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LOAN AGREEMENT
between
INDIANA DEVELOPMENT FINANCE AUTHORITY
and
PSI ENERGY, INC.
-------------------------------
$54,025,000
Indiana Development Finance Authority
Environmental Refunding
Revenue Bonds, Series 2000A and Series 2000B
(PSI Energy, Inc. Project)
-------------------------------
Dated
as of
May 1, 2000
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<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS...................................................2
Section 1.1. Use of Defined Terms..........................................2
Section 1.2. Definitions...................................................2
Section 1.3. Interpretation................................................7
Section 1.4. Captions and Headings.........................................7
ARTICLE II REPRESENTATIONS...............................................8
Section 2.1. Representations of the Issuer.................................8
Section 2.2. No Warranty by Issuer of Condition or
Suitability of the Project....................................8
Section 2.3. Representations and Covenants of the Company..................8
ARTICLE III COMPLETION OF THE PROJECT; ISSUANCE OF THE BONDS.............13
Section 3.1. Acquisition, Construction and Installation...................13
Section 3.2. Project Description..........................................13
Section 3.3. Issuance of the Bonds; Application of Proceeds...............13
Section 3.4. Investment of Fund Moneys....................................14
Section 3.5. Rebate Fund..................................................14
ARTICLE IV LOAN BY ISSUER; LOAN PAYMENTS; ADDITIONAL PAYMENTS;
MUNICIPAL BOND INSURANCE POLICY; AND LIQUIDITY
FACILITY.....................................................16
Section 4.1. Loan Repayment...............................................16
Section 4.2. Additional Payments..........................................16
Section 4.3. Place of Payments............................................17
Section 4.4. Obligations Unconditional....................................17
Section 4.5. Assignment of Revenues and Agreement.........................17
Section 4.6. Municipal Bond Insurance Policy; Liquidity Facility;
Cancellation.................................................17
Section 4.7. Company's Option to Elect Rate Period; Changes in
Auction Date and Length of Auction Periods...................18
Section 4.8. Company's Obligation to Purchase Bonds.......................18
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<PAGE>
ARTICLE V ADDITIONAL AGREEMENTS AND COVENANTS..........................19
Section 5.1. Right of Inspection..........................................19
Section 5.2. Maintenance..................................................19
Section 5.3. Removal of Portions of the Project Facilities................19
Section 5.4. Operation of Project Facilities..............................19
Section 5.5. Insurance....................................................20
Section 5.6. Workers' Compensation Coverage...............................20
Section 5.7. Damage; Destruction and Eminent Domain.......................20
Section 5.8. Company to Maintain its Corporate Existence;
Conditions Under Which Exceptions Permitted..................20
Section 5.9. Indemnification..............................................21
Section 5.10. Company Not to Adversely Affect Exclusion of Interest on
Bonds From Gross Income For Federal Income Tax Purposes......22
Section 5.11. Use of Project Facilities....................................22
Section 5.12. Assignment by Company........................................22
Section 5.13. The Depository Trust Company Letter of Representation........23
ARTICLE VI REDEMPTION...................................................24
Section 6.1. Optional Redemption..........................................24
Section 6.2. Extraordinary Optional Redemption............................24
Section 6.3. Mandatory Redemption.........................................26
Section 6.4. Notice of Redemption.........................................26
Section 6.5. Actions by Issuer............................................26
ARTICLE VII EVENTS OF DEFAULT AND REMEDIES...............................27
Section 7.1. Events of Default............................................27
Section 7.2. Remedies on Default..........................................28
Section 7.3. No Remedy Exclusive..........................................29
Section 7.4. Agreement to Pay Attorneys' Fees and Expenses................29
Section 7.5. No Waiver....................................................29
Section 7.6. Notice of Default............................................29
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ARTICLE VIII MISCELLANEOUS................................................30
Section 8.1. Term of Agreement............................................30
Section 8.2. Amounts Remaining in Funds...................................30
Section 8.3. Notices......................................................30
Section 8.4. Extent of Covenants of the Issuer; No Personal Liability.....30
Section 8.5. Binding Effect...............................................31
Section 8.6. Amendments and Supplements...................................31
Section 8.7. Execution Counterparts.......................................31
Section 8.8. Severability.................................................31
Section 8.9. Governing Law................................................31
EXHIBIT A Project......................................................34
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<PAGE>
LOAN AGREEMENT
THIS LOAN AGREEMENT is made and entered into as of May 1, 2000 between the
INDIANA DEVELOPMENT FINANCE AUTHORITY (the "Issuer"), a separate body corporate
and politic organized and existing under the laws of the State of Indiana, and
PSI ENERGY, INC. (the "Company"), a public utility and corporation duly
organized and validly existing under the laws of the State of Indiana.
Capitalized terms used in the following recitals are used as defined in Article
I of this Agreement.
Pursuant to Indiana Code, Title 4, Article 4, Chapters 10.9 and 11
(collectively, the "Act"), the Issuer has determined to issue, sell and deliver
the Bonds, and to lend the proceeds derived from the sale thereof to the Company
to assist in the refunding of the Refunded Bonds as defined below. The Refunded
Bonds were issued to provide funds to make a loan to the Company to assist in
the financing or refinancing of its portion of the costs of the Project as
defined below.
The Company and the Issuer each have full right and lawful authority to
enter into this Agreement and to perform and observe the provisions hereof on
their respective parts to be performed and observed.
NOW THEREFORE, in consideration of the premises and the mutual
representations and agreements hereinafter contained, the Issuer and the Company
agree as follows (provided that any obligation of the Issuer or the State
created by or arising out of this Agreement shall never constitute a general
debt of the Issuer or the State or give rise to any pecuniary liability of the
Issuer or the State but shall be payable solely out of Revenues):
- 1 -
<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1.1. USE OF DEFINED TERMS. In addition to the words and terms
defined elsewhere in this Agreement, the Indenture or by reference to another
document, the words and terms set forth in Section 1.2 hereof shall have the
meanings set forth therein unless the context or use clearly indicates another
meaning or intent. Such definitions shall be equally applicable to both the
singular and plural forms of any of the words and terms defined therein.
SECTION 1.2. DEFINITIONS. As used herein:
-----------
"Additional Payments" means the amounts required to be paid by the Company
pursuant to the provisions of Section 4.2 hereof.
"Administration Expenses" means the compensation (which compensation shall
not be greater than that typically charged in similar circumstances) and
reimbursement of reasonable expenses and advances payable to the Trustee, the
Registrar, the Remarketing Agent, the Broker-Dealer, the Auction Agent, any
Paying Agent and any Authenticating Agent.
"Agreement" means this Loan Agreement, as amended or supplemented from time
to time.
"Engineer" means an engineer (who may be an employee of the Company) or
engineering firm qualified to practice the profession of engineering under the
laws of the State and who or which is acceptable to the Trustee.
"EPA" means the Department of Environmental Management of the State and any
successor body, agency, commission or department.
"Event of Default" means any of the events described as an Event of Default
in Section 7.1 hereof.
"Force Majeure" means any of the following:
(i) acts of God; strikes, lockouts or other industrial disturbances;
acts of public enemies; orders or restraints of any kind of the government
of the United States of America or of the State or any of their
departments, agencies, political subdivisions or officials, or any civil or
military authority; insurrections; civil disturbances; riots; epidemics;
landslides; lightning; earthquakes; fires; hurricanes; tornados; storms;
droughts; floods; arrests; restraint of government and people; explosions;
breakage, nuclear accidents or other malfunction or accident to facilities,
machinery, transmission pipes or canals; partial or entire failure of a
utility serving the Project; shortages of labor, materials, supplies or
transportation; or
(ii) any cause, circumstance or event not reasonably within the
control of the Company.
"Generating Stations" means collectively the Gibson Generating Station, the
Noblesville Generating Station, the Cayuga Generating Station, the Edwardsport
Generating Station, the Gallagher Generating Station and the Wabash River
Generating Station and "Generating Station" means any one of such separately.
"Indenture" means the Trust Indenture, dated as of the same date as this
Agreement, between the Issuer and the Trustee, as amended or supplemented from
time to time.
"Insurance Agreement" means the Insurance Agreement, dated as of the same
date as this Agreement, between the Company and Ambac Assurance Corporation, as
amended or supplemented from time to time.
"Interest Rate for Advances" means the interest rate per year payable on
the Bonds.
"Loan" means the loan by the Issuer to the Company of the proceeds received
from the sale of the Bonds.
"Loan Payment Date" means any date on which any Bond Service Charges are
due and payable.
"Loan Payments" means the amounts required to be paid by the Company in
repayment of the Loan pursuant to Section 4.1 hereof.
"1954 Code" means the Internal Revenue Code of 1954 as amended from time to
time through the date of enactment of the Code. References to the 1954 Code and
Sections of the 1954 Code include relevant applicable regulations (including
temporary regulations) and proposed regulations thereunder and any successor
provisions to those Sections, regulations or proposed regulations.
"Notice Address" means:
(a) As to the Issuer: Indiana Development Finance Authority
One North Capitol, Suite 320
Indianapolis, Indiana 46204
Attention: Executive Director
(b) As to the Company: PSI Energy, Inc.
139 East Fourth Street
Cincinnati, Ohio 45202
Attention: Treasurer
(c) As to the Trustee: Fifth Third Bank, Indiana
Fifth Third Center
38 Fountain Square
Cincinnati, Ohio 45263
Attention: Corporate Trust Administration
or such additional or different address, notice of which is given under Section
8.3 hereof.
"Original Bonds" means, collectively, the Series 1982 Bonds, the Series
1990 Refunded Bonds and the Series 1993 Bonds.
"Person" or words importing persons mean firms, associations, partnerships
(including without limitation, general and limited partnerships), limited
liability entities, joint ventures, societies, estates, trusts, corporations,
public or governmental bodies, other legal entities and natural persons.
"Pollution Control Facility" or "Pollution Control Facilities" means those
facilities which are pollution control facilities as defined in Section 24 of
Chapter 10.9 of the Act and those facilities described in Section 103(b)(4)(F)
of the Internal Revenue Code of 1954, as amended, and the final, proposed and
temporary regulations promulgated thereunder and other administrative authority
in effect.
"Prior Bonds" means the Original Bonds and the Series 1990 Princeton
Refunded Bonds.
"Project" or "Project Facilities" means the real, personal or real and
personal property, including undivided or other interests therein, identified in
the Project Description, financed with the proceeds of the Original Bonds.
"Project Description" means collectively the description of the Project
Facilities originally financed with the proceeds of the Original Bonds, attached
hereto as Exhibit A.
"Project Purposes" means the purposes of Pollution Control Facilities as
described in the Act and as particularly described in Exhibit A hereto.
"Project Site" means with respect to the various components of the Project,
certain pollution control, solid waste disposal and sewage facilities of the
Company at its following facilities: (a) the Cayuga Generating Station, State
Road 63, Cayuga, Vermillion County, Indiana; (b) the Edwardsport Generating
Station, State Road 67, Edwardsport, Knox County, Indiana; (c) the Gallagher
Generating Station, Jackson Street, New Albany, Floyd County, Indiana; (d) the
Gibson Generating Station, Highway 64 West, Gibson County, Indiana; (e) the
Noblesville Generating Station, 21225 Riverwood Avenue, Noblesville, Hamilton
County, Indiana; and (f) the Wabash River Generating Station, Bolton Road, Terre
Haute, Vigo County, Indiana.
"Refunded Bonds" means, collectively, the Series 1990 Princeton
Refunded Bonds, the Series 1990 Refunded Bonds and the Series 1993A Refunded
Bonds.
"Refunded Bonds Indenture" means, collectively, the Trust Indenture dated
as of March 15, 1990 between the City of Princeton, Indiana, and INB National
Bank (as predecessor to Bank One Trust Company, NA, the Trust Indenture dated as
of March 15, 1990 between the Indiana Employment Development Commission, as
predecessor to the Issuer, and INB National Bank, as predecessor to Bank One
Trust Company, NA and the Trust Indenture dated as of February 15, 1993 between
the Issuer and Bank One, Indianapolis, NA as predecessor to Bank One Trust
Company, NA.
"Refunded Bonds Loan Agreement" means, collectively, the Loan Agreement
dated as of March 15, 1990 between the City of Princeton, Indiana and Public
Service Company of Indiana, Inc., as predecessor to the Company, the Loan
Agreement dated as of March 15, 1990 between the Indiana Employment Development
Commission, as predecessor to the Issuer, and Public Service Company of Indiana,
Inc., as predecessor to the Company and the Loan Agreement dated as of February
15, 1993, between the Issuer and the Company.
"Refunded Bonds Trustee" means Bank One Trust Company, NA (as successor to
Bank One, Indianapolis, National Association), as trustee under the Refunded
Bonds Indenture.
"Revenues" means (a) the Loan Payments, (b) all other moneys received or to
be received by the Issuer (excluding any fees paid to the Issuer) or the Trustee
in respect of repayment of the Loan, including without limitation, all moneys
and investments in the Bond Fund, (c) any moneys and investments in the
Refunding Fund, and (d) all income and profit from the investment of the
foregoing moneys. The term "Revenues" does not include any moneys or investments
in the Rebate Fund or the Bond Purchase Fund.
"Series 1982 Bonds" means the City of Princeton, Indiana 12-3/8% Pollution
Control Revenue Bonds, 1982 Series A (Public Service Company of Indiana, Inc.
Project C), in the aggregate principal amount of $10,000,000.
"Series 1982 Indenture" means the Trust Indenture dated April 1, 1982
between the City of Princeton, Indiana and the American Fletcher National Bank
and Trust Company, as predecessor to Bank One, Indianapolis, NA and Bank One
Trust Company, NA.
"Series 1982 Loan Agreement" means the Loan Agreement dated as of April 1,
1982 between the City of Princeton, Indiana and Public Service Company of
Indiana, Inc., as predecessor to PSI Energy, Inc.
"Series 1990 Princeton Refunded Bonds" means the City of Princeton, Indiana
7-3/8% Pollution Control Refunding Revenue Bonds, 1990 Series (Public Service
Company of Indiana, Inc. Project C), issued and outstanding in the aggregate
principal amount of $10,000,000.
"Series 1990 Refunded Bonds" means the Indiana Employment Development
Commission 7-1/2% Environmental Revenue Bonds, Series 1990 (Public Service
Company of Indiana, Inc.), issued and outstanding in the aggregate principal
amount of $14,250,000.
"Series 1993 Bonds" means, collectively, the Series 1993A Bonds and the
Series 1993B Bonds.
"Series 1993A Bonds" means the Indiana Development Finance Authority 5.60%
Environmental Revenue Bonds, Series 1993A (PSI Energy, Inc.), issued in the
aggregate principal amount of $30,000,000 and currently outstanding in the
aggregate principal amount of $29,795,000.
"Series 1993A Refunded Bonds" means the Series 1993A Bonds to be refunded
by the Series 2000A Refunding Bonds in the aggregate amount of $29,775,000.
"Series 1993B Bonds" means the Indiana Development Finance Authority 5 3/4%
Environmental Revenue Bonds, Series 1993B (PSI Energy, Inc.), issued in the
aggregate principal amount of $50,000,000.
"Series 2000A Refunding Bonds" means the Indiana Development Finance
Authority Environmental Refunding Revenue Bonds, Series 2000A (PSI Energy, Inc.
Project), in the aggregate principal amount of $44,025,000.
"Series 2000B Refunding Bonds" means the Indiana Development Finance
Authority Environmental Refunding Revenue Bonds, Series 2000B (PSI Energy, Inc.
Project), in the aggregate principal amount of $10,000,000.
"Sewage Facility" or "Sewage Facilities" means those facilities defined as
pollution control facilities in Section 24 of Chapter 10.9 of the Act and those
facilities described in Section 142(a)(5) of the Code.
"Solid Waste Disposal Facility" or "Solid Waste Disposal Facilities" means
those facilities defined as pollution control facilities in Section 24 of
Chapter 10.9 of the Act and those facilities described in Section 142(a)(6) of
the Code.
"State" means the State of Indiana.
"Trustee" means Fifth Third Bank, Indiana located in Indianapolis, Indiana,
a corporation duly organized and validly existing under the laws of the State,
until a successor Trustee shall have become such pursuant to the applicable
provisions of the Indenture, and thereafter "Trustee" shall mean the successor
Trustee. "Principal Office" of the Trustee shall mean the principal corporate
trust office of the Trustee, which office at the date of issuance of the Bonds
is located at its Notice Address.
"Unassigned Issuer Rights" means all of the rights of the Issuer to receive
Additional Payments under Section 4.2 hereof, to inspection pursuant to Section
5.1 hereof, to be held harmless and indemnified under Section 5.9 hereof, to be
reimbursed for attorney's fees and expenses under Section 7.4 hereof and to give
or withhold consent to amendments, changes, modifications, alterations and
termination of this Agreement under Section 8.6 hereof and its right to enforce
such rights.
SECTION 1.3. INTERPRETATION. Any reference herein to the State, to the
Issuer or to any member or officer of either includes entities or officials
succeeding to their respective functions, duties or responsibilities pursuant to
or by operation of law or lawfully performing their functions.
Any reference to a section or provision of the Constitution of the State or
the Act, or to a section, provision or chapter of the Indiana Code, or to any
statute of the United States of America, includes that section, provision or
chapter as amended, modified, revised, supplemented or superseded from time to
time; provided, that no amendment, modification, revision, supplement or
superseding section, provision or chapter shall be applicable solely by reason
of this provision, if it constitutes in any way an impairment of the rights or
obligations of the Issuer, the State, the Holders, the Trustee, the Registrar,
the Auction Agent, an Authenticating Agent, a Paying Agent, Ambac Assurance, the
Remarketing Agent, or the Company under this Agreement, the Indenture or the
Bonds.
Unless the context indicates otherwise, words importing the singular number
include the plural number, and vice versa; the terms "hereof", "hereby",
"herein", "hereto", "hereunder" and similar terms refer to this Agreement; and
the term "hereafter" means after, and the term "heretofore" means before, the
date of delivery of the Bonds. Words of any gender include the correlative words
of the other genders, unless the sense indicates otherwise.
SECTION 1.4. CAPTIONS AND HEADINGS. The captions and headings in this
Agreement are used solely for convenience of reference and in no way define,
limit or describe the scope or intent of any Articles, Sections, subsections,
paragraphs or subparagraphs or clauses hereof.
(End of Article I)
<PAGE>
ARTICLE II
REPRESENTATIONS
SECTION II.1. REPRESENTATIONS OF THE ISSUER. The Issuer represents that:
(a) it is a body corporate and politic duly organized and validly existing under
the laws of the State; (b) it has duly accomplished all conditions necessary to
be accomplished by it prior to the issuance and delivery of the Bonds and the
execution and delivery of this Agreement and the Indenture; (c) it is not in
violation of or in conflict with any provisions of the laws of the State which
would impair its ability to carry out its obligations contained in this
Agreement or the Indenture; (d) it is empowered to enter into the transactions
contemplated by this Agreement and the Indenture; (e) it has duly authorized the
execution, delivery and performance of this Agreement and the Indenture; (f) it
will do all things in its power in order to maintain its existence or assure the
assumption of its obligations under this Agreement and the Indenture by any
successor municipal corporation; and (g) following reasonable notice, a public
hearing was held on April 18, 2000 with respect to the issuance of the Bonds as
required by Section 147(f) of the Code.
SECTION II.2. NO WARRANTY BY ISSUER OF CONDITION OR SUITABILITY OF THE
PROJECT. The Issuer makes no warranty, either express or implied, as to the
suitability or utilization of the Project for the Project Purposes, or as to the
condition of the Project Facilities or that the Project Facilities are or will
be suitable for the Company's purposes or needs.
SECTION II.3. REPRESENTATIONS AND COVENANTS OF THE COMPANY. The Company
represents that:
(a) The Company has been duly incorporated and is validly existing as a
corporation under the laws of the State, with power and authority (corporate and
other) to own its properties and conduct its business, to execute and deliver
this Agreement and to perform its obligations under this Agreement.
(b) This Agreement has been duly authorized, executed and delivered by the
Company and this Agreement constitutes a valid and legally binding obligation of
the Company, enforceable in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.
(c) The execution, delivery and performance by the Company of this
Agreement and the consummation of the transactions contemplated hereby will not
violate any provision of law or regulation applicable to the Company, or of any
writ or decree of any court or governmental instrumentality, or of the Amended
Articles of Consolidation, as amended, or the By-laws of the Company, or of any
mortgage, indenture, contract, agreement or other undertaking to which the
Company is a party or which purports to be binding upon the Company or upon any
of its assets.
(d) The Project constitutes and will constitute either land or property of
a character subject to the allowance for depreciation for purposes of the Code,
and all expenditures for the cost of constructing the Project have been charged
to a capital account for federal income tax purposes (or would have been so
charged either with or but for a proper election to deduct such amounts).
(e) No other bonds are being sold for or on behalf of the Company or any
related person thereto at substantially the same time (within less than 15 days)
pursuant to a common plan of financing and which are payable from the same
source of funds determined without regard to guarantees from unrelated parties.
(f) No portion of the Project had been acquired and placed in operation
at substantially the level for which it was designed for more than one year
prior to the date of delivery of the Original Bonds series which financed such
portion of the Project.
(g) The weighted average maturity of the Series 2000A Refunding Bonds does
not exceed 120% of the average economic life of the Project Facilities
originally financed by the Series 1990 Refunded Bonds and the portion of the
Series 1993 Bonds allocable to the Series 1993A Refunded Bonds.
(h) The weighted average maturity of the Series 2000B Refunding Bonds does
not exceed 120% of the average economic life of the Project Facilities
originally financed by the Series 1982 Bonds.
(i) The portions of the Project (i) which are Pollution Control Facilities
were designed to meet or exceed applicable federal, state and local requirements
then in effect for the control of air pollution and have been and will be used
to abate or control air pollution or contamination by removing, altering,
disposing of or storing pollutants, contaminants, wastes or heat, and the
Pollution Control Facilities components of the Project as designed constitute
"air pollution control facilities" or facilities functionally related or
subordinate thereto within the meaning of Section 103(b)(4)(F) of the 1954 Code,
and the final, temporary and proposed regulations promulgated thereunder and
other administrative authority in effect; (ii) which are Solid Waste Disposal
Facilities have been and will be used for the collection, storage, treatment,
utilization, processing or final disposal of solid waste and constitute "solid
waste disposal facilities" within the meaning of Section 142(a)(6) of the Code
and the regulations applicable thereto; and (iii) which are Sewage Facilities
have been and will be used for the collection and treatment of sewage and
constitute "sewage facilities" within the meaning of Section 142(a)(5) of the
Code and the regulations applicable thereto.
(j) The Project has been and will be used wholly to control pollution and
dispose of solid waste and sewage and was designed for no significant purpose
other than pollution control and disposal of solid waste and sewage, and the
Project was not designed to result in an increase in production or capacity, in
a material extension of the useful life of the Generating Stations or, in the
case of the portions of the Project which are Pollution Control Facilities, in
the recovery of by-products of any substantial value.
(k) Substantially all (at least 90%) of the proceeds of the Series 1982
Bonds was used to provide Pollution Control Facilities and Solid Waste Disposal
Facilities.
(l) Substantially all (at least 95%) of the proceeds of each of the Series
1990 Refunded Bonds and the Series 1993 Bonds was used to provide "Solid Waste
Disposal Facilities" and "Sewage Facilities".
(m) Acquisition, construction and installation or the incurrence of Cost of
Construction (as defined in the Series 1982 Loan Agreement for the Series 1982
Bonds) for the Pollution Control Facilities portion of the Project or any
separate facility thereof was not commenced prior to the adoption of the
resolution of the City of Princeton, Indiana, on October 16, 1978; and
acquisition, construction and installation or the incurrence of Cost of
Construction for the Solid Waste Disposal Facilities and Sewage Facilities
portion of the Project or any separate facility thereof was not commenced prior
to the adoption of the applicable resolution of the Issuer on April 18, 1988 or
February 15, 1993.
(n) The entire proceeds of each of the Original Bonds series were spent for
the Project Facilities financed pursuant to the respective Series 1982 Loan
Agreement and Refunded Bonds Loan Agreement for each Original Bonds series or to
pay costs of issuance of the Original Bonds. The proceeds of the Bonds (other
than any accrued interest thereon) will be used exclusively to refund the
Refunded Bonds; any investment earnings on such proceeds of the Bonds will be
used to pay principal, premium or interest on the Refunded Bonds; and none of
the proceeds of the Bonds will be used to pay for any costs of issuance of the
Bonds. The principal amount of the Bonds does not exceed the outstanding
principal amount of the Refunded Bonds. The proceeds of the Bonds will be used
to retire the Refunded Bonds not later than 90 days after the date of issuance
of the Bonds.
(o) It has caused the Project to be substantially completed. The Project
constitutes Pollution Control Facilities under the Act and is consistent with
the purposes of the Act. The Project is being, and the Company will cause the
Project to be, operated and maintained in such manner to conform with all
applicable zoning, planning, building, environmental and other applicable
governmental regulations and all permits, variances and orders issued or granted
pursuant thereto, including the permit-to-install for the Project, which
permits, variances and orders have not been withdrawn or otherwise suspended,
and to be consistent with the Act.
(p) It has used or operated or has caused to be used or operated, and
presently intends to use or operate or cause to be used or operated the Project
Facilities in a manner consistent with the Project Purposes until the date on
which the Bonds have been fully paid and knows of no reason why the Project
Facilities will not be so operated. The Company does not intend to sell or
otherwise dispose of the Project or any portion thereof.
(q) None of the proceeds of each of the Prior Bonds was used and none of
the proceeds of the Bonds will be used to provide any airplane, skybox or other
private luxury box, or health club facility, any facility primarily used for
gambling or any store the principal business of which is the sale of alcoholic
beverages for consumption off premises.
(r) Less than 25% of the proceeds of each of the Prior Bonds was used to
acquire land or any interest therein, and none of such proceeds was used to
provide land which was used for farming purposes.
(s) None of the proceeds of each of the Prior Bonds was used to acquire
existing property or any interest therein unless the first use of such property
was by the Company and was pursuant to and followed such acquisition.
(t) At no time will any funds constituting gross proceeds of the Bonds be
used in a manner as would constitute failure of compliance with Section 148 of
the Code.
(u) The Prior Bonds were not, and the Bonds will not be, "federally
guaranteed" within the meaning of Section 149(b) of the Code.
(v) It is not anticipated that as of the date hereof, there will be created
any "replacement proceeds", within the meaning of Section 1.148-1(c) of the
Treasury Regulations, with respect to the Bonds; however, in the event that any
such replacement proceeds are deemed to have been created, such amounts will be
invested in compliance with Section 148 of the Code.
(w) On the date of issuance and delivery of each of the Prior Bonds, the
Company reasonably expected that at least 85% of the respective spendable
proceeds of each of the Prior Bonds would be expended to carry out the
respective governmental purpose of each such issue within the 3-year period
beginning on the issue date of such issue and the Company reasonably expected
that the proceeds of each of the Prior Bonds would be spent in accordance with
the spending requirements of Section 149(g)(2) of the Code. The spendable
proceeds of each of the Prior Bonds have been fully expended prior to the date
of issuance of the Bonds. The proceeds of each of the Prior Bonds series were
not invested in nonpurpose investments having a substantially guaranteed yield
for four years or more.
(x) The information furnished by the Company and used by the issuer in
preparing the certifications and statements pursuant to Sections 148 and 149(e)
of the Code or their statutory predecessors with respect to each of the Prior
Bonds was accurate and complete as of the respective date of issuance thereof,
and the information furnished by the Company and used by the Issuer in preparing
the certification pursuant to Section 148 of the Code and in preparing the
information statement pursuant to Section 149(e) of the Code, both referred to
in the Bond Resolution, will be accurate and complete as of the date of issuance
of the Bonds.
(y) The Project Facilities do not include any office except for offices (i)
located on the Project Site and (ii) not more than a de minimis amount of the
functions to be performed at which is not directly related to the day-to-day
operations of the Project Facilities.
(End of Article II)
<PAGE>
ARTICLE III
COMPLETION OF THE PROJECT; ISSUANCE OF THE BONDS
SECTION III.1. ACQUISITION, CONSTRUCTION AND INSTALLATION. The Company
represents that it has caused the Project Facilities to be acquired, constructed
and installed on the respective Project Sites, substantially in accordance with
the Project Description and in conformance with all applicable zoning, planning,
building and other similar regulations of all governmental authorities having
jurisdiction over the Project and all permits, variances and orders issued in
respect of the Project by EPA, and that the proceeds derived from the Series
1982 Bonds and Refunded Bonds, including any investment thereof, were expended
in accordance with the respective Series 1982 Indenture or respective Series
1982 Loan Agreement or Refunded Bonds Indenture and the Refunded Bonds Loan
Agreement.
SECTION III.2. PROJECT DESCRIPTION. The Project Description may be changed
from time to time by, or with the consent of, the Company provided that any such
change shall also be filed with the Issuer and provided further that no change
in the Project Description shall materially change the function of the Project
Facilities unless the Trustee shall have received (i) an Engineer's certificate
that such changes will not impair the significance or character of the Project
Facilities as Pollution Control Facilities, Solid Waste Disposal Facilities and
Sewage Facilities and (ii) an Opinion of Bond Counsel or ruling of the Internal
Revenue Service to the effect that such amendment will not adversely affect the
exclusion of interest on the Bonds from gross income for federal income tax
purposes.
SECTION III.3. ISSUANCE OF THE BONDS; APPLICATION OF PROCEEDS. To provide
funds to make the Loan to the Company to assist the Company in the refunding of
the Refunded Bonds, the Issuer will issue, sell and deliver the Bonds to the
Original Purchaser. The Bonds will be issued pursuant to the Indenture in the
aggregate principal amount, will bear interest, will mature and will be subject
to redemption as set forth therein. The Company hereby approves the terms and
conditions of the Indenture and the Bonds, and the terms and conditions under
which the Bonds will be issued, sold and delivered.
The Company hereby requests that the Issuer notify the Refunded Bonds
Trustee (unless the Refunded Bonds Trustee has already received such notice),
pursuant to the Refunded Bonds Indenture, that the entire outstanding principal
amount of the Refunded Bonds is to be redeemed pursuant to the following chart,
plus accrued interest to that redemption date.
REFUNDED BONDS REDEMPTION DATE REDEMPTION PRICE
Series 1990 Princeton June 19, 2000 102%
Refunded Bonds
Series 1990 Refunded Bonds June 19, 2000 102%
Series 1993A Refunded Bonds June 19, 2000 102%
The proceeds from the sale of the Bonds (other than any accrued interest)
shall be loaned to the Company to assist the Company in refunding the Refunded
Bonds in order to reduce the interest cost payable by the Company; those
proceeds shall be deposited in the Refunding Fund. On the applicable redemption
date, all moneys on deposit in the Refunding Fund shall be disbursed by the
Trustee as provided in Section 5.02 of the Indenture to the Refunded Bonds
Trustee for deposit in the Bond Fund created in the Refunded Bonds Indenture and
applied by the Refunded Bonds Trustee to the payment of principal of and
interest on the Refunded Bonds on their redemption date. The Company shall pay
to the Refunded Bonds Trustee prior to the date of redemption of such series of
Refunded Bonds such additional amounts as shall be required to pay in full on
such date the entire amount of principal of, premium and interest due on the
Refunded Bonds.
Pending disbursement pursuant to this Section, the proceeds so deposited in
the Refunding Fund, together with any investment earnings thereon, shall
constitute a part of the Revenues assigned by the Issuer to the Trustee for the
payment of Bond Service Charges. Any accrued interest shall be deposited in the
Bond Fund.
SECTION III.4. INVESTMENT OF FUND MONEYS. At the oral (confirmed promptly
in writing) or written request of the Company, any moneys held as part of the
Bond Fund, the Refunding Fund or the Rebate Fund shall be invested or reinvested
by the Trustee in Eligible Investments; provided, that such moneys shall be
invested or reinvested by the Trustee only in Eligible Investments which shall
mature, or which shall be subject to redemption by the holder thereof at the
option of such holder, not later than the date upon which the moneys so invested
are needed to make payments from those Funds. The Issuer (to the extent it
retained or retains direction or control) and the Company each hereby represents
that the investment and reinvestment and the use of the proceeds of the Refunded
Bonds were restricted in such manner and to such extent as was necessary so that
the Refunded Bonds would not constitute arbitrage bonds under Section 148 of the
Code or its statutory predecessor and each hereby covenants that it will
restrict that investment and reinvestment and the use of the proceeds of the
Bonds in such manner and to such extent, if any, as may be necessary so that the
Bonds will not constitute arbitrage bonds under Section 148 of the Code.
The Company shall provide the Issuer with, and the Issuer may base its
certificate and statement, each as authorized by the Bond Resolution, on a
certificate of an appropriate officer, employee or agent of or consultant to the
Company for inclusion in the transcript of proceedings for the Bonds, setting
forth the reasonable expectations of the Company on the date of delivery of and
payment for the Bonds regarding the amount and use of the proceeds of the Bonds
and the facts, estimates and circumstances on which those expectations are
based.
SECTION III.5. REBATE FUND. To the extent required by Section 5.08 of the
Indenture, within five days after the end of the fifth Bond Year (as defined in
the Indenture) and every fifth Bond Year thereafter, and within five days after
payment in full of all outstanding Bonds, the Company shall calculate the amount
of Excess Earnings (as defined in the Indenture) as of the end of that Bond Year
or the date of such payment and shall notify the Trustee of that amount. If the
amount then on deposit in the Rebate Fund created under the Indenture is less
than the amount of Excess Earnings (computed by taking into account the amount
or amounts, if any, previously paid to the United States pursuant to Section
5.08 of the Indenture and this Section), the Company shall, within five days
after the date of the aforesaid calculation, pay to the Trustee for deposit in
the Rebate Fund an amount sufficient to cause the Rebate Fund to contain an
amount equal to the Excess Earnings. The obligation of the Company to make such
payments shall remain in effect and be binding upon the Company notwithstanding
the release and discharge of the Indenture. The Company shall obtain and keep
such records of the computations made pursuant to this Section as are required
under Section 148(f) of the Code.
(End of Article III)
ARTICLE IV
LOAN BY ISSUER; LOAN PAYMENTS;
ADDITIONAL PAYMENTS; MUNICIPAL BOND INSURANCE
POLICY AND LIQUIDITY FACILITY
SECTION IV.1. LOAN REPAYMENT. Upon the terms and conditions of this
Agreement, the Issuer agrees to make the Loan to the Company. The proceeds of
the Loan shall be deposited with the Trustee pursuant to Section 3.3 hereof. In
consideration of and in repayment of the Loan, the Company shall make, as Loan
Payments, to the Trustee for the account of the Issuer, payments which
correspond, as to time, and are equal in amount as of the Loan Payment Date, to
the corresponding Bond Service Charges payable on the Bonds. All Loan Payments
received by the Trustee shall be held and disbursed in accordance with the
provisions of the Indenture and this Agreement for application to the payment of
Bond Service Charges.
The Company shall be entitled to a credit against the Loan Payments
required to be made on any Loan Payment Date to the extent that the balance of
the Bond Fund is then in excess of amounts required (a) for the payment of Bonds
theretofore matured or theretofore called for redemption, or to be called for
redemption pursuant to Section 6.1 hereof (b) for the payment of interest for
which checks or drafts have been drawn and mailed by the Trustee or Paying
Agent, and (c) to be deposited in the Bond Fund by the Indenture for use other
than for the payment of Bond Service Charges due on that Loan Payment Date.
Except for such interest of the Company as may hereafter arise pursuant to
Section 8.2 hereof or Sections 5.06 or 5.07 of the Indenture, the Company and
the Issuer each acknowledge that neither the Company, the State nor the Issuer
has any interest in the Bond Fund or the Bond Purchase Fund, and any moneys
deposited therein shall be in the custody of and held by the Trustee in trust
for the benefit of the Holders.
SECTION IV.2. ADDITIONAL PAYMENTS. The Company shall pay to the Issuer, as
Additional Payments hereunder, any and all costs and expenses incurred or to be
paid by the Issuer in connection with the issuance and delivery of the Bonds or
otherwise related to actions taken by the Issuer under this Agreement or the
Indenture.
The Company shall pay the Administration Expenses to the Trustee, the
Registrar, the Remarketing Agent, the Auction Agent, and any Paying Agent or
Authenticating Agent, as appropriate, as Additional Payments hereunder.
The Company may, without creating a default hereunder, contest in good
faith the reasonableness of any such cost or expense incurred or to be paid by
the Issuer and any Administration Expenses claimed to be due to the Trustee, the
Registrar, the Auction Agent, the Remarketing Agent, any Paying Agent or any
Authenticating Agent.
In the event the Company should fail to pay any Loan Payments, Additional
Payments or Administration Expenses when due, the payment in default shall
continue as an obligation of the Company until the amount in default shall have
been fully paid together with interest thereon during the default period at the
Interest Rate for Advances.
SECTION IV.3. PLACE OF PAYMENTS. The Company shall make all Loan
Payments directly to the Trustee at its Principal Office. Additional Payments
shall be made directly to the person or entity to whom or to which they are due.
SECTION IV.4. OBLIGATIONS UNCONDITIONAL. The obligations of the Company to
make Loan Payments, Additional Payments and any payments required of the Company
under Section 5.08 of the Indenture shall be absolute and unconditional, and the
Company shall make such payments without abatement, diminution or deduction
regardless of any cause or circumstances whatsoever including, without
limitation, any defense, set-off, recoupment or counterclaim which the Company
may have or assert against the Issuer, the Trustee, the Registrar, the
Remarketing Agent, the Auction Agent, the Paying Agent or any other Person.
SECTION IV.5. ASSIGNMENT OF REVENUES AND AGREEMENT. To secure the payment
of Bond Service Charges, the Issuer shall, by the Indenture, (a) absolutely and
irrevocably assign to the Trustee, its successors in trust and its and their
assigns forever, all of the Issuer's rights and remedies under this Agreement
(except for the Unassigned Issuer Rights), and (b) grant a security interest to
the Trustee, its successors in trust and its and their assigns forever, in all
of its rights to and interest in the Revenues including, without limitation, all
Loan Payments and other amounts receivable by or on behalf of the Issuer under
the Agreement in respect of repayment of the Loan. The Company hereby agrees and
consents to those assignments and that grant of a security interest.
SECTION IV.6. MUNICIPAL BOND INSURANCE POLICY; LIQUIDITY FACILITY;
CANCELLATION.
(a) The Company agrees to provide for the payment of the principal of and
interest on the Bonds by causing the Municipal Bond Insurance Policy to be
delivered to the Trustee on the date of the delivery of the Bonds.
(b) The Company may provide for the delivery of a Liquidity Facility.
(c) The Company may cancel any Liquidity Facility then in effect at such
time and direct the Trustee in writing to surrender such Liquidity Facility to
the Liquidity Facility Issuer by which it was issued in accordance with the
Indenture; provided, that no such cancellation shall become effective and no
such surrender shall take place until all Bonds subject to purchase pursuant to
Section 4.07(d) of the Indenture have been so purchased or redeemed with the
proceeds of such Liquidity Facility.
SECTION IV.7. COMPANY'S OPTION TO ELECT RATE PERIOD; CHANGES IN AUCTION
DATE AND LENGTH OF AUCTION PERIODS. The Company shall have, and is hereby
granted, the option to elect to convert on any Conversion Date the interest rate
borne by the Bonds to another Variable Rate or return to the Auction Rate, to be
effective for a Rate Period pursuant to the provisions of Article II of the
Indenture and subject to the terms and conditions set forth therein. The Company
also shall have the option to direct the change of Auction Dates and/or the
length of Auction Rate Periods in accordance with the Indenture. To exercise
such options, the Company shall give the written notice required by the
Indenture.
SECTION IV.8. COMPANY'S OBLIGATION TO PURCHASE BONDS. The Company hereby
agrees to pay or cause to be paid to the Trustee or the Paying Agent, on or
before each day on which Bonds may be or are required to be tendered for
purchase, amounts equal to the amounts to be paid by the Trustee or the Paying
Agent with respect to the Bonds tendered for purchase on such dates pursuant to
Article IV of the Indenture; provided, however, that the obligation of the
Company to make any such payment under this Section shall be reduced by the
amount of (A) moneys paid by the Remarketing Agent as proceeds of the
remarketing of such Bonds by the Remarketing Agent, (B) moneys drawn under any
Liquidity Facility, for the purpose of paying such purchase price and (C) other
moneys made available by the Company, as set forth in Section 4.08(b)(ii) of the
Indenture.
(End of Article IV)
ARTICLE V
ADDITIONAL AGREEMENTS AND COVENANTS
SECTION V.1. RIGHT OF INSPECTION. The Company agrees that, subject to
reasonable security and safety regulations and to reasonable requirements as to
notice, the Issuer and the Trustee and their or any of their respective duly
authorized agents shall have the right at all reasonable times to enter upon the
Project Site to examine and inspect the Projects.
SECTION V.2. MAINTENANCE. The Company shall use its best efforts to keep
and maintain the Project Facilities, including all appurtenances thereto and any
personal property therein or thereon, in good repair and good operating
condition so that the Project Facilities will continue to constitute Pollution
Control Facilities, Sewage Facilities or Solid Waste Disposal Facilities, for
the purposes of the operation thereof as required by Section 5.4 hereof.
So long as such shall not be in violation of the Act or impair the
character of the Project Facilities as Pollution Control Facilities, Sewage
Facilities or Solid Waste Disposal Facilities, and provided there is continued
compliance with applicable laws and regulations of governmental entities having
jurisdiction thereof, the Company shall have the right to remodel the Project
Facilities or make additions, modifications and improvements thereto, from time
to time as it, in its discretion, may deem to be desirable for its uses and
purposes, the cost of which remodeling, additions, modifications and
improvements shall be paid by the Company and the same shall, when made, become
a part of the Project Facilities.
SECTION V.3. REMOVAL OF PORTIONS OF THE PROJECT FACILITIES. The Company
shall not be under any obligation to renew, repair or replace any inadequate,
obsolete, worn out, unsuitable, undesirable or unnecessary portions of the
Project Facilities, except that, subject to Section 5.4 hereof, it will use its
best efforts to ensure the continued character of the Project Facilities as
Pollution Control Facilities, Sewage Facilities or Solid Waste Disposal
Facilities. The Company shall have the right from time to time to substitute
personal property or fixtures for any portions of the Project Facilities,
provided that the personal property or fixtures so substituted shall not impair
the character of the Project Facilities as Pollution Control Facilities, Sewage
Facilities or Solid Waste Disposal Facilities. Any such substituted property or
fixtures shall, when so substituted, become a part of the Project Facilities.
The Company shall also have the right to remove any portion of the Project
Facilities, without substitution therefor; provided, that the Company shall
deliver to the Trustee a certificate signed by an Engineer describing said
portion of the Project Facilities and stating that the removal of such property
or fixtures will not impair the character of the Project Facilities as Pollution
Control Facilities, Sewage Facilities or Solid Waste Disposal Facilities.
SECTION V.4. OPERATION OF PROJECT FACILITIES. The Company will, subject to
its obligations and rights to maintain, repair or remove portions of the Project
Facilities, as provided in Sections 5.2 and 5.3 hereof, use its best efforts to
continue operation of the Project Facilities so long as and to the extent that
operation thereof is required to comply with laws or regulations of governmental
entities having jurisdiction thereof or unless the Issuer shall have approved
the discontinuance of such operation (which approval shall not be unreasonably
withheld). The Company agrees that it will, within the design capacities
thereof, use its best efforts to operate and maintain the Project Facilities in
accordance with all applicable, valid and enforceable rules and regulations of
governmental entities having jurisdiction thereof; provided, that the Company
reserves the right to contest in good faith any such laws or regulations.
Nothing in this Agreement shall prevent or restrict the Company, in its
sole discretion, at any time, from discontinuing or suspending either
permanently or temporarily its use of any facility of the Company served by the
Project Facilities and in the event such discontinuance or suspension shall
render unnecessary the continued operation of the Project Facilities, the
Company shall have the right to discontinue the operation of the Project
Facilities during the period of any such discontinuance or suspension.
SECTION V.5. INSURANCE. The Company shall cause the Project Facilities to
be kept insured against fire or other casualty to the extent that property of
similar character is usually so insured by companies similarly situated and
operating like properties, to a reasonable amount by reputable insurance
companies or, in lieu of or supplementing such insurance in whole or in part,
adopt some other method or plan of protection against loss by fire or other
casualty at least equal in protection to the method or plan of protection
against loss by fire or other casualty of companies similarly situated and
operating properties subject to similar or greater fire or other hazards or on
which properties an equal or higher primary fire or other casualty insurance
rate has been set by reputable insurance companies.
SECTION V.6. WORKERS' COMPENSATION COVERAGE. Throughout the term of this
Agreement, the Company shall comply, or cause compliance, with applicable
workers' compensation laws of the State.
SECTION V.7. DAMAGE; DESTRUCTION AND EMINENT DOMAIN. If, during the term of
this Agreement, the Project Facilities or any portion thereof is destroyed or
damaged in whole or in part by fire or other casualty, or title to, or the
temporary use of, the Project Facilities or any portion thereof shall have been
taken by the exercise of the power of eminent domain, the Company (unless it
shall have exercised its option to prepay the Loan Payments pursuant to Section
6.2 hereof) shall promptly repair, rebuild or restore the portion of the Project
Facilities so damaged, destroyed or taken with such changes, alterations and
modifications (including the substitution and addition of other property) as may
be necessary or desirable for the administration and operation of the Project
Facilities as Pollution Control Facilities, Sewage Facilities or Solid Waste
Disposal Facilities and as shall not impair the character or significance of the
Project Facilities as furthering the purposes of the Act.
SECTION V.8. COMPANY TO MAINTAIN ITS CORPORATE EXISTENCE; CONDITIONS UNDER
WHICH EXCEPTIONS PERMITTED. The Company agrees that, during the term of this
Agreement, it will maintain its corporate existence, will not dissolve or
otherwise dispose of all or substantially all of its assets and will not
consolidate with or merge into another corporation or permit one or more other
corporations to consolidate with or merge into it; provided that the Company
may, without violating its agreement contained in this Section, consolidate with
or merge into another corporation, or permit one or more other corporations to
consolidate with or merge into it, or sell or otherwise transfer to another
corporation all or substantially all of its assets as an entirety and thereafter
dissolve, provided the surviving, resulting or transferee corporation, as the
case may be (if other than the Company), is a corporation organized and existing
under the laws of one of the states of the United States, and assumes in writing
all of the obligations of the Company herein, and, if not an Indiana
corporation, is qualified to do business in the State.
If consolidation, merger or sale or other transfer is made as provided in
this Section, the provisions of this Section 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.
SECTION V.9. INDEMNIFICATION. The Company releases the Issuer from, agrees
that the Issuer shall not be liable for, and indemnifies the Issuer against, all
liabilities, claims, costs and expenses imposed upon or asserted against the
Issuer on account of: (a) any loss or damage to property or injury to or death
of or loss by any person that may be occasioned by any cause whatsoever
pertaining to the construction, maintenance, operation and use of the Project
Facilities; (b) any breach or default on the part of the Company in the
performance of any covenant or agreement of the Company under this Agreement or
any related document, or arising from any act or failure to act by the Company,
or any of its agents, contractors, servants, employees or licensees; (c) the
authorization, issuance and sale of the Bonds, and the provision of any
information furnished in connection therewith concerning the Project Facilities
or the Company (including, without limitation, any information furnished by the
Company for inclusion in any certifications made by the Issuer under Section 3.4
hereof or for inclusion in, or as a basis for preparation of, the Form 8038
information statement to be filed by the Issuer); and (d) any claim or action or
proceeding with respect to the matters set forth in (a), (b) and (c) above
brought thereon.
The Company agrees to indemnify the Trustee, the Paying Agent, the
Remarketing Agent, the Auction Agent, and the Registrar (each hereinafter
referred to in this section as an "indemnified party") for and to hold each of
them harmless against all liabilities, claims, costs and expenses incurred
without negligence or willful misconduct on the part of the indemnified party,
on account of any action taken or omitted to be taken by the indemnified party
in accordance with the terms of this Agreement, the Bonds or the Indenture or
any action taken at the request of or with the consent of the Company, including
the costs and expenses of the indemnified party in defending itself against any
such claim, action or proceeding brought in connection with the exercise or
performance of any of its powers or duties under this Agreement, the Bonds or
the Indenture.
In case any action or proceeding is brought against the Issuer, or an
indemnified party in respect of which indemnity may be sought hereunder, the
party seeking indemnity promptly shall give notice of that action or proceeding
to the Company, and the Company upon receipt of that notice shall have the
obligation and the right to assume the defense of the action or proceeding;
provided, that failure of a party to give that notice shall not relieve the
Company from any of its obligations under this Section unless that failure
prejudices the defense of the action or proceeding by the Company. At its own
expense, an indemnified party may employ separate counsel and participate in the
defense; provided, however, where it is ethically inappropriate for one firm to
represent the interests of the Issuer, and any other indemnified party or
parties, the Company shall pay the Issuer's legal expenses in connection with
the Issuer's retention of separate counsel. The Company shall not be liable for
any settlement made without its consent.
The indemnification set forth above is intended to and shall include the
indemnification of all affected officials, directors, officers and employees of
the Issuer, the Trustee, the Paying Agent, the Remarketing Agent, the Auction
Agent, and the Registrar, respectively. That indemnification is intended to and
shall be enforceable by the Issuer, the Trustee, the Paying Agent, the
Remarketing Agent and the Registrar, respectively, to the full extent permitted
by law.
SECTION V.10. COMPANY NOT TO ADVERSELY AFFECT EXCLUSION OF INTEREST ON
BONDS FROM GROSS INCOME FOR FEDERAL INCOME TAX PURPOSES. The Company hereby
covenants and represents that it has taken and caused to be taken and shall take
and cause to be taken all actions that may be required of it for the interest on
the Bonds to be and remain excluded from the gross income of the Holders for
federal income tax purposes, and that it has not taken or permitted to be taken
on its behalf, and covenants that it will not take, or permit to be taken on its
behalf, any action which, if taken, would adversely affect that exclusion under
the provisions of the Code.
SECTION V.11. USE OF PROJECT FACILITIES. The Issuer agrees that it will not
take any action, or cause any action to be taken on its behalf, to interfere
with the Company's ownership interest in the Project or to prevent the Company
from having possession, custody, use and enjoyment of the Project other than
pursuant to Article VII of this Agreement or Article VII of the Indenture.
SECTION V.12. ASSIGNMENT BY COMPANY. Notwithstanding any other provision of
this Loan Agreement, this Agreement may be assigned in whole or in part by the
Company and the Project may be sold or conveyed by the Company without the
necessity of obtaining the consent of either the Issuer or the Trustee, subject,
however, to each of the following conditions:
(a) The Company must provide the Trustee and the Remarketing Agent with an
Opinion of Bond Counsel that such action will not affect the exclusion of
interest on the Bonds for federal income tax purposes.
(b) Ambac Assurance must provide to the Trustee its written consent to such
action.
(c) The Company shall, within 30 days after execution thereof, furnish or
cause to be furnished to the Issuer and the Trustee a true and complete copy of
each such assignment together with any instrument of assumption.
(d) Any assignment from the Company shall not materially impair fulfillment
of the Project Purposes to be accomplished by operation of the Project as herein
provided.
SECTION V.13. THE DEPOSITORY TRUST COMPANY LETTER OF REPRESENTATION. The
Company agrees that it shall cause the Trustee on behalf of the Issuer to
fulfill the obligations set forth in the Depository Trust Company Letter of
Representation for the Bonds.
(End of Article V)
ARTICLE VI
REDEMPTION
SECTION VI.1. OPTIONAL REDEMPTION. Provided no Event of Default shall have
occurred and be subsisting, at any time and from time to time, the Company may
deliver moneys to the Trustee in addition to Loan Payments or Additional
Payments required to be made and direct the Trustee to use the moneys so
delivered for the purpose of calling Bonds for optional redemption in accordance
with the applicable provisions of the Indenture providing for optional
redemption at the redemption price stated in the Indenture. Pending application
for those purposes, any moneys so delivered shall be held by the Trustee in a
special account in the Bond Fund and delivery of those moneys shall not, except
as set forth in Section 4.1 hereof, operate to abate or postpone Loan Payments
or Additional Payments otherwise becoming due or to alter or suspend any other
obligations of the Company under this Agreement.
SECTION V1.2. EXTRAORDINARY OPTIONAL REDEMPTION. The Company shall have,
subject to the conditions hereinafter imposed, the option during a Term Rate
Period to direct the redemption of the Bonds in whole upon the occurrence of the
event described below in paragraph (c) and in part upon the occurrence of the
other events described below in accordance with the applicable provisions of the
Indenture. In the event that any of the events described below affect less than
all of the Project Facilities and the Generating Stations which they serve, the
Bonds may be redeemed in an amount equal to the outstanding principal amount of
the Bonds multiplied by the allocable percentage figure for each Project
Facility, to-wit: 50.5% for Unit 4 of the Gibson Generating Station, 19.0% for
Unit 2 of the Gibson Generating Station, 18.5% for Unit 5 of the Gibson
Generating Station, 8.5% for Wabash River Generating Station, 1.5% for the
Noblesville Generating Station, 1.0% for the Edwardsport Generating Station,
1.0% for the Cayuga Generating Station, and 0.0% for the Gallagher Generating
Station.
(a) One or more of the Project Facilities or the Generating Stations which
they serve shall have been damaged or destroyed to such an extent that (1) such
Project Facilities or such Generating Stations cannot reasonably be expected to
be restored, within a period of six consecutive months, to the condition thereof
immediately preceding such damage or destruction or (2) the Company is
reasonably expected to be prevented from carrying on its normal use and
operation of such Project Facilities or such Generating Stations for a period of
six consecutive months.
(b) Title to, or the temporary use of, all or a significant part of one or
more of the Project Facilities or the Generating Stations which they serve shall
have been taken under the exercise of the power of eminent domain to such an
extent (1) that such Project Facilities or such Generating Stations cannot
reasonably be expected to be restored within a period of six consecutive months
to a condition of usefulness comparable to that existing prior to the taking or
(2) the Company is reasonably expected to be prevented from carrying on its
normal use and operation of such Project Facilities or such Generating Stations
for a period of six consecutive months.
(c) As a result of any changes in the Constitution of the State, the
Constitution of the United States of America or any state or federal laws or as
a result of legislative or administrative action (whether state or federal) or
by final decree, judgment or order of any court or administrative body (whether
state or federal) entered after any contest thereof by the Issuer or the Company
in good faith, this Agreement shall have become void or unenforceable or
impossible of performance in accordance with the intent and purpose of the
parties as expressed in this Agreement.
(d) Unreasonable burdens or excessive liabilities shall have been imposed
upon the Issuer or the Company with respect to one or more of the Project
Facilities or the Generating Stations which they serve or the operation thereof,
including, without limitation, the imposition of federal, state or other ad
valorem, property, income or other taxes other than ad valorem taxes at the
rates presently levied upon privately owned property used for the same general
purpose as such Project Facilities or such Generating Stations.
(e) Changes in the economic availability of raw materials, operating
supplies, energy sources or supplies or facilities (including, but not limited
to, facilities in connection with the disposal of industrial wastes) necessary
for the operation of one or more of the Project Facilities or the Generating
Stations which they serve for the Project Purposes occur or technological or
other changes occur which the Company cannot reasonably overcome or control and
which in the Company's reasonable judgment render such Project Facilities or
such Generating Stations uneconomic or obsolete for the Project Purposes.
(f) Any court or administrative body shall enter a judgment, order or
decree, or shall take administrative action, requiring the Company to cease all
or any substantial part of its operations served by one or more of the Project
Facilities or the Generating Stations which they serve to such extent that the
Company is or will be prevented from carrying on its normal operations at such
Project Facilities or such Generating Stations for a period of six consecutive
months.
(g) The termination by the Company of operations at any of the Generating
Stations which are served by any of the Project Facilities.
The amount payable by the Company in the event of its exercise of the
option granted in this Section shall be the sum of the following:
(i) An amount of money which, when added to the moneys and investments
held to the credit of the Bond Fund, will be sufficient pursuant to the
provisions of the Indenture to pay, at 100% of the principal amount thereof
plus accrued interest to the redemption date, and discharge, all or such
portion of Outstanding Bonds to be redeemed on the earliest applicable
redemption date, that amount to be paid to the Trustee, plus
(ii) An amount of money equal to the Additional Payments relating to
those Bonds accrued and to accrue until actual final payment and redemption
of those Bonds, that amount or applicable portions thereof to be paid to
the Trustee or to the Persons to whom those Additional Payments are or will
be due.
The requirement of (ii) above with respect to Additional Payments to accrue
may be met if provisions satisfactory to the Trustee and the Issuer are made for
paying those amounts as they accrue.
The rights and options granted to the Company in this Section may be
exercised whether or not the Company is in default hereunder; provided, that
such default will not relieve the Company from performing those actions which
are necessary to exercise any such right or option granted hereunder.
SECTION VI.3. MANDATORY REDEMPTION. The Company shall deliver to the
Trustee the moneys needed to redeem the Bonds in accordance with any mandatory
redemption provisions relating thereto as may be set forth in Sections 4.01(b)
of the Indenture.
SECTION VI.4. NOTICE OF REDEMPTION. In order to exercise an option granted
in, or to consummate a redemption required by, this Article VI, the Company
shall, within 180 days following the event authorizing the exercise of such
option, or at any time during the continuation of the condition referred to in
paragraphs (c), (d) or (e) of Section 6.2 hereof, or at any time that optional
redemption of the Bonds is permitted under the Indenture as provided in Section
6.1 hereof, or promptly upon the occurrence of a Determination of Taxability (as
defined in the Indenture), give written notice to the Issuer and the Trustee
that it is exercising its option to direct the redemption of Bonds, or that the
redemption thereof is required by Section 4.01(b) of the Indenture due to the
occurrence of a Determination of Taxability, as the case may be, in accordance
with the Agreement and the Indenture, and shall specify therein the date on
which such redemption is to be made, which date shall not be more than 180 days
from the date such notice is mailed. The Company shall make arrangements
satisfactory to the Trustee for the giving of the required notice of redemption
to the Holders of the Bonds, in which arrangements the Issuer shall cooperate.
SECTION VI.5. ACTIONS BY ISSUER. At the request of the Company or the
Trustee, the Issuer shall take all steps required of it under the applicable
provisions of the Indenture or the Bonds to effect the redemption of all or a
portion of the Bonds pursuant to this Article VI.
(End of Article VI)
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
SECTION VII.1. EVENTS OF DEFAULT. Each of the following shall be an Event
of Default:
(a) The occurrence of an event of default as defined in Section 7.01 (a),
(b), or (c) of the Indenture;
(b) The Company shall fail to observe and perform any other agreement, term
or condition contained in this Agreement, other than such failure as will have
resulted in an event of default described in (a) above and the continuation of
that failure for a period of 90 days after notice thereof shall have been given
to the Company by the Issuer or the Trustee, or for such longer period as the
Issuer and the Trustee may agree to in writing; provided, that failure shall not
constitute an Event of Default so long as the Company institutes curative action
within the applicable period and diligently pursues that action to completion
within 150 days after the expiration of initial cure period as determined above,
or within such longer period as the Issuer and the Trustee may agree to in
writing; and
(c) The receipt by the Trustee of written notice from Ambac Assurance that
an event of default has occurred and is continuing under the Insurance
Agreement; and
(d)
(i) By decree of a court of competent jurisdiction the Company shall
be adjudicated a bankrupt, or an order shall be made approving a petition
or answer filed seeking reorganization or readjustment of the Company under
the federal bankruptcy laws or other law or statute of the United States of
America or of the state of incorporation of the Company or of any other
state, or, by order of such a court, a trustee in bankruptcy, a receiver or
receivers shall be appointed of all or substantially all of the property of
the Company, and any such decree or order shall have continued unstayed on
appeal or otherwise and in effect for a period of sixty (60) days; or
(ii) The Company shall file a petition in voluntary bankruptcy or
shall make an assignment for the benefit of creditors or shall consent to
the appointment of a receiver or receivers of all or any part of its
property, or shall file a petition seeking reorganization or readjustment
under the Federal bankruptcy laws or other law or statute of the United
States of America or any state thereof, or shall file a petition to take
advantage of any debtors' act.
Notwithstanding the foregoing, if, by reason of Force Majeure, the Company
is unable to perform or observe any agreement, term or condition hereof which
would give rise to an Event of Default under subsection (b) hereof, the Company
shall not be deemed in default during the continuance of such inability.
However, the Company shall promptly give notice to the Trustee and the Issuer of
the existence of an event of Force Majeure and shall use its best efforts to
remove the effects thereof; provided that the settlement of strikes or other
industrial disturbances shall be entirely within its discretion.
The exercise of remedies hereunder shall be subject to any applicable
limitations of federal bankruptcy law affecting or precluding that declaration
or exercise during the pendency of or immediately following any bankruptcy,
liquidation or reorganization proceedings.
SECTION VII.2. REMEDIES ON DEFAULT. Whenever an Event of Default shall have
happened and be subsisting, either or both of the following remedial steps may
be taken:
(a) The Issuer or the Trustee may have access to, inspect, examine and make
copies of the books, records, accounts and financial data of the Company, only,
however, insofar as they pertain to the Project; or
(b) The Issuer or the Trustee may pursue all remedies now or hereafter
existing at law or in equity to recover all amounts, including all Loan Payments
and Additional Payments and under Section 4.8 hereof the purchase price of Bonds
tendered for purchase, then due and thereafter to become due under this
Agreement, or to enforce the performance and observance of any other obligation
or agreement of the Company under this Agreement.
Notwithstanding the foregoing, the Issuer shall not be obligated to take
any step which in its opinion will or might cause it to expend time or money or
otherwise incur liability unless and until a satisfactory indemnity bond has
been furnished to the Issuer at no cost or expense to the Issuer. Any amounts
collected as Loan Payments or applicable to Loan Payments and any other amounts
which would be applicable to payment of Bond Service Charges collected pursuant
to action taken under this Section shall be paid into the Bond Fund and applied
in accordance with the provisions of the Indenture or, if the outstanding Bonds
have been paid and discharged in accordance with the provisions of the
Indenture, shall be paid as provided in Section 5.07 of the Indenture for
transfers of remaining amounts in the Bond Fund.
The provisions of this Section are subject to the further limitation that
the rescission and annulment by the Trustee of its declaration that all of the
Bonds are immediately due and payable also shall constitute a rescission and
annulment of any corresponding declaration made pursuant to this Section and a
rescission and annulment of the consequences of that declaration and of the
Event of Default with respect to which that declaration has been made, provided
that no such rescission and annulment shall extend to or affect any subsequent
or other default or impair any right consequent thereon.
SECTION VII.3. NO REMEDY EXCLUSIVE. No remedy conferred upon or reserved to
the Issuer or the Trustee by this Agreement 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 under this
Agreement, or now or hereafter existing at law, in equity or by statute. No
delay or omission to exercise any right or power accruing upon any default shall
impair that 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 Issuer or the Trustee to exercise any
remedy reserved to it in this Article, it shall not be necessary to give any
notice, other than any notice required by law or for which express provision is
made herein.
SECTION VII.4. AGREEMENT TO PAY ATTORNEYS' FEES AND EXPENSES. If an Event
of Default should occur and the Issuer or the Trustee should incur expenses,
including attorneys' fees, in connection with the enforcement of this Agreement
or the collection of sums due hereunder, the Company shall be required, to the
extent permitted by law, to reimburse the Issuer and the Trustee, as applicable,
for the expenses so incurred upon demand.
SECTION VII.5. NO WAIVER. No failure by the Issuer or the Trustee to insist
upon the strict performance by the Company of any provision hereof shall
constitute a waiver of their right to strict performance and no express waiver
shall be deemed to apply to any other existing or subsequent right to remedy the
failure by the Company to observe or comply with any provision hereof.
SECTION VII.6. NOTICE OF DEFAULT. The Company shall notify the Trustee
and Ambac Assurance immediately if it becomes aware of the occurrence of any
Event of Default hereunder or of any fact, condition or event which, with the
giving of notice or passage of time or both, would become an Event of Default.
(End of Article VII)
ARTICLE VIII
MISCELLANEOUS
SECTION VIII.1. TERM OF AGREEMENT. This Agreement shall be and remain in
full force and effect from the date of delivery of the Bonds to the Original
Purchaser until such time as (i) all of the Bonds shall have been fully paid (or
provision made for such payment) and the Indenture has been released pursuant to
Section 9.01 thereof and (ii) all other sums payable by the Company under this
Agreement shall have been paid; provided, however, the obligations of the
Company under Sections 4.2 and 5.9 hereof shall survive any termination of this
Agreement.
SECTION VIII.2. AMOUNTS REMAINING IN FUNDS. Any amounts in the Bond Fund
remaining unclaimed by the Holders of Bonds for four years after the due date
thereof (whether at stated maturity, by redemption, upon acceleration or
otherwise), at the option of the Company, shall be deemed to belong to and shall
be paid, subject to Section 5.06 of the Indenture, at the written request of the
Company, to the Company by the Trustee. With respect to that principal of and
any premium and interest on the Bonds to be paid from moneys paid to the Company
pursuant to the preceding sentence, the Holders of the Bonds entitled to those
moneys shall look solely to the Company for the payment of those moneys.
Further, any amounts remaining in the Bond Fund and any other special funds or
accounts created under this Agreement or the Indenture, except the Rebate Fund,
after all of the Bonds shall be deemed to have been paid and discharged under
the provisions of the Indenture and all other amounts required to be paid under
this Agreement and the Indenture have been paid, shall be paid to the Company to
the extent that those moneys are in excess of the amounts necessary to effect
the payment and discharge of the Outstanding Bonds.
SECTION VIII.3. NOTICES. All notices, certificates, requests or other
communications hereunder shall be in writing, except as provided in Section 3.4
hereof, and shall be deemed to be sufficiently given when mailed by registered
or certified mail, postage prepaid, and addressed to the appropriate Notice
Address. A duplicate copy of each notice, certificate, request or other
communication given hereunder to the Issuer, the Company, Ambac Assurance or the
Trustee shall also be given to the others. The Company, the Issuer, Ambac
Assurance and the Trustee, by notice given hereunder, may designate any further
or different addresses to which subsequent notices, certificates, requests or
other communications shall be sent.
SECTION VIII.4. EXTENT OF COVENANTS OF THE ISSUER; NO PERSONAL LIABILITY.
All covenants, obligations and agreements of the Issuer contained in this
Agreement or the Indenture shall be effective to the extent authorized and
permitted by applicable law. No such covenant, obligation or agreement shall be
deemed to be a covenant, obligation or agreement of any present or future
member, officer, agent or employee of the Issuer in other than his official
capacity, and neither the members of the Issuer 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 or by reason of
the covenants, obligations or agreements of the Issuer contained in this
Agreement or in the Indenture.
SECTION VIII.5. BINDING EFFECT. This Agreement shall inure to the benefit
of and shall be binding in accordance with its terms upon the Issuer, the
Company and their respective permitted successors and assigns provided that this
Agreement may not be assigned by the Company (except as permitted under Sections
5.8 or 5.12 hereof) and may not be assigned by the Issuer except to (i) the
Trustee pursuant to the Indenture or as otherwise may be necessary to enforce or
secure payment of Bond Service Charges or (ii) any successor public body to the
Issuer.
SECTION VIII.6. AMENDMENTS AND SUPPLEMENTS. Except as otherwise expressly
provided in this Agreement or the Indenture, subsequent to the issuance of the
Bonds and prior to all conditions provided for in the Indenture for release of
the Indenture having been met, this Agreement may not be effectively amended,
changed, modified, altered or terminated by the parties hereto except with the
consents required by, and in accordance with, the provisions of Article XI of
the Indenture, as applicable.
SECTION VIII.7. EXECUTION COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which shall be regarded as an original and
all of which shall constitute but one and the same instrument.
SECTION VIII.8. SEVERABILITY. If any provision of this Agreement, or any
covenant, obligation or agreement contained herein is determined by a judicial
or administrative authority to be invalid or unenforceable, that determination
shall not affect any other provision, covenant, obligation or agreement, each of
which shall be construed and enforced as if the invalid or unenforceable portion
were not contained herein. That invalidity or unenforceability shall not affect
any valid and enforceable application thereof, and each such provision,
covenant, obligation or agreement shall be deemed to be effective, operative,
made, entered into or taken in the manner and to the full extent permitted by
law.
SECTION VIII.9. GOVERNING LAW. This Agreement shall be deemed to be a
contract made under the laws of the State and for all purposes shall be governed
by and construed in accordance with the laws of the State.
(End of Article VIII)
IN WITNESS WHEREOF, the Issuer and the Company have caused this Agreement
to be duly executed in their respective names, all as of the date hereinbefore
written.
INDIANA DEVELOPMENT FINANCE
AUTHORITY
By: ----------------------------
William H. King, Chairman
Attest:
---------------------------------------------------------
Courtney R. Tobin, Executive Director
PSI ENERGY, INC.
By: -----------------------------
Assistant Treasurer
EXHIBIT A
PROJECT
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SERIES 1990 PRINCETON REFUNDED BONDS
(Series 1982 Bonds)
Facility 1 - Flue gas desulfurization and sludge fixation system for Gibson
Generating Station, Unit #5.
Facility 2 - Electrostatic precipitator for Gibson Generating Station, Unit #5.
Facility 3 - Off-road solid waste transport /disposal site improvements for
Gibson Generating Station, Unit #5.
SERIES 1990 REFUNDED BONDS
Facility 1 - Improvements and modifications for Edwardsport Generating Station
ash disposal facilities.
Facility 2 - Sewage lift station for Edwardsport Generating Station.
Facility 3 - Improvements and modifications for Noblesville Generating Station
ash disposal facilities.
Facility 4 - Replacement of sewage treatment plant at Wabash River Generating
Station.
Facility 5 - Discrete portions of demineralizer for Wabash River Generating
Station dedicated exclusively to regeneration of resin beds.
Facility 6 - Improvements and modifications for Wabash River Generating Station
ash disposal facilities.
Facility 7 - Sewage treatment plant for Gallagher Generating Station.
Facility 8 - Improvements and modifications for Gallagher Generating Station ash
disposal facilities.
Facility 9 - Improvements and modifications for Cayuga Generating Station ash
disposal facilities.
Facility 10 - Improvements and modifications for Gibson Generating Station ash
disposal facilities.
Facility 11 - Improvements and modifications for Gibson Generating Station ash
disposal facilities.
SERIES 1993A REFUNDED BONDS
Facility 3 - Improvements and modifications for Wabash River Generating Station
and disposal system.
Facility 5 - Discrete portions of demineralizer for Gallagher Generating
Station.
Facility 6 - Improvements and modifications for Gibson Generating Station ash
collection and disposal system.
Facility 7 - Sludge stabilization and disposal system for Gibson Generating
Station, Unit #4.
Facility 8 - Integrated control system for Gibson Generating Station.
