1992.
FAS 71............ Statement of Financial Accounting Standards #71:
Accounting for the Effects of Certain Types of
Regulation.
FAS 92............ Statement of Financial Accounting Standards #92:
Regulated Enterprises - Accounting for Phase-In Plans.
FAS 101........... Statement of Financial Accounting Standards #101:
Regulated Enterprises - Accounting for the
Discontinuation of Application of FAS 71.
FAS 121........... Statement of Financial Accounting Standards #121:
Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of.
FERC.............. Federal Energy Regulatory Commission.
First Mortgage Bonds First mortgage bonds issued under the General First
Mortgage.
General First Mortgage The Indenture, dated as of April 1, 1941, of Tucson
Gas, Electric Light and Power Company to The Chase
National Bank of the City of New York, as trustee, as
supplemented and amended.
Holding Company Act The Public Utility Holding Company Act of 1935, as
amended.
Irvington......... Irvington Generating Station.
Irvington Lease... The leveraged lease arrangement relating to Irvington Unit
4.
kWh............... Kilowatt-hours).
MRA............... Master restructuring agreement between the Company and the
Banks which includes the Renewable Term Loan, Revolving
Credit and certain replacement reimbursement agreement.
iii
MSR............... Modesto, Santa Clara and Redding Public Power Agency.
Nations Energy.... Nations Energy Corporation, a wholly-owned subsidiary of
the Company.
1994 Rate Order... ACC Rate Order concerning an increase in the Company's
retail base rates and certain regulatory write-offs,
issued January 11, 1994.
1996 Rate Order..................... ACC Rate Order concerning an
increase in the Company's retail base rates and the
recovery of Springerville Unit 2 costs, issued March 29,
1996.
NOL............... Net Operating Loss carryforward for tax purposes.
NOPR.............. Notice of Proposed Rulemaking.
PURPA............. Public Utility Regulatory Policies Act of 1978, as
amended.
RTGs.............. Regional Transmission Groups.
Renewable Term Loan Credit facility that replaced the Term Loan pursuant to
the MRA Sixth Amendment, dated as of November 1, 1994,
and effective March 7, 1995.
Revolving Credit.. $50 million revolving credit facility entered into between
a syndicate of banks and the Company.
Shareholders...... Holders of Common Stock.
Springerville..... Springerville Generating Station.
Springerville Common Facilities
Leases.......... Leveraged lease arrangements relating to one-half interest
in certain facilities at Springerville used in common
with Springerville Unit 1 and Springerville Unit 2.
Springerville Unit 1 Leases Leveraged lease arrangements relating to
Springerville Unit 1, and one half interest in certain
facilities at Springerville used in common with
Springerville Unit 1 and Springerville Unit 2.
SWRTA............. Southwest Regional Transmission Association.
iv
DEFINITIONS
concluded)
Valencia Leases... Valencia's leveraged lease arrangements relating to the
coal handling facilities serving Springerville.
WRTA.............. Western Regional Transmission Association.
INDEPENDENT ACCOUNTANTS' REPORT
Tucson Electric Power Company
220 West Sixth Street
Tucson, Arizona 85701
We have reviewed the accompanying condensed consolidated balance sheet of Tucson
Electric Power Company and subsidiaries the "Company") as of March 31, 1996 and
the related condensed consolidated statements of income loss) and of cash flows
for the three-month periods ended March 31, 1996 and 1995. These financial
statements are their responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and of making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to such condensed consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet and statement of capitalization of the
Company as of December 31, 1995 and the related consolidated statements of
income loss), cash flows, and changes in stockholders' equity deficit) for the
year then ended not presented herein); and in our report dated January 29, 1996
which includes an explanatory paragraph relating to the timing of the recovery
of 37.5% of Springerville Unit 2; see Note 1 to the March 31, 1996 condensed
1
consolidated financial statements for the current status of this matter), we
expressed an unqualified opinion on those consolidated financial statements. In
our opinion, the information set forth in the accompanying consolidated balance
sheet as of December 31, 1995 is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which is has been derived.
DELOITTE & TOUCHE LLP
Tucson, Arizona
May 3, 1996
2
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------
The March 31 consolidated financial statements are unaudited but reflect
all normal recurring accruals and other adjustments which are, in the opinion
of management, necessary for a fair statement of the results for the interim
periods covered. Due to seasonal fluctuations in sales, the quarterly
results are not indicative of annual operating results. Also see Item 2. -
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
COMPARATIVE CONSOLIDATED STATEMENTS OF INCOME (LOSS)
Three Months Ended
March 31,
1996 1995
-Thousands of Dollars-
Operating Revenues
Retail Customers $125,210 $118,187
Amortization of MSR Option Gain Regulatory Liability 5,013 5,013
Sales for Resale 17,805 19,545
--------- ---------
Total Operating Revenues 148,028 142,745
--------- ---------
Operating Expenses
Fuel and Purchased Power 50,849 45,716
Capital Lease Expense 23,325 23,443
Amortization of Springerville Unit 1 Allowance (7,273) (7,108)
Other Operations 23,954 24,842
Maintenance and Repairs 8,792 10,683
Depreciation and Amortization 23,487 22,886
Taxes Other Than Income Taxes 13,858 15,557
Income Taxes (7,536) (22)
--------- ---------
Total Operating Expenses 129,456 135,997
--------- ---------
Operating Income 18,572 6,748
--------- ---------
Other Income (Deductions)
Income Taxes 5,693 1,130
Interest Income 1,473 2,721
Gains on Sales of Securities - 2,958
Other (562) (32)
--------- ---------
Total Other Income (Deductions) 6,604 6,777
--------- ---------
Interest Expense
Long-Term Debt - Net 14,644 18,378
Interest Imputed on Losses Recorded at Present Value 8,363 8,345
Other 2,118 2,039
Allowance for Borrowed Funds Used During Construction (368) (277)
--------- ---------
Total Interest Expense 24,757 28,485
--------- ---------
Net Income (Loss) $ 419 $(14,960)
========= =========
Average Shares of Common Stock Outstanding (000) 160,668 160,724
========= =========
Net Income (Loss) per Average Share $ 0.00 $ (0.09)
========= =========
See Notes to Consolidated Financial Statements.
COMPARATIVE CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
March 31,
1996 1995
-Thousands of Dollars-
Cash Flows from Operating Activities
Cash Receipts from Retail Customers $140,519 $137,231
Cash Receipts from Sales for Resale 17,037 25,476
Fuel and Purchased Power Costs Paid (39,985) (38,185)
Wages Paid, Net of Amounts Capitalized (24,824) (23,962)
Payment of Other Operations and Maintenance Costs (19,922) (19,105)
Capital Lease Interest Paid (37,838) (37,912)
Interest Paid, Net of Amounts Capitalized (13,739) (17,119)
Taxes Paid, Net of Amounts Capitalized (12,013) (26,293)
Emission Allowance Inventory Sale 4,120 -
Interest Received 1,890 2,919
--------- ---------
Net Cash Flows - Operating Activities 15,245 3,050
--------- ---------
Cash Flows from Investing Activities
Construction Expenditures (17,835) (14,577)
Other 311 2,768
--------- ---------
Net Cash Flows - Investing Activities (17,524) (11,809)
--------- ---------
Cash Flows from Financing Activities
Payments to Retire Long-Term Debt (10,000) (35,492)
Payments on Renewable Term Loan - (55,660)
Payments to Retire Capital Lease Obligations (4,150) (4,911)
Other 288 227
--------- ---------
Net Cash Flows - Financing Activities (13,862) (95,836)
--------- ---------
Net Decrease in Cash and Cash Equivalents (16,141) (104,595)
Cash and Cash Equivalents, Beginning of Year 85,094 248,152
--------- ---------
Cash and Cash Equivalents, End of Period $ 68,953 $143,557
========= =========
See Notes to Consolidated Financial Statements.
SUPPLEMENTAL CONSOLIDATED CASH FLOW INFORMATION
Three Months Ended
March 31,
1996 1995
-Thousands of Dollars-
Net Income (Loss) $ 419 $(14,960)
Adjustments to Reconcile Net Income (Loss)
to Net Cash Flows
Depreciation and Amortization Expense 23,487 22,886
Deferred Income Taxes and
Investment Tax Credits - Net (13,229) (1,152)
Deferred Fuel and Purchased Power - 1,757
Lease Payments Deferred (9,138) (9,006)
Regulatory Amortizations, Net of Interest Imputed
on Losses Recorded at Present Value (3,923) (3,776)
Other (305) (1,335)
Changes in Assets and Liabilities which
Provided (Used) Cash Exclusive of
Changes Shown Separately
Accounts Receivable 6,929 16,615
Materials and Fuel 1,290 (10,126)
Accounts Payable (1,178) 6,778
Taxes Accrued 14,173 2,583
Other Current Assets and Liabilities (7,934) (8,818)
Other Deferred Assets and Liabilities 4,654 1,604
--------- ---------
Net Cash Flows - Operating Activities $ 15,245 $ 3,050
========= =========
See Notes to Consolidated Financial Statements.
COMPARATIVE CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, December 31,
1996 1995
- Thousands of Dollars -
Utility Plant
Plant in Service $2,105,690 $2,095,679
Utility Plant Under Capital Leases 893,064 893,064
Construction Work in Progress 58,857 50,898
----------- -----------
Total Utility Plant 3,057,611 3,039,641
Less Accumulated Depreciation and Amortization (878,646) (859,227)
Less Accumulated Amortization of Capital Leases (43,661) (40,113)
Less Springerville Unit 1 Allowance (162,478) (162,175)
----------- -----------
Total Utility Plant - Net 1,972,826 1,978,126
----------- -----------
Investments and Other Property 51,730 52,116
----------- -----------
Current Assets
Cash and Cash Equivalents 68,953 85,094
Accounts Receivable 54,788 61,717
Materials and Fuel 40,878 42,168
Deferred Income Taxes - Current 16,154 18,250
Other 9,334 7,565
----------- -----------
Total Current Assets 190,107 214,794
----------- -----------
Deferred Debits - Regulatory Assets
Income Taxes Recoverable Through Future Rates 135,957 135,957
Deferred Common Facility Costs 62,667 63,303
Deferred Springerville Unit 2 Costs 38,807 42,039
Deferred Lease Expense 18,679 19,808
Other Deferred Regulatory Assets 8,380 8,576
Deferred Debits - Other 15,320 16,211
----------- -----------
Total Deferred Debits 279,810 285,894
----------- -----------
Total Assets $2,494,473 $2,530,930
=========== ===========
See Notes to Consolidated Financial Statements.
COMPARATIVE CONSOLIDATED BALANCE SHEETS
CAPITALIZATION AND OTHER LIABILITIES
March 31, December 31,
1996 1995
- Thousands of Dollars -
Capitalization
Common Stock $ 645,281 $ 645,295
Capital Stock Expense (6,357) (6,357)
Accumulated Deficit (626,031) (626,450)
----------- -----------
Common Stock Equity 12,893 12,488
Capital Lease Obligations 900,979 897,958
Long-Term Debt 1,207,460 1,207,460
----------- -----------
Total Capitalization 2,121,332 2,117,906
----------- -----------
Current Liabilities
Short-Term Debt 12,039 12,039
Current Obligations Under Capital Leases 32,011 33,389
Current Maturities of Long-Term Debt 2,075 12,075
Accounts Payable 24,000 25,178
Interest Accrued 40,610 57,389
Taxes Accrued 29,869 15,696
Accrued Employee Expenses 5,032 13,680
Other 7,710 7,989
----------- -----------
Total Current Liabilities 153,346 177,435
----------- -----------
Deferred Credits and Other Liabilities
MSR Option Gain Regulatory Liability 21,384 25,610
Accumulated Deferred Investment Tax Credits
Regulatory Liability 18,376 19,603
Other Regulatory Liabilities 13,947 10,343
Deferred Income Taxes - Noncurrent 131,882 145,982
Other 34,206 34,051
----------- -----------
Total Deferred Credits and Other Liabilities 219,795 235,589
----------- -----------
Total Capitalization and Other Liabilities $2,494,473 $2,530,930
=========== ===========
See Notes to Consolidated Financial Statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------
NOTE 1. RATE MATTERS
- ---------------------
On March 29, 1996, the ACC authorized a 1.1%, or $6.4 million, increase
in base rates effective March 31, 1996. Pursuant to the 1996 Rate Order, the
Company agreed to not seek an increase in base rates before January 1, 2000,
subject to conditions specified in such order.
The 1996 Rate Order recognizes all of Springerville Unit 2 as used and
useful for regulatory purposes, so that the Company will be able to recover
operating and capital costs associated with the portion of such generating
unit not previously included in rate base. Prior to the 1996 Rate Order, the
Company was not recovering through retail rates the depreciation, property
taxes, operating and maintenance expenses other than fuel, or interest costs
associated with the 37.5% of Springerville Unit 2 capacity not deemed by the
ACC to be used and useful for the retail jurisdiction and therefore not
included in rate base (hereinafter referred to as "retail excess capacity
deferrals"). The 1994 Rate Order permitted such costs to be deferred for
future recovery over the remaining useful life of Springerville Unit 2.
However, this phase-in plan did not qualify under FAS 92 and, therefore, such
retail excess capacity deferrals, while deferred for regulatory purposes,
were not deferred for financial reporting purposes and were expensed as
incurred. Such retail excess capacity deferrals totaled $3 million during
the three months ended March 31, 1996, bringing the total to $81 million at
March 30, 1996. Beginning March 31, 1996, the total retail excess capacity
deferrals will be amortized for regulatory purposes over 20 years.
In addition, prior to the 1996 Rate Order, the Company was not
recovering through retail rates 37.5% of the deferred Springerville Unit 2
rate synchronization costs ($28 million at March 30, 1996), which were non-
fuel costs of Springerville Unit 2 incurred from January 1, 1991 through
October 14, 1991. Beginning March 31, 1996, these costs will be amortized
over a three-year period on the Consolidated Statements of Income (Loss), in
accordance with the 1996 Rate Order. This amount, together with the balance
of such costs that the Company has been recovering through rates, pursuant to
the 1994 Rate Order, ($11 million at March 31, 1996), are reported in the
Company's Consolidated Balance Sheet as Deferred Springerville Unit 2 Costs.
The amortization of such costs is included in Depreciation and Amortization
on the Company's Consolidated Statements of Income (Loss).
NOTE 2. TAX ASSESSMENTS
- ------------------------
The Arizona Department of Revenue has issued transaction privilege tax
assessments to the Company alleging that Valencia is liable for sales tax on
gross income received from coal sales, transportation and coal-handling
services to the Company for the period November 1985 through May 1993. The
Company protested the assessments. On March 11, 1994, the Arizona Tax Court
issued a Minute Entry granting Summary Judgment to the Arizona Department of
Revenue and upholding the validity of the assessment issued for the period
November 1985 through March 1990. The Company appealed this decision to the
Court of Appeals. Generally, Arizona law requires payment of the assessment
due prior to the appellate process. In prior years, the Company has paid,
under protest, a total of $23 million of the disputed sales tax assessments,
subject to refund in the event the Company prevails.
Also, the Arizona Department of Revenue has issued transaction privilege
tax assessments to the lessors from whom the Company leases certain property.
The assessments allege sales tax liability on a component of rents paid by
the Company on the Springerville Unit 1 Leases, Springerville Common
Facilities Leases, Irvington Lease and Valencia Leases. Assessments cover
the period August 1, 1988 to September 30, 1993. Under the terms of the
lease agreements, if the Arizona Department of Revenue prevails the Company
must reimburse the lessors for taxes paid by them pursuant to indemnification
provisions.
In the opinion of management, the Company has recorded, through the
Consolidated Statements of Income (Loss) in current and prior years, a
liability for the amount of federal and state taxes and interest thereon for
which the Company feels incurrence is probable as of March 31, 1996. In the
event that all or most of the Arizona Department of Revenue's proposed
assessments are sustained, additional liabilities would result. Based on the
current status of the legal proceedings, the Company believes that the
ultimate resolution of such disputes will occur over a period of one to four
years. Although it is reasonably possible that the ultimate resolution of
such matters could result in additional sales tax expense of up to
approximately $27 million in excess of amounts accrued, management and
outside tax counsel believe that the Company has meritorious defenses to
mitigate or eliminate the assessed amounts. Based on consultations with
counsel, the Company believes that the resolution of the tax matters
described herein should not have a material adverse effect on the Company's
Consolidated Financial Statements.
NOTE 3. INCOME TAXES
- ---------------------
The benefit for income taxes included in the Comparative Consolidated
Statements of Income (Loss) consists of the following:
Three Months Ended
March 31,
1996 1995
---------- ----------
- Thousands of Dollars -
Operating Expenses:
Deferred Tax Benefit
Federal $ 5,979
State 1,543
---------- ----------
Total 7,522
Investment Tax Credit Amortization 14 $ 22
---------- ----------
Total Benefit Included in Operating Expenses 7,536 22
---------- ----------
Other Income (Deductions):
Deferred Tax Expense
Federal (292) -
State (77) -
---------- ----------
Total (369) -
Reduction in Valuation Allowance 4,849 -
Investment Tax Credit Amortization 1,213 1,130
---------- ----------
Total Benefit Included in
Other Income (Deductions) 5,693 1,130
---------- ----------
Total Benefit for Federal and State
Income Taxes $ 13,229 $ 1,152
========== ==========
The differences between income tax benefit and the amount obtained by
multiplying income (loss) before income taxes by the U.S. statutory federal
income tax rate are as follows:
Three Months Ended
March 31,
1996 1995
---------- ----------
- Thousands of Dollars -
Federal Income Tax Benefit at
Statutory Rate $ 4,484 $ 5,639
State Income Tax Benefit, Net of
Federal Deduction 690 -
Investment Tax Credit Amortization 1,227 1,152
Reduction in Valuation Allowance 4,849 -
Loss for Which No Tax Benefit
is Recognized - (5,639)
Use of Capital Loss Carryforwards 1,663 -
Other 316 -
---------- ----------
Total Benefit for Federal and
State Income Taxes $ 13,229 $ 1,152
========== ==========
NOTE 4. LONG-TERM DEBT
- -----------------------
On May 1, 1996, the Coconino County, Arizona Pollution Control
Corporation, on behalf of the Company, issued $16.7 million of variable rate
Pollution Control Revenue Bonds. The Pollution Control Corporation also
issued $14.7 million of variable rate Pollution Control Refunding Revenue
Bonds on behalf of the Company to provide funds to refund previously issued
8.25% Pollution Control Revenue Bonds. Both issues have a scheduled maturity
in 2031 and are secured by separate Letters of Credit that expire in 1999.
NOTE 5. RECLASSIFICATION
- -------------------------
Minor reclassifications have been made to the prior year financial
statements presented to conform to the current year's presentation.
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following contains information regarding the results of the Company's
operations during the first quarter of 1996 compared with the first quarter of
1995, the outlook for dividends on Common Stock, and changes in liquidity and
capital resources of the Company during the first quarter of 1996. Also
management's expectations of identifiable material trends are discussed.
OVERVIEW
Earnings for the Company improved by approximately $15.4 million in the
first quarter of 1996 relative to the same time period in 1995. This
improvement, from a net loss of $15.0 million to net income of $0.4 million,
reflects the recognition of non-cash tax benefits of $9.6 million associated
with federal net operating loss carryforwards generated in the first quarter of
1996 and the expected future utilization of federal net operating loss
carryforwards. See ~Results~of~Utility~Operations,~Income~Taxes~below. This
improvement also reflects the Company's continuing efforts to reduce operating
costs and capital costs, and growth in the Company's retail service area. The
Company also ended the first quarter of 1996 with common stock equity of $12.9
million, compared to a balance of $12.5 million as of December 31, 1995 and a
$57.2 million deficit balance recorded as of March 31, 1995.
Despite such improvements, the Company's financial prospects continue to be
subject to significant economic, regulatory and other uncertainties, some of
which are beyond the Company's control. These uncertainties include the degree
of utilization of generation capacity through either retail electric service or
wholesale sales and the extent to which the Company, due to continued high
financial and operating leverage, can alter operations and reduce costs in
response to unanticipated economic downturns or industry changes. The Company's
7
success will depend, among other things, on the Company's ability to contain the
costs of serving retail customers and the level of sales to such customers.
Although the Company anticipates continued growth in sales over the next five
years primarily as a result of anticipated population and economic growth in the
Tucson area, a number of factors such as changes in economic conditions and the
increasingly competitive electric markets could affect the Company's levels of
sales.
If the Company is unable to make sales at prices adequate to recover its
costs or if for other reasons the Company fails to maintain or improve its cash
flows, the Company's ability to meet its obligations may be jeopardized. During
the 1997-2001 period, approximately $1.0 billion of the Company's long-term debt
will be maturing, including approximately $805 million in reimbursement
agreements relating to letters of credit which will expire. The Company intends
to pay or refinance maturing bonds and bank loans and to replace or extend such
letters of credit. There can be no assurance, however, that the Company will be
able to pay such debt or replace or extend such letters of credit. In addition,
the Company has a significant amount of variable rate debt and, as a result, the
Company's future cash flows are also affected by the level of interest rates.
See ~Liquidity~and~Capital~Resources~below.
The Company's capital structure is highly leveraged and the Company's
ability to raise capital through either public or private financings) is
limited. The Company's ability to obtain debt financing is limited by reason of
limited free cash flow available to meet additional interest expense and due to
the restrictive covenants contained in existing obligations to creditors. To
the extent the Company refinances its debt obligations in order to repay them
when due, such refinancing may be made on terms which may be adverse to the
Company. Such terms could include, among other things, higher interest rates
and various restrictive covenants, such as dividend payment restrictions.
Access to equity capital may be limited because of the Company's likely limited
8
future profitability and its present inability to pay dividends. See
~Dividends~on~Common~Stock~~below.
During the next twelve months, the Company expects to be able to fund
continuing operating activities and construction expenditures with internal cash
flows, existing cash balances, and, if necessary, drawdowns under the Renewable
Term Loan and/or borrowings under the Revolving Credit. Cash balances are
invested in investment grade, money-market securities with an emphasis on
preserving the principal amount invested.
RATE MATTERS
On March 27, 1996 the ACC took formal action to resolve the Company's rate
application which was filed on June 13, 1995. In that application the Company
requested an overall increase in retail rates of 4.9% approximately $28.4
million in annual revenues). In its order dated March 29, 1996, the ACC
approved with certain modifications a rate settlement agreement which was filed
with the ACC on March 8, 1996, and approved a one-time rate increase for the
Company of 1.1 percent approximately $6.4 million annually). The rate increase
was implemented by the Company on March 31, 1996 for electrical usage on or
after such date.
The 1996 Rate Order recognizes all of Springerville Unit 2 as used and
useful for ratemaking purposes so that the Company will be able to recover the
operating and capital costs associated with that portion of the generating unit
not previously included in rates. See ~Note~1~of
the~Notes~to~Consolidated~Financial~Statements~, ~Rate~Matters.~The 1996 Rate
Order and approved settlement agreement also establish a rate moratorium period
for the Company. The Company has committed not to file for a change in base
rates prior to January 1, 2000, except for conditions or circumstances which
9
constitute an emergency, for the sharing of benefits with customers of cost
containment efforts where appropriate, or in the event the Company is acquired
or merged with another company. Among other things, the 1996 Rate Order and
approved settlement agreement also contain provisions relating to the
implementation of time-of-use rates for residential customers, increased pricing
flexibility for commercial and industrial customers, the consideration of
incentive regulation and a review of jurisdictional cost allocation procedures
for wholesale sales.
The rates approved in the 1996 Rate Order are based on a rate of return of
6.59 percent on a fair value rate base of approximately $1.36 billion, or 7.72
percent on an original cost rate base of approximately $1.16 billion. The
capital structure adopted by the ACC for rate making purposes includes 62.5
percent debt and 37.5 percent equity. Consistent with previous ACC rate orders,
the Company's leasehold interest in utility plant was reflected in rates through
an allowance for rental expense, and was therefore not included in rate base.
COMPETITION
WHOLESALE
The Company competes with other utilities, marketers and independent power
producers in the sale of electric capacity and energy in the wholesale market.
The Company's rates for wholesale sales of capacity and energy, generally, are
not permitted to exceed rates determined on a cost of service basis. In the
current market, wholesale prices are substantially below costs determined on a
fully allocated cost of service basis, but, in all instances, prices exceed the
level necessary to recover fuel and other variable costs. It is expected that
competition to sell capacity will remain vigorous, and that prices will remain
depressed for at least the next several years, due to increased competition and
10
surplus capacity in the southwestern United States. Competition for the sale of
capacity and energy is influenced by many factors, including the availability of
capacity in the southwestern United States, the availability and prices of
natural gas and oil, spot energy prices and transmission access. In addition,
the Energy Act has promoted increased competition in the wholesale electric
power markets.
The Energy Policy Act of 1992 addresses a wide range of energy issues,
including several matters affecting bulk power competition in the electric
utility industry. It creates exemptions from regulation under the Holding
Company Act for persons or corporations that own and/or operate in the United
States certain generating and interconnecting transmission facilities dedicated
exclusively to wholesale sales, thereby encouraging the participation of utility
affiliates, independent power producers and other non-utility participants in
the development of power generation. In order to facilitate competition in
power generation, the Energy Act also confers expanded authority upon FERC to
issue orders requiring electric utilities to transmit power and energy to or for
wholesale purchasers and sellers, and to require electric utilities to enlarge
or construct additional transmission capacity to provide these services.
FERC is encouraging all parties interested in transmission access to form
RTGs to facilitate access to and development of transmission service and to
assist in settling disputes regarding such matters. RTGs will not relieve FERC
of its responsibilities related to transmission access; however, such
organizations could provide for more efficient handling of transmission service
requests and planning for regional transmission needs. The Company is currently
involved in the development of two RTGs in the West, SWRTA and WRTA. WRTA was
approved by FERC on May 16, 1995 and SWRTA was approved on October 31, 1995.
The Company is a member of SWRTA and is also considering membership in WRTA. As
a condition of its approval of WRTA and SWRTA as RTGs the FERC has required all
transmitting utility members of each RTG to offer comparable transmission
services at least to other members of such RTG through tariffs that set
11
forth the rates, terms and conditions of service.
On March 29, 1995, the FERC issued a Notice of Proposed Rulemaking NOPR) on
Open Access Non-Discriminatory Transmission Services by Public Utilities and
Transmitting Utilities the Open Access NOPR) and a supplemental NOPR on Recovery
of Stranded Costs the Stranded Costs NOPR). On December 13, 1995, FERC issued a
third and supplemental NOPR on Real-Time Information Networks and Standards of
Conduct. On April 24, 1996, the FERC issued two orders pertaining to these
rulemaking proceedings. Order Number 888 addresses both open access and
stranded cost issues. Order Number 889 addresses the issue of establishing
real-time electronic information systems for transmission capacity, and provides
standards of conduct for owners of transmission capacity. On this same date the
FERC also issued a NOPR which proposes to establish a new system for utilities
to use in reserving capacity on their own and others' transmission lines.
Pursuant to Order Number 888, all public utilities that own, control, or
operate interstate transmission facilities will be required to offer
transmission service to others under a single tariff that incorporates certain
minimum terms and conditions of transmission service established by the FERC.
This tariff must also be used by public utilities for their own wholesale
market transactions. Transmission and generation services for new wholesale
service are to be unbundled and priced separately. According to the Order, the
use of a single tariff, when combined with other aspects of the order, is
intended to promote wholesale competition through the provision of non-
discriminatory open access transmission service by public utilities. Public
utilities will be required to file open access tariffs containing the terms and
conditions outlined in the Order within 60 days after publication of the final
rules in the Federal Register. With regard to the pricing of transmission
services, the order does not prescribe rates for network, point-to-point, or
ancillary services. Instead, public utilities may charge current rates or apply
for new transmission rates that comply with a transmission pricing policy
statement issued by the FERC in 1994. In establishing new rates for
12
transmission service, the order allows transmission providers to propose the
recovery of opportunity costs and expansion costs. Additionally, the order
permits public utilities to reserve existing transmission capacity needed for
native load growth and network transmission customer load growth that is
reasonably forecasted to occur within the utility's current planning horizon.
As proposed in the new NOPR pertaining to transmission capacity reservation,
each public utility would be required to replace the single pro forma tariff
established in Order Number 888 with a capacity reservation tariff by December
31, 1997. Comments on this new NOPR are due by August 1, 1996.
Order Number 888 also provides a basis for recovery by regulated public
utilities of legitimate and verifiable stranded costs associated with existing
wholesale requirements customers and retail customers who become unbundled
wholesale transmission customers of the utility. The order allows public
utilities to seek recovery of wholesale stranded costs from departing customers.
Such recovery would be achieved through a rate filing that is premised on the
direct assignment of stranded costs to the departing customer. The order
further states that the FERC would consider allowing the recovery of stranded
costs associated with retail wheeling only if a state regulatory commission
lacks the authority to consider that issue.
Order Number 889 requires transmission service providers to establish or
participate in an open access same-time information system OASIS) that provides
information on the availability of transmission capacity to wholesale market
participants. The order also establishes standards of conduct that are designed
to prevent employees of a public utility engaged in marketing functions from
obtaining preferential access to OASIS-related information or from engaging in
unduly discriminatory business practices. As such, public utilities will be
required to completely separate their wholesale power marketing and transmission
operation functions. The rules contained in this order will become effective 60
days after publication in the Federal Register. However, compliance with these
rules will not be required until November 1, 1996.
13
The requirements of Order Number 888 and Order Number 889 are still under
review by the Company. Therefore, the Company is unable to predict at this time
the ultimate impact of such orders on the Company's future results of
operations.
RETAIL
Under current law, the Company is not in direct competition with any other
regulated electric utility for electric service in the Company's retail service
territory. Nevertheless, the Company competes for retail markets against gas
service suppliers and others who may provide energy services which would be
substitutes for, or bypass of, the Company's services.
Electric energy for meeting retail customers' needs primarily competes with
natural gas, an alternative fuel source for certain retail energy uses. Such
uses may include heating, cooling and a limited number of other energy
applications. In most applications, electric energy is a cost effective source
of energy compared with natural gas. Also, customers, particularly industrial
and large commercial customers, may own and operate facilities to generate their
own electric energy requirements and, if such facilities are qualifying
facilities, to require the displaced electric utility to purchase the output of
such facilities at "avoided costs" pursuant to PURPA. Such facilities may be
operated by the customers themselves or by other entities engaged for such
purpose.
The Company actively markets energy and customized energy-related services
to meet customer needs. The Company has to date lost no customers to self-
generation in part because of such efforts and in part because such self-
generation alternatives have proven to be uneconomic in comparison with Company-
provided electric service. For example, the Company's two mining customers,
which provide approximately 10% of the Company's total annual revenues from
14
retail customers, each have considered self-generation. However, following
negotiations with the Company in 1993 and 1994, new contracts were executed that
included, among other things, rate reductions and term extensions. These
contracts expire after the year 2000, subject to various provisions allowing the
customers to terminate partially or entirely, under certain circumstances upon
at least one and up to two years prior notice. To date, no such notice has been
received. The ability to enter into or extend contracts, to avoid early
termination, and to retain customers will be dependent on, among other things,
the Company's ability to contain its costs, market conditions and alternatives
available to customers from time to time.
The legislatures and/or the regulatory commissions in several states have
considered or are considering "retail wheeling" which, in general terms, means
the transmission by an electric utility of energy produced by another entity
over its transmission and distribution system to a retail customer in such
utility's service territory. A requirement to transmit directly to retail
customers could have the result of permitting retail customers to purchase
electric capacity and energy from, at the election of such customers, the
electric utility in whose service area they are located or from other electric
utilities or independent power producers. While retail wheeling would expose
the Company's service territory to increased competition, it would also open
additional markets into which the Company may sell its electric power.
In Arizona, the ACC Staff issued its first report on a retail electric
competition workshop held in October of 1994. This report is the first in a
series of reports that will be issued on various workshops that will be held
from time to time to identify and address policy issues related to competition.
While other states are considering competition proposals, the ACC effort is
designed to obtain information about competition. No specific proposals are
currently being considered. The report proposes that Staff develop a
comprehensive set of options to better inform the ACC about its choices. Staff
recommended that three options be considered: 1) encouraging retail
15
competition, 2) permitting limited retail competition, and 3) discouraging
retail competition by prohibiting retail wheeling and allowing distributed
energy services. The ACC has also established a working group on retail
electric competition. Membership in the working group includes ACC Staff,
Arizona utilities, and other interested parties, and the first meeting of the
group took place in January 1995. A report from the group was issued in October
1995. This report concludes Phase I of the Commission's investigation into
retail electric competition. In February 1996, Phase II started and is focusing
on obtaining more information from interested parties and recommendations on
policy. Responses to a series of questions posed by the ACC on issues related
to retail competition and market structure are due to be filed with the ACC by
June 28, 1996. The Company cannot predict what the working group will recommend
and what, if any, changes in electric regulation and competition will be
implemented by the ACC.
The Company continues to assess the impact of the Energy Act and other
possible legislation on the Company's ability to remain competitive in the
electric utility industry. The Company is unable to predict the ultimate impact
the Energy Act or any other possible legislation will have on its operations.
ACCOUNTING FOR THE EFFECTS OF REGULATION
The Company prepares its financial statements in accordance with the
provisions of FAS 71. This statement requires a cost-based rate-regulated
utility to reflect the effect of regulatory decisions in its financial
statements. In certain circumstances, FAS 71 requires that certain costs and/or
obligations be reflected in a deferral account in the balance sheet and not be
reflected in the statement of income or loss until matching revenues are
recognized. Therefore, the Company's Consolidated Balance Sheets at March 31,
1996, and at December 31, 1995, contain certain line items for example, Deferred
Debits - Regulatory Assets and MSR Option Gain Regulatory Liability, Accumulated
Deferred Investment Tax Credits Regulatory Liability, and Other
16
Regulatory Liabilities) solely as a result of the application of FAS 71. In
addition, a number of line items in the Company's Consolidated Statements of
Income Loss) for the quarters ended March 31, 1996 and 1995 also reflect the
application of FAS 71.
If at some point in the future the Company determines that all or a portion
of the Company's regulated operations no longer meet the criteria for continued
application of FAS 71, the Company would be required to adopt the provisions of
FAS 101 for that portion of the operations for which FAS 71 no longer applied.
Adoption of FAS 101 would require the Company to write off its regulatory assets
and liabilities as of the date of adoption of FAS 101 and would preclude the
future deferral in the balance sheet of costs not recovered through rates at the
time such costs were incurred, even if such costs were expected to be recovered
in the future. Based on the balances of the Company's regulatory assets and
liabilities as of March 31, 1996, the Company estimates that future adoption of
FAS 101 for all of the Company's regulated operations would result in an
extraordinary loss of $142 million, which includes a reduction for the related
deferred income taxes of $68 million. The Company's cash flows would not be
affected by the adoption of FAS 101.
At the present time, the Company recovers the costs of its plant assets
through its regulated revenues. If in the future the Company discontinues
accounting according to the provisions of FAS 71, the Company would also need to
consider whether the markets in which the Company is then selling power will
allow the Company to recover the costs of its plant assets. If at that time
market prices are not expected to allow the Company to recover the costs of its
plant assets, additional write-downs may be required in accordance with the
provisions of FAS 121. The Company is presently unable to predict the amounts,
if any, of any potential future write-downs attributable to the provisions of
FAS 121 under such circumstances.
DIVIDENDS ON COMMON STOCK
17
The Company is precluded by restrictive covenants in certain debt
agreements from declaring or paying dividends. No dividend on common stock has
been declared or paid since 1989.
Under the applicable provisions of amendments to the Arizona General
Corporation Law, in effect starting in 1996, a company is permitted to make
distributions to shareholders unless, after giving effect to such distribution,
either i) the company would not be able to pay its debts as they come due in the
usual course of business, or ii) the company's total assets would be less than
the sum of its total liabilities plus the amount necessary to satisfy any
liquidation preferences of shareholders with preferential rights. Under such
provisions, the Company is currently able to declare and pay a dividend.
The Company's ability to pay a dividend is restricted by certain covenants
of the General First Mortgage applicable so long as certain series of First
Mortgage Bonds aggregating $184 million in principal amount) are outstanding.
These covenants restrict the payment of dividends on Common Stock if certain
cash flow coverage and retained earnings tests are not met. The cash flow
coverage and retained earnings test will prevent the Company from paying
dividends on its Common Stock until such time as the Company's cash flow
coverage ratio, as defined therein, is greater or equal to a ratio of 2 to 1,
and the Company has positive retained earnings rather than an accumulated
deficit. As of March 31, 1996, the Company had a cash flow coverage ratio in
excess of 2 to 1 and the Company's accumulated deficit was $626 million. Such
covenants will remain in effect until the First Mortgage Bonds of such series
have been paid or redeemed. The latest maturity of such First Mortgage Bonds is
in 2003.
The MRA contains a similar dividend restriction based on the amount of
retained earnings. Such restriction will no longer apply if i) the Renewable
Term Loan and the Revolving Credit have been paid in full and the commitments
18
relating thereto have been terminated and ii) the Company's senior long-term
debt is rated investment grade. Currently, the Company's total outstanding
amounts under the Renewable Term Loan are $31 million and to date no amounts
have been borrowed under the Revolving Credit. Commitments relating to such
facilities permit the Company to borrow $133 million under the Renewable Term
Loan and $50 million under the Revolving Credit. Also, the Company's senior
debt is currently rated below investment grade.
In order for the Company to pay a dividend when such covenants would
otherwise restrict such payment, the Company would have to i) obtain a waiver or
an amendment to the MRA's retained earnings covenant and ii) redeem all
outstanding First Mortgage Bonds of the series that contain dividend
restrictions or amend the General First Mortgage. Such amendment would require
approval by holders of 75% of all First Mortgage Bonds.
In addition to such restrictive covenants, the Company may also be
restricted under the Federal Power Act from paying dividends from funds properly
included in capital account. The provisions of the Federal Power Act leaves the
scope of any such restriction and its potential applicability to the Company
unclear.
EARNINGS
The Company recorded net income of $0.4 million in the first quarter of
1996 compared with a net loss of $15.0 million in the first quarter of 1995.
The net income per average share of Common Stock was essentially zero for the
first quarter of 1996 compared with a net loss per average share of Common Stock
of $0.09 for the first quarter of 1995.
RESULTS OF OPERATIONS
19
RESULTS OF UTILITY OPERATIONS
SALES AND REVENUES
Comparisons of kilowatt-hour sales and electric revenues are shown below:
Increase/Decrease)
Three Months Ended March 31 1996 1995 Amount Percent
Electric kWh Sales 000):
Retail Customers 1,581,425 1,493,302 88,123 5.9 %
Sales for Resale 719,064 577,343 141,721 24.5
Total 2,300,489 2,070,645 229,844 11.1
Electric Revenues 000):
Retail Customers $125,210 $118,187$ 7,023 5.9 %
Amortization of MSR Option
Gain Regulatory Liability 5,013 5,013 - -
Sales for Resale 17,805 19,545 (1,740 ) 8.9)
Total $148,028 $142,745$ 5,283 3.7
KWh sales to retail customers increased by 5.9% in the first quarter of
1996 compared with the first quarter of 1995 due to a 3.0% increase in the
20
average number of retail customers and an 8.5% increase in sales to industrial
customers.
Revenues from sales to retail customers increased in the first quarter of
1996 compared with the same period of 1995 due to higher kWh sales discussed
above.
Higher sales for resale in the first quarter of 1996 relative to the same
period in 1995 resulted primarily from the availability of generating capacity
which was out of service in early 1995 due to planned maintenance activities.
Despite the increase in sales, wholesale revenues declined due to a reduction in
the average price per kWh sold. This reduction in the average unit price
realized was due primarily to the expiration of a firm power sale agreement with
Nevada Power Company in December 1995.
OPERATING EXPENSES
Fuel and Purchased Power expense increased in the first quarter of 1996
compared with the same period in 1995 primarily as a result of increased kWh
sales. However, fuel expense increased disproportionately to the increase in
revenues due to take-or-pay payments made in the first quarter of 1996.
Although the Company's present fuel requirements are generally in excess of the
stated take-or-pay minimum amounts, from time to time the Company has purchased
spot market alternative fuels or switched fuel burn from one generating station
to another in order to achieve lower overall fuel costs, while incurring take-
or-pay minimum charges. As a result, the Company incurred take-or-pay minimum
charges of approximately $1 million during the first quarter of 1996. The
Company incurred no take-or-pay charges in 1995.
Maintenance and Repairs expense was lower in the first quarter of 1996 than
in the same period of 1995 due primarily to overhaul work performed at the San
Juan and Springerville stations in early 1995.
21
Taxes Other Than Income Taxes decreased in the first quarter of 1996
compared with the same period in 1995 due to lower accruals for estimated
property taxes.
Income Taxes benefits) increased in the first quarter of 1996 from the
first quarter of 1995. See ~Income~Taxes~below
and~Note~3~of~Notes~to~Financial~Statements,~Income~Taxes~.
OTHER INCOME
Income Taxes benefits) included in Other Income also increased in the first
quarter of 1996 from the first quarter of 1995. See ~Income~Taxes~below
and~Note~3~of~Notes~to~Financial~Statements,~Income~Taxes~.
Interest Income decreased as a result of lower short-term investment
balances and lower interest rates during the first three months of 1996 relative
to the same period in 1995. This decrease in short-term interest income was
partially offset by the receipt of interest income on approximately $18 million
of Springerville Unit 1 lease debt securities which were purchased by the
Company in May 1995.
Gains on Sales of Securities decreased in the first quarter of 1996
relative to the same period in 1995 due to gains realized in the first quarter
of 1995 on sales of certain equity securities by the investment subsidiaries.
No such sales occurred in the first quarter of 1996.
Other income decreased in the first quarter of 1996 compared with the same
period in 1995 due primarily to expenses recorded for ancillary
22
services provided in the first quarter of 1996.
INTEREST EXPENSE
Interest expense on long-term debt decreased in the first quarter of 1996
relative to the first quarter of 1995 due to the retirement of approximately
$189 million of debt obligations in calendar year 1995 and in the first quarter
of 1996.
The Allowance for Borrowed Funds Used During Construction interest
deduction) increased in the first quarter of 1996 compared to the same period in
1995 due to a higher balance of construction work-in-progress.
INCOME TAXES
Net income tax benefits increased $12.1 million in the first quarter of
1996 from the first quarter of 1995 due primarily to i) a $5 million benefit for
federal net tax operating loss carryforwards NOL) generated in the first quarter
of 1996 and ii) recognition of a $4.6 million benefit for the expected future
utilization of prior period federal NOLs.
The $5 million benefit relates to the net operating loss generated in the
first quarter for tax purposes. Each quarter, the Company will record, as a
component of income taxes, an expense or benefit relating to the quarter's tax
operating income or loss. These quarterly amounts are combined to produce the
result for the year. Due to seasonal operating results, the results for a
quarter are not indicative of the income tax expense or benefit to be recognized
in subsequent quarters.
The recognition of the $4.6 million benefit of prior period NOLs results
from a revision in the estimated amount of NOLs generated in prior periods that
the Company believes are likely to reduce taxable income on a future tax
23
return. Because the Company's results from operations have been steadily
improving, the three year historical average net book income of the Company has
increased, and, as a result, the Company now believes it is more likely than not
that it will realize an additional $13 million of federal NOLs. Accordingly,
the Company recognized a $4.6 million income tax benefit related to the expected
utilization of this $13 million of federal NOLs. As of March 31, 1996, the
Company had recognized a total of $32.6 million of income tax benefits relating
to federal NOLs. The $32.6 million consists of $23 million of benefits related
to prior period NOLs recognized in 1995, $4.6 million of benefits related to
prior period NOLs recognized in the first quarter of 1996, and $5 million of
benefits related to NOLs generated in the first quarter of 1996.
Benefits attributable to state NOLs are included in Income Taxes in the
Consolidated Statement of Income and are considerably less. The state income
tax rate is less than the federal income tax rate and the state NOL carryforward
period is five years as opposed to fifteen years for federal.
The Company recognizes benefits related to prior period NOLs based on
changes in the estimated amount of NOLs that in the Company's judgment, are more
likely than not to be realized in the future. A significant factor, among
others, considered in estimating such amount is the three year historical
average net book income. If the Company's operating results continue to
improve, the three year historical average net book income will increase and,
correspondingly, the estimated amount of NOLs that are more likely than not to
be realized in the future will likely increase. If the Company's operating
results continue to improve, recognition of prior period federal and state NOL
benefits totaling approximately $140 million will likely occur during the next
three to five years. The amount, if any, of NOL benefits recognized in future
periods may vary significantly from the potential benefits described herein. In
addition, in future periods when such NOLs are utilized on a tax return, income
tax expense shown on the Company's Consolidated Statements of Income Loss) will
not be reduced to reflect such utilization.
24
LIQUIDITY AND CAPITAL RESOURCES
The Company expects to generate sufficient cash flows during 1996 to fund
its continuing operating activities and construction expenditures. Furthermore,
the Company believes it has sufficient cash flow along with adequate cash and
temporary investments to meet expected cash obligations for the remainder of
1996. However, the Company's projected cash flows are subject to variation due
to changes in wholesale revenues and changes in short-term interest rates. An
increase in short-term interest rates of 100 basis points 1%) would result in an
approximate $10 million increase in annual interest expense. If cash flows were
to fall short of expectations, the Company would rely on existing cash balances,
borrowings under the Renewable Term Loan and, if necessary, borrowings under the
Revolving Credit.
At May 9, 1996, the Company had a loan balance of $31 million outstanding
under the Renewable Term Loan, and to date, no amount has been borrowed under
the Revolving Credit. The Renewable Term Loan commitment and the Revolving
Credit commitment were $164 million and $50 million, respectively.
The Company's cash and cash equivalents balance at May 9, 1996 was
approximately $46 million. Cash balances are invested in investment grade
money-market securities with an emphasis on preserving the principal amounts
invested.
CASH FLOWS
The Company's cash and cash equivalents decreased $75 million or 52%, from
the March 31, 1995 ending balance of $144 million to the March 31, 1996 ending
balance of $69 million. The reduction was primarily due to debt repayments, the
purchase of debt securities, and investments in energy-related ventures.
25
Net cash flows from continuing operating activities increased in aggregate
by $12 million in the first three months of 1996 compared with the same period
in 1995. This increase was due primarily to a $14.6 million tax payment made
in the first quarter of 1995 relating to an appeal of a transaction privilege
tax assessment see ~Note~2~~of
~Notes~to~Consolidated~Financial~Statements,~Tax~Assessments),~a reduction in
interest paid on debt obligations in the first quarter of 1996 relative to the
same period in 1995, and the receipt of cash in the first quarter of 1996
related to the sale of emission allowances. These contributions to cash flow
were partially offset by a decrease in revenues and cash receipts derived from
wholesale sales of electricity, the receipt of lower interest income, and a 3.6%
increase in wages paid net of amounts capitalized) during the first three months
of 1996 compared with the same period in 1995.
Net cash flows from investing activities decreased in aggregate by $6
million in the first three months of 1996 compared with the same period in 1995.
This decrease in net cash flow was due to increased construction expenditures in
the first quarter of 1996, as well as to the receipt of proceeds from sales of
investment subsidiary securities in the first quarter of 1995.
Net cash outflows from financing activities were $82 million lower in the
first three months of 1996 compared with the same period in 1995 as a result of
lower debt principal repayments.
FINANCING DEVELOPMENTS
On February 1, 1996, the Company retired upon maturity the $10 million
balance of 4.875% first mortgage bonds then outstanding.
On May 1, 1996, the Pollution Control Corporation of Coconino County,
Arizona issued $16.7 million aggregate principal amount of its Series A
pollution control revenue bonds for the benefit of the Company. The proceeds
26
from this issuance have been loaned to the Company to reimburse the Company for
expenditures related to the Company's interest in pollution abatement facilities
at the Navajo Generating Station.
On May 1, 1996, the Pollution Control Corporation of Coconino County,
Arizona also issued $14.7 million aggregate principal of its Series B pollution
control refunding revenue bonds for the benefit of the Company. The proceeds
from this issuance have been loaned to the Company and will be used on June 14,
1996, to redeem all of the Company's 1975 Series A pollution control revenue
bonds 8.25% due in 2005) currently outstanding.
Interest rates on the newly issued bonds will initially be reset weekly by
the remarketing agent. The initial rates of interest on the bonds, expressed on
an annual basis, were 4.25% for the 1996 Series A bonds and 4.15% for the 1996
Series B bonds. Pursuant to the terms of the offering, the Company has the
right, subject to certain conditions, to change the variable interest rate term
or to convert the interest rate from a variable rate to a fixed rate. Both
issues have a stated maturity date of May 1, 2031, and are backed by separate
irrevocable letters of credit which terminate in 1999 .
PART II - OTHER INFORMATION
ITEM 1. -- LEGAL PROCEEDINGS
TAX ASSESSMENTS
See ~Note~2~of~Notes~to~Consolidated~Financial~Statements,~Tax~Assessments.
~
~
~
27
ITEM 6. -- EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits.
4a - Loan Agreement, dated as of May 1, 1996, between Coconino County,
Arizona Pollution Control Corporation and the Registrant relating to
Pollution Control Revenue Bonds, 1996 Series A Tucson Electric Power
Company Project).
4b - Indenture of Trust, dated as of May 1, 1996, between Coconino County,
Arizona Pollution Control Corporation
and First Trust of New York, National Association authorizing
Pollution Control Revenue Bonds, 1996 Series A Tucson Electric Power
Company Project).
4c - Letter of Credit and Reimbursement Agreement, dated as of
May 1, 1996, between the Registrant, Various Banks, and Canadian
Imperial Bank of Commerce, New York Agency.
4d - Loan Agreement, dated as of May 1, 1996, between Coconino County,
Arizona Pollution Control Corporation and the Registrant relating to
Pollution Control Refunding Revenue Bonds, 1996 Series B Tucson
Electric Power Company Project).
4e - Indenture of Trust, dated as of May 1, 1996, between Coconino County,
Arizona Pollution Control Corporation and First Trust of New York,
National Association authorizing Pollution Control Refunding Revenue
Bonds, 1996 Series B Tucson Electric Power Company Project).
4f - Letter of Credit and Reimbursement Agreement, dated as of
May 1, 1996, between the Registrant and Societe Generale,
Los Angeles Branch.
15 - Letter regarding unaudited interim financial information.
27 - Financial Data Schedule.
b) Reports on Form 8-K.
- Dated January 26, 1996, reporting on the ACC's rejection of a
28
settlement agreement pertaining to the Company's rate application and
holding company application.
- Dated February 9, 1996, reporting on the recommendation of the ACC's
Chief Hearing Officer in the proceedings regarding the Company's
Notice of Intent to form a Holding Company.
- Dated March 6, 1996, reporting on the approval by the Company's
Board of Directors of a one-for-five reverse stock split and a
reduction in the number of authorized shares of common stock.
- Dated April 4, 1996, reporting on the 1996 Rate Order issued by the
ACC.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TUCSON ELECTRIC POWER COMPANY
Registrant)
Date: May 13, 1996 Ira R. Adler
Ira R. Adler
Senior Vice President and Principal
Financial Officer
EXHIBIT INDEX
29
4a - Loan Agreement, dated as of May 1, 1996, between Coconino County,
Arizona Pollution Control Corporation and the Registrant relating to
Pollution Control Revenue Bonds, 1996 Series A Tucson Electric Power
Company Project).
4b - Indenture of Trust, dated as of May 1, 1996, between Coconino County,
Arizona Pollution Control Corporation
and First Trust of New York, National Association authorizing
Pollution Control Revenue Bonds, 1996 Series A Tucson Electric Power
Company Project).
4c - Letter of Credit and Reimbursement Agreement, dated as of
May 1, 1996, between the Registrant, Various Banks, and Canadian
Imperial Bank of Commerce, New York Agency.
4d - Loan Agreement, dated as of May 1, 1996, between Coconino County,
Arizona Pollution Control Corporation and the Registrant relating to
Pollution Control Refunding Revenue Bonds, 1996 Series B Tucson
Electric Power Company Project).
4e - Indenture of Trust, dated as of May 1, 1996, between Coconino County,
Arizona Pollution Control Corporation and First Trust of New York,
National Association authorizing Pollution Control Refunding Revenue
Bonds, 1996 Series B Tucson Electric Power Company Project).
4f - Letter of Credit and Reimbursement Agreement, dated as of
May 1, 1996, between the Registrant and Societe Generale,
Los Angeles Branch.
15 - Letter regarding unaudited interim financial information.
27 - Financial Data Schedule.
30
Exhibit 15
Tucson Electric Power Company
220 West Sixth Street
Tucson, Arizona 85701
We have made a review, in accordance with standards established by the
American Institute of Certified Public Accountants, of the unaudited interim
financial information of Tucson Electric Power Company and subsidiaries (the
"Company") for the three-month periods ended March 31, 1996 and 1995, as
indicated in our report dated May 3, 1996, because we did not perform an
audit, we expressed no opinion on that information.
We are aware that our report referred to above, which is included in your
Quarterly Report on Form 10-Q for the quarter ended March 31, 1996, is
incorporated by reference in Post-Effective Amendment No. 1 to Registration
Statement No. 33-55732 of the Company on Form S-3, Registration Statement No.
33-58173 of UniSource Energy Corporation on Form S-4, and Registration
Statements No. 33-56523, No. 33-57233 and No. 33-57231 of the Company on Form
S-8.
We are also aware that the aforementioned report, pursuant to Rule 436(c)
under the Securities Act of 1933, is not considered a part of the
Registration Statement prepared or certified by an accountant or a report
prepared or certified by an accountant within the meaning of Sections 7 and
11 of that Act.
DELOITTE & TOUCHE LLP
May 10, 1996
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05/09/96/DMG/06361/009/AGREE/28862.5
LOAN AGREEMENT
between
COCONINO COUNTY, ARIZONA
POLLUTION CONTROL CORPORATION
and
TUCSON ELECTRIC POWER COMPANY
Dated as of May 1, 1996
Relating To
Pollution Control Revenue Bonds,
1996 Series A
(Tucson Electric Power Company Project)
TABLE OF CONTENTS*
Page
LOAN AGREEMENT 1
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions 1
ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.01 Representations and Warranties of the Pollution Control
Corporation 7
SECTION 2.02 Representations and Warranties of the Company 7
ARTICLE III
THE FACILITIES
SECTION 3.01 Construction of the Facilities 8
SECTION 3.02 Insufficient Moneys in Construction Fund 8
SECTION 3.03 Revision of Plans and Specifications 9
SECTION 3.04 Certification of Completion Date 9
SECTION 3.05 Maintenance of Facilities; Remodeling 9
SECTION 3.06 Insurance 9
SECTION 3.07 Condemnation 9
SECTION 3.08 Termination of Construction 10
ARTICLE IV
ISSUANCE OF THE BONDS; THE LOANS; DISPOSITION OF PROCEEDS
OF THE BONDS
SECTION 4.01 Issuance of the Bonds 10
SECTION 4.02 Issuance of Other Obligations 10
SECTION 4.03 The Loans; Disposition of Bond Proceeds 10
SECTION 4.04 Disbursements from Construction Fund 11
ARTICLE V
LOAN PAYMENTS; OTHER OBLIGATIONS
SECTION 5.01 Loan Payments. 12
SECTION 5.02 Payments Assigned; Obligation Absolute 12
SECTION 5.03 Payment of Expenses 12
SECTION 5.04 Indemnification 13
SECTION 5.05 Payment of Taxes; Discharge of Liens 13
ARTICLE VI
SPECIAL COVENANTS
SECTION 6.01 Maintenance of Corporate Existence 14
SECTION 6.02 Permits or Licenses 14
SECTION 6.03 Pollution Control Corporation's Access to
Facilities 14
SECTION 6.04 Tax-Exempt Status of Interest on Bonds. 14
SECTION 6.05 Use of Facilities 15
SECTION 6.06 Financing Statements 15
SECTION 6.07 Security Arrangements 15
SECTION 6.08 Neither the Company nor the Pollution
Control Corporation to be Initial
Purchasers of the Bonds. 17
ARTICLE VII
ASSIGNMENT, LEASING AND SELLING
SECTION 7.01 Conditions
SECTION 7.02 Instrument Furnished to Trustee 18
SECTION 7.03 Limitation 18
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
SECTION 8.01 Events of Default 18
SECTION 8.02 Force Majeure 19
SECTION 8.03 Remedies 19
SECTION 8.04 No Remedy Exclusive 19
SECTION 8.05 Reimbursement of Attorneys' and Agents' Fees 20
SECTION 8.06 Waiver of Breach 20
ARTICLE IX
REDEMPTION OF BONDS
SECTION 9.01 Redemption of Bonds 20
SECTION 9.02 Compliance with the Indenture 20
ARTICLE X
PURCHASE AND REMARKETING OF BONDS
SECTION 10.01 Purchase of Bonds 20
SECTION 10.02 Optional Purchase of Bonds 21
ARTICLE XI
MISCELLANEOUS
SECTION 11.01 Term of Agreement 21
SECTION 11.02 Notices 21
SECTION 11.03 Parties in Interest 22
SECTION 11.04 Amendments 22
SECTION 11.05 Counterparts 22
SECTION 11.06 Severability 22
SECTION 11.07 Governing Law 22
Signatures 24
Exhibit A A-1
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of May 1, 1996 (this
"Agreement"), between COCONINO COUNTY, ARIZONA POLLUTION CONTROL
CORPORATION, an Arizona nonprofit corporation and a political
subdivision of the State of Arizona (hereinafter called the
"Pollution Control Corporation"), and TUCSON ELECTRIC POWER
COMPANY, a corporation organized and existing under the laws of
the State of Arizona (hereinafter called the "Company"),
W I T N E S S E T H :
WHEREAS, the Pollution Control Corporation is authorized and
empowered under Title 35, Chapter 6, Arizona Revised Statutes, as
amended (the "Act"), to issue its bonds in accordance with the
Act and to make secured or unsecured loans for the purpose of
financing or refinancing the acquisition, construction,
improvement or equipping of pollution control facilities
consisting of real and personal properties, including but not
limited to machinery and equipment whether or not now in
existence or under construction, which are used in whole or in
part to control, prevent, abate, alter, dispose or store, solid
waste, thermal, noise, atmospheric or water pollutants,
contaminants or products therefrom, whether such facilities serve
one or more purposes or functions in addition to controlling,
preventing, abating, altering, disposing or storing such
pollutants, contaminants or the products therefrom, and to charge
and collect interest on such loans and pledge the proceeds of
loan agreements as security for the payment of the principal of
and interest on bonds, or designated issues of bonds, issued by
the Pollution Control Corporation and any agreements made in
connection therewith, whenever the Board of Directors of the
Pollution Control Corporation finds such loans to be in
furtherance of the purposes of the Pollution Control Corporation;
and
WHEREAS, the Pollution Control Corporation proposes to issue
and sell its revenue bonds for the purpose of financing the costs
of the acquisition, construction, improvement and equipping of
the pollution control facilities described in Exhibit A hereto;
NOW, THEREFORE, the parties hereto, intending to be legally
bound hereby and in consideration of the premises, DO HEREBY
AGREE as follows:
ARTICLE I
DEFINITIONS
2.01 Definitions. The terms defined in this Article I shall
for all purposes of this Agreement have the meanings herein
specified, unless the context clearly requires otherwise:
Act:
"Act" shall mean Title 35, Chapter 6, Arizona Revised Statutes,
and all acts supplemental thereto or amendatory thereof.
Administration Expenses:
"Administration Expenses" shall mean the reasonable expenses
incurred by the Pollution Control Corporation with respect to
this Agreement, the Indenture and any transaction or event
contemplated by this Agreement or the Indenture, including the
compensation and reimbursement of expenses and advances payable
to the Trustee, to the paying agent, any co-paying agent and the
registrar under the Indenture, and to the Tender Agent and the
Remarketing Agent.
Agreement:
"Agreement" shall mean this Loan Agreement, dated as of May 1,
1996, between the Pollution Control Corporation and the Company,
and any and all modifications, alterations, amendments and
supplements hereto.
Authorized Company Representative:
"Authorized Company Representative" shall mean each person at
the time designated to act on behalf of the Company by written
certificate furnished to the Pollution Control Corporation and
the Trustee containing the specimen signature of such person and
signed on behalf of the Company by its President, any Vice
President or its Treasurer, together with its Secretary or any
Assistant Secretary.
Bank:
"Bank" shall mean Canadian Imperial Bank of Commerce, New York
Agency, a banking corporation organized and existing under the
laws of Canada, so long as the Letter of Credit shall be in
effect, in its capacity as issuer of the Letter of Credit, its
successors in such capacity and their assigns and, if any other
Security Arrangement on which the Company shall not be the
obligor shall have been issued and delivered as a Security
Arrangement in accordance with Section 6.07(a) hereof, "Bank"
shall mean the obligor on such other Security Arrangement so long
as such other Security Arrangement shall be in effect, in its
capacity as issuer of such other Security Arrangement, its
successors and their assigns.
Bond Counsel:
"Bond Counsel" shall mean any firm or firms of nationally
recognized bond counsel experienced in matters pertaining to the
validity of, and exclusion from gross income for federal tax
purposes of interest on bonds issued by states and political
subdivisions, selected by the Company and acceptable to the
Pollution Control Corporation.
Bond Fund:
"Bond Fund" shall mean the fund created by Section 4.01 of the
Indenture.
Bonds:
"Bond" or "Bonds" shall mean the Pollution Control Revenue
Bonds, 1996 Series A (Tucson Electric Power Company Project) of
the Pollution Control Corporation.
Business Day:
"Business Day" shall mean a day of the year on which banks
located in The City of New York, New York, and in the city in
which the Principal Office of the Trustee is located, and in the
city in which the office of the Bank at which drawings or other
demands for payment on a Security Arrangement on which the
Company shall not be the obligor, if any, are made, are not
required or authorized to remain closed and on which The New York
Stock Exchange is not closed.
Capital Account:
"Capital Account" shall mean any of the accounts so named
established under Sections 4.01 and 5.01 of the Indenture.
Code:
"Code" shall mean the Internal Revenue Code of 1986 or any
successor statute thereto. Each reference to a section of the
Code herein shall be deemed to include the United States Treasury
Regulations proposed or in effect thereunder and applicable to
the Bonds or the use of the proceeds thereof, unless the context
clearly requires otherwise. Reference to any particular Code
section shall, in the event of a successor Code, be deemed to be
a reference to the successor to such Code section.
Company:
"Company" shall mean Tucson Electric Power Company, a
corporation organized and existing under the laws of the State of
Arizona, its successors and their assigns.
Completion Date:
"Completion Date" shall mean the date specified in Section 3.04
hereof.
Construction (and other forms of the word "construct"):
"Construction" (and other forms of the word "construct") shall
mean, when used with respect to the Facilities, the construction
of the Facilities and shall include, without limitation, the
acquisition, construction, improvement and equipping of the
Facilities, all as contemplated by the Act.
Construction Fund:
"Construction Fund" shall mean the fund created by Section 5.01
of the Indenture.
Cost of Construction:
"Cost of Construction" shall embrace all costs paid or incurred
by the Company with respect to the Facilities and the financing
thereof for the payment of which the Pollution Control
Corporation is authorized to issue bonds under the Act, and shall
include without limitation (a) obligations paid or incurred by
the Company for labor, materials and other expenses and to
contractors, builders and materialmen in connection with the
construction of the Facilities; (b) the costs paid or incurred by
the Company for contract bonds and for insurance of all kinds
that may be deemed by the Company to be desirable or necessary
during the course of construction of the Facilities; (c) the
expenses paid or incurred by the Company for test borings,
surveys, estimates, plans and specifications, and preliminary
investigations therefor, with respect to the Facilities and for
supervising construction, as well as for the performance of all
other duties required by or reasonably necessary for the proper
construction, of the Facilities; (d) Administration Expenses paid
or incurred prior to the Completion Date and legal, accounting,
financial, underwriting, advertising, recording and printing
expenses and all other fees and expenses paid or incurred by the
Company in connection with the issuance and sale of the Bonds and
the issuance of the Letter of Credit; (e) amounts in respect of
interest (exclusive of accrued interest paid by the initial
purchasers upon delivery thereof) accruing upon the Bonds until
the Completion Date; (f) fees and charges in respect of any
Security Arrangement accruing until the Completion Date; (g) all
other costs that the Company shall be required to pay under the
terms of any contract or contracts for the construction of the
Facilities; (h) any other costs or expenses paid or incurred by
the Company, and any sums required to reimburse the Company for
work done by it, with respect to the Facilities which are
properly chargeable to the capital account of the Company with
respect to the Facilities or would be so chargeable for federal
income tax purposes either with a proper election or but for a
proper election to deduct the same; and (i) amounts required to
be paid to the United States by the Company (on behalf of the
Pollution Control Corporation) in respect of the Bonds pursuant
to Section 148 of the Code. For purposes of the application of
the proceeds of the Bonds, the Cost of Construction shall be
deemed to include the payment or redemption, or provision
therefor, of any obligations, other than the Bonds, issued to
finance or refinance any of the costs listed above. The Cost of
Construction shall also be deemed to include all costs paid or
incurred with respect to the Facilities by any Person to whom the
Facilities have been leased or sold as a whole or in part,
provided that such costs, had they been paid or incurred by the
Company, would otherwise constitute a portion of the Cost of
Construction.
Facilities:
"Facilities" shall mean the real and personal properties,
machinery and equipment currently existing, under construction
and to be constructed which are described in Exhibit A hereto, as
revised from time to time to reflect any changes therein,
additions thereto, substitutions therefor and deletions therefrom
permitted by the terms hereof, subject, however, to the
provisions of Section 7.01 hereof.
Fixed Rate Period:
"Fixed Rate Period" shall have the meaning set forth in the
Indenture.
Flexible Rate:
"Flexible Rate" shall have the meaning set forth in the
Indenture.
Indenture:
"Indenture" shall mean the Indenture of Trust, dated as of May
1, 1996, between the Pollution Control Corporation and the
Trustee relating to the Bonds, and any and all modifications,
alterations, amendments and supplements thereto.
Interest Payment Date:
"Interest Payment Date" shall have the meaning set forth in the
Indenture.
Investment Account:
"Investment Account" shall mean any of the accounts so named
established under Sections 4.01 and 5.01 of the Indenture.
Letter of Credit:
"Letter of Credit" shall mean an irrevocable letter of credit
issued by the Bank to the Trustee in accordance with Section
6.07(b) hereof, and, upon the issuance and delivery of any other
letter of credit as a Security Arrangement in accordance with
Section 6.07(a) hereof, "Letter of Credit" shall mean such other
letter of credit, and, upon the Termination or Expiration of the
Letter of Credit, "Letter of Credit" shall mean any credit
facility having terms substantially the same as those of the
Letter of Credit delivered as a Security Arrangement in
accordance with Section 6.07(a) hereof.
Loan Payments:
"Loan Payments" shall mean the payments required to be made by
the Company pursuant to Section 5.01 hereof.
Moody's:
"Moody's" shall mean Moody's Investors Service, Inc., a
corporation organized and existing under the laws of the State of
Delaware, its successors and their assigns, and, if such
corporation shall be dissolved or liquidated or shall no longer
perform the functions of a securities rating agency, "Moody's"
shall be deemed to refer to any other nationally recognized
securities rating agency designated by the Pollution Control
Corporation, with the approval of the Company, by notice to the
Trustee and the Remarketing Agent.
1954 Code:
"1954 Code" shall mean the Internal Revenue Code of 1954, as
amended.
Outstanding:
"Outstanding", when used in reference to the Bonds, shall mean,
as at any particular date, the aggregate of all Bonds
authenticated and delivered under the Indenture except:
(a) those canceled by the Trustee at or prior to such date
or delivered to or acquired by the Trustee at or prior to such
date for cancellation;
(b) those deemed to be paid in accordance with Article VIII
of the Indenture;
(c) those deemed to be purchased in accordance with Section
13.03(b) of the Indenture; and
(d) those in lieu of or in exchange or substitution for
which other Bonds shall have been authenticated and delivered
pursuant to the Indenture, unless proof satisfactory to the
Trustee and the Company is presented that such Bonds are held
by a bona fide holder in due course.
Person:
"Person" means (i) any corporation, limited liability company,
partnership, joint venture, association, joint-stock company,
business trust, unincorporated organization, in each case formed
or organized under the laws of the United States of America, any
state thereof or the District of Columbia, or (ii) the United
States of America or any state thereof, or any political
subdivision of either thereof, or any agency, authority or other
instrumentality of any of the foregoing.
Plant:
"Plant" shall mean the Navajo Generating Station, an electric
power generating plant near Page, Arizona, in Coconino County,
Arizona, and any additions or improvements thereto or
replacements thereof.
Plant Agreements:
"Plant Agreements" shall mean all contracts relating to the
ownership, construction and operation of the Plant, including the
Facilities, as from time to time amended or supplemented.
Pollution Control Corporation:
"Pollution Control Corporation" shall mean Coconino County,
Arizona Pollution Control Corporation, an Arizona nonprofit
corporation and a political subdivision of the State of Arizona
incorporated for and with the approval of the County of Coconino,
Arizona, pursuant to the provisions of the Constitution of the
State of Arizona and the Act, its successors and their assigns.
Reimbursement Agreement:
"Reimbursement Agreement" shall mean the agreement between the
Company and the Bank pursuant to which the Letter of Credit or
other Security Arrangement is issued by the Bank and delivered to
the Trustee, and any and all modifications, alterations,
amendments and supplements thereto.
Remarketing Agent:
"Remarketing Agent" shall mean the remarketing agent engaged in
accordance with Section 13.04 of the Indenture.
Security Arrangement; Termination thereof; Expiration thereof:
"Security Arrangement" shall mean any of the following: (i) the
Letter of Credit; (ii) the bonds of one or more series issued
under the Indenture, dated as of April 1, 1941, between the
Company and The Chase Manhattan Bank (National Association), as
trustee, as heretofore and hereafter amended and supplemented,
and delivered to the Trustee as contemplated by Section 12.06 of
the Indenture; and (iii) any credit facility, insurance policy or
other credit support agreement or mechanism obtained, delivered,
made, entered into or otherwise arranged by the Company for the
purpose of securing, evidencing or being otherwise in furtherance
of the obligations of the Company under Section 5.01 or 10.01
hereof, or both, or for the purpose of securing the Bonds but
shall not include any facility, arrangement or mechanism, such as
a liquidity facility or line of credit, that is not an
irrevocable obligation to pay amounts in respect of the
obligations of the Company under Section 5.01 hereof.
"Termination" (and other forms of the word "terminate") shall
mean, when used with respect to any Security Arrangement, the
replacement, removal, surrender or other termination of such
Security Arrangement by the Trustee or the Company other than the
Expiration of such Security Arrangement. "Expiration" (and other
forms of the word "expire") shall mean when used with respect to
any Security Arrangement, the expiration or termination of such
Security Arrangement in accordance with its terms.
S&P:
"S&P" shall mean Standard & Poor's Ratings Services, a division
of The McGraw-Hill Companies, Inc., a corporation organized and
existing under the laws of the State of New York, its successors
and their assigns, and if such corporation shall be dissolved or
liquidated or shall no longer perform the functions of a
securities rating agency, "S&P" shall be deemed to refer to any
other nationally recognized securities rating agency designated
by the Pollution Control Corporation, with the approval of the
Company, by notice to the Trustee, Remarketing Agent and the
Company.
Tax Agreement:
"Tax Agreement" shall mean that tax certificate and agreement,
dated May 1, 1996, between the Pollution Control Corporation and
the Company, relating to the requirements of the Code, and any
and all modifications, alterations, amendments and supplements
thereto.
Tender Agent:
"Tender Agent" shall mean the tender agent appointed in
accordance with Section 13.01 of the Indenture.
Term Rate Period:
"Term Rate Period" shall have the meaning set forth in the
Indenture.
Trustee:
"Trustee" shall mean First Trust of New York, National
Association, as trustee under the Indenture, its successors in
trust and their assigns.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.02 Representations and Warranties of the Pollution Control
Corporation. The Pollution Control Corporation makes the
following representations and warranties as the basis for the
undertakings on the part of the Company contained herein:
(a) The Pollution Control Corporation is an Arizona nonprofit
corporation and a political subdivision of the State of Arizona
created and existing under the Constitution and laws of the State
of Arizona;
(b) The Pollution Control Corporation has the power to enter
into this Agreement and the Indenture and to perform and observe
the agreements and covenants on its part contained herein and
therein, including without limitation the power to issue and sell
the Bonds as contemplated herein and in the Indenture, and by
proper action has duly authorized the execution and delivery
hereof and thereof;
(c) The execution and delivery of this Agreement and the
Indenture by the Pollution Control Corporation do not, and
consummation of the transactions contemplated hereby and
fulfillment of the terms hereof and thereof by the Pollution
Control Corporation will not, result in a breach of any of the
terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust or other agreement or
instrument to which the Pollution Control Corporation is now a
party or by which it is now bound, or any order, rule or
regulation applicable to the Pollution Control Corporation of any
court or of any regulatory body or administrative agency or other
governmental body having jurisdiction over the Pollution Control
Corporation or over and of its properties, or the Constitution or
laws of the State of Arizona;
(d) No consent, approval, authorization or other order of any
regulatory body or administrative agency or other governmental
body is legally required for the Pollution Control Corporation's
participation in the transactions contemplated by this Agreement,
except such as may have been obtained or may be required under
the securities laws of any jurisdiction; and
(e) The Pollution Control Corporation has found and determined
that all requirements of the Act with respect to the issuance of
the Bonds and the execution and delivery of the Indenture and
this Agreement have been complied with and that the financing of
the Cost of Construction of the Facilities by issuing the Bonds
and entering into the Indenture and this Agreement will be in
furtherance of the purposes of the Act.
2.03 Representations and Warranties of the Company. The
Company makes the following representations and warranties as the
basis for the undertakings on the part of the Pollution Control
Corporation contained herein:
(a) The Company is a corporation duly organized and existing
in good standing under the laws of the State of Arizona and duly
qualified as a foreign corporation in the State of New Mexico;
(b) The Company has power to enter into this Agreement and to
perform and observe the agreements and covenants on its part
contained herein and by proper corporate action has duly
authorized the execution and delivery hereof;
(c) The execution and delivery of this Agreement by the
Company do not, and consummation of transactions contemplated
hereby and fulfillment of the terms hereof by the Company will
not, result in a breach of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of
trust or other agreement or instrument to which the Company is a
party or by which it is now bound, or the Restated Articles of
Incorporation or by-laws of the Company, or any order, rule or
regulation applicable to the Company of any court or of any
regulatory body or administrative agency or other governmental
body having jurisdiction over the Company or over any of its
properties, or any statute of any jurisdiction applicable to the
Company;
(d) The Arizona Corporation Commission has approved all
matters relating to the Company's participation in the
transactions contemplated by this Agreement which require said
approval, and no other consent, approval, authorization or other
order of any regulatory body or administrative agency or other
governmental body is legally required for the Company's
participation therein, except such as may have been obtained or
may be required under the securities laws of any jurisdiction;
(e) The Facilities to be financed shall constitute "pollution
control facilities" as such term is defined in the Act; and
(f) The Company estimates that all of the proceeds of the
Bonds (exclusive of accrued interest, if any, paid by the initial
purchasers of such Bonds upon delivery thereof) will be expended
to pay the Cost of Construction.
ARTICLE III
THE FACILITIES
2.04 Construction of the Facilities. The Company shall
exercise all of its rights, powers, elections and options under
the Plant Agreements to cause the Facilities to be constructed
with all reasonable dispatch in order to effectuate the purposes
of the Act. The Company shall have the sole responsibility under
this Agreement for the construction of the Facilities and may
perform the same itself or through its agents, and may make or
issue such contracts, orders, receipts and instructions, and in
general do or cause to be done all such other things as it may in
its sole discretion consider requisite or advisable for the
construction of the Facilities and for fulfilling its obligations
under this Article III. The Company shall have full authority
and the sole right under this Agreement to supervise and control,
directly or indirectly, all aspects of the construction of the
Facilities. The Pollution Control Corporation shall have no
right, title or interest in the Facilities.
2.05 Insufficient Moneys in Construction Fund. If the moneys
in the Construction Fund, together with any other moneys made
available to pay the Cost of Construction, shall not be
sufficient to pay the Cost of Construction in full, then the
Company shall pay all that portion of the Cost of Construction in
excess of the moneys available therefor.
The Pollution Control Corporation does not make any warranty,
either express or implied, that the moneys which will be paid
into the Construction Fund will be sufficient to pay the Cost of
Construction in full.
If the Company makes any payments pursuant to this Section
3.02, it shall not be entitled to any reimbursement therefor from
the Pollution Control Corporation (except from the proceeds of
any obligations subsequently issued by the Pollution Control
Corporation in respect of the Facilities), the Trustee or the
owners of the Bonds, nor shall it be entitled to any diminution
in or postponement of the payment of the Loan Payments or the
payment of any other amounts payable under this Agreement.
2.06 Revision of Plans and Specifications. The Company may
consent to one or more revisions to the plans and specifications
for the Facilities (including without limitation any changes
therein, additions thereto, substitutions therefor and deletions
therefrom), at any time and from time to time prior to the
Completion Date in any respect; provided, however, that, if any
such revision shall render inaccurate the description of the
Facilities contained in Exhibit A hereto, the Company shall
deliver to the Pollution Control Corporation and the Trustee (a)
a revised Exhibit A containing a description of the Facilities as
revised, the accuracy of which shall have been certified by an
Authorized Company Representative, and (b) an opinion of Bond
Counsel to the effect that the Facilities as described in the
revised Exhibit A are such that the expenditure of the proceeds
of the Bonds pursuant to this Agreement will not, in and of
itself, impair the validity of the Bonds under the Act or the
exclusion from gross income for federal tax purposes of interest
on the Bonds. A revision of Exhibit A hereto pursuant to this
Section 3.03 shall not constitute an amendment, change or
modification of this Agreement within the meaning of Article XII
of the Indenture.
2.07 Certification of Completion Date. The Completion Date
shall be the date on which the Facilities are completed in their
entirety and ready to be placed in service and operated, all as
determined by the Company. Promptly after the Completion Date,
the Company shall submit to the Pollution Control Corporation and
the Trustee a certificate, executed by an Authorized Company
Representative, which shall specify the Completion Date and shall
state that (a) construction of the Facilities has been completed
and the Cost of Construction has been paid, except for any
portion thereof which has been incurred but is not then due and
payable, or the liability for the payment of which is being
contested or disputed by the Company, and for the payment of
which the Trustee is directed to retain specified amounts of
moneys in specified accounts within the Construction Fund, and
(b) the Facilities are suitable for operation for the purposes
for which they were designed. Notwithstanding the foregoing,
such certificate may state that it is given without prejudice to
any rights against third parties which exist at the date thereof
or which may subsequently come into being.
2.08 Maintenance of Facilities; Remodeling. The Company shall
at all times exercise all of its rights, powers, elections and
options under the Plant Agreements to cause the Facilities, and
every element and unit thereof, to be maintained, preserved and
kept in thorough repair, working order and condition and to cause
all needful and proper repairs and renewals thereto to be made;
provided, however, that the Company may exercise all of its
rights, powers, elections and options under the Plant Agreements
to cause the operation of the Facilities, or any element or unit
thereof, to be discontinued if, in the judgment of the Company,
it is no longer advisable to operate the same, or if the Company
intends to sell or dispose of the same and within a reasonable
time shall endeavor to effectuate such sale or disposition.
After the Completion Date, the Company may, subject to the
provisions of Section 6.05 hereof, at its own expense consent to
the remodeling of the Facilities or to the making of such
substitutions, modifications and improvements to the Facilities
from time to time as it, in its discretion, may deem to be
desirable for its uses and purposes, which remodeling,
substitutions, modifications and improvements shall be included
under the terms of this Agreement as part of the Facilities.
2.09 Insurance. The Company shall exercise all of its rights,
powers, elections and options under the Plant Agreements to keep
the Facilities insured against fire and other risks to the extent
usually insured against by companies owning and operating similar
property, by reputable insurance companies or, at the Company's
election, with respect to all or any element or unit of the
Facilities, by means of an adequate insurance fund set aside and
maintained by it out of its own earnings or in conjunction with
other companies through an insurance fund, trust or other
agreement or, by means of unfunded self-insurance as may be
reasonable and customary by companies owning and operating
similar property. All proceeds of such insurance shall be for
the account of the Company.
2.010 Condemnation. The Company shall be entitled to the
entire proceeds of any condemnation award or portion thereof made
for damages to or takings of the Facilities or other property of
the Company.
2.011 Termination of Construction. (a) Anything in this
Agreement to the contrary notwithstanding, the Company shall have
the right at any time to exercise all of its rights, powers,
elections and options under the Plant Agreements to terminate the
construction of the Facilities, in whole, if the Company shall
have determined that the continued construction or operation of
the Facilities, in whole, is impracticable, uneconomical or
undesirable for any reason.
(a) Promptly after the termination of the construction of the
Facilities, the Company shall submit to the Pollution Control
Corporation and the Trustee a certificate, executed by an
Authorized Company Representative, which shall state the reasons
for such termination and shall state that the Cost of
Construction, to the extent of the construction of the Facilities
as of the date of such termination, has been paid, except for any
Costs of Construction which have been incurred but are not then
due and payable, or the liability for the payment of which is
being contested or disputed by the Company, and for the payment
of which the Trustee is directed to retain specified amounts of
moneys in specified accounts within the Construction Fund.
Notwithstanding the foregoing, such certificate may state that it
is given without prejudice to any rights against third parties
which exist at the date thereof or which may subsequently come
into being.
ARTICLE IV
ISSUANCE OF THE BONDS; THE LOANS; DISPOSITION OF PROCEEDS
OF THE BONDS
2.012 Issuance of the Bonds. The Pollution Control
Corporation shall issue the Bonds under and in accordance with
the Indenture, subject to the provisions of the bond purchase
agreement among the Pollution Control Corporation, the initial
purchaser or purchasers of the Bonds and the Company. The
Company hereby approves the issuance of the Bonds and all terms
and conditions thereof.
2.013 Issuance of Other Obligations. The Pollution Control
Corporation and the Company expressly reserve the right to enter
into, to the extent permitted by law, but shall not be obligated
to enter into, an agreement or agreements other than this
Agreement with respect to the issuance by the Pollution Control
Corporation, under an indenture or indentures other than the
Indenture, of obligations to provide additional funds to pay the
Cost of Construction of the Facilities or obligations to refund
all or any principal amount of the Bonds, or any combination
thereof.
2.014 The Loans; Disposition of Bond Proceeds. The
Pollution Control Corporation shall from time to time lend to the
Company the proceeds of the issuance and sale of the Bonds, other
than accrued interest, if any, paid by the initial purchaser or
purchasers thereof, for the purposes specified in this Agreement,
such proceeds to be applied as hereinafter and in the Indenture
provided.
The Pollution Control Corporation shall establish the Bond Fund
and the Construction Fund with the Trustee in accordance with
Sections 4.01 and 5.01 of the Indenture. The proceeds of the
issuance and sale of the Bonds, other than accrued interest, if
any, paid by the initial purchaser or purchasers thereof, shall
be deposited into the Construction Fund, and any such accrued
interest shall be deposited into the Bond Fund, all in accordance
with the provisions of the Indenture.
The moneys on deposit in the Construction Fund shall be applied
by the Trustee as provided in Section 4.04 hereof and as
otherwise provided in Article V of the Indenture. Until the
moneys on deposit in the Construction Fund are so applied, such
moneys shall be and remain the property of the Pollution Control
Corporation, subject to the lien of the Indenture, and the
Company shall have no right, title or interest therein except as
expressly provided in this Agreement and the Indenture. However,
in order to secure the payment by the Company of the Loan
Payments, and the payment by the Pollution Control Corporation of
the principal of and premium, if any, and interest on the Bonds,
and the performance and observance by the Company and the
Pollution Control Corporation of all covenants and conditions
expressed herein and in the Indenture and contained in the Bonds,
the Company hereby mortgages, pledges, assigns, creates and
grants a security interest in and confirms to the Trustee such
right, title and interest as the Company may be deemed to have or
hereafter acquire in the proceeds of the issuance and sale of the
Bonds to be deposited into the Construction Fund and the proceeds
from the investment and reinvestment thereof, upon terms and
conditions co-extensive with those set forth in the Indenture
with respect to the lien and security interest of the Trustee in
the Trust Estate (as defined in the Indenture).
2.015 Disbursements from Construction Fund. (a) To the
extent that moneys on deposit in the Construction Fund shall not
otherwise have been applied in accordance with the provisions of
Article V of the Indenture, such moneys shall be loaned to the
Company from time to time to reimburse the Company for portions
of the Cost of Construction paid by it or to make payments to
persons designated by the Company in respect of portions of the
Cost of Construction, upon receipt by the Trustee of requisitions
executed by, or communications by telegram, telex or facsimile
transmission from, an Authorized Company Representative, which
requisitions or communications shall state with respect to each
payment to be made: (i) the requisition number, (ii) the name and
address of the person, firm or corporation to whom payment is due
or has been made (or, in the case of payments to the Bond Fund,
instructions to make such payments thereto), (iii) the amount
paid or to be paid, (iv) the account or accounts within the
Construction Fund from which payment of such requisition, or any
portion thereof, shall be made, (v) (A) that each obligation,
item of cost or expense with respect to which such requisition is
being made has been properly incurred and has been paid or is
then due and payable as an item of the Cost of Construction, is a
proper charge against the Construction Fund, and has not been the
basis of any previous final payment therefrom or from the
proceeds of any other obligations issued by the Pollution Control
Corporation or (B) in the event that a portion of the Bonds shall
have been paid, redeemed or deemed to have been paid within the
meaning of Article VIII of the Indenture by reason of the
application of the proceeds of the sale of any obligations issued
under an indenture other than the Indenture and if the payment of
such requisition is to be made into the construction, acquisition
or other similar fund created under such other indenture, that
upon disbursement from such construction, acquisition or other
similar fund, each obligation, item of cost or expense mentioned
in the requisition for such disbursement will have been properly
incurred and will have been paid or will then be due and payable
as an item of the Cost of Construction, will be a proper charge
against the construction, acquisition or other similar fund under
such indenture, and will not have been the basis of any previous
final payment therefrom or from the proceeds of any other revenue
bonds issued by the Pollution Control Corporation, (vi) that the
payment of such requisition will not result in a breach of any of
the covenants of the Company contained in subsection (c) or (d)
of this Section 4.04 and (vii) that, to the best of the knowledge
of such Authorized Company Representative, there shall not have
occurred and be continuing any Event of Default described in
Section 8.01 hereof. Any such communication by telegram, telex
or facsimile transmission shall be promptly confirmed by a
requisition executed by an Authorized Company Representative.
The Company shall furnish to the Pollution Control Corporation a
copy of each requisition delivered to the Trustee promptly upon
request therefor.
(a) In paying any requisition under this Section 4.04, the
Trustee shall be entitled to conclusively rely as to the
completeness and accuracy of all statements in such requisition
upon the approval of such requisition by an Authorized Company
Representative, execution thereof to be conclusive evidence of
such approval, and the Company shall indemnify and save harmless
the Pollution Control Corporation and the Trustee from any
liability incurred in connection with any requisition so executed
by an Authorized Company Representative.
(b) The Company shall not submit requisitions for Costs of
Construction which, on a cumulative aggregate basis, if paid,
would result in less than 97% of the sum of the total amount of
the proceeds of the Bonds expended, for any purpose, being used
to provide air or water pollution control or sewage or solid
waste disposal facilities or other exempt facilities, including
facilities functionally related or subordinate thereto, within
the meaning of Section 141 of the Code or Section 103(b)(4) of
the 1954 Code, as applicable; provided, however, that the moneys
paid from the Investment Account within the Construction Fund
shall be disregarded for purposes of the foregoing covenant and
all computations made in accordance therewith if the Company
shall have furnished to the Pollution Control Corporation and the
Trustee an opinion of Bond Counsel to the effect that such moneys
may be so disregarded without impairing the exclusion from gross
income for federal tax purposes of interest on the Bonds.
(c) The Company shall not submit or cause to be submitted to
the Trustee any requisition pursuant to this Section 4.04, and
shall have no claim upon any moneys in the Construction Fund, so
long as there shall have occurred and be continuing any Event of
Default described in Section 8.01 hereof.
ARTICLE V
LOAN PAYMENTS; OTHER OBLIGATIONS
2.016 Loan Payments. In consideration of the issuance of
the Bonds and the disposition of the proceeds thereof as
contemplated in Section 4.03 hereof, the Company shall pay, or
cause to be paid, to the Trustee for the account of the Pollution
Control Corporation an amount equal to the aggregate principal
amount of the Bonds from time to time Outstanding and, as
interest on its obligation to pay such amount, an amount equal to
premium, if any, and interest on such Bonds, such amounts to be
paid in installments due on the dates, in the amounts and in the
manner provided in the Indenture for the Pollution Control
Corporation to cause amounts to be deposited in the Bond Fund for
the payment of the principal of and premium, if any, and interest
on the Bonds whether at stated maturity, upon redemption or
acceleration or otherwise; provided, however, that the obligation
of the Company to make any such payment hereunder shall be
reduced by the amount of any reduction under the Indenture of the
amount of the corresponding payment required to be made by the
Pollution Control Corporation thereunder; and provided, further,
that the obligation of the Company to make any payment hereunder
shall be deemed to be satisfied and discharged to the extent of
the corresponding payment made to the Trustee under any Security
Arrangement.
2.017 Payments Assigned; Obligation Absolute. It is
understood and agreed that all Loan Payments are, by the
Indenture, to be pledged by the Pollution Control Corporation to
the Trustee, and that all rights and interest of the Pollution
Control Corporation hereunder (except for the Pollution Control
Corporation's rights under Sections 5.03, 5.04, 6.03 and 8.05
hereof and any rights of the Pollution Control Corporation to
receive notices, certificates, requests, requisitions and other
communications hereunder), including any right to delivery of any
Security Arrangement, are to be pledged and assigned to the
Trustee. The Company assents to such pledge and assignment and
agrees that the obligation of the Company to make the Loan
Payments and to make, or cause to be made, payments under Section
10.01(a) hereof shall be absolute, irrevocable and unconditional
and shall not be subject to cancellation, termination or
abatement, or to any defense other than payment or to any right
of set-off, counterclaim or recoupment arising out of any breach
by the Pollution Control Corporation or the Trustee or any other
party under this Agreement, the Indenture or otherwise, or out of
any obligation or liability at any time owing to the Company by
the Pollution Control Corporation, the Trustee or any other
party, and, further, that the Loan Payments and the other
payments due hereunder shall continue to be payable at the times
and in the amounts herein and therein specified, whether or not
the Facilities, or any portion thereof, shall have been completed
or shall have been destroyed by fire or other casualty, or title
thereto, or the use thereof, shall have been taken by the
exercise of the power of eminent domain, and that there shall be
no abatement of or diminution in any such payments by reason
thereof, whether or not the Facilities shall be used or useful,
whether or not any applicable laws, regulations or standards
shall prevent or prohibit the use of the Facilities, or for any
other reason, all of the foregoing being subject, however, to the
provisions of Sections 6.01 and 7.01 hereof.
2.018 Payment of Expenses. The Company shall pay, or, to
the extent permitted by this Agreement, cause to be paid out of
the Construction Fund, all Administration Expenses of the
Pollution Control Corporation, including, without limitation,
Administration Expenses incurred at and subsequent to the time
the Bonds are deemed to have been paid in accordance with Article
VIII of the Indenture. The payment of the compensation and the
reimbursement of expenses and advances of the Trustee, of the
paying agent, any co-paying agent and the registrar under the
Indenture and of the Tender Agent and the Remarketing Agent shall
be made directly to such entities.
2.019 Indemnification. The Company releases the Pollution
Control Corporation, the Trustee, the Tender Agent and the
Remarketing Agent and their directors, officers, employees and
agents from, agrees that the Pollution Control Corporation, the
Trustee, the Tender Agent and the Remarketing Agent shall not be
liable for, and agrees to indemnify and hold the Pollution
Control Corporation, the Trustee, any predecessor Trustee, the
Tender Agent and the Remarketing Agent and their directors,
officers, employees and agents free and harmless from, any
liability for any loss or damage to property or any injury to or
death of any person (including, without limitation, attorneys'
and other agents' fees and expenses) that may be occasioned by
any cause whatsoever pertaining to the Facilities, except in any
case as a result of the negligence or bad faith or willful
misconduct of the party otherwise to be indemnified.
The Company will indemnify and hold the Pollution Control
Corporation, the Trustee, any predecessor Trustee, the Tender
Agent and the Remarketing Agent free and harmless from any loss,
claim, damage, tax, penalty, liability, disbursement, litigation
expenses, attorneys' and other agents' fees and expenses or court
costs arising out of, or in any way relating to, the execution or
performance of this Agreement, the issuance or sale of the Bonds,
actions taken under the Indenture or any other cause whatsoever
pertaining to the Facilities, except in any case as a result of
the negligence or bad faith or willful misconduct of the party
otherwise to be indemnified.
The Company will indemnify and hold the Pollution Control
Corporation and its directors, officers, employees and agents
free and harmless from any loss, claim, damage, tax, penalty,
liability, disbursement, litigation expenses, attorney's fees and
expenses or court costs arising out of or in any way relating to
any untrue statements or alleged untrue statement of any material
fact or omission or alleged omission to state a material fact
necessary to make the statements made, in light of the
circumstances under which they were made, not misleading in any
official statement or other offering material utilized in
connection with the sale of any Bonds.
2.020 Payment of Taxes; Discharge of Liens. The Company
shall: (a) pay, or make provision for payment of, all lawful
taxes and assessments, including income, profits, property or
excise taxes, if any, or other municipal or governmental charges,
levied or assessed by any federal, state or municipal government
or political body upon the Facilities or any part thereof or upon
the Pollution Control Corporation with respect to the Loan
Payments or payments pursuant to Section 10.01(a) hereof, when
the same shall become due; and (b) pay or cause to be satisfied
and discharged or make adequate provision to satisfy and
discharge, within sixty (60) days after the same shall accrue,
any lien or charge upon the Loan Payments or payments pursuant to
Section 10.01(a) hereof, and all lawful claims or demands for
labor, materials, supplies or other charges which, if unpaid,
might be or become a lien upon such amounts; provided, that, if
the Company shall first notify the Pollution Control Corporation
and the Trustee of its intention so to do, the Company may in
good faith contest any such lien or charge or claims or demands
in appropriate legal proceedings, and in such event may permit
the items so contested and identified as such by the Company to
remain undischarged and unsatisfied during the period of such
contest and any appeal therefrom, unless the Trustee shall notify
the Company in writing that, in the opinion of counsel to the
Trustee based upon material facts disclosed to the Trustee
without any duty of investigation, by nonpayment of any such
items the lien of the Indenture as to the Loan Payments will be
materially endangered, in which event the Company shall promptly
pay and cause to be satisfied and discharged all such unpaid
items. The Pollution Control Corporation shall cooperate fully
with the Company in any such contest.
ARTICLE VI
SPECIAL COVENANTS
2.021 Maintenance of Corporate Existence. Except as
permitted in this Section 6.01, the Company shall maintain its
corporate existence, will not dissolve or otherwise dispose of
all or substantially all of its assets and will not consolidate
with or merge with or into another corporation. The Company may
consolidate with or merge into another corporation incorporated
under the laws of the United States of America, any state thereof
or the District of Columbia, or sell, transfer or otherwise
dispose of all or substantially all of its assets (and may
thereafter dissolve) to any Person if the surviving or resulting
corporation (if other than the Company) or the transferee Person,
as the case may be, prior to or simultaneously with such merger,
consolidation, sale, transfer or disposition, assumes, by
delivery to the Trustee and the Pollution Control Corporation of
an instrument in writing satisfactory in form to the Trustee, all
the obligations of the Company hereunder including without
limitation the obligations of the Company under Sections 5.01 and
10.01(a) hereof. Notwithstanding the foregoing, in the case of
any such sale, transfer or other disposition by the Company of
all or substantially all of its assets, (x) any such sale,
transfer or other disposition of assets which includes the
Facilities shall be subject to the provisions of Section 7.01
hereof and shall not be subject to the provisions of this Section
6.01 and (y) in the case of any such sale, transfer or other
disposition of substantially all of the Company's assets but not
including the Facilities, the transferee shall not be required to
assume any obligations hereunder and the Company shall remain
liable in respect of its obligations hereunder.
If consolidation, merger or sale or other transfer is made as
permitted by this Section 6.01, the provisions of this Section
6.01 shall continue in full force and effect and no further
consolidation, merger or sale or other transfer shall be made
except in compliance with the provisions of this Section 6.01.
2.022 Permits or Licenses. In the event that it may be
necessary for the proper performance of this Agreement on the
part of the Company or the Pollution Control Corporation that any
application or applications for any permit or license to do or to
perform certain things be made to any governmental or other
agency by the Company or the Pollution Control Corporation, the
Company and the Pollution Control Corporation each shall, upon
the request of either, execute such application or applications.
2.023 Pollution Control Corporation's Access to Facilities.
The Pollution Control Corporation shall have the right, upon
appropriate prior notice to the Company, to have reasonable
access to the Facilities during normal business hours for the
purpose of making examinations and inspections of the same.
2.024 Tax-Exempt Status of Interest on Bonds. (a) It is
the intention of the parties hereto that interest on the Bonds
shall be and remain tax-exempt, and to that end the covenants and
agreements of the Pollution Control Corporation and the Company
in this Section 6.04 and the Tax Agreement are for the benefit of
the Owners from time to time of the Bonds.
(b) Each of the Company and the Pollution Control
Corporation covenants and agrees for the benefit of the Owners
from time to time of the Bonds that it will not directly or
indirectly use or permit the use of (to the extent within its
control) the proceeds of any of the Bonds or any other funds, or
take or omit to take any action, if and to the extent such use,
or the taking or omission to take such action, would cause any of
the Bonds to be "arbitrage bonds" within the meaning of Section
148 of the Code or otherwise subject to federal income taxation
by reason of Section 103 and 141 through 150 of the Code or
Section 103 of the 1954 Code and Title XIII of the Tax Reform Act
of 1986, as applicable, and any applicable regulations
promulgated thereunder. To such ends, the Pollution Control
Corporation and the Company will comply with all requirements of
such Section 148 to the extent applicable to the Bonds. In the
event that at any time the Pollution Control Corporation or the
Company is of the opinion that for purposes of this Section
6.04(b) it is necessary to restrict or limit the yield on the
investment of any moneys held by the Trustee under the Indenture,
the Pollution Control Corporation or the Company shall so notify
the Trustee in writing.
Without limiting the generality of the foregoing, the
Company and the Pollution Control Corporation agree that there
shall be paid from time to time all amounts required to be
rebated to the United States of America pursuant to Section
148(f) of the Code and any applicable Treasury Regulations. This
covenant shall survive payment in full or defeasance of the Bonds
and the satisfaction and discharge of the Indenture. The Company
specifically covenants to pay or cause to be paid for and on
behalf of the Pollution Control Corporation to the United States
of America at the times and in the amounts determined under
Section 7.08 of the Indenture the Rebate Requirement as described
in the Tax Agreement.
(c) The Pollution Control Corporation certifies and
represents that it has not taken, and the Pollution Control
Corporation covenants and agrees that it will not take, any
action which results in interest paid on the Bonds being included
in gross income of the Owners of the Bonds for federal tax
purposes pursuant to Sections 103 and 141 of the Code or to
Section 103 of the 1954 Code and Title XIII of the Tax Reform Act
of 1986, as applicable, and any regulations thereunder; and the
Company certifies and represents that it has not taken or (to the
extent within its control) permitted to be taken, and the Company
covenants and agrees that it will not take or (to the extent
within its control) permit to be taken any action which will
cause the interest on the Bonds to become includable in gross
income for federal income tax purposes; provided, however, that
neither the Company nor the Pollution Control Corporation shall
be deemed to have violated these covenants if the interest on any
of the Bonds becomes taxable to a person solely because such
person is a "substantial user" of the Project or a "related
person" within the meaning of Section 103(b)(13) of the 1954
Code; and provided, further, that none of the covenants and
agreements herein contained shall require either the Company or
the Pollution Control Corporation to enter an appearance or
intervene in any administrative, legislative or judicial
proceeding in connection with any changes in applicable laws,
rules or regulations or in connection with any decisions of any
court or administrative agency or other governmental body
affecting the taxation of interest on the Bonds. The Company
acknowledges having read Section 7.08 of the Indenture and agrees
to perform all duties imposed on it by such Section 7.08, by this
Section and by the Tax Agreement. Insofar as Section 7.08 of the
Indenture and the Tax Agreement impose duties and
responsibilities on the Company, they are specifically
incorporated herein by reference.
(d) Notwithstanding any provision of this Section 6.04 and
Section 7.08 of the Indenture, if the Company shall provide to
the Pollution Control Corporation and the Trustee an opinion of
Bond Counsel to the effect that any specified action required
under this Section 6.04 and Section 7.08 of the Indenture is no
longer required or that some further or different action is
required to maintain the tax-exempt status of interest on the
Bonds, the Company, the Trustee and the Pollution Control
Corporation may conclusively rely upon such opinion in complying
with the requirements of this Section 6.04, and the covenants
hereunder shall be deemed to be modified to that extent.
2.025 Use of Facilities. So long as the Facilities are
operated by or for the benefit of the Company, the Company shall
exercise all of its rights, powers, elections and options under
the Plant Agreements to cause the Facilities to be used for
purposes contemplated by the Act.
2.026 Financing Statements. The Company shall file and
record, or cause to be filed and recorded, all financing
statements and continuation statements referred to in Section
7.07 of the Indenture.
2.027 Security Arrangements. (a) In order to secure,
evidence or be otherwise in furtherance of the obligations of the
Company under Section 5.01 or 10.01 hereof, or both, the Company
may, but (except as otherwise provided in subsection (b) of this
Section 6.07) shall not be obligated to, provide, subject to the
provisions of subsection (g) of this Section 6.07, one or more
Security Arrangements (which shall not have a stated Expiration
Date earlier than the earlier of (x) the date which is one year
from the date of the provision of any such Security Arrangement
and (y) [final maturity date]) at any time, and from time to
time, and, subject to the provisions of subsections (c) and (d)
of this Section 6.07, may, at any time and from time to time,
Terminate, or cause or allow to be terminated, any such Security
Arrangement. The Company hereby authorizes and directs the
Trustee to draw moneys under the Letter of Credit, and to take
actions under any other Security Arrangement, in accordance with
the terms thereof and of the Indenture.
(a) Upon the initial authentication and delivery of the Bonds,
the Company shall provide for the payment of its obligations
under Sections 5.01 and 10.01 hereof by the delivery of the
Letter of Credit.
The Letter of Credit shall be the obligation of the Bank to pay
to the Trustee or its designee, in accordance with the terms
thereof, such amounts as shall be specified therein and available
to be drawn thereunder for the timely payment of the principal of
and premium, if any, and interest on the Bonds, and the purchase
price of Bonds, required to be made pursuant to, and in
accordance with, the provisions of the Indenture. Drawings under
the Letter of Credit shall be made in accordance with the
provisions set forth therein and in the Indenture.
The Company may, at its election, and with the consent of the
Bank, provide for one or more extensions of the Letter of Credit
in accordance with the terms of the Reimbursement Agreement.
(b) In the event that the Company shall cause or allow a
Security Arrangement to be Terminated, not more than sixty (60)
days nor less than twenty (20) days prior to the Interest Payment
Date next preceding, or, while the Bonds bear interest at a
Flexible Rate, prior to the latest then scheduled Interest
Payment Date for any Bond, the proposed effective date of such
Termination:
(i) the Company shall deliver to the Pollution Control
Corporation, the Trustee, the Tender Agent, the Remarketing
Agent and the Bank a notice which (A) states the effective
date of such Termination (which date shall not be earlier than
the first Business Day after such Interest Payment Date), (B)
describes any substitute Security Arrangement which is to be
provided in lieu thereof and (C) directs the Trustee, after
taking such actions thereunder as are required to be taken to
provide moneys due under the Indenture in respect of the Bonds
or the purchase thereof, to surrender any evidence of the
Security Arrangement to be Terminated to the obligor thereon
on the effective date of such Termination, and to thereupon
deliver any and all instruments to effect such Termination
which may be reasonably requested by such obligor; and
(ii) the Company shall furnish to the Trustee and the
Tender Agent an opinion of Bond Counsel to the effect that the
Termination of such Security Arrangement and the provision, if
any, of a substitute Security Arrangement in lieu thereof (A)
are authorized under this Agreement and (B) will not impair
the validity under the Act of the Bonds or the exclusion of
interest on the Bonds from gross income for federal income tax
purposes.
(c) The Interest Payment Date next preceding the date of any
such Termination shall not be prior to the first date on which
the Bonds are redeemable at a redemption price (including
premium, if any) not exceeding the amount available to be drawn
under the Security Arrangement in respect of such redemption
price pursuant to Section 3.01(c) of the Indenture unless the
Company shall have furnished to the Trustee, the Tender Agent and
the Remarketing Agent, no later than the fortieth (40th) day
preceding such Interest Payment Date, and prior to taking any
action under such Security Arrangement to effect the Termination
thereof, letters or certificates to the effect specified in
Section 2.02(h)(iii) of the Indenture.
Anything in this Agreement or the Indenture to the contrary
notwithstanding, (i) if a substitute Security Arrangement is to
be provided, the substitute Security Arrangement shall become
effective on or before the Termination date of the then existing
Security Arrangement and (ii) in the event that a Termination of
a Security Arrangement, or the Termination of a Security
Arrangement and the provision of another Security Arrangement in
lieu thereof, shall require the Bonds to be tendered for
purchase, the Termination of such Security Arrangement shall not
occur until the Trustee or its duly authorized agent shall have
made such drawings, if any, or taken such other actions, if any,
thereunder as shall be required under the Indenture in order to
provide sufficient moneys for payment of the purchase price of
Bonds on the date fixed for such mandatory tender for purchase
and such moneys shall have been provided to the Trustee or its
duly authorized agent.
(d) The Company shall, prior to the provision of any
Security Arrangement (other than the initial Letter of Credit),
deliver to the Trustee, the Tender Agent, the Remarketing Agent
and the Bank a notice which describes any Security Arrangement
which is to be provided and states the effective date thereof,
and shall, concurrently with the giving of such notice, furnish
to the Trustee an opinion of Bond Counsel to the same effect as
the opinion described in subsection (c) of this Section 6.07.
(e) The Company shall Terminate, or cause or allow to be
Terminated, any Security Arrangement on the first day of a Term
Rate Period or the Fixed Rate Period if such Security Arrangement
will Expire prior to the first date on which the Bonds will be
redeemable pursuant to Section 3.01(c) of the Indenture at a
redemption price (including premium, if any) not exceeding the
amount available to be drawn under such Security Arrangement.
(f) The Company shall not, on or after the fortieth (40th) day
preceding the first day of a Term Rate Period or the Fixed Rate
Period, provide a Security Arrangement which will Expire prior to
the first date on which the Bonds will be redeemable pursuant to
Section 3.01(c) of the Indenture at a redemption price (including
premium, if any) not exceeding the amount available to be drawn
under such Security Arrangement.
SECTION 6.08 Neither the Company nor the Pollution Control
Corporation to be Initial Purchasers of the Bonds. In no event
shall the initial purchasers of the Bonds be the Company or any
affiliate of the Company or the Pollution Control Corporation or
any "insider" of either thereof within the meaning of the United
States Bankruptcy Code, 11 U.S.C. Section 101 et seq., if there
shall be in effect a security arrangement on which the Company
shall not be the Obligor.
ARTICLE VII
ASSIGNMENT, LEASING AND SELLING
2.028 Conditions. The Company's interest in this Agreement
may be assigned as a whole or in part, and its interest in the
Facilities may be leased, sold, transferred or otherwise disposed
of by the Company as a whole or in part (whether an interest in a
specific element or unit or an undivided interest), to any
Person; provided, however, that no such assignment, lease, sale,
transfer or other disposition (a) shall relieve the Company from
its primary liability for its obligations under Sections 5.01 and
10.01(a) hereof or (b) shall be made unless the assignee, lessee,
purchaser or other transferee, as the case may be, prior to or
simultaneously with such assignment, lease, sale, transfer or
other disposition, assumes, by delivery of an instrument to the
Trustee and the Pollution Control Corporation, all other
obligations of the Company hereunder to the extent of the
interest assigned, leased, sold, transferred or otherwise
disposed of, and the Company shall be released of and discharged
from such obligations to the extent so assumed. Notwithstanding
the foregoing, (a) if (i) the Company's interest in this
Agreement shall be assigned as a whole or in undivided part, (ii)
the Company's interest in the Facilities shall be leased as a
whole or in undivided part and the term of such leasehold or the
term of any extension or extensions thereof at the option of the
Company shall extend beyond the maturity date of the Bonds or
(iii) the Company's interest in the Facilities shall be sold,
transferred or otherwise disposed of as a whole or in undivided
part, and (b) in the event that the assignee, lessee, purchaser
or other transferee shall assume the obligations of the Company
under either or both of Sections 5.01 and 10.01(a) hereof for the
remaining term of this Agreement to the extent of such
assignment, lease, sale, transfer or other disposition, the
Company shall be released from and discharged of all liability in
respect of such obligations to the extent so assumed (but only to
such extent); provided, however, that if there shall not be a
Security Arrangement in effect on which the Company is not the
obligor, the release and discharge of the Company pursuant to
clause (b) shall be conditioned upon delivery by the Company to
the Trustee and the Pollution Control Corporation of written
evidence from Moody's, if the Bonds are rated by Moody's, and
S&P, if the Bonds are rated by S&P, in each case to the effect
that such release and discharge of the Company, after giving
effect to such assumption by the assignee, lessee, purchaser or
other transferee, will not, by itself, result in a reduction or
withdrawal of its ratings then in effect on the Bonds; and
provided, further, that after any such assumption, release and
discharge as aforesaid, the Company may again assume such
obligations under Section 5.01 or 10.01(a) hereof, or both, in
whole or in part, at any time and from time to time, and, to the
extent of any such assumption by the Company (but only to such
extent), the aforesaid assignee, lessee, purchaser or other
transferee shall be released from and discharged of all liability
in respect of such obligations.
Anything herein to the contrary notwithstanding, the Company
shall not make any assignment, lease or sale as provided in the
immediately preceding paragraph unless it shall have furnished to
the Pollution Control Corporation and the Trustee an opinion of
Bond Counsel to the effect that the proposed assignment, lease or
sale will not impair the validity under the Act of the Bonds or
the exclusion of interest on the Bonds from gross income for
federal tax purposes.
After any lease, sale, transfer or other disposition of any
element or unit of the Facilities, or any interest therein, the
Company may, at its option, cause such element or unit, or
interest therein, to no longer be deemed to be part of the
Facilities for the purposes of this Agreement by delivering to
the Pollution Control Corporation and the Trustee the agreements
or other documents required pursuant to Section 7.02 hereof
together with an instrument signed by an Authorized Company
Representative stating that such element or unit, or interest
therein, shall no longer be deemed to be part of the Facilities
for the purposes of this Agreement.
2.029 Instrument Furnished to Trustee. The Company shall,
within fifteen (15) days after the delivery thereof, furnish to
the Pollution Control Corporation and the Trustee a true and
complete copy of the agreements or other documents effectuating
any such assignment, lease, sale, transfer or other disposition.
2.030 Limitation. This Agreement shall not be assigned nor
shall the Facilities be leased, sold, transferred or otherwise
disposed of, in whole or in part, except as provided in this
Article VII or in Section 6.01 or 5.02 hereof.
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
2.031 Events of Default. Each of the following events
shall constitute and is referred to in this Agreement as an
"Event of Default":
(a) a failure by the Company to make any Loan Payment or any
payment required under Section 10.01(a) hereof, which failure
shall have resulted in an "Event of Default" under clause (a),
(b) or (c) of Section 9.01 of the Indenture;
(b) a failure by the Company to pay when due any amount
required to be paid under this Agreement or to observe and
perform any covenant, condition or agreement on its part to be
observed or performed (other than a failure described in clause
(a) above), which failure shall continue for a period of ninety
(90) days after written notice, specifying such failure and
requesting that it be remedied, shall have been given to the
Company by the Pollution Control Corporation or the Trustee,
unless the Pollution Control Corporation and the Trustee shall
agree in writing to an extension of such period prior to its
expiration; provided, however, that the Pollution Control
Corporation and the Trustee shall be deemed to have agreed to an
extension of such period if corrective action is initiated by the
Company within such period and is being diligently pursued; or
(c) the dissolution or liquidation of the Company, or failure
by the Company promptly to lift any execution, garnishment or
attachment of such consequence as will impair its ability to make
any payments under this Agreement, or the entry of an order for
relief by a court of competent jurisdiction in any proceeding for
its liquidation or reorganization under the provisions of any
bankruptcy act or under any similar act which may be hereafter
enacted, or an assignment by the Company for the benefit of its
creditors, or the entry by the Company into an agreement of
composition with its creditors (the term "dissolution or
liquidation of the Company," as used in this clause, shall not be
construed to include the cessation of the corporate existence of
the Company resulting either from a merger or consolidation of
the Company into or with another corporation or a dissolution or
liquidation of the Company following a transfer of all or
substantially all its assets as an entirety, under the conditions
permitting such actions contained in Section 6.01 hereof).
2.032 Force Majeure. The provisions of Section 8.01 hereof
are subject to the following limitations: if by reason of acts of
God; strikes, lockouts or other industrial disturbances; acts of
public enemies; orders or any kind of the government of the
United States or of the State of Arizona, or any department,
agency, political subdivision, court or official of any of them,
or any civil or military authority; insurrections; riots;
epidemics; landslides; lightning; earthquakes; volcanoes; fires;
hurricanes; tornadoes; storms; floods; washouts; droughts;
arrests; restraint of government and people; civil disturbances;
explosions; breakage or accident to machinery; partial or entire
failure of utilities; or any cause or event not reasonably within
the control of the Company, the Company is unable in whole or in
part to carry out any one or more of its agreements or
obligations contained herein, other than its obligations under
Sections 5.01, 5.03, 5.05, 6.01 and 10.01(a) hereof, the Company
shall not be deemed in default by reason of not carrying out said
agreement or agreements or performing said obligation or
obligations during the continuance of such inability. The
Company shall make reasonable effort to remedy with all
reasonable dispatch the cause or causes preventing it from
carrying out its agreements; provided, that the settlement of
strikes, lockouts and other industrial disturbances shall be
entirely within the discretion of the Company, and the Company
shall not be required to make settlement of strikes, lockouts and
other industrial disturbances by acceding to the demands of the
opposing party or parties when such course is in the judgment of
the Company unfavorable to the Company.
2.033 Remedies. (a) Upon the occurrence and continuance
of any Event of Default described in clause (a) of Section 8.01
hereof, and further upon the condition that, in accordance with
the terms of the Indenture, the Bonds shall have been declared to
be immediately due and payable pursuant to any provision of the
Indenture, the Loan Payments shall, without further action,
become and be immediately due and payable.
Any waiver of any "Event of Default" under the Indenture and a
rescission and annulment of its consequences shall constitute a
waiver of the corresponding Event or Events of Default under this
Agreement and a rescission and annulment of the consequences
thereof.
(a) Upon the occurrence and continuance of any Event of
Default, the Pollution Control Corporation, or the Trustee with
respect to the rights of the Pollution Control Corporation
assigned to the Trustee by the Indenture, may take any action at
law or in equity to collect any payments then due and thereafter
to become due, or to enforce performance and observance of any
obligation, agreement or covenant of the Company hereunder.
(b) Any amounts collected by the Trustee from the Company
pursuant to this Section 8.03 shall be applied in accordance with
the Indenture.
2.034 No Remedy Exclusive. No remedy conferred upon or
reserved to the Pollution Control Corporation hereby is intended
to be exclusive of any other available remedy or remedies, but
each and every such remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or now or
hereafter existing at law or in equity or by statute. No delay
or omission to exercise any right or power accruing upon any
default shall impair any such right or power or shall be
construed to be a waiver thereof, but any such right or power may
be exercised from time to time and as often as may be deemed
expedient. In order to entitle the Pollution Control Corporation
to exercise any remedy reserved to it in this Article VIII, it
shall not be necessary to give any notice, other than such notice
as may be herein expressly required.
2.035 Reimbursement of Attorneys' and Agents' Fees. If the
Company shall default under any of the provisions hereof and the
Pollution Control Corporation or the Trustee shall employ
attorneys or agents or incur other reasonable expenses for the
collection of payments due hereunder or for the enforcement of
performance or observance of any obligation or agreement on the
part of the Company contained herein, the Company will on demand
therefor reimburse the Pollution Control Corporation or the
Trustee and any predecessor Trustee, as the case may be, for the
reasonable fees of such attorneys and such other reasonable
expenses so incurred.
2.036 Waiver of Breach. In the event any obligation
created hereby shall be breached by either of the parties and
such breach shall thereafter be waived by the other party, such
waiver shall be limited to the particular breach so waived and
shall not be deemed to waive any other breach hereunder. In view
of the assignment of certain of the Pollution Control
Corporation's rights and interest hereunder to the Trustee, the
Pollution Control Corporation shall have no power to waive any
breach hereunder by the Company in respect of such rights and
interest without the consent of the Trustee, and the Trustee may
exercise any of the rights of the Pollution Control Corporation
hereunder.
ARTICLE IX
REDEMPTION OF BONDS
2.037 Redemption of Bonds. The Pollution Control
Corporation shall take, or cause to be taken, the actions
required by the Indenture to discharge the lien created thereby
through the redemption, or provision for payment or redemption,
of all Bonds then Outstanding, or to effect the redemption, or
provision for payment or redemption, of less than all the Bonds
then Outstanding, upon receipt by the Pollution Control
Corporation and the Trustee from the Company of a notice
designating the principal amount of the Bonds to be redeemed, or
for the payment or redemption of which provision is to be made,
and, in the case of redemption of Bonds, or provision therefor,
specifying the date of redemption and the applicable redemption
provision of the Indenture. Such redemption date shall not be
less than 45 days from the date such notice is given (unless a
shorter notice is satisfactory to the Trustee). Unless otherwise
stated therein, such notice shall be revocable by the Company at
any time prior to the time at which the Bonds to be redeemed, or
for the payment or redemption of which provision is to be made,
are first deemed to be paid in accordance with Article VIII of
the Indenture. The Company shall furnish any moneys or
Government Obligations (as defined in the Indenture) required by
the Indenture to be deposited with the Trustee or otherwise paid
by the Pollution Control Corporation in connection with any of
the foregoing purposes.
2.038 Compliance with the Indenture. Anything in this
Agreement to the contrary notwithstanding, the Pollution Control
Corporation and the Company shall take all actions required by
this Agreement and the Indenture in order to comply with any
provisions of the Indenture requiring the mandatory redemption of
Bonds.
ARTICLE X
PURCHASE AND REMARKETING OF BONDS
2.039 Purchase of Bonds. (a) In consideration of the
issuance by the Pollution Control Corporation of the Bonds, but
for the benefit of the owners of the Bonds, the Company has
agreed, and does hereby covenant, to cause the necessary
arrangements to be made and to be thereafter continued whereby
Owners from time to time of the Bonds may deliver Bonds for
purchase and whereby such Bonds shall be so purchased. In
furtherance of the foregoing covenant of the Company, the
Pollution Control Corporation, at the direction of the Company,
has set forth in Section 2.02 of the Indenture the terms and
conditions relating to the delivery of Bonds by the Owners
thereof for purchase, has set forth in Article XIII of the
Indenture the duties and responsibilities of the Tender Agent
with respect to the purchase of Bonds, and of the Remarketing
Agent with respect to the remarketing of Bonds and has therein
provided for the appointment by the Company of the Tender Agent
and the Remarketing Agent. The Company hereby authorizes and
directs the Tender Agent and the Remarketing Agent to purchase,
offer, sell and deliver Bonds in accordance with the provisions
of Article XIII of the Indenture.
In consideration of the Pollution Control Corporation's having
set forth in the Indenture the aforesaid provisions of Section
2.02 and the Article XIII thereof, the Company covenants, for the
benefit of the owners of Outstanding Bonds, to pay, cause to be
paid, to the Tender Agent for the account of such holders such
amounts as shall be necessary to effect the payment of the
purchase price of Outstanding Bonds delivered for purchase, all
as more particularly described in Sections 2.02 and 13.03 of the
Indenture; provided, however, that the obligation of the Company
to make any such payment hereunder to the Tender Agent shall be
reduced by the amount of any moneys available for such payment
described in clause (i), (iii) or (iv) of Section 13.03(a) of the
Indenture; and provided, further, that such obligation of the
Company shall be deemed to be satisfied and discharged to the
extent of the corresponding payment made by the obligor (other
than the Company) under any Security Arrangement.
(a) The Pollution Control Corporation shall have no obligation
or responsibility, financial or otherwise, with respect to the
purchase of Bonds or the making or continuation of arrangements
therefor other than as expressly set forth in subsection (a) of
this Section 10.01, except that the Pollution Control Corporation
shall generally cooperate with the Company, the Tender Agent and
the Remarketing Agent as contemplated in Article XIII of the
Indenture.
2.040 Optional Purchase of Bonds. The Company may at any
time, and from time to time, furnish moneys to the Tender Agent
accompanied by a notice directing such moneys to be applied to
the purchase of Bonds delivered for purchase pursuant to the
terms of the Indenture, which Bonds shall be delivered to the
Trustee for cancellation in accordance with Section 13.07(b) of
the Indenture. The Company shall deliver to the Remarketing
Agent and the Bank a copy of any such notice.
ARTICLE XI
MISCELLANEOUS
2.041 Term of Agreement. This Agreement shall remain in
full force and effect from the date hereof until the right, title
and interest of the Trustee in and to the Trust Estate (as
defined in the Indenture) shall have ceased, terminated and
become void in accordance with Article VIII of the Indenture and
until all payments required under this Agreement shall have been
made. Notwithstanding the foregoing, the covenant contained in
Section 5.03, 5.04, Section 6.04 and 8.05 hereof shall survive
the termination of this Agreement.
2.042 Notices. Except as otherwise provided in this
Agreement, all notices, certificates, requests, requisitions and
other communications hereunder shall be in writing and shall be
sufficiently given and shall be deemed given when mailed by
registered mail, postage prepaid, addressed as follows: if to the
Pollution Control Corporation, c/o Mangum, Wall, Stoops & Warden,
222 East Birch Avenue, Flagstaff, Arizona 86001, Attention:
President; if to the Company, at 220 West Sixth Street, Tucson,
Arizona 85702, Attention: Treasurer; if to the Trustee or to the
Tender Agent, at such address as shall be designated by it in the
Indenture; and if to the Remarketing Agent, at such address as
shall be designated by it pursuant to the Indenture. A copy of
each notice, certificate, request or other communication given
hereunder to the Pollution Control Corporation, the Company, or
the Trustee shall also be given to the others. The Pollution
Control Corporation, the Company, and the Trustee may, by notice
given hereunder, designate any further or different addresses to
which subsequent notices, certificates, requests or other
communications shall be sent.
2.043 Parties in Interest. This Agreement shall inure to
the benefit of and shall be binding upon the Pollution Control
Corporation, the Company and their respective successors and
assigns, and no other person, firm or corporation shall have any
right, remedy or claim under or by reason of this Agreement;
provided, however, that the lien and security interest granted to
the Trustee in Section 4.03 hereof, as well as the rights and
remedies granted to the Pollution Control Corporation in Article
VIII hereof, shall inure to the benefit of the Trustee, on behalf
of the owners from time to time of the Bonds, and shall be
enforceable by the Trustee as a third party beneficiary or as
assignee of the Pollution Control Corporation; and provided,
further, that the obligations of the Company under Section
10.01(a) hereof shall inure to the benefit of the Tender Agent,
on behalf of the owners from time to time of the Bonds, and shall
be enforceable by the Tender Agent as a third party beneficiary;
and provided, further, that neither the County of Coconino,
Arizona nor the State of Arizona shall in any event be liable for
the payment of the principal of or premium, if any, or interest
on the Bonds or for the performance of any pledge, mortgage,
obligation or agreement created by or arising out of this
Agreement or the issuance of the Bonds, and further that neither
the Bonds nor any such obligation or agreement of the Pollution
Control Corporation shall be construed to constitute an
indebtedness of the County of Coconino, Arizona or the State of
Arizona within the meaning of any constitutional or statutory
provisions whatsoever, but shall be limited obligations of the
Pollution Control Corporation payable solely out of the revenues
derived from this Agreement or any Security Arrangement provided
hereunder, or from the sale of the Bonds, or from the investment
or reinvestment of any of the foregoing, as provided herein and
in the Indenture.
2.044 Amendments. This Agreement may be amended only by
written agreement of the parties hereto, subject to the
limitations set forth herein and in the Indenture.
2.045 Counterparts. This Agreement may be executed in any
number of counterparts, each of which, when so executed and
delivered, shall be an original; but such counterparts shall
together constitute but one and the same Agreement.
2.046 Severability. If any clause, provision or section of
this Agreement shall, for any reason, be held illegal or invalid
by any court, the illegality or invalidity of such clause,
provision or section shall not affect any of the remaining
clauses, provisions or sections hereof, and this Agreement shall
be construed and enforced as if such illegal or invalid clause,
provision or section had not been contained herein. In case any
agreement or obligation contained in this Agreement be held to be
in violation of law, then such agreement or obligation shall be
deemed to be the agreement or obligation of the Pollution Control
Corporation or the Company, as the case may be, to the full
extent permitted by law.
2.047 Governing Law. The laws of the State of Arizona
shall govern the construction and enforcement of this Agreement,
except that the provisions of Section 14.09 of the Indenture,
construed as provided in Section 14.07 of the Indenture, shall
apply to this Agreement as if contained herein.
2.048 Notice Regarding Cancellation of Contracts. As
required by the provisions of Section 38-511, Arizona Revised
Statutes, as amended, notice is hereby given that political
subdivisions of the State of Arizona or any of their departments
or agencies may, within three (3) years of its execution, cancel
any contract, without penalty or further obligation, made by the
political subdivisions or any of their departments or agencies on
or after September 30, 1988, if any person significantly involved
in initiating, negotiating, securing, drafting or creating the
contract on behalf of the political subdivisions or any of their
departments or agencies is, at any time while the contract or any
extension of the contract is in effect, an employee or agent of
any other party to the contract in any capacity or a consultant
to any other party of the contract with respect to the subject
matter of the contract. The cancellation shall be effective when
written notice from the chief executive officer or governing body
of the political subdivision is received by all other parties to
the contract unless the notice specifies a later time.
The Company covenants and agrees not to employ as an employee,
agent or, with respect to the subject matter of this Agreement, a
consultant, any person significantly involved in initiating,
negotiating, securing, drafting or creating such Agreement on
behalf of the Issuer within three (3) years from the execution
hereof, unless a waiver is provided by the Pollution Control
Corporation.
IN WITNESS WHEREOF, the parties hereto have caused this Loan
Agreement to be duly executed as of the day and year first above
written.
COCONINO COUNTY, ARIZONA
POLLUTION CONTROL CORPORATION
ATTEST:
By_____________________________
President
_______________________________
Secretary
TUCSON ELECTRIC POWER COMPANY
ATTEST:
By_____________________________
Vice President
________________________________
Assistant Secretary
EXHIBIT A
A portion of the costs of the construction, improvement or
equipping of the following Facilities will be financed with the
proceeds of the Pollution Control Revenue Bonds, 1996 Series A
(Tucson Electric Power Company Project) issued by Coconino
County, Arizona Pollution Control Corporation and referred to in
the foregoing Loan Agreement.
____________________
_______________________________
* This table of contents is not part of the Loan Agreement, and
is for convenience only. The captions herein are of no legal
effect and do not vary the meaning or legal effect of any part
of the Loan Agreement.
05/09/96/LOB/06361/009/AGREE/28864.8
INDENTURE OF TRUST
between
COCONINO COUNTY, ARIZONA
POLLUTION CONTROL CORPORATION
and
FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION
Dated as of May 1, 1996
Authorizing
Pollution Control Revenue Bonds,
1996 Series A
(Tucson Electric Power Company Project)
TABLE OF CONTENTS*
Page
Parties 1
Recitals 1
Granting Clause 2
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. 2
ARTICLE II
THE BONDS
Section 2.01. Creation of Bonds. 15
Section 2.02. Interest on the Bonds. 15
Section 2.03. Form of Bonds. 23
Section 2.04. Execution of Bonds. 24
Section 2.05. Authentication of Bonds. 24
Section 2.06. Bonds Not General Obligations. 24
Section 2.07. Prerequisites to Authentication of Bonds. 24
Section 2.08.Lost or Destroyed Bonds or Bonds Canceled in Error 25
Section 2.09. Transfer, Registration and Exchange of Bonds 26
Section 2.10. Notice of Mandatory Tender; Special Notice
by Tender Agent During Flexible Rate
Period. 27
Section 2.11. Other Obligations 27
Section 2.12. Temporary Bonds 28
Section 2.13. Cancellation of Bonds 28
Section 2.14. Payment of Principal and Interest 28
ARTICLE III
REDEMPTION OF BONDS
Section 3.01. Redemption Provisions 28
Section 3.02. Selection of Bonds to be Redeemed 31
Section 3.03. Procedure for Redemption 33
Section 3.04. No Partial Redemption After Default 34
Section 3.05. Payment of Redemption Price 34
ARTICLE IV
THE BOND FUND
Section 4.01. Creation of Bond Fund 34
Section 4.02. Liens 34
Section 4.03. Deposits into Bond Fund 34
Section 4.04. Use of Moneys in Bond Fund 35
Section 4.05. Custody of Bond Fund; Withdrawal of Moneys 36
Section 4.06. Bonds Not Presented for Payment 36
Section 4.07. Moneys Held in Trust 37
Section 4.08. Security Arrangements 37
ARTICLE V
THE CONSTRUCTION FUND
Section 5.01.Creation of, and Disbursements from, Construction Fund 39
Section 5.02.Completion of Facilities; Termination of Construction. 40
Section 5.03. Redemption of All Outstanding Bonds 41
Section 5.04. Acceleration of Bonds 41
Section 5.05. Refunding of Bonds 41
Section 5.06. Moneys Held in Trust 41
ARTICLE VI
INVESTMENTS
Section 6.01. Investments 42
ARTICLE VII
GENERAL COVENANTS
Section 7.01. No General Obligations 42
Section 7.02.Performance of Covenants of the Pollution Control Corporation;
Representations 43
Section 7.03.Maintenance of Rights and Powers; Compliance with Laws 43
Section 7.04.Enforcement of Obligations of the Company; Amendments 43
Section 7.05. Further Instruments. 43
Section 7.06. No Disposition of Trust Estate. 44
Section 7.07. Financing Statements. 44
Section 7.08. Tax Covenants; Rebate Fund. 44
Section 7.09. Notices of Trustee. 45
Section 7.10. No Transfer of Security Arrangement. 45
ARTICLE VIII
DEFEASANCE
Section 8.01. Defeasance. 45
ARTICLE IX
DEFAULTS AND REMEDIES
Section 9.01. Events of Default. 47
Section 9.02. Remedies. 49
Section 9.03. Restoration to Former Position. 49
Section 9.04. Bank's or Owners' Right to Direct Proceedings. 49
Section 9.05.Limitation on Owners' Right to Institute Proceedings. 49
Section 9.06. No Impairment of Right to Enforce Payment. 50
Section 9.07.Proceedings by Trustee without Possession of Bonds. 50
Section 9.08. No Remedy Exclusive. 50
Section 9.09. No Waiver of Remedies. 50
Section 9.10. Application of Moneys. 50
Section 9.11. Severability of Remedies. 51
ARTICLE X
TRUSTEE; PAYING AGENT AND CO-PAYING AGENTS; REGISTRAR
Section 10.01. Acceptance of Trusts. 52
Section 10.02. No Responsibility for Recitals. 52
Section 10.03. Limitations on Liability. 52
Section 10.04. Compensation, Expenses and Advances. 52
Section 10.05. Notice of Events of Default. 53
Section 10.06. Action by Trustee. 53
Section 10.07. Good Faith Reliance. 54
Section 10.08.Dealings in Bonds and with the Pollution Control Corporation
and the Company. 54
Section 10.09. Allowance of Interest. 54
Section 10.10. Construction of Indenture. 54
Section 10.11. Resignation of Trustee. 54
Section 10.12. Removal of Trustee. 55
Section 10.13. Appointment of Successor Trustee. 55
Section 10.14. Qualifications of Successor Trustee. 55
Section 10.15. Judicial Appointment of Successor Trustee. 56
Section 10.16. Acceptance of Trusts by Successor Trustee. 56
Section 10.17. Successor by Merger or Consolidation. 56
Section 10.18. Standard of Care. 56
Section 10.19.Notice to Owners of Bonds of Event of Default. 57
Section 10.20.Intervention in Litigation of the Pollution Control
Corporation. 57
Section 10.21. Paying Agent; Co-Paying Agents. 57
Section 10.22.Qualifications of Paying Agent and Co-Paying Agents;
Resignation; Removal. 57
Section 10.23. Registrar. 58
Section 10.24.Qualifications of Registrar; Resignation; Removal. 58
Section 10.25. Several Capacities. 59
ARTICLE XI
EXECUTION OF INSTRUMENTS BY OWNERS OF BONDS AND
PROOF OF OWNERSHIP OF BONDS
Section 11.01. Execution of Instruments; Proof of Ownership. 59
ARTICLE XII
MODIFICATION OF THIS INDENTURE AND THE LOAN AGREEMENT
Section 12.01. Limitations. 60
Section 12.02.Supplemental Indentures without Owner Consent. 60
Section 12.03.Supplemental Indentures with Consent of Owners. 61
Section 12.04. Effect of Supplemental Indenture. 63
Section 12.05.Consent of the Company and Obligor under Security
Arrangement. 63
Section 12.06.Amendment of Loan Agreement without Consent of
Owners. 63
Section 12.07.Amendment of Loan Agreement with Consent of Owners. 64
ARTICLE XIII
TENDER AGENT; REMARKETING AGENT; PURCHASE AND REMARKETING OF BONDS
Section 13.01. Tender Agent. 65
Section 13.02.Qualifications of Tender Agent; Resignation;
Removal. 66
Section 13.03. Purchase of Bonds; Notices. 67
Section 13.04. Remarketing Agent. 68
Section 13.05. Qualifications of Remarketing Agent. 69
Section 13.06. Remarketing of Bonds; Notice of Sales. 69
Section 13.07. Delivery of Bonds. 70
Section 13.08. Security Arrangements. 70
Section 13.09. Delivery of Proceeds of Sale. 70
Section 13.10. No Purchases or Sales After Default. 71
ARTICLE XIV
MISCELLANEOUS
Section 14.01.Successors of the Pollution Control Corporation. 71
Section 14.02. Parties in Interest. 71
Section 14.03. Severability. 71
Section 14.04.No Personal Liability of Pollution Control
Corporation Officials. 71
Section 14.05.Bonds Owned by the Pollution Control Corporation or
the Company. 71
Section 14.06. Counterparts. 72
Section 14.07. Governing Law. 72
Section 14.08. Notices. 72
Section 14.09. Holidays. 72
Section 14.10.Statutory Notice Regarding Cancellation of Contracts. 73
Section 14.11. Notice of Change. 73
Testimonium 75
Signatures and Seals 75
Exhibit A A-1
Exhibit B B-1
Exhibit C C-1
Exhibit D D-1
INDENTURE OF TRUST
THIS INDENTURE OF TRUST, dated as of May 1, 1996 (this
"Indenture"), between COCONINO COUNTY, ARIZONA POLLUTION
CONTROL CORPORATION, an Arizona nonprofit corporation and
a political subdivision of the State of Arizona
(hereinafter called the "Pollution Control Corporation"),
and FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION, as
trustee (hereinafter called the "Trustee"),
W I T N E S S E T H :
WHEREAS, the Pollution Control Corporation is
authorized and empowered under Title 35, Chapter 6,
Arizona Revised Statutes, as amended (the "Act"), to issue
its bonds in accordance with the Act and to make secured
or unsecured loans for the purpose of financing or
refinancing the acquisition, construction, improvement or
equipping of pollution control facilities consisting of
real and personal properties, including but not limited to
machinery and equipment whether or not now in existence or
under construction, which are used in whole or in part to
control, prevent, abate, alter, dispose or store, solid
waste, thermal, noise, atmospheric or water pollutants,
contaminants or products therefrom, whether such
facilities serve one or more purposes or functions in
addition to controlling, preventing, abating, altering,
disposing or storing such pollutants, contaminants or the
products therefrom, and to charge and collect interest on
such loans and pledge the proceeds of loan agreements as
security for the payment of the principal of and interest
on bonds, or designated issues of bonds, issued by the
Pollution Control Corporation and any agreements made in
connection therewith, whenever the Board of Directors of
the Pollution Control Corporation finds such loans to be
in furtherance of the purposes of the Pollution Control
Corporation; and
WHEREAS, the Pollution Control Corporation proposes to
issue and sell its revenue bonds as provided herein (the
"Bonds") for the purpose of financing the costs of the
acquisition, construction, improvement and equipping of
the pollution control facilities described in Exhibit A to
the Loan Agreement, dated as of May 1, 1996 (the "Loan
Agreement"), between the Pollution Control Corporation and
Tucson Electric Power Company, an Arizona corporation (the
"Company");
NOW, THEREFORE, for and in consideration of these
premises and the mutual covenants herein contained, of the
acceptance by the Trustee of the trusts hereby created, of
the purchase and acceptance of the Bonds by the Owners (as
hereinafter defined) thereof and of the sum of one dollar
lawful money of the United States of America, to it duly
paid by the Trustee at or before the execution and
delivery of these presents, and for other good and
valuable consideration the receipt and sufficiency of
which are hereby acknowledged, in order to secure the
payment of the principal of and premium, if any, and
interest on the Bonds at any time Outstanding (as
hereinafter defined) under this Indenture according to
their tenor and effect, the reimbursement of the Bank (as
hereinafter defined) as provided herein for drawings on
the Letter of Credit (as hereinafter defined) and the
performance and observance by the Pollution Control
Corporation of all the covenants and conditions expressed
or implied herein and contained in the Bonds, the
Pollution Control Corporation does hereby grant, bargain,
sell, convey, mortgage, pledge and assign, and grant a
security interest in, the Trust Estate (as hereinafter
defined) to the Trustee, its successors in trust and their
assigns forever;
TO HAVE AND TO HOLD all the same with all privileges
and appurtenances hereby conveyed and assigned, or agreed
or intended so to be, to the Trustee, its successors in
trust and their assigns forever;
IN TRUST NEVERTHELESS, upon the terms and trusts herein
set forth, first, for the equal and proportionate benefit
and security of all Owners of the Bonds issued under and
secured by this Indenture without preference, priority or
distinction as to the lien of any Bonds over any other
Bonds, except to the extent that Bonds held of record by
the Company or by the Tender Agent (as hereinafter
defined) for the account of the Company pursuant to
Section 13.07(c) hereof shall not be entitled to the
benefit of the Letter of Credit (as hereinafter defined),
as provided in Section 4.08 hereof and, second, for the
benefit and security of the Bank as and to the extent
provided in Sections 4.04(c) and 8.01 hereof;
PROVIDED, HOWEVER, that if, after the right, title and
interest of the Trustee in and to the Trust Estate shall
have ceased, terminated and become void in accordance with
Article VIII hereof, the principal of and premium, if any,
and interest on the Bonds shall have been paid to the
Owners thereof, or shall have been paid to the Company
pursuant to Section 4.06 hereof, then and in that case
these presents and the estate and rights hereby granted
shall cease, terminate and be void, and thereupon the
Trustee shall cancel and discharge this Indenture and
execute and deliver to the Pollution Control Corporation
and the Company such instruments in writing as shall be
requisite to evidence the discharge hereof; otherwise this
Indenture is to be and remain in full force and effect.
THIS INDENTURE OF TRUST FURTHER WITNESSETH, and it is
expressly declared, that all Bonds issued and secured
hereunder are to be issued, authenticated and delivered,
and the Trust Estate and the other estate and rights
hereby granted are to be dealt with and disposed of,
under, upon and subject to the terms, conditions,
stipulations, covenants, agreements, trusts, uses and
purposes as hereinafter expressed, and the Pollution
Control Corporation has agreed and covenanted, and does
hereby agree and covenant, with the Trustee and with the
respective Owners, from time to time, of the Bonds, as
follows:
I DEFINITIONS
I.11. Definitions. The terms defined in this
Article I shall, for all purposes of this Indenture, have
the meanings herein specified, unless the context clearly
requires otherwise:
Act:
"Act" shall mean Title 35, Chapter 6, Arizona Revised
Statutes, and all acts supplemental thereto or amendatory
thereof.
Administration Expenses:
"Administration Expenses" shall mean the reasonable
expenses incurred by the Pollution Control Corporation
with respect to the Loan Agreement, this Indenture and any
transaction or event contemplated by the Loan Agreement or
this Indenture, including the compensation and
reimbursement of expenses and advances payable to the
Trustee, to the Paying Agent, any Co-Paying Agent and the
Registrar, and to the Tender Agent and the Remarketing
Agent.
Authorized Company Representative:
"Authorized Company Representative" shall mean each
person at the time designated to act on behalf of the
Company by written certificate furnished to the Pollution
Control Corporation and the Trustee containing the
specimen signature of such person and signed on behalf of
the Company by its President, any Vice President or its
Treasurer, together with its Secretary or any Assistant
Secretary.
Available Moneys:
"Available Moneys" shall mean (a) with respect to any
payment date occurring during the term of a Security
Arrangement on which the Company shall not be the obligor,
(i) moneys furnished to the Trustee or the Tender Agent by
the Company or the Pollution Control Corporation which
have been on deposit with the Trustee or the Tender Agent
for at least 123 days prior to and during which no
petition by or against the Company or the Pollution
Control Corporation under any bankruptcy act or under any
similar act which may be hereafter enacted shall have been
filed, unless such petition shall have been dismissed and
such dismissal shall be final and not subject to appeal
(provided that such moneys need not have been on deposit
for 123 days if the Company shall furnish to the Pollution
Control Corporation, the Trustee and the Tender Agent an
unqualified opinion of counsel of national recognition
experienced in bankruptcy matters, and to Moody's if the
Bonds shall then be rated by Moody's, and to S&P if the
Bonds shall then be rated by S&P, that payment of such
moneys to the Owners would not constitute an avoidable
preference under Section 547 of the United States
Bankruptcy Code in the event of the filing of a petition
thereunder by or against the Company or the Pollution
Control Corporation), and (ii) the proceeds from the
investment of moneys described in clause (i) above, which
moneys described in clause (i) and clause (ii) shall have
been continuously on deposit with the Trustee or Tender
Agent in trust for the benefit of the Owners in a separate
and segregated account in which only such moneys are held,
and (b) with respect to any payment date not occurring
during the term of a Security Arrangement on which the
Company shall not be the obligor, any moneys furnished to
the Trustee, and the proceeds from the investment thereof.
Bank:
"Bank" shall mean Canadian Imperial Bank of Commerce,
New York Agency, a banking corporation organized and
existing under the laws of Canada, so long as the Letter
of Credit shall be in effect, in its capacity as issuer of
the Letter of Credit, its successors in such capacity and
their assigns and, if any other Security Arrangement on
which the Company shall not be the obligor, shall have
been issued and delivered as a Security Arrangement in
accordance with Section 6.07(a) of the Loan Agreement,
"Bank" shall mean the obligor on such other Security
Arrangement so long as such other Security Arrangement
shall be in effect, in its capacity as issuer of such
other Security Arrangement, its successors and their
assigns.
Bond Counsel:
"Bond Counsel" shall mean any firm or firms of
nationally recognized bond counsel experienced in matters
pertaining to the validity of, and exclusion from gross
income for federal tax purposes of interest on bonds
issued by states and political subdivisions, selected by
the Company and acceptable to the Pollution Control
Corporation.
Bond Fund:
"Bond Fund" shall mean the fund created by Section 4.01
hereof.
Bonds:
"Bond" or 'Bonds" shall mean the bonds authorized to be
issued under this Indenture.
Business Day:
"Business Day" shall mean a day of the year on which
banks located in The City of New York, New York, and in
the city in which the Principal Office of the Trustee is
located, and in the city in which the office of the Bank
at which drawings or other demands for payment on a
Security Arrangement on which the Company shall not be the
obligor, if any, are made, are not required or authorized
to remain closed and on which The New York Stock Exchange
is not closed.
Capital Account:
"Capital Account" shall mean any of the accounts so
named established under Sections 4.01 and 5.01 hereof.
Code:
"Code" shall mean the Internal Revenue Code of 1986 or
any successor statute thereto. Each reference to a
section of the Code herein shall be deemed to include the
United States Treasury Regulations proposed or in effect
thereunder and applicable to the Bonds or the use of
proceeds thereof, unless the context clearly requires
otherwise. References to any particular Code section
shall, in the event of a successor Code, be deemed to be a
reference to the successor to such Code section.
Company:
"Company" shall mean Tucson Electric Power Company, a
corporation organized and existing under the laws of the
State of Arizona, its successors and their assigns.
Company Mortgage:
"Company Mortgage" shall mean the Indenture, dated as
of April 1, 1941, between The Tucson Gas, Electric Light
and Power Company (predecessor of the Company) and The
Chase National Bank of the City of New York (now The Chase
Manhattan Bank (National Association)), as trustee, as
heretofore and hereafter amended and supplemented.
Completion Date:
"Completion Date" shall mean the date specified in
Section 3.04 of the Loan Agreement.
Construction (and other forms of the word "construct"):
"Construction" (and other forms of the word
"construct") shall mean, when used with respect to the
Facilities, the construction of the Facilities and shall
include, without limitation, the acquisition,
construction, improvement and equipping of the Facilities,
all as contemplated by the Act.
Construction Fund:
"Construction Fund" shall mean the fund created by
Section 5.01 hereof.
Conversion Date:
"Conversion Date" shall mean (a) when used with respect
to the Fixed Rate Period, the day on which the interest
rate on the Bonds is converted to the Fixed Rate pursuant
to Section 2.02(d) hereof; (b) when used with respect to
any Variable Rate Period, the day on which a particular
type of Variable Rate Period becomes effective for the
Bonds pursuant to Section 2.02(c) hereof and is not
preceded by the same type of Variable Rate Period (and,
when used with respect to any Term Rate Period, a day
which is not preceded by a Term Rate Period of the same
duration); and (c) when used with respect to Flexible Rate
Periods, the day on which such periods become effective
for the Bonds and were not preceded by a Flexible Rate
Period pursuant to Section 2.02(a)(i) hereof.
Cost of Construction:
"Cost of Construction" shall embrace all costs paid or
incurred by the Company with respect to the Facilities and
the financing thereof for the payment of which the
Pollution Control Corporation is authorized to issue bonds
under the Act, and shall include without limitation (a)
obligations paid or incurred by the Company for labor,
materials and other expenses and to contractors, builders
and materialmen in connection with the construction of the
Facilities; (b) the costs paid or incurred by the Company
for contract bonds and for insurance of all kinds that may
be deemed by the Company to be desirable or necessary
during the course of construction of the Facilities; (c)
the expenses paid or incurred by the Company for test
borings, surveys, estimates, plans and specifications, and
preliminary investigations therefor, with respect to the
Facilities and for supervising construction, as well as
for the performance of all other duties required by or
reasonably necessary for the proper construction, of the
Facilities; (d) Administration Expenses paid or incurred
prior to the Completion Date and legal, accounting,
financial, underwriting, advertising, recording and
printing expenses and all other fees and expenses paid or
incurred by the Company in connection with the issuance
and sale of the Bonds and the issuance of the Letter of
Credit; (e) amounts in respect of interest (exclusive of
accrued interest paid by the initial purchasers upon
delivery thereof) accruing upon the Bonds until the
Completion Date; (f) fees and charges in respect of any
Security Arrangement accruing until the Completion Date;
(g) all other costs that the Company shall be required to
pay under the terms of any contract or contracts for the
construction of the Facilities; (h) any other costs or
expenses paid or incurred by the Company, and any sums
required to reimburse the Company for work done by it,
with respect to the Facilities which are properly
chargeable to the capital account of the Company with
respect to the Facilities or would be so chargeable for
federal income tax purposes either with a proper election
or but for a proper election to deduct the same; and (i)
amounts required to be paid to the United States by the
Company (on behalf of the Pollution Control Corporation)
in respect of the Bonds pursuant to Section 148 of the
Code. For purposes of the application of the proceeds of
the Bonds, the Cost of Construction shall be deemed to
include the payment or redemption, or provision therefor,
of any obligations, other than the Bonds, issued to
finance or refinance any of the costs listed above. The
Cost of Construction shall also be deemed to include all
costs paid or incurred with respect to the Facilities by
any Person (as defined in the Loan Agreement) to whom the
Facilities have been leased or sold as a whole or in part,
provided that such costs, had they been paid or incurred
by the Company, would otherwise constitute a portion of
the Cost of Construction.
Daily Rate:
"Daily Rate" shall mean the interest rate to be
determined for the Bonds on each Business Day pursuant to
Section 2.02(b)(ii) hereof.
Daily Rate Period:
"Daily Rate Period" shall mean each period during which
the Bonds bear interest at a Daily Rate.
Depositary:
"Depositary" shall mean The Depository Trust Company or
any successor thereto as a securities repository for the
Bonds.
DTC:
"DTC" shall mean The Depository Trust Company, its
successors and their assigns or if The Depository Trust
Company or its successor or assign resigns from its
functions as depository for the Bonds, any other
securities depository which agrees to follow the
procedures required to be followed by a securities
depository in connection with the Bonds and which is
selected by the Pollution Control Corporation, at the
direction of the Company.
Facilities:
"Facilities" shall mean the real and personal
properties, machinery and equipment currently existing,
under construction and to be constructed which are
described in Exhibit A to the Loan Agreement, as revised
from time to time to reflect any changes therein,
additions thereto, substitutions therefor and deletions
therefrom permitted by the terms of the Loan Agreement,
subject, however, to the provisions of Section 7.01 of the
Loan Agreement.
First Mortgage Bonds:
"First Mortgage Bonds" shall mean the bonds issued and
delivered under the Company Mortgage and delivered to the
Trustee as contemplated in Section 12.06 hereof.
Fixed Rate:
"Fixed Rate" shall mean the rate at which the Bonds
shall bear interest from and including the Fixed Rate
Conversion Date to the maturity date thereof.
Fixed Rate Conversion Date:
"Fixed Rate Conversion Date" shall mean the date on
which the interest rate on the Bonds is converted to the
Fixed Rate pursuant to Section 2.02(d) hereof.
Fixed Rate Period:
"Fixed Rate Period" shall mean the period during which
the Bonds bear interest at the Fixed Rate.
Flexible Rate:
"Flexible Rate" shall mean, when used with respect to
any particular Bond, the interest rate determined for each
Flexible Rate Period applicable thereto pursuant to
Section 2.02(b)(i) hereof.
Flexible Rate Conversion Date:
"Flexible Rate Conversion Date" shall mean each day on
which the interest rate on the Bonds is converted to a
Flexible Rate or Rates pursuant to Section 2.02(c) hereof.
Flexible Rate Period:
"Flexible Rate Period" shall mean each period during
which a Bond bears interest at a Flexible Rate.
General Account:
"General Account" shall mean the account so named
established under Section 4.01 hereof.
Government Obligations:
"Government Obligations" shall mean:
(a) direct obligations of, or obligations the principal
of and interest on which are unconditionally guaranteed
by, the United States of America entitled to the
benefit of the full faith and credit thereof; and
(b) certificates, depositary receipts or other
instruments which evidence a direct ownership interest
in obligations described in clause (a) above or in any
specific interest or principal payments due in respect
thereof; provided, however, that the custodian of such
obligations or specific interest or principal payments
shall be a bank or trust company organized under the
laws of the United States of America or of any state or
territory thereof or of the District of Columbia, with
a combined capital stock surplus and undivided profits
of at least $50,000,000; and provided, further, that
except as may be otherwise required by law, such
custodian shall be obligated to pay to the holders of
such certificates, depositary receipts or other
instruments the full amount received by such custodian
in respect of such obligations or specific payments and
shall not be permitted to make any deduction therefrom.
Indenture:
"Indenture" shall mean this Indenture of Trust, dated
as of May 1, 1996, between the Pollution Control
Corporation and the Trustee, and any and all
modifications, alterations, amendments and supplements
thereto.
Interest Payment Date:
"Interest Payment Date" shall mean (a) when used with
respect to Bonds bearing interest at the Daily or Monthly
Rate, the first Business Day of each calendar month to
which interest at such rate has accrued; (b) when used
with respect to Bonds bearing interest at a Weekly Rate,
the first Wednesday of each calendar month to which
interest at such rate has accrued; (c) when used with
respect to Bonds bearing interest at a Term Rate or the
Fixed Rate, the first day of the sixth calendar month
following the month in which the Term or Fixed Rate
Conversion Date occurs and the first day of each sixth
calendar month thereafter to which interest at such rate
has accrued, except that the last Interest Payment Date
for any Term Rate Period which is followed by a conversion
to any type of Rate Period (except a Term or Fixed Rate
Period) shall be the first Business Day of the sixth
calendar month following the preceding Interest Payment
Date; (d) when used with respect to any particular Bond
bearing interest at a Flexible Rate, the day after the
last day of each Flexible Rate Period applicable thereto;
and (e) May 1, 2031.
Interest Period:
"Interest Period" shall mean the period from and
including any Interest Payment Date to and including the
day immediately preceding the next following Interest
Payment Date.
Investment Account:
"Investment Account" shall mean any of the accounts so
named established under Sections 4.01 and 5.01 hereof.
Investment Securities:
"Investment Securities" shall mean any of the following
obligations or securities on which neither the Company nor
any of its subsidiaries is the obligor: (a) Government
Obligations; (b) interest bearing deposit accounts (which
may be represented by certificates of deposit) in
national, state or foreign banks having a combined capital
and surplus of not less than $10,000,000; (c) bankers'
acceptances drawn on and accepted by commercial banks
having a combined capital and surplus of not less than
$10,000,000; (d) (i) direct obligations of, (ii)
obligations the principal of and interest on which are
unconditionally guaranteed by, and (iii) any other
obligations the interest on which is exempt from federal
income taxation issued by, any state of the United States
of America, the District of Columbia or the Commonwealth
of Puerto Rico, or any political subdivision, agency,
authority or other instrumentality of any of the
foregoing, which, in any case, are rated by a nationally
recognized rating agency in any of its three highest
Rating Categories; (e) obligations of any agency or
instrumentality of the United States of America; (f)
commercial or finance company paper which is rated by a
nationally recognized rating agency in any of its three
highest Rating Categories; (g) corporate debt securities
issued by corporations having debt securities rated by a
nationally recognized rating agency in any of its three
highest Rating Categories; (h) repurchase agreements with
banking or financial institutions having a combined
capital and surplus of not less than $10,000,000 with
respect to any of the foregoing obligations or securities;
(i) shares or interests in registered investment companies
whose assets consist of obligations or securities which
are described in any other clause of this sentence; and
(j) any other obligations which may lawfully be purchased
by the Trustee. The commercial banks and banking
institutions referred to above may include the entities
acting as Trustee, Paying Agent, Co-Paying Agent,
Registrar, Tender Agent and Remarketing Agent hereunder if
such entities shall otherwise satisfy the requirements set
forth above.
Letter of Credit:
"Letter of Credit" shall mean an irrevocable letter of
credit issued by the Bank to the Trustee in accordance
with Section 6.07(b) of the Loan Agreement, and, upon the
issuance and delivery of any other letter of credit as a
Security Arrangement in accordance with Section 6.07(a) of
the Loan Agreement, "Letter of Credit" shall mean such
other letter of credit, and, upon the Termination or
Expiration of the Letter of Credit, "Letter of Credit"
shall mean any credit facility having terms substantially
the same as those of the Letter of Credit delivered as a
Security Arrangement in accordance with Section 6.07(a) of
the Loan Agreement.
Loan Agreement:
"Loan Agreement" shall mean the Loan Agreement, dated
as of May 1, 1996, between the Pollution Control
Corporation and the Company relating to the Bonds, and any
and all modifications, alterations, amendments and
supplements thereto.
Loan Payments:
"Loan Payments" shall mean the payments required to be
made by the Company pursuant to Section 5.01 of the Loan
Agreement.
Maximum Rate:
"Maximum Rate" shall mean 12% per annum.
Monthly Rate:
"Monthly Rate" shall mean the interest rate to be
determined for the Bonds on a monthly basis pursuant to
Section 2.02(b)(iv) hereof.
Monthly Rate Conversion Date:
"Monthly Rate Conversion Date" shall mean each day on
which the interest rate on the Bonds is converted to a
Monthly Rate pursuant to Section 2.02(c) hereof.
Monthly Rate Period:
"Monthly Rate Period" shall mean each period during
which the Bonds bear interest at a Monthly Rate.
Moody's:
"Moody's" shall mean Moody's Investors Service, Inc., a
corporation organized and existing under the laws of the
State of Delaware, its successors and their assigns, and,
if such corporation shall be dissolved or liquidated or
shall no longer performs the functions of a securities
rating agency, "Moody's" shall be deemed to refer to any
other nationally recognized securities rating agency
designated by the Pollution Control Corporation, with the
approval of the Company, by notice to the Trustee and the
Remarketing Agent.
1954 Code:
"1954 Code" shall mean the Internal Revenue Code of
1954, as amended.
Notice by Mail:
"Notice by Mail" or "notice" of any action or condition
"by Mail" shall mean a written notice meeting the
requirements of this Indenture mailed by first-class mail
to the Owners of specified registered Bonds at the
addresses shown in the registration books maintained
pursuant to Section 2.09 hereof; provided, however, that
if, because of the temporary or permanent suspension of
delivery of first-class mail or for any other reason, it
is impossible or impracticable to give such notice by
first-class mail, then such giving of notice in lieu
thereof, which may include publication, as shall be made
with the approval of the Trustee (or, if there be no
trustee hereunder, the Pollution Control Corporation)
shall constitute a sufficient giving of such notice.
Notice by Publication:
"Notice by Publication" or "notice" of any action or
condition "by Publication" shall mean publication of a
notice meeting the requirements of this Indenture in a
newspaper or financial journal of general circulation in
The City of New York, New York, which carries financial
news, is printed in the English language and is
customarily published on each Business Day; provided,
however, that any successive weekly publication of notice
required hereunder may be made, unless otherwise expressly
provided herein, on the same or different days of the week
and in the same or different newspapers or financial
journals; and provided, further, that if, because of the
temporary or permanent suspension of the publication or
general circulation of any newspaper or financial journal
or for any other reason, it is impossible or impracticable
to publish such notice in the manner herein described,
then such publication in lieu thereof as shall be made
with the approval of the Trustee (or, if there be no
trustee hereunder, the Pollution Control Corporation)
shall constitute a sufficient publication of such notice.
Outstanding:
"Outstanding", when used in reference to the Bonds,
shall mean, as at any particular date, the aggregate of
all Bonds authenticated and delivered under this Indenture
except:
(a) those canceled by the Trustee at or prior to such
date or delivered to or acquired by the Trustee at or
prior to such date for cancellation;
(b) those deemed to be paid in accordance with Article
VIII hereof;
(c) those deemed to be purchased in accordance with
Section 13.03(b) hereof; and
(d) those in lieu of or in exchange or substitution for
which other Bonds shall have been authenticated and
delivered pursuant to this Indenture, unless proof
satisfactory to the Trustee and the Company is
presented that such Bonds are held by a bona fide
holder in due course.
Owner:
"Owner" shall mean the person in whose name any Bond is
registered upon the registration books maintained pursuant
to Section 2.09 hereof. The Company may be an Owner.
Paying Agent; Co-Paying Agent; Principal Office thereof:
"Paying Agent" and "Co-Paying Agent" shall mean the
paying agent and any co-paying agent appointed in
accordance with Section 10.21 hereof. "Principal Office"
of the Paying Agent or any Co-Paying Agent shall mean the
office thereof designated in writing to the Trustee.
Plant:
"Plant" shall mean the Navajo Generating Station, an
electric power generating plant near Page, Arizona, in
Coconino County, Arizona, and any additions or
improvements thereto or replacements thereof.
Pollution Control Corporation:
"Pollution Control Corporation" shall mean Coconino
County, Arizona Pollution Control Corporation, an Arizona
nonprofit corporation and a political subdivision of the
State of Arizona incorporated for and with the approval of
the County of Coconino, Arizona, pursuant to the
provisions of the Constitution of the State of Arizona and
the Act, its successors and their assigns.
Rate Period:
"Rate Period" shall mean the period during which a
particular rate of interest determined for the Bonds is to
remain in effect until a subsequently determined rate of
interest becomes effective pursuant to Section 2.02
hereof.
Rating Agency:
"Rating Agency" shall mean Moody's or S&P.
Rating Category:
"Rating Category" shall mean a generic securities
rating category, without regard to any refinement or
gradation of such rating category by a numerical modifier
or otherwise.
Receipts and Revenues of the Pollution Control Corporation
from the Loan Agreement:
"Receipts and Revenues of the Pollution Control
Corporation from the Loan Agreement" shall mean all moneys
paid or payable to the Trustee for the account of the
Pollution Control Corporation by the Company in respect of
the Loan Payments and payments pursuant to Section 9.01 of
the Loan Agreement, including the proceeds of all drawings
by the Trustee on the Letter of Credit or any other
Security Arrangement in satisfaction of the Company's
obligations to make the Loan Payments and all receipts of
the Trustee which, under the provisions of this Indenture,
reduce the amount of such payments.
Record Date:
"Record Date" shall mean the close of business on the
(a) Business Day immediately preceding an Interest Payment
Date, in the case of Bonds bearing interest at Flexible,
Daily, Weekly and Monthly Rates, (b) fifteenth (15th) day
(whether or not a Business Day) of the calendar month
immediately preceding the Interest Payment Date, in the
case of Bonds bearing interest at a Term Rate or the Fixed
Rate.
Registrar; Principal Office thereof:
"Registrar" shall mean the registrar appointed in
accordance with Section 10.23 hereof. "Principal Office"
of the Registrar shall mean the office thereof designated
in writing to the Trustee.
Reimbursement Agreement:
"Reimbursement Agreement" shall mean the agreement
between the Company and the Bank pursuant to which the
Letter of Credit or other Security Arrangement is issued
by the Bank and delivered to the Trustee, and any and all
modifications, alterations, amendments and supplements
thereto.
Remarketing Agent; Principal Office thereof:
"Remarketing Agent" shall mean the remarketing agent
appointed in accordance with Section 13.04 hereof.
"Principal Office" of the Remarketing Agent shall mean the
office thereof designated in writing to the Pollution
Control Corporation, the Trustee, the Tender Agent, the
Company and the Bank.
S&P:
"S&P" shall mean Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc., a corporation
organized and existing under the laws of the State of New
York, its successors and their assigns, and, if such
corporation shall be dissolved or liquidated or shall no
longer perform the functions of a securities rating
agency, "S&P" shall be deemed to refer to any other
nationally recognized securities rating agency designated
by the Pollution Control Corporation, with the approval of
the Company, by notice to the Trustee and the Remarketing
Agent.
Security Arrangement; Termination thereof; Expiration
thereof:
"Security Arrangement" shall mean any of the following:
(i) the Letter of Credit; (ii) First Mortgage Bonds
delivered to the Trustee as contemplated by Section 12.06
hereof; and (iii) any credit facility, insurance policy or
other credit support agreement or mechanism obtained,
delivered, made, entered into or otherwise arranged by the
Company for the purpose of securing, evidencing or being
otherwise in furtherance of the obligations of the Company
under Section 5.01 or 10.01 of the Loan Agreement, or
both, or for the purpose of securing the Bonds but shall
not include any facility, arrangement or mechanism, such
as a liquidity facility or line of credit, that is not an
irrevocable obligation to pay amounts in respect of the
obligations of the Company under Section 5.01 of the Loan
Agreement. "Termination" (and other forms of the word
"terminate") shall mean, when used with respect to any
Security Arrangement, the replacement, removal, surrender
or other termination of such Security Arrangement by the
Trustee or the Company other than the Expiration of such
Security Arrangement. "Expiration" (and other forms of
the word "expire") shall mean, when used with respect to
any Security Arrangement, the expiration or termination of
such Security Arrangement in accordance with its terms.
Supplemental Indenture:
"Supplemental Indenture" shall mean any indenture of
the Pollution Control Corporation modifying, altering,
amending, supplementing or confirming this Indenture for
any purpose, in accordance with the terms hereof.
Supplemental Loan Agreement:
"Supplemental Loan Agreement" shall mean any agreement
between the Pollution Control Corporation and the Company
modifying, altering, amending or supplementing the Loan
Agreement, in accordance with the terms hereof.
Tax Agreement:
"Tax Agreement" shall mean that tax certificate and
agreement, dated May 1, 1996, between the Pollution
Control Corporation and the Company, relating to the
requirements of the Code and the 1954 Code, and any and
all modifications, alterations, amendments and supplements
thereto.
Tender Agent; Principal Office thereof:
"Tender Agent" shall mean the tender agent appointed in
accordance with Section 13.01 hereof. "Principal Office"
of the Tender Agent shall mean the office thereof
designated in writing to the Pollution Control
Corporation, the Trustee, the Remarketing Agent, the
Company and the Bank.
Term Rate:
"Term Rate" shall mean the interest rate to be
determined for the Bonds for a term of one or more whole
years pursuant to Section 2.02(b)(v) hereof.
Term Rate Conversion Date:
"Term Rate Conversion Date" shall mean each day on
which the Bonds bear interest at a Term Rate pursuant to
Section 2.02(c) hereof, which is preceded by a day on
which the Bonds did not bear interest at a Term Rate or
bore interest at a Term Rate for a Term Rate Period of a
different duration.
Term Rate Period:
"Term Rate Period" shall mean each period during which
the Bonds bear interest at a Term Rate.
Trust Estate:
"Trust Estate" shall mean at any particular time all
right, title and interest of the Pollution Control
Corporation in and to the Loan Agreement (except its
rights under Sections 5.03, 5.04, 6.03 and 8.05 thereof
and any rights of the Pollution Control Corporation to
receive notices, certificates, requests, requisitions and
other communications thereunder), including without
limitation, the Receipts and Revenues of the Pollution
Control Corporation from the Loan Agreement, the Letter of
Credit (excluding the rights to make drawings thereunder
with respect to the purchase of Bonds and proceeds of such
drawings) and any other Security Arrangement (except to
the extent that such Security Arrangement is in
furtherance of the obligations of the Company with respect
to the purchase of Bonds), the Bond Fund and the
Construction Fund and all moneys and Investment Securities
from time to time on deposit therein (excluding, however,
any moneys or Investment Securities held in any subaccount
within the Bond Fund or the Construction Fund established
in furtherance of the obligations of the Company under
clause (b) of Section 6.04 of the Loan Agreement), any and
all other moneys and obligations (other than Bonds) which
at such time are deposited or are required to be deposited
with, or are held or are required to be held by or on
behalf of, the Trustee, the Paying Agent or any Co-Paying
Agent in trust under any of the provisions of this
Indenture and all other rights, titles and interests which
at such time are subject to the lien of this Indenture;
provided, however, that in no event shall there be
included in the Trust Estate (a) moneys or obligations
deposited with or held by the Trustee pursuant to Section
7.08 hereof, (b) moneys or obligations deposited with or
paid to the Trustee for the redemption or payment of Bonds
which are deemed to have been paid in accordance with
Article VIII hereof or moneys held pursuant to Section
4.06 hereof or (c) except as herein expressly provided,
any moneys held by the Tender Agent for the purchase of
Bonds or for payment of Bonds held by it pursuant to
Section 13.03(c) or 13.07(c) hereof.
Trustee; Principal Office thereof:
"Trustee" shall mean First Trust of New York, National
Association, as trustee under this Indenture, its
successors in trust and their assigns. "Principal Office"
of the Trustee shall mean the principal corporate trust
office of the Trustee, which office at the date of
acceptance by the Trustee of the duties and obligations
imposed on the Trustee by this Indenture is located at the
address specified in Section 14.08 hereof.
Variable Rate:
"Variable Rate" shall mean, as the context requires,
the Daily, Weekly, Monthly, or Term Rate applicable from
time to time to the Bonds.
Variable Rate Period:
"Variable Rate Period" shall mean each period during
which the Bonds bear interest at a specific Variable Rate.
Weekly Rate:
"Weekly Rate" shall mean the interest rate to be
determined for the Bonds on a weekly basis pursuant to
Section 2.02(b)(iii) hereof.
Weekly Rate Conversion Date:
"Weekly Rate Conversion Date" shall mean each day on
which the interest rate on the Bonds is converted to a
Weekly Rate pursuant to Section 2.02(c) hereof.
Weekly Rate Period:
"Weekly Rate Period" shall mean each period during
which the Bonds bear interest at a Weekly Rate.
II THE BONDS
II.11. Creation of Bonds. There is hereby
authorized and created under this Indenture, for the
purpose of providing moneys to pay a part of the Cost of
Construction, an issue of Bonds, entitled to the benefit,
protection and security of this Indenture, in the
aggregate principal amount of Sixteen Million Seven
Hundred Thousand Dollars ($16,700,000). Each of the Bonds
shall be designated by the title "Coconino County, Arizona
Pollution Control Corporation Pollution Control Revenue
Bond, 1996 Series A (Tucson Electric Power Company
Project)". The Bonds shall mature, subject to prior
redemption upon the terms and conditions hereinafter set
forth, on May 1, 2031.
II.12. Interest on the Bonds. The Bonds shall bear
interest, payable on each Interest Payment Date, at the
lesser of (a) a Daily Rate, a Weekly Rate, a Monthly Rate,
a Flexible Rate or Rates, a Term Rate or the Fixed Rate as
selected by the Company in accordance with this Section
2.02 and (b) 12% per annum (the "Maximum Rate"). The Bonds
shall initially bear interest at a Weekly Rate. When the
Bonds bear interest at a Variable Rate (other than a Term
Rate) or at Flexible Rates, interest shall be computed on
the basis of the actual number of days elapsed over a year
of 365 days (366 in leap years). When the Bonds bear
interest at a Term Rate or the Fixed Rate, interest shall
be computed on the basis of a 360-day year of twelve 30-
day months. For purposes of any such calculation of
interest payable with respect to the final interest
payment during a Term Rate Period immediately followed by
a Flexible, Daily, Weekly or Monthly Rate Period, the
amount of interest which shall be payable with respect to
such final interest period shall be determined as if the
Interest Payment Date for such period were the first day
of the sixth month following the preceding Interest
Payment Date, notwithstanding any extension of such month
to the first Business Day of such month by reason of the
conversion to such Flexible, Daily, Weekly or Monthly Rate
Period. Interest shall be paid on each Bond on each
Interest Payment Date for such Bond. Each Bond shall bear
interest from the Interest Payment Date to which interest
thereon shall have been paid in full which is, or
immediately precedes, its date of authentication, or, if
no interest shall have been paid on the Bonds, from the
date of initial authentication and delivery of Bonds under
this Indenture.
While there exists an Event of Default, the interest
rate on the Bonds will be the rate on the Bonds
immediately prior to the occurrence of such Event of
Default, except that if the Bonds then bore interest at
Flexible Rates the rate during the continuance of such
Event of Default will be the highest Flexible Rate then in
effect for any Bond. The interest rate determination
method may be changed by the Company as described in
Sections 2.02(c) and 2.02(d) hereof. The methods of
determining the various interest rates are as provided in
Sections 2.02(b) and 2.02(d) hereof. The various Rate
Periods are described in Section 2.02(a) and 2.02(d)
hereof.
Notwithstanding any provision of this Indenture or of
any Bond, the Trustee or the Paying Agent may, but shall
not be obligated to, enter into an agreement with any
Owner of 100% in aggregate principal amount of the Bonds
providing for making any or all payments to that Owner of
principal or redemption price of and interest on the Bonds
or any part thereof (other than any payment of the entire
unpaid principal amount thereof) at a place and in a
manner other than as provided in this Indenture and in the
Bonds, without presentation or surrender of the Bonds, and
for giving any notice required hereunder, upon any
conditions that shall be satisfactory to the Trustee, the
Paying Agent and the Company; provided that no such
agreement with such an Owner shall provide for less notice
than is otherwise provided for herein.
The Trustee or the Paying Agent, as the case may be,
will furnish a copy of each of those agreements, certified
to be the document executed by an officer of the Trustee,
to the Company. Any payment of principal, redemption price
or interest pursuant to such an agreement shall constitute
payment thereof pursuant to, and for all purposes of, this
Indenture.
(a) Rate Periods.
(i) Flexible Rate Periods. The Flexible Rate Period for
each Bond shall be of such duration, not exceeding 270
days, as may be offered by the Remarketing Agent and
specified by the purchaser pursuant to Section 2.02(b)(i)
hereof, and any Bond may bear interest at a Flexible Rate,
and have a Flexible Rate Period, different from any other
Bond; provided that each such Flexible Rate Period shall
(A) commence on a Business Day (initially, the Flexible
Rate Conversion Date), and (B) end on a day which is
immediately followed by a Business Day.
(ii) Daily Rate Periods. Daily Rate Periods shall
commence on each Business Day and shall extend to, but not
include, the next succeeding Business Day.
(iii) Weekly Rate Periods. Weekly Rate Periods shall
commence on Wednesday of each week and end on Tuesday of
the following week; except that (A) in the case of a
conversion to a Weekly Rate Period, the initial Weekly
Rate Period for Bonds shall commence on the Weekly Rate
Conversion Date and end on Tuesday of the following week;
and (B) in the case of a conversion from a Weekly Rate
Period to a different Rate Period, the last Weekly Rate
Period prior to conversion shall end on the last day
immediately preceding the Conversion Date.
(iv) Monthly Rate Periods. Monthly Rate Periods shall
(A) commence on a Monthly Rate Conversion Date, which
shall be the first Business Day of a month and the first
Business Day of each calendar month thereafter, and (B)
end on the last day preceding either the commencement date
of the following Monthly Rate Period or a Conversion Date
on which a different type of Rate Period shall become
effective.
(v) Term Rate Periods. Term Rate Periods shall (A)
commence on a Term Rate Conversion Date; and (B) end on
the last day preceding either the commencement date of the
following Term Rate Period or the Conversion Date on which
a different Rate Period shall become effective.
(b) Determination of Interest Rates. The interest rate
for the Bonds for each Rate Period (other than a Flexible
Rate Period), shall be determined by the Remarketing Agent
to be the lowest rate of interest which, in the judgment
of the Remarketing Agent as of the date of determination
and under prevailing market conditions, would cause the
Bonds to have a market value equal to the principal amount
thereof, plus accrued and unpaid interest, if any. The
interest rate shall be determined by the Remarketing Agent
for each Rate Period as follows:
(i) Flexible Rates. The Flexible Rate for each Flexible
Rate Period shall be effective from and including the
commencement date of such period to and including the last
day thereof. Each Flexible Rate, and Flexible Rate Period,
shall be determined by the Remarketing Agent in connection
with the sale of the Bond or Bonds to which it relates.
Each Flexible Rate, and Flexible Rate Period, shall be
determined for each Bond on or prior to the first day of
each Flexible Rate Period with respect to such Bond by the
Remarketing Agent by the offer and acceptance of purchase
commitments for such Bond (at a price equal to 100% of the
principal amount) for such Flexible Rate Period and/or for
such Flexible Rate as the Remarketing Agent deems to be
advisable in order to minimize the net interest cost on
the Bonds under prevailing market conditions; provided,
however, that the foregoing shall not prohibit the
Remarketing Agent from accepting purchase commitments for
longer Flexible Rate Periods (and at higher Flexible
Rates) than are otherwise available at the time of any
remarketing if the Remarketing Agent determines, in its
sole judgment, that, under prevailing market conditions, a
lower net interest cost on the Bonds can be achieved over
the longer Flexible Rate Period. Notwithstanding the
foregoing, no Flexible Rate Period may be established
which exceeds 270 days or, if the Remarketing Agent has
given or received notice of any conversion to a Variable
or Fixed Rate Period, the remaining number of days prior
to the Conversion Date. If for any reason a Flexible Rate
shall not be determined for any Flexible Rate Period for
any Bond, the Flexible Rate for such Flexible Rate Period
for such Bond shall be the Flexible Rate in effect for the
immediately preceding Flexible Rate Period, or a Flexible
Rate Period shall not be determined for any Bond, the
Flexible Rate Period for such Bond shall be the shortest
period encompassing at least one Business Day.
(ii) Daily Rates. The Daily Rate for each Daily Rate
Period shall be effective from and including the
commencement date thereof and shall remain in effect from
day to day until changed by the Remarketing Agent. The
initial Daily Rate and any change to the Daily Rate shall
be determined by the Remarketing Agent between 1:00 p.m.,
New York City time, on the Business Day immediately
preceding the commencement date of the Daily Rate Period
to which it relates and 10:00 a.m., New York City time, on
such commencement date.
(iii) Weekly Rates. The Weekly Rate for each Weekly
Rate Period shall be effective from and including the
commencement date of such period and shall remain in
effect through and including the last day thereof. Each
such Weekly Rate shall be determined by the Remarketing
Agent not later than 4:00 p.m., New York City time, on the
Tuesday or the next Business Day immediately preceding the
commencement date of the Weekly Rate Period to which it
relates.
(iv) Monthly Rates. The Monthly Rate for each Monthly
Rate Period shall be effective from and including the
commencement date of such period and shall remain in
effect through and including the last day thereof. The
Monthly Rate for each Monthly Rate Period shall be
determined not later than 4:00 pm., New York City time, on
the Business Day immediately preceding the commencement
date of the Monthly Rate Period to which it relates.
(v) Term Rates. The Term Rate for each Term Rate Period
shall be effective from and including the commencement
date of such period and shall remain in effect through and
including the last day thereof. Each Term Rate shall be
determined by the Remarketing Agent not later than 4:00
p.m., New York City time, on the Business Day immediately
preceding the commencement date of the Term Rate Period to
which it relates. If for any reason the duration of any
Term Rate Period shall not be determined for such Term
Rate Period, such duration shall be one year.
(vi) Non-Determination. If for any reason a Weekly Rate,
Monthly Rate or Term Rate shall not be determined for a
Weekly Rate Period, Monthly Rate Period or Term Rate
Period, the Weekly Rate, Monthly Rate or Term Rate, as the
case may be, shall be the Weekly Rate, Monthly Rate or
Term Rate in effect for the immediately preceding Rate
Period.
(c) Conversions between Rate Periods. In addition to
any conversion to the Fixed Rate pursuant to Section
2.02(d) hereof, at the option of the Company, the Bonds
may be converted from the one type of Rate Period to
another as follows:
(i) The Conversion Date for a conversion to a different
Rate Period shall be an Interest Payment Date on which
interest is payable for the Rate Period from which the
conversion is to be made; provided, however, that:
(A) if the conversion is from Flexible Rate Periods,
the Conversion Date shall be the last Interest Payment
Date on which interest is payable for any Flexible Rate
Periods theretofore established for the Bonds;
(B) if the conversion is from a Term Rate Period to a
Term Rate Period of a different duration or to a different
Rate Period, the Conversion Date may only be the last
Interest Payment Date in respect of that Term Rate Period;
and
(C) if the conversion is between Daily and Weekly Rate
Periods, the Conversion Date may be any Wednesday,
regardless of whether the Wednesday is an Interest Payment
Date.
(ii) The Company shall give written notice of any such
conversion to the Remarketing Agent, the Trustee, the
Tender Agent and the Bank not fewer than thirty-five (35)
days prior to the proposed Conversion Date. Such notice
shall specify the proposed Conversion Date and the type of
Rate Period to which the conversion will be made, and in
the case of conversion to a Term Rate Period, the number
of years to be included within such Term Rate Period.
(iii) Not more than sixty (60) days prior to the
Conversion Date and not fewer than thirty (30) days prior
to the Conversion Date, the Tender Agent shall give Notice
by Mail of the conversion to the Owners of the Bonds
stating the proposed Conversion Date and the proposed type
of Rate Period and, except in the case of conversions
between Daily and Weekly Rate Periods, stating that the
Bonds will bc subject to mandatory tender for purchase on
the Conversion Date at a purchase price equal to the
principal amount thereof. The notice shall state: (A)
that all Bonds must be delivered to the Tender Agent for
mandatory purchase on the Conversion Date at a purchase
price equal to the principal amount thereof and that if
the Owner fails to deliver any Bonds to the Tender Agent
on the purchase date and the Tender Agent is in receipt of
the purchase price therefor, such Bonds shall be deemed to
be purchased on the purchase date and ownership
transferred to the purchaser thereof, and (B) that an
Owner who fails to deliver such Bonds shall have no
further rights thereunder except the right to receive the
purchase price thereof upon presentation and surrender of
such Bond to the Tender Agent.
(iv) Any conversion to a different Rate Period (except a
conversion, if any, between Daily and Weekly Rate Periods)
pursuant to this Section 2.02(c) shall be subject to the
condition that on or before the Conversion Date, the
Company shall have delivered to the Pollution Control
Corporation, the Trustee, the Tender Agent and the
Remarketing Agent an opinion of Bond Counsel to the effect
that the conversion is authorized hereunder and under the
Act and will not, in and of itself, adversely affect the
exclusion from gross income for federal tax purposes of
the interest on the Bonds.
(v) While the Letter of Credit shall be in effect, the
Bonds shall not be converted to a Term Rate Period or
Flexible Rate Period unless the Letter of Credit may be
drawn upon (in respect of interest or the portion of
purchase price equal to accrued interest) in an amount
which equals at least 210 days accrued interest in the
case of a Term Rate Period or 300 days accrued interest in
the case of a Flexible Rate Period.
(d) The Fixed Rate. At the option of the Company, the
Bonds may be converted to bear interest at a Fixed Rate to
their final maturity. Any such conversion shall be made as
follows:
(i) The Fixed Rate Conversion Date shall be an Interest
Payment Date on which interest is payable for the Rate
Period from which the conversion is to be made; provided,
however, that (A) if the conversion is from a Term Rate
Period, the Fixed Rate Conversion Date shall be limited to
an Interest Payment Date on which a new Term Rate Period
would otherwise have commenced and (B) if the conversion
is from a Flexible Rate Period, the Fixed Rate Conversion
Date shall be an Interest Payment Date on which interest
is payable for all Bonds.
(ii) (A) The Company shall give written notice of any
such conversion to the Pollution Control Corporation, the
Trustee, the Remarketing Agent, the Tender Agent and the
Bank not fewer than forty-five (45) days prior to the
proposed Conversion Date. Such notice shall specify the
Fixed Rate Conversion Date.
(A) Not fewer an thirty (30) nor more than sixty (60)
days prior to the Fixed Rate Conversion Date, the Tender
Agent shall give Notice by Mail of the conversion to the
Owners of all Bonds, specifying the proposed Conversion
Date and stating that the Bonds will be subject to
mandatory tender for purchase on the Conversion Date. The
notice shall state that all Bonds must be delivered to the
Tender Agent for mandatory purchase on the Conversion Date
at a purchase price equal to the principal amount thereof
and that if the Owner fails to deliver any Bonds to the
Tender Agent on the purchase date and the Tender Agent is
in receipt of the purchase price therefor, such Bonds
shall be deemed to be purchased on the purchase date and
ownership transferred to the purchaser thereof and that an
Owner who fails to deliver such Bonds shall have no
further rights thereunder except the right to receive the
purchase price thereof upon presentation and surrender of
such Bond to the Tender Agent.
(iii) The Fixed Rate shall be determined by the
Remarketing Agent no later than 3:00 pm., New York City
time, on the Business Day preceding the Fixed Rate
Conversion Date. The Fixed Rate shall be the lowest rate
of interest which, in the judgment of the Remarketing
Agent as of the date of determination and under prevailing
market conditions, would cause the Bonds to have a market
value equal to the principal amount thereof.
(iv) Any conversion to a Fixed Rate shall be subject to
the condition that on or before the Fixed Rate Conversion
Date, the Company shall have delivered to the Pollution
Control Corporation, the Trustee, the Tender Agent and the
Remarketing Agent an opinion of Bond Counsel to the effect
that the conversion is authorized hereunder and under the
Act and will not, in and of itself, adversely affect the
exclusion from gross income for federal tax purposes of
the interest on the Bonds.
(e) Calculation of Interest. The Remarketing Agent
will notify the Trustee and the Company, in writing or by
telecopy or telephone promptly confirmed by tested telex
by 4:00 p.m., New York City time:
(i) on the last Business Day of a month in which
interest on the Bonds is payable at a Variable Rate other
than Term Rate, of the Variable Rate for each day in such
month;
(ii) on the first Business Day of each Flexible Rate
Period, of the length thereof, the Flexible Rate therefor
and the principal amount of Bonds bearing interest at such
Flexible Rate; and
(iii) on the day of a determination thereof, of the
Term Rate and the Fixed Rate.
Using the rates supplied by the Remarketing Agent pursuant
to this Section, the Trustee will calculate the interest
payable on the Bonds. The Remarketing Agent will inform
the Tender Agent and the Bank orally at the oral request
of any of them of any interest rate set by the Remarketing
Agent. The Trustee will use commercially reasonable
efforts to respond to telephonic inquiries from Owners of
Bonds with respect to the effective interest rate.
The setting of the rates and the calculation of
interest payable on the Bonds as provided in this
Indenture will be conclusive and binding on all parties
and on each Owner of a Bond.
(f) Change in Rate Periods-Opinion or Opinions of Bond
Counsel. Notwithstanding any provision of this Section
2.02, no change shall be made in the Rate Period pursuant
to Section 2.02(c) or 2.02(d) hereof if the opinion or
opinions of Bond Counsel required under Section 2.02(c) or
2.02(d) hereof are not delivered on or before the
Conversion Date. If the Tender Agent shall have sent any
notice to the Owners of the Bonds regarding a change in
the Rate Period, then in the event such opinion or
opinions are not delivered, the Tender Agent shall
promptly notify by commercially reasonable means all
Owners of the Bonds that the proposed change in Rate
Period shall not occur and that the existing Rate Period
shall continue in effect.
(g) Optional Tenders for Purchase during Variable Rate
Periods.
(i) Owners of Bonds bearing interest at Variable Rates
may elect to have their Bonds (or portions thereof in
amounts equal to the lowest denomination then authorized
or whole multiples of such lowest denomination) purchased
at a purchase price equal to 100% of the principal amount
of such Bonds (or portions thereof), plus, except as
hereinafter provided, accrued and unpaid interest, if any,
on the following purchase dates and upon the giving of the
following telephonic or written notices meeting the
further requirements of subsection (ii) below:
(A) Bonds bearing interest at Daily Rates may be
tendered for purchase at a price payable in immediately
available funds on any Business Day prior to conversion
from a Daily Rate Period to a different Rate Period, upon
telephonic notice of tender to the Tender Agent given not
later than 10:45 a.m., New York City time, on the purchase
date.
(B) Bonds bearing interest at Weekly Rates may be
tendered for purchase at a price payable in immediately
available funds on any Business Day prior to conversion
from a Weekly Rate Period to a different Rate Period upon
delivery of a written or telephonic notice (in the case of
telephonic notice, promptly confirmed in writing) of
tender to the Tender Agent not later than 5:00 p.m., New
York City time, on a Business Day not fewer than seven (7)
days prior to the purchase date.
(C) Bonds bearing interest at Monthly Rates may be
tendered for purchase on any Interest Payment Date for
such Bonds at a price payable in immediately available
funds upon delivery of a written notice of tender to the
Tender Agent not later than 5:00 p.m., New York City time,
on a Business Day which is not fewer than seven (7) days
prior to the purchase date.
(D) Bonds bearing interest at a Term Rate may be
tendered for purchase on the commencement date of the
succeeding Rate Period at a price payable in immediately
available funds upon delivery of a written notice of
tender to the Tender Agent not later than 5:00 p.m., New
York City time, on a Business Day which is not fewer than
fifteen (15) days prior to the purchase date.
(ii) Each notice of tender:
(A) shall (y) in the case of a written notice, except
as otherwise specified, be delivered by or on behalf of
the Owner to the Tender Agent at its Principal Office, and
be in form satisfactory to the Tender Agent; and (z) in
the case of Bonds registered in the name of a nominee of
DTC as DTC shall designate and held by DTC in its
book-entry system, notice to the Tender Agent shall be in
the form set forth as Exhibit D hereto.
II.0(J) shall state, whether delivered in
writing or by telephone (promptly confirmed in
writing) (w) the principal amount of the Bond or
Bonds to which the notice relates, (x) that the Owner
irrevocably demands purchase of such Bond or Bonds or
a specified portion thereof in an amount equal to the
lowest denomination then authorized or a whole
multiple of such lowest denomination, (y) the date on
which such Bond or Bonds or portion thereof is to be
purchased, and (z) payment instructions with respect
to the purchase price; and
(C) shall automatically constitute, whether delivered
in writing or by telephone, (w) an irrevocable offer to
sell the Bond or portion thereof to which the notice
relates on the purchase date to any purchaser selected by
the Remarketing Agent, at a price equal to the principal
amount of such Bond or portion thereof plus, with respect
to Bonds bearing interest at Daily Rates or Weekly Rates,
any interest thereon accrued and unpaid as of the purchase
date, except that Bonds held at DTC and for which an
optional tender has been made by delivery of the notice
set forth as Exhibit D hereto shall not be purchased
unless such Bonds are transferred to the account of the
Tender Agent on the tender date as provided in such
notice, (x) an irrevocable authorization and instruction
to the Tender Agent to effect the transfer of such Bond or
portion thereof upon payment of such price to the Tender
Agent on the purchase date, (y) an irrevocable
authorization and instruction to the Tender Agent to
effect the exchange of the Bond to be purchased in whole
or in part for other Bonds in an equal aggregate principal
amount so as to facilitate the sale of such Bond or
portion thereof to be purchased, and (z) an acknowledgment
that such Owner will have no further rights with respect
to such Bond or portion thereof upon payment of the
purchase price thereof to the Tender Agent on the purchase
date, except for the right of such Owner to receive such
purchase price upon surrender of such Bond.
The determination of the Tender Agent as to
whether a notice of tender has been properly
delivered pursuant to the forgoing shall be
conclusive and binding upon the Owner. The Tender
Agent may waive any conditions to a conforming
tender.
(iii) Not later than 11:00 a.m., New York City time,
on the Business Day immediately following the date of
receipt of any notice of tender (or immediately upon such
receipt, in the case of Bonds bearing interest at Daily
Rates), the Tender Agent shall notify, by telephone
promptly confirmed in writing, in the case of a Daily,
Weekly or Monthly Rate, and in writing in all other cases,
the Trustee, the Remarketing Agent, the Company and the
Bank of the principal amount of Bonds (or portions
thereof) to be purchased and the date of purchase.
(h) Mandatory Tenders for Purchase.
(i) Each Bond bearing interest at a Flexible Rate shall
be subject to mandatory tender for purchase on the day
immediately following the last day of each Flexible Rate
Period applicable to such Bond at a purchase price equal
to 100% of the principal amount thereof; provided,
however, that any such Bond shall not be subject to such
mandatory tender for purchase if, prior to 3:00 p.m. on
the Business Day next preceding the day such mandatory
tender would otherwise occur hereunder, the Owner of such
Bond by notice delivered in writing or by telephone
(promptly confirmed in writing) to the Remarketing Agent
shall have elected to retain such Bond for an additional
Flexible Rate Period and such Owner shall have agreed with
the Remarketing Agent as to the duration of the additional
Flexible Rate Period and the Flexible Rate to be effective
during such period.
(ii) Bonds to be converted to the Fixed Rate or from one
type of Rate Period to another (other than conversions
between Daily and Weekly Rate Periods) or from any Term
Rate Period to a Term Rate Period of a different duration
are subject to mandatory tender for purchase on such
Conversion Date at a purchase price equal to 100% of the
principal amount thereof.
(iii) Bonds shall be subject to mandatory tender for
purchase at a purchase price that would be the then
applicable redemption price set forth in Section 3.01 (a)
or (c) hereof if such Bonds were redeemed on such day, on
the first day of the month in which the Expiration or
Termination of the term of any Security Arrangement shall
occur; provided, however, that there shall be no such
mandatory tender if prior to the giving of notice
described in Section 2.10 hereof, (A) the Company shall
have delivered to the Tender Agent a certificate or letter
from Moody's, if the Bonds are then rated by Moody's, and
from S&P, if the Bonds are then rated by S&P, to the
effect that the Termination or Expiration of such Security
Arrangement, or the Termination of such Security
Arrangement and the provision of another Security
Arrangement in lieu thereof, as the case may be, will not,
by itself, result in a reduction or withdrawal of its
ratings then in effect on the Bonds and (B) if another
Security Arrangement is to be provided in lieu thereof,
such substitute Security Arrangement shall have been
delivered to the Trustee and shall, by its terms, become
effective on or before the Expiration or Termination of
the term of any existing Security Arrangement.
(iv) Bonds are subject to mandatory tender for
purchase at a purchase price equal to 100% of the
principal amount thereof plus accrued interest to the
date of purchase, upon the occurrence of either of the
following events:
(A) receipt by the Trustee, following a drawing
on a Security Arrangement on which the Company shall
not be the obligor to pay accrued interest, or the
portion of purchase price equal to accrued interest,
on the Bonds, of notice from the Bank that the amount
available to be drawn on such Security Arrangement
will not be reinstated (in respect of interest or
portion of purchase price equal to accrued interest)
in the amount of such drawing, unless such notice
also directs the Trustee to provide notice to the
Pollution Control Corporation of its obligation to
redeem the Bonds pursuant to Section 3.01(f) hereof;
or
(B) receipt by the Trustee of notice from the
Bank stating that an Event of Default under the
Reimbursement Agreement (or other agreement between
the Company and the Bank pursuant to which the Bank
issued and delivered to the Trustee a Security
Arrangement) has occurred and is continuing, unless
such notice also directs the Trustee to provide
notice to the Pollution Control Corporation of its
obligation to redeem the Bonds pursuant to Section
3.01(f) hereof.
Upon the occurrence of an event specified in clause (A)
or (B) of the immediately preceding paragraph, the
Trustee shall direct the Tender Agent to purchase, and
the Tender Agent shall purchase, the Bonds on the first
Business Day after the receipt by the Trustee of such
notice on which the Trustee may make a drawing or
drawings on such Security Arrangement and on which the
proceeds of such drawing or drawings shall be
immediately available, but not prior to such date.
II.13. Form of Bonds. Bonds shall be authenticated
and delivered hereunder solely as fully registered bonds
without coupons in the denomination of $100,000 or
integral multiples thereof in the case of Bonds bearing
interest at a Variable Rate other than Term Rates,
$100,000 or integral multiples of $5,000 in excess thereof
in the case of Bonds bearing interest at a Flexible Rate
and $5,000 or integral multiples thereof, in the case of
bonds bearing interest at Term Rates or the Fixed Rate.
Bonds shall be numbered as determined by the Trustee and
shall be dated the date of the initial authentication and
delivery thereof.
Principal of and premium, if any, on Bonds shall be
payable to the Owners of such Bonds upon presentation and
surrender of such Bonds at the Principal Office of the
Paying Agent or any Co-Paying Agent. Interest on the
Bonds shall be paid by check drawn upon the Paying Agent
and mailed to the Owners of such Bonds as of the close of
business on the Record Date with respect to each Interest
Payment Date at the registered addresses of such Owners as
they shall appear as of the close of business on such
Record Date on the registration books maintained pursuant
to Section 2.09 hereof notwithstanding the cancellation of
any such Bond upon any exchange or registration of
transfer subsequent to such Record Date, except that if
and to the extent that there should be a default on the
payment of interest on any Bond, such defaulted interest
shall be paid to the Owners in whose name such Bond (or
any Bond or Bonds issued upon any exchange or registration
of transfer thereof) is registered as of the close of
business on a date selected by the Trustee in its
discretion, but not more than 15 days or less than 10 days
prior to the date of payment of such defaulted interest;
notwithstanding the foregoing, except in respect of a Term
Rate Period and the Fixed Rate Period, upon request to the
Paying Agent by an Owner of not less than $1,000,000 in
aggregate principal amount of Bonds, interest on such
Bonds and, after presentation and surrender of such Bonds,
the principal thereof shall be paid to such Owner by wire
transfer to the account maintained within the continental
United States specified by such Owner or, if such Owner
maintains an account with the entity acting as Paying
Agent, by deposit into such account. Payment as aforesaid
shall be made in such coin or currency of the United
States of America as, at the respective times of payment,
shall be legal tender for the payment of public and
private debts.
The Bonds and the form for registration of transfer and
the form of certificate of authentication to be printed on
the Bonds are to be in substantially the forms thereof set
forth in Exhibits A, B and C hereto, respectively, with
necessary or appropriate variations, omissions and
insertions as permitted or required by this Indenture.
Upon conversion to a Term Rate Period or to the Fixed Rate
Period, a new form of Bond may be prepared containing a
summary of tender and redemption provisions applicable to
the Bonds during such Term Rate Period or Fixed Rate
Period.
II.14. Execution of Bonds. The Bonds shall be
executed on behalf of the Pollution Control Corporation by
the President or a Vice President of the Pollution Control
Corporation and shall have affixed, impressed or
reproduced thereon the official seal of the Pollution
Control Corporation which shall be attested by the
Secretary or an Assistant Secretary of the Pollution
Control Corporation. Each of the foregoing officers may
execute or cause to be executed with a facsimile signature
in lieu of his manual signature the Bonds, provided the
signature of either the President or a Vice President of
the Pollution Control Corporation or the Secretary or
Assistant Secretary of the Pollution Control Corporation
shall, if required by applicable laws, be manually
subscribed.
In case any officer of the Pollution Control
Corporation whose signature or a facsimile of whose
signature shall appear on the Bonds shall cease to be such
officer before the authentication by the Trustee and
delivery of such Bonds, such signature or such facsimile
shall nevertheless be valid and sufficient for all
purposes, the same as if he had remained in office until
delivery; and any Bond may be signed on behalf of the
Pollution Control Corporation by such persons as, at the
time of execution of such Bond, shall be the proper
officers of the Pollution Control Corporation, even though
at the date of such Bond or of the execution and delivery
of this Indenture any such person was not such officer.
II.15. Authentication of Bonds. Only such Bonds as
shall have endorsed thereon a certificate of
authentication substantially in the form set forth in
Exhibit C hereto duly executed by the Trustee shall be
entitled to any right or benefit under this Indenture. No
Bond shall be valid or obligatory for any purpose unless
and until such certificate of authentication shall have
been duly executed by the Trustee, and such executed
certificate of authentication of the Trustee upon any such
Bonds shall be conclusive evidence that such Bond has been
authenticated and delivered under this Indenture. The
Trustee's certificate of authentication on any Bond shall
be deemed to have been executed by it if signed with an
authorized signature of the Trustee, but it shall not be
necessary that the same person sign the certificate of
authentication on all of the Bonds issued hereunder. This
Section 2.05 is subject to the provisions of Section 10.17
hereof.
II.16. Bonds Not General Obligations. Neither the
County of Coconino, Arizona nor the State of Arizona shall
in any event be liable for the payment of the principal of
or premium, if any, or interest on the Bonds, and neither
the Bonds nor the premium, if any, or the interest
thereon, shall be construed to constitute an indebtedness
of County of Coconino, Arizona or the State of Arizona
within the meaning of any constitutional or statutory
provisions whatsoever. The Bonds and the premium, if any,
and the interest thereon shall be limited obligations of
the Pollution Control Corporation payable solely from the
Receipts and Revenues of the Pollution Control Corporation
from the Loan Agreement and the other moneys pledged
therefor under this Indenture, and such fact shall be
plainly stated on the face of each Bond. The Pollution
Control Corporation shall not be obligated to pay the
purchase price of Bonds from any source.
II.17. Prerequisites to Authentication of Bonds.
The Pollution Control Corporation shall execute and
deliver to the Trustee and the Trustee shall authenticate
the Bonds and deliver said Bonds to the initial purchasers
thereof as may be directed hereinafter in this Section
2.07.
Prior to the delivery on original issuance by the
Trustee of any authenticated Bonds there shall be or have
been delivered to the Trustee:
(a) a duly certified copy of a resolution of the Board
of Directors of the Pollution Control Corporation
authorizing the execution and delivery of this Indenture
and the Loan Agreement and the issuance of the Bonds;
(b) an original duly executed counterpart or a duly
certified copy of the Loan Agreement;
(c) the Letter of Credit;
(d) a request and authorization to the Trustee on behalf
of the Pollution Control Corporation, signed by its
President or a Vice President, to authenticate and deliver
the Bonds in the aggregate principal amount determined by
this Indenture to the purchaser or purchasers therein
identified upon payment to the Trustee, but for the
account of the Pollution Control Corporation, of a sum
specified in such request and authorization plus any
accrued interest on such Bonds to the date of delivery;
and
(e) a written statement on behalf of the Company,
executed by the President, any Vice President or the
Treasurer, (i) approving the issuance and delivery of the
Bonds and (ii) consenting to each and every provision of
this Indenture.
II.18. Lost or Destroyed Bonds or Bonds Canceled in
Error. If any Bond, whether in temporary or definitive
form, is lost (whether by reason of theft or otherwise),
destroyed (whether by mutilation, damage, in whole or in
part, or otherwise) or canceled in error, the Pollution
Control Corporation may execute and the Trustee may
authenticate a new Bond of like date and denomination and
bearing a number not contemporaneously outstanding;
provided that (a) in the case of any mutilated Bond, such
mutilated Bond shall first be surrendered to the Trustee
and (b) in the case of any lost Bond or Bond destroyed in
whole, there shall be first furnished to the Pollution
Control Corporation, the Trustee and the Company evidence
of such loss or destruction. In every case, the applicant
for a substitute Bond shall furnish the Pollution Control
Corporation, the Trustee and the Company such security or
indemnity as may be required by any of them. In the event
any lost or destroyed Bond or a Bond canceled in error
shall have matured or is about to mature, or has been
called for redemption, instead of issuing a substitute
Bond the Trustee may, in its discretion, pay the same
without surrender thereof if there shall be first
furnished to the Pollution Control Corporation, the
Trustee and the Company evidence of such loss, destruction
or cancellation, together with indemnity, satisfactory to
them. Upon the issuance of any substitute Bond, the
Pollution Control Corporation and the Trustee may require
the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation
thereto. The Trustee may charge the Owner of any such
Bond with the Trustee's reasonable fees and expenses in
connection with any transaction described in this Section
2.08.
Every substitute Bond issued pursuant to the provisions
of this Section 2.08 by virtue of the fact that any Bond
is lost, destroyed or canceled in error shall constitute
an additional contractual obligation of the Pollution
Control Corporation, whether or not the Bond so lost,
destroyed or canceled shall be at any time enforceable,
and shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all
other Bonds duly issued hereunder. All Bonds shall be
held and owned upon the express condition that, to the
extent permitted by law, the foregoing provisions are
exclusive with respect to the replacement or payment of
lost, destroyed or improperly canceled Bonds,
notwithstanding any law or statute now existing or
hereafter enacted.
II.19. Transfer, Registration and Exchange of Bonds.
The Registrar shall maintain and keep, at its Principal
Office, books for the registration and registration of
transfer of Bonds, which, at all reasonable times, shall
be open for inspection by the Pollution Control
Corporation, the Trustee and the Company; and, upon
presentation for such purpose of any Bond entitled to
registration or registration of transfer at the Principal
Office of the Registrar, the Registrar shall register or
register the transfer in such books, under such
reasonable regulations as the Registrar may prescribe.
The Registrar shall make all necessary provisions to
permit the exchange or registration of transfer of Bonds
at its Principal Office.
The transfer of any Bond shall be registered upon the
registration books of the Registrar at the written request
of the Owner thereof or his attorney duly authorized in
writing, upon surrender thereof at the Principal Office of
the Registrar, together with a written instrument of
transfer satisfactory to the Registrar duly executed by
the Owner or his duly authorized attorney. Upon the
registration of transfer of any such Bond or Bonds, the
Pollution Control Corporation shall issue in the name of
the transferee, in authorized denominations, a new Bond or
Bonds in the same aggregate principal amount as the
surrendered Bond or Bonds.
The Pollution Control Corporation, the Trustee, the
Tender Agent, the Paying Agent, any Co-Paying Agent, the
Registrar and the Remarketing Agent may deem and treat the
Owner of any Bond as the absolute owner of such Bond,
whether such Bond shall be overdue or not, for the purpose
of receiving payment of, or on account of, the principal
of and premium, if any, and, except as provided in Section
2.03 hereof, interest on, or the purchase price of, such
Bond and for all other purposes, and neither the Pollution
Control Corporation, the Trustee, the Tender Agent, the
Paying Agent, any Co-Paying Agent, the Registrar nor the
Remarketing Agent shall be affected by any notice to the
contrary. All such payments so made to any such Owner or
upon his order shall be valid and effective to satisfy and
discharge the liability upon such Bond to the extent of
the sum or sums so paid.
Bonds, upon surrender thereof at the Principal Office
of the Registrar may, at the option of the Owner thereof,
be exchanged for an equal aggregate principal amount of
Bonds of any authorized denomination.
In all cases in which the privilege of exchanging Bonds
or registering the transfer of Bonds is exercised, the
Pollution Control Corporation shall execute and the
Trustee shall authenticate and deliver Bonds in accordance
with the provisions of this Indenture. For every such
exchange or registration of transfer of Bonds, whether
temporary or definitive, the Pollution Control
Corporation, the Registrar, or the Trustee may make a
charge sufficient to reimburse it for any tax or other
governmental charge required to be paid with respect to
such exchange or registration of transfer, which sum or
sums shall be paid by the person requesting such exchange
or registration of transfer as a condition precedent to
the exercise of the privilege of making such exchange or
registration of transfer. Except in connection with the
tender of Bonds for purchase pursuant to their terms and
the delivery thereof pursuant to Section 13.07 hereof, the
Registrar shall not be obligated (a) to make any such
exchange or registration of transfer of Bonds during the
fifteen (15) days next preceding the date on which notice
of any proposed redemption of Bonds is given, (b) to make
any exchange or registration of transfer of any Bonds
called for redemption or (c) in the case of Bonds bearing
interest at a Term Rate or the Fixed Rate, in the period
following the Record Date and prior to the Interest
Payment Date to which such Record Date relates.
The Bonds are to be initially registered in the name of
Cede & Co., as nominee for the Depositary. Such Bonds
shall not be transferable or exchangeable, nor shall any
purported transfer be registered, except as follows:
(a) such Bonds may be transferred in whole, and
appropriate registration of transfer effected, if such
transfer is by such nominee to the Depositary, or by the
Depositary to another nominee thereof, or by any nominee
of the Depositary to any other nominee thereof, or by the
Depositary or any nominee thereof to any successor
securities depositary or any nominee thereof; and
(b) such Bond may be exchanged for definitive Bonds
registered in the respective names of the beneficial
holders thereof, and thereafter shall be transferable
without restriction, if:
(i) the Depositary shall have notified the Company and
the Trustee that it is unwilling or unable to continue to
act as securities depositary with respect to such Bonds
and the Trustee shall not have been notified by the
Company within ninety (90) days of the identity of a
successor securities depositary with respect to such
Bonds;
(ii) the Company shall have delivered to the Trustee a
written instrument to the effect that such Bonds shall be
so exchangeable on an after a date specified therein; or
(iii) (1) an Event of Default shall have occurred
and be continuing, (2) the Trustee shall have given notice
of such Event of Default pursuant to Section 10.19 hereof
and (3) there shall have been delivered to the Pollution
Control Corporation, the Company and the Trustee an
opinion of counsel to the effect that the interests of the
beneficial owners of such Bonds in respect thereof will be
materially impaired unless such owners become owners of
definitive Bonds.
The Bonds delivered to the Depositary may contain a
legend reflecting the foregoing restrictions on
registration of transfer and exchange.
II.2 0. Notice of Mandatory Tender; Special Notice by
Tender Agent During Flexible Rate Period. (a) The Tender
Agent shall give notice to the Owners of the Bonds of each
event which requires the mandatory tender of the Bonds
pursuant to Section 2.02(h), other than the occurrence of
a last day of a Flexible Rate Period which shall not be
the effective date of a new Rate Period and other than a
mandatory tender for purchase pursuant to Section
2.02(h)(iv). Such notice shall be given in the manner and
at the times set forth in Section 3.03 hereof for the
giving of a notice of redemption. Such notice shall
describe the event which requires the Bonds to be tendered
and, if such event shall be the Termination or Expiration
of a Security Arrangement, shall also contain the
information referred to in Section 4.08(c) hereof. Notice
of a mandatory tender for purchase pursuant to Section
2.02(h)(iv) shall be given by the Tender Agent as soon as
practicable by Mail upon receipt by the Tender Agent of
the notice from the Trustee specified in Section
2.02(h)(iv) to all Owners of Outstanding Bonds.
(a) Upon each registration of transfer of a Bond
bearing interest at a Flexible Rate, the Tender Agent
shall give written notice to the transferee that (i) no
notices of the length of any Flexible Rate Period or the
Flexible Rate borne by his Bond during such period will be
given to the Owner of the Bond, but that such information
may be obtained, upon request, from the Remarketing Agent
and setting forth the manner that such information may be
obtained, (ii) the Owner of any Bond bearing interest at a
Flexible Rate will be required to tender such Bond on its
Interest Payment Date and (iii) no additional notice of
any such requirement to tender will be given to the Owner.
II.22. Other Obligations. The Pollution Control
Corporation expressly reserves the right to issue, to the
extent permitted by law, but shall not be obligated to
issue, obligations under another indenture or indentures
to provide additional funds to pay the Cost of
Construction of the Facilities or to refund all or any
principal amount of the Bonds, or any combination thereof.
II.23. Temporary Bonds. Pending the preparation of
definitive Bonds, the Pollution Control Corporation may
execute and the Trustee shall authenticate and deliver
temporary Bonds. Temporary Bonds shall be issuable as
registered Bonds without coupons, of any authorized
denomination, and substantially in the form of the
definitive Bonds but with such omissions, insertions and
variations as may be appropriate for temporary Bonds, all
as may be determined by the Pollution Control Corporation.
Temporary Bonds may contain such reference to any
provisions of this Indenture as may be appropriate. Every
temporary Bond shall be executed by the Pollution Control
Corporation and be authenticated by the Trustee upon the
same conditions and in substantially the same manner, and
with like effect, as the definitive Bonds. As promptly as
practicable the Pollution Control Corporation shall
execute and shall furnish definitive Bonds and thereupon
temporary Bonds may be surrendered in exchange therefor
without charge at the Principal Office of the Trustee, and
the Trustee shall authenticate and deliver in exchange for
such temporary Bonds a like aggregate principal amount of
definitive Bonds of authorized denominations. Until so
exchanged the temporary Bonds shall be entitled to the
same benefits under this Indenture as definitive Bonds.
II.24. Cancellation of Bonds. All Bonds which shall
have been surrendered to the Paying Agent or any Co-Paying
Agent for payment or redemption, and all Bonds which shall
have been surrendered to the Registrar for exchange or
registration of transfer, shall be delivered to the
Trustee for cancellation. All Bonds delivered to or
acquired by the Trustee for cancellation shall be canceled
and destroyed by the Trustee. The Trustee shall furnish
to the Pollution Control Corporation, the Paying Agent,
the Registrar and the Company counterparts of certificates
evidencing such cancellation and destruction and
specifying such Bonds by number.
II.25. Payment of Principal and Interest. For the
payment of interest on the Bonds, the Pollution Control
Corporation shall cause to be deposited in the Bond Fund,
on each Interest Payment Date, solely out of the Receipts
and Revenues of the Pollution Control Corporation from the
Loan Agreement and other moneys pledged therefor, an
amount sufficient to pay the interest to become due on
such Interest Payment Date. The obligation of the
Pollution Control Corporation to cause any such deposit to
be made hereunder shall be reduced by the amount of moneys
in the Bond Fund available on such Interest Payment Date
for the payment of interest on the Bonds.
For the payment of the principal of the Bonds upon
maturity, the Pollution Control Corporation shall cause to
be deposited in the Bond Fund, on the stated or
accelerated date of maturity, solely out of the Receipts
and Revenues of the Pollution Control Corporation from the
Loan Agreement and other moneys pledged therefor, an
amount sufficient to pay the principal of the Bonds. The
obligation of the Pollution Control Corporation to cause
any such deposit to be made hereunder shall be reduced by
the amount of moneys in the Bond Fund available on the
maturity date for the payment of the principal of the
Bonds.
III REDEMPTION OF BONDS
III.11. Redemption Provisions. (a) When interest on
the Bonds is payable at Flexible Rates or a Variable Rate
other than a Term Rate, the Bonds shall be subject to
redemption by the Pollution Control Corporation, at the
direction of the Company, in whole at any time or in part
from time to time, at the principal amount thereof plus
accrued interest to the redemption date.
(a) When interest on the Bonds is payable at a Term
Rate or the Fixed Rate, the Bonds shall be subject to
redemption by the Pollution Control Corporation, at the
direction of the Company, in whole at any time at the
principal amount thereof plus accrued interest to the
redemption date, if:
(i) the Company shall have determined that the
continued operation of the Plant is impracticable,
uneconomical or undesirable for any reason;
(ii) the Company shall have determined that the
continued operation of the Facilities is impracticable,
uneconomical or undesirable due to (A) the imposition of
taxes, other than ad valorem taxes currently levied upon
privately owned property used for the same general purpose
as the Facilities, or other liabilities or burdens with
respect to the Facilities or operation thereof, (B)
changes in technology, in environmental standards or legal
requirements or in the economic availability of materials,
supplies, equipment or labor or (C) destruction of or
damage to all or part of the Facilities;
(iii) all or substantially all of the Facilities or
the Plant shall have been condemned or taken by eminent
domain; or
(iv) the operation of the Facilities or the Plant shall
have been enjoined or shall have otherwise been prohibited
by, or shall conflict with, any order, decree, rule or
regulation of any court or of any federal, state or local
regulatory body, administrative agency or other
governmental body.
(b) When interest on the Bonds is payable at a Term
Rate for a Term Rate Period of five years or more or the
Fixed Rate, the Bonds shall be subject to redemption by
the Pollution Control Corporation, at the direction of the
Company, on any day in whole at any time or in part from
time to time, at the applicable redemption price shown
below, in each case plus accrued interest to the
redemption date, as follows:
Length of Term Commencement of Redemption Price
Rate Period; Years Redemption Period
Remaining
Until Final
Maturity
During Fixed Rate
Period
More than 12 years Tenth anniversary 102%, declining
of commencement of by 1% on each
Term Rate Period succeeding
or Fixed Rate anniversary of
Period the first day of
the redemption
period until
reaching 100% and
thereafter at
100%
More than 8, but Seventh 101 1/2%,
not more than 12 anniversary of declining by 3/4%
years commencement of on each
Term Rate Period succeeding
or Fixed Rate anniversary of
Period the first day of
the redemption
period until
reaching 100% and
thereafter at
100%
More than 5, but Fifth anniversary 101%, declining
not more than 8 of commencement of by 1/2% on each
years Term Rate Period succeeding
or Fixed Rate anniversary of
Period the first day of
the redemption
period until
reaching 100% and
thereafter at
100%
Five years or less Bonds not callable 100%
until commencement
of next Rate
Period, if any
Anything in this Indenture to the contrary
notwithstanding, in the event that the Company shall
consolidate with, merge with or into, or sell or otherwise
transfer all or substantially all of its assets to,
another corporation in accordance with Section 6.01 of the
Loan Agreement, the Bonds shall be subject to redemption
by the Pollution Control Corporation, at the direction of
the Company, in whole, at any time prior to the first date
on which the Bonds are redeemable as herein before
provided in paragraph (c) at the redemption price which
would be applicable on such date plus accrued interest to
the redemption date.
(c) The Bonds shall be subject to mandatory redemption
by the Pollution Control Corporation, at the principal
amount thereof plus accrued interest to the redemption
date, on the 180th day (or such earlier date as may be
designated by the Company) after a final determination by
a court of competent jurisdiction or an administrative
agency, to the effect that, as a result of a failure by
the Company to perform or observe any covenant, agreement
or representation contained in the Loan Agreement, the
interest payable on the Bonds is included for federal
income tax purposes in the gross income of the owners
thereof, other than any owner of a Bond who is a
"substantial user" of the Facilities or a "related person"
within the meaning of Section 103(b)(13) of the 1954 Code.
No determination by any court or administrative agency
shall be considered final for the purposes of this Section
3.01 (d) unless the Company shall have been given timely
notice of the proceeding which resulted in such
determination and an opportunity to participate in such
proceeding, either directly or through an owner of a Bond,
and until the conclusion of any appellate review sought by
any party to such proceeding or the expiration of the time
for seeking such review. The Bonds shall be redeemed
either in whole or in part in such principal amount that
the interest payable on the Bonds remaining outstanding
after such redemption would not be included in the gross
income of any owner thereof, other than an owner of a Bond
who is a "substantial user" of the Facilities or a
"related person" within the meaning of Section 103(b)(13)
of the 1954 Code.
(d) In the event that the aggregate of the amounts
deposited pursuant to Section 5.02 hereof into the Capital
Account and the Investment Account maintained within the
Bond Fund, together with any income or other gain from the
investment thereof, shall at any time, or from time to
time, be equal to or greater than $100,000, but only to
the extent that such amounts are required under Section
4.04(b) hereof to be applied to the redemption of Bonds,
the Pollution Control Corporation shall redeem Bonds, at
the principal amount thereof plus accrued interest to the
redemption date, in the largest aggregate principal amount
which does not exceed the amount of such deposit or
deposits, together with such income or gain, on the next
Interest Payment Date on which a redemption may be made in
accordance with the provisions of Section 3.03(a), (b) or
(c) hereof and on which Bonds, in such amount, are
otherwise redeemable at the principal amount thereof under
subsection (a), (b) or (c) of this Section 3.01.
(e) The Bonds shall be subject to mandatory redemption
by the Pollution Control Corporation, at the principal
amount thereof plus accrued interest to the redemption
date, upon the occurrence of either of the following
events:
(i) receipt by the Trustee, following a drawing on a
Security Arrangement on which the Company shall not be
the obligor to pay accrued interest, or the portion of
purchase price equal to accrued interest, on the Bonds,
of notice from the Bank that the amount available to be
drawn on such Security Arrangement will not be
reinstated (in respect of interest or portion of
purchase price equal to accrued interest) in the amount
of such drawing and directing the Trustee to provide
notice to the Pollution Control Corporation of its
resulting obligation to redeem the Bonds; or
(ii) receipt by the Trustee of notice from the Bank
stating that an Event of Default under the
Reimbursement Agreement (or other agreement between the
Company and the Bank pursuant to which the Bank issued
and delivered to the Trustee a Security Arrangement)
has occurred and is continuing and directing the
Trustee to provide notice to the Pollution Control
Corporation of its resulting obligation to redeem the
Bonds.
Upon the occurrence of either of the events described
in the immediately preceding paragraph, the Pollution
Control Corporation shall be obligated to redeem the Bonds
on the first Business Day after the occurrence of such
event on which the Trustee may make a drawing or drawings
on a Security Arrangement on which the Company shall not
be the obligor and on which the proceeds of such drawing
or drawings shall be available, but shall not redeem the
Bonds prior to such date. The Trustee shall give written
notice of such obligation to redeem the Bonds to the
Pollution Control Corporation, the Company, the Bank, the
Tender Agent and the Remarketing Agent and shall give
notice thereof as soon as practicable by Mail upon receipt
by the Trustee of the notice specified in Section
3.01(f)(i) or (ii) to all Owners of Outstanding Bonds.
The provisions of the second preceding paragraph are
subject to the condition that if either of the events
described in clause (i) or (ii) of the second preceding
paragraph shall have occurred and if the Trustee shall
thereafter have received notice from the Bank (a) that the
notice which requires a mandatory redemption pursuant to
the second preceding paragraph has been withdrawn and (b)
that the amounts available to be drawn on the Security
Arrangement to pay (i) the principal of the Bonds or the
portion of purchase price equal to principal and (ii)
interest on the Bonds and the portion of purchase price
equal to accrued interest have been reinstated, then, in
every such case, the event giving rise to such mandatory
redemption shall be deemed to be waived and all
proceedings for such redemption shall be rescinded and
annulled, and the Trustee shall promptly give written
notice of such waiver, rescission and annulment to the
Pollution Control Corporation, the Company, the Bank, the
Tender Agent and the Remarketing Agent, and, if notice of
such redemption shall have been given to the Owners of the
Bonds, shall give notice thereof by Mail to all Owners of
Outstanding Bonds; but no such waiver, rescission and
annulment shall extend to or affect any subsequent event
requiring a mandatory redemption or impair any right or
remedy consequent thereon.
III.12. Selection of Bonds to be Redeemed. A
redemption of Bonds shall be a redemption of the whole or
of any part of the Bonds from any funds available for that
purpose. If less than all the Bonds shall be called for
redemption under any provision of this Indenture
permitting such partial redemption, the particular Bonds
or portions of Bonds to be redeemed shall be selected by
the Trustee, in such manner as the Trustee in its
discretion may deem proper, in the aggregate principal
amount designated to the Trustee by the Company or
otherwise as required by this Indenture; provided,
however, that if, as indicated in a certificate of an
Authorized Company Representative delivered to the
Trustee, the Company shall have offered to purchase all
Bonds then Outstanding and less than all such Bonds have
been tendered to the Company for such purchase, the
Trustee, at the direction of an Authorized Company
Representative, shall select for redemption all such Bonds
which shall not have been so tendered and provided,
further, that, if the redemption date shall not be during
a Flexible Rate Period, Term Rate Period or the Fixed Rate
Period, the portion of any Bond to be redeemed shall be in
the principal amount of $100,000 or some integral multiple
thereof and that, in selecting Bonds for redemption, the
Trustee shall treat each Bond as representing that number
of Bonds which is obtained by dividing the principal
amount of such Bond by $100,000; and provided, further,
that, if the redemption date shall be during a Flexible
Rate Period, a Term Rate Period or the Fixed Rate Period,
the portion of any Bond to be redeemed shall be in the
principal amount of $5,000 or some integral multiple
thereof (and, in the case of a Flexible Rate Period, in a
minimum principal amount of $100,000) and that, in
selecting Bonds for redemption, the Trustee shall treat
each Bond as representing that number of Bonds which is
obtained by dividing the principal amount of such Bond by
$5,000. For any redemption not occurring during a Flexible
Rate Period, Term Rate Period or the Fixed Rate Period, if
it is determined that one or more, but not all, of the
$100,000 units of principal amount represented by any such
Bond is to be called for redemption, then, upon notice of
intention to redeem such $100,000 unit or units the Owner
of such Bond shall forthwith surrender such Bond to the
Paying Agent or any Co-Paying Agent for (a) payment to
such Owner of the redemption price of the $100,000 unit or
units of principal amount called for redemption and (b)
delivery to such Owner of a new Bond or Bonds in the
aggregate principal amount of the unredeemed balance of
the principal amount of such Bond. For any redemption
occurring during a Flexible Rate Period, a Term Rate
Period or the Fixed Rate Period, if it is determined that
one or more, but not all, of the $5,000 units of principal
amount represented by any such Bond is to be called for
redemption, then, upon notice of intention to redeem such
$5,000 unit or units, the Owner of such Bond shall
forthwith surrender such Bond to the Paying Agent or any
Co-Paying Agent for (y) payment to such Owner of the
redemption price (including the redemption premium, if
any, and accrued interest to the date fixed for
redemption) of the $5,000 unit or units of principal
amount called for redemption and (z) delivery to such
Owner of a new Bond or Bonds in the aggregate principal
amount of the unredeemed balance of the principal amount
of any such Bond. Bonds representing the unredeemed
balance of the principal amount of any such Bond shall be
delivered to the Owner thereof, without charge therefor.
In selecting Bonds for redemption, the Trustee may shall
first select Bonds tendered for purchase pursuant to the
terms thereof and delivered, and then held, as
contemplated in Section 13.07(c) hereof and (ii) the
Trustee may treat Bonds so tendered and otherwise
delivered pursuant to Section 13.07 hereof during the
fifteen (15) days next preceding the first mailing of
notice of any proposed redemption of Bonds as though such
tender and delivery had not occurred. If a Bond selected
for redemption shall have been tendered pursuant to the
terms thereof and delivered pursuant to Section 13.07
hereof on or after the fifteenth (15th) day next preceding
the first mailing of notice of any proposed redemption of
Bonds, then the Bond so delivered pursuant to Section
13.07 hereof shall be deemed to be the Bond so tendered
and selected for redemption. If the Owner of any such
Bond of a denomination greater than $100,000 ($5,000
during a Term Rate Period or the Fixed Rate Period) shall
fail to present such Bond to the Paying Agent or any
Co-Paying Agent for payment and exchange as aforesaid,
such Bond shall, nevertheless, become due and payable on
the date fixed for redemption to the extent of the
$100,000 ($5,000 during a Term Rate Period or the Fixed
Rate Period) unit or units of principal amount called for
redemption (and to that extent only).
III.13. Procedure for Redemption. (a) In the event
any of the Bonds are called for redemption, the Trustee
shall give notice, in the name of the Pollution Control
Corporation, of the redemption of such Bonds, which notice
shall (i) specify the Bonds to be redeemed, the redemption
date, the redemption price, and the place or places where
amounts due upon such redemption will be payable (which
shall be the Principal Office of the Paying Agent or any
Co-Paying Agent) and, if less than all of the Bonds are to
be redeemed, the numbers of the Bonds to be redeemed, and
the portion of the principal amount of any Bond to be
redeemed in part, (ii) state any condition to such
redemption and (iii) state that on the redemption date,
and upon the satisfaction of any such condition, the Bonds
or portions thereof to be redeemed shall cease to bear
interest. Such notice may set forth any additional
information relating to such redemption. Such notice
shall be given by Mail at least thirty (30) days prior
(except in the case of a redemption pursuant to Section
3.01(f)) to the date fixed for redemption to the Owners of
the Bonds to be redeemed; provided, however, that failure
duly to give such Notice by Mail, or any defect therein,
shall not affect the validity of any proceedings for the
redemption of Bonds as to which there shall have been no
such failure or defect; and provided, further, that if
such Notice by Mail shall not have been given with respect
to a Bond delivered pursuant to Section 13.07 hereof on or
after the fifteenth (15th) day next preceding the first
mailing of notice of any proposed redemption of Bonds, and
if such Bond shall be deemed to have been selected for
redemption pursuant to Section 3.02 hereof, such notice
shall be attached to such Bond prior to the delivery
thereof pursuant to Section 13.07 hereof. If a notice of
redemption shall be unconditional, or if the conditions of
a conditional notice or redemption shall have been
satisfied, then upon presentation and surrender of Bonds
so called for redemption at the place or places of
payment, such Bonds shall be redeemed. The Trustee shall
promptly deliver to the Company and the Bank a copy of
each such notice of redemption.
(a) With respect to any notice of an event which
requires the Owners of the Bonds to tender their Bonds in
accordance with Section 2.02(h)(iii) hereof, such notice
shall contain the information referred to in Section
4.08(c) hereof.
(b) With respect to any notice of redemption of Bonds in
accordance with subsection (a), (b) or (c) of Section 3.01
hereof, unless, upon the giving of such notice, such Bonds
shall be deemed to have been paid within the meaning of
Article VIII hereof, such notice shall state that such
redemption shall be conditional upon the receipt, by the
Trustee at or prior to the opening of business on the date
fixed for such redemption, of moneys sufficient to pay the
principal of and premium, if any, and interest on such
Bonds to be redeemed, and that if such moneys shall not
have been so received said notice shall be of no force and
effect and the Pollution Control Corporation shall not be
required to redeem such Bonds. In the event that such
notice of redemption contains such a condition and such
moneys are not so received, the redemption shall not be
made and the Trustee shall within a reasonable time
thereafter give notice, in the manner in which the notice
of redemption was given, that such moneys were not so
received.
(c) Any Bonds and portions of Bonds which have been
duly selected for redemption and which are deemed to be
paid in accordance with Article VIII hereof shall cease to
bear interest on the specified redemption date.
(d) The Trustee shall not give any notice of redemption
to be made in accordance with Section 3.01(c) hereof when
a Security Arrangement shall be in effect on which the
Company shall not be the obligor unless, prior to the
giving of such notice, either (i) such Security
Arrangement shall expressly allow a drawing thereunder for
the purpose of paying, and in an amount sufficient to pay,
any redemption premium payable upon such redemption, or
(ii) there shall be on deposit in the Bond Fund moneys in
an amount sufficient to pay such premium and which are
Available Moneys.
III.14. No Partial Redemption After Default.
Anything in this Indenture to the contrary
notwithstanding, if there shall have occurred and be
continuing an Event of Default defined in clause (a), (b)
or (c) of the first paragraph of Section 9.01 hereof,
there shall be no redemption of less than all of the Bonds
at the time Outstanding.
III.15. Payment of Redemption Price. For the
redemption of any of the Bonds, the Pollution Control
Corporation shall cause to be deposited in the Bond Fund,
on the redemption date, solely out of the Receipts and
Revenues of the Pollution Control Corporation from the
Loan Agreement, an amount sufficient to pay the principal
of and premium, if any, and interest to become due on such
redemption date. The obligation of the Pollution Control
Corporation to cause any such deposit to be made hereunder
shall be reduced by the amount of moneys in the Bond Fund
available on such redemption date for payment of the
principal of and premium, if any, and accrued interest on
the Bonds to be redeemed.
IV THE BOND FUND
IV.11. Creation of Bond Fund. There is hereby
created and established with the Trustee a trust fund in
the name of the Pollution Control Corporation to be
designated "Coconino County, Arizona Pollution Control
Corporation Pollution Control Revenue Bonds, 1996 Series A
(Tucson Electric Power Company Project) Bond Fund". The
Trustee shall establish and maintain such segregated
subaccounts as shall be necessary to comply with the order
of priority for payments on the Bonds set forth in Section
4.04(a) hereof and such other subaccounts as may be
requested by an Authorized Company Representative. The
Bond Fund, and all moneys and certificated securities
therein, shall be kept in the possession of the Trustee.
IV.12. Liens. The Pollution Control Corporation
shall not create any lien upon the Bond Fund or upon the
Receipts and Revenues of the Pollution Control Corporation
from the Loan Agreement other than the lien hereby
created.
IV.13. Deposits into Bond Fund. (a) There shall be
deposited into the Bond Fund:
(i) the accrued interest, if any, on the Bonds accrued
to the date of delivery thereof and paid by the initial
purchasers thereof, such accrued interest to be deposited
into the General Account;
(ii) all amounts required to be deposited into the Bond
Fund by Section 5.02 hereof, such amounts to be deposited
into the Capital Account or the Investment Account;
(iii) all amounts required to be deposited into the
Bond Fund by Sections 5.03 and 5.04 hereof, such amounts
to be deposited into the General Account;
(iv) all Loan Payments, and all moneys drawn by or made
available to the Trustee under any Security Arrangement
for the payment of principal of and premium, if any, and
interest on the Bonds, such payments and moneys to be
deposited into the General Account;
(v) all amounts required to be deposited into the Bond
Fund by Section 13.01(c) hereof, such amounts to be
deposited into the General Account; and
(vi) all other moneys received by the Trustee under and
pursuant to any provision of the Loan Agreement, other
than Sections 5.03, 5.04 and 8.05 thereof, or from any
other source when accompanied by directions by the Company
that such moneys are to be paid into the Bond Fund, such
moneys to be deposited into the account specified by such
provision of the Loan Agreement or by such directions, or,
if no specification is made, into the General Account.
(b) All income or other gain from the investment of
moneys in the Capital Account or the Investment Account
shall be deposited into the Investment Account. All
income or other gain from the investment of moneys in the
General Account shall be deposited into the General
Account.
IV.14. Use of Moneys in Bond Fund. (a) Except as
otherwise provided in subsection (d) of this Section 4.04
and in Sections 4.06, 9.01 and 10.04 hereof, moneys in the
Bond Fund constituting part of the Trust Estate shall be
used solely for the payment of the principal of and
premium, if any, and interest on the Bonds as the same
shall become due and payable at maturity, upon redemption
or otherwise. Funds for such payments of the principal of
and premium, if any, and interest on the Bonds shall be
derived from the following sources in the order of
priority indicated:
(i) moneys, if any, paid into the Bond Fund pursuant to
clause (i) of Section 4.03(a) hereof which shall be
applied to the payment of interest on the Bonds;
(ii) moneys furnished by the Company to the Trustee
pursuant to Section 9.01 of the Loan Agreement, and
proceeds from the investment thereof, which constitute
Available Moneys;
(iii) moneys drawn by, or made available to, the
Trustee under any Security Arrangement for the payment of
the principal of and premium, if any, and interest on the
Bonds;
(iv) amounts deposited into the Bond Fund pursuant to
clause (ii) or (iii) of Section 4.03(a) hereof; and
(v) Loan Payments or moneys furnished by the Company to
the Trustee pursuant to Section 9.01 of the Loan Agreement
or moneys deposited into the Bond Fund pursuant to Section
13.01 hereof.
(b) Moneys deposited pursuant to Section 5.02 hereof
into the Capital Account or the Investment Account
maintained within the Bond Fund, and any income or other
gain from the investment thereof, shall be applied by the
Trustee (i) in whole or in part (A) to the purchase of
Bonds in such amounts, at such prices, at such times and
otherwise as directed by an Authorized Company
Representative, excluding the purchase of Bonds by the
Tender Agent pursuant to Section 13.03 hereof, or to the
redemption, at the direction of the Company, of Bonds
pursuant to subsection (a) or (c) or, if applicable, (b)
of Section 3.01 hereof or (B) in any other manner directed
by an Authorized Company Representative which, as
indicated in an opinion of Bond Counsel furnished by the
Company to the Pollution Control Corporation and the
Trustee, will not, in and of itself, impair the validity
under the Act of the Bonds or the exclusion of the
interest on the Bonds from gross income for federal income
tax purposes, or, in the absence of any such purchase,
redemption or direction on or prior to the forty-fifth
(45th) day prior to the first Interest Payment Date
specified in Section 3.01(e) hereof, (ii) to the payment
of principal upon the redemption, from time to time, of
Bonds pursuant to Section 3.01(e) hereof, any moneys which
are not so applied to be retained in the accounts into
which they were deposited and applied by the Trustee to
the payment of principal of Bonds either at maturity or
upon the redemption of all or any portion of the Bonds,
whichever occurs first. Pending the application of moneys
deposited into the Bond Fund pursuant to Section 5.02
hereof, such moneys may be invested in Investment
Securities in the manner permitted by Section 6.01 hereof,
provided that such investment shall not produce a yield
greater than the yield on the Bonds unless, as indicated
in an opinion of Bond Counsel furnished by the Company to
the Pollution Control Corporation and the Trustee,
investments producing a greater yield would not, in and of
itself, impair the exclusion from gross income for federal
income tax purposes of the interest on the Bonds. In the
case of any such redemption made when a Security
Arrangement is in effect, if moneys for such redemption
shall have been drawn by, or made available to, the
Trustee under such Security Arrangement, the Trustee shall
reimburse the obligor on such Security Arrangement for the
amount so drawn by, or made available to, the Trustee
with, and to the extent of, any moneys deposited pursuant
to Section 5.02 hereof into the Bond Fund and otherwise
available therefor.
(c) In the event that all of the Bonds cease to be
Outstanding, any moneys remaining in the Capital Account
or the Investment Account shall be deposited into the
General Account.
(d) Upon receipt by the Trustee from the Bank of a
notice stating that the Bank has not been reimbursed for
any drawing or drawings on the Letter of Credit as
contemplated in Section 4.08(a) hereof, the Trustee shall
promptly pay to the Bank from moneys in the Bond Fund an
amount equal to the lesser of (i) the total amount owed by
the Company to the Bank in respect of such drawing or
drawings as specified in such notice and (ii) the total
amount on deposit in all accounts and subaccounts within
the Bond Fund; provided, however, that there shall not be
taken into account for purposes of clause (ii) above (x)
moneys described in clause (i), (ii) or (iii) in
subsection (a) of this Section, (y) any moneys furnished
by the Company to the Trustee pursuant to Section 9.01 of
the Loan Agreement or moneys furnished by the Company to
the Tender Agent pursuant to Section 10.01 of the Loan
Agreement and subsequently deposited into the Bond Fund
pursuant to Section 13.01(c) hereof, which moneys in
either case shall have been furnished together with
directions that the same are to be maintained in a
segregated account or subaccount until the same became
Available Moneys or (z) proceeds from the investment and
reinvestment of moneys described in clause (x) or (y)
above.
IV.15. Custody of Bond Fund; Withdrawal of Moneys.
The Bond Fund shall be in the custody of the Trustee but
in the name of the Pollution Control Corporation and the
Pollution Control Corporation hereby authorizes and
directs the Trustee to withdraw from the Bond Fund and
furnish to the Paying Agent funds constituting part of the
Trust Estate sufficient to pay the principal of and
premium, if any, and interest on the Bonds as the same
shall become due and payable, and to withdraw from the
Bond Fund funds sufficient to pay any other amounts
payable therefrom as the same shall become due and
payable.
IV.16. Bonds Not Presented for Payment. In the
event any Bonds shall not be presented for payment when
the principal thereof and premium, if any, thereon become
due, either at maturity or at the date fixed for
redemption thereof or otherwise, if moneys sufficient to
pay such Bonds are held by the Paying Agent or any
Co-Paying Agent for the benefit of the Owners thereof, the
Paying Agent shall segregate and hold such moneys in
trust, without liability for interest thereon, for the
benefit of holders of such Bonds, who shall, except as
provided in the following paragraph, thereafter be
restricted exclusively to such fund or funds for the
satisfaction of any claim of whatever nature on their part
under this Indenture or relating to said Bonds.
Any moneys which the Paying Agent shall segregate and
hold in trust for the payment of the principal of and
premium, if any, or interest on any Bond and remaining
unclaimed for one year after such principal, premium, if
any, or interest has become due and payable shall, upon
the Company's written request to the Paying Agent, be paid
to the Company, with notice to the Trustee of such action;
provided, however, that, if a Security Arrangement on
which the Company shall not be an obligor is in effect,
prior to any such payment to the Company as aforesaid, the
Paying Agent shall deliver to the Bank a notice specifying
the date of such payment (which date shall not be less
than four (4) Business Days after the date of delivery of
such notice), and if prior to such specified date the Bank
shall have delivered to the Paying Agent a notice stating
that amounts are owed by the Company to the Bank under the
Reimbursement Agreement and have not been paid, the
Trustee, prior to any such payment to the Company as
aforesaid, shall pay to the Bank an amount equal to the
lesser of (a) the total amount owed by the Company to the
Bank as specified in such notice and (b) the total amount
of such unclaimed moneys; and provided, further, that
before the Paying Agent shall be required to make any such
repayment, the Paying Agent may, and at the request of the
Trustee shall, at the expense of the Company cause notice
to be given once by Publication to the effect that such
money remains unclaimed and that, after a date specified
therein, which shall not be less than thirty (30) days
from the date of such notice by Publication, any unclaimed
balance of such moneys then remaining will be paid to the
Company. After the payment of such unclaimed moneys to
the Company, the Owner of such Bond shall thereafter look
only to the Company for the payment thereof, and all
liability of the Trustee and the Paying Agent with respect
to such moneys shall thereupon cease.
IV.17. Moneys Held in Trust. All moneys and
Investment Securities held by the Trustee in the Bond
Fund, and all moneys required to be deposited with or paid
to the Trustee for deposit into the Bond Fund, and all
moneys withdrawn from the Bond Fund and held by the
Trustee, the Paying Agent, any Co-Paying Agent, or the
Tender Agent, shall be held by the Trustee, the Paying
Agent, any Co-Paying Agent or the Tender Agent, as the
case may be, in trust, and such moneys and Investment
Securities (other than moneys held pursuant to Section
4.06 hereof and moneys or Investment Securities held in
any subaccount within the Bond Fund established in
furtherance of the obligations of the Company under clause
(b) of Section 6.04 of the Loan Agreement), while so held
or so required to be deposited or paid, shall constitute
part of the Trust Estate and be subject to the lien and
security interest created hereby in favor of the Trustee,
first, for the benefit of the Owners from time to time of
the Bonds and, second, for the benefit of the Bank as and
to the extent provided herein. The Company shall have no
right, title or interest in the Bond Fund, except such
rights as may arise after the right, title and interest of
the Trustee in and to the Trust Estate and all covenants,
agreements and other obligations of the Pollution Control
Corporation under this Indenture shall have ceased,
terminated and become void and shall have been satisfied
and discharged in accordance with Article VIII hereof.
IV.18. Security Arrangements. (a) The Letter of
Credit shall be the obligation of the Bank to pay to the
Trustee, in accordance with the terms thereof, such
amounts as shall be specified therein and available to be
drawn thereunder for the timely payment of the principal
of and premium, if any, and interest on the Bonds, and the
purchase price of Bonds, required to be made pursuant to,
and in accordance with, the provisions of this Indenture.
Drawings under the Letter of Credit for the payment of
principal of, and premium, if any, and interest on the
Bonds shall be made only to the extent moneys from other
eligible sources specified in Section 4.04(a) hereof shall
not be available for such payment. The Letter of Credit
shall be reduced to the extent of any drawings thereunder
and reinstated in accordance with the terms thereof.
The Trustee shall draw moneys under the Letter of
Credit and take action under any other Security
Arrangement in accordance with the terms thereof to the
extent necessary to make timely payments of principal of
and premium, if any, and interest on the Bonds required to
be made from the Bond Fund; provided, however, that,
anything herein to the contrary notwithstanding, in no
event shall the Trustee draw moneys under any Security
Arrangement on which the Company is not the obligor in
order to make payments of principal of or premium, if any,
or interest on Bonds or the purchase price of Bonds held
of record by the Company or by the Tender Agent for the
account of the Company pursuant to Section 13.07(d) hereof
if the Security Arrangement prohibits by its terms a
drawing thereunder for such purpose. Upon any reduction
in the aggregate principal amount of Bonds Outstanding,
the Trustee shall, at the direction of an Authorized
Company Representative, request the Bank to make permanent
correlative reductions in the amounts that may be drawn
under the Letter of Credit or take corresponding actions
with respect to any other Security Arrangement. For
extensions of the term of the Letter of Credit or any
Security Arrangement, the Trustee shall, at the direction
of an Authorized Company Representative, take such actions
as are required to effect such extension of the Letter of
Credit, surrender the Letter of Credit to the Bank in
exchange for a letter of credit of the Bank conforming in
all material respects to the Letter of Credit except that
the Expiration date shall be extended and take
corresponding actions with respect to any other Security
Arrangement. If at any time there shall cease to be any
Bonds Outstanding hereunder, the Trustee shall promptly
surrender the Letter of Credit to the Bank, in accordance
with the terms of the Letter of Credit, for cancellation
or shall take corresponding actions with respect to any
other Security Arrangement.
(a) If at any time there shall have been delivered to
the Trustee, all as described in and in accordance with
the applicable provisions of Section 6.07 of the Loan
Agreement, (i) a notice of the Company, (ii) the required
opinion of Bond Counsel, if any, (iii) the required
certificates or letters of Moody's and S&P, if any, and
(iv) the Security Arrangement, if any, described in such
notice, then the Trustee shall accept such substitute
Security Arrangement, if any, and comply with the
direction of the Company, if any, contained in such
notice.
(b) The Trustee shall give notice, in the name of the
Pollution Control Corporation, of any amendment or
Termination or Expiration of any Security Arrangement and
of the provision of any substitute Security Arrangement,
which notice shall (i) describe generally the Security
Arrangement, if any, in effect prior to any amendment,
Termination, Expiration or provision and the Security
Arrangement, if any, in effect or to be in effect upon
such amendment, Termination, Expiration or provision and
(ii) state the date of such amendment, Termination,
Expiration or provision. Such notice shall be given by
Mail to all Owners of Bonds promptly after such amendment,
Termination, Expiration or provision, except that if, as a
result of such amendment, Termination or Expiration, the
Bonds shall be required to be tendered for purchase, such
notice may be given together with the notice thereof given
by the Tender Agent pursuant to Section 2.10 hereof and
shall, if such information is furnished by the Company,
state the Rating Category or Categories (including any
refinements or gradations thereof), if any, in which the
Bonds are expected to be rated by Moody's and S&P
subsequent to such amendment, Termination or Expiration of
a Security Arrangement and the provision of any substitute
Security Arrangement.
(c) Anything in this Indenture or the Loan Agreement to
the contrary notwithstanding, in the event that a
Termination of a Security Arrangement, or the Termination
of a Security Arrangement and the provision of another
Security Arrangement in lieu thereof, shall require the
Owners of Bonds to tender their Bonds for purchase the
Trustee shall not surrender any evidence of the Security
Arrangement to be Terminated until the Trustee shall have
made such drawings, if any, or taken such other actions,
if any, thereunder as shall be required under this
Indenture in order to provide sufficient moneys for the
related purchase of Bonds and such moneys shall have been
provided to the Trustee.
V THE CONSTRUCTION FUND
V.11. Creation of, and Disbursements from,
Construction Fund. (a) There is hereby created and
established with the Trustee a trust fund in the name of
the Pollution Control Corporation to be designated
"Coconino County, Arizona Pollution Control Corporation
Pollution Control Revenue Bonds, 1996 Series A (Tucson
Electric Power Company Project) Construction Fund". The
Trustee shall establish and maintain within the
Construction Fund a "Capital Account" and an "Investment
Account". The Trustee shall establish and maintain any
subaccount within the Capital Account or the Investment
Account which may be requested by an Authorized Company
Representative. The Construction Fund, and all moneys and
certificated securities therein, shall be kept in the
possession of the Trustee. The Pollution Control
Corporation shall not create any lien upon the
Construction Fund other than the lien hereby created.
(a) The proceeds from the issuance and sale of the
Bonds, other than accrued interest, if any, on such Bonds
to the date of delivery thereof paid by the initial
purchasers thereof, shall be deposited into the Capital
Account. All income or other gain from the investment of
moneys in the Capital Account or the Investment Account
shall be deposited into the Investment Account. In the
event that all or a portion of the proceeds of the Bonds
shall have been applied to the payment or redemption, or
provision therefor, of any obligations issued by the
Pollution Control Corporation other than Bonds, any
balance remaining in the construction, acquisition or
other similar fund maintained in respect of such
obligations, which balance shall have been delivered to
the Trustee accompanied by a direction of the Company that
such balance be deposited into the Construction Fund,
shall be deposited into the Capital Account and the
Investment Account in accordance with such direction.
Anything in this Article V to the contrary
notwithstanding, in the event that the Company shall at
any time deliver moneys to the Trustee for deposit into
the Construction Fund, such moneys shall be deposited into
a separate subaccount therein and, until such moneys
become Available Moneys, shall not be used for the payment
of principal of or premium, if any, or interest on Bonds,
or purchase price of Bonds, except to the extent that
there shall not be available for such purpose sufficient
proceeds of a drawing or drawings on the Letter of Credit.
(b) The Trustee is hereby authorized and directed to
disburse moneys in the Construction Fund to or upon the
order of the Company from time to time upon receipt by the
Trustee of requisitions executed by, or communications by
telegram, telex or facsimile transmission from, an
Authorized Company Representative, which requisitions or
communications shall state with respect to each payment to
be made: (i) the requisition number, (ii) the name and
address of the person, firm or corporation to whom payment
is due or has been made (or, in the case of payments to
the Bond Fund, instructions to make such payments
thereto), (iii) the amount paid or to be paid, (iv) the
account or accounts within the Construction Fund from
which payment of such requisition, or any portion thereof,
shall be made, (v)(A) that each obligation, item of cost
or expense with respect to which such requisition is being
made has been properly incurred and has been paid or is
then due and payable as an item of the Cost of
Construction, is a proper charge against the Construction
Fund, and has not been the basis of any previous final
payment therefrom or from the proceeds of any other
obligations issued by the Pollution Control Corporation or
(B) in the event that a portion of the Bonds shall have
been paid, redeemed or deemed to have been paid within the
meaning of Article VIII hereof by reason of the
application of the proceeds of the sale of any obligations
issued under an indenture other than this Indenture and if
the payment of such requisition is to be made into the
construction, acquisition or other similar fund created
under such other indenture, that upon disbursement from
such construction, acquisition or other similar fund, each
obligation, item of cost or expense mentioned in the
requisition for such disbursement shall have been properly
incurred and shall have been paid or will then be due and
payable as an item of the Cost of Construction, (vi) that
the payment of such requisition will not result in a
breach of any of the covenants of the Company contained in
Section 4.04 (c) or (d) of the Loan Agreement and (vii)
that, to the best of the knowledge of such Authorized
Company Representative, there shall not have occurred and
be continuing any event of default under the Loan
Agreement. In Section 4.04 of the Loan Agreement the
Company has agreed that any such communication by
telegram, telex or facsimile transmission shall be
promptly confirmed by a requisition executed by an
Authorized Company Representative.
(c) In paying any requisition under this Section 5.01,
the Trustee shall be entitled to rely as to the
completeness and accuracy of all statements in such
requisition upon the approval of such requisition by an
Authorized Company Representative, execution thereof to be
conclusive evidence of such approval, and the Company has
by the provisions of the Loan Agreement covenanted and
agreed to indemnify and save harmless the Trustee from any
liability incurred in connection with the payment of any
requisition so executed by an Authorized Company
Representative.
The Trustee shall keep and maintain adequate records
pertaining to each account within the Construction Fund
and all disbursements therefrom and, upon receipt of a
certificate furnished pursuant to Section 3.04 or Section
3.08(b) of the Loan Agreement, the Trustee shall, if
requested by the Pollution Control Corporation or the
Company, file an accounting thereof with the Pollution
Control Corporation and with the Company.
V.12. Completion of Facilities; Termination of
Construction. Upon receipt by the Trustee of a
certificate furnished pursuant to Section 3.04 or Section
3.08(b) of the Loan Agreement, any balance remaining in
the Capital Account or the Investment Account maintained
within the Construction Fund (other than amounts retained
by the Trustee at the direction of the Company pursuant to
Section 3.04 or 3.08 of the Loan Agreement or in
furtherance of the covenant of the Company contained in
clause (b) of Section 6.04 of the Loan Agreement) shall
(a) be applied in whole or in part (i) to the purchase of
Bonds in such amounts, at such prices, at such times and
otherwise as directed by an Authorized Company
Representative, excluding the purchase of Bonds pursuant
to Section 13.03 hereof, or (ii) in any other manner
directed by the Company which, as indicated in an opinion
of Bond Counsel furnished by the Company to the Pollution
Control Corporation and the Trustee, will not impair the
validity under the Act of the Bonds or the exclusion of
the interest on the Bonds from gross income for federal
income tax purposes or (b) in the absence of any such
purchase or direction within sixty (60) days of the
receipt by the Trustee of such certificate (or such
shorter period as the Company shall direct), be deposited
by the Trustee into the corresponding account maintained
within the Bond Fund. From time to time as the proper
disposition of the amounts retained by the Trustee in the
Construction Fund as aforesaid shall be determined, to the
extent that such amounts are not paid out in full by the
Trustee pursuant to Section 5.01 or 6.01 hereof, the
Company shall so notify the Trustee and the Pollution
Control Corporation by one or more certificates as
aforesaid and any amounts from time to time no longer to
be so retained by the Trustee shall be applied as
aforesaid. Pending the application of any moneys
remaining in the Construction Fund following the receipt
of the aforesaid certificate, such moneys may be invested
in Investment Securities in the manner permitted by
Section 6.01 hereof, provided that such investments (other
than investments made with the moneys retained by the
Trustee at the direction of the Company pursuant to
Section 3.04 or 3.08 of the Loan Agreement) shall not
produce a yield greater than the yield on the Bonds
unless, as indicated in an opinion of Bond Counsel
furnished by the Company to the Pollution Control
Corporation and the Trustee, investments producing a
greater yield would not, in and of itself, impair the
exclusion from gross income for federal tax purposes of
the interest on the Bonds.
V.13. Redemption of All Outstanding Bonds. Except
as set forth in Section 5.05 hereof, in the event that all
Outstanding Bonds are to be redeemed, the Trustee shall,
without further authorization, deposit into the General
Account within the Bond Fund all amounts remaining in the
Construction Fund constituting part of the Trust Estate,
with advice to the Pollution Control Corporation and the
Company of such action, such deposit to be made on the
date fixed for such redemption.
V.14. Acceleration of Bonds. In the event that the
principal of the Bonds shall have become due and payable
pursuant to Section 9.01 hereof, the Trustee shall,
without further authorization, deposit into the General
Account within the Bond Fund all amounts constituting part
of the Trust Estate remaining in the Construction Fund,
with advice to the Pollution Control Corporation and the
Company of such action, such deposit to be made on the
date fixed for such acceleration.
V.15. Refunding of Bonds. In the event that all
Outstanding Bonds are paid, redeemed or deemed to have
been paid within the meaning of Article VIII hereof by
reason of the application of the proceeds of the sale of
any obligations the interest on which is exempt from
federal income taxation, under an indenture other than
this Indenture, the Trustee shall, without further
authorization, withdraw all amounts constituting part of
the Trust Estate remaining in the Capital Account and the
Investment Account maintained within the Construction Fund
and deposit such amounts into corresponding accounts in
the construction, acquisition or other similar fund
created under the indenture under which such obligations
are issued, with advice to the Pollution Control
Corporation and the Company of such action, such
withdrawals and deposits to be made, in accordance with
the provisions of such indenture, on the date on which
such Bonds are so paid, redeemed or deemed to have been
paid; provided, however, that if Bonds shall have been
paid, redeemed or deemed to have been paid within the
meaning of Article VIII hereof by reason of the
application of the proceeds of the sale of more than one
issue of obligations the interest on which is excluded
from gross income for federal income tax purposes under
indentures other than this Indenture, the Trustee shall,
if directed by an Authorized Company Representative,
withdraw all amounts remaining in the Capital Account and
the Investment Account maintained within the Construction
Fund and such amounts shall be allocated among, and
deposited into, as directed by such Authorized Company
Representative, corresponding accounts in the
construction, acquisition or other similar funds created
under the indentures under which such obligations are
issued, with advice to the Pollution Control Corporation
and the Company of such action, such withdrawals and
deposits to be made, in accordance with the provisions of
such indentures, on the date on which all Bonds are so
paid, redeemed or deemed to have been paid.
V.16. Moneys Held in Trust. All moneys and
Investment Securities held by the Trustee in the
Construction Fund, and all moneys required to be deposited
with or paid to the Trustee for deposit into the
Construction Fund, and any moneys withdrawn from the
Construction Fund and held by the Tender Agent for the
purchase of Bonds, shall be held by the Trustee or the
Tender Agent, as the case may be, in trust and such moneys
and Investment Securities (other than any moneys held by
the Tender Agent pursuant to Section 13.03(c) hereof and
moneys or Investment Securities held in any subaccount
within the Construction Fund established in furtherance of
the obligations of the Company under Section 6.04(b) of
the Loan Agreement) while so held or so required to be
deposited or paid, shall constitute part of the Trust
Estate and be subject to the lien and security interest
created hereby in favor of the Trustee for the benefit of
the Owners from time to time of the Bonds. The Company
shall have no right, title or interest in the Construction
Fund, except that, to the extent not required to be
applied in another manner by any provision hereof, moneys
held by the Trustee in the Construction Fund shall be
disbursed by the Trustee to the Company upon and to the
extent of, but solely upon and to the extent of,
satisfaction of the conditions set forth in Section
5.01(c) hereof.
VI INVESTMENTS
VI.11. Investments. The moneys in the Construction
Fund and in the Bond Fund shall, at the direction of the
Company, be invested and reinvested in Investment
Securities; provided, however, that moneys constituting
proceeds of a drawing on a Security Arrangement on which
the Company is not the obligor and, while a Security
Arrangement on which the Company is not the obligor is in
effect, any moneys held by the Paying Agent pursuant to
Section 4.06 hereof, or by the Tender Agent pursuant to
Section 13.03(c) hereof, shall be invested only in
Government Obligations as described in clause (a) of the
definition thereof which shall not contain provisions
permitting the redemption thereof at the option of the
issuer and which have a remaining term to maturity not
exceeding 30 days and in any event maturing as needed.
Any Investment Securities may be purchased subject to
options or other rights in third parties to acquire the
same. In addition, subject to the proviso contained in
the first sentence of this Section 6.01 and except for
moneys in the General Account of the Bond Fund, the
Trustee shall, at the direction of the Company, enter into
(i) reverse repurchase agreements, option agreements and
agreements to lend securities with respect to any
Investment Securities held by it and (ii) transactions for
the purchase or sale of financial futures contracts in
obligations which constitute Investment Securities or
options on financial futures contracts in obligations
which constitute Investment Securities. Subject to the
further provisions of this Section 6.01, such investments
shall be made by the Trustee as directed and designated by
the Company in a certificate of, or telephonic advice
promptly confirmed by a certificate of, an Authorized
Company Representative. As and when any amounts thus
invested may be needed for disbursements from the
Construction Fund or the Bond Fund, the Trustee shall
request the Company to designate such investments to be
sold or otherwise converted into cash to the credit of
such fund as shall be sufficient to meet such disbursement
requirements and shall then follow any directions in
respect thereto of an Authorized Company Representative.
As long as no Event of Default (as defined in Section 9.01
hereof) shall have occurred and be continuing, the Company
shall have the right to designate the investments to be
sold and to otherwise direct the Trustee in the sale or
conversion to cash of the investments made with the moneys
in the Construction Fund and in the Bond Fund, provided
that the Trustee shall be entitled to conclusively assume
the absence of any such Event of Default unless it has
notice thereof within the meaning of Section 10.05 hereof.
At any time that S&P or Moody's rates the Bonds, the
General Account of the Bond Fund may only be invested in
Investment Securities with a rating level at least as high
as the current rating of the Bonds.
VII GENERAL COVENANTS
VII.11. No General Obligations. Each and every
covenant herein made, including all covenants made in the
various sections of this Article VII, is predicated upon
the condition that neither the County of Coconino, Arizona
nor the State of Arizona shall in any event be liable for
the payment of the principal of, or premium, if any, or
interest on the Bonds or for the purchase of Bonds or for
the performance of any pledge, mortgage, obligation or
agreement created by or arising out of this Indenture or
the issuance of the Bonds, and further that neither the
Bonds, nor the premium, if any, or interest thereon, nor
any such obligation or agreement of the Pollution Control
Corporation shall be construed to constitute an
indebtedness of the County of Coconino, Arizona or the
State of Arizona within the meaning of any constitutional
or statutory provisions whatsoever. The Bonds and the
interest and premium, if any, thereon shall be limited
obligations of the Pollution Control Corporation payable
solely from the Receipts and Revenues of the Pollution
Control Corporation from the Loan Agreement and the other
moneys pledged therefor.
The Pollution Control Corporation shall promptly cause
to be paid, solely from the sources stated herein, the
principal of and premium, if any, and interest on every
Bond issued under this Indenture at the place, on the
dates and in the manner provided herein and in said Bonds
according to the true intent and meaning thereof. The
Pollution Control Corporation shall have no obligation or
responsibility with respect to the purchase of Bonds or
the making or continuation of arrangements therefor,
except that the Pollution Control Corporation shall
generally cooperate with the Company, the Tender Agent and
the Remarketing Agent as contemplated in Article XIII
hereof.
VII.12. Performance of Covenants of the Pollution
Control Corporation; Representations. The Pollution
Control Corporation shall faithfully perform at all times
any and all covenants, undertakings, stipulations and
provisions contained in this Indenture, in any and every
Bond executed, authenticated and delivered hereunder, and
in all proceedings pertaining thereto. The Pollution
Control Corporation represents that it is duly authorized
under the Constitution and laws of the State of Arizona to
issue the Bonds authorized hereby, to enter into the Loan
Agreement and this Indenture, and to pledge and assign to
the Trustee the Trust Estate, and that the Bonds in the
hands of the Owners thereof are and will be valid and
binding limited obligations of the Pollution Control
Corporation.
VII.13. Maintenance of Rights and Powers; Compliance
with Laws. The Pollution Control Corporation shall at all
times use its best efforts to maintain its corporate
existence or assure the assumption of its obligations
under this Indenture by any public body succeeding to its
powers under the Act; and it shall at all times use its
best efforts to comply with all valid acts, rules,
regulations, orders and directions of any legislative,
executive, administrative or judicial body known to it to
be applicable to the Loan Agreement and this Indenture.
VII.14. Enforcement of Obligations of the Company;
Amendments. Upon receipt of written notification from the
Trustee, the Pollution Control Corporation shall cooperate
with the Trustee in enforcing the obligation of the
Company to pay or cause to be paid all the payments and
other costs and charges payable by the Company under the
Loan Agreement and on any Security Arrangement on which
the Company is the obligor. The Pollution Control
Corporation shall not enter into any agreement with the
Company amending the Loan Agreement without the prior
written consent of the Trustee and the Bank and compliance
with Sections 12.06 and 12.07 of this Indenture (a
revision to Exhibit A to the Loan Agreement not being
deemed an amendment for purposes of this Section).
VII.15. Further Instruments. The Pollution Control
Corporation shall, upon the reasonable request of the
Trustee, from time to time execute and deliver such
further instruments and take such further action as may be
reasonable and as may be required to carry out the
purposes of this Indenture; provided, however, that no
such instruments or actions shall pledge the credit or
taxing power of the State of Arizona, the County of
Coconino, the Pollution Control Corporation or any other
political subdivision of said State.
VII.16. No Disposition of Trust Estate. Except as
permitted by this Indenture, the Pollution Control
Corporation shall not sell, lease, pledge, assign or
otherwise dispose of or encumber its interest in the Trust
Estate and will promptly pay or cause to be discharged or
make adequate provision to discharge any lien or charge on
any part thereof not permitted hereby.
VII.17. Financing Statements. The Pollution Control
Corporation and the Trustee shall cooperate with the
Company in causing appropriate financing statements and
continuation statements, naming the Trustee as pledgee of
the Receipts and Revenues of the Pollution Control
Corporation from the Loan Agreement and of the other
moneys pledged under the Indenture for the payment of the
principal of and premium, if any, and interest on the
Bonds, and as pledgee and assignee of the balance of the
Trust Estate, to be duly filed and recorded in the
appropriate state and county offices as required by the
provisions of the Uniform Commercial Code or other similar
law as adopted in the State of Arizona and any other
applicable jurisdiction, as from time to time amended, in
order to perfect and maintain the security interests
created by this Indenture.
VII.18. Tax Covenants; Rebate Fund. (a) The
Pollution Control Corporation covenants for the benefit of
all Owners from time to time of the Bonds and the Bank
that it will not directly or indirectly use or (to the
extent within its control), permit the use of, the
proceeds of any of the Bonds or any other funds of the
Pollution Control Corporation, or take or omit to take any
other action, if and to the extent that such use, or the
taking or omission to take such action, would cause any of
the Bonds to be "arbitrage bonds" within the meaning of
Section 148 of the Code or otherwise subject to federal
income taxation by reason of Sections 103 and 141 through
150 of the Code or Section 103 of the 1954 Code, as
applicable, and any applicable regulations promulgated
thereunder. To that end the Pollution Control Corporation
covenants to comply with all covenants set forth in the
Tax Agreement, which is hereby incorporated herein by
reference as though fully set forth herein.
(a) The Trustee shall establish and maintain a fund
separate from any other fund established and maintained
hereunder designated the "Coconino County, Arizona
Pollution Control Corporation Pollution Control Revenue
Bonds, 1996 Series A (Tucson Electric Power Company
Project) Rebate Fund" (herein called the "Rebate Fund").
Within the Rebate Fund, the Trustee shall maintain such
accounts as shall be directed by the Company in order for
the Pollution Control Corporation and the Company to
comply with the provisions of the Tax Agreement. Subject
to the transfer provisions provided in paragraph (c)
below, all money at any time deposited in the Rebate Fund
shall be held by the Trustee in trust, to the extent
required to satisfy the Rebate Requirement (as defined in
the Tax Agreement), for payment to the United States of
America, and neither the Company, the Pollution Control
Corporation or the Owners shall have any rights in or
claim to such moneys. All amounts deposited into or on
deposit in the Rebate Fund shall be governed by this
Section 7.08, by Section 6.04 of the Loan Agreement and by
the Tax Agreement. The Trustee shall conclusively be
deemed to have complied with such provisions if it follows
the directions of the Company, including supplying all
necessary information in the manner set forth in the Tax
Agreement, and shall not be required to take any actions
thereunder in the absence of written directions from the
Company.
(b) Upon receipt of the Company's written instructions,
the Trustee shall remit part or all of the balances in the
Rebate Fund to the United States of America, as so
directed. In addition, if the Company so directs, the
Trustee shall deposit moneys into or transfer moneys out
of the Rebate Fund from or into such accounts or funds as
directed by the Company's written directions. Any funds
remaining in the Rebate Fund after all of the Bonds shall
have been paid and any Rebate Requirement shall have been
satisfied, or provision therefor reasonably satisfactory
to the Trustee shall have been made, and all amounts owing
to the Bank under the Reimbursement Agreement have been
paid, shall be withdrawn and remitted to the Company.
(c) Notwithstanding any provision of this Indenture,
the obligation to remit the Rebate Requirement to the
United States of America and to comply with all other
requirements of this Section 7.08, Section 6.04 of the
Loan Agreement and the Tax Agreement shall survive the
payment of the Bonds and the satisfaction and discharge of
this Indenture.
VII.19. Notices of Trustee. The Trustee shall give
notice to both the Pollution Control Corporation and the
Company whenever it is required hereby to give notice to
either and, additionally, shall furnish to the Pollution
Control Corporation and the Company copies of any notice
by mailing or Publication given by it pursuant to any
provision hereof.
VII.2 0. No Transfer of Security Arrangement. The
Trustee shall not sell, assign or transfer any Security
Arrangement except to a successor trustee under this
Indenture.
VIII DEFEASANCE
VIII.11. Defeasance. If the Pollution Control
Corporation shall pay or cause to be paid to the Owner of
any Bond secured hereby the principal of and premium, if
any, and interest due and payable, and thereafter to
become due and payable, upon such Bond or, if not during a
Flexible Rate Period or Term Rate Period or Fixed Rate
Period, any portion of any Bond in the principal amount of
$100,000 or any integral multiple thereof, or, if during a
Flexible Rate Period or Term Rate Period or Fixed Rate
Period, any portion of such Bond in the principal amount
of $5,000 or any integral multiple thereof (and, in the
case of a Flexible Rate Period, in a minimum principal
amount of $100,000), such Bond or portion thereof shall
cease to be entitled to any lien, benefit or security
under this Indenture. If the Pollution Control
Corporation shall pay or cause to be paid to the Owners of
all the Bonds secured hereby the principal of and premium,
if any, and interest due and payable, and thereafter to
become due and payable, thereon, and shall pay or cause to
be paid all other sums payable hereunder including,
without limitation, amounts payable pursuant to Section
10.04 hereof, then, and in that case, the right, title and
interest of the Trustee in and to the Trust Estate shall
thereupon cease, terminate and become void. In such
event, the Trustee shall assign, transfer and turn over to
the Company the Trust Estate, including, without
limitation, any surplus in the Bond Fund and any balance
remaining in any other fund created under this Indenture;
provided, however, that, if a Security Arrangement on
which the Company shall not be an obligor is in effect,
prior to any such assignment, transfer and turning over to
the Company as aforesaid, the Trustee shall deliver to the
Bank a notice specifying the date of such assignment,
transfer and turning over (which date shall not be less
than four (4) Business Days after the date of delivery of
such notice), and if prior to such specified date the Bank
shall have delivered to the Trustee a notice stating that
amounts are owed by the Company to the Bank under the
Reimbursement Agreement and have not been paid, the
Trustee, prior to any such assignment, transfer and
turning over to the Company as aforesaid, shall pay to the
Bank an amount equal to the lesser of (a) the total amount
owed by the Company to the Bank as specified in such
notice and (b) the total amount remaining in all funds
created under this Indenture.
All or any portion of Outstanding Bonds or, if not
during a Flexible Rate Period, a Term Rate Period or the
Fixed Rate Period, portions of Bonds in principal amounts
of $100,000 or any integral multiple thereof or, if during
a Flexible Rate Period, a Term Rate Period or the Fixed
Rate Period, portions of Bonds in principal amounts of
$5,000 or any integral multiple thereof (and, in the case
of a Flexible Rate Period, in a minimum principal amount
of $100,000), shall prior to the maturity or redemption
date thereof be deemed to have been paid within the
meaning and with the effect expressed in this Article
VIII, and the entire indebtedness of the Pollution Control
Corporation with respect thereof shall be satisfied and
discharged, when
(a) in the event said Bonds or portions thereof have
been selected for redemption in accordance with Section
3.02 hereof, the Trustee shall have given, or the Company
shall have given to the Trustee in form satisfactory to it
irrevocable instructions to give, on a date in accordance
with the provisions of Section 3.03 hereof notice of
redemption of such Bonds or portions thereof,
(b) there shall have been deposited with the Trustee
either moneys in an amount which shall be sufficient, or,
during the Fixed Rate Period, Government Obligations which
shall not contain provisions permitting the redemption
thereof at the option of the issuer, the principal of and
the interest on which, when due, and without regard to any
reinvestment thereof, will provide moneys which, together
with the moneys, if any, deposited with or held by the
Trustee, shall be sufficient, to pay when due the
principal of and premium, if any, and interest (at the
Maximum Rate, if such deposit shall not be made during the
Fixed Rate Period) due and to become due on said Bonds or
portions thereof on and prior to the redemption date or
maturity date thereof, as the case may be; provided,
however, that such moneys shall constitute Available
Moneys and that such Government Obligations either (i)
shall have been purchased with Available Moneys or, (ii)
shall have been held by the Trustee for the period of time
for which the moneys used for the purchase thereof would
be required to be so held in order for such moneys to
constitute Available Moneys if such moneys had been
deposited with the Trustee and the purchase of such
Government Obligations were disregarded, and
(c) in the event said Bonds or portions thereof do not
mature and are not to be redeemed within the next
succeeding sixty (60) days, the Company shall have given
the Trustee in form satisfactory to it irrevocable
instructions to give, as soon as practicable in the same
manner as a notice of redemption is given pursuant to
Section 3.03 hereof, a notice to the holders of said Bonds
or portions thereof that the deposit required by clause
(b) above has been made with the Trustee and that said
Bonds or portions thereof are deemed to have been paid in
accordance with this Article VIII and stating the maturity
or redemption date upon which moneys are to be available
for the payment of the principal of and premium, if any,
and interest on said Bonds or portions thereof.
Notwithstanding the foregoing, no Bond shall be deemed
paid and discharged pursuant to this Section 8.01 during
any period when a Letter of Credit is in effect unless
written evidence is received from S&P, if S&P is then
rating the Bonds, and Moody's, if Moody's is then rating
the Bonds, that such defeasance will not adversely affect
the ratings on the Bonds.
Neither the Government Obligations nor moneys deposited
with the Trustee pursuant to this Article VIII nor
principal or interest payments on any such Government
Obligations shall be withdrawn or used for any purpose
other than, and such Government Obligations, moneys and
principal or interest payments shall be held in trust for,
the payment of the principal of and premium, if any, and
interest on said Bonds or portions thereof, or for the
payment of the purchase price of said Bonds in accordance
with Section 13.03 hereof; provided, that, prior to the
Fixed Rate Date, such moneys, if not then needed for such
purposes, shall, to the extent practicable, be invested
and reinvested in Government Obligations maturing on or
prior to the earlier of (a) the date moneys shall be
required for the purchase of Bonds pursuant to Section
13.03 hereof and (b) the Interest Payment Date next
succeeding the date of investment or reinvestment, and
interest earned from such investments shall be paid over
to the Company, as received by the Trustee, free and clear
of any trust, lien or pledge hereunder; and provided,
further, that, during the Fixed Rate Period, any cash
received from such principal or interest payments on such
Government Obligations deposited with the Trustee, if not
then needed for such purposes, shall, to the extent
practicable, be invested in Government Obligations of the
type described in clause (b) of the next preceding
paragraph maturing at times and in amounts sufficient to
pay when due the principal of and premium, if any, and
interest to become due on said Bonds or portions thereof
on and prior to such redemption date or maturity date
thereof, as the case may be, and interest earned from such
reinvestments shall be paid over to the Company, as
received by the Trustee, free and clear of any trust, lien
or pledge hereunder. If payment of less than all the
Bonds is to be provided for in the manner and with the
effect provided in this Article VIII, the Trustee shall
select such Bonds or portions of Bonds in the manner
specified by Section 3.02 hereof for selection for
redemption of less than all Bonds in the principal amount
designated to the Trustee by the Company. If the Bonds
are rated by S&P or Moody's, Government Obligations for
purposes of this Section 8.01 shall be limited to those
described in clause (a) of such definition and at or prior
to the time of the deposit of any Government Obligations
with the Trustee pursuant to this Section 8.01, the
Company shall provide S&P and Moody's with a certificate
of an accountant or accounting firm as to the sufficiency
of such Government Obligations to pay when due the
principal of and premium, if any, and interest due and to
become due as set forth in clause (b) of the preceding
paragraph.
IX DEFAULTS AND REMEDIES
IX.11. Events of Default. Each of the following
events shall constitute and is referred to in this
Indenture as an "Event of Default":
(a) a failure to pay the principal of or premium, if
any, on any of the Bonds when the same shall become due
and payable at maturity, upon redemption or otherwise;
(b) a failure to pay an installment of interest on any
of the Bonds after such interest shall have become due and
payable for a period of two (2) Business Days, if such
failure shall occur in respect of interest determined at a
Flexible Rate or a Variable Rate other than a Term Rate,
or for a period of sixty (60) days, if such failure shall
occur in respect of interest determined at a Term Rate or
the Fixed Rate;
(c) a failure to pay an amount due in respect of a
tender for purchase after such amount shall have become
due and payable;
(d) a failure by the Pollution Control Corporation to
observe and perform any covenant, condition, agreement or
provision (other than as specified in clauses (a), (b) and
(c) of this Section 9.01) contained in the Bonds or in
this Indenture on the part of the Pollution Control
Corporation to be observed or performed, which failure
shall continue for a period of ninety (90) days after
written notice, specifying such failure and requesting
that it be remedied, shall have been given to the
Pollution Control Corporation and the Company by the
Trustee, which may give such notice in its discretion and
which shall give such notice at the written request of
Owners of not less than 25% in principal amount of the
Bonds then Outstanding or of the Bank, unless the Trustee,
or the Trustee and Owners of a principal amount of Bonds
not less than the principal amount of Bonds the Owners of
which requested that such notice be given or the Bank, as
the case may be, shall agree in writing to an extension of
such period prior to its expiration; provided, however,
that the Trustee, or the Trustee and the Owners of such
principal amount of Bonds or the Bank, as the case may be,
shall be deemed to have agreed to an extension of such
period if corrective action is initiated by the Pollution
Control Corporation, or the Company on behalf of the
Pollution Control Corporation, within such period and is
being diligently pursued.
Upon the occurrence and continuance of any Event of
Default described in clause (a), (b) or (c) of the
preceding paragraph, the Trustee may, and at the written
request of Owners of not less than 25% in principal amount
of Bonds then Outstanding or of the Bank shall, by written
notice to the Pollution Control Corporation, the Bank and
the Company, declare the Bonds to be immediately due and
payable, whereupon they shall, without further action,
become and be immediately due and payable, anything in
this Indenture or in the Bonds to the contrary
notwithstanding, and the Trustee shall give notice thereof
to the Tender Agent and the Remarketing Agent, and shall
give notice thereof by Mail to all Owners of Outstanding
Bonds; provided, however, that so long as the Letter of
Credit shall be in effect and no drawing on the Letter of
Credit shall have been, and shall remain, wrongfully
dishonored, the Trustee shall not declare the acceleration
of the maturity of the Bonds without the consent of the
Bank. In the case of an Event of Default described in the
preceding paragraph occurring when a Security Arrangement
on which the Company shall not be the obligor is in effect
and with respect to which the Trustee is required to
accelerate the Bonds, the Trustee shall make the aforesaid
declaration on the first Business Day after the occurrence
of such Event of Default on which the Trustee may make a
drawing or drawings on such Security Arrangement and on
which the proceeds of such drawing or drawings shall be
immediately available, but shall not make such declaration
prior to such date. With respect to an Event of Default
described in the preceding paragraph occurring when a
Security Arrangement on which the Company shall not be the
obligor is in effect, but with respect to which the
Trustee is not required to accelerate the Bonds, the
Trustee may make the aforesaid declaration only on a date
when the Trustee may make a drawing or drawings on such
Security Arrangements. Upon such declaration, interest on
the Bonds shall cease to accrue.
The provisions of the preceding paragraph, however, are
subject, when no Security Arrangement on which the Company
shall not be the obligor shall be in effect, to the
condition that if, after the principal of the Bonds shall
have been so declared to be due and payable, and before
any judgment or decree for the payment of the moneys due
shall have been obtained or entered as hereinafter
provided, the Pollution Control Corporation shall cause to
be deposited with the Trustee a sum sufficient to pay all
matured installments of interest upon all Bonds and the
principal of any and all Bonds which shall have become due
otherwise than by reason of such declaration (with
interest upon such principal and, to the extent
permissible by law, on overdue installments of interest,
at the rate per annum borne by the Bonds) and such amounts
as shall be sufficient to cover reasonable compensation
and reimbursement of expenses payable to the Trustee and
any predecessor Trustee, and all Events of Default
hereunder other than nonpayment of the principal of Bonds
which shall have become due by said declaration shall have
been remedied, then, in every such case, such Event of
Default shall be deemed waived and such declaration and
its consequences rescinded and annulled, and the Trustee
shall promptly give written notice of such waiver,
rescission and annulment to the Pollution Control
Corporation, the Company, the Tender Agent and the
Remarketing Agent, and, if notice of the acceleration of
the Bonds shall have been given to the Owners of the
Bonds, shall give notice thereof by Mail to all Owners of
Outstanding Bonds; but no such waiver, rescission and
annulment shall extend to or affect any subsequent Event
of Default or impair any right or remedy consequent
thereon.
IX.12. Remedies. Upon the occurrence and
continuance of any Event of Default, then and in every
such case the Trustee in its discretion may, and upon the
written request of the Bank or Owners of not less than 25%
in principal amount of the Bonds then Outstanding and
receipt of indemnity to its satisfaction shall, in its own
name and as the Trustee of an express trust:
(a) by mandamus, or other suit, action or proceeding at
law or in equity, enforce all rights of the Owners of the
Bonds, and require the Pollution Control Corporation, the
Bank or the obligor on any other Security Arrangement or
the Company to carry out any agreements with or for the
benefit of such Owners and to perform its or their duties
under the Act, the Loan Agreement, the Letter of Credit or
other Security Arrangement and this Indenture;
(b) bring suit upon the Bonds; or
(c) by action or suit in equity enjoin any acts or
things which may be unlawful or in violation of the rights
of the Owners of the Bonds.
The Trustee shall give to the Bank prompt notice of its
election of any one or more of the foregoing remedies,
anything herein to the contrary notwithstanding, so long
as the Letter of Credit shall be in effect and no drawing
on the Letter of Credit shall have been, and shall remain,
wrongfully dishonored, the Trustee shall not pursue any of
such remedies without the consent of the Bank.
IX.13. Restoration to Former Position. In the event
that any proceeding taken by the Trustee to enforce any
right under this Indenture shall have been discontinued or
abandoned for any reason, or shall have been determined
adversely to the Trustee, then the Pollution Control
Corporation, the Trustee and the Owners shall be restored,
subject to any determination in such proceeding, to their
former positions and rights hereunder, respectively, and
all rights, remedies and powers of the Trustee shall
continue as though no such proceeding had been taken.
IX.14. Bank's or Owners' Right to Direct
Proceedings. Anything in this Indenture to the contrary
notwithstanding, the Bank or Owners of a majority in
principal amount of the Bonds then Outstanding hereunder
shall have the right, by an instrument in writing executed
and delivered to the Trustee, to direct the time, method
and place of conducting all remedial proceedings available
to the Trustee under this Indenture or exercising any
trust or power conferred on the Trustee by this Indenture;
provided, however, that the Bank shall have no such rights
in respect of remedies against the Bank; and provided,
further, that such direction shall not be otherwise than
in accordance with law and the provisions of this
Indenture and that the Trustee shall have the right (but
not the obligation) to decline to follow any such
direction if the Trustee, being advised by counsel, shall
determine that the action or proceeding so directed may
not lawfully be taken, or if the Trustee in good faith
shall determine that the action or proceedings so directed
would involve the Trustee in personal liability or if the
Trustee in good faith shall so determine that the actions
or forbearances specified in or pursuant to such direction
would be unduly prejudicial to the interests of Owners not
joining in the giving of said direction, it being
understood that the Trustee shall have no duty to
ascertain whether or not such actions or forbearances are
unduly prejudicial to such Owners. In the event of a
conflict between the directions of the Bank and those of
the Owners of the Bonds, so long as the Letter of Credit
shall be in effect and no drawing on the Letter of Credit
shall have been, and shall remain wrongfully dishonored,
the directions of the Bank shall prevail; otherwise, the
directions of the Owners of the Bonds shall prevail.
IX.15. Limitation on Owners' Right to Institute
Proceedings. No Owner of Bonds shall have any right to
institute any suit, action or proceeding in equity or at
law for the execution of any trust or power hereunder, or
any other remedy hereunder or on said Bonds, unless such
Owner previously shall have given to the Trustee written
notice of an Event of Default as hereinabove provided and
unless the Owners of not less than 25% in principal amount
of the Bonds then Outstanding shall have made written
request of the Trustee so to do, after the right to
institute said suit, action or proceeding shall have
accrued, and shall have afforded the Trustee a reasonable
opportunity to proceed to institute the same in either its
or their name, and unless there also shall have been
offered to the Trustee security and indemnity satisfactory
to it against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee shall not
have complied with such request within a reasonable time;
and such notification, request and offer of indemnity are
hereby declared in every such case, at the option of the
Trustee, to be conditions precedent to the institution of
said suit, action or proceeding; it being understood and
intended that no one or more of the Owners of the Bonds
shall have any right in any manner whatever by his or
their action to affect, disturb or prejudice the security
of this Indenture, or to enforce any right hereunder or
under the Bonds, except in the manner herein provided, and
that all suits, actions and proceedings at law or in
equity shall be instituted, had and maintained in the
manner herein provided and for the equal benefit of all
Owners of the Bonds. No Owner of any Bond shall have any
right to make a drawing on a Security Arrangement on which
the Company shall not be the obligor or to institute any
suit, action or proceeding in equity or at law against the
Bank to enforce a drawing on a Security Arrangement on
which the Company shall not be the obligor.
IX.16. No Impairment of Right to Enforce Payment.
Notwithstanding any other provision in this Indenture, the
right of any Owner of a Bond to receive payment of the
principal of and premium, if any, and interest on such
Bond, on or after the respective due dates expressed
therein, or to institute suit for the enforcement of any
such payment on or after such respective dates, shall not
be impaired or affected without the consent of such Owner.
IX.17. Proceedings by Trustee without Possession of
Bonds. All rights of action under this Indenture or under
any of the Bonds secured hereby which are enforceable by
the Trustee may be enforced by it without the possession
of any of the Bonds, or the production thereof on the
trial or other proceedings relative thereto, and any such
suit, action or proceeding instituted by the Trustee shall
be brought in its name for the equal and ratable benefit
of the Owners of the Bonds, subject to the provisions of
this Indenture.
IX.18. No Remedy Exclusive. No remedy herein
conferred upon or reserved to the Trustee or to the Owners
of the Bonds is intended to be exclusive of any other
remedy or remedies, and each and every such remedy shall
be cumulative, and shall be in addition to every other
remedy given hereunder, under the Loan Agreement or under
any Security Arrangement, now or hereafter existing at law
or in equity or by statute.
IX.19. No Waiver of Remedies. No delay or omission
of the Trustee or of any Owner of a Bond to exercise any
right or power accruing upon any default shall impair any
such right or power or shall be construed to be a waiver
of any such default, or an acquiescence therein; and every
power and remedy given by this Article IX to the Trustee
and to the Owners of the Bonds, respectively, may be
exercised from time to time and as often as may be deemed
expedient.
IX.2 0. Application of Moneys. Any moneys received by the
Trustee, by any receiver or by any Owner of a Bond
pursuant to any right given or action taken under the
provisions of this Article IX, after payment of the costs
and expenses of the proceedings resulting in the
collection of such moneys and of all amounts due to the
Trustee and any predecessor Trustee under Section 10.04
hereof, shall be deposited in the Bond Fund and all moneys
so deposited in the Bond Fund during the continuance of an
Event of Default (other than moneys for the payment of
Bonds which had matured or otherwise become payable prior
to such Event of Default or for the payment of interest
due prior to such Event of Default) shall be applied as
follows (provided, however, that any drawing by the
Trustee on any Security Arrangement for the payment of
principal of, or premium, if any, or interest on the Bonds
shall be applied only to the payment of the principal of
or premium, if any, or interest on the Bonds pursuant to
the terms of the Security Arrangement):
(a) Unless the principal of all the Bonds shall have
become due and payable, all such moneys shall be applied
(i) first, to the payment to the persons entitled thereto
of all installments of interest then due on the Bonds,
with interest on overdue installments, if lawful, at the
rate per annum borne by the Bonds, in the order of
maturity of the installments of such interest and, if the
amount available shall not be sufficient to pay in full
any particular installment of interest, then to the
payment ratably, according to the amounts due on such
installment, and (ii) second, to the payment to the
persons entitled thereto of the unpaid principal of any of
the Bonds which shall have become due (other than Bonds
called for redemption for the payment of which money is
held pursuant to the provisions of this Indenture), with
interest on such Bonds at their rate from the respective
dates upon which they became due and, if the amount
available shall not be sufficient to pay in full Bonds due
on any particular date, together with such interest, then
to the payment ratably, according to the amount of
principal and interest due on such date, in each case to
the persons entitled thereto, without any discrimination
or privilege; provided, however, that moneys derived from
the rights of the Trustee under any Security Arrangement
on which the Company shall not be the obligor shall not be
applied to the payment of the principal of or premium, if
any, or interest on Bonds held of record by the Company,
or by the Tender Agent for the account of the Company
pursuant to Section 13.07(c) hereof, if such Security
Arrangement prohibits by its terms a drawing thereunder
for such purpose.
(b) If the principal of all the Bonds shall have become
due and payable, all such moneys shall be applied to the
payment of the principal and interest then due and unpaid
upon the Bonds, with interest on overdue interest and
principal, as aforesaid, without preference or priority of
principal over interest or of interest over principal, or
of any installment of interest over any other installment
of interest, or of any Bond over any other Bond, ratably,
according to the amounts due respectively for principal
and interest, to the persons entitled thereto without any
discrimination or privilege; provided, however, that
moneys derived from the rights of the Trustee under any
Security Arrangement in which the Company shall not be the
obligor shall not be applied to the payment of the
principal of or premium, if any, or interest on Bonds held
of record by the Company, or by the Tender Agent for the
account of the Company pursuant to Section 13.07(c)
hereof, if such Security Arrangement prohibits by its
terms a drawing thereunder for such purpose.
(c) If the principal of all the Bonds shall have come
due and payable, and if acceleration of the maturity of
the Bonds by reason of such Event of Default shall
thereafter have been rescinded and annulled under the
provisions of this Article IX, then, subject to the
provisions of clause (b) of this Section 9.10 which shall
be applicable in the event that the principal of all the
Bonds shall later become due and payable, the moneys shall
be applied in accordance with the provisions of clause (a)
of this Section 9.10.
IX.22. Severability of Remedies. It is the purpose
and intention of this Article IX to provide rights and
remedies to the Trustee and the Owners which may be
lawfully granted under the provisions of the Act, but
should any right or remedy herein granted be held to be
unlawful, the Trustee and the Owners shall be entitled, as
above set forth, to every other right and remedy provided
in this Indenture and by law.
X TRUSTEE; PAYING AGENT AND CO-PAYING AGENTS; REGISTRAR
X.11. Acceptance of Trusts. The Trustee hereby
accepts and agrees to execute the trusts hereby created,
but only upon the additional terms set forth in this
Article X, to all of which the Pollution Control
Corporation agrees and the respective Owners agree by
their acceptance of delivery of any of the Bonds.
X.12. No Responsibility for Recitals. The
recitals, statements and representations contained in this
Indenture or in the Bonds, save only the Trustee's
authentication upon the Bonds, are not made by the
Trustee, and the Trustee does not assume, and shall not
have, any responsibility or obligation for the correctness
of any thereof. The Trustee makes no representation as to
the validity or sufficiency of this Indenture or the
Bonds.
X.13. Limitations on Liability. The Trustee may
execute any of the trusts or powers hereof and perform the
duties required of it hereunder by or through attorneys,
agents, receivers, or employees, and shall be entitled to
advice of counsel concerning all matters of trust and its
duty hereunder, and the Trustee shall not be answerable
for the default or misconduct of any such attorney, agent,
receiver, or employee selected by it with reasonable care.
The Trustee shall not be answerable for the exercise of
any discretion or power under this Indenture or for
anything whatsoever in connection with the trust created
hereby, except only for its own negligence or bad faith.
Anything in this Indenture to the contrary
notwithstanding, the Trustee shall in no event be required
to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of
its duties or in the exercise of any of its rights or
powers, if there shall be reasonable grounds for believing
that the repayment of such funds or adequate indemnity
against such liability is not reasonably assured to it.
X.14. Compensation, Expenses and Advances. The
Trustee, the Paying Agent and any Co-Paying Agent, the
Registrar, the Tender Agent and the Remarketing Agent
under this Indenture shall be entitled to reasonable
compensation for their services rendered hereunder (not
limited by any provision of law regarding the compensation
of the trustee of an express trust) and to reimbursement
for their actual out-of-pocket expenses (including counsel
fees) reasonably incurred in connection therewith except
as a result of their negligence or bad faith, including,
without limitation, compensation for any services
rendered, and reimbursement for any expenses incurred, at
and subsequent to the time the Bonds are deemed to have
been paid in accordance with Article VIII hereof. If the
Pollution Control Corporation shall fail to perform any of
the covenants or agreements contained in this Indenture,
other than the covenants or agreements in respect of the
payment of the principal of and premium, if any, and
interest on the Bonds, the Trustee may, in its
uncontrolled discretion and without notice to the Owners
of the Bonds, at any time and from time to time, make
advances to effect performance of the same on behalf of
the Pollution Control Corporation, but the Trustee shall
be under no obligation so to do; and any and all such
advances may bear interest at a rate per annum not
exceeding the base rate then in effect for 90-day
commercial loans by the Trustee or a commercial banking
affiliate of the Trustee designated as such by the Trustee
in the city in which is located the Principal Office of
the Trustee (or such affiliate, as the case may be) to
borrowers of the highest credit standing; but no such
advance shall operate to relieve the Pollution Control
Corporation from any default hereunder. In Section 5.03
of the Loan Agreement, the Company has agreed that it will
pay to the Trustee (including any predecessor Trustee),
the Paying Agent and any Co-Paying Agent, the Registrar,
the Tender Agent and the Remarketing Agent, such
compensation and reimbursement of expenses and advances,
but the Company may, without creating a default hereunder,
contest in good faith the reasonableness of any such
services, expenses and advances. If the Company shall
have failed to make any payment to the Trustee or any
predecessor Trustee under Section 5.03 of the Loan
Agreement and such failure shall have resulted in an Event
of Default under the Loan Agreement, the Trustee, and any
predecessor Trustee, shall have, in addition to any other
rights hereunder, a claim, prior to the claim of the
Owners, for the payment of its compensation and the
reimbursement of its expenses and any advances made by it,
as provided in this Section 10.04, upon the moneys and
obligations in the Bond Fund; provided, however, that
neither the Trustee nor any predecessor Trustee shall have
any such claim upon proceeds of drawings on a Security
Arrangement on which the Company shall not be the obligor
or upon moneys or obligations deposited with or paid to
the Trustee for the redemption or payment of Bonds which
are deemed to have been paid in accordance with Article
VIII hereof; and provided, further, that, so long as a
Security Arrangement on which the Company shall not be the
obligor is in effect, neither the Trustee nor any
predecessor Trustee shall have any such claim upon any
moneys or obligations in the Bond Fund unless, after
satisfaction of such claim, there shall remain in the Bond
Fund moneys sufficient to pay all amounts then due in
respect of the Bonds.
In Section 5.04 of the Loan Agreement, the Company has
agreed to indemnify the Trustee and any predecessor
Trustee to the extent provided therein.
X.15. Notice of Events of Default. The Trustee
shall not be required to take notice, or be deemed to have
notice, of any default or Event of Default under this
Indenture other than an Event of Default under clause (a)
or (b) of the first paragraph of Section 9.01 hereof,
unless an officer assigned by the Trustee to administer
its corporate trust business has been specifically
notified in writing of such default or Event of Default by
Owners of at least 25% in principal amount of the Bonds
then Outstanding or by the Bank, the Tender Agent or the
Remarketing Agent. The Trustee may, however, at any time,
in its discretion, require of the Pollution Control
Corporation and the Company full information and advice as
to the performance of any of the covenants, conditions and
agreements contained herein.
X.16. Action by Trustee. The Trustee shall be
under no obligation to take any action in respect of any
default or Event of Default hereunder or toward the
execution or enforcement of any of the trusts hereby
created, or to institute, appear in or defend any suit or
other proceeding in connection therewith, unless requested
in writing so to do by Owners of at least 25% in principal
amount of the Bonds then Outstanding or the Bank, and, if
in its opinion such action may tend to involve it in
expense or liability, unless furnished, from time to time
as often as it may require, with security and indemnity
satisfactory to it; provided, however, that no such
security or indemnity shall be required prior to the
Trustee taking any action on a Security Arrangement
(including a drawing on the Letter of Credit) otherwise
required by the terms hereof, but the Trustee shall be
entitled to such security or indemnity thereafter. The
foregoing provisions are intended only for the protection
of the Trustee, and shall not affect any discretion or
power given by any provisions of this Indenture to the
Trustee to take action in respect of any default or Event
of Default without such notice or request from the Owners
of the Bonds or the Bank, or without such security or
indemnity.
X.17. Good Faith Reliance. The Trustee shall be
protected and shall incur no liability in acting or
proceeding in good faith upon any resolution, notice,
telegram, telex, facsimile transmission, request, consent,
waiver, certificate, statement, affidavit, voucher, bond,
requisition or other paper or document which it shall in
good faith believe to be genuine and to have been passed
or signed by the proper board, body or person or to have
been prepared and furnished pursuant to any of the
provisions of this Indenture or the Loan Agreement, or
upon the written opinion of any attorney, engineer,
accountant or other expert believed by the Trustee to be
qualified in relation to the subject matter, and the
Trustee shall be under no duty to make any investigation
or inquiry as to any statements contained or matters
referred to in any such instrument, but may accept and
rely upon the same as conclusive evidence of the truth and
accuracy of such statements. Neither the Trustee, the
Paying Agent, any Co-Paying Agent, the Registrar nor the
Tender Agent shall be bound to recognize any person as an
Owner of a Bond or to take any action at his request
unless the ownership of such Bond is proved as
contemplated in Section 11.01 hereof.
X.18. Dealings in Bonds and with the Pollution
Control Corporation and the Company. The Trustee, the
Paying Agent, any Co-Paying Agent, the Registrar, the
Tender Agent or the Remarketing Agent, in its individual
or any other capacity, may in good faith buy, sell, own,
hold and deal in any of the Bonds issued hereunder, and
may join in any action which any Owner of a Bond may be
entitled to take with like effect as if it did not act in
any capacity hereunder. The Trustee, the Paying Agent,
any Co-Paying Agent, the Registrar, the Tender Agent or
the Remarketing Agent, in its individual or any other
capacity, either as principal or agent, may also engage in
or be interested in any financial or other transaction
with the Pollution Control Corporation or the Company, and
may act as depositary, trustee, or agent for any committee
or body of Owners of Bonds secured hereby or other
obligations of the Pollution Control Corporation as freely
as if it did not act in any capacity hereunder.
X.19. Allowance of Interest. The Trustee may, but
shall not be obligated to, allow and credit interest upon
any moneys which it may at any time receive under any of
the provisions of this Indenture, at such rate, if any, as
it customarily allows upon similar funds of similar size
and under similar conditions. All interest allowed on any
such moneys shall be credited as provided in Articles IV,
V and VI with respect to interest on investments.
X.2 0. Construction of Indenture. The Trustee may
construe any of the provisions of this Indenture insofar
as the same may appear to be ambiguous or inconsistent
with any other provision hereof, and any construction of
any such provisions hereof by the Trustee in good faith
shall be binding upon the Owners of the Bonds.
X.21. Resignation of Trustee. The Trustee may
resign and be discharged of the trusts created by this
Indenture by executing an instrument in writing resigning
such trust and specifying the date when such resignation
shall take effect, and filing the same with the President
of the Pollution Control Corporation, and with the Tender
Agent, the Remarketing Agent, the Company and the Bank,
not less than forty-five (45) days before the date
specified in such instrument when such resignation shall
take effect, and by giving notice of such resignation by
Mail to all Owners of Bonds. Such resignation shall take
effect on the later to occur of (i) the day specified in
such instrument and notice, unless previously a successor
Trustee shall have been appointed as hereinafter provided,
in which event such resignation shall take effect
immediately upon the appointment of such successor Trustee
and (ii) the appointment of a successor Trustee.
So long as no event which is, or after notice or lapse
of time, or both, would become, an Event of Default shall
have occurred and be continuing, if the Pollution Control
Corporation shall have delivered to the Trustee (i) an
instrument appointing a successor Trustee, effective as of
a date specified therein and (ii) an instrument of
acceptance of such appointment, effective as of such date,
by such successor Trustee in accordance with Section
10.16, the Trustee shall be deemed to have resigned as
contemplated in this Section, the successor Trustee shall
be deemed to have been appointed pursuant to subsection
(b) of Section 10.13 and such appointment shall be deemed
to have been accepted as contemplated in Section 10.16,
all as of such date, and all other provisions of this
Article X shall be applicable to such resignation,
appointment and acceptance except to the extent
inconsistent with this paragraph. The Pollution Control
Corporation shall deliver any such instrument of
appointment at the direction of the Company.
X.22. Removal of Trustee. The Trustee may be
removed at any time by filing with the Trustee so removed,
and with the Pollution Control Corporation, the Tender
Agent, the Remarketing Agent and the Company, an
instrument or instruments in writing, appointing a
successor, or an instrument or instruments in writing,
consenting to the appointment by the Pollution Control
Corporation (at the direction of the Company) of a
successor and accompanied by an instrument of appointment
by the Pollution Control Corporation (at the direction of
the Company) of such successor, and in any event executed
by Owners of not less than a majority in principal amount
of the Bonds then Outstanding, such filing to be made by
any Owner of a Bond or his duly authorized attorney.
X.23. Appointment of Successor Trustee. (a) In
case at any time the Trustee shall be removed, or be
dissolved, or if its property or affairs shall be taken
under the control of any state or federal court or
administrative body because of insolvency or bankruptcy,
or for any other reason, then a vacancy shall forthwith
and ipso facto exist and a successor may be appointed, and
in case at any time the Trustee shall resign or be deemed
to have resigned, then a successor may be appointed, by
filing with the Pollution Control Corporation, the Tender
Agent, the Remarketing Agent and the Company an instrument
in writing appointing such successor Trustee executed by
Owners of not less than a majority in principal amount of
Bonds then Outstanding, together with, so long as the
Letter of Credit shall be in effect and no drawing on the
Letter of Credit shall have been, and shall remain,
wrongfully dishonored, a consent of the Bank to such
appointment (such consent not to be unreasonably
withheld). Copies of such instrument shall be promptly
delivered by the Pollution Control Corporation to the
predecessor Trustee, to the Trustee so appointed and the
Company.
(a) Until a successor Trustee shall be appointed by the
Owners of the Bonds as herein authorized, the Pollution
Control Corporation, shall appoint a successor Trustee as
directed by the Company with, so long as the Letter of
Credit shall be in effect and no drawing on the Letter of
Credit shall have been, and shall remain, the consent of
the Bank (such consent not to be unreasonably withheld).
After any appointment by the Pollution Control
Corporation, it shall cause notice of such appointment to
be given by Mail to all Owners of Bonds. Any new Trustee
so appointed by the Pollution Control Corporation shall
immediately and without further act be superseded by a
Trustee appointed by the Owners of the Bonds in the manner
above provided.
(b) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this
Article shall become effective until the acceptance of
appointment by the successor Trustee.
X.24. Qualifications of Successor Trustee. Every
successor Trustee (a) shall be a bank or trust company
duly organized under the laws of the United States or any
state or territory thereof authorized by law to perform
all the duties imposed upon it by this Indenture and (b)
shall have (or the parent holding company of which shall
have) a combined capital stock, surplus and undivided
profits of at least $100,000,000 if there can be located,
with reasonable effort, such an institution willing and
able to accept the trust on reasonable and customary
terms.
X.25. Judicial Appointment of Successor Trustee.
In case at any time the Trustee shall resign and no
appointment of a successor Trustee shall be made pursuant
to the foregoing provisions of this Article X prior to the
date specified in the notice of resignation as the date
when such resignation is to take effect, the retiring
Trustee may forthwith apply to a court of competent
jurisdiction for the appointment of a successor Trustee.
If no appointment of a successor Trustee shall be made
pursuant to the foregoing provisions of this Article X
within six months after a vacancy shall have occurred in
the office of Trustee, any Owner of a Bond may apply to
any court of competent jurisdiction to appoint a successor
Trustee. Such court may thereupon, after such notice, if
any, as it may deem proper and prescribe, appoint a
successor Trustee.
X.26. Acceptance of Trusts by Successor Trustee.
Any successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Pollution Control
Corporation an instrument accepting such appointment
hereunder, and thereupon such successor Trustee, without
any further act, deed or conveyance, shall become duly
vested with all the estates, property, rights, powers,
trusts, duties and obligations of its predecessor in the
trust hereunder, with like effect as if originally named
Trustee herein. Upon request of such Trustee, such
predecessor Trustee and the Pollution Control Corporation
shall execute and deliver an instrument transferring to
such successor Trustee all the estates, property, rights,
powers and trusts hereunder of such predecessor Trustee
and, subject to the provisions of Section 10.04 hereof,
such predecessor Trustee shall pay over to the successor
Trustee all moneys and other assets at the time held by it
hereunder.
X.27. Successor by Merger or Consolidation. Any
corporation or association into which any Trustee
hereunder may be merged or converted or with which it may
be consolidated, or any corporation or association
resulting from any merger or consolidation to which any
Trustee hereunder shall be a party, shall be the successor
Trustee under this Indenture, without the execution or
filing of any paper or any further act on the part of the
parties hereto, anything in this Indenture to the contrary
notwithstanding.
If, at the time any such successor to the Trustee shall
succeed to the trusts created by this Indenture, any of
the Bonds shall have been authenticated but not delivered,
such successor Trustee may adopt the certificate of
authentication of any predecessor Trustee and deliver such
Bonds so authenticated; and if at that time, any of the
Bonds shall not have been authenticated, such successor
Trustee may authenticate such Bonds either in the name of
any such predecessor hereunder or in the name of such
successor; and, in all such cases, such certificate of
authentication shall have the full force which it is
anywhere in the Bonds or in this Indenture provided that
the certificate of authentication of the Trustee shall
have; provided, however, that the right to adopt the
certificate of authentication of any predecessor Trustee
or to authenticate Bonds in the name of any predecessor
Trustee shall apply only to its successor or successors by
merger, conversion or consolidation.
X.28. Standard of Care. Notwithstanding any other
provisions of this Article X, the Trustee shall, during
the existence of an Event of Default of which the Trustee
has actual notice, exercise such of the rights and powers
vested in it by this Indenture and use the same degree of
skill and care in their exercise as a prudent man would
use and exercise under the circumstances in the conduct of
his own affairs.
X.29. Notice to Owners of Bonds of Event of
Default. If an Event of Default occurs of which the
Trustee by Section 10.05 hereof is required to take notice
and deemed to have notice, or any other Event of Default
occurs of which the Trustee has been specifically notified
in accordance with Section 10.05 hereof, and any such
Event of Default shall continue for at least two days
after the Trustee acquires actual notice thereof, unless
the Trustee shall have theretofore given a notice of
acceleration pursuant to Section 9.01 hereof, the Trustee
shall give notice thereof to the Tender Agent, the
Remarketing Agent and the Bank and give Notice by Mail to
all Owners of Outstanding Bonds.
X.3 0. Intervention in Litigation of the Pollution
Control Corporation. In any judicial proceeding to which
the Pollution Control Corporation is a party and which in
the opinion of the Trustee and its counsel has a
substantial bearing on the interests of the Owners of
Bonds, the Trustee may intervene on behalf of the Owners
of the Bonds and shall, upon receipt of indemnity
satisfactory to it, do so if requested in writing by
Owners of at least 25% in principal amount of the Bonds
then Outstanding if permitted by the court having
jurisdiction in the premises.
X.31. Paying Agent; Co-Paying Agents. The
Pollution Control Corporation shall, with the approval of
the Company, appoint the Paying Agent for the Bonds and
may at any time or from time to time, with the approval of
the Company, appoint one or more Co-Paying Agents for the
Bonds, subject to the conditions set forth in Section
10.22 hereof. The Paying Agent and each Co-Paying Agent
shall designate to the Trustee its Principal Office and
signify its acceptance of the duties and obligations
imposed upon it hereunder by a written instrument of
acceptance delivered to the Pollution Control Corporation
and the Trustee in which such Paying Agent or Co-Paying
Agent will agree, particularly:
(a) to hold all sums held by it for the payment of the
principal of and premium, if any, or interest on Bonds in
trust for the benefit of the Owners of the Bonds until
such sums shall be paid to such Owners or otherwise
disposed of as herein provided;
(b) to keep such books and records as shall be
consistent with prudent industry practice, to make such
books and records available for inspection by the
Pollution Control Corporation, the Trustee and the Company
at all reasonable times and, in the case of a Co-Paying
Agent, to promptly furnish copies of such books and
records to the Paying Agent; and
(c) in the case of a Co-Paying Agent, upon the request
of the Paying Agent, to forthwith deliver to the Paying
Agent all sums so held in trust by such Co-Paying Agent.
The Pollution Control Corporation shall cooperate with
the Trustee and the Company to cause the necessary
arrangements to be made and to be thereafter continued
whereby funds derived from the sources specified in
Sections 4.03 and 4.04 hereof will be made available to
the Paying Agent and each Co-Paying Agent for the payment
when due of the principal of, premium, if any, and
interest on the Bonds.
X.32. Qualifications of Paying Agent and Co-Paying
Agents; Resignation; Removal. The Paying Agent and any
Co-Paying Agent shall be a corporation or association duly
organized under the laws of the United States of America
or any state or territory thereof, having a combined
capital stock, surplus and undivided profits of at least
$15,000,000 and authorized by law to perform all the
duties imposed upon it by this Indenture; provided that,
if the Bonds shall be rated by Moody's and if such
corporation shall not be a bank or trust company, its long
term debt or that of its parent shall have a Moody's
rating not lower than Baa3 or the equivalent thereof and
its short-term debt or that of its parent shall have a
Moody's rating not lower than P-3 or the equivalent
thereof unless, in either case, there shall have been
furnished to the Pollution Control Corporation, the
Trustee and the Company written evidence from Moody's to
the effect that the appointment of the proposed Paying
Agent or Co-Paying Agent will not, by itself, result in a
reduction or withdrawal of its ratings then in effect on
the Bonds. The Paying Agent and any Co-Paying Agent may
at any time resign and be discharged of the duties and
obligations created by this Indenture by giving at least
sixty (60) days' notice to the Pollution Control
Corporation, the Company and the Trustee. The Paying
Agent and any Co-Paying Agent may be removed at any time,
at the direction of the Company, by an instrument, signed
by the Pollution Control Corporation, filed with the
Paying Agent or such Co-Paying Agent, as the case may be,
and with the Trustee.
In the event of the resignation or removal of the
Paying Agent or any Co-Paying Agent, the Paying Agent or
such Co-Paying Agent, as the case may be, shall pay over,
assign and deliver any moneys held by it in such capacity
to its successor or, if there be no successor, to the
Trustee.
In the event that the Pollution Control Corporation
shall fail to appoint a Paying Agent hereunder, or in the
event that the Paying Agent shall resign or be removed, or
be dissolved, or if the property or affairs of the Paying
Agent shall be taken under the control of any state or
federal court or administrative body because of bankruptcy
or insolvency, or for any other reason, and the Pollution
Control Corporation shall not have appointed its successor
as Paying Agent, the Trustee shall ipso facto be deemed to
be the Paying Agent for all purposes of this Indenture
until the appointment by the Pollution Control Corporation
of the Paying Agent or successor Paying Agent, as the case
may be.
Upon the appointment of a successor Paying Agent, the
Trustee shall give notice thereof by Mail to all Owners of
Bonds.
X.33. Registrar. The Pollution Control Corporation
shall, with the approval of the Company, appoint the
Registrar for the Bonds, subject to the conditions set
forth in Section 10.24 hereof. The Registrar shall
designate to the Trustee its Principal Office and signify
its acceptance of the duties imposed upon it hereunder by
a written instrument of acceptance delivered to the
Pollution Control Corporation and the Trustee in which
such Registrar will agree, particularly, to keep such
books and records as shall be consistent with prudent
industry practice and to make such books and records
available for inspection by the Pollution Control
Corporation, the Trustee and the Company at all reasonable
times.
The Pollution Control Corporation shall cooperate with
the Trustee and the Company to cause the necessary
arrangements to be made and to be thereafter continued
whereby Bonds, executed by the Pollution Control
Corporation and authenticated by the Trustee, shall be
made available for exchange, registration and registration
of transfer at the Principal Office of the Registrar. The
Pollution Control Corporation shall cooperate with the
Trustee, the Registrar and the Company to cause the
necessary arrangements to be made and thereafter continued
whereby the Paying Agent, any Co-Paying Agent, the Tender
Agent and the Remarketing Agent shall be furnished such
records and other information, at such times, as shall be
required to enable the Paying Agent, such Co-Paying Agent,
the Tender Agent and the Remarketing Agent to perform the
duties and obligations imposed upon them hereunder.
X.34. Qualifications of Registrar; Resignation;
Removal. The Registrar shall be a corporation or
association duly organized under the laws of the United
States of America or any state or territory thereof,
having a combined capital stock, surplus and undivided
profits of at least $15,000,000 and authorized by law to
perform all the duties imposed upon it by this Indenture.
The Registrar may at any time resign and be discharged of
the duties and obligations created by this Indenture by
giving at least sixty (60) days' notice to the Pollution
Control Corporation, the Trustee and the Company. The
Registrar may be removed at any time, at the direction of
the Company, by an instrument signed by the Pollution
Control Corporation filed with the Registrar and the
Trustee.
In the event of the resignation or removal of the
Registrar, the Registrar shall deliver any Bonds held by
it in such capacity to its successor or, if there be no
successor, to the Trustee.
In the event that the Pollution Control Corporation
shall fail to appoint a Registrar hereunder, or in the
event that the Registrar shall resign or be removed, or be
dissolved, or if the property or affairs of the Registrar
shall be taken under the control of any state or federal
court or administrative body because of bankruptcy or
insolvency, or for any other reason, and the Pollution
Control Corporation shall not have appointed its successor
as Registrar, the Trustee shall ipso facto be deemed to be
the Registrar for all purposes of this Indenture until the
appointment by the Pollution Control Corporation of the
Registrar or successor Registrar, as the case may be.
Upon the appointment of a successor Registrar, the
Trustee shall give notice thereof by Mail to all Owners of
Bonds.
X.35. Several Capacities. Anything herein to the
contrary notwithstanding, the same entity may serve
hereunder as the Trustee, the Paying Agent or a Co-Paying
Agent, the Registrar, the Tender Agent and the Remarketing
Agent, and in any combination of such capacities to the
extent permitted by law.
XI EXECUTION OF INSTRUMENTS BY OWNERS OF BONDS AND
PROOF OF OWNERSHIP OF BONDS
XI.11. Execution of Instruments; Proof of Ownership.
Any request, direction, consent or other instrument in
writing, whether or not required or permitted by this
Indenture to be signed or executed by Owners of the Bonds,
may be in any number of concurrent instruments of similar
tenor and may be signed or executed by Owners of the Bonds
or by an agent appointed by an instrument in writing.
Proof of the execution of any such instrument and of the
ownership of Bonds shall be sufficient for any purpose of
this Indenture and shall be conclusive in favor of the
Trustee with regard to any action taken by it under such
instrument if made in the following manner:
(a) The fact and date of the execution by any person of
any such instrument may be proved by the certificate of
any officer in any jurisdiction who, by the laws thereof,
has power to take acknowledgments within such
jurisdiction, to the effect that the person signing such
instrument acknowledged before him the execution thereof,
or by an affidavit of a witness to such execution.
(b) The ownership or former ownership of Bonds shall be
proved by the registration books kept under the provisions
of Section 2.09 hereof.
Nothing contained in this Article XI shall be construed
as limiting the Trustee to such proof, it being intended
that the Trustee may accept any other evidence of matters
herein stated which it may deem sufficient. Any request
or consent of any Owner of a Bond shall bind every future
Owner of the same Bond or any Bond or Bonds issued in lieu
thereof in respect of anything done by the Trustee or the
Pollution Control Corporation in pursuance of such request
or consent.
XII MODIFICATION OF THIS INDENTURE AND THE LOAN AGREEMENT
XII.11. Limitations. Neither this Indenture nor the
Loan Agreement shall be modified or amended in any respect
subsequent to the original issuance of the Bonds except as
provided in and in accordance with and subject to the
provisions of this Article XII and Section 7.04 hereof.
The Trustee may, but shall not be obligated to, enter
into any Supplemental Indenture which affects the
Trustee's own rights, duties or immunities under this
Indenture or otherwise.
XII.12. Supplemental Indentures without Owner
Consent. The Pollution Control Corporation and the
Trustee may, from time to time and at any time, without
the consent of or notice to the Owners of the Bonds, enter
into Supplemental Indentures as follows:
(a) to cure any formal defect, omission, inconsistency
or ambiguity in this Indenture, provided, however, that
such cure shall not materially and adversely affect the
interests of the Owners of the Bonds;
(b) to grant to or confer or impose upon the Trustee for
the benefit of the Owners of the Bonds any additional
rights, remedies, powers, authority, security, liabilities
or duties which may lawfully be granted, conferred or
imposed;
(c) to add to the covenants and agreements of, and
limitations and restrictions upon, the Pollution Control
Corporation in this Indenture other covenants, agreements,
limitations and restrictions to be observed by the
Pollution Control Corporation;
(d) to confirm, as further assurance, any pledge under,
and the subjection to any claim, lien or pledge created or
to be created by, this Indenture, of the Receipts and
Revenues of the Pollution Control Corporation from the
Loan Agreement or of any other moneys, securities or
funds;
(e) to authorize a different denomination or
denominations of the Bonds and to make correlative
amendments and modifications to this Indenture regarding
exchange ability of Bonds of different denominations,
redemptions of portions of Bonds of particular
denominations and similar amendments and modifications of
a technical nature;
(f) to modify, alter, amend or supplement this Indenture
in any and all respects which may be correlative to any
and all modifications, alterations, amendments and
supplements to the Loan Agreement referred to in the
second paragraph of Section 12.06 hereof or which may be
necessary, desirable or appropriate in connection
therewith (including without limitation the insertion of
provisions relating to the priority of sources of funds to
be used for the payment of the principal of and premium,
if any, and interest on the Bonds, changes to the
provisions relating to the priority of sources of funds to
be used for the purchase of Bonds, changes to the default
provisions hereof and the insertion of provisions relating
to the non-transferability and surrender of the evidence
of the additional security referred to in the second
paragraph of Section 12.06 hereof) or to carry out the
purposes thereof; provided, however, that anything in this
clause (f) of Section 12.02 or Section 12.06 to the
contrary notwithstanding, no such modification,
alteration, amendment or supplement to this Indenture or
the Loan Agreement shall render the Receipts and Revenues
of the Pollution Control Corporation from the Loan
Agreement (as such term is defined in this Indenture as
originally executed and delivered or as modified, altered,
amended or supplemented) insufficient to pay the principal
of and premium, if any, and interest on the Bonds;
(g) to modify, alter, supplement or amend this Indenture
in such manner as shall permit the qualification hereof
under the Trust Indenture Act of 1939, as from time to
time amended;
(h) to modify, alter, supplement or amend this Indenture
in such manner as shall be necessary, desirable or
appropriate in order to provide for or eliminate the
registration and registration of transfer of the Bonds
through a book-entry or similar method, whether or not the
Bonds are evidenced by certificates;
(i) to provide a different method for the determination
of the Daily Rate, Weekly Rate, Monthly Rate, Term Rate,
Flexible Rates or the Fixed Rate if the method set forth
herein is unavailable or unrealistic in the marketplace,
but only after notice thereof shall have been given by
Mail to all Owners of the Bonds;
(j) to modify, alter, amend or supplement this Indenture
in any other respect which is not materially adverse to
the Owners and which does not involve a change described
in clause (i), (ii), (iii) or (iv) of Section 12.03(a)
hereof;
(k) to provide any additional procedures, covenants or
agreements necessary or desirable to maintain the tax-
exempt status of interest on the Bonds; and
(l) to modify, alter, amend or supplement this Indenture
in any other respect, including amendments which would
otherwise be described in Section 12.03 hereof, if the
effective date of such amendment is a date on which all
Bonds affected thereby are subject to mandatory tender for
purchase pursuant to Section 2.02(h) or if Notice by Mail
of the proposed amendment is given to Owners of the
affected Bonds at least 30 days before the effective date
thereof and, on or before such effective date, such Owners
have the right to demand purchase of their Bonds pursuant
to Section 2.02(g) hereof.
Before the Pollution Control Corporation and the
Trustee shall enter into any Supplemental Indenture
pursuant to this Section 12.02, there shall have been
delivered to the Trustee an opinion of Bond Counsel
stating that such Supplemental Indenture is authorized or
permitted by this Indenture and the Act, complies with
their respective terms, will, upon the execution and
delivery thereof, be valid and binding upon the Pollution
Control Corporation in accordance with its terms and will
not, in and of itself, adversely affect the exclusion from
gross income for federal tax purposes of the interest on
the Bonds.
XII.13. Supplemental Indentures with Consent of
Owners. (a) Except for any Supplemental Indenture entered
into pursuant to Section 12.02 hereof, subject to the
terms and provisions contained in this Section 12.03 and
Section 12.05 and not otherwise, Owners of not less than a
majority in aggregate principal amount of the Bonds then
Outstanding which would be adversely affected thereby
shall have the right from time to time to consent to and
approve the execution and delivery by the Pollution
Control Corporation and the Trustee of any Supplemental
Indenture deemed necessary or desirable by the Pollution
Control Corporation for the purposes of modifying,
altering, amending, supplementing or rescinding, in any
particular, any of the terms or provisions contained in
this Indenture; provided, however, that, unless approved
in writing by the Owners of all the Bonds then Outstanding
which would be adversely affected thereby, nothing herein
contained shall permit, or be construed as permitting, (i)
a change in the times, amounts or currency of payment of
the principal of or premium, if any, or interest on any
Outstanding Bond, a change in the purchase price or time
of purchase of Bonds tendered pursuant to the terms
hereof, a reduction in the principal amount or redemption
price of any Outstanding Bond or a change in the method of
determining the rate of interest thereon, or any
impairment of the right of any Owner to institute suit for
the payment of any Bond owned by it, or (ii) the creation
of a claim or lien upon, or a pledge of, the Receipts and
Revenues of the Pollution Control Corporation from the
Loan Agreement ranking prior to or on a parity with the
claim, lien or pledge created by this Indenture (except as
referred to in Section 10.04 hereof), or (iii) a
preference or priority of any Bond or Bonds over any other
Bond or Bonds, or (iv) a reduction in the aggregate
principal amount of Bonds the consent of the Owners of
which is required for any such Supplemental Indenture or
which is required, under Section 12.07 hereof, for any
modification, alteration, amendment or supplement to the
Loan Agreement.
(a) If at any time the Pollution Control Corporation
shall request the Trustee to enter into any Supplemental
Indenture for any of the purposes of this Section 12.03,
the Trustee shall cause notice of the proposed
Supplemental Indenture to be given by Mail to all Owners
of Outstanding Bonds and to the Bank. Such notice shall
briefly set forth the nature of the proposed Supplemental
Indenture and shall state that a copy thereof is on file
at the Principal Office of the Trustee for inspection by
all Owners of Bonds and by the Bank.
(b) Within two years after the date of the first mailing
of such notice, the Pollution Control Corporation and the
Trustee may enter into such Supplemental Indenture in
substantially the form described in such notice only if
there shall have first been delivered to the Trustee (i)
the required consents, in writing, of Owners of Bonds and
(ii) an opinion of Bond Counsel stating that such
Supplemental Indenture is authorized or permitted by this
Indenture and the Act, complies with their respective
terms and, upon the execution and delivery thereof, will
be valid and binding upon the Pollution Control
Corporation in accordance with its terms and will not
adversely affect the exemption from federal income
taxation of interest on the Bonds.
(c) If Owners of not less than the percentage of Bonds
required by this Section 12.03 shall have consented to and
approved the execution and delivery thereof as herein
provided, no Owner shall have any right to object to the
execution and delivery of such Supplemental Indenture, or
to object to any of the terms and provisions contained
therein or the operation thereof, or in any manner to
question the propriety of the execution and delivery
thereof, or to enjoin or restrain the Pollution Control
Corporation or the Trustee from executing and delivering
the same or from taking any action pursuant to the
provisions thereof.
(d) Subject to the terms and provisions contained in
this subsection (e) of Section 12.03 and in Section 12.05,
the Owners of all the Bonds at any time Outstanding shall
have the right, and the Pollution Control Corporation and
the Trustee by their execution and delivery of this
Indenture hereby expressly confer upon such Owners the
right to modify, alter, amend or supplement this Indenture
in any respect, including without limitation in respect of
the matters described in clauses (i), (ii), (iii) and (iv)
of the proviso contained in subsection (a) of this Section
12.03, by delivering to the Pollution Control Corporation,
the Trustee and the Company a written instrument or
instruments, executed by or on behalf of such Owners,
containing a form of Supplemental Indenture which sets
forth such modifications, alterations, amendments and
supplements, and, upon the expiration of a thirty (30) day
period commencing on the date of such delivery during
which no notice of objection shall have been delivered by
the Pollution Control Corporation, the Trustee or the
Company to such Owners at an address specified in such
written instrument, such Supplemental Indenture shall be
deemed to have been approved and confirmed by the
Pollution Control Corporation and the Trustee, to the same
extent as if actually executed and delivered by the
Pollution Control Corporation and the Trustee, and to have
been approved by the Company, and such Supplemental
Indenture shall thereupon become and be for all purposes
in full force and effect without further action by the
Pollution Control Corporation, the Trustee or the Company.
The foregoing provisions are, however, subject to the
following conditions:
(i) no such Supplemental Indenture shall in any way
affect the limited nature of the obligations of the
Pollution Control Corporation under this Indenture as set
forth in Sections 2.06 and 7.01 hereof or shall adversely
affect any of its rights hereunder;
(ii) no such Supplemental Indenture shall be to the
prejudice of the Paying Agent or any Co-Paying Agent, the
Registrar, the Tender Agent or the Remarketing Agent; and
(iii) there shall have been delivered to the
Pollution Control Corporation, the Trustee and the Company
an opinion of Bond Counsel stating that such Supplemental
Indenture is authorized or permitted by this Indenture and
the Act, complies with their respective terms, will, upon
the expiration of the aforesaid thirty (30) day period, be
valid and binding upon the Pollution Control Corporation
in accordance with its terms and will not adversely affect
the exclusion of the interest on the Bonds from gross
income for federal income tax purposes.
XII.14. Effect of Supplemental Indenture. Upon the
execution and delivery of any Supplemental Indenture
pursuant to the provisions of this Article XII (including
the becoming effective of a Supplemental Indenture as
provided in Section 12.03(e) hereof), this Indenture shall
be, and be deemed to be, modified, altered, amended or
supplemented in accordance therewith, and the respective
rights, duties and obligations under this Indenture of the
Pollution Control Corporation, the Trustee and Owners of
all Bonds then Outstanding shall thereafter be determined,
exercised and enforced under this Indenture subject in all
respects to such modifications, alterations, amendments
and supplements.
XII.15. Consent of the Company and Obligor under
Security Arrangement. Anything herein to the contrary
notwithstanding, any Supplemental Indenture under this
Article XII which affects any rights, powers, agreements
or obligations of the Company under the Loan Agreement or
of the obligor under any Security Arrangement, or requires
a revision of the Loan Agreement or any Security
Arrangement, shall not become effective unless and until
the Company or such obligor, as the case may be, shall
have consented to such Supplemental Indenture.
XII.16. Amendment of Loan Agreement without Consent
of Owners. Without the consent of or notice to the Owners
of the Bonds, the Pollution Control Corporation may enter
into any Supplemental Loan Agreement, and the Trustee may
consent thereto, as may be required (a) by the provisions
of the Loan Agreement and this Indenture, (b) for the
purpose of curing any formal defect, omission,
inconsistency or ambiguity therein, (c) to provide any
additional procedures, covenants or agreements necessary
or desirable to maintain the tax-exempt status of interest
on the Bonds, or (d) in connection with any other change
therein which is not materially adverse to the Owners of
the Bonds. A revision of Exhibit A to the Loan Agreement
pursuant to Section 3.03 thereof, shall not be deemed a
Supplemental Loan Agreement for purposes of this
Indenture.
In addition to the foregoing, without the consent of or
notice to the Owners of the Bonds, the Pollution Control
Corporation may modify, alter, amend or supplement the
Loan Agreement, and the Trustee shall consent thereto, in
any and all respects necessary, desirable or appropriate
in connection with the Termination, in accordance with
Section 6.07(c) of the Loan Agreement, or any provision of
any Security Arrangement, including, without limitation,
to provide that the obligation of the Company to make (a)
the Loan Payments, (b) that portion of the Loan Payments
equal to the principal amount of the Bonds, or (c) that
portion of the Loan Payments equal to the principal amount
of the Bonds plus all or any portion of the Loan Payments
equal to the premium, if any, and interest on the Bonds,
shall be either evidenced or secured by First Mortgage
Bonds issued and delivered to the Trustee. In connection
with any such modification, alteration, amendment or
supplement made in connection with the delivery to the
Trustee of First Mortgage Bonds, (a) the First Mortgage
Bonds to be delivered shall be equal in principal amount
to the Bonds then Outstanding, but may be delivered from
time to time in principal amounts determined by reference
to the amounts remaining on deposit in the Construction
Fund or the Capital Account maintained therein, (b) the
First Mortgage Bonds shall (i) bear no interest, (ii) bear
interest at a fixed rate or (iii) bear interest at a rate
equal to the rate of interest borne by the Bonds, as
determined by the Company, (c) the First Mortgage Bonds
shall be voted, and consents shall be given with respect
thereto, proportionately with what the Trustee reasonably
believes will be the vote or consent of the holders of all
other bonds outstanding under the Company Mortgage which
vote or consent, or otherwise as provided in such
modification, alteration, amendment or supplement, (d) the
First Mortgage Bonds shall be pledged and assigned by the
Pollution Control Corporation to the Trustee as part of
the Trust Estate and may be pledged and assigned by the
Pollution Control Corporation, secondarily and subject to
the rights of the Trustee therein, to the obligor on any
other Security Arrangement as collateral security for the
obligations of the Company to such obligor, and (e) to the
extent that the First Mortgage Bonds shall evidence the
obligation of the Company to make the Loan Payments, the
obligation of the Company contained in the Loan Agreement
to make the Loan Payments may be extinguished.
The right of the Pollution Control Corporation to make
any modification, alteration, amendment or supplement to
the Loan Agreement pursuant to the preceding paragraph
shall include the right to make any and all such
additional modifications, alterations, amendments or
supplements to the Loan Agreement as may be necessary,
desirable or appropriate to carry out the purposes set
forth in such paragraph.
Before the Pollution Control Corporation shall enter
into, and the Trustee shall consent to, any Supplemental
Loan Agreement pursuant to this Section 12.06, there shall
have been delivered to the Trustee an opinion of Bond
Counsel stating that such Supplemental Loan Agreement is
authorized or permitted by this Indenture and the Act,
complies with their respective terms, will, upon the
execution and delivery thereof, be valid and binding upon
the Pollution Control Corporation and the Company in
accordance with its terms and will not, in and of itself,
adversely affect the exclusion from gross income for
federal tax purposes of interest on the Bonds.
XII.17. Amendment of Loan Agreement with Consent of
Owners. Except in the case of Supplemental Loan
Agreements referred to in Section 12.06 hereof, the
Pollution Control Corporation shall not enter into, and
the Trustee shall not consent to, any Supplemental Loan
Agreement without the written approval or consent of the
Owners of not less than a majority in aggregate principal
amount of the Bonds then Outstanding which would be
adversely affected thereby, given and procured as provided
in Section 12.03 hereof; provided, however, that, unless
approved in writing by the Owners of all Bonds then
Outstanding which would be adversely affected thereby,
nothing herein contained shall permit, or be construed as
permitting, a change in the obligations of the Company
under Section 5.01 of the Loan Agreement or a change in
the obligations of the Company under Section 10.01(a) of
the Loan Agreement. If at any time the Pollution Control
Corporation or the Company shall request the consent of
the Trustee to any such proposed Supplemental Loan
Agreement, the Trustee shall cause notice of such proposed
Supplemental Loan Agreement to be given in the same manner
as provided by Section 12.03 hereof with respect to
Supplemental Indentures. Such notice shall briefly set
forth the nature of such proposed Supplemental Loan
Agreement and shall state that copies of the instrument
embodying the same are on file at the Principal Office of
the Trustee for inspection by all Owners of the Bonds and
by the Bank. The Pollution Control Corporation may enter
into, and the Trustee may consent to, any such proposed
Supplemental Loan Agreement subject to the same
conditions, and with the same effect, as provided by
Section 12.03 hereof with respect to Supplemental
Indentures.
XIII TENDER AGENT; REMARKETING AGENT; PURCHASE AND RE
MARKETING OF BONDS
XIII.11. Tender Agent. Subject to the conditions set
forth in Section 13.02 hereof, the Tender Agent shall be
appointed by the Company. The Tender Agent shall
designate its Principal Office and signify its acceptance
of the duties and obligations imposed upon it hereunder by
a written instrument of acceptance delivered to the
Pollution Control Corporation, the Trustee, the
Remarketing Agent, the Company and the Bank in which the
Tender Agent will agree, particularly:
(a) to hold all Bonds delivered to it for purchase
hereunder in trust for the benefit of the respective
Owners which shall have so delivered such Bonds until
moneys representing the purchase price of such Bonds shall
have been delivered to or for the account of or to the
order of such Owners;
(b) to hold all moneys delivered to it hereunder for the
purchase of Bonds, other than moneys delivered to it by
the Company during the term of a Security Arrangement on
which the Company shall not be the obligor, as agent and
bailee of, and in escrow for the benefit of, the person or
entity which shall have so delivered such moneys until the
Bonds to be purchased with such moneys shall have been
delivered to or for the account of such person or entity;
(c) to hold all moneys delivered to it by the Company
for the purchase of Bonds in trust for the benefit of the
Owners or former Owners who shall deliver Bonds to it for
purchase until the Bonds purchased with such moneys shall
have been delivered to or for the account of the Company;
provided, however, that if the Bonds shall at any time
become due and payable, the Tender Agent shall cause such
moneys (other than moneys held pursuant to Section
13.03(c) hereof) to be deposited into the Bond Fund;
(d) to hold Bonds for the account of the Company as and
to the extent directed by the Bank as contemplated by
Section 13.07(c) hereof, such Bonds to be released to or
upon the order of the Company upon receipt by the Tender
Agent from the Bank of a written notice to the effect that
such Bonds are released from any security interest in
favor of the Bank, the Letter of Credit is reinstated in
full and that the Trustee is entitled to draw under the
Security Arrangement, to pay (i) principal of the Bonds
and the portion of purchase price equal to principal and
(ii) interest on the Bonds and the portion of purchase
price equal to accrued interest, amounts equal to the
amounts that could be drawn under a Security Arrangement
if the drawing made to purchase such Bonds were
disregarded (it being understood that, if so requested by
the Bank, the Tender Agent shall hold such Bonds in its
capacity as custodian or collateral agent for the Bank,
subject to any security interest of the Bank therein);
and, in the event of a redemption of any of such Bonds or
the acceleration of all Outstanding Bonds, to hold in
trust moneys delivered to the Tender Agent in payment of
the Bonds so held by it and to turn such moneys over to
the Bank to the extent of the amount specified by the Bank
to the Tender Agent as the aggregate amount then owed by
the Company to the Bank under the Reimbursement Agreement
in respect of drawings under the Security Arrangement and
interest thereon, any balance to be turned over to the
Company;
(e) to give the notice specified in Section 2.10 hereof
to the Owners of the Bonds; and
(f) to keep such books and records as shall be
consistent with prudent industry practice and to make such
books and records available for inspection by the
Pollution Control Corporation, the Trustee, the Company
and the Remarketing Agent at all reasonable times.
The Pollution Control Corporation shall cooperate with
the Trustee, the Registrar, the Company, the Tender Agent,
the Remarketing Agent and the Bank to cause the necessary
arrangements to be made and to be thereafter continued
whereby funds from the sources specified herein and in the
Loan Agreement will be made available for the purchase of
Bonds delivered to the Principal Office of the Tender
Agent for purchase in accordance with Section 2.02 hereof,
and to otherwise enable the Tender Agent to carry out its
duties hereunder.
XIII.12. Qualifications of Tender Agent; Resignation;
Removal. The Tender Agent shall be a corporation duly
organized under the laws of the United States of America
or any state or territory thereof, having a combined
capital stock, surplus and undivided profits of at least
$100,000,000 and authorized by law to perform all the
duties imposed upon it by this Indenture; provided that,
if the Bonds shall be rated by Moody's and if such
corporation shall not be a bank or trust company, its
long-term debt or that of its parent shall have a Moody's
rating not lower than Baa3 or the equivalent thereof and
its short-term debt or that of its parent shall have a
Moody's rating not lower than P-3 or the equivalent
thereof unless, in either case, there shall have been
furnished to the Pollution Control Corporation, the
Trustee and the Company written evidence from Moody's to
the effect that the appointment of the proposed Tender
Agent will not, by itself, result in a reduction or
withdrawal of its ratings then in effect on the Bonds.
The Tender Agent may at any time resign and be discharged
of the duties and obligations created by this Indenture by
giving at least sixty (60) days' notice to the Pollution
Control Corporation, the Trustee, the Company, the
Remarketing Agent and the Bank. The Tender Agent may be
removed at any time by an instrument signed by the
Company, filed with the Tender Agent, and with the
Pollution Control Corporation, the Trustee, the
Remarketing Agent and the Bank.
In the event of the resignation or removal of the
Tender Agent, the Tender Agent shall deliver any Bonds and
moneys held by it in such capacity to its successor or, if
there be no successor, to the Trustee.
In the event that the Company shall fail to appoint a
Tender Agent, or in the event that the Tender Agent shall
resign or be removed, or be dissolved, or if the property
or affairs of the Tender Agent shall be taken under the
control of any state or federal court or administrative
body because of bankruptcy or insolvency, or for any other
reason, and the Company shall not have appointed its
successor as Tender Agent, the entity acting as Trustee
shall ipso facto be deemed to be the Tender Agent for all
purposes of this Indenture until the appointment by the
Company of the Tender Agent or successor Tender Agent, as
the case may be.
XIII.13. Purchase of Bonds; Notices. (a) On any date
Bonds are to be purchased pursuant to Section 2.02 hereof,
the Tender Agent shall purchase, as agent and not for its
own account, but only from the funds listed below, such
Bonds from the Owners thereof at the applicable purchase
price thereof specified in Section 2.02 hereof. Funds for
the payment of such purchase price shall be derived from
the following sources in the order of priority indicated:
(i) moneys furnished by the Trustee to the Tender Agent
pursuant to Section 8.01 hereof, such moneys to be applied
only to the purchase of Bonds which are deemed to be paid
in accordance with Article VIII hereof;
(ii) moneys furnished by the Company to the Tender Agent
pursuant to Section 10.02 of the Loan Agreement and
proceeds from the investment thereof, which constitute
Available Moneys;
(iii) proceeds of the sale of such Bonds pursuant to
Section 13.06 hereof, provided such proceeds are made
available or credited to the Tender Agent at or prior to
the last time the Trustee may demand payment of moneys
under any Security Arrangement;
(iv) moneys representing proceeds of a drawing on the
Letter of Credit or proceeds of any other Security
Arrangement; and
(v) moneys furnished by the Company to the Tender Agent
pursuant to Section 10.01 of the Loan Agreement.
(b) (i) If moneys sufficient to pay the purchase price
of Bonds tendered for purchase or required to be tendered
for purchase by their terms shall be held by the Tender
Agent on the date such Bonds are to be purchased, such
Bonds shall be deemed to have been purchased, for all
purposes of this Indenture, irrespective of whether or not
such Bonds shall have been delivered to the Tender Agent,
and the former Owner or Owners shall have no claim
thereon, under this Indenture or otherwise, for any amount
other than the purchase price thereof.
(ii) The Trustee shall authenticate and deliver to the
Tender Agent a new Bond or Bonds in an aggregate
principal amount equal to the principal amount of Bonds
deemed to have been purchased in accordance with this
subsection (b) of Section 13.03 and bearing a number or
numbers not contemporaneously outstanding. Every Bond
authenticated and delivered as provided in the
preceding sentence shall be entitled to all the
benefits of this Indenture equally and proportionately
with any and all other Bonds duly issued hereunder.
The Tender Agent shall maintain a record of the Bonds
deemed to have been purchased as provided in this
subsection (b) of Section 13.03, together with the
names and addresses of the former Owners thereof.
(c) In the event any Bonds shall not be presented for
purchase as provided in subsection (b) of this Section
13.03, if moneys sufficient to purchase such Bonds are
held by the Tender Agent for the benefit of the former
Owners thereof, the Tender Agent shall segregate and hold
such moneys in trust, without liability for interest
thereon, for the benefit of the former Owners of such
Bonds, who shall, except as provided in the following
sentence, thereafter be restricted exclusively to such
fund or funds for the satisfaction of any claim for the
purchase price of such Bonds. Any moneys which the Tender
Agent shall segregate and hold in trust for the payment of
the purchase price of any Bond and remaining unclaimed for
one year after the date of purchase shall, upon the
Company's written request to the Tender Agent, be paid to
the Company; provided, however, that before the Tender
Agent shall be required to make any such repayment, the
Tender Agent may, at the expense of the Company, cause
notice to be given once by Mail to the former Owner of
such Bond or once by Publication, or both, to the effect
that such money remains unclaimed and that, after a date
specified therein, which shall not be less than thirty
(30) days from the date of the latest such notice, any
unclaimed balance of such moneys then remaining will be
paid to the Company. After the payment of such unclaimed
moneys to the Company, the former Owner of such Bond shall
thereafter look only to the Company for the payment of the
purchase price therefor, and all liability of the Tender
Agent with respect to such moneys shall thereupon cease.
(d) (i) On any date Bonds are to be purchased pursuant
to Section 2.02 and subsection (a) of this Section 13.03,
the Tender Agent shall give immediate telephonic or
telegraphic notice, promptly confirmed by a written
notice, to the Remarketing Agent specifying the principal
amount of Bonds delivered to it for purchase.
(i) On any date Bonds are to be purchased pursuant to
Section 2.02 and subsection (a) of this Section 13.03,
unless the Tender Agent shall have received a notice given
by the Remarketing Agent pursuant to Section 13.06(b)
hereof indicating that all Bonds to be sold by the
Remarketing Agent pursuant to Section 13.06(a) on such
date have been remarketed and that all remarketing
proceeds have been received, the Tender Agent shall give
telephonic or telegraphic notice no later than 11:15 a.m.,
New York City time, promptly confirmed by a written
notice, to the Trustee and the Company which notice shall
specify (A) the principal amount of the Bonds, if any, so
sold by the Remarketing Agent and the remarketing proceeds
thereof in its possession and (B) the amount to be drawn
on the Letter of Credit or other Security Arrangement,
and, simultaneously therewith, the Tender Agent shall
direct the Trustee to make drawings on the Letter of
Credit or other Security Arrangement in such specified
amount in accordance with Section 13.08 hereof. In giving
the foregoing notice the Tender Agent shall utilize the
information provided to it by the Remarketing Agent in the
notice required pursuant to Section 13.06(b); provided,
however, that in the event that the Tender Agent shall not
have received such notice from the Remarketing Agent prior
to the Tender Agent being required to give notice
hereunder, the Tender Agent shall assume that such Bonds
have not been remarketed.
XIII.14. Remarketing Agent. Subject to the conditions
set forth in Section 13.05 hereof, the Remarketing Agent
shall be appointed by the Company. The Remarketing Agent
shall designate its Principal Office and signify its
acceptance of the duties and obligations imposed upon it
hereunder by a written instrument of acceptance delivered
to the Pollution Control Corporation, the Trustee, the
Company and the Tender Agent in which the Remarketing
Agent will agree, particularly:
(a) to hold all Bonds, if any, delivered to it hereunder
as agent and bailee of, and in escrow for the benefit of,
the person or entity which shall have so delivered such
Bonds until moneys representing the purchase price of such
Bonds shall have been delivered to or for the account of
or to the order of such person or entity;
(b) to hold all moneys, if any, delivered to it
hereunder for the purchase of Bonds as agent and bailee
of, and in escrow for the benefit of, the person or entity
which shall have so delivered such moneys until the Bonds
purchased with such moneys shall have been delivered to or
for the account of such person or entity; and
(c) to keep such books and records as shall be
consistent with prudent industry practice and to make such
books and records available for inspection by the
Pollution Control Corporation, the Trustee, the Tender
Agent and the Company at all reasonable times.
The Pollution Control Corporation shall cooperate with
the Trustee, the Registrar, the Company, the Tender Agent
and the Remarketing Agent to cause the necessary
arrangements to be made and to be thereafter continued
whereby Bonds, executed by the Pollution Control
Corporation and authenticated by the Trustee, shall be
delivered to the Remarketing Agent to the extent necessary
for delivery pursuant to Section 13.07 hereof, and to
otherwise enable the Remarketing Agent to carry out its
duties hereunder.
XIII.15. Qualifications of Remarketing Agent. The
Remarketing Agent shall be (a) a member of the National
Association of Securities Dealers, Inc., having a
capitalization of at least $15,000,000 or (b) a bank or
trust company organized under the laws of the United
States or any state or territory thereof having a combined
capital stock, surplus and undivided profits of at least
$15,000,000, and, in either case, authorized by law to
perform all the duties imposed upon it by this Indenture;
provided that, if the Bonds shall be rated by Moody's and
if the proposed Remarketing Agent shall not be a bank or
trust company, its long-term debt or that of its parent
shall have a Moody's rating not lower than Baa3 or the
equivalent thereof and its short-term debt or that of its
parent shall have a Moody's rating not lower than P-3 or
the equivalent thereof unless, in either case, there shall
have been furnished to the Pollution Control Corporation,
the Trustee and the Company written evidence from Moody's
to the effect that the engagement of the proposed
Remarketing Agent will not, by itself, result in a
reduction or withdrawal of its ratings then in effect on
the Bonds. The Remarketing Agent may at any time resign
and be discharged of the duties and obligations created by
this Indenture by giving at least thirty (30) days' notice
to the Pollution Control Corporation, the Trustee, the
Company, the Tender Agent and the Bank. The Remarketing
Agent may be removed at any time by an instrument, signed
by the Company, filed with the Remarketing Agent and with
the Trustee, the Tender Agent, the Pollution Control
Corporation and the Bank.
In the event of the resignation or removal of the
Remarketing Agent, the Remarketing Agent shall pay over,
assign and deliver any moneys and Bonds held by it in such
capacity to its successor or, if there be no successor, to
the Tender Agent.
In the event that the Company shall fail to engage a
Remarketing Agent hereunder, or in the event that the
Remarketing Agent shall resign or be removed, or be
dissolved, or if the property or affairs of the
Remarketing Agent shall be taken under the control of any
state or federal court or administrative body because of
bankruptcy or insolvency, or for any other reason, and the
Company shall not have appointed its successor as
Remarketing Agent, the Tender Agent, notwithstanding the
provisions of the first paragraph of this Section 13.05,
shall ipso facto be deemed to be the Remarketing Agent for
all purposes of this Indenture until the appointment by
the Company of the Remarketing Agent or successor
Remarketing Agent, as the case may be; provided, however,
that the Tender Agent, in its capacity as Remarketing
Agent, shall not be required to sell Bonds pursuant to
Section 13.06 hereof if the Tender Agent should be
prohibited by law from conducting such activities.
XIII.16. Remarketing of Bonds; Notice of Sales. (a)
On or after the date of the delivery of a notice of a
tender by any Owner of a Bond in accordance with Section
2.02(g) hereof and on the date on which Bonds shall be
required to be tendered pursuant to Section 2.02(h)
hereof, the Remarketing Agent shall offer for sale and use
its best efforts to sell such Bonds, any such sale to be
made on the date such Bonds are to be purchased pursuant
to such tender, at a price at least equal to the purchase
price thereof plus interest accrued thereon, if any, to
the date of sale; provided, however, that to the extent
that any moneys described in clause (i) or (ii) of Section
13.03(a) shall be on deposit with Tender Agent, any Bonds
delivered to the Tender Agent which may be purchased with
such moneys shall be so purchased and shall not be offered
for sale or sold by the Remarketing Agent; and provided,
further, that in no event shall Bonds be sold pursuant to
this Section 13.06 to the Company, any Affiliate of the
Company, the Pollution Control Corporation or any
"insider" of either thereof within the meaning of the
United States Bankruptcy Code, 11 U.S.C. Section 101 et
seq., if there shall be in effect a Security Arrangement
on which the Company shall not be the obligor.
(a) On the date on which any Bonds are to be sold by the
Remarketing Agent pursuant to subsection (a) of this
Section 13.06, the Remarketing Agent shall give immediate
telephonic or telegraphic notice no later than 11:00 a.m.
New York time, promptly confirmed by a written notice, to
the Tender Agent specifying the principal amounts of such
Bonds, if any, so sold and the amount of the remarketing
proceeds in its possession. Such remarketing proceeds
shall be delivered in accordance with Section
13.03(a)(iii).
XIII.17. Delivery of Bonds. (a) Bonds sold by the
Remarketing Agent pursuant to Section 13.06 hereof shall
be delivered to the purchasers thereof against payment
therefor.
(a) Bonds purchased with moneys described in clause (i)
or (ii) of Section 13.03(a) hereof shall be delivered to
the Trustee for cancellation and shall be canceled.
(b) Bonds purchased with moneys described in clause (iv)
of Section 13.03(a) hereof shall be:
(i) delivered to the Bank, if the Letter of Credit
provides for reinstatement in respect of drawings for the
purchase of Bonds delivered pursuant to Section 2.02
hereof and not remarketed by the delivery to the Bank of
such Bonds;
(ii) held by the Tender Agent for the account of the
Company subject to a security interest in favor of the
Bank, if the Letter of Credit provides for reinstatement
in respect of the drawings described in clause (i) of this
Section 13.07(c) by reimbursement to the Bank of the
amount of such drawings together with interest thereon; or
(iii) if a Security Arrangement other than a
Letter of Credit shall be in effect, delivered in
accordance with the directions of the obligor
thereon.
(c) Bonds purchased with moneys described in clause (v)
of Section 13.03(a) hereof shall, at the direction of the
Company, be (A) held by the Tender Agent for the account
of the Company, (B) delivered to the Trustee for
cancellation or (C) delivered to the Company; provided,
however, that any Bonds so purchased after the selection
thereof by the Trustee for redemption shall be delivered
to the Trustee for cancellation.
(d) Bonds delivered as provided in this Section 13.07
shall be registered in the manner directed by the
recipient thereof.
XIII.18. Security Arrangements. The Tender Agent
shall direct the Trustee to make drawings on the Letter of
Credit, or take action under any other Security
Arrangement, to the extent necessary to make timely
payments required to be made pursuant to, and in
accordance with Section 13.03(a) hereof, and, except as
provided in Section 13.10 hereof, the Trustee shall comply
with such directions and furnish such moneys to the Tender
Agent.
XIII.19. Delivery of Proceeds of Sale. The proceeds
of the sale by the Remarketing Agent of any Bonds
delivered to it by, or held by it for the account of, the
Tender Agent or the Company, or delivered to it by the
Bank or any other Owner of a Bond shall be turned over to
or upon the order of the Tender Agent, the Company, the
Bank or such other Owner, as the case may be. The excess,
if any, of the price at which a Bond shall be remarketed
over the purchase price thereof shall be turned over to
the Company.
XIII.2 0. No Purchases or Sales After Default.
Anything in this Indenture to the contrary
notwithstanding, if there shall have occurred and be
continuing an Event of Default described in clause (a),
(b) or (c) of the first paragraph of Section 9.01 hereof,
there shall be no purchases or sales of Bonds pursuant to
this Article XIII and the Trustee shall make no drawings
under the Letter of Credit, or take similar action under
any other Security Arrangement, for the purchase of Bonds
pursuant to Section 13.03(a) hereof.
XIV MISCELLANEOUS
XIV.11. Successors of the Pollution Control
Corporation. In the event of the dissolution of the
Pollution Control Corporation, all the covenants,
stipulations, promises and agreements in this Indenture
contained, by or on behalf of, or for the benefit of, the
Pollution Control Corporation, shall bind or inure to the
benefit of the successors of the Pollution Control
Corporation from time to time and any entity, officer,
board, commission, agency or instrumentality to whom or to
which any power or duty of the Pollution Control
Corporation shall be transferred.
XIV.12. Parties in Interest. Except as herein
otherwise specifically provided, nothing in this Indenture
expressed or implied is intended or shall be construed to
confer upon any person, firm or corporation other than the
Pollution Control Corporation, the Company, the Trustee
and the Bank and their successors and assigns and the
Owners of the Bonds any right, remedy or claim under or by
reason of this Indenture, this Indenture being intended to
be for the sole and exclusive benefit of the Pollution
Control Corporation, the Company, the Trustee and the Bank
and their successors and assigns and the Owners of the
Bonds.
XIV.13. Severability. In case any one or more of the
provisions of this Indenture or of the Loan Agreement or
of the Bonds shall, for any reason, be held to be illegal
or invalid, such illegality or invalidity shall not affect
any other provisions of this Indenture or of the Loan
Agreement or of such Bonds, and this Indenture and the
Loan Agreement and such Bonds shall be construed and
enforced as if such illegal or invalid provisions had not
been contained herein or therein.
XIV.14. No Personal Liability of Pollution Control
Corporation Officials. No covenant or agreement contained
in the Bonds or in this Indenture shall be deemed to be
the covenant or agreement of any director, official,
officer, agent, or employee of the Pollution Control
Corporation in his individual capacity, and neither the
members of the Board of Directors of the Pollution Control
Corporation nor any official executing the Bonds shall be
liable personally on the Bonds or be subject to any
personal liability or accountability by reason of the
issuance thereof.
XIV.15. Bonds Owned by the Pollution Control
Corporation or the Company. In determining whether Owners
of the requisite aggregate principal amount of the Bonds
have concurred in any direction, consent or waiver under
this Indenture, Bonds which are owned by the Pollution
Control Corporation or the Company or by any person
directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company
(unless the Pollution Control Corporation, the Company or
such person owns all Bonds which are then Outstanding,
determined without regard to this Section 14.05) shall be
disregarded and deemed not to be Outstanding for the
purpose of any such determination, except that, for the
purpose of determining whether the Trustee shall be
protected in relying on any such direction, consent or
waiver, only Bonds which the Trustee knows are so owned
shall be so disregarded. Upon the request of the Trustee,
the Company and the Pollution Control Corporation shall
furnish to the Trustee a certificate identifying all
Bonds, if any, actually known to either of them to be
owned or held by or for the account of any of the
above-described persons, and the Trustee shall be entitled
to rely on such certificate as conclusive evidence of the
facts set forth therein and that all other Bonds are
Outstanding for the purposes of such determination. Bonds
so owned which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act
with respect to such Bonds and that the pledgee is not the
Pollution Control Corporation or the Company or any person
directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company;
provided, however, that Bonds delivered to the Bank, or
held by the Tender Agent, pursuant to Section 14.07 hereof
shall be regarded as Outstanding for purposes of this
Section 14.05. In case of a dispute as to such right, any
decision by the Trustee taken upon the advice of counsel
shall be full protection to the Trustee.
XIV.16. Counterparts. This Indenture may be executed
in any number of counterparts, each of which, when so
executed and delivered, shall be an original; but such
counterparts shall together constitute but one and the
same Indenture.
XIV.17. Governing Law. The laws of the State of
Arizona shall govern the construction and enforcement of
this Indenture and of all Bonds, except that the laws of
the State of New York shall govern the construction and
enforcement of the rights and duties of the Trustee
hereunder and the construction of Section 14.09 hereof and
the computation of any period of grace provided herein.
XIV.18. Notices. Except as otherwise provided in
this Indenture, all notices, certificates, requests
requisitions or other communications by the Pollution
Control Corporation, the Company, the Trustee, the
Remarketing Agent, the Paying Agent, any Co-Paying Agent,
the Registrar, the Tender Agent or the Bank pursuant to
this Indenture shall be in writing and shall be
sufficiently given and shall be deemed given when mailed
by registered mail, postage prepaid, addressed as follows:
If to the Pollution Control Corporation, c/o Mangum, Wall,
Stoops & Warden, 222 East Birch Avenue, Flagstaff, Arizona
86001, Attention: President; if to the Company, at 220
West Sixth Street, Tucson, Arizona 85702, Attention:
Treasurer; if to the Trustee, at 100 Wall Street, Suite
1600, New York, New York 10005, Attention: Corporate Trust
Administration; if to the Paying Agent, any Co-Paying
Agent, the Registrar, the Tender Agent or the Remarketing
Agent, at the address designated in the acceptance of
appointment or engagement; and if to the obligor (other
than the Company) on any Security Arrangement, to the
address designated therein. Any of the foregoing may, by
notice given hereunder to each of the others, designate
any further or different addresses to which subsequent
notices, certificates, requests or other communications
shall be sent hereunder.
XIV.19. Holidays. If the date for making any payment
or the last date for performance of any act or the
exercising of any right, as provided in this Indenture,
shall be a Saturday, Sunday or a public holiday in the
city in which is located the Principal Office of the
Trustee, such payment may be made or act performed or
right exercised on the next succeeding Business Day, with
the same force and effect as if done on the nominal date
provided in this Indenture, and no interest shall accrue
for the period after such nominal date. If the last day
of any period of grace, as provided in this Indenture,
shall be a Saturday, Sunday or a public holiday in the
city in which is located the Principal Office of the
Trustee, the last day of such period of grace shall be
deemed to be the next succeeding Business Day.
XIV.2 0. Statutory Notice Regarding Cancellation of
Contracts. As required by the provisions of Section 38-
511, Arizona Revised Statutes, as amended, notice is
hereby given that political subdivisions of the State of
Arizona or any of their departments or agencies may,
within three (3) years of its execution, cancel any
contract, without penalty or further obligation, made by
the political subdivisions or any of their departments or
agencies on or after September 30, 1988, if any person
significantly involved in initiating, negotiating,
securing, drafting or creating the contract on behalf of
the political subdivisions or any of their departments or
agencies is, at any time while the contract or any
extension of the contact is in effect, an employee or
agent of any other party to the contract in any capacity
or a consultant to any other party of the contract with
respect to the subject matter of the contract.
The Trustee covenants and agrees not to employ as an
employee, agent or, with respect to the subject matter of
this Indenture, a consultant, any person actually known by
the Trustee to be significantly involved in initiating,
negotiating, securing, drafting or creating such Indenture
on behalf of the Pollution Control Corporation within
three (3) years from the execution hereof, unless a waiver
is provided by the Pollution Control Corporation.
XIV.21. Notice of Change. The Trustee shall give
notice to Moody's if the Bonds are then rated by Moody's,
at 99 Church Street, New York, New York 10007, Attention:
Structured Transaction Group, 4th Floor, and to S&P, if
the Bonds are then rated by S&P, at 25 Broadway, New York,
New York 10004, Attention: LOC Surveillance Group, of any
of the following events:
(a) a change in the Trustee;
(b) a change in the Remarketing Agent;
(c) a change in the Tender Agent;
(d) a change in the Paying Agent;
(e) the expiration, cancellation, renewal or
substitution of the Security Arrangement;
(f) any proposed amendment or any proposed supplement
to the Indenture, the Loan Agreement or the Security
Arrangement;
(g) payment or provision therefor of all the Bonds;
and
(h) any conversion of the Rate Period applicable to
the Bonds or any change in the length of the Term Rate
Period.
The Trustee shall have no liability or obligation to
Moody's or S&P or to any other person if it shall fail to
give such notice.
Notwithstanding the foregoing, it is expressly
understood and agreed that failure to provide any such
notice to either S&P or Moody's or to both such rating
agencies or any defect therein will not affect the
validity of any action with respect to which notice is to
be given or the effectiveness of any such action.
IN WITNESS WHEREOF, Coconino County, Arizona Pollution
Control Corporation has caused this Indenture to be
executed by its President and First Trust of New York,
National Association has caused this Indenture to be
executed in its behalf by one of its Trust Officers and
its corporate seal to be impressed hereon, all as of the
day and year first above written.
COCONINO COUNTY, ARIZONA
POLLUTION CONTROL CORPORATION
Attest:
By:
President
Secretary
FIRST TRUST OF NEW YORK, NATIONAL
ASSOCIATION
Attest:
By:
Trust Officer
Assistant Secretary
EXHIBIT A
(FORM OF BOND)
No.
Coconino County, Arizona
Pollution Control Corporation
Pollution Control Revenue Bond,
1996 Series A
(Tucson Electric Power Company Project)
Maturity Date: Dated:
Cusip:
Registered Owner:
Principal Amount:
Dollars
Coconino County, Arizona Pollution Control Corporation,
a political subdivision of the State of Arizona (the
"Pollution Control Corporation"), for value received,
hereby promises to pay (but only out of the Receipts and
Revenues of the Pollution Control Corporation from the
Loan Agreement, as hereinafter defined, and other moneys
pledged therefor) to the Registered Owner identified above
or registered assigns, on the Maturity Date set forth
above, upon the presentation and surrender hereof, the
Principal Amount set forth above and to pay (but only out
of the Receipts and Revenues of the Pollution Control
Corporation from the Loan Agreement and other moneys
pledged therefor), interest on said Principal Amount until
said Principal Amount has become due and payable, from the
Interest Payment Date (as hereinafter defined) to which
interest on this Bond shall have been paid in full which
is, or immediately precedes, the date of authentication of
this Bond or, if no interest shall have been paid on the
Bonds, from the date of original issuance thereof.
Interest shall be paid on each Interest Payment Date (as
hereinafter defined) at the rates determined as set forth
in the Indenture and described herein. Interest on this
Bond will be paid at the lesser of (a) a Daily Rate, a
Weekly Rate, a Monthly Rate, a Flexible Rate, a Term Rate
or the Fixed Rate (each as defined in the Indenture) as
selected in accordance with the Indenture and (b) 12% per
annum. Interest will be initially payable at a Weekly
Rate. While there exists an Event of Default under the
Indenture, the interest rate on the Bonds will be the rate
on the Bonds on the day before the Event of Default
occurred, except that if interest on the Bonds was then
payable at Flexible Rates, the default rate will be the
highest Flexible Rate then in effect for any Bond.
When interest is payable at a Variable Rate other than a
Term Rate or a Flexible Rate, interest will be computed on
the basis of the actual number of days elapsed over a year
of 365 days (366 in leap years). When payable at a Term
Rate or the Fixed Rate, interest will be computed on the
basis of a 360-day year of twelve 30-day months. For
purposes of any such calculation of interest payable with
respect to the final interest payment during a Term Rate
Period immediately followed by a Flexible, Daily, Weekly
or Monthly Rate Period, the amount of interest which shall
be payable with respect to such final interest period
shall be determined as if the Interest Payment Date for
such period were the first day of the sixth month
following the preceding Interest Payment Date,
notwithstanding any extension of such month to the first
Business Day (as hereinafter defined) of such month by
reason of the conversion to such Flexible, Daily, Weekly
or Monthly Rate Period.
As used in this Bond, "Interest Payment Date" means
(a) when this Bond bears interest at the Daily or Monthly
Rate, the first Business Day of each calendar month to
which interest at such rate has accrued, (b) when this
Bond bears interest at a Weekly Rate, the first Wednesday
of each calendar month to which interest at such rate has
accrued, (c) when this Bond bears interest at a Term Rate
or the Fixed Rate, the first day of the sixth calendar
month following the month in which the Term or Fixed Rate
Conversion Date (as defined in the Indenture) occurs and
the first day of each sixth calendar month thereafter to
which interest at such rate has accrued, except that the
last Interest Payment Date for any Term Rate Period which
is followed by a conversion to any type of Rate Period (as
defined below) (except a Term or Fixed Rate Period) shall
be the first Business Day of the sixth month following the
preceding Interest Payment Date, (d) when this Bond bears
interest at a Flexible Rate, the day after the last day of
each Flexible Rate Period applicable thereto, and (e) May
1, 2031.
The regular record date ("Record Date") for any Interest
Payment Date shall be the close of business on the
(a) Business Day immediately preceding an Interest Payment
Date, in the case of Bonds bearing interest at Flexible,
Daily, Weekly and Monthly Rates, and (b) fifteenth
(15th) day (whether or not a Business Day) of the calendar
month immediately preceding the Interest Payment Date, in
the case of Bonds bearing interest at a Term Rate or the
Fixed Rate.
As used in this bond, "Rate Period" means the period
during which a particular rate of interest determined for
the Bonds as hereinafter provided is to remain in effect
until a subsequently determined rate of interest pursuant
to Article II of the Indenture becomes effective.
Prior to any conversion of the interest rate on the
Bonds to the Fixed Rate, the Bonds may bear interest at
Flexible Rates or a Variable Rate effective for "Flexible
Rate Periods" in the case of Flexible Rates and "Variable
Rate Periods" in the case of Variable Rates selected by
the Company from time to time. The rate of interest to be
borne by the Bonds during any particular Rate Period will
be determined by the Remarketing Agent. The Bonds may
bear interest as follows:
Variable Rates
The Bonds may bear interest at a Variable Rate computed
on a Daily, Weekly, Monthly or Term basis in accordance
with the applicable provisions of the Indenture.
Daily Rate.
While the Bonds bear interest at a Daily Rate, the
interest rate established for the Bonds will be effective
from day to day until changed by the Remarketing Agent.
Weekly Rate.
While the Bonds bear interest at a Weekly Rate, the rate
of interest on the Bonds will be determined on the Tuesday
or next Business Day immediately preceding the Wednesday
which is the commencement date of the Weekly Rate Period
by the Remarketing Agent to be effective for a seven-day
period commencing on such Wednesday and ending on the
following Tuesday.
Monthly Rate.
While the Bonds bear interest at a Monthly Rate, the
rate of interest will be determined monthly by the
Remarketing Agent on the Business Day immediately
preceding the commencement date of the Monthly Rate Period
to which it relates to be in effect for the related
Monthly Rate Period.
Term Rate.
While the Bonds bear interest at a Term Rate, the
interest rate will be determined by the Remarketing Agent
on the Business Day immediately preceding the commencement
date of the Term Rate Period to which it relates, such
interest rate to remain in effect for the related Term
Rate Period.
Flexible Rates
While the Bonds bear interest at Flexible Rates, the
interest rate for each particular Bond will be determined
by the Remarketing Agent and will remain in effect for the
duration (not exceeding 270 days) of the Flexible Rate
Period selected for that Bond by the Remarketing Agent.
While the Bonds bear interest at Flexible Rates, Bonds may
have successive Flexible Rate Periods of any duration up
to 270 days each and any Bond may bear interest at a rate
and for a period different from any other Bond.
Fixed Rate
If the Bonds are to bear interest at the Fixed Rate, the
interest rate will be determined by the Remarketing Agent
and will remain in effect until the final maturity of the
Bonds.
The duration and beginning and ending dates of any Rate
Period may vary in the event of conversions between Rate
Periods. The type of Rate Period selected by the Company
will remain in effect until changed by the Company in
accordance with the Indenture.
Bonds which bear interest at Flexible Rates will be
issued in the determination of $100,000 and integral
multiples of $5,000 in excess thereof. Bonds which bear
interest at a Daily, Weekly or Monthly Rate will be issued
in denominations of $100,000 and integral multiples
thereof. Bonds which bear interest at a Term or Fixed
Rate will be issued in the denomination of $5,000 and
integral multiples thereof.
OPTIONAL TENDERS
While this Bond bears interest at a Variable Rate the
Registered Owner of this Bond has the right to tender this
Bond for purchase at the principal amount hereof plus
accrued and unpaid interest, if any, as follows: (i)
during a Daily Rate Period on any Business Day prior to a
conversion from a Daily Rate Period to a different Rate
Period upon telephone notice to the Tender Agent not later
than 10:45 am., New York City time, on the purchase date,
(ii) during a Weekly Rate Period on any Business Day prior
to the conversion from a Weekly Rate Period to a different
Rate Period upon written or telephonic notice (in the case
of telephonic notice promptly confirmed in writing by the
Registered Owner) to the Tender Agent not later than 5:00
p.m., New York City time, on a Business Day which is not
fewer than seven days prior to the purchase date, (iii)
during a Monthly Rate Period on any Interest Payment Date
upon written notice to the Tender Agent not later than
5:00 p.m., New York City time, on a Business Day which is
not fewer than seven days prior to the purchase date, (iv)
during a Term Rate Period on the commencement date of the
succeeding Rate Period upon written notice to the Tender
Agent not later than 5:00 p.m., New York City time, on a
Business Day which is not fewer than fifteen days prior to
the purchase date, all as more particularly provided in
the Indenture.
The Registered Owner of any Bond which such Registered
Owner has elected to tender (as described in the
Indenture) and which is not tendered on the tender date,
but for which there has been irrevocably deposited with
the Tender Agent an amount sufficient to pay the purchase
price thereof, shall not be entitled to any payment,
including the payment of interest on such Bond after the
tender date, other than the purchase price for such Bond,
and such Bond shall no longer be outstanding and entitled
to the benefits of the Indenture, except for the payment
of the purchase price of such Bond from moneys held by the
Tender Agent for such payment. On the tender date, the
Tender Agent shall authenticate and deliver substitute
Bonds in lieu of such untendered Bonds.
MANDATORY TENDERS
This Bond shall be subject to mandatory tender for
purchase (i) while this Bond bears interest at a Flexible
Rate, on the day following the last day of each Flexible
Rate Period applicable to this Bond at a purchase price
equal to 100% of the principal amount hereof, provided,
however, that this Bond shall not be subject to such
mandatory tender for purchase if, prior to 3:00 p.m. on
the Business Day next preceding the day such mandatory
tender would otherwise occur, the Owner of this Bond by
notice delivered in writing or by telephone (promptly
confirmed in writing) to the Remarketing Agent shall have
elected to retain this Bond for an additional Flexible
Rate Period and such Owner shall have agreed with the
Remarketing Agent as to the duration of the additional
Flexible Rate Period and the Flexible Rate to be effective
during such period, (ii) on the Conversion Date (as
defined in the Indenture) on which this Bond is converted
to the Fixed Rate or from one Rate Period to another type
of Rate Period (other than conversions between Daily and
Weekly Rate Periods) or from any Term Rate Period to a
Term Rate Period of a different duration, at a purchase
price equal to 100% of the principal amount thereof,
(iii) at the price that would be the then applicable
redemption price set forth in the redemption provisions
lettered (a) or (c) below if such Bond were redeemed on
the date of the tender, on the first day of the month in
which the expiration or termination of the term of any
Security Arrangement (as hereinafter defined) shall occur;
provided, however, that there shall be no such mandatory
tender if the Company shall have delivered to the Tender
Agent letters or certificates to the effect specified in
Section 6.07(c) of the Loan Agreement, and (iv) on the
first Business Day on which the Trustee may make a drawing
or drawings on a Security Arrangement on which the Company
shall not be the obligor and on which the proceeds of such
drawing or drawings shall be immediately available, but
not prior to such date, on or after the receipt by the
Trustee of notice that either (a) following a drawing on a
Security Arrangement on which the Company shall not be the
obligor to pay accrued interest, or the portion of
purchase price equal to accrued interest, on the Bonds,
that the amount available to be drawn on such Security
Arrangement will not be reinstated to the amount specified
in the Indenture, or (b) an "Event of Default" under the
Reimbursement Agreement has occurred and is continuing,
unless in either such case, the notice received by the
Trustee also directs it to provide notice to the Pollution
Control Corporation of its obligation to redeem the Bonds
pursuant to the Indenture.
If an Owner of a Bond is required to tender its Bond as
set forth in the preceding paragraph such Bond will be
deemed to be purchased at the price set forth above on the
date that the Bond is required to be tendered,
notwithstanding the failure of the Owner thereof to
deliver the Bond to the Tender Agent. If a Bond is so
deemed to be purchased, the Owner thereof at the time of
such purchase shall not be entitled to receive any
interest accruing on such Bond on and after the date it is
deemed to be purchased, and shall not be entitled to any
benefits under the Indenture except for the right to
receive the purchase price for such Bond.
WRITTEN NOTICE OF CHANGE IN TYPE OF RATE PERIOD
While this Bond bears interest at a Flexible Rate or at
a Variable Rate, the Tender Agent shall give notice to the
Owners of all Bonds of the conversion from one type of
Rate Period to another type of Rate Period (or to a Term
Rate Period from a Term Rate Period of a different
duration) at the times described in the Indenture. If the
Company does not elect in a timely fashion to convert to a
new type of Rate Period for the Bonds (or to a different
Term Rate Period for the Bonds) or any condition to such
conversion under the Indenture is not satisfied, the type
of Rate Period then in effect will continue until changed
by timely notice and, in the case of a Term Rate Period,
the duration of the Term Rate Period shall be one year.
CONVERSION TO THE FIXED RATE
The Indenture provides that, subject to certain
conditions, the Company has the right to convert the
interest rate on this Bond to the Fixed Rate to maturity.
This Bond shall be subject to mandatory tender for
purchase on the Fixed Rate Conversion Date. After the
Fixed Rate Conversion Date, the Owner of this Bond shall
have no right to tender this Bond for purchase.
The principle of and premium, if any, on this Bond are
payable at the principal office of First Trust of New
York, National Association, as Paying Agent, or at the
principal office of any co-paying agent appointed in
accordance with the Indenture, at the option of the
registered Owner hereof. Interest on this Bond is payable
by check drawn upon the Paying Agent and mailed to the
registered address of the registered owner of this bond as
of the close of business on the Record Date. Except in
respect of a Term Rate Period and the Fixed Rate Period,
owners of not less than $1,000,000 aggregate principal
amount of Bonds may request that interest on the Bonds
and, after presentation and surrender of such Bonds, the
principal thereof be paid by wire transfer to an account
maintained within the continental United States specified
by the owner thereof. Payment of the principal of and
premium, if any, and interest on, and purchase price of,
this Bond shall be in any coin or currency of the United
States of America as, at the respective times of payment,
shall be legal tender for the payment of public and
private debts.
This Bond is one of the duly authorized Pollution
Control Revenue Bonds, 1996 Series A (Tucson Electric
Power Company Project) of the Pollution Control
Corporation, aggregating Sixteen Million Seven Hundred
Thousand Dollars ($16,700,000) in principal amount (the
"Bonds"), issued under and pursuant to the Constitution
and laws of the State of Arizona, particularly Title 35,
Chapter 6, Arizona Revised Statutes, as amended (the
"Act"), and the Indenture of Trust, dated as of May 1,
1996 (the "Indenture"), between the Pollution Control
Corporation and First Trust of New York, National
Association, as trustee (the "Trustee"), for the purpose
of financing the costs of the acquisition, construction,
improvement and equipping of certain pollution control
facilities (the "Facilities") at the Navajo Generating
Station (the "Plant"). Pursuant to the Loan Agreement,
dated as of May 1, 1996 (the "Loan Agreement"), between
the Pollution Control Corporation and Tucson Electric
Power Company, a corporation organized and existing under
the laws of the State of Arizona (the "Company"), the
proceeds of the Bonds, other than accrued interest, if
any, paid by the initial purchasers thereof, will be
loaned from time to time to the Company.
Neither the County of Coconino, Arizona nor the Statute
of Arizona shall in any event be liable for the payment of
the principal of or premium, if any, or interest on the
Bonds, and neither the Bonds, nor the premium, if any, or
the interest thereon, shall be construed to constitute an
indebtedness of the County of Coconino, Arizona or the
State of Arizona within the meaning of any constitutional
or statutory provisions whatsoever. The Bonds and the
premium, if any, and the interest thereon are limited
obligations of the Pollution Control Corporation payable
solely from the Receipts and Revenues of the Pollution
Control Corporation from the Loan Agreement and other
moneys pledged therefor under the Indenture. The
Pollution Control Corporation shall not be obligated to
pay the purchase price of Bonds from any source.
As used herein:
(a) the term "Business Day" means a day of the year
on which banks located in The City of New York, New
York, and in the city in which the principal office of
the Trustee is located, and in the city in which the
office of the Bank (as hereinafter defined) at which
drawings or other demands for payment on a Security
Arrangement (as hereinafter defined) on which the
Company shall not be the obligor, if any, are made, are
not required or authorized to remain closed and on
which The New York Stock Exchange is not closed; and
(b) the term "Security Arrangement" means any letter
of credit, first mortgage bonds of the Company, credit
facility, insurance policy or other credit support
agreement or mechanism arranged by the Company to
evidence its obligations under the Loan Agreement or
for the purpose of securing the Bonds, but shall not
include any facility, agreement or mechanism, such as a
liquidity facility or line of credit, that is not an
irrevocable obligation to pay amounts in respect of the
obligations of the Company under the Loan Agreement.
The Bonds are equally and ratably secured, to the extent
provided in the Indenture, by the pledge thereunder of the
"Receipts and Revenues of the Pollution Control
Corporation from the Loan Agreement", which term is used
herein as defined in the Indenture and which as therein
defined means all moneys paid or payable to the Trustee
for the account of the Pollution Control Corporation by
the Company in respect of the loan payments, including all
moneys drawn by the Trustee under any Security Arrangement
in satisfaction of the Company's obligation to make the
loan payments, and all receipts of the Trustee which,
under the provisions of the Indenture, reduce the amounts
of such payments. The Pollution Control Corporation has
also pledged and assigned to the Trustee as security for
the Bonds all other rights and interests of the Pollution
Control Corporation under the Loan Agreement (other than
its rights to indemnification and his administrative
expenses and certain other rights).
The transfer of this Bond shall be registered upon the
registration books kept at the principal office of
_________________________________, as Registrar, at the
written request of the registered owner hereof or his
attorney duly authorized in writing, upon surrender of
this Bond at said office, together with a written
instrument of transfer satisfactory to the Registrar duly
executed by the registered owner or his duly authorized
attorney.
The Company may, but is not obligated to, provide one or
more Security Arrangements in order to secure, evidence or
otherwise further its obligations under the Loan
Agreement. The Company has authorized and directed the
Trustee to take action under any Security Arrangement in
accordance with the terms thereof and of the Indenture.
In the manner and with the effect provided in the
Indenture, each of the Bonds may be redeemed prior to
maturity, as follows:
(a) When interest on the Bonds is payable at
Flexible Rates or a Variable Rate other than a Term
Rate, the Bonds shall be subject to redemption by the
Pollution Control Corporation, at the direction of the
Company, in whole at any time or in part from time to
time, at the principal amount thereof plus accrued
interest to the redemption date.
(b) When interest is payable on the Bonds at a Term
Rate or the Fixed Rate, the Bonds shall be subject to
redemption by the Pollution Control Corporation, at the
direction of the Company, in whole at any time at the
principal amount thereof plus accrued interest to the
redemption date, if:
(i) the Company shall have determined that the
continued operation of the Plant is impracticable,
uneconomical or undesirable for any reason;
(ii) the Company shall have determined that the
continued operation of the Facilities is
impracticable, uneconomical or undesirable due to (A)
the imposition of taxes, other than ad valorem taxes
currently levied upon privately owned property used
for the same general purpose as the Facilities, or
other liabilities or burdens with respect to the
Facilities or operation thereof: (B) changes in
technology, in environmental standards or legal
requirements or in the economic availability of
materials, supplies, equipment or labor or (C)
destruction of or damage to all or part of the
Facilities;
(iii) all or substantially all of the Facilities
or the Plant shall have been condemned or taken by
eminent domain; or
(iv) the operation of the facilities or the
Plant shall have been enjoined or shall have
otherwise been prohibited by, or shall conflict with,
any order, decree, rule or regulation of any court or
of any federal, state or local regulatory body,
administrative agency or other governmental body.
(c) When interest on the Bonds is payable at a Term
Rate for a Term Rate Period of five years or more or the
Fixed Rate, the Bonds shall be subject to redemption by
the Pollution Control Corporation, at the direction of the
Company, on any day in whole at any time or in part from
time to time, at the applicable redemption price shown
below, in each case plus accrued interest to the
redemption date, as follows:
Length of Term
Rate Period; Years
Remaining Commencement of
Until Final Redemption Period Redemption Price
Maturity
During Fixed Rate
Period
More than 12 years Tenth anniversary 102%, declining by
of commencement 1% on each
of Term Rate succeeding
Period or Fixed anniversary of the
Rate Period first day of the
redemption period
until reaching
100% and
thereafter at 100%
More than 8, but Seventh 101 1/2%,
not more than 12 anniversary of declining by 3/4%
years commencement of on each succeeding
Term Rate Period anniversary of the
or Fixed Rate first day of the
Period redemption period
until reaching
100% and
thereafter at 100%
More than 5, but Fifth anniversary 101%, declining by
not more than 8 of commencement 1/2% on each
years of Term Rate succeeding
Period or Fixed anniversary of the
Rate Period first day of the
first day of the
redemption period
until reaching
100% and
thereafter at 100%
Five years or less Bonds not 100%
callable until
commencement of
next Rate Period,
if any
Anything herein or in the Indenture to the contrary
notwithstanding, in the event that the Company shall
consolidate with, merge with or into, or sell or otherwise
transfer all or substantially all of its assets to,
another corporation in accordance with Section 6.01 of the
Loan Agreement, the Bonds shall be subject to redemption
by the Pollution Control Corporation, at the direction of
the Company, in whole, at any time prior to the first date
on which the Bonds are redeemable as herein before
provided, at the redemption price which would be
applicable on such date plus accrued interest to the
redemption date.
(d) The Bonds shall be subject to mandatory redemption
by the Pollution Control Corporation, at the principal
amount thereof plus accrued interest to the redemption
date, on the 180th day (or such earlier date as may be
designated by the Company) after a final determination by
a court of competent jurisdiction or an administrative
agency, to the effect that, as a result of a failure by
the Company to perform or observe any covenant, agreement
or representation contained in the Loan Agreement, the
interest payable on the Bonds is included for Federal
income tax purposes in the gross income of the owners
thereof, other than any owner of a Bond who is a
"substantial user" of the Facilities or a "related person"
within the meaning of Section 103(b)(13) of the Internal
Revenue Code of 1954, as amended, as applicable. No
determination by any court or administrative agency shall
be considered final for the purposes of this paragraph (d)
unless the Company shall have been given timely notice of
the proceeding which resulted in such determination and an
opportunity to participate in such proceeding, either
directly or through an owner of a Bond, and until the
conclusion of any appellate review sought by any party to
such proceeding or the expiration of the time for seeking
such review. The Bonds shall be redeemed either in whole
or in part in such principal amount that the interest
payable on the Bonds remaining outstanding after such
redemption would not be included in the gross income of
any owner thereof, other than an owner of a Bond who is a
"substantial user" of the Facilities or a "related person"
within the meaning of Section 103(b)(13) of the 1954 Code.
(e) In the event that the aggregate of the amounts, if
any, of the proceeds of the Bonds remaining unexpended
upon the completion of the Facilities or upon the
termination of the acquisition and construction thereof,
together with any income or other gain from the investment
thereof, shall at any time, or from time to time, be equal
to or greater than $100,000, the Pollution Control
Corporation shall redeem the Bonds, at the principal
amount thereof plus accrued interest to the redemption
date, in the largest aggregate principal amount which does
not exceed the amount of such proceeds together with
income or other gain on an Interest Payment Date
determined as set forth in, and otherwise in accordance
with the provisions of, the Indenture; provided, however,
that the Company may direct that such proceeds and income
be applied to the purchase of the Bonds or in any other
manner which will not impair the validity of the Bonds or
the exemption from Federal income taxes of the interest
thereon.
(f) The Bonds shall be subject to mandatory redemption
by the Pollution Control Corporation, at the principal
amount thereof plus accrued interest to the redemption
date, upon the occurrence of either of the following
events:
(i) receipt by the Trustee, following a drawing on a
Security Arrangement on which the Company shall not be
the obligor to pay accrued interest, or the portion of
purchase price equal to accrued interest, on the Bonds,
of notice from the Bank that the amount available to be
drawn on such Security Arrangement will not be
reinstated (in respect of interest or portion of
purchase price equal to accrued interest) in the amount
of such drawing and directing the Trustee to provide
notice to the Pollution Control Corporation of its
resulting obligation to redeem the Bonds; or
(ii) receipt by the Trustee of notice from the Bank
stating that an Event of Default under the
Reimbursement Agreement (or other agreement between the
Company and the Bank pursuant to which the Bank issued
and delivered to the Trustee a Security Arrangement)
has occurred and is continuing and directing the
Trustee to provide notice to the Pollution Control
Corporation of its resulting obligation to redeem the
Bonds.
Upon the occurrence of either of the events described in
the immediately preceding paragraph, the Pollution Control
Corporation shall be obligated to redeem the Bonds on the
first Business Day after the occurrence of such event on
which the Trustee may make a drawing or drawings on a
Security Arrangement on which the Company shall not be the
obligor and on which the proceeds of such drawing or
drawings shall be available, but shall not redeem the
Bonds prior to such date.
The provisions of clause (f) of the second preceding
paragraph are subject to the condition that if either of
the events described in clause (i) or (ii) of the second
preceding paragraph shall have occurred and if the Trustee
shall thereafter have received notice from the Bank (a)
that the notice which requires a mandatory redemption
pursuant to the second preceding paragraph has been
withdrawn and (b) that the amounts available to be drawn
on the Security Arrangement to pay (i) the principal of
the Bonds or the portion of purchase price equal to
principal and (ii) interest on the Bonds and the portion
of purchase price equal to accrued interest have been
reinstated then, in every such case, the event giving rise
to such mandatory redemption shall be deemed to be waived
and all proceedings for such redemption shall be rescinded
and annulled.
If less than all of the Bonds at the time outstanding
are to be called for redemption, the particular Bonds or
portions of Bonds to be redeemed shall be selected by the
Trustee, in such manner as the Trustee in its discretion
may deem proper, in the principal amounts designated to
the Trustee by the Company or otherwise as required by the
Indenture; provided, however, that, if the Company shall
have offered to purchase all Bonds then outstanding and
less than all such Bonds have been tendered to the Company
for such purchase, the Trustee, at the direction of the
Company, shall select for redemption all such Bonds which
shall not have been so tendered.
In the event any of the Bonds are called for redemption,
the Trustee shall give notice, in the name of the
Pollution Control Corporation, of the redemption of such
Bonds. Such notice shall be given by mailing a copy of
the redemption notice by first-class mail at least thirty
(30) days prior (except in the case of a redemption
pursuant to clause (f) of the fourth preceding paragraph)
to the date fixed for redemption to the owners of the
Bonds to be redeemed at the addresses shown on the
registration books; provided, however, that failure duly
to give such notice by mailing, or any defect therein,
shall not affect the validity of any proceedings for the
redemption of the Bonds as to which there shall be no such
failure or defect.
With respect to any notice of redemption of Bonds in
accordance with the redemption provisions lettered (a),
(b) or (c) above, unless, upon the giving of such notice,
such Bonds shall be deemed to have been paid within the
meaning of the Indenture, such notice shall state that
such redemption, shall be conditional upon the receipt, by
the Trustee on or prior to the opening of business on the
date fixed for such redemption of moneys sufficient to pay
the principal of and premium, if any, and interest on such
Bonds to be redeemed, and that if such moneys shall not
have been so received said notice shall be of no force and
effect and the Pollution Control Corporation shall not be
required to redeem such Bonds. In the event that such
notice of redemption contains such a condition and such
moneys are not so received, the redemption shall not be
made and the Trustee shall within a reasonable time
thereafter give notice, in the manner in which the notice
of redemption was given, that such moneys were not so
received.
If a notice of redemption shall be unconditional, or if
the conditions of a conditional notice of redemption shall
have been satisfied, then upon presentation and surrender
of Bonds so called for redemption at the place or places
of payment, such Bonds shall be redeemed.
Any Bonds and portions of Bonds which have been duly
selected for redemption or deemed selected for redemption
and which are deemed to be paid in accordance with the
Indenture shall cease to bear interest on the specified
redemption date and shall thereafter cease to be entitled
to any lien, benefit or security under the Indenture.
The owner of this Bond shall have no right to enforce
the provisions of the Indenture, or to institute action to
enforce the covenants therein, or to take any action with
respect to any default under the Indenture, or to
institute, appear in or defend any suit or other
proceeding with respect thereto, except as provided in the
Indenture.
With certain exceptions as provided therein, the
Indenture and the Loan Agreement may be modified or
amended only with the consent of the owners of a majority
in aggregate principal amount of all Bonds outstanding
under the Indenture which would be adversely affected
thereby.
Reference is hereby made to the Indenture and the Loan
Agreement, copies of which are on file with the Trustee,
for the provisions, among others, with respect to the
nature and extent of the rights, duties and obligations of
the Pollution Control Corporation, the Company, the
Trustee, the Remarketing Agent, the Tender Agent, the Bank
and the owners of the Bonds. The owner of this Bond, by
the acceptance hereof, is deemed to have agreed and
consented to the terms and provisions of the Indenture and
the Loan Agreement.
As provided in the Indenture and subject to certain
limitations therein set forth, this Bond or any portion of
the principal amount hereof will be deemed to have been
paid within the meaning and with the effect expressed in
the Indenture, and the entire indebtedness of the
Pollution Control Corporation in respect thereof shall be
satisfied and discharged, if there has been irrevocably
deposited with the Trustee, in trust, money in an amount
which will be sufficient and/or Government Obligations (as
defined in the Indenture), the principal of and interest
on which, when due, without regard to any reinvestment
thereof, will provide moneys which, together with moneys
deposited with or held by the Trustee, will be sufficient,
to pay when due the principal of and premium, if any, and
interest on this Bond or such portion of the principal
amount hereof when due.
The Pollution Control Corporation, the Trustee, the
Registrar, the Tender Agent, the Remarketing Agent, the
Paying Agent, any authenticating agent and any co-paying
agent may deem and treat the person in whose name this
Bond is registered as the absolute owner hereof for all
purposes, whether or not this Bond is overdue, and neither
the Pollution Control Corporation, the Trustee, the Tender
Agent, the Remarketing Agent, the Paying Agent nor any
co-paying agent shall be affected by any notice to the
contrary.
It is hereby certified, recited and declared that all
acts, conditions and things required by the Constitution
and laws of the State of Arizona to exist, to have
happened and to have been performed, precedent to and in
the execution and delivery of the Indenture and the
issuance of this Bond, do exist, have happened and have
been performed in regular and due form as required by law.
No covenant or agreement contained in this Bond or the
Indenture shall be deemed to be a covenant or agreement of
any official, officer, agent or employee of the Pollution
Control Corporation in his individual capacity, and
neither the members of the Board of Directors of the
Pollution Control Corporation, nor any official executing
this Bond, shall be liable personally on this Bond or be
subject to any personal liability or accountability by
reason of the issuance or sale of this Bond.
This Bond shall not be entitled to any right or benefit
under the Indenture, or be valid or become obligatory for
any purpose, until this Bond shall have been authenticated
by the execution by the Trustee, or its successor as
Trustee, or an authenticating agent thereof, of the
certificate of authentication inscribed hereon.
IN WITNESS WHEREOF, Coconino County, Arizona Pollution
Control Corporation has caused this Bond to be executed
with the manual or facsimile signature of its President or
Vice President and its official seal or a facsimile
thereof to be impressed or imprinted hereon and attested
with the manual or facsimile signature of its Secretary or
Assistant Secretary.
COCONINO COUNTY, ARIZONA
POLLUTION CONTROL
CORPORATION
By.......................................................
President
ATTEST:
...........................................
Assistant Secretary
EXHIBIT B
(FORM FOR ORDINARY REGISTRATION OF TRANSFER)
COMPLETE AND SIGN THIS FORM FOR ORDINARY
REGISTRATION OF TRANSFER
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
Please Insert Social Security Or Other Identifying Number of
Assignee
Please print or typewrite name and address including postal zip
code of assignee
this bond and all rights thereunder, hereby irrevocably
constituting and appointing
attorney to register such
transfer on the registration books in the principal office of the
Registrar, with full power of substitution in the premises.
Dated:.........................
.................................................................
..........
NOTE: The
signature on this assignment must
correspond with the name as written
on the face of this Bond in every
particular, without alteration,
enlargement or any change
whatsoever.
EXHIBIT C
(FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This is to certify that this Bond is one of the Bonds
described in the within-mentioned Indenture.
FIRST TRUST OF NEW YORK, NATIONAL
ASSOCIATION
as Trustee
By............................................................
Authorized Officer
Date of Authentication:......................
EXHIBIT D
NOTICE OF TENDER OF BOOK-ENTRY BONDS
Coconino County, Arizona
Pollution Control Corporation
Pollution Control Revenue Bonds
1996 Series A
(Tucson Electric Power Company Project)
The Undersigned DTC Participant representing the beneficial
owner of the book-entry bonds described below (the "Tendered
Book-Entry Bonds") does hereby irrevocably tender the Tendered
Book-Entry Bonds to [ ] or its successor as Tender Agent
(the "Tender Agent", for purchase by the Tender Agent seven days
from the date of the Tender Agent's receipt, by telecopy or
otherwise, of this notice, or the next Business Day if such day
is not a Business Day* (the "Tender Date"); provided, however,
that if this notice is received by the Tender Agent by telecopy,
this notice shall be of no force or effect, and the Tendered
Book-Entry Bonds shall not be accepted or purchased by the Tender
Agent, unless the Tender Agent receives this notice in original
executed form by hand delivery prior to 2:00 p.m. New York time
on the Business Day next succeeding its receipt of such notice by
telecopy. The Purchase Price of Tendered Book-Entry Bonds shall
be the unpaid principal amount of the Tendered Book-Entry Bonds
plus accrued and unpaid interest, if any, thereon to, but not
including, the Tender Date, and without premium (the "Purchase
Price"). In the event that the Tender Date is also an interest
payment date for the Tendered Book-Entry Bonds, interest on the
Tendered Book-Entry Bonds to, but not including, the Tender Date
shall be paid in the ordinary fashion and shall not constitute
part of the Purchase Price.
Tendered Book-Entry Bonds
Tendered
Principal Amount
(in multiples of $100,000) DTC Participant Number
CUSIP Numbers(s)
$
_________
* "Business Day" shall have the meaning ascribed thereto by the
Indenture of Trust under which the Bonds are issued.
THE UNDERSIGNED ACKNOWLEDGES AND AGREES BY THE EXECUTION AND
DELIVERY OF THIS NOTICE (1) THAT THE TENDER OF THE TENDERED
BOOK-ENTRY BONDS IS IRREVOCABLE; (2) THAT THE UNDERSIGNED IS
CONTRACTUALLY BOUND TO TENDER SUCH TENDERED BOOK-ENTRY BONDS TO
THE TENDER AGENT ON THE TENDER DATE; AND (3) THAT IN THE EVENT OF
A FAILURE TO TENDER THE TENDERED BOOK-ENTRY BONDS TO THE TENDER
AGENT ON OR BEFORE 10:30 A.M. NEW YORK TIME ON THE TENDER DATE
THE UNDERSIGNED SHALL PAY TO THE TENDER AGENT AN AMOUNT (THE
"DEFAULT AMOUNT") EQUAL TO THE DIFFERENCE BETWEEN (A) THE COSTS
ARISING OUT OF THE FAILURE TO TENDER AND (B) THE PURCHASE PRICE,
AS DEFINED ABOVE, WHICH WOULD HAVE BEEN PAID TO THE UNDERSIGNED
UPON A TENDER. AS USED HEREIN THE "COSTS ARISING OUT OF THE
FAILURE TO TENDER" SHALL MEAN THE SUM OF (X) THE AMOUNT EXPENDED
BY THE TENDER AGENT, EITHER DIRECTLY OR THROUGH AN AGENT, IN
ACQUIRING BOOK-ENTRY BONDS IN SUBSTITUTION OF THE TENDERED
BOOK-ENTRY BONDS (INCLUDING INTEREST THEREON) AND (Y) THE
ADMINISTRATIVE AND OTHER CHARGES, EXPENSES OR COMMISSIONS
INCURRED IN CONNECTION WITH THE ACQUISITION OF SUCH SUBSTITUTE
BOOK-ENTRY BONDS.
THE UNDERSIGNED AGREES THAT THE TENDER AGENT, EITHER
DIRECTLY OR THROUGH AN AGENT, MAY ACQUIRE SUCH SUBSTITUTE BONDS
IN SUCH MANNER AND MARKET AS IT DEEMS COMMERCIALLY REASONABLE,
AND FURTHER AGREES THAT THE DEFAULT AMOUNT IS REASONABLE IN LIGHT
OF THE ANTICIPATED HARM CAUSED BY THE FAILURE TO TENDER AND THE
INCONVENIENCE OF OBTAINING ANY OTHER REMEDY.
THE UNDERSIGNED HEREBY IRREVOCABLY APPOINTS THE TENDER AGENT
AS HIS DULY AUTHORIZED ATTORNEY AND DIRECTS THE TENDER AGENT TO
EFFECT THE TRANSFER OF THE TENDERED BOOK-ENTRY BONDS.
Date of Notice:
Signature of DTC Participant Representing
the Beneficial Owner of the Tendered
Book-Entry Bonds
Street City
State Zip
Area Code Telephone Number
Federal Taxpayer Identification Number
_______________________________
* This table of contents is not a part of the Indenture, and is
for convenience only. The captions herein are of no legal
effect and do not vary the meaning or legal effect of any part
of the Indenture.
3206076.7 051096 932C 96256581
_________________________________________________________________
LETTER OF CREDIT AND
REIMBURSEMENT AGREEMENT
dated as of May 1, 1996
among
TUCSON ELECTRIC POWER COMPANY,
VARIOUS BANKS
and
CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK AGENCY
individually and as Agent
Relating to $16,700,000
Coconino County, Arizona Pollution Control Corporation
Pollution Control Revenue Bonds, 1996 Series A
(Tucson Electric Power Company Project)
_________________________________________________________________
THIS LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT, dated as
of May 1, 1996, among TUCSON ELECTRIC POWER COMPANY, an Arizona
corporation (the "Company"), the undersigned banks and CANADIAN
IMPERIAL BANK OF COMMERCE, NEW YORK AGENCY, as Agent for the
Banks (in such capacity, the "Agent").
PRELIMINARY STATEMENTS. (1) At the Company's request,
the Coconino County, Arizona Pollution Control Corporation (the
"Issuer") is issuing, pursuant to an Indenture of Trust, dated as
of May 1, 1996 (the "Indenture"), between First Trust of New
York, National Association as trustee (such entity, or its
successor as trustee, being the "Trustee") and the Issuer,
$16,700,000 aggregate principal amount of its Pollution Control
Revenue Bonds, 1996 Series A (Tucson Electric Power Company
Project) (the "Bonds") to various purchasers.
(2) The Issuer and the Company are entering into a
Loan Agreement, dated as of May 1, 1996 (the "Loan Agreement"),
which the Issuer is assigning to secure the payment of the Bonds,
and pursuant to which, among other things, the Company is
requesting Canadian Imperial Bank of Commerce, New York Agency
(acting in its individual corporate capacity, "CIBC") to issue
its irrevocable transferable letter of credit, in substantially
the form of Exhibit A (such letter of credit, as it may from time
to time be extended or amended pursuant to the terms of this
Agreement, being the "Letter of Credit"), in the amount of
$18,347,124 (the "Commitment") of which (i) $16,700,000 shall
support the payment of principal of the Bonds, and (ii)
$1,647,124 shall support the payment of up to 300 days' interest
on the principal amount of the Bonds computed at a maximum rate
of 12% per annum.
(3) As more fully set forth hereinafter, each of the
Banks has agreed to purchase a participation in the Letter of
Credit.
NOW, THEREFORE, in consideration of the premises and in
order to induce CIBC to issue the Letter of Credit and the Banks
to participate therein, the parties hereto agree as follows:
I DEFINITIONS
I.1 Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings
to be equally applicable to both the singular and plural forms of
the terms defined):
"ACC" means the Arizona Corporation Commission or any
successor thereto.
"ACC Order" means the order of the ACC dated April 24,
1996.
"Advance" means any Tender Advance.
"Affiliate" means any trade or business (whether or not
incorporated) which is a member of a group of which the
Company is a member and which is under common control within
the meaning of the regulations under Sections 414(b) or (c)
of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).
"Agent" has the meaning assigned to it in the Preamble
to this Agreement, and includes any successor thereto.
"Agreement" means this Letter of Credit and
Reimbursement Agreement as it may be amended, supplemented
or otherwise modified in accordance with the terms hereof at
any time and from time to time.
"Available Amount" in effect at any time means the
maximum amount available to be drawn at such time under the
Letter of Credit, the determination of such maximum amount
to assume compliance with all conditions for drawing and no
reduction for any amount drawn by the Trustee in order to
make a regularly scheduled payment of interest on the Bonds
(unless such amount is not reinstated under the Letter of
Credit).
"Bank" means each of the banks whose signature appears
on the signature pages of this Agreement, including, without
limitation, CIBC in its capacity as issuer of the Letter of
Credit, and their respective successors and assigns; "Banks"
refers to all such banks.
"Base Advance" means any Advance bearing interest at
the Base Rate or the Default Rate.
"Base Rate" means, on any date, a fluctuating rate of
interest per annum equal to the higher of
(a) the rate of interest most recently
announced by CIBC in New York City as its prime
commercial lending rate (the "Prime Rate"); and
(b) the Federal Funds Rate plus .50%.
Neither the Prime Rate nor the Base Rate is necessarily
intended to be the lowest rate of interest determined by
CIBC in connection with extensions of credit. Changes in
the rate of interest will take effect simultaneously with
each change in the Base Rate.
"Bonds" has the meaning assigned to that term in the
Preliminary Statements hereto.
"Business Day" means a day of the year on which banks
located in The City of New York, New York are not required
or authorized to remain closed and on which The New York
Stock Exchange is not closed and, if the applicable Business
Day relates to any Eurodollar Advance or Interest Period
therefor, on which dealings are carried on in the London or
other relevant interbank market.
"Cancellation Date" has the meaning assigned to that
term in the Letter of Credit.
"CIBC" has the meaning assigned to that term in the
Preliminary Statements hereto.
"Code" means the Internal Revenue Code of 1986, as
amended from time to time.
"Collateral" has the meaning assigned to that term in
Section 1.1 of the Custodian Agreement.
"Commitment" has the meaning assigned to that term in
the Preliminary Statements hereto.
"Company" has the meaning assigned to that term in the
Preliminary Statements hereto.
"Custodian Agreement" means the custodian and pledge
agreement in substantially the form of Exhibit B hereto.
"Debt" means, without duplication, (i) indebtedness for
borrowed money or for the deferred purchase price of
property or services, (ii) obligations as lessee under
Capital Leases, (iii) liabilities in respect of unfunded
vested benefits under plans covered by Title IV of ERISA,
(iv) withdrawal liability incurred under ERISA by the
Company or any Affiliate to any Multiemployer Plan, (v) all
obligations (contingent or otherwise) under reimbursement or
other similar agreements with respect to the issuance of
letters of credit (other than obligations in respect of
documentary letters of credit opened for the payment of
goods or services in the ordinary course of business), (vi)
obligations under direct or indirect guarantees in respect
of, and obligations (contingent or otherwise) to purchase or
otherwise acquire, or otherwise to assure a creditor against
loss in respect of, indebtedness, obligations and
liabilities of others of the kind referred to in clauses (i)
through (v) above, and (vii) to the extent due and payable
on any date of determination, all interest and premium on,
and other fees or charges payable in connection with,
indebtedness or obligations of the kinds referred to in
clauses (i) through (vi) above.
"Default Rate" means a fluctuating interest rate equal
at all times to the higher of (i) 2% per annum above the
Base Rate in effect from time to time and (ii) 2% per annum
above the IBO Rate determined for a period of one month.
"Drawing" has the meaning assigned to that term in the
Letter of Credit.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time.
"Eurodollar Advance" means any Advance bearing interest
at the Eurodollar Rate.
"Eurodollar Rate" for the Interest Period for any
Eurodollar Advance means an interest rate per annum equal at
all times during such Interest Period to 2.05% above the IBO
Rate for such Interest Period.
"Eurodollar Reserve Percentage" for the Interest Period
for any Eurodollar Advance means the reserve percentage
applicable during such Interest Period (or if more than one
such percentage shall be so applicable, the daily average of
such percentages for those days in such Interest Period
during which any such percentage shall be so applicable)
under regulations issued from time to time by the Board of
Governors of the Federal Reserve System (or any successor)
for determining the maximum reserve requirement (including,
without limitation, any emergency, supplemental or marginal
reserve requirement) for CIBC with respect to liabilities or
assets consisting of or including eurocurrency liabilities
having a term approximately equal to such Interest Period.
"Event of Default" has the meaning assigned to that
term in Section 6.01.
"Federal Funds Rate" means for any day, the weighted
average of the rate on overnight federal funds transactions
with member banks of the Federal Reserve System arranged by
Federal funds brokers as published by the Federal Reserve
Bank of New York for such day (or, if such day is not a
Business Day, for the next preceding Business Day), or, if
such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on
such transactions received by CIBC from three Federal funds
brokers of recognized standing selected by it.
"First Mortgage Bond" means the interest bearing First
Mortgage Bond(s), Pollution Control Series I in the
aggregate principal amount of $18,347,124 issued to CIBC
pursuant to the First Mortgage Bond Indenture Supplement in
accordance with Section 2.16.
"First Mortgage Bond Delivery Agreement" means the Bond
Delivery Agreement, dated as of May 1, 1996, between the
Company and CIBC, substantially in the form of Exhibit C.
"First Mortgage Bond Indenture" means the Indenture
dated as of April 1, 1941 of the Tucson Gas, Electric Light
and Power Company, a predecessor to the Company, to The
Chase National Bank of the City of New York, as trustee, a
predecessor to The Chase Manhattan Bank (National
Association), as amended, supplemented or otherwise modified
from time to time.
"First Mortgage Bond Indenture Supplement" means the
Thirty-First Supplemental Indenture dated as of May 1, 1996
to the First Mortgage Bond Indenture of the Company to The
Chase Manhattan Bank (National Association), as trustee,
pursuant to which the First Mortgage Bonds shall be issued.
"First Mortgage Documents" has the meaning assigned to
that term in Section 4.1(n).
"Funding Default" has the meaning assigned to that term
in Section 2.7(b).
"IBO Rate" for any Interest Period means the rate per
annum obtained by dividing (i) the rate of interest per
annum at which deposits in United States dollars are offered
by CIBC to prime banks in the London or other relevant
interbank market at 11:00 A.M. (local time of such interbank
market) two Business Days before the first day of such
Interest Period for a period equal to such Interest Period
by (ii) a percentage equal to 100% minus the Eurodollar
Reserve Percentage.
"Indenture" has the meaning assigned to that term in
the Preliminary Statements hereto.
"Interest Period" has the meaning assigned to that term
in Section 2.06(b)(ii).
"Issuer" has the meaning assigned to that term in the
Preliminary Statements hereto.
"Letter of Credit" has the meaning assigned to that
term in the Preliminary Statements hereto.
"Letter of Credit Fee Rate" at any time means whichever
of the following is applicable at such time:
Level I
0.525%
Level II 0.875%
Level III 1.175%
Level IV 1.475%
Level V 1.825%
The foregoing Levels are based on the ratings assigned to
the bonds issued under the First Mortgage Bond Indenture by
the Rating Agencies as follows:
Level I BBB- and Baa3
or higher
Level II BB+ and Ba1
Level III
BB and Ba2
Level IV BB- and Ba3
Level V B+ or B1 or lower
If the Rating Agencies assign ratings in different Levels,
then the Level with the highest two ratings shall apply. If
the highest two ratings are in different Levels, the Level
with the lower of the highest two ratings shall apply.
"Lien" means any security interest, mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance,
lien (statutory or otherwise), charge against or interest in
property to secure payment of a debt or performance of an
obligation or other priority or preferential arrangement of
any kind or nature whatsoever.
"Loan Agreement" has the meaning assigned to that term
in the Preliminary Statements hereto.
"Majority Banks" means, at any time, those Banks whose
Percentages in the aggregate are greater than fifty percent
(50%).
"Master Restructuring Agreement" means the Master
Restructuring Agreement dated as of June 30, 1992, as
amended from time to time (but without giving effect to any
termination thereof), among the Company, certain of its
subsidiaries, various banks, and Barclays Bank PLC, New York
Branch, as Administrative Agent and Collateral Agent.
"Maximum Interest Period" has the meaning assigned to
that term in Section 2.6(a).
"Multiemployer Plan" means a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA.
"Official Statement" means the Official Statement dated
April 30, 1996 of the Issuer relating to the Bonds, together
with the documents incorporated therein by reference.
"Owner" has the meaning assigned to that term in the
Indenture.
"PBGC" means the Pension Benefit Guaranty Corporation
or any successor thereto.
"Percentage" means, as to any Bank, the percentage set
forth opposite such Banks signature hereto, or as such
percentage may be adjusted from time to time pursuant to an
assignment under Section 7.8 or 7.12.
"Person" means an individual, partnership, corporation
(including a business trust), limited liability company,
joint stock company, trust, unincorporated association,
joint venture or other entity, or a government or any
political subdivision or agency thereof.
"Plan" means an employee benefit plan (other than a
Multiemployer Plan) maintained by the Company or any
Affiliate and which is subject to the provisions of Title IV
of ERISA.
"Preliminary Official Statement" means the Preliminary
Official Statement dated April 19, 1996, of the Issuer
relating to the Bonds, together with the documents
incorporated therein by reference.
"Rating Agencies" means Moody's Investors Service,
Inc., Fitch Investors Service, Inc., Duff & Phelps Credit
Rating Co. and Standard & Poor's or any successors thereto.
"Related Documents" has the meaning assigned to that
term in Section 2.15(i).
"Remarketing Agent" has the meaning assigned to that
term in the Indenture.
"Remarketing Agreement" has the meaning assigned to
that term in Section 1.1 of the Custodian Agreement.
"Stated Termination Date" means the expiration date
specified in clause (i) of the second paragraph of the
Letter of Credit (which date shall initially be May 1,
1999), as such date may be extended pursuant to Section 2.13
or modified pursuant to the Letter of Credit.
"Subsidiary" shall mean a corporation, joint venture or
other entity of which the Company and/or its other
Subsidiaries own, directly or indirectly, such number of
outstanding shares or interests as have at least 50% of the
ordinary voting power for the election of directors or the
governance of the business of such entity. Unless the
context otherwise requires, each reference to Subsidiaries
herein shall be a reference to Subsidiaries of the Company.
"Tender Advance" has the meaning assigned to that term
in Section 2.6(a).
"Tender Drawing" has the meaning assigned to that term
in the Letter of Credit.
"Termination Event" means (i) a Reportable Event
described in Section 4043 of ERISA and the regulations
issued thereunder (other than a Reportable Event not subject
to the provision for 30-day notice to the PBGC under such
regulations), or (ii) the filing of a notice of intent to
terminate a Plan or the treatment of a Plan amendment as a
termination under Section 4041 of ERISA (which such event
would result in a material liability being imposed on the
Company or an Affiliate or a material contribution being
made by the Company or an Affiliate), or (iii) the
institution of proceedings to terminate a Plan by the PBGC,
or (iv) any other event or condition which might constitute
grounds under Section 4042 of ERISA for the termination of,
or the appointment of a trustee to administer, any Plan.
"Trustee" has the meaning assigned to that term in the
Preliminary Statements hereto.
I.2 Computation of Time Periods. In this Agreement, in the
computation of a period of time from a specified date to a later
specified date, the word "from" means "from and including" and
the words "to" and "until" each means "to but excluding".
I.3 Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with generally
accepted United States accounting principles consistently
applied, except as otherwise stated herein.
I.4 Internal References. The words "herein", "hereof" and
"hereunder" and words of similar import, when used in this
Agreement, shall refer to this Agreement as a whole and not to
any provision of this Agreement, and "Article", "Section",
"subsection", "paragraph", and respective references are to
Articles, Sections, subsections, paragraphs and related
references respectively, in this Agreement unless otherwise
specified.
II AMOUNT AND TERMS OF THE LETTER OF CREDIT
II.1 The Letter of Credit. CIBC agrees, on the terms and
conditions hereinafter set forth, to issue the Letter of Credit
to the Trustee on the date hereof in the amount of the Commitment
and expiring on or before the Stated Termination Date.
II.2 Issuing the Letter of Credit. Upon the fulfillment of the
applicable conditions set forth in Article III, CIBC will issue
the Letter of Credit to the Trustee.
II.3 Participations in Letter of Credit. Concurrently with the
issuance of the Letter of Credit, CIBC shall be deemed to have
sold and transferred to each other Bank, and each other Bank
shall be deemed irrevocably and unconditionally to have purchased
and received from CIBC, without recourse or warranty (subject to
Section 7.6), an undivided interest and participation, to the
extent of such other Bank's Percentage, in (i) the Letter of
Credit and any payments and Advances made by CIBC with respect
thereto, (ii) the lien on and security interest in the Collateral
as provided in the Custodian Agreement, (iii) all liabilities
(other than liabilities arising from CIBC's gross negligence or
wilful misconduct) and obligations of CIBC arising in connection
with the Letter of Credit and any such payments or Advances, and
(iv) the Company's reimbursement obligations with respect to any
payments, Advances, or any other obligations to all of the Banks,
howsoever characterized, arising under or in connection with the
Letter of Credit, any Drawing certificates thereunder or this
Agreement. For the purpose of this Agreement, the unparticipated
portion of the Letter of Credit, any payments and Advances made
with respect thereto, all liabilities and obligations of CIBC
arising in connection with the Letter of Credit and any Advances,
and the Company's reimbursement obligations with respect to any
payments and Advances shall be deemed to be CIBC's
"participation" therein. CIBC hereby agrees to deliver to each
other Bank, upon request of such Bank, copies of the Letter of
Credit and related documentation as such other Bank may from time
to time reasonably request.
II.4 Commissions and Fees. Without requirement for notice or
demand by CIBC, the Agent or any other Person:
(a) The Company hereby agrees to pay to CIBC upon execution
of this Agreement the fee set forth in that certain letter
agreement, dated the date hereof, between CIBC and the Company.
(b) The Company hereby agrees to pay to CIBC a letter of
credit fee calculated on the Available Amount of the Letter of
Credit, from the date of issuance of the Letter of Credit until
the Cancellation Date, at the rate of 0.125% payable quarterly in
arrears on the last day of each March, June, September and
December commencing on the first such date to occur following the
date of issuance of the Letter of Credit, and on the Cancellation
Date.
(c) The Company hereby agrees to pay to the Agent for the
account of the Banks in accordance with each Bank's respective
Percentage a commitment fee calculated on the Available Amount,
from the date of issuance of the Letter of Credit until the
Cancellation Date, at the Letter of Credit Fee Rate payable
quarterly in arrears on the last day of each March, June,
September and December commencing on the first such date to occur
following the date of issuance of the Letter of Credit, and on
the Cancellation Date. Each Bank shall be entitled to receive
its Percentage of the fees described in this Section 2.04(c) in
immediately available funds promptly upon receipt by the Agent.
(d) The Company hereby agrees to pay to CIBC, on the date
of each drawing by the Trustee under the Letter of Credit, a
drawing fee in the amount of $50 per drawing.
(e) The Company hereby agrees to pay to CIBC, upon each
transfer of the Letter of Credit in accordance with its terms, a
transfer fee equal to $1,000.
II.5 Reimbursement On Demand. Subject to the provisions of
Section 2.6 hereof, the Company hereby agrees to pay to the Agent
on demand (i) on and after each date on which CIBC shall pay any
amount under the Letter of Credit pursuant to any certificate
thereunder, a sum equal to such amount so paid (which sum shall
constitute a demand loan from CIBC to the Company until so paid),
plus (ii) interest on any amount remaining unpaid by the Company
to the Agent under clause (i) above, at the Default Rate in
effect from time to time, from the date CIBC honors such
certificate, until payment of such amount in full. CIBC shall
notify the Company whenever any demand for payment is made under
the Letter of Credit (or any certificate thereunder) by the
Trustee; provided that the failure of CIBC to so notify the
Company shall not affect the rights of CIBC or the other Banks in
any manner whatsoever.
II.6 Advances. (a) If CIBC shall make any payment under the
Letter of Credit with respect to (i) the purchase price of Bonds
delivered pursuant to a put, in accordance with Sections 2.02(g)
and (h) of the Indenture (other than in accordance with Section
2.02(h)(iv) of the Indenture) or (ii) the redemption price of
Bonds delivered pursuant to a redemption in accordance with
Section 3.01(d) of the Indenture, such payment shall,
notwithstanding Section 2.5, constitute an advance made by CIBC
to the Company on the date and in the amount of such payment
(each such advance being a "Tender Advance"). Unless otherwise
selected in accordance with subsection (b) of this Section 2.6,
each Advance shall bear interest as provided in Section 2.6(b)(i)
and shall have an Interest Period commencing on the date such
Advance is made and ending on the earlier of (i) one month
thereafter or (ii) the Stated Termination Date. The Company may,
in accordance with Section 2.8, repay the unpaid principal amount
of each Advance on the last day of the Interest Period applicable
thereto and shall repay the unpaid principal amount of each
Advance on the Cancellation Date unless otherwise prepaid in
accordance with Section 2.8 hereof.
(a) The Company shall pay interest on the unpaid principal
amount of each Advance from the date of such Advance until such
principal amount is paid in full at the applicable rate or rates
as set forth below.
(i) Base Rate. Except to the extent that the Company
shall elect to pay interest on any Advance for any Interest Period
designated pursuant to paragraph (ii) of this Section 2.6(b) at a
rate designated pursuant to paragraph (iii) of this Section
2.6(b), the Company shall pay interest on such Advance at all
times from the date such Advance is made until the earlier to
occur of (A) the date of repayment in full of such Advance and
(B) the last day of the Maximum Interest Period for such Advance,
payable on such earlier date, at a fluctuating interest rate per
annum in effect from time to time equal to the Base Rate in
effect from time to time with respect to any Advance.
(ii) Interest Periods. The Company may from time to time
elect to have the interest on any Advance determined and payable
for a specified period (an "Interest Period" for such Advance;
subject to the terms hereof, an Advance may be comprised of one
or more such Interest Periods) in accordance with paragraph (i)
or (iii) of this Section 2.6(b); provided, however, that (x) the
Interest Period applicable to any election to pay interest in
accordance with Section 2.6(b)(iii) hereof shall be of one month
or two months duration, and (y) no such election with respect to
any Advance shall be effective if it would cause the aggregate
duration of all Interest Periods applicable to such Advance to
extend beyond the Stated Termination Date. The first day of the
first Interest Period for any Advance shall be the date such
Advance is made and the first day of each subsequent Interest
Period for such Advance shall be the date on which the applicable
election for such Interest Period is effective (which shall be a
Business Day) or if no such election is made, the day following
the last day of the immediately preceding Interest Period.
Unless the Company shall have given timely notice to the Agent
with respect to any Advance that it elects to either pay interest
thereon pursuant to Section 2.6(b)(iii) or prepay such Advance
pursuant to Section 2.8, the interest rate payable with respect
to such Advance shall automatically be the Base Rate as provided
in Section 2.6(b)(i) commencing on the day following the last day
of the immediately preceding Interest Period applicable to such
Advance. All Interest Periods shall end on or prior to the
Stated Termination Date and no Advances shall be made on or after
the Stated Termination Date.
(iii) Eurodollar Rate. Subject to Section
2.6(b)(ii) hereof, the Company may from time to time irrevocably
elect to pay interest on any Advance at the Eurodollar Rate for the
Interest Period for such Advance by notice, specifying the
Advance (which shall not be less than $1,000,000 unpaid principal
amount during such Interest Period) and the first day and
duration of such Interest Period, received by CIBC before 11:00
A.M. (New York time) three Business Days prior to the first day
of such Interest Period.
(iv) Illegality. If and so long as it shall be or
become unlawful for CIBC or any of the Banks to obtain funds in the
London or other relevant interbank market in order to fund or
maintain Eurodollar Advances or otherwise to perform its
obligations hereunder with respect to any Eurodollar Advances,
the rate of interest accruing on all such Advances shall be equal
to the Base Rate in effect from time to time until the maturity
of such Advance, and the right of the Company to select the
Eurodollar Rate for any Advance shall be suspended.
(v) Less Than $1,000,000. On and after the date on
which the unpaid principal amount of any Advance shall be reduced, by
payment or prepayment or otherwise, to less than $1,000,000, the
rate of interest on the unpaid principal amount of such Advance
shall be equal to the Base Rate, and the right of the Company to
select a different rate for such Advance shall terminate;
provided, however, that if and so long as the Company shall
select for such Advance the same rate for the same Interest
Period as another Advance or other Advances and the aggregate
unpaid principal amount of all such Advances shall equal or
exceed $1,000,000, the Company shall have the right to select
such rate for such Interest Period for such Advance.
(vi) Default Rate. Notwithstanding any provision to
the contrary herein (including, without limitation, any interest
elections under this subsection (b)) the Company shall pay
interest on all past-due Advances and (to the fullest extent
permitted by law) interest, costs, fees and expenses hereunder,
from the date when such amounts became due until paid in full,
payable on demand, at the Default Rate in effect from time to
time.
(b) If, on or before any date on which a Eurodollar Advance
would otherwise be made hereunder, pursuant to paragraph (iii) of
Section 2.6(b), either (i) the Agent determines or is notified by
any of the Banks that funding in the manner contemplated in
paragraph (iii), as the case may be, of Section 2.6(b) is not
reasonably available or (ii) the Agent determines or is notified
by any of the Banks that the rate of interest so elected for the
relevant Interest Period would not adequately reflect the cost to
the Banks of making, funding or maintaining such Advance for such
Interest Period, the Agent shall forthwith give telephonic notice
(confirmed promptly in writing) to the Company and telephonic
notice to each Bank of such determination or notification,
whereupon the Company shall not be entitled hereunder to elect to
pay interest at the rate provided in paragraph (iii) of Section
2.6(b) for such Interest Period; and such Advance shall bear
interest as provided in Section 2.6(b)(i) and shall have an
Interest Period as provided in Section 2.6(a).
II.7 Reimbursement Obligations Deemed to be Loans; Funding by
Banks to CIBC. (a) In the event that CIBC makes any payment or
disbursement under the Letter of Credit or any draft accepted
thereunder (including any Advance) and the Company shall not have
reimbursed CIBC in full for such payment or disbursement on the
same Business Day in accordance herewith, each Bank shall be
obligated to pay CIBC in full or partial payment of the purchase
price of its participation in the Letter of Credit, its pro rata
share, according to the amount of its Percentage, of such payment
or disbursement (but such obligation of the Banks shall not
diminish the obligation of the Company hereunder), and the Agent
shall promptly notify each other Bank thereof. Each other Bank
irrevocably and unconditionally agrees to pay to the Agent in
immediately available funds for CIBC's account the amount of such
other Bank's Percentage of such payment or disbursement, without
setoff, counterclaim, recoupment or any reduction for any reason.
If and to the extent any Bank shall not have made such amount
available to the Agent by 3:00 P.M., New York time, on the
Business Day on which such Bank receives notice from the Agent of
payment or disbursement (it being understood that such notice
received after 1:30 P.M., New York time, on any Business Day
shall be deemed to have been received on the next following
Business Day), such Bank agrees to pay interest on such amount to
the Agent for CIBC's account forthwith on demand for each day
from and including the date such amount was to have been
delivered to the Agent to but excluding the date such amount is
paid, at a rate per annum equal to the Federal Funds Rate. Any
Bank's failure to make available to the Agent its Percentage of
any such payment or disbursement shall not relieve any other Bank
of its obligation hereunder to make available to the Agent such
other Bank's Percentage of such payment, but no Bank shall be
responsible for the failure of any other Bank to make available
to the Agent such other Bank's Percentage of any such payment or
disbursement.
(a) Without limitation to the foregoing provisions of this
Section 2.7, if a Bank shall, at any time, fail to make any
payment to the Agent required under Section 2.7(a) (a "Funding
Default"), CIBC may, but shall not be required to, cause the
Agent to retain payments that would otherwise be made to such
Bank hereunder and apply such payments to such Bank's defaulted
obligations hereunder, at such time, and in such order, as CIBC
may elect in its sole discretion. Upon a Funding Default by a
Bank, CIBC shall have the right, but not the obligation, to
terminate and repurchase such Bank's participation in all or, in
its discretion, any portion of the Letter of Credit, for a
purchase price equal to such Bank's proportionate share of the
then unpaid principal balance of the outstanding Advances, if
any, being repurchased, together with interest, fees and other
amounts accrued and owing thereon (reduced by an amount equal to
such Bank's Percentage of any such Advance or portion thereof
with respect to which such Bank has not, as of the time of such
repurchase, reimbursed CIBC in full in accordance with Section
2.7(a) and by the amount of any costs or expenses incurred by
CIBC or the Agent in connection with such Bank's Funding Default
and such repurchase), and terminate such Bank's obligations
hereunder with respect to the repurchased Advances and any
Drawings then made under the Letter of Credit with respect to
which CIBC has not made payment as of the time of purchase. Upon
the occurrence and continuance of a Funding Default by a Bank,
the Agent and CIBC shall not be required to obtain the consent of
such Bank to any action as provided in this Section 2.7.
II.8 Prepayments; Reinstatement of Letter of Credit Amounts.
(a) The Company may, upon at least two Business Days' notice to
the Agent, prepay the outstanding amount of any Base Advance in
whole or in part (which prepayment shall be at least $1,000,000)
with accrued interest to the date of such prepayment on the
amount prepaid by making payment to the Agent for the pro rata
share of the Banks. Except for prepayments made pursuant to
subsection (b) of this Section 2.8, the Company shall not be
entitled to prepay any Eurodollar Advance; provided, however,
that the Company may repay any Eurodollar Advance on the last day
of the Interest Period applicable thereto upon at least two
Business Days' notice to the Agent. Any prepayment of a
Eurodollar Advance made pursuant to subsection (b) below, Section
6.2 or otherwise shall be accompanied by an additional payment,
in accordance with Section 2.9(b), of an amount sufficient to
compensate the Banks affected, as determined by each such Bank
and notified to the Agent, for any loss (including loss of
anticipated profits), cost or expense incurred by such Banks by
reason of such prepayment.
(a) Prior to or simultaneously with the receipt of proceeds
related to the resale of Bonds purchased pursuant to one or more
draws under the Letter of Credit by one or more Tender Drawings,
the Company shall directly or through the Remarketing Agent or
the Tender Agent on behalf of the Company, prepay the then
outstanding Advances (in the order in which they were made) by
paying to the Agent for the pro rata share of the Banks an amount
equal to the sum of (i) the aggregate principal amount of the
Bonds resold plus (ii) that aggregate amount of interest on such
Bonds which was paid by such Tender Drawing or Drawings.
II.9 Increased Costs. (a) If either (i) the introduction of or
any change (including, without limitation, any change by way of
imposition or increase of reserve requirements other than those
referred to in the definition of "Eurodollar Reserve Percentage")
in or in the interpretation of any law or regulation or (ii) the
compliance by CIBC or any of the other Banks with any guideline,
requirement or request from any central bank or other
governmental or quasi-governmental authority (whether or not
having the force of law), shall either (A) impose, modify or deem
applicable any reserve, assessment, special deposit or similar
requirement against letters of credit issued by, or assets held
by, or deposits in or for the account of, CIBC or any of the
other Banks or (B) impose on CIBC or any of the other Banks any
other condition regarding this Agreement, the Letter of Credit or
any Advance, and the result of any event referred to in clause
(A) or (B) above, shall be to increase the cost to any of the
Banks of issuing or maintaining the Letter of Credit or agreeing
to make or making, funding or maintaining any Advance by an
amount which such Bank reasonably deems material (which increase
in cost shall be determined by such Bank's reasonable allocation
of the aggregate of such cost increases resulting from such
event), then, upon demand by the Agent (which demand shall be
made at the direction of any of the Banks affected), the Company
shall pay to the Agent for the benefit of the Banks affected,
from time to time as specified by the Agent, additional amounts
which shall be sufficient to compensate such Banks for such
increased cost. A certificate setting forth such increased cost
incurred by the Banks as a result of any event referred to in
clause (i) or (ii) above, and giving a reasonable explanation
thereof, submitted by the Agent, on behalf of and at the
direction of the Banks affected, to the Company, shall constitute
such demand and shall, in the absence of manifest error, be
conclusive and binding for all purposes.
(a) If, due to any change of interest rate on any Advance
pursuant to Section 2.6(b)(iv), any prepayment pursuant to
Section 2.8, any acceleration of maturity of the Advances
pursuant to Section 6.2, or any other reason, any Bank is subject
to a change of interest rate, or receives payments of principal,
of any Eurodollar Advance other than on the last day of the
Interest Period relating to such Advance, the Company shall,
promptly after demand by the Agent (which demand shall be made at
the direction of such Bank), pay to the Agent for the benefit of
the Banks affected any amounts required to compensate such Banks
for any additional losses, costs or expenses which they may
reasonably incur as a result of such change or payment,
including, without limitation, any loss (including loss of
anticipated profits), cost or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired
by such Banks to fund or maintain such Eurodollar Advance. A
certificate setting forth the amount of such additional losses,
costs or expenses and giving a reasonable explanation thereof,
submitted by the Agent, on behalf of and at the direction of the
Banks affected, to the Company, shall constitute such demand and
shall, in the absence of manifest error, be conclusive and
binding for all purposes.
II.10 Increased Capital. If either (i) the introduction of
or any change in or in the interpretation of any law or
regulation or (ii) compliance by any of the Banks with any
guideline or request from any central bank or other governmental
authority (whether or not having the force of law) affects or
would affect the amount of capital required or expected to be
maintained by such Bank or any corporation controlling such Bank
and such Bank determines that the amount of such capital is
increased by or based upon the existence of letters of credit (or
similar contingent obligations) then, the Company shall
immediately pay to the Agent for the benefit of the Banks
affected, from time to time as specified by the Agent at the
direction of such Banks, additional amounts sufficient to
compensate such Banks in the light of such circumstances, to the
extent that such Banks reasonably determined such capital to be
allocable to the issuance or maintenance of the Letter of Credit
(or participation therein). A certificate as to such amounts
submitted to the Company by the Agent on behalf of and at the
direction of the Banks affected, giving a reasonable explanation
thereof, shall constitute such demand and shall, in the absence
of manifest error, be conclusive and binding for all purposes as
to the amount thereof.
II.11 Payments and Computations. The Company shall make
each payment hereunder not later than 12:00 Noon (New York time)
on the day when due in lawful money of the United States of
America to CIBC or the Agent, as appropriate, at its address
referred to in Section 7.2 in same-day funds. Any amounts due to
the Banks hereunder in respect of any such payment received from
the Company shall be paid by the Agent to the Banks in lawful
money of the United States of America at their respective
addresses, as provided in Section 7.2, in same-day funds by the
close of the Business Day on which such payment is received. If
and to the extent any such amount due to any Bank is not paid by
the Agent in a timely fashion as aforesaid, the Agent agrees to
pay interest on such unpaid amount for such Bank's account
forthwith on demand for each day from and including the date such
amount was to have been paid to such Bank to but excluding the
date such amount is paid, at a rate per annum equal to the
Federal Funds Rate. Computations of the Prime Rate and the
Default Rate shall be made by the Agent on the basis of a year of
365 or 366 days, as the case may be, for the actual number of
days (including the first day but excluding the last day)
elapsed. Computations of the Eurodollar Rate, the Federal Funds
Rate and the commissions and fees under Section 2.4 hereof shall
be made by the Agent on the basis of a year of 360 days for the
actual number of days (including the first day but excluding the
last day) elapsed.
II.12 Non-Business Days. Whenever any payment to be made
hereunder shall be stated to be due, or whenever the last day of
any Interest Period would otherwise occur, on a day which is not
a Business Day, such payment shall be made, and the last day of
such Interest Period shall occur, on the next succeeding Business
Day, and such extension of time shall in such case be included in
the computation of payment of interest, fee or commission, as the
case may be; provided, however, if such extension would cause
such payment of a Eurodollar Advance to be made and the last day
of an Interest Period for a Eurodollar Advance to occur in the
next following calendar month, such payment shall be made and the
last day of such Interest Period shall occur on the next
preceding Business Day.
II.13 Extension of the Stated Termination Date. Unless the
Letter of Credit shall have expired in accordance with its terms
on the Cancellation Date, at least 60 but not more than 120 days
before each May 1, commencing May 1, 1997, the Company may
request the Agent in writing (each such request being
irrevocable) to extend for one year the Stated Termination Date
(it being understood that the Company may make no more than two
such requests under this Section). If the Company shall make
such a request, the Agent shall, no later than 40 days following
the date on which the Agent shall have received such request,
notify the Company in writing whether or not the Banks consent to
such request (such consent requiring unanimous written approval
of the Banks in their individual sole discretion) and, if all of
the Banks do so consent, the conditions of such consent
(including conditions relating to legal documentation and the
consent of the Trustee). If the Agent shall not so notify the
Company, the Banks shall be deemed not to have consented to such
request.
II.14 Evidence of Debt. CIBC and, as appropriate, each
other Bank shall maintain, in accordance with its usual practice
evidence of the indebtedness of the Company resulting from each
drawing under the Letter of Credit and from each Advance made
from time to time hereunder and the amounts of principal and
interest payable and paid from time to time hereunder. In any
legal action or proceeding in respect of this Agreement, the
entries made shall, in the absence of manifest error, be
conclusive evidence of the existence and amounts of the
obligations of the Company therein recorded.
II.15 Obligations Absolute. The payment obligations of the
Company under this Agreement shall be unconditional and
irrevocable, and shall be paid strictly in accordance with the
terms of this Agreement under all circumstances, including,
without limitation, the following circumstances:
(i) any lack of validity or enforceability of the Letter of
Credit, the Bonds, the Indenture, the Loan Agreement, the
Custodian Agreement, the First Mortgage Bond, the First Mortgage
Bond Indenture, the First Mortgage Bond Indenture Supplement, the
First Mortgage Bond Delivery Agreement, the Remarketing
Agreement, (collectively, the "Related Documents"), this
Agreement, or any other agreement or instrument relating thereto;
(ii) any amendment or waiver of or any consent to departure
from all or any of the Related Documents;
(iii) the existence of any claim, set-off, defense or
other right which the Company may have at any time against the
Trustee or any other beneficiary, or any transferee, of the Letter of
Credit (or any persons or entities for whom the Trustee, any such
beneficiary or any such transferee may be acting), any Bank, or
any other person or entity, whether in connection with this
Agreement, the transactions contemplated herein or in the Related
Documents, or any unrelated transaction;
(iv) any statement or any other document presented under the
Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue
or inaccurate in any respect;
(v) payment by CIBC under the Letter of Credit against
presentation of a draft or certificate which does not comply with
the terms of the Letter of Credit; or
(vi) any other circumstance or happening
whatsoever, whether or not similar to any of the
foregoing.
Nothing in this Section 2.15 is intended to limit any liability
of CIBC pursuant to Section 7.6 in respect of its wilful
misconduct or gross negligence.
II.16 First Mortgage Bond. The Company shall cause all
obligations of the Company to reimburse CIBC with respect to any
payment under the Letter of Credit to be and remain secured,
until paid, by the First Mortgage Bonds issued to CIBC in a
principal amount equal to $18,347,124, accruing interest at a
floating rate equal to the Eurodollar Rate (subject to a cap of
12% per annum) and containing other provisions and terms and
otherwise in accordance with the First Mortgage Bond Delivery
Agreement.
III CONDITIONS PRECEDENT
III.1 Condition Precedent to Issuance of the Letter of
Credit. The obligation of CIBC to issue the Letter of Credit is
subject to the condition precedent that the Agent and each of the
Banks shall have received on or before the date of the issuance
of the Letter of Credit the following, each dated such date, in
form and substance satisfactory to the Agent and the Banks:
(a) An executed copy (or a duplicate copy thereof certified
in a manner satisfactory to the Agent and the Banks to be a true,
correct and complete copy) of the Indenture.
(b) Executed copies (or duplicate copies thereof, in each
case certified in a manner satisfactory to the Agent and the
Banks to be a true, correct and complete copy) of the Loan
Agreement.
(c) The original First Mortgage Bond(s), an executed copy
of the First Mortgage Bond Delivery Agreement, and executed
copies (or duplicate copies or specimens, as appropriate, of such
copies, in each case certified in a manner satisfactory to the
Agent and the Banks to be a true, correct and complete copy) of
each of the First Mortgage Bond Indenture, the First Mortgage
Bond Indenture Supplement (together with evidence satisfactory to
the Agent of the due recording thereof), the Custodian Agreement
and the Remarketing Agreement.
(d) Certified copies of the Articles of Incorporation, By-
Laws and resolutions of the Board of Directors of the Company
authorizing this Agreement and all of the Related Documents to
which the Company is a party and the transactions contemplated
hereby and thereby, and of all other documents evidencing any
other necessary corporate action.
(e) Originals (or duplicate copies certified in a manner
satisfactory to the Agent and the Banks to be true, correct and
complete copies) of the application filed by the Company for the
ACC Order and of all governmental actions and regulatory
approvals (including, without limitation, approvals or orders of
the Issuer and the ACC) necessary for the Company with respect to
this Agreement and each of the Related Documents to which the
Company is a party and the transactions contemplated hereby and
thereby.
(f) A certificate of the Secretary or an Assistant
Secretary of the Company certifying the names and true signatures
of the officers of the Company authorized to sign this Agreement
and the other documents to be delivered by it hereunder.
(g) An opinion of Reid & Priest, LLP counsel to the
Company, in substantially the form of Exhibit D hereto and as to
such other matters as the Banks may reasonably request.
(h) An opinion of Dennis R. Nelson, Esq., General Counsel
to the Company, in substantially the form of Exhibit D-2 hereto
and as to such other matters as the Agent may reasonably request.
(i) An opinion of Rodey, Dickason, Sloan, Akin & Robb,
P.A., New Mexico counsel to the Company, in substantially the
form of Exhibit D-3 hereto and as to such other matters as the
Agent may reasonably request.
(j) An opinion of Dickerman & Marvin, P.C., special Arizona
counsel to the Company, in substantially the form of Exhibit D-4
hereto and as to such other matters as the Agent may reasonably
request.
(k) A letter from Orrick, Herrington & Sutcliffe, Bond
Counsel for the Company, addressed to the Banks and stating
therein that the Banks may rely on the opinion of such firm
delivered pursuant to Section 9(c) of the Bond Purchase
Agreement.
(l) A copy of the signature book or authorizing resolution
of the Trustee showing the names and signatures of the persons
authorized to execute Drawing certificates or other documents or
instruments under or in connection with Letter of Credit on
behalf of the Trustee.
III.2 Additional Conditions Precedent to Issuance of the
Letter of Credit. The obligation of CIBC to issue the Letter of
Credit shall be subject to the further conditions precedent that
on the date of the issuance of the Letter of Credit:
(a) the following statements shall be true and the Agent
shall have received a certificate signed by a duly authorized
officer of the Company, dated the date of such issuance, stating
that:
(i) The representations and warranties contained in Section
4.1 of this Agreement are true and correct on and as of the date
of issuance of the Letter of Credit as though made on and as of
such date; and
(ii) No event has occurred and is continuing, or would
result from the issuance of the Letter of Credit, which constitutes an
Event of Default or would constitute an Event of Default but for
the requirement that notice be given or time elapse or both; and
(b) the Agent shall have received such other approvals,
opinions or documents as the Agent may reasonably request.
IV REPRESENTATIONS AND WARRANTIES
IV.1 Representations and Warranties of the Company. In order
to induce CIBC to issue, and the other Banks to purchase a
participation in, the Letter of Credit, the Company hereby
represents and warrants to the Banks as of (i) the date hereof,
(ii) the date of the issuance of the Letter of Credit, and (iii)
the date of any Tender Advance, as follows:
(a) The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of
Arizona and is in compliance, in all material respects, with all
applicable laws, rules, regulations and orders, the non-
compliance with which could have a material adverse effect on the
financial condition or operations of the Company or its ability
to perform its obligations hereunder or in connection herewith.
(b) The execution, delivery and performance by the Company
of this Agreement and the Related Documents to which it is a
party are within the Company's corporate powers, have been duly
authorized by all necessary corporate action, and do not
contravene (i) the Company's charter or code of regulations or
(ii) law (including, without limitation, any order, rule or
regulation of the ACC) or any contractual restriction binding on
or affecting the Company, and do not result in or require the
creation of any lien, security interest or other charge or
encumbrance (except as may be created under the Related
Documents) upon or with respect to any of its properties.
(c) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery and
performance by the Company of this Agreement or any Related
Document to which the Company is a party except for the ACC
Order, which has been duly obtained, is final and in full force
and effect and is not the subject of appeal or reconsideration or
other review.
(d) This Agreement is, and the Related Documents to which
it is a party when delivered hereunder will be, legal, valid and
binding obligations of the Company enforceable against the
Company in accordance with their respective terms.
(e) The consolidated balance sheets (including the notes
thereto) of the Company and its Subsidiaries as at December 31,
1995, and the related statements of income and retained earnings
and statements of cash flows (including the notes thereto) of the
Company and its Subsidiaries for the fiscal year then ended,
certified by Deloitte and Touche LLP, independent public
accountants, copies of which have been furnished to the Agent,
fairly present the financial condition of the Company and its
Subsidiaries as at such date and the results of the operations of
the Company and its Subsidiaries for the fiscal year then ended,
all in accordance with generally accepted accounting principles
consistently applied, except, in the case of all such statements,
as noted in the report of the independent public accountants or
as noted elsewhere in the Company's Annual Report on Form 10-K
for the year ended December 31, 1995 (the "1995 10-K"); and,
except as disclosed in the 1995 10-K and the Current Reports on
Form 8-K, dated as of March 6 and April 4, 1996 (together with
the 1995 10-K, the "Disclosure Documents"), since December 31,
1995, there has been no material adverse change in the financial
condition, business, properties, operations or prospects of the
Company.
(f) Except as disclosed in the Disclosure Documents, as
filed with the Securities and Exchange Commission, there is no
pending or (to the best knowledge of the Company after due
inquiry) threatened action, investigation or proceeding before
any court, governmental agency or arbitrator against or affecting
the Company or any of its Subsidiaries which may materially
adversely affect the financial condition, business, properties,
operations or prospects of the Company or the ability of the
Company to perform its obligations hereunder or under any of the
Related Documents or which purports to affect the legality,
validity or enforceability of this Agreement or any Related
Document.
(g) No Termination Event has occurred nor is reasonably
expected to occur with respect to any Plan, and no contribution
failure has occurred with respect to any Plan sufficient to give
rise to a lien under Section 302(f) of ERISA.
IV(ff) Schedule B (Actuarial Information) to the
199_ annual report (Form 5500 Series) with respect to each
Plan, copies of which have been filed with the Internal
Revenue Service and furnished to the Agent, is complete and
accurate and fairly presents the funding status of such
Plan, and since the date of such Schedule B there has been
no material adverse change in such funding status.
(i) Neither the Company nor any of its Affiliates has
incurred nor reasonably expects to incur any withdrawal liability
under ERISA to any Multiemployer Plan. No condition exists or
event or transaction has occurred with respect to any Plan which
could result in the incurrence by the Company of any material
liability, fine or penalty (other than the liability in the
ordinary course of business to pay benefits or make
contributions). Except as disclosed in Schedule 4.1(i) hereto,
the Company has no contingent liability with respect to any post-
retirement benefit under a welfare plan as defined in Section
3(1) of ERISA, other than liability for continuation coverage
described in Part 6 of subtitle B of title I of ERISA.
(j) The Company has filed all material tax returns
(Federal, state and local), which to the knowledge of the
Company, are required to be filed and paid all taxes shown
thereon to be due, including interest and penalties, or provided
adequate reserves for payment thereof other than such taxes that
the Company is contesting in good faith by appropriate legal
proceedings.
(k) Except as otherwise disclosed to the Agent by the
Company in writing or as disclosed in any publicly available
report filed by the Company with the Securities and Exchange
Commission, in each case, prior to the date hereof, (i) all
facilities and property (including underlying groundwater) owned
or leased by the Company or any of its Subsidiaries have been,
and continue to be, owned or leased by it and its Subsidiaries in
compliance with all environmental laws, except for such failures
to comply which would not give rise to any potential material
liability of the Company or any of its Subsidiaries; and (ii)
there have been no past, and, to the Company's actual knowledge,
there are no pending or threatened (x) claims, complaints or
notices for information received by the Company or any of its
Subsidiaries with respect to any alleged violation of any
environmental law, or (y) complaints or notices to the Company or
any of its Subsidiaries regarding potential material liability
under any environmental law, except for such alleged violations
which would not give rise to any potential material liability of
the Company or any of its Subsidiaries.
(l) All information heretofore or contemporaneously
herewith furnished by the Company to the Agent and the Banks for
purposes of or in connection with this Agreement and the
transactions contemplated hereby is, and all information
hereafter furnished by or on behalf of the Company to the Agent
or the Banks will be, true and accurate in every material respect
on the date as of which such information is dated or certified,
and none of such information is or will be incomplete by omitting
to state any material fact necessary to make such information not
misleading in light of the circumstances in which such
information was provided.
(m) The Company is not engaged in the business of extending
credit for the purpose of purchasing or carrying margin stock,
and no proceeds of any Advances will be used for a purpose which
violates, or would be inconsistent with, Regulation G, U or X of
the Board of Governors of the Federal Reserve. Terms for which
meanings are provided in said Regulation G, U or X or any
regulations substituted therefor, as from time to time in effect,
are used in this Section 4.1(n) with such meanings.
(n) The provisions of the First Mortgage Bond Indenture
(including the First Mortgage Bond Indenture Supplement), the
First Mortgage Bonds and the First Mortgage Bond Delivery
Agreement (the "First Mortgage Documents") are effective to
create, in favor of the Agent for the benefit of the Banks, a
legal, valid and enforceable Lien on or in all of the "Mortgaged
Property" (as defined in the First Mortgage Bond Indenture), and
all necessary and appropriate recordings and filings have been
made in all necessary and appropriate public offices so that the
Liens created by the First Mortgage Documents constitute
perfected Liens on or in all rights, titles, estates and
interests of the Company in the "Mortgaged Property" (as defined
in the First Mortgage Bond Indenture), prior and superior to all
other Liens other than Liens permitted under subsection 12.4(d)
and (e) of the Master Restructuring Agreement, and all necessary
and appropriate consents to the creation and perfection of such
Liens have been obtained. No mortgage or financing statement or
other instrument or recordation covering all or any part of the
"Mortgaged Property" (as defined in the First Mortgage Bond
Indenture) is on file in any recording office which has not been
terminated or released, except as may have been filed in favor of
the Agent, for the benefit of the Banks or in respect of any Lien
permitted under subsection 12.4(d) and (e) of the Master
Restructuring Agreement.
V COVENANTS OF THE COMPANY
V.1 Affirmative Covenants. So long as a drawing is available
under the Letter of Credit (or the Banks shall have any other
obligation to the Company thereunder) or the Banks shall have any
Commitment hereunder or the Company shall have any obligation to
pay any amount to the Banks hereunder, the Company will, unless
the Agent (with the consent of the Majority Banks) shall
otherwise consent in writing:
(a) Preservation of Corporate Existence, Etc. Without
limiting the rights of the Company under Section 5.2(d), preserve
and maintain its corporate existence, rights (charter and
statutory), and franchises, and its qualification to do business
in Arizona; provided, however, that the Company shall not be
required to maintain any right or franchise if the Board of
Directors of the Company shall determine that the preservation
thereof is no longer desirable in the conduct of the business of
the Company and that the loss thereof is not disadvantageous in
any material respect to the Company.
(b) Compliance with Laws, Etc. Comply in all material
respects with all applicable laws, rules, regulations and orders
(including, without limitation, applicable environmental laws,
rules, regulations and orders), such compliance to include,
without limitation, paying before the same become delinquent all
material taxes, assessments and governmental charges imposed upon
it or upon its property, except to the extent that compliance
with or payment of any of the foregoing is then being contested
in good faith and by appropriate proceedings and against which
adequate reserves are being maintained; provided, however, that
any such non-compliance which will not have a material adverse
effect on the financial condition or operations of the Company or
its ability to perform its obligations shall not constitute a
breach of this subsection (b).
(c) Visitation Rights. Subject to contractual or statutory
limitations regarding confidential or proprietary information, at
any reasonable time and from time to time, permit the Agent or
any agents or representatives thereof, to examine and make copies
of and abstracts from the records and books of account of, and
visit the properties of, the Company and any of its Subsidiaries
which the Agent determines in good faith to be relevant to the
interests of the Banks hereunder, and to discuss the affairs,
finances and accounts of the Company and any of its Subsidiaries
with any of their respective officers or directors; provided,
however, that the Company reserves the right to restrict access
to any of its facilities in accordance with reasonably adopted
procedures relating to safety and security and provided, further,
that anything herein to the contrary notwithstanding, such costs
and expenses incurred by the Agent in connection with any such
examinations, copies, abstracts, visits or discussions occurring
or made prior to the occurrence and continuance of an Event of
Default shall be for the account of such Bank. Each Bank agrees
to use its best efforts to ensure that any information concerning
the Company or any of its Subsidiaries obtained by such Bank
pursuant to this Section 5.1(c) that is not contained in a report
or other document filed with the Securities and Exchange
Commission distributed by the Company or any of its Subsidiaries
to its shareholders or otherwise available to the public
generally, will to the extent permitted by law and except as may
be required by valid subpoena or in the normal course of business
operations of such Bank be treated confidentially by such Bank
and will not be distributed or otherwise made available by such
Bank to any person or entity other than bank examiners and the
employees, auditors, counsel, authorized agents or
representatives of such Bank or the Agent.
(d) Keeping of Books. Keep proper books of record and
account, in which appropriate entries shall be made of all
financial transactions and the assets and business of the Company
in accordance with generally accepted accounting principles.
(e) Reporting Requirements. Furnish to the Agent and each
of the Banks the following:
(i) as soon as possible and in any event within five
Business Days after the occurrence of each Event of Default and
each event which, with the giving of notice, lapse of time, or
both, would constitute any such Event of Default, the statement of
an authorized officer of the Company setting forth details of such
Event of Default or event and the action which the Company has
taken and proposes to take with respect thereto;
(ii) as soon as available and in any event within 60 days
after the close of each of the first three quarters in each fiscal
year of the Company, or 15 days after the date on which its
quarterly report for such fiscal quarterly period is required to be
filed with the Securities and Exchange Commission, whichever is
later, (A) an unaudited consolidated balance sheet of the Company and
its Subsidiaries as of the end of such quarter and consolidated
statements of income and of summary changes in financial position
of the Company and its Subsidiaries for the twelve-month period
then ended, fairly presenting the financial condition of the
Company and its Subsidiaries as at such date and the results of
operations and summary changes in the financial position of the
Company and its Subsidiaries for such period and setting forth in
each case in comparative form the corresponding figures for the
corresponding period of the preceding fiscal year, all in
reasonable detail and duly certified (subject to year-end audit
adjustments) by the chief financial officer, treasurer, assistant
treasurer, controller or corporate secretary (or the designee of
such corporate officers) of the Company as having been prepared
in accordance with generally accepted accounting principles
consistently applied, except as stated therein or in the
certificate referred to above, or noted elsewhere therein, (it
being understood and agreed that the delivery by the Company to
the Agent within the time period specified above of the Company's
Quarterly Report on Form 10-Q for such quarter, as filed with the
Securities and Exchange Commission, containing such balance sheet
and statements shall be deemed to satisfy the requirements of
this subparagraph (A)), (B) a certificate of such officer stating
whether he has any knowledge of the occurrence at any time prior
to the date of such certificate of any Event of Default not
theretofore reported pursuant to the provisions of paragraph (i)
of this subsection (e) or of the occurrence at any time prior to
such date of any such event, except events theretofore reported
pursuant to the provisions of paragraph (i) of this subsection
(e) and remedied, which with notice or lapse of time or both
would constitute an Event of Default and, if so, setting forth
the details of such Event of Default or event;
(iii) (A) as soon as available and in any event within
105 days after the end of each fiscal year of the Company or 15 days
after the date on which the annual report for such fiscal year is
required to be filed with the Securities and Exchange Commission,
whichever is later, a copy of the annual report for such year for
the Company and its Subsidiaries, containing financial statements
for such year and an audit report (without material qualification
as to the scope of or manner of performing such audit), in each
case, prepared in accordance with generally accepted auditing
standards by independent public accountants of recognized
national standing selected by the Company (it being understood
and agreed that the delivery by the Company to the Bank within
the time period specified above of the Company's Annual Report on
Form 10-K for such year, as filed with the Securities and
Exchange Commission, containing such financial statements shall
be deemed to satisfy the requirements of this subparagraph (A))
and (B) a certificate of the chief financial officer, treasurer,
assistant treasurer, comptroller or corporate secretary (or the
designee of such corporate officers) of the Company stating
whether he has any knowledge of the occurrence at any time prior
to the date of such certificate of any Event of Default not
theretofore reported pursuant to the provisions of paragraph (i)
of this subsection (e) or of the occurrence at any time prior to
such date of any such event, except events theretofore reported
pursuant to the provisions of paragraph (i) of this subsection
(e) and remedied, which with notice or lapse of time or both
would constitute an Event of Default and, if so, setting forth
the details of such Event of Default or event;
(iv) promptly after the sending or filing thereof, (A) copies
of all reports which the Company sends to its shareholders
generally and (B) copies of all reports which the Company or any
Subsidiary files with the Securities and Exchange Commission or
any national securities exchange;
(v) as soon as possible and in any event (i) within 30 days
after the Company or any Affiliate knows or has reason to know
that any Termination Event described in clause (i) of the
definition of Termination Event with respect to any Plan has
occurred and (ii) within 10 days after the Company or any
Affiliate knows or has reason to know that any other Termination
Event with respect to any Plan, a statement of the chief
financial officer of the Company describing such Termination
Event and the action, if any, which the Company or such Affiliate
proposes to take with respect thereto;
(vi) promptly and in any event within five Business Days after
receipt thereof by the Company or any Affiliate from the PBGC,
copies of each notice received by the Company or any such
Affiliate of the PBGC's intention to terminate any Plan or to
have a trustee appointed to administer any Plan;
(vii) promptly and in any event within 30 days after the
filing thereof with the Internal Revenue Service, copies of each
Schedule B (Actuarial Information) to the annual report (Form
5500 Series) with respect to each Plan which is a pension plan
(other than a Multiemployer Plan) maintained by the Company or
any Affiliate, which provides payments at, or defers receipt of
payment until, retirement and is subject to Title IV of ERISA;
(viii) if and for so long as the Company or any Affiliate
shall incur, or expect to incur, any liability under a
Multiemployer Plan, promptly and in any event within five
Business Days after receipt thereof by the Company or any
Affiliate from a Multiemployer Plan sponsor, a copy of each
notice received by the Company or any Affiliate concerning (A)
the imposition of withdrawal liability by a Multiemployer Plan
pursuant to Section 4202 of ERISA, (B) the determination that a
Multiemployer Plan is, or is expected to be, in reorganization
within the meaning of Title IV of ERISA, (C) the termination of a
Multiemployer Plan within the meaning of Title IV of ERISA, or
(D) the amount of liability incurred, or expected to be incurred,
by the Company or any Affiliate in connection with any event
described in clause (A), (B) or (C), above;
(ix) promptly after the Company knows or has reason to know of
(i) any pending or threatened action, investigation or proceeding
of the type described in Section 4.1(g) which may have a material
adverse effect of the type described therein, (ii) any claim,
complaint or notice of the type described in Section 4.1(l)
regarding potential material liability or respecting alleged
violations which might give rise to such potential material
liability, as described therein, (iii) any material adverse
change in the financial condition, business, properties,
operations or prospects of the Company, or (iv) any amendment,
supplement or other modification to the Indenture to which the
Agent is not a party, or any consent, waiver or release with
respect to the Indenture to which the Agent is not a party,
affecting the obligations or duties of the Tender Agent
thereunder with respect to the Collateral, the statement of an
authorized officer of the Company describing the foregoing and
the action, if any, which the Company proposes to take with
respect thereto; and
(x) such other information respecting the condition or
operations, financial or otherwise, of the Company or any of its
Subsidiaries as the Agent may from time to time reasonably
request.
(f) Redemption or Defeasance of Bonds. Use its best
efforts to cause the Trustee, upon redemption or defeasance of
less than all of the Bonds pursuant to the Indenture, to furnish
to the Agent a notice in the form of Exhibit 4 to the Letter of
Credit, and, upon a redemption or defeasance of all of the Bonds
pursuant to the Indenture, to surrender the Letter of Credit to
CIBC for cancellation.
(g) Maintenance of Insurance. Maintain insurance with
reputable insurers covering all such properties and against loss
or damage of the kinds and in such amounts, including self
insurance and retainage arrangements, as is usually carried by
companies engaged in similar businesses, similarly situated and
owning similar properties.
V.2 Negative Covenants. So long as a drawing is available
under the Letter of Credit (or the Banks shall have any other
obligations to the Company thereunder) or any of the Banks shall
have any Commitment hereunder or the Company shall have any
obligation to pay any amount to any of the Banks hereunder, the
Company will not, without the written consent of the Agent (with
the consent of the Majority Banks):
(a) Amendment of Any Related Document. Enter into or
consent to any amendment or modification of any Related Document,
except with prior written notice to the Agent and, in the case of
any amendment or modification adverse to the Agent or the Banks
or affecting any rights, powers, agreements or obligations of the
Agent or any Bank hereunder or thereunder, with the prior written
consent of the Agent and the Majority Banks (subject to the
second and third sentences of Section 7.15).
(b) Compliance with ERISA. (i) Enter into any prohibited
transaction (as defined in Section 4975 of the Code and in
Section 406 of ERISA and not otherwise exempt) involving any Plan
which may result in any fine or penalty being imposed on the
Company which (in the reasonable opinion of the Agent) is
material to the financial position or operations of the Company
or (ii) allow or suffer to exist any other event or condition
known to the Company which results in any liability of the
Company to the PBGC which (in the reasonable opinion of the
Agent) is material to the financial position or operations of the
Company. For purposes of this Section 5.2(b), "liability" shall
not include termination insurance premiums payable under Section
4007 of ERISA.
VI EVENTS OF DEFAULT
VI.1 Events of Default. The occurrence of any of the following
events shall be an "Event of Default" hereunder:
(a) The Company shall fail to pay any amount (other than
any amount due under Section 2.5(i) or the principal amount of
any Advance) payable hereunder within five (5) days after such
amount becomes due or shall fail to pay any amount due under
Section 2.5(i) or the principal amount of any Advance when due;
or
(b) Any representation or warranty made, or deemed made, by
the Company herein or by the Company (or any of its officers) in
connection with this Agreement or any of the Related Documents
shall prove to have been incorrect in any material respect when
made or deemed made; or
(c) The Company shall fail to perform or observe any term,
covenant or agreement contained in this Agreement or any material
term, covenant or agreement contained in any of the Related
Documents on its part to be performed or observed (other than a
term, covenant or agreement referred to in Section 6.1(a) or (b))
and, in any such case, such failure shall continue for 30 days
after written notice thereof from the Agent or any Bank (with
concurrent notice to the Agent) to the Company; the Company shall
seek to invalidate the Custodian Agreement or any lien or
security interest created thereby; or the Custodian Agreement
shall at any time fail to provide the Agent with a perfected
security interest in the Bonds as contemplated by the terms
thereof; or
(d) The Company shall fail to pay any Debt (excluding Debt
under this Agreement or under the Bonds) of the Company (as the
case may be), when due (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) in an aggregate
amount exceeding $10,000,000 and such failure shall continue
after the applicable grace period, if any, specified in the
agreement or instrument relating to such Debt; or any other
default under any agreement or instrument relating to any such
Debt, or any other event, shall occur and shall continue after
the applicable grace period, if any, specified in such agreement
or instrument, if the effect of such default or event is to
accelerate, or to permit the acceleration of, the maturity of
such Debt; or any such Debt shall be declared to be due and
payable prior to the stated maturity thereof; or
(e) The Company shall generally not pay its debts as such
debts become due, or shall admit in writing its inability to pay
its debts generally, or shall make a general assignment for the
benefit of creditors; or any proceeding shall be instituted by or
against the Company seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it
or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee, or
other similar official for it or for any substantial part of its
property; or the Company shall take any corporate action to
authorize any of the actions set forth above in this subsection
(e); or
(f) One or more final judgments or decrees shall be entered
against the Company involving in the aggregate a liability (not
paid or fully covered by insurance) of $10,000,000 plus with
respect to judgments or decrees for state income, sales, use and
property taxes, $20,000,000 or more and all such judgments or
decrees shall not have been vacated, discharged or stayed within
90 days from the entry thereof; or
(g) Any provision of this Agreement or any material
provision of any Related Document to which the Company is a party
shall at any time for any reason cease to be valid and binding on
the Company, or shall be declared to be null and void, or the
validity or enforceability thereof shall be denied or contested
by the Company, or a proceeding shall be commenced by any
governmental agency or authority having jurisdiction over the
Company seeking to establish the invalidity or unenforceability
thereof and the Company shall fail diligently or successfully to
defend such proceeding; or
(h) Any "Event of Default" under and as defined in the Loan
Agreement or the Indenture shall have occurred and be continuing;
or
(i) Any Termination Event with respect to a Plan shall have
occurred, and, 30 days after notice thereof shall have been given
to the Company by the Agent or any Bank (with concurrent notice
to the Agent), (i) such Termination Event (if correctable) shall
not have been corrected and (ii) the then present value of such
Plan's vested benefits exceeds the then current value of assets
accumulated in such Plan by more than the amount of $10,000,000;
or
(j) The Company or any of its Affiliates as employer under
a Multiemployer Plan shall have made a complete or partial
withdrawal from such Multiemployer Plan and the plan sponsor of
such Multiemployer Plan shall have notified such withdrawing
employer that such employer has incurred a withdrawal liability
in an annual amount exceeding $10,000,000; or
(k) Any order of the ACC or any approval or order of any
other governmental body, public board, or public body related to
the Related Documents shall be modified, rescinded, revoked or
set aside or otherwise cease to remain in full force and effect;
or
(l) Any "Event of Default" under and as defined in the
Master Restructuring Agreement shall have occurred and be
continuing; or
(m) Any of the First Mortgage Documents shall, at any time,
cease to be in full force and effect (unless released by the
Agent) or shall be declared to be null and void, or the validity
or enforceability thereof shall be contested by the Company, or
any Lien intended to be created by any of the First Mortgage
Documents shall cease to be or shall not be a valid and perfected
Lien having the priority contemplated thereby.
VI.2 Upon an Event of Default. If any Event of Default, other
than an Event of Default described in Section 6.1(e), shall have
occurred and be continuing, the Agent may or, at the direction of
the Majority Banks, shall (i) by notice to the Company, declare
the obligation of CIBC to issue the Letter of Credit and to make
Advances hereunder to be terminated, whereupon the same shall
forthwith terminate, (ii) (A) give notice to the Trustee and
pursuant to Section 2.02(h)(iv) of the Indenture stating that an
Event of Default under this Agreement has occurred and requiring
the Trustee to direct the Tender Agent to purchase the Bonds upon
mandatory tender for purchase pursuant to Section 2.02(h)(iv) of
the Indenture, or (B) give notice to the Trustee stating that an
Event of Default under this Agreement has occurred and directing
the Trustee to notify the Issuer of its resulting obligation to
redeem the Bonds pursuant to Section 3.01(f) of the Indenture,
(iii) declare the Advances, all interest thereon and all other
amounts payable thereunder or in respect thereof to be forthwith
due and payable, whereupon the Advances, all such interest and
all such amounts shall become and be forthwith due and payable,
without presentment, demand, protest, or further notice of any
kind, all of which are hereby expressly waived by the Company,
and (iv) in addition to other rights and remedies provided for
herein or in the Custodian Agreement or otherwise available to
it, pursue any other rights and remedies permitted to the Agent
or any Bank at law or in equity. If any Event of Default
described in Section 6.1(e) shall occur, (i) the Commitment (if
not theretofore terminated) shall automatically terminate, (ii)
the obligation to issue the Letter of Credit (if not theretofore
issued) and make Advances hereunder shall automatically
terminate, and (iii) all Advances and other amounts outstanding,
all interest thereon and all other amounts payable thereunder or
in respect thereof shall automatically be and become immediately
due and payable, in each case, without presentment, demand,
protest or notice of any kind to the Company (or any other
Person), all of which are hereby expressly waived by the Company.
VII MISCELLANEOUS
VII.1 Amendments, Etc. Subject to the second and third
sentences of Section 7.15 hereof, no amendment or waiver of any
provision of this Agreement, nor consent to any departure by the
Company therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Agent (with the
consent of the Majority Banks) and then any such waiver or
consent shall be effective only in the specific instance and for
the specific purpose for which given.
VII.2 Notices, Etc. All notices and other communications
provided for hereunder shall be in writing (including telegraphic
communication) and mailed, telecopied, telexed, telegraphed or
delivered, if to the Company, to it at 220 West Sixth Street,
Tucson, Arizona 85702, Attention: Treasurer, if to the Agent or
CIBC, at its address at 2727 Paces Ferry Road, Two Paces West,
Atlanta, Georgia 30339, Attention: Clare Coyne; and if to any
other Bank, at its address set forth on the signature page
hereto; or, as to each party, at such other address as shall be
designated by such party in a written notice to the other
parties. All such notices and communications shall, when mailed,
telecopied, telexed or telegraphed, be effective when deposited
in the mails or sent by telecopy or telex or delivered to the
telegraph company, respectively, addressed as aforesaid, except
that notices to CIBC or the Agent (as the case may be) pursuant
to the provisions of Article II shall not be effective until
received by CIBC or the Agent (as the case may be).
VII.3 No Waiver; Remedies. No failure on the part of any
Bank or the Agent to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right hereunder preclude any
other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
VII.4 Right of Set-off; Sharing of Payments. (a) Upon the
occurrence and during the continuance of any Event of Default,
each Bank is hereby authorized at any time and from time to time,
to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time
owing by such Bank to or for the credit or the account of the
Company against any and all of the obligations of the Company now
or hereafter existing under this Agreement, up to its pro rata
share thereof, according to the amount of its Percentage,
irrespective of whether or not such Bank shall have made any
demand hereunder and although such obligations may be contingent
or unmatured.
(a) Each Bank agrees promptly to notify the Company after
any such set-off and application referred to in subsection (a)
above; provided that the failure to give such notice shall not
affect the validity of such set-off and application. The rights
of the Banks under this Section are in addition to other rights
and remedies (including, without limitation, other rights of set-
off) which the Banks may have.
(b) If any Bank shall obtain any payment or other recovery
(whether voluntary, involuntary, by application of setoff or
otherwise) on account of any Advance (other than pursuant to the
terms of Sections 2.09 and 2.10) in excess of its pro rata share
of payments then or therewith obtained by all Banks, such Bank
shall purchase from the other Banks such participations in
Advances made by them as shall be necessary to cause such
purchasing Bank to share the excess payment or other recovery
ratably with each of them; provided, however, that if all or any
portion of the excess payment or other recovery is thereafter
recovered from such purchasing Bank, the purchase shall be
rescinded and each Bank which has sold a participation to the
purchasing Bank shall repay to the purchasing Bank the purchase
price to the ratable extent of such recovery together with an
amount equal to such selling Bank's ratable share (according to
the proportion of
(i) the amount of such selling Bank's required repayment
to the purchasing Bank, to
(ii) the total amount so recovered from the purchasing
Bank) of any interest or other amount paid or payable by the
purchasing Bank in respect of the total amount so recovered. The
Company agrees that any Bank so purchasing a participation from
another Bank pursuant to this Section 7.4(c) may, to the fullest
extent permitted by law, exercise all its rights of payment
(including pursuant to Section 7.4(a) and (b) with respect to such
participation as fully as if such Bank were the direct creditor
of the Company in the amount of such participation. If under any
applicable bankruptcy, insolvency or other similar law, any Bank
receives a secured claim in lieu of a setoff to which this
Section applies, such Bank shall, to the extent practicable,
exercise its rights in respect of such secured claim in a manner
consistent with the rights of the Banks entitled under this
Section to share in the benefits of any recovery on such secured
claim.
VII.5 Indemnification. The Company hereby indemnifies and
holds the Banks and the Agent harmless from and against any and
all claims, damages, losses, liabilities, penalties, costs and
expenses which any Bank or the Agent may incur or which may be
claimed against any Bank or the Agent by any Person:
(a) by reason of any inaccuracy or alleged inaccuracy in
any material respect, or any untrue statement or alleged untrue
statement of any material fact, contained in the Preliminary
Official Statement or the Official Statement or any amendment or
supplement thereto, or by reason of the omission or alleged
omission to state therein a material fact necessary to make such
statements, in the light of the circumstances under which they
were made, not misleading; or
(b) by reason of or in connection with the execution,
delivery or performance of the Bonds, the Indenture, or the Loan
Agreement, or any transaction contemplated by the Indenture or
the Loan Agreement, other than as specified in subsection (c)
below; or
(c) by reason of or in connection with the execution and
delivery or transfer of, or payment or failure to make payment
under, the Letter of Credit or any documents or instruments in
connection therewith; provided, however, that the Company shall
not be required to indemnify any Bank or the Agent pursuant to
this Section 7.5(c) for any claims, damages, losses, liabilities,
costs or expenses to the extent caused by (i) CIBC's wilful
misconduct or gross negligence, as determined by a court of
competent jurisdiction, in determining whether documents
presented under the Letter of Credit comply with the terms of the
Letter of Credit or (ii) CIBC's wilful or grossly negligent
failure, as determined by a court of competent jurisdiction, to
make lawful payment under the Letter of Credit after the
presentation to it by the Trustee of a draft and certificate
strictly complying with the terms and conditions of the Letter of
Credit.
Nothing in this Section 7.5 is intended to limit the Company's
obligations contained in Article II. Without prejudice to the
survival of any other obligation of the Company hereunder, the
indemnities and obligations of the Company contained in this
Section 7.5 shall survive the payment in full of amounts payable
pursuant to Article II and the termination of the Letter of
Credit.
VII.6 Liability of the Banks. The Company assumes all
risks of the acts or omissions of the Trustee and any other
beneficiary or transferee of the Letter of Credit with respect to
its use of the Letter of Credit. Neither the Banks, the Agent
nor any of their respective officers or directors shall be liable
or responsible for: (a) the use which may be made of the Letter
of Credit or any acts or omissions of the Trustee and any other
beneficiary or transferee in connection therewith; (b) the
validity, sufficiency or genuineness of documents, or of any
endorsement thereon, even if such documents should prove to be in
any or all respects invalid, insufficient, fraudulent or forged;
(c) payment by CIBC against presentation of documents which do
not comply with the terms of the Letter of Credit, including
failure of any documents to bear any reference or adequate
reference to the Letter of Credit; or (d) any other circumstances
whatsoever in making or failing to make payment under the Letter
of Credit, except that the Company shall have a claim against
CIBC, and CIBC shall be liable to the Company, to the extent of
any direct, as opposed to consequential, damages suffered by the
Company which the Company proves were caused by (i) CIBC's wilful
misconduct or gross negligence, as determined by a court of
competent jurisdiction, in determining whether documents
presented under the Letter of Credit comply with the terms of the
Letter of Credit or (ii) CIBC's wilful or grossly negligent
failure, as determined by a court of competent jurisdiction, to
make lawful payment under the Letter of Credit after the
presentation to it by the Trustee of a draft and certificate
strictly complying with the terms and conditions of the Letter of
Credit. In furtherance and not in limitation of the foregoing,
CIBC may accept (documents that appear on their face to be in
order (whether original documents or copies thereof, including
but not limited to, facsimile copies), without responsibility for
further investigation, regardless of any notice or information to
the contrary.
VII.7 Costs, Expenses and Taxes. The Company agrees to pay
on demand all reasonable costs and expenses in connection with
the preparation, execution, delivery, filing, recording, and
administration of this Agreement, the Custodian Agreement and any
other documents which may be delivered in connection with this
Agreement (including any amendments or waivers of, or consents to
depart from, any provision hereof executed in accordance herewith
at any time or from time to time), including, without limitation,
(A) the reasonable fees and out-of-pocket expenses of counsel for
the Agent and CIBC, and local counsel who may be retained by said
counsel, with respect thereto and with respect to advising the
Agent and CIBC as to their respective rights and responsibilities
under this Agreement and all costs and expenses (including
counsel fees and expenses) in connection with (i) the enforcement
(whether through negotiations, legal proceedings or otherwise) of
this Agreement and such other documents which may be delivered in
connection with this Agreement or (ii) any action or proceeding
relating to a court order, injunction, or other process or decree
restraining or seeking to restrain CIBC from paying any amount
under the Letter of Credit and (B) all costs and expenses of any
Bank (including fees and expenses of counsel to such Bank) in
connection with enforcement (whether through negotiations, legal
proceedings or otherwise) of this Agreement and such other
documents which may be delivered in connection with this
Agreement. In addition, the Company shall pay any and all stamp
and other taxes and fees payable or determined to be payable in
connection with the execution, delivery, filing and recording of
this Agreement or the Letter of Credit or any such other
documents, and agrees to save the Banks harmless from and against
any and all liabilities with respect to or resulting from any
delay in paying or omission to pay such taxes and fees.
Notwithstanding the foregoing, the Company's obligation in
respect of the fees of Agent's counsel in respect of the
preparation and initial closing under this Agreement shall be
limited to $15,000.
VII.8 Binding Effect. This Agreement shall become
effective when it shall have been executed and delivered by the
Company, the Agent and the Banks and thereafter shall be binding
upon and inure to the benefit of the Company, the Agent and the
Banks and their respective successors and assigns, except that
the Company shall not have the right to assign its rights
hereunder or any interest herein without the prior written
consent of the Agent. CIBC may assign to one or more banks or
other entities all or any part of, or may grant participations to
one or more banks or other entities in all or any part of, or any
interest (undivided or divided) in, CIBC's rights and benefits
under this Agreement, and to the extent of any such assignment or
participation (unless otherwise stated therein) the assignee or
purchaser of such assignment or participation shall, to the
fullest extent permitted by law, have the same rights and
benefits hereunder as it would have if such assignee were a Bank
hereunder.
VII.9 Severability. Any provision of this Agreement which
is prohibited, unenforceable or not authorized in any
jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition, unenforceability or non-
authorization without invalidating the remaining provisions
hereof or affecting the validity, enforceability or legality of
such provision in any other jurisdiction.
VII.10 Governing Law. This Agreement shall be governed by,
and construed in accordance with, the internal laws of the State
of New York.
VII.11 Headings. Section headings in this Agreement are
included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
VII.12 Subparticipation. Subject to Section 7.8, no Bank's
participation may be subdivided or transferred without the
Agent's prior written consent (which consent shall not be
unreasonably withheld); except that each Bank may, with notice to
the Agent and each of the Banks, subdivide or transfer its
participation without consent of the Agent if such subdivision or
transfer is made exclusively with or to a branch of such Bank
located in any State of the United States and subject to
jurisdiction of the state and federal courts therein.
VII.13 Acknowledgements and Agreements by the Banks. Each
Bank expressly acknowledges and agrees that: (a) it has received
a copy of this Agreement, the Official Statement, the Indenture,
the Loan Agreement and such other documents in connection with
this Agreement and the Letter of Credit as it has deemed
appropriate to make its own credit analysis and decision to enter
into this Agreement; (b) such Bank, independently and without
reliance upon CIBC or the Agent, has made its own appraisal of
the creditworthiness of the Company and any and all other
obligors, has made a commercial banking decision to purchase its
participation and did take such care on its own behalf as would
have been the case if it were a direct party to the Letter of
Credit; (c) neither CIBC nor the Agent has made or does make any
representations or warranties or assumes any responsibility with
respect to the validity, genuineness, due authorization,
execution, delivery, legality, sufficiency, enforceability or
collectibility of any document related to the Letter of Credit or
any Advance (including, without limitation, this Agreement or any
other agreement, security agreement, guaranty, statement or
certificate delivered in connection therewith) or with respect to
the validity, genuineness, enforceability, collectibility,
existence or worth of any collateral securing the same or
guarantees thereof; (d) CIBC and the Agent assume no
responsibility for (i) any statement, warranty, representation,
or certification made in, or in connection with, any document
relative to the Letter of Credit or Advances, (ii) the filing,
recording, or taking of any action with respect to any document
relative to the Letter of Credit or Advances or any security
therefor, or (iii) the financial condition of the Company or any
other obligor with respect to the Letter of Credit or Advances or
the performance or observance by the Company or any other obligor
with respect to the Letter of Credit or Advances of their
obligations; and (e) the sale of the participation hereunder does
not constitute the sale of a "security" for purposes of the
Securities Act of 1933 and the Securities and Exchange Act of
1934.
VII.14 Authorization. Each Bank authorizes the Agent to act
on behalf of such Bank to the extent provided herein or in any
Related Document, the Letter of Credit or any other document or
instrument delivered hereunder or in connection herewith, and to
take such other action as may be reasonably incidental thereto.
VII.15 Action by the Agent. Each Bank expressly understands
and agrees that (a) the Agent may use its discretion with respect
to exercising or refraining from exercising any rights which it
may have or taking or refraining from taking any actions it may
be entitled to take in connection with the Letter of Credit,
Advances, this Agreement or any other document related to the
Letter of Credit or Advances or any collateral therefor or any
obligor or beneficiary thereunder; and (b) in exercising such
discretion, the Agent will use the same care to protect the
interest of the Banks as it would if the Agent were the holder of
the Banks' interests, and that, so long as the Agent exercises
such care, it shall not be under any liability to the Banks
except in the instance of the Agent's gross negligence or willful
misconduct (without limiting the foregoing, the Agent may consult
with legal counsel, independent public accountants, and experts
selected by it, and will not be liable for any action that it
takes or does not take, in good faith, in accordance with the
advice of such counsel, accountants or experts, and the Agent may
act in reliance on any notice, consent or other instrument or
writing which it believes to be genuine or to have been presented
by a proper Person). Each Bank further expressly understands and
agrees that the Agent may, with the consent of the Majority
Banks, agree to any amendment, modification, waiver, termination,
release or consent with respect to the Letter of Credit,
Advances, this Agreement or any document (including, without
limitation, any security agreement or guaranty) relative to the
Letter of Credit, Advances or this Agreement or any Related
Document, or take, or refrain from taking, any action with
respect thereto, except that the Agent will not, without the
consent of all of the Banks, agree to any extension of the Letter
of Credit (or this Agreement in connection therewith), reduction
of the effective fee rate or interest rate payable to the Banks
in connection with the Letter of Credit or Advances, forgiveness
or postponement of any reimbursement obligation in respect of the
Letter of Credit or any principal of or interest on the Advances
payable to the Banks, or any release of Collateral under the
Custodian Agreement. If the Agent requests the consent of the
Banks to an amendment, modification, waiver, release or consent
and any Bank does not respond within ten (10) days of CIBC's
written request, such Bank shall be deemed not to have given its
consent thereto. If a Bank fails to consent to any amendment,
modification, waiver, release or consent which requires its
consent, CIBC shall have the right, but not the obligation, to
terminate and repurchase such Bank's participation in the Letter
of Credit and all Advances or, in its discretion, in only the
Advances under the Letter of Credit affected by such change, at
such time, for a purchase price equal to the Bank's proportionate
share of the then unpaid principal balance of the outstanding
Advances, if any, being repurchased (reduced by an amount equal
to such Bank's Percentage of any such Advance or portion thereof
with respect to which such Bank has not, as of the time of such
repurchase, reimbursed CIBC in full in accordance with Section
2.7(a)), together with interest, fees and other amounts accrued
with respect thereto, and terminate the Bank's obligations
hereunder with respect to the Letter of Credit and/or the
repurchased Advances, as appropriate.
VII.16 Indemnification by the Banks. The Agent shall not
be required to do any act hereunder or under any Related
Document, the Letter of Credit, or any other document or
instrument delivered hereunder or in connection herewith or take
any action toward the execution or enforcement of the agency
hereby created, or to prosecute or defend any suit in respect of
this Agreement, the Related Documents, the Letter of Credit, or
any collateral security, or other documents in connection with
the foregoing, unless indemnified to its satisfaction by the
Banks, pro rata, in accordance with their respective Percentages,
against loss, cost, liability, and expense. If any indemnity
furnished to the Agent for any purpose shall, in the opinion of
the Agent, be insufficient or become impaired, the Agent may call
for additional indemnity and not commence or cease to do the acts
indemnified against until such additional indemnity is furnished.
VII.17 Exculpation of the Agent. Neither the Agent nor
any of its directors, officers, employees or agents shall (i) be
responsible for any recitals, representations or warranties
contained in, or for the execution, validity, genuineness,
effectiveness or enforceability of, this Agreement, any Related
Document, the Letter of Credit, or any other instrument or
document delivered hereunder or in connection herewith, (ii) be
responsible for the validity, genuineness, Related Document, the
Letter of Credit, or any other instrument or document delivered
hereunder or in connection herewith, (ii) be responsible for the
validity, genuineness, perfection, effectiveness, enforceability,
existence, value or enforcement of any Collateral or other
collateral security, (iii) be under any duty to inquire into or
pass upon any of the foregoing matters, or to make any inquiry
concerning the performance by the Company or any other obligor of
its obligations, (iv) be responsible to verify that any schedule,
certificate, statement, report, notice or other writing which is
required to be delivered by the Company to the Banks has in fact
been delivered to the Banks, (v) be responsible for the content
of any schedule, certificate, statement, report, notice or other
writing which is required to be delivered by the Company to the
Banks including, without limitation, any such writing which in
fact is not delivered to the Banks, or (vi) in any event, be
liable as such for any action taken or omitted by it or them,
except, in each case, for its or their own gross negligence or
willful misconduct. The agency hereby created shall in no way
impair or affect any of the rights and powers of, or impose any
duties or obligations upon, the Agent in its individual capacity.
VII.18 Knowledge. The Agent shall be entitled to assume
that no Event of Default or event or circumstance that with
notice or lapse of time or both would constitute an Event of
Default exists, absent actual knowledge thereof.
VII.19 Resignation. The Agent may resign as such at any
time upon at least 30 days' prior notice to the Company and the
Banks. In the event of any such resignation, the Banks shall as
promptly as practicable appoint a successor Agent with the
consent of those Banks whose Percentages in the aggregate are
greater than 50%. After any resignation pursuant to this Section
7.19, the provisions of this Agreement relating to
indemnification and limitation of the liability of the Agent,
including without limitation Sections 7.13, 7.15, 7.16 and 7.17,
shall inure to the benefit of the retiring Agent as to any
actions taken or omitted to be taken by it while it was Agent
hereunder.
VII.20 Submission To Jurisdiction; Waivers. The Company
hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action
or proceeding relating to this Agreement, the First Mortgage
Documents and the Custodian Agreement, or for recognition and
enforcement of any judgment in respect thereof, to the non-
exclusive general jurisdiction of the Courts of the State of New
York in the County of New York, the courts of the United States
of America for the Southern District of New York, and appellate
courts from any thereof;
(b) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now
or hereafter have to the venue of any such action or proceeding
in any such court or that such action or proceeding was brought
in an inconvenient court and agrees not to plead or claim the
same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar form
of mail), postage prepaid, to the Company at its address set
forth in Section 7.2 or at such other address of which the Agent
shall have been notified pursuant thereto; and
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or
shall limit the right to sue in any other jurisdiction.
VII.21 WAIVERS OF JURY TRIAL. THE COMPANY, THE AGENT AND
THE BANKS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY
JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT
OR ANY FIRST MORTGAGE DOCUMENT OR THE CUSTODIAN AGREEMENT AND FOR
ANY COUNTERCLAIM THEREIN.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their respective
duly authorized officers as of the date first above written.
TUCSON ELECTRIC POWER COMPANY
By____________________________
Name:_______________________
Title:______________________
Amount of Percentage of
Commitment Commitment
$18,347,124.00 100.00% CANADIAN IMPERIAL BANK OF
COMMERCE, NEW YORK AGENCY
individually and as Agent
By____________________________
Name:_______________________
Title:______________________
EXHIBIT A
FORM OF LETTER OF CREDIT
May 1, 1996
First Trust of New York, National Association
100 Wall Street
Suite 1600
New York, New York 10005
Attention: Corporate Trust Administration
Dear Sir or Madam:
We hereby issue our Irrevocable Letter of Credit No.
U-96-0623, at the request and for the account of Tucson Electric
Power Company (the "Company"), in your favor, as Trustee under
the Indenture of Trust, dated as of May 1, 1996 (the
"Indenture"), between the Coconino County, Arizona Pollution
Control Corporation (the "Issuer") and you, as Trustee, pursuant
to which $16,700,000 in aggregate principal amount of the
Issuer's Pollution Control Revenue Bonds, 1996 Series A (Tucson
Electric Power Company Project) (the "Bonds"), are to be issued,
this Letter of Credit being in the total amount of $18,347,124
(subject to adjustment as provided below).
This Letter of Credit shall be effective immediately
and shall expire upon the earliest to occur of (i) April 30,
1999, (ii) the date on which we receive a written and completed
certificate signed by you in the form of Exhibit 1 or Exhibit 3
attached hereto, stating that the drawing thereunder is the final
drawing under this Letter of Credit and that, upon the honoring
of such drawing, this Letter of Credit will expire in accordance
with its terms, and (iii) the date upon which we receive a
written certificate signed by you and stating therein that either
(a) no Bonds are "Outstanding" (as defined in the Indenture) or
(b) this Letter of Credit is being "Terminated" (as defined in
the Indenture) without a mandatory purchase of the Bonds (such
earliest date being the "Cancellation Date").
The aggregate amount which may be drawn under this
Letter of Credit, subject to reductions in amount and
reinstatement as provided below, is $18,347,124, of which the
aggregate amounts set forth below may be drawn as indicated.
(i) An aggregate amount not exceeding
$16,700,000, as such amount may be reduced and restored
as provided below, may be drawn in respect of payment
of principal of the Bonds (or the portion of the
purchase price of Bonds corresponding to principal)
(the "Principal Component").
(ii) An aggregate amount not exceeding
$1,647,124, as such amount may be reduced and restored
as provided below, may be drawn in respect of the
payment of up to 300 days' interest on the principal
amount of the Bonds computed at a maximum rate of 12%
per annum (or the portion of the purchase price of
Bonds corresponding thereto) (the "Interest
Component").
The Principal Component and the Interest Component
shall be reduced effective upon our receipt of a certificate in
the form of Exhibit 4 attached hereto completed in strict
compliance with the terms hereof.
The Principal Component and the Interest Component
shall be reduced immediately following our honoring of any
certificate requesting a drawing hereunder, in each case by an
amount equal to the respective component of the amount specified
in such certificate. The presentation of a certificate
requesting a drawing hereunder, in strict compliance with the
terms hereof, shall be a "Drawing"; a Drawing in respect of a
regularly scheduled interest payment or payment of principal of
and interest on the Bonds upon scheduled or accelerated maturity
shall be a "Regular Drawing"; a Drawing to pay principal of and
interest on Bonds upon redemption of the Bonds in whole or in
part or to pay the purchase price of the Bonds in accordance with
Section 2.02(h)(iv) of the Indenture shall be a
"Redemption/Mandatory Tender Upon Default Drawing"; and a Drawing
to pay the purchase price of Bonds in accordance with Section
2.02(g) or (h) of the Indenture shall be a "Tender Drawing".
On the eighth day following any Drawing hereunder
against the Interest Component (other than the amount drawn
pursuant to a Redemption/Mandatory Tender Upon Default Drawing in
respect of the payment of interest accrued on the Bonds) the
amount so drawn shall be automatically restored to the Interest
Component (if not previously restored pursuant to the following
paragraph) unless you shall have received written notice from us
prior to such day that we will not reinstate the Letter of Credit
in the amount of such drawing because we have not been reimbursed
in respect of such Drawing or because an "Event of Default" under
the Letter of Credit and Reimbursement Agreement dated as of May
1, 1996 between the Company and us, as it may be amended from
time to time (the "Reimbursement Agreement") has occurred and is
continuing.
Upon our having been reimbursed by or for the account
of the Company in respect of any Regular Drawing for the payment
of interest on the Bonds or in respect to any Tender Drawing,
together with interest, if any, owing thereon pursuant to the
Reimbursement Agreement, the Principal Component and the Interest
Component, respectively, shall be restored in the same proportion
as the applicable Drawing. Upon your telephone request, we will
confirm reinstatement pursuant to this paragraph.
Funds under this Letter of Credit are available to you
against the appropriate certificate specified below, duly
executed by you and appropriately completed.
Exhibit Setting Forth
Type of Drawing Form of Certificate Required
Regular Drawing Exhibit 1
Tender Drawing Exhibit 2
Redemption/Mandatory Tender Exhibit 3
Upon Default Drawing
Drawing certificates and other certificates hereunder
shall be dated the date of presentation and shall be presented on
a business day (as hereinafter defined) by hand delivery at our
office located at 2727 Paces Ferry Road, Two Paces West,
Atlanta,Georgia 30339, Attention: Clare Coyne. The certificates
you are required to submit to us may be submitted to us by
facsimile transmission to the following number: (770) 319-4950
subsequently confirmed in writing, which you agree to send by
overnight courier for next day delivery. If we receive your
certificate at such office, all in strict conformity with the
terms and conditions of this Letter of Credit, with respect to
any Drawing at or before 11:30 A.M. (New York time), on a
business day on or before the Cancellation Date, we will honor
such Drawing at or before 3:00 P.M. (New York time), on the same
business day, in accordance with your payment instructions. If
we receive your certificate at such office, all in strict
conformity with the terms and conditions of this Letter of
Credit, after 11:30 A.M. (New York time), with respect to any
Drawing on any business day on or before the Cancellation Date,
we will honor such certificate at or before 3:00 P.M. (New York
time) on the next succeeding business day. Payment under this
Letter of Credit will be made by wire transfer of Federal Funds
to your account with any bank that is a member of the Federal
Reserve System. All payments made by us under this Letter of
Credit will be made with our own funds and not with any funds of
the Company, its affiliates or the Issuer. As used herein,
"business day" shall mean any day on which banks located in the
City of New York, New York are not required or authorized to
remain closed and on which The New York Stock Exchange is not
closed.
This Letter of Credit is transferable in its entirety,
but not in part, to any transferee who has succeeded you as
Trustee under the Indenture and may be successively so
transferred. Transfer of the available balance under this Letter
of Credit to such transferee shall be effected by the
presentation to us of this Letter of Credit accompanied by a
certificate in form set forth in Exhibit 5.
This Letter of Credit shall be governed by and
construed in accordance with the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of
Commerce Publication 500, and, to the extent matters are not
covered thereby, the laws of the State of New York, including the
Uniform Commercial Code as in effect in the State of New York.
To the extent of any inconsistency, the laws of the State of New
York will control. This Letter of Credit sets forth in full our
undertaking, and such undertaking shall not in any way be
modified, amended, amplified or limited by reference to any
document, instrument or agreement referred to herein (including,
without limitation, the Bonds and the Indenture), except only the
certificates referred to herein; and any such reference shall not
be deemed to incorporate herein by reference any document,
instrument or agreement except for such certificates. Whenever
and wherever the terms of this Letter of Credit shall refer to
the purpose of a Drawing hereunder, or the provisions of any
agreement or document pursuant to which such Drawing may be made
hereunder, such purpose or provisions shall be conclusively
determined by reference to the statements made in the certificate
accompanying such Drawing.
Very truly yours,
CANADIAN IMPERIAL BANK OF COMMERCE,
NEW YORK AGENCY
By_____________________________
Authorized Signatory
REGULAR DRAWING CERTIFICATE
The undersigned, a duly authorized officer of
____________ (the "Trustee"), hereby certifies as follows to
Canadian Imperial Bank of Commerce, New York Agency (the "Bank"),
with reference to Irrevocable Letter of Credit No. U-96-0623 (the
"Letter of Credit"), issued by the Bank in favor of the Trustee.
Terms defined in the Letter of Credit and used but not defined
herein shall have the meanings given them in the Letter of
Credit.
(1) The Trustee is the Trustee under the Indenture for
the holders of the Bonds.
(2) The respective amounts of principal of and
interest on the Bonds, which do not exceed the Principal
Component and Interest Component, respectively, under the Letter
of Credit, which are due and payable (or which have been declared
to be due and payable) and with respect to the payment of which
the Trustee is presenting this Certificate, are as follows:
Principal: $_________________
Interest: $_________________
(3) The respective portions of the amount of this
Certificate in respect of payment of principal of and interest on
the Bonds have been computed in accordance with (and this
Certificate complies with) the terms and conditions of the Bonds
and the Indenture and do not include any amount with respect to
any Bonds held of record by the Company or the Issuer or by the
Tender Agent under the Indenture for the account of the Company
or the Issuer.
(4) Please send the payment requested hereunder by
wire transfer to __________________[insert wire transfer
instructions].
[(5) This Certificate is being presented upon the
[scheduled maturity of the Bonds] [accelerated maturity of the
Bonds pursuant to the Indenture]/1 and is the final amount to be
drawn under the Letter of Credit in respect of principal of and
interest on the Bonds. Upon the honoring of this Certificate,
the Letter of Credit will expire in accordance with its terms.
Following application of the proceeds of the Drawing under this
Certificate, no Bonds will be Outstanding (as defined in the
Indenture).]/2
IN WITNESS WHEREOF, the Trustee has executed and
delivered this Certificate as of the ____ day of _________ 19__.
[TRUSTEE NAME],
as Trustee
By________________________
Title:
EXHIBIT 2
TENDER DRAWING CERTIFICATE
The undersigned, a duly authorized officer of
_____________ (the "Trustee"), hereby certifies as follows to
Canadian Imperial Bank of Commerce, New York Agency (the "Bank"),
with reference to Irrevocable Letter of Credit No. U-96-0623 (the
"Letter of Credit"), issued by the Bank in favor of the Trustee.
Terms defined in the Letter of Credit and used but not defined
herein shall have the meanings given them in the Letter of
Credit.
(1) The Trustee is the Trustee under the Indenture for
the holders of the Bonds.
(2) The respective principal and interest portions of
the purchase price of the Bonds being tendered for which this
Tender Drawing is being made, which do not exceed the Principal
Component and Interest Component, respectively, under the Letter
of Credit, are as follows:
Principal: $__________________
Interest: $__________________
The Bonds are not being tendered for purchase pursuant
to Section 2.02(h)(iv) of the Indenture.
(3) The respective portions of the total amount of
this Certificate have been computed in accordance with (and this
Certificate complies with) the terms and conditions of the Bonds
and the Indenture and do not include any amount with respect to
any Bonds held of record by the Company or the Issuer or by the
Tender Agent under the Indenture for the account of the Company
or the Issuer.
(4) Please send the payment requested hereunder by
wire transfer to ___________________ [insert wire transfer
instructions].
IN WITNESS WHEREOF, the Trustee has executed and
delivered this Certificate as of the _____ day of ___________
19___.
[TRUSTEE NAME],
as Trustee
By________________________
Title:
REDEMPTION/MANDATORY TENDER UPON DEFAULT DRAWING CERTIFICATE
The undersigned, a duly authorized officer of
_____________ (the "Trustee"), hereby certifies as follows to
Canadian Imperial Bank of Commerce, New York Agency (the "Bank"),
with reference to Irrevocable Letter of Credit No. U-96-0623 (the
"Letter of Credit"), issued by the Bank in favor of the Trustee.
Terms defined in the Letter of Credit and used but not defined
herein shall have the meanings given them in the Letter of
Credit.
(1) The Trustee is the Trustee under the Indenture for
the holders of the Bonds.
[(2) The respective principal and interest portions of
the redemption price of the Bonds being redeemed for which this
Redemption/Mandatory Tender Upon Default Drawing is being made,
which do not exceed the Principal Component and Interest
Component, respectively, under the Letter of Credit, are as
follows:
Principal: $___________________
Interest: $___________________]/3
[(2) The respective principal and interest portions of
the purchase price of the Bonds being tendered pursuant to
Section 2.02(h)(iv) of the Indenture, which do not exceed the
Principal Component and Interest Component, respectively, under
the Letter of Credit, are as follows:
Principal: $___________________
Interest: $___________________]2/
(3) The respective portions of the total amount of
this Certificate have been computed in accordance with (and this
Certificate complies with) the terms and conditions of the Bonds
and the Indenture and do not include any amount with respect to
any Bonds held of record by the Company or the Issuer or by the
Tender Agent under the Indenture for the account of the Company
or the Issuer.
(4) Please send the payment requested hereunder by
wire transfer to ________________ [insert wire transfer
instructions].
[(5) This Certificate is the final Drawing under the
Letter of Credit and, upon the honoring of such Certificate, the
Letter of Credit will expire in accordance with its terms.]/43/
[Upon application of the proceeds of the Drawing under this
Certificate, no Bonds will be Outstanding (as defined in the
Indenture).]/5
IN WITNESS WHEREOF, the Trustee has executed and
delivered this Certificate as of the ____ day of _________ 19___.
[TRUSTEE
NAME],
as Trustee
By_______________________
Title:
REDUCTION CERTIFICATE
The undersigned, a duly authorized officer of
___________ (the "Trustee"), hereby certifies as follows to
Canadian Imperial Bank of Commerce, New York Agency (the "Bank"),
with reference to Irrevocable Letter of Credit No. U-96-0623 (the
"Letter of Credit"), issued by the Bank in favor of the Trustee.
Terms defined in the Letter of Credit and used but not defined
herein shall have the meanings given them in the Letter of
Credit.
(1) The Trustee is the Trustee under the Indenture for
the holders of the Bonds.
(2) The aggregate principal amount of the Bonds
outstanding (as defined in the Indenture) has been reduced to
$__________.
(3) The Principal Component is hereby correspondingly
reduced to $__________.
(4) The Interest Component is hereby reduced to
$__________/6 to reflect the amount of interest allocable to the
reduced amount of principal set forth in paragraph (2) hereof.
IN WITNESS WHEREOF, the Trustee has executed this
Certificate as of the ___ day of ________________, 19__.
[TRUSTEE NAME],
as Trustee
By________________________
Title:
INSTRUCTIONS TO TRANSFER
_____________, 19__
Re: Canadian Imperial Bank of Commerce, New York
Agency,
Irrevocable Letter of Credit No. U-96-0623
Gentlemen:
The undersigned, as Trustee under the Indenture of
Trust between [TRUSTEE NAME] and the Coconino County, Arizona
Pollution Control Corporation, dated as of May 1, 1996, is named
as beneficiary in the Letter of Credit referred to above (the
"Letter of Credit"). The Transferee named below has succeeded
the undersigned as Trustee under such Indenture.
_______________________________
(Name of Transferee)
______________________________
(Address)
Therefore, for value received, the undersigned hereby
irrevocably instructs you to transfer to such Transferee all
rights of the undersigned to draw under the Letter of Credit.
By this transfer, all rights of the undersigned in the
Letter of Credit are transferred to such Transferee and such
Transferee shall hereafter have the sole rights as beneficiary
under the Letter of Credit; provided, however, that no rights
shall be deemed to have been transferred to such Transferee until
such transfer complies with the requirements of the Letter of
Credit pertaining to transfers.
IN WITNESS WHEREOF, the undersigned has executed and
delivered this Certificate as of the ____ day of _____________
19__.
[TRUSTEE NAME],
as Trustee
By________________________
Title:
3206960.3 051096 1042C 96256581
CUSTODIAN AND PLEDGE AGREEMENT
THIS CUSTODIAN AND PLEDGE AGREEMENT (the "Agreement"), dated
as of May 1, 1996, is made by and among TUCSON ELECTRIC POWER
COMPANY (the "Company"), FIRST TRUST OF NEW YORK, NATIONAL
ASSOCIATION, as custodian (such entity, or its successor or
assign as custodian, being the "Custodian") and CANADIAN IMPERIAL
BANK OF COMMERCE, NEW YORK AGENCY, acting in its capacity as
Agent (in such capacity, "CIBC") for the benefit of certain
Banks, pro rata, in accordance with their respective Percentages
pursuant to a Letter of Credit and Reimbursement Agreement, dated
as of April 1, 1996 (the "Reimbursement Agreement"), among the
Company, such Banks and CIBC, individually and as Agent
thereunder.
WHEREAS, at the Company's request, the Coconino County,
Arizona Pollution Control Corporation (the "Issuer") is issuing
$16,700,000 in aggregate principal amount of the Issuer's
Pollution Control Revenue Bonds, 1996 Series A (Tucson Electric
Power Company Project) (the "Bonds"), pursuant to an Indenture of
Trust, dated as of May 1, 1996 (the "Indenture"), between the
Issuer and First Trust of New York, National Association, as
trustee (such trustee and any successor trustee under the
Indenture, in such capacity, being the "Trustee"), for the
purpose stated in the Indenture;
WHEREAS, to induce CIBC to issue a letter of credit to
support certain amounts payable on and in respect of the Bonds
(the "Letter of Credit") pursuant to the terms of the
Reimbursement Agreement, the Company proposes to pledge the
Collateral (as hereinafter defined) and to enter into this
Agreement;
NOW, THEREFORE, the Company, the Custodian and CIBC hereby
agree as follows:
I
DEFINITIONS; INTERPRETATION
I.1 Definitions. For the purposes of this Agreement, terms
defined in the Reimbursement Agreement and used but not otherwise
defined herein have the meanings given them in the Reimbursement
Agreement, and the following terms have the meanings indicated
(such meanings to be equally applicable to both singular and
plural forms of the terms defined):
"Collateral" means each Pledged Bond, all payments of
principal and interest payable on Pledged Bonds, all of the
Company's rights to receive Pledged Bonds and amounts payable
thereon and all of the Company's right, title and interest in and
to Pledged Bonds and such principal of and interest thereon, and
all proceeds thereof, as they may from time to time be delivered
to or held, pending payment by the Custodian, the Remarketing
Agents or the Trustee, in money, securities or collections from
or with respect to any or all of the foregoing.
"Obligations" means (a) all amounts of principal of and
interest on each Advance, (b) all other amounts due to the Agent
and the Banks by or on behalf of the Company under or in respect
of the Reimbursement Agreement and (c) all amounts paid or costs
or expenses (including, without limitation, reasonable attorneys'
fees) incurred by CIBC or any of the Banks in the collection of
any of the foregoing or for the maintenance, preservation,
protection or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or realization upon, the Collateral
or in connection with the enforcement or administration of this
Agreement or the Reimbursement Agreement, in each case
irrespective of whether the obligation to pay any such amount is
direct or indirect, absolute or contingent, joint or several, due
or not due, liquidated or unliquidated, arises by operation of
law or otherwise or is from time to time reduced and thereafter
reincurred. To the extent any payment made with respect to an
Obligation is rescinded or recovered or is otherwise avoided or
must be restored under or by reason of any bankruptcy or
insolvency proceedings of the Company or any other Person or
otherwise, the amount of such payment so rescinded, recovered,
restored or avoided shall again constitute an Obligation, as if
such payment had never been made.
"Pledged Bond" means any Bond held at any time by the Tender
Agent pursuant to Section 13.01 of the Indenture.
"Remarketing Agreement" means the Remarketing Agreement
between the Company and the Remarketing Agent, as the same may be
amended from time to time, and any remarketing agreement between
the Company and a successor Remarketing Agent.
I.2 Interpretation. The headings of the Articles and Sections
hereof are for convenience of reference only and shall not limit
or affect the meaning or construction of any provision hereof.
II
SECURITY INTEREST
II.1 Grant of Security Interest. As security for the due and
punctual payment in full of each of the Obligations, the Company
hereby grants to CIBC (on behalf of and for the benefit of the
Banks, pro rata, in accordance with their respective Percentages)
a continuing first lien on and security interest in the
Collateral.
II.2 Interest Continuing and Absolute. Until payment in full
of all the Obligations has been indefeasibly made after the
Cancellation Date, the security interest hereunder in the
Collateral shall continue in full force and effect, and it and
the Company's obligations hereunder shall be effective
irrespective of any illegality, invalidity or unenforceability of
the Bonds, the Letter of Credit, the Reimbursement Agreement,
this Agreement or any other Related Document.
II.3 Perfection. The Company shall perfect the security
interest hereunder in the Collateral (a) in the case of Pledged
Bonds, by delivering or causing to be delivered such Pledged
Bonds to the Custodian, (b) in the case of any other certificated
securities and cash proceeds forming part of the Collateral, by
delivering such Collateral to CIBC, (c) in the case of
uncertificated securities forming part of the Collateral, by
registering such securities in the name of CIBC, or (d) by any
other method permitted by the Uniform Commercial Code as in
effect in the State of New York on the date of such perfection.
All steps necessary for such perfection shall be taken by the
Company, in the case of each Pledged Bond forming part of the
Collateral, on the day such Bond becomes a Pledged Bond and, in
the case of proceeds, uncertified securities and any other
Collateral, immediately. The Company shall promptly notify CIBC
of any Collateral delivered to the Custodian and of any steps
taken to perfect the security interest hereunder in the
Collateral pursuant to Section 2.3(c) or (d) hereof.
III
REPRESENTATIONS AND WARRANTIES
III.1 Representations and Warranties. The Company
represents and warrants to CIBC and the Custodian and, so long as
any of the Obligations remain unpaid, shall be deemed
continuously to represent and warrant to CIBC and the Custodian,
as follows:
(a) At the time of delivery to CIBC or the Custodian of any
Collateral, the Company will have good and marketable title to,
and be the sole owner of, such Collateral, free and clear of all
liens and other encumbrances, other than the security interest
created hereby, the security interest hereunder in such
Collateral shall have been perfected and no financing statement
or other instrument with respect to any of the Collateral shall
have been and continue to be recorded, registered or filed, and
no security agreement with respect to any of the Collateral shall
have been executed by the Company, other than with respect to
such security interest in favor of CIBC (for the benefit of the
Banks) as provided in Section 2.1 hereof.
(b) CIBC (on behalf of the Banks as aforesaid) has a valid,
first and prior perfected security interest in the Collateral.
(c) The Collateral may be properly pledged hereunder.
(d) No consents or approvals of any Person are required for
the execution, delivery and performance by the Company of this
Agreement, the assignment and transfer by the Company of any of
the Collateral to CIBC hereunder, or the subsequent sale or
transfer of the Collateral by CIBC pursuant to the terms hereof.
(e) This Agreement has been authorized by all necessary
corporate action, duly executed and delivered by the Company, and
constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
IV
COVENANTS
IV.1 Protection of CIBC's Security Interest. The Company
hereby covenants and agrees that it shall defend its title to,
and the security interest hereunder in, the Collateral against
all claims of all other Persons, and shall keep the Collateral
free from all liens and encumbrances (other than the security
interest hereunder) and pay or cause to be paid promptly when due
all taxes, fees, assessments and other charges now or hereafter
imposed on or in respect of any of the Collateral.
IV.2 Sale of Collateral. The Company hereby covenants and
agrees that it shall not, without the prior written consent of
CIBC (given with the consent of the Majority Banks), sell,
transfer or otherwise dispose of, or permit any other Person to
sell, transfer or otherwise dispose of, any of the Collateral or
any of the Company's interests therein except in accordance with
the terms of this Agreement, the Indenture and the Remarketing
Agreement. The receipt by CIBC of all or any part of the
proceeds of any sale, transfer or other disposition of any of the
Collateral, except in accordance with the prior sentence, shall
not be deemed or construed to be a consent by CIBC to any such
sale, transfer or other disposition.
IV.3 Further Assurances. The Company hereby covenants and
agrees that it shall execute and deliver to CIBC or the Custodian
such assignments and other documents and instruments, and shall
take all other action relating to the Collateral and the
preservation, protection or perfection of CIBC's security
interest therein, as CIBC or the Custodian may request, and the
Company shall not file or permit to be filed any financing
statement (or amendment or continuation statement) or execute any
security agreement with respect to any of the Collateral unless
it names CIBC (on behalf of the Banks as aforesaid) as the only
secured party. To the extent permitted by law, the Company
hereby irrevocably appoints CIBC as its attorney-in-fact (without
requiring CIBC to act as such) to perform all acts that CIBC
deems appropriate to preserve, protect and perfect its continuing
security interest in the Collateral or to preserve or protect the
Collateral, and the Company and all other parties hereto
acknowledge and agree that such appointment is coupled with an
interest.
V
REMEDIES UPON THE OCCURRENCE OF AN EVENT OF
DEFAULT
V.1 Default Remedies. If an Event of Default under the
Reimbursement Agreement shall occur and be continuing, CIBC shall
be entitled to exercise and shall, at the direction of the
Majority Banks, exercise any one or more (at the discretion of
CIBC and/or such Majority Banks, as appropriate, at one or more
times) of the following remedies:
(a) CIBC shall have the right to receive the Collateral, if
any, then held by the Custodian, the Remarketing Agent or any
other Person, endorse, assign or deliver in its own name or the
name of the Company any and all checks, drafts and other
instruments for the payment of money, securities or other
property relating to or constituting part of the Collateral, and
cause the Collateral to be registered in the name of CIBC or its
designee, and the Company hereby waives presentment, protest and
notice of nonpayment of any instrument so endorsed. In
furtherance of the foregoing, the Company hereby irrevocably
appoints CIBC, or any of its officers or designees, the Company's
lawful attorney-in-fact (without requiring CIBC so to act), with
power of substitution, in the name of the Company or in the name
of CIBC (i) to endorse the name of the Company upon any of the
Collateral, including proceeds, and to cause any of the
Collateral to be registered in the name of CIBC (on behalf of the
Banks as aforesaid) or its designee; (ii) to demand, collect,
receive payment of, receipt for and give discharges and releases
of any of the Collateral; (iii) to commence and prosecute any and
all actions or proceedings at law or in equity in any court to
collect or otherwise realize on any of the Collateral to enforce
any rights in respect thereof; (iv) to initiate, settle,
compromise, compound, adjust or defend any actions, suits or
proceedings relating or pertaining to any of the Collateral; and
(v) to sell, transfer, assign, discount, negotiate or otherwise
deal in all or any portion of the Collateral or the proceeds
thereof and generally to perform all other acts necessary or
desirable to realize on, and obtain the benefits of, the
Collateral and otherwise to carry out the intention of this
Agreement, as fully and effectively as though CIBC were the
absolute owner thereof, and the Company hereby ratifies and
confirms all that CIBC shall do by virtue of this appointment.
CIBC shall not, under any circumstances, have any liability for
any error or omission made in the settlement, collection or
payment or other disposition of any or all of the Collateral or
of any instrument received in payment there for.
(b) CIBC may sell or cause to be sold, in one or more
sales, at such price as CIBC may deem adequate, in its sole
discretion, and for cash or on credit or for future delivery,
with or without assumption of any credit risk, all or any portion
of the Collateral, at public or private sale, without demand of
performance or notice of intention to sell or of time or place of
sale (except such notice as may be required by applicable statute
and cannot be waived), and CIBC and the Banks may be the
purchaser of all or any portion of the Collateral so sold;
provided, however, that CIBC shall first give notice to the
Trustee that an Event of Default has occurred and is continuing.
If any Pledged Bonds are sold pursuant to this subsection (b)
(unless sold on a basis that would exclude such Pledged Bond from
the benefit of the Letter of Credit), CIBC shall reinstate the
Letter of Credit to the full amount of principal and 300 days'
interest on the principal amount at 12% per annum for any such
Pledged Bonds sold; provided, however, that such reinstatement
shall not be deemed to constitute a waiver by CIBC of any of its
rights under Section 6.02 of the Reimbursement Agreement. The
purchaser(s) at any such sale shall thereafter hold the
Collateral so sold absolutely, free from any claim or right
whatsoever, including any equity of redemption, of the Company.
Any such demand, notice, claim, right or equity is hereby
expressly waived and released by the Company. Without limiting
the foregoing, if any such notice of the time or place of sale is
so required, the Company agrees that CIBC need not give more than
ten days' notice of the time and place of any public sale or of
the time after which a private sale or other intended disposition
is to take place and that such notice is reasonable notification
of such matters. Neither CIBC nor any Bank shall, under any
circumstances, incur any liability as a result of the sale of the
Collateral or any part thereof at any sale conducted in
accordance with the provisions of this Agreement. The Company
hereby waives any claims against CIBC or the Banks arising by
reason of the fact that the price at which the Collateral may
have been sold at any private sale was less than the price which
might have been obtained at a public sale or was less than the
aggregate principal amount of the Pledged Bonds or the then total
unpaid Obligations.
(c) The Company recognizes that CIBC may not deem it
desirable to effect a public sale of any or all of the Pledged
Bonds or otherwise but may deem it desirable to resort to one or
more private sales thereof to a restricted group of purchasers
who will be obliged to agree, among other things, to acquire such
securities for their own account for investment and not with a
view to the distribution or resale thereof. CIBC shall be under
no obligation to delay a sale of any of the Pledged Bonds for the
period of time necessary to permit the Issuer to register them
for public sale under the Securities Act of 1933, as amended (the
"Act"), or under applicable state securities laws, even should
the Issuer agree to do so.
(d) The Company shall do or cause to be done all such other
acts and things as may be deemed necessary or desirable by CIBC
to make such sale or sales of any portion or all of the Pledged
Bonds valid and binding and in compliance with all applicable
laws, regulations, orders, writs, injunctions, decrees or awards
of any and all courts, arbitrators or governmental
instrumentalities, domestic or foreign, having jurisdiction over
any such sale or sales, including registering such Bonds under
the Act, or any state securities laws (to the extent necessary,
in CIBC's judgment), all at the Company's expense.
(e) The Company acknowledges that a breach of any of the
covenants contained in this Article will cause irreparable injury
to CIBC (and the Banks) and that CIBC (on behalf of the Banks as
aforesaid) has no adequate remedy at law in respect of any such
breach and, as a consequence, agrees that each and every covenant
contained in this Article shall be specifically enforceable
against the Company, and the Company hereby waives and agrees not
to assert any defenses against an action for specific performance
of such covenants except for a defense that no Event of Default
has occurred.
V.2 Remedies Not Exclusive. (a) The remedies provided for
herein are cumulative and are not exclusive of any other rights,
powers, privileges or remedies provided by law or under the
Reimbursement Agreement, including, without limitation, all
rights and remedies of a secured party under Article 9 of the
Uniform Commercial Code as in effect in the State of New York on
the date of the exercise of any such remedy. The exercise by
CIBC of any one or more remedies under Section 5.1 shall not
constitute a waiver of, or otherwise prohibit, the exercise by
CIBC of other remedies provided herein or by law at the same or
other times.
(b) CIBC shall not be required to exercise any
particular rights, powers, remedies or benefits hereunder or
under the Reimbursement Agreement or any Related Document.
Without limiting the generality of the foregoing, CIBC (i) shall
be entitled to seek to realize upon or enforce the Collateral in
such order as it may from time to time determine and without
regard to whether or not any other collateral or security for any
of the Obligations shall have been resorted to, and (ii) shall
not be required to exhaust or enforce any particular portion of
the Collateral before seeking to realize or enforce upon any
other portion thereof.
VI
COLLECTIONS BY THE COMPANY AND APPLICATIONS
OF PROCEEDS IN RESPECT OF COLLATERAL
VI.1 Collections on Pledged Bonds by the Company. (a) If,
while any of the Obligations are outstanding, the Company becomes
entitled to receive or receives any payment in respect of any
Pledged Bond, the Company shall accept such payment as CIBC's
(and the Banks') agent, hold it in trust on behalf of CIBC (and
the Banks) and deliver it, with any necessary endorsements,
forthwith to CIBC for application to satisfaction of the
Obligations then due and payable. All sums of money so paid in
respect of any payment of interest on, or any portion of purchase
price equal to the amount of accrued interest on, any Pledged
Bond which are received by the Company and paid to CIBC shall be
credited against the obligation of the Company to pay interest as
set forth in Sections 2.5 and 2.6 of the Reimbursement Agreement.
All sums of money so paid in respect of any payment of principal
of, or any portion of purchase price equal to the principal
amount of, any Pledged Bond which are received by the Company and
paid to CIBC shall be credited against the obligation of the
Company to pay principal to CIBC as set forth in Sections 2.5 and
2.6 of the Reimbursement Agreement.
VI.2 Application of Proceeds. All proceeds received from the
sale or other disposition of, or realization on or with respect
to, all or any part of the Collateral shall be applied by CIBC,
in such order as CIBC in its sole discretion (but subject to the
direction of the Majority Banks) may determine, to the payment of
the costs and expenses of such sale, disposition or realization,
including, without limitation, reasonable fees and expenses of
counsel for CIBC and the Banks and all expenses, liabilities and
advances of CIBC in connection therewith, and to the payment of
the remaining Obligations (pro rata, among the Banks).
VII
RELEASE OF COLLATERAL; COMPANY'S LIABILITY
FOR DEFICIENCY
VII.1 Release of Collateral. If (a) the Company makes or
causes to be made to CIBC a prepayment under Section 2.8(b) of
the Reimbursement Agreement in respect of its principal repayment
obligation under Section 2.6(b) of the Reimbursement Agreement in
respect of any Advance, (b) the Remarketing Agent causes Pledged
Bonds at the time held hereunder to be sold or (c) the
Obligations are otherwise indefeasibly satisfied, upon receipt of
such prepayment or of the proceeds of such sale or other
satisfaction of the Obligations, Pledged Bonds in an aggregate
principal amount equal to the prepayment so made, or the
principal amount of Pledged Bonds so sold, or the Obligations so
satisfied, shall be released from the lien of this Agreement and
the Company or its designee shall be entitled to have the
released Bonds delivered to the Company or the Remarketing Agent
in accordance with Sections 13.06 and 13.07 of the Indenture;
provided, however, that before delivering the released Bonds to
the Company or the Remarketing Agent, the Custodian shall have
received notice from CIBC of the reinstatement of the amounts so
prepaid, sold or satisfied as available under the Letter of
Credit.
VII.2 Company's Liability for Deficiency. The Company
shall in any event remain liable for any deficiency remaining
unpaid after the application of the proceeds of the Collateral to
the satisfaction of the Obligations.
VIII
GENERAL
VIII.1 Expenses. The Company shall pay to CIBC all expenses
(including reasonable fees and expenses of counsel) of, or
incident to, any actual or attempted sale or other disposition
of, or any exchange, enforcement (whether through negotiations,
legal proceedings or otherwise), collection, compromise or
settlement of or with respect to, all or any of the Collateral,
by litigation or otherwise. The Company shall reimburse CIBC on
demand for all reasonable costs and expenses incurred in
connection with the negotiation, preparation, execution and
administration of this Agreement and any Amendment hereto,
including, without limitation, any fees or expenses (including
reasonable fees and expenses of counsel to the Custodian) paid by
CIBC to the Custodian for its services in connection with this
Agreement.
VIII.2 Notices. All notices and other communications
provided for hereunder shall be in writing (including telegraphic
communication) and mailed, telecopied, telexed, telegraphed or
delivered to the parties to the telex or telecopier number or
address (as the case may be) specified for the intended recipient
on the signature page hereof, or to such other number or address
as such recipient may have last specified by notice to the other
parties. All such notices and communications shall, when mailed,
telecopied, telexed or telegraphed, be effective when deposited
in the mails or sent by telecopy or telex or delivered to the
telegraph company, respectively, addressed as aforesaid.
VIII.3 Remedies and Waivers. No failure or delay on the
part of CIBC in exercising any right hereunder shall operate as a
waiver of, or impair, any such right. No single or partial
exercise of any such right shall preclude any other or further
exercise thereof or the exercise of any other right. No waiver
of any such right shall be effective unless given in writing. No
waiver of any such right shall be deemed a waiver of any other
right hereunder. The remedies herein provided are cumulative and
not exclusive of any remedies provided by law.
VIII.4 Amendment. No amendment or waiver of any provision
of this Agreement, nor consent to any departure by the Company
therefrom, shall in any event be effective unless the same shall
be in writing and signed by the Custodian and CIBC (with the
consent of the Majority Banks), and then any such waiver or
consent shall be effective only in the specific instance and for
the specific purpose for which given.
VIII.5 Assignment. (a) This Agreement shall be binding upon
and inure to the benefit of CIBC, the Custodian and the Company
and their respective successors and assigns; provided, however,
that the Company and the Custodian may not assign any of their
respective rights or obligations under this Agreement without the
prior written consent of CIBC.
(b) If CIBC or the Custodian assigns or otherwise
transfers any of its rights and obligations hereunder, each
reference in this Agreement to CIBC or the Custodian, as the case
may be, shall be deemed to be a reference to CIBC or the
Custodian, as the case may be, and the Person or Persons to which
such rights and obligations were assigned and transferred to the
extent of their respective interests.
VIII.6 Governing Law. This Agreement shall be governed by,
and construed and interpreted in accordance with, the laws of the
State of New York.
VIII.7 Custodian Appointed Agent. CIBC hereby appoints the
Custodian as its agent to receive and hold Pledged Bonds
constituting Collateral granted hereunder for CIBC's account.
The Company acknowledges such appointment and agrees with CIBC
and the Custodian, which by its execution of this Agreement
accepts such appointment, that, for so long as this Agreement
shall remain in full force and effect, all certificates or
instruments representing or evidencing the Pledged Bonds (and all
other portions of the Collateral which may be delivered to the
Custodian) shall be delivered to and held by the Custodian, as
agent for CIBC, separate and apart from all of the other property
of the Custodian and subject to CIBC's exclusive direction and
control. Upon receipt of any Collateral, the Custodian shall
promptly give notice to CIBC specifying the Collateral received.
Upon request from time to time by CIBC, the Custodian shall
promptly deliver all or such portions of the Collateral as CIBC
shall specify and to such Persons as CIBC shall specify by notice
to the Custodian. The Custodian shall give prompt notice to CIBC
(i) at least 30 days prior to resigning as Tender Agent under the
Indenture and (ii) upon receipt of notice or otherwise learning
of (x) its removal as such Tender Agent or (y) any amendment,
supplement or other modification of the Indenture, or any
consent, waiver or release with respect thereto, affecting the
obligations or duties of the Tender Agent under the Indenture
with respect to the Collateral.
VIII.8 Reasonable Care. Subject to Section 8.7 hereof, the
Custodian shall be deemed to have exercised reasonable care in
the custody and preservation of the Collateral in its possession
if the Collateral is accorded treatment substantially equal to
that which the Custodian accords its own property. In executing,
delivering and performing under this Agreement the Custodian
shall be entitled to all rights, privileges and immunities
afforded the Trustee under the Indenture which are hereby
incorporated by reference.
VIII.9 Integration of Terms; References in Indenture. This
Agreement contains the entire agreement between the parties
relating to the subject matter hereof and supersedes all oral
statements and prior writings with respect thereto. This
Agreement shall be deemed to be the "Custodian Agreement"
referenced in the Indenture.
VIII.10 Counterparts. This Agreement may be executed in
counterparts, and such counterparts taken together shall be
deemed to constitute one and the same agreement.
VIII.11 Severability. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
VIII.12
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above
written.
TUCSON ELECTRIC POWER COMPANY
220 West Sixth Street
Tucson, Arizona 85702
Telecopy:
Attention:
By: ___________________________
Name: _________________________
Title: ________________________
CANADIAN IMPERIAL BANK OF
COMMERCE, NEW YORK AGENCY, as
Bank
425 Lexington Avenue
New York, New York 10017
Telex:
Telecopy:
Attention:
By:
_____________________________
Name:
___________________________
Title:
__________________________
FIRST TRUST OF NEW YORK,
NATIONAL ASSOCIATION, as
Custodian
100 Wall Street
Suite 1600
New York, New York 10005
Attention: Corporate Trust
Administration
Telex:
Telecopy:
Attention:
By:
_____________________________
Name:
___________________________
Title:
__________________________
TABLE OF CONTENTS
Page
PRELIMINARY STATEMENTS 1
ARTICLE I
DEFINITIONS 1
SECTION 1.1 Certain Defined Terms 1
SECTION 1.2 Computation of Time Periods 8
SECTION 1.3 Accounting Terms 8
SECTION 1.4 Internal References 9
ARTICLE II
AMOUNT AND TERMS OF THE LETTER OF CREDIT 9
SECTION 2.1 The Letter of Credit 9
SECTION 2.2 Issuing the Letter of Credit 9
SECTION 2.3 Participations in Letter of Credit 9
SECTION 2.4 Commissions and Fees 10
SECTION 2.5 Reimbursement On Demand 10
SECTION 2.6 Advances 11
SECTION 2.7 Reimbursement Obligations Deemed to be Loans;
Funding by Banks to CIBC 13
SECTION 2.8 Prepayments; Reinstatement of Letter of Credit
Amounts 15
SECTION 2.9 Increased Costs 15
SECTION 2.10 Increased Capital 16
SECTION 2.11 Payments and Computations 17
SECTION 2.12 Non-Business Days 17
SECTION 2.13 Extension of the Stated Termination Date 18
SECTION 2.14 Evidence of Debt 18
SECTION 2.15 Obligations Absolute 18
SECTION 2.16 First Mortgage Bond 19
ARTICLE III
CONDITIONS PRECEDENT 19
SECTION 3.1 Condition Precedent to Issuance of the
Letter of Credit 19
SECTION 3.2 Additional Conditions Precedent to Issuance
of the Letter of Credit 21
ARTICLE IV
REPRESENTATIONS AND WARRANTIES 22
SECTION 4.1 Representations and Warranties of the
Company 22
ARTICLE V
COVENANTS OF THE COMPANY 26
SECTION 5.1 Affirmative Covenants 26
(a)
Preservation of Corporate Existence, Etc 26
(b) Compliance
with Laws, Etc. 26
(c) Visitation
Rights 26
(d) Keeping of
Books 27
(e) Reporting
Requirements 27
(f) Redemption
or Defeasance of Bonds 31
(g)
Maintenance of Insurance 31
SECTION 5.2 Negative Covenants 31
(a) Amendment
of Any Related Document 31
(b) Compliance
with ERISA 31
ARTICLE VI
EVENTS OF DEFAULT 32
SECTION 6.1 Events of Default 32
SECTION 6.2 Upon an Event of Default 34
ARTICLE VII
MISCELLANEOUS 35
SECTION 7.1 Amendments, Etc 35
SECTION 7.2 Notices, Etc 35
SECTION 7.3 No Waiver; Remedies 35
SECTION 7.4 Right of Set-off; Sharing of Payments 36
SECTION 7.5 Indemnification 37
SECTION 7.6 Liability of the Banks 38
SECTION 7.7 Costs, Expenses and Taxes 38
SECTION 7.8 Binding Effect 39
SECTION 7.9 Severability 40
SECTION 7.10 Governing Law 40
SECTION 7.11 Headings 40
SECTION 7.12 Subparticipation 40
SECTION 7.13 Acknowledgements and Agreements by the
Banks 40
SECTION 7.14 Authorization 41
SECTION 7.15 Action by the Agent 41
SECTION 7.16 Indemnification by the Banks 42
SECTION 7.17 Exculpation of the Agent 42
SECTION 7.18 Knowledge 43
SECTION 7.19 Resignation 43
SECTION 7.20 Submission To Jurisdiction; Waivers 43
SECTION 7.21 WAIVERS OF JURY TRIAL 44
||
EXHIBIT A - Form of Irrevocable Letter of Credit with
Exhibits 1 through 6 thereto
EXHIBIT B - Form of Custodian and Pledge Agreement
EXHIBIT C - Form of Bond Delivery Agreement
EXHIBIT D-1 - Form of Opinion of Counsel to the Company
EXHIBIT D-2 - Form of Opinion of General Counsel of the Company
EXHIBIT D-3 - Form of Opinion of New Mexico Counsel to the Company
EXHIBIT D-4 - Form of Opinion of Arizona Counsel to the Company
_______________________________
1/ Insert appropriate bracketed language.
2/ To be used upon scheduled or accelerated maturity of the
Bonds.
3/ To be used for redemption of Bonds.
4/ To be used for a mandatory tender of the Bonds for purchase
pursuant to Section 2.02(h)(iv) of the Indenture.
5/ To be used upon optional or mandatory redemption of the
Bonds in full.
6/ Calculated by multiplying the amount of the principal amount
in the last line of paragraph (2) by twelve percent (12%)
and multiplying the product thereof by the quotient of 300
divided by 365.
05/09/96/DMG/06361/009/AGREE/35272.3
LOAN AGREEMENT
between
COCONINO COUNTY, ARIZONA
POLLUTION CONTROL CORPORATION
and
TUCSON ELECTRIC POWER COMPANY
Dated as of May 1, 1996
Relating To
Pollution Control Refunding Revenue Bonds,
1996 Series B
(Tucson Electric Power Company Project)
TABLE OF CONTENTS*
Page
LOAN AGREEMENT 1
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions 1
ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.01 Representations and Warranties of the Pollution Control
Corporation 6
SECTION 2.02 Representations and Warranties of the Company 7
ARTICLE III
THE FACILITIES
SECTION 3.01 Facilities; Property of the Company 8
SECTION 3.02 Revision of Plans and Specifications 8
SECTION 3.03 Maintenance of Facilities; Remodeling 8
SECTION 3.04 Insurance 8
SECTION 3.05 Condemnation 8
SECTION 3.06 Termination of Construction 8
ARTICLE IV
ISSUANCE OF THE BONDS; THE LOANS; DISPOSITION OF PROCEEDS
OF THE BONDS
SECTION 4.01 Issuance of the Bonds 9
SECTION 4.02 Issuance of Other Obligations. 9
SECTION 4.03 The Loan; Disposition of Bond Proceeds. 9
ARTICLE V
LOAN PAYMENTS; OTHER OBLIGATIONS
SECTION 5.01 Loan Payments. 9
SECTION 5.02 Payments Assigned; Obligation Absolute 9
SECTION 5.03 Payment of Expenses 10
SECTION 5.04 Indemnification 10
SECTION 5.05 Payment of Taxes; Discharge of Liens 10
ARTICLE VI
SPECIAL COVENANTS
SECTION 6.01 Maintenance of Corporate Existence 11
SECTION 6.02 Permits or Licenses 11
SECTION 6.03 Pollution Control Corporation's Access to
Facilities 11
SECTION 6.04 Tax-Exempt Status of Interest on Bonds. 12
SECTION 6.05 Use of Facilities 13
SECTION 6.06 Financing Statements 13
SECTION 6.07 Security Arrangements 13
SECTION 6.08 Neither the Company nor the Pollution
Control Corporation to be Initial
Purchasers of the Bonds. 14
ARTICLE VII
ASSIGNMENT, LEASING AND SELLING
SECTION 7.01 Conditions 14
SECTION 7.02 Instrument Furnished to Trustee 15
SECTION 7.03 Limitation 15
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
SECTION 8.01 Events of Default 16
SECTION 8.02 Force Majeure 16
SECTION 8.03 Remedies 16
SECTION 8.04 No Remedy Exclusive 17
SECTION 8.05 Reimbursement of Attorneys' and Agents'
Fees 17
SECTION 8.06 Waiver of Breach 17
ARTICLE IX
REDEMPTION OF BONDS
SECTION 9.01 Redemption of Bonds 17
SECTION 9.02 Compliance with the Indenture 18
ARTICLE X
PURCHASE AND REMARKETING OF BONDS
SECTION 10.01 Purchase of Bonds 18
SECTION 10.02 Optional Purchase of Bonds 18
ARTICLE XI
MISCELLANEOUS
SECTION 11.01 Term of Agreement 19
SECTION 11.02 Notices 19
SECTION 11.03 Parties in Interest 19
SECTION 11.04 Amendments 19
SECTION 11.05 Counterparts 19
SECTION 11.06 Severability 19
SECTION 11.07 Governing Law 20
Signatures 21
Exhibit A A-1
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of May 1, 1996 (this
"Agreement"), between COCONINO COUNTY, ARIZONA POLLUTION CONTROL
CORPORATION, an Arizona nonprofit corporation and a political
subdivision of the State of Arizona (hereinafter called the
"Pollution Control Corporation"), and TUCSON ELECTRIC POWER
COMPANY, a corporation organized and existing under the laws of
the State of Arizona (hereinafter called the "Company"),
W I T N E S S E T H :
WHEREAS, the Pollution Control Corporation is authorized and
empowered under Title 35, Chapter 6, Arizona Revised Statutes, as
amended (the "Act"), to issue its bonds in accordance with the
Act and to make secured or unsecured loans for the purpose of
financing or refinancing the acquisition, construction,
improvement or equipping of pollution control facilities
consisting of real and personal properties, including but not
limited to machinery and equipment whether or not now in
existence or under construction, which are used in whole or in
part to control, prevent, abate, alter, dispose or store, solid
waste, thermal, noise, atmospheric or water pollutants,
contaminants or products therefrom, whether such facilities serve
one or more purposes or functions in addition to controlling,
preventing, abating, altering, disposing or storing such
pollutants, contaminants or the products therefrom, and to charge
and collect interest on such loans and pledge the proceeds of
loan agreements as security for the payment of the principal of
and interest on bonds, or designated issues of bonds, issued by
the Pollution Control Corporation and any agreements made in
connection therewith, whenever the Board of Directors of the
Pollution Control Corporation finds such loans to be in
furtherance of the purposes of the Pollution Control Corporation;
WHEREAS, the Pollution Control Corporation has heretofore
issued and sold $25,000,000 aggregate principal amount of its
Pollution Control Revenue Bonds, 1974 Series A (Tucson Gas &
Electric Company Project) (the "1974 Bonds") due December 17,
1975;
WHEREAS, the Pollution Control Corporation has also heretofore
issued and sold $15,700,000 aggregate principal amount of its
Pollution Control Revenue Bonds, 1975 Series A (Tucson Gas and
Electric Company Project), of which $14,700,000 remain
outstanding (the "1975 Bonds"), the proceeds of which were loaned
to the Company (formerly known as Tucson Gas & Electric Company)
to pay a portion of the principal amount of the 1974 Bonds; and
WHEREAS, the Pollution Control Corporation proposes to issue
and sell its revenue bonds to refinance, by the payment or
redemption of the 1975 Bonds, or provisions therefor, a portion
of the cost of the pollution control facilities described in
Exhibit A hereto paid from the proceeds of the 1975 Bonds;
NOW, THEREFORE, the parties hereto, intending to be legally
bound hereby and in consideration of the premises, DO HEREBY
AGREE as follows:
ARTICLE I
DEFINITIONS
2.01 Definitions. The terms defined in this Article I shall
for all purposes of this Agreement have the meanings herein
specified, unless the context clearly requires otherwise:
Act:
"Act" shall mean Title 35, Chapter 6, Arizona Revised Statutes,
and all acts supplemental thereto or amendatory thereof.
Administration Expenses:
"Administration Expenses" shall mean the reasonable expenses
incurred by the Pollution Control Corporation with respect to
this Agreement, the Indenture and any transaction or event
contemplated by this Agreement or the Indenture, including the
compensation and reimbursement of expenses and advances payable
to the Trustee, to the paying agent, any co-paying agent and the
registrar under the Indenture, and to the Tender Agent and the
Remarketing Agent.
Agreement:
"Agreement" shall mean this Loan Agreement, dated as of May 1,
1996, between the Pollution Control Corporation and the Company,
and any and all modifications, alterations, amendments and
supplements hereto.
Authorized Company Representative:
"Authorized Company Representative" shall mean each person at
the time designated to act on behalf of the Company by written
certificate furnished to the Pollution Control Corporation and
the Trustee containing the specimen signature of such person and
signed on behalf of the Company by its President, any Vice
President or its Treasurer, together with its Secretary or any
Assistant Secretary.
Bank:
"Bank" shall mean Societe Generale, Los Angeles Branch, a
banking corporation organized and existing under the laws of
France, so long as the Letter of Credit shall be in effect, in
its capacity as issuer of the Letter of Credit, its successors in
such capacity and their assigns and, if any other Security
Arrangement on which the Company shall not be the obligor shall
have been issued and delivered as a Security Arrangement in
accordance with Section 6.07(a) hereof, "Bank" shall mean the
obligor on such other Security Arrangement so long as such other
Security Arrangement shall be in effect, in its capacity as
issuer of such other Security Arrangement, its successors and
their assigns.
Bond Counsel:
"Bond Counsel" shall mean any firm or firms of nationally
recognized bond counsel experienced in matters pertaining to the
validity of, and exclusion from gross income for federal tax
purposes of interest on bonds issued by states and political
subdivisions, selected by the Company and acceptable to the
Pollution Control Corporation.
Bond Fund:
"Bond Fund" shall mean the fund created by Section 4.01 of the
Indenture.
Bonds:
"Bond" or "Bonds" shall mean the Pollution Control Refunding
Revenue Bonds, 1996 Series B (Tucson Electric Power Company
Project) of the Pollution Control Corporation.
Business Day:
"Business Day" shall mean a day of the year on which banks
located in The City of New York, New York, and in the city in
which the Principal Office of the Trustee is located, and in the
city in which the office of the Bank at which drawings or other
demands for payment on a Security Arrangement on which the
Company shall not be the obligor, if any, are made, are not
required or authorized to remain closed and on which The New York
Stock Exchange is not closed.
Capital Account:
"Capital Account" shall the account so named established under
Section 4.01 of the Indenture.
Code:
"Code" shall mean the Internal Revenue Code of 1986 or any
successor statute thereto. Each reference to a section of the
Code herein shall be deemed to include the United States Treasury
Regulations proposed or in effect thereunder and applicable to
the Bonds or the use of the proceeds thereof, unless the context
clearly requires otherwise. Reference to any particular Code
section shall, in the event of a successor Code, be deemed to be
a reference to the successor to such Code section.
Company:
"Company" shall mean Tucson Electric Power Company, a
corporation organized and existing under the laws of the State of
Arizona, its successors and their assigns.
Completion Date:
"Completion Date" shall be the date on which the Facilities are
completed in their entirety and ready to be placed in service and
operated, all as determined by the Company.
Facilities:
"Facilities" shall mean the real and personal properties,
machinery and equipment currently existing, under construction
and to be constructed which are described in Exhibit A hereto, as
revised from time to time to reflect any changes therein,
additions thereto, substitutions therefor and deletions therefrom
permitted by the terms hereof, subject, however, to the
provisions of Section 7.01 hereof.
Fixed Rate Period:
"Fixed Rate Period" shall have the meaning set forth in the
Indenture.
Flexible Rate:
"Flexible Rate" shall have the meaning set forth in the
Indenture.
Indenture:
"Indenture" shall mean the Indenture of Trust, dated as of May
1, 1996, between the Pollution Control Corporation and the
Trustee relating to the Bonds, and any and all modifications,
alterations, amendments and supplements thereto.
Interest Payment Date:
"Interest Payment Date" shall have the meaning set forth in the
Indenture.
Investment Account:
"Investment Account" shall mean any account so named
established under Section 4.01 of the Indenture.
Letter of Credit:
"Letter of Credit" shall mean an irrevocable letter of credit
issued by the Bank to the Trustee in accordance with Section
6.07(b) hereof, and, upon the issuance and delivery of any other
letter of credit as a Security Arrangement in accordance with
Section 6.07(a) hereof, "Letter of Credit" shall mean such other
letter of credit, and, upon the Termination or Expiration of the
Letter of Credit, "Letter of Credit" shall mean any credit
facility having terms substantially the same as those of the
Letter of Credit delivered as a Security Arrangement in
accordance with Section 6.07(a) hereof.
Loan Payments:
"Loan Payments" shall mean the payments required to be made by
the Company pursuant to Section 5.01 hereof.
Moody's:
"Moody's" shall mean Moody's Investors Service, Inc., a
corporation organized and existing under the laws of the State of
Delaware, its successors and their assigns, and, if such
corporation shall be dissolved or liquidated or shall no longer
perform the functions of a securities rating agency, "Moody's"
shall be deemed to refer to any other nationally recognized
securities rating agency designated by the Pollution Control
Corporation, with the approval of the Company, by notice to the
Trustee and the Remarketing Agent.
1954 Code:
"1954 Code" shall mean the Internal Revenue Code of 1954, as
amended.
1975 Bonds:
"1975 Bonds" shall mean the $15,700,000 aggregate principal
amount of the Pollution Control Corporation's Pollution Control
Revenue Bonds, 1975 Series A (Tucson Gas and Electric Company
Project), of which $14,700,000 remain outstanding.
1974 Bonds:
"1974 Bonds" shall mean the $25,000,000 aggregate principal
amount of the Pollution Control Corporation's Pollution Control
Revenue Bonds, 1974 Series A (Tucson Gas and Electric Company
Project).
Outstanding:
"Outstanding", when used in reference to the Bonds, shall mean,
as at any particular date, the aggregate of all Bonds
authenticated and delivered under the Indenture except:
(a) those canceled by the Trustee at or prior to such date
or delivered to or acquired by the Trustee at or prior to such
date for cancellation;
(b) those deemed to be paid in accordance with Article VIII
of the Indenture;
(c) those deemed to be purchased in accordance with Section
13.03(b) of the Indenture; and
(d) those in lieu of or in exchange or substitution for
which other Bonds shall have been authenticated and delivered
pursuant to the Indenture, unless proof satisfactory to the
Trustee and the Company is presented that such Bonds are held
by a bona fide holder in due course.
Person:
"Person" means (i) any corporation, limited liability company,
partnership, joint venture, association, joint-stock company,
business trust, unincorporated organization, in each case formed
or organized under the laws of the United States of America, any
state thereof or the District of Columbia, or (ii) the United
States of America or any state thereof, or any political
subdivision of either thereof, or any agency, authority or other
instrumentality of any of the foregoing.
Plant:
"Plant" shall mean the Navajo Generating Station, an electric
power generating plant near Page, Arizona, in Coconino County,
Arizona, and any additions or improvements thereto or
replacements thereof.
Plant Agreements:
"Plant Agreements" shall mean all contracts relating to the
ownership, construction and operation of the Plant, including the
Facilities, as from time to time amended or supplemented.
Pollution Control Corporation:
"Pollution Control Corporation" shall mean Coconino County,
Arizona Pollution Control Corporation, an Arizona nonprofit
corporation and a political subdivision of the State of Arizona
incorporated for and with the approval of the County of Coconino,
Arizona, pursuant to the provisions of the Constitution of the
State of Arizona and the Act, its successors and their assigns.
Reimbursement Agreement:
"Reimbursement Agreement" shall mean the agreement between the
Company and the Bank pursuant to which the Letter of Credit or
other Security Arrangement is issued by the Bank and delivered to
the Trustee, and any and all modifications, alterations,
amendments and supplements thereto.
Remarketing Agent:
"Remarketing Agent" shall mean the remarketing agent engaged in
accordance with Section 13.04 of the Indenture.
Security Arrangement; Termination thereof; Expiration thereof:
"Security Arrangement" shall mean any of the following: (i) the
Letter of Credit; (ii) the bonds of one or more series issued
under the Indenture, dated as of April 1, 1941, between the
Company and The Chase Manhattan Bank (National Association), as
trustee, as heretofore and hereafter amended and supplemented,
and delivered to the Trustee as contemplated by Section 12.06 of
the Indenture; and (iii) any credit facility, insurance policy or
other credit support agreement or mechanism obtained, delivered,
made, entered into or otherwise arranged by the Company for the
purpose of securing, evidencing or being otherwise in furtherance
of the obligations of the Company under Section 5.01 or 10.01
hereof, or both, or for the purpose of securing the Bonds but
shall not include any facility, arrangement or mechanism, such as
a liquidity facility or line of credit, that is not an
irrevocable obligation to pay amounts in respect of the
obligations of the Company under Section 5.01 hereof.
"Termination" (and other forms of the word "terminate") shall
mean, when used with respect to any Security Arrangement, the
replacement, removal, surrender or other termination of such
Security Arrangement by the Trustee or the Company other than the
Expiration of such Security Arrangement. "Expiration" (and other
forms of the word "expire") shall mean when used with respect to
any Security Arrangement, the expiration or termination of such
Security Arrangement in accordance with its terms.
S&P:
"S&P" shall mean Standard & Poor's Ratings Services, a division
of The McGraw-Hill Companies, Inc., a corporation organized and
existing under the laws of the State of New York, its successors
and their assigns, and if such corporation shall be dissolved or
liquidated or shall no longer perform the functions of a
securities rating agency, "S&P" shall be deemed to refer to any
other nationally recognized securities rating agency designated
by the Pollution Control Corporation, with the approval of the
Company, by notice to the Trustee, Remarketing Agent and the
Company.
Tax Agreement:
"Tax Agreement" shall mean that tax certificate and agreement,
dated May 1, 1996, between the Pollution Control Corporation and
the Company, relating to the requirements of the Code, and any
and all modifications, alterations, amendments and supplements
thereto.
Tender Agent:
"Tender Agent" shall mean the tender agent appointed in
accordance with Section 13.01 of the Indenture.
Term Rate Period:
"Term Rate Period" shall have the meaning set forth in the
Indenture.
Trustee:
"Trustee" shall mean First Trust of New York, National
Association, as trustee under the Indenture, its successors in
trust and their assigns.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.02 Representations and Warranties of the Pollution Control
Corporation. The Pollution Control Corporation makes the
following representations and warranties as the basis for the
undertakings on the part of the Company contained herein:
(a) The Pollution Control Corporation is an Arizona nonprofit
corporation and a political subdivision of the State of Arizona
created and existing under the Constitution and laws of the State
of Arizona;
(b) The Pollution Control Corporation has the power to enter
into this Agreement and the Indenture and to perform and observe
the agreements and covenants on its part contained herein and
therein, including without limitation the power to issue and sell
the Bonds as contemplated herein and in the Indenture, and by
proper action has duly authorized the execution and delivery
hereof and thereof;
(c) The execution and delivery of this Agreement and the
Indenture by the Pollution Control Corporation do not, and
consummation of the transactions contemplated hereby and
fulfillment of the terms hereof and thereof by the Pollution
Control Corporation will not, result in a breach of any of the
terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust or other agreement or
instrument to which the Pollution Control Corporation is now a
party or by which it is now bound, or any order, rule or
regulation applicable to the Pollution Control Corporation of any
court or of any regulatory body or administrative agency or other
governmental body having jurisdiction over the Pollution Control
Corporation or over and of its properties, or the Constitution or
laws of the State of Arizona;
(d) No consent, approval, authorization or other order of any
regulatory body or administrative agency or other governmental
body is legally required for the Pollution Control Corporation's
participation in the transactions contemplated by this Agreement,
except such as may have been obtained or may be required under
the securities laws of any jurisdiction; and
(e) The Pollution Control Corporation has found and determined
that all requirements of the Act with respect to the issuance of
the Bonds and the execution and delivery of the Indenture and
this Agreement have been complied with and that the refinancing
of the Company's share of the cost of construction of the
Facilities by issuing the Bonds and entering into the Indenture
and this Agreement will be in furtherance of the purposes of the
Act.
2.03 Representations and Warranties of the Company. The
Company makes the following representations and warranties as the
basis for the undertakings on the part of the Pollution Control
Corporation contained herein:
(a) The Company is a corporation duly organized and existing
in good standing under the laws of the State of Arizona and duly
qualified as a foreign corporation in the State of New Mexico;
(b) The Company has power to enter into this Agreement and to
perform and observe the agreements and covenants on its part
contained herein and by proper corporate action has duly
authorized the execution and delivery hereof;
(c) The execution and delivery of this Agreement by the
Company do not, and consummation of transactions contemplated
hereby and fulfillment of the terms hereof by the Company will
not, result in a breach of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of
trust or other agreement or instrument to which the Company is a
party or by which it is now bound, or the Restated Articles of
Incorporation or by-laws of the Company, or any order, rule or
regulation applicable to the Company of any court or of any
regulatory body or administrative agency or other governmental
body having jurisdiction over the Company or over any of its
properties, or any statute of any jurisdiction applicable to the
Company;
(d) The Arizona Corporation Commission has approved all
matters relating to the Company's participation in the
transactions contemplated by this Agreement which require said
approval, and no other consent, approval, authorization or other
order of any regulatory body or administrative agency or other
governmental body is legally required for the Company's
participation therein, except such as may have been obtained or
may be required under the securities laws of any jurisdiction;
(e) The Facilities to be refinanced constitute "pollution
control facilities" as such term is defined in the Act.
ARTICLE III
THE FACILITIES
2.04 Facilities; Property of the Company. An undivided
interest in the Facilities shall be the property of the Company
and the Pollution Control Corporation shall have no right, title
or interest in the Facilities.
2.05 Revision of Plans and Specifications. The Company may
consent to one or more revisions to the plans and specifications
for the Facilities (including without limitation any changes
therein, additions thereto, substitutions therefor and deletions
therefrom), at any time and from time to time prior to the
Completion Date in any respect; provided, however, that, if any
such revision shall render inaccurate the description of the
Facilities contained in Exhibit A hereto, the Company shall
deliver to the Pollution Control Corporation and the Trustee (a)
a revised Exhibit A containing a description of the Facilities as
revised, the accuracy of which shall have been certified by an
Authorized Company Representative, and (b) an opinion of Bond
Counsel to the effect that the Facilities as described in the
revised Exhibit A are such that the expenditure of the proceeds
of the Bonds pursuant to this Agreement will not, in and of
itself, impair the validity of the Bonds under the Act or the
exclusion from gross income for federal tax purposes of interest
on the Bonds. A revision of Exhibit A hereto pursuant to this
Section 3.02 shall not constitute an amendment, change or
modification of this Agreement within the meaning of Article XII
of the Indenture.
2.06 Maintenance of Facilities; Remodeling. The Company shall
at all times exercise all of its rights, powers, elections and
options under the Plant Agreements to cause the Facilities, and
every element and unit thereof, to be maintained, preserved and
kept in thorough repair, working order and condition and to cause
all needful and proper repairs and renewals thereto to be made;
provided, however, that the Company may exercise all of its
rights, powers, elections and options under the Plant Agreements
to cause the operation of the Facilities, or any element or unit
thereof, to be discontinued if, in the judgment of the Company,
it is no longer advisable to operate the same, or if the Company
intends to sell or dispose of the same and within a reasonable
time shall endeavor to effectuate such sale or disposition.
After the Completion Date, the Company may, subject to the
provisions of Section 6.05 hereof, at its own expense consent to
the remodeling of the Facilities or to the making of such
substitutions, modifications and improvements to the Facilities
from time to time as it, in its discretion, may deem to be
desirable for its uses and purposes, which remodeling,
substitutions, modifications and improvements shall be included
under the terms of this Agreement as part of the Facilities.
2.07 Insurance. The Company shall exercise all of its rights,
powers, elections and options under the Plant Agreements to keep
the Facilities insured against fire and other risks to the extent
usually insured against by companies owning and operating similar
property, by reputable insurance companies or, at the Company's
election, with respect to all or any element or unit of the
Facilities, by means of an adequate insurance fund set aside and
maintained by it out of its own earnings or in conjunction with
other companies through an insurance fund, trust or other
agreement or, by means of unfunded self-insurance as may be
reasonable and customary by companies owning and operating
similar property. All proceeds of such insurance shall be for
the account of the Company.
2.08 Condemnation. The Company shall be entitled to the entire
proceeds of any condemnation award or portion thereof made for
damages to or takings of the Facilities or other property of the
Company.
2.09 Termination of Construction. Anything in this Agreement
to the contrary notwithstanding, the Company shall have the right
at any time to exercise all of its rights, powers, elections and
options under the Plant Agreements to terminate the construction
of the Facilities, in whole, if the Company shall have determined
that the continued construction or operation of the Facilities,
in whole, is impracticable, uneconomical or undesirable for any
reason.
ARTICLE IV
ISSUANCE OF THE BONDS; THE LOANS; DISPOSITION OF PROCEEDS
OF THE BONDS
2.010 Issuance of the Bonds. The Pollution Control
Corporation shall issue the Bonds under and in accordance with
the Indenture, subject to the provisions of the bond purchase
agreement among the Pollution Control Corporation, the initial
purchaser or purchasers of the Bonds and the Company. The
Company hereby approves the issuance of the Bonds and all terms
and conditions thereof.
2.011 Issuance of Other Obligations. The Pollution Control
Corporation and the Company expressly reserve the right to enter
into, to the extent permitted by law, but shall not be obligated
to enter into, an agreement or agreements other than this
Agreement with respect to the issuance by the Pollution Control
Corporation, under an indenture or indentures other than the
Indenture, of obligations to provide additional funds to pay the
cost of construction of the Facilities or obligations to refund
all or any principal amount of the Bonds, or any combination
thereof.
2.012 The Loan; Disposition of Bond Proceeds. The
Pollution Control Corporation and the Company shall enter into
escrow arrangements with the trustee for the 1975 Bonds and shall
cause the proceeds of the Bonds, other than accrued interest, if
any, paid by the initial purchaser or purchasers thereof, to be
deposited in escrow with such trustee to be applied to the
payment of the 1975 Bonds upon the redemption thereof.
The Pollution Control Corporation shall establish the Bond Fund
with the Trustee in accordance with Section 4.01 of the
Indenture.
ARTICLE V
LOAN PAYMENTS; OTHER OBLIGATIONS
2.013 Loan Payments. In consideration of the issuance of
the Bonds and the disposition of the proceeds thereof as
contemplated in Section 4.03 hereof, the Company shall pay, or
cause to be paid, to the Trustee for the account of the Pollution
Control Corporation an amount equal to the aggregate principal
amount of the Bonds from time to time Outstanding and, as
interest on its obligation to pay such amount, an amount equal to
premium, if any, and interest on such Bonds, such amounts to be
paid in installments due on the dates, in the amounts and in the
manner provided in the Indenture for the Pollution Control
Corporation to cause amounts to be deposited in the Bond Fund for
the payment of the principal of and premium, if any, and interest
on the Bonds whether at stated maturity, upon redemption or
acceleration or otherwise; provided, however, that the obligation
of the Company to make any such payment hereunder shall be
reduced by the amount of any reduction under the Indenture of the
amount of the corresponding payment required to be made by the
Pollution Control Corporation thereunder; and provided, further,
that the obligation of the Company to make any payment hereunder
shall be deemed to be satisfied and discharged to the extent of
the corresponding payment made to the Trustee under any Security
Arrangement.
2.014 Payments Assigned; Obligation Absolute. It is
understood and agreed that all Loan Payments are, by the
Indenture, to be pledged by the Pollution Control Corporation to
the Trustee, and that all rights and interest of the Pollution
Control Corporation hereunder (except for the Pollution Control
Corporation's rights under Sections 5.03, 5.04, 6.03 and 8.05
hereof and any rights of the Pollution Control Corporation to
receive notices, certificates, requests, requisitions and other
communications hereunder), including any right to delivery of any
Security Arrangement, are to be pledged and assigned to the
Trustee. The Company assents to such pledge and assignment and
agrees that the obligation of the Company to make the Loan
Payments and to make, or cause to be made, payments under Section
10.01(a) hereof shall be absolute, irrevocable and unconditional
and shall not be subject to cancellation, termination or
abatement, or to any defense other than payment or to any right
of set-off, counterclaim or recoupment arising out of any breach
by the Pollution Control Corporation or the Trustee or any other
party under this Agreement, the Indenture or otherwise, or out of
any obligation or liability at any time owing to the Company by
the Pollution Control Corporation, the Trustee or any other
party, and, further, that the Loan Payments and the other
payments due hereunder shall continue to be payable at the times
and in the amounts herein and therein specified, whether or not
the Facilities, or any portion thereof, shall have been completed
or shall have been destroyed by fire or other casualty, or title
thereto, or the use thereof, shall have been taken by the
exercise of the power of eminent domain, and that there shall be
no abatement of or diminution in any such payments by reason
thereof, whether or not the Facilities shall be used or useful,
whether or not any applicable laws, regulations or standards
shall prevent or prohibit the use of the Facilities, or for any
other reason, all of the foregoing being subject, however, to the
provisions of Sections 6.01 and 7.01 hereof.
2.015 Payment of Expenses. The Company shall pay all
Administration Expenses of the Pollution Control Corporation,
including, without limitation, Administration Expenses incurred
at and subsequent to the time the Bonds are deemed to have been
paid in accordance with Article VIII of the Indenture. The
payment of the compensation and the reimbursement of expenses and
advances of the Trustee, of the paying agent, any co-paying agent
and the registrar under the Indenture and of the Tender Agent and
the Remarketing Agent shall be made directly to such entities.
2.016 Indemnification. The Company releases the Pollution
Control Corporation, the Trustee, the Tender Agent and the
Remarketing Agent and their directors, officers, employees and
agents from, agrees that the Pollution Control Corporation, the
Trustee, the Tender Agent and the Remarketing Agent shall not be
liable for, and agrees to indemnify and hold the Pollution
Control Corporation, the Trustee, any predecessor Trustee, the
Tender Agent and the Remarketing Agent and their directors,
officers, employees and agents free and harmless from, any
liability for any loss or damage to property or any injury to or
death of any person (including, without limitation, attorneys'
and other agents' fees and expenses) that may be occasioned by
any cause whatsoever pertaining to the Facilities, except in any
case as a result of the negligence or bad faith or willful
misconduct of the party otherwise to be indemnified.
The Company will indemnify and hold the Pollution Control
Corporation, the Trustee, any predecessor Trustee, the Tender
Agent and the Remarketing Agent free and harmless from any loss,
claim, damage, tax, penalty, liability, disbursement, litigation
expenses, attorneys' and other agents' fees and expenses or court
costs arising out of, or in any way relating to, the execution or
performance of this Agreement, the issuance or sale of the Bonds,
actions taken under the Indenture or any other cause whatsoever
pertaining to the Facilities, except in any case as a result of
the negligence or bad faith or willful misconduct of the party
otherwise to be indemnified.
The Company will indemnify and hold the Pollution Control
Corporation and its directors, officers, employees and agents
free and harmless from any loss, claim, damage, tax, penalty,
liability, disbursement, litigation expenses, attorney's fees and
expenses or court costs arising out of or in any way relating to
any untrue statement or alleged untrue statement of any material
fact or omission or alleged omission to state a material fact
necessary to make the statements made, in light of the
circumstances under which they were made, not misleading in any
official statement or other offering material utilized in
connection with the sale of any bonds.
2.017 Payment of Taxes; Discharge of Liens. The Company
shall: (a) pay, or make provision for payment of, all lawful
taxes and assessments, including income, profits, property or
excise taxes, if any, or other municipal or governmental charges,
levied or assessed by any federal, state or municipal government
or political body upon the Facilities or any part thereof or upon
the Pollution Control Corporation with respect to the Loan
Payments or payments pursuant to Section 10.01(a) hereof, when
the same shall become due; and (b) pay or cause to be satisfied
and discharged or make adequate provision to satisfy and
discharge, within sixty (60) days after the same shall accrue,
any lien or charge upon the Loan Payments or payments pursuant to
Section 10.01(a) hereof, and all lawful claims or demands for
labor, materials, supplies or other charges which, if unpaid,
might be or become a lien upon such amounts; provided, that, if
the Company shall first notify the Pollution Control Corporation
and the Trustee of its intention so to do, the Company may in
good faith contest any such lien or charge or claims or demands
in appropriate legal proceedings, and in such event may permit
the items so contested and identified as such by the Company to
remain undischarged and unsatisfied during the period of such
contest and any appeal therefrom, unless the Trustee shall notify
the Company in writing that, in the opinion of counsel to the
Trustee based upon material facts disclosed to the Trustee
without any duty of investigation, by nonpayment of any such
items the lien of the Indenture as to the Loan Payments will be
materially endangered, in which event the Company shall promptly
pay and cause to be satisfied and discharged all such unpaid
items. The Pollution Control Corporation shall cooperate fully
with the Company in any such contest.
ARTICLE VI
SPECIAL COVENANTS
2.018 Maintenance of Corporate Existence. Except as
permitted in this Section 6.01, the Company shall maintain its
corporate existence, will not dissolve or otherwise dispose of
all or substantially all of its assets and will not consolidate
with or merge with or into another corporation. The Company may
consolidate with or merge into another corporation incorporated
under the laws of the United States of America, any state thereof
or the District of Columbia, or sell, transfer or otherwise
dispose of all or substantially all of its assets (and may
thereafter dissolve) to any Person if the surviving or resulting
corporation (if other than the Company) or the transferee Person,
as the case may be, prior to or simultaneously with such merger,
consolidation, sale, transfer or disposition, assumes, by
delivery to the Trustee and the Pollution Control Corporation of
an instrument in writing satisfactory in form to the Trustee, all
the obligations of the Company hereunder including without
limitation the obligations of the Company under Sections 5.01 and
10.01(a) hereof. Notwithstanding the foregoing, in the case of
any such sale, transfer or other disposition by the Company of
all or substantially all of its assets, (x) any such sale,
transfer or other disposition of assets which includes the
Facilities shall be subject to the provisions of Section 7.01
hereof and shall not be subject to the provisions of this Section
6.01 and (y) in the case of any such sale, transfer or other
disposition of substantially all of the Company's assets but not
including the Facilities, the transferee shall not be required to
assume any obligations hereunder and the Company shall remain
liable in respect of its obligations hereunder.
If consolidation, merger or sale or other transfer is made as
permitted by this Section 6.01, the provisions of this Section
6.01 shall continue in full force and effect and no further
consolidation, merger or sale or other transfer shall be made
except in compliance with the provisions of this Section 6.01.
2.019 Permits or Licenses. In the event that it may be
necessary for the proper performance of this Agreement on the
part of the Company or the Pollution Control Corporation that any
application or applications for any permit or license to do or to
perform certain things be made to any governmental or other
agency by the Company or the Pollution Control Corporation, the
Company and the Pollution Control Corporation each shall, upon
the request of either, execute such application or applications.
2.020 Pollution Control Corporation's Access to Facilities.
The Pollution Control Corporation shall have the right, upon
appropriate prior notice to the Company, to have reasonable
access to the Facilities during normal business hours for the
purpose of making examinations and inspections of the same.
2.021 Tax-Exempt Status of Interest on Bonds. (a) It is
the intention of the parties hereto that interest on the Bonds
shall be and remain tax-exempt, and to that end the covenants and
agreements of the Pollution Control Corporation and the Company
in this Section 6.04 and the Tax Agreement are for the benefit of
the Owners from time to time of the Bonds.
(b) Each of the Company and the Pollution Control
Corporation covenants and agrees for the benefit of the Owners
from time to time of the Bonds that it will not directly or
indirectly use or permit the use of (to the extent within its
control) the proceeds of any of the Bonds or any other funds, or
take or omit to take any action, if and to the extent such use,
or the taking or omission to take such action, would cause any of
the Bonds to be "arbitrage bonds" within the meaning of Section
148 of the Code or otherwise subject to federal income taxation
by reason of Section 103 and 141 through 150 of the Code or
Section 103 of the 1954 Code and Title XIII of the Tax Reform Act
of 1986, as applicable, and any applicable regulations
promulgated thereunder. To such ends, the Pollution Control
Corporation and the Company will comply with all requirements of
such Section 148 to the extent applicable to the Bonds. In the
event that at any time the Pollution Control Corporation or the
Company is of the opinion that for purposes of this Section
6.04(b) it is necessary to restrict or limit the yield on the
investment of any moneys held by the Trustee under the Indenture,
the Pollution Control Corporation or the Company shall so notify
the Trustee in writing.
Without limiting the generality of the foregoing, the
Company and the Pollution Control Corporation agree that there
shall be paid from time to time all amounts required to be
rebated to the United States of America pursuant to Section
148(f) of the Code and any applicable Treasury Regulations. This
covenant shall survive payment in full or defeasance of the Bonds
and the satisfaction and discharge of the Indenture. The Company
specifically covenants to pay or cause to be paid for and on
behalf of the Pollution Control Corporation to the United States
of America at the times and in the amounts determined under
Section 7.08 of the Indenture the Rebate Requirement as described
in the Tax Agreement.
(c) The Pollution Control Corporation certifies and
represents that it has not taken, and the Pollution Control
Corporation covenants and agrees that it will not take, any
action which results in interest paid on the Bonds being included
in gross income of the Owners of the Bonds for federal tax
purposes pursuant to Sections 103 and 141 of the Code or to
Section 103 of the 1954 Code and Title XIII of the Tax Reform Act
of 1986, as applicable, and any regulations thereunder; and the
Company certifies and represents that it has not taken or (to the
extent within its control) permitted to be taken, and the Company
covenants and agrees that it will not take or (to the extent
within its control) permit to be taken any action which will
cause the interest on the Bonds to become includable in gross
income for federal income tax purposes; provided, however, that
neither the Company nor the Pollution Control Corporation shall
be deemed to have violated these covenants if the interest on any
of the Bonds becomes taxable to a person solely because such
person is a "substantial user" of the Project or a "related
person" within the meaning of Section 103(b)(13) of the 1954 Code
and provided, further, that none of the covenants and agreements
herein contained shall require either the Company or the
Pollution Control Corporation to enter an appearance or intervene
in any administrative, legislative or judicial proceeding in
connection with any changes in applicable laws, rules or
regulations or in connection with any decisions of any court or
administrative agency or other governmental body affecting the
taxation of interest on the Bonds. The Company acknowledges
having read Section 7.08 of the Indenture and agrees to perform
all duties imposed on it by such Section 7.08, by this Section
and by the Tax Agreement. Insofar as Section 7.08 of the
Indenture and the Tax Agreement impose duties and
responsibilities on the Company, they are specifically
incorporated herein by reference.
(d) Notwithstanding any provision of this Section 6.04 and
Section 7.08 of the Indenture, if the Company shall provide to
the Pollution Control Corporation and the Trustee an opinion of
Bond Counsel to the effect that any specified action required
under this Section 6.04 and Section 7.08 of the Indenture is no
longer required or that some further or different action is
required to maintain the tax-exempt status of interest on the
Bonds, the Company, the Trustee and the Pollution Control
Corporation may conclusively rely upon such opinion in complying
with the requirements of this Section 6.04, and the covenants
hereunder shall be deemed to be modified to that extent.
2.022 Use of Facilities. So long as the Facilities are
operated by or for the benefit of the Company, the Company shall
exercise all of its rights, powers, elections and options under
the Plant Agreements to cause the Facilities to be used for
purposes contemplated by the Act.
2.023 Financing Statements. The Company shall file and
record, or cause to be filed and recorded, all financing
statements and continuation statements referred to in Section
7.07 of the Indenture.
2.024 Security Arrangements. (a) In order to secure,
evidence or be otherwise in furtherance of the obligations of the
Company under Section 5.01 or 10.01 hereof, or both, the Company
may, but (except as otherwise provided in subsection (b) of this
Section 6.07) shall not be obligated to, provide, subject to the
provisions of subsection (g) of this Section 6.07, one or more
Security Arrangements (which shall not have a stated Expiration
Date earlier than the earlier of (x) the date which is one year
from the date of the provision of any such Security Arrangement
and (y) [final maturity date]) at any time, and from time to
time, and, subject to the provisions of subsections (c) and (d)
of this Section 6.07, may, at any time and from time to time,
Terminate, or cause or allow to be terminated, any such Security
Arrangement. The Company hereby authorizes and directs the
Trustee to draw moneys under the Letter of Credit, and to take
actions under any other Security Arrangement, in accordance with
the terms thereof and of the Indenture.
(a) Upon the initial authentication and delivery of the Bonds,
the Company shall provide for the payment of its obligations
under Sections 5.01 and 10.01 hereof by the delivery of the
Letter of Credit.
The Letter of Credit shall be the obligation of the Bank to pay
to the Trustee or its designee, in accordance with the terms
thereof, such amounts as shall be specified therein and available
to be drawn thereunder for the timely payment of the principal of
and premium, if any, and interest on the Bonds, and the purchase
price of Bonds, required to be made pursuant to, and in
accordance with, the provisions of the Indenture. Drawings under
the Letter of Credit shall be made in accordance with the
provisions set forth therein and in the Indenture.
The Company may, at its election, and with the consent of the
Bank, provide for one or more extensions of the Letter of Credit
in accordance with the terms of the Reimbursement Agreement.
(b) In the event that the Company shall cause or allow a
Security Arrangement to be Terminated, not more than sixty (60)
days nor less than twenty (20) days prior to the Interest Payment
Date next preceding, or, while the Bonds bear interest at a
Flexible Rate, prior to the latest then scheduled Interest
Payment Date for any Bond, the proposed effective date of such
Termination:
(i) the Company shall deliver to the Pollution Control
Corporation, the Trustee, the Tender Agent, the Remarketing
Agent and the Bank a notice which (A) states the effective
date of such Termination (which date shall not be earlier than
the first Business Day after such Interest Payment Date), (B)
describes any substitute Security Arrangement which is to be
provided in lieu thereof and (C) directs the Trustee, after
taking such actions thereunder as are required to be taken to
provide moneys due under the Indenture in respect of the Bonds
or the purchase thereof, to surrender any evidence of the
Security Arrangement to be Terminated to the obligor thereon
on the effective date of such Termination, and to thereupon
deliver any and all instruments to effect such Termination
which may be reasonably requested by such obligor; and
(ii) the Company shall furnish to the Trustee and the
Tender Agent an opinion of Bond Counsel to the effect that the
Termination of such Security Arrangement and the provision, if
any, of a substitute Security Arrangement in lieu thereof (A)
are authorized under this Agreement and (B) will not impair
the validity under the Act of the Bonds or the exclusion of
interest on the Bonds from gross income for federal income tax
purposes.
(c) The Interest Payment Date next preceding the date of any
such Termination shall not be prior to the first date on which
the Bonds are redeemable at a redemption price (including
premium, if any) not exceeding the amount available to be drawn
under the Security Arrangement in respect of such redemption
price pursuant to Section 3.01(c) of the Indenture unless the
Company shall have furnished to the Trustee, the Tender Agent and
the Remarketing Agent, no later than the fortieth (40th) day
preceding such Interest Payment Date, and prior to taking any
action under such Security Arrangement to effect the Termination
thereof, letters or certificates to the effect specified in
Section 2.02(h)(iii) of the Indenture.
Anything in this Agreement or the Indenture to the contrary
notwithstanding, (i) if a substitute Security Arrangement is to
be provided, the substitute Security Arrangement shall become
effective on or before the Termination date of the then existing
Security Arrangement and (ii) in the event that a Termination of
a Security Arrangement, or the Termination of a Security
Arrangement and the provision of another Security Arrangement in
lieu thereof, shall require the Bonds to be tendered for
purchase, the Termination of such Security Arrangement shall not
occur until the Trustee or its duly authorized agent shall have
made such drawings, if any, or taken such other actions, if any,
thereunder as shall be required under the Indenture in order to
provide sufficient moneys for payment of the purchase price of
Bonds on the date fixed for such mandatory tender for purchase
and such moneys shall have been provided to the Trustee or its
duly authorized agent.
(d) The Company shall, prior to the provision of any
Security Arrangement (other than the initial Letter of Credit),
deliver to the Trustee, the Tender Agent, the Remarketing Agent
and the Bank a notice which describes any Security Arrangement
which is to be provided and states the effective date thereof,
and shall, concurrently with the giving of such notice, furnish
to the Trustee an opinion of Bond Counsel to the same effect as
the opinion described in subsection (c) of this Section 6.07.
(e) The Company shall Terminate, or cause or allow to be
Terminated, any Security Arrangement on the first day of a Term
Rate Period or the Fixed Rate Period if such Security Arrangement
will Expire prior to the first date on which the Bonds will be
redeemable pursuant to Section 3.01(c) of the Indenture at a
redemption price (including premium, if any) not exceeding the
amount available to be drawn under such Security Arrangement.
(f) The Company shall not, on or after the fortieth (40th) day
preceding the first day of a Term Rate Period or the Fixed Rate
Period, provide a Security Arrangement which will Expire prior to
the first date on which the Bonds will be redeemable pursuant to
Section 3.01(c) of the Indenture at a redemption price (including
premium, if any) not exceeding the amount available to be drawn
under such Security Arrangement.
SECTION 6.08 Neither the Company nor the Pollution Control
Corporation to be Initial Purchasers of the Bonds. In no event
shall the initial purchasers of the Bonds be the Company or any
affiliate of the Company or the Pollution Control Corporation or
any "insider" of either thereof within the meaning of the United
States Bankruptcy Code, 11 U.S.C. Section 101 et seq., if there
shall be in effect a security arrangement on which the Company
shall not be the Obligor.
ARTICLE VII
ASSIGNMENT, LEASING AND SELLING
2.025 Conditions. The Company's interest in this Agreement
may be assigned as a whole or in part, and its interest in the
Facilities may be leased, sold, transferred or otherwise disposed
of by the Company as a whole or in part (whether an interest in a
specific element or unit or an undivided interest), to any
Person; provided, however, that no such assignment, lease, sale,
transfer or other disposition (a) shall relieve the Company from
its primary liability for its obligations under Sections 5.01 and
10.01(a) hereof or (b) shall be made unless the assignee, lessee,
purchaser or other transferee, as the case may be, prior to or
simultaneously with such assignment, lease, sale, transfer or
other disposition, assumes, by delivery of an instrument to the
Trustee and the Pollution Control Corporation, all other
obligations of the Company hereunder to the extent of the
interest assigned, leased, sold, transferred or otherwise
disposed of, and the Company shall be released of and discharged
from such obligations to the extent so assumed. Notwithstanding
the foregoing, (a) if (i) the Company's interest in this
Agreement shall be assigned as a whole or in undivided part, (ii)
the Company's interest in the Facilities shall be leased as a
whole or in undivided part and the term of such leasehold or the
term of any extension or extensions thereof at the option of the
Company shall extend beyond the maturity date of the Bonds or
(iii) the Company's interest in the Facilities shall be sold,
transferred or otherwise disposed of as a whole or in undivided
part, and (b) in the event that the assignee, lessee, purchaser
or other transferee shall assume the obligations of the Company
under either or both of Sections 5.01 and 10.01(a) hereof for the
remaining term of this Agreement to the extent of such
assignment, lease, sale, transfer or other disposition, the
Company shall be released from and discharged of all liability in
respect of such obligations to the extent so assumed (but only to
such extent); provided, however, that if there shall not be a
Security Arrangement in effect on which the Company is not the
obligor, the release and discharge of the Company pursuant to
clause (b) shall be conditioned upon delivery by the Company to
the Trustee and the Pollution Control Corporation of written
evidence from Moody's, if the Bonds are rated by Moody's, and
S&P, if the Bonds are rated by S&P, in each case to the effect
that such release and discharge of the Company, after giving
effect to such assumption by the assignee, lessee, purchaser or
other transferee, will not, by itself, result in a reduction or
withdrawal of its ratings then in effect on the Bonds; and
provided, further, that after any such assumption, release and
discharge as aforesaid, the Company may again assume such
obligations under Section 5.01 or 10.01(a) hereof, or both, in
whole or in part, at any time and from time to time, and, to the
extent of any such assumption by the Company (but only to such
extent), the aforesaid assignee, lessee, purchaser or other
transferee shall be released from and discharged of all liability
in respect of such obligations.
Anything herein to the contrary notwithstanding, the Company
shall not make any assignment, lease or sale as provided in the
immediately preceding paragraph unless it shall have furnished to
the Pollution Control Corporation and the Trustee an opinion of
Bond Counsel to the effect that the proposed assignment, lease or
sale will not impair the validity under the Act of the Bonds or
the exclusion of interest on the Bonds from gross income for
federal tax purposes.
After any lease, sale, transfer or other disposition of any
element or unit of the Facilities, or any interest therein, the
Company may, at its option, cause such element or unit, or
interest therein, to no longer be deemed to be part of the
Facilities for the purposes of this Agreement by delivering to
the Pollution Control Corporation and the Trustee the agreements
or other documents required pursuant to Section 7.02 hereof
together with an instrument signed by an Authorized Company
Representative stating that such element or unit, or interest
therein, shall no longer be deemed to be part of the Facilities
for the purposes of this Agreement.
2.026 Instrument Furnished to Trustee. The Company shall,
within fifteen (15) days after the delivery thereof, furnish to
the Pollution Control Corporation and the Trustee a true and
complete copy of the agreements or other documents effectuating
any such assignment, lease, sale, transfer or other disposition.
2.027 Limitation. This Agreement shall not be assigned nor
shall the Facilities be leased, sold, transferred or otherwise
disposed of, in whole or in part, except as provided in this
Article VII or in Section 6.01 or 5.02 hereof.
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
2.028 Events of Default. Each of the following events
shall constitute and is referred to in this Agreement as an
"Event of Default":
(a) a failure by the Company to make any Loan Payment or any
payment required under Section 10.01(a) hereof, which failure
shall have resulted in an "Event of Default" under clause (a),
(b) or (c) of Section 9.01 of the Indenture;
(b) a failure by the Company to pay when due any amount
required to be paid under this Agreement or to observe and
perform any covenant, condition or agreement on its part to be
observed or performed (other than a failure described in clause
(a) above), which failure shall continue for a period of ninety
(90) days after written notice, specifying such failure and
requesting that it be remedied, shall have been given to the
Company by the Pollution Control Corporation or the Trustee,
unless the Pollution Control Corporation and the Trustee shall
agree in writing to an extension of such period prior to its
expiration; provided, however, that the Pollution Control
Corporation and the Trustee shall be deemed to have agreed to an
extension of such period if corrective action is initiated by the
Company within such period and is being diligently pursued; or
(c) the dissolution or liquidation of the Company, or failure
by the Company promptly to lift any execution, garnishment or
attachment of such consequence as will impair its ability to make
any payments under this Agreement, or the entry of an order for
relief by a court of competent jurisdiction in any proceeding for
its liquidation or reorganization under the provisions of any
bankruptcy act or under any similar act which may be hereafter
enacted, or an assignment by the Company for the benefit of its
creditors, or the entry by the Company into an agreement of
composition with its creditors (the term "dissolution or
liquidation of the Company," as used in this clause, shall not be
construed to include the cessation of the corporate existence of
the Company resulting either from a merger or consolidation of
the Company into or with another corporation or a dissolution or
liquidation of the Company following a transfer of all or
substantially all its assets as an entirety, under the conditions
permitting such actions contained in Section 6.01 hereof).
2.029 Force Majeure. The provisions of Section 8.01 hereof
are subject to the following limitations: if by reason of acts of
God; strikes, lockouts or other industrial disturbances; acts of
public enemies; orders of any kind of the government of the
United States or of the State of Arizona, or any department,
agency, political subdivision, court or official of any of them,
or any civil or military authority; insurrections; riots;
epidemics; landslides; lightning; earthquakes; volcanoes; fires;
hurricanes; tornadoes; storms; floods; washouts; droughts;
arrests; restraint of government and people; civil disturbances;
explosions; breakage or accident to machinery; partial or entire
failure of utilities; or any cause or event not reasonably within
the control of the Company, the Company is unable in whole or in
part to carry out any one or more of its agreements or
obligations contained herein, other than its obligations under
Sections 5.01, 5.03, 5.05, 6.01 and 10.01(a) hereof, the Company
shall not be deemed in default by reason of not carrying out said
agreement or agreements or performing said obligation or
obligations during the continuance of such inability. The
Company shall make reasonable effort to remedy with all
reasonable dispatch the cause or causes preventing it from
carrying out its agreements; provided, that the settlement of
strikes, lockouts and other industrial disturbances shall be
entirely within the discretion of the Company, and the Company
shall not be required to make settlement of strikes, lockouts and
other industrial disturbances by acceding to the demands of the
opposing party or parties when such course is in the judgment of
the Company unfavorable to the Company.
2.030 Remedies. (a) Upon the occurrence and continuance
of any Event of Default described in clause (a) of Section 8.01
hereof, and further upon the condition that, in accordance with
the terms of the Indenture, the Bonds shall have been declared to
be immediately due and payable pursuant to any provision of the
Indenture, the Loan Payments shall, without further action,
become and be immediately due and payable.
Any waiver of any "Event of Default" under the Indenture and a
rescission and annulment of its consequences shall constitute a
waiver of the corresponding Event or Events of Default under this
Agreement and a rescission and annulment of the consequences
thereof.
(a) Upon the occurrence and continuance of any Event of
Default, the Pollution Control Corporation, or the Trustee with
respect to the rights of the Pollution Control Corporation
assigned to the Trustee by the Indenture, may take any action at
law or in equity to collect any payments then due and thereafter
to become due, or to enforce performance and observance of any
obligation, agreement or covenant of the Company hereunder.
(b) Any amounts collected by the Trustee from the Company
pursuant to this Section 8.03 shall be applied in accordance with
the Indenture.
2.031 No Remedy Exclusive. No remedy conferred upon or
reserved to the Pollution Control Corporation hereby is intended
to be exclusive of any other available remedy or remedies, but
each and every such remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or now or
hereafter existing at law or in equity or by statute. No delay
or omission to exercise any right or power accruing upon any
default shall impair any such right or power or shall be
construed to be a waiver thereof, but any such right or power may
be exercised from time to time and as often as may be deemed
expedient. In order to entitle the Pollution Control Corporation
to exercise any remedy reserved to it in this Article VIII, it
shall not be necessary to give any notice, other than such notice
as may be herein expressly required.
2.032 Reimbursement of Attorneys' and Agents' Fees. If the
Company shall default under any of the provisions hereof and the
Pollution Control Corporation or the Trustee shall employ
attorneys or agents or incur other reasonable expenses for the
collection of payments due hereunder or for the enforcement of
performance or observance of any obligation or agreement on the
part of the Company contained herein, the Company will on demand
therefor reimburse the Pollution Control Corporation or the
Trustee and any predecessor Trustee, as the case may be, for the
reasonable fees of such attorneys and such other reasonable
expenses so incurred.
2.033 Waiver of Breach. In the event any obligation
created hereby shall be breached by either of the parties and
such breach shall thereafter be waived by the other party, such
waiver shall be limited to the particular breach so waived and
shall not be deemed to waive any other breach hereunder. In view
of the assignment of certain of the Pollution Control
Corporation's rights and interest hereunder to the Trustee, the
Pollution Control Corporation shall have no power to waive any
breach hereunder by the Company in respect of such rights and
interest without the consent of the Trustee, and the Trustee may
exercise any of the rights of the Pollution Control Corporation
hereunder.
ARTICLE IX
REDEMPTION OF BONDS
2.034 Redemption of Bonds. The Pollution Control
Corporation shall take, or cause to be taken, the actions
required by the Indenture to discharge the lien created thereby
through the redemption, or provision for payment or redemption,
of all Bonds then Outstanding, or to effect the redemption, or
provision for payment or redemption, of less than all the Bonds
then Outstanding, upon receipt by the Pollution Control
Corporation and the Trustee from the Company of a notice
designating the principal amount of the Bonds to be redeemed, or
for the payment or redemption of which provision is to be made,
and, in the case of redemption of Bonds, or provision therefor,
specifying the date of redemption and the applicable redemption
provision of the Indenture. Such redemption date shall not be
less than 45 days from the date such notice is given (unless a
shorter notice is satisfactory to the Trustee). Unless otherwise
stated therein, such notice shall be revocable by the Company at
any time prior to the time at which the Bonds to be redeemed, or
for the payment or redemption of which provision is to be made,
are first deemed to be paid in accordance with Article VIII of
the Indenture. The Company shall furnish any moneys or
Government Obligations (as defined in the Indenture) required by
the Indenture to be deposited with the Trustee or otherwise paid
by the Pollution Control Corporation in connection with any of
the foregoing purposes.
2.035 Compliance with the Indenture. Anything in this
Agreement to the contrary notwithstanding, the Pollution Control
Corporation and the Company shall take all actions required by
this Agreement and the Indenture in order to comply with any
provisions of the Indenture requiring the mandatory redemption of
Bonds.
ARTICLE X
PURCHASE AND REMARKETING OF BONDS
2.036 Purchase of Bonds. (a) In consideration of the
issuance by the Pollution Control Corporation of the Bonds, but
for the benefit of the owners of the Bonds, the Company has
agreed, and does hereby covenant, to cause the necessary
arrangements to be made and to be thereafter continued whereby
Owners from time to time of the Bonds may deliver Bonds for
purchase and whereby such Bonds shall be so purchased. In
furtherance of the foregoing covenant of the Company, the
Pollution Control Corporation, at the direction of the Company,
has set forth in Section 2.02 of the Indenture the terms and
conditions relating to the delivery of Bonds by the Owners
thereof for purchase, has set forth in Article XIII of the
Indenture the duties and responsibilities of the Tender Agent
with respect to the purchase of Bonds, and of the Remarketing
Agent with respect to the remarketing of Bonds and has therein
provided for the appointment by the Company of the Tender Agent
and the Remarketing Agent. The Company hereby authorizes and
directs the Tender Agent and the Remarketing Agent to purchase,
offer, sell and deliver Bonds in accordance with the provisions
of Article XIII of the Indenture.
In consideration of the Pollution Control Corporation's having
set forth in the Indenture the aforesaid provisions of Section
2.02 and the Article XIII thereof, the Company covenants, for the
benefit of the owners of Outstanding Bonds, to pay, cause to be
paid, to the Tender Agent for the account of such holders such
amounts as shall be necessary to effect the payment of the
purchase price of Outstanding Bonds delivered for purchase, all
as more particularly described in Sections 2.02 and 13.03 of the
Indenture; provided, however, that the obligation of the Company
to make any such payment hereunder to the Tender Agent shall be
reduced by the amount of any moneys available for such payment
described in clause (i), (iii) or (iv) of Section 13.03(a) of the
Indenture; and provided, further, that such obligation of the
Company shall be deemed to be satisfied and discharged to the
extent of the corresponding payment made by the obligor (other
than the Company) under any Security Arrangement.
(a) The Pollution Control Corporation shall have no obligation
or responsibility, financial or otherwise, with respect to the
purchase of Bonds or the making or continuation of arrangements
therefor other than as expressly set forth in subsection (a) of
this Section 10.01, except that the Pollution Control Corporation
shall generally cooperate with the Company, the Tender Agent and
the Remarketing Agent as contemplated in Article XIII of the
Indenture.
2.037 Optional Purchase of Bonds. The Company may at any
time, and from time to time, furnish moneys to the Tender Agent
accompanied by a notice directing such moneys to be applied to
the purchase of Bonds delivered for purchase pursuant to the
terms of the Indenture, which Bonds shall be delivered to the
Trustee for cancellation in accordance with Section 13.07(b) of
the Indenture. The Company shall deliver to the Remarketing
Agent and the Bank a copy of any such notice.
ARTICLE XI
MISCELLANEOUS
2.038 Term of Agreement. This Agreement shall remain in
full force and effect from the date hereof until the right, title
and interest of the Trustee in and to the Trust Estate (as
defined in the Indenture) shall have ceased, terminated and
become void in accordance with Article VIII of the Indenture and
until all payments required under this Agreement shall have been
made. Notwithstanding the foregoing, the covenant contained in
Section 5.03, 5.04, Section 6.04 and 8.05 hereof shall survive
the termination of this Agreement.
2.039 Notices. Except as otherwise provided in this
Agreement, all notices, certificates, requests, requisitions and
other communications hereunder shall be in writing and shall be
sufficiently given and shall be deemed given when mailed by
registered mail, postage prepaid, addressed as follows: if to the
Pollution Control Corporation, c/o Mangum, Wall, Stoops & Warden,
222 East Birch Avenue, Flagstaff, Arizona 86001, Attention:
President; if to the Company, at 220 West Sixth Street, Tucson,
Arizona 85702, Attention: Treasurer; if to the Trustee or to the
Tender Agent, at such address as shall be designated by it in the
Indenture; and if to the Remarketing Agent, at such address as
shall be designated by it pursuant to the Indenture. A copy of
each notice, certificate, request or other communication given
hereunder to the Pollution Control Corporation, the Company, or
the Trustee shall also be given to the others. The Pollution
Control Corporation, the Company, and the Trustee may, by notice
given hereunder, designate any further or different addresses to
which subsequent notices, certificates, requests or other
communications shall be sent.
2.040 Parties in Interest. This Agreement shall inure to
the benefit of and shall be binding upon the Pollution Control
Corporation, the Company and their respective successors and
assigns, and no other person, firm or corporation shall have any
right, remedy or claim under or by reason of this Agreement;
provided, however, that the lien and security interest granted to
the Trustee in Section 4.03 hereof, as well as the rights and
remedies granted to the Pollution Control Corporation in Article
VIII hereof, shall inure to the benefit of the Trustee, on behalf
of the owners from time to time of the Bonds, and shall be
enforceable by the Trustee as a third party beneficiary or as
assignee of the Pollution Control Corporation; and provided,
further, that the obligations of the Company under Section
10.01(a) hereof shall inure to the benefit of the Tender Agent,
on behalf of the owners from time to time of the Bonds, and shall
be enforceable by the Tender Agent as a third party beneficiary;
and provided, further, that neither the County of Coconino,
Arizona nor the State of Arizona shall in any event be liable for
the payment of the principal of or premium, if any, or interest
on the Bonds or for the performance of any pledge, mortgage,
obligation or agreement created by or arising out of this
Agreement or the issuance of the Bonds, and further that neither
the Bonds nor any such obligation or agreement of the Pollution
Control Corporation shall be construed to constitute an
indebtedness of the County of Coconino, Arizona or the State of
Arizona within the meaning of any constitutional or statutory
provisions whatsoever, but shall be limited obligations of the
Pollution Control Corporation payable solely out of the revenues
derived from this Agreement or any Security Arrangement provided
hereunder, or from the sale of the Bonds, or from the investment
or reinvestment of any of the foregoing, as provided herein and
in the Indenture.
2.041 Amendments. This Agreement may be amended only by
written agreement of the parties hereto, subject to the
limitations set forth herein and in the Indenture.
2.042 Counterparts. This Agreement may be executed in any
number of counterparts, each of which, when so executed and
delivered, shall be an original; but such counterparts shall
together constitute but one and the same Agreement.
2.043 Severability. If any clause, provision or section of
this Agreement shall, for any reason, be held illegal or invalid
by any court, the illegality or invalidity of such clause,
provision or section shall not affect any of the remaining
clauses, provisions or sections hereof, and this Agreement shall
be construed and enforced as if such illegal or invalid clause,
provision or section had not been contained herein. In case any
agreement or obligation contained in this Agreement be held to be
in violation of law, then such agreement or obligation shall be
deemed to be the agreement or obligation of the Pollution Control
Corporation or the Company, as the case may be, to the full
extent permitted by law.
2.044 Governing Law. The laws of the State of Arizona
shall govern the construction and enforcement of this Agreement,
except that the provisions of Section 14.09 of the Indenture,
construed as provided in Section 14.07 of the Indenture, shall
apply to this Agreement as if contained herein.
2.045 Notice Regarding Cancellation of Contracts. As
required by the provisions of Section 38-511, Arizona Revised
Statutes, as amended, notice is hereby given that political
subdivisions of the State of Arizona or any of their departments
or agencies may, within three (3) years of its execution, cancel
any contract, without penalty or further obligation, made by the
political subdivisions or any of their departments or agencies on
or after September 30, 1988, if any person significantly involved
in initiating, negotiating, securing, drafting or creating the
contract on behalf of the political subdivisions or any of their
departments or agencies is, at any time while the contract or any
extension of the contract is in effect, an employee or agent of
any other party to the contract in any capacity or a consultant
to any other party of the contract with respect to the subject
matter of the contract. The cancellation shall be effective when
written notice from the chief executive officer or governing body
of the political subdivision is received by all other parties to
the contract unless the notice specifies a later time.
The Company covenants and agrees not to employ as an employee,
agent or, with respect to the subject matter of this Agreement, a
consultant, any person significantly involved in initiating,
negotiating, securing, drafting or creating such Agreement on
behalf of the Issuer within three (3) years from the execution
hereof, unless a waiver is provided by the Pollution Control
Corporation.
IN WITNESS WHEREOF, the parties hereto have caused this Loan
Agreement to be duly executed as of the day and year first above
written.
COCONINO COUNTY, ARIZONA
POLLUTION CONTROL CORPORATION
ATTEST:
By_____________________________
President
_______________________________
Secretary
TUCSON ELECTRIC POWER COMPANY
ATTEST:
By_____________________________
Vice President
________________________________
Assistant Secretary
EXHIBIT A
A portion of the costs of the construction, improvement or
equipping of the following Facilities will be refinanced with the
proceeds of the Pollution Control Refunding Revenue Bonds, 1996
Series B (Tucson Electric Power Company Project) issued by
Coconino County, Arizona Pollution Control Corporation and
referred to in the foregoing Loan Agreement.
____________________
_______________________________
* This table of contents is not part of the Loan Agreement, and
is for convenience only. The captions herein are of no legal
effect and do not vary the meaning or legal effect of any part
of the Loan Agreement.
05/09/96/LOB/06361/009/AGREE/35274.6
INDENTURE OF TRUST
between
COCONINO COUNTY, ARIZONA
POLLUTION CONTROL CORPORATION
and
FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION
Dated as of May 1, 1996
Authorizing
Pollution Control Refunding Revenue Bonds,
1996 Series B
(Tucson Electric Power Company Project)
TABLE OF CONTENTS*
Page
Parties 1
Recitals 1
Granting Clause 2
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. 2
ARTICLE II
THE BONDS
Section 2.01. Creation of Bonds. 14
Section 2.02. Interest on the Bonds. 14
Section 2.03. Form of Bonds. 22
Section 2.04. Execution of Bonds. 23
Section 2.05. Authentication of Bonds. 23
Section 2.06. Bonds Not General Obligations. 23
Section 2.07. Prerequisites to Authentication of Bonds. 23
Section 2.08.Lost or Destroyed Bonds or Bonds Canceled in Error 24
Section 2.09. Transfer, Registration and Exchange of Bonds 25
Section 2.10. Notice of Mandatory Tender; Special Notice
by Tender Agent During Flexible Rate
Period. 26
Section 2.11. Other Obligations 27
Section 2.12. Temporary Bonds 27
Section 2.13. Cancellation of Bonds 27
Section 2.14. Payment of Principal and Interest 27
ARTICLE III
REDEMPTION OF BONDS
Section 3.01. Redemption Provisions 28
Section 3.02. Selection of Bonds to be Redeemed 31
Section 3.03. Procedure for Redemption 32
Section 3.04. No Partial Redemption After Default 33
Section 3.05. Payment of Redemption Price 33
ARTICLE IV
THE BOND FUND
Section 4.01. Creation of Bond Fund 33
Section 4.02. Liens 33
Section 4.03. Deposits into Bond Fund 33
Section 4.04. Use of Moneys in Bond Fund 34
Section 4.05. Custody of Bond Fund; Withdrawal of Moneys 35
Section 4.06. Bonds Not Presented for Payment 35
Section 4.07. Moneys Held in Trust 35
Section 4.08. Security Arrangements 36
ARTICLE V
DISPOSITION OF PROCEEDS
Section 5.01. Disposition of Proceeds. 37
ARTICLE VI
INVESTMENTS
Section 6.01. Investments 37
ARTICLE VII
GENERAL COVENANTS
Section 7.01. No General Obligations 38
Section 7.02.Performance of Covenants of the Pollution Control Corporation;
Representations 38
Section 7.03.Maintenance of Rights and Powers; Compliance with Laws 38
Section 7.04.Enforcement of Obligations of the Company; Amendments 39
Section 7.05. Further Instruments. 39
Section 7.06. No Disposition of Trust Estate. 39
Section 7.07. Financing Statements. 39
Section 7.08. Tax Covenants; Rebate Fund. 39
Section 7.09. Notices of Trustee. 40
Section 7.10. No Transfer of Security Arrangement. 40
ARTICLE VIII
DEFEASANCE
Section 8.01. Defeasance. 40
ARTICLE IX
DEFAULTS AND REMEDIES
Section 9.01. Events of Default. 42
Section 9.02. Remedies. 44
Section 9.03. Restoration to Former Position. 45
Section 9.04. Bank's or Owners' Right to Direct Proceedings. 45
Section 9.05.Limitation on Owners' Right to Institute Proceedings. 45
Section 9.06. No Impairment of Right to Enforce Payment. 45
Section 9.07.Proceedings by Trustee without Possession of Bonds. 46
Section 9.08. No Remedy Exclusive. 46
Section 9.09. No Waiver of Remedies. 46
Section 9.10. Application of Moneys. 46
Section 9.11. Severability of Remedies. 47
ARTICLE X
TRUSTEE; PAYING AGENT AND CO-PAYING AGENTS; REGISTRAR
Section 10.01. Acceptance of Trusts. 47
Section 10.02. No Responsibility for Recitals. 47
Section 10.03. Limitations on Liability. 47
Section 10.04. Compensation, Expenses and Advances. 48
Section 10.05. Notice of Events of Default. 49
Section 10.06. Action by Trustee. 49
Section 10.07. Good Faith Reliance. 49
Section 10.08.Dealings in Bonds and with the Pollution Control
Corporation and the Company. 49
Section 10.09. Allowance of Interest. 50
Section 10.10. Construction of Indenture. 50
Section 10.11. Resignation of Trustee. 50
Section 10.12. Removal of Trustee. 50
Section 10.13. Appointment of Successor Trustee. 50
Section 10.14. Qualifications of Successor Trustee. 51
Section 10.15. Judicial Appointment of Successor Trustee. 51
Section 10.16. Acceptance of Trusts by Successor Trustee. 51
Section 10.17. Successor by Merger or Consolidation. 52
Section 10.18. Standard of Care. 52
Section 10.19.Notice to Owners of Bonds of Event of Default. 52
Section 10.20.Intervention in Litigation of the Pollution Control
Corporation. 52
Section 10.21. Paying Agent; Co-Paying Agents. 52
Section 10.22.Qualifications of Paying Agent and Co-Paying
Agents; Resignation; Removal. 53
Section 10.23. Registrar. 54
Section 10.24.Qualifications of Registrar; Resignation; Removal. 54
Section 10.25. Several Capacities. 55
ARTICLE XI
EXECUTION OF INSTRUMENTS BY OWNERS OF BONDS AND
PROOF OF OWNERSHIP OF BONDS
Section 11.01. Execution of Instruments; Proof of Ownership. 55
ARTICLE XII
MODIFICATION OF THIS INDENTURE AND THE LOAN AGREEMENT
Section 12.01. Limitations. 55
Section 12.02.Supplemental Indentures without Owner Consent. 56
Section 12.03.Supplemental Indentures with Consent of Owners. 57
Section 12.04. Effect of Supplemental Indenture. 59
Section 12.05.Consent of the Company and Obligor under Security
Arrangement. 59
Section 12.06.Amendment of Loan Agreement without Consent of
Owners. 59
Section 12.07.Amendment of Loan Agreement with Consent of
Owners. 60
ARTICLE XIII
TENDER AGENT; REMARKETING AGENT; PURCHASE AND REMARKETING OF BON
DS
Section 13.01. Tender Agent. 61
Section 13.02.Qualifications of Tender Agent; Resignation;
Removal. 62
Section 13.03. Purchase of Bonds; Notices. 62
Section 13.04. Remarketing Agent. 64
Section 13.05. Qualifications of Remarketing Agent. 64
Section 13.06. Remarketing of Bonds; Notice of Sales. 65
Section 13.07. Delivery of Bonds. 66
Section 13.08. Security Arrangements. 66
Section 13.09. Delivery of Proceeds of Sale. 66
Section 13.10. No Purchases or Sales After Default. 66
ARTICLE XIV
MISCELLANEOUS
Section 14.01.Successors of the Pollution Control Corporation. 67
Section 14.02. Parties in Interest. 67
Section 14.03. Severability. 67
Section 14.04.No Personal Liability of Pollution Control
Corporation Officials. 67
Section 14.05.Bonds Owned by the Pollution Control Corporation
or the Company. 67
Section 14.06. Counterparts. 68
Section 14.07. Governing Law. 68
Section 14.08. Notices. 68
Section 14.09. Holidays. 68
Section 14.10.Statutory Notice Regarding Cancellation of
Contracts. 68
Section 14.11. Notice of Change. 69
Testimonium 70
Signatures and Seals 70
Exhibit A A-1
Exhibit B B-1
Exhibit C C-1
Exhibit D D-1
INDENTURE OF TRUST
THIS INDENTURE OF TRUST, dated as of May 1, 1996 (this
"Indenture"), between COCONINO COUNTY, ARIZONA POLLUTION
CONTROL CORPORATION, an Arizona nonprofit corporation and
a political subdivision of the State of Arizona
(hereinafter called the "Pollution Control Corporation"),
and FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION, as
trustee (hereinafter called the "Trustee"),
W I T N E S S E T H :
WHEREAS, the Pollution Control Corporation is
authorized and empowered under Title 35, Chapter 6,
Arizona Revised Statutes, as amended (the "Act"), to issue
its bonds in accordance with the Act and to make secured
or unsecured loans for the purpose of financing or
refinancing the acquisition, construction, improvement or
equipping of pollution control facilities consisting of
real and personal properties, including but not limited to
machinery and equipment whether or not now in existence or
under construction, which are used in whole or in part to
control, prevent, abate, alter, dispose or store, solid
waste, thermal, noise, atmospheric or water pollutants,
contaminants or products therefrom, whether such
facilities serve one or more purposes or functions in
addition to controlling, preventing, abating, altering,
disposing or storing such pollutants, contaminants or the
products therefrom, and to charge and collect interest on
such loans and pledge the proceeds of loan agreements as
security for the payment of the principal of and interest
on bonds, or designated issues of bonds, issued by the
Pollution Control Corporation and any agreements made in
connection therewith, whenever the Board of Directors of
the Pollution Control Corporation finds such loans to be
in furtherance of the purposes of the Pollution Control
Corporation;
WHEREAS, the Pollution Control Corporation has
heretofore issued and sold $25,000,000 aggregate principal
amount of its Pollution Control Revenue Bonds, 1974 Series
A (Tucson Gas & Electric Company Project) (the "1974
Bonds") due December 17, 1975;
WHEREAS, the Pollution Control Corporation has also
heretofore issued and sold $15,700,000 aggregate principal
amount of its Pollution Control Revenue Bonds, 1975 Series
A (Tucson Gas and Electric Company Project), of which
$14,700,000 remain outstanding (the "1975 Bonds"), the
proceeds of which were loaned to the Company (formerly
known as Tucson Gas & Electric Company) to pay a portion
of the principal amount of the 1974 Bonds; and
WHEREAS, the Pollution Control Corporation proposes to
issue and sell its revenue bonds to refinance, by the
payment or redemption of the 1975 Bonds, or provisions
therefor, a portion of the cost of the pollution control
facilities described in Exhibit A to the Loan Agreement,
dated as of May 1, 1996 (the "Loan Agreement"), between
the Pollution Control Corporation and Tucson Electric
Power Company, an Arizona corporation (the "Company") paid
from the proceeds of the 1975 Bonds;
NOW, THEREFORE, for and in consideration of these
premises and the mutual covenants herein contained, of the
acceptance by the Trustee of the trusts hereby created, of
the purchase and acceptance of the Bonds by the Owners (as
hereinafter defined) thereof and of the sum of one dollar
lawful money of the United States of America, to it duly
paid by the Trustee at or before the execution and
delivery of these presents, and for other good and
valuable consideration the receipt and sufficiency of
which are hereby acknowledged, in order to secure the
payment of the principal of and premium, if any, and
interest on the Bonds at any time Outstanding (as
hereinafter defined) under this Indenture according to
their tenor and effect, the reimbursement of the Bank (as
hereinafter defined) as provided herein for drawings on
the Letter of Credit (as hereinafter defined) and the
performance and observance by the Pollution Control
Corporation of all the covenants and conditions expressed
or implied herein and contained in the Bonds, the
Pollution Control Corporation does hereby grant, bargain,
sell, convey, mortgage, pledge and assign, and grant a
security interest in, the Trust Estate (as hereinafter
defined) to the Trustee, its successors in trust and their
assigns forever;
TO HAVE AND TO HOLD all the same with all privileges
and appurtenances hereby conveyed and assigned, or agreed
or intended so to be, to the Trustee, its successors in
trust and their assigns forever;
IN TRUST NEVERTHELESS, upon the terms and trusts herein
set forth, first, for the equal and proportionate benefit
and security of all Owners of the Bonds issued under and
secured by this Indenture without preference, priority or
distinction as to the lien of any Bonds over any other
Bonds, except to the extent that Bonds held of record by
the Company or by the Tender Agent (as hereinafter
defined) for the account of the Company pursuant to
Section 13.07(c) hereof shall not be entitled to the
benefit of the Letter of Credit (as hereinafter defined),
as provided in Section 4.08 hereof and, second, for the
benefit and security of the Bank as and to the extent
provided in Sections 4.04(c) and 8.01 hereof;
PROVIDED, HOWEVER, that if, after the right, title and
interest of the Trustee in and to the Trust Estate shall
have ceased, terminated and become void in accordance with
Article VIII hereof, the principal of and premium, if any,
and interest on the Bonds shall have been paid to the
Owners thereof, or shall have been paid to the Company
pursuant to Section 4.06 hereof, then and in that case
these presents and the estate and rights hereby granted
shall cease, terminate and be void, and thereupon the
Trustee shall cancel and discharge this Indenture and
execute and deliver to the Pollution Control Corporation
and the Company such instruments in writing as shall be
requisite to evidence the discharge hereof; otherwise this
Indenture is to be and remain in full force and effect.
THIS INDENTURE OF TRUST FURTHER WITNESSETH, and it is
expressly declared, that all Bonds issued and secured
hereunder are to be issued, authenticated and delivered,
and the Trust Estate and the other estate and rights
hereby granted are to be dealt with and disposed of,
under, upon and subject to the terms, conditions,
stipulations, covenants, agreements, trusts, uses and
purposes as hereinafter expressed, and the Pollution
Control Corporation has agreed and covenanted, and does
hereby agree and covenant, with the Trustee and with the
respective Owners, from time to time, of the Bonds, as
follows:
I DEFINITIONS
I.11. Definitions. The terms defined in this
Article I shall, for all purposes of this Indenture, have
the meanings herein specified, unless the context clearly
requires otherwise:
Act:
"Act" shall mean Title 35, Chapter 6, Arizona Revised
Statutes, and all acts supplemental thereto or amendatory
thereof.
Administration Expenses:
"Administration Expenses" shall mean the reasonable
expenses incurred by the Pollution Control Corporation
with respect to the Loan Agreement, this Indenture and any
transaction or event contemplated by the Loan Agreement or
this Indenture, including the compensation and
reimbursement of expenses and advances payable to the
Trustee, to the Paying Agent, any Co-Paying Agent and the
Registrar, and to the Tender Agent and the Remarketing
Agent.
Authorized Company Representative:
"Authorized Company Representative" shall mean each
person at the time designated to act on behalf of the
Company by written certificate furnished to the Pollution
Control Corporation and the Trustee containing the
specimen signature of such person and signed on behalf of
the Company by its President, any Vice President or its
Treasurer, together with its Secretary or any Assistant
Secretary.
Available Moneys:
"Available Moneys" shall mean (a) with respect to any
payment date occurring during the term of a Security
Arrangement on which the Company shall not be the obligor,
(i) moneys furnished to the Trustee or the Tender Agent by
the Company or the Pollution Control Corporation which
have been on deposit with the Trustee or the Tender Agent
for at least 123 days prior to and during which no
petition by or against the Company or the Pollution
Control Corporation under any bankruptcy act or under any
similar act which may be hereafter enacted shall have been
filed, unless such petition shall have been dismissed and
such dismissal shall be final and not subject to appeal
(provided that such moneys need not have been on deposit
for 123 days if the Company shall furnish to the Pollution
Control Corporation, the Trustee and the Tender Agent an
unqualified opinion of counsel of national recognition
experienced in bankruptcy matters, and to Moody's if the
Bonds shall then be rated by Moody's, and to S&P if the
Bonds shall then be rated by S&P, that payment of such
moneys to the Owners would not constitute an avoidable
preference under Section 547 of the United States
Bankruptcy Code in the event of the filing of a petition
thereunder by or against the Company or the Pollution
Control Corporation), and (ii) the proceeds from the
investment of moneys described in clause (i) above, which
moneys described in clause (i) and clause (ii) shall have
been continuously on deposit with the Trustee or Tender
Agent in trust for the benefit of the Owners in a separate
and segregated account in which only such moneys are held,
and (b) with respect to any payment date not occurring
during the term of a Security Arrangement on which the
Company shall not be the obligor, any moneys furnished to
the Trustee, and the proceeds from the investment thereof.
Bank:
"Bank" shall mean Societe Generale, Los Angeles Branch,
a banking corporation organized and existing under the
laws of France, so long as the Letter of Credit shall be
in effect, in its capacity as issuer of the Letter of
Credit, its successors in such capacity and their assigns
and, if any other Security Arrangement on which the
Company shall not be the obligor, shall have been issued
and delivered as a Security Arrangement in accordance with
Section 6.07(a) of the Loan Agreement, "Bank" shall mean
the obligor on such other Security Arrangement so long as
such other Security Arrangement shall be in effect, in its
capacity as issuer of such other Security Arrangement, its
successors and their assigns.
Bond Counsel:
"Bond Counsel" shall mean any firm or firms of
nationally recognized bond counsel experienced in matters
pertaining to the validity of, and exclusion from gross
income for federal tax purposes of interest on bonds
issued by states and political subdivisions, selected by
the Company and acceptable to the Pollution Control
Corporation.
Bond Fund:
"Bond Fund" shall mean the fund created by Section 4.01
hereof.
Bonds:
"Bond" or 'Bonds" shall mean the bonds authorized to be
issued under this Indenture.
Business Day:
"Business Day" shall mean a day of the year on which
banks located in The City of New York, New York, and in
the city in which the Principal Office of the Trustee is
located, and in the city in which the office of the Bank
at which drawings or other demands for payment on a
Security Arrangement on which the Company shall not be the
obligor, if any, are made, are not required or authorized
to remain closed and on which The New York Stock Exchange
is not closed.
Capital Account:
"Capital Account" shall mean any account so named
established under Section 4.01 hereof.
Code:
"Code" shall mean the Internal Revenue Code of 1986 or
any successor statute thereto. Each reference to a
section of the Code herein shall be deemed to include the
United States Treasury Regulations proposed or in effect
thereunder and applicable to the Bonds or the use of
proceeds thereof, unless the context clearly requires
otherwise. References to any particular Code section
shall, in the event of a successor Code, be deemed to be a
reference to the successor to such Code section.
Company:
"Company" shall mean Tucson Electric Power Company, a
corporation organized and existing under the laws of the
State of Arizona, its successors and their assigns.
Company Mortgage:
"Company Mortgage" shall mean the Indenture, dated as
of April 1, 1941, between The Tucson Gas, Electric Light
and Power Company (predecessor of the Company) and The
Chase National Bank of the City of New York (now The Chase
Manhattan Bank (National Association)), as trustee, as
heretofore and hereafter amended and supplemented.
Conversion Date:
"Conversion Date" shall mean (a) when used with respect
to the Fixed Rate Period, the day on which the interest
rate on the Bonds is converted to the Fixed Rate pursuant
to Section 2.02(d) hereof; (b) when used with respect to
any Variable Rate Period, the day on which a particular
type of Variable Rate Period becomes effective for the
Bonds pursuant to Section 2.02(c) hereof and is not
preceded by the same type of Variable Rate Period (and,
when used with respect to any Term Rate Period, a day
which is not preceded by a Term Rate Period of the same
duration); and (c) when used with respect to Flexible Rate
Periods, the day on which such periods become effective
for the Bonds and were not preceded by a Flexible Rate
Period pursuant to Section 2.02(a)(i) hereof.
Daily Rate:
"Daily Rate" shall mean the interest rate to be
determined for the Bonds on each Business Day pursuant to
Section 2.02(b)(ii) hereof.
Daily Rate Period:
"Daily Rate Period" shall mean each period during which
the Bonds bear interest at a Daily Rate.
Depositary:
"Depositary" shall mean The Depository Trust Company or
any successor thereto as a securities repository for the
Bonds.
DTC:
"DTC" shall mean The Depository Trust Company, its
successors and their assigns or if The Depository Trust
Company or its successor or assign resigns from its
functions as depository for the Bonds, any other
securities depository which agrees to follow the
procedures required to be followed by a securities
depository in connection with the Bonds and which is
selected by the Pollution Control Corporation, at the
direction of the Company.
Facilities:
"Facilities" shall mean the real and personal
properties, machinery and equipment currently existing,
under construction and to be constructed which are
described in Exhibit A to the Loan Agreement, as revised
from time to time to reflect any changes therein,
additions thereto, substitutions therefor and deletions
therefrom permitted by the terms of the Loan Agreement,
subject, however, to the provisions of Section 7.01 of the
Loan Agreement.
First Mortgage Bonds:
"First Mortgage Bonds" shall mean the bonds issued and
delivered under the Company Mortgage and delivered to the
Trustee as contemplated in Section 12.06 hereof.
Fixed Rate:
"Fixed Rate" shall mean the rate at which the Bonds
shall bear interest from and including the Fixed Rate
Conversion Date to the maturity date thereof.
Fixed Rate Conversion Date:
"Fixed Rate Conversion Date" shall mean the date on
which the interest rate on the Bonds is converted to the
Fixed Rate pursuant to Section 2.02(d) hereof.
Fixed Rate Period:
"Fixed Rate Period" shall mean the period during which
the Bonds bear interest at the Fixed Rate.
Flexible Rate:
"Flexible Rate" shall mean, when used with respect to
any particular Bond, the interest rate determined for each
Flexible Rate Period applicable thereto pursuant to
Section 2.02(b)(i) hereof.
Flexible Rate Conversion Date:
"Flexible Rate Conversion Date" shall mean each day on
which the interest rate on the Bonds is converted to a
Flexible Rate or Rates pursuant to Section 2.02(c) hereof.
Flexible Rate Period:
"Flexible Rate Period" shall mean each period during
which a Bond bears interest at a Flexible Rate.
General Account:
"General Account" shall mean the account so named
established under Section 4.01 hereof.
Government Obligations:
"Government Obligations" shall mean:
(a) direct obligations of, or obligations the principal
of and interest on which are unconditionally guaranteed
by, the United States of America entitled to the
benefit of the full faith and credit thereof; and
(b) certificates, depositary receipts or other
instruments which evidence a direct ownership interest
in obligations described in clause (a) above or in any
specific interest or principal payments due in respect
thereof; provided, however, that the custodian of such
obligations or specific interest or principal payments
shall be a bank or trust company organized under the
laws of the United States of America or of any state or
territory thereof or of the District of Columbia, with
a combined capital stock surplus and undivided profits
of at least $50,000,000; and provided, further, that
except as may be otherwise required by law, such
custodian shall be obligated to pay to the holders of
such certificates, depositary receipts or other
instruments the full amount received by such custodian
in respect of such obligations or specific payments and
shall not be permitted to make any deduction therefrom.
Indenture:
"Indenture" shall mean this Indenture of Trust, dated
as of May 1, 1996, between the Pollution Control
Corporation and the Trustee, and any and all
modifications, alterations, amendments and supplements
thereto.
Interest Payment Date:
"Interest Payment Date" shall mean (a) when used with
respect to Bonds bearing interest at the Daily or Monthly
Rate, the first Business Day of each calendar month to
which interest at such rate has accrued; (b) when used
with respect to Bonds bearing interest at a Weekly Rate,
the first Wednesday of each calendar month to which
interest at such rate has accrued; (c) when used with
respect to Bonds bearing interest at a Term Rate or the
Fixed Rate, the first day of the sixth calendar month
following the month in which the Term or Fixed Rate
Conversion Date occurs and the first day of each sixth
calendar month thereafter to which interest at such rate
has accrued, except that the last Interest Payment Date
for any Term Rate Period which is followed by a conversion
to any type of Rate Period (except a Term or Fixed Rate
Period) shall be the first Business Day of the sixth
calendar month following the preceding Interest Payment
Date; (d) when used with respect to any particular Bond
bearing interest at a Flexible Rate, the day after the
last day of each Flexible Rate Period applicable thereto;
and (e) May 1, 2031.
Interest Period:
"Interest Period" shall mean the period from and
including any Interest Payment Date to and including the
day immediately preceding the next following Interest
Payment Date.
Investment Account:
"Investment Account" shall mean any account so named
established under Section 4.01 hereof.
Investment Securities:
"Investment Securities" shall mean any of the following
obligations or securities on which neither the Company nor
any of its subsidiaries is the obligor: (a) Government
Obligations; (b) interest bearing deposit accounts (which
may be represented by certificates of deposit) in
national, state or foreign banks having a combined capital
and surplus of not less than $10,000,000; (c) bankers'
acceptances drawn on and accepted by commercial banks
having a combined capital and surplus of not less than
$10,000,000; (d) (i) direct obligations of, (ii)
obligations the principal of and interest on which are
unconditionally guaranteed by, and (iii) any other
obligations the interest on which is exempt from federal
income taxation issued by, any state of the United States
of America, the District of Columbia or the Commonwealth
of Puerto Rico, or any political subdivision, agency,
authority or other instrumentality of any of the
foregoing, which, in any case, are rated by a nationally
recognized rating agency in any of its three highest
Rating Categories; (e) obligations of any agency or
instrumentality of the United States of America; (f)
commercial or finance company paper which is rated by a
nationally recognized rating agency in any of its three
highest Rating Categories; (g) corporate debt securities
issued by corporations having debt securities rated by a
nationally recognized rating agency in any of its three
highest Rating Categories; (h) repurchase agreements with
banking or financial institutions having a combined
capital and surplus of not less than $10,000,000 with
respect to any of the foregoing obligations or securities;
(i) shares or interests in registered investment companies
whose assets consist of obligations or securities which
are described in any other clause of this sentence; and
(j) any other obligations which may lawfully be purchased
by the Trustee. The commercial banks and banking
institutions referred to above may include the entities
acting as Trustee, Paying Agent, Co-Paying Agent,
Registrar, Tender Agent and Remarketing Agent hereunder if
such entities shall otherwise satisfy the requirements set
forth above.
Letter of Credit:
"Letter of Credit" shall mean an irrevocable letter of
credit issued by the Bank to the Trustee in accordance
with Section 6.07(b) of the Loan Agreement, and, upon the
issuance and delivery of any other letter of credit as a
Security Arrangement in accordance with Section 6.07(a) of
the Loan Agreement, "Letter of Credit" shall mean such
other letter of credit, and, upon the Termination or
Expiration of the Letter of Credit, "Letter of Credit"
shall mean any credit facility having terms substantially
the same as those of the Letter of Credit delivered as a
Security Arrangement in accordance with Section 6.07(a) of
the Loan Agreement.
Loan Agreement:
"Loan Agreement" shall mean the Loan Agreement, dated
as of May 1, 1996, between the Pollution Control
Corporation and the Company relating to the Bonds, and any
and all modifications, alterations, amendments and
supplements thereto.
Loan Payments:
"Loan Payments" shall mean the payments required to be
made by the Company pursuant to Section 5.01 of the Loan
Agreement.
Maximum Rate:
"Maximum Rate" shall mean 12% per annum.
Monthly Rate:
"Monthly Rate" shall mean the interest rate to be
determined for the Bonds on a monthly basis pursuant to
Section 2.02(b)(iv) hereof.
Monthly Rate Conversion Date:
"Monthly Rate Conversion Date" shall mean each day on
which the interest rate on the Bonds is converted to a
Monthly Rate pursuant to Section 2.02(c) hereof.
Monthly Rate Period:
"Monthly Rate Period" shall mean each period during
which the Bonds bear interest at a Monthly Rate.
Moody's:
"Moody's" shall mean Moody's Investors Service, Inc., a
corporation organized and existing under the laws of the
State of Delaware, its successors and their assigns, and,
if such corporation shall be dissolved or liquidated or
shall no longer performs the functions of a securities
rating agency, "Moody's" shall be deemed to refer to any
other nationally recognized securities rating agency
designated by the Pollution Control Corporation, with the
approval of the Company, by notice to the Trustee and the
Remarketing Agent.
1954 Code:
"1954 Code" shall mean the Internal Revenue Code of
1954, as amended.
1975 Bonds:
"1975 Bonds" shall mean the $15,700,000 aggregate
principal amount of the Pollution Control Corporation's
Pollution Control Revenue Bonds, 1975 Series A (Tucson Gas
and Electric Company Project), of which $14,700,000 remain
outstanding.
1974 Bonds:
"1974 Bonds" shall mean the $25,000,000 aggregate
principal amount of the Pollution Control Corporation's
Pollution Control Revenue Bonds, 1974 Series A (Tucson Gas
and Electric Company Project).
Notice by Mail:
"Notice by Mail" or "notice" of any action or condition
"by Mail" shall mean a written notice meeting the
requirements of this Indenture mailed by first-class mail
to the Owners of specified registered Bonds at the
addresses shown in the registration books maintained
pursuant to Section 2.09 hereof; provided, however, that
if, because of the temporary or permanent suspension of
delivery of first-class mail or for any other reason, it
is impossible or impracticable to give such notice by
first-class mail, then such giving of notice in lieu
thereof, which may include publication, as shall be made
with the approval of the Trustee (or, if there be no
trustee hereunder, the Pollution Control Corporation)
shall constitute a sufficient giving of such notice.
Notice by Publication:
"Notice by Publication" or "notice" of any action or
condition "by Publication" shall mean publication of a
notice meeting the requirements of this Indenture in a
newspaper or financial journal of general circulation in
The City of New York, New York, which carries financial
news, is printed in the English language and is
customarily published on each Business Day; provided,
however, that any successive weekly publication of notice
required hereunder may be made, unless otherwise expressly
provided herein, on the same or different days of the week
and in the same or different newspapers or financial
journals; and provided, further, that if, because of the
temporary or permanent suspension of the publication or
general circulation of any newspaper or financial journal
or for any other reason, it is impossible or impracticable
to publish such notice in the manner herein described,
then such publication in lieu thereof as shall be made
with the approval of the Trustee (or, if there be no
trustee hereunder, the Pollution Control Corporation)
shall constitute a sufficient publication of such notice.
Outstanding:
"Outstanding", when used in reference to the Bonds,
shall mean, as at any particular date, the aggregate of
all Bonds authenticated and delivered under this Indenture
except:
(a) those canceled by the Trustee at or prior to such
date or delivered to or acquired by the Trustee at or
prior to such date for cancellation;
(b) those deemed to be paid in accordance with Article
VIII hereof;
(c) those deemed to be purchased in accordance with
Section 13.03(b) hereof; and
(d) those in lieu of or in exchange or substitution for
which other Bonds shall have been authenticated and
delivered pursuant to this Indenture, unless proof
satisfactory to the Trustee and the Company is
presented that such Bonds are held by a bona fide
holder in due course.
Owner:
"Owner" shall mean the person in whose name any Bond is
registered upon the registration books maintained pursuant
to Section 2.09 hereof. The Company may be an Owner.
Paying Agent; Co-Paying Agent; Principal Office thereof:
"Paying Agent" and "Co-Paying Agent" shall mean the
paying agent and any co-paying agent appointed in
accordance with Section 10.21 hereof. "Principal Office"
of the Paying Agent or any Co-Paying Agent shall mean the
office thereof designated in writing to the Trustee.
Plant:
"Plant" shall mean the Navajo Generating Station, an
electric power generating plant near Page, Arizona, in
Coconino County, Arizona, and any additions or
improvements thereto or replacements thereof.
Pollution Control Corporation:
"Pollution Control Corporation" shall mean Coconino
County, Arizona Pollution Control Corporation, an Arizona
nonprofit corporation and a political subdivision of the
State of Arizona incorporated for and with the approval of
the County of Coconino, Arizona, pursuant to the
provisions of the Constitution of the State of Arizona and
the Act, its successors and their assigns.
Rate Period:
"Rate Period" shall mean the period during which a
particular rate of interest determined for the Bonds is to
remain in effect until a subsequently determined rate of
interest becomes effective pursuant to Section 2.02
hereof.
Rating Agency:
"Rating Agency" shall mean Moody's or S&P.
Rating Category:
"Rating Category" shall mean a generic securities
rating category, without regard to any refinement or
gradation of such rating category by a numerical modifier
or otherwise.
Receipts and Revenues of the Pollution Control Corporation
from the Loan Agreement:
"Receipts and Revenues of the Pollution Control
Corporation from the Loan Agreement" shall mean all moneys
paid or payable to the Trustee for the account of the
Pollution Control Corporation by the Company in respect of
the Loan Payments and payments pursuant to Section 9.01 of
the Loan Agreement, including the proceeds of all drawings
by the Trustee on the Letter of Credit or any other
Security Arrangement in satisfaction of the Company's
obligations to make the Loan Payments and all receipts of
the Trustee which, under the provisions of this Indenture,
reduce the amount of such payments.
Record Date:
"Record Date" shall mean the close of business on the
(a) Business Day immediately preceding an Interest Payment
Date, in the case of Bonds bearing interest at Flexible,
Daily, Weekly and Monthly Rates, (b) fifteenth (15th) day
(whether or not a Business Day) of the calendar month
immediately preceding the Interest Payment Date, in the
case of Bonds bearing interest at a Term Rate or the Fixed
Rate.
Registrar; Principal Office thereof:
"Registrar" shall mean the registrar appointed in
accordance with Section 10.23 hereof. "Principal Office"
of the Registrar shall mean the office thereof designated
in writing to the Trustee.
Reimbursement Agreement:
"Reimbursement Agreement" shall mean the agreement
between the Company and the Bank pursuant to which the
Letter of Credit or other Security Arrangement is issued
by the Bank and delivered to the Trustee, and any and all
modifications, alterations, amendments and supplements
thereto.
Remarketing Agent; Principal Office thereof:
"Remarketing Agent" shall mean the remarketing agent
appointed in accordance with Section 13.04 hereof.
"Principal Office" of the Remarketing Agent shall mean the
office thereof designated in writing to the Pollution
Control Corporation, the Trustee, the Tender Agent, the
Company and the Bank.
S&P:
"S&P" shall mean Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc., a corporation
organized and existing under the laws of the State of New
York, its successors and their assigns, and, if such
corporation shall be dissolved or liquidated or shall no
longer perform the functions of a securities rating
agency, "S&P" shall be deemed to refer to any other
nationally recognized securities rating agency designated
by the Pollution Control Corporation, with the approval of
the Company, by notice to the Trustee and the Remarketing
Agent.
Security Arrangement; Termination thereof; Expiration
thereof:
"Security Arrangement" shall mean any of the following:
(i) the Letter of Credit; (ii) First Mortgage Bonds
delivered to the Trustee as contemplated by Section 12.06
hereof; and (iii) any credit facility, insurance policy or
other credit support agreement or mechanism obtained,
delivered, made, entered into or otherwise arranged by the
Company for the purpose of securing, evidencing or being
otherwise in furtherance of the obligations of the Company
under Section 5.01 or 10.01 of the Loan Agreement, or
both, or for the purpose of securing the Bonds but shall
not include any facility, arrangement or mechanism, such
as a liquidity facility or line of credit, that is not an
irrevocable obligation to pay amounts in respect of the
obligations of the Company under Section 5.01 of the Loan
Agreement. "Termination" (and other forms of the word
"terminate") shall mean, when used with respect to any
Security Arrangement, the replacement, removal, surrender
or other termination of such Security Arrangement by the
Trustee or the Company other than the Expiration of such
Security Arrangement. "Expiration" (and other forms of
the word "expire") shall mean, when used with respect to
any Security Arrangement, the expiration or termination of
such Security Arrangement in accordance with its terms.
Supplemental Indenture:
"Supplemental Indenture" shall mean any indenture of
the Pollution Control Corporation modifying, altering,
amending, supplementing or confirming this Indenture for
any purpose, in accordance with the terms hereof.
Supplemental Loan Agreement:
"Supplemental Loan Agreement" shall mean any agreement
between the Pollution Control Corporation and the Company
modifying, altering, amending or supplementing the Loan
Agreement, in accordance with the terms hereof.
Tax Agreement:
"Tax Agreement" shall mean that tax certificate and
agreement, dated May 1, 1996, between the Pollution
Control Corporation and the Company, relating to the
requirements of the Code and the 1954 Code, and any and
all modifications, alterations, amendments and supplements
thereto.
Tender Agent; Principal Office thereof:
"Tender Agent" shall mean the tender agent appointed in
accordance with Section 13.01 hereof. "Principal Office"
of the Tender Agent shall mean the office thereof
designated in writing to the Pollution Control
Corporation, the Trustee, the Remarketing Agent, the
Company and the Bank.
Term Rate:
"Term Rate" shall mean the interest rate to be
determined for the Bonds for a term of one or more whole
years pursuant to Section 2.02(b)(v) hereof.
Term Rate Conversion Date:
"Term Rate Conversion Date" shall mean each day on
which the Bonds bear interest at a Term Rate pursuant to
Section 2.02(c) hereof, which is preceded by a day on
which the Bonds did not bear interest at a Term Rate or
bore interest at a Term Rate for a Term Rate Period of a
different duration.
Term Rate Period:
"Term Rate Period" shall mean each period during which
the Bonds bear interest at a Term Rate.
Trust Estate:
"Trust Estate" shall mean at any particular time all
right, title and interest of the Pollution Control
Corporation in and to the Loan Agreement (except its
rights under Sections 5.03, 5.04, 6.03 and 8.05 thereof
and any rights of the Pollution Control Corporation to
receive notices, certificates, requests, requisitions and
other communications thereunder), including without
limitation, the Receipts and Revenues of the Pollution
Control Corporation from the Loan Agreement, the Letter of
Credit (excluding the rights to make drawings thereunder
with respect to the purchase of Bonds and proceeds of such
drawings) and any other Security Arrangement (except to
the extent that such Security Arrangement is in
furtherance of the obligations of the Company with respect
to the purchase of Bonds), the Bond Fund and all moneys
and Investment Securities from time to time on deposit
therein (excluding, however, any moneys or Investment
Securities held in any subaccount within the Bond Fund
established in furtherance of the obligations of the
Company under clause (b) of Section 6.04 of the Loan
Agreement), any and all other moneys and obligations
(other than Bonds) which at such time are deposited or are
required to be deposited with, or are held or are required
to be held by or on behalf of, the Trustee, the Paying
Agent or any Co-Paying Agent in trust under any of the
provisions of this Indenture and all other rights, titles
and interests which at such time are subject to the lien
of this Indenture; provided, however, that in no event
shall there be included in the Trust Estate (a) moneys or
obligations deposited with or held by the Trustee pursuant
to Section 7.08 hereof, (b) moneys or obligations
deposited with or paid to the Trustee for the redemption
or payment of Bonds which are deemed to have been paid in
accordance with Article VIII hereof or moneys held
pursuant to Section 4.06 hereof or (c) except as herein
expressly provided, any moneys held by the Tender Agent
for the purchase of Bonds or for payment of Bonds held by
it pursuant to Section 13.03(c) or 13.07(c) hereof.
Trustee; Principal Office thereof:
"Trustee" shall mean First Trust of New York, National
Association, as trustee under this Indenture, its
successors in trust and their assigns. "Principal Office"
of the Trustee shall mean the principal corporate trust
office of the Trustee, which office at the date of
acceptance by the Trustee of the duties and obligations
imposed on the Trustee by this Indenture is located at the
address specified in Section 14.08 hereof.
Variable Rate:
"Variable Rate" shall mean, as the context requires,
the Daily, Weekly, Monthly, or Term Rate applicable from
time to time to the Bonds.
Variable Rate Period:
"Variable Rate Period" shall mean each period during
which the Bonds bear interest at a specific Variable Rate.
Weekly Rate:
"Weekly Rate" shall mean the interest rate to be
determined for the Bonds on a weekly basis pursuant to
Section 2.02(b)(iii) hereof.
Weekly Rate Conversion Date:
"Weekly Rate Conversion Date" shall mean each day on
which the interest rate on the Bonds is converted to a
Weekly Rate pursuant to Section 2.02(c) hereof.
Weekly Rate Period:
"Weekly Rate Period" shall mean each period during
which the Bonds bear interest at a Weekly Rate.
II THE BONDS
II.11. Creation of Bonds. There is hereby
authorized and created under this Indenture, for the
purpose of providing moneys to pay, or redeem, or provide
for the redemption therefor, of the 1975 Bonds, an issue
of Bonds, entitled to the benefit, protection and security
of this Indenture, in the aggregate principal amount of
Fourteen Million Seven Hundred Thousand Dollars
($14,700,000). Each of the Bonds shall be designated by
the title "Coconino County, Arizona Pollution Control
Corporation Pollution Control Refunding Revenue Bond, 1996
Series B (Tucson Electric Power Company Project)". The
Bonds shall mature, subject to prior redemption upon the
terms and conditions hereinafter set forth, on May 1,
2031.
II.12. Interest on the Bonds. The Bonds shall bear
interest, payable on each Interest Payment Date, at the
lesser of (a) a Daily Rate, a Weekly Rate, a Monthly Rate,
a Flexible Rate or Rates, a Term Rate or the Fixed Rate as
selected by the Company in accordance with this Section
2.02 and (b) 12% per annum (the "Maximum Rate"). The
Bonds shall initially bear interest at a Weekly Rate.
When the Bonds bear interest at a Variable Rate (other
than a Term Rate) or at Flexible Rates, interest shall be
computed on the basis of the actual number of days elapsed
over a year of 365 days (366 in leap years). When the
Bonds bear interest at a Term Rate or the Fixed Rate,
interest shall be computed on the basis of a 360-day year
of twelve 30-day months. For purposes of any such
calculation of interest payable with respect to the final
interest payment during a Term Rate Period immediately
followed by a Flexible, Daily, Weekly or Monthly Rate
Period, the amount of interest which shall be payable with
respect to such final interest period shall be determined
as if the Interest Payment Date for such period were the
first day of the sixth month following the preceding
Interest Payment Date, notwithstanding any extension of
such month to the first Business Day of such month by
reason of the conversion to such Flexible, Daily, Weekly
or Monthly Rate Period. Interest shall be paid on each
Bond on each Interest Payment Date for such Bond. Each
Bond shall bear interest from the Interest Payment Date to
which interest thereon shall have been paid in full which
is, or immediately precedes, its date of authentication,
or, if no interest shall have been paid on the Bonds, from
the date of initial authentication and delivery of Bonds
under this Indenture.
While there exists an Event of Default, the interest
rate on the Bonds will be the rate on the Bonds
immediately prior to the occurrence of such Event of
Default, except that if the Bonds then bore interest at
Flexible Rates the rate during the continuance of such
Event of Default will be the highest Flexible Rate then in
effect for any Bond. The interest rate determination
method may be changed by the Company as described in
Sections 2.02(c) and 2.02(d) hereof. The methods of
determining the various interest rates are as provided in
Sections 2.02(b) and 2.02(d) hereof. The various Rate
Periods are described in Section 2.02(a) and 2.02(d)
hereof.
Notwithstanding any provision of this Indenture or of
any Bond, the Trustee or the Paying Agent may, but shall
not be obligated to, enter into an agreement with any
Owner of 100% in aggregate principal amount of the Bonds
providing for making any or all payments to that Owner of
principal or redemption price of and interest on the Bonds
or any part thereof (other than any payment of the entire
unpaid principal amount thereof) at a place and in a
manner other than as provided in this Indenture and in the
Bonds, without presentation or surrender of the Bonds, and
for giving any notice required hereunder, upon any
conditions that shall be satisfactory to the Trustee, the
Paying Agent and the Company; provided that no such
agreement with such an Owner shall provide for less notice
than is otherwise provided for herein.
The Trustee or the Paying Agent, as the case may be,
will furnish a copy of each of those agreements, certified
to be the document executed by an officer of the Trustee,
to the Company. Any payment of principal, redemption price
or interest pursuant to such an agreement shall constitute
payment thereof pursuant to, and for all purposes of, this
Indenture.
(a) Rate Periods.
(i) Flexible Rate Periods. The Flexible Rate Period for
each Bond shall be of such duration, not exceeding 270
days, as may be offered by the Remarketing Agent and
specified by the purchaser pursuant to Section 2.02(b)(i)
hereof, and any Bond may bear interest at a Flexible Rate,
and have a Flexible Rate Period, different from any other
Bond; provided that each such Flexible Rate Period shall
(A) commence on a Business Day (initially, the Flexible
Rate Conversion Date), and (B) end on a day which is
immediately followed by a Business Day.
(ii) Daily Rate Periods. Daily Rate Periods shall
commence on each Business Day and shall extend to, but not
include, the next succeeding Business Day.
(iii) Weekly Rate Periods. Weekly Rate Periods shall
commence on Wednesday of each week and end on Tuesday of
the following week; except that (A) in the case of a
conversion to a Weekly Rate Period, the initial Weekly
Rate Period for Bonds shall commence on the Weekly Rate
Conversion Date and end on Tuesday of the following week;
and (B) in the case of a conversion from a Weekly Rate
Period to a different Rate Period, the last Weekly Rate
Period prior to conversion shall end on the last day
immediately preceding the Conversion Date.
(iv) Monthly Rate Periods. Monthly Rate Periods shall
(A) commence on a Monthly Rate Conversion Date, which
shall be the first Business Day of a month and the first
Business Day of each calendar month thereafter, and (B)
end on the last day preceding either the commencement date
of the following Monthly Rate Period or a Conversion Date
on which a different type of Rate Period shall become
effective.
(v) Term Rate Periods. Term Rate Periods shall (A)
commence on a Term Rate Conversion Date; and (B) end on
the last day preceding either the commencement date of the
following Term Rate Period or the Conversion Date on which
a different Rate Period shall become effective.
(b) Determination of Interest Rates. The interest rate
for the Bonds for each Rate Period (other than a Flexible
Rate Period), shall be determined by the Remarketing Agent
to be the lowest rate of interest which, in the judgment
of the Remarketing Agent as of the date of determination
and under prevailing market conditions, would cause the
Bonds to have a market value equal to the principal amount
thereof, plus accrued and unpaid interest, if any. The
interest rate shall be determined by the Remarketing Agent
for each Rate Period as follows:
(i) Flexible Rates. The Flexible Rate for each Flexible
Rate Period shall be effective from and including the
commencement date of such period to and including the last
day thereof. Each Flexible Rate, and Flexible Rate Period,
shall be determined by the Remarketing Agent in connection
with the sale of the Bond or Bonds to which it relates.
Each Flexible Rate, and Flexible Rate Period, shall be
determined for each Bond on or prior to the first day of
each Flexible Rate Period with respect to such Bond by the
Remarketing Agent by the offer and acceptance of purchase
commitments for such Bond (at a price equal to 100% of the
principal amount) for such Flexible Rate Period and/or for
such Flexible Rate as the Remarketing Agent deems to be
advisable in order to minimize the net interest cost on
the Bonds under prevailing market conditions; provided,
however, that the foregoing shall not prohibit the
Remarketing Agent from accepting purchase commitments for
longer Flexible Rate Periods (and at higher Flexible
Rates) than are otherwise available at the time of any
remarketing if the Remarketing Agent determines, in its
sole judgment, that, under prevailing market conditions, a
lower net interest cost on the Bonds can be achieved over
the longer Flexible Rate Period. Notwithstanding the
foregoing, no Flexible Rate Period may be established
which exceeds 270 days or, if the Remarketing Agent has
given or received notice of any conversion to a Variable
or Fixed Rate Period, the remaining number of days prior
to the Conversion Date. If for any reason a Flexible Rate
shall not be determined for any Flexible Rate Period for
any Bond, the Flexible Rate for such Flexible Rate Period
for such Bond shall be the Flexible Rate in effect for the
immediately preceding Flexible Rate Period, or a Flexible
Rate Period shall not be determined for any Bond, the
Flexible Rate Period for such Bond shall be the shortest
period encompassing at least one Business Day.
(ii) Daily Rates. The Daily Rate for each Daily Rate
Period shall be effective from and including the
commencement date thereof and shall remain in effect from
day to day until changed by the Remarketing Agent. The
initial Daily Rate and any change to the Daily Rate shall
be determined by the Remarketing Agent between 1:00 p.m.,
New York City time, on the Business Day immediately
preceding the commencement date of the Daily Rate Period
to which it relates and 10:00 a.m., New York City time, on
such commencement date.
(iii) Weekly Rates. The Weekly Rate for each Weekly
Rate Period shall be effective from and including the
commencement date of such period and shall remain in
effect through and including the last day thereof. Each
such Weekly Rate shall be determined by the Remarketing
Agent not later than 4:00 p.m., New York City time, on the
Tuesday or the next Business Day immediately preceding the
commencement date of the Weekly Rate Period to which it
relates.
(iv) Monthly Rates. The Monthly Rate for each Monthly
Rate Period shall be effective from and including the
commencement date of such period and shall remain in
effect through and including the last day thereof. The
Monthly Rate for each Monthly Rate Period shall be
determined not later than 4:00 pm., New York City time, on
the Business Day immediately preceding the commencement
date of the Monthly Rate Period to which it relates.
(v) Term Rates. The Term Rate for each Term Rate Period
shall be effective from and including the commencement
date of such period and shall remain in effect through and
including the last day thereof. Each Term Rate shall be
determined by the Remarketing Agent not later than 4:00
p.m., New York City time, on the Business Day immediately
preceding the commencement date of the Term Rate Period to
which it relates. If for any reason the duration of any
Term Rate Period shall not be determined for such Term
Rate Period, such duration shall be one year.
(vi) Non-Determination. If for any reason a Weekly Rate,
Monthly Rate or Term Rate shall not be determined for a
Weekly Rate Period, Monthly Rate Period or Term Rate
Period, the Weekly Rate, Monthly Rate or Term Rate, as the
case may be, shall be the Weekly Rate, Monthly Rate or
Term Rate in effect for the immediately preceding Rate
Period.
(c) Conversions between Rate Periods. In addition to
any conversion to the Fixed Rate pursuant to Section
2.02(d) hereof, at the option of the Company, the Bonds
may be converted from the one type of Rate Period to
another as follows:
(i) The Conversion Date for a conversion to a different
Rate Period shall be an Interest Payment Date on which
interest is payable for the Rate Period from which the
conversion is to be made; provided, however, that:
(A) if the conversion is from Flexible Rate Periods,
the Conversion Date shall be the last Interest Payment
Date on which interest is payable for any Flexible Rate
Periods theretofore established for the Bonds;
(B) if the conversion is from a Term Rate Period to a
Term Rate Period of a different duration or to a different
Rate Period, the Conversion Date may only be the last
Interest Payment Date in respect of that Term Rate Period;
and
(C) if the conversion is between Daily and Weekly Rate
Periods, the Conversion Date may be any Wednesday,
regardless of whether the Wednesday is an Interest Payment
Date.
(ii) The Company shall give written notice of any such
conversion to the Remarketing Agent, the Trustee, the
Tender Agent and the Bank not fewer than thirty-five (35)
days prior to the proposed Conversion Date. Such notice
shall specify the proposed Conversion Date and the type of
Rate Period to which the conversion will be made, and in
the case of conversion to a Term Rate Period, the number
of years to be included within such Term Rate Period.
(iii) Not more than sixty (60) days prior to the
Conversion Date and not fewer than thirty (30) days prior
to the Conversion Date, the Tender Agent shall give Notice
by Mail of the conversion to the Owners of the Bonds
stating the proposed Conversion Date and the proposed type
of Rate Period and, except in the case of conversions
between Daily and Weekly Rate Periods, stating that the
Bonds will bc subject to mandatory tender for purchase on
the Conversion Date at a purchase price equal to the
principal amount thereof. The notice shall state: (A)
that all Bonds must be delivered to the Tender Agent for
mandatory purchase on the Conversion Date at a purchase
price equal to the principal amount thereof and that if
the Owner fails to deliver any Bonds to the Tender Agent
on the purchase date and the Tender Agent is in receipt of
the purchase price therefor, such Bonds shall be deemed to
be purchased on the purchase date and ownership
transferred to the purchaser thereof, and (B) that an
Owner who fails to deliver such Bonds shall have no
further rights thereunder except the right to receive the
purchase price thereof upon presentation and surrender of
such Bond to the Tender Agent.
(iv) Any conversion to a different Rate Period (except a
conversion, if any, between Daily and Weekly Rate Periods)
pursuant to this Section 2.02(c) shall be subject to the
condition that on or before the Conversion Date, the
Company shall have delivered to the Pollution Control
Corporation, the Trustee, the Tender Agent and the
Remarketing Agent an opinion of Bond Counsel to the effect
that the conversion is authorized hereunder and under the
Act and will not, in and of itself, adversely affect the
exclusion from gross income for federal tax purposes of
the interest on the Bonds.
(v) While the Letter of Credit shall be in effect, the
Bonds shall not be converted to a Term Rate Period or
Flexible Rate Period unless the Letter of Credit may be
drawn upon (in respect of interest or the portion of
purchase price equal to accrued interest) in an amount
which equals at least 210 days accrued interest in the
case of a Term Rate Period or 300 days accrued interest in
the case of a Flexible Rate Period.
(d) The Fixed Rate. At the option of the Company, the
Bonds may be converted to bear interest at a Fixed Rate to
their final maturity. Any such conversion shall be made as
follows:
(i) The Fixed Rate Conversion Date shall be an Interest
Payment Date on which interest is payable for the Rate
Period from which the conversion is to be made; provided,
however, that (A) if the conversion is from a Term Rate
Period, the Fixed Rate Conversion Date shall be limited to
an Interest Payment Date on which a new Term Rate Period
would otherwise have commenced and (B) if the conversion
is from a Flexible Rate Period, the Fixed Rate Conversion
Date shall be an Interest Payment Date on which interest
is payable for all Bonds.
(ii) (A) The Company shall give written notice of any
such conversion to the Pollution Control Corporation, the
Trustee, the Remarketing Agent, the Tender Agent and the
Bank not fewer than forty-five (45) days prior to the
proposed Conversion Date. Such notice shall specify the
Fixed Rate Conversion Date.
(A) Not fewer an thirty (30) nor more than sixty (60)
days prior to the Fixed Rate Conversion Date, the Tender
Agent shall give Notice by Mail of the conversion to the
Owners of all Bonds, specifying the proposed Conversion
Date and stating that the Bonds will be subject to
mandatory tender for purchase on the Conversion Date. The
notice shall state that all Bonds must be delivered to the
Tender Agent for mandatory purchase on the Conversion Date
at a purchase price equal to the principal amount thereof
and that if the Owner fails to deliver any Bonds to the
Tender Agent on the purchase date and the Tender Agent is
in receipt of the purchase price therefor, such Bonds
shall be deemed to be purchased on the purchase date and
ownership transferred to the purchaser thereof and that an
Owner who fails to deliver such Bonds shall have no
further rights thereunder except the right to receive the
purchase price thereof upon presentation and surrender of
such Bond to the Tender Agent.
(iii) The Fixed Rate shall be determined by the
Remarketing Agent no later than 3:00 pm., New York City
time, on the Business Day preceding the Fixed Rate
Conversion Date. The Fixed Rate shall be the lowest rate
of interest which, in the judgment of the Remarketing
Agent as of the date of determination and under prevailing
market conditions, would cause the Bonds to have a market
value equal to the principal amount thereof.
(iv) Any conversion to a Fixed Rate shall be subject to
the condition that on or before the Fixed Rate Conversion
Date, the Company shall have delivered to the Pollution
Control Corporation, the Trustee, the Tender Agent and the
Remarketing Agent an opinion of Bond Counsel to the effect
that the conversion is authorized hereunder and under the
Act and will not, in and of itself, adversely affect the
exclusion from gross income for federal tax purposes of
the interest on the Bonds.
(e) Calculation of Interest. The Remarketing Agent
will notify the Trustee and the Company, in writing or by
telecopy or telephone promptly confirmed by tested telex
by 4:00 p.m., New York City time:
(i) on the last Business Day of a month in which
interest on the Bonds is payable at a Variable Rate other
than Term Rate, of the Variable Rate for each day in such
month;
(ii) on the first Business Day of each Flexible Rate
Period, of the length thereof, the Flexible Rate therefor
and the principal amount of Bonds bearing interest at such
Flexible Rate; and
(iii) on the day of a determination thereof, of the
Term Rate and the Fixed Rate.
Using the rates supplied by the Remarketing Agent pursuant
to this Section, the Trustee will calculate the interest
payable on the Bonds. The Remarketing Agent will inform
the Tender Agent and the Bank orally at the oral request
of any of them of any interest rate set by the Remarketing
Agent. The Trustee will use commercially reasonable
efforts to respond to telephonic inquiries from Owners of
Bonds with respect to the effective interest rate.
The setting of the rates and the calculation of
interest payable on the Bonds as provided in this
Indenture will be conclusive and binding on all parties
and on each Owner of a Bond.
(f) Change in Rate Periods-Opinion or Opinions of Bond
Counsel. Notwithstanding any provision of this Section
2.02, no change shall be made in the Rate Period pursuant
to Section 2.02(c) or 2.02(d) hereof if the opinion or
opinions of Bond Counsel required under Section 2.02(c) or
2.02(d) hereof are not delivered on or before the
Conversion Date. If the Tender Agent shall have sent any
notice to the Owners of the Bonds regarding a change in
the Rate Period, then in the event such opinion or
opinions are not delivered, the Tender Agent shall
promptly notify by commercially reasonable means all
Owners of the Bonds that the proposed change in Rate
Period shall not occur and that the existing Rate Period
shall continue in effect.
(g) Optional Tenders for Purchase during Variable Rate
Periods.
(i) Owners of Bonds bearing interest at Variable Rates
may elect to have their Bonds (or portions thereof in
amounts equal to the lowest denomination then authorized
or whole multiples of such lowest denomination) purchased
at a purchase price equal to 100% of the principal amount
of such Bonds (or portions thereof), plus, except as
hereinafter provided, accrued and unpaid interest, if any,
on the following purchase dates and upon the giving of the
following telephonic or written notices meeting the
further requirements of subsection (ii) below:
(A) Bonds bearing interest at Daily Rates may be
tendered for purchase at a price payable in immediately
available funds on any Business Day prior to conversion
from a Daily Rate Period to a different Rate Period, upon
telephonic notice of tender to the Tender Agent given not
later than 10:45 a.m., New York City time, on the purchase
date.
(B) Bonds bearing interest at Weekly Rates may be
tendered for purchase at a price payable in immediately
available funds on any Business Day prior to conversion
from a Weekly Rate Period to a different Rate Period upon
delivery of a written or telephonic notice (in the case of
telephonic notice, promptly confirmed in writing) of
tender to the Tender Agent not later than 5:00 p.m., New
York City time, on a Business Day not fewer than seven (7)
days prior to the purchase date.
(C) Bonds bearing interest at Monthly Rates may be
tendered for purchase on any Interest Payment Date for
such Bonds at a price payable in immediately available
funds upon delivery of a written notice of tender to the
Tender Agent not later than 5:00 p.m., New York City time,
on a Business Day which is not fewer than seven (7) days
prior to the purchase date.
(D) Bonds bearing interest at a Term Rate may be
tendered for purchase on the commencement date of the
succeeding Rate Period at a price payable in immediately
available funds upon delivery of a written notice of
tender to the Tender Agent not later than 5:00 p.m., New
York City time, on a Business Day which is not fewer than
fifteen (15) days prior to the purchase date.
(ii) Each notice of tender:
(A) shall (y) in the case of a written notice, except
as otherwise specified, be delivered by or on behalf of
the Owner to the Tender Agent at its Principal Office, and
be in form satisfactory to the Tender Agent; and (z) in
the case of Bonds registered in the name of a nominee of
DTC as DTC shall designate and held by DTC in its
book-entry system, notice to the Tender Agent shall be in
the form set forth as Exhibit D hereto.
II.0(J) shall state, whether delivered in
writing or by telephone (promptly confirmed in
writing) (w) the principal amount of the Bond or
Bonds to which the notice relates, (x) that the Owner
irrevocably demands purchase of such Bond or Bonds or
a specified portion thereof in an amount equal to the
lowest denomination then authorized or a whole
multiple of such lowest denomination, (y) the date on
which such Bond or Bonds or portion thereof is to be
purchased, and (z) payment instructions with respect
to the purchase price; and
(C) shall automatically constitute, whether delivered
in writing or by telephone, (w) an irrevocable offer to
sell the Bond or portion thereof to which the notice
relates on the purchase date to any purchaser selected by
the Remarketing Agent, at a price equal to the principal
amount of such Bond or portion thereof plus, with respect
to Bonds bearing interest at Daily Rates or Weekly Rates,
any interest thereon accrued and unpaid as of the purchase
date, except that Bonds held at DTC and for which an
optional tender has been made by delivery of the notice
set forth as Exhibit D hereto shall not be purchased
unless such Bonds are transferred to the account of the
Tender Agent on the tender date as provided in such
notice, (x) an irrevocable authorization and instruction
to the Tender Agent to effect the transfer of such Bond or
portion thereof upon payment of such price to the Tender
Agent on the purchase date, (y) an irrevocable
authorization and instruction to the Tender Agent to
effect the exchange of the Bond to be purchased in whole
or in part for other Bonds in an equal aggregate principal
amount so as to facilitate the sale of such Bond or
portion thereof to be purchased, and (z) an acknowledgment
that such Owner will have no further rights with respect
to such Bond or portion thereof upon payment of the
purchase price thereof to the Tender Agent on the purchase
date, except for the right of such Owner to receive such
purchase price upon surrender of such Bond.
The determination of the Tender Agent as to
whether a notice of tender has been properly
delivered pursuant to the forgoing shall be
conclusive and binding upon the Owner. The Tender
Agent may waive any conditions to a conforming
tender.
(iii) Not later than 11:00 a.m., New York City time,
on the Business Day immediately following the date of
receipt of any notice of tender (or immediately upon such
receipt, in the case of Bonds bearing interest at Daily
Rates), the Tender Agent shall notify, by telephone
promptly confirmed in writing, in the case of a Daily,
Weekly or Monthly Rate, and in writing in all other cases,
the Trustee, the Remarketing Agent, the Company and the
Bank of the principal amount of Bonds (or portions
thereof) to be purchased and the date of purchase.
(h) Mandatory Tenders for Purchase.
(i) Each Bond bearing interest at a Flexible Rate shall
be subject to mandatory tender for purchase on the day
immediately following the last day of each Flexible Rate
Period applicable to such Bond at a purchase price equal
to 100% of the principal amount thereof; provided,
however, that any such Bond shall not be subject to such
mandatory tender for purchase if, prior to 3:00 p.m. on
the Business Day next preceding the day such mandatory
tender would otherwise occur hereunder, the Owner of such
Bond by notice delivered in writing or by telephone
(promptly confirmed in writing) to the Remarketing Agent
shall have elected to retain such Bond for an additional
Flexible Rate Period and such Owner shall have agreed with
the Remarketing Agent as to the duration of the additional
Flexible Rate Period and the Flexible Rate to be effective
during such period.
(ii) Bonds to be converted to the Fixed Rate or from one
type of Rate Period to another (other than conversions
between Daily and Weekly Rate Periods) or from any Term
Rate Period to a Term Rate Period of a different duration
are subject to mandatory tender for purchase on such
Conversion Date at a purchase price equal to 100% of the
principal amount thereof.
(iii) Bonds shall be subject to mandatory tender for
purchase at a purchase price that would be the then
applicable redemption price set forth in Section 3.01 (a)
or (c) hereof if such Bonds were redeemed on such day, on
the first day of the month in which the Expiration or
Termination of the term of any Security Arrangement shall
occur; provided, however, that there shall be no such
mandatory tender if prior to the giving of notice
described in Section 2.10 hereof, (A) the Company shall
have delivered to the Tender Agent a certificate or letter
from Moody's, if the Bonds are then rated by Moody's, and
from S&P, if the Bonds are then rated by S&P, to the
effect that the Termination or Expiration of such Security
Arrangement, or the Termination of such Security
Arrangement and the provision of another Security
Arrangement in lieu thereof, as the case may be, will not,
by itself, result in a reduction or withdrawal of its
ratings then in effect on the Bonds and (B) if another
Security Arrangement is to be provided in lieu thereof,
such substitute Security Arrangement shall have been
delivered to the Trustee and shall, by its terms, become
effective on or before the Expiration or Termination of
the term of any existing Security Arrangement.
(iv) Bonds are subject to mandatory tender for purchase
at a purchase price equal to 100% of the principal amount
thereof plus accrued interest to the date of purchase,
upon the occurrence of either of the following events:
(A) receipt by the Trustee, following a drawing
on a Security Arrangement on which the Company shall
not be the obligor to pay accrued interest, or the
portion of purchase price equal to accrued interest,
on the Bonds, of notice from the Bank that the amount
available to be drawn on such Security Arrangement
will not be reinstated (in respect of interest or
portion of purchase price equal to accrued interest)
in the amount of such drawing, unless such notice
also directs the Trustee to provide notice to the
Pollution Control Corporation of its obligation to
redeem the Bonds pursuant to Section 3.01(e) hereof;
or
(B) receipt by the Trustee of notice from the
Bank stating that an Event of Default under the
Reimbursement Agreement (or other agreement between
the Company and the Bank pursuant to which the Bank
issued and delivered to the Trustee a Security
Arrangement) has occurred and is continuing, unless
such notice also directs the Trustee to provide
notice to the Pollution Control Corporation of its
obligation to redeem the Bonds pursuant to Section
3.01(e) hereof.
Upon the occurrence of an event specified in clause (A)
or (B) of the immediately preceding paragraph, the
Trustee shall direct the Tender Agent to purchase, and
the Tender Agent shall purchase, the Bonds on the first
Business Day after the receipt by the Trustee of such
notice on which the Trustee may make a drawing or
drawings on such Security Arrangement and on which the
proceeds of such drawing or drawings shall be
immediately available, but not prior to such date.
II.13. Form of Bonds. Bonds shall be authenticated
and delivered hereunder solely as fully registered bonds
without coupons in the denomination of $100,000 or
integral multiples thereof in the case of Bonds bearing
interest at a Variable Rate other than Term Rates,
$100,000 or integral multiples of $5,000 in excess thereof
in the case of Bonds bearing interest at a Flexible Rate
and $5,000 or integral multiples thereof, in the case of
bonds bearing interest at Term Rates or the Fixed Rate.
Bonds shall be numbered as determined by the Trustee and
shall be dated the date of the initial authentication and
delivery thereof.
Principal of and premium, if any, on Bonds shall be
payable to the Owners of such Bonds upon presentation and
surrender of such Bonds at the Principal Office of the
Paying Agent or any Co-Paying Agent. Interest on the
Bonds shall be paid by check drawn upon the Paying Agent
and mailed to the Owners of such Bonds as of the close of
business on the Record Date with respect to each Interest
Payment Date at the registered addresses of such Owners as
they shall appear as of the close of business on such
Record Date on the registration books maintained pursuant
to Section 2.09 hereof notwithstanding the cancellation of
any such Bond upon any exchange or registration of
transfer subsequent to such Record Date, except that if
and to the extent that there should be a default on the
payment of interest on any Bond, such defaulted interest
shall be paid to the Owners in whose name such Bond (or
any Bond or Bonds issued upon any exchange or registration
of transfer thereof) is registered as of the close of
business on a date selected by the Trustee in its
discretion, but not more than 15 days or less than 10 days
prior to the date of payment of such defaulted interest;
notwithstanding the foregoing, except in respect of a Term
Rate Period and the Fixed Rate Period, upon request to the
Paying Agent by an Owner of not less than $1,000,000 in
aggregate principal amount of Bonds, interest on such
Bonds and, after presentation and surrender of such Bonds,
the principal thereof shall be paid to such Owner by wire
transfer to the account maintained within the continental
United States specified by such Owner or, if such Owner
maintains an account with the entity acting as Paying
Agent, by deposit into such account. Payment as aforesaid
shall be made in such coin or currency of the United
States of America as, at the respective times of payment,
shall be legal tender for the payment of public and
private debts.
The Bonds and the form for registration of transfer and
the form of certificate of authentication to be printed on
the Bonds are to be in substantially the forms thereof set
forth in Exhibits A, B and C hereto, respectively, with
necessary or appropriate variations, omissions and
insertions as permitted or required by this Indenture.
II.14. Execution of Bonds. The Bonds shall be
executed on behalf of the Pollution Control Corporation by
the President or a Vice President of the Pollution Control
Corporation and shall have affixed, impressed or
reproduced thereon the official seal of the Pollution
Control Corporation which shall be attested by the
Secretary or an Assistant Secretary of the Pollution
Control Corporation. Each of the foregoing officers may
execute or cause to be executed with a facsimile signature
in lieu of his manual signature the Bonds, provided the
signature of either the President or a Vice President of
the Pollution Control Corporation or the Secretary or
Assistant Secretary of the Pollution Control Corporation
shall, if required by applicable laws, be manually
subscribed.
In case any officer of the Pollution Control
Corporation whose signature or a facsimile of whose
signature shall appear on the Bonds shall cease to be such
officer before the authentication by the Trustee and
delivery of such Bonds, such signature or such facsimile
shall nevertheless be valid and sufficient for all
purposes, the same as if he had remained in office until
delivery; and any Bond may be signed on behalf of the
Pollution Control Corporation by such persons as, at the
time of execution of such Bond, shall be the proper
officers of the Pollution Control Corporation, even though
at the date of such Bond or of the execution and delivery
of this Indenture any such person was not such officer.
II.15. Authentication of Bonds. Only such Bonds as
shall have endorsed thereon a certificate of
authentication substantially in the form set forth in
Exhibit C hereto duly executed by the Trustee shall be
entitled to any right or benefit under this Indenture. No
Bond shall be valid or obligatory for any purpose unless
and until such certificate of authentication shall have
been duly executed by the Trustee, and such executed
certificate of authentication of the Trustee upon any such
Bonds shall be conclusive evidence that such Bond has been
authenticated and delivered under this Indenture. The
Trustee's certificate of authentication on any Bond shall
be deemed to have been executed by it if signed with an
authorized signature of the Trustee, but it shall not be
necessary that the same person sign the certificate of
authentication on all of the Bonds issued hereunder. This
Section 2.05 is subject to the provisions of Section 10.17
hereof.
II.16. Bonds Not General Obligations. Neither the
County of Coconino, Arizona nor the State of Arizona shall
in any event be liable for the payment of the principal of
or premium, if any, or interest on the Bonds, and neither
the Bonds nor the premium, if any, or the interest
thereon, shall be construed to constitute an indebtedness
of County of Coconino, Arizona or the State of Arizona
within the meaning of any constitutional or statutory
provisions whatsoever. The Bonds and the premium, if any,
and the interest thereon shall be limited obligations of
the Pollution Control Corporation payable solely from the
Receipts and Revenues of the Pollution Control Corporation
from the Loan Agreement and the other moneys pledged
therefor under this Indenture, and such fact shall be
plainly stated on the face of each Bond. The Pollution
Control Corporation shall not be obligated to pay the
purchase price of Bonds from any source.
II.17. Prerequisites to Authentication of Bonds.
The Pollution Control Corporation shall execute and
deliver to the Trustee and the Trustee shall authenticate
the Bonds and deliver said Bonds to the initial purchasers
thereof as may be directed hereinafter in this Section
2.07.
Upon conversion to a Term Rate Period or to the Fixed
Rate Period, a new form of Bond may be prepared containing
a summary of tender and redemption provisions applicable
to the Bonds during such Term Rate Period or Fixed Rate
Period.
Prior to the delivery on original issuance by the
Trustee of any authenticated Bonds there shall be or have
been delivered to the Trustee:
(a) a duly certified copy of a resolution of the Board
of Directors of the Pollution Control Corporation
authorizing the execution and delivery of this Indenture
and the Loan Agreement and the issuance of the Bonds;
(b) an original duly executed counterpart or a duly
certified copy of the Loan Agreement;
(c) the Letter of Credit;
(d) a request and authorization to the Trustee on behalf
of the Pollution Control Corporation, signed by its
President or a Vice President, to authenticate and deliver
the Bonds in the aggregate principal amount determined by
this Indenture to the purchaser or purchasers therein
identified upon payment to the Trustee, but for the
account of the Pollution Control Corporation, of a sum
specified in such request and authorization plus any
accrued interest on such Bonds to the date of delivery;
and
(e) a written statement on behalf of the Company,
executed by the President, any Vice President or the
Treasurer, (i) approving the issuance and delivery of the
Bonds and (ii) consenting to each and every provision of
this Indenture.
II.18. Lost or Destroyed Bonds or Bonds Canceled in
Error. If any Bond, whether in temporary or definitive
form, is lost (whether by reason of theft or otherwise),
destroyed (whether by mutilation, damage, in whole or in
part, or otherwise) or canceled in error, the Pollution
Control Corporation may execute and the Trustee may
authenticate a new Bond of like date and denomination and
bearing a number not contemporaneously outstanding;
provided that (a) in the case of any mutilated Bond, such
mutilated Bond shall first be surrendered to the Trustee
and (b) in the case of any lost Bond or Bond destroyed in
whole, there shall be first furnished to the Pollution
Control Corporation, the Trustee and the Company evidence
of such loss or destruction. In every case, the applicant
for a substitute Bond shall furnish the Pollution Control
Corporation, the Trustee and the Company such security or
indemnity as may be required by any of them. In the event
any lost or destroyed Bond or a Bond canceled in error
shall have matured or is about to mature, or has been
called for redemption, instead of issuing a substitute
Bond the Trustee may, in its discretion, pay the same
without surrender thereof if there shall be first
furnished to the Pollution Control Corporation, the
Trustee and the Company evidence of such loss, destruction
or cancellation, together with indemnity, satisfactory to
them. Upon the issuance of any substitute Bond, the
Pollution Control Corporation and the Trustee may require
the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation
thereto. The Trustee may charge the Owner of any such
Bond with the Trustee's reasonable fees and expenses in
connection with any transaction described in this Section
2.08.
Every substitute Bond issued pursuant to the provisions
of this Section 2.08 by virtue of the fact that any Bond
is lost, destroyed or canceled in error shall constitute
an additional contractual obligation of the Pollution
Control Corporation, whether or not the Bond so lost,
destroyed or canceled shall be at any time enforceable,
and shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all
other Bonds duly issued hereunder. All Bonds shall be
held and owned upon the express condition that, to the
extent permitted by law, the foregoing provisions are
exclusive with respect to the replacement or payment of
lost, destroyed or improperly canceled Bonds,
notwithstanding any law or statute now existing or
hereafter enacted.
II.19. Transfer, Registration and Exchange of Bonds.
The Registrar shall maintain and keep, at its Principal
Office, books for the registration and registration of
transfer of Bonds, which, at all reasonable times, shall
be open for inspection by the Pollution Control
Corporation, the Trustee and the Company; and, upon
presentation for such purpose of any Bond entitled to
registration or registration of transfer at the Principal
Office of the Registrar, the Registrar shall register or
register the transfer in such books, under such
reasonable regulations as the Registrar may prescribe.
The Registrar shall make all necessary provisions to
permit the exchange or registration of transfer of Bonds
at its Principal Office.
The transfer of any Bond shall be registered upon the
registration books of the Registrar at the written request
of the Owner thereof or his attorney duly authorized in
writing, upon surrender thereof at the Principal Office of
the Registrar, together with a written instrument of
transfer satisfactory to the Registrar duly executed by
the Owner or his duly authorized attorney. Upon the
registration of transfer of any such Bond or Bonds, the
Pollution Control Corporation shall issue in the name of
the transferee, in authorized denominations, a new Bond or
Bonds in the same aggregate principal amount as the
surrendered Bond or Bonds.
The Pollution Control Corporation, the Trustee, the
Tender Agent, the Paying Agent, any Co-Paying Agent, the
Registrar and the Remarketing Agent may deem and treat the
Owner of any Bond as the absolute owner of such Bond,
whether such Bond shall be overdue or not, for the purpose
of receiving payment of, or on account of, the principal
of and premium, if any, and, except as provided in Section
2.03 hereof, interest on, or the purchase price of, such
Bond and for all other purposes, and neither the Pollution
Control Corporation, the Trustee, the Tender Agent, the
Paying Agent, any Co-Paying Agent, the Registrar nor the
Remarketing Agent shall be affected by any notice to the
contrary. All such payments so made to any such Owner or
upon his order shall be valid and effective to satisfy and
discharge the liability upon such Bond to the extent of
the sum or sums so paid.
Bonds, upon surrender thereof at the Principal Office
of the Registrar may, at the option of the Owner thereof,
be exchanged for an equal aggregate principal amount of
Bonds of any authorized denomination.
In all cases in which the privilege of exchanging Bonds
or registering the transfer of Bonds is exercised, the
Pollution Control Corporation shall execute and the
Trustee shall authenticate and deliver Bonds in accordance
with the provisions of this Indenture. For every such
exchange or registration of transfer of Bonds, whether
temporary or definitive, the Pollution Control
Corporation, the Registrar, or the Trustee may make a
charge sufficient to reimburse it for any tax or other
governmental charge required to be paid with respect to
such exchange or registration of transfer, which sum or
sums shall be paid by the person requesting such exchange
or registration of transfer as a condition precedent to
the exercise of the privilege of making such exchange or
registration of transfer. Except in connection with the
tender of Bonds for purchase pursuant to their terms and
the delivery thereof pursuant to Section 13.07 hereof, the
Registrar shall not be obligated (a) to make any such
exchange or registration of transfer of Bonds during the
fifteen (15) days next preceding the date on which notice
of any proposed redemption of Bonds is given, (b) to make
any exchange or registration of transfer of any Bonds
called for redemption or (c) in the case of Bonds bearing
interest at a Term Rate or the Fixed Rate, in the period
following the Record Date and prior to the Interest
Payment Date to which such Record Date relates.
The Bonds are to be initially registered in the name of
Cede & Co., as nominee for the Depositary. Such Bonds
shall not be transferable or exchangeable, nor shall any
purported transfer be registered, except as follows:
(a) such Bonds may be transferred in whole, and
appropriate registration of transfer effected, if such
transfer is by such nominee to the Depositary, or by the
Depositary to another nominee thereof, or by any nominee
of the Depositary to any other nominee thereof, or by the
Depositary or any nominee thereof to any successor
securities depositary or any nominee thereof; and
(b) such Bond may be exchanged for definitive Bonds
registered in the respective names of the beneficial
holders thereof, and thereafter shall be transferable
without restriction, if:
(i) the Depositary shall have notified the Company and
the Trustee that it is unwilling or unable to continue to
act as securities depositary with respect to such Bonds
and the Trustee shall not have been notified by the
Company within ninety (90) days of the identity of a
successor securities depositary with respect to such
Bonds;
(ii) the Company shall have delivered to the Trustee a
written instrument to the effect that such Bonds shall be
so exchangeable on an after a date specified therein; or
(iii) (1) an Event of Default shall have occurred
and be continuing, (2) the Trustee shall have given notice
of such Event of Default pursuant to Section 10.19 hereof
and (3) there shall have been delivered to the Pollution
Control Corporation, the Company and the Trustee an
opinion of counsel to the effect that the interests of the
beneficial owners of such Bonds in respect thereof will be
materially impaired unless such owners become owners of
definitive Bonds.
The Bonds delivered to the Depositary may contain a
legend reflecting the foregoing restrictions on
registration of transfer and exchange.
II.2 0. Notice of Mandatory Tender; Special Notice by
Tender Agent During Flexible Rate Period. (a) The Tender
Agent shall give notice to the Owners of the Bonds of each
event which requires the mandatory tender of the Bonds
pursuant to Section 2.02(h), other than the occurrence of
a last day of a Flexible Rate Period which shall not be
the effective date of a new Rate Period and other than a
mandatory tender for purchase pursuant to Section
2.02(h)(iv). Such notice shall be given in the manner and
at the times set forth in Section 3.03 hereof for the
giving of a notice of redemption. Such notice shall
describe the event which requires the Bonds to be tendered
and, if such event shall be the Termination or Expiration
of a Security Arrangement, shall also contain the
information referred to in Section 4.08(c) hereof. Notice
of a mandatory tender for purchase pursuant to Section
2.02(h)(iv) shall be given by the Tender Agent as soon as
practicable by Mail upon receipt by the Tender Agent of
the notice from the Trustee specified in Section
2.02(h)(iv) to all Owners of Outstanding Bonds.
(a) Upon each registration of transfer of a Bond
bearing interest at a Flexible Rate, the Tender Agent
shall give written notice to the transferee that (i) no
notices of the length of any Flexible Rate Period or the
Flexible Rate borne by his Bond during such period will be
given to the Owner of the Bond, but that such information
may be obtained, upon request, from the Remarketing Agent
and setting forth the manner that such information may be
obtained, (ii) the Owner of any Bond bearing interest at a
Flexible Rate will be required to tender such Bond on its
Interest Payment Date and (iii) no additional notice of
any such requirement to tender will be given to the Owner.
II.22. Other Obligations. The Pollution Control
Corporation expressly reserves the right to issue, to the
extent permitted by law, but shall not be obligated to
issue, obligations under another indenture or indentures
to provide additional funds to pay the cost of
construction of the Facilities or to refund all or any
principal amount of the Bonds, or any combination thereof.
II.23. Temporary Bonds. Pending the preparation of
definitive Bonds, the Pollution Control Corporation may
execute and the Trustee shall authenticate and deliver
temporary Bonds. Temporary Bonds shall be issuable as
registered Bonds without coupons, of any authorized
denomination, and substantially in the form of the
definitive Bonds but with such omissions, insertions and
variations as may be appropriate for temporary Bonds, all
as may be determined by the Pollution Control Corporation.
Temporary Bonds may contain such reference to any
provisions of this Indenture as may be appropriate. Every
temporary Bond shall be executed by the Pollution Control
Corporation and be authenticated by the Trustee upon the
same conditions and in substantially the same manner, and
with like effect, as the definitive Bonds. As promptly as
practicable the Pollution Control Corporation shall
execute and shall furnish definitive Bonds and thereupon
temporary Bonds may be surrendered in exchange therefor
without charge at the Principal Office of the Trustee, and
the Trustee shall authenticate and deliver in exchange for
such temporary Bonds a like aggregate principal amount of
definitive Bonds of authorized denominations. Until so
exchanged the temporary Bonds shall be entitled to the
same benefits under this Indenture as definitive Bonds.
II.24. Cancellation of Bonds. All Bonds which shall
have been surrendered to the Paying Agent or any Co-Paying
Agent for payment or redemption, and all Bonds which shall
have been surrendered to the Registrar for exchange or
registration of transfer, shall be delivered to the
Trustee for cancellation. All Bonds delivered to or
acquired by the Trustee for cancellation shall be canceled
and destroyed by the Trustee. The Trustee shall furnish
to the Pollution Control Corporation, the Paying Agent,
the Registrar and the Company counterparts of certificates
evidencing such cancellation and destruction and
specifying such Bonds by number.
II.25. Payment of Principal and Interest. For the
payment of interest on the Bonds, the Pollution Control
Corporation shall cause to be deposited in the Bond Fund,
on each Interest Payment Date, solely out of the Receipts
and Revenues of the Pollution Control Corporation from the
Loan Agreement and other moneys pledged therefor, an
amount sufficient to pay the interest to become due on
such Interest Payment Date. The obligation of the
Pollution Control Corporation to cause any such deposit to
be made hereunder shall be reduced by the amount of moneys
in the Bond Fund available on such Interest Payment Date
for the payment of interest on the Bonds.
For the payment of the principal of the Bonds upon
maturity, the Pollution Control Corporation shall cause to
be deposited in the Bond Fund, on the stated or
accelerated date of maturity, solely out of the Receipts
and Revenues of the Pollution Control Corporation from the
Loan Agreement and other moneys pledged therefor, an
amount sufficient to pay the principal of the Bonds. The
obligation of the Pollution Control Corporation to cause
any such deposit to be made hereunder shall be reduced by
the amount of moneys in the Bond Fund available on the
maturity date for the payment of the principal of the
Bonds.
III REDEMPTION OF BONDS
III.11. Redemption Provisions. (a) When interest on
the Bonds is payable at Flexible Rates or a Variable Rate
other than a Term Rate, the Bonds shall be subject to
redemption by the Pollution Control Corporation, at the
direction of the Company, in whole at any time or in part
from time to time, at the principal amount thereof plus
accrued interest to the redemption date.
(a) When interest on the Bonds is payable at a Term
Rate or the Fixed Rate, the Bonds shall be subject to
redemption by the Pollution Control Corporation, at the
direction of the Company, in whole at any time at the
principal amount thereof plus accrued interest to the
redemption date, if:
(i) the Company shall have determined that the
continued operation of the Plant is impracticable,
uneconomical or undesirable for any reason;
(ii) the Company shall have determined that the
continued operation of the Facilities is impracticable,
uneconomical or undesirable due to (A) the imposition of
taxes, other than ad valorem taxes currently levied upon
privately owned property used for the same general purpose
as the Facilities, or other liabilities or burdens with
respect to the Facilities or operation thereof, (B)
changes in technology, in environmental standards or legal
requirements or in the economic availability of materials,
supplies, equipment or labor or (C) destruction of or
damage to all or part of the Facilities;
(iii) all or substantially all of the Facilities or
the Plant shall have been condemned or taken by eminent
domain; or
(iv) the operation of the Facilities or the Plant shall
have been enjoined or shall have otherwise been prohibited
by, or shall conflict with, any order, decree, rule or
regulation of any court or of any federal, state or local
regulatory body, administrative agency or other
governmental body.
(b) When interest on the Bonds is payable at a Term
Rate for a Term Rate Period of five years or more or the
Fixed Rate, the Bonds shall be subject to redemption by
the Pollution Control Corporation, at the direction of the
Company, on any day in whole at any time or in part from
time to time, at the applicable redemption price shown
below, in each case plus accrued interest to the
redemption date, as follows:
Length of Term Commencement of Redemption Price
Rate Period; Years Redemption Period
Remaining
Until Final
Maturity
During Fixed Rate
Period
More than 12 years Tenth anniversary 102%, declining
of commencement of by 1% on each
Term Rate Period succeeding
or Fixed Rate anniversary of
Period the first day of
the redemption
period until
reaching 100% and
thereafter at
100%
More than 8, but Seventh 101 1/2%,
not more than 12 anniversary of declining by 3/4%
years commencement of on each
Term Rate Period succeeding
or Fixed Rate anniversary of
Period the first day of
the redemption
period until
reaching 100% and
thereafter at
100%
More than 5, but Fifth anniversary 101%, declining
not more than 8 of commencement of by 1/2% on each
years Term Rate Period succeeding
or Fixed Rate anniversary of
Period the first day of
the redemption
period until
reaching 100% and
thereafter at
100%
Five years or less Bonds not callable 100%
until commencement
of next Rate
Period, if any
Anything in this Indenture to the contrary
notwithstanding, in the event that the Company shall
consolidate with, merge with or into, or sell or otherwise
transfer all or substantially all of its assets to,
another corporation in accordance with Section 6.01 of the
Loan Agreement, the Bonds shall be subject to redemption
by the Pollution Control Corporation, at the direction of
the Company, in whole, at any time prior to the first date
on which the Bonds are redeemable as herein before
provided in paragraph (c) at the redemption price which
would be applicable on such date plus accrued interest to
the redemption date.
(c) The Bonds shall be subject to mandatory redemption
by the Pollution Control Corporation, at the principal
amount thereof plus accrued interest to the redemption
date, on the 180th day (or such earlier date as may be
designated by the Company) after a final determination by
a court of competent jurisdiction or an administrative
agency, to the effect that, as a result of a failure by
the Company to perform or observe any covenant, agreement
or representation contained in the Loan Agreement, the
interest payable on the Bonds is included for federal
income tax purposes in the gross income of the owners
thereof, other than any owner of a Bond who is a
"substantial user" of the Facilities or a "related person"
within the meaning of Section 103(b)(13) of the 1954 Code.
No determination by any court or administrative agency
shall be considered final for the purposes of this Section
3.01 (d) unless the Company shall have been given timely
notice of the proceeding which resulted in such
determination and an opportunity to participate in such
proceeding, either directly or through an owner of a Bond,
and until the conclusion of any appellate review sought by
any party to such proceeding or the expiration of the time
for seeking such review. The Bonds shall be redeemed
either in whole or in part in such principal amount that
the interest payable on the Bonds remaining outstanding
after such redemption would not be included in the gross
income of any owner thereof, other than an owner of a Bond
who is a "substantial user" of the Facilities or a
"related person" within the meaning of Section 103(b)(13)
of the 1954 Code.
(d) The Bonds shall be subject to mandatory redemption
by the Pollution Control Corporation, at the principal
amount thereof plus accrued interest to the redemption
date, upon the occurrence of either of the following
events:
(i) receipt by the Trustee, following a drawing on a
Security Arrangement on which the Company shall not be
the obligor to pay accrued interest, or the portion of
purchase price equal to accrued interest, on the Bonds,
of notice from the Bank that the amount available to be
drawn on such Security Arrangement will not be
reinstated (in respect of interest or portion of
purchase price equal to accrued interest) in the amount
of such drawing and directing the Trustee to provide
notice to the Pollution Control Corporation of its
resulting obligation to redeem the Bonds; or
(ii) receipt by the Trustee of notice from the Bank
stating that an Event of Default under the
Reimbursement Agreement (or other agreement between the
Company and the Bank pursuant to which the Bank issued
and delivered to the Trustee a Security Arrangement)
has occurred and is continuing and directing the
Trustee to provide notice to the Pollution Control
Corporation of its resulting obligation to redeem the
Bonds.
Upon the occurrence of either of the events described
in the immediately preceding paragraph, the Pollution
Control Corporation shall be obligated to redeem the Bonds
on the first Business Day after the occurrence of such
event on which the Trustee may make a drawing or drawings
on a Security Arrangement on which the Company shall not
be the obligor and on which the proceeds of such drawing
or drawings shall be available, but shall not redeem the
Bonds prior to such date. The Trustee shall give written
notice of such obligation to redeem the Bonds to the
Pollution Control Corporation, the Company, the Bank, the
Tender Agent and the Remarketing Agent and shall give
notice thereof as soon as practicable by Mail upon receipt
by the Trustee of the notice specified in Section 3.01
(e)(i) or (ii) to all Owners of Outstanding Bonds.
The provisions of the second preceding paragraph are
subject to the condition that if either of the events
described in clause (i) or (ii) of the second preceding
paragraph shall have occurred and if the Trustee shall
thereafter have received notice from the Bank (a) that the
notice which requires a mandatory redemption pursuant to
the second preceding paragraph has been withdrawn and (b)
that the amounts available to be drawn on the Security
Arrangement to pay (i) the principal of the Bonds or the
portion of purchase price equal to principal and (ii)
interest on the Bonds and the portion of purchase price
equal to accrued interest have been reinstated, then, in
every such case, the event giving rise to such mandatory
redemption shall be deemed to be waived and all
proceedings for such redemption shall be rescinded and
annulled, and the Trustee shall promptly give written
notice of such waiver, rescission and annulment to the
Pollution Control Corporation, the Company, the Bank, the
Tender Agent and the Remarketing Agent, and, if notice of
such redemption shall have been given to the Owners of the
Bonds, shall give notice thereof by Mail to all Owners of
Outstanding Bonds; but no such waiver, rescission and
annulment shall extend to or affect any subsequent event
requiring a mandatory redemption or impair any right or
remedy consequent thereon.
III.12. Selection of Bonds to be Redeemed. A
redemption of Bonds shall be a redemption of the whole or
of any part of the Bonds from any funds available for that
purpose. If less than all the Bonds shall be called for
redemption under any provision of this Indenture
permitting such partial redemption, the particular Bonds
or portions of Bonds to be redeemed shall be selected by
the Trustee, in such manner as the Trustee in its
discretion may deem proper, in the aggregate principal
amount designated to the Trustee by the Company or
otherwise as required by this Indenture; provided,
however, that if, as indicated in a certificate of an
Authorized Company Representative delivered to the
Trustee, the Company shall have offered to purchase all
Bonds then Outstanding and less than all such Bonds have
been tendered to the Company for such purchase, the
Trustee, at the direction of an Authorized Company
Representative, shall select for redemption all such Bonds
which shall not have been so tendered and provided,
further, that, if the redemption date shall not be during
a Flexible Rate Period, Term Rate Period or the Fixed Rate
Period, the portion of any Bond to be redeemed shall be in
the principal amount of $100,000 or some integral multiple
thereof and that, in selecting Bonds for redemption, the
Trustee shall treat each Bond as representing that number
of Bonds which is obtained by dividing the principal
amount of such Bond by $100,000; and provided, further,
that, if the redemption date shall be during a Flexible
Rate Period, a Term Rate Period or the Fixed Rate Period,
the portion of any Bond to be redeemed shall be in the
principal amount of $5,000 or some integral multiple
thereof (and, in the case of a Flexible Rate Period, in a
minimum principal amount of $100,000) and that, in
selecting Bonds for redemption, the Trustee shall treat
each Bond as representing that number of Bonds which is
obtained by dividing the principal amount of such Bond by
$5,000. For any redemption not occurring during a Flexible
Rate Period, Term Rate Period or the Fixed Rate Period, if
it is determined that one or more, but not all, of the
$100,000 units of principal amount represented by any such
Bond is to be called for redemption, then, upon notice of
intention to redeem such $100,000 unit or units the Owner
of such Bond shall forthwith surrender such Bond to the
Paying Agent or any Co-Paying Agent for (a) payment to
such Owner of the redemption price of the $100,000 unit or
units of principal amount called for redemption and (b)
delivery to such Owner of a new Bond or Bonds in the
aggregate principal amount of the unredeemed balance of
the principal amount of such Bond. For any redemption
occurring during a Flexible Rate Period, a Term Rate
Period or the Fixed Rate Period, if it is determined that
one or more, but not all, of the $5,000 units of principal
amount represented by any such Bond is to be called for
redemption, then, upon notice of intention to redeem such
$5,000 unit or units, the Owner of such Bond shall
forthwith surrender such Bond to the Paying Agent or any
Co-Paying Agent for (y) payment to such Owner of the
redemption price (including the redemption premium, if
any, and accrued interest to the date fixed for
redemption) of the $5,000 unit or units of principal
amount called for redemption and (z) delivery to such
Owner of a new Bond or Bonds in the aggregate principal
amount of the unredeemed balance of the principal amount
of any such Bond. Bonds representing the unredeemed
balance of the principal amount of any such Bond shall be
delivered to the Owner thereof, without charge therefor.
In selecting Bonds for redemption, (i) the Trustee shall
first select Bonds tendered for purchase pursuant to the
terms thereof and delivered, and then held, as
contemplated in Section 13.07(c) hereof and (ii) the
Trustee may treat Bonds so tendered and otherwise
delivered pursuant to Section 13.07 hereof during the
fifteen (15) days next preceding the first mailing of
notice of any proposed redemption of Bonds as though such
tender and delivery had not occurred. If a Bond selected
for redemption shall have been tendered pursuant to the
terms thereof and delivered pursuant to Section 13.07
hereof on or after the fifteenth (15th) day next preceding
the first mailing of notice of any proposed redemption of
Bonds, then the Bond so delivered pursuant to Section
13.07 hereof shall be deemed to be the Bond so tendered
and selected for redemption. If the Owner of any such
Bond of a denomination greater than $100,000 ($5,000
during a Term Rate Period or the Fixed Rate Period) shall
fail to present such Bond to the Paying Agent or any
Co-Paying Agent for payment and exchange as aforesaid,
such Bond shall, nevertheless, become due and payable on
the date fixed for redemption to the extent of the
$100,000 ($5,000 during a Term Rate Period or the Fixed
Rate Period) unit or units of principal amount called for
redemption (and to that extent only).
III.13. Procedure for Redemption. (a) In the event
any of the Bonds are called for redemption, the Trustee
shall give notice, in the name of the Pollution Control
Corporation, of the redemption of such Bonds, which notice
shall (i) specify the Bonds to be redeemed, the redemption
date, the redemption price, and the place or places where
amounts due upon such redemption will be payable (which
shall be the Principal Office of the Paying Agent or any
Co-Paying Agent) and, if less than all of the Bonds are to
be redeemed, the numbers of the Bonds to be redeemed, and
the portion of the principal amount of any Bond to be
redeemed in part, (ii) state any condition to such
redemption and (iii) state that on the redemption date,
and upon the satisfaction of any such condition, the Bonds
or portions thereof to be redeemed shall cease to bear
interest. Such notice may set forth any additional
information relating to such redemption. Such notice
shall be given by Mail at least thirty (30) days prior
(except in the case of a redemption pursuant to Section
3.01(e)) to the date fixed for redemption to the Owners of
the Bonds to be redeemed; provided, however, that failure
duly to give such Notice by Mail, or any defect therein,
shall not affect the validity of any proceedings for the
redemption of Bonds as to which there shall have been no
such failure or defect; and provided, further, that if
such Notice by Mail shall not have been given with respect
to a Bond delivered pursuant to Section 13.07 hereof on or
after the fifteenth (15th) day next preceding the first
mailing of notice of any proposed redemption of Bonds, and
if such Bond shall be deemed to have been selected for
redemption pursuant to Section 3.02 hereof, such notice
shall be attached to such Bond prior to the delivery
thereof pursuant to Section 13.07 hereof. If a notice of
redemption shall be unconditional, or if the conditions of
a conditional notice or redemption shall have been
satisfied, then upon presentation and surrender of Bonds
so called for redemption at the place or places of
payment, such Bonds shall be redeemed. The Trustee shall
promptly deliver to the Company and the Bank a copy of
each such notice of redemption.
(a) With respect to any notice of an event which
requires the Owners of the Bonds to tender their Bonds in
accordance with Section 2.02(h)(iii) hereof, such notice
shall contain the information referred to in Section
4.08(c) hereof.
(b) With respect to any notice of redemption of Bonds in
accordance with subsection (a), (b) or (c) of Section 3.01
hereof, unless, upon the giving of such notice, such Bonds
shall be deemed to have been paid within the meaning of
Article VIII hereof, such notice shall state that such
redemption shall be conditional upon the receipt, by the
Trustee at or prior to the opening of business on the date
fixed for such redemption, of moneys sufficient to pay the
principal of and premium, if any, and interest on such
Bonds to be redeemed, and that if such moneys shall not
have been so received said notice shall be of no force and
effect and the Pollution Control Corporation shall not be
required to redeem such Bonds. In the event that such
notice of redemption contains such a condition and such
moneys are not so received, the redemption shall not be
made and the Trustee shall within a reasonable time
thereafter give notice, in the manner in which the notice
of redemption was given, that such moneys were not so
received.
(c) Any Bonds and portions of Bonds which have been
duly selected for redemption and which are deemed to be
paid in accordance with Article VIII hereof shall cease to
bear interest on the specified redemption date.
(d) The Trustee shall not give any notice of redemption
to be made in accordance with Section 3.01(c) hereof when
a Security Arrangement shall be in effect on which the
Company shall not be the obligor unless, prior to the
giving of such notice, either (i) such Security
Arrangement shall expressly allow a drawing thereunder for
the purpose of paying, and in an amount sufficient to pay,
any redemption premium payable upon such redemption, or
(ii) there shall be on deposit in the Bond Fund moneys in
an amount sufficient to pay such premium and which are
Available Moneys.
III.14. No Partial Redemption After Default.
Anything in this Indenture to the contrary
notwithstanding, if there shall have occurred and be
continuing an Event of Default defined in clause (a), (b)
or (c) of the first paragraph of Section 9.01 hereof,
there shall be no redemption of less than all of the Bonds
at the time Outstanding.
III.15. Payment of Redemption Price. For the
redemption of any of the Bonds, the Pollution Control
Corporation shall cause to be deposited in the Bond Fund,
on the redemption date, solely out of the Receipts and
Revenues of the Pollution Control Corporation from the
Loan Agreement, an amount sufficient to pay the principal
of and premium, if any, and interest to become due on such
redemption date. The obligation of the Pollution Control
Corporation to cause any such deposit to be made hereunder
shall be reduced by the amount of moneys in the Bond Fund
available on such redemption date for payment of the
principal of and premium, if any, and accrued interest on
the Bonds to be redeemed.
IV THE BOND FUND
IV.11. Creation of Bond Fund. There is hereby
created and established with the Trustee a trust fund in
the name of the Pollution Control Corporation to be
designated "Coconino County, Arizona Pollution Control
Corporation Pollution Control Refunding Revenue Bonds,
1996 Series B (Tucson Electric Power Company Project) Bond
Fund". The Trustee shall establish and maintain within
the Bond Fund a "Capital Account" and an "Investment
Account". In addition, the Trustee shall establish and
maintain within the Bond Fund a "General Account". The
Trustee shall establish and maintain such segregated
subaccounts as shall be necessary to comply with the order
of priority for payments on the Bonds set forth in Section
4.04(a) hereof and such other subaccounts as may be
requested by an Authorized Company Representative. The
Bond Fund, and all moneys and certificated securities
therein, shall be kept in the possession of the Trustee.
IV.12. Liens. The Pollution Control Corporation
shall not create any lien upon the Bond Fund or upon the
Receipts and Revenues of the Pollution Control Corporation
from the Loan Agreement other than the lien hereby
created.
IV.13. Deposits into Bond Fund. (a) There shall be
deposited into the Bond Fund:
(i) the accrued interest, if any, on the Bonds accrued
to the date of delivery thereof and paid by the initial
purchasers thereof, such accrued interest to be deposited
into the General Account;
(ii) all Loan Payments, and all moneys drawn by or made
available to the Trustee under any Security Arrangement
for the payment of principal of and premium, if any, and
interest on the Bonds, such payments and moneys to be
deposited into the General Account;
(iii) all amounts required to be deposited into the
Bond Fund by Section 13.01(c) hereof, such amounts to be
deposited into the General Account; and
(iv) all other moneys received by the Trustee under and
pursuant to any provision of the Loan Agreement, other
than Sections 5.03, 5.04 and 8.05 thereof, or from any
other source when accompanied by directions by the Company
that such moneys are to be paid into the Bond Fund, such
moneys to be deposited into the account specified by such
provision of the Loan Agreement or by such directions, or,
if no specification is made, into the General Account.
(b) All income or other gain from the investment of
moneys in the Capital Account or the Investment Account
shall be deposited into the Investment Account. All
income or other gain from the investment of moneys in the
General Account shall be deposited into the General
Account.
IV.14. Use of Moneys in Bond Fund. (a) Except as
otherwise provided in subsection (c) of this Section 4.04
and in Sections 4.06, 9.01 and 10.04 hereof, moneys in the
Bond Fund constituting part of the Trust Estate shall be
used solely for the payment of the principal of and
premium, if any, and interest on the Bonds as the same
shall become due and payable at maturity, upon redemption
or otherwise. Funds for such payments of the principal of
and premium, if any, and interest on the Bonds shall be
derived from the following sources in the order of
priority indicated:
(i) moneys, if any, paid into the Bond Fund pursuant to
clause (i) of Section 4.03(a) hereof which shall be
applied to the payment of interest on the Bonds;
(ii) moneys furnished by the Company to the Trustee
pursuant to Section 9.01 of the Loan Agreement, and
proceeds from the investment thereof, which constitute
Available Moneys;
(iii) moneys drawn by, or made available to, the
Trustee under any Security Arrangement for the payment of
the principal of and premium, if any, and interest on the
Bonds;
(iv) amounts deposited into the Bond Fund pursuant to
clause (ii) or (iii) of Section 4.03(a) hereof; and
(v) Loan Payments or moneys furnished by the Company to
the Trustee pursuant to Section 9.01 of the Loan Agreement
or moneys deposited into the Bond Fund pursuant to Section
13.01 hereof.
(b) In the event that all of the Bonds cease to be
Outstanding, any moneys remaining in the Capital Account
or the Investment Account shall be deposited into the
General Account.
(c) Upon receipt by the Trustee from the Bank of a
notice stating that the Bank has not been reimbursed for
any drawing or drawings on the Letter of Credit as
contemplated in Section 4.08(a) hereof, the Trustee shall
promptly pay to the Bank from moneys in the Bond Fund an
amount equal to the lesser of (i) the total amount owed by
the Company to the Bank in respect of such drawing or
drawings as specified in such notice and (ii) the total
amount on deposit in all accounts and subaccounts within
the Bond Fund; provided, however, that there shall not be
taken into account for purposes of clause (ii) above (x)
moneys described in clause (i), (ii) or (iii) in
subsection (a) of this Section, (y) any moneys furnished
by the Company to the Trustee pursuant to Section 9.01 of
the Loan Agreement or moneys furnished by the Company to
the Tender Agent pursuant to Section 10.01 of the Loan
Agreement and subsequently deposited into the Bond Fund
pursuant to Section 13.01(c) hereof, which moneys in
either case shall have been furnished together with
directions that the same are to be maintained in a
segregated account or subaccount until the same became
Available Moneys or (z) proceeds from the investment and
reinvestment of moneys described in clause (x) or (y)
above.
IV.15. Custody of Bond Fund; Withdrawal of Moneys.
The Bond Fund shall be in the custody of the Trustee but
in the name of the Pollution Control Corporation and the
Pollution Control Corporation hereby authorizes and
directs the Trustee to withdraw from the Bond Fund and
furnish to the Paying Agent funds constituting part of the
Trust Estate sufficient to pay the principal of and
premium, if any, and interest on the Bonds as the same
shall become due and payable, and to withdraw from the
Bond Fund funds sufficient to pay any other amounts
payable therefrom as the same shall become due and
payable.
IV.16. Bonds Not Presented for Payment. In the
event any Bonds shall not be presented for payment when
the principal thereof and premium, if any, thereon become
due, either at maturity or at the date fixed for
redemption thereof or otherwise, if moneys sufficient to
pay such Bonds are held by the Paying Agent or any
Co-Paying Agent for the benefit of the Owners thereof, the
Paying Agent shall segregate and hold such moneys in
trust, without liability for interest thereon, for the
benefit of holders of such Bonds, who shall, except as
provided in the following paragraph, thereafter be
restricted exclusively to such fund or funds for the
satisfaction of any claim of whatever nature on their part
under this Indenture or relating to said Bonds.
Any moneys which the Paying Agent shall segregate and
hold in trust for the payment of the principal of and
premium, if any, or interest on any Bond and remaining
unclaimed for one year after such principal, premium, if
any, or interest has become due and payable shall, upon
the Company's written request to the Paying Agent, be paid
to the Company, with notice to the Trustee of such action;
provided, however, that, if a Security Arrangement on
which the Company shall not be an obligor is in effect,
prior to any such payment to the Company as aforesaid, the
Paying Agent shall deliver to the Bank a notice specifying
the date of such payment (which date shall not be less
than four (4) Business Days after the date of delivery of
such notice), and if prior to such specified date the Bank
shall have delivered to the Paying Agent a notice stating
that amounts are owed by the Company to the Bank under the
Reimbursement Agreement and have not been paid, the
Trustee, prior to any such payment to the Company as
aforesaid, shall pay to the Bank an amount equal to the
lesser of (a) the total amount owed by the Company to the
Bank as specified in such notice and (b) the total amount
of such unclaimed moneys; and provided, further, that
before the Paying Agent shall be required to make any such
repayment, the Paying Agent may, and at the request of the
Trustee shall, at the expense of the Company cause notice
to be given once by Publication to the effect that such
money remains unclaimed and that, after a date specified
therein, which shall not be less than thirty (30) days
from the date of such notice by Publication, any unclaimed
balance of such moneys then remaining will be paid to the
Company. After the payment of such unclaimed moneys to
the Company, the Owner of such Bond shall thereafter look
only to the Company for the payment thereof, and all
liability of the Trustee and the Paying Agent with respect
to such moneys shall thereupon cease.
IV.17. Moneys Held in Trust. All moneys and
Investment Securities held by the Trustee in the Bond
Fund, and all moneys required to be deposited with or paid
to the Trustee for deposit into the Bond Fund, and all
moneys withdrawn from the Bond Fund and held by the
Trustee, the Paying Agent, any Co-Paying Agent, or the
Tender Agent, shall be held by the Trustee, the Paying
Agent, any Co-Paying Agent or the Tender Agent, as the
case may be, in trust, and such moneys and Investment
Securities (other than moneys held pursuant to Section
4.06 hereof and moneys or Investment Securities held in
any subaccount within the Bond Fund established in
furtherance of the obligations of the Company under clause
(b) of Section 6.04 of the Loan Agreement), while so held
or so required to be deposited or paid, shall constitute
part of the Trust Estate and be subject to the lien and
security interest created hereby in favor of the Trustee,
first, for the benefit of the Owners from time to time of
the Bonds and, second, for the benefit of the Bank as and
to the extent provided herein. The Company shall have no
right, title or interest in the Bond Fund, except such
rights as may arise after the right, title and interest of
the Trustee in and to the Trust Estate and all covenants,
agreements and other obligations of the Pollution Control
Corporation under this Indenture shall have ceased,
terminated and become void and shall have been satisfied
and discharged in accordance with Article VIII hereof.
IV.18. Security Arrangements. (a) The Letter of
Credit shall be the obligation of the Bank to pay to the
Trustee, in accordance with the terms thereof, such
amounts as shall be specified therein and available to be
drawn thereunder for the timely payment of the principal
of and premium, if any, and interest on the Bonds, and the
purchase price of Bonds, required to be made pursuant to,
and in accordance with, the provisions of this Indenture.
Drawings under the Letter of Credit for the payment of
principal of, and premium, if any, and interest on the
Bonds shall be made only to the extent moneys from other
eligible sources specified in Section 4.04(a) hereof shall
not be available for such payment. The Letter of Credit
shall be reduced to the extent of any drawings thereunder
and reinstated in accordance with the terms thereof.
The Trustee shall draw moneys under the Letter of
Credit and take action under any other Security
Arrangement in accordance with the terms thereof to the
extent necessary to make timely payments of principal of
and premium, if any, and interest on the Bonds required to
be made from the Bond Fund; provided, however, that,
anything herein to the contrary notwithstanding, in no
event shall the Trustee draw moneys under any Security
Arrangement on which the Company is not the obligor in
order to make payments of principal of or premium, if any,
or interest on Bonds or the purchase price of Bonds held
of record by the Company or by the Tender Agent for the
account of the Company pursuant to Section 13.07(d) hereof
if the Security Arrangement prohibits by its terms a
drawing thereunder for such purpose. Upon any reduction
in the aggregate principal amount of Bonds Outstanding,
the Trustee shall, at the direction of an Authorized
Company Representative, request the Bank to make permanent
correlative reductions in the amounts that may be drawn
under the Letter of Credit or take corresponding actions
with respect to any other Security Arrangement. For
extensions of the term of the Letter of Credit or any
Security Arrangement, the Trustee shall, at the direction
of an Authorized Company Representative, take such actions
as are required to effect such extension of the Letter of
Credit, surrender the Letter of Credit to the Bank in
exchange for a letter of credit of the Bank conforming in
all material respects to the Letter of Credit except that
the Expiration date shall be extended and take
corresponding actions with respect to any other Security
Arrangement. If at any time there shall cease to be any
Bonds Outstanding hereunder, the Trustee shall promptly
surrender the Letter of Credit to the Bank, in accordance
with the terms of the Letter of Credit, for cancellation
or shall take corresponding actions with respect to any
other Security Arrangement.
(a) If at any time there shall have been delivered to
the Trustee, all as described in and in accordance with
the applicable provisions of Section 6.07 of the Loan
Agreement, (i) a notice of the Company, (ii) the required
opinion of Bond Counsel, if any, (iii) the required
certificates or letters of Moody's and S&P, if any, and
(iv) the Security Arrangement, if any, described in such
notice, then the Trustee shall accept such substitute
Security Arrangement, if any, and comply with the
direction of the Company, if any, contained in such
notice.
(b) The Trustee shall give notice, in the name of the
Pollution Control Corporation, of any amendment or
Termination or Expiration of any Security Arrangement and
of the provision of any substitute Security Arrangement,
which notice shall (i) describe generally the Security
Arrangement, if any, in effect prior to any amendment,
Termination, Expiration or provision and the Security
Arrangement, if any, in effect or to be in effect upon
such amendment, Termination, Expiration or provision and
(ii) state the date of such amendment, Termination,
Expiration or provision. Such notice shall be given by
Mail to all Owners of Bonds promptly after such amendment,
Termination, Expiration or provision, except that if, as a
result of such amendment, Termination or Expiration, the
Bonds shall be required to be tendered for purchase, such
notice may be given together with the notice thereof given
by the Tender Agent pursuant to Section 2.10 hereof and
shall, if such information is furnished by the Company,
state the Rating Category or Categories (including any
refinements or gradations thereof), if any, in which the
Bonds are expected to be rated by Moody's and S&P
subsequent to such amendment, Termination or Expiration of
a Security Arrangement and the provision of any substitute
Security Arrangement.
(c) Anything in this Indenture or the Loan Agreement to
the contrary notwithstanding, in the event that a
Termination of a Security Arrangement, or the Termination
of a Security Arrangement and the provision of another
Security Arrangement in lieu thereof, shall require the
Owners of Bonds to tender their Bonds for purchase the
Trustee shall not surrender any evidence of the Security
Arrangement to be Terminated until the Trustee shall have
made such drawings, if any, or taken such other actions,
if any, thereunder as shall be required under this
Indenture in order to provide sufficient moneys for the
related purchase of Bonds and such moneys shall have been
provided to the Trustee.
V DISPOSITION OF PROCEEDS
V.11. Disposition of Proceeds. The proceeds from
the issuance and sale of the Bonds shall be applied as
provided in Section 4.03 of the Loan Agreement.
VI INVESTMENTS
VI.11. Investments. The moneys in the Bond Fund
shall, at the direction of the Company, be invested and
reinvested in Investment Securities; provided, however,
that moneys constituting proceeds of a drawing on a
Security Arrangement on which the Company is not the
obligor and, while a Security Arrangement on which the
Company is not the obligor is in effect, any moneys held
by the Paying Agent pursuant to Section 4.06 hereof, or by
the Tender Agent pursuant to Section 13.03(c) hereof,
shall be invested only in Government Obligations as
described in clause (a) of the definition thereof which
shall not contain provisions permitting the redemption
thereof at the option of the issuer and which have a
remaining term to maturity not exceeding 30 days and in
any event maturing as needed. Any Investment Securities
may be purchased subject to options or other rights in
third parties to acquire the same. In addition, subject
to the proviso contained in the first sentence of this
Section 6.01 and except for moneys in the General Account
of the Bond Fund, the Trustee shall, at the direction of
the Company, enter into (i) reverse repurchase agreements,
option agreements and agreements to lend securities with
respect to any Investment Securities held by it and (ii)
transactions for the purchase or sale of financial futures
contracts in obligations which constitute Investment
Securities or options on financial futures contracts in
obligations which constitute Investment Securities.
Subject to the further provisions of this Section 6.01,
such investments shall be made by the Trustee as directed
and designated by the Company in a certificate of, or
telephonic advice promptly confirmed by a certificate of,
an Authorized Company Representative. As and when any
amounts thus invested may be needed for disbursements from
the Bond Fund, the Trustee shall request the Company to
designate such investments to be sold or otherwise
converted into cash to the credit of the Bond Fund as
shall be sufficient to meet such disbursement requirements
and shall then follow any directions in respect thereto of
an Authorized Company Representative. As long as no Event
of Default (as defined in Section 9.01 hereof) shall have
occurred and be continuing, the Company shall have the
right to designate the investments to be sold and to
otherwise direct the Trustee in the sale or conversion to
cash of the investments made with the moneys in the Bond
Fund, provided that the Trustee shall be entitled to
conclusively assume the absence of any such Event of
Default unless it has notice thereof within the meaning of
Section 10.05 hereof. At any time that S&P or Moody's
rates the Bonds, the General Account of the Bond Fund may
only be invested in Investment Securities with a rating
level at least as high as the current rating of the Bonds.
VII GENERAL COVENANTS
VII.11. No General Obligations. Each and every
covenant herein made, including all covenants made in the
various sections of this Article VII, is predicated upon
the condition that neither the County of Coconino, Arizona
nor the State of Arizona shall in any event be liable for
the payment of the principal of, or premium, if any, or
interest on the Bonds or for the purchase of Bonds or for
the performance of any pledge, mortgage, obligation or
agreement created by or arising out of this Indenture or
the issuance of the Bonds, and further that neither the
Bonds, nor the premium, if any, or interest thereon, nor
any such obligation or agreement of the Pollution Control
Corporation shall be construed to constitute an
indebtedness of the County of Coconino, Arizona or the
State of Arizona within the meaning of any constitutional
or statutory provisions whatsoever. The Bonds and the
interest and premium, if any, thereon shall be limited
obligations of the Pollution Control Corporation payable
solely from the Receipts and Revenues of the Pollution
Control Corporation from the Loan Agreement and the other
moneys pledged therefor.
The Pollution Control Corporation shall promptly cause
to be paid, solely from the sources stated herein, the
principal of and premium, if any, and interest on every
Bond issued under this Indenture at the place, on the
dates and in the manner provided herein and in said Bonds
according to the true intent and meaning thereof. The
Pollution Control Corporation shall have no obligation or
responsibility with respect to the purchase of Bonds or
the making or continuation of arrangements therefor,
except that the Pollution Control Corporation shall
generally cooperate with the Company, the Tender Agent and
the Remarketing Agent as contemplated in Article XIII
hereof.
VII.12. Performance of Covenants of the Pollution
Control Corporation; Representations. The Pollution
Control Corporation shall faithfully perform at all times
any and all covenants, undertakings, stipulations and
provisions contained in this Indenture, in any and every
Bond executed, authenticated and delivered hereunder, and
in all proceedings pertaining thereto. The Pollution
Control Corporation represents that it is duly authorized
under the Constitution and laws of the State of Arizona to
issue the Bonds authorized hereby, to enter into the Loan
Agreement and this Indenture, and to pledge and assign to
the Trustee the Trust Estate, and that the Bonds in the
hands of the Owners thereof are and will be valid and
binding limited obligations of the Pollution Control
Corporation.
VII.13. Maintenance of Rights and Powers; Compliance
with Laws. The Pollution Control Corporation shall at all
times use its best efforts to maintain its corporate
existence or assure the assumption of its obligations
under this Indenture by any public body succeeding to its
powers under the Act; and it shall at all times use its
best efforts to comply with all valid acts, rules,
regulations, orders and directions of any legislative,
executive, administrative or judicial body known to it to
be applicable to the Loan Agreement and this Indenture.
VII.14. Enforcement of Obligations of the Company;
Amendments. Upon receipt of written notification from the
Trustee, the Pollution Control Corporation shall cooperate
with the Trustee in enforcing the obligation of the
Company to pay or cause to be paid all the payments and
other costs and charges payable by the Company under the
Loan Agreement and on any Security Arrangement on which
the Company is the obligor. The Pollution Control
Corporation shall not enter into any agreement with the
Company amending the Loan Agreement without the prior
written consent of the Trustee and the Bank and compliance
with Sections 12.06 and 12.07 of this Indenture (a
revision to Exhibit A to the Loan Agreement not being
deemed an amendment for purposes of this Section).
VII.15. Further Instruments. The Pollution Control
Corporation shall, upon the reasonable request of the
Trustee, from time to time execute and deliver such
further instruments and take such further action as may be
reasonable and as may be required to carry out the
purposes of this Indenture; provided, however, that no
such instruments or actions shall pledge the credit or
taxing power of the State of Arizona, the County of
Coconino, the Pollution Control Corporation or any other
political subdivision of said State.
VII.16. No Disposition of Trust Estate. Except as
permitted by this Indenture, the Pollution Control
Corporation shall not sell, lease, pledge, assign or
otherwise dispose of or encumber its interest in the Trust
Estate and will promptly pay or cause to be discharged or
make adequate provision to discharge any lien or charge on
any part thereof not permitted hereby.
VII.17. Financing Statements. The Pollution Control
Corporation and the Trustee shall cooperate with the
Company in causing appropriate financing statements and
continuation statements, naming the Trustee as pledgee of
the Receipts and Revenues of the Pollution Control
Corporation from the Loan Agreement and of the other
moneys pledged under the Indenture for the payment of the
principal of and premium, if any, and interest on the
Bonds, and as pledgee and assignee of the balance of the
Trust Estate, to be duly filed and recorded in the
appropriate state and county offices as required by the
provisions of the Uniform Commercial Code or other similar
law as adopted in the State of Arizona and any other
applicable jurisdiction, as from time to time amended, in
order to perfect and maintain the security interests
created by this Indenture.
VII.18. Tax Covenants; Rebate Fund. (a) The
Pollution Control Corporation covenants for the benefit of
all Owners from time to time of the Bonds and the Bank
that it will not directly or indirectly use or (to the
extent within its control), permit the use of, the
proceeds of any of the Bonds or any other funds of the
Pollution Control Corporation, or take or omit to take any
other action, if and to the extent that such use, or the
taking or omission to take such action, would cause any of
the Bonds to be "arbitrage bonds" within the meaning of
Section 148 of the Code or otherwise subject to federal
income taxation by reason of Sections 103 and 141 through
150 of the Code or Section 103 of the 1954 Code, as
applicable, and any applicable regulations promulgated
thereunder. To that end the Pollution Control Corporation
covenants to comply with all covenants set forth in the
Tax Agreement, which is hereby incorporated herein by
reference as though fully set forth herein.
(a) The Trustee shall establish and maintain a fund
separate from any other fund established and maintained
hereunder designated the "Coconino County, Arizona
Pollution Control Corporation Pollution Control Refunding
Revenue Bonds, 1996 Series B (Tucson Electric Power
Company Project) Rebate Fund" (herein called the "Rebate
Fund"). Within the Rebate Fund, the Trustee shall
maintain such accounts as shall be directed by the Company
in order for the Pollution Control Corporation and the
Company to comply with the provisions of the Tax
Agreement. Subject to the transfer provisions provided in
paragraph (c) below, all money at any time deposited in
the Rebate Fund shall be held by the Trustee in trust, to
the extent required to satisfy the Rebate Requirement (as
defined in the Tax Agreement), for payment to the United
States of America, and neither the Company, the Pollution
Control Corporation or the Owners shall have any rights in
or claim to such moneys. All amounts deposited into or on
deposit in the Rebate Fund shall be governed by this
Section 7.08, by Section 6.04 of the Loan Agreement and by
the Tax Agreement. The Trustee shall conclusively be
deemed to have complied with such provisions if it follows
the directions of the Company, including supplying all
necessary information in the manner set forth in the Tax
Agreement, and shall not be required to take any actions
thereunder in the absence of written directions from the
Company.
(b) Upon receipt of the Company's written instructions,
the Trustee shall remit part or all of the balances in the
Rebate Fund to the United States of America, as so
directed. In addition, if the Company so directs, the
Trustee shall deposit moneys into or transfer moneys out
of the Rebate Fund from or into such accounts or funds as
directed by the Company's written directions. Any funds
remaining in the Rebate Fund after all of the Bonds shall
have been paid and any Rebate Requirement shall have been
satisfied, or provision therefor reasonably satisfactory
to the Trustee shall have been made, and all amounts owing
to the Bank under the Reimbursement Agreement have been
paid, shall be withdrawn and remitted to the Company.
(c) Notwithstanding any provision of this Indenture,
the obligation to remit the Rebate Requirement to the
United States of America and to comply with all other
requirements of this Section 7.08, Section 6.04 of the
Loan Agreement and the Tax Agreement shall survive the
payment of the Bonds and the satisfaction and discharge of
this Indenture.
VII.19. Notices of Trustee. The Trustee shall give
notice to both the Pollution Control Corporation and the
Company whenever it is required hereby to give notice to
either and, additionally, shall furnish to the Pollution
Control Corporation and the Company copies of any notice
by mailing or Publication given by it pursuant to any
provision hereof.
VII.2 0. No Transfer of Security Arrangement. The
Trustee shall not sell, assign or transfer any Security
Arrangement except to a successor trustee under this
Indenture.
VIII DEFEASANCE
VIII.11. Defeasance. If the Pollution Control
Corporation shall pay or cause to be paid to the Owner of
any Bond secured hereby the principal of and premium, if
any, and interest due and payable, and thereafter to
become due and payable, upon such Bond or, if not during a
Flexible Rate Period or Term Rate Period or Fixed Rate
Period, any portion of any Bond in the principal amount of
$100,000 or any integral multiple thereof, or, if during a
Flexible Rate Period or Term Rate Period or Fixed Rate
Period, any portion of such Bond in the principal amount
of $5,000 or any integral multiple thereof (and, in the
case of a Flexible Rate Period, in a minimum principal
amount of $100,000), such Bond or portion thereof shall
cease to be entitled to any lien, benefit or security
under this Indenture. If the Pollution Control
Corporation shall pay or cause to be paid to the Owners of
all the Bonds secured hereby the principal of and premium,
if any, and interest due and payable, and thereafter to
become due and payable, thereon, and shall pay or cause to
be paid all other sums payable hereunder including,
without limitation, amounts payable pursuant to Section
10.04 hereof, then, and in that case, the right, title and
interest of the Trustee in and to the Trust Estate shall
thereupon cease, terminate and become void. In such
event, the Trustee shall assign, transfer and turn over to
the Company the Trust Estate, including, without
limitation, any surplus in the Bond Fund and any balance
remaining in any other fund created under this Indenture;
provided, however, that, if a Security Arrangement on
which the Company shall not be an obligor is in effect,
prior to any such assignment, transfer and turning over to
the Company as aforesaid, the Trustee shall deliver to the
Bank a notice specifying the date of such assignment,
transfer and turning over (which date shall not be less
than four (4) Business Days after the date of delivery of
such notice), and if prior to such specified date the Bank
shall have delivered to the Trustee a notice stating that
amounts are owed by the Company to the Bank under the
Reimbursement Agreement and have not been paid, the
Trustee, prior to any such assignment, transfer and
turning over to the Company as aforesaid, shall pay to the
Bank an amount equal to the lesser of (a) the total amount
owed by the Company to the Bank as specified in such
notice and (b) the total amount remaining in all funds
created under this Indenture.
All or any portion of Outstanding Bonds or, if not
during a Flexible Rate Period, a Term Rate Period or the
Fixed Rate Period, portions of Bonds in principal amounts
of $100,000 or any integral multiple thereof or, if during
a Flexible Rate Period, a Term Rate Period or the Fixed
Rate Period, portions of Bonds in principal amounts of
$5,000 or any integral multiple thereof (and, in the case
of a Flexible Rate Period, in a minimum principal amount
of $100,000), shall prior to the maturity or redemption
date thereof be deemed to have been paid within the
meaning and with the effect expressed in this Article
VIII, and the entire indebtedness of the Pollution Control
Corporation with respect thereof shall be satisfied and
discharged, when
(a) in the event said Bonds or portions thereof have
been selected for redemption in accordance with Section
3.02 hereof, the Trustee shall have given, or the Company
shall have given to the Trustee in form satisfactory to it
irrevocable instructions to give, on a date in accordance
with the provisions of Section 3.03 hereof notice of
redemption of such Bonds or portions thereof,
(b) there shall have been deposited with the Trustee
either moneys in an amount which shall be sufficient, or,
during the Fixed Rate Period, Government Obligations which
shall not contain provisions permitting the redemption
thereof at the option of the issuer, the principal of and
the interest on which, when due, and without regard to any
reinvestment thereof, will provide moneys which, together
with the moneys, if any, deposited with or held by the
Trustee, shall be sufficient, to pay when due the
principal of and premium, if any, and interest (at the
Maximum Rate, if such deposit shall not be made during the
Fixed Rate Period) due and to become due on said Bonds or
portions thereof on and prior to the redemption date or
maturity date thereof, as the case may be; provided,
however, that such moneys shall constitute Available
Moneys and that such Government Obligations either (i)
shall have been purchased with Available Moneys or, (ii)
shall have been held by the Trustee for the period of time
for which the moneys used for the purchase thereof would
be required to be so held in order for such moneys to
constitute Available Moneys if such moneys had been
deposited with the Trustee and the purchase of such
Government Obligations were disregarded, and
(c) in the event said Bonds or portions thereof do not
mature and are not to be redeemed within the next
succeeding sixty (60) days, the Company shall have given
the Trustee in form satisfactory to it irrevocable
instructions to give, as soon as practicable in the same
manner as a notice of redemption is given pursuant to
Section 3.03 hereof, a notice to the holders of said Bonds
or portions thereof that the deposit required by clause
(b) above has been made with the Trustee and that said
Bonds or portions thereof are deemed to have been paid in
accordance with this Article VIII and stating the maturity
or redemption date upon which moneys are to be available
for the payment of the principal of and premium, if any,
and interest on said Bonds or portions thereof.
Notwithstanding the foregoing, no Bond shall be deemed
paid and discharged pursuant to this Section 8.01 during
any period when a Letter of Credit is in effect unless
written evidence is received from S&P, if S&P is then
rating the Bonds, and Moody's, if Moody's is then rating
the Bonds, that such defeasance will not adversely affect
the ratings on the Bonds.
Neither the Government Obligations nor moneys deposited
with the Trustee pursuant to this Article VIII nor
principal or interest payments on any such Government
Obligations shall be withdrawn or used for any purpose
other than, and such Government Obligations, moneys and
principal or interest payments shall be held in trust for,
the payment of the principal of and premium, if any, and
interest on said Bonds or portions thereof, or for the
payment of the purchase price of said Bonds in accordance
with Section 13.03 hereof; provided, that, prior to the
Fixed Rate Date, such moneys, if not then needed for such
purposes, shall, to the extent practicable, be invested
and reinvested in Government Obligations maturing on or
prior to the earlier of (a) the date moneys shall be
required for the purchase of Bonds pursuant to Section
13.03 hereof and (b) the Interest Payment Date next
succeeding the date of investment or reinvestment, and
interest earned from such investments shall be paid over
to the Company, as received by the Trustee, free and clear
of any trust, lien or pledge hereunder; and provided,
further, that, during the Fixed Rate Period, any cash
received from such principal or interest payments on such
Government Obligations deposited with the Trustee, if not
then needed for such purposes, shall, to the extent
practicable, be invested in Government Obligations of the
type described in clause (b) of the next preceding
paragraph maturing at times and in amounts sufficient to
pay when due the principal of and premium, if any, and
interest to become due on said Bonds or portions thereof
on and prior to such redemption date or maturity date
thereof, as the case may be, and interest earned from such
reinvestments shall be paid over to the Company, as
received by the Trustee, free and clear of any trust, lien
or pledge hereunder. If payment of less than all the
Bonds is to be provided for in the manner and with the
effect provided in this Article VIII, the Trustee shall
select such Bonds or portions of Bonds in the manner
specified by Section 3.02 hereof for selection for
redemption of less than all Bonds in the principal amount
designated to the Trustee by the Company. If the Bonds
are rated by S&P or Moody's, Government Obligations for
purposes of this Section 8.01 shall be limited to those
described in clause (a) of such definition and at or prior
to the time of the deposit of any Government Obligation
with the Trustee pursuant to this Section 8.01, the
Company shall provide S&P and Moody's with a certificate
of an accountant or accounting firm as to the sufficiency
of such Government Obligation to pay when due the
principal of and premium, if any, and interest due and to
become due as set forth in clause (b) of the preceding
paragraph.
IX DEFAULTS AND REMEDIES
IX.11. Events of Default. Each of the following
events shall constitute and is referred to in this
Indenture as an "Event of Default":
(a) a failure to pay the principal of or premium, if
any, on any of the Bonds when the same shall become due
and payable at maturity, upon redemption or otherwise;
(b) a failure to pay an installment of interest on any
of the Bonds after such interest shall have become due and
payable for a period of two (2) Business Days, if such
failure shall occur in respect of interest determined at a
Flexible Rate or a Variable Rate other than a Term Rate,
or for a period of sixty (60) days, if such failure shall
occur in respect of interest determined at a Term Rate or
the Fixed Rate;
(c) a failure to pay an amount due in respect of a
tender for purchase after such amount shall have become
due and payable;
(d) a failure by the Pollution Control Corporation to
observe and perform any covenant, condition, agreement or
provision (other than as specified in clauses (a), (b) and
(c) of this Section 9.01) contained in the Bonds or in
this Indenture on the part of the Pollution Control
Corporation to be observed or performed, which failure
shall continue for a period of ninety (90) days after
written notice, specifying such failure and requesting
that it be remedied, shall have been given to the
Pollution Control Corporation and the Company by the
Trustee, which may give such notice in its discretion and
which shall give such notice at the written request of
Owners of not less than 25% in principal amount of the
Bonds then Outstanding or of the Bank, unless the Trustee,
or the Trustee and Owners of a principal amount of Bonds
not less than the principal amount of Bonds the Owners of
which requested that such notice be given or the Bank, as
the case may be, shall agree in writing to an extension of
such period prior to its expiration; provided, however,
that the Trustee, or the Trustee and the Owners of such
principal amount of Bonds or the Bank, as the case may be,
shall be deemed to have agreed to an extension of such
period if corrective action is initiated by the Pollution
Control Corporation, or the Company on behalf of the
Pollution Control Corporation, within such period and is
being diligently pursued.
Upon the occurrence and continuance of any Event of
Default described in clause (a), (b) or (c) of the
preceding paragraph, the Trustee may, and at the written
request of Owners of not less than 25% in principal amount
of Bonds then Outstanding or of the Bank shall, by written
notice to the Pollution Control Corporation, the Bank and
the Company, declare the Bonds to be immediately due and
payable, whereupon they shall, without further action,
become and be immediately due and payable, anything in
this Indenture or in the Bonds to the contrary
notwithstanding, and the Trustee shall give notice thereof
to the Tender Agent and the Remarketing Agent, and shall
give notice thereof by Mail to all Owners of Outstanding
Bonds; provided, however, that so long as the Letter of
Credit shall be in effect and no drawing on the Letter of
Credit shall have been, and shall remain, wrongfully
dishonored, the Trustee shall not declare the acceleration
of the maturity of the Bonds without the consent of the
Bank. In the case of an Event of Default described in the
preceding paragraph occurring when a Security Arrangement
on which the Company shall not be the obligor is in effect
and with respect to which the Trustee is required to
accelerate the Bonds, the Trustee shall make the aforesaid
declaration on the first Business Day after the occurrence
of such Event of Default that the Trustee may make a
drawing or drawings on such Security Arrangement and on
which the proceeds of such drawing or drawings shall be
immediately available, but shall not make such declaration
prior to such date. With respect to an Event of Default
described in the preceding paragraph occurring when a
Security Arrangement on which the Company shall not be the
obligor is in effect, but with respect to which the
Trustee is not required to accelerate the Bonds, the
Trustee may make the aforesaid declaration only on a date
when the Trustee may make a drawing or drawings on such
Security Arrangements. Upon such declaration, interest on
the Bonds shall cease to accrue.
The provisions of the preceding paragraph, however, are
subject, when no Security Arrangement on which the Company
shall not be the obligor shall be in effect, to the
condition that if, after the principal of the Bonds shall
have been so declared to be due and payable, and before
any judgment or decree for the payment of the moneys due
shall have been obtained or entered as hereinafter
provided, the Pollution Control Corporation shall cause to
be deposited with the Trustee a sum sufficient to pay all
matured installments of interest upon all Bonds and the
principal of any and all Bonds which shall have become due
otherwise than by reason of such declaration (with
interest upon such principal and, to the extent
permissible by law, on overdue installments of interest,
at the rate per annum borne by the Bonds) and such amounts
as shall be sufficient to cover reasonable compensation
and reimbursement of expenses payable to the Trustee and
any predecessor Trustee, and all Events of Default
hereunder other than nonpayment of the principal of Bonds
which shall have become due by said declaration shall have
been remedied, then, in every such case, such Event of
Default shall be deemed waived and such declaration and
its consequences rescinded and annulled, and the Trustee
shall promptly give written notice of such waiver,
rescission and annulment to the Pollution Control
Corporation, the Company, the Tender Agent and the
Remarketing Agent, and, if notice of the acceleration of
the Bonds shall have been given to the Owners of the
Bonds, shall give notice thereof by Mail to all Owners of
Outstanding Bonds; but no such waiver, rescission and
annulment shall extend to or affect any subsequent Event
of Default or impair any right or remedy consequent
thereon.
IX.12. Remedies. Upon the occurrence and
continuance of any Event of Default, then and in every
such case the Trustee in its discretion may, and upon the
written request of the Bank or Owners of not less than 25%
in principal amount of the Bonds then Outstanding and
receipt of indemnity to its satisfaction shall, in its own
name and as the Trustee of an express trust:
(a) by mandamus, or other suit, action or proceeding at
law or in equity, enforce all rights of the Owners of the
Bonds, and require the Pollution Control Corporation, the
Bank or the obligor on any other Security Arrangement or
the Company to carry out any agreements with or for the
benefit of such Owners and to perform its or their duties
under the Act, the Loan Agreement, the Letter of Credit or
other Security Arrangement and this Indenture;
(b) bring suit upon the Bonds; or
(c) by action or suit in equity enjoin any acts or
things which may be unlawful or in violation of the rights
of the Owners of the Bonds.
The Trustee shall give to the Bank prompt notice of its
election of any one or more of the foregoing remedies,
anything herein to the contrary notwithstanding, so long
as the Letter of Credit shall be in effect and no drawing
on the Letter of Credit shall have been, and shall remain,
wrongfully dishonored, the Trustee shall not pursue any of
such remedies without the consent of the Bank.
IX.13. Restoration to Former Position. In the event
that any proceeding taken by the Trustee to enforce any
right under this Indenture shall have been discontinued or
abandoned for any reason, or shall have been determined
adversely to the Trustee, then the Pollution Control
Corporation, the Trustee and the Owners shall be restored,
subject to any determination in such proceeding, to their
former positions and rights hereunder, respectively, and
all rights, remedies and powers of the Trustee shall
continue as though no such proceeding had been taken.
IX.14. Bank's or Owners' Right to Direct
Proceedings. Anything in this Indenture to the contrary
notwithstanding, the Bank or Owners of a majority in
principal amount of the Bonds then Outstanding hereunder
shall have the right, by an instrument in writing executed
and delivered to the Trustee, to direct the time, method
and place of conducting all remedial proceedings available
to the Trustee under this Indenture or exercising any
trust or power conferred on the Trustee by this Indenture;
provided, however, that the Bank shall have no such rights
in respect of remedies against the Bank; and provided,
further, that such direction shall not be otherwise than
in accordance with law and the provisions of this
Indenture and that the Trustee shall have the right (but
not the obligation) to decline to follow any such
direction if the Trustee, being advised by counsel, shall
determine that the action or proceeding so directed may
not lawfully be taken, or if the Trustee in good faith
shall determine that the action or proceedings so directed
would involve the Trustee in personal liability or if the
Trustee in good faith shall so determine that the actions
or forbearances specified in or pursuant to such direction
would be unduly prejudicial to the interests of Owners not
joining in the giving of said direction, it being
understood that the Trustee shall have no duty to
ascertain whether or not such actions or forbearances are
unduly prejudicial to such Owners. In the event of a
conflict between the directions of the Bank and those of
the Owners of the Bonds, so long as the Letter of Credit
shall be in effect and no drawing on the Letter of Credit
shall have been, and shall remain wrongfully dishonored,
the directions of the Bank shall prevail; otherwise, the
directions of the Owners of the Bonds shall prevail.
IX.15. Limitation on Owners' Right to Institute
Proceedings. No Owner of Bonds shall have any right to
institute any suit, action or proceeding in equity or at
law for the execution of any trust or power hereunder, or
any other remedy hereunder or on said Bonds, unless such
Owner previously shall have given to the Trustee written
notice of an Event of Default as hereinabove provided and
unless the Owners of not less than 25% in principal amount
of the Bonds then Outstanding shall have made written
request of the Trustee so to do, after the right to
institute said suit, action or proceeding shall have
accrued, and shall have afforded the Trustee a reasonable
opportunity to proceed to institute the same in either its
or their name, and unless there also shall have been
offered to the Trustee security and indemnity satisfactory
to it against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee shall not
have complied with such request within a reasonable time;
and such notification, request and offer of indemnity are
hereby declared in every such case, at the option of the
Trustee, to be conditions precedent to the institution of
said suit, action or proceeding; it being understood and
intended that no one or more of the Owners of the Bonds
shall have any right in any manner whatever by his or
their action to affect, disturb or prejudice the security
of this Indenture, or to enforce any right hereunder or
under the Bonds, except in the manner herein provided, and
that all suits, actions and proceedings at law or in
equity shall be instituted, had and maintained in the
manner herein provided and for the equal benefit of all
Owners of the Bonds. No Owner of any Bond shall have any
right to make a drawing on a Security Arrangement on which
the Company shall not be the obligor or to institute any
suit, action or proceeding in equity or at law against the
Bank to enforce a drawing on a Security Arrangement on
which the Company shall not be the obligor.
IX.16. No Impairment of Right to Enforce Payment.
Notwithstanding any other provision in this Indenture, the
right of any Owner of a Bond to receive payment of the
principal of and premium, if any, and interest on such
Bond, on or after the respective due dates expressed
therein, or to institute suit for the enforcement of any
such payment on or after such respective dates, shall not
be impaired or affected without the consent of such Owner.
IX.17. Proceedings by Trustee without Possession of
Bonds. All rights of action under this Indenture or under
any of the Bonds secured hereby which are enforceable by
the Trustee may be enforced by it without the possession
of any of the Bonds, or the production thereof on the
trial or other proceedings relative thereto, and any such
suit, action or proceeding instituted by the Trustee shall
be brought in its name for the equal and ratable benefit
of the Owners of the Bonds, subject to the provisions of
this Indenture.
IX.18. No Remedy Exclusive. No remedy herein
conferred upon or reserved to the Trustee or to the Owners
of the Bonds is intended to be exclusive of any other
remedy or remedies, and each and every such remedy shall
be cumulative, and shall be in addition to every other
remedy given hereunder, under the Loan Agreement or under
any Security Arrangement, now or hereafter existing at law
or in equity or by statute.
IX.19. No Waiver of Remedies. No delay or omission
of the Trustee or of any Owner of a Bond to exercise any
right or power accruing upon any default shall impair any
such right or power or shall be construed to be a waiver
of any such default, or an acquiescence therein; and every
power and remedy given by this Article IX to the Trustee
and to the Owners of the Bonds, respectively, may be
exercised from time to time and as often as may be deemed
expedient.
IX.2 0. Application of Moneys. Any moneys received by the
Trustee, by any receiver or by any Owner of a Bond
pursuant to any right given or action taken under the
provisions of this Article IX, after payment of the costs
and expenses of the proceedings resulting in the
collection of such moneys and of all amounts due to the
Trustee and any predecessor Trustee under Section 10.04
hereof, shall be deposited in the Bond Fund and all moneys
so deposited in the Bond Fund during the continuance of an
Event of Default (other than moneys for the payment of
Bonds which had matured or otherwise become payable prior
to such Event of Default or for the payment of interest
due prior to such Event of Default) shall be applied as
follows (provided, however, that any drawing by the
Trustee on any Security Arrangement for the payment of
principal of, or premium, if any, or interest on the Bonds
shall be applied only to the payment of the principal of
or premium, if any, or interest on the Bonds pursuant to
the terms of the Security Arrangement):
(a) Unless the principal of all the Bonds shall have
become due and payable, all such moneys shall be applied
(i) first, to the payment to the persons entitled thereto
of all installments of interest then due on the Bonds,
with interest on overdue installments, if lawful, at the
rate per annum borne by the Bonds, in the order of
maturity of the installments of such interest and, if the
amount available shall not be sufficient to pay in full
any particular installment of interest, then to the
payment ratably, according to the amounts due on such
installment, and (ii) second, to the payment to the
persons entitled thereto of the unpaid principal of any of
the Bonds which shall have become due (other than Bonds
called for redemption for the payment of which money is
held pursuant to the provisions of this Indenture), with
interest on such Bonds at their rate from the respective
dates upon which they became due and, if the amount
available shall not be sufficient to pay in full Bonds due
on any particular date, together with such interest, then
to the payment ratably, according to the amount of
principal and interest due on such date, in each case to
the persons entitled thereto, without any discrimination
or privilege; provided, however, that moneys derived from
the rights of the Trustee under any Security Arrangement
on which the Company shall not be the obligor shall not be
applied to the payment of the principal of or premium, if
any, or interest on Bonds held of record by the Company,
or by the Tender Agent for the account of the Company
pursuant to Section 13.07(c) hereof, if such Security
Arrangement prohibits by its terms a drawing thereunder
for such purpose.
(b) If the principal of all the Bonds shall have become
due and payable, all such moneys shall be applied to the
payment of the principal and interest then due and unpaid
upon the Bonds, with interest on overdue interest and
principal, as aforesaid, without preference or priority of
principal over interest or of interest over principal, or
of any installment of interest over any other installment
of interest, or of any Bond over any other Bond, ratably,
according to the amounts due respectively for principal
and interest, to the persons entitled thereto without any
discrimination or privilege; provided, however, that
moneys derived from the rights of the Trustee under any
Security Arrangement in which the Company shall not be the
Obligor shall not be applied to the payment of the
principal of or premium, if any, or interest on Bonds held
of record by the Company, or by the Tender Agent for the
account of the Company pursuant to Section 13.07(c)
hereof, if such Security Arrangement prohibits by its
terms a drawing thereunder for such purpose.
(c) If the principal of all the Bonds shall have come
due and payable, and if acceleration of the maturity of
the Bonds by reason of such Event of Default shall
thereafter have been rescinded and annulled under the
provisions of this Article IX, then, subject to the
provisions of clause (b) of this Section 9.10 which shall
be applicable in the event that the principal of all the
Bonds shall later become due and payable, the moneys shall
be applied in accordance with the provisions of clause (a)
of this Section 9.10.
IX.22. Severability of Remedies. It is the purpose
and intention of this Article IX to provide rights and
remedies to the Trustee and the Owners which may be
lawfully granted under the provisions of the Act, but
should any right or remedy herein granted be held to be
unlawful, the Trustee and the Owners shall be entitled, as
above set forth, to every other right and remedy provided
in this Indenture and by law.
X TRUSTEE; PAYING AGENT AND CO-PAYING AGENTS; REGISTRAR
X.11. Acceptance of Trusts. The Trustee hereby
accepts and agrees to execute the trusts hereby created,
but only upon the additional terms set forth in this
Article X, to all of which the Pollution Control
Corporation agrees and the respective Owners agree by
their acceptance of delivery of any of the Bonds.
X.12. No Responsibility for Recitals. The
recitals, statements and representations contained in this
Indenture or in the Bonds, save only the Trustee's
authentication upon the Bonds, are not made by the
Trustee, and the Trustee does not assume, and shall not
have, any responsibility or obligation for the correctness
of any thereof. The Trustee makes no representation as to
the validity or sufficiency of this Indenture or the
Bonds.
X.13. Limitations on Liability. The Trustee may
execute any of the trusts or powers hereof and perform the
duties required of it hereunder by or through attorneys,
agents, receivers, or employees, and shall be entitled to
advice of counsel concerning all matters of trust and its
duty hereunder, and the Trustee shall not be answerable
for the default or misconduct of any such attorney, agent,
receiver, or employee selected by it with reasonable care.
The Trustee shall not be answerable for the exercise of
any discretion or power under this Indenture or for
anything whatsoever in connection with the trust created
hereby, except only for its own negligence or bad faith.
Anything in this Indenture to the contrary
notwithstanding, the Trustee shall in no event be required
to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of
its duties or in the exercise of any of its rights or
powers, if there shall be reasonable grounds for believing
that the repayment of such funds or adequate indemnity
against such liability is not reasonably assured to it.
X.14. Compensation, Expenses and Advances. The
Trustee, the Paying Agent and any Co-Paying Agent, the
Registrar, the Tender Agent and the Remarketing Agent
under this Indenture shall be entitled to reasonable
compensation for their services rendered hereunder (not
limited by any provision of law regarding the compensation
of the trustee of an express trust) and to reimbursement
for their actual out-of-pocket expenses (including counsel
fees) reasonably incurred in connection therewith except
as a result of their negligence or bad faith, including,
without limitation, compensation for any services
rendered, and reimbursement for any expenses incurred, at
and subsequent to the time the Bonds are deemed to have
been paid in accordance with Article VIII hereof. If the
Pollution Control Corporation shall fail to perform any of
the covenants or agreements contained in this Indenture,
other than the covenants or agreements in respect of the
payment of the principal of and premium, if any, and
interest on the Bonds, the Trustee may, in its
uncontrolled discretion and without notice to the Owners
of the Bonds, at any time and from time to time, make
advances to effect performance of the same on behalf of
the Pollution Control Corporation, but the Trustee shall
be under no obligation so to do; and any and all such
advances may bear interest at a rate per annum not
exceeding the base rate then in effect for 90-day
commercial loans by the Trustee or a commercial banking
affiliate of the Trustee designated as such by the Trustee
in the city in which is located the Principal Office of
the Trustee (or such affiliate, as the case may be) to
borrowers of the highest credit standing; but no such
advance shall operate to relieve the Pollution Control
Corporation from any default hereunder. In Section 5.03
of the Loan Agreement, the Company has agreed that it will
pay to the Trustee (including any predecessor Trustee),
the Paying Agent and any Co-Paying Agent, the Registrar,
the Tender Agent and the Remarketing Agent, such
compensation and reimbursement of expenses and advances,
but the Company may, without creating a default hereunder,
contest in good faith the reasonableness of any such
services, expenses and advances. If the Company shall
have failed to make any payment to the Trustee or any
predecessor Trustee under Section 5.03 of the Loan
Agreement and such failure shall have resulted in an Event
of Default under the Loan Agreement, the Trustee, and any
predecessor Trustee, shall have, in addition to any other
rights hereunder, a claim, prior to the claim of the
Owners, for the payment of its compensation and the
reimbursement of its expenses and any advances made by it,
as provided in this Section 10.04, upon the moneys and
obligations in the Bond Fund; provided, however, that
neither the Trustee nor any predecessor Trustee shall have
any such claim upon proceeds of drawings on a Security
Arrangement on which the Company shall not be the obligor
or upon moneys or obligations deposited with or paid to
the Trustee for the redemption or payment of Bonds which
are deemed to have been paid in accordance with Article
VIII hereof; and provided, further, that, so long as a
Security Arrangement on which the Company shall not be the
obligor is in effect, neither the Trustee nor any
predecessor Trustee shall have any such claim upon any
moneys or obligations in the Bond Fund unless, after
satisfaction of such claim, there shall remain in the Bond
Fund moneys sufficient to pay all amounts then due in
respect of the Bonds.
In Section 5.04 of the Loan Agreement, the Company has
agreed to indemnify the Trustee and any predecessor
Trustee to the extent provided therein.
X.15. Notice of Events of Default. The Trustee
shall not be required to take notice, or be deemed to have
notice, of any default or Event of Default under this
Indenture other than an Event of Default under clause (a)
or (b) of the first paragraph of Section 9.01 hereof,
unless an officer assigned by the Trustee to administer
its corporate trust business has been specifically
notified in writing of such default or Event of Default by
Owners of at least 25% in principal amount of the Bonds
then Outstanding or by the Bank, the Tender Agent or the
Remarketing Agent. The Trustee may, however, at any time,
in its discretion, require of the Pollution Control
Corporation and the Company full information and advice as
to the performance of any of the covenants, conditions and
agreements contained herein.
X.16. Action by Trustee. The Trustee shall be
under no obligation to take any action in respect of any
default or Event of Default hereunder or toward the
execution or enforcement of any of the trusts hereby
created, or to institute, appear in or defend any suit or
other proceeding in connection therewith, unless requested
in writing so to do by Owners of at least 25% in principal
amount of the Bonds then Outstanding or the Bank, and, if
in its opinion such action may tend to involve it in
expense or liability, unless furnished, from time to time
as often as it may require, with security and indemnity
satisfactory to it; provided, however, that no such
security or indemnity shall be required prior to the
Trustee taking any action on a Security Arrangement
(including a drawing on the Letter of Credit) otherwise
required by the terms hereof, but the Trustee shall be
entitled to such security or indemnity thereafter. The
foregoing provisions are intended only for the protection
of the Trustee, and shall not affect any discretion or
power given by any provisions of this Indenture to the
Trustee to take action in respect of any default or Event
of Default without such notice or request from the Owners
of the Bonds or the Bank, or without such security or
indemnity.
X.17. Good Faith Reliance. The Trustee shall be
protected and shall incur no liability in acting or
proceeding in good faith upon any resolution, notice,
telegram, telex, facsimile transmission, request, consent,
waiver, certificate, statement, affidavit, voucher, bond,
requisition or other paper or document which it shall in
good faith believe to be genuine and to have been passed
or signed by the proper board, body or person or to have
been prepared and furnished pursuant to any of the
provisions of this Indenture or the Loan Agreement, or
upon the written opinion of any attorney, engineer,
accountant or other expert believed by the Trustee to be
qualified in relation to the subject matter, and the
Trustee shall be under no duty to make any investigation
or inquiry as to any statements contained or matters
referred to in any such instrument, but may accept and
rely upon the same as conclusive evidence of the truth and
accuracy of such statements. Neither the Trustee, the
Paying Agent, any Co-Paying Agent, the Registrar nor the
Tender Agent shall be bound to recognize any person as an
Owner of a Bond or to take any action at his request
unless the ownership of such Bond is proved as
contemplated in Section 11.01 hereof.
X.18. Dealings in Bonds and with the Pollution
Control Corporation and the Company. The Trustee, the
Paying Agent, any Co-Paying Agent, the Registrar, the
Tender Agent or the Remarketing Agent, in its individual
or any other capacity, may in good faith buy, sell, own,
hold and deal in any of the Bonds issued hereunder, and
may join in any action which any Owner of a Bond may be
entitled to take with like effect as if it did not act in
any capacity hereunder. The Trustee, the Paying Agent,
any Co-Paying Agent, the Registrar, the Tender Agent or
the Remarketing Agent, in its individual or any other
capacity, either as principal or agent, may also engage in
or be interested in any financial or other transaction
with the Pollution Control Corporation or the Company, and
may act as depositary, trustee, or agent for any committee
or body of Owners of Bonds secured hereby or other
obligations of the Pollution Control Corporation as freely
as if it did not act in any capacity hereunder.
X.19. Allowance of Interest. The Trustee may, but
shall not be obligated to, allow and credit interest upon
any moneys which it may at any time receive under any of
the provisions of this Indenture, at such rate, if any, as
it customarily allows upon similar funds of similar size
and under similar conditions. All interest allowed on any
such moneys shall be credited as provided in Articles IV,
V and VI with respect to interest on investments.
X.2 0. Construction of Indenture. The Trustee may
construe any of the provisions of this Indenture insofar
as the same may appear to be ambiguous or inconsistent
with any other provision hereof, and any construction of
any such provisions hereof by the Trustee in good faith
shall be binding upon the Owners of the Bonds.
X.21. Resignation of Trustee. The Trustee may
resign and be discharged of the trusts created by this
Indenture by executing an instrument in writing resigning
such trust and specifying the date when such resignation
shall take effect, and filing the same with the President
of the Pollution Control Corporation, and with the Tender
Agent, the Remarketing Agent, the Company and the Bank,
not less than forty-five (45) days before the date
specified in such instrument when such resignation shall
take effect, and by giving notice of such resignation by
Mail to all Owners of Bonds. Such resignation shall take
effect on the later to occur of (i) the day specified in
such instrument and notice, unless previously a successor
Trustee shall have been appointed as hereinafter provided,
in which event such resignation shall take effect
immediately upon the appointment of such successor Trustee
and (ii) the appointment of a successor Trustee.
So long as no event which is, or after notice or lapse
of time, or both, would become, an Event of Default shall
have occurred and be continuing, if the Pollution Control
Corporation shall have delivered to the Trustee (i) an
instrument appointing a successor Trustee, effective as of
a date specified therein and (ii) an instrument of
acceptance of such appointment, effective as of such date,
by such successor Trustee in accordance with Section
10.16, the Trustee shall be deemed to have resigned as
contemplated in this Section, the successor Trustee shall
be deemed to have been appointed pursuant to subsection
(b) of Section 10.13 and such appointment shall be deemed
to have been accepted as contemplated in Section 10.16,
all as of such date, and all other provisions of this
Article X shall be applicable to such resignation,
appointment and acceptance except to the extent
inconsistent with this paragraph. The Pollution Control
Corporation shall deliver any such instrument of
appointment at the direction of the Company.
X.22. Removal of Trustee. The Trustee may be
removed at any time by filing with the Trustee so removed,
and with the Pollution Control Corporation, the Tender
Agent, the Remarketing Agent and the Company, an
instrument or instruments in writing, appointing a
successor, or an instrument or instruments in writing,
consenting to the appointment by the Pollution Control
Corporation (at the direction of the Company) of a
successor and accompanied by an instrument of appointment
by the Pollution Control Corporation (at the direction of
the Company) of such successor, and in any event executed
by Owners of not less than a majority in principal amount
of the Bonds then Outstanding, such filing to be made by
any Owner of a Bond or his duly authorized attorney.
X.23. Appointment of Successor Trustee. (a) In
case at any time the Trustee shall be removed, or be
dissolved, or if its property or affairs shall be taken
under the control of any state or federal court or
administrative body because of insolvency or bankruptcy,
or for any other reason, then a vacancy shall forthwith
and ipso facto exist and a successor may be appointed, and
in case at any time the Trustee shall resign or be deemed
to have resigned, then a successor may be appointed, by
filing with the Pollution Control Corporation, the Tender
Agent, the Remarketing Agent and the Company an instrument
in writing appointing such successor Trustee executed by
Owners of not less than a majority in principal amount of
Bonds then Outstanding, together with, so long as the
Letter of Credit shall be in effect and no drawing on the
Letter of Credit shall have been, and shall remain,
wrongfully dishonored, a consent of the Bank to such
appointment (such consent not to be unreasonably
withheld). Copies of such instrument shall be promptly
delivered by the Pollution Control Corporation to the
predecessor Trustee to the Trustee so appointed and the
Company.
(a) Until a successor Trustee shall be appointed by the
Owners of the Bonds as herein authorized, the Pollution
Control Corporation, shall appoint a successor Trustee as
directed by the Company with, so long as the Letter of
Credit shall be in effect and no drawing on the Letter of
Credit shall have been, and shall remain, wrongfully
dishonored, the consent of the Bank (such consent not to
be unreasonably withheld). After any appointment by the
Pollution Control Corporation, it shall cause notice of
such appointment to be given by Mail to all Owners of
Bonds. Any new Trustee so appointed by the Pollution
Control Corporation shall immediately and without further
act be superseded by a Trustee appointed by the Owners of
the Bonds in the manner above provided.
(b) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this
Article shall become effective until the acceptance of
appointment by the successor Trustee.
X.24. Qualifications of Successor Trustee. Every
successor Trustee (a) shall be a bank or trust company
duly organized under the laws of the United States or any
state or territory thereof authorized by law to perform
all the duties imposed upon it by this Indenture and (b)
shall have (or the parent holding company of which shall
have) a combined capital stock, surplus and undivided
profits of at least $100,000,000 if there can be located,
with reasonable effort, such an institution willing and
able to accept the trust on reasonable and customary
terms.
X.25. Judicial Appointment of Successor Trustee.
In case at any time the Trustee shall resign and no
appointment of a successor Trustee shall be made pursuant
to the foregoing provisions of this Article X prior to the
date specified in the notice of resignation as the date
when such resignation is to take effect, the retiring
Trustee may forthwith apply to a court of competent
jurisdiction for the appointment of a successor Trustee.
If no appointment of a successor Trustee shall be made
pursuant to the foregoing provisions of this Article X
within six months after a vacancy shall have occurred in
the office of Trustee, any Owner of a Bond may apply to
any court of competent jurisdiction to appoint a successor
Trustee. Such court may thereupon, after such notice, if
any, as it may deem proper and prescribe, appoint a
successor Trustee.
X.26. Acceptance of Trusts by Successor Trustee.
Any successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Pollution Control
Corporation an instrument accepting such appointment
hereunder, and thereupon such successor Trustee, without
any further act, deed or conveyance, shall become duly
vested with all the estates, property, rights, powers,
trusts, duties and obligations of its predecessor in the
trust hereunder, with like effect as if originally named
Trustee herein. Upon request of such Trustee, such
predecessor Trustee and the Pollution Control Corporation
shall execute and deliver an instrument transferring to
such successor Trustee all the estates, property, rights,
powers and trusts hereunder of such predecessor Trustee
and, subject to the provisions of Section 10.04 hereof,
such predecessor Trustee shall pay over to the successor
Trustee all moneys and other assets at the time held by it
hereunder.
X.27. Successor by Merger or Consolidation. Any
corporation or association into which any Trustee
hereunder may be merged or converted or with which it may
be consolidated, or any corporation or association
resulting from any merger or consolidation to which any
Trustee hereunder shall be a party, shall be the successor
Trustee under this Indenture, without the execution or
filing of any paper or any further act on the part of the
parties hereto, anything in this Indenture to the contrary
notwithstanding.
If, at the time any such successor to the Trustee shall
succeed to the trusts created by this Indenture, any of
the Bonds shall have been authenticated but not delivered,
such successor Trustee may adopt the certificate of
authentication of any predecessor Trustee and deliver such
Bonds so authenticated; and if at that time, any of the
Bonds shall not have been authenticated, such successor
Trustee may authenticate such Bonds either in the name of
any such predecessor hereunder or in the name of such
successor; and, in all such cases, such certificate of
authentication shall have the full force which it is
anywhere in the Bonds or in this Indenture provided that
the certificate of authentication of the Trustee shall
have; provided, however, that the right to adopt the
certificate of authentication of any predecessor Trustee
or to authenticate Bonds in the name of any predecessor
Trustee shall apply only to its successor or successors by
merger, conversion or consolidation.
X.28. Standard of Care. Notwithstanding any other
provisions of this Article X, the Trustee shall, during
the existence of an Event of Default of which the Trustee
has actual notice, exercise such of the rights and powers
vested in it by this Indenture and use the same degree of
skill and care in their exercise as a prudent man would
use and exercise under the circumstances in the conduct of
his own affairs.
X.29. Notice to Owners of Bonds of Event of
Default. If an Event of Default occurs of which the
Trustee by Section 10.05 hereof is required to take notice
and deemed to have notice, or any other Event of Default
occurs of which the Trustee has been specifically notified
in accordance with Section 10.05 hereof, and any such
Event of Default shall continue for at least two days
after the Trustee acquires actual notice thereof, unless
the Trustee shall have theretofore given a notice of
acceleration pursuant to Section 9.01 hereof, the Trustee
shall give notice thereof to the Tender Agent, the
Remarketing Agent and the Bank and give Notice by Mail to
all Owners of Outstanding Bonds.
X.3 0. Intervention in Litigation of the Pollution
Control Corporation. In any judicial proceeding to which
the Pollution Control Corporation is a party and which in
the opinion of the Trustee and its counsel has a
substantial bearing on the interests of the Owners of
Bonds, the Trustee may intervene on behalf of the Owners
of the Bonds and shall, upon receipt of indemnity
satisfactory to it, do so if requested in writing by
Owners of at least 25% in principal amount of the Bonds
then Outstanding if permitted by the court having
jurisdiction in the premises.
X.31. Paying Agent; Co-Paying Agents. The
Pollution Control Corporation shall, with the approval of
the Company, appoint the Paying Agent for the Bonds and
may at any time or from time to time, with the approval of
the Company, appoint one or more Co-Paying Agents for the
Bonds, subject to the conditions set forth in Section
10.22 hereof. The Paying Agent and each Co-Paying Agent
shall designate to the Trustee its Principal Office and
signify its acceptance of the duties and obligations
imposed upon it hereunder by a written instrument of
acceptance delivered to the Pollution Control Corporation
and the Trustee in which such Paying Agent or Co-Paying
Agent will agree, particularly:
(a) to hold all sums held by it for the payment of the
principal of and premium, if any, or interest on Bonds in
trust for the benefit of the Owners of the Bonds until
such sums shall be paid to such Owners or otherwise
disposed of as herein provided;
(b) to keep such books and records as shall be
consistent with prudent industry practice, to make such
books and records available for inspection by the
Pollution Control Corporation, the Trustee and the Company
at all reasonable times and, in the case of a Co-Paying
Agent, to promptly furnish copies of such books and
records to the Paying Agent; and
(c) in the case of a Co-Paying Agent, upon the request
of the Paying Agent, to forthwith deliver to the Paying
Agent all sums so held in trust by such Co-Paying Agent.
The Pollution Control Corporation shall cooperate with
the Trustee and the Company to cause the necessary
arrangements to be made and to be thereafter continued
whereby funds derived from the sources specified in
Sections 4.03 and 4.04 hereof will be made available to
the Paying Agent and each Co-Paying Agent for the payment
when due of the principal of, premium, if any, and
interest on the Bonds.
X.32. Qualifications of Paying Agent and Co-Paying
Agents; Resignation; Removal. The Paying Agent and any
Co-Paying Agent shall be a corporation or association duly
organized under the laws of the United States of America
or any state or territory thereof, having a combined
capital stock, surplus and undivided profits of at least
$15,000,000 and authorized by law to perform all the
duties imposed upon it by this Indenture; provided that,
if the Bonds shall be rated by Moody's and if such
corporation shall not be a bank or trust company, its long
term debt or that of its parent shall have a Moody's
rating not lower than Baa3 or the equivalent thereof and
its short-term debt or that of its parent shall have a
Moody's rating not lower than P-3 or the equivalent
thereof unless, in either case, there shall have been
furnished to the Pollution Control Corporation, the
Trustee and the Company written evidence from Moody's to
the effect that the appointment of the proposed Paying
Agent or Co-Paying Agent will not, by itself, result in a
reduction or withdrawal of its ratings then in effect on
the Bonds. The Paying Agent and any Co-Paying Agent may
at any time resign and be discharged of the duties and
obligations created by this Indenture by giving at least
sixty (60) days' notice to the Pollution Control
Corporation, the Company and the Trustee. The Paying
Agent and any Co-Paying Agent may be removed at any time,
at the direction of the Company, by an instrument, signed
by the Pollution Control Corporation, filed with the
Paying Agent or such Co-Paying Agent, as the case may be,
and with the Trustee.
In the event of the resignation or removal of the
Paying Agent or any Co-Paying Agent, the Paying Agent or
such Co-Paying Agent, as the case may be, shall pay over,
assign and deliver any moneys held by it in such capacity
to its successor or, if there be no successor, to the
Trustee.
In the event that the Pollution Control Corporation
shall fail to appoint a Paying Agent hereunder, or in the
event that the Paying Agent shall resign or be removed, or
be dissolved, or if the property or affairs of the Paying
Agent shall be taken under the control of any state or
federal court or administrative body because of bankruptcy
or insolvency, or for any other reason, and the Pollution
Control Corporation shall not have appointed its successor
as Paying Agent, the Trustee shall ipso facto be deemed to
be the Paying Agent for all purposes of this Indenture
until the appointment by the Pollution Control Corporation
of the Paying Agent or successor Paying Agent, as the case
may be.
Upon the appointment of a successor Paying Agent, the
Trustee shall give notice thereof by Mail to all Owners of
Bonds.
X.33. Registrar. The Pollution Control Corporation
shall, with the approval of the Company, appoint the
Registrar for the Bonds, subject to the conditions set
forth in Section 10.24 hereof. The Registrar shall
designate to the Trustee its Principal Office and signify
its acceptance of the duties imposed upon it hereunder by
a written instrument of acceptance delivered to the
Pollution Control Corporation and the Trustee in which
such Registrar will agree, particularly, to keep such
books and records as shall be consistent with prudent
industry practice and to make such books and records
available for inspection by the Pollution Control
Corporation, the Trustee and the Company at all reasonable
times.
The Pollution Control Corporation shall cooperate with
the Trustee and the Company to cause the necessary
arrangements to be made and to be thereafter continued
whereby Bonds, executed by the Pollution Control
Corporation and authenticated by the Trustee, shall be
made available for exchange, registration and registration
of transfer at the Principal Office of the Registrar. The
Pollution Control Corporation shall cooperate with the
Trustee, the Registrar and the Company to cause the
necessary arrangements to be made and thereafter continued
whereby the Paying Agent, any Co-Paying Agent, the Tender
Agent and the Remarketing Agent shall be furnished such
records and other information, at such times, as shall be
required to enable the Paying Agent, such Co-Paying Agent,
the Tender Agent and the Remarketing Agent to perform the
duties and obligations imposed upon them hereunder.
X.34. Qualifications of Registrar; Resignation;
Removal. The Registrar shall be a corporation or
association duly organized under the laws of the United
States of America or any state or territory thereof,
having a combined capital stock, surplus and undivided
profits of at least $15,000,000 and authorized by law to
perform all the duties imposed upon it by this Indenture.
The Registrar may at any time resign and be discharged of
the duties and obligations created by this Indenture by
giving at least sixty (60) days' notice to the Pollution
Control Corporation, the Trustee and the Company. The
Registrar may be removed at any time, at the direction of
the Company, by an instrument signed by the Pollution
Control Corporation filed with the Registrar and the
Trustee.
In the event of the resignation or removal of the
Registrar, the Registrar shall deliver any Bonds held by
it in such capacity to its successor or, if there be no
successor, to the Trustee.
In the event that the Pollution Control Corporation
shall fail to appoint a Registrar hereunder, or in the
event that the Registrar shall resign or be removed, or be
dissolved, or if the property or affairs of the Registrar
shall be taken under the control of any state or federal
court or administrative body because of bankruptcy or
insolvency, or for any other reason, and the Pollution
Control Corporation shall not have appointed its successor
as Registrar, the Trustee shall ipso facto be deemed to be
the Registrar for all purposes of this Indenture until the
appointment by the Pollution Control Corporation of the
Registrar or successor Registrar, as the case may be.
Upon the appointment of a successor Registrar, the
Trustee shall give notice thereof by Mail to all Owners of
Bonds.
X.35. Several Capacities. Anything herein to the
contrary notwithstanding, the same entity may serve
hereunder as the Trustee, the Paying Agent or a Co-Paying
Agent, the Registrar, the Tender Agent and the Remarketing
Agent, and in any combination of such capacities to the
extent permitted by law.
XI EXECUTION OF INSTRUMENTS BY OWNERS OF BONDS AND
PROOF OF OWNERSHIP OF BONDS
XI.11. Execution of Instruments; Proof of Ownership.
Any request, direction, consent or other instrument in
writing, whether or not required or permitted by this
Indenture to be signed or executed by Owners of the Bonds,
may be in any number of concurrent instruments of similar
tenor and may be signed or executed by Owners of the Bonds
or by an agent appointed by an instrument in writing.
Proof of the execution of any such instrument and of the
ownership of Bonds shall be sufficient for any purpose of
this Indenture and shall be conclusive in favor of the
Trustee with regard to any action taken by it under such
instrument if made in the following manner:
(a) The fact and date of the execution by any person of
any such instrument may be proved by the certificate of
any officer in any jurisdiction who, by the laws thereof,
has power to take acknowledgments within such
jurisdiction, to the effect that the person signing such
instrument acknowledged before him the execution thereof,
or by an affidavit of a witness to such execution.
(b) The ownership or former ownership of Bonds shall be
proved by the registration books kept under the provisions
of Section 2.09 hereof.
Nothing contained in this Article XI shall be construed
as limiting the Trustee to such proof, it being intended
that the Trustee may accept any other evidence of matters
herein stated which it may deem sufficient. Any request
or consent of any Owner of a Bond shall bind every future
Owner of the same Bond or any Bond or Bonds issued in lieu
thereof in respect of anything done by the Trustee or the
Pollution Control Corporation in pursuance of such request
or consent.
XII MODIFICATION OF THIS INDENTURE AND THE LOAN AGREEMENT
XII.11. Limitations. Neither this Indenture nor the
Loan Agreement shall be modified or amended in any respect
subsequent to the original issuance of the Bonds except as
provided in and in accordance with and subject to the
provisions of this Article XII and Section 7.04 hereof.
The Trustee may, but shall not be obligated to, enter
into any Supplemental Indenture which affects the
Trustee's own rights, duties or immunities under this
Indenture or otherwise.
XII.12. Supplemental Indentures without Owner
Consent. The Pollution Control Corporation and the
Trustee may, from time to time and at any time, without
the consent of or notice to the Owners of the Bonds, enter
into Supplemental Indentures as follows:
(a) to cure any formal defect, omission, inconsistency
or ambiguity in this Indenture, provided, however, that
such cure shall not materially and adversely affect the
interests of the Owners of the Bonds;
(b) to grant to or confer or impose upon the Trustee for
the benefit of the Owners of the Bonds any additional
rights, remedies, powers, authority, security, liabilities
or duties which may lawfully be granted, conferred or
imposed;
(c) to add to the covenants and agreements of, and
limitations and restrictions upon, the Pollution Control
Corporation in this Indenture other covenants, agreements,
limitations and restrictions to be observed by the
Pollution Control Corporation;
(d) to confirm, as further assurance, any pledge under,
and the subjection to any claim, lien or pledge created or
to be created by, this Indenture, of the Receipts and
Revenues of the Pollution Control Corporation from the
Loan Agreement or of any other moneys, securities or
funds;
(e) to authorize a different denomination or
denominations of the Bonds and to make correlative
amendments and modifications to this Indenture regarding
exchange ability of Bonds of different denominations,
redemptions of portions of Bonds of particular
denominations and similar amendments and modifications of
a technical nature;
(f) to modify, alter, amend or supplement this Indenture
in any and all respects which may be correlative to any
and all modifications, alterations, amendments and
supplements to the Loan Agreement referred to in the
second paragraph of Section 12.06 hereof or which may be
necessary, desirable or appropriate in connection
therewith (including without limitation the insertion of
provisions relating to the priority of sources of funds to
be used for the payment of the principal of and premium,
if any, and interest on the Bonds, changes to the
provisions relating to the priority of sources of funds to
be used for the purchase of Bonds, changes to the default
provisions hereof and the insertion of provisions relating
to the non-transferability and surrender of the evidence
of the additional security referred to in the second
paragraph of Section 12.06 hereof) or to carry out the
purposes thereof; provided, however, that anything in this
clause (f) of Section 12.02 or Section 12.06 to the
contrary notwithstanding, no such modification,
alteration, amendment or supplement to this Indenture or
the Loan Agreement shall render the Receipts and Revenues
of the Pollution Control Corporation from the Loan
Agreement (as such term is defined in this Indenture as
originally executed and delivered or as modified, altered,
amended or supplemented) insufficient to pay the principal
of and premium, if any, and interest on the Bonds;
(g) to modify, alter, supplement or amend this Indenture
in such manner as shall permit the qualification hereof
under the Trust Indenture Act of 1939, as from time to
time amended;
(h) to modify, alter, supplement or amend this Indenture
in such manner as shall be necessary, desirable or
appropriate in order to provide for or eliminate the
registration and registration of transfer of the Bonds
through a book-entry or similar method, whether or not the
Bonds are evidenced by certificates;
(i) to provide a different method for the determination
of the Daily Rate, Weekly Rate, Monthly Rate, Term Rate,
Flexible Rates or the Fixed Rate if the method set forth
herein is unavailable or unrealistic in the marketplace,
but only after notice thereof shall have been given by
Mail to all Owners of the Bonds;
(j) to modify, alter, amend or supplement this Indenture
in any other respect which is not materially adverse to
the Owners and which does not involve a change described
in clause (i), (ii), (iii) or (iv) of Section 12.03(a)
hereof;
(k) to provide any additional procedures, covenants or
agreements necessary or desirable to maintain the tax-
exempt status of interest on the Bonds; and
(l) to modify, alter, amend or supplement this Indenture
in any other respect, including amendments which would
otherwise be described in Section 12.03 hereof, if the
effective date of such amendment is a date on which all
Bonds affected thereby are subject to mandatory tender for
purchase pursuant to Section 2.02(h) or if Notice by Mail
of the proposed amendment is given to Owners of the
affected Bonds at least 30 days before the effective date
thereof and, on or before such effective date, such Owners
have the right to demand purchase of their Bonds pursuant
to Section 2.02(g) hereof.
Before the Pollution Control Corporation and the
Trustee shall enter into any Supplemental Indenture
pursuant to this Section 12.02, there shall have been
delivered to the Trustee an opinion of Bond Counsel
stating that such Supplemental Indenture is authorized or
permitted by this Indenture and the Act, complies with
their respective terms, will, upon the execution and
delivery thereof, be valid and binding upon the Pollution
Control Corporation in accordance with its terms and will
not, in and of itself, adversely affect the exclusion from
gross income for federal tax purposes of the interest on
the Bonds.
XII.13. Supplemental Indentures with Consent of
Owners. (a) Except for any Supplemental Indenture entered
into pursuant to Section 12.02 hereof, subject to the
terms and provisions contained in this Section 12.03 and
Section 12.05 and not otherwise, Owners of not less than a
majority in aggregate principal amount of the Bonds then
Outstanding which would be adversely affected thereby
shall have the right from time to time to consent to and
approve the execution and delivery by the Pollution
Control Corporation and the Trustee of any Supplemental
Indenture deemed necessary or desirable by the Pollution
Control Corporation for the purposes of modifying,
altering, amending, supplementing or rescinding, in any
particular, any of the terms or provisions contained in
this Indenture; provided, however, that, unless approved
in writing by the Owners of all the Bonds then Outstanding
which would be adversely affected thereby, nothing herein
contained shall permit, or be construed as permitting, (i)
a change in the times, amounts or currency of payment of
the principal of or premium, if any, or interest on any
Outstanding Bond, a change in the purchase price or time
of purchase of Bonds tendered pursuant to the terms
hereof, a reduction in the principal amount or redemption
price of any Outstanding Bond or a change in the method of
determining the rate of interest thereon, or any
impairment of the right of any Owner to institute suit for
the payment of any Bond owned by it, or (ii) the creation
of a claim or lien upon, or a pledge of, the Receipts and
Revenues of the Pollution Control Corporation from the
Loan Agreement ranking prior to or on a parity with the
claim, lien or pledge created by this Indenture (except as
referred to in Section 10.04 hereof), or (iii) a
preference or priority of any Bond or Bonds over any other
Bond or Bonds, or (iv) a reduction in the aggregate
principal amount of Bonds the consent of the Owners of
which is required for any such Supplemental Indenture or
which is required, under Section 12.07 hereof, for any
modification, alteration, amendment or supplement to the
Loan Agreement.
(a) If at any time the Pollution Control Corporation
shall request the Trustee to enter into any Supplemental
Indenture for any of the purposes of this Section 12.03,
the Trustee shall cause notice of the proposed
Supplemental Indenture to be given by Mail to all Owners
of Outstanding Bonds and to the Bank. Such notice shall
briefly set forth the nature of the proposed Supplemental
Indenture and shall state that a copy thereof is on file
at the Principal Office of the Trustee for inspection by
all Owners of Bonds and by the Bank.
(b) Within two years after the date of the first mailing
of such notice, the Pollution Control Corporation and the
Trustee may enter into such Supplemental Indenture in
substantially the form described in such notice only if
there shall have first been delivered to the Trustee (i)
the required consents, in writing, of Owners of Bonds and
(ii) an opinion of Bond Counsel stating that such
Supplemental Indenture is authorized or permitted by this
Indenture and the Act, complies with their respective
terms and, upon the execution and delivery thereof, will
be valid and binding upon the Pollution Control
Corporation in accordance with its terms and will not
adversely affect the exemption from federal income
taxation of interest on the Bonds.
(c) If Owners of not less than the percentage of Bonds
required by this Section 12.03 shall have consented to and
approved the execution and delivery thereof as herein
provided, no Owner shall have any right to object to the
execution and delivery of such Supplemental Indenture, or
to object to any of the terms and provisions contained
therein or the operation thereof, or in any manner to
question the propriety of the execution and delivery
thereof, or to enjoin or restrain the Pollution Control
Corporation or the Trustee from executing and delivering
the same or from taking any action pursuant to the
provisions thereof.
(d) Subject to the terms and provisions contained in
this subsection (e) of Section 12.03 and in Section 12.05,
the Owners of all the Bonds at any time Outstanding shall
have the right, and the Pollution Control Corporation and
the Trustee by their execution and delivery of this
Indenture hereby expressly confer upon such Owners the
right to modify, alter, amend or supplement this Indenture
in any respect, including without limitation in respect of
the matters described in clauses (i), (ii), (iii) and (iv)
of the proviso contained in subsection (a) of this Section
12.03, by delivering to the Pollution Control Corporation,
the Trustee and the Company a written instrument or
instruments, executed by or on behalf of such Owners,
containing a form of Supplemental Indenture which sets
forth such modifications, alterations, amendments and
supplements, and, upon the expiration of a thirty (30) day
period commencing on the date of such delivery during
which no notice of objection shall have been delivered by
the Pollution Control Corporation, the Trustee or the
Company to such Owners at an address specified in such
written instrument, such Supplemental Indenture shall be
deemed to have been approved and confirmed by the
Pollution Control Corporation and the Trustee, to the same
extent as if actually executed and delivered by the
Pollution Control Corporation and the Trustee, and to have
been approved by the Company, and such Supplemental
Indenture shall thereupon become and be for all purposes
in full force and effect without further action by the
Pollution Control Corporation, the Trustee or the Company.
The foregoing provisions are, however, subject to the
following conditions:
(i) no such Supplemental Indenture shall in any way
affect the limited nature of the obligations of the
Pollution Control Corporation under this Indenture as set
forth in Sections 2.06 and 7.01 hereof or shall adversely
affect any of its rights hereunder;
(ii) no such Supplemental Indenture shall be to the
prejudice of the Paying Agent or any Co-Paying Agent, the
Registrar, the Tender Agent or the Remarketing Agent; and
(iii) there shall have been delivered to the
Pollution Control Corporation, the Trustee and the Company
an opinion of Bond Counsel stating that such Supplemental
Indenture is authorized or permitted by this Indenture and
the Act, complies with their respective terms, will, upon
the expiration of the aforesaid thirty (30) day period, be
valid and binding upon the Pollution Control Corporation
in accordance with its terms and will not adversely affect
the exclusion of the interest on the Bonds from gross
income for federal income tax purposes.
XII.14. Effect of Supplemental Indenture. Upon the
execution and delivery of any Supplemental Indenture
pursuant to the provisions of this Article XII (including
the becoming effective of a Supplemental Indenture as
provided in Section 12.03(e) hereof), this Indenture shall
be, and be deemed to be, modified, altered, amended or
supplemented in accordance therewith, and the respective
rights, duties and obligations under this Indenture of the
Pollution Control Corporation, the Trustee and Owners of
all Bonds then Outstanding shall thereafter be determined,
exercised and enforced under this Indenture subject in all
respects to such modifications, alterations, amendments
and supplements.
XII.15. Consent of the Company and Obligor under
Security Arrangement. Anything herein to the contrary
notwithstanding, any Supplemental Indenture under this
Article XII which affects any rights, powers, agreements
or obligations of the Company under the Loan Agreement or
of the obligor under any Security Arrangement, or requires
a revision of the Loan Agreement or any Security
Arrangement, shall not become effective unless and until
the Company or such obligor, as the case may be, shall
have consented to such Supplemental Indenture.
XII.16. Amendment of Loan Agreement without Consent
of Owners. Without the consent of or notice to the Owners
of the Bonds, the Pollution Control Corporation may enter
into any Supplemental Loan Agreement, and the Trustee may
consent thereto, as may be required (a) by the provisions
of the Loan Agreement and this Indenture, (b) for the
purpose of curing any formal defect, omission,
inconsistency or ambiguity therein, (c) to provide any
additional procedures, covenants or agreements necessary
or desirable to maintain the tax-exempt status of interest
on the Bonds, or (d) in connection with any other change
therein which is not materially adverse to the Owners of
the Bonds. A revision of Exhibit A to the Loan Agreement
pursuant to Section 3.03 thereof shall not be deemed a
Supplemental Loan Agreement for purposes of this
Indenture.
In addition to the foregoing, without the consent of or
notice to the Owners of the Bonds, the Pollution Control
Corporation may modify, alter, amend or supplement the
Loan Agreement, and the Trustee shall consent thereto, in
any and all respects necessary, desirable or appropriate
in connection with the Termination, in accordance with
Section 6.07(c) of the Loan Agreement, or any provision of
any Security Arrangement, including, without limitation,
to provide that the obligation of the Company to make (a)
the Loan Payments, (b) that portion of the Loan Payments
equal to the principal amount of the Bonds, or (c) that
portion of the Loan Payments equal to the principal amount
of the Bonds plus all or any portion of the Loan Payments
equal to the premium, if any, and interest on the Bonds,
shall be either evidenced or secured by First Mortgage
Bonds issued and delivered to the Trustee. In connection
with any such modification, alteration, amendment or
supplement made in connection with the delivery to the
Trustee of First Mortgage Bonds, (a) the First Mortgage
Bonds shall (i) bear no interest, (ii) bear interest at a
fixed rate or (iii) bear interest at a rate equal to the
rate of interest borne by the Bonds, as determined by the
Company, (b) the First Mortgage Bonds shall be voted, and
consents shall be given with respect thereto,
proportionately with what the Trustee reasonably believes
will be the vote or consent of the holders of all other
bonds outstanding under the Company Mortgage which vote or
consent, or otherwise as provided in such modification,
alteration, amendment or supplement, (c) the First
Mortgage Bonds shall be pledged and assigned by the
Pollution Control Corporation to the Trustee as part of
the Trust Estate and may be pledged and assigned by the
Pollution Control Corporation, secondarily and subject to
the rights of the Trustee therein, to the obligor on any
other Security Arrangement as collateral security for the
obligations of the Company to such obligor, and (d) to the
extent that the First Mortgage Bonds shall evidence the
obligation of the Company to make the Loan Payments, the
obligation of the Company contained in the Loan Agreement
to make the Loan Payments may be extinguished.
The right of the Pollution Control Corporation to make
any modification, alteration, amendment or supplement to
the Loan Agreement pursuant to the preceding paragraph
shall include the right to make any and all such
additional modifications, alterations, amendments or
supplements to the Loan Agreement as may be necessary,
desirable or appropriate to carry out the purposes set
forth in such paragraph.
Before the Pollution Control Corporation shall enter
into, and the Trustee shall consent to, any Supplemental
Loan Agreement pursuant to this Section 12.06, there shall
have been delivered to the Trustee an opinion of Bond
Counsel stating that such Supplemental Loan Agreement is
authorized or permitted by this Indenture and the Act,
complies with their respective terms, will, upon the
execution and delivery thereof, be valid and binding upon
the Pollution Control Corporation and the Company in
accordance with its terms and will not, in and of itself,
adversely affect the exclusion from gross income for
federal tax purposes of interest on the Bonds.
XII.17. Amendment of Loan Agreement with Consent of
Owners. Except in the case of Supplemental Loan
Agreements referred to in Section 12.06 hereof, the
Pollution Control Corporation shall not enter into, and
the Trustee shall not consent to, any Supplemental Loan
Agreement without the written approval or consent of the
Owners of not less than a majority in aggregate principal
amount of the Bonds then Outstanding which would be
adversely affected thereby, given and procured as provided
in Section 12.03 hereof; provided, however, that, unless
approved in writing by the Owners of all Bonds then
Outstanding which would be adversely affected thereby,
nothing herein contained shall permit, or be construed as
permitting, a change in the obligations of the Company
under Section 5.01 of the Loan Agreement or a change in
the obligations of the Company under Section 10.01(a) of
the Loan Agreement. If at any time the Pollution Control
Corporation or the Company shall request the consent of
the Trustee to any such proposed Supplemental Loan
Agreement, the Trustee shall cause notice of such proposed
Supplemental Loan Agreement to be given in the same manner
as provided by Section 12.03 hereof with respect to
Supplemental Indentures. Such notice shall briefly set
forth the nature of such proposed Supplemental Loan
Agreement and shall state that copies of the instrument
embodying the same are on file at the Principal Office of
the Trustee for inspection by all Owners of the Bonds and
by the Bank. The Pollution Control Corporation may enter
into, and the Trustee may consent to, any such proposed
Supplemental Loan Agreement subject to the same
conditions, and with the same effect, as provided by
Section 12.03 hereof with respect to Supplemental
Indentures.
XIII TENDER AGENT; REMARKETING AGENT; PURCHASE AND RE
MARKETING OF BONDS
XIII.11. Tender Agent. Subject to the conditions set
forth in Section 13.02 hereof, the Tender Agent shall be
appointed by the Company. The Tender Agent shall
designate its Principal Office and signify its acceptance
of the duties and obligations imposed upon it hereunder by
a written instrument of acceptance delivered to the
Pollution Control Corporation, the Trustee, the
Remarketing Agent, the Company and the Bank in which the
Tender Agent will agree, particularly:
(a) to hold all Bonds delivered to it for purchase
hereunder in trust for the benefit of the respective
Owners which shall have so delivered such Bonds until
moneys representing the purchase price of such Bonds shall
have been delivered to or for the account of or to the
order of such Owners;
(b) to hold all moneys delivered to it hereunder for the
purchase of Bonds, other than moneys delivered to it by
the Company during the term of a Security Arrangement on
which the Company shall not be the obligor, as agent and
bailee of, and in escrow for the benefit of, the person or
entity which shall have so delivered such moneys until the
Bonds to be purchased with such moneys shall have been
delivered to or for the account of such person or entity;
(c) to hold all moneys delivered to it by the Company
for the purchase of Bonds in trust for the benefit of the
Owners or former Owners who shall deliver Bonds to it for
purchase until the Bonds purchased with such moneys shall
have been delivered to or for the account of the Company;
provided, however, that if the Bonds shall at any time
become due and payable, the Tender Agent shall cause such
moneys (other than moneys held pursuant to Section
13.03(c) hereof) to be deposited into the Bond Fund;
(d) to hold Bonds for the account of the Company as and
to the extent directed by the Bank as contemplated by
Section 13.07(c) hereof, such Bonds to be released to or
upon the order of the Company upon receipt by the Tender
Agent from the Bank of a written notice to the effect that
such Bonds are released from any security interest in
favor of the Bank, the Letter of Credit is reinstated in
full and that the Trustee is entitled to draw under the
Security Arrangement, to pay (i) principal of the Bonds
and the portion of purchase price equal to principal and
(ii) interest on the Bonds and the portion of purchase
price equal to accrued interest, amounts equal to the
amounts that could be drawn under a Security Arrangement
if the drawing made to purchase such Bonds were
disregarded (it being understood that, if so requested by
the Bank, the Tender Agent shall hold such Bonds in its
capacity as custodian or collateral agent for the Bank,
subject to any security interest of the Bank therein);
and, in the event of a redemption of any of such Bonds or
the acceleration of all Outstanding Bonds, to hold in
trust moneys delivered to the Tender Agent in payment of
the Bonds so held by it and to turn such moneys over to
the Bank to the extent of the amount specified by the Bank
to the Tender Agent as the aggregate amount then owed by
the Company to the Bank under the Reimbursement Agreement
in respect of drawings under the Security Arrangement and
interest thereon, any balance to be turned over to the
Company;
(e) to give the notice specified in Section 2.10 hereof
to the Owners of the Bonds; and
(f) to keep such books and records as shall be
consistent with prudent industry practice and to make such
books and records available for inspection by the
Pollution Control Corporation, the Trustee, the Company
and the Remarketing Agent at all reasonable times.
The Pollution Control Corporation shall cooperate with
the Trustee, the Registrar, the Company, the Tender Agent,
the Remarketing Agent and the Bank to cause the necessary
arrangements to be made and to be thereafter continued
whereby funds from the sources specified herein and in the
Loan Agreement will be made available for the purchase of
Bonds delivered to the Principal Office of the Tender
Agent for purchase in accordance with Section 2.02 hereof,
and to otherwise enable the Tender Agent to carry out its
duties hereunder.
XIII.12. Qualifications of Tender Agent; Resignation;
Removal. The Tender Agent shall be a corporation duly
organized under the laws of the United States of America
or any state or territory thereof, having a combined
capital stock, surplus and undivided profits of at least
$100,000,000 and authorized by law to perform all the
duties imposed upon it by this Indenture; provided that,
if the Bonds shall be rated by Moody's and if such
corporation shall not be a bank or trust company, its
long-term debt or that of its parent shall have a Moody's
rating not lower than Baa3 or the equivalent thereof and
its short-term debt or that of its parent shall have a
Moody's rating not lower than P-3 or the equivalent
thereof unless, in either case, there shall have been
furnished to the Pollution Control Corporation, the
Trustee and the Company written evidence from Moody's to
the effect that the appointment of the proposed Tender
Agent will not, by itself, result in a reduction or
withdrawal of its ratings then in effect on the Bonds.
The Tender Agent may at any time resign and be discharged
of the duties and obligations created by this Indenture by
giving at least sixty (60) days' notice to the Pollution
Control Corporation, the Trustee, the Company, the
Remarketing Agent and the Bank. The Tender Agent may be
removed at any time by an instrument signed by the
Company, filed with the Tender Agent, and with the
Pollution Control Corporation, the Trustee, the
Remarketing Agent and the Bank.
In the event of the resignation or removal of the
Tender Agent, the Tender Agent shall deliver any Bonds and
moneys held by it in such capacity to its successor or, if
there be no successor, to the Trustee.
In the event that the Company shall fail to appoint a
Tender Agent, or in the event that the Tender Agent shall
resign or be removed, or be dissolved, or if the property
or affairs of the Tender Agent shall be taken under the
control of any state or federal court or administrative
body because of bankruptcy or insolvency, or for any other
reason, and the Company shall not have appointed its
successor as Tender Agent, the entity acting as Trustee
shall ipso facto be deemed to be the Tender Agent for all
purposes of this Indenture until the appointment by the
Company of the Tender Agent or successor Tender Agent, as
the case may be.
XIII.13. Purchase of Bonds; Notices. (a) On any date
Bonds are to be purchased pursuant to Section 2.02 hereof,
the Tender Agent shall purchase, as agent and not for its
own account, but only from the funds listed below, such
Bonds from the Owners thereof at the applicable purchase
price thereof specified in Section 2.02 hereof. Funds for
the payment of such purchase price shall be derived from
the following sources in the order of priority indicated:
(i) moneys furnished by the Trustee to the Tender Agent
pursuant to Section 8.01 hereof, such moneys to be applied
only to the purchase of Bonds which are deemed to be paid
in accordance with Article VIII hereof;
(ii) moneys furnished by the Company to the Tender Agent
pursuant to Section 10.02 of the Loan Agreement and
proceeds from the investment thereof, which constitute
Available Moneys;
(iii) proceeds of the sale of such Bonds pursuant to
Section 13.06 hereof, provided such proceeds are made
available or credited to the Tender Agent at or prior to
the last time the Trustee may demand payment of moneys
under any Security Arrangement;
(iv) moneys representing proceeds of a drawing on the
Letter of Credit or proceeds of any other Security
Arrangement; and
(v) moneys furnished by the Company to the Tender Agent
pursuant to Section 10.01 of the Loan Agreement.
(b) (i) If moneys sufficient to pay the purchase price
of Bonds tendered for purchase or required to be tendered
for purchase by their terms shall be held by the Tender
Agent on the date such Bonds are to be purchased, such
Bonds shall be deemed to have been purchased, for all
purposes of this Indenture, irrespective of whether or not
such Bonds shall have been delivered to the Tender Agent,
and the former Owner or Owners shall have no claim
thereon, under this Indenture or otherwise, for any amount
other than the purchase price thereof.
(ii) The Trustee shall authenticate and deliver to the
Tender Agent a new Bond or Bonds in an aggregate
principal amount equal to the principal amount of Bonds
deemed to have been purchased in accordance with this
subsection (b) of Section 13.03 and bearing a number or
numbers not contemporaneously outstanding. Every Bond
authenticated and delivered as provided in the
preceding sentence shall be entitled to all the
benefits of this Indenture equally and proportionately
with any and all other Bonds duly issued hereunder.
The Tender Agent shall maintain a record of the Bonds
deemed to have been purchased as provided in this
subsection (b) of Section 13.03, together with the
names and addresses of the former Owners thereof.
(c) In the event any Bonds shall not be presented for
purchase as provided in subsection (b) of this Section
13.03, if moneys sufficient to purchase such Bonds are
held by the Tender Agent for the benefit of the former
Owners thereof, the Tender Agent shall segregate and hold
such moneys in trust, without liability for interest
thereon, for the benefit of the former Owners of such
Bonds, who shall, except as provided in the following
sentence, thereafter be restricted exclusively to such
fund or funds for the satisfaction of any claim for the
purchase price of such Bonds. Any moneys which the Tender
Agent shall segregate and hold in trust for the payment of
the purchase price of any Bond and remaining unclaimed for
one year after the date of purchase shall, upon the
Company's written request to the Tender Agent, be paid to
the Company; provided, however, that before the Tender
Agent shall be required to make any such repayment, the
Tender Agent may, at the expense of the Company, cause
notice to be given once by Mail to the former Owner of
such Bond or once by Publication, or both, to the effect
that such money remains unclaimed and that, after a date
specified therein, which shall not be less than thirty
(30) days from the date of the latest such notice, any
unclaimed balance of such moneys then remaining will be
paid to the Company. After the payment of such unclaimed
moneys to the Company, the former Owner of such Bond shall
thereafter look only to the Company for the payment of the
purchase price therefor, and all liability of the Tender
Agent with respect to such moneys shall thereupon cease.
(d) (i) On any date Bonds are to be purchased pursuant
to Section 2.02 and subsection (a) of this Section 13.03,
the Tender Agent shall give immediate telephonic or
telegraphic notice, promptly confirmed by a written
notice, to the Remarketing Agent specifying the principal
amount of Bonds delivered to it for purchase.
(i) On any date Bonds are to be purchased pursuant to
Section 2.02 and subsection (a) of this Section 13.03,
unless the Tender Agent shall have received a notice given
by the Remarketing Agent pursuant to Section 13.06(b)
hereof indicating that all Bonds to be sold by the
Remarketing Agent pursuant to Section 13.06(a) on such
date have been remarketed and that all remarketing
proceeds have been received, the Tender Agent shall give
telephonic or telegraphic notice no later than 11:15 a.m.,
New York City time, promptly confirmed by a written
notice, to the Trustee and the Company which notice shall
specify (A) the principal amount of the Bonds, if any, so
sold by the Remarketing Agent and the remarketing proceeds
thereof in its possession and (B) the amount to be drawn
on the Letter of Credit or other Security Arrangement,
and, simultaneously therewith, the Tender Agent shall
direct the Trustee to make drawings on the Letter of
Credit or other Security Arrangement in such specified
amount in accordance with Section 13.08 hereof. In giving
the foregoing notice the Tender Agent shall utilize the
information provided to it by the Remarketing Agent in the
notice required pursuant to Section 13.06(b); provided,
however, that in the event that the Tender Agent shall not
have received such notice from the Remarketing Agent prior
to the Tender Agent being required to give notice
hereunder, the Tender Agent shall assume that such Bonds
have not been remarketed.
XIII.14. Remarketing Agent. Subject to the conditions
set forth in Section 13.05 hereof, the Remarketing Agent
shall be appointed by the Company. The Remarketing Agent
shall designate its Principal Office and signify its
acceptance of the duties and obligations imposed upon it
hereunder by a written instrument of acceptance delivered
to the Pollution Control Corporation, the Trustee, the
Company and the Tender Agent in which the Remarketing
Agent will agree, particularly:
(a) to hold all Bonds, if any, delivered to it hereunder
as agent and bailee of, and in escrow for the benefit of,
the person or entity which shall have so delivered such
Bonds until moneys representing the purchase price of such
Bonds shall have been delivered to or for the account of
or to the order of such person or entity;
(b) to hold all moneys, if any, delivered to it
hereunder for the purchase of Bonds as agent and bailee
of, and in escrow for the benefit of, the person or entity
which shall have so delivered such moneys until the Bonds
purchased with such moneys shall have been delivered to or
for the account of such person or entity; and
(c) to keep such books and records as shall be
consistent with prudent industry practice and to make such
books and records available for inspection by the
Pollution Control Corporation, the Trustee, the Tender
Agent and the Company at all reasonable times.
The Pollution Control Corporation shall cooperate with
the Trustee, the Registrar, the Company, the Tender Agent
and the Remarketing Agent to cause the necessary
arrangements to be made and to be thereafter continued
whereby Bonds, executed by the Pollution Control
Corporation and authenticated by the Trustee, shall be
delivered to the Remarketing Agent to the extent necessary
for delivery pursuant to Section 13.07 hereof, and to
otherwise enable the Remarketing Agent to carry out its
duties hereunder.
XIII.15. Qualifications of Remarketing Agent. The
Remarketing Agent shall be (a) a member of the National
Association of Securities Dealers, Inc., having a
capitalization of at least $15,000,000 or (b) a bank or
trust company organized under the laws of the United
States or any state or territory thereof having a combined
capital stock, surplus and undivided profits of at least
$15,000,000, and, in either case, authorized by law to
perform all the duties imposed upon it by this Indenture;
provided that, if the Bonds shall be rated by Moody's and
if the proposed Remarketing Agent shall not be a bank or
trust company, its long-term debt or that of its parent
shall have a Moody's rating not lower than Baa3 or the
equivalent thereof and its short-term debt or that of its
parent shall have a Moody's rating not lower than P-3 or
the equivalent thereof unless, in either case, there shall
have been furnished to the Pollution Control Corporation,
the Trustee and the Company written evidence from Moody's
to the effect that the engagement of the proposed
Remarketing Agent will not, by itself, result in a
reduction or withdrawal of its ratings then in effect on
the Bonds. The Remarketing Agent may at any time resign
and be discharged of the duties and obligations created by
this Indenture by giving at least thirty (30) days' notice
to the Pollution Control Corporation, the Trustee, the
Company, the Tender Agent and the Bank. The Remarketing
Agent may be removed at any time by an instrument, signed
by the Company, filed with the Remarketing Agent and with
the Trustee, the Tender Agent, the Pollution Control
Corporation and the Bank.
In the event of the resignation or removal of the
Remarketing Agent, the Remarketing Agent shall pay over,
assign and deliver any moneys and Bonds held by it in such
capacity to its successor or, if there be no successor, to
the Tender Agent.
In the event that the Company shall fail to engage a
Remarketing Agent hereunder, or in the event that the
Remarketing Agent shall resign or be removed, or be
dissolved, or if the property or affairs of the
Remarketing Agent shall be taken under the control of any
state or federal court or administrative body because of
bankruptcy or insolvency, or for any other reason, and the
Company shall not have appointed its successor as
Remarketing Agent, the Tender Agent, notwithstanding the
provisions of the first paragraph of this Section 13.05,
shall ipso facto be deemed to be the Remarketing Agent for
all purposes of this Indenture until the appointment by
the Company of the Remarketing Agent or successor
Remarketing Agent, as the case may be; provided, however,
that the Tender Agent, in its capacity as Remarketing
Agent, shall not be required to sell Bonds pursuant to
Section 13.06 hereof if the Tender Agent should be
prohibited by law from conducting such activities.
XIII.16. Remarketing of Bonds; Notice of Sales. (a)
On or after the date of the delivery of a notice of a
tender by any Owner of a Bond in accordance with Section
2.02(g) hereof and on the date on which Bonds shall be
required to be tendered pursuant to Section 2.02(h)
hereof, the Remarketing Agent shall offer for sale and use
its best efforts to sell such Bonds, any such sale to be
made on the date such Bonds are to be purchased pursuant
to such tender, at a price at least equal to the purchase
price thereof plus interest accrued thereon, if any, to
the date of sale; provided, however, that to the extent
that any moneys described in clause (i) or (ii) of Section
13.03(a) shall be on deposit with Tender Agent, any Bonds
delivered to the Tender Agent which may be purchased with
such moneys shall be so purchased and shall not be offered
for sale or sold by the Remarketing Agent; and provided,
further, that in no event shall Bonds be sold pursuant to
this Section 13.06 to the Company, any Affiliate of the
Company, the Pollution Control Corporation or any
"insider" of either thereof within the meaning of the
United States Bankruptcy Code, 11 U.S.C. Section 101 et
seq., if there shall be in effect a Security Arrangement
on which the Company shall not be the obligor.
(a) On the date on which any Bonds are to be sold by the
Remarketing Agent pursuant to subsection (a) of this
Section 13.06, the Remarketing Agent shall give immediate
telephonic or telegraphic notice no later than 11:00 a.m.
New York City time, promptly confirmed by a written
notice, to the Tender Agent specifying the principal
amounts of such Bonds, if any, so sold and the amount of
the remarketing proceeds in its possession. Such
remarketing proceeds shall be delivered in accordance with
Section 13.03(a)(iii).
XIII.17. Delivery of Bonds. (a) Bonds sold by the
Remarketing Agent pursuant to Section 13.06 hereof shall
be delivered to the purchasers thereof against payment
therefor.
(a) Bonds purchased with moneys described in clause (i)
or (ii) of Section 13.03(a) hereof shall be delivered to
the Trustee for cancellation and shall be canceled.
(b) Bonds purchased with moneys described in clause (iv)
of Section 13.03(a) hereof shall be:
(i) delivered to the Bank, if the Letter of Credit
provides for reinstatement in respect of drawings for the
purchase of Bonds delivered pursuant to Section 2.02
hereof and not remarketed by the delivery to the Bank of
such Bonds;
(ii) held by the Tender Agent for the account of the
Company subject to a security interest in favor of the
Bank, if the Letter of Credit provides for reinstatement
in respect of the drawings described in clause (i) of this
Section 13.07(c) by reimbursement to the Bank of the
amount of such drawings together with interest thereon; or
(iii) if a Security Arrangement other than a
Letter of Credit shall be in effect, delivered in
accordance with the directions of the obligor
thereon.
(c) Bonds purchased with moneys described in clause (v)
of Section 13.03(a) hereof shall, at the direction of the
Company, be (A) held by the Tender Agent for the account
of the Company, (B) delivered to the Trustee for
cancellation or (C) delivered to the Company; provided,
however, that any Bonds so purchased after the selection
thereof by the Trustee for redemption shall be delivered
to the Trustee for cancellation.
(d) Bonds delivered as provided in this Section 13.07
shall be registered in the manner directed by the
recipient thereof.
XIII.18. Security Arrangements. The Tender Agent
shall direct the Trustee to make drawings on the Letter of
Credit, or take action under any other Security
Arrangement, to the extent necessary to make timely
payments required to be made pursuant to, and in
accordance with Section 13.03(a) hereof, and, except as
provided in Section 13.10 hereof, the Trustee shall comply
with such directions and furnish such moneys to the Tender
Agent.
XIII.19. Delivery of Proceeds of Sale. The proceeds
of the sale by the Remarketing Agent of any Bonds
delivered to it by, or held by it for the account of, the
Tender Agent or the Company, or delivered to it by the
Bank or any other Owner of a Bond shall be turned over to
or upon the order of the Tender Agent, the Company, the
Bank or such other Owner, as the case may be. The excess,
if any, of the price at which a Bond shall be remarketed
over the purchase price thereof shall be turned over to
the Company.
XIII.2 0. No Purchases or Sales After Default.
Anything in this Indenture to the contrary
notwithstanding, if there shall have occurred and be
continuing an Event of Default described in clause (a),
(b) or (c) of the first paragraph of Section 9.01 hereof,
there shall be no purchases or sales of Bonds pursuant to
this Article XIII and the Trustee shall make no drawings
under the Letter of Credit, or take similar action under
any other Security Arrangement, for the purchase of Bonds
pursuant to Section 13.03(a) hereof.
XIV MISCELLANEOUS
XIV.11. Successors of the Pollution Control
Corporation. In the event of the dissolution of the
Pollution Control Corporation, all the covenants,
stipulations, promises and agreements in this Indenture
contained, by or on behalf of, or for the benefit of, the
Pollution Control Corporation, shall bind or inure to the
benefit of the successors of the Pollution Control
Corporation from time to time and any entity, officer,
board, commission, agency or instrumentality to whom or to
which any power or duty of the Pollution Control
Corporation shall be transferred.
XIV.12. Parties in Interest. Except as herein
otherwise specifically provided, nothing in this Indenture
expressed or implied is intended or shall be construed to
confer upon any person, firm or corporation other than the
Pollution Control Corporation, the Company, the Trustee
and the Bank and their successors and assigns and the
Owners of the Bonds any right, remedy or claim under or by
reason of this Indenture, this Indenture being intended to
be for the sole and exclusive benefit of the Pollution
Control Corporation, the Company, the Trustee and the Bank
and their successors and assigns and the Owners of the
Bonds.
XIV.13. Severability. In case any one or more of the
provisions of this Indenture or of the Loan Agreement or
of the Bonds shall, for any reason, be held to be illegal
or invalid, such illegality or invalidity shall not affect
any other provisions of this Indenture or of the Loan
Agreement or of such Bonds, and this Indenture and the
Loan Agreement and such Bonds shall be construed and
enforced as if such illegal or invalid provisions had not
been contained herein or therein.
XIV.14. No Personal Liability of Pollution Control
Corporation Officials. No covenant or agreement contained
in the Bonds or in this Indenture shall be deemed to be
the covenant or agreement of any director, official,
officer, agent, or employee of the Pollution Control
Corporation in his individual capacity, and neither the
members of the Board of Directors of the Pollution Control
Corporation nor any official executing the Bonds shall be
liable personally on the Bonds or be subject to any
personal liability or accountability by reason of the
issuance thereof.
XIV.15. Bonds Owned by the Pollution Control
Corporation or the Company. In determining whether Owners
of the requisite aggregate principal amount of the Bonds
have concurred in any direction, consent or waiver under
this Indenture, Bonds which are owned by the Pollution
Control Corporation or the Company or by any person
directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company
(unless the Pollution Control Corporation, the Company or
such person owns all Bonds which are then Outstanding,
determined without regard to this Section 14.05) shall be
disregarded and deemed not to be Outstanding for the
purpose of any such determination, except that, for the
purpose of determining whether the Trustee shall be
protected in relying on any such direction, consent or
waiver, only Bonds which the Trustee knows are so owned
shall be so disregarded. Upon the request of the Trustee,
the Company and the Pollution Control Corporation shall
furnish to the Trustee a certificate identifying all
Bonds, if any, actually known to either of them to be
owned or held by or for the account of any of the
above-described persons, and the Trustee shall be entitled
to rely on such certificate as conclusive evidence of the
facts set forth therein and that all other Bonds are
Outstanding for the purposes of such determination. Bonds
so owned which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act
with respect to such Bonds and that the pledgee is not the
Pollution Control Corporation or the Company or any person
directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company;
provided, however, that Bonds delivered to the Bank, or
held by the Tender Agent, pursuant to Section 14.07 hereof
shall be regarded as Outstanding for purposes of this
Section 14.05. In case of a dispute as to such right, any
decision by the Trustee taken upon the advice of counsel
shall be full protection to the Trustee.
XIV.16. Counterparts. This Indenture may be executed
in any number of counterparts, each of which, when so
executed and delivered, shall be an original; but such
counterparts shall together constitute but one and the
same Indenture.
XIV.17. Governing Law. The laws of the State of
Arizona shall govern the construction and enforcement of
this Indenture and of all Bonds, except that the laws of
the State of New York shall govern the construction and
enforcement of the rights and duties of the Trustee
hereunder and the construction of Section 14.09 hereof and
the computation of any period of grace provided herein.
XIV.18. Notices. Except as otherwise provided in
this Indenture, all notices, certificates, requests
requisitions or other communications by the Pollution
Control Corporation, the Company, the Trustee, the
Remarketing Agent, the Paying Agent, any Co-Paying Agent,
the Registrar, the Tender Agent or the Bank pursuant to
this Indenture shall be in writing and shall be
sufficiently given and shall be deemed given when mailed
by registered mail, postage prepaid, addressed as follows:
If to the Pollution Control Corporation, c/o Mangum, Wall,
Stoops & Warden, 222 East Birch Avenue, Flagstaff, Arizona
86001, Attention: President; if to the Company, at 220
West Sixth Street, Tucson, Arizona 85702, Attention:
Treasurer; if to the Trustee, at 100 Wall Street, Suite
1600, New York, New York 10005, Attention: Corporate Trust
Administration; if to the Paying Agent, any Co-Paying
Agent, the Registrar, the Tender Agent or the Remarketing
Agent, at the address designated in the acceptance of
appointment or engagement; and if to the obligor (other
than the Company) on any Security Arrangement, to the
address designated therein. Any of the foregoing may, by
notice given hereunder to each of the others, designate
any further or different addresses to which subsequent
notices, certificates, requests or other communications
shall be sent hereunder.
XIV.19. Holidays. If the date for making any payment
or the last date for performance of any act or the
exercising of any right, as provided in this Indenture,
shall be a Saturday, Sunday or a public holiday in the
city in which is located the Principal Office of the
Trustee, such payment may be made or act performed or
right exercised on the next succeeding Business Day, with
the same force and effect as if done on the nominal date
provided in this Indenture, and no interest shall accrue
for the period after such nominal date. If the last day
of any period of grace, as provided in this Indenture,
shall be a Saturday, Sunday or a public holiday in the
city in which is located the Principal Office of the
Trustee, the last day of such period of grace shall be
deemed to be the next succeeding Business Day.
XIV.2 0. Statutory Notice Regarding Cancellation of
Contracts. As required by the provisions of Section 38-
511, Arizona Revised Statutes, as amended, notice is
hereby given that political subdivisions of the State of
Arizona or any of their departments or agencies may,
within three (3) years of its execution, cancel any
contract, without penalty or further obligation, made by
the political subdivisions or any of their departments or
agencies on or after September 30, 1988, if any person
significantly involved in initiating, negotiating,
securing, drafting or creating the contract on behalf of
the political subdivisions or any of their departments or
agencies is, at any time while the contract or any
extension of the contact is in effect, an employee or
agent of any other party to the contract in any capacity
or a consultant to any other party of the contract with
respect to the subject matter of the contract.
The Trustee covenants and agrees not to employ as an
employee, agent or, with respect to the subject matter of
this Indenture, a consultant, any person actually known by
the Trustee to be significantly involved in initiating,
negotiating, securing, drafting or creating such Indenture
on behalf of the Pollution Control Corporation within
three (3) years from the execution hereof, unless a waiver
is provided by the Pollution Control Corporation.
XIV.21. Notice of Change. The Trustee shall give
notice to Moody's if the Bonds are then rated by Moody's,
at 99 Church Street, New York, New York 10007, Attention:
Structured Transaction Group, 4th Floor, and to S&P, if
the Bonds are then rated by S&P, at 25 Broadway, New York,
New York 10004, Attention: LOC Surveillance Group, of any
of the following events:
(a) a change in the Trustee;
(b) a change in the Remarketing Agent;
(c) a change in the Tender Agent;
(d) a change in the Paying Agent;
(e) the expiration, cancellation, renewal or
substitution of the Security Arrangement;
(f) any proposed amendment or any proposed supplement
to the Indenture, the Loan Agreement or the Security
Arrangement;
(g) payment or provision therefor of all the Bonds;
and
(h) any conversion of the Rate Period applicable to
the Bonds or any change in the length of the Term Rate
Period.
The Trustee shall have no liability or obligation to
Moody's or S&P or to any other person if it shall fail to
give such notice.
Notwithstanding the foregoing, it is expressly
understood and agreed that failure to provide any such
notice to either S&P or Moody's or to both such rating
agencies or any defect therein will not affect the
validity of any action with respect to which notice is to
be given or the effectiveness of any such action.
IN WITNESS WHEREOF, Coconino County, Arizona Pollution
Control Corporation has caused this Indenture to be
executed by its President and First Trust of New York,
National Association has caused this Indenture to be
executed in its behalf by one of its Trust Officers and
its corporate seal to be impressed hereon, all as of the
day and year first above written.
COCONINO COUNTY, ARIZONA
POLLUTION CONTROL CORPORATION
Attest:
By:
President
Secretary
FIRST TRUST OF NEW YORK, NATIONAL
ASSOCIATION
Attest:
By:
Trust Officer
Assistant Secretary
EXHIBIT A
(FORM OF BOND)
No.
Coconino County, Arizona
Pollution Control Corporation
Pollution Control Refunding Revenue Bond,
1996 Series B
(Tucson Electric Power Company Project)
Maturity Date: Dated:
Cusip:
Registered Owner:
Principal Amount:
Dollars
Coconino County, Arizona Pollution Control Corporation,
a political subdivision of the State of Arizona (the
"Pollution Control Corporation"), for value received,
hereby promises to pay (but only out of the Receipts and
Revenues of the Pollution Control Corporation from the
Loan Agreement, as hereinafter defined, and other moneys
pledged therefor) to the Registered Owner identified above
or registered assigns, on the Maturity Date set forth
above, upon the presentation and surrender hereof, the
Principal Amount set forth above and to pay (but only out
of the Receipts and Revenues of the Pollution Control
Corporation from the Loan Agreement and other moneys
pledged therefor), interest on said Principal Amount until
said Principal Amount has become due and payable, from the
Interest Payment Date (as hereinafter defined) to which
interest on this Bond shall have been paid in full which
is, or immediately precedes, the date of authentication of
this Bond or, if no interest shall have been paid on the
Bonds, from the date of original issuance thereof.
Interest shall be paid on each Interest Payment Date (as
hereinafter defined) at the rates determined as set forth
in the Indenture and described herein. Interest on this
Bond will be paid at the lesser of (a) a Daily Rate, a
Weekly Rate, a Monthly Rate, a Flexible Rate, a Term Rate
or the Fixed Rate (each as defined in the Indenture) as
selected in accordance with the Indenture and (b) 12% per
annum. Interest will be initially payable at a Weekly
Rate. While there exists an Event of Default under the
Indenture, the interest rate on the Bonds will be the rate
on the Bonds on the day before the Event of Default
occurred, except that if interest on the Bonds was then
payable at Flexible Rates, the default rate will be the
highest Flexible Rate then in effect for any Bond.
When interest is payable at a Variable Rate other than a
Term Rate or a Flexible Rate, interest will be computed on
the basis of the actual number of days elapsed over a year
of 365 days (366 in leap years). When payable at a Term
Rate or the Fixed Rate, interest will be computed on the
basis of a 360-day year of twelve 30-day months. For
purposes of any such calculation of interest payable with
respect to the final interest payment during a Term Rate
Period immediately followed by a Flexible, Daily, Weekly
or Monthly Rate Period, the amount of interest which shall
be payable with respect to such final interest period
shall be determined as if the Interest Payment Date for
such period were the first day of the sixth month
following the preceding Interest Payment Date,
notwithstanding any extension of such month to the first
Business Day (as hereinafter defined) of such month by
reason of the conversion to such Flexible, Daily, Weekly
or Monthly Rate Period.
As used in this Bond, "Interest Payment Date" means
(a) when this Bond bears interest at the Daily or Monthly
Rate, the first Business Day of each calendar month to
which interest at such rate has accrued, (b) when this
Bond bears interest at a Weekly Rate, the first Wednesday
of each calendar month to which interest at such rate has
accrued, (c) when this Bond bears interest at a Term Rate
or the Fixed Rate, the first day of the sixth calendar
month following the month in which the Term or Fixed Rate
Conversion Date (as defined in the Indenture) occurs and
the first day of each sixth calendar month thereafter to
which interest at such rate has accrued, except that the
last Interest Payment Date for any Term Rate Period which
is followed by a conversion to any type of Rate Period (as
defined below) (except a Term or Fixed Rate Period) shall
be the first Business Day of the sixth month following the
preceding Interest Payment Date, (d) when this Bond bears
interest at a Flexible Rate, the day after the last day of
each Flexible Rate Period applicable thereto, and (e)
May 1, 2031.
The regular record date ("Record Date") for any Interest
Payment Date shall be the close of business on the
(a) Business Day immediately preceding an Interest Payment
Date, in the case of Bonds bearing interest at Flexible,
Daily, Weekly and Monthly Rates, and (b) fifteenth
(15th) day (whether or not a Business Day) of the calendar
month immediately preceding the Interest Payment Date, in
the case of Bonds bearing interest at a Term Rate or the
Fixed Rate.
As used in this bond, "Rate Period" means the period
during which a particular rate of interest determined for
the Bonds as hereinafter provided is to remain in effect
until a subsequently determined rate of interest pursuant
to Article II of the Indenture becomes effective.
Prior to any conversion of the interest rate on the
Bonds to the Fixed Rate, the Bonds may bear interest at
Flexible Rates or a Variable Rate effective for "Flexible
Rate Periods" in the case of Flexible Rates and "Variable
Rate Periods" in the case of Variable Rates selected by
the Company from time to time. The rate of interest to be
borne by the Bonds during any particular Rate Period will
be determined by the Remarketing Agent. The Bonds may
bear interest as follows:
Variable Rates
The Bonds may bear interest at a Variable Rate computed
on a Daily, Weekly, Monthly or Term basis in accordance
with the applicable provisions of the Indenture.
Daily Rate.
While the Bonds bear interest at a Daily Rate, the
interest rate established for the Bonds will be effective
from day to day until changed by the Remarketing Agent.
Weekly Rate.
While the Bonds bear interest at a Weekly Rate, the rate
of interest on the Bonds will be determined on the Tuesday
or next Business Day immediately preceding the Wednesday
which is the commencement date of the Weekly Rate Period
by the Remarketing Agent to be effective for a seven-day
period commencing on such Wednesday and ending on the
following Tuesday.
Monthly Rate.
While the Bonds bear interest at a Monthly Rate, the
rate of interest will be determined monthly by the
Remarketing Agent on the Business Day immediately
preceding the commencement date of the Monthly Rate Period
to which it relates to be in effect for the related
Monthly Rate Period.
Term Rate.
While the Bonds bear interest at a Term Rate, the
interest rate will be determined by the Remarketing Agent
on the Business Day immediately preceding the commencement
date of the Term Rate Period to which it relates, such
interest rate to remain in effect for the related Term
Rate Period.
Flexible Rates
While the Bonds bear interest at Flexible Rates, the
interest rate for each particular Bond will be determined
by the Remarketing Agent and will remain in effect for the
duration (not exceeding 270 days) of the Flexible Rate
Period selected for that Bond by the Remarketing Agent.
While the Bonds bear interest at Flexible Rates, Bonds may
have successive Flexible Rate Periods of any duration up
to 270 days each and any Bond may bear interest at a rate
and for a period different from any other Bond.
Fixed Rate
If the Bonds are to bear interest at the Fixed Rate, the
interest rate will be determined by the Remarketing Agent
and will remain in effect until the final maturity of the
Bonds.
The duration and beginning and ending dates of any Rate
Period may vary in the event of conversions between Rate
Periods. The type of Rate Period selected by the Company
will remain in effect until changed by the Company in
accordance with the Indenture.
Bonds which bear interest at Flexible Rates will be
issued in the determination of $100,000 and integral
multiples of $5,000 in excess thereof. Bonds which bear
interest at a Daily, Weekly or Monthly Rate will be issued
in denominations of $100,000 and integral multiples
thereof. Bonds which bear interest at a Term or Fixed
Rate will be issued in the denomination of $5,000 and
integral multiples thereof.
OPTIONAL TENDERS
While this Bond bears interest at a Variable Rate the
Registered Owner of this Bond has the right to tender this
Bond for purchase at the principal amount hereof plus
accrued and unpaid interest, if any, as follows: (i)
during a Daily Rate Period on any Business Day prior to a
conversion from a Daily Rate Period to a different Rate
Period upon telephone notice to the Tender Agent not later
than 10:45 am., New York City time, on the purchase date,
(ii) during a Weekly Rate Period on any Business Day prior
to the conversion from a Weekly Rate Period to a different
Rate Period upon written or telephonic notice (in the case
of telephonic notice promptly confirmed in writing by the
Registered Owner) to the Tender Agent not later than 5:00
p.m., New York City time, on a Business Day which is not
fewer than seven days prior to the purchase date, (iii)
during a Monthly Rate Period on any Interest Payment Date
upon written notice to the Tender Agent not later than
5:00 p.m., New York City time, on a Business Day which is
not fewer than seven days prior to the purchase date, (iv)
during a Term Rate Period on the commencement date of the
succeeding Rate Period upon written notice to the Tender
Agent not later than 5:00 p.m., New York City time, on a
Business Day which is not fewer than fifteen days prior to
the purchase date, all as more particularly provided in
the Indenture.
The Registered Owner of any Bond which such Registered
Owner has elected to tender (as described in the
Indenture) and which is not tendered on the tender date,
but for which there has been irrevocably deposited with
the Tender Agent an amount sufficient to pay the purchase
price thereof, shall not be entitled to any payment,
including the payment of interest on such Bond after the
tender date, other than the purchase price for such Bond,
and such Bond shall no longer be outstanding and entitled
to the benefits of the Indenture, except for the payment
of the purchase price of such Bond from moneys held by the
Tender Agent for such payment. On the tender date, the
Tender Agent shall authenticate and deliver substitute
Bonds in lieu of such untendered Bonds.
MANDATORY TENDERS
This Bond shall be subject to mandatory tender for
purchase (i) while this Bond bears interest at a Flexible
Rate, on the day following the last day of each Flexible
Rate Period applicable to this Bond at a purchase price
equal to 100% of the principal amount hereof, provided,
however, that this Bond shall not be subject to such
mandatory tender for purchase if, prior to 3:00 p.m. on
the Business Day next preceding the day such mandatory
tender would otherwise occur, the Owner of this Bond by
notice delivered in writing or by telephone (promptly
confirmed in writing) to the Remarketing Agent shall have
elected to retain this Bond for an additional Flexible
Rate Period and such Owner shall have agreed with the
Remarketing Agent as to the duration of the additional
Flexible Rate Period and the Flexible Rate to be effective
during such period, (ii) on the Conversion Date (as
defined in the Indenture) on which this Bond is converted
to the Fixed Rate or from one Rate Period to another type
of Rate Period (other than conversions between Daily and
Weekly Rate Periods) or from any Term Rate Period to a
Term Rate Period of a different duration, at a purchase
price equal to 100% of the principal amount thereof,
(iii) at the price that would be the then applicable
redemption price set forth in the redemption provisions
lettered (a) or (c) below if such Bond were redeemed on
the date of the tender, on the first day of the month in
which the expiration or termination of the term of any
Security Arrangement (as hereinafter defined) shall occur;
provided, however, that there shall be no such mandatory
tender if the Company shall have delivered to the Tender
Agent letters or certificates to the effect specified in
Section 6.07(c) of the Loan Agreement, and (iv) on the
first Business Day on which the Trustee may make a drawing
or drawings on a Security Arrangement on which the Company
shall not be the obligor and on which the proceeds of such
drawing or drawings shall be immediately available, but
not prior to such date, on or after the receipt by the
Trustee of notice that either (a) following a drawing on a
Security Arrangement on which the Company shall not be the
obligor to pay accrued interest, or the portion of
purchase price equal to accrued interest, on the Bonds,
that the amount available to be drawn on such Security
Arrangement will not be reinstated to the amount specified
in the Indenture, or (b) an "Event of Default" under the
Reimbursement Agreement has occurred and is continuing,
unless in either such case, the notice received by the
Trustee also directs it to provide notice to the Pollution
Control Corporation of its obligation to redeem the Bonds
pursuant to the Indenture.
If an Owner of a Bond is required to tender its Bond as
set forth in the preceding paragraph such Bond will be
deemed to be purchased at the price set forth above on the
date that the Bond is required to be tendered,
notwithstanding the failure of the Owner thereof to
deliver the Bond to the Tender Agent. If a Bond is so
deemed to be purchased, the Owner thereof at the time of
such purchase shall not be entitled to receive any
interest accruing on such Bond on and after the date it is
deemed to be purchased, and shall not be entitled to any
benefits under the Indenture except for the right to
receive the purchase price for such Bond.
WRITTEN NOTICE OF CHANGE IN TYPE OF RATE PERIOD
While this Bond bears interest at a Flexible Rate or at
a Variable Rate, the Tender Agent shall give notice to the
Owners of all Bonds of the conversion from one type of
Rate Period to another type of Rate Period (or to a Term
Rate Period from a Term Rate Period of a different
duration) at the times described in the Indenture. If the
Company does not elect in a timely fashion to convert to a
new type of Rate Period for the Bonds (or to a different
Term Rate Period for the Bonds) or any condition to such
conversion under the Indenture is not satisfied, the type
of Rate Period then in effect will continue until changed
by timely notice and, in the case of a Term Rate Period,
the duration of the Term Rate Period shall be one year.
CONVERSION TO THE FIXED RATE
The Indenture provides that, subject to certain
conditions, the Company has the right to convert the
interest rate on this Bond to the Fixed Rate to maturity.
This Bond shall be subject to mandatory tender for
purchase on the Fixed Rate Conversion Date. After the
Fixed Rate Conversion Date, the Owner of this Bond shall
have no right to tender this Bond for purchase.
The principle of and premium, if any, on this Bond are
payable at the principal office of First Trust of New
York, National Association, as Paying Agent, or at the
principal office of any co-paying agent appointed in
accordance with the Indenture, at the option of the
registered Owner hereof. Interest on this Bond is payable
by check drawn upon the Paying Agent and mailed to the
registered address of the registered owner of this bond as
of the close of business on the Record Date. Except in
respect of a Term Rate Period and the Fixed Rate Period,
owners of not less than $1,000,000 aggregate principal
amount of Bonds may request that interest on the Bonds
and, after presentation and surrender of such Bonds, the
principal thereof be paid by wire transfer to an account
maintained within the continental United States specified
by the owner thereof. Payment of the principal of and
premium, if any, and interest on, and purchase price of,
this Bond shall be in any coin or currency of the United
States of America as, at the respective times of payment,
shall be legal tender for the payment of public and
private debts.
This Bond is one of the duly authorized Pollution
Control Refunding Revenue Bonds, 1996 Series B (Tucson
Electric Power Company Project) of the Pollution Control
Corporation, aggregating Fourteen Million Seven Hundred
Thousand Dollars ($14,700,000) in principal amount (the
"Bonds"), issued under and pursuant to the Constitution
and laws of the State of Arizona, particularly Title 35,
Chapter 6, Arizona Revised Statutes, as amended (the
"Act"), and the Indenture of Trust, dated as of May 1,
1996 (the "Indenture"), between the Pollution Control
Corporation and First Trust of New York, National
Association, as trustee (the "Trustee"), for the purpose
of refinancing, by payment or redemption of the Pollution
Control Corporation's Pollution Control Revenue Bonds,
1975 Series A (Tucson Gas and Electric Company Project),
or provision therefor, the cost of certain pollution
control facilities (the "Facilities") at the Navajo
Generating Station (the "Plant"). Pursuant to the Loan
Agreement, dated as of May 1, 1996 (the "Loan Agreement"),
between the Pollution Control Corporation and Tucson
Electric Power Company, a corporation organized and
existing under the laws of the State of Arizona (the
"Company"), the proceeds of the Bonds, other than accrued
interest, if any, paid by the initial purchasers thereof,
will be loaned from time to time to the Company.
Neither the County of Coconino, Arizona nor the Statute
of Arizona shall in any event be liable for the payment of
the principal of or premium, if any, or interest on the
Bonds, and neither the Bonds, nor the premium, if any, or
the interest thereon, shall be construed to constitute an
indebtedness of the County of Coconino, Arizona or the
State of Arizona within the meaning of any constitutional
or statutory provisions whatsoever. The Bonds and the
premium, if any, and the interest thereon are limited
obligations of the Pollution Control Corporation payable
solely from the Receipts and Revenues of the Pollution
Control Corporation from the Loan Agreement and other
moneys pledged therefor under the Indenture. The
Pollution Control Corporation shall not be obligated to
pay the purchase price of Bonds from any source.
As used herein:
(a) the term "Business Day" means a day of the year
on which banks located in The City of New York, New
York, and in the city in which the principal office of
the Trustee is located, and in the city in which the
office of the Bank (as hereinafter defined) at which
drawings or other demands for payment on a Security
Arrangement (as hereinafter defined) on which the
Company shall not be the obligor, if any, are made, are
not required or authorized to remain closed and on
which The New York Stock Exchange is not closed; and
(b) the term "Security Arrangement" means any letter
of credit, first mortgage bonds of the Company, credit
facility, insurance policy or other credit support
agreement or mechanism arranged by the Company to
evidence its obligations under the Loan Agreement or
for the purpose of securing the Bonds, but shall not
include any facility, agreement or mechanism, such as a
liquidity facility or line of credit, that is not an
irrevocable obligation to pay amounts in respect of the
obligations of the Company under the Loan Agreement.
The Bonds are equally and ratably secured, to the extent
provided in the Indenture, by the pledge thereunder of the
"Receipts and Revenues of the Pollution Control
Corporation from the Loan Agreement", which term is used
herein as defined in the Indenture and which as therein
defined means all moneys paid or payable to the Trustee
for the account of the Pollution Control Corporation by
the Company in respect of the loan payments, including all
moneys drawn by the Trustee under any Security Arrangement
in satisfaction of the Company's obligation to make the
loan payments, and all receipts of the Trustee which,
under the provisions of the Indenture, reduce the amounts
of such payments. The Pollution Control Corporation has
also pledged and assigned to the Trustee as security for
the Bonds all other rights and interests of the Pollution
Control Corporation under the Loan Agreement (other than
its rights to indemnification and his administrative
expenses and certain other rights).
The transfer of this Bond shall be registered upon the
registration books kept at the principal office of
_________________________________, as Registrar, at the
written request of the registered owner hereof or his
attorney duly authorized in writing, upon surrender of
this Bond at said office, together with a written
instrument of transfer satisfactory to the Registrar duly
executed by the registered owner or his duly authorized
attorney.
The Company may, but is not obligated to, provide one or
more Security Arrangements in order to secure, evidence or
otherwise further its obligations under the Loan
Agreement. The Company has authorized and directed the
Trustee to take action under any Security Arrangement in
accordance with the terms thereof and of the Indenture.
In the manner and with the effect provided in the
Indenture, each of the Bonds may be redeemed prior to
maturity, as follows:
(a) When interest on the Bonds is payable at
Flexible Rates or a Variable Rate other than a Term
Rate, the Bonds shall be subject to redemption by the
Pollution Control Corporation, at the direction of the
Company, in whole at any time or in part from time to
time, at the principal amount thereof plus accrued
interest to the redemption date.
(b) When interest is payable on the Bonds at a Term
Rate or the Fixed Rate, the Bonds shall be subject to
redemption by the Pollution Control Corporation, at the
direction of the Company, in whole at any time at the
principal amount thereof plus accrued interest to the
redemption date, if:
(i) the Company shall have determined that the
continued operation of the Plant is impracticable,
uneconomical or undesirable for any reason;
(ii) the Company shall have determined that the
continued operation of the Facilities is
impracticable, uneconomical or undesirable due to (A)
the imposition of taxes, other than ad valorem taxes
currently levied upon privately owned property used
for the same general purpose as the Facilities, or
other liabilities or burdens with respect to the
Facilities or operation thereof: (B) changes in
technology, in environmental standards or legal
requirements or in the economic availability of
materials, supplies, equipment or labor or (C)
destruction of or damage to all or part of the
Facilities;
(iii) all or substantially all of the Facilities
or the Plant shall have been condemned or taken by
eminent domain; or
(iv) the operation of the facilities or the
Plant shall have been enjoined or shall have
otherwise been prohibited by, or shall conflict with,
any order, decree, rule or regulation of any court or
of any federal, state or local regulatory body,
administrative agency or other governmental body.
(c) When interest on the Bonds is payable at a Term
Rate for a Term Rate Period of five years or more or the
Fixed Rate, the Bonds shall be subject to redemption by
the Pollution Control Corporation, at the direction of the
Company, on any day in whole at any time or in part from
time to time, at the applicable redemption price shown
below, in each case plus accrued interest to the
redemption date, as follows:
Length of Term
Rate Period; Years
Remaining Commencement of
Until Final Redemption Period Redemption Price
Maturity
During Fixed Rate
Period
More than 12 years Tenth anniversary 102%, declining by
of commencement 1% on each
of Term Rate succeeding
Period or Fixed anniversary of the
Rate Period first day of the
redemption period
until reaching
100% and
thereafter at 100%
More than 8, but Seventh 101 1/2%,
not more than 12 anniversary of declining by 3/4%
years commencement of on each succeeding
Term Rate Period anniversary of the
or Fixed Rate first day of the
Period redemption period
until reaching
100% and
thereafter at 100%
More than 5, but Fifth anniversary 101%, declining by
not more than 8 of commencement 1/2% on each
years of Term Rate succeeding
Period or Fixed anniversary of the
Rate Period first day of the
first day of the
redemption period
until reaching
100% and
thereafter at 100%
Five years or less Bonds not 100%
callable until
commencement of
next Rate Period,
if any
Anything herein or in the Indenture to the contrary
notwithstanding, in the event that the Company shall
consolidate with, merge with or into, or sell or otherwise
transfer all or substantially all of its assets to,
another corporation in accordance with Section 6.01 of the
Loan Agreement, the Bonds shall be subject to redemption
by the Pollution Control Corporation, at the direction of
the Company, in whole, at any time prior to the first date
on which the Bonds are redeemable as herein before
provided, at the redemption price which would be
applicable on such date plus accrued interest to the
redemption date.
(d) The Bonds shall be subject to mandatory redemption
by the Pollution Control Corporation, at the principal
amount thereof plus accrued interest to the redemption
date, on the 180th day (or such earlier date as may be
designated by the Company) after a final determination by
a court of competent jurisdiction or an administrative
agency, to the effect that, as a result of a failure by
the Company to perform or observe any covenant, agreement
or representation contained in the Loan Agreement, the
interest payable on the Bonds is included for Federal
income tax purposes in the gross income of the owners
thereof, other than any owner of a Bond who is a
"substantial user" of the Facilities or a "related person"
within the meaning of Section 103(b)(13) of the Internal
Revenue Code of 1954, as amended, as applicable. No
determination by any court or administrative agency shall
be considered final for the purposes of this paragraph (d)
unless the Company shall have been given timely notice of
the proceeding which resulted in such determination and an
opportunity to participate in such proceeding, either
directly or through an owner of a Bond, and until the
conclusion of any appellate review sought by any party to
such proceeding or the expiration of the time for seeking
such review. The Bonds shall be redeemed either in whole
or in part in such principal amount that the interest
payable on the Bonds remaining outstanding after such
redemption would not be included in the gross income of
any owner thereof, other than an owner of a Bond who is a
"substantial user" of the Facilities or a "related person"
within the meaning of Section 103(b)(13) of the 1954 Code.
(e) The Bonds shall be subject to mandatory redemption
by the Pollution Control Corporation, at the principal
amount thereof plus accrued interest to the redemption
date, upon the occurrence of either of the following
events:
(i) receipt by the Trustee, following a drawing on a
Security Arrangement on which the Company shall not be
the obligor to pay accrued interest, or the portion of
purchase price equal to accrued interest, on the Bonds,
of notice from the Bank that the amount available to be
drawn on such Security Arrangement will not be
reinstated (in respect of interest or portion of
purchase price equal to accrued interest) in the amount
of such drawing and directing the Trustee to provide
notice to the Pollution Control Corporation of its
resulting obligation to redeem the Bonds; or
(ii) receipt by the Trustee of notice from the Bank
stating that an Event of Default under the
Reimbursement Agreement (or other agreement between the
Company and the Bank pursuant to which the Bank issued
and delivered to the Trustee a Security Arrangement)
has occurred and is continuing and directing the
Trustee to provide notice to the Pollution Control
Corporation of its resulting obligation to redeem the
Bonds.
Upon the occurrence of either of the events described in
the immediately preceding paragraph, the Pollution Control
Corporation shall be obligated to redeem the Bonds on the
first Business Day after the occurrence of such event on
which the Trustee may make a drawing or drawings on a
Security Arrangement on which the Company shall not be the
obligor and on which the proceeds of such drawing or
drawings shall be available, but shall not redeem the
Bonds prior to such date.
The provisions of clause (e) of the second preceding
paragraph are subject to the condition that if either of
the events described in clause (i) or (ii) of the second
preceding paragraph shall have occurred and if the Trustee
shall thereafter have received notice from the Bank (a)
that the notice which requires a mandatory redemption
pursuant to the second preceding paragraph has been
withdrawn and (b) that the amounts available to be drawn
on the Security Arrangement to pay (i) the principal of
the Bonds or the portion of purchase price equal to
principal and (ii) interest on the Bonds and the portion
of purchase price equal to accrued interest have been
reinstated then, in every such case, the event giving rise
to such mandatory redemption shall be deemed to be waived
and all proceedings for such redemption shall be rescinded
and annulled.
If less than all of the Bonds at the time outstanding
are to be called for redemption, the particular Bonds or
portions of Bonds to be redeemed shall be selected by the
Trustee, in such manner as the Trustee in its discretion
may deem proper, in the principal amounts designated to
the Trustee by the Company or otherwise as required by the
Indenture; provided, however, that, if the Company shall
have offered to purchase all Bonds then outstanding and
less than all such Bonds have been tendered to the Company
for such purchase, the Trustee, at the direction of the
Company, shall select for redemption all such Bonds which
shall not have been so tendered.
In the event any of the Bonds are called for redemption,
the Trustee shall give notice, in the name of the
Pollution Control Corporation, of the redemption of such
Bonds. Such notice shall be given by mailing a copy of
the redemption notice by first-class mail at least thirty
(30) days prior (except in the case of a redemption
pursuant to clause (e) of the fourth preceding paragraph)
to the date fixed for redemption to the owners of the
Bonds to be redeemed at the addresses shown on the
registration books; provided, however, that failure duly
to give such notice by mailing, or any defect therein,
shall not affect the validity of any proceedings for the
redemption of the Bonds as to which there shall be no such
failure or defect.
With respect to any notice of redemption of Bonds in
accordance with the redemption provisions lettered (a),
(b) or (c) above, unless, upon the giving of such notice,
such Bonds shall be deemed to have been paid within the
meaning of the Indenture, such notice shall state that
such redemption, shall be conditional upon the receipt, by
the Trustee on or prior to the opening of business on the
date fixed for such redemption of moneys sufficient to pay
the principal of and premium, if any, and interest on such
Bonds to be redeemed, and that if such moneys shall not
have been so received said notice shall be of no force and
effect and the Pollution Control Corporation shall not be
required to redeem such Bonds. In the event that such
notice of redemption contains such a condition and such
moneys are not so received, the redemption shall not be
made and the Trustee shall within a reasonable time
thereafter give notice, in the manner in which the notice
of redemption was given, that such moneys were not so
received.
If a notice of redemption shall be unconditional, or if
the conditions of a conditional notice of redemption shall
have been satisfied, then upon presentation and surrender
of Bonds so called for redemption at the place or places
of payment, such Bonds shall be redeemed.
Any Bonds and portions of Bonds which have been duly
selected for redemption or deemed selected for redemption
and which are deemed to be paid in accordance with the
Indenture shall cease to bear interest on the specified
redemption date and shall thereafter cease to be entitled
to any lien, benefit or security under the Indenture.
The owner of this Bond shall have no right to enforce
the provisions of the Indenture, or to institute action to
enforce the covenants therein, or to take any action with
respect to any default under the Indenture, or to
institute, appear in or defend any suit or other
proceeding with respect thereto, except as provided in the
Indenture.
With certain exceptions as provided therein, the
Indenture and the Loan Agreement may be modified or
amended only with the consent of the owners of a majority
in aggregate principal amount of all Bonds outstanding
under the Indenture which would be adversely affected
thereby.
Reference is hereby made to the Indenture and the Loan
Agreement, copies of which are on file with the Trustee,
for the provisions, among others, with respect to the
nature and extent of the rights, duties and obligations of
the Pollution Control Corporation, the Company, the
Trustee, the Remarketing Agent, the Tender Agent, the Bank
and the owners of the Bonds. The owner of this Bond, by
the acceptance hereof, is deemed to have agreed and
consented to the terms and provisions of the Indenture and
the Loan Agreement.
As provided in the Indenture and subject to certain
limitations therein set forth, this Bond or any portion of
the principal amount hereof will be deemed to have been
paid within the meaning and with the effect expressed in
the Indenture, and the entire indebtedness of the
Pollution Control Corporation in respect thereof shall be
satisfied and discharged, if there has been irrevocably
deposited with the Trustee, in trust, money in an amount
which will be sufficient and/or Government Obligations (as
defined in the Indenture), the principal of and interest
on which, when due, without regard to any reinvestment
thereof, will provide moneys which, together with moneys
deposited with or held by the Trustee, will be sufficient,
to pay when due the principal of and premium, if any, and
interest on this Bond or such portion of the principal
amount hereof when due.
The Pollution Control Corporation, the Trustee, the
Registrar, the Tender Agent, the Remarketing Agent, the
Paying Agent, any authenticating agent and any co-paying
agent may deem and treat the person in whose name this
Bond is registered as the absolute owner hereof for all
purposes, whether or not this Bond is overdue, and neither
the Pollution Control Corporation, the Trustee, the Tender
Agent, the Remarketing Agent, the Paying Agent nor any
co-paying agent shall be affected by any notice to the
contrary.
It is hereby certified, recited and declared that all
acts, conditions and things required by the Constitution
and laws of the State of Arizona to exist, to have
happened and to have been performed, precedent to and in
the execution and delivery of the Indenture and the
issuance of this Bond, do exist, have happened and have
been performed in regular and due form as required by law.
No covenant or agreement contained in this Bond or the
Indenture shall be deemed to be a covenant or agreement of
any official, officer, agent or employee of the Pollution
Control Corporation in his individual capacity, and
neither the members of the Board of Directors of the
Pollution Control Corporation, nor any official executing
this Bond, shall be liable personally on this Bond or be
subject to any personal liability or accountability by
reason of the issuance or sale of this Bond.
This Bond shall not be entitled to any right or benefit
under the Indenture, or be valid or become obligatory for
any purpose, until this Bond shall have been authenticated
by the execution by the Trustee, or its successor as
Trustee, or an authenticating agent thereof, of the
certificate of authentication inscribed hereon.
IN WITNESS WHEREOF, Coconino County, Arizona Pollution
Control Corporation has caused this Bond to be executed
with the manual or facsimile signature of its President or
Vice President and its official seal or a facsimile
thereof to be impressed or imprinted hereon and attested
with the manual or facsimile signature of its Secretary or
Assistant Secretary.
COCONINO COUNTY, ARIZONA
POLLUTION CONTROL
CORPORATION
By.......................................................
President
ATTEST:
...........................................
Assistant Secretary
EXHIBIT B
(FORM FOR ORDINARY REGISTRATION OF TRANSFER)
COMPLETE AND SIGN THIS FORM FOR ORDINARY
REGISTRATION OF TRANSFER
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
Please Insert Social Security Or Other Identifying Number of
Assignee
Please print or typewrite name and address including postal zip
code of assignee
this bond and all rights thereunder, hereby irrevocably
constituting and appointing
attorney to register such
transfer on the registration books in the principal office of the
Registrar, with full power of substitution in the premises.
Dated:.........................
.................................................................
..........
NOTE: The
signature on this assignment must
correspond with the name as written
on the face of this Bond in every
particular, without alteration,
enlargement or any change
whatsoever.
EXHIBIT C
(FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This is to certify that this Bond is one of the Bonds
described in the within-mentioned Indenture.
FIRST TRUST OF NEW YORK, NATIONAL
ASSOCIATION
as Trustee
By............................................................
Authorized Officer
Date of Authentication:......................
EXHIBIT D
NOTICE OF TENDER OF BOOK-ENTRY BONDS
Coconino County, Arizona
Pollution Control Corporation
Pollution Control Revenue Bonds
1996 Series A
(Tucson Electric Power Company Project)
The Undersigned DTC Participant representing the beneficial
owner of the book-entry bonds described below (the "Tendered
Book-Entry Bonds") does hereby irrevocably tender the Tendered
Book-Entry Bonds to [ ] or its successor as Tender Agent
(the "Tender Agent", for purchase by the Tender Agent seven days
from the date of the Tender Agent's receipt, by telecopy or
otherwise, of this notice, or the next Business Day if such day
is not a Business Day* (the "Tender Date"); provided, however,
that if this notice is received by the Tender Agent by telecopy,
this notice shall be of no force or effect, and the Tendered
Book-Entry Bonds shall not be accepted or purchased by the Tender
Agent, unless the Tender Agent receives this notice in original
executed form by hand delivery prior to 2:00 p.m. New York time
on the Business Day next succeeding its receipt of such notice by
telecopy. The Purchase Price of Tendered Book-Entry Bonds shall
be the unpaid principal amount of the Tendered Book-Entry Bonds
plus accrued and unpaid interest, if any, thereon to, but not
including, the Tender Date, and without premium (the "Purchase
Price"). In the event that the Tender Date is also an interest
payment date for the Tendered Book-Entry Bonds, interest on the
Tendered Book-Entry Bonds to, but not including, the Tender Date
shall be paid in the ordinary fashion and shall not constitute
part of the Purchase Price.
Tendered Book-Entry Bonds
Tendered
Principal Amount
(in multiples of $100,000) DTC Participant Number
CUSIP Numbers(s)
$
_________
* "Business Day" shall have the meaning ascribed thereto by the
Indenture of Trust under which the Bonds are issued.
THE UNDERSIGNED ACKNOWLEDGES AND AGREES BY THE EXECUTION AND
DELIVERY OF THIS NOTICE (1) THAT THE TENDER OF THE TENDERED
BOOK-ENTRY BONDS IS IRREVOCABLE; (2) THAT THE UNDERSIGNED IS
CONTRACTUALLY BOUND TO TENDER SUCH TENDERED BOOK-ENTRY BONDS TO
THE TENDER AGENT ON THE TENDER DATE; AND (3) THAT IN THE EVENT OF
A FAILURE TO TENDER THE TENDERED BOOK-ENTRY BONDS TO THE TENDER
AGENT ON OR BEFORE 10:30 A.M. NEW YORK TIME ON THE TENDER DATE
THE UNDERSIGNED SHALL PAY TO THE TENDER AGENT AN AMOUNT (THE
"DEFAULT AMOUNT") EQUAL TO THE DIFFERENCE BETWEEN (A) THE COSTS
ARISING OUT OF THE FAILURE TO TENDER AND (B) THE PURCHASE PRICE,
AS DEFINED ABOVE, WHICH WOULD HAVE BEEN PAID TO THE UNDERSIGNED
UPON A TENDER. AS USED HEREIN THE "COSTS ARISING OUT OF THE
FAILURE TO TENDER" SHALL MEAN THE SUM OF (X) THE AMOUNT EXPENDED
BY THE TENDER AGENT, EITHER DIRECTLY OR THROUGH AN AGENT, IN
ACQUIRING BOOK-ENTRY BONDS IN SUBSTITUTION OF THE TENDERED
BOOK-ENTRY BONDS (INCLUDING INTEREST THEREON) AND (Y) THE
ADMINISTRATIVE AND OTHER CHARGES, EXPENSES OR COMMISSIONS
INCURRED IN CONNECTION WITH THE ACQUISITION OF SUCH SUBSTITUTE
BOOK-ENTRY BONDS.
THE UNDERSIGNED AGREES THAT THE TENDER AGENT, EITHER
DIRECTLY OR THROUGH AN AGENT, MAY ACQUIRE SUCH SUBSTITUTE BONDS
IN SUCH MANNER AND MARKET AS IT DEEMS COMMERCIALLY REASONABLE,
AND FURTHER AGREES THAT THE DEFAULT AMOUNT IS REASONABLE IN LIGHT
OF THE ANTICIPATED HARM CAUSED BY THE FAILURE TO TENDER AND THE
INCONVENIENCE OF OBTAINING ANY OTHER REMEDY.
THE UNDERSIGNED HEREBY IRREVOCABLY APPOINTS THE TENDER AGENT
AS HIS DULY AUTHORIZED ATTORNEY AND DIRECTS THE TENDER AGENT TO
EFFECT THE TRANSFER OF THE TENDERED BOOK-ENTRY BONDS.
Date of Notice:
Signature of DTC Participant Representing
the Beneficial Owner of the Tendered
Book-Entry Bonds
Street City
State Zip
Area Code Telephone Number
Federal Taxpayer Identification Number
_______________________________
* This table of contents is not a part of the Indenture, and is
for convenience only. The captions herein are of no legal
effect and do not vary the meaning or legal effect of any part
of the Indenture.
-66-
EXECUTION COPY
LETTER OF CREDIT AND
REIMBURSEMENT AGREEMENT
dated as of May 1, 1996
between
TUCSON ELECTRIC POWER COMPANY
and
SOCIETE GENERALE,
LOS ANGELES BRANCH
Relating to $14,700,000
Pollution Control Refunding Revenue Bonds
1996 Series B
(Tucson Electric Power Company Project)
LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT,
dated as of May 1, 1996, between TUCSON ELECTRIC POWER
COMPANY, an Arizona corporation (the "Company"), and
SOCIETE GENERALE, LOS ANGELES BRANCH (the "Bank").
PRELIMINARY STATEMENTS. (1) Coconino County,
Arizona Pollution Control Corporation (the "Issuer") is
issuing, pursuant to an Indenture of Trust, dated as of May
1, 1996 (as amended, modified or supplemented from time to
time, the "Indenture"), by and between the Issuer and First
Trust of New York, National Association, as trustee (such
entity, or its successor as trustee, being the "Trustee"),
$14,700,000 aggregate principal amount of Pollution Control
Refunding Revenue Bonds, 1996 Series B (Tucson Electric
Power Company Project) (the "Bonds").
(2) The Issuer and the Company are entering into
a Loan Agreement, dated as of May 1, 1996 (as amended,
modified or supplemented from time to time, the "Loan
Agreement"), pursuant to which the Issuer will loan to the
Company substantially all of the proceeds resulting from
the issuance of the Bonds. The Issuer will assign certain
of its rights under the Loan Agreement to the Trustee on
behalf of the Owners of the Bonds to secure the payment of
the Bonds.
(3) In connection with the issuance of the
Bonds, the Company has requested that the Bank issue its
irrevocable, transferable letter of credit in substantially
the form of Exhibit A hereto (such letter of credit, as it
may from time to time be extended pursuant to the terms of
this Agreement, being the "Letter of Credit"), in the
amount of $16,149,864 (as the same may be reduced and
reinstated from time to time in accordance with the terms
of the Letter of Credit, the "Stated Amount"), of which (i)
$14,700,000 shall support the payment of principal of the
Bonds (or the portion of the purchase price of the Bonds
corresponding to principal), and (ii) $1,449,864 shall
support the payment of up to 300 days' interest on the
principal amount of the Bonds (or the portion of the
purchase price of the Bonds corresponding to interest),
computed at 12% per annum on the basis of a year of 365
days (the Bank's obligation to issue the Letter of Credit
as hereinafter provided being hereinafter referred to as
the Commitment (the "Commitment")).
NOW, THEREFORE, in consideration of the premises
and in order to induce the Bank to issue the Letter of
Credit, the parties hereto agree as follows:
Note: Paragraph defined X .01 (a) (i)
I. DEFINITIONS
I.01. Certain Defined Terms. As used in this
Agreement, the following terms shall have the following
meanings (such meanings to be equally applicable to both
the singular and plural forms of the terms defined):
"ACC" means the Arizona Corporation Commission,
or any successor or other agency or authority of the State
of Arizona from time to time having a similar jurisdiction.
"ACC Order" means, at any time, the order by the
ACC in effect at such time that authorizes the Company to
enter into this Agreement and the Related Documents to
which it is, or is to be, a party, to request the Bank to
issue the Letter of Credit hereunder and to incur Debt to
the Bank hereunder in an amount not less than the Stated
Amount. The ACC Order, when given by ACC, shall be deemed
to include the application for such order by the Company.
"Advance" has the meaning provided in Section
2.05(a) hereof.
"Affiliate" means each person (as defined in
Section 3(9) of ERISA) which together with the Company or a
Significant Subsidiary of the Company would be deemed to be
a "single employer" within the meaning of Section 414(b) or
(c) of the Code, and for the purpose of Section 302 of
ERISA and/or Section 412, 4971, 4977 and/or 4980B of the
Code, within the meaning of Section 414(b), (c), (m) or (o)
of the Code.
"Alternate Base Rate" means a fluctuating
interest rate per annum equal at all times to the higher
of:
(i) the rate of interest announced publicly by the
Bank in New York, New York, from time to time as the Bank's
Prime Rate; and
(ii) the rate equal to the sum of:
(x) the rate per annum obtained by
dividing (A) 1/2 of one percent above the
Federal Funds Rate in effect from time to
time by (B) a percentage equal to 100% minus
the Domestic Reserve Percentage, plus
(y) the Assessment Rate.
The Alternate Base Rate shall change concurrently with each
change in the Prime Rate or the Federal Funds Rate, as the
case may be.
"Applicable L/C Rate" shall mean (i) 1.5% for any
day on which Level I Status exists, (ii) .80% for any day
on which Level II Status exists, (iii) .70% for any day on
which Level III Status exists and (iv) .60% for any day on
which Level IV Status exists.
"Assessment Rate" for any period means the annual
assessment rate per annum estimated by the Bank on the
first day of such period for determining the then current
annual assessment payable by the Bank to the Federal
Deposit Insurance Corporation (or any successor) for
insuring U.S. dollar deposits of the Bank in the United
States.
"Authorized Representative" means (i) for the
Company, the Chairman of the Board, the President, the Vice
President, the Director, the Treasurer and the Secretary
and (ii) for any other Person, an authorized officer of
such Person.
"Bond Purchase Agreement" means the Bond Purchase
Agreement, dated April 30, 1996, among the Issuer,
PaineWebber Incorporated and the Company.
"Bonds" has the meaning assigned to that term in
the first Preliminary Statement hereto.
"Business Day" means a day of the year on which
banks located in the City of New York, New York, and in the
City of Los Angeles, California are not required or
authorized by law to remain closed and on which the New
York Stock Exchange is not closed.
"Cancellation Date" has the meaning assigned to
that term in the Letter of Credit.
"Code" means the Internal Revenue Code of 1986,
as amended from time to time after the date hereof, and the
rules and regulations promulgated thereunder. Section
references to the Code are to the Code, as in effect at the
date of this Agreement and any subsequent provisions of the
Code, amendatory thereof, supplemental thereto or
substituted therefor.
"Commitment" has the meaning assigned to that
term in the third Preliminary Statement hereto.
"Commitment Termination Date" has the meaning
assigned to that term in Section 2.01.
"Common Equity" means the common stockholders'
equity of the Company, less the book value of all
intangible assets of the Company.
"Company Mortgage" means the Indenture, dated as
of April 1, 1941, between The Tucson Gas, Electric Light
and Power Company (predecessor of the Company) and The
Chase National Bank of the City of New York (now The Chase
Manhattan Bank, National Association), as trustee, as
heretofore and hereafter amended and supplemented.
"Custodian Agreement" means the Custodian
Agreement in substantially the form of Exhibit B hereto.
"Debt" means (i) indebtedness for borrowed money
or for the deferred purchase price of property or services,
(ii) obligations as lessee under leases which shall have
been or should be, in accordance with generally accepted
accounting principles, recorded as capital leases, (iii)
obligations (contingent or otherwise) in respect of
bankers' acceptances or letters of credit, (iv) obligations
under direct or indirect guaranties in respect of, and
obligations (contingent or otherwise) to purchase or
otherwise acquire, or otherwise to assure a creditor
against loss in respect of, indebtedness or obligations of
others of the kinds referred to in clause (i) through (iii)
above, (v) liabilities in respect of unfunded vested
benefits under plans covered by Title IV of ERISA, and (vi)
withdrawal liability incurred under ERISA by the Company or
any of its Affiliates to any Multiemployer Plan.
"Default Rate" means a fluctuating interest rate
equal at all times to 2% per annum above the Alternate Base
Rate in effect from time to time.
"Designated Rating" means, with respect to any
Rating Agency for any day, the rating of the senior secured
long-term debt of the Company (a "Secured Rating")
outstanding and in effect on such day (including for this
purpose as separate categories "+" and "-" designations by
S&P or "1", "2" and "3" designations by Moody's). If a
Rating Agency does not have a Secured Rating outstanding
and in effect on any day, then there exists no Designated
Rating by such Rating Agency for such day.
"Domestic Reserve Percentage" means, for any
period, that percentage which is specified on the first day
of such period, as the case may be, by the Board of
Governors of the Federal Reserve System (or any successor)
for determining the maximum reserve requirement (including,
but not limited to, any marginal reserve requirement) for
the Bank with respect to liabilities consisting of or
including (among other liabilities) U.S. dollar nonpersonal
time deposits in the United States and with a maturity
equal to such period.
"Environmental Claim" means any allegation,
notice of violation, claim, demand, or order by any
governmental authority or any Person for any damage or for
fines, penalties or restrictions, resulting from or based
upon (i) the existence of a Release of, or exposure to, any
Hazardous Material, in, into or onto the environment at,
in, by, from or related to any facility, (ii) the use,
handling, transportation, storage, treatment or disposal of
Hazardous Materials in connection with the operation of any
facility, or (iii) the violation of any Environmental Laws.
"Environmental Laws" means all laws relating to
environmental matters, including, without limitation, those
relating to fines, orders, injunctions, penalties, damages,
contribution, cost recovery compensation, losses or
injuries resulting from the Release or threatened Release
of Hazardous Materials and to the generation, use, storage,
transportation, or disposal of Hazardous Materials, in any
manner applicable to Company or any of its Subsidiaries or
any of their respective properties, including, without
limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. 9601 et seq.),
the Hazardous Material Transportation Act (49 U.S.C. 1801
et seq.), the Resource Conservation and Recovery Act (42
U.S.C. 6901 et seq.), the Federal Water Pollution Control
Act (33 U.S.C. 1251 et seq.), the Clean Air Act (42
U.S.C. 7401 et seq.), the Toxic Substances Control Act
(15 U.S.C. 2601 et seq.), the Occupational Safety and
Health Act (29 U.S.C. 651 et seq.) and the Emergency
Planning and Community Right to Know Act (42 U.S.C. 11001
et seq.), each as amended or supplemented, and any
analogous future or present applicable local, state and
federal statutes and regulations promulgated pursuant
thereto, each as in effect as of the date of determination.
"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended from time to time, and the
regulations and rulings promulgated thereunder. Section
references to ERISA are to ERISA as in effect at the date
of this Agreement and any subsequent provisions of ERISA,
amendatory thereof, supplemental thereto or substituted
therefor.
"Event of Default" has the meaning assigned to
that term in Section 6.01.
"Federal Funds Rate" means, for any period, a
fluctuating interest rate per annum equal for each day
during such period to the weighted average of the rates on
overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers,
as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not
so published for any day which is a Business Day, the
average of the quotations for such day on such transactions
received by the Bank from three Federal funds brokers of
recognized standing selected by it.
"Fee Letter" means that certain letter agreement
dated as of April 29, 1996 executed by the Company.
"First Mortgage Bonds" means the bonds issued and
delivered under the Supplement to Company Mortgage.
"Hazardous Materials" means (i) any chemical,
material or substance defined as or included in the
definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous waste,"
"restricted hazardous waste," or "toxic substances" or
words of similar import under any applicable local, state
or federal law or under the regulations adopted or
publications promulgated pursuant thereto, including,
without limitation, Environmental Laws, (ii) any oil,
petroleum or petroleum-derived substance, any drilling
fluids, produced waters and other wastes associated with
the exploration, development or production of crude oil,
any flammable substances or explosives, any radioactive
materials, any hazardous wastes or substances, any toxic
wastes or substances or any other materials or pollutants
which (A) pose a hazard to any property of the Company or
any of its Subsidiaries or to Persons on or about such
property or (B) cause such property to be in violation of
any Environmental Laws, (iii) asbestos in any form which is
or could become friable, urea formaldehyde foam insulation,
electrical equipment which contains any oil or dielectric
fluid containing levels of polychlorinated biphyenyls in
excess of fifty parts per million, and (iv) any other
chemical, material or substance, exposure to which is
prohibited, limited or regulated by any governmental
authority or may or could pose a hazard to the health and
safety of the owners, occupants or any Persons surrounding
any of the facilities.
"Indenture" has the meaning assigned to that term
in the first Preliminary Statement hereto.
"Issuer" has the meaning assigned to that term in
the first Preliminary Statement hereto.
"Letter of Credit" has the meaning assigned to
that term in the third Preliminary Statement hereto.
"Level I Status" exists for any day if, on such
day, none of Level II Status, Level III Status or Level IV
Status exists.
"Level II Status" exists for any day if, on such
day, (a) neither Level III Status nor Level IV Status
exists and (b) the Company has the following Designated
Ratings: (i) a Designated Rating by S&P of BBB- and (ii) a
Designated Rating by Moody's of Baa3.
"Level III Status" exists for any day if, on such
day, (a) Level IV Status does not exist and (b) the Company
has the following Designated Ratings: (i) a Designated
Rating by S&P of BBB and (ii) a Designated Rating by
Moody's of Baa2.
"Level IV Status" exists for any day if, on such
day, the Company has the following Designated Ratings: (i)
a Designated Rating by S&P of BBB+ or higher and (ii) a
Designated Rating by Moody's of Baa1 or higher.
"Lien" means any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien
(statutory or other), preference, priority or other
security agreement of any kind or nature whatsoever
(including, without limitation, any conditional sale or
other title retention agreement, any financing or similar
statement or notice filed under the UCC or any other
similar recording or notice statute, and any lease having
substantially the same effect as any of the foregoing).
"Loan Agreement" has the meaning assigned to that
term in the second Preliminary Statement hereto.
"Master Restructuring Agreement" means that
certain Master Restructuring Agreement, dated as of June
30, 1992, among Tucson Electric Power Company, Escavada
Company, Gallo Wash Development Company, Valencia Energy
Company, the several Banks parties thereto and Barclays
Bank PLC, New York Branch, as Administrative Agent and
Collateral Agent, as the same may be amended, modified or
supplemented from time to time.
"Moody's" means Moody's Investors Service, Inc.
or its successor and assigns.
"Multiemployer Plan" means a "multiemployer plan"
as defined in Section 4001(a)(3) of ERISA with respect to
which the Company, any Significant Subsidiary of the
Company or any Affiliate (i) contributes or has an
obligation to contribute to or (ii) could have liability.
"1975 Bonds" means the $15,700,000 aggregate
principal amount of the Pollution Control Corporation's
pollution Control Revenue Bonds, 1975 Series A (Tucson Gas
and Electric Company Project), of which $14,700,000 remain
outstanding.
"Official Statement" means the Official
Statement, dated April 30, 1996, relating to the Bonds.
"Participant" has the meaning provided in Section
7.14 hereof.
"PBGC" means the Pension Benefit Guaranty
Corporation or any successor thereto.
"Person" means an individual, partnership,
corporation (including a business trust), limited liability
company, joint stock company, trust, unincorporated
association, joint venture or other entity, or a government
or any political subdivision or agency thereof.
"Plan" means an employee benefit plan (other than
a Multiemployer Plan) maintained or contributed to by (or
to which there is an obligation to contribute to by) the
Company, a Significant Subsidiary of the Company or an
Affiliate and subject to the requirements of Title IV of
ERISA or the minimum funding requirements of Section 412 of
the Code and each such plan for the five year period
immediately following the latest date on which the Company,
a Significant Subsidiary of the Company or an Affiliate
maintained, contributed to, or had an obligation to
contribute to such plan.
"Pledged Bond" has the meaning assigned to that
term in the Custodian Agreement.
"Preliminary Official Statement" means the
Preliminary Official Statement, dated April 19, 1996,
relating to the Bonds.
"Prime Rate" means a fluctuating annual rate of
interest equal to the rate publicly announced by the Bank
at its principal New York office as its Prime Rate. For
purposes of this Agreement, any change in the Prime Rate
shall be effective on the date such change is announced and
the Company acknowledges that the Prime Rate is a reference
rate and does not necessarily reflect the lowest interest
rate at which the Bank offers loans to its customers.
"Rating Agency" means S&P or Moody's.
"Related Documents" has the meaning assigned to
that term in Section 2.13.
"Release" means any release, emission, disposal,
leaching, or migration into the environmental (including,
without limitation, the abandonment or disposal of any
barrels, containers or other closed receptacles containing
any Hazardous Material), or into or out of any of the
facilities.
"Remarketing Agent" has the meaning assigned to
that term in the Indenture.
"Remarketing Agreement" means the Remarketing
Agreement, dated as of May 1, 1996, between the Company, on
the one hand, and PaineWebber Incorporated, on the other
hand, as the same shall have been amended, modified or
supplemented from time to time.
"Reportable Event" means a reportable event
described in Section 4043(c) of ERISA and the regulations
issued thereunder (other than a reportable event not
subject to the provision for 30-day notice to the PBGC.
"S&P" means Standard & Poor's Rating Group or its
successors and assigns.
"Significant Subsidiary" shall have the meaning
given thereto in Regulation S-X promulgated by the
Securities and Exchange Commission.
"Stated Amount" has the meaning assigned to that
term in the third Preliminary Statement hereto.
"Stated Termination Date" means the expiration
date specified in clause (i) of section (1) of the Letter
of Credit, as such date may be extended pursuant to Section
2.11.
"Subsidiary" means, as to any Person, (i) any
corporation of which more than 50% of the outstanding
capital stock having ordinary voting power to elect a
majority of the board of directors of such corporation
(irrespective of whether or not at the time capital stock
of any other class or classes of such corporation shall or
might have voting power upon the occurrence of any
contingency) is at the time directly or indirectly owned by
such Person or by one or more Subsidiaries of such Person
and (ii) any partnership, limited liability company,
association, joint venture or other Person in which such
Person and/or one or more Subsidiaries of such Person has
more than a 50% equity interest at the time.
"Supplement to Company Mortgage" means that
certain Thirty-Second Supplemental Indenture, dated as of
May 1, 1996, to the Company Mortgage.
"Tender Drawing" has the meaning assigned to that
term in the Letter of Credit.
"Termination Event" means (i) a Reportable Event
or (ii) the withdrawal of the Company or any of its
Significant Subsidiaries or any Affiliate from a Plan
during a plan year in which the Company or such Significant
Subsidiary or Affiliate was a "substantial employer" as
defined in Section 4001(a)(2) of ERISA which would result
in a material liability being imposed on the Company or
such Significant Subsidiary or Affiliate, or (iii) on or
after the date hereof a Plan is or may reasonably be
expected to be terminated or amended in a manner that
constitutes a termination under Section 4041 of ERISA,
which such event would result in a material liability being
imposed on the Company or any of its Significant
Subsidiaries or Affiliates, or (iv) the institution of
proceedings to terminate a Plan by the PBGC or the
appointment by the PBGC or a court of competent
jurisdiction of a trustee to administer a Plan, or (v) any
other event or condition which may reasonably be expected
to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to
administer, any Plan.
"Trustee" has the meaning assigned to that term
in the first Preliminary Statement hereto.
"Unfunded Current Liability" of any Plan means
the amount, if any, by which the actuarial present value of
the accrued benefit obligations under the Plan as of the
close of its most recent plan year exceeds the fair market
value of the assets allocable thereto, each determined in
accordance with Statement of Financial Accounting Standards
No. 87, based upon the actuarial assumptions used by the
plan's actuary in the most recent annual valuation of the
Plan.
I.02. Computation of Time Periods. In this
Agreement, in the computation of a period of time from a
specified date to a later specified date, the word "from"
means "from and including" and the words "to" and "until"
each means "to but excluding".
I.03. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in
accordance with generally accepted United States accounting
principles consistent (except as otherwise stated herein)
with those applied in the preparation of the December 31,
1995 financial statements referred to in Section 4.01(f).
I.04. Internal References. The words "herein",
"hereof" and "hereunder" and words of similar import, when
used in this Agreement, shall refer to this Agreement as a
whole and not to any provision of this Agreement, and
"Article", "Section", "subsection", "paragraph", and
respective references are to this Agreement unless
otherwise specified.
II.
AMOUNT AND TERMS OF THE LETTER OF CREDIT
II.01. The Letter of Credit. The Bank agrees, on the
terms and conditions hereinafter set forth, to issue the
Letter of Credit to the Trustee on any Business Day during
the period from the date hereof to and including May 1,
1996 (the "Commitment Termination Date").
II.02. Issuing the Letter of Credit. The Letter of
Credit shall be issued on at least three Business Days'
notice from the Company to the Bank specifying the Business
Day of issuance thereof. On such Business Day specified by
the Company in such notice and upon fulfillment of the
applicable conditions precedent set forth in Article III,
the Bank will issue the Letter of Credit to the Trustee.
II.03. Commissions and Fees. (a) The Company hereby
agrees to pay to the Bank a letter of credit fee on the
Stated Amount from the date the Letter of Credit is issued
until the Cancellation Date, at the Applicable L/C Rate as
adjusted from time to time, which letter of credit fee
shall be payable quarterly in arrears on the last Business
Day of each June, September, December and March commencing
on June 28, 1996, and on the Cancellation Date.
(a) The Company hereby agrees to pay to the Bank a
transfer commission of $2,000 upon each transfer of the
Letter of Credit in accordance with its terms.
(b) The Company agrees to pay to the Bank the fees
and other amounts set forth in the Fee Letter on the dates
set forth therein.
II.04. Reimbursement On Demand. Except as otherwise
specified in Section 2.05 (and provided the conditions
precedent specified therein shall have been fulfilled),
each amount paid by the Bank under the Letter of Credit
(including, without limitation, amounts in respect of any
reinstatement of the Interest Component (as defined in the
Letter of Credit) at the election of the Bank
notwithstanding any failure by the Company to reimburse the
Bank for any previous drawing to pay interest on the Bonds)
shall constitute a demand loan made by the Bank to the
Company on the date of such payment by the Bank under the
Letter of Credit. The Company agrees to pay each such
demand loan on the date of its making. Any such demand
loan (or any portion thereof) not so paid on such date
shall bear interest, payable on demand, from the date of
making of such demand loan until payment in full, at a
fluctuating interest rate per annum equal to the Default
Rate.
II.05. Advances and Interest. (a) If the Bank shall
make any payment under the Letter of Credit in response to
a Tender Drawing submitted thereunder pursuant to Section
2.02(g) of the Indenture and to a Redemption/Mandatory
Purchase Drawing pursuant to Sections 2.02(h)(i) and (ii)
of the Indenture, such payment shall, notwithstanding
Section 2.04, constitute an advance made by the Bank to the
Company on the date and in the amount of such payment (each
such advance being an "Advance"). The Company shall pay
interest on the unpaid principal amount of each Advance
quarterly in arrears on the last Business Day of March,
June, September and December of each calendar year. Each
Advance shall bear interest (i) from the date of the
incurrence thereof until the earlier of (A) the date upon
which such Advance is paid in full and (B) the date which
is 90 days after the date of the incurrence thereof, at the
Alternate Base Rate and (ii) from and after the 90th day
from the date of incurrence thereof until the date upon
which such Advance is paid in full, at the Alternate Base
Rate plus 1%. Notwithstanding any other provision to the
contrary herein, each Advance shall be due and payable by
the Company to the Bank on the Cancellation Date.
(a) Notwithstanding any provision to the contrary
herein, the Company shall pay interest on all past-due
amounts of principal and (to the fullest extent permitted
by law) interest, costs, fees and expenses hereunder, from
the date when such amounts became due until paid in full,
payable on demand, at the Default Rate in effect from time
to time.
II.06. Prepayments. (a) The Company may, upon at
least two Business Days' notice to the Bank, prepay the
outstanding amount of any Advance in whole or in part with
accrued interest to the date of such prepayment on the
amount prepaid.
(a) Prior to or simultaneously with the resale of all
of the Bonds purchased with the proceeds of a Tender
Drawing under the Letter of Credit, the Company shall
prepay or cause to be prepaid in full the then outstanding
principal amount (pursuant to Section 2.04) or Advance
arising pursuant to such Tender Drawing, together with all
interest thereon to the date of such prepayment. If less
than all of such Bonds are resold, then prior to or
simultaneously with such resale the Company shall prepay or
cause to be prepaid a portion (as specified below) of the
then outstanding principal amount (pursuant to Section
2.04) or Advance arising pursuant to such Tender Drawing,
together with all interest thereon to the date of such
prepayment. The portion of such principal amount or such
Advance to be prepaid shall be determined by multiplying
such principal amount or such Advance by a fraction, the
numerator of which shall be the face amount of the Bonds
resold and the denominator of which shall be the face
amount of all of the Bonds purchased with the proceeds of
the relevant Tender Drawing.
II.07. Increased Costs. If either (i) the
introduction of or any change (including, without
limitation, any change by way of imposition or increase of
reserve requirements other than those referred to in the
definition of "Domestic Reserve Percentage" in or in the
interpretation of any law or regulation or (ii) the
compliance by the Bank with any guideline or request from
any central bank or other governmental authority (whether
or not having the force of law), shall either (A) impose,
modify or deem applicable any reserve, special deposit or
similar requirement against letters of credit issued by, or
assets held by, or deposits in or for the account of, the
Bank or participated in by any Participant or (B) impose on
the Bank any other condition regarding this Agreement, the
Letter of Credit, any amount outstanding hereunder or any
Advance, and the result of any event referred to in clause
(A) or (B), above, shall be to increase the cost to the
Bank or any Participant of issuing or maintaining the
Letter of Credit (or its participation therein) or agreeing
to make or making, funding or maintaining any Advance by an
amount which the Bank or any such Participant deems to be
material, then, upon demand by the Bank, the Company shall
pay to the Bank (for its own account or for the account of
such Participant, as the case may be, within 10 days of
receipt of such notice and from time to time as specified
by the Bank, all additional amounts which shall be
sufficient to compensate the Bank for such increased costs.
A certificate setting forth such increased costs incurred
by the Bank as a result of any event referred to in clause
(i) or (ii), above, submitted by the Bank to the Company,
shall constitute such demand and shall, in the absence of
manifest error, be conclusive and binding for all purposes.
II.08. Increased Capital. If the Bank determines
(1) the adoption of any applicable law, rule or regulation
after the date hereof regarding capital adequacy, or any
change therein, or any change in the interpretation or
administration thereof by any court or administrative or
governmental authority charged with the interpretation or
administration thereof, or (2) compliance by the Bank with
any directive regarding capital adequacy of any such admini
strative or governmental authority, generally affects banks
issuing letters of credit or entering into agreements
similar to or of the same type as this Agreement and has or
would have the effect of reducing the rate of return on the
Bank's capital as a consequence of issuing or maintaining
the Letter of Credit to a level below that which the Bank
would have achieved but for such adoption, change or com
pliance (taking into consideration the Bank's policies with
respect to capital adequacy), then, upon demand by the
Bank, the Company shall immediately pay to the Bank, from
time to time as specified by the Bank, additional amounts
sufficient to compensate the Bank in the light of such
circumstances, to the extent that the Bank reasonably
determined such capital to be allocable to this Agreement
or the issuance or maintenance of the Letter of Credit. In
determining such increased fee, the Bank may use reasonable
and customary averaging and attribution methods. A
certificate as to such amounts submitted to the Company by
the Bank shall constitute such demand and shall, in the
absence of manifest error, be conclusive and binding for
all purposes.
II.09. Payments and Computations. The Company shall
make each payment hereunder not later than 12:00 noon (Los
Angeles time) on the day when due in lawful money of the
United States of America to the Bank at its address
referred to in Section 7.02 in same day funds. Computations
of (i) the Alternate Base Rate, the Prime Rate and the
Default Rate shall be made by the Bank on the basis of a
year of 365/366 days, as the case may be, and the actual
number of days (including the first day but excluding the
last day) elapsed and (ii) the commissions and fees under
Section 2.03 shall be made by the Bank on the basis of a
year of 360 days and the actual number of days (including
the first day but excluding the last day) elapsed.
Paragraph definition changed to X. 1.
Starting paragraph ?.10.
I.01.
II.010. Non-Business Days. Whenever any payment to be
made hereunder shall be stated to be due on a day which is
not a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall
in such case be included in the computation of interest,
commission or fee, as the case may be.
II.011.
II.011. Extension of the Stated Termination Date;
Reduction of Stated Amount. (a) Unless the Letter of
Credit shall have expired in accordance with its terms, at
least 75 but not more than 120 days before each of the
first and second anniversary of the date of issuance of the
Letter of Credit, the Company may request the Bank in
writing (each such request being irrevocable) to extend for
one year the Stated Termination Date. If the Company shall
make any such request, the Bank shall, no later than 30
days following the date on which the Bank shall have
received such request, notify the Company in writing (with
a copy of such notice to the Trustee) whether or not the
Bank consents, in its sole discretion, to such request and,
if the Bank does so consent, the conditions of such consent
(including conditions relating to legal documentation). If
the Bank shall not so notify the Company, the Bank shall be
deemed not to have consented to such request. Upon the
Bank's consenting to any such extension, the Company shall
cause the Trustee to surrender the Letter of Credit to the
Bank. Simultaneously with such surrender, the Bank may at
its option either (a) return the Letter of Credit after
amendment thereof to reflect the extension of the scheduled
expiration date or (b) cancel the Letter of Credit and
issue to the Trustee, in substitution therefor, a
substitute irrevocable letter of credit in the form of
Exhibit A hereto, dated the date of such surrender,
reflecting the extension of the scheduled expiration date
but otherwise having terms substantially identical to the
Letter of Credit being so extended.
(b) The Company shall have the right at any time to
permanently reduce the Stated Amount of the Letter of
Credit in the amount of Bonds which have been defeased in
an amount equal to such principal amount plus the amount of
interest, calculated in accordance with the Letter of
Credit, with respect to such principal amount, upon
directing the Trustee to give written notice to the Bank
pursuant to Paragraph 4 of the Letter of Credit.
II.012. Evidence of Debt. The Bank shall maintain, in
accordance with its usual practice, an account or accounts
evidencing the indebtedness of the Company resulting from
each drawing under the Letter of Credit and from each
Advance made from time to time hereunder and the amounts of
principal and interest payable and paid from time to time
hereunder. In any dispute, legal action or proceeding in
respect of this Agreement, the entries made in such account
or accounts shall, in the absence of manifest error, be
conclusive evidence of the existence and amounts of the
obligations of the Company therein recorded.
II.013. Obligations Absolute. The payment obligations
of the Company under this Agreement shall be unconditional
and irrevocable, and shall be paid strictly in accordance
with the terms of this Agreement under all circumstances,
including, without limitation, the following circumstances:
(i) any lack of validity or enforceability of the
Letter of Credit, the Bonds, the Indenture, the Loan
Agreement, the Custodian Agreement, the Fee Letter, the
Bond Purchase Agreement, the Remarketing Agreement, the
Master Restructuring Agreement, the Supplement to Company
Mortgage or the First Mortgage Bonds (collectively, the
"Related Documents") or any other agreement or instrument
relating thereto;
(ii) any amendment or waiver of or any consent to or
departure from all or any of the Related Documents;
(iii) the existence of any claim, set-off, defense
or other right which the Company may have at any time
against the Trustee or any other beneficiary, or any
transferee, of the Letter of Credit (or any Person for whom
the Trustee, any such beneficiary or any such transferee
may be acting), the Bank, or any other Person, whether in
connection with this Agreement, the transactions
contemplated herein or in the Related Documents, or any
unrelated transaction;
(iv) any statement or any other document presented
under the Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any
respect, provided that acceptance of such statement or
other document by the Bank does not result from the Bank's
gross negligence or willful misconduct;
(v) payment by the Bank under the Letter of Credit
against presentation of a draft or certificate which does
not comply with the terms of the Letter of Credit, provided
that such payment shall not have constituted gross
negligence or willful misconduct of the Bank; or
(vi) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing, provided
that such other circumstance or happening shall not have
been the result of gross negligence or willful misconduct
of the Bank.
II.014. Taxes. (a) All payments made by the Company
hereunder will be made without setoff, counterclaim or
other defense. All such payments will be made free and
clear of, and without deduction or withholding for, any
present or future taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or
hereafter imposed by any jurisdiction or by any political
subdivision or taxing authority thereof or therein (but
excluding, except as provided below, any tax imposed on or
measured by the net income of the Bank pursuant to the laws
of the jurisdiction (or any political subdivision or taxing
authority thereof or therein) in which the principal office
or lending office of the Bank is located) and all interest,
penalties or similar liabilities with respect thereto
(collectively, "Taxes"). If the Company shall be required
by law to deduct any Taxes from or in respect of any sum
payable hereunder or under the Fee Letter, (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
2.14) such Bank receives an amount equal to the sum it
would have received had no such deductions been made, (ii)
the Company shall make all such required deductions and
shall pay the full amount deducted to the relevant taxing
authority in accordance with applicable law and (iii) the
Company will furnish to the Bank, within 45 days after the
date the payment of any Taxes is due, certified copies of
tax receipts evidencing such payment by the Company. If
any amounts are payable in respect of Taxes pursuant to the
preceding sentence, the Company agrees to reimburse the
Bank, upon the written request of the Bank for taxes
imposed on or measured by the net income of the Bank
pursuant to the laws of the jurisdiction (or any political
subdivision or taxing authority thereof or therein) in
which the principal office or lending office of the Bank is
located and for any withholding of taxes as the Bank shall
determine are payable by, or withheld from, the Bank in
respect of such amounts so paid to or on behalf of the Bank
pursuant to the preceding sentence and in respect of any
amount paid to or on behalf of the Bank pursuant to this
sentence. The Company will indemnify and hold harmless the
Bank, and reimburse the Bank upon its written request, for
the amount of any Taxes so levied or imposed and paid by
the Bank. The Bank shall use reasonable efforts (subject
to overall policy considerations of the Bank) to avoid or
minimize, as the case may be, the payment by the Company of
any additional sums under this Section 2.14 or the
subjection of any payment by the Company to Taxes
pertaining to the Bank, provided that such avoidance or
minimization is made on such terms that the Bank suffers no
economic, legal or regulatory disadvantage.
(b) The Bank represents and warrants to the
Company that either (1) as of the date of this Agreement it
is entitled to the benefits of an income tax treaty with
the United States which provides for an exemption from
United States withholding tax on interest and other
payments to be made by the Company to the Bank pursuant to
the terms of this Agreement; or (2) all interest and other
payments to be made by the Company to the Bank pursuant to
the terms of this Agreement will be effectively connected
with the conduct by the Bank of a trade or business within
the United States (within the meaning of Section 882 of the
Code). Prior to the date of issuance of the Letter of
Credit and, to the extent legally entitled to do so,
thereafter upon the request of the Company, the Bank agrees
to furnish to the Company two copies of either U.S.
Internal Revenue Service Form 4224 or U.S. Internal Revenue
Service Form 1001 (wherein the Bank claims entitlement to
complete exemption from U.S. federal withholding tax on all
interest and other payments hereunder). In the event the
Bank fails to provide an accurate Form 4224 or Form 1001
required by this paragraph and which it is legally entitled
to provide, the Company shall not be required to pay any
additional amounts with respect to U.S. Federal income
taxes to such Bank pursuant to this paragraph.
Notwithstanding any other provisions of this Agreement and
except in the event of a change in applicable law, the
representations, warranties and obligations of the Bank set
forth in this paragraph in respect of any interest in this
Agreement or the Letter of Credit shall survive until the
assignment, sale, payment or other disposition of such
interest or the Letter of Credit.
III.
CONDITIONS PRECEDENT
III.01. Conditions Precedent to Issuance of the Letter
of Credit. The obligation of the Bank to issue the Letter
of Credit is subject to the conditions precedent that the
Bank shall have received on or before the date of the
issuance of the Letter of Credit the following, each dated
such date, in form and substance satisfactory to the Bank:
(a) A copy of the Custodian Agreement, duly executed
by the Company and the Trustee.
(b) A copy of the Indenture and each amendment
thereto to the date hereof, in each case duly executed by
the Issuer and the Trustee and certified by the Company as
being a true and correct copy thereof.
(c) A copy of the Loan Agreement and each amendment
thereto to the date hereof, in each case duly executed by
the Issuer and the Company and certified by the Company as
being a true and correct copy thereof.
(d) A copy of the Bond Purchase Agreement and each
amendment thereto to the date hereof, in each case duly
executed by all parties thereto and certified by the
Company as being a true and correct copy thereof.
(e) A copy of the Remarketing Agreement and each
amendment thereto to the date hereof, in each case duly
executed by all parties thereto and certified by the
Company as being a true and correct copy thereof.
(f) A copy of the Supplement to Company Mortgage, in
recordable form, granting the trustee under the Company
Mortgage a security interest in the property pledged to
such trustee under the Company Mortgage pari passu with any
other first mortgages granted thereunder and a copy of the
Company Mortgage and each supplement thereto which amends
any provisions of the Company Mortgage to the date hereof,
both certified by the Company as being true and correct
copies thereof, along with the First Mortgage Bonds.
(g) A true and correct copy of the Official
Statement.
(h) Certified copies of the resolutions of the Board
of Directors of the Company approving this Agreement, the
Letter of Credit, the Custodian Agreement and the other
Related Documents to which the Company is a party and the
transactions contemplated hereby and thereby, and of all
other documents evidencing any other necessary corporate
action.
(i) An original (or a duplicate copy certified by the
Company in a manner satisfactory to the Bank to be a true
copy) of the application filed by the Company for the ACC
Order and of each governmental action and regulatory
approval (including, without limitation, the ACC Order and
approvals or orders of the Issuer and the ACC) necessary
for the Company to enter into this Agreement, the Letter of
Credit, the Custodian Agreement and the other Related
Documents to which the Company is a party and for the
transactions contemplated hereby and thereby.
(j) A certificate of the Secretary or an Assistant
Secretary of the Company certifying the names and true
signatures of the officers of the Company authorized to
sign this Agreement and the other documents to be delivered
by it hereunder.
(k) A certificate from an authorized officer of the
Trustee certifying that (i) the Trustee is not in default
under any of the terms or provisions of the Indenture or
any other Related Document to which it is a party, (ii)
each of the Related Documents to which such Person is a
party is in full force and effect and is the legal, valid
and binding obligations of such Person and (iii) no
litigation or proceeding is pending, or to his knowledge
threatened, in respect of the Bonds, amounts payable
thereunder, any Related Document or any other document or
agreement delivered in connection therewith.
(l) A letter from Orrick, Herrington & Sutcliffe,
Bond Counsel, addressed to the Bank and stating therein
that the Bank may rely on the opinion of such firm in the
form attached as Appendix E to the Official Statement.
(m) A letter from Reid & Priest LLP, special New York
counsel to the Company, addressed to the Bank and stating
therein that the Bank may rely on the opinion of such firm
delivered pursuant to Section 9(c) of the Bond Purchase
Agreement.
(n) A letter from Dennis R. Nelson, Esq., General
Counsel to the Company, addressed to the Bank and stating
therein that the Bank may rely on the opinion of Dennis R.
Nelson, Esq. delivered pursuant to Section 9(c) of the Bond
Purchase Agreement.
(o) An opinion of Dennis R. Nelson, Esq., General
Counsel of the Company, in substantially the form of
Exhibit C hereto and as to such other matters as the Bank
may reasonably request.
(p) An opinion of Reid & Priest LLP, special New York
counsel to the Company, in substantially the form of
Exhibit D hereto and as to such other matters as the Bank
may reasonably request.
(q) An opinion from Rodey, Dickason, Sloan, Akin &
Robb, P.A., special New Mexico counsel to the Company,
addressed to the Bank in a form acceptable to the Bank.
(r) An opinion from Dickerman & Marvin, P.C., special
Arizona counsel to the Company, addressed to the Bank in a
form acceptable to the Bank.
(s) Receipt by the Bank from the Company of (i) the
fees provided for in the Fee Letter which by its terms are
due and payable on or prior to the issuance of the Letter
of Credit and (ii) receipt by White & Case as counsel to
the Bank of its fees and expenses incurred to date on
behalf of the Bank in connection with the negotiation and
drafting of this Agreement and certain other documents.
(t) Letters from Moody's and S&P setting forth such
Rating Agency's rating of the Bonds.
III.02. Additional Conditions Precedent to Issuance of
the Letter of Credit. The obligation of the Bank to issue
the Letter of Credit shall be subject to the further
conditions precedent that on the date of the issuance of
the Letter of Credit:
(a) The following statements shall be true and the
Bank shall have received a certificate signed by a duly
authorized representative of the Company, dated the date of
such issuance, stating that:
(i) The representations and warranties contained
in Section 4.01 of this Agreement are true and correct on and
as of the date of issuance of the Letter of Credit as
though made on and as of such date; and
(ii) No event has occurred and is continuing, or
would result from the issuance of the Letter of Credit, which
constitutes an Event of Default or would constitute an
Event of Default but for the requirement that notice be
given or time elapse, or both;
(b) The Bank shall be satisfied that all conditions
precedent to the purchase of the Bonds by PaineWebber
Incorporated under the Bond Purchase Agreement shall have
been satisfied.
(c) The Bank shall be satisfied that the 1975 Bonds
are to be redeemed in full in accordance with their terms.
(d) All legal matters incident to this Agreement and
the Related Documents shall be satisfactory to counsel for
the Bank; and
(e) The Bank shall have received such other
approvals, opinions or documents as the Bank may reasonably
request.
IV.
REPRESENTATIONS AND
WARRANTIES
IV.01. Representations and Warranties of the Company.
The Company hereby represents and warrants, as follows:
(a) The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the
State of Arizona and is duly qualified to do business as a
foreign corporation and is in good standing under the laws
of each state in which the ownership of its properties and
the conduct of its business makes such qualification
necessary. The Company has all requisite corporate power
and authority to conduct its business as presently
conducted and to own its properties.
(b) The execution, delivery and performance by the
Company of this Agreement and the Related Documents to
which it is or is to be a party are within the Company's
corporate powers, have been duly authorized by all
necessary corporate action, and do not contravene (i) the
Company's charter or by-laws or (ii) any law, rule,
regulation, order, writ, judgment or similar restriction
(including, without limitation, any order, rule or
regulation of the ACC) or any contractual restriction
binding on or affecting the Company, and do not result in
or require the creation of any Lien (except as may be
created under the Related Documents) upon or with respect
to any of its properties.
(c) No authorization or approval or other action by,
and no notice to or filing with, any governmental authority
or regulatory body is required for the due execution,
delivery and performance by the Company of this Agreement
or any Related Document to which the Company is or is to be
a party, except for the ACC Order, which, on the date of
the issuance of the Letter of Credit, has been duly
obtained, is final and in full force and effect and is not
the subject of appeal or reconsideration or other review.
(d) This Agreement is, and the Related Documents to
which the Company is a party are, legal, valid and binding
obligations of the Company enforceable against the Company
in accordance with their respective terms, except as
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally
and by general equitable principles (whether enforcement is
sought by proceedings in equity or at law). Each of the
Related Documents is in full force and effect and no party
to such agreements has contested or challenged the validity
or enforceability thereof or refused to perform its
obligations thereunder.
(e) The proceeds of the Bonds will be used in the
manner set forth in Section 4.03 of the Loan Agreement and
the trustee under the Indenture creating the 1975 Bonds has
received a redemption notice for all of the 1975 Bonds.
(f) The balance sheet (including the notes thereto)
of the Company as at December 31, 1995 and the related
statements of income and retained earnings of the Company
for the fiscal year then ended, certified by Deloitte &
Touche LLP, independent public accountants, in each case as
set forth in the annual report of the Company on Form 10-K
for the year ended December 31, 1995 as filed with the
Securities and Exchange Commission (the "1995 Annual
Report"), a copy of which has been furnished to the Bank,
fairly present the financial condition of the Company as at
such date and the results of the operations of the Company
for the period ended on such date, all in accordance with
generally accepted accounting principles consistently
applied (except as otherwise noted therein), and, except as
disclosed in the 1995 Annual Report and the Current Reports
on Form 8-K, dated March 6, 1996 and April 4, 1996
(together with the 1995 Annual Report, the "Disclosure
Documents"), since December 31, 1995 there has been no
material adverse change in the Company's financial
condition, results of operations, business, properties,
operations, or prospects.
(g) Except as disclosed in the Disclosure Documents,
there is no pending or threatened action or proceeding
affecting the Company or any of its Subsidiaries before any
court, governmental agency or arbitrator, which is likely
to have a material adverse effect on the financial
condition, results of operations, business, properties,
operations, or prospects of the Company and its
Subsidiaries, taken as a whole, and, since the filing of
the Disclosure Documents, there has occurred no material
adverse development in any such action or proceeding so
disclosed.
(h) No proceeds of any drawing under the Letter of
Credit will be used to acquire any security in any
transaction which is subject to Section 13 or 14 of the
Securities Exchange Act of 1934, as amended.
(i) The Company is not engaged in the business of
extending credit for the purpose of buying or carrying
margin stock (within the meaning of Regulation U issued by
the Board of Governors of the Federal Reserve System), and
no proceeds of any drawing under the Letter of Credit will
be used to buy or carry any margin stock or to extend
credit to others for the purpose of buying or carrying any
margin stock.
(j) No Termination Event has occurred or is
reasonably expected to occur.
(k) The most recent annual report (Form 5500 Series)
with respect to each Plan (including all required
schedules, statements and other information), copies of
which have been filed with the Internal Revenue Service and
furnished to the Bank, is complete and accurate and fairly
presents the funding status of each such Plan, and since
the date of each such form (but prior to the filing of the
next subsequent form) there has been no material adverse
change in such funding status, and no Plan has an Unfunded
Current Liability which, when added to the aggregate amount
of Unfunded Current Liabilities with respect to all other
Plans, exceeds $10,000,000.
(l) Neither the Company nor any of its Significant
Subsidiaries or Affiliates has incurred, or reasonably
expects to incur, any withdrawal liability under ERISA with
respect to any Multiemployer Plan, to the Company's
knowledge no proceedings have been instituted to terminate
or appoint a trustee to administer a Multiemployer Plan, to
the Company's knowledge no Multiemployer Plan is insolvent
or in reorganization, and using actuarial assumptions and
computation methods consistent with Part 1 of subtitle E of
Title IV of ERISA, the aggregate liabilities of the Company
and its Significant Subsidiaries and Affiliates to all
Multiemployer Plans in the event of a complete withdrawal
therefrom, as of the close of the most recent fiscal year
of each such Multiemployer Plan ended prior to the date of
the issuance of the Letter of Credit would not exceed
$10,000,000.
(m) Neither the Company nor any of its Significant
Subsidiaries or Affiliates has incurred or reasonably
expects to incur material liability under Title IV of ERISA
or pursuant to Section 406, 409, 502(i), 502(l) or 515 of
ERISA or Section 401(a)(29), 4971 or 4975 of the Code and
to the Company's knowledge no condition exists which
presents a material risk to the Company or any Significant
Subsidiary of the Company or any Affiliate of incurring a
liability pursuant to the foregoing provisions of ERISA and
the Code.
(n) Each Plan is in substantial compliance with the
applicable provisions of ERISA and the Code.
(o) No Plan has an accumulated or waived funding
deficiency or has applied for an extension of any
amortization period within the meaning of Section 412 of
the Code.
(p) All contributions required to be made by the
Company and its Significant Subsidiaries and Affiliates
with respect to any Plan and any Multiemployer Plan have
been timely made.
(q) No lien imposed under the Code or ERISA on the
assets of the Company or any Significant Subsidiary of the
Company or any Affiliate exists or may reasonably be
expected to arise on account of any Plan or any
Multiemployer Plan.
(r) The Company and its Significant Subsidiaries do
not maintain or contribute to any employee welfare benefit
plan (as defined in Section 3(1) of ERISA) which provides
benefits to retired employees or other former employees
(other than as required by Section 601 of ERISA) or any
employee pension benefit plan (as defined in Section 3(2)
of ERISA) the obligations with respect to which could
reasonably be expected to (i) exceed the value of the
obligations under such plans as of the date hereof and (ii)
have a material adverse effect on the ability of the
Company to perform its obligations under this Agreement.
(s) The Company and each of its consolidated
subsidiary for tax purposes have filed all material tax
returns (Federal, state and local) which to the knowledge
of the Company are required to be filed and paid all taxes
payable by it, including interest and penalties, other than
such taxes that the Company or any such subsidiary is
contesting in good faith and by appropriate legal
proceedings and for which adequate reserves have been set
aside on the books of the Company or such Subsidiary in
accordance with generally accepted accounting principles.
(t) Neither the Company nor any of its Subsidiaries
is a party to any indenture, loan or credit agreement or
any lease or other agreement or instrument which would have
a material adverse effect on the ability of the Company to
perform its obligations under this Agreement or any of the
Related Documents to which it is, or is to be, a party.
(u) Appendix A to the Official Statement, and the
documents incorporated by reference therein, and all other
information provided to the Bank were, and any supplement
or amendment thereof shall be, accurate in all material
respects, as of their respective dates and as of the date
hereof, for the purposes for which their use was or shall
be authorized; and such Appendix A to the Official
Statement, the documents incorporated by reference therein,
and all other information provided to the Bank, as of their
respective dates and as of the date hereof, did not, and
any such supplement or amendment shall not, contain any
untrue statement of a material fact or, when read together,
omit to state any material fact necessary to make the
statements therein, in light of the circumstances under
which they were made, not misleading.
(v) Except as set forth in Schedule 4.01(v) hereto:
(1) to the best knowledge of the
Company, the operations of the Company and of
each of its Subsidiaries (including, without
limitation, all operations and conditions at or
in the facilities currently used by the Company
and its Subsidiaries) comply in all material
respects with all Environmental Laws;
(2) neither the Company nor any of its
Subsidiaries has received (A) any written notice
or claim to the effect that it is or may be
liable to any person as a result of the Release
or threatened Release of any Hazardous Material
that could have a material adverse effect on the
financial condition or operations of the Company
or (B) any letter or request for information
under Section 104 of the Comprehensive
Environmental Response, Compensation, and
Liability Act (42 U.S.C. 9604) or comparable
state laws, and to the best of the Company's
knowledge, none of the operations of the Company
or any of its Subsidiaries is the subject of any
federal or state investigation evaluating whether
any remedial action is needed to respond to a
Release or threatened Release of any Hazardous
Material at any facility or at any other
location;
(3) the Company and each of its
Subsidiaries and all of their respective
facilities or operations are not subject to any
outstanding written order with any governmental
authority or any outstanding written judicial
order with any private party respecting (A) any
Environmental Law or (B) any Environmental Claim;
(4) neither the Company nor any of its
Subsidiaries has any contingent obligation in
connection with any Release of any Hazardous
Material by the Company or any of its
Subsidiaries that could have a material adverse
effect on the financial condition or operations
of the Company;
(5) except in the ordinary course of
its business and in compliance with all
Environmental Laws, (i) neither the Company nor
any of its Subsidiaries nor any predecessor of
the Company or any of its Subsidiaries has filed
any notice under any Environmental Law indicating
past or present treatment or disposal of any
Hazardous Material at any facility, and (ii) none
of the Company's or any of its Subsidiaries'
operations involves the generation,
transportation, treatment, storage or disposal of
hazardous waste, as defined under 40 C.F.R. Parts
260-270 or any state equivalent or of any other
Hazardous Material;
(6) to the best knowledge of the
Company, no Hazardous Material exists on, under
or around any facility in a manner that could
give rise to an Environmental Claim resulting in
a material adverse effect on the financial
condition or operations of the Company, and
neither the Company nor any of its Subsidiaries
has filed any notice or report of a Release of
any Hazardous Materials that could give rise to
an Environmental Claim resulting in a material
adverse effect on the financial condition or
operations of the Company;
(7) to the best knowledge of the
Company, neither the Company nor any of its
Subsidiaries (nor any of their respective
predecessors) has disposed of any Hazardous
Material in a manner that may give rise to an
Environmental Claim resulting in a material
adverse effect on the financial condition or
operations of the Company; and
(8) neither the Company nor any of its
Subsidiaries maintains any underground storage
tanks or surface impoundments in a manner that
may give rise to an Environmental Claim resulting
in a material adverse effect on the financial
condition or operations of the Company.
V. COVENANTS OF THE COMPANY
V.01. Affirmative Covenants. So long as (i) the
Commitment Termination Date has not yet occurred, (ii) any
drawing is available under the Letter of Credit, or (iii)
the Company shall have any obligation to pay any amount to
the Bank hereunder, the Company shall, unless the Bank
shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply, and cause
each of its Subsidiaries to comply, in all material
respects, with all applicable laws, rules, regulations and
orders, such compliance to include, without limitation,
paying before the same become delinquent all taxes,
assessments and governmental charges imposed upon it or
upon its property, except to the extent that any such
non-compliance would not, individually or in the aggregate,
materially adversely affect the financial condition,
results of operations, operations, business or credit of
the Company or its ability to perform its obligations
hereunder or under any Related Document to which it is or
is to be a party, except to the extent that compliance with
or payment of any of the foregoing is then being contested
in good faith and by appropriate proceedings and against
which adequate reserves in accordance with generally
accepted accounting principles are being maintained.
(b) Visitation Rights. Subject to contractual or
statutory limitations regarding confidential or proprietary
information, at any reasonable time and from time to time,
permit the Bank or any agents or representatives thereof to
examine and make copies of and abstracts from the records
and books of account of, and visit the properties of, the
Company and any of its Subsidiaries, and to discuss the
affairs, finances and accounts of the Company and any of
its Subsidiaries, with any of their respective officers or
directors or with the independent auditors of the Company;
provided, however, that the Company and its Subsidiaries
may restrict access to any of its generating facilities in
accordance with reasonably adopted procedures relating to
safety and security. The Bank will treat any information
concerning the Company or any of its Subsidiaries obtained
by the Bank pursuant to this Section 5.01(b) that is not
contained in a report or other document filed with the
Securities and Exchange Commission, distributed by the
Company or any of its Subsidiaries to its shareholders or
otherwise available to the public generally, to the extent
permitted by law and except as may be required by valid
subpoena or in the normal course of business operations of
the Bank, as is customary for the Bank to treat such
confidential information.
(c) Reporting Requirements. Furnish to the Bank the
following:
(i) as soon as possible and in any event within
two Business Days after the occurrence of each Event of Default
and each event which, with the giving of notice, lapse of
time, or both, would constitute any such Event of Default,
the statement of an Authorized Representative of the
Company setting forth details of such Event of Default or
event and the action which the Company has taken and
proposes to take with respect thereto;
(ii) as soon as available and in any event within
60 days after the close of each of the first three quarters in
each fiscal year of the Company, or 15 days after the date
on which the Company's quarterly report for such fiscal
quarterly period is required to be filed with the
Securities Exchange Commission, whichever is later:
(1) an unaudited balance sheet of the Company as
at the end of such quarter and statements of income and
retained earnings of the Company for the period commencing
at the end of the previous fiscal year and ending with the
end of such quarter, fairly presenting the financial
condition of the Company as at such date and the results of
operations of the Company for such period and setting forth
in each case in comparative form the corresponding figures
for the corresponding period of the preceding fiscal year,
all in reasonable detail and duly certified (subject to
year-end audit adjustments) by the chief financial officer
(or the designee of such officer) of the Company as having
been prepared in accordance with generally accepted
accounting principles consistently applied, except as
otherwise noted therein (it being understood and agreed
that the delivery by the Company to the Bank within such
time period specified above of the Company's Quarterly
Report on Form 10-Q for such quarter, as filed with the
Securities and Exchange Commission, containing such balance
sheet and statements shall be deemed to satisfy the
requirements of this subparagraph (A)); and
(2) a certificate of the chief financial officer
or Treasurer (or the designee of either such officer) of
the Company stating whether he or she has any knowledge of
the occurrence at any time prior to the date of such
certificate of any Event of Default not previously reported
pursuant to the provisions of paragraph (i) of this
subsection (c), or of the occurrence at any time prior to
such date of any event, except events previously reported
pursuant to the provisions of paragraph (i) of this
subsection (c) and remedied, which, with notice or lapse of
time, or both, would constitute an Event of Default and, if
so, setting forth the details of such Event of Default or
event and the action which the Company has taken and
proposes to take with respect thereto;
(iii) (A) as soon as available and in any event
within 105 days after the end of each fiscal year of the
Company, or 15 days after the date on which its annual
report for such fiscal year is required to be filed with
the Securities and Exchange Commission, whichever is later,
a copy of the annual report for such year for the Company,
containing financial statements for such year certified in
a manner acceptable to the Bank by Deloitte & Touche LLP or
other independent public accountants acceptable to the Bank
(it being understood and agreed that the delivery by the
Company to the Bank within such time period specified above
of the Company's Annual Report on Form 10-K for such year,
as filed with the Securities and Exchange Commission,
containing such financial statements shall be deemed to
satisfy the requirements of this subparagraph (A)), and (B)
a certificate of the chief financial officer or Treasurer
(or the designee of either such officer) of the Company
stating whether he or she has any knowledge of the
occurrence at any time prior to the date of such
certificate of any Event of Default not previously reported
pursuant to the provisions of paragraph (i) of this
subsection (c), or of the occurrence at any time prior to
such date of any such event, except events previously
reported pursuant to the provisions of paragraph (i) of
this subsection (c) and remedied, which, with notice or
lapse of time, or both, would constitute an Event of
Default and, if so, setting forth the details of such Event
of Default or event and the action which the Company has
taken and proposes to take with respect thereto;
(iv) promptly after the sending or filing thereof, (A)
copies of all reports which the Company sends to its
security holders (other than to employees of the Company
concerning stock option plans, dividend investment plans
and other similar reports) and (B) copies of all reports
which the Company or any Subsidiary files with the
Securities and Exchange Commission or any national
securities exchange;
(v) as soon as possible and in any event (i) within
30 days after the Company or any Significant Subsidiary of
the Company or any Affiliate knows or has reason to know
that any Termination Event described in clause (i) of the
definition of Termination Event has occurred and (ii)
within ten days after the Company or any Significant
Subsidiary of the Company or any Affiliate knows or has
reason to know that any other Termination Event has
occurred, a statement of the chief financial officer (or
the designee of such officer) of the Company describing
such Termination Event and the action, if any, which the
Company, such Significant Subsidiary or such Affiliate is
required or proposes to take with respect thereto;
(vi) copies of any notice required or proposed to be
given to or filed with or by the Company, any Significant
Subsidiary of the Company, any Affiliate, the PBGC, a Plan
participant or the Plan administrator with respect to any
such Termination Event;
(vii) promptly and in any event within ten
Business Days after the required filing date thereof with
the Internal Revenue Service, copies of each annual report
(Form 5500 Series) (including any required statements,
schedules and other information) with respect to each Plan;
(viii) promptly and in any event within ten
Business Days after the Company, any Significant Subsidiary
of the Company or any Affiliate knows or has reason to know
of any of the following, a statement of the chief financial
officer of the Company describing such occurrence together
with any notices required or proposed to be given to or
filed with or by the Company, the Significant Subsidiary,
the Affiliate, the PBGC, a Multiemployer Plan participant
or the Multiemployer Plan sponsor with respect thereto: (A)
the Company, any Significant Subsidiary of the Company or
any Affiliate will or may reasonably be expected to incur
any liability to or on account of withdrawal from a
Multiemployer Plan pursuant to Section 4201, 4202, 4204 or
4212 of ERISA, (B) the determination that a Multiemployer
Plan is, or is expected to be, in reorganization, declared
insolvent or partitioned within the meaning of Title IV of
ERISA, (C) the termination or expected termination of a
Multiemployer Plan within the meaning of Title IV of ERISA,
(D) that proceedings may be or have been instituted by the
PBGC to terminate or appoint a trustee to administer a
Multiemployer Plan, or (E) the amount of liability
incurred, or expected to be incurred, by the Company, any
Significant Subsidiary of the Company or any Affiliate in
connection with any event described in clause (A), (B), (C)
or (D) above;
(ix) promptly and in any event within ten Business
Days after the Company, any Significant Subsidiary of the
Company or any Affiliate knows or has reason to know that
it has incurred or could reasonably expect to incur
material liability under Title IV of ERISA or pursuant to
Section 406, 409, 502(i), 502(l) or 515 of ERISA or Section
401(a)(29), 4971 or 4975 of the Code, a statement of the
chief financial officer of the Company describing such
occurrence and the action, if any, which the Company, such
Significant Subsidiary or such Affiliate is required or
proposes to take with respect thereto, together with any
notices required or proposed to be given to or filed with
or by the Company, the Significant Subsidiary, the
Affiliate, the PBGC, a Plan or a Mulitemployer Plan
participant or the Plan or Multiemployer Plan
administrator;
(x) as soon as possible and in any event within 10 days
after the Company or any Significant Subsidiary of the
Company or any Affiliate knows or has reason to know of any
of the following, a statement of the chief financial
officer of the Company describing such occurrence together
with any notices required or proposed to be given to or
filed with or by the Company, the Significant Subsidiary,
the Affiliate, the PBGC, a Plan or Multiemployer Plan
sponsor with respect thereto: (A) that an accumulated
funding deficiency has been incurred or an application may
be or has been made to the Secretary of the Treasury for a
waiver or modification of the minimum funding standard
(including any required installment payments) or an
extension of any amortization period under Section 412 of
the Code with respect to a Plan or a Multiemployer Plan;
(B) that a contribution required to be made to a Plan or a
Multiemployer Plan has not been timely made; (C) that a
Plan has an Unfunded Current Liability giving rise to a
lien under ERISA or the Code; or (D) that the Company or
any Significant Subsidiary of the Company may incur any
material liability pursuant to any employee welfare benefit
plan (as defined in Section 3(1) of ERISA) that provides
benefits to retired employees or other former employees
(other than as required by Section 601 of ERISA) or any
employee pension benefit plan (as defined in Section 3(2)
of ERISA) which, when expressed as a present value amount,
exceeds the present value of the liability that existed on
the date hereof pursuant to any such plan or plans by more
than $25,000,000 (such present value amounts being
determined pursuant to the actuarial assumptions and
methods utilized by the Company for such purposes, which
are, individually and in the aggregate, reasonable);
(xi) promptly and in any event within ten Business Days
after receipt thereof by the Company, any Significant
Subsidiary of the Company or any Affiliate, copies of any
material notices (not otherwise required to be furnished to
the Bank under this Section 5.01(c)) received by the
Company, such Significant Subsidiary of the Company or such
Affiliate with respect to any Plan or Multiemployer Plan,
the contents of which indicate the incurrence or reasonable
likelihood of incurrence of material liability by the
Company, such Significant Subsidiary or such Affiliate;
(xii) promptly and in each case within five Business
Days following the effectiveness thereof, copies of each
amendment, waiver, consent or other modification to the
Master Restructuring Agreement or the Company Mortgage; and
(xiii) such other information respecting the condition
or operations, financial or otherwise, of the Company or
any of its Subsidiaries as the Bank may from time to time
reasonably request.
(d) Maintenance of Insurance. Maintain, and cause
each of its Significant Subsidiaries to maintain, insurance
with responsible and reputable insurance companies or
associations, or through its own program of self-insurance
as is customarily maintained by corporations engaged in the
same or similar business similarly situated, in such
amounts and covering such risks as is usually carried by
companies engaged in similar businesses and owning similar
properties in the same general areas in which the Company
or such Significant Subsidiary operates and, upon the
written request of the Bank, (1) deliver to the Bank a
certificate of an authorized representative of the Company
specifying the details of such insurance in effect or (2)
cause its insurance agent to deliver to the Bank a
certificate specifying the details of such insurance in
effect.
(e) Preservation of Corporate Existence, Etc. Except
to the extent permitted by Section 5.02(b), preserve and
maintain, and cause each of its Significant Subsidiaries to
preserve and maintain, its corporate existence, rights
(charter and statutory), franchises and, to the extent
required in connection with its operations, foreign
qualifications, unless the failure to so preserve and
maintain such rights, franchises or qualifications would
not have a material adverse effect on the business,
operations, property or condition (financial or otherwise)
of the Company and its Significant Subsidiaries taken as a
whole or the ability of the Company to perform its
obligations under this Agreement or any Related Document.
(f) Keeping of Books. Keep, and cause each of its
Subsidiaries to keep, proper books of record and account,
in which full and correct entries shall be made of all
financial transactions and the assets and business of the
Company and each of its Subsidiaries in accordance with
generally accepted accounting principles.
(g) Maintenance of Properties, Etc. Maintain and
preserve, and cause each of its Significant Subsidiaries to
maintain and preserve, all of its properties which are used
or useful in the conduct of its business in good working
order and condition, ordinary wear and tear excepted;
provided, however, that the Company or any of its
Significant Subsidiaries may discontinue the operation of
any of its properties to the extent, in the judgment of the
Company, it is no longer advisable to operate them from a
financial or safety viewpoint or to the extent permitted by
5.02(a).
(h) Performance and Compliance with Other Covenants.
Perform and comply with each of the covenants to be
performed by the Company, as set forth in the Related
Documents, without giving effect to any subsequent
amendment, modification or termination thereof after the
date hereof, unless such amendment, modification, or
termination was consented to by the Bank.
V.02. Negative Covenants. So long as (i) the
Commitment Termination Date has not yet occurred, (ii) any
drawing is available under the Letter of Credit, or (iii)
the Company shall have any obligation to pay any amount to
the Bank hereunder, the Company will not, without the
written consent of the Bank:
(a) Sales, Etc. of Assets. Sell, lease, transfer or
otherwise dispose of, directly or indirectly, whether in
one transaction or in a series of transactions, all or
substantially all of the assets of the Company, except (i)
in the ordinary course of business as presently conducted
or (ii) in a transaction not prohibited by subsection (b)
below.
(b) Mergers, Etc. Merge or consolidate with or into,
or acquire all of the assets of, any other Person, except
that (i) the Company may acquire all the assets of any
Subsidiary, (ii) any Subsidiary may merge or consolidate
with or into, or acquire assets from, any other Subsidiary,
(iii) any Subsidiary may merge into the Company and (iv)
the Company may merge or consolidate with or into, and any
Subsidiary may merge or consolidate with or into, any other
Person; provided, however, that (A) in the case of any such
merger, consolidation or acquisition, both immediately
before and after giving effect thereto, no Event of Default
or event which, with the passage of time or the giving of
notice, or both, would constitute an Event of Default shall
have occurred and be continuing and (B) in the case of any
merger to which the Company is a party, either the Company
is the surviving corporation or the corporation into which
the Company shall be merged or consolidated shall assume
the Company's obligations under this Agreement and the
Related Documents to which it is, or is to be, a party in a
writing in form and substance satisfactory to the Bank.
(c) Related Documents. Amend or modify any Related
Document to which the Company is or is to be a party or
consent to any amendment or modification of any Related
Document to which the Company is not or is not to be a
party.
(d) Compliance with ERISA. (i) Terminate, or permit
any Significant Subsidiary of the Company or any Affiliate
to terminate, any Plan so as to result in any material (in
the reasonable opinion of the Bank) liability of the
Company or any Significant Subsidiary of the Company, or
(ii) permit to exist any occurrence of any Reportable
Event, or any other event or condition, which may
reasonably be expected (in the opinion of the Bank) to
present a material risk of a Plan termination by the PBGC.
(e) Successors. Appoint, or agree to the appointment
of, a successor Trustee, Tender Agent or Remarketing Agent
without the consent of the Bank.
(f) Employment. Employ as an employee, agent or,
with respect to the subject matter of the Related
Documents, a consultant, any person actually known by the
Company to be significantly involved in initiating,
negotiating, securing, drafting or creating any such
Related Documents on behalf of the Issuer within three
years from the execution thereof, unless a waiver is
provided by the Issuer.
VI. EVENTS OF DEFAULT
VI.01. Events of Default. The occurrence of any of
the following events shall be an "Event of Default"
hereunder:
(a) The Company shall fail to pay any principal
amount when due; or the Company shall fail to pay any
interest amount or any other amount payable under any
provision of Article II within five days after any such
interest or other amount becomes due; or
(b) Any representation or warranty made, or deemed
made, by the Company herein or by the Company (or any of
its officers) in connection with this Agreement or any of
the Related Documents shall prove to have been incorrect in
any material respect when made or deemed made; or
(c) The Company shall fail to perform or observe any
of its covenants and agreements contained in Section 5.02
hereof; or
(d) The Company shall fail to perform or observe any
other covenant or agreement contained in this Agreement or
the Custodian Agreement and, in any such case, such failure
shall continue for thirty Business Days after written
notice thereof from the Bank to the Company; or
(e) An Event of Default, as defined in the Master
Restructuring Agreement, shall occur and be continuing
under the Master Restructuring Agreement; or
(f) The Company shall (i) fail to make any payment,
equal to or exceeding (individually or in the aggregate)
$10,000,000, of any Debt (excluding Debt under this
Agreement) of the Company, when due (whether by scheduled
maturity, required prepayment, acceleration, demand or
otherwise) and such failure shall continue after the
applicable grace period, if any, specified in the agreement
or instrument relating to such Debt, or (ii) fail to
perform or observe any term, covenant or condition on its
part to be performed or observed, and such failure
continues after the applicable grace period, if any,
specified in such agreement or instrument, if the effect of
such failure to perform or observe is to accelerate, or to
permit the acceleration of, the maturity of any Debt, the
unpaid principal amount of which (individually or in the
aggregate) then equals or exceeds $10,000,000; or
(g) A judgment or order for the payment of money in
excess of $10,000,000 shall be rendered against the Company
and either (i) enforcement proceedings shall have been
commenced by any creditor upon such judgment or order or
(ii) there shall be any period of 90 days during which a
stay of enforcement of such judgment or order, by reason of
a pending appeal or otherwise, shall not be in effect; or
(h) Any approval of the ACC (including the ACC Order)
or any governmental body, public board or public body
related to this Agreement, the Custodian Agreement or any
of the Related Documents shall be modified, rescinded,
revoked or set aside or otherwise cease to remain in full
force and effect, and as a result thereof, the ability of
the Company to perform its obligations hereunder, in the
Bank's sole discretion, shall be adversely affected, or
shall otherwise not authorize the entirety of the Advances
and other amounts outstanding hereunder; or
(i) Any provision of this Agreement, the Custodian
Agreement or any other Related Document shall at any time
for any reason cease to be valid and binding on the
Company, or shall be declared to be null and void, or the
validity or enforceability thereof shall be denied or
contested by the Company, or a proceeding shall be
commenced by any governmental agency or authority having
jurisdiction over the Company seeking to establish the
invalidity or unenforceability thereof, or the Company
shall deny that it has any further liability or obligation
thereunder; or
(j) Any one or more of the events described in
paragraphs (i) through (ix) below shall have occurred and
there shall result from any such event or events the
imposition of a lien, the granting of a security interest,
or a liability or a material risk of incurring a liability;
which lien, security interest or liability, individually,
and/or in the aggregate, in the reasonable opinion of the
Bank, could reasonably be expected to have a material
adverse effect upon the business, operations, condition
(financial or otherwise) or prospects of the Company:
(i) any Termination Event shall have occurred;
(ii) the Company or any Significant Subsidiary of the
Company or any Affiliate shall have incurred or is likely
to incur a withdrawal liability with respect to any
Multiemployer Plan;
(iii) any Multiemployer Plan shall have been or is
likely to be terminated or to be the subject of termination
proceedings under ERISA;
(iv) any Multiemployer Plan shall have had or is likely to
have a trustee appointed by the PBGC or a court of
competent jurisdiction to administer such Multiemployer
Plan;
(v) the Company or any Significant Subsidiary of the
Company or any Affiliate shall incur or shall be likely to
incur liability pursuant to any one or more of Title IV of
ERISA or pursuant to Section 406, 409, 502(i), 502(l) or
515 of ERISA or Section 401(a)(29), 4971 or 4975 of the
Code;
(vi) any Plan shall fail to satisfy the minimum funding
standard required for any plan year or part thereof or a
waiver of such standard or extension of any amortization
period is sought or granted under Section 412 of the Code;
(vii) any Plan shall have an Unfunded Current
Liability;
(viii) a contribution required to be made to a Plan or
a Multiemployer Plan has not been timely made; or
(ix) the Company or any Significant Subsidiary of the
Company has incurred or is likely to incur liabilities
pursuant to one or more employee welfare benefit plans (as
defined in Section 3(1) of ERISA) that provide benefits to
retired employees or other former employees (other than as
required by Section 601 of ERISA) or employee pension
benefit plans (as defined in Section 3(2) of ERISA); or
(k) The Company or any of its Significant
Subsidiaries shall generally not pay its debts as such
debts become due, or shall admit in writing its inability
to pay its debts generally, or shall make a general
assignment for the benefit of creditors; or any proceeding
shall be instituted by or against the Company or any of its
Significant Subsidiaries seeking to adjudicate it a
bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection,
relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee, or other
similar official for it or for any substantial part of its
property; or the Company or any of its Significant
Subsidiaries shall take any corporate action to authorize
any of the actions set forth above in this subsection (k);
or
(l) The Company Mortgage, including the Supplement to
Company Mortgage, or the First Mortgage Bonds shall cease
to be in full force and effect, or shall cease to provide
the Liens, rights, powers and privileges purported to be
created thereby, or the Company, or any Authorized
Representative of the Company, shall deny or disaffirm the
Company's obligations under the Company Mortgage, including
the Supplement to Company Mortgage, or the First Mortgage
Bonds; or
VI.02. Upon an Event of Default. If any Event of
Default shall have occurred and be continuing, the Bank may
(i) if the Letter of Credit shall not have been issued, by
notice to the Company declare the Commitment to be
terminated, whereupon the same shall forthwith terminate,
(ii) if the Letter of Credit shall have been issued, notify
the Trustee of such Event of Default and direct the Trustee
either to cause a mandatory tender of all of the Bonds or
to cause a mandatory redemption of all of the Bonds and
upon such mandatory redemption to terminate the Letter of
Credit, and provide a copy of such notice to the Company
and the Issuer, (iii) if the Letter of Credit shall have
been issued and a drawing to pay interest on the Bonds
shall have been made thereunder (other than such a drawing
in respect of the payment of interest upon scheduled or
accelerated maturity, or redemption, of the Bonds), notify
the Trustee prior to the seventh day following such drawing
that the Interest Component (as defined in the Letter of
Credit) in the amount of such drawing will not be
reinstated, (iv) declare the Advances and all other
principal amounts outstanding hereunder, all interest
thereon and all other amounts payable hereunder to be
forthwith due and payable, whereupon the Advances and all
other principal amounts outstanding hereunder, all such
interest and all such other amounts shall become and be
forthwith due and payable, without presentment, demand,
protest or further notice of any kind, all of which are
hereby expressly waived by the Company, (v) exercise in
respect of the Pledged Bonds, in addition to other rights
and remedies provided for herein or in the Custodian
Agreement or otherwise available to it, all the rights and
remedies of a secured party on default under the Uniform
Commercial Code in effect in the State of New York at that
time and (vi) exercise any and all remedies available to
the Bank pursuant to the Company Mortgage; provided,
however, that in the event an order for relief with respect
to the Company under the Federal Bankruptcy Code is entered
or sought by the Company, (A) the Commitment and the
obligation of the Bank to make Advances shall automatically
be terminated, and (B) the Advances and all amounts
reimbursable on demand pursuant to Section 2.04, all
interest accrued and unpaid thereon and all other amounts
payable hereunder shall automatically become due and
payable, without presentment, demand, protest or any notice
of any kind, all of which are hereby expressly waived by
the Company.
VII. MISCELLANEOUS
VII.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement, nor consent to any departure
by the Company therefrom, shall in any event be effective
unless the same shall be in writing and signed by the Bank
and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for
which given.
VII.02. Notices, Etc. All notices and other
communications provided for hereunder shall be in writing
(including telegraphic communication) and mailed,
telecopied, telexed, telegraphed or delivered, if to the
Company, to it at its address at 220 West Sixth Street,
P.O. BOX 711, Tucson, Arizona 85702, Attention: Mr. Kevin
P. Larson, Treasurer, telecopy no. (520) 884-3888; and if
to the Bank, to it at its address at 2029 Century Park
East, Suite 2900, Los Angeles, California 90067, Attention:
Mr. George Chen, telecopy number (310) 551-1537; or, as to
each party, at such other address or telecopy number as
shall be designated by such party in a written notice to
the other party. All such notices and communications
shall, when mailed, telecopied or telegraphed, be effective
when deposited in the mails or sent by telecopy or
delivered to the telegraph company, respectively, addressed
as aforesaid, except that notices to the Bank pursuant to
the provisions of Article II shall not be effective until
received by the Bank.
VII.03. No Waiver; Remedies. No failure on the part of
the Bank to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right hereunder preclude
any other or further exercise thereof or the exercise of
any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by
law.
VII.04. Right of Set-off. (a) Upon the occurrence and
during the continuance of any Event of Default, the Bank is
hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand,
provisional or final) at any time held and other
indebtedness at any time owing by the Bank to or for the
credit or the account of the Company against any and all of
the obligations of the Company now or hereafter existing
under this Agreement, irrespective of whether or not the
Bank shall have made any demand hereunder and although such
obligations may be contingent or unmatured. The rights of
the Bank under this Section are in addition to other rights
and remedies (including, without limitation, other rights
of set-off) which the Bank may have.
(b) The Bank agrees promptly to notify the Company
after any such set-off and application referred to in
subsection (a) above; provided that the failure to give
such notice shall not affect the validity of such set-off
and application.
VII.05. Indemnification. The Company hereby
indemnifies and holds the Bank, its officers, directors,
employees and agents harmless from and against any and all
claims, damages, losses, liabilities, costs and expenses
which the Bank may incur or which may be claimed against
the Bank, its officers, directors, employees and agents by
any Person:
(a) by reason of or in connection with the execution,
delivery or performance of, or the sale or resale of, the
Bonds including those resulting from any misstatement in or
omission from any official statement or other offering
document or supplement thereto relating to the Bonds
(except any misstatement in or omission resulting from
information furnished in writing by the Bank expressly for
inclusion in such offering documents), the Indenture, the
Loan Agreement, any other Related Document or any
transaction contemplated thereby, other than as specified
in subsection (b) below; or
(b) by reason of or in connection with the execution
and delivery, transfer or use of the proceeds of, or
payment or failure to make payment under, the Letter of
Credit; provided, however, that the Company shall not be
required to indemnify the Bank pursuant to this Section
7.05(b) for any claims, damages, losses, liabilities, costs
or expenses to the extent caused by (i) the Bank's willful
misconduct or gross negligence in determining whether
documents presented under the Letter of Credit are genuine
or comply with the terms of the Letter of Credit or (ii)
the Bank's willful or grossly negligent failure to make
lawful payment under the Letter of Credit after the
presentation to it by the Trustee under the Indenture of a
draft and certificate strictly complying with the terms and
conditions of the Letter of Credit.
(c) The Company will also indemnify and hold harmless
the Bank from and against all losses and reasonable costs
or expenses which the Bank may incur by reason of either
(i) any failure of the Remarketing Agent to pay when due
the purchase price of any Bond for which the Remarketing
Agent has given the notice referred to in alternate 2 of
paragraph (1) of Exhibit 4 of the Letter of Credit and/or
(ii) any failure by the Trustee promptly to turn over to
the Bank in accordance with the provisions of the Indenture
the proceeds from the sale of any such Bond received from
the Remarketing Agent. The Company shall pay to the Bank
any such amounts not paid by the Remarketing Agent or the
Trustee, as the case may be, upon demand.
Nothing in this Section 7.05 is intended to limit the
Company's obligations contained in Article II. Without
prejudice to the survival of any other obligation of the
Company hereunder, the indemnities and obligations of the
Company contained in this Section 7.05 shall survive the
payment in full of amounts payable pursuant to Article II
and the termination of the Letter of Credit.
VII.06. Bank Not Liable. (a) The Company assumes all
risks of the acts or omissions of the Trustee, the
Remarketing Agent and any beneficiary or transferee of the
Letter of Credit with respect to its use of the Letter of
Credit. Neither the Bank nor any of its officers,
directors, employees or agents shall be liable or
responsible for: (a) the use which may be made of the
Letter of Credit or any acts or omissions of the Trustee
and any other beneficiary or transferee in connection
therewith; (b) the validity, sufficiency or genuineness of
documents, or of any endorsement thereon, even if such
documents should prove to be in any or all respects
invalid, insufficient, fraudulent or forged; (c) payment by
the Bank against presentation of documents which do not
comply with the terms of the Letter of Credit, including
failure of any documents to bear any reference or adequate
reference to the Letter of Credit; or (d) any other
circumstances whatsoever in making or failing to make
payment under the Letter of Credit, except that the Company
shall have a claim against the Bank, and the Bank shall be
liable to the Company, to the extent of any direct, as
opposed to consequential, damages suffered by the Company
which the Company proves were caused by (i) the Bank's
willful misconduct or gross negligence in determining
whether documents presented under the Letter of Credit are
genuine or comply with the terms of the Letter of Credit or
(ii) the Bank's willful or grossly negligent failure to
make lawful payment under the Letter of Credit after the
presentation to it by the Trustee under the Indenture of a
draft and certificate strictly complying with the terms and
conditions of the Letter of Credit. In furtherance and not
in limitation of the foregoing, the Bank may accept
original or facsimile (including telecopy) sight drafts and
accompanying certificates presented under the Letter of
Credit that appear on their face to be in order, without
responsibility for further investigation, regardless of any
notice or information to the contrary.
(b) The Bank shall not have any liability to the
Company, and the obligations of the Company under this
Agreement shall not be affected by (1) the form,
sufficiency, correctness, validity, genuineness and legal
effect of any drafts, demands and other documents,
instruments and other papers relating thereto, (2) the good
faith and acts of any Person, (3) the existence, form,
sufficiency and breach of contracts of any nature
whatsoever, including the Related Documents, (4) the
solvency, standing and responsibility of any Person, (5)
any delay in giving or failure to give any notice, demand
or protest, (6) failure of any Person to comply with the
terms of the Letter of Credit, (7) errors, omissions or
delays in or nondelivery of any message, however sent, and
(8) any other error, neglect or omission, except as
provided in the last sentence of paragraph (a) of this
Section.
(c) The Bank shall not have any liability to the
Company for, and the Company waives any right to object to,
payment made under the Letter of Credit against a demand
varying in punctuation, capitalization, spelling or similar
matters of form. The determination whether a demand has
been made before the expiration of the Letter of Credit and
whether a demand is in proper and sufficient form for
compliance with the Letter of Credit shall be made by the
Bank in its sole discretion, which determination shall be
conclusive and binding upon the Company except as otherwise
expressly provided in this Agreement.
VII.07. Costs, Expenses and Taxes. The Company agrees
to pay on demand all costs and expenses in connection with
the preparation, execution, delivery, filing, recording,
and administration (including any amendment or waiver) of
this Agreement and any other documents which may be
delivered in connection with this Agreement, including,
without limitation, the reasonable fees and out-of-pocket
expenses of counsel for the Bank, and local counsel who may
be retained by said counsel, with respect thereto and with
respect to advising the Bank as to its rights and
responsibilities under this Agreement and such other
documents which may be delivered in connection with this
Agreement and all costs and expenses (including counsel
fees and expenses) in connection with (i) the enforcement
(whether through negotiations, legal proceedings or
otherwise) of this Agreement and such other documents which
may be delivered in connection with this Agreement or
(ii) any action or proceeding relating to a court order,
injunction, or other process or decree restraining or
seeking to restrain the Bank from paying any amount under
the Letter of Credit. In addition, the Company shall pay
any and all stamp and other taxes and fees payable or
determined to be payable in connection with the execution,
delivery, filing and recording of this Agreement or the
Letter of Credit or any of such other documents, and agrees
to save the Bank harmless from and against any and all
liabilities with respect to or resulting from any delay in
paying or omission to pay such taxes and fees.
VII.08. Binding Effect. This Agreement shall become
effective when it shall have been executed and delivered by
the Company and the Bank and thereafter shall be binding
upon and inure to the benefit of the Company and the Bank
and their respective successors and assigns, except that
the Company shall not have the right to assign its rights
hereunder or any interest herein without the prior written
consent of the Bank.
VII.09. Severability. Any provision of this Agreement
which is prohibited, unenforceable or not authorized in any
jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition, unenforceability or
non-authorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability
or legality of such provision in any other jurisdiction.
VII.010. Governing Law; Submission to Jurisdiction; etc.
This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York. Any
action or proceeding arising out of or relating to this
Agreement or the Letter of Credit shall be heard and
determined in an appropriate state or federal court in the
State of New York. The Company irrevocably waives, to the
fullest extent permitted by law, any objection which it may
now or hereafter have to the laying of venue of any such
suit, action or proceeding brought in such courts and any
claim that any such suit, action or proceeding has been
brought in an inconvenient forum. The Company also irrevo
cably consents to the service of any and all process in any
such suit, action or proceeding by mailing of copies of
such process to the Company at its address provided in
Section 7.02. The Company agrees that a final judgment not
stayed in any such action or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. All
mailings under this Section 7.10 shall be by certified
mail, return receipt requested. Nothing in this Section
7.10 shall affect the right of the Bank to serve legal
process in any other manner permitted by law or affect the
right of the Bank to bring any suit, action or proceeding
against the Company or its property in the courts of any
other jurisdiction.
VII.011. Headings. Section headings in this Agreement
are included herein for convenience of reference only and
shall not constitute a part of this Agreement for any other
purpose.
VII.012. Counterparts. This Agreement may be executed
by the parties hereto in separate counterparts, each of
which when so executed and delivered shall be an original,
but all such counterparts shall together constitute but one
and the same instrument.
VII.013. Waiver of Jury Trial. EACH PARTY HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT. THE PARTIES HERETO (a)
CERTIFY THAT NO REPRESENTATIVE OR ATTORNEY OF ANY OTHER
PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVER, AND (b) ACKNOWLEDGE THAT THEY
HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND THE OTHER
RELATED DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION.
VII.014. Assignment and Participation. (a) The Bank
may with the consent of the Company (which consent may not
be unreasonably withheld) assign to one or more financial
institutions all, or a proportional part of all, of its
rights and obligations under this Agreement, as such
assignee shall assume such rights and obligations. Upon
any such assignment the assignee shall become a party to
this Agreement, shall be a "Bank" hereunder and shall be
entitled to all of the rights and benefits hereunder
(including, without limitation, the rights set forth in
Sections 2.07, 2.08, 2.14, 7.04, 7.05 and 7.07).
(b) The Bank may, with the consent of the
Company (which consent may not be unreasonably withheld),
sell participations to one or more banks or other financial
institutions (each a "Participant") in all or a portion of
its rights and obligations under this Agreement; provided,
however, (1) the Bank's obligations under this Agreement
shall remain unchanged, (ii) the Bank shall remain solely
responsible to the Company for the performance of such
obligations, (iii) except as expressly set forth herein,
any such Participant shall be entitled to the benefit of
the cost and fee protection and indemnification provisions
contained in Sections 2.07, 2.08, 2.14, 7.04, 7.05 and 7.07
to the same extent as if the Participant were the Bank
hereunder, and (iv) the Trustee and the Issuer shall
continue to deal solely and directly with the Bank in
connection with the Bank's rights and obligations under
this Agreement and the Related Documents and the Bank shall
retain the sole right to approve any amendment,
modification or waiver of any provisions of this Agreement
or any Related Document (other than amendments,
modifications, releases or waivers with respect to any
amounts payable hereunder or the amount of principal of or
the rate at which interest is payable hereunder or the
dates fixed for payments of interest or fees, or the
termination of, or any change to the Stated Amount).
(c) The Bank may disclose to any assignee or
Participant or proposed assignee or Participant any
information that the Company has delivered or is required
to deliver to the Bank pursuant to this Agreement or the
other Related Documents.
VII.015. Beneficiaries. This Agreement is made
solely for the benefit of the Bank, its successors and
assigns, and the Company, its successors and assigns and no
other Person shall have any right, benefit or interest
under or because of the existence of this Agreement.
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed and delivered by
their respective duly authorized representatives as of the
date first above written.
TUCSON ELECTRIC POWER COMPANY
By________________________
Title:
SOCIETE GENERALE, LOS ANGELES
BRANCH
By________________________
Title:
Schedule 4.01(v)
[Environmental Disclosure]
SCHEDULE 4.01(v)
(2)(B). The Company received a letter requesting certain
information pursuant to CERCLA Section 104 on March 17, 1994
from the Arizona Dept. of Environmental Quality (ADEQ). This
request dealt with a parcel that had been owned by the Company's
predecessor, Tucson Gas & Electric (TG&E), from 1974 to 1984.
This parcel, and other nearby non-Company parcels, had received
some dumping of processed aluminum airplane parts ("dross") in
the late 1960's. ADEQ had inspected the property in 1987 and
issued a report in 1988, with no other activity apparent until
the ADEQ request letter of 1994.
TG&E conducted no activities on this undeveloped
3)(A). The Company is subject to a Consent Judgment with the
Arizona Dept. of Environmental Quality (ADEQ) dated September 12,
1995, concerning the Springerville Generating Station (SGS) in
Apache County, Arizona. No judgment of any actual violations was
entered as part of this voluntary order, which centered on tests
and inspections conducted in July 1993; rather, the Company
agreed to perform quarterly (rather than annual) particulate air
quality tests on SGS Unit 2 for a period of one year, and to
submit written plans for 1) additional particulate reductions at
SGS, and 2) providing for backup ambient monitors in the event of
equipment failure.
Both written plans were duly submitted to ADEQ on
October 12, 1995, and two of the four quarters' testing have been
successfully completed to date. After two more quarterly tests
are completed, the Company may apply to the Maricopa County
Superior Court for an order terminating the agreement.
(5). The Company is a generator of hazardous waste at both
its Irvington and Springerville Generation Stations. Both
operations are registered with the Arizona Dept. of Environmental
Quality as Small Quantity Generators, and neither site has any
outstanding notices of violation for hazardous waste activities.
The treatment, storage, and disposal of these wastes are
conducted off-site by other parties under contract with the
Company.
EXHIBIT A
FORM OF LETTER OF CREDIT
IRREVOCABLE DIRECT-PAY LETTER OF CREDIT
NO. 40054
May 1, 1996
First Trust of New York,
National Association
100 Wall Street, Suite 1600
New York, New York 10005
Attention: Corporate Trust Administration
Dear Sir or Madam:
We hereby establish, at the request and for the
account of Tucson Electric Power Company (the "Company"),
in your favor, as Trustee under the Indenture of Trust,
dated as of May 1, 1996 (the "Indenture"), by and between
Coconino County, Arizona Pollution Control Corporation (the
"Issuer") and you, as Trustee, pursuant to which
$14,700,000 in aggregate principal amount of the Issuer's
Pollution Control Refunding Revenue Bonds, 1996 Series B
(Tucson Electric Power Company Project) (the "Bonds"), are
being issued, our Irrevocable Letter of Credit No. 40054 in
the amount of $16,149,864 (subject to reduction and
reinstatement as provided below).
(a) Cancellation Date. This Letter of Credit shall
expire on the earliest to occur of (i) April 30, 1999 (the
"Stated Termination Date"),/1 (ii) the date upon which we
honor a draft accompanying a written and completed
certificate signed by you in substantially the form of
Exhibit 1 or Exhibit 3 attached hereto, and stating therein
that such draft is the final draft to be drawn under this
Letter of Credit and that, upon the honoring of such draft,
this Letter of Credit will expire in accordance with its
terms and (iii) the date upon which we receive a written
certificate signed by you and stating therein that either
(a) no Bonds are Outstanding (as defined in the Indenture)
or (b) the Letter of Credit is being Terminated (as defined
in the Indenture) without a mandatory purchase of the Bonds
(such earliest date being the "Cancellation Date").
As used herein, "business day" shall mean any day
on which banks are not required or authorized by law to
close in New York City, in the city in which the principal
office of the Trustee is located or Los Angeles, California
and on which the New York Stock Exchange is not closed.
(b) Principal and Interest Components. The aggregate
amount which may be drawn under this Letter of Credit,
subject to reductions in amount and reinstatement as
provided below, is $16,149,864 (Sixteen Million One Hundred
Forty-Nine Thousand Eight Hundred Sixty-Four Dollars), of
which the aggregate amounts set forth below may be drawn as
indicated.
(i) An aggregate amount not exceeding $14,700,000
(Fourteen Million Seven Hundred Thousand Dollars), as such
amount may be reduced and restored as provided below, may
be drawn in respect of payment of principal (whether upon
scheduled or accelerated maturity, or upon redemption) of
the Bonds or the portion of the purchase price of Bonds
corresponding to principal (the "Principal Component").
(ii) An aggregate amount not exceeding $1,449,864 (One
Million Four Hundred Forty-Nine Thousand Eight Hundred
Sixty-Four Dollars), as such amount may be reduced and
restored as provided below, may be drawn in respect of
payment of interest on the Bonds or the portion of the
purchase price of Bonds corresponding to interest, but not
more than an amount equal to accrued interest on the Bonds
for the period of 300 days immediately preceding the date
of such drawing at a maximum rate of twelve percent (12%)
per annum calculated on the basis of a year of 365 days
(the "Interest Component").
(c) Drawings. Funds under this Letter of Credit are
available to you against (i) your draft payable on the date
such draft is drawn on us, stating on its face: "Drawn
under Irrevocable Letter of Credit No. 40054, dated May 1,
1996", and (ii) the appropriate certificate specified
below, duly executed by you and appropriately completed.
Exhibit Setting Forth
Type of Drawing Form of Certificate Required
Drawing in respect of Exhibit 1
regularly scheduled
interest payment or
payment of principal of
and interest on the Bonds
upon scheduled or
accelerated maturity
Tender Drawing (as Exhibit 2
hereinafter defined)
Redemption/Mandatory Exhibit 3
Purchase Drawing (as
hereinafter defined)
Drafts and certificates hereunder shall be dated
the date of presentation and shall be presented to Societe
Generale, Los Angeles Branch, Letter of Credit Department,
Attention: Ms. Minerva Arvisu, 2029 Century Park East,
Suite 2900, Los Angeles, California 90067 (or at such other
office as we may designate by written notice to you) or by
facsimile transmission received by us at the following
telephone number: (310) 203-0539 (or at such other
telephone number as we may designate by written notice to
you) subsequently confirmed in writing. If we receive your
draft(s) and certificate(s) at such office, all in strict
conformity with the terms and conditions of this Letter of
Credit, (A) with respect to a drawing in respect of a
regularly scheduled interest payment or payment of
principal of and interest on the Bonds upon scheduled
maturity, on a business day on or before the day before the
Cancellation Date, if such draft(s) are received prior to
the close of business on such day, we will honor such
draft(s) at or before 12:00 noon (Los Angeles time) on the
next business day and (B) with respect to a drawing in
respect of principal and interest on the Bonds upon
accelerated maturity, Tender Drawings and
Redemption/Mandatory Purchase Drawings, at or before 9:00
a.m. (Los Angeles time), on a business day on or before the
Cancellation Date, we will honor such draft(s) at or before
12:00 noon (Los Angeles time) on the same business day to
your order in accordance with your payment instructions;
and draft(s) so received following 9:00 a.m. (Los Angeles
time) will be so honored at or before 10:00 a.m. (Los
Angeles time) on the next business day (notwithstanding
that such prior business day may have been the Cancellation
Date). If you request, by written notice to us delivered
in a timely fashion, payment under this Letter of Credit
will be made by wire transfer of federal funds to your
account with any bank that is a member of the Federal
Reserve System, or by deposit of immediately available
funds into a designated account that you maintain with us.
All payments made by us under this Letter of Credit will be
made with our own funds and not with any funds of the
Company or the Issuer.
(d) Reductions. The Principal Component and the
Interest Component shall be reduced immediately following
(i) our honoring any draft drawn hereunder (a) to pay
principal of, or interest on, the Bonds or to pay the
principal of, or interest on, Bonds that are subject to
redemption by the Company pursuant to Section 3.01 of the
Indenture or the purchase price of Bonds that are subject
to mandatory purchase by the Company pursuant to Section
2.02(h) of the Indenture (any such drawing in respect of
the payment of principal of and interest, if any, on the
Bonds upon redemption of the Bonds in whole or in part or
the purchase price of Bonds that are so subject to
mandatory purchase by the Company being a
"Redemption/Mandatory Purchase Drawing"), or (b) to pay the
purchase price of Bonds that are purchased pursuant to an
election by the holders thereof pursuant to Section 2.02(g)
of the Indenture (any such drawing in respect of the
circumstances referred to in this clause (ii) being a
"Tender Drawing"), in each case by an amount equal to the
respective component of the amount of such draft and (ii)
our receipt of a written certificate from you stating the
principal amount of Bonds which have been defeased in an
amount equal to such principal amount plus the amount of
interest, calculated in accordance with this Letter of
Credit, with respect to such principal amount.
(e) Reinstatement. On the eighth day (provided that
if such day is not a business day, then on the next
succeeding business day) following each drawing under this
Letter of Credit to pay interest on the Bonds, the amount
so drawn shall be reinstated to the Interest Component
unless you shall have theretofore received written notice
from us by the seventh day following such drawing that we
will not reinstate this Letter of Credit in the amount of
such drawing because (i) we have not been reimbursed in
full by the Company for the amount of such drawing,
together with interest, if any, owing thereon pursuant to
the Letter of Credit and Reimbursement Agreement, dated as
of May 1, 1996 (the "Reimbursement Agreement"), between the
Company and us, (ii) a previous drawing has been made under
this Letter of Credit for which we have not been
reimbursed, or (iii) an Event of Default under the
Reimbursement Agreement has occurred and is then
continuing.
When we have been reimbursed by or for the
account of the Company in respect of the principal amount
of any Tender Drawing or Redemption/Mandatory Purchase
Drawing, owing thereon pursuant to the Reimbursement
Agreement, the amounts of which we have been reimbursed in
respect of such Tender Drawing or Redemption/Mandatory
Purchase Drawing shall be reinstated to the Principal
Component.
(f) Notices. Communications with respect to this
Letter of Credit shall be in writing and shall be addressed
to us at 2029 Century Park East, Suite 2900, Los Angeles,
California 90067, Attention: Ms. Minerva Arvisu (or at
such other office as we may designate by written notice to
you) or by facsimile transmission received by us at the
following telephone number: (310) 203-0539 (or at such
other telephone number as we may designate by written
notice to you) specifically referring to the number of this
Letter of Credit.
(g) Transfer. This Letter of Credit is transferable
in its entirety (but not in part) to any transferee who has
succeeded you as Trustee under the Indenture and may be
successively so transferred. Transfer of the available
balance under this Letter of Credit to such transferee
shall be effected by the presentation to us of this Letter
of Credit accompanied by a certificate substantially in the
form set forth in Exhibit 4.
(h) Governing Laws, Etc. This Letter of Credit shall
be governed by and construed in accordance with the laws of
the State of New York, including the Uniform Commercial
Code as in effect in the State of New York. This Letter of
Credit sets forth in full our undertaking, and such
undertaking shall not in any way be modified, amended,
amplified or limited by reference to any document,
instrument or agreement referred to herein (including,
without limitation, the Bonds, the Indenture and the
Reimbursement Agreement), except only the certificates and
the drafts referred to herein; and any such reference shall
not be deemed to incorporate herein by reference any
document, instrument or agreement except for such
certificates and such drafts. Whenever and wherever the
terms of this Letter of Credit shall refer to the purpose
of a draft hereunder, or the provisions of any agreement or
document pursuant to which such draft may be presented
hereunder, such purpose or provisions shall be conclusively
determined by reference to the certificate accompanying
such draft; in furtherance of this sentence, whether any
drawing is in respect of payment of regularly scheduled
interest on the Bonds or of principal of or interest on the
Bonds upon scheduled or accelerated maturity or is a Tender
Drawing or a Redemption/Mandatory Purchase Drawing shall be
conclusively determined by reference to the certificate
accompanying such drawing.
Very truly yours,
SOCIETE GENERALE, LOS ANGELES
BRANCH
By___________________________
Title:
EXHIBIT 1
TO THE LETTER OF CREDIT
CERTIFICATE FOR DRAWING IN RESPECT OF
REGULARLY SCHEDULED INTEREST PAYMENT OR
PAYMENT OF PRINCIPAL OF AND INTEREST ON THE
BONDS UPON SCHEDULED OR ACCELERATED MATURITY
OF THE BONDS
The undersigned, a duly authorized officer of
First Trust of New York, National Association (the
"Trustee"), hereby certifies as follows to Societe
Generale, Los Angeles Branch (the "Bank"), with reference
to Irrevocable Letter of Credit No. 40054 (the "Letter of
Credit") issued by the Bank in favor of the Trustee. Terms
defined in the Letter of Credit and used but not defined
herein shall have the meanings given them in the Letter of
Credit.
(i) The Trustee is the Trustee under the Indenture
for the holders of the Bonds.
(j)
(j) The Trustee is making a drawing under the Letter
of Credit in respect of [a regularly scheduled interest
payment]/2 [the payment of principal of and interest on the
Bonds upon the scheduled or accelerated maturity of the
Bonds]/3. Such Bonds are not registered in the name of the
Company or the Issuer and are not held or required to be
held by the Trustee for the account of the Company or the
Issuer pursuant to the Indenture.
(k) The respective amounts of principal of and
interest on the Bonds which are due and payable (or which
have been declared to be due and payable) and with respect
to the payment of which the Trustee does not have available
amounts that, pursuant to Section 4.04(a) of the Indenture,
are to be applied to such payment prior to moneys drawn
under the Letter of Credit are as follows, and the amount
of the draft accompanying this Certificate does not exceed
the sum of such amounts:
Principal: $_________________
Interest: $_________________
(l) The portion of the amount of the draft
accompanying this Certificate being drawn in respect of
payment of principal of the Bonds, as indicated in
paragraph (3), above, does not exceed the Principal
Component of the Letter of Credit, and the portion of the
amount of the draft accompanying this Certificate being
drawn in respect of payment of interest on the Bonds, as
indicated in paragraph (3), above, does not exceed the
Interest Component of the Letter of Credit. The respective
portions of the amount of the draft accompanying this
Certificate in respect of payment of principal of and
interest on the Bonds have been computed in accordance with
the terms and conditions of the Bonds and the Indenture.
(m) The draft accompanying this Certificate being
presented upon the [scheduled maturity of the Bonds]
[accelerated maturity of the Bonds pursuant to Section 9.01
of the Indenture]/4 is the final draft to be drawn under
the Letter of Credit in respect of principal of and
interest on the Bonds. Upon the honoring of such draft,
the Letter of Credit will expire in accordance with its
terms. Following application of the proceeds of this
drawing, no Bonds will be Outstanding (as defined in the
Indenture).]/5
IN WITNESS WHEREOF, the Trustee has executed and
delivered this Certificate as of the ____ day of _________
____.
FIRST TRUST OF NEW YORK,
NATIONAL ASSOCIATION,
as Trustee
By_________________________
Title:
EXHIBIT 2
TO THE LETTER OF CREDIT
CERTIFICATE FOR TENDER DRAWING
UPON BONDHOLDER ELECTION
The undersigned, a duly authorized officer of
First Trust of New York, National Association (the
"Trustee"), hereby certifies as follows to Societe
Generale, Los Angeles Branch (the "Bank"), with reference
to Irrevocable Letter of Credit No. 40054 (the "Letter of
Credit") issued by the Bank in favor of the Trustee. Terms
defined in the Letter of Credit and used but not defined
herein shall have the meanings given them in the Letter of
Credit.
(n) The Trustee is the Trustee under the Indenture
for the holders of the Bonds.
(o)
(o) The Trustee is making a Tender Drawing under the
Letter of Credit with respect to the purchase price of
Bonds delivered pursuant to an election by the holders of
the Bonds pursuant to Section 2.02(g) of the Indenture and
the Bonds. Such Bonds are not registered in the name of
the Company or the Issuer and are not held or required to
be held by the Trustee for the account of the Company or
the Issuer pursuant to the Indenture./6
(p) The respective amounts of purchase price
corresponding to principal of and accrued interest, if any,
on such Bonds and with respect to the payment of which the
Tender Agent (as such term is defined in the Indenture)
does not have available amounts that, pursuant to Section
13.03(a) of the Indenture, are to be applied to such
payment prior to moneys drawn under the Letter of Credit
are as follows, and the amount of the draft accompanying
this Certificate does not exceed the sum of such amounts:
Principal:
$______________
Interest:
$______________
(q) The portion of the amount of the draft
accompanying this Certificate being drawn in respect of
purchase price corresponding to principal of the Bonds, as
indicated in paragraph (3), above, does not exceed the
Principal Component of the Letter of Credit, and the
portion of the amount of the draft accompanying this
Certificate being drawn in respect of purchase price
corresponding to interest on the Bonds, as indicated in
paragraph (3), above, does not exceed the Interest
Component of the Letter of Credit. The respective portions
of the amount of the draft accompanying this Certificate in
respect of purchase price corresponding to principal of and
interest on such Bonds have been computed in accordance
with the terms and conditions of the Bonds and the
Indenture.
IN WITNESS WHEREOF, the Trustee has executed and
delivered this Certificate as of the ____ day of
___________, ____.
FIRST TRUST OF NEW YORK,
NATIONAL ASSOCIATION,
as Trustee
By_________________________
Title:
EXHIBIT 3
TO THE LETTER OF CREDIT
CERTIFICATE FOR REDEMPTION/MANDATORY PURCHASE
DRAWING IN RESPECT OF PAYMENT OF
PRINCIPAL OF AND INTEREST ON BONDS
UPON REDEMPTION OR MANDATORY PURCHASE
The undersigned, a duly authorized officer of
First Trust of New York, National Association (the
"Trustee"), hereby certifies as follows to Societe
Generale, Los Angeles Branch (the "Bank"), with reference
to Irrevocable Letter of Credit No. 40054 (the "Letter of
Credit") issued by the Bank in favor of the Trustee. Terms
defined in the Letter of Credit and used but not defined
herein shall have the meanings given them in the Letter of
Credit.
(r) The Trustee is the Trustee under the Indenture
for the holders of the Bonds.
(s)
(s) The Trustee is making a Redemption/Mandatory
Purchase Drawing under the Letter of Credit with respect to
[the payment of principal of and accrued interest, if any,
on the Bonds upon redemption of the Bonds in accordance
with Section 3.01 of the Indenture]/7 [the purchase price
of Bonds subject to mandatory purchase by the Company
pursuant to Section 2.02(h)[(i)][(ii)][(iii)][(iv)] of the
Indenture]./8 Such Bonds are not registered in the name of
the Company or the Issuer and are not held or required to
be held by the Trustee for the account of the Company or
the Issuer pursuant to the Indenture.
(t) The respective amounts of principal of and
interest on the Bonds which are due and payable and with
respect to the payment of which the Trustee does not have
available amounts that, pursuant to Section 4.04(a) of the
Indenture, are to be applied to such payment prior to
moneys drawn under the Letter of Credit are as follows, and
the amount of the draft accompanying this Certificate does
not exceed the sum of such amounts:
Principal: $_______________
Interest: $_______________]/9
[(3) The respective amounts of the purchase price
corresponding to principal of and accrued interest, if any,
on such Bonds and with respect to the payment of which the
Trustee does not have available amounts that, pursuant to
Section 4.04(a) of the Indenture, are to be applied to such
payment prior to moneys drawn under the Letter of Credit
are as follows, and the amount of the draft accompanying
this Certificate does not exceed the sum of such amounts:
Principal: $_______________
Interest: $_______________]/10
(u) The portion of the amount of the draft
accompanying this Certificate being drawn in respect of
payment of principal of the Bonds, as indicated in
paragraph (3), above, does not exceed the Principal
Component of the Letter of Credit, and the portion of the
amount of the draft accompanying this Certificate being
drawn in respect of payment of interest on the Bonds, as
indicated in paragraph (3), above, does not exceed the
Interest Component of the Letter of Credit. The respective
portions of the amount of the draft accompanying this
Certificate in respect of payment of principal of and
interest on the Bonds have been computed in accordance with
the terms and conditions of the Bonds and the Indenture.]3/
[(4) The portion of the amount of the draft
accompanying this Certificate being drawn in respect of
purchase price corresponding to principal of the Bonds, as
indicated in paragraph (3), above, does not exceed the
Principal Component of the Letter of Credit, and the
portion of the amount of the draft accompanying this
Certificate being drawn in respect of purchase price
corresponding to interest on the Bonds, as indicated in
paragraph (3), above, does not exceed the Interest
Component of the Letter of Credit. The respective portions
of the amount of the draft accompanying this Certificate in
respect of purchase price corresponding to principal of and
interest on such Bonds have been computed in accordance
with the terms and conditions of the Bonds and the
Indenture.]/11
(v) The draft accompanying this Certificate is the final
draft to be drawn under the Letter of Credit in respect of
principal of and interest on the Bonds and, upon the
honoring of such draft, the Letter of Credit will expire in
accordance with its terms. Upon application of the
proceeds of this drawing, no Bonds will be Outstanding (as
defined in the Indenture).]/12
[(5) The draft accompanying this Certificate is
the final draft to be drawn under the Letter of Credit in
respect of the purchase price corresponding to principal of
and interest on the Bonds and, upon the honoring of such
draft, the Letter of Credit will expire in accordance with
its terms.]/13
IN WITNESS WHEREOF, the Trustee has executed and
delivered this Certificate as of the _____ day of
____________, ____.
FIRST TRUST OF NEW YORK,
NATIONAL ASSOCIATION,
as Trustee
By_________________________
Title:
EXHIBIT 4
TO THE LETTER OF CREDIT
INSTRUCTIONS TO TRANSFER
_____________, _____
Re: Irrevocable Letter of Credit No. 40054
Ladies and Gentlemen:
The undersigned, as Trustee under the Indenture
of Trust by and between Coconino County, Arizona Pollution
Control Corporation (the "Issuer") and First Trust of New
York, National Association, dated as of May 1, 1996, is
named as beneficiary in the Letter of Credit referred to
above (the "Letter of Credit"). The Transferee named below
has succeeded the undersigned as Trustee under such
Indenture.
__________________________________
(Name of Transferee)
__________________________________
(Address)
Therefore, for value received, the undersigned
hereby irrevocably instructs you to transfer to such
Transferee all rights of the undersigned to draw under the
Letter of Credit.
By this transfer, all rights of the undersigned
in the Letter of Credit, and all obligations of the
undersigned under the Custodian Agreement, dated as of May
1, 1996, between the undersigned, as "Custodian", and you
(the "Custodian Agreement"), are transferred to such
Transferee, and such Transferee shall hereafter have the
sole rights as beneficiary under the Letter of Credit and
the obligations as "Custodian" under the Custodian
Agreement; provided, however, that no rights shall be
deemed to have been transferred to such Transferee until
such transfer complies with the requirements of the Letter
of Credit pertaining to transfers.
IN WITNESS WHEREOF, the undersigned has executed
and delivered this Certificate as of the _____ day of
___________, ____.
FIRST TRUST OF NEW YORK,
NATIONAL ASSOCIATION,
as Trustee
By__________________________
Title:
The undersigned, [Name of Transferee], hereby
accepts the foregoing transfer of rights under the Letter
of Credit and obligations under the Custodian Agreement.
[Name of Transferee]
By__________________________
Title:
Address of Principal
Corporate Trust Office:
[insert address]
EXHIBIT B
FORM OF CUSTODIAN AGREEMENT
THIS CUSTODIAN AGREEMENT (the "Agreement"), dated
as of May 1, 1996, is made by and among TUCSON ELECTRIC
POWER COMPANY (the "Company"), FIRST TRUST OF NEW YORK,
NATIONAL ASSOCIATION, as custodian (such entity and any
successor custodian hereunder being the "Custodian") and
SOCIETE GENERALE, LOS ANGELES BRANCH (the "Bank").
WHEREAS, at the request of the Company, Coconino
County, Arizona Pollution Control Corporation (the
"Issuer") is issuing $14,700,000 in aggregate principal
amount of the Issuer's Pollution Control Refunding Revenue
Bonds, 1996 Series B (Tucson Electric Power Company
project) (the "Bonds"), pursuant to an Indenture of Trust,
dated as of May 1, 1996 (as amended, modified or
supplemented from time to time, the "Indenture"), between
the Issuer and First Trust of New York, National
Association, as trustee (such trustee and any successor
trustee under the Indenture, in such capacity, being the
"Trustee"), for the purpose stated in the Indenture; and
WHEREAS, to induce the Bank to issue a letter of
credit to support certain amounts payable on and in respect
of the Bonds (the "Letter of Credit") and to enter into a
Letter of Credit and Reimbursement Agreement, dated as of
May 1, 1996, between the Bank and the Company relating
thereto (the "Reimbursement Agreement"), the Company
proposes to pledge the Collateral (as hereinafter defined)
and to enter into this Agreement;
NOW, THEREFORE, the Company, the Custodian and
the Bank hereby agree as follows:
VIII.
DEFINITIONS; INTERPRETATION
VIII.01. Definitions. For the purposes of this
Agreement, terms defined in the Reimbursement Agreement and
used but not otherwise defined herein have the meanings
given them in the Reimbursement Agreement, and the
following terms have the meanings indicated:
"Collateral" means each Pledged Bond, all
payments of principal and interest payable on Pledged
Bonds, all of the Company's rights to receive Pledged Bonds
and amounts payable thereon and all of the Company's right,
title and interest in and to Pledged Bonds and such
principal of and interest thereon, and all proceeds
thereof, as they may from time to time be delivered to or
held, pending payment by the Custodian, the Remarketing
Agent or the Trustee, in money, securities or collections
from or with respect to any or all of the foregoing.
"Custodian" means First Trust of New York,
National Association, or such other Person appointed from
time to time by the Bank to act as Custodian hereunder and
accepting such appointment.
"Obligations" means (a) all amounts of principal
of and interest on each Advance, (b) all other amounts due
under or in respect of the Reimbursement Agreement and
(c) all amounts paid or costs or expenses incurred by the
Bank in the collection of any of the foregoing or for the
maintenance, preservation, protection or enforcement
(whether through negotiations, legal proceedings or
otherwise) of, or realization upon, the Collateral or in
connection with the enforcement or administration of this
Agreement or the Reimbursement Agreement, in each case
irrespective of whether the obligation to pay any such
amount is direct or indirect, absolute or contingent, joint
or several, due or not due, liquidated or unliquidated,
arises by operation of law or otherwise or is from time to
time reduced and thereafter reincurred. To the extent any
payment made with respect to an Obligation is rescinded or
recovered or is otherwise avoided or must be restored under
or by reason of any bankruptcy or insolvency proceedings of
the Company or any other Person or otherwise, the amount of
such payment so rescinded, recovered, restored or avoided
shall again constitute an Obligation, as if such payment
had never been made.
"Pledged Bond" means each Bond for which payment
of the purchase price is made, in whole or in part, with
the proceeds of a drawing by the Trustee under the Letter
of Credit.
"Remarketing Agreement" means the Remarketing
Agreement, dated as of May 1, 1996, between the Company, on
the one hand, and PaineWebber Incorporated, on the other
hand as the same shall have been amended, modified or
supplemented from time to time.
VIII.02. Interpretation. The headings of the articles
and sections hereof are for convenience of reference only
and shall not limit or affect the meaning or construction
of any provision hereof.
IX.
SECURITY INTEREST
IX.01. Grant of Security Interest. As security for
the due and punctual payment in full of each of the
Obligations, the Company hereby grants to the Bank a
continuing first lien on and security interest in the
Collateral.
IX.02. Interest Continuing and Absolute. Until
payment in full of all the Obligations has been
indefeasibly made after the Cancellation Date, the Bank's
security interest in the Collateral hereunder shall
continue in full force and effect, and it and the Company's
obligations hereunder shall be effective irrespective of
any illegality, invalidity or unenforceability of the
Bonds, the Letter of Credit, the Reimbursement Agreement or
any other Related Document.
IX.03. Perfection. The Company shall perfect the
security interest of the Bank in the Collateral (a) in the
case of Pledged Bonds, by delivering such Pledged Bonds to
the Custodian, (b) in the case of any other certificated
securities and cash proceeds forming part of the
Collateral, by delivering the Collateral to the Bank, (c)
in the case of uncertificated securities forming part of
the Collateral, by registering such securities in the name
of the Bank, or (d) by any other method permitted by the
Uniform Commercial Code as in effect in the State of New
York on the date of such perfection. All steps necessary
for such perfection shall be taken by the Company, in the
case of each Pledged Bond forming part of the Collateral,
on the day such Bond becomes a Pledged Bond and, in the
case of proceeds, immediately.
X.
REPRESENTATIONS AND WARRANTIES
X.01. Representations and Warranties. The Company
represents and warrants to the Bank and, so long as any of
the Obligations remains unpaid, shall be deemed
continuously to represent and warrant to the Bank and the
Custodian, as follows:
(a) At the time of delivery to the Bank or the
Custodian of any Collateral, the Company will have good and
marketable title to, and be the sole owner of, such
Collateral, free and clear of all liens and other
encumbrances, other than the security interest created
hereby, the Bank's security interest in such Collateral
shall have been perfected and no financing statement or
other instrument with respect to any of the Collateral
shall have been and continue to be recorded, registered or
filed and no security agreement with respect to any of the
Collateral shall have been executed by the Company, other
than with respect to such security interest in favor of the
Bank.
(b) The Bank has a valid and perfected first priority
security interest in the Collateral.
(c) The Collateral may be properly pledged hereunder.
(d) No consents or approvals of any Person are
required for the assignment and transfer by the Company of
any of the Collateral to the Bank hereunder, or the
subsequent sale or transfer of the Collateral by the Bank
pursuant to the terms hereof.
(e) This Agreement has been duly executed and
delivered by the Company and constitutes a legal, valid and
binding obligation of the Company, enforceable against the
Company in accordance with its terms.
XI.
COVENANTS
XI.01. Protection of the Bank's Security Interest.
The Company shall defend its title to, and the Bank's
security interest in, the Collateral against all claims of
all other Persons, and shall keep the Collateral free from
all liens and encumbrances (other than the Bank's security
interest hereunder) and pay or cause to be paid promptly
when due all taxes, fees, assessments and other charges now
or hereafter imposed on or in respect of any of the
Collateral.
XI.02. Sale of Collateral. The Company shall not,
without the prior written consent of the Bank, sell,
transfer or otherwise dispose of, or permit any other
Person to sell, transfer or otherwise dispose of, any of
the Collateral or any of the Company's interests therein,
except in accordance with the terms of this Agreement, the
Indenture and the Remarketing Agreement. The receipt by
the Bank of all or any part of the proceeds of any sale,
transfer or other disposition of any of the Collateral,
except in accordance with the prior sentence, shall not be
deemed or construed to be a consent by the Bank to any such
sale, transfer or other disposition.
XI.03. Further Assurances. The Company shall execute
and deliver to the Bank or the Custodian such assignments
and other documents and instruments, and shall take all
other action relating to the Collateral and the
preservation, protection or perfection of the Bank's
security interest therein, as the Bank may request, and the
Company shall not file or permit to be filed any financing
statement (or amendment or continuation statement) or
execute any security agreement with respect to any of the
Collateral unless it names the Bank as the only secured
party. To the extent permitted by law, the Company hereby
appoints the Bank as its attorney-in-fact (without
requiring the Bank to act as such) to perform all acts that
the Bank deems appropriate to preserve, protect and perfect
its continuing security interest in the Collateral or to
preserve or protect the Collateral.
XII.
REMEDIES UPON THE OCCURRENCE OF AN EVENT OF DEFAULT
XII.01. Default Remedies. If an Event of Default under
the Reimbursement Agreement shall occur and be continuing,
the Bank shall be entitled to exercise any one or more (at
the Bank's discretion, at one or more times) of the
following remedies:
(a) The Bank shall have the right to receive the
Collateral, if any, then held by the Custodian, the
Remarketing Agent, the Trustee or any other Person,
endorse, assign or deliver in its own name or the name of
the Company any and all checks, drafts and other
instruments for the payment of money relating to or
constituting part of the Collateral, and cause the
Collateral to be registered in the name of the Bank or its
designee, and the Company hereby waives presentment,
protest and notice of nonpayment of any instrument so
endorsed. In furtherance of the foregoing, the Company
hereby irrevocably appoints the Bank, or any of its
officers or designees, the Company's lawful
attorney-in-fact (without requiring the Bank so to act),
with power of substitution, in the name of the Company or
in the name of the Bank (i) to endorse the name of the
Company upon any of the Collateral, including proceeds, and
to cause any of the Collateral to be registered in the name
of the Bank or its designee; (ii) to demand, collect,
receive payment of, receipt for and give discharges and
releases of any of the Collateral; (iii) to commence and
prosecute any and all actions or proceedings at law or in
equity in any court to collect or otherwise realize on any
of the Collateral to enforce any rights in respect thereof;
(iv) to initiate, settle, compromise, compound, adjust or
defend any actions, suits or proceedings relating or
pertaining to any of the Collateral; and (v) to sell,
transfer, assign, discount, negotiate or otherwise deal in
all or any portion of the Collateral or the proceeds
thereof and generally to perform all other acts necessary
or desirable to realize on, and obtain the benefits of, the
Collateral and otherwise to carry out the intention of this
Agreement, as fully and effectively as though the Bank were
the absolute owner thereof, and the Company hereby ratifies
and confirms all that the Bank shall do by virtue of this
appointment. The Bank shall not, under any circumstances,
have any liability for any error or omission made in the
settlement, collection or payment or other disposition of
any or all of the Collateral or of any instrument received
in payment therefor.
(b) The Bank may sell or cause to be sold, in one or
more sales, at such price as the Bank may deem adequate,
and for cash or on credit or for future delivery, with or
without assumption of any credit risk, all or any portion
of the Collateral, at public or private sale, without
demand of performance or notice of intention to sell or of
time or place of sale (except such notice as may be
required by applicable statute and cannot be waived), and
the Bank may be the purchaser of all or any portion of the
Collateral so sold; provided, however, that the Bank shall
first give notice to the Trustee that an Event of Default
has occurred and is continuing. The purchaser(s) at any
such sale shall thereafter hold the Collateral so sold
absolutely, free from any claim or right whatsoever,
including any equity of redemption, of the Company. Any
such demand, notice, claim, right or equity is hereby
expressly waived and released by the Company. Without
limiting the foregoing, if any such notice of the time or
place of sale is so required, the Company agrees that the
Bank need not give more than ten days' notice of the time
and place of any public sale or of the time after which a
private sale or other intended disposition is to take place
and that such notice is reasonable notification of such
matters. The Bank shall not, under any circumstances,
incur any liability as a result of the sale of the
Collateral or any part thereof at any sale conducted in
accordance with the provisions of this Agreement. The
Company hereby waives any claims against the Bank arising
by reason of the fact that the price at which the
Collateral may have been sold at any private sale was less
than the price which might have been obtained at a public
sale or was less than the aggregate principal amount of the
Pledged Bonds or the then total unpaid Obligations.
(c) The Company recognizes that the Bank may not deem
it desirable to effect a public sale of any or all of the
Pledged Bonds or otherwise but may deem it desirable to
resort to one or more private sales thereof to a restricted
group of purchasers who will be obliged to agree, among
other things, to acquire such securities for their own
account for investment and not with a view to the
distribution or resale thereof. The Bank shall be under no
obligation to delay a sale of any of the Pledged Bonds for
the period of time necessary to permit the Issuer to
register them for public sale under the Securities Act of
1933, as amended (the "Act"), or under applicable state
securities laws, even should the Issuer agree to do so.
(d) The Company shall do or cause to be done all such
other acts and things as may be deemed necessary or
desirable by the Bank to make such sale or sales of any
portion or all of the Pledged Bonds valid and binding and
in compliance with all applicable laws, regulations,
orders, writs, injunctions, decrees or awards of any and
all courts, arbitrators or governmental instrumentalities,
domestic or foreign, having jurisdiction over any such sale
or sales, including registering such Bonds under the Act,
or any state securities laws (to the extent necessary), all
at the Company's expense.
(e) The Company acknowledges that a breach of any of
the covenants contained in this Article 5 will cause
irreparable injury to the Bank and that the Bank has no
adequate remedy at law in respect of any such breach and,
as a consequence, agrees that each and every covenant
contained in this Article 5 shall be specifically
enforceable against the Company, and the Company hereby
waives and agrees not to assert any defenses against an
action for specific performance of such covenants except
for a defense that no Event of Default has occurred.
XII.02. Remedies Not Exclusive. (a) The remedies
provided for herein are cumulative and are not exclusive of
any other rights, powers, privileges or remedies provided
by law or under the Reimbursement Agreement, including,
without limitation, all rights and remedies of a secured
party under Article 9 of the Uniform Commercial Code as in
effect in the State of New York on the date of the exercise
of any such remedy. The exercise by the Bank of any one or
more remedies under Section 5.1, above, shall not
constitute a waiver, or otherwise prohibit, the exercise by
the Bank of other remedies provided herein or by law at the
same or other times.
(a) The Bank shall not be required to exercise any
particular rights, powers, remedies or benefits hereunder
or under the Reimbursement Agreement or any Related
Document. Without limiting the generality of the
foregoing, the Bank (i) shall be entitled to seek to
realize upon or enforce the Collateral in such order as it
may from time to time determine and without regard to
whether or not any other collateral or security for any of
the Obligations shall have been resorted to, and (ii) shall
not be required to exhaust or enforce any particular
portion of the Collateral before seeking to realize or
enforce upon any other portion thereof.
XIII.
COLLECTIONS BY THE COMPANY AND APPLICATIONS
OF PROCEEDS IN RESPECT OF COLLATERAL
XIII.01. Collections on Pledged Bonds by the Company.
(a) If, while any of the Obligations are outstanding, the
Company becomes entitled to receive or receives any payment
in respect of any Pledged Bond, the Company shall accept
such payment as the Bank's agent, hold it in trust on
behalf of the Bank and deliver it forthwith to the Bank for
application to satisfaction of the Obligations then due and
payable. All sums of money so paid in respect of any
payment of interest on, or any portion of purchase price
equal to the amount of accrued interest on, any Pledged
Bond which are received by the Company and paid to the Bank
shall be credited against the obligation of the Company to
pay interest to the Bank set forth in Sections 2.04 and
2.05 of the Reimbursement Agreement. All sums of money so
paid in respect of any payment of principal of, or any
portion of purchase price equal to the principal amount of,
any Pledged Bond which are received by the Company and paid
to the Bank shall be credited against the obligation of the
Company to pay principal to the Bank set forth in Sections
2.04 and 2.05 of the Reimbursement Agreement.
XIII.02. Application of Proceeds. All proceeds received
from the sale or other disposition of, or realization on or
with respect to, all or any part of the Collateral shall be
applied by the Bank, in such order as the Bank, in its sole
discretion, may determine to the payment of the costs and
expenses of such sale, disposition or realization,
including, without limitation, reasonable fees and expenses
of counsel for the Bank and all expenses, liabilities and
advances of the Bank in connection therewith, and to the
payment of the remaining Obligations.
XIV.
RELEASE OF COLLATERAL; COMPANY'S LIABILITY
FOR DEFICIENCY
XIV.01. Release of Collateral. If (a) the Company
prepays or causes to be prepaid any Advance pursuant to
Section 2.06 of the Reimbursement Agreement, (b) the
Remarketing Agent causes Pledged Bonds at the time held
hereunder to be sold, or (c) the Obligations are otherwise
satisfied, upon receipt of such prepayment or of the
proceeds of such sale or other satisfaction of the
Obligations, Pledged Bonds in an aggregate principal amount
equal to the prepayment so made, or the principal amount of
Pledged Bonds so sold, or the Obligations so satisfied,
shall be automatically released from the lien of this
Agreement and the Company or its designee shall be entitled
to have the released Bonds delivered to the Remarketing
Agent, the Company or such other Person as designated by
the Company in accordance with the terms of the Indenture;
provided, however, that before any delivery of such
released Bonds, the Trustee and the Custodian shall have
received notice from the Bank of the reinstatement of the
amounts so prepaid, sold or satisfied as available under
the Letter of Credit and such notice shall constitute
notice to the Custodian to release the Pledged Bonds to the
Trustee.
XIV.02. Company's Liability for Deficiency. The
Company shall in any event remain liable for any deficiency
remaining unpaid after the application of the proceeds of
the Collateral to the satisfaction of the Obligations.
XV.
GENERAL
XV.01. Expenses. The Company shall pay to the Bank
all expenses (including reasonable fees and expenses of
counsel) of, or incident to, any actual or attempted sale
or other disposition of, or any exchange, enforcement
(whether through negotiations, legal proceedings or
otherwise), collection, compromise or settlement of or with
respect to, all or any of the Collateral, by litigation or
otherwise. The Company shall reimburse the Bank on demand
for all reasonable costs and expenses incurred in
connection with the negotiation, preparation, execution and
administration of this Agreement, including, without
limitation, any fees or expenses (including reasonable fees
and expenses of counsel to the Custodian) paid by the Bank
to the Custodian for its services in connection with this
Agreement.
XV.02. Notices. All notices and other communications
provided for hereunder shall be in writing (including
telegraphic communication) and mailed, telecopied, telexed,
telegraphed or delivered to the parties to the telex or
telecopier number or address (as the case may be) specified
for the intended recipient on the signature page hereof, or
to such other number or address as such recipient may have
last specified by notice to the other party. All such
notices and communications shall, when mailed, telecopied,
telexed or telegraphed, be effective when deposited in the
mails or sent by telecopy or telex or delivered to the
telegraph company, respectively, addressed as aforesaid.
XV.03. Remedies and Waivers. No failure or delay on
the part of the Bank in exercising any right hereunder
shall operate as a waiver of, or impair, any such right.
No single or partial exercise of any such right shall
preclude any other or further exercise thereof or the
exercise of any other right. No waiver of any such right
shall be effective unless given in writing. No waiver of
any such right shall be deemed a waiver of any other right
hereunder. The remedies herein provided are cumulative and
not exclusive of any remedies provided by law.
XV.04. Amendment. No amendment or waiver of any
provision of this Agreement, nor consent to any departure
by the Company therefrom, shall in any event be effective
unless the same shall be in writing and signed by the
Custodian and the Bank, and then such waiver or consent
shall be effective only in the specific instance and for
the specific purpose for which given.
XV.05. Assignment. (a) This Agreement shall be
binding upon and inure to the benefit of the Custodian, the
Bank and the Company and their respective successors and
assigns; provided, however, that the Company may not assign
any of its rights or obligations under this Agreement
without the prior written consent of the Bank.
(a) If the Bank or the Custodian assigns or otherwise
transfers any of its rights and obligations hereunder, each
reference in this Agreement to the Bank or the Custodian,
as the case may be, shall be deemed to be a reference to
the Bank or the Custodian, as the case may be, and the
Person or Persons to which such rights and obligations were
assigned and transferred to the extent of their respective
interests.
XV.06. Governing Law. This Agreement shall be
governed by, and construed and interpreted in accordance
with, the laws of the State of New York.
XV.07. Custodian Appointed Agent. The Bank hereby
appoints the Custodian as its agent to receive and hold
Pledged Bonds constituting Collateral granted hereunder for
the Bank's account. The Company acknowledges such
appointment and agrees with the Bank and the Custodian,
which by its execution of this Agreement accepts such
appointment, that, for so long as this Agreement shall
remain in full force and effect, all certificates or
instruments representing or evidencing the Pledged Bonds
shall be delivered to and held by the Custodian, as agent
for the Bank.
XV.08. Reasonable Care. The Custodian shall be deemed
to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the
Collateral is accorded treatment substantially equal to
that which the Custodian accords its own property. In
executing, delivering and performing under this Custodian
Agreement, the Custodian shall be entitled to all rights,
privileges and immunities afforded the Trustee under the
Indenture which are hereby incorporated by reference.
XV.09. Integration of Terms. This Agreement contains
the entire agreement between the parties relating to the
subject matter hereof and supersedes all oral statements
and prior writings with respect thereto.
XV.010. Counterparts. This Agreement may be executed
in counterparts, and such counterparts taken together shall
be deemed to constitute one and the same agreement.
XV.011. Severability. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting
the validity or enforceability of such provision in any
other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first
above written.
TUCSON ELECTRIC POWER COMPANY
220 West Sixth Street
P.O. Box 711
Tucson, Arizona 85702
Telecopy: (520) 884-3888
Attention: Treasurer
By______________________
Title:
FIRST TRUST OF NEW YORK
NATIONAL ASSOCIATION, as
Custodian
100 Wall Street, Suite 1600
New York, New York 10005
Telecopy: (212) 514-6841
Attention: Corporate Trust
Administration
By___________________________
Title:
SOCIETE GENERALE, LOS ANGELES
BRANCH
2029 Century Park East
Suite 2900
Los Angeles, California 90067
Telecopy: (310) 551-0539
Attention: Mr. George Chen
By___________________________
Title:
EXHIBIT C
[LETTERHEAD OF GENERAL COUNSEL OF THE COMPANY]
[Date of Issuance of
Letter of Credit]
SOCIETE GENERALE, LOS ANGELES BRANCH
2029 Century Park East
Suite 2900
Los Angeles, California 90067
Nevada Power Company
Ladies and Gentlemen:
I am Vice President and General Counsel of Tucson
Electric Power Company, an Arizona corporation (the
"Company"), and have acted as such in connection with:
(a) the Letter of Credit and Reimbursement Agreement,
dated as of May 1, 1996 (the "Reimbursement Agreement"),
between the Company and Societe Generale, Los Angeles
Branch (the "Bank");
(b)
(b) the Thirty-Second Supplemental Indenture, dated as
of May 1, 1996 (the "First Mortgage Supplement"), from the
Company to The Chase Manhattan Bank (National Association),
as trustee (the "First Mortgage Trustee"), creating a
series of First Mortgage Bonds, Pollution Control Series J
(the "First Mortgage Bonds"), being a supplement to the
Indenture, dated as of April 1, 1941 (the "Original First
Mortgage"), from the Company to the First Mortgage Trustee;
(c) the Bond Delivery Agreement, dated as of May 1,
1996, from the Company to the Bank relating to the First
Mortgage Bonds; and
(d) the Custodian Agreement, dated as of May 1, 1996,
from the Company to the Bank.
The documents referred to above (other than the
Original First Mortgage) are herein collectively referred
to as the "Financing Documents." The Original First
Mortgage, as amended and supplemented by all indentures
supplemental thereto including the First Mortgage
Supplement, is hereinafter referred to as the "First
Mortgage."
In so acting I have reviewed all corporate proceedings
of the Company in connection with the authorization,
execution and delivery of the First Mortgage and the
Financing Documents and the authorization, execution and
issuance of the First Mortgage Bonds. I have also examined
such other documents and satisfied myself as to such other
matters as I have deemed necessary as a basis for the
opinions set forth below. I have relied as to various
questions of fact upon the representations and warranties
of the Company contained in the Financing Documents, and in
the certificates of public officials and officers of the
Company delivered thereunder and have further relied upon
certificates of the First Mortgage Trustee as to the
authentication of the First Mortgage Bonds.
Based upon and subject to the foregoing, and subject
also to the qualifications hereinafter set forth, I am of
the opinion that:
XVI. The Company (a) is duly organized, validly
existing and in good standing under the laws of the State
of Arizona, (b) has the corporate power and authority to
own and operate its property, to lease the property it
operates as lessee and to conduct the business in which it
is currently engaged, and (c) is duly qualified as a
foreign corporation and in good standing under the laws of
each jurisdiction where its ownership, lease or operation
of property or the conduct of its business requires such
qualification and (d) is in compliance with all laws,
treaties, rules or regulations applicable to or binding
upon it or any of its property or to which it or its
property is subject except to the extent, in each of (c)
and (d), that the failure to comply therewith would not, in
the aggregate, have a material adverse effect on the
business or operations of the Company.
XVII. The Company has the corporate power and
authority to execute, deliver and perform the Financing
Documents and to incur indebtedness thereunder and to issue
and deliver the First Mortgage Bonds and has taken all
necessary corporate action to authorize the execution,
delivery and performance of the Financing Documents and to
incur indebtedness thereunder and issue and deliver the
First Mortgage Bonds.
XVIII. The First Mortgage and the Financing
Documents have been duly and validly executed and delivered
on behalf of the Company and constitute legal, valid and
binding obligations of the Company, enforceable against it
in accordance with their respective terms except that
certain of the remedial provisions of the First Mortgage
may be limited by the law of the state wherein the
mortgaged property is located (however, such law does not,
in my opinion, make the remedies afforded by the First
Mortgage inadequate for the practical realization of the
benefits thereof) and except as enforceability may be
limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting
the enforcement of mortgagees' and other creditors' rights
generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law)
and subject to any principles of public policy limiting the
right to enforce indemnification or contribution provisions
contained in the Financing Documents with respect to
liabilities under federal or state securities laws.
XIX. The First Mortgage Bonds have been duly and
validly issued, executed and delivered by the Company and
authenticated by the First Mortgage Trustee and are legal,
valid and binding obligations of the Company enforceable in
accordance with their terms (subject to the exceptions
referred to in paragraph 3 above) and are entitled to the
security and benefits of the First Mortgage.
XX. No consent or authorization of, filing with or
other act by or in respect of, the federal government, any
state, county, city or other political subdivision or
agency thereof or any entity exercising executive,
legislative, judicial, regulatory or administrative
functions pertaining thereto (collectively, a "Governmental
Authority") or any other person is required in connection
with the incurrence of indebtedness by the Company under
the Reimbursement Agreement or the issuance and delivery by
the Company of the First Mortgage Bonds or the mortgaging
of the Company's properties as security for the First
Mortgage Bonds or the execution, delivery or performance by
the Company or the enforceability against the Company of
the First Mortgage, the Financing Documents or the First
Mortgage Bonds except the Opinion and Order, dated
April 24, 1996, of the ACC relating thereto which has been
obtained and which is, to the best of our knowledge, in
full force and effect; provided, however, that I express no
opinion as to compliance with the securities or "blue sky"
laws of any jurisdiction.
XXI. The execution, delivery and performance by the
Company of the First Mortgage, or the Financing Documents,
the incurrence of indebtedness thereunder and the issuance
and delivery of the First Mortgage Bonds will not violate
any law, treaty, rule or regulation applicable to or
binding upon the Company or any of its property or to which
the Company or any of its property is subject or any
material contractual obligation of the Company and will not
result in, or require, the creation or imposition of any
lien or other encumbrance on any of its properties or
revenues pursuant to any such law, treaty, rule or
regulation or any such material contractual obligation of
the Company other than as contemplated by the First
Mortgage and the Financing Documents.
XXII. No litigation, investigation or proceeding
of or before any arbitrator or Governmental Authority is
pending or, to the best of my knowledge, threatened by or
against the Company or against any of its properties or
revenues (a) with respect to the Financing Documents, the
First Mortgage, the First Mortgage Bonds or any of the
transactions contemplated thereby or (b) which would have a
material adverse effect on the business or operations of
the Company other than such litigations, proceedings and
investigations as are disclosed in the Company's Annual
Report on Form 10-K for the year-ended December 31, 1995
(the "10-K") filed with the Securities and Exchange
Commission and all reports and other documents filed by the
Company pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934, as amended, after the
date of the filing of the 10-K.
XXIII. No taxes (as distinguished from filing and
recordation fees) are payable to the State of Arizona or
any subdivision or agency thereof in connection with the
execution, delivery and filing or recordation of the First
Mortgage Supplement or any related filings or recordings,
or the execution, authentication, issuance or delivery of
the First Mortgage Bonds.
In rendering the opinions enumerated above, as to all
matters regarding the status of title and the lien of the
First Mortgage and the filing and recordation of the First
Mortgage in the State of Arizona and conformity to Arizona
law, I have relied, with your consent, upon the opinion of
even date herewith rendered to you by Dickerman & Marvin,
P.C., of Tucson, Arizona. As a member of the Bar of the
State of Arizona, I do not hold myself out as an expert on
the laws of other jurisdictions except the laws of the
United States, and as to all matters regarding the status
of title and the lien of the First Mortgage and the filing
and recordation of the First Mortgage in the State of New
Mexico and conformity to New Mexico law, and as to all
other matters governed by New Mexico law, I have relied,
with your consent, upon the opinion of even date herewith
rendered to you by Rodey, Dickason, Sloan, Akin & Robb,
P.A., of Albuquerque, New Mexico. As to matters governed
by New York law, the Securities Act of 1933, as amended,
the Public Utility Holding Company Act of 1935, as amended,
the Federal Power Act, as amended, or the Investment
Company Act of 1940, as amended, and as to matters
involving technical compliance with the conditions set
forth in the First Mortgage precedent to the issuance of
the First Mortgage Bonds (insofar as such matters are
governed by the Trust Indenture Act of 1939, as amended), I
have relied, with your consent, upon the opinion of even
date herewith rendered to you by Reid & Priest LLP of New
York, New York.
Reid & Priest LLP, Dickerman & Marvin, P.C. and Rodey,
Dickason, Sloan, Akin & Robb, P.A., are authorized to rely
upon this letter as to matters of Arizona law except to the
extent that the opinions set forth herein are expressly
stated to be made in reliance upon the opinion of Dickerman
& Marvin, P.C. This letter is not being delivered for the
benefit of, nor may it be relied upon by, any person or
entity to which it is not specifically addressed or by
which reliance is not expressly authorized hereby.
Very truly yours,
DENNIS R. NELSON, ESQ.
Vice President and General Counsel
EXHIBIT D
[LETTERHEAD OF SPECIAL COUNSEL TO THE COMPANY]
[Dates of Issuance of
Letter of Credit]
SOCIETE GENERALE, LOS ANGELES BRANCH
2029 Century Park East
Suite 2900
Los Angeles, California 90067
Tucson Electric Power Company
Ladies and Gentlemen:
We are counsel to Tucson Electric Power Company, an
Arizona corporation (the "Company"), and have acted as such
in connection with:
(a) the Letter of Credit and Reimbursement Agreement,
dated as of May 1, 1996 (the "Reimbursement Agreement"),
between the Company and Societe Generale, Los Angeles
Branch (the "Bank");
(b)
(b) the Thirty-Second Supplemental Indenture, dated as
of May 1, 1996 (the "First Mortgage Supplement"), from the
Company to The Chase Manhattan Bank (National Association),
as trustee (the "First Mortgage Trustee"), creating a
series of First Mortgage Bonds, Pollution Control Series J
(the "First Mortgage Bonds"), being a supplement to the
Indenture, dated as of May 1, 1941 (the "Original First
Mortgage"), from the Company to the First Mortgage Trustee;
(c) the Bond Delivery Agreement, dated as of May 1,
1996, from the Company to the Bank mentioned above relating
to the First Mortgage Bonds; and
(d) the Custodian Agreement, dated as of May 1, 1996
(the "Custodian Agreement") from the Company to the Bank.
The documents referred to above (other than the
Original First Mortgage) are herein collectively referred
to as the "Financing Documents." The Original First
Mortgage, as amended and supplemented by all indentures
supplemental thereto including the First Mortgage
Supplement, is hereinafter referred to as the "First
Mortgage."
In so acting we have reviewed all corporate
proceedings of the Company in connection with the
authorization, execution and delivery of the First Mortgage
and the Financing Documents and the authorization,
execution and issuance of the First Mortgage Bonds. We
have also examined such other documents and satisfied
ourselves as to such other matters as we have deemed
necessary as a basis for the opinions set forth below. We
have relied as to various questions of fact upon the
representations and warranties of the Company contained in
the Financing Documents, and in the certificates of public
officials and officers of the Company delivered thereunder
and have further relied upon certificates of the First
Mortgage Trustee as to the authentication of the First
Mortgage Bonds. We do not serve as counsel to direct or
indirect subsidiaries or affiliates of the Company, and, as
to various questions relating to the activities of such
subsidiaries and affiliates, we have further relied upon
certificates of officers thereof and opinions of counsel
thereto.
Based upon and subject to the foregoing, and subject
also to the qualifications hereinafter set forth, we are of
the opinion that:
XXIV. The Company (a) is duly organized, validly
existing and in good standing under the laws of the State
of Arizona, (b) has the corporate power and authority to
own and operate its property, to lease the property it
operates as lessee and to conduct the business in which it
is currently engaged, and (c) is duly qualified as a
foreign corporation and in good standing under the laws of
each jurisdiction where its ownership, lease or operation
of property or the conduct of its business requires such
qualification.
XXV. The Company has the corporate power and authority
to execute, deliver and perform the Financing Documents and
to incur indebtedness thereunder and to issue and deliver
the First Mortgage Bonds and has taken all necessary
corporate action to authorize the execution, delivery and
performance of the Financing Documents and to incur
indebtedness thereunder and issue and deliver the First
Mortgage Bonds.
XXVI. The First Mortgage and the Financing
Documents have been duly and validly executed and delivered
on behalf of the Company and constitute legal, valid and
binding obligations of the Company, enforceable against it
in accordance with their respective terms except that
certain of the remedial provisions of the First Mortgage
may be limited by the law of the state wherein the
mortgaged property is located and except as enforceability
may be limited by applicable bankruptcy, insolvency,
reorganization, moratoriums or other similar laws affecting
the enforcement of mortgagees' and other creditors' rights
generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law)
and subject to any principles of public policy limiting the
right to enforce indemnification or contribution provisions
contained in the Financing Documents with respect to
liabilities under federal or state securities laws.
XXVII. The First Mortgage Bonds have been duly and
validly issued, executed and delivered by the Company and
authenticated by the First Mortgage Trustee and are legal,
valid and binding obligations of the Company enforceable in
accordance with their terms (subject to the exceptions
referred to in paragraph 3 above) and are entitled to the
security and benefits of the First Mortgage.
XXVIII. No consent or authorization of, filing with
or other act by or in respect of, the Securities and
Exchange Commission ("SEC"), the Federal Energy Regulatory
Commission ("FERC") or the Arizona Corporation Commission
("ACC") is required in connection with the incurrence of
indebtedness by the Company under the Reimbursement
Agreement or the issuance and delivery by the Company of
the First Mortgage Bonds or the mortgaging of the Company's
properties as security for the First Mortgage Bonds or the
execution, delivery or performance by the Company or the
enforceability against the Company of the First Mortgage,
the Financing Documents or the First Mortgage Bonds except
the Opinion and Order, dated April 24, 1996 of the ACC
relating thereto which has been obtained and is, to the
best of our knowledge, in full force and effect; provided,
however, that we express no opinion in this paragraph as to
compliance with the securities or "blue sky" laws of any
jurisdiction.
XXIX. The execution, delivery and performance by
the Company of the First Mortgage, and the Financing
Documents, the borrowings thereunder, the use of the
proceeds thereof and the issuance and delivery of the First
Mortgage Bonds will not violate any law administered by or
any rule or regulation of the SEC, the FERC or the ACC or
any material contractual obligation of the Company arising
out of, (1) the Master Restructuring Agreement, dated as of
June 30, 1992 (the "MRA"), among the Company, Escavada
Company, Gallo Wash Development Company, Valencia Energy
Company, the several banks parties thereto, and Barclays
Bank PLC, New York Branch, as Administrative Agent and
Collateral Agent, (2) the Company's Restated Articles of
Incorporation, (3) the First Mortgage or (4) any agreement
or other instrument, of which we have knowledge after due
inquiry (A) to which the Company is a party relating to
pollution control revenue bonds or industrial development
revenue bonds issued to finance projects of the Company,
(B) to which the Company is a party relating to the
Irvington Unit 4 Lease (as defined in the MRA), (C) to
which the Company is a party relating to the Valencia Lease
(as defined in the MRA), (D) to which the Company is a
party relating to the Springerville Common Lease (as
defined in the MRA) or (E) to which te Company is a party
relating to the Springerville Unit 1 Lease (as defined in
the MRA) and will not result in, or require, the creation
or imposition of any lien or other encumbrance on any of
its respective properties or revenues pursuant to any such
law, rule or regulation or any such material contractual
obligation other than as contemplated by the First Mortgage
and the Financing Documents.
XXX. No taxes (as distinguished from filing and
recordation fees) are payable to the State of New York or
any subdivision or agency thereof in connection with the
execution, delivery and filing or recordation of the First
Mortgage Supplement or any related filings or recordings,
or the execution, authentication, issuance or delivery of
the First Mortgage Bonds.
XXXI. (a) The Company is not an "investment
Company," or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act
of 1940, as amended.
(b) The Company and its subsidiaries are exempt
from all provisions of the Public Utility Holding Company
Act of 1935, as amended, except Section 9(a)(2) thereof.
XXXII. The obligations of the Company under the
Reimbursement Agreement are not subordinated to any other
indebtedness or obligations of the Company.
XXXIII. The provisions of Section 13.01 and
13.07(c)(ii) of the Indenture (as defined in the
Reimbursement Agreement), together with the Custodian
Agreement, are effective to create a valid and perfected
security interest in the Company's right, title and
interest in the Bonds (as defined in the Reimbursement
Agreement) from time to time pledged under the Custodian
Agreement and held by the Tender Agent (as defined in the
Indenture) in accordance with such provisions of the
Indenture.
As members of the Bar of the State of New York, we do
not hold ourselves out as experts on the laws of other
jurisdictions except the laws of the United States, and, to
the extent that the opinions enumerated above are dependent
upon matters governed by the law of the State of Arizona or
the State of New Mexico, we have relied, with your consent,
upon the opinion of even date herewith rendered to you by
Dennis R. Nelson, Esq., Vice President and General Counsel
of the Company, and the opinions of even date herewith
rendered to you by Dickerman & Marvin, P.C. and Rodey,
Dickason, Sloan, Akin & Robb, P.A., counsel to the Company.
Dennis R. Nelson, Esq., Dickerman & Marvin, P.C. and
Rodey, Dickason, Sloan, Akin & Robb, P.A., are authorized
to rely upon this letter as to matters of New York and the
Federal law covered hereby. This letter is not being
delivered for the benefit of, nor may it be relied upon by,
any person or entity to which it is not specifically
addressed or by which reliance is not expressly authorized
hereby.
Very truly yours,
REID & PRIEST LLP
TABLE OF CONTENTS
Page
THERE IS A DEFINE MARK CODE HERE FOR TofC FOR 5 LEVELS --
DO NOT PUT IN ANOTHER DEFINE CODE
PRELIMINARY STATEMENTS 1
ARTICLE I.
DEFINITIONS 2
SECTION 1.01. Certain Defined Terms 2
SECTION 1.02. Computation of Time Periods 11
SECTION 1.03. Accounting Terms 11
SECTION 1.04. Internal References 11
ARTICLE II.
AMOUNT AND TERMS OF THE LETTER OF CREDIT 12
SECTION 2.01. The Letter of Credit 12
SECTION 2.02. Issuing the Letter of Credit 12
SECTION 2.03. Commissions and Fees 12
SECTION 2.04. Reimbursement On Demand 12
SECTION 2.05. Advances and Interest 13
SECTION 2.06. Prepayments 13
SECTION 2.07. Increased Costs 14
SECTION 2.08. Increased Capital 15
SECTION 2.09. Payments and Computations 15
SECTION 2.10. Non-Business Days 15
SECTION 2.11. Extension of the Stated
Termination Date; Reduction of Stated Amount 16
SECTION 2.12. Evidence of Debt 16
SECTION 2.13. Obligations Absolute 17
SECTION 2.14. Taxes 18
ARTICLE III.
CONDITIONS PRECEDENT 20
SECTION 3.01. Conditions Precedent to
Issuance of the Letter of Credit 20
SECTION 3.02. Additional Conditions
Precedent to Issuance of the Letter of
Credit 23
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES 24
SECTION 4.01. Representations and
Warranties of the Company 24
ARTICLE V.
COVENANTS OF THE COMPANY 30
SECTION 5.01. Affirmative Covenants 30
SECTION 5.02. Negative Covenants 38
ARTICLE VI.
EVENTS OF DEFAULT 40
SECTION 6.01. Events of Default 40
SECTION 6.02. Upon an Event of Default 43
ARTICLE VII.
MISCELLANEOUS 44
SECTION 7.01. Amendments, Etc. 44
SECTION 7.02. Notices, Etc. 44
SECTION 7.03. No Waiver; Remedies 45
SECTION 7.04. Right of Set-off 45
SECTION 7.05. Indemnification 46
SECTION 7.06. Bank Not Liable 47
SECTION 7.07. Costs, Expenses and Taxes 48
SECTION 7.08. Binding Effect 49
SECTION 7.09. Severability 49
SECTION 7.10. Governing Law; Submission to
Jurisdiction; etc. 49
SECTION 7.11. Headings 50
SECTION 7.12. Counterparts 50
SECTION 7.13. Waiver of Jury Trial 50
SECTION 7.14. Assignment and Participation 50
SECTION 7.15. Beneficiaries 51
SECTION 7.14 Assignments and
Participations. . . 46
EXHIBIT A - Form of Irrevocable Letter of Credit with
Exhibits 1 through 4 thereto
EXHIBIT B - Form of Custodian Agreement
EXHIBIT C - Form of Opinion of General Counsel of the
Company
EXHIBIT D - Form of Opinion of Special Counsel to the
Company
_______________________________
1/ Insert date of third anniversary of date of issuance.
2/ To be used for regularly scheduled interest payments.
3/ To be used upon scheduled or accelerated maturity of
the Bonds.
4/ Insert appropriate bracketed language.
5/ To be used upon scheduled or accelerated maturity of
the Bonds.
6/ To be used where the Tender Drawing is made in
connection with Bonds tendered by the holders of the Bonds
and not remarketed on the day they are tendered.
7/ To be used upon an optional or mandatory redemption of
the Bonds in whole or in part.
8/ To be used upon a mandatory purchase of the Bonds
pursuant to Sections 2.02(h)(i), (ii), (iii) or (iv) of the
Indenture.
9/ To be used upon an optional or mandatory redemption of
the Bonds in whole or in part.
10/ To be used upon a mandatory purchase of the Bonds
pursuant to Sections 2.02(h)(i), (ii), (iii) or (iv) of the
Indenture.
11/ To be used upon a mandatory purchase of the Bonds
pursuant to Sections 2.02(h)(i), (ii), (iii) or (iv) of the
Indenture.
12/ To be used in the case of all redemptions of the Bonds
other than redemptions in part.
13/ To be used in the case of mandatory purchases of the
Bonds pursuant to Section 2.02(h)(ii) in the case of a
conversion of the Bonds to a "Term Rate Period" or the
"Fixed Rate Period" if this Letter of Credit will expire
prior to the first date on which the Bonds will be
redeemable pursuant to the Indenture or Section
2.02(h)(iii) of the Indenture.
