SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For The Quarterly Period Ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________.
Commission File Number 1-5924
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, ARIZONA P.O. BOX 711
85701 85702
(Address of Principal Executive Offices) (Zip Code)
(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 15(d) 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 8, 1997, 32,133,345 shares of the registrant's Common Stock,
no par value (the only class of Common Stock), were outstanding.
TABLE OF CONTENTS
Page
----
Definitions ii
Independent Accountants' Report 1
PART I - FINANCIAL INFORMATION
Item 1. -- Financial Statements
Comparative Condensed Consolidated Statements of Income 2
Comparative Condensed Consolidated Statements of Cash Flows 3
Comparative Condensed Consolidated Balance Sheets 4
Notes to Condensed Consolidated Financial Statements
Note 1. Tax Assessments 5
Note 2. Income Taxes 6
Note 3. Long-Term Debt 6
Note 4. Valencia Merger 7
Note 5. Common Stock Reverse Split 7
Note 6. New Accounting Standard 7
Note 7. Reclassification 7
Item 2. -- Management's Discussion and Analysis of Financial Condition and
Results of Operations
Overview 8
Competition
Wholesale 9
Retail 9
Holding Company Proposal 12
Accounting for the Effects of Regulation 12
Dividends on Common Stock 13
Earnings 13
Results of Operations
Results of Utility Operations
Sales and Revenues 14
Operating Expenses 14
Other Income 15
Liquidity and Capital Resources 15
Cash Flows 15
Financing Developments 16
Safe Harbor for Forward-Looking Statements 16
PART II - OTHER INFORMATION
Item 1. -- Legal Proceedings
Tax Assessments 18
Item 6. -- Exhibits and Reports on Form 8-K 18
Signature Page 19
Exhibit Index 20
DEFINITIONS
The abbreviations and acronyms used in the 1997 First Quarter Form 10-Q are
defined below:
- -------------------------------------------------------------------------------
ACC............... Arizona Corporation Commission.
ADOR.............. Arizona Department of Revenue.
Banks............. Various banks with which the Company has credit
relationships.
Common Stock...... The Company's common stock, without par value.
Company or TEP.... Tucson Electric Power Company.
FAS 71............ Statement of Financial Accounting Standards #71:
Accounting for the Effects of Certain Types of
Regulation.
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.
IDBs.............. Industrial development revenue or pollution control bonds.
Irvington......... Irvington Generating Station.
Irvington Lease... The leveraged lease arrangement relating to Irvington
Unit 4.
ITC............... Investment Tax Credit for income tax purposes.
kWh............... Kilowatt-hour(s).
LOC............... Letter of Credit.
MRA............... Master restructuring agreement between the Company and the
Banks which includes the Renewable Term Loan, Revolving
Credit and certain replacement reimbursement agreements.
MSR............... Modesto, Santa Clara and Redding Public Power Agency.
MW................ Megawatt(s).
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 income tax purposes.
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.
SEC............... Securities and Exchange Commission.
Shareholders...... Holders of Common Stock.
Springerville..... Springerville Generating Station.
Springerville Coal
Handling Facilities
Leases......... Leveraged lease arrangements relating to the coal
handling facilities serving Springerville.
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.
Valencia.......... Valencia Energy Company, previously a wholly-owned
subsidiary of the Company, merged into the Company on May
31, 1996.
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
Tucson Electric Power Company and its Stockholders
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, 1997 and
the related condensed consolidated statements of income and of cash flows for
the three-month periods ended March 31, 1997 and 1996. These financial
statements are the 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, 1996 and the related consolidated statements of
income, cash flows, and changes in stockholders' equity (deficit) for the year
then ended (not presented herein); and in our report dated January 27, 1997, we
expressed an unqualified opinion on those consolidated financial statements. In
our opinion, the information set forth in the accompanying condensed
consolidated balance sheet as of December 31, 1996 is fairly stated, in all
material respects, in relation to the consolidated balance sheet from which it
has been derived.
DELOITTE & TOUCHE LLP
Tucson, Arizona
May 2, 1997
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------
The March 31 condensed 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 presentation 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 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
March 31,
1997 1996
-Thousands of Dollars-
Operating Revenues
Retail Customers $129,937 $125,210
Amortization of MSR Option Gain Regulatory Liability 5,013 5,013
Sales for Resale 19,331 17,805
--------- ---------
Total Operating Revenues 154,281 148,028
--------- ---------
Operating Expenses
Fuel and Purchased Power 45,646 45,824
Capital Lease Expense 26,276 25,805
Amortization of Springerville Unit 1 Allowance (7,009) (7,273)
Other Operations 26,296 24,088
Maintenance and Repairs 10,231 9,534
Depreciation and Amortization 21,774 23,753
Taxes Other Than Income Taxes 12,625 15,051
Income Taxes (2,348) (5,872)
--------- ---------
Total Operating Expenses 133,491 130,910
--------- ---------
Operating Income 20,790 17,118
--------- ---------
Other Income (Deductions)
Income Taxes 14,558 7,357
Interest Income 1,756 1,473
Other Deductions (1,010) (562)
--------- ---------
Total Other Income (Deductions) 15,304 8,268
--------- ---------
Interest Expense
Long-Term Debt - Net 14,117 14,644
Interest Imputed on Losses Recorded at Present Value 8,279 8,363
Other 2,641 2,328
Allowance for Borrowed Funds Used During Construction (435) (368)
--------- ---------
Total Interest Expense 24,602 24,967
--------- ---------
Net Income $ 11,492 $ 419
========= =========
Average Shares of Common Stock Outstanding (000) 32,135 32,134
========= =========
Net Income per Average Share $ 0.36 $ 0.01
========= =========
See Notes to Condensed Consolidated Financial Statements.
COMPARATIVE CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
March 31,
1997 1996
-Thousands of Dollars-
Cash Flows from Operating Activities
Cash Receipts from Retail Customers $142,918 $140,519
Cash Receipts from Sales for Resale 22,402 17,037
Fuel and Purchased Power Costs Paid (39,847) (39,985)
Wages Paid, Net of Amounts Capitalized (20,259) (24,824)
Payment of Other Operations and Maintenance Costs (18,876) (20,806)
Capital Lease Interest Paid (37,512) (37,838)
Interest Paid, Net of Amounts Capitalized (13,400) (13,739)
Taxes Paid, Net of Amounts Capitalized (11,121) (12,013)
Emission Allowance Inventory Sale - 4,120
Interest Received 2,262 1,890
Other 410 884
--------- ---------
Net Cash Flows - Operating Activities 26,977 15,245
--------- ---------
Cash Flows from Investing Activities
Construction Expenditures (15,602) (17,835)
Investments in Joint Ventures (1,338) -
Other 988 311
--------- ---------
Net Cash Flows - Investing Activities (15,952) (17,524)
--------- ---------
Cash Flows from Financing Activities
Payments to Retire Long-Term Debt - (10,000)
Payments on Renewable Term Loan (31,000) -
Payments to Retire Capital Lease Obligations (4,061) (4,150)
Other 383 288
--------- ---------
Net Cash Flows - Financing Activities (34,678) (13,862)
--------- ---------
Net Decrease in Cash and Cash Equivalents (23,653) (16,141)
Cash and Cash Equivalents, Beginning of Year 130,291 85,094
--------- ---------
Cash and Cash Equivalents, End of Period $106,638 $ 68,953
========= =========
SUPPLEMENTAL CONDENSED CONSOLIDATED CASH FLOW INFORMATION
Three Months Ended
March 31,
1997 1996
-Thousands of Dollars-
Net Income $ 11,492 $ 419
Adjustments to Reconcile Net Income
to Net Cash Flows
Depreciation and Amortization Expense 21,774 23,753
Deferred Income Taxes and
Investment Tax Credits - Net (16,907) (13,229)
Lease Payments Deferred (8,306) (9,308)
Regulatory Amortizations, Net of Interest Imputed
on Losses Recorded at Present Value (3,743) (3,923)
Other (1,954) (353)
Changes in Assets and Liabilities which
Provided (Used) Cash Exclusive of
Changes Shown Separately
Accounts Receivable 7,534 6,929
Materials and Fuel 153 1,290
Accounts Payable 2,369 (1,656)
Taxes Accrued 11,826 14,173
Other Current Assets and Liabilities (436) (7,456)
Other Deferred Assets and Liabilities 3,175 4,606
--------- ---------
Net Cash Flows - Operating Activities $ 26,977 $ 15,245
========= =========
See Notes to Condensed Consolidated Financial Statements.
COMPARATIVE CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, December 31,
1997 1996
- Thousands of Dollars -
Utility Plant
Plant in Service $2,135,620 $2,129,205
Utility Plant Under Capital Leases 893,064 893,064
Construction Work in Progress 81,705 74,210
----------- -----------
Total Utility Plant 3,110,389 3,096,479
Less Accumulated Depreciation and Amortization (938,132) (922,947)
Less Accumulated Amortization of Capital Leases (60,524) (56,240)
Less Springerville Unit 1 Allowance (164,479) (163,388)
----------- -----------
Total Utility Plant - Net 1,947,254 1,953,904
----------- -----------
Investments and Other Property 70,443 69,289
----------- -----------
Current Assets
Cash and Cash Equivalents 106,638 130,291
Accounts Receivable 58,371 65,905
Materials and Fuel 30,203 30,356
Deferred Income Taxes - Current 4,842 10,223
Other 13,766 14,026
----------- -----------
Total Current Assets 213,820 250,801
----------- -----------
Deferred Debits - Regulatory Assets
Income Taxes Recoverable Through Future Rates 174,955 173,731
Deferred Common Facility Costs 60,127 60,762
Deferred Springerville Unit 2 Costs 18,558 21,260
Deferred Lease Expense 14,081 15,067
Other Deferred Regulatory Assets 7,806 8,004
Deferred Debits - Other 15,813 15,723
----------- -----------
Total Deferred Debits 291,340 294,547
----------- -----------
Total Assets $2,522,857 $2,568,541
=========== ===========
CAPITALIZATION AND OTHER LIABILITIES
March 31, December 31,
1997 1996
- Thousands of Dollars -
Capitalization
Common Stock $ 645,265 $ 645,243
Capital Stock Expense (6,357) (6,357)
Accumulated Deficit (494,106) (505,598)
----------- -----------
Common Stock Equity 144,802 133,288
Capital Lease Obligations 892,570 895,867
Long-Term Debt 1,192,025 1,223,025
----------- -----------
Total Capitalization 2,229,397 2,252,180
----------- -----------
Current Liabilities
Short-Term Debt 3,567 3,567
Current Obligations Under Capital Leases 15,833 10,383
Current Maturities of Long-Term Debt 1,635 1,635
Accounts Payable 32,241 28,806
Interest Accrued 41,314 57,404
Taxes Accrued 35,833 24,007
Other 11,855 15,614
----------- -----------
Total Current Liabilities 142,278 141,416
----------- -----------
Deferred Credits and Other Liabilities
Deferred Income Taxes - Noncurrent 76,335 96,422
Accumulated Deferred Investment Tax Credits
Regulatory Liability 14,212 15,188
MSR Option Gain Regulatory Liability 3,017 7,853
Other Regulatory Liabilities 17,585 17,596
Other 40,033 37,886
----------- -----------
Total Deferred Credits and Other Liabilities 151,182 174,945
----------- -----------
Total Capitalization and Other Liabilities $2,522,857 $2,568,541
=========== ===========
See Notes to Condensed Consolidated Financial Statements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------
NOTE 1. TAX ASSESSMENTS
- ------------------------
RULING ON ARIZONA SALES TAX ASSESSMENTS - COAL SALES
The Arizona Department of Revenue (ADOR) issued transaction privilege
(sales) tax assessments to the Company alleging that Valencia was 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 these assessments. On March 11, 1994, the
Arizona Tax Court issued a Minute Entry granting Summary Judgment to the ADOR
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. On September 12, 1996, the Arizona Court of Appeals upheld the
validity of the assessment issued for the period November 1985 through March
1990. The Company filed with the Court of Appeals a motion for
reconsideration of their September 12, 1996 decision which was denied. On
December 10, 1996, the Company filed with the Court of Appeals a Petition for
Review by the Arizona Supreme Court of the September 12, 1996 decision.
Additionally, the Company is protesting the assessments for the period April
1990 through May 1993.
Previously, the Company had recorded an expense through the Consolidated
Statements of Income (Loss) in current and prior years and related liability
for the amount of sales taxes and interest thereon which the Company then
believed was probable of incurrence. As a result of the Court of Appeals
decision, the Company recorded an additional expense of approximately $9.2
million in September 1996. The amounts recorded by the Company included
estimates for the period June 1993 through May 1996, the period for which the
Company has not yet been assessed.
On May 31, 1996, Valencia was merged into the Company. Effective with
the merger, Valencia no longer supplies coal to the Company. Instead the
Company acquires coal directly from the supplier. As a result, the Company
believes it is not liable for transaction privilege tax computed on a basis
similar to the assessments described above subsequent to May 31, 1996. For
periods subsequent to May 31, 1996 the Company continues to record an
estimated interest expense on the above assessments.
Generally, Arizona law requires payment of an assessment due prior to
pursuing the appellate process. The Company has previously paid, under
protest, a total of $23 million of the disputed sales tax assessments,
subject to refund in the event the Company would prevail.
ARIZONA SALES TAX ASSESSMENTS - LEASES
The ADOR has issued transaction privilege (sales) 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 Springerville Coal Handling Facilities Leases.
Assessments cover the period August 1, 1988 to September 30, 1993. Under the
terms of the lease agreements, if the ADOR 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 state taxes and interest thereon for which the
Company feels incurrence is probable as of March 31, 1997. In the event that
the assessments by the ADOR are sustained, an additional liability would
result. Although it is reasonably possible that the ultimate resolution of
such matter could result in an additional sales tax expense of up to
approximately $20 million in excess of amounts recorded, management and
outside tax counsel believe that the Company has meritorious defenses to
mitigate or eliminate the assessed amounts.
Based on the current status of the legal proceedings, the Company
believes that the ultimate resolution of such dispute will occur over a
period of two to four years. Based on consultations with counsel and
considering the amounts already accrued, the Company believes that the
resolution of this tax matter should not have a material adverse effect on
the Company's Consolidated Financial Statements.
NOTE 2. INCOME TAXES
- ---------------------
The benefit for income taxes included in the Comparative Condensed
Consolidated Statements of Income consists of the following:
Three Months Ended
March 31,
1997 1996
---------- ----------
- Thousands of Dollars -
Operating Expenses:
Deferred Tax Benefit
Federal $ 1,859 $ 4,657
State 479 1,201
---------- ----------
Total 2,338 5,858
Investment Tax Credit Amortization 10 14
---------- ----------
Total Benefit Included in
Operating Expenses 2,348 5,872
---------- ----------
Other Income (Deductions):
Deferred Tax (Expense) Benefit
Federal (577) 1,030
State (149) 265
---------- ----------
Total (726) 1,295
Reduction in Valuation Allowance 14,318 4,849
Investment Tax Credit Amortization 966 1,213
---------- ----------
Total Benefit Included in
Other Income (Deductions) 14,558 7,357
---------- ----------
Total Benefit for Federal and State
Income Taxes $ 16,906 $ 13,229
========== ==========
The differences between income tax benefit and the amount obtained by
multiplying income before income taxes by the U.S. statutory federal income
tax rate are as follows:
Three Months Ended
March 31,
1997 1996
---------- ----------
- Thousands of Dollars -
Federal Income Tax Benefit at
Statutory Rate $ 1,895 $ 4,484
State Income Tax Benefit, Net of
Federal Deduction 291 690
Investment Tax Credit Amortization 976 1,227
Reduction in Valuation Allowance 14,318 4,849
Use of Capital Loss Carryforwards - 1,663
Other (574) 316
---------- ----------
Total Benefit for Federal and
State Income Taxes $ 16,906 $ 13,229
========== ==========
NOTE 3. LONG-TERM DEBT
- -----------------------
In February 1997, the Company repaid the outstanding Renewable Term Loan
balance of $31 million thereby reducing its Long-Term Debt. At April 30,
1997, the Company had $140 million available for borrowing under the
Renewable Term Loan.
In April 1997, the City of Farmington, New Mexico issued $80.4 million
of Pollution Control Revenue Bonds for the benefit of the Company. The
proceeds will be used in June 1997 to redeem $47.9 million principal amount
of previously issued 6.25% bonds that mature in 2003 and $32.5 million
principal amount of previously issued 6.10% bonds that mature in 2007. The
new bonds, which are unsecured, bear interest at 6.95% and mature in 2020.
In April 1997, the Coconino County, Arizona Pollution Control
Corporation issued $36.7 million of Pollution Control Revenue Bonds for the
benefit of the Company. The net proceeds loaned to the Company will be used
to fund $20 million of construction costs of additional pollution abatement
facilities at Navajo Generating Station and to redeem, in June 1997, $16.7
million principal amount of previously issued variable rate bonds that mature
in 2031. The new bonds, which are unsecured, bear interest at 7.125% and
mature in 2032.
In April 1997, the Coconino County, Arizona Pollution Control
Corporation issued $14.7 million of Pollution Control Revenue Bonds for the
benefit of the Company. The net proceeds loaned to the Company will be used
in June 1997 to redeem $14.7 million principal amount of previously issued
variable rate bonds that mature in 2031. The new bonds, which are unsecured,
bear interest at 7.00% and mature in 2032.
NOTE 4. VALENCIA MERGER
- ------------------------
On May 31, 1996, Valencia Energy Company, a wholly-owned subsidiary of
the Company, was merged into the Company. Effective with the merger, the
Company assumed all of the assets and liabilities of Valencia; the
responsibilities for the coal procurement, coal transportation and coal
handling services at Springerville Generating Station; and the
responsibilities as the lessee of the Springerville Coal Handling Facilities
Leases. Certain amounts previously included in Fuel and Purchased Power have
been reclassified to Capital Lease Expense, Other Operations, Maintenance and
Repairs, Depreciation and Amortization and Taxes Other Than Income Taxes on
the Company's Condensed Consolidated Statements of Income to conform to the
current year's presentation.
NOTE 5. COMMON STOCK REVERSE SPLIT
- -----------------------------------
In May 1996, Shareholders approved a one-for-five reverse split of the
Company's common stock. All references in the financial statements to
average number of shares and per share amounts of Common Stock have been
retroactively restated to reflect the reverse split. In addition,
Shareholders also approved the reduction in the number of authorized shares
of Common Stock from 200 million to 75 million.
NOTE 6. NEW ACCOUNTING STANDARD
- --------------------------------
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128 (FAS 128), Earnings per
Share. This Statement simplifies the standards for computing earnings per
share (EPS) and replaces the presentation of primary EPS with a presentation
of basic EPS. It requires a dual presentation of basic and diluted EPS on
the face of the income statement. The Company is required to adopt FAS 128
in the fourth quarter of 1997. The Company does not expect the adoption of
FAS 128 to have a material impact on the Company's calculation of EPS.
NOTE 7. RECLASSIFICATION
- -------------------------
Minor reclassifications, other than those described in Note 4, have been
made to the prior year financial statements 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 1997 compared with the first quarter of
1996, the outlook for dividends on Common Stock, and changes in liquidity and
capital resources of the Company during the first quarter of 1997. Also
management's expectations of identifiable material trends are discussed.
OVERVIEW
- --------
Earnings for the Company improved significantly during the first quarter of
1997 relative to the same period in 1996. Net income increased from $0.4
million in the first quarter of 1996 to $11.5 million in the first quarter of
1997. This improvement was due primarily to an increase in the amount of non-
cash income tax benefits recognized by the Company and to growth in the
Company's sales and revenues. Due to continuing improvement in the Company's
profitability, the Company recognized non-cash tax benefits associated with the
expected future utilization of federal and state net operating loss
carryforwards generated in prior periods. Such recognized benefits totaled
$14.3 million for the first quarter of 1997 compared with $4.8 million recorded
for the first quarter of 1996. See Results of Utility Operations, Other Income
below. Total kWh sales increased by 1.6% during the first quarter of 1997
relative to the same period in 1996. Due to the increase in sales, higher
wholesale energy prices, and a 1.1% retail rate increase implemented on March
31, 1996, total operating revenues increased by 4.2% in the first quarter of
1997 compared with the same period in 1996. Despite a 2.0% increase in the
Company's operating expenses, first quarter operating income increased by 21% in
1997 compared with the same period in 1996.
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 industry changes or unanticipated economic downturns. The Company's
success will depend, in part, 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 the economic and regulatory environment and
the increasingly competitive electric markets could affect the Company's levels
of sales.
The Company is developing strategies to address the uncertainties discussed
above as well as to position itself to benefit from the changing regulatory
environment. Such strategies include the implementation of enhanced cost
measurement and management techniques, organizational realignment and staffing
reductions, and the development of new entities to provide energy services to
markets beyond the Company's retail service territory.
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 period 1999-2003, $192 million of the Company's long-term debt obligations
will mature. Letters of credit supporting $805 million of the Company's long-
term variable rate debt obligations also have scheduled expiration dates between
December 31, 1999 and December 31, 2002. See Financing Developments below.
Should the credit ratings on the Company's senior debt securities reach
investment grade levels on certain dates or during certain periods subsequent to
January 1, 1998, the expiration dates for such letters of credit would move
forward to the period December 31, 1998 to December 31, 2000. In the event that
expiring letters of credit are not replaced or extended, the corresponding
variable rate debt obligations would be subject to mandatory redemption. While
the Company intends to pay or refinance maturing bonds, and to replace or extend
expiring letters of credit, there can be no assurance that the Company will be
able to pay such debt or replace or extend such letters of credit. The
Company's future cash flows will also be affected by the level of interest rates
due to the significant amount of variable rate debt outstanding. 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 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 present inability to pay
dividends. See Dividends on Common Stock below.
During the next twelve months, the Company expects to be able to fund
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. As discussed in Liquidity
and Capital Resources below, there are a variety of factors that could cause
actual cash flows to differ materially from projected cash flows. As of May 8,
1997, the Company's cash balance including cash equivalents was approximately
$88 million. Cash balances are invested in investment grade, money-market
securities with an emphasis on preserving the principal amount invested.
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 prices 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, wholesale sales
have been made at prices which 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 may remain depressed for at least the next
several years, due to increased competition and 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 Policy Act
of 1992 has promoted increased competition in the wholesale electric power
markets by encouraging the participation of utility affiliates, independent
power producers and other non-utility participants in the development of power
generation.
The FERC issued two orders pertaining to transmission access in April 1996.
FERC Order No. 888, among other things, requires all public utilities that own,
control, or operate interstate transmission facilities 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. A Phase I open access tariff
containing the terms and conditions outlined in the Order was filed by the
Company on July 9, 1996. The Company has since filed a Stipulation in Offer of
Settlement regarding the proposed tariff. Such settlement has been certified as
being uncontested by the Administrative Law Judge assigned to this matter and
has been referred to the FERC for approval.
FERC Order No. 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. The Company is in compliance with
these requirements.
The Company and several other electric utilities located in the
southwestern United States have recently begun to investigate the feasibility of
forming an independent system operator for the region. It is presently
contemplated that such an organization, if formed, would be responsible for
ensuring transmission reliability and nondiscriminatory access to the regional
transmission grid. Other utilities involved in the feasibility study include
Arizona Public Service Company, El Paso Electric Company, Nevada Power Company,
Public Service Company of New Mexico, Salt River Project, Texas-New Mexico Power
Company, and the Western Area Power Administration - Desert Southwest Region.
Several public meetings have been held in order to obtain public input to the
study. The feasibility study is expected to be completed by the end of 1997.
The formation of an independent system operator would be subject to approval by
the FERC and state regulatory authorities in the region. The financial aspects
of forming an independent system operator, including the potential effects on
the Company's future results of operations, are being examined as part of the
feasibility study.
Given the level of competition already present in the wholesale market for
electricity, the Company does not believe that FERC Order No. 888 or Order No.
889 will have a material effect on the Company's future results of operations.
However, such orders could assume greater significance if the Company's retail
service territory were to be opened to competing suppliers of electricity.
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. However, the Company does compete against gas service suppliers and
others who may provide energy services which would be substitutes for, or bypass
of, the Company's services. In addition, the ACC recently adopted rules that
require a phase-in of retail electric competition in Arizona over a four year
period beginning January 1, 1999.
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 the Public Utilities Regulatory
Act of 1978, as amended. 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. For example, the Company's two
principal mining customers, which provide approximately 10% of the Company's
total annual revenues from 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, price reductions
and term extensions. In 1996, the Company negotiated contract amendments with
its largest mining customer. The contract amendments include, among other
things, price reductions, a market pricing mechanism covering a portion of the
customer's electrical load, and a change in service from a firm basis to an
interruptible basis. Such contract is scheduled to expire in January 2003,
while the contract with the Company's other principal mining customer is
scheduled to expire in March 2001. Early terminations of the contracts by
mining customers require 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. Changes in service
requirements (from a firm basis to an interruptible basis) may also permit the
Company to delay additions to peaking capacity.
On December 23, 1996, the ACC voted to adopt rules on retail electric
competition. The rules require each "Affected Utility" to open its retail
service area to competing electric service providers on a phased-in basis over
the period 1999 to 2003. Beginning no later than January 1, 1999, retail
customers representing at least 20% of each Affected Utility's 1995 peak demand
will be eligible to choose their electric service provider from companies
certificated by the ACC. Such service providers would include Affected
Utilities as well as other entities that apply for and receive a certificate of
convenience and necessity from the ACC. Beginning no later than January 1,
2001, retail customers representing at least 50% of each Affected Utility's 1995
peak demand will be eligible to choose their service provider. All remaining
retail customers would then be eligible to choose from certificated service
providers by January 1, 2003. Under the rules, Affected Utilities will be
required to provide distribution wheeling services (i.e., retail wheeling) at
rates approved by the ACC in order to facilitate sales by competing energy
providers. Such wheeling services would involve the transmission of energy
produced by other entities over the Company's transmission and distribution
system to consumers located in the Company's present retail service area.
While retail wheeling will expose the Company's service area to increased
competition, it will also open additional markets into which the Company may
sell its electric power.
The Affected Utilities whose service territories will be open to competing
service providers under the rules include the Company, Arizona Public Service
Company, Citizens Utilities Company, and several electric cooperatives.
However, electric cooperatives will be permitted to request a modification to
the phase-in schedule in order to preserve their tax exempt status or to modify
power supply arrangements and related loan agreements. Each of the Affected
Utilities will be eligible to offer electric service to customers of other
certificated entities within Arizona. Participation in competitive retail
markets by other electric utilities which are not regulated by the ACC, such as
the Salt River Project and certain municipal utilities, will be permitted under
the rules on a similar reciprocal basis (i.e., their service territories would
be similarly open to competing service providers).
The rules require new market entrants to obtain a certificate of
convenience and necessity from the ACC prior to offering retail electric
service. New market entrants will be required to demonstrate adequate technical
and financial capabilities to the ACC prior to certification. In addition, all
competitive market participants, including Affected Utilities, will be required
to obtain at least one-half of one percent of the energy sold competitively in
the Arizona retail market from new solar generating resources by January 1,
1999. This required percentage will increase to one percent on January 1, 2002.
New solar resources are defined under the rules as photovoltaic or solar thermal
resources that are installed on or after January 1, 1997. Electric service
providers not in compliance with these solar resource standards will be subject
to a penalty of up to 30 cents per kWh to be applied to the kWh deficiency in
solar energy provided.
The rules specify that the ACC shall allow the recovery of unmitigated
stranded costs by Affected Utilities. Stranded cost is defined in the rules as
the net difference between the value of prudent jurisdictional assets and
obligations under traditional regulation and the market value of those assets
and obligations in a competitive retail market. In order to recover stranded
costs, utilities would have to demonstrate to the ACC that they have taken every
feasible, cost effective measure to mitigate or offset stranded costs, and
utilities would have to file estimates of unmitigated stranded costs with the
ACC which are fully supported by analyses and records of market transactions
undertaken by willing buyers and sellers. Furthermore, Affected Utilities would
have to seek ACC approval of distribution charges or other means of recovering
unmitigated stranded costs from customers who reduce or terminate service as a
direct result of retail competition. The rules specify that other issues
related to the analysis and recovery of stranded costs would be examined by a
working group following adoption of the rules. Until such time as the ACC
adopts specific guidelines for quantifying unmitigated stranded costs, including
the methods used to identify and value jurisdictional assets and obligations,
the Company believes that any estimate of unmitigated stranded costs would be
highly speculative.
Each Affected Utility will be required to file unbundled service tariffs
with the ACC by December 31, 1997, for the following services: distribution
wheeling service, metering and meter reading services, billing and collection
services, open access transmission service (as approved by the FERC, if
applicable), ancillary services (as defined by FERC Order No. 888), information
services such as the provision of customer information to other service
providers, and other ancillary services necessary for safe and reliable system
operation. Until such time as the ACC determines that retail competition has
been substantially implemented, each Affected Utility will also have to provide
standard offer bundled service equivalent to the services currently being
provided at regulated rates to all consumers located in their current retail
service areas.
Pursuant to the rules, working groups have been formed to analyze various
issues related to retail competition. Each working group consists of members
representing a wide variety of interests including the ACC Staff, consumers,
Affected Utilities, and potential new service providers. Separate working
groups have been established to investigate issues related to the quantification
and recovery of stranded costs, the unbundling of utility services and rates,
the maintenance of system reliability and safety, the methods to be used in
determining consumer participation during the early phase-in periods, and
certain legal issues related to the rules. Reports describing the activities
and recommendations of working group members are scheduled to be provided to the
ACC by the fourth quarter of 1997. The Company is actively participating in
each of the working groups investigating retail competition issues.
On January 10, 1997, the Company filed with the ACC a motion for
reconsideration and request for stay of the rules. Concerns expressed by the
Company in its motion included the potential impact on system reliability,
mechanisms for stranded cost quantification and recovery, the ability to compete
fairly with public power entities and recipients of federal preference power,
and certain legal deficiencies which would likely result in legal appeals and
litigation. On January 30, 1997, the Company's motion for reconsideration was
deemed denied by the ACC by operation of law. On February 28, 1997, the Company
filed an appeal of the ACC order in both the Arizona Superior Court and the
Arizona Court of Appeals. At the present time, the Company is unable to
predict the outcome of the appeals or the effects such rules, in their present
form, would have on the Company's future results of operations.
The Arizona Legislature is also investigating the potential merits of
retail electric competition. Legislation was passed in 1996 requiring the
establishment of a joint legislative study committee on electric industry
competition. This committee is charged with studying and making recommendations
on a wide variety of issues related to electric industry competition. The
committee is to complete a report to the legislature no later than December 31,
1997. Such report is to contain a proposal for electric utility competition for
implementation by December 31, 1999. An advisory committee on electric industry
competition was also created, consisting of members representing electric
consumers, electric utilities, various State offices and agencies, and other
interested parties. The Company has a representative on such advisory committee
who is actively participating as a committee member. Three subcommittees of
the advisory committee were recently formed for purposes of evaluating the
timing of retail competition, reviewing tax issues related to retail competition
and identifying specific legislative actions necessary to implement retail
competition.
The Company cannot predict whether or not there will be competing
initiatives on industry restructuring from both the ACC and the Arizona
Legislature. However, the Company believes that certain matters contained in
the ACC's rules on retail competition may require legislative changes, while
other matters may require constitutional amendments. Additionally, several
federal initiatives regarding retail electric competition have been introduced
in Congress which, if passed, could modify, augment or preempt the actions taken
by the ACC or the Arizona Legislature. The Company will continue to assess the
likely impact of the ACC's rules on retail competition, proposed legislation on
retail competition, and other potential market reforms on the Company. At the
present time the Company is unable to predict the ultimate impact of increased
retail competition on the Company's future results of operations. See Accounting
for the Effects of Regulation below for a discussion of the potential impact of
increased competition on the Company's accounting policies.
HOLDING COMPANY PROPOSAL
- ------------------------
On April 4, 1997, the Company filed with the ACC a notice of intent to
organize a public utility holding company. If approved by the ACC and the FERC,
the Company intends to establish through a one-for-one share exchange a new
corporate structure in which the Company will be a subsidiary of a new holding
company named UniSource Energy Corporation. The Company is seeking to establish
a holding company structure because the Company believes that it is in the best
interests of its Shareholders for the Company to participate in various segments
of the evolving and expanding electric energy business. The Company believes
that such participation would be facilitated and enhanced by the holding company
structure, a structure commonly used in the electric industry and other
industries to conduct different lines of business. In May 1995, Shareholders
approved the formation of a holding company and the related one-for-one share
exchange. If regulatory approvals are received, it is likely that no further
Shareholder approval would be required to effect the share exchange.
If the holding company structure is established, substantially all of the
assets of the holding company initially following the share exchange would
consist of the Company's Common Stock. The holding company would rely primarily
on funding sources other than TEP to fund its operations and to capitalize
affiliate companies because the Company is currently prohibited from paying
dividends (see Dividends on Common Stock below) and because the Company may be
prohibited from making investments in the holding company or affiliated
companies. Also, the ACC's affiliated interest rules would limit certain
transactions between the holding company and the Company unless approved by the
ACC. Accordingly, funds for the holding company would be limited until the
holding company obtains outside financing or until the affiliate companies are
able to pay cash dividends to the holding company. The Company is reviewing
various methods for the holding company to obtain outside financing, including
the issuance of new equity by the holding company.
In the unlikely event the holding company incurs liabilities in excess of
cash flow available from the Company, the affiliate companies or outside
financings, the holding company might not have sufficient cash available to meet
such liabilities. Under such circumstances the Company may be required to seek
waivers of the provisions of certain of its credit agreements and leases and the
affiliated interest rules in order to permit the Company to provide interim
financing to the holding company. There can be no assurance that a holding
company structure will be effected in the future, that the holding company will
be able to obtain outside financing, or that the Company would be able to obtain
necessary waivers if so required.
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,
1997, and at December 31, 1996, 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
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 for the quarters ended March 31, 1997 and 1996 also reflect the
application of FAS 71.
As noted in Competition, Retail above, on December 23, 1996, the ACC voted
to adopt rules on retail electric competition. Until such time as the ACC
adopts specific guidelines for quantifying unmitigated stranded costs,
including the methods used to identify and value jurisdictional assets and
obligations, the Company is unable to predict whether it will recover the full
costs of its investments in utility plant assets and regulatory assets. If less
than full recovery is provided, write-offs of assets may occur and the Company
may be unable to continue to apply FAS 71.
Further, in response to the legislation adopted by the State of California
in 1996 establishing competitive markets for electricity in that state, the SEC
is reported to have questioned the continued applicability of FAS 71 by
California investor-owned utilities even though the recovery of stranded
costs is provided through a statutory funding mechanism. It is reasonably
possible that the SEC could question the continued applicability of FAS 71 to
investor-owned utilities subject to similar legislation or regulatory action in
other states. The Company understands that the Financial Accounting Standards
Board's Emerging Issues Task Force has agreed to commence consideration of this
issue during the second quarter of 1997. Depending upon the outcome of such
review, the SEC's response to this issue, and the applicability to the retail
electric competition rules adopted in Arizona, the Company may be unable to
continue to apply FAS 71, even if it believes it will recover the full
amount of its costs under the ACC competition phase-in plan. The Company is
unable to predict the outcome of these matters.
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, 1997, the Company estimates that if FAS 101 were
adopted and applied to all segments of the Company's operations, an
extraordinary loss of $158 million, which includes a reduction for the related
deferred income taxes of $82 million, would be required. 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. At that time, if
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.
DIVIDENDS ON COMMON STOCK
- ------------------------
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. The Company
is not currently prevented from declaring and paying a dividend under such
provisions.
The Company's ability to pay a dividend is restricted by certain covenants
of the General First Mortgage. 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 test
would 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 retained earnings test would permit
dividend payments if the Company has positive retained earnings rather than an
accumulated deficit. As of March 31, 1997, the Company had a cash flow
coverage ratio in excess of 2 to 1 and the Company's accumulated deficit was
$494 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 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 relating
thereto have been terminated and (ii) the Company's senior long-term debt is
rated investment grade. At May 8, 1997, there was no outstanding balance due
under the Renewable Term Loan, and to date no amounts have been borrowed under
the Revolving Credit. Commitments relating to such facilities permit the
Company to borrow $140 million under the Renewable Term Loan and $50 million
under the Revolving Credit. The Company's senior long-term 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 General First Mortgage
amendment would require approval by holders of 75% of all First Mortgage Bonds.
In addition to such restrictive covenants, the Federal Power Act states
that dividends shall not be paid out of funds properly included in the capital
account. It is unclear whether such provisions of the Federal Power Act
restrict the Company from paying dividends.
EARNINGS
- --------
The Company recorded net income of $11.5 million in the first quarter of
1997 compared with net income of $0.4 million in the first quarter of 1996. The
net income per average share of Common Stock was $0.36 for the first quarter of
1997 compared with net income per average share of Common Stock of $0.01 for the
first quarter of 1996.
RESULTS OF OPERATIONS
- ---------------------
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 1997 1996 Amount Percent
- --------------------------- ---- ---- ------ -------
Electric kWh Sales (000):
Retail Customers 1,622,441 1,581,425 41,016 2.6%
Sales for Resale 715,187 719,064 (3,877) (0.5)
--------- --------- ------
Total 2,337,628 2,300,489 37,139 1.6
======== ========= ======
Electric Revenues (000):
Retail Customers $129,937 $125,210 $ 4,727 3.8%
Amortization of MSR Option
Gain Regulatory Liability 5,013 5,013 - -
Sales for Resale 19,331 17,805 1,526 8.6
------- -------- --------
Total $154,281 $148,028 $ 6,253 4.2
======== ======== ========
KWh sales to retail customers increased by 2.6% in the first quarter of
1997 compared with the first quarter of 1996, due primarily to a 2.6% increase
in the average number of retail customers. Revenues from sales to retail
customers increased by 3.8% in the first quarter of 1997 compared with the same
period in 1996 due to higher kWh sales and a 1.1% retail rate increase
implemented by the Company on March 31, 1996.
Sales for resale decreased by 0.5% in the first quarter of 1997 relative to
the same period in 1996. However, revenues from sales for resale increased by
8.6% due to higher market prices for wholesale economy energy in the first
quarter of 1997 compared with the first quarter of 1996. Factors contributing
to higher market prices included an increase in natural gas prices and a
reduction in regional generating capability due to planned and forced outages of
generating facilities in the southwestern United States.
OPERATING EXPENSES
Fuel and Purchased Power expense decreased slightly in the first quarter of
1997 compared with the same period in 1996. This expense did not increase
proportionately with the increase in kWh sales due to take-or-pay payments for
fuel accrued in the first quarter of 1996. No such payments were made or
accrued in the first quarter of 1997.
Other Operations expense increased by $2.2 million in the first quarter of
1997 relative to the same period in 1996. This increase was attributable to an
increase in payments for outside services as well as an adjustment related to
post-retirement benefits other than pensions.
Depreciation and Amortization expense decreased by $2.0 million in the
first quarter of 1997 compared with the first quarter of 1996. This decrease
was attributable to the completion in January 1997 of a three year amortization
period for Springerville Unit 2 Rate Synchronization Costs established in the
1994 Rate Order, as well as an extension of the depreciable life for pollution
control facilities as required by the Company's 1996 Rate Order.
Taxes Other Than Income Taxes decreased by $2.4 million in the first
quarter of 1997 compared with the same period in 1996. This decrease was due
primarily to a reduction in property tax rates and reduced property valuations
for tax purposes.
Income Tax benefit included in Operating Expenses decreased by $3.5 million
in the first quarter of 1997 compared with the first quarter of 1996 due to an
increase in pre-tax operating income net of interest expense.
OTHER INCOME
Income Tax benefits included in Other Income increased $7.2 million in the
first quarter of 1997 compared with the first quarter of 1996 due primarily to
increased NOL benefit recognition resulting from a revision in the expected
future utilization of NOLs generated in prior periods. 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 book income before taxes.
If the Company's operating results continue to improve, the three year
historical average net book income would continue to increase. Correspondingly,
the Company would likely recognize additional NOL benefits totaling up to
approximately $27 million over the next two years relating to prior period NOLs
unrecognized at March 31, 1997. The amount of NOL benefits recognized in
periods subsequent to March 31, 1997, if any, and the timeframe in which such
benefits are recognized, may vary significantly from the estimate described in
this paragraph. In addition, in future periods when such NOLs are utilized for
income tax purposes to offset taxable income, income tax expense shown on the
Company's Consolidated Statements of Income will not be reduced to reflect such
utilization.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company expects to generate sufficient cash flows during 1997 to fund
its continuing operating activities and construction expenditures. However, the
Company's projected cash flows are subject to variation due to changes in
wholesale revenues, changes in short-term interest rates, and other factors.
For example, an increase in short-term interest rates of 100 basis points (1%)
would result in an approximate $9 million increase in annual interest payments.
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 8, 1997, there was no outstanding balance due under the Renewable
Term Loan, and to date, no amount has been borrowed under the Revolving Credit.
Pursuant to the terms of the MRA, the Renewable Term Loan commitment is
scheduled to decrease by 5% per quarter during 1997 and by 10% per quarter in
1998 and 1999, resulting in termination of the commitment by December 31, 1999.
As such, the Renewable Term Loan commitment decreased from $164 million to $156
million as of March 31, 1997. Due to MRA provisions regarding the optional
prepayment of debt obligations, and the April 1997 refinancing of $31.4 million
of floating rate IDBs (see Financing Developments below), the Renewable Term
Loan commitment was reduced by an additional $16 million as of April 29, 1997,
to $140 million. The Revolving Credit commitment remained at $50 million as of
May 8, 1997.
The Company's cash and cash equivalents balance at May 8, 1997 was
approximately $88 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 increased $37.7 million or 55%,
from the March 31, 1996 ending balance of $68.9 million to the March 31, 1997
ending balance of $106.6 million. This increase was due to the receipt of net
cash flows from operating activities in excess of the net cash flows required
for investing and financing activities for the twelve month period ended March
31, 1997.
Net cash flows from operating activities increased in aggregate by $11.7
million in the first quarter of 1997 compared with the same period in 1996.
This increase was due primarily to an increase in cash receipts from retail and
wholesale customers and a $4.6 million reduction in wages paid (net of amounts
capitalized) during the first quarter of 1997 compared with the same period in
1996. These increases to net cash flows were partially offset by the receipt of
$4.1 million in cash related to the sale of emission allowances in the first
quarter of 1996.
Net cash outflows from investing activities decreased in aggregate by $1.6
million in the first quarter of 1997 compared with the same period in 1996, due
primarily to a reduction in construction expenditures. This reduction was
partially offset by a $1.3 million increase in investments in joint ventures.
Net cash outflows from financing activities increased in aggregate by $20.8
million in the first quarter of 1997 compared with the same period in 1996 as a
result of the Company's repayment of the $31 million Renewable Term Loan balance
during the first quarter of 1997.
FINANCING DEVELOPMENTS
On April 29, 1997, the City of Farmington, New Mexico issued $80.41 million
aggregate principal amount of its 1997 Series A Pollution Control Revenue Bonds
(Tucson Electric Power Company San Juan Project) for the benefit of the Company.
The proceeds from this issuance have been made available to the Company under an
installment sale agreement and will be used on June 12, 1997 to redeem all of
the City of Farmington's Series 1973 Pollution Control Revenue bonds (Tucson Gas
& Electric Company San Juan Project), 6.25% due in 2003 ($47.91 million
aggregate principal amount) and all of the City of Farmington's 1977 Series A
Collateralized Pollution Control Revenue bonds (Tucson Gas & Electric Company
San Juan Project), 6.10% due 2007 ($32.5 million aggregate principal amount).
The Farmington 1977 Series A bonds were secured by an equal principal amount of
First Mortgage Bonds. The new bonds, which are unsecured, pay interest at a
fixed annual rate of 6.95% and will mature in October 2020.
On April 29, 1997, the Coconino County, Arizona Pollution Control
Corporation issued $36.7 million aggregate principal amount of its 1997 Series A
Pollution Control Revenue Bonds (Tucson Electric Power Company Navajo Project)
for the benefit of the Company. The proceeds from this issuance have been
loaned to the Company and will be used on June 4, 1997 to (i) redeem all of the
1996 Series A Pollution Control Revenue Bonds (Tucson Electric Power Company
Project), variable rate due 2031 ($16.7 million aggregate principal amount) and
(ii) fund the construction of additional pollution abatement facilities at the
Navajo Generating Station. The new bonds, which are unsecured, pay interest at
a fixed annual rate of 7.125% and will mature in October 2032.
On April 29, 1997, the Coconino County, Arizona Pollution Control
Corporation also issued $14.7 million aggregate principal amount of its 1997
Series B Pollution Control Revenue Bonds (Tucson Electric Power Company Navajo
Project) for the benefit of the Company. The proceeds from this issuance have
been loaned to the Company and will be used on June 4, 1997 to redeem all of the
1996 Series B Pollution Control Refunding Revenue Bonds (Tucson Electric Power
Company Project), variable rate due 2031 ($14.7 million aggregate principal
amount). The new bonds, which are unsecured, pay interest at a fixed annual
rate of 7.00% and will mature in October 2032.
The refunded Coconino bonds are backed by letters of credit. The issuers
of such letters of credit received First Mortgage Bonds in the aggregate
principal amount of $34.5 million to secure the Company's reimbursement
obligations. Upon the redemption of such Coconino bonds, the aggregate
principal amount of Company debt backed by letters of credit will be reduced
from $805 million to $774 million. The aggregate principal amount of First
Mortgage Bonds outstanding will also be reduced by $34.5 million.
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
- ------------------------------------------
This Quarterly Report on Form 10-Q contains forward-looking statements as
defined by the Private Securities Litigation Reform Act of 1995. The Company is
including the following cautionary statements to make applicable and take
advantage of the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995 for any forward-looking statements made by, or on behalf, of
the Company in this Quarterly Report on Form 10-Q. Forward-looking statements
include statements concerning plans, objectives, goals, strategies, future
events or performance and underlying assumptions and other statements which are
other than statements of historical facts. Such forward-looking statements may
be identified, without limitation, by the use of the words "anticipates,"
"estimates," "expects," "intends," "plans," "predicts," "projects," and similar
expressions. From time to time, the Company may publish or otherwise make
available forward-looking statements of this nature. All such forward-looking
statements, whether written or oral, and whether made by or on behalf of the
Company, are expressly qualified by these cautionary statements and any other
cautionary statements which may accompany the forward-looking statements. In
addition, the Company disclaims any obligation to update any forward-looking
statements to reflect events or circumstances after the date hereof.
Forward-looking statements involve risks and uncertainties which could
cause actual results or outcomes to differ materially from those expressed in
the forward-looking statements. The Company's expectations, beliefs and
projections are expressed in good faith and are believed by the Company to have
a reasonable basis, including without limitation, management's examination of
historical operating trends, data contained in the Company's records and other
data available from third parties, but there can be no assurance that
management's expectations, beliefs or projections will result or be achieved or
accomplished. In addition to other factors and matters discussed elsewhere
herein, some of the important factors that, in the view of the Company, could
cause actual results to differ materially from those discussed in the forward-
looking statements include the following:
1. Effects of restructuring initiatives in the electric industry and other
energy-related industries.
2. Changes in economic conditions, demographic patterns and weather conditions
in the Company's retail service area.
3. Changes affecting the Company's cost of providing electrical service
including, but not limited to, changes in fuel costs, generating unit
operating performance, interest rates, tax laws, environmental laws, and the
general rate of inflation.
4. Changes in governmental policies and regulatory actions with respect to
allowed rates of return, financings, and rate structures.
5. Changes affecting the cost of competing energy alternatives, including
changes in available generating technologies and changes in the cost of
natural gas.
6. Changes in accounting principles or the application of such principles to the
Company.
PART II - OTHER INFORMATION
ITEM 1. -- LEGAL PROCEEDINGS
==============================================================================
TAX ASSESSMENTS
See Note 1 of Notes to Condensed Consolidated Financial Statements, Tax
Assessments.
ITEM 6. -- EXHIBITS AND REPORTS ON FORM 8-K
==============================================================================
(a) Exhibits.
- See Exhibit Index.
(b) Reports on Form 8-K.
- The Company has not filed any Current Reports on Form 8-K since
filing the Form 10-K for 1996.
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 14, 1997 Ira R. Adler
------------------------------------
Ira R. Adler
Senior Vice President and Principal
Financial Officer
EXHIBIT INDEX
4a - Amended and Restated Installment Sale Agreement, dated as of April 1,
1997, between the City of Farmington, New Mexico and the Registrant
relating to Pollution Control Revenue Bonds, 1997 Series A (Tucson
Electric Power Company San Juan Project).
4b - City of Farmington, New Mexico Ordinance No. 97-1055, adopted April
17, 1997, authorizing Pollution Control Revenue Bonds, 1997 Series A
(Tucson Electric Power Company San Juan Project).
4c - Loan Agreement, dated as of April 1, 1997, between Coconino County,
Arizona Pollution Control Corporation and the Registrant relating to
Pollution Control Revenue Bonds, 1997 Series A (Tucson Electric Power
Company Navajo Project).
4d - Indenture of Trust, dated as of April 1, 1997, between Coconino
County, Arizona Pollution Control Corporation and First Trust of New
York, National Association, authorizing Pollution Control Revenue
Bonds, 1997 Series A (Tucson Electric Power Company Navajo Project).
4e - Loan Agreement, dated as of April 1, 1997, between Coconino County,
Arizona Pollution Control Corporation and the Registrant relating to
Pollution Control Revenue Bonds, 1997 Series B (Tucson Electric Power
Company Navajo Project).
4f - Indenture of Trust, dated as of April 1, 1997, between Coconino
County, Arizona Pollution Control Corporation and First Trust of New
York, National Association, authorizing Pollution Control Revenue
Bonds, 1997 Series B (Tucson Electric Power Company Navajo Project).
15 - Letter regarding unaudited interim financial information.
27 - Financial Data Schedule.
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, 1997 and 1996, as
indicated in our report dated May 2, 1997; 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, 1997, 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 12, 1997
<TABLE> <S> <C>
<ARTICLE> UT
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,947,254
<OTHER-PROPERTY-AND-INVEST> 70,443
<TOTAL-CURRENT-ASSETS> 213,820
<TOTAL-DEFERRED-CHARGES> 291,340
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 2,522,857
<COMMON> 638,908
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> (494,106)
<TOTAL-COMMON-STOCKHOLDERS-EQ> 144,802
0
0
<LONG-TERM-DEBT-NET> 1,192,025
<SHORT-TERM-NOTES> 3,567
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 1,635
0
<CAPITAL-LEASE-OBLIGATIONS> 892,570
<LEASES-CURRENT> 15,833
<OTHER-ITEMS-CAPITAL-AND-LIAB> 272,425
<TOT-CAPITALIZATION-AND-LIAB> 2,522,857
<GROSS-OPERATING-REVENUE> 154,281
<INCOME-TAX-EXPENSE> (2,348)
<OTHER-OPERATING-EXPENSES> 135,839
<TOTAL-OPERATING-EXPENSES> 133,491
<OPERATING-INCOME-LOSS> 20,790
<OTHER-INCOME-NET> 15,304
<INCOME-BEFORE-INTEREST-EXPEN> 36,094
<TOTAL-INTEREST-EXPENSE> 24,602
<NET-INCOME> 11,492
0
<EARNINGS-AVAILABLE-FOR-COMM> 11,492
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 26,977
<EPS-PRIMARY> 0.36
<EPS-DILUTED> 0.36
</TABLE>
EXHIBIT 4a
=================================================================
AMENDED AND RESTATED INSTALLMENT SALE AGREEMENT
(AMENDING AND RESTATING THE TWO INSTALLMENT SALE AGREEMENTS
DATED AS OF DECEMBER 1, 1973 AND NOVEMBER 1, 1977, RESPECTIVELY)
BETWEEN
CITY OF FARMINGTON, NEW MEXICO
VENDOR
AND
TUCSON ELECTRIC POWER COMPANY
VENDEE
------------
DATED AS OF APRIL 1, 1997
-------------
RELATING TO
POLLUTION CONTROL REVENUE BONDS,
1997 SERIES A
(TUCSON ELECTRIC POWER COMPANY SAN JUAN PROJECT)
=================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
AMENDED AND RESTATED INSTALLMENT SALE AGREEMENT . . . . . . . 1
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . 3
SECTION 1.02. Incorporation of Certain
Definitions by Reference . . . . . . . . . . 7
ARTICLE II
REPRESENTATIONS, WARRANTIES AND FINDINGS
SECTION 2.01. Representations and Warranties of the City. . 7
SECTION 2.02. Representations and Warranties of the Company 7
SECTION 2.03. Findings of the City. . . . . . . . . . . . . 8
ARTICLE III
PRIOR CONVEYANCE TO THE CITY; THE FACILITIES
SECTION 3.01. Prior Conveyance to the City. . . . . . . . . 8
SECTION 3.02. Revision of Plans and Specifications . . . . . 8
SECTION 3.03. Maintenance of Facilities; Remodeling; Notice of
Damages . . . . . . . . . . . . . . . . . . . 9
SECTION 3.04. Insurance . . . . . . . . . . . . . . . . . . 9
SECTION 3.05. Condemnation; Eminent Domain. . . . . . . . . 9
ARTICLE IV
ISSUANCE AND SALE OF THE BONDS;
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. Disposition of Bond Proceeds. . . . . . . . . 10
SECTION 4.04. Investment of Moneys in Funds and Accounts. . 10
ARTICLE V
PURCHASE BY THE COMPANY;
PURCHASE PRICE PAYMENTS; OTHER OBLIGATIONS
SECTION 5.01. Prior Purchase by the Company. . . . . . . . . 10
SECTION 5.02. Purchase Price Payments. . . . . . . . . . . . 11
-----------------
* This table of contents is not part of the Installment Sale
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 Installment Sale Agreement.
<PAGE>
SECTION 5.03. Payments Pledged and Assigned; Obligation
Absolute . . . . . . . . . . . . . . . . . . 11
SECTION 5.04. Payment of Expenses . . . . . . . . . . . . . 11
SECTION 5.05. Indemnification . . . . . . . . . . . . . . . 11
SECTION 5.06. Payment of Taxes; Discharge of Liens . . . . . 12
ARTICLE VI
SPECIAL COVENANTS
SECTION 6.01. Maintenance of Corporate Existence . . . . . . 12
SECTION 6.02. Permits or Licenses . . . . . . . . . . . . . 13
SECTION 6.03. City's Access to Facilities. . . . . . . . . . 13
SECTION 6.04. Tax-Exempt Status of Interest on Bonds. . . . 13
SECTION 6.05. Use of Facilities . . . . . . . . . . . . . . 14
SECTION 6.06. Financing Statements . . . . . . . . . . . . . 14
SECTION 6.07. No Warranties. . . . . . . . . . . . . . . . . 14
SECTION 6.08. Quiet Enjoyment. . . . . . . . . . . . . . . . 14
SECTION 6.09. Additional Payments by Company Concerning the
Facilities. . . . . . . . . . . . . . . . . . 15
SECTION 6.10 Qualification in New Mexico . . . . . . . . . 15
ARTICLE VII
ASSIGNMENT, LEASING AND SELLING
SECTION 7.01. By the City. . . . . . . . . . . . . . . . . . 15
SECTION 7.02. By the Company . . . . . . . . . . . . . . . . 15
SECTION 7.03. Instrument Furnished to the City and Trustee . 17
SECTION 7.04. Limitation . . . . . . . . . . . . . . . . . . 17
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
SECTION 8.01. Events of Default . . . . . . . . . . . . . . 17
SECTION 8.02. Force Majeure . . . . . . . . . . . . . . . . 17
SECTION 8.03. Remedies . . . . . . . . . . . . . . . . . . . 18
SECTION 8.04. No Remedy Exclusive . . . . . . . . . . . . . 18
SECTION 8.05. Reimbursement of Attorneys' and Agents' Fees . 18
SECTION 8.06. Waiver of Breach . . . . . . . . . . . . . . . 18
ARTICLE IX
PREPAYMENT OF PURCHASE PRICE PAYMENTS;
REDEMPTION OF BONDS
SECTION 9.01. Prepayment of Purchase Price Payments; Redemption
of Bonds . . . . . . . . . . . . . . . . . . 19
SECTION 9.02. Compliance with the Ordinance . . . . . . . . 19
<PAGE>
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Term of Agreement . . . . . . . . . . . . . . 19
SECTION 10.02. Effect of Plant Agreements . . . . . . . . . 19
SECTION 10.03. Notices . . . . . . . . . . . . . . . . . . . 19
SECTION 10.04. Parties in Interest . . . . . . . . . . . . . 20
SECTION 10.05. Amendments . . . . . . . . . . . . . . . . . 20
SECTION 10.06. Counterparts . . . . . . . . . . . . . . . . 20
SECTION 10.07. Severability . . . . . . . . . . . . . . . . 20
SECTION 10.08. Governing Law . . . . . . . . . . . . . . . . 20
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . 21
Exhibit A Description of Facilities . . . . . . . . . . . . . A-1
<PAGE>
AMENDED AND RESTATED INSTALLMENT SALE AGREEMENT
THIS AMENDED AND RESTATED INSTALLMENT SALE AGREEMENT, dated
as of April 1, 1997 (this "Agreement"), between the CITY OF
FARMINGTON, in the County of San Juan, an incorporated
municipality, a body politic and corporate, existing under the
Constitution and laws of the State of New Mexico (hereinafter
called the "City"), as Vendor, and TUCSON ELECTRIC POWER COMPANY,
a corporation organized and existing under the laws of the State
of Arizona, formerly known as Tucson Gas & Electric Company
(hereinafter called the "Company"), as Vendee, being an amendment
to and a restatement in its entirety of those certain Installment
Sale Agreements, dated as of December 1, 1973 (the "Series 1973
Installment Sale Agreement") and November 1, 1977 (the "Series
1977 Installment Sale Agreement"), each between the City, as
Vendor, and the Company, as Vendee (it being understood that
Public Service Company of New Mexico was, but no longer is, an
additional Vendee under such Installment Sale Agreement dated as
of December 1, 1973).
W I T N E S S E T H :
WHEREAS, the City is authorized and empowered under the
Pollution Control Revenue Bond Act, Chapter 397, Laws of 1973 of
the State of New Mexico, 31st Legislature, 1st Session, as
amended (the "Act"), to issue revenue bonds for and to acquire,
whether by construction, purchase, gift or lease, one or more
projects consisting of any land, interest in land, building,
structure, facility, system, fixture, improvement, appurtenance,
machinery, equipment or any combination thereof, or any interest
in any one or more of the foregoing, whether or not presently in
existence or under construction, used by any individual,
partnership, firm, company, corporation (including a public
utility), association, trust, estate, political subdivision,
state agency or any other legal entity, or its legal
representative, agent or assigns, substantially for the
reduction, abatement or prevention of pollution, including, but
not limited to, the removal of pollutants, contaminants or
foreign substances from land, air or water, or for the removal or
treatment of any substance in a processed material which would
otherwise cause pollution when such material is used, provided
that any such project shall be located within the State of New
Mexico and within or without or partially within or without the
City, but not more than fifteen miles outside of the corporate
limits of the City (or that, if there is no municipality within
fifteen miles of the project, the City is in the county in which
the project is or may be located) and to sell or lease or
otherwise dispose of any or all of such projects upon such terms
and conditions as the governing body of the City (hereinafter
called the "City Council") may deem advisable and as shall not
conflict with the provisions of the Act; and
WHEREAS, the San Juan Generating Station, an electric power
generating plant, is located within fifteen miles of the
corporate limits of the City in San Juan County, New Mexico but
not within the corporate limits of any municipality; and
WHEREAS, on August 28, 1973, the City Council adopted
Resolution Number 709 ("Resolution No. 709") determining to issue
and, subject to certain conditions, agreeing to issue revenue
bonds under the Act to finance the costs to the Company of
certain facilities for the reduction, abatement or prevention of
pollution caused by the operation of the San Juan Generating
Station, including facilities for the reduction, abatement or
prevention of pollution caused by the operation of Units 1 and 2
of such generating station (the "Facilities") and authorizing the
Mayor of the City to execute and deliver preliminary agreements
relating thereto and, subject to certain conditions, to take such
steps and actions as required or necessary in order to issue such
revenue bonds, and a Preliminary Agreement (the "Original
Preliminary Agreement"), in the form contemplated by Resolution
No. 709, was executed and delivered by the City and the Company;
and
WHEREAS, on November 27, 1973, the City Council adopted
Resolution Number 721 ("Resolution No. 721") in order to
authorize consideration of the adoption of a proposed Ordinance,
in order to, among other matters, increase the aggregate
principal amount of revenue bonds authorized to be issued by the
City to finance the costs to the Company of the acquisition,
construction and installation of the Facilities; and
WHEREAS, on August 13, 1974, the City Council adopted
Resolution Number 751 ("Resolution No. 751") authorizing the
Mayor of the City to execute and deliver certain amendments to
the Original Preliminary Agreement in order to, among other
matters, further increase the aggregate principal amount of
revenue bonds authorized to be issued by the City to finance the
costs to the Company of the acquisition, construction and
installation of the Facilities; and
WHEREAS, a supplemental preliminary agreement (the
"Supplemental Preliminary Agreement," and, together with the
Original Preliminary Agreement and Resolution No. 721, the
"Preliminary Agreement"), in the form contemplated by Resolution
No. 751, was executed and delivered by the City and the Company
on August 13, 1974; and
WHEREAS, pursuant to Ordinance No. 486, adopted by the City
Council on December 17, 1973, as supplemented by Ordinance No.
487, adopted by the City Council on January 3, 1974 (together,
the "Series 1973 Ordinance"), the City has heretofore issued and
sold $55,000,000 aggregate principal amount of its Pollution
Control Revenue Bonds, Series 1973 (Tucson Gas & Electric Company
San Juan Project), of which $47,910,000 in principal amount
remains outstanding (the "1973 Bonds"), the proceeds of which
were to be used to finance a portion of the costs to the Company
of the acquisition, construction and installation of the
Facilities at Units 1 and 2 of the San Juan Generating Station
described in Exhibit A to the Series 1973 Installment Sale
Agreement; and
WHEREAS, Public Service Company of New Mexico has redeemed
the pollution control revenue bonds secured by revenues derived
pursuant to the Series 1973 Installment Sale Agreement and its
obligations and rights pursuant thereto have been discharged so
that the Company remains the sole Vendee thereunder; and
WHEREAS, pursuant to Ordinance No. 579, adopted by the City
Council on November 1, 1977, as supplemented by Ordinance No.
580, adopted by the City Council on November 8, 1977 (together,
the "Series 1977 Ordinance"), the City has also heretofore issued
and sold $32,500,000 aggregate principal amount of its
Collateralized Pollution Control Revenue Bonds, 1977 Series A
(Tucson Gas & Electric Company San Juan Project), of which
$32,500,000 in principal amount remains outstanding (the "1977
Bonds") (the 1973 Bonds and the 1977 Bonds being hereinafter
called, collectively, the "Prior Bonds"), the proceeds of which
were to be used to finance a portion of the costs to the Company
of the acquisition, construction and installation of the
Facilities at Units 1 and 2 of the San Juan Generating Station
described in Exhibit A to the Series 1977 Installment Agreement;
and
WHEREAS, in order to refinance the Facilities through the
refunding and redemption of the Prior Bonds, the City intends to
issue and sell its Pollution Control Revenue Bonds, 1997 Series A
(Tucson Electric Power Company San Juan Project) (the "Bonds")
pursuant to Ordinance No. 97-1055, adopted by the City Council on
April 17, 1997, and Resolution No. 97-879, adopted by the City
Council on April 17, 1997 (together, the "Ordinance"), for the
purpose of providing funds which, together with other funds
available therefor, will be sufficient to refund and redeem the
Prior Bonds; and
WHEREAS, in connection with the issuance of the Bonds, the
Company has requested that the Series 1973 Installment Sale
Agreement and the Series 1977 Installment Sale Agreement (each an
"Original Sale Agreement," and hereinafter collectively referred
to as the "Original Sale Agreements") be amended and restated;
NOW, THEREFORE, the parties hereto, intending to be legally
bound hereby and in consideration of the premises, DO HEREBY
AGREE as follows:
<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1.01. 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 the Pollution Control Revenue Bond Act,
Chapter 397, Laws of 1973 of the State of New Mexico, 31st
Legislature, 1st Session, as amended by Chapter 312, Laws of 1977
of the State of New Mexico, 33rd Legislature, 1st Session, by
Chapter 181, Laws of 1978 of the State of New Mexico, 33rd
Legislature, 2nd Session, and by Chapter 114, Laws of 1983 of the
State of New Mexico, 36th Legislature, 1st Session, and all acts
supplemental thereto or amendatory thereof.
Administration Expenses:
"Administration Expenses" shall mean the reasonable expenses
incurred by the City with respect to this Agreement, the
Ordinance and any transaction or event contemplated by this
Agreement or the Ordinance, 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
Ordinance.
Agreement:
"Agreement" shall mean this Amended and Restated Installment
Sale Agreement, dated as of April 1, 1997, between the City 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 City 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.
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 City.
Bond Fund:
"Bond Fund" shall mean the fund created by Section 4.01 of
the Ordinance.
Bonds:
"Bond" or "Bonds" shall mean the Pollution Control Revenue
Bonds, 1997 Series A (Tucson Electric Power Company San Juan
Project) of the City.
City:
"City" shall mean the City of Farmington, in the County of
San Juan, an incorporated municipality, a body politic and
corporate, existing under the Constitution and laws of the State
of New Mexico, and its successors and their assigns.
City Council:
"City Council" shall mean the City Council of the City or
the board or other body in which general legislative powers of
the City subsequently may be vested.
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, including, without
limitation, any successor obligor under Section 6.01 and 7.02 to
the extent of the obligations assumed thereunder.
Company Mortgages:
"Company Mortgages" 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), as
trustee, as heretofore and hereafter amended and supplemented and
the Indenture of Mortgage and Deed of Trust, dated as of December
1, 1992, between the Company and Bank of Montreal Trust Company,
as trustee, as heretofore and hereafter amended and supplemented.
Company Project:
"Company Project" shall mean the interests in the Facilities
previously sold by the City to the Company, pursuant to the
Original Sale Agreements.
Facilities:
"Facilities" shall mean the systems and facilities for the
reduction, abatement or prevention of pollution caused by the
operation of the Plant which are described in Exhibit A hereto,
as from time to time amended or modified, and related
improvements.
1954 Code:
"1954 Code" shall mean the Internal Revenue Code of 1954, as
amended.
1977 Bonds:
"1977 Bonds" shall mean the $32,500,000 aggregate principal
amount of the City's Collateralized Pollution Control Revenue
Bonds, 1977 Series A (Tucson Gas & Electric Company San Juan
Project), all of which remain outstanding.
1973 Bonds:
"1973 Bonds" shall mean the $55,000,000 aggregate principal
amount of the City's Pollution Control Revenue Bonds, Series 1973
(Tucson Gas & Electric Company San Juan Project), of which
$47,910,000 in principal amount remains outstanding.
Ordinance:
"Ordinance" shall mean Ordinance No. 97-1055 adopted by the
City Council on April 17, 1997 creating and securing the Bonds,
as modified, altered, amended or supplemented by any and all
ordinances and resolutions supplemental thereto or amendatory
thereof adopted by the City Council and effective prior to the
initial issuance of the Bonds, including without limitation,
Resolution No. 97-879 adopted by the City Council on April 17,
1997 and any Supplemental Ordinances and related resolutions
adopted thereafter by the City Council pursuant thereto.
Original Sale Agreements:
"Original Sale Agreements" shall mean the Series 1973
Installment Sale Agreement and the Series 1977 Installment Sale
Agreement.
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 Ordinance 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 Ordinance; and
(c) those in lieu of or in exchange or substitution
for which other Bonds shall have been authenticated and
delivered pursuant to the Ordinance, unless proof
satisfactory to the Trustee and the Company is presented
that such Bonds are held by a bona fide holder in due
course.
Permitted Encumbrances:
"Permitted Encumbrances" shall mean and include (a) liens
for taxes, assessments and other governmental charges not
delinquent or which can be paid without penalty; (b) unfiled,
inchoate mechanics' and materialmen's liens for construction work
in progress; (c) workmen's, repairmen's warehousemen's and
carriers' liens and other similar liens, if any, arising in the
ordinary course of business; (d) all the following, if they do
not individually or in the aggregate materially impair the use of
the Facilities or materially detract from the value thereof to
the Company, viz.: any easements, restrictions, mineral, oil, gas
and mining rights and reservations, zoning laws and defects in
title or other encumbrances to which the Facilities may be
subject because of the installation thereof at the Plant; (e) any
lien for the satisfaction and discharge of which a sum of money
or a surety bond deemed adequate by the Trustee is on deposit
with the Trustee; (f) the rights of the City and the Company
under this Agreement and any prior or subsequent installment sale
agreement or lease between the City and Company relating to all
or any part of the Facilities and the issuance of revenue bonds
in connection therewith; (g) the lien of the Company Mortgages
and liens, encumbrances and defects of the character of the
permitted encumbrances referred to therein; and (h) the Plant
Agreements.
Person:
"Person" means (i) any corporation, limited liability
company, partnership, joint venture, association, joint-stock
company, business trust or 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 Units 1 and 2 and related common
facilities of the San Juan Generating Station, an electric power
generating plant located northwest of and within fifteen miles of
the corporate limits of the City in San Juan County, New Mexico,
and not within the corporate limits of any municipality, 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.
Prior Bonds:
"Prior Bonds" shall mean the 1973 Bonds and the 1977 Bonds,
collectively.
Purchase Price Payments:
"Purchase Price Payments" shall mean the payments required
to be made by the Company pursuant to Section 5.02 hereof.
Series 1973 Installment Sale Agreement:
"Series 1973 Installment Sale Agreement" shall mean the
Installment Sale Agreement, dated as of December 1, 1973, between
the City, as Vendor, and Public Service Company of New Mexico
(which has now been discharged therefrom) and the Company, as
Vendees, as amended and supplemented pursuant to the terms
thereof prior to the date hereof.
Series 1977 Installment Sale Agreement:
"Series 1977 Installment Sale Agreement" shall mean the
Installment Sale Agreement, dated as of November 1, 1977, between
the City, as Vendor, and the Company, as Vendee, as amended and
supplemented pursuant to the terms thereof prior to the date
hereof.
Supplemental Ordinance:
"Supplemental Ordinance" shall mean any ordinance or
resolution adopted by the City Council and effective subsequent
to the initial issuance of the Bonds modifying, altering,
amending, supplementing or confirming the Ordinance or for any
purpose, in accordance with the terms of the Ordinance, as such
Supplemental Ordinance may be modified, altered, amended or
supplemented by any and all ordinances and related resolutions of
the City Council of the City adopted pursuant thereto.
Tax Agreement:
"Tax Agreement" shall mean that tax certificate and
agreement, dated the date of the initial authentication and
delivery of the Bonds, between the City and the Company, relating
to the requirements of the Code and the 1954 Code, and any and
all modifications, alterations, amendments and supplements
thereto.
Trustee:
"Trustee" shall mean First Trust of New York, National
Association, as trustee under the Ordinance, its successors in
trust and their assigns.
SECTION 1.02. Incorporation of Certain Definitions by
Reference. Each capitalized term used herein and not otherwise
defined herein shall have the meaning set forth in the Ordinance.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND FINDINGS
SECTION 2.01. Representations and Warranties of the City.
The City makes the following representations and warranties as
the basis for the undertakings on the part of the Company
contained herein:
(a) The City is an incorporated municipality, a body
politic and corporate, existing under the Constitution and
laws of the State of New Mexico;
(b) The City has the power to enter into this
Agreement and to perform and observe the agreements and
covenants on its part contained herein, including without
limitation the power to issue and sell the Bonds as
contemplated herein and in the Ordinance, and by proper
corporate action has duly authorized the execution and
delivery hereof;
(c) The execution and delivery of this Agreement by
the City do not, and consummation of the transactions
contemplated hereby and fulfillment of the terms hereof by
the City will not, result in a breach of any of the terms or
provisions of, or constitute a default under, any ordinance,
indenture mortgage, deed of trust or other agreement or
instrument to which the City is now a party or by which it
is now bound, or any order, rule or regulation applicable to
the City of any court or of any regulatory body or
administrative agency or other governmental body having
jurisdiction over the City or over any of its properties, or
the Constitution or laws of the State of New Mexico;
SECTION 2.02. 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
City 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
ordinance, 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 (i) are designed to meet applicable
federal, state and local requirements for the control of
pollution now in effect, (ii) are to be used to reduce,
abate or prevent pollution and (iii) are located or are to
be located in San Juan County within fifteen miles outside
the corporate limits of the City and not within the
corporate limits of any municipality;
(f) All of the proceeds of the Bonds (exclusive of
accrued interest, if any, to be paid by the initial
purchasers of the Bonds upon delivery thereof) will be
expended to refund the Prior Bonds;
(g) The Company presently owns and undivided 50%
interest in Unit 1 of the Plant and an undivided 50%
interest in Unit 2 of the Plant.
(h) With respect to the Facilities as of the date of
execution and delivery of this Agreement, the Company has
good and marketable title to its interest in such Facilities
free and clear of all claims, liens and encumbrances, other
than Permitted Encumbrances;
(i) The Facilities consist of those facilities
described in Exhibit A attached hereto, and so long as the
Company owns an interest in the Facilities, the Company
shall cause to be made, or consent to, no changes to the
Facilities or to the operation thereof which would affect
the qualification of the Facilities as pollution control
facilities under the Act or impair the tax-exempt status of
interest on the Bonds;
(j) To the extent necessary to preserve the security
for the Bonds, the validity of the Bonds under the Act and
the tax-exempt status of interest on the Bonds, all material
certificates, approvals, permits and authorizations with
respect to the construction of the Facilities of applicable
local, state and federal governmental agencies have been
obtained, and the Facilities have been constructed and are
in operation in all material respects in accordance with
such certificates, approvals, permits and authorizations;
and
(k) The Company has used the proceeds of the Prior
Bonds and the proceeds from the sale of any facilities
financed with the Prior Bonds for purposes which are
authorized by the Act and which would not adversely affect
the exclusion from gross income for federal tax purposes of
interest on the Prior Bonds or the exemption of interest on
the Prior Bonds from State of New Mexico income taxation.
SECTION 2.03. Findings of the City. The City hereby
confirms its findings that its financing and refinancing of the
Company's interest in the Facilities will serve the public
purpose of the Act to protect and promote the health, welfare and
safety of the citizens of the State of New Mexico and its habitat
and wildlife, with the resultant higher level of employment and
economic activity and stability.
ARTICLE III
PRIOR CONVEYANCE TO THE CITY; THE FACILITIES
SECTION 3.01. Prior Conveyance to the City. The Company
and the City confirm that, pursuant to the Original Sale
Agreements, the Company has heretofore sold and conveyed to the
City, and the City has heretofore purchased and acquired from the
Company, the Company's interest in the Facilities, subject only
to Permitted Encumbrances.
SECTION 3.02. 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) 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 City 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 Ordinance.
SECTION 3.03. Maintenance of Facilities; Remodeling; Notice
of Damages. 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; provided further that prior
to any such discontinuation, the Company shall furnish to the
City and the Trustee a certificate executed by an Authorized
Company Representative stating that the operation of the
Facilities, or any element or unit thereof, is being discontinued
and the reasons therefor.
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.
After the occurrence of any material damage or loss to the
Facilities, if any Bonds are then Outstanding, the Company shall
notify the City as to the nature and extent of such damages or
loss and whether it is practicable and desirable to rebuild,
repair, or restore such damage or loss.
SECTION 3.04. Insurance. The Company shall exercise all of
its rights, powers, elections and options under the Plant
Agreements to keep the Facilities insured against fire, casualty,
public liability 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.
SECTION 3.05. Condemnation; Eminent Domain. (a) In the
event that title to or the temporary use of the Facilities, or
any part thereof, shall be taken in condemnation or by the
exercise of the power of eminent domain by any governmental body
or by any person, firm or corporation acting under governmental
authority, any proceeds received by the City from any award or
awards in respect of the Facilities or any part thereof made in
such condemnation or eminent domain proceedings, after payment of
all expenses incurred in the collection thereof, shall to the
extent of the Company's interest therein be paid for the account
of the Company, and the City hereby assigns to the Company all of
its right, title and interest in and to any claim for and rights
with respect to any such condemnation award.
(b) The City shall cooperate fully with the Company in
the handling and conduct of any prospective or pending
condemnation proceedings with respect to the Facilities or any
part thereof. In no event will the City voluntarily settle or
consent to the settlement of any prospective or pending
condemnation proceedings with respect to the Facilities or any
part thereof without the written consent of the Company and the
City will, at the request of the Company, accept a sum in payment
therefor at any stage of the condemnation proceedings which the
Company shall certify to the City to be fair. Unless and until
such a request is made by the Company, the City will take or
cause to be taken all actions necessary to obtain the award of
fair compensation for the taking and the collecting thereof.
(c) The Company shall be entitled to the entire
proceeds of any condemnation award or portion thereof made for
damages to or takings of its own property other than the
Facilities.
ARTICLE IV
ISSUANCE AND SALE OF THE BONDS;
DISPOSITION OF PROCEEDS OF THE BONDS
SECTION 4.01. Issuance of the Bonds. The City shall issue
the Bonds under and in accordance with the Ordinance subject to
the provisions of the bond purchase agreement among the City, 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.
SECTION 4.02. Issuance of Other Obligations. The City 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 City, under an ordinance or
ordinances other than the Ordinance, 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.
SECTION 4.03. Disposition of Bond Proceeds. The City and
the Company shall enter into escrow arrangements with the trustee
for each series of Prior Bonds and shall cause a portion of the
proceeds of the Bonds in amount equal to (i) the proceeds of the
Bonds, other than accrued interest, if any, paid by the initial
purchaser or purchasers thereof, multiplied by the ratio
determined by multiplying outstanding principal amount of such
series of Prior Bonds by the aggregate outstanding principal
amount of the Prior Bonds, to be deposited in escrow with such
trustee to be applied to the payment of such series of Prior
Bonds upon the redemption thereof.
The City shall establish the Bond Fund with the Trustee in
accordance with Section 4.01 of the Ordinance. The accrued
interest, if any, paid by the initial purchasers of the Bonds
shall be deposited into the Bond Fund.
SECTION 4.04. Investment of Moneys in Funds and Accounts.
The Company and the City agree that any moneys held in any fund
or account created by the Ordinance shall be invested as provided
in the Ordinance.
ARTICLE V
PURCHASE BY THE COMPANY;
PURCHASE PRICE PAYMENTS; OTHER OBLIGATIONS
SECTION 5.01. Prior Purchase by the Company. The City and
the Company confirm that pursuant to the Original Sale
Agreements, the City has heretofore sold and conveyed to the
Company, without warranty of any kind whatsoever, and the Company
confirms that it has purchased and acquired from the City, the
interest in the Facilities acquired by the City as described in
Section 3.01 hereof. The parties hereto agree that
notwithstanding anything to the contrary in the Original Sale
Agreements, effective as of the date of initial issuance of the
Bonds the respective purchase prices for the interest in the
Facilities shall be the purchase price payments set forth in
Section 5.02 hereof.
SECTION 5.02. Purchase Price Payments. As the purchase
price to be paid by the Company for the interest in the
Facilities which comprise the Company Project, the Company shall
pay, or cause to be paid, to the Trustee for the account of the
City an amount equal to the aggregate principal amount of the
Bonds from time to time Outstanding and, as interest on 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 Ordinance for
the City to cause amounts to be deposited in the Bond Fund for
the timely 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 Section
2.12 and Section 3.05 of the Ordinance of the amount of the
corresponding payment required to be made by the City thereunder.
SECTION 5.03. Payments Pledged and Assigned; Obligation
Absolute. It is understood and agreed that all Purchase Price
Payments are, by the Ordinance, to be pledged by the City to the
Trustee, and that all rights and interest of the City hereunder
(except for the City's rights under Sections 5.04, 5.05, 6.03 and
8.05 hereof and any rights of the City to receive notices,
certificates, requests, requisitions and other communications
hereunder) 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 Purchase Price Payments and
the other charges payable hereunder 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 City or the Trustee
or any other party under this Agreement, the Ordinance or
otherwise, or out of any obligation or liability at any time
owing to the Company by the City, the Trustee or any other party,
and, further, that the Purchase Price Payments and the other
payments due and charges payable 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
Plant or the Facilities, or for any other reason, all of the
foregoing being subject, however, to the provisions of Sections
6.01 and 7.02 hereof.
SECTION 5.04. Payment of Expenses. (a) The Company shall
pay all Administration Expenses, 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 Ordinance. 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
Ordinance shall be made directly to such entities.
(b) The City may submit to the Company periodic
statements, not more frequently than monthly, for the reasonable
value of services of any City employees utilized, and the full
amount of any City expenses incurred, by the City in connection
with the performance or attainment by the City of its obligations
and rights under or pursuant to the Ordinance, the Bonds or this
Agreement, and the Company shall make payment to the City of the
full amount of each such statement within thirty (30) days after
the Company receives such statement, provided that the Company
within such thirty (30) day period may in writing and in good
faith specifically protest all or any portion of the amounts
included in such statement and in such event the Company shall
not be obligated to make payment to the City of the amount which
has been protested in such manner until ten (10) days after such
protest shall have been resolved either by agreement between the
City and the Company or by an appropriate tribunal. The Company
agrees that the provisions of this Section 5.04 shall survive the
payment, redemption or defeasance of the Bonds.
SECTION 5.05. Indemnification. The Company releases the
City and the Trustee from, and covenants and agrees that neither
the City nor the Trustee shall be liable for, and covenants and
agrees, to indemnify and hold harmless the City and the Trustee
and their officers (including members of the City Council),
employees and agents from and against, any and all losses,
claims, damages, liabilities (including, without limitation,
those resulting from any environmental laws), taxes (including,
without limitation, gross receipts taxes but, with respect to the
Trustee, not including taxes owing in the ordinary course of
business), or expenses, of every conceivable kind, character and
nature whatsoever arising out of, resulting from or in any way
connected with (1) the Facilities or the conditions, occupancy,
use, possession, conduct or management of, or work done in or
about, or from the planning, design, acquisition, installation or
construction of the Facilities or any part thereof, except for
those arising out of the activities described in Section 56-7-1 A
or B, N.M.S.A. 1978, or in Section 56-7-2 A or B, N.M.S.A. 1978,
to the extent such Sections are applicable; (2) the issuance of
any Bonds or any certifications or representations made in
connection therewith and the carrying out of any of the
transactions contemplated by the Bonds, the Ordinance and this
Agreement; (3) the Trustee's acceptance or administration of the
trusts under the Ordinance; or (4) 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 circular utilized by the City or any underwriter or
placement agent in connection with the sale of any Bonds;
provided that such indemnity shall not be required for losses,
claims, damages, liabilities or expenses that result from, in the
case of parties other than the City, negligence or from willful
misconduct on the part of the party seeking such indemnity. The
indemnity of the Trustee and the City required by this Section
shall be only to the extent that any loss sustained by the
Trustee or the City, as the case may be, exceeds the net proceeds
the Trustee or the City, as the case may be, receives from any
insurance carried with respect to the loss sustained. The
Company further covenants and agrees, to the extent permitted by
law, to pay or to reimburse the City and the Trustee and their
officers, employees and agents for any and all reasonable costs,
attorneys fees and expenses, liabilities or expenses incurred in
connection with investigating, defending against or otherwise in
connection with any such losses, claims, damages, liabilities,
expenses or actions, except to the extent that the same arise out
of the negligence or willful misconduct of the party claiming
such payment or reimbursement. The provisions of this Section
shall survive the retirement of the Bonds or resignation or
removal of the Trustee.
SECTION 5.06. 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 City with respect to the Purchase Price
Payments, 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 Purchase Price Payments, 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, except Permitted Encumbrances; provided, that, if
the Company shall first notify the City 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
Ordinance as to the Purchase Price 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
City shall cooperate fully with the Company in any such contest.
ARTICLE VI
SPECIAL COVENANTS
SECTION 6.01. Maintenance of Corporate Existence. Except
as permitted in this Section 6.01, the Company shall maintain its
corporate existence, shall not sell, transfer or otherwise
dispose of all of its assets, as or substantially as an entirety,
and shall 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 of its assets, as
or substantially as an entirety, 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 other
disposition, assumes, by delivery to the Trustee and the City of
an instrument in writing satisfactory in form to the Trustee and
the City, all the obligations of the Company under this
Agreement, including without limitation the obligations of the
Company under Section 5.02 hereof. Upon such an assumption
following any such sale, transfer or other disposition of assets,
the Company shall be released and discharged from all liability
in respect of all obligations under this Agreement.
Notwithstanding the foregoing, in the case of any such sale,
transfer or other disposition of assets, which do not include the
Facilities, the Company shall remain liable in respect of all
obligations under this Agreement other than the obligations under
Section 5.02 hereof, and the transferee shall not be required to
assume any obligations hereunder other than the obligations under
Section 5.02 hereof; provided, however, that the transferee shall
be required to assume all such other obligations unless the
Company shall have delivered to the City and the Trustee an
opinion of Bond Counsel to the effect that the non-assumption by
the transferee of such other obligations will not impair the
validity under the Act of the Bonds and will not adversely affect
the exclusion from gross income for federal tax purposes of
interest on the Bonds.
If consolidation, merger or sale, transfer or other
disposition 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 or other disposition shall be made except in compliance
with the provisions of this Section 6.01.
Anything in this Agreement to the contrary notwithstanding,
the sale, transfer or other disposition by the Company of all of
its facilities (a) for the generation of electric energy, (b) for
the transmission of electric energy or (c) for the distribution
of electric energy, in each case considered alone, or all of its
facilities described in clauses (a) and (b), considered together,
or all of its facilities described in clauses (b) and (c),
considered together, shall in no event be deemed to constitute a
sale, transfer or other disposition of all the properties of the
Company, as or substantially as an entirety, unless, immediately
following such sale, transfer or other disposition, the Company
shall own no properties in the other such categories of property
not so sold, transferred or otherwise disposed of. The character
of particular facilities shall be determined by reference to the
Uniform System of Accounts prescribed for public utilities and
licensees subject to the Federal Power Act, as amended, to the
extent applicable.
SECTION 6.02. 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 City 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 City, the Company and the City each shall, upon
the request of either, execute such application or applications.
SECTION 6.03. City's Access to Facilities. The City 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.
SECTION 6.04. 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 City 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) The City covenants and agrees that it will not
take or omit to take any action reasonably within its control
that will cause 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 Section 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 end, the
City covenants to the extent reasonably within its control to
comply with all covenants set forth in the Tax Agreement, which
is hereby incorporated by reference as though fully set forth
herein.
(c) The Company 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 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
Company is of the opinion that for purposes of this Section
6.04(c) it is necessary to restrict or limit the yield on the
investment of any moneys held by the Trustee under the Ordinance,
the Company shall so notify the Trustee in writing.
Without limiting the generality of the foregoing, the
Company agrees 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 Ordinance. The Company specifically covenants
to pay or cause to be paid the Rebate Requirement as defined and
described in the Tax Agreement.
(d) 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 City shall be
deemed to have violated the covenants set forth in this Section
6.04 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 City 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 Ordinance 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
Ordinance and the Tax Agreement impose duties and
responsibilities on the Company, they are specifically
incorporated herein by reference.
(e) Notwithstanding any provision of this Section 6.04
and Section 7.08 of the Ordinance, if the Company shall provide
to the City 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 Ordinance 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 City 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.
SECTION 6.05. Use of Facilities. So long as any Bonds are
Outstanding and 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
and in the Tax Agreement.
SECTION 6.06. 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 Ordinance.
SECTION 6.07. No Warranties. The City makes no warranty,
either express or implied, with respect to the Facilities as a
whole or with respect to any item or portion of the Facilities.
Without limiting the effect of the preceding sentence, it is
expressly agreed that in connection with the sale or conveyance
pursuant to Section 5.01 of this Agreement (a) the City make no
warranty that the title conveyed shall be good or that its
transfer is rightful or that the goods shall be delivered free
from any security interest or other lien or encumbrance, (b) the
City makes NO WARRANTY OF MERCHANTABILITY, and (c) THERE ARE NO
WARRANTIES WHICH EXTEND BEYOND THE DESCRIPTION ON THE FACE
HEREOF.
SECTION 6.08. Quiet Enjoyment. The City covenants that the
Company, upon observing and performing the terms, conditions and
covenants on the Company's part to be observed and performed
under this Agreement, shall peaceably and quietly have, hold and
enjoy the Company Project as purchaser in possession, free from
molestation, hindrance, eviction or disturbance by the City or by
any other person or persons claiming the same by, through or
under the City.
SECTION 6.09. Additional Payments by Company Concerning the
Facilities. In addition to the payments provided for in Section
5.02 and Section 5.04 hereof, the Company will pay, or will
exercise all of its rights, powers, elections and options under
the Plant Agreements to cause to be paid, as applicable, all of
the expenses of operation of the Facilities, including, without
limitation, the cost of all necessary and proper repairs,
replacements and renewals made pursuant to Section 3.03 hereof
and premiums for insurance pursuant to Section 3.04 hereof.
SECTION 6.10 Qualification in New Mexico. The Company
agrees that throughout the term of this Agreement it, or any
successor or assignee as permitted by Section 6.01 or Section
7.02 hereof, will be qualified to do business in the State of New
Mexico.
ARTICLE VII
ASSIGNMENT, LEASING AND SELLING
SECTION 7.01. By the City. Except as provided in Article V
of this Agreement, the City will not sell, lease, assign,
transfer, convey or otherwise dispose of its interest in the
Facilities or any portion thereof or interest therein or in the
revenues therefrom without the written consent of the Company,
nor will it create or suffer to be created any debt, lien or
charge thereon, not consented to by the Company, except Permitted
Encumbrances.
SECTION 7.02. By the Company. 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 Section 5.02 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 City of an instrument in
writing satisfactory in form to the Trustee, 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) if the assignee, lessee, purchaser or other
transferee shall assume the obligations of the Company under
Section 5.02 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 the
release and discharge of the Company pursuant to clause (b) shall
be conditioned upon delivery by the Company to the City and the
Trustee of a certificate of an Independent Expert (as hereinafter
defined) describing the interests so assigned, leased, sold,
transferred or otherwise disposed of, together with all other
rights, interests, assets and/or properties assigned, leased,
sold, transferred or otherwise disposed of by the Company to the
same Person in the same or a related transaction, stating that
such rights, interests, assets and/or properties so described
constitute facilities for the generation, transmission and/or
distribution of electric energy and stating that, in the opinion
of such Independent Expert, the Fair Value (as hereinafter
defined) of such rights, interests, assets and/or properties to
the Person acquiring the same is not less than an amount equal to
10/7 of the sum of (x) the aggregate principal amount of the
Bonds then Outstanding and (y) the outstanding principal amount
of all other obligations of the Company representing indebtedness
for borrowed money or for the deferred purchase price of property
which are being assumed by such Person; and provided, further,
that after any such assumption, release and discharge as
aforesaid, the Company may again assume such obligations under
Section 5.02 hereof, 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 City 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 and will not adversely affect
the exclusion from gross income for federal tax purposes of
interest on the Bonds.
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 City and the Trustee the agreements or other documents
required pursuant to Section 7.03 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.
For purposes of this Section 7.02:
(a) "Independent Expert" means a Person which (i) is
an engineer, appraiser or other expert and which, with respect to
any certificate to be delivered pursuant to this Section, is
qualified to pass upon the matter set forth in such certificate
and (ii)(A) is in fact independent, (B) does not have any direct
material financial interest in the transferee or in any obligor
upon the Bonds or under this Agreement or in any affiliate of the
transferee or any such obligor, (C) is not connected with the
transferee or any such obligor as an officer, employee, promoter,
underwriter, trustee, partner, director or any person performing
similar functions and (D) is approved by the Trustee in the
exercise of reasonable care; for purposes of this definition
"engineer" means a Person engaged in the engineering profession
or otherwise qualified to pass upon engineering matters
(including, but not limited to, a Person licensed as a
professional engineer, whether or not then engaged in the
engineering profession); and for purposes of this definition
"appraiser" means a Person engaged in the business of appraising
property or otherwise qualified to pass upon the Fair Value or
fair market value of property.
(b) "Fair Value" means the fair value of the
interests, rights, assets and/or properties assigned, leased,
sold, transferred or otherwise disposed of (but, in the case of a
lease, only to the extent of such lease) as may be determined by
reference to (i) except in the case of a lease, the amount which
would be likely to be obtained in an arm's-length transaction
with respect to such interests, rights, assets and/or properties
between an informed and willing buyer and an informed and willing
seller, under no compulsion, respectively, to buy or sell, (ii)
in the case of a lease, the amount (discounted to present value
at a rate not lower than the taxable equivalent of the yield to
maturity of the Bonds based on prevailing market prices
immediately prior to the first public announcement of the
proposed transaction) which would be likely to be obtained in an
arm's-length transaction with respect to such interests, rights,
assets and/or properties between an informed and willing lessee
and an informed and willing lessor, neither under any compulsion
to lease; (iii) the amount of investment with respect to such
interests, rights, assets and/or properties which, together with
a reasonable return thereon, would be likely to be recovered
through ordinary business operations or otherwise, (iv) the cost,
accumulated depreciation and replacement cost with respect to
such interests, rights, assets and/or properties and/or (v) any
other relevant factors; provided, however, that (x) Fair Value
shall be determined without deduction for any mortgage, deed of
trust, pledge, security interest, encumbrance, lease,
reservation, restriction, servitude, charge or similar right or
any other lien of any kind and (y) the Fair Value to the
transferee of any property shall not reflect any reduction
relating to the fact that such property may be of less value to a
Person which is not the owner, lessee or operator of the property
or any portion thereof than to a Person which is such owner,
lessee or operator. Fair Value may be determined, without
physical inspection, by the use of accounting and engineering
records and other data maintained by the Company or the
transferee or otherwise available to the Expert certifying the
same.
SECTION 7.03. Instrument Furnished to the City and Trustee.
The Company shall, within fifteen (15) days after the delivery
thereof, furnish to the City and the Trustee a true and complete
copy of the agreements or other documents effectuating any such
assignment, lease, sale, transfer or other disposition.
SECTION 7.04. 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 5.03 hereof. This Article
VII shall not apply to any sale, transfer or other disposition by
the Company of all of its assets, as or substantially as an
entirety, as contemplated in Section 6.01.
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
SECTION 8.01. 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 Purchase
Price Payment, which failure shall have resulted in an
"Event of Default" under clause (a) or (b) of Section 9.01
of the Ordinance;
(b) a failure by the Company to pay when due any other
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 sixty (60) days after written notice,
specifying such failure and requesting that it be remedied,
shall have been given to the Company by the City or the
Trustee, unless the City and the Trustee shall agree in
writing to an extension of such period prior to its
expiration; provided, however, that the City 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 or
substantially as an entirety, under the conditions
permitting such actions contained in Section 6.01 hereof).
SECTION 8.02. 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 New Mexico, 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 5.02, 5.04, 5.06, and 6.01
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. Any failure of the
Company to perform its obligations under Sections 5.02, 5.04,
5.06 and 6.01 hereof shall constitute an Event of Default
hereunder regardless of the reason for such failure to perform.
SECTION 8.03. 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 Ordinance, the Bonds shall have
been declared to be immediately due and payable pursuant to any
provision of the Ordinance, the Purchase Price Payments shall,
without further action, become and be immediately due and
payable.
Any waiver of any "Event of Default" under the
Ordinance 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.
(b) Upon the occurrence and continuance of any Event
of Default, the City, or the Trustee with respect to the
rights of the City assigned to the Trustee by the Ordinance,
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.
(c) Any amounts collected by the Trustee from the
Company pursuant to this Section 8.03 shall be applied in
accordance with the Ordinance.
SECTION 8.04. No Remedy Exclusive. No remedy conferred
upon or reserved to the City 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 City
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.
SECTION 8.05. Reimbursement of Attorneys' and Agents' Fees.
If the Company shall default under any of the provisions hereof
and the City 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 City or the Trustee and any predecessor Trustee, as the case
may be, for the reasonable fees of such attorneys or agents and
such other reasonable expenses so incurred.
SECTION 8.06. 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 City's
rights and interest hereunder to the Trustee, the City 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 City
hereunder.
ARTICLE IX
PREPAYMENT OF PURCHASE PRICE PAYMENTS;
REDEMPTION OF BONDS
SECTION 9.01. Prepayment of Purchase Price Payments;
Redemption of Bonds. The Company shall have, and is hereby
granted, the option to prepay all or any portion of the Purchase
Price Payments and in conjunction therewith to direct the
redemption, or provision for payment or redemption, of a
principal amount of Bonds equal to the amount of principal of the
Purchase Price Payments to be prepaid, any such redemption to be
in accordance with Section 3.01(a) or (b) of the Ordinance. In
order to exercise such option, the Company shall deliver to the
City and the Trustee 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 Ordinance. Upon
receipt of such notice, the City shall take, or cause to be
taken, the actions required by the Ordinance 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. The date of any such
redemption 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 Ordinance. The Company shall
furnish any moneys or Government Obligations (as defined in the
Ordinance) required by the Ordinance to be deposited with the
Trustee or otherwise paid by the City in connection with any of
the foregoing purposes. The redemption, or provision for payment
or redemption, of Bonds as contemplated in this Section shall,
pro tanto, reduce and constitute a prepayment of the Purchase
Price Payments.
SECTION 9.02. Compliance with the Ordinance. Anything in
this Agreement to the contrary notwithstanding, the City and the
Company shall take all actions required by this Agreement and the
Ordinance in order to comply with any provisions of the Ordinance
requiring the mandatory redemption of Bonds, including, without
limitation, Section 3.01(c) of the Ordinance.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. 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 Ordinance) shall have ceased,
terminated and become void in accordance with Article VIII of the
Ordinance and until all payments required under this Agreement
shall have been made. Notwithstanding the foregoing, the
covenants contained in Section 5.04, 5.05, Section 6.04 and 8.05
hereof shall survive the termination of this Agreement.
SECTION 10.02. Effect of Plant Agreements. The City
acknowledges that the Company has executed and delivered certain
of the Plant Agreements and may execute and deliver others. The
Company agrees that none of the Plant Agreements heretofore or
hereafter executed and delivered shall in any way affect or
diminish the rights of the City or the obligations to the City of
the Company created by this Agreement. The City acknowledges
that the Facilities are subject to the lien of the Company
Mortgages and are or may be subject to other Permitted
Encumbrances.
SECTION 10.03. 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
City, at 800 Municipal Drive, Farmington, New Mexico 87401,
Attention: Treasurer; if to the Company, at 220 West Sixth
Street, Tucson, Arizona 85702, Attention: Treasurer; and if to
the Trustee, at such address as shall be designated by it in
accordance with the provisions of the Ordinance. A copy of each
notice, certificate, request or other communication given
hereunder to the City, the Company, or the Trustee shall also be
given to the others. The City, 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.
SECTION 10.04. Parties in Interest. This Agreement shall
inure to the benefit of and shall be binding upon the City, 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
rights and remedies granted to the City 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
City; and provided, further, that any obligation of the City
created by or arising out of this Agreement shall not be a
general obligation of the City within the meaning of Article 9,
Sections 12 and 13 of the Constitution of the State of New Mexico
and shall be payable solely out of the Receipts and Revenues of
the City from the Sale Agreement and shall never constitute an
indebtedness of the City within the meaning of any state
constitutional provision or statutory limitation and shall never
constitute or give rise to a pecuniary liability of the City or a
charge upon the City's general credit or against its taxing
powers.
SECTION 10.05. Amendments. This Agreement may be amended
only by written agreement of the parties hereto, subject to the
limitations set forth herein and in the Ordinance.
SECTION 10.06. 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.
SECTION 10.07. 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 City or the Company, as the case may be, to the full
extent permitted by law.
SECTION 10.08. Governing Law. The laws of the State of New
Mexico shall govern the construction and enforcement of this
Agreement.
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this
Amended and Restated Installment Sale Agreement to be duly
executed as of the day and year first above written.
CITY OF FARMINGTON,
as Vendor
ATTEST: By /s/ Thomas C. Taylor
----------------------
Mayor
/s/ Mary L. Banks
-----------------------------
City Clerk
(SEAL) TUCSON ELECTRIC POWER COMPANY,
as Vendee
ATTEST: By /s/ Kevin Larson
----------------------
Vice President
/s/ Vincent Nitido Jr.
--------------------------
Assistant Secretary
<PAGE>
EXHIBIT A
DESCRIPTION OF THE FACILITIES
The Facilities consist of various systems and facilities to
abate or control water and atmospheric pollution from the
generation of electricity by Units 1 and 2 of the San Juan
Generating Station (the "Plant"). Such systems and facilities
contain equipment to collect, remove, alter, and dispose of air
and water pollutants so that gaseous and liquid emissions to the
environment from Units 1 and 2 meet all applicable government air
and water quality standards. Both Units 1 and 2 are coal-fired,
steam turbine electric generating units. Combustion of
pulverized coal in these Units is the primary cause of pollution
at the Plant. Ash, nitrogen oxide, and sulfur oxides are by-
products of combustion that must be controlled in order to meet
environmental quality standards. Because pulverized coal is used
as a fuel, coal dust must be suppressed when coal is loaded,
transported, or crushed. Also, the generation of steam requires
large quantities of fresh water for boiler makeup and condenser
cooling. Cooling tower blowdown has a high concentration of
dissolved solids and must be treated in order to prevent the
possibility of contamination of surrounding surface water with
inorganic salts. In addition, wastewater from the Plant's
sanitary system must be treated.
Major components of the project are as follows:
(A) Ash Handling System. A pneumatic system including
blowers, valves, pipes, storage silos, unloading facilities,
associated structural supports and controls to transfer and
store fly ash collected from the steam generator economizer
and precipitator hoppers of both Units 1 and 2. A high
pressure water sluicing system including pumps, valves, ash
grinder, pipes, dewatering tanks, unloading facilities,
associated structural supports, and controls to transfer and
store bottom ash from the steam generators of both Units 1
and 2.
(B) Nitrogen Oxides Reduction System. Windbox
modification to include overfire air ports to reduce NOx
formation by off stoichiometric combustion for Unit 2.
Windbox modification to include overfire air ports and duct
work, dampers, fan and motor for gas recirculation to reduce
NOx formation by reducing flame temperatures and diluting
combustion air for Unit 1.
(C) Electrostatic Precipitators. High efficiency
electrostatic precipitators for both Units 1 and 2, along
with associated structural supports and duct work, to remove
fly ash from flue gas exiting the steam boiler.
(D) Sulfur Oxide and Particulate Removal System.
Duplicate equipment is provided at both Units 1 and 2.
(1) Venturi scrubber-A variable throat venturi to
provide (i) backup fly ash removal to the electrostatic
precipitators and (ii) incidental sulfur oxide removal.
(2) Sulfur oxide absorber-Open, multi-stage,
spray chamber to contact a reagent solution with sulfur
oxide in the flue gas in order to chemically remove the
sulfur oxide.
(3) Demisting train-Cyclone separator followed by
a chevron demister and a mesh pad demister (i) to
remove fly ash from the flue gas in case of
precipitator upset and (ii) to prevent particle
reentrainment from the scrubber system itself by
physical entrapment of particulate matter.
(4) Reheat section-Oil burner and related duct
work to reheat flue gas in order to keep sulfur oxide
in a gaseous form to maintain operating reliability of
the Scrubber System and to provide additional plume
buoyancy.
(5) Calcium sulfate stabilization system-Primary
and secondary dewatering tanks, a mixing and
conditioning tank, reagent dispensing tanks, and
associated piping, conveyors, pumps, and other
equipment to chemically fix calcium sulfate residue.
(E) Dust Suppression System. Pipes, pumps, pipe
nozzles, tanks, and associated equipment to spray water over
coal transfer points in order to control the escape of coal
dust to the atmosphere.
(F) Wastewater Treatment System.
(1) Collecting basin-A two and one-half million
gallon soil cement pond to receive and settle
wastewater from steam boiler blowdown, cooling tower
blowdown, and sanitary waste treatment.
(2) Evaporator-Mechanical evaporator to remove
inorganic salts from process wastewater.
(3) Sanitary system-An extended aeration system
to treat sanitary wastes.
(4) Sewer system-Sewers, pipes, pumps, sumps, and
associated equipment necessary to interconnect the
various components of the Wastewater Treatment System.
EXHIBIT 4b
=================================================================
CITY OF FARMINGTON,
NEW MEXICO
----------------
ORDINANCE NO. 97-1055
ADOPTED APRIL 17, 1997
-----------------
AUTHORIZING
POLLUTION CONTROL REVENUE BONDS,
1997 SERIES A
(TUCSON ELECTRIC POWER COMPANY SAN JUAN PROJECT)
-----------------
=================================================================
<PAGE>
TABLE OF CONTENTS
Page
-----
Title . . . . . . . . . . . . . . . . . . . . . . . . . 1
Recitals . . . . . . . . . . . . . . . . . . . . . . . . 1
Granting Clause . . . . . . . . . . . . . . . . . . . . 2
ARTICLE I
DEFINITIONS; FINDINGS, DECLARATIONS, DETERMINATIONS,
APPROVALS AND AUTHORIZATIONS
Section 1.01. Definitions . . . . . . . . . . . . . . . . . 3
Section 1.02. Findings, Declarations, Determinations,
Approvals and Authorizations . . . . . . . 10
ARTICLE II
THE BONDS
Section 2.01. Creation of Bonds. . . . . . . . . . . . . . . 11
Section 2.02. Form of Bonds. . . . . . . . . . . . . . . . . 11
Section 2.03. Execution of Bonds. . . . . . . . . . . . . . 12
Section 2.04. Authentication of Bonds. . . . . . . . . . . . 12
Section 2.05. Bonds Not General Obligations . . . . . . . . 12
Section 2.06. Prerequisites to Authentication of Bonds. . . 13
Section 2.07. Lost or Destroyed Bonds or Bonds Canceled in
Error . . . . . . . . . . . . . . . . . . . . 13
Section 2.08. Transfer, Registration and Exchange of Bonds . 14
Section 2.09. Other Obligations . . . . . . . . . . . . . . 15
Section 2.10. Temporary Bonds . . . . . . . . . . . . . . . 15
Section 2.11. Cancellation of Bonds . . . . . . . . . . . . 15
Section 2.12. Payment of Principal and Interest . . . . . . 15
Section 2.13. Bonds Equally Secured . . . . . . . . . . . . 16
Section 2.14. Applicability of Book-Entry Provisions . . . . 16
ARTICLE III
REDEMPTION OF BONDS
Section 3.01. Redemption Provisions . . . . . . . . . . . . 16
Section 3.02. Selection of Bonds to be Redeemed . . . . . . 17
Section 3.03. Procedure for Redemption . . . . . . . . . . . 18
Section 3.04. No Partial Redemption After Default . . . . . 18
Section 3.05. Payment of Redemption Price . . . . . . . . . 18
--------------
* This table of contents is not a part of the Ordinance, 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 Ordinance.
<PAGE>
-ii-
ARTICLE IV
THE BOND FUND
Section 4.01. Creation of Bond Fund . . . . . . . . . . . . 19
Section 4.02. Liens . . . . . . . . . . . . . . . . . . . . 19
Section 4.03. Deposits into Bond Fund . . . . . . . . . . . 19
Section 4.04. Use of Moneys in Bond Fund . . . . . . . . . . 19
Section 4.05. Custody of Bond Fund; Withdrawal of Moneys . . 19
Section 4.06. Bonds Not Presented for Payment . . . . . . . 19
Section 4.07. Moneys Held in Trust . . . . . . . . . . . . . 20
ARTICLE V
DISPOSITION OF PROCEEDS
Section 5.01. Disposition of Proceeds. . . . . . . . . . . . 20
ARTICLE VI
INVESTMENTS
Section 6.01. Investments . . . . . . . . . . . . . . . . . 20
ARTICLE VII
GENERAL COVENANTS
Section 7.01. No General Obligations . . . . . . . . . . . . 21
Section 7.02. Performance of Covenants of the City;
Representations . . . . . . . . . . . . . . . 21
Section 7.03. Maintenance of Rights and Powers; Compliance with
Laws . . . . . . . . . . . . . . . . . . . . 21
Section 7.04. Enforcement of Obligations of the Company;
Amendments . . . . . . . . . . . . . . . . . 21
Section 7.05. Further Instruments. . . . . . . . . . . . . . 21
Section 7.06. No Disposition of Trust Estate. . . . . . . . 22
Section 7.07. Financing Statements. . . . . . . . . . . . 22
Section 7.08. Tax Covenants; Rebate Fund. . . . . . . . . . 22
Section 7.09. Notices of Trustee. . . . . . . . . . . . . . 23
ARTICLE VIII
DEFEASANCE
Section 8.01. Defeasance. . . . . . . . . . . . . . . . . . 23
ARTICLE IX
DEFAULTS AND REMEDIES
Section 9.01. Events of Default. . . . . . . . . . . . . . . 24
Section 9.02. Remedies. . . . . . . . . . . . . . . . . . . 25
Section 9.03. Restoration to Former Position. . . . . . . . 25
Section 9.04. Owners' Right to Direct Proceedings. . . . . . 25
<PAGE>
-iii-
Section 9.05. Limitation on Owners' Right to Institute
Proceedings. . . . . . . . . . . . . . . . . 26
Section 9.06. No Impairment of Right to Enforce Payment. . . 26
Section 9.07. Proceedings by Trustee without Possession of
Bonds. . . . . . . . . . . . . . . . . . . . 26
Section 9.08. No Remedy Exclusive. . . . . . . . . . . . . . 26
Section 9.09. No Waiver of Remedies. . . . . . . . . . . . . 26
Section 9.10. Application of Moneys. . . . . . . . . . . . . 27
Section 9.11. Severability of Remedies. . . . . . . . . . . 27
Section 9.12. No Obligation of City to Act. . . . . . . . . 27
ARTICLE X
TRUSTEE; PAYING AGENT AND CO-PAYING AGENTS; REGISTRAR
Section 10.01. Acceptance of Trusts. . . . . . . . . . . . . 28
Section 10.02. No Responsibility for Recitals. . . . . . . . 28
Section 10.03. Limitations on Liability. . . . . . . . . . . 28
Section 10.04. Compensation, Expenses and Advances. . . . . . 28
Section 10.05. Notice of Events of Default. . . . . . . . . . 29
Section 10.06. Action by Trustee. . . . . . . . . . . . . . . 29
Section 10.07. Good Faith Reliance. . . . . . . . . . . . . . 29
Section 10.08. Dealings in Bonds and with the City and the
Company. . . . . . . . . . . . . . . . . . . 29
Section 10.09. Allowance of Interest. . . . . . . . . . . . . 30
Section 10.10. Construction of Ordinance. . . . . . . . . . . 30
Section 10.11. Resignation of Trustee. . . . . . . . . . . . 30
Section 10.12. Removal of Trustee. . . . . . . . . . . . . . 30
Section 10.13. Appointment of Successor Trustee. . . . . . . 30
Section 10.14. Qualifications of Successor Trustee. . . . . . 31
Section 10.15. Judicial Appointment of Successor Trustee. . . 31
Section 10.16. Acceptance of Trusts by Successor Trustee. . . 31
Section 10.17. Successor by Merger or Consolidation. . . . . 31
Section 10.18. Standard of Care. . . . . . . . . . . . . . . 32
Section 10.19. Notice to Owners of Bonds of Event of Default. 32
Section 10.20. Intervention in Litigation of the City. . . . 32
Section 10.21. Paying Agent; Co-Paying Agents. . . . . . . . 32
Section 10.22. Qualifications of Paying Agent and Co-Paying
Agents;
Resignation; Removal. . . . . . . . . . . . . 32
Section 10.23. Registrar. . . . . . . . . . . . . . . . . . . 33
Section 10.24. Qualifications of Registrar; Resignation;
Removal. . . . . . . . . . . . . . . . . . . 33
Section 10.25. Several Capacities. . . . . . . . . . . . . . 34
ARTICLE XI
EXECUTION OF INSTRUMENTS BY OWNERS OF BONDS AND
PROOF OF OWNERSHIP OF BONDS
Section 11.01. Execution of Instruments;
Proof of Ownership . . . . . . . . . . . . 34
ARTICLE XII
MODIFICATION OF THIS ORDINANCE AND THE SALE AGREEMENT
Section 12.01. Limitations. . . . . . . . . . . . . . . . . . 34
Section 12.02. Supplemental Ordinances without Owner Consent. 35
<PAGE>
-iv-
Section 12.03. Supplemental Ordinances with Consent of Owners.
35
Section 12.04. Effect of Supplemental Ordinance. . . . . . . 36
Section 12.05. Consent of the Company. . . . . . . . . . . . 36
Section 12.06. Amendment of Sale Agreement without Consent of
Owners. . . . . . . . . . . . . . . . . . . . 37
Section 12.07. Amendment of Sale Agreement with Consent of
Owners. . . . . . . . . . . . . . . . . . . . 37
ARTICLE XIII
MISCELLANEOUS
Section 13.01. Successors of the City. . . . . . . . . . . . 37
Section 13.02. Parties in Interest. . . . . . . . . . . . . . 37
Section 13.03. Ratification of Prior Action. . . . . . . . . 38
Section 13.04. Severability. . . . . . . . . . . . . . . . . 38
Section 13.05. No Personal Liability of City Officials. . . . 38
Section 13.06. Bonds Owned by the City or the Company. . . . 38
Section 13.07. Acceptance by Trustee. . . . . . . . . . . . . 38
Section 13.08. Governing Law. . . . . . . . . . . . . . . . . 38
Section 13.09. Notices. . . . . . . . . . . . . . . . . . . . 38
Section 13.10. Holidays. . . . . . . . . . . . . . . . . . . 39
Section 13.11. Emergency Circumstances . . . . . . . . . . . 39
Signatures and Seals . . . . . . . . . . . . . . . . . . . . 40
Acceptance of Duties by the Trustee . . . . . . . . . . . . . 40
Exhibit A Form of Bond . . . . . . . . . . . . . . . . . . . A-1
Exhibit B Form of Endorsement of Transfer . . . . . . . . . . B-1
Exhibit C Form of Certificate of Authentication . . . . . . . C-1
<PAGE>
ORDINANCE NO. 97-1055
An Ordinance authorizing and providing for the issuance by
the City of Farmington, New Mexico of an issue of its revenue
bonds designated "Pollution Control Revenue Bonds, 1997 Series A
(Tucson Electric Power Company San Juan Project)" to be issued
pursuant to the provisions of the Pollution Control Revenue Bond
Act, Chapter 397, Laws of 1973 of the State of New Mexico, 31st
Legislature, 1st Session, as amended, for the purpose of
refunding certain outstanding revenue bonds issued under such Act
the proceeds of which were used to finance certain costs of the
acquisition, construction and installation of projects consisting
of undivided interests in certain air and water pollution control
facilities at the San Juan Generating Station, an electric power
generating plant located in San Juan County, New Mexico,
undivided interests in which are owned by Tucson Electric Power
Company, a corporation organized and existing under the laws of
the State of Arizona, formerly known as Tucson Gas & Electric
Company, said revenue bonds to be payable by the City solely from
the revenues payable to the City by Tucson Electric Power Company
pursuant to a certain Amended and Restated Installment Sale
Agreement dated as of April 1, 1997 between the City, as Vendor,
and Tucson Electric Power Company, as Vendee, and certain other
moneys pledged therefor hereunder, said revenue bonds never to
constitute an indebtedness of the City within the meaning of any
State constitutional provision or statutory limitation, and never
to constitute or give rise to a pecuniary liability of the City
or a charge against its general credit or taxing powers and
declaring an emergency.
WHEREAS, the City of Farmington, an incorporated
municipality, a body politic and corporate, existing under the
Constitution and laws of the State of New Mexico (hereinafter
called the "City"), is authorized and empowered under the
Pollution Control Revenue Bond Act, Chapter 397, Laws of 1973 of
the State of New Mexico, 31st Legislature, 1st Session, as
amended (the "Act") to issue revenue bonds for and to acquire,
whether by construction, purchase, gift or lease, one or more
projects consisting of any land, interest in land, building,
structure, facility, system, fixture, improvement, appurtenance,
machinery, equipment or any combination thereof, or any interest
in any one or more of the foregoing, whether or not presently in
existence or under construction, used by an individual,
partnership, firm, company, corporation (including a public
utility), association, trust, estate, political subdivision,
state agency or any other legal entity, or its legal
representative, agent or assigns, substantially for the
reduction, abatement or prevention of pollution including, but
not limited to, the removal of pollutants, contaminants or
foreign substances from land, air or water, or for the removal or
treatment of any substance in a processed material which would
otherwise cause pollution when such material is used, provided
that any such project shall be located within the State of New
Mexico and within or without or partially within or without the
City, but not more than fifteen miles outside of the corporate
limits of the City (or that, if there is no municipality within
fifteen miles of the project, the City is in the county in which
the project is or may be located) and to sell or lease or
otherwise dispose of any or all of such projects upon such terms
and conditions as the governing body of the City (hereinafter
called the "City Council") may deem advisable and as shall not
conflict with the provisions of the Act; and
WHEREAS, the City is authorized and empowered under the Act
to issue revenue bonds to refund bonds issued and outstanding
under the Act; and
WHEREAS, on August 28, 1973, the City Council adopted
Resolution Number 709 ("Resolution No. 709") determining to issue
and, subject to certain conditions, agreeing to issue revenue
bonds under the Act to finance the costs to Tucson Electric Power
Company formerly known as Tucson Gas & Electric Company, a
corporation organized and existing under the laws of the State of
Arizona (the "Company"), of certain facilities for the reduction,
abatement or prevention of pollution caused by the operation of
the San Juan Generating Station, an electric power generating
plant located in San Juan County, New Mexico, including
facilities for the reduction, abatement or prevention of
pollution caused by the operation of Units 1 and 2 of such
generating station (the "Facilities") and authorizing the Mayor
of the City to execute and deliver preliminary agreements
relating thereto and, subject to certain conditions, to take such
steps and actions as required or necessary in order to issue such
revenue bonds, and a Preliminary Agreement (the "Original
Preliminary Agreement"), in the form contemplated by Resolution
No. 709, was executed and delivered by the City and the Company;
and
WHEREAS, on November 27, 1973, the City Council adopted
Resolution Number 721 ("Resolution No. 721") in order to
authorize consideration of the adoption of a proposed ordinance
in order to, among other matters, increase the aggregate amount
of revenue bonds authorized to be issued by the City to finance
the costs to the Company of the acquisition, construction and
installation of the Facilities; and
WHEREAS, on August 13, 1974, the City Council adopted
Resolution Number 751 ("Resolution No. 751") authorizing the
Mayor of the City to execute and deliver certain amendments to
the Original Preliminary Agreement in order to, among other
matter, further increase the aggregate amount of revenue bonds
authorized to be issued by the City to finance the costs to the
Company of the acquisition, construction and installation of the
Facilities; and
WHEREAS, a supplemental preliminary agreement (the
"Supplemental Preliminary Agreement", and, together with the
Original Preliminary Agreement and Resolution No. 721,
hereinafter collectively referred to as the "Preliminary
Agreement"), in the form contemplated by Resolution No. 751, was
executed and delivered by the City and the Company on August 13,
1974; and
WHEREAS, the City has heretofore issued and sold $55,000,000
aggregate principal amount of its Pollution Control Revenue
Bonds, Series 1973 (Tucson Gas & Electric Company San Juan
Project), of which $47,910,000 remain outstanding (the "1973
Bonds"), the proceeds of which were to be used to finance a
portion of the costs to the Company of the acquisition,
construction and installation of the Facilities described in
Exhibit A of that certain Installment Sale Agreement, dated as of
December 1, 1973, as amended and supplemented pursuant to the
terms thereof prior to the date hereof (the "Series 1973
Installment Sale Agreement"), between the City, as Vendor, and
Public Service Company of New Mexico and the Company, as Vendees;
and
WHEREAS, Public Service Company of New Mexico has redeemed
the pollution control revenue bonds secured by revenues derived
pursuant to the Series 1973 Installment Sale Agreement and its
obligations and rights pursuant thereto have been discharged so
that the Company remains as the sole Vendee pursuant thereto; and
WHEREAS, the City has also heretofore issued and sold
$32,500,000 aggregate principal amount of its Collateralized
Pollution Control Revenue Bonds, 1977 Series A (Tucson Gas &
Electric Company San Juan Project), of which $32,500,000 remain
outstanding (the "1977 Bonds") (the 1973 Bonds and the 1977
Bonds, collectively, the "Prior Bonds"), the proceeds of which
were to be used to finance a portion of the costs to the Company
of the acquisition, construction and installation of the
Facilities described in Exhibit A of that certain Installment
Sale Agreement, dated as of November 1, 1977, as amended and
supplemented pursuant to the terms thereof prior to the date
hereof (the "Series 1977 Installment Sale Agreement"), between
the City, as Vendor, and the Company, as Vendee; and
WHEREAS, the Company has requested the City to consider
taking steps, in accordance with the Preliminary Agreement,
necessary for the issuance of revenue bonds under the Act, the
proceeds of which revenue bonds are to be used to refund and
redeem the Prior Bonds; and
WHEREAS, the City is adopting a resolution approving and
authorizing the execution and delivery by the Mayor and the City
Clerk of the City, on behalf of the City, of that certain Amended
and Restated Installment Sale Agreement, dated as of April 1,
1997 (hereinafter called the "Sale Agreement"), between the City,
as Vendor, and the Company as Vendee, which amends and restates
in their entirety the Series 1973 Installment Sale Agreement, and
the Series 1977 Installment Sale Agreement (each, an "Original
Sale Agreement", and hereinafter collectively referred to as the
"Original Sale Agreements"); and
WHEREAS, the Sale Agreement restates the prior sale by the
Company of its undivided interest in the Facilities described in
Exhibit A to each of the Original Sale Agreements to the City and
the prior sale back by the City of its interest in the
Facilities, and sets forth the undertaking by the City to issue
and sell its issue of revenue bonds designated "Pollution Control
Revenue Bonds, 1997 Series A (Tucson Electric Power Company San
Juan Project) (hereinafter called the "Bonds"), if and when
authorized by the City pursuant to this Ordinance, the proceeds
of the Bonds (except for accrued interest, if any) to be used to
refund and redeem the Prior Bonds; and
WHEREAS, pursuant to the Sale Agreement referred to in the
preceding clause, the Company will release the City and will
agree that the City shall not be liable for, and will agree to
indemnify and hold the City harmless from, certain matters; and
WHEREAS, certain findings and determinations relating to the
Sale Agreement and the Facilities have heretofore been made and
are set forth in this Ordinance; and
WHEREAS, this Ordinance shall serve as an indenture of
trust.
NOW, THEREFORE,
BE IT ORDAINED BY THE GOVERNING BODY OF THE CITY OF
FARMINGTON, NEW MEXICO that the City, in consideration of the
covenants herein contained and of the purchase and acceptance of
the Bonds by the Owners thereof, and in order to secure the
payment of all Bonds at any time outstanding under this
Ordinance, according to their tenor and effect, and the
performance and observance of all the covenants and conditions in
the Bonds and herein contained, and to declare the terms and
conditions upon and subject to which the Bonds are issued and
secured, does grant, pledge and assign to the Trustee (as
hereinafter defined), and to its successors and assigns forever,
upon written acceptance of this Ordinance by the Trustee, the
Trust Estate (as hereinafter defined) for the equal and
proportionate benefit, security and protection of all holders and
owners of the Bonds issued under and secured by this Ordinance
without privilege, priority or distinction as to the lien or
otherwise of any of the Bonds over any other of the Bonds, all
upon the terms stated in this Ordinance.
ARTICLE I
DEFINITIONS; FINDINGS, DECLARATIONS, DETERMINATIONS,
APPROVALS AND AUTHORIZATIONS
Section 1.01. Definitions. The terms defined in this
Article I shall, for all purposes of this Ordinance, have the
meanings herein specified, unless the context clearly requires
otherwise:
Act:
"Act" shall mean the Pollution Control Revenue Bond Act,
Chapter 397, Laws of 1973 of the State of New Mexico, 31st
Legislature, 1st Session, as amended by Chapter 312, Laws of 1977
of the State of New Mexico, 33rd Legislature, 1st Session, by
Chapter 181, Laws of 1978 of the State of New Mexico, 33rd
Legislature, 2nd Session, and by Chapter 114, Laws of 1983 of the
State of New Mexico, 36th Legislature, 1st Session, and all acts
supplemental thereto or amendatory thereof.
Administration Expenses:
"Administration Expenses" shall mean the reasonable expenses
incurred by the City with respect to the Sale Agreement, this
Ordinance and any transaction or event contemplated by the Sale
Agreement or this Ordinance, including the compensation and
reimbursement of expenses and advances payable to the Trustee, to
the Paying Agent, any Co-Paying Agent and the Registrar.
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 City 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.
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 City.
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 Ordinance.
City:
"City" shall mean the City of Farmington, in the County of
San Juan, an incorporated municipality, a body politic and
corporate, existing under the Constitution and laws of the State
of New Mexico, and its successors and their assigns.
City Council:
"City Council" shall mean the City Council of the City or
the board or other body in which general legislative powers of
the City subsequently may be vested.
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, including, without
limitation, any successor obligor under Section 6.01 or 7.02 of
the Sale Agreement to the extent of the obligations assumed
thereunder.
Depositary:
"Depositary" shall mean The Depository Trust Company or any
successor thereto as a securities repository for the Bonds.
Facilities:
"Facilities" shall mean the systems and facilities for the
reduction, abatement or prevention of pollution caused by the
operation of the Plant which are described in Exhibit A to the
Sale Agreement, as from time to time amended or modified, and
related improvements.
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.
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 but only to the extent investment
in said obligations or securities is permitted by applicable law:
(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 or Registrar hereunder if such entities shall
otherwise satisfy the requirements set forth above.
1954 Code:
"1954 Code" shall mean the Internal Revenue Code of 1954, as
amended.
1977 Bonds:
"1977 Bonds" shall mean the $32,500,000 aggregate principal
amount of the City's Collateralized Pollution Control Revenue
Bonds, 1977 Series A (Tucson Gas & Electric Company San Juan
Project), all of which remain outstanding.
1973 Bonds:
"1973 Bonds" shall mean the $55,000,000 aggregate principal
amount of the City's Pollution Control Revenue Bonds, Series 1973
(Tucson Gas & Electric Company San Juan Project), of which
$47,910,000 in principal amount remains outstanding.
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 Ordinance mailed by first-class mail to the Owners of
specified registered Bonds at the addresses shown in the
registration books maintained pursuant to Section 2.08 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 City)
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 Ordinance 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 City) shall constitute a sufficient
publication of such notice.
Ordinance:
"Ordinance" shall mean this Ordinance of the City as
modified, altered, amended or supplemented by any and all
ordinances and resolutions supplemental hereto or amendatory
hereof adopted by the City Council and effective prior to the
initial issuance of the Bonds and all Supplemental Ordinances and
related resolutions adopted thereafter by the City Council
pursuant hereto.
Original Sale Agreements:
"Original Sale Agreements" shall mean the Series 1973
Installment Sale Agreement and the Series 1977 Installment Sale
Agreement.
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 Ordinance 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; and
(c) those in lieu of or in exchange or substitution for
which other Bonds shall have been authenticated and
delivered pursuant to this Ordinance, 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 2.08 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 Units 1 and 2 and related common
facilities of the San Juan Generating Station, an electric power
generating plant located northwest of and within fifteen miles of
the corporate limits of the City in San Juan County, New Mexico
and not within the corporate limits of any municipality, 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.
Prior Bonds:
"Prior Bonds" shall mean the 1973 Bonds and the 1977 Bonds,
collectively.
Purchase Price Payments:
"Purchase Price Payments" shall mean the payments required
to be made by the Company pursuant to Section 5.02 of the Sale
Agreement.
Rebate Fund:
"Rebate Fund" shall mean the fund created by Section 7.08
hereof.
Receipts and Revenues of the City from the Sale Agreement:
"Receipts and Revenues of the City from the Sale Agreement"
shall mean all moneys paid or payable to the Trustee for the
account of the City by the Company in respect of the Purchase
Price Payments and all receipts of the Trustee which, under the
provisions of this Ordinance, reduce the amount of such payments.
Record Date:
"Record Date" shall mean the close of business on the
fifteenth (15th) day of the calendar month immediately preceding
each regularly scheduled interest payment date.
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.
Sale Agreement:
"Sale Agreement" shall mean the Amended and Restated
Installment Sale Agreement, dated as of April 1, 1997, amending
and restating the Original Sale Agreements, between the City, as
Vendor and the Company, as Vendee, and any and all modifications,
alterations, amendments and supplements thereto.
Series 1973 Installment Sale Agreement:
"Series 1973 Installment Sale Agreement" shall mean the
Installment Sale Agreement, dated as of December 1, 1973, between
the City, as Vendor, and Public Service Company of New Mexico
(which has now been discharged therefrom) and the Company, as
Vendees, as amended and supplemented pursuant to the terms
thereof prior to the date hereof.
Series 1977 Installment Sale Agreement:
"Series 1977 Installment Sale Agreement" shall mean the
Installment Sale Agreement, dated as of November 1, 1977, between
the City, as Vendor, and the Company, as Vendee, as amended and
supplemented pursuant to the terms thereof prior to the date
hereof.
State:
"State" shall mean the State of New Mexico.
Supplemental Ordinance:
"Supplemental Ordinance" shall mean any ordinance or
resolution adopted by the City Council and effective subsequent
to the initial issuance of the Bonds modifying, altering,
amending, supplementing or confirming this Ordinance for any
purpose, in accordance with the terms hereof, as such
Supplemental Ordinance may be modified, altered, amended or
supplemented by any and all ordinances and resolutions of the
City Council adopted pursuant hereto.
Supplemental Sale Agreement:
"Supplemental Sale Agreement" shall mean any agreement
between the City and the Company modifying, altering, amending or
supplementing the Sale Agreement, in accordance with the terms
thereof and hereof.
Tax Agreement:
"Tax Agreement" shall mean that tax certificate and
agreement, dated the date of the initial authentication and
delivery of the Bonds, between the City and the Company, relating
to the requirements of the Code and the 1954 Code, and any and
all modifications, alterations, amendments and supplements
thereto.
Trust Estate:
"Trust Estate" shall mean at any particular time all right,
title and interest of the City in and to the Sale Agreement
(except its rights under Sections 5.04, 5.05, 6.03 and 8.05
thereof and any rights of the City to receive notices,
certificates, requests, requisitions and other communications
thereunder), including without limitation, the Receipts and
Revenues of the City from the Sale Agreement, 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 the Rebate Fund), 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
Ordinance and all other rights, titles and interests which at
such time are subject to the lien of this Ordinance; 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 in the Rebate Fund pursuant to Section 7.08 hereof or (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.
Trustee; Principal Office thereof:
"Trustee" shall mean the bank or trust company appointed as
trustee in a resolution of the City Council of the City adopted
prior to the first issuance of the Bonds, 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 Ordinance is located
at the address specified in such resolution.
Section 1.02. Findings, Declarations, Determinations,
Approvals and Authorizations. It is hereby found and determined
that:
(1) The City is authorized and empowered under the Act
to issue and sell the Bonds authorized under this Ordinance and
to enter into the Sale Agreement and the same will further the
intent of the Act.
(2) The Facilities are located within 15 miles of the
corporate limits of the City and not within the corporate limits
of any municipality.
(3) The amount necessary in each year to pay the
principal of and premium, if any, and interest (excluding accrued
interest and purchase premium, if any, to be paid by the initial
purchasers of the Bonds) on the Bonds is equal to the portion of
the purchase price of the Facilities refinanced with the proceeds
of the Bonds in each such year required to be paid by the Company
to the Trustee by Section 5.02 of the Sale Agreement. The City
Council shall determine and set forth in a resolution adopted
prior to the first issuance of Bonds the amount necessary to pay
in each year the principal of and interest on the Bonds.
(4) It is not advisable or necessary to establish any
reserve fund in connection with the retirement of the Bonds or
the maintenance of the Facilities and no reserve fund has been
established for the Bonds. The Sale Agreement provides that, as
purchaser of an undivided interest in the Facilities from the
City, the Company shall exercise all of its rights, powers,
elections and options under the Plant Agreements to cause the
Facilities to be maintained in good repair and to keep or cause
to be kept the Facilities properly insured, and under the Sale
Agreement the Company is obligated to make payments that shall be
at least sufficient to pay before the same shall become due, as
set forth in subsection (3) above, the principal of and premium,
if any, and interest on the Bonds.
(5) The City shall not operate the Facilities as a
business or in any manner except as seller of an undivided
interest therein under the Sale Agreement.
(6) The Bonds shall not be the general obligations of
the City within the meaning of Article 9, Sections 12 and 13 of
the Constitution of New Mexico, shall be payable by the City
solely from the Receipts and Revenues of the City from the Sale
Agreement, and the Bonds shall never constitute an indebtedness
of the City within the meaning of any State constitutional
provision or statutory limitation, and shall never constitute or
give rise to any pecuniary liability of the City or a charge
against its general credit or taxing powers, and such fact shall
be plainly stated on the face of each such Bond.
(7) In connection with the authorization, issuance and
sale of the Bonds pursuant to this Ordinance, it is advantageous
that the sale thereof be private rather than public within the
meaning of the Act.
(8) The Mayor and the City Clerk are, and each of them
is, authorized and directed to cause this Ordinance to be
published one time by title and a general summary of the subject
matter contained herein in the manner provided by Section 3-17-5,
New Mexico Statutes Annotated 1978. This Ordinance shall be
effective five days after it has been so published.
(9) The authority previously granted by resolution on
February 25, 1997 to the Mayor and the City Clerk to cause this
Ordinance in proposed form to be published by title and subject
matter in the manner provided by Section 3-17-3, New Mexico
Statutes Annotated 1978, is hereby confirmed and such publication
is hereby adopted, ratified and confirmed.
(10) The Trustee, Paying Agent and Registrar shall be
designated by a resolution of the City Council adopted prior to
the first issuance of Bonds under this Ordinance.
(11) The Mayor, the City Clerk and the City Treasurer or the
Deputy City Treasurer are authorized to take all action necessary
or appropriate to effectuate the provisions of this Ordinance,
including without limiting the generality of the foregoing,
preparation of the Bonds, the execution, delivery, and, if
required or desirable, the filing and recording of such
documents, instruments, financing statements and certificates as
are required by this Ordinance and as may reasonably be required
by the purchasers of the Bonds, including, without limiting the
generality of the foregoing, certificates relating to the signing
of the Bonds, the tenure and identity of the municipal officials,
the delivery of the Bonds and payment therefor, and, if in
accordance with the facts, the absence of litigation, pending or
threatened, affecting the validity of the Bonds, and the absence
and existence of factors affecting the exemption of interest on
the Bonds from federal income taxation, and, upon or after the
effective date of this Ordinance, to execute and deliver the
Bonds in accordance with this Ordinance and to do and cause to be
done any and all acts and things necessary or proper for carrying
out the transactions contemplated by this Ordinance, and all
actions taken pursuant to such authorization are hereby ratified,
approved and confirmed.
ARTICLE II
THE BONDS
Section 2.01. Creation of Bonds. There is hereby
authorized and created under this Ordinance, for the purpose of
providing moneys to refund, pay and redeem the Prior Bonds, an
issue of Bonds, entitled to the benefit, protection and security
of this Ordinance, in the aggregate principal amount of Eighty
Million Four Hundred Ten Thousand Dollars ($80,410,000). Each of
the Bonds shall be designated by the title "City of Farmington,
New Mexico Pollution Control Revenue Bond, 1997 Series A (Tucson
Electric Power Company San Juan Project)". The Bonds shall
mature in such amounts on such date or dates not exceeding thirty
years from the date of the Bonds, and shall bear such rate or
rates of interest from their date, payable semi-annually on
October 1 and April 1 of each year, commencing on October 1, 1997
until payment of the principal thereof shall have been made or
duly provided for in accordance with the provisions of this
Ordinance, all as shall be set forth in a resolution of the City
Council adopted prior to the initial issuance of the Bonds,
provided that such interest rate or rates shall not exceed the
maximum interest rate of 10% per annum. Unless otherwise
provided in such resolution of the City Council adopted prior to
the issuance of the Bonds, interest on the Bonds shall be
calculated on the basis of a 360-day year consisting of twelve
30-day months.
Section 2.02. Form of Bonds. Bonds shall be authenticated
and delivered hereunder solely as fully registered bonds without
coupons in the denomination of $5,000 or integral multiples
thereof. Bonds shall be numbered as determined by the Trustee.
Bonds authenticated prior to the first interest payment date
shall be dated April 1, 1997 or such other date as may be set
forth in a resolution of the City Council adopted prior to the
initial issuance of the Bonds. Bonds authenticated on or
subsequent to the first interest payment date thereon shall be
dated the interest payment date next preceding the date of
authentication thereof, unless such date of authentication shall
be an interest payment date to which interest on the Bonds has
been paid in full or duly provided for, in which case they shall
be dated such date of authentication; provided, however, that if,
as shown by the records of the Trustee, interest on the Bonds
shall be in default, Bonds issued in exchange for Bonds
surrendered for transfer or exchange shall be dated the date to
which interest has been paid in full on the Bonds surrendered.
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 2.08 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, 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 Ordinance.
Section 2.03. Execution of Bonds. The Bonds shall be
executed on behalf of the City by its Mayor and Treasurer or
Deputy City Treasurer and shall have affixed, impressed or
reproduced thereon the corporate seal of the City which shall be
attested by the City Clerk. Each of the foregoing officers,
after filing with the Secretary of State of the State of New
Mexico the manual signature of such officer certified under oath,
may execute or cause to be executed or attest or cause to be
attested with a facsimile signature in lieu of his manual
signature the Bonds.
In case any officer of the City 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 such officer had remained in office until delivery;
and any Bond may be signed on behalf of the City by such persons
as, at the time of execution of such Bond, shall be the proper
officers of the City, even though at the date of such Bond or of
the execution and delivery of this Ordinance any such person was
not such officer.
Section 2.04. 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 Ordinance. 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 Ordinance. 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 2.04 is subject to the provisions of
Section 10.17 hereof.
Section 2.05. Bonds Not General Obligations. The Bonds and
the premium, if any, and the interest thereon shall not be
general obligations or indebtedness of the City within the
meaning of Article 9, Sections 12 and 13 of the Constitution of
the State of New Mexico, but shall be limited obligations of the
City payable solely from the Receipts and Revenues of the City
from the Sale Agreement and the other moneys pledged therefor
under this Ordinance. The Bonds and the premium, if any, and
interest thereon shall never constitute an indebtedness of the
City within the meaning of any state constitutional provision or
statutory limitation, and shall never constitute nor give rise to
a pecuniary liability of the City or a charge against its general
credit or taxing powers, and such fact shall be plainly stated on
the face of each Bond.
Section 2.06. Prerequisites to Authentication of Bonds.
The City 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 2.06.
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 the Ordinance;
(b) an original duly executed counterpart or a duly
certified copy of the Sale Agreement;
(c) a request and authorization to the Trustee on
behalf of the City, signed by its Mayor, to authenticate and
deliver the Bonds in the aggregate principal amount
determined by this Ordinance to the purchaser or purchasers
therein identified upon payment to the Trustee, but for the
account of the City, of a sum specified in such request and
authorization plus any accrued interest on such Bonds to the
date of delivery, in the aggregate principal amount
determined by this Ordinance; and
(d) 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 Ordinance.
Section 2.07. 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 City 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 City, the Trustee and the Company evidence of
such loss or destruction. In every case, the applicant for a
substitute Bond shall furnish the City, 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 City, 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 City 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 2.07.
Every substitute Bond issued pursuant to the provisions of
this Section 2.07 by virtue of the fact that any Bond is lost,
destroyed or canceled in error shall constitute an additional
contractual obligation of the City, 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 Ordinance 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.
Section 2.08. 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 City, 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 City 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 City, the Trustee, the Paying Agent, any Co-Paying Agent
and the Registrar 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 2.02 hereof, interest on such Bond and for all other
purposes, and neither the City, the Trustee, the Paying Agent,
any Co-Paying Agent nor the Registrar 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 City shall
execute and the Trustee shall authenticate and deliver Bonds in
accordance with the provisions of this Ordinance. For every such
exchange or registration of transfer of Bonds, whether temporary
or definitive, the City, 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.
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.
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 City, 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 City at the direction of the Company within a reasonable
time after 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 and 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 City, 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.
Section 2.09. Other Obligations. The City expressly
reserves the right to issue, to the extent permitted by law, but
shall not be obligated to issue, obligations under another
ordinance or ordinances 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.
Section 2.10. Temporary Bonds. Pending the preparation of
definitive Bonds, the City 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 City. Temporary Bonds may contain such
reference to any provisions of this Ordinance as may be
appropriate. Every temporary Bond shall be executed by the City
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 City 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 Ordinance as
definitive Bonds.
Section 2.11. 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 City, the Paying Agent, the
Registrar and the Company counterparts of certificates evidencing
such cancellation and destruction and specifying such Bonds by
number.
Section 2.12. Payment of Principal and Interest. For the
payment of interest on the Bonds, the City shall cause to be
deposited in the Bond Fund, on each interest payment date, solely
out of the Receipts and Revenues of the City from the Sale
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 City 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 City 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 City from the Sale Agreement and
other moneys pledged therefor, an amount sufficient to pay the
principal of the Bonds. The obligation of the City 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.
Section 2.13. Bonds Equally Secured. The Trust Estate
shall be for the equal and proportionate benefit, security and
protection of all Owners of the Bonds issued under and secured by
this Ordinance without privilege, priority or distinction as to
the lien or otherwise of any of the Bonds over any other of the
Bonds, all upon the terms stated herein.
Section 2.14. Applicability of Book-Entry Provisions.
Anything in this Ordinance to the contrary notwithstanding, (a)
the provisions of the Blanket Issuer Letter of Representations,
dated December 5, 1996, between the City and The Depository Trust
Company relating to the manner of and procedures for payment and
redemption of Bonds and related matters shall apply so long as
such Depositary shall be the Owner of all Outstanding Bonds and
(b) the City, the Trustee or the Paying Agent, as applicable, may
enter into a similar agreement, on terms satisfactory to the
Company, with any subsequent Depositary and the provisions
thereof shall apply so long as such Depositary shall be the Owner
of all Outstanding Bonds.
ARTICLE III
REDEMPTION OF BONDS
Section 3.01. Redemption Provisions. (a) The Bonds shall
be subject to redemption by the City, at the direction of the
Company, on any date on or after October 1, 2007 in whole at any
time or in part from time to time, at the applicable redemption
price (expressed as a percentage of principal amount) set forth
below, plus accrued interest to the redemption date:
Redemption Period Redemption
Price
---------------- ---------------
-
October 1, 2007 through September 30, 2008 102%
October 1, 2008 through September 30, 2009 101%
October 1, 2009 and thereafter 100%
(b) The Bonds shall be subject to redemption by the City,
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) The Bonds shall be subject to mandatory redemption by
the City, 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 Sale 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 (b) 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.
Section 3.02. Selection of Bonds to be Redeemed. If less
than all the Bonds shall be called for redemption under any
provision of this Ordinance 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 Ordinance; 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 the portion of any Bond to be
redeemed shall be in the principal amount of $5,000 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 $5,000. 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. If the Owner of any such Bond of a denomination
greater than $5,000 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 $5,000 unit
or units of principal amount called for redemption (and to that
extent only).
Section 3.03. 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 City, 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 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. 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 a
copy of each such notice of redemption.
(b) With respect to any notice of redemption of Bonds in
accordance with subsection (a) or (b) 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 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 City 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 shall cease to bear interest on the
specified redemption date provided that moneys sufficient to pay
the principal of, premium, if any, and interest on such Bonds
shall be on deposit with the Trustee on the date fixed for
redemption so that such Bonds will be deemed to be paid in
accordance with Article VIII hereof.
Section 3.04. No Partial Redemption After Default.
Anything in this Ordinance to the contrary notwithstanding, if
there shall have occurred and be continuing an Event of Default
defined in clause (a) or (b) 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 other than a partial redemption in
connection with an offer by the Company to purchase all Bonds
Outstanding as contemplated in the first proviso to the first
sentence of Section 3.02 hereof.
Section 3.05. Payment of Redemption Price. For the
redemption of any of the Bonds, the City shall cause to be
deposited in the Bond Fund, on the redemption date, solely out of
the Receipts and Revenues of the City from the Sale 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 City 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.
ARTICLE IV
THE BOND FUND
Section 4.01. Creation of Bond Fund. There is hereby
created and established with the Trustee a trust fund in the name
of the City to be designated "City of Farmington, New Mexico
Pollution Control Revenue Bonds, 1997 Series A (Tucson Electric
Power Company San Juan Project) Bond Fund". The Trustee shall
establish and maintain within the Bond Fund such segregated
accounts and 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.
Section 4.02. Liens. The City shall not create any lien
upon the Bond Fund or upon the Receipts and Revenues of the City
from the Sale Agreement other than the lien hereby created.
Section 4.03. 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;
(ii) all Purchase Price Payments; and
(iii) all other moneys received by the Trustee under
and pursuant to any provision of the Sale Agreement, other
than Sections 5.04, 5.05 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;
(b) All income or other gain from the investment of moneys
in the Bond Fund shall be deposited into the Bond Fund.
Section 4.04. Use of Moneys in Bond Fund. Moneys, if any,
paid into the Bond Fund pursuant to clause (i) of Section 4.03(a)
hereof shall be applied to the payment of interest on the Bonds.
Except as otherwise provided in Sections 4.06, 9.01 and 10.04
hereof, all other 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.
Section 4.05. Custody of Bond Fund; Withdrawal of Moneys.
The Bond Fund shall be in the custody of the Trustee but in the
name of the City and the City 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.
Section 4.06. 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
the Owners 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 Ordinance 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 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 City,
the Trustee and the Paying Agent with respect to such moneys
shall thereupon cease.
Section 4.07. 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, shall be held by the Trustee, the Paying Agent
or any Co-Paying 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 the Rebate Fund established in furtherance of the obligations
of the Company under clause (b) of Section 6.04 of the Sale
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
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 City under
this Ordinance shall have ceased, terminated and become void and
shall have been satisfied and discharged in accordance with
Article VIII hereof.
ARTICLE V
DISPOSITION OF PROCEEDS
Section 5.01. Disposition of Proceeds. The proceeds from
the issuance and sale of the Bonds shall be applied as provided
in Section 4.03 of the Sale Agreement.
ARTICLE VI
INVESTMENTS
Section 6.01. Investments. The moneys in the Bond Fund
shall, at the direction of the Company, be invested and
reinvested in Investment Securities. Any Investment Securities
may be purchased subject to options or other rights in third
parties to acquire the same. 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.
ARTICLE VII
GENERAL COVENANTS
Section 7.01. 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 any obligation for the payment of money incurred by the City
shall not be the general obligation or indebtedness of the City
within the meaning of Article 9, Sections 12 and 13 of the
Constitution of the State of New Mexico, and shall never
constitute an indebtedness of the City within the meaning of any
state constitutional provision or statutory limitation, and shall
never constitute nor give rise to a pecuniary liability of the
City or a charge against its general credit or taxing powers, but
shall be payable by the City solely from the Receipts and
Revenues of the City from the Sale Agreement, which are required
to be set apart and transferred to the Bond Fund, and which,
along with the balance of the Trust Estate, are hereby
specifically pledged to the payment thereof in the manner and to
the extent in this Ordinance specified, and nothing in the Bonds
or in this Ordinance shall be considered as pledging any other
funds or assets of the City.
The City 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 Ordinance at the place,
on the dates and in the manner provided herein and in said Bonds
according to the true intent and meaning thereof.
Section 7.02. Performance of Covenants of the City;
Representations. The City shall faithfully perform at all times
any and all covenants, undertakings, stipulations and provisions
contained in this Ordinance, in any and every Bond executed,
authenticated and delivered hereunder, and in all proceedings
pertaining thereto. The City represents that it is duly
authorized under the Constitution and laws of the State of New
Mexico to issue the Bonds authorized hereby, to enter into the
Sale Agreement and to adopt this Ordinance, 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 City.
Section 7.03. Maintenance of Rights and Powers; Compliance
with Laws. The City shall at all times maintain its corporate
existence or assure the assumption of its obligations under this
Ordinance 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 Sale Agreement and this Ordinance.
Section 7.04. Enforcement of Obligations of the Company;
Amendments. Upon receipt of written notification from the
Trustee, the City 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 Sale Agreement. The City shall not enter into any agreement
with the Company amending the Sale Agreement without the prior
written consent of the Trustee and compliance with Sections 12.06
and 12.07 of this Ordinance.
Section 7.05. Further Instruments. The City 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 Ordinance; provided, however, that no such
instruments or actions shall pledge the credit or taxing power of
the State of New Mexico, the City or any other political
subdivision of said State.
Section 7.06. No Disposition of Trust Estate. Except as
permitted by this Ordinance, the City 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.
Section 7.07. Financing Statements. The City and the
Trustee shall cooperate with the Company in causing appropriate
financing statements, naming the Trustee as pledgee of the
Receipts and Revenues of the City from the Sale Agreement and of
the other moneys pledged under the Ordinance 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,
and the City shall cooperate with the Trustee and the Company in
causing appropriate continuation statements 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 New Mexico and any other
applicable jurisdiction, as from time to time amended, in order
to perfect and maintain the security interests created by this
Ordinance.
Section 7.08. Tax Covenants; Rebate Fund. (a) The City
covenants for the benefit of all Owners from time to time of the
Bonds that the City, to the extent within its control, will not
take or omit to take any action which, 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 City
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.
(b) The Trustee shall establish and maintain a fund
separate from any other fund established and maintained hereunder
designated the "City of Farmington, New Mexico Pollution Control
Revenue Bonds, 1997 Series A (Tucson Electric Power Company San
Juan Project) Rebate Fund" (herein called the "Rebate Fund") in
accordance with the provisions of the Tax Agreement. Within the
Rebate Fund, the Trustee shall maintain such accounts as shall be
directed by the Company in order for the City 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 City 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 Sale
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.
(c) 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, shall be
withdrawn and remitted to the Company.
(d) Notwithstanding any provision of this Ordinance, 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 Sale Agreement and the Tax
Agreement shall survive the payment of the Bonds and the
satisfaction and discharge of this Ordinance.
Section 7.09. Notices of Trustee. The Trustee shall give
notice to both the City and the Company whenever it is required
hereby to give notice to either and, additionally, shall furnish
to the City and the Company copies of any Notice by Mail or
Publication given by it pursuant to any provision hereof.
ARTICLE VIII
DEFEASANCE
Section 8.01. Defeasance. If the City 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 any
portion of such Bond in the principal amount of $5,000 or any
integral multiple thereof, such Bond or portion thereof shall
cease to be entitled to any lien, benefit or security under this
Ordinance. If the City 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
Ordinance.
All or any portion of Outstanding Bonds or portions of Bonds
in principal amounts of $5,000 or any integral multiple thereof,
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 City 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
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 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; 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 Owners 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.
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; provided,
that 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 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. 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
the Trustee with a certificate of an accountant or an 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.
ARTICLE IX
DEFAULTS AND REMEDIES
Section 9.01. Events of Default. Each of the following
events shall constitute and is referred to in this Ordinance 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 thirty (30) days;
(c) a failure by the City to observe and perform any
covenant, condition, agreement or provision (other than as
specified in clauses (a) and (b) of this Section 9.01)
contained in the Bonds or in this Ordinance on the part of
the City to be observed or performed, which failure shall
continue for a period of sixty (60) days after written
notice, specifying such failure and requesting that it be
remedied, shall have been given to the City 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 33% in principal amount of the Bonds
then Outstanding, 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, 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, as
the case may be, shall be deemed to have agreed to an
extension of such period if corrective action is initiated
by the City, or the Company on behalf of the City, within
such period and is being diligently pursued.
Upon the occurrence and continuance of any Event of Default
described in clause (a) or (b) of the preceding paragraph, the
Trustee may, and at the written request of Owners of not less
than 33% in principal amount of Bonds then Outstanding shall, by
written notice to the City 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 Ordinance or in the Bonds to the contrary
notwithstanding, and the Trustee shall give notice thereof by
Mail to all Owners of Outstanding Bonds.
The provisions of the preceding paragraph, however, are
subject 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
City 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 City and the Company, 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.
Section 9.02. 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 Owners of not less than a majority 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 City 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 Sale
Agreement and this Ordinance;
(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.
Section 9.03. Restoration to Former Position. In the event
that any proceeding taken by the Trustee to enforce any right
under this Ordinance shall have been discontinued or abandoned
for any reason, or shall have been determined adversely to the
Trustee, then the City, 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.
Section 9.04. Owners' Right to Direct Proceedings.
Anything in this Ordinance to the contrary notwithstanding, the
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 Ordinance or exercising any
trust or power conferred on the Trustee by this Ordinance;
provided, however, that such direction shall not be otherwise
than in accordance with law and the provisions of this Ordinance
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.
Section 9.05. 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 a
majority 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
Ordinance, 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.
Section 9.06. No Impairment of Right to Enforce Payment.
Notwithstanding any other provision in this Ordinance, 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.
Section 9.07. Proceedings by Trustee without Possession of
Bonds. All rights of action under this Ordinance 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 Ordinance.
Section 9.08. 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 or
under the Sale Agreement, now or hereafter existing at law or in
equity or by statute.
Section 9.09. 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.
Section 9.10. 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:
(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 Ordinance), 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.
(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.
(c) If the principal of all the Bonds shall have become
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.
Section 9.11. 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 Ordinance and by law.
Section 9.12. No Obligation of City to Act. Subject to
Sections 7.04 and 7.05, the City shall have no obligation to take
any action or pursue any right or remedy of the Trustee or any
Owner under this Ordinance or otherwise, including, but not
limited to, taking any action in a bankruptcy proceeding.
ARTICLE X
TRUSTEE; PAYING AGENT AND CO-PAYING AGENTS; REGISTRAR
Section 10.01. Acceptance of Trusts. By executing the
Acceptance of the Duties of the Trustee and the certificate of
authentication with respect to each of the Bonds, the Trustee
shall signify its acceptance and agreement to execute the trusts
hereby created, but only upon the additional terms set forth in
this Article X, to all of which the City agrees and the
respective Owners agree by their acceptance of delivery of any of
the Bonds.
Section 10.02. No Responsibility for Recitals. The
recitals, statements and representations contained in this
Ordinance 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
Ordinance or the Bonds.
Section 10.03. 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
Ordinance or for anything whatsoever in connection with the trust
created hereby, except only for its own negligence or bad faith.
Anything in this Ordinance 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.
Section 10.04. Compensation, Expenses and Advances. The
Trustee, the Paying Agent and any Co-Paying Agent, and the
Registrar under this Ordinance 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 City shall fail to perform any of the covenants or
agreements contained in this Ordinance, 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 City, 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 City from any default
hereunder. In Section 5.04 of the Sale Agreement, the Company
has agreed that it will pay to the Trustee (including any
predecessor Trustee), the Paying Agent and any Co-Paying Agent
and the Registrar, 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 5.04 of the Sale Agreement and such failure
shall have resulted in an Event of Default under the Sale
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 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.
In Section 5.05 of the Sale Agreement, the Company has
agreed to indemnify the Trustee and any predecessor Trustee to
the extent provided therein.
Section 10.05. 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 Ordinance
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 33% in
principal amount of the Bonds then Outstanding. The Trustee may,
however, at any time, in its discretion, require of the City and
the Company full information and advice as to the performance of
any of the covenants, conditions and agreements contained herein.
Section 10.06. 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 a
majority in principal amount of the Bonds then Outstanding, 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. 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 Ordinance 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 without such security or
indemnity.
Section 10.07. 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 Ordinance or the Sale 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 nor the Registrar 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.
Section 10.08. Dealings in Bonds and with the City and the
Company. The Trustee, the Paying Agent, any Co-Paying Agent or
the Registrar, 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 or the Registrar, 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
City 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 City as freely as if it did not act in
any capacity hereunder.
Section 10.09. 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 Ordinance, 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 Article IV with respect to
interest on investments.
Section 10.10. Construction of Ordinance. The Trustee may
construe any of the provisions of this Ordinance 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.
Section 10.11. Resignation of Trustee. The Trustee may
resign and be discharged of the trusts created by this Ordinance
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 City Clerk of the City and with the
Company, 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 City 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 City shall deliver any such instrument of
appointment at the direction of the Company.
Section 10.12. Removal of Trustee. The Trustee may be
removed at any time by filing with the Trustee so removed, and
with the City 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 City (at the
direction of the Company) of a successor and accompanied by an
instrument of appointment by the City (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.
Section 10.13. 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 City 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.
Copies of such instrument shall be promptly delivered by the City
to the predecessor Trustee to the Trustee so appointed and the
Company.
(b) Until a successor Trustee shall be appointed by the
Owners of the Bonds as herein authorized, the City, by an
instrument authorized by resolution, shall appoint a successor
Trustee as directed by the Company. After any appointment by the
City, it shall cause notice of such appointment to be given by
Mail to all Owners of Bonds. Any new Trustee so appointed by the
City shall immediately and without further act be superseded by a
Trustee appointed by the Owners of the Bonds in the manner above
provided.
(c) 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.
Section 10.14. 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 Ordinance 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.
Section 10.15. 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.
Section 10.16. Acceptance of Trusts by Successor Trustee.
Any successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the City 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 City
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.
Section 10.17. 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 or
any corporation or association succeeding to the corporate trust
business of the Trustee, shall be the successor Trustee under
this Ordinance, without the execution or filing of any paper or
any further act on the part of the parties hereto, anything in
this Ordinance to the contrary notwithstanding.
If, at the time any such successor to the Trustee shall
succeed to the trusts created by this Ordinance, 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 Ordinance 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.
Section 10.18. 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 Ordinance 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.
Section 10.19. 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 by Mail to all Owners of Outstanding Bonds.
Section 10.20. Intervention in Litigation of the City. In
any judicial proceeding to which the City 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 a majority in principal amount of the Bonds
then Outstanding if permitted by the court having jurisdiction in
the premises.
Section 10.21. Paying Agent; Co-Paying Agents. The City
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
City 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 City, 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 City 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.
Section 10.22. 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 Ordinance. The
Paying Agent and any Co-Paying Agent may at any time resign and
be discharged of the duties and obligations created by this
Ordinance by giving at least sixty (60) days' notice to the City,
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 City, 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 City 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 City
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 Ordinance until the appointment by the City 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.
Section 10.23. Registrar. The City 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 City 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 City, the Trustee and the Company at all
reasonable times.
The City 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 City and authenticated
by the Trustee, shall be made available for exchange,
registration and registration of transfer at the Principal Office
of the Registrar. The City 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 and any
Co-Paying Agent shall be furnished such records and other
information, at such times, as shall be required to enable the
Paying Agent and such Co-Paying Agent to perform the duties and
obligations imposed upon them hereunder.
Section 10.24. 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 Ordinance. The Registrar may at any time resign and be
discharged of the duties and obligations created by this
Ordinance by giving at least sixty (60) days' notice to the City,
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 City 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 City 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 City shall not have
appointed its successor as Registrar, the Trustee shall ipso
facto be deemed to be the Registrar for all purposes of this
Ordinance until the appointment by the City 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.
Section 10.25. 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 and the
Registrar and in any combination of such capacities to the extent
permitted by law.
ARTICLE XI
EXECUTION OF INSTRUMENTS BY OWNERS OF BONDS AND
PROOF OF OWNERSHIP OF BONDS
Section 11.01. Execution of Instruments; Proof of Ownership.
Any request, direction, consent or other instrument in writing,
whether or not required or permitted by this Ordinance 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 Ordinance 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 2.08 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 City in pursuance of such request or
consent.
ARTICLE XII
MODIFICATION OF THIS ORDINANCE AND THE SALE AGREEMENT
Section 12.01. Limitations. Neither this Ordinance nor the
Sale 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, accept any
Supplemental Ordinance which affects the Trustee's own rights,
duties or immunities under this Ordinance or otherwise.
Section 12.02. Supplemental Ordinances without Owner
Consent. The City may, from time to time and at any time,
without the consent of or notice to the Owners of the Bonds,
adopt, and the Trustee may accept, Supplemental Ordinances as
follows:
(a) to cure any formal defect, omission, inconsistency
or ambiguity in this Ordinance, 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 City in this
Ordinance other covenants, agreements, limitations and
restrictions to be observed by the City;
(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 Ordinance, of the Receipts and
Revenues of the City from the Sale 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 Ordinance 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, supplement or amend this
Ordinance in such manner as shall permit the qualification
hereof under the Trust Indenture Act of 1939, as from time
to time amended;
(g) to modify, alter, supplement or amend this
Ordinance 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;
(h) to modify, alter, amend or supplement this
Ordinance 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; and
(i) to provide any additional procedures, covenants or
agreements necessary or desirable to maintain the tax-exempt
status of interest on the Bonds.
Before the City shall adopt, and the Trustee shall accept,
any Supplemental Ordinance pursuant to this Section 12.02, there
shall have been delivered to the City and the Trustee an opinion
of Bond Counsel stating that such Supplemental Ordinance is
authorized or permitted by this Ordinance and the Act, complies
with their respective terms, will, upon the adoption thereof, be
valid and binding upon the City 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.
Section 12.03. Supplemental Ordinances with Consent of
Owners. (a) Except for any Supplemental Ordinance adopted
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 adoption by the City, and
acceptance by the Trustee, of any Supplemental Ordinance deemed
necessary or desirable by the City for the purposes of modifying,
altering, amending, supplementing or rescinding, in any
particular, any of the terms or provisions contained in this
Ordinance; 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 reduction in the
principal amount or redemption price of any Outstanding Bond or a
change in 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 City from the Sale
Agreement ranking prior to or on a parity with the claim, lien or
pledge created by this Ordinance (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 Ordinance
or which is required, under Section 12.07 hereof, for any
modification, alteration, amendment or supplement to the Sale
Agreement.
(b) If at any time the City shall request the Trustee to
accept any Supplemental Ordinance for any of the purposes of this
Section 12.03, the Trustee shall cause notice of the proposed
Supplemental Ordinance to be given by Mail to all Owners of
Outstanding Bonds. Such notice shall briefly set forth the
nature of the proposed Supplemental Ordinance and shall state
that a copy thereof is on file at the Principal Office of the
Trustee for inspection by all Owners of Bonds.
(c) Within two years after the date of the first mailing of
such notice, the City may adopt, and the Trustee may accept, such
Supplemental Ordinance 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 Ordinance is authorized or permitted by this
Ordinance and the Act, complies with their respective terms and,
upon the adoption thereof, will be valid and binding upon the
City 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.
(d) 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 adoption of such
Supplemental Ordinance, 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 adoption thereof, or to
enjoin or restrain the City or the Trustee from executing and
delivering the same or from taking any action pursuant to the
provisions thereof.
Section 12.04. Effect of Supplemental Ordinance. Upon the
adoption of any Supplemental Ordinance pursuant to the provisions
of this Article XII, this Ordinance shall be, and be deemed to
be, modified, altered, amended or supplemented in accordance
therewith, and the respective rights, duties and obligations
under this Ordinance of the City, the Trustee and Owners of all
Bonds then Outstanding shall thereafter be determined, exercised
and enforced under this Ordinance subject in all respects to such
modifications, alterations, amendments and supplements.
Section 12.05. Consent of the Company. Anything herein to
the contrary notwithstanding, any Supplemental Ordinance under
this Article XII which affects any rights, powers, agreements or
obligations of the Company under the Sale Agreement, or requires
a revision of the Sale Agreement, shall not become effective
unless and until the Company shall have consented to such
Supplemental Ordinance.
Section 12.06. Amendment of Sale Agreement without Consent
of Owners. Without the consent of or notice to the Owners of the
Bonds, the City may enter into any Supplemental Sale Agreement,
and the Trustee may consent thereto, as may be required (a) by
the provisions of the Sale Agreement and this Ordinance, (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.
Before the City shall enter into, and the Trustee shall
consent to, any Supplemental Sale Agreement pursuant to this
Section 12.06, there shall have been delivered to the City and
the Trustee an opinion of Bond Counsel stating that such
Supplemental Sale Agreement is authorized or permitted by this
Ordinance and the Act, complies with their respective terms,
will, upon the execution and delivery thereof, be valid and
binding upon the City 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.
Section 12.07. Amendment of Sale Agreement with Consent of
Owners. Except in the case of Supplemental Sale Agreements
referred to in Section 12.06 hereof, the City shall not enter
into, and the Trustee shall not consent to, any Supplemental Sale
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 5.02 of the Sale Agreement. If at any time the City or
the Company shall request the consent of the Trustee to any such
proposed Supplemental Sale Agreement, the Trustee shall cause
notice of such proposed Supplemental Sale Agreement to be given
in the same manner as provided by Section 12.03 hereof with
respect to Supplemental Ordinances. Such notice shall briefly
set forth the nature of such proposed Supplemental Sale 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. The City may enter into, and the
Trustee may consent to, any such proposed Supplemental Sale
Agreement subject to the same conditions, and with the same
effect, as provided by Section 12.03 hereof with respect to
Supplemental Ordinances.
ARTICLE XIII
MISCELLANEOUS
Section 13.01. Successors of the City. In the event of the
dissolution of the City, all the covenants, stipulations,
promises and agreements in this Ordinance contained, by or on
behalf of, or for the benefit of, the City, shall bind or inure
to the benefit of the successors of the City from time to time
and any entity, officer, board, commission, agency or
instrumentality to whom or to which any power or duty of the City
shall be transferred.
Section 13.02. Parties in Interest. Except as herein
otherwise specifically provided, nothing in this Ordinance
expressed or implied is intended or shall be construed to confer
upon any person, firm or corporation other than the City, the
Company and the Trustee and their successors and assigns and the
Owners of the Bonds any right, remedy or claim under or by reason
of this Ordinance, this Ordinance being intended to be for the
sole and exclusive benefit of the City, the Company and the
Trustee and their successors and assigns and the Owners of the
Bonds.
Section 13.03. Ratification of Prior Action. All action
(not inconsistent with the provisions of this Ordinance)
heretofore taken by the City Council and the officers of the City
directed toward the refunding of the Prior Bonds and sale and
issuance of the Bonds and all action taken in connection with the
use of proceeds of the Prior Bonds insofar as consistent with the
Act, is ratified, approved and confirmed.
Section 13.04. Severability. In case any one or more of the
provisions of this Ordinance or of the Sale 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 Ordinance or of the Sale Agreement or of such
Bonds, and this Ordinance and the Sale Agreement and such Bonds
shall be construed and enforced as if such illegal or invalid
provisions had not been contained herein or therein.
Section 13.05. No Personal Liability of City Officials. No
covenant or agreement contained in the Bonds or in this Ordinance
shall be deemed to be the covenant or agreement of any director,
official, officer, agent, or employee of the City in his
individual capacity, and neither the members of the City Council
of the City 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.
Section 13.06. Bonds Owned by the City 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 Ordinance, Bonds which are owned by the City 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 City, the Company or such person owns all
Bonds which are then Outstanding, determined without regard to
this Section 13.05) 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 City 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 City
or the Company or any person directly or indirectly controlling
or controlled by or under direct or indirect common control with
the Company. 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.
Section 13.07. Acceptance by Trustee. The execution by the
party designated and appointed as Trustee of the acceptance set
forth at the end of this Ordinance certified by the City Clerk of
the City shall be sufficient to constitute said party as the
Trustee hereunder in accordance with the provisions hereof
without the execution of any other instrument.
Section 13.08. Governing Law. The laws of the State of New
Mexico shall govern the construction and enforcement of this
Ordinance and of all Bonds.
Section 13.09. Notices. Except as otherwise provided in
this Ordinance, all notices, certificates, requests requisitions
or other communications by the City, the Company, the Trustee,
the Paying Agent, any Co-Paying Agent or the Registrar pursuant
to this Ordinance 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 City, at 800
Municipal Drive, Farmington, New Mexico 87401, Attention:
Treasurer; if to the Company, at 220 West Sixth Street, Tucson,
Arizona 85702, Attention: Treasurer; if to the Trustee, at the
address specified in the resolution of the City Council of the
City appointing the Trustee; if to the Paying Agent, any
Co-Paying Agent or the Registrar, at the address designated in
the acceptance of appointment or engagement. 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.
Section 13.10. 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 Ordinance, 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 Ordinance, 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 Ordinance, 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.
Section 13.11. Emergency Circumstances. The City Council of
the City declares that emergency circumstances exist which are of
an immediate danger to the public health, safety and welfare of
the City and that this Ordinance shall therefore take effect five
days after publication in The Farmington Daily Times of the title
and a general summary of the subject matter thereof.
<PAGE>
Passed, Adopted, Signed and Approved this 17th day of April,
1997.
(SEAL) /s/ Thomas C. Taylor
------------------------
Mayor
Attest:
/s/ Mary L. Banks
--------------------------------------------
City Clerk
I, Thomas C. Taylor, Mayor of the City of Farmington, New
Mexico, do hereby declare that, pursuant to Section 3-17-3
N.M.S.A. 1978, this Ordinance deals with an emergency of an
immediate danger to the public health, safety and welfare of the
City, and any publication of such Ordinance prior to its adoption
is hereby declared to be unnecessary.
/s/ Thomas C. Taylor
---------------------------------------------------------------
Mayor
ACCEPTANCE OF DUTIES BY THE TRUSTEE
First Trust of New York, National Association, as
Trustee, hereby accepts as of April 29, 1997 the trust under the
foregoing Ordinance and the duties and obligations imposed on the
Trustee thereby.
FIRST TRUST OF NEW YORK,
NATIONAL ASSOCIATION
By /s/ Patrick J. Crowley
-----------------------
Authorized Officer
Attest:
/s/ Steven Haas
----------------------------------------
Authorized Officer
<PAGE>
EXHIBIT A
(FORM OF BOND)
No.
CITY OF FARMINGTON, NEW MEXICO
POLLUTION CONTROL REVENUE BOND,
1997 SERIES A
(TUCSON ELECTRIC POWER COMPANY SAN JUAN PROJECT)
INTEREST RATE (PER ANNUM):
MATURITY DATE: DATED:
CUSIP:
REGISTERED OWNER:
PRINCIPAL AMOUNT: DOLLARS
The City of Farmington, an incorporated municipality, a body
politic and corporate, existing under the Constitution and laws
of the State of New Mexico, United States of America (the
"City"), for value received, hereby promises to pay (but only out
of the Receipts and Revenues of the City from the Sale 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 City from the
Sale Agreement and other moneys pledged therefor), interest on
said Principal Amount until payment of said Principal Amount has
been made or duly provided for, from the date hereof, at the
Interest Rate set forth above, semi-annually on the first days of
October and April in each year, commencing October 1, 1997.
Interest will be calculated on the basis of a 360-day year of
twelve 30-day months.
The principal 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 Ordinance
(as hereinafter defined), 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 Owner of this Bond as
of the close of business on the Record Date (as defined in the
Ordinance), at the registered address of such Registered Owner;
notwithstanding the foregoing, upon request to the Paying Agent
by a Registered 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 Registered Owner by wire transfer to the
account maintained within the continental United States specified
by such Registered Owner or, if such Registered Owner maintains
an account with the entity acting as Paying Agent, by deposit
into such account. Payment of the principal of and premium, if
any, and interest on 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.
As more fully provided in the Ordinance, the Bonds and the
premium, if any, and interest thereon are not general obligations
to which the full faith and credit of the City are pledged, but
are limited obligations of the City, which is obligated to pay
the principal of and premium, if any, and interest on the Bonds
only out of the Receipts and Revenues of the City from the Sale
Agreement. This Bond does not, and shall never, constitute an
indebtedness of the City within the meaning of any state
constitutional provision or statutory limitation, and shall never
constitute or give rise to a pecuniary liability of the City or a
charge against its general credit or taxing powers.
This Bond is one of the duly authorized issue of bonds of
the City designated as Pollution Control Revenue Bonds, 1997
Series A (Tucson Electric Power Company San Juan Project) (the
"Bonds"), aggregating Eighty Million Four Hundred Ten Thousand
Dollars ($80,410,000) in principal amount, issued under and
pursuant to the Constitution and laws of the State of New Mexico,
particularly the Pollution Control Revenue Bond Act, Chapter 397,
Laws of 1973 of the State of New Mexico, 31st Legislature, 1st
Session, as amended (the "Act"), and Ordinance No. 97-1055 of the
City adopted April 17, 1997 by the City Council of the City and
Resolution
No. 97-879 of the City, adopted April 17, 1997 by the City
Council of the City (collectively the "Ordinance"). The Bonds
are being issued to refund certain prior bonds issued by the City
for the benefit of Tucson Electric Power Company a corporation
organized and existing under the laws of the State of Arizona
(the "Company"), for the purpose of defraying the cost to the
Company of the acquisition, construction and installation of
certain air and water pollution control facilities (the
"Facilities") at Units 1 and 2 of the San Juan Generating
Station, an electric power generating plant located within
fifteen miles of the corporate limits of the City but not within
the corporate limits of any municipality, in San Juan County, New
Mexico. Pursuant to an Amended and Restated Installment Sale
Agreement (amending and restating the Original Sale Agreements as
defined in the Ordinance), dated as of April 1, 1997 (the "Sale
Agreement"), between the City and the Company, the prior sale by
the Company to the City of undivided interests in the Facilities
and the prior sale back of such undivided interests in the
Facilities by the City to the Company has been confirmed.
The Bonds are equally and ratably secured, to the extent
provided in the Ordinance, by the pledge thereunder of the
"Receipts and Revenues of the City from the Sale Agreement",
which term is used herein as defined in the Ordinance and which
as therein defined means all moneys paid or payable to the
Trustee for the account of the City by the Company in respect of
the Purchase Price Payments (as such term is defined in the Sale
Agreement), including all receipts of the Trustee which, under
the provisions of the Ordinance, reduce the amounts of such
payments. The City has also pledged and assigned to the Trustee
as security for the Bonds all other rights and interests of the
City under the Sale Agreement (other than its rights to
indemnification and its administrative expenses and certain other
rights).
The transfer of this Bond shall be registered upon the
registration books kept at the principal office of First Trust of
New York, National Association, 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.
In the manner and with the effect provided in the Ordinance,
each of the Bonds may be redeemed prior to maturity, as follows:
(a) The Bonds shall be subject to redemption by the
City, at the direction of the Company, on any date on or
after October 1, 2007, in whole at any time or in part from
time to time, at the applicable redemption price (expressed
as a percentage of principal amount) set forth below, plus
accrued interest to the redemption date:
Redemption Period Redemption Price
------------------ ----------------
October 1, 2007 through September 30, 2008 102%
October 1, 2008 through September 30, 2009 101%
October 1, 2009 and thereafter 100%
(b) The Bonds shall be subject to redemption by the
City, 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 (as defined in the
Ordinance) 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) The Bonds shall be subject to mandatory redemption
by the City, 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 Sale 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 (the "1954 Code"). No determination by
any court or administrative agency shall be considered final
for the purposes of this paragraph (c) 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.
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 Ordinance.
In the event any of the Bonds are called for redemption, the
Trustee shall give notice, in the name of the City, 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 to the date fixed for redemption to the
Registered 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) or (b)
above, unless, upon the giving of such notice, such Bonds shall
be deemed to have been paid within the meaning of the Ordinance,
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 City 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 shall cease to bear interest on the
specified redemption date provided that moneys sufficient to pay
the principal of, premium, if any, and interest on such Bonds
shall be on deposit with the Trustee on the date fixed for
redemption so that such Bonds will be deemed to be paid in
accordance with the Ordinance and such Bonds shall thereafter
cease to be entitled to any lien, benefit or security under the
Ordinance.
The owner of this Bond shall have no right to enforce the
provisions of the Ordinance, or to institute action to enforce
the covenants therein, or to take any action with respect to any
default under the Ordinance, or to institute, appear in or defend
any suit or other proceeding with respect thereto, except as
provided in the Ordinance.
With certain exceptions as provided therein, the Ordinance
and the Sale 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 Ordinance which would be
adversely affected thereby.
Reference is hereby made to the Ordinance and the Sale
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 City, the Company,
the Trustee and the Registered Owners of the Bonds. The
Registered Owner of this Bond, by the acceptance hereof, is
deemed to have agreed and consented to the terms and provisions
of the Ordinance and the Sale Agreement.
Among other things, as provided in the Ordinance 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
Ordinance, and the entire indebtedness of the City 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 Ordinance), 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.
Among other things, the Sale Agreement contains terms,
provisions and conditions relating to the consolidation or merger
of the Company with or into, and the sale, transfer or other
disposition, of assets to, another Person (as defined in the Sale
Agreement), to the assumption by such Person, in certain
circumstances, of all of the obligations of the Company under the
Sale Agreement and to the release and discharge of the Company,
in certain circumstances, from such obligations.
The City, the Trustee, the Registrar, the Paying 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
City, the Trustee, the Registrar, 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 New Mexico, the governing rules and procedures of
the City and the Ordinance to exist, to have happened and to have
been performed, precedent to and in the adoption of the Ordinance
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
Ordinance shall be deemed to be a covenant or agreement of any
official, officer, agent or employee of the City in his
individual capacity, and neither the members of the City Council
of the City, 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 Ordinance, 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 of the
certificate of authentication inscribed hereon.
IN WITNESS WHEREOF, the City of Farmington, New Mexico, has
caused this Bond to be executed in its name and on its behalf by
its Mayor and Treasurer or Deputy City Treasurer, each by his or
her manual or facsimile signature, and has caused the corporate
seal of the City to be affixed, impressed or reproduced hereon
and attested by the City Clerk with his or her manual or
facsimile signature.
CITY OF FARMINGTON, NEW MEXICO
By___________________________
Mayor
By____________________________
Deputy City Treasurer
(Seal)
ATTEST:
--------------------------------------
City Clerk
<PAGE>
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.
<PAGE>
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 Ordinance.
First Trust of New York, National Association,
as Trustee
By________________________________________
Authorized Officer
Date of Authentication:____________________
EXHIBIT 4c
=================================================================
LOAN AGREEMENT
BETWEEN
COCONINO COUNTY, ARIZONA
POLLUTION CONTROL CORPORATION
AND
TUCSON ELECTRIC POWER COMPANY
--------------------
DATED AS OF APRIL 1, 1997
---------------------
RELATING TO
POLLUTION CONTROL REVENUE BONDS,
1997 SERIES A
(TUCSON ELECTRIC POWER COMPANY NAVAJO PROJECT)
================================================================
<PAGE>
TABLE OF CONTENTS
Page
-----
LOAN AGREEMENT . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions . . . . . . . . . . . . . . . 1
SECTION 1.02 Incorporation of Certain Definitions by
Reference . . . . . . . . . . . . . . . . . 5
ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.01 Representations and Warranties of the
Pollution Control Corporation . . . . . . . 5
SECTION 2.02 Representations and Warranties of the
Company . . . . . . . . . . . . . . . . . 6
ARTICLE III
THE FACILITIES
SECTION 3.01 Construction of the Facilities . . . . . . 7
SECTION 3.02 Insufficient Moneys in Construction Fund . 7
SECTION 3.03 Revision of Plans and Specifications . . . 7
SECTION 3.04 Certification of Completion Date . . . . . 7
SECTION 3.05 Maintenance of Facilities; Remodeling . . 8
SECTION 3.06 Insurance . . . . . . . . . . . . . . . . 8
SECTION 3.07 Condemnation . . . . . . . . . . . . . . . 8
SECTION 3.08 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 Loans; Disposition of Bond Proceeds . 9
SECTION 4.04 Disbursements from Construction Fund . . . 9
SECTION 4.05 Investment of Moneys in Funds and Accounts.
10
ARTICLE V
LOAN PAYMENTS; OTHER OBLIGATIONS
SECTION 5.01 Loan Payments. . . . . . . . . . . . . . . 11
SECTION 5.02 Payments Assigned; Obligation Absolute . . 11
SECTION 5.03 Payment of Expenses . . . . . . . . . . . 11
SECTION 5.04 Indemnification . . . . . . . . . . . . . 11
SECTION 5.05 Payment of Taxes; Discharge of Liens . . . 12
-------------------
* 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.
<PAGE>
ARTICLE VI
SPECIAL COVENANTS
SECTION 6.01 Maintenance of Corporate Existence . . . . 12
SECTION 6.02 Permits or Licenses . . . . . . . . . . . 13
SECTION 6.03 Pollution Control Corporation's Access to
Facilities . . . . . . . . . . . . . . . . 13
SECTION 6.04 Tax-Exempt Status of Interest on Bonds. . 13
SECTION 6.05 Use of Facilities . . . . . . . . . . . . 14
SECTION 6.06 Financing Statements . . . . . . . . . . . 14
SECTION 7.01 Conditions . . . . . . . . . . . . . . . . 14
SECTION 7.02 Instrument Furnished to the Pollution
Control Corporation and Trustee . . . . . . 16
SECTION 7.03 Limitation . . . . . . . . . . . . . . . . 16
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
SECTION 8.01 Events of Default . . . . . . . . . . . . 16
SECTION 8.02 Force Majeure . . . . . . . . . . . . . . 17
SECTION 8.03 Remedies . . . . . . . . . . . . . . . . . 17
SECTION 8.04 No Remedy Exclusive . . . . . . . . . . . 18
SECTION 8.05 Reimbursement of Attorneys' and Agents'
Fees . . . . . . . . . . . . . . . . . . . 18
SECTION 8.06 Waiver of Breach . . . . . . . . . . . . . 18
ARTICLE IX
REDEMPTION OF BONDS
SECTION 9.01 Redemption of Bonds . . . . . . . . . . . 18
SECTION 9.02 Compliance with the Indenture . . . . . . 18
ARTICLE X
MISCELLANEOUS
SECTION 10.01 Term of Agreement . . . . . . . . . . . . 19
SECTION 10.02 Notices . . . . . . . . . . . . . . . . . 19
SECTION 10.03 Parties in Interest . . . . . . . . . . . 19
SECTION 10.04 Amendments . . . . . . . . . . . . . . . 19
SECTION 10.05 Counterparts . . . . . . . . . . . . . . 19
SECTION 10.06 Severability . . . . . . . . . . . . . . 19
SECTION 10.07 Governing Law . . . . . . . . . . . . . . 20
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . 21
Exhibit A - Description of the Facilities . . . . . . . . . A-1
<PAGE>
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of April 1, 1997 (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 formerly known as Tucson Gas & Electric
Company (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 $16,700,000 aggregate principal amount of its
Pollution Control Revenue Bonds, 1996 Series A (Tucson Electric
Power Company Project), all of which remain outstanding (the
"1996 Bonds"), the proceeds of which were loaned to the Company
to finance a portion of the costs of the acquisition
construction, improvement and equipping of a portion of the
pollution control facilities described in Exhibit A hereto (the
"Facilities");
WHEREAS, the Pollution Control Corporation proposes to issue
and sell its revenue bonds for the purpose of financing a portion
of the costs of the acquisition, construction, improvement and
equipping of an additional portion of the Facilities and for the
purpose of refinancing, by the payment or redemption of the 1996
Bonds, or provision therefor, the portion of the costs of the
acquisition, construction, improvement and equipping of the
Facilities previously financed with the proceeds of the 1996
Bonds; and
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
SECTION 1.01 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.
Agreement:
"Agreement" shall mean this Loan Agreement, dated as of April
1, 1997, 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.
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, 1997 Series A (Tucson Electric Power Company Navajo
Project) of the Pollution Control Corporation.
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, including, without
limitation, any successor obligor under Section 6.01 or 7.01 to
the extent of the obligations assumed thereunder.
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;
(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) 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; (g)
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 (h) 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.
Indenture:
"Indenture" shall mean the Indenture of Trust, dated as of
April 1, 1997, between the Pollution Control Corporation and the
Trustee relating to the Bonds, and any and all modifications,
alterations, amendments and supplements thereto.
Investment Account:
"Investment Account" shall mean any of the accounts so named
established under Sections 4.01 and 5.01 of the Indenture.
Loan Payments:
"Loan Payments" shall mean the payments required to be made by
the Company pursuant to Section 5.01 hereof.
1954 Code:
"1954 Code" shall mean the Internal Revenue Code of 1954, as
amended.
1996 Bonds:
"1996 Bonds" shall mean the $16,700,000 aggregate principal
amount of the Pollution Control Corporation's Pollution Control
Revenue Bonds, 1996 Series A (Tucson Electric Power 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; and
(c) 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 or 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.
Tax Agreement:
"Tax Agreement" shall mean that tax certificate and agreement,
dated the date of the initial authentication and delivery of the
Bonds, 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.
Trustee:
"Trustee" shall mean First Trust of New York, National
Association, as trustee under the Indenture, its successors in
trust and their assigns.
SECTION 1.02 Incorporation of Certain Definitions by
Reference. Each capitalized term used herein and not otherwise
defined herein shall have the meaning set forth in the Indenture.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.01 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 any 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 and refinancing 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.
SECTION 2.02 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 and refinanced 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
SECTION 3.01 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.
SECTION 3.02 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.
SECTION 3.03 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.
SECTION 3.04 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.
SECTION 3.05 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.
SECTION 3.06 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.
SECTION 3.07 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.
SECTION 3.08 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.
(b) 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
SECTION 4.01 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.
SECTION 4.02 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.
SECTION 4.03 The Loans; Disposition of Bond Proceeds. The
Pollution Control Corporation and the Company shall enter into
escrow arrangements with the trustee for the 1996 Bonds and shall
cause $16,700,000 of the proceeds of the Bonds to be deposited in
escrow with such trustee to be applied to the payment of the 1996
Bonds upon the redemption thereof. The Pollution Control
Corporation shall from time to time lend to the Company the
remaining 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 the $16,700,000
deposited in escrow with the trustee for the 1996 Bonds as
hereinabove provided and 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).
SECTION 4.04 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.
(b) 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.
(c) 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.
(d) 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.
SECTION 4.05 Investment of Moneys in Funds and Accounts. The
Company and the Pollution Control Corporation agree that any
moneys held in any fund or account created by the Indenture shall
be invested as provided in the Indenture.
ARTICLE V
LOAN PAYMENTS; OTHER OBLIGATIONS
SECTION 5.01 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.
SECTION 5.02 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) 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 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.
SECTION 5.03 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, 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 shall be made directly to such
entities.
SECTION 5.04 Indemnification. The Company releases the
Pollution Control Corporation and the Trustee and their
directors, officers, employees and agents from, agrees that the
Pollution Control Corporation and the Trustee shall not be liable
for, and agrees to indemnify and hold the Pollution Control
Corporation, the Trustee and any predecessor Trustee and their
directors, officers, employees and agents free and harmless from,
any liability (including, without limitation, attorneys' and
other agents' fees and expenses) for any loss or damage to
property or any injury to or death of any person 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 and any predecessor Trustee, 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.
SECTION 5.05 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, 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, 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
SECTION 6.01 Maintenance of Corporate Existence. Except as
permitted in this Section 6.01, the Company shall maintain its
corporate existence, shall not sell, transfer or otherwise
dispose of all of its assets, as or substantially as an entirety,
and shall 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 of its assets, as
or substantially as an entirety, 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 under this
Agreement, including, without limitation, obligations of the
Company under Section 5.01 hereof. Upon such an assumption
following any such sale, transfer or other disposition of assets,
the Company shall be released and discharged from all liability
in respect of all obligations under this Agreement.
Notwithstanding the foregoing, in the case of any such sale,
transfer or other disposition of assets, which do not include the
Facilities, the Company shall remain liable in respect of
obligations under this Agreement other than the obligations under
Section 5.01 hereof, and the transferee shall not be required to
assume any obligations hereunder other than the obligations under
Section 5.01 hereof; provided, however, that the transferee shall
be required to assume all such other obligations unless the
Company shall have delivered to the Pollution Control Corporation
and the Trustee an opinion of Bond Counsel to the effect that the
non-assumption by the transferee of such other obligations will
not impair the validity under the Act of the Bonds and will not
adversely affect the exclusion from gross income for federal tax
purposes of interest on the Bonds.
If consolidation, merger or sale, transfer or other
disposition 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.
Anything in this Agreement to the contrary notwithstanding,
the sale, transfer or other disposition by the Company of all of
its facilities (a) for the generation of electric energy, (b) for
the transmission of electric energy or (c) for the distribution
of electric energy, in each case considered alone, or all of its
facilities described in clauses (a) and (b), considered together,
or all of its facilities described in clauses (b) and (c),
considered together, shall in no event be deemed to constitute a
sale, transfer or disposition of all the properties of the
Company, as or substantially as an entirety, unless, immediately
following such sale, transfer or other disposition, the Company
shall own no properties in the other such categories of property
not so sold, transferred or otherwise disposed of. The character
of particular facilities shall be determined by reference to the
Uniform System of Accounts prescribed for public utilities and
licensees subject to the Federal Power Act, as amended, to the
extent applicable.
SECTION 6.02 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.
SECTION 6.03 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.
SECTION 6.04 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, the Rebate
Requirement as defined and 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 Facilities 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.
SECTION 6.05 Use of Facilities. So long as any Bonds are
Outstanding and 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
and in the Tax Agreement.
SECTION 6.06 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.
ARTICLE VII
ASSIGNMENT, LEASING AND SELLING
SECTION 7.01 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 Section 5.01
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 in
writing satisfactory in form 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 Section 5.01 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 the release and discharge
of the Company pursuant to clause (b) shall be conditioned upon
the delivery by the Company to the Pollution Control Corporation
and the Trustee of a certificate of an Independent Expert (as
hereinafter defined) describing the interests so assigned,
leased, sold, transferred or otherwise disposed of, together with
all other rights, interests, assets and/or properties assigned,
leased, sold, transferred or otherwise disposed of by the Company
to the same Person in the same or a related transaction, stating
that such rights, interests, assets and/or properties so
described constitute facilities for the generation, transmission
and/or distribution of electric energy and stating that, in the
opinion of such Independent Expert, the Fair Value (as
hereinafter defined) of such rights, interests, assets and/or
properties to the Person acquiring the same is not less than an
amount equal to 10/7 of the sum of (x) the aggregate principal
amount of the Bonds then Outstanding and (y) the outstanding
principal amount of all other obligations of the Company
representing indebtedness for borrowed money or for the deferred
purchase price of property which are being assumed by such
Person; provided, further, that after any such assumption,
release and discharge as aforesaid, the Company may again assume
such obligations under Section 5.01 hereof, 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 and
will not adversely affect 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.
For purposes of this Section 701:
(a) "Independent Expert" means a Person which (i) is an
engineer, appraiser or other expert and which, with respect to
any certificate to be delivered pursuant to this Section, is
qualified to pass upon the matter set forth in such
certificate and (ii)(A) is in fact independent, (B) does not
have any direct material financial interest in the transferee
or in any obligor upon the Bonds or under this Agreement or in
any affiliate of the transferee or any such obligor, (C) is
not connected with the transferee or any such obligor as an
officer, employee, promoter, underwriter, trustee, partner,
director or any person performing similar functions and (D) is
approved by the Trustee in the exercise of reasonable care;
for purposes of this definition "engineer" means a Person
engaged in the engineering profession or otherwise qualified
to pass upon engineering matters (including, but not limited
to, a Person licensed as a professional engineer, whether or
not then engaged in the engineering profession); and for
purposes of this definition "appraiser" means a Person engaged
in the business of appraising property or otherwise qualified
to pass upon the Fair Value or fair market value of property.
(b) "Fair Value" means the fair value of the interests,
rights, assets and/or properties assigned, leased, sold,
transferred or otherwise disposed of (but, in the case of a
lease, only to the extent of such lease) as may be determined
by reference to (i) except in the case of a lease, the amount
which would be likely to be obtained in an arm's-length
transaction with respect to such interests, rights, assets
and/or properties between an informed and willing buyer and an
informed and willing seller, under no compulsion,
respectively, to buy or sell, (ii) in the case of a lease, the
amount (discounted to present value at a rate not lower than
the taxable equivalent of the yield to maturity of the Bonds
based on prevailing market prices immediately prior to the
first public announcement of the proposed transaction) which
would be likely to be obtained in an arm's-length transaction
with respect to such interests, rights, assets and/or
properties between an informed and willing lessee and an
informed and willing lessor, neither under any compulsion to
lease; (iii) the amount of investment with respect to such
interests, rights, assets and/or properties which, together
with a reasonable return thereon, would be likely to be
recovered through ordinary business operations or otherwise,
(iv) the cost, accumulated depreciation and replacement cost
with respect to such interests, rights, assets and/or
properties and/or (v) any other relevant factors; provided,
however, that (x) Fair Value shall be determined without
deduction for any mortgage, deed of trust, pledge, security
interest, encumbrance, lease, reservation, restriction,
servitude, charge or similar right or any other lien of any
kind and (y) the Fair Value to the transferee of any property
shall not reflect any reduction relating to the fact that such
property may be of less value to a Person which is not the
owner, lessee or operator of the property or any portion
thereof than to a Person which is such owner, lessee or
operator. Fair Value may be determined, without physical
inspection, by the use of accounting and engineering records
and other data maintained by the Company or the transferee or
otherwise available to the Expert certifying the same.
SECTION 7.02 Instrument Furnished to the Pollution Control
Corporation and 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.
SECTION 7.03 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. This Article
VII shall not apply to any sale, transfer or other disposition by
the Company of all of its assets, as or substantially as an
entirety, as contemplated in Section 6.01.
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
SECTION 8.01 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,
which failure shall have resulted in an "Event of Default"
under clause (a) or (b) 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 sixty (60) 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).
SECTION 8.02 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 and 6.01 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.
SECTION 8.03 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.
(b) 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.
(c) Any amounts collected by the Trustee from the Company
pursuant to this Section 8.03 shall be applied in accordance with
the Indenture.
SECTION 8.04 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.
SECTION 8.05 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.
SECTION 8.06 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
SECTION 9.01 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.
SECTION 9.02 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
MISCELLANEOUS
SECTION 10.01 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 covenants contained in
Section 5.03, 5.04, Section 6.04 and 8.05 hereof shall survive
the termination of this Agreement.
SECTION 10.02 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; and if to the Company, at 220 West Sixth Street,
Tucson, Arizona 85702, Attention: Treasurer; and if to the
Trustee, at such address as shall be designated by it in 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.
SECTION 10.03 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 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 from the sale of the Bonds, or from the investment or
reinvestment of any of the foregoing, as provided herein and in
the Indenture.
SECTION 10.04 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.
SECTION 10.05 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.
SECTION 10.06 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.
SECTION 10.07 Governing Law. The laws of the State of
Arizona shall govern the construction and enforcement of this
Agreement, except that the provisions of Section 13.09 of the
Indenture, construed as provided in Section 13.07 of the
Indenture, shall apply to this Agreement as if contained herein.
SECTION 10.08 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.
<PAGE>
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 /s/ Bruce J. Nordstrom
-----------------------------
President
/s/ Terrence J. Rice
----------------------
Secretary
TUCSON ELECTRIC POWER COMPANY
ATTEST: By /s/ Kevin Larson
----------------------------
Vice President
/s/ Vincent J. Nitido
-------------------------
Assistant Secretary
<PAGE>
EXHIBIT A
A portion of the costs of the construction, improvement or
equipping of the following Facilities will be financed or
refinanced with the proceeds of the Pollution Control Revenue
Bonds, 1997 Series A (Tucson Electric Power Company Navajo
Project) issued by Coconino County, Arizona Pollution Control
Corporation and referred to in the foregoing Loan Agreement.
____________________
Sulphur dioxide abatement and related facilities more
particularly described in the Tax Certificate and Agreement,
dated as of April 29, 1997, between the Coconino County, Arizona
Pollution Control Corporation and Tucson Electric Power Company.
EXHIBIT 4d
=================================================================
INDENTURE OF TRUST
BETWEEN
COCONINO COUNTY, ARIZONA
POLLUTION CONTROL CORPORATION
AND
FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION
-----------------
DATED AS OF APRIL 1, 1997
-----------------
AUTHORIZING
POLLUTION CONTROL REVENUE BONDS,
1997 SERIES A
(TUCSON ELECTRIC POWER COMPANY NAVAJO PROJECT)
=================================================================
<PAGE>
(i)
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. . . . . . . . . . . . . 9
Section 2.02. Form of Bonds. . . . . . . . . . . . . . . 9
Section 2.03. Execution of Bonds. . . . . . . . . . . . . 10
Section 2.04. Authentication of Bonds. . . . . . . . . . 11
Section 2.05. Bonds Not General Obligations. . . . . . . 11
Section 2.06. Prerequisites to Authentication of Bonds. . 11
Section 2.07. Lost or Destroyed Bonds or Bonds Canceled in
Error . . . . . . . . . . . . . . . . . . 12
Section 2.08. Transfer, Registration and
Exchange of Bonds . . . . . . . . . . . . . 12
Section 2.09. Other Obligations . . . . . . . . . . . . . 14
Section 2.10 Temporary Bonds. . . . . . . . . . . . . . 14
Section 2.11. Cancellation of Bonds . . . . . . . . . . . 14
Section 2.12. Payment of Principal and Interest . . . . . 14
Section 2.13. Applicability of Book-Entry Provisions . . 14
ARTICLE III
REDEMPTION OF BONDS
Section 3.01. Redemption Provisions . . . . . . . . . . 15
Section 3.02. Selection of Bonds to be Redeemed . . . . 16
Section 3.03. Procedure for Redemption . . . . . . . . 17
Section 3.04. Payment of Redemption Price . . . . . . . 17
Section 3.05. No Partial Redemption After Default . . . 17
---------------------
* 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.
<PAGE>
(ii)
ARTICLE IV
THE BOND FUND
Section 4.01. Creation of Bond Fund . . . . . . . . . . 18
Section 4.02. Liens . . . . . . . . . . . . . . . . . . 18
Section 4.03. Deposits into Bond Fund . . . . . . . . . 18
Section 4.04. Use of Moneys in Bond Fund . . . . . . . 18
Section 4.05. Custody of Bond Fund; Withdrawal
of Moneys . . . . . . . . . . . . . . 19
Section 4.06. Bonds Not Presented for Payment . . . . . 19
Section 4.07. Moneys Held in Trust . . . . . . . . . . 20
ARTICLE V
THE CONSTRUCTION FUND
Section 5.01. Creation of, and Disbursements from,
Construction Fund . . . . . . . . . . 20
Section 5.02. Completion of Facilities; Termination of
Construction. . . . . . . . . . . . . . 21
Section 5.03. Redemption of All Outstanding Bonds . . . 22
Section 5.04. Acceleration of Bonds . . . . . . . . . . 22
Section 5.05. Refunding of Bonds . . . . . . . . . . . 22
Section 5.06. Moneys Held in Trust . . . . . . . . . . 23
ARTICLE VI
INVESTMENTS
Section 6.01. Investments . . . . . . . . . . . . . . . 23
ARTICLE VII
GENERAL COVENANTS
Section 7.01. No General Obligations . . . . . . . . . 23
Section 7.02. Performance of Covenants of the Pollution
Control Corporation; Representations. . 24
Section 7.03. Maintenance of Rights and Powers;
Compliance with Laws . . . . . . . . . 24
Section 7.04. Enforcement of Obligations of the Company;
Amendments . . . . . . . . . . . . . . 24
Section 7.05. Further Instruments. . . . . . . . . . . 24
Section 7.06. No Disposition of Trust Estate. . . . . . 25
Section 7.07. Financing Statements. . . . . . . . . . 25
Section 7.08. Tax Covenants; Rebate Fund. . . . . . . . 25
Section 7.09. Notices of Trustee. . . . . . . . . . . . 26
ARTICLE VIII
DEFEASANCE
Section 8.01. Defeasance. . . . . . . . . . . . . . . . 26
<PAGE>
(iii)
ARTICLE IX
DEFAULTS AND REMEDIES
Section 9.01. Events of Default. . . . . . . . . . . . 27
Section 9.02. Remedies. . . . . . . . . . . . . . . . . 28
Section 9.03. Restoration to Former Position. . . . . . 29
Section 9.04. Owners' Right to Direct Proceedings. . . 29
Section 9.05. Limitation on Owners' Right to Institute
Proceedings. . . . . . . . . . . . . 29
Section 9.06. No Impairment of Right to
Enforce Payment. . . . . . . . . . . . 29
Section 9.07. Proceedings by Trustee without Possession
of Bonds. . . . . . . . . . . . . . . 29
Section 9.08. No Remedy Exclusive. . . . . . . . . . . 30
Section 9.09. No Waiver of Remedies. . . . . . . . . . 30
Section 9.10. Application of Moneys. . . . . . . . . . 30
Section 9.11. Severability of Remedies. . . . . . . . . 31
ARTICLE X
TRUSTEE; PAYING AGENT AND CO-PAYING AGENTS; REGISTRAR
Section 10.01. Acceptance of Trusts. . . . . . . . . . . 31
Section 10.02. No Responsibility for Recitals. . . . . . 31
Section 10.03. Limitations on Liability. . . . . . . . . 31
Section 10.04. Compensation, Expenses and Advances. . . 31
Section 10.05. Notice of Events of Default. . . . . . . 32
Section 10.06. Action by Trustee. . . . . . . . . . . . 32
Section 10.07. Good Faith Reliance. . . . . . . . . . . 32
Section 10.08. Dealings in Bonds and with the Pollution
Control Corporation and the Company. . 33
Section 10.09. Allowance of Interest. . . . . . . . . . 33
Section 10.10. Construction of Indenture. . . . . . . . 33
Section 10.11. Resignation of Trustee. . . . . . . . . . 33
Section 10.12. Removal of Trustee. . . . . . . . . . . . 33
Section 10.13. Appointment of Successor Trustee. . . . . 34
Section 10.14. Qualifications of Successor Trustee. . . 34
Section 10.15. Judicial Appointment of
Successor Trustee.. . . . . . . . . . . 34
Section 10.16. Acceptance of Trusts by Successor Trustee. 35
Section 10.17. Successor by Merger or Consolidation. . . 35
Section 10.18. Standard of Care. . . . . . . . . . . . . 35
Section 10.19. Notice to Owners of Bonds of Event of
Default. . . . . . . . . . . . . . . 35
Section 10.20. Intervention in Litigation of the
Pollution Control Corporation. . . . . 35
Section 10.21. Paying Agent; Co-Paying Agents. . . . . . 35
Section 10.22. Qualifications of Paying Agent and
Co-Paying Agents; Resignation; Removal. 36
Section 10.23. Registrar. . . . . . . . . . . . . . . . 36
Section 10.24. Qualifications of Registrar; Resignation;
Removal. . . . . . . . . . . . . . . . 37
Section 10.25. Several Capacities. . . . . . . . . . . . 37
<PAGE>
(iv)
ARTICLE XI
EXECUTION OF INSTRUMENTS BY OWNERS OF BONDS AND
PROOF OF OWNERSHIP OF BONDS
Section 11.01. Execution of Instruments; Proof of
Ownership. . . . . . . . . . . . . . . 38
ARTICLE XII
MODIFICATION OF THIS INDENTURE AND THE LOAN AGREEMENT
Section 12.01. Limitations. . . . . . . . . . . . . . . 38
Section 12.02. Supplemental Indentures without Owner
Consent. . . . . . . . . . . . . . . . 38
Section 12.03. Supplemental Indentures with Consent of
Owners. . . . . . . . . . . . . . . . . 39
Section 12.04. Effect of Supplemental Indenture. . . . . 40
Section 12.05. Consent of the Company. . . . . . . . . . 40
Section 12.06. Amendment of Loan Agreement without
Consent of Owners. . . . . . . . . . . 40
Section 12.07. Amendment of Loan Agreement with Consent
of Owners. . . . . . . . . . . . . . .. 41
ARTICLE XIII
MISCELLANEOUS
Section 13.01. Successors of the Pollution Control
Corporation. . . . . . . . . . . . . .. 41
Section 13.02. Parties in Interest. . . . . . . . . . . 41
Section 13.03. Severability. . . . . . . . . . . . . . . 42
Section 13.04. No Personal Liability of Pollution Control
Corporation Officials. . . . . . . . . 42
Section 13.05. Bonds Owned by the Pollution Control
Corporation or the Company. . . . . . . 42
Section 13.06. Counterparts. . . . . . . . . . . . . . . 42
Section 13.07. Governing Law. . . . . . . . . . . . . . 42
Section 13.08. Notices. . . . . . . . . . . . . . . . . 42
Section 13.09. Holidays. . . . . . . . . . . . . . . . . 43
Section 13.10. Statutory Notice Regarding Cancellation of
Contracts. . . . . . . . . . . . . . 43
Testimonium . . . . . . . . . . . . . . . . . . . . . . . . 44
Signatures and Seals . . . . . . . . . . . . . . . . . . . 44
Exhibit A - Form of Bond . . . . . . . . . . . . . . . . . . A-1
Exhibit B - Form of Endorsement of Transfer . . . . . . . . . B-1
Exhibit C - Form of Certificate of Authentication . . . . . . C-1
<PAGE>
INDENTURE OF TRUST
THIS INDENTURE OF TRUST, dated as of April 1, 1997 (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 $16,700,000 aggregate principal amount of its
Pollution Control Revenue Bonds, 1996 Series A (Tucson Electric
Power Company Project), all of which remain outstanding (the
"1996 Bonds"), the proceeds of which were loaned to the Tucson
Electric Power Company, an Arizona corporation (the "Company"),
for the purpose of financing a portion of the costs of the
acquisition, construction, improvement and equipping of certain
of the pollution control facilities (the "Facilities") described
in Exhibit A to the Loan Agreement, dated as of April 1, 1997
(the "Loan Agreement"), between the Pollution Control Corporation
and Company; and
WHEREAS, the Pollution Control Corporation proposes to issue
and sell its revenue bonds as provided herein (the "Bonds") for
the purpose of financing a portion of the costs of the
acquisition, construction, improvement and equipping certain
additional items of the Facilities and for the purpose of
refinancing, by the payment or redemption of the 1996 Bonds, or
provision therefor, the portion of the costs of the acquisition,
construction, improvement and equipping of the Facilities
previously financed with the proceeds of the 1996 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 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;
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:
ARTICLE I
DEFINITIONS
Section 1.01. 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.
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.
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.
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, including without
limitation, any successor obligor under Section 6.01 or 7.01 of
the Loan Agreement to the extent of the obligations assumed
thereunder.
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.
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;
(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) 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; (g)
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 (h) 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.
Depositary:
"Depositary" shall mean The Depository Trust Company or any
successor thereto as a securities repository for the Bonds.
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.
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
April 1, 1997, between the Pollution Control Corporation and the
Trustee, and any and all modifications, alterations, amendments
and supplements thereto.
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 and Registrar, hereunder if such entities shall
otherwise satisfy the requirements set forth above.
Loan Agreement:
"Loan Agreement" shall mean the Loan Agreement, dated as of
April 1, 1997, 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.
1954 Code:
"1954 Code" shall mean the Internal Revenue Code of 1954, as
amended.
1996 Bonds:
"1996 Bonds" shall mean the $16,700,000 aggregate principal
amount of the Pollution Control Corporation's Pollution Control
Revenue Bonds, 1996 Series A (Tucson Electric Power 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 2.08 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; and
(c) 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 2.08 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.
Rebate Fund:
"Rebate Fund" shall mean the fund created by Section 7.08
hereof.
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, 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
fifteenth (15th) day of the calendar month immediately preceding
each regularly scheduled interest payment date.
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.
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 thereof and hereof.
Tax Agreement:
"Tax Agreement" shall mean that tax certificate and agreement,
dated the date of the initial authentication and delivery of the
Bonds, 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.
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 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 the Rebate Fund), 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 in the Rebate Fund pursuant to
Section 7.08 hereof or (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.
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 13.08 hereof.
ARTICLE II
THE BONDS
Section 2.01. 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 Thirty-
six Million Seven Hundred Thousand Dollars ($36,700,000). Each
of the Bonds shall be designated by the title "Coconino County,
Arizona Pollution Control Corporation Pollution Control Revenue
Bond, 1997 Series A (Tucson Electric Power Company Navajo
Project)". The Bonds shall mature, subject to prior redemption
upon the terms and conditions hereinafter set forth, on October
1, 2032 and shall bear interest from the date thereof until
payment of the principal or redemption price thereof shall have
been made or provided for in accordance with the provisions
hereof, whether at maturity, upon redemption or otherwise, at the
rate of seven and one-eighth per centum (7 1/8%) per annum, with
interest thereon payable semi-annually on each October 1 and
April 1, commencing October 1, 1997. Interest shall be
calculated on the basis of a 360-day year consisting of twelve
30-day months.
Section 2.02. Form of Bonds. Bonds shall be authenticated
and delivered hereunder solely as fully registered bonds without
coupons in the denomination of $5,000 or integral multiples
thereof. Bonds shall be numbered as determined by the Trustee.
Bonds authenticated prior to the first interest payment date
shall be dated April 1, 1997. Bonds authenticated on or
subsequent to the first interest payment date shall be dated the
interest payment date next preceding the date of authentication
thereof, unless such date of authentication shall be an interest
payment date to which interest on the Bonds has been paid in full
or duly provided for, in which case they shall be dated such date
of authentication; provided, however, that if, as shown by the
records of the Trustee, interest on the Bonds shall be in
default, Bonds issued in exchange for Bonds surrendered for
transfer or exchange shall be dated the date to which interest
has been paid in full on the Bonds surrendered.
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 2.08 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, 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.
Section 2.03. 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 such officer 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.
Section 2.04. 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 2.04 is subject to the provisions of
Section 10.17 hereof.
Section 2.05. 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.
Section 2.06. 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 2.06.
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) 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
(d) 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.
Section 2.07. 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
2.07.
Every substitute Bond issued pursuant to the provisions of
this Section 2.07 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.
Section 2.08. 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 Paying
Agent, any Co-Paying Agent and the Registrar 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 2.02 hereof, interest on
such Bond and for all other purposes, and neither the Pollution
Control Corporation, the Trustee, the Paying Agent, any Co-Paying
Agent nor the Registrar 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.
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 or (b) to make any exchange or
registration of transfer of any Bonds called for redemption.
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 and 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.
Section 2.09. 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.
Section 2.10 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.
Section 2.11. 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.
Section 2.12. 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.
Section 2.13. Applicability of Book-Entry Provisions.
Anything in this Indenture to the contrary notwithstanding, (a)
the provisions of the Blanket Issuer Letter of Representations,
dated October 12, 1995, between the Pollution Control Corporation
and The Depository Trust Company relating to the manner of and
procedures for payment and redemption of Bonds and related
matters shall apply so long as such Depositary shall be the Owner
of all Outstanding Bonds and (b) the Pollution Control
Corporation, the Trustee or the Paying Agent, as applicable, may
enter into a similar agreement, on terms satisfactory to the
Company, with any subsequent Depositary and the provisions
thereof shall apply so long as such Depositary shall be the Owner
of all Outstanding Bonds.
ARTICLE III
REDEMPTION OF BONDS
Section 3.01. Redemption Provisions. (a) The Bonds shall
be subject to redemption by the Pollution Control Corporation, at
the direction of the Company, on any date on or after October 1,
2007 in whole at any time or in part from time to time, at the
applicable redemption price (expressed as a percentage of
principal amount) set forth below, plus accrued interest to the
redemption date:
Redemption Period Redemption Price
----------------- ----------------
October 1, 2007 through
September 30, 2008 102%
October 1, 2008 through
September 30, 2009 101%
October 1, 2009 and thereafter 100%
(b) 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) 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 (c) 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
$5,000, 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) or (b) hereof and on which Bonds, in such
amount, are otherwise redeemable at the principal amount thereof
under subsection (a) or (b) of this Section 3.01.
Section 3.02. Selection of Bonds to be Redeemed. 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 the portion of any Bond to be
redeemed shall be in the principal amount of $5,000 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 $5,000. 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. If the Owner of any such Bond of a denomination
greater than $5,000 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 $5,000 unit
or units of principal amount called for redemption (and to that
extent only).
Section 3.03. 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 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. 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 a
copy of each such notice of redemption.
(b) With respect to any notice of redemption of Bonds in
accordance with subsection (a) or (b) 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 shall cease to bear interest on the
specified redemption date provided that moneys sufficient to pay
the principal of, premium, if any, and interest on such Bonds
shall be on deposit with the Trustee on the date fixed for
redemption so that such Bonds will be deemed to be paid in
accordance with Article VIII hereof.
Section 3.04. 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.
Section 3.05. 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) or (b) 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 other than a partial redemption in
connection with an offer by the Company to purchase all Bonds
Outstanding as contemplated in the first proviso to the first
sentence of Section 3.02 hereof.
ARTICLE IV
THE BOND FUND
Section 4.01. 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, 1997 Series A (Tucson Electric Power Company
Navajo Project) Bond Fund". The Trustee shall establish and
maintain within the Bond Fund a "Capital Account", an "Investment
Account" and a "General Account". In addition, the Trustee shall
establish and maintain such segregated subaccounts within the
Capital Account or the Investment Account and such other
segregated subaccounts within the Bond Fund 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.
Section 4.02. 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.
Section 4.03. 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, such payments and moneys to be
deposited into the General Account; and
(v) 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.
Section 4.04. Use of Moneys in Bond Fund. (a) Moneys, if
any, paid into the Bond Fund pursuant to clause (i) of Section
4.03(a) hereof shall be applied to the payment of interest on the
Bonds. Except as otherwise provided in Sections 4.06, 9.01 and
10.04 hereof, all other 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.
(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, or to the redemption, at the direction of the
Company, of Bonds pursuant to subsection (b) or, if applicable,
(a) 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(d)
hereof, (ii) to the payment of principal upon the redemption,
from time to time, of Bonds pursuant to Section 3.01(d) 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
tax purposes of the interest on the Bonds.
(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.
Section 4.05. 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.
Section 4.06. 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
the Owners 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 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 Pollution Control
Corporation, the Trustee and the Paying Agent with respect to
such moneys shall thereupon cease.
Section 4.07. 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, shall be held by the Trustee, the Paying Agent
or any Co-Paying 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 the Rebate 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
for the benefit of the Owners from time to time of the Bonds.
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.
ARTICLE V
THE CONSTRUCTION FUND
Section 5.01. 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,
1997 Series A (Tucson Electric Power Company Navajo 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.
(b) The proceeds from the issuance and sale of the Bonds,
other than the $16,700,000 deposited in escrow with the trustee
for the 1996 Bonds as provided in Section 4.03 of the Loan
Agreement and 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.
(c) 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.
(d) 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.
Section 5.02. 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, 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.
Section 5.03. 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.
Section 5.04. 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.
Section 5.05. 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.
Section 5.06. Moneys Held in Trust. All moneys and
Investment Securities held by the Trustee in the Construction
Fund, shall be held by the Trustee, in trust and such moneys and
Investment Securities (other than any 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.
ARTICLE VI
INVESTMENTS
Section 6.01. 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. Any
Investment Securities may be purchased subject to options or
other rights in third parties to acquire the same. In addition,
except with respect to moneys or Investment Securities held
within 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.
ARTICLE VII
GENERAL COVENANTS
Section 7.01. 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 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.
Section 7.02. 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.
Section 7.03. 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.
Section 7.04. 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. 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 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).
Section 7.05. 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.
Section 7.06. 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.
Section 7.07. 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, and the Pollution Control Corporation shall
cooperate with the Trustee and the Company in causing appropriate
continuation statements 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.
Section 7.08. Tax Covenants; Rebate Fund. (a) The
Pollution Control Corporation covenants for the benefit of all
Owners from time to time of the Bonds 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.
(b) 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, 1997 Series A
(Tucson Electric Power Company Navajo Project) Rebate Fund"
(herein called the "Rebate Fund") in accordance with the
provisions of the Tax Agreement. 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.
(c) 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, shall be
withdrawn and remitted to the Company.
(d) 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.
Section 7.09. 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 Mail or Publication given
by it pursuant to any provision hereof.
ARTICLE VIII
DEFEASANCE
Section 8.01. 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 any portion of such Bond in the
principal amount of $5,000 or any integral multiple thereof, 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.
All or any portion of Outstanding Bonds or portions of Bonds
in principal amounts of $5,000 or any integral multiple thereof,
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
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 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, 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 Owners 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.
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; provided,
that 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 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. 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
the Trustee with a certificate of an accountant or an 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.
ARTICLE IX
DEFAULTS AND REMEDIES
Section 9.01. 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 thirty (30) days;
(c) a failure by the Pollution Control Corporation to
observe and perform any covenant, condition, agreement or
provision (other than as specified in clauses (a) and (b) 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 sixty (60) 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 33% in principal amount of
the Bonds then Outstanding, 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, 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, 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) and (b) of the preceding paragraph, the
Trustee may, and at the written request of Owners of not less
than 33% in principal amount of Bonds then Outstanding shall, by
written notice to the Pollution Control Corporation 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 by Mail to all Owners of Outstanding Bonds.
The provisions of the preceding paragraph, however, are
subject 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 and the Company,
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.
Section 9.02. 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 Owners of not less than a majority 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 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 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.
Section 9.03. 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.
Section 9.04. Owners' Right to Direct Proceedings.
Anything in this Indenture to the contrary notwithstanding,
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 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.
Section 9.05. 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 a
majority 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.
Section 9.06. 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.
Section 9.07. 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.
Section 9.08. 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 or
under the Loan Agreement, now or hereafter existing at law or in
equity or by statute.
Section 9.09. 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.
Section 9.10. 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:
(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.
(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.
(c) If the principal of all the Bonds shall have become
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.
Section 9.11. 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.
ARTICLE X
TRUSTEE; PAYING AGENT AND CO-PAYING AGENTS; REGISTRAR
Section 10.01. 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.
Section 10.02. 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.
Section 10.03. 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.
Section 10.04. Compensation, Expenses and Advances. The
Trustee, the Paying Agent and any Co-Paying Agent and the
Registrar 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
and the Registrar 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 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.
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.
Section 10.05. 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 33% in
principal amount of the Bonds then Outstanding. 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.
Section 10.06. 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 a majority in principal amount of the Bonds then
Outstanding, 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. 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 without such security or indemnity.
Section 10.07. 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 nor the Registrar 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.
Section 10.08. Dealings in Bonds and with the Pollution
Control Corporation and the Company. The Trustee, the Paying
Agent, any Co-Paying Agent or the Registrar, 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 or the Registrar,
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.
Section 10.09. 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 and V with respect
to interest on investments.
Section 10.10. 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.
Section 10.11. 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 Company, 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.
Section 10.12. Removal of Trustee. The Trustee may be
removed at any time by filing with the Trustee so removed, and
with the Pollution Control Corporation 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.
Section 10.13. 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 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. 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.
(b) 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. 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.
(c) 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.
Section 10.14. 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.
Section 10.15. 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.
Section 10.16. 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.
Section 10.17. 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 or
any corporation or association succeeding to the corporate trust
business of the Trustee, 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.
Section 10.18. 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.
Section 10.19. 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 by Mail to all Owners of Outstanding Bonds.
Section 10.20. 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 a majority in principal amount of the Bonds
then Outstanding if permitted by the court having jurisdiction in
the premises.
Section 10.21. 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.
Section 10.22. 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. 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.
Section 10.23. 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 and any Co-Paying Agent shall be
furnished such records and other information, at such times, as
shall be required to enable the Paying Agent and such Co-Paying
Agent to perform the duties and obligations imposed upon them
hereunder.
Section 10.24. 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.
Section 10.25. 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 and the
Registrar, and in any combination of such capacities to the
extent permitted by law.
ARTICLE XI
EXECUTION OF INSTRUMENTS BY OWNERS OF BONDS AND
PROOF OF OWNERSHIP OF BONDS
Section 11.01. 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 2.08 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.
ARTICLE XII
MODIFICATION OF THIS INDENTURE AND THE LOAN AGREEMENT
Section 12.01. 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.
Section 12.02. 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, 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;
(g) 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;
(h) 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;
and
(i) to provide any additional procedures, covenants or
agreements necessary or desirable to maintain the tax-exempt
status of interest on the Bonds.
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.
Section 12.03. 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 reduction in the principal amount or
redemption price of any Outstanding Bond or a change in 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.
(b) 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. 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.
(c) 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, in and of itself, adversely affect the
exclusion from gross income for federal tax purposes of the
interest on the Bonds.
(d) 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.
Section 12.04. Effect of Supplemental Indenture. Upon the
execution and delivery of any Supplemental Indenture pursuant to
the provisions of this Article XII, 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.
Section 12.05. Consent of the Company. 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 requires a
revision of the Loan Agreement shall not become effective unless
and until the Company shall have consented to such Supplemental
Indenture.
Section 12.06. 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.
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.
Section 12.07. 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. 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. 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.
ARTICLE XIII
MISCELLANEOUS
Section 13.01. 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.
Section 13.02. 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 and the Trustee 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 and the Trustee
and their successors and assigns and the Owners of the Bonds.
Section 13.03. 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.
Section 13.04. 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.
Section 13.05. 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 13.05) 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. 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.
Section 13.06. 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.
Section 13.07. 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 13.09 hereof and the computation of any period of
grace provided herein.
Section 13.08. 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 Paying Agent, any Co-Paying Agent or
the Registrar 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: Vice President; if to the Paying Agent, any
Co-Paying Agent or the Registrar, at the address designated in
the acceptance of appointment or engagement. 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.
Section 13.09. 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.
Section 13.10. 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.
<PAGE>
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 on its behalf by its
Vice President, all as of the day and year first above written.
COCONINO COUNTY, ARIZONA
POLLUTION CONTROL CORPORATION
Attest: By: /s/ Bruce J. Nordstrom
--------------------------
President
/s/ Terrence J. Rice
-----------------------------------
Secretary
FIRST TRUST OF NEW YORK,
NATIONAL ASSOCIATION
Attest: By: /s/ Patrick J. Crowley
--------------------------
Vice President
/s/ Steven Haas
-----------------------------------
Assistant Secretary
<PAGE>
EXHIBIT A
(FORM OF BOND)
No.
COCONINO COUNTY, ARIZONA
POLLUTION CONTROL CORPORATION
POLLUTION CONTROL REVENUE BOND,
1997 SERIES A
(TUCSON ELECTRIC POWER COMPANY NAVAJO PROJECT)
INTEREST RATE (PER ANNUM):
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 payment of said Principal
Amount has been made or duly provided, from the date hereof, at
the Interest Rate set forth above, semi-annually on the first
days of October and April in each year, commencing October 1,
1997. Interest will be calculated on the basis of a 360-day year
of twelve 30-day months.
The principal 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 (as
hereinafter defined), 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 Owner of this Bond as
of the close of business on the Record Date (as defined in the
Indenture), at the registered address of such Registered Owner;
notwithstanding the foregoing, upon request to the Paying Agent
by a Registered 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 Registered Owner by wire transfer to the
account maintained within the continental United States specified
by such Registered Owner or, if such Registered Owner maintains
an account with the entity acting as Paying Agent, by deposit
into such account. Payment of the principal of and premium, if
any, and interest on 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, 1997 Series A (Tucson Electric Power Company
Navajo Project) (the "Bonds") of the Pollution Control
Corporation, aggregating Thirty-six Million Seven Hundred
Thousand Dollars ($36,700,000) in principal amount, 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 April 1, 1997 (the "Indenture"), between the
Pollution Control Corporation and First Trust of New York,
National Association, as trustee (the "Trustee"), for the purpose
of financing and refinancing a portion of 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 April 1, 1997 (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 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 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 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 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 its
administrative expenses and certain other rights).
The transfer of this Bond shall be registered upon the
registration books kept at the principal office of First Trust of
New York, National Association, 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.
In the manner and with the effect provided in the Indenture,
each of the Bonds may be redeemed prior to maturity, as follows:
(a) The Bonds shall be subject to redemption by the
Pollution Control Corporation, at the direction of the
Company, on any date on or after October 1, 2007 in whole at
any time or in part from time to time, at the applicable
redemption price (expressed as a percentage of principal
amount) set forth below, plus accrued interest to the
redemption date:
Redemption Period Redemption Price
----------------- ----------------
October 1, 2007 through
September 30, 2008 102%
October 1, 2008 through
September 30, 2009 101%
October 1, 2009 and thereafter 100%
(b) 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) 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 (the "1954 Code"). No
determination by any court or administrative agency shall be
considered final for the purposes of this paragraph (c) 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, 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 $5,000, 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
gross income for federal tax purposes of the interest thereon.
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.
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 to the date
fixed for redemption to the Registered 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) or (b)
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 shall cease to bear interest on the specified
redemption date provided that moneys sufficient to pay the
principal of, premium, if any, and interest on such Bonds shall
be on deposit with the Trustee on the date fixed for redemption
so that such Bonds will be deemed to be paid in accordance with
the Indenture and such Bonds shall thereafter cease to be
entitled to any lien, benefit or security under the Indenture.
The Registered 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 Registered 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 and the Registered Owners
of the Bonds. The Registered 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.
Among other things, 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.
Among other things, the Loan Agreement contains terms,
provisions and conditions relating to the consolidation or merger
of the Company with or into, and the sale, transfer or other
disposition of assets to, another Person (as defined in the Loan
Agreement), to the assumption by such other Person, in certain
circumstances, of all of the obligations of the Company under the
Loan Agreement and to the release and discharge of the Company,
in certain circumstances, from such obligations.
The Pollution Control Corporation, the Trustee, the Registrar,
the Paying 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 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 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 attested with the manual or facsimile signature of its
Secretary or Assistant Secretary.
COCONINO COUNTY, ARIZONA
POLLUTION CONTROL CORPORATION
By
-----------------------------------------
President
ATTEST:
-------------------------------------------
Secretary
<PAGE>
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.
<PAGE>
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 4e
=================================================================
LOAN AGREEMENT
BETWEEN
COCONINO COUNTY, ARIZONA
POLLUTION CONTROL CORPORATION
AND
TUCSON ELECTRIC POWER COMPANY
---------------
DATED AS OF APRIL 1, 1997
---------------
RELATING TO
POLLUTION CONTROL REVENUE BONDS,
1997 SERIES B
(TUCSON ELECTRIC POWER COMPANY NAVAJO PROJECT)
=================================================================
<PAGE>
TABLE OF CONTENTS*
Page
----
LOAN AGREEMENT . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions . . . . . . . . . . . . . . . 2
SECTION 1.02. Incorporation of Certain Definitions by
Reference . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.01. Representations and Warranties of the
Pollution Control Corporation . . . . . . . . . . . . . 5
SECTION 2.02. Representations and Warranties of the
Company . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE III
THE FACILITIES
SECTION 3.01. Facilities; Property of the Company . . . 6
SECTION 3.02. Revision of Plans and Specifications . . 6
SECTION 3.03. Maintenance of Facilities; Remodeling . . 6
SECTION 3.04. Insurance . . . . . . . . . . . . . . . . 7
SECTION 3.05. Condemnation . . . . . . . . . . . . . . 7
SECTION 3.06. Termination of Construction . . . . . . . 7
ARTICLE IV
ISSUANCE OF THE BONDS; THE LOANS; DISPOSITION OF PROCEEDS
OF THE BONDS
SECTION 4.01. Issuance of the Bonds . . . . . . . . . . 7
SECTION 4.02. Issuance of Other Obligations. . . . . . 7
SECTION 4.03. The Loan; Disposition of Bond Proceeds. . 7
SECTION 4.04. Investment of Moneys in Funds and Accounts 7
ARTICLE V
LOAN PAYMENTS; OTHER OBLIGATIONS
SECTION 5.01. Loan Payments. . . . . . . . . . . . . . 8
SECTION 5.02. Payments Assigned; Obligation Absolute . 8
SECTION 5.03. Payment of Expenses . . . . . . . . . . . 8
SECTION 5.04. Indemnification . . . . . . . . . . . . . 8
SECTION 5.05. Payment of Taxes; Discharge of Liens . . 9
-------------------------
* 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.
<PAGE>
ARTICLE VI
SPECIAL COVENANTS
SECTION 6.01. Maintenance of Corporate Existence . . . 9
SECTION 6.02. Permits or Licenses . . . . . . . . . . . 10
SECTION 6.03. Pollution Control Corporation's Access to
Facilities .. . . . . . . . . . . . . . . 10
SECTION 6.04. Tax-Exempt Status of Interest on Bonds. . 10
SECTION 6.05. Use of Facilities . . . . . . . . . . . . 11
SECTION 6.06. Financing Statements . . . . . . . . . . 11
ARTICLE VII
ASSIGNMENT, LEASING AND SELLING
SECTION 7.01. Conditions . . . . . . . . . . . . . . . 11
SECTION 7.02. Instrument Furnished to Pollution Control
Corporation and Trustee . . . . . . . . . 13
SECTION 7.03. Limitation . . . . . . . . . . . . . . . 13
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
SECTION 8.01. Events of Default . . . . . . . . . . . . 13
SECTION 8.02. Force Majeure . . . . . . . . . . . . . . 14
SECTION 8.03. Remedies . . . . . . . . . . . . . . . . 14
SECTION 8.04. No Remedy Exclusive . . . . . . . . . . . 14
SECTION 8.05. Reimbursement of Attorneys' and Agents'
Fees . . . . . . . . . . . . . . . . . . 14
SECTION 8.06. Waiver of Breach . . . . . . . . . . . . 15
ARTICLE IX
REDEMPTION OF BONDS
SECTION 9.01. Redemption of Bonds . . . . . . . . . . . 15
SECTION 9.02. Compliance with the Indenture . . . . . . 15
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Term of Agreement . . . . . . . . . . . 15
SECTION 10.02. Notices . . . . . . . . . . . . . . . . 15
SECTION 10.03. Parties in Interest . . . . . . . . . . 16
SECTION 10.04. Amendments . . . . . . . . . . . . . . . 16
SECTION 10.05. Counterparts . . . . . . . . . . . . . . 16
SECTION 10.06. Severability . . . . . . . . . . . . . . 16
SECTION 10.07. Governing Law . . . . . . . . . . . . . 16
SECTION 10.08. Notice Regarding Cancellation of
Contracts. . . . . . . . . . . . . . . 16
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . 18
Exhibit A - Description of the Facilities . . . . . . . . . . A-1
<PAGE>
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of April 1, 1997 (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 formerly known as Tucson Gas & Electric
Company (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) (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 has also heretofore
issued and sold $14,700,000 aggregate principal amount of its
Pollution Control Refunding Revenue Bonds, 1996 Series B (Tucson
Electric Power Company Project), all of which remain outstanding
(the "1996 Bonds"), the proceeds of which were loaned to the
Company to pay the outstanding principal amount of the 1975
Bonds; and
WHEREAS, the Pollution Control Corporation proposes to issue
and sell its revenue bonds for the purpose of refinancing, by the
payment or redemption of the 1996 Bonds, or provisions therefor,
a portion of the cost of the pollution control facilities
described in Exhibit A hereto (the "Facilities") 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
SECTION 1.01. 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.
Agreement:
"Agreement" shall mean this Loan Agreement, dated as of April
1, 1997, 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.
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, 1997 Series B (Tucson Electric Power Company Navajo
Project) of the Pollution Control Corporation.
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, including, without
limitation, any successor obligor under Section 6.01 or 7.01 to
the extent of the obligations assumed thereunder.
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.
Indenture:
"Indenture" shall mean the Indenture of Trust, dated as of
April 1, 1997, between the Pollution Control Corporation and the
Trustee 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 hereof.
1954 Code:
"1954 Code" shall mean the Internal Revenue Code of 1954, as
amended.
1996 Bonds:
"1996 Bonds" shall mean the $14,700,000 aggregate principal
amount of the Pollution Control Corporation's Pollution Control
Refunding Revenue Bonds, 1996 Series B (Tucson Electric Power
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; and
(c) 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, or 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.
Tax Agreement:
"Tax Agreement" shall mean that tax certificate and agreement,
dated the date of the initial authentication and delivery of the
Bonds, 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.
Trustee:
"Trustee" shall mean First Trust of New York, National
Association, as trustee under the Indenture, its successors in
trust and their assigns.
SECTION 1.02. Incorporation of Certain Definitions by
Reference. Each capitalized term used herein and not otherwise
defined herein shall have the meaning set forth in the Indenture.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.01. 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 any 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.
SECTION 2.02. 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; and
(f) 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 refinance the
Facilities through the payment or redemption of the 1996
Bonds, or provisions therefor.
ARTICLE III
THE FACILITIES
SECTION 3.01. 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.
SECTION 3.02. 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.
SECTION 3.03. 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.
SECTION 3.04. 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.
SECTION 3.05. 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.
SECTION 3.06. 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
SECTION 4.01. 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.
SECTION 4.02. 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.
SECTION 4.03. The Loan; Disposition of Bond Proceeds. The
Pollution Control Corporation and the Company shall enter into
escrow arrangements with the trustee for the 1996 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 1996 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.
SECTION 4.04. Investment of Moneys in Funds and Accounts.
The Company and the Pollution Control Corporation agree that any
moneys held in any fund or account created by the Indenture shall
be invested as provided in the Indenture.
ARTICLE V
LOAN PAYMENTS; OTHER OBLIGATIONS
SECTION 5.01. 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.
SECTION 5.02. 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) 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 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.
SECTION 5.03. Payment of Expenses. The Company shall pay all
Administration Expenses, 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 shall be made directly to such entities.
SECTION 5.04. Indemnification. The Company releases the
Pollution Control Corporation, the Trustee and their directors,
officers, employees and agents from, agrees that the Pollution
Control Corporation and the Trustee shall not be liable for, and
agrees to indemnify and hold the Pollution Control Corporation,
the Trustee and any predecessor Trustee and their directors,
officers, employees and agents free and harmless from, any
liability (including, without limitation, attorneys' and other
agents' fees and expenses) for any loss or damage to property or
any injury to or death of any person 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 and any predecessor Trustee 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.
SECTION 5.05. 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, 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, 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
SECTION 6.01. Maintenance of Corporate Existence. Except as
permitted in this Section 6.01, the Company shall maintain its
corporate existence, shall not sell, transfer or otherwise
dispose of all of its assets, as or substantially as an entirety,
and shall 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 of its assets, as
or substantially as an entirety, 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 under this
Agreement, including, without limitation, the obligations of the
Company under Section 5.01 hereof. Upon such an assumption
following any such sale, transfer or other disposition of assets,
the Company shall be released and discharged from all liability
in respect of all obligations under this Agreement.
Notwithstanding the foregoing, in the case of any such sale,
transfer or other disposition of assets, which do not include the
Facilities, the Company shall remain liable in respect of all
obligations under this Agreement other than the obligations under
Section 5.01 hereof, and the transferee shall not be required to
assume any obligations hereunder other than the obligations under
Section 5.01 hereof; provided, however, that the transferee shall
be required to assume all such other obligations unless the
Company shall have delivered to the Pollution Control Corporation
and the Trustee an opinion of Bond Counsel to the effect that the
non-assumption by the transferee of such other obligations will
not impair the validity under the Act of the Bonds and will not
adversely affect the exclusion from gross income for federal tax
purposes of interest on the Bonds.
If consolidation, merger or sale, transfer or other
disposition 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.
Anything in this Agreement to the contrary notwithstanding,
the sale, transfer or other disposition by the Company of all of
its facilities (a) for the generation of electric energy, (b) for
the transmission of electric energy or (c) for the distribution
of electric energy, in each case considered alone, or all of its
facilities described in clauses (a) and (b), considered together,
or all of its facilities described in clauses (b) and (c),
considered together, shall in no event be deemed to constitute a
sale, transfer or other disposition of all the properties of the
Company, as or substantially as an entirety, unless, immediately
following such sale, transfer or other disposition, the Company
shall own no properties in the other such categories of property
not so sold, transferred or otherwise disposed of. The character
of particular facilities shall be determined by reference to the
Uniform System of Accounts prescribed for public utilities and
licensees subject to the Federal Power Act, as amended, to the
extent applicable.
SECTION 6.02. 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.
SECTION 6.03. 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.
SECTION 6.04. 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
the Rebate Requirement as defined and 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 Facilities 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.
SECTION 6.05. Use of Facilities. So long as any Bonds are
Outstanding and 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
and in the Tax Agreement.
SECTION 6.06. 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.
ARTICLE VII
ASSIGNMENT, LEASING AND SELLING
SECTION 7.01. 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 Section 5.01
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 in
writing satisfactory in form 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 Section 5.01 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 the release and discharge
of the Company pursuant to clause (b) shall be conditioned upon
the delivery by the Company to the Pollution Control Corporation
and the Trustee of a certificate of an Independent Expert (as
hereinafter defined) describing the interests so assigned,
leased, sold, transferred or otherwise disposed of, together with
all other rights, interests, assets and/or properties assigned,
leased, sold, transferred or otherwise disposed of by the Company
to the same Person in the same or a related transaction, stating
that such rights, interests, assets and/or properties so
described constitute facilities for the generation, transmission
and/or distribution of electric energy and stating that, in the
opinion of such Independent Expert, the Fair Value (as
hereinafter defined) of such rights, interests, assets and/or
properties as the Person acquiring the same is not less than an
amount equal to 10/7 of the sum of (x) the aggregate principal
amount of the Bonds then Outstanding and (y) the outstanding
principal amount of all other obligations of the Company
representing indebtedness for borrowed money or for the deferred
purchase price of property which are being assumed by such
Person; provided, further, that after any such assumption,
release and discharge as aforesaid, the Company may again assume
such obligations under Section 5.01 hereof, 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 and
will not adversely affect 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.
For purposes of this Section 701:
(a) "Independent Expert" means a Person which (i) is an
engineer, appraiser or other expert and which, with respect to
any certificate to be delivered pursuant to this Section, is
qualified to pass upon the matter set forth in such
certificate and (ii)(A) is in fact independent, (B) does not
have any direct material financial interest in the transferee
or in any obligor upon the Bonds or under this Agreement or in
any affiliate of the transferee or any such obligor, (C) is
not connected with the transferee or any such obligor as an
officer, employee, promoter, underwriter, trustee, partner,
director or any person performing similar functions and (D) is
approved by the Trustee in the exercise of reasonable care;
for purposes of this definition "engineer" means a Person
engaged in the engineering profession or otherwise qualified
to pass upon engineering matters (including, but not limited
to, a Person licensed as a professional engineer, whether or
not then engaged in the engineering profession); and for
purposes of this definition "appraiser" means a Person engaged
in the business of appraising property or otherwise qualified
to pass upon the Fair Value or fair market value of property.
(b) "Fair Value" means the fair value of the interests,
rights, assets and/or properties assigned, leased, sold,
transferred or otherwise disposed of (but, in the case of a
lease, only to the extent of such lease) as may be determined
by reference to (i) except in the case of a lease, the amount
which would be likely to be obtained in an arm's-length
transaction with respect to such interests, rights, assets
and/or properties between an informed and willing buyer and an
informed and willing seller, under no compulsion,
respectively, to buy or sell, (ii) in the case of a lease, the
amount (discounted to present value at a rate not lower than
the taxable equivalent of the yield to maturity of the Bonds
based on prevailing market prices immediately prior to the
first public announcement of the proposed transaction) which
would be likely to be obtained in an arm's-length transaction
with respect to such interests, rights, assets and/or
properties between an informed and willing lessee and an
informed and willing lessor, neither under any compulsion to
lease; (iii) the amount of investment with respect to such
interests, rights, assets and/or properties which, together
with a reasonable return thereon, would be likely to be
recovered through ordinary business operations or otherwise,
(iv) the cost, accumulated depreciation and replacement cost
with respect to such interests, rights, assets and/or
properties and/or (v) any other relevant factors; provided,
however, that (x) Fair Value shall be determined without
deduction for any mortgage, deed of trust, pledge, security
interest, encumbrance, lease, reservation, restriction,
servitude, charge or similar right or any other lien of any
kind and (y) the Fair Value to the transferee of any property
shall not reflect any reduction relating to the fact that such
property may be of less value to a Person which is not the
owner, lessee or operator of the property or any portion
thereof than to a Person which is such owner, lessee or
operator. Fair Value may be determined, without physical
inspection, by the use of accounting and engineering records
and other data maintained by the Company or the transferee or
otherwise available to the Expert certifying the same.
SECTION 7.02. Instrument Furnished to Pollution Control
Corporation and 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.
SECTION 7.03. 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. This Article
VII shall not apply to any sale, transfer or other disposition by
the Company of all of its assets, as or substantially as an
entirety, as contemplated in Section 6.01.
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
SECTION 8.01. 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,
which failure shall have resulted in an "Event of Default"
under clause (a) or (b) 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 sixty (60) 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).
SECTION 8.02. 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, and 6.01 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.
SECTION 8.03. 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.
(b) 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.
(c) Any amounts collected by the Trustee from the Company
pursuant to this Section 8.03 shall be applied in accordance with
the Indenture.
SECTION 8.04. 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.
SECTION 8.05. 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.
SECTION 8.06. 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
SECTION 9.01. 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.
SECTION 9.02. 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
MISCELLANEOUS
SECTION 10.01. 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
covenants contained in Section 5.03, 5.04, Section 6.04 and 8.05
hereof shall survive the termination of this Agreement.
SECTION 10.02. 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; and if to the Trustee, at
such address as shall be designated by it in 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.
SECTION 10.03. 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 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 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 from the sale of the Bonds, or
from the investment or reinvestment of any of the foregoing, as
provided herein and in the Indenture.
SECTION 10.04. 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.
SECTION 10.05. 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.
SECTION 10.06. 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.
SECTION 10.07. Governing Law. The laws of the State of
Arizona shall govern the construction and enforcement of this
Agreement, except that the provisions of Section 13.09 of the
Indenture, construed as provided in Section 13.07 of the
Indenture, shall apply to this Agreement as if contained herein.
SECTION 10.08. 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 /s/ Bruce J. Nordstrom
-----------------------------
President
/s/ Terrence J. Rice
-------------------------------
Secretary
TUCSON ELECTRIC POWER COMPANY
ATTEST: By /s/ Kevin Larson
------------------------
Vice President
/s/ Vincent Nitido, Jr.
----------------------------
Assistant Secretary
<PAGE>
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, 1997
Series B (Tucson Electric Power Company Navajo Project) issued by
Coconino County, Arizona Pollution Control Corporation and
referred to in the foregoing Loan Agreement.
--------------------
The air and water pollution control facilities, sewage
disposal facilities and solid waste disposal and related
facilities more particularly described in Exhibit A to the Loan
and Escrow Agreement, dated as of December 17, 1974, among the
Coconino County, Arizona Pollution Control Corporation, Tucson
Gas & Electric Company and Security Pacific National Bank as
escrow agent, a copy of which is attached as Exhibit A-1.
<PAGE>
EXHIBIT A-1
The air and water pollution control facilities, sewage
disposal facilities and solid waste disposal facilities in whole
or in part with the proceeds of the Bonds will consist of the
following systems:
1. SO2 Removal System. This System consists of the
Basic Removal and Disposal System, and other additional features
for in-plant SO2 removal. The Basic Removal and Disposal System
includes several five-chamber alkaline scrubbing modules which
may be of either a vertical or horizontal design, and associated
equipment and piping. The other additional in-plant features
include by-pass dampers and ductwork modifications, connections
for steam extraction, induced draft fans sized to overcome the
loss of velocity of the flue gas caused by the Basic Removal and
Disposal System, chimney coating to protect the stack from
corrosion due to lower exit gas temperatures caused by the Basic
Removal and Disposal System, miscellaneous electrical equipment
and building space needed to accommodate the other SO2 removal
equipment, and a supplementary SO2 monitoring system.
2. Particulate Removal System. This System, which is
designated to charge and collect particles contained in the flue
gas produced by the steam generator, includes a sixteen chamber
hot electrostatic precipitator, the structural supports for the
precipitator, guillotine dampers, louver isolation dampers
ductwork, totally enclosed Nova feeders, opacity monitoring
equipment, induced draft fans sized to accommodate a maximum
efficiency precipitator, several electrical fields complete with
casings and hoppers and the structural steel for such fields.
3. Flue Gas Monitoring System. This System consists
of chimney equipment common to both SO2 particulate removal
systems and NOx particulate removal systems, and includes the
instrumentation and connections necessary to continuously monitor
and record emissions from the chimneys and a personal hoist and
related equipment to permit performance testing and maintenance
of the monitoring equipment.
4. Dust Suppression System. The equipment comprising
this System includes (i) enclosures for the coal conveyors and
transfer towers, (ii) a shed-like enclosure for the tract hopper,
(iii) several dust collectors, baghouses, rotary screw conveyors,
separators and a vacuum conveying system to provide dust
collection in the cascade gallery, silo, sample building and
plant surge bin areas, (iv) a dust collector with a baghouse and
rotary screw conveyor for the yard bin area, (v) a dust
suppression spray system consisting of jet sprays and associated
equipment located throughout the plant, (vi) enclosures to
partition the coal gallery area from the boiler turbine area to
control coal dust, (vii) a fixed header vacuum cleaning system
for the coal unloading hopper basement and the coal silo gallery,
and (viii) portable vacuum cleaners for use in the coal
pulverizer area and the feeder deck area.
5. Sanitary Sewer System. Two pumping lift stations
with dual pumps will be installed on the main collector line and
an aerated tank located below grade will be provided. Secondary
treatment by chlorine dosing may be utilized, and treated
effluent will be discharged to the evaporation pond system. A
service water line will be installed to permit the sewage
treatment area to be washed and the sump weirs to be cleaned.
Equipment will be installed downstream from the sewage treatment
plant to monitor sanitary waster discharges.
6. Waste Water Disposal System. This System includes
the Waste Water Collection System, the Water Reclamation Unit,
Evaporation Ponds, and the Ground Water Monitoring System.
(A) Waste Water Collection System. The various
types of wastewaters from the Project will be collected
and transported by the following facilities: (i) sumps
and duplex regenerative sump pumps to receive drainage
from the chemical feed area and the anion-cation
regeneration area; (ii) the primary softener tank
drain, the sand filter backwash drain, the sodium
zeolite softener regeneration rinse tank drain, and a
special primary water treatment pump to accommodate
those drains; (iii) sumps and acid resistant duplex
pumps to accommodate the acid trench and chemical tank
area; (iv) a surface drain and associated pumps to
receive runoff from the coal storage area; (v) special
drains, pumps and piping to permit boiler water to by-
pass other boiler water drains and to be pumped
directly to the evaporation ponds; (vi) special
drainage ditches and culverts to direct all surface
water runoff from the coal storage area to the
evaporation ponds, and (vii) sumps and associated pumps
and piping to permit oily wastes to be transported to
the evaporation ponds.
(B) Water Reclamation Unit. This Unit includes
several clarifiers and associated pumps and piping to
permit clarification of cooling tower blowdown.
(C) Evaporation Ponds. A series of terraced and
diked evaporation ponds will be provided to receive
sanitary wastes, surface water runoff and process
wastes, and a second series of terraced diked
evaporation ponds will be provided to receive only
process wastes.
(D) Ground Water Monitoring System. An extensive
observation well and associated equipment will be
installed to monitor seepage from the ash disposal area
and the evaporation ponds to insure that such seepage
does not enter the underground waterway leading to Lake
Powell.
7. Bottom Ash and Economizer Ash Disposal System.
This System, which causes bottom ash, economizer ash and
pulverizer rejects to be transported to dewatering bins, water to
be drained from the dewatering bins into settling tanks, and
water from the settling tanks to be recirculated and reused for
ash transport, includes six dewatering bins, two settling tanks,
three water surge tanks, one operating centrifugal ash pump, one
standby centrifugal ash pump and associated piping, an auxiliary
tank for sluicing economizer ash and the necessary control valves
and piping to transport water to the mixing chamber and
economizer ash slurry to the bottom ash hopper.
8. Fly Ash Disposal System. This System, which
transports fly ash from the precipitation hoppers to the fly ash
storage silos, includes several pneumatic conveyors and
associated blowers, filters and pipelines for transporting ash to
the ash storage silos, two ash storage silos and associated steel
support structures, stairs and platforms, and eight dustless
unloaders.
9. Solid Waste Common Systems. The equipment
included in the Systems consists of the trucks that will be used
to haul damp fly ash, bottom ash, scrubber solids and evaporator
solids to the disposal area, the initial dikes for the solids
disposal canyon, the road from the ash handling area to the
canyon, and fencing for the road and the solids disposal area.
10. Electrical Equipment. This equipment consists of
transformers, buses, bus ducts, breakers, switching equipment and
associated equipment necessary for the operation of the
facilities.
EXHIBIT 4f
=================================================================
INDENTURE OF TRUST
BETWEEN
COCONINO COUNTY, ARIZONA
POLLUTION CONTROL CORPORATION
AND
FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION
----------------
DATED AS OF APRIL 1, 1997
-----------------
AUTHORIZING
POLLUTION CONTROL REVENUE BONDS,
1997 SERIES B
(TUCSON ELECTRIC POWER COMPANY NAVAJO PROJECT)
=================================================================
<PAGE>
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. . . . . . . . . . . . . . . 8
Section 2.02. Form of Bonds. . . . . . . . . . . . . . . . . 9
Section 2.03. Execution of Bonds. . . . . . . . . . . . . . 9
Section 2.04. Authentication of Bonds. . . . . . . . . . . . 10
Section 2.05. Bonds Not General Obligations. . . . . . . . . 10
Section 2.06. Prerequisites to Authentication of Bonds. . . 10
Section 2.07. Lost or Destroyed Bonds or Bonds Canceled in
Error . . . . . . . . . . . . . . . . . . . . 11
Section 2.08. Transfer, Registration and Exchange of Bonds . 11
Section 2.09. Other Obligations . . . . . . . . . . . . . . 13
Section 2.10 Temporary Bonds . . . . . . . . . . . . . . . 13
Section 2.11. Cancellation of Bonds . . . . . . . . . . . . 13
Section 2.12. Payment of Principal and Interest . . . . . . 13
Section 2.13. Applicability of Book-Entry Provisions . . . . 14
ARTICLE III
REDEMPTION OF BONDS
Section 3.01. Redemption Provisions . . . . . . . . . . . . 14
Section 3.02. Selection of Bonds to be Redeemed . . . . . . 15
Section 3.03. Procedure for Redemption . . . . . . . . . . . 16
Section 3.04. Payment of Redemption Price . . . . . . . . . 16
Section 3.05. No Partial Redemption After Default . . . . . 16
* 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.
ARTICLE IV
THE BOND FUND
Section 4.01. Creation of Bond Fund . . . . . . . . . . . . 17
Section 4.02. Liens . . . . . . . . . . . . . . . . . . . . 17
Section 4.03. Deposits into Bond Fund . . . . . . . . . . . 17
Section 4.04. Use of Moneys in Bond Fund . . . . . . . . . . 17
Section 4.05. Custody of Bond Fund; Withdrawal of Moneys . . 17
Section 4.06. Bonds Not Presented for Payment . . . . . . . 18
Section 4.07. Moneys Held in Trust . . . . . . . . . . . . . 18
ARTICLE V
DISPOSITION OF PROCEEDS
Section 5.01. Disposition of Proceeds. . . . . . . . . . . . 18
ARTICLE VI
INVESTMENTS
Section 6.01. Investments . . . . . . . . . . . . . . . . . 19
ARTICLE VII
GENERAL COVENANTS
Section 7.01. No General Obligations . . . . . . . . . . . . 19
Section 7.02. Performance of Covenants of the Pollution Control
Corporation; Representations . . . . . . . . 19
Section 7.03. Maintenance of Rights and Powers; Compliance with
Laws . . . . . . . . . . . . . . . . . . . . 20
Section 7.04. Enforcement of Obligations of the Company;
Amendments . . . . . . . . . . . . . . . . . 20
Section 7.05. Further Instruments. . . . . . . . . . . . . . 20
Section 7.06. No Disposition of Trust Estate. . . . . . . . 20
Section 7.07. Financing Statements. . . . . . . . . . . . 20
Section 7.08. Tax Covenants; Rebate Fund. . . . . . . . . . 20
Section 7.09. Notices of Trustee. . . . . . . . . . . . . . 21
ARTICLE VIII
DEFEASANCE
Section 8.01. Defeasance. . . . . . . . . . . . . . . . . . 21
ARTICLE IX
DEFAULTS AND REMEDIES
Section 9.01. Events of Default. . . . . . . . . . . . . . . 23
Section 9.02. Remedies. . . . . . . . . . . . . . . . . . . 24
Section 9.03. Restoration to Former Position. . . . . . . . 24
Section 9.04. Owners' Right to Direct Proceedings. . . . . . 24
Section 9.05. Limitation on Owners' Right to Institute
Proceedings. . . . . . . . . . . . . . . . . 25
Section 9.06. No Impairment of Right to Enforce Payment. . . 25
Section 9.07. Proceedings by Trustee without Possession of
Bonds. . . . . . . . . . . . . . . . . . . . 25
Section 9.08. No Remedy Exclusive. . . . . . . . . . . . . . 25
Section 9.09. No Waiver of Remedies. . . . . . . . . . . . . 25
Section 9.10. Application of Moneys. . . . . . . . . . . . . 26
Section 9.11. Severability of Remedies. . . . . . . . . . . 26
ARTICLE X
TRUSTEE; PAYING AGENT AND CO-PAYING AGENTS; REGISTRAR
Section 10.01. Acceptance of Trusts. . . . . . . . . . . . . 27
Section 10.02. No Responsibility for Recitals. . . . . . . . 27
Section 10.03. Limitations on Liability. . . . . . . . . . . 27
Section 10.04. Compensation, Expenses and Advances. . . . . . 27
Section 10.05. Notice of Events of Default. . . . . . . . . . 28
Section 10.06. Action by Trustee. . . . . . . . . . . . . . . 28
Section 10.07. Good Faith Reliance. . . . . . . . . . . . . . 28
Section 10.08. Dealings in Bonds and with the Pollution Control
Corporation and the Company. . . . . . . . . 29
Section 10.09. Allowance of Interest. . . . . . . . . . . . . 29
Section 10.10. Construction of Indenture. . . . . . . . . . . 29
Section 10.11. Resignation of Trustee. . . . . . . . . . . . 29
Section 10.12. Removal of Trustee. . . . . . . . . . . . . . 29
Section 10.13. Appointment of Successor Trustee. . . . . . . 30
Section 10.14. Qualifications of Successor Trustee. . . . . . 30
Section 10.15. Judicial Appointment of Successor Trustee. . . 30
Section 10.16. Acceptance of Trusts by Successor Trustee. . . 30
Section 10.17. Successor by Merger or Consolidation. . . . . 31
Section 10.18. Standard of Care. . . . . . . . . . . . . . . 31
Section 10.19. Notice to Owners of Bonds of Event of Default. 31
Section 10.20. Intervention in Litigation of the Pollution
Control
Corporation. . . . . . . . . . . . . . . . . 31
Section 10.21. Paying Agent; Co-Paying Agents. . . . . . . . 31
Section 10.22. Qualifications of Paying Agent and Co-Paying
Agents; Resignation; Removal. . . . . . . . 32
Section 10.23. Registrar. . . . . . . . . . . . . . . . . . . 33
Section 10.24. Qualifications of Registrar; Resignation;
Removal. . . . . . . . . . . . . . . . . . . 33
Section 10.25. Several Capacities. . . . . . . . . . . . . . 33
ARTICLE XI
EXECUTION OF INSTRUMENTS BY OWNERS OF BONDS AND
PROOF OF OWNERSHIP OF BONDS
Section 11.01. Execution of Instruments; Proof of Ownership. 34
ARTICLE XII
MODIFICATION OF THIS INDENTURE AND THE LOAN AGREEMENT
Section 12.01. Limitations. . . . . . . . . . . . . . . . . . 34
Section 12.02. Supplemental Indentures without Owner Consent. 34
Section 12.03. Supplemental Indentures with Consent of Owners.
35
Section 12.04. Effect of Supplemental Indenture. . . . . . . 36
Section 12.05. Consent of the Company. . . . . . . . . . . . 36
Section 12.06. Amendment of Loan Agreement without Consent of
Owners. . . . . . . . . . . . . . . . . . . . 37
Section 12.07. Amendment of Loan Agreement with Consent of
Owners. . . . . . . . . . . . . . . . . . . . 37
ARTICLE XIII
MISCELLANEOUS
Section 13.01. Successors of the Pollution Control Corporation.
37
Section 13.02. Parties in Interest. . . . . . . . . . . . . . 38
Section 13.03. Severability. . . . . . . . . . . . . . . . . 38
Section 13.04. No Personal Liability of Pollution Control
Corporation Officials. . . . . . . . . . . . 38
Section 13.05. Bonds Owned by the Pollution Control Corporation
or the Company. . . . . . . . . . . . . . . . 38
Section 13.06. Counterparts. . . . . . . . . . . . . . . . . 38
Section 13.07. Governing Law. . . . . . . . . . . . . . . . . 39
Section 13.08. Notices. . . . . . . . . . . . . . . . . . . . 39
Section 13.09. Holidays. . . . . . . . . . . . . . . . . . . 39
Section 13.10. Statutory Notice Regarding Cancellation of
Contracts. . . . . . . . . . . . . . . . . 39
Testimonium . . . . . . . . . . . . . . . . . . . . . . . . 40
Signatures and Seals . . . . . . . . . . . . . . . . . . . 40
Exhibit A - Form of Bond . . . . . . . . . . . . . . . . . . A-1
Exhibit B - Form of Endorsement of Transfer . . . . . . . . . B-1
Exhibit C - Form of Certificate of Authentication . . . . . . C-1
<PAGE>
INDENTURE OF TRUST
THIS INDENTURE OF TRUST, dated as of April 1, 1997 (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, the proceeds of which were loaned to Tucson Electric Power
Company, an Arizona corporation formerly known as Tucson Gas &
Electric Company (the "Company");
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
& Electric Company Project) (the "1975 Bonds"), the proceeds of
which were loaned to the Company to pay a portion of the
principal amount of the 1974 Bonds; and
WHEREAS, the Pollution Control Corporation has also
heretofore issued and sold $14,700,000 aggregate principal amount
of its Pollution Control Refunding Revenue Bonds, 1996 Series B
(Tucson Electric Power Company Project), all of which remain
outstanding (the "1996 Bonds"), the proceeds of which were loaned
to the Company to pay the outstanding principal amount of the
1975 Bonds; and
WHEREAS, the Pollution Control Corporation proposes to issue
and sell its revenue bonds to refinance, by the payment or
redemption of the 1996 Bonds, or provisions therefor, a portion
of 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 April 1, 1997 (the
"Loan Agreement"), between the Pollution Control Corporation and
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 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;
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:
ARTICLE I
DEFINITIONS
Section 1.01. 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.
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.
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.
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, including, without
limitation, any successor obligor under Section 6.01 or 7.01 of
the Loan Agreement to the extent of the obligations assumed
thereunder.
Depositary:
"Depositary" shall mean The Depository Trust Company or any
successor thereto as a securities repository for the Bonds.
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.
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
April 1, 1997, between the Pollution Control Corporation and the
Trustee, and any and all modifications, alterations, amendments
and supplements thereto.
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 or Registrar hereunder if such entities shall
otherwise satisfy the requirements set forth above.
Loan Agreement:
"Loan Agreement" shall mean the Loan Agreement, dated as of
April 1, 1997, 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.
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 & Electric Company
Project).
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 & Electric Company
Project).
1996 Bonds:
"1996 Bonds" shall mean the $14,700,000 aggregate principal
amount of the Pollution Control Corporation's Pollution Control
Refunding Revenue Bonds, 1996 Series B (Tucson Electric Power
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 2.08 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; and
(c) 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 2.08 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.
Rebate Fund:
"Rebate Fund" shall mean the fund created by Section 7.08
hereof.
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 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
fifteenth (15th) day of the calendar month immediately preceding
each regularly scheduled interest payment date.
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.
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 thereof and 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 thereof and hereof.
Tax Agreement:
"Tax Agreement" shall mean that tax certificate and
agreement, dated the date of the initial authentication and
delivery of the Bonds, 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.
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 Bond Fund and
all moneys and Investment Securities from time to time on deposit
therein (excluding, however, any moneys or Investment Securities
held in the Rebate Fund), 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 in the Rebate Fund pursuant to Section 7.08 hereof or (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.
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 13.08 hereof.
ARTICLE II
THE BONDS
Section 2.01. 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 1996 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 Revenue Bond, 1997 Series B
(Tucson Electric Power Company Navajo Project)". The Bonds shall
mature, subject to prior redemption upon the terms and conditions
hereinafter set forth, on October 1, 2032 and shall bear interest
from the date thereof until payment of the principal or
redemption price thereof shall have been made or provided for in
accordance with the provisions hereof, whether at maturity, upon
redemption or otherwise, at the rate of seven per centum (7%) per
annum, with interest thereon payable semi-annually on each
October 1 and April 1, commencing October 1, 1997. Interest
shall be calculated on the basis of a 360-day year consisting of
twelve 30-day months.
Section 2.02. Form of Bonds. Bonds shall be authenticated
and delivered hereunder solely as fully registered bonds without
coupons in the denomination of $5,000 or integral multiples
thereof. Bonds shall be numbered as determined by the Trustee.
Bonds authenticated prior to the first interest payment date
shall be dated April 1, 1997. Bonds authenticated on or
subsequent to the first interest payment date thereon shall be
dated the interest payment date next preceding the date of
authentication thereof, unless such date of authentication shall
be an interest payment date to which interest on the Bonds has
been paid in full or duly provided for, in which case they shall
be dated such date of authentication; provided, however, that if,
as shown by the records of the Trustee, interest on the Bonds
shall be in default, Bonds issued in exchange for Bonds
surrendered for transfer or exchange shall be dated the date to
which interest has been paid in full on the Bonds surrendered.
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 2.08 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, 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.
Section 2.03. 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 such officer 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.
Section 2.04. 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 2.04 is subject to the provisions of
Section 10.17 hereof.
Section 2.05. 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.
Section 2.06. 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 2.06.
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) 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
(d) 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.
Section 2.07. 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
2.07.
Every substitute Bond issued pursuant to the provisions of
this Section 2.07 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.
Section 2.08. 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 Paying
Agent, any Co-Paying Agent and the Registrar 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 2.02 hereof, interest on,
such Bond and for all other purposes, and neither the Pollution
Control Corporation, the Trustee, the Paying Agent, any Co-Paying
Agent nor the Registrar 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.
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.
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 and 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.
Section 2.09. 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.
Section 2.10 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.
Section 2.11. 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.
Section 2.12. 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.
Section 2.13. Applicability of Book-Entry Provisions.
Anything in this Indenture to the contrary notwithstanding, (a)
the provisions of the Blanket Issuer Letter of Representations,
dated October 12, 1995, between the Pollution Control Corporation
and The Depository Trust Company relating to the manner of and
procedures for payment and redemption of Bonds and related
matters shall apply so long as such Depositary shall be the Owner
of all Outstanding Bonds and (b) the Pollution Control
Corporation, the Trustee or the Paying Agent, as applicable, may
enter into a similar agreement, on terms satisfactory to the
Company, with any subsequent Depositary and the provisions
thereof shall apply so long as such Depositary shall be the Owner
of all Outstanding Bonds.
ARTICLE III
REDEMPTION OF BONDS
Section 3.01. Redemption Provisions. (a) The Bonds shall
be subject to redemption by the Pollution Control Corporation, at
the direction of the Company, on any date on or after October 1,
2007 in whole at any time or in part from time to time, at the
applicable redemption price (expressed as a percentage of
principal amount) set forth below, plus accrued interest to the
redemption date:
Redemption Period Redemption
Price
---------------- ---------------
October 1, 2007 through September 30, 2008 102%
October 1, 2008 through September 30, 2009 101%
October 1, 2009 and thereafter 100%
(b) 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) 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 (c) 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.
Section 3.02. Selection of Bonds to be Redeemed. 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 the portion of any Bond to be
redeemed shall be in the principal amount of $5,000 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 $5,000. 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. If the Owner of any such Bond of a denomination
greater than $5,000 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 $5,000 unit
or units of principal amount called for redemption (and to that
extent only).
Section 3.03. 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 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. 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 a
copy of each such notice of redemption.
(b) With respect to any notice of redemption of Bonds in
accordance with subsection (a) or (b) 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 shall cease to bear interest on the
specified redemption date provided that moneys sufficient to pay
the principal of, premium, if any, and interest on such Bonds
shall be on deposit with the Trustee on the date fixed for
redemption so that such Bonds will be deemed to be paid in
accordance with Article VIII hereof.
Section 3.04. 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.
Section 3.05. 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) or (b) 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 other than a partial redemption in
connection with an offer by the Company to purchase all Bonds
Outstanding as contemplated in the first proviso to the first
sentence of Section 3.02 hereof.
ARTICLE IV
THE BOND FUND
Section 4.01. 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, 1997 Series B (Tucson Electric Power Company
Navajo Project) Bond Fund". The Trustee shall establish and
maintain within the Bond Fund such segregated 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.
Section 4.02. 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.
Section 4.03. 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;
(ii) all Loan Payments; and
(iii) 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.
(b) All income or other gain from the investment of moneys
in the Bond Fund shall be deposited into the Bond Fund.
Section 4.04. Use of Moneys in Bond Fund. Moneys, if any,
paid into the Bond Fund pursuant to clause (i) of Section 4.03(a)
hereof shall be applied to the payment of interest on the Bonds.
Except as otherwise provided in Sections 4.06, 9.01 and 10.04
hereof, all other 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.
Section 4.05. 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.
Section 4.06. 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
the Owners 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 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
Pollution Control Corporation, the Trustee and the Paying Agent
with respect to such moneys shall thereupon cease.
Section 4.07. 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, shall be held by the Trustee, the Paying Agent
or any Co-Paying 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 the Rebate 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, for the benefit of the Owners from time to time of the
Bonds. 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.
ARTICLE V
DISPOSITION OF PROCEEDS
Section 5.01. 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.
ARTICLE VI
INVESTMENTS
Section 6.01. Investments. The moneys in the Bond Fund
shall, at the direction of the Company, be invested and
reinvested in Investment Securities. Any Investment Securities
may be purchased subject to options or other rights in third
parties to acquire the same. 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.
ARTICLE VII
GENERAL COVENANTS
Section 7.01. 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 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.
Section 7.02. 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.
Section 7.03. 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.
Section 7.04. 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. 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 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).
Section 7.05. 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.
Section 7.06. 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.
Section 7.07. Financing Statements. The Pollution Control
Corporation and the Trustee shall cooperate with the Company in
causing appropriate financing 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, and the
Pollution Control Corporation shall cooperate with the Trustee
and the Company in causing appropriate continuation statements 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.
Section 7.08. Tax Covenants; Rebate Fund. (a) The
Pollution Control Corporation covenants for the benefit of all
Owners from time to time of the Bonds 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.
(b) 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, 1997 Series B
(Tucson Electric Power Company Navajo Project) Rebate Fund"
(herein called the "Rebate Fund") in accordance with the
provisions of the Tax Agreement. 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.
(c) 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, shall be
withdrawn and remitted to the Company.
(d) 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.
Section 7.09. 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 Mail or Publication given
by it pursuant to any provision hereof.
ARTICLE VIII
DEFEASANCE
Section 8.01. 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 any portion of such Bond in the
principal amount of $5,000 or any integral multiple thereof, 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.
All or any portion of Outstanding Bonds or portions of Bonds
in principal amounts of $5,000 or any integral multiple thereof,
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
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 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, 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 Owners 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.
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; provided,
that 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 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. 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
the Trustee with a certificate of an accountant or an 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.
ARTICLE IX
DEFAULTS AND REMEDIES
Section 9.01. 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 thirty (30) days;
(c) a failure by the Pollution Control Corporation to
observe and perform any covenant, condition, agreement or
provision (other than as specified in clauses (a) and (b) 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 sixty (60) 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 33% in principal
amount of the Bonds then Outstanding, 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, 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, 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) or (b) of the preceding paragraph, the
Trustee may, and at the written request of Owners of not less
than 33% in principal amount of Bonds then Outstanding shall, by
written notice to the Pollution Control Corporation 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 by Mail to all Owners of Outstanding Bonds.
The provisions of the preceding paragraph, however, are
subject 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 and the Company,
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.
Section 9.02. 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 Owners of not less than a majority 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 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 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.
Section 9.03. 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.
Section 9.04. Owners' Right to Direct Proceedings.
Anything in this Indenture to the contrary notwithstanding, the
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 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.
Section 9.05. 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 a
majority 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.
Section 9.06. 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.
Section 9.07. 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.
Section 9.08. 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 or
under the Loan Agreement, now or hereafter existing at law or in
equity or by statute.
Section 9.09. 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.
Section 9.10. 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:
(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.
(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.
(c) If the principal of all the Bonds shall have become
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.
Section 9.11. 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.
ARTICLE X
TRUSTEE; PAYING AGENT AND CO-PAYING AGENTS; REGISTRAR
Section 10.01. 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.
Section 10.02. 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.
Section 10.03. 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.
Section 10.04. Compensation, Expenses and Advances. The
Trustee, the Paying Agent and any Co-Paying Agent, and the
Registrar 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
and the Registrar, 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 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.
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.
Section 10.05. 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 33% in
principal amount of the Bonds then Outstanding. 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.
Section 10.06. 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 a majority in principal amount of the Bonds then
Outstanding, 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. 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 without such security or indemnity.
Section 10.07. 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 nor the Registrar 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.
Section 10.08. Dealings in Bonds and with the Pollution
Control Corporation and the Company. The Trustee, the Paying
Agent, any Co-Paying Agent or the Registrar, 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 or the Registrar,
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.
Section 10.09. 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 Article IV with respect to
interest on investments.
Section 10.10. 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.
Section 10.11. 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 Company, 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.
Section 10.12. Removal of Trustee. The Trustee may be
removed at any time by filing with the Trustee so removed, and
with the Pollution Control Corporation 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.
Section 10.13. 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 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. 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.
(b) 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. 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.
(c) 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.
Section 10.14. 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.
Section 10.15. 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.
Section 10.16. 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.
Section 10.17. 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 or
any corporation or association succeeding to the corporate trust
business of the Trustee, 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.
Section 10.18. 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.
Section 10.19. 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 by Mail to all Owners of Outstanding Bonds.
Section 10.20. 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 a majority in principal amount of the Bonds
then Outstanding if permitted by the court having jurisdiction in
the premises.
Section 10.21. 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.
Section 10.22. 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. 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.
Section 10.23. 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 and any Co-Paying Agent shall be
furnished such records and other information, at such times, as
shall be required to enable the Paying Agent and such Co-Paying
Agent to perform the duties and obligations imposed upon them
hereunder.
Section 10.24. 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.
Section 10.25. 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 and the
Registrar and in any combination of such capacities to the extent
permitted by law.
ARTICLE XI
EXECUTION OF INSTRUMENTS BY OWNERS OF BONDS AND
PROOF OF OWNERSHIP OF BONDS
Section 11.01. 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 2.08 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.
ARTICLE XII
MODIFICATION OF THIS INDENTURE AND THE LOAN AGREEMENT
Section 12.01. 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.
Section 12.02. 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, 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;
(g) 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;
(h) 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; and
(i) to provide any additional procedures, covenants or
agreements necessary or desirable to maintain the tax-exempt
status of interest on the Bonds.
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.
Section 12.03. 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 reduction in the principal amount or
redemption price of any Outstanding Bond or a change in 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.
(b) 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. 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.
(c) 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, in and of itself, adversely affect the
exclusion from gross income for federal tax purposes of the
interest on the Bonds.
(d) 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.
Section 12.04. Effect of Supplemental Indenture. Upon the
execution and delivery of any Supplemental Indenture pursuant to
the provisions of this Article XII, 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.
Section 12.05. Consent of the Company. 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 requires
a revision of the Loan Agreement, shall not become effective
unless and until the Company shall have consented to such
Supplemental Indenture.
Section 12.06. 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.
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.
Section 12.07. 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. 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. 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.
ARTICLE XIII
MISCELLANEOUS
Section 13.01. 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.
Section 13.02. 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 and the Trustee 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 and the Trustee
and their successors and assigns and the Owners of the Bonds.
Section 13.03. 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.
Section 13.04. 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.
Section 13.05. 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 13.05) 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. 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.
Section 13.06. 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.
Section 13.07. 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 13.09 hereof and the computation of any period of
grace provided herein.
Section 13.08. 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 Paying Agent, any Co-Paying Agent or
the Registrar 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: Vice President; if to the Paying Agent, any
Co-Paying Agent or the Registrar, at the address designated in
the acceptance of appointment or engagement. 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.
Section 13.09. 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.
Section 13.10. 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.
<PAGE>
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 on its behalf by its
Vice President, all as of the day and year first above written.
COCONINO COUNTY, ARIZONA
POLLUTION CONTROL CORPORATION
Attest: By: /s/ Bruce J. Nordstrom
----------------------------
President
/s/ Terrence J. Rice
___________________________
Secretary
FIRST TRUST OF NEW YORK,
NATIONAL ASSOCIATION
Attest: By: /s/ Patrick J. Crowley
-----------------------
Vice President
/s/ Steven Haas
____________________________
Assistant Secretary
<PAGE>
EXHIBIT A
(FORM OF BOND)
No.
COCONINO COUNTY, ARIZONA
POLLUTION CONTROL CORPORATION
POLLUTION CONTROL REVENUE BOND,
1997 SERIES B
(TUCSON ELECTRIC POWER COMPANY NAVAJO PROJECT)
INTEREST RATE (PER ANNUM):
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 payment of said Principal
Amount has been made or duly provided for, from the date hereof,
at the Interest Rate set forth above, semi-annually on the first
days of April and October in each year, commencing on October 1,
1997. Interest will be calculated on the basis of a 360-day year
of twelve 30-day months.
The principal 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
(as hereinafter defined), 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 Owner of this Bond as
of the close of business on the Record Date (as defined in the
Indenture) at the registered address of such Registered Owner;
notwithstanding the foregoing, upon request to the Paying Agent
by a Registered 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 Registered Owner by wire transfer to the
account maintained within the continental United States specified
by such Registered Owner or, if such Registered Owner maintains
an account with the entity acting as Paying Agent, by deposit
into such account. Payment of the principal of and premium, if
any, and interest on, 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, 1997 Series B (Tucson Electric Power Company
Navajo Project) (the "Bonds") of the Pollution Control
Corporation, aggregating Fourteen Million Seven Hundred Thousand
Dollars ($14,700,000) in principal amount, 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
April 1, 1997 (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 Refunding Revenue Bonds, 1996 Series B (Tucson
Electric Power Company Project), or provision therefor, a portion
of 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 April 1, 1997 (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 to the
Company.
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 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 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 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 its
administrative expenses and certain other rights).
The transfer of this Bond shall be registered upon the
registration books kept at the principal office of First Trust of
New York, National Association, 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.
In the manner and with the effect provided in the Indenture,
each of the Bonds may be redeemed prior to maturity, as follows:
(a) The Bonds shall be subject to redemption by the
Pollution Control Corporation, at the direction of the
Company, on any date on or after October 1, 2007 in whole at
any time or in part from time to time, at the applicable
redemption price (expressed as a percentage of principal
amount) set forth below, plus accrued interest to the
redemption date:
Redemption Period Redemption
Price
----------------- ---------------
October 1, 2007 through September 30, 2008 102%
October 1, 2008 through September 30, 2009 101%
October 1, 2009 and thereafter 100%
(b) 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) 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 (the "1954
Code"). No determination by any court or administrative
agency shall be considered final for the purposes of this
paragraph (c) 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.
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.
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 to the date
fixed for redemption to the Registered 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) or (b)
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 shall cease to bear interest on the
specified redemption date provided that moneys sufficient to pay
the principal of, premium, if any, and interest on such Bonds
shall be on deposit with the Trustee on the date fixed for
redemption so that such Bonds will be deemed to be paid in
accordance with the Indenture and such Bonds shall thereafter
cease to be entitled to any lien, benefit or security under the
Indenture.
The Registered 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 Registered 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 and the Registered Owners
of the Bonds. The Registered 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.
Among other things, 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.
Among other things, the Loan Agreement contains terms,
provisions and conditions relating to the consolidation or merger
of the Company with or into, and the sale, transfer or other
disposition of assets to, another Person (as defined in the Loan
Agreement), to the assumption by such other Person, in certain
circumstances, of all of the obligations of the Company under the
Loan Agreement and to the release and discharge of the Company,
in certain circumstances, from such obligations.
The Pollution Control Corporation, the Trustee, the
Registrar, the Paying 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 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, 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 attested with the manual or facsimile signature of its
Secretary or Assistant Secretary.
COCONINO COUNTY, ARIZONA
POLLUTION CONTROL CORPORATION
By_____________________________
President
ATTEST:
______________________________
Secretary
<PAGE>
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
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Please print or typewrite name and address including postal zip
code of assignee
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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.
<PAGE>
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:______________________
